House of Commons

Wednesday 28th November 2012 Commons Chamber

Wednesday 28 November 2012

The House met at half-past Eleven o’clock

Prayers

Wednesday 28th November 2012 Commons Chamber

[Mr Speaker in the Chair]

Oral Answers to Questions

Wednesday 28th November 2012 Commons Chamber

The Secretary of State was asked—

[Andrew Stephenson (Pendle) (Con)]

1. What recent discussions he has had with his ministerial colleagues on the prospects for the energy generation sector in Wales.

[The Secretary of State for Wales (Mr David Jones)]

Before I answer the question, Mr Speaker, with your permission I would like to express my sympathy—and, I am sure, that of the whole House—for the victims of the flooding in north Wales and our thanks for the hard work of the emergency services. I propose to visit the affected area tomorrow.

I have regular discussions with ministerial colleagues on the prospects for the energy generation sector in Wales, particularly in relation to the recent good news that Horizon Nuclear Power has been bought by Hitachi, helping to secure the future for new nuclear on Anglesey.

[Andrew Stephenson]

I thank my right hon. Friend for that answer and join him in paying tribute to our emergency services. On the specific issue of nuclear power, in my constituency of Pendle we have the excellent Graham Engineering, which is part of the nuclear supply chain and supports more than 300 local jobs. In light what he has just said about the Hitachi-Horizon announcement and nuclear generation in Wales, can he say more about supply chain job creation in both Wales and other parts of the UK?

[Mr Jones]

The announcement by Hitachi provides an enormous opportunity for all those involved in the nuclear industry in this country, particularly those in the supply chain. I am heartened that Hitachi has already said that up to 60% of the total cost of the first nuclear reactor will come from British content. I have no doubt that there is a tremendous opportunity for companies such as those in my hon. Friend’s constituency.

[Albert Owen (Ynys Môn) (Lab)]

I welcome the support the Secretary of State has given to Horizon and for the takeover by Hitachi. To get 21st-century technologies such as offshore wind and nuclear power on to the grid, we need to improve the infrastructure, and 21st-century infrastructure should include subsea and subsea stations. Will the Secretary of State agree to meet me to discuss the proposals from National Grid that are in front of the public in north Wales?

[Mr Jones]

I commend the hon. Gentleman for the work he has done in seeking to obtain new nuclear on Anglesey. He knows that I have always been anxious to work closely with him on all aspects of nuclear generation on Anglesey and of course I am prepared to meet him, because he has raised a very important point.

[Mr Elfyn Llwyd (Dwyfor Meirionnydd) (PC)]

As the Secretary of State knows, Wales is very well placed for energy generation and the Swansea bay tidal lagoon project plans to offer educational services to the university in Swansea to foster skills in green energy creation. Will he commend the project and those similar to it for their commitment to creating jobs and local expertise in Wales?

[Mr Jones]

The right hon. Gentleman makes an important point. Green energy presents enormous opportunities to Wales and I commend the project he mentions. We now have the green investment bank, which has just been launched today. It will provide the most enormous opportunity to leverage investment into that important future sector.

[Mr Llwyd]

I thank the Secretary of State for being so positive. He knows that renewable energy generation in Wales increased by 58% between 2004 and 2010 and employs hundreds of people, including in the solar panel industry in mid-Wales, and of course we have seen the developments on Ynys Môn, the energy island. Does he agree that now is perhaps the time for us in Wales to showcase our skills, our resources and our prospects to the rest of the world at a green energy summit? If he is so minded, would it not be a good thing to place that summit in the enterprise zone at Trawsfynydd?

[Mr Jones]

Actually, I had not thought of that, but it is an excellent idea that we should take further. I was speaking to the leader of Gwynedd council, Councillor Dyfed Edwards, the other day and discussed the important enterprise zone at Trawsfynydd. Let us explore the prospects of a summit at Trawsfynydd.

[Glyn Davies (Montgomeryshire) (Con)]

2. What discussions he (a) has had and (b) plans to have with the Welsh Government on effective ways of increasing organ transplantation in Wales.

[The Parliamentary Under-Secretary of State for Wales (Stephen Crabb)]

We continue to work closely with the Welsh Government on their proposal to introduce an opt-out system of consent for organ donation in Wales. We have made considerable progress across the UK over the past four years with organ donor numbers rising by about 40% over the baseline year of 2007-08.

[Glyn Davies]

Since the organ donation taskforce was set up by the previous Prime Minister—it reported in 2008—there has been a massive increase in organ donation across the UK, particularly in Wales, where the level of donation is higher. What plans does my hon. Friend have to discuss with the Department of Health at Westminster and the Welsh Government the ways in which we can work together to build on that success?

[Stephen Crabb]

Extensive discussions are under way involving all the Departments and Ministers that my hon. Friend mentioned with a view to achieving further increases in organ donation across the UK. We have yet to see the detail of the Welsh Government legislation, but we hope it will contribute to a further increase, not cut across it.

[Paul Flynn (Newport West) (Lab)]

Hon. Members may recall the visit of Mr Matthew Lammas of Newport to the House just over a year ago. At the age of just 23, he gave a harrowing account of his wait, the frustrations and delays, for a heart transplant. Tragically, Matthew died two months ago, but is not the example of the frustration and delay that he faced a powerful argument for supporting the proposals of the Welsh Assembly Government?

[Stephen Crabb]

The hon. Gentleman brings a powerful example to the House of why we need to do more at different levels, in both the UK and the Welsh Governments, to increase the number of organ donors across the UK, and to that end we look forward to seeing the detail of the Welsh Government legislation.

[Mr Speaker]

I call Mr Roger Williams.

[Roger Williams (Brecon and Radnorshire) (LD)]

Question 3, Mr Speaker.

[Mr Speaker]

I did not realise the hon. Gentleman wished to ask Question 3. I shall call Nia Griffith first. We will get to the hon. Gentleman; we are saving him up.

[Nia Griffith (Llanelli) (Lab)]

I very much welcome the Welsh Government’s initiative of introducing legislation to increase organ donation, but after the Supreme Court justices described as “bizarre” the referral by the Secretary of State to the court of the Welsh Government’s byelaw legislation, will the Minister give the House unreserved assurances that the Wales Office will not delay this life-saving legislation and will not waste taxpayers’ money by making any more spurious referrals to the Supreme Court?

[Stephen Crabb]

My Department and the Department of Health have been in close discussion with the Welsh Government about the detail of the legislation, and we are optimistic that all outstanding devolution issues will be addressed before publication of the legislation.

[Roger Williams (Brecon and Radnorshire) (LD)]

3. What steps he plans to take to implement the recommendations of the first report of the Commission on Devolution in Wales published in November 2012.

[Mr Mark Williams (Ceredigion) (LD)]

5. What steps he plans to take to implement the recommendations of the first report of the Commission on Devolution in Wales published in November 2012.

[The Secretary of State for Wales (Mr David Jones)]

I welcome the publication of the commission’s first report. It is an important piece of work that is thorough and wide-ranging, and I am giving each of the 33 recommendations my full consideration in consultation with Treasury and other Cabinet colleagues. The Government will respond formally in due course.

[Roger Williams]

I, too, congratulate Paul Silk and his team on the excellent work they have done and on the report they produced. Will the Secretary of State make a commitment to introduce legislation in this Parliament to carry forward some of the recommendations in the Silk report?

[Mr Jones]

This matter has been referred to Her Majesty’s Treasury and is the subject of negotiations with the Welsh Government. I can confirm that the legislation will be looked at with a view to proceeding as expeditiously as possible.

[Mr Mark Williams]

The Silk Commission makes a compelling case on the devolution of partial income tax to the Assembly. How swiftly does the Secretary of State believe that we can proceed on this, given the apparent reluctance of the First Minister to countenance reform before full Barnett reform, despite a very good agreement that was brokered in October?

[Mr Jones]

The First Minister’s position is a matter for him, but Paul Silk makes it clear that the commission recommended the devolution of income tax-varying powers within different bands, subject to agreement between the Welsh and the British Governments on issues such as funding. That matter must continue to be looked at.

[Jonathan Edwards (Carmarthen East and Dinefwr) (PC)]

Does the Secretary of State agree that those who argue that Wales does not have the tax base to partially devolve income tax are fiscally illiterate?

[Mr Jones]

I do not know whether I would go that far, but clearly there is an argument to be made, and it is under consideration.

[David T. C. Davies (Monmouth) (Con)]

Does the Secretary of State agree that if the Assembly is given, and uses, powers to raise unlimited amounts of income tax, the effects on the Welsh economy could be devastating?

[Mr Jones]

I think it unlikely that the Assembly could raise unlimited amounts of tax, because it would need unlimited levels of income, which everyone would agree it does not have. Paul Silk’s work is important, and it deserves careful consideration, and that is what is happening at the moment.

[Owen Smith (Pontypridd) (Lab)]

May I first add my words of sympathy and best wishes to those who have been affected by the floods in Wales, and my thanks to the emergency services and volunteers, and to the Secretary of State for going there tomorrow?

As the Secretary of State will know, the Silk commission’s report is a very important document that has produced recommendations relating to air passenger duty and income tax—issues that affect not just Wales, but the whole of the UK. Does he therefore agree that the whole House ought to be able to debate those issues, and can he explain why he seems to want to limit that debate to the Welsh Grand Committee?

[Mr Jones]

I believe that we should have an early debate in the Welsh Grand Committee on this important issue. The hon. Gentleman will know that my office is in touch with his office and the offices of the leaders of other parties with a view to agreeing that. It should be done as quickly as possible. On the question of a further debate, that is clearly a matter for the Treasury, the Wales Office and the Welsh Assembly Government to progress the work that is being done to discuss the issue, and at that stage we should consider a further debate, which could potentially be on the Floor of the House. Certainly, any legislation would require primary legislation, which would have to be a matter for the House to deal with in the usual way.

[Owen Smith]

I think the Secretary of State said he is in favour of a debate on the Floor of the House, which is welcome, as his predecessor committed to holding such a debate when we last discussed the Silk commission. In anticipation of that debate and outside the Silk commission, so to speak, the right hon. Gentleman will know that borrowing powers are extremely important to the Welsh Government. Can he confirm that the Silk commission’s recommendation that £200 million-worth of non-income tax powers would constitute, in his view, an independent income stream that would facilitate borrowing for the Welsh Government?

[Mr Jones]

That matter is under active consideration between the Welsh Government, the Wales Office and the Treasury. The hon. Gentleman will have seen the announcement that was made at the end of October and will have been able to draw his own conclusions.

[Andrea Leadsom (South Northamptonshire) (Con)]

4. What recent assessment he has made of repatriating from the EU regional policy as it relates to Wales.

[The Parliamentary Under-Secretary of State for Wales (Stephen Crabb)]

In July my right hon. Friend the Foreign Secretary announced to the House the launch of the Government’s review into the balance of competences of the European Union. The review will look at the scope of the EU’s competences as they affect the UK and what this means for our national interest. The review will be completed in 2014.

[Andrea Leadsom]

As the Government’s position, set out in the fifth cohesion report in January 2011, is that wealthier states should not receive structural and cohesion funds, what assessment has my hon. Friend made of the impact on the Welsh regions of repatriating regional policy to the UK?

[Stephen Crabb]

The Government have made consistently clear our belief that wealthier member states have both the ability and the capacity to finance their own regional development policy and hence do not require structural funds. However, as the Prime Minister made clear on Monday afternoon, we also recognise that the more prosperous member states, such as the UK, need to be given time to make the adjustment and so should continue to receive funding during the 2014-20 programming period. The Government will consider the right balance of competences in terms of regional policy in the autumn of 2013 as part of our review.

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

Does the Minister accept that Wales does not get its fair share of UK funding in either capital or revenue from Barnett, that the money paid, for instance, to Swansea university—£60 million from the European Investment Bank and £30 million from convergence—helps Wales to succeed, and that we would like to see the UK Government help Wales in the same way?

[Stephen Crabb]

I do not accept that Wales is underfunded. This Government have demonstrated in our announcements on investment in rail infrastructure in Wales and broadband infrastructure in Wales that we are providing funding over and above the Barnett formula for Wales, so I do not accept the hon. Gentleman’s proposition at all.

[Mr David Hanson (Delyn) (Lab)]

6. What assessment he has made of the effect of proposed changes to housing benefit in Wales.

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

11. What assessment he has made of the likely effect of changes to housing benefit on people in Wales.

[The Parliamentary Under-Secretary of State for Wales (Stephen Crabb)]

Information on the expected impact in Wales and across Great Britain of our housing benefit reforms is set out in the relevant impact assessments.

[Mr Hanson]

Many of my constituents who are in work on low incomes face an unpalatable choice in April next year. Do they face unaffordable increases in rent, do they downsize to non-existent one-bedroom flats, or do they make themselves homeless? What advice would the Minister give, particularly at a time when the Government are giving a tax cut to millionaires?

[Stephen Crabb]

Many, many people in work face exactly the same difficult choices about their living arrangements as the ones that the right hon. Gentleman described. One of the central principles of our reforms is that people receiving benefits should have to make the same practical decisions about their living accommodation as people in work.

[Chris Evans]

Many disabled constituents have come to me because, despite having had to make adjustments to their homes simply to accommodate their disability, they now face being kicked out for having an extra bedroom. Does the Minister think that is fair in the 21st century?

[Stephen Crabb]

The Government are making available transitional funds to help people who have made significant adaptations to their homes in order to cope with serious disability—exactly the circumstances the hon. Gentleman describes—because we recognise that there is a vulnerability and we want to protect those people.

[Jonathan Evans (Cardiff North) (Con)]

Does my hon. Friend recognise that the housing benefit budget in this country is £23 billion and that 5 million receive it? With a budget of that size, surely it is appropriate that the Government are demonstrating to the taxpayer that they are working to get value for money.

[Stephen Crabb]

My hon. Friend is exactly right, but our reforms are based not just on the need to achieve value for money for the taxpayer. Underpinning our welfare reforms is the need to elevate the principle of making work pay and to ensure much greater fairness in the way our welfare system is delivered.

[Alun Cairns (Vale of Glamorgan) (Con)]

7. What recent discussions he has had with UK Trade & Investment on attracting investment to enterprise zones in Wales.

[The Secretary of State for Wales (Mr David Jones)]

When I met the chief executive of UKTI last month we discussed how to attract more investment into Wales, including via enterprise zones.

[Alun Cairns]

The progress of enterprise zones in Wales has been somewhat patchy, compared with those in England. Will my right hon. Friend agree to work with the enterprise zone in St Athan in seeking to attract major international airlines because of its policy on aerospace?

[Mr Jones]

We would like to see faster progress in the Welsh enterprise zones. Having said that, my hon. Friend is entirely right that St Athan is well placed as an enterprise zone, and I am hopeful that major airlines will be attracted to the facilities it offers.

[Nick Smith (Blaenau Gwent) (Lab)]

14. With 11 jobseeker’s allowance claimants chasing every vacancy, we need jobs in Blaenau Gwent. A planning application for a world-class motor sport project will be kick-started this week. Will the Secretary of State help the investors to meet the Treasury to nail down the tax incentives needed for that game-changing development?

[Mr Jones]

I commend the hon. Gentleman for his efforts on behalf of that enterprise zone. He will know that I have met the potential operators of the race track. I understand that bids for enhanced capital allowances have been made by the Welsh Government to HM Treasury. As he knows, I am always happy to discuss these issues with him in person.

[Wayne David (Caerphilly) (Lab)]

8. What recent estimate he has made of the number of long-term unemployed people in Wales; and if he will make a statement.

[The Parliamentary Under-Secretary of State for Wales (Stephen Crabb)]

The economy is our top priority, and I am very pleased that unemployment in Wales fell by 5,000 over the last quarter and by 14,000 over the last year. In October 2012 there were 21,000 people in Wales who had been claiming job seeker’s allowance for 12 months or longer.

[Wayne David]

Does not the fact that long-term unemployment in Wales has risen for 17 consecutive months demonstrate that the Work programme has been an abysmal failure?

[Stephen Crabb]

It demonstrates nothing of the sort. The statistics published yesterday for the Work programme should not be the basis on which its overall success is judged, because it is a long-term programme. Many of the biggest gains from the programme will be seen in the second year, and statistics will follow this time next year.

[Hywel Williams (Arfon) (PC)]

Recently in Caernarfon 300 people applied for three jobs at a supermarket checkout and 30 people applied for a junior secretarial post, some of them with higher degrees, and I could give further examples. Why are the Government punishing people who are looking for work when that work is not to be found?

[Stephen Crabb]

We are not punishing people who are looking for work at all; we are incentivising them to go out and find work. I remind the hon. Gentleman that unemployment is falling right across Wales. There are pockets where more needs to be done, particularly in rural and isolated areas, but he should not doubt our ambition to see all of Wales enjoy some of the good things we are currently seeing in the Welsh labour market.

[Mr Philip Hollobone (Kettering) (Con)]

9. What departmental savings he plans to make in 2013-14.

[The Secretary of State for Wales (Mr David Jones)]

The Wales Office will be making savings of around £550,000 in 2013-14, which amounts to a 10% saving in its administration budget.

[Mr Hollobone]

With Wales, Scotland and Northern Ireland now having Assemblies or Parliaments of their own, many of us would like to see the three territorial Departments rolled into one to save taxpayer funds. Given that that is not part of the coalition’s programme, will my right hon. Friend at least look at more joint working and shared services between the three Departments so as to save money for the taxpayer?

[Mr Jones]

I am pleased to say that that joint working already takes place. In fact, the Wales Office is working actively with the other territorial offices to identify shared working arrangements and we also have a shared parliamentary team. I must take issue with my hon. Friend: I think that Wales benefits immensely from having a Wales Office here at Westminster and I would not want to see it submerged in a quasi-colonial office.

[Stephen Mosley (City of Chester) (Con)]

10. What discussions he has had with (a) his ministerial colleagues and (b) Welsh Government Ministers on the development of enterprise zones in Wales and the Welsh borders.

[The Secretary of State for Wales (Mr David Jones)]

I am determined that we should maximize the opportunities that enterprise zones can offer in attracting private sector investment and growth into Wales. I am working with ministerial colleagues and the Welsh First Minister to secure this.

[Stephen Mosley]

My right hon. Friend will be aware of the proximity of the Deeside enterprise zone with those in Wirral Waters and Daresbury. Does he think there is a case for those three enterprise zones to work together to maximise the potential for economic growth in the economic sub-region?

[Mr Jones]

Yes. As my hon. Friend has said, the Deeside enterprise zone is close geographically to that in Wirral Waters, and I believe that there is a tremendous opportunity for synergy between the two zones. In fact, I have already had discussions with the chairman of the Deeside enterprise zone to see what can be done to advance that.

[Mr Stephen O’Brien (Eddisbury) (Con)]

What processes does the Secretary of State have in place to try to resolve some of the issues that Welsh border constituencies have with access to the NHS, road maintenance and other services? They are finding it very difficult to resolve such issues through their local MPs, because the Welsh Assembly and Government will not give time to consider them.

[Mr Jones]

My hon. Friend raises an important issue. I believe that, in his part of the world, the Mersey Dee Alliance is an appropriate focus and I was very heartened by the proposals in Mrs Elizabeth Haywood’s report to the Welsh Government to create a cross-border city region focused on the Mersey Dee Alliance area.

[Guy Opperman (Hexham) (Con)]

12. What steps he is taking to tackle fuel poverty in Wales.

[The Parliamentary Under-Secretary of State for Wales (Stephen Crabb)]

The Government are committed to tackling fuel poverty and helping people in Wales and across the UK, and especially those in low-income vulnerable households, to heat their homes more affordably.

[Guy Opperman]

I thank the Minister for that answer. The Office of Fair Trading looked at fuel poverty in both Wales and Northumberland. Does the Minister agree that the energy reforms will bring about real change for hard-pressed consumers?

[Stephen Crabb]

I absolutely agree with my hon. Friend. The Government cannot, of course, control volatile energy prices on the world markets, but what we can do is ensure that consumers in the UK get access to the very best deals on their energy bills. That is what we are committed to doing, as demonstrated by last week’s announcement by my right hon. Friend the Energy Secretary.

[Mr Speaker]

Order. A very large number of noisy conversations are taking place in the Chamber. Let us have a bit of order for Mr Guto Bebb.

[Guto Bebb (Aberconwy) (Con)]

13. What recent discussions he has had with the Secretary of State for Transport on capital investment in rail infrastructure in Wales; and if he will make a statement.

[The Secretary of State for Wales (Mr David Jones)]

I discussed railway infrastructure with my right hon. Friend the Secretary of State for Transport when I met him last month. Last week I met local authorities and business leaders in north Wales to confirm my commitment to progressive electrification of the railways in Wales.

[Guto Bebb]

I was disappointed to read in a recent letter from the Minister of State, Department for Transport, my right hon. Friend the Member for Chelmsford (Mr Burns) that the Welsh Government has not prioritised the electrification of the north Wales line. In view of the fact that the Welsh Government do not seem to be interested in north Wales, will the Secretary of State provide an assurance that the Wales Office will prioritise expenditure on the north Wales line in due course?

[Mr Jones]

As my hon. Friend will know, only last Friday I held a meeting in Llandudno, the consequence of which was the formation of a working group to work towards the electrification of the north Wales coast line. The group has started its work and I hope that it will receive support from hon. Members in this House.

[Ian Lucas (Wrexham) (Lab)]

Far from the Assembly’s Transport Minister not being interested in north Wales, he represents a north Wales seat and has been communicating with me about electrifying the Wrexham-Bidston line. Will the Secretary of State please join our communication and work with us to improve public transport networks in north-east Wales?

[Mr Jones]

The Wrexham-Bidston line was also a matter under discussion last Friday. I mention again the two enterprise zones in Wirral Waters and Deeside, which would benefit enormously from the electrification of that line. I am very supportive of what the hon. Gentleman says.

[Andrew Selous (South West Bedfordshire) (Con)]

15. What recent discussions he has had with his ministerial colleagues on increasing private sector employment in Wales.

[The Parliamentary Under-Secretary of State for Wales (Stephen Crabb)]

The Government have taken action to protect the economy and have set out a comprehensive strategy to achieve strong, sustainable and balanced growth. Because of this action, we have seen over 1 million private sector jobs created across the UK since we came to power. [Interruption.]

[Mr Speaker]

Order. The House is now immensely disorderly. In the interests of the hon. Gentleman, let us have a bit of order.

[Andrew Selous]

In two years, this Government have created 1.2 million net new private sector jobs—nearly double the amount that the previous Government created in 10 years. How have we done in Wales?

[Stephen Crabb]

I am very pleased to inform the House that we are seeing similar good progress in Wales. The House of Commons Library tells me that an estimated 60,000 additional private sector jobs have been created in Wales since May 2010.

The Prime Minister was asked—

[Henry Smith (Crawley) (Con)]

Q1. If he will list his official engagements for Wednesday 28 November.

[The Prime Minister (Mr David Cameron)]

Before I answer, I am sure that the whole House will wish to join me in expressing our sympathies to the victims of the appalling flooding that we have seen across our country in recent days, and in giving support and praise to our emergency services—the police, fire and ambulance services—and to the Environment Agency, local councils, voluntary bodies and good neighbours, who have all done extraordinary things to help those in distress.

This morning I had meetings with ministerial colleagues and others. In addition to my duties in this House I shall have further such meetings later today.

[Henry Smith]

The whole House will of course endorse the words of the Prime Minister in paying tribute to our fantastic emergency services in responding to the terrible floods, and those who have been victims of them.

Tomorrow sees the publication of the Leveson report. Does my right hon. Friend agree that those who should be uppermost in our minds are the victims, unfairly, of previous media intrusion? Does he also agree that the status quo needs updating?

[The Prime Minister]

My hon. Friend is absolutely right in what he says. The status quo, I would argue, does not just need updating; the status quo is unacceptable and needs to change. This Government set up Leveson because of unacceptable practices in parts of the media and because of a failed regulatory system. I am looking forward to reading the report carefully, and I am sure that all Members will want to consider it carefully. I think we should try to work across party lines on this issue. It is right to meet other party leaders about this issue, and I will do so. What matters most, I believe, is that we end up with an independent regulatory system that can deliver and in which the public will have confidence.

[Edward Miliband (Doncaster North) (Lab)]

Let me associate myself entirely with the Prime Minister’s remarks about the victims of flooding. All my sympathies and the sympathies of Labour Members go to those victims, and our thanks go to the emergency services and the Environment Agency for the fantastic job that they do.

Let me also associate myself with the Prime Minister’s remarks about the Leveson report, which will be published tomorrow. I hope that we can work on this on an all-party basis. This is a once-in-a-generation opportunity for real change, and I hope that this House can make it happen.

When the Work programme was launched in June 2011, the Prime Minister described it as

“the biggest and boldest programme since the great depression.”

Eighteen months on, can he update the House on how it is going?

[The Prime Minister]

Yes, I can update the House. Over 800,000 people have taken part in the Work programme, over half of whom came off benefits. Over 200,000 people have got into work because of the Work programme. It is worth remembering that the Work programme is dealing with the hardest to employ cases in our country; these are adults who have been out of work for over a year and young people who have been out of work for over nine months. On that basis, yes, we need to make further progress, but it is the right programme.

[Edward Miliband]

But the scheme is supposed to create sustained jobs for people, and in a whole year of the programme just two out of every 100 people got a job—that is a success rate of 2%. The Government estimate—[Interruption.] I do not know why the part-time Chancellor is chuntering—yesterday in Cabinet he was telling off the Work and Pensions Secretary for the failure of the Work programme.

The Government estimate that without the Work programme—this is the basis on which they did the tender—five out of every 100 people would get a job. Is it an historic first to have designed a welfare-to-work programme in which someone is more likely to get a job if they are not on that programme?

[The Prime Minister]

I have to say to the Leader of the Opposition that I listened very carefully to what he said, and what he said was wrong. He said that only 2% of people on this programme got a job. That is not correct. More than 800,000 people have taken part, and more than 200,000 have got into work. The specific figure that he referred to concerned people continuously in work for six months—but of course, he is only looking at a programme that has been going for a year, and the figure is 19,000 people. He should listen to the CBI, which said that

“the Work Programme has already helped to turn around the lives of thousands of people”.

Those are people who Labour left on the scrap heap. The right hon. Gentleman should be apologising, not attacking the Work programme.

[Edward Miliband]

I think that is as close as we get to an admission that I was right and he was wrong.

The Prime Minister boasted that his flagship policy, the Work programme, was about tackling the scourge of long-term unemployment. Will he confirm that since the Work programme was introduced in June 2011, long-term unemployment has risen by 96%?

[The Prime Minister]

Let me give the right hon. Gentleman the employment numbers: a million more private sector jobs over the past two years; since the last election, 190,000 fewer people on out-of-work benefits; in the last quarter, employment up by 100,000 people and unemployment down by 49,000. While we are at it, let us remember Labour’s poisonous legacy: youth unemployment up by 40%; unemployment among women up by 24%; and 5 million people on out-of-work benefits. That is the legacy we are dealing with, and we are getting the country back to work.

[Edward Miliband]

I wish for once that the Prime Minister would just answer the question. I asked him a very simple question about whether long-term unemployment has gone up by 96% since the Work programme was introduced, and the answer is yes. While he is talking about Labour’s programmes, let us talk about the future jobs fund. Last Friday, the Government issued a very interesting document. The Prime Minister spent two years rubbishing the future jobs fund but what did this document say? It said that the scheme provided

“net benefit to participants, their employers and society as a whole.”

In other words, it was a success. The Prime Minister rubbished the programme yet it helped 120,000 young people into work. His Work programme has helped only 3,000—[Hon. Members: “What does it cost?”] They shout, “What does it cost?”, but we cannot afford not to have young people in work. Is the truth that the Prime Minister got rid of a Labour programme that was working, and replaced it with a Tory one that is not?

[The Prime Minister]

Once again the right hon. Gentleman is completely wrong so let me give him the figures. The Government’s work experience programme sees half of the young people who take part get into work. That is the same result as for the future jobs fund, and it costs 20 times less. That is the truth: our programme is good value for taxpayers’ money and it is getting people into work. The right hon. Gentleman wasted money and left people on the dole.

[Edward Miliband]

The more the Prime Minister blusters, the redder he gets and the less convincing he is. That is the reality. We know in real time what happened at yesterday’s Cabinet—they were at each other like rats in a sack. The Chancellor blames the Work and Pensions Secretary; the Work and Pensions Secretary blames the Chancellor for the lack of growth. The Prime Minister is doing what he does best and blaming everyone else for the failure. Is the reality that the Government’s failure on the Work programme is a product of their failure to get growth, and the failure of their whole economic strategy?

[The Prime Minister]

The right hon. Gentleman worked in a Government where the Prime Minister and the Chancellor could not be in the same room as each other—rats in a sack does not even cover it.

Why not have a look at what the right hon. Gentleman has achieved on welfare this week? Once again this week, Labour voted against the welfare cap. Today, the Opposition are asking us to vote on a motion in the House on welfare. Last night, the motion specifically said they wanted further reform of welfare, but today the motion mentions nothing about it. The truth is that they are against the benefit cap, against the housing benefit cap and against the Work programme. They are officially the party of something for nothing.

[Edward Miliband]

I will tell the Prime Minister the reality. His welfare reform programme is failing because there is not the work, and his economic strategy is failing. That is the reality. He has a Work programme that is not working, a growth strategy that is not delivering, and a deficit that is rising. The Government are failing, the Prime Minister is failing and the British people—

[The Prime Minister]

rose—

[Edward Miliband]

Calm down, calm down. The Prime Minister just cannot keep his cool when he knows he is losing the argument, and it is the British people who are paying the price for his failure.

[The Prime Minister]

I think what we can see is a leadership that is drowning. This Government have cut corporation tax, scrapped the jobs tax, introduced enterprise zones, backed the regional growth fund, and funded 1 million apprenticeships, and we are rebuilding our economy so that we see 1 million more people in private sector work. We are putting the country back to work; Labour wrecked it.

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

Q2. Will the Prime Minister join me in congratulating the Milton Keynes-based Red Bull Formula 1 team on winning the world championship for three years in a row? They are another fine example of British technological innovation.

[The Prime Minister]

I am delighted to praise and pay tribute to the Formula 1 team based in my hon. Friend’s constituency, which sadly beat the Formula 1 team—Lotus Renault—based in mine. It is a remarkable fact that almost all of the Formula 1 cars, wherever they are racing in the world, are built, designed and engineered here in Britain. It is an industry in which we lead the world, and we should be very proud of it.

[Jonathan Ashworth (Leicester South) (Lab)]

Q3. The Prime Minister must have studied his Government’s own report that shows that the future jobs fund had a net benefit to participants, employers and society. Given that report, and that youth unemployment is now higher in Leicester than it was at the general election, why did he tell me in questions a year ago that the future jobs fund provided only “phoney jobs”?

[The Prime Minister]

The hon. Gentleman needs first to explain why youth unemployment went up 40% under the Labour Government. The facts of the future jobs fund are these: the figures show that 2% of the placements in Birmingham under the future jobs fund were in the private sector, but the rest were in the public sector. The cost of the scheme was 20 times higher than the work experience placement, which is doing just as well.

[Mrs Cheryl Gillan (Chesham and Amersham) (Con)]

My right hon. Friend—[Interruption.]

[Mr Speaker]

Order. The right hon. Lady must be heard.

[Mrs Gillan]

My right hon. Friend is aware that the Government are consulting on the compensation people will receive if High Speed 2 goes ahead. This is critical for people in my constituency. Will he give me a personal undertaking that he will study the proposals for the final packages for compensation and ensure that those people whose homes, businesses and lives will be totally disrupted by the scheme if it goes ahead are both fairly and generously compensated?

[The Prime Minister]

I absolutely give that undertaking that I will look carefully at the scheme. As my right hon. Friend knows, we are consulting at the moment. The proposals we have put forward are as good as the scheme for HS1 and better than the compensation scheme for previous motorway developments. As she also knows, there is an advance purchase scheme for property purchase to simplify the process for property owners in the safeguarded area. There is also a voluntary purchase scheme to allow home owners outside the area to have their homes purchased. I am very happy to discuss with her and others how we can ensure that the scheme works properly for people.

[Ms Gisela Stuart (Birmingham, Edgbaston) (Lab)]

Q4. On Monday, the police and crime commissioner, Bob Jones, and Chief Constable Chris Sims, called for a fair deal for policing for Birmingham and the west midlands, which arguably has the highest policing needs outside London. How can the Prime Minister hope to build one nation if areas such as Birmingham and the west midlands lose 800 front-line police officers while low-crime areas such as Surrey get an extra 250 bobbies on the beat? Do not we all deserve to live in safe communities?

[The Prime Minister]

The point I would make to the hon. Lady is that yes, we have asked the police to make funding reductions. They have been able to do that, keeping a higher proportion of bobbies on the front line, which has been effective, and taking people out of back-office jobs. At the same time, crime has fallen and public confidence in the police has risen. Yes, we are asking the police to take difficult decisions, but they are doing it and they are delivering.

[Roger Williams (Brecon and Radnorshire) (LD)]

Q5. I congratulate the coalition Government on introducing regulations to protect the welfare of wild animals performing in travelling circuses. This House voted overwhelmingly for a complete ban in 2011. While we wait for a draft Bill to be published, will the Prime Minister commit to introducing legislation so that this ban can be introduced in this Parliament?

[The Prime Minister]

It is our intention to do just that. My hon. Friend is absolutely right to raise the fact that we have changed the regulations in advance of legislation, so that the clearly expressed will of this House can be met.

[Mr Nigel Dodds (Belfast North) (DUP)]

Petrol prices in this country are among the very highest in the EU, and diesel prices are the very highest. Given that the Prime Minister is introducing minimum limits on alcohol pricing, can he turn his mind to maximum limits on fuel duty and start reducing the price of petrol and diesel for hard-pressed families and businesses across the UK?

[The Prime Minister]

The right hon. Gentleman makes an important point. Because of the changes we have made, petrol and diesel are 10p less a litre than they otherwise would have been if we had kept the tax increases that were put in place by the Opposition. That is the effect of this Government and we want to go on making that progress.

[Mel Stride (Central Devon) (Con)]

Q6. I thank my right hon. Friend for visiting Buckfastleigh with me yesterday, a town in my constituency severely affected by flooding. What the people of Buckfastleigh wish to know is how they are now going to get flooding insurance at affordable rates, particularly given that many homes have been blighted. Will he join me in pressing the Association of British Insurers to stop grandstanding in its negotiations with the Government, to get down to the table and thrash out a deal so that my constituents can get the insurance they need?

[The Prime Minister]

My hon. Friend makes an important point. I very much enjoyed visiting his constituency with him yesterday, seeing at first hand the appalling damage done by the floods and speaking with local people, the emergency services and the Environment Agency about all the work that is being done to protect more houses in future. We need to address the insurance issue and negotiations are under way. The Minister for Government Policy, my right hon. Friend the Member for West Dorset (Mr Letwin) is leading for the Government. I want us to get a resolution so that insurance companies provide what they are meant to provide, which is insurance for people living in their homes who want proper protection.

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

I thank the Prime Minister for his expressions of sympathy for the family of my elderly constituent who died in the floods. I join him in expressing sympathy to the families of all those—I think four people—who have died in the floods. Will the Prime Minister immediately reverse the 30% cuts he has made to flood defences in the past two years? What part will he play in the issue of flood insurance for those who live in flood risk areas?

[The Prime Minister]

Let me join the hon. Gentleman in paying tribute to his constituents, who have had to bear some truly terrible floods. The pictures of floods in St Asaph were of biblical scenes. The emergency services have performed extraordinary feats to rescue people and to help people at what is a very difficult time. On flood defence spending, the Government are planning to spend more than £2 billion in the next four years. That is 6% less than in the previous four years, but we believe that by spending the money better, and by leveraging money from private and other sectors, we can increase the level of flood defence spending. The spending that is already under way will protect an additional 145,000 homes between now and 2015, but if we can go further then of course we should.

[Caroline Nokes (Romsey and Southampton North) (Con)]

Q7. More than 3 million people a year fall victim to postal scams, telephone calls and e-mails making false promises of lottery wins, windfalls and inheritances. Is my right hon. aware that £3.5 billion a year is lost by UK consumers? Will he commit to working with the Home Office to amend existing legislation to protect the predominantly elderly and vulnerable victims?

[The Prime Minister]

I think my hon. Friend makes an important point. This is a growing area of crime and criminality that takes advantage of people using the internet and often those who are vulnerable. That is why, as part of the National Crime Agency, we are setting up a new unit dedicated to tackling this problem that will work across agencies to catch criminals and take the steps she rightly speaks about.

[Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab)]

Q8. A moment ago, the Leader of the Opposition asked whether long-term unemployment had risen by 96% since the introduction of the Work programme, but he did not receive an answer. I ask the Prime Minister again: has long-term unemployment risen by 96% since the Work programme was introduced?

[The Prime Minister]

I have given the figures for the Work programme: 800,000 people taking part and 200,000 people getting work. That is against a background where, over the last quarter, unemployment and the rate of youth unemployment have been falling and there have been more people in work. That is a record we can build on.

[Dr Liam Fox (North Somerset) (Con)]

A free press is a necessary counterbalance to a strong state and the British people also have an inherent sense of fairness, so we do not need to restrict the press; we need to focus on redress when the press cross an unacceptable line. With that in mind, will my right hon. Friend look at access to justice in this country to ensure that the libel and defamation laws we already have are available to everyone, not just the rich and famous?

[The Prime Minister]

My right hon. Friend makes an important point about access to justice, but one of the key things that the Leveson inquiry is trying to get to the bottom of is: how can we have a strong and independent regulatory system, so that we do not have to wait for the wheels of the criminal justice system or the libel system to work? People should be able to rely on a good regulatory system as well in order to get the redress they want, whether prominent apologies, fines for newspapers or the other things that are clearly so necessary.

[Derek Twigg (Halton) (Lab)]

Q9. The Department for Education is proposing to close its Runcorn site, with the loss of at least 220 jobs. It is in the 27th most-deprived borough in the country. How will that help with unemployment and social deprivation in my constituency? It is a pity that the Education Secretary has refused to meet me to discuss this matter.

[The Prime Minister]

I know that the hon. Gentleman has met the permanent secretary at the Department for Education to discuss the matter, and I will certainly discuss it with the Secretary of State as well. Of course, there will be consultation with affected staff and other local MPs, but let me make this important point: we all know that we have to try and find savings in departmental overhead budgets in order to maximise the money going into the schools. The Government have managed to maintain the per-pupil funding, and I am sure that hon. Members who think about it will consider that the most important thing for our schools, our children and our education system.

[George Freeman (Mid Norfolk) (Con)]

Last year, more than 10,000 men in Britain died from prostate cancer, the silent killer. Survival rates have increased from 20% to 70%, because of earlier diagnosis and better drugs. I pay tribute to the Prime Minister’s commitment to the NHS cancer drugs fund. Will he join me in welcoming the Movember campaign’s work to raise male health awareness and champion British leadership in cancer research?

[The Prime Minister]

I not only join my hon. Friend in praising the Movember campaign but praise his efforts lurking tentatively under his nose. This is an important campaign, because it raises awareness of cancers, including cancers such as the one he mentioned, which people are sometimes worried about mentioning and talking about. Raising awareness is important, as too are things, such as the cancer drugs fund, that ensure we get the drugs to the people who need them.

[Ian Lucas (Wrexham) (Lab)]

Q10. I once represented a seriously injured car-crash victim who was hounded and hurt further by an irresponsible press. When he set up the Leveson inquiry, the Prime Minister said: “I accept we can’t say it is the last chance saloon all over again. We’ve done that.”For the victims—for the McCanns, the Dowlers—will he keep his word?

[The Prime Minister]

The hon. Gentleman is absolutely right, as is my hon. Friend the Member for Crawley (Henry Smith), in saying that uppermost in our minds, as we consider the report, should be the victims of press intrusion and invasion of privacy, and the appalling things, in some cases, written about them and their families. We owe them a regulatory system that will work for them and which the public will have confidence in, and that is what we hope Leveson will produce.

[Jake Berry (Rossendale and Darwen) (Con)]

Leaving home before it is light and returning from work when it is dark, hard-working families in my constituency have a gross household income of just £25,000. Does my right hon. Friend think it right that their neighbours living on benefits currently earn more?

[The Prime Minister]

My hon. Friend makes an important point. Only this week we have yet again had a vote on our welfare benefits cap—which most people would see as generous at £26,000—and once again Labour has voted for unlimited welfare. We have long memories: we can remember that under Labour, some families were getting £70,000, £80,000, £90,000 or £100,000 of housing benefit. Labour did nothing about it because it believes in something for nothing.

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

Q11. Since the Prime Minister denounced aggressive tax avoidance as “morally repugnant”, why are his Government now actively promoting aggressive tax avoidance by cutting the tax on multinationals that open a finance company in a tax haven from the current 23% to just 5%? How can we be one nation when the Government are on the side of the tax dodgers?

[The Prime Minister]

I think the right hon. Gentleman has misunderstood what we are doing. We are introducing a general anti-avoidance rule—something that he, in 13 years of Labour Government, never managed to do. We will do it in three.

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

We were all inspired by the amazing London 2012 Olympic and Paralympic games, in an incredible summer of sport, but it is so important to get people involved in grass-roots community sport. Will the Prime Minister meet me, the Sport and Recreation Alliance, the county sports partnership network and Sport England to discuss the “Be Inspired, Get Involved” initiative, the first fair of which is this evening in my constituency?

[The Prime Minister]

I am happy to meet my hon. Friend about this issue. It is important that we take the legacy of the Olympics and turn it into increased rates of participation. That means, yes, working with the organisations that he spoke about, but also recognising the many heroes and heroines right around our country who run the Saturday morning football clubs, rugby clubs and cricket clubs. It is those clubs that provide so much of the answer for getting more sport into our communities and more sport into our schools as well.

[Jeremy Corbyn (Islington North) (Lab)]

Q12. Will the Prime Minister, like me, welcome the ceasefire in Gaza last week and regret all those who died as a result of the conflict, but also recognise that, fundamentally, the future of the middle east lies with peace and justice for the Palestinian people, be they in Gaza, the west bank or refugee camps? We have to recognise the Palestinian people, so tomorrow, will the British Government accordingly cast our vote at the United Nations in favour of Palestinian recognition without any preconditions—such as suggesting they should not have access to the International Criminal Court—as an independent, recognised nation?

[The Prime Minister]

I certainly join the hon. Gentleman in welcoming the fact that there is a ceasefire and that that conflict has ceased. I do not go all the way with him on the rest of his question, but my right hon. Friend the Foreign Secretary will be making a statement about this from the Dispatch Box in a few moments. I do not want to steal his thunder, but I think it is important that we use our vote to try to say to both sides in this conflict: “We need talks without preconditions.” In the end, as I said on Monday, the only way we are going to see a peace process that works is when Israelis and Palestinians come to the table and talk through the final status issues, including Jerusalem, including refugees and including borders—when they do it themselves. We can wish for all we want at the United Nations; in the end, you have got to have direct talks between the direct parties to get the two-state solution we want.

[Mr Shailesh Vara (North West Cambridgeshire) (Con)]

The Prime Minister will be aware that tomorrow’s business on the Order Paper includes a debate in my name to mark the 40th anniversary of the expulsion of Asians by Idi Amin from Uganda and their arrival in the UK. However, because of the need for a statement on the Leveson inquiry, it is likely that my debate may not now take place. [Hon. Members: “Oh!”] I and the community at large fully appreciate the circumstances. However, does the Prime Minister acknowledge the need for and the importance of such a debate, and will he also do whatever he can to ensure that I am given another debate as soon as possible?

[The Prime Minister]

The reaction of colleagues from right across the House shows that my hon. Friend speaks for the whole House—and I believe the whole country—in wanting to speak up for the Ugandan Asians who came to our country in the 1970s, who have made the most fantastic contribution to our national life. It is very good to see. I remember meeting my hon. Friend’s parents and how proud they are of him—second generation, coming to this country, sitting in the House of Commons and speaking up so well on these and other issues. Although I do not have control of the House of Commons agenda—sadly—I very much hope that the people who do will listen carefully to the point he made and reschedule his debate as fast as possible.

[Gemma Doyle (West Dunbartonshire) (Lab/Co-op)]

Q13. Will the Prime Minister confirm that, as a result of his cutting the 50p tax rate, 8,000 people earning over £1million will next year gain an average of £107,500? Whose side is he on?

[The Prime Minister]

What I can confirm is that, at 45p, the top rate of tax will be higher under this Government than it was in any of the 13 years of the last Government. That is a fact. The richest in our country will actually be paying more in income tax in every year of this Government than in any year of that Government.

[Robert Halfon (Harlow) (Con)]

In Harlow, Comet has made 80 home delivery and shop staff redundant, and the jobs of at least 65 transport and logistics staff are now at risk. Many of the redundant workers are suggesting that there has been malpractice. Will my right hon. Friend ask the Business Secretary to investigate this, to ensure that anyone who has lost their job gets the proper support and help that they are entitled to?

[The Prime Minister]

I am very happy to look carefully at what my hon. Friend has said. Clearly, what has happened at Comet is a tragedy for those who work for that business. I will talk to the Business Secretary about this, and see what can be done in the way that my hon. Friend suggests.

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

Q14. Last week, the Prime Minister told me and the House that the Government were investing an extra £900 million to combat tax avoidance. In fact, as Her Majesty’s Revenue and Customs will confirm, no such investment is taking place, and HMRC is facing a 15% cut in its budget. So is the Prime Minister guilty of fact avoidance or fact evasion?

[The Prime Minister]

The truth is that this Government have put £900 million into the specific measures of getting hold of tax avoidance. All these schemes grew up under years and years of the Labour Government, but they never did a general anti-tax avoidance. They presided over a system where people in the City were paying less tax than their cleaners, and it took this Government to sort it out.

[Philip Davies (Shipley) (Con)]

May I warn my right hon. Friend not to be remembered as the Prime Minister who introduced state regulation of the press? A free press is an essential part of a free democracy. Does he agree that state regulation of the press is like pregnancy? Just as someone is either pregnant or they are not, so we can either have state regulation or not. There is no alternative third way.

[The Prime Minister]

Where I would agree with my hon. Friend is that a free press is absolutely vital for a healthy democracy. We should recognise all that the press has done, and should continue to do, to uncover wrongdoing and to stand up to the powerful. That is vitally important and, whatever the changes we make, we want a robust and free press in our country.

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

Q15. Research by the charity Save the Children reveals, shockingly, that one in seven children in our country do not have a warm coat this winter. The Government are now cutting child benefit support to 100,000 families who look after disabled children—[Interruption.] Whatever our views on how our economic problems were brought about, surely it cannot be right that children, the poorest and the most vulnerable pay the most for this economic crisis.

[The Prime Minister]

I listened carefully to the hon. Gentleman, and the point that I would make is that we are removing child benefit from people earning over £60,000 a year. We think that that is the right step to take, because those with the broadest backs should be bearing the greatest burden. We have frozen child benefit for other families, but we have increased the child tax credit that goes to the poorest families.

Petition

Wednesday 28th November 2012 Commons Chamber

Chris Williamson (Derby North) (Lab)

- Hansard - - Excerpts

I rise to present a petition that has united the whole of the city of Derby and the city council, because people are fed up with the unfair funding cuts to which Derby has been subjected. The level of cuts in Derby is far higher than in many other parts of the country. Only yesterday, 350 more staff were made redundant from the council, and all three party leaders have written to the Secretary of State, calling for a fair deal for Derby. The petition is headed “Fair Deal for Derby”. It states:

The Petition of citizens of the United Kingdom,

Declares that they believe there has been a disproportionate impact of the Government’s austerity programme on Derby compared to other local authority areas and that the cumulative impact of the cuts being forced on Derby City Council will amount to £75.77 per person compared to a few pounds in other more affluent parts of the country.

The Petitioners therefore request that the House of Commons urges the Secretary of State for Communities and Local Government to ensure a fair deal for Derby by reducing the amount of cuts made to Derby City Council.

And the Petitioners remain, etc.

[P001139]

Palestinian Resolution (United Nations)

Wednesday 28th November 2012 Commons Chamber

12:33

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

With permission, I will make a statement on the Palestinian resolution to be moved at the United Nations General Assembly tomorrow. The resolution calls for the upgrading of the Palestinian UN status from observer to non-member observer state. I wish to inform the House of the discussions the Government have had about this with the Palestinian leadership, and of how we intend to proceed.

Achieving a two-state solution to the Israeli-Palestinian conflict is one of our top international priorities. We support a negotiated settlement leading to a safe and secure Israel living alongside a viable and sovereign Palestinian state, based on 1967 borders, with agreed land swaps, with Jerusalem as the shared capital of both states and with a just, fair and agreed settlement for refugees. That is the only way to secure a sustainable end to the conflict, and it has wide support in this House and across the world.

There has been a dangerous impasse in the peace process over the last two years. The pace of settlement building has increased, rocket attacks on Israel have increased, frustration and insecurity have deepened on both sides, and the parties have not been able to agree a return to talks. The crisis in Gaza and tragic loss of Palestinian and Israeli life shows why the region and the world cannot afford this vacuum in the peace process.

I pay tribute today to Egypt, the United States and the UN Secretary-General for their role in bringing about a ceasefire in Gaza, and we now need to build on it to bring about a lasting peace, including an end to the smuggling of weapons and the opening up of Gaza for trade as well as for aid.

I set out in the House last week our belief that the United States should launch a new initiative urgently to revive the middle east peace process. If progress on negotiations is not made next year, the two-state solution could become impossible to achieve. Yesterday, I said to Secretary Clinton that such an effort led by the US would need to be more intense than anything seen since the Oslo peace accords, and it should backed by a more active role for European nations as well.

Given the overriding need for both Israelis and Palestinians to return to negotiations as soon as possible, we asked Palestinian President Mahmoud Abbas not to move a resolution at the UN General Assembly for the time being. Our view was that it would be better to give the US Administration the opportunity to set out a new initiative. We pointed out that a UN resolution would be depicted by some as a move away from bilateral negotiations with Israel. We were also concerned about the considerable financial risks to the Palestinian Authority at a time when their situation is already precarious, if a vote led to a strong backlash from Israel and within the US political system.

Nevertheless, President Abbas has decided to press ahead—a decision we must respect. No one should be in any doubt that he is a courageous man of peace. Our central objective remains that of ensuring a rapid return to credible negotiations in order to secure a two-state solution. This is the guiding principle that will determine the way in which we will vote on any resolution at any time.

The frustration felt by many ordinary Palestinians about the lack of progress in the peace process is wholly understandable. Illegal settlement activity in the west bank, which we condemn, threatens the very viability of the peace process, and after many decades the Palestinians still do not have the state they aspire to. That is why we have consistently asked Israel to make a more decisive offer to Palestinians than in the recent past, and have also called on Palestinians not to set preconditions for negotiations.

We want to see a Palestinian state and look forward to the day when its people can enjoy the same rights and dignity as those of any other nation. For us to support a resolution at the UN, it is important that the risks to the peace process are addressed, so that the chances of negotiations beginning after it are enhanced rather than diminished.

I spoke to President Abbas on Monday and my right hon. Friend the Deputy Prime Minister spoke to him yesterday. We explained that, while there is no question of the United Kingdom voting against the resolution, in order to vote for it we would need certain assurances or amendments. The first is that the Palestinian Authority should indicate a clear commitment to return immediately to negotiations—without preconditions. This is the essential answer to the charge that by moving the resolution, the Palestinians are taking a path away from negotiations. Given the great difficulty in restarting negotiations in recent years and the risk that some will see this resolution as a step that is inconsistent with such negotiations, this commitment is indispensable to us.

The second assurance relates to membership of other specialised UN agencies and action in the International Criminal Court. Our country is a strong supporter, across all parties, of international justice and the International Criminal Court. We would ultimately like to see a Palestinian state represented throughout all the organs of the United Nations. However, we judge that if the Palestinians were to build on this resolution by pursuing ICC jurisdiction over the occupied territories at this stage, it could make a return to negotiations impossible. This is extremely important, given that we see 2013 as a crucial year—for the reasons I have described—for the middle east peace process.

We have also said to President Abbas that we would like to see language in the resolution that does not prejudge any deliberations by the UN Security Council, and for it to be clear that the resolution does not apply retrospectively. We believe these changes would not be difficult to make; that if they were made either in the text of the resolution or in accompanying statements as appropriate, they would win wider support for the resolution without any prejudice to final status issues; and that they would increase the prospects for negotiations moving ahead.

Up until the time of the vote itself, we will remain open to voting in favour of the resolution if we see public assurances by the Palestinians on these points. However, in the absence of these assurances, the United Kingdom would abstain on the vote. That would be consistent with our strong support for the principle of Palestinian statehood, but also with our concern that the resolution could set the peace process back.

We call again on the Palestinian Authority to make every possible amendment to win the widest possible support and to give the strongest possible assurances. We call on Israel to be ready to enter negotiations, and to agree a two-state solution before it is too late. Whatever happens at the General Assembly, we call on Israel to avoid reacting in a way that would damage the peace process or Israel’s international standing. We would not support a strong reaction that undermined the peace process by sidelining President Abbas, or risked the collapse of the Palestinian Authority. We also look to the US, with our strong and active support, to do all that it can in the coming weeks and months to restart this process.

The only way in which the Palestinian people can be given the state that they need and deserve, and the Israeli people can be given the security and peace to which they are entitled, is through a negotiated two-state solution. That requires—now—Israelis and Palestinians to return to negotiations, Israel to stop illegal settlement building, Palestinian factions to be reconciled with each other, and the international community —led by the United States and supported by European nations—to make the necessary huge effort to revive the peace process.

12:41

[Mr Douglas Alexander (Paisley and Renfrewshire South) (Lab)]

I thank the Foreign Secretary for early sight of his statement, and welcome his decision to come to the House to debate this matter today.

Only last week, the Foreign Secretary admitted in the House that

“Time is running out for the two-state solution.”

I agree with his assessment. Belief in the possibility of a negotiated two-state solution is today haemorrhaging, and haemorrhaging badly, across the region. The Foreign Secretary is an eloquent man, but I struggle to reconcile his statement of today with his analysis of last week. Exactly eight days ago, he told the House:

“There is a perfectly respectable and legitimate case for saying that it would be right to pass such a motion because this has gone on for so long and because Palestinian frustrations are so intense, for understandable reasons. I believe, however, that the balance of judgment comes down on the side of saying that to do so would be more likely to retard efforts to restart the peace process than to advance them”.

Following his statement today, may I ask the Foreign Secretary whether he has, in fact, changed his mind?

Let me now address the criteria that the Foreign Secretary tells us that he will use to determine how the United Kingdom votes. First, let me turn to the issue of the International Criminal Court. It is a matter of record that, as the Foreign Secretary repeated today, our country is a strong supporter of international justice and of the ICC. It is also a matter of record that Israel is not a party to the ICC treaty, and does not accept its jurisdiction within its own boundaries. Given that, as recently as two weeks ago, the British Government were urging Israel to adhere to international law, will the Foreign Secretary explain why the UK Government now apparently wish to exempt it from possible actions in the ICC for any future breaches of international law in the Occupied Palestinian Territories?

The second criterion that the Foreign Secretary mentioned was a return to negotiations without preconditions. Only eight days ago, he told the House:

“Owing to unacceptable settlement building on the west bank and in east Jerusalem, we are not far from a two-state solution becoming impossible and unviable.”

So why, just eight days later, is he apparently suggesting that Israel’s refusal to suspend the expansion of illegal settlements—changing the very facts on the ground as the basis of the negotiations, even as future talks get under way—is a reasonable position for the Israelis to adopt? Is it not the truth that, for all today’s sonorous words from the Foreign Secretary, he let the cat out of the bag eight days ago when he explained his own thinking on the issue? He stated then that

“because of the possible reaction of the US Congress and the possibility of Israel withholding tax revenues, the position of the Palestinian Authority could be made worse by the passage of such a resolution.”—[Official Report, 20 November 2012; Vol. 553, c. 450.]

Let me ask the Foreign Secretary this. Does he really believe that threats issued by a Republican-controlled Congress to punish the Palestinians for taking this diplomatic step are a reasonable basis on which to determine British policy? Does he really believe that Israel’s threat to withhold tax and customs revenues that it collects on behalf of the Palestinians, which legally belong to the Palestinians, are a reasonable basis on which to determine British policy on this vote? When will the Foreign Secretary understand that statehood for the Palestinians is not a gift to be given, but a right to be acknowledged?

I warn the Foreign Secretary that if the United Kingdom abstains tomorrow, it will not be a measure of our growing influence; it will be a confirmation of our growing irrelevance to meaningful engagement in the search for peace. Across Europe, countries such as France and Spain have already made it clear that they will join what I believe will be an overwhelming majority of the 193 members of the UN General Assembly in voting for enhanced observer status for the Palestinians. That vote can, and must, send a powerful signal to the Palestinians that diplomatic efforts and the path of politics, not the path of rockets and violence, offer the route to a negotiated two-state solution.

Let us be honest: in recent days Hamas-run Gaza has, in the midst of conflict with Israel, welcomed the secretary-general of the Arab League, the Prime Minister of Egypt and the Foreign Ministers of Turkey, Iraq, Jordan, the Palestinian Authority, Qatar, Tunisia, Saudi Arabia and Sudan. In his statement today, the Foreign Secretary rightly lauded President Abbas as a “courageous man of peace”. If, as the Government assert, they genuinely want to support moderate Palestinians and efforts to engage in meaningful negotiations, what signal would an abstention tomorrow send about whether violence or politics secures legitimacy and results?

Just eight days ago the Foreign Secretary sought to explain his position by telling the House that recognition at the UN could “risk paralysing the process”. He spoke again of the process today, but when will he understand: there is no process; there is only paralysis? Indeed, can the Foreign Secretary explain what process he was referring to today? In the last two years, there have been continued illegal settlement-building and continued rocket attacks. There has been fear, anxiety and continuing conflict. There has been continued occupation. There has been continued blockade. But there have been no meaningful negotiations. That is why, for more than a year, Labour has been clear that recognition at the UN for the Palestinians is one of the steps required to achieve a negotiated two-state solution. Abstention tomorrow would be an abdication of Britain’s responsibilities.

Let me appeal to the Foreign Secretary as a historian, by referring to a figure from history whom he and his party rightly revere. The phrase “to govern is to decide” is attributed to Winston Churchill. I urge the Foreign Secretary, even at this late hour, not to dither, but to decide to vote for enhanced recognition for the Palestinians tomorrow at the United Nations.

[Mr Hague]

Although there are clearly some differences between us, the shadow Foreign Secretary expressed common ground when he said that time is running out. The analysis of all of us in all parties on both sides of the House starts from that point, although we draw some different tactical conclusions from it. Indeed, my statement, and our attitude, is based on a sentiment the right hon. Gentleman expressed: we support the right to a Palestinian state. I supported that very strongly in my statement. I have not, however, changed my mind about anything. The right hon. Gentleman was looking too hard for changes between what I said last week and this week because, so far as I am aware, I said the same things about the risks to the peace process, the risks in the US Congress and the risks in Israel.

The right hon. Gentleman asked: is there a process? One of the main points I have been stressing is the need to revive—to restart—that process. There have been many attempts to do that over the past year, and, in particular, the Kingdom of Jordan has played a very constructive role. There are many obstacles to achieving that, however, including Israeli settlement building—which I think is condemned across the House—but another obstacle has been an unwillingness by Palestinians to remove all preconditions for negotiations. It is important to have the commitment from Palestinians to return to negotiations without preconditions, which is why that is one of the criteria we have set. We need both sides to do that, and to be ready to do so whatever happens at the General Assembly. We would welcome that—and, of course, we would particularly welcome it if it could be made clear before the vote. It would be the single most crucial factor that would enable us to vote for the resolution. We will still welcome it if the Palestinians can say that after the vote.

The right hon. Gentleman asked about the International Criminal Court. We are certainly not arguing that Israel should be exempt from the ICC, but it is important to remember that, given the urgency on which we all agree, our overriding objective is for negotiations to resume and to succeed. The right hon. Gentleman appealed to me as a historian, and the lesson of history in respect of negotiations is that we have to have enough common ground to bring the two sides together, and that it is important to avoid doing things, certainly in the short term, that make it harder to bring the two sides together. That is the reason for that criterion. So these are sensible criteria for us to have put forward. The right hon. Gentleman expressed his support for voting for the Palestinian resolution even before seeing the resolution. I have waited to see the resolution and then looked at how it can be improved and how we can react to it in a way that maximises the chances of successful negotiations.

It is very important for the Opposition to ask themselves this: if we succeeded and the Palestinians did give the assurances I have asked for, would the chances of negotiations taking place and succeeding be improved? Yes, they undoubtedly would if the Palestinians made those commitments. If they do not give those commitments and we abstain, will the United Kingdom still be in a position, with the Palestinians, with the Israelis, and with the United States, to advance whatever we can make of the peace process? Yes, we will. Therefore, what I have expressed is the optimum position for the United Kingdom and the best for the middle east peace process.

This is not about just agreeing with a resolution because we sympathise, as we do, with the position of the Palestinians; we are a country, not a newspaper or a pressure group. We have to use our vote with all considerations and the ultimate objective in mind. It does not help the Palestinians to help them celebrate for one day while at the same time failing to address the wider needs of the peace process. That is the reason for our position. Whatever happens with this resolution and in the vote tomorrow, the United Kingdom will continue to be at the forefront of working for peace, stability and security in the middle east.

[Mr James Clappison (Hertsmere) (Con)]

I agree with what my right hon. Friend has said about the urgent need for talks. I also agree with my right hon. Friend the Prime Minister, who has said that for the Palestinians

“there is no path to statehood except through talks with Israel.”

Both territory and security for Israel must be addressed in the course of that. Will the Foreign Secretary give us some indication of the precise nature of the assurances he has sought from the Palestinians about membership of the International Criminal Court and the other international bodies? Have any assurances so far been offered from the other side and the Palestinians?

[Mr Hague]

I am grateful to my hon. Friend for that. The assurances are those I have described in the statement. On the recourse to the ICC, at this stage, in the occupied territories because of the impact on the ability to bring about a negotiated settlement, we are not talking about that. As I said in response to the right hon. Member for Paisley and Renfrewshire South (Mr Alexander), we are certainly not advocating some permanent exemption. We have not received any assurances on those points, which is one of the reasons why we continue to seek them and why, as things stand, we cannot vote for the resolution. We will continue to seek them over the coming 24 hours.

[Mr Jack Straw (Blackburn) (Lab)]

Will the Foreign Secretary please understand that this complex conditionality of which he speaks is too clever by half and that what it will most achieve is to undermine Britain’s influence, both with the Israelis and in the Arab world, and at the same, and more crucially, to undermine the position of the man he has praised, President Abbas? What has happened in the past three weeks is that Hamas has seen its power and influence enhanced and that the message has gone out, not least from Israel, “If you send enough rockets over the border, you can get to negotiations”, while one condition after another is imposed on the peace-seeking Palestinians. This approach, I am afraid, is not going to help.

[Mr Hague]

I do not agree with that, although the right hon. Gentleman has a lot of experience in these matters. I can tell him that in all the conversations that we have had with Palestinian negotiators, and that the Deputy Prime Minister and I have had with President Abbas in the past few days, our relations have been excellent. That deep friendship will continue. The financial and political support that this country gives, with very strong cross-party support, to the Palestinian Authority, which is among the foremost in the world, is understood well by the Palestinian Authority and will, of course, continue. That is very clear, and so I do not believe that anything we have said or done is in any way undermining of President Abbas. It is also important for us to maintain our close relations with all the other countries involved in the peace process. So I do not accept the premise of the right hon. Gentleman’s argument.

[Nicholas Soames (Mid Sussex) (Con)]

May I say to my right hon. Friend that I certainly understand the fiendish difficulties of this matter, but I profoundly disagree with what he says? Whatever this resolution says, these conditions are unnecessary, one-sided and grossly unfair. What further steps does he plan to take to help and encourage the Palestinians to proceed with these vital peace talks, without which the middle east will continue to sink into an abyss?

[Mr Hague]

Clearly my right hon. Friend and I have a different view on this point, as is very apparent to the House, but we will go on arguing for the same things. Although the concentration at the moment is, understandably, on tomorrow’s vote, what is very important is what happens on Friday. Whatever the result of the vote and however individual nations vote, we must discourage any steps by any parties involved, including Israel, that would be damaging to the peace process and negotiations. We will continue to urge the Palestinians to do the things that I have described—in particular, to enter into negotiations without preconditions. As he knows, I have been very, very critical of Israel on settlement building and on not making a big enough, generous, decisive enough offer to the Palestinians, but we also have to be critical of Palestinians at times, when opportunities are not taken. They have failed on several occasions to take the opportunity of negotiations, because too many preconditions have been set, and we have to be frank about that. So I will encourage them in that direction.

[Richard Burden (Birmingham, Northfield) (Lab)]

Does the Foreign Secretary think it would be reasonable for this country or the international community to make Israel’s continued full membership of the United Nations dependent on meeting conditions laid down by him or by the international community? If he thinks that would be unreasonable, as I do, why does he apply different standards to the Palestinians? Does he not realise that the position he has articulated today will again be seen as a classic double standard on the part of the United Kingdom? Why will he not join the more than 100 Members of this House who have signed an early-day motion calling for recognition? Why will he not join France, Spain, the majority of the United Nations General Assembly and the more than 1.5 million people who, in an online poll, supported upgrading the Palestinian recognition? Is it not time to drop the double standards?

[Mr Hague]

What we want is, as I have explained, a successful negotiation. We deal with the hand that history has dealt to us all. Decisions about Israel’s membership of the United Nations were taken long ago, but decisions about Palestinian membership were not, so now we have to try to resolve that. We want to see Palestine in the United Nations, at the United Nations and in all the organs of the United Nations. However, I stress the point the Prime Minister made at Prime Minister’s questions in answer to the hon. Member for Islington North (Jeremy Corbyn): this will come about only as a result of a successful negotiation with Israel. If that is true, and I have not heard anyone argue that it is not, everything we do should be consistent with promoting, facilitating and bringing to a success such negotiations. That is our guiding principle; it is an overriding principle set against all the other factors that, understandably, people raise.

[Martin Horwood (Cheltenham) (LD)]

May I applaud the Foreign Secretary for bringing Britain closer to a yes vote in support of Palestinian aspirations than any previous British Government have done, but say that Liberal Democrat Members, too, would have preferred a British yes vote with no preconditions? In anticipation of the General Assembly as a whole voting yes, will he tell us what representations he has made to the Governments of Israel and the United States to discourage either of them from giving a punitive response to this peaceful diplomatic initiative?

[Mr Hague]

I am grateful to my hon. Friend for that, and he will be pleased that the Deputy Prime Minister has been so much involved in our efforts over the past few days. Of course, we have made such representations, doing so directly in Israel and in the United States. I referred to the conversations that I had with Secretary Clinton yesterday, which of course covered this subject. We will make urgent such representations if the resolution is passed by a large majority, as is expected, on Thursday night. So those representations will be strong and continuous.

[Mrs Louise Ellman (Liverpool, Riverside) (Lab/Co-op)]

For two years, the Palestinians have refused to go back to the negotiating table. What will convince the Foreign Secretary that enhanced status for the Palestinians at the UN will encourage them to go back to the negotiations in which they have refused to take part for the past two years?

[Mr Hague]

This is the other side of the argument. I have pointed out that as well as our criticism of Israel, which has been very strong, I am also critical of Palestinians for sometimes, including over the last year, setting preconditions for going back into negotiations that meant that such negotiations did not take place. I believe in their wish to enter into and conclude such negotiations, so I do not go as far the other way as the hon. Lady. Since those negotiations are the only way to bring about a settlement of the issue for Israelis and Palestinians, we must promote them, however difficult they are.

[Stephen Phillips (Sleaford and North Hykeham) (Con)]

My right hon. Friend has correctly told the House that time for a two-state solution is running out. He has also told the House that that is the only thing that can guarantee statehood for the Palestinians and peace for Israel. How long have we got?

[Mr Hague]

I think that we do not have very long and that is why urgency has been expressed across the House. The pace of settlement building is steadily reducing the time available for a two-state solution, as has the sheer time that has been exhausted over so many years of trying to bring it about. Although I would not count the time in months, we do not have many years. We might have only one or two years to bring this about, hence the urgency of restarting negotiations.

[Sir Gerald Kaufman (Manchester, Gorton) (Lab)]

So the right hon. Gentleman offers President Abbas all support short of actual support. May I warn him, just as I warned Yitzhak Rabin when he was Prime Minister of Israel? I said to him personally in conversation that if he failed to give validity to Fatah, all that would be left would be Hamas. Mr Rabin shook hands with Arafat on the White House lawn; the right hon. Gentleman sits on his hands.

[Mr Hague]

I do not think that that is what the Palestinians would think after all the discussions we have had with them over the past few days. Of course, I do not agree with the right hon. Gentleman on that point. Support takes many forms and our strong support for the Palestinian Authority as well as the huge financial and other support we give are maintained and much appreciated by the leaders of the Palestinian Authority. Of course there are disagreements about our vote tomorrow, but I hope that no one in the House will pretend that we do not have good relations with and support for people, particularly those of a moderate persuasion, in the Palestinian Authority. There is no doubt that we have such relations and that they continue.

[Andrew Percy (Brigg and Goole) (Con)]

The Foreign Secretary is absolutely right to seek those assurances and I give him credit for that. I think he said that he wanted to see public assurances by the Palestinians. Will they be in writing and will he ensure that they are not time limited?

[Mr Hague]

They could take many forms, of course, and I have made that point to the Palestinians. What we are seeking could be in the resolution, which can be amended at a very late stage—even right up to the vote tomorrow—it could be in the speech we expect President Abbas to deliver in New York tomorrow, or it could be in writing and published. Such assurances could take many forms and there is still time to give them.

[Mr Nigel Dodds (Belfast North) (DUP)]

In the House in October, the Foreign Secretary described the Palestinian application as a “divisive symbolic” gesture. In the absence of the assurances or amendments he seeks, does he stand by that statement? Will he update the House on the progress that has been made in getting Hamas to renounce its commitment to the absolute annihilation of the state of Israel?

[Mr Hague]

Sadly, no one has made that progress with Hamas yet. Indeed, it is vital for Hamas to recognise previous agreements, forswear violence and recognise the right of Israel to exist. It is good that talks are taking place under Egyptian auspices on Gaza and that those talks include how to prevent the smuggling of weapons into Gaza as well as how to open it up. It is important and good that those talks are taking place. As I said in the statement, we asked the Palestinians not to proceed with the resolution at this time because our fear is that although it could be symbolic, which is why many people want to support it, the fact that it could be divisive in the peace process is a danger. The assurances we have sought would make it more than symbolic and would mitigate any divisive effect. That is the logic of what we are doing.

[Sir Tony Baldry (Banbury) (Con)]

Following the answer my right hon. Friend gave to our hon. and learned Friend the Member for Sleaford and North Hykeham (Stephen Phillips), what will happen if the two-state solution fails? Will the Palestinians for ever remain an occupied people? Will they for ever remain stateless? Will they for ever remain in a situation where more and more of their land is being taken by illegal settlements?

[Mr Hague]

The outlook is very bleak if a two-state solution fails, but the outlook is bleak for Israel, too. That is the message in our constant conversation with Israeli leaders: unless they conclude a two-state solution within the kind of time frame that I have been talking about, they are faced with one-state solutions, which pose many profound challenges for Israel and the nature of its society. That is why it is so important for both sides that this is addressed and such challenges would be so difficult that I do not want to speculate about what they would lead to at this time.

[Mr Ben Bradshaw (Exeter) (Lab)]

A yes vote would mark an historic and very welcome shift in British Government policy. I congratulate the Foreign Secretary for edging towards that position and my right hon. Friend the shadow Foreign Secretary for encouraging him to do so, although I regret the conditions. The Americans, as ever, are critical. How hopeful was the Foreign Secretary after his discussion yesterday with Mrs Clinton?

[Mr Hague]

After my discussions with Secretary Clinton yesterday, I think there is a good understanding of the strength of view across the world, including in countries such as ours as well as in other European countries, and of the urgency of the matter. It is very important for that understanding to be shared across the American system. I have worked closely with Secretary Clinton over the past two and a half years, but she intends to depart office as Secretary of State in the coming weeks. This will be the No. 1 item we discuss with the incoming Secretary of State of the United States; indeed, I have already discussed it with some of the people who might become Secretary of State. It has been prominent among our discussions with President Obama, and the Prime Minister and I have both put the point strongly to the President. The understanding is there in the United States but we now need to help them translate it into real action.

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

I pay a great tribute to the Secretary of State for not only ensuring that this is a UK Government foreign policy priority but trying to ensuring that it becomes a second-term American Administration foreign policy priority. On the difficult issue he has addressed of the ICC jurisdiction, I understand exactly what he is trying to do. Is it his hope not that the ICC should not have a jurisdiction but that if the Palestinians and Israelis come to the table for peace talks, the question of the ICC can be parked for a time so that the attempt to get a peace deal is not skewered by sending the question to courts that would take much longer to resolve it?

[Mr Hague]

My right hon. Friend is right, of course, about the second-term priorities. Given the urgency of the situation and given that from January the Israeli elections will have taken place and the United States will be at the beginning of a second-term Administration, if we are not going to address and resolve the problem then, when on earth will we ever do so? We see this question as very important for the re-elected US Administration. He is also right about the ICC and that is what we are saying. We are saying not that anyone should be exempt from the ICC for the long-term future, but that since a negotiation must succeed everybody has to accept some things that are temporary or unpleasant. We had our own experience of that—many hon. Members have much experience of it—in the Northern Ireland peace process. We had to do things we were very reluctant to do but that were necessary to bring about a settlement. That is true in the middle east, too.

[Hazel Blears (Salford and Eccles) (Lab)]

My right hon. Friend the shadow Foreign Secretary set out the very powerful case that support for the resolution could act not as a block to peace but as a bridge. Earlier this year, I met President Abbas and I was convinced that he was a man of courage who wanted to get back to negotiations. How has the Foreign Secretary weighed the importance of empowering President Abbas to kick-start the negotiations against the assurances he has set out, which although they are important are a very high bar? That balance is key if we are to make progress for both Israel and Palestine.

[Mr Hague]

The right hon. Lady is absolutely right. That is the judgment—how to weigh those things. We want the Palestinian Authority to succeed, and we believe that President Abbas is the best interlocutor that Israel will have to bring about peace. We also believe, however, that the other factors that I have described are essential for that to work. Our way of weighing those two factors in the balance is to try to combine them in a successful resolution.

I make again the point that I made in response to the right hon. Member for Paisley and Renfrewshire South: if these assurances were received, and we could vote for the resolution, and it was passed with a large majority, would the chances of negotiation beginning again and succeeding be greater than they are today? The answer is undeniably yes, and that is the logic of our position.

[John Howell (Henley) (Con)]

I refer the House to my entry in the Register of Members’ Financial Interests. I welcome the Foreign Secretary’s statement. When I was in Israel and the Palestinian territories, I did not detect any appetite for overreacting to the passing of the resolution. What has he heard that has changed his mind?

[Mr Hague]

As my hon. Friend can imagine, we have discussed this with the United States and Israel in detail, and there are people who do not in any way hold extreme views on these things who are concerned about possible reactions and about—we certainly hope that there will not be—any sudden, dramatic, adverse reaction to the passing of the resolution. They are concerned that the result might be stagnation and that it could make it more difficult for the United States to do the sort of thing that we have all called for in the House today. That is why we have asked for additional assurances.

[Simon Danczuk (Rochdale) (Lab)]

The Palestinian people deserve the support of the British people and the British Government. Why does the Foreign Secretary ask the Palestinian people not to set conditions, only to set conditions on his support for the Palestinians at the United Nations?

[Mr Hague]

We are simply trying to frame the resolution and what goes with it in the right way to remove preconditions. An obstacle to negotiations in the past year, as I explained, has been preconditions on the Palestinian side. We want to get rid of that obstacle and secure a commitment to return to negotiations without preconditions. I do not see any problem with that condition.

[Dr Matthew Offord (Hendon) (Con)]

I understand that the Foreign Secretary had a conversation with President Abbas about the resolution. In that conversation, at any point did President Abbas indicate that his priority was to return to peace talks without preconditions? If he did not, does the Foreign Secretary agree that this is just a distraction?

[Mr Hague]

We have had many conversations with President Abbas on this subject, and we have discussed many times over the past two and a half years how to get back into negotiations. At one stage, for a brief period, that happened at the end of the 10-month settlement freeze. I have no doubt of President Abbas’s sincerity in wanting to bring about successful negotiations, but he did not respond to my request by saying that he would say publicly that there would be no preconditions. We will continue to encourage him to do so, but we should not draw any adverse conclusions about President Abbas on that either. We simply have to keep encouraging him in that direction.

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

How Britain votes at the United Nations will surely be a test of how genuine our commitment is to the Palestinian cause. Arising from previous questions, does the Foreign Secretary accept that the choice is really for Israel, leaving aside the resolution at the UN, on whether it accepts a viable and independent Palestinian state—the Palestinian people are certainly not going to disappear any more than Israelis are—or a one-state solution with safeguards for both communities? That may not be the best choice for Israel, but the choice lies with Israel.

[Mr Hague]

Well, I will go so far with the hon. Gentleman: absolutely, of course that is an important test for Israel, which is why it needs to enter negotiations in the right spirit and with the right generosity. However, the Palestinians need to play their part. Any such negotiation requires both parties to conclude it successfully, and they must be prepared to make the necessary compromises. There are important tests for both sides, and our vote in the UN General Assembly should be determined by our determination to see them make a success of those negotiations, rather than to demonstrate that the Palestinian cause is more important than Israeli security, or the other way round. The test for us is supporting negotiation.

[Duncan Hames (Chippenham) (LD)]

We have heard today the consequences for the Palestinians if they place any preconditions on entering peace talks, but what consequences does the Foreign Secretary see for the next Israeli Government, both political and economic, if they fail to end the illegal settlement activity that he said threatens the viability of any peace process?

[Mr Hague]

As I mentioned, there will be serious and accumulating consequences for Israel of failing to bring about a two-state solution. Settlement building is a major contributor. It is the single biggest factor in removing the time and opportunity to create such a two-state solution. So, yes, Israel will face greater problems in future. As for other measures—my hon. Friend is seeking diplomatic penalties and so on for Israel in future—that arises when we turn our minds to how the United States should restart the peace process, and how European nations can support that. We will want to do so in a very active way, but I do not want to speculate about what measures we could take at this point.

[Jeremy Corbyn (Islington North) (Lab)]

The Foreign Secretary must be aware of the misery of refugees living for 60 years in the camps in Lebanon, Jordan and Syria; of the people of Gaza, imprisoned effectively by the Israeli blockade; and of the west bank under occupation. Why has he made a statement that effectively says that the diplomatic objectives of the US and Israel are holding a veto over our vote at the UN tomorrow? Will he not put himself on the side of history, rather than talking about the hand of history, and vote for the unconditional recognition of Palestine?

[Mr Hague]

I do not think that I was talking about the hand of history. That was a Tony Blair phrase—I have not adopted it. The lesson of history—I shall return to that point—is that we need a negotiation to succeed. The hon. Gentleman asked why the opinions of Israel and the United States matter so much. It is because we will only alleviate these problems and help decisively the people to whose plight he rightly drew attention with a negotiated settlement with Israel. Of course, one has to allow for opinion in Israel as well, and the nation with the closest relationships with Israel and the biggest leverage over its foreign policy decisions is the United States. That is why we must have due regard for its opinions. That is the practical and diplomatic approach that foreign policy must allow for. As I said, we are exercising the vote of a country and exercising our foreign policy, not making gestures.

[Mr Philip Hollobone (Kettering) (Con)]

In 1947, His Majesty’s Government abstained on the admission of a Jewish national homeland into the United Nations. Sixty-five years later, it looks as though we will do the same again. Now, we are a constant friend of Israel, and in recognition of the fact that the resolution will be passed tomorrow whatever we do, should Her Majesty’s Government not change gear and work over the next few years with both Israelis and moderate Palestinians to bring about the real game-changing event in the middle east—Israeli sponsorship of eventual full Palestinian admission to the United Nations, with both states living in peace behind secure borders?

[Mr Hague]

Yes, my hon. Friend puts it very well. This has moved rapidly to the top of the list of international priorities, and this is the time to do so. Given that, as we discussed, it is the beginning of a second term in Washington and the Israeli election campaign concludes in January, it is an important moment to try to achieve exactly what he describes.

[Mark Durkan (Foyle) (SDLP)]

May I ask the Foreign Secretary to show a little less neck to the Palestinians and a little more backbone to the Israelis? He referred to the Northern Ireland peace process. One of the lessons of that is that when give and take is not happening between the parties immediately involved, responsible external weight can be used to establish necessary givens, even against the shrill opposition of key elements at the time. Has he no fear that an abstention tomorrow will only undermine President Abbas and underwrite an Israeli veto in terms that will be seen to underwrite the very Israeli violations that he himself has condemned?

[Mr Hague]

No, I do not think so. I gave the reasons earlier why I do not think that undermines President Abbas at all. Indeed, in his phone call last night with the Deputy Prime Minister, President Abbas was clear about the strong and continuing friendship between us, irrespective of the vote tomorrow. I defer to Northern Ireland Members on some of the lessons of the peace process, but here that requires external parties to say, “Above all, you are going to have to be pushed back into negotiations.” That means pressure on both sides. This is an example of us exerting that pressure on both sides, so the hon. Gentleman should welcome that.

[Robert Halfon (Harlow) (Con)]

I refer Members to my entry in the Register of Members’ Financial Interests. I thank my right hon. Friend for his reasoned statement and particularly for the work of the Minister with responsibility for the middle east. Inevitably, Hamas will see tomorrow’s vote as a victory for its missile attacks on Israel. The Palestinian Authority say that recognition will help bolster the moderate Palestinians. If the Palestinian state is voted for and Hamas is strengthened and resumes its missile attacks on Israel, what actions will the Government take?

[Mr Hague]

My hon. Friend paints a range of unwelcome events that could come about, and he knows many of the things that we do to discourage those things, including rocket attacks on Israel. Of course we will continue to advocate the revival of the peace process. Of course we stand by the security and legitimacy of Israel, as he knows, but we also want Israel to do what is necessary for the peace process to succeed and Palestinians to enter negotiations with them, so we will do our utmost to guard against the outcomes that he fears.

[Mr Andy Slaughter (Hammersmith) (Lab)]

The Secretary of State said that he had spoken to Mahmoud Abbas. I would be interested to know which Israelis he spoke to before putting together this miserable little offer that continues to treat the Palestinians as second-class citizens, if citizens at all. What, apart from the fact that Israel wants it, should lead the Palestinians to fetter their access to the Security Council and the International Criminal Court, and what in particular should make them enter negotiations for their own land when the colonisation of that land continues?

[Mr Hague]

The hon. Gentleman can make that case and it is very powerfully felt among Palestinians, but I remind the House again that their plight will be alleviated only if there is a successful negotiation between both parties—between Israel and the Palestinians—so it would not be wise to disregard all Israeli concerns. Those concerns have to be met as well. Israel has to know that it can reliably live in peace and security, just as Palestinians need to know that they can live in a viable sovereign state. So it is very important to understand both sides of the argument, and I do not think the hon. Gentleman’s question was a very good example of that.

[Guto Bebb (Aberconwy) (Con)]

A two-state solution demands, in my view, bilateral talks, not unilateral grandstanding. As such, does my right hon. Friend have any views on the numerous peace initiatives of the Israeli Government over the past three years, all of which have been rebuffed by the Palestinian Authority?

[Mr Hague]

It does require bilateral talks; my hon. Friend is absolutely right. There is, as I indicated a few moments ago, fault on both sides when it comes to efforts to have negotiations over the past few years. Israel has been, on the whole, readier to enter into negotiations, but Israel has not made the decisive offer, or the more decisive offer than anything seen in recent years, that I have called for. The Palestinians have not always been ready to enter into negotiations at all. Both those things will have to change if we are to see a successful peace process.

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

The Foreign Secretary said that he was worried about a backlash from Israel and others. Given the blockades, the illegal settlements, the wall, the destruction of Palestinian farms, the arrests, the imprisonment, the decades of ignoring UN resolutions, the refugee camps, the abject poverty and the rest, how much worse does he think it can get for the Palestinians?

[Mr Hague]

Unfortunately, the position could get worse. The Palestinian Authority is in a precarious financial position, although the United Kingdom, under Governments of all parties, has a very strong record in that regard, and we will maintain that strong record. But it is a difficult position. Given the nature of the west bank, the proximity of Israel and the obviously very difficult relations with Israel, yes, things could get worse. There are ways in which they could get even worse, so the hon. Gentleman is right to draw attention to all the factors to which he drew attention, but we still need the parties to be able to restart negotiations, taking into account the concerns of both sides.

[Kris Hopkins (Keighley) (Con)]

I welcome my right hon. Friend’s thoughtful and considered statement, which I know will be closely examined by many in my constituency. Will this country continue to pursue a two-state solution with every effort, if for no other reason than that we have an historical and moral responsibility to assist in ending that conflict?

[Mr Hague]

I am grateful to my hon. Friend. We will do that. I have referred many times today and on previous occasions to the vital importance of this issue over the coming months and to its urgency. That will be fully reflected in the way that we conduct our foreign policy over the coming weeks and months.

[Hywel Williams (Arfon) (PC)]

May I first express the regret of my right hon. and hon. Friends who sit on this Bench in respect of the conditions set out by the Foreign Secretary? May I ask him a genuine question? What assessment has he made of any change for good or ill in the stance of the Israeli Government with the forthcoming election and with the departure of Ehud Barak?

[Mr Hague]

This is a matter for the Israeli people. I will not intervene in their politics. We have always had close and good relations with Mr Barak. Indeed, he is one of the Israeli leaders I speak to most frequently, so in that sense we will regret his departure. But it is up to the Israelis who they choose to lead them in their elections in January. Whoever that is, we will make the case powerfully to them about the urgency of the issue and about the importance of it being in their own long-term strategic interests to tackle it decisively over the coming year. So we will not be shy of doing that, just as we are not shy of saying to Palestinians what we need from them.

[Mr Robin Walker (Worcester) (Con)]

I welcome the news that the UK will not oppose or veto greater recognition for Palestine. The House should support all those on both sides who strive for peace and lay aside violence. Although I hope that the Secretary of State’s conditions can be satisfied, does he agree that enhanced recognition would mark a step towards the sovereign Palestine and secure Israel that we all want to see and increase the accountability of Palestinian organisations to the UN?

[Mr Hague]

Whether that would mark a step towards that depends on what happens next. As I mentioned earlier, it is important that Palestinians can celebrate success not just for one day at the United Nations, but that then there is a sequence of events that they can celebrate and that will give them hope for the future. That is what we are trying to provide in the assurances that we have asked for, to maximise the chances of further progress being made after a vote at the UN tomorrow, rather than the peace process going backwards. So we can answer my hon. Friend’s question fully only when we see what happens next.

[Fiona Mactaggart (Slough) (Lab)]

The Foreign Secretary told us about the conditions that he put to the Palestinian Authority. What I am interested in is what he said to the Israeli Government about their threat to withhold the taxes that they owe the Palestinians. What is he doing to prevent that threat from being carried out?

[Mr Hague]

We have said what I said about that towards the end my statement—that we would not support any such action by Israel. Of course we are concerned. Among our concerns is that something like that could happen, but we are very clear, and we have been very clear with Israel already, that we hope that the Israeli Government will not take any such steps and that they will not react in an adverse way to the passing of the resolution. As I have explained in answer to other questions, we will apply our persuasion and pressure to Israel, just as we do to Palestinians.

[Mr David Ward (Bradford East) (LD)]

Is this not all about the messages that we are sending out? The Foreign Secretary speaks in complimentary terms about President Abbas but urges him not to move his resolution because of the possible financial and political consequences for Palestinians. If the resolution is not moved, will that not simply show that bullying and threats work and send out completely the wrong message to all Israelis and Palestinians who seek a peaceful resolution to the divisions that they face?

[Mr Hague]

I have some differences with my hon. Friend on that, because I do not think that this is just about messages; it is about how we get these two parties, who have not had a successful negotiation for a long time, back together and negotiating. It is actually quite a practical question. It is not just the business of loud hailers; it is the business of painstaking negotiations. Our actions should therefore be guided by what maximises their chances. That is the guiding principle of our policy.

[Anas Sarwar (Glasgow Central) (Lab)]

I am sorry to say that the Foreign Secretary’s statement undermines the UK’s credibility as an honest and fair player in what remains of the peace process. It is clear that there is overwhelming global support for the resolution. Indeed, there is overwhelming public support for it in the UK. He said that President Abbas is a courageous man, but is the Foreign Secretary?

[Mr Hague]

I do not agree that this undermines our credibility in any way. On the contrary, I think that we will be in a strong position, after all the discussions that we have had with the Palestinians, the Israelis and the United States in recent days, to do our utmost to move the peace process forward with those countries and parties over the coming weeks. I think that the hon. Gentleman will find that his prediction is not borne out by events.

[David Mowat (Warrington South) (Con)]

We have heard a lot this afternoon about preconditions. Will the Foreign Secretary tell the House which preconditions he regards as most unreasonable, and does he not regard Israeli settlement activity as a different type of precondition?

[Mr Hague]

We condemn settlement activity on occupied land, but we differed with the Palestinians over the past year when they would not re-enter negotiations without a halt to such activity. Of course one can understand the rationale behind them not doing so, but the result, since that is a precondition, is that such activity goes on but no negotiations take place. It would be better to get stuck into negotiations, even while settlement activity continues. That is the sort of precondition that I am talking about.

[Caroline Lucas (Brighton, Pavilion) (Green)]

Does the Foreign Secretary feel comfortable with the fact that what he is effectively suggesting is that a nation’s status at the UN should depend on its willingness to give up access to recognised mechanisms for implementing international law? How does that look consistent or fair?

[Mr Hague]

Because we want a negotiation to succeed. I do not think that any right hon. or hon. Member has successfully contradicted what I have said several times. Across the House, we all recognise that this conflict will be resolved and peace will come to the middle east only if there is a successful negotiation between the Israelis and the Palestinians. I have heard no one offer any alternative. There is much desire to express opinions, make gestures and so on, but no one has contradicted that. If that is the case and a successful negotiation is required, that requires us to encourage both parties into that negotiation and for each side to do what will allow it to be successful. That is the simple logic.

[Roger Williams (Brecon and Radnorshire) (LD)]

In his statement, the Foreign Secretary paid tribute to Egypt and its role in obtaining a ceasefire. Does he agree that Egypt has a role to play in reopening the peace negotiations and bringing some normality to that troubled region?

[Mr Hague]

Yes, absolutely. There is a major opportunity for the new Egypt to do that. Last week, I called the Egyptian Foreign Minister to congratulate him on the efforts Egypt has made, and the Under-Secretary of State for Foreign and Commonwealth Affairs, my hon. Friend the Member for North East Bedfordshire (Alistair Burt), called again last night to urge the Egyptians on with their efforts on further negotiations about Gaza, in trying to open up Gaza but prevent the smuggling of weapons. If that can be achieved, Egypt will be in a strong position to continue its efforts on broader issues.

[Grahame M. Morris (Easington) (Lab)]

No hon. Member doubts the Foreign Secretary’s integrity or honesty or the diligent way that his team has tried to bring about peace in the middle east with his usual good humour, but is he not concerned that we are on the wrong side of the argument? We should be on the side of the right, not the might. Opposition Members have referred to a major poll conducted by YouGov, showing that 76% of respondents were in favour of recognising the Palestinian state and only 6% were against it. Is it not rather perverse that he is saying that Palestinians should not place preconditions on negotiations when that is precisely what we are doing? I am afraid that we are putting ourselves on the wrong side of the argument.

[Mr Hague]

I am grateful to the hon. Gentleman for stating his arguments in such a measured way. I think that Members on both sides of the House are on the side of a successful settlement of the middle east peace process and a two-state solution. Our only disagreement is about how to encourage that. Our view is that when faced with such a vote at the UN we should use it in a way that maximises the chances of negotiations by removing preconditions. I know that there are strong feelings about that, as has been illustrated across the House. He will understand that we cannot determine our foreign policy week by week according to opinion polls. If we did, he might not agree with the conclusions that would be reached on many issues.

[Rushanara Ali (Bethnal Green and Bow) (Lab)]

Given our country’s distinct history in the region and the legacy that was left behind, does the Foreign Secretary agree that Britain has a unique responsibility to take a stand, show international leadership and courage and generate some hope for both the Palestinians and the Israelis who want peace? Surely, the resolution would be one way to signal our role in showing that leadership. I ask him to think again before tomorrow.

[Mr Hague]

The hon. Lady is right about the history. We have a unique responsibility, although of course we do not have power in exactly the same way that we did in the 1940s, but we have it in many new and different forms. We have a great responsibility as a member of the UN Security Council to assist in these matters. The problem with her question was apparent when she referred to giving hope to Palestinians and to Israelis. That is an important point. It is important that we give hope to people on both sides of the divide, and that is what I am seeking to do.

[Jonathan Ashworth (Leicester South) (Lab)]

It would be churlish not to recognise that the Foreign Secretary has shifted his position to an extent, but I am sorry to say that I feel that, as my right hon. Friend the Member for Blackburn (Mr Straw) said, this manoeuvre is too clever by half. Given that countries around the world are shifting their position—I am thinking of France and Spain—is the right hon. Gentleman not worried that we risk losing influence on these matters? Given our history and standing in the region, would voting in favour of the resolution tomorrow not send a signal to both sides that only a political solution is viable?

[Mr Hague]

No, I think that our influence will be important whatever happens in the vote and, indeed, however we vote. As a member of the Security Council and given the good relations that we have with the Palestinian Authority and Israel and our special relationship with the United States, our influence will continue to be very important. That absolutely will be maintained. We will be using that influence from the moment after the vote is conducted to try to ensure that negotiations begin again.

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

Surely, a vote for Palestinian statehood would give faith to many Palestinians that a political solution is possible, and surely the strengthening of such moderate Palestinian opinion must be key to progress.

[Mr Hague]

The thing that would most give those people hope and confidence that there is the future that they rightly desire would be to see their leadership sitting down with the Israeli leadership, both making the necessary concessions and talking about how they can help each other to achieve the goal of a settlement based on 1967 borders, with Jerusalem as a shared capital of both states and with a settlement for refugees. That would really give them hope, as it would have done at the time of the Oslo peace accords, so everything that we do should be calculated to encourage that, and that is what has dictated our policy.

[Jim Shannon (Strangford) (DUP)]

I thank the Foreign Secretary for his considered statement to the House. When the latest peace agreement was reached, Palestinian authorities stood by and allowed seven Palestinians to be killed after allegations were made that they had given information to Israel. One of them was under close arrest in a prison in Palestine at the time and so could have given no information whatsoever. Does the Foreign Secretary agree that it is obvious that Palestine has not moved away from Hamas terrorism and brutality and that he must stand firm and not agree to the enhanced recognition for Palestine at this time for those very reasons?

[Mr Hague]

That is the other side of the argument that we have heard. Certainly, Hamas is an organisation that has committed serious abuses of human rights. In response to the right hon. Member for Belfast North (Mr Dodds), I referred to what Hamas needs to do and how it needs to change. The hon. Gentleman has given a further illustration of the need for that.

Business of the House

Wednesday 28th November 2012 Commons Chamber

13:40

[The Leader of the House of Commons (Mr Andrew Lansley)]

With permission, Mr Speaker, I would like to make a short business statement.

As I announced last week, the Prime Minister will make a statement in response to the Leveson report. With your kind permission, Mr Speaker, I expect that statement to be made to the House at 3 pm tomorrow, at the conclusion of the Back-Bench debate on Scotland and the Union.

Given the extent of the interest in the Leveson report, I can tell the House that the scheduled Back-Bench debate on the 40th anniversary of the expulsion of Ugandan Asians will now take place at a later date.

I will set out the forthcoming business as usual tomorrow.

13:41

[Ms Angela Eagle (Wallasey) (Lab)]

I thank the Leader of the House for his statement and for making clear what will happen tomorrow after the publication of the Leveson report. Can he enlighten the House on whether, when the Prime Minister responds to the report, he will speak on behalf of the whole Government or merely of a part of the Conservative party?

[Mr Lansley]

As I said, the Prime Minister will make a statement on behalf of the Government.

[Jane Ellison (Battersea) (Con)]

May I say on behalf of the Backbench Business Committee that, although we are obviously disappointed, we understand the reason why business has been changed? The bid for the debate was extremely well supported by the Committee, so if there is anything that we can do to accommodate the debate in good order, we will do it.

[Mr Lansley]

I am grateful to my hon. Friend and, indeed, the Backbench Business Committee for their forbearance. One of the consequences of what I have announced is that, although less Back-Bench time has been allocated for tomorrow, more will be allocated at a later date. I hope that the Committee will find a ready opportunity to accommodate this important debate.

[Mr Shailesh Vara (North West Cambridgeshire) (Con)]

As the proposer of the debate that will now be postponed, I am clearly disappointed, but I fully appreciate the circumstances. Mindful of the subject’s topicality, I would be happy to reduce the time allowed for the debate from three hours to one and a half hours if that is of assistance to those who schedule things, so that we can have it sooner rather than later.

[Mr Lansley]

I am grateful to my hon. Friend. I share his disappointment and thank him for his forbearance, too. I am sure that the Backbench Business Committee, which considers the allocation of time, will have heard what he has said.

Consolidation of Housing Regulations

Wednesday 28th November 2012 Commons Chamber

Motion to bring in a Bill (Standing Order No. 23)

13:43

[Mr Adrian Sanders (Torbay) (LD)]

I beg to move,

That leave be given to bring in a Bill to consolidate Regulations relating to tenancies in the social and private housing sectors; and for connected purposes.

I would like to draw the House’s attention to my declaration in the Register of Members’ Financial Interests.

The Bill would revamp the current framework for the private rented sector, seek to solve some systemic imbalances, make both tenants and landlords more aware of their rights and responsibilities, and provide a more robust foundation to encourage investment in new housing.

It is clear that, for a number of reasons, we face a housing crisis in the UK that will only get worse in the coming years. At root is the problem of supply. Household formation has been fast outstripping house building for many years. In addition, there is a massive problem with affordability. The inequalities of wealth and income that grew in the 1980s remain and in many cases are worse today. Housing costs in particular have risen phenomenally and a decade of harmful speculation in property prices sadly shows few signs of transforming into a more stable market, such as that in Germany. This is accompanied by inter-generational inequality, so people on low incomes and younger people have far less opportunity to own their own home.

As well as the distortions to the housing market that that set of circumstances creates, it is of direct financial cost to the Treasury. As we all know, the increase in the housing benefit bill has been relentless—it has increased by 50% since 2005. This diverts resources that otherwise could be spent on preventing the inequality in the first place. Demand is already increasing steeply and, if not managed properly, this will create yet more challenges for policy makers to fix retrospectively.

There will undoubtedly be many new landlords in the coming years, but they will act in a culture of uncertainty. As Sir Adrian Montague’s recent report highlighted, the sector has not yet encouraged significant extra institutional investment, despite clear potential. The introduction of universal credit produces uncertainty for landlords. The reduction of direct payments to landlords may well lead to private landlords no longer offering their properties to those in work and receiving universal credit.

Many landlords and tenants are, remarkably, unaware of their rights and responsibilities. There remains a section of landlords who are remiss or even criminal in their duties towards their tenants. We must not forget, either, that there are also some bad tenants, who willingly fail to uphold their responsibilities.

New builds are covered by a relatively comprehensive range of regulations, including for fire safety and energy conservation, but a consolidation of regulations would go some way to encouraging the improvement of older rented properties—the quarter of rented homes that do not currently meet the decent homes standard.

What, then, is the argument for simplification? The Law Commission’s 2006 report, “Renting Homes”, provided a blueprint for simplification consisting of deregulation, consolidation and rationalisation. This Bill will focus on the second of those, which the report defines as

“bringing together different regulations into a more manageable form and restating the law more clearly. By improving transparency and understanding, it should reduce compliance costs”.

At present, landlords are subject to regulation from the following sources: the Gas Safety (Installation and Use) Regulations 1998, the Furniture and Furnishings (Fire) (Safety) Regulations 1988, as amended in 1993, the Electrical Equipment (Safety) Regulations 1994, the Plugs and Sockets etc. (Safety) Regulations 1994, part P of the building regulations, selective licensing under the Housing Act 2004, the various provisions of the Landlord and Tenant Acts 1985 and 1987, the Taxation of Income from Land (Non-residents) Regulations 1995, the Protection from Eviction Act 1977, the Data Protection Act, energy performance certificate regulations, tenancy deposit regulations and equalities legislation. I could go on.

This range of rules creates confusion. Although the Department for Communities and Local Government and others have produced guides synthesizing this information, these are no substitute for a single piece of legislation. The confusion is not only for landlords and tenants, but for legislators and those discussing the future of the sector. Providing for all regulations to be approved by a single Department or agency would also add clarity.

Despite these difficulties, the majority of landlords comply with legislation and, indeed, go beyond it, because they know it makes financial sense to do so. The problem arises when unscrupulous landlords let properties, and it is exacerbated when tenants are vulnerable or on very low incomes. A consolidated regulatory regime would also benefit from a one-stop shop for complaints and redress. At the moment, tenancy deposit protection agencies, local authorities, the courts and a host of other agencies are able to intervene. In practice, far too many tenants are not able to get landlords to fulfil their responsibilities promptly and, indeed, many landlords are unhappy that there is not a better process for redress when tenants fall into arrears. We need a single ombudsman-type body to adjudicate and mediate when things go wrong between landlords and tenants, and ideally at an early stage, so that tenancies do not fall through and the inevitable costs to all involved are avoided.

We want to avoid situations—I am sure we have all heard of them in our surgeries—whereby families are evicted with one or two weeks’ notice, do not know their rights and do not have recourse to a speedy solution. As the “Renting Homes” reports states:

“Many landlord-tenant disputes currently arise from ignorance. Our recommended scheme, with its emphasis on written model contracts, drafted in plain language, enables both landlords and occupiers to discover easily their respective rights and responsibilities. This will reduce the need to seek legal advice and facilitate the resolution of problems and disputes. All parties gain from this approach which leads to significantly reduced compliance costs.”

Another aspect is the regularity of inspection or demonstration of compliance with regulatory duties for landlords. Landlords are required to perform an annual gas safety inspection, and there is no reason why this could not be converted, at very little extra cost, into a more robust assessment of other areas of the safety of the property, such as the presence of a working smoke alarm, or any of the other risk factors that local authorities will search for under the housing health and safety rating system. Such a check could be performed less frequently, at no danger to the tenant or property, than on the current annual basis—perhaps every two or three years.

A comprehensive rebundling of regulation would provide an opportunity to consider broader tenancy reform, as “Renting Homes” suggested, taking a more consumer protection-oriented approach. However, some aspects of regulation still need strengthening. The requirement to have a working smoke alarm, already present for houses in multiple occupation and new build, could save dozens of lives and prevent thousands of injuries a year if extended to all rented homes. Taking regulation in the round could allow such extra elements to be introduced without the massive regulatory cost that would arise from introducing piecemeal changes. Most importantly, providing a standardised and transparent approach to renting would give investors the confidence to pledge resources to the build-to-let sector.

The Montague report effectively covers some of the problems, including the pitfalls of the planning system, the need to release more public sector land, and the need for new business models for investment. Most importantly, Montague states in his fifth and final recommendation that

“the market would benefit from a clearer understanding of what tenants should have the right to expect.”

A clearer framework for how the sector operates would undoubtedly reassure many investors, who are bound to be wary in the current financial climate. Sadly, it is clear that poor standards are also present in the social sector, so there is plenty of scope for the Government to take a broad approach to reforming the rented sector overall.

Other jurisdictions are taking this action. The Welsh Government, for example, set out a comprehensive review of housing regulation in their recent “Homes for Wales” white paper. They propose a national accreditation scheme, which the deregulating zeal of the UK Government would clearly preclude, but also endorse flexible tenancy reform, which this Bill seeks to emulate. There are other, more subtle ways of improving housing quality by bringing in related industries such as insurance and banking, as the Rugg review outlined. As the review concluded, we would benefit from light-touch licensing with effective redress.

This Bill would allow for better regulation of the private rented sector, better enforcement of that regulation, a better deal for landlords and tenants, and a better incentive to invest in building the new homes that so many of our constituents desperately need.

Question put and agreed to.

Ordered,

That Mr Adrian Sanders, Annette Brooke, Paul Farrelly, Dan Rogerson, Andrew George, Mr David Ward, Caroline Lucas and Mark Durkan present the Bill.

Mr Adrian Sanders accordingly presented the Bill.

Bill read the First time; to be read a Second time on Friday 18 January 2013 and to be printed (Bill 98).

Opposition Day

Wednesday 28th November 2012 Commons Chamber

[11th Allotted Day]

Income Tax

Wednesday 28th November 2012 Commons Chamber

[Mr Speaker]

I inform the House that I have selected the amendment in the name of the Prime Minister.

13:54

[Rachel Reeves (Leeds West) (Lab)]

I beg to move,

That this House notes that HM Revenue and Customs figures show that 8,000 people earning over £1 million will gain an average of £107,500 from the Government’s decision to cut the top rate of income tax from April 2013; further notes that figures from the Institute for Fiscal Studies show that the Government’s changes to tax allowances for pensioners will mean that 4.4 million existing pensioners will lose an average of £83 from 2013-14, while thousands of people turning 65 will lose £323; and calls on the Government to announce in the Autumn Statement that it will not go ahead with its proposal to cut the top rate of tax for the richest earners at a time when the economy is flatlining, millions of pensioners on middle and low incomes are paying more, and when wider tax and benefit changes being implemented in 2012-13 will result in families with children losing an average of £511.

In March this year the Chancellor of the Exchequer stood in this House to deliver his Budget. It was a revealing moment. Having previously said that we are all in it together and insisted that those with the broadest shoulders should bear the greatest burden, the Chancellor announced a tax cut worth, on average, £107,000 for those earning more than £1 million a year. It was the moment that the Government’s façade of fairness disappeared for good. In these tough times, against the backdrop of the biggest squeeze in living standards for a generation, and with the economy flatlining, the Chancellor prioritised millionaires above millions of working people. That is why we have called this debate: to question the priorities of the Government, to stand up for pensioners and families who are being hit hardest—

[Mr Graham Stuart (Beverley and Holderness) (Con)]

The hon. Lady said that she wants to prioritise ordinary people over millionaires, so would the Labour party, if it were to come into government in 2015, reintroduce the 50p rate?

[Rachel Reeves]

We are hoping that Government Members will see sense and vote for the motion, and that the Chancellor will rethink his decision in next week’s autumn statement. It is not too late to reverse this change. I am not going to write the manifesto for 2015 now, but every single Labour MP will be voting against this tax change, which has not yet come into effect, so the Government can still think again.

[Jonathan Edwards (Carmarthen East and Dinefwr) (PC)]

Can the hon. Lady explain why only two Labour Members—the hon. Members for Newport West (Paul Flynn) and for Bolsover (Mr Skinner)—voted against the rise after the Budget statement in March?

[Rachel Reeves]

We have already debated this; when we debated the Finance Bill, Labour MPs voted against the cut in the top rate from 50p to 45p, as the hon. Gentleman is aware.

Let us look at the facts. There are 30 million taxpayers in the UK—30 million people who go out to work each day and pay their tax—yet the Chancellor’s tax cut helps only the richest 300,000, of whom 8,000 take home more than £1 million a year. According to table 2.5 on page 30 of Her Majesty’s Revenue and Customs’ income tax liabilities statistics of April this year, their total income in 2012-13 is expected to be £18.4 billion, and they will pay £8.6 billion of tax on that income at the 50p rate. From next April, when the additional rate is lowered to 45p, they will pay £7.7 billion of tax on that income. This represents £860 million of lost revenue because of a tax cut for people earning over £1 million, and an average tax giveaway of £107,000 to each and every one of them—not just in one year but in each year to come.

[Andrew Bridgen (North West Leicestershire) (Con)]

rose—

[Rachel Reeves]

I give way, and I look forward to hearing a justification for that.

[Andrew Bridgen]

Will not the hon. Lady be honest with this House and this country? This was a Trojan horse of a tax brought in at the very fag end of the Labour Government as part of a scorched-earth policy that has been shown to have cost the Exchequer almost £7 billion already—something else that the previous Government messed up and that this Government have to put right.

[Mr Speaker]

Order. In using the word “honest”, it should be taken as read that Members are always honest in the Chamber.

[Rachel Reeves]

Thank you, Mr Speaker.

The increase in the top rate of tax from 40p to 50p was introduced to help to reduce the deficit because the last Labour Government thought that it was right that those with the broadest shoulders paid a little bit more towards achieving that. The fact that this Chancellor has reversed that and is reducing the top rate of tax shows that he thinks exactly the opposite—that his priorities are not with ordinary working people but with the richest 1%. [Interruption.]

[Charlie Elphicke (Dover) (Con)]

Will the hon. Lady give way?

[Rachel Reeves]

I will—and if the hon. Member for Beverley and Holderness (Mr Stuart) has an intervention to make, then he can make it.

[Charlie Elphicke]

Does the hon. Lady accept the calculation by the Office for Budget Responsibility that this proposal would cost £100 million—yes or no?

[Rachel Reeves]

Let us look at what Robert Chote, the chair of the OBR, says about the cut in the 50p rate:

“This is a judgement based on not even a full year’s data based in terms of how people have responded to the 50p rate, in particular in terms of those self assessment tax-payers.”

Indeed, we know that a series of larger-than-usual dividends were paid in the days and weeks just before the introduction of the 50p rate. For example, the Prime Minister’s friend Emma Harrison, who is the Government’s adviser on their welfare-to-work programme—we know how successful that has been—was paid on 1 April 2010, before the new tax year, which meant that her dividend was taxed at the old 40% rate, saving her £800,000.

That is why the Government’s claims about the yield of the 50p rate do not stand up. People have had the opportunity to anticipate the introduction of the new taxation rate by bringing their income forward, as they did when the rate was reduced. As the Office for Budget Responsibility and the Institute for Fiscal Studies said, it is difficult to produce a definitive estimate for the long-term yield of a tax that has been in place for only a short period, and it is fiscally irresponsible and wholly misleading to use figures from the first year to justify the policy.

[Charlie Elphicke]

I thank the hon. Lady for giving way again, but let me press her a bit more on this point. The OBR said that its calculation was a “reasonable and central estimate.” Does she disagree with that?

[Rachel Reeves]

Robert Chote has said:

“This is a judgment based on not even a full year’s worth of data”

and the estimates are very uncertain. Another group of experts at the IFS stated that

“by giving out £3 billion to well-off people who pay 50p tax…the Government is banking on a very, very uncertain amount of people changing their behaviour and paying more tax as a result of the fact that you’re taxing them…There is a lot of uncertainty, a lot of risk on this estimate.”

If the Government think that lots of millionaires who were not paying the 50p rate of tax will start flooding to these shores to pay the 45p rate—well, we will see what happens when the numbers come out.

[Charlie Elphicke]

Let us talk about those millionaires. Today’s Daily Mail states that the number of millionaires slumped from 16,000 to 6,000 after the 50p rate of tax was introduced, and that revenues fell from £13.4 billion to £6.5 billion. Does that show that if the rate of tax is increased too much, it will have a negative impact on the public finances?

[Rachel Reeves]

I thank the hon. Gentleman for at least highlighting that thousands of people with declared incomes of more than £1 million who were paying the 50p rate will get a tax cut next year. His figures show that in 2010-11 there were 6,000 people with declared incomes of more than £1 million, and 10,000 in 2011-12. A written answer that I received from the Exchequer Secretary to the Treasury on 19 June stated that 70% of people earning more than £250,000 were paying more than 40% in tax, and 80% of those earning more than £500,000 were paying the 50p rate. In the new year, each and every one will get a large tax cut.

If the Government honestly want people to pay their fair share of tax, they should spend more time and resources on tackling tax avoidance, not compensate the wealthiest by cutting the headline rate of tax. No wonder they have cut staff numbers at Her Majesty’s Revenue and Customs by 11%—they have just given up.

I am happy to debate the Government’s record on raising revenue through taxation. Last autumn, as a result of the slowing economy, projected income tax revenues across the board had to be written down by £51.2 billion by the Office for Budget Responsibility because of the weakness of the economy and the double-dip recession. Only last week, the Office for National Statistics released statistics showing that public borrowing in October was £2.7 billion higher than for the same month last year.

Over the first seven months of financial year 2012-13, the Government have borrowed around £5 billion more than for the same period last year. Why are we seeing that increase in borrowing? It is not as if the Government have not put up taxes for ordinary people or cut public services. The Chancellor’s flatlining economy has forced a 10% slump in corporation tax revenues, and VAT revenues are expected to be down by 2.5%. The Government can spend all the time they like defending a tax cut for millionaires, and Ministers as much time as they like in Cabinet arguing among themselves about why there has been no growth, but it is time they changed course and adopted a plan for jobs and growth.

[Mark Pritchard (The Wrekin) (Con)]

Whether the rate is 45p or 50p, does the hon. Lady accept the principle that a low-tax economy is better for Britain and for businesses to do business in Britain?

[Rachel Reeves]

The hon. Gentleman says, “Whether the rate is 45p or 50p”, but the difference between those figures is £3 billion that could be used to pay down the deficit, help families who are struggling with the rising cost of living or get rid of the granny tax that the Chancellor is introducing next year. The principle of having lower taxes is fine, but we have a deficit to reduce. I thought the Government believed we should be cutting that deficit instead of giving tax cuts. The Chancellor said that in his first Budget, but he has thought again since then and is giving a tax cut to the wealthiest while asking ordinary families to pay more. That is not what my constituents want, and I doubt it is what those of the hon. Gentleman want either.

[Sheila Gilmore (Edinburgh East) (Lab)]

Does my hon. Friend agree that, strangely, because the cut in the rate of tax was announced and then postponed, a number of people will doubtless try to do in reverse what they appear to have done when the tax was introduced? The Government will then say, “Ah, but in this year, not enough was raised through that tax.” It will almost become a self-fulfilling prophecy.

[Rachel Reeves]

Exactly that point about income profiling and not being able to estimate the impact of the tax because it has not been in place long enough was made by the IFS and the OBR. It is a shocking indictment of the Government’s priorities that the Chancellor has chosen at this time to give a tax cut to the few at the top—a tax break for millionaires—while asking working people to pay more. They are the same, old, out-of-touch Tories, and not one of their accomplices—the Liberal Democrats—had the nerve to stand up to the Chancellor.

[Paul Flynn (Newport West) (Lab)]

Studies show that those countries in the world that are happiest and have highest levels of contentment and well-being are the Scandinavian nations that have relatively high taxes and high minimum wages. Is it not strange for the Government to believe that we make the rich work harder by giving them more money but the poor work harder by taking money from them?

[Rachel Reeves]

My hon. Friend makes an important point. The work of Wilkinson and Pickett in “The Spirit Level”, and other academic research, has shown exactly that. Some people will be a lot happier next year—the 8,000 millionaires who will have their taxes cut—but ordinary working people who see their taxes go up will be a lot worse off and, I expect, not very happy with either their finances or the Government who have inflicted that situation on them.

In the same Budget as the Chancellor’s giveaway to the richest, buried in the small print as a tax simplification, was the Chancellor’s granny tax. The freeze in the age-related allowance for the over-65s will see 4.4 million pensioners who pay income tax losing an average of £83 each per year. People who turn 65 next year will lose most of all—up to £322. Listening to the Chancellor was like watching Robin Hood in reverse. Most pensioners who will be hit by the granny tax live on incomes that put them in the bottom half of income tax distribution. Those with a small personal pension of £67 a week—£3,000 a year—will be in line to lose under this measure. How insulting to pensioners who have worked hard all their lives, who have not earned large salaries, but who have done the right thing and saved responsibly so they could provide for themselves in later life.

[Mr David Anderson (Blaydon) (Lab)]

Does my hon. Friend recognise figures from Hansard that show that in the north-east some 4,000 taxpayers will benefit from the changes, but more than 278,000 will be worse off and they will mainly be pensioners? Does that not show all we need to know about the Conservative party?

[Rachel Reeves]

My hon. Friend makes an important point. People on modest incomes such as pensioners will lose out, while those at the top get a little bit more—well, not a little bit more; they will get £107,000 more next year from the Government. How insulting for those pensioners to see their taxes go up on the same day that millionaires have their taxes cut. Families, pensioners and young people cannot escape the Chancellor’s austerity programme—only millionaires can do that.

Pensioners have already seen their winter fuel allowance cut and their pension indexed to a lower measure of inflation. The increase in the state pension age for women has been brought forward, and the rise in VAT has added £275 to the costs faced by an average pensioner couple. Services such as the national health service, social care and local transport have been cut, and the TUC estimates that a single pensioner will lose access to services worth 11% of his or her income. No wonder so many people have spoken out against what the Chancellor is doing.

Age UK has stated:

“We feel it is disappointing that the budget offered a tax break of at least £10,000 to the very wealthy while penalising many pensioners on fairly modest incomes who are already squeezed.”

The chief executive of Saga has said:

“Over the next five years, pensioners with an income of between £10,500 and £24,000 will be paying an extra £3 billion in tax while richer pensioners are left unaffected”.

The National Pensioners Convention has said:

“We have been inundated by pensioners who are disgusted that those on around £11,000 a year will no longer get additional reductions in their tax…whilst those earning £150,000 or more will see their tax bills reduced…This is seen by many as the last straw…Pensioners feel they are being asked to bail out the super rich…and it’s simply not fair.”

The Opposition could not agree more. It is the same old out-of-touch Tories.

[Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab)]

To add to that litany of taxes on pensioners, annuity rates are in freefall; one cardinal fact of the past two and a half years is the collapse in annuity rates for pensioners. On top of those other attacks on their income, pensioners now find that their annuity rates are collapsing.

[Rachel Reeves]

I thank my hon. Friend, who is the shadow pensions Minister, for his intervention. I am sure he could add many other examples of pensioners being hard hit by the Government. The change in annuity rates is one example as the economy continues to flatline.

The rest of the taxpaying public look with disbelief on what the Government are doing, including the families with children, who are, on average, £450 a year worse off because of last year’s VAT rise, and another £511 a year worse off this year because of further cuts, freezes and reductions to benefits and tax credits; the couples with children who cannot increase their hours to the higher threshold introduced by the Government and who will have working tax credits withdrawn, which, in many cases will drop them below the poverty line; the families with incomes above £26,000, who are now losing all their child tax credit, contrary to the Prime Minister’s promises before the general election; and those on modest earnings with children at school, who will suffer cuts to services equivalent to 13% of their incomes.

The deterioration of the economic outlook on this Chancellor’s watch has led to the OBR revising projections on real disposable income per household down by £800 last year, by £1,100 this year and by £1,700 next year.

[Mr Jim Cunningham (Coventry South) (Lab)]

On tax credits, what does my hon. Friend think about a case I heard about two or three days ago, in which the application for tax credits was not even opened for three months?

[Rachel Reeves]

Given the cuts to departmental budgets, it is not surprising that some applications are not being processed and that, as a result, families are missing out on the tax credits to which they entitled, pushing them further into hardship.

How will households throughout the country feel next year, when those earning more than £1 million get a tax cut of £107,000? What is the Government’s message to people who work hard and want to get on in life? We remember when the Conservatives liked to think of themselves as the party of aspiration. Baroness Thatcher liked to claim she stood up for people who wanted to work their way up, and yet, under this Government, people who get a pay rise or promotion lose their child benefit. Imagine that! A person who earns £49,000 a year and has three children will lose thousands of pounds in child benefit if they take a pay rise or promotion. What a terrible position to put people in.

The truth about the Government is this: pensioners pay more, low-paid parents pay more, and a family working hard to get on in life and provide for their children pay more, but millionaires pay less. That tells us everything we need to know about the Government and their values. For many, 2012 will be remembered as the year the Chancellor’s drastic cuts began to hit home, but for the richest, 2013 will be remembered as the year they received their tax give-away from this Robin-Hood-in-reverse Chancellor.

Last week, the Prime Minister compared the economic situation we face to war. It is true that we are facing a period of national upheaval, but that is why it is crucial that the Government are a uniting force, not a dividing one. Is this really the time for a tax cut for the richest? During the second world war, the public queued to get their copy of the Beveridge report, because it set out the beginnings of a welfare state in which everyone had a stake. In the period of reconstruction after the war, that spirit and sense of national mission led to the creation of the national health service.

The Government do not understand the need for one nation politics, or the need to take people with them and share the burden of sacrifice fairly. Instead, they will be remembered as a Government who divided. Indeed, of the richest who are receiving the tax give-away, 85% are men, but around 70% of the revenue raised from direct tax and benefit changes will come from women. Fifty-two per cent. of those benefiting from the millionaires’ tax give-away are based in London and the south-east, but long-term unemployment is rising in the north. The poor are expected to work harder, because otherwise they will be made poorer, but the rich will work harder only if they are made richer. There is one rule for the very richest and another for everybody else. It is the same old out-of-touch Tories.

When the Chancellor came to the House to deliver his 2011 Budget, he said that

“now would not be the right time to remove it when we are asking others in our society on much lower incomes to make sacrifices”.—[Official Report, 23 March 2011; Vol. 525, c. 957.]

He was right then, and he is wrong now. He revealed his true colours in this year’s Budget.

[Andy Sawford (Corby) (Lab/Co-op)]

Does my hon. Friend recall the remarks of the parents whom she and I met at the Pen Green centre in Corby, who spoke about many local priorities, including vital local services such as our hospital? They did not believe the millionaires’ tax cut was the right priority for people in Corby and east Northamptonshire or for people throughout the country.

[Rachel Reeves]

Although my hon. Friend has been in the House for a lot less time than many Government Members, he speaks more sense than they do, on behalf of his constituents in Corby and east Northamptonshire, who sent a clear message to the Prime Minister two weeks ago when they elected my hon. Friend and booted out the Conservatives. He is right to stand up for their interests. They do not want the tax cut for millionaires; they want help for ordinary families, for pensioners and for young people getting back to work. That is what people in Corby and the rest of the country want.

The Chancellor waved goodbye to the pretence of being on the side of working people in this year’s Budget. He waved goodbye to saying, “We’re all in this together,” and, “Those with the broadest shoulders should bear the greatest burden.” The Budget was the U-turn that revealed his true motives and told people for whom he stands. People will not forget that, when times were tough and they needed support, the Government cared only for those who needed it least. The Tories are back to doing what they do best. It is the same old out-of-touch Tories.

[Several hon. Members]

rose—

[Mr Speaker]

Order. Just before I call the Minister from the Treasury Bench, I remind the House that, on account of the time available and the number of hon. Members wishing to speak, I have imposed a limit of 10 minutes on each Back-Bench contribution.

14:10

[The Exchequer Secretary to the Treasury (Mr David Gauke)]

I beg to move an amendment, to leave out from “House” to the end of the Question and add:

“notes that the previous administration maintained the top rate of income tax at 40 per cent for 13 years, only increasing it to 50 per cent in April 2010, one month before the Government was formed, and that this new rate was damaging to UK competitiveness; further notes that the independent Office for Budget Responsibility certified the Government’s central estimate that reducing the 50 per cent rate to 45 per cent would have a cost to the Exchequer of £100 million per year and that measures introduced at the last Budget increased taxes on the wealthy by some £500 million; recognises that in contrast to the previous administration that abolished the 10 per cent rate of tax which increased taxes on more than five million low earners, the Government is cutting income tax for 25 million low and middle earners while taking two million low-paid people out of income tax altogether through increasing the tax free personal allowance; recognises that every Budget under this Government has increased taxes on the rich, including a new stamp duty land tax rate for properties over £2 million, an annual charge on these properties, introducing a cap on previously unlimited income tax reliefs and an extension to the capital gains tax regime, clamping down on tax evasion and aggressive tax avoidance, and bringing in a General Anti-Abuse Rule; and welcomes the introduction of the Triple Lock, which led this year to the biggest ever cash rise in the state pension.”

The amendment is in my name and those of my right hon. and hon. Friends. After all the anger and bluster the House has just heard, may I bring to its attention a few pertinent facts? Hon. Members have been told that the 45p rate for high earners is too low, which ignores the fact that there was a top rate of 40p for all but 36 of the 4,758 days of the Labour Government. We have been told that the rich should pay more. That ignores the fact that other changes in the tax system introduced in the Budget will raise five times the amount of tax from the wealthiest than the 50p rate raised in practice. We have heard that moving to 45p is wrong, but the Opposition will not commit to reversing it after the next general election.

[Sheila Gilmore]

Will the Minister confirm a report that I read in, I believe, The Sunday Times, which stated that the number of property sales above the level of increased stamp duty has fallen since the Budget? When will he produce figures on whether such so-called additional taxes raise any additional money?

[Mr Gauke]

I note with interest that the hon. Lady appears to be arguing that an increase in tax can sometimes lead to a loss of revenue. She is right—that can sometimes happen. As it happens, the revenue on stamp duty land tax is holding up all right, but she makes an important point, one that I hope is understood more widely in her party. I am pleased that the Opposition are keeping open the option of not increasing the 45p rate of income tax. Although it is right that those with the broadest shoulders bear the greatest burden—I will set out how the Government are making that happen—it is also necessary to ensure that the UK is competitive in attracting wealth creators to locate and stay in this country. A Government that are serious about the UK winning the global race for growth should be very careful about pursuing a policy that places a huge “closed for business” sign over our economy. That is exactly what the 50p rate of income tax was—a “closed for business” sign. I hope that at the next general election there will be a consensus that we do not want to re-erect that sign over our economy.

[Mark Pritchard]

The new growth guru in Europe is of course President Hollande of France, who is well known to the Opposition Front Bench. I wonder whether my hon. Friend thinks that the higher 75p rate of tax in France has helped entrepreneurs and business people to stay within France, or to flee to other shores, such as the low tax economy in Britain.

[Mr Gauke]

My hon. Friend raises an interesting point. Perhaps I should not be drawn too much into discussing the domestic policies of one of our close European allies, but it will be interesting to see the impact in France of a very high rate of income tax, and whether people will move out of that country and we see any additional revenue as a consequence.

[Mr Graham Stuart]

I appeal to my hon. Friend not to be too harsh on the Opposition. Does he not understand that the Labour party now gets 90% of its funding from the trade union movement? If the trade unions insist that there should be a 50p tax rate—even if it does not raise money and undermines public services—it may feel obliged to put it in its manifesto regardless.

[Mr Gauke]

My hon. Friend displays an unusual degree of cynicism. I am still hopeful that Labour Members will share with us a desire for the UK to be a competitive environment for business that attracts high net worth and high-earning individuals to locate and pay tax in the UK, and that we can raise more revenue from them. Perhaps, however, my hon. Friend will turn out to be right and they will be driven more by their trade union paymasters.

[Paul Flynn]

Did the hon. Gentleman see the filmed interview with the treasurer of the Conservative party who demanded £250,000 for an invitation to dinner with the Prime Minister? Does not that give us an idea of the source of the Tory party’s funds?

[Mr Gauke]

I suspect, Mr Speaker, that you would not want us to be drawn into a lengthy debate about party funding. All I can say is that the Conservative party and this coalition Government will make decisions on tax policy on the basis of ensuring that we have a fair and competitive tax system, and that is exactly what we are doing.

[Andrew Bridgen]

Does the Minister agree that when data show that the top 1% of earners already pay 28% of all income tax, we want to encourage them to stay, and, indeed, attract other high earners to our economy?

[Mr Gauke]

My hon. Friend makes an important point. Our income tax receipts are dependent on high earners, and that will continue to be the case. We will continue to raise substantial sums from those high earners, but we must ensure that the UK is an attractive place for them to be located. At a time when labour mobility is perhaps greater than it has ever been before, particularly for such individuals, we have to recognise that the UK is competing for talented individuals and business investment, and that a 50p rate of income tax does not help us do that. That is the essence of the reason why we reduced the rate to 45p.

It may be helpful to provide some background to the policy we are debating. As the House will be aware, the previous Chancellor, the right hon. Member for Edinburgh South West (Mr Darling), announced in his 2009 Budget that the additional rate of income tax would come into effect in April 2010. It was accepted that there would be behavioural change as a consequence of that. The shadow Chief Secretary referred to the figure of £3 billion, which she alleged was the cost of cutting the 50p rate to 45p. She got that figure by looking at the static cost—not including any behavioural change whatsoever. It is worth pointing out that when the previous Government announced the increase from 40p to 50p, they assumed a behavioural change that would mean that rather than raising £6 billion, approximately only £2.5 billion would be raised. That was the assumption made by the previous Government. Such a substantial behavioural impact is inevitably bad for the economy. Not only were we left with an economy in a disastrous state and a huge budget deficit resulting in public sector debt growing very rapidly, we were left with a tax system that was highly uncompetitive and drove away big contributors to tax revenue.

[Andrew Bridgen]

I thank the Minister for giving way again—he is very generous. Does my hon. Friend agree that having a high income does not guarantee friends, happiness or health but does guarantee choice, and that one of the major choices is where one is domiciled for tax?

[Mr Gauke]

My hon. Friend is right, and harks back to what I was saying a moment ago. We have to bear in mind that the ability of high-earning individuals to be mobile has increased over time. It is striking, for example, that the number of UK citizens moving to Switzerland in 2010 increased by 29%. That demonstrates the fact that individuals will respond to fiscal incentives. They will respond to one of the highest rates of personal tax in the developed world, which was the position that the UK was in.

[Charlie Elphicke]

Is not the Minister’s point thrown into sharp relief by the fact that millionaires were paying approximately £13.4 billion before that measure was introduced, and that that went down to £6.5 billion? Is it not dangerous for our public finances to start jacking up the rate and driving people out of the country, as the previous Government did?

[Mr Gauke]

My hon. Friend sets out some dramatic numbers. They are the correct numbers, although it would be right to say that an element of that had to do with forestalling and people moving their income around. However, Opposition Members should not take great comfort from that. They demonstrate the enormous amount of behavioural change as a consequence of high rates. That level of forestalling is striking. What is also striking is that when the previous Government made their estimate of what would happen with income, no allowance was made for forestalling whatsoever, which again demonstrates flaws with the methodology that was in place.

[Lyn Brown (West Ham) (Lab)]

The hon. Gentleman makes an erudite argument, as always, and he sounds plausible, but can he not see that ordinary families, who are losing at least £500 per year, facing difficulties buying food and struggling with petrol costs, find it really hard to stomach why the Government are choosing to give £107,000 per year to people who are earning £1 million? It does not make sense to them. It does not make sense to us.

[Mr Gauke]

In the Office for Budget Responsibility assessment there is a tax cut of £100 million that goes to those who are paying the 50p rate.

In the same Budget package, however, there are measures to deal with stamp duty avoidance on properties over £2 million, a stamp duty increase on properties over £2 million, which is bringing in revenue, and caps on reliefs directed at high-earning individuals. So who is paying the stamp duty and not benefiting from the reliefs as before? They are high-earning individuals. They are paying for the cut in the 50p rate five times over as a consequence of the measures announced in the last Budget. That is the explanation to the hon. Lady’s constituents, and mine, of how the cut is being funded.

[Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)]

Will the Exchequer Secretary confirm that the expectations in the OBR’s assessment in March on income tax and VAT receipts are not being met?

[Mr Gauke]

The hon. Gentleman tempts me down that route, but we have an autumn statement next week on that matter, when we will hear the OBR numbers.

[Jonathan Edwards]

Obviously, my party does not agree with this measure and voted against it following the Budget statement, but, if the Treasury intends to pursue this line of argument, when will it drop the rate to 40p?

[Mr Gauke]

I admire the hon. Gentleman’s ambition. To be fair, he did not make this point, but, when Labour voted on this matter in the Finance Bill debates, effectively they would have got us to a 40p rate—but there we go. It was HMRC’s assessment that a reduction from 50p to 45p would be relatively inexpensive, and, given the damage the 50p rate was doing to our competitiveness, we believed it would be well worth doing. Of course, all taxes are under review, but the 45p rate remains in place.

[Barry Gardiner (Brent North) (Lab)]

I understand the Exchequer Secretary’s point. He calculates that the reduction in the top rate of tax has been, in his eyes, more than compensated for—five times over, he said—by the other taxes. How, then, will the reduction in the top rate of tax provide the incentive to those taxpayers he wants to domicile here? How will this fivefold increase in tax not send them rushing abroad? I thought that was precisely his point.

[Mr Gauke]

Very simply, different taxes have different elasticities. It is perfectly simple: people are more likely to respond to high direct rates of income tax than to stamp duty. Of course, the OBR took into account the behavioural impacts when it assessed how much revenue would be raised on, for example, stamp duty land tax. As Tony Blair sets out in his memoirs, which I was flicking through last night, direct rates of income tax are not a good way of raising income.

[Charlie Elphicke]

I thank my hon. Friend for giving way once more; he is being incredibly generous.

On the point about elasticity, is income tax not notorious for raising more revenue, the more it is cut? We saw that throughout the ’80s, when it fell from the sky-high levels of Labour to 60% and then 40%. Each time, the take increased. Is it not the case that, if we cut the rate of income tax, broadly we end up increasing the take?

[Mr Gauke]

It depends where we are on the Laffer curve, but, if we have the highest rate of income tax of any of the G20 economies, we are clearly in a vulnerable position. That was the position we inherited and why we were right to remove it.

I want to touch on the HMRC report laid before the House of Commons at the time of the Budget. It contained the assessment of the 50p rate. It showed that the additional rate was distortive, inefficient, and damaging to our international competitiveness, and that the previous Government greatly understated its impact on the behaviour of those affected. High earners were able to bring forward about £18 billion before the new rate came in, which the previous Government did not account for in their revenue projections. The 50p rate has failed: it has been criticised by business, damaged the UK economy and raised much less for the Exchequer than the last Government had hoped. In fact, it could have generated a net loss. The HMRC report estimates that it raised at most only £1 billion, and, when indirect taxes are taken into account, could have raised less than nothing.

The Government have decided not to stifle the economy further and to show that we are open for business, which is why we will reduce the rate to 45p from April next year. This move to 45p, based on the central estimate of the taxable income elasticity, will cost only £100 million—a small price to pay to regain some of the international competitiveness we lost as a result of the previous Government’s decisions. In fact, when indirect taxes are taken into account, this move could even result in a positive yield.

The 50p rate not only harmed our economy and contributed little to the Exchequer, but placed us in the unwanted position of having the highest statutory rate of income tax in the G20. Our decision to lower the rate will see us drop below Australia, Germany, Japan and Canada. In 2011-12, the top 1% of taxpayers paid about 25% of income tax revenues, and for over a decade our dependence on them has grown. Owing to this considerable economic contribution to the UK, each highly mobile earner who is driven out by internationally high tax rates hits the Exchequer and results in less revenue for public services.

Opposition Members might not care when internationally mobile individuals leave, but, given our dependence on high earners, we want them working in the UK, creating wealth and paying taxes, not moving abroad or retiring early. A competitive tax environment is unambiguously in the UK’s interests, and failing to act decisively as we did would be to ignore our long-term interests, as the 50p rate continued to drive high earners out of the country.

[Mr Anderson]

Has any assessment been made of how many people have become highly mobile and left, how many will leave and how many will come back?

[Mr Gauke]

The HMRC assessment set out the impacts that had already emerged. I highlighted the number of people moving to Switzerland and so on. The assessment of the behavioural impact was that about one third to half was a consequence of reduced economic activity—either people retiring or moving outside the UK. That is a considerable impact. It is not good for the UK economy, and the sooner we take steps to address it and set out plans to get rid of the 50p rate, the better.

[Andrew Bridgen]

Following on from the Exchequer Secretary’s last point, has the Treasury assessed the impact that the top rate of tax was having on dissuading foreign people from coming here?

[Mr Gauke]

That is also included in the HMRC assessment of the consequences for economic activity. My hon. Friend raises an important point, however: it is not just about people leaving the UK, but the fact that people would not be moving to the UK, thus damaging our reputation as a business centre. I am pleased to say that under this Government we now have a competitive top rate and corporate tax system. That is why, just this week, UBM and Seadrill announced they were moving to the UK—because it is a good place to do business, and our tax system plays a part in that.

We have taken measures to ensure that high earners make a fair contribution without resorting to punitive and populist measures that damage the economy. We have raised revenues from the most well-off in society in every Budget since we came to power, creating a fairer tax system—one where those with the broadest shoulders bear the greatest burden. That has included increases in capital gains tax and stamp duty. We have also taken a tough stance on avoidance and evasion. For example, we introduced the disguised remuneration legislation in the 2011 Budget, raising £750 million a year, mainly from higher and additional rate tax payers. That is seven and a half times the amount that was being raised by 50p as compared with 45p—and by the way, the Opposition voted against it.

In the 2012 Budget we set out policies on tackling tax avoidance. All our Budgets have included firm measures to close loopholes and strengthen HMRC’s ability to deal with tax avoidance.

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

Will the Minister give way?

[Mr Gauke]

I will give way to the right hon. Gentleman, who I know is interested in this issue.

[Mr Meacher]

If the Minister is trying to make a point about how tax loopholes are being closed, how can he possibly justify changing the controlled foreign company rules in 2013-14 to reduce the rate on multinationals with a finance company in a tax haven from the current 23% to just over 5%?

[Mr Gauke]

The CFC reforms are making the UK much more attractive for businesses headquartered here. The House will remember that in 2007 a number of businesses left the UK. Now some of them are returning, including UBM, which announced just two days ago that it was moving to the UK. Artificial diversion of profits is dealt with under the reformed CFC regime. The old CFC was past its sell-by date. It was unattractive and was driving businesses out of the UK. Indeed, there has been cross-party consensus on the need to reform the CFC legislation. Because of that, we are now seeing businesses moving to the UK, which I welcome.

We have taken steps to deal with tax avoidance. I would like briefly to touch on the issue of pensioners, as the shadow Chief Secretary raised it and it is touched on in the motion. The House should remember that we have seen a substantial increase in the state pension this year. Indeed, the increase has been £120 a year greater than it would have been had we stuck with the plans inherited from Labour. The abolition of the age-related allowances will not result in any cash losers. There are those who are affected by the withdrawal, but they will benefit from the largest ever cash increase in their personal allowance—a real-terms tax cut of £170. Since coming to power, we have taken steps to increase the personal allowance. That is the really big tax cut that dominated the last Budget and it is benefiting millions of people.

We have taken steps to cut fuel duty, with pump prices now 10p a litre lower than they would have been under the previous Government’s plans. We are supporting those on benefits by improving incentives to move into work and increase the number of hours they work. The introduction of universal credit will see the number of people losing more than 70% of their earnings when they move into 10 hours of work fall by 1.2 million. In addition, the single taper in universal credit will ensure that practically every household will face a marginal tax rate of less than 80% when they increase gross earnings, compared with 500,000 under the current system.

In all parts of this House we agree that those who can most afford to should contribute their fair share to the Exchequer, but those in opposition who insist that we should do that through a 50p rate that damaged our economy, sacrificed our international competitiveness and did not raise the revenues intended are making a big mistake. Those advocating a return to a 50p rate have to answer this question. Given that it will not raise any significant amount of revenue—it may even cost money—why do it? It is not about deficit reduction or economics, and it is not even about getting more from the wealthy, because there are better ways to do it; it is all about the politics. But at what cost? At a time when the UK must compete to prosper in a globalised world and when we have a choice to sink or swim, those who advocate a 50p rate are taking the easy choice—short-term populism triumphing over increased competitiveness; a traditional message of “bash the rich” prevailing over the need to attract and keep wealth creators in this country. This country’s route to success will not be through the lazy populism we have heard from Labour. Instead, we have taken steps to ensure that those with the most contribute the most, but also ensured that we have a tax system that enables us to compete on a global stage, creating a fairer tax system that still shows that the UK is open for business.

[Several hon. Members]

rose—

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. There is a 10-minute limit on Back-Bench speeches. Please observe the convention of the maiden speech. Croeso, Stephen Doughty.

14:39

[Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)]

Diolch yn fawr, Mr Deputy Speaker. Thank you very much for giving me the liberty to make my maiden speech in this important debate today.

I can certainly say that at a time of great economic hardship and uncertainty for many hard-working families across my constituency of Cardiff South and Penarth, the actions of this Government—whether in giving tax cuts to millionaires, failing to invest in jobs or growth, or cutting front-line police officers—appear increasingly disconnected from the daily challenges that my constituents are facing. This Government often attempt to rewrite the history books to place blame for the current economic difficulties on the last Government, who in fact took crucial action at the 11th hour to prevent the collapse of our banks and financial system. What the recent crisis truly reveals is the global and interconnected nature of our financial and economic systems, and that the global is now truly the local.

I will return to those issues in due course, but I would be grateful for the House’s indulgence if I use this opportunity to follow one of the conventions of this House by paying tribute to my distinguished predecessor, the right honourable Alun Michael, who I am truly delighted to say is continuing his service to the people of south Wales as our newly elected police and crime commissioner. I cannot think of a more fitting role for a public servant who has dedicated a significant part of his life, both before entering Parliament and during his time here, to tackling crime, the causes of crime and reoffending, and in particular building a justice system that works for young offenders. Alun always had a much deeper understanding of the nature of our systems of law and order and, in particular, the words of another former Member of this House, the distinguished former Home Secretary and Prime Minister, the right honourable Sir Robert Peel, who argued that:

“The police are the public and the public are the police”.

I am confident that, as commissioner, Alun will be putting that vision of co-operation into practice.

Alun was well known for his influential career as a senior Minister at the Home Office, the Department of Trade and Industry and the Department for Environment, Food and Rural Affairs, as Secretary of State for Wales, as the first First Minister of Wales, as an influential member of the Select Committees on Justice and on Home Affairs, and as a great parliamentarian, in this House and the National Assembly for Wales. However, I know that he would view with equal pride his work as a local councillor, magistrate and youth and community worker, making a difference at the grass roots for many young people experiencing complex and turbulent lives. My father Barry remembers with affection his time working with Alun in Llanrumney and St Mellons as part of the Army youth team in the late 1970s, and later in Ely. Both of them truly understood the importance of investing in, and engaging, with some of the hardest-to-reach young people in our society.

Alun, like me, is also a great lover of our natural environment and of the hills, mountains and coastlines of Wales. He was a strong supporter of our national parks, of right to roam legislation, of the Youth Hostels Association and of protecting our wildlife. I am sure that he will still be climbing the slopes of Pen y Fan for many years to come and that many a fox will raise a paw to thank him for escaping the cruelty of the hunt.

Alun also truly understood the diversity of the remarkable constituency that is Cardiff South and Penarth, whether in his hugely significant work with the people, Parliament and the Government of Somaliland—I wish the people there the very best in their local elections, which take place today—or in his ability to reach out to people of all faiths and of none to find common ground. He sets a truly high bar to follow. In Alun’s tradition, I am also proud to retain my constituency’s strong links with campaigning trade unions, such as the GMB, Unison and the Union of Shop, Distributive and Allied Workers, particularly as I have already made clear my strong opposition to this Government’s plans on regional pay and my support for equality in both life and the workplace, regardless of gender, ethnicity, sexual orientation or disability. I am also deeply proud to sit in this House not only as a member of the Labour party, but as a member of the Co-operative party, in our largest ever group of Members in this House. I pledge to play my part in pushing for an economy and society that needs more than ever the values of co-operation and mutualism.

In paying tribute to Alun, I am also particularly conscious of the honour afforded to me in serving a constituency that has been represented by only two Members of Parliament since the second world war. Hon. Members will no doubt be aware that Alun’s predecessor was the late right honourable Lord Callaghan, a remarkable figure in British politics of the 20th century, remaining the only MP to have held all four great offices of state. Lord Callaghan’s rise to the premiership is a story of inspiration. The son of a petty officer who had to rely on the Ministry of Pensions to pay his school fees and who left school at 17 to enter the civil service at the lowest level became our Prime Minister. “Gentleman Jim” or “Sunny Jim”, as he remains known by many, made an indelible impression on me as a child. When I was 10-years-old, my family and I were invited up for a tour of these remarkable buildings and of this House by the former Member for the Vale of Glamorgan, Mr John Smith. As we were shown around the other place, we encountered Lord Callaghan in one of the Lobbies, and were introduced. But rather than speaking only to my parents and ignoring my brother and me, Lord Callaghan spoke to us for some time, without a hint of being patronising, as an equal, and explained how he always believed that it was vital that politicians should listen to children and young people—a lesson as true today as it was then.

Like Alun and I, Lord Callaghan also understood that our values and responsibilities did not end at our borders. Early on, as a Member of this House, it is written that

“he emphasised the fact that Britain’s African colonies belonged to the Africans”,

but also

“that Britain had a responsibility to those countries it had colonised, and could not simply walk away and leave the countries to sink or swim on their own”.

I believe firmly that it is not only our moral responsibility but in our common interest to tackle poverty and injustice and to promote sustainable economic development wherever it is needed—from the streets of Tremorfa and Stanwell to Lilongwe and Lashkar Gah.

The late Lord Callaghan and I had one other thing in common. After constituency business on Fridays and Saturdays, there could only be one other priority: popping down to Ninian Park to watch the Bluebirds fly. For the record, I remain as deeply attached to the traditional blue of my football team as I am to the red of the Labour rose.

It was particularly fascinating to read the maiden speech of the late Lord Callaghan, delivered as it was in this House after the 1945 general election but while conflict remained in the Pacific region. He urged hon. Members to

“lift their eyes for a few moments from the European scene to what is happening in Asia at the present time.”—[Official Report, 20 August 1945; Vol. 351, c. 413.]

Now, 67 years later, we would do well to heed that call, albeit in a very different context. While the House will no doubt enjoy further vigorous and important debates on the future of the European Union, and on our place in it over the months and years to come, I would contend that many of the vital stories that will drive the direction of humanity in the present and in the time to come are now being written on far shores, whether in China, India, Brazil or, indeed, Africa.

The challenges that I attempt to answer on the doorsteps of Cardiff South and Penarth are more intimately connected to global events and global dynamics than ever before. We live in a world where energy or food price hikes are being driven in part by the flaws in global energy and commodity markets and where the changing patterns of demand by the billions of new global citizens in China or India might affect the price of a loaf of bread on Splott road.

We live in a world where false myths of confrontation between peoples and religions has, sadly, drawn young men—thankfully only a few—from the streets of Cardiff towards false visions of how to change the world through conflict, rather than towards the university, although their communities have stepped up to challenge that situation head on. It is a world where rapidly shifting patterns of competitive advantage challenge us daily on how to best educate and equip our young women and men to be able to secure a job and make a difference, as the old employers of the Bute docks are replaced by the internet design studio or the green technology company in St Mellons.

The people of Cardiff and Penarth have coped well with dramatic changes before, and flourished. From a sleepy village, we became the largest coal-exporting port in the world at the turn of the last century. Welsh anthracite fired the ships, built in the yards of the Clyde, that took British manufacturer to the far-flung reaches of the empire and beyond. The terraces of Splott expanded to serve the steelworks and industry flanking the busy port. Penarth was fondly known as the garden by the sea, with thousands of Victorians flocking to enjoy its beautiful views. In 1897, Marconi, the pioneer of global radio communication, sent the first wireless message over open sea, from Lavernock point near Sully across the Bristol channel to the island of Flat Holm.

People came from all over the world to our great Welsh capital, many working on those same ships and in those docks that were the lifeblood of our communities. They included Somalis from the former protectorate of British Somaliland, Yemenis and Irish, and, later still, Bengalis, Pakistanis, Ugandan Asians fleeing the horrors of Idi Amin, and many others. The prominence of the beautiful St. Augustine’s church is matched by the quiet reverence of the Alice Street mosque, one of Britain’s oldest. New estates were built in the east of the city, on the supposed lands of the infamous pirate Sir Henry Morgan, to support the families of the post-war generation. They underpin the strong communities that remain there today.

How have things changed? Thanks to the vision and energy of many local people, including my predecessor, Cardiff and Penarth are re-energising and re-visioning for our new world. Our sky and shoreline are now marked by few ship masts and furnace chimneys; instead, we see the hubs of energy and enterprise in the St Mellons business park, the wind turbine powering new green businesses in Rumney, the wave-lined roof of the new BBC Wales Drama Village, where we might just spot the Tardis or a “Holby City” ambulance, the transparency of our Senedd building where our colleagues in the National Assembly meet, and the imposing forms of the Millennium stadium and of the Cardiff City stadium, home to my beloved Bluebirds. Finally, sweeping round the corner of Penarth headland, we can see our beautiful historic Victorian pier being restored. Those are sights that mark new directions in our economy, democracy and society as well as connections to our past and our traditions.

In his maiden speech to the House, Alun Michael described our constituency as a

“microcosm from which the Government could learn many lessons.”—[Official Report, 2 July 1987; Vol. 118, c. 709.]

That sentiment remains as true today as it was 25 years ago. There is much to cherish, but there are huge challenges, too. We might have the Tardis and “Torchwood”, but we also have working families in Trowbridge struggling to get by, young people in Grangetown struggling to find a job, and older people such as those who attend the Moorland day centre in Splott, of which I am proud to be a trustee. We also have people who are finding it hard to get by in retirement, and hospital workers in Llandough fearing regional pay. This Government would do well to listen to the real experiences of the people living in my constituency. I strongly support the motion today, and I am confident that the people of Cardiff South and Penarth will join me in supporting it, too.

14:55

[Charlie Elphicke (Dover) (Con)]

It is a real pleasure to follow a maiden speech, particularly that of the hon. Member for Cardiff South and Penarth (Stephen Doughty), whom I congratulate on his excellent speech. He has a hard act to follow, as he acknowledged, having had two illustrious predecessors: “Sunny” Jim Callaghan and Alun Michael, late of this House. We will all watch his career with interest to see whether the constituency can provide a trio of senior Cabinet Ministers in due course. I must warn him, however, that no one ever tells us before we come to this place how busy it is and how hard-worked we are. I hope that he will still find the time to go and see Cardiff City play, and to pursue his singing hobby, which I understand he is partial to.

Moving on to the matter of income tax, I believe that the right policy is one of fair taxes, not only in regard to the higher rates but across the piece. For me, that means taking the poorest out of tax altogether, as well as taking the middle classes out of the higher rate and not allowing them to be consumed by fiscal drag as they have been over the past decade. It also means avoiding punitive rates that drive people out of the United Kingdom altogether, and ensuring that multinationals pay their fair share of tax on their UK revenues. Putting all that together would create the system of fair taxes and tax justice that this country urgently requires.

Did Labour do any of those things when it was in office? It did not do much to take the poorest out of tax. Indeed, many of the comments from the Opposition today on our policy of increasing the personal rate to £10,000, which I hope to see, have been mealy-mouthed at best. They appear at times even to oppose it.

[Sheila Gilmore]

Does the hon. Gentleman accept that there are different ways of assisting those on lower wages? The Institute for Fiscal Studies has suggested that tax credits are more efficient than raising the tax threshold, which is very expensive. Furthermore, once people have fallen below the threshold and out of tax, they get no further help. It is at least arguable that the Government’s much-vaunted raising of the personal allowance will not help the poorest families, and that it will come at a very high price.

[Charlie Elphicke]

I prefer aspiration to the welfare dependency that Labour has offered over the past decade.

We have cut income tax for 25 million people in this country, and we are taking 2 million people out of tax altogether. I am proud that this Government have done that. We are increasing the personal allowance to £9,205 in April 2013, and I want to see it increased to £10,000 in due course. These are real achievements for the Government. It was wrong that the previous Government allowed so many people on middling incomes to get stuck in the 40p rate, where they should not have been. I hope that, as the public finances recover, we will be able to find more space to take middle-earning people out of the higher rate. They are not rich people; they are the people in the squeezed middle created by Labour when it was in power, and I hope that that situation will change over time.

The most important thing is to look at the effects of the punitive rates that Labour introduced. Let us face the facts. Today’s Daily Mail reports that about two thirds of Britain’s highest earners “deserted the UK” after the 50p top rate of tax was introduced. It found that in 2009-10 some 16,000 workers with an income of over a million quid paid tax, but that the number then dropped to 6,000 after the former Prime Minister brought in new tax rules.

I would like to congratulate my hon. Friend the Member for West Worcestershire (Harriett Baldwin) on asking the questions that drew forward these important figures. The tax paid by top earners fell from £13.4 billion to just £6.5 billion in 2010-11. That is the issue, is it not? If the rate is increased so much that it becomes punitive, people will leave the country, squirrel away their income, not declare their income, leave it in companies—personal service companies—or cash boxes where it is not subject to tax. When that happens, tax revenue is lost.

[Gregg McClymont]

rose—

[Charlie Elphicke]

I will give way to the hon. Gentleman if he can tell me whether the Labour party, if it formed a Government, would scrap this Government’s move?

[Gregg McClymont]

I thank the hon. Gentleman for giving way, although I am not sure that it is within his purview to specify what subject I should intervene upon. If what he says about the 50p tax rate is all true, why is it so popular with the electorate, as evidenced by poll after poll after poll?

[Charlie Elphicke]

I think the most important thing is to look at how we get the most money in. We have a massive deficit—a massive amount of debt caused by the Labour party when it was in government and overspent for years and years and years. It created a massive structural deficit in our public finances, shattered our public finances and maxed out on our country’s credit card, so we need to get the maximum amount of money in to repair that chaos, that mess, that economic mismanagement.

What we are doing today is ensuring that we say that the country is open for business, that we are interested in companies growing and doing really well and that we want to encourage aspiration, not envy. I think this is an important gulf that lies between the Government and the Opposition. As I say, the most important thing is how to get the most money in, and if we jack up the rate, as the Labour party did, we will not get more money; rather, people will leave the country and we will lose the wealth creators. That is why what Labour did with a little grenade just before it left office was so dangerous and so toxic. It did so through political opportunism, damaging the people of this country and damaging our economy—shame on it for doing so.

[Gregg McClymont]

I thank the hon. Gentleman for giving way again. I am listening to his speech. Is the issue one of a failure of communication on the Government’s part? If everything he says is true, one would think that the public would support the Government’s tax cut for millionaires, yet every single poll shows that the 50p rate is popular.

[Charlie Elphicke]

On that basis, I am sure that the hon. Gentleman will jump up next to say that he is in favour of hanging, along with most of the British people. I do not see him or his Labour colleagues supporting that particular measure—or, indeed, a measure to leave the European Union, which is what most people in this country say they want when they are polled. I urge the hon. Gentleman to be cautious when it comes to these issues; he needs to be careful about what he wishes for.

I think that the Treasury is right to cut the 50p rate to a more sustainable level. We know it will cost £100 million, but we also know that five times that amount has been raised by taxes that are less elastic. This measure is right for the public finances and it is the right economic policy to encourage growth and prosperity in this country. It is also the case that if we cut the rate, we up the take; and I suspect the Treasury figures might turn out to be a little bit better—or perhaps it has been a little more cautious—than we think. I suspect that we might well end up with more money in the bank as a result of these measures.

Broadly, what the Government have done is right. It is important to remember that if we encourage millionaires to stay in Britain and to set up and run businesses here, they will do so far more effectively. It is important, too, for the Government to look at multinationals and ensure that they pay a fair share. We should also note that in the past decade, the Labour Government allowed multinationals to flout our tax law and not pay a fair share of tax. The reason we are talking about the super-rich—Apple, Amazon, Google and all the rest of these large combines—today is that the Labour Government let them completely off the hook. They were so determined to be the pro-business party that they did not collect the revenue from these companies that they should have done. They did not keep our tax law up to date for the internet age.

The Opposition may well want to talk about millionaires and the people who earn amounts that lead to the 50p rate, but it is wrong for them to do so while they completely let off the hook the really large businesses that have substantial revenues that they could and should pay in the UK but do not. Shame on them for that. Let us face the fact that the working nation under Labour saw income taxes rise by about 80%, whereas non-oil corporation tax revenues went up by just 6%. I do not think that is a record of which the Labour party should be proud; it is not a good record or a justifiable record, and people are very angry about the fact that Labour was completely asleep at the wheel on that score.

I think the Government took the right measure in dealing with tax avoidance by the super-rich. It is not just about the 50p income tax rate, as it is also about tackling tax avoidance. An important consultation on tax avoidance is taking place, along with the introduction of the general anti-abuse rule. It is important, too, that we are raising more money from less elastic taxes as a result of getting rid of the 50p rate. We have a package of measures, such as stamp duty land tax, cracking down on tax avoidance and introducing a cap on uncapped income tax reliefs. Reducing the 50p rate for millionaires is not the right way to approach these things; the right thing to do is to look at the inelastic taxes.

It is very revealing that we have seen interventions by Labour Members today attacking the measures on stamp duty land tax, implying that they are almost the wrong thing to do. It is important to go for the less elastic taxes and use the elastic taxes to encourage entrepreneurs, wealth creators and those who will create jobs and money. It is important, too, that the figures in the Office for Budget Responsibility report and from Her Majesty’s Custom and Excise show that the 50p rate raised next to nothing. Analysis showed that the 50p rate meant £16 billion to £18 billion of income was deliberately shifted into the tax year before it was introduced.

[Sheila Gilmore]

Will the hon. Gentleman give way?

[Charlie Elphicke]

I have already given way.

Self-assessment receipts for 2011-12 are below the forecast by £3.6 billion and the increase from the 40p to the 50p rate raised only a third of the £3 billion that the Labour Government said it would raise. It is easy for Labour to say, “Ah, but eventually this money will pop up”—but not necessarily. The money could be kept in a personal service company, as so many Labour Members and, indeed, the former Labour Mayor of London have done, and lent to oneself with a beneficial loan, helping to avoid paying tax. People can take those sorts of measures, or they can capitalise their income and invest it in something else, meaning that the money never comes into charge. That is why super-high rates are unwise. It also means driving people abroad. That is exactly what happened: people were driven abroad by the Labour Government’s penal tax rates. Again, that is not the right thing to do. We need to look at how to repair our nation’s finances, not look at how to play politics with the politics of envy.

It is important to remember that the former Chancellor of the Exchequer said that the 50p rate was always meant to be temporary and that the Revenue has been very effective in cracking down on tax avoidance, which is where the really big numbers lie. The 50p rate does not raise a whole of lot of money and it discourages a whole load of people by sending out a negative message on the competitiveness of Britain, while the tax avoidance and evasion yield has jumped to a record £21 billion. It is important to crack down on all those tax avoiders and tax evaders, making sure that they pay a fair share.

Finally, I would like to quote what the OECD says about the effect of the 50p rate on our competitiveness and on our economy. Back in July 2010, it said:

“Consider reducing the top rate of PIT”—

personal income tax—

“which is substantially above the OECD average and likely adversely to affect work incentives and entrepreneurship, particularly of high skilled workers. Consideration should be given to reducing the top rate of personal income tax to close to 40 per cent”.

It is very telling that an international organisation is saying that a country’s tax system is going to drive people away, particularly the high skilled, highly able, highly job-creating, highly entrepreneurial people that a country most needs to have. The Government have been very brave in putting the economics before the politics in the last Budget. I commend them for what they have done and for taking the tough decisions that are right for our economy.

[Several hon. Members]

rose—

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. The debate will finish at about 4 pm. So that as many speakers as possible can be accommodated, the time limit is being reduced to five minutes.

15:09

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

Let me make it clear that I am not against success. I believe that everyone should be rewarded with the fruit of their labours. However, it is becoming increasingly clear that the Government are in the grip of a failed economic theory—a theory which claims that tax cuts for those at the very top will somehow trickle down through society and that it is possible to go on cutting taxes and spending and that that will have absolutely no consequences.

I am someone who likes to look forward, but I think that in this instance we must look back to the last occasion on which we followed trickle-down economics. When the Thatcher Government followed that policy, they ran deficits in every year except 1988 and 1989. In 1990, we saw record business repossessions, unemployment above 3 million, record mortgage rates and record inflation, and I fear that we are going back there.

Let me tell hon. Members who say that the argument about cutting the top rate of tax is a “left versus right” argument that they are entirely wrong, because it is not a political argument. It is about something quite simple: mathematics. When we take £3 billion out of the economy, we will have to make up that shortfall somewhere, somehow. Judging by what I have heard from the Chancellor so far, I do not think that the Government are very long on detail.

The Chancellor and the Government talk about tax evasion, which has been mentioned today, including by the hon. Member for Dover (Charlie Elphicke), and they talk about going after all those people who avoid taxes. Well, I say this to the Chancellor: “Good luck to you.” Does he honestly believe that the last Government did not go after tax evaders? Does he honestly believe, when faced with people who have created byzantine systems to avoid the taxman, that it will suddenly be possible to close the loopholes? It is simply not going to happen.

People are working harder than they have ever worked before. Some are working 37 hours a week; some are doing two or three jobs just to make ends meet, and what do they see? They see food prices rising all the time. The worst effect is on their families; when they come home from work, they are too tired to involve themselves in their children’s lives. In my constituency, unemployment has risen by 429% in the past year. More people are struggling than ever before, and what do the Government do? They stand back and give tax cuts to the people who are riding in Bentleys and tax increases to those who drive vans for a living.

[John Glen (Salisbury) (Con)]

The hon. Gentleman is making a powerful speech, but if he is so committed to fairness in the tax system, can he tell me why, for 666 weeks under the Labour Government, the higher rate of tax was lower than it is now? How can he possibly stand up and make the case that he is making, given that his party, which was so recently in power, adopted a very different approach?

[Chris Evans]

I congratulate the hon. Gentleman on his factual recall. Yes, the top rate of tax was lower, but—I do not know whether he is aware of this—we experienced something called the financial crash and the rules changed somewhat. That is the truth: things have changed. We live in a different world now, and that should be accepted. My argument, which I shall maintain throughout my speech, is that the people at the bottom are feeling the pain.

The increase in VAT is a tax on the low-paid, because everyone has to pay it; everyone has to buy goods. When I walk down Blackwood high street, I see that every retail business there has been affected by the VAT increase. VAT on food is zero-rated, but the haulier who delivers the food will pass on the increase in VAT on his petrol to the food shop, just as the increased price of cotton is passed on to the clothes shop. Not a single person has been helped. People in this country are suffering, and what do we see? We see a tax cut for those at the very top.

We hear much talk about rebalancing the economy. We are told that the economy is being built, but what this tax cut shows us is an economy that is being built not on people and products, but on perks and promises. That is the wrong message for us to be sending.

[Ben Gummer (Ipswich) (Con)]

I am loth to interrupt the hon. Gentleman, who always speaks with such passion, but I wonder whether he is as angry with the Labour Front Benchers who put their names to the motion and who refuse to promise to restore the 50p tax rate and to cut VAT should they win the election in 2015, as he is with the Government. Surely he should be as cross with his Front Benchers as he is with ours.

[Chris Evans]

I have a lot of admiration for the hon. Gentleman. We served on the Justice Committee together, and I admire the bit of mischief that he is trying to cause me. However, he will be aware that, as I have said before, we do not know what is around the corner. We will make judgments—I am sure that our Front Benchers will make judgments—when we win the next election; and we will win the next election.

I am also struck by the Government’s sheer stupidity. It is all very well to talk about polls and people feeling good about things. When people hear about welfare reform, they support it because it sounds wonderful—66% supported it in the polls—but let us consider housing benefit, for instance. It annoys me that because seven out of eight people who claim it are in work, they are being labelled scroungers. A cap on housing benefit will create ghettoes outside the major cities because people cannot afford to live there and it will make more and more people homeless.

The one thing that the Government need to learn is that someone, somewhere, will have to pick up the bill, whether it is the taxpayer or the hard-pressed charity. We do not live in a consequence-free society. It is not possible to go on cutting taxes and cutting spending without something going wrong. I am deeply concerned, because people out there are crying out for change and the Government are in the way. It is time that we started building a society and an economy in which hard work is rewarded and people can flourish once again.

15:12

[Harriett Baldwin (West Worcestershire) (Con)]

It was a privilege to be present for the maiden speech of the hon. Member for Cardiff South and Penarth (Stephen Doughty), who spoke eloquently and passionately about his local area. The picture that he painted has made me eager to take the first possible opportunity to visit his constituency.

Let me begin with a small maths problem that I often pose to students in my constituency. If income tax rates were set at zero, how much income tax would the Chancellor raise? The students always get the answer right: it is zero. I then ask this question: if the Chancellor set the income tax rate at 100%, how much more income tax would he raise? Usually, someone will put his or her hand up and say, “He would raise a lot more.” I should welcome an intervention from any Opposition Member who has a view on how much income tax the Chancellor would raise if the rate was set at 100%.

[Sheila Gilmore]

Giving such an extreme and ridiculous example is unhelpful, as I think the hon. Lady is well aware. No Opposition Member is suggesting that the income tax rate should be 100%.

[Harriett Baldwin]

I seem to recall that in my lifetime—under the Government of, I think, the predecessor but one of the hon. Member for Cardiff South and Penarth—income tax was set at more than 90%. If it were set at 100%, we should have no income tax revenue, because no one would consider it worth while to work.

I then ask my students what would happen if we lowered the rate of income tax from 100% to 70%. Would we raise more or less revenue? Again, I should welcome interventions from Opposition Members. Everyone realises that we would raise more revenue, because if the rate was 70%, we would take home 30p in the pound. I notice that the new socialist Government across the channel recently introduced that income tax rate. We will see how that stacks up over time, but I expect that it will prove to be a deterrent to additional work, too.

The motion contains the seeds of its own mathematical inconsistency, because the Opposition are extrapolating a linear relationship between the income tax rate and the amount of income tax revenue raised. They are also extrapolating that those who can, in what is a global market, take their labour to any other country in the world will not take into account any difference in tax rates between the UK and other nations, yet all the evidence shows that that is not the case.

The Labour motion refers to 8,000 people paying income tax on income of £1 million or more. In 2009-10, which is the last tax year in which we had the 40p tax rate, some 16,000 people had an income of £1 million or more. Through raising the tax rate from 40p—a rate that was in place for all but one month of Labour’s entire 13 years in office—we can see that millionaires can do other things with their income. They can take their entire labour overseas, or they can decide to shelter their income or not to take a dividend that year, or they can use any of the other methods to ensure they do not pay that increase in income tax. There was a reduction of £7 billion in revenue after the income tax rate went up from 40p to 50p.

[Charlie Elphicke]

Will my hon. Friend give way?

[Harriett Baldwin]

I think that I have already taken two interventions, and I have only a minute and a half, unfortunately.

The Government have reduced the number of ways in which people on high incomes can reduce their taxable earnings. The Opposition opposed measures to reduce the amount people could put into their pension fund from more than £250,000 to £50,000. I also voted for the abolition of disguised remuneration, which was quite rampant under the previous Government. That also serves to limit the ways in which people on high incomes can reduce the amount of income tax that they pay.

The relationship between the rate of income tax and the amount of revenue raised by the Chancellor is non-linear. Between 0% and 100% there is a curve, and we need to agree about the optimal point on it—the point where the Treasury can get the most revenue from those at the highest end of the income spectrum. I suspect that 45p will be a lot closer to that optimal rate than 50p was.

The Government are focusing on tax cuts for those who are on the lowest incomes, lifting them out of income tax, and ending this tax cull on millionaires.

[Mr Deputy Speaker (Mr Nigel Evans)]

Order.

15:21

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

First, I congratulate my hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty) on making such an extraordinarily good maiden speech. It was elegant, forceful, confident and amusing, and it had a global sweep, covering most of the current political agenda. I am sure that we will hear a great deal more from my hon. Friend, and I wish him well.

The basic reason why the 50p rate decision is so unfair is that the very rich caused the financial crash, yet those at the top of the banks have hardly suffered at all, while the rest of the population are having to fund the bail-out and are now paying the price in rising unemployment, shrinking incomes and reduced services. To cap it all, in those current circumstances of austerity, the Chancellor flagrantly and provocatively cut the 50p tax rate to give the 1% very richest in the country—those on more than £3,000 a week—an average £10,000 tax break, including giving 14,000 millionaires a gift of £40,000 each, which is an extra £800 a week.

The Exchequer Secretary gave two reasons for doing that, one of which was that not much money will be lost as a result, but Her Majesty’s Revenue and Customs report on the 50p rate reduction plainly states, in table A2, that the Treasury will forgo £3 billion as a result.

[Sheila Gilmore]

Does my right hon. Friend think the Government’s rush to judgment on the effect of the 50p rate decision will be as good as their rush to judgment on the value of the future jobs fund?

[Mr Meacher]

My hon. Friend makes her own point. It is very difficult to reach a final conclusion on this matter, because of forestalling and because this change is seen as temporary. The very rich will, therefore, ensure that most of their income is put forward until the rate is lowered.

[Charlie Elphicke]

On tax avoidance, would the right hon. Gentleman support a higher tax on second and third homes?

[Mr Meacher]

I believe that second or third homes—and all other non-primary homes—should incur a higher rate of tax. I never supported the discount given for second homes, which has now been raised to a level nearly equal to that for first homes, and there is a case for the rate for empty homes being raised above that.

As I was saying, HMRC’s report shows that the loss will be £3 billion a year, as opposed to the sum that the Exchequer Secretary kept on talking about today: the £100 million that Treasury Ministers signed off originally, on the basis of arcane taxable income elasticity calculations, about which the Government’s own Office for Budget Responsibility said there was huge uncertainty.

A table given in Hansard on 25 April this year, at column 898, is also interesting. It shows that 80% of those earning more than £1 million paid more than 40% in tax. In other words, tens of thousands of people were—and are—paying the 50p tax rate. They were unable to dodge it. That is an important point, because it serves to destroy the Government’s argument that the 50p rate is a very inefficient method of raising tax revenue and that its abolition will have a negligible effect. I think it will have a very significant effect.

The Exchequer Secretary’s other argument in support of cutting the 50p rate was the old Thatcherite canard—which he stated repeatedly in his speech—that we should not tax the wealthy more because we depend on them for our future. That is the old trickle-down theory. However, we know that the opposite is, in fact, the case. Over the past 30 years, there has been a steady trickle-up effect. There has been a ballooning of inequality, with most middle England incomes having stagnated. That would not be so bad if the trickle-up effect made us more competitive.

The fact is that since 1987, when the top rate went down from 83% to 40%, we have not had a surplus on our current account in the balance of payments for the past 35 years. Our share of world trade was 6.5% in 1970, but it has dropped by two thirds to just 2.3% and our deficit on traded goods last year was £100 billion. That is a monument of uncompetitiveness.

Not only did the Chancellor originally impose £18 billion cuts on the poorest families in the country, but he is now proposing a further £10 billion of cuts to fill the gap left by his failed deficit-cutting policies. The housing benefit cuts that are coming in next April will remove thousands of families across the country from their homes because they simply will not be able to pay the rent. The disability living allowance cuts will leave thousands of disabled people housebound. Atos is cutting a swathe through thousands on incapacity benefit who simply cannot get a job. The poor are being punished for what they did not do, and the rich, who have a great deal to answer for, are almost getting off unscathed.

The second reason for keeping the 50p rate is that the very rich are in a far better position at this time to contribute to meeting Britain’s needs. According to The Sunday Times rich list published this April, the richest 1,000 people—a tiny group who make up 0.003% of the adult population—racked up gains in the past three years of austerity of £155 billion. If those gains were charged to capital gains tax, about £40 billion would be raised. Perhaps the real figure would be less and only £20 billion or £30 billion would be raised, but if it were well invested, it would be enough to kick-start the economy and begin to reduce the deficit in a way that we need to do—by real growth.

The third reason for keeping the 50p rate is the real anger building up across the country about what rich individuals and rich multinationals are getting away with on tax avoidance. I return to the Exchequer Secretary’s table, because it shows that 9% of those earning more than £10 million, which is more than £200,000 a week, paid tax at a lower rate than their cleaning ladies—

[Mr Deputy Speaker (Mr Nigel Evans)]

Order.

15:30

[Stephen Williams (Bristol West) (LD)]

I am glad to join others in saying how pleasant it was to listen to the new hon. Member for Cardiff South and Penarth (Stephen Doughty). I am well familiar with various parts of his constituency from family visits. It is nice to welcome another Welsh Stephen to the Chamber; I just wish our accents were as mellifluous as the hon. Member for Islwyn (Chris Evans).

We are discussing an Opposition motion, so let us examine the Labour party’s record when in office. In 1997, Tony Blair said that there would be no increase in the basic rate or the top rate of income tax while he was Prime Minister. As the Exchequer Secretary was saying, the Labour Government were in office for 13 years—for just over 4,700 days—and it was only in the last 35 days that the top rate of tax was increased to 50%. To put it another way, only one of the 156 pay slips that higher rate taxpayers would have received in that period would have shown an increase in their taxation. That suggests that the Labour party had no record of action and no philosophical appetite when it was in government and had the opportunity to do these things for higher taxes on high earners.

On tax relief for high earners Labour also had a lamentable record compared with its rhetoric today. It increased the relief for higher rate taxpayers to set against their pension contributions; people could put £215,000 into their pension fund and get higher rate tax relief in 2006, but that had been raised to £255,000 by 2010. The capital gains tax rate that Labour inherited in 1997 from the previous Government was 40%, but that was reduced steadily to 18% by the time Labour left office. On the lowest paid in society, the 10p rate of income tax was introduced in 1999, with the then Chancellor saying it was a measure to help the low-paid. I agree with that, but unfortunately he scrapped it in 2007, to loud cheers from his Labour colleagues—I well remember witnessing it from the Opposition Benches—because that tax rise for the lowest paid was financing tax cuts for those on higher earnings. Such is the record of the Labour party when it was in office.

[Annette Brooke (Mid Dorset and North Poole) (LD)]

Does my hon. Friend agree that it is really unusual that under a Labour Government in power for so long the rich became richer and the poor became poorer?

[Stephen Williams]

My hon. Friend says it is unusual, but I would say that it should not be surprising, given what Tony Blair said would be the intention of his party while it was in office. Of course, that gives us another opportunity to remind ourselves of Lord Mandelson’s comment that new Labour was

“intensely relaxed about people getting filthy rich”.

Let us compare the Labour Government’s record with what the coalition has done. Liberal Democrat priorities in the coalition are twofold: tax cuts for the lowest paid and effective taxes on the wealthy. We have seen the £10,000 tax-free threshold go from the front page of our manifesto and election leaflets through to the coalition agreement and it is on course for delivery within this Parliament. We will have raised the tax threshold from £6,475 steadily towards £10,000 possibly within four years and certainly within five. In the previous decade under the Labour Government, the tax threshold was raised by just £2,090. Under the coalition, more than 20 million people will have a tax cut of up to £700 and 3 million will have been raised out of income tax altogether. That disproportionately helps people who work part time, who are disproportionately women, and is particularly effective in helping the young. Indeed, a young person on the minimum wage can now work full time without paying any income tax. That is a huge difference from the position we inherited.

[Sheila Gilmore]

I am listening very carefully to what the hon. Gentleman is saying. Would he support urging the Government to change how they will approach universal credit? Under the new rules, people will be assessed on their post-tax income and as a result for every £1,000 increase in tax allowance people on tax credit will receive only £70. Would he support an amendment or a change to that?

[Stephen Williams]

I think that universal credit will be seen in time as a major piece of welfare reform, sitting with what the 1945 Labour Government and 1906 Liberal Government did, and will have huge significance in simplifying the benefit system. Surely the hon. Lady, like me, will have visitors in her surgeries who fall between the stools of council tax benefit, housing benefit, jobseeker’s allowance, employment and support allowance, and all the others and who ask her to sort that out for them. The Government are making progress on that. There are intricacies to sort out—I grant her that—but the reforms are yet to be brought in and I hope that there is still time to ensure that the system, when it starts, genuinely helps the most vulnerable in society, which we certainly want to see.

The top priority for the Liberal Democrats in this coalition is the £10,000 tax-free threshold. That is now the flagship policy of the coalition and both parties should be pleased that it is being delivered, but we also want to see effective taxes on the wealthy. The Government have already raised the rate of income tax from the 18% we inherited to 28%. We have raised stamp duty on properties worth more than £2 million from 5% to 7%. That is an extra £40,000 of stamp duty that someone will pay when acquiring a property worth £2 million or more. We have also imposed a 15% surcharge stamp duty to discourage the tax avoidance that was rife under the previous Labour Government, when people used corporate vehicles to acquire personal property. We have effectively put measures in place to block that. Of course, I now want the Government to go further and to see whether in our next couple of Budgets we can get an effective mansion tax and annual wealth tax in place.

When the announcement was made in this year’s Budget that the 50p top rate would be reduced next year to 45p, the Chancellor ensured that other measures put in place would raise five times as much revenue as was predicted to be lost as a result. I am interested in having an effective top rate of income tax and 45% compares well with the international situation. In Germany, the top rate of tax is 47.5%, but it bites only after about £208,000 of income. In the US, the rate is roughly 42% in the states that have the highest rates of taxation, but it bites only at £240,000. In France—I am surprised that Opposition Members have not mentioned President Hollande more often—the top rate of tax is 41%, lower than the 45% that ours will be next year, whereas the 75% that he talks of introducing will be only on incomes of more than €1 million if it is introduced in 2013.

Rates and thresholds are effective only if taxes are collected, which is why I am pleased that the Treasury has set up an affluence unit to target people who have assets and income of more than £1 million and why we are introducing a general anti-abuse and anti-avoidance rule, for which I have called for many years. That action has been taken by this Government and was dismissed by the two Chancellors of the previous Government.

When Labour was in office, it made a virtue of low taxes on the wealthy and high earners. The coalition has slashed tax for the poor, has effective taxes in place on the wealthy and is cracking down on tax avoidance. I know which record I prefer.

15:40

[Sammy Wilson (East Antrim) (DUP)]

I approach the debate from a different angle from some Opposition Members. I am sympathetic to the view that we ought to aim for a low-tax economy, which offers benefits. Only this week in Northern Ireland, we announced tax cuts for small businesses. Measures that we announced six months ago have had an impact in creating jobs. Fifty-two new businesses have started, and over 100 jobs have been created in return for a modest reduction in tax revenue. We are also seeking the devolution of corporation tax, so that we can introduce a lower corporation tax rate.

As I have pointed out to Members of the Northern Ireland Assembly, all of that means that there are certain things that we cannot do. We have to find efficiencies in public spending, and there are things on which we cannot spend money. The logic of the measure is accepted by Sinn Fein, which supports it, although some of its members are probably to the left of Labour Members.

However, I oppose the measure that the Government introduced to reduce the top rate of income tax for the best paid. I do not believe that the cost will be as low as the Government said. The Minister said that it will cost £100 million, but that figure is surrounded with lots of conditions and caveats, such as notions about how tax changes are sensitive to how people behave. As the Office for Budget Responsibility has pointed out, estimates of tax income elasticity vary from 0.35% to 0.48%, which is a difference of nearly 40%. Whatever the assumptions about behavioural consequences—whether people will move back to the United Kingdom or stop moving out; whether they will stop avoiding tax or keep using existing measures—given the cost of moving back or changing pension or retirement arrangements, it is unlikely that the impact will be as great as suggested.

Even if the measure were correct—the hon. Member for Dover (Charlie Elphicke) said that he was glad that the Government had divorced politics from economics in making that tax decision—we should not introduce it at a time when we are telling people across the United Kingdom that they have to tighten their belt, spend less and accept that they will have a lower income. We are saying that to pensioners, to lower-paid people and to people on middle incomes. We cannot send out a contradictory message that that is okay for people at the lower end of the income spectrum, but not for people at the higher end. If the Government really want to sell their message of austerity, that message must be clear so that people know that everyone will be equally affected. If a pensioner faces a £7 weekly decrease in their pension and a millionaire gains a £2,000 increase in their weekly income, people will not take the view that we are all in this together.

The politics of the measure is important. The Government might believe that low taxes can stimulate the economy because they will attract the rich to the UK, where they will create jobs, but it has been proven that other tax cuts costing an equal amount would provide a far greater stimulus to the economy. For the same price as reducing the top rate of income tax for the top 1%, we could reduce VAT on extensions on premises to provide jobs in small businesses in the building industry. There is much greater price elasticity in demand for that activity, as has been shown, so such a measure could provide a much greater stimulus.

The policy is wrong economically; it is wrong politically; and it is wrong on the basis on which the Government have tried to sell it. For that reason, I support the motion.

15:44

[Mr David Anderson (Blaydon) (Lab)]

I start by congratulating my hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty). He has two hard acts to follow, but he made a great start today and long may he continue.

On a point of clarification, the hon. Member for Beverley and Holderness (Mr Stuart), who is no longer here, said that my party had chosen the debate today because of the way it is funded—by the trade union movement. Can we be very clear? The funding that goes to the Labour party is dictated by rules and laws that were written mainly by the Conservatives and the arrangements are transparent and open to scrutiny. Let us also be clear that none of the people who donate to the Labour party has been in jail, unlike Michael Brown or Asil Nadir. Those two people were given back the money that they stole by the Conservatives and Liberal Democrats. Those two parties can have no credibility at all when they talk about paymasters.

I have been paying income tax since 1969—I know it is hard to believe, Mr Deputy Speaker, but I have—and I am quite happy to pay my share, but everybody else should be paying their share as well. It took a long time coming, but the hon. Member for Dover (Charlie Elphicke) said it—that this debate is about the politics of envy. It is not about the politics of envy; it is about the politics of fairness, and what is right and what is wrong.

The parties in government have a raft of policies based on the so-called politics of fairness. They believe it is fair to cut benefits, fair to sack 750,000 public servants, and fair to move people out of homes that they had lived in for decades just because the children have moved out. They think it is fair to sign sick and disabled people off the sick list if the incentivised company that they have employed says that that is the right thing to do. They think it is fair to make people work longer, pay more and receive less for their pension. They think it is fair to slash people’s living standards, fair to force young people to go to work for nothing on workfare schemes, and fair to treble the cost of going to university.

But now the Government also think it is fair to do other things. They think it is fair to tell 4.5 million pensioners that in a year’s time they will be losing £83 a year. People who have contributed all their lives will be paying more because of the Government’s failure. The Government think it is fair to tell thousands of people who are just turning 65 that, despite promises that reinstating the pensions link would be good for them, they will lose more than the amount of the pension rise—they will be losing more than £300 a year. They think it is fair to tell hard-working families struggling to bring up kids that from next year they will be more than £500 a year worse off.

Why do they think all that is fair? Because they want to give their pals a 100-grand backhander. There are 8,000 of them, so that is an £860 million giveaway to their friends, people who are raking in at least £1 million a year. This is the face of the modern Tory party and it is no different from the old one, except for the back-up by the yellow-livered Liberal Democrats. This is their way of looking after themselves, their pals in the City and the millionaires of this country. They want to give themselves a nice little six-figure Easter egg from the public purse, from a public worn out by cuts and austerity, and they are being supported every step of the way by the so-called nice guys, the Liberal Democrats.

Fairness? The Conservatives do not know the meaning of the word. This is not the politics of fairness and it is not the politics of envy. It is the politics of greed. It is the politics of a party intent on dismantling the consensus that has existed in this country since the end of the war. They are intent on slash and burn, and on feathering their own nests in the name of the people who bankroll them. This is the action of members of a party who do not care who they hurt, as long as it is not their kind.

The real sadness is that this is not new. It is the same kind of attack as they carried out in the 1930s when they destroyed communities throughout the country where people were living in desperation, despair and depression. It is the same kind of attack as in the 1980s when towns such as the one I lived in were wiped off the face of the earth, with debt, drugs and depression replacing years of hard work and people living in good quality communities. We saw crime going through the roof. We in the north-east of England became the car crime capital of the world. Burglary was commonplace, while the Tories were lighting cigars with £5 notes, swapping their Quattros for Porsches, and having battles to see who could spend the most on a bottle of Bolly.

They believe in a two-tier country, in two-tier government and in a two-tier, class-ridden ideology. It is the same old story with the same old Tories, backed by the Liberal Democrats. In this together? Not a chance!

15:49

[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

We have certainly had an interesting debate. The planned cut in the 50p rate of tax is still what this Government will be remembered for. At a time when families with children are being hit by cuts to tax credits, when VAT has been hiked and when pensioners are being hit by the granny tax, the Government have chosen to spend almost £3 billion on a tax cut for the richest 1% of the population.

As many of my hon. Friends have stated passionately in different ways today, the tax cut will be worth a staggering £107,500 on average for 8,000 people earning more than £1 million a year. It is staggering for members of the public. The decision to go ahead with the cut is even more staggering when we consider the fragile state of the economy. With growth at just 0.6% since the comprehensive spending review, rather than the 4.6% the Chancellor predicted, the Government’s economic plan is clearly failing. Prioritising the tax cut in these circumstances shows just how out of touch the Government are.

The Prime Minister and the Chancellor used to agree with us on that point. Before their omnishambles Budget of 2012, they repeated at every opportunity the view that a tax cut for the richest would not be fair in such difficult economic circumstances. The Chancellor said in November 2009:

“I cannot even consider lifting”

the 50p rate

“while I’m asking others in the economy to bear a burden.”

The Prime Minister said in November 2011:

“I have been very clear and we have all been clear, we have to try to do this in a way that is fair so that the broadest backs bear the biggest burden. That is why we haven’t changed… the 50p tax rate.”

The Deputy Prime Minister said in September 2011:

“At a time when millions of people who play by the rules, work hard, pay their taxes and try to look after their families, it would be incomprehensible to them to have a government which actually says our priority is to lower the tax burden on the top 1% of people who aren’t in the same position of distress.”

It has not been said for some time, but I agree with Nick. This move is indeed incomprehensible to those who are feeling the squeeze. They do not understand why the Government want to spend £3 billion at this time on a give-away for the very richest.

Labour Members have expressed clearly today that they do not understand why the Government have done this either, and we heard some powerful contributions that showed the strength of feeling. I want to pay particular tribute to my hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty), who gave a real tour de force in his maiden speech, which took us from the shores of Wales to the far-flung parts of Africa but all the time emphasised the impact the Government’s policies are having on the constituents he is so proud to represent. My hon. Friend the Member for Islwyn (Chris Evans) made a characteristically passionate speech that expressed the voice of ordinary people who are concerned about this policy.

We also heard from Government Members. The hon. Member for Dover (Charlie Elphicke) brought up the politics of envy, although my hon. Friend the Member for Blaydon (Mr Anderson), rebutting that claim passionately, stated that this is about the politics of fairness. The hon. Member for West Worcestershire (Harriett Baldwin) subjected us to a rather dubious maths lesson, and I fear that she highlighted the dubious “back of an envelope” approach that the Government seem to be taking to their tax calculations. I pay tribute to all Members who have contributed to the debate, but particularly Opposition Members, who forcefully made clear the feelings of constituents up and down the country who are concerned about the choices the Government are making.

New figures released today show that just 27% of the public agree that the Chancellor has proved since 2010 that we are all in this together. Indeed, the Government have not even persuaded their own supporters, only 51% of whom are on board. Just 23% of women feel that we are all in this together, which is hardly surprising, given that 85% of the top rate taxpayers who will benefit from the tax cut are men. It is abundantly clear from the impact of the tax cut that we are not all in this together. The Government are planning to raise £3 billion, almost exactly the cost of the 50p tax cut, through the granny tax. Millions of pensioners are set to lose an average of £83 in 2013-14, while those just turning 65 will lose more than three times that amount.

Families with children are set to lose an average of £511 as a result of the Government’s policies, and that comes on top of the damaging VAT rise, which will cost them up to £450 a year and a pensioner couple £275 a year. Working couples with children earning less than £17,000 on average will lose their working tax credits, worth up to £3,870, if they have not been able to increase their working hours. It is clear that families are paying a much higher price than the banks. I think it was my hon. Friend the Member for Leeds West (Rachel Reeves) who pointed out that the Government seem to believe that the poor will work harder if we cut their incomes, but that millionaires will work harder only if we cut their tax. It does not stack up.

Where will this extra work come from? Welfare bills are going up, not down, because there is simply no plan for jobs and growth. We heard yesterday that the Work programme is performing worse than if it did not exist. Only two in every 100 participants are getting jobs through the programme. That is in stark contrast to the future jobs fund, which the Department for Work and Pensions itself confirmed gave a net gain to the taxpayer of more than £7,000 per participant. This Government scrapped the fund, left nothing in its place and then gave us a double-dip recession. There is also increased borrowing and rising long-term unemployment, yet the Chancellor’s priority is still to spend £3 billion on a tax cut for the richest 1% of the country. It is the wrong priority at the wrong time.

Government Members have tried to argue today that the 50p rate was not working, yet the Office for Budget Responsibility has said that the Government’s projected figures on the yield are “highly uncertain”. We have discussed that at length today. The Institute for Fiscal Studies stressed:

“If the future of the 50p rate is to be determined on the basis of evidence about its impact, then Budget 2012 will be too soon to form a robust judgement.”

Despite the Prime Minister’s claims that the top rate of tax has not raised any money, the Treasury’s own figures show that higher-rate taxpayers have been paying the tax.

In next week’s autumn statement, the Chancellor has a chance to change direction. He can scrap the tax cut for millionaires and focus on getting the economy—which is putting more people on the dole and seeing borrowing going up, not down—off its knees. Now is not the time to give handouts to the top 1%; it is time to give a real hand up to the hard-working majority of the people of Britain.

15:57

[The Financial Secretary to the Treasury (Greg Clark)]

It is a pleasure to respond to this debate, not least because of the maiden speech made with such distinction by the hon. Member for Cardiff South and Penarth (Stephen Doughty), whom I warmly welcome to the House. He spoke in a way that was assured and fluent and with a degree of geniality that I think will make him many friends throughout the House. I have one issue of contention with him. He outed himself as a fan of Cardiff City and, since they are locked in a promotion battle with my hometown club of Middlesbrough, that will be a point of disagreement between us during the weeks and months ahead.

Call me naive, but I had hoped that, during an Opposition day debate, we might have heard something—anything—about the Opposition’s policy, but sadly it was not to be. At the end of this debate, their economic policy is, if possible, even more obscure than it was at the beginning. There are four fundamental matters crucial to this debate that both shadow Ministers—the hon. Members for Leeds West (Rachel Reeves) and for Newcastle upon Tyne North (Catherine McKinnell)—failed to address.

The first could not be more basic. What do the Opposition believe to be the purpose of the 50p rate of income tax? Is it to raise revenue, to punish the rich, as the right hon. Member for Oldham West and Royton (Mr Meacher) has said, or to serve as a piece of rhetoric? We need to know, because if the Opposition are clear that its purpose is to raise money, will the hon. Member for Newcastle upon Tyne North say—she is welcome to intervene—whether they will drop their support for the 50p rate if the evidence continues to support our assessment and those of HMRC and the OBR that it raised very little indeed and would be likely to cost the public purse even more? Will she be clear—is the argument that the rate raises money the criterion for the Opposition’s support for it, or is it a price worth paying just to send a message that they want to soak the rich?

Secondly, do the Opposition accept, in the words of HMRC, that

“high tax rates in the UK make its tax system less competitive and make it a less attractive place to start, finance and grow a business”?

Do they accept HMRC’s assessment that high taxes are bad for the international standing of the country? I would be pleased to take an intervention from the hon. Lady. My hon. Friend the Member for The Wrekin (Mark Pritchard) asked the shadow Chief Secretary whether she subscribed to that view, and she could not answer. Is tax competitiveness important to the Opposition? We do not know. In their view, does it matter if the UK has the highest tax rate in the G20? Is that a concern or not? Does it make a difference to British competitiveness? The last time the hon. Member for Pontypridd (Owen Smith) was asked he said, “I don’t know.”

The third issue is whether the Opposition agree with the former Chancellor, the right hon. Member for Edinburgh South West (Mr Darling), who said that this measure should be only temporary. We have had no clarity on that from Opposition Front Benchers.

The fourth matter that the Opposition need to consider, given that they regard this tax as being so crucial—so totemic—that they wanted to call this debate about it, is whether they will send a clear message that they would restore it if they came to power. Again, we have silence. Let us bear in mind that we are now in the second half of the Parliament, and the time for posturing and procrastination is over. The time has come for the Opposition to tell the country what they would do in government—or do they simply not have the courage to face up to the need to be straight with the British people? I strongly suspect that this will be one of the last occasions when we debate the 50p tax rate as it gets shuffled off to the retirement home of meaningless gestures that the Opposition no longer have time and use for.

Labour is, to its core, the party of tax and spend, and, to be fair, it takes a very consistent view of both sides of the equation. With regard to spending, it is always a matter of “How much?” and not “To what end?”—of inputs, not outcomes; of the number in the headline on the press release, not what is achieved with the money. On taxation, too, for Labour it is all about the price tag—the headline rate, not the revenue actually raised, nor, indeed, the amount of tax that the wealthy actually pay. The top rate of tax paid by the rich in all but the last month of the previous Government was lower than what they pay now. The top 1% of earners now contribute over 27% of income tax revenue—far more than they did under Labour—and the effect of this year’s Budget is to take from the richest five times what they gave through the reduction of the 50% rate.

Of course, the tax system that we inherited from the previous Government was a mess—a typically socialist tangle of tripwires and loopholes which, as my hon. Friend the Exchequer Secretary made clear, we are taking action to close. Too much of the money made under the previous Government was in keeping with the ethos of the previous Government—short term, reckless and unsustainable; the boom before the bust. In future, if there is money to be made it will be done in the responsible way, through real enterprise and real innovation. As we seek to rebuild a productive economy on the ruins of Labour’s cardboard economy, this is the worst time to punish the producers, innovators and entrepreneurs on whom our future depends.

[Rachel Reeves]

If the Government are doing so well on the economy, why has it shrunk over the past year, and why is Government borrowing now rising, not falling?

[Greg Clark]

The hon. Lady will be aware that the record structural deficit in the G7 bequeathed by the previous Government has been paid down by a quarter.

As we seek to rebuild our productive economy, Labour Members know all about the power of the headline figure—that is why they have made such big play of the top rate of income tax. It is interesting that the shadow Minister was more familiar with the opinion polls than with the cost of this measure to the economy. If they think that it plays well to the gallery, then how do they think it plays to those who might or might not want to invest in this country, and who might create the new private sector jobs that a financially exhausted public sector can no longer pay for?

For our part, we want to create an economy in which those who prosper most are those who are best at creating wealth for all. That will require moderate tax rates, properly enforced, and the long, hard slog of tax reform and simplification. As in so much else, we have chosen the difficult path but the right one. Today’s debate provides further proof that Labour has made the opposite choice. As always, the politics are cheap but the consequences would cost our country dear.

Question put (Standing Order No. 31(2)), That the original words stand part of the Question.

16:04

Division 105

Ayes: 222

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Labour: 205
Democratic Unionist Party: 6
Scottish National Party: 4
Social Democratic & Labour Party: 3
Plaid Cymru: 3
Independent: 2
Alliance: 1
Green Party: 1

Noes: 291

---

Conservative: 252
Liberal Democrat: 38

Question put forthwith (Standing Order No. 31(2)), That the proposed words be there added.

Question agreed to.

The Deputy Speaker declared the main Question, as amended, to be agreed to (Standing Order No. 31(2)).

Resolved,

That this House notes that the previous administration maintained the top rate of income tax at 40 per cent for 13 years, only increasing it to 50 per cent in April 2010, one month before the Government was formed, and that this new rate was damaging to UK competitiveness; further notes that the independent Office for Budget Responsibility certified the Government’s central estimate that reducing the 50 per cent rate to 45 per cent would have a cost to the Exchequer of £100 million per year and that measures introduced at the last Budget increased taxes on the wealthy by some £500 million; recognises that in contrast to the previous administration that abolished the 10 per cent rate of tax which increased taxes on more than five million low earners, the Government is cutting income tax for 25 million low and middle earners while taking two million low-paid people out of income tax altogether through increasing the tax free personal allowance; recognises that every Budget under this Government has increased taxes on the rich, including a new stamp duty land tax rate for properties over £2 million, an annual charge on these properties, introducing a cap on previously unlimited income tax reliefs and an extension to the capital gains tax regime, clamping down on tax evasion and aggressive tax avoidance, and bringing in a General Anti-Abuse Rule; and welcomes the introduction of the Triple Lock, which led this year to the biggest ever cash rise in the state pension.

Jobs and Social Security

Wednesday 28th November 2012 Commons Chamber

16:19

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

I beg to move,

That this House notes that only just over two in every hundred people referred to the Work Programme in its first year have gone into work; further notes that it has delivered a worse outcome than no programme at all; recognises that long term unemployment is soaring and that the welfare bill is projected to be £20 billion higher than planned; notes with concern that the Government is cutting £14 billion from tax credits and is taking £6.7 billion from disability benefits to pay for this cost of failures; and calls on the Government to implement a bank bonus tax to fund a Real Jobs Guarantee for young people and commission a cumulative impact assessment of disability benefit changes.

Our debate takes place in the shadow of the Chancellor’s winter statement next week. It is clear that a winter of misery lies ahead. The Chancellor has already had to revise up the cost of welfare spending for this Parliament by an eye-watering £20 billion, and now, after yesterday’s brutal exposure of the Work programme, we know a great deal more about who is to blame.

We already knew that the Chancellor had done his level best to throttle the recovery. He has cut so far and so fast that we have now been landed with the longest double-dip recession since the war; and our economy is so fragile that the Governor of the Bank of England has warned that we might lapse into another recession this year; but what we did not know until yesterday was just how badly let down the Chancellor, the Cabinet and our constituents have been by the complete inability of the Department for Work and Pensions to get our country back to work. No wonder the Chancellor is tearing strips off the Secretary of State for Work and Pensions in Cabinet.

All over Britain, businesses and families are busting a gut to do anything and everything to find work. Some 60% of jobs created since the election have either been part-time or self-employed, and, amidst all that strain and effort, we might have expected a little more support and a little more of a helping hand from the DWP. Yesterday, however, we discovered that it has done worse than nothing. Ministers swept into office promising the biggest-ever scheme to help people back to work, but yesterday we heard, not the hype, but the reality. It has been trying to hide these figures for more than a year, and yesterday we found out why: the Work programme has proved precisely as useful as doing absolutely nothing—in fact, worse than nothing.

When the DWP went out to market to ask contractors to come forward and help with the task, it said, in its documents, that it could expect about 5% of people on long-term benefits to make it into work under their own steam each year. That is why it set itself a target of outperforming doing nothing by 10%—not a high bar—but somehow it managed to set a target as low as possible and miss it. It is right, therefore, that the House highlights, not just this failure, but the soaring cost of failure, which our constituents will now have to help pay down.

[Mr John Redwood (Wokingham) (Con)]

Will the right hon. Gentleman give us some positive ideas on what improvements could be made? I am sure that all people of good will in the House want more people to get back to work and will recognise that this large welfare spending needs to be used in a way that encourages them.

[Mr Byrne]

The right hon. Gentleman will be as concerned as I am about this question, because only 2.6% of people in his constituency on the Work programme got a sustainable job outcome. I will come directly to that very question, but I want to dwell first on the cost of failure.

Since the Work programme has been in place, the number of people out of work full-time for more than a year has risen by an extraordinary 210,000. This spiralling cost of long-term unemployment is now costing us, in the jobseeker’s allowance bill alone, £750 million. That is an enormous cost of failure. It is the cost, in fact, of 18,000 nurses, 16,000 teachers and 14,000 police officers.

[Bill Esterson (Sefton Central) (Lab)]

My right hon. Friend talks about the cost of the failure of this programme. Will he also mention the impact on our constituents? The message from mine is clear: when they go on Work programme activities, they are not given the sort of training or opportunities they are promised, by and large, and so there is little prospect, even from the start, of their getting a job, even if the jobs are there at the end. Does he agree that that is a common experience across the country?

[Mr Byrne]

I know this is of great concern to my hon. Friend. There are more than six people chasing every job in his constituency. What his constituents need is a back-to-work programme that actually works, pulling out all the stops to get people into jobs, but I am afraid the story he has told from his constituency has become all too common across the country.

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

I am sure the right hon. Gentleman wants to get the record straight. Will he now tell the House that in the last two years of his complacent Government, long-term unemployment rose by some 400,000?

[Mr Byrne]

I would be happy to trade arguments about our record with the Secretary of State, because while Labour was in office, the amount of money that we spent on out-of-work benefits fell by £7.5 billion. That is why his noble Friend Lord Freud described Labour’s record in getting people back to work as remarkable. It is a shame that he could not arrive at the same judgment about this Government’s programme, which is now in place.

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

I am sure that my constituents want a reflective debate today, not the sort of intervention they have just heard from the Secretary of State. As I remember, Lord Freud—or Mr Freud or Dr Freud, before he was ennobled—did a thorough piece of work for the former Prime Minister, Tony Blair. What went wrong? Was his analysis wrong or was the way the Conservative Government interpreted it wrong? Was Freud wrong and his analysis abused, or was he right and something has gone wrong with the Government?

[Mr Byrne]

The Work programme has got only just over 2% of the people in my hon. Friend’s constituency in the programme into sustainable jobs. It is becoming clear that there is simply not enough fuel in the tank.

[Andrew Bridgen (North West Leicestershire) (Con)]

Will the right hon. Gentleman give way?

[Mr Byrne]

In a moment.

The Government spent something like £63 million closing down the flexible new deal—a programme that was actually getting more people into sustainable jobs than the Work programme and was costing only something like 9.5% more per job outcome. The Government have, in effect, shut down a system that was working, spent an awful long time getting something back up and then overseen a programme that has dramatically failed to hit the target set for it in the first years. It is a catalogue of failure.

[Jessica Morden (Newport East) (Lab)]

Does my right hon. Friend agree that yesterday’s figures for young long-term unemployed people were especially tragic? Would he be interested to know that Jobs Growth Wales, which was introduced by the Labour Government in the Welsh Assembly in April, has proved to be seven times as effective in getting young people back into work and was based precisely on the future jobs fund?

[Mr Byrne]

My hon. Friend is absolutely right. The Work programme has been an abject failure in her constituency. Only 1.4% of people in her constituency who went into the programme were attached to any kind of sustainable job outcome. We know from Department for Work and Pensions research last week that the future jobs fund was a roaring success, delivering more than £7,500 of wider benefit to society. It was such a tragedy that the Government closed it down. Thank heavens that Labour is in power up and down the country, including in Wales, where we are building on the lessons of the future jobs fund, making it better and stronger, and now making a difference for young people across her constituency and beyond in Wales.

[Nick de Bois (Enfield North) (Con)]

Before we get too engrossed in bandying statistics around, is it not worth remembering that a job outcome is measured over a six-month period? The Work programme has been in place for a year; therefore, the early statistics will inevitably not reflect its success accurately. Indeed, we could actually discount almost half the 800,000, simply because getting a six-month job outcome is almost impossible.

[Mr Byrne]

I am afraid that prompts the question why the DWP set the target in the first place. Indeed, yesterday on the television news that I watched, the Secretary of State made great play of the fact that the Work programme was only in its first year. However, the fact that the targets were set by the DWP was somehow missing from what he said yesterday. Indeed, they were targets for the first year. The challenge only gets greater in the second year. If the hon. Gentleman looks at the tender documents that the DWP put out, he will see that in the second year the Work programme has to get 27.5% of those on jobseeker’s allowance into sustainable job outcomes. That is about 10 times what the Government have managed to deliver in the first year. So I am afraid the argument that the Work programme is just warming up simply will not do.

[Nick de Bois]

I think that the right hon. Gentleman would accept, on reflection, that in achieving the goal of helping people to secure full-time employment, it is inevitable in these difficult times that some of them will need to take jobs that might not last six months in order to help them to get back into the Work programme cycle. The inevitable consequence of that is that we will do far better in the next year. So be it: let us celebrate that.

[Mr Byrne]

There is an element of me that feels sorry for the Secretary of State. He is operating in an economy whose recovery has been throttled by the Chancellor, while another Cabinet colleague, the Secretary of State for Communities and Local Government, is implementing the biggest cuts to those local councils where there are the fewest jobs. So yes, the Secretary of State for Work and Pensions faces a difficult challenge, but it was his Department that set out the bald statistic—[Interruption.] I am sorry that the hon. Member for Enfield North (Nick de Bois) cannot hear me because of the chatter from those on his Front Bench. It was the Secretary of State’s Department that said that if the Government did nothing, 5% of people on long-term benefits could flow into work. The Work programme has delivered less than that, and the benchmarks will get stiffer next year.

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

My right hon. Friend has seen a successful job creation plan for the long-term unemployed in my city of Glasgow, run by the Labour administration on Glasgow city council. There are 1,320 long-term unemployed people in my constituency, but under the Work programme only 2.5% of them have found a lasting job. Does not that illustrate the difference between a Labour administration who know how to help to create jobs, and a Conservative-led coalition that is making an absolute hash of it?

[Mr Byrne]

My hon. Friend is absolutely right. Glasgow city council has lessons to teach all of us about what it takes to get young people back into work. Despite all the difficult decisions that the council has had to take, it has made it a priority to get young people back into work. The way in which it has built on the future jobs fund is a real lesson for everybody.

[Andrew Bridgen]

The right hon. Gentleman talks about the Labour Government’s record of getting people into work. Can he explain why the number of households in which no one had ever worked doubled to 350,000 during the 13 years of his Government?

[Mr Byrne]

The hon. Gentleman should check his facts. The number of people on out-of-work benefits came down by 1 million under Labour, and the out-of-work benefit bill came down by £7.5 billion. That is in sharp contrast to this Government, who have put up welfare spending by £20 billion more than they projected. To pay down that bill, they are now having to cut tax credits from constituents such as those of the hon. Gentleman.

[Andrew Bridgen]

The right hon. Gentleman did not answer the question. I asked why the number of households in which no one had ever worked doubled to 350,000 under the last Labour Government.

[Mr Byrne]

I am afraid the hon. Gentleman has to check his facts. The truth is that Labour delivered 1 million fewer people on out-of-work benefits and a £7.5 billion reduction in the out-of-work benefits bill. That is why his noble Friend Lord Freud described our record of getting people back to work as remarkable.

If this Government had built on those lessons rather than ignoring them, they would not be presiding over the sorry state of affairs that was announced yesterday, when the Secretary of State and the Minister for unemployment—the Minister of State, Department for Work and Pensions, the hon. Member for Fareham (Mr Hoban)—were forced to come out and tell us that the only virtue they could find in yesterday’s figures was that the Work programme was cheaper than the flexible new deal. The truth is that a payment-by-results system will always be cheaper if there are no results. It is the lack of results that is now costing this country a fortune. That is what is driving up the welfare bill by £20 billion more than was projected at the beginning of this Parliament.

We have to ask who is going to pick up the tab. We know that it will not be Britain’s richest citizens. They have been handed a tax cut of some £3 billion. They will not be asked to pay for this failure. Instead, it will be Britain’s strivers and battlers—those whom the Prime Minister promised to defend. Well, some defence! This Government are now taking £14 billion off tax credits over the course of this Parliament. I think I am right in saying that tax credits are the only benefit that is currently frozen.

The tragedy is that the cuts are so unfocused and so unwise that Britain’s part-time workers will now be better off on benefits than they will be in work. How on earth can that be right? A couple with two children and some child care costs on £40,000 a year are set to lose £1,900—5% of their income—in benefits over the course of this Parliament, while 8,000 millionaires will gain an average of £100,000 a year from the Government’s tax rate cut in April. If that is the Prime Minister’s defence of Britain’s battlers and strivers, I would hate to see what happens when he starts attacking them.

[Gavin Shuker (Luton South) (Lab/Co-op)]

Is not the reality even worse than my right hon. Friend paints it? [Interruption.] He says that he has not finished yet! Many of the battlers and strivers are young people, and in my constituency, long-term youth unemployment is up by 1,150%. The other options available to them are going on to university or staying in education, yet tuition fees have trebled and the education maintenance allowance has been taken away.

[Mr Byrne]

My hon. Friend is absolutely right: there is a bleak future for many young people in his constituency, where the Work programme has delivered something like 1.3% of people into sustainable jobs, so it is one of the worst figures in the country. When young people in my hon. Friend’s constituency face tuition fees that have trebled, the cancellation of EMA and the shutdown of the future jobs programme, he is right to call in this place for a very different course of action.

Even more worrying for the future, the signs are that when universal credit is introduced, it will not get better for Britain’s strivers and battlers; it will actually get worse. We know that new rules for universal credit will mean taking in-work benefits away from anyone who has managed to squirrel away £16,000, and we know that it locks in cuts to tax credits. Now, in this morning’s Sun, we read that a couple working full time—over a million of them will be in the system—will lose something like £1,200 a year. That is, of course, if it ever happens.

[Andrew Bridgen]

rose—

[Mr Byrne]

Perhaps the hon. Gentleman will tell us what he thinks of that.

[Andrew Bridgen]

I thank the right hon. Gentleman for giving way again. I would like to tackle him on the last Government’s record on what he claims was getting people into work. If that were the case, will he explain why the working age welfare budget increased by 40% in real terms during the 13 years of the last Labour Government?

[Mr Byrne]

Let me give the hon. Gentleman some statistics. If he looked at the amount spent on benefits in 1996-97, he would find that it came to about £51 billion, excluding pensions. By the time we reach 2009-10, that had fallen to £44 billion, so I am afraid that no matter how he looks at it, the truth is that the amount spent on out-of-work benefits over the course of Labour’s period in office fell by £7.5 billion. The hon. Gentleman is a member of a party that has presided over an increase in the projected welfare spend by £20 billion, and there are something like 8,000 families in his constituency that are now seeing their tax credits either frozen or cut to pay for that cost of failure. I wonder how he is going to explain that to his constituents as we get closer to the next election.

It is not simply people in work who are paying the bill. We now know that about 6 million families are working, yet are still in poverty. There is another group of our constituents that we must worry about, too—those constituents who are disabled yet are set to lose something like £6.7 billion of help over the course of this Parliament to help pay for the failure to get Britain back to work. These benefits are being taken away, without any cumulative assessment of their combined impact, and these cuts total more than the Government are taking away from banks. That, I am afraid, is a sorry indictment of this Government’s values.

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

My right hon. Friend will know that growth is at a standstill because of the collapse in consumer demand. Given that poor people spend all their money while rich people can afford to save or hide it away, does he accept that focusing the cuts on the poorest—cutting disablement benefits, the working families tax credit and the like—is completely counter-productive for job growth as it deflates the whole economy?

[Mr Byrne]

My hon. Friend is right. The Work programme has delivered only about 1% of his constituents into sustainable work. What we will publish this afternoon is an analysis showing that the per capita cuts in councils across the country are biggest where jobs are fewest. Where there is something like £200 a head in cuts, it means two or three times the national average of people chasing every single job. It is not surprising that the Work programme, flawed as it is, is finding it hard work because the Chancellor has throttled the economy and the Secretary of State for Communities and Local Government is cutting back where jobs are fewest.

[Joan Walley (Stoke-on-Trent North) (Lab)]

Does my right hon. Friend agree that the Government should be redoubling their efforts to invest in the areas that need investment most—the areas that have been hit hardest by the welfare reform cuts? The Prime Minister implied that Stoke-on-Trent would have a local enterprise zone, but that never happened. We need to benefit from the regional growth fund, and we need a Government emphasis on what needs to happen.

[Mr Byrne]

My hon. Friend has been a consistent champion of Stoke, and has consistently drawn attention to the need for greater economic development there. The Work programme is not helping, the cuts in council funds are not helping, and the Chancellor’s wider economic strategy is not helping. My hon. Friend is right: we must redouble our efforts, particularly in those poorer parts of the country, to get people back into work. There is very little sign that that is happening at present.

Once upon a time we were promised a welfare revolution, and I think that we are right to ask this afternoon what on earth has happened to it. Universal credit is descending into universal chaos, punishing the strivers and battlers whom it was supposed to help. A climate of fear is being created for disabled people, and the Work programme quite simply is not working. The Chancellor knows that it is going wrong, and No. 10 knows that it is going wrong. Only the Secretary of State thinks that it is all okay. There he was yesterday, running from studio to studio, saying to anyone and everyone who would listen that it was all fine—that it would be all right on the night—although, quite obviously, it is all wrong. I am now sure that the Secretary of State is competing for Channel 4’s Comical Ali award for those who ignore all the evidence around them. It is not delusions of grandeur from which he suffers; it is delusions of adequacy, and the tragedy is that there is an alternative.

[Andrew Gwynne (Denton and Reddish) (Lab)]

Does my right hon. Friend agree that, although it would be bad enough if just one of the elements that he has mentioned affected any of his constituents, many of our constituents will be clobbered by a combination of them all? They will be hit by the bedroom tax, they will be hit by the changes in tax credits, they will be hit by the housing benefit changes, and they will be hit by the localisation of council tax relief.

[Mr Byrne]

My hon. Friend is exactly right. Many of our communities throughout Britain are being hit from all sides, and the Government simply do not seem to understand the combined impact of what is happening. We can only hope that next week’s autumn statement will contain a proper plan to get us back to growth and to get our country back to work.

[Mr Andy Slaughter (Hammersmith) (Lab)]

No group is being hit harder than the homeless, or the most recently homeless. I do not know whether my right hon. Friend has had a chance to read “The Programme’s Not Working”, a report published yesterday by Homeless Link, St Mungo’s and Crisis about the experience of homeless people on the Work programme. It states that 58% of them were not even asked whether homelessness contributed to their difficulty in obtaining a job, and that the same number said they were not treated with dignity or respect. People who are losing their benefits are also being victimised by this dreadful scheme.

[Mr Byrne]

I am grateful to my hon. Friend for bringing that report to the House’s attention. I have not seen it, but yesterday’s announcement made clear that for the groups who need extra help, the Work programme is failing particularly badly. I was extremely disappointed to learn, for example, that those receiving employment and support allowance were getting the toughest deal. Fewer than 1% of them were being helped into sustainable jobs. That is not a record of which any Member in the House can be proud.

[Hywel Williams (Arfon) (PC)]

I am grateful to the right hon. Gentleman for giving way. He is being very generous. To complete the picture, does he agree that the poorest areas often contain the largest public sectors? Would it not be a tragedy if regional pay in the public sector were introduced in those areas, including my own, and would not regional benefits compound the difficulty?

[Mr Byrne]

The hon. Gentleman is right. That is just one more element of the wider picture that we are presenting this afternoon. At a time when there is a huge combined impact on communities throughout the country, we do not have a plan to get Britain back to work. What we have is a welfare bill that is rising, and when it comes to paying that down, it is Britain’s working people—those in receipt of tax credits—who are bearing the brunt. The Government are taking £14 billion out of tax credits over the course of the present Parliament.

We are arguing for a different approach, and we hope that we will see it next week. We believe that that different approach starts with getting our young people back into work. They currently constitute some 40% of those who are out of work. That is one of the highest levels in any western country, and it is a badge of shame. Now, all over the country Labour councils are leading the charge to get young people back into jobs. In Leeds, Sheffield, Liverpool, Wales, Cardiff, Glasgow and Birmingham, it is now Labour councils that are rolling up their sleeves and leading the drive to get young people into jobs. We should help them, so let us put in place a bank bonus tax to create a fund that would help us get young people back into work.

This Saturday is the 70th anniversary of the Beveridge report. That report offered the blueprint for post-war social security. The truth is that 70 years later, working people in this country need new things from the welfare state. They need retraining when they lose their job. They need child care. They need better social care. They need help when they are disabled. Millions today pay in and get nothing back. They are short-changed Britain, when what we want is something-for-something Britain.

Those of us who want to modernise the system know we need to remember the most important lesson Beveridge taught us: social security is built on full employment. So let us get on with getting Britain back to work, and we should start with the young people, whom we will ask to pay for all of our futures—our young people who are hungry for work, yet are being let down by this shambolic Government.

I commend the motion to the House.

16:46

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

The Labour motion is one of the stupidest motions I have ever had to deal with. It says very little and nothing at all about what the Opposition would do if they were in office. It also lays yet more spending commitments on an Opposition whose programme is littered with huge cost increases.

I will take no lectures from the right hon. Member for Birmingham, Hodge Hill (Mr Byrne). I remind everyone again that he is the man who thought it was a joke to write a letter to the incoming Government saying there was no money left. [Interruption.] Opposition Members moan, but the reality is that the last Government bust this country, and we are having to pick up the mess. Furthermore, the right hon. Gentleman was hugely responsible for that mess, yet we have just got a lecture from him on the economy and on unemployment. The reality, however, is that unemployment is now lower than it was when he left office. We have higher employment. We have more women in work than ever before. We also have 1 million new private sector jobs. The reality is that he and his party left us with an utter mess, and we are having to take tough decisions to get ourselves out of it.

[Mr Byrne]

rose—

[Mr Duncan Smith]

I will take some interventions from the right hon. Gentleman after I have dealt with a few of the points that he made.

The right hon. Gentleman’s motion says that just

“two in every hundred people referred to the Work Programme in its first year have gone into work”.

That is complete nonsense. The Opposition have added, and then divided, the numbers in a very partial way, to come up with the worst possible figure, which is precisely what they wanted. They have added up all the total attachments, but taken into account only a small proportion of those for whom six-month job placements were found.

[Several hon. Members]

rose—

[Mr Duncan Smith]

As I have said, I will take some interventions after I have made a few rebuttal points.

If the Opposition had worked the figures out correctly, they would have noticed what my hon. Friend the Member for Enfield North (Nick de Bois) has pointed out: some 315,000 of the 837,000 people who were attached were not in a position to have a six-month outcome because they had not been on the programme for six months. The Opposition do not want to incorporate that fact into their figures, however. Those people will come through into the next set of figures that we produce.

[Mr Byrne]

rose—

[Mr Duncan Smith]

I will give way to the right hon. Gentleman after I have made this point. In fact, the total number in sustained job outcomes falls well within the target area that we were trying to achieve during the first year’s figures. If people want to gerrymander the figures, they should make sure that they gerrymander them all.

[Mr Byrne]

May I draw the Secretary of State’s attention back to the invitation to tender, which presumably he signed off? Under the heading of “Key Performance Measure”, which is in bold type and is the thing that we are interested in and debating, it says:

“Performance will be measured by comparing job outcomes…in the previous 12 months to referrals in the same period.”

The target for performance in the previous 12 months was 5%, and the Work programme statistics delivered yesterday showed that that target had been missed comprehensively.

[Mr Duncan Smith]

Yet again, the right hon. Gentleman has defeated the first point that he made. In other words, the figures that he has produced in the motion are wrong and he has just proved it. [Interruption.] If he wants to listen, he might learn something. No wonder he ended up as the man who told us there was no money left—with his kind of arithmetic, I am surprised that there was anything left at all. The reality is that in a year—if we want six-month referrals—a number of people will not have been in the programme for six months. So 315,000 people—[Interruption.] I am simply saying to him that the reality exists. This programme is on track; it is the best programme; and it will be putting some of the most difficult people back into work. Let me just deal with another point, which is the one about unemployment.

[Mr David Lammy (Tottenham) (Lab)]

rose—

[Mr Duncan Smith]

I said that I was going to make a few points and then give way.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. The right hon. Member for Tottenham (Mr Lammy)knows that he cannot keep standing. I am sure that the Secretary of State has made a note and is going to give way shortly.

[Mr Duncan Smith]

I just want to pick up on one point and then I will happily give way to the right hon. Gentleman.

The same scant regard for general facts is apparent throughout the motion. The Opposition claim that long-term unemployment is now soaring, yet long-term unemployment nearly doubled in the two years before Labour left office, going from 396,000 to 783,000 in 2010. By the way, just so that the record is absolutely straight, the right hon. Member for Birmingham, Hodge Hill says that Labour had got spending down, but welfare spending rose by 60% under the previous Government.

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

rose—

[Mr Duncan Smith]

I will give way in a moment, but I said that I was going to make these points.

Labour’s policies then went on to try to hide the true scale of the problem, by automatically moving people off jobseeker’s allowance into training allowances or short-term jobs, thus breaking their claim just before they reached the 12-month point. The Opposition claim today that long-term unemployment is up by more than 200,000 since the Work programme began, but in actual fact, comparing like for like, which means counting all those who were previously hidden on training allowances and other support, the total number on jobseeker’s allowance is about the same as it was at the start of the Work programme, so that point is complete nonsense.

[Mr Lammy]

Can the Secretary of State confirm that, on his figures, he is talking about 4.5%, which is still below the dead-weight of 5%—in other words, the situation if he did nothing—and his target of 5.5%? Is it 4.5% on his figures? If I am wrong, what is it?

[Mr Duncan Smith]

No, the figures we stand by are those we published yesterday. The point that I was making today to the right hon. Member for Birmingham, Hodge Hill—[Interruption.] No, actually the figure would be more than 5%, but I am not claiming that. What I am saying is that we stand by the figures that we published yesterday, and I believe we are on track. The point I was making, legitimately, is that the right hon. Gentleman spent his time deducting some numbers from one bit and adding them into another to create some bogus figure that two in every 100 people were found sustainable jobs. That is complete nonsense.

[Mr Byrne]

rose—

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

rose—

[Mr Duncan Smith]

I will give way to the right hon. Member for Birmingham, Hodge Hill in a moment, but some of his colleagues behind him want to intervene.

[Geraint Davies]

Today, at that Dispatch Box, the Prime Minister said that 19,000 people out of 800,000 had gone into full-time work. I make that 2.3%, so the Secretary of State is saying that the Prime Minister is talking complete rubbish.

[Mr Duncan Smith]

I stand by the figures that we published yesterday—3.5% is exactly correct. The reality is that what I have said today is what we said yesterday. The point that I want to make is that the thing that has gone missing in all this is that, without the Work programme, some 207,000 people who had been long-term unemployed would not be in work today—they are. Now, we work with those 207,000 people, many of whom have serious problems and difficulties, to make them longer-term employed, which is the key. The Work programme is all about resolving that.

[Mr Byrne]

I am grateful to the Secretary of State, who is being characteristically generous in giving way. Broadly speaking, about 800,000 people were referred to the Work programme in the 14 months to which he extended the reporting period to flatter the figures, and 5% of 800,000 is 40,000. According to his figures, only just over 30,000 got into sustained jobs, so 10,000 more people would have got into jobs if the Government had done nothing. That cannot be a record of which he is proud; surely, he can admit that to the House.

[Mr Duncan Smith]

That is simply not true. I do not want to spend any longer on this, but the point that I made earlier about the right hon. Gentleman’s figures was that, when he concocted the figure of 200,000, he stripped out of his achievement figures the numbers for those who had been on employment and support allowance and so on and divided the total that was left, but those figures were in the other total. The Opposition have made a mistake and need to reckon that their adding up is wrong. The truth is that we have a programme that is helping people who are long-term unemployed.

[Margot James (Stourbridge) (Con)]

I visited EOS, our local provider in the black country, which gave me data to show far in excess of 5% getting back into work. Those data were more recent than the statistics that are being publicised, and I am very encouraged by what the Work programme is doing for people in the black country. Before 2009, the number of people on JSA in my constituency rose by 205%, which was a scandal. That figure is much reduced now.

[Mr Duncan Smith]

The truth is that the previous Government did next to nothing for the seriously long-term unemployed, and as I have said, we saw the figure rise by nearly 400,000. I want to come to that point in a second, but let me first deal with another comment made by the right hon. Member for Birmingham, Hodge Hill during his speech. He said that Labour’s unemployment scheme was a roaring success. I noticed that in Prime Minister’s questions today—I do not know whether I have got this wrong—the Opposition quoted a report that they said had been done by the DWP.

Let us deal with that point now: both the future jobs fund and the flexible new deal were rushed through just before the election. After all the years for which Labour had been in government, it suddenly discovered an urgent need to start to spend money on some programmes. Let us deal with them one at a time, and with the future jobs fund first. The Leader of the Opposition quoted a DWP report earlier and said that that scheme had a net benefit to society of £7,750. What he did not say—I suspect that he needs to speak to the right hon. Member for Birmingham, Hodge Hill next time he gives him something to say at Prime Minister’s questions—was that the report goes on to state that

“these estimates exclude the cost of administering the programme and the cost of hiring and training participants.”

I wonder why he did not quote that.

Using any one of the more conservative estimates, as used in the report in table 5.3 on page 62, puts the benefits at £4,650, less than the £6,500 that it cost to place people in those jobs. So the right hon. Member for Birmingham, Hodge Hill and the Leader of the Opposition unwittingly misled the House and the future jobs fund lost money, rather than rescuing the situation. The report goes on to state that

“it is notable that under all of the scenarios considered in this analysis, the programme is estimated to result in a net cost to the Exchequer”

and

“depending on the rate of decay there might never be an estimated net benefit to the Exchequer.”

What the Opposition are saying is fundamentally wrong: their scheme cost money and did not as a net benefit get anything back to constituents.

[Bill Esterson]

The Secretary of State is talking about a completely different world that is divorced from the reality for my constituents. My constituents who were on the future jobs fund had real jobs at the end because the programme worked. They are now missing a programme that works, because the Work programme is designed wrong and because the jobs are not being created. He needs to talk to his friend the Chancellor and get the jobs created, as well as getting the Work programme right. Is that not the reality of what is needed?

[Mr Duncan Smith]

Of course it was a different world—it was a world in which the previous Government thought that every problem could be solved by chucking shed-loads of taxpayers’ money at it without caring what the outcomes were. That is exactly the point I am making. We have had to clear that mess up.

[Mr Byrne]

rose—

[Mr Duncan Smith]

I will give way, but I ought to deal with the other programme first, as the right hon. Gentleman might want to ask some questions about that, too. The other programme that the Opposition cited was the flexible new deal. If that was such a brilliant programme, surely it would have been rolled out nationally; it never was. When Labour left office, it was only just up to running across half of the UK.

Over an equivalent period and claimant cohort, the Work programme has got more people into work for six months or more—19,000—compared with 15,000 under FND, and it delivers better value for money. The £14,000 per outcome figure thrown around by Labour ignores the start-up costs of the Work programme, which covers five to seven years. An independent cost comparison by the Employment Related Services Association shows a figure of £2,000 per job under the Work programme, compared with £7,500 under FND which, just like other programmes, ultimately cost money and did not succeed in helping to get people into work.

[Mr Byrne]

This is an important point for us to debate. I do not know whether the Secretary of State has seen the analysis that was published yesterday by Inclusion, but it is pretty clear on this question. The proportion of people flowing into sustained jobs from the flexible new deal was 5%, which is much higher than the figures for the Work programme. The flexible new deal was more expensive. Inclusion calculates that the cost per job outcome under the Work programme is £14,000. The flexible new deal was 9.5% more expensive, but the Secretary of State is failing to be level with the House about the fact that doing nothing costs his Department less, but it costs the country more, because the welfare bill goes up. A payment-by-results programme is cheaper if there are no results. That is the problem that we have to fix, and that is why the Chancellor is so cross.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. Many Members wish to speak in the debate, so we must have shorter interventions and replies.

[Mr Duncan Smith]

Guided by you, Mr Deputy Speaker, I shall simply tell the right hon. Member for Birmingham, Hodge Hill that he is wrong. I do not agree with his figures, and anyway, he served in government while the bill for welfare rose by 60% in real terms over the lifetime of that Government. Enough said: we took on a massive problem, and we have to deal with it.

[Kate Green]

rose—

[Mr Duncan Smith]

I shall make some progress, but I promise to give way to the hon. Lady.

Let us deal with the final point made by the right hon. Gentleman in the motion: that somehow all this could be solved if only we did not cut, change or reform anything and implemented a bank bonus tax to fund a real jobs guarantee. Such a one-off tax would be worth £3.5 million. However, we have introduced an annual bank levy, which raises much more money over the period. The Opposition did not introduce such a levy when they were in power.

Let us look at the bank bonus tax that they propose. I love the fact that that tax is wheeled out whenever they are in a corner. It has already been used to cover the spending of £13.5 billion that they committed to make when reversing the VAT increase. It has been used for more capital spending—£5.8 billion—and again to reverse tax credit savings of £5.5 billion. It was used to build 25,000 extra homes—£1.2 billion. It was used again to reverse child benefit savings of £1.7 billion, and more and more.

It is a joke to keep wheeling out that ridiculous programme as an excuse for what the Opposition should be doing, which, as my right hon. Friend the Member for Wokingham (Mr Redwood) said earlier, is telling us what they would do instead, where they would make the necessary savings and how they would reform welfare. That is the main issue.

[Kate Green]

The debate has moved on, but I wanted to say that the rise in social security spending under the Labour Administration was not all in relation to out-of-work benefits. A large proportion related to better payments for children and working tax credit, which subsidised low pay.

[Mr Duncan Smith]

I agree. The only way to look at these things is to consider the overall state of welfare spending. That is exactly how I look at it. As for the point about tax credit, much of it had nothing to do with going back to work, but it supported families for other reasons. The Opposition cannot separate what suits them from the other bits. We have a welfare budget, and they must own up to the fact that it rose by 60%.

Let me deal with what the Work programme really is. It supports 800,000 people—more than any previous programme—and data published yesterday show that it is successfully moving claimants off welfare rolls into jobs, so generating savings in the process. More than half those referred to the programme in June 2011 have since come off benefits, and about a third have spent the past three months off benefit, and a fifth have spent six months off benefit. Independent statistics published on Monday show that 207,000 people, as I have said, have been in work—a fifth of everyone on the programme. What is more, job entries are rising month on month. The figures that we published yesterday showed that in the past two months there was a 40% increase in attachments lasting six months.

We have rejected the old tendency that the right hon. Member for Birmingham, Hodge Hill keeps coming back to—chucking money at programmes in the hope that people will say we are doing something because we are spending money. With the FND, Labour paid out 40% of the fee up front just for signing up someone. Firms never had to do much at all. Under the flexible new deal, the average up-front attachment fee was more than £1,500. More than £500 million was paid out in total, without any assurance of success at all.

[Mr Bain]

In my constituency, just 70 people have been placed through the Work programme into sustainable employment, but the Employment Related Services Association says that providers of the Work programme have received £436 million in public money already, as at September 2012. Can the Secretary of State update the House with the most recent figures? Does he really believe that constitutes value for money?

[Mr Duncan Smith]

The figures have been published. This is about start-up costs and the money that is paid for every job. If the hon. Gentleman wants to do the mathematics, he will find that it adds up quite well.

Under the Work programme, companies are paid only if they keep people in work for six months for the most part, and for some 13 weeks. Under Labour’s programme, 40% of the total budget or about £500 million, as I said earlier, was paid just to sign up people. That is the difference. We save the taxpayer the money, and we will produce a programme that gets people into work. It transfers the risk. In future, we should be able to shift market share from those who do not succeed to those who succeed.

Many of the same companies are used as were used under the previous Government, but the difference is that they are now being examined to show how successful their programmes are. Whereas under the previous Government they could simply sign up people, now they have to get them into work and sustain them in work, or they do not get paid.

[Steve McCabe (Birmingham, Selly Oak) (Lab)]

If I accept the Secretary of State’s proposition and that of the Minister of State, the hon. Member for Fareham (Mr Hoban) in his letter yesterday that it is a bit early to judge the programme, when is it reasonable to judge it? Can we expect to see a substantial improvement in the figures next year? If we do not, will the Secretary of State admit then that he has failed?

[Mr Duncan Smith]

I happen to believe that the people who will admit that they failed are the Opposition. I hope that within a few months they will be eating their words over all this. Over many years, while the hon. Gentleman’s party was in government, we saw welfare bills soaring. By the time that Labour left office, there were 5 million on out-of-work benefits, one in every five households had no one working, 2 million or so children were living in those workless households with no chance that they would ever see anyone go back to work, and youth unemployment was up by 40%. Unemployment was at 7.9% and inactivity at 23.5%.

What a contrast with the situation now. In recent months, there have been more women and more people overall in work than ever before, up 734,000 since the election. There are 1 million more jobs in the private sector. We have seen four consecutive quarters of rising jobs growth and three consecutive quarters of falling unemployment. Not one word about that from the Opposition; not one congratulation to those who have found jobs. Excluding students, youth unemployment is down 65,000 on the latest quarter and 15,000 since May 2010. There are now 190,000 fewer people claiming the main out-of-work benefit and the inactivity rate is close to the lowest in a generation.

Thirteen months after coming into office, this Government introduced the biggest payment-by-results programme that the UK has ever seen. It is succeeding. It will succeed. We have heard nothing from the Opposition today. It is a pathetic motion from a pathetic Front Bench team and I will oppose it tonight.

[Several hon. Members]

rose—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. I remind hon. Members that there is a 10-minute time limit on Back-Bench speeches.

17:09

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

It is a pleasure to take part in this debate, although I must say that there were moments when I wondered whether some of the Members who have spoken had somewhat lost the plot. So few people seem to be interested in our parliamentary democracy these days, and sometimes I think that is because of how we shout across these Benches, which puts many people off. The truth of the matter is that all the mature industrial democracies are facing some deep-seated structural challenges. The previous Government struggled with those structural difficulties, as will this Government. If anyone expects the coalition Government’s policies, many aspects of which I am critical of, to solve the problems that the Labour Administration failed to solve, I think that they are being rather naive.

What do we all want for our economy and our democracy at the moment? I want us to have full democratic citizens, something we do not often talk about. I get sick of Governments, even my own, talking about taking people out of tax. I want everyone in our country to pay tax. I want a broad tax base and the people who pay tax to feel that they are real citizens and participants. They do not want to be non-taxpayers. They also want good pay that is fair and better than the lowest legal pay, the basic minimum wage. We want full citizens, good taxpayers, fair pay and, of course, high skills.

One of the real challenges our country faces, as exemplified by the Ofsted inspector’s annual review published yesterday, is that a significant percentage of people do not get a good deal out of education and skills. We have improved immensely. The previous Government expanded higher education, and much of our school education has been improved under the previous Government and this Government. However, the fact of the matter is that roughly 25% of kids—perhaps even 30%—in many constituencies across this country are not getting the opportunity to acquire the kinds of skills that would make them full, taxpaying, participatory citizens.

Indeed, evidence given to the Skills Commission, which I co-chair along with Dame Ruth Silver, by the chief executive of Hackney college—the Secretary of State does not seem to be interested in this, but he should listen—which takes in the whole of silicon roundabout, shows that around 30,000 jobs have been created there, but unemployment in the area has not fallen by so much as 0.5%. That gets to the heart of what the McKinsey report states, which is that there is a real problem across modern industrial democracies: those people whom we cannot skill-up, whatever age they are, and who cannot get jobs.

[Ann McKechin (Glasgow North) (Lab)]

My hon. Friend makes some good points about skills and training. Does he share my concern that the Department for Work and Pensions is still to reach agreement with the Scottish Government about who is responsible for the cost of training those who have entered the Work programme in Scotland and that, as a result, applicants in Scotland are actually less likely to get training under the Work programme than those south of the border?

[Mr Sheerman]

My hon. Friend will forgive me for knowing less about the situation in Scotland than I do about the situation in Yorkshire and England, but I am sure that she is right. There are many local differences, as I am finding in my area.

That is why I asked for the Freudian analysis earlier. Lord Freud, before he became a Member of the upper House, was asked by Tony Blair to evaluate which programmes worldwide had actually worked and addressed the structural problem of how to get people into work so that they can be full citizens. He looked right across the piece to identify which programmes had been successful. By requesting the Freudian analysis, I was asking whether it was good information. It was the whole basis of the policy that influenced our Labour Government’s policy and also that of the Conservative party. Freud is very important to these discussions, however he has been interpreted, and we should not forget that he was trying to look at that central problem we all face.

[Mr Duncan Smith]

Given that the hon. Gentleman has asked about my noble friend, who is an excellent addition to our team—whichever party he represented previously, he is a very good man and is doing very well—I may say that the Australian system, which is the basis of the Work programme, has shown some of the best results, which occur once companies are geared up and focused on getting people back into long-term, sustained employment. The system is working very well and says that it is on track.

[Mr Sheerman]

I thank the Secretary of State for that intervention, and I accept what he says. He knows that what I am getting at in this short contribution is that we play this game of blaming each other all the time, but the problem is international and global and we will have to sometimes forget party differences and work together on it. I want to make a couple of suggestions as to how we might do that.

Let us face it: all Governments throughout Europe, the United States and beyond have a long history of failure. Modern industrial democracies have this problem of skilling the work force. Indeed, I have never heard such castigation of our country’s further education system as that in yesterday’s annual report by the chief inspector of Ofsted, who said how poorly further education was performing in our country. All the evidence shows that further education is where young people get skills for the good life. It is where they get high skills to get good jobs to be the full citizens that I am after.

I have never heard of the chief inspector picking on one town in particular. I do not know what he has against Hastings, but he said that early years and primary schools are a failure for the children of Hastings and that they also fail when they go on to secondary school and further education. I was astonished. Thank God he was not talking about Huddersfield. It comes down to the fact that a significant percentage of people in our country have inadequate training and skills, and we need to work across parties to do something about that.

I want to share some of my experiences. One of my last reports when I chaired the Children, Schools and Families Committee looked at the problem of those not in education, employment or training. We found that intelligent programmes on the ground which represented a positive response from local authorities that understood their local communities, and which also had good local skills training and good employers, could make a significant difference to the number of people gaining skills and getting into work. There are good exemplars in this country, but some towns are more fortunate than others in retaining their manufacturing and employment base.

[Jane Ellison (Battersea) (Con)]

I rise merely to express agreement with the thrust of the hon. Gentleman’s argument on skills, and in particular to say that London is the classic case that supports it, because it has created hundreds of thousands of jobs over the past decade or so, yet large numbers of our young people have been left behind. That points to a much more deep-seated problem.

[Mr Sheerman]

That is why I spoke of our experience in the United Kingdom, which has good exemplars of significant improvement, but the best example that I found in Europe was in the Netherlands, which has a much tougher welfare policy than us. It is difficult for someone to get any welfare payment there until they are about 27. If they are not in work, they have to be in education or training, and if they are not in education or training, they do not get a welfare payment. We in this country seem to have accepted over a long period that significant numbers of young people, many of them with low skills, can be left in a shadow land—a marginal existence—on housing benefit and a little benefit for subsistence, and that they can live in this half world as half citizens for a very long time.

During one of my shadow ministerial jobs a long time ago—it was so long ago that I was a deputy to Roy Hattersley—I became something of an expert on crime and criminality. It is fascinating that if young people do not get into crime before they are 25, they do not at all; unless they bump off their partner for the usual reason later on, they do not get into criminality. The sensible policy on deterring young people from crime is to spend money on doing so early on. We can apply the same analysis of our society to unemployment. What we hate most is intergenerational worklessness, where three generations of a family have never known anyone work.

[Margot James]

Will the hon. Gentleman give way?

[Mr Sheerman]

No, I am sorry.

Intergenerational worklessness is a dreadful scourge. We all see it on some of the estates that we represent, and we hate it, so what are we going to do about it?

We have to say, on an all-party basis, that nobody under the age of 25 should be unemployed. We should not let them down in that way. Every young person under the age of 25 should be in work, in training, or participating in a programme; I do not care if we call it the new deal, the new new deal or the Work programme. They should be in a routine of getting up in the morning, going to work and doing something creative, whether it is in the community or helping in hospitals. We have got to the stage where we are moving very quickly towards the participation age rising to 17 or 18. Neither the former Government nor this Government have seriously tackled what young people with a lower level of skills are going to do in the extra year. That is a challenge for those on both sides of the House. I once said that to my right hon. Friend the Member for Kirkcaldy and Cowdenbeath (Mr Brown), but he got very cross with me for pointing it out, and asked what I wanted for these young people. I said that I wanted for them what rich people have—a personal trainer and a life coach—and he thought I was mad, but never mind.

I want to abolish unemployment for those under 25 and to get people out of that routine. I want to get rid of intergenerational worklessness, with a fundamental change in how we allow people to live that half life. My plea is that across the parties we should agree on a programme that gives all our young people the opportunity to live a full, democratic life.

17:22

[Nigel Mills (Amber Valley) (Con)]

It is a pleasure to follow the hon. Member for Huddersfield (Mr Sheerman). I think that I agree with most of what he said. I certainly agree that on this issue we need cross-party consensus and not political point-scoring. It is a pity that his Front Benchers did not take note of that in drafting their motion and chose to play politics instead of dealing with the substance.

Whatever our concerns about the performance of the Work programme to date, it beggars belief to suggest that people would have been better off left to their own devices, with none of the support that it has been providing, and that more of them would have found work in the difficult economic climate we have seen over the past 18 months. That is a grave insult to the providers and their employees who have been working hard trying to help people who have been unemployed for a long time. We have to give the programme somewhat more time than its first year before we draw any real conclusions about its success. We can see from the data published by the trade association that its performance is improving, and that is consistent with what I have seen on the ground in my constituency.

[Sheila Gilmore (Edinburgh East) (Lab)]

The problem I have with quoting the additional figures that have emerged from the trade association is that for the past year and a half we have been lectured on the fact that we could not have any interim information about how the Work programme is going because the data had to be properly evaluated and reliable. Yet because the published data do not suit the Government, we are suddenly having all these unverified data thrown at us to tell us that things are not really how we think they are. Why was all this kept secret?

[Nigel Mills]

I am not sure that I am the best person to answer that question. However, when we have a programme that is running for seven years, with people being put on to it for two years, we cannot draw many conclusions from the data in the first few months of its operation. A decent period will have to elapse before we get some reliable data that will have some meaning and can be used to look at trends. I see why we have official data to the end of July this year, but data since then would have more relevance if we also had data from the first three months of the programme.

No Member of this House seriously disputes the need to provide those with most barriers in their way with the additional support that they need to get back to work. Many such people have been out of work for a long time and will need help with serious issues in order to build up confidence and have any chance of getting back to work. To be fair, the scheme of the previous Government towards the end of their time in office was not radically different from that introduced by the current Government. This Government have accelerated the change, introduced a more consistent programme over the whole country and brought the strands of different schemes into one programme, but the direction of travel is not entirely different. In fact, many providers involved with the previous scheme are also involved in the current one. It is not sensible to say that the Work programme is doing the wrong thing and is a terrible idea, and that its support is completely wrong. Where does that leave us? Surely it is not the Opposition’s policy to have no support at all for the long-term unemployed.

[Mr Byrne]

The hon. Gentleman is generous in giving way. Our point is that there is not enough fuel in the tank. I am sure he is as worried as I am that on current performance, the Work programme may not hit its second-year target to get 27.5% of those on the programme into a long-term job. The Opposition motion says that we should start putting more fuel in the tank by providing extra resources for young people.

[Nigel Mills]

One problem of the Work programme is that the year we are looking at contained the second part of the double-dip recession. We all accept that it is hard for anyone to find work in a recession, let alone those who have been out of work for a long time and have the most barriers to overcome. We hope that as the economy gathers strength in the coming year, that will give the Work programme even more chance of success in meeting its second-year targets.

[Margot James]

My hon. Friend draws attention to some of the similarities between the Work programme and what went before. Does he agree that one key difference is the remuneration paid to Work programme providers? They get a £300 attachment fee when someone is referred to them, but do not receive further remuneration until a candidate has been in work for six months. That provides a huge incentive—along with the fact that some applicants will have their benefits docked if they do not co-operate—and makes the Work programme a greater success than what preceded it.

[Nigel Mills]

I am grateful to my hon. Friend. The motion suggests that people would have been better off without the Work programme and with no extra support, but the support it provides is valuable and not entirely different from that provided in previous programmes. Payment by results, which I will come to, provides a far greater incentive to providers to get people back into work and, most importantly, not just to start a job but to find a sustainable position where they can remain for a long time. That is a key part of the programme.

The Work programme also fixed the problem of providers going for low-hanging fruit and getting back into work those who could do so most easily, while not placing quite the right focus on those who were more challenging. Remuneration for the Work programme means there are far more incentives to focus on the harder parts of the cohort.

Like my hon. Friend the Member for Stourbridge (Margot James), I have visited providers in my constituency—A4e and Ingeus—and I have seen their work and how they go about it. Importantly, somebody does not come through the door on the first day and start applying for jobs on the second; there is a long period of working out a person’s needs, what support they have, the training they need, and building their confidence, before they start applying for jobs. One does not expect providers to get people into work in the early months of their referral, which is why there is a problem with the statistics. We are looking at numbers of people who have been in work for six months of a programme that has existed for 13 months during a double-dip recession. The providers might not have even tried to get some of those people into work at the start of the programme—it is not a fair measure. Providers in my constituency are doing great work and the support they provide is valuable. I commend them on that, rather than saying that their work is worthless or worse than nothing.

No one would pretend that yesterday’s results were anything other than disappointing and concerning. We all wish that progress was quicker, and the whole House wants to get people back into work to improve the quality of their lives and for the sake of the taxpayer. However, the Work programme is a seven-year programme that gives individuals a two-year programme, and it is unfair to judge it on the basis of its first-year performance. We should look in a year’s time when the first cohort has spent two years in the programme. Let us look at the outcomes after the full two years, and see how many people are in work at that point.

[Ben Gummer (Ipswich) (Con)]

My hon. Friend is entirely right that the figures are disappointing. I am sure that he, like me, has had successful cases in his surgery. Two people who came to my surgery went through training schemes under the previous Administration—one of them had been unemployed for eight years—but found a job through the Work programme, so it is having an effect in individual cases. It is certainly making an impact in my constituency, as I am sure it is doing in his.

[Nigel Mills]

My hon. Friend reinforces the point that it is utterly unreasonable to say that the scheme is worse than doing nothing.

Providers who cover my constituency have told me that they had only a short time to prepare before they started work. They said they had not worked in the east midlands before, so had not only to find staff, but to build links and form relationships with employers to convince them to take people in more challenging situations. Expecting brilliant results at the start of the programme does not work.

The latest data show that 29% of first referrals from June 2011 have now had a job start, and that 37% of under-25s have had a job start. Those are not terrible results; they are encouraging. In Amber Valley, the results are better than average: 4.2% of those referred have met the target of spending six months in a job. I accept that that is less than the 5.5% target, but it is well ahead of the national average. Amber Valley is generally performing well. Total jobseeker’s allowance claimants are down 21% since the election, and JSA claimants under 25 are down 24%. Claimants per vacancy are down from 6.2 to 1.5. That is not a disastrous situation, but a sign that things are going in the right direction. I sincerely hope it continues—[Interruption.]

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. I know a new Member will speak shortly, but could we just have a little quiet so we can hear Mr Mills?

[Nigel Mills]

Opposition Members clearly do not want to hear the truth of my argument.

The Select Committee on Work and Pensions report from last year, which was produced before I was a member of the Committee, gave the scheme a broad welcome, but one concern was the impact on smaller providers that are subcontractors to the main providers. I wholeheartedly endorse payment by results, but it can make things quite hard for organisations that are not large businesses with strong balance sheets, which can fund the gap. Given the delays in the system, some of the smaller providers have found their cash flow squeezed and are struggling to survive. All hon. Members value their innovative ideas and the extra local knowledge they can add to the scheme, so will the Government, after seeing the results, find a way of reviewing how small providers are funded and ensure they can survive the transition period and continue to provide their valuable work?

Overall, there are some concerns with how the Work programme has started. We would prefer the numbers to be a lot better, but there are encouraging signs. The programme can be a success and performance is going in the right direction. I hope that, in a year’s time, we are talking about the great successes of getting the most challenged people—those who have been out of work for a long time—back into jobs, which will improve their lives and the situation for the taxpayer.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. Before I call the new hon. Member for Manchester Central (Lucy Powell), I remind Members that there will be no interventions because it is a maiden speech.

17:33

[Lucy Powell (Manchester Central) (Lab/Co-op)]

Thank you very much indeed, Mr Deputy Speaker, for the opportunity to speak in this important debate. It is a huge privilege, if a little daunting, to be making my maiden speech in the House today as the new Member for my home city of Manchester.

I should first like to pay tribute to Tony Lloyd, not just because it is the custom, but because he is a brilliant man and a very dear friend of mine. Tony was first elected to this House in 1983 as the hon. Member for Stretford, taking over as the Member for Manchester Central in 1997 following boundary changes. Through his 29 years’ service as an MP, he always remained absolutely rooted in his constituency and home city, providing a first-class service to his constituents and making a real impact on the quality of their lives by ensuring they got the support, services and investment they so badly needed.

Tony married that local commitment with a distinguished and long parliamentary career, particularly in the field of foreign affairs. He was also extremely popular among his colleagues, becoming the chair of the parliamentary Labour party for six years. It is a tricky position to hold at the best of times, but Tony managed to achieve it under three different party leaders.

Like me, Tony is a proud Mancunian, but I have to say that there was one area on which we disagreed. Thankfully, the passing of the baton from Tony also marks a new era in Manchester: the passing of the Championship from the red side to the blue, and long may City’s reign continue. I know Tony will be sorely missed in this place, but I am sure that the whole House will join me in wishing him well in his important new position.

In preparing for this speech, I also looked back at the maiden speech of Tony’s predecessor, Bob Litherland. Bob was another proud Mancunian and he was also elected in a by-election, just after the 1979 general election. In his maiden speech, like me he felt compelled to speak early on in a debate on the effects of the Tory Government’s Budget, as it had been a big issue in his campaign. He said:

“The people of Manchester Central will be hit hardest, because they are the people who need the facilities and who cannot afford any more cuts to their standard of living.”—[Official Report, 24 October 1979; Vol. 972, c. 471-4.]

His words would have been just as relevant in today’s debate.

As with by-elections today, turnout was relatively low in Bob’s election. However, the turnout in my election, Mr Deputy Speaker, I am sorry to say, was very low indeed. There were a number of difficult and complicated factors at play, but still, we in this House should not be satisfied with falling voter engagement and growing apathy. The previously lowest turnout in a by-election was in the Leeds Central by-election of 1999, a record that my right hon. Friend the Member for Leeds Central (Hilary Benn) was quick to relinquish when he phoned to congratulate me the next day.

As the granddaughter of Irish immigrants on one side and a mining family on the other, my family are hugely proud of my achievements here today. I was born on the day of the second general election of 1974. My dad would not take my mum to the hospital until after our local polling station in Moss Side had opened, where he duly declared that my mum was in labour and voting Labour. Some thought this marked my future destiny, but my beliefs and conviction were actually shaped by the fact that it would be nearly 23 years before Labour would next win a general election.

Growing up in Manchester in the ’80s, I was surrounded by social injustice and lost opportunity. At school, we shared old and poor resources, leaving many pupils behind. Our city was dying, and to succeed people needed to get out of there, and fast. Members of our families died prematurely, or suffered unnecessarily. Too many of my school friends lived in cramped and poor homes.

The Manchester of today is a very different place indeed. An urban renaissance, begun by my hon. Friend the Member for Blackley and Broughton (Graham Stringer) when he was the leader of the council and then realised by Sir Richard Leese, was accelerated by the investment and measures brought in by the previous Labour Government. Manchester Central now boasts one of the best hospitals in the country, the Manchester Royal infirmary; all our secondary schools are new or rebuilt, raising attainment significantly; we have a network of Sure Start centres, which we are keeping open; housing stock has been transformed with major redevelopments in Beswick, Ardwick, Ancoats and the city centre; areas formerly associated with gangland culture, such as Moss Side and Hulme, are unrecognisable and fast becoming highly desirable places to live; and, perhaps most importantly in the context of this debate, we have a city that is growing, attracting new businesses and residents, where public and private work together to generate jobs and growth.

Nowhere epitomises that partnership more than the Sharp project in Newton Heath. In the shell of an old factory now sits a buzzing and successful digital media hub, housing tens of digital start-ups. Sharp has recently announced a major expansion into West Gorton, creating 400 new jobs, as well as a new apprenticeship scheme for local young people. Cities around the world are trying to emulate this success. The private sector alone has not, and could not, ever spontaneously create such an environment. It was local political leadership, working in partnership with the private sector, that has delivered jobs and growth.

It is this vision and partnership that ensures Manchester pulls above its weight in other areas too. Manchester’s audacious bid for the Olympics, followed by a successful bid for the Commonwealth games in 2002, has left a lasting legacy for my constituency, and indeed for the rest of the country. The national cycling centre, a world-class aquatic centre, sports city and, now, the only indoor competition BMX track in the world are all in Manchester Central. They are all used by local young people and they all contributed to Britain’s recent success in the Olympics.

For all that transformation and recent achievement as a city, however, challenges remain and, I fear, might get worse over the coming years. A child born in Manchester Central is still likely to live five years less than the UK average; 50% of children in Manchester Central live in poverty; long-term youth unemployment is high and rising; too many families are in underemployment with not enough hours to make ends meet; wages are stagnant and bills getting higher; access to quality, affordable child care is getting harder; the vulnerable and disabled are seeing their services and support cut; and places such as Collyhurst, Clayton, Newton Heath and Openshaw are still in desperate need of regeneration.

In summary, Manchester Central has the third-highest level of child poverty in the country; the fourth-lowest life expectancy; and the 10th-highest level of unemployment in the UK. And yet Manchester received the fifth-worst local government settlement last year, resulting in £170 million of cuts over two years, compared with no cuts in other much more affluent authorities. It is this sort of unfairness that makes my constituents really angry. But, for all these depressing statistics, Manchester Central is a fantastic constituency with many diverse communities, all of which are united in their pride for the city and themselves. They do not want handouts or sympathy—just a fair shot and a fair playing field. Manchester has great culture, sport and history, too, and I am sure the whole House will agree that Manchester Central has the best conference venue in the country.

So, next time my hon. Friends are in Manchester, I recommend they venture out of the secure area to explore what Manchester has to offer: cafes and bars in the northern quarter, Chinatown, the gay village perhaps, museums, galleries, shops, music and much, much more. I am incredibly proud to be the Labour and Co-operative Member of Parliament for Manchester Central, the modern-day home of the co-operative movement, and I am proud to be Labour’s first-ever woman MP for my home city. I will do my very best to stand up for Manchester and all of its communities in the House and beyond. Thank you very much.

17:42

[Guto Bebb (Aberconwy) (Con)]

It is a great pleasure to follow the maiden speech from the hon. Member for Manchester Central (Lucy Powell). I agree with much of what she said about Manchester—I can certainly attest to the fact that the city has been renewed dramatically—but it is fair to say that my son would not support the same football team as she does, although the fact that he supports a team in Manchester, rather than Liverpool, would probably go down well with the Manchester electorate.

It is a great pleasure to contribute to this debate. This issue constantly comes back for debate and is rightly being scrutinised, because the Government’s investment in the Work programme is probably among the most important things the coalition is doing. It is right that the Opposition scrutinise how the Work programme operates, but this debate is premature and the motion is not based on any reality that I recognise. I certainly want to challenge some of the assumptions—lazy assumptions, I would argue—behind the debate.

As the Secretary of State made clear, the Labour Front-Bench spokesman provided no context for the debate. I reiterate that, despite the difficult economic circumstances that the coalition is dealing with, we have seen sustained employment growth. We have the highest number of people employed in this country ever, yet we get no recognition of that from the Opposition. I almost think they begrudge employment creation in the private sector under the coalition. Nothing typifies Labour’s behaviour better than the way it constantly dismisses some of the jobs being created by the private sector. As I have said before, if I ever hear another Labour Member talk about jobs that are “nothing more than shelf-stacking”, I will finally blow my top.

[Nick de Bois]

Is it not also worth highlighting the fact that Jobcentre Plus has a successful record of getting those who have been employed for less than one year into work? Not only is that an achievement that we should celebrate, but it has the effect of leaving a tough challenge for those in the Work programme who are finding it hardest to get placed.

[Guto Bebb]

That is an important point. I have visited Jobcentre Plus in my constituency to pay tribute to the work it is doing. Jobcentre Plus has been successful in getting people back into employment quickly, which means that the Work programme providers are not dealing with the low-hanging fruit, but with difficult-to-place individuals who need support and guidance over a longer period than Labour is willing to admit. It is also important to say that a job is not just a job, but an opportunity to change one’s lifestyle, gain respect in one’s family and community, and show that one can make a contribution.

[Jane Ellison]

The rather dismissive attitude towards jobs in retail that my hon. Friend has described drives me to distraction as well, particularly as I am co-chairman of the all-party retail group. Retail is an industry in which a great many people have started at the bottom and, from that chance on the shop floor, have risen to the very top through their application and talents. There can be no more meritocratic industry, so he is quite right to castigate the Opposition for being so dismissive.

[Guto Bebb]

Indeed. My experience of going around Tesco’s partnership stores, for example, has been quite inspiring. I found somebody who had been unemployed for eight years and was given an opportunity to work in the bakery section; 18 months later she was the manager, and famously said, “They’ll be carrying me out of here in a box, because I’ve been given an opportunity.” That is the reality of what creating a job and helping people into a job is all about.

[Sheila Gilmore]

The points the hon. Gentleman makes about the importance of employment are clearly correct. The reason I have any criticism of jobs in the retail sector, for example, is not because they are not important jobs, but because people are increasingly being offered short-hours jobs, on zero-hours contracts and with little security, which simply does not work for those trying to organise child care. That is the problem.

[Guto Bebb]

I disagree on the whole. Quite often the current restriction means that when people go over a certain number of hours, they are penalised. That will be dealt with when we introduce universal credit. What I have found is that there is a feeling out there that people are still being penalised for wanting to work more. Universal credit will certainly deal with that, which is an important change that is required.

We have heard a lot in this debate—from the Opposition Front-Bench spokesman and some Opposition Back Benchers too—about youth unemployment. Obviously it is absolutely problematic if too many young people are not working, but between 2004 and 2010, youth unemployment in my constituency of Aberconwy increased by 192%. If I recall it correctly, I think the Labour party was in government at that point.

[Rehman Chishti (Gillingham and Rainham) (Con)]

Does my hon. Friend agree that a number of councils out there are working in partnership with Jobcentre Plus? They include Medway council, which reduced youth unemployment from 1,600 to 1,200 between April and October. That clearly shows that where there is the will, the Government’s policies, with local councils working in partnership with Jobcentre Plus, are reducing youth unemployment.

[Guto Bebb]

Indeed, and that example should be replicated in other parts of the country, where partnership working can make a difference.

Despite a 192% increase in youth unemployment in my constituency of Aberconwy during the last six years of the Labour Government, we have seen a 21% reduction in youth unemployment since this coalition came into play. Twenty-one per cent is not enough—the fact that I still have young people not working in my constituency is unacceptable—but we should recognise the success in getting young people back into employment. Every young person who is not claiming unemployment benefit or lying around doing nothing is a success story as far as I am concerned. When Labour Members talk about youth unemployment, it is important that they consider their performance in government.

However, I suspect that this debate is more about the Work programme than about the general context. I have talked about the general context, but it is important to bear in mind that the Work programme is the Department’s flagship programme, and a lot rests on its success. My concern is that this debate is premature, because it is difficult to look at a long-term programme—which is looking at paying people based on their performance over the long term, not the short term—and say after a year that it is failing. Even going on the figures that came out yesterday, it looks as though the programme is doing exactly as it was supposed to be doing. They show that 56% of Work programme starters in June 2011 are no longer on benefit, that 30% of them have been off benefit for 15 weeks and that 19% have been off benefit for 26 weeks.

[Paul Flynn (Newport West) (Lab)]

The results that we heard about yesterday cannot be compared with anything else that ever happened. It is probably true that if the Government did nothing at all, there would be a better outcome. Can we therefore conclude that the best we can expect from the Government for the next two and a half years of their miserable existence is a long period of inactivity?

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. We have a lot of speakers to get in, and we need shorter interventions. Otherwise, Members are going to be disappointed.

[Guto Bebb]

The hon. Member for Newport West (Paul Flynn) seldom sees the bright side of life. The truth is that I am not willing to see 31,000 job outcomes so far as immaterial. That is something that we should be proud of. To be perfectly frank, if that is failure, give us more.

The Opposition seem unwilling to accept that we should be concerned about value for money for the taxpayer. Obviously, I am not going to mention the comment made by the right hon. Member for Birmingham, Hodge Hill (Mr Byrne) about our financial position, but the Government should be aware of getting value for money for the taxpayer. The figures that I have here show that some of the previous employment support projects have not been particularly successful in that regard. The flexible new deal cost £7,500 per job created, and £770 million was spent. The employment zones cost £993 million, with an average spend of £7,800 per job. The new deal for young people—which was successful, it has to be said—cost £3,300 per job created. At the moment, the Work programme is coming in at about £2,000 per job created. I think that that is a sign of success. Even though it is still premature to look at the outcome figures, we should take a great deal of comfort from the fact that it is giving that level of value for money.

The proof of the pudding is in visiting the Work programme providers in our own constituencies and localities. I have visited the providers operating in the county of Conwy, and I was very encouraged by that visit. I found teams of dedicated members of staff, but an organisation that was taking a huge financial hit because of the performance-related concept that the Department for Work and Pensions insists that the Work programme providers deal with. Interestingly, however, none of the providers that I spoke to suggested that they had any intention of leaving the programme. That was because they could see that they were going to be successful as time moved on. Indeed, separate data published by the Employment Related Services Association, the trade association that speaks for the Work programme providers, show that job starts have increased in the months since yesterday’s figures were collated. That is reinforced by what I have been told in my constituency.

Nothing gives a feeling for the importance of the Work programme better than talking to the participants. They feel that they are finally being taken seriously. They are getting support in areas such as presenting themselves and putting together a CV. Even more impressively, they are getting support with transport to take them to job interviews and training opportunities.

On the visit that I made, I was also impressed by the flexibility of the Work programme to deal with the local issues affecting that particular part of the world. One of the key issues for the Work programme providers in rural north-west Wales is the need to be more flexible in supporting people into self-employment. The original contract that the provider signed included a comparatively low number of members of staff dealing with self-employment. However, it became apparent in no time at all that self-employment was going to be a key deliverer of outcomes in a constituency such as mine, and the contract was flexible enough to allow the provider to up the number of people being supported into self-employment.

A great example of partnership working in that context was the business support structure of the Labour Welsh Government giving its full support to the Work programme providers who were helping unemployed people who wanted to start their own businesses. So the flexibility is there, and the outcomes will potentially be there in due course. What I am seeing is work in progress and a programme that is aimed at ending our long-standing dependency culture. That needs to be targeted and dealt with.

When I visited these Work programme providers, the most impressive thing was that a number of the job outcomes highlighted on the whiteboards were job outcomes in local hotels and local restaurants. That is important in a constituency such as mine, which is heavily dependent on tourism, because previously over the past five or six years—and certainly from 2003-04 onwards—the jobs created in the leisure and hospitality sector in my constituency were being filled by hard-working individuals from eastern Europe. The wonderful thing about the Work programme is that we are seeing evidence that those jobs are now being filled by people living in my constituency and being willing to take the opportunity to work.

[Several hon. Members]

rose—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. We are going to have to reduce the time limit to seven minutes, as I want to allow all Members to participate. It would be helpful if we had fewer interventions.

17:55

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

It is a pleasure to follow the hon. Member for Aberconwy (Guto Bebb) and more especially to follow the newly elected Member, my hon. Friend the Member for Manchester Central (Lucy Powell), who made a magnificent speech, in sharp contrast to the ragbag of rubbish that we heard from the Secretary of State, who again painted the false picture that all the problems were inherited from the Labour party and that everything is hunky-dory now.

The reality is, of course, that under the previous Labour Administration we had sustained growth to 2008, after which there was a financial tsunami, yet we kept growth going through the fiscal stimulus. Two thirds of the deficit in 2010 was due to the banking community and only a third was due to pump priming, which kept us on the move.

What did we see then? The Conservatives arrived, deflating consumer demand by immediately announcing half a million job cuts—and we have seen virtually zero growth since. Growth is the prerequisite to getting the deficit down. It cannot be done simply by cutting and cutting, particularly by targeting the most savage cuts at the poorest, which is precisely the strategy of the Tories and their Liberal accomplices.

We have heard of figures purporting to show more people going into work, but when they are analysed, they show that the number of people in part-time work is going up. There is a transition from full-time to part-time work. The people with the least are getting less—again, deflating consumer demand—and people with less spend more of their income. In the time available, I want to answer the question how the measures for the restructuring of the welfare state impact on the effectiveness of the generation of jobs, growth and getting the deficit down, and how they impact on fairness, by hitting those who are least able to afford it.

Some of the most profound changes affect housing benefit. Particularly despicable, of course, is the reduction of housing benefit for people under 25, 45% of whom are with children. The question is whether this reduction in housing benefit, sometimes thrusting people into homelessness, helps or hinders them from getting a job, so that they can care for their family and provide tax for the Exchequer—or, rather, does it throw them into a situation from which they cannot get work again because they are, frankly, out on the street?

A couple in Wales were highlighted recently. The man had worked since he was 15 for nearly 10 years continuously, but he now faces six months of unemployment. His partner is now redundant, so under the new legislation, they face homelessness. What chance will they have to secure employment and what sort of springboard for life chances will their child have? Very little, I would suggest.

[Jim Shannon (Strangford) (DUP)]

Is the hon. Gentleman experiencing in his constituency, as I am in mine, a greater demand from constituents for applications for housing benefit at a time when there is less money to go round? Does that not highlight the issue for the Government? They must provide more money for benefits and for housing benefit in particular.

[Geraint Davies]

We are seeing the perverse irony that the welfare bill is going up and up, with more people going into dependency, because the environment for job creation is not there. Meanwhile, the Government’s one-string solution is simply to give people less and less, when the focus should be on how to create new jobs, so that we can help people to get and sustain a job.

Another example—other than the targeting of under-25s who tend to have children and the escalation of child poverty into intergenerational poverty—is the empty bedroom tax. This is another horrendous idea whereby poor people—they are poor by definition as they are on housing benefit—who have an empty bedroom will lose about £7.50 a week, or £15 if they have two empty bedrooms. For example, a couple with two children, one of whom wants to go to university or get a job, will clearly have an incentive to say, “Don’t go to university,” or “Don’t leave home to get a job”—“Don’t ‘get on your bike’”, as Lord Tebbit would have it—“because, if you do, we shall end up being taxed £7.50 a week.”

A man who came to my surgery a couple of weeks ago told me that he was receiving disability living allowance, that he had a second bedroom—he used it for painting, as it happens—and that he did not have a job. Indeed, he was not a person who could have got a job. After he had paid his utility bills and all the rest, his disposable income was £20 a week. He will now lose £7.50 as a result of the bedroom tax, and next April the Government will cut the council tax rebate by 20%, which amounts to about £5 a week. His disposable income will then be down to £8 a week, which will have to cover his food, clothing and leisure.

This despicable and, in my view, socially criminal activity generates very little money from those who can least afford it, and one of the by-products will be mass homelessness. I have been a leader of a local authority, and I know that local authorities usually build family-size housing. Someone living in a two-bedroom flat or a three-bedroom house that ceases to be full when the children leave home will lose housing benefit and will then be evicted if he or she goes into arrears. Where do such people go when a local authority has not built enough one-bedroom accommodation because it is supposed to cater for families?

What if a child wants to come back from university, or to visit the family? What if there is a split in the family and the child needs to move from one place to another? The bedroom tax will cause massive disruption to communities in areas like mine throughout the country and disfigure the opportunities for us to create new jobs and get back on a sound track towards economic recovery.

[Andrew Bridgen]

Will the hon. Gentleman not concede that better utilisation of the social housing stock and an increase in its capacity will give us an opportunity to reduce homelessness?

[Geraint Davies]

I have been the housing chair for London and for Croydon. I know that it is possible to devise strategies involving incentives to encourage people to move to smaller homes—and, of course, as people die over time, housing is recycled in any case—but the suggestion that a group of people in social housing should be evicted once their children have grown up and that, because suitable housing does not exist in their own communities, they should be moved around is not only despicable but completely counter-productive. It is economically insane as well as socially immoral.

[Sheila Gilmore]

I am sure my hon. Friend agrees that this is not an attempt to ensure that housing is distributed more evenly. It even applies to people with disabilities. Couples who have to sleep apart for medical reasons will be suddenly told that they have too big a house. It is a draconian measure.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. There is a danger that those who wish to make a speech later will not be able to do so. I am sure that the hon. Lady understands that if she does not have an opportunity to make a speech herself, it will be her own fault.

[Geraint Davies]

As has already been said, the tax affects those with particular problems such as disabilities. If one half of a couple is ill with flu and, because the couple are allowed only one bedroom, that person infects the other one, it will not help the other one to work. None of this has been thought through. The idea seems to be that such people live in council houses and receive benefit and that the Government will sort them out by cutting it, but what they are doing is preventing them from working and making their contribution.

The Government also say, “Let’s cut working tax credit.” Working tax credit was an ingenious device. If I were starting a small business—indeed, I have started and run small businesses—I might be able to give someone a job paying £12,000 a year because of the way in which the business worked, but that person might not be able to afford to work for less than £15,000 because of, for instance, child care costs. The Government stepped in and stumped up the difference. What did we end up with? A growing company and a job, instead of a company that was not growing and a person stuck at home. That is the economic logic of working tax credit, but it is being cut, so part-time workers are losing £3,750 a year if they do not work for 18 hours and go down to 16 hours, as there is not enough work to do. We need to evaluate keenly whether some of these nasty cuts deliver economic disincentives to working and are therefore counter-productive in getting the deficit down.

There are ways ahead, including targeted investment involving universities and various job programmes. Other Members have spoken of the effectiveness of the current scheme, but, as I mentioned earlier, the Prime Minister has confirmed the statistic in our motion, namely that only 19,000 people out of 800,000—2%—have gone into full-time work. That is in sharp contrast to what the Secretary of State said earlier, so someone must be wrong. We should refocus, by making sure that the changes do not disrupt job creation and that they are fair and put us back on track for a strong economy and a fair society.

18:03

[Priti Patel (Witham) (Con)]

I welcome this debate, as it gives us an opportunity to highlight the positive steps that the Government have taken to get people off benefits and back into work. It is extraordinary that the Opposition should want to hold this debate given that many of the problems that the Government face in tackling unemployment are due to the Labour party’s failings when it was last in power. Labour left a legacy of more than 3 million workless families, with youth unemployment of about 1 million—the figure rose by about 40% from 2004—and that was when the economy was growing. Millions of people had never worked as Labour confined people to the scrapheap and kept people on disability and incapacity benefits even though they were capable of working. Labour also imposed heavy tax and regulatory burdens on businesses, which stopped them employing people and creating jobs.

I am sure that we all remember the following remarkable statement by the previous Prime Minister, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown). Once upon a time, he spoke about British jobs for British workers, but his policies—especially on open-door immigration in respect of eastern Europe and accession states—effectively left a generation of young people struggling to compete with their international competitors in our domestic labour market. That policy denied hundreds of thousands—if not millions—of British people jobs.

Labour also left that generation of young people struggling to compete with their international competitors because our school standards fell. In 2000, England was ranked 8th in the world for maths, 7th for literacy and 4th for science. By the time Labour left office, we had dropped down the international league tables to 24th for maths, 17th for reading and 14th for science. Education is very important for young people’s job prospects and this country’s ability to attract inward foreign investment and compete for jobs internationally, and Labour’s neglect of education has left Britain far behind in the global race for jobs, investment and growth. The current Government are trying to turn that around.

I applaud the Secretary of State for his commitment to changing the culture in this country. Ministers are putting an end to the “something for nothing” culture that blights our economy and saps our hunger to compete in the global race. It also undermines many of our communities and does so much to damage aspiration—the concept of social mobility and moving onwards and upwards in life. Over time, reforms to education and welfare will improve the prospects for young people who are currently trapped in challenging situations.

My constituency has some areas of substantial deprivation and poverty, yet youth unemployment has fallen by 6.6% in the last year—and it would be nice to hear a few positive words of congratulation from Opposition Members on such achievements. We should do whatever we can to support our young people to get into employment and to enhance their skills, and we should create opportunities for them not only in the labour market, but through apprenticeships and other innovative schemes with small businesses.

Many young people in my constituency are securing apprenticeship places, and the Government should be congratulated on doubling the number of adult apprenticeships to about 650,000 this year, from a figure of 300,000 inherited from the previous Government. If we include apprenticeships for 16 to 18-year-olds, there will be close to 900,000 apprentices in this country this year. Apprenticeships help people to learn new skills, to get a foothold in the labour market and to increase their confidence by having work experience.

Unemployment is, of course, still too high. No one likes the fact that it is high, but we should remember that the Government are also reducing the number of economically inactive people, by helping to get those who were left on the scrapheap by Labour into meaningful employment. Even in these challenging economic times, Britain is expanding its work force and businesses in my constituency are eager to grow and create more jobs, and they are doing so.

About 83% of jobs in my constituency are based in small and medium-sized enterprises—a figure considerably higher than the national average. Those firms are local wealth creators, and they will do their utmost to support local jobs. Many of them are opening their doors to young people, again giving them the opportunity to get off benefits, get work experience and increase their skills. That is why it is so important that the Government continue to focus on getting rid of business regulation, so that small businesses have a greater opportunity to invest and grow.

Unlike the Labour party, which tried to force small businesses to pay for the deficit by increasing all sorts of taxes and regulatory burdens on them, this Government understand small businesses and know exactly what needs to be done to cut red tape costs, which are still about £17 billion a year. That is equivalent to the cost of Crossrail or almost two Olympic games; it is 11 times the apprenticeships budget.

I urge the Government to continue with all the positive work that they are doing. I know that Ministers value the private sector and the role that it plays in supporting employment and will do more in the months ahead to support the sector. I welcome the steps that the Government are taking to create jobs and enable our young people and unemployed to move onwards, off benefits and back into work. The employment prospects of my constituents are far greater and higher now than they would have been under a Labour Government.

[Several hon. Members]

rose—

[Madam Deputy Speaker (Dawn Primarolo)]

Order. To ensure that all Members can participate in this debate, I am reducing the time limit, with immediate effect, to six minutes.

18:11

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

As others have said, the Work programme builds on a direction of travel that those on both sides of the House have been pursuing for a number of years. As my right hon. Friend the Member for Birmingham, Hodge Hill (Mr Byrne) said, the difficulty is not particularly with the concept; it is that there simply is not enough investment in the programme to produce the outcomes we need. The problem is that a lot of over-simplification of the issues that long-term workless people face means that we are failing to address some of the real drivers of worklessness and are allowing ourselves to be carried away by some incorrect and pervasive myths.

The first myth, which I am sorry to say has been repeated again this afternoon, is about a culture of worklessness and three generations of households where nobody has ever worked. These households do not exist; researchers have gone out looking for them and they are not there. The hon. Member for Witham (Priti Patel) looks doubtful, but what is there are households that have experienced, over the generations, sporadic and insecure employment. As Joseph Rowntree Foundation research carried out in 2010 by Teesside university has shown, there is no evidence whatever of a pervasive culture of worklessness among these households. Actually, the opposite is the case; many of the people now accessing the Work programme are and have always been desperate to work, and they have a history of employment, although it has not been sustainable employment. It is really important that we address the true underlying causes of worklessness.

Secondly, we recognise that skills are important in enabling people to access employment and to progress at work, but it is important to recognise that when that low-income group of workless people move into work, skills are not particularly well correlated with a long-term improvement in their incomes and do not predict particularly strong labour market success for that group. A lot of difficulties remain in respect of how skills strategies do not improve people’s labour market prospects. Some of the initiatives being taken forward by the Government are going to miss the mark. Too many apprenticeships are being offered at level 2, and we need to increase access to apprenticeships at higher levels. We are seeing a reduction in employer levels of training—they are down to low levels not seen since 1996. Poor-quality jobs also inhibit the demand for skills. Even if we upskill our work force, the skills investment will be wasted if the skilled jobs are not there for them to do. So one thing we have to invest in is the leadership and entrepreneurial skills of those who start up businesses and create jobs.

It is also important to understand that different groups in the workplace and in the labour market experience different barriers and obstructions to progressing at work. The Work programme has proved uneven in how some groups have done better and some have fared worse; interestingly, women and lone parents are shown to be doing quite badly in these early Work programme figures. That contrasts with a very strong record of success on lone parent employment under the new deal for lone parents offered by the previous Government. It is also deeply concerning that we still have an alarmingly high rate of unemployment among young black men—twice the rate among young white people—yet the Government are determined that the Work programme will be, in the words of Ministers, “colour-blind”. No specific measures will be taken to address the particular characteristics that affect that hard-hit group.

Equally, it is of concern—the hon. Member for Aberconwy (Guto Bebb), who is no longer in his place, referred to this—that many of the new private sector jobs that are being created are part-time jobs. Some people prefer part-time work, but a large proportion are unable to access the full-time work that they want.

[The Minister of State, Department for Work and Pensions (Mr Mark Hoban)]

rose—

[Kate Green]

The Minister clearly has a figure that he wants to offer me and I will be interested to hear it. I have heard reports just this week that in one workplace, employers are refusing to extend hours of work and are holding people to part-time contracts because they know that they do not have the resources to pay more.

[Mr Hoban]

As the hon. Lady is so keen on evidence-based policy making, let me point out that the last unemployment figures demonstrated that 80% of the people working part time wanted part-time work, as it helps them get back into the labour market after years of caring for people and being off sick.

[Kate Green]

That might be the case, but the Minister must also recognise that 40% of the new private sector jobs that have been created have been part time. He needs to be confident that that part-time work will lift families out of poverty, because far too often the evidence suggests that it will not. It certainly will not do so under the newly structured universal credit, as the rewards for working will be for one full-time breadwinner earner, reducing the opportunities for a second member of the same household to undertake the part-time work that the Minister is suggesting is a stepping stone into more work. There will be very little incentive for people to take the part-time work that improves their labour market prospects and it is to be regretted that he is not grappling with that point.

We still have a real issue with pay in the labour market and gender segregation in the workplace. The apprenticeship figures over the past few months show that women are still going down the traditional routes of care, business administration and retail, where pay is lower, and that men are more likely to go into information and communications technology, construction or engineering, where pay is typically higher. We have heard very little today about how apprenticeship strategies will be developed to widen access at a higher level and to ensure much more diverse participation in industry sectors that offer the best prospects of work and pay.

Finally, we have all been guilty of focusing too much on what we might call the supply side of the worklessness problem, as if the difficulty was that individuals needed help to be got into work. We have not considered the demand side nearly sufficiently. The problem is not a lack of willingness to work, related to what the individual seeks to achieve; the problem is that the jobs are not available. They are not available at the rates of pay that enable people to support their families, in places that people can travel to and at the hours that match up with domestic and caring responsibilities. Also, frankly, they are often not permanent, which means that people repeatedly fall in and out of low-paid and insecure work. That is the labour market failure we ought to be tackling and that I am afraid the Work programme is so far failing to address.

18:18

[Andrew Bridgen (North West Leicestershire) (Con)]

I share the Secretary of State’s incredulity that the Opposition would choose to debate these issues on an Opposition day, since they have no credibility at all. They snipe from the political sidelines despite the fact that the Government have created more than 1 million private sector jobs in just three years—twice as many as the previous Labour Government produced in 13 years.

The Opposition seem also to have forgotten the terrible legacy that they left, and they should once again be reminded of a few of the facts. For instance, in their 13 years in government in arguably favourable economic conditions—the boom before the inevitable bust—the number of households in which no one has ever been in work doubled to 350,000. That legacy will take many years to rectify, as children in those households will have no working role model and will probably come to believe that not working is the norm and that it is normal to subsist on benefits. As a Member of Parliament, there is nothing more depressing than visiting a school and asking a young child what they want to do when they finish school, only to be told, “I’m going to sit at home and watch television with my dad.” I never want to hear that again; it makes me want to weep.

Almost 2 million children are growing up in homes where nobody works. The UK has one of the highest proportions of workless households in Europe, and as I have pointed out, the working age welfare budget increased by a shocking 40% in real terms in 13 years of Labour government. That is another area where the Opposition failed to fix the roof while the sun was shining. However, we now have a Government who are determined to tackle the welfare dependency that developed under the previous Government and oversee the creation of sustainable, private sector jobs as we work to rebalance our economy. The Opposition do not want to hear the good news about employment statistics, but despite their sniping, real progress has been made. Some 1.2 million jobs have been created; employment is up by a net 750,000; and there are more people in work than ever, including more women employed than at any time in our country’s history.

One statistic that the Government should be particularly proud of is the fact that more than half a million people started an apprenticeship in the past year. In my constituency of North West Leicestershire, there were 420 apprentice starts in 2009-10, but 940 in 2010-11—a growth rate of 124%. I would like to mention the excellent work undertaken by community groups and charities to boost apprentice numbers. In my constituency, Whitwick Community Enterprises has undertaken sterling work, reaching out to young people who are not even classified as not in employment, education or training—they have slipped under the radar altogether—giving them life skills in preparation for their return to full employment. I am delighted that that group has successfully applied for Government grants, which means that even more people in my constituency will be given the opportunity to learn skills for life. It should be extremely proud of that.

Opposition spokespeople have discussed the Work programme, and what they perceive as a lack of success. According to the Employment Related Services Association, the industry has helped 207,831 people back into work since the Work programme was introduced, and 29 in every 100 people who have gone on the programme since June 2011 have been supported into a job. Indeed, every month, more than 20,000 people are finding jobs through the Work programme, and the figures improve month on month, as many of my colleagues have said.

Many people would suggest that the Work programme is the biggest and most ambitious scheme of its type in the world. It is, and we should be positive about it. According to the Employment Related Services Association, the official statistics released by the Government yesterday represent a limited snapshot of performance in the early months of the programme, bearing in mind that it has been running for only a year. For someone to qualify as undertaking fixed employment they have to be on the programme for six months and employed for six months. Very few people fit those criteria, but I am assured by the providers that there is more good news in the pipeline.

The Work programme has helped 64,601 people into work. Over that period, unemployment fell by 49,000, so it is difficult to argue that it has not had an impact in reducing unemployment. I would have liked more time, but it was Labour that proposed the jobs tax—the increase in national insurance—which we reversed. It was under Labour that youth unemployment increased by 40%, and half a million people were left on benefit facing marginal tax rates of over 80% if they found work. The Opposition are as credible on welfare reform as they are on the economy: no apologies, no new ideas, and still nothing to say.

18:24

[Mr David Lammy (Tottenham) (Lab)]

I am grateful for the opportunity to speak in this debate and to follow my good friend, my hon. Friend the Member for Manchester Central (Lucy Powell). There are fewer and fewer Members of Parliament who come from their constituencies, and many people will look on her maiden speech with tremendous pride. You will be familiar with the St Pauls area of Bristol, Madam Deputy Speaker, so you will know that there is great affinity between areas such as Moss Side, St Pauls and, indeed, Tottenham.

Last week, together with my right hon. Friend the Member for South Shields (David Miliband), I held an event with chief executives from the voluntary sector in north London. It was a jobs summit in which the London boroughs of Waltham Forest, Haringey and Enfield came together to discuss the urgent issue of unemployment in our areas, what we could do and what the voluntary sector could do and is doing. We talked, for example, about the Haringey jobs fund, where Haringey council itself is providing apprenticeships and subsidising jobs in a similar way to the future jobs fund that we ran when we were in government.

We also got down to neighbourhood level and looked at what Waltham Forest is doing with its Going the Distance initiative with problem families in that borough, working with families whose young people are caught up in gang violence. The aim is not just to deal with former gang members, but to help parents into employment in such communities.

We were conscious when we got together that we were meeting in Tottenham town hall which, throughout the 1980s and 1990s, had emblazoned on the front the figures for unemployment in my constituency. It is important to recognise when we have these debates in the House that there are many constituencies around the country that have seen successive appalling levels of unemployment, particularly youth unemployment, over many generations. I recall the deep recessions of the early 1980s and the recessions of the early 1990s that scarred so many in the community in Tottenham and in many communities across London.

I do not want to doubt the sincerity of Members on the Government Benches, who must recognise the urgency of youth unemployment. I particularly do not want to doubt it because I have worked cross-party with the Secretary of State on these issues, but we must be very concerned that, since the Work programme began, the figure for long-term unemployment in London has risen by 30,000. If we look at young people in London, the figure has risen by 7,000. That is an increase of 420% since the Work programme began in our city. My constituency is one of those that still has high unemployment, fluctuating between eighth and ninth in the country. It is deeply unsatisfactory that the Work programme has benefited only 110 people in Tottenham, or 2.7%.

We cannot afford to have young people long-term unemployed, and often their parents long-term unemployed, in a constituency such as mine. We should take no great comfort from the zero-hour contracts that are being handed out, which do not allow people to budget for next week, for the future or for their benefits. That is causing chaos and hardship in our communities. We should not take comfort either from apprenticeship figures that are massaged by the number of people over 25 who are put on to apprenticeships.

When we look at the numbers, we see that a fifth of apprenticeships are in the retail sector, a third are in administration, and some do not last longer than 15 weeks or so. Are they really the apprenticeships that we understood them to be? The number of apprenticeships in London in construction is falling. The number in engineering is disappearing. Much of this goes to the heart of what growth is meant to be in our economy, and we should not take great comfort from the fact that we are, in effect, asking the retail sector to take up the slack because we are not doing the hard work to identify where growth is to come from in Britain.

We should also be deeply concerned about the number of people who are effectively the working poor—6 million at the last count, who are working, often on those zero-hour contracts, often in temporary or casual employment, who are not able to make their way and certainly do not have a living wage to provide for their family.

Two and a half years into this Government, we now have some data coming forward, and Opposition Members are genuinely concerned, because the scars are deep, and I say that as an MP who has seen those scars over successive generations. My hon. Friend the Member for Manchester Central, who made her maiden speech, will be all too aware of the repercussions in Moss Side if we do not get this right on this attempt.

[Several hon. Members]

rose—

[Madam Deputy Speaker (Dawn Primarolo)]

Order. The winding-up speeches will start at 20 minutes to 7. I will divide the remaining time equally between the two Members who are yet to speak, which means they have five minutes each.

18:30

[Ian Lavery (Wansbeck) (Lab)]

I will obviously be very brief, Madam Deputy Speaker—I have no choice now.

Yesterday’s report on the Work programme was very revealing, and my constituents are absolutely horrified by the statistics on Wansbeck. The coalition’s flagship Work programme has created fewer jobs than would have been created had no programme been in place at all. Members across the House have scorned that finding, but it is an absolute reality. Only two people in every 100 who have been referred to the programme have actually gained employment. That is absolutely astonishing—astounding, in fact.

Yet the Secretary of State said yesterday and today that the results are excellent and that the scheme is on track. The Minister of State, Department for Work and Pensions, the hon. Member for Fareham (Mr Hoban), said yesterday that we should not worry because the information used in the report gave only a snapshot and that it is against the backdrop of growth that was much weaker than expected. Well, whose fault is that? It is the Government’s fault. We need a plan B, or C or D, whatever we want to call it.

In Northumberland, one of the biggest counties in the country, only 80 of the 4,570 people in the Work programme have found a job. That is 1.75%. And the Government say we are on track. Goodness me, what would happen if we were not on track? Perhaps the Minister will answer that simple question. In Wansbeck we have very few job opportunities, a lack of new business start-ups and increased levels of bankruptcy. In fact, the constituency has the highest rate of bankruptcies in the country. Many businesses are doing what they can and working very hard indeed, and I say well done to them, but we have huge problems. We are still reeling from the job losses at Rio Tinto Alcan and seeing 26 jobseekers apply for every job at the jobcentre. That means that 25 are absolutely disappointed because the jobs are not there.

My heart goes out to the unemployed, those who are searching for jobs; searching for dignity. The Deputy Prime Minister and the Prime Minister have talked time and again about “alarm clock Britain”. There are those in alarm clock Britain who peek from behind their curtains every morning to watch their neighbours getting into their cars and going to work, wishing that they had the same employment opportunities. The problem is that there are no jobs in the region. There are not many jobs for young people either, with 15.9% of 18 to 24-year-olds in Wansbeck unemployed.

I do not have much time left but I want to say something about social security, which is also mentioned in the motion. A huge problem up and down the country is the way the Government are casting disabled people aside and on to the scrap heap through their vicious work capability assessment. It is absolutely outdated and needs to be cast aside. We need to look at the situation and look after the elderly and disabled people who are suffering so much as a result of the Government’s attacks on benefits. Nothing short of getting rid of the WCA will do.

We need to look at enterprise zones and be more imaginative and creative on job creations. Why not invest the £435 million that has already been spent on the Work programme and the £725 million for the next five years on people who have a stake in their communities and who want to create employment for the right reasons, not for mass profit?

18:35

[Sheila Gilmore (Edinburgh East) (Lab)]

Whenever any Government Minister, from the Prime Minister down, is asked what they are doing to tackle unemployment, they always answer by setting out a litany of schemes, starting with the Work programme. The problem is that the Work programme does not create any jobs. Jobs are created by other aspects of the economy. In the past financial year, the number of affordable homes in Scotland has halved compared with the previous two years, so we can see where the problem lies. An awful lot of building jobs are not being done, because houses are not being started, because the funding is not in place. Since the start of the Work programme, one of our issues has been that it does not create jobs, and if the jobs are not there in the right areas for the right people, no amount of money put into the programme will resolve that. Perhaps the Government have just convinced themselves of their own propaganda. They have spent so long saying that the employment problem facing Britain is that people either will not or cannot work and that benefits are too generous that they have swallowed their own propaganda.

Another question about the Work programme is whether it is actually effective in doing what it sets out to do, namely training people, giving them confidence and skills, and helping them to meet employers to get jobs. We were told a lot about the black-box approach, the trouble with which is that we do not know and are not allowed to know what is happening.

The hon. Member for Aberconwy (Guto Bebb) spoke about visiting one of his Work programme providers, which I have also done. I heard a whole load of stuff—this was near the beginning of the programme—about how it would give people personalised programmes, have medical people on hand and give people counselling. It sounded wonderful, but the anecdotal evidence from my constituents—yes, it is anecdotal; we are not told much about what is happening because of the black box—is that all that is lacking.

I met one constituent last weekend whose view was that he could have done what his Work programme provider got him to do equally well at home. He went there once a fortnight—it was not an intensive programme—to do a job search on a computer, but he already knew how to do that and had been doing it himself. It was what he did with the jobcentre before he ever went on the Work programme. There did not seem to be a huge amount of value in what was happening.

The problem lies partly with the Government’s pride in cheapness. If we pay peanuts, we do not get very much. Gingerbread, an organisation that represents single parents, has told me of single parents on the Work programme who, because their provider does not provide child-care costs—it is not funded to do so—cannot necessarily take up any available training opportunities. Perhaps we are not investing enough in the programme to get the job outcomes. It may be cheap, but it is not producing the outcomes.

I have also visited in the past couple of weeks a social enterprise in my constituency that does employability services work, mainly with people with mental health problems. It gets some of its funding and a substantial number of referrals through Edinburgh’s health services, which is probably just as well, because that at least gives it some steady income. It is also a Work programme subcontractor. It carries out an intensive programme with people with mental health difficulties and understands the lack of confidence that they often have. The constituent I mentioned who had had the bad experience could have done with that, because he had suffered a nervous breakdown previously. The enterprise does 95% of its work with people who are got into work, and it is successful and involves less than half the contract price. Might it not be more efficient to contract directly with such organisations, which have been a proven success? That could be done locally through Jobcentre Plus or local councils. I offer that as a possible solution to the problems with the Work programme. I am not just criticising it but suggesting how to make it better.

18:40

[Stephen Timms (East Ham) (Lab)]

We have had a good debate to which the backdrop is yesterday’s publication of the first Work programme outcome data. One cannot help but admire the former employment Minister, the right hon. Member for Epsom and Ewell (Chris Grayling), who ensured that no data at all were published before the reshuffle and so secured his trouble-free ascent into the Cabinet, rather unfairly leaving the new Minister to face the music yesterday.

The hon. Member for Amber Valley (Nigel Mills), at least, recognised that the figures published yesterday were disappointing, and he is absolutely right. The Secretary of State did not recognise that; in fact, he claimed the opposite. It has been suggested that we have been unfair in evaluating the performance of this programme after only 12 months, but all we have done is to apply the measures and the criteria set out by the Department for Work and Pensions itself. The invitation to tender for the Work programme says:

“DWP will set a non-intervention performance…reflecting the number of job outcomes that would be expected to occur in the absence of the Work Programme.”

It goes on to say that the figure would be 5% based on historical job-entry rates—that is, that it would expect 5% of people referred to achieve a job outcome within 12 months. It then says that it would expect the situation to be better than that, and so makes the figure up to 5.5%, adding:

“DWP expects that Providers will significantly exceed these minimum levels.”

We discovered yesterday that they did not significantly exceed 5.5%; in fact, they got nowhere near it. The BBC reported yesterday that the figure was 3.5%, but for the first month’s cohort it is 2%. Oddly, despite the fact that the DWP refers to the “key performance measure”, that number does not appear in the data published yesterday. Strangely, it has been omitted and we have to work it out for ourselves. Given that the Minister’s Department describes it as the key performance measure, will he give us his calculation of it based on yesterday’s data?

The Secretary of State suggested that we were unfairly taking the employment and support allowance data out of the numbers and therefore reducing them. In fact, the reverse is the case. The ESA data are by far the worst. The key performance measure for the ESA data comes to 1%—a disgraceful level of performance. The Minister needs to tell us what he is going to do to address the lamentable failure of the programme to help new ESA applicants.

I congratulate my hon. Friend the Member for Manchester Central (Lucy Powell) on her excellent maiden speech. The depth of her roots in the community she represents was very clear, and I know that she will robustly defend her constituents from failures of the kind that we are debating.

Ministers need to sort out specific problems with the design of the Work programme. First, for over a year we have been pointing to the folly of the secrecy in which the programme has been cloaked. With previous programmes, providers have gladly published their performance data so that everybody could see how they were getting on and make comparisons between them—it was simply taken for granted that that was what they did—but the previous Minister banned them from doing that. I wonder whether he read the “Open Public Services” White Paper that was published by the Minister for the Cabinet Office and Paymaster General in the summer last year. It is worth a read. It asserts—rightly in my view—that:

“Open public services that are more accountable to the people they serve (both the users and the taxpayers who fund them) will be better services.”,

and that, importantly:

“Providers of public services from all sectors will need to publish information on performance and user satisfaction.”

Not only have Ministers not required providers to publish such information on the Work programme, they have actually banned them from doing so. Yesterday’s data were the first on job outcomes in almost 18 months since the programme began. If providers had published their own data, everyone would have seen quickly which approaches were working well—and which were not—and changes could have been made. As it is, we have had to wait almost 18 months, and that cloak of secrecy is one reason for the disappointing performance.

It would be useful to have data on Work programme user satisfaction, as the White Paper demanded, although I fear that after the drubbing yesterday, there is next to no chance of us getting it. Such data should be published because, as the Prime Minister argued in the foreword to the White Paper, that information would be a powerful lever for improvement. Will the Minister at least commit to lifting the ban on providers publishing their own performance data? The ban was imposed only to ensure no impediment to his predecessor’s appointment to the Cabinet, but since that has been accomplished, it should now be scrapped. Lift the veil and let the sun shine in!

I have a couple of other suggestions on how to salvage the programme and I want to pick up on a point made by my hon. Friend the Member for Huddersfield (Mr Sheerman) about skills. The Government have increased the number of apprenticeships—my right hon. Friend the Member for Tottenham (Mr Lammy) rightly expressed some concern about what those have amounted to, but nevertheless, numbers have increased. Hardly anybody on the Work programme ever gets on an apprenticeship, however, although many should be able to—most people think that apprenticeships exist to help unemployed people develop skills to get into work—and I urge the Minister to work with his opposite number to make that possible. My hon. Friend the Member for Stretford and Urmston (Kate Green) is right to say that we must address the current rate of unemployment among young black men, which is more than 50%, and the Work programme cannot be blind to the scale of the problem.

The Minister has spoken about what has gone wrong, and in an interview with The Daily Telegraph published on Saturday he made clear who he thought was to blame. He said it was “proving difficult” to return people to long-term work—he was getting his excuses in early—and the article stated that:

“He called on private firms…which have been given the task of retraining the long-term unemployed and placing them in jobs, to ‘get their act together’.”

So, it is their fault. Private firms are the reason the programme has not delivered—by the way, the Telegraph headline was:

“Just one in 20 aided by back to work scheme”.

Presumably that is what the Minister hinted at, but in fact the number was a great deal smaller. The Financial Times got the number right yesterday morning when it stated that

“the employment minister, will confirm the actual figure—which some believe could be as low as 3 per cent—when he publishes official statistics on Tuesday.”

The Minister reassures us that poor performance means the Government are saving money, but as my hon. Friend the Member for Edinburgh East (Sheila Gilmore) said, that is no comfort for the young unemployed parent who is worried about paying for Christmas but has been parked and is not getting the help they need to get back to work. They do not want to know that the Government are saving money; they want the help they were promised to get a job.

Why has it gone so badly wrong? The Minister says that providers need to get their act together, but it is Ministers, not providers, who have got this so badly wrong. Ministers assured providers bidding for the Work programme that their economic policies would lead to steady growth and falling unemployment. They did not say those policies would lead to a double-dip recession, although tragically they did.

My hon. Friend the Member for Wansbeck (Ian Lavery) is right: we need a plan B. It is not Work programme providers who must get their act together but Ministers who must come forward with policies to deliver jobs and growth. It is difficult to get people into jobs if there are no jobs. The lack of growth and jobs is hobbling the Work programme—no amount of providers getting their act together will change that.

The Work programme has fallen miles short. I hope the Minister comes clean on how far short. What is that key performance measure? It is not the providers’ fault. The Government promised steady growth and falling unemployment, but that has not happened. The providers are not to blame for the ludicrous ban on data, which has undermined the programme. I urge the Minister to announce tonight at least that that ban will be lifted.

I also ask the Minister to commit to address the truly appalling performance among applicants for employment and support allowance. Just 1% of those referred to the programme in the first three one-month cohorts were placed in a sustainable job. When will he sort those problems out?

18:50

[The Minister of State, Department for Work and Pensions (Mr Mark Hoban)]

This useful debate has exposed comprehensively the emptiness of the Opposition’s policies on welfare reform and their deeply patronising attitude to part-time work and apprenticeships. I shall come back to those points.

My hon. Friend the Member for Amber Valley (Nigel Mills) was right to point out the scale of the ambition of the programme. It meets a wide range of needs and provides tailored, personal support to some of the hardest-to-help and hardest-to-reach people to get back into work. It supports people who have been on incapacity benefit for 10 or 15 years. They had been condemned to a life on benefit, but the programme gives them the opportunity to get back into work.

My hon. Friend the Member for Aberconwy (Guto Bebb) was right to highlight the importance of self-employment as a route back into the labour market. We see many examples of people who are able to juggle self-employment with caring responsibilities and people who return to the labour market after ill health through self-employment. That is why we have extended eligibility for the new enterprise allowance. We have seen good examples—for instance, in Humberside—of people using the enterprise allowance to get back into work and creating businesses for themselves and their community.

My hon. Friend the Member for Witham (Priti Patel) will be pleased to know that 80% of the increase in employment in the past year was for UK nationals. That demonstrates progress compared with the empty slogans of the previous Government. My hon. Friend the Member for North West Leicestershire (Andrew Bridgen) was right to hold Labour Members to account for their record in government, the legacy that they left this country and the appalling economic mess that this Government must clear up.

The hon. Member for Huddersfield (Mr Sheerman) spoke of the deep-seated structural challenges that we face. He is right: we are in a global race, and we need to respond to threats from overseas. The model that we have set out to broaden the economic base and move away from Labour’s debt-fuelled model of consumption provides sure foundations for us to win that global race.

The hon. Member for Manchester Central (Lucy Powell) gave an accomplished speech. I particularly liked the bit when she said she was delighted that the baton had passed from red to blue, but perhaps she was talking about football. As the son of a former miner, I know just how much family pride there is in achievements such as hers and mine.

The hon. Members for Swansea West (Geraint Davies) and for Stretford and Urmston (Kate Green) were dismissive of people who have part-time jobs. For so many people, taking part-time work is the right thing to do. It gets them back into employment.

[Kate Green]

Will the Minister give way?

[Mr Hoban]

I will not give way; the hon. Lady had her chance earlier.

The last labour market survey showed that 80% of people in part-time work wanted part-time work—it is right for them to do so. It is the right route back into employment for many people.

The right hon. Member for Tottenham (Mr Lammy)—

[Geraint Davies]

rose—

[Mr Hoban]

Let me address the right hon. Member for Tottenham, who was critical of apprenticeships in retail. How many of our supermarket bosses started off on the shop floor? We should not close down any route to advancement. He also criticised apprenticeships in administration. For many people, a job in an office is a route out of poverty. He should welcome opportunities to broaden the range of skills that are available to people.

I should tell the hon. Member for Wansbeck (Ian Lavery) that I get fed up with people talking down the north-east. I was born and bred in the north-east, and I went there a couple of weeks ago. Let us look at what has happened there. Employment is up by 40,000. People are talking about the need for more skills. There are big challenges in the north-east, but he does his region no service by talking down its people. While I am at it, let me say that he talked about the work capability assessment. Let me remind him that his Government introduced it. This Government are reforming it to ensure that it is the right policy and that it gets people into work and off a lifetime condemned to inactivity.

[James Wharton (Stockton South) (Con)]

I welcomed the Minister to the north-east recently, and I am delighted to hear him say such positive things about the region. Is it not in places such as the north-east, where welfare dependency can be seen to do the most damage, that these sorts of programmes are so important?

[Mr Hoban]

My hon. Friend is absolutely right. We need to see programmes of reform to get people off benefit and into work. It is about making sure that we equip people with the skills they need in a 21st-century economy. Programmes such as the Work programme enable that to happen.

I was rather disappointed that we did not hear more from the shadow Minister about Labour’s bank bonus tax. This is a big feature of the motion before us today. Yet again, the Opposition trot out the bank payroll tax as the solution. The problem is that it is their solution for everything. How would they pay for a VAT cut? The bank payroll tax. Higher capital expenditure? The bank payroll tax. Reversing changes to child benefit? The bank payroll tax. At the last count, a tax that they think would raise £2 billion has been used 15 times over to fund tax cuts and spending increases.

[Stephen Timms]

rose—

[Mr Hoban]

I have three minutes left, so I am going to continue.

The other thing in the motion that neither the right hon. Gentleman nor the shadow Secretary of State referred to—[Interruption.] No, let me talk about something that they did not refer to in their motion. The right hon. Gentleman talked about the increased benefit bill—£20 billion. Is he actually saying, given that most of that relates to uprating, that he is opposed to uprating pensioners’ benefits? Is he opposed to the triple lock that we introduced? Does he want to see a return to the days when the previous Government increased the state pension by 75p? Is he really saying that that is what he is against? The reality is that that is part of the reason why we have seen the benefit bill rise, and that is also because we are seeing post-dated cheques left by the Opposition who, when they left government, told us there was no money left.

[Stephen Timms]

rose—

[Mr Hoban]

I am not going to give way. I want to try to address some of the points that have been raised in the debate.

It is clear that the Work programme is in place. What we saw yesterday was a snapshot—207,000 people have got into work as a consequence of the Work programme. The Opposition should be celebrating that achievement, not criticising it. In the same way that we heard nothing in their speeches to congratulate the private sector on creating 1 million net new jobs, they said nothing about falls in unemployment and nothing about the fact that the previous Government fiddled figures and that youth unemployment is now lower than when we came into office. They have no ideas. They complain about the welfare bill, but oppose measures to bring it down. They fail to acknowledge the doubling of long-term unemployment during the recession and the rise in youth unemployment even when the economy was growing. They fall back on the empty rhetoric of the bank payroll tax and hark back to schemes that were bad for the unemployed and bad for the taxpayer.

The truth is that more people are in work, fewer people are unemployed and youth unemployment is down. One million net new jobs have been created by the private sector since May 2010. We are making work pay by reforming the benefits system and introducing universal credit. There are 190,000 fewer people now on out-of-work benefits than there were in 2010. That is the scale of the welfare reform that we are introducing. Rather than condemning people to a lifetime on benefits, we are providing support to get them into work. We have provided more help for young people, through the £1 billion Youth Contract. The work experience element is cheaper and as effective as the future jobs fund jobs that the Opposition parade.

[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.

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.

18:59

Division 106

Ayes: 212

---

Labour: 199
Scottish National Party: 4
Democratic Unionist Party: 3
Plaid Cymru: 3
Social Democratic & Labour Party: 2
Independent: 1
Green Party: 1

Noes: 283

---

Conservative: 245
Liberal Democrat: 37

Business without Debate

Wednesday 28th November 2012 Commons Chamber

Delegated legislation

Wednesday 28th November 2012 Commons Chamber

[Madam Deputy Speaker (Dawn Primarolo)]

With the leave of the House, I will take motions 3 to 5 together.

Motion made, and Question put forthwith (Standing Order No. 118(6)),

Environmental Protection

That the draft Producer Responsibility Obligations (Packaging Waste) (Amendment) Regulations 2012, which were laid before this House on 16 October, be approved.

Electricity

That the draft Electricity and Gas (Energy Companies Obligation) Order 2012, which was laid before this House on 30 October, be approved.

Energy Conservation

That the draft Green Deal Framework (Disclosure, Acknowledgment, Redress etc.) (Amendment) Regulations 2012, which were laid before this House on 30 October, be approved.—(Joseph Johnson..)

Question agreed to.

Local Authority Funding (Derby)

Wednesday 28th November 2012 Commons Chamber

19:16

[Chris Williamson (Derby North) (Lab)]

I rise to present a petition that has united the whole of the city of Derby and the city council, because people are fed up with the unfair funding cuts to which Derby has been subjected. The level of cuts in Derby is far higher than in many other parts of the country. Only yesterday, 350 more staff were made redundant from the council, and all three party leaders have written to the Secretary of State, calling for a fair deal for Derby. The petition is headed “Fair Deal for Derby”. It states:

The Petition of citizens of the United Kingdom,

Declares that they believe there has been a disproportionate impact of the Government’s austerity programme on Derby compared to other local authority areas and that the cumulative impact of the cuts being forced on Derby City Council will amount to £75.77 per person compared to a few pounds in other more affluent parts of the country.

The Petitioners therefore request that the House of Commons urges the Secretary of State for Communities and Local Government to ensure a fair deal for Derby by reducing the amount of cuts made to Derby City Council.

And the Petitioners remain, etc.

[P001139]

Unsustainable Provider Regime (NHS)

Wednesday 28th November 2012 Commons Chamber

Motion made, and Question proposed, That this House do now adjourn.—(Joseph Johnson.)

19:18

[Jim Dowd (Lewisham West and Penge) (Lab)]

I am delighted that Mr Speaker has seen fit to grant me this opportunity to raise a matter of considerable importance—in fact, the dominant issue—for my constituency and a large part of south-east London at the moment. The title on the Order Paper is “Unsustainable provider regime and special administration in the NHS”; and I will refer to all the special administrators appointed in the past, as there is only the one.

Last Saturday, along with thousands of other people, I was marching through the centre of Lewisham in the rain with my parliamentary colleagues, my right hon. Friend the Member for Lewisham, Deptford (Dame Joan Ruddock) and my hon. Friend the Member for Lewisham East (Heidi Alexander)—they would have liked to be here this evening, but are attending other events relating to the same issue—to Ladywell fields just behind Lewisham hospital.

My experience of marches goes back quite a long way—I have been on a fair number of them in my time—but three factors made this march strikingly different from the usual ones. First, the majority of the marchers were ordinary residents and their families. Secondly, the motorists who were being held up by the march were, more often than not, tooting their horns to show their support for it. Thirdly—I had rarely seen this before—people were joining the march along the way, some of them with young children.

That march took place under the auspices of the Save Lewisham Hospital campaign. The reason for it was that, last July, the then Secretary of State appointed a trust special administrator—to whom I shall refer from now on as the TSA—for the South London Healthcare NHS Trust, under the unsustainable provider regime provided for by the National Health Service Act 2006. The three principal hospitals in the trust are Queen Elizabeth hospital in Woolwich, Princess Royal University hospital in Farnborough, and Queen Mary’s hospital in Sidcup. You will have noted, Madam Deputy Speaker, that Lewisham hospital is not part of the trust for which the TSA was appointed. However, far the most damaging proposals are those that affect that hospital.

The proposals are to close the accident and emergency department, which currently sees more than 120,000 attendances a year, to remove the maternity unit altogether—last year there were 4,500 births there, and the number has been projected to rise to 5,000 in the coming year—and to remove all the medical beds. If these plans were to see the light of day, there would be only one fully functioning accident and emergency unit to serve the three quarters of a million people who live in Bexley, Greenwich and Lewisham. Although there is scope for Lewisham to merge with Queen Elizabeth at Woolwich, it should not be necessary to pay such an extortionate price in terms of services for the people of Lewisham. It is rather as if the administrator for Comet—who, sadly, is having to do his work at the moment—were to decide that the best thing to do for Comet was to shut Currys down. The problem does not lie in Lewisham; it lies in the South London Healthcare NHS Trust.

It is not just the proposals themselves that are making people so angry; it is also the devious and underhand way in which they are being enacted. The last Secretary of State made a written statement last July, when he appointed the TSA. Before that, however, one of the first acts that he had undertaken as Secretary of State, just after the general election in May 2010, was to stop changes that were already taking place for the revitalisation of the South London Healthcare NHS Trust. He had put them on hold, without offering any alternative to a plan that had already been in place for a number of years; the last time the Government reviewed the services was four years ago. Having stopped those changes in their tracks, he then had the temerity to say, when he came to appoint the TSA, that not enough progress was being made to rebalance the trust’s finances.

In his written statement in July, the then Secretary of State said:

“The trust special administrator’s regime is not a day-to-day performance management tool for the NHS or a back-door approach to reconfiguration.”—[Official Report, 12 July 2012; Vol. 548, c. 48WS.]

However, that is exactly how it feels and looks in south-east London. There is a widespread feeling, backed by legal opinions, that the TSA does not have the power under the 2006 Act—and the current Secretary of State confirmed during Health questions yesterday that that was the legislation involved—to enforce his recommendations. Yet a “chief executive designate”, whatever one of those might be, is already working for the putative but non-existent joint Queen Elizabeth and Lewisham hospital trust.

The ultimate agreement of the Secretary of State seems to have been taken for granted—unless, of course, his authority is so ill-regarded that it does not matter what he thinks. However, the problem is not with the link between the University Hospital in Lewisham and Queen Elizabeth in Woolwich; rather, it is the intolerable price that the people of Lewisham are being expected to pay in terms of poorer, less accessible and more inconvenient services.

Let us contrast how Lewisham is being treated with how the other hospitals in the group are being treated. The TSA has suggested Queen Mary’s Sidcup should do a deal with Oxleas NHS Foundation Trust, and that is apparently going through without any great problem. The TSA also recommends that King’s College Hospital NHS Foundation Trust should take over the Princess Royal in Farnborough, even though no details whatever have been seen on how King’s would manage the Princess Royal. The arrangements for Lewisham are, however, prescriptive and take up much of the TSA report—and we must, of course, bear in mind that Lewisham hospital is not even part of the same trust.

The most damaging recommendation is that the A and E department at Lewisham should close, followed closely by the proposal to close all maternity services. A little booklet that the trust special administrator has put out says:

“Clearly this recommendation proposes change for University Hospital Lewisham. However, this is less than some may initially think. Based on analysis done by the Trust, it is expected that nearly 80% of patients who currently visit University Hospital Lewisham’s A&E would still be treated at the urgent care centre there in the future. This recommendation is not about ‘closing’ an A&E department but rather making changes to it.”

That is not what happened just over the river at Guy’s when its A and E was closed a few years ago, and it is certainly not what happened when the A and E at Queen Mary’s Sidcup was closed four years ago.

It is also certainly not what the emergency department doctors at Lewisham had to say. Their submission to the trust special administrator states in respect of the

“assumption that 77% of our ED patients can still be seen in the UCC”—

urgent care centre—

“in future: patients in the UHL UCC are seen by combination of”

practice nurses

“GPs and ED doctors between 0800 and 2400hrs…This means patients are seen in our UCC department with problems far greater than those that can be handled in a typical UCC. A standalone UCC will not be able to handle the number or acuity of patient that we presently see…Quite clearly, the 77% figure you have employed is not representative of any realistic future modelling…On review of our case mix, by our estimation at most only 30% of the total attendances to the present-day combined ED and UCC could be safely managed in a standalone UCC.”

That is the view of professional doctors. The TSA’s view is that of a civil servant. We do not need to be terribly perceptive to work out which we should place the greater store by.

The conclusion of the emergency doctors’ statement encapsulates the issue. They state that the TSA suggests that 30% of current presentations will, by some completely magical and invisible formula, be treated in the community, but that has not been achieved anywhere else in the UK and there is no evidence to support the assertion. The TSA is not so foolish as to try to adduce any. Nothing in the report or any of its appendices show how this 30% figure, which represents almost 40,000 people presenting at Lewisham A and E, will be dealt with. Their conclusion is:

“Feedback from our patients, the public and colleagues such as the London Ambulance Service (LAS) tells us that this ED”—

emergency department—

“is incredibly well regarded, and that the public and LAS choose to come here. We believe the implications of this proposal are extremely serious and will detrimentally affect the care and service that is offered to our local community. Concerns over how our patients will be able to access acute services at QEH, and the inevitable impact on an overstretched LAS, have also not been adequately addressed.

It is our opinion that as the draft report has been based on demonstrably incorrect figures and assumptions, its findings cannot be relied upon. An issue as important as the acute care of patients in South-East London cannot be determined by a hasty and flawed process, which was never designed to be used to reconfigure NHS services.

We have no objections to change, and strongly support all moves that propose the safe and effective care of patients. Thus we strongly urge that the proposed merged trusts (QEH and UHL), the local GPs and the wider public be left to decide at a local level how our services should be reconfigured. This would not only be safer and more considered, but would also be in line with the Government’s ethos of greater local control with a patient-centred approach to healthcare.”

That is signed by the four emergency department consultants, including the clinical lead, the two emergency department matrons and the emergency department nurse consultant. Hon. Members would have to agree that that is a damning indictment of what the TSA has been proposing.

As I have just demonstrated, the report’s assumptions, such as they are, are inaccurate, and the figures—even the financial figures—are completely unreliable. The TSA suggests that there is a £1.7 million saving to the Beckenham Beacon, the former Beckenham hospital which is now an urgent care centre predominantly occupied by GPs, but with the support of secondary and ancillary services. The TSA states that £1.7 million can be saved on what the South London Healthcare NHS Trust currently rents at Beckenham Beacon. This is right on the boundary of my constituency and that of the hon. and gallant Member for Beckenham (Bob Stewart); his constituency is on one side of the Croydon road and mine is on the other. People in the area were clearly concerned about the effect on services, so I went to see the putative clinical commissioning group, which takes over next year. It said that it is determined to continue to provide a comparable range of services—it will not be exactly the same as what is there at the moment—that that £1.7 million was only provided to South London Healthcare NHS Trust by the primary care trust previously for commissioning services there and that the CCG will continue commissioning services there. I have asked for exactly what the services will be to be put in writing, but I was told that broadly the CCG will be spending the same. So there is no saving to be had.

All the TSA is saying is that as South London Healthcare NHS Trust will cease to exist, it cannot pay any bills—so far, so bloody obvious. I would have thought it was not worth making the effort, but including this in the financial calculations demonstrates just how unreliable this report is. It is all smoke and mirrors. Given that it was carried out in such a short time and given that this system—the unsustainable provider regime—is not designed to deal with this degree of complexity, it is hardly surprising that it is such a shoddy and unreliable piece of work.

Why then be so prescriptive about what happens at Lewisham, given that in the case of the Princess Royal and Queen Mary’s an altogether more relaxed view is to be taken? The answer can be found on page 41 of the report. I will not wave it at you, Madam Deputy Speaker, but take my word for it. It contains a map of the Lewisham hospital site and it shows that the TSA wants to sell more than two thirds of the whole site. That would leave one building for hospital purposes and one building currently used by South London and Maudsley NHS Foundation Trust, which deals with mental health, so that the rest of the site can be sold off. Doing that will only raise between £17 million and £20 million, but it will close off the options. Once that has been done, Lewisham hospital can never be resuscitated, resurrected or whatever other language we might care to use. To enable the rest of the site, which includes a £12 million redevelopment of accident and emergency and maternity services that was only completed in 2010, to be cleared the TSA suggests that an additional £55 million will need to be spent on extending the riverside block.

The whole riverside block to which the TSA refers was only built six years ago under the private finance initiative and is working pretty well. The whole building only cost £70 million, and the TSA is proposing that £55 million should be spent so that the rest of the site can be cleared and sold for less than £20 million. That is almost unbelievable—it does not make any sense whatsoever. I do not know what will come back from the consultation that is under way.

Right across south-east London there are huge issues with acute services. I know that colleagues raised the matter in Health questions yesterday. The right hon. Member for Bermondsey and Old Southwark (Simon Hughes) mentioned the concern about Guy’s and St Thomas’, King’s, South London and Maudsley and King’s college, London—that is the university college, not the hospital—joining together to construct one of the largest trusts in the country. There is deep concern in Southwark and Lambeth about the impact that that could have on services. There is further concern, as I mentioned, in Lewisham, Bexley, Bromley and Greenwich about what else is going on.

I suggest that the Secretary of State parks the consultation. He should note what it says but launch a proper and legal clinical review of services across south-east London, as was conducted just four short years ago, when it was decided that Lewisham could stand on its own and provide decent services for the people of that area. I am not against improving services in Greenwich, Bexley or Bromley. Indeed, I represent the north-west part of Bromley, which sees Lewisham as its local hospital. However, what I cannot see—the TSA cannot convince me of this—is how degrading the services for people in Lewisham benefits anybody. It will not improve the services in Greenwich, Bexley or Bromley, so what is the point?

On 31 October, my hon. Friend the Member for Lewisham East asked the Prime Minister to recall that in 2007 he said that he would be prepared to get into a “bare-knuckle fight” over 29 assorted hospitals, one of which was Lewisham, to protect their A and E. I can tell the Prime Minister that he is in a bare-knuckle fight now over the future of A and E at Lewisham. The fight for Lewisham goes on.

Lewisham hospital has been threatened before, but the people of Lewisham have always fought to save it and they always have. They will again. In his reply to my hon. Friend, the Prime Minister said—this gives me some hope—that

“there will be no changes to NHS configurations unless they have the support of local GPs, unless they have strong public and patient engagement, unless they are backed by sound clinical evidence and unless they provide support for patient choice.”—[Official Report, 31 October 2012; Vol. 552, c. 230.]

I am confident that Lewisham will survive this, because none of those factors is in place at the moment, nor does this process have any legitimacy.

19:38

[The Parliamentary Under-Secretary of State for Health (Anna Soubry)]

I congratulate the hon. Member for Lewisham West and Penge (Jim Dowd) on securing the debate and on speaking with such eloquence and passion. That is what one would expect from a Member of this place; we would expect Members to bring to Parliament the concerns and the anger of those whom they represent so that Ministers can hear all that is to be said. In this case, perhaps most importantly, even if the trust special administrator and his team did not hear the hon. Gentleman’s speech they will certainly read it and take it on board.

These matters are always difficult and, as I have mentioned, they make people angry. I hope that the hon. Gentleman’s speech will be reported in his local media and that my remarks might also be reported.

It is important to make it clear—and I hope that the hon. Gentleman will take this back to Lewisham and the people he represents—that this is not a question of cuts. Anyone on a march bearing a banner saying, “Stop the Government cuts” does not represent the situation fairly, and does their cause no great service. It is about how to make sure that people receive the finest health care that can be provided, and that that service is sustainable. As the hon. Gentleman said, it stems from a profound problem at South London Healthcare NHS Trust.

When changes to an NHS service are mooted, people become anxious and feelings run high. This is the first time that the trust special administration regime has been used, so people are anxious, and that has a knock-on effect on patients, staff and members of the public. This may sound like weasel words, but it is important. It would be wrong to comment on specific recommendations of the trust’s special administrator, because the matter is out for public consultation, which closes on 13 December. As the hon. Gentleman explained, the matter will go to the Secretary of State, who will consider the recommendations and the full report. He will make his decision at the beginning of February. At this stage, it is not for Ministers to comment. Our minds must remain completely open.

I want to explain the process. The previous Government created the trust special administration regime in the Health Act 2009. The regime creates a transparent, time-limited process to deal with trusts in failure. We have alluded to that timetable, and have given details of it. A trust special administrator appointed to an NHS trust must make recommendations to the Secretary of State about the future of the organisation and its services. Significantly, they must set out how high-quality services can be provided in a financially and clinically sustainable way. Before making final recommendations to the Secretary of State, the administrator must consult publicly on draft recommendations, and that process has been undertaken. A summary of all consultation responses must be included in the final report to the Secretary of State. I am sure that the hon. Gentleman will ensure that his response and the responses of other MPs representing Lewisham are included in that report.

South London Healthcare NHS Trust was formed in 2009, and it was the product of a merger of three trusts, each with long-standing financial issues. When the Secretary of State appointed the special administrator to the trust in July, it was losing over £1 million a week. Last year, the trust had a deficit of £65million—the largest in the country—which is £65 million a year being taken away from well-run trusts to subsidise one that is clearly failing. There are two private finance initiatives with which the trust is struggling. They are incredibly burdensome, with a cost of £60 million a year.

To be blunt, the situation cannot go on indefinitely. The NHS simply cannot afford to spend huge sums on keeping non-viable organisations afloat. Even if we had all the money in the world, it would not be right to have such a deficit and loss. In my opinion, the Government are to be commended on having the courage to tackle the long-running challenges facing South London Healthcare NHS Trust. Sometimes, tough decisions have to be made to make sure that NHS services are improved and are put on a clinically and financially sustainable footing.

I fully accept that the hon. Gentleman is concerned about the administrator’s recommendations in the draft report that impact on Lewisham Healthcare NHS Trust. The remit of the trust special administrator is to develop recommendations for the Secretary of State on the action that should be taken in relation to South London Healthcare NHS Trust. The aim is to secure the sustainable provision of health services which meet patients’ needs and deliver value for money. For those recommendations to be viable and credible, the trust special administrator must consider all relevant factors, including the intentions of NHS commissioners and the consequential impact on the local health system. This has required him to consider implications for other health care providers that are part of the local health care system. That is why his remit is so large and so broad.

As we all know, an NHS trust does not exist in a vacuum. All trusts are part of a complex, integrated health care system. In making recommendations about South London Healthcare NHS Trust, the trust special administrator must consider the consequences of those recommendations on neighbouring trusts, such as Lewisham, and patients in those neighbouring areas. I am aware that in developing his draft recommendations the trust special administrator has had continuing dialogue with patients and the public, staff, clinicians, local authorities and other partners, and so he should. That is continuing through his public consultation, which is now under way.

In addressing the long-standing challenges facing South London Healthcare NHS Trust, the administrator’s recommendations must take into account the objective of delivering safe, high quality, sustainable health care for the people of south-east London. That, of course, includes Lewisham. To ensure that this happens, he must have regard to the Secretary of State’s four tests for NHS service change when developing his recommendations. Perhaps this may give some comfort to the hon. Gentleman. Those four tests are: support from GP commissioners; the strength of public and patient engagement; clarity on the clinical evidence base; and support for patient choice. Those are four very important principles.

The hon. Gentleman touched on many of those principles. He spoke with passion and some anger. Much of that anger is understandable in all the circumstances. The draft report is out to the public, as I said. I hope that everybody will now engage and make sure that their voice is heard, as individuals or through their elected representatives. The recommendations will go to the Secretary of State, who will consider all of them. He will then make his decision.

Question put and agreed to.

19:47

House adjourned.