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Caroline Dinenage (Gosport) (Con)
1. What steps he is taking to tackle tax avoidance.
The Chancellor of the Exchequer (Mr George Osborne)
This coalition Government have dramatically increased the pressure against those who avoid and evade taxes. As a result of our efforts, tax revenues from our compliance and enforcement are £3 billion higher than when we came to office. We have tackled disguised remuneration, we are dealing with stamp duty enveloping and we are introducing a general anti-abuse rule. None of those things, of course, happened over the previous 13 years.
Caroline Dinenage
My constituents do not mind paying taxes, so long as everyone pays their fair share. Given that the tax gap widened under the previous Government, will the Chancellor confirm that this Government are committed to tackling all forms of aggressive tax avoidance as well as tax evasion?
Mr Osborne
We are committed to doing that. My hon. Friend is right that the tax gap—the amount of money that should be collected but is not collected—rose from £35 billion to £39 billion under the previous Government. As I have said, our compliance and enforcement efforts have already increased the amount raised by £3 billion, and later this week we will confirm that we have raised £500 million more in extra tax from high net worth individuals as a result of our efforts through Her Majesty’s Revenue and Customs. We are taking action, but need it to be supported, yet the Labour party recently voted against the changes to disguised remuneration, which were an attempt to clamp down on a particularly egregious form of tax avoidance.
Paul Goggins (Wythenshawe and Sale East) (Lab)
One group of people who could not avoid paying tax are the disabled Remploy staff who were recently made redundant. They were put on an emergency code, with the result that their holiday and notice pay was taxed at almost 50%. HMRC has promised refunds, but will the Chancellor go back to his Department and ensure that the payments are made as a matter of urgency and within the current tax year?
Mr Andrew Tyrie (Chichester) (Con)
Many Members of this House have told me of their deep concern about the development of retrospective tax measures, and the Treasury Committee shares those concerns. Does the Chancellor agree that the best way to prevent loss of revenue from avoidance schemes is to work much harder to create a simpler tax system in the beginning?
Mr Osborne
Yes, I agree that that is of course the best approach, but in the tax code of a western democracy there will inevitably be opportunities for abuse and avoidance, which we need to deal with. When it comes to retrospection, I say to my hon. Friend, the Chair of the Treasury Committee, that I think the House of Commons should sanction retrospective taxation only when it is very clear that the explicit wishes of Parliament have been abused and avoided. For example, in the case of a particular UK bank that his Committee and I have corresponded about, we acted retrospectively because there was a clear breach of what Parliament had expressed, and I am very pleased to note that the bank’s new chief executive has today said that the bank will be scaling down its tax structuring activities.
Stewart Hosie (Dundee East) (SNP)
A year ago the Chief Secretary to the Treasury made a speech in which he said he would employ 2,000 more tax inspectors, but in March this year it transpired that there were almost 1,300 fewer people in compliance than there had been when the Government came to power. Can the Chancellor tell us when we will see any of those 2,000 new inspectors, or are we to take it that that was simply a conference flourish speech and that there is no real determination to clamp down on tax avoidance as the Chancellor has said?
Mr Osborne
The number of specialist tax people at HMRC dealing with compliance is going up over this Parliament. We are also committing an extra £900 million to the organisation specifically for that activity. As I have just explained to the House, we are collecting £3 billion more in tax as a result of compliance over this Parliament and, as we will confirm later this week, we are collecting £500 million more from high net worth individuals because of the high net worth unit and its better than expected performance over the past two years.
Simon Hughes (Bermondsey and Old Southwark) (LD)
Following the Government’s very good initiatives so far on dealing with tax avoidance, will the Chancellor look at those private sector companies that are monopoly providers of public sector services, which have billion-pound turnovers, pay no corporation tax and often channel their money through offshore accounts in places such as the Caribbean and the Channel Islands?
Mr Osborne
I repeat the general observation that we are making every effort, through legislation and enforcement activity, to reduce tax avoidance and to stop tax evasion. If my right hon. Friend has specific examples that he wants to bring to my attention, he should please do so, and if necessary we will investigate.
Jason McCartney (Colne Valley) (Con)
2. What recent steps he has taken to support nationally important infrastructure projects.
Mr Stewart Jackson (Peterborough) (Con)
3. What assessment he has made of the effect that investment in infrastructure will have on the economy.
The Chancellor of the Exchequer (Mr George Osborne)
A competitive market economy such as Britain needs modern infrastructure if it is to succeed, yet in areas such as roads, energy and broadband, the last decade saw us fall behind the rest of Europe. This Government are righting those wrongs by overseeing a £250 billion investment in infrastructure—double the amount in the previous Parliament, even in these straitened times. Our new legislation will guarantee billions more in investment from the private sector. This will bring the new roads, the superfast broadband to our cities, and the new rail connections such as the northern hub. We are also cutting through the delays in Whitehall and in the planning system to make sure that we deliver faster than Labour did.
Jason McCartney
I welcome all that investment in infrastructure, particularly the investment in electrification of the trans-Pennine rail route and the full funding of the northern hub rail project. Will my right hon. Friend continue to invest in infrastructure so that we can recover from the shocking situation we inherited whereby for every 10 jobs created in London and the south-east under the previous Government, only one was created in the regions?
Mr Osborne
My hon. Friend points to the stark truth that, as he says, for every 10 jobs created in the private sector in the south of England only one was created in the north of England. In a region as important as the west midlands, for example, private sector employment fell during Labour’s period in office, and that was before the crash. We are investing in the infrastructure. The trans-Pennine electrification is incredibly important. The stretch between Liverpool and Manchester is already under way, and of course it then crosses the Pennines. We are also fully committing to the northern hub—something that was not done under the previous Government.
Mr Stewart Jackson
I support the Government’s national infrastructure plan. I particularly welcome specific projects such as the dualling of the A11 and the potential new A14 toll road in Cambridgeshire near my constituency. Is not the lesson of such discrete local transport infrastructure projects that they deliver a much more profound impact on jobs and growth than grandiose projects such as High Speed 2, the business case for which is fatally flawed?
Mr Osborne
I agreed with my hon. Friend until his last sentence. He is right to say that it is not just the big projects announced from this Dispatch Box that count; the local projects in Peterborough and elsewhere will also unlock jobs, development and investment. Of course, we cannot make all those announcements here in the House of Commons. However, we have provided local authorities with the funds to make those transport changes and improvements. We call it the Growing Places fund, and it is worth about £500 million. In the city deals that we are striking with different cities, we are improving road and rail connections to create jobs and get the private sector growing, which is what we all want to see.
Anas Sarwar (Glasgow Central) (Lab)
The huge contraction in our construction sector is one of the reasons we are in a double-dip recession. We have seen two reshuffles—one in the UK Government and one in the Scottish Government. In Scotland, the new Cabinet Secretary for Infrastructure, Investment and Cities will be building not the case for schools, hospitals and railways but the case for independence, and we have a UK Chancellor who thinks that a credible economic policy is just about rolling up his sleeves. When we will see a change in direction from this Government to make sure that we are creating investment and jobs right across the UK?
Mr Osborne
In this case, I agreed with the first half of the question. I do not think that the Scottish Government are focused on the priorities of the Scottish people, and I made that case when I spoke to CBI Scotland in Glasgow last week. However, I disagree with his attempt to compare the record of the Labour Government with that of this coalition Government. We are spending more on capital investment than the previous Labour Government planned to spend in this period, as they set out just before the general election. We are spending more on capital investment in the essential infrastructure of this country than they did. We are also taking tough decisions on welfare and the like in order to get the deficit down and get money spent where it can create jobs.
Geraint Davies (Swansea West) (Lab/Co-op)
Will the Chancellor consider extra investment in the ports of Neath, Port Talbot and Swansea in order that they become recognised by the European Commission as core ports and therefore trigger TEN-T—trans-European transport network—investment in an area where it is much needed?
Mr Osborne
I am keen to see further investment in our ports. I am happy to engage in a specific conversation with the hon. Gentleman about his proposal and, if necessary, speak to the Welsh Government about it.
Mr John Redwood (Wokingham) (Con)
Does the Chancellor agree that the projects that have the most beneficial impact on the economy are those that are fully self-financing in the private sector because they are popular?
Mr Osborne
I agree that we want to see private sector investment, and tens of billions of pounds of private sector investment is coming into the United Kingdom. Indeed, today the Chinese company Huawei has announced a $2 billion investment in the UK. I absolutely agree with my right hon. Friend. We want to create the low-tax, competitive conditions for the UK economy in which the private sector can grow, but I think he would recognise that there is a role for public money in providing large-scale transport infrastructure, for example, which these companies need to succeed.
Rachel Reeves (Leeds West) (Lab)
In a speech yesterday, the Chief Secretary to the Treasury declared that
“infrastructure is at the centre of our strategy to kick-start our economy.”
With that in mind, will the Chancellor tell the House whether the value of orders for infrastructure investment made by the private sector rose or fell between 2010 and 2011?
Mr Osborne
For a start, we have just announced £40 billion of additional guarantees for private sector infrastructure. If the hon. Lady wants the figures, £113 billion was invested over the period from 2005 to 2010, and £250 billion of investment for both the private and public sectors has been announced in this Parliament.
Rachel Reeves
As the Chancellor will know, there is a difference between announcing something and actually delivering it. The answer to my question is that those orders fell by a fifth, from £7.3 billion in 2010 to £5.9 billion in 2011—a result of the collapse in business confidence that the Chancellor’s disastrous decision to cut too far and too fast has resulted in.
Is it not the truth that next week’s Infrastructure (Financial Assistance) Bill is necessary only in order to create the impression of activity and to distract from this Government’s complete and utter failure to deliver the infrastructure investment that they have been promising and that the country is crying out for?
Mr Osborne
There is a difference between announcement and delivery: Labour announced no more boom and bust, and delivered the biggest boom and the biggest bust. We know all about the record of the last Labour Government. One of the quite extraordinary things is that, despite spending and borrowing all that money, they did not actually invest in the modern infrastructure that the private sector needs to create sustainable jobs. That is the lesson that the hon. Lady should learn from their last period in office.
Zac Goldsmith (Richmond Park) (Con)
We are told by the Government that we urgently need more airport capacity, so could the Chancellor explain why his only policy on the issue is to commit the Government to doing nothing at all for three years, until after the next election? Surely he appreciates that voters need to know where the Government stand before they vote.
Mr Osborne
As my hon. Friend knows better than pretty much anyone else in this House, we made a very firm commitment that we would not proceed with a third runway in this Parliament, but Howard Davies is now looking at all the options for airport capacity in the south-east. This issue has evaded Governments of all political colours for the past 30 years, and it is time that we tried to achieve some cross-party consensus, because I am absolutely clear—[Interruption.] If the Labour party was so good at building airports, where are they? Where are these additional airports that it built? The truth is that the south-east of England needs additional airport capacity. The question is where we place it and I think that Howard Davies is the right man to advise us all.
Mr Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab)
4. What recent estimate he has made of the effect on pensioners of plans to end age-related tax allowances.
The Exchequer Secretary to the Treasury (Mr David Gauke)
The impacts of the reforms to age-related allowances were set out alongside Budget 2012. Half of those over the age of 65 pay no income tax, and nobody will pay more tax in 2013-14 than in 2012-13 as a result of these changes. The Government remain committed to supporting pensioners and have introduced the triple guarantee for the basic state pension, ensuring that it will increase each and every year by the highest of earnings, prices or 2.5%.
Mr Gauke
The right hon. Gentleman will be aware that the policy announcements in the last Budget resulted in millionaires paying more in tax, not less. As far as this Government’s record on pensioners is concerned, let us not forget that the state pension is going up by £120 more compared with the Opposition party’s plans.
Duncan Hames (Chippenham) (LD)
For a long time, some pensioners, by virtue of having their personal allowance clawed back, have found themselves paying an effective rate of income tax far higher than many working people on a similar income. Will the Government’s policy of raising the personal allowance mean that that unfairness is eventually brought to an end?
Mr George Mudie (Leeds East) (Lab)
5. What assessment he has made of the implications for his policies of the public sector net borrowing figures in the current fiscal year.
The Chief Secretary to the Treasury (Danny Alexander)
Public sector borrowing figures have been higher than expected, primarily because of short-term factors, including lower corporation tax receipts caused by the Elgin shutdown and the lower than expected oil price. With eight months of the year remaining, it is too early to draw conclusions about the year as a whole, but the Government remain committed to returning the public finances to a sustainable path, while allowing the automatic stabilisers to operate in response to the weakness in the global economy.
Mr Mudie
The Chancellor boasted in his 2010 Budget speech that the borrowing requirement this year would be £89 billion. The Office for Budget Responsibility is suggesting that the figure will be £120 billion—a 33% overshoot. Can we have an explanation of why the Chancellor got it so wrong?
Danny Alexander
The hon. Gentleman, as he knows, is referring to the OBR’s forecasts. Of course, a number of problems in the global economy, not least those in the eurozone, have become more serious since those forecasts were made. I would have thought that he would applaud the fact that our plan is sufficiently flexible to allow the automatic stabilisers to support our economy when there is weakness in the global economy.
Richard Graham (Gloucester) (Con)
No one in the House underestimates the size of the economic challenge before us or the importance of supporting manufacturing and exports, which make up a fifth of the gross domestic product in my constituency, but at a time when the employment figures are encouraging, our manufacturing indices are outstanding and our global competitiveness has risen by two places, does my right hon. Friend agree that two impediments to business confidence are the threat of strikes by unions and the chorus of despair from the Opposition?
Danny Alexander
My hon. Friend is right to highlight some of the positives in the UK economy, especially the employment figures. My experience of dealing with trade unions is that one should not pay much attention to the rhetoric at their conferences. When one gets down to business with the trade unions, as I did on public service pensions, the majority of them are willing to behave responsibly. That said, and as the shadow Chancellor has said, the British public and trade union members do not want to see strike action in this country.
Bill Esterson (Sefton Central) (Lab)
Borrowing is rising because of the scale and speed of the cuts, as we warned it would. Is it not the case that the economic policy brought in by the right hon. Gentleman and his friend the Chancellor has backfired?
Danny Alexander
Before asking that question the hon. Gentleman should have reflected on the fact that the policy of his party’s Front Benchers is to increase borrowing yet further. They recently announced a new approach, known as pre-distribution. We now know what that means: spend money before it has arrived, in the hope that it might arrive in future. That is the policy that failed this country for 13 years and we will not go back to it.
Mr Julian Brazier (Canterbury) (Con)
Does my right hon. Friend agree that the 900,000 extra private sector jobs that have been created since the last election will go a considerable way towards easing the fiscal position, as well as cast some doubt over the output figures of the Office for National Statistics?
Danny Alexander
I certainly would not wish to question the integrity of the ONS’s figures. However, I join my hon. Friend in highlighting the excellent record of many private sector businesses in creating jobs in all parts of the country over the past two years.
Rehman Chishti (Gillingham and Rainham) (Con)
6. What steps he has taken to help households with their cost of living.
The Chief Secretary to the Treasury (Danny Alexander)
The Government have taken wide-ranging action to support households. For example, we cut fuel duty last year and have deferred various increases planned by the Labour party. We are also helping those in work by raising the personal allowance by £1,100 in April next year, which is the largest cut in income tax for median earners in more than a decade. That is a substantial record of dealing with the big questions in the cost of living for families.
Rehman Chishti
I thank my right hon. Friend for that answer. There are concerns that fuel companies delay the reduction in petrol prices when the cost of crude oil falls. What action are the Government taking to ensure that companies pass on savings to motorists?
Danny Alexander
The hon. Gentleman raises an important point, and I sympathise greatly with families up and down the country who face the problem that he describes. That is why we have made decisions on fuel duty that mean that the price of petrol is roughly 10p a litre less than it would have been had we followed through the Labour party’s plans. The Office of Fair Trading has recently announced a call for information on the problem, and I urge him and Members in all parts of the House to pass on any information that they have. Having spoken to Clive Maxwell of the OFT, I know that it is committed to ensuring—
Mr Speaker
Order. I am greatly obliged to the Chief Secretary, but from now on we need rather shorter exchanges if I am to maximise the number of Back-Bench contributors.
Kerry McCarthy (Bristol East) (Lab)
The Chief Secretary will know that one thing that is really hitting people at the moment is the rising cost of food. A huge number of people, even those in work, are having to resort to going to food banks. What action are the Government taking to address that situation?
Danny Alexander
The hon. Lady will also know that the substantial increases in the personal allowance are putting more money in the pockets of people on low incomes who are working hard. We protected the lowest-paid public sector workers from the impact of the pay freeze, and she will also know that out-of-work benefits went up by 5.2% this year.
Tessa Munt (Wells) (LD)
Returning to the high cost of petrol, diesel and heating oil, I am sure the Chief Secretary is aware that in the past few days FairFuelUK has published a statement from a whistleblower alleging that the oil commodity trading market is being rigged in a similar way to LIBOR. Will he confirm that he will back the call for a wider investigation and inquiry into the UK oil trading market by the Financial Services Authority or the Bank of England, whichever is more appropriate?
Danny Alexander
I applaud the work of the FairFuelUK campaign in drawing attention to such issues. Having discussed the matter with Clive Maxwell of the Office of Fair Trading, I can reassure my hon. Friend that if the call for information in which it is currently engaged yields evidence of real problems in the fuel market, it will launch a full investigation.
Chris Leslie (Nottingham East) (Lab/Co-op)
In four months’ time, more than a million families will see their cost of living rise, with the loss of child benefit and a complex tax change costing the Exchequer £100 million more just to administer. Can the Chief Secretary tell the House how many more families will have to fill out a self-assessment tax form for the privilege of losing their child benefit, and when will those complex forms begin to arrive?
Danny Alexander
Letters to people who are likely to be affected by that change will go out in October—[Hon. Members: “Which year?”] October of this year. I am surprised to hear that the hon. Gentleman objects to the change, given that it is a necessary part of our fiscal consolidation, and particularly part of our asking the wealthiest in this country to make a contribution to deficit reduction. His party should support that.
Karl MᶜCartney (Lincoln) (Con)
7. What assessment he has made of the effect on pubs of the continuation of the beer duty escalator.
The Economic Secretary to the Treasury (Sajid Javid)
The Government recognise the important contribution that pubs throughout the country make to their local communities and the wider community. Given the large number of factors contributing to the decline in pub numbers, including shifting social trends, the relationship between beer duty and the pub industry cannot easily be determined.
Karl MᶜCartney
I welcome the new Minister to his post and thank him for that answer. In my constituency, the beer and pubs sector supports around 1,300 jobs. At a time when household incomes are static and pubs have seen a reduction in trade as a result of the smoking ban and other nanny state impositions by the Labour Government, does he agree that the Treasury needs to provide further support to the industry by reversing the trend of rises in beer duty, which has grown by more than 40% since 2008?
Sajid Javid
As the incoming Economic Secretary, I note that I have been given responsibility for some of the more popular duties and taxes.
There will be no further changes to alcohol duties beyond those designed and pre-announced by the previous Government, but I hope that the minimum unit pricing system that the Government have announced will make a difference to pubs, along with other measures that we have announced to help small businesses such as reducing the corporation tax rate, the extension of the small business rate relief holiday and the reduction of the small profits tax rate.[Official Report, 12 September 2012, Vol. 550, c. 2MC.]
Mr Dominic Raab (Esher and Walton) (Con)
8. What steps he is taking to simplify the tax system.
The Exchequer Secretary to the Treasury (Mr David Gauke)
The Government are committed to simplifying the tax system. Since 2010 we have set up the Office of Tax Simplification and acted on a range of its recommendations. We have abolished 43 tax reliefs, and from April 2013 we will introduce a new cash basis for calculating tax, benefiting up to 3 million small self-employed businesses. Her Majesty’s Revenue and Customs is also improving tax administration for small businesses, as set out in its publication at the time of the 2012 Budget.
Mr Raab
I thank the Minister for that response. The 2020 Tax Commission found that UK tax administration costs were double those of Norway, triple those of Estonia, and almost five times higher than in Switzerland, so I welcome the Minister’s drive for simplification. What progress has been made on merging national insurance and income tax, and other areas affecting business, that could yield an estimated £5 billion each year for the British economy?
Mr Gauke
The Government are continuing to explore the potential of merging the operation of income tax and national insurance contributions. We also want to make the tax system as transparent as possible, and one of the steps we have taken is the introduction of personal tax statements that will make it clearer to taxpayers how much they are paying in both income tax and national insurance.
Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab)
The Minister will be aware that his colleague the Chancellor presented the granny tax as a tax simplification in the Budget. Is the Minister confident that further measures of tax simplification will be more successful and less unpopular than the granny tax?
Steve Brine (Winchester) (Con)
9. What plans he has to maintain low market interest rates.
The Chancellor of the Exchequer (Mr George Osborne)
My hon. Friend is right: low interest rates are secured by credible, economic and fiscal policy, and delivered by the independent Bank of England. Sir Mervyn King has been an outstanding Governor of the Bank, and has helped set monetary policy to support our economy through one of its most challenging periods in modern history. He is serving his second and final term as Governor, and will retire on 30 June 2013.
I can tell the House today that I have decided that the appointment of his successor will be conducted through fair and open competition. For the first time in history, the post will be advertised and the advertisement will appear in the press later this week. As with Mervyn King, we are seeking a Governor of intelligence, independence and integrity, and we intend to announce the successful candidate by the end of the year.
Steve Brine
I thank the Chancellor for that response, and I welcome his announcement.
Those looking for a home in my Winchester constituency want to know that their Conservative council is building new council homes for the first time in 25 years. Those looking to buy in the private sector want to know that they can get on the housing ladder and get a mortgage, with some certainty that they can repay the money over the years to come. Will the Chancellor reassure my constituents that, unlike the Labour party, he understands that even a small rise in interest rates will have a punishing effect on family budgets?
Mr Osborne
My hon. Friend is absolutely right. Low interest rates are crucial to the recovery, and a loss of confidence in the UK’s ability to pay its way in the world will lead to an increase in market interest rates, an increase in mortgage costs for millions of families, and, of course, an increase in borrowing costs for businesses. It would be a disaster, and that is why the Government do not take the path advocated by the Labour party. We also want to ensure that low interest rates are felt by families, which is why the funding for lending scheme announced jointly with the Bank of England is already leading to banks offering cheaper mortgages. The combination of our Firstbuy and NewBuy schemes is also helping families to buy their first home.
Fiona Mactaggart (Slough) (Lab)
Many people do not have access to those kinds of interest rates, and are depending on high street, rip-off schemes such as Wonga and so on. What is the Chancellor doing to protect ordinary families who cannot get loans and who need to depend on rip-off merchants?
Mr Osborne
We have toughened up the regulation of consumer credit, and next year there will be a tough new consumer agency, the financial conduct authority, which we are creating in order to deal with the bad advice that is sometimes provided to families. Indeed, Martin Wheatley, its chief executive, gave an interesting speech about that last week, and about the impact of sales commissions and the like on the provision of bad advice and bad products to families. We are taking action to do that, but as I said, the worst possible thing for all those families, and everyone else in the country, would be a sharp rise in interest rates, which a loss of confidence in the Government’s fiscal policies would bring about.
Chris Evans (Islwyn) (Lab/Co-op)
10. What estimate he has made of the effect of the level of VAT on the retail sector in the last 12 months.
The Exchequer Secretary to the Treasury (Mr David Gauke)
The Government aim to provide a climate of economic stability that will benefit all businesses. That would not be possible without a credible plan to deal with Government debt, and a VAT increase is an important component of that plan.
Chris Evans
Since January this year, 42 retail businesses in Wales have gone to the wall. What message does the Minister have for Welsh business leaders who have called for a reduction in VAT to breath new life into the high street?
Charlie Elphicke (Dover) (Con)
If the Government were to adopt that unfunded mandate and the other £200 billion of unfunded borrowing suggested by the Opposition, what would be the effect on interest rates and our national credit rating?
Naomi Long (Belfast East) (Alliance)
11. If he will commission research to determine the effect of air passenger duty on UK holidaymakers, employment and economic growth.
Ms Margaret Ritchie (South Down) (SDLP)
12. What assessment he has made of the effect of air passenger duty on tourism and the regional economy.
The Economic Secretary to the Treasury (Sajid Javid)
The Government undertook an extensive consultation on air passenger duty last year. The consultation gathered views and evidence from stakeholders—more than 500 responses were received from all sectors. The Government published our response to the consultation on 6 December 2011 and we have no plans to commission further research.
Naomi Long
As the Minister is aware, the issue of direct long-haul flights has been dealt with. However, that is a small but important part of the market—most people will travel to or through another UK airport, and passengers from Northern Ireland will pay APD twice, because there is a restricted number of through-carriers. Do the Government believe there would be merit in reviewing APD generally so that it is more supportive of tourism and business, and of growth?
Sajid Javid
The hon. Lady is passionate about this issue, and I thought she would welcome the measures that the Government have taken, which have made a significant contribution. I hope she joins me in realising that the Government have made substantial progress. He also knows that the Chancellor announced in the previous Budget that the Government are looking at other things that can be done to boost the Northern Ireland economy.
Ms Ritchie
I thank the Minister for his answer, but could he advise the House on what discussions he has held with the Northern Ireland Executive on the need to scrap APD for short-haul flights between Northern Ireland and Britain and Europe?
Sajid Javid
I have not had any such discussions since I was appointed, but I look forward to having them in future and will report to the hon. Lady when I do.
Mark Pritchard (The Wrekin) (Con)
I congratulate my hon. Friend on his appointment to the Front Bench. I am sorry to ask him a difficult question to begin with, but what consideration has been given to the impact of APD on our Commonwealth cousins? It is having an impact on many economies. We would not want our Commonwealth cousins to turn to the black economy or illegal activities, or even to require more overseas development aid. Will he look again at the impact of the policy on the Commonwealth?
Sajid Javid
I thank my hon. Friend for his warm welcome and for his characteristically strong question. As far as I am aware, the Government have not looked specifically at the impact on the Commonwealth, but I am willing to do so and will get back to him.
Miss Anne McIntosh (Thirsk and Malton) (Con)
I welcome my hon. Friend to his new position. Will he look at the position of the Caribbean in that regard? Will he also look at the conclusions of the all-party group on aviation report on APD and at the impact APD is having on regional economies such as Yorkshire that compete as tourism destinations for people coming from China and the US?
Sajid Javid
I thank my hon. Friend for her welcome. I will take a look at that, but given the amount of money from APD on which the Government rely to deal with the fiscal deficit we inherited, it is appropriate to point out that, if we changed the banding, APD might have to rise for others.
Lilian Greenwood (Nottingham South) (Lab)
13. What assessment he has made of the effect on families with children of the tax and benefit changes made in 2012-13.
The Economic Secretary to the Treasury (Sajid Javid)
The Government have taken unprecedented steps to increase the transparency of decision making. All but the highest income decile have on average gained from direct tax changes. The Government continue to help and protect the most vulnerable with, for example, increases in the child element of the child tax credit by £180 per annum above inflation in April 2011.
Lilian Greenwood
Up to 1,000 households in my constituency face having their tax credits withdrawn this year, and 275 families with 625 children faced losing working tax credit if parents could not increase their hours. Why is the Chancellor trying to balance the books on the backs of hard-working families, and will he concede that children are bearing the brunt of this Government’s failed policies?
Sajid Javid
Under the previous Government, spending on tax credits was out of control, having risen from £18 billion in 2003 to £30 billion in 2010, meaning that nine out of 10 families with children were eligible for tax credits. This Government have reduced that to six out of 10 by taking a more targeted approach. It is important that we support those on the lowest incomes while ensuring that those who can contribute to deficit reduction do so. There is nothing fair about running huge deficits for our children.
John Hemming (Birmingham, Yardley) (LD)
In Birmingham, 283,000 people have benefited from a tax cut of £220. Will the Minister assure me that we will continue to try to protect the low-paid by reducing how much tax they pay?
Sajid Javid
That is a central plank of the Government’s policy, and I am sure that my hon. Friend will agree that some of the changes we have already announced, such as those contained in the personal allowance, which I know he supports, are doing exactly that.
Catherine McKinnell (Newcastle upon Tyne North) (Lab)
I congratulate the Minister on his appointment, but the Government’s tax and spending cuts have hit women and children the hardest, leaving families struggling and child poverty on the rise. The last time there was no woman in the Treasury was 17 years ago under the last Tory Government. Although I welcome him to his place, does he think that the Government’s record with women will get worse or better with no female voice at the table?
Sajid Javid
The Government have an excellent record on women in government—[Interruption.]
Mr Speaker
Order. Mr Bryant, you are trying to become a statesman. Calm yourself, man.
Mr Speaker
Perhaps the hon. Gentleman does not think he has to try. Anyway, the Minister must be heard.
Sajid Javid
The Government’s policies, including those of the Treasury, are helping women. The change I mentioned previously—to the personal tax credits—will take 1.1 million people out of income taxation altogether, which will disproportionately benefit women.
John Stevenson (Carlisle) (Con)
14. What assessment he has made of the effect on the cost of living of the increase in the personal allowance.
The Chief Secretary to the Treasury (Danny Alexander)
In this year’s Budget, we announced a £1,100 increase in the personal allowance for 2013-14—the largest ever cash increase. The combined increases that the coalition has announced will reduce the tax paid by a typical basic rate taxpayer next year by £350 in real terms and £546 in cash terms.
John Stevenson
Given that the policy of significantly increasing the personal allowance has been hugely successful, would the Chief Secretary agree that the long-term goal should be to link the personal allowance with the minimum wage, thereby ensuring that anybody on the minimum wage does not pay income tax?
Danny Alexander
I am grateful for my hon. Friend’s endorsement of the policy. The coalition Government have committed to increasing the personal allowance to £10,000—a policy that was on the front page of the Liberal Democrat election manifesto—but I agree that the long-term objective, which I and my party share, should be to link the personal allowance to the minimum wage. However, a considerable cost would be attached to that.
Alison McGovern (Wirral South) (Lab)
May I bring the Chief Secretary back to the reality faced by my constituents, who see their cost of living rising all the time, with food prices increasing in the shops, and Government borrowing rising nationally? Which part of the Government’s record is he least proud of?
Danny Alexander
As the question that the hon. Lady is following up on concerns the personal allowance, let me limit my answer to that, Mr Speaker. Her constituents, in common with other Members’ constituents, are benefiting from the fact that the Government have introduced the most radical policy for many years by putting more money back into the pockets of hard-working families across the country. She would do well to accept that.
Gavin Williamson (South Staffordshire) (Con)
15. What steps the Government have taken to reduce the cost of credit to the real economy.
Greg Clark
Goodness. Thank you. I feel like Boris Johnson.
The Government and the Bank of England have launched the funding for lending scheme to enable banks to make loans cheaper and more easily available to households and businesses. In addition, 19,000 cheaper loans have been offered to smaller businesses under the national loan guarantee system.
Gavin Williamson
I welcome my right hon. Friend to his new post and wish him every success. Many businesses in South Staffordshire face a great challenge in raising finance to grow and recruit new workers. Will he explain how the measures that he has outlined will help small and medium-sized businesses in my constituency to grow and expand?
Greg Clark
I am grateful for my hon. Friend’s question. He knows what he speaks of because he is an ex-manufacturer himself—appropriately enough, as a Staffordshire MP, in the Potteries. One of the early successes of the funding for lending scheme is that banks are now targeting manufacturing firms. Just yesterday, RBS said that the scheme would be used for mid-sized manufacturers. RBS has cut interest rates from 3.45% to 2.75% and is looking to increase lending to mid-sized manufacturing businesses, which have so much potential.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
May I push the Minister on this issue and what is happening in the real world? As even Boris would explain to him, the fact of the matter is that we have low interest rates, but people cannot get mortgages to get into the housing market and my constituents, along with people in business across Yorkshire, cannot get decent loans to start businesses or, more importantly, expand their businesses. In the real world, it is not working. What is the Minister going to do about it?
Greg Clark
The hon. Gentleman will know, because he has studied the figures, that mortgage lending has actually been increasing. The point of the funding for lending scheme is precisely to make more funds available. When he studies the detail—I am happy to meet him and go through it with him—he will be able to promote the scheme in his constituency, because his constituents, whether they are businesses or households, can benefit from it.
Karen Lumley (Redditch) (Con)
T1. If he will make a statement on his departmental responsibilities.
The Chancellor of the Exchequer (Mr George Osborne)
The core purpose of the Treasury is to ensure the stability of the economy, promote business and employment, reform banking and manage the public finances so that Britain starts to live within her means. I can also tell the House today that the autumn statement will be on Wednesday 5 December.
Karen Lumley
Does the Chancellor think a general strike would be helpful to the UK economy?
Mr Osborne
No, I do not. I think it would cost jobs in the British economy and hit prosperity. I hope that all Members of this House, whether they are sponsored by trade unions or not, would condemn all calls on the trade unions to take up a general strike.
Ed Balls (Morley and Outwood) (Lab/Co-op)
May I take this opportunity to welcome the Financial Secretary and the Economic Secretary to their new posts? I wish them good luck in their new positions. May I also congratulate the Chancellor on somehow managing to keep his job in the reshuffle? Clearly, performance-related management has not yet made it to the Cabinet.
Since our last Treasury questions, the Office for National Statistics has published new figures for Government borrowing. We did not get clarity earlier, so let me ask the Chancellor this. What is the total figure for borrowing for the first four months of this financial year? How does that compare with the same period last year, and how does he explain what has happened?
Mr Osborne
It is good to welcome the Member for “Unite West” back from the TUC conference. As the Chief Secretary explained to the House, borrowing in the short term has been higher this year than in the first four months of last year, but he pointed to particular one-off factors, such as the shutdown of the Elgin oilfield. That is why the increase in borrowing comes from weaker corporation tax receipts. I am glad to report to the House that VAT, national insurance and income tax receipts have broadly held up, despite the weaker economic conditions here and around the world. However, the right hon. Gentleman will have to wait until 5 December to get the next economic forecast from the independent Office for Budget Responsibility—because we make these forecasts independently these days.
Ed Balls
I have to say, we are losing patience with the Chancellor’s schoolboy bluster. It is one thing to be heckled by a few trade union delegates at a conference this morning; it is another thing to be booed by 80,000 people—the whole of the Olympic stadium—when he only turned up to give out a medal.
Let me tell the Chancellor the answer. He is right that borrowing has gone up by a quarter compared with last year, but the reason is that our economy is in double-dip recession, tax revenues are down and spending on unemployment is going up. That is why borrowing is going up, on the watch of a Chancellor who said that he would secure the recovery and get borrowing down. So let me ask the Chancellor this. The International Monetary Fund, the British Chambers of Commerce, the TUC, the engineering employers and even Boris Johnson are now calling for action to kick-start the recovery. Is it not time the Chancellor did something the public might cheer: admit he has got it wrong, change course and finally get a plan for jobs and growth?
Mr Osborne
The right hon. Gentleman talks about unemployment; 900,000 private sector jobs have been created in this economy over the past two years, and we are rebalancing the economy away from the dependence on debt and the unaffordable public sector that he presided over when he was in the Treasury. [Interruption.] He says that borrowing has gone up, but we have cut the deficit by 25%. He has also said that Labour needs a credible deficit reduction plan. He has had all summer to think of one. Where is it?
Dr Thérèse Coffey (Suffolk Coastal) (Con)
T3. Building our energy infrastructure is a key element of the national infrastructure plan. Preparations by EDF are already under way at Hinkley, and I hope that they will soon start at Sizewell in my constituency. Will my hon. Friend assure me that the Treasury will strain every sinew to ensure that EDF can make a positive investment decision later this year and build the power stations that that lot on the Labour Benches did not build?
The Economic Secretary to the Treasury (Sajid Javid)
My hon. Friend is passionate about this issue, and she will be pleased to hear that the Government are removing unnecessary obstacles to investment in nuclear power plants and that new power stations will come forward. For example, the Government are undertaking electricity market and planning reforms and introducing an energy Bill. As it happens, I am meeting representatives of EDF later this afternoon, and I would be happy to share her concerns with the company.
Stephen Timms (East Ham) (Lab)
T5. Why is Britain in a double-dip recession when France and Germany are not?
Mr George Osborne
In case the right hon. Gentleman had not noticed, the eurozone is in recession. He talks about France and Germany, but the International Monetary Fund—[Hon. Members: “Answer!”] I am about to give him the answer. The IMF’s latest forecasts for growth next year show the UK growing at almost twice the speed of France, and the same with Germany. If the question is, “Why isn’t the British economy more like Germany’s?”, I will give him the answer. It is because we did not invest in skills over the past decade. We did not build our export links with China and India and the growing parts of the economy. We put all our bets on the City of London when the right hon. Member for Morley and Outwood (Ed Balls) was the City Minister and it all went spectacularly wrong. We are now clearing up the mess.
Mr Marcus Jones (Nuneaton) (Con)
T4. Small businesses in my constituency regularly raise with me the issue of the administration and service levels at Her Majesty’s Revenue and Customs. Those problems constantly add to the administrative burden of small businesses. What more can the Government do to make HMRC more efficient, in order to unburden our small businesses and let them get on with the day job?
The Exchequer Secretary to the Treasury (Mr David Gauke)
My hon. Friend will be aware of the paper that HMRC produced at the time of the last Budget, in which it set out the ways in which we would reduce the administrative burden on small businesses, including cash accounting. He mentioned the difficulties in getting through to HMRC and the problems with the contact centres. HMRC is making further investments and employing an additional 1,000 people in order to improve the performance at its contact centres.
Derek Twigg (Halton) (Lab)
T7. The Chief Secretary to the Treasury was asked earlier about the cost of living, but he said nothing in his reply about what the Government were doing about rising food, transport and energy prices. Have he and his colleagues had discussions with the Energy Secretary about getting a grip on the energy companies and sorting out the soaring energy prices and the profits that the companies are making as a result?
The Chief Secretary to the Treasury (Danny Alexander)
I have certainly had conversations with the Energy Secretary about initiatives such as the green deal, under which people’s energy costs will be brought down by insulating their homes. The hon. Gentleman mentioned fuel costs, but he must be aware that the price of a litre of fuel is 10p less than it would have been if we had stuck with the plans that the previous Government put in place. That was their approach to the cost of living, and this is ours.
Andrew Stephenson (Pendle) (Con)
T8. Big increases in the funding of vital rail infrastructure projects in the north-west of England, such as the Todmorden curve, the northern hub and High Speed 2, are hugely welcome and will provide jobs and opportunities that would not have been available under the previous Government. Will my right hon. Friend confirm that, without his decisive action on the public finances, such high levels of spending on infrastructure would simply not have been possible?
Mr George Osborne
My hon. Friend is right. It is precisely because we have taken difficult decisions—for example, to cut £18 billion from the welfare budget—that we are able to invest in rail and road improvements that will help to create jobs in Lancashire and across the north-west. The northern hub is a project that has been talked about for many years, but it is under this coalition Government that it is being delivered.
Mr Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab)
May I specifically ask the Chancellor whether, notwithstanding the recent reshuffle, the Government are still committed to achieving 0.7% GNI for overseas aid? If so, when can we expect the Bill?
Mr Osborne
The short answer is yes, we are. It is not about legislation; it is about delivering the money. [Interruption.] Labour Members say “Ah”, but we can legislate as much as we like; the question is whether we are prepared to take the difficult decisions to deliver the money. [Interruption.] They say they do not trust us, but this is the Government who will deliver the 0.7% aid commitment that all parties signed up to.
Simon Kirby (Brighton, Kemptown) (Con)
T9. As the TUC meets in sunny Brighton, what message does my right hon. Friend think an irresponsible strike will send to the millions of hard-working people who are worried about our economic recovery?
Mr Osborne
I think it sends a terrible message to my hon. Friend’s constituents in Brighton and across the country. The last thing this country needs at the moment is a series of strikes. We have struck a good deal for the public sector on public sector pensions that will ensure that people continue to enjoy some of the best pensions in Britain, while at the same time reducing the cost to the taxpayer by 50% over the long term. We are also instituting public sector pay restraint so we do not have to make even more difficult decisions about job losses. That is because we are dealing with a very difficult economic situation with a very large deficit. I would hope that the trade unions would understand that rather than try to take their members out on strike.
Dr William McCrea (South Antrim) (DUP)
Will the Chancellor tell us how money can be taken out of the banks and put into small and medium-sized businesses right across the United Kingdom? Without it, we are certainly not going to kick-start the economy.
Mr Osborne
This is, of course, the key challenge in these difficult financial conditions, which have endured for five years or so. I know that there is a particular challenge in Northern Ireland, where the collapse of the banking system in southern Ireland has had a real impact. The funding for lending scheme, launched last month, is an £80 billion Treasury/Bank of England scheme to reduce bank funding costs so that banks are able to lend to businesses and households. A number of banks, such as Barclays and Lloyds, have already launched products that will bring those lower interest rates to the hon. Gentleman’s constituents.
Stephen Williams (Bristol West) (LD)
The fact that the deficit has come down by a quarter enables the British Government to borrow at roughly the equivalent rate of the United States Government—a rate lower than every EU member state apart from Germany. Does the Chief Secretary agree that this enables the Government to contemplate infrastructure investment and to use the strength of our balance sheet to facilitate and guarantee private sector infrastructure investment?
Danny Alexander
My hon. Friend is absolutely right. We can use the strength of the balance sheet that has been built up as a result of this Government’s fiscal credibility to provide, for example, £40 billion of guarantees to infrastructure investment and £10 billion of guarantees to registered social landlords. The Labour party may oppose these guarantees, but they have been widely welcomed by infrastructure providers, by the business community and, in the latter case, by housing associations. That shows precisely the benefit of the tough fiscal policy decisions this Government have taken.
Jenny Chapman (Darlington) (Lab)
Will Ministers look urgently at the length of time it is taking to process tax credit applications? My constituents are being declined their tax credits simply because they are on fixed-term contracts that come to an end before the tax credit application is considered.
Mr Gauke
I certainly take the hon. Lady’s comments on board. It is our intention to deal with tax credit applications as swiftly as possible. We will look at individual cases, so if she wants to contact me or the permanent secretary at HMRC, either of us would be happy to take the case up.
Nadine Dorries (Mid Bedfordshire) (Con)
The Government are to invest £17 billion in phase 1 of HS2, which will transport someone from London to Birmingham 20 minutes quicker, yet there are students in my constituency today who cannot accept their place in Bedford college because of the lack of a local transport network, and constituents who cannot accept offers of work because they cannot get to the train stations via a bus network. Would it not be a better use of that investment to put it into regional transport networks so that people can get to work and to college?
Mr George Osborne
I think we can do both; we can invest in local and regional transport networks. If my hon. Friend has specific schemes in Bedfordshire that she wants to bring to my attention or that of the Department for Transport, we will look at them very carefully, but that does not preclude us as country from taking the big infrastructure decisions—as we did with the M25 and as our predecessors did with the railways centuries ago—to invest in a railway system for the future. High-speed rail will connect the north to the south of England.
Nick Smith (Blaenau Gwent) (Lab)
Today, the Public Accounts Committee exposed very poor management of the Government’s regional growth fund. Can the Chancellor tell us how many extra jobs will be created by the national infrastructure plan which was announced last autumn?
Mr Osborne
I can write to the hon. Gentleman providing a specific jobs total for this year, but I can tell him now that the national infrastructure plan is already seeing the development of the trans-Pennine electrification, which we discussed earlier, the creation of 700 jobs in the north-east as we spend £600 million on new inter-city trains, and the huge Crossrail development across London, which, as I have seen, is employing many hundreds if not thousands of people. The plan is not just a plan for this year; it is also a plan for the future, and it shows that making difficult decisions about things such as welfare enables us to spend on things that will help the private sector to create jobs.
Andrea Leadsom (South Northamptonshire) (Con)
I congratulate the Financial Secretary on his new post. Would he be willing—when the dust settles, and in the wake of the LIBOR scandal—to look again with fresh eyes at the possibilities of full bank account portability, which could be a game-changer for British banking, and try to get our economy going again once and for all?
The Financial Secretary to the Treasury (Greg Clark)
My hon. Friend is a distinguished member of the Treasury Committee. The Independent Commission on Banking has considered the matter, and has made some proposals for easier transfer between accounts. It has said that that should be under review, but I shall be happy to meet my hon. Friend, and I understand the case that she is making.
Seema Malhotra (Feltham and Heston) (Lab/Co-op)
The number of young people in my constituency who have been unemployed for more than 12 months has risen twelvefold since May 2010. Why does the Minister think that is, and was it a mistake to get rid of the future jobs fund within weeks of taking office?
Sajid Javid
I thought that the hon. Lady might start by congratulating the Government on the fifth consecutive fall in unemployment. She will know that one of the key planks of the Government’s policy for dealing with youth employment is the provision of apprenticeships. She might also welcome the 68% increase in the number of apprenticeships in her constituency.
Sir Nick Harvey (North Devon) (LD)
What are the Government’s intentions regarding transition regions in the next round of EU funding? I am told that four Departments are slightly at odds over that. May I surprise my hon. Friends by saying that in the south-west those in the Treasury are seen as the good guys, in this context at least? Will they impress on their Government colleagues the fact that if these schemes are to help areas such as North Devon and Torbay, which have been shown to be at more risk of going into poverty than Cornwall, they will need to operate bottom-up and not top-down?
Danny Alexander
My hon. Friend is right to say that transition status has benefited regions such as his—and, indeed, mine in the highlands and islands—during the current multiannual financial framework period. Our principal objective in relation to the budget negotiations is to bring down the total EU budget in recognition of what is going on around Europe, but we will happily discuss further with him his concerns about the issues that he has raised to ensure that we secure a fair deal for impoverished regions of this country as well.
John Healey (Wentworth and Dearne) (Lab)
Legislation for Government borrowing guarantees to help to fund infrastructure is due to be presented to the House next week. The Chancellor is right to try to use the power of government in this way, so why has it taken two and a half years, and nine months of double-dip recession, for him to decide to do it?
Mr Osborne
Let me say this as politely as I can to the shadow Chancellor and former Treasury Minister. Not once in the 13 years during which Labour was in office did it propose guaranteeing large-scale infrastructure projects, but that is precisely what we are doing. We are breaching decades of Treasury orthodoxy to support the private sector, investing for our country’s future, and I hope that that commands all-party support—in the politest possible way.
Mr Speaker
I am sorry to disappoint colleagues. Demand was extremely high on this occasion, and they could not all be satisfied.
Petition
(12 years, 1 month ago)
Commons ChamberRead Full debate Read Hansard Text
Mr Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab)
It is a privilege for me to present this petition on behalf of my constituents, who wish to see in the village of Bargeddie both existing postal services maintained and additional ones in due course.
The petition states:
The Petition of residents of the Coatbridge, Chryston and Bellshill constituency,
Declares that the Petitioners support the continued presence of the Bargeddie post office as well as the maintenance of DVLA provision and other facilities there.
The Petitioners therefore request that the House of Commons urges the Department for Business, Innovation and Skills, to make provision for the Bargeddie post office to remain open and for the provision of DVLA and other connected facilities to be continued.
And the Petitioners remain, etc.
[P001116]
Point of Order
(12 years, 1 month ago)
Commons ChamberRead Full debate Read Hansard Text
Pete Wishart (Perth and North Perthshire) (SNP)
On a point of order, Mr. Speaker. Last night we secured today’s Opposition day motion on tuition fees with barely 20 minutes left before the House adjourned. Not only was that a discourtesy to you, Mr. Speaker, and to officials of the House, but it meant that right hon. and hon. Members had very little opportunity to prepare and submit an amendment to the motion. Is there anything that you can do to oblige Labour to give us the topic of their Opposition day in time for the previous week’s business statement, and to ensure that all Members have at least 24 hours in which to prepare and submit amendments to Opposition day motions?
Mr Speaker
I am grateful to the hon. Gentleman for his point of order. Although the rules of the House require that notice of Opposition day motions need only be given by the rise of the House on the previous day, it is obviously helpful if longer notice is given.
NHS Audit Requirements (Foreign Nationals)
(12 years, 1 month ago)
Commons ChamberRead Full debate Read Hansard Text
Henry Smith (Crawley) (Con)
I beg to move,
That leave be given to bring in a Bill to require the Secretary of State to instruct the National Health Service to record and audit the cost of treatment of individuals not entitled to free health care and of foreign nationals under the European Health Insurance Card Scheme and other reciprocal healthcare agreements; and for connected purposes.
Last year’s figures show that under the European health insurance card scheme alone the UK paid out £1.7 billion for the treatment of British nationals abroad, but claimed back only £125 million from qualifying countries. Freedom of Information Act requests have shown that most NHS trusts at best only cursorily audit the treatment of foreign nationals not entitled to automatic free health care and GP practices do not record this information at all, despite the fact that in many other countries access to primary care has a nominal charge for all patients, including British visitors. That is the case in France and Germany, where an entry fee for primary care is required, and in Spain, where proof of insurance is needed. The purpose of the Bill is not to deny health care to foreign nationals; rather, it is to ensure that the reciprocal arrangements that we have with European economic area nations and other countries are properly used so the British health budget is not unfairly burdened.
Many hospitals do not even ask whether patients are foreign nationals, with one poll of NHS managers showing that a third of them did not routinely ask patients about their eligibility for free care. The issue of fairness is key—fairness to the taxpayers who fund the system, and fairness to those who use it. Emergency medical treatment should, of course, always be provided to those who require it at the point of need, without exception. Beyond that, entitlement to free health care is considerably more generous to visitors to the UK and short-term residents than is reciprocated for UK citizens abroad, and our system is more liberal, and lax, than anywhere else in the world.
GPs may choose to register any person as an NHS patient, and, indeed, are actively encouraged and incentivised to register all who approach them, even where an individual has no right to free NHS care. Thus, many foreign nationals receive free primary care, including free prescriptions, and, once registered with a GP, essentially have unlimited access via referral throughout the NHS without charge.
Secondary care providers have a duty to enforce the regulations and screen all patients for eligibility, applying charges where appropriate, but most do not—they either struggle to do so or do not bother at all. Earlier this year I sent Freedom of Information Act requests to 445 health organisations including primary care trusts, foundation trusts and acute trusts, inquiring whether they screen foreign patients for auditing purposes and, if so, requesting the breakdown figures over a number of previous years. However, there is an added layer of complexity, because a number of small health organisations referred the request to larger regional facilities as they did not hold the information themselves. In addition, several trusts are dealt with in terms of a cluster of PCTs, with one response covering numerous PCTs.
A total of 212 responses were received. What was extremely concerning was that only 105 trusts were able to respond with data at all. Information, therefore, was supplied by fewer than a quarter of NHS organisations, and the data that did exist were patchy. It is worth noting that of the minority who responded with data, four trusts took over 100 days to reply. One trust, which was unable to provide any information, even asked, “What do you mean by a patient?” Some 340 said they were unable to supply any data because the information was not held or was too complex. Clearly, the semblance of a system that does exist is at best varied, confused and obscure, and at worst is chaotic, inadequate and non-existent.
Problems with the data that were supplied included recording members of the armed forces who are based abroad as being foreign patients; many British citizens were also considered foreign just because they had moved abroad. In addition, some trusts cited information relating to EU/non-EU patients instead of EEA/non-EEA patients, and, thus, their information is not in line with the European health insurance card scheme. The most common reasons for not supplying data included the fact that the information is not held, with information relating only to ethnic origin and not nationality being recorded. Some trusts claimed that they were not required to collect the information and, thus, do not hold it, whereas others that had some data said that they had held none before 2011. Where there was a refusal to supply information, we encountered statements that to do so would entail the investment of an unreasonable and significant amount of time and resource; suggestions were also made that no audit code existed for such costs.
Confusion was evident, with some NHS organisations refusing to disclose information and citing section 40 of the Freedom of Information Act. They claimed that disclosure could enable individuals to be identified, despite the fact that figures for those foreign nationals treated by the trusts that did respond often ran into the tens of thousands each year.
EU citizens coming to live in the UK do not need to register or take out health insurance, whereas many other EU countries require Britons to have insurance and/or charge an entrance fee for care. There are similar reciprocal agreements with other nations, including New Zealand, Australia and Russia, but the problems are similar to the European example. Any foreign national who has legitimately lived in the UK for more than a year is entitled to free NHS care—this is one of the most generous schemes anywhere in the world.
Refugees and asylum seekers are given free NHS treatment, but if their application to remain in the UK is turned down by the Home Office they lose that entitlement. However—my hon. Friend the Member for Kingswood (Chris Skidmore) publicised this fact in May—a local Bristol-based human rights law firm had warned GPs that they face legal action if they refuse to admit illegal immigrants as patients. In addition, one surgery in Essex was ordered to reinstate two failed asylum seekers from Nigeria, despite current Government guidance making it clear that if an application to remain in the UK is turned down people lose the entitlement to free NHS treatment. I must pay tribute to my hon. Friend for the extensive and effective investigations he has made in this area. He is certainly an asset to the Select Committee on Health, and I am honoured that he is one of the co-sponsors of this Bill.
In my constituency, UK Border Agency officials see, on average, 150 cases a year at Gatwick airport of heavily pregnant passengers arriving with visitor visas. The other week there was an infamous case of a “health tourist” who travelled more than 3,000 miles from Nigeria to Wythenshawe hospital for an emergency caesarean. It is understood that the woman, who is apparently Harvard-educated, flew to Manchester airport and went directly to the hospital, where she told doctors that she required the procedure and that she had had a scan in Nigeria. Even when overseas patients try to pay, they are often unable to do so because the cost of their care is not recorded. A US citizen who asked for a receipt after receiving medical care in order to claim the cost back on their health insurance was told that an invoice was unavailable.
I very much welcome the implementation of the overseas visitors hospital charging regulations published in May, but clearly they need to be confirmed by the force of primary legislation. My hon. Friend the Member for Guildford (Anne Milton), when she was a Health Minister, and my hon. Friend the Member for Ashford (Damian Green), when he was Immigration Minister, said in a March written statement that the Home Office plans to introduce immigration sanctions on overseas visitors who refuse to pay appropriate charges for treatment of more than £1,000 and to share such data between the Department of Health and Home Office. That is a very welcome start, but the law needs to be changed to provide certainty.
In conclusion, this Bill would qualify residency criteria for free NHS care; extend current charging principles to primary care; create more effective and efficient processes to screen for eligibility; and establish more robust methods of securing the recovery of treatment costs, including options for requiring health insurance. Those measures would save the NHS hundreds of millions of pounds a year, and I commend this Bill to the House.
Question put and agreed to.
Ordered, That Henry Smith, supported by Chris Skidmore, John Pugh, Nicholas Soames, Mr Frank Field, Dr Julian Lewis, Gareth Johnson, Priti Patel, Andrea Leadsom, John Glen, Mr David Davis and Andrew Rosindell, present the Bill.
Henry Smith accordingly presented the Bill.
Bill read the First time; to be read a Second time on Friday 1 March 2013, and to be printed (Bill 67).
Opposition Day
(12 years, 1 month ago)
Commons ChamberRead Full debate Read Hansard Text
Universal Credit and Welfare Reform
(12 years, 1 month ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
18:59 - The House having divided: - Ayes: 230 / Noes: 297 - Question accordingly negatived.
Mr Liam Byrne (Birmingham, Hodge Hill) (Lab)
I beg to move,
That this House notes that the Universal Credit is late and over budget; recognises that there is widespread unease surrounding the implementation of the £2 billion scheme’s IT system; further notes that the project is so badly designed that it is set to reduce work incentives for over two million people and hurt small businesses and the self-employed; believes that Ministers have failed to properly account for numerous basic details of how the scheme will work, such as its interaction with free school meals or what is to be done with 20,000 Housing Benefit staff; further believes that the project is poorly thought through and is now at risk of descending into chaos; and calls on the Government to publish the business case, so that the House can see a detailed plan of implementation, and urgently to set out a plan to address these deep flaws before it is too late.
At the heart of the debate is a very simple principle, which is that anyone in this country should be better off in work than they are on benefits. That is a principle in which we in the Opposition passionately believe. We are a party that was founded by and for working people and that is why we want universal credit to succeed. It is now, however, an open secret in Whitehall that universal credit is a flagship that is sinking fast. The Treasury, says Mr Nick Robinson of the BBC,
“have long had deep anxieties that”
the Secretary of State
“might not be able to control spending”
on universal credit. Last week, the Minister for the Cabinet Office and Paymaster General, who is an old friend of the Secretary of State, was asked how universal credit was going. He said:
“Are we there yet? Am I absolutely confident we are there yet?”
His answer? “No.” This morning, an unnamed Minister weighed in to support the Secretary of State in his own way with a ringing endorsement, saying that universal credit
“is another car crash waiting to happen”.
The Secretary of State is no stranger to friendly fire. Indeed, back in 2002, he described himself as the “quiet man” who was about to “turn up the volume”. Today, we are not asking the Secretary of State to turn up the volume. We are asking him to dial down the chaos and dial up the competence in his Department.
The Secretary of State and I share a faith. He, like me, believes that confession is good for the soul, and today is confession time. We need answers to a host of questions about universal credit and we cannot help to get this vital project back on track unless he comes clean about exactly what is going on.
Jacob Rees-Mogg (North East Somerset) (Con)
While we are on a religious theme, I wonder whether the right hon. Gentleman might think about motes and beams, as there is rather a large beam in the eye of those on the Opposition Benches.
Mr Byrne
It is unclear how I might respond to that. I hope I will be able to set out for the hon. Gentleman this afternoon what I think will be a shared set of concerns about how to get this vital project back on track. I hope we have a degree of clarity, honesty and openness from those on the Treasury Bench.
Mr Denis MacShane (Rotherham) (Lab)
My right hon. Friend is starting at a macro level, but last Friday I had meetings with the people who have to apply the universal credit scheme in Rotherham. I also met the voluntary groups that deal with the people who rely on it and there are genuine fears. People want reform and they are not necessarily anti the Government for political reasons, but they do not think that the scheme will work as it is devised. The computer crashes for which our Governments are so famous—both those of whom he was a member and this Government—are a legend in the computer industry.
Mr Byrne
Let me start with precisely that risk. We were told when universal credit was first proposed that the IT costs would be in the order of £2 billion. Some £200 million was taken off for subsidies for another problem with child care created by the Secretary of State’s friend, the Chancellor. The former Minister responsible for unemployment, the right hon. Member for Epsom and Ewell (Chris Grayling), before he departed for the Ministry of Justice, said that the cost had spiralled to £2.1 billion. Already, two years in, the project is £100 million over budget and we learned yesterday that universal credit, when it is introduced and fully rolled out in 2017, will demand an extra £3.1 billion in welfare payments each year. That was the figure that the Department for Work and Pensions gave to the Office for Budget Responsibility in July last year.
Yesterday, however, the Secretary of State told the House that he had agreed to a Treasury target of £2.5 billion, wiping £600 million off tax credits by so-called policy designs. Where on earth is that money going to come from? It is, I am afraid, a mystery. It is a mystery shrouded in further questions about whether people will be better off in work when universal credit is introduced. What on earth is going to happen to free school meals, which are worth £410 million a year to families in many of our constituencies and are a vital lifeline every week? The Children’s Society says that if universal credit integrates free school meals in the wrong way, that will wipe out incentives to work for 120,000 families. What is going to happen to that budget?
Then there is the question of council tax benefit, which is worth £5 billion for 6 million households in Britain. As it turns out, we are going to get not a national scheme but a local scheme, because the Secretary of State lost his battle with the Secretary of State for Communities and Local Government. He was sat on by the right hon. Member for Brentwood and Ongar (Mr Pickles), which is a fate we would not wish on anyone. The result is that whether someone is better off in work or on benefits will depend on where they live. The Institute for Fiscal Studies says that universal credit “severely undermines” the simplification.
Then there is the question of how universal credit will interact with increases in personal allowances, which were introduced with such a great fanfare over the past year or two. Last week, Gingerbread said that because universal credit is calculated on post-tax income, the lowest paid would see most of the increase in personal allowances wiped out. In fact, when universal credit is introduced, the low paid will lose two thirds of the increase in personal allowances. Somehow the Chancellor of the Exchequer forgot to tell us that when he unveiled the proposal in his last Budget.
Then there is the question of how universal credit will lock in the cuts to tax credits that hit so many of our constituents this April. Those cuts now mean, according to answers given to my hon. Friend the Member for Stockport (Ann Coffey), that a couple with kids working part time—and goodness me, there are more people working part time these days—will now be more than £700 better off on benefits than in work. How on earth can that send the right signal?
Mr Redwood
Will the right hon. Gentleman give the House some of his ideas on how we could make it more worth while for people to work, given that all parties in the House think that that is the right aim and that it is not worth while enough at the moment?
Mr Byrne
That is very much the point of bringing the debate here today. We need from the Government transparency about the business case, which is being kept secret. Until we get to the heart of how the policy will be rolled out, until we get some answers to these basic questions, it is difficult for us to offer some constructive advice—advice we would offer for free.
John Healey (Wentworth and Dearne) (Lab)
Will my right hon. Friend take a look at the Rotherham citizens advice bureau survey, which I have sent to the Secretary of State today? The bureau questioned more than 100 people who had been through employment and support allowance assessments last year; more than half said that the assessment was rushed, nearly two thirds said that the assessor did not listen to them and only a quarter felt that the assessor was fully qualified to assess their medical condition. Does he agree that a fair benefits system and a fair universal credit depend on a fair and accurate system of assessment?
Mr Byrne
It absolutely does. Our chief concern is that that open and fair system of assessment will not fall into place for universal credit, with enormous consequences for our constituents.
The final point about the basic principle of whether people will be better off in work or on benefit is the evidence published by the Secretary of State’s own Department in the impact assessment that he signed earlier in the Parliament. The evidence shows that the marginal deduction rates will not go down for many people but will go up—2.1 million people will see their marginal deduction rates go up when universal credit is introduced. The incentive for them to work does not increase with universal credit; it goes into reverse. We have problems with free school meals and with council tax benefit, a short-changed personal allowance, the lock-in of cuts to tax credits and a worse incentive to work. That raises fundamental questions about a system that is about to go live in 150 days. That is why in this debate we want some answers on how these problems will be solved.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
I will just give the right hon. Gentleman some answers on the marginal deduction rates. The fact is that 1.2 million people will receive a reduced marginal deduction rate as a result of what we are doing with universal credit. At the moment, 500,000 families see marginal deduction rates of well over 80%. Virtually nobody will see that once universal credit comes in. Some 2.8 million households will gain and 80% of those gains will go to the bottom 40%, improving their life chances dramatically.
Mr Byrne
But the Secretary of State refuses to admit that the marginal deduction rates will get worse for 2.1 million people. Until he answers the question about what will happen to free school meals and to council tax benefit, he cannot give us the assurance that that number of people will be better off in every single part of this country. He has to come clean about a system that is about to go live in 150 days. He is cutting it too fine, which is why No. 10 is worried, why the Treasury is worried and why his old friend the Minister for the Cabinet Office is worried.
Charlie Elphicke (Dover) (Con)
The fact is that 1.4 million people have been on out-of-work benefits for nine of the past 10 years. Rather than fear-mongering, shroud-waving and trying to frighten people, why is the right hon. Gentleman not working with the Government to get the best result and tell those people, “You’re needed in the workplace. We want you to play a part in building up the economy for future generations”?
Mr Byrne
If the hon. Gentleman was serious about wanting to get unemployed people in his constituency back to work—goodness knows there are enough of them—he would support Labour’s proposal for a tax on bankers’ bonuses that would get 110,000 young people back into work over the course of the next year.
Mr John Denham (Southampton, Itchen) (Lab)
Those of us who were here when the Child Support Agency was introduced know the dangers of introducing legislation that everyone agrees with in principle but that is badly carried out. My right hon. Friend is doing the right thing by raising these questions, but does he not agree that it is a little odd that it was the Secretary of State who was in danger of being forced out of his job when so many of the problems with the system lie with the Treasury, the Department for Communities and Local Government and the Department for Education, all the bits of the Government that are refusing to play ball with this vision?
Mr Byrne
My right hon. Friend is precisely right. That is why we are here to help the Secretary of State this afternoon by setting out some of the questions on which, if he was only a little clearer with the House, we would be happy to engage and help. One of the issues in which we share an interest is the way we support the enterprise spirit in this country. The CBI and the Chartered Institute of Taxation have flagged up their worry that universal credit will be a car crash for Britain’s entrepreneurs. The number of self-employed people in this country increased by 280,000 over the past couple of years and many people must now look to their own resources for work, but what is being prepared for self-employed people is frankly chaotic.
Mr Byrne
I will in a moment.
We have heard from the Chartered Institute of Taxation that the system proposed for entrepreneurs will require self-employed claimants to report their transactions each month and that they will have only seven days after the end of the month to file them. They will have to put all that information into a great big IT system and calculate their earnings using a system that is different from the one they use to calculate their tax bill. How on earth does the Secretary of State think Britain’s entrepreneurs, who are busy doing other things day to day, will deal with the new system? I thought that the Government were committed to cutting red tape, not swaddling entrepreneurs with it if they want any chance of help with tax credits. Perhaps the hon. Member for St Albans (Mrs Main) can explain a way through it.
Mrs Main
The right hon. Gentleman should take a little while to consider that not everybody who is self-employed is the entrepreneur he is talking about. The reason that degree of scrutiny is needed is that people who sell The Big Issue for a certain period of time can suddenly declare themselves to be self-employed, so the scrutiny is not something he should want to remove; it is a question of whether it is reasonable. If he wishes to help my right hon. Friend the Secretary of State, he might like to propose a constructive way forward for how we can stop people abusing the system by declaring themselves to be self-employed when all they are doing is a minimal amount.
Mr Byrne
Members on both sides of the House want this to work, but if the hon. Lady looks at the evidence submitted by the CBI and the Chartered Institute for Taxation to the Work and Pensions Committee on Friday, she will see that there is now a real worry that this is going to be a catastrophe for the many entrepreneurs who rely on tax credits for help to balance the books at the end of the month. What I want from the Secretary of State is clarity about how this is going to work in practice.
This is the start of a whole series of risks that have been brought to the attention of hon. Members here and in the Select Committee. Flagged up in the evidence submitted on Friday was the decision to deny people a choice about who receives the money. I hope that the Secretary of State will reform this before implementation of universal credit, because many people who run women’s refuges say that the system is so badly thought through that refuges for women fleeing from domestic violence will have to close. In fact, Refuge tells us—[Interruption.] This is not scaremongering by me; it is evidence submitted to the Select Committee by Refuge, which says that the idea is so badly thought through that unless changes are made, 297 refuges will have to close. This is not scaremongering; it is bringing to the House’s attention information and arguments provided by one of the most important charities in the country.
The Minister of State, Department for Work and Pensions (Steve Webb)
Yesterday in oral questions, at which I think the right hon. Gentleman was present, the Secretary of State gave categorical assurances about refuges, so to repeat the smear after receiving those assurances is scaremongering.
Mr Byrne
If the Minister is accusing Refuge and Women’s Aid of a smear, I am afraid that he has got his facts seriously wrong. This element was not in the original design. Yesterday we finally extracted from the Secretary of State a commitment to change; now we want to know how it, along with a host of other things, will work in practice.
Some of these issues are now bedevilling local authorities. There is a serious risk that direct payments of universal credit, which includes housing benefit going to the individual, will result in local councils’ arrears bills and eviction rates beginning to rise. We are still no clearer about what will happen to the 20,000 housing benefit staff who work for local councils and will no longer have to process housing benefit claims once the DWP takes over the task. Are they going to be sacked or made redundant? Who will pick up the bill? Is it yet another bill that will fall on the shoulders of hard-pressed council tax payers?
Jim Shannon (Strangford) (DUP)
In my constituency, housing benefit applications are up by between 10% and 15% and extra staff have been employed. The waiting list for applications to be processed takes anything from six to eight, or even 10, weeks. Yesterday the manager of the housing benefit office told me that only six months into the scheme he is already cutting back on the moneys that are allocated to try to make them last until next April. Does the right hon. Gentleman think that in the case of housing benefit, chaos is knocking on the door?
Mr Byrne
I am afraid that that is absolutely right. That is the message that is coming back from local authorities all over the country. In fact, the Local Government Association told the Select Committee on Friday that there is
“a real risk that the central Government universal credit IT systems will not be ready on time”.
That was part of an array of evidence submitted about the mounting risks. The CBI said that the
“tight delivery timetable…is a risk to business”.
Citizens Advice said that universal credit
“risks causing difficulties to the 8.5 million people who have never used the internet”.
The Chartered Institute of Taxation said that for many people
“The proposed procedures for self-employed claimants…will be impossible to comply with.”
Shelter has said:
“Social landlords and their lenders have voiced considerable concern at the implications of direct payments for social tenants”.
The Association of Directors of Adult Social Services says that the abolition of severe disability premium is an
“apparent contradiction of the Government’s stated aim to protect the most vulnerable.”
Alison Seabeck (Plymouth, Moor View) (Lab)
On direct payments to landlords, last night I met representatives of south-west housing associations, and to a person they all expressed serious concerns about the implications for them, their lenders and their loan books.
Dame Joan Ruddock (Lewisham, Deptford) (Lab)
I am grateful to my right hon. Friend for reciting the concerns of a whole range of people and organisations. One of the things that has surprised me most is that every employer in the country will have to report to Her Majesty’s Revenue and Customs on the circumstances of every employee on a monthly basis and sometimes, perhaps, even on a weekly basis instead of annually. Is this not going to be an incredible burden on British business, which is already in difficulty?
Mr Byrne
Exactly—as if British businesses were not struggling enough. The point is that the 500 pages of evidence submitted to the Select Committee on Friday present to the Secretary of State a whole range of issues to which we have received no answers, despite the fact that the system will go live in 150 days. The system is already over budget and late, and I am afraid that we now need some urgent answers from the Secretary of State this afternoon.
Kate Green (Stretford and Urmston) (Lab)
Does my right hon. Friend agree that one of the great concerns of the many agencies that he has mentioned—they are worried about how universal credit will affect the client groups that they work with—is that the funding of those advice agencies that could support individuals is being squeezed and that there will simply be no access to support, either to make applications or to sort out problems when things go wrong?
Mr Byrne
That is a real concern. I know from the fact that a number of advice centres in Birmingham have been forced to close that advice is simply not available for many people in some of the most deprived parts of our country. They are being asked to contend with a new benefit system that is complicated and vital to their living standards, so that is a real worry. I hope that the Secretary of State will take that into account in his response.
I am going to draw my remarks to a close, because I know that many hon. and right hon. Members want to contribute to the debate. All I will say to the Secretary of State is that, following the recent attacks on him by the Treasury, the Cabinet Office and No. 10, he could be forgiven for wanting to retreat to the deepest, darkest bunker in Whitehall. The truth is that his Department is already one of the most secretive in Government. He is refusing to publish information about the Work programme and he has refused Labour’s freedom of information request to release the business case for universal credit. I know that he does not always see eye to eye with the Minister for the Cabinet Office, but I hope that he will pay heed to his words:
“Transparency is at the heart of our agenda for government…We are unflinching in our belief that data that can be published should be published.”
Unflinching indeed.
Universal credit is a massive project—it is too big to be allowed to fail. We need to make sure that it is on track and I hope that the House will join us in sending an unequivocal message to that effect this afternoon.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
This debate cannot take place in a vacuum, as the right hon. Member for Birmingham, Hodge Hill (Mr Byrne) would wish. Let me start by saying that he is wrong: we are not over budget on the programme and we are not out of time. Both are proceeding much according to the plans that we laid. He referred to a report or note that mentioned £3.1 billion. That was considered as a possible end position and the Office for Budget Responsibility, which is independent, looked at it well before Members of both Houses had completed their scrutiny of the legislation. It was done in July of last year. Since then we have had a series of discussions with the OBR. It has looked at the modelling in detail, and continues to do so.
Mr Duncan Smith
Wait a minute.
As far as the OBR is concerned, we are progressing in the right direction and the modelling seems to be about right. We are committed to the £2.5 billion a year and the £2 billion of investment in our IT programmes.
Mr Byrne
I am grateful to the Secretary of State for being characteristically generous in giving way so early in his remarks. Will he explain what policy designs resulted in the £3.1 billion estimate, made by his own Department, dropping down to £2.5 billion? Will he also confirm to the House that everybody affected will be on universal credit by 2017, as initially planned?
Mr Duncan Smith
First, I will answer the second question. That is exactly what we intend and we believe that we are on track to do just that. The right hon. Gentleman and the House should realise that this is not, as has been the case with previous IT programmes, a “waterfall” approach whereby everything explodes and is launched on one date, which I think the previous Government used to realise was probably not a good idea. This will be a progression over four years, so that, as we bring in different groups, such as jobseeker’s allowance recipients, and first address the flow, then the stock, and then look at tax credits and how they fit in, we can make sure that we get this absolutely right at every stage. We know that there are important things to consider so that people do not suffer as a result of universal credit. We want to get this right, even as we do it.
We agreed on the £2.5 billion figure. That is our position. As we look at all these things, including the disregards, we see that we can realise better ways of doing them. It is a work in progress. That is how we are able to achieve these things, just as when we looked at them originally.
The right hon. Member for East Ham (Stephen Timms) has peppered us with freedom of information requests, which is exactly what an Opposition Member should do. However, it does him and the shadow Secretary of State ill to lecture us about releasing business cases. When they developed employment and support allowance, a system about as large and complicated as this one—I think that the right hon. Member for East Ham was a Minister in the Department at the time—at no stage, despite the request, did they ever release their business plan to us.
Kate Green
I wonder whether the Secretary of State will clarify something that he said in response to my right hon. Friend the Member for Birmingham, Hodge Hill (Mr Byrne). He said that the change would be implemented in stages, with first the flow, then the stock and then tax credits. Surely the tax credits for the first claimants to receive universal credit will have to be brought in on the first day of universal credit.
Mr Duncan Smith
No; it has always been part of the process that jobseeker’s allowance will be the first to move across. I am happy to discuss that further. Universal credit will run in parallel with the other systems until we shut them down and move them across. That is the way it will work. That has always been clear. I think that the Chair of the Work and Pensions Committee knows that, because I have been open with her about it from the word go.
Mr Duncan Smith
I have explained the plan that we have and I want to make some progress, but I will give way.
John Healey
The Secretary of State maintains that the project is on track, when everybody else seems to think that it is in serious trouble and way off track. Rotherham Jobcentre Plus staff have told me that he has told the public that jobseeker’s allowance and new claims for out-of-work support will be treated as new claims for universal credit from October 2013. Is that still the case?
Mr Duncan Smith
I thought that I had been pretty clear about that. The plan is that, starting in October 2013, we will move through the different groups of benefits and tax credits progressively over the four years, bringing in different groups at different stages. That is how it will work. We will be giving a big presentation next week for members of the media.
Mr Duncan Smith
The timetable is not slipping at all. We are on target. The right hon. Gentleman needs to be happy about that.
It is all very well for the Opposition to carp, while saying that they support universal credit, but let me be absolutely clear why I believe that we have to do this. First, we inherited a complex mess of 30 different benefits. There are seven additions relating to disability alone, which are complicated for people who are disabled. They are often confused about what to do. Some payments are available when a person works for 16 hours, some at 24 hours and some at 30. Some are withdrawn at 40%, some at 65% and some even at 100%. Some are net and some are gross. One needs to be a mathematician to figure them out.
My previous permanent secretary admitted that one day, when he was listening to a lone parent who had come in for guidance on what benefit she would receive and how it would work if she took extra hours beyond the 16 hours at which she was already being supported. It took the adviser about 40 minutes to figure out whether she would be better off, marginally in the same position or marginally worse off because of the dramatic rise in the deduction rates. How can we expect every lone parent who is worried about authority and may not come in for help to understand what these things mean? The complexity and confusion are a problem. The decision whether to go to work is often a marginal one, and many people do not feel that it is worth while.
It is small wonder, therefore, that even before the recession there were over 4 million people on out-of-work benefits and 1.4 million people who had never worked at all. Things then got a lot worse because of the recession. The inheritance that we received included 5 million people on out-of-work benefits, youth unemployment already high and more children in workless households in this country than in the rest of the EU—that is a staggering thought. And that came after years of growth and plenty, which the previous Government wasted.
Ending that failure is a monumental task, and we have undertaken it because it has to be done, whether there is a Labour Government, a Conservative one, a coalition one or even a Liberal one. Universal credit is one of the most fundamental reforms to the welfare system, and it deserves to be supported and helped.
Mr Duncan Smith
I have given way quite a bit. If the hon. Lady will give me a little leeway I will give way again later, but I want to make some progress.
A single payment, withdrawn at a clear and consistent rate when people move into work, will make work pay at each and every hour and remove the stumbling block in the current system whereby, as I said earlier, some people lose out dramatically. They lose 96p in every pound that they earn, which cannot be an incentive to go to work. Nobody here would take work at that rate, and trying to get the deduction rate down has to be a good reason for our reform.
The Opposition say that they are concerned about work incentives under universal credit. I reassure them that, as I said earlier, the flat 65% withdrawal rate will mean reduced marginal deduction rates for 1.2 million households. What is more, 80% of those gainers are in the bottom 40% of the income distribution. Why am I, as a Conservative, having to stand here and tell the Opposition that that is positive? Surely they should have ensured that it happened during all the years when they were in power.
Stephen Lloyd (Eastbourne) (LD)
The Opposition have mentioned the Work and Pensions Committee a few times. I am a member of that Committee, and although the Opposition are absolutely right to say that there were some concerns about universal credit, the Secretary of State might be interested to know that the Committee universally supported the concept of universal credit to make work pay.
Luciana Berger
I listened closely to what the Secretary of State said about 1.2 million people having better marginal deduction rates, but his Department’s own impact assessment shows that 2.1 million people will be worse off in work as a result of universal credit.
Mr Duncan Smith
The reality about marginal deduction rates, as I have just said, is that the massive majority of the money that we are investing will go to those in the lowest income groups, which has to benefit them. People who would otherwise not enter work because of the margins will now find that it is beneficial to do so. Despite what the hon. Lady and the right hon. Member for Birmingham, Hodge Hill, have said about marginal deduction rates, the median increase will be just about 4%. The truth is that there will be a massive improvement in the marginal deduction rate for vast numbers of households. As I said earlier, half a million people who struggled under the previous Government’s complicated taxes had marginal deduction rates of well over 80%. That will not happen under universal credit, which is a critical point.
Mr Duncan Smith
I am going to make some progress, and I will pick up on some of the points that have been made as I go through my speech. If the right hon. Gentleman will bear with me, I will certainly give way to him later.
I turn to the delivery of universal credit. As I said earlier, its implementation is on time and on budget. Of course, the process is challenging, and I have never said anything else. The right hon. Member for East Ham knows that I have a huge amount of time for him and believe that he was an effective Minister. When we have discussed universal credit I have always told him that all our programmes have challenges and risks to them, but the job of Ministers and our officials is to manage that risk. Life has risks, and we deal with them and manage them. The universal credit programme is challenging, but we are investing £2 billion—I say again to the right hon. Member for Birmingham, Hodge Hill, that the figure is £2 billion—to get the infrastructure and IT systems right.
Mr Byrne
But the Secretary of State must have seen the parliamentary answers that his ministerial colleagues have provided stating that the implementation costs for parts of the programme are now running at £103 million, £391 million, £600 million and £1 billion. By my maths, that adds up to £2.1 billion, which is £100 million more than the budget that he has set out. Is the programme on budget or over budget?
Mr Duncan Smith
I am never keen to rely on the right hon. Gentleman’s maths—that is what ran us into trouble in the first place. Maybe this is a confessional now, and I will take that as a confession from him. All I can say to him is that we are investing £2 billion, but I will drop him a note about any detail that he is concerned about.
As I said earlier, we are making progress. We completed our first testing stages in August and have already held two open sessions with MPs, peers and the media and intend to hold many more. We will demonstrate the IT front-end systems next week and will do so again afterwards for many hon. Members.
Chi Onwurah (Newcastle upon Tyne Central) (Lab)
Will the Secretary of State give way?
Mr Duncan Smith
Perhaps the hon. Lady will give me a little time. I think I have been reasonably generous—I am trying to be because I hope that we can discuss this issue in the right spirit. I will give way to the hon. Lady in due course, but first I would like to make a little progress.
We will be ready to roll out universal credit across the country in October 2013, and before that we will launch the pathfinder scheme in Greater Manchester in April 2013—perhaps some hon. Members do not know that yet, but that is the reality. As I have said, the phased transition from current benefits and tax credits is expected to be completed by 2017, and the safe delivery of universal credit will be my primary objective throughout. For what it is worth, I take absolute, direct and close interest in every single part of the IT development. I hold meetings every week and a full meeting every two weeks, and every weekend a full summary of the IT developments and everything to do with policy work is in my box and I am reading it. I take full responsibility and I believe that we are taking the right approach.
Dr Eilidh Whiteford (Banff and Buchan) (SNP)
Will the Secretary of State give way?
Mr Duncan Smith
Perhaps I could make a little progress, and then I will give way because I know that hon. Members have questions.
I believe that we are taking the right approach; we have supported the scheme and our methods have received support elsewhere. Our use of the “agile” process has received good support from the independent Institute for Government, which in “Fixing the flaws in government IT” stated:
“The switch from traditional techniques—”
those used by the previous Government, and others—
“to a more Agile approach is not a case of abandoning structure for chaos. Agile projects”—
those used in the private sector—
“accept change and focus on the early delivery of a working solution.”
I do not underestimate the scale of the undertaking. Some 8 million households will be affected because they are in receipt, either wholly or in part, of some kind of support. I believe, however, that the Department is capable of implementing programmes of this kind. It has the best record, just as it did when the Labour party was in government, as Opposition Members will recall. The delivery of employment and support allowance was a good example of that, and the right hon. Member for Birmingham, Hodge Hill who was involved in that knows too well the quality of the Department for Work and Pensions. Although the scheme is not without risks, the Department understands that and we have brought in a huge number of people and bodies from outside the Government to help implement it.
Mr Duncan Smith
I will give way to two people, first to the hon. Member for Newcastle upon Tyne Central (Chi Onwurah) because she was first, and then to my hon. Friend the Member for Gainsborough (Mr Leigh).
Chi Onwurah
The Secretary of State was speaking about his pride in the investment in IT systems that his Department has undertaken, but is he concerned that by making universal credit available primarily—and eventually solely—online, he will be dependent on investment by other Departments in the broadband infrastructure in this country? By abandoning Labour’s universal promise of broadband availability, many vulnerable people will not have access to broadband, and will not be able to benefit from universal credit.
Mr Duncan Smith
I was coming to that point, but I will deal with it now because the hon. Lady has a legitimate interest and all hon. Members will want to know about this issue. Two things are important. First, we must understand that the Government and the benefits system must move alongside what is happening in work. Those in receipt of benefits—often long-term benefits—are often outside and excluded from the workplace because of their lack of ability to work with and manage IT systems. We want to help them to enter the world of online work.
Secondly, the vast majority of people claiming benefits today already use computers and the internet—around 80% of those who claim jobseeker’s allowance use computers. Importantly, however, not all of them use their computer for claiming benefits, which they often do on the telephone. Over each month we intend to move more of those people to an online process of claiming—already more than 30% of people have started on that, and we intend to increase that figure first to 50% and eventually to 80%. We know, however, that to do that we may need to help people enormously, so jobcentres will be fitted out—we are doing trials—with computers and telephones that connect people directly to contact centres. My plan is for contact centres to get people on to their computers and work through the process with them. One reason people are worried and do not want to go online is that the present online system is not good. It is notchy and difficult—I have used it myself—and difficult to get through. We are developing and designing with claimants, jobcentre staff and local authority staff a front-end system that will be much simpler and easier. I will demonstrate it to colleagues on both sides of the House when we have time—I will do so next week, but on other occasions, too.
The whole idea is to move people to the new system, but we will of course retain the scope to deal with those who have difficulty.
Mr Duncan Smith
I am dealing with those who have difficulty with the new system. I will give way twice more—first to the hon. Member for Banff and Buchan (Dr Whiteford) and then to my hon. Friend the Member for Gainsborough—and then get on.
Dr Whiteford
Will the Secretary of State address the question of implementation in the devolved Administrations? A wide range of policy areas is affected. UK Ministers have held informal discussions with the Scottish Parliament’s Welfare Reform Committee, but will he make a commitment that his new ministerial team will engage with the Committee, which has expressed concern in the past that such engagement has lacked substance?
Mr Duncan Smith
Absolutely—nothing makes me happier than getting out of London to visit the devolved Administrations, whether in Cardiff or Edinburgh. I shall spend a day in Edinburgh next week speaking to that Administration about this very subject, as I have done on a number of occasions. I am engaging in the same way in Wales, as are my colleagues. I can absolutely give the hon. Lady that guarantee.
Mr Duncan Smith
If the hon. Gentleman will forgive me, I said I would give way to my hon. Friend the Member for Gainsborough.
Mr Edward Leigh (Gainsborough) (Con)
The problem with IT systems in the public sector, rather than the private sector, is the sheer scale of numbers—8 million households will use the new system—the complexity of the issues and the lifestyle of the recipients. I saw more failed Government IT systems in my time on the Public Accounts Committee than I have had hot breakfasts. I beg the Secretary of State to be cautious, to test and re-test, to pilot and re-pilot, and not to believe a word spoken to him by IT companies or his civil servants.
Mr Duncan Smith
My hon. Friend was an excellent Chairman of the Public Accounts Committee—he is highly respected among Members on both sides of the House—and I absolutely agree with him. That is how I see my role. One thing I have done is brought into the system a red team, whose job is to go through and doubt everything I am told, and to ask questions. Being a sceptic and not believing are part of the process of delivering. I absolutely understand that. We are involving others in the process—that is our purpose.
Charlie Elphicke
Does my right hon. Friend share my concern that much of the Opposition case is based on the idea that people are basically thick—too thick to use the internet, too thick to budget monthly and too thick to pay the rent? A cornerstone of universal credit is that we trust people and believe in them. We want to encourage people to work and to manage their own affairs.
Mr Duncan Smith
I understand what my hon. Friend says. He refers to the fact that people need to be helped—that they are often more intelligent than we give them credit for, but that they lack local knowledge and instruction. A legitimate concern of Members on both sides of the House is to protect those who are the most vulnerable. I will always assume their best intents. It is our job to ensure that we meet those concerns—that is my purpose and I intend to meet it. He is right that we should assume that people are intelligent enough, but that we have to get them to the point at which they use the system.
Mr Duncan Smith
Let me make a bit of progress, because others might want to speak.
We have discussed finances. The Government have always made it clear that the £2.5 billion is additional and that that was how it would work. We have always agreed on that. The nature and design of universal credit means that this is an iterative process. The reality is that we learn as we do the developing. One thing that “agile” allows us to do is to rectify previous assumptions that things have improved because of changes. I can confirm to my hon. Friend the Member for Gainsborough that, as we proceed with the IT project, “agile” will allow us to ensure that we do not wait to the end moment to test it; we are testing stuff pretty much the whole time.
Mr Michael McCann (East Kilbride, Strathaven and Lesmahagow) (Lab)
Will the Secretary of State give way?
Mr Duncan Smith
May I make a little progress? I think I have been reasonably generous in giving way. I promise that I will try to get the hon. Gentleman in later.
On our engagement, it is clear from what I have just said that the independent OBR has open access. We have been in regular discussions. The right hon. Member for Birmingham, Hodge Hill described it yesterday as a think-tank, but it is not a think-tank. It accredits and decides whether the Government’s calculations and projections are correct. No one has a perfect view of the future, but at least it is independent of all political positions and positioning. It is working with us at the moment. I can assure hon. Members that the process is robust and will continue until the Government announce the final rates for universal credit and the OBR includes them in its forecasts. That is what we are working to.
Elsewhere, we are continually engaging with a host of organisations. The Work and Pensions Committee’s inquiry concluded, quite legitimately, that organisations have concerns. Of course, they will be concerned and will want answers, and we are working and talking with them. We are also dealing with local government, and have shared our draft regulations with the Social Security Advisory Committee and are carefully considering its advice. We are in regular contact with local authorities. We recently visited many local authorities and are informing them about policy work and regulations.
We are consulting on the future—this was raised in one or two questions—of the passported benefits and the interaction with universal credit. That is taking place right now, and we are discussing the matter with the regular and other Departments. They have to decide what they want to do, and we must decide how and whether to incorporate that into universal credit. That process is under way. Rather than constantly saying, “We can’t do these things, it’s impossible, so we won’t try”, it is worth trying to get the system right. One problem for many people is that they have to go to so many places for so many different things, they get confused and often do not get it right, and each time they feel a bit more worn down. If we can smooth out that process and make it easier and more accessible, in due course we will improve the lot of those in the greatest difficulty.
Dame Anne Begg (Aberdeen South) (Lab)
Does the Secretary of State now regret responsibility for administering council tax benefit being given to local authorities? That seems to fly in the face of the whole concept of universal credit and creates the very difficulties he claims he is trying to solve.
Mr Duncan Smith
I am a huge admirer of the Chairman of the Select Committee, but her inducements for me to express any personal opinion must be resisted. My general view is that localisation is a good thing, and I am sure that local authorities will robustly deliver a system that works brilliantly. Collectively, we are absolutely in favour of it.
Mr Duncan Smith
I am not one for discussing what goes on privately. I have been kicking around this game long enough to know that sometimes people like other people to move or be promoted, but some of us are not interested in careers. We reached a settlement and we are very happy—it was a happy discussion. We are a Government of friends, we get on enormously well and we do not need to worry about what everybody else says about us.
Jake Berry (Rossendale and Darwen) (Con)
I would like to take my right hon. Friend back to the online delivery of the universal credit. Although figures vary, he will be aware that the vast majority of people living in social housing have no access to the internet. BT does a social housing telephone tariff. Will he explore the possibility of a social housing broadband tariff to enable those who want to claim their benefits online to do so?
Mr Duncan Smith
Absolutely right. That is exactly what we are trying to do, and I will ensure that it is one of the areas we look at. That is the whole process we are engaged in. If we can get more people in social housing online, the net benefit will be phenomenal. We are all desperate for more broadband, but the people who will benefit the most—for shopping and so on—will be older people and others in difficulty on lower incomes. They will benefit massively, if we can begin to get them online. This is a crusade as much as anything else.
Dame Joan Ruddock
I am extremely grateful to the Secretary of State for giving way. He said earlier that he would not publish the business case, despite the request. I wonder, however, whether he can tell us something that we assume might be in the business case. How many more hours working in the economy does he expect to see as a consequence of introducing universal benefit next year?
Mr Duncan Smith
If the right hon. Lady will forgive me, I am not going to give her specific details now, although I am happy to talk to her at greater length later on. The point I would simply make is that universal credit is designed to get more people who are below work, as it were, to cross the line into work. When people ask, “What is universal credit really about?”, they always talk about the taper. That is really important: simplifying the taper allows people to move up the hours. In truth, however, universal credit’s key component is the disregards—the bit we call the participation tax rate. In other words, right now, unless someone goes straight to 16 hours as a lone parent, for example, the participation tax rate—the moment when they join work—is so high that there are households that need two earners in work just to have enough money to survive. The idea of universal credit is to break that down and improve their lot. I cannot give the right hon. Lady the detail, but I believe that more people will move up the hours, with more people moving into higher hours and longer-term work.
Mark Durkan
I thank the Secretary of State for giving way. He has said that he is taking a hands-on approach to the developing IT system. Will he assure us that the IT system, which will also cover Northern Ireland, will be formatted to allow both the continued weekly or fortnightly payment of benefits, if that is the policy of the Northern Ireland Assembly, and the direct payment of housing benefit to social landlords, which is the policy of the Assembly? Will the IT system also be able to cope with the problems of cross-border workers?
Mr Duncan Smith
I was going to deal with a lot of that in my speech, so the hon. Gentleman is helping me to speed up. Let me deal with monthly payments. I genuinely believe that we need to get people on to monthly payments, for a very good reason. Right now, about 75% of the work force are on monthly payments. We looked at this issue—as I am sure others have—when I was at the Centre for Social Justice. One of the biggest stumbling blocks we found is that when people are out of work, everything is paid directly to them every fortnight, but when they go back to work they really struggle—particularly those who have been out of work for a little time—to cope with the first few months in work. We are looking to get as many people as we possibly can on to a monthly payment, so that when they go into work they have already completed that process and it is not a big break for them.
Of course we will want to identify—working with councils and local groups, and so on—those in real difficulty. Now, here’s the thing. Until now, nobody has really bothered much about them, unless someone—maybe an MP—makes a specific effort to try to get something resolved for them. What we are doing will make us look at why those people cannot cope and then start to surround them with support. It might be about their ability to budget; it might be that the family has serious drug problems, in which case we will need to get to that. So, we start looking at the reason, then we can resolve that and move them into the process. We will allow for the ability to settle at two weeks where we think it vitally necessary, but the mainstream will go to monthly payments. However, I am happy to talk to the hon. Gentleman further about that and help him out.
Mr Marcus Jones (Nuneaton) (Con)
I thank my right hon. Friend for giving way and I wholeheartedly support the outcome he is seeking in implementing the policy. One of the greatest impediments to getting back into work, particularly for low earners, is child care. Will he outline what more the Government can do to support people with child care costs?
Mr Duncan Smith
The whole idea behind the universal credit is that it allows us not to cherry-pick child care. That is, we will support child care up the various hours, because at the moment the system is set so that people get it only at certain points. Universal credit allows us to do that, and we are putting another £300 million behind that. That is a major positive. Universal credit is also a major positive for lone parents seeking work, because of the increased ability of the first earner back into work to receive that money. That should benefit them enormously.
Let me try to address one other point that was made and then conclude. The Opposition have expressed some concerns about the universal credit and HMRC’s real-time information project, but the scheme will deliver a net reduction of £300 million in administrative burdens on employers. That is important, because the project will help enormously with the way we flow information, together with HMRC—and I stress “together”. The right hon. Member for Birmingham, Hodge Hill has made the point about that, both today and to me in the past, but I say to him simply: I am not letting this one go, as with some other Departments. We are locked into this. In fact, we have now placed one of the DWP people in the team working on real time information, which will report at the same time as the others. We believe that we are making good progress on getting RTI moving in the right direction.
The right hon. Gentleman asked what was to be done with the 20,000 housing benefit staff. We are dealing with this matter sensitively. We recognise that staff across the country will have concerns about the impact of the new benefit, which is why we are consulting local government right now. Although housing benefit will be absorbed into universal credit, we must not forget that that will not happen overnight. I am sure that any impact on job roles will be counterbalanced by, for example, changes to localised council tax benefit, which will require a number of staff. The administration of the social fund is also being moved down to local authorities, and there will be other work, too. This is a matter for us to discuss with the councils, but it can be dealt with sensitively. I do not think that we should get too concerned about it, but we need to deal with it. I think that there is scope for all of them.
I was asked earlier about the business case. We are constantly reshaping and remodelling it, and I do not think that we need to publish it. As I said to the right hon. Members for Birmingham, Hodge Hill and for East Ham, I am happy to discuss any issues surrounding it at any time. They are always invited in; it is always good to have a drink with them and discuss these matters.
Alison Seabeck
In Plymouth, we have more than 80% broadband coverage, but we do not have that level of broadband connection. A lot of my constituents are very poor and do not have internet access. They use their mobile phones to access the internet, but they cannot use them for downloading documents. There is therefore likely to be a surge of people going into jobcentres and elsewhere seeking support. My constituency also has quite a high level of illiteracy. Does the Secretary of State intend to bolster the number of staff in jobcentres to deal with that potential early surge, perhaps using some of the staff in housing benefit departments who could lose their jobs?
Mr Duncan Smith
The hon. Lady obviously would not expect me to make a commitment on that now. I can tell her what we are doing, however. I have visited a large number of jobcentres and talked to the managers and staff about what will happen when we move over to the new process. A number of jobcentres are already trialling ways of speeding up the online process of moving people to the new system. We are going to install computers and have staff ready to advise people. When they come in to make their claim, they will be shown to a computer, with a telephone or an adviser, and helped through the process. So, if they cannot do it at home, they should at least be able to do it at a jobcentre, with guidance and help.
I am also talking to my colleagues at the Department for Culture, Media and Sport, because we really need to get broadband to all areas, and we need to do it pretty fast. I accept that that is a matter for the Government. We are not just telling people that they have to do this, and then forgetting about them. We are going to ensure that those who have no internet access have another way to complete the process. We are also looking at different ways of using mobile telephones for making certain types of claim. There is a whole process taking place, and nothing is being left to chance. If the hon. Lady has any ideas, we would be pleased to hear them. I am sure that they will be brilliant.
Mr Duncan Smith
I was not going to give way again, because the Deputy Speaker is looking at me with the kind of look that says, “This boring bloke needs to shut up and sit down as soon as possible so that others can speak”, but if the hon. Member for North Antrim (Ian Paisley) is very quick, I will give way to him.
Ian Paisley
I thank the Secretary of State for his generosity, and I hope that I will not be too boring. What contingency plans is he working on to deal with a catastrophic failure of the new IT system? For eight weeks over the summer, the Ulster bank in Northern Ireland was effectively closed as a result of such a system failure. If it can happen to a bank, it will happen to the new system.
Mr Duncan Smith
As I have said, we are working through all of that. Of course we have to prepare for contingencies and for certain events, and we are looking at that right now. It is part of the process of developing the system.
No one has asked me about the security of the system, but I might as well be open about it. That is of course an area that we are working on. We are learning the lessons from what happened when the banks started operating online, and we are now engaged with various organisations, including GCHQ, and talking about those matters. A long, detailed, iterative process of work is taking place to try to cover every eventuality, and I promise the hon. Gentleman and the House that we shall leave no stone unturned.
I recognise why the Opposition wanted this debate, and I know that people have read bits and snippets from the newspapers. People should not always believe everything they read in the newspapers, however. Personally, I do not read them often these days for that very simple reason! None the less, I say to the Opposition and to every Member that if we get universal credit right—I believe that we will, and we are working to achieve it—it will benefit all our constituents. It is a major plus and a key reform—one that will genuinely define us as a Parliament that cared enough to take on the risks and achieve this. Not to do so risks too much for people as they head into the modern world unable to cope, unready and believing that they and their families will never see the process of work, which will scar them for the rest of their lives.
Dame Anne Begg (Aberdeen South) (Lab)
This is a timely debate although I would say that, as I chair the Select Committee that happens to be undertaking an inquiry into the implementation of universal credit. I hope that today’s debate and the findings that my Committee will eventually publish—I cannot say exactly what they will be in advance—will help to highlight important issues to the Secretary of State and his Ministers, such as the questions that still need answers, the decisions that still have to be taken and the unintended consequences. I know that witnesses have already presented us with a number of such consequences in the evidence we have taken. Some groups will be worse off under universal credit and some will lose out. [Interruption.] I hope that the Secretary of State is listening, as he is due to appear before the Select Committee on Monday; he has until then to find out all the answers.
We know that major change costs money, not just in administration and set-up costs: the Government have said that there will be cash protection so that there will be no cash losers at the point of transition from existing benefits into universal credit. Those transitional arrangements will then be frozen until the universal credit level is reached or the cash protection will be lost when there is a change of circumstances.
The Government are already cutting large areas of support that people receive—in-work credits next year, for example, while housing benefit is already being reformed—and there are more changes to come. Child care tax credit is being reduced, while the rules for working tax credit for couples have changed so that people have to be in work for more than 25 hours in order to qualify. Under the new universal credit, certain things will not exist, particularly various premiums received by many disabled people and their carers. There probably will be fewer cash losers than originally anticipated as people move on to universal credit, because quite a number of people will already have lost their benefits or have seen a reduction in their income. That is probably good for the Government in respect of transitional protection because it will cost them less, but it is potentially bad for the claimant who is going to have to live on less money.
This is a huge subject, so let me concentrate my remarks on the most vulnerable. Even by the Government’s own analysis, some people will not be able to manage the online claims system or, indeed, the monthly payments. The Government use the term “digital by default”, but it will be impossible for many people, perhaps because of their IT skills or indeed as a result of the cost of accessing the equipment. I was glad to hear the Secretary of State say that there would be terminals in Jobcentre Plus centres, as that has not come out to date in the evidence we have taken; let us hear the announcement on Monday.
The Government say that most people will manage the process or will soon adapt to it. It is great if they do, because if the majority are not able to manage the system as it has been designed, it would be a catastrophe. It would also be a catastrophe if the IT did not work. In that case, everyone claiming universal credit, including those who are computer literate and can manage the system, will be in deep trouble. This is not a single benefit such as tax credits. Then, when the IT went wrong or did not work properly in the first place, it meant only a part of the family’s income not being paid. Families were not left destitute, as they had other income to fall back on until the problem was sorted out or until interim payments were put in place. That cost an absolute fortune at the time. If the IT does not work for universal credit, families will receive no money. They will not be able to pay their rent, pay any bills or buy food. As is inevitable in such circumstances, it will take time for the arrangements to be put in place, and they may become destitute before that happens.
Alison Seabeck
Given the potential for arrears and non-payment of bills, there may be serious problems with credit ratings, which would have huge knock-on effects for many people.
Dame Anne Begg
We should also bear in mind the debt that those people will incur in the meantime, and the fact that, even when the money has been paid, it will be difficult for them to get back on to an even keel.
I know that the Government will not want to plan for failure, but, as was pointed out by the hon. Member for North Antrim (Ian Paisley)—who has now left the Chamber—they need to have a contingency plan in case the worst happens, or, indeed, the system proves to be susceptible to large-scale fraud. I hope that the worst does not happen, but, given the Government’s record of IT failures, the possibility must have crossed Ministers’ minds. It is not enough to say that the tax credit IT disaster was the Treasury’s fault, as the Treasury is involved in universal credit with real-time information, which is not being developed on the “agile” system by which the Secretary of State sets so much store.
I must admit that—apart from the disastrous Child Support Agency—the DWP has a better reputation than most for delivering new IT systems, although that is not saying much. However, all its previous systems have been delivered over a much longer time scale, with much more testing, than will be the case with universal credit.
The Government say that they have learnt from the experience of the tax credit system that there will not be a “big bang”, because not everyone will come into the system on day one. However, for individual families there will be a big bang, because all their benefit, or income, will be put at risk if anything does go wrong.
Let me return to the subject of those who will not be able to manage the new system. Let us take the best-case scenario that the Government have painted today, and assume that the IT system works perfectly, with no hitches; that most people adapt to the monthly payments; that the welfare rights people and all the other organisations are given lots of money by the Government, are well trained and provide plenty of advice; and that 80% of people—or even 90%, but the Government are saying 80%—are able to access the online form and make their applications digitally. Even if all that works, there will still be people who will not manage. The success or otherwise of universal credit will depend on how well they are catered for, even if the proportion is as low as 10% or 20%. If it is only 10%, that still represents 770,000 households. More than 1 million people will probably struggle with the system, and on the basis of the Government’s own figures the number could be more than 2 million, so I hope that the Government are paying a great deal of attention to that group of people.
Jane Ellison (Battersea) (Con)
Does the hon. Lady really think that the only measure of universal credit’s success will be what may happen to the most vulnerable, about whom all of us feel understandable concern? Does she not think that an important measure of its success will be the fact that it will increase incentives to work, and will make work pay for those who want to return to the work force?
Dame Anne Begg
If the group about whom I have been talking cannot access the system, there is very little chance that they will be able to return to work. That is why the support is needed.
Mr Duncan Smith
I had not intended to intervene, but I think that I ought to take up the point that the hon. Lady has raised. Our plans already take account of a number of people who will not be online. We want 50% of those receiving the benefit to be online when we launch the system in October 2013, and we want the proportion to rise to 80% by 2017. We have always had parallel arrangements for those who will not be online, and we will explain those key arrangements to the hon. Lady.
Dame Anne Begg
I thank the Secretary of State, and may I also make a plea for it to be easily accessible, high quality and free, which is very important, too?
The poorest in our society are already disadvantaged in the digital age. They have already fallen behind the rest of us. Universal credit and its reliance on digital claims could exacerbate that still further. Instead of giving people living in poverty the help and support, and the access to work, that raises them out of poverty, universal credit could plunge them further into poverty and disadvantage. That would be a disaster.
We will not know the full impact of universal credit until we know the level at which it is set. Despite what the Secretary of State has said today, only then will we know the real marginal reduction rates and who will be better and worse off—who will be up, and who will be down—and whether people genuinely will be better off in work. Only when we get the real figures for real families, rather than the scenario planning that has gone on thus far, will we be able to see whether universal credit will work and they will have more money. Until then, a lot of what we are discussing is just an academic exercise. We need to get those figures, and I hope they will come soon.
There is, however, a great deal to play for. I said on Second Reading of the Welfare Reform Bill that a single working-age benefit is the holy grail of welfare reform. It is now up to the Government to make sure it does not turn out to be a very expensive cracked clay pot.
Charlie Elphicke (Dover) (Con)
For me, universal credit is important first of all because of the message it sends. It sends a very clear message that everyone of working age in this country is needed and has the potential to do really well in the workplace—that they are needed to help to build up our economy and put the “Great” back into Britain. Too often in the past there has been a tone of pessimism which accepts that it is okay for people just to sit at home all day on benefits and do no work. We can see that in the figures. This Government inherited a situation in which some 5 million people were on out-of-work benefits, and 2 million children were growing up in homes where no one worked. Furthermore, 1.4 million of those 5 million people had been receiving out-of-work benefits for nine of the last 10 years.
Andrew Bingham (High Peak) (Con)
Does my hon. Friend agree that the previous benefit system acted as a disincentive to people to explore work possibilities and their own potential, and that the purpose of universal credit is to allow people to get back into work and develop their potential, and thereby to liberate them from the welfare state?
Charlie Elphicke
I thank my hon. Friend for making that important point. That is, indeed, the kernel of what universal credit is about: it gives a clear message that it pays to work and it is good to work. The Opposition call themselves the Labour party, yet too often when in office they gave the impression of being the non-labour party. This coalition is on the side of the working person—those who are working in a job in order to earn money and bring cash back to their families, and thereby to lift their children out of poverty.
It was often said in past times that the best cure for deprivation is a job. Many people in my constituency live in deprivation. It is important to get people back into work, to incentivise and encourage people to be in work and to make work pay; that is an important message to send. That is why I see universal credit as a message of optimism saying that we want everyone to play their role, and that everyone is expected to play their role and to be active in the workplace.
I support universal credit because it is a simpler system. It makes the situation easier to understand. There are not five different types of payments; there is just one simple payment. It is a fairer system, too. Rather than people losing 90p in the pound—thereby entirely disincentivising them from working harder to get a pay rise or from working longer hours—only 65p in the pound will be withdrawn, which incentivises them to work harder and for longer, and to bring more prosperity back to their families.
Stephen Timms (East Ham) (Lab)
Is the hon. Gentleman worried, as I am, about the proposals of some local authorities to add a 40p in the pound taper on council tax benefit on top of the 65p taper he has just talked about? Under that approach, people who earn more would get less because they would lose more benefit than they would gain in income.
Charlie Elphicke
The right hon. Gentleman knows, as I do, that the fine tuning of council tax is still under discussion and still under way, and I hope that that will come out in the wash. I represent a coastal constituency, so I watch that situation carefully, as I know my coastal MP colleagues have been doing. They, too, want to ensure that the low paid in our constituencies are not adversely hit. That is an important point, but it is a fine part of the detailing of the implementation of the policy rather than the overall purpose of the policy, which is to encourage work and to give people more money if they work harder, do better, skill up and get a better job. That is a really important thing.
Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)
The hon. Gentleman is talking a lot about how universal credit will make entering the workplace available to everybody. Is he concerned about the absence of the second earning disregard, which means that the second person in a relationship would not really have that work incentive? Is he concerned that perhaps behind some of this there is an assumption of a model where the man goes out to work and the woman stays behind at home?
Charlie Elphicke
The hon. Gentleman lives a bit more in the past than I do; I am the second earner in my household, as many men are in theirs. We Conservatives, as the more progressive party, understand that. He should know—[Interruption.] He has had his go. He should know that second earners in households will not lose out under the universal credit.
One thing that I particularly welcome is that universal credit is progressive; the poorest will gain most, according to the Institute for Fiscal Studies. It says that the bottom six tenths on income distribution will gain on average, while the richest four tenths will lose out slightly in the long run. This is therefore a progressive policy, benefiting the poorest most.
Kate Green
I wish to take the hon. Gentleman up on this point about second earners. The logic of the system is that for the second earner in a couple it will not be worth working more than a very few hours a week. The problem with that is that it will, in the longer run, inhibit that person’s labour market prospects and have an impact on that family’s future prosperity.
Charlie Elphicke
Six million second earners will be better off. Importantly, 2.5 million working families will gain in the long run from the introduction of universal credit—again, that is according to IFS figures, not the Government’s figures. The Opposition are normally so keen to use the IFS figures, so it is worth quoting those figures to them and underlining how many people will be better off. That contrasts sharply with the scaremongering that we have heard from the Opposition today.
The other really important thing is that universal credit will help to lift children out of poverty. Universal credit is a transformational change which will affect some 8 million households, and we hope that 900,000 individuals, including more than 350,000 children and more than half a million working-age adults, will be lifted out of poverty as a result. The real question is: why did the previous Government not do it? Why do the Opposition not embrace it and work constructively with the Government on the fine tuning and detailing of this policy to get the best for all our electors, in whichever constituency we represent.
We are also investing an additional £300 million in child care support under universal credit, on top of £2 billion already being spent under the current system. That is worth pointing out, given a lot of the scaremongering we have heard about child care, as it shows the Government’s seriousness about helping out with child care. That will mean that more families than ever before will receive child care support, including 80,000 prevented from doing so by the current hours rule.
Universal credit is the right policy and this is the right time for it. We know that government and IT systems do not make good bedfellows—they do not make happy couples—and that there have been difficulties in the past. However, the previous Government should not judge this Government by their standards, and we should look at the implementation of employment and support allowance, as that was not an IT disaster. The Department for Work and Pensions has a good record, so we should give it the benefit of the doubt. Nevertheless, we should watch carefully to make sure that all goes well and all continues to be moving on time. Universal credit is important because it is very much for the many, with 2.5 million households that will gain. That is an important part of the reform.
Finally, we should trust people. There is too much of a tendency in the House to think that no one can manage, that we have to spoon-feed everyone and that no one can take responsibility. It is assumed that if they find it difficult to take responsibility, they should be spoon-fed rather than encouraged, helped and enabled to take more responsibility for their lives.
Naomi Long (Belfast East) (Alliance)
I agree that we want to encourage people to take care of their own affairs, but there is a conflict in that many people do not have the financial capability to do so. The funding for many of the organisations that provide them with advice and support is also under pressure, with the result that they do not have the capacity to support those people through that process. Does not the hon. Gentleman think that this is perhaps not the right time for such an approach and that we need to invest in services to give people financial capability?
Charlie Elphicke
Just because they do not have that capability today does not mean that we should write them off for all time. It does not mean that we should be pessimistic or defeatist, as the previous Government too often were.
Let us look at the facts. Some 75% of people in work today are paid monthly and if someone is going to go back into the workplace, they need to get used to monthly payments. When the previous Government moved from weekly to fortnightly payments, all the usual customers, suspects and groups popped up and said that it would be a disaster, but what actually happened? People managed. If we trust people, they often step up to the plate. We need to accept that people are able and responsible and have the ability to be successful in taking responsibility for their lives.
Nicola Blackwood (Oxford West and Abingdon) (Con)
I agree with my hon. Friend’s point about the need to trust people as well as the need to move towards monthly payments and increase people’s capacity to go back into the workplace. I understand that the DWP is considering which individuals might need exemptions and support for certain aspects of universal credit, and does he agree that there are certain circumstances in which exemptions and support might be necessary? I am thinking in particular of joint payments in circumstances where individuals might be at risk of domestic abuse, in which case joint payments might present a barrier to a safe exit.
Charlie Elphicke
I am sure that the Minister will deal with that point when he winds up the debate, but I heard my right hon. Friend the Secretary of State say from a sedentary position that the Government are dealing with that. It is important.
Of course, there will always be cases where people are unable to use computers at all, because they have severe dyslexia or other such conditions, and we need to be understanding of that. I draw a lot of comfort from the fact that we are hearing from the DWP that jobcentres will help to lead people through the process to ensure that they can access modern technology and be up for using it. Surely that is right, because we want people in the workplace to be able to access and use the most modern technology. That is why we should not write people off.
Surely the more that people are using the internet, the more that they are used to monthly payments and monthly budgeting and the more they are used to paying their rent like everyone else who is not on benefits, the better. I urge the Opposition to consider a change of heart about trusting people, to think that people can take responsibility for their lives and to take a more optimistic viewpoint. We will then be able to send a clear message to people that we believe in them, that they have a role to play in the future success of the country and that more of them should be able to be in work and play their part in making this country great again.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. Many people want to speak and the debate is important, so I am going to reduce the time limit to seven minutes. If Members try to reduce the number of interventions, that will help everybody to get in.
Gemma Doyle (West Dunbartonshire) (Lab/Co-op)
I am grateful for the opportunity to speak in the debate, mainly because, since I was elected at the last election, I have been contacted every single week by constituents who are concerned about the Government’s plans to shake up the benefit system—the so-called welfare revolution—and about what it will mean for them.
Universal credit was supposed to lie at the heart of that revolution, but it appears to be unravelling. The Secretary of State’s flagship project is descending into chaos; it is £100 million over budget and the timetable has slipped by several months. He needs to get a grip on it before it sinks and takes £2 billion of public money with it. I am surprised that he did not take the chance of a free transfer to another team to get him out of the mess.
A welfare project as all-encompassing as universal credit is too important to get wrong. We are not talking about numbers and schemes but about people having enough money to feed and clothe their children and keep warm. In Scotland we have experience of the Tory Government testing out their flawed policies and failing in the face of mass opposition, and I worry that this policy will be as disastrous as the poll tax. I sincerely hope that it will not.
One of the few things that most Members agree on is the importance of a welfare system that encourages people who are able to do so to look for work. It is very difficult for people to find a job at the moment, and if the Secretary of State is as compassionate as he makes out, he should recognise that when he does his tour round Glasgow. In West Dunbartonshire more than 19 people are chasing every job vacancy. At times in the past year that number has been as high as 40 and it continues to fluctuate.
The Government have cut the number of public sector jobs in West Dunbartonshire, including at Jobcentre Plus. The Scottish National party Government have excluded my constituency from any assistance such as from enterprise zones and the youth unemployment strategy fund despite the fact that when they announced the areas that would get money, West Dunbartonshire had the highest youth unemployment and had been named as the most difficult place in the whole of Scotland to find a job. The SNP continues to ignore us.
The people of West Dunbartonshire feel let down by both the UK and the Scottish Governments, and that may be one reason they booted out the SNP council and elected a Labour one in May. They have never elected a Tory council, I am glad to say. Even for those people who are in work, many are now worse off as a result of the Government’s changes to tax credits. The new criteria on minimum working hours mean that some families will be better off out of work and on benefits. Is that really what the Government want; is it what their Back Benchers want? I really do not think it is, so I suggest that they look again at the system.
It should never be the case that it is better to be on benefits than in work—[Interruption.] Well, this is what the Government are doing. If Government Members do not like it, I suggest that they tell their Government.
Nick de Bois (Enfield North) (Con)
So does the hon. Lady support the benefit caps that mean that some will be better off working? That is presumably why she voted against them.
Gemma Doyle
I want work to pay for everyone and what the Government are doing means that it does not for some families, and that is the black-and-white truth.
In West Dunbartonshire 200 households are set to lose up to £4,000 a year as a result of the Government’s changes and, with the jobs market already very difficult and businesses struggling to keep afloat, it is almost impossible for people to increase their working hours.
Unemployment in West Dunbartonshire was falling before the Government were elected, but under their stewardship of the economy it is rising again. What the Secretary of State and his Ministers forget is that when they make a decision the people who pick up the pieces are the volunteers and staff who try to help people through the welfare maze. That includes the staff in Jobcentre Plus and in my constituency it includes West Dunbartonshire welfare rights service, the Independent Resource Centre and the citizens advice bureau. They are all swamped at the moment. They help people with appeals and frequently win them because Atos has such a low rate of getting it right the first time around. Even for people who win their appeal the stress continues because they are soon sent for further assessment; they are knocked back, taken off benefit again and go into a never-ending cycle of appeals and assessments.
One of the organisations has told me that often claimants are told on the phone that they have been judged fit for work, and that the clock has started ticking on the time within which they can appeal, but that they cannot make that appeal before they receive the formal decision notice, which often does not appear until more than a week later. I would ask Ministers to look at this issue; I hope that it is not an attempt to squeeze the amount of time that claimants have to make an appeal. The delay is certainly making it more difficult. The organisations in my constituency have also raised with me the problem of the IT equipment used to move towards the online system.
I also want to raise briefly a specific concern about the replacement of disability living allowance with the new personal independence payment. Earlier this summer the Prime Minister apparently intervened to ensure that injured veterans would not have to undergo further assessments for PIP and to protect their benefits, but I understand that no definite protections have yet been put in place. I have been contacted by a veteran who is very concerned that only those who qualify for the armed forces compensation scheme will be covered by the protections and that pre-2005 veterans who were injured during their service and receive a war disablement pension will not be covered under the protections. I ask the Minister to look at that issue and hope that we will have some clarity on it soon.
There were elements of the universal credit that sounded promising, such as a simpler and more streamlined application process, but there are many outstanding concerns, as we have heard today. I support a welfare system that makes work pay. I would also support a Government who create work, but this Government are failing to do that.
Nick de Bois (Enfield North) (Con)
I am grateful for the opportunity to contribute to the debate. I am not recognised for praising those on either Front Bench, but I must say that I am pleased that both sides genuinely seemed to take a workmanlike approach to the debate. Furthermore, I hope that there is a genuine consensus that the debate is about getting people back to work, rather than labouring on about welfare cuts and so on, which would be the more stereotypical debate. I think that the premise that it is about getting people back to work is genuinely accepted. At moments during the debate I wondered whether Opposition Members are fair-weather friends of that argument, but I hope I am generous in assuming that it is the main goal.
I will set out a little context before turning to some specifics. In 2010 around 5 million people—12% of the working-age population—were effectively trapped on out-of-work benefits. It is also true that many of them—about 1.5 million—had been receiving such benefits for a considerable time, which meant that we were dealing with not only a personal problem that was individual to each of those people, but a cultural problem that demanded change to help move them from a life of dependency to one of independence.
Reforming welfare is as much about driving cultural change as it is about the process. We are fighting something that has become intergenerational and almost institutional. Worklessness and welfare dependency are two evils that are very close together and they do not simply develop in difficult economic times; we have enjoyed long periods of growth, yet 11% of the working-age population—some 4 million people—were on out-of-work benefits during those years. It is interesting, although worrying, that during the last economic boom employment rose by around 2.5 million, yet a great deal of that was in the public sector and more than half was accounted for by non-UK nationals. This is not an immigration debate and I am not trying to make that point, except to register the huge challenge we face in driving the welfare system to help put people back to work.
The shift is now about moving from handouts being at the centre of the welfare system to putting work first. I know that we could look over the previous Government’s time in office and say that they continually grew the welfare state—it is a fact; it happened—and I suggest that they did so with entirely the right intentions, but it has led to this generational and cultural issue. I think that we can alter this cultural perception so that working becomes something to aspire to, rather than the exception in many families.
In that context, I should like to address one or two of the concerns that have been raised, starting with the question of managing money and monthly payments. This is about a practical need. If someone who is unemployed goes straight into a job, there is a strong chance that they will end up getting paid on a monthly basis, and not many employers will give a new employee an advance.
Dr Whiteford
The hon. Gentleman will be aware that many people who work in part-time jobs, particularly women, are still paid on a weekly basis. That is not unusual among lower-paid workers.
Nick de Bois
That is why I chose my words carefully. Many people will be paid in that way. However, in this debate we risk letting the whole programme be driven by a group of individuals, be it those that the hon. Lady mentioned or those who are unfamiliar with computers, who may be in the minority but are none the less significant. That is not the right approach. I would turn the telescope round and look the other way, and help those groups to aspire to have control over their money on a monthly basis or to become computer-literate. That is the difference in emphasis that I would suggest. I see the hon. Lady shrug and sigh, but I offer those comments in the spirit of our all wanting to improve the quality of people’s lives and their opportunities to move forward.
Managing money is also about individual responsibility. We have seen an attitude building up whereby people are almost saying, “The state will look after me and the state will do this for me.” We cannot accept that any more; it is wrong. It does not encourage the right motivation to take responsibility for our lives, when we can. There must be a practical and moral drive to increase personal self-sufficiency.
The argument about computers is valid, particularly where broadband issues arise. I am pleased that Ministers have recognised the problem and will try to provide access to computers to overcome it. We have talked in terms of percentages. There are about 3,500 jobseeker’s allowance claimants in my constituency; I am pleased to say that the number is slightly diminishing. We should not call into question the proposed universal credit merely because 700 of those people may not be able to get access to or use a computer. If 2,800 people can do it, we should work harder to help the other 700 to achieve it. Perhaps that is, again, another way of looking at the problem.
Like others, I am very cautious about IT systems. When I worked in my own company, we used to plan for a bill of £20,000 and it often came in a lot higher and with few of the results that we needed. That is a fact of life. It is daunting to see some of the Government projects that have gone wrong in the past, so I applaud the approach that this Government are taking, and I think that the House rightly gives it credit. This computer system is not going to be launched with a big bang on day one; it is being trialled and done in stages, and that is correct. To be fair, we should give credit to the Secretary of State and his team for learning from the lessons of the past in trying to drive good value. I wish him well in his task, as I am sure that the whole House does. I note that Labour Members have some concerns about this, but from the perspective of the overall goal, they are manageable.
Mr Frank Field (Birkenhead) (Lab)
I want to touch on three themes. First, the importance of this debate goes beyond universal credit, because it is the big test of whether an approach to welfare reform that has been increasingly based on means-testing is the correct strategy for us to follow. Secondly, I want to explain why I fear that this will be a disaster despite all the comforting words that we have heard. Thirdly, I want to suggest to my right hon. and hon. Friends that if that is the view that emerges in the country, we will need an alternative to strategies of the kind that we have been deploying for the past 50 or more years.
First, I have nothing but praise for the Secretary of State for how he has engaged with the debate. He has accomplished an extraordinary feat by getting into a new area, mastering it and introducing his own proposals; but the fact that he is so exceptional in that sense does not necessarily mean that his proposals will work or are desirable. Means tests rot the souls of individuals. We have heard lots of talk about how important this is and how people will be better off in work than out of work, but even if someone is a saint, means tests will corrupt them.
Let us assume that someone who wants to work is in the very small group of people whom we are paying more than 90%, which will be reduced to 65%. Under this reform, the number of people who will pay higher marginal tax rates will be higher than that under the previous proposal. What is being clawed back makes people question whether it would be worth taking on overtime, an extra job or getting qualifications. If those on the Treasury Bench think that the rich in this country will not get off their backsides and work harder if we tax them at 50% and that we therefore need to reduce the rate to 45%, why do they think that that stick of making people marginally better off will work for the poor?
There are two groups of people: those who are in work wondering whether they would be better off, and the 1.45 million people—which is the figure that the hon. Member for Dover (Charlie Elphicke) kept coming up with—who have never worked. If those on the Treasury Bench think that tweaking the marginal rates of tax will get a large number of those who have turned down jobs actually to work, they have another think coming. That is not to say that there are not huge armies of people who wish to work and who would jump at any job, but we delude ourselves and misrepresent our constituents if we believe that the whole body of people who are registered as having never worked since they left school are eager to get a job. They are not and they will certainly not be affected by universal credit.
My second point is on how the atmosphere has changed. For Third Reading of the Welfare Reform Bill, the Government Benches were full and Government Members were baying at us. Their tails were up and they were confident about the reform, but look at them now—they are going to run out of speakers unless the Whips get more into the Chamber. By contrast, a galaxy of Opposition Members want to contribute. [Interruption.] The seven-minute rule has been applied purely and simply because we will not otherwise fit in all the Opposition Members who wish to speak. The atmosphere is changing. The Secretary of State will not have seen how glum his supporters looked when he was making his contribution. It is a totally different situation from that during Second and Third Readings of the Bill. What some of us forecast is coming home to Government Members.
Let us put to one side all the IT schemes that we failed with and look at when we tinkered with tax credits back in 2005. That scheme was much narrower in scope than this one. The then Prime Minister had to come to the House to apologise for the chaos that we managed to create. Nearly 2 million people were being overpaid and there was little chance of getting the money back from them, and 750,000 people were being underpaid. The lessons for making the proposed changes, even if they are made in stages, are difficult. Although I wish the Government well, I doubt whether they will be that much better than we were when we implemented a reform that was far less ambitious than their scheme.
The disaster will not only come from the IT. Why the secrecy? Why has not the pilot on the operation of the scheme been released to the Department for Work and Pensions? The Secretary of State says that a member of the team is now in the Department, but I can tell him that, even if someone is a Minister in a Department, it is possible for people to make sure that departmental information cannot be accessed, never mind information that is shared by Departments. Why the secrecy over that? Why have the senior civil servants on this project been lost? Why cannot Opposition Members get more information about the real-time working? The crucial point is not whether Sainsbury’s or Marks and Spencer can fit into that—of course they will be able to. The problem is with the vast majority of employers from whom the Revenue already has difficulties getting an annual return, let alone a monthly return or an even more frequent one.
Perhaps understandably, the Government are secretive over their risk register. I hope that the National Audit Office will be more effective than Parliament has been in looking at that, so that we can be more aware of what the risks are and of how the Government have tried, or not tried, to counter them.
I do not have time to get on to my third theme. I will seek another occasion to discuss it. It is all very well for us to criticise what we fear is going to happen. Come the election, I hope that there will be an alternative proposal, based on real wage rates.
Mr Graham Stuart (Beverley and Holderness) (Con)
Will the right hon. Gentleman give way?
Mr Field
The alternative to the means-testing strategy that we have pursued with ever greater vigour over the past 50 years is to look at the distribution of incomes of people at work, to look at low wages and to ask how we can raise people’s real wages. Secondly, I believe that there must be a fundamental change in the welfare state from a means-tested system, in which we meet people’s needs, to the welfare state that was originally envisaged, in which people draw benefits because of the contributions that they make, either in work or in a wide sense to the community. I do not underestimate how fundamental that change would be, but when the system crashes, we will need an alternative.
I am immensely grateful to the Chairman of the Education Committee the hon. Member for Beverley and Holdeness (Mr Stuart) for allowing me the time to make that point.
Stephen Lloyd (Eastbourne) (LD)
It is a privilege to speak in this debate and to follow the right hon. Member for Birkenhead (Mr Field), whose speeches on this matter I have read for many years.
The issue of benefit dependency was one of the triggers that drew me back into politics 10 or 11 years ago. That is why, once I was elected, I became a member of the Work and Pensions Committee. I have been very involved in its work ever since, along with the hon. Member for Aberdeen South (Dame Anne Begg).
We must remind ourselves of the figures that have been talked about. There are more than 2 million children in the UK living in households in which nobody is in work. That figure is from 2005 or 2006, when the economy was booming. I imagine that the figure is much higher today, because of the recession that we have been in since 2008. The Secretary of State reminded us that there are more children in workless households in the UK than across the rest of the EU, which is a shocking statistic. Such figures are the reason many Members from all parties feel so strongly about this subject. Although there are anxieties about universal credit, which I will touch on in a minute, we all in our hearts hope and pray that it works.
Over a period of 30 or 40 years, not because of a conspiracy or through malice, but through society trying to do the right thing, a chronic situation has developed in which for many of our neighbours, colleagues and constituents, it simply does not make rational sense to work. I spoke to a young woman on Saturday at my surgery. She had come to see me about a different issue, but we got on to this matter because she knows that I feel strongly about it. She pointed out that she was losing five or six quid a week by working. It would make financial sense for her to go on to benefits. Luckily, she is the sort of person who would see that as the road to perdition, so she is sticking to her job, hoping that she will earn more money in a year or two. I thought to myself, “This is absolutely insane. How have we got here?” We all know that it has been down to a series of actions over 30 or 40 years, but we are where we are, so how do we change things?
I am anxious that someone with such a reputation on the subject as the right hon. Member for Birkenhead feels so negative about universal credit. That makes me nervous, because he has a lot more experience in this area than I have. None the less, let us see what we have got. We have got the biggest shake-up of the system in 40 years. That is not necessarily a good thing—a number of colleagues have talked about the history of public sector IT programmes, and I do not even want to go there—but it is a substantial change.
I defer to the right hon. Gentleman somewhat—forgive me for mentioning him again, but it is a privilege to speak straight after him—in agreeing with him that the opinion has become ingrained in many of our citizens over a number of generations that there has to be some sort of means-testing process to get people into a position in which they are prepared to work. That is linked to the Work programme. For all its challenges, of which there are many, it recognises that we have to offer training providers enough money that it is worth their while to get people into work and sustain them there.
I mention that because before I was elected I was a trustee of the Royal National Institute for Deaf People and was involved in a number of disability charities. For many years, training providers used to do what they called creaming and parking. They would take people who were job-ready from the jobcentre, turn them around very quickly, get them a job and take the money from whichever Government were in power, either Labour or Conservative. The premium for those providers was so little that they put people who were a long way from the job market in a corner and did not bother with them. That situation built up over a period of time. As we know, the Work programme is modelled in such a way that training providers stand to gain a considerable amount of money if they get long-term benefit recipients into work. I am keen on that. I want the directors of training providers and the people who work for them to end up as wealthy men and women, because I know that if that happens, we will finally break the desperate cycle that has gone on for 30 or 40 years and third-generation benefit dependants will be getting jobs. Universal credit is crucial to that.
Will universal credit work? That is the $64,000 question. The Secretary of State is confident about the IT and confident that the programme is on budget and on time. Like a lot of Members, I hope and pray that he is right, because I do not want to wait another few years for the Labour party to come up with a plan, perhaps one put together by the right hon. Member for Birkenhead. It lost that opportunity 12 or 13 years ago. Frankly, I think that is a shame, but that is by the by. I am not confident that his ideas will ever come through into Opposition policy, so universal credit has to work. I urge the Secretary of State and the Department to listen to some of our procedural concerns about monthly payments, council tax benefit and which primary earner will get a household’s money, but otherwise I support universal credit wholeheartedly and look forward to its implementation.
Huw Irranca-Davies (Ogmore) (Lab)
I am pleased to speak in the debate and I applaud the many constructive contributions that have been made. I hope I can do as well. I start with one principle that I believe is agreed throughout the Chamber: that any reform now or in the future should be designed to enable people to get into work and to ensure that work pays. However, many concerns have been raised about whether the Government’s reforms will work or whether they will unravel rapidly and spectacularly.
I want to focus on the narrow subject of some of the most vulnerable people who might be badly affected by the reforms, if the reforms are not right and delivered correctly. I want to ensure that they are protected so that I do not meet in homes in my constituency, or in my office, people who say that they have been badly let down by unintended consequences. As the Minister knows, such people will visit his office, and they will be real people with real tragedies.
Baroness Tanni Grey-Thompson, who is far better versed with the group I want to talk about than I am, said:
“Cuts—such as those to support for most disabled children, and disabled adults living alone—are going to make the future considerably bleaker for many of the most disadvantaged households in Britain.”
I hope she is not right, but let me develop some of the detail behind that direct criticism of the reforms under discussion, which are to be rolled out progressively.
I welcome the fact that I am following the hon. Member for Eastbourne (Stephen Lloyd). He has a great background in representing some of the concerns we are discussing, and I am sure he would want the Minister to respond to them. The Minister can do so in his closing remarks, but I am happy for his officials to write to me.
Let us consider claimants who have children with disabilities. Under the proposals, the lower rate that will be available to families with disabled children is, if I understand correctly, significantly lower than the current disabled child element of child tax credit. I understand from Citizens Advice in my community, and others, that it has been estimated that the proposals will make such families worse off by up to £30 per week. If so, I guarantee that those families will wash up not only at citizens advice bureaux but in my constituency office, and I need to know what to say to them, where they can turn and how we can help them.
Another group is claimants who have disabilities. As hon. Members have regularly heard in their offices, disability premiums have always been a major aspect of the current means-tested support and recognise the many and complex additional costs faced by claimants with disabilities from things such as dietary requirements, extra heating for or adaptation of their homes, special aids, and so on. The disability premium is worth about £58 per week, and the disability element of the working tax credit about £54 a week. If claimants are to be significantly disadvantaged, I seek the Minister’s assurance that the proposed package will mitigate that. We are led to understand that around 500,000 fewer people will qualify for the new support when the disability living allowance is replaced by the personal independence payment. Once again, those people will turn up in the advice surgeries of MPs around the UK.
One final aspect concerns joint claimants who have limited capabilities. Under universal credit, couples who have limited capability at work, or in getting ready for work, will receive only one element that recognises restricted functions. Two individuals in a household might have much greater expenditure, but that is not reflected in the payment, which covers only one individual. Once again, those people will be coming to my surgery, unless the Minister can give a clear and categorical assurance that the proposals include some form of mitigation for those claimant groups, which include many tens of thousands of individuals.
I want to be broadly optimistic about the proposals and the principles behind them, but I share the worries that hon. Members have expressed—the proposals could unravel and there has been delay, and we do not know whether the planning and implementation will be effective and make them work. However, I want to ask the Minister specifically about the claimant groups who are at or below the poverty line, who could be the most significantly impacted by the changes. Have they been taken into account and is proper mitigation in place? If not, will he think again?
Richard Graham (Gloucester) (Con)
I begin my contribution to this important debate with a letter I received in 2007 from the ancient ward of Kingsholm in my constituency, where the Domesday Book was commissioned, and which is today home to Britain’s finest rugby club. The letter was from a young mother who wanted to return to work. She had been offered a part-time job and had done some detailed calculations, which she shared with me, and which showed conclusively that she would be about 10% worse off in work than she was on benefits. She wrote: “The system appears to have been designed to make sure that I should never work again,” and added for good measure that, “the depressing thing is that this letter will make absolutely no difference at all.”
My reply at the time was that the situation my constituent described was morally wrong. I said I hoped that if my Government were given the chance, we would act to change things, and that one day I would be able to say to her, “We have made sure that work pays.” I still have her letter, and I hope to have the chance to write to her in due course to say that our dream has come true.
The motion could not be further from that dream. Indeed, although the shadow Minister, the right hon. Member for Birmingham, Hodge Hill (Mr Byrne), said in introducing the debate that we all want work to pay, it was not clear to me that his heart was really in it. It sounded as if he rather hoped the scheme that the Conservatives and Liberal Democrats have worked so hard on would end in tears, or, as he put it, that it would descend into chaos—an inferno of incompetence that he awaits with some relish.
It was ironic to hear a call from the right hon. Gentleman to “dial up the competence”. After all, his Government designed the most complex benefits system in the world, and he left office apologising that there was no money left. He also reverted to form in calling for yet another play on the bankers’ bonus as a solution to the problem. I have said before in the House that he is an outstanding salesman of the absolutely unsellable policy of his party’s refusal to back any cap on benefits. This time, however, he has been pushed forward as a salesman without a policy. He simply attempted to rubbish and decry arguably the most important policy that the Conservative and Liberal Democrat coalition is proposing, which, sadly, his party was unable to construct during its 13 years in office.
If any hon. Member wishes for proof of that, I can offer a conversation that I had more than two years ago with Lord Freud, the Minister with responsibility for welfare reform. I asked him: “What is the difference between the work you did as an adviser to the previous Government and the work you do as a Minister?” He said, simply, “The most important difference is that whereas the previous Government talked about reform, this Government will deliver it.”
The motion contains several main criticisms of the work being done by my right hon. Friend the Secretary of State and his ministerial colleagues. The first is that universal credit is late and over-budget, but we have heard a convincing rebuttal of both accusations. For example, the roll-out of the pathfinder starts next April and more widely in October.
The second accusation is that there is widespread unease surrounding the implementation of the £2 billion IT project. I asked about this when a member of the Work and Pensions Committee and since then I have asked questions of the contractor and the Department, and I will go on doing so because there is no room for complacency. Again, though, the accusation of widespread unease is a bit rich—or perhaps the Opposition have realised that the situation with the £60 billion national NHS IT project that went so disastrously wrong under the former Government should not be repeated. On that, I am absolutely with the right hon. Member for Birmingham, Hodge Hill. We must ensure that the project is successful, and I am sure that Ministers are listening carefully.
Thirdly, the motion accuses the Department of creating such a bad design that it reduces work incentives. It has been designed to do precisely the opposite. Above all, the project is designed to provide strong incentives for everybody to return to work. It is not poorly thought out and there is no serious risk of it descending into chaos. It will affect 8 million households, lift 900,000 individuals out of poverty and reduce 30 complex benefits into something that even the humblest citizens advice bureau can understand and explain to the many constituents of ours who visit them. This is a vital project that we all should back. The impact of its not succeeding would be too awful for us to consider. Universal credit is the right thing. It is a noble goal and deserves our support, and my constituents will back it strongly. In particular, the woman who wrote to me in 2007 deserves a reply. That means that the motion should be soundly defeated.
Madam Deputy Speaker (Dawn Primarolo)
Order. To accommodate as many Members as possible still wishing to speak, I am reducing the time limit to five minutes. I call Mr Ian Lavery.
Ian Lavery (Wansbeck) (Lab)
There have been some thoughtful contributions this afternoon, but I must wholeheartedly disagree with the comments about cross-party agreement and how this is not about cuts.
Hon. Members can call me a party pooper, if they wish, but I want to consider the reality facing many people in my constituency and constituencies up and down the country. Let us face it, we are in a double-dip recession made in Downing street. In order to recover our finances, we need a suitable plan for growth and jobs in the economy. Twenty one people in my constituency apply for each job vacancy, and the only way out is with a plan B. It is no good denying that. It will not do anybody any good to deny that we are in times of extreme austerity.
This is a timely debate, because although millions of people were in London yesterday celebrating the fantastic, first-class Olympics and Paralympics—the best ever seen—the picture out there for tens of thousands of disabled, vulnerable, sick and unemployed people is quite different. Many people fear for their future, and rightly so, particularly given how welfare reform has developed over the past two years and what will happen with the universal credit. Lots of people will lose out.
My hon. Friend the Member for Ogmore (Huw Irranca-Davies) mentioned disabled children. We have got disabled claimants. Carers are set to lose out, as, too, are joint claimants with limited capabilities, young lone parent and large families. We have not got any facts or figures on how much the universal credit will be per individual and how much the additional payments will be. The only figure we are sure of is the size of the benefit cuts—£20 billion. Some Members might say, as they regularly do in the Chamber, “This is not about impacting on the less well-off in society but about simplifying the benefit system and making it easier”, but I look at it differently: if we take £18 billion to £20 billion away from welfare in the name of welfare reform, somebody will lose out, and to stand up in the House and suggest otherwise is disingenuous. We must be careful not to start universal credit the same way we started welfare reform two years ago. We cannot have people worrying about losing their benefits—about appealing for benefits but being cast aside. If universal credit is introduced in the same way as Atos operates the work capability assessment, more people will become unemployed—booted on to the dole, some may say.
The universal credit will be introduced next year, and constituents of mine have received lots of letters and e-mails about its implementation and underlying principle. The Government hope for 80% take-up online, so people who prefer face-to-face interaction will have to use the internet, yet the 2009 digital report stated that 15 million still did not use the internet. I accept that it might be dated, being three years old, but I emphasise that many people still prefer not to use the internet.
Monthly payments, sanctions, the IT failure, joint payments and the transitional project have all been mentioned by hon. Members this afternoon, and I hope that the Secretary of State and his ministerial team will look at them all. We have to treat poor people with dignity. They are not asking for the earth and have never looked for luxury. They just want to live a life as near as possible to what we do. They do not want merely to exist.
Guto Bebb (Aberconwy) (Con)
It is a pleasure to contribute to this debate. I reject the claim by the right hon. Member for Birkenhead (Mr Field), who is no longer in his place, that there is a lack of interest among Government Members. Indeed, I spent my summer recess taking an interest: I visited my local jobcentre to see how it was dealing with the proposed changes; the two Work programme providers serving my constituency because I wanted to see how they were getting on; and a Tesco regeneration partnership store in Liverpool, which is an example of what can be done when large corporations work with the jobcentre system to get the long-term unemployed into jobs.
One clear message that came out of those visits was that the welfare changes were welcomed by jobcentre staff, who saw them as an opportunity to help people back into work, and by the Work programme providers, who understood the long-term issue at stake. The issue is not about getting people into six-month placements or getting them off the register for six months and then back on to it but about working with the unemployed to ensure their long-term capacity to work.
I represent a seaside resort in Llandudno, north Wales, which has seen a huge influx of people from eastern Europe to work in our hotels. They are wonderfully hard-working and welcome because of the level of service they offer. Nevertheless, it was of huge concern that although people were unemployed in my constituency, several hundred people from elsewhere in Europe were willing to work in the positions available. When I visited the Work programme providers serving my constituency, therefore, it was a pleasure to see a white board on the wall listing 28 jobs filled that August, several of which had been in local hotels and restaurants, because those businesses were engaging with the Work programme.
One message that came out clearly from those visits was that the Work programme providers were still having to sit down with people who wanted to take on a job and work out whether they would be better or worse off. I can tell the House that the Work programme providers and the clients I met were looking forward to the time when they would know for a fact that if they took a job, they would be better off.
The right hon. Member for Birkenhead made the strong point that if a 50p tax rate is problematic when it comes to incentives to work, then surely a 65p withdrawal rate is problematic too. I agree: a 65p withdrawal rate is problematic. It is an issue that we should expect the poorest in society to pay a 65% marginal tax rate, yet we acknowledge that a 50% rate was unacceptable. However, we have to put the issue in context. The fact is that we had—indeed, we still have—500,000 people facing withdrawal rates of 85% to 90%. If we can slowly move to a position where, regardless of the situation, people are better off when they work, we should not be carping about that. Hon. Members can of course make the arguments for a withdrawal rate of less than 65%—in due course I would support that—but this Government are taking difficult decisions at a difficult point in the economic cycle, in trying to change a system that has failed far too many of our fellow citizens. To argue that the change does not go far enough, when Labour sat on its hands for 13 years, is completely unacceptable.
The key point is this. I went to Liverpool and visited that Tesco store in Toxteth, which has the most wonderful views of the constituency of Birkenhead and north Wales. As a Conservative MP from Wales, I was slightly concerned about meeting Scousers who might not be the most welcoming of a Conservative politician. Under a partnership agreement with Jobcentre Plus, half the staff at the store had to have been unemployed for more than a year before being recruited and moving into a position. Visiting that store was a humbling experience. The retention rate in the first 18 months was 94%—that is, 94% of the staff who had been long-term unemployed were still in position. The pride that those people took in their jobs was something to behold, so when I hear people in this House saying, “Yes, the only jobs being created in this economy are in shelf stacking,” I just feel ashamed. The people in that store in Toxteth took pride in the fact that they were earning a salary, taking income home to their families and standing proud, knowing that they were making a difference.
However, there was one message that well and truly came out of that meeting. So many were saying, “I’m currently working 16 hours,”—or, “I’m currently working 24 hours”—“but if I go over that, I’ll be worse off.” If nothing else, the message from the universal credit to them must be: “Work 30 hours; work 40 hours—you will be better off.”
Kate Green (Stretford and Urmston) (Lab)
It is a great pleasure to contribute to this debate. Of course I welcome the universal credit to the extent that it may encourage people to work at all. However, there is a danger that the fact that it has been designed to provide incentives to many people to work only in short-hours jobs will mean that more people will choose to work in short-hours jobs. Although those jobs can be a valuable stepping stone into further employment, particularly for those with caring responsibilities, we know that long periods spent trapped in mini-jobs can damage individuals’ future earning prospects. Mini-jobs are often more badly paid and more insecure than established jobs with more hours, yet those are exactly the trends that we do not want if we are to tackle in-work poverty.
It is clear that the Government are worried about that aspect of the design of universal credit, because they are planning to introduce into our benefits system—for the first time, I think—a measure of in-work conditionality, to push people working in mini-jobs into working more hours or perhaps getting a better-paid job. We currently have very little information on how in-work conditionality will work. We have not been told what additional resources will be available to Jobcentre Plus to implement it, who it will apply to or what additional training might be given to advisers to cope with the different challenge of dealing with people who are already in work. What we do know—from the DWP’s own research—is that in-work conditionality is one of the least popular aspects of what the Government are proposing when it is raised in the DWP’s research. I therefore invite the Minister to say a little more about in-work conditionality. It has been completely airbrushed out of the debate so far, but it will be extremely important to a substantial number of people who begin in low-hours, low-paid work.
I also want to reiterate the points made by my right hon. Friend the Member for Birmingham, Hodge Hill (Mr Byrne) and my hon. Friend the Member for Stalybridge and Hyde (Jonathan Reynolds), as well as others, about how the logic of the system will push some people to reduce their hours of work, not increase them. My right hon. Friend mentioned the interaction with the rise in the personal tax threshold which, as the charity Gingerbread has shown, means that a £1,000 increase in the personal tax allowance will give £200 a year to every basic rate taxpayer, except those on universal credit, who will gain only £70. Similarly, as we know, the new system will disincentivise second earners in couples, the majority of whom will be women. The Institute for Fiscal Studies has shown that a second earner who is entitled to universal credit when out of work will initially lose 65% of every pound earned when they move into work, rather than 41%, as they do under the current, tax credits system. Indeed, the DWP’s own modelling shows that 900,000 potential second earners will face lower incentives to work under the new policy.
I am concerned about the payment mechanism, with payments typically going to one member of a household. The hon. Member for Oxford West and Abingdon (Nicola Blackwood) pointed out that there are particular concerns where there is a risk of domestic violence or abuse. There is also a concern that money might not get through to children when the element of the benefit that is related to child care or child costs is intended for them. I invite the Minister to explain whether he thinks it is feasible for a woman—or man—experiencing abuse in their relationship to ask the DWP for the benefit to be split or paid all to her, rather than to him. Surely that will precipitate further abuse. I would also like to know whether the Department intends to move towards allowing the benefit to be paid partly to each member of the household and what cost assessment has been made of taking on board requests to pay the benefit in a different way. Would it not be simpler to return to the model, which has been tried and tested—as this Minister knows particularly well—of paying benefits for children to the main carer and benefits for housing to the person with the rental obligation?
Finally, let me ask some quick questions about refuges. I welcome the assurances given today. However, as people are in refuges for only two or three days, because they are dealing with an emergency, can the Minister confirm that rent will be paid directly to the landlord in those circumstances? Can he confirm that where people are in receipt of dual benefits—for their own home and the time in the refuge—they will not be hit by the benefits cap? Can he also confirm that housing costs that are currently met by the benefits system will continue to be met in full? In fact, will the Department publish an equality impact assessment of the proposals? Regrettably, we have so far seen no such thing.
Jacob Rees-Mogg (North East Somerset) (Con)
It is a great pleasure to support the Secretary of State today. He is one of the most serious-minded members of Her Majesty’s Government, and he has put forward a proposal where there is amazingly little disagreement over the principle of what is being done. Indeed, the motion is not about the principle; it is about some of the practicalities. However, it is worth concentrating on what the principles underlying the universal credit are.
The first principle must be simplification. All of us know from our surgeries that the people who come in to see us—who are some of the most vulnerable in society—are confused and bewildered by the range of benefits that may or may not be available to them, the interaction between one and another, and the way they can become worse off by doing sensible things, which therefore encourages them to do things that are not in their long-term best interests. To move to a system that is simple and straightforward must therefore be an advantage, and it has, I think, broad support across this House.
Then there is the issue of the reduction rate—the rate at which people lose money from benefits when they move into work. I have spoken before in this House about the Laffer curve. It is often pooh-poohed by Opposition Members, although I see—as they themselves say—that there is an irony in that we quote it most often in favour of high-rate taxpayers and they quote it most often in favour of people on benefits. However, in my view the Laffer curve applies equally to both. People work because they get money out of it. It was Dr Johnson who said that nobody but a blockhead writes, except for money. It is not just writing that is done just for money; it is most employment—with the exception of being a Member of Parliament, which I think most of us are so privileged to do that we might even pay for the opportunity.
The importance of that point is that the withdrawal rate is going to be the absolute key. It is crucial that, at all times, being in work makes people better off than being unemployed, not only for their financial benefit but because dependency is bad for people and their families. It is destructive to their lives. It leaves them without a focus, unable to get up in the morning or to do anything. It can also lead to depression. We want a society in which people want to be, and are encouraged to be, in the work force, and in which dependency is an option that is limited to those for whom nothing can be done. We need to become a society in which dependency is rejected.
The principles behind the reforms are fantastic, and they are worthy of widespread support. I agree with my hon. Friend the Member for Aberconwy (Guto Bebb) that we would like the withdrawal rate to be reduced from 65%, but 65% is still a lot better than some of the very high rates that exist, which is extremely good news. In respect of the practicalities of the reforms, my admiration for the Secretary of State is unbounded. I have never before seen a Minister or an Opposition spokesman in the House being so open to suggestions, thoughts and questions about what they were doing, or being so careful about the way in which their proposals were being implemented.
It was notable at questions yesterday that, in response to a point about refuges raised by the hon. Member for Manchester Central (Tony Lloyd), the Secretary of State said:
“If he has any concerns that he thinks we might not have dealt with, my door is open for him to come and talk to me.”—[Official Report, 10 September 2012; Vol. 550, c. 14.]
That is a Conservative being open to a socialist Member of Parliament. Politics normally involves a Minister being defensive and saying, “I’ve got it right. You know I’ve got it right, and my troops will vote for me because the Whips have arranged that in advance.” It has been wonderfully refreshing to hear the Secretary of State go through all the points today. Has anyone ever seen a Secretary of State take more interventions than he did in his speech? In each case, if he did not have an immediate answer, he said that he would be willing to listen and to consider the matter, to ensure that we got this right. Pilots are being carried out, and the scheme is being implemented carefully and cautiously.
Jackie Doyle-Price
Does my hon. Friend agree that the spirit in which the Secretary of State is approaching this issue stands in clear contrast to the approach of the Opposition, who have tabled this mealy-mouthed, negative motion? They are willing the reforms to fail, but we should all want them to succeed if we really want to make work pay.
Jacob Rees-Mogg
I am very sympathetic to what my hon. Friend says. This is something of a puzzle to me, because the Labour Front-Bench spokesmen on this subject are among the most civilised members of the Opposition, and it seems uncharacteristic of them to table such a motion—[Hon. Members: “Hear, hear!”] I felt sure that they would be delighted to be flattered by me, of all people. What I have said about them is true, however; it is recognised by those on my own Front Bench.
However, the motion before us is extremely overstated. It uses the language of chaos and disaster, as did the right hon. Member for Birmingham, Hodge Hill (Mr Byrne), and calls on the Government “urgently to set out” plans. In contrast, the Secretary of State answered every question that was put to him. He was willing to listen, and he is doing something that, in principle, those on both sides of the House agree with.
Mark Durkan
I thank the hon. Gentleman for giving way during his praise of the Secretary of State. Last week, the Secretary of State refused to accept a reasonable job offer and incurred no sanction. If that is okay for him, why is it not okay for others?
Jacob Rees-Mogg
That was a most brilliantly phrased intervention. In turning down the opportunity to be Lord High Chancellor—one of the most ancient posts in the land, and one that most people would be honoured to hold—the Secretary of State showed his commitment to ensuring that the reforms will work. In turning down a promotion, he showed his nobility. Having listened to his speech in the debate today, I wonder whether there ought to be an amendment to “Erskine May”, so that when an argument has been comprehensively won by a Minister at the Dispatch Box, the debate could simply end, to a round of applause and cheering, with no further need for discussion.
Andrew Gwynne (Denton and Reddish) (Lab)
It is a pleasure to contribute to this important debate. The notion of making work pay should be supported by everyone in the House, but there are worrying signs in the Government’s proposals and unless they heed them, I fear that they will fail in their ambitions.
One of the two local authorities that cover my constituency—Tameside metropolitan borough council—has been selected, along with Oldham and Wigan councils, to be in the Greater Manchester pathfinder area. The Secretary of State mentioned the pathfinder areas in his speech. We are told that the aim of the pathfinders is to build confidence in the components of universal credit and to learn lessons for the larger-scale implementation of the scheme later in the year. Tameside council tells me that it agreed to take part in the scheme so that it could highlight any glitches in the new system that a borough like that might encounter, before the system was rolled out nationwide, so that the Government would be able to iron them out in good time.
I want to turn briefly to some of the specific concerns. There is general consensus on the ethos that work should pay, but there are real worries that such dramatic changes could disadvantage families and that, instead, work—or at least low-paid work—would not pay. On the proposal for monthly payments, the Minister will know that, at present, a significant amount of housing benefit is paid directly to landlords, and in particular to registered social landlords. The Department for Work and Pensions has announced eight local authority demonstrator pilots, and payments direct to tenants in social housing have been accelerated in those pilot areas from June this year. However, none of the pilots is in Greater Manchester. I do not know why; Oldham and Wigan were certainly long-listed. The Government should have a spread of pilots, in order to ascertain the impact that the changes could have in different types of communities. That is the first worry.
Secondly, as we have heard, universal credit is to be paid one month in advance, to mirror a monthly salary if the claimant gains employment. This is a real concern for private landlords and registered social landlords, not least because they expect rent arrears to increase. People might need more budgeting advice and assistance than is currently available. What assurances can the Minister give to me, to landlords and to my council that arrears will not increase in that way? What joined-up thinking has taken place between the DWP and the Department for Communities and Local Government to ensure that it does not happen? Ministers must also understand that residents, especially those under real pressure, will be seeking support from local advisory services, such as Citizens Advice and Welfare Rights, at a time when those services are being reduced as a result of spending cuts. That, too, is a real worry.
A further worry has arisen over the introduction of online application forms. We have already heard that between 5% and 10% of residents will require additional support with such applications. That is particularly worrying in an area such as mine, where there is a digital divide. A significant proportion of the community that I represent cannot easily access the internet and would need extra support to make a claim. Furthermore, this change comes at a time when publicly accessible community IT facilities are being removed as a result of Government cuts.
My final worry relates to the combined impact of other welfare changes, particularly when a transfer of responsibility to local authorities is involved. Local council tax support schemes are an example of that. Indeed, Tameside council tells me that there is still no information from the DWP about how the so-called localisation of council tax benefit will be co-ordinated with the introduction of universal credit, particularly in relation to the sharing of data. It is potentially the same residents who will be targeted by the reductions arising from the changes to housing benefit, to council tax benefit and to the under-occupancy rules. It worries me that those same people are facing a squeeze on their tax credits.
That brings me neatly to where I started. Unless the Government get a real grip on these issues, the new system will fail, particularly in constituencies such as Denton and Reddish where, sadly, the damage could be lasting.
Jane Ellison (Battersea) (Con)
It is a pleasure to contribute to the debate. Needless to say, I do not share much of the scepticism of so many Opposition Members, who I fear are, in some cases, substituting extended concern about the detail, however right and proper, as a proxy for opposing the reform. Some of the support we have seen even for the principle of these reforms is half hearted at best. Given what we have heard in one or two speeches, one would have thought that this Government inherited some sort of welfare utopia in which all was working smoothly, nothing needed amending and only the uprating of benefits was necessary each year.
The situation we inherited was a complete shambles, which is apparent in a constituency such as mine. We are lucky in that many jobs have been created over the past decade in London, yet young people in my constituency have said to my face, “It isn’t worth getting a job; I’m better off sitting at home, playing on the internet and living on benefits”. If that is the case, we have to do something about it. The problem I see is an inter-generational one.
I have listened to many of the detailed speeches given by the hon. Member for Stretford and Urmston (Kate Green) in Public Bill Committee and elsewhere, and I know she makes many good points about the detail that have to be addressed, but this is also about committing ourselves to a principle, quite apart from the rising costs of the whole system. I have seen intelligent women in my constituency being infantilised and reduced to a position in which they do not even back themselves to manage their own finances monthly, and I have seen people with qualifications and degrees who have been out of work for a very long time.
Jane Ellison
I shall take just this one intervention, as we are running out of time.
Kate Green
No one is pretending that the previous benefit system was perfect, but we should equally acknowledge that for the overwhelming majority of people in it, work did pay more than being on benefits. One instance of how the system was effective in helping to support that is the fact that lone parent employment—mostly female employment—rose from 44% in the mid-1990s to approaching 60% today.
Jane Ellison
That intervention misses one essential point—that there were too many in the system altogether. We cannot go on as we are.
Concerns have been expressed about monthly budgeting and other issues, and it is right to look at them. One particular point I want to make in my limited time is about what I hope will be a real engine for creativity in respect of new products to help people. We cannot say that it is only a matter of providing advice services; we need to work harder as a society to create products that work for people who are vulnerable or less financially skilled and so forth.
I do not believe the point has been made this afternoon that there is a real opportunity for a degree of rehabilitation of the banking sector. I represent an area in Battersea where the Clapham sect was active between 1790 and 1830. Its members included Wilberforce and others who were great pioneers of social reform. Not every Member may know that nearly all the Clapham sect were from banking families. I was reminded of this fact by the vicar of St Luke’s church in my constituency this week. She is piloting a meeting to discuss how the world of finance can do more to help the poor and the vulnerable in today’s society, building on the work of the Clapham sect.
I think there is a real opportunity here for the banking sector to use some genuine creativity and to step into the breach and look at ways of providing practical assistance, putting something back into society in the form of serving vulnerable people who, to date, have largely not been catered for by proper banking products or the right support from that sector. It should not be all about the voluntary sector; there is an opportunity for people involved in banks to be true to some of the heritage of the social reformers who have gone before them. I am thinking about jam jar accounts and individual banking, which I know the Department is looking at, as they could prove to be important and life changing for many vulnerable citizens.
My main point is that the Labour party has got itself on the wrong side of this debate. I believe in the welfare state, which is one of this country’s most important and civilised achievements, but if we do not make it work, not just for the people in it but for society as a whole, and if we do not restore confidence in it, we fatally undermine something that represents, as I say, such an important and civilising aspect of this country.
Before I was an MP, when I was candidate, I received an e-mail that was rather similar to the letter my hon. Friend the Member for Gloucester (Richard Graham) told us he received. My e-mail was from a young woman who was a trainee nurse and lived on one of the tougher estates in my constituency. She was a single mum bringing up two children, and she wanted to work. Every morning, however, as she walked down the walkway on her estate, she was mocked, as people shouted at her through the windows of other flats. They said she was a fool to go to work and asked why she was doing it. It is absolutely appalling that we have created a situation in which someone like that, trying to do the right thing for her family, is mocked by the people around her.
Unless the Labour party puts itself on the right side of this debate and understands that we create and maintain confidence in the welfare state as an important aspect of our country by being on the side of that nurse who wanted to go to work and by ensuring that the system always works for her, it will find itself left behind in this debate. I applaud the Government for what they are trying to do. There are risks, and the Secretary of State has been open about them today—of course there are risks in major reform—but it is about meeting those risks head on and making the reform work, not about naysaying it before it has even started.
Yvonne Fovargue (Makerfield) (Lab)
Universal credit has been called a “welfare revolution”—the most ambitious, fundamental and radical change to the welfare system since it began. As with any language when revolution is mentioned, people are worried and concerned; and when they are worried and concerned about their future income and their benefits and want advice, where do they go? To the advice agencies—to the local citizens advice bureaux and the law centres, which have helped people in troubled times for more than 70 years.
What these worried and concerned individuals might not realise, however, is that the introduction of universal credit is happening at precisely the same time as some of the most destabilising and threatening cuts to our advice services are taking place. Welfare benefit cases are no longer eligible for legal aid, leading to a loss of specialist advisers. Many specialist advisers, who have often worked in the system for a long time, train the generalist advisers who often give their services for nothing, and they support them by explaining the intricacies of any new system. The specialist support unit has already gone and all its funding has been cut, so there is no one at the end of the phone to talk through the complexities and anomalies or to provide the training. Many centres are having to close their services due to the toxic combination of council cuts, legal aid cuts and other funding cuts.
I worked in a citizens advice bureau during the change from supplementary benefit, so I know that people come early and want their advice early. Advice agencies are already receiving a spike in inquiries. Even a modest change means that the number of inquiries goes up exponentially. Will the Minister set out the Government’s strategy on the role of independent advice provision? I also gently remind him that a strategy without the money behind it remains simply a vain hope. It is no use relying on Jobcentre Plus and the Benefits Agency or presuming that people will go there for advice, as those agencies are seen as an arm of government. People rely on their neighbourhood advice centres and people want an independent assessment of their benefit claim. The emphasis on claiming online will also increase the number of people requiring advice because only 17% of people deal with their claims online, and 31% of the poorest in society never use the internet at all.
I can remember that when the social fund was brought in, people had to go to Jobcentre Plus, which had a free phone for claims. Where in fact did they go, however? They went to citizens advice bureaux and the advice agencies, even though the free phone was available, because people go to the agencies that they trust.
I am concerned about the change in payments, too. What about the 20% of people who do not have access to a bank account? I remind Government Members that they voted down our amendment to the Financial Services Bill, which sought to make the banks provide socially responsible products for those who had been discriminated against. How will they be helped to open an account and manage their money, particularly when housing benefit will be paid to the claimant? Have the need for and availability of budgeting advice been considered, particularly during the switch to monthly payments?
The harsher sanctions regime is another concern, as the DWP’s own research has shown that vulnerable claimants have been more likely to be subject to sanctions. That has certainly been borne out by my own constituency experience. A severely autistic claimant was sanctioned for not attending to sign on, when his appointment had been changed three times in three weeks and the last appointment letter was received after the date of the appointment.
I have a number of concerns about the social and human cost—and also the cost to the public purse—of failing to ensure that there is timely access to expert advice. Introducing a revolutionary new system at precisely the time when the advice services report that they are facing a “perfect storm” of funding cuts is unfair to claimants, will not help those who administer the system, and will affect the most vulnerable. I urge the Government to consider the role of advice provision in the pathfinder areas, and to assess the need for and funding of that advice in the roll-out.
Mr William Bain (Glasgow North East) (Lab)
Let me begin with a statement on which there should be agreement throughout the House: a strong welfare state benefits all of us in society.
A growing body of evidence, extending from the International Monetary Fund to the Obama White House, shows that if we want to lift the current trend rate of growth, we need a fairer distribution of wealth across our society. We need more people to participate in the labour market, particularly the estimated 700,000 to 1.4 million women who are missing from employment in Britain in comparison with the rates in better-performing OECD countries. Our system of child care is less generous and more expensive than those of many of our trading partners in the European Union, and claims an ever larger share of take-home pay for many families. During the past 30 years the link between rising productivity and wages has gone and they have become decoupled, and that trend has accelerated over the last 10 years.
It is clear that there must be a wage-led recovery in living standards, with a living wage in the areas of the economy where it will work, and that companies must be made aware of the benefits to the whole economy of paying higher wages to their staff rather than increasing their short-term profit-taking. However, the role of the tax and benefits system will remain critical to a reduction in poverty, because from 2005 onwards the modest uplift in the living standards experienced by low to middle earners in Britain was exclusively due to the tax credit system. Other countries with better early-years education, which invested heavily in vocational education and skills, such as Denmark, and those with stronger collective bargaining systems in the workplace, such as the Netherlands, had even lower levels of pre-distribution poverty.
In principle, simplifying the tax and in-work benefits system by uniting them in a single integrated payment may have beneficial effects, but there is evidence that the Government are failing to address potential weaknesses in several key areas.
First, the system becomes more complicated for the growing number of self-employed people, and depends on access to the internet. In my constituency, where the poverty level is drastically above the national average, more than eight in 10 people do not have access to the internet at home.
Secondly, the current design of universal credit appears to penalise lone parents. Gingerbread understands that up to 4 million of them, including 1 million who are in work, will lose out under universal credit. Estimates suggest that 150,000 of the poorest single parents could lose up to £68 per week, which would push 250,000 children deeper into poverty. The situation appears worse when we consider the increasing competition for part-time work in a weak labour market. The rate of under-employment among women aged between 16 and 24 has risen by nearly 5% in the last four years, and for women aged between 35 and 49 the figure is nearly 4%.
Thirdly, universal credit does not put right the harm that the Government have already done in regard to support for child care costs. According to Save the Children, 56% of mums say that the main issue preventing them from working, or making them consider giving up work, is the increase in child care costs. However, parents on low incomes are already paying more than they used to because of the 10% reduction in the child care tax credit. The Resolution Foundation found that last year child care costs rose by 50% for some of those families.
Fourthly, the much-trumpeted rise in the personal tax allowance will be counteracted by universal credit, because people on low incomes who receive the credit will no longer receive a reduction in their tax bills. A £1,000 increase in the personal tax allowance will give £200 per year to every basic rate taxpayer except those on universal credit, who will gain only £70. They will receive only a third as much from any increase in the personal tax allowance as the rest of the population.
Fifthly, there is a risk that the withdrawal of “passported” benefits such as free school meals, and the lack of a second-earner disregard in the design of the credit, will create new cliff edges in the benefits system.
Finally, those who take jobs after being unemployed for more than six months will not receive an extra four weeks on benefits to smooth their transition.
The benefits bill is rising by £9 billion because of higher unemployment. I think it is clear that the Government should be focusing on that, rather than taking money away from—
Madam Deputy Speaker (Dawn Primarolo)
Order. The hon. Gentleman’s time is up.
Stephen Timms (East Ham) (Lab)
This has been a thoughtful debate which has covered a lot of important ground.
Let me begin by endorsing the concept of universal credit. It is a good idea to bring different benefits together. The last Government looked forward to a single working-age benefit, and the present Government are right to take that idea forward. It ought to make it possible to simplify the system, strengthen work incentives, and make those incentives clearer. It is in the task of translating those noble aspirations—which every Member in the Chamber has shared this afternoon—into reality that Ministers are struggling so badly. The Treasury is worried; the Prime Minister is worried, as we discovered from the reshuffle last week; and, as we have heard in the debate, people in the system are worried. The wheels are wobbling, and, as my right hon. Friend the Member for Birkenhead (Mr Field) pointed out, the public mood and, indeed, the mood on the Conservative Back Benches is becoming much chillier in regard to this initiative.
The first big thing that went wrong was the decision that the credit should not be universal after all. Council tax benefit, one of the most widely claimed benefits, has been left out. So we now face the prospect of a “not quite universal credit”. My right hon. Friend the Member for Southampton, Itchen (Mr Denham) rightly observed that that was not the fault of the Secretary of State, who wanted council tax benefit to be included. The Secretary of State for Communities and Local Government wanted it to be excluded, and unfortunately the Secretary of State for Communities and Local Government won. It is now becoming clear what a blunder that was.
As I mentioned earlier in an intervention, Welwyn and Hatfield district council is consulting on a 40% taper rate for council tax benefit, on top of the 65% taper rate for universal credit. If the council proceeds with that proposal, for every extra pound that people earn they will lose more than £1 of universal credit. That is precisely the kind of lunacy that universal credit was supposed to abolish. The idea was supposed to be that work should always pay. I think that that was supported by every Member who spoke today, and it was mentioned specifically by my hon. Friend the Member for West Dunbartonshire (Gemma Doyle). However, thanks to the success of the Secretary of State for Communities and Local Government in winning a row with the Secretary of State for Work and Pensions, it will not now happen. Every council in the country will have its own council tax benefit scheme and its own taper, so people’s work incentives will depend on their postcode. So much, sadly, for simplicity.
Mr Frank Field
Is my right hon. Friend not being too kind to Treasury Ministers? The moneys for the rebates will be limited, and it will be up to local authorities to meet existing need, let alone new need.
Stephen Timms
My right hon. Friend is absolutely right. The money is being cut by 10%, so councils must somehow come up with a scheme that will save 10% and will be introduced on a local basis. It will be chaotic. Many councils are saying that they will not be able to do it in time, and it will certainly mean that there will be no national taper that everyone can understand.
However, that is just the start of the problems. The project is not on schedule, despite what the Secretary of State said earlier. According to paragraph 21 on page 37 of his White Paper of November 2010, between October 2013 and April 2014
“All new claims for out-of-work support are treated as claims to Universal Credit. No new Jobseeker’s Allowance, Employment and Support Allowance, Income Support and Housing Benefit claims will be accepted.”
I believe that that is what my right hon. Friend the Member for Wentworth and Dearne (John Healey) was told. It is absolutely clear, but it is no longer true. A newsletter appeared on the Department for Work and Pensions website over the summer announcing that, in fact, that timetable will apply in only one Jobcentre Plus district per region. In all the other districts, the change will take place some time after October 2013 and by summer 2014. The timetable has slipped; it has been delayed from what was stated in the White Paper—I am delighted that the Secretary of State is back in his place. On the budget, to the end of the last financial year the project was due to spend £400 million. In fact, it spent £500 million. So it is already over budget, too.
I welcome what the Secretary of State said about online claims: he told us that the Department expects that at the beginning only about half of claims will be submitted online. That is a very significant change from what has been said until now in respect of the digital-by-default proposal. It would be helpful to know what will happen to the 50% who do not apply online. How will things work for them? When people have problems, who is going to help them? As my hon. Friends the Members for Denton and Reddish (Andrew Gwynne) and for Makerfield (Yvonne Fovargue) rightly pointed out, the introduction of universal credit will coincide with a drastic reduction in the availability of advice, just when people are supposed to be grappling with these new processes.
What about people’s documents? At the moment, people applying for housing benefit present their documents to the local authority. Where will they present them in future? Will people start turning up at jobcentres with their documents or will they be expected to post them somewhere—or will we no longer have the fraud checks that are currently built into the system?
This is supposed to be all about work incentives, but large numbers of people will find that their work incentives are worse. The Government apparently plan a simple income cut-off for free school meals. If people earn less than X, their children will be entitled to free school meals, but if they earn more than X, they will not. That is a disastrous new cliff edge—far worse than anything in the current system. It means that someone with three children who earns less than X will suddenly have to start paying out over £3,000 in school meal charges per year if their income increases above X by just a pound or two. That is a massive disincentive to people to increase their income.
We have been asking how Ministers are going to tackle this issue since March last year. We asked the Secretary of State when he would make up his mind when he gave evidence to the Welfare Reform Bill Committee. He said that
“during the Committee stage we should be in a much stronger position to make it much clearer how we will do that.”––[Official Report, Welfare Reform Public Bill Committee, 24 March 2011; c. 155, Q299.]
Some 18 months have now passed, and today the Secretary of State told us he is talking to various people about it. All this is supposed to be in place within 12 months from now and Ministers still cannot tell us what they will do, but it does appear that that very damaging feature will be part of the system.
I have asked about the publication of the business case. I believe that Ministers will not publish it because it projects that there will be no increase at all in the total number of hours worked as a result of the introduction of universal credit. In other words, the whole basis on which this project is being taken forward is flawed. That is partly because of the situation for second earners, which has been mentioned. My right hon. Friend the Member for Lewisham, Deptford (Dame Joan Ruddock) asked the Secretary of State what would happen to hours worked. He did not answer, and I think I have just explained the reason why. As my hon. Friend the Member for Stretford and Urmston (Kate Green) pointed out, second earners in a couple face sharply worse work incentives than in the current system. We are going back to an outdated male breadwinner model, where the second person in the couple is not expected to work.
As my hon. Friend the Member for Glasgow North East (Mr Bain) pointed out, incentives for self-employment are terrible, too. Tax credits have encouraged self-employment, but, under universal credit, the DWP will assume after the first year that people are earning at least the minimum wage for every single hour they are working in self-employment.
Nia Griffith (Llanelli) (Lab)
Does my right hon. Friend share my concern that the Federation of Small Businesses is saying that this will be a disincentive to people to get up off their backsides and start their own businesses and get going? That suggests that something is fundamentally wrong.
Stephen Timms
My hon. Friend is absolutely right, and that is because of the design that has been chosen. In July, the chair of the Low Incomes Tax Reform Group called for a rethink. He said:
“In many cases the income of self-employed earners will fall sharply making it, in some cases, uneconomic for them to continue to work.”
That is the opposite of what everybody in this debate has said universal credit is supposed to do, but that appears to be where we are heading. It is, I am afraid, a mess.
As you know, Madam Deputy Speaker, a great deal of care was taken over the design of tax credits to ensure that mothers receive cash support for their children. All those safeguards are deliberately being removed from universal credit, which will cause serious problems.
I very much welcome what the Secretary of State said yesterday about refuges. As we know, Refuge has been saying that it will have to shut all its domestic violence shelters. I am pleased that my hon. Friend the Member for Walthamstow (Stella Creasy) was able to secure a pledge from the new Home Office Minister, the hon. Member for Taunton Deane (Mr Browne), that he will lobby DWP Ministers on that point, but how are the costs of other kinds of supported housing to be met? The Government concluded a consultation on that in October last year. Another year has passed, and nothing definite has been announced, and in one more year this is all supposed to be up and running.
As has been said, we do not know anything about how in-work conditionality will operate. I have not even mentioned Her Majesty’s Revenue and Customs’ real-time information system for pay-as-you-earn. That is supposed to start from next April. Every company in the land is due to start reporting PAYE to HMRC not, as now, once a year after the end of the financial year, but every single month. The Government say it will all happen automatically through everybody’s computerised payroll systems, but what about small firms that do not have a computerised system? The Low Incomes Tax Reform Group says:
“Businesses will have to draw up two sets of accounts—one for HMRC, the other for DWP—and the latter will have to be done monthly, thereby massively increasing bureaucratic burdens.”
This is a mess. It has not been properly worked through. Key decisions have not yet been made. It is no wonder the Treasury and No. 10 are so worried. The House should be too, and should support our motion.
The Minister of State, Department for Work and Pensions (Steve Webb)
Almost 20 Members took part in the debate, and we are grateful to all of them. The high point was when my hon. Friend the Member for North East Somerset (Jacob Rees-Mogg) suggested that the contribution of my right hon. Friend the Secretary of State had been so definitive that we should have a parliamentary procedure under which the debate simply ceases and applause follows.
We have heard some powerful contributions. I was particularly struck by what Members had to say about the attitudes to work that they had encountered and the experiences of some of their constituents, as well as about the barriers to work. My hon. Friend the Member for Gloucester (Richard Graham) mentioned a letter he received before being elected to the House from someone who said she was demoralised by the fact that it did not pay to work. My hon. Friend said he came to this House wanting to do something about that, and he can be proud to be a part of a coalition that is doing something about it. My hon. Friend the Member for Battersea (Jane Ellison) mentioned the experience of a nurse who was heckled on her way to work for being stupid for going to work at all, because why would she bother? We have to end that situation. Although Opposition Front Benchers say they think work should always pay, they failed to deliver that when in office.
We must not lose sight of the big picture of this reform. We are bringing together separate strands into a single integrated system so that people do not have to go for their housing benefit to the council, for their jobseeker’s allowance to the DWP, and for their tax credits to HMRC. That will be good for tackling poverty, as it will lift many families and children out of poverty. It will also be good for tackling benefit take-up, because instead of having to claim several separate benefits, people will make a single claim. The suggestion that somehow the previous tax credits system was used as a model is absolutely extraordinary.
Someone said, “We all remember how terrible it was when people had their tax credits overpaid or under-claimed, or underpaid and claimed back.” That will come to an end because people will get the money when they need it. Under the real-time information, when their wage goes down, their tax credits—now their universal credit—will increase. They will not have to wait three years for a reassessment to claw back an underpayment; it will happen when they need the money. That is the way to tackle poverty.
Huw Irranca-Davies
The Government have justified their refusal to reveal the business case and, following an earlier intervention by my right hon. Friend the Member for Lewisham, Deptford (Dame Joan Ruddock), have declined to answer how many additional hours of work will be generated as a result of these changes. May I make things simpler? I ask the Minister: will these changes in the business case result in an increase in hours worked?
Steve Webb
I am grateful to the hon. Gentleman for bringing me to the issue of work incentives. It was central to this debate, so let me address the point directly. Two separate work incentives have been muddled together in this debate, including, I regret, by the right hon. Member for Birkenhead (Mr Field). The first is the incentive to take a job and the second is the incentive for those in work to work more hours. My right hon. Friend the Secretary of State, in introducing this debate, identified the fact that universal credit significantly improves the incentive to take a job. That is fundamental in order to move from a situation where, as we have heard, millions of people are in workless households where nobody is working. Of course the incentives for the second earner are important, but those for the first earner are even more important. We make no apology for prioritising them; we want far more households to have someone in work, which is why we have structured this as we have. We are therefore putting £2.5 billion extra per year, at a time when we are having to save on welfare, into in-work benefits, thereby improving the return to work. It must be the case that if we are spending more on in-work benefits, we are improving the incentive to work.
Mr Frank Field
Either the hon. Gentleman misrepresents me or I did not make myself clear. I said that, crudely, we are talking about three groups. The first is those who are unemployed and desperate to get back to work. The idea about incentives does not occur to them, as work is part of their DNA. We do not need to have reforms for them; we need jobs for them. The second group is those who regard their benefit as a pension, and no marginal increase in income is going to get them back to work. The third group is those in work who are deciding whether they will work longer, whether they will work harder and whether they will get new jobs. Will a scheme that puts their marginal tax rate up, as this one does for many people, actually be a work inducement?
Steve Webb
Let me deal with that point directly. Under the current system, people who are below the tax and national insurance threshold and get tax credits and housing benefit lose 79p in the pound—that will fall to 65p. Under the current system, people who are above the tax and NI threshold and get tax credits and housing benefit lose 91p in the pound—that will fall to 76p. Under the new system, there will be almost no one who loses more than 80p in the pound, compared with 500,000 people who do so now. What is not to like about that? This is good news for work incentives.
Stephen Timms
What is the Department’s assessment of the effect of the introduction of universal credit on the number of hours worked in the UK economy?
Steve Webb
As the right hon. Gentleman well understands, the impact on every individual will be different, so we have not used a specific figure for the number of hours worked. However, what I have demonstrated is that the people who face the biggest barriers to working more hours will see cuts in their marginal rates and the people who face the biggest barriers to working at all will get more return for working. So this is good news for work incentives. The right hon. Member for Birkenhead referred to the people facing an increase in their marginal rate, but that increase is by four percentage points, from a median of 41 to 45. That is the trade-off. We give people an incentive to take work and we tackle the most severe marginal rates, while some people face a four percentage point increase. That seems to me to be a good trade-off.
Quite properly, a lot of hon. Members raised the issue of internet access. We want to make it absolutely clear that the proposition is digital by default, so if we can get people in on the internet and online, we will do so. However, as the Secretary of State said at the start, we fully recognise that not everybody is online and not everybody will be, so the core planning for the universal credit contains provision for people who will not be online.
Some of the figures we have heard grossly distort the extent to which people of working age in the benefit population are online these days. The evidence suggests that 74% of claimants—not of the whole population, but of claimants—have home broadband and that 41% of claimants do internet banking. To hear the speeches we have heard in this debate, one would not think that these people even knew what a computer looked like. It has been suggested in this debate that we have to avoid patronising people on benefits, and that is absolutely right. We want to support people who are not online—jobcentres will play a part in that and we are talking to local authorities about it—but let us see this as an opportunity to get more people to be internet savvy, online and more employable. Let us not condemn people; let us give them opportunities and training.
The impact of this measure is very important, and the hon. Member for Stretford and Urmston (Kate Green) asked about the equalities impact. We will publish an updated equalities impact assessment with the final regulations after the autumn statement.
The hon. Member for Glasgow North East (Mr Bain) gave some bizarre figures about the impact of this reform on lone parents, and I do not know where he got them from. Lone parents gain from universal credit: 400,000 lone parents who rent will gain, as opposed to 200,000 who will have lower entitlement; there will be twice as many gainers as losers in that category. This reform will reduce child poverty, because we are spending huge sums of additional money at a time when money is tight. We are doing so because of our priority of making work pay.
We have heard discussion of the real-time information system, the fact that people’s benefit will be based on their current situation and the impact on business. This approach has been assessed as saving businesses £300 million a year. Those figures are signed off not by us, but by the Regulatory Policy Committee, which is a business-led organisation; they have been validated by business. Businesses are doing a lot of these calculations anyway, with the software doing it for them in most cases, but the streamlining of the system will save businesses cost overall. We are working closely with our colleagues at Her Majesty’s Revenue and Customs; there has been close working between the two Departments. The Department for Work and Pensions is represented in the governance of HMRC’s real-time information programme at every level, and the DWP and HMRC have jointly presented to Parliament.
The right hon. Member for Birkenhead, in another bizarre, overstated allegation, said that there has been a mass exodus of senior civil servants on the programme. That is completely untrue. The senior responsible officer, Terry Moran, whom he will know from years gone by, has held that role since November 2010. The programme director has been in place since August 2011. At HMRC, the senior responsible officer for the real-time information service has retired—we still allow people to retire, even under our policies—but has been replaced by someone from the DWP. So the suggestion that people are just walking out the door is nonsense and is scaremongering.
Steve Webb
I have got only two minutes, so I had better not give way.
We were asked about the position on domestic violence, an important issue raised by my hon. Friend the Member for Oxford West and Abingdon (Nicola Blackwood). It is an important issue in respect of provision for splitting payments, for example. The Government are absolutely committed to protecting those who are subject to domestic violence. For example, under universal credit, victims of domestic violence will be exempt from things such as work search requirements for a three-month period. Although shared payments would normally be appropriate, because we know that most households budget together, clearly we will make alternative arrangements in exceptional cases. We have therefore retained powers to split payments between members of a couple, for example, in cases of domestic violence. Details of those exemptions will be included in guidance.
We heard a large number of contributions and I cannot do justice to them all, but the key theme from Government Members has been a unified view that we must make work pay and that we should not listen to the naysayers. Frankly, it is always possible to get a newspaper headline by saying “Big Government IT project bound not to work”, because if it does work nobody will ever remember. That is always the way in which the Opposition conduct themselves, but we are in the business of making things happen. When my right hon. Friend the Secretary of State explained how closely he monitors the programme, he was not exaggerating. This project has probably had more hours of testing, evolution and making things work than any other with which I have been associated.
The hon. Member for Makerfield (Yvonne Fovargue) mentioned the 1988 benefit changes, which were a “big bang” change. Income support, supplementary benefit, family credit, the family income supplement and housing benefit were reformed all on a single day. This is a roll out over four to five years and we will get it right by doing it gradually, testing it, having pathfinders and bringing in groups one step at a time. We all saw what happened under the previous Government to the tax credit system when the changes were done in a “big bang”, but we will make this change gradually, get it right and make work pay, so we should reject the naysayers and reject the motion.
Question put.
The House proceeded to a Division.
Madam Deputy Speaker (Dawn Primarolo)
I ask the Serjeant at Arms to investigate the delay in the No Lobby.
Higher and Further Education
(12 years, 1 month ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
21:59 - The House divided: - Ayes: 224 / Noes: 285 - Question accordingly negatived.
Madam Deputy Speaker
We now come to the second debate. I have to announce that the Speaker has selected the amendment in the name of the Prime Minister.
Shabana Mahmood (Birmingham, Ladywood) (Lab)
I beg to move,
That this House notes with concern that September 2012 marks the first term where students will face the trebling of student fees to £9,000 a year; further notes that barriers are also being put up for vocational routes, with direct Government support for learners cut for level 3 courses and above, which includes apprenticeships and access courses to university, and with Higher Education-style loans being introduced, costing learners up to £4,000 a year; and calls on the Government to change course and, as a first step, reduce tuition fees to £6,000, funded by reversing the corporation tax cut for banks and requiring graduates earning over £65,000 a year to pay higher interest rates on their student loans.
In just over a week, university freshers weeks will kick off in earnest ahead of the new academic year. New students will soon start arriving at their institutions excited, nervous and full of anticipation and hope for their futures as they look forward to three, maybe four, of the best years of their life. They do so against a backdrop of confidence in the quality of our world-class higher education sector, which collectively will do all it can to give them the best possible higher education experience.
But this year is also markedly different, for this year we will see the first cohort of students who as a result of the Government’s action will be paying tuition fees of up to £9,000 a year and leaving university with significant debts which for some will exceed £50,000. Until the Government changed the rules of the game, higher education had been paid for by a partnership between the student and taxpayer since 1998, but this Government’s trebling of tuition fees in conjunction with their 80% cut in the teaching grant for universities represents a betrayal of future generations of students.
The partnership model for funding has been torn up, and students have been told to go it alone. They must bear the burden of the cost entirely on their own. We all know that this is not what the Liberal Democrats said they would do before the general election.
Mr Graham Stuart (Beverley and Holderness) (Con)
The hon. Lady is speaking fluently from the Dispatch Box, but she is doing our young people a disservice. She is scaremongering and sending them the message that they cannot afford university when the monthly payments are lower than they were before, the threshold before they start paying is higher than it ever was before and anyone who suffers illness, who is pregnant and stops working or has—
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. I am sure that the hon. Gentleman wants to catch my eye and make a speech later rather than waste time now.
Shabana Mahmood
If the hon. Gentleman had not decided to patronise me at the beginning of his intervention, he might have had enough time to complete his mini-speech. I will move on later to the record drops we have seen in the number of applications, including from mature students, and the increase in the withdrawal rate for students who have been offered university places but decided not to take them, which stands in direct contrast to the rather more rosy picture he is trying to paint.
As I was saying, the Liberal Democrats went into the 2010 general election promising to scrap tuition fees altogether—we all remember that famous pledge—but they broke their promise, and the trust of those who voted for them, and betrayed the students whose votes they courted so assiduously ahead of the election. I wonder how many of them will rediscover their pre-election principles in the Lobbies tonight. Although the Conservatives are no doubt pleased that most of the anger surrounding the betrayal on tuition fees has focused on the Liberal Democrats, they too have form, having previously voted against a rise in tuition fees to £3,000.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
I am grateful to the hon. Lady for giving way and congratulate her on her appointment. The motion
“calls on the Government to change course and, as a first step, reduce tuition fees to £6,000”.
As she knows, in Wales fees are substantially lower, and in Scotland there are no fees at all, so if right hon. and hon. Members from Wales and Scotland support the motion, are they in effect advocating an increase in fees to £6,000 in their respective countries?
Shabana Mahmood
Both the motion and our alternative proposal for the Government of a £6,000 cap on fees reflect our position as it relates to England, not the devolved Administrations. The Conservatives and the Liberal Democrats have played politics with tuition fees in the past, and it is students today who are paying the price.
Simon Hughes (Bermondsey and Old Southwark) (LD)
I am happy for us to deal with the allegations about what happened after we did not win the general election and therefore could not deliver what we promised, but I would be grateful if the hon. Lady would quickly confirm that Labour promised no tuition fees, but then introduced them, promised in its manifesto not to increase them, but then did so, and has now adopted tuition fees of £6,000. Will she confirm that that is entirely correct?
Shabana Mahmood
The right hon. Gentleman’s party went into the 2010 general election promising to scrap tuition fees at a time when they knew the country faced a difficult economic situation, so I am afraid that he cannot escape his own record by looking to much older Parliaments. We are talking about the burden of debt that this Government have placed on students, which is much more significant than anything they faced before.
Gareth Johnson (Dartford) (Con)
Does the hon. Lady not agree that there is something inherently right about those who benefit from having a degree paying for it?
Shabana Mahmood
The principle that those who benefit should pay a contribution towards their degree is absolutely right and one we support, but we believe that paying for higher education should be a partnership between the individual student who benefits and the taxpayer, who also benefits greatly from those going into higher education.
Andrew Percy (Brigg and Goole) (Con)
The hon. Lady might recall that I voted against tuition fees, and I am saddened that some of the things we warned about have come to fruition, but I struggle to understand why the income level of £65,000 has been chosen. How would that be funded, and when would the interest rates come in? If someone drops below that income level, would they fall back down? Can she also explain why the Labour party defends retaining child benefit for people on £65,000 but wants to land them with a higher interest rate on their student loans?
Shabana Mahmood
Our proposal that the Government should reduce the headline level of tuition fees from £9,000 to £6,000 is an alternative measure that they could introduce right now, paid for by not going ahead with the corporation tax cut for the banks. It would be a way for the Government to send a message to the country that they will support future generations of students, rather than saddle them with ever higher levels of debt. As for those earning £65,000 or more, that reflects earnings in each and every year of their working lives. All we are asking is that the wealthiest 10% of graduates pay a little more towards the cost of higher education in order to reduce the costs for those elsewhere.
Shabana Mahmood
I will make a little progress before giving way again.
The biggest impact has been on the number of applicants. Although applications for the coming term are still open, we already know that there are around 50,000 fewer applications to higher education for the coming year and that one in 20 18-year-olds who would have been expected to apply in previous years have not applied this time around, which represents a decline of around 15,000. I am told by the sector that total accepted applications are down by about 30,000 on last year. That is equivalent to shutting down two mid-sized universities—for example Imperial college and the university of Lincoln.
Shabana Mahmood
Not at the moment.
That is set against a backdrop of a worsening economic outlook as a result of the Government’s failed economic policies. The economy is in a double-dip recession made in Downing street. We know that there is a strong link between periods of recession and interest in higher education, as people seek to enhance their employability and competitiveness in difficult economic circumstances, but this year that is not the case. There is a massive drop that, combined with cuts in the number of places, will result in tens of thousands fewer students entering higher education in 2012. It indicates straight away the impact of the Government’s trebling of tuition fees. Students are being put off and are basing decisions not on whether a university education is right for them, but on whether they can afford it. That is a tragedy for both the person making the decision and the country as a whole, because if they miss out on higher education, we miss out by failing to capture their full potential.
Nadhim Zahawi (Stratford-on-Avon) (Con)
On affordability, will the hon. Lady at least admit that a graduate earning £21,000 will pay £45 less than they would have done under the system we inherited from her Government?
Shabana Mahmood
If the hon. Gentleman’s party took on board our £6k proposal, there would be an even more progressive system for future generations of students.
Cost is the real problem. The Centre for Economic Performance recently surveyed 12,000 teenagers and found that all the indications are that the hike in fees in late 2010 increased the perception that going to university is simply too expensive. That perception was significantly higher in comprehensive schools, compared with independent and selective state schools, and among children eligible for free school meals. If these perceptions influence effort at school or behaviour post-16, they will increase future socio-economic inequality.
Mature students are one of the worst affected groups, as many more are choosing not to go to university this year. The Government failed to take into account the effects of their policies on that group, and we have seen an 11.3% drop in such applications, making them the biggest group affected. There are around 30,000 fewer older applicants this year than last year.
Lisa Nandy (Wigan) (Lab)
Does my hon. Friend agree that, at a time when the Government are closing off opportunities for young people at every turn, with the axing of the future jobs fund, the abolition of the education maintenance allowance and youth unemployment now over 1 million, opening up these opportunities to young people from deprived backgrounds is more important than ever?
Shabana Mahmood
My hon. Friend makes an extremely powerful point. I agree with her comment and endorse it entirely.
Too often we in this House consider higher education issues through the prism of the 18-year-old undergraduate going to university for the first time. Although the experience of such undergraduates is of course incredibly important, we know from the figures that in 2009-10 more than a third of undergraduates entering university for the first time were 21 or older. The impact of the trebling of tuition fees on that group is particularly interesting, as their perspective and actual experience of debt and finance are very different. These are people who often have significant financial and family commitments, with mortgages to pay and child care costs. If they are making a decision to walk away from enhancing their skills by obtaining a degree, they are doing so on the basis of cost.
There is a much higher rate of withdrawals from the application process this year than last year—16% higher. At this stage, 13,138 students who are holding offers from universities have decided to withdraw from the process. That is an extremely worrying sign that students who had already made the decision to go to university are now being put off. Having attended open days, filled out applications and gone to interviews, they are now saying “No thanks.” Where will they end up? What are their prospects for the future given the record levels of youth unemployment and the ongoing recession?
Shabana Mahmood
Not at the moment.
Reading the Government’s amendment, one would think that there were no problems with their policy whatsoever and that it has had hardly any impact—further proof, if any were needed, that they are complacent and out of touch.
Shabana Mahmood
I am not going to take any more interventions at the moment; I will do so later.
The Government try to explain away the impact of their choices by saying that the drops in applications are due to the decline in the population of 18-year-olds. However, that does not get them off the hook because, as the Independent Commission on Fees pointed out in its recent report, in the rest of the UK, where the fees regime has remained the same, there has not been the same drop in applications.
Naomi Long (Belfast East) (Alliance)
It may be relevant to look at the applications of Northern Ireland students to Northern Ireland universities versus GB universities. While applications to Northern Ireland institutions have been consistent with previous years, this year applications to GB institutions have dropped by 14%. Even allowing for demographics, it is clear that students are choosing to stay at home and not to apply to university, perhaps in England specifically, because of the rise in fees.
Shabana Mahmood
The hon. Lady makes a very powerful point, and she is entirely right in her conclusions.
The Independent Commission on Fees found that in Scotland, Wales and Northern Ireland the number of applicants aged 20 or over increased between 2010 and 2012 while, by contrast, in England they fell by 12%. The number of younger applicants—those aged up to 19—fell by 7%, but by only 1% to 2% in the other home countries. Although population size could be a factor, the report found that the relative decline in English applications was much higher. That raises concerns about the impact of fees, because there are falls in the number of applicants both in absolute terms and relative to the rest of the UK.
Shabana Mahmood
I have taken an intervention from the hon. Member for Stratford-on-Avon (Nadhim Zahawi), so I give way to the hon. Member for Winchester (Steve Brine).
Steve Brine
They say that persistence always pays off. I thank the hon. Lady for giving way; she is being very generous with her time. She keeps saying that applications are down. At the university of Winchester, fees have increased from just over £3,000 a year to just on £8,000, and applications are up on last year. The main reason is that the graduate employment outcomes of students at the university of Winchester, with teacher training being one of the biggest parts of its business, are 97%. Does she accept that the key point is that it is up to higher education institutions to make the case for students to come and spend their money with them so that they will get the benefit from it?
Shabana Mahmood
I am glad that I gave another hon. Gentleman an opportunity to make a mini-speech. If only the experience of the whole of the higher education sector was the same as that in Winchester.
Shabana Mahmood
I am afraid not; I have no desire to respond to a Whips’ question.
The trebling of fees is not the only thing that this Government have done to destabilise and put at risk the quality of our higher education sector.
Mr Gareth Thomas (Harrow West) (Lab/Co-op)
Is there not another reason to be concerned about the current admissions data? For example, has my hon. Friend seen today’s report suggesting that even vice-chancellors of universities that have done reasonably well in applications continue to be worried about a decline in the number for humanities and languages?
Shabana Mahmood
My hon. Friend is absolutely right. There are worrying signs of perverse things happening as a result of the Government’s policies. Of course, there has been a focus on STEM subjects—science, technology, engineering and maths—which are very important to our continued economic growth, but that should not happen at the expense of modern languages or humanities. It is very worrying that we are seeing drops in the number of applications for those subjects.
Nic Dakin (Scunthorpe) (Lab)
Is it not true that the impact of Government policy is putting off not only UK students but, with the visa debacle, international students, and that that combination threatens to destabilise our universities to the detriment of individuals and UK plc?
Shabana Mahmood
I thank my hon. Friend for raising the subject of international students, which has been much in the news recently with the case of London Metropolitan university. I have written to the Minister for Universities and Science with some detailed questions about the handling of the London Met affair. I have yet to receive a response, but I very much look forward to it given that at last week’s Business, Innovation and Skills questions he ducked the opportunity to promise that no genuine international student at London Metropolitan university would be financially worse off. Perhaps he would like to intervene now to confirm that that will be the case—but I see that he is not going to do so.
Keith Vaz (Leicester East) (Lab)
I have met some of the students at London Met. It is not just a question of being financially worse off; some had come to the end of their degrees and had been asked to take re-sits when they were six weeks away from getting their PhDs. It is very important that no matter what the Government have done—they may have done the right thing; the courts will decide in the end—genuine students should not lose out as a result of their decision.
Shabana Mahmood
My right hon. Friend, who is Chair of the Home Affairs Committee, has been speaking up powerfully on behalf of genuine international students at London Metropolitan university, and I commend him for his efforts in trying to protect them from the impact of the decision to revoke its highly trusted status. He is absolutely right. Genuine international students who have paid huge sums of money for the privilege of a UK higher education and who have come to the end, or almost the end, of their studies at London Met should at least have been given the opportunity to continue and complete them there rather than have to scramble around to find an alternative institution that might take them. It seems entirely right that new international students are prevented from coming to London Met until these issues are resolved, probably through the courts system, but those who were already here and were genuine international students should not have had to suffer in this way.
This is one of the hardest years for universities, which begin the year 20,000 places down thanks to 10,000 places being directly cut by the Government and a further 10,000 being taken away because of the discredited, and frankly chaotic, core and margin policy. Core and margin was a deliberate attempt to force fees down—but crucially, not to benefit students but because the Minister got his sums wrong when he, the Business Secretary, who is sitting next to him, the Deputy Prime Minister and the Prime Minister were busy telling everybody that £9,000 would be the exception rather than the norm and that the average would be much more like £7,500. We now know that that is not how things panned out. To cover that up, and no doubt to get the Treasury off his back, the Minister introduced his core and margin policy. That policy does not put students at the heart of the system. First, it sends a dangerously conflicting message about the cost of tuition. On the one hand, the Government tell students that they can afford £9,000 a year because of the repayment terms, but on the other they try to show that cheaper courses are a good option for those put off by the top level of £9,000. It also acts as an inverse pupil premium. Incentivising poorer students to take up cheaper courses means that they are entering into a higher education experience with the least being spent on them, their learning resources, their activities and their institution. This undermines the Deputy Prime Minister’s pupil premium policy, and there is a risk that it will further entrench educational inequality in the UK.
Mr Thomas
Some of the cheaper courses to which my hon. Friend refers are clearly intended to be provided by commercial, for-profit universities. Why does she think that Ministers believe that commercial, for-profit universities should be regulated to a lower standard than mainstream universities?
Shabana Mahmood
I thank my hon. Friend for his question, which the Government have managed to duck through their refusal to introduce a higher education Bill in this Parliament. Frankly, they were taught a very hard lesson on the Health and Social Care Bill and other reforms that they have tried to make, so they have bottled it on higher education, which means that there are regulatory gaps in the system. I and others in the sector have warned that regulation is incredibly important to the reputation of our higher education sector, and that the Government should not miss an opportunity to ensure that the regulatory system for all providers of higher education in our country is robust and represents a fair and level playing field.
The core and margin model further undermines the idea of student choice. The policy makes a mockery of the Minister’s ambition to put students at the heart of the system, because it artificially takes places away from institutions that have high demand for their courses, to much lower-demand colleges. It is incoherent, hypocritical, bad for students and bad for universities. Alongside the core and margin model, the Government have removed a number of controls for recruitment at grades AAB as a result of the plan to go down to ABB next year. Again, the implementation of the numbers control policy poses a threat to the stability of the higher education sector.
John Healey (Wentworth and Dearne) (Lab)
My hon. Friend is making a very powerful critique of the chaos caused by recent policies. We have two very fine universities in Sheffield in south Yorkshire. Sheffield Hallam university has told me, just as she has said, that the problem is that
“the goalposts were moved often and late this year…This made it difficult for potential students to decide where they might want to go and difficult for Universities to be precise about what they could offer and how many places they had.”
Does my hon. Friend recognise those problems, which are being caused by the Government’s policies?
Shabana Mahmood
I thank my right hon. Friend for his intervention. In fact, I visited Sheffield Hallam university during universities week and the academic staff I met made exactly the same point to me. The way in which the Government have gone about making their changes to higher education, with the introduction of the core and margin model after applications had been made and after fees for the academic year had been set, was chaotic, caused universities no end of difficulties and is absolutely not the way to treat a world-class higher education system.
Last year’s estimate of the number of students who would fall into the grade AAB category was 20,000 lower than what transpired when the results came out a few weeks ago. That places a considerable burden on the student support budget, which cannot properly be planned, and risks exacerbating funding pressures on top of the points that my hon. Friend has made about Sheffield Hallam university.
There is a considerable risk that the nature of equivalent qualifications—a distinction for a BTEC, for example, will be counted in with the AAB-plus grading—means that estimates will be very difficult to calculate and are highly likely to be inaccurate. This adds yet more uncertainty and instability to a sector already fraught with upheaval. Institutions will lose out, budgets will not stretch, and services and support for students will be put under significant strain.
The early indication is that the policy is not working. The vice-chancellor of Southampton told the press last week that his university, which was meant to benefit from the AAB policy, has been struggling to recruit and is about 600 students down. I have visited Southampton university with my hon. Friend the shadow Business Secretary. It is an excellent institution and I am sorry to see that it is facing such difficult circumstances as a result of the Government’s ill-thought-out and ill-planned policies.
On the heels of the trebling of tuition fees and the scrapping of the education maintenance allowance from 2013-14, the Government are withdrawing the support that they offer for people aged 24 or over who take A-level equivalent courses and above, and are introducing a system of loans for further education students. These could be as much as £4,000 a year. Course fees are expected to rise dramatically as colleges look to recoup the money they lose from Government funding. At present, the Government provide about 50% of the funding for such courses, so this mirrors the problems that occurred as a result of their disastrous changes to higher education loans. According to the Skills Funding Agency’s figures, about 376,000 people took such courses in 2010-11. The changes could have a real and damaging effect on social mobility and on individuals’ career and job prospects. It is an attack on aspiration and on people trying to get on. Many of those taking level 3 qualifications missed out on the opportunities the first time around and may come from disadvantaged backgrounds.
Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
The further education college in my constituency, Hackney community college, provides a lot of support to precisely those people whom my hon. Friend is talking about—people who did not receive education the first time around and who now often have children. Now they have to make a choice about whether they can commit to a course for three years and I fear that many will choose not to. Does my hon. Friend have any further comments on the Government’s policy in that regard?
Shabana Mahmood
I thank my hon. Friend for her intervention. She is absolutely right. As I have said, choices that are being made on the basis of affordability represent a tragedy not just for the individual making them, but for us as a country, because we are missing out on their potential at a time when we should be investing in our education and skills base. In a highly skilled economy we need our people to have high-level skills. This Government are creating circumstances in which that will not be possible in the future.
This Government’s policies will affect level 3 apprenticeships for those aged 24 and over. The added costs could act as a deterrent for potential apprentices and the added bureaucracy could put off businesses from offering places.
A high percentage of learners are also enrolled in courses directly related to, or benefiting, public services. For example, just over 90,000 learners were enrolled in courses in health, public services and care, and over 45,000 in those for education and training. Sixty three per cent. of those affected are women. A drop-off from those numbers would hit local services, and local economic growth prospects could hit the productivity of the public sector and the life chances of tens of thousands of adult learners. The policy will also affect those taking courses in science, technology, engineering and maths when we need more people, not fewer, to take STEM subjects in order to compete in the world with new technology and new industries.
As with higher education, the Government’s policies on further education take us in the wrong direction on participation and social mobility. We are mindful of the impact that the trebling of fees is having on students and would-be students, so this time last year we suggested an alternative to the Government. We have called on them to cut the tuition fee cap to a third, to a maximum of £6,000. We have proposed a fully funded way of doing that, paid for by not going ahead with the corporation tax cut for the banks and through some additional payments by the wealthiest graduates.
Pete Wishart (Perth and North Perthshire) (SNP)
The hon. Lady is being very generous in giving way. We know now the difference between a Labour tuition fee and a Conservative tuition fee—it is £3,000. She says that the proposal will be funded by reversing the corporation tax for banks. Does that include Scottish financial institutions? Why should they pay for a cut in tuition fees for English students?
Shabana Mahmood
No, I will not, because I must wrap up. Under our alternative package, the top 10% of earners—those with average incomes of £65,000 or more over their working lives—would pay more, but research from the House of Commons Library has shown that all other income groups would be better off under this package. Universities would receive funding to compensate them for the loss of income from lower fees and the package would be revenue-neutral. The important point is that the headline level of debt carried by students would be significantly lower and would avoid the harm to families and graduates that would be caused by the Government’s plans.
Tonight’s vote is the last opportunity before the new academic term begins for this House to force the Government to change course on their trebling of tuition fees and to give hope to future generations of students that we as a House are prepared to prioritise them and their future; that we will not abandon them; that we understand that we need to provide them with ladders of opportunity, not kick them away; and that we will do whatever we can to help them fulfil their aspirations. If they are allowed to succeed, we as a country will succeed, and I commend this motion to the House.
Mr Deputy Speaker (Mr Lindsay Hoyle)
I warn Members that I will have to introduce a seven-minute limit on speeches, and that that will have to go down later on, due to the amount of time that we have.
The Minister for Universities and Science (Mr David Willetts)
I beg to move an amendment, to leave out from “House” to the end of the Question and add:
“congratulates all those who have recently achieved their educational qualifications; notes the number of full-time higher education students in 2012 is expected to be higher than in any year under the previous administration; believes that the pupil premium, which is designed to raise the attainment of pupils from low-income households, represents a powerful mechanism for widening participation in higher education; welcomes the increased spending on widening participation in higher education, including the higher maintenance grants, the National Scholarship Programme and the extension of tuition loans to part-time students; further notes the Institute for Fiscal Studies’ recent finding that the new student finance system ‘is actually more progressive than its predecessor: the poorest 29 per cent of graduates will be better off under the new system’; supports the extra information provided to prospective students through the student finance tour and the Key Information Set; further supports the efforts being made to ensure the best possible match between students and institutions, with one-quarter of all undergraduate places removed from centralised number controls; and congratulates the Government for working with employers to deliver an unprecedented increase in apprenticeships, with 800,000 new starts since September 2010.”
I welcome this opportunity to debate our reforms to higher and further education. It is the right time to have this debate, as hundreds of thousands of students are starting at university. We congratulate them on their achievement and wish them well at university. We also welcome this opportunity to set out our policies. I will describe our approach to higher education and my excellent new colleague, the Under-Secretary of State for Skills, my hon. Friend the Member for West Suffolk (Matthew Hancock), will set out our approach to training and further education.
Mr Willetts
In a moment.
Of course, it is also right to scrutinise the Opposition’s policies, as set out in the motion. I will turn to the previous Minister for universities, the right hon. Member for Tottenham (Mr Lammy), in a moment. I hope he will accept that under the inevitable partisanship of these exchanges, we should remind ourselves that all three political parties, faced with the dilemma of how to finance higher education in the future, have concluded that the right way forward is to have no up-front payments by students, but instead to have a graduate repayment scheme, paid for through pay-as-you-earn and incorporating the best features of a graduate income tax. All three parties, when faced with the responsibilities of Government, have reached the same decision.
Mr Willetts
We have published our White Paper and have set out our proposals in several consultation documents. We are implementing those proposals step by step.
Shabana Mahmood
The Minister has tried to defend his £9k policy, but has avoided saying anything about the 80% cut to teaching grant funding, which has necessitated the trebling of tuition fees to £9,000 a year. What does he have to say about that?
Mr Willetts
That leads me on neatly to setting out what our reforms are accomplishing. The first thing they are accomplishing—[Interruption.] The hon. Member for Birmingham, Ladywood (Shabana Mahmood) will have to be patient, because I am going to set out the figures for her. Our reforms ensure that students will continue to get well-funded higher education, while at the same time—we make no apology for this—saving money for the Exchequer, because of the fiscal crisis that we inherited from the previous Government. The total amount of cash going to universities to pay for the teaching of students is £7.2 billion for 2011-12, £7.4 billion for 2012-13 and £7.9 billion for 2013-14. We are increasing the amount of cash available to finance the education of university students, while significantly reducing the Exchequer contribution.
Contrary to what the Opposition spokesman said, we are maintaining a partnership between Exchequer funding and private funding. The latest OECD figures, which were published yesterday in its excellent education handbook, estimate that approximately 40% of the costs of educating students will be met directly by the Exchequer. The other 60% does indeed come not from students, but from graduates when they can afford to pay it back. That is a sensible way of financing higher education in an age of austerity.
As well as providing more cash for universities while saving money for the Exchequer, our second achievement is increasing the choice and flexibility in the system by liberalising the controls over numbers that we inherited. We have started that this year with our liberalisation for AAB students. We estimate that approximately one in four students will benefit from the freedom of choosing a university without any of the old corporatist controls on the total number of places at individual universities that we inherited. We are proud to be going further next year by including ABB students, meaning that one in three students will enjoy those freedoms.
Mr Willetts
I want to make some progress, but I will of course give way to the Opposition spokesman for a second time.
Shabana Mahmood
I thank the Minister for giving way a second time. Will he remind the House why he had to introduce his core and margin model? Does he remember telling the House on many occasions that £9k fees would be the exception, not the norm?
Mr Willetts
I did not recognise what the hon. Lady said about fees of £7,500. I have explained to the House many times the basis of the calculations. We introduced the policy to bring more diversity into the system. There are local further education colleges across the country that, for the first time, will be able to offer higher education, financed out of our core and margin policy, which is to be welcomed.
We have therefore increased choice and flexibility. We have also transformed the amount of information that is available for prospective students, which we believe will drive up standards in universities as prospective students think about what contact hours they will have, what the class sizes will be, how universities score on the national students survey and, crucially, how universities score on employment outcomes for graduates.
Indeed, this morning, I joined Which? at a London comprehensive for the launch of its excellent new website, which offers far more information to prospective students than ever before. It was a great moment. It was also a pleasure to be joined by the president of the National Union of Students. The NUS is working with Which? to provide better consumer information for prospective students.
Mr Andrew Smith (Oxford East) (Lab)
If the information that the Minister is giving out is so good, why are withdrawals from the application process up by 16%? Does that not show that the more information people get about the costs that the Government have imposed, the more they are put off?
Mr Willetts
No. I think that we have succeeded in getting across to prospective students the important message that they do not have to pay up front to go to university. I hope that all Members from all parts of the House, regardless of their views on the fees, will agree that we should all communicate the message that no student pays up front and that they pay back only as graduates. I pay tribute to the enormous efforts of my right hon. Friend the Member for Bermondsey and Old Southwark (Simon Hughes) in that regard.
Emily Thornberry (Islington South and Finsbury) (Lab)
I wonder whether the right hon. Gentleman will help me communicate a message to one of my constituents, who is here legally as an overseas student. He is unable to go into the third year at London Metropolitan university because, for some reason, he is no longer allowed to go there. He wishes to pay the fees and wants to complete his degree. Will the right hon. Gentleman help me convey to him why his education has been so abruptly and unfairly stopped?
Mr Willetts
Several points have been made about London Met, so let me explain the latest position to the House. I fully understand that there are genuine overseas students who are here legitimately and who need as much assurance as we can offer them about their ability to pursue their studies. That is why we set up a taskforce on the day that the UK Border Agency took its operational decision. The taskforce has met several times. It is led by the head of the Higher Education Funding Council for England and other bodies are involved. Next Monday, as a result of the efforts of the task force, there will be a mini clearing procedure. We are collecting offers from universities around London and elsewhere of places on particular courses, which will be available to overseas students at London Met. I will be happy to keep the House updated, in whatever way is suitable, as the taskforce makes progress in ensuring a fair deal for overseas students.
Tristram Hunt (Stoke-on-Trent Central) (Lab)
Why did the Department for Business, Innovation and Skills not stand up to the Home Office and the UK Border Agency, and not stand up for British universities and their reputation around the world, by not allowing this crazy decision to go ahead, which is doing untold damage to this world-class industry?
Mr Willetts
It was an operational decision by the UK Border Agency, for whom the matter is very clear. Highly trusted status, which is enjoyed by individual universities, is highly prized and brings heavy responsibilities. UKBA’s assessment, independently made, was that London Met was not meeting the responsibilities that it needed to in order to have highly trusted status. In those circumstances, it was unable to advise Ministers that the situation should be allowed to continue. That is the background to the decision, but we are focusing on ensuring the best possible support for legitimate overseas students as constructively as we can.
Simon Hughes
Does the Minister agree that we need to persuade everybody to get the message across not only that there are no fees to be paid up front or while at university, but that there are still places available not just for first-time, 18-year-old students but for more mature students? We should also encourage people to consider university not as the only option in the weeks ahead but as one option.
Mr Willetts
My right hon. Friend is absolutely right, and that leads me to my next point.
Another feature of our reforms is that we have done everything to encourage students from the widest possible range of backgrounds to continue to apply for university. I remind the House of the figures, which the Opposition spokesman carefully ignored in her lengthy speech. The percentage of applications to university by young people has indeed fallen—I accept that—to 31.6% from 32.6% last year. Last year’s rate was the highest on record, and this year’s is the second-highest on record. It is a higher rate of university applications than in any year when the Labour party was in government. I believe that that is because we have successfully communicated to young people that they will not have to pay up front to go to university. Of course, we are also increasing maintenance support for students at university this year. The maintenance grant and support for bursaries are going up. That is why we still have record rates of application to university, and we should celebrate and remember that fact.
Steve Brine
Given that the Minister inherited a commitment to cutting £600 million from the budget, what would the outcome have been if he had not taken the decision to base university financing on a system of student fees and loans? Presumably it would have been a dramatic drop in numbers and my having to say to thousands of my constituents, “Sorry, university’s not for you.”
Mr Willetts
We inherited from the previous Government a simple line in the 2009 autumn statement announcing £600 million of cuts in higher education, science and research. Absolutely no work had been done about where the cuts should be and how they should be delivered, but they would have meant either falling student numbers or less support for science and research. We have been able to offer cash protection in a ring-fenced science budget, and as I showed the House earlier this evening, there has been an increase in the total funding available for teaching in our universities. To achieve that when we are facing the severe financial problems that we inherited from the previous Government is evidence of our commitment to opportunities for young people and to universities and research.
That is exactly what the outside experts say. For example, I remind the Opposition spokesman of the assessment by the Institute for Fiscal Studies. It stated in June:
“The HE funding regime to be introduced in England in September 2012 will be substantially more progressive than the current system. Roughly the poorest 30% of graduates, in terms of lifetime earnings, will be better off…than under the current system…Universities will also be better off, on average, and the taxpayer will save around £2,500 per graduate.”
Only yesterday I met the head of the education division of the OECD, who was here to launch “Education at a Glance”, its annual publication. He described our system of repaying loans as
“the most advanced system in the OECD”,
and added that
“probably no system does it better.”
That was what the impartial head of the OECD’s education division said yesterday.
Mr Willetts
I hope that the hon. Gentleman will agree that he should endorse the assessments of the IFS and OECD.
Tristram Hunt
While the Minister was having that conversation, did the OECD back the Government’s strategy of an 80% cut in the teaching budget at a time when every other major nation is investing in education and higher education and thinking about those industries as part of the future rather than cutting them? We are in the same bracket as Romania.
Mr Willetts
The OECD actually believes that our proposals are a way of continuing to ensure that a good number of people go to university even when we are having to save Exchequer funding. It believes that other countries can learn from our model.
I have set out our policies, and I should like to turn to the Labour party’s policies, about which the hon. Member for Birmingham, Ladywood said surprisingly little in her lengthy speech. We know from the motion that Labour’s policy is £6,000 fees. There is a long and unhappy history to Labour’s higher education policy. I will not take her through the whole of it, although I am tempted. I will jump straight to where we are at present, as stated in the motion and in the longest single statement of Labour’s policy that we have found, the speech by the shadow Secretary of State on 2 December. His explanation of that policy took up a tiny fragment of the speech, a few lines. It was the type of fragment of text that academics in our universities love to pore over. He said:
“I’ll explain how this works: reducing the maximum level of fees to £6,000 while compensating universities for the difference costs £1.1 billion.”
That was his starting point. Well, the Department’s official costings show that his policy of bringing fees down to £6,000 would cost £2 billion. That £2 billion is currently going to our universities to pay for the education of students and for outreach, bursaries and access programmes that we thought Labour supported. He would take away that £2 billion of funding for higher education. He claims that he would miraculously be able to finance that, although admittedly he would only have £1.1 billion so he is £900 million short already.
Let us go through how the shadow Secretary of State claims he would plug that gap. He stated:
“£350 million will come from automatic savings from reducing the cap to £6,000 because it will mean some associated expenditure, such as on as fee waivers, will no longer be required”.
The trick is in the words “such as”, because it is not just fee waivers. Let us be clear about what that “associated expenditure” is. It is programmes to assist with student retention; outreach programmes whereby universities go to local schools and encourage students to apply to university; and bursary programmes financed out of the higher fees to offer our students increased financial support. I have a simple question for the hon. Member for Birmingham, Ladywood. I have already permitted her to intervene twice, and I will do so again. Can she offer a guarantee that no student at university would be worse off as a result of the changes that she would make to save that £350 million?
Shabana Mahmood
I am very happy to intervene on the Minister, and I can absolutely guarantee that. What he is missing in his desperate attempt to attack the much more progressive £6,000 fee proposal is that it would automatically obviate the need for quite so many fee waivers and bursaries created by his more expensive system of tuition fees.
Mr Willetts
That is a very confusing intervention. First, the hon. Lady said that she could guarantee that nobody would be worse off, then she said that Labour’s policy would obviate the need for bursaries. Let us be absolutely clear that no student will pay fees up front. They will be paid by graduates. Bursaries matter because they are cash for students now. Is she pledging that the extra money from fees above £6,000, some of which finances bursary programmes and extra support for students, would continue after fees were reduced to £6,000? Yes or no? Would all bursaries be preserved?
Shabana Mahmood
The position of bursaries would be unaffected under the £6,000 proposal. We are saying that the additional cost incurred by moving to £9,000 tuition fees would be brought down. We would not need quite so much money, because people would not have the same level of debt.
Mr Willetts
We are talking about future graduate debt, and the House is noticing that the hon. Lady is wriggling on the issue. We are saying that the extra funding helps to pay out cash for students at university through higher bursaries that are paid for out of revenues from higher fees. Students will have observed the failure of the Labour party to commit to maintaining that money.
Let us look at the next item that will supposedly meet those losses. We have established that the cost is not £1.1 billion but £2 billion, and that £330 million of that already comes from a set of measures that students will dislike. The shadow Secretary of State went on:
“£300 million comes from cancelling the Government’s planned cut to the corporation tax on the banks”.
That is the next extraordinary device that he thinks will help him save that money. Let us be clear: this Government have introduced a bank levy to raise at least £2.5 billion a year. That was set out by the Chancellor in the 2012 Budget, to take account of the benefit to the banking system from additional reductions in corporation tax on banks. In other words, we are already raising this money; we are already collecting extra money from the banks through the banking levy which is to offset the effect of lower corporation tax. There is no reduction in the taxation on banks that the Labour party could use to pay for this policy; the banking levy is extracting that funding.
If any Member of this House were remorseless in ensuring that every pound of revenue was extracted from our banks to contribute to education and other purposes, it would be my right hon. Friend the Secretary of State. We are already extracting a large amount of money from the banks, and it is evidence of the bankruptcy of the Labour party’s thinking that when faced with any problem or public expenditure challenge it keeps claiming that it can meet the cost by taxing the banks. The evidence shows that the funding is simply not available to pay for it.
Reversing the VAT increase—£13.5 billion—is supposed to be met by taxing the banks. The Opposition have called for more capital spending—£5.9 billion—which will supposedly be met by taxing the banks. Reversing the child benefit savings of £2.5 billion will apparently be met by taxing the banks. Reversing tax credit savings—£5.5 billion—will be met by taxing the banks. They want more regional growth funding, and now we learn their plans for universities as well. There is simply no way in which taxing the banks will solve the gaping black hole in the Opposition’s financial proposals, and we will not let them get away with it.
Mr Willetts
Let me continue to make progress.
The final item, and the biggest on the shadow Secretary of State’s list, is in some ways the most curious. Some £500 million is to come from the top 10% of graduates. I quote the shadow Secretary of State, who wishes to ask
“graduates earning over £65,000 in each year of their working life—to pay more through a combination of a higher interest rate…and to continue to pay for an additional two years.”
That is £65,000 in each year of their working life. The shadow Secretary of State is possibly the only person in the Chamber who could have imagined earning £60,000 a year in each year of his working life. The idea that a levy on people earning £60,000 in each year of their working life could raise £500 million is absolutely incomprehensible. Does the Labour party perhaps mean that when someone’s earnings eventually reach £65,000, they will be charged a higher rate or be charged retrospectively? Again, however, there is no way in which such a measure could raise anything like £500 million, not least because in a free and voluntary system in which we have—quite correctly—protected the right of people to make early repayments of their loan, people whose earnings are heading that way will simply repay their loans. The idea that they will find themselves trapped in penal repayment terms when they are earning over £65,000 a year is complete fantasy. There is no £500 million.
I am, incidentally, offering the hon. Member for Birmingham, Ladywood a free briefing on her policy, and I hope she appreciates how helpful it is. I am trying to explain it to her. In addition, if she were to move to anything like the commercial terms envisaged by the Opposition, consumer credit legislation would come into force and she would find a whole host of new regulatory requirements placed on her scheme that it would not be able to meet because of the design of the scheme that we inherited from the previous Government. It would simply become unworkable. There is no £500 million to finance the Opposition’s proposal, and they have no way of financing fees of £6,000.
Mr Thomas
Perhaps I can bring the Minister back to the Government’s own policy—or lack of it. Perhaps he will explain why it is fair for a student and their family to be able to probe the offer from a mainstream university using freedom of information legislation, but not that of a commercial, for-profit university.
Mr Willetts
It has come to a pretty pass when a loyal Opposition Back Bencher has to help those on the Front Bench by diverting attention from his party’s own policies, but that is what it has come to. The fact is that there is a black hole in the Opposition’s accounts, and we need to know whether they will cut £2 billion from resources that are now going to our universities. How are they are going to provide an extra £2 billion that is financed properly and honestly, and not by the slick accounting tricks used in the only attempt that they have so far made to explain their policy?
George Freeman
The Minister is famously well read, and I wonder whether he saw the comments made by Lord Mandelson in his paperback autobiography. He said that when he launched the Browne review in November 2009, he
“assumed, as the Treasury did, that the outcome would have to include a significant increase in tuition fees. I felt that they would certainly have to double.”
Is not the truth that dare not speak its name on the Opposition Front Bench that the Labour party would have doubled fees had it stayed in power?
Mr Willetts
I do recall that vivid and frank admission from the former Secretary of State.
The final irony of the Labour party’s proposals is that it is not at all clear what purpose they achieve. Let us be clear: there is nothing in those proposals for students who are currently at university; there are only risks. There are risks of having less money to pay for the student’s higher education, and, as we have seen, of less money for their bursaries. There seems to be no proposal to change the repayment terms of the scheme—9% on earnings above £21,000—and there is no reduction in the monthly repayments that graduates pay. There is, therefore, nothing in those proposals for people in their 20s or 30s; it will simply mean that they end their repayment period a bit earlier than they would otherwise have done. There is absolutely nothing for recent graduates.
Therefore, there is nothing for students, nothing for recent graduates because monthly repayments are not reduced, and there is no help for the poorest graduates, the one third who are better off under our scheme because we fully accept that they will not be able to repay the full amount under the current scheme. The Opposition managed to spend £2 billion that they do not have, with no help for students, no help for recent graduates, and no help for the poorest graduates. That is an extraordinary achievement.
I do not know which bit of the policy-making process produced this proposal, but the Opposition really need to do better. Just possibly, the Leader of the Opposition recognises that problem. In September last year he was asked on the “Andrew Marr show” about his policy, and about the status of the commitment to £6,000 and whether it was a policy that the Labour party would take into the next election. He said:
“The status is that it’s something that we would do now, that it’s something we’re committed to. But the manifesto’s three and a half years away. We'll announce the manifesto”.
It does not even look as if the Leader of the Opposition believes that that policy will ever make it into the Labour manifesto, and after what we have understood about it in today’s debate, I am not at all surprised.
Mr Nicholas Brown (Newcastle upon Tyne East) (Lab)
It is a pleasure to follow the Minister. He entertained the House enormously as he distracted attention from the core point of the Government’s policy and did his best to misrepresent the Opposition’s policy, so much so that he chided my hon. Friend the Member for Birmingham, Ladywood (Shabana Mahmood) for trying to draw his attention back to the Government policy he is supposed to be defending. If that is the most terrible charge the Minister can make against my hon. Friend, surely his case is weak.
Before coming to my core concern—the level of student debt—I should congratulate my hon. Friend on how she opened the debate for the parliamentary Labour party. It is a pleasure to follow her, just as it is a pleasure to follow the Minister. He did his best to distract attention from his policy and to misrepresent the Opposition’s policy. At one stage I thought he was praising—almost sincerely—the Secretary of State; next he will be writing “Focus” leaflets to deliver around the House of Commons. I have too much respect for the Minister to encourage him to go down that sad and sordid road.
My key point is this: my objection to the student fee contribution arrangements being introduced in this academic year is that the required student contribution is too high. It is as straightforward as that. I am not quarrelling with the Minister over the repayment mechanism: he is right that there are common themes between the Labour party and Conservative party positions, but whatever the arguments about establishing competition and a marketplace through different student fee contributions might have been in theory, the fact of the matter is that the annual student fee contribution for most courses has remorselessly settled already at the ceiling of £9,000 a year.
To that we must add the cost of student maintenance, including rent, and the cost of necessary books, equipment and visits associated with the course. Annual living costs for students are expected to reach £11,000 this year, which is £910 a month—the cost was £561 a month in 2004. With fees, that amounts to around £20,000 per year. That is too much money for young people to carry as personal debt. Of itself, it is unjust.
Other things in life require debt in early adulthood: a starter home and the accompanying mortgage, or perhaps a loan to set up a small business as a new entrepreneur. Any lender will take the student debt into account when looking at the potential for repayment. The 30-year repayment period means that debt follows the young person well into middle age.
The Government’s new regime has brought about a rather obvious response. Before the introduction of the new regime there was a burst of applications, but this year university applications are down by 8.7%. The situation is particularly pronounced in the north-east, which I have the honour to represent—applications are down by 11.2%—and among the poor.
The Office for Fair Access tells us that despite substantially larger bursaries at Cambridge than at Northumbria university, Northumbria’s proportion of students from poor backgrounds is around four times higher than Cambridge’s proportion. That, too, is unjust. Young people are having the opportunity to be everything they could be priced away from them.
Sir Alan Beith (Berwick-upon-Tweed) (LD)
Will the right hon. Gentleman give way?
Sir Alan Beith
The right hon. Gentleman and I share an interest in Northumbria university, where there are a large number of part-time students. Under the Government’s scheme, they will be given access to repayment facilities that they did not have before.
Mr Brown
I accept that. I am sympathetic to features of the Government’s scheme, and we would find agreement and consensus on other aspects, including those to which the Minister referred. My objection is to the total debt. My contention is that £20,000 a year is just too much money for a young person to take on. The right hon. Gentleman knows that there will be a similar feeling among his constituents, who are no more affluent than people in the community I represent.
For those trying to get into higher education, the situation is exacerbated by the loss of something like 15,000 student places—that is the only election pledge that the Liberal Democrats have actually kept. Young people from economically poorer backgrounds look instead at going directly into employment and making their way without a degree and the accompanying mandatory debt. Even if they do so, the cards are stacked against them, because graduate entry is now much more of a requirement for careers that used to be open to non-graduates.
The argument for the fee contribution is that graduates, over a lifetime, will earn more than non-graduates, and so should make a contribution to their education costs. I accept that, but the argument is about how much of a contribution they should make. Not all graduates will find well-paid jobs. Graduate recruitment is currently running at 6% below pre-recession levels, if we take the high point of 2007, and for every graduate job advertised there is an average of 52 applications. One in five graduates is unemployed.
The remedy seems clear enough: we should cap the fee contribution. The Labour party has pledged to set a cap at £6,000, and to go further in reducing the cap if the reduction is affordable. I say that we should go further and we should face up to the fact that it must be paid for.
The Secretary of State for Business, Innovation and Skills has very little room for manoeuvre in his departmental budget. To achieve his share of the cuts, he has shifted costs from the state to the students in higher education and abolished the regional development agencies, which were the principal regional economic development arm. His Department has cut university teaching budgets by 47% in real terms, from £7.1 billion to £4.2 billion. Combined with the increased subsidy element of student loans, that results in a real-terms cut in higher education funding, excluding research, of 23%, from £8.8 billion to £7.5 billion by 2015.
Dr Wendy Piatt, the director general of the Russell group, warned today that the UK has fallen behind countries such as Mexico, Russia and India in investment in higher education as a proportion of gross domestic product.
We must look outside the Secretary of State’s Department to find the savings dramatically to reduce the cap on student fees. The renewal of Britain’s independent nuclear deterrent and a new generation of Trident submarines are unaffordable and unnecessary public expenditure, not the higher education of our nation’s young people—[Interruption.] To respond to the Minister, at least I can say how I would pay for it.
The coalition Government have made a different choice. They have diminished the importance of higher education, and in that, they are wrong.
Mr Deputy Speaker (Mr Nigel Evans)
Order. James Clappison will be the last hon. Member to have a seven-minute limit. After him, I will reduce the limit to six minutes.
Mr James Clappison (Hertsmere) (Con)
Thank you, Mr Deputy Speaker—I hope I will not take that long.
It is always a great pleasure to follow the right hon. Member for Newcastle upon Tyne East (Mr Brown), who is a great champion of the north-east. Both he and the hon. Member for Birmingham, Ladywood (Shabana Mahmood), who spoke for the Opposition, made some perfectly proper points about tuition fees in principle. Her points were answered comprehensively from the Government Front Bench by the right hon. Member for Kingston upon Hull West and Hessle (Alan Johnson) when he took the Labour Government’s tuition fees Bill through the House in 2003. I had the pleasure of serving on that Bill Committee. The same points arose then, but with one significant distinction: the Labour Government’s increase in tuition fees was introduced at a time when the public finances were in a completely different position to the one they are in today.
Then as now, however, the issue of tuition fees was politically linked to what Ministers then and now have chosen to call “access to universities”. Then and now, my question, which arises naturally from the question of access, is about maintaining the highest possible academic standards in universities.
Like many others, I believe that the achievement of those high standards, which is in our national interest, depends on admissions to university being strictly on merit and admitting those whom the universities judge to be of the highest merit. The universities themselves are best placed to make that judgment. That the principle of university autonomy over admissions ought to be cherished is a clear conclusion to be drawn from a conservative view of the world. It would be anathema to somebody who really believed in a free society to contemplate with equanimity the prospect of state interference, whether directly or indirectly through a quango, in university admissions.
Mr Clappison
I will give way to my hon. Friend, because I get an extra minute if I do so.
Mr Binley
Does my hon. Friend realise that the new director of OFFA reportedly said that he wants the Russell group universities to admit one student from a poor background for every student accepted from a wealthy background? Is means-testing becoming part of the admissions process, thus excluding some students for reasons other than academic ones, and does it suggest that our worst fears about this new appointment are coming to fruition?
Mr Clappison
I am grateful to my hon. Friend for his intervention. I have written to the Minister about this, and I look forward to hearing his interpretation of the remarks of the distinguished gentlemen placed in charge of OFFA. I hope that the Minister will answer that in his winding-up speech.
Ministers claim to be interested in encouraging applications but not in interfering with or influencing admissions, yet Governments send out directives to OFFA telling them how to set access agreements and giving them clear political steers. How can we see it as anything other than political interference when Ministers send guidance to OFFA enjoining it to implement Ministers’ wishes, as happened under the previous Government and is happening under this one? In a directive last year, the Government told OFFA to send the following message to universities:
“Through this letter we want to encourage you and the higher education sector to focus more sharply on the outcomes of outreach and other access activities rather than the inputs and processes”.
To what, other than admissions, could “outcomes” possibly refer? They are the only way that outcomes can be defined and measured. How can that not affect universities, given that OFFA has swingeing powers to take away their income if they do not comply with its injunctions?
How can we say that universities have complete freedom over admissions when they have this apparatus hanging over them? How can they not be influenced, given that they face swingeing fines and their fee income being withheld if they do not comply with OFFA’s targets?
Mr Clappison
I will later, if I have time. I think I have used up my extra minutes already, although I know that the right hon. Gentleman is very interested in this subject.
Although I disagree with OFFA in principle, I pay tribute to its outgoing head, Sir Martin Harris, who is a man of great academic distinction. That brings me to the question of his successor. As my hon. Friend the Member for Northampton South (Mr Binley) touched on, the Business, Innovation and Skills Committee expressed concerns that led it to withhold approval for his appointment. I share these concerns and, as a parliamentarian, take little pleasure in seeing a Select Committee’s view being completely ignored, but I wish Professor Ebdon well, will take a close interest in his work and will endeavour to help in any way I can. His recent interview with The Daily Telegraph, however, has attracted much comment. [Interruption.] I can see the Minister in a leaping position, as though he wants to leap into the debate. I will certainly give way, if he wishes intervene.
Mr Willetts
I look forward to continuing these exchanges in a variety of ways, but let me assure my hon. Friend that the most recent advice that I and my right hon. Friend the Secretary of State have sent to OFFA makes it clear to Les Ebdon, for whom I have the greatest respect, that he is to work within the framework of agreed Government policy, as set out in the higher education White Paper. We explicitly set out in our letter that he has a duty to protect the ultimate right of higher education institutions to select their own students. That right of universities to choose their own students was put into law by the previous Government—possibly by the very Committee that he sat on—and is one that we will continue to respect and protect.
Mr Clappison
That is like the small print of a contract. I have seen the advice to OFFA and what is said on its website. I do not know whether my right hon. Friend, through that intervention, sought to withdraw the injunction given to OFFA last year—the right hon. Member for Bermondsey and Old Southwark (Simon Hughes) is looking very interested—that universities should focus more sharply on their outcomes, rather than simply on their inputs and activities in trying to generate applications. The universities were given the clear message that there had to be a sharper focus on targets. If my right hon. Friend the Minister is withdrawing that, I would be pleased to hear it. Otherwise, what he has said remains the case, as it always has been, including under the previous Labour Government—it has been put in the small print as a longstop.
Mr Clappison
That sharper focus was the clear message in the guidance. If my right hon. Friend is prepared to withdraw that, I will happily give way to him.
Mr Willetts
Let me try to set out the position—this goes back to my comments about the Opposition’s policies. We are talking about universities having perhaps £700 million of access spend, because of the extra revenues they have from higher fees. It is absolutely right to say to OFFA that we want it to scrutinise the effectiveness of all that spending. Some of it goes on summer schools and some of it goes on outreach visits to secondary schools, and there are also foundation-year programmes. Indeed, there is a whole range of things. When we are talking about expenditure on such a scale, it is rather important to ask OFFA to work out what works and what does not. That is a legitimate question when substantial sums of money are involved.
Mr Clappison
I would be grateful if my right hon. Friend could therefore clarify—perhaps I will leave it to the wind-up, because I am intervening in my own speech now—what else “outcomes” can mean other than admissions. That is the only way one can look at it in this context. My right hon. Friend’s advice was to go beyond applications and look at outcomes, and outcomes in this context can mean only admissions. If there is another meaning, I look forward to his clarifying that, but as I see it, the position is that OFFA’s original activities were given a “sharper focus”, as the advice to OFFA from the present Government puts it. I shall be taking a great interest in this matter.
I am also particularly interested in what Professor Ebdon has said—perhaps the Minister would care to deal with this in the wind-up as well—about what he describes as the “most selective universities” in terms of admissions. He said:
“It would be wrong to underestimate the challenges they face.”
I think we should praise and celebrate our most selective universities, including Oxford and Cambridge, not seek to undermine them. My frame of reference is the fact that they are a great national asset. They are not doing anything wrong. If Ministers and Professor Les Ebdon want something to look at, they should perhaps look at those universities that have an extremely high drop-out rate—not Oxford and Cambridge, or the other selective universities—which is such a waste of public money and resources.
I hope that the Minister will be able to convince me in his winding-up speech and answer the concerns that have been raised. At the moment, I feel very much as though I am not helping to build the big society—which is what I want to do—but recreating the Soviet Union, because that is what this apparatus reminds me of.
Mr David Lammy (Tottenham) (Lab)
I am grateful for the opportunity to discuss these important issues. Indeed, it is some time since the House had the opportunity to consider them.
Given that I preceded the Minister for Universities and Science, it is probably right to begin by welcoming some of the moves he has made, particularly on student contact hours, which were a growing concern during our period in office, on employment outcomes, the relevance of which has become even more heightened, given the nature of the economy, and, importantly, in ring-fencing the science budget. However, this debate is important also because of where this country stands economically. We are in a second recession in as many years. Unemployment is at an all-time high among graduates and is seriously worrying among non-graduates. Under the circumstances, one would expect university to be a place where young people go to shelter and stay. Indeed, many of the debates that we are having in this House—and that we shall rightly continue to have—go to the heart of whether we can begin to see serious growth in our economies. We will not see that growth unless we have university students coming out and getting jobs, and unless we can be convinced and reassured that our universities will remain world class.
However, as my hon. Friend the Member for Birmingham, Ladywood (Shabana Mahmood) outlined in opening for the Opposition, the backdrop for higher education is one of serious concerns and confusion about core and margin and AAB, as well as confusion in the lead-up to reaching the fee agreement. When I pressed the Minister on when we would see the legislation that he promised almost two years ago, he was unable to give us a date. Against that backdrop, universities are, quite rightly, hugely worried about their future. This is a serious issue, and the Minister ought to have demonstrated more concern about the fact that students are turning away from higher education in the way that they are.
The Minister will know that, before the Labour Government came to power, there were parts of Birmingham, Manchester, Cardiff and London in which more young people were going to prison than were going to university. My constituency was one such area. I am proud that, during our period in office, constituencies such as mine saw the numbers of people going to university quadruple, and that the number of young people from right across the country going to the Russell group universities trebled in that period. Participation rates were between 10% and 12% when I was going to university in the late 1980s, but the Labour Government achieved a rise in the rate to 43%, which represents a 44% increase in the number of entrants. That is now being put in jeopardy, and that should be a matter of concern if we want to compete properly, to have a growth economy and to see the kind of prospects for our country over the next few years that we clearly need to see.
Higher education contributes £59 billion a year to the UK economy, making it a hugely important sector. Many hon. Members who have raised the issue of London Metropolitan university have voiced their serious concerns about Britain’s reputation. There might be an assumption that Britain is open for business, and that we want to be world class and to be at the centre of higher education in the world, but the message that the Government are repeatedly sending out is that none of those is the case.
The Minister’s description of higher fees and of what he suspected took place under the Labour Government does not accord with my understanding of the situation. We certainly had absolutely no plans to strip out 80% of the teaching budget. That this Government are doing so is a scandal. There is no country in the civilised world that does not acknowledge the importance of the state’s contribution to higher education. It is only this Government who have decided to withdraw entirely from that area. It is no wonder that we have seen a drop in applications for humanities and languages this year.
That disastrous Government policy sits alongside the huge escalation in fees to £9,000—a trebling of the figure. For an average family, with combined earnings of £42,000—in effect, the earnings of a postman and a nurse—and unable to get a grant, £9,000 is just too much. How are they to find that amount? That is the question on the table, but the Minister has not answered it. Numbers are falling and we are losing our world-class status. I am sorry to say that, on his watch, a world-class educational sector in this country is losing its way.
Mr Rob Wilson (Reading East) (Con)
It is a pleasure to follow the right hon. Member for Tottenham (Mr Lammy), who made his case powerfully. Perhaps he forgets, however, that during his time as a higher education Minister, a number of physics and chemistry departments around the country were closed, not least at Reading university. We all need to look to our record on these matters.
The motion deals with tuition fees, but the real issue for debate is social mobility and how we approach it through higher education. My view is that going to university must be about individual academic ability, and not about where someone was born or about their parents’ bank balance. No talented young person should be left behind because of their background. For many people, university is a way of unlocking their potential and becoming socially mobile—essentially, bettering themselves and preparing themselves for a better life. Of course it is worth pointing out that university is definitely not the only route to success, and that many happy and successful careers are pursued by people who do not have a university degree, but I want to focus today on higher education, rather than on further education, apprenticeships and all the other avenues that are available.
For those who are suited to university, regardless of their socio-economic background, sustainable funding arrangements must be in place, coupled with a rigorous admissions process that is based on merit. The Labour party’s rather shrill message this evening has been that the new fees form a barrier to higher education. That, however, is simply not the case. Leading experts in the field of higher education do not consider the new tuition fees to have hit students, particularly students from disadvantaged backgrounds, negatively. The unfair and unworkable situation that Labour prophesied has simply not come to pass. Labour needs to understand that fees are not the real barrier to higher education.
I am pleased that the Opposition have raised this subject for debate this evening, but I am disappointed that the motion fails to deal with the real threat to social mobility that is stalking higher education. That threat is to be found in our schools and their role in failing to secure more admissions to top universities and therefore wider participation. The sad fact is that the poorer people are, the less likely they are to attend one of our top universities. Figures from the Sutton Trust show that a comprehensive school pupil on free school meals is 55 times less likely to attend Oxbridge than those educated at an independent school.
We heard today that four of our universities are in the top six in the worldwide league tables, but if we are to ensure our continued pre-eminent position as a world-class provider of higher education, with world-class institutions equipped with world-class reputations, we must have an admissions regime based on individual academic merit.
I know that, because social mobility is so important, many hon. Members share my concern, as my hon. Friend the Member for Hertsmere (Mr Clappison) has made clear, about the comments of Professor Les Ebdon, the head of the Office for Fair Access. I have held meetings with him and I am willing to give him fair wind and every chance to prove himself in that role. Last week, however, barely 72 hours into his new post, he suggested that, over time, our top universities should have one poor student for every candidate enlisted from the top 20% of households. I would be grateful if the Minister clarified whether that is the Government’s understanding of OFFA’s role. Is it the Government’s desire and expectation that that should happen?
In many respects, this is a laudable aim, but it is completely impossible for universities to deliver it on their own through the many outreach and summer schools and the foundation degrees that they invest in heavily. The implicit threat in Professor Ebdon’s approach to fair access is that targets are to be forced on top universities—regardless of merit. His approach does not seem overly concerned with removing the current barriers to opportunity, which would mean addressing the structural issues. Sadly, Professor Ebdon’s philosophy appears to be that of a social engineer, rather than one to socially enable. He sees his role as “challenging” universities on admissions targets.
Paul Blomfield (Sheffield Central) (Lab)
Does the hon. Gentleman not recognise the role, as prescribed by the Government, of the director of fair access? It is not his responsibility to restructure the entire education system; it is his responsibility to challenge universities on their contribution.
Mr Wilson
I thank the hon. Gentleman for his contribution, which I will deal with if I have enough time.
I fear that Professor Ebdon’s comments on setting “challenging” targets for our most selective universities show that he sees OFFA’s access agreements as a means of forcing institutions into accepting rigid quotas for university applicants. He has said that he is unafraid of using the “nuclear” penalties option available to him through OFFA. Such action would tear this country’s higher education system apart. He is on record as saying to his critics that
“the reason I shouldn’t be appointed was if I got the job, I might actually do it”,
but I think we need to be clear about what that job entails.
In my view—one shared by many of my colleagues—Professor Ebdon’s job is not to interfere with the university admissions process. He favours the deliberate lowering of admissions criteria in order to increase the number of poorer students into elite universities. This is not the way to ensure that our top universities remain the best in the world or to help poorer students. It is, at best, a short-term fix. Instead, we need to enhance opportunity for students from disadvantaged backgrounds by improving the state secondary education system across the board. We need to get more students up to the level necessary for them to apply to our best universities, and when they are, we need to ensure that they actually apply to our top universities.
According to Professor Ebdon,
“Context has to be taken into account if you are going to assess potential.”
I do not disagree with the proposition that individual cases may well require context, but that is a matter for the admission boards at universities, not for state interference, and the universities deal with it very well. The trouble is that Professor Ebdon appears to believe that top universities are deliberately trying to exclude poorer students, and that could not be further from the truth. In contrast to Professor Ebdon, I believe that we must change the context of this debate; and that means driving up standards in state schools, much as the Secretary of State for Education is trying to do. Initiatives such as the pupil premium, free schools and university technical colleges, among many others, make an enormous contribution. The solution to the problem of providing fair access to university is not to be found through heavy-handed outside interference or pontification on fees. It is to be found pre-university, in our state schools.
Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)
I welcome the motion, and the opportunity to debate the issues that it raises.
Much of what has been said in today’s debate should have been said 18 months or two years ago. The range of problems that we are discussing now arose partly because of the back-to-front way in which the Government have implemented education policy. We have seen the most profound change in our education system since the war. The trebling of tuition fees, along with the cuts in higher education funding, took place without adequate consultation with all interested bodies, and without the normal process involving a White Paper and subsequent legislation. The rest was supposed to come later. Yes, we did get the White Paper—about nine months later—and it listed a range of consultations that still needed to take place. We were then promised a Bill, which has somehow evaporated, and as a result we are now having to deal with a legacy of muddle and confusion, both in the minds of would-be students and in universities.
In the short time available to me, I want to focus on the idea of widening participation. As a representative of a black country constituency with a legacy of low income and low educational aspiration, I think that the policies that are now being implemented had the potential to bring about profound consequences. The first and most obvious was that the headline raising of tuition fees, and the likely debt that would have to be paid off as a result, would disproportionately deter those from low-income families. That has still to be tested. Initial figures from UCAS indicate that although there has been a drop in the number of applications—the figure of 50,000 has been mentioned today—the percentage of applications among those with lower-income backgrounds has not changed significantly. However, that fails to take a couple of factors into account.
First, the cohort that is going to university now would have gone into the sixth form two years ago under a different regime, and would have had university aspirations at that time. We do not yet know whether the cohorts of subsequent years will have the same aspirations. Secondly, a worrying trend is beginning to be discerned among applicants. UCAS says that there is no evidence that applicants are opting for their local—sometimes cheaper—universities. In fact, considerable evidence is emerging in the black country that applicants are opting for their local universities so that they can study at home, although I do not know whether those universities are cheaper. The local newspaper, the Express and Star, rang a number of secondary schools, and some of the leading providers of university applicants—Wood Green in Wednesbury, Brownhills in Walsall and Wednesfield in Wolverhampton—said that the percentage of their students applying to go to their local universities so that they could study at home had greatly increased. That is good news for Wolverhampton, but it has other implications.
Simon Hughes
The Chairman of the Business, Innovation and Skills Committee is being very fair in his analysis. All the evidence is that, because of cost of living issues, if there is an equal choice of university, more students will want to go less far away in the future. We also ought to pay attention to the fact that there has been a drop in the number of mature students applying to universities. They are far more difficult to reach because they cannot be captured in the school context. That is a challenge in the west midlands, as in the rest of England.
Mr Bailey
The right hon. Gentleman mentions a number of issues that I wish I had sufficient time to deliberate upon. The point I am making is that those from lower-income backgrounds whose local university is not one that higher-aspiration students might wish to attend are suffering a disadvantage. A two-tier system may therefore be emerging. More lower-income students will want to stay at home regardless of the nature of their local university. I should stress that I think Wolverhampton university is excellent, and I would recommend it to prospective students, but it may not be the most appropriate institution for those seeking professional and academic qualifications. Not only will such lower-income students be missing out on the broader university experience of living away from home—although it is debatable how important that is—but they are less likely to have a good home learning environment.
Mr Thomas
If there is an increase in the numbers wanting to stay at home and go to their local university, there is also the risk of distortions in respect of choice of subject. In that context, has the hon. Gentleman seen the comments of the languages professor at Southampton university who is worried about the lack of provision of languages courses in the east of England, with the sole exception of Cambridge?
Mr Bailey
My hon. Friend makes an important point. I have alluded to the lack of choice such students would have. Their local university may well not offer the appropriate course for them to be able to optimise their educational development. That is a further example of potential disadvantage.
People from lower-income and lower-aspiration backgrounds will also be disproportionately disadvantaged as a result of the further education loans measures. They are more likely to have missed out on their original educational experience. They are also more likely to be in jobs where they need to upskill, so they will have greater need of support to study for enhanced qualifications. The Government are seeking to shrink the public sector in order to benefit the private sector, and the lowest-income areas are often those with the highest proportion of public sector workers, who are most at risk, and most in need of support to acquire the skills to enable them to transfer from the public sector to the private sector, in furtherance of Government policy. This is an example of disjointed government. People who will need to change jobs as a result of Government policy in one area will have the support that they need to fulfil the Government’s objectives kicked away. The end product could well be that their lives are devastated, along with the Government’s economic objectives.
I would like to discuss many other aspects of funding and the economics of this issue, but my great concern is supporting educational aspiration and fulfilment, and the need to do that to benefit our economy. That will not be achieved under these proposals.
Gordon Birtwistle (Burnley) (LD)
Two and a half years ago, I arrived in this place and two years ago I was introduced to the Browne report on the future funding of universities, which had been asked for by the previous Labour Government. It was to be studied not only in itself, but when the country faced a catastrophic financial situation. I could not have agreed with the Browne report as it was, because having universities charging unlimited sums was not acceptable to me. So I told the current Secretary of State that I could not agree with it and that he had to do something for the poorer families in the country, particularly those in my constituency. We then got the proposal that we have now, with the change from an unlimited to a limited amount of money. The Browne report, asked for by the Labour Government, was talking about making it unlimited. Now, not only was the amount to be absolutely limited at £9,000, but there would be national scholarships to help young people from families who did not have the funding to go to these places. That has happened quite a lot in Burnley; a lot of young people have gone on these special scholarships, getting their first year and, we hope, their second year free at the colleges.
When I went back to the town to discuss the matter with the young people there, I was astonished to hear that they had been fed the story, particularly by the Labour party, that they would have to find the money up front—that the £21,000 would have to be paid before they turned up on the university doorstep. That was parroted by the Labour party and in some of the press.
Paul Blomfield
The hon. Gentleman is making a serious claim against the Opposition. Will he say on precisely what occasion anybody speaking on behalf of my party said that?
Gordon Birtwistle
A number of members of the Labour party in Burnley were saying to the young people of Burnley, and convincing them, that they would have to find the money up front. That was obviously not the case, so I told them that they would not have to pay the money up front, that the money would be given to them up front and that no repayments would have to be made until they were earning £21,000. They then asked how much they would have to pay when they were earning £22,000, which is a gross salary of £1,850 a month. When they are on that income, their repayment to the taxpayer for funding their education at university will be £8 a month. When I asked them whether they would mind paying back £8 a month if they had a salary of £1,850 they said, “Of course not. We understood that it would be lots more than that.” I then asked them to assume that they were on a salary of £25,000, which is a substantial salary in Burnley, and so would be collecting more than £2,000 a month. When I asked whether they would then object to paying back £30 a month to the taxpayer who had funded their education at university I was again told, “Well of course not, but that is not what we have been told. That is not the understanding that we have. So we are happy to do it.” I even got the student union rep at the university of central Lancashire to say, “That is far better than what we have now.” The young people of Burnley are getting a better deal now than they had before, and that convinced me to support the proposals in the Bill.
I also compared the number of students who go to university with the total number of students who leave school. About 40% go to university, which means that 60% do not. So I looked at the prospects for those young people who do not go to university—I am thinking of the apprenticeship scheme. I was an apprentice engineer in 1958. Over the past 25 years, various Governments, particularly the last one, took the decision to destroy apprenticeships. They said that they did not need apprenticeships, that they would pray and bow to the City and the finance sector, so never mind the manufacturing sector—let it go. The Indians and Chinese could do the manufacturing and we would just make money out of the finance sector. We all saw what happened to the finance sector: it caught a cold and we all got pneumonia.
We have to support manufacturing, so the Government have invested in 800,000 young people who are now apprentices. Many of them are going to university but are being funded by the companies that they work for, which means that they are getting degrees and have a job, but do not have any debt. That is the kind of forward thinking that the Government should demonstrate and that is what we have had.
Mr Lammy
I welcome what the hon. Gentleman has said about apprenticeships, but does he share my concern that we have too many apprenticeships that are for less than six months and many apprenticeships in parts of retail that are not like the apprenticeships he described, such as the one he went on?
Gordon Birtwistle
I have some sympathy with that comment, because I believe that apprenticeships should be for a real job and I agree that young people should not be taken on on short-term contracts and called apprentices. I have met many young people in Burnley who are on real apprenticeships in engineering, distribution, motor mechanics and so on and they are doing very well out of it.
I also want to comment on the £350 million that the Government are putting in to university technical colleges. Technical colleges are another thing of the past—people who did not go to grammar school but to the secondary modern school could manage to get to a technical college halfway through. Technical colleges trained people to go and do a job in industry, but we gave up on them in the 1960s. They are now coming back and we will have 32 university technical colleges.
Young people will be able to leave secondary school at 14 and be trained at the colleges for a real job, doing subjects into which the businesses in the area will have input. Those companies are now involved with the university technical colleges, which are delivering young people into the jobs that this country needs. We are desperate for engineers and scientists, whereas there are more people with law degrees stacking shelves in supermarkets than doing anything else. We need to start making things and training people to do the jobs of the future and that is what the university technical colleges will do with young people. If we take the colleges, together with the apprenticeships and the young people who go to university, we have a good deal.
I do not see the arguments against our approach and what I have heard from the Minister tonight suggests that the funding system proposed by the Opposition is equal to the previous funding system, which has bankrupted the country. I do not want to go back to those days. I want real jobs, for real young people studying at university, and the delivery of everything else that goes with that.
Pat Glass (North West Durham) (Lab)
I wanted to speak in the debate because I feel very strongly about this issue. I have listened to several debates on tuition fees and was a member of the relevant Bill Committee in 2010, so I have heard the Government’s arguments a number of times and have heard them again today. I did not accept them then and do not accept them now.
I remember being lobbied by some young people from my constituency at the time of the vote on tuition fees in 2010 and being joined by one brave Tory MP. I must say that there were not many Lib Dems around at the time, but some Tories came out and argued their case. That MP said he had concerns that people who had not had the advantage of a university education were being asked to pay for the education of others who would not only get a good education but benefit financially from better earnings. He felt that that was not fair and I accept that argument, but I recall one young person coming back quickly and, taking that argument to its natural conclusion, asking why we ask well people to pay for the NHS and the sick and why we ask single people without children or childless couples to pay for the education of other people’s children—an argument I think we all recognise. As a community, we all contribute to the education of other people’s children because ultimately we all benefit from a better educated and skilled work force that makes this country richer. For me, it is simple: I believe that paying taxes to educate our young people is not a waste of money but an investment for the future not just of the young people themselves but of all of us who benefit from an educated, knowledge-rich, competitive society that leads to an entrepreneurial economy.
We do not have a lot of time, but in the time I have I want to talk a little about what is happening in further education now. I sat this morning in the Education Committee, as did colleagues on the Government Benches, listening to evidence on the GCSE English language fiasco this year. I thought I understood what had happened. I thought that there was some leniency in marking in January, so that there had to be some bringing into line of the marking in June. But that was not what happened. I was pretty stunned by what I heard.
It appears that under Ofqual’s policy of comparable standards, whereby whatever the cohort got at key stage 2 they have to get at key stage 4, irrespective of better teaching or improvements in learning—
Pat Glass
Okay.
As a result, young people who should have been enrolling on level 3 courses in FE are now enrolling on level 2 courses, and many more are simply disappearing from the system. This will have an impact on our number of people not in education, employment or training. It is not just that there was some rigorous marking in June; there has been clawback, as the pupils in June are compensating for over-lenient marking in January. I think it goes against the principle of natural justice that one group of young people is doubly punished for what happened with others.
The young people I am talking about are C-D borderline pupils. There are not many such pupils in grammar schools or independent schools. These are kids from comprehensive schools from less well-off homes. These are the kids from whom the Government have already taken the education maintenance allowance. They are the kids who can least afford to have a kick in the teeth like this. It simply illustrates the fact that the Government’s education policy from higher education to further education and right through to the key stages in schools is chaotic; it is damaging our children and ultimately it will damage our economy.
Pauline Latham (Mid Derbyshire) (Con)
I am pleased to follow the hon. Member for North West Durham (Pat Glass), who did not seem to touch on tuition fees at all.
Pauline Latham
But we are talking about tuition fees.
I am delighted to follow my hon. Friend the Member for Burnley (Gordon Birtwistle), who raised all the issues that I want to talk about. He has studied what has been going on and he cares about it. I am pleased that young people at last understand what the tuition fees are all about. All the demonstrations in London and elsewhere took place because students had been misled by the Labour party, the National Union of Students and the media, who were determined to make them realise that they would have to pay the fees up front. They have never had to pay up front and they never will have to. They have to start paying after they earn over £21,000.
I have spent quite a lot of time talking to young people in my constituency—some who have been through university and finished, under the old system introduced by Labour, and some who are going to university this October. I have also talked to people working in this establishment for Members of Parliament. Those who went to university under the old system say that they wish that they had studied under the system that is going to start now. They would far rather not have had to ask their parents to help them pay the money up front. They would rather pay it themselves. It is much better for people from poorer backgrounds to be able to pay so that their parents do not have to contribute. It is better that they do not feel under pressure to ask their parents to pay, because they cannot afford it.
The students who will be going through now will earn more than many people in this country. When I ask young people whether they think it is fair that the caretaker or dinner lady in their school has to pay for their education, even though they will never earn as much as the young people, I find that the young people understand that it is much better that they pay back to the taxpayer, who is funding their education in the first place.
Mel Stride (Central Devon) (Con)
My hon. Friend makes a powerful point. Does she agree that one of the benefits of a loans system is that those going to university are far more discerning in their choice, which makes universities work much harder to secure those students and, therefore, drives up standards?
Pauline Latham
My hon. Friend makes a powerful point. My children used to come back from university with some horrific tales about the sort of education they were getting. I believe that once students become customers the universities will have to sharpen up their act, which they are already doing, and in many cases they are providing a better education for the students now going through the system.
I am pleased to report that none of the people I have spoken with has a problem. Not one person I have spoken with has said that they are not going to university. Some might decide to choose apprenticeships, which my hon. Friend the Member for Burnley mentioned. I am delighted that we have so many opportunities for apprenticeships in this country and surprised that no Opposition Members mentioned them whatsoever, because they are opening up opportunities and we need more people in engineering. We have lots of apprenticeships in Derbyshire, particularly in Derby, and some really high-quality apprenticeships in Rolls-Royce, Bombardier and Toyota. We need all those people, because they are the income generators of the future.
The hon. Member for Birmingham, Ladywood (Shabana Mahmood) said that tuition fees will put off mature students. Well, the interesting statistic from Derby university, which is in my constituency, is that 52% of the student intake are under 21 and 47% are over 21 and mature students. It is also interesting to note that 46% of them are male and 54% are female, and it is extremely good that more women than men are going to Derby university, because that did not use to be the case.
I am pleased to report that in Mid Derbyshire we have a thriving university that has come up through the ranks. People used to write it off, but it is doing incredibly well, under the leadership of Professor John Coyne. It is providing world-class graduates, many of whom work in local industries and businesses because they liked what they saw when they came to live in Derby. I am very pleased about that, because they contribute a huge amount to our economy.
I am sure that many Opposition Members will have seen, before and during the Olympics, the wonderful ceramic flower garden on Cromwell Green, which was the work of a fantastic artist called Paul Cummins, a graduate of Derby university. He has special needs, went through Derby university and has thrived as a result, because he was nurtured there. We need to encourage more students from all backgrounds to go to university. I am pleased to report that Derby university is doing better than ever and is not having the problems in attracting students that universities in some Opposition Members’ constituents are clearly having.
The difference between the two parties that we must recognise is that we like to talk up our education and the opportunities for young people, whereas the Labour party seems to want to undermine the university opportunities that this Government have given students. I am very disappointed about that, because we all need world-class graduates who will contribute to our economy.
Tristram Hunt (Stoke-on-Trent Central) (Lab)
First, I declare an interest as a lecturer at Queen Mary university of London. I therefore know something about the university system first hand and from the inside; I am not sure that the hon. Member for Mid Derbyshire (Pauline Latham) does.
Over the past year, the number of young people out of work for 12 months or more has reached its highest level since July 1997. Over the past year, youth unemployment in my constituency has risen by almost 300%. Alongside their disastrous economic policy, that inability to get a grip on youth unemployment is one of the defining stories of this increasingly discredited, hapless Government. That is why this debate is so important. If we are going to pay our way in the world, as the Chancellor likes to say, and deliver the right jobs to rebuild our economy, we desperately need a skilled and well-educated work force. As my right hon. Friend the Member for Newcastle upon Tyne East (Mr Brown) said, graduate employment is vital in the global marketplace, and no Labour Member can see how on earth Government policy is going to deliver that.
When one speaks to vice-chancellors and students, they say that they see a Government who fail to value higher education; who put cart before horse by introducing tuition fees with no proper strategy for the sector, given that we have yet to see a White Paper on it; who fail to take on the Home Office over immigration, casting ridicule on our university sector right around the world; and who cut investment when every other competitor is looking to support learning and education.
In a more sympathetic previous life, the Minister for Universities and Science wrote a book on the plight of young people today—“generation crunch”, as he called them. We thought it was a critique; in fact, it was a recipe for policies. He then introduced one of the most expensive tuition fee systems in the western world, where student debts of £30,000 to £40,000 in places such as Derby will become the norm. In our view, this level is simply too high.
Gordon Birtwistle
What would the debt be under a cap of £6,000? Does the hon. Gentleman have many students in his constituency who, with a salary of £1,850 a month, would object to paying back £8 a month?
Tristram Hunt
I am happy to have taken that intervention, which allows me to say that the debt would be less because we would be charging £6,000 as a cap rather than £9,000.
Tristram Hunt
I will not take any more interventions because I want to allow colleagues to speak.
When the cost of providing a world-class education is already so high, why on earth would the Government have as their priority the slashing of 80% from the teaching budget? That miscalculation led to the nonsensical core and margin proposals, which, in effect, incentivise students to take up cheaper courses, with poorer students often taking up poorer courses. As my hon. Friend the Member for West Bromwich West (Mr Bailey) suggested, that will mean local people going to local universities which do not always supply the kind of education that they want but to which they are driven by price structures.
What is more, we know that this policy is really going to bite in the middle-ranking universities just below the Russell group which are charging £9,000 a year. We have already heard about the difficulties that Southampton university is facing. These universities are complaining about the implications of the policy. They are also complaining about what is happening in university entrance departments as regards the AAB marks. The last-minute upgrades are playing havoc with course planning. Perhaps the Government’s strategy is for a little bit of creative destruction in the public services; perhaps they want a few universities to go bust. If the Minister can be honest about his policy, we would like to hear that from the Dispatch Box.
In the past, Ministers have poured scorn on those of us who warned that such fees would deter students. Well, now the numbers are in. History applications are down by 7%, design applications are down by 16%, and non-European language applications are down by 21%. I am interested to hear how this Government, who hope we will export to the BRIC economies of Brazil, Russia, India and China and make our way in the world, can think that non-European language applications being down by 21% is in any way a good economic strategy for this country.
Staffordshire university in my constituency has experienced a drop of 12%, while nearby Keele university is taking over 1,000 fewer students this year. Overall, the number of students accepted on to higher education courses last year fell by over 30,000. With student numbers falling by far less in Northern Ireland, Wales and Scotland, one does not need a degree, even from the university of Winchester, to work out what is deterring them. We heard about a fall of 14% in applications from Northern Ireland to institutions in Great Britain. That is the reality of what is happening as a result of this policy.
On the question of having different fees in different nations of the United Kingdom, I cannot think of a more sure-fire way to break up the Union than differentials of the kind that we are seeing. This is not the Government’s particular problem, but by increasing the cap to £9,000 they are, as used to be said, accelerating the contradiction.
It is clear that the Opposition policy is correct. It is right that we should use corporation tax to lower tuition fees, and it is right that we should ask those who earn £65,000-plus to make a larger contribution.
While we are discussing higher education, let me say something, briefly, about the controversy at London Metropolitan university. To be frank, I am amazed that the Minister and the Business, Innovation and Skills team have allowed the Home Office cack-handedly to undermine one of our most successful global industries. The actions of the UK Border Agency have reverberated around the world and our competitors in America, Australia and Canada are delighted at what has happened. I recently returned from a trip to New Delhi, where the Indian authorities cannot understand why we are seeking to shoot one of our most successful industries in the foot. What London Metropolitan university has done wrong needs to be addressed, but that will not be achieved by punishing those who are studying.
Our competitors around the world recognise that investing in higher education and lifelong learning and widening the skills base are the route to a more prosperous future, but, as colleagues have pointed out, we are one of the only countries in the OECD that is not currently increasing spending on higher education. Instead we are making an 80% cut to teaching budgets. It seems perverse that countries such as Mexico, Russia and India, above all, are succeeding when we are choosing to undermine one of our most successful global industries. The Government have got this totally wrong.
Mr Deputy Speaker (Mr Nigel Evans)
Order. The time limit for speeches is five minutes and I advise Members that any interventions will eat into the time left for the last contributor.
Justin Tomlinson (North Swindon) (Con)
I will try to make a whistle-stop speech covering just two aspects that allow potential students to make informed decisions, the first being career options and the second the cost of tuition fees.
One of the things that all parties have done over the past 10 to 15 years is desperately chase the target of getting 50% of young people into higher education. I have to say that sometimes I question whether that was the right target, in part because it created such a stigma for those who did not choose to go into higher education. There are alternatives, and I welcome the increase in the high-level apprenticeships and in apprenticeships in general, the options to consider work-based learning and the Government’s decision to invest £350 million in university technical colleges, from which my constituency is determined to benefit.
I have also been doing a lot of work, both in my constituency and by making speeches in Parliament, on encouraging more young people to consider becoming young entrepreneurs. Over the past six months, 759 start-up businesses have started in Swindon and some of them have involved young people.
My hon. Friend the Member for Mid Derbyshire (Pauline Latham) made a valuable point that we need to empower students who are paying tuition fees to become more like consumers, because we are going to make universities display statistics and information relating to their courses, the contact time available, the employability ratios, which are essential if students are going to make informed decisions, and student evaluation surveys, which I certainly would have enjoyed completing following my time at university.
I want to reflect briefly on my time at university. I was one of 350 students who went to Oxford Brookes university and studied business with a mind to set up a business, but I was the only one who actually went on to run one. With hindsight I would question whether it was beneficial for me to spend four years doing that, because we did not learn very much about setting up a business. Actually, they managed to teach 349 people out of taking the risk of doing so, whereas we certainly need more people to make that step up.
The cost of tuition fees is also important when it comes to making informed decisions. My hon. Friend the Member for Burnley (Gordon Birtwistle) set out clearly the challenges and confusions that potential students face. The system is complex. Recent research by the Sutton Trust and Universities UK shows that less than a third of prospective students fully understand how they will pay for their education. Just as worryingly, more than half of parents believe that they have not received enough information, and a third say that they have little or no understanding. That concern is shared by 95% of vice-chancellors.
One strand of the work of the all-party parliamentary group on financial education for young people, which I chair, relates to higher education. We were delighted that Martin Lewis of MoneySavingExpert was keen to support that work. He did not comment on whether tuition fees were good or bad, but was just determined to set out clear information. On behalf of our group, he approached Ministers, who empowered him to set up the studentfinance2012.com website, which set out to educate prospective students and their parents through leaflets, videos and online calculators. He busts some of the myths with his ten points:
“You don’t need cash to pay for uni”,
“There are no debt collectors”,
“Earn under £21,000 and repay nothing”,
“After 30 years the debt is wiped”,
“Repayments will be £470 a year less than before”,
“Repay the same per month at £6,000 or £9,000”,
“You will owe longer and may pay more”,
“Loans and grants for living costs are given too”,
“For many £9,000 doesn’t cost more than £6,000”,
and finally,
“Paying fees upfront could be a big mistake”.
That is the sort of information that is needed so that people can make an informed decision about what is the best option for their career and what is their best option financially.
I congratulate the Government on listening and making the change to allow graduates who are fortunate enough to get a good graduate job to make early repayments and not be locked in to costly repayment costs.
Finally, we all have a duty to help young people to make an informed decision, regardless of which system they face.
Paul Blomfield (Sheffield Central) (Lab)
I have the privilege of representing both of Sheffield’s great universities. Both are strong in their own parts of the sector, extremely popular and important to the local economy, and both are facing falling applications as a result of this Government’s policies. That is no surprise, because it is in line with the national trend. The deeper concern in the sector, as I have learnt from talking to vice-chancellors over the past year, is not so much about the applications but about the conversion rate. We are now seeing their fears realised. As the final figures are beginning to emerge, it is clear, as has been pointed out, that the rate of people dropping out of the process after submitting applications is now much higher at 16%.
It does not have to be like this, because politics is about choice. The Government are clearly making the wrong choices. Earlier in the debate, the Minister for Universities and Science, on the back foot, simply blamed austerity. Were he here now, I would remind him of his statement to the House in November 2010. In response to questions, he made it clear that the Government’s response to the Browne review was only partly driven by the need to deliver cuts, and was more about “delivering reform” and “remodelling” the sector. Indeed it was: it was about transferring the cost of teaching from the state to students, ending the previous position whereby that responsibility was shared, and making our system one of the most expensive in the world, with fees higher than most universities in the United States.
Paul Blomfield
I am sorry, but I will not because of time.
The Government’s response was about withdrawing all public funding for teaching from the majority of courses in the majority of universities, making the statement that arts, humanities and social science courses do not deserve public support.
I am also sorry that the right hon. Member for Bermondsey and Old Southwark (Simon Hughes) is not in his place, because I recall him, in the same debate, seeking and securing a guarantee from the Business Secretary that fees of £9,000 would be the exception, not the norm. They are now the norm, because the Government failed to listen to vice-chancellors when they changed the system. At that time, every vice-chancellor was saying, “We cannot run our institutions at the fees the Government are talking about.”
Amazingly, when university governing bodies fulfilled their responsibilities to their institutions by setting fees at the much higher level that we have seen, it seemed to surprise the Government. It appears that they expected the universities obediently to set their fees according to their perceived quality, with Oxbridge setting the fees at £9,000 and everybody else neatly ranking themselves below. When that did not happen, new policies emerged as quickly as they could be written on the back of a cigarette packet, particularly the core and margin policy. Taking 20,000 places out of the system and selling them off to the lowest bidder does not help students; it simply reduces the student loan obligations to the Treasury. Indeed, it has damaged the position of many students, as universities were encouraged to scrap bursaries to fund fee cuts and create competition for places.
The debate is about not just the sector’s problems but the unfairness caused to students who can least afford it. The problem at the heart of the Government is that the Prime Minister just does not get it. Echoing the comments made by the hon. Member for Mid Derbyshire (Pauline Latham), I recall that at the height of the debate on trebling fees, the Prime Minister tried to defend his policy during a factory visit by asking workers:
“Do you think it is right that your taxes are going to educate my children and your boss’s children?”
It clearly had not crossed his mind that those factory workers might have children who wanted to go to university, had the talent to do so and deserved support.
The damage that the Government’s policies are doing to social mobility is not just at undergraduate level. There is deep concern in our universities that the transition from undergraduate courses to postgraduate taught courses will be affected by higher fees. The Browne review did not consider the issue, but many professions now require a taught master’s qualification and others expect it. If that route is closed to those who cannot afford to add to their debt, we will have taken an enormous step backwards.
The Government’s higher education policy is deeply damaging to our universities and deeply unfair to students, so I hope that the House will support the motion.
Mr Gareth Thomas (Harrow West) (Lab/Co-op)
My hon. Friend the Member for Sheffield Central (Paul Blomfield) is spot-on about the effect of such high tuition fees on those wanting to apply for postgraduate courses. Like him, I want to focus on one particular issue, which is clearly linked to the Government’s plans for higher education and their policy of £9,000 tuition fees, but which has not been given such a high profile in the debate so far.
As others have mentioned, Ministers wanted students to consider degrees costing less than £9,000, to reduce the Treasury’s exposure to student debt. What has not been highlighted in the debate is Ministers’ plan significantly to increase the role of commercial, for-profit universities owned by private shareholders to help to achieve that objective. They have significantly increased the number of courses run by such institutions for which students can secure a student loan.
I should say that there are already a large number of students studying and doing well at private universities in the UK. However, it is far from clear that Ministers have grasped the scale of risk involved in allowing an even bigger expansion of access to student loans for commercial universities without proper safeguards. In the US, the for-profit higher education world has been rocked by a series of scandals involving very high drop-out rates, very low degree completion rates and aggressive recruitment practices. Indeed, according to a recent American Senate investigation, in the three previous years almost 2 million students had withdrawn from for-profit institutions without completing a degree but with significant personal debt. One such institution had a drop-out rate of 84%.
I accept that Ministers have said that some safeguards are needed as the commercial, for-profit part of the universities sector grows. It would be helpful if the Under-Secretary of State for Skills, the hon. Member for West Suffolk (Matthew Hancock), whom I congratulate on his appointment, set out in his response a little more detail about the Department’s plans.
For-profit commercial universities are still much less well regulated than mainstream universities. Surely Government Members would want the marketplace, as they describe it, for university education at least to be on a fair basis. Surely all for-profit companies offering a university education that want to recruit students who can access publicly backed loans should be subject to the same information and publication requirements as public universities. Those requirements should include student data and financial information and, as I made clear in my intervention on the Minister—uncharacteristically, he resorted to blather and ducked the question—be subject to freedom of information legislation.
When he replies to the debate, I encourage the Minister not to follow the example of his right hon. Friend the Minister for Universities and Science but to answer the question: when will Ministers bring forward plans to require commercial, for-profit universities to be subject to freedom of information legislation? When will they be required to provide the same level of data and information as mainstream universities so that they can be held to account in the same way?
Mr Willetts
Briefly, we are using the designation power—the power to designate courses and institutions—much more actively than the previous Government. That will ensure both the financial strength and the quality of provision in courses at alternative providers. There are still differences in the regulatory regime and it cuts both ways—FOI legislation cuts one way, equalities cuts the other, but that is the power we are using.
Mr Thomas
I say gently to the Minister that it is interesting that he and his colleagues in the Treasury are examining whether commercial, for-profit universities should be exempt from VAT in order to create a level playing field, but other sensible regulations, such as the requirement to be answerable to FOI legislation, as mainstream universities are, do not apply. Our collective experience of banking regulation and its failings, about which hon. Members across the House have uncomfortable memories, ought to encourage Ministers to be wary of market failure. As I have said, surely commercial universities that want exemptions should be properly held to account.
In her excellent opening speech, my hon. Friend the Member for Birmingham, Ladywood (Shabana Mahmood) set out clearly how this policy of higher tuition fees exemplifies the Government’s failures in a series of other areas. Our motion outlines a clear, sensible alternative, and on that basis, I commend it to the House.
Mr Gordon Marsden (Blackpool South) (Lab)
I begin by commending all speakers for the Opposition. My right hon. Friend the Member for Newcastle upon Tyne East (Mr Brown) was forensic on debt, and my right hon. Friend the Member for Tottenham (Mr Lammy) was impassioned about participation. My hon. Friend the Member for West Bromwich West (Mr Bailey) was sharp on upskilling as was my hon. Friend the Member for North West Durham (Pat Glass) when she spoke about the chaos in the FE sector. My hon. Friend the Member for Stoke-on-Trent Central (Tristram Hunt) spoke about teaching, my hon. Friend the Member for Sheffield Central (Paul Blomfield) about social mobility, and my hon. Friend the Member for Harrow West (Mr Thomas) about the problems of private providers.
We move from one fee fiasco in higher education to another in further education. In her opening remarks, my hon. Friend the Member for Birmingham, Ladywood (Shabana Mahmood) spelt out the uncertain future that faces the nearly 400,000 adult learners affected by the proposals. That situation came about as a direct result of the blood offering made by Ministers from the Department for Business, Innovation and Skills to the Chancellor’s cuts in late 2010. As if appalled by the implications of what they had done, they then sat on the issue and dithered for over a year before commissioning any surveys or discussing its practical consequences with stakeholders. Those consequences are now putting huge pressures on the FE sector.
FE colleges, which are key drivers of social mobility and hubs within our communities, are being hit left, right and centre by Government policy. First they were saddled with the 25% cut in resource grants, then the abolition of the education maintenance allowance put a strain on their budgets and, for the first time in many years, they have seen a fall in the number of enrolments of 16-to-18 years olds. They are now confronted with an FE loans policy that operates on a base assumption that student numbers will drop by 20%. In fact, the Department expects as many as 45% of learners—up to 150,000 people based on current numbers—to drop out, and that will hit learners old and young alike as the viability of college courses is affected.
The system is inevitably more complex than HE loans because of the varying start dates, course durations and the costs of FE courses, and no central administration similar to that of UCAS has been entrusted to the Student Loans Company. I say no more. Many hon. Members bare the casework scars from that organisation, and there are no pilots in place to trial the new system.
Mr Marsden
You have not. With their ability to offer a second chance, FE colleges are at the vanguard of promoting social mobility and loans could be a huge barrier to that. Four thousand pounds is a huge amount of money during the recession and could be a major deterrent for learners, restricting the social mobility that I thought the Business Secretary was keen to promote. He should not just take my word for that, but should listen to his party’s immensely respected former spokeswoman on education in the Lords, Baroness Sharp. In May this year she said:
“I cannot understand why we, as a government, why on earth we are pushing forward with loans for level 3…I really think that if we are concerned about social mobility, it’s very important that we try to overturn it.”
She speaks for women, with whom level 3 FE courses are popular. The Departments statistics show that women make up roughly two thirds of the cohort who will be hit by FE loans. For many women—those doing low-paid jobs or juggling family and caring commitments—a £4,000 a year loan is not a realistic proposition.
My discussions with women learners around the country reminded me of the outlook of many of my women students when I was an Open university tutor. They wanted to broaden their horizons and welcomed what their completed qualifications could offer them. However, none felt they would be able to do those things under a loans system. The Government, and not least the Minister, have told us that we should forgo Government activity in favour of nudge theory. The jury may be out on the latest intellectual fad, but Ministers need to be reminded that people can be nudged away from things as well as towards them.
HE access courses are a popular route for female learners, so I am glad that, after a long campaign, the former Minister for Further Education, Skills and Lifelong Learning announced a series of concessions before the summer recess. That was a welcome first step, but his successor needs to ensure that those commitments are implemented rapidly and effectively. Even so, Million+ warns us in the briefing for today’s debate that the net result of the overall changes will, in the long term, be fewer mature learners, and that progression by those who want to study later in life will be undermined.
However, the Government have not budged an inch on scrapping direct financial support for level 3 and above apprenticeships and forcing apprentices to take on individual loans. In responding to the FE consultation, the UK Commission for Employment and Skills specifically counselled the Government that not just large employers are concerned and lukewarm about the proposals, but adult apprentices themselves. UKCES gave the Government at best an amber light, and at worst a red light, and yet they press ahead. If huge numbers of adults drop out, the Government’s much-vaunted drive to increase apprenticeships, which is heavily dependent on increases in post-25 apprenticeships, will be in tatters. The numbers will simply fall off a cliff. That might blow a hole in the Government’s hubris, but more importantly, it will deny the life chances of tens of thousands of adult learners.
At the other end of the age spectrum, grants are offered for small and medium-sized enterprises to take on 16 to 24-year-olds, but they are moving at a snail’s pace. That is why the Opposition proposed earlier this year to expand the number of apprenticeships, by buddying up with large employers and expanding group training associations. In the meantime, local authorities, including many Labour local authorities, must pick up the slack as the Government stall and flail around. Councils such as Liverpool, Wakefield, Barking and Dagenham, Knowsley, Dudley, Oldham, and my council, Blackpool, work with local colleges and providers to place young people in quality apprenticeships.
Many young people are still unable to access some of the most competitive apprenticeships without the necessary pre-apprenticeship training. The Government’s fiascos—they first allowed and then curtailed short-term apprenticeships—have wasted precious months and years, as the Association of Employment and Learning Providers said in its September newsletter. Young learners in further education face a double-whammy. Those not in education, employment or training and those just above have not had the training and support to allow them to access apprenticeships, while those in the middle must compete with young people who have stronger academic grades.
On top of that, Department for Education Ministers have failed to fulfil their part of the FE bargain by dropping work experience from the schools curriculum, dropping independent advice and guidance, and by failing to help young people to climb the FE or apprenticeship ladders. They do not say that that is what they are doing; they simply abdicate their responsibility for providing frameworks to make those things happen.
The classic example is the Government’s response to Jason Holt’s excellent review on how small and medium-sized enterprises could be given more support and encouragement to take on young people. The Department’s response to his plea to them on careers advice and guidance was this:
“Whilst we welcome the specific suggestions made by Mr Holt …we believe it should be up to schools, together with local partners including employers, to determine how best to address this challenge”.
I am therefore not surprised that, in this week’s issue of Further Education Week, Mr Holt states:
“I am disappointed the Government has not taken more notice of my proposal…I had hoped they would require schools actively to promote apprenticeships and to put a stronger emphasis on equipping pupils with…skills…there is still no obvious structure in the school system to encourage young people to think of apprenticeships…The Government’s decision to hand the baton to already hard-pressed and financially constrained schools will result in little actually happening.”
When I chided him on this last week in Question Time, the Secretary of State said that he did not regard the hands-off approach at the Department for Education as the last word on active Government. The new Under-Secretary of State for Skills, the hon. Member for West Suffolk (Matthew Hancock), has a golden opportunity. He is a Minister in the Department for Education as well as BIS. Will he take up the cause and address Jason Holt’s concerns? His predecessor would have done so.
At the same time, little or nothing has been done to respond to the pleas from business to get involved in such programmes—again, waffle but no action. This is a dithering Government. For all their talk of being joined-up, the chasms and conflicts between the Department for Education and BIS are widening. They have wasted the best part of two years, failing to use billions of pounds of public procurement to guarantee apprenticeships from companies bidding for large contracts.
While the Opposition have been working closely on policies to give young people a linked partnership of opportunities—from school days and college through to further education, including for older learners—the gap between the two Departments has become a chasm. While they want to erect barriers, we want to build bridges. As my right hon. Friend the Leader of the Opposition said this week, we need a skills system that does not leave us a country where the 50% who do not go to university feel completely left out. We plan to build that new agenda with schools, young people, businesses and trade unions working to fashion new vocational training systems. My right hon. Friend has said it all: while the Government dither, we are stepping forward. I commend the motion.
The Parliamentary Under-Secretary of State for Skills (Matthew Hancock)
I rise to propose that the House oppose the motion. We have had contributions of great passion, not least from the right hon. Members for Newcastle upon Tyne East (Mr Brown) and for Tottenham (Mr Lammy), both of whom supported fees in principle but wished that they were lower. They both generously set out where they agree with what the Government have done, not least on improved contact hours and the focus on employment outcomes, which surely must be crucial. I listened carefully to their points and welcome their constructive approach, particularly because each argued that, in this competitive world, having a first-rate university and further education sector is critical for our ability to compete in the world. I welcome many of their comments, but would go further. The right hon. Member for Newcastle upon Tyne East even said how he would pay to reduce fees. I will come to that in a moment.
That constructive approach was in sharp contrast to the contribution from the hon. Member for Stoke-on-Trent Central (Tristram Hunt), who is not in his place. He talked about application numbers, but did not point out that the number of 18-year-olds in the country is falling. We therefore have to look at the proportion of 18-year-olds applying. According to UCAS, the proportion applying this year was higher than in any year of the previous Labour Government. Every Opposition Member should remember that fact when listening to the anecdotal numbers. If there are fewer 18-year-olds, surely we should look at the proportion of them applying to university.
My hon. Friend the Member for North Swindon (Justin Tomlinson) made a powerful speech and, in particular, celebrated studentfinance2012.com, which busts many of the myths sadly propagated by Opposition Members and instead points out what happens to students when they go to university, and when and how much they pay back. I commend the work of studentfinance2012.com. Indeed, I am sure that the fact that the proportion of applications is higher than in any year under the Labour Government is partly because students look at facilities and think very hard about how they are going to go to university.
The hon. Member for Sheffield Central (Paul Blomfield) argued strongly about social mobility. By contrast, I had a lot of respect for, but disagreed with, the hon. Member for North West Durham (Pat Glass). She made an impassioned argument against fees, as did the hon. Gentleman. She also focused on the need to reform the GCSE system. She made an effective speech, and I agree that the GCSE exam system needs to be reformed.
My hon. Friends the Members for Hertsmere (Mr Clappison) and for Reading East (Mr Wilson) focused on access, saying that universities should be free to make decisions about access. The Minister of State set out the duty to protect the rights of universities to select students. Les Ebdon’s comment that one poor student should be able to go to university for everyone in the top 20% is indeed a laudable aim. I agree with him about that, and I think broad education reforms will be needed, not least free schools, academies, the pupil premium and the focus on improving education throughout our system, including in schools, all of which will be important.
Matthew Hancock
I am sorry, but if the hon. Gentleman had been here at the start of the wind-ups, I might have given way to him.
Matthew Hancock
No, I am not giving way. If the hon. Gentleman will not come back for the wind-ups, he is not going to have another say.
The hon. Member for West Bromwich West (Mr Bailey) raised concerns about applications from low-income students and asked about FE loans. The shadow Minister, the hon. Member for Blackpool South (Mr Marsden)—with whom I look forward very much to working—also made the argument about FE loans. Rather like with part-time students in HE, the FE loans policy will remove up-front costs. Following the package that was set out by my predecessor in July—which was welcomed by the Association of Colleges, as well as the hon. Gentleman and others—I very much look forward to working with him and the Chair of the Business, Innovation and Skills Committee on the design of the package, and to talking to him about it soon.
The hon. Member for Harrow West (Mr Thomas) argued against profit-making universities.
Matthew Hancock
I will give way to people who were here for the start of the winding-up speeches, but not those who make a speech and then do not come back.
Mr Speaker
Order. The Minister is clearly not giving way. I think that much we have established.
Matthew Hancock
It was very clear.
My hon. Friends the Members for Burnley (Gordon Birtwistle) and for Mid Derbyshire (Pauline Latham) effectively made the case that we all have a responsibility to let everybody know that no one will pay a penny in their fees until they are earning over £21,000. Let that message go out from here. My hon. Friend the Member for Burnley was typically passionate, and my hon. Friend the Member for Mid Derbyshire showed strong support for Derby university and for apprenticeships.
Matthew Hancock
No.
Finally, in the short amount of time available to me, let me say that Government Members faced up to the difficult challenges of funding higher education. However, we do not know what the Opposition stand for. It is like a multiple-choice question. Which is the answer? Is it the graduate tax? We know that the Leader of the Opposition is in favour of a graduate tax because he said:
“I want to have a graduate tax.”
Or is the answer lower fees, paid for by axing bursaries and access schemes and by cutting courses—
Mr Alan Campbell (Tynemouth) (Lab)
claimed to move the closure (Standing Order No. 36).
Question put forthwith, That the Question be now put.
Question agreed to.
Question put accordingly (Standing Order No. 31(2)), That the original words stand part of the Question.
Business without Debate
(12 years, 1 month ago)
Commons ChamberRead Full debate Read Hansard Text
European Union Documents
(12 years, 1 month ago)
Commons ChamberRead Full debate Read Hansard Text
Post Office Facilities (Bargeddie)
(12 years, 1 month ago)
Commons ChamberRead Full debate Read Hansard Text
Mr Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab)
It is a privilege for me to present this petition on behalf of my constituents, who wish to see in the village of Bargeddie both existing postal services maintained and additional ones in due course.
The petition states:
The Petition of residents of the Coatbridge, Chryston and Bellshill constituency,
Declares that the Petitioners support the continued presence of the Bargeddie post office as well as the maintenance of DVLA provision and other facilities there.
The Petitioners therefore request that the House of Commons urges the Department for Business, Innovation and Skills, to make provision for the Bargeddie post office to remain open and for the provision of DVLA and other connected facilities to be continued.
And the Petitioners remain, etc.
[P001116]
Wayne Moore
(12 years, 1 month ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Diana Johnson (Kingston upon Hull North) (Lab)
May I start by welcoming the Minister to his place and his new role, and also extend my thanks to him for contacting me in advance about this evening’s debate? I am very pleased to have secured this Adjournment debate concerning my constituent, Mr Wayne Moore. I sought this debate as a previous Government Minister had refused to meet me about my constituent and because of the appalling way he has been treated. I will set out the facts and the key issues.
In May 2008, Wayne Moore was working as a chef in Germany, as a self-employed contractor for an agency employed by the Ministry of Defence. On 25 May 2008, he was seriously assaulted by a serving member of the British forces. He was so seriously hurt that he had to be revived twice. This attack has had considerable consequences for Wayne in terms of continuing illness, long periods of not being able to work, depression and anxiety, as well as post-traumatic stress disorder.
After the attack, I would have expected the Royal Military Police immediately to carry out a thorough investigation to put a case together for the relevant prosecuting authority to act upon in a timely manner. However, what appears to have happened is a very shoddy, inadequate investigation. We now know that although CCTV had been viewed at the time, it was not captured as evidence. Forensic evidence was not obtained and medical evidence was not properly sought and looked at. It is important to note that the Special Investigation Branch originally took a statement from Wayne. That happens only when serious assaults take place, which indicates the severity of the attack. I understand that the assailant was identified by a witness, but Wayne was never invited to confirm the identity of the attacker. It came to light later, when a local MEP asked whether the German police had been notified at the time of the assault, that once again a mistake had been made in the initial investigation as the RMP had wrongly thought both assailant and victim were British forces; it had not even been bothered to find out that Wayne was a civilian.
Of further concern was the fact that after such a vicious attack on a contractor of the British Army, the British Army provided no victim support or other care and advice to Wayne. He was not contacted or kept informed of the progress of the case in those early weeks and months, and this pattern was to continue for the following four years. So Wayne contacted his then constituency MP, the hon. Member for Cheltenham (Martin Horwood), who wrote to the MOD on 14 August to find out what was going on, asking whether Wayne would be asked to confirm the identity of his attacker and whether there was to be an identity parade. I pay tribute to the hon. Gentleman and his caseworker, Roberta Crawley, for their hard work and persistence over the years that followed in challenging the Ministry of Defence on Wayne’s behalf. I also pay tribute to Paul Carbert, in my office, for his work over the past year.
The first letters from the MOD initially claimed that Wayne had left Germany and not given contact information to the Army. That was wrong and the MOD later had to admit that contact information had been provided by Wayne in June. It also said that an identity parade would be arranged, and a video identity parade by electronic recording was scheduled to take place at Wayne’s home on 23 September 2008. However, less than 24 hours before, on 22 September, he was told it was to take place at a barracks, which was both insensitive, because of the location of the attack, and very short notice. After the ID parade, nothing further was heard. Wayne had to chase the outcome and be told that he had identified the wrong person. That was never confirmed to him in writing.
On 15 November 2008, the MOD said that the case file was being completed and would be sent on to the appropriate authority and, once it was finalised, Wayne would be sent an inquiry outcome notification letter to update him on progress. On 26 November 2008, a letter was apparently sent to Wayne, but he never received it. If the Minister looks at that letter, he will find that it certainly gives the impression that the case had been sent to the prosecution authorities and that the perpetrator would be brought before the courts. As Wayne did not know that, he contacted his MP again and the hon. Member for Cheltenham wrote again on 15 December 2008 and 13 February 2009 raising concerns about what was happening and about the conduct of the investigation. On 9 March 2009, the MOD stated that a letter had been sent on 26 November 2008 but also agreed that a review of the investigation was to take place. A letter dated 31 July 2009 from the relevant Minister said that the review was taking longer than expected but expressed the hope that he would be able to advise of the outcome in the near future.
I now want to refer to the letter that then did follow, that of 19 August 2009, which listed the findings of the independent review of the military police’s involvement in the case. I shall read a couple of sections of that letter. It came from an MOD Minister and it stated:
“In summary, the Reviewing Officer has concluded that although there were missed investigative opportunities in this case, these errors would not have altered the outcome of the investigation. Nevertheless, it would appear that the RMP and the Army did not provide Mr Moore with the support that he should have been able to expect from this Department. I apologise for this and I can assure you that a number of lessons have been learnt.”
“As part of the Review, the RMP Reviewing Officer identified a number of missed investigative opportunities: CCTV footage was viewed but not recovered; potential witnesses to the assault were not identified; opportunities to recover medical and forensic evidence were missed and there were unnecessary delays, which in one case led to a witness declining to provide identification evidence. Importantly, there was a general lack of higher level supervision which led to the investigation as a whole taking too long.”
It continued:
“While the identification of further witnesses and more complete medical evidence may have given the Commanding Officer and his legal advisers a more detailed understanding of the facts, it is the view of the Reviewing Officer that this would not have changed the outcome of the investigation.”
It also said that the reviewing officer had “highlighted failings” in relation to
“how Mr Moore, as a victim of crime, was kept informed of progress of the investigation and of the subsequent decision not to charge the alleged offender with any offence.”
It also commented on how the outcome notification letter could have misled anyone reading it.
As a result of that letter, Wayne Moore had a personal meeting with the reviewing officer, Lieutenant Colonel Grainger, who, it transpired at the meeting, was ignorant of many of the facts of the case. He thought that there had been “a coming together” of the two men, but did not know that Wayne had been resuscitated twice and also that the SIB had been involved. In Lieutenant Colonel Grainger’s own words, it would have been involved only in life-threatening cases.
So the hon. Member for Cheltenham wrote asking for a further review on 23 October 2009, and in February 2010 the relevant Minister sent the case to the independent case file assessor. In April 2010, the independent assessor recommended a more detailed look at the medical evidence and at whether any variation to the seriousness of the original offence should be considered.
On 8 September 2010, we had a new Government and a new Minister. The Minister wrote that he was getting on with obtaining the medical evidence and that it would be sent to the Service Prosecuting Authority. On 31 March 2011, the Minister wrote again saying that it had taken a long time to get the medical evidence and that he was now seeking information from the SPA on how to proceed.
Further chasing letters were sent by the hon. Member for Cheltenham in May, June and July 2011. Finally, an e-mail from the SPA in July 2011 confirmed that the case had never been referred and a letter from the Minister in September 2011 admitted that the case had never been passed on. That is one year’s further delay in Mr Moore’s case. I became involved in the case in October 2011.
Martin Horwood (Cheltenham) (LD)
I commend the hon. Lady for securing this debate and for the extremely diligent and committed way in which she has pursued and taken up this very disturbing case. Does she agree that it demonstrates a truly appalling series of failings in the investigations, the administration of the case by the different authorities, the communications between them and, above all, the communications between those authorities and Mr Moore, who has only ever sought justice for the injuries he received?
Diana Johnson
I am very grateful to the hon. Gentleman for that point, which he makes very well. It clearly sets the context of the debate.
I met Wayne in October 2011 when he moved to Hull and on 31 October 2011 I raised concerns with the then Minister about the fact that the case was progressing so slowly. The Minister said that the case was still under consideration by the SPA and I chased that again. Wayne finally received a letter dated 10 April 2012, nearly four years after the original assault. It stated that the SPA had concluded that there was no realistic prospect of conviction, and suggested that Wayne was drunk when the attack happened and that the attacker was acting in self-defence. That was the first time that this version of events had been suggested and I must say that I was shocked that after four years Wayne was being accused of assault. It also occurs to me that if the Army really thought that that was what had happened, it had completely failed in its responsibilities to investigate the case fully.
I therefore asked for a meeting with the Minister to discuss the case on 23 May 2012. I was refused, which is why I have come to the House and why I sought a debate from Mr Speaker. I believe that there has been a catalogue of errors and incompetence from start to finish in the investigation of the attack on Wayne Moore. From the file it is quite clear that Ministers were signing letters in good faith, but I believe that those letters were misleading in retrospect. The Ministry of Defence needs to look very carefully at how Ministers were put in that position.
I believe that the MOD has to explain a few things. The first is the delay and incompetent investigation by the military police at the start. I find it incomprehensible that the MOD could conclude that the missed investigative opportunities would not have altered the outcome of the case. Secondly, the MOD must explain the lack of updates and support for Wayne, a victim of a serious assault, and its failure to deal with matters in a timely way. Thirdly, it must explain the perceived bias of an investigation in which the alleged attacker was a member of the armed forces and the victim was a civilian. Fourthly, it must explain why the first review was carried out by Lieutenant Colonel Grainger, who clearly did not know the facts of what had happened, and whether the MOD feels that a new review should now take place with all the evidence made available.
I think that the MOD should apologise to Wayne for how the Department has acted over the past four years and for trying, four years on, to claim that Wayne Moore was the perpetrator of the assault when that question was never raised before and has caused him enormous distress. I realise that the Minister present this evening is a new Minister, but I hope that he has some answers for Mr Moore, who feels very aggrieved about how he has been treated. He is a law-abiding citizen who is doing his best and who has been out of work for many years now, and he feels that he has been very shabbily treated.
The Minister of State, Ministry of Defence (Mr Mark Francois)
If the House will allow me a brief indulgence, after two and a half years in the Whips Office and the vow of Omerta that goes with it, it is a pleasure to be able to speak in the House of Commons again. Now that I have that ability, may I congratulate the hon. Member for Kingston upon Hull North (Diana Johnson) on securing this debate on the case of her constituent, Mr Wayne Moore, who was allegedly assaulted on 25 May 2008 in Germany? I note that the hon. Member for Cheltenham (Martin Horwood) is also in the Chamber and I am well aware of his long interest in this case as Mr Moore’s constituency MP, before Mr Moore moved to Hull.
I was sorry to learn the details of this incident, as I am for Mr Moore, who has clearly suffered following the events of 25 May 2008. That was made plain by the Member of Parliament who now represents him. I hope that this debate will help answer any outstanding concerns Mr Moore may have. I am sure, though, that the House will also understand that I will be unable to cover some detail relating to the case publicly, not least for reasons of data protection and legal privilege. However, I can confirm that this incident was initially investigated by the Royal Military Police. It may help at this juncture if I explain that the RMP undertook the investigation under the agreement with the German authorities covering the basing of our forces in the country as part of the NATO alliance, which is known as the status of forces agreement. This is because the accused was a British serviceman and the incident took place on a British military base. The service police work very closely with their civilian colleagues, both in the UK and when our forces are deployed overseas.
The initial investigation commenced on 26 May 2008. It concluded in November that year, and the matter was passed to the chain of command of the accused for their consideration. In December, following legal advice, the commanding officer made a decision using his statutory authority under the Army Act 1955—the legislation that was in force at that time—not to prosecute any individual in relation to the incident. The case was therefore discontinued at that stage. Following representations from Mr Moore, a lieutenant colonel from the Royal Military Police conducted an internal review in July 2009, which the hon. Member for Kingston upon Hull North mentioned. He conducted a thorough review of the case and the relevant evidence, and identified a number of missed investigative opportunities. CCTV footage was reviewed and found to have no evidence of the incident in question, but was not recovered; some potential witnesses to the incident were not identified; and there were avoidable delays that, in one case, may have led to a witness declining to provide identification evidence. Nevertheless, he concluded that those shortfalls would not have materially altered the outcome, not least because other evidence, including witness evidence, contradicted Mr Moore’s version of the incident.
The Royal Military Police’s chief officer, the Provost Marshal (Army), wrote to Mr Moore to offer his personal apologies for these failures in the investigative process and to suggest a meeting with his staff to explain their findings in more detail. Mr Moore took them up on this offer and later that year the Royal Military Police met the hon. Lady’s constituent and explained their findings to him directly.
Following that review, Mr Moore continued to express reservations about the way in which the matter had been investigated and again asked that the matter be reopened. Accordingly, in March 2010, the Royal Military Police asked a retired civilian detective chief superintendent with many years’ experience in this area to undertake a further independent review of the case to provide additional external assurance of the investigation. This further review concurred with the Royal Military Police’s own assessment that although some investigative opportunities were missed in the case, as the hon. Lady said, they would not have altered the outcome of the investigation. It was, however, suggested by the detective chief superintendent, that obtaining further evidence from medical sources who treated Mr Moore in Germany at the time and subsequently in the UK might provide grounds to allow investigators to refer the case to the Service Prosecuting Authority under the new legislative framework of the Armed Forces Act 2006, which had recently come into force in October 2009.
As such, the chief officer of the Royal Military Police set about obtaining further medical evidence in support of Mr Moore’s case. Unfortunately, and despite the efforts of police investigators, it took until March 2011 for all the additional information to be provided. I should point out here that these medical sources were not military and there was considerable delay on the part of the civilian medical authorities in providing the necessary information. The issue of patient/doctor confidentiality and data protection, and the difficulty this poses to police forces wishing to pursue fully all lines of inquiry, is an issue that we recognise, and one that faces many police organisations, not only, in fairness, those in the military.
As a result of that further work, the case was referred to the Director of Service Prosecutions. Having received the file, prosecutors requested further clarification, which required a short period of further work. Once that was complete, they properly applied the “full code” test, which requires the prosecuting authority to judge whether there is a realistic prospect of conviction—is it more likely than not?—and, if so, whether prosecution is in the public, including the service, interest. In this case they considered that there was not a realistic prospect of conviction and, therefore, no charges were brought.
Because of the role it plays within the service justice system, the Service Prosecuting Authority is rightly independent of both the chain of command and the Ministry of Defence and falls under the superintendence of my right hon. and learned Friend the Attorney-General. That is analogous to the Crown Prosecution Service being independent of the civilian police. I hope that the hon. Lady will therefore understand that it would be inappropriate for me to comment further on its decision.
What I can say is that the Director of Service Prosecutions has reviewed the case personally and not only provided an assurance that the correct assessment processes were followed but endorsed the decision that there was no realistic prospect of conviction. Accordingly, the managing prosecutor wrote to Mr Moore to advise him formally of the outcome, explaining the reasons for the conclusion he reached and provided Mr Moore with the opportunity to request a meeting to discuss the reasons in more detail, which I understand he has not, to date, pursued. The Solicitor-General subsequently reviewed the case papers and did not dissent from the decision.
No one can deny that, following the independent case review in early 2010, this case was more protracted than anyone would have wished. In that sense, the hon. Lady has a perfectly fair point. We also recognise that there were failures properly to support and inform Mr Moore of the status of the initial investigation and subsequently through the review process. I hope that the hon. Lady is assured, as I was, by the willingness of the service police to consider her constituent’s concerns and review the case not once, but twice, including by an independent assessor. As I know she will appreciate, the vast majority of police investigations within the service justice system are managed quickly, efficiently and effectively. Nevertheless, in the small percentage of cases in which investigative mistakes have been made, it is vital that the police are open and honest enough to hold their hands up and apologise, and I believe that this case highlights their willingness to do so.
Diana Johnson
I think that the Minister is coming to the end of his contribution and wonder whether he might be willing to comment on the allegation that has now been made against Mr Moore four years on—that he perpetrated the attack—which was not raised before and has caused him a great deal of distress.
Mr Francois
I understand the hon. Lady’s point and think that I will have time to refer to it in my conclusion.
I would not want to leave the House with the impression that the delay that occurred in this case, for which the RMP has apologised, is the norm within the service justice system: it is not. Members will be aware that the three services each have their own police forces—the Royal Navy Police, the Royal Military Police and the Royal Air Force Police—which have statutory powers devolved through the Armed Forces Act. They are deployed wherever the armed forces are based and, because the armed forces reflect society, are expected to deliver the full spectrum of law enforcement capability and investigate all types of crime. They are therefore trained to standards set by the National Policing Improvement Agency and, where necessary, advanced technical training is provided by the civil police.
Last year more than 2,500 cases were investigated by the Royal Military Police alone and over 600 cases were prosecuted by the Service Prosecuting Authority at courts martial. The average time to trial in 2011 was 111 days, which compares favourably with, for example, magistrates courts, which have average completion rates of 144 days for all defendants, although I accept that it is difficult to make direct comparisons because of the unique nature of some service offences.
I would like to take this opportunity to pay tribute to the work of the service police. For the most part, they do an outstanding job in difficult and sometimes exceptionally dangerous circumstances. Of course they sometimes get criticised—every police force in the country has been criticised at one time or another—but it would be wrong to draw broad conclusions from individual cases. Some cases result in convictions, some in acquittals, and some, for various reasons, do not proceed to trial. That is the nature of any criminal justice system, whether service or civilian. The key thing is for organisations to acknowledge when mistakes are made and to learn from them. I can assure the hon. Lady that that is what has happened in this case. Lessons have been learned. Royal Military Police investigative policy and practice is continually developed and adapted in the light of experience and emerging civil police best practice. Furthermore, since Mr Moore raised his concerns, a code of practice has been introduced by the Ministry of Defence detailing the services to be provided by the armed forces to the victims of crime. This is designed to ensure that victims are properly supported and that at every stage of the investigation and prosecutorial process they are kept fully informed of progress in their case.
Ultimately, we accept that there could have been improvements in the way the case was initially investigated. I am conscious, however, that it has now been reviewed and considered by the Royal Military Police, by a senior retired civilian detective, by the Service Prosecuting Authority, and by the Solicitor-General, so it has been looked at in great detail four times already. I have also discussed the case personally with the Provost Marshal (Army) as well as consulting staff from the independent Service Prosecuting Authority. I have been assured that the case has now been exhaustively investigated and that the correct decision not to prosecute was reached. Part of the reason that decision has been made is that, as I said, the witness statements that have been made available clearly contradict the version of events that has been provided by Mr Moore.
I know that the hon. Lady’s constituent continues to suffer as a result of the events of May 2008. Nevertheless, his suffering is not in itself proof that a crime was committed, and after repeated, careful and independent consideration of the events in question the conclusion has always remained the same—that there is no realistic prospect of convicting any individual in relation to this matter. I hope that in saying that I have been able to answer fairly clearly the point that she put to me in her intervention, but if she feels that I have not, I will gladly give way again.
Diana Johnson
I am grateful to the Minister for allowing me to intervene again. If he is now saying, four years on, that the witness statements contradicted the original account of what had happened, why was an investigation not taken forward against Mr Moore? It seems very convenient that four years on the tables have been turned on him and that this was not raised much earlier if there was evidence.
Mr Francois
I understand the hon. Lady’s question. I do not think that there was evidence sufficient to prosecute Mr Moore for what happened in this case, just as I do not think there was evidence sufficient to prosecute the accused, as it were. Given that the case has been reviewed four times, and having looked into this, I am confident that the previous decisions were correct. However, I absolutely respect the hon. Lady’s doggedness in wanting to get to the bottom of what happened on behalf of the member of the public she represents. I hope that she will feel that I have tried to answer her question directly.
The Service Prosecuting Authority’s offer to meet Mr Moore further to explain its decision not to prosecute remains open. Under the circumstances, particularly as explained to the House by the hon. Lady and the hon. Member for Cheltenham, I strongly encourage Mr Moore—the hon. Lady might want to play some part in this—to take the Service Prosecuting Authority up on this offer in the hope that he could then put these questions to it directly and that that might enable it to answer those questions and perhaps to help him to come to terms with what has happened. I can only make that suggestion from this Dispatch Box, but I hope that the hon. Lady’s constituent will take it up because, given the long and complicated history of this case, it would be helpful if he sat down with and put these questions directly to the SPA so that it could reply directly to him. I can drop a hint in that regard, but I cannot force the hon. Lady’s constituent to take it.
In conclusion, I hope that I have done my best to address directly the points that have been put to me. I commend the hon. Lady and her friend on the Liberal Democrat Benches, who is also my hon. Friend the Member for Cheltenham, for the way in which they have approached this case. I hope that I have done my best to put their concerns to rest.
Question put and agreed to.