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Mr Philip Hollobone (Kettering) (Con)
1. What proportion of secondary school pupils are taught in academies in (a) the borough of Kettering, (b) Northamptonshire and (c) England.
The Secretary of State for Education (Michael Gove)
On behalf of the whole House, may I take this opportunity to congratulate you, Mr Speaker, on your 50th birthday on Saturday? On behalf of the whole House, I hope that it was a festive weekend in the Speaker’s household.
There are 2,619 academies in England. Over half of state-funded secondary schools are now open as academies or have applied for academy status. In Kettering, 85% of secondary school-age pupils are taught in academies; in Northamptonshire overall the figure is 75%; and in England it is 52%.
Mr Hollobone
My constituents are delighted that five of our six secondary schools have now become academies. Will my right hon. Friend kindly agree to visit Kettering to see for himself how the lives of young people are being transformed and their educational development is being enhanced by this exciting Government initiative?
Michael Gove
It would be a pleasure to visit Kettering. I am delighted at the progress that has been made in Northamptonshire. A wide range of academy sponsors have helped to ensure that children—not just in my hon. Friend’s constituency but across the county—are at last enjoying the education they deserve.
Kate Green (Stretford and Urmston) (Lab)
As the Secretary of State knows, Trafford borough council has a strong educational record and is giving good support to schools to form academy trusts, including Elmridge and Acre Hall schools in my constituency, about which I have written to him. Does he agree that it is important that every support is given to enable local solutions and local sponsors to come forward in successful authorities such as Trafford, rather than simply opening things up through outside organisations that might have little association with our children’s educational needs?
Michael Gove
I absolutely accept the hon. Lady’s point that Conservative-controlled Trafford is a superb local authority, and we can see the many schools that have flourished under its care over the years. As a strong local authority, not only has it welcomed the growth and expansion of outstanding schools—such as Urmston grammar, led by Mike Spinks, in her constituency —but it recognises that schools sometimes have a responsibility beyond their borders to help others to improve. In Northamptonshire we would not have schools improving had it not been for the actions of David Ross and other outside sponsors. Similarly, I know that there are schools in the north-west that wish to extend their wings, not least Altrincham girls grammar in Trafford, helping schools in deprived east Manchester.
Bob Blackman (Harrow East) (Con)
20. Three of the schools in my constituency have become academies, but there are still some laggards. What can my right hon. Friend do to encourage the rest of the schools to offer the same opportunity enjoyed by the young people in those academies?
Michael Gove
I think that the best thing I can do is join my hon. Friend in visiting those schools in person, so that we can have a charm offensive to persuade them to become academies. He will provide the charm—and I will complement him.
Mr Gordon Marsden (Blackpool South) (Lab)
2. What assessment he has made of the effects of removing statutory guidance on work experience at key stage 4 on the promotion of vocational education to young people.
The Secretary of State for Education (Michael Gove)
In her report on vocational education, Professor Alison Wolf recommended the replacement of work-related learning at key stage 4 with high-quality work experience beyond the age of 16. Thanks to that report, funding reforms and the introduction of new 16-to-19 study programmes are supporting those changes, which were announced last July and will take effect from September.
Mr Marsden
Apart from the fact that most of that was fairly waffly, how would the Secretary of State know what is going on in his Department, given that his former children’s Minister told the Select Committee on Education last week that it was more like a department of Grace Brothers than a Department of State? What will the Secretary of State do, therefore, to ensure that people are being served? The Engineering Employers Federation, the Forum of Private Business and others have all said, “This isn’t working. Get your act together.”
Michael Gove
I am grateful to the hon. Gentleman, but as Minister responsible for vocational education I do not know why he is so dismissive of department stores. Retail provides many opportunities for young people to learn the skills that they need to be successful in the world of employment. Last week we had the opportunity to discuss qualifications at 16 and the importance of vocational education. I was delighted then that those on the Opposition Front Bench endorsed every recommendation in the Wolf report, and I am delighted also that we have an opportunity now to carry through those recommendations.
Caroline Dinenage (Gosport) (Con)
My local education business partnership does fantastic work linking local businesses with schools and giving pupils a bit more understanding of the world of work and the workplace. What are the Government doing to help to promote such social enterprises?
Michael Gove
I am absolutely delighted that business, not only in my hon. Friend’s constituency but elsewhere, is playing an increasingly positive role in supporting work experience in schools and promoting an understanding of the world of work among the next generation. In particular, I have been delighted to be able to work with Business in the Community, an outstanding organisation supported and established by the Prince of Wales, that has done much to ensure that business plays its part in encouraging our young people to aspire to achieve more.
Ms Karen Buck (Westminster North) (Lab)
This morning, the Under-Secretary of State for Skills tweeted his support for the Policy Exchange report on vocational education, but that report and Tim Oates’s report for Cambridge Assessment were both heavily critical of the Government’s approach, including of their move away from immersion in the workplace for young people. Will the Secretary of State tell us how many schools have now withdrawn provision for work experience for 14 to 16-year-olds, and whether he wants that provision to be ended completely?
Michael Gove
It is for each school to decide what is appropriate for its own students, but Alison Wolf’s report, which was welcomed across the House, clearly underlined the importance of high-quality work experience after the age of 16. That position was supported by the CBI and by the Labour party at the time, and our reforms to the funding of post-16 education now facilitate that provision.
Mr Jonathan Djanogly (Huntingdon) (Con)
Will not the removal of the statutory guidance assist schools and further education colleges to work more closely together to maximise vocational opportunities for all vocational students in a particular area?
Michael Gove
My hon. Friend makes an important point. We need better integration of schools and further education colleges, and that is happening as a result of the Wolf report. The barrier that prevented those who are qualified to work in further education colleges from working in schools has been removed, and children over the age of 14 have the opportunity to be taught in FE colleges, which they did not have before. Greater integration of the two sectors is vital if we are to build on the successes of both.
John Glen (Salisbury) (Con)
3. What steps he is taking to accelerate the adoption process.
The Parliamentary Under-Secretary of State for Education (Mr Edward Timpson)
I am determined to eradicate underperformance in the adoption system. The Department has already published two rounds of adoption scorecards for local authorities as part of a tougher approach to driving up the speed of the adoption process. Our most pressing priority now is to increase the number of approved adopters, and it is crucial that all parts of the system focus on that goal. I hope to make an announcement shortly.
John Glen
I thank the Minister for that response. I have been made aware of a case involving a couple seeking to adopt, who have been piloting concurrent care with their local authority. The judge initially ruled that the placement order had to be completed within 26 weeks of the birth of the child, but it now looks unlikely to be completed before 44 weeks, at best. Is the Minister listening to the experiences of carers undertaking such pilots to ensure that he understands what they are saying and is able to improve the process across the country?
Mr Timpson
It is disappointing to hear of the experience of my hon. Friend’s constituents, who are trying to help some of the most vulnerable children in our society. We are keen to promote all ways of improving approaches to concurrent planning, and to fostering for adoption, that are child-focused and that will ensure that children are placed as soon as possible. We are working with Coram to develop practice guidance that is informed by the experience of carers themselves, including—I hope—those in my hon. Friend’s constituency, in order to improve people’s and professionals’ understanding of how those placements work. We will also be legislating in the forthcoming children and families Bill to ensure that care cases are completed as soon as possible within the 26-week time limit.
Bill Esterson (Sefton Central) (Lab)
Adoption is successful for many children and families, as I can confirm from personal experience, but as the Minister knows, there is a shortage of adoptive parents coming forward. Will he confirm that it is important that we improve care standards in residential care and among foster carers, and that we make an investment in those people as well as, rightly, trying to speed up the adoption process?
Mr Timpson
I completely agree with the hon. Gentleman, who has huge experience in this area. We need to ensure that we have the right placement available for the child at the right time. That could involve a variety of potentially permanent placements, but we need to ensure that the child has the opportunity to thrive whatever the placement. We believe that there are more children who could benefit from adoption, but we need to ensure that the whole system is fit for purpose.
Mr Julian Brazier (Canterbury) (Con)
May I congratulate my hon. Friend on the progress that he is making on adoption, an area in which he is particularly well qualified, professionally and personally? What progress is he making on driving out the political correctness that makes it difficult for white parents to adopt children from ethnic minorities even though there is a shortage of adoptive parents?
Mr Timpson
We know that that is still a problem in the adoption system. For example, it takes over a year longer for a black child to be adopted than a white child. There is also concern that there is still too much emphasis on getting a perfect ethnic match in the adoption system. That is why we will be legislating to ensure that all factors that are relevant to the characteristics of the child are taken into consideration, but that none, including the child’s ethnicity, should be overriding.
Fiona Bruce (Congleton) (Con)
4. What steps he is taking to raise awareness in schools of the dangers of human trafficking in the UK.
The Parliamentary Under-Secretary of State for Education (Elizabeth Truss)
Human trafficking is a heinous crime, and I salute my hon. Friend’s work in raising awareness of this issue. Schools can ensure that pupils receive appropriate information on this important topic through personal, social, health and economic education.
Fiona Bruce
I thank the Minister for that reply. I commend the work undertaken among girls at Sandbach high school in my constituency, raising awareness that trafficking is happening right here in many UK towns and cities. What are the Government doing to make sure that school pupils recognise grooming, are aware of the dangers to which it can lead and know how to avoid becoming victims?
Elizabeth Truss
I, too, commend the work done by pupils and teachers at Sandbach high school, and I thank my hon. Friend for bringing it to my attention. I would be interested to hear more from her about how that school carries out best practice. She rightly highlights that PSHE plays a role in ensuring how pupils learn about, recognise and spot the signs of abuse and grooming, helping them to stay safe and to make informed choices.
Fiona Mactaggart (Slough) (Lab)
Are not too many teachers anxious about raising such subjects in the classroom? We know of the real risks that young girls face—most brutally revealed at the Old Bailey last week by the cases of young children in Oxford? What can the Minister do to help teachers in the classroom to have the tools they need to protect these girls?
Elizabeth Truss
The hon. Lady is absolutely right that we need teachers to be aware of, and well trained in, these issues. I would like to learn from the case raised by my hon. Friend the Member for Congleton (Fiona Bruce) and to share it as best practice, so that we can ensure that those important issues are taught in our schools.
Keith Vaz (Leicester East) (Lab)
One of the signs, of course, is children who go missing from school on a regular basis. In 2011, the Select Committee recommended that the Secretary of State should write to schools annually, reminding them of their responsibilities. Is that now happening?
Elizabeth Truss
I am not sure, but I will certainly undertake to get back to the right hon. Gentleman. He raises a very important point, and schools should be vigilant about it.
Andrew Selous (South West Bedfordshire) (Con)
5. How many children went missing from local authority care in each of the last three years.
The Parliamentary Under-Secretary of State for Education (Mr Edward Timpson)
The number of children reported to the Department as missing from care for more than 24 hours was 800 in 2010, 920 in 2011 and 1,490 in 2012. However, there are significant differences in data collected by the police and local authorities, which need to be addressed. The expert group on data has now made recommendations, and we will announce our actions shortly.
Andrew Selous
Those are large and significant numbers. Can we try to get to a situation in which at least child victims of trafficking are treated no worse than adult victims, as surely they deserve no less?
Mr Timpson
I completely agree with my hon. Friend’s analysis and about the importance of ensuring that all children, particularly those who have been trafficked who are probably the most vulnerable of all, have the protection they need within the care system. Our forthcoming revised statutory guidance on children who go missing from home or care will include specific advice on how to safeguard trafficked children. We are asking the Refugee Council together with the Children’s Society to carry out a review of the practical care arrangements for children in care who may have been trafficked, to identify the gaps in the system and to make sure that good practice is spread as widely as possible.
Ann Coffey (Stockport) (Lab)
I thank the Minister for the very constructive meeting we had before Christmas. I am sure he is aware of concerns about the new police definitions of “missing” and “absent” and their impact on effective child protection. I am sure he would agree that the key to protecting children from child sexual exploitation is a sharing of all data about vulnerable children, including absence figures at the local level? Will he therefore ensure that any future guidance from his Department about children missing from care reinforces that?
Mr Timpson
I pay tribute to the hon. Lady not only for her chairmanship of the all-party parliamentary group for runaway and missing children and adults, but for her vital contribution to the work of the groups in the Department that have been looking into the issue. I hope that we can continue that dialogue in future.
It is crucial for us to improve data on missing and absent children at local level, in police forces and local authorities and more widely in other agencies, and we need to make that as effective as possible throughout the whole system. I look forward to discussing with the hon. Lady how we can do that better.
Mr Peter Bone (Wellingborough) (Con)
As the Minister will readily acknowledge, the police think that far more children are going missing than local authorities record. What the Minister says about trafficked children is absolutely right, but until local authorities are forced to identify trafficked children, we cannot begin to deal with the problem. Will he instruct authorities in future to record the number of trafficked children whom they are looking after?
Mr Timpson
Part of the purpose of the working group that we set up following the report from the all-party parliamentary group and the accelerated report from the deputy Children’s Commissioner was to consider how we could better record the data on all children who have some contact with the care system, and that includes trafficked children. I will think carefully about what my hon. Friend has said in conjunction with that work, and I should be happy to discuss it with him further.
Lisa Nandy (Wigan) (Lab)
It is said that one of the main reasons children go missing from care is a lack of time, love and attention from those who care for them. However, the Government have presided over dramatic cuts in children’s services at a time when more children are entering the care system, along with—according to the former children’s Minister—a “downgrading” in the Department of issues involving children. Given that more than 50% of social workers are describing their case loads as unmanageable and 88% say that children’s lives may be put at risk by the cuts, can the Minister tell me who will be able to spare those children the time, love and attention that they need, keep them in the care system and keep them safe?
Mr Timpson
We must ensure that the child protection system that we have is as effective as possible. We are implementing the Munro reforms, which the hon. Lady’s party supports, both in relation to the statutory guidance on safeguarding and working together and in relation to better trained and higher quality social workers. We want protection to be in place for every child who needs it, but we must also provide the care that children require once they are in the care system. I want what the hon. Lady wants, which is the best possible care for all those children, and I hope she will join me in supporting Eileen Munro’s work so that we can ensure that it is provided.
Toby Perkins (Chesterfield) (Lab)
6. What recent representations he has received on his proposed changes to GCSEs; and if he will make a statement.
Karl Turner (Kingston upon Hull East) (Lab)
12. What recent representations he has received on his proposed changes to GCSEs; and if he will make a statement.
The Secretary of State for Education (Michael Gove)
We have received almost 5,500 written responses to our consultation, and we are currently reviewing them, along with all the views that we have heard in meetings with interested organisations. We will report on the findings from the consultation once we have had a chance to consider them in full.
Toby Perkins
If the Secretary of State had succeeded in uniting everyone—from the CBI to the teaching unions, from Kenneth Baker to Sir Jonathan Ive—in support of his proposals, we would be calling him a genius. What word would he use to describe someone who has achieved the exact opposite?
Michael Gove
I am always grateful for the thought that the hon. Gentleman is toying with the question of whether to call me a genius or a saint. I shall merely say that what we have managed to do so far is put the case for reform after the years when, sadly, the Labour party was in power, and confidence in our examination system received a shock from which the coalition Government are at last rescuing it.
Karl Turner
The Secretary of State may not see anything wrong with a 19th-century education system that places no value on practical, vocational or creative training, but employers are very concerned, and so is the CBI. Why is the Secretary of State not as worried as they are?
Michael Gove
I am grateful to the hon. Gentleman for his question, because it gives me another opportunity to remind the House of the changes that we have made to, for example, the teaching of computer science. We replaced an out-of-date information and communications technology curriculum, which had not changed under the last Government, with a fit-for-purpose computer science curriculum that was endorsed by the industry. The hon. Gentleman’s question also gives me an opportunity to point out that, through both the Wolf review of vocational qualifications and the Richard review of apprenticeships, we have managed to unite all those who take vocational education seriously in acclaiming the reforming steps that we have taken.
Mr Nick Gibb (Bognor Regis and Littlehampton) (Con)
The school information regulations that came into force last September require schools to publish on their websites their GCSE results and the GCSE courses that they offer, as well as details of the curriculum for each academic subject in each year of school. Will my right hon. Friend ensure that schools comply with those regulations, so that parents have all the information that they need when deciding on a school for their children?
Michael Gove
My hon. Friend makes an excellent point; one of the best ways in which we can ensure that all schools offer the range of subjects that young people need in order to succeed is to ensure that there is transparency about the curriculum and clarity in the minds of parents. The changes he mentions should secure that, and it is important that schools observe them.
Andrew Bridgen (North West Leicestershire) (Con)
Does my right hon. Friend agree that if this country’s work force are to be able to compete in the global marketplace, we must always endeavour to equip our students better with the skills that they will need to flourish in an increasingly competitive and globalised world?
Michael Gove
My hon. Friend, once again, hits the nail on the head; he is acquiring a reputation in these Question Times for cutting straight to the heart of an issue. He describes why the changes we have made to ensure that all students who fail to secure adequate GCSE passes in English and maths at 16 are now required to take those critical subjects on beyond that age are so important. That is also why we are absolutely delighted that we are recruiting a better cohort of teachers than ever before, to build on the achievements of the past.
Kevin Brennan (Cardiff West) (Lab)
A quote:
“The EBacc is very similar to the exam I sat in 1951…the School Certificate. It’s exactly the same, exactly!”
That was changed in 1951
“because it simply wasn’t broad enough for most children…I was part of a privileged elite. And the EBacc is a throwback to that.”
Those were the words of former Conservative Education Secretary, Lord Baker. Discuss.
Michael Gove
I am happy to say that what was an academic education limited to a narrow elite in the 1950s is now being extended to more and more children. I am very sorry that the snobbish attitude that prevails on the Labour Benches—[Interruption.] It is interesting to see Labour Members uniting behind a view that academic education should be available only to a minority, and it is a unique historic trap into which they are falling by endorsing the idea that English, maths, science and modern foreign languages should somehow be denied to young people. What a pity that the party that once stood up for ragged-trousered philanthropists is now standing up for closed-minded reaction.
Damian Hinds (East Hampshire) (Con)
Despite the concerns that have been expressed about arts and creative subjects, is it not true that there is plenty of room in the curriculum for young people who are interested in studying those subjects, even while taking the full English baccalaureate suite?
Michael Gove
Yes, and I find it curious that there are those who say, for example, that English literature is not a subject that encourages creativity. The assault on the subjects in the English baccalaureate betrays the most narrow of mindsets, whereby the only things that are creative are those which fall within a particularly narrow spectrum. I think that scientists are creative; I think that those who study physics are capable of creativity; I think that geographers are creative; I think that historians are creative. To have Labour Members attacking those subjects as somehow not being creative and not being appropriate for the 21st century is as revealing as the dog that did not bark in Sherlock Holmes’s story.
Mike Gapes (Ilford South) (Lab/Co-op)
7. What plans he has for early intervention provision; and if he will make a statement.
The Secretary of State for Education (Michael Gove)
Local authorities have a key role in securing early intervention provision to meet the needs of their communities. To support this, we are increasing the overall funding for early intervention, from £2.2 billion in 2011-12 to £2.5 billion in 2014-15. That funding will enable local authorities to support early intervention provision, as well as funding the early education for two-year-olds from low-income families, which evidence shows is one of the most important types of early intervention.
Mike Gapes
I am interested in those figures, because I do not think they are quite what they seem. If it is so important to have early intervention, why is the Secretary of State actually taking away more than £1 billion from early intervention in England? Why is he taking 41% in real terms—more than £4.4 million—from my local authority, the London borough of Redbridge?
Michael Gove
I am a great fan of the hon. Gentleman; he does distinguished work in this House, so it is rare to see him lapse. I would remind him of two things: we inherited a blasted economic heath as a result of the depredations of the previous Government; and the figures for the amount that we are spending on early intervention rise for every year of this Parliament.
Dan Rogerson (North Cornwall) (LD)
In view of the success of the pupil premium in targeting money for school-age children and on this important issue of early intervention, has the Department given any consideration to a form of nursery premium that would extend the benefits of that to younger children?
Michael Gove
My hon. Friend is absolutely right: the pupil premium has been hugely successful in incentivising innovation and trying to ensure that children from disadvantaged backgrounds do better. It has also ensured that the balance of funding in education has moved towards disadvantaged children and disadvantaged areas. We are constantly looking at ways to ensure that the innovation and progress that the pupil premium has helped bring about are extended to more children at more ages.
Stephen Twigg (Liverpool, West Derby) (Lab/Co-op)
The Secretary of State cites a figure of £2.2 billion for 2011-12, but by that point he had cut £600 million from early intervention in the previous year. I asked him about that in October; since then we have had the local government settlement, which includes a further cut of £49 million to early intervention. Is this not yet another example of how, as the former children’s Minister told the Select Committee last week, children and families are a “declining priority” for this Secretary of State?
Michael Gove
I am grateful to the hon. Gentleman for his point. I remind him that he and his colleagues would have more credibility in discussing public spending if they were to acknowledge the terrible mistakes made by the previous Labour Government that led to the desperate economic situation in which we find ourselves. The figures are—[Interruption.] Silence in class! Spending on early intervention has gone up from £2.2 billion to £2.36 billion to £2.39 billion to £2.51 billion. Even at a time of tremendous economic pressure, spending is increasing. I should have thought that that would be good news in anyone’s language.
Richard Harrington (Watford) (Con)
8. How many students are enrolled in university technical colleges; and how many he expects to be enrolled by September 2013.
The Minister for Schools (Mr David Laws)
Five university technical colleges are open that, once full, will educate more than 2,600 young people. Twelve more UTCs are preparing to open in September and interest in enrolling is very high.
Richard Harrington
I congratulate the Government on the progress in the expansion and implementation of UTCs, and particularly the work of Lord Hill, the former Minister. I am sure that we all wish him the best in his new position. I must confess that I hope that there will be a UTC in Watford before very long. Does the Minister agree that the time must come very soon when all students of the appropriate age group have access to UTCs? Does he also agree that UTCs are an excellent weapon in reducing the long-term unemployment of young people by providing the skills they need to get jobs?
Mr Laws
I also pay tribute to the work of Lord Hill in this area and I note my hon. Friend’s representations on behalf of Watford. He is absolutely right that it is essential we provide the opportunity for all young people to access high-quality vocational education. He will be interested to hear that we are already well on the way to exceeding the Government’s target of 24 UTCs by 2014.
Mr Gerry Sutcliffe (Bradford South) (Lab)
It is important that areas such as Bradford in west Yorkshire which have high levels of youth unemployment have access to initiatives such as UTCs. How will the Minister expand and promote the policy as quickly as possible so that areas such as Bradford and west Yorkshire can participate?
Andrew Percy (Brigg and Goole) (Con)
Despite improvements in recent years, educational attainment in North Lincolnshire is still not where we would like it to be. May I urge the Minister to do everything he can to ensure that the UTC application for Scunthorpe progresses?
Henry Smith (Crawley) (Con)
9. What steps he is taking to ensure that children with special educational needs receive a co-ordinated service across agencies.
The Parliamentary Under-Secretary of State for Education (Mr Edward Timpson)
Our proposed reforms will ensure that services work closely together to support children and young people with special educational needs, including a requirement for local authorities and the health service to commission services jointly. We are testing approaches to implementation across 20 pathfinders, including a local offer that sets out services available for all children and young people with SEN and a co-ordinated education, health and care plan for those with more complex needs.
Henry Smith
I am grateful to the Minister for that reply. What is his Department doing to help provide joined-up and co-ordinated services specifically for children with special educational needs who are in care or being fostered?
Mr Timpson
Around 70% of children in care have some form of special educational needs so it is vital that we better co-ordinate the support that they receive, including in their foster placements. The pathfinders are looking specifically at improving working partnerships between education, health and social care in respect of looked-after children, as well as at the training needs of foster carers to ensure that we get much more co-ordinated support.
Nic Dakin (Scunthorpe) (Lab)
Additional needs funding will be routed through local authorities to all post-16 providers from September 2013. There is quite a lot of evidence in the colleges sector that local authorities have not got a grip on the number of our young people in their area who have additional needs. What will the Minister do to ensure that this does not get in the way of a smooth transfer next autumn?
Mr Timpson
The Department and the Education Funding Agency are working closely with local authorities and colleges. I have had discussions with the Association of Colleges, as well as a number of discussions with my right hon. Friend the Minister for Schools, to make sure that the transition is as smooth as possible and that the adjustments that need to be made are made in good time so that no child misses out as a consequence.
Caroline Nokes (Romsey and Southampton North) (Con)
Twenty thousand pupils in Hampshire are educated in the independent sector, including children with special educational needs, yet those schools do not benefit from the same level of scrutiny by child protection boards as those in the state sector. Given the appalling case of sexual abuse and the recent tribunal ruling at a school in my constituency which specialises in teaching children with special educational needs, will my hon. Friend agree to meet me as a matter of urgency to discuss what measures can be taken to improve that situation?
Mr Timpson
I am happy to meet my hon. Friend to discuss that issue in more detail. Every school must have a child protection policy and the new Ofsted multi-agency inspection that comes in later this year will be a strong way of ensuring that there is a much more co-ordinated response to safeguarding and child protection, not just within schools but right across all agencies.
Barbara Keeley (Worsley and Eccles South) (Lab)
11. What plans he has for child care provision; and if he will make a statement.
The Parliamentary Under-Secretary of State for Education (Elizabeth Truss)
Ensuring that children benefit from high-quality early education and child care is a key priority. This Government spend more than £5 billion per year. As a proportion of GDP, that is higher than Germany and as much as France, yet our parents pay some of the highest costs and child care workers in England receive lower salaries than those in comparable countries. There is much scope to reform our system to achieve higher quality and better value for money.
Barbara Keeley
As the Minister says, the UK has some of the most expensive child care in the OECD. The Resolution Foundation tells us that a woman second earner working full-time on the minimum wage would bring home only £4 extra from that second role in her family, after paying child care costs and losing tax credits, and the Government hardly helped by cutting the child care element of the working tax credit, which hit 400,000 families. Is it not time that the Government got on and did something to help parents with those high child care costs?
Elizabeth Truss
As we announced in the mid-term review, we will help hard-working families with the cost of child care and we will announce measures on that in due course. As a country we spend more than £5 billion a year, more than countries such as Germany and the same amount as France, and we are not yet getting value for money. My other aim is to make sure that we use the money in our system much better to ensure that more money goes to the front line and that our hard-working child care workers in nurseries and our child minders receive more of the money coming from parents and the Government.
Mr David Burrowes (Enfield, Southgate) (Con)
21. In the Minister’s focus on the quality of child care, will she not forget the value of parents and relatives looking after young children at home?
Elizabeth Truss
My role is to make sure that the child care provided in this country is of the highest quality and provides value for the money that the Government are putting in. My hon. Friend is right: many parents choose to look after their own children at home. That is important, too, but my role is very much to ensure that child care is of the highest quality.
Mrs Sharon Hodgson (Washington and Sunderland West) (Lab)
Two expert advisers on child care, Professors Helen Penn and Eva Lloyd, have warned the Government about their child care plans. Does the Minister agree with Professor Lloyd that changing ratios would not reduce costs, but would result in “a reduction in quality”? Will the Minister publish the expert report that her Department commissioned nine months ago and take the advice of these experts who said, in effect, that she needs to go back to the drawing board?
Elizabeth Truss
I suggest that the hon. Lady speaks to her boss, who has advocated Danish and Swedish child care systems, both of which have higher ratios than we currently have in England. They also have higher salaries and higher levels of qualification.
We are looking at best practice in Germany, France, Denmark and the Netherlands to make sure that we end up with a system in which we pay child care workers more than the £6.60 an hour that they are getting at the moment. That is a legacy of the previous Government. We are paying those who should be highly paid professionals £6.60 an hour—barely more than the minimum wage.
Kelvin Hopkins (Luton North) (Lab)
13. What recent assessment he has made of the success of sixth-form colleges; and if he will make a statement.
The Minister for Schools (Mr David Laws)
Sixth-form colleges make an important contribution to the education of 16 to 19 year-olds. The latest data show that the sector is performing well in both student attainment and a range of valued-added measures. Nearly four fifths of sixth-form colleges are rated “good” or “outstanding” by Ofsted.
Kelvin Hopkins
As the Minister has just said, sixth-form colleges are our most successful educational institutions, in terms of both quality of education and value for money. I suggest that the Government would do well by our young people and taxpayers if they sought to establish many more sixth-form colleges and ensured that those that we have are treated fairly and supported.
Mr Laws
We will certainly go on strongly supporting sixth-form colleges. I believe that an all-party sixth-form college group will be formed in the near future with the hon. Gentleman as its chairman. I will be more than happy to meet him in his capacity as chair of that group.
Robert Halfon (Harlow) (Con)
There is only one school sixth form in my constituency; the rest of the sixth-form students go to Harlow college. Will my right hon. Friend ensure that the poorest pupils going to sixth-form and further education colleges have access to free school meals, as school students have?
Sir Bob Russell (Colchester) (LD)
Will the Minister accept, however, that funding should be equal for sixth-form students regardless of the status of the establishment they go to? With that in mind, will he accept an invitation from me to visit Colchester sixth-form college—arguably the best in the country—to see how successful it is?
Mr Henry Bellingham (North West Norfolk) (Con)
14. What plans he has to encourage the setting up of further academies.
The Secretary of State for Education (Michael Gove)
The Department is working to ensure that as many good and outstanding state schools as possible have the opportunity to sponsor other schools. We have created a sponsor capacity fund to ensure that just such a change can take place.
Mr Bellingham
I refer my right hon. Friend to the excellent progress being made by King’s Lynn academy. Will he join me in paying tribute to the principal Craig Morrison and his team, who have put in place a new reinvigorated ethos and put real pride into the school? Is it not an excellent example of why the academies programme should be rolled out and will he join me in visiting the school in the not-too-distant future?
Michael Gove
It is always a pleasure to visit the county of Norfolk, particularly in my hon. Friend’s company, and I would be delighted to do so. In the past, educational standards in Norfolk simply were not good enough, but as a result of the transformational leadership of academy principals, things are at last improving. I commend, for example, the work undertaken by Rachel de Souza at the Ormiston Victory academy and the work that she is extending across the whole county, particularly targeting children in the most disadvantaged parts who need our reforms most.
Kerry McCarthy (Bristol East) (Lab)
By April this year, 40% of Bristol pupils will be taught in academies. One of the consequences of that has been the creation of rather fragmented services in school improvement, educational welfare and so on; 75%, I think, of the academies are buying those services in from the local authority, but not all of them are. What assessment has been made of the quality of both statutory and non-statutory safeguarding provisions in academies as a result of the change?
Michael Gove
There was fragmentation in education in Bristol, with far too many children being educated outside the city and far too many of their parents feeling that they had to be educated privately. At last, educational standards in Bristol are being turned around, not least thanks to the inspirational leadership of academy sponsors and academy leaders such as David Carter of the Cabot Learning Federation. There is no evidence that child safeguarding is taken any less seriously in academies. All the evidence is that academies, in pastoral and in educational terms, outperform other schools.
Mr Rob Wilson (Reading East) (Con)
Academies and free schools are making a real difference to educational attainment in this country. May I make the Secretary of State aware of an excellent bid for a new free school in east Reading that is truly worthy of Government support?
Michael Gove
I am grateful to my hon. Friend for making that case. I find increasingly that Members in all parts of the House are supporting free school bids. Not so long ago, the shadow Education Secretary was saying that free schools were freaky schools; now, increasingly, free schools are the schools that every Member of this House wants in their constituency.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
15. What progress he has made on ensuring the provision of a high-quality information, advice and guidance service in all secondary schools.
The Parliamentary Under-Secretary of State for Education (Elizabeth Truss)
An excellent, broad education grounded in core subjects such as maths, languages and sciences is an important foundation for a successful career. That is why we have introduced the English baccalaureate to encourage students not to close off their options too early. We have also given schools a new duty to secure independent careers guidance, which will help students to make informed choices about the best study routes for them.
Mr Sheerman
The Minister must know that children from more socially deprived backgrounds desperately need high-quality careers advice. All the evidence is that that careers advice is diminishing rapidly up and down this country. What is she going to do about that to help those young people?
Elizabeth Truss
I thank the hon. Gentleman for his question. As I have said, ensuring that more students are taking core subjects means that they will have better career opportunities later in life, and extending the opportunity to study maths and English beyond GCSE level for those who have not got a grade C means that they will get those important points. We have developed the National Careers Service, and the helpline has had 62,000 contacts with 13 to 18-year-olds, giving people these opportunities. We also ask schools to offer face-to-face advice. The key is that students get a good education; that is what will help them to compete in the world.
Mr Graham Stuart (Beverley and Holderness) (Con)
Tens of billions of pounds are spent on post-14 education alone, and the choices made by young people are crucial to their future and to that of the nation. The Education Committee’s report on careers advice and guidance will come out on Wednesday. Does the Minister agree that we must ensure that the right advice and guidance is in place, not only to help those most disadvantaged in our society but to ensure the most effective use of public funds?
Elizabeth Truss
Of course I will be extremely interested to see what the Select Committee report says on the subject. We do need good careers guidance, but we also need a system where students have an incentive to take subjects that will prove of value to them later in life. That is the whole point of the English baccalaureate.
Diana Johnson (Kingston upon Hull North) (Lab)
T1. If he will make a statement on his departmental responsibilities.
The Secretary of State for Education (Michael Gove)
More than 5,000 schools across the country are closed today as a result of adverse weather conditions. Thanks to changes that this Government have made, no school that ensures that it is open will be penalised if individual students cannot make it to school on that day. I hope that as a result more and more schools will recognise that while the decision on whether to remain open or closed is a matter for the head teacher, everything can and should be done to ensure that all children get access to a good education.
Diana Johnson
After the revelations about Jimmy Savile, Cyril Smith and other appalling cases, is it not time for the Secretary of State to stop dragging his feet over personal, social, health and economic education, causing its teaching over the past two years to decline, and instead to help equip our young people to better resist the efforts of predatory paedophiles?
Michael Gove
The hon. Lady is absolutely right that given their scale the recent revelations about the extent of child abuse and child grooming are uniquely worrying. In a speech that I gave to the Institute for Public Policy Research just before Christmas, I outlined a series of steps that my Department has taken, and will take, in order to deal with this.
Neil Carmichael (Stroud) (Con)
T2. Given the evolving role of school governors, especially in performing accountability measures, and bearing in mind how Ofsted is focusing on school governors and their role in ensuring that higher standards are found in schools that have thus far not managed to achieve them, does the Secretary of State agree that we need to focus on skills and, in particular, the role of the chair?
Michael Gove
I thank my hon. Friend for the work that he has done on how to improve school governance. It matters hugely and one of the successes of the academies programme has been to raise the quality of school governance. I agree that, while it is important that the community feels that its voice is represented on governing bodies, the single most important thing is the skills and capabilities of the governing body.
Stephen Twigg (Liverpool, West Derby) (Lab/Co-op)
Last week, the former children’s Minister, the hon. Member for East Worthing and Shoreham (Tim Loughton), said that the children and families agenda is a “declining priority” for this Government. The response from a senior official in the Department was to describe the hon. Gentleman as “lazy” and “incompetent”. The code of conduct for special advisers and civil servants precludes them from making such personal attacks. Will the Education Secretary investigate to determine whether a breach of the code has occurred and, if one has, will he take all necessary disciplinary action?
Michael Gove
I am grateful to the hon. Gentleman for making that point. It gives me an opportunity to affirm the importance of child protection and of ensuring that this Government take all the steps needed to make sure that no child is placed at risk and to—[Hon. Members: “Answer the question.”] I think the first part of the question was about child protection and I regard that as the most important part, which is why we have taken steps to ensure that child protection is and remains a top priority. It is, of course, the case that leaks are a part of political life, and I tend to regard them all with equanimity.
Mr Douglas Carswell (Clacton) (Con)
T3. Does my right hon. Friend agree that we need to give head teachers and individual schools far greater autonomy over teachers’ pay, to allow them to reward, recruit and retain good teachers?
Michael Gove
I am grateful to my hon. Friend for making a very important point. Changes to the way in which we pay and reward teachers will ensure that good teachers are rewarded better and that those schools in disadvantaged areas which, thanks to the pupil premium, are receiving more money will have the chance to get the high-quality teaching that their children deserve.
Bridget Phillipson (Houghton and Sunderland South) (Lab)
T4. Hetton school in my constituency was due to be rebuilt under Labour’s Building Schools for the Future programme. The school was then accepted on to this Government’s new scheme, but its head has now been told that, due to financing issues, the rebuilding will be delayed by another year. Will the Secretary of State explain the reasons for that?
Michael Gove
I am grateful to the hon. Lady for her question and will investigate the specific case that she mentions. Sadly, the Building Schools for the Future programme had to be terminated, not least because of the inefficiencies within the scheme. The priority schools building programme will ensure that schools are repaired at less cost to the taxpayer and in a more effective way. If there has been any slippage in the particular case that the hon. Lady has brought to my attention, I will look at it and write to her.
Chris Skidmore (Kingswood) (Con)
T6. Today, the all-party group on archives and history has formally published its report, “History for all?” One of its principal recommendations is to consider whether there should be a British history qualification at 16 that would teach the broad chronological span of British history. Will the Secretary of State seriously consider this report and meet a cross-party delegation of MPs to discuss its findings?
Michael Gove
It is an excellent report and I would love to meet a cross-party delegation of MPs to tease out the implications of some of its brilliant recommendations.
Tristram Hunt (Stoke-on-Trent Central) (Lab)
T5. The Secretary of State has spoken eloquently of the need for academic subjects to be taught in poorer communities, so why is Keele university in north Staffordshire seeing its allocation for secondary teacher core training cut by 100% in history, 100% in geography and 100% in English? Will he give me an assurance that the new teaching regime will not distort teacher supply geographically, so that areas such as Stoke-on-Trent are not deprived of well trained, well motivated teachers? Why this snobbery? Don’t Stoke kids deserve the best?
Michael Gove
I am grateful to the hon. Gentleman for raising this issue. I read his column in the Stoke Sentinel on precisely this issue, with admiration both for his passion and for the quality of his prose. I assure him that we will absolutely ensure that, across the country, teachers who are well trained will be placed in the schools that need them most. That is why we have reformed pay and conditions—there is still silence from the Labour party on whether or not it supports our changes—and why we have made changes to teacher training through the school direct programme. Let me offer the hon. Gentleman a meeting with the head of the Teaching Agency, Charlie Taylor. After that meeting, if he is not impressed by Charlie and his commitment to helping the poorest children do well, I am afraid that nothing will convince him.
Richard Harrington (Watford) (Con)
T7. I am sure that Ministers will be aware that Holocaust memorial day will take place this week and that the work of the Holocaust Education Trust has been commended by this and previous Governments. Are they also aware that the Lord Merlyn-Rees memorial lecture will take place this evening here in Parliament—in the Attlee suite—at which the former Foreign Secretary, the right hon. Member for South Shields (David Miliband), and Mr Danny Finkelstein of The Times will speak? I hope that Ministers will implore their constituents and colleagues to attend.
Michael Gove
I look forward to listening to both the right hon. Member for South Shields (David Miliband) and Mr Finkelstein of The Times this evening. Let me place on record my gratitude to the last Government for instituting state support for the Holocaust Education Trust, and particularly to my predecessor as Secretary of State, the right hon. Member for Morley and Outwood (Ed Balls), for the courage and commitment that he showed to the fantastic work of the HET. I extend my congratulations also to its chief executive, Karen Pollock, who is an inspirational public figure and richly deserved her recent recognition in the honours list.
Lyn Brown (West Ham) (Lab)
T8. I have just come from an excellent event hosted by Newham council called “Every child a musician”. It is a scheme that was launched in 2010 to give all children from whatever background access to a musical education. It has been rigorously evaluated by the Institute of Education, and Professor Graham Welch has stated that evidence already exists of“a link between progress in EcAM and progress in writing and English.”Can the Secretary of State explain, therefore, why arts subjects will not count towards the English baccalaureate?
Michael Gove
I congratulate Newham council on its leadership, and I congratulate all those involved in music education, who have been supported in London by the Mayor through the scheme that he has introduced to ensure that more children have access to instrumental tuition.
Darren Henley’s report on music education was greeted as probably the best report on the subject that had been written, and enacted by any Government, since the dawn of time. I am grateful that there is such widespread recognition of our commitment to school music.
Bob Blackman (Harrow East) (Con)
T9. Some 18,000 young people and teachers have had the opportunity to visit Auschwitz thanks to the wonderful work of the Holocaust Education Trust. Does my right hon. Friend agree that we should commend those who are organising events across the country to commemorate the awful evil of the holocaust, and that it is important that all young people learn the lessons from the past so that it is not repeated in the future?
Michael Gove
I absolutely agree, and at a time when we are seeing the effects of prejudice and anti-Semitism on the rise—all of us will have been watching news programmes over the weekend horrified at the re-emergence of murderous prejudice in north Africa and the middle east—we will all affirm the vital importance of the work that the Holocaust Education Trust continues to do.
Julie Hilling (Bolton West) (Lab)
Youth services are being wiped out up and down the country. Why will the Secretary of State not collect the data from local authorities and ensure that they meet their statutory duty to provide a sufficient youth service?
The Parliamentary Under-Secretary of State for Education (Mr Edward Timpson)
The hon. Lady will know that there are duties on local authorities to ensure that there is adequate provision of the services that she mentions. We work closely with many youth services, and I spoke at the National Youth Agency only last week about the innovative and creative practices that are now developing in a lot of areas, which are delivering excellent services for young people. That includes the £240 million capital investment that we have recently put into myplace centres, which are benefiting many of the poorest parts of our country.
Duncan Hames (Chippenham) (LD)
T10. In recent years, more premature babies, who are being born even earlier, are surviving in good health, albeit that they start school with development that, when measured from their birth date, is delayed. Will the Minister consider fresh evidence, especially about severely premature summer-born babies, and give their parents the final say on when they start school?
The Minister for Schools (Mr David Laws)
We are certainly prepared to consider that further. My hon. Friend will know that in the simpler code that was introduced on 1 February 2012, we clarified some aspects of the admissions situation and made parents’ rights on deferral much clearer. The Department is also meeting parents who are affected by such issues to consider any further changes.
Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
Earlier, the Under-Secretary of State, the hon. Member for South West Norfolk (Elizabeth Truss), hinted again about changes to child care. A week or so ago there were major trails in the Sunday papers about imminent announcements. Has she been thwarted in her ambitions by members of the Government who do not wish to see women back in the workplace and contributing to the Government’s tax take?
The Parliamentary Under-Secretary of State for Education (Elizabeth Truss)
We will shortly announce proposals on child care. As I mentioned earlier, we are not getting value for money for the £5 billion that we spend. In the mid-term review, we said that we would put forward a new offer for working parents. At the moment, our parents pay more than those in virtually any other OECD country, after 13 years of Labour creating a system that does not work. We are going to fix it.
Michael Fabricant (Lichfield) (Con)
We heard earlier about the success of Northamptonshire in introducing academies. We have not been as successful in Staffordshire, and one reason for that has been peer pressure by headmasters on those headmasters who want to establish academies. What steps can the Department take—if any—to encourage headmasters to have a little bit more courage to go ahead and take that step?
Michael Gove
I am grateful to my hon. Friend for that question. I fear we have reached a tipping point in the number of schools that have become academies at secondary level, with more than 52% of pupils now educated in academies. As a result of that, even in local authorities where there are perhaps one or two more small c conservative head teachers, I believe that the overwhelming evidence of the benefits that academies bring will ensure that we see more schools going down that path.
Hazel Blears (Salford and Eccles) (Lab)
I know that the Secretary of State shares my determination to improve social mobility. Will he therefore support my constituent, Damien Shannon, who has been prevented from taking an MSc place at St Hugh’s college Oxford simply because he cannot lay his hands on £21,000 immediately? How does that help social mobility?
Michael Gove
May I take this opportunity to pay tribute to the right hon. Lady’s commitment to social mobility and the work she has done in encouraging internships in this House? I shall look as quickly as I can into that case and discuss it with the Department for Business, Innovation and Skills.
Alun Cairns (Vale of Glamorgan) (Con)
I look forward to the Minister’s proposals for improving outcomes for children with special educational needs. However, for those parents who are still forced to use the tribunal process, the delay before they get to that tribunal is considerable and can lead to additional pressure and for too long leave children without the education they need. Will he agree to discuss the matter with the Department, and seek to improve those outcomes?
Mr Timpson
I know my hon. Friend has a lot of experience in his family of these issues, and we are working hard to ensure that we move away from the adversarial nature of our system which means that far too many cases end up in a tribunal. We have looked carefully at the report from the Education Committee and will be responding shortly with—I hope—answers that it will find helpful.
Jenny Chapman (Darlington) (Lab)
At Christmas, officials from the Department for Education held a party at which they were encouraged to wear silly hats and not remove them until they had identified what cuts they wanted to make. Another official blogged that he would like a barge on which to sail between the different offices outside London. The one he could not reach was Darlington, which is under threat of moving to Newcastle. Does the Secretary of State see how insulting that is to 450 of my constituents who might be losing their jobs?
Michael Gove
The hon. Lady has made a good case for the continuation of Department for Education provision at Mowden hall in Darlington. It is important for us all to recognise that the work of civil servants engaged in the DfE review has been typical of the committed work they do across the Department to ensure that we have better services for less money. I am looking forward to working with her to ensure that we examine the case for either Darlington or another location in the north-east providing an even better service for all children in the future.
George Eustice (Camborne and Redruth) (Con)
In light of the report by the right hon. Member for Birkenhead (Mr Field) earlier in this Parliament, will the Secretary of State say what steps he is taking to improve the parenting skills of parents who have children under the age of three?
Michael Gove
We are currently undertaking three pilots to see how parenting classes can enhance the capacity of parents from a variety of backgrounds to provide children with the support they need. I am particularly open to innovation in that field, and those three pilots should help us to decide the best way to move on.
Algeria
(11 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Prime Minister (Mr David Cameron)
With permission, Mr Speaker, I would like to update the House on the despicable terrorist attack in Algeria and the tragic events of the last few days. It is with great sadness that I have to confirm that we now know three British nationals have been killed, and that a further three are believed to be dead, as is a Colombian national who was resident in Britain. I am sure the whole House will join me in sending our deepest condolences to the families and friends of all those who have lost loved ones.
First, let me update the House on developments over the weekend and the steps we have taken to get survivors home, and then I will begin to set out how I believe we will work with our allies to overcome the terrorist scourge in this region. The Algerian Prime Minister told me on Saturday afternoon that the Algerian military had completed its offensive and that the terrorist incident was over. Since then, Algerian forces have undertaken a further operation to clear the site of potential explosives and booby traps. This is still being completed, and it will allow our embassy-led team to access the site.
It is important to put on record the scale of what happened. There is still some uncertainty about the precise facts, but we believe that, in total, there were some 800 employees working at the In Amenas site at the time of the attack, about 135 of whom were foreign nationals. Over 40 were taken hostage, and at least 12 were killed, with at least a further 20 unaccounted for and feared dead. The Algerian Prime Minister has said today that he believes 37 foreign hostages were killed. The number of terrorists was over 30. Most were killed during the incident but a small number are in Algerian custody.
Our immediate priorities have been the safety of the British nationals involved, the evacuation of the wounded and freed hostages, and the repatriation of those who have tragically been killed. Working closely with BP, and side by side with our US, Japanese and Norwegian partners, a swift international evacuation effort has been completed. The last British flights out on Saturday night brought not only the remaining freed Britons, but Germans, Americans, New Zealanders, Croats, Romanians and Portuguese.
As of yesterday, all 22 British nationals caught up in the attack, who either escaped or were freed, had been safely returned to Britain, to be debriefed by the police and of course reunited with their families. Now, our most vital work is bringing home those who died. An international team of British, American and Norwegian experts is in close co-operation with the Algerian Ministry of Justice undertaking the task of formally identifying their bodies. We want this process to happen as swiftly as possible, but it will involve some intensive forensic and policing work, and so may take some time.
Throughout the last five days, the British ambassador to Algeria and staff from across the Government and beyond have been working around the clock to support British citizens and their families, and I am sure the House would like to join me in thanking them for their efforts.
We should also recognise all that the Algerians have done to confront this dreadful attack. I am sure the House will understand the challenges that Algeria faced in dealing with over 30 terrorists bent on killing innocent people in a large, extremely remote and dangerous industrial complex. This would have been a most demanding task for security forces anywhere in the world, and we should acknowledge the resolve shown by the Algerians in undertaking it. Above all, the responsibility for these deaths lies squarely with the terrorists.
Many questions remain about this whole incident, but one thing is clear: this attack underlines the threat that terrorist groups pose to the countries and peoples of that region, and to our citizens, our companies and our interests. Four years ago, the principal threat from Islamist extremism came from the Afghanistan and Pakistan region. A huge amount has been done to address and reduce the scale of that threat. Whereas at one point three quarters of the most serious terrorist plots against the UK had links to that region, today that has reduced to less than half, but at the same time al-Qaeda franchises have grown in Yemen, Somalia and parts of north Africa.
The changing nature of the threat we face was highlighted in our national security strategy in 2010 and shaped the decisions we made. Although there were difficult decisions to make, we increased our investment in our special forces, cyber-security and key intelligence capabilities, while also increasing our investment in fragile and broken states.
In north Africa—as in Somalia—terrorist activity has been fuelled by hostage ransoms and wider criminality. To date, the threat it poses has been to these north African states themselves and, of course, as I have said, to western interests in those states, but as it escalates, it is becoming a magnet for jihadists from other countries who share this poisonous ideology. Indeed, there are already reports of non-Algerian nationals involved in this attack.
More than ever, the evolving threat demands an international response. It must be one that is tough, intelligent, patient and based on strong international partnerships. First, we should be clear that this murderous violence requires a strong security response. We must be realistic and hard-headed about the threats we face. Our role is to support the Governments of the region in their resolve to combat this menace, as many are doing at a high cost. We will therefore work closely with the Algerian Government to learn the lessons of this attack, and to deepen our security co-operation, and we will contribute British intelligence and counter-terrorism assets to an international effort to find and dismantle the network that planned and ordered the brutal assault at In Amenas.
We must work right across the region. In Nigeria, we will continue our close security partnership with the Government there as they confront Islamist-inspired terrorism. In Libya, we will continue to support the new Government on the urgent priority of building new and effective security forces. In Mali, we will work with the Malians themselves, with their neighbours and with our international allies, to prevent a new terrorist haven developing on Europe’s doorstep.
We support the French intervention that took place at the request of the Malian Government, and we are working to ensure that an African-led military force can—with the appropriate training and support—help to ensure Mali’s long-term stability. That support will include the EU training mission that was agreed by EU Foreign Ministers in Brussels last week.
Secondly, our tough security response must be matched by an intelligent political response. Al-Qaeda franchises thrive where there are weak political institutions, political instability and a failure to address long-standing political grievances, so we need a political approach that addresses these issues. We must support effective and accountable government, back people in their search for a job and a voice, and work with the UN and our international partners to solve long-standing political conflicts and grievances.
Thirdly, we must be patient and resolute. Together with our partners in the region, we are in the midst of a generational struggle against an ideology which is an extreme distortion of the Islamic faith, and which holds that mass murder and terror are not only acceptable but necessary. We must tackle this poisonous thinking at home and abroad, and resist the ideologues’ attempt to divide the world into a clash of civilisations.
The underlying conflicts and grievances that are exploited by terrorists are in many cases long standing and deep, and, of course, the building blocks of democracy—the rule of law and the independence of the judiciary, the rights of minorities, free media and association, and a proper place in society for the army—which are a big part of the solution, all take a long time to put in place. But this patient, intelligent but tough approach is the best way to defeat terrorism and to ensure our own security. We must pursue it with an iron resolve.
I will use our chairmanship of the G8 this year to make sure this issue of terrorism, and how we respond to it, is right at the top of the agenda, where it belongs. In sum, we must frustrate the terrorists with our security, we must beat them militarily, we must address the poisonous narrative they feed on, we must close down the ungoverned space in which they thrive, and we must deal with the grievances that they use to garner support. This is the work that our generation faces, and we must demonstrate the same resolve and sense of purpose as previous generations did with the challenges that they faced in this House and in this country. I commend this statement to the House.
Edward Miliband (Doncaster North) (Lab)
I join the Prime Minister in expressing my deepest sympathy and condolences to the families who lost loved ones in last week’s terrorist attack. For them, and for all those involved, the past six days have been an unimaginable nightmare. The whole country has been shocked as the horrific details of this unprovoked and violent act of terror have emerged. This was pre-meditated, cold-blooded murder of the most brutal kind, and behind each lost life is a family of loved ones who are in our thoughts today.
I echo the Prime Minister’s unequivocal condemnation of those involved in planning and carrying out this attack. It is they who bear full responsibility for the dreadful loss of life, and every effort must now be made to bring them to justice. We on this side of the House will give the Government our full support as they seek to achieve that. We will also give them our support as they consider how best to respond to the growing threat that al-Qaeda in the Islamic Maghreb and other violent extremist groups pose.
In particular, the task is to understand the nature of the new threat, which is more decentralised and fragmented and takes advantage of the ungoverned spaces and security vacuum in parts of north Africa. At the same time, in its response the international community needs to apply the lessons of the past about the combination of diplomacy, politics and security required to help to bring about stability in the region.
On the attack itself, people will agree with the Prime Minister that the Algerian Government was faced with some extremely difficult judgments about how and when to act. I join him in paying tribute to all our embassy staff for the work that they did. In the light of the attack, can the Prime Minister say more about the work that the British Government are doing with British companies operating in the region? Can he tell us whether, at this early stage, any lessons can be learned about the security of those installations?
Turning to the broader context of what is happening in the region, on Mali we support the Government’s actions to date. Can the Prime Minister confirm that he does not envisage a combat role for British troops? We agree that the efforts of the French military must be supplemented by the much more rapid deployment of west African forces, as the Prime Minister said in his statement. Can he tell us by what means, and in what time scale, he expects that to be achieved?
After last year’s coup, the Mali Government face a security and legitimacy crisis. Can the Prime Minister tell us what further steps can be taken by the international community and Governments to use diplomacy and development to stabilise the situation in Mali and, in particular, which international body will co-ordinate that urgent work?
More broadly across the region, countering the emerging threat of terrorism begins with understanding it and talking about it in the right way. The work to deal with that threat will be painstaking: diplomatic and political as much as military; and collaborative and multilateral, not unilateral. Does the Prime Minister agree that we are talking about a number of distinct regional organisations, some using the banner of al-Qaeda and others not, rather than a single, centrally co-ordinated or controlled group? Each of these threats needs to be monitored and countered appropriately. Will he outline what further steps might be taken—he talked about some in his statement—to improve the flow of information and intelligence from the region, and whether it needs to be better shared with key allies?
As the Prime Minister said, we know that these threats grow where governance is weak. What longer term roles does he anticipate for the African Union and the Economic Community of West African States in securing greater stability in the region, and how does he believe that the EU will support that effort? On the question of ready access to arms, can the Prime Minister set out how the international community can better prevent the spread of weaponry throughout the region, including weapons left over from the Libyan conflict?
Finally, does he agree with me that if we are to meet the challenges we face, we need a much greater focus of our diplomatic development and political resources on this region? We should remember the events of the Arab spring, which demonstrated the desire of people across north Africa to improve their lives through peaceful means, not through violence and terror. We should support their cause.
Today, above all, we mourn the victims of this terrorist attack. We grieve with the families of those who died. We stand united in seeking to bring the perpetrators to justice, and to doing everything we can to protect British citizens working and living around the world.
The Prime Minister
I thank the right hon. Gentleman for his response. I think there is genuine cross-party agreement, not just on our response to this dreadful event but about the thinking that needs to be done on how to tackle these problems in the future, and I welcome what he has said. He is right to say this was premeditated murder, and he is right to say we need to understand the nature of the threat and learn the lessons of the past.
Turning to his individual questions, on the British Government’s work with the companies involved, all the major companies have been contacted across the region. All of them have put in place procedures for heightened security. Crucially, we have asked all of them to update their consular information. When these events happen, one of the first things that needs to be done is to try to be absolutely clear about who is employed, who is contracted, and who is in the country and who is not.
I can assure the right hon. Gentleman that we are not seeking a combat role in Mali. We believe that we should be supporting the French, who have taken emergency action to stop Mali being overtaken by what is effectively an al-Qaeda-backed group of rebels. Our help for the French will be discussed again at the National Security Council tomorrow. We have lent them two C-17s. We propose to continue with that, and will be looking at other transport and surveillance assets that we can let the French use to help them in what they are doing.
The right hon. Gentleman is right to say that the answer on the security front is to train up African soldiers, and that they should play the lead role. Some African soldiers are already in Mali from west African states, and others will be arriving soon. On who should have the co-ordinating role, ECOWAS has been encouraged to take the lead, and there is also the backing of a UN resolution that was secured before Christmas.
The right hon. Gentleman is also correct to say that what we are dealing with are distinct organisations in different countries, some of them more connected to al-Qaeda than others. I think that we need to make sure that we deal with each one individually, while recognising that there are some commonalities. We are trying to break up these problems and deal with them individually, rather than pose one global response to the challenge. As I tried to say in my statement, we need to show patience and intelligence as well as toughness and resolution.
In terms of what the Government need to do to step up our contacts with the region, the point was well made. We have had National Security Council discussions on the Sahel and I have appointed my hon. Friend the Member for Eddisbury (Mr O'Brien) as my envoy to the region. There is obviously a huge amount of French influence on the region and we have been less well represented. I do not want us to try to track or double up with other allies on this, but we should be working together, and that is what we are focused on.
In terms of the African Union and ECOWAS, we should be helping to build their capacity for the future. The right hon. Gentleman was also right to raise the point about Libyan weapons. The British Government have stepped up our engagement with Libya at all levels to help with the challenge of security and removing so many weapons from their society. In terms of what he said about stepping up our development, diplomatic and other resources in the region, that is very much something we need to consider.
Finally, I think that the right hon. Gentleman’s point about the Arab spring being a long-term benefit for the region, despite the difficulties that the move to democracy can sometimes engender, is correct. I think it is wrong to believe that vicious, dictatorial regimes such as Gaddafi’s somehow made our world safer; they did not. That is not just in terms of people living in Lockerbie, because we still have the problems of Gaddafi-supplied Semtex in Northern Ireland and all the terrorism that was engendered by his regime.
Sir Malcolm Rifkind (Kensington) (Con)
May I pay tribute to the Prime Minister for the sober and realistic way in which he has treated this crisis and for his strategy for the future? I suggest that the strategy needs two essential ingredients. First, we must work with the natural leaders of north Africa and west Africa. Nigeria, which he mentioned, and Algeria not only will be decisive in this crisis, but share a common interest in defeating international terrorism. Secondly, does he agree that we need to work to isolate the jihadi terrorists from the other insurgents in Mali and other countries who have local grievances? That suggests the need for a political strategy, not merely a military one.
The Prime Minister
My right hon. and learned Friend sets out extremely well the twin aims of working with African leaders and isolating the terrorists. If we look at the case of Somalia, which is a badly broken and fractured state that is trying to recover from years of civil war, terrorism and other abuses, we will see that the international community is demonstrating working with African leaders and trying to disengage terrorists from other organisations. That is the way forward to try patiently to rebuild those countries.
Mrs Louise Ellman (Liverpool, Riverside) (Lab/Co-op)
Two dedicated Liverpool men, Paul Morgan and Garry Barlow, have now died at the hands of terrorists in Algeria. I would like to thank the Foreign Office for the work it has done to assist the families. What immediate steps can the Prime Minister take to try to deal with this horrendous situation and to try to reduce the apprehension felt by so many families, in Liverpool and across the country, who have loved ones working away in vulnerable areas?
The Prime Minister
The hon. Lady speaks for everyone in raising the case of those two men from Liverpool who lost their lives. They were working abroad, trying to earn a good living for themselves and their families. There are many British people who do that in difficult and dangerous parts of the world, and I believe that it is part of the British Government’s job to work with foreign Governments to make sure that we defend the interests of people such as those she mentions. That is why we are getting in contact with the large businesses and thickening our contacts with all those Governments. I think that it is vital that we do everything we can with those Governments, who have to have the primary responsibility, to keep our people safe.
Sir Menzies Campbell (North East Fife) (LD)
My right hon. Friend’s agenda lacks nothing in ambition, but ambition needs to be supported by adequate resources. Can we be satisfied, in this period of financial austerity, that the intelligence services and the armed services will have adequate financial resources to meet the substantial elements that he has wished upon them?
The Prime Minister
My right hon. and learned Friend makes a very good point. Of course, there are always challenges over the level of resources, even in times when money is plentiful—and it is not plentiful today. I would say, though, that our defence budget, for instance, is stable in cash terms at £33 billion. We have tried as a Government—perhaps we need to look again and go even further—to focus on those threats to our security that we face today: an investment in key intelligence capabilities and greater investment in special forces, cyber-security and the things that will have the maximum impact in keeping our people safe. We therefore have to make changes in other parts of our armed services to make possible this vital investment for the future.
Mr Peter Hain (Neath) (Lab)
I welcome the priority the Prime Minister has given this matter and the tone of his statement, especially his focus on the political and not simply the security. To add to the question that has just been put to him, the truth is that our diplomatic capacity in that region has been cut, not simply under his Government but, sadly, under our Government too. Will he look at that capacity? It is not simply about our diplomatic capabilities, but about our related ones. Unless we focus resources on where the threats are—and that means the Foreign Office’s budget not being continuously chopped, as it has been in recent years—we will not be able to deliver.
The Prime Minister
I will look very closely—it is absolutely right to look closely—at what diplomatic resources we have in that part of the world. I would simply make two points. One is that the Foreign Office actually got a reasonably generous settlement in terms of public spending and has been opening embassies in parts of the world where there are really important economic priorities for Britain, particularly in south-east Asia. The second point is that when we look at west Africa, we should be very much thinking about how we will work with our partners—I have already had this conversation with President Hollande and President Obama. We have particularly strong ties with countries such as Nigeria; France has particularly strong ties with countries such as Mali. It does not make sense for us all to double up in the same places but, working together, we need to ensure that our coverage is very good.
Dr Liam Fox (North Somerset) (Con)
Al-Qaeda represents both a mindset and a physical capability. Does my right hon. Friend agree that, as well as an uncompromising security response, there is a particular responsibility on the leaders in the Islamic world, both religious and political, to make it very clear that the sort of barbaric acts we saw in Algeria are incompatible with Islam, and that that message needs to be made crystal clear abroad and in the United Kingdom?
The Prime Minister
My right hon. Friend makes a very important point. Just as we have to isolate and defeat this sort of terrorism in a security and military sense, we need to isolate and defeat the poisonous ideology on which it feeds; and that requires, as he says, Muslim leaders and faith leaders—and, indeed, leaders of Muslim-majority countries—to condemn it in very strong terms. I have been very struck over the last year that the Prime Minister of Malaysia and the President of Indonesia, along with a number of countries, have made the strongest possible statements about how Islam is completely incompatible with this sort of taking of life, and we need to hear that a lot more in the future.
Mr Bob Ainsworth (Coventry North East) (Lab)
The Prime Minister is right to use this tragedy to make people aware of the growing threat from the region. He is also right to say that the best response is a regional-led response, but do we have the capacity to have a proper input across the range in this area? The Foreign Office’s headline cuts were a lot bigger once the responsibilities for the BBC had been transferred. We need a diplomatic, political, security and developmental response to this kind of situation if the threat is to be removed, which can only happen over time.
The Prime Minister
The right hon. Gentleman asks a central question. I would say yes, there is the capacity, for two good reasons. First, I believe we are more effectively co-ordinating what we have. The National Security Council means that we have the Development Secretary, the Home Secretary, the Foreign Secretary and the Defence Secretary, with their budgets, sitting round the table, which makes it more possible to use that money—including through the conflict pool—to come to terms with the challenges we face. Secondly, we have taken some difficult decisions on defence, but as a result we have reduced the amount of unfunded commitments and our budget is now, as it were, in balance for the future. We can afford the very important capabilities that include heavy lift—vital for the sorts of things we are doing with the French—air-to-air refuelling and those sorts of capacities, which will be so important for the future.
Mr Andrew Mitchell (Sutton Coldfield) (Con)
Does my right hon. Friend agree that the terrible events in Algeria underline the critical importance for the international community of tackling the root causes of poverty, instability and conflict in west Africa? Britain has been doing that in east Africa, not least in Somalia, where some progress seems at last to have been made.
The Prime Minister
My right hon. Friend is entirely right to say that the work we do to address those root causes will be vital not only for those countries but for our long-term security. One of the excellent things that he did as Secretary of State for International Development was to focus more of our money on conflict and on broken states, because it is there that the investment can make the biggest difference. No one would argue that Somalia was somehow a model case, but it seems that the work we are doing with international partners, using our aid budget and working with the new Somali Government, is helping patiently to mend that country in a way that does not involve military intervention by us.
Angus Robertson (Moray) (SNP)
Stabilisation and security in the region are set to be supported by a European Union training mission, although that will not be in place in Mali until mid-February. There are plans for 250 trainers and 200 close protection personnel, but it is already being suggested that those numbers are insufficient. Does the Prime Minister believe them to be sufficient? What contribution will the UK be making to the training mission?
The Prime Minister
The point about an EU training mission is that it would be part of the process of training up the west African troops who want to play a part in stabilising and securing Mali. The total size of the mission would perhaps be around 500 personnel, and if there were a British contribution to it, it would be in the tens, not in the hundreds. It is a training mission, not a combat mission. The lead on this will clearly be taken by the French, who have the greatest interest in rapidly training up west African forces to replace the French forces that are currently in action in Mali.
Nicholas Soames (Mid Sussex) (Con)
Given that the instability in north Africa is going to last for a very long time, does my right hon. Friend agree that the commitments required from this country, our European partners and others will be very considerable indeed? Given Britain’s fine record on the training of defence forces, does he also agree that our Army will have a major role to play in training African troops, and that we will be able to be of real help to them?
The Prime Minister
My right hon. Friend makes an important point. If we look at the capabilities that we have that will make the biggest difference in that area, we see that training is clearly one of them, alongside counter-terrorism, ISTAR—intelligence, surveillance, target acquisition and reconnaissance—and other assets that we have. We also have training assets in this country. We should be using our training academies not only to train our own military but as a way of building relationships with other militaries around the world, as that would help us in circumstances such as those that we face today.
Mr David Winnick (Walsall North) (Lab)
Western powers cannot stand aside, particularly when our own nationals are so tragically involved, but does the Prime Minister accept that the defeat of these terrorist and murder gangs in north Africa and elsewhere will largely depend on the attitude of the people involved, and certainly not on military action from outside? We must bear in mind that the Taliban will still be around in Afghanistan after 11 years of western military action there.
The Prime Minister
I agree with the hon. Gentleman that the key will be the peoples of those countries rejecting Islamic extremism and violence and opting instead for having a job and a voice in a secure country. He is right about that, but, as we were discussing earlier, one of the roles that we can play is in recognising that we have to try to split the terrorist groups from the other groups with which they can become affiliated. In the case of Mali, for example, there is a combination of terrorist groups and Tuareg tribes. We should be trying to split up those alliances, rather than reinforcing them through our actions. I do not accept that the right thing to do is in any way to turn our back on the world. Britain is an open, engaged country and our interests are threatened in those countries. The idea that if we did less or did nothing we would somehow be safer is wrong.
Richard Ottaway (Croydon South) (Con)
In the last decade, the population of Mali has grown by 60%, and it is forecast to grow by 400% by 2050. That leaves millions of young men and women without any reasonable expectation of employment—a sure prescription for social violence, fuelling instability in the region. Does the Prime Minister agree that if there were ever a role for DFID funding, it would be to address the economic wasteland that is the Sahel?
The Prime Minister
My hon. Friend makes a very important point. Our aid is at work in Mali. UK aid is currently helping 200,000 people in Mali through the provision of food, emergency health and medicine, and we are always one of the first to step forward and help, and this is an example of that. I know our aid budget is controversial, but if we are to put together these broken and fragile states, I would say yes, there is a role for security; yes, there is a role for diplomacy and politics; but there is also a role for aid and economic assistance.
Mr George Howarth (Knowsley) (Lab)
May I join the Prime Minister in expressing my condolences to the families who lost loved ones in Algeria, and may I also express a little relief that my own constituent who was caught up in those events managed to get home safely? I commend the Under-Secretary of State for Foreign and Commonwealth Affairs, the hon. Member for North East Bedfordshire (Alistair Burt) for the personal efforts he made to keep informed those MPs whose constituents were caught up in this situation.
On the question of our own intelligence and security agencies, does the Prime Minister agree that whatever changes we make to our own priorities, it is important to do more of what we are good at rather than trying to do too much in operations in which we would probably not be as effective?
The Prime Minister
First, I join the right hon. Gentleman in thanking my hon. Friend the Under-Secretary, who has been working extremely hard, almost around the clock, trying to keep people in touch, whether it be the Scottish Government, MPs, or the police liaison teams that liaised with the families through what has been an incredibly difficult—impossibly difficult—period for them. I pay tribute to those teams that do such an important job. I think the right hon. Gentleman is right in his general point that we should do more of what we are good at. All budgets are limited, and although £33 billion is a large defence budget, it has its limits, so we should focus on areas where we can, with our partners, make the greatest difference.
Bob Stewart (Beckenham) (Con)
It is excellent that my right hon. Friend chairs our new National Security Council, but as it is a committee, may I ask if an official close to the National Security Council could operate with your authority and your confidence right across the gamut of government to ensure that we have a co-ordinated approach to dealing with international terrorism? Could that official report to you through the committee?
The Prime Minister
My hon. Friend is absolutely right. We do not want a National Security Council to be a sort of talking shop. It has behind it the whole of the national security apparatus of Whitehall, now all based in the Cabinet Office and very ably headed by my national security adviser, Sir Kim Darroch. He is able to drive the will of the committee and the decisions it takes right across Whitehall. That is the point of it. We are still learning how best to operate the system, but I think it has been a good innovation.
Keith Vaz (Leicester East) (Lab)
The Prime Minister is right to focus on north Africa, but he will know that al-Qaeda has been operating in countries such as the Yemen for years. As a result, Yemen has been destabilised, and the Prime Minister knows that, because he has put a lot of face time into helping the Government of Yemen. As he chairs the G8, will he consider inviting the leaders of those countries that are affected by al-Qaeda to attend the summit, as they did in Georgia in 2004, so that we can have a co-ordinated approach that involves them as well?
The Prime Minister
The right hon. Gentleman makes an interesting suggestion. I will take it away and think about it. He is absolutely right to say that Yemen has been one of the countries most troubled by terrorism. If we look at the scale of the threat to the UK directly, we find that what has been happening in Yemen and al-Qaeda in the Arabian peninsula have posed a great threat to the UK—greater than from al-Qaeda in the Islamic Maghreb. We should continue our focus on Yemen, which very much fits what I have said. We help Yemen militarily with counter-terrorism advice and support, we have an aid programme and a big diplomatic programme in Yemen, and we act with other allies to assist Yemen in its fight with the terrorists. I think that the Yemeni authorities have been making good progress on that front.
Martin Horwood (Cheltenham) (LD)
I strongly welcome the Prime Minister’s statement, I am particularly pleased that he drew attention to the planned European Union military training mission in Mali, which will build on the successful EU model in Somalia. Does he think that he will have an opportunity to emphasise the value of European security and defence policy at any other time soon?
The Prime Minister
I cannot imagine what the hon. Gentleman is thinking of, but he may not be disappointed.
Chris Bryant (Rhondda) (Lab)
For the last two decades, the southern countries in the European Union have been arguing that the whole EU needs to take security issues in the Maghreb far more seriously. Do not the events of the past week—as well as the arrival of many mercenaries from Libya, the arrival of narco-traffickers in the region, and the killing of 1,000 people by Boko Haram—show that we need a united and sustained EU approach to security to prevent us from facing the same problems again?
The Prime Minister
I agree that it is very important for the European Union to have a sensible programme of engagement with north African countries, which it has through its partnership. My criticisms of it in the past have been that it has not been exacting enough of those north African countries, and that there has been much aid without sensible strings and political development attached. I think that there is now a more realistic view in the European Union about the sort of progress, democracy and security response that we require throughout north Africa.
Mr James Arbuthnot (North East Hampshire) (Con)
Let me echo what my right hon. Friend said about the very effective work with constituency Members done during the crisis by the Under-Secretary of State for Foreign and Commonwealth Affairs, my hon. Friend the. Member for North East Bedfordshire (Alistair Burt). Will my right hon. Friend confirm that this appalling attack had clearly been planned a long time before the French took action in Mali, or before we supported it; that Mali was no more than a hastily fabricated excuse; and that it would therefore be entirely wrong for us to step down from the region, as the terrorists clearly want?
The Prime Minister
I think that my right hon. Friend is right on both counts. It is clear from the scale of the attack, and the number of terrorists involved, that it was some time in the planning. However, I would advance the wider argument that my right hon. Friend has advanced. Do we really believe that we—British people, British companies and British interests—would somehow be safer if we, and others, stood back from Mali and allowed it to become a country effectively governed by an al-Qaeda franchise? Of course we would not be safer. The whole premise behind such thinking is wrong. Britain is a country that is engaged in the world and open to the world, and we have people living all over the world. We are safer if we act with others to deal with problems as they occur, rather than turning our back on the world and pretending that it is possible to take that approach.
Mr Dennis Skinner (Bolsover) (Lab)
Does the Prime Minister agree that eliminating a religious and political ideology is not an easy thing to do, as is evidenced by both Iraq and Afghanistan? Can he guarantee that, if it is not possible to get many west African troops, his crusading zeal will not lead him to the use of British troops in the future?
The Prime Minister
I do not believe that the only answer, or the right answer on its own, is security and military action. As I said, and as I think the Leader of the Opposition said, we need to use all the elements at our disposal: a political response, a development response, and working with partners. However, that does not mean that a tough security approach is not part of what is required.
Patrick Mercer (Newark) (Con)
No one can have forgotten that on 21 July 2005, a lethal attack—which mercifully failed—was mounted against the London tube by a mixture of north Africans, including Algerians. The French, of course, have increased their domestic security. What is the Prime Minister’s assessment of how much more we are threatened at home as a result of these incidents, and what are we going to do about it?
The Prime Minister
Let me say first that my hon. Friend is absolutely right to raise the issue of extremists from other parts of the world who are based in the United Kingdom and who threaten our security. The Government are doing everything that they can to ensure that we are secure from those people. We also need to address the issue of being able effectively to deport people when they threaten our country.
On the specific question my hon. Friend asks about the threat to the UK of al-Qaeda in the Islamic Maghreb, the principal threat it poses is, as I said, to those countries in the region and to the people of those countries in that region, and to our interests and our people in that region. But there has been a history with the al-Qaeda franchises whereby they become magnets for terrorists from elsewhere, and pretty soon we find that their ambitions and the risks that they pose go wider.
Mike Gapes (Ilford South) (Lab/Co-op)
The Prime Minister said that he was going to push the issue of terrorism on the agenda for the G8. Will he also raise it with the EU 27 and the NATO 28, and try to get better co-ordination between the United States Africa Command —AFRICOM—in Stuttgart and the European security and defence policies?
The Prime Minister
I will certainly take the hon. Gentleman’s advice, and he makes a good point. The reason for specifically mentioning the G8 is that in that slightly smaller forum it is possible to have an in-depth conversation with American, French, Italian, Canadian and other partners about what more we can do to thicken our various defence, security, political and diplomatic relations with countries in, for instance, north Africa, making sure that we do not all fall over each other in trying to do the same thing in the same country. We should be recognising that in some cases there are very strong British relationships that we should build on, but in others the relationships may be French, Italian or American.
Dr Julian Lewis (New Forest East) (Con)
May I commend to the Prime Minister the concept of containment when he is considering these long-term problems? It served us well both for 70 years in the cold war and for 38 years in relation to Northern Ireland, and it would help to avoid an oscillation of policy from over-involvement on the ground, at one extreme, to too little involvement and an over-emphasis on withdrawal, at the other.
The Prime Minister
My hon. Friend makes an extremely intelligent point, and I will think about it carefully. Part of my response would be to say that in a country such as Somalia our aim should not be to contain the problems of terrorism in Somalia; it should be to work with the Somali Government to build up Somali security forces and to work with the Somalis to have a better political solution to political problems in that country, so that, over time, politically, militarily and diplomatically, through aid and everything else, we squeeze the terrorists out of the space. That is not containing; it is trying, over time, to overcome them completely. That is the ambition we should have, but it does not mean, to answer the hon. Member for Bolsover (Mr Skinner), that we have to have some sort of “crusading zeal”; it means that we have to have real resolve, but bring an intelligent mix of answers to these very deep problems.
Mr Frank Roy (Motherwell and Wishaw) (Lab)
Sadly, the last few days have shown us that we must engage more with ordinary people in north African countries. Does the Prime Minister agree that we must do all we can to increase resources for projects such as the Arab Partnership, which brings together an understanding between the United Kingdom and the Arab people?
The Prime Minister
The hon. Gentleman makes a very good point; that partnership does have some £110 million in it, it has been an important initiative and we should continue to work on it.
Mr John Baron (Basildon and Billericay) (Con)
Given our experience in Afghanistan, where, as intelligence services confirm, we achieved our original mission very early on of defeating al-Qaeda, or of driving it out of the country, but then got drawn into an expensive nation-building exercise, does the Prime Minister agree that if we are to defeat international terrorism, we need a more nuanced, flexible policy on terrorism, which takes into account local dynamics, including closer liaison with those Governments threatened on the ground?
The Prime Minister
I do not disagree with the way in which my hon. Friend has put his question. It was absolutely right to go into Afghanistan to get rid of a Government who were a host to al-Qaeda, but then of course—this is what we are doing right now in Afghanistan—we do need to have a strong political track to get a political settlement that can enable that country not only to have its own security forces, but to have stability in its political system. That is the sort of thinking we need to bring to all these problems in the future.
Ms Gisela Stuart (Birmingham, Edgbaston) (Lab)
The Prime Minister referred several times to al-Qaeda “franchises”, and he rightly did so. Is he satisfied that what he would describe as such are not part of the Syrian opposition, which we appear to be supporting at the moment?
The Prime Minister
The hon. Lady makes an important point. Many organisations in the Syrian opposition want what most people in this House would want, which is for the Syrian people to be free of the brutal dictatorship and from the murder and mayhem they face—60,000 are dead so far. Of course, elements of the Syrian opposition have extremist views and extremist ways and we must be extremely concerned about that. To characterise all or a majority of the Syrian opposition in that way would not be right.
Mr Ben Wallace (Wyre and Preston North) (Con)
May I pay tribute to my right hon. Friend for not only how he has dealt with the immediate situation but for how, since the beginning of this Government, he has tried to deal with the underlying causes of terrorism abroad through the proper focus of international development? One way that Britain can protect her interests abroad by identifying threat is through a good strong network of defence attachés across our embassies. In the past decade, that network has weakened slightly. Will my right hon. Friend reconsider it and see what he can do?
The Prime Minister
I am very happy to reconsider that issue. I have been struck on my travels by the fact that the relationship between the defence attaché and foreign Governments is often one of the strongest we have. We will publish a paper about our defence engagement strategy shortly and it will carefully consider that issue.
Paul Flynn (Newport West) (Lab)
Even while contemplating this frightening future of perpetual war, will the Prime Minister contrast the successful results of our involvement in Kosovo and Sierra Leone with the results in Iraq and Afghanistan, where 620 British soldiers have died? Is not the prime lesson of Iraq and Afghanistan that we cannot win over hearts and minds with drones and bullets?
The Prime Minister
I think the hon. Gentleman draws a slightly unfair comparison about some of the engagements that, after all, a Labour Government got us into. In Kosovo and Sierra Leone, we were not dealing with the massive ideological problem of a twisted Islamic ideology that sees the murder of innocent people as not just possible but necessary. That, I think, is one of the differences with what we have been dealing with in Afghanistan and that point bears making.
Mr Julian Brazier (Canterbury) (Con)
I welcome my right hon. Friend’s comprehensive approach through the National Security Council to this threat and its potential domestic extension. Does he agree that that further underlines the importance of ensuring that we can deport those people who are a threat to our country, or imprison them if they cannot be deported, and that our intelligence services can fight court cases without giving away vital intelligence? That is why we need the Justice and Security Bill.
The Prime Minister
My hon. Friend makes some very important points. There is no doubt that we have had a problem in recent years with some foreign nationals in this country who have extremist views and extremist aims. It has been very difficult to deport them, even when we have taken huge steps to get safeguards and assurances from the countries to which they will be sent—this applies to the previous Government, too. I am personally convinced that we must crack the problem and need to consider all possible avenues to do that. My hon. Friend is right, too, about the Justice and Security Bill, as we owe that to our security services. The Bill does not apply to criminal trials; it is for use when our security services are, in effect, being sued through the civil courts. It will allow more cases to come to court, rather than fewer.
Mr Ronnie Campbell (Blyth Valley) (Lab)
The Prime Minister is right that there are small terrorist groups, local terrorist groups and big ones, such as al-Qaeda. Who finances these big ones? They feed the other ones, so if we can get to the finance and cut the head off, the body will die.
The Prime Minister
The hon. Gentleman makes an extremely good point. One of the problems in north Africa is that the al-Qaeda franchises have been fed by money from hostage-taking and sometimes very large ransom payments have been made. One thing we will consider at the G8 is whether we can do more to cut off that sort of finance. That is vital in Somalia and in north Africa, too.
Simon Hughes (Bermondsey and Old Southwark) (LD)
Given that Algeria, like many countries in Africa, has many neighbours—six, in this case—and long and difficult to defend borders, which mean that people, not just from Africa, can cross without being spotted or detected, would not one option for NATO and the EU be not to offer troops on the ground but to build up our capacity to offer technical and surveillance support, so that we can monitor the activities of those who cross and who wish nobody any good?
The Prime Minister
My right hon. Friend makes an important point. Clearly, border security is extremely difficult in these countries, but there is more that we can do to help them with technical abilities and also with training. That is particularly the case with the Libyans.
Dan Jarvis (Barnsley Central) (Lab)
In the light of recent events in north Africa, does the Prime Minister think the strategic defence and security review remains relevant? If not, what is the mechanism whereby he plans to re-assess the Government’s current policy?
The Prime Minister
We plan for strategic defence and security reviews every five years, so this is a rolling programme where we permanently look at whether, given the threats that we face around the world, we have the right defence and security assets to deal with them. The decisions that we took in the last SDSR—in which we were bringing the defence budget back into balance, reducing the number of main battle tanks and looking at smaller, more flexible armed forces, but were putting money into ISTAR, drones and surveillance, into special forces and into cyber-security, making sure that we protected the key intelligence and security functions—were the right decisions. If anything, if we had the review over again, we would go more in that direction. All the evidence shows that these are the emerging problems that we are going to be dealing with more in the future.
Mark Pritchard (The Wrekin) (Con)
May I commend the Prime Minister on his leadership during this crisis and on keeping the House updated? My right hon. Friend mentioned an intelligent mix of assets. I wonder whether the 12,000 Algerians in the United Kingdom and 4,000 Mali nationals might be part of that intelligent approach, by deploying them in a positive way back to their own country in a developmental role and in a role that shows leadership within their country.
The Prime Minister
My hon. Friend makes an important point, which is that in drawing up our national security strategy, we should be listening to the settled communities here in the UK that have a huge amount of knowledge and expertise about the countries that may be causing us concern. That is very much the case with the Somali community, and I am sure the points that he makes about the Algerian community are right, too.
Rosie Cooper (West Lancashire) (Lab)
Mindful of the distress caused, will the Prime Minister ensure that each family is told before names are released by the Government, and undertake, where the families wish it, to give them the fullest possible information about when, where and how their loved ones died?
The Prime Minister
The hon. Lady makes an extremely important point. We do a lot of thinking and a lot of work to try to get this impossibly difficult decision right. That is what the police liaison teams do, and the Government should always be asking, “Can this be handled even more sensitively in the future?”
Sir Edward Garnier (Harborough) (Con)
I was reassured by my right hon. Friend in his answers to the former Secretary of State, the right hon. Member for Coventry North East (Mr Ainsworth), about our diplomatic and military resources, but will my right hon. Friend draw any lessons from the request by the French to borrow two transport aircraft? They are the third biggest military force in Europe. Does that mean that they just do not have the aeroplanes, or does it mean that their aeroplanes were doing something else and they needed to borrow some from us?
The Prime Minister
My hon. and learned Friend makes an important point. My understanding is that the French do not have C-17s. They have a different lay-down of forces. I would argue that one of the things that we did in the SDSR, which the previous Government were working on too, was making sure that we had good mobility and strategic lift for our armed forces. They are vital. The C-17s are based in my constituency, at RAF Brize Norton, so perhaps I am biased, but as far as I can see they are workhorses. They are vitally important. We have eight of them, and lending two to the French for this vital task is right. In future, we have the A400M coming in and that is a highly capable plane that will help with the transport and heavy-lift capabilities as well.
Joan Walley (Stoke-on-Trent North) (Lab)
Will the Prime Minister assure us that when he says the UK Government will be working across the region, this will include increased diplomatic efforts to find a peaceful solution to the conflict in Western Sahara?
The Prime Minister
Yes. The hon. Lady makes an important point. As I tried to say in my statement, there are many long-standing, deep, difficult political conflicts that have to be resolved. Although there is never an excuse for the sort of terrorism that we saw over the weekend, terrorist groups and others exploit these grievances. An intelligent approach to trying to combat al-Qaeda right across the piece is to break up the different parts of this insurgency and deal with the individual problems, as well as undertaking the tough security response that I spoke about.
Geoffrey Clifton-Brown (The Cotswolds) (Con)
Does my right hon. Friend agree that we should use the extensive contact that we have had with the Algerians as a result of the tragedy to encourage them to use their considerable resources to combat the jihadists, whoever they are, in north and west Africa?
The Prime Minister
My hon. Friend makes an important point. I have spoken to the Algerian Prime Minister six times, I think, in the last three days, and the Under-Secretary of State, my hon. Friend the Member for North East Bedfordshire, has had a number of conversations, as has the Foreign Secretary.
The Algerians have huge, long experience of fighting against extremist Islamism and their country had a very painful and difficult civil war. It is a country where we will want to thicken and deepen our diplomatic, political and even military and counter-terrorism contacts.
Chi Onwurah (Newcastle upon Tyne Central) (Lab)
Many of those so tragically caught up in the terrorist attacks in Algeria are engineers, who, as I know from my own engineering career, are often called on to work abroad without appropriate security information, particularly if they work for smaller companies or are contractors. The Prime Minister said that he would be in contact with larger oil companies. May I urge him and the Foreign Secretary to work with the professional bodies concerned, such as my own body, the Institution of Engineering and Technology, to ensure that individuals as well as companies can make informed choices for themselves?
The Prime Minister
The hon. Lady makes an extremely good point, and Foreign Office Ministers were listening carefully. Some 250 to 300 British nationals are working in oil and gas installations in Algeria. I encourage the companies and, in the case of subcontractors, perhaps the individuals as well, to make sure that they contact the consular authorities, so that we know who is in the country and what their roles are. It would help enormously if they did.
Penny Mordaunt (Portsmouth North) (Con)
Defence planning has tended to focus on building the most flexible capabilities to respond to future threats. I welcome the shift under this Government, who are also investing in preventing those threats from occurring in the first place. Will the Prime Minister show the same leadership as he did on Libya in getting other countries in Europe and further afield to follow suit?
The Prime Minister
I am grateful for what my hon. Friend says. Right across Europe, countries are having strategic defence reviews or their equivalents, and we should encourage them to do that. An enormous amount of resource is locked up in European defence budgets that is, frankly, wasted on a lot of capabilities that are not so necessary. While it is always difficult to change the lay-down of forces and to scrap old equipment and old ways of doing things, if we want to face the threats of the future, it is essential that all countries do this.
Kevin Brennan (Cardiff West) (Lab)
In his statement, the Prime Minister told us that a small number of the terrorists involved in the incident are in Algerian custody. Can he elaborate on that at all and tell us anything further about the potential for intelligence from those prisoners?
The Prime Minister
I am afraid that it is very difficult to do that. I do not have the final numbers on the number of hostage takers who were captured by the Algerian authorities; obviously, that will be a responsibility for them. I also think that figures and facts will emerge about the different make-up of the hostage takers, who included a number of foreign nationals. We do not yet have information that any are British nationals, but I expect that figures will be released at some stage showing that a number of nationals from other countries were involved in the atrocity.
Mark Menzies (Fylde) (Con)
I join others in congratulating the Prime Minister on the level-headed way in which he has handled this. Algeria is a proud country that wants to strengthen its relations with the United Kingdom. Can the Prime Minister assure me that everything will be done to strengthen and deepen that relationship at a time when Algeria needs us most?
The Prime Minister
I can certainly give my hon. Friend that assurance. Relations are good—they were already good—but this tragedy does give us the opportunity to look again at what more we can do in co-operation with the Algerians.
Jonathan Ashworth (Leicester South) (Lab)
The Prime Minister rightly said that terrorism will be at the top of the agenda at the G8. Given that we are dealing with al-Qaeda affiliates, or franchises, as he puts it, will he give us more detail on the type of co-ordinated action on which he hopes to get agreement at the G8? Will he also say a word or two about his assessment of the security situation in Nigeria? Can he reassure us that increased and understandable emphasis on west Africa will not mean less emphasis on Somalia?
The Prime Minister
There were a lot of questions there. The first thing that the G8 can do is make sure that we share a common analysis of the problem. I believe that we do and that this mixture of tough but intelligent response is what is required. There are some specific things we can start to discuss about how countries in the G8—France, Italy, Canada, America, the British—can start thinking about how we partner up more with countries, but make sure that we do not fall over each other in doing so.
What the hon. Gentleman says about Somalia is key. Last year’s London conference was successful in helping to bring about the political transition that was necessary in Somalia; it also helped in getting the United Nations resolution that was needed and in the building up of Somali security forces. I am committed to making sure that we continue that patient, painstaking work, which is helping that country to put itself back together again. I am determined that we should not slip back.
Mr Speaker
Order. I did indeed listen intently to the three questions from the hon. Member for Leicester South (Jonathan Ashworth), but if we are to get to the end in reasonable time, it would be helpful if Members now confine themselves to one question each.
Mr Philip Hollobone (Kettering) (Con)
It must be right that, in addition to the appropriate security response, there should be a refocusing of international development assistance on failed or failing states in north Africa. There are a lot of very rich Islamic nations in the world. Might we see rather more money coming from them to provide that international development assistance, rather than its coming only from the west?
The Prime Minister
My hon. Friend makes an important point. We do have one of the largest budgets in the world and I think we use it well, but we are focusing much more on conflict and broken states; a lot more of the money is going in that direction. The G8 traditionally discusses development assistance, but the G20 is starting to do that as well, and of course the G20 includes some of the most populous and richest Islamic states on Earth. We should certainly encourage their work.
Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)
The Prime Minister referred to the role that could be played by the ECOWAS states—indeed, some are already taking action—but he will know that ECOWAS was not originally set up as a military or political alignment, that its resources are limited, and that some of its members are stretched elsewhere in terms of military activity. Is there a danger in expecting too much from ECOWAS, at least in the short term? What role can be played by other international bodies such as the African Union and, indeed, the United Nations, which has not been mentioned today?
The Prime Minister
The hon. Gentleman makes an important point. The key thing is that it is much better if the military and security forces are provided by local states, rather than by others. The French intervened because it was an emergency, but their aim, as I understand it, is to make sure that we train up and encourage west African states to put their military into Mali as a way of providing security. It is in our interest to build the capacity of these countries and, frankly, it is in their interest to make sure that that capacity is there, because if we do not sort out problems such as Mali, the knock-on effect on other west African states will be felt very rapidly. However, the hon. Gentleman is right that we should not overestimate what is available.
Craig Whittaker (Calder Valley) (Con)
I thank my right hon. Friend for his statement and for the way he has handled the crisis over the past week. What level of counselling and other support are BP and the British Government offering to the British nationals who were held hostage and their families?
The Prime Minister
Obviously BP has a huge responsibility because many of these people are its employees, and I know that it takes that very seriously. On the Government side, the main point of access is the police liaison teams, who do a fantastic job in very difficult circumstances. As others have said, one of the key concerns and considerations is how to keep them up to date with the news as it is coming in while not getting ahead of what they are being told. That is never easy to get right, and I will make sure that we always try to learn the lessons if we have not done so.
Thomas Docherty (Dunfermline and West Fife) (Lab)
I am sure that the whole House welcomes the Prime Minister’s new focus on cyber-security and other defence interests, but will he confirm whether these investments will be met from existing budgets or he is proposing new money for the Ministry of Defence?
The Prime Minister
I am afraid that there is not new money available to the MOD. However, the decision we made in the strategic defence and security review was for hundreds of millions of pounds to be spent on cyber-security, and that was new money—investment that was not taking place previously. Also, the priority given to things such as special forces and some key intelligence assets was, in effect, new investment to make sure that our forces and our national security are correctly aligned with the threats that we face.
Sir Bob Russell (Colchester) (LD)
The Prime Minister gave a five-point summary of how to defeat terrorists, the second of which was military action. Will he reflect on whether it is prudent and in Britain’s interests to cut the size of our armed forces?
The Prime Minister
All these decisions are difficult, but the key for the future is not necessarily to look at the overall number of regular soldiers, sailors or airmen we have, but to look at the capabilities we have. We should reflect on the decisions taken in the SDSR that made sure that our forces are mobile, properly equipped and accompanied by all the assets they need. If, for example, we decided to maintain the number of soldiers but not to invest in C-17 aircraft, we would not be able to move those soldiers around the world. If we invested simply in the number of soldiers but did not have drones and other intelligence, surveillance, target acquisition and reconnaissance—ISTAR—equipment, we would not be able to fight modern warfare. Yes, those are difficult decisions, but I have to say that I find it frustrating when people just want to keep what we have and then add to it. To govern is to make difficult choices about priorities, but I am convinced that we made the right choices in the SDSR.
Mr William Bain (Glasgow North East) (Lab)
People in Scotland have been horrified at the loss of life over the weekend and at the growing threat we face from terrorist groups operating across national boundaries in north Africa. Does the Prime Minister agree with the plan of the US and French Governments: that Algeria should secure its borders with Mali to staunch the flow of terrorist groups and the proceeds from drug trafficking, which underpins much of their activity?
The Prime Minister
I agree with the hon. Gentleman that there is obviously huge concern in Scotland. Over the centuries, Scots have been fantastic at working and earning money overseas and travelling the world, and we need to make sure that we protect their interests. Of course I want to see Algeria work to defend its borders, but, to be frank, if we do not deal with crises such as that in Mali and the existence of ungoverned space in other neighbouring countries, it is very difficult for any country, no matter how good its border and security forces, to maintain secure borders.
James Duddridge (Rochford and Southend East) (Con)
Given that a number of the countries in north and west Africa are French speaking, is it not fortuitous that the Foreign Secretary took the decision last year to reopen our embassy in Abidjan, Côte d’Ivoire? Not only was Abidjan known as the Paris of Africa, a number of other Francophone countries look toward Abidjan for guidance.
The Prime Minister
My right hon. Friend the Foreign Secretary is endlessly far-sighted, because not only did he reopen that embassy, but he reopened the language school for the Foreign Office. He is always telling me that a key part of this Government’s story about fighting and succeeding in the global race is the fact that we are investing in our diplomatic network and our network of embassies around the world. Of course, as I said, we will also have to look carefully at the lay-down in west Africa.
David Rutley (Macclesfield) (Con)
I join the Prime Minister in thanking the Foreign Office and the police for their heroic and exemplary efforts to support British hostages and their families. Will my right hon. Friend tell the House what steps are being taken, militarily and from a security perspective, to encourage greater co-operation between west African and north African states in the fight against terrorists?
The Prime Minister
My hon. Friend makes an important point. What we should be doing is working out with each of the countries the best and most appropriate partnership. In the case of Nigeria, as I have said many times, we have a very strong relationship and are very involved in helping on counter-terrorism and policing. With the French and others, we should be looking at all of these countries, whether it is Niger, Mali or Algeria, and working out what we can best do to help.
Christopher Pincher (Tamworth) (Con)
Beyond Algeria, my right hon. Friend will know that more than 4,000 BP workers and their families live in the south Caucasus and, in particular, Azerbaijan. Although Azerbaijan is a stable and secular state, will my right hon. Friend work with the Government in Baku to assess the risk faced by Britons there and the facilities in which they work, to ensure that they are protected to the utmost?
The Prime Minister
My hon. Friend is absolutely right: the Government should do that—but of course it is the primary responsibility of companies such as BP, which have huge resources and, indeed, almost their own diplomatic networks, to make sure that their people are safe, to work with the Governments of the countries in which they operate and to look at their security based on the present level of threat. I commend BP for the work that it does on that, but it needs to redouble all its efforts.
Rehman Chishti (Gillingham and Rainham) (Con)
I welcome the Prime Minister’s statement. He will know that Saudi Arabia has set up a world-renowned deradicalisation centre, which was visited by the previous Prime Minister and is recognised by the United Nations. What steps are being taken to get countries such as Saudi Arabia to share their good practice with other countries on how they can tackle radicalisation and extremism?
The Prime Minister
My hon. Friend makes an important point. I think that Saudi Arabia realised what a problem it had with Islamic extremism. It is now a leader in deradicalisation programmes, and I strongly encourage it to share its thinking and approach with other countries. We need to build an alliance of Islamic countries to make sure that we all back deradicalisation and condemn utterly the perverse interpretation of Islam that says that somehow it is right to carry out terrorist attacks and murder innocent people.
Karen Lumley (Redditch) (Con)
A few years ago, it could have been me waiting for news from Algeria, as my husband used to work in the oil industry out there and in many other African countries. Following many conversations that we have had over the weekend, will the Prime Minister assure me that he and his colleagues will talk to major oil companies to ensure that they tighten up their security procedures?
The Prime Minister
I can certainly give my hon. Friend that assurance. I have had several conversations with Bob Dudley, the head of BP, in recent days and, as I just said, it is very important that companies recognise their responsibilities, look at all the modern levels of threat and work out what they need to do for themselves and with the countries in which they are located.
Dr Matthew Offord (Hendon) (Con)
On 13 March last year, I raised my concerns on the Floor of the House about Libyan weaponry falling into the hands of terrorists who were intent on kidnapping. In the light of my question then, the recent incident is even more regrettable, so may I urge the Prime Minister to put pressure on the international community to end the illicit circulation of small arms and light weapons and ammunition for them in the region?
The Prime Minister
My hon. Friend raises a very important point. Frankly, Libya had a problem with excessive levels of firearms in civilian possession long before the fall of Gaddafi, and the problem has worsened in recent times. That is why we are working closely with the Libyan Government to help them to build security forces that can bring greater security to that country. I do not accept the view of those who say that we would somehow be better off if authoritarian dictators such as Gaddafi were still in power, not only because of what I said about his personal encouragement of terrorism around the world, but because I think that such regimes encouraged many young people to take up the path of jihadism, extremism and violence, perhaps not in Libya but in other parts of the world. We are still dealing with that today.
Neil Carmichael (Stroud) (Con)
I welcome the Prime Minister’s statement and his emphasis on the need for Britain to remain fully involved internationally. In an earlier answer, he noted the importance of strategic defence reviews and the need to encourage member states of the European Union to undertake them. Can he see a way of encouraging member states to reflect in those reviews their obvious and clear national interest in having political security and stability in north and west Africa?
The Prime Minister
My hon. Friend makes an important point. We ourselves need to look at what we can do to enhance our security, and we need to look at all the issues that have been raised this afternoon, but the principal response will need to be from the north and west African countries that are on the front line of fighting al-Qaeda franchises.
Andrew Bridgen (North West Leicestershire) (Con)
Does my right hon. Friend agree that these events show that it was right for the strategic defence review to focus defence spending on the capabilities needed to counter such new threats, including extra funding for special forces? Is he as surprised and disappointed as I am that the BBC has consistently described the perpetrators of these heinous crimes as militants, rather than as the terrorists they are?
The Prime Minister
My hon. Friend makes a good point. They are terrorists and they should be described as such. This was a terrorist attack to take hostages and kill innocent people, and it should be condemned utterly.
Gavin Barwell (Croydon Central) (Con)
The Prime Minister will be aware of research showing a worrying level of Islamophobia in this country. With that in mind, as an MP representing a constituency with a significant Muslim community, may I warmly welcome his clear statement that the generational conflict in which we are engaged is not between the west and Islam, but between people of all faiths who want to live in peace and those who would resort to terror?
The Prime Minister
What my hon. Friend says is absolutely right and should form part of every speech and statement made about this issue. This is not a clash of civilisations; it is all people against a very small minority who are poisoned by that ideology. It is worth making the point that the biggest number of victims of al-Qaeda violence are Muslim men and women. That remains the case, and we cannot make that point too often.
Mr Robert Buckland (South Swindon) (Con)
I warmly welcome my right hon. Friend’s refocusing of attention on the causes of instability in that troubled region; some are recent, but some are of much longer standing. Will he do all that he can to resolve the plight of thousands of Sahrawi refugees who continue to languish in the camps of Tindouf in Algeria, which may be a source of instability in the region?
The Prime Minister
My hon. Friend makes an important point that echoes one made by an Opposition Member. A number of long-standing political conflicts, grievances and other issues in the region have to be addressed. They are never an excuse for terrorism, but they can provide some of the backdrop. The way I would put it is that we have to drain the swamp of all those issues at the same time as confronting, in a very tough manner, the terrorism and the terrorists that we face.
Welfare Benefits Up-rating Bill
(11 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
20:58 - The Committee having divided: - Ayes: 238 / Noes: 312 - Question accordingly negatived.
21:16 - The Committee divided: - Ayes: 307 / Noes: 243 - Question accordingly agreed to.
22:00 - The House divided: - Ayes: 305 / Noes: 246 - Question accordingly agreed to.
The First Deputy Chairman of Ways and Means (Mr Nigel Evans)
Before I call the first group of amendments I must tell the Committee that the amendments to the schedule have been marshalled in error before the new clauses. The Committee will deal with the new clauses before it considers the schedule. I invite Members who wish to speak to clause 1 as a whole to do so in this debate, as I do not anticipate that there will be a separate debate on clause 1 stand part.
Clause 1
Up-rating of certain social security benefits for tax years 2014-15 and 2015-16
Stephen Timms (East Ham) (Lab)
I beg to move amendment 12, page 1, line 4, leave out ‘by 1%’.
The First Deputy Chairman
With this it will be convenient to discuss the following:
Amendment 7, page 1, line 4, leave out ‘1%’ and insert
‘the Retail Prices Index measure of inflation.’.
Amendment 10, page 1, line 4, leave out ‘1%’ and insert
‘the percentage by which the general level of earnings is greater at the end of the period under review in that tax year under section 150(1) of the Social Security Administration Act 1992 than it was at the beginning of that period’.
Amendment 20, page 1, line 22, leave out subsection (5).
Clause stand part.
Stephen Timms
In this Bill the Government are punishing people who are already hard up for the failure of their economic policy. We were promised that the policy would lead to steady growth and falling unemployment, but it has failed. We have had a double-dip recession, and some predict that this week we will learn we are in a triple dip. Unemployment is now officially forecast to go up next year, so spending on unemployment benefits will go up, and borrowing will go up too.
The Chancellor’s policy has failed and the Government have decided to respond by forcing down the incomes of those whose incomes are already the lowest of all. Roughly speaking, the saving over the two years to which the Bill refers will be about the same as the increase in welfare spending resulting from the rise in unemployment forecast just between the Budget last year and the autumn statement.
The Government want to cut the incomes of the least well-off in real terms, not just for the coming year but, through this Bill, for the year after and the year after that. At the same time, in April they will give a tax cut to everybody earning more than £150,000 per year. That combination of policies will force up poverty in every part of the country, and it is a disgrace that Ministers are forcing this Committee stage into a single day.
This Bill is a bitter blow to large numbers of families—in work and out of work—who are on low incomes at the moment and struggling to make ends meet. Three new food banks open every week; last year a quarter of a million people received help from a food bank because they could not afford enough to eat, and this Bill will make matters significantly worse. It means that for three years, low-income families will get below-inflation increases. The number of people visiting a food bank will be higher this year and, because of this Bill, it will be higher still next year and higher again the year after that.
As Citizens Advice points out:
“The cumulative impact of capping the uprating of most benefits to no more than 1%”,
for the next three years, will lead to an exponential increase in net losses each year. Child Poverty Action Group stated that
“the poorer you are, the greater your loss.”
Mr John Redwood (Wokingham) (Con)
Do the Opposition want to make it more worth while to be in work than out of work, and if so, how would they do it?
Stephen Timms
We certainly want it to be more worth while for people to be in work, but forcing down the incomes of those who are out of work is not the way to do it.
Clause 1 affects mainly out-of-work benefits, but people struggling to make ends meet in work are hit as well. Schedule 1(b) means that the personal allowance used in the calculation of housing benefit for people in work will go up by only 1%, irrespective of what happens to rent levels.
Charlie Elphicke (Dover) (Con)
Is it therefore the right hon. Gentleman’s and the Opposition’s policy that uprating should be not by 1%, but by inflation? Is that a commitment?
Stephen Timms
Uprating should indeed be in line with inflation, as it always was in the past.
James Duddridge (Rochford and Southend East) (Con)
Will the right hon. Gentleman give way?
Stephen Timms
I will make a little more progress, and then gladly give way again. As I was saying, schedule 1(b) means that housing benefit for people in work will be cut in real terms as well. We will return to that when we speak to amendment 17.
The change in the personal tax allowance, which we have heard a good deal about, will not do very much to help people who are in work on low incomes. Citizens Advice points out that
“any rise in net earnings leads to a reduction in housing benefit and council tax benefit.”
In addition, of course, the change will do nothing at all for people who are out of work.
Neil Carmichael (Stroud) (Con)
I listened carefully to the right hon. Gentleman’s observation, but note that about 3,800 people in my constituency who are in work have been lifted out of tax altogether. Does he not believe that that is a step in the right direction?
Stephen Timms
Those people will lose council tax benefit, and if they are paying rent, they will lose housing benefit. Citizens Advice is right that the effect of the change in the threshold on people in low-income work is very low indeed.
Stephen Timms
My hon. Friend says that the change is 13p week, which is a derisory amount.
Stephen Timms
No—I will make progress before I give way again.
The Bill was designed by the Chancellor to promote his party’s narrow interest. Like a number of the Chancellor’s efforts of that kind, it has not worked out as he hoped, but let us be clear that the Government have restricted uprating to 1% for the coming year without a Bill and did not need a Bill to restrict uprating for future years. The Chancellor thought he could boost his party’s standing if he introduced a Bill, so we have one. Coalition Ministers are here to help advance the Chancellor’s cause.
In particular, it is ridiculous to announce now—before we know anything about the future course of inflation—by how much benefits will be uprated in more than two years’ time, which is well after the general election. The Opposition therefore reject the proposal to restrict the uprating of social security benefits and tax credits to 1%. As I have said, in our view, uprating should be in line with inflation and assessed, as it always has been, at the end of the preceding year.
The Secretary of State claimed in his speech on Second Reading that, as part of employment and support allowance, the support group is protected, but it is not. The Secretary of State said that people who are not in the support group will find that they are affected. That is true, but people in the support group will be hit as well. Citizens Advice has worked out that a lone parent with three children who is in the support group will lose £600 in 2015-16 because of the exponential way in which the Bill will grind down the incomes of people who are already hard-up. We will come back to that.
Sandra Osborne (Ayr, Carrick and Cumnock) (Lab)
Is my right hon. Friend aware of the coalition of 60 Scottish charities that says that the Bill contradicts the principle that everyone should have a reasonable income in order to live a dignified life, and that many people in Scotland will be adversely affected by the Bill?
Stephen Timms
My hon. Friend is absolutely right, as are the organisations to which she refers. Indeed, as I shall say, there has been a widespread call along those lines pointing out the damage that the Bill will do. Disability Rights UK states:
“The Government has suggested that all disabled people are protected from the lower 1% increase in benefits. This is not the case.”
In fact, as the impact assessment tells us, disabled households are more likely than others to be hit by the changes in the Bill.
James Duddridge
The right hon. Gentleman has twice from the Dispatch Box repeated the commitment to uprate benefits by inflation. Is that the retail prices index or the consumer prices index, or has that yet to be decided?
Stephen Timms
That is a matter to be announced at the appropriate time. At the end of this year, we will set out how benefits should be uprated for the following year, as it always has been done, and at the end of next year for the year after that.
Stephen Timms
I will make a little more progress and then I will gladly give way again.
In moving amendment 12, I wish to focus on the effect of clause 1, as it stands, on child poverty. Previously—reflecting the commitment in the coalition agreement to eradicate child poverty by 2020—the Government have published the effect of Budgets, spending reviews and autumn statements on child poverty. We know from the Institute for Fiscal Studies that, taking account of everything that the Government announced before the autumn statement, child poverty is set to go up by 400,000 by 2015 and 800,000 by 2020. In this autumn statement, they did not mention child poverty at all. There was no mention in the impact statement, where it should have been. I tabled a question and the Minister told me that he would reply as soon as possible: I am still waiting.
Despite the Government’s best efforts, the answer did slip out in an answer from a different Minister. In that, we read that the three years of uprating will increase child poverty by an additional 200,000 on top of the increase that is already due. That means that we are on track for 1 million more children below the poverty line by 2020. That is a devastating blow and will undo all the progress of the last 15 years.
Caroline Lucas (Brighton, Pavilion) (Green)
The powerful figures that the right hon. Gentleman cites show that this is a cruel and callous Bill. Given that that is the case, does he not think that Labour supporters might be disappointed that he will not commit now to re-link the upratings with RPI? Nor has Labour said that if it were to form a Government next time, they would reverse the Bill. Is not there a danger that people will think that it is all rhetoric and no action from the Opposition?
Stephen Timms
The time to announce how benefits would be uprated for next year is later this year in the normal way. The time for the following year is the end of next year. We reject the Bill, which is the Chancellor’s partisan and unprecedented device to set out the trajectory for two years’ time, before we know anything about the future course of inflation.
Ministers still say that they are committed to eradicating child poverty. It says so in the coalition agreement. That commitment is clearly now fictitious. The Bill is simply incompatible with that commitment. Ministers should stop pretending. They have given up on reducing child poverty. They have not just given up on publishing the numbers as they used to do: they have given up on delivering the goal as well. Now they are implementing policies that will force child poverty up.
George Freeman
Given that the last Government spent £150 billion on tax credits and achieved a 6% reduction in child poverty, does the right hon. Gentleman think that lifting 350,000 out of child poverty for a £2 billion investment in universal credit represents good value for money?
Stephen Timms
The policies of the previous Government reduced the number of children below the poverty line by 1.1 million. The policies of this Government are set to increase it by 1 million by 2020. That is a shameful record.
What we will have from April is a toxic combination of policies that will cut the highest rate of income tax and real-terms cuts in benefits and tax credits. Some 8,000 people who earn over £1 million a year will get a tax cut in April averaging more than £2,000 a week. Someone receiving the adult rate of jobseeker’s allowance will receive 71p a week. People are getting angry at what the Government are doing.
Martin Horwood (Cheltenham) (LD)
The right hon. Gentleman may or may not think that the Bill is a partisan device by the Chancellor—and he may or may not be right—but in refusing to support either the amendment tabled by the hon. Member for Brighton, Pavilion (Caroline Lucas) or the various amendments tabled by Liberal Democrat Members, is not the Labour party being absolutely pathetic? It has the opportunity to do something about this and it is not taking it.
Stephen Timms
We will announce uprating policy in the normal way on the normal timetable, not on a date chosen by the Chancellor for his own partisan purposes.
I think the Minister knows that I have been looking back at his speech in the Child Poverty Bill Second Reading debate in July 2009—fewer than four years ago. It was an autobiographical speech, as he said at the time. He explained that his first job was with the Institute for Fiscal Studies, where he had the task in the 1980s of compiling its poverty statistics. He said that
“year after year the level of child poverty would remorselessly grow. A majority of people would do relatively well, enjoying tax cuts, and the people at the top would do exceptionally well, but year after year more and more children would find themselves in poverty.”
He said that he decided to become a politician because he
“was appalled at what was happening in our country to the most vulnerable people”—[Official Report, 20 July 2009; Vol. 496, c. 625.]
Now here he is, three and a half years later, arguing in this Committee for exactly the same combination of policies he condemned at the time: tax cuts for the highest paid and benefit cuts for the most vulnerable. Exactly as in the 1980s, as he knows better than anybody, the result is certain: child poverty rocketing. With the extra rise as a result of the Bill, if current policies are maintained it will go up by 1 million by 2020—right back up to the level he was logging at the IFS in the 1980s.
Margot James (Stourbridge) (Con)
Does the right hon. Gentleman accept that the most recent data demonstrate a reduction in child poverty last year of 300,000? If he disputes that, does he have any comment on the way the previous Government measured child poverty, and whether that measure should be changed?
Stephen Timms
Absolutely right—the policies of the previous Government have continued to have beneficial impacts, but as soon as this Government change the policy the numbers will rocket back up again. According to the IFS, child poverty will rise by 400,000 by 2015 and by 800,000 by 2020. On top of that, there will be an additional rise of 200,000 as a result of the Bill. That is what the Government’s policies are doing.
Kate Green (Stretford and Urmston) (Lab)
Of course, that is the figure the Government have been prepared to acknowledge in relation to relative income poverty, but they have said nothing about the impact on absolute poverty, material deprivation or persistent poverty—all measures they are signed up to in the Child Poverty Act 2010. Does my right hon. Friend agree with me that they should publish the impact on those measures of poverty as well?
Stephen Timms
Absolutely. That is what they have done in previous Budgets and autumn statements; in this one there was silence. I agree with my hon. Friend that the Government should absolutely return to the practice they adopted after the election.
Like the Minister in the 1980s, anybody who cares about poverty and who is looking at what is set to happen to the most vulnerable in the next few years, will be appalled. Child poverty will be growing remorselessly once again—back to the policies of the 1980s and back to their consequences, too. There is enormous public concern about the effects of clause 1 and the Bill as a whole. My hon. Friend the Member for Ayr, Carrick and Cumnock (Sandra Osborne) referred to the coalition of organisations in Scotland who have written about their concern. The Child Poverty Action Group has said:
“The Bill is a cause of great concern.”
Barnardo’s has stated:
“This policy will punish children the most by trapping them in poverty and impacting on their lives, leading to poor health, poor qualifications and unemployment.”
Citizens Advice said:
“It is imperative, particularly whilst increases to earnings from work are restricted, that support for low earners received through the welfare system is not disconnected from inflationary measures to the cost of living.”
The Children’s Society said:
“Groups which are meant to be protected (such as households with somebody with a disability) are more likely to be affected than households without protection.”
In an open letter this morning, the chief executives of Catholic charities in Liverpool, Manchester and London warned of the threat the Bill
“poses to the fundamental well-being of disabled, unemployed and low paid people, as well as their families who are already buckling under the weight of recent changes to the welfare system.”
Sarah Newton (Truro and Falmouth) (Con)
I ask the right hon. Gentleman to look at the facts, rather than scaremongering. The fact is that the child element of tax credit has gone up by 16% under this Government—£470. He really should look at the facts.
Stephen Timms
I simply ask the hon. Lady to look at all the other things the Government have done and at the Institute for Fiscal Studies assessment of the consequences for child poverty. As I have said, its assessment is that the number of children living below the poverty line will increase by 400,000 by 2015 and by 800,000 by 2020 and that there will be an additional rise of 200,000 as a direct result of the Bill.
The general secretary of USDAW, the shop workers’ union, has spoken of
“a kick in the teeth for working people that will fill many households with despair.”
Disability Rights UK has said:
“We are fearful that the Welfare Benefits UP-rating Bill will… impoverish thousands more disabled people.”
Homeless Link has said that
“the proposals contained in the Bill are grossly unfair, hitting the poorest in society the hardest.”
Mr Redwood
I just wonder how the right hon. Gentleman can forecast with such certainty this abrupt turnaround and deterioration until 2020. Does his forecast assume that there will be a Conservative Government for that second period?
Stephen Timms
The right hon. Gentleman should ask the Institute for Fiscal Studies, where the Minister served with considerable distinction in the 1980s. It has been a reliable guide in the past and will be in the future. The assumption is that the existing policies will continue.
This is a terrible Bill that is being rushed through in a disgraceful manner. It will hit very hard those people who are already struggling to make ends meet. It will hit women disproportionately hard. It will hit disabled people, including everyone in the support group for employment and support allowance. It will hit children, pushing 200,000 below the poverty line.
At a time when the coalition Government are—
The Minister of State, Department for Work and Pensions (Steve Webb)
What the right hon. Gentleman is saying sounds like a peroration, so I think that he might have accidentally dropped the page on which he was going to say where, if not from these measures, he would find the £3.5 billion. Where would he find the money?
Stephen Timms
Of course, the background to this policy is the failure of the Government’s policy. If we look at the unemployment forecast set out at last year’s Budget and compare it with the forecast set out at the autumn statement, we will see that it will cost an extra £3 billion in additional benefits. What the Minister and the Chancellor should be doing is putting in place policies that will reduce unemployment, not see it continue to rise.
At a time when the coalition Government are handing the richest people a tax cut of £2,000 a week each, they have decided that people on jobseeker’s allowance can have only 71p each, 72p the year after, and 73p the year after that. To quote the Minister’s 2009 speech, it is “appalling”. I urge the Committee to support our amendment and vote against clause stand part.
Charlie Elphicke
I will speak briefly. I think that it is important that all of us who represent communities with a lot of deprivation, such as my constituency of Dover and Deal, make sure that the Government, or any Government, have policies that make work pay. About 5 million people in this country could work but do not. We need more of an incentive for people to realise their potential and do well in life. Part of that needs to be an economic incentive. Let me pray in aid the words of the Chancellor of the Exchequer:
“We have to acknowledge that over the last five years, those on out-of-work benefits have seen their incomes rise twice as fast as those in work. With pay restraint in businesses and Government, average earnings have risen by about 10% since 2007. Out-of-work benefits have gone up by about 20%. That is not fair to working people who pay the taxes that fund them.”—[Official Report, 5 December 2012; Vol. 554, c. 879.]
Charlie Elphicke
I will in a moment.
It is also unfair on those people who are not in work, because they have no incentive to go and seek work. We need to provide that incentive, not because we want to attack people who are unemployed but because we want to give them every incentive to get work, realise their potential and take the opportunity to do really well in life and be a great success.
Helen Goodman
In that case, why does the Bill apply to statutory maternity and paternity leave, adoption leave and sick pay—all those things that are provided for people exactly when they cannot possibly go to work?
Charlie Elphicke
As the hon. Lady knows, the principal part of clause 1, which we are discussing, deals with out-of-work benefits. As she also knows, the policy of the Opposition—that uprating should continue according to inflation—and their opposition to this Bill would cost £3.5 billion. Money is tight in this country today. The reason for that is that she and her party drove our economy off a cliff, overspending for years and displaying fiscal incontinence that was unparalleled in this country in the last century.
Mr Michael McCann (East Kilbride, Strathaven and Lesmahagow) (Lab)
Does the hon. Gentleman accept that since his Government were elected, they have increased borrowing by £212 billion?
Charlie Elphicke
The hon. Gentleman makes the case better than I could about the extent of the mess left by the previous Government, which was such that recovery has been choppy. As the whole Committee knows, a recovery from a debt crisis is always much tougher, particularly when we also have the eurozone plunging into crisis because of its years of mismanagement. Unless we have sound money and ensure restraint in the public finances and growth in the private sector, we will not be able to turn the corner and get the economy growing and the nation’s finances in place. The economy is now starting to heal, but part of that involves building in an extra incentive to ensure that work pays—universal credit is part of that—and ensuring an extra incentive for those who are out of work and on benefits to go into work. We do that by not continuing with the over-generous benefits or over-uprating of benefits, as compared with what people in work have received, that we have seen in recent years.
Toby Perkins (Chesterfield) (Lab)
The hon. Gentleman is making the point strongly that it is important that we make work pay. On that basis, is he concerned that 60% of those affected by the clauses we are discussing today are in work, and that this Bill is making precisely those hard-working people on low and middle incomes worse off by being in work?
Charlie Elphicke
The hon. Gentleman well knows that this Government have taken many people on low incomes out of tax altogether. That is not something that his party did. Labour froze the personal allowance and, over time, had more people in the tax system relatively speaking. We have taken people out of tax, because we do not see the point in taking money off people in taxes and then handing their own money back to them. It is better not to take it off them in the first place.
The key point is that the Opposition are proposing to impose a cost of £3.5 billion. I ask them: where are they going to find the money? How will they pay for their spending pledge? If they want to pay for it through more borrowing—which always seems to be their policy—all they will do is raise interest rates for hard-pressed mortgage holders, small businesses and borrowers.
George Freeman
Is not the truth that the Opposition’s opposition to this Bill would cost the average family £5,000 extra in debt? Does my hon. Friend agree that there is no money growing on trees—we pay for that either in debt or in tax—and that the Bill is a sensible measure, as debt simply holds more families back?
Charlie Elphicke
I absolutely agree with my hon. Friend. The Labour party just thinks that we can sink further into a sea of debt. We have to call time on that. We have to get control of our public finances and our private finances, and restore sound money once again.
Amber Rudd (Hastings and Rye) (Con)
Does my hon. Friend not find it confusing that the Opposition support fixing public sector pay rises at 1%, but not controlling the level by which out-of-work benefits increase?
Charlie Elphicke
That is absolutely right. It is extraordinary that the Opposition say that it is fine to have a 1% cap on public sector pay, but not on benefits. We need parity.
Charlie Elphicke
I have been quite generous in giving way, so I would like to make a bit of progress.
Let me turn to the issue of child poverty. We heard a lot of rhetoric on child poverty from the shadow Minister, in addition to the amazing spending commitment that he delivered to the Committee in response to my intervention. Let us look at the child poverty figures, which the Opposition say are a key reason to oppose clause 1. The figures from the last Parliament show that, after housing costs, there were 3.6 million children in poverty in 2004-05. In 2009-10, there were 3.8 million. In other words, it went up 200,000 under the previous Government. The figures for 2010-11, the latest available, went down 200,000 under the present Government. The achievement of the previous Labour Government was therefore to increase child poverty by 200,000—not a great record, to put it mildly—while the present Government have been in office at a time when child poverty has been falling.
Let us also consider the fact that there were 700,000 children in severe poverty in 2004-05. By the end of the Labour Government, that figure was the same. After one year of this Government, however, the figure had gone down to 600,000. Before the Opposition start talking about child poverty, they ought to take a closer look at their record in office. We also need to have a closer look at the policy of universal credit, which, according to Government statistics and the Red Book, will take about 350,000 children out of poverty.
It is important that we look after children and give them the best possible start in life, and this Government are committed to that. The Secretary of State for Work and Pensions is certainly committed to that, as am I. I am committed to the Bill, and the measures in clause 1 are really important because we need to do all we can to ensure that people who are not in work achieve their potential, get into work, do really well and achieve great success in their lives.
Ian Mearns
The hon. Member for Dover (Charlie Elphicke) forgot to mention that while those on benefits have had their benefits uprated at twice the rate of those in work in percentage terms over the past five years, the actual increase in financial terms has been on average about £49 for those in work and about £12 for those on benefits. Those figures were put into the public domain by Paul Lewis on “Moneybox” on BBC Radio 4, and I have no reason to disbelieve him. I wonder whether the hon. Gentleman has. It is important to take those figures into consideration. Percentages are meaningless; 50% or 100% of very little is still very little. Making comparisons in the way that he did demeans the debate.
I would like to thank you for calling me to speak, Mr Evans, because this is an important debate on a Bill that, if voted through, will have a detrimental impact on many thousands of my constituents and others across Tyneside and the north-east. I have said this before, but it is important: the way in which this country’s economy works is very different in different parts of the country. It is therefore important to remember that the equation of welfare to work is a two-part equation. Welfare is one part; work is the other. In some parts of the country, there is no work; in others, between a dozen and 20 people—or even more in some places—wait for each vacancy. In such places, where people have no real opportunity to get work anywhere near their own locality, there must be decent welfare so that they can sustain themselves, their families and, most important, their children.
I was fortunate enough to speak in previous debates on this issue earlier this month, so I shall keep this speech as brief as possible, given that many Members will wish to take part in the debate. I shall try not to repeat the points I have already made. Instead, I shall focus on the impact that the Bill will have on families and, particularly, on children. I also do not want to disregard one important set of people—namely, those with mental health difficulties. I believe that the impacts of the Bill on those people has been underplayed to a certain extent.
I visited Tyneside Mind in Gateshead on Friday and spoke to a range of service users there. It is disturbing to see the increased pressure being put on those vulnerable people, who are in a fragile state of mind, to jump through a whole range of hoops, and to see the impact that the new measures are having on them.
Hywel Williams (Arfon) (PC)
Does the hon. Gentleman accept that this situation puts great pressure on local agencies that are trying to help people back into work—the Agored Cymru in my constituency, for example, which works with people with mental health and substance abuse problems—and that they are feeling the pinch as well?
Ian Mearns
I have no doubt that that is the case. It applies to the north-east of England where the capacity of local authorities to help out local communities has been dramatically undermined—disproportionately, by comparison with other parts of the country.
This Bill provides yet another example of the Government demonising the most vulnerable in our society, making the poorest live in relative poverty. The Government’s decision to cap uprating on certain benefits and tax credits will, as confirmed only last week by the Minister with responsibility for disabilities, result in around 200,000 more children living in poverty. Let us bear in mind the fact that this is not the only policy forcing those on the lowest incomes into poverty. We need look only at the sprouting of food banks everywhere truly to understand the impact of this Government’s welfare agenda.
According to the Child Poverty Action Group report entitled “The Double Lockout: How local income families will be locked out of fair living standards”, this Bill
“is poverty-producing and means that both absolute and relative child poverty will increase”.
How exactly? First, delinking the uprating of benefits from increases in the price of commodities such as fuel and food will obviously result in a fall in standards of living for anyone dependent on state assistance. Given that two thirds of the households affected by the Bill have children in them, it is not hard to understand why child poverty will increase. Furthermore, given that proportionately poorer households spend more on basics such as fuel, food, water and other households necessities, their rate of inflation is higher when the prices of those basic goods increase faster—a trend we have seen over recent years.
In the last few months we have seen utility companies hiking up their prices—the highest change we have seen is about 10.8 or 11%. How on earth are the low paid and those out of work supposed to heat their homes if their benefits are not increased in line with inflation? We are going to see families—we are already seeing them—having to make the difficult choice between eating or heating.
The Children’s Society estimates that the following professions are also affected: 300,000 nurses and midwives in the NHS; 150,000 staff in primary and nursery schools; 1.14 million admin workers, secretaries and secretarial assistants; 44,000 electricians and electrical fitters; 510,000 sales assistants and cashiers; and 42,000 armed forces personnel.
Toby Perkins
Does not that list of people in those professions that are going to be badly hit fundamentally undermine the idea that the Bill is really about incentivising lazy people to go and get a job, which will happen only if the incentive system is made a little bit nastier?
Ian Mearns
I think it is the ultimate insult to ordinary people’s intelligence to say that in order to incentivise those at the top end of the economy we have to pay them more, while incentivising people at the bottom end by paying them less. “We are all in this together”—I don’t think.
By no stretch of the imagination should these hard-working people—all those I have just listed—be regarded as shirkers. The Joseph Rowntree Foundation estimates the cost of child poverty to the taxpayer as £25 billion, despite the fact that 57% of children living in poverty have one parent working. Surely increasing the number of children suffering from child poverty, which is what the Bill will do, will take more out of the Treasury’s coffers in the long term than would be saved from capping the uprating.
Martin Horwood
On the subject of insulting people’s intelligence, will the hon. Gentleman vote for either of the amendments that seek to change the rate of this benefit cut?
Ian Mearns
What I will do is listen to the debate and see whether I can be convinced one way or the other.
Given that the majority of the people impacted by the Bill are in work, the Minister should perhaps have listened to my suggestion on Second Reading: why not legislate for a living wage so that low-paid workers are not reliant on the Government to top up their income but are paid an adequate wage?
Margot James
The hon. Gentleman talks about low-paid people and what they are suffering, but will he acknowledge that many people have been taken out of tax altogether, including 3,000 in his own constituency, and that 30,000 people in his constituency have at least benefited from the increased personal allowances?
Ian Mearns
I live in the heart of my constituency, among the people whom I represent, and, oddly enough, the people whom I represent do not feel massively better off as a result of the Government’s changes. VAT, for instance, has a dramatically greater impact on those at the lower end of the income spectrum.
Kate Green
Is not one reason why very low-paid people do not gain in any way from an increase in the tax threshold the fact that if they are working part-time on the minimum wage, they will be below the tax threshold in the first place?
Ian Mearns
The position in my constituency is exemplified by the fact that household income probably hovers just above £20,000 per annum. That is household income, not personal income.
Ian Mearns
I could not agree more, and that, of course, has a dramatic impact on people at the lower end of the income spectrum.
Let me clarify something that I said a moment ago. The average income per household in my constituency is just above £20,000 per annum, but that average is dragged up by some relatively well-heeled neighbourhoods. An awful lot of my constituents are struggling to get by, and I have a fantastic amount of sympathy for them, but there seems to be a compassion bypass on the Government Benches.
Given that most of the people affected by the Bill are in work, perhaps the Minister should adopt my earlier suggestion and return to the idea of a living wage. That could reduce the benefits bill, and also make companies such as Starbucks pay their staff a real wage so that we, the taxpayers, would not have to subsidise multinationals that may not be paying the corporation tax that they should be paying.
The Chancellor talks of strivers and skivers, but I see something different on the ground. I see families scraping by in low-paid work, or jumping from insecure jobs to benefits and back again. I have come across people who are working with all their might and main, moving from one part-time job to another just to scrape a living, and all too often the work that they are doing is demeaning and low-paid.
The truth, unlike what the Government keep spouting, is that those who rely on benefits and tax credits are in work, have worked, or will be desperately trying to find work in the near future. They are not scroungers, but victims of a stagnated economy, and the Government are undoubtedly making the situation worse. We need to stimulate the economy rather than stagnating it. We need to provide jobs in places such as the north-east. That, rather than crippling those who are on the lowest income levels in the whole economy, is the way to reduce the benefits bill.
Let me say this to Members in all parts of the House. When they walk towards the Lobbies, they should think long and hard about whether they can vote to allow 200,000 more children to live in poverty. I know which Lobby I will choose.
Mr Redwood
I think it would be a good idea for us to start by working out what we agree about, because during debates such as this the House sometimes becomes very tribal. It seems to me that we agree that we hate poverty, and that that is true not just of the Opposition but of the two governing parties. We see poverty as a scourge. We come here to promote and support policies that will make people better off and improve their living standards—of course we do—and today’s debate is about how we can achieve that in very straitened and difficult circumstances.
I should have thought it was common ground that we need to ensure that it is more worth while to work. In order to ascertain whether that is common ground, I intervened on the right hon. Member for East Ham (Stephen Timms)—who was very eloquent—and he said that that was indeed Labour policy as well as Conservative and Liberal Democrat policy. So we agree that we want to get rid of poverty and that we need to make work more worth while. That is where our Ministers are faced with a difficult dilemma. Last year’s benefits uprating occurred at about the peak of the spike in inflation and so benefit recipients got the 5.2% increase whereas low-paid people working alongside them in their local communities got perhaps 1.7%, if they were lucky—that was about the average. Suddenly, in one fell swoop, people were 3.5% worse off in work than out of work because of the normal uprating.
Toby Perkins
What the right hon. Gentleman has just said is fundamentally untrue. Just because the percentage rise for someone on £71 a week is more than that for someone on £35,000 a year does not mean that they are better off. Will he correct the record on that point?
Mr Redwood
No, I am talking about people in very similar circumstances—those either in low-income employment or out of work—where the two numbers are much closer together. They are closer together than any of us would like, because we want it to be that much more worth while for people to work. The hon. Gentleman has to accept that, at the lowest income levels, there was a problem because the benefits went up by much more than the wages. What would the best answer be? It would be for all wages to go up more. The second best answer would be for the prices not to go up so much. But we are where we are and we have to work to try to come up with a fair settlement for the future.
Dr Julian Huppert (Cambridge) (LD)
The right hon. Gentleman highlights the 5.2% increase last year. I have not yet heard Opposition Members congratulate the Government on that, but I congratulate the Government now. Does he agree that one of the worst things—for decades far too little was done to fix it—was the benefits trap, whereby people discovered that when they started to work part time, they ended up with less money than they had before? I hope that this entire House could agree that that is fundamentally wrong. It has affected some of my constituents and has not yet been fixed sufficiently.
Mr Redwood
That is where I hope, again, we can try to build a little more agreement. We need to work to avoid that kind of problem.
Mr Redwood
Let me deal with one intervention and then, of course, I will give way to another.
If we can work to try to prevent that kind of problem from happening again, we might make a bit more progress. My right hon. and hon. Friends have a couple of policies that try to do that. First, they are rightly taking many low-paid people out of tax altogether. I believe in tax cuts for everyone. I do not just want tax cuts for the rich; I want tax cuts for those on middle incomes and low incomes, particularly those at the lower end. The idea of the tax cut for the rich is to get more money out of them; all we are trying to do is get back closer to Labour’s very successful 40% rate, which it kept for almost all the time it was in office. I noticed that its 40% rate collected considerably more revenue than the 50% it bequeathed to the incoming Government, and so it was rather foolish to put in a rate that did not work in taking money off the rich. We are trying to get back to the earlier rate.
Mr Redwood
I now give way to the hon. Lady, who will now be duly aroused again.
Helen Goodman
The right hon. Gentleman clearly did not read the background papers published with the Budget in March, which showed, incontrovertibly, that the amount of money lost by the cut in the top rate of tax from 50% to 45% was £2.5 billion. As he well knows, the only reason why the Government have got cover is because people have been shuffling their income around from one year to another.
Mr Redwood
The hon. Lady has chosen the wrong Member to accuse of not reading the Budget papers properly; I am normally accused by my right hon. Friends of reading them too closely. If she read on through those Budget papers, she would see that that top rate led to an almost 10% reduction in the amount of top-level income tax coming in, which is a very foolish position to get into when we need all the money we can get. My right hon. and hon. Friends are very sensible to try to correct that, in order to get more money off the rich. We need more money off them and less money off people at the other end of the income scale. The way to take less money off people at the other end of that scale is to take them out of tax altogether, and good progress is being made in that regard.
I agree with my hon. Friend the Member for Dover (Charlie Elphicke), who has not stayed for the rest of the debate but who wisely said that it was more sensible to let people keep the money they earn at the low income levels rather than taking it off them through an expensive tax system and then giving it back through an expensive benefits system; by definition, they get back less overall, because we have to charge them a handling charge, as the rich will not pay all the money we need—they pay only quite a bit of it—and so we also have to tax the poor in order to give them benefits, and that can be silly.
Kate Green
The problem with using the tax threshold as a means of not taking money away with one hand and giving it back with the other is that it gives to people who do not need as well as to people who do. By contrast, tax credits targeted at lower-income households give to people who need, and the tax credit is tapered away rather than kept at the same level as people rise up the income spectrum.
Mr Redwood
What a miserable world the hon. Lady lives in. People on £30,000 and £40,000 need more money as well as people on £10,000 and £20,000, and I am here to try to ensure that they get more money. I do not believe that the Government should take all their money; they should be allowed to keep more of it so that they have more to spend, which would create more jobs. I thought that was part of the Opposition’s argument—or it would be, were we having a different debate. They will not use that argument today, because we are debating benefits.
My right hon. and hon. Friends on the Front Bench are trying to deal with part of the problem by taking people out of tax altogether and cutting the amount of tax that those at the lower end of the income scale have to pay. That is a very good thing to be doing. They are also about to launch their universal credit in trial systems. The whole purpose of universal credit, as described, is to make it more worth while to work and to deal with the fact that if benefit is taken away too quickly, people face a high rate of tax combined with benefit withdrawal, which is a big disincentive to going to work. It might even get in the way of their going to work, as they might not have enough money for the bus fare, the clothes they need and all the rest of the things one needs when setting oneself back up in a job. That is very important.
Mr Redwood
The hon. Gentleman shouts “Where is the work?”, and of course we need more work. There are a lot of jobs on offer and we wish people well in applying for and getting them. I accept his implied point: in some parts of the country work is very scarce and we need economic policies that promote it. That is where lower taxes can be extremely helpful, and I urge my colleagues on the Front Bench to do more, if they can, because if more money is circulating in people’s pockets, bank accounts and purses, we will have more spending in the economy, which will help.
Mr Redwood
That is not my case at all. My case is that the Government inherited an impossible financial position: the public sector was spending and borrowing far too much and the economy had been performing very badly, with a collapse in living standards towards the end of Labour’s period in office that was the biggest that any of us in this House had witnessed in our lifetimes.
My right hon. and hon. Friends on the Front Bench are trying desperately to come up with a series of policies that promote growth and restore a greater degree of normality. The Committee must recognise that the model that sustained growth from 1945 through to 2007 was comprehensively broken when Labour broke the banks and nationalised them. Until we sort that mess out, we will be dealing with very unpopular and difficult choices, whoever is in government.
Mr William Bain (Glasgow North East) (Lab)
I know that the right hon. Gentleman always reads his economic documents, so why does he disagree with the view expressed by the Chancellor when he came to office in 2010 and by the IMF now that the automatic stabilisers in our economy should operate unimpeded?
Mr Redwood
If the hon. Gentleman looks again at the numbers in the Budget Red Book, he will see that the automatic stabilisers have been more than functioning. Under this Government, public spending has gone up considerably while borrowing has remained at extremely high levels. The borrowing levels the Government inherited were off the chart compared with those in any previous cycle we have witnessed in the British economy. Levels of public borrowing are still well above the peaks in previous cycles. The hon. Gentleman must understand that the numbers show that plenty of automatic stabilisers are in operation—the question he needs to answer is why they are not working. Of course, they are not working because of the other problems that have been inherited, such as the broken banks, the difficulties with tax rates and the large structural deficit. Those are all part of the problem and we can debate them at another time during a general debate on the economy.
The Government are attempting, through their tax and benefit changes, to tackle the problem of people asking, “Why work?” I have two bits of advice for my right hon. and hon. Friends on the Front Bench that might be more to the liking of the Labour party. If my right hon. and hon. Friends are going to pursue and sustain the policy of very low benefit increases for the next period, it is important that two other conditions are met. The first is that every action should be taken to get inflation down. If inflation suddenly took off, this would become a much tougher and crueller policy than Ministers have in mind. That would be extremely difficult. So it is in everybody’s interest—not just of those in low-paid work and not just those on benefit, but those people in particular—that more is done to sustain and control price rises.
Andrew Bridgen (North West Leicestershire) (Con)
My right hon. Friend makes a valid point—1.2 million new jobs created. He missed one point, however— 1.2 million new private sector jobs.
Mr Redwood
That is true, and it had to be the case because the public sector had no money left, as the previous Chief Secretary reminded us, and it was inevitable that action had to be taken to rein in the public sector. I remember that just before the Labour Government left office, they enacted proposals to halve the deficit over the next Parliament, so members of their Front-Bench team in office were fully aware that they had overdone it and they were recommending pretty unpalatable cuts to their colleagues. They did not specify the cuts, of course, because that would have been even more unpopular, but they told us in general terms that there had to be very big cuts.
Hywel Williams
Is the right hon. Gentleman pleased that many of those 1.2 million jobs claimed to have been created are part-time and low paid, and as such allow people to claim tax credits and lift the bill that his hon. Friends complain so much about?
Mr Redwood
If somebody wanted a part-time job, I am delighted that they have now got a part-time job. Quite a lot of people choose to have a part-time job. Their family commitments mean that that is what they can manage and it is a very good thing that we have generated more part-time jobs so that they can have them. To those who seriously want a full-time job—I am sure the hon. Gentleman can find people who would prefer a full-time job and are still in part-time work—I would say it is easier to get that full-time job from their part-time job than from unemployment. It is easier to get work from work. It is easier to get promoted when they are in the company and very difficult to get promoted if they have not joined the company.
It is very encouraging that people in some of our best large enterprises start off in part-time, low-paid, not very glamorous work, and when they show application and interest, they get trained and are then given greater responsibilities, and they can go on to do great things. When I last visited one of my local supermarkets, I met the manager and the deputy manager who had worked their way up from shelf-stacking some years before. That is great and shows that that path can work for people.
Andrew George (St Ives) (LD)
The broad-brush principles that my right hon. Friend describes are pretty much unarguable, but the Bill is very specific. It specifies a 1% uprating for two years beyond the coming year. Does he sign up to that inflexible approach? He is talking about keeping inflation down. Does he think that being able to predetermine and know the rate of increase is a wise approach to deal with the problem?
Mr Redwood
I have already expressed the view that I did not come to Parliament to impose such restrictions on people with very little income, that that is a difficult thing to have to do but that I quite understand why Front Benchers are in that position.
Yes, I will trust Ministers’ judgment today but I am also saying to them that there are those two important conditions. They have to watch the situation because if inflation starts to rise too far, things will be too tough, and it would be wrong not to recognise that. If there is not a sustained increase in the number of jobs, that, too, will make the policy difficult to sustain. I am hoping that the economic policy can kick in with lower price rises and more jobs, which would make the measure a little less unpalatable. However, surely nobody can say that they want to do this—it is not very pleasant—but what else can we do?
Stephen Timms
The right hon. Gentleman is making an interesting speech. However, is not a clear consequence of his argument that it is a serious mistake to be setting now the levels of benefits in two years’ time, when we just do not know what inflation will be in the meantime?
Mr Redwood
The Government are fighting for credibility with their general finances. They have a series of difficult decisions to make and have decided to make this decision. The Opposition cannot always come here and say that they must get the deficit down but never support anything that makes a contribution towards that. That is where they have great difficulties.
The Opposition have great difficulties today because they are coming here and saying that they do not like the measure, but will not support amendments that would mean that we were definitely going to pay a lot more. They have sufficient maturity to understand that the benefits bill is extremely large and difficult to manage.
I have one final thought to put to Ministers. The British public, who wish to see the benefit bill controlled and brought down, are keen for us to check up on eligibility, which causes more issues than anything else. Most of us feel extremely generous when it comes to eligibility for disabled people and we want the Government to do the best they possibly can, which might not be generous enough.
What we are worried about is extending eligibility too far—through the European Union rules, for example. I hope that that kind of thing will be pursued. I hear that the Prime Minister is now looking at the matter, but I do not think it is right that a large number of people should be able to come into the country and immediately start claiming benefits that other people, who have been settled here for a long time and are working hard, have had to pay into and make contributions towards. I hope that we will get better news and that there will be some kind of contributory principle or settlement before people can get those benefits, so that somebody who has been living here clearly becomes our responsibility after a sensible period.
Andrew Bridgen
Does my right hon. Friend agree that if we put benefits up faster in this country, we would make it more attractive for other EU citizens to travel here and take advantage of our generous benefits system?
Mr Redwood
I am rather pleased that our benefits system is a lot more generous than those afforded in eastern Europe, but I also want to make sure that we do not open ourselves up to paying a large number of benefit bills to people from more or less anywhere in the European Union who come here because they have worked out that we have a generous system compared with theirs. That would seem extremely unfair, very tough on British taxpayers and ultimately self-defeating, because people who were working hard and had talent and enterprise would say, “I can’t afford to pay the tax rates in Britain to pay for benefits for everybody else, so I’ll go somewhere else to do my work.”
George Freeman
My right hon. Friend made an interesting and important point about eligibility. Does he agree that one of the most pernicious legacies of the last Government was that their tendency to hand out, increase and widen the eligibility for welfare payments has meant that, when the payback comes, the most vulnerable people in our society tend to be hardest hit? We are doing everything we can to target benefits at those who need them most. For example, there are 600,000 disability claimants. Increasingly, we know that small groups of people desperately need the benefits but that many receiving them do not.
Mr Redwood
I quite agree. I would like to see a more generous regime for disabled people, as my hon. Friend rightly says. To pay for that, I have come up with suggestions both on getting more people back into work, which is the best way, and on dealing with the issue of eligibility so that only our own deserving cases get the generous treatment that we rightly expect.
In summary, the policy is not easy. Ministers have to watch to make sure that it does not become unintentionally more penal. We want much more work on the side of promoting jobs and growth because we come here to eliminate poverty, not to make it worse. It is also time for the Opposition to join the serious conversation about how we tackle these obstinate and difficult issues, given that the high-level aims—getting rid of poverty and making it more worth while to work—are, mercifully, shared across the House.
Caroline Lucas
I will speak to amendment 7, which stands in my name. It is an attempt, at least, to neuter what I believe is a cruel and callous Bill by restoring the historic link between benefits and tax credits and the retail prices index.
It is a fiction that benefit levels are too high. Someone who relies on benefits is poor and will be struggling to survive from week to week; if any unexpected costs occur, they will probably have to go without or go into debt. The Institute for Fiscal Studies points out that we do not know at least two important things about the Bill: we do not know what the actual effects of breaking the link with prices will be, because that will depend on future price levels, which exposes the poorest in society to serious inflation risk; and secondly, we do not know the Government’s view on how benefits should be indexed in the longer run, and we ought to.
What are we to make of the Government’s long-term policy intentions? Unfortunately, I think they are clear: to chip away at the welfare state and leave people to fend for themselves, with US-style deprivation for the unsuccessful. It is a scandal to expose poor people to such risk and insecurity, especially at the same time as the most wealthy are set to enjoy a significant tax cut. That is why I have tabled my amendments, which represent the very minimum safety net that must be in place.
Mr John Leech (Manchester, Withington) (LD)
Will the hon. Lady explain whether she tabled amendment 7 because RPI is normally higher than CPI, or because she believes that it is a better way of working out inflation?
Caroline Lucas
I think the answer is probably both of the above. Recently, the RPI has been higher. I would have been happy to look at an amendment—no such amendment exists, unfortunately—that combined the work that the hon. Gentleman’s party has been doing on earnings with my effort to get a link back to the RPI and prices. We should look at whichever is the most generous. I stuck to the RPI link in my amendment because I wanted it to be realistic enough to get more support across the House. I fear that I might have been a little over-ambitious.
It worries me that instead of seeking to restore the link to prices, the official Opposition have not sought to protect people who are seeking work, but appear to have picked out one or two benefits, such as employment and support allowance and maternity benefit, for proper protection. They have ignored, for example, those on jobseeker’s allowance, as long as some sort of workfare system is brought in for people who have been looking for work for two years. Do the Opposition think that it is okay for the link to be broken for JSA recipients in the meantime? The Opposition amendments offer an improvement to a nasty Bill, and for that I support them, but I believe they expose a certain cowardice in not confronting the stereotypes and myths that the Government continue to perpetrate. Why are the Opposition not standing up for unemployed people and restoring the link to RPI? I do not accept that they could not consider that principle today, and it is disappointing that they will not. A link to prices is an absolute minimum, a safety net red line.
Richard Graham (Gloucester) (Con)
Will the hon. Lady confirm that she is advocating a return to a link between all benefits and the retail prices index from now on? In 2012-13, benefits went up by 5.3% and the Office for National Statistics labour statistics show that the pay of all those in work went up on average by 2.1%. What impact does the hon. Lady think that would have over a few years on the morale of people in work? Would it act as an incentive to work, or to retreat back to benefits as fast as possible?
Caroline Lucas
The hon. Gentleman’s intervention shows the different beliefs that he and I have about the great British public. I do not believe that most people have to be pushed into work by cruel incentives; I believe that the vast majority want to work, contribute and feel part of a wider society. That is where he and I differ.
Richard Graham
I am with the hon. Lady; I do believe that most people want to work. I am asking her about the impact it will have if somebody off work continually gets double, if not more, the increase that working people get. Surely she understands that there is a link.
Caroline Lucas
The proposition is spurious. First, it happens very rarely; secondly, we ought to look at the actual amounts of money involved. The Government talk glibly about percentages, but the percentage of something very small is still very small. The amounts that we are talking about do not make that much difference. What does make a difference is social solidarity and the sense of people really being in it together. If this Government cared more about making that a reality than just having the rhetoric, we might stand a chance of securing a happier and better-off society.
Caroline Lucas
I should like to make some progress because I have let the hon. Gentleman in twice.
Hywel Williams
The hon. Lady would of course also argue that historically benefits have been very low indeed and, in fact, the amount of money that people have to live on is miserably low. I think that the majority of the British public would accept that and accept that we need to raise benefits substantially. That is why it is so important to use a rate that raises benefits by the highest amount, perhaps by RPI or earnings.
Caroline Lucas
I absolutely agree with the hon. Gentleman and thank him for his intervention. I think that people do want that to happen, partly because it is what they would want if they themselves fell into difficulties, and it is what they would want for their families and friends, who unfortunately and increasingly are in exactly that position.
Caroline Lucas
I will give way in a moment, but I should like to make a little progress on the other amendments.
The Opposition have supported the public sector pay freeze and the switch from RPI to CPI introduced by the coalition, saying that they did so on a short-term basis to tackle the deficit. The former shadow Pensions Minister, now shadow Chief Secretary to the Treasury, the hon. Member for Leeds West (Rachel Reeves), said that the Opposition supported the switch to CPI indexation as a temporary measure, and in July 2011 she said:
“Making a permanent change from the use of the retail prices index to the consumer prices index with the impact being felt even after the deficit is long gone is an ideologically driven move that we do not support.”––[Official Report, Pensions Public Bill Committee, 14 July 2011; c. 293.]
My contention is that people are suffering now and that is why the link to prices should be restored now. The Opposition seem to have swallowed the Government line that this measure is necessary despite acknowledging that it is ideologically driven. I repeat my disappointment that apparently they will not support my amendment 7.
This is a debate about priorities, not necessarily about affordability. As the right hon. Member for South Shields (David Miliband) made very clear during his strong speech on Second Reading, today, prices are increasing and they have been rising faster than earnings in recent years. We are in the grip of a harsh public sector pay freeze imposed by the Government and supported by the Opposition. If the Opposition really believe in making sure that benefits reflect the increase in the price of a pint of milk or a pair of school shoes, or what it really costs to make sure that people can survive without becoming destitute, I ask them again to reconsider whether they might support my amendment.
Charlie Elphicke
Does the hon. Lady share my puzzlement that she has tabled an amendment—a principled amendment with which I disagree—suggesting that the RPI measure of inflation should be used, and yet the official Opposition will not support it although they gave a commitment at the Dispatch Box that they wanted inflation uprating? Does she not find that strange?
Caroline Lucas
I thank the hon. Gentleman, who has encapsulated what I said in my earlier intervention and what I am saying now. Yes, it is strange, and disappointing.
Let me say a few words about RPI and earnings. The right hon. Member for Ross, Skye and Lochaber (Mr Kennedy) and the hon. Member for St Ives (Andrew George) have tabled amendments on earnings that would improve the Bill, and I support them. However, we have a public sector pay freeze, and earnings growth right now is slow; people are experiencing falling living standards as energy bills and food prices rise faster than income. In the longer term, however, earnings are important. Since the second world war, the UK norm has been for earnings to rise faster than prices, with real wages rising in most years, driving living standards higher.
Caroline Lucas
Let me make a bit more progress.
It is worth remembering that benefits were linked to earnings until 1980, when the Thatcher Government changed the link to prices in order to save money. That was a deliberate and aggressive policy to run down benefit levels. In 1980, unemployment benefits were one fifth of average earnings; today, they are one tenth. Earnings are important in the long term, but in the current context, I worry that focusing on earnings when they are so low, without the link to RPI, risks being a smokescreen for existing Government policy. I worry that without the additional protection of a link to prices, the link to earnings will not protect people from inflation risk over the next three years. People must, at the very minimum, be able to keep up with the rising cost of living. My personal view is that benefits should increase either in line with RPI or in line with average earnings, depending on which is higher, but I deliberately tabled a more modest amendment that would just restore the link to RPI because I wanted to press the Committee to provide that minimum protection in the face of this Bill, and hoped that such an amendment would garner more support.
Andrew Bridgen
The hon. Lady stated earlier that a 1% increase in benefits is a very small increase on a very small amount of money. Is she aware that the welfare budget is almost a third of all Government spending and is by no stretch of the imagination a small amount of money?
Caroline Lucas
If the hon. Gentleman made a distinction between the overall benefits bill and pensions, he might find that he had a rather different set of figures before him.
It is not true that the Government are doing this to be fair. The measure is an unnecessary, spiteful and counter-productive attack on the poor. It is unnecessary because it is ludicrous to blame the unemployed and the low-paid for the deficit and to elicit from them the highest price for paying it off when high earners are receiving tax breaks. As the Government well know but conveniently forget, the culprits behind the entire financial crisis were the bankers on their very high incomes, many of whom do very well from over-generous tax relief on pension contributions and will benefit from the tax cut that is being granted to the highest earners with the abolition of the 50p rate. I welcome the Opposition’s amendment on the latter point.
The measure is spiteful because the Government insist on suggesting that it is somehow unfair that benefits have gone up by 20% when they know very well that 20% of very little is very little, and that in cash terms the average annual increase for those on jobseeker’s allowance over the past five years has been just £2.37—that is hardly the life of Riley that Ministers are pretending. Again and again they frame the debate around misleading percentages instead of the reality of hard cash increases that are far lower for people on benefits than for those in work.
Mr Marcus Jones (Nuneaton) (Con)
The hon. Lady talks about reality. The reality that the country faces is that we are running a huge deficit year on year and have been doing so for some years. Will she say a little about that? Can she say how she proposes to pay for the policy she advocates and how much it would cost?
Caroline Lucas
I am grateful for the hon. Gentleman’s intervention, and yes, I can tell him how much it would cost: about £7.3 billion, according to the Library.
Caroline Lucas
The hon. Gentleman has asked me a question, so he should let me answer it; I am very happy to do so. We face a number of choices, and the key thing is where we decide that the axe is going to fall. His Government would like the axe to fall on the poorest and most vulnerable; I would prefer that it fell on those with the broadest shoulders. That is the difference between us. It is also important to say that his Government’s policies are draining demand out of the economy and making the deficit worse. If I were in his shoes, I would be looking to see why my own Government’s policies are exacerbating the deficit, not making it better. If we looked for some alternatives, we might find a more positive way forward.
Caroline Lucas
I have let the hon. Gentleman intervene once, and I think that is probably enough.
The policy is also counter-productive. [Interruption.] Perhaps the hon. Member for Nuneaton (Mr Jones) would like to listen to this, because it addresses his point. Such a measure is counter-productive because, first, if money is taken from people who are only just surviving, they will experience more crises that the state will then have to step and pay for; and secondly, if money is put into the pockets of the poorest, they will spend it into the economy and thus address the deficit that we are trying to deal with.
Mr Redwood
Does the hon. Lady agree, though, that the policies of extremely expensive energy that she promotes are at the root of poverty now, and that if she would reverse her policies and go for cheap energy, we might be able to do something for the people we want to help?
Caroline Lucas
I congratulate the right hon. Gentleman on his attempt, but it was a bit feeble. All the evidence from Deutsche bank, the International Energy Agency and many other places tells us that rising fuel bills are a result of rising gas prices, and the percentage extra on people’s fuel bills that is coming from renewable energy, which, sadly, he is not a fan of, is very much smaller. I do not agree with his premise.
If our priority is fairness, we should be seeking savings from those who can afford it, not penalising the poorest and pushing them into ever more precarious misery. Without this very basic link to RPI, what exactly are we saying to people on benefits? We are giving them a message of punishment that says, “You’ve done something wrong. It’s your fault that you don’t have a job and the state is going to make life hard for you.” Frankly, that is despicable. Oxfam says that it is Dickensian and rightly points out that slashing the incomes of those at the bottom is not just cold-hearted but wrong-headed, because it will depress the economy further.
I said earlier that most people want to work, and I could cite very many examples from my own constituency of people who have come to my surgeries who are desperate for work but have been unable to find it. The link to RPI, as I have said, is essential. It is the absolute minimum acceptable. The Government have already taken from the poorest by switching to CPI and now they want to heap even more misery on people who simply cannot absorb it. Amendment 7 seeks to provide the most basic protection for benefits from the accumulative erosion of value that severing the historic link to prices will create. I commend the amendment, and hope to press it to a vote.
Andrew George
Amendment 10 stands in my name and in those of my right hon. Friend the Member for Ross, Skye and Lochaber (Mr Kennedy) and my hon. Friends the Members for Argyll and Bute (Mr Reid), for Manchester, Withington (Mr Leech), for North Cornwall (Dan Rogerson) and for Ceredigion (Mr Williams). Its purpose is to address the oft-repeated key concern of the Secretary of State and the Government—it has been repeated today by the hon. Member for Gloucester (Richard Graham) and others—that in certain circumstances and, admittedly, over selected periods, benefits have risen at a rate higher than wages, and that in straitened times such as these, a principle should be established whereby that should not happen and that average wages should be the marker against which future benefit rises are set.
A further weakness in the Government’s proposals, to repeat an earlier intervention of mine on the right hon. Member for Wokingham (Mr Redwood), relates to their intention to enshrine in future policy the blunt and inflexible instrument of a 1% rise beyond the next general election—up until 2016—and whether we can foretell with confidence what is likely to happen during that time.
Kwasi Kwarteng (Spelthorne) (Con)
Is it not the case that the 1% uprating is for two years? It is not designed to be extended after the next election.
Andrew George
The hon. Gentleman is right that it is for two years—it is from 2014 to 2016, which is beyond the next general election.
Mr Alan Reid (Argyll and Bute) (LD)
The Bill covers only two years, but the Government have already announced in the autumn statement their intention to introduce a statutory instrument so that the 1% also applies next year, so it will cover three years in total.
Andrew George
The combined effect of both the statutory instrument and the Bill will, indeed, be for three years. I have no clairvoyant skills whatsoever and would never follow my forecasts on the future of the economy or prices, but the Bill is asking us to forecast what is likely to happen, particularly in relation to prices. In the context of food price volatility, which we know takes place, and of tremendous uncertainty in the energy market and, indeed, other markets, we are being asked to predict what the circumstances are likely to be in 2016, beyond the next general election.
In his opening remarks, the hon. Member for Gateshead (Ian Mearns) said that large swathes of people are out of work in some parts of the country and in work in other parts. There are also many places, including my own in west Cornwall and the Isles of Scilly, where a lot of people spend their lives going in and out of work because of the seasonality of the area’s economy. Not only are such people moving in and out of work—not of their own choice, but because of their circumstances—but there is also a plethora of zero-hours contracts and of people who exist on the basis of putting together part-time work.
I congratulate the Government on their achievement in rolling out apprenticeships, but the fact is that those apprentices are being paid £2.65 an hour for their apprenticeship and have to do bar work, waitressing and other work at the weekend in order to get themselves up to a living wage. An apprenticeship offers a good opportunity, but we have to acknowledge that, among working people and those who are moving in and out of wages, there is a class or group who are, in effect, on the very margins of survival. They will be significantly affected by the proposal to peg benefits at 1%. Some argue that the Bill is about ensuring that we make work pay and that clause 1 is entirely about out-of-work benefits, but the fact is that a significant number of people—many thousands—who are in work or, indeed, in and out of work will be affected by it. That is the most difficult position.
Andrew Bridgen
My hon. Friend makes a valid point about those who move from unemployment into temporary work and the complexities involved in re-applying for benefits under the current system. Does he agree that the introduction of universal credit will improve the situation, remove that uncertainty and make it a much bigger incentive for those who are out of work to take temporary work?
Andrew George
I agree with that point and congratulate in particular the Minister of State, Department for Work and Pensions, my hon. Friend the Member for Thornbury and Yate (Steve Webb) on advocating that for many years. He must be pleased. Indeed, I am pleased for him and it is appropriate that that policy is being rolled out. I hope that it will help to iron out the difficulties faced by a lot of people. Having said that, let us see whether it addresses those issues, as I hope it will, when it is rolled out.
If we look back at the principles set out by the Chancellor in the first emergency Budget, we will see that we were clearly told that we were all in it together, that those with the broadest shoulders would bear the greatest burden and that the vulnerable would be protected. Those are the principles against which we must measure the Government. We all have different views on where the lines should be drawn with regard to achieving those objectives, and that is where we get into specifics such as those in the Bill.
It would be a kamikaze mission for me to begin a debate—I am only seven minutes into my speech—by asking my hon. Friend the Minister, for whom I have the highest respect this: what on earth does he know about benefits? He is highly regarded in that sphere. He is respected considerably by people and, indeed, by his political opponents—and rightly so—for what he has achieved. I think we would have ended up with something a great deal worse had he not been in his position.
Helen Goodman
Before the hon. Gentleman began on his paean of praise for the Minister, I thought he was making a very good case about the situation in west Cornwall and the difficulties faced by people on the margins of the labour market. That being so, when it comes to the vote will he and his colleagues who tabled amendment 10 vote against clause stand part?
Andrew George
I am sure that my right hon. and hon. Friends will make up their own minds on that issue. I do not speak for them, but I have made it clear that I will vote against the Bill as it stands, because I do not think it addresses the fundamental concerns that I have enunciated elsewhere.
To return to congratulating my hon. Friend the Minister on his achievements, my beloved coalition colleagues may not like what I am about to say—[Hon. Members: “Don’t say it!”] Having listened to what has been articulated by those in the Conservative party in recent months, we have to acknowledge what would have happened had my hon. Friend and, indeed, the Liberal Democrats not been in the coalition Government. First, we have to question whether we would have had the increase in the personal tax allowance, on which I congratulate the coalition Government. The Conservatives made it quite clear that they wished not only to freeze benefits altogether but to do so for six years, so we would not even be getting a 1% rise. There would have been a wider impact on pensioners and the disabled, which would have been significant. Child benefit would have been constrained, as well as being cut from families with more than two children.
Ian Mearns
The hon. Gentleman is making a powerful contribution. Given what he has said, does he reject the spin of some Government Members who have said that people on benefits have had their income uprated by 20% over a five-year period as opposed to 12.5% for those who work? When we examine the figures in cash terms—the impact on people’s pockets—we see that the uprating has been worth an average of £49 for people in work and only £12 or so for those who rely on benefits.
Andrew George
There has been a lot of selective quotation of statistics, with selective beginnings and ends of the time period within which those comparators are applied. I understood that the purpose of the Bill was as the Secretary of State articulated it when he introduced it—to ensure that benefits would never rise faster than average wages. Our amendment would deal with that.
Kwasi Kwarteng
My hon. Friend has suggested that people are referring to arbitrary time frames, but they are not. By looking at the past five years we can determine when the financial crisis began, so that is an entirely natural time frame to examine.
Andrew George
One can look at it in a variety of ways. If we examined a much wider time period, say the past 20 or 30 years, we would certainly not come to the conclusion that benefits have risen significantly faster than wages, because that is clearly not the case.
Kwasi Kwarteng
Will my hon. Friend acknowledge that the fiscal problem that the Government face began as a result of the financial crisis? It is therefore entirely logical to consider the matter over the period between the financial crisis beginning in 2008 and the present day.
Andrew George
But when does the crisis end? The figures produced by the Office for Budget Responsibility estimate that in three years’ time, wages will exceed CPI. One has to examine the matter over a much longer period. The Conservatives paid for some posters a couple of weeks ago to make the point that it was unacceptable for benefits to rise faster than wages, and the amendment would deal with that issue.
I said earlier that one big weakness of the Government’s proposal, and the reason why I opposed it, was the inflexibility of the 1% uprating. It takes no account of what may happen to food prices, for example, by 2015-16. It is all very well having a Bill that takes a clairvoyant view that a 1% increase will not press large numbers of working families, as well as out-of-work families, into severe and extreme hardship. However, we have experienced this year in the UK the impact of significant volatility in our climate. There has been significant climate change, which is having an impact on the food baskets of the world, including those in many developing countries and here. We therefore need to ask ourselves whether we can confidently say that there will not be food price spikes such as we saw only a few years ago. I suggest that we may see such spikes again. There is also tremendous concern about the potential volatility of energy prices. The 1% uprating figure is inflexible and somewhat arbitrary, and we cannot say with confidence that we will not need to introduce further primary legislation to revise that figure in 2016.
We must also consider the impact of the 1% uprating on housing. In their emergency Budget, the Government proposed to cut housing benefit from the 50th percentile of rents to the 30th percentile. Whether or not we like the fact that only 30% of the private rental market might be available to people in receipt of housing benefit, rather than half of it, it is essential that the rate is linked to the variation in private sector rents. The 1% uprating will break the link with what is available in the market and instead peg housing benefit back. In my area, and I know in many others, the Government’s attempt to peg it back by cutting the rate to the 30th per- centile of rents has failed to constrain private sector rents, so it has not had the desired impact. Maybe it has in some areas, but certainly not in mine or many others.
The measures that the Government have brought forward in the Bill have been ill thought through, and I fear that we will have to reconsider the figure set out in it next year or the year after. On that basis, we will listen to what the Minister says in response to the debate before we have the opportunity to divide the Committee on the amendment.
Toby Perkins
It is a great pleasure to follow the thoughtful and useful contribution of the hon. Member for St Ives (Andrew George) and the contributions of other hon. Members.
One thing that has come across in the speeches of Members on both sides of the Chamber is the economic illiteracy of the Government’s policy as part of a strategy for reducing the deficit. As other Members have said, one of the great things about welfare payments is that when people are living on the bread line, the money that they receive is spent in the local economy, often within their own community or on their own estate. They spend it at their local convenience store. They tend to spend it the minute they get it, rather than put it in trust funds, because they are attempting to sustain their life on the bread line.
When money is taken from the poorest in our society and at the same time given to the very wealthiest in our society, as was mentioned earlier, we are taking money away from people who will spend it in the real economy and giving it to people who are much more likely to take it out of the real economy and not spend it. It makes no economic sense, even on the basis that the Government are introducing this measure to reduce the deficit.
Kwasi Kwarteng
I still have not heard what exactly the Opposition would propose to reduce the deficit. Surely the hon. Gentleman will admit that there must be some reduction in public spending.
Toby Perkins
As Members on the Government Benches are fond of reminding us, at one point they thought that the original plans of my right hon. Friend the Member for Edinburgh South West (Mr Darling) were not paying off the deficit fast enough. We now see, however, that under those plans we were actually paying off the deficit faster than this Government are doing. The fact that the Labour party was going to make tough decisions is reflected in a whole number of ways, and we supported—with tremendous reluctance—the very small uplift in public sector pay. We heard from the hon. Member for Brighton, Pavilion (Caroline Lucas) a shopping list of things we should be asking for and ways in which she felt we did not go far enough.
The Labour party recognises that tough choices need to be made, and it agreed to a whole raft of things in all the discussions on welfare. When I go back to my local party, the members ask, “Why are we agreeing with these things?” I say, “Look, it is very difficult. We would always like to make certain different decisions but”—
Toby Perkins
Let me just answer the point raised by the hon. Member for Spelthorne (Kwasi Kwarteng). We would always like to make different decisions, but we are not always in a position to do so. There is a raft of things with which we have agreed that we would not have wanted. We have seen, however, from the policies that the hon. Gentleman has so loyally supported time after time, that when we pursue austerity to the extent that he has been happy to support, demand comes out of the economy. Various retail businesses have gone bust and people are losing their jobs. A huge number of people in the public sector who were consumers are now not spending money, and the level of borrowing that the Government predict is higher than the Labour party proposed under its policies.
Mark Reckless (Rochester and Strood) (Con)
Is the hon. Gentleman seriously blaming firms such as Jessops and HMV for going into administration on the Government’s austerity programme?
Toby Perkins
On the specific issue of whether HMV has gone bust purely as a result of the economic circumstances, no, that is not the case I am making. However, when a raft of retail organisations go into administration, and when we see in many town centres—happily, not in Chesterfield because of the progressive policies of the Labour council—a huge number of empty shop units, it is perhaps time to start considering whether the economic policies pursued by the Government may have some sort of link to the economic success of our businesses.
Julie Hilling (Bolton West) (Lab)
I am following what my hon. Friend says and I absolutely agree that cuts have to be economically competent. The International Monetary Fund has already warned the Government that the annual cut of £24 billion to benefits and tax credits will reduce economic output by up to £40 billion.
Toby Perkins
That very important point underlines much of what I am saying. When hon. Members talk about benefits rising faster than earnings, we have to understand that each one of us needs basic things to stay alive. We need to have enough food to eat and put in front of our children for them to survive; we need clothing so that we can go out in the street; and we must be able to afford transport to get to job interviews.
Toby Perkins
I would like to finish my point. I am glad that my comments have elicited so much excitement and that lots of people want to intervene. There are basic things that we need in order to sustain life, and if someone is on poverty money—the hon. Member for Dover (Charlie Elphicke) said there are 600,000 people in severe poverty—their 1% increase cannot be compared with a school teacher, for example.
Toby Perkins
Such increases cannot be compared with how a Member of Parliament is able to sustain small increases. There is no comparison between what someone in severe poverty is able to cut and the situation faced by public sector workers, despite their currently being hard pressed, as many will testify.
John Howell (Henley) (Con)
Has the hon. Gentleman taken into account in his figures the impact of universal credit, which will lift 900,000-plus people out of poverty?
Toby Perkins
We have heard a lot of talk about universal credit but we still lack a lot of the detail. Given the record of the Secretary of State for Work and Pensions and the most catastrophic Work programme in history, if I were the hon. Gentleman I would not have much confidence in the success of the policies pursued by the Secretary of State until he has seen what the Government deliver.
Dr Hywel Francis (Aberavon) (Lab)
My hon. Friend is making a series of interesting points. Does he agree that the insufficient time allowed by the Government to scrutinise these changes—eight days between Second Reading and the remaining stages of the Bill—does not allow us to scrutinise and ask the Government questions about why, for example, they are treating categories of disabled people differently and why they do not recognise that they may be breaching United Nations conventions relating to the rights of children and disabled people?
Toby Perkins
That is an incredibly powerful point. My hon. Friend probably thinks—as I do—that we are being given so little time to scrutinise those issues because this is an entirely political Bill. It is not an economic Bill or something put together and discussed on the Floor of the House because the law needs to be changed. It is being done for entirely political reasons, and the minute that the Opposition said—to their tremendous credit—that they were going to oppose it, the posters were already up and ready because they had been designed in advance. This was an entirely political manoeuvre that had nothing to do with comments that might be made by the United Nations or any of the details of it.
I want to return to the issue of benefits rising faster than earnings.
Toby Perkins
I am pleased to see the hon. Gentleman in his place. The past two times that he has been billed to appear he has not actually been present, so now that that he is here I will definitely allow him to intervene. However—perhaps he will reflect on this—the central point of the whole debate seems to be that benefits claimed by someone on £71 a week can be compared with the earnings of a school teacher or a doctor in a hospital, and that a 1% rise is the same to someone on jobseeker’s allowance as to someone working in the public sector. Will the hon. Gentleman at least accept that they are not the same thing?
Richard Graham
I am very grateful to the hon. Gentleman for letting me intervene and I will come straight to his specific point. It would be interesting if he came to meet some of my constituents who work in the public sector in Gloucester. We have over 20,000 people working in the public sector—as I used to—and most of them are seeing no increase in their salary whatsoever, with a cap at a maximum of 1%. The hon. Gentleman appears to be supporting an increase of 2.2%—more than double what those in work will be getting—for those who are out of work. I would like him to respond to a constituent of mine who wrote to me. She is a retired nurse—
The Temporary Chair (John Robertson)
Order. Will the hon. Gentleman make his point?
Richard Graham
I am making my point as fast as I can. My constituent has two daughters who are nurses and who are receiving a 1% rise. She is asking why so many people in the House of Commons are desperate to increase the benefits of the unemployed by more.
Toby Perkins
It is almost as though the last two minutes of my speech did not exist. I had answered the hon. Gentleman’s point before he made it and I have no idea why he felt the need to intervene when I had specifically dealt with that issue—[Interruption.] I have already dealt with that point. We just cannot compare what 1% means to someone on £70 a week with what it means to a doctor. People on poverty money and in severe poverty have not got lots of options as to what they can cut back. They cannot decide, “Well, I’m only going to have one holiday this year”, as those whose jobs are more lucrative might be able to do. Interruption.] I have reflected on that point and I think I have answered it at some length.
There is a particular irony in the Chancellor, who was a millionaire the day he was born, railing against the extravagance of those on £71 a week. The debate needs to be put in proper context.
Toby Perkins
I will take further interventions, but I would like to crack on a bit now.
The 1% increase comes on top of a raft of difficult choices on benefits, including housing benefit cuts, tax credits cuts and council tax benefit cuts, at a time when there is increasing poverty, including severe poverty and child poverty. Specifically, there is an increase in poverty among those in work. That is the context in which this debate is held, and the reason why the Labour party has taken the stance it has. No one should be in any doubt that, in taking that stance, the Labour party recognises that there is tremendous contention about benefits, and that many feel just like the hon. Member for Gloucester (Richard Graham) and his constituent. I recognise that many people in many communities feel that way, and therefore how difficult it was for my right hon. Friend the Member for East Ham (Stephen Timms) to take that principled stance.
Susan Elan Jones (Clwyd South) (Lab)
I am not sure whether my hon. Friend could hear the hon. Member for Gloucester (Richard Graham) say a second ago from a sedentary position, “What’s your solution?” Surely the Opposition’s solution is to help families such as the 8,600 families in his constituency who receive in-work tax credits. The hon. Member for Gloucester seems silent now.
Toby Perkins
My hon. Friend makes a valuable point. Perhaps Government Members’ strategy is to follow Mitt Romney, who said that anyone who receives any welfare should be written off because they will never vote for the right-wing party. It did not work particularly well for Mitt Romney, but perhaps that is the electoral strategy of the hon. Member for Gloucester.
Toby Perkins
The hon. Gentleman is about to tell us what he will do for the 8,600 people in his constituency who will be worse off as a result of the vote he will cast tonight.
Richard Graham
I thank the hon. Gentleman for his generosity in allowing me to intervene a second time, but the answer to him and the hon. Member for Clwyd South (Susan Elan Jones) is that, on the question we are debating, I have not heard their proposal. Does he agree with the hon. Member for Brighton, Pavilion (Caroline Lucas) that the solution is to peg those benefits for ever to the retail prices index, so that people who are out of work can continue to have annual rises three times higher than those who are in work? While the hon. Gentleman is advocating that my public sector workers should continue to lose out relative to people who are on benefits, I am proud that the Conservative party has left 35,000 people with lower tax bills.
Toby Perkins
The hon. Gentleman was silent on the 8,600 people in his constituency who will be worse off as a result of the vote he will cast tonight, but the Opposition’s proposals are clear in the amendment. I will touch on this in more detail, but one interesting thing is the extent to which the Chancellor, for reasons best known to himself, has chosen to handcuff himself to a level of benefit increase for year after year when he has no idea what the level of inflation will be—the hon. Member for St Ives made that point.
Toby Perkins
Let me make more progress before I let hon. Members intervene again.
One issue I have raised previously in the context of the Bill is housing benefit changes. Last week, I met Chesterfield borough council officials to discuss the impact of the bedroom tax, which will hit people across Chesterfield in April. The council knows it faces a time bomb as people who cannot afford to pay their rents are told that there is a shortage of smaller properties for them to move to. Many of those people are at the back end of their working careers, and are either not working or in part-time employment. The council is budgeting for a situation in which around a third of them will fall into arrears—their housing-related benefits will be reduced and they will no longer have enough to pay their rents—and the Government are increasing the discretionary payment to allow councils to meet the costs of some who fall into that situation, which is a totally illogical policy. People who have been council house tenants for many years will fall behind, and the Government will give money to councils to bail them out. At the same time, the Government will hit them on housing and council tax benefit, and on tax credits. They are saying, “Those payments have already been cut, but they will now be increased by less than the rate of inflation.”
Mr Marcus Jones
A thread running through the hon. Gentleman’s speech is how we help the lowest paid. Does he agree that the coalition Government are helping the lowest paid in his constituency, because in April 3,880 of his constituents will be lifted out of income tax altogether, like 3,168 people in my constituency?
Toby Perkins
I welcome any measure that makes people better off, but the hon. Gentleman is entirely wrong if he thinks those being lifted out of tax are the lowest paid—they are not. Many who are earning less than them will get no benefit from the increase in the tax threshold. The people being lifted out of tax are not the lowest paid, although I recognise that they are on modest incomes.
Charlie Elphicke
More than 30,000 people in the hon. Gentleman’s constituency have seen their pay go up in recent years by just 10%. They are in work and striving to get by. How can he justify asking them to pay more taxes and provide more money for people on benefits when the latter have had a 20% increase in the same period? Is that not unfair on working people?
Toby Perkins
One point I have laboured is that hon. Members cannot compare in percentage terms the difference the Bill will make for someone on £70 a week and someone on £35,000 a year. The hon. Gentleman seems to be attempting to make such a comparison, but as my right hon. Friend the Member for Birkenhead (Mr Field) related previously—
Toby Perkins
I will answer the ill-advised point made by the hon. Member for Dover (Charlie Elphicke) before I take another intervention.
As my right hon. Friend the Member for Birkenhead has said, in cash terms—we should bear in mind that we buy food and clothing for our children with cash— people on benefits have had an increase of £12 a week; at the same time, working people have had an increase of £49 a week. It is impossible to make the comparison in simple percentage terms. That is one of the central points of my speech, but I have dwelt on it rather too much. I keep returning to it because hon. Members who intervene seem not to hear it.
Toby Perkins
I will crack on, because I have not taken a useful intervention from Government Members yet, and other hon. Members want to speak.
Many of the people I meet who face this financial calamity on the horizon have worked most of their lives. The people I meet who have worked for 30 years and then gone on to benefits are overwhelmed not by the generosity of benefits, but by the difficulty of getting by. They believe there must be an alternative benefits system that is incredibly generous—that is the one they read about in the papers—because it is tough to get by on the benefits that they receive.
When we talk about the benefit bill, the most fundamental question we must confront is where the money goes. Most of it goes not into the pockets of benefit recipients, but into the pockets of landlords. The Thatcher Government introduced the right to buy. That was a good thing, but they did not have a corresponding scheme to replace the social housing that was lost, and there was chronic under-investment in the remaining stock.
The Blair Government rightly prioritised the refurbishment of social housing up to the decent homes standard over building new homes, but many Labour Members believe they took too long to take the housing shortage seriously. Although much of that was hidden during the good times, the welcome steps introduced by the Brown Government were too late and too slow to stop the housing crisis from escalating. Whomever we blame for the huge inflation in private rents, the people who claim housing benefit, whether they are working or not, are not to blame.
Toby Perkins
I will try to plough on if I may, because many hon. Members want to speak, and I sense the Opposition deputy Chief Whip—my hon. Friend the Member for Tynemouth (Mr Campbell)—glaring at me with intent.
In a raft of ways, tax credits cuts will hit people on low to middle incomes. By anyone’s definition, they are the thrifty, hard-working strivers that people across the political divide recognise are key to the country’s future prosperity, but they will be badly hit by the Bill.
Once again, women and children will be hit worst of all. The Government’s strivers tax will hit women particularly hard—4.6 million women who receive child tax credit will be hit by the strivers tax, including 2.5 million working women. All those will come together as the perfect storm. The 1% uplift is nothing but a blunt political instrument designed to create a political trap that has nothing to do with a nuanced benefits system, with all its complexities.
The Child Poverty Action Group has said that the 200,000 increase set out in the written answer from the Under-Secretary of State for Work and Pensions, the hon. Member for Wirral West (Esther McVey) should be added to the increase of 800,000 in children in relative income poverty by 2020 that the Institute for Fiscal Studies found in its analysis of the coalition’s welfare cuts. Let us remind ourselves of what the Prime Minister used to say about relative poverty. In 2006, he said:
“I believe that poverty is an economic waste and a moral disgrace. In the past, we used to think of poverty only in absolute terms—meaning straightforward material deprivation. That’s not enough. We need to think of poverty in relative terms, the fact that some people lack those things which others in society take for granted. So I want this message to go out loud and clear: the Conservative party recognises, will measure and will act on relative poverty.”
That is the manifesto on which Conservative Members were elected, and that was what they used to believe, but that is what they will vote against tonight when they support the Bill and reject the very reasonable amendment moved by my right hon. Friend the right hon. Member for East Ham (Stephen Timms).
Mr Charles Kennedy (Ross, Skye and Lochaber) (LD)
I shall be brief as we are all conscious that we are increasingly up against the clock. I followed the progress of the argument and analysis by the hon. Member for Chesterfield (Toby Perkins) with some interest. Had his predecessor in that seat been here tonight, he would most certainly have voted for the Liberal Democrat amendment, so I hope that the hon. Gentleman will maintain that proud Chesterfield tradition and join us in the Lobby later this evening.
As one who—like so many of my right hon. and hon. Friends—applauds so many of the initiatives that the coalition has been able to take, specifically in the field of social policy, I think that the input from the Liberal Democrats has been significant, not least from my hon. Friend the Minister of State who will have the arduous task of replying to the very wide diaspora of this debate later this evening. That input includes taking low-paid people out of tax altogether to moving in the direction of universal credit—I do not take the jaundiced view of many as to its prospects. I am delighted that the Secretary of State for Work and Pensions is in his place, because if we find, a little further down the track, that a little more constructive pressure needs to be placed on the Treasury to make things work that little bit better, he can certainly count on support from these Benches, because we think that the direction of travel on universal credit is very good. However, my hon. Friend the Member for St Ives (Andrew George) pointed out that the Bill sits at odds, both practically and philosophically, with developments of that type. He used the phrase “a blunt instrument” and I think that is a fair description. Our amendment would maintain a responsible position in relation to the wider issue of the deficit—and deficit reduction policy—in that benefits would not rise at a higher rate than earnings. That is responsible, consistent and a constructive contribution to the debate this evening.
Toby Perkins
The right hon. Gentleman just described his amendment as a Liberal Democrat amendment. Can he confirm that all the Liberal Democrats will vote for it?
Mr Kennedy
From my time as leader, and indeed from reading the memoirs of previous leaders, I know that no leader of the Liberal Democrats worth his salt would ever dare to predict how every Liberal Democrat was going to vote at any given time. But we hope that the critical mass will be such that it will send a helpful signal to those on the Treasury Bench and give me a sentence or two for my own memoirs, if I ever get round to them.
I do not want to get into detail at this stage in the debate: my objection is more a philosophical and political observation. It is right that a party that can look back to a lineage including Beveridge and Lloyd George should make this reflection—that there is a large measure of political device about the Bill, which emanates in particular from the personage of the Chancellor of the Exchequer, aided and abetted by the Prime Minister. I say that because a tactical judgment has been made by the Conservative—not coalition—high command that this can be a very useful dividing stretch of water to place between themselves and, in particular, the Labour party with a view to the next election.
We are not against the politics of choice, argumentation and the clash of ideas—what is the point of a House of Commons and a parliamentary democracy without that? But the insidious aspect of the Bill is that, in seeking to open up a philosophical divide of that type, it becomes not an issue of political leadership, but of political pandering to some of the fears, insecurities and downright prejudices that can be stoked up in society—the “us and them” mentality and the sense of resentment and envy. When people start playing fast and loose with those factors—and we have seen early examples against the backdrop of this legislation in the last week to 10 days —they are following a very risky strategy indeed.
I was pleased that the Deputy Prime Minister—the leader of my party—spoke out robustly against the initial posters and some of the leaflets that the Conservatives were producing. However, where the temptation of Her Majesty’s Britannic and historic Conservative and Unionist party is concerned about opportunism within the welfare state historically and playing that card to their advantage and to the disadvantage of others, I would take reassurances from them on that this week as assuredly as I would take reassurances on Wednesday night from the Prime Minister about the direction of their European policy. That is the fact of the matter. But if that is the game that we are playing—and I fear it is—the Liberal Democrats should ensure a clear distance between ourselves and the Conservatives, given our political lineage.
My second point, as my hon. Friend the Member for St Ives said, is that the presence of my hon. Friend the Minister of State—and other colleagues, both in the coalition as Ministers and outside it—has added strength to the philosophical and practical arguments that we seek to bring to social policy. Before the last election, I shared a party platform at one of our conferences with the leader of my party. We were speaking about aspects of social policy, and the point I made to him and to the audience I repeat tonight. We can be tough-minded—indeed much more tough-minded than many an outside commentator ever expected the Liberal Democrats would or could be when the coalition was entered into two and a half years ago—and that has been proven. What we have to remind people of—with a view to the next election—is that our party and our cause is not just about the head, but must also be about the heart. Many people will view this Bill as hard-hearted, and many will remember that when they come to cast their votes. In part, what we are trying to do here is remind that section of our electorate, our membership, our activists, our sympathisers and our supporters whom we want to come back over the second half of this Parliament, that while the head remains rigorous in government, the heart has not been lost in the wider environ that is UK Liberal Democracy.
My final point is one that I believe my hon. Friend the Member for Argyll and Bute (Mr Reid), who has had such excellent and characteristically detailed input to our internal discussions, raised with the Prime Minister only last Wednesday at Prime Minister’s questions. In setting this arbitrary and post-2015 set of legislative strictures on what will happen to benefits uprating, what account had been taken of the difficult art of gazing into the crystal ball where future levels of inflation are concerned, not least where trends in food and energy prices are involved? The answer, frankly, in any fair-minded way, came there none from the Prime Minister to my hon. Friend.
Helen Goodman
It is a great pleasure to follow the right hon. Member for Ross, Skye and Lochaber (Mr Kennedy), who made some telling points about the problems with the Bill.
I rise to speak in support of amendment 12, moved by my right hon. Friend the Member for East Ham (Stephen Timms). The proposals to cut the real income of the poorest are ugly and unjust. I am pleased that the Secretary of State is in his place on the Front Bench. He frequently parades his Christian beliefs, so I shall begin by quoting from the Churches Regional Commission report, “Am I My Brother’s Keeper?”, which states that the switch in indexation
“represents an on-going erosion…effectively ratcheting up poverty long into the future.”
By 2015, the effect of 1% indexation compared with indexation in line with the CPI to a person on JSA or ESA will be a loss of £156 a year; that is a 4% cut in real terms for those least able to afford it. If the Office for Budget Responsibility’s inflation forecast is wrong, the situation could be even worse.
As we consider the Bill we need to look across at all the changes that the Government are making—we cannot look at this measure in isolation. To see the impact it will have on people, we need to look across the board. I now receive a lot of correspondence from constituents on ESA, who are particularly badly hit. I want to tell the House about one person. Her £66 a week rent is paid by housing benefit. In April, her benefit will go up to £71.70. Out of that, she pays £10 a week for electricity, and £6 a week for water rates. Like many of my constituents, she still uses coal for heating, and three bags of coal—just to inform the Minister, because I do not suppose he is up with coal prices—will cost her £19.50 a week. Her return bus fare to the town—she lives in a village—is £4 a week, and her bedroom tax is £9.24 a week. All of that will leave her with £22.96 for food, cleaning, all household goods and clothes. I submit that even the hon. Member for Gloucester (Richard Graham) could not live on £22.96 a week. If he actually considered the sums of money that ordinary people will be expected to live on, he would understand the outrage we on this side of the House feel at the continuous erosion of the social security net.
Richard Graham
I am grateful to the hon. Lady for giving way after her passionate outburst. Yes, of course I share her concern about people on not very much money. My issue with the speech made by the hon. Member for Chesterfield (Toby Perkins) was his assumption that we were talking about people earning £35,000 a year. I do not think he understands that the average wage in my constituency is less than £25,000. We are talking about young nurses—people whose salaries are capped and who are seeing people on benefits get significantly larger increases. That is the issue at stake this evening.
Helen Goodman
I am sorry, but the hon. Gentleman evidently does not understand the Bill. He evidently does not understand that people on those low wages will also lose out through the cuts to working tax credits and housing benefit. In fact, the whole point about the Government’s strategic, political mistake is that more people in work will lose out from the Bill than those who do not work. Furthermore—if he will allow me to do a little more arithmetic for him—a person currently on ESA will get a 70p increase in April, but a person earning £25,000 and receiving a 1% increase will get a £5 a week increase. Can he not understand that 70p is quite a lot less than £5?
Helen Goodman
I am not going to give way to the hon. Gentleman again, because other Members want to speak.
I want to address the Minister. When, in the previous Parliament, we introduced the Bill that became the Child Poverty Act 2010, he gave a great deal of evidence from the Family Budgeting Unit in York and the people at Loughborough about the minimum income standard—the minimum income guarantee. He said that what the Labour Government were doing was absolutely shameful and that benefits were not high enough. Now, however, we see that he is prepared to cut benefits in a way that we never did. The testimony to the great success of this Government’s benefit policy is the expansion in the number of food banks: in Durham last year, the food bank fed 4,455 people, of whom 1,390 were children. That is utterly shameful. To demonstrate that it is not possible to live on £22.96 a week, I am going to try to do so during the February recess. Neither I nor, I believe, any other hon. Member seriously believes that they could live on £22.96 a week. We have to look at this in context.
The Bill is unjust because it is simply not fair in the treatment of people in work and those out of work, and the treatment of people on high incomes and people on low incomes. When the dole was introduced in 1912, it was approximately a fifth of average earnings, and so it stayed until 1979, as the hon. Member for Brighton, Pavilion (Caroline Lucas) said. By 1989, it was 15.8% of average earnings; by 1997, according to the House of Commons Library, it was 13.2%; and by 2015, it will be 11.1%. It is absolutely clear that the Government are trying to take it back to the very lowest point at the very bottom of the recession, irrespective of the impact on people’s normal standards of living. Everything the Prime Minister has said about those with the broadest shoulders bearing the biggest burden is seen to be utterly empty and fallacious when the Government introduce such a Bill.
There has been an ugly attempt to divide the poor between the “deserving” and the “undeserving”—taking us back to the 19th century—between sheep and goats, between strivers and shirkers, and between with those with their curtains closed and those with their curtains open. In my constituency, if people’s curtains are closed at 9 o’clock in the morning, it is probably because they are on nights and they are trying to catch up with their sleep. The Churches Regional Commission states that
“of all the words to describe those who depend on welfare, “feckless” has to be the one that rankles most.”
This attempt to divide has failed, however, on the factual ground that two thirds of those affected by the Bill are in work. The housing benefit and tax credit changes will affect far more people.
The right hon. Member for Wokingham (Mr Redwood), who unfortunately is no longer present, tried to tell us that these changes will improve work incentives. As the noble Lord Freud said in the other House,
“there is an inevitable trade-off between the level of benefits and incentives to work. Raising benefit levels would undoubtedly hamper the work-incentive”.—[Official Report, House of Lords, 13 October 2011; Vol. 730, c. GC498.]
Obviously, that is setting to one side the fact that in order to work harder the poor must be made poorer, but the rich can be made richer.
Let us look at the impact of the changes and the context. In my constituency, 7,200 people will lose out as a result of the Bill, by an average of £500; that will take £3.5 million out of the local economy. If the International Monetary Fund is correct, the second round effect will be even greater, at £4.5 million, so the net upshot is an £8 million loss to the economy of my constituency. It is no wonder shops are closing and small business are folding. That is absolutely illogical, and it goes against what the Chancellor of the Exchequer said about the need to let the fiscal stabilisers work.
Andrew Bridgen
The hon. Lady talks of her concern for the poor, and it is shared by right hon. and hon. Members on the Government Benches. The problem is that every time her party gets into office, its policies create more of them. Can she explain why the number of adults out of work for more than 24 months doubled in Labour’s last term in office?
Helen Goodman
Yes, I can. It is absolutely obvious: we were in the middle of a very deep recession, which the hon. Gentleman seems conveniently to have forgotten. Of course the number of unemployed people has gone up, but the previous Labour Government helped all sorts of other people back into work—365,000 lone parents, for example. If he would care to look at a map of where incapacity benefit and ESA claimants live, he will see that it looks like a map charting the industrial revolution in the 18th century. Those benefit costs clearly reflect the overhanging legacy of the decline of heavy industry. It is totally unreasonable and unfair to punish the people who happened to work in heavy industry.
Once again, we come to the issue of unemployment. We in the north-east have the highest rate of unemployment in the entire country—9.9%. We have seven people chasing every job vacancy. Whether the gap between the increase for a person on £25,000 a year and the increase for a person on JSA is £4.30 or £4.20 will make no material difference to people’s capability or willingness to find a job, which is why we need a completely different approach to job creation. My constituents want to go back to work.
Helen Goodman
No, I will not. The hon. Gentleman will have a chance to make his own speech. Many hon. Members have given way to him in the course of the debate.
The Chancellor of the Exchequer has broken another promise he made in 2011. He said:
“I also want to protect… those who, through no fault of their own, have lost jobs and are trying to find work”.—[Official Report, 29 November 2011; Vol. 536, c. 802.]
He is patently failing to protect those people. By definition, people on statutory sick pay, statutory maternity pay, statutory paternity pay or statutory adoption pay are not going out to work, but they, too, are seeing their incomes fall, and that is at a time when they have new children coming into the family and need more support.
Mr Marcus Jones
The hon. Lady talks about the difficult decisions the Government are having to make, but she does not acknowledge the fact that from the time the Government came into office to 2016, the child element of working tax credit will actually go up by £470 in cash terms.
Helen Goodman
The hon. Gentleman is absolutely right, but the point I am trying to make is that we have to look at the cumulative impact of all the changes. If he looks at the tax and benefits micro-simulation model produced by Her Majesty’s Treasury, he will see that everybody in the bottom half of the distribution is a loser, but those people between 50% and 80% in the distribution are gainers. Therefore, he can understand that although the change to child tax credit—we will discuss it under the next group of amendments—might be very welcome, it is not doing the business because of the severity of the Government’s other reductions.
The hon. Gentleman has raised the issue of child poverty, and there is one specific question I wish to ask the Minister and that I hope—
Helen Goodman
Let me ask the question before trying to answer it. We have heard that the IFS has estimated that by 2015 the number of children in relative poverty will increase by 400,000. Furthermore, the Bill will push another 200,000 children into relative poverty. The Minister knows that we had four measures in the Child Poverty Act 2010. What will be the increase over the life of this Parliament in the number of children living in absolute poverty?
Steve Webb
I will respond very fully on the issue of child poverty, which a number of hon. Members have raised. I wanted to ask the hon. Lady about the point she made about incapacity benefit. She said that if we look across Britain, we will see that incapacity benefit is highest in all the industrial heartlands. I hesitate to bring her back to the Bill, but is she aware that we are actually proposing to increase the main rate of incapacity benefit fully in line with inflation?
Helen Goodman
Yes, but the hon. Gentleman knows that his own impact assessment demonstrates that the Government’s claim that they would protect all people with disabilities is not accurate. I am disappointed that he did not answer my question about child poverty. I do not know whether that is because he does not know the answer or because he is ashamed of it. Perhaps he can explain when he winds up the debate.
Mr Reid
I want to speak in support of amendment 10, to which I am a signatory. It is important to set the debate in context. In 2010, the Government inherited an economic mess from the previous Government, including a huge budget deficit, which is why difficult decisions have to be taken. It is important to remind the Committee that just before the previous Government left office, for every £3 they raised, they were spending £4, so borrowing was going up and up. It was interesting to listen to the opening remarks of the right hon. Member for East Ham (Stephen Timms). There was a lot of sound and fury, but little actual policy. In fact, Labour’s amendment would replace the 1% in the Bill with a blank space. Labour does not seem to have any policy at all. His remarks seemed to indicate that the policy, whatever it is, would cost a lot. I think that Labour’s policy of borrow and spend is still in place.
Sheila Gilmore
I ask the hon. Gentleman to consider, in terms of what is or is not happening, that this measure is not part of what the Government came into office to do. This measure has been made necessary because they have not managed to reach the position they had anticipated they would reach, and that is because their policies have failed. Had they reached the position they had anticipated reaching, these further reductions in benefits would not be necessary.
Mr Reid
Well, we did not hear any policy from the hon. Lady. I can only assume that she still follows the previous Government’s borrow-and-spend policies.
I support amendment 10, rather than the Labour party’s “empty space” policy. Amendment 10 would have benefits increase in line with the increase in average earnings.
The tax increases under this Government have quite rightly fallen most heavily on those with high incomes, who are paying a far higher proportion of their income in tax than under the previous Government—let us take, for example, the increase in capital gains tax. If there were a Liberal Democrat Government and not a coalition Government, the well-off would be paying far more tax—a mansion tax, for example. The Government have also helped people in low-paid jobs by increasing the personal allowance, which I hope will be raised to £10,000 before the end of this Parliament. The work done by the Minister of State, my hon. Friend the Member for Thornbury and Yate (Steve Webb) on universal credit will also help people on low incomes. Pensioners have also been protected from the cuts, because of the triple-lock guarantee, and my hon. Friend is introducing the new single-tier pension—another major achievement.
The group of people we are discussing this evening, whose incomes would be cut by clause 1, are those in receipt of working-age benefits, but not disability benefits. Coalition is all about negotiations and reaching compromises. It is important to note what would be happening to welfare benefits if we had a Conservative Government and not a coalition. We know from statements in the public domain that a Conservative Government would propose a benefits freeze, not a 1% increase, and that the cuts would apply to all benefits, not just those listed this evening. Such a freeze would last for several years—not just three years, as under the coalition Government’s policy—and child benefit would be awarded only for the first two children in the household. These are all policies that a Conservative Government would introduce, but which the coalition is not. We also know, as was made evident earlier—certainly from the cheers on the Conservative Benches behind me—that a Conservative Government would reduce the top rate of tax to 40%, not leave it at 45%. Liberal Democrats in government have achieved a great deal in lessening the impact on welfare benefits uprating, compared with a purely Conservative Government.
However, my main concern about the measures in the Bill—this echoes concerns raised by the right hon. Member for Wokingham (Mr Redwood) and others who have spoken—is that committing the country to a 1% increase for three years now, before we know what inflation will be when the increase comes into effect, could end up being harmful to people on low incomes, because we have absolutely no idea how much world fuel and food prices will rise in those three years. I recognise the strength of the argument that benefits for people out of work should not rise at a higher rate than the earnings of those in work, which is why amendment 10 proposes to increase such benefits by the same percentage as the rise in average earnings over the previous year. Amendment 10 would be a fair compromise between the need to cut the deficit and the need to provide a safety net for those dependent on welfare benefits.
There has been a lot of talk about scroungers and curtains being drawn. I entirely reject such rhetoric. It is important to note that strong sanctions are available for those receiving jobseeker’s allowance. For example, people can lose their jobseeker’s allowance for up to three years if they do not apply for a job that their adviser tells them about, do not accept a suitable job offer, leave a job voluntarily, lose their job because of misconduct or do not take part in a compulsory Work programme. Therefore, sanctions are indeed available.
I represent a very rural constituency. It is important to point out that prices on islands or remote parts of the mainland are higher than in most of the rest of the country, and that people on jobseeker’s allowance in remote areas who are finding it difficult to get a job in the area in which they live are on very low incomes. We should not commit ourselves to only a 1% increase for the next three years, because we do not know what will happen to prices during that time.
Mr Marcus Jones
Would my hon. Friend acknowledge that if we had applied the logic that he is now advocating over the last five or six years and pegged benefits to wage rate inflation, the people he is talking about—the people he is trying to help—would be far worse off?
Mr Reid
A lot depends on where we start. If we are talking about rises matching prices or wages, it all depends on the starting point—if we pick a different starting point, we get a different result.
I was talking about the next three years. We know what the rise in average earnings was last year, so obviously we know what the rise in benefits would be in 2013-14. We do not know what it would be in 2014-15 or 2015-16, but setting the increase to the rise in average earnings, rather than a fixed rate of 1%, would mean that as the economy gradually grew, the level of growth in the economy would be paid to those on benefits, as well as those in work. That is a better approach than having a fixed rate of 1% for three years.
No Government have control over world food and energy prices. At Prime Minister’s questions last week I raised this potential problem when I asked the Prime Minister what contingency plans the Government had for benefit increases, should food and energy prices rise by more than expected. He answered by pointing to the good work being done by my right hon. Friend the Secretary of State for Energy and Climate Change to ensure that energy companies put people on the lowest available tariffs. That will indeed be a big help to people on low incomes, but if energy prices rise by more than expected, the lowest tariff will rise by more than expected too. After I heard the Prime Minister’s answer, I am afraid that I was left to form the conclusion that the Government have no contingency plans for a scenario in which prices rise by more than expected. I hope that when my hon. Friend the Minister replies to this debate, he will be able to reassure me on that point. I hope there is a plan B, in case world prices go up by more than expected.
Setting future increases to the increase in average earnings would address the legitimate argument that out-of-work benefits should not rise faster than earnings and would help to cut the deficit. For example, if the CPI figure were used for 2013-14, benefits would increase by 2.2%. If average earnings were used, they would increase by 1.6%, saving half the amount that a 1% increase would save. It is also important to point out that cutting public spending on its own will not eliminate the deficit. We need to grow the economy as well. All the economic research indicates that money put into the pockets of people on low incomes is far more likely to be spent straight away than it would be by those on higher incomes. Not increasing welfare benefits by the rate of inflation will have an impact on shops and other businesses, as well as the recipients themselves.
To sum up, linking benefit increases to average earnings is much fairer all round and avoids committing ourselves to a fixed figure unnecessarily far in advance. I hope that the Committee will support amendment 10, and I hope that you will allow it to be put to a vote, Mr Amess.
Mr William Bain
This evening’s debate on clause 1 and amendment 12, moved by my right hon. Friend the Member for East Ham (Stephen Timms), is important because it speaks to more than the £13 billion increase in the welfare budget caused by this Government’s failure on growth since 2010 or even the chronic lack of jobs, in a still depressed economy, faced by so many hundreds of thousands of people in our country. This debate speaks to the very values of our society.
Are we a country that is content to divide socially instead of coming together—jobless and workers, low-paid and middle earners—to defeat again the social evils of worklessness, low pay, slumping living standards and poverty? Are we a country that is content to see the doubling of food banks under this Government since May 2010, as 1.4 million people in work find themselves needing to resort to credit to help to pay the rent or the mortgage each month? Are we a country that will fall for the cynical “divide and rule” tactics of the Chancellor, which treat people as pawns in a squalid political game, amid a campaign of demonising the poor and turning neighbour against neighbour, when a responsible Government would seek to unite people rather than divide the country? This clause is rotten economics, ruinous for weak economic demand up and down the country and rank politics, from a Government who can relaunch as many times as they like, but who will never rediscover any sense of moral purpose while they engage in this basest of agendas of social division.
Andrew Bridgen
The hon. Gentleman mentions unity. Does he agree that if people lead their life on welfare, it is not only bad for our economy and for our society but tremendously bad for those people themselves, hugely reducing their life expectancy and seriously damaging their children’s lives and prospects? It should be discouraged; the best way out of poverty is through work.
Mr Bain
On this pleasant occasion, I find that I entirely agree with the hon. Gentleman. Let us hope that that agreement will continue when he contributes to the debate later, and in future debates.
These measures are not pro-growth, as they were included in the analysis from the Office for Budget Responsibility in December that further downgraded growth forecasts for this year by 0.8% of gross domestic product. They are not pro-deficit reduction, as unemployment is set to become 340,000 higher than the level predicted by the OBR in 2010, and benefit bills will be £13 billion higher than forecast. They are not pro-equality either, as two thirds of the real-terms cuts introduced by clauses 1 and 2 will hurt women, and three fifths of them will hurt working families.
If the Government believe that they are standing up for fairness in the midst of the longest slump for 140 years, this must be either the most incompetent or the most misguided set of measures since those proposed by the National Government in 1931. On every count, they will increase, not cut, inequality in our country, given that 71% of the households affected are on or below the average income, and that 60% of the total savings from the Bill will come from the poorest third on the income scale. Only 3% will come from the wealthiest third. On no count can these measures be described as fair. How on earth can the Government believe that it is right to introduce a 4% real-terms cut in benefits until 2015 while continuing to pay top-rate pension tax relief to top-rate taxpayers at a rate of 50p in the pound? They are doing that while impoverishing the very poorest people at the same time.
Unemployment in my constituency remains consistently high at more than 4,000, or 12% of the working-age population. Although more than two thirds of jobless people experience only a few months out of work at the most, there are more than 1,300 people there who have been out of work for a year or more. Within that group, some 600 people have been out of work for two years or more. If the Government were serious about welfare reform, they would accept that ending the crushing blow of such long-term joblessness, which saps the human spirit and harms long-term job prospects—as the hon. Member for North West Leicestershire (Andrew Bridgen) pointed out—should be the first duty of a responsible Government. Instead, they have put this ruinous set of measures before us tonight.
Andrew Bridgen
Given the sense of unity between us, will the hon. Gentleman endorse the coalition Government’s policies that have helped the economy to create 1.2 million new private sector jobs during this Parliament?
Mr Bain
I would not endorse that policy because, as the hon. Gentleman knows, that figure includes the transfer of between 200,000 and 250,000 college staff from the public sector to the private sector. I am not going to endorse that figure; he knows that it is not accurate.
Sheila Gilmore
Would my hon. Friend like to refer the hon. Member for North West Leicestershire (Andrew Bridgen) to recent articles—including some in The Guardian, which he would probably discount—that show not only that those jobs were transferred from the public sector to the private sector but that the Government are counting unpaid work in the total of new jobs being created?
Mr Bain
Yes indeed, I have seen that report, and it was scandalous. I was somewhat perplexed by the right hon. Member for Wokingham (Mr Redwood) when he said that people who were in part-time work were satisfied with that situation. The truth is that, as the TUC has established, 3.2 million people in this country are stuck in involuntary part-time work because of weak demand, low growth and low investment in the low-productivity economy that is being presided over by this Government.
Christopher Pincher (Tamworth) (Con)
The hon. Gentleman is making a thoughtful contribution, as ever. He talks about fairness. Does he think it fair for a Government to spend £25 billion over 10 years only to see the number of those in fuel poverty increase by 2.8 million? Does he think it fair to add 75p to a pensioner’s pension? Does he think it fair to add 10p to fuel duty? And does he think it fair that 1,610 people in his constituency were lifted out of tax last December?
Mr Bain
What I would certainly define as unfair is introducing a clause whose impact on the poorest 10% of people on the income scale will be 14 times harder than on the richest 10%. I hope that he has read the impact assessment as closely as I have. If he has, he will know that 1.4 million people in the lowest 10% will be affected by this measure, but only 100,000 in the top 10% will be similarly affected. That cannot, by any stretch of the imagination, be considered fair.
Mr Bain
I hope that the hon. Gentleman will have an opportunity to make his own contribution later, and that he will recognise that I have been generous in giving way to him once already.
Long-term unemployment in Scotland has risen by 385% since 2008. I welcomed the presence of Scottish National party Members in the Division Lobby with Labour Members the other week, voting for our reasoned amendment to the Bill relating to the jobs guarantee, and I hope that it will not be too much longer before the Scottish Government follow Labour’s lead and introduce a jobs guarantee for those most in need of work in Scotland. They could easily do that. I hope that they will look at the example set by Glasgow city council in introducing a successful jobs fund for the young jobless, because such a measure would supersede the measures in clause 1. Countries such as Sweden, which many in the Scottish Government often ask people in Scotland to emulate, have used jobs guarantee policies very successfully indeed for nearly two decades, while reducing their deficit at the same time.
Dr Eilidh Whiteford (Banff and Buchan) (SNP)
Does the hon. Gentleman also welcome the Scottish Government’s efforts to ensure that every 16 to 19-year-old in Scotland be guaranteed an educational or training place?
Mr Bain
I would welcome any measures from any tier of Government that would increase the level of training and skills provided to my constituents and those in other Scottish constituencies. I have to say to the hon. Lady, however, that I have two major colleges in my constituency—North Glasgow college and John Wheatley college—which have seen staggering levels of cuts introduced by the Scottish Government. That is driving more young people in my constituency into unemployment and creating the very figures that allow those on the Treasury Bench to produce measures such as those in clause 1.
Even in constituencies such as mine, it is still the case that people move in and out of unemployment. The calculated framing of this debate by the Government, based on the fabricated and manufactured premise that there is a monolithic army of the permanently idle, unwilling even to open their curtains, and defrauding the system, wilfully ignores that fact. Fraud in the benefit system is only 0.7%, and many unemployed people, including many of my constituents, are struggling hugely on just £71.40 a week. Unemployment benefit as a proportion of average income has fallen from 22% in 1979 to a mere 15% now, so the argument from those on the Treasury Bench that unemployment benefit is somehow unaffordable and that it cannot continue into the decades to come is simply a false premise to put to the Committee tonight.
Helen Goodman
Would my hon. Friend like to point out to Government Members that, in the days when jobseeker’s allowance and its predecessors represented a higher proportion of earnings than now, we also had lower unemployment?
Mr Bain
That is absolutely right. We also had lower levels of long-term unemployment than we have now. As I and other Members have pointed out, high levels of long-term unemployment decrease the earnings potential of the people afflicted by that social evil.
Only today, the Joseph Rowntree Foundation published a survey of poverty in Scotland which revealed that a baby boy born in the richest 10% of Scottish neighbourhoods has a life expectancy 14 years higher than that of a baby boy born in the poorest 10% of such neighbourhoods. Having a 4% real-terms cut in unemployment and other out-of-work benefits of the sort contained in clause 1 is going to make those figures in Scotland even worse. I urge the Government to think again, to accept amendment 12 and to reduce the terrible social damage that will be caused if this measure becomes law.
I hope that, at this eleventh hour, the Government will decide to make policy on the basis of evidence, rather than reintroduce some Victorian distinction between the deserving and the undeserving poor. I urge them to think again about the impact that clause 1 will have, ensuring that 90% of those in out-of-work benefits will, according to the Institute for Fiscal Studies, be an average of £215 a year worse off. They should consider the effect that will have not just on high streets in our towns, villages and cities but on the local shop. They should think about the amount of economic demand that will be taken out of local communities, the jobs that will go as a result of the passing of this measure in this form tonight.
The Government ignore the inconvenient truth that out-of-work benefits constitute just 3% of the welfare budget, and that outside of pensions, most welfare spending ensures that work pays for many of our citizens. Nearly three in 10 of my constituents earn less than the living wage of £7.45 an hour. Although introducing a living wage in those parts of the economy where it will work would save money in lower tax credit costs, we, like many other countries, need a strong tax credit system to reduce imbalances within the labour market that would otherwise cause unacceptable levels of inequality. The simple truth is that most poverty in Britain today is among the working poor. It is mainly the working poor who are losing out as a result of these measures. They will be the biggest victims if this iniquitous Bill were to become law, with a real-terms 4% cut in their living standards.
In Scotland, as a result of these measures, some 261,000 working families, nearly one in five, would lose an average of £259 a year by 2015—the antithesis of work paying for those 261,000. About 70% of the tax credit cuts will affect working families in Scotland. The median wage in my constituency is less than £17,600 a year, and many thousands of people will be savagely hurt by clause 1, as Citizens Advice outlined in its submission. A couple on just £13,000 with two children will lose nearly 5% of their income as a result of this Bill, completely overwhelming any benefit from increasing personal tax allowances, which is worth just 13p a week to them.
This debate is not just about the measure before us; it is a debate about the values of this Government and the priorities of our society. This Bill impoverishes the poor, without reducing the deficit; it makes inequality worse, adding 200,000 to the child poverty figures, leaving 1 million more children in poverty by 2020. This clause is a provision that will cause enormous hardship to some of the poorest people in society, and it will devastate economic demand in constituencies such as mine. I urge the Committee to endorse amendment 12 and to vote against clause 1.
Kwasi Kwarteng
I am grateful to be called to contribute to this Committee debate. Many of tonight’s speeches have made me feel that I live in a different world from the one in which my constituents and a large number of people in this country live. I propose to Labour Members that the world in which they live is one far removed from reality.
When this Government came to office in 2010, the coalition confronted the worst peacetime deficit in Britain’s history. That fact cannot be repeated often enough. This is the architecture and the framework through which every single decision has been made since the formation of that Government. It is particularly nauseating to see Labour Members berate the Government for trying to make very tough choices and trying to make savings when they were the architects responsible for the chronic and devastating mismanagement of our public finances; and it is particularly nauseating to see those Members berate and accuse the Government of being purely political in respect of this very difficult measure.
Sheila Gilmore
Does the hon. Gentleman not appreciate the reason why this particular Bill and its measures have been called political? It was clear in the autumn statement that the Chancellor intended these measures to be some sort of political trap. In making choices, any Government would not be looking only at the contents of this Bill. I would be happy to talk about a much wider range of choices, so why can we not have a wider Bill?
Kwasi Kwarteng
In my opening remarks, I made a wider point about the eurozone. This is exactly what goes to the heart of the issue. What those countries have done to deal with their fiscal crisis—I am not saying we should follow it, but we have to remember that their deficits are better than ours at the moment—is to make swingeing cuts to public spending in the form of benefits. We have not done that. We have spared our people that measure of severity, but we have to recognise that a large portion of spending goes in this direction and that the savings we are making are in the region of £3.7 billion a year.
Our coalition colleagues, the Liberal Democrats have said that the time frame is arbitrary. Some people have talked about 1912—more than 100 years ago—and some have talked about the last 30 years. I am not interested in the last 30 years. I am interested in what has happened since the financial crisis. I am interested in what has happened since Labour got us into the mess we are in. I accept that it is an international mess and that there is a world crisis, but the fact remains that, at £170 billion, this was a much larger deficit than that of any of our competitor or partner countries in the OECD. In that context, something had to give. We had to make some very tough choices about spending.
Let me consider some of the provisions. There is clearly a measure of disagreement over how we should approach this aspect of welfare spending. I have yet to hear from Opposition Members by how much they think benefits should rise. We have heard one suggestion, although admittedly it came from the only member of the Green party in the House. The hon. Member for Brighton, Pavilion (Caroline Lucas) seemed to be saying that she would have raised the rate in line with the retail prices index. When asked how much that would cost, she blithely replied “£7.4 billion”—I am sorry, it was £7.6 billion—as if that were a snip. It is to her credit that she at least had the honesty to spell out what are, in my view, the disastrous fiscal implications of her policy. Labour members have given no such undertakings. They have made no such statements about what their policies would actually cost. They have simply wailed and moaned about the harshness of the Government, without in any way recognising the severity of the crisis that we face.
Charlie Elphicke
Does my hon. Friend agree that it is a question not just of welfare policies, but of employment or, in the case of the Labour party, unemployment policies? In my constituency youth unemployment rose by 52% under the last Labour Government, and rose by 36% in the constituency of the hon. Member for Glasgow North East (Mr Bain). Under the present Government, it has fallen by 11% in Glasgow North East. Does that not show that our war on unemployment is beginning to work, and the economy is beginning to heal?
Kwasi Kwarteng
I could not have put it better myself. My hon. Friend has made an important point about employment, which touches on a wider point about the division between Government and Opposition. The Labour attempt to create a socialist state by means of Government spending led to absolute disaster, as it always does. We will not be able to create jobs simply by expanding the public sector ad infinitum; logic tells us that that is not going to work.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
I am pleased to note that my hon. Friend ascribes efficiency and a real plan to the Labour Government, but that great plan of theirs to create a socialist state ended in the payment of tax credits to people earning more than £70,000 a year. Who were they helping in that regard?
Kwasi Kwarteng
This is anecdotal evidence, but I was reliably informed that a couple of Liberal Democrat Members of Parliament were claiming tax credits on the basis that they were entitled to them. That is the sort of barmy universe that was constructed under the last Administration, and it is something that we have had to redress. When we consider matters such as those that we are considering today, we must always bear in mind that, given a budget deficit of £170 billion—more than 12% of GDP—it is very difficult to curb public spending sufficiently to enable the country to pay its way on a sustainable basis.
Christopher Pincher
I am obliged to my hon. Friend for reminding the House that it is the historic mission of the Conservative party to clear up the mess left behind by successive Labour Governments. Does he agree that it is unfair for people earning more than £70,000 a year to be paid tax credits, but very fair that people earning just £10,000 a year—who paid £1,160 in tax and national insurance in 2010—will now pay only £670, and even fairer that next year they will pay only £360? Is that not an example of Conservative fairness?
Kwasi Kwarteng
It is not only fair, but common sense. The Labour cash merry-go-round, when Labour was taxing people with very low earnings and then handing back the money in the form of benefits, did not provide a sustainable model. The measures that we have introduced have been far more effective in reducing—[Interruption.] I wish I could share the joke, but I have more important matters with which to deal.
Helen Goodman
The hon. Gentleman can share the joke. I was just wondering whether he was going to tell the House that the banking collapse had been caused by working tax credit.
Kwasi Kwarteng
I have my own ideas about the banking collapse, which I am happy to share with the hon. Lady—although not, perhaps, tonight.
The financial crisis, which we all remember, devastated everyone. Even today, the United Kingdom economy is 3% smaller than it was in 2008. I cannot speak for everyone in the country, but the vast majority of people are much less well-off than they were in those days. What has happened to benefits since then? According to the figures that we have heard, they have increased by 20% while the earnings of people in work have risen by 10%. That is not fair.
Labour Members have talked of fairness. For instance, the hon. Member for Chesterfield argued eloquently that 1% on £70 a week was very different from 1% on £35,000 a year. However, it is not the people on £35,000 a year about whom we are worried; it is the people on very low incomes. People in my constituency who do night shifts at Heathrow come to me and ask “Why did out-of-work benefits rise by 5% last year? I earn £11,000 a year if I am lucky and work 20 hours a week, but I was not given such a big increase.” That is the sort of fairness that we are talking about. This is a really important issue, which Opposition Members have not addressed in any way.
Martin Horwood
Is not the answer to the hon. Gentleman’s question—which applies to people on low incomes in my constituency as much as to those in his—that those who have worked hard and have low incomes, but have paid their taxes and done the right thing, can still lose their jobs through no fault of their own and find themselves trying to subsist on 70 quid a week, and that we do not want to make things more difficult for those people? I think that very few of them are scroungers, and most want to get back to work as fast as possible.
Kwasi Kwarteng
I accept what the hon. Gentleman says, but I am talking about the position in general. It cannot be right, arithmetically, for benefits to rise, year after year, faster than the wages of the low-paid people to whom he has referred. However, we must look at the overall picture. The 1% increase is not very much. I know that some Government Members proposed a cash freeze, and I am glad to note that the Government have not adopted that severe option; but in the context of the European and the global financial crisis, a cash freeze is not completely off the table. We have seen other countries take extremely tough measures. Why have they done that? They have not done it because they want to limit demand, as the hon. Member for Glasgow North East suggested. They have not done it because they want to hurt people on low incomes. They have done it because they feel that the fiscal future—the future of the state: the future of their countries—requires a tough approach to public spending.
Mr Bain
Would the hon. Gentleman care to comment on the fact that the International Monetary Fund has called for the free and unimpeded operation of the automatic fiscal stabilisers, including unemployment benefits, when people, sadly, lose their jobs? Does he agree with Jonathan Portes, who used to work for the Government and now works for the National Institute of Economic and Social Research, and who says that the Bill makes little or no sense macro-economically? Is Jonathan Portes not right?
Kwasi Kwarteng
Jonathan Portes is not right. I do not think that anything he has ever written—I read his blog—makes any sense whatsoever, and I am happy for Hansard to record that. On the point about the automatic stabilisers, I refer the hon. Gentleman to the answer that my right hon. Friend the Member for Wokingham (Mr Redwood) gave him. The automatic stabilisers are working; in cash terms, a lot of our spending in these elements is higher than it was. That is a clear sign that the automatic stabilisers are working.
Andrew Bridgen
Does my hon. Friend agree with my argument that what we have heard in this evening’s debate confirms that the parts of the country with the highest levels of unemployment often also have the lowest average wages and so it is important, if we want to make work pay—I believe all right hon. and hon. Members in the Chamber would agree that work must always pay—that we keep that disparity in respect of work and keep the incentive for people to get into jobs?
Kwasi Kwarteng
That is absolutely right.
I shall try to keep my closing remarks brief. The 1% rise in the uprating is surely a temporary measure; I would not want to see this in perpetuity. My right hon. Friend the Member for Wokingham talked about the need to combat inflation. Clearly if inflation is sustained at 3% or 4% over years, that would be very punitive and would make the proposed measures even more difficult for people to bear. So the Government need to keep a firm handle and an eagle eye on the inflation rate. I am absolutely in favour of that, but on the general approach I would not want to see any amendments to this Bill. It is a difficult proposal that we are trying to push through, but many people up and down the country are supporting the Government on it because they feel that the measures we are introducing are encouraging people to get out to work. People also realise—I will close where I started my speech—the appalling fiscal legacy given to us, the incredibly difficult financial circumstances in which the Government found themselves, and the tough and courageous measures we are taking to get us out of the mess.
Mr Frank Field (Birkenhead) (Lab)
I rise to support the amendment because it is very clear: it seeks to tear the heart out of this Bill, and it should tear the heart out of the Bill, because it is a terrible Bill. By taking this stance, I am not saying that we should not, with all urgency, think about welfare reform, because that is a mega task which will face a succession of Governments. I am not saying that we do not recognise that there is a real problem in this country with incentives to work, because there is. I am not saying that there are not all sorts of other issues that we need to deal with and consider in relation to this measure. We have to consider what this measure is actually about.
I agree totally with the Government Members who said how serious the fiscal deficit is. I do not doubt that when Labour breaks the trend and has to clear up a mess—we have been hearing this afternoon about Tories clearing up our mess—we might well have to look at the size of the welfare bill. However, I do not believe that any Labour Government would get cuts through without presenting them in a context in which the cuts were thought to be fair. That goes to the heart of the current Government’s strategy. Despite the rhetoric in which they have tried to clothe themselves in respect of the changes they have been making, the country will have to make a judgment in the election on whether the Government have fulfilled the assurance they gave at the beginning of this journey that who had most would pay most and those who had least would be protected. It is no accident that we link the amendments being debated tonight with the tax cuts in the Budget for those who have most.
We will not have to face this issue tonight because, sadly, we know how the vote is likely to go, despite the presence of some brave Liberals—I hope that my saying that encourages even more to vote, knowing that it is safe to register their protest. In the end, it is those outside this House who will judge whether this measure is fair. Is it fair that, at time when we can find moneys to make tax cuts for the very richest, we cut living standards for the very poorest?
Mr Field
No, I am going to make a short speech. I am grateful for the hon. Gentleman’s interest and the way he is following my speech, but I do not want to extend it.
The country will make a judgment about how fair the collection of measures is. I think the Government must be extremely confident, given that we are seeing a record number of people who are hungry and are turning up at food banks operating in our constituencies. Thank God for food banks. I do not hold the view that food banks are terrible; it is great that we have them, because people are hungry. I think it is terrible that we live in society where people are hungry. That is where we should direct the anger; it should not be aimed at the people providing the food banks. We are thinking about cutting benefits at a time when we also know that people who probably have greater abilities than I do in managing on a low income—thank God, I have never had to do so—find that they fail. The Bill will crush some decent people, who find it impossible to live on the levels of income that we lay down.
That we should do this at a time when we can find the money for the richest to take more passes all my understanding. Perhaps the Opposition will lose the vote tonight, but I am not so sure that, on this argument, an indelible mark will not now be made against the coalition Government, who found money to cut taxes for the very rich while making life more and more difficult for the poor, some of whom do not have enough to eat. Should more people join that terrible queue of our fellow citizens? Lots of other arguments have been marvellously put, but for me it comes down, as I guess it will for the electorate, to whether this is fair. I think that they will say no.
The Temporary Chair (Mr David Amess)
Order. I thank the right hon. Gentleman for his brevity. May I remind the Committee that three hon. Members are still seeking to catch my eye, that our Committee proceedings finish at 9 pm and that we still have to hear from the Minister and the Opposition spokesman? I call Mr Richard Graham.
Richard Graham
Thank you, Mr Amess, for calling me to speak in this debate. I will follow your advice and try to be as brief as I can.
Tonight I came to listen to different views on options for this Bill, and we have heard an interesting mix of practical ideas, impractical ones and vacuums. Much of the debate has been wrapped in an argument about, on the one hand, who can claim the moral ground as the more compassionate and, on the other, who can claim to be more practical on economics.
We have just heard from the right hon. Member for Birkenhead (Mr Field), for whom I have enormous respect. He made the argument that this is ultimately all about fairness, but given that Labour Members wanted to retain child benefits for all higher-rate taxpayers, no matter how many millions they earn, I find it hard to take that argument at face value. I also reject the bizarre argument about taxing the richest by more than his party ever did in its 13 years in power—that raising £7 billion less in tax revenue for services that all our poorest constituents most value is somehow beneficial to our poorest and most vulnerable members of society.
On the proposals that have actually been made, the only person who emerges with real credit for honesty is the hon. Member for Brighton, Pavilion (Caroline Lucas). She has the guts to say that these benefits should be uprated now and for ever by the retail prices index, at a preliminary cost of some £7.6 billion. She might have some idea where that money will come from—I am sure she does not, as certainly none of the rest of us does—but at least she has tried to put a value on her compassion. Personally, I think that it is as practical as some of her efforts to spread wind farms across the country, in a passion for green energy for which our constituents will also pay heftily through their energy bills, but that is a separate matter. At least she has put a mark on the ground.
In contrast, Opposition Members, including the hon. Member for Bishop Auckland (Helen Goodman), disappearing from her seat after speaking at great volume, and the hon. Members for Glasgow North East (Mr Bain) and for Chesterfield (Toby Perkins) were unable to say with what they would replace the Government’s proposed uprating of 1%. It was as if they would offer a happy vacuum in which we would depend on the munificence of the shadow Secretary of State—he who famously apologised for having no money left—who would somehow find the money to fill it.
Richard Graham
On that note, I am happy to give way to my great friend, who was unable to recommend his proposals on tax credits to the Communist party of China last week.
Mr Byrne
I am grateful to the hon. Gentleman, who is giving way with characteristic generosity. He will accept that hitherto in this country, and for many years, the proposal to uprate benefits has been presented annually and much closer to the time at which uprating should take place, so that the Chancellor can take account of the latest economic circumstances and the latest level of inflation. It is only now that the House of Commons is being invited to set in stone a strategy that will stretch ahead for many years to come. That is the unusual situation.
Richard Graham
My friend—for he is my friend— the right hon. Member for Birmingham, Hodge Hill (Mr Byrne) would make a valid point if it was not for the fact that this provision is set for only three years and it is set in the context of what he and his colleagues achieved during the extraordinary runaway period between 2003 and 2010, when they unleashed £170 billion of tax credits and raised welfare spending by 60%, so that, as we know, it is now a third of all Government expenditure. That is the bill that all our constituents are having to pay today.
It is not surprising that the Government are having to take the risk—I accept that there is an element of risk—of pre-setting the uprating of these benefits without knowing what the level of inflation will be. That is why my right hon. Friend the Member for Wokingham (Mr Redwood) was right. Hon. Members on both sides of the Committee gave him credit for flagging up the two crucial ingredients—control of inflation and energy—so that some of the less well-off in our constituencies do not suffer from the effective freeze over the next three years.
Mr Byrne
The hon. Gentleman is incredibly generous in giving way. Does he think the Bill is unconnected to the OBR’s decision to uprate the claimant count by a third of a million over the next few years, lifting its forecast for spending on unemployment and other out-of-work benefits by £6 billion? The Bill is needed to pay the price of economic failure. Surely that is the arithmetic.
Richard Graham
The right hon. Gentleman, with his great experience of these matters, asks a technical question which I am fully confident the Minister will answer in detail in due course.
I promised I would be brief, Mr Amess, so let me come to the point. In effect, tonight we have debated in practical terms the benefits of tax credits against the benefits of tax allowances. I argue that tax credits, the chosen policy of the previous Government, were flawed by their cynicism, having been increased by 58% just before the 2005 election and by 20% just before the 2010 election. I am sorry to say that those were giant electoral bribes that led directly to the greatest bust of all times. The hon. Member for Glasgow North East spoke about moral divisions, and to hear that from a Member whose Government created pension credits, which divided pensioner from pensioner, discouraged saving, enabled arguments between—
Richard Graham
I am sorry, but we have no more time for further interventions—
Richard Graham
The hon. Lady will have to wait, and so will my hon. Friend.
I reject completely the idea of moral divisions. This is not an argument between what the hon. Member for Gateshead (Ian Mearns) called a compassion-bypass Government and an economic-car-crash Government. It is about what is fair for the people who pay the taxes that pay for the services and benefits and what is fair for those who receive them. Many of us will have had letters from constituents who work for not very much money, contrary to what the hon. Member for Chesterfield implied, and who point out that their motivation for working suffers when they realise that those who do not work have received more than double the increase in their wage over the past year.
Measuring social justice entirely by how much we spend of other people’s money to generate a system where we now pay more in interest on our debt than we spend on the entire education budget—that is not moral compassion. It is wrong, and that is why we must make practical decisions that are sometimes tough. One of them is being presented to us this evening and I shall support the Bill.
Dr Whiteford
I start by paying tribute to the work of the Scottish Campaign on Welfare Reform, which has done so much to draw attention to the impact of the measures in the Bill. It speaks volumes that more than 60 charities, Churches, other faith groups and trade unions have come together to speak with one voice to express their concerns about this heartless Bill and to support amendments that might mitigate some of its most adverse impacts.
The problem with what we are debating tonight is that an uprating cap of 1% is entirely arbitrary. It will inevitably cause hardship not just to those on low incomes but to those on middle incomes. I want to try to focus on amendment 7, which was supported so eloquently by my hon. Friend the Member for Brighton, Pavilion (Caroline Lucas). It is important that we try to restore a link to prices this evening. The problem with a below-inflation flat-rate uprating of benefits is that it represents a real-terms cut in the incomes and living standards of those who already live in the most straitened circumstances and will continue to do so for the next three years. Some 70% of those who are adversely affected are families with children and an estimated two thirds of the savings derived will be taken from the pockets of people in low-paid or part-time work.
Tonight, we have repeatedly heard, not least from the hon. Member for Gloucester (Richard Graham), that it is unfair, when people in work may be receiving below-inflation rises, not to impose a real-terms freeze in the uprating of benefits. That is a particularly facile argument, which we rehearsed on Second Reading. It goes without saying that whereas someone with a job with average pay would receive £200 or £300 for a 1% increase, depending on whether they were a man or a woman, a person on benefits of £70 a week would see an annual increase of £36. That probably would not even take me beyond the boundaries of my own constituency. It is wrong to pretend that 1% of not very much is equivalent to 1% of an average salary—or, indeed, of the very generous salary that so many people in this place enjoy.
As others have highlighted, there is a great deal of uncertainty in the Bill. If inflation stays in line with OBR predictions, the Government’s approach will result in a 4% real-terms cut in tax credits and benefits by 2015. That is a very big “if”, though: the OBR’s crystal ball has not been very effective to date and it has certainly not been good at predicting inflation—or, pretty much anything else. If inflation is higher than the guesstimates from the OBR, the impact on low and average-income households will be greater than we predict today. That is why we must preserve the link between social protection payments and the cost of living.
The Government’s distributional analysis of the impact of the autumn statement shows that next year the people in the five lowest income deciles will be worse off as a consequence of the cumulative impact of the Government’s changes to the tax and benefits system, and the least affluent will be the most affected. In contrast, three out of five people on average incomes and above will be better off. That exposes the truth of the matter: the Government have set themselves priorities and made choices that make those on low and average incomes pay for the tax breaks for the very wealthy. The poorer half of our society is being asked to carry the can for a financial crisis and a failure of political leadership that is not of its making, rather than seeing that burden shared across society.
The other key point that I want to make this evening—again, one that I made on Second Reading—echoes points made by the hon. Member for Gateshead (Ian Mearns) earlier today. It is that the measures of inflation that we use are not especially good at measuring the impact of inflation on lower income households. We know that low income households spend a far greater proportion of their resources on essentials such as food and domestic fuel. In the past five years, food prices have risen by around 30%, and the prices of some staple foods, such as potatoes, have risen by 40%. Projections for next year are for rising prices for a number of staple commodities because of poor harvests in north America and many parts of Europe, not least in our own country. Thrifty shoppers, as we know, are adept at switching to cheaper brands when money is tight, but when global prices are on an upward trajectory there is often nowhere to hide.
The other disproportionate expense for low income families is domestic energy, which is another area where prices have soared and fluctuated in recent years. The 20% increases in gas prices announced before Christmas are just the latest in a series of cumulative hikes in the price of fuel in recent years. There is snow on the ground outside today; that may be unusual here in London, but it is just normal winter weather in my constituency. In such conditions, families, especially families with young children, need to heat their homes adequately.
Although neither the consumer prices index nor the retail prices index captures the full impact of inflation on the lowest income households, the retail prices index includes some housing costs and is more likely to reflect the actual inflation that poor people experience. The Bill will cause tangible hardship, quantifiable in real money terms and in practical ways for people on low incomes. Hundreds of thousands of people who are disabled, who are carers, who are lone parents, will be particularly hard hit. It will hit families, whether they are in or out of work, dealing with the added expense of bringing up children. It will not cut the deficit—indeed, it will take money out of local economies and inhibit recovery at a time when we should be trying to get local economies going. On the basis of the Government’s own assessment, 200,000 more children will be pushed into poverty by this part of the Bill alone. We know that the long-term cost of child poverty cannot be measured only in financial terms. The long-term implications for children who grow up in deprivation are well quantified. The results are devastating and store up problems for the future, some of which we are still dealing with from the last period of austerity and the last poverty measures back in the 1980s and 1990s.
Dickens has been mentioned several times today. Whereas some speakers have talked of “A Christmas Carol” and the days of Scrooge, I was set thinking of “A Tale of Two Cities”, and indeed a tale of two countries. Today the Scottish Government announced an extra £5.7 million for advice services to support people who have to face the problems associated with these welfare cuts. It is a sad state of affairs when people are using food banks; it is a sad state of affairs when disabled people who, through no fault of their own, cannot persuade an employer to give them a job, are being pushed further into poverty and are being blamed and vilified for the state of the wider economy. People in Scotland have a choice and I look forward to the day they will get to make that choice in a referendum on their future governance, because never again will they have to take the Tory policies that they did not vote for.
Amendment 7 would make this deeply flawed Bill slightly less iniquitous and slightly less unfair, and would ensure that the very poorest families do not carry a disproportionate share of the burden in tough economic times. I urge Members across the Chamber to support us this evening when we push it to a vote.
John McDonnell (Hayes and Harlington) (Lab)
I apologise, Mr Amess, for persisting in seeking to speak at this late hour. I sat through the five hours of Second Reading and time did not permit me to be called then, and I have tabled an amendment tonight which we will not reach. One could become paranoid at times. I wanted the opportunity to set out my views briefly on this core element of the Bill for my own constituents.
I will vote for every amendment that seeks to ameliorate the Bill. That includes the amendments that have been tabled from both sides, including by my own party. I feel there is a moral imperative to do so. There was a consensus for a time in our country about how we dealt with welfare benefit upratings: they would increase on the basis of either earnings or inflation, whichever was the higher. That consensus was achieved because there was a moral commitment to protect the poorest in our society—in a civilised society. It went alongside a steady rise in wages at the time. What we have seen recently—it has impacted on my constituents particularly—is wage cuts and wage freezes across the public sector and in some parts of the private sector. I opposed the wage freeze in the public sector that was supported by my own party.
In the past 12 or 15 months we have seen a succession of measures—more than a dozen key measures—that have cut the income of my constituents. The Bill is the last straw. People in my constituency are suffering and will suffer more as a result of this measure. As I mentioned in a recent debate in Westminster Hall, there is a gulf between the views and experiences of some Members of the House and the experiences of many of our constituents and the way that they suffer. I thought that might be particular to my community—a working-class multicultural community that is taking a battering at present—but I looked at some of the statistics in the briefings that were prepared for this debate.
The Government’s own household survey of those living below the average wage identified 11% of families in that category who cannot keep their homes warm. I looked at the Save the Children survey, which found that 14% of children do not have a warm coat this winter. I looked at the survey undertaken by Contact a Family, the charity that works with families who care for disabled children. It was an extensive survey which found one in six families going without food, one in five without heating, one in four without the specialist adaptations that they need, and a third taking out a loan to pay for food and heating.
I looked at the Zacchaeus 2000 Trust work that has been undertaken by the Centre for Research in Social Policy, which demonstrated how the basic income from benefits has decreased in relation to the inflationary impact on basics such as food, heating and rents. I also looked at the work it had done on nutrition for expectant mothers and the concern, which was echoed some time ago by the Minister himself, about the incidence of poor maternal nutrition resulting in low birth weight.
The right hon. Member for Ross, Skye and Lochaber (Mr Kennedy) expressed his fear that this was, effectively, dog-whistle politics, that the poor were being used as a political football between the parties. I share those fears. I wish I did not. That was the tenor of the debate that was opened up in the budgetary statement by the Chancellor of the Exchequer—the reference to curtains, and the debate that has gone on in the media about skivers and strivers. I have more faith in the British people. I do not believe that they accept the terms of that debate. I think the British people have a sense of fairness and a sense of moral commitment to people less fortunate than themselves. That is why I do not think there is majority support for the measure. I think that, as a result of this debate, understanding is overcoming prejudice. Prejudice will be defeated by humanity; there will be an upsurge of popular support for those of us across the House who will oppose this legislation tonight and are calling for the Government to think again about the whole trajectory of their welfare cuts.
My right hon. Friend the Member for Birkenhead (Mr Field) has done immensely important work about interventions to tackle deprivation. There is a whole range of them, and they are not just about income. However, his work has found that those interventions are impeded from the outset if people are struggling simply to put food on the table, heat their homes and have some kind of decent standard of living.
Clause 1 is a major setback for large numbers of people right the way across our country. It undermines their standard of living and diminishes the whole of our society. It will have repercussions for a long time to come, unless we defeat it tonight.
Steve Webb
This has been a wide-ranging debate of nearly four hours. Although it has technically been about amendments to clause 1, the generosity of the Chair has meant that we have essentially covered the whole Bill and the issues raised by it.
First, I want to respond to the point about the language in which the debate is constructed. My right hon. Friend the Member for Ross, Skye and Lochaber (Mr Kennedy) and a number of other Members said that we should avoid divisive language, and I entirely agree. I seem to recall that it was the Labour party that used the phrase “strivers’ tax” about this debate—indeed, a year or so ago, the shadow Secretary of State used his party conference speech to create the very divisions that his hon. Friends are criticising. He said:
“Let’s face the tough truth—that many people on the doorstep at the last election felt that too often we were for shirkers not workers.”
The right hon. Gentleman has form on this issue. In 2012, he was at it again. During a speech at the London School of Economics, to what I imagine was a packed house, he said:
“Labour is the party of hard workers not free-riders. The clue is in the name. We are the Labour party. The party that said that idleness is an evil. The party of workers, not shirkers.”
Mr Byrne
The Minister will remember that it was Sir William Beveridge who used the phrase about idleness being an evil.
There is a difference between reporting a conversation on a doorstep in one’s constituency and using a line as the basis of a political strategy that seeks to punish those on low incomes while handing out a £3 billion tax cut to Britain’s richest citizens. I am simply not sure how the Minister, as a Liberal Democrat, can support that policy.
Steve Webb
It is good to hear from the true heir of Beveridge. The quotes describing the Labour party that I just read out were in party conference speeches and at a conference at the LSE—
“The party that said that idleness is an evil. The party of workers, not shirkers.”
Steve Webb
It is disgraceful, as my hon. Friend says.
The second question that has arisen is why the Bill is necessary. It has been suggested that the Bill is simply a political device, but that draws a veil over the fact that we are dealing with one of the biggest deficits in peacetime history. To listen to the Labour leadership, one would think that they took such matters seriously. The leader of the Labour party said on “The Andrew Marr Show”, in an interview, I think, with James Landale:
“So when it comes to the next Labour government, if I was saying to you, ‘I can absolutely promise to restore this cut or that cut’, you would say ‘Well, where is the money going to come for that?’...We are absolutely determined that Labour shows we would be fiscally credible in government.”
We have not heard a lot of that today. The shadow Chancellor has said:
“The public want to know that we are going to be ruthless and disciplined in how we go about public spending”.
In fact, we have heard speech after speech calling for the Bill to be scrapped but there has not been a hope of hearing where the money would come from.
The Bill and related measures save £3.6 billion. When I challenged the shadow Minister, the right hon. Member for East Ham (Stephen Timms), about where that money would come from, he said—I paraphrase—“We wouldn’t start from here.” I am afraid that the Opposition have to do rather better than that.
Steve Webb
I will not give way; I would like to respond to what has been said in the past four hours before taking further interventions.
A number of my hon. Friends asked perfectly reasonably about why we needed to set out in legislation exactly where we were going. We all want our constituents to continue to enjoy, for example, the low mortgage rates that are absolutely crucial to their standard of living. We all know that for those of our constituents in the position of owning their own homes, the mortgage is their biggest single outgoing by a long way. It is vital, therefore, that we keep interest rates under control.
Steve Webb
But that is kind of the point—not at the moment, because we have kept interest rates under control.
Why is that necessary? Let me share what the International Monetary Fund’s “World Economic Outlook” said as recently as October 2012:
“To anchor market expectations, policymakers need to specify adequately detailed medium-term plans for lowering debt ratios, which must be backed by binding legislation”.
That is the important point. Were we to go year by year, seeing how it went, we would not have the credibility of deficit reduction to which all of us who signed up to the coalition agreement are committed.
Likewise, the OECD’s economic outlook said:
“The government’s fiscal policy stance and strong institutions have secured the confidence of financial markets, as evidenced by the near record-low government bond yields.”
In other words, this is for a purpose—the purpose of tackling the vast, sprawling deficit. To give a sense of scale, my hon. Friend the Member for Argyll and Bute (Mr Reid) was absolutely right when he said that in the final year of the previous Labour Government, for every £3 raised in tax, £4 was spent. What did that add up to? We are talking about a Bill and related measures that will eventually save about £3 billion a year. Labour was borrowing £3 billion a week, so we would need, say, 50 of these Bills to tackle just one year of Labour borrowing. That is the scale of the situation. When Labour Members airily take the moral high ground and pretend that there is a free lunch to be had—that we do not have to do this or make all the other cuts, but that somehow the deficit will disappear—we need to remind people that these are Labour cuts tackling Labour’s deficit.
People should not just take my word for it regarding the need to include social security as part of deficit reduction. Clearly, as my right hon. Friend the Member for Wokingham (Mr Redwood) said, this is not comfortable stuff, and it is not something that any of us take any pleasure in. However, the IFS has said this about why social security is part of the mix:
“When cutting public spending dramatically to help reduce an unsustainable budget deficit”—
that is the IFS’s language, not mine—
“it is almost inevitable that spending on benefits and tax credits—which account for 30% of the government’s total budget—will be targeted.”
Steve Webb
Not for the moment.
We have a target for 2015-16 of £10 billion of spending reductions. We have not yet found that £10 billion. Even with this Bill, we are on about £6 billion, and without the Bill and related measures we would be down to about £3 billion. The challenge for Opposition Members who have said that taking money away from benefits takes spending power out of the economy is that so do other forms of spending cuts. If the money comes not from benefits but from local government, that will be money out of the local economy; if it comes from infrastructure projects, that will be money out of the local economy. There is not a free way of finding money without any impact.
Let me deal first with amendment 12, tabled by the right hon. Member for East Ham. My hon. Friend the Member for Gloucester (Richard Graham) put it very well when he said of Labour that there is a vacuum where there should be a policy. That is a metaphor for the Labour party. In relation to a Bill that says that benefits and tax credits should go up by 1%, the amendment would take out the figure of 1%, so what would be left? Presumably, “Benefits should go up” but by how much? Perhaps by a fraction of 1%—we do not know. The amendment is incoherent; it would take something out and put nothing in its place. It would remove the heart of the Bill but gives no guidelines on whether the figure should be below inflation or above inflation, below earnings or above earnings.
Toby Perkins
As the right hon. Member for Wokingham (Mr Redwood) and the hon. Member for St Ives (Andrew George) said, the Chancellor sets a Budget every single year, and the benefit uprating will have to be relevant to whatever else has happened in the economy by taking into account inflation, wage inflation and so on. There is no need for this Bill now because we have a Budget every single year. Surely that is the central point.
Steve Webb
The hon. Gentleman was not listening. The point about establishing a long-term fiscal framework is that it has to be credible; if it could be changed every year, it would not be credible. The whole reason we are able to keep interest rates low—[Interruption.] The hon. Gentleman is saying, “Why not change it every Budget?”, but that would not be credible for the long term.
Toby Perkins
On a point of order, Mr Amess. The Minister is misquoting me, so let me clarify this. I said that if it was all about stability, why do we have a Budget every year instead of setting three-year budgets, which would reflect that fact?
The Temporary Chairman (Mr David Amess)
That is not a point of order—it is a point of debate.
Steve Webb
I will not for the moment, because my hon. Friend has joined our proceedings relatively recently. I should like to respond to the amendments that my hon. Friends and others have tabled, and I hope he understands that.
Amendment 7, tabled by the hon. Member for Brighton, Pavilion (Caroline Lucas) and supported by the hon. Member for Banff and Buchan (Dr Whiteford), is in fantasy land, I am afraid. It not only rejects the savings in the Bill but would add additional savings on top by linking benefits to RPI. I have to give credit to the hon. Member for Brighton, Pavilion, because she knows how ludicrously expensive her amendment is and I am grateful to her for being frank about that. In a single year, it would cost £2.6 billion more than the current plan.
Steve Webb
Let me respond a little further. The hon. Lady said that we should choose RPI because, essentially, it is bigger on average. The point about correcting benefits for inflation is not just to find the biggest number possible, but to measure inflation properly and correct benefits accordingly. We could also have a separate debate about the adequacy of benefits, but to use a flawed inflation measure that even the Office for National Statistics, which constructs it, says does not meet international standards, is a crazy direction to take, even if the hon. Lady did not need to find £2.5 billion.
Caroline Lucas
The hon. Member for Banff and Buchan (Dr Whiteford) addressed the fact that RPI is not a perfect indicator, but it is better than what we have. On the question of paying for our proposal, this is about priorities. If the Government limited tax relief on pension contributions to £26,000, that would give them £33 billion. If they cracked down on tax evasion and tax avoidance, they could get more than £100 billion. It is about political choices: this Government want to target the poorest and we do not.
Steve Webb
If it were trivial to raise £100 billion from the filthy rich, I suspect that most Governments would have been there by now.
The most credible, coherent amendment in this group is amendment 10, which was moved by my hon. Friend the Member for St Ives (Andrew George). He was so nice about me that I was almost tempted to accept the amendment, but not quite. Let me explain the reasons why not.
The first relates to the specifics of the amendment, which links benefit increases in 2014-15 and 2015-16 to whatever amount average earnings grow by. Based on the forecasts—I accept that that is what they are—that would mean an above inflation increase in the second of those two years, because we think that average earnings in a couple of years’ time will be more than CPI, as is the case in many normal years. At a time when we all agree that money will be tight, my hon. Friend is suggesting that an above inflation benefit increase in the second of those two years should be a priority. I do not think that it should be. At a time when we will have to make other difficult decisions about saving, the first consequence of his amendment—I do not imagine that he meant this—would be to lock in what we expect to be an above inflation increase in benefits in 2015-16. I do not believe that that will be our priority at that point.
Had we been in Committee upstairs and the Bill had further stages to go through, my hon. Friend may well have said that this was a probing amendment and we could have had a chat about it, but if we were to agree to the amendment tonight it would become part of the Bill that will go to the other place. It is a serious amendment that would have an unintended consequence.
Secondly, this is not intended as a wrecking amendment, but it would have that effect. We estimate that it would wipe out virtually all the Bill’s savings. Although I understand that my hon. Friend shares my concern about the impact on people on low incomes, that money would have to be found somewhere else. I do not believe that there is a painless way of finding that money or that the social security budget would be exempted from finding it.
We have already had to do some very difficult things on welfare spending in the Parliament whereby we have targeted particular benefits and identified particular issues, and a relatively small number of people have faced large cash losses. This is a different approach. It is a gradual approach that will create much smaller losses, but for much larger numbers of people. At a time when we are trying to find savings from this budget, I believe that spreading the pain relatively thinly across a larger group, rather than focusing on a smaller one, is the way to go.
Andrew George
Leaving aside the wisdom or otherwise of committing ourselves to the Government’s proposed uprating level of 1% for 2015-16, my hon. Friend is right, according to the Government’s figures, that there is a funding gap of about £2.5 billion for 2015-16. He has to accept, however, that two fifths of cash benefits go to those with above average incomes. Indeed, a former constituent of mine has said how laughable it is that he now lives in Greece yet still receives a winter fuel allowance. Surely we can find savings that are less painful than those proposed.
Steve Webb
I can tell my hon. Friend that we have his ex-constituent in Greece in our sights. All I can say is that I hope he enjoyed his last payment. Joking aside, even if we took away all winter fuel payments to overseas pensioners, we would be talking about tens of millions of pounds, not savings on the scale that we need.
Greg Mulholland (Leeds North West) (LD)
As my hon. Friend has said, the Government have made a difficult decision to deal with the matter in the least unfair way. What has not been said in the debate is that the 1% uprating will not apply to all out-of-work or in-work benefits. Certain particularly vulnerable groups have been deliberately excluded. I hope he will reiterate that.
Steve Webb
My hon. Friend is absolutely right to remind the Committee of that. We have made our commitment to the triple lock on the state pension, which means that it will rise by an amount above inflation this April. We have passed cash on to the guarantee credit to ensure that the poorest pensioners get the full increase, protected the key disability benefits—disability living allowance and attendance allowance—and ensured that the support component of employment and support allowance is protected. We can be proud of achieving all those things despite the difficult financial situation.
Penny Mordaunt (Portsmouth North) (Con)
Is the Minister aware that in the city that I represent, which also happens to be the birthplace of Charles Dickens, 82,000 people will benefit from the tax cut in April and nearly 7,000 will have been lifted out of poverty altogether by the cumulative effect of tax cuts under the coalition? Is that not the best way of tackling poverty—to stop taking money off people in the first place?
Steve Webb
I am grateful to my hon. Friend for mentioning the position of low-paid workers. People on the minimum wage were mentioned in the debate, and we will have halved the tax bill of someone on the minimum wage. That is a real contribution to their standard of living.
I say to my hon. Friend the Member for St Ives that we cannot find the savings that we need by excluding the social security budget from them. The two biggest things that the Government spend money on are public sector pay, which has already been the subject of a separate measure, and social security benefits. The two together account for a vast swathe of public spending. When we need savings, we cannot ring-fence social security. What we can do, however, is try to do things gradually.
I want to explain why some of the figures for people’s losses that have been quoted are far greater than is truly the case. My hon. Friend mentioned someone who is in and out of work, and the typical time on jobseeker’s allowance is three months. My right hon. Friend the Member for Bermondsey and Old Southwark (Simon Hughes) asked me to give some examples of cash figures. We are talking about an uprating of perhaps 80p a week or so below inflation in one year, so maybe £2.50 a week below inflation over a three-year period. For a typical person who is out of work for three months, which is the median spell on JSA, the difference will therefore be a tenner a month, or £30 to £40 over that three-month period. That £40 is a lot of money to someone who is unemployed, but the typical experience is that someone has three months of unemployment and then finds a job. We are about to cut people’s income tax bills by £600 a year, so that person might have, say, £3 a week less while unemployed, but the typical experience is for them to be unemployed for a relatively short period and then get a job, so they will benefit from all our other measures.
John Hemming
Does my hon. Friend agree that the Opposition’s policy of not having a policy runs the risk of putting up the interest rate on our Government debt? We owe more than £1 trillion, and 1% more on that would be more than £10 billion extra to find through either extra cuts or extra taxes.
Steve Webb
My hon. Friend is quite right. There is nothing progressive about vast borrowing, because then we are asking our children and grandchildren to pay for it.
There has been much discussion about percentages during the debate. Several Members have said that a small percentage of not very much is not very much—I think their argument was that the answer was a slightly bigger percentage of not very much. However, even a small percentage of a £200 billion bill for tax credits, pensions and benefits is a vast sum of money, which is why we have to take the difficult decisions we are talking about.
Sheila Gilmore
Is not the reality that we have already had all the welfare reforms, and the only reason we are debating this issue is because the Government’s policy has not worked? They have now had to find extra savings, and that is what the Bill is about.
Steve Webb
It is, I suppose, possible that had Labour won the last election the eurozone crisis might never have happened, and I grant it is possible that world commodity prices might not have gone up. It is possible that all sorts of things might have happened, but in the real world we live in a global economy. Of course things have been more difficult than we expected. That is why we must tackle the situation, not just borrow more money.
Let me offer my hon. Friend the Member for St Ives further reassurance about what will happens if inflation rises—an important issue raised by my hon. Friend the Member for Argyll and Bute. Our right hon. Friend the Secretary of State for Energy and Climate Change is actively seeking to ensure, for example, that low-income constituents get the best energy tariff they can, rather than what they currently pay. Evidence shows that the people most likely to shop around, switch and be online are not on the whole the most vulnerable customers, so we are ensuring that the most vulnerable customers, who may not take advantage of those lower tariffs, get access to them. I believe that will make a real difference.
More broadly, my hon. Friend the Member for St Ives asks what would happen if inflation ran away, but the Government would not sit idly by and watch—we have various measures available to us to respond to that. The OBR’s forecast for CPI is lower for 2015 than it is now. It is, of course, a forecast, but we will not simply let inflation rip. If we do not commit now to firm targets on where we are going, the OBR will not sign them off, they will not appear in our spending plans and the market will not believe us. If the market does not believe us, interest rates will go up as will the mortgages of our constituents who will have less spending power—where?—in the local economy, which is exactly where everybody has said they want to see demand. There is a knock-on effect from all those things, and the failure of the Labour party to suggest an alternative is shocking.
Let me respond to one or two other points raised during the debate. The hon. Member for Gateshead (Ian Mearns) made a point about percentages being meaningless, but as I have said, from a £200 billion budget those percentages make a great deal of difference. My right hon. Friend the Member for Wokingham made some powerful points. He said that we need to keep inflation down—I have given some examples of how we want to do that—and mentioned the need to get jobs going, which we agree with.
The Labour party seems to be saying that if we adopt its policies, somehow the jobs would flow, but what have we heard about that today? Funnily enough, we have heard almost nothing about the whizzo scheme that was so good when Labour tried it in office as a pilot that it never actually saw it through. Somehow the scheme is supposed to find £3.5 billion of savings, but that is fantasy land. It was a fig leaf rushed out over Christmas so that Labour had something to say because it realised it was on the wrong side of the argument.
There has been some discussion of child poverty and it is important to address that issue in the final few minutes of the debate. The Institute for Fiscal Studies has said that when looking at a Government’s impact on child poverty, we should look at their policies in the round. Clearly, the single biggest thing that we will do to tackle child poverty is the universal credit introduced by my right hon. Friend the Secretary of State for Work and Pensions. That is designed to make work pay and to take children and adults out of poverty. As soon as we are able to bring it in—starting later this year, which is a great achievement—we will start to see its impact.
I was asked for predictions about child poverty, but let me point out the paradox that we have published a set of figures that relate to this Government. Those figures show not a rise in child poverty but a fall of 300,000 according to the measure of child poverty that is the key target of the Child Poverty Act 2010. We have not gone round television studios saying, “Aren’t we great, we’ve got child poverty down?”, because the main reason child poverty fell was a recession that meant average incomes fell. It would have been absurd for us to trumpet a triumph on child poverty when children were apparently lifted out of poverty because incomes had fallen. That is perverse.
The hon. Member for Bishop Auckland (Helen Goodman) asked what the figures will be at the end of the Parliament. For a start, there has been a 300,000 improvement, for which we will not claim any credit, and the universal credit policy will help. Of course, taking money off benefits moves things in the other direction, but overall we are moving things in the right direction, not the wrong one.
Helen Goodman
As the Minister knows very well, my question was this: what are his figures on absolute poverty?
Steve Webb
The hon. Lady will know perfectly well that the Labour Government never forecast poverty rates. She was a Work and Pensions Minister with—if I remember rightly—responsibility for child poverty, and never once forecast poverty rates, but in opposition she suddenly believes that this Government should do so. We will publish the annual figures that show the effects of all our policies and the state of the economy. That is what the public want to see.
Another question that resonates with my hon. Friends in the Liberal Democrats is why we are taking money off poor people and giving it to rich people. That is a summary of what was said. I worked for the IFS for nine years and have the highest regard for it, but, to be clear, when the IFS does its numbers, it does not count almost all the taxes on the rich we have introduced—it cannot, because it uses household surveys, to which the rich do not, on the whole, reply at all, partly because they are too busy salting their money away in Swiss bank accounts. [Interruption.] Not any more—we have tackled Swiss bank accounts to the tune of several billion pounds. We have increased the main rate of capital gains tax to 28%, which is a substantial increase.
The Labour party focuses on the wages of millionaires as if millionaires are those who earn a £1 million wage. However, millionaires on the whole are folk who have capital gains and properties. They pay stamp duty. They try to avoid paying tax, but we have been cracking down on that, and there is a further clampdown on pension tax relief. The vast majority of those gains for the Government are not counted in the IFS figures. The overall impact is that we are taking far more from the rich than Labour ever would have done. I can therefore assure my right hon. and hon. Friends that this is not a question of taking money from the poor when we could take it from the rich. Even the Budget that reduced the higher rate of tax from 50% to 45% raised many times more in other measures. As we have heard during the course of the debate, the 45p rate, which Opposition Members tell us they find morally repugnant, is 5% more than the Labour Government levied in 13 years.
Amendment 12 would create a vacuum instead of a policy. It would give us no credibility in the financial markets and drive up interest rates when we want to keep them low. Amendment 7 would reinstate the RPI, which even the official statistician says is not up to international standards, and cost £2.5 billion a year compared with the Government’s plans. I have no doubt that amendment 10, in the name of my hon. Friend the Member for St Ives, is well-intended, but unfortunately it would tie the Government in to an above-inflation increase in 2015-16. The Liberal Democrats would not choose that as a priority, but I can assure him that the Bill, on top of the decisions the Government have made to prioritise the poor, will mean that benefits will rise in line with earnings over the period since the financial crisis. My hon. Friend wants that through his amendment, and that is what we will deliver through the Bill.
I therefore urge the Committee to reject the amendments and support the Bill.
Stephen Timms
We have had an interesting debate. The right hon. Member for Ross, Skye and Lochaber (Mr Kennedy), the former leader of the Minister’s party—the Liberal Democrats—described the Bill as a device dreamed up by the Chancellor, which was recognised on both sides of the Committee during the debate. The Government are bearing down on the incomes of the least well-off people because of the failure of their policies. I urge the Committee to support amendment 12 and to reject clause 1.
Question put, That the amendment be made.
The Committee proceeded to a Division.
The Chairman of Ways and Means (Mr Lindsay Hoyle)
Will the Serjeant at Arms investigate the Aye Lobby? We seem to have a hold-up or a blockage of some kind.
Caroline Lucas
On a point of order, Mr Deputy Speaker. I wonder whether consideration could be given to how our business could be organised better, so that legitimate amendments could be put to a vote rather than being talked out. My amendment was supported by at least four parties, and the amendment of the hon. Member for St Ives (Andrew George) would no doubt have received significant support as well, but there was no time for that happen. I think that it would be a worrying precedent if the only amendments put to a vote were those tabled by members of the official Opposition.
Mr Deputy Speaker (Mr Lindsay Hoyle)
I understand the hon. Lady’s frustration, but the amount of time given was agreed by the House on 8 January, and unfortunately the time allowed today has been squeezed on that basis. We are now eating into Third Reading time, which we would have lost completely had more Divisions been allowed.
Andrew George
Further to the point of order, Mr Deputy Speaker. As the hon. Member for Brighton, Pavilion (Caroline Lucas) has pointed out, there is some disappointment among those who wished to test the temperature of the Committee. We were readily allowed to engage in the two-dimensional tribalism represented by previous Divisions, but we had no opportunity to ensure that the more nuanced and considered debate on other issues was brought to a proper conclusion, because those who wished to express a view had no opportunity to do so in the Lobbies.
Mr Deputy Speaker
That was, in fact, the same point of order. Again, I understand the frustration that is felt, but—quite rightly—it is not for the Chair to decide the amount of time that is allocated for a debate. It is for the House to make that decision, and it did so on 8 January. No doubt the hon. Gentleman will wish to take the matter up with the Whips in future.
Bill reported.
Third Reading
Mr Duncan Smith
I beg to move, That the Bill be now read the Third time.
The Bill moves into its Third Reading with—I believe—its fundamental principles intact. I thought that my hon. Friend the Minister of State’s closing speech before the votes answered, in detail, many of the questions that remained after the debate on the amendments, but now, on Third Reading, I think it important to make further progress.
The arguments that we advanced when we presented the Bill were first and foremost about affordability. Our main argument concerned the need to reduce the historic deficit left by Labour. As I have said to my colleagues throughout the coalition, at no stage have we made our decisions lightly. This is not something that, at the start, we would have wanted to do, and I want to come back to that point in a moment. We were left a legacy of disaster and spending that was out of control, and our priority must be to get that back under control. If we do not do that, the poorest in society will fare the worst—that is the main point to make.
Let me give an illustration of the point I was making. Under the previous Government public spending ran to excess, while the cost of working age welfare increased by some 60% in real terms, as has been said on a number of occasions. Money was poured into what became an over-inflated system; as my hon. Friend the Minister of State, has said, for every £3 taken in tax £4 was actually borrowed, with the result that we had a growing deficit. It was one of the worst deficits in Europe, if not the worst in the western world. We spent £170 billion on tax credits alone between 2003 and 2010. For all the talk about this being absolutely about people in work, 70% of that money went on child tax credits, chasing a target that Labour never hit, and that was payable regardless of whether parents were in work or not.
Mr Duncan Smith
No, I am going to make a little progress now, although I will give way later. I recognise that some who did not get a chance to speak earlier may wish to say a few words, and I want to give them a little time to do so.
The previous Government appeared to have no care or concern for the fact that more than £10 billion was wasted and lost eventually through fraud, error and overpayments, nor that the rest of the money altogether failed to meet its aim. There was already a problem with fraud and error on tax credits, but, worse still, the previous Government did not even record overpayments, so we have no idea to what degree that system was damaged. However, we do know—
Mr Duncan Smith
I said that I would make a little progress and then give way. I wish to make one point, which is that £4 billion has had to be written off as a direct result of this inability to get the money back, with a further £4 billion likely to be written off directly as a result of Labour’s massive failure to control that budget.
The second part of our approach is important and it relates to the issue of fairness, which my hon. Friend the Minister of State addressed. We do not do these things lightly, but we do want to make sure that those paying the tax bill for those receiving it in welfare recognise that their taxes are well spent; we want to ensure that those in work paying their taxes do not see the rises for those on welfare outstripping their own. We have already discussed the increases, so this is fundamentally an issue of fairness.
Mr Duncan Smith
I said I would give way, so I will give way to the right hon. Member for Birmingham, Hodge Hill (Mr Byrne) now.
Mr Byrne
Over the past month or two, as the Secretary of State has warmed up the debate for tonight’s Bill, he has launched attack after attack on tax credits. Will he just accept the principle that tax credits are important in helping to make sure that people are better off in work and, indeed, that that is why he is not abolishing tax credits but incorporating them into the new system of universal credit? Will he just set that point straight for the House?
Mr Duncan Smith
I have said all along that I do not doubt that at the beginning the intention was to try to improve the lot of those working on low incomes; I have never attacked that as a principle. The point I am making tonight is that there seemed to be a loss of control. In 2005, the then Government stuck a 58% increase into tax credits just before an election—almost 70% of all the money in tax credits goes on child tax credits—and they were, in a way, bribing an electorate in the hope that these people would vote for them because they felt that there would be some reason why they would not get the money afterwards.
I wish to make one important point to the right hon. Gentleman on tax credits, because he has asked me about them. The reality was that the previous Government ended up, through tax credits and child tax credits, attempting to chase a target that, as the economy improved, ran away from them. This became spending for an arbitrary target, and the taxpayer was chasing a target that the previous Government never achieved.
Mr Duncan Smith
I will not give way. Progress on tackling child poverty stalled, and the previous Government missed their 2010 target by some 600,000 children.
Mr Duncan Smith
No, I will not give way yet. From 2004 until the last election the previous Government spent £171 billion trying to hit their target, and that was where the problem came from. They wrecked what might have been a good process because they turned it into a target-chasing process, which never succeeded finally.
Debbie Abrahams
Some 200,000 children will be pushed into poverty as a result of this uprating measure, according to the assessments, so how can the Government claim to have any commitment to reducing child poverty?
Mr Duncan Smith
Let me put the figures in the round within the period of spending review. My hon. Friend the Minister of State made a very good point, with which I agree and which I have made in the past—we do not trumpet our progress because we think the process of setting a target around 60% of the median income line was a recipe for nightmare problems and excess spending. We do not claim that that is the right way to measure the problem. The hon. Lady will have noticed that in answer to a parliamentary question last week, we said that we will go into full public consultation about a better way to measure real child poverty that the coalition Government will set and measure ourselves against—[Interruption.] Income will be part of it, but not the dominant part that her Government made it. If she and her party were honest—when I made this point on Second Reading, I noticed one of her Front Benchers nodding his head—they would admit that when they worked out the arbitrary target in 1997-98, they thought that they would not be in power that long and that they could achieve the targets along the way. What they ended up in doing was create a nightmare for themselves.
Some £170 billion were spent on tax credits but targets to halve child poverty by 2010 were missed by 600,000. Easier successes were found and then later the rate fell from 26% to 23%. It dropped further between 2002 and 2005 but that coincided with a 75% increase in spending on tax credits from £13.2 billion to £22.9 billion. Throughout that period, the amount of severe child poverty was absolutely static.
Simon Hughes (Bermondsey and Old Southwark) (LD)
The Secretary of State knows that the Liberal Democrats are not comfortable about this sort of Bill, but my hon. Friend the Minister of State argued that, in difficult circumstances, we must take difficult measures. Will the Secretary of State reaffirm the Government’s commitment to taking children out of poverty, to the basic principles of the welfare state and to go on seeking to ensure that all those who cannot work through no fault of their own—carers, unemployed people and pensioners—will continue to be supported? Will he reaffirm that we intend there to be a fairer society at the end of this Government than there was at the beginning?
Mr Duncan Smith
That is my genuine intention. My right hon. Friend will know that his hon. Friend the Minister of State and I have worked to ensure that what we do to get the deficit down through universal credit and the other reforms—even those for pensions—will improve the lot of the poorest in society. If we take the figures on that relative income point across the period covered by the spending review, we can see that some 350,000 children net will be lifted out of poverty, even if we take into account the effect of this Bill. I can tell my right hon. Friend that that is absolutely our purpose and one that I believe we can stand by.
Mr Duncan Smith
I want to make a little progress before I give way again.
We need to remind ourselves that although the Opposition spent the debate in Committee going on and on at my hon. Friends about taxes on the wealthy coming down, we are raising more in tax from the wealthiest than they ever planned to throughout the whole of their spending programme. Hon. Members should remember that Labour was the party that said early on that it was
“intensely relaxed about people getting filthy rich”.
We will take no lessons from the party that did not raise the upper rate to 50% until the last month or two before it lost the election.
Mr Duncan Smith
I shall give way in a second, but I want to make a little more progress.
Let me deal with the point about deficit reduction, which is really important. The Opposition did not answer a key question during our debates in Committee. They have voted against every single measure to reform and reduce the overall spending on welfare so that we can get the deficit under control. Let me quote somebody whom they might remember. The quote is this:
“from 2005 onwards Labour was insufficiently vigorous in limiting or eliminating the potential structural deficit.”
That was their former Prime Minister, Tony Blair. I agree with him. In 2005 the previous Government raised spending dramatically as a device for electoral success, as we said earlier. Time and again Labour has voted against our reforms.
Mr Duncan Smith
Before I give way, let me give some examples. The Opposition opposed the Welfare Reform Bill, and that would have cost £2.1 billion in extra spending. They rejected the benefit cap—a further £500,000. Reversing tax credit savings would cost £5.5 billion. Reversing the child benefit savings would cost £1.7 billion. Voting against this Bill would cost another £1.9 billion. That money would need to come from somewhere.
If I give way to the right hon. Gentleman now, I would like to hear him tell us how exactly he would reduce the overall spending. Please, nothing on the bankers bonus tax, which has been spent at least 10 times already. If he tells us that he would get long-term unemployed people back to work, he should remember that under his Government the long-term unemployed figures doubled.
Mr Byrne
I am grateful to the Secretary of State for giving way. We have said that contributory employment and support allowance should be limited to two years. We have said that there should be an independent gateway for disability living allowance. We have said that we should switch the way we uprate benefits from RPI to CPI. We have said that there should be a benefit cap which, yes, is different in London from the rest of the country, but a benefit cap none the less. We have said that disregards in tax credits should be reduced. Crucially, we have said that there should be a two-year limit on jobseeker’s allowance. That is a far bigger list than the current Chancellor of the Exchequer ever set out when he was in opposition. We think welfare spending should come down. We think getting people back into work is the way to do it. That is why we think the Secretary of State should have brought forward plans to sort out the Work programme, which is failing, and to fix universal credit, which is in disarray.
Mr Duncan Smith
I wonder why I bothered to give way to the right hon. Gentleman. Every one of those statements was a spending commitment. They were not reductions. Every one of them would still leave a Labour Government with a vast bill to pay. I remind the Opposition that what they have opposed remains the reality. They are stacking up spending commitments without one single observation about how they would make the savings necessary to cut the deficit that they left us—one of the worst deficits, as I said before. Their proposed raid on pensions, which they wanted to talk about, would not cover it. They have already spent several times over all their little gimmicks. Voting against the Bill is another spending commitment.
Mr Duncan Smith
I will give way to the hon. Gentleman, but first I want to deal with some of the claims that the right hon. Member for Birmingham, Hodge Hill made in the course of the debates on the Bill. The first claim that he made was that spending on out-of-work benefits was falling before 2010. That is not true. The figures published show that between 1997-98 and 2010-11 spending on out-of-work benefits rose by £2.6 billion. There we have it. Even the Opposition’s attempt to whitewash what was a very small idea is not true. Overall benefits and tax credit spending increased by £75 billion, from £122 billion to £197 billion, which is 60% in real terms.
The Opposition’s decision to vote against the Bill has financial implications equivalent to 48,000 nurses’ salaries or more than 500,000 primary school places. That is the kind of mess that they have got themselves into because they have taken the easy course in opposition, which is to oppose everything and to come up with no serious proposals.
Hugh Bayley
In York there is a particularly large gap between private sector rents and the levels of housing benefit because the broad rental market area for York includes a number of towns 20 miles away, such as Malton, Norton and Easingwold, where rents are about 40% lower. A new clause was tabled that suggested that the Department should analyse those gaps on an annual basis, but there was not time to discuss it. How would the Secretary of State respond to that proposal? Would he support such a proposal if it were made in another place?
Mr Duncan Smith
We are always analysing what we are doing with local housing allowance and housing benefit generally, so that is an ongoing process for us. We are also testing our proposals for universal credit when it comes to housing.
I know that I need to conclude, but I want to say something, as the hon. Gentleman touches on the subject. When we brought in the housing benefit changes, we heard all sorts of threats that those would lead to total disaster. One of the myths propagated by the Opposition was that 82,000 people across London would lose their homes. The reality is, so far, that the figure is up by just under 600. The myth was that 134,000 people would have to move or become homeless. The reality is that across the country, the numbers of those in temporary accommodation is up by only about 900.
In conclusion, the changes that we are putting forward are down to the first point that I made, the second point being that we need to carry them out in the fairest possible way. As my hon. Friend the Minister said earlier, we do not take this course of action lightly, but we know that if we were to go on borrowing at the rate that the last Government would have, we would punish the poorest.
I say to the Opposition that it is not good enough simply to take the easy course. When in government, they left us with the worst deficit and high borrowing that would have completely devastated those who pay their mortgages. They need to come to the Dispatch Box and tell us now how they would be fair to those who have to pay the highest tax bills.
Mr Byrne
I rise to oppose Third Reading. I have not been in the House for as long as the Secretary of State, but never in my years here have I seen so much taken from so many so fast. It is a disgrace that the Government should have rammed the Bill through the House in just two weeks. I hope that the other place will have listened hard to our debates today and seen how little time has been granted to us in the Commons to debate measures that will hurt thousands and thousands of our constituents.
In the fortnight since the Bill was introduced, claim after claim made by the Government has simply fallen apart. Originally, we were told that the Bill would not hurt working people, that the Government would protect disabled people, and that they cared about “family-raisers”, to use the Prime Minister’s term, yet in vote after vote tonight the Government have refused to stand by their word. They have refused to protect working people or to offer safeguards for disabled people, and we have heard nothing remotely credible from them about how child poverty will be tackled. After tonight’s debate, no one will believe that there is such a thing as compassionate conservatism. To be frank, it was always a wild claim and, lo and behold, so it has turned out.
When the Bill was first presented to us, we were invited to believe that it was squarely aimed at those of our neighbours who were “sleeping off a life on benefits”, in supposed contrast with a Budget that allegedly helped working people and gave effect to the Prime Minister’s determination, expressed to the party faithful—their number is dwindling—at his party’s conference. He said:
“They call us the party of the better-off”.
That is true; we do. He continued:
“no: we are the party of the want to be better-off, those who strive to make a better life for themselves and their families.”
How does the Bill help those who are striving to be better off? The Institute for Fiscal Studies could not have been blunter: 7 million working people will be hurt by the Bill. The impact of changes announced in the autumn statement will be, between now and April 2015, to reduce the real income of the one-earner working family by £534 on average, net of any increase in the personal allowance. That is why this is a strivers’ tax, pure and simple, which we will oppose.
Andy Sawford (Corby) (Lab/Co-op)
Does my right hon. Friend agree that it makes much more sense to uprate by inflation in this Parliament and then take stock, with a proper zero-based budgeting look at this in the next Parliament?
Mr Byrne
My hon. Friend is absolutely right that it would make sense to uprate in line with inflation for the rest of this Parliament, but frankly we do not know what kind of mess will be inherited in the next Parliament, which is why my right hon. Friend the shadow Chancellor is right to say that a zero-based review will be needed.
In the seven minutes that remain, I want to make two more points. One is about disabled people, who the Chancellor and Secretary of State said would be protected under the Bill. The Chancellor said that he would “support the vulnerable” and that disability benefits would be
“increased in line with inflation”—[Official Report, 5 December 2012; Vol. 554, c. 879.]
Then we learned the truth: 3.4 million disabled households will be hit by the Bill, admitted the Pensions Minister in a written answer. On average, they will be £156 a year worse off. Hundreds of thousands of people on employment and support allowance—people who the Department says have a disability—will be £87.50 a year worse off.
Mr Byrne
No. Given the hon. Gentleman’s support for a programme motion that has given me six minutes to respond to a Bill that takes hundreds of pounds off thousands of his constituents, he will forgive me for carrying on.
Some 206,000 disabled people will be £62 a year worse off as a result of this Bill. The Government have been caught red-handed trying to keep the truth from this House.
I am glad that today we have had an extensive debate on child poverty, because we were told nothing about how many children and how many working parents would be hurt by this Bill. Only in the past couple of weeks has the truth finally emerged. I want to put on record Labour Members’ gratitude to the Child Poverty Action Group for ruthlessly exposing the impact of the Bill and the cumulative impact of other measures.
The Secretary of State spent some time casting doubt on the strategy for tackling child poverty, which I seem to remember he voted for when he supported the Child Poverty Act 2010. On 24 November 2004, the Prime Minister said:
“I believe that poverty is an economic waste and a moral disgrace. In the past, we used to think of poverty only in absolute terms… That’s not enough. We need to think of poverty in relative terms.”
The Chancellor was even blunter when he said to the News of the World: “We’re all in this together. I’m not going to balance the Budget on the backs of the poor.” That encouraged the Secretary of State to wade in on “Sky News” in June 2010, when he said that “you have” to make savings
“but protect the poorest and that’s my absolute priority.”
How hollow those words ring tonight.
The truth is now before us: 200,000 children will be pushed into poverty as a result of this Bill. According to the Child Poverty Action Group, the measures in this Bill, alongside other measures that have been introduced, mean that 1 million children will be pushed into poverty by this Government. That will be the Secretary of State’s legacy. He spent all those years trying to persuade us that the Conservative party was finally a party that cared about poverty, and now, because the Chancellor needed a new year’s dividing line on welfare, he is accountable for putting 1 million children into poverty. It is well and truly clear that the nasty party is back.
This is about not just children but their mothers. A fortnight ago, my hon. Friend the Member for West Bromwich East (Mr Watson) published a list of 106 battle- ground constituencies. In those seats, there are 150,000 mothers who will be hurt by this Bill, losing £180 a year. In fact, as a result of measures put through by this Government, they are now losing £1,400, and tonight Members on the Treasury Bench voted to allow that to continue. They were given the chance to protect those 150,000 mothers and they chose not to. Over the next few months, we will be getting in touch with mothers in those constituencies and making it very clear that their Member of Parliament had a chance to protect their maternity pay and chose not to. Right now, the price of children’s clothing is rising by 4.5% and food prices are rising by 3.6%. Working mothers going on to statutory maternity pay are losing £180 a year at a time when someone on £1 million a year is getting a £2,000 tax cut. How are Government Members going to justify that to people in their constituencies?
Mr Byrne
No, there is too little time.
It is a disgrace that this Bill is being rammed through the House tonight. The Secretary of State did not want public hearings and Ministers did not want to defend the detail of the Bill in Committee. We hope that the other place will give it the scrutiny that was denied to Members of this House.
The tragedy is that there is another way to bring down welfare spending. Long-term unemployment is now rising towards the 1 million mark, as is youth unemployment. Nothing in this Bill fixes the Work programme, which gets only 2.6 people out of every 100 back into work, or fixes the disarray that is now unfolding in universal credit. What the Government should have been doing tonight is bringing us measures to bring down unemployment, long-term unemployment and youth unemployment, and to save this country the cost of failure. Instead, the debate on this Bill has shown a Government and Secretary of State who are hellbent on making savings and clearing up the cost of the failure of a rising unemployment bill by taking that money from working people—6,000 working people for every Conservative-held marginal constituency.
Business without Debate
(11 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text
Mr Deputy Speaker (Mr Lindsay Hoyle)
With the leave of the House, it will be convenient to take motions 2, 3 and 4 together.
Ordered,
Culture, Media And Sport
That Mr Adrian Sanders be discharged from the Culture, Media and Sport Committee and Mr John Leech be added.
Justice
That Karl Turner be discharged from the Justice Committee and Graham Stringer be added.
Transport
That Mr John Leech be discharged from the Transport Committee and Mr Adrian Sanders be added.—(Mr Geoffrey Clifton-Brown, on behalf of the Committee of Selection.)
East Midlands Ambulance Service
(11 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
John Mann (Bassetlaw) (Lab)
I rise to highlight the problems of the reorganisation and funding of the East Midlands ambulance service. The problem has been covered up because, over the last 18 months, the service has lost the contract for non-emergency transfers of patients to Arriva trains and buses. Regardless of the question of service, the impact on the East Midlands ambulance service is £5 million a year. That was told to me, in advance of the loss of the contract, by the senior officials who ran the service. That £5 million a year has not been put back in additionally by the Government. Therefore, £5 million of cuts are required in the service.
To make those cuts, the service is attempting to reconfigure, which has a detrimental impact on my constituency and elsewhere, as I shall outline. Before doing so, I wish to highlight another problem for the Minister to respond to: targets and how they are set. There is currently an in-built pressure for ambulance services to meet specific targets. The reconfiguration is happening in the context of meeting those targets, but there are perverse incentives within many of them.
I shall highlight that with one example, but there could be many. A mother sadly lost her child last year. The mother went into premature labour at 29 weeks and the child, Jessica Day, died at birth. When the mother went into premature labour, she had a midwife with her and an ambulance was called, but none was available. A response vehicle with a single paramedic came, but Jessica Day’s mother needed—medically—an immediate transfer to an intensive care unit within a hospital to give the baby, Jessica, a chance of survival. Had that immediate transfer happened, on the balance of probabilities, Jessica would be alive. It did not happen because no ambulance was available. In fact, the nearest ambulance was on its way back from Sheffield on the M1 in Yorkshire.
That in itself is a major issue, but perhaps equally major is the fact that the target was met. Despite the fact that the mother with the baby needed to be in hospital immediately but did not get there for an hour and two minutes, the target was met, because a car arrived with a paramedic within 19 minutes. The mother and baby needed to be in an ambulance, and it was the right medical decision not to transfer them in their own car, which was available, as that would have endangered the mother as well. That is a graphic illustration of the problem.
As we see repeatedly, not least in respect of elderly people, if the target is not met, the ambulance does not come for many hours. For example, one 80-year-old pensioner was laying in a garden for more than an hour with a broken hip. Because the immediate response target could not be met, the emergency was de-prioritised, and the ambulance was sent somewhere else to meet another target—the second incident may or may not be as urgent. The longest wait I know of for an emergency response is 10 hours, but it is often three or four hours—with “often” not meaning daily, but certainly weekly. That needs to be looked at.
I also see a problem emerging with improvements. How could improvements be a problem? Over the last 11 years as an MP, I have called for a vast increase in the number of community defibrillators. I would like to see them in every community building, every significant employer, most small employers, every school and every parish council, with trained responders to use them. That would be wonderful, and a wise expenditure. All those defibrillators would be maintained by the East Midlands ambulance service, and every time one was used, it would be deemed to be an eight-minute response. Therefore there is a perverse incentive not to have community defibrillators in areas such as mine, because it would mean fewer ambulances. The community first-responder with the defibrillator would meet the response time, but the ambulance would not come in that minority of cases in which the patient needed to get to hospital. That is no good for my constituents.
It is similar for strokes. I would like to see localised thrombolysing done immediately in the way it is done in Iceland, for example. The brain image is scanned and sent to the consultant, wherever they are. They analyse it instantly and the decision on thrombolysing is made. That is done without having to take people to hospital, but we are light-years away from that simple system. The reconfiguration of the ambulance service now under way will worsen that situation.
There are bigger problems for people who do not live in a city. I want to go through some mathematics with the House to show the problems. The problem of averaging to meet targets means that, by definition, high-density cities will always be prioritised over low-density rural areas. I have a theoretical example, but it could be real in the east midlands. Suppose we have a city of 900,000 people and a rural constituency of 100,000 people. The average time for an ambulance to get to a job is much shorter in the city because of the density of population. In other words, the propensity of any square kilometre to have an incident is much higher simply because of the density of population. Therefore there will be a much higher level of vehicle cover in the city. But a 95% response time in the city and a 60% response time in the rural area—with the population figures I have given—results in a 91.5% response time overall. If those figures are reversed, with a 60% response time in the city and a 95% response time in the rural area—the exact opposite—the overall response time falls from 91.5% to 63.5%. Therefore, by definition, setting response times as they are means that ambulance services will disproportionately put their resources in the high-density cities rather than in rural areas. That is bound to happen, and the problem when the service faces a shortage of money is that when it reconfigures to meet response times, it has to downgrade the rural areas. It is not possible to do otherwise if response times alone are taken into account. The Minister needs to look at how the response times are set.
These are major issues for the Government, and I do not make those points in a hostile, partisan way. These are issues that successive Governments have looked at, but no solution has been found. Those things have to be changed. As well as Bassetlaw hospital, we use Doncaster royal infirmary—we are part of the same trust. We use Sheffield hospitals for heart attacks and cancer. However, the East Midlands ambulance service plans have been reconfigured to take us to King’s Mill in Ashfield, which is an entirely different area.
Gloria De Piero (Ashfield) (Lab)
The loss of ambulance stations in semi-rural areas is a particular concern. The town of Eastwood in my constituency faces the loss of its ambulance station. Does my hon. Friend agree that closing an ambulance station cannot help already poor response times?
John Mann
The figures I have presented to the House show this in-built bias against rural and semi-rural areas, and, not least, former mining communities. We have the proposals to close Worksop and Retford ambulance stations and to have one hub in Ashfield’s King’s Mill hospital to serve my population. The population of Bassetlaw will have a parking lot with a potential portakabin under the original proposals.
Toby Perkins (Chesterfield) (Lab)
Was my hon. Friend as surprised as I was to hear that the initial consultation has been replaced by a subsequent one which is suggesting doubling the number of hubs? I welcome the fact that there was some element of listening, but it suggests that the original plans were miles away from what was safe for the people in the east midlands.
John Mann
As you might imagine Mr Deputy Speaker, in Bassetlaw we had the biggest response to the consultation, with more than 19,000 people involved directly in the consultation, and we had the largest public meetings. We found one person—I will not name his political party, but he was the campaign organiser for a small party—in favour. All the other 19,000 who signed up were against it—every single person in the public meetings was against it. All the staff were against it—every single one of them. They were all against it because, if the ambulances and the base are shifted out of the area and we have just a parking lot with a portakabin, we will have an even worse second-rate, service in Bassetlaw. The averages will be maintained as the cities get our ambulances and we will not have them, and we will become the bit of the response time that is not met. My constituents will continue to die unnecessarily.
What I want from the East Midlands ambulance service, therefore, is a proper rethink. It is clearly rethinking, but I want to ensure that Worksop and Retford ambulance stations stay open. If they want to juggle the minutiae of where the management is based, I am not worried about that and neither are my constituents, but we want two proper bases. We want the Gainsborough ambulance service maintained to keep accessibility in the north-east part, the rural part, over the border in Lincolnshire. That is what we need if we are to maintain the kind of service that my constituents expect. They pay their taxes. We have our illnesses like everybody else. What is unacceptable to all of my constituents and to me is that former mining areas and rural areas have a worse ambulance provision than the rest of the country. We are not prepared to accept that. East Midlands ambulance service must come back with a proper proposal. In that proposal, Worksop and Retford ambulance stations will need to stay open so that there is a proper base to allow the staff to continue to do their excellent job. I thank the people of Bassetlaw for the way they have responded. They will continue to do so to ensure that we get the service that they deserve.
The Parliamentary Under-Secretary of State for Health (Anna Soubry)
I congratulate the hon. Member for Bassetlaw (John Mann) on securing this debate. Were it not for the fact that I now sit on the Front Bench, I would have put in for a similar debate—there is no doubt about it—such is my concern, as the constituency MP representing Broxtowe, about the situation with East Midlands ambulance service. It is important that I recognise that interest, because I, too, have had many concerns about EMAS, although they are perhaps slightly different from those the hon. Gentleman has described. As a result, I had a meeting with the chief executive of EMAS, Mr Philip Milligan, a week last Friday. I believe that he has since met the hon. Gentleman, so he will have heard about many of the issues that the hon. Gentleman raised in the House today, and rightly so.
I do not believe that this is simply a matter of finance—that is certainly not where my concern lies—or about the “Being the Best” scheme, which has been out for consultation, as the hon. Gentleman described. My concern, and that of many other hon. Members whose constituencies are covered by EMAS, is about poor response times, notably for elderly people who have fallen. My hon. Friend the Member for Loughborough (Nicky Morgan), for example, has had difficulties in her constituency, and I have had half a dozen problems in mine, with frail elderly people with suspected fractures having to lie on the floor, sometimes for up to four hours, despite being less than 10 minutes from the Queen’s medical centre in Nottingham. My hon. Friend the Member for South Derbyshire (Heather Wheeler) is nodding in agreement, as no doubt she has heard of similar experiences in her constituency. That situation is unacceptable, and I hope to offer some insight as to why that is the case.
Heather Wheeler (South Derbyshire) (Con)
In South Derbyshire we have had numerous cases of elderly people falling over in a park and having to wait hours for an ambulance. Residents have come to put blankets on them because they know that they should not be moved. We are 15 minutes from Burton hospital, but we cannot do anything because we rely on the professionals.
Anna Soubry
I am grateful to my hon. Friend for her intervention, but I think that it is also important to pay tribute to the ambulance staff who work for EMAS and the outstanding work they do. It is also important to point out that between October 2010 and December 2012 EMAS recruited 65 new front-line staff, so something is going on that is not right. Many people are of the view that unfortunately it is the way that EMAS is being run that is at the heart of the problem.
Mr Mark Spencer (Sherwood) (Con)
I wonder whether my hon. Friend is aware that Nottinghamshire fire and rescue service, if it has to be the first responder, is often left to look after patients until an ambulance arrives, which could be up to an hour, so the fire engine is not available to deal with a much more important issue.
Anna Soubry
As ever, my hon. Friend makes an important point, and it is one that I will certainly look at further. I hope that those in EMAS who are listening to the debate will take that comment on board.
In response to the points made by the hon. Members for Ashfield (Gloria De Piero) and for Chesterfield (Toby Perkins), I do not think that it is as simple as saying that the closure of an ambulance station will de facto reduce the service available. Ambulances do not sit in ambulance stations waiting to respond to a local incident. They spend most of their time out of ambulance stations on the road so that they can respond to emergency calls. EMAS reported—these are important facts that should be widely publicised; I am sure the hon. Member for Bassetlaw will ensure that they are—a total turnover of £169.5 million in its 2011-12 final accounts and a £1.4 million surplus. It has also reported surpluses in the previous three years. I understand that for 2012-13 the trust received £3.5 million funding as its share of the EMAS contract from Bassetlaw primary care trust. As I have said, my concern is not so much about the money, but about the way the service is being operated.
Let me turn to the “Being the Best” review. EMAS tells me that it recognises that its response times in rural areas do not match the response times in city centres. In response, EMAS published its “Being the Best” change programme in 2012, which outlined plans designed to ensure that response times and the service provided to all the people of the region were improved. As the hon. Member for Bassetlaw described, EMAS has consulted clinical commissioning groups, overview and scrutiny committees and local people on its proposals. As we have been told, it received substantial feedback from the people of Bassetlaw, with a petition from some 9,000 people. The business case should be presented to the board on 25 March, allowing the trust additional time to review alternative options and develop final proposals for the board to consider.
I am told that a number of options are being considered. They include the “do nothing” option, which involves making no changes to the configuration of ambulance stations; the “do nothing-plus” option, which involves making no changes to the configuration of ambulance stations, but making an additional resource investment in more ambulance vehicles and staff; and the “do minimal” option, which involves making the minimum changes necessary to deliver current service standards in a safer and more effective manner. That option would retain all the current stations and introduce the 118 new community ambulance posts. The fourth option would establish 13 hubs, plus 118 community ambulance posts—I know that my hon. Friend the Member for High Peak (Andrew Bingham), along with many hon. Members, has expressed his concern about that option. The fifth option—a new option—would establish 27 hubs, plus 108 community ambulance posts, and is being considered as a direct result of the consultation feedback.
Andrew Bingham (High Peak) (Con)
Does my hon. Friend think, like me, that although the hub and spoke model has merit, the key is where the hubs go? High Peak is very rural; we need a hub, as I am sure the hon. Member for Bassetlaw (John Mann) feels he does.
Anna Soubry
That is a very good point. My hon. Friend has summed it up—we are having an outbreak of cross-party unity. As he says, the key point is the positioning of the hub. One of the attractions of the hub approach is that the mechanics would be in place to ensure that the vehicles were ready at the beginning of a shift. At the moment, paramedics are responsible for that, which does not seem to be a very good use of their time. There is therefore much merit in establishing 27 hubs in the right areas to ensure that we have a service that is fit for purpose.
There is something else that needs to be, not so much explored, perhaps, as exposed. The hon. Member for Bassetlaw has quite properly commented on the difficulty of having targets, and I could not agree with him more. This debate is a good example of where top-down, Government-led targets have blighted an ambulance service—no doubt there are many other examples in the NHS. That is why, when this Government were elected, for many of us it was on the basis that these targets, far from freeing up services and making them better, were strangling them and making them worse. This debate is an example of targets doing all the things they were designed not to do, constricting a service and making it worse. It is worth bearing it in mind that it was in 1997, I believe, that the ambulance service suffered from such targets. I hope that there will be more cross-party agreement and moving forward, so that although there are laudable aims that all services should have, we should not necessarily set rigid targets, which then create exactly the sort of horribly sad cases that the hon. Gentleman told us about.
Anna Soubry
No, the Minister is not saying that she is going to get rid of them; what I am saying is that I take the view—as the hon. Gentleman does—that targets are not particularly improving services. I think there is a case for re-examining targets, and I hope he would join me in saying to the ambulance service, “Let’s look again at these targets in the NHS to see whether they’re doing the job we want them to do,” because it is precisely because of these targets that elderly people in my constituency have been lying on floors for up to four hours while ambulances have to go to meet a target.
Toby Perkins
The hon. Lady seems to be saying that the ambulance service is so focused on targets that it is incapable of recognising that leaving an old lady lying on the floor for four hours is reprehensible and appalling. She is letting the ambulance service off tremendously lightly to suggest that that is reasonable.
Anna Soubry
I am not saying that it is reasonable at all. What I am saying is that this was the system introduced under the last Labour Administration— a Government whom the hon. Gentleman supported. These are the precise consequences of that system; it is the perversion of that system that has led us to a situation in which targets have to be hit. I can assure hon. Members that I explored this matter with Mr Milligan, and an elderly lady lying on the floor with a suspected fractured hip does not fall into the category of an emergency life-threatening situation. These are not definitions imposed by this Government; these are the consequences of the 13 years of the previous Administration. I take the view that the situation needs urgent review, and I will certainly be making that recommendation in the Department that we need to look again at the ambulance service.
Mr Dennis Skinner (Bolsover) (Lab)
Does the Minister agree that a lot of people in the east midlands, including many of the Members who have spoken here tonight, are dealing with pretty much the same kinds of characteristics in the old mining areas and rural areas? In my area of Bolsover and mid-Derbyshire, it seemed as though the 17 control centres were going to be reduced to two. I get the impression that the Minister is saying that most of the 27 would be likely to remain. It is hard for me to say this, but do we have a cross-party agreement to save those in mid-Derbyshire that cover Bolsover as well?
Anna Soubry
I have to say that, for the first time, I am almost speechless. It is not for me to say what is my preferred option. That decision has to be made at a local level. As the hon. Gentleman might imagine, however, I may have a point of view on the preferred option, and I am entitled to make my view known to EMAS, as indeed I will. I take the hon. Gentleman’s important point about the former coal-mining communities —they are similar to my own, although mine is not on the same scale as Bolsover. I make the point again, however, to be fair to EMAS, that the reason it has gone through this process—which has been painful for many people—is precisely because it wants to improve its service. It recognises that rural areas do not receive the kind of service that urban areas do.
Chris Heaton-Harris (Daventry) (Con)
In the last couple of minutes, will the Minister address the concept of regionalisation of a service such as this? We have previously seen money being wasted on the regionalisation of the fire service, and many of us with constituencies on the periphery of the East Midlands ambulance service really worry about this. The hon. Member for Bassetlaw (John Mann) talked about the hospitals outside the region that his constituents go to. My constituents go to hospitals in Oxford, Coventry and elsewhere. Does this mean that those of us in the rural outreaches of the east midlands are the ones who have to pay for this centralisation?
Anna Soubry
My hon. Friend’s intervention raises a point that I hope I can help him with. There is absolutely nothing to prevent an ambulance in Daventry from going to whichever hospital offers the best treatment for that particular patient. Exactly the same applies in Bassetlaw. Under the new rule, there will be nothing to prevent a patient from going to Doncaster royal infirmary, or up to Sheffield, or indeed down to the Queen’s medical centre in Nottingham. The changes will not affect the ultimate decision of which is the best hospital for that particular patient—[Interruption.] The hon. Member for Bassetlaw is chuntering at me. Does he wish to intervene on me?
Anna Soubry
With great respect to the hon. Gentleman, he misses the more important and indeed more valid point that just because there is an ambulance station in a particular town or village, that does not mean to say that there is always an ambulance sitting there waiting to serve that town or village. What is important is—