House of Commons

Thursday 21st March 2013 Commons Chamber

Thursday 21 March 2013

The House met at half-past Nine o’clock

Prayers

Thursday 21st March 2013 Commons Chamber

[Mr Speaker in the Chair]

Oral Answers to Questions

Thursday 21st March 2013 Commons Chamber

The Secretary of State was asked—

[Glyn Davies (Montgomeryshire) (Con)]

1. What progress his Department has made on developing trade links with non-European Union countries.

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

We have increased UK Trade & Investment’s focus on growth markets and we are championing ambitious EU trade agreements to help stimulate an export-led recovery. Over three years, our goods exports to Brazil are up by half; to India, by over half; to China, they have almost doubled; and to Russia, they are up by 130%.

[Glyn Davies]

We learned yesterday from Office for Budget Responsibility figures that the eurozone economy shrank by 0.6% in the last quarter, and the economies of the United States and Japan are flat. Does my right hon. Friend agree that if we are to return to sustained growth in the United Kingdom, we have to increase the business we do with high-growth economies such as Brazil, Russia, China and India?

[Vince Cable]

Yes, I absolutely agree. The Prime Minister and I, and other Ministers, spend a lot of our time trying to develop exports in these growth markets and to attract inward investment from them; that is clearly where the growth is. That does not mean that the EU market is not important; it clearly is, and that is why we are pressing for improvements to the single market.

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

In his autumn statement 2010, the Chancellor stated that he wanted to see an export-led recovery. Given that last year exports fell and the current account deficit was the greatest for a quarter of a century, how does the Minister responsible for exports think his Department is doing?

[Vince Cable]

We are being extremely energetic in promoting that agenda. It is certainly true, as the Office for Budget Responsibility has made clear, that the slow-down in the British economy was primarily due to the failure in net exports. In our major export markets, zero or negative growth has been a significant factor. As I said in my first answer, we have very rapid growth in exports to some of the big emerging markets. A lot of that is due to the supportive efforts that are being made not only by British business but by Ministers, including me.

[Mr Philip Hollobone (Kettering) (Con)]

Is it not a serious source of concern that while we have a £20 billion trade surplus with the rest of the world, we have a £48 billion trade deficit with the European Union?

[Vince Cable]

Yes, it is a source of concern. We now have the benefits of a much more competitive exchange rate, and given the efforts that we are making to promote British exports and import competing industries, I would expect that deficit to narrow.

[Mr Iain Wright (Hartlepool) (Lab)]

As the Secretary of State and the hon. Member for Montgomeryshire (Glyn Davies) have said, the UKTI strategy recognises the need

“to increase exports, especially to the high growth and emerging markets of the new global marketplace”.

Yet despite this objective, and as well as sterling’s dramatic weakening in recent months, which should help exports, the Bank of England has described export performance as “disappointing”, the OBR has described it as “weak”, and yesterday’s Budget revealed forecasts of net trade rising by a paltry 0.1% until 2017. Why are we not experiencing an export-led recovery, and what will the Secretary of State now do differently to boost exports?

[Vince Cable]

I would have thought it was fairly obvious that when there is an economic slump in the markets that constitute half our exports, it is rather difficult to expand into them, despite the competitive advantage that we have. There are deep structural problems. Many exporters genuinely have problems in getting access to bank finance or difficulties in getting access to trained workers. These are long-term structural problems that we inherited and are now trying to deal with.

[Mr Dominic Raab (Esher and Walton) (Con)]

2. What steps he is taking to reduce business regulation for start-ups and small businesses.

[The Minister of State, Department for Business, Innovation and Skills (Michael Fallon)]

Through the red tape challenge, we have committed to scrapping, improving or simplifying at least 3,000 regulations. We introduced the ground-breaking one in, one out rule, which has saved businesses around £1 billion in regulatory costs; and from January we upped that to one in, two out. In addition, the micro-business moratorium introduced in April 2011 has protected the very smallest firms, and I hope that we can build on that when the moratorium expires next March.

[Mr Raab]

I thank the Minister for that answer. The Institute of Directors estimates that regulation costs British business £112 billion each year. I understand that the Government moratorium on new regulation applied to micro-businesses and start-ups, to which the Minister has referred, expires next year. Will he extend it for another three years in order to boost growth and get firms hiring?

[Michael Fallon]

We are looking hard at what we can do to extend that protection for the very smallest businesses from burdensome regulation from next year. In addition, we are pressing the Commission to make more proposals to implement its own commitment to a moratorium. We have seen a couple of examples from the European Union so far and we need to see more.

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

The Minister will agree that most of the small firms we meet want light regulation, if none at all, but they also want good finance. What does he have to say about Rich Ricci, who has just been awarded a £16.7 million bonus by Barclays? What has Barclays ever done for small business in order for a man to get a £16.7 million bonus on the same day as the Budget took welfare money away from the poorest in our country?

[Michael Fallon]

I am not sure what that has to do with the red tape challenge, but Barclays is one of the banks that we are pressing hard to do more to lend more to small businesses, and we expect it to steadily increase the take-up of the various Government schemes on offer.

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

Will my right hon. Friend look at removing gold-plated provisions on items such as jam, which has to be marketed as a preserve unless it has the right amount of sugar or fruit in it?

[Michael Fallon]

It was the previous Government who transposed the European directive but who failed to transcribe the flexibility that France and Germany have to lower the minimum sugar content in jam. We will consult on that shortly. Under this Government, not only is there more flexibility towards the European Union, but there will be more jam tomorrow.

[Mr David Hanson (Delyn) (Lab)]

Given that Members in another place—not just Labour peers, but a former Conservative Chancellor of the Exchequer and former Cabinet Ministers and Cabinet Secretaries—have this week rejected the Government’s shabby proposals on cash for workers’ rights, is it not right that the Government now reconsider their shabby proposal?

[Michael Fallon]

This House agreed before Christmas to make available this additional right. Nobody has to take it up—they cannot be bullied or harassed into it. There is no need for them to take it up, but equally there is no need for the other place to deny them the opportunity if they wish to do so.

[Jonathan Ashworth (Leicester South) (Lab)]

3. What recent assessment he has made of the operation of the regional growth fund.

[The Minister of State, Department for Business, Innovation and Skills (Michael Fallon)]

The regional growth fund is a success, not least in the east midlands where 16 projects and programmes have access to nearly £117 million. Nationwide, 198 projects and programmes have already been finalised and can draw down their funding, including 15 from round 3 which have already benefited from the accelerated process I announced last October. The rest of the round 3 awards will be finalised in the middle of next month, including, I hope, the Leicester and Leicestershire local enterprise partnership programme, which will support businesses in the hon. Gentleman’s constituency.

[Jonathan Ashworth]

I think that the right hon. Gentleman intends to visit my constituency tomorrow to attend the Federation of Small Businesses conference. I am sure he will find that we have a significant number of small and medium-sized enterprises in Leicester, Leicestershire and the east midlands, and a significant manufacturing base. Despite what he has said, the east midlands appears to be bottom of the pile when it comes to regional growth fund allocations. In round 3, we received just 2% of allocations. When will the east midlands get a fair deal?

[Michael Fallon]

I am looking forward to attending the FSB’s annual conference with the Secretary of State in the hon. Gentleman’s constituency tomorrow, and to hearing more about how it applauds what was in yesterday’s Budget. I hope the hon. Gentleman will be there, too.

On the regional fund’s allocation for the east midlands, this is a competitive fund. There are no specific targets for each region and 19 bids have been selected in the east midlands. Subject to finalising the award I mentioned, the Leicester and Leicestershire LEP programme will support SMEs across the hon. Gentleman’s constituency with 25% capital investment grants ranging from £25,000 up to £150,000. I hope he will encourage—

[Mr Speaker]

Order. The answer is too long.

[Duncan Hames (Chippenham) (LD)]

The regional growth fund has certainly attracted interest in Wiltshire, with bids from Melksham’s Cooper Tires and the Corsham Institute. Whether it brings sustainable energy solutions or exploits the digital economy, is this not a welcome diversification of Wiltshire’s economy?

[Michael Fallon]

It certainly is. The purpose of the regional growth fund is to help better balance our economy by encouraging manufacturing, especially in those regions that have been over-dependent either on public sector employment or single types of employment.

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

4. If he will bring forward proposals to require companies to include supply chain issues in their annual narrative reporting.

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jo Swinson)]

The Department has no plans to require companies to report specifically on supply chains. However, responsible supply chain management is an important issue, which good businesses should understand and take seriously. From October, listed companies will be required to report on community, employee and human rights issues. Later this year, we will publish a framework for action on corporate responsibility, which will consider supply chain management.

[Michael Connarty]

I thank the Minister for that reply. We found out yesterday in a press release that businesses are being urged to sign a human trafficking charter. That came not from the Department for Business, Innovation and Skills but from the Home Office. It appears that the Minister for Immigration is taking over the responsibilities of Business, Innovation and Skills Ministers. He is proposing that businesses should sign up to a charter that seems very similar to the contents of my private Member’s Bill, the Transparency in UK Company Supply Chains (Eradication of Slavery) Bill. Surely it is up to BIS to include human trafficking in the narrative reporting of companies in its proposed statutory instrument. If the Minister for Immigration wants that requirement on human trafficking, surely BIS Ministers do too.

[Mr Speaker]

Order. We are grateful. We have got the point.

[Jo Swinson]

I commend the hon. Gentleman for campaigning against this vile and abhorrent crime. He rightly points out the action that the Government are taking on human trafficking. That is being done in conjunction with BIS, but the Home Office is obviously the lead Department on human trafficking. The Minister for Immigration has rightly been taking the matter forward. Both he and I spoke at a conference this week about human trafficking and the risks to the hospitality sector in particular. We will continue to work with business to raise the awareness of this issue and to clamp down on problems in the supply chain. It is a reputational risk for businesses and we must ensure that there is proper enforcement through the Home Office procedures.

[Alison McGovern (Wirral South) (Lab)]

5. What assessment he has made of access to apprenticeships for young women.

[The Parliamentary Under-Secretary of State for Skills (Matthew Hancock)]

The number of women starting apprenticeships has more than doubled since this Government took office. The tax cuts for low earners that were announced yesterday by my right hon. Friend the Chancellor of the Exchequer will take thousands of apprentices—men and women—out of tax altogether.

[Alison McGovern]

I thank the Minister for his answer, I think. It sounded lovely, but unfortunately the Business, Innovation and Skills Committee reported in November:

“Gender segregation remains a huge problem with only 3% of engineering apprentices”

being women

“compared to 92% of hairdressing apprentices.”

The Select Committee said:

“Such inequality, especially in a publicly funded scheme is not acceptable”.

Since November, what has the Minister been doing about that?

[Matthew Hancock]

Under Labour, a minority—[Interruption.] Hold on! Under Labour, a minority of those starting apprenticeships were women, and now a majority of those starting apprenticeships are women. I thought that the hon. Lady would welcome that. Specifically on engineering, not only is the apprentice of the year, Jenny Westworth, a brilliant engineer, but we have a scheme with Rolls-Royce, BAE Systems and others to promote women in engineering. This is something that I feel passionately about and we will do yet more.

[Peter Luff (Mid Worcestershire) (Con)]

This week, I met two hugely impressive female engineering apprentices from the company MBDA, which achieves a 50% intake of female engineering apprentices. That shows that it can be done. Does my hon. Friend agree that one of the best ways of achieving that is for businesses to engage with schools as part of an effective design and technology curriculum?

[Matthew Hancock]

I agree entirely. That demonstrates the effort that is being made. Indeed, the Secretary of State met the female engineers my hon. Friend talked about. The number of apprentices in engineering and manufacturing has gone up by more than half in the past two and a half years. [Interruption.] The “Oohs” and “Aahs” of Labour Members only reflect their disappointment at being such failures themselves.

[Pat Glass (North West Durham) (Lab)]

The Minister’s Department found recently that one in five apprentices receives no training whatever. That is worrying for apprentices and damaging to the brand. What action is the Minister taking to address that?

[Matthew Hancock]

The gathering of that evidence started in 2008. It is shocking that that happened under the previous Administration, and we have stopped it.

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

6. What assessment he has made of national apprenticeship week 2013.

[The Parliamentary Under-Secretary of State for Skills (Matthew Hancock)]

National apprenticeship week last week was a triumph. Tens of thousands of new apprenticeship places were announced; there was double the coverage of last year; and the message went out loud and clear from this House and beyond that apprenticeships deliver.

[Mike Freer]

I am grateful to the Minister for that answer. Last week I had an apprenticeships fair. Does the Minister agree that the National Apprenticeship Service does a wonderful job in supporting MPs, private organisations and charities in boosting apprenticeships in this country?

[Matthew Hancock]

I commend the National Apprenticeship Service for its work, and I know there were more than 400 local residents and 22 employers at my hon. Friend’s job fair. I have my own jobs fair tomorrow, and national apprenticeship week next year will take place on 3-7 March. I hope that all hon. Members will get involved.

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

Businesses in my constituency report difficulty in recruiting apprentices in electrical, mechanical and control engineering. What can the Minister do to develop a pipeline of such apprentices?

[Matthew Hancock]

We have made it clear that we expect a new norm for school leavers to go either into apprenticeships or to university. On average, 10 people apply for every apprenticeship vacancy. There is huge enthusiasm, but much more that we can do.

[Ann McKechin (Glasgow North) (Lab)]

Further to the question from my hon. Friend the Member for Wirral South (Alison McGovern), surely the Government should adopt a comprehensive strategy to tackle gender segregation, just as they have—rightly—supported the Davies report on senior women on company boards.

[Matthew Hancock]

A comprehensive strategy is about ensuring that we support women as well as men who want to do apprenticeships, and that is exactly what we are doing.

[Tristram Hunt (Stoke-on-Trent Central) (Lab)]

7. What recent assessment he has made of manufacturing activity and future capacity in that sector.

[Chris Williamson (Derby North) (Lab)]

8. What recent assessment he has made of manufacturing activity and future capacity in that sector.

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

After years of manufacturing being in relative decline we are seeking to bolster manufacturing capacity and drive the transformation to a skilled economy. On Monday we launched an aerospace strategy with £2 billion Government-industry funding for an aerospace technology institute. Rounds 2 and 3 of the advanced manufacturing supply chain initiative opened for applications today.

[Tristram Hunt]

One of the major problems affecting ceramics manufacturing in my constituency is, after yesterday’s Budget, no longer the climate change levy, but is security of supply when it comes to gas. We have dangerously low levels of gas storage capacity in this country, and in recent weeks we have come close to energy cut-outs. Will the right hon. Gentleman meet the Secretary of State for Energy and Climate Change as a matter of urgency so that we can have proper energy security for our ceramics industry?

[Vince Cable]

I congratulate the hon. Gentleman and his fellow potteries MPs on putting ceramics on the agenda. We recognise that because ceramics institutions are driven by gas rather than electricity it is more difficult to compensate them under the Government’s scheme. He is right to raise the issue of gas storage, which goes back many years. Compared with France we have relatively little strategic storage and I would be happy to talk to the Energy Secretary about that.

[Chris Williamson]

I hope the Secretary of State supports early-day motion 1185 which calls for the 600 taxpayer-funded carriages for the Crossrail project to be built at Derby’s Bombardier factory, safeguarding more than 10,000 jobs. Given that the Mayor of London will have a big say in where those trains are built, will the Secretary of State tell the House whether he is making the socio-economic case to the Mayor for building those trains in the UK, and specifically in Derby?

[Vince Cable]

We will certainly make the case for tendering to be conducted in a proper, strategic way. One lesson we have learnt over the years is that the rather opportunistic approach that used to happen in public sector tendering for public transport was not helpful, and we will certainly make the strategic case directly with Government and public agencies.

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

Manufacturing is very important to my constituency. Will my right hon. Friend update the House on the outcome of the third annual manufacturing summit, which took place in February 2013?

[Vince Cable]

It was a very productive session at Gaydon and we were able to see successful British car manufacturing—Jaguar Land Rover and Aston Martin were just across the road. It was the largest summit we have had so far, and a celebration, as well as a serious business discussion, of the progress we are making on apprenticeships, innovation and other support for manufacturing.

[Graham Evans (Weaver Vale) (Con)]

9. What steps he is taking to promote advance manufacturing.

[The Minister for Universities and Science (Mr David Willetts)]

Advanced manufacturing is crucial to economic growth. That is why the Chancellor announced a further £1.1 billion for our industrial strategy in his Budget. That follows an additional £600 million investment in the autumn statement for eight great technologies.

[Graham Evans]

Will my right hon. Friend commend the vital contribution to the national economy made by advanced manufacturing industries, such as APPH in Runcorn, which manufactures vital parts for the Saab Gripen fighter? The company has recruited four new engineering apprentices from Manchester, Liverpool and Salford universities. Does he agree that it is vital to encourage more young people to take up engineering as a career?

[Mr Willetts]

I agree with my hon. Friend. The aerospace announcement in the Budget, to which my right hon. Friend the Secretary of State has just referred, is crucial in supporting those industries. My hon. Friend can be proud of a constituency that has, in Daresbury, an important high-tech centre.

[George Freeman (Mid Norfolk) (Con)]

This week, AstraZeneca announced a deep global restructuring, committing its manufacturing facility to Cheshire, but moving its global R and D to Cambridge, with a £300 million investment and 2,000 staff. Does my right hon. Friend agree that that is a sharp reminder of the deep global restructuring in the pharmaceutical sector and the importance of the life science strategy we put in place 18 months ago? May I congratulate his Department on the speed with which the task force was set up?

[Mr Willetts]

The announcement was obviously disappointing for people at Alderley Park, but we have worked with AstraZeneca in setting up a task force, which I hope will secure a future for the site. Meanwhile, we should celebrate the fact that AstraZeneca decided, having looked around the world, that the UK was the best place to invest in new R and D facilities.

[Dan Jarvis (Barnsley Central) (Lab)]

10. What his policy is on vocational education routes; and if he will make a statement.

[The Parliamentary Under-Secretary of State for Skills (Matthew Hancock)]

We are reforming vocational education to be more rigorous and responsive. We will introduce a TechBacc to recognise high-value technical education. We are strengthening further education colleges and, through the Richard reforms, strengthening apprenticeships, so that university or an apprenticeship becomes the new norm for school leavers.

[Dan Jarvis]

I thank the Minister for his response. He may not be aware that a number of major public and private sector employers in Barnsley recently signed a pledge to have 2.5% of their work force as apprenticeships. However, with the number of young people aged 16 to 18 starting apprenticeships falling, can the Minister learn anything from the innovative approach taken in my constituency?

[Matthew Hancock]

Yes, I am sure I can learn an awful lot from such an approach. It sounds terrific and I would like to hear more.

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

My constituency experience is that many young people and their families find it very difficult to understand exactly the qualification routes in vocational education and how young people might plug in later to more academic careers or whatever. Will the Minister consider simplifying the system to ensure much greater clarity for those interested in following such careers?

[Matthew Hancock]

That is an important point. The TechBacc aims to do precisely what the right hon. Gentleman suggests, alongside making apprenticeships the new norm. We want to make clear the progression routes that people can take to get into the career that they want. I am happy to look at any other steps we can take, but simplification is the order of the day.

[Mr Gordon Marsden (Blackpool South) (Lab)]

Does the Minister realise that success in vocational education is a game of two halves? We will get the expansion in quality apprenticeships we need only if he has prepared the ground, which means proper support for vocational education in schools, on which the Government are failing. The latest research from the Chartered Institute of Personnel and Development shows that parents remain doubtful. Therefore, in his second day job as a Minister in the Department for Education, will he restore key stage 4 work experience and dedicated funding for face-to-face guidance, for which half the people surveyed by the CIPD and the employers I speak to are crying out?

[Matthew Hancock]

We are introducing work experience as part of the study programmes in sixth forms and for 16 to 18-year-olds. The new duty on schools to provide independent and impartial advice is an important step we have taken from this summer.

[Martin Vickers (Cleethorpes) (Con)]

11. What support his Department is providing to encourage investment and growth in north and north-east Lincolnshire authority areas.

[The Minister of State, Department for Business, Innovation and Skills (Michael Fallon)]

North and north-east Lincolnshire are benefiting from over £41 million of Government investment from the regional growth fund, including the £30 million Humber local enterprise partnership that I launched in February with my hon. Friend, which will support businesses in his constituency. The Humber has also secured the largest enterprise zone allocation in England—1,200 acres over two sites—which will help to support the development of the offshore renewable industry in both north and north-east Lincolnshire.

[Martin Vickers]

We obviously welcome the Government’s continuing support and any further initiatives. To emphasise that Cleethorpes is a good place to start businesses, today is the fifth anniversary of the launch of the Cleethorpes Chronicle by two local businessmen. Does the Minister agree that if people show determination and enthusiasm and have a quality product, it is appropriate to start a business, even in these difficult times, as we have seen with the success of the Cleethorpes Chronicle?

[Michael Fallon]

I congratulate the Cleethorpes Chronicle on reaching that milestone and we should send our best wishes to Nigel Lowther, Mark Webb and the team. It is a great local paper, committed to the community and the businesses that it serves.

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

rose—

[Mr Speaker]

I do not wish to be unkind to the hon. Gentleman, but he represents a Northamptonshire constituency: he does not feature in north-east Lincolnshire. He is close, but not quite close enough. I will give him a go later, if he is a patient fellow, as I am sure he will be.

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

12. What plans he has to implement a share scheme for Royal Mail employees.

[The Minister of State, Department for Business, Innovation and Skills (Michael Fallon)]

Parliament decided two years ago that employees of Royal Mail should share in its success. It would be wrong to deny employees this any longer. They should be sharing in the company’s success and dividends, and it is our intention to have such a scheme in place at the time that we conduct a sale of Royal Mail.

[Roger Williams]

I thank the Minister for that encouraging reply. The better financial performance of Royal Mail owes much to the loyalty of postmen and women getting the mail out to every address in the country, even in during these difficult weather conditions. Can the Minister give us a little more certainty about the timing of this scheme and how those loyal postmen and women will benefit?

[Michael Fallon]

It is our intention to conduct a sale during the forthcoming financial year, 2013-14, and I confirm that at the time of that sale we intend to make a share scheme available to the 130,000 employees of Royal Mail who, as my hon. Friend says, have worked so tirelessly to turn it into a successful and profitable business and should share in that success.

[Mr Russell Brown (Dumfries and Galloway) (Lab)]

What assurances can the Minister give to small businesses and many individuals across the UK who rely on a well performing, six-day-a-week service to their homes and businesses? Will that remain so once Royal Mail is privatised?

[Michael Fallon]

Yes, it will, because Parliament put in place, in the Postal Services Act 2011, the statutory requirement for a universal postal service that is secured by Ofcom, an independent regulator, and that will exist irrespective of the ownership of Royal Mail.

[Ian Murray (Edinburgh South) (Lab)]

We very much support genuine employee ownership, especially for hard-working Royal Mail employees. However, we vehemently oppose this Government undermining employee ownership by attaching it to the Beecroft agenda of giving up rights at work. The Chancellor announced this policy by proclaiming:

“Workers of the world, unite!”

Well, they have: they have united against this policy, along with the Employee Ownership Association and the vast majority of responses to the consultation. The Minister is not listening to this large body of opinion, so may I press him again, following the question from my right hon. Friend the Member for Delyn (Mr Hanson), to heed the advice of Conservative Lords Lawson, King, Forsyth and Gummer who voted yesterday, with a large majority of other Lords, to dump these divisive shares for rights policies?

[Michael Fallon]

I note that the hon. Gentleman wants to divert the House from the question about Royal Mail and the more interesting question of whether those on the Opposition Front Bench will support this opening up of Royal Mail to private capital and the scheme to ensure that those who work for the company will share in its success.

[Richard Fuller (Bedford) (Con)]

13. What recent assessment he has made of the costs and benefits of international students to the UK economy.

[The Minister for Universities and Science (Mr David Willetts)]

International students provide enormous economic and cultural benefits to the UK. Education exports from further and higher education contribute some £9 billion to the economy. We therefore stated in January that we will place no cap on the number of genuine students coming from across the world to study in this country.

[Richard Fuller]

I thank the Minister for that answer. We all understand the importance of clearing up the chaotic mess of immigration left by the last Government and the attention that the public pay to reducing the total numbers, but many of us would like to see student numbers excluded from our migration statistics. The economic case has been made by Universities UK and the 1994 Group. Will the Minister reassure me that he is sensitive to these representations?

[Mr Willetts]

My hon. Friend is right. The first priority was to eliminate abuse so that people can have confidence that students are legitimate. We have now said that we will disaggregate the statistics so that students are separately identified. The next step is a positive education export strategy, which we will produce before the summer.

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

The Royal Botanic Gardens in my constituency carries out world-leading research that benefits the UK in many ways. International students and interns are an important part of that work, but the gardens’ particular organisational status sometimes makes it difficult to obtain visas for them. If I write to the Minister with the details, will he, perhaps in conjunction with his colleagues in the Home Office, look at this issue to help support its important work?

[Mr Willetts]

I am always happy to work with the Minister for Immigration, my hon. Friend the Member for Forest of Dean (Mr Harper), to iron out such problems, but the general point is very simple: genuine, legitimate students are allowed into this country and there is no limit on the numbers.

[Shabana Mahmood (Birmingham, Ladywood) (Lab)]

The Minister tries to paint a rosy picture, but the facts are that the recent drop in net migration is due to 38,000 fewer international students coming to this country. His policy is choking growth in our seventh-largest export industry, worth billions of pounds, at a time when our economy is flatlining. It is clear that the Minister is too weak to make the case for our world-class universities around the world and too weak to lobby his Government colleagues to change course. Does he agree with me that the one genuine achievement of the net migration pledge has been a net decrease in his own credibility?

[Mr Willetts]

The hon. Lady should understand that we have a clear policy: there is no limit on the number of students. I went with the Prime Minister on his most recent trade mission to India, accompanied by leading vice-chancellors, to communicate clearly and directly to one of our most important markets for overseas students that they are welcome to come and study in the UK.

[Stephen Barclay (North East Cambridgeshire) (Con)]

14. What assessment he has made of the potential benefits of the development of a new agri-tech centre in Wisbech for regeneration in the fenland region.

[The Minister for Universities and Science (Mr David Willetts)]

We announced funding for agri-tech only this week as part of the Chancellor’s excellent Budget. I congratulate my hon. Friend on being the first to bid for some of that funding. I am sure his idea for a new agri-tech centre will be considered carefully, and we will set out our plans in our agri-tech strategy.

[Stephen Barclay]

I welcome the additional funding announced in the Budget yesterday and pay tribute to the excellent work my hon. Friend the Member for Mid Norfolk (George Freeman) has done on this issue. Will the Minister agree to meet me and the leaders of Cambridgeshire county council and Fenland district council, given the strength of the bid for an area that is located at the heart of the farming fens, in close proximity to the talent centres of Cambridge and Norwich, and adjacent to the College of West Anglia, which is the regional lead for science and technology and is currently building a new £12 million engineering faculty?

[Mr Willetts]

Of course I am happy to meet my hon. Friend. I understand the significance of the wider strategy for his area. East Anglia is one of our national leaders in agri-tech and agri-science, with excellent research institutes across the area.

[Angela Smith (Penistone and Stocksbridge) (Lab)]

15. What progress his Department has made on improving the export performance of UK manufacturers; and if he will make a statement.

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jo Swinson)]

As part of the Government’s industrial strategy, the Department has focused its efforts on helping British manufacturers access global supply chains through schemes such as the advanced manufacturing supply chain initiative and the manufacturing advisory service. We are concentrating in particular on 20 of the world’s highest growth markets. One sign of progress is that, for the first time since the 1970s, the UK is a net exporter of cars.

[Angela Smith]

The Chancellor’s economic plan was predicated to a large degree on boosting exports. It was reported at the end of January, however, that new export orders had fallen for the 13th month in a row. What advice is the Department giving to the Chancellor on how to move from plan A to plan B and give our manufacturers the support they really need?

[Jo Swinson]

My right hon. Friend the Secretary of State for Business, Innovation and Skills outlined in response to an earlier question the significant progress we are making, particularly in non-EU economies, which are seeing much better growth than the EU. The Government have a range of different programmes, with the industrial strategy, the advanced manufacturing supply chain initiative and UK Trade & Investment providing help for businesses to export. In fact, in the past year they have supported firms in creating and securing more than 100,000 jobs for the UK economy.

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

The Geddington road in my constituency links Corby not only to north-east Lincolnshire but to export markets all around the world. Will the Minister prevail on Northamptonshire county council to reopen the road to goods vehicles, which is important to ensuring that goods can get to markets from my constituency?

[Jo Swinson]

The hon. Gentleman ingeniously uses the question to highlight a local issue. It is obviously up to local authorities to make their own decisions, but he uses this opportunity to put his views firmly on the record. No doubt his colleagues on the council will look closely at his comments.

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

16. What progress he made on the adoption of an industrial strategy for the UK.

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

We are developing long-term partnerships with business across a variety of sectors and policy areas. On Monday, I announced £1.6 billion of new Government funding over the next 10 years—well beyond this Parliament—to back our industrial strategy, concentrating initially on aerospace, automotives and agri-food.

[Jonathan Reynolds]

In recent weeks, the former director general of the Institute of Directors, Sir George Cox, in his excellent review of tackling short-termism in the British economy, added his voice to the call for a proper industrial strategy to support long-term growth. Since he took office and abandoned much of what the last Labour Government were doing, the Secretary of State has delivered many good speeches on delivering an industrial strategy, but we do not yet seem to have one. When will we get this sorted?

[Vince Cable]

We already have one. We are reversing much of the damage done with the decline of manufacturing industry under the Labour Government. I applaud the George Cox study. It follows, and in many ways echoes, the survey of long-termism and short-termism that I did through Professor John Kay.

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

17. What support his Department is providing to small businesses to compete in global markets.

[The Minister for Universities and Science (Mr David Willetts)]

The Government have increased funding to UKTI, with an extra £140 million over the next two years, so that it can double the number of small and medium-sized businesses supported from 25,000 to 50,000 by 2015. We will also help 8,000 small companies attend overseas exhibitions in the next financial year. My hon. and learned Friend is absolutely right about the importance of promoting small businesses and export markets.

[Stephen Phillips]

I am grateful to my right hon. Friend for that answer. SMEs in my constituency, such as Destec Engineering, which I recently had the opportunity to visit, are the drivers of both our local and national economies. Does he agree that the measures announced in yesterday’s Budget, particularly the employment allowance and the reduction in corporation tax, will go a long way to helping such businesses grow and compete in the global economy?

[Mr Willetts]

My hon. and learned Friend is absolutely right. We believe that the employment allowance measure, on its own, will ensure that more than 400,000 SMEs no longer have to pay employers’ national insurance contributions, which is the boost they need.

[Nick Smith (Blaenau Gwent) (Lab)]

19. Which measures in the Government’s growth plan his Department has not yet implemented; and if he will make a statement.

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

Yesterday, the Government published a progress report on implementation of the plan for growth and the autumn statement 2011. All measures are being implemented and almost two thirds of the measures are now complete—up from a quarter at Budget last year. We are on track for delivery.

[Nick Smith]

The Government have announced the electrification of the Ebbw Vale to Cardiff line, but in advance of that we need to redouble the line to improve train frequency. Will the Government work with the Welsh Government to ensure that the finance for this shovel-ready project is delivered before the next election?

[Vince Cable]

I am delighted to hear an acknowledgement that after many decades of decline in the railway system we now have a major investment in railways and a rail revolution taking place. The hon. Gentleman raises a specific point that I am happy to follow up with the Welsh Government.

[Mr Speaker]

Steve Baker, not here. Sir Bob Russell, not here. I call Chris Williamson.

[Chris Williamson (Derby North) (Lab)]

T3. If he will make a statement on his departmental responsibilities.

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

My Department plays a key role in supporting the rebalancing of the economy through business to deliver growth while increasing skills and learning.

[Chris Williamson]

A recent report by the respected consumer group Which? highlighted the extent of irresponsible lending in the high-cost credit market. Do Ministers think that the Office of Fair Trading’s recent threat to revoke the licences of 50 payday lenders goes far enough to stamp out bad practice in the sector?

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jo Swinson)]

The hon. Gentleman is quite right to highlight some of the unscrupulous and unacceptable behaviour in the payday lending industry. The OFT’s action, telling the industry it has 12 weeks to shape up or lose its licences, is welcome, but that is not all that is happening. The OFT also intends to refer the industry to the Competition Commission, and we have given it extra powers to suspend licences immediately. The Financial Conduct Authority will be able to take much more action, with the sweeping powers we have given it to ban products, impose unlimited fines and order redress to consumers. The Government take this issue extremely seriously and are acting on it.

[Mr Speaker]

Good of the hon. Member for Colchester (Sir Bob Russell) to drop in.

[Sir Bob Russell (Colchester) (LD)]

T2. Thank you, Mr Speaker; I followed the instructions on the Order Paper, which said, “from 10.15”. Timing is always important. What are the coalition Government doing to promote apprenticeships in manufacturing industries? If the Minister would like good examples, I can draw his attention to Paxman in my constituency—MAN Diesel and Turbo—and Fläkt Woods, among whose apprentices is Kallum Parks, who last month was presented with the Essex apprentice of the year award for 2012.

[The Parliamentary Under-Secretary of State for Skills (Matthew Hancock)]

I have just announced to the House that national apprenticeship week next year will from 3 to 7 March. I commend Fläkt Woods for the work it does and the apprenticeships it teaches. The number of apprenticeships in Colchester over the last couple of years has more than doubled, so clearly my hon. Friend’s efforts are making progress.

[Mr Chuka Umunna (Streatham) (Lab)]

Last year this Government presided over a double-dip recession. The Office for Budget Responsibility has just halved its forecast for what growth will be on the Government’s watch this year, so the situation is urgent. Yesterday the Government announced a number of measures that the Secretary of State says will help—the employment allowance for employers in respect of national insurance, an increase in capital spending by £3 billion a year and the establishment of Lord Heseltine’s single local growth fund. Which of these measures will help struggling businesses in 2013?

[Vince Cable]

There is a long answer, but I will give a short one. Let us start with the employment allowance, which will provide substantial support for micro-companies, building on considerable success with job creation— 1.25 million new jobs over the two and a half years of this Government and 600,000 forecast by the OBR.

[Mr Umunna]

The answer is that none of those measures will help businesses in 2013, because they do not kick in for at least a year, when what the economy needs is a stimulus now. What confidence can we have that the Government will actually deliver? Let us take Budgets 2011 and 2012. The Secretary of State and others boasted about their infrastructure plan, but two years on, less than 2% of the projects are completed or operational and now he says that Budget 2013 will get business investing. If that is the case, why, having accounted for this Budget, has the OBR revised down its forecasts for business investment this year, next year and in the following three years? It is not exactly a vote of confidence, is it?

[Vince Cable]

The OBR was quite clear about the reason for its downward revision of growth: it was explained in terms of net trade. That was the overwhelming factor, but if the hon. Gentleman wants evidence of projects that are now going through, he should look at some of the increases in capital investment approved in the autumn statement—and happening in my Department with my colleague the Minister for Universities and Science—big R and D projects going ahead in partnership with the private sector and many others now going ahead under the regional growth fund, creating jobs across the country.

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

T6. I believe it is Lord Heseltine’s birthday today. I wish him congratulations. Large rafts of money are going to city regions such as Leeds and Sheffield for transport infrastructure and other projects. We feel that we will be left in the lurch, so may I ask the team what support will be given to rural areas of North Yorkshire to improve the roads and other infrastructure?

[The Minister of State, Department for Business, Innovation and Skills (Michael Fallon)]

That is a perfectly fair point, but let me reassure my hon. Friend that the single pot funding from 2015 will be allocated not simply to the cities, but through local enterprise partnerships. It is her local enterprise partnership that will be able to make a bid to the Government.

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

T4. I do not want to use my topical question to talk about the obscene Barclays bonus; I want to ask whether the Secretary of State is aware of the fine example of CEEP—clean and energy efficient production—and sustainable manufacturing in our country’s industrial production. We are a world leader and we have amazing markets in China and India for this product. Will he put even more effort behind CEEP—he has done well up to now—so that we can conquer those markets?

[Vince Cable]

Yes, absolutely. I appreciate the hon. Gentleman’s acknowledgement that we have done well up to now. I have visited Huddersfield twice to see some of the successful companies there, and I am very happy to see more.

[Mr Robin Walker (Worcester) (Con)]

T7. I welcome the appointment of Andrew Witty to lead a review of how universities can support local growth. The university of Worcester has already delivered exciting regeneration projects, including Europe’s first joint university and city library, the Hive, and the new Worcester Arena. As it sets out to look into a new university business park, may I encourage my right hon. Friend to come to Worcester to meet representatives of the university, which has already become a powerful engine of local growth?

[The Minister for Universities and Science (Mr David Willetts)]

I welcome my hon. Friend’s welcome for the important new review that Andrew Witty will be carrying out and, yes, of course I look forward to visiting the university of Worcester. I have not visited it for several years, but I believe that I shall be there in June, and I look forward to that.

[Nick Smith (Blaenau Gwent) (Lab)]

T5. May I press the Minister on payday lenders? Will the Government really get those companies to make it much easier for consumers to understand the cost of those awful payday loans?

[Jo Swinson]

The short answer is yes. The hon. Gentleman is quite right to say that consumer awareness is vital. Some of the people who take out such loans would be much better off with an entirely different financial product. That is why advertising is such an important element in tackling the issue. The Government are working with the Advertising Standards Authority and we will also work with the Financial Conduct Authority, which will take over those powers from next year, to ensure that we clamp down on advertising that misleads people and lures them into taking out products that are not right for them.

[Mark Menzies (Fylde) (Con)]

T8. The north-west is at the heart of Britain’s aerospace industry, and I welcome this week’s announcement of the £2 billion aerospace technology institute. May I urge the Minister to consider the Warton enterprise zone in my constituency as a potential location for it?

[Michael Fallon]

We will certainly do that. The aerospace industry received an enormous boost on Monday with the announcement of £1.5 billion that is to be shared, along with another £1 billion from the private sector. I hope that that will give the industry the confidence to invest, right across the remainder of this Parliament and through to the end of the next one, in what is already one of Britain’s great success stories.

[Sheila Gilmore (Edinburgh East) (Lab)]

T10. The Secretary of State has often told us of his plans to rebalance the economy. Is he as worried as I and many commentators are that a huge plank of the Chancellor’s growth strategy seems to be predicated on a policy that could reinflate the housing bubble?

[Vince Cable]

We certainly would not want to see that happen again. I have to say that I am a little surprised to be given a lecture on this, having seen the housing bubble that developed 10 years ago and got completely out of control and did so much damage. Clearly, the intention of the stimulus announced yesterday is to provide supply as well as demand in the housing market.

[Eric Ollerenshaw (Lancaster and Fleetwood) (Con)]

T9. Lancaster is an excellent university town, and we have a high number of creative and innovative entrepreneurs. What additional help can we get from the Department to provide them with the right marketing, financial and manufacturing advice to help them to get their products to market?

[Mr Willetts]

My hon. Friend is absolutely right. Among the resources that we do not use enough are the business schools in our universities, which can be a source of expertise and support for local businesses. I hope that this will be among the issues that Andrew Witty addresses in his review.

[Mr Dennis Skinner (Bolsover) (Lab)]

The Secretary of State is fond of talking about rebalancing the economy. A walk down the high street in any town or city will show that the growth industries are payday loans, betting shops, pawnbrokers and food banks. Is not that a really sad, evil commentary on these three wasted years?

[Vince Cable]

Perhaps the hon. Gentleman will come back with me to Markham Vale in his constituency, which I visited at his suggestion—[Interruption.] Real regeneration is taking place there with Government support.

[Andrew Jones (Harrogate and Knaresborough) (Con)]

I have raised the issue of interest rate swaps with my right hon. Friend the Secretary of State before, and I am grateful for the action he has taken. However, the problem is still hurting businesses in my constituency, so will he keep the issue firmly on his radar and work with colleagues across government to bring it to a conclusion as swiftly as possible? [Interruption.]

[Vince Cable]

I am sorry; I did not catch the hon. Gentleman’s question.

[Mr Speaker]

I am sorry if the hon. Gentleman’s words were lost; let us hear them.

[Andrew Jones]

I have raised the issue of interest rate swaps with Ministers before and have been grateful for the action taken, but this issue is still hurting businesses in Harrogate and Knaresborough. May I ask the Secretary of State to keep this issue on his radar and to work across government to try to resolve this as quickly as possible?

[Vince Cable]

Yes, the hon. Gentleman is right: interest rate swaps were a major scandal. The Financial Services Authority has, as he knows, already set in train a process for remedies. I am working very actively with it, but it is very much in the hands of the FSA and the banks to produce a just solution. [Interruption.]

[Mr Speaker]

I gather that the hon. Member for Bolsover (Mr Skinner) was banging on about car salesmen and his disapproval of the answer. If he would like to apply for an Adjournment debate, there is always a sympathetic ear; let us see what is available for him.

[Julie Elliott (Sunderland Central) (Lab)]

The proportion of workplaces that have some employees on zero-hours contracts has increased massively in recent years with some 23% of companies having more than 100 employees using them. What are the Government going to do to regulate those contracts, which confer fewer employment rights and cause considerable financial uncertainty for workers?

[Jo Swinson]

The UK employment and labour market is flexible, which can be helpful. For some employees, zero-hours contracts can be helpful. Clearly, where there is abuse happening, it should be clamped down on. That is certainly what the Government will make sure is done.

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

Recently, Axminster Carpets, a great local company, went into administration. Its bankers were less than sympathetic. The Government have capital funds in place for banks to lend; can the Secretary of State do much more to make sure banks properly lend to business?

[Vince Cable]

There are a great many initiatives taking place. Apart from the advanced manufacturing supply chain finance announced this morning, we will be talking tomorrow about a new raft of initiatives for non-bank lending. The hon. Gentleman will have seen this morning’s ministerial statement on the future role of the business bank. He is right that the closure of the carpet factory is a serious blow, but it relates more to the viability of the company than to the ability of getting credit from banks.

[Emma Reynolds (Wolverhampton North East) (Lab)]

As chair of the all-party parliamentary group on aerospace, I want to welcome the announcement earlier this week of the aerospace technology institute. Will the Secretary of State or the Minister say more about the timetable for its creation and what types of investment it will support?

[Michael Fallon]

Yes, I co-chaired the aerospace growth partnership on Monday to press the industrial side of the partnership to get on with the money made available—some £2 billion spread over seven years. I have challenged them to make sure that the money starts to get put into action so that the institute is established as rapidly as possible this year.

[Neil Carmichael (Stroud) (Con)]

In welcoming the industrial strategy being supported by £1.6 billion, I ask whether the Secretary of State agrees that we need to encourage our SMEs to start thinking about investing in tooling for components, especially in the automotive sector, because that is how we will further boost the values of our already impressive exports in cars?

[Vince Cable]

My hon. Friend is absolutely right that the issue in the industrial strategy is promoting not simply the prime contractors but the supply chains. These have been badly hollowed out in recent years, but there is quite a lot of evidence of re-shoring, and we want to support that with the advanced manufacturing supply chain initiative.

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

The Secretary of State has just cut by half the consultation period for large-scale redundancies. Does he imagine in his wildest dreams—I imagine he has some pretty wild ones—that this will do anything to foster economic confidence?

[Jo Swinson]

This was the subject of a lively debate in the Committee corridor earlier this week. As I made clear at that point, this is a minimum consultation period; where it is helpful to continue the consultation, benefiting the business and jobs, of course that can and should continue. The quality of the consultation is being improved through ACAS, which will help to make sure that business benefits but also that more jobs can be saved as a result of that improved process. There is no benefit in just prolonging the uncertainty when it is very clear that a business needs to restructure to make sure that the remaining jobs can be secured.

[George Freeman (Mid Norfolk) (Con)]

On the day of Lord Heseltine’s birthday, I have no idea what presents he might have been expecting, but I am sure that the Government’s acceptance of his report’s recommendations will have been a strong gift. I invite the Secretary of State, on behalf of the House, to pay tribute to Lord Heseltine’s tireless work for British business over a long career and to encourage the Government to implement his reforms with the radicalism and speed demanded.

[Vince Cable]

Yes, I would be delighted to pay tribute to him. Quite apart from this major report, large parts of which we are accepting, Lord Heseltine has played a major role in chairing the group of business people overseeing the regional growth fund and has led the initiative, now being taken in Birmingham, to mobilise chambers of commerce. Indeed, he makes a contribution far bigger than that of many Ministers in this and previous Governments.

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

Last year the Business Secretary wrote to the Prime Minister complaining that his Government lacked “a compelling vision” to drive up growth and provide business confidence. Given that the growth forecast has been cut to 0.6%, and given that the economy is at best flatlining and at worst teetering on the edge of a double-dip recession, does the Business Secretary still think that the Government lack a compelling vision?

[Vince Cable]

The compelling vision has been manifest in the industrial strategy. As the hon. Gentleman will have noted on Monday, the Chancellor and the Prime Minister are fully behind it, and are providing financial support to make that vision a reality.

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

Will the Secretary of State comment on the progress that has been made in Europe on the introduction of transparency to the extractive industries?

[Jo Swinson]

I strongly welcome the support that has been received from both industry and non-governmental organisations for the pursuit of increased transparency in those industries. Talks have been continuing in the European Union this week. We want to make strong EU rules that match the tough United States requirements. There should be no exemptions: listed extractive companies should publish information about all payments that they make to all Governments in all their countries of operation.

Petition

Thursday 21st March 2013 Commons Chamber

Phil Wilson (Sedgefield) (Lab)

- Hansard - - Excerpts

I present this petition on behalf of 156 residents who are opposed to the proposed Wingate Grange wind farm in my constituency.

The petition states:

The Petition of residents of the UK,

Declares that the Petitioners strongly object to the proposed planning application for the erection of 5 wind turbines of a maximum height of 115 metres and the associated infrastructure which will include a crane, hard standing, a substation and control building, transformers, underground cabling, access tracks and a meteorological mast; further that they object to the proposed location for the turbines of Wingate Grange Farm situated to the west of Wingate, south-east of Wheatley Hill, north of Deaf Hill and on the southern side of the A181.

The Petitioners therefore request that the House of Commons urges the Government to take the necessary steps to prevent the erection of the wind turbines.

And the Petitioners remain, etc.

[P001166]

Speaker’s Statement

Thursday 21st March 2013 Commons Chamber

10:31

[Mr Speaker]

The House will be aware that yesterday the Evening Standard published the main points of the Budget before the House had been informed of them by the Chancellor.

I have received formal apologies from the editor and the political editor of the Evening Standard. They have also apologised, separately, to the Chairman of Ways and Means. I shall place those communications in the Library. Their error was extremely regrettable, but I am minded not to take that matter further. However, the error would not have occurred had the newspaper not been in possession of prior detailed information about the Budget.

This pre-briefing of Budget proposals is a matter of concern to me, and, I judge, to the House as well. I am therefore writing to the Chancellor of the Exchequer to ask him to set out what happened on this occasion, and whether this is a practice of the Treasury. I will revert to the House as necessary.

Business of the House

Thursday 21st March 2013 Commons Chamber

10:32

[Ms Angela Eagle (Wallasey) (Lab)]

Will the Leader of the House give us the business for next week?

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

The business for next week will be as follows:

Monday 25 March—Conclusion of the Budget debate.

Tuesday 26 March—If necessary, consideration of Lords amendments, followed by debate on a motion relating to flood insurance, followed by the pre-recess Adjournment debate, the format of which has been specified by the Backbench Business Committee.

The business for the week commencing 15 April will be:

Monday 15 April—Second Reading of the Finance Bill.

Tuesday 16 April—If necessary, consideration of Lords amendments, followed by consideration of Lords amendments to the Growth and Infrastructure Bill, followed by consideration of Lords amendments to the Enterprise and Regulatory Reform Bill, followed by consideration of Lords amendments to the Defamation Bill, followed by consideration of Lords amendments to the Groceries Code Adjudicator Bill [Lords], followed by, if necessary, consideration of Lords amendments.

Wednesday 17 April—Consideration in Committee of the Finance Bill (day 1).

Thursday 18 April—Consideration in Committee of the Finance Bill (day 2).

I should also like to inform the House that the business in Westminster Hall for 18, 22 and 25 April will be:

Thursday 18 April—Debate on the Energy and Climate Change Select Committee report on the road to UNFCCC COP and beyond, followed by debate on the Energy and Climate Change Select Committee report on low-carbon growth links with China.

Monday 22 April—Debate on an e-petition relating to immigration from Bulgaria and Romania in 2014.

Tuesday 25 April—Debate on the Transport Select Committee report on road safety, followed by debate on the Transport Select Committee report on plug-in vehicles, plugged in policy?

[Ms Eagle]

I thank the Leader of the House for announcing next week’s business and congratulate him on the fact that there have been no sudden U-turns, on the business at least.

This is our last business questions session before we rise for recess, so may I take this opportunity to wish you, Mr Speaker, staff, the Leader of the House and all colleagues from across the House a happy Easter? Would the Leader of the House care to comment on rumours that there are plans afoot to start selling a coalition Easter egg? It would have shiny yellow wrapping but the chocolate would be true blue. Despite the slick advertising it would be entirely hollow, and it would come with two free mugs and a health warning.

The situation on the European Union bank bail-out for Cyprus is volatile and fast-moving. The Government gave assurances at the weekend that no British service personnel or civil servants working in Cyprus would lose out, and then had to dispatch an aircraft full of cash to fulfil that promise. As Parliament will rise on Tuesday for the Easter recess and not return until 15 April, and because a bank run in a eurozone country would have serious implications for the UK, will the right hon. Gentleman consider recalling the House if there is a serious deterioration in the situation?

While the Chancellor was busy revealing the scale of his economic failure in this House, the other place was voting to defeat his absurd shares for employment rights scheme, which was announced with great fanfare at the Tory party conference. Mrs Thatcher’s favourite Chancellor, Lord Lawson, was so impressed with his successor’s flagship policy that he voted against it—he was not the only one. So will the Government now see sense and abandon this appalling policy before the Growth and Infrastructure Bill returns to the Commons on 16 April?

Mr Speaker, you have just made a statement about yesterday’s Budget leak. It included market-sensitive information being leaked on Twitter before the Chancellor had even opened his mouth. We welcome the apology, which you have drawn to our attention this morning, from the Evening Standard, but is it not the case that budget secrecy is now a principle more honoured in the breach than the observance? Will the Leader let the House let us know what action will be taken on behalf of the Government to ensure that this never happens again, particularly in respect of the inclusion of market-sensitive information in any embargo?

This morning, the Chancellor refused to say whether his mortgage support schemes would be open to those who wish to buy second homes up to the value of £600,000. As the Chancellor could not tell us, perhaps the Leader of the House could clear up the confusion: is it really the Government’s intention to subsidise the purchase of second homes up to the value of £600,000 while homelessness rates soar? Or will this be the first U-turn of the Budget?

The next Prime Minister’s questions will not now take place for a whole month, so the Prime Minister should have time to read all the Budget documents for himself. Close inspection will show him that the Office for Budget Responsibility has halved growth forecasts for this year and downgraded them for next; revealed that borrowing will be £245 billion higher than was thought in the spending review to pay for the costs of his Government’s failing economic plan; and shown that real wages will fall by 2.7% over the course of this Parliament. We have had three years of pain and not an inch of gain. The Chancellor claimed he was trying to

“light the fires of ambition”—[Official Report, 20 March 2013; Vol. 560, c. 941.],

but it is his own reputation and the dreams of millions that are going up in smoke, and next week 3,000 millionaires will get a tax cut while the rest of us pay the price of this Government’s failure. This was a downgraded budget from a downgraded Chancellor.

[Mr Lansley]

I am grateful to the shadow Leader of the House for that, and I share her hope that those in the House service who look after us so well here in the House will get a bit of a rest while we are busy in our constituencies.

[Thomas Docherty (Dunfermline and West Fife) (Lab)]

And eating Easter eggs!

[Mr Lansley]

The hon. Gentleman reminds me of the shadow Leader of the House’s desire for us to keep up Easter traditions, one of which, as I recall it, is a white rabbit. The shadow Chancellor is clearly fond of dressing up—he appears as Father Christmas over the Christmas season—so perhaps he could dress up as the white rabbit. It would be in keeping with his tradition of popping up everywhere but never being pinned down on anything in particular, just as the Leader of the Opposition found it intensely difficult yesterday to respond to the Budget and any measures in it. He seemed to be devoted to reading out a pre-prepared script about everything else.

The shadow Leader of the House asked specific questions about Cyprus. She will recall that my right hon. Friend the Financial Secretary to the Treasury made a statement to the House on Monday and we are committed, as she knows, to ensuring that those we have sent to Cyprus as part of the armed services or the civil service are looked after. That is why the flight went there. Indeed, we are also ensuring that the UK benefits payable to UK nationals in Cyprus are protected likewise. Of course, in coming days, as was made clear by my right hon. Friend, we will continue to keep the House updated. We have no plans to seek Mr Speaker’s permission to recall the House. One must always consider that only when the circumstances would demand it, and we have no such plans.

The hon. Lady asked about the Growth and Infrastructure Bill and, as I set out, we expect consideration of Lords amendments to that Bill to be on Tuesday 16 April. In the course of the Budget debate, there will also be an opportunity to realise how we are supporting employee ownership, not least through tax measures that will relieve capital gains tax for those who want to sell their business interests to their employees as part of the promotion of employee ownership.

The hon. Lady asked about the circumstances of the Evening Standard’s pre-publication of material on the Budget and the House will have heard Mr Speaker’s statement. The House will know that I, like Members of the House, deplore the fact that contents of the Budget were published before my right hon. Friend the Chancellor of the Exchequer made his statement to the House. Members will have seen the statement of apology made by the editor of the Evening Standard, as Mr Speaker set out. It has been a long-standing practice to provide information under embargo, but as the House will be aware my right hon. Friend the Chancellor has asked the permanent secretary at the Treasury to investigate the circumstances of the event in relation to the material that was briefed, to whom it was briefed and what led to the Evening Standard’s premature release of that information. The House will understand the importance that I attach to major announcements being made first to this House and I will ensure that the House is updated on that investigation.

The shadow Leader of the House made a number of points about the Budget and economic circumstances. The business of the House today, tomorrow and on Monday will enable them to be discussed. On Monday, there will be an opportunity to discuss housing and to see how this Government will give a tremendous boost to home buyers and those who seek to buy properties with relatively high loan-to-value mortgages.

I am looking forward to our discussing in the Budget debate the scrapping of the further extension that the previous Government had planned to fuel duty. Fuel will be 13p a litre less than it would have been under their escalator. We will also have the opportunity to debate the benefit to pubs of the reduction in beer duty instigated by a number of Members, including my hon. Friends, and resulting from the e-petition to this House that was debated on 1 November. Those representations led to that important measure from the Chancellor. We will also have the opportunity to discuss the following: that we have reduced the deficit by a third; that employment is up, with private sector employment up by 1.25 million; the tax cut by April 2014 for 24 million people through the personal allowance going up to £10,000, taking 2.7 million people out of tax altogether; the help for many hundreds of thousands of home buyers; and the help for every business through a cut in national insurance to promote jobs. It is a Budget for jobs and growth and it will be the business of this House for the next three days.

[Several hon. Members]

rose—

[Mr Speaker]

Order. As usual, a very large number of hon. and right hon. Members are seeking to catch my eye. I remind the House that a statement by the Foreign Secretary will follow and it might be of interest to the House to know that the Budget debate today is very heavily subscribed, with almost 40 Members seeking to contribute. If I am to accommodate the level of interest expressed in the business statement, brevity from Back and Front Benchers alike will be imperative. We can be led in that mission by Fiona Bruce.

[Fiona Bruce (Congleton) (Con)]

What is the reaction of the Leader of the House to the proposals to change the chapel of St Mary Undercroft in this place to a multi-faith prayer room? There is already a multi-faith prayer room in Parliament and an Islamic prayer room in the Lords.

[Mr Lansley]

My hon. Friend is right. There is a multi-faith room on the estate at 7 Millbank which is available to those who work here. The question of a change of use of the chapel of St Mary Undercroft is not a matter for the Government. Any proposals would be subject to consideration by several stakeholders, including this House and the royal household, owing to the chapel’s status as a royal peculiar. The other place would have an interest as well. It raises complex issues on which I will not offer immediate answers, but I can tell my hon. Friend that under the provisions of the Marriage (Same Sex Couples) Bill that is being debated, no religious organisation will be forced to opt in to conducting same sex marriages, and the Church of England has thus far made it clear that it will not choose to opt in.

[Emma Reynolds (Wolverhampton North East) (Lab)]

The Transport Secretary recently visited Wolverhampton and, in an interview with the Express and Star, described Wolverhampton train station as “awful”. I agree, but will the Leader of the House ask the Transport Secretary what he is going to do about it?

[Mr Lansley]

I will, of course, ask the Transport Secretary, as the hon. Lady asks. I know that Network Rail and the train companies are undertaking quite a programme of improvement. I can say that because I know that the awful circumstances at Cambridge station will benefit from a substantial programme of rebuilding very soon. I will seek a reply for the hon. Lady.

[Andrew George (St Ives) (LD)]

May I seek the advice of my right hon. Friend in respect of the NHS competition regulations, which were laid before the House? The first version has not been revoked. As a result, the second version of the regulations, SI 500, as I understand it, even if it were successful, would not stop the implementation of the previously laid and defective competition regulations. I would be grateful for his advice on that.

[Mr Lansley]

If I am wrong about this I will correct it, but my understanding is that when the second draft of those regulations was laid, it included the revocation of the first draft.

[Andrew George]

indicated dissent.

[Mr Lansley]

I have read it. It does include that, so I know that to be the case. Since those regulations are subject to a negative resolution, they will come into force unless they are negatived. The original regulations will therefore not come into force, and the subsequent clarified regulations will.

[Paul Flynn (Newport West) (Lab)]

When can we debate the subject that is being discussed in almost every television studio, newspaper and pub in the country—that is, Britain’s decision 10 years ago to join Bush’s war in Iraq? A timely request for such a debate was made by two Tories, a Green Member and a Labour Member, yet it has not been timetabled. Is it not of paramount importance that we discuss the consequences of our own decision in this House which, among other things, sent 179 British soldiers to their deaths?

[Mr Lansley]

I am sure the hon. Gentleman will recall that the hon. Member from—[Interruption]. The Scottish nationalists asked a similar question last week. The hon. Member for Newport West (Paul Flynn) will recall that a number of Members made an application for such a debate to the Backbench Business Committee a number of weeks ago. Such a debate has not been timetabled. I will reiterate what I said before: it is important to debate these issues, but we are aware of the prospect of a report from the Chilcot inquiry and the importance of debating those issues in the light of that report.

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

May we have a debate on the value of house building to the UK economy? I have several high-profile house builders in my constituency, as well as two of the country’s leading brick manufacturers. I am sure they will all be delighted at the Government’s announcement yesterday in the Budget of the Help to Buy scheme—£3.5 billion of investment to help people get on to and move up the housing ladder.

[Mr Lansley]

My hon. Friend is absolutely right. He and other Members will have realised how important the construction industry is to securing growth. Frankly, we all have many families in our constituencies who are looking for homes but do not have the opportunity to buy them. The number of households is growing, but we do not have the number of homes we need. We were left an appalling situation after autumn 2008, when new house building fell off a cliff. We need to build that up again. The measures set out in the Budget yesterday, which will be debated on Monday, will turbo-charge the housing construction sector, which is what we are all looking for.

[Kevin Brennan (Cardiff West) (Lab)]

On that very matter, if we do have that debate, may we have some clarification on the mortgage subsidy the Chancellor proposed in the Budget, because this morning on the “Today” programme he could not say whether or not it will be available to people buying second homes? Would it not be ironic if the Government, at the same time as they are imposing a bedroom tax—a “spare-room subsidy”, as they call it—brought in a second home subsidy for the most affluent?

[Mr Lansley]

I am surprised that the hon. Gentleman has not read page 39 of the Red Book, where he will find the answer to his question—[Interruption.] He just has to read it, which he clearly has not done. I remind the House that on Monday the Secretary of State for Communities and Local Government will be here and Members will have an opportunity to focus specifically on housing issues.

[John Glen (Salisbury) (Con)]

As a result of the necessary cuts to the Ministry of Defence budget, 80 MOD police officers are due to leave Wiltshire. In the light of the recent basing review, will the Leader of the House arrange for a statement from a Defence Minister on reviewing that decision because, with 4,000 soldiers returning to Wiltshire, clearly it would be appropriate to have sufficient MOD police to look after them?

[Mr Lansley]

I know that the House will share my hon. Friend’s appreciation of the work of the MOD police. The MOD has concluded that there is scope for savings to be made in the policing of some defence establishments. The measures relating to that are subject to ongoing consultation with staff and trade unions. No final decisions have been made.

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

I am sure the Leader of the House would like to note that today the Scottish Parliament will learn the date of Scotland’s historic independence referendum. Over 90% of MSPs voted against the bedroom tax but, like the poll tax, it will still be imposed in Scotland. If we have another debate and 100% of MSPs vote against the bedroom tax, can we have that pernicious, awful tax withdrawn from our nation?

[Mr Lansley]

I am sure that the House will be interested to learn the date of the referendum in due course later today. We live in a United Kingdom, and some matters are devolved and some are reserved. The same principles apply in Scotland as apply anywhere else in this country. In circumstances in which we are paying £23 billion in housing benefit and need to make savings, we must have a view to fairness, and how can it have been fair that housing benefit was not available to subsidise spare rooms in the private rented sector but was available for that in the social rented sector?

[Jeremy Lefroy (Stafford) (Con)]

In April the people of the United Kingdom will fulfil their commitment to give 0.7% of GNI to the developing world, which I think all Members of the House will welcome. At the same time, the Small Charitable Donations Act 2012 will come into effect. May we have a statement, perhaps from the Economic Secretary to the Treasury, to explain how that will benefit those who donate to charities in all our constituencies?

[Mr Lansley]

My hon. Friend is right. I share with him, and with the House, the hope that that Act will give further support to charities. It is an essential part of how we support the charitable sector here and around the world. I am not entirely sure how we will mark it, but it will be a very important moment, because, despite the tough times we and others around the world are experiencing, we have demonstrated our generosity, and indeed our responsibility, to the poorest people right around the world by fulfilling, under the coalition Government, the long-held ambition of devoting 0.7% of our GNI to overseas development assistance.

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

Following the question asked by my hon. Friend the Member for Cardiff West (Kevin Brennan), may we have a debate on the Chancellor’s policy announced yesterday on helping people to buy a home? On page 39 of the Red Book it specifically says that the scheme is

“open not only to first-time buyers but also to existing homeowners”.

As my hon. Friend said, how can a Government be taxing people in social housing for a spare bedroom but subsidising those who already own a home to purchase a new one?

[Mr Lansley]

I am very impressed that Opposition Members have made progress by actually finding page 39 and reading it. It says—[Interruption.] All I will say to the hon. Gentleman and to Labour Members is that they are asking for an opportunity to debate this issue, and it will be available in the Budget debate.

[Philip Davies (Shipley) (Con)]

West Yorkshire police recently lost in the High Court and the Court of Appeal a case against Leeds United about who pays for policing on match days. This will lead to West Yorkshire police having to repay Leeds United £1 million. It will also lead to my constituents having to lose police officers so that they can move across to help to police Leeds United football matches because of a small element of hooligan supporters. Will the Leader of the House get the Home Secretary to come and make a statement about this so that we can find out what she is going to do to reverse this intolerable situation?

[Mr Lansley]

My hon. Friend makes an interesting and important point. I will, if I may, make clear to the Home Secretary his interest in this matter. Of course, were he to be here for Home Office questions on Monday he might find that he attracts Mr Speaker’s eye.

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

Early-day motion 1177 refers to concerns about the contracts of parliamentary House staff.

[That this House draws attention to the discrepancies in proposed salary increases amongst staff working on the Parliamentary estate, ranging from one per cent for lower paid staff to an average of five per cent for senior level staff; expresses concern at these double standards; notes that lower paid staff appear to be paying the price for austerity measures, while senior level staff are not facing the same cutbacks; and calls for the House authorities to examine these pay rises in detail and ensure all levels are forced to bear the same levels of cuts.]

Having discussed this matter with some of the people involved, it seems that our hard-working Hansard staff and our messengers appear to be threatened with a substantial loss in their earnings. Is it not time that we had a debate in here about the principles of how we employ our staff, who have certainly served us well in the 21 years that I have been here, and seem to be under the threat of a cut to their earnings?

[Mr Lansley]

I have read the early-day motion. As the hon. Gentleman will understand, these are matters for the House of Commons Commission. In that respect, there are opportunities to ask questions of the hon. Member for Caithness, Sutherland and Easter Ross (John Thurso), who answers on behalf of the Commission. In this particular instance, I would say two things. As a member of the House of Commons Commission, I know that it has always sought to pursue the principle that the House should be an exceptionally good employer, and we set out to do that. That does not mean, however, that arrangements for pay should not reflect the issues that govern public service generally, and, indeed, it should not inhibit us from being prepared to modernise pay systems in this House.

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

May I ask the Leader of the House to grant time for an early debate on the proposed reforms to the common agricultural policy? Broad political agreement is expected to be reached at EU level by the end of June. The key will be how these reforms are implemented and will impact on farmers in this country. They involve technical concepts such as who will be defined as the active farmer, how the moneys will be spent, and what will be the contribution from the UK Exchequer.

[Mr Lansley]

My hon. Friend will know that my right hon. Friend the Environment Secretary and his colleagues are actively engaged in precisely the negotiations that she describes. Of course, as we all appreciate, this is happening against the backdrop of the success that the Prime Minister achieved in the EU budget negotiations, which is terrifically important. We do need further reform of the common agricultural policy, and that is what this Government have set out to achieve. In terms of a debate in this House, I suspect that in the course of this process the European Scrutiny Committee will have an opportunity to look at these proposals, and it is of course open to it to make a decision on whether to refer them to the House for debate.

[Nic Dakin (Scunthorpe) (Lab)]

In the light of news that the Mersey gateway, like the Forth road bridge improvements, might well be built with Chinese steel, may we have a debate in this House about procurement policy for major infrastructure projects?

[Mr Lansley]

What we want to do is not only to secure best value in procurement, but to ensure that British manufacturers and companies are best placed to deliver it. Today offers an excellent opportunity for the hon. Gentleman to debate growth and, indeed, Michael Heseltine’s important review, with my right hon. Friends and others.

[Oliver Colvile (Plymouth, Sutton and Devonport) (Con)]

Last month, the all-party group on pharmacy, of which I am the vice-chairman, held an open meeting on the decriminalisation of pharmacists for dispensing errors. As my right hon. Friend will know, pharmacists can be sent to prison for that offence, but unfortunately it appears that general practitioners cannot. Could we have a debate so that we can try to clear up this anomaly and get the Government to announce the timetable for doing so?

[Mr Lansley]

My hon. Friend raises an important point, which I know has been of continuing concern to pharmacists for a number of years. I have been concerned to make progress on the issue and the Department of Health has established a programme board to examine the balance between medicines legislation and pharmacy professional regulation in order not only to deliver protection for the public, but to deal with an issue of great concern to pharmacists, and rightly so, because inadvertent errors could leave them vulnerable to criminal prosecution. I hope that that work will be taken forward and I will ask the Department to get back to my hon. Friend about the timetable.

[Andy McDonald (Middlesbrough) (Lab)]

Will the Leader of the House secure a statement from the Secretary of State for Justice on whether he will carry out a risk assessment of his transforming rehabilitation programme?

[Mr Lansley]

The hon. Gentleman will be aware of the requirement for proposals to be subject to impact assessments, which I imagine is what he meant to say, because risk assessments are internal examinations. When those proposals are introduced to the House, an impact assessment will accompany them.

[Mr Philip Hollobone (Kettering) (Con)]

Moldova is not in the European Union and it is a centre for human trafficking. It is right next door to Romania, and hundreds of thousands of Moldovans, through grandparental rights, are now applying for and getting Romanian passports with the intent of immigrating to the United Kingdom from 1 January next year. Could we have an urgent statement from a Foreign and Commonwealth Office Minister about what representations Her Majesty’s Government are making to the Romanian Government to plug this loophole in the EU’s external frontiers?

[Mr Lansley]

My hon. Friend makes an important point, which is relevant to an e-petition debate in which he may like to participate, if he is able to do so, on Monday 22 April in Westminster Hall. He will also be aware of the work taking place inside Government to ensure that, while we meet our obligations relating to free movement, we do not so in a way that leaves us open to abuse.

[Nick Smith (Blaenau Gwent) (Lab)]

Could we have a debate on alcohol pricing and the cost of antisocial behaviour on our high streets?

[Mr Lansley]

The hon. Gentleman will have heard me remind the House that the Home Secretary will answer questions on Monday. He could also discuss alcohol pricing in the Budget debate, especially in the light of the Chancellor’s decisions on alcohol duties, including the reduction in beer duty. I am sure that the House would welcome the hon. Gentleman’s contribution.

[Christopher Pincher (Tamworth) (Con)]

Following the Chancellor’s welcome help yesterday for the least well-off to keep more of their own money, could we have a debate on hospital parking charges, and especially on the decision by Burton Hospitals NHS Foundation Trust to levy up to £6 a day on users of the Sir Robert Peel hospital car park? The proposals were made without consultation, contrary to the trust’s previous assurances, and will hit the very people whom the Chancellor set out to help yesterday.

[Mr Lansley]

I know how important this issue can be for many constituents, particularly if they are frequent users of hospital services. A code of practice has been established through the NHS Confederation and that should ensure that those frequent users are able to access discounts and the like. I encourage my hon. Friend to talk to the Burton Hospitals NHS Foundation Trust about that, while recognising that these are decisions for NHS organisations. As a Government we have not sought to impose a structure on hospitals. Indeed, we have not chosen to divert money that should be available to support patient care to the subsidising of car parking.

[Ian Murray (Edinburgh South) (Lab)]

Several of my constituents who are small business owners came to see me on Saturday to tell me that the Clydesdale bank is refusing to renew their facilities, despite promises that it would do so. They are now on punitive interest rates of 29.9% APR and face the threat of losing their homes. May we have an urgent debate in the House on why the banks are telling us that they are doing all they can to support businesses and to ensure that people do not get thrown out of their homes, when in reality they are doing the opposite?

[Mr Lansley]

Many Members across the House share the hon. Gentleman’s frustration about the relationship between many small businesses and the banking system, but I bring him good news. Today, my right hon. Friend the Secretary of State for Business, Innovation and Skills has made a written statement, which may be followed up in today’s debate, about the operation of the new business bank and the support that it will give to stronger lending to small businesses. I am sure that when the hon. Gentleman has a further meeting with small businesses in his constituency, they will share with him their delight at the Budget measures, including the £2,000 per employer reduction in national insurance contributions.

[Andrew Stephenson (Pendle) (Con)]

The Chancellor’s announcements yesterday on housing have been warmly welcomed by the construction industry, estate agents and the many people who are looking to get on the housing ladder across the UK. Indeed, I received an e-mail from a local estate agent, Mark Horsfall of Twenty Four Estates in Barrowford, while the Chancellor was still on his feet. I am aware that the schemes may require legislation, so will the Leader of the House clarify when we will be able to debate the specifics of those very welcome proposals?

[Mr Lansley]

I agree with my hon. Friend that the proposals are very welcome. Many people find it difficult to see how they can get on the housing ladder as a first-time home buyer. We know that the whole housing market can be very responsive to first-time home buyer activity spreading through the marketplace. The Help to Buy scheme will provide dramatic help. Although we have the funding for lending scheme and low interest rates in this country, which have happened only because of the credibility that the Chancellor’s policy has given this country, those things are not translating into access to mortgages for those who, of necessity, are looking for high loan-to-value ratios. All of that will make a very big difference and it may be debated on Monday.

[Alison McGovern (Wirral South) (Lab)]

Will the Leader of the House arrange for a statement to be made by a Minister on food prices? Families and older people in the Wirral are seeing the price of their shopping going up and up. They will have noticed that any gains that they make from income tax thresholds are being inflated away. Will the Leader of the House get the Government to explain what they are doing?

[Mr Lansley]

Of course, the Budget debate affords an opportunity to debate precisely those issues. I hope that the hon. Lady will take that opportunity to express her appreciation of the fact that by April 2014, the increase in personal allowances will have taken 3,071 of her constituents out of income tax altogether.

[Andrew Jones (Harrogate and Knaresborough) (Con)]

After the positive news in yesterday’s Budget about the scrapping of the beer duty escalator and the other cuts in duty, I was contacted by my constituent Mr Simon Theakston, who runs the iconic Yorkshire brewing business of the same name. He said that the changes would be seen as a vote of confidence in the industry and trigger investment from it. May we have a debate about that great British institution, the pub, and its role in communities, especially in village life?

[Mr Lansley]

Yes; the House demonstrated its concern about that issue on 1 November last year, when it debated beer duty. It will no doubt do so again during the Budget debate and there will perhaps be further opportunities to debate the brewing industry and pubs, when the House will be able to share in the coalition Government’s recognition, through the Budget changes, of the importance of pubs not only as an industry but to local communities.

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

I have raised this matter before, but Members of Parliament from Greater Manchester are desperately seeking a chance to debate the imminent privatisation of passenger transport ambulance services in the conurbation. Soon, those services will no longer be delivered by the NHS, but by Arriva buses as the Government’s agenda for the NHS starts to take shape in our constituencies. I have applied repeatedly for an Adjournment debate since the beginning of January, but unfortunately I have not been successful. Surely it is reasonable to try to scrutinise a decision of such magnitude.

[Mr Lansley]

I recall that the hon. Gentleman raised the issue with me previously, and if the Department of Health can add anything further by way of information, I will ensure that it is made available to him. He could, of course, seek an Adjournment debate on this matter, as it relates to his constituency and neighbouring constituencies. I remind him that we are talking about passenger transport services, not the emergency responses of ambulance trusts. There are instances across the country where passenger services are not necessarily provided by the ambulance service but work alongside it, which can work perfectly effectively.

[Rehman Chishti (Gillingham and Rainham) (Con)]

Research has suggested that more than half of cigarettes smoked in Gillingham have avoided tax. Can we have an urgent debate on tackling illegal tobacco?

[Mr Lansley]

I cannot promise an immediate debate, but I reassure my hon. Friend that Her Majesty’s Revenue and Customs and UK Border Force published their latest strategy to tackle tobacco smuggling in April 2011, building on success already achieved in tackling tobacco fraud. Since the launch of the first tobacco anti-fraud strategy more than a decade ago, the illicit market for cigarettes has reduced from 21% to 9%, and from 61% to 38% for hand-rolling tobacco.

[Glyn Davies (Montgomeryshire) (Con)]

Yesterday’s Budget was very good news for Wales and added more than £100 million to the Welsh Assembly budget— £161 million for capital investment. Will my right hon. Friend arrange an opportunity for the House to consider the impact on Wales of investment decisions in England by the UK Government? Cross-border investment is hugely important to my Montgomeryshire constituents as well as to the efficient operation of devolution.

[Mr Lansley]

I cannot promise an immediate debate, but I hope that opportunities will continue to manifest themselves for us to debate those important cross-border issues. Some decisions that have been made—for example, on the electrification of the rail line in south Wales to Cardiff and Swansea—are tremendously important for economic recovery in Wales. If the Welsh Assembly Government have any resources available, it might be an opportunity to reconsider what seems to be the completely misplaced priority of cutting the NHS budget by 8% in real terms in Wales, with all the damaging consequences illustrated in Wales itself.

[Jason McCartney (Colne Valley) (Con)]

rose—

[Mr Speaker]

Order. I was advised that the hon. Gentleman had left the Chamber; he certainly left his seat and for some significant period was not visible. He has insisted that he was in the Chamber, even though he was not in his seat, so on this occasion—this is not the first time this has happened, as he knows—I will call him, as he is a very assiduous contributor to the proceedings of the House. In future, the hon. Gentleman would help himself if instead of perambulating around, he remained in his seat.

[Jason McCartney]

Thank you, Mr Speaker. I am suffering with a tickly cough, and I would like to thank your Clerk for providing me with a glass of water, for which I came to the Front Bench.

Will my right hon. Friend the Leader of the House join me in congratulating on behalf of other Yorkshire MPs the Secretary of State for Culture, Media and Sport and the Treasury on agreeing to underwrite by up to £10 million the Tour de France coming to Yorkshire? Can we have a debate on the wonderful economic and social benefits that that global sporting event will bring to Yorkshire?

[Mr Lansley]

That was a question worth waiting for, Mr Speaker. When the Cabinet was in Leeds, we heard a presentation about the Tour de France grand départ and were tremendously impressed by what Yorkshire had done to secure that event for this country. From my point of view, since a subsequent stage will go through my constituency in Cambridgeshire, we are doubly grateful to Yorkshire for that. I do not know whether we will be able to have a debate soon, but we very much welcome my hon. Friend’s support, and that of his colleagues, for what will be a wonderful three days of cycling in 2014.

Afghanistan

Thursday 21st March 2013 Commons Chamber

11:15

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

With permission, I will make a statement, as we do quarterly, on our progress in Afghanistan. This represents the combined assessment of the Foreign and Commonwealth Office, the Ministry of Defence, and the Department for International Development.

I pay tribute to the great courage and professionalism of our armed forces in Afghanistan. Four hundred and forty British service personnel have lost their lives there since 2001, including two since my right hon. Friend the Defence Secretary made the last quarterly statement on 19 December. We will never forget the sacrifice they and their families have made to protect our nation’s security, or the efforts of the civilian staff, who have also served bravely in Afghanistan over the past decade.

The Government’s objective and strategy in Afghanistan are unchanged. We seek an Afghanistan that can maintain its own security and that is not a safe haven for international terrorists. That requires us to help the Afghan Government to increase the capability of their national security forces, to make progress towards a sustainable political settlement, and to build a viable Afghan state.

Although formidable challenges remain, there is progress to report to the House on all three of those fronts. First, significant progress is being made in building up the capability of the Afghan security forces. In the past three months, insurgent activity in Afghanistan has followed the historical cycle of winter seasons, with a reduced level of violence nationwide. High-profile attacks have been limited over the period. Recent attacks, such as those against the national directorate of security and traffic police headquarters, have been largely dealt with by Afghan forces, without direct support from the international security assistance force. Afghan security forces are now leading 80% of all security operations in Afghanistan, and are due to take lead responsibility for combat operations across the country by this summer, with ISAF taking an advisory role. More than three quarters of ISAF bases have been closed or transferred to the Afghan Government, and the ANSF is on track to assume full responsibility for security in Afghanistan by the end of 2014.

That progress is allowing the gradual redeployment of UK military forces and equipment. The Prime Minister announced in December that our military presence will be reduced by nearly half this year, and that the UK, along with our allies, will move steadily towards a supporting role. The role of UK personnel is changing from a combat role to training and advising the Afghan security forces. In the short term, UK personnel will continue to support Afghan operations through casualty evacuation, air support and the provision of surveillance capabilities, while working to help the Afghans to develop their own suitable capabilities. In addition, UK personnel provide the infrastructure necessary to work in Afghanistan, including food, medical care, welfare and transportation. Although our focus is increasingly on supporting our Afghan partners, we will maintain sufficient capability to project military force if the conditions require it until the end of 2014.

The ANSF currently has more than 330,000 personnel and is progressing towards a final number of 352,000. As those forces become more capable and approach full strength, our mentoring has switched from company to battalion level, and by the end of this year, our forces will no longer need to mentor them below brigade level. The vast majority of training is also now led by the Afghans themselves.

Of course, our task is still a difficult one. The Taliban will continue to seek to undermine popular confidence in the Afghan authorities, and as Afghan forces assume the lead in combat operations across the country, they are likely to become the focus of Taliban attacks. Moreover, the formation of professional armed forces takes time, and reducing attrition rates and improving leadership across the Afghan forces will be important priorities for years to come. The UK is therefore proud to take the lead in building up the new Afghan national army officer academy which will develop the next generation of Afghan military leaders.

Secondly, we continue to help drive progress towards a sustainable political settlement and efforts by the Governments of Afghanistan and Pakistan to strengthen their relationship. On 3 and 4 February, the Prime Minister hosted a summit at Chequers with President Karzai of Afghanistan and President Zardari of Pakistan. That was the third in a series of trilateral meetings hosted by the Prime Minister in the past year. The aim was to assist the Afghan-led peace and reconciliation process, and strengthen joint Afghan and Pakistani efforts to address extremism, and to advance regional peace and stability.

The summit led to an agreement on co-operation between military and security services, and strengthened co-ordination of Taliban prisoner releases from Pakistani custody. It also led to a public statement supporting the opening of a Taliban political office in Doha. That sends a clear message to the Taliban that now is the time to take part in a peaceful political dialogue. The UK will continue to support this Afghan-led peace process and to facilitate improved relations between the Afghan and Pakistani Governments, including supporting further trilateral meetings in future.

Thirdly, we continue to work to help strengthen Afghanistan’s democratic institutions. In just over a year’s time, on 5 April 2014, the Afghan people will begin voting in the third presidential elections since the fall of the Taliban. Elections to the provincial councils will take place on the same day. These elections must be credible, inclusive and transparent. All Afghan constituencies, including women and minorities, must feel part of the electoral process and have the opportunity to make their voices heard. Although it will be Afghan-led, the UK will continue to provide support and advice to the local authorities. We are lobbying the Afghan Government to ensure that key electoral laws, which will underpin the credibility of the 2014 elections, are passed by the Parliament and not by presidential decree.

The UK is supporting the Afghan authorities to prepare for the elections through providing funding to the United Nations Development Programme ELECT II programme—Enhancing Legal and Electoral Capacity for Tomorrow—which builds the capacity of the Independent Election Commission. The UK will provide £12 million between November 2012 and December 2013 to the ELECT II fund. In addition, last year we provided $215,000 to the Free and Fair Elections Foundation of Afghanistan, and we have provided an additional $750,000 to the Afghan Parliamentary Assistance Programme, which supports capacity building for Afghan Members of Parliament, including on drafting legislation, improving budget analysis and oversight and strengthening links between parliamentarians and their constituents.

Economic growth is also vital if Afghanistan is to become a stable and secure state that is not dependent on foreign aid. The country has significant natural resources that must be developed, including metals, minerals and hydrocarbons. On 6 March, my right hon. Friends the Prime Minister and the Secretary of State for International Development, and the Afghan Minister of Mines, hosted a forum for representatives of the extractives industry to help attract credible international investment to Afghanistan. The Department for International Development has also agreed a three-year, £10 million programme of support to the Ministry of Mines to improve transparency and accountability, so that the main beneficiaries of that mineral wealth are the Afghan people themselves.

I wish to emphasise that it is critical that Afghanistan takes the necessary steps to ensure women are able to play their full role in society and developing the economy. The Foreign Office, along with other Departments, continually lobbies the Afghan Government on human rights issues. Women’s rights were an important theme of the visit of my noble Friend Baroness Warsi to Afghanistan earlier this month, and the Secretary of State for International Development met President Karzai in her visit in December to discuss the challenges faced by Afghan women.

UK aid funding has already helped to ensure that 5.9 million Afghan children are regularly attending school, including 2.3 million girls. That compares to virtually none under the Taliban. Our aid money is also being used to recruit and train teachers, build and maintain schools, and increase the availability and quality of education. DFID has announced a further £45 million for the global girls education challenge fund, which is helping to improve education for more than 250,000 marginalised girls.

The FCO and DFID are also working together to ensure that the Afghan Government uphold their commitments on women’s rights, including through implementation of the Elimination of Violence Against Women law, which is a central commitment under the Tokyo mutual accountability framework. The International Development Secretary has stated that tackling violence against women and girls will be a strategic priority for the Department’s work in Afghanistan.

The UK will do whatever it can to increase rights for women in Afghanistan, and we must also do more to improve the lives of all the Afghan people. We will therefore play a key role in ensuring that Afghan commitments from last year’s NATO summit in Chicago and the Tokyo conference on development are implemented by the Afghan Government. We look forward to the initial review of progress against the Tokyo mutual accountability framework in July, and we will chair jointly the first ministerial review of it in 2014.

We also continue to take steps to address the immediate humanitarian needs of the Afghan people; DFID has announced a new £12 million humanitarian programme from existing funding that will provide nutrition and food support to more than 900,000 vulnerable people affected by conflict, natural disaster and harsh winters.

The end of the ISAF mission next year does not mean an end to the support provided by the international community. Planning continues for the NATO-led follow-on mission that will help to train and advise the Afghan security forces after combat missions draw to a close. The UK will continue to support governance and development in Afghanistan through the next decade—with £178 million per year agreed until 2017—helping to ensure that the progress made to date is not lost. That is in addition to our £70 million commitment to sustain the ANSF after 2014.

The path of transition will not be easy. But progress is being made, and we will stand by the people of Afghanistan as they build a more peaceful and secure future.

11:25

[Mr John Spellar (Warley) (Lab)]

I thank the Secretary of State for his statement and for early sight of it. I join him in paying tribute to our forces who continue to serve in the most difficult of circumstances. In particular, I offer the condolences of the whole House to the two service personnel killed since the Defence Secretary last made a statement of this kind to the House. The suffering of the families and the sorrow of the loved ones left behind are in the hearts and minds of all Members. I pay tribute to the ongoing work of our civil servants and to NGOs working, struggling and hoping to build a better future for Afghanistan, often in difficult and dangerous circumstances. I put on record the shadow Foreign Secretary’s regret at not being here to respond to the statement, but given the scheduling of the statement I am responding on his behalf.

Like the Government, we recognise that the transition period between now and the full draw-down of NATO forces will be extremely testing, with significant challenges for all. It is therefore imperative that the Government ensure that the alliance keeps focused on the key objectives. First, they must remain a key priority to ensure that the Afghan state is able to maintain its own security and prevent the country from being used once again as a safe haven for terrorists. The support being given to the Afghan national security forces is vital, as is their increasing capability, but can the Minister reassure the House that that is sustainable, particularly as in the months ahead, as the Foreign Secretary acknowledged in his statement, we are likely to see the period during which in past years we have witnessed some of the most intense levels of fighting and attacks? To what extent is he confident about the internal cohesion of those Afghan forces and their capabilities in the face of such sustained pressures?

In light of the recent tragic reports of continued loss of life through what are referred to as green on blue attacks, can he provide his current assessment of the threat posed to our forces by such attacks, and what steps are being taken to minimise the risks, as much as is possible in the context? Given that British forces will remain in a training role for some time in Afghanistan following the 2014 draw-down, can he provide us with reassurance about the levels of force protection? Frankly, it will not be sufficient to state merely that troops are not in a combat role. As I am sure he will accept, and as soldiers know only too well, unfortunately it is primarily the enemy that defines whether troops are in a combat role. Given that he rightly stated that the insurgents remain committed to conducting a campaign of violence in Afghanistan, what role does he see the UK playing post-2014 in preventing the return of insurgent dominance in regions of the country? Will he also clarify whether the planned force reduction figures from his last statement have altered, and, if so, how does that align with wider ISAF withdrawal planning?

Turning to the issue of Afghan civil society and the protection of human rights, will the Foreign Secretary set out what steps are being taken to embed the considerable advances that have been made in recent years—some of which he has referred to today—particularly with respect to women’s rights? I am sure the whole House will want to join me in welcoming the news of Malala Yousafzai, the brave young girl brutally attacked by the Taliban in Pakistan in October, who this week went back to school—in Birmingham—for the first time since the shooting, and her wonderful treatment at the Queen Elizabeth hospital in Birmingham. In Afghanistan, despite similar continued campaigns by the Taliban, it is worth repeating that enrolment of girls in school has risen from 5,000 under the Taliban to 2.3 million. In addition, vastly more women now have access to medical facilities, particularly in rural areas.

There is a very real fear in Afghanistan and elsewhere that that could be put at risk by a potential re-emergence of the Taliban in certain regions following the NATO draw-down. Amnesty International has produced an excellent briefing for parliamentarians entitled “Now is the Time for Women’s Rights”, which I commend to the Secretary of State and other Ministers. It rightly quotes the comments of the Chair of the International Development Committee, the right hon. Member for Gordon (Sir Malcolm Bruce):

“The treatment of women in Afghanistan after troops pull-out in 2014 will be the litmus test of whether we have succeeded in improving the lives of ordinary Afghans over the last ten years.”

What assurances has the Foreign Secretary sought to ensure that those gains will be protected as part of any future negotiations over a political settlement with the Taliban and other insurgent groups, and that the electoral process is, as he says, truly inclusive?

The ongoing situation in Afghanistan is of vital strategic interest to us, but for neighbouring countries its stability is also crucial. The Opposition regularly urge the greater involvement of neighbouring powers in ensuring stability and social progress in Afghanistan, and we welcome the tripartite summit that the Prime Minister hosted in February with President Karzai and President Zardari of Pakistan. In those discussions, did the Prime Minister raise the rights and participation of Afghan women as being essential to any reconciliation process and to securing a stable Pakistan?

These discussions must continue, because, in addition to the support of the wider international community, they are key to ensuring Afghanistan’s long-term security and regional stability. Will the Foreign Secretary therefore outline what diplomatic architecture is being discussed to help ensure the sustained and ongoing engagement of regional partners? There is a danger that if neighbouring countries pursue individual agendas, leading to instability in Afghanistan, all of them will suffer from the fallout, as well as us in the wider international community.

[Mr Hague]

I am grateful to the right hon. Gentleman for his comments. He rightly joined in the tributes to our armed forces and everyone who has worked so hard and so bravely in Afghanistan, and I join in his tribute to Malala Yousafzai. I am proud that we took the decision to bring her to this country and that she has been so well looked after in Birmingham—in Edgbaston, to be specific. I visited her family there shortly after she arrived for medical care and was enormously impressed by their determination, resolve and bravery, as well as by that which she herself displayed.

The right hon. Gentleman is right that the transition is a testing period, and he correctly pointed out many of our priorities. The Afghan national security forces are showing steadily increased capabilities, including in their cohesion and ability to hold territory and conduct operations. As I mentioned, they now lead 80% of operations, and by this summer will have lead responsibility for security across the whole country. This transition has been taking place in one area after another, through four transition tranches, on the basis of experience and the capabilities of the Afghan forces, which should be increasingly respected internationally and within Afghanistan.

A great deal of work has been done to minimise so-called green on blue attacks, including through collecting biometric data earlier from Afghans involved in training. The MOD has taken every possible measure to minimise the threat of those attacks, while of course ensuring that training and mentoring can continue in the appropriate way. The right hon. Gentleman also asked about force protection. My right hon. Friend the Secretary of State for Defence, who is here, is clear that those forces must be adequately protected, but we will make decisions in due course about the number, level and nature of the forces necessary to do that.

The right hon. Gentleman asked about the draw-down of forces. There has been no change since my right hon. Friend’s statement in December and the Prime Minister’s announcement then that our force levels would fall to approximately 5,200 this year. That is well aligned with statements made by our partners, particularly the United States, which of course contributes more than two thirds of all international forces deployed in Afghanistan. Since the last statement to the House, President Obama has announced a draw-down of approximately half the US forces—quite similar to our statement, therefore—reaching 34,000 over the next year, up to early next year.

We are intensely focused on women’s rights and the position of women in Afghan society, as I set out at some length in my statement. I will not go over all those things again, except to reiterate the importance that the Department for International Development attaches to this issue in all its huge programme of work— £180 million a year—which is particularly focused on this area. The International Development Secretary has made it a strategic priority of DFID’s work over the next few years. Again, that is a challenge, but the UK has a strong record in this area and can continue to contribute a great deal.

I am grateful for the right hon. Gentleman’s welcome for the trilateral process that we have been conducting with Afghanistan and Pakistan. The involvement and support of neighbouring countries is the most important piece of the jigsaw. He was right to point to it, because when it is clear that Pakistan and Afghanistan will co-operate more closely together, including on their security, that the whole leadership of Pakistan seeks stability in Afghanistan and that Afghanistan knows it can have a successful peace process only with the support of Pakistan—these things are increasingly clear owing to our trilateral process and the efforts of both Governments—that in itself will be a powerful signal to the Taliban that it is time to take part in a peaceful political process. The opportunity is now there for them to do so.

Other regional support comes through different formats, including the Heart of Asia process—I attended the conference of countries from around Asia which took place in Kabul last June. Through that process we are able to encourage support from other nations in the region as well.

[Bob Blackman (Harrow East) (Con)]

Clearly, the long-term economic stability of Afghanistan is key. Arguably, the chief output from the economy is the poppy crop. Can my right hon. Friend report to the House on what progress has been made to ensure that it is used for beneficial, medical purposes, rather than for the illicit black market trade in drugs?

[Mr Hague]

The poppy crop is of course, if we are realistic, mainly for the illicit black market trade. Only a small proportion of it would be for the objectives that my hon. Friend rightly talks about. There was an increase in poppy cultivation in some areas last year, brought on, it seems, by the high prices that were available in 2011. Nevertheless, the Government of Afghanistan’s eradication programmes have been expanded successfully. The total area under cultivation last year was about 40,000 hectares less than at the peak. It is therefore fair to say that some progress has been made, but we are a long way from achieving the cultivation of such crops purely for the beneficial and medical uses that my hon. Friend speaks about.

[Keith Vaz (Leicester East) (Lab)]

I thank the Foreign Secretary for his update. Can he tell us what is being done about the criminal gangs that are preying on Afghani citizens, making them pay thousands of euros in order to traffic them from Afghanistan to the border of Greece and Turkey and eventually into the EU? It is an appalling practice that is causing enormous distress, because at the end of the day the Afghani citizens are deported from the EU back to Afghanistan and the cycle starts again. What can we do about that?

[Mr Hague]

The right hon. Gentleman points to what is a serious problem not only in Afghanistan but in many other countries. Human trafficking of this kind has many sources, in many different parts of the world, particularly in Asia and Africa. We are increasing our law and order co-operation. In fact, my right hon. Friend the Home Secretary visited Afghanistan for the first time a month ago, to talk partly about counter-narcotics co-operation, but also about how we work together on policing and maintaining law and order in future. This issue is a natural part of that work. The right hon. Gentleman rightly draws attention to a serious problem and I will write to him with further details on what we think we can do about it.

[Sir Nick Harvey (North Devon) (LD)]

Afghanistan has been of great security and strategic significance for centuries. May I echo the Foreign Secretary’s tribute to the work done by British and international personnel, both military and civilian, in recent years to try to ensure the stability of Afghanistan? I broadly share his optimistic view of the future, but some commentators do not. What discussions has he had with his international counterparts on what the international response would be if the situation deteriorated and those historical anxieties recurred?

[Mr Hague]

Of course the situation remains difficult, as I made clear in my statement, but it is important that responsibility for security should be passed to the Afghans themselves. It is for them to make decisions about their own country. Regarding future support, the international commitments made at the NATO summit in Chicago last year and at the Tokyo summit on development are very strong. Each commitment involves the provision of $4 billion a year, well into the future, to maintain the Afghan national security forces in one case and to contribute to sound economic development in the other. That $8 billion commitment from the international community is a huge one. That is the support it is going to provide, and we now have to help to ensure that the Afghan leadership can make good use of it.

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

May I press the Foreign Secretary on one point? He has pledged that Britain’s combat role will end in 2014. Is that absolutely firm, no matter what occurs or whether the Taliban engage in talks?

[Mr Hague]

Yes, that has been firm for a long time. The hon. Gentleman will have heard the Prime Minister talking about this, as well as my right hon. Friend the Defence Secretary and me, and he will remember how clear the Prime Minister has been on the matter for a long time. It is in any case the commitment of the whole of ISAF. There are decisions to be made about the presence after that, but that is the end of our combat role. We have already made a commitment to lead the officer training academy afterwards. I have given such enormous attention to building up the Afghan national security forces and a viable Afghan state, as well as pursuing the political process and an Afghan-led peace process, so that we can be absolutely sure about this.

[Mr James Gray (North Wiltshire) (Con)]

The beginning of the end in Afghanistan is a welcome moment indeed, but let us cast our minds forward to what will happen after 2014. Am I right in thinking that the bulk of our training forces will be in the north, in and around Kabul and the officer training base? If so, will we retain any presence in Helmand province, and what will happen to Lashkar Gah and Camp Bastion?

[Mr Hague]

My hon. Friend is right to suggest that the bulk of the effort will be near Kabul. As I have said, we have made no decisions about any other military presence apart from that after 2014. We will make those decisions in due course, along with our partners in NATO, and we will keep the House updated on that through further statements. Of course, the transition is already taking place in many parts of Helmand. Lashkar Gah, for instance, was one of the first places to undergo transition, and other parts of Helmand have been involved in tranches 2 and 3 of the transition process. So even in Helmand, it is increasingly the Afghan forces that have been taking the lead, and they are equipped to do so.

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

When does the Foreign Secretary expect the first meetings in Doha to take place between the Taliban and the High Peace Council of Afghanistan? Also, has the UK considered making post-2015 aid dependent on respect for the human rights of women?

[Mr Hague]

On the hon. Lady’s first question, that will depend on the actions of the Taliban. Afghanistan and Pakistan support the opening of a Taliban political office in Doha, with our encouragement and with the support and readiness of Qatar. The Taliban leadership now need to decide whether they are prepared to take this opportunity to enter into a peaceful political process, or whether they will let it slip by and lose such an opportunity.

As to decisions about development—if my right hon. Friend the Secretary of State for International Development were here, she would prefer to put it in the positive sense—we are committed to development in Afghanistan with the programme of £178 million a year, and women’s rights are an important part of that programme. It is not our normal habit around the world to say, “This aid will be withdrawn unless you do X, Y and Z”. If countries behave in a completely unacceptable way, of course, we have been known to withdraw our assistance.

[Rehman Chishti (Gillingham and Rainham) (Con)]

On the point about commitment by the Governments of Afghanistan and Pakistan, the Foreign Secretary will know that there may be a new Government in Pakistan in May, as there is an election going on, and that within a year there will be a new President in Afghanistan. Have there been discussions with some of the main opposition elements to see if they are committed to this process of working together for national security, peace and stability? Linked to that, will the Foreign Secretary join me in paying tribute to the Government and Parliament of Pakistan for the latter being the first in the history of Pakistan to serve its full term?

[Mr Hague]

Yes, I readily join in that tribute. This statement was very much focused on Afghanistan rather than on anything internal happening in Pakistan, which explains why I did not mention that earlier, but I absolutely join in that tribute. It is an important milestone in the democracy of Pakistan, which all parties across the House strongly support, that a democratically elected Government have served a full term and that another democratically elected Government of whatever shape or form will follow; that has never happened before in the history of Pakistan. The discussions we have hosted between the Pakistani and Afghan Governments have been broader than comprising just the political leaders, as they have included the military and intelligence leadership of those countries. Wherever possible, we have briefed opposition leaders. Just last week, for instance, I had discussions with the leading member of the opposition parties in Pakistan, Mr Nawaz Sharif. If opposition parties come into office, they will of course have to make their own decisions, but I believe there is a strong consensus across government—and, I hope, across political parties—in both countries in support of that.

[Several hon. Members]

rose—

[Mr Speaker]

Order. The Foreign Secretary is as courteous a member of the Cabinet and as fine a parliamentarian as it is possible to find. He cannot be accused of excluding from his answers any matter that could conceivably be of material relevance to any hon. or right hon. Member. I am hoping, however, that we can wrap up this debate by midday, as 37 Members wish to speak in the Budget debate.

[Paul Flynn (Newport West) (Lab)]

I thank and congratulate the Government and the staff at Brize Norton on the very sensitively conceived new facility for receiving the fallen from Afghanistan and on providing some consolation to their loved ones.

Frederick and Kimberly Kagan were at the right hand of General Petraeus during his time in Afghanistan, and they had access to all the secret documents and secret meetings. They were employed not by the Government, the military or Petraeus, but by the defence contractors, who were thought to be hugely influential. As our policy is tied to American policy, should we not look at the influence of defence contractors in prolonging existing wars and fomenting new ones?

[Mr Hague]

The hon. Gentleman raises a wider issue. I think he can be very confident that the decisions of the United States—and, indeed, of its allies, including the United Kingdom—have been thoroughly consistent throughout the last few years with what I have described: bringing our combat role to an end, transferring responsibility to Afghans and building a peaceful future for Afghanistan. I do not think anyone could accuse President Obama of anything other than that—or of any of the things the hon. Gentleman has just described. The President’s commitment to bringing this about in Afghanistan is abundantly clear, and I do not think he has been influenced against that by any contractors.

[Christopher Pincher (Tamworth) (Con)]

I welcome my right hon. Friend’s report on the further democratic developments in Afghanistan as it moves towards its presidential elections next year, but is he at all concerned by the report in The Times that the first major political figure to announce his candidacy—Mr Daudzai, the President’s former chief of staff—has, in the past, received cash in aid from the Government of Iran?

[Mr Hague]

I do not think it would be very helpful to the Afghan electoral process for Foreign Ministers in other countries to give a running commentary on each of the candidates as they emerge. My hon. Friend has made his point, but I do not think I will take it any further. In view of your injunction that I should be less informative in my answers, Mr. Speaker, I shall take this opportunity to set an example.

[Thomas Docherty (Dunfermline and West Fife) (Lab)]

I am sure the whole House agrees there should be no drop in the quality of medical care available to personnel after 2014, given that some will be staying behind. Can the Foreign Secretary update the House on the progress of talks with the United States about the need to ensure that the air bridge and the medical support continue to be of the present high standard?

[Mr Hague]

That is an important issue, which the Ministry of Defence continues to pursue. Our facility will be located next to a major United States facility. That will mean that we have access to the best possible medical care, which is the MOD’s intention.

[Philip Davies (Shipley) (Con)]

May I press the Foreign Secretary on a point made by my hon. Friend the Member for Gillingham and Rainham (Rehman Chishti) and touched on by my hon. Friend the Member for Tamworth (Christopher Pincher)? How dependent are the nature and extent of the Government’s involvement in Afghanistan on the outcomes of the elections in Pakistan and Afghanistan this year and next?

[Mr Hague]

I can assure my hon. Friend that they are not dependent on that. It will be important for us to work with the Governments of Pakistan and Afghanistan, whoever is elected this year and next year, because we have vital strategic interests and it is vitally in our national interests for us to continue to do so; and it is important for whoever stands for election in those countries to know that we are prepared to do so. The imperative to support—in a new and different way, after 2014—the building of peace and prosperity as well as security in Afghanistan will continue, and it is not dependent on those two elections.

[Dan Jarvis (Barnsley Central) (Lab)]

As the Foreign Secretary will know, the original ministerial decision to shift United Kingdom military effort from northern Afghanistan down to Helmand in the south came at a time when the UK was already dedicating a significant effort to operations in Iraq. I am not saying that that decision was right or wrong, but I do think that a mechanism is needed to enable the Government to review such decisions and learn from them. Does the Foreign Secretary agree, and if so, what does he think is the best mechanism for the purpose, in the context of Afghanistan?

[Mr Hague]

The hon. Gentleman has raised a very interesting issue. The decision to which he refers was made back in 2006, under the last Administration, so I cannot go into too much detail about the making of it. However, it is important for us to learn lessons after any conflict, and we have learnt enormous lessons in Afghanistan as we have gone along, including about such matters as military equipment and tactics. It will be for the House, and for all of us, to take stock when our combat role comes to an end, so I will not commit the Government to some new process of examination or inquiry at this point.

[Andrew Stephenson (Pendle) (Con)]

I welcome my right hon. Friend’s statement. We must never forget the ultimate sacrifice made by so many of our soldiers, including Lance Corporal Jordan Bancroft and Lance Corporal Michael Foley from Pendle, in achieving a sustainable settlement in Afghanistan.

I also welcome the Prime Minister’s recent trilateral meeting with his Afghan and Pakistani counterparts. Can my right hon. Friend say more about the continuing dialogue with Pakistan? Are there plans for any more trilateral meetings to take place before the Pakistani elections?

[Mr Hague]

Pakistan is going through a period of caretaker government before the elections. We will of course maintain contact with the caretaker Government, and I will continue to pursue with the caretaker Foreign Minister of Pakistan the trilateral process that I have pursued with the outgoing Foreign Minister, Hina Rabbani Khar, over the past year. I have spoken to the Afghan Foreign Minister in the last 10 days to make sure of Afghanistan’s continuing commitment to the trilateral process. The election in Pakistan will not interrupt that process.

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

It is 10 years to the day since the illegal invasion of Iraq, yet we have no statement and no debate in this House, even though the Scottish Parliament could debate it. Is that because the Foreign Secretary has sent a memo to senior Cabinet members telling them not to discuss the war—not to mention the war? Did he get away with it?

[Mr Hague]

It is easy to obey your request, Mr Speaker, by giving a short answer to this question because it is not relevant to the subject we are discussing. This statement is about Afghanistan, and we do not forget our responsibilities to our forces there just because there are controversies about other conflicts in the past.

[Oliver Colvile (Plymouth, Sutton and Devonport) (Con)]

I thank my right hon. Friend for his precise report, and I welcome the idea that we are going to be very supportive of governance in Afghanistan. The key to that is ensuring that an independent judicial system and a corruption-free police force are in place, so is he happy with the progress being made on that? Does he think that when we eventually come out of Afghanistan next year, that will be able to continue?

[Mr Hague]

It would be going too far to say that I am happy with all the progress made, because a lot more needs to be done to tackle corruption in Afghanistan. At the Tokyo conference last July, the Afghan Government entered into 164 specific different commitments about fighting corruption, and it is very important that they implement all of those. They have started implementing them, and we have seen some prosecutions following the Kabul bank scandal, but more work needs to be done on that as well. My hon. Friend draws attention to a very important subject, on which a beginning has been made—but it is only a beginning.

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

Our objectives in Afghanistan have always been noble, but surely there are lessons to learn from how we have pursued them at various times during the conflict. That applies not only to specific decisions, as my hon. Friend the Member for Barnsley Central (Dan Jarvis) mentioned, but to how we have deployed and rotated our forces, which initially led to a frequent change of tactics. As we approach 2014, surely the Government are doing some work to assess how our country has fought and managed this conflict.

[Mr Hague]

A great deal has been learnt under both Governments who have been involved in this as matters have progressed in Afghanistan. We have learnt about military tactics, training and equipment, all of which have been improved as time has gone on. Secondly, at this moment our focus is, of course, on the priorities I have set out: on making sure that our forces come home safely, and that the rest of the help we are giving Afghanistan is properly and effectively supplied. Thirdly, there must be a time for reflection in the round on all these matters, but I have no new announcement to make about that today.

[Mr Philip Hollobone (Kettering) (Con)]

Since 1945, Her Majesty’s Government have had more experience than any other on earth of withdrawing armed forces from theatre, and since the 1840s we have disengaged from Afghanistan several times. Sadly, the countries we have left behind have not always had the most stable of new beginnings. Since we have left Iraq, Iran’s influence over that country has grown exponentially. What is to stop the pernicious influence of Iran taking over in Afghanistan?

[Mr Hague]

My hon. Friend is right to ask that question. It underlines the importance of building up the Afghans’ capability to look after their own security and to develop their own economy—that is the only sure answer to the excessive interference by, or influence of, any other power in the region. It also shows the importance of supporting an Afghan-led peace process with the active co-operation of Pakistan. That is the best hope of bringing about a political settlement and a general peace in Afghanistan that would also then minimise outside interference in Afghan affairs. So those are two central planks of what the Government are trying to do.

[Nicola Blackwood (Oxford West and Abingdon) (Con)]

Yesterday, I met two female Afghan MPs. One had narrowly avoided being killed by a suicide bomber, and the other had been evacuated from her constituency by the UN and ISAF after having the temerity to celebrate international women’s day. Does the Foreign Secretary accept that not all Afghan women are victims, that those are exactly the kind of women we need to work with to ensure that the gains in women’s rights are not lost post-2014, and that an important way to do that is to implement the EU guidelines on human rights defenders in Afghanistan?

[Mr Hague]

My hon. Friend is absolutely right. The Afghan Government made a series of public commitments at the Tokyo conference in July to uphold the human rights of all Afghan citizens. That includes women, of course, and the promotion and protection of their rights as enshrined in the Afghan constitution. It is vital not only that human rights are upheld, but that human rights defenders are defended and protected, and that the Afghan Government fully implement their commitments on the law on the elimination of violence against women and the convention on the elimination of all forms of discrimination against women. We will try to hold them to all those things.

Ways and Means

Thursday 21st March 2013 Commons Chamber

Budget Resolutions and Economic Situation

Thursday 21st March 2013 Commons Chamber

amendment of the Law

Debate resumed (Order, 20 March).

Question again proposed,

That, —

(1) It is expedient to amend the law with respect to the National Debt and the public revenue and to make further provision in connection with finance.

(2) This Resolution does not extend to the making of any amendment with respect to value added tax so as to provide—

(a) for zero-rating or exempting a supply, acquisition or importation;

(b) for refunding an amount of tax;

(c) for any relief, other than a relief that—

(i) so far as it is applicable to goods, applies to goods of every description, and

(ii) so far as it is applicable to services, applies to services of every description.

12:00

[Ed Balls (Morley and Outwood) (Lab/Co-op)]

It is the morning after—the cold light of day—and the full reality of this Chancellor of the Exchequer’s fourth Budget is starting to sink in. What a huge disappointment it was; what another wasted opportunity. On growth, on borrowing and on living standards, this Chancellor’s plan has completely failed.

Families, pensioners and businesses are paying the price, but what did we get yesterday? A change of direction? Action to kick-start our flatlining economy? Real help now for families on middle and low incomes? Any recognition from the Chancellor that things have not worked out as he planned? No. All we got was more of the same failing policies. Tweeting, tinkering, but no change, of course. The Chancellor confirmed that he will still go ahead in two weeks’ time with a tax cut for millionaires. We had more of the same failing policies and a long hard road to nowhere from a downgraded Chancellor who looks out of touch and increasingly out of his depth. Surely Britain deserves better than that. What do we have to look forward to this morning?

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

What my constituents on the islands can look forward to next month is fuel duty at 18p a litre less than it would have been if the right hon. Gentleman’s Government had still been in power. Is he not delighted that this Government have reversed his party’s policy and reduced fuel duty by 18p a litre for my island constituents?

[Ed Balls]

Unfortunately, the hon. Gentleman fought the last election by saying that his constituents should vote Liberal Democrat to stop the Tory VAT bombshell. VAT has gone up, petrol is up as a result and his constituents will make their choice in two years’ time.

What do we have to look forward to this morning? Another painful, contorted and pathos-bathed Budget debate speech from the Business Secretary. I look across at him sitting on the Front Bench and cannot bear to read out once again all those pre-election quotes. You know the ones I mean, Mr Deputy Speaker—[Hon. Members: “Go on!”] No, I just cannot bear it. They were the ones in which he warned that the Chancellor’s austerity plan, his VAT rise and his rapid spending cuts would choke off the recovery and make the deficit worse. The Business Secretary knew that this plan would fail and he now knows that he is deeply implicated in its catastrophic economic failure, yet he still does not have the courage to stand up and speak out about it. Long, contorted and fudged essays in the New Statesman just will not do. No wonder he was completely ignored in yesterday’s Budget. It is a personal tragedy as well as a national tragedy, but we will hear from the Business Secretary shortly.

[Mr Tobias Ellwood (Bournemouth East) (Con)]

The right hon. Gentleman talks about economic failure. I have the UK annual debt figures going back a few years. When the right hon. Gentleman was in office, the UK debt was £347 billion. Before the crisis struck, it rose to £624 billion. After the crisis it ratcheted up another £200 billion. With this track record, why should the nation trust Labour with Britain’s finances ever again?

[Ed Balls]

This is the Conservative Member who stated just two months ago that

“the past 2 and a half years have set Britain on the right track.”

The economy flatlined, borrowing stalled and the national debt is rising year by year by year on his Chancellor’s watch. The right track? I can scarcely think what the wrong track would be.

This morning we heard the Deputy Prime Minister on “Call Clegg” attacking the Leader of the Opposition for repeating the same attacks in this year’s Budget response as he used last year. I went back to my opening speech of a year ago, the one following the Chancellor’s third Budget, the omnishambles Budget. We all remember that one, don’t we? This is what I said a year ago:

“The British economy is stagnating, unemployment is rising…the Government’s deficit reduction plans have gone wildly off track, middle and lower-income families and pensioners are facing rising…prices, rising energy bills and falling living standards—and what did the Chancellor do in his Budget yesterday? Did he admit that his economic plan has failed? Did he act to kick-start the stalled recovery?...No.”—[Official Report, 22 March 2012; Vol. 542, c. 957.]

That was a year ago, and the tragedy is that 12 months on the position is even worse. In the words of the great Yogi Berra, it really is déjà vu all over again. It is a groundhog day Budget from a failing and out-of-touch Chancellor.

Twelve months on, living standards are still falling. The Office for Budget Responsibility says that real wages adjusted for inflation will be a full 2.4% lower in 2015 than in 2010—worse off under the Tories. It is groundhog day too because 12 months on, the economy is still flatlining. As recently as the autumn statement, the Chancellor was expecting growth of 1.2% this year, but the OBR has now halved that forecast to just 0.6%—not the right track; the wrong track. At the time of the spending review in autumn 2010 the Chancellor was expecting growth by now of 5.3%. So far it has been just 0.7%, and the stagnation and flatlining continue.

[Penny Mordaunt (Portsmouth North) (Con)]

I would be interested in the right hon. Gentleman’s explanation of why the OBR is forecasting 600,000 more jobs in 2013 than there were a year ago.

[Ed Balls]

Perhaps the hon. Lady should also study the book. The interesting thing is that the OBR is also forecasting that unemployment will rise, not fall. More jobs, unemployment rising—maybe there are more people in the country. Does she know what the OBR forecasts net migration to be in the next few years? Tens of thousands? No. Net migration of 140,000 every year. That is what is going on.

It is groundhog day too because, as a result of the present stagnation, the Chancellor’s fiscal plans are even more wildly out of control than they were a year ago. No wonder his fiscal credibility is in tatters. The Chancellor used to claim that the national debt would start to fall in 2015 from a peak of 69.7% of GDP. He now expects it to rise in 2015, to rise in 2016, to rise in 2017 and to hit a staggering not 69.7%, but 85.6% of GDP. And the reason the national debt is rising is that, as the OBR said yesterday, the Chancellor’s deficit reduction plan has stalled. The deficit is now expected to be the same next year as it is this year and as it was last year. It is not a deficit reduction plan anymore. That is why the Chancellor is now set to borrow—[Interruption.] The Chancellor should listen to this. He is now set to borrow £245 billion more than he planned, vastly more than the borrowing he inherited from the Labour Government.

[Richard Fuller (Bedford) (Con)]

While the vast army of PAs behind the shadow Chancellor search for a bullet point on Bedford, let me say that his criticisms are not falling very strongly, in part because his hands are dipped in red—the red ink of years of borrowing and debt. Does he not think that the arguments would be stronger if he moved to one side and gave his seat to the fresh-faced young man sitting next to him, the shadow Secretary of State for Business, Innovation and Skills?

[Ed Balls]

The voters of Bedford might be disappointed to find out the truth: compared with a year ago, the Chancellor will borrow £29 billion more than he planned this year, £59 billion more next year, £73 billion more the year after and £77 billion more the year after that. Mr Deputy Speaker, if you want to know who the borrowing Chancellor is, it is him. Do you know what he managed to do yesterday in his Budget documentation? He fiddled around and managed to say that borrowing this year is lower than it was last year by £0.1 billion. We know why: as the OBR confirms, the Chancellor and the Chief Secretary to the Treasury, when one would think they would be working on a plan for jobs and growth or reform of the banking system, have been scrabbling around and hacking away at spending in this year in a desperate attempt to try to get the borrowing down.

The detail is set out on page 13 of the OBR document. It shows that, compared even with the autumn statement, tax revenues are down this year by £5 billion but that since December the Chancellor has found a further so-called underspend of £3.4 billion, which he says is not like normal underspends. What does the OBR tell us about that so-called underspend. It states:

“It is very rare for the government to under-spend the departmental plans it has set out less than a year ago by such a wide margin...Our overall forecast of under-spending has a number of elements: money that the Treasury has agreed to allow departments to move into future years;…money that departments thought they would spend this year, but which they do not now expect to spend either this year or in the future; and payments (for example to some international institutions) that were due to be made late in the current financial year, but which are being delayed into 2013-14.”

The cheque is in the post, but it will not arrive until after 1 April in order to massage the figures. Who does the OBR say has been hardest hit? The answer is the national health service, which has been cut by over £2 billion this year. At the same time the NHS is losing more than 5,000 nurses, the Treasury scrabbles around to try to save the Chancellor’s face.

[Richard Graham (Gloucester) (Con)]

Yesterday I brought the CEO of a significant medium-sized manufacturer in Gloucester to listen to the Budget statement and the Opposition’s response. He commented afterwards:

“I thought the Government’s commitment to helping business was exactly what is needed for growth and jobs, and I continue to be dismayed that the Opposition remains so theatrical, playing for headlines only, which cannot help any of us.”

Is not it time the shadow Chancellor gave us less theatre and more substance on what he would do to help businesses and growth?

[Ed Balls]

Falling living standards for families in the hon. Gentleman’s constituency, rising child poverty and families in work seeing their tax credits cut—that is not theatre; that is the real world. As for the national insurance cut for small businesses, that is point 5 of Labour’s five-point plan for jobs and growth. That is the reality.

[David Wright (Telford) (Lab)]

Talking about theatre and the movement of money between financial years, is it not interesting that hospitals in Shropshire have been cancelling operations? One of the chief nurses says that is because of funding cuts in the NHS. I wonder whether it is because of the Chancellor’s fiddle.

[Ed Balls]

The OBR document is very interesting. It sets out the unusual underspend Department by Department. I do not think that we have yet heard the full truth about what has been going on in the Treasury: the pressure applied in one year to cut spending or to move it to the next year just to fiddle the borrowing figures. I think that we will discover the truth in the coming weeks. For a Government who attack businesses and make late payments to small business, they are the late payment Government.

Has the Chancellor learned nothing over the past 12 months? He used to say that he was sticking to his plan in order to secure the recovery, but then we had the double-dip recession. He used to say that he was sticking to his plan to get the deficit down, but his spending cuts and tax rises have choked off the recovery. As the OBR revealed yesterday, the deficit was basically unchanged last year and will remain unchanged this year and next. Then all he could say was that he had to stick to his plan in order to keep his treasured triple A credit rating, but he has even lost that. The only reason he will not now change course is to avoid his own political humiliation, and that is no reason to stick to a failing plan.

[George Freeman (Mid Norfolk) (Con)]

The right hon. Gentleman alleges that the Government have increased the deficit. I have checked the figures from the Institute for Fiscal Studies and the OBR. Will he confirm that when the Government came to power the deficit was 11.2% of GDP and that it is now 7.4%? Is that a rise?

[Ed Balls]

The Government inherited a deficit reduction plan from the previous Government, but the Chancellor is wildly off track from our plan, which he used to call irresponsible. He is borrowing pretty much a quarter of a trillion pounds more. He said that he would get the deficit down, but the deficit reduction plan has stalled.

I have urged the Chancellor to change course, as in recent months have the International Monetary Fund, The Economist, the Mayor of London, the Business Secretary and the Home Secretary. They have all cast doubt on his plan. But yesterday we got more of the same. How did he describe the Budget? He described it as a “steady-as-she-goes Budget.” Steady as she goes? What kind of ship does he think he is on: the Titanic; the Mary Celeste?

There were some welcome measures. We have consistently called for a tax break for small firms taking on extra workers. The Government are now set to introduce a similar scheme, three years after the shadow Business Secretary and I urged them to. That is a welcome step forward. The Chancellor has finally joined Twitter, five years after I did. Maybe he will find out that his plan is going to fail five years after I worked it out, although by then he will be on the Opposition side of the House.

Yesterday there was no proper plan to kick-start our economy, no bank bonus tax to fund a youth jobs guarantee, no real action to get lending going to small firms, no proper investment in affordable homes and no return of the 10p starting rate to help millions of people, paid for by a mansions tax. Despite the welcome small change of 1p off a pint of beer—buy 320 pints and get one free, which might even be too much for the Foreign Secretary—and even after the increase in the personal allowance, an important point for the Liberal Democrats, families will still be worse off next year compared with this year because of the Chancellor’s tax and benefit changes.

[Paul Flynn (Newport West) (Lab)]

With all the voodoo economics and fiddles that have now been exposed, is not the Treasury exposed as the most disreputable massage parlour in Britain?

[Ed Balls]

I think it is a little unfair to tease this Chancellor about what goes on late at night in massage parlours. Perhaps he will correct me and tell me that it was not a massage parlour. I will take an intervention if he would like to clarify it; I cannot remember that chapter in the biography.

According to House of Commons Library figures, a one-earner family—[Interruption.] The Chancellor should listen to the reality of his plans and their impact on hard-working families in our country. According to the Library, a one-earner family on £20,000 a year with two children will be £381 a year worse off in 2013 compared with 2010, even with the personal allowance, because that is outweighed by the hit to tax credits for a working family. This is without taking into account the rise in VAT. By 2015, that family on £20,000 will be £600 a year worse off.

It is not just a case of being worse off under the Tories, but worse off under the Liberal Democrats too. In 16 days’ time, as the Chancellor, with the support of the Business Secretary, rams through the granny tax, the strivers tax and the bedroom tax, he is pressing ahead with a £3 billion tax cut for the very richest people in our country. In two weeks’ time, 13,000 millionaires will get an average tax cut of £100,000 each. Millions are paying more while millionaires get a tax cut.

[Damian Collins (Folkestone and Hythe) (Con)]

The shadow Chancellor is on record as saying that his solution is that we should be borrowing more now. How much more would he borrow on top of what the Chancellor is already borrowing?

[Ed Balls]

I will quote the Business Secretary. Asked on the “Today” programme, “Won’t that mean more borrowing?”, he replied, “But we are borrowing more.” The Government are borrowing more—it is all here in the OBR document. If they had listened to our plan two years ago, the borrowing would be coming down, and it is not.

[Several hon. Members]

rose—

[Ed Balls]

I will take some more interventions if Members want. Let us have the hon. Member for Bournemouth East (Mr Ellwood) again.

[Mr Ellwood]

I am grateful to the right hon. Gentleman. He spoke about a deficit reduction plan. What year was he referring to? Was it 2001-02, when the deficit was £0.8 billion, or was it any one of the years leading up to the last year that Labour was in government, when it was a staggering £158 billion? Under the previous Government, the deficit increased in every single year after 2001. Will he tell me in which year his deficit was supposed to kick in?

[Ed Balls]

I do not want to have to give the hon. Gentleman an economics lesson, although given that he thinks we are on the right track, perhaps he needs one. The Chancellor’s fiscal rule is to balance the current structural budget, excluding investment—[Interruption.] Don’t be so silly. [Interruption.]

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. Can we calm down? Shouting from sedentary positions does not help the debate.

[Ed Balls]

The economy has flatlined and the national debt is rising year on year, and the hon. Gentleman does not want to know the truth.

Not only is the Chancellor pressing ahead with a tax cut for millionaires; it now seems that his mortgage scheme announced yesterday will help people, no matter how high their income, to buy a subsidised second home worth up to £600,000. From what I have seen so far, the Government are basically saying, “If you’ve got a spare room in a social home you’ll pay the bedroom tax, but if you want a spare home and you can afford it, we’ll help you to buy one.” Are the Government really going to allow millionaires, who will get a tax cut averaging £100,000 in two weeks’ time, to get a taxpayer guarantee if they use that money as a deposit on a house, a second home, or even a buy-to-let house? That is not just tax cuts for millionaires; it is subsidised mortgages for millionaires—or should I say a spare homes subsidy? I will take an intervention if the Chancellor wants to clear up the absolute confusion and chaos over this policy. Surely people struggling to get a mortgage—those who want to get their first home—should be the priority for help, not the small number who can potentially afford to buy a second home or a buy-to-let home. We will solve the housing crisis and help first-time buyers only if we finally build the new affordable homes that we said should be built but which he ignored in this Budget.

This is more of the same from a Chancellor who does not even understand the Budget he has announced, as we saw a year ago. I ask him again—is the taxpayer subsidy available for second homes to people with incomes over £100,000 or for buy-to-let properties? Yes or no? If he does not clear it up, the confusion and chaos will continue. Does he want clarify it? Pasties, caravans, churches, skips—and now subsidised second homes for millionaires. It is not “Who Wants To Be A Millionaire?”; it is “Who Wants To Help A Millionaire?” It is not “phone a friend”; it is “cut taxes for your friends.” As for “ask the audience”, he must be hoping that he does not have to ask the electorate any time soon—certainly not after the past 12 months.

What a 12 months it has been for this Chancellor! The omnishambles Budget, the double-dip recession, booed at the Paralympics, forced to upgrade on the train, downgraded by Moody’s, his fascinating biography—and now his colleagues are even speculating that he might have to be replaced by the Foreign Secretary, the Defence Secretary, or even the right hon. Member for Wokingham (Mr Redwood). A year ago they feted him as the next leader of the Tory party; now, according to the Tories, they are touting him as our next man in Brussels. It used to be Calamity Clegg they were sending off to the Commission; now it is Calamity George. Well, we do know he likes a bit of “Whip crack-away, whip crack-away, whip crack-away.” [Interruption.] Are you suggesting that I do not sing it, Mr Deputy Speaker?

A few weeks ago, the Chancellor reportedly told his colleagues at a Cabinet meeting that if they did not make a decision that day they would have to do so after 2015, sitting round the shadow Cabinet table. That is going to be the one forecast that he actually gets right.

[Mr Nick Gibb (Bognor Regis and Littlehampton) (Con)]

This is all very amusing, but not very serious. Is the right hon. Gentleman aware that in his own constituency over the past 12 months unemployment has fallen by 2.5% and youth unemployment has fallen by 12.5%? Why is he complaining about higher borrowing and at the same time advocating higher borrowing? Is it not right that the Chancellor is letting the automatic stabilisers kick in?

[Ed Balls]

The problem with what the Chancellor is doing this year—cutting in-year spending—is that it is the opposite of the automatic stabilisers. He is cutting spending and the OBR says that it is having a direct impact on economic growth. I sympathise with everybody who loses their job, including the hon. Member for Bognor Regis and Littlehampton (Mr Gibb). In my constituency unemployment has come down, but working families are worse off because of cuts to tax credits, the bedroom tax and cuts to child care. The £700 million-a-year tax break for new child care is no compensation for the £7 billion a year cut in support for families.

[Andrea Leadsom (South Northamptonshire) (Con)]

Is the right hon. Gentleman aware that inequality in income has dropped significantly since May 2010?

[Ed Balls]

I think the hon. Lady may find that that is before the millionaires’ tax cut kicks in in 14 days’ time.

The hon. Member for Bognor Regis and Littlehampton asked whether I am being serious. I am being deadly serious about the failure of this Government’s economic plan. They are failing on growth and on borrowing, and living standards are falling as families and businesses pay the price. I warned the Chancellor two and a half years ago that his plan could not work and that, given that a global hurricane was brewing, it was the wrong time to rip out the foundations of our own house. I told him that monetary policy in a situation akin to that of Japan in the 1990s or of the world in the 1930s could not do the trick to restore growth. I warned him that attempting to have the biggest tax rises and fastest spending cuts in our post-war history, and probably beyond, would backfire and choke off recovery rather than support it.

The Under-Secretary of State for Skills, the hon. Member for West Suffolk (Matthew Hancock) is the Chancellor’s former adviser and he is now a member of the Business Secretary’s ministerial team. He wrote an article in The Times in the autumn of 2010 in which he said—this is the Chancellor’s former adviser—that faster deficit reduction would lead to stronger growth. He said, as the Chancellor has also argued, that this was an example of expansionary fiscal contraction, but fiscal contraction has not been expansionary—it choked off the recovery. If the Chancellor was relying on advisers like the hon. Gentleman, it is no wonder that he got into such trouble.

[Bob Blackman (Harrow East) (Con)]

The shadow Chancellor has made great fun of tax changes and other issues relating to growth. Does he welcome the Government measure that means that next month 36,270 working people in his own constituency will get a tax cut?

[Ed Balls]

The hon. Gentleman needs to look at the figures and understand the impact on working families in his constituency. The problem with his Chancellor is that he gives with one hand and takes a lot more with the other. A one-earner family on £20,000 and with two children are worse off, even with the personal allowance, by £380 a year because of the cuts to tax credits. Working families are losing out. The Chancellor tried to divide the country into strivers versus shirkers, but we do not hear that any more because it turned out that his shirkers were the working people of this country.

The real tragedy for this Chancellor is that he is set to join a long line of past Chancellors. Philip Snowden, Norman Lamont and now George Osborne—

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. Do not refer to Members by name.

[Ed Balls]

I apologise, Mr Deputy Speaker.

Philip Snowden, Lord Lamont and now Chancellor Osborne—[Interruption.] It was not the Lamont name that I got wrong, was it, Mr Deputy Speaker? Philip Snowden, Lord Lamont and now this Chancellor have said, “I will stick to the plan.” Those past Chancellors ignored all the warnings from those who said that the plan would not work. They boasted, “If the medicine’s not hurting, it’s not working,” and ploughed on and on as things got worse and worse, and their careers ended in disaster as their failed policy finally consumed them.

Is that not the truth? This Chancellor is an historian who does not know his history and he does not know his economics, either. He is completely out of his depth—business, the country, his Back Benchers and Cabinet colleagues and the Business Secretary all know it and, in his heart of hearts, I think the Chancellor knows it, too. He was the wrong man for the job at this vital time. He is running out of excuses, he has run out of answers and he is running out of road.

We needed a Budget for growth, jobs and fairness, but we got more of the same. There is no plan for growth, just tax cuts for the rich while everyone else pays the price. This is more of the same failing plan from a downgraded Chancellor—not steady as she goes, but sinking like a stone.

[Several hon. Members]

rose—

[Mr Deputy Speaker]

Order. Thirty-three Members want to take part in this debate and a time limit will be announced following the Business Secretary’s response to the shadow Chancellor, but six to seven minutes would not be too far out.

12:29

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

I am delighted to speak in support of the Budget and thank the shadow Chancellor for 35 minutes of pantomime. More worryingly for me, I occasionally read in the newspapers that we agree with each other; I am not sure whether he regards that as a bigger slander than I do. I have been trying to find out what it is that I am supposed to agree with and to understand what actually is his plan B. A quick search revealed seven different variants of plan B. In fact, that is almost certainly an understatement, because the shadow Chancellor has had more positions on the economy than there are positions in the “Kama Sutra”.

Let me run through some of the variations that we have heard from the shadow Chancellor over the past couple of years. He started with the big stimulus to the economy that was going to come from the bankers’ bonus tax, which would have imposed a £2 billion tax on a tax base—a bonus pool—of £1.6 billion. He had not realised that, since his time in charge of the City, the bonus pool had shrunk from £14 billion.

The shadow Chancellor then moved on to the five-point plan, which was mostly pretty sensible. It included apprenticeships, which we are already doing on a much bigger scale. He also wanted, I think, £200 million for the regional growth fund. Well, we have given it billions, not hundreds of millions. He then moved on to the reallocation of the money from the 4G auction sale, but it had already been allocated—I have already spent quite a lot of it.

We have now moved on to trying to understand what plan B actually means today. As far as I can fit it together, it consists of several elements, including a big stimulus from a value added tax cut, stopping Government spending cuts and, somehow out of the alchemy, reducing borrowing. I have tried to work out how this plan was created and am struck by its similarity to the economic strategy being developed by Nigel Farage, although I may be doing the UK Independence party a disservice.

The shadow Chancellor and I have a serious interest in economics. Before we discuss how to deal with this crisis, we have to try to understand how it originated. I think that most serious economists, whether they are in the Keynesian tradition or not, would acknowledge that this is not a cyclical recession. It is what is now called a balance sheet recession, and in order to understand how that happened we need to understand why the balance sheet got so big in the first place and why private sector deleveraging is now happening on such a massive and damaging scale.

This is an uncomfortable set of questions for the shadow Chancellor because, among other things, he has to explain the following. Why was it that in the 50 quarters of growth without inflation, nobody noticed the massive asset bubble in residential and commercial property, which has since burst? He has to explain why households in the UK, which have become heavily over-leveraged, managed in that period to acquire the highest level of personal debt in relation to income of any country in the developed world. He has to explain why a medium-sized bank in Scotland was encouraged and actively supported by his Government in trying to become the biggest bank in the world on the basis of dodgy acquisitions and gambling in its casino operations. He also has to explain why, when his former boss commissioned an excellent study on the banking system in 2000, which explained why there was a cartel operating that was squeezing the life out of small business, his Government did absolutely nothing about it.

We have a major economic crisis caused by balance sheet deleveraging, arising out of a major financial crisis. One would have thought that those on the left would want to talk about a crisis of financial capitalism, but they do not want to talk about it at all. In fact, the shadow Chancellor has a striking resemblance to the lead character in “Fawlty Towers”. Colleagues may remember the episode in which he goes around with great indignation, wanting to have an animated conversation about Germany, but nobody wants to talk about the war. The shadow Chancellor wants to talk about the economic crisis, but not the financial collapse that he presided over.

[Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)]

The right hon. Gentleman has talked about an asset bubble. What is the Chancellor’s mortgage scheme, other than the hope of an asset bubble to get him out of trouble? What growth or capacity would that add to the economy? The problems of this economy will not be answered by yet another asset bubble. What are the Government trying to do? All that their scheme will do is create another asset bubble.

[Vince Cable]

There are two elements to the Chancellor’s housing package. The first is the development of the FirstBuy scheme, which will provide £3.5 billion for shared ownership. That has been widely welcomed because it will increase the demand for housing and get the housing market going. The other, more ambitious scheme is a form of insurance for mortgages, which has been very successfully applied in Canada, for example, where it prevented a collapse of the market of the kind that occurred here and introduced greater stability. The Chancellor is now consulting on how that scheme should be designed, which is absolutely right.

[Helen Goodman (Bishop Auckland) (Lab)]

The Secretary of State needs to be a champion of the mansion tax, which would be a very sensible thing to do at the moment. Why is he supporting this scheme, which will support the purchase of houses up to the value of £600,000?

[Vince Cable]

I remain a champion of the mansion tax and will continue to champion it with my colleagues on the Liberal Democrat Benches. The Chancellor is going to consult on how this major reform to the housing market will be implemented. We recognise that there are many complex products in the mortgage market. For example, many parents support their children’s housing acquisitions. Those kinds of transactions have to be properly analysed before the scheme is launched.

[Mr David Hanson (Delyn) (Lab)]

I will be going back to my constituency tonight and would like to give the Budget a fair wind if I could. Will the Secretary of State therefore confirm that the scheme will not apply to second homes or to people who can afford to provide such a subsidy themselves?

[Vince Cable]

As I said a few moments ago, there are two schemes. The first, which is the development of a scheme that is already operating, most emphatically does not apply to second homes. The major mortgage guarantee scheme is complex and the Chancellor will consult on how to draw the boundaries around eligible mortgages.

[Ed Balls]

Will the right hon. Gentleman give way?

[Vince Cable]

Let me just finish this point.

[Ed Balls]

Will he give way?

[Vince Cable]

I will in a moment. Let me just deal with the question of the millionaires who benefit. I remember the 13 years that I spent on the Opposition Benches, asking about taxes. Let us remember the situation. We had a 40p top tax rate, we had an 18% capital gains tax, which was widely used for tax avoidance in the private equity industry and elsewhere, and non-dom tax reliefs were completely uncapped. When we challenged that situation, we were told repeatedly by this shadow Chancellor and others, “No, you can’t do that. You’ll frighten away all the bankers who are generating wealth in the City of London.”

Of course we need a more equitable tax system. That is why the Liberal Democrats continue to argue for a mansion tax. But we have a higher rate of income tax at the top than prevailed in any year of the Labour Government.

[Ed Balls]

The Business Secretary is a member of the Cabinet and a student of these matters, and he cares a lot about how the economy works. Can he tell us, because he will have been part of the discussions, whether the new mortgage scheme applies to second homes and buy-to-let. Yes or no? He is the Business Secretary; can he answer the question?

[Vince Cable]

The scheme has not yet been designed in detail. It was typical of the Labour party that it frequently launched into half-baked schemes without thinking about the detail. This is a major change and it will be planned carefully.

[Ed Balls]

To be absolutely clear, in two weeks’ time millionaires are getting an income tax cut and the new scheme that was introduced yesterday could allow them to use that tax cut to get a taxpayer subsidy for a second home or a buy-to-let, but the Business Secretary cannot tell us—yes or no—whether that will be the case. Is that not an absolute shambles? Is it not set to be totally unfair? It is a spare home subsidy.

[Vince Cable]

The right hon. Gentleman does not know, and I do not yet know, what the final outcome of this massive scheme will be. To be lectured with righteous indignation by the people who created a massive property bubble that destroyed this country’s economy and wiped out enormous gains in people’s living standards is the most gross hypocrisy.

Let me turn to some of the other issues that the shadow Chancellor raised.

[Guy Opperman (Hexham) (Con)]

The shadow Chancellor took us on an interesting history tour of former Chancellors. Does the Business Secretary recall who it was who advocated light-touch banking regulation, sold our gold and uttered the famous phrase, “No more boom and bust”?

[Vince Cable]

Yes, I think we do. That bears repetition and the hon. Gentleman has done it very well.

[Mr Reid]

Was my right hon. Friend as disappointed as I was that the hon. Member for Na h-Eileanan an Iar (Mr MacNeil) intervened and did not thank the Government for the 18p cut in fuel duty that this Government have given his constituents, thanks to campaigns by myself and other Government Members?

[Vince Cable]

My colleague is absolutely right. He reminds us of two things that the Government have done. One is the freezing of petrol duty. The other is the allowance for remote communities, which he ably represents, as does the hon. Member for Na h-Eileanan an Iar (Mr MacNeil).

[Mr MacNeil]

Does the Secretary of State agree that the rural fuel derogation should be increased? A 5p cut is not enough; we really need a 10p cut. I am sure that the hon. Member for Argyll and Bute (Mr Reid) would agree with me.

[Vince Cable]

I am sure that we would have free petrol in a perfect world.

Let me deal with some of the points of economic substance that have been raised. The first was about job creation. It is true that in the last set of figures there was a very small increase in unemployment. However, that happened against the context of the last three months, in which 130,000 new jobs were created, vacancies rose and redundancies fell. In this Parliament, we have created 1.25 million new private sector jobs. It is difficult to understand why, if the economy is performing as badly as the shadow Chancellor claims, a large number of new private sector companies are creating jobs in that way. There are regions of the country, such as the west midlands, that in the boom periods saw a decline in private sector employment. That is now being comprehensively reversed.

The question put by my hon. Friend the Member for Portsmouth North (Penny Mordaunt) is apposite: why does the Labour party think that 600,000 jobs are being predicted by the OBR in the coming year? We got the ludicrous answer that it has something to do with immigration, but immigration is about the supply of labour, not the demand. Where is the demand coming from, other than a favourable business environment that encourages small companies to establish and grow jobs?

[Mr Russell Brown (Dumfries and Galloway) (Lab)]

We have listened long and hard to the Government about the number of private sector jobs that have been created—it went from 1 million, to 1.2 million, fell back to 1 million for some reason, and yesterday we heard an announcement of 1.25 million new jobs. Will the Secretary of State put in the Library a complete breakdown of those jobs that states where they are located—not just percentage-wise but numbers-wise—which sectors they are in, and the hours that people are working, so that we know exactly what is happening?

[Vince Cable]

I understand that some of those details were placed in the Library yesterday, and the hon. Gentleman is free to consult them. I hope he is not trying to deny that the phenomenon is taking place.

[Julie Hilling (Bolton West) (Lab)]

It is not clear how many unpaid, workfare jobs are counted among the jobs created. Clearly, they are not jobs created if people are working for nothing. How many of the jobs are like that?

[Vince Cable]

These are proper jobs, as defined by the Office for National Statistics. I honestly do not know why Opposition Members are trying to deny a genuine piece of good news that affects their constituents.

[Sheila Gilmore (Edinburgh East) (Lab)]

I thought that perhaps the Secretary of State would like to hear the answer to the question, which is actually in the report by the Office for Budget Responsibility. Of jobs described as jobs created over the past year, 14% are unpaid work experience or work placements.

[Vince Cable]

I do not understand why the Opposition should be hostile to work experience. All our evidence suggests that people who enjoy work experience go on to stable employment. It is an extraordinary state of denial when we have a successful process of job creation that the Opposition do not want to acknowledge exists.

[Ed Balls]

To clear up the Business Secretary’s confusion a few moments ago—I am not sure whether he or the Chancellor have seen this document, but it might be helpful to them—the Treasury has published a document, “Help to Buy: mortgage guarantee”, which makes it clear that the scheme does not apply to buy-to-let properties. A person cannot take out a mortgage for a buy-to-let property; it must be residential. As far as we can see from the document, however, the scheme absolutely does allow second homes. It is a spare homes subsidy. I do not know whether the Business Secretary has seen the document, but perhaps he would like to comment.

[Vince Cable]

I am glad the right hon. Gentleman felt able to withdraw his earlier allegation that this was about buy-to-let mortgages.

[Ed Balls]

For absolute clarity, I asked the Chancellor and the Business Secretary whether the scheme applied to buy-to-let properties, and whether it would allow second homes. Neither of them knew. The Business Secretary said that it had not been decided, but in fact the document has been published and states that the scheme does not apply to buy-to-let properties, but it does allow second homes. The accusation stands. Is that true? It is not in the document; are they going to amend it?

[The Parliamentary Under-Secretary of State for Skills (Matthew Hancock)]

Is it in the document or not?

[Ed Balls]

It is not in the document—[Interruption.]

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. Please make the intervention briefly.

[Ed Balls]

The document is very clear. Buy-to-let is ruled out but second homes are allowed. That is a fact.

[Vince Cable]

I think the shadow Chancellor is digging himself into a certain amount of trouble. He refers to a document as fact, but it is actually a consultation document. Rather more sensibly, the shadow Business Secretary yesterday applauded the new housing initiatives. We will proceed with the consultation, and if the shadow Chancellor has any technical criticisms of the tenure arrangements, he can make them in the consultation process and we will listen constructively.

[Mr Chuka Umunna (Streatham) (Lab)]

With the greatest respect to the Business Secretary, he mentioned what I said yesterday, but I said that not knowing that people who want second homes can take advantage of the scheme. He did not know that either.

[Vince Cable]

The Opposition Front Bench is getting a little silly. Let us leave it to the consultation and see what comes out. I am sure that those imaginary horrors will not be realised.

The second criticism from the Opposition was about the level of borrowing. I was not clear whether the shadow Chancellor regards high levels of borrowing as a good or bad thing—a rather basic question. Is the Labour party in favour of more borrowing, or less? The Institute for Fiscal Studies made a thorough comparison between what is likely to happen under the Government’s fiscal plans and what would have happened under the so-called Darling plan. It was a bit perfunctory, but it gave us a framework and concluded that in 2016-17 the level of borrowing under the Labour trajectory would have been £76 billion, but £24 billion under the coalition’s policy. That is after the revisions that have taken place.

As someone brought up in the Keynesian tradition, I think it rather creditable that the Chancellor has responded to a slow-down in the economy by allowing counter-cyclical stabilisers to apply. I am amazed that those on the Opposition Front Bench find that a source of criticism, when it is good, common-sense, practical economics.

[Penny Mordaunt]

The shadow Chancellor’s speech not only did a grave disservice to the Chancellor, but to Philip Snowden. I declare an interest as my late mother was Jennifer Snowden so I am related to the first Labour Chancellor of the Exchequer. As a consequence I have his biography which states:

“He was raised in an atmosphere which regarded borrowing as an evil and free trade as an essential ingredient of prosperity.”

Does the Business Secretary think that I should loan my copy to Opposition Members?

[Vince Cable]

We seem to have forgotten, but I think Philip Snowden was the first Labour Chancellor—[Interruption.] Indeed, there have been many others.

[Mr Brooks Newmark (Braintree) (Con)]

My right hon. Friend mentioned a study by the Institute for Fiscal Studies, but the IFS also noted that under the shadow Chancellor’s plan B, the extra cost of borrowing would be another £200 billion. That surely cannot be good for UK plc.

[Vince Cable]

The hon. Gentleman has obviously found another version of plan B that I did not discover in my search, but I am sure he is right.

Let us consider what has caused this slow-down, which the shadow Chancellor blames on Government policy. The OBR was clear and explicit and stated that the downward revision in our forecast for 2012 is largely accounted for by a reduction in the contribution of net trade. We are operating in a difficult international context—particularly in the eurozone, which accounts for half our exports—and that largely explains the slow-down that has occurred, and the consequential impact on Government debt and borrowing.

We are giving overriding priority to developing British trade in those markets that have been neglected for many years. Over the past two years, led by the Prime Minister, I and other Ministers have gone back time and again to people in the big emerging economies to promote exports and inward investment. That is why our exports to Brazil and India have increased by more than half, and by approximately 100% to China and 130% to Russia. That diversification of our export base is fundamental to getting us out of this crisis. That is what we are doing, and we are succeeding.

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

I welcome the Secretary of State’s comments, but they appear pretty poor words for companies such as Alcan in Northumberland that is going to shut —the Budget did not come soon enough to provide tax breaks for energy-intensive industries. Furthermore, the steel industry in England and Scotland has been losing out to foreign, imported steel in bridge contracts, as my hon. Friend the Member for Scunthorpe (Nic Dakin) mentioned today in business questions.

[Vince Cable]

That is a serious point and I am sympathetic to it. My colleagues and I have spent a lot of time talking to the EEF, the CBI and other employers groups about the higher costs of energy and how we compensate for it. A compensation package has been through consultation and is being implemented—the cash will be disbursed soon—for the higher cost of the carbon price floor and the EU emissions trading scheme. I fully understand the hon. Gentleman’s concern—he is absolutely right—and we are addressing it.

[Tom Blenkinsop]

Further to that point, places such as Wilton, which has the largest chemical industry in the country—

[Helen Goodman]

It is the largest in Europe.

[Tom Blenkinsop]

As my hon. Friend reminds me, it is the largest in Europe. Wilton has lost out on the carbon capture and storage programme, which would have added 20 or 30 years’ longevity to the capital on site. The north-east is pushing more than any other region in providing exports for the country, and yet the Secretary of State is not providing the financial support for the infrastructure that was provided by the Labour Government.

[Vince Cable]

A CCS competition is taking place. As the Chancellor pointed out in his Budget, there is a recognition of the problems of energy-intensive industries in the north-east, Scunthorpe and south Wales. They will be given an extra year of support as a result of yesterday’s announcement.

[Richard Fuller]

I commend my right hon. Friend’s comments on exports—I have seen for myself UK exports to the Nigerian market. Does he agree that getting traditionally reluctant small and medium-sized business to export is key? Does he also agree that the employment allowance will enable some of our small businesses to take on those additional employees to attack those new markets?

[Vince Cable]

The hon. Gentleman is right on both counts. I was recently in Nigeria supporting that effort. If we are to have momentum, it must come through small and medium-sized companies. Frankly, the export effort in many emerging markets was neglected for most of the past decade—the relationships are not there and must be built up. He is also right that the employment allowance, which will help 400,000 micro-companies, is a big step forward and a big incentive to them to take on that extra member of staff.

In my concluding section, I shall address some of the big strategic choices made in the Budget. We can argue about temporary changes, but it is important that the country has a sense of direction. First, the industrial strategy gives a sense of direction; secondly, the changes in money and banking policy are fundamental after the crisis; and thirdly, the tax agenda creates a greater level of fairness.

On the industrial strategy, I was teased earlier about the “compelling vision” for the British economy, but we clearly need a vision of the economy that goes beyond one Parliament and Government, and that stretches decades ahead. That is why we have made the commitment to long-term planning and working in partnership with business in those sectors of the economy that need such a framework. We have produced agreements with the aerospace industry, and will do so with the automotive and biological sciences industries, and with the supply chains in renewable and non-renewable energy, which were desperately hollowed out in the years when manufacturing was neglected under the previous Government. We are trying to rebuild those supply chains.

A Back-Bench colleague made the point that we have an extra 70,000 jobs in manufacturing after 1 million were lost in the decade of the Labour Government. Of course, the industrial strategy is not just about manufacturing; it is about key service sectors such as education and higher education, and professional and financial services, which are equally important in driving exports.

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

In the right hon. Gentleman’s three years as Secretary of State for Business, Innovation and Skills, he has mastered being an apologist for the Conservative-led Government. May I politely remind him that he was elected in 2010 as a Liberal Democrat on the Liberal Democrat manifesto, in which, on page 15, he says:

“If spending is cut too soon, it would undermine the much-needed recovery”?

He was right then, but does he still believe he was right?

[Vince Cable]

I recommend that the hon. Gentleman look at the OBR’s figures to see what has happened to Government consumption in the past three years. In 2010, it grew by 0.5%; in 2011, it grew by 2.6%; and last year, it grew by 0.6%. It is true that aspects of Government spending have been cut in a way that has been damaging. The Chancellor has acknowledged, as I have, that capital spending cuts were a mistake. That was the one bit of fiscal consolidation that the Labour Government launched, and it has had damaging consequences, which is why we are now reversing it.

[Helen Goodman]

That is not how things look from the perspective of the north-east. The Government destroyed regional development agencies. Of the capital spending the Government have introduced, only 0.5% has gone to the north-east. Why?

[Vince Cable]

Job creation in the north-east is growing more rapidly than it is in many other parts of the country. It is precisely because the north-east has a higher share of exports in its regional gross domestic product than any other region that it is benefiting from the shift that is now taking place to manufacturing.

[Mr Umunna]

The Secretary of State says that the Government have made a mistake with their capital spending cuts and that they are reversing them— presumably, he refers to the extra £3 billion. However, why are he and his colleagues reversing the mistake only from 2015, when the economy needs the support now?

[Vince Cable]

I answered the hon. Gentleman’s point in Business, Innovation and Skills questions. Some of the increases in capital spending have already taken place. There was a significant increase in the capital outlay on universities, which my colleague the Minister for Universities and Science is seeing through at the moment in the establishment of R and D centres. After the fiasco of further education college building under the previous Government, the current Government are, in a systematic way, restoring the infrastructure of the FE sector.

[George Freeman]

This week, AstraZeneca announced a global restructuring, in which it committed its advanced manufacturing facility to Macclesfield in Cheshire, and moved its global R and D to Cambridge, with £300 million investment and 2,000 employees. The Government have moved quickly to set up a taskforce to help with the changeover of the old site to an incubator. AstraZeneca has congratulated the Government on their life sciences strategy. May I congratulate the Secretary of State and Lord Heseltine, whose birthday is today, on the leadership that the Conservative and Liberal coalition is giving on a modern industrial policy for new businesses?

[Vince Cable]

I accept the hon. Gentleman’s congratulations. Life sciences are a key area. It is a difficult sector, because the business model of pharmaceutical companies is changing—they are taking much of their R and D to spin-off companies rather than having it at their headquarters. That has been painful, but my colleague the Chancellor of the Exchequer intervened to help to make the process in his constituency less painful than it otherwise would have been. However, the decision of that large company to have its headquarters and R and D centre in the UK in East Anglia is a vote of confidence in Britain.

I want to make one more point on the industrial strategy. Apart from supporting successful sectors, we must reinforce those elements of the economy that drive long-term growth—meaning, basically, innovation and skills. That is why I and the Under-Secretary of State for Skills who is responsible for apprenticeships are driving enormous growth in apprenticeships, particularly in key areas such as advanced manufacturing skills. It is also why we must invest significantly in innovation. We have therefore established the chain of catapults, and we have the excellent proposal that my colleague the Chancellor made yesterday for the small business research initiative for small business innovation.

[Jack Dromey (Birmingham, Erdington) (Lab)]

The Secretary of State is right that it was a mistake to cut investment in affordable house building. The £4 billion cut in 2010 brought about a collapse in affordable house building. Housing starts were down 11% last year, 70,000 more construction workers are on the dole, and there has been an 8% contraction in construction. If capital investment is key to getting house building and the economy moving, why did the Government not accept the proposal of my right hon. Friend the shadow Chancellor of the Exchequer for investment to build 100,000 affordable homes, which would have added 1% to GDP, put 100,000 construction workers back to work, and got the economy moving?

[Vince Cable]

Why did the Labour party not do that when it was in government? Why was its first proposal for stabilising the budget to cut capital spending, including on affordable housing? If the hon. Gentleman had read the Budget, he would have discovered that, in addition to the housing policies that will affect private mortgages, it included a significant increase in support for affordable housing in the social sector.

The second long-term change relates to money and banking. One of the big features of the post-crisis economies has been the way in which Governments have had to pursue fiscal consolidation—because of the inheritance they received, and ours was worse than most—alongside supportive monetary policy. I made my maiden speech in 1997 in support of the then Chancellor when he made the Bank of England operationally independent. That was an important and good reform. But we have realised over the years that the world has changed. Inflation took no account of the massive asset bubbles that grew up, and the regime was not prepared for the collapse of the financial system and the difficulties we have had rectifying it. That is why it is right that, following on from the very successful, improvised monetary policies that we have experienced, the Chancellor is now consulting on a changed regime, which will be more flexible and take account of the level of unemployment, the level of nominal GDP and other variables that are crucial to long-term growth.

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

In the past, the Secretary of State has rightly criticised the banks and bankers for their contribution to the serious financial difficulties we are in. Can he therefore clarify whether he agrees with the Chancellor that bankers’ bonuses should be capped?

[Vince Cable]

There already are regulations that affect bankers’ bonuses, which we introduced long before the European Parliament and which firmly cap the amount of bonuses that can be paid out in cash, as opposed to stock, which is not redeemable in the short run. That reform has already been made in order to stabilise the banking system.

I agree that the banking crisis did enormous damage. As someone who has probably spent more time thinking and writing about it than most people in the House, I acknowledge that I have underestimated the damage that was done by the collapse of the banking system, especially the crippled, semi-state owned banks—to such an extent that even if we now ordered those banks to lend more, they would be institutionally incapable of doing so. What we have realised is that there are two problems. The first is the problem that has arisen from the banking collapse itself and the de-leveraging that followed it. The other is the fact that over a decade ago the bankers stripped out their capacity for local relationship banking. Effectively, they looted their banks and denuded them of the capacity to engage in sensible business lending. Of course, that was anticipated in the Cruickshank report, which the Labour Government ignored, but it has done serious damage that makes it difficult to revive conventional business lending. We are trying a series of initiatives to do that.

On Friday, a new tranche of money will be made available for non-bank lending. Today, we had the advanced manufacturing supply chain initiative, which is helping to fund our supply chains. I put in the Library this morning a written ministerial reply on the business bank, which gives a time profile for how that new institution will support challenger banks and new forms of wholesale financing in the banking sector. The Chancellor’s speech yesterday included a positive initiative on equity capital and helping to relieve some of the burdens on companies going to the alternative investment market on the equity side.

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

The Secretary of State is right about the loss of relationship banking: we need to put that right. However, will he acknowledge that businesses can fund themselves in two ways? One is to go to the bank and the other is to raise share capital. What the Chancellor did yesterday on AIM shares and ISDX shares—getting rid of stamp duty—is incredibly useful, but does the Secretary of State agree that business owners need education in how to seek out share capital to grow their businesses? That is key.

[Vince Cable]

My hon. Friend is right. There are a series of bottlenecks in raising risk capital. At the top end, the problem is accessing equity markets, and at the bottom end the problem is in raising angel finance, which is something else that we are trying to support. As it happens, the business bank will have a role not just in lending, but in developing equity markets for small-scale companies.

[Andrea Leadsom]

I was delighted that recently the Financial Secretary announced a consultation on a new independent payments regulator. Does my right hon. Friend agree that if we are to solve the problem of the lack of bank lending to SMEs, we need a raft of new challenger banks? The best way to achieve that would be full account number portability, which would encourage new entrants into the market.

[Vince Cable]

My hon. Friend is right, and the details of the Treasury’s proposals on that point are emerging quickly. For the first time in a lifetime, we are now getting serious challenger banks in the UK, such as Aldermore, Metro, Shawbrook and others, which are an important addition. I hope that the Co-op, the Nationwide and other mutuals that are trying to get into this market will also contribute.

[Sheila Gilmore]

Is not the real problem the collapse in demand in the economy, partly caused by the stripping out of the public sector, why people are not borrowing, why banks are not lending and why companies are sitting on big assets that they are not spending?

[Vince Cable]

There is a demand in the economy. When the Government come forward with proposals to stimulate demand, as they did in the housing sector, the Opposition jump up and criticise them.

[Jim Sheridan]

If press reports are to be believed, a banker is about to receive a £17.5 million bonus. If that is correct, what has the cap been set at?

[Vince Cable]

I deprecate that and I am surprised that the new chief executive of Barclays, who seemed to have turned over a new leaf, has allowed that to happen on his watch. But of course it is a private bank. It is subject to regulation and the high-paid executives will be properly taxed at a higher rate than ever happened under the Labour Government.

While we achieve long-term change, develop an industrial strategy and change the monetary and credit landscape, people have to have a sense of fairness, which is why some of the basic changes, including taxation reforms, are being made. I reminded the shadow Chancellor a few minutes ago of my 13 years in opposition, pointing to the tax regime that applied under the Labour Government, with lower income tax, lower capital gains tax and more generous treatment of non-dom investors than is occurring under this Government. The Opposition complain about a millionaires’ tax break, but they should remember that in office they created a tax haven for billionaires. That is the legacy that we have had to deal with, and we are dealing with it at the top end of the income and wealth scale, as well as at the bottom with our ambitious proposals to lift low earners out of tax. In 2006, when I was shadow Chancellor, I remember explaining these proposals for the first time, and they were ridiculed by Labour as impractical, unaffordable and a fantasy land. In government, we have now delivered them, and some 2.5 million low-paid workers, many of them women, will pay no income tax when these changes are introduced. That is a major change in the direction of providing incentives and fairness, and I am proud to be associated with that and the other reforms that we are putting through in this Budget.

[Several hon. Members]

rose—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. I remind the House that we will have a seven-minute limit on Back-Bench speeches.

13:18

[David Wright (Telford) (Lab)]

It is a pleasure to follow the Business Secretary. He is of course right that there is demand in the economy: it is demand for change. It is significant that last year we had the omnishambles Budget and this year we have had a Budget from a Chancellor imprisoned by his own rhetoric and his own record. What we needed this year was a bold Budget to break us free from the Chancellor’s record of nearly three years of a flatlining economy. We heard a lot about fuel yesterday, and slogans about driving the economy forward. In 2010, the Chancellor said that the economy would grow by more than 2% every year up to 2015, a steady drive on the road to recovery. Well, he has failed. He has not got the UK economy into gear. This debate is about growth. He has failed on growth, and the triple A rating fell off the roof rack on the way.

Budgets tend to unravel as the details are revealed, and we have seen that this afternoon. It is less than a day since the Chancellor sat down, and we have already seen cracks appearing in the second homes subsidy and the Budget as a whole, and I have no doubt that will continue in the coming days. He could have kept it simple. The fact is that for most people the standard of living is under severe pressure. Energy and other everyday household bills are rising, wages are stagnant, real wages have fallen since the Government came to power, and those on the lowest incomes and on benefits are seeing their incomes falling. That is bad for them, obviously, but it also sucks demand out of the economy and creates a crisis of confidence.

The priority of this Budget should have been a dash for growth to instil confidence in the UK economy. We have already heard the Business Secretary admit this afternoon that there was a split in the Government on this strategy; a split that still has not been resolved. The Chancellor has never admitted that he got his economic strategy wrong in the way that the Business Secretary did this afternoon. The problem is that the Chancellor is lashed to the mast of austerity. To break free would be a significant admission of his own failure, so the only cry we hear from the Chancellor is “O Canada!” He is hoping that the new Governor of the Bank of England will adopt a pro-growth strategy to dig him out of this hole with a new monetary approach, because the Chancellor cannot come to this Chamber and admit that he got it wrong.

We should dwell for a few moments on the geographical perspective to the health of the UK economy. Within the M25 ring, the London economy is pretty successful. It is patchy in areas, but it is a major engine for our economy. Outside of the M25, the situation is particularly patchy. As a whole the economy is flatlining, but there are significant regional and sub-regional problems that the Budget did not address at all. Basically, the Government have binned their regional economic development strategy—a comprehensive approach to renewing our towns and cities and ensuring growth. Centre for Cities produced its “Cities Outlook 2013” report recently. It said:

“The 64 cities that Outlook assesses account for 53 per cent of businesses, 58 per cent of jobs and 60 per cent of UK economic output. As such, policy that can help to stimulate urban growth by making the most of cities’ distinctive strengths and weaknesses will help stimulate growth of the national economy.”

Telford is one of those 64 cities, and we need help. Unemployment in Telford is stubbornly high at 7%, and a large proportion of the unemployed are aged between 16 and 24. Median rates of gross weekly pay are lower than elsewhere in the west midlands and England. The Budget did nothing at all to help young people. I did not hear the Chancellor talk about the problems faced by young people; it certainly was not a major element of his Budget.

We are not sitting back and doing nothing in Telford. We are trying to make a difference. The Labour council is leading a major drive on apprenticeships, and Telford College of Arts and Technology is working hard to offer training and development in local companies. We are delivering new schools across the borough through the Building Schools for the Future programme—the last great legacy of the previous Labour Government—and providing new learning environments. We are regenerating estates such as Brookside, and are making a significant investment, in partnership with the private sector, in the town centre as part of the Southwater scheme.

What we need now is a Government who are as keen as our Labour council in Telford and Wrekin to make a difference. We need a city deal for Telford. Twenty cities have been asked to bid in the second round of “city deal”, in addition to the major cities that have already secured it. We need the flexibility to work with Government to bring in investment. In Telford, Homes and Communities Agency land has been sitting idle since the new town corporation was wound down, and it is ready for development. We could be developing a profit-sharing deal with the Government for those land sites, working together to shift them off the Government ledger, getting investment for housing and infrastructure into our town, and profit-sharing with the Treasury. That would be good for the local community, good for the Treasury and would get the economy moving. I call on the Business Secretary to think about that. I hope he is willing to meet representatives, along with the Secretary of State for Communities and Local Government.

We need a flexible approach to the regional strategy. The Government have totally destroyed their regional approach to economic development. They need to think again about the existence and structure of regional development agencies. I spoke to the business community in Telford after the Budget via a phone-in conference. They told me that they are extremely worried that the local enterprise partnerships are not dynamic or effective enough, and do not knit together different elements across the region.

Telford needs to be driving for growth. We have the capacity to do that, and the Government need to help us. I see nothing in yesterday’s Budget that will help us, and I hope they change course. They could have done a lot things, but a major measure would have been to cut VAT. VAT is sucking demand out of the economy, and they could have moved on that yesterday.

13:25

[Mr Tobias Ellwood (Bournemouth East) (Con)]

It is a pleasure to participate in this important debate.

Labour has had its moment to spell out what it would do. We heard a lot of noise yesterday, and we have heard a lot today. What we thought was Keynesian economics was actually Hayek’s economic policy, because Labour is saying “Let’s do absolutely nothing.” It is welcome news that in the coalition’s fourth Budget, following the biggest financial crisis in our history, the deficit has been reduced by one third, employment is at record levels and private sector jobs are finally replacing those in the public sector by a ratio of 6:1. It is a difficult climate out there.

[David Rutley (Macclesfield) (Con)]

Does my hon. Friend think that one reason why Opposition Members are so gloomy is that they have failed to notice that the International Monetary Fund growth forecast for France and Germany for this year and next is lower than that for the UK?

[Mr Ellwood]

My hon. Friend makes the point I was about to come on to. We are suffering from international gloom. Along with other major economies around the world, such as France, Germany, Japan and the United States, we are faring better, despite the problems of high oil and commodity prices and the frustratingly slow resolution of the eurozone crisis. That is thanks to the Government’s strategy of monetary and fiscal responsibility, along with supply-side reform.

In layman’s terms, monetary policies reflect the price the Government pay to borrow money and the total supply of money itself. It is thanks to our low interest rates that the cost of borrowing for individuals, banks and the Government is low. That helps to keep inflation low and provides the stability that investors need for confidence in the markets. On fiscal policy—how much money goes into the pot through taxes, and what comes out to influence economic activity—this Government are smaller than the previous Government. They have cut waste and are costing the taxpayer less, which is very positive. Indeed, the public sector borrowing requirement is down by a third from its post-war peak, only three years ago, of 11.2% of GDP.

There are many incentives in the Budget to help influence economic activity. I will mention just three main measures: the introduction of the £10,000 personal allowance, which essentially is a £700 tax cut for 24 million people; the new £2,000 employment allowance; and a cut in corporation tax to just 20%, which makes us one of the most competitive economies in the G20. They are all signs that Britain is open again for business.

There is not enough time to go through the other key aspects of the Budget that were mentioned in yesterday’s debate. The Help to Buy scheme, the new mortgage guarantee scheme, the cancellation of the 3p rise in fuel duty and the introduction of tax-free child care are all very welcome. I particularly welcome the £3 billion capital spending commitment and the £1.6 billion of sector-targeted funding, some of which I hope will come to my constituency of Bournemouth East, and to Dorset, which is developing an international reputation in aerospace industries and the digital economy. Indeed, it is nicknamed the silicon beach of south England.

The 0.7% GDP target for overseas development assistance spending is an historic achievement and sends an important message to the rest of the world about our lead role in the international community. Unsurprisingly, given the waste and mismanagement under the last Government, some are sceptical about how the money is being spent, but it is clear how ODA funds can be spent. It matters not who signs the cheques; what matters is what the project does, although traditionally the Department for International Development has signed them. On the modern battlefield, however, it is no longer just about defeating the enemy, but about giving the people who have been liberated the skills to look after themselves. Clearly, war fighting does not qualify for ODA funding—that would be wrong—but peacekeeping and nation-building tasks do.

[Bob Stewart (Beckenham) (Con)]

In 1992-93, when I was sent to Bosnia in a peacekeeping role to deliver humanitarian aid, the cost of my deployment was met by the Ministry of Defence. I felt, and still feel, that the Overseas Development Administration, as DFID was then known, should have paid some of the costs of our operations in the Balkans.

[Mr Ellwood]

My hon. and gallant Friend’s thinking is the same as the Secretary of State for International Development’s and the Prime Minister’s. Those stabilisation skill sets—post-conflict and nation-building skills—should be funded by DFID but executed by the MOD, because although the budget sits with DFID, it is clear that the MOD is doing incredible work in this post-conflict world. We could have saved £24 billion in Afghanistan and £8 billion in Iraq had we moved from war-fighting to peacekeeping far quicker and avoided the delay that followed completion of the fighting. I urge the Chancellor to consider that matter carefully.

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

Does the hon. Gentleman think that the Secretary of State for International Development should come here to explain the under-spend, on page 70 of the Red Book, of £500 million in the DFID budget and tell us which projects, programmes, international subscriptions and other things—perhaps relating to peacekeeping—have not been paid this year, but have been stopped in order to sort out the borrowing figures?

[Mr Ellwood]

Before I reply to that, Mr Deputy Speaker, may I point out that the clock did not stop? I hope you will give me some injury time.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

The hon. Gentleman will get no injury time, because he has given way twice before.

[Mr Ellwood]

I stand corrected. I understood that I got an extra minute for the first two interventions and that after that, if someone intervened, the clock stopped.

It is disappointing that we have not heard any answers from Labour. It has offered nothing constructive; in fact, it is in a state of denial. Its strategy seems to be to employ a little inaccuracy and a spot of amnesia, and to avoid a ton of explanation. It is now apparent that under Labour, government was too big, too costly and too inefficient. Labour allowed banks to lend money to people who could not afford it, using financial instruments they did not understand. When the history books are written, it will become apparent just how much damage the former Labour Chancellor and Prime Minister did. He will probably go down as one of the most disastrous Chancellors in history.

The former Chancellor not only doubled national debt, but killed off British competitiveness and introduced the “something for nothing” culture that this Government are now undoing. Labour squandered their 13 years in office, and it is now left to this Government not only to solve the economic mess and make Britain more competitive again, but to simplify the tax system, curb immigration, modernise the benefits system and restore respectability to our pensions system. Labour has proven the adage that occasionally applies in this Chamber: the democratic right to be heard here does not include the right to be taken seriously.

In conclusion, this is a constructive and progressive Budget that will provide a further stimulus to the economy and help hard-hit families and individuals seeking to get on. From my days as a young officer, my philosophy in life has been not to complain about the weather, but to march with determination out of the rain. That analogy holds today, as this Conservative-led Government lead Britain out of the economic storm, while Labour, which created the mess, offers no helpful solutions whatsoever, other than to repeat past mistakes such as encouraging the spending of money we do not have. We will not stop reminding the public of the last Government’s mismanagement of the economy. Whatever speculation there might be about opinion polls, small parties or even possible Lib-Lab pacts, the bottom line is clear: either a Miliband or a Cameron will occupy No. 10. I know whom I would prefer to lead the country, and it is not the former adviser to one of the worst Chancellors in history.

[Several hon. Members]

rose—

[Mr Deputy Speaker]

I remind hon. Members that they get two hits with two minutes, but no extra time for interventions after that. Hon. Members should also be aware that every intervention could knock someone off the bottom of the list. If someone is desperate to intervene, therefore, they should understand if they do not get called in the end.

13:35

[Pamela Nash (Airdrie and Shotts) (Lab)]

It is a pleasure to follow the hon. Member for Bournemouth East (Mr Ellwood). Interestingly, he used the analogy of walking out of the bad weather. The Chancellor used exactly the same analogy on Radio 4 this morning, but he blamed the economic weather for everything that was going wrong with the Government’s economic policy.

I am grateful for the opportunity to put forward my constituents’ deep concerns about the Budget. A Budget should speak to the entire country, but when the Chancellor delivered his statement yesterday, he spoke not for one nation, but for individuals, such as the millionaires who will benefit from his top-rate tax cut in just a few days. Today, I shall focus on the impact that the Budget will have on my constituents and the effects that his economic policies have had in Airdrie and Shotts.

The unemployed claimant rate in my constituency stands at 8.4%. That is not only higher than rates in the rest of Scotland and the UK, but much higher than when Labour left office. The same applies to the employment count across Scotland. Today, there are 145,000 jobseeker’s allowance claimants in Scotland—the same as the population of Dundee. This dole queue of people would reach from Edinburgh to Glasgow. The claimant count in my constituency is now three times what it is in the Chancellor’s constituency. In 2007, two people were going for every vacancy, but now 12 people are chasing every job.

Long-term unemployment is also an issue in my constituency. According to the stats, the number of people who have been unemployed for more than a year is up by 52% and the number of young people who have been unemployed for 12 months has risen by 116% in the past year alone. That is not acceptable. Youth unemployment in Scotland is one third higher now than it was in May 2010, with 38,000 young people claiming jobseeker’s allowance in Scotland—more than the entire population of Airdrie. How can it be acceptable that such a large number of young people are blocked from achieving their dreams and aspirations after two years of austerity measures?

The Chancellor called this Budget the aspiration Budget, but not one word of it spoke to young people. These are not faceless statistics; I am speaking about my constituents and people I have grown up with and known my whole life. Just a few days ago, a constituent I went to school with contacted me. He wanted to tell me how much the Government’s policies were affecting him. He served his country in the Army, before returning home and working as a security guard on a construction site. Like many of those in the industry, however, he now finds himself unemployed.

Not only does my constituent have to worry about finding a job in an economy facing the increasing likelihood of a triple-dip recession, but he will now be hit by the bedroom tax. He rents a modest two-bedroom home to allow his child to visit him at the weekends, but owing to his current situation he is now dependent on housing benefit and has the choice either of not having his child stay overnight in their own bedroom or being forced to move away from the area in which, like me, he has lived his whole life. How many Government Members truly understand the problems he is facing? When they talk about tough choices, I doubt that any of them ever have to make the decisions that he has to make, choosing between seeing his child and paying the rent.

The case of my constituent is not an isolated one. The National Housing Federation has said that 2,000 people in my constituency are losing out from the bedroom tax. My local authority of North Lanarkshire council has 5,500 tenants who will be affected by it, but at the last count it had just 26 one-bedroom properties available to rent. With those figures, where are those 5,500 people supposed to go? There is nowhere for them to go; they simply face a painful benefit cut. This is an attack on our most vulnerable and on many who are struggling with bills every month and with under-employment, and it is resulting in millions of pounds being taken out of my local economy.

If the Government really want to solve the problem, one of the things they should do is build more houses. That would go a lot further to support growth than the bedroom tax or the mortgage guarantee that was announced yesterday, which is already falling apart at the seams. In Scotland, housing makes up 40% of the construction sector. Every £1 spent on housing generates £3 in the wider economy. It is a no-brainer. Every new home creates two jobs in the construction sector and four in the supply chain. When construction makes up a third of the businesses in my constituency and around one in 10 jobs, hon. Members can see why I was hoping that capital spending in Scotland would be a bit higher than was announced yesterday. The Scottish Government could also do a bit more with the money they already have. Some 40,000 construction jobs have vanished in Scotland since the Scottish National party came to power, and in December more than 14,000 construction workers were still on the dole.

There are things the Government could be doing. For example, my local council—Labour-run North Lanarkshire—is working to help to create private sector jobs through its youth investment programme, which helps small businesses by paying 50% of the cost of employing a young person for the first year. It also has programmes helping older workers to return to work. I hope that the Government might go away and look at that example—I am happy to provide more information on it—to see how simple, practical support is making a difference to help small and medium-sized businesses and create employment just where it is needed.

To conclude, yesterday’s Budget offered none of the helpful measures that I and my constituents were hoping for. We need a change of course to bring growth back into our economy. If this Chancellor will not change course, the next Labour Government will.

13:42

[Mr Nick Gibb (Bognor Regis and Littlehampton) (Con)]

It is a pleasure to follow the hon. Member for Airdrie and Shotts (Pamela Nash), but I should point out to her that unemployment in her constituency has fallen by 3.8% over the last 12 months and youth unemployment by 9.3%.

I welcome this Budget, in particular the cut in corporation tax to 20% from April 2015; the rise in the personal allowance to £10,000; the cancellation of the planned fuel duty rise; the new measures to counter tax avoidance, particularly the information-sharing agreements that have been reached with the Isle of Man, Guernsey and Jersey; and the abolition of stamp duty on share transactions on small company growth markets, which will help to reverse the bias in the tax system towards debt financing and improve the tax position of equity financing. I also welcome the new remit for the Monetary Policy Committee, which means it can issue guidance about future interest rate expectations. Monetary policy is key to reviving growth, and the fact that the monthly 12-month growth rate of M4—the broad money supply—has been negative since October 2010 demonstrates the need for continued low interest rates.

Above all, I welcome the Government’s continued commitment to fiscal consolidation and restraint in public spending—policies that in my view have been remarkably successful over the last three years in reducing the budget deficit from a staggering £159 billion in 2009-10, or some 11.2% of GDP, to £121 billion in 2011-12, or some 7.9% of GDP. There have been two guiding principles to the Government’s fiscal policy—the fiscal mandate—which says that the structural deficit shall be eliminated within the five-year forecasting horizon. As table B.6 on page 105 of the Red Book makes clear, the cyclically adjusted surplus on current account—that is, the structural deficit—will move into a surplus of 0.1% of GDP by 2016-17, a year ahead of the five-year time horizon. The supplementary target—that the Government’s total accumulated debt should be starting to fall as a percentage of national income by 2015-16—will be met by 2017-18, with a fall from 85.6% of GDP in 2016 to 84.8% in 2017-18. That is two years later than the target; nevertheless, it is forecast to be achieved. The fact that the Chancellor has not tightened the fiscal position further in order to meet the target by 2015-16 is evidence that the Government’s economic policy is far more nuanced than critics suggest.

My right hon. Friend the Business Secretary, in his article in the New Statesman cited a paper by Carmen Reinhart and Kenneth Rogoff that made the important point that

“financial crises are typically followed by slow and difficult recovery.”

Given that Britain had the biggest banking sector relative to GDP of any major country, it is inevitable that Britain’s recovery was going to be slow and difficult. The key is that it is heading in the right direction, which is also the view of most informed commentators, such as the OECD. As it said in its 2013 economic survey of the UK, which was published last month,

“The fiscal stance remains appropriate”.

It went on:

“the Government’s decision in the December 2012 Autumn Statement to continue with its existing consolidation plans and not to override the automatic stabilisers in order to meet the supplementary debt target is appropriate.”

In other words, the fact that accumulated debt will not start falling as a percentage of GDP until 2017-18 instead of 2015-16 is not only acceptable; it is also a beneficial fiscal stimulus—the automatic stabiliser. As the Institute for Fiscal Studies says in its “Green Budget”,

“since meeting the target would do little to ensure the sustainability of the UK’s public finances, the fact that it looks set to be missed should not, on its own, cause significant concern about fiscal sustainability.”

As my right hon. Friend put it in his article, the Government have been

“sufficiently pragmatic to allow the fiscal consolidation to drift from four years to seven.”

When I listen to the shadow Chancellor arguing that we should spend and borrow more to stimulate demand in the economy, I would argue that because the Government have done that, but through the automatic stabiliser, they maintain the confidence of the capital markets, whereas his approach would not. As a consequence, there are 1.25 million new private sector jobs, while unemployment has fallen over the last 12 months by 4% and youth unemployment by 13%. Indeed, in the shadow Chancellor’s own constituency, unemployment has fallen by 2.5% and youth unemployment by 12.5% over the last year.

To those who argue for stronger spending cuts to fund further tax cuts, I would argue that the fall in public sector employment of 300,000 between 2010 and 2013 represents a sizeable reduction in the state sector, with the IFS forecasting that the figure will fall by 900,000 in total by 2017-18. I would also argue that the cuts in corporation tax are precisely the supply-side tax cuts we need to stimulate the business sector, while the rise in the personal allowance is likely to be the most effective tax reduction measure to boost demand.

If there had been more time, I would have said more about exports and the damage and the threat that the eurozone crises have already caused and may continue to cause to the economy’s growth prospects; about the importance to Conservatives of continuing to maintain strong spending on the NHS, particularly with a growing elderly population and ever more developments in medical science; and more about domestic demand in the economy, which the figures show is strong. In short, I believe it is vital that the Government continue on this rocky road to recovery and do not allow themselves to be pushed off course by siren voices claiming that there are short cuts, which of course there are not.

13:49

[Dan Jarvis (Barnsley Central) (Lab)]

I am grateful for the opportunity to contribute to this important debate at this important time. The Chancellor told us yesterday that his priority was to promote an “aspiration nation” with a Budget for those who want to work hard and get on. I hope he will understand if we are sceptical about his ability to deliver, given that in each of his last three Budgets he set out his key priority and test for the Budget, and in each of those three Budgets, he has failed to deliver.

In 2010, the Chancellor’s priority was tackling the deficit. That Budget was, he said, the Budget to deal with our country’s debts. But what has happened to our country’s debts? Today, national debt as a percentage of gross domestic product is not forecast to start falling until 2017-18, and borrowing is forecast to be £245 billion more than planned at the time of the spending review, to pay for the mounting costs of this Government’s economic failure.

In 2011, the Chancellor’s priority was promoting growth. That was the Budget that the Chancellor named the “Budget for growth”. Since 2010, however, the UK economy has grown by just 0.7%, compared with the 5.3% forecast at the time. Last year, the UK endured a double-dip recession and the economy shrank by 0.3% in the final quarter. Only three other G20 countries have grown more slowly than the UK in that time, and the Office for Budget Responsibility’s growth forecast has halved from 1.2% to 0.6% since the autumn statement.

In 2012, the Chancellor placed an emphasis on rewarding those who work. I concede that he has made some progress towards that goal. For the wealthiest in today’s society, there is a huge reward for work—in fact, a £100,000 reward. Unfortunately, it is those who are struggling on low and middle incomes who are suffering, including many people in constituencies such as mine.

Barnsley is a town with a proud history and it should have a bright future, but each week, I see what the Chancellor failed to address yesterday: a lack of opportunity, a lack of growth in our economy and a lack of vision from a Government who are more interested in running the country than in changing it. According to the latest figures for my constituency, the number of people claiming jobseeker’s allowance is at its highest since May 2010, at 7.8%. The figure for young people claiming JSA is 13.7%.

[Duncan Hames (Chippenham) (LD)]

Unemployment is an important matter, and it is important that our constituents should have jobs. Is the hon. Gentleman trying to tell us through those statistics that unemployment in his constituency was higher under the last Labour Government than it is today?

[Dan Jarvis]

I was simply stating a matter of fact: unemployment in my constituency is higher now than it was in May 2010. The number of young people claiming jobseeker’s allowance is now 13.7%, which is higher than it was in 2010. Those people in my constituency want to work, to provide for their families and to earn a living. They want to get on the housing ladder, to save for their old age and to contribute to our town, but the jobs are simply not available.

Yesterday, we heard the Chancellor set out his latest scheme to provide growth: a new infrastructure plan. During the course of this Parliament, we have already heard about the Government’s national infrastructure plan—in 2010, 2011 and 2012. Despite the promises, however, infrastructure spending in the public and private sectors has fallen, year on year, according to the Office for National Statistics. Frankly, my response to this latest announcement is, “We’ll believe it when we see it.”

A lack of growth has a multitude of effects, and they are being felt most acutely by our low and middle income families. Utility bills are rising, the price of food is rising and fuel costs are rising, all at the same time as wages are stagnating. A typical low income family will see their net income fall by 15% by 2020, while the wealthiest households will see their living standards grow.

Fairness has been the one consistent priority for the Chancellor in every Budget since 2010, yet fairness is the area in which he is failing to deliver the most. This Government’s favoured slogan, “We’re all in this together”, simply does not ring true as inequality deepens and the Chancellor’s policies target those who have the least to give. It cannot be right that millions of ordinary families are being forced to pay more for this Government’s economic failure, through cuts to tax credits, child benefit and maternity pay and through the bedroom tax, while at the same time, the most well off in society are set to receive an average £100,000 tax cut.

The Budget, and the Chancellor’s record, have failed to secure economic recovery, and that is certainly not fair. We have had three Budgets and three failures. On every economic test that the Chancellor has set himself, he has fallen short. On deficit reduction, on growth, on rewarding those who work and on fairness, he has failed those who need the Government the most. Despite numerous opportunities and calls to change course from the Opposition and from Members within his own party and even from members of the Cabinet, the Government continue on a reckless course that is serving only to prolong the economic crisis, and it is people in my constituency of Barnsley Central who, sadly, will pay the price of this failure.

13:56

[Andrew Griffiths (Burton) (Con)]

I recognise that time is short so I will do my level best to keep my comments as brief as possible. I speak as the Member of Parliament for Burton, the home of British brewing, and as the chairman of the all-party parliamentary beer group. It is therefore incumbent on me to put on record my thanks, and those of the brewing industry, for the Chancellor’s momentous decision yesterday to scrap the beer duty escalator and cut beer duty by 1p. We cannot underestimate the importance of the decision for brewers, for publicans and for beer drinkers across the country.

In his speech today, the shadow Chancellor dismissed the 1p cut in a bit of a flippant way, but I think that the 1,745 people who are employed in brewing and pubs in his constituency will be hugely grateful to the Chancellor, who has shown himself to be on the side of the publicans and beer drinkers of this country. The previous Chancellor of the Exchequer appeared on posters in pubs up and down the country stating that he was “barred from this pub”, because his Government had chosen to introduce the beer duty escalator, which has resulted in beer duty rising by an incredible 42% since 2008. That has contributed to the closure of many of our communities’ pubs in that period.

I am therefore delighted to support a coalition Government who have done more for brewers and pubs than any other Government for a generation. I went to the House of Commons Library yesterday and spoke to the Treasury expert. I asked him when a Chancellor had last cut the duty on beer. He replied, “Mr Griffiths, this might take some time, as it was so long ago. I shall have to go away and research it.” He came back with the answer: Derick Heathcoat-Amory was the last Chancellor to cut the duty on beer, in 1959. Someone who was just old enough to enjoy a pint of great British beer at that reduced price in 1959 would now be 72 years old.

It is important to applaud the campaign that has led to these changes. As the chairman of the all-party parliamentary beer group, I want to thank colleagues from all across the House who have supported it. Members on both sides have worked incredibly hard on behalf of their brewers, publicans and beer lovers. We all recognise the importance of the community pub and the role it plays in the heart of our constituencies. This measure provides us with a real opportunity to support those pubs.

[David Rutley]

I join many others in paying tribute to the great work my hon. Friend has taken forward. I received one tweet yesterday from the Wharf in Macclesfield saying this was

“a good Budget for pubs, the brewing trade and all industry”.

Has my hon. Friend received similar plaudits from people across the country?

[Andrew Griffiths]

I thank my hon. Friend for the support he has given to pubs and breweries as part of this campaign. I agree: I have been overwhelmed by the number of publicans, brewers and members of the Campaign for Real Ale and beer lovers who have welcomed this announcement. He quotes one brewer and I will quote another—Belinda Sutton from Elgood & Sons in Wisbech in Cambridgeshire who said:

“The result could be the saving of our brewery, as this was just what we needed to…stimulate trade in our pubs and hopefully increase production.”

That is so important: every brewery and every pub in our constituency are important employers, so it is fantastic that we can give them this boost. I am absolutely sure that when this cut is introduced on Sunday, beer drinkers across the country will be raising a glass to the Chancellor and toasting his health.

I am hugely sorry that the Economic Secretary is not in his place on the Front Bench, as we owe him a huge debt of gratitude. Within days of him becoming a Minister—I think it was his first ministerial duty—he spoke in a Backbench Business Committee debate to which many Members contributed. He said then that he was listening. He is a listening Minister who has listened on behalf of pubs and brewers across the land.

I would also like to pay tribute to CAMRA and its thousands of supporters who took part in this campaign and who participated in the mass lobby organised by Emily Ryan and Jonathan Mail to explain to Members of Parliament just how important their community pubs and great British beer are to them. I commend, too, the work of the Beer and Pub Association, which works tirelessly to build a bright future for pubs and breweries across the country.

I end my comments there. Let me just say that this is a great Budget for brewers, a great Budget for beer and a great Budget for beer drinkers in Britain.

14:02

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

I want to raise an issue that is close to my heart—the Scotch whisky industry—not just because it is an excellent tipple when taken responsibly and because I am chair of the all-party group on Scotch whisky, but, more importantly, because that industry provides hundreds, if not thousands, of jobs in this country.

The Chancellor suggested yesterday that he was cutting beer duty to help boost pubs, yet as 40% of pub sales come from spirits and wine, his duty increases on Scotch whisky and other drinks mean that when it comes to pubs, he has given with one hand and taken back with the other.

[Andrew Griffiths]

Will the hon. Gentleman give way?

[Jim Sheridan]

No, I do not have time.

Like the Chancellor, I wish to see British businesses succeed to help to secure British jobs. The Chancellor talked about the opportunity for UK business that a successful free trade agreement would bring. He talked about backing businesses that are a global success. For the Government and the European Commission, improved market access and reduced discrimination are priorities for the Indian free trade agreement talks. In a spectacular lack of joined-up government, in one speech the Chancellor has attacked Scotch whisky—the one industry that is currently investing for international growth to India and elsewhere—by increasing discrimination against it here at home.

[Andrew Griffiths]

Will the hon. Gentleman give way?

[Jim Sheridan]

No.

What sort of signal does that send to overseas markets? British ambassadors around the world who are trying to help Scotch gain fairer trading conditions will be shaking their heads at the example set by our own Chancellor here in this country. This industry accounts for 25% of UK food and drink exports, generating some £134 a second for the UK balance of trade, yet the Chancellor’s only action is to penalise it in its home market. The UK is the third largest market for Scotch whisky in the world, and some companies depend on the UK market for success.

[Andrew Griffiths]

rose—

[Jim Sheridan]

As I have said, this industry employs people in areas where few alternative jobs exist. The Chancellor threatens jobs in such areas, as the Chief Secretary presumably told him. [Interruption.]

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. Mr Griffiths, you have already spoken. The Member does not want to give way and we do not need a running commentary from the Back Benches.

[Jim Sheridan]

Thank you, Mr Deputy Speaker. I have been heckled by better.

Perhaps the Chancellor will explain to pensioners enjoying a dram why they should have to pay 48% more duty for the alcohol they enjoy than their neighbours who prefer a beer. Only three countries in the EU penalise Scotch whisky more than the UK does. It is time to halt the duty escalator for all and to start backing, not penalising, our successful industries.

Let me deal briefly with pensions. Like many of my colleagues here, I have a large number of pensioners in my constituency, and I am concerned that this Budget will do nothing to reduce pensioner poverty, currently standing at 1.7 million people nationally. There are no proposals to help pensioners who are struggling with rising living costs.

Moving on to growth, in a written answer I received on 17 January, the Economic Secretary told me:

“The OBR forecast that real household disposable income will grow in each year from 2013 to 2017.”—[Official Report, 17 January 2013; Vol. 556, c. 866W.]

In December 2010, the Chancellor was equally confident, telling CNBC:

“Britain is on the mend. We got pretty steady and sustainable economic growth forecasts, pretty sustainable increases in employment, a steady decline in the deficit.”

Well, how wrong could this Government be? Real wages are set to fall by 2.4% over this Parliament. The OBR has also halved the growth forecast for this year and downgraded it for next year, too. I ask the Chancellor to see some sense and stop relying on the private sector to provide the boost to the economy that is needed. Millions will be squeezed by another year of capping public sector pay, while the private sector has simply not managed to perform as well as was needed at a time when growth has stalled.

A sensible Budget would have seen an intervention to legislate for a living wage, rather than giving the tax break to millionaires that is coming up in a few days’ time. That would not only be fair on working people, but could help inject the economy with consumer spending power. The most ironic part of this plan is that the Chancellor has not even succeeded in reducing the deficit—the golden goal that we have been suffering these tax cuts in order to achieve. Borrowing is now forecast to be £245 billion more than was planned at the time of the spending review. We will not have balanced books, but we will have low-income families paying the price, while millionaires continue to count their money.

I concur with the views of the TUC, which welcomes the British business bank but is calling for more resources to support businesses on a larger scale and for the bank to be able to raise funds in the capital markets as comparable banks do.

I and, I am sure, my constituents do not see this as an aspirational Budget, but as a desperation Budget.

14:09

[David Rutley (Macclesfield) (Con)]

I am sorry to disappoint the House, but I will not be speaking about beer—[Hon. Members: “Oh!] I said I was sorry. I will not be speaking about spirits either, but I will—

[George Freeman]

Lift our spirits!

[David Rutley]

I will indeed lift our spirits. Given the co-operation of my hon. Friend, I will also say a little about life sciences. Let me begin, however, by joining other Government Members in welcoming a Budget which has delivered a positive response that recognises the needs of hard-working people, and which, as others have pointed out, has clearly demonstrated that the doors of British business are firmly open.

It is sometimes wondered whether “To intervene, or not to intervene” is the question when it comes to industrial policy. I believe that in normal free, competitive markets intervention should be minimal, but that, given the burden of regulation that was imposed on the British economy for 13 years by the Labour Government, the question needs to change from whether there should be intervention to how that intervention can take place effectively. For me, the answer to that question is simple: we need to flatten the barriers to growth, which is exactly what Government Members are determined to do.

We need only consider the recent experience of our northern neighbours to see how that can be achieved. Sweden has enjoyed tremendous success since the mid-1990s with an ethos of deregulation across the economy. Estonia had 2,000 enterprises in 1992; by the end of 1994, the figure had ballooned to 70,000. By 2003, an economic basket case with inflation of 1,000% in 1992 had spawned the invention of Skype. There are clear lessons to be learnt from those northern neighbours, the most fundamental being that if industrial policy is to work, there needs to be a broadly “horizontal” approach. That does not mean being laid back, but it does mean having a more laissez-faire confidence in the ability of businesses to identify and satisfy customer demand—as they are best placed to do—and providing the right foundation for enterprise to flourish across the board, rather than backing policies in the sense of picking winners. That is the course the Government have charted, and I am delighted they are sticking to it.

We have an industrial policy with a foundation that encourages enterprise across the board and, in key sectors, focuses on the removal of the roadblocks that prevent growth, rather than the line-by-line, multi-targeting Brownite plan for daily tactical interventions that we have seen in so many parts of the public sector. We want that foundation to consist of low taxes, a high skills base and deregulated, competitive markets, and those are being put in place.

The Government are making good progress. Before the Budget, we were on track to have the lowest corporation tax in the G7; now, as a result of the Budget, we are on track to have the lowest corporation tax in the G20—20%—by 2015. The new £2,000 employment allowance will help to spur growth and build on the Government’s successful record of creating jobs in the private sector: the private sector, not the public sector. In an enterprising constituency such as Macclesfield, where an unusually high proportion of the population are self-employed, reforms like those can tip the balance for sole traders, encouraging them to incorporate themselves in businesses that can grow, and for the self-employed, encouraging them to become regular employers.

Those are positive steps, and the Red Book goes further. It provides an important update on the progress the Government are making with their industrial policy, and demonstrates that they are breaking down barriers in certain sectors of industry and in certain local areas. I welcome the creation of the single local growth fund, which will be devolved to local level through local growth deals.

Some industrial sectors will always have greater prospects for growth than others. The Government’s industrial strategy, announced last autumn, identified 11 broad sectors that the Government want to support, including advanced manufacturing, creative industries and life sciences. That approach is bearing fruit in the case of life sciences. The Government’s “One Year On” review shows that deregulation is helping to reduce the time taken to set up clinical trials from 600 days to a 70-day benchmark. Those are important steps which need to be mirrored in many other sectors.

This week we were given challenging news in AstraZeneca’s restructuring strategy statement. The good news is that, according to its plans, the Macclesfield manufacturing site will be secure, retaining 1,800 jobs which will be safeguarded for years to come. However, AstraZeneca also announced changes in the research and development plant at Alderley Park. The fact that 700 jobs have been safeguarded there is important, but the R and D facilities will move to Cambridge, which has created uncertainty for the employees. I am working with AstraZeneca to ensure that there are plans to provide them with proper careers advice and the support that they need.

The next priority—a vital priority for Alderley Park, for the sub-region, for the north-west and for the UK economy—is to ensure that the site has a vibrant future. The way in which to do that, and the way in which we are committed to doing it, is to provide a bio-science park where other businesses can go to work. We are working with the Government, and I am delighted to say that we have set up a taskforce. Evidence from other sites where the experience has been similar suggests that there will be spin-out operations.

We need to harness that energy, and ensure that we secure money from the regional growth fund on an emergency basis so that we can support this vital part of the UK’s life sciences sector. I am committed to doing that and to working with the Government, and I will knock on every door to make sure we receive the support that is required.

This Budget has been a huge success for British business, and I am sure that it will lead to further successes if we break down barriers, not just in life sciences but in many other sectors.

14:16

[Susan Elan Jones (Clwyd South) (Lab)]

I am grateful to you, Mr Deputy Speaker, for allowing me to speak in this important Budget debate. I shall make a relatively short speech, because I know that many other Members wish to speak. I make no apology for focusing on my constituency, and on the people who elected me to be their representative in Parliament.

I do not think there is a single issue in my area that people care about more than jobs, and I entirely agree with them. My constituents know that without work, there can be no community and no prosperity. Much concern has rightly been expressed about the fact that growth in our economy now stands at less than a seventh of the amount that the Chancellor anticipated in his 2010 spending review: 0.7%, rather than the 5.3% that was forecast at that time. However, I believe that we are right to be even more concerned about the fact that yesterday the Chancellor, rather alarmingly, had to admit that the growth forecast for this year had been cut in half, to just 0.6%. The forecast by the Office for Budget Responsibility that borrowing will hit £114 billion this year, instead of the already immense £108 billion that was previously forecast, should fill us all with concern, as should the fact that yesterday’s UK unemployment figures were up by 7,000 to 2.52 million.

It troubles me, in human terms, that according to the very latest unemployment figures, one person in every 20 in the economically active population aged between 16 and 64—1,770 people—in my constituency is unemployed. I believe that that figure would be even higher were it not for the serious efforts of the Welsh Government’s Jobs Growth Wales fund, which has provided 4,000 jobs for young people throughout Wales.

On the day on which a new Archbishop of Canterbury is to be enthroned, I think that we can do worse than reflect on the words of one of his great predecessors. Archbishop William Temple wrote:

“The worst evil of unemployment is in its creating in the unemployed a sense that they have fallen out of the common life. However much their physical needs may be supplied the gravest part of the trouble remains; They are not wanted!”

Those are the words of someone who lived through the great depression of the 1930s, and who realised that without the politics of one nation, our country could never have stood against fascism. They are, I believe wise and prophetic words for us today. That is why I believe that discussions about unemployment affect us all, and why unemployment can never be seen as a price worth paying. It is why I am deeply disappointed that the Chancellor did not take the step yesterday that my party would have taken by guaranteeing a job for every young person out of work for a year or more and for every adult unemployed for more than two years—funded by a fair tax on bank bonuses and changes to pensions tax relief for the very richest. That would be a far better investment than the subsidy for second homes. For Labour Members, it is the flesh and blood of one nation politics and would have been the best and fairest option.

Real action on national insurance to help small businesses take on more staff would have been the fairest option too. Any Government Members awake at this point may say, “Did you not hear what the Chancellor said yesterday?” Of course I did, and I like the idea of the national insurance cuts for employers so much that I am delighted to be a member of the party that proposed them. It is just that, in the interests of fairness, growth and getting our economy going again, I have to ask: if it matters so much to him, why will he not do it now? Why does he think that excellent local small businesses such as the Community café in Rhosymedre should not be supported this year, yet millionaires will get their tax cut from next month? Why will he not commit to a British investment bank? The hon. Member for Burton (Andrew Griffiths) spoke eloquently about the Campaign for Real Ale and real ale pubs. Unlike him, I have last year’s CAMRA pub of the year in my constituency. One of its biggest problems in setting up was that bank managers persistently refused it loans. It is exactly the sort of programme that our British investment bank would support. The Government’s thinking on this one just does not make sense.

[Guto Bebb (Aberconwy) (Con)]

In view of the need to support small businesses with finance, how can the hon. Lady justify in the current economic scenario Finance Wales, which is funded by the Welsh Government, giving out loans at 8% or 9% above base?

[Susan Elan Jones]

I am sure that we could carry on this conversation ad infinitum. I am sure that the hon. Gentleman could tell me how he can justify all the cuts in revenue spending that are coming to the Welsh Government, but we will carry that one on some other day. I am sure that he could also tell me about the excellent impact there will be on his local economy when the holiday homes subsidy is in place, but, again, we will carry that on later.

I believe that investment, growth and employment are not just terms in economic textbooks; they are at the heart of what makes communities and countries work. I am talking about communities in my constituency and, more widely, across the nations and regions of the United Kingdom. If our Government and our Chancellor cannot understand that, it is high time for them to be replaced by a genuinely one nation Government who do understand.

14:22

[John Howell (Henley) (Con)]

One is tempted to start with the unemployment figure in one’s constituency—it is down by 25% since April 2010—but I wish to speak about housing. It is appropriate to raise that issue today because our reforms are as much about the supply of housing as about the demand for it and about the importance of that sector and of the construction sector as a whole.

The Localism Act 2011 turned us into a nation of planners. Neighbourhood plans are steaming ahead, and the reform of the planning system has ended one of the biggest blocks to development and taken away a large amount of red tape. I understand that the proportion of planning applications approved is at a 10-year high. As for local plans, 70% of councils now have something on paper. However, there is still much more to do to turn this nation of planners into a nation of builders. I was interested to read paragraph 1.115 in the Red Book, which said that yet more reforms to the planning system were proposed. We are to have reduced planning guidance, which will come forward in line with Lord Taylor’s recommendations, and

“pro-growth planning policies and delivery arrangements”

for local areas as part of local growth deals.

The importance of the supply side can be seen in a number of areas. The first such area is affordable housing, which is an important element for this Government and always has been. We have recently issued a prospectus to support affordable homes delivered through the guarantee programme, so I was pleased that an additional £225 million had been put into the Budget to support a further 15,000 affordable homes, which will be built by 2015.

[Sheila Gilmore]

Will the hon. Gentleman give way?

[John Howell]

No, I am not giving way. Those 15,000 homes will be new build homes. As for the build-to-rent sector, the Budget provides £1 billion to support the development of more homes—that is an awful lot of homes to be built. We also need certainty on social rents, which is left to the spending round in the Budget book. On the right to buy, a great Conservative measure, we are increasing the London cap to £100,000 and reducing the qualifying period to three years. Overall, this Budget introduces billions of pounds of financial support to tackle both the long-term housing market problems—the problems with the sector—and the problems faced by people wanting to get on to the housing ladder.

The Chancellor mentioned two schemes in that latter regard, the first of which is the “help to buy: equity loan” scheme. It applies to new builds only, and someone will need a minimum 5% deposit to qualify. The scheme will expand the existing FirstBuy scheme and is available to everyone; the Government will lend up to 20% of the value of the property through an equity loan. That provides extremely important assistance to first-time buyers and to those wanting to acquire a new build as part of their development. The second scheme is the mortgage guarantee scheme, under the same arrangement, where the intention is clearly not to provide a subsidy for second homes—the intention is to have a consultation to ensure that it precisely does not give subsidies to second homes.

All these measures illustrate the main point: the Government have understood that the link between the supply of mortgages and the supply of houses is an intimate one, and that these things cannot be tackled separately. They need to be looked at in the round and together.

We hope that by tackling the problem of access to mortgages we will help to stimulate the economy. That is certainly what the Federation of Small Businesses has suggested. It has said:

“The Help to Buy scheme is a bold move from the Chancellor to boost the industry and to get people onto the housing ladder.”

It continued:

“In addition the measure to build 15,000 new homes will give the sector a welcome boost.”

The Home Builders Federation has said:

“Building the homes the country desperately needs can be a key driver of economic activity. Government must be praised for its attempts to stimulate activity”.

I agree absolutely with that. A very bold attempt is being made to stimulate activity, both on the development of housing and on access to that housing.

14:28

[Seema Malhotra (Feltham and Heston) (Lab/Co-op)]

This Budget comes at an unprecedented moment in our economic history, when families and businesses are looking to the Government for a change of direction and bold action to kick-start our flatlining economy. It is a time for urgency, as after three years of this Chancellor the economy is still 3% smaller than it was five years ago. However, all we got was more of the same. Unemployment in Feltham and Heston has risen by nearly l0% in the past six months; the number of young people out of work is at its highest level since March last year. During the Budget debate last year, I spoke of how there were six people chasing every job in Feltham and Heston. A year later, I am deeply concerned and saddened that I am saying the same thing again. There has been no change from this Government. This is the third successive year of less than 1% growth and the Budget is a gamble, not a plan.

Some measures are welcome. Local businesses will welcome the fuel duty freeze as well as measures to help them take on extra workers, for which Labour has been calling for some time. This is a jam tomorrow Budget, however, not one that takes action now. As John Longworth, director general of the British Chambers of Commerce commented yesterday, many of the Chancellor’s measures might come too late. Britain needs urgency, scale and delivery today. In the last quarter, net lending to businesses fell by £4.5 billion, and in the past two years, under this Chancellor, it has fallen by £28.1 billion. The reality behind those figures is that thousands of entrepreneurs and small businesses—our country’s wealth creators—are unable to access the finance they need to grow and to take on new employees. The Budget shows no signs of changing that. As the female entrepreneur Laura Tenison said on “Newsnight” last night, “I am trying to create jobs, but the Government isn’t helping.”

One nation Labour is the party for small business and enterprise. We had a regional development agenda and a legacy of which we could be proud which was dismantled by this Government and replaced with confusion. The Chancellor said yesterday that the Budget confronts our problems head on. The problem is that his judgment is the problem. A Treasury team of five men and no women has produced a Budget that did not even mention women and business. Research shows that if we had the same levels of female entrepreneurship as the US, £42 billion would be added to the economy. With more than 1 million women out of work across the UK, the Budget missed an opportunity to support female entrepreneurship. I should not have held my breath. The Government’s previous three Budgets have shown policies that have hit women the hardest. Women are paying three times as much to bring the deficit down—decisions that were made by a Cabinet with three times more men than women.

Hundreds of families in Hounslow have recently called on the Government to help mums, not millionaires. The Chancellor has ignored those calls and will go ahead with a £180 tax on new mums on the same day as millionaires will get a £100,000 tax cut. The House of Commons Library has also shown that low-paid new mums are set to lose £1,300 by the end of the first year of a child’s life, through the cuts to pregnancy support and tax credits and real-term cuts to maternity pay.

The record on housing is no better. Affordable home statistics in London have fallen off a cliff. Figures published by the Greater London authority show that 425 affordable homes were started in the first six months of the current financial year, compared with 4,659 in the previous year and more than 18,000 in 2010-11.

[Sheila Gilmore]

Does my hon. Friend agree—this is the point that I would have made to the hon. Member for Henley (John Howell), by the way—that it is a misnomer to call such homes affordable when the rents will be up to 80% of market rent? The subsidy on each of the 15,000 houses that were referred to will be £15,000, which is why the rents have to be so high. The houses will not be affordable and, what is more, they will put up the housing benefit bill.

[Seema Malhotra]

My hon. Friend makes her point extremely well. The £225 million proposed in the Budget to support “affordable” homes building is a fraction of the £4 billion that Labour would have invested.

The Government proposed change but this is more of the same. The policies of this Government have failed on jobs, on growth, on the deficit and in the lives of ordinary people. The Budget will do nothing for the 13,000 on the waiting list for a home in my constituency.

[Andrew Griffiths]

Will the hon. Lady give way?

[Seema Malhotra]

I am sorry, but I will not.

The Budget will do nothing for the 74-year-old woman waiting a week for a blood transfusion because of staffing cuts in the local hospital. The Budget will do nothing for the family I met recently who live in one room: two teenage brothers sharing a bed; a mother and father who put mattresses down on the floor; the father who goes to work at 4 in the morning until 2 in the afternoon; the mother goes to work at 11 am and comes back at 11 pm. They are not shirkers, they are hard workers and they will not be helped by the Budget.

The legacy of the past three years in my constituency is rising unemployment, Sure Start centres under threat, longer waiting times in local hospitals and police numbers being cut. Families are suffering for the decisions that the Government have made and are wondering where they will live as the bedroom tax kicks in and makes their homes unaffordable. It is not too late for the Chancellor to change his mind, change course and get a plan for jobs and growth that will deliver for Britain’s families and businesses.

14:35

[George Freeman (Mid Norfolk) (Con)]

I congratulate the Chancellor and his Treasury team on the work they have done on the historic and disgraceful debt legacy that this generation, this Parliament and this Government are having to deal with. The lack of any apology from Labour in the nearly three years in which I have had the honour to be a Member of this place is deeply shaming—[Interruption.] For the record, the Opposition’s barracking of my point serves simply to highlight their lack of ability to deal with the truth, difficult though it may be.

We are still trying to deal with a legacy of debt that we and future generations inherited from the Labour party—a legacy that hangs over the economy and this country. The Budget has been warmly and widely welcomed by all serious commentators: the International Monetary Fund, the OECD, the Bank of England, the CBI, the Institute of Directors and the British Chambers of Commerce. I urge the Chancellor to stay the course and not to be lured by the siren voices of Opposition Front Benchers calling for more borrowing, or of those calling for borrowing-funded tax cuts.

[Barbara Keeley (Worsley and Eccles South) (Lab)]

Will the hon. Gentleman give way?

[George Freeman]

I will develop my argument a little further, if I may, as time is limited.

We need a credible programme for deficit reduction, a fair burden of taxation and a long-term vision for the British economy, and that is what the Budget delivered. Simon Walker of the Institute of Directors said yesterday:

“We applaud this Budget. The Chancellor has stuck to his guns and held his nerve—which is exactly what we wanted to see. Deficit reduction is not an optional policy, it is an absolute necessity, and he is right to reject the siren calls to abandon it.”

Plan A is right for three central reasons. First, it tackles the appalling structural debt legacy that we were bequeathed by the Opposition. Secondly, it does so in a way that is fair in allocating the burden of taxation that must be paid. Thirdly, it is bold in setting out the platform at the base of an industrial policy for a sustainable economic recovery in which future generations—particularly the current young generation, who will have to deal with the debt crisis—can have confidence.

Let me remind the House, particularly Opposition Front Benchers, of the nature of the debt legacy we inherited. We started with the worst debt to GDP ratio of any country in the western world, worse than that of Greece and other economies that have been put into special measures by the IMF. The annual deficit when we started was running at 11% of GDP and is now 7%—that, for the benefit of Opposition Front Benchers, is a reduction.

In the situation we inherited, the interest on our debts was set to rise, if we had not acted, to £76 billion a year. We were spending £1 on interest for every £4 the Government were spending on public services. The national debt was just short of £1 trillion—roughly £15,000 for every man, woman and child in this country. As 1 trillion is a big number and people are baffled by big numbers, let me try to break it down. If it took 11 days to pay off £1 million, how long would it take to pay off £1 billion? Thirty-two years—[Interruption.] Opposition Members might think that it is funny, but I can assure them I do not, my constituents do not and the young people who will have to claw their way out of the crisis do not. If it takes 11 days to pay off £1 million and 32 years to pay off £1 billion, it takes 32,000 years to pay off £1 trillion at the same rate.

The truth is that we inherited not just an annual deficit but a structural deficit. For the benefit of Opposition Members who are not aware of the difference, the structural deficit is that bit of the Budget which, even when the economy is growing, continues to haemorrhage money. The biggest drivers of our structural deficit are pensions, benefits and the NHS. The IFS pre-Budget briefing yesterday, which was made available to all parties, makes it clear that the structural deficit continues to put a black hole at the heart of our public finances. The IFS forecasts that between 2011 and 2018 we will be spending an extra £5 billion on pensions, £20 billion on benefits and £15 billion on the NHS. That is after the sensible and pragmatic reforms we have introduced. It is a legacy the Opposition should be ashamed of.

Plan A sets out three key ways of dealing with that—tackling the deficit, a fair burden of tax and a sustainable long-term platform for growth. We have cut the deficit by 30%, from 11% of GDP to 7%, although the shadow Chancellor seemed unable this morning to accept that that is indeed a reduction. The IFS has made it clear that under the Labour party’s plan B we would incur £201 billion more debt by 2016-17. Who on earth could think that borrowing another £200 billion, given that legacy, is the answer?

On the second part of plan A, the fairness of the burden of taxation, the Opposition have been scaremongering about it and need to understand it. First, the Chancellor has decided, rightly, to pay off 80% of the debt through public spending reductions and 20% through taxation. The burden of taxation is powerfully shifted towards those with the broadest shoulders. I remind the House that 1% of taxpayers in this country pay 25% of all tax, and 50% of our income tax is paid by the top 20%. We have taken 2 million people out of tax altogether. The £130 billion funding to help new homeowners is the largest package of support—far larger than anything the Opposition were asking for. The £6 billion relief on fuel duty is a massive support for hard-working families, and coming from a rural constituency I particularly welcome its effect on the rural economy. The beer duty measure, too, is a substantial one for rural communities where pubs are at the very heart of rural life; substantial help is also being provided with child care.

This is a Budget to help the working poor. Taken alongside the universal credit and the welfare reforms, it will have a substantial impact on those who are striving to get on. In the remaining seconds, I want to pay tribute to the Government’s work in laying the foundations for a sustainable economic recovery. We cannot borrow our way out of this crisis. We will have to trade our way out.

[Richard Fuller]

I would be interested to hear what my hon. Friend thinks should be the foundations of that strategy.

[George Freeman]

I thank my hon. Friend for that intervention. I believe that this country has every reason to be optimistic about our ability to trade our way out of the present crisis. Around the world the emerging nations are growing at a phenomenal rate—7% to 8% for the BRIC nations and the 11+ nations following them. They have extraordinary needs, and in the next 30 years they will go through a revolution in medicine, food, energy, professional services, IT and leisure that we took nearly 200 years to go through. In all the areas where we have a strong and mature offering, these countries will drive phenomenal demand in the years ahead.

I applaud the work the Government have done to lay the foundations in science and research funding, skills and the industrial strategy, on which we heard from colleagues earlier. In my own sector—life sciences, food, medicine and energy, three of the largest markets in the world—today, Astra Zeneca has made a major commitment to this country, investing £300 million in Cambridge and making us its global head of research and development. With this vision, people can be confident that we are tackling the debt crisis in a way that is fair and that will allow their children to be optimistic for a better future.

14:45

[Barbara Keeley (Worsley and Eccles South) (Lab)]

People in my constituency must have hoped that the Budget could provide some light at the end of the tunnel created by austerity and cuts, but they will have been disappointed. Thousands of them are being hit this year by the coalition Government’s fiscal and welfare reform measures, to be implemented after 1 April. After so many Government U-turns there could have been action in the Budget to soften the blow of these changes. The Chancellor could have done that, instead of the tax cut for millionaires he is going ahead with.

Manchester and Salford are cities hardest hit by the bedroom tax. More than 2,600 families in my constituency will be hit by that policy, and many will have to pay between £500 and £900 extra to continue to rent their homes. If they cannot pay, they are expected to move, but the catch is that there are very few smaller properties available for those trying to move. City West housing trust told me that some 460 families have asked to downsize. However, it expects to have re-housed only 43 families by April, and 260 more in 2013-14. The trust believes that some 80 households might find a mutual exchange. So, the total number of households that can be helped to move is less than 400, leaving more than 2,000 to find between £500 and £900 extra in rent. It is estimated that the bedroom tax will cost our local economy £1.9 million in my constituency and almost twice that in Salford, because tenants will have so much less to spend.

This year, pensioners in my constituency lost more than £80 because the personal allowance was frozen, and people who turn 65 this year will lose much more—£320—owing to the change in age-related allowances. Parents in my constituency have lost out on child benefit. Constituents who lost this previously universal benefit felt deep resentment at that. A survey carried out by the Child Poverty Action Group found that child benefit is overwhelmingly spent on clothes, books, education and food—so that is a further loss to our local economy. The hon. Member for Mid Norfolk (George Freeman) spoke about serious commentators. The Child Poverty Action Group did not welcome yesterday’s Budget, for obvious reasons.

Unemployment rose yesterday in my constituency— 3,477 people are now unemployed, an increase on the previous month’s figure. As a result of the Government’s failure on growth and jobs, borrowing is set to be billions higher. To pay for this failure, the Chancellor is taking billions from working-age benefits and tax credits by uprating them, as we know, by only 1% over the next three years, a real-terms cut.

[Sheila Gilmore]

One thing that has not been discussed much is that, on top of that 1% cut, the Government appear to want to cap the type of expenditure that has always been demand-led. That will presumably require further cuts to benefits; otherwise, it will not happen.

[Barbara Keeley]

It is frightening both in extent and in scale. In Worsley and Eccles South, 7,500 people are in work and receiving tax credits. They are the ones who will lose out over the next three years. Most of the savings the Government are making are not from out-of-work benefits, as we have discussed in previous debates, but from tax credits, maternity allowance, maternity pay, sick pay and housing benefit, all of which are claimed by working people—the strivers whom David Cameron promised to stand up for and who are now being hit by Government cuts.

As my right hon. Friend the shadow Chancellor said earlier, the 1% benefits uprating, along with all the other changes that keep being trumpeted, such as the tax allowances, will mean that a one-earner family on £20,000 with two children will lose £380 a year. A family on that level of income is also likely to be hit further by the bedroom tax and the cut to council tax benefit. Indeed, 20,000 households in Salford will be affected by the 10% cut to council tax benefits that the Government are leaving it to the city council to implement.

On new announcements, it is disappointing for families with children that the Government are pledging to help with child care costs in a scheme due to start in autumn 2015. Families on middle and low incomes have already lost up to £1,500 through earlier Government cuts to child care support. They need help now, not in two and a half years’ time.

[Seema Malhotra]

Does my hon. Friend agree that that is yet another example of delaying giving people the resources and support they need, which in turn will delay the recovery and people’s ability to go back to work?

[Barbara Keeley]

I very much agree, particularly in the case of child care support. Families with a couple of children will now have to wait two and a half years before they can get help with child care, which is very expensive. That delay is bad enough, but, worse still, the proposed child care scheme will give a tax break to families earning up to £300,000 a year but offer no help to families on tax credits, whose incomes are already squeezed. Once again, the coalition Government are giving more help to higher earners and less to those on low and modest incomes, the people with the greatest need of child care support.

The Government propose to set the cap for social care at £72,000. Although we welcome the fact that a cap is finally being set, having waited more than a year for the announcement, we must remember that the Dilnot commission recommended a cap of £35,000. Setting the cap at that level would have offered the best protection to people on lower and middle incomes. It is very disappointing, to say the least, that the Government have ignored the advice of the experts whom they put together in the commission, and set the cap at a much higher level while also—this point tends to be ignored—making people pay accommodation costs of £12,000 a year, the very top end of what Dilnot recommended. People who need care when they are elderly, frail or ill will continue to face the shock of large care bills. Examples I have seen of the cap being set at such a high level show that the reality is that often, people will have to pay for their care for four or five years before getting any state help. Many fewer people will be helped by the Government’s proposals.

The final hit on my constituency, which I was disturbed to hear about, is the damage that will be caused to the value of homes as a result of exploration for shale gas. The Government have already caused confusion and uncertainty through their drastic overhaul of the planning system, yet the Red Book states:

“As the shale gas industry develops the Government will ensure an effective planning system is in place”.

That does not inspire confidence, because exploration for shale gas is going ahead in my constituency and, worryingly, it appears we do not have an effective planning system in place to deal with that. Drilling and fracking operations have been known to bring down house prices in an area by as much as 20%. People of course do not want to live in areas where fracking is planned, particularly after the disturbing events that took place when exploration first went ahead in other parts of the north-west. Exploration for shale gas could have a long-lasting adverse impact on the quality of life of people in my constituency. I am strongly opposed to it.

Mr Deputy Speaker, you know the geography of my constituency, so you will know that it is ringed by motorways; I am sure they are very useful in getting you home in the evening. A final aspect of the damage that the Budget will do to my constituency is that it goes ahead with an ill-advised widening of the M60 motorway, which will bring absolute chaos to 800 households in my constituency. When the motorway was built through my constituency, it was called the Stretford bypass. Now, the plan is to widen it by using the hard shoulders. “Hard shoulder running” will bring the M60—and you, Mr Deputy Speaker, if you are motoring—right next to the homes, windows and gardens of my constituents. Those 800 homes will be blighted by that ill-advised scheme, which I will continue to oppose to the best of my ability.

The Budget is a huge disappointment and will be seen as such in my constituency, because it is a massive missed opportunity and is damaging in so many different ways.

14:49

[Guto Bebb (Aberconwy) (Con)]

It is a pleasure to follow the hon. Member for Worsley and Eccles South (Barbara Keeley), but I think that her speech was representative of those we have heard from Labour Members today: there was no effort to explain the context; not a single acknowledgement of the problems the Labour party left this Government; no mention of the fact that there is a crisis in the eurozone; no mention of the fact that the IMF has indicated that UK levels of growth will be higher than those of Germany and France; and no mention of the fact that we are facing an international energy crisis—there was no mention of reality. That is the truth about what we have heard from the Labour party. Labour Members seem to be living in their own fantasy world in which money grows on trees or can be created from nowhere. The truth, as my constituents, the people of Wales and the people of Britain know, is that money does not grow on trees; we have to pay our way in the world.

The worst thing I heard today from Labour Members is their complaint that there is no demand in the economy, apparently because of the welfare cuts being implemented by the Government. Those cuts are being implemented to deal with the mess the previous Administration left behind. There is no acknowledgement that the so-called growth period under the previous Government was basically built on unsustainable Government and personal debt. There is a lack of demand in the British economy because the British public have realised that they have to live within their means, and this Government realise that they must deal with the mess left behind by the previous Administration and that we must live within our means—[Interruption.] The hon. Member for Hartlepool (Mr Wright) might laugh, but the people of this country are not laughing at the mess the previous Administration left behind. That is the context of this Budget and, in that context, I think that the Government have made a substantial and significant move in the right direction.

We need confidence that businesses will create jobs. Labour Members continually talk about Governments creating jobs. Governments do not create long-term sustainable employment. The private sector does that; businesses do that, working with Government. This Government are making sure that people can invest in the United Kingdom with confidence and know that if they make a profit in this country they will do so with the right to a more competitive tax advantage than in any other part of the world. The competitive levels of the UK economy in comparison with the situation under the previous Government show that we are definitely moving in the right direction in creating the circumstances for business investment.

[Michael Ellis (Northampton North) (Con)]

Does my hon. Friend acknowledge, as the Opposition clearly do not, that the OBR is forecasting 600,000 more jobs in the coming year than had previously been anticipated?

[Guto Bebb]

Indeed, and I welcome every single one of those jobs.

The worst thing about the argument that we are having is that every time Labour Members appear in the media in Wales, they complain, “Yes, jobs have been created, but they’re not our type of jobs—they’re not proper jobs.” They insult people who are going out to work and trying to earn a living in supermarkets and hotels by claiming that they are not taking the right type of jobs. People in my constituency know that a job is an opportunity to help themselves. This Government are making sure that people in low-paid jobs are keeping the money they earn because their tax rates are going down. Labour Members bribed people with their own money; this Government are allowing people to keep their money in order to look after themselves, encouraging self-sufficiency and responsibility rather than the expectation that the state will look after them. We are moving in a direction that I am proud of, because we will have a country in which people are confident that if they invest, they will be able to keep more of their money without being taxed and in which people will be able to earn money without being penalised for doing so.

In my constituency and in many other parts of Wales, we are very dependent on the small business community, which was never understood by Labour Members; indeed, they do not understand it now. I will give an example of how bad Labour is at understanding business. Labour’s Minister for Finance in Wales says that she does not believe in capitalism and prefers Marxism. If she were a trade unionist or a Labour activist, I would understand that, but she is the Minister responsible for economic development in Wales and does not believe in capitalism. She should give up her job and get somebody better to do it who will ensure that Wales can benefit from the policies of this Government.

Every single one of the small businesses in my constituency will benefit from a reduction in employer’s national insurance contributions. Labour increased national insurance contributions for people employing staff; we are reducing them significantly. Some 35,000 businesses in Wales will benefit, 20,000 of which will pay no employer’s national insurance contributions. My hon. Friend the Member for Burton (Andrew Griffiths) talked about small breweries and the fact that the beer duty escalator has been stopped, which is a good thing for the industry. In my constituency I have four small breweries that will benefit not only from the changes to the beer duty escalator, which was brought in by Labour, but from the reduction in employer’s national insurance contributions, allowing them to invest and to develop more opportunities for work in the area.

There is a 13% differential between the rate at which Labour would be taxing petrol and what this Government are doing. In a rural constituency such as mine, that is crucial—13p per litre makes a huge difference. Labour Members might not understand this because they do not understand rural areas, but in my part of the world there is an understanding that the changes to fuel duty and excise duties are crucial for a rural area that depends on self-employment and the small businesses that do understand the needs of the community and the need to invest in order to improve.

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

What does the hon. Gentleman think would be the effect on rural and, indeed, urban communities in his constituency of a housing measure that will apparently subsidise people to buy second homes up to a value of £600,000?

[Guto Bebb]

We await clarity on that issue. However, I am absolutely terrified about the fact that the administration of that measure will be partly devolved to Wales, where the situation is astonishing. The NewBuy scheme was introduced by this Government in April 2012, but it has yet to be introduced in Wales. The Welsh Labour Government will introduce it in June 2013. In other words, 15 months after the money was made available, the Labour Government in Cardiff are still not helping people in my constituency who want support to buy new houses.

I am concerned that the Labour Government in Cardiff are not delivering. Their decisions on every single policy are made for political reasons to undermine the work of this coalition Government, and nowhere is that more the case than with how the Welsh Government refuse to co-operate with the Work programme. Many programmes in Wales are funded by money from the European social fund and they provide support to those who need it to get back into employment, but the Welsh Labour Government refuse to allow those individuals to access the Work programme and the ESF business support programmes at the same time. The Labour party’s commitment to employment growth in Wales is zero, while its commitment to wrecking the work of this coalition Government is 100% and total. The people of Wales realise the betrayal of their communities by the Labour party.

The fact of the matter is that, on every single issue, this Budget is making an effort, in very difficult circumstances, to help those people who want to help themselves. As a Member who represents an area that is very dependent on self-employment, I welcome the key decision to introduce the flat pension rate. For far too long, the option of self-employment was penalised by the pensions system. The move to a flat system whereby people will benefit by about £144 a week from a guaranteed state pension is crucial. The decision to become self-employed is a difficult one to make, especially so in Wales, where it is also difficult to then provide for a pension, because the position of the public sector is so different. I warmly welcome the fact that this Government are tackling the need for a fairer pension system. Every single person in my constituency—employed or self-employed—will realise that if they put money aside for their own pension, they will be supported by a Government who are committed to supporting people to do the right thing.

Finally, one of my concerns about the current economic situation relates to financing for small businesses. This is not a criticism of the Government. Time and again I meet representatives from banks who claim that they have money available but that there is a lack of demand for funding. We have heard the same complaints from the Labour party. The key thing is that MPs can do a lot of work on this matter. During the Easter recess I will hold two surgeries to tell businesses how to get themselves fit for the lending available. Circumstances have changed. The time when money was thrown at businesses has gone, but businesses that go to the banks with appropriate business plans and ideas for development and growth should and could access money at much cheaper rates than the Welsh Assembly-funded Finance Wales scheme. MPs can stand up in this Chamber and complain as much as they want, but the key thing is that we—I know that my Government colleagues do this—work with businesses to help them access that funding, rather than complain all the time in the way that the Labour party does.

15:03

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

It is a pleasure to follow the hon. Member for Aberconwy (Guto Bebb), whose analysis was wrong on so many levels. That is probably why he was rejected by Plaid Cymru, which, frankly, takes some doing.

It is worth remembering that in his June 2010 Budget, the Chancellor of the Exchequer stood at the Dispatch Box and announced that the growth rate for 2013 would be 2.9%. In his autumn statement, just a few months ago in December 2012, he stood at the same Dispatch Box and announced that the rate would be 1.2%. Yesterday, humiliatingly for the Chancellor, he had to announce to the country that the Office for Budget Responsibility’s own statistics show that the projected growth rate for this year is a miserly 0.6%. It does not get any better, because the 2010 Budget’s projected growth for 2014 was 2.5%, which was downgraded by the autumn statement to 2%, and yesterday the Chancellor said that it would be 1.8%, which is, frankly, optimistic. It is worth remembering that in 2010, actual growth was 1.8%. This is a real humiliation for the Chancellor, because he has had to admit that for the last three years his growth strategy has been a no growth strategy, because there has not been any growth in our economy.

Of course, the Business Secretary admitted to that last year, when he wrote to the Prime Minister and said that his Government lacked a “compelling vision” for growth. He was absolutely right. I was pleased to hear him finally acknowledge from the Dispatch Box today that the Chancellor and the coalition Government got it wrong in 2010 when they cut the investment that this country so desperately needed. I do not recall any apology from the Business Secretary or the Chancellor before today. I might have missed it because I am not an avid reader of the Evening Standard, but I do not think that it was pre-briefed that they have got it wrong for the past three years. It is three years too late for many of our constituents. The Government snuffed out the recovery that was beginning in 2010.

I will refer briefly to some of the local initiatives and challenges in my Denton and Reddish constituency. In the short time I have left, I will then recognise the positive ideas in Lord Heseltine’s “No Stone Unturned” strategy. To be fair to Lord Heseltine, unlike most Members on the Government Benches, he understands what is needed to drive up growth in the English regions. A number of his initiatives should be taken on board.

[Nic Dakin (Scunthorpe) (Lab)]

My hon. Friend is stating things very clearly. Does he believe that this Government will allow Lord Heseltine’s proactive approach to regenerate the regions?

[Andrew Gwynne]

I very much doubt it; we can but hope. There are some good ideas that build on the many regional initiatives that the last Labour Government left in place in May 2010. The strategy almost reinvents the wheel, but I do not care who reinvents the wheel; the fact is that the wheel should never have been smashed up in the first place.

My Denton and Reddish constituency has been badly affected by unemployment. The figures that were released yesterday showed an increase in those claiming jobseeker’s allowance over the past 12 months. There are now 2,642 unemployed claimants in my constituency, which is 6% of the economically active population. The longer-term picture is far worse. The number of those claiming jobseeker’s allowance over the past 12 months has now gone up 32%. The figure has gone up 44% for young people and, staggeringly, for people over 25 claiming jobseeker’s allowance, the figure has gone up 70% in the past year.

[Barbara Keeley]

Is my hon. Friend as concerned as I am to learn from the OBR forecasts that unemployment has not peaked? It will peak later this year or early next year, so the figures that he and I have quoted will get worse.

[Andrew Gwynne]

My hon. Friend is absolutely right. She may have read the Manchester Evening News research, which showed that Tameside, which is part of my constituency, is the worst place in the north-west of England for young people to access job opportunities. There are real issues here that need to be resolved by Government.

Some good local initiatives are being pushed through by my two local authorities. One is Tameside, a Labour local authority, and the other is Stockport, a Liberal Democrat authority. They are doing their best in very tight circumstances, not least because every man, woman and child in Tameside is losing the equivalent of £163 in central Government grant to the local authority and Stockport is losing £94 per head of population.

We are seeing initiatives such as the introduction of town teams in Denton—I am proud that my office is represented on the Denton town team—and a pooled apprenticeship scheme in Tameside, which enables firms to reduce the risk in taking on apprentices. That initiative has been ably led by the leader of Tameside council, Councillor Kieran Quinn, who set out an ambition to have every young person in work or training by 2020. Tameside council has done a deal with New Charter Housing, the local registered social landlord, to ensure that one affordable house is built per week for the next three years. Stockport has the Stockport Boost initiative, its town centre is a Portas pilot, and there are huge opportunities along the M60 corridor with its close proximity to the airport city enterprise zone and the Grand Central redevelopment. That initiative is being pushed forward by the Greater Manchester combined authority and the Association of Greater Manchester Authorities—a Labour-led, city region initiative.

Lord Heseltine talks about combined authorities and giving more responsibility to local enterprise partnerships, and that is where Greater Manchester takes a lead. He also mentions local leadership, which is a thorny issue. I personally support the idea of a Greater Manchester-wide mayor, and although I realise that others in the city region are not convinced, I at least welcome the debate started by Lord Heseltine in his report.

My final point—which I have already touched on—is about housing, which continues to be a big problem in my constituency. The new homes bonus announced by the Government in 2010 was supposed to unleash growth and help build at least 400,000 additional homes, but it has failed to deliver.

[Mark Lazarowicz]

Will my hon. Friend give way?

[Andrew Gwynne]

I will not as I do not have time. Housing starts fell by 11% last year to below 100,000—fewer than half the number required to meet housing need. The Government’s £10 billion guarantee scheme has yet to deliver a single penny of support for house building. There were a number of small things to be welcomed in the Budget, but there were no answers on growth or for communities such as Denton and Reddish. After three years of failure, it is time for a different approach.

15:12

[Damian Collins (Folkestone and Hythe) (Con)]

Following the speech by the hon. Member for Denton and Reddish (Andrew Gwynne) I feel I should point out that the Government do welcome Lord Heseltine’s report, which is why they have adopted the vast majority of his recommendations. I was also pleased to hear the hon. Gentleman mention the success of town teams and the Portas pilots, although he failed to mention that those initiatives were introduced by this Government.

I am sure, Mr Deputy Speaker, as a bit of context for this debate, that you will be familiar with the novel by Chris Mullin, a former Member of this House, called “A Very British Coup”—many Members will have read it; I think it was almost a manifesto for certain Opposition Members at one point. It tells the story of a left-wing Labour Government who run out of money and go cap in hand to the International Monetary Fund, but they cannot accept the terms that the IMF offers, so instead they go cap in hand to the Russians.

That scenario has, thankfully, been avoided here, but it is the meat and drink of a member of the eurozone and a European country, albeit a small country: Cyprus. It has lost control of its debts and spending and is in the awful position—as countries are when they get to this point—where the cuts it is being asked to make at this late stage are much worse than those it might have made earlier, at the right time. Countries find that they cannot go on borrowing for ever because one day the people lending the money will not lend it any more, or only at a rate so punitive that it cannot be accepted. That warning is live. It is affecting a member of the eurozone and may soon affect other countries. The Labour party ignore that peril, but the Chancellor of the Exchequer is steering this country away from it.

Throughout this debate Opposition Members, just as the shadow Chancellor and Leader of the Opposition did yesterday, have pointed out how much the country is borrowing and said that we are borrowing more than was forecast—a perfectly legitimate point. They are, however, much more reluctant to be drawn on whether they would borrow even more. The shadow Chancellor seems to be very happy when he is touring the news studios and sitting on the sofas to be a bit more frank and open about this, but he was asked about it twice in the debate and refused to answer both times. Last week, he was asked by Gavin Esler on “Newsnight” whether his plans would mean that the Labour party would borrow more, and his answer was, “Of course it would.” He is right. His plans do not come out of thin air. He must borrow the money to put in place the stimulus he wants. The reason he is not forthcoming is that he knows that that is not what the country wants. He knows that people are genuinely concerned about the high level of debt we have and about the costs we will put on future generations if we do not get on top of it now. He knows that people are looking at countries such as Cyprus and thinking, “That could happen here if we do not get a grip of our debts.”

[Barbara Keeley]

The hon. Gentleman does not hear what I hear from the shadow Chancellor. I heard him say, first, that we want a cut to VAT to stimulate the economy—the economy has been badly affected by the VAT increase—and, secondly, that we would use the proceeds from the 4G spectrum auction to build 100,000 houses, which would also stimulate the economy and the construction sector. My right hon. Friend the shadow Chancellor does answer those questions; the hon. Gentleman should listen to him.

[Damian Collins]

I hear the shadow Chancellor tell us how he will spend the same money a number of times. A VAT holiday could not be paid for, and would be only a temporary measure—the rate would go back up again. It would be an artificial stimulus, and the country cannot afford any more of those. Why will Labour Members not have the courage of their convictions and say, “Yes, of course borrowing would go up. That is the truth of the matter.” That is what the shadow Chancellor said on “Newsnight”. When they challenge the Chancellor, it is like a sumo wrestler giving unsolicited advice on dieting. Their prescription is worse. They want to borrow more than we have borrowed. People need to understand that. I do not understand why Labour Members will not be up front about it.

What can we do to get our economy going? Labour Members do not like to talk about the growth in jobs, because the recovery of the private sector economy and its response to the measures put in place by the Chancellor of the Exchequer in his series of Budgets is an inconvenient fact.

I was recently at the London launch of the campaign to market the east Kent regional growth fund. Doug Richard, the entrepreneur and former dragon on “Dragons’ Den”, was there to support the event. He is a great supporter of start-up businesses, particularly in the tech and digital sectors. He said that now is a great time not only to start a business—that is why we have a record number of private sector businesses in this country—but to go to the market to look for finance to set up a business. He highlighted, as have many entrepreneurs—particularly in the tech, creative and digital sectors, which are so important to the future growth of our economy—that initiatives such as the seed enterprise investment scheme, which the Chancellor mentioned in his Budget, provide great incentives to bring private sector money into start-up business, and to encourage individual investors to support the growth in those businesses.

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

I accept what the hon. Gentleman says about those schemes, but the main funnel for credit provision to small businesses is the funding for lending scheme. That scheme is not working as effectively as we would want. Is he disappointed that there were no initiatives in the Budget to improve funding for lending to address the small business problem?

[Damian Collins]

We should look at the series of schemes and initiatives that have been put in place and accept that it sometimes takes time from the moment of their creation for the money to come through. Funding is now coming through for the regional growth fund for east Kent. A high-end engineering business in my constituency, HV Wooding, which supplies parts for the CERN hadron collider and grand prix engines, has received a grant of more than £1 million from the regional growth fund, which could create up to 50 sustainable, high-skilled engineering jobs at its factory in Hythe. Those are exactly the type of businesses we want to support. Money is also coming through the seed enterprise investment scheme to support creative businesses, and digital businesses in particular.

People can see the benefits that those schemes are creating in the economy. That is one reason why we see job creation in the economy and new business start-ups performing strongly. The measures put in place in the past four Budgets are starting to bear fruit, which we should appreciate and accept.

The help to buy scheme, launched by the Chancellor yesterday, is a bold and imaginative measure that could help to stimulate the housing market and construction sector. I have been in many debates in the past year in which people have said that the problem with the construction industry and the housing market is that builders are reluctant to commit to starting projects because they do not think that they will be able to sell the properties. The scheme put in place by the Chancellor will give them the confidence to start building, and will give people the confidence to start buying. That can have a dramatic impact on our housing sector.

As in the measure to support small and start-up businesses, the Chancellor is working with the grain of the aspirations of the British people to give them the opportunity to start a business or buy their own home, with the backing of the Government to do so. The hon. Member for Worsley and Eccles South (Barbara Keeley) said that the cap on the cost of residential care—the implementation of the Dilnot measures—was still quite high, but at least it is there now, and we are saying for the first time that people who work and save all their lives, who set up a business or buy their own home, will not have all that taken away late in life. There will be a cap on their contributions so that they do not pay through the nose for something that other people get for free. That is part of supporting the aspirations of the British people, and I welcome the Budget.

15:21

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

This is a Government whose central argument rests on the spurious claim that the economic crisis was national and all Labour’s fault up until 2010, and magically internationalised only after they came to power. With every passing day, the extent of that basic deception and the false conclusions drawn from it are exposed. We were told the pain would be worth it because the Chancellor would have the debt and the deficit under control by 2015. Now it will be 2017-18 and, according to PricewaterhouseCoopers, the current debt overshoot is likely to be £8 billion higher than predicted just three months ago.

This was the tomorrow budget for a tomorrow that never comes—almost anything of any value is put off until 2015 or beyond. With a Chancellor whose forecasts have proved worthless so far, just what kind of certainty does that provide? The Government’s claim is that the deficit is down by a third but the OBR’s figures show that it is down by less than a quarter, and there is no prospect of further cuts in the deficit in the next two years.

[Richard Fuller]

Does the hon. Gentleman think that the answer is to borrow more money?

[Steve McCabe]

The answer can be to borrow some money for investment, but not to squander it on rising unemployment and wasteful expenditure, which is what the Chancellor is doing. All the pain will simply be to stand still. The OBR has also pointed out that the public debt in 2015, rather than being the £37 billion the Chancellor originally promised, will actually be a staggering £108.4 billion. Just when are this lot going to learn that they have lost all right to lecture anybody about debt?

I welcome the cut in the duty on beer, although the VAT rise added 5p to a pint of beer, and the likely benefit of the measure will be offset by the loss of jobs and sales in the whisky industry, so it is not quite the achievement that some people might think. I am also pleased that the Chancellor has offered some certainty by scrapping, rather than postponing for the umpteenth time, the planned rise in petrol. The £3 billion lift in capital spending is welcome, but we need it now, not in 2015. His own fiscal rules allow him to borrow to invest: why does he not do so?

We can all welcome the cut in national insurance for small employers as probably the one genuinely growth-stimulating measure in the Budget. Perhaps that is not surprising, as it was our idea.

The Chancellor has once again promised a cut in corporation tax in 2015. Just like the now-forgotten triple A rating, stimulating inward investment by cuts to corporation tax is a Government mantra. It is not working, however. Foreign direct investment inflows to the UK fell between 2010 and 2011, and are now about a third of what they were before the crash. Meanwhile our total investment rate is 15% of GDP—the lowest in the G7—and our current account deficit is now at its highest since the 1980s. We are stifling opportunities for investment.

Legitimate foreign students are worth approximately £8 billion a year to the British economy, and that is being lost in pursuit of the Home Secretary’s immigration target. Simultaneously, she is letting in 30,000 people a year on temporary student visas that require no entry qualifications, no evidence of income and no guarantee of qualification. As usual, it is the wrong target at the wrong time. Similarly, the lack of Chinese tourists means that the very people we need to attract and to encourage to trade with us are now four times more likely to take their spending to France.

As usual, this was a Budget of missed opportunities. Where is the plan for a properly capitalised British investment bank of the kind operated by every other G7 country? There is nothing in the Budget about a target to decarbonise by 2030, but that is exactly the message that would provide certainty for the renewables supply chain and create jobs. Only one in 10 wind farm components are directly sourced in the UK. Why is it that the Chancellor is unable to see what everybody else can see?

The Chancellor called this a budget for an aspiration nation; it sounds more like alienation to me. He is presiding over what Professor Arnold Blumberg calls a zombie economy where rising inflation and no growth eats away at savings, strangles enterprise and innovation, and deprives small businesses of the capital and opportunities they need to grow. We have yet to see who the real beneficiaries of the abolition of stamp duty on share trading will be, but we know who it will not be. This is an alienation budget because the vast majority of our people are into their third year of pay cuts and falling livings standards, and the only ones doing okay are the millionaires in line for a tax cut. There is alienation as it emerges that the mortgage assistance scheme is actually a second home subsidy at the very time when the bedroom tax threatens to throw others out on to the street.

I invite the Chancellor to try listening to real people, like I do. Of those I surveyed in Selly Oak, 50% said that creating jobs and the conditions for jobs should be his top priority, 39% were worried about the rise in domestic gas and electricity prices, and 29% cannot make ends meet and will be forced into debt by his policies. The people of Selly Oak are a good barometer and they know what needs to be done. When will this Chancellor start to listen to real people and do the things that the country desperately needs?

15:28

[Bob Blackman (Harrow East) (Con)]

It is a pleasure to follow the hon. Member for Birmingham, Selly Oak (Steve McCabe), who grudgingly accepted that there are good things in the Budget as well as things to condemn. A Budget is a snapshot in time that builds on previous Budgets. Good things have come out of previous Budgets and there are great things in this Budget.

One performance measure of an economy is the level of unemployment. In my constituency, in April 2005, the level of unemployment was 1,402. By the time the Labour Government left office in April 2010, it was 1,901. That is an increase of 36%, but then we all know that Labour Governments always leave office with higher unemployment than when they arrive. Now, however, unemployment is down to 1,632—a fall of 14% in three years—showing that despite the recession and the difficulties, the Government have got it right on encouraging and promoting employment.

Next month, 4,035 of my constituents will be taken out of tax completely by the Government’s increases in the personal allowance. More importantly, 40,101 working people in my constituency will get a tax reduction, which means they will have more money in their bank accounts to spend as they choose. One of the great measures is the new employment allowance, from which 145,000 businesses across London will gain. They will be able to employ people without having to pay national insurance contributions. Furthermore, 75,000 of those businesses will pay nothing at all for the people they recruit, which has got to be great news. Combined with the abolition of the fuel and beer duty escalators, that means that the Government have got it right on taxation.

I want to dedicate most of my speech to the treatment of Equitable Life policyholders. For 13 years, when Labour ran the country, it refused to do anything about the 1 million people who suffered as a result of this scandal. I am proud to belong to a party and a Government who have taken steps to assist the victims. In 2010, the coalition Government honoured our election pledges to compensate the victims of that fiasco. The claimants asserted that £5.2 billion-worth of compensation would be needed, if full compensation was to be paid. Clearly, given the economic position, we could not afford that, so £1.5 billion was set aside to ensure that the victims received due recompense.

The victims split into three groups. The first group comprised the 37,000 with-profit annuity policyholders, who have received full compensation for the losses that resulted from the scandal for which the then Government, the regulator and Equitable Life were responsible. The nearly 900,000 people who took out pension plans have also been compensated, but at a much lower level, because they had the alternative of transferring their pension plans elsewhere. Unfortunately, however, owing to how the scheme was implemented, the people who were most vulnerable and most desperately in need of assistance—those whose money was trapped in their pension plans because they took them out before 1 September 1992—received no compensation at all.

[Mr Love]

I congratulate the hon. Gentleman on his campaign. Will he be campaigning for further compensation for those who have not received anything thus far?

[Bob Blackman]

I shall come to that when I conclude my remarks.

Some 10,000 of the most vulnerable people received no compensation at all. The all-party group on justice for Equitable Life policyholders put forward clear evidence that they suffered as much as the people being compensated. We pointed out that they could not have known before 1 September 1992 that this scandal was going on, and that they had suffered and lost money like all the others. It has taken a long time and a lot of persuasion, and my hon. Friend the Economic Secretary to the Treasury listened with great patience, weighed the evidence and proposed to the Chancellor that the pre-1992 trapped annuitants receive compensation. I am delighted to congratulate the Chancellor and his team on listening to the evidence, weighing it up and saying, “Yes, we got it slightly wrong.” All the people I have mentioned will now get £5,000 in compensation automatically, as an ex gratia payment without taxation, while those on pension credit will get an additional £5,000. It is not the full compensation that we would like to see, but it is a recognition of the fact that every policyholder suffered as a result of the scandal and will be repaid.

Let me turn to the intervention by the hon. Member for Edmonton (Mr Love). The campaign continues. The policyholders have not received the full compensation that they are due or the compensation that has been promised—it is still being paid. My clarion call to my colleagues on the Front Bench is this. Let us ensure that they receive the money—particularly the trapped annuitants —as fast as possible, because since we started the campaign in 2010, 1,000 of the trapped annuitants have sadly died, and they are dying each day. We want to see people compensated and receiving their money as fast as possible, so that they can enjoy their retirement in a reasonable way. I say thank you to my colleagues on the Front Bench, but with this word of warning: we will carry on campaigning and ensuring that the compensation is paid as it should be.

Finally, I want to refer to housing. Currently, banks and financial institutions are demanding a 25% deposit before they will allow people to get a loan for a mortgage. In my constituency, prices start at £300,000 for a two-bedroom flat. A detached house can be up to £1 million or more. A reasonable three-bedroom property is of the order of £500,000. Imagine trying to find £125,000 as a deposit to buy a family home. It is almost impossible and beyond the reach of ordinary working people. I therefore welcome what the Government are doing to support them. We want to get the housing market moving, with new properties being built and existing properties passed on, so that the starter homes can be used by new people.

[Several hon. Members]

rose—

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. To accommodate the remaining speakers we are moving to a five-minute limit.

15:37

[Mark Durkan (Foyle) (SDLP)]

I am delighted to follow the hon. Member for Harrow East (Bob Blackman). I acknowledge the effective advocacy that he has provided for Equitable Life annuitants. I commend him and the Chancellor and his ministerial colleagues for addressing that outstanding injustice. The issue now is to deliver not just the solution that has been designed, but the outcome that people deserve.

There are some things in the Budget that it would be churlish of me not to acknowledge from a Northern Ireland perspective. Our exclusion from the carbon price floor is hugely important, given that Northern Ireland is part of a single electricity market in Ireland. The effect of the price floor would have been to skew investment in our generating capacity in a way that would have penalised business and consumers. I am therefore glad that Ministers woke up to the problems that many of us have been raising in the Chamber for so long, ever since the measure was announced.

We already know that there is some confusion about aspects of the Budget, such as Help to Buy, the mortgage support scheme. The shadow Chancellor has rightly raised some issues and questions about the scheme, but let us be clear: whether or not it will support people with buy-to-let mortgages, there is to be no income cap whatever on the people qualifying for it. At a time when people here are all about the “aspiration nation”, there are a lot of people out there who just feel exasperation that a scheme such as this should come along with no income cap. Meanwhile, they have suffered the loss of child benefit, on which there is an income cap, starting at £50,000, with payments ending completely at £60,000. Those people are exasperated too when they hear, “Oh yes, child care benefits are coming”—in two and a half years’ time. Government Members used to criticise the former Chancellor and Prime Minister when he produced Budgets and made announcements about things that would be introduced in two or three years’ time but sold them as though they were happening at the time. They rightly criticised him for that, yet they are cheering on their own Chancellor for doing exactly the same thing, while people are suffering the loss of support for caring for their children.

The Chancellor talked a lot yesterday about investing in new energy sources, but we needed to hear about investing in energy efficiency. He talked about new house building schemes to help the construction sector, but the sector is screaming out for support for repairs, maintenance and retrofitting to support energy efficiency in our existing housing stock. Many people want to stay where they are and to improve the energy efficiency of their homes, and they should be supported in that, not least through proper, targeted VAT relief and reductions.

Similar VAT reductions should be targeted at the tourism sector. That is happening in quite a number of EU member states. It is allowed, it is effective and it traps the multipliers here at home. I do not agree with the proposals for a blanket reduction in VAT for a particular period, as it could suck in all sorts of imports and send other money out of the country. We should target VAT reductions where they will produce real benefit in home sectors, and such targeting on the construction and tourism sectors would help.

[Mark Lazarowicz]

I agree with my hon. Friend’s point about targeting help, particularly on building maintenance and repair and on tourism. Does he agree that one benefit of such targeting is that it would take effect very quickly and would be likely to help small business and small traders? Many of the housing measures announced yesterday were welcome, but they will mainly benefit the bigger builders. The VAT cuts that my hon. Friend is suggesting would provide a quick way of boosting the economy and helping many of the people who need help now.

[Mark Durkan]

I fully accept my hon. Friend’s point. The multipliers would get into gear far faster under that sort of measure than under some of the other measures that have been proposed, welcome though they are in their own context.

Certain aspects of the Budget served notice of more pain to come. The Chancellor spoke yesterday about changes that he will be making through annually managed expenditure. That sounds like a dry, technical change, but it will have a significant impact in relation to the controls that are being placed on welfare spending. We have already had the Welfare Reform Act 2012, which changed many of the rules, structures and qualifying criteria for benefits. It was designed in such a way as to allow for wide regulatory powers to place further changes and squeezes on benefits without the need for further primary legislation.

It is clear that, by moving to change the rules relating to annually managed expenditure, the Chancellor is trying to put in place more fixed envelopes for welfare spending. That will have particular implications for the way in which social security spend is managed in Northern Ireland, because the money comes to Northern Ireland not as part of the departmental expenditure limit—the DEL—but as annually managed expenditure. If that is now to be subject to some fixed-envelope procedure and capped in advance, it will put serious stress on the Northern Ireland Assembly. The Assembly is in the bizarre position of having to pass karaoke legislation that has to be exactly the same as that passed here, but it is notionally responsible for the administrative discretion on delivery. That will be a fundamental challenge for us in Northern Ireland, and we all need to wake up to that fact.

We need to be as alert to that challenge as the Executive have been on the case for corporation tax. I can see where the Chancellor is going with that, but his rate of travel in regard to corporation tax UK-wide means that, by the time any concession is delivered to Northern Ireland, the marginal benefits it will give us will be a lot less.

[Damian Collins]

The hon. Gentleman is talking about business. Will he welcome the introduction of the employment allowance, and the benefit that it will bring to small businesses in Northern Ireland?

[Mark Durkan]

Yes, I welcome that. Labour has advocated it as well; it is a good, sensible measure that I know many firms will take up.

Similarly, I welcome the increase in the personal allowance, although it will perhaps not benefit as many people in my constituency as in the constituencies of some Government Members who have mentioned the measure. That is because my constituency has very high unemployment and high rates of economic inactivity. The problem in my constituency is the lack of work, not the lack of a work ethic. I will support any measures in the Budget or anywhere else that will ensure that more people can find work, embrace and express their aspirations and ambitions and make a contribution to their community and society.

The Chancellor is introducing fiscal apps and things in regional and city economies here in Britain that I would like to see our Executive and Assembly emulate at home in Northern Ireland. I would like to see the devolution discretion used a lot more to give us more creative capacity. When I see some of the measures in the Budget, I recognise that there is some constructive engagement to get the economy going again, but we need to get our share of it.

15:44

[Richard Fuller (Bedford) (Con)]

It is always a pleasure to follow the hon. Member for Foyle (Mark Durkan), who represents a very different part of the United Kingdom from the one I represent. It is always informative to listen to his contributions, and I always learn something from them.

There are some very good points in the Budget for the people of Bedford and Kempston. The cuts in national insurance rates—Labour’s job tax—are a welcome change, meaning that the people of Bedford are more likely to have a job. When they travel to work in their cars, they can look at the petrol pump and see that fuel duty has been frozen. When they arrive at work, they will know that at the end of the day, thanks to the increase in the personal allowance, they will keep more of the money they have earned. When they get home in the evening and go out to the pub with their mates, they can raise a pint to the Chancellor and say, “Thank you very much for scrapping that other iniquity of our tax system left by the last Labour Government—the beer duty escalator.” Those are all very welcome measures. On fuel duty, it is particularly important for everyone to realise that when they fill up their tank and look up at the price per litre, 13p of that is Labour’s price on fuel, which applies every time we fill up our cars.

Let me draw your attention, Mr Deputy Speaker, and that of Members to page 12 of the Red Book, which features an interesting chart—I see Members avidly reaching for it—showing the growth of debt in this country from the mid-1990s until 2010. It shows that the last Labour Government left this country as the most indebted nation on earth. They grew our debt—this does not include Government debt, which has to be added on top—from two times to five times the size of the economy. That is a massive debt that must be paid for by our children and grandchildren. I wonder whether the Economic Secretary would consider adding the Government debt to this chart and requiring to be displayed on a poster in every single school, so that our children know what they are going to have to pay back owing to the policies pursued by the last Labour Government. Their policies were an abject failure of economic management.

In the private sector, when companies have poorly performing management, we fire them and bring in other people. In the Labour party, they promote them.

[Mr Iain Wright (Hartlepool) (Lab)]

He’s pointing at me!

[Richard Fuller]

The Leader of the Opposition and the shadow Chancellor were promoted, yet their fingers are all over this increase in debt. I must say that the hon. Member for Hartlepool (Mr Wright) has it right. Those two are acting as bed blockers for more talented people on the Opposition Front Bench. Let us hope there will be a change in that regard some day.

Let me say more broadly, if I may—I sometimes get a little controversial—that the debates I have heard in this place since becoming a Member of Parliament have reinforced my view that the political class has let down the people of this country, regardless of political party. The debt is not just the fault of the last Labour Government but of the country as a whole, which had got itself into terrible levels of debt.

There are two ways of looking at the problem. The Government are borrowing £1 billion every three days, the interest on which amounts to £15 million. So, every three days, £15 million has to be taken out of the budget for our schools and our hospitals. That is a very considerable burden that places pressure on the Government, and I say to the Economic Secretary that I am not sure the Government have done enough to bring public expenditure under control. We have to go further. We need to look at the Heseltine review of the way the Government spend their money—not as an end-point, but as a starting-point for a much more radical reform of how we provide our cherished public services, so that we can deliver on the promise of providing more for less money.

In my remaining time, let me mention the Help to Buy mortgage guarantee scheme. I have read the scheme outline and there are some interesting charts in it, but an important chart is missing—that for the loan-to-value ratio over time.

[Andrew Griffiths]

Does my hon. Friend share the joy of many first-time buyers in my constituency at the fact that this will give them a real chance to get on the housing ladder?

[Richard Fuller]

I appreciate my hon. Friend’s intervention, but I am not sure that I can share his joy. The impetus behind this Treasury document is the notion that enhancing loan-to-value ratios of 95% is somehow a good policy, and I need some more reassurance about that.

Let us compare the average house bought in 1997 at the average loan-to-value ratio of 80% with the average house bought in 2007—after all that price inflation—at a 95% loan-to-value ratio. Over the 20 or 25 years of their mortgage, the people who bought the average house in 2007 will have to spend £234,000 more than those who bought the average house in 1997. Increasing loan-to-value ratios depresses people’s ability to spend money on other things, because they are spending more on their mortgages. I want some more reassurance from the Treasury that this scheme will not have unintended consequences for their ability to spend money appropriately in relation to their incomes.

[Mark Lazarowicz]

Is not another possible unintended consequence of the measure the setting off of regionally based house price spirals, exacerbating some of the regional differences that other measures in the Budget are intended to address?

[Richard Fuller]

The hon. Gentleman makes a fair point, but I do not see that that would be a problem in this instance. In fact, the scheme might counteract the problem. However, it is clear that the issue needs to be sorted out as what is currently an outline becomes a fully developed scheme.

Let me end by making a fundamental point. Every politician in the House must recognise that our debt burden presents us all with a challenge to do more with less. The answer is not to continue kicking the can down the road. We must face up to our responsibilities, and we owe it to the generations to come to do that quickly, while interest rates are low, rather than waiting to see what—as was pointed out by my hon. Friend the Member for Folkestone and Hythe (Damian Collins)—may happen if they suddenly start to spike, and we find ourselves in a much more difficult position in trying to bring Government spending back under control.

15:52

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

I am extremely grateful not only to have been called to speak, but to follow the hon. Member for Bedford (Richard Fuller), because I intend to use his speech as a launchpad for my own. I have a great deal of sympathy with much of what he said. In particular, I agree with him that the rising level of private sector debt in the economy is worrying—much more worrying than the rising level of public sector debt during the earlier period to which he referred.

However, the most important question for the House to answer is this. Given that members of all parties know there is a massive problem in our economy—the mountain of debt that is at this moment being added to our existing national debt—why do Ministers refuse to face up to it?

Where would we have been, had the OBR’s initial assessment been correct? By this point in the present Parliament, our economy would have grown by 5% or 6%, there would have been a solid and recognisable recovery, and further scope for a reduction in public spending as the deficit went down. Instead, we have seen growth of between 0% and 1%, and we know that, in this first quarter of 2013, we are a margin of error away from a triple-dip recession—let alone the double-dip recession that has already happened. There is clearly a lack of confidence, not just consumer confidence but confidence among businesses and elsewhere, preventing investment and the securing of the growth we need.

The result of all this—the result of the halving of growth in the most recent Budget assessment, and of the Chancellor’s having not only to downgrade his own assessments of growth but to upgrade the amount he will have to borrow every time he comes to the Dispatch Box—is quite simple. We are adding an incredible amount of debt to the economy, and the Government are giving no clear indication of what they are going to do. The pain experienced by my constituents, and by many of our constituents throughout the country, can be tempered only by a sense that we are getting somewhere in sorting out the problem that has been created.

However, the sad assessment is that we have wasted three years in getting there. The debt has continued to rise. When Government Members say, “We are paying down Britain’s debts”, either they are being ignorant of the facts or something more sinister is going on. No debt has been paid down by this Government. In their five years, this Government will have borrowed more than was borrowed during the 13 years of the previous Labour Government, and that was true even before yesterday’s horror-show figures. We know that at the end of this Parliament the deficit will still be in the tens of billions of pounds; I believe the figure will be £70 billion in the final year of this Parliament. We know that last year, this year and next year the deficit remains, in essence, unchanged, at about £120 billion.

Many of us choose not to talk about this next issue. Many Government Members would say privately that they are deeply concerned about the Government’s economic strategy, but they will not talk about it in this Chamber. The shocking thing is the effect that is having on the general public’s perception of what is going on in the real economy. All the polling shows us that only about one in 10 people understands that the debt is going up, rather than going down or remaining the same. The public believe, by and large, that these cuts are productive. They confuse—possibly because the Government themselves have confused—the debt and the deficit, but, believe it or not, this Government will borrow more in their period in office than the previous Labour Government did in 13 years. We need to call them out on that as clearly as we can.

For a plan to work, it needs to be credible. What do I mean by that? First, a proper plan is needed. This Government said that they had one—Labour had one going into the last election. Secondly, the belief is needed that the Government will see it through. This Government say they will see it through, even though they are clearly not keeping to the plan. We believe that the best way to make a credible case for seeing it through would be an Act of Parliament stating that the deficit will be halved in four years. The third test of a credible plan is: does it work? I ask in the simplest way I can: on what measure is the Chancellor’s economic plan working? The answer is none whatsoever, and that presents real challenges to our constituents and to our country.

15:57

[Justin Tomlinson (North Swindon) (Con)]

Given the time constraints, this will, obviously, be a bit of a whistle-stop tour. However, I will set out some of my Budget highlights and, with each one, something on my wish list to try to be constructive for the Government. First, I very much welcome the £10,000 personal allowance. As we know, that is a tax cut for 24 million people and 2.7 million people will be completely taken out of paying income tax. This is genuinely a reward for people doing the right thing.

Some excellent work by the TaxPayers Alliance has highlighted a chronic lack of understanding of the impact of changes to taxation in people’s own payslips. In this week’s The Spectator, I set out a request that when changes to pay-as-you-earn made by any future Government, of any colour, kick in, they should be explained on the employee’s payslip. In that way, we can get greater engagement. I know through my work on the all-party group on financial education for young people that because we now have so many direct debits and standing orders, people are disfranchised from their own bank accounts. Therefore, setting out the information I suggest will help.

I welcome the various measures to support business, such as the 20p rate of corporation tax and the £2,000 employment allowance. It will make a huge difference in the south-west, as 85,000 employers will gain and 40,000 will be taken out of paying national insurance altogether. Some 1.25 million private sector jobs have been created and a quarter of a million new businesses have started since we came to power. My constituency has seen the fastest increase in the number of start-up businesses in the south-west. It is also crucial that we continue to support businesses looking to export to emerging economies such as Brazil, India and China, so that we are not so exposed to the turbulence in the European Union.

I also want more to be done to help promote young entrepreneurs. We all support that principle, but young people face a challenge, as I find when I talk to business students. I was the only one of the 350 who studied business on my university course who ended up running their own business and employing people. When I ask business students whether they would like to run a business, all the hands go up and they are extremely enthusiastic; they have been enthused by “The Apprentice” and “Dragons’ Den”. When I then ask how many will do it, all the hands go back down, because they simply do not know how. When people choose to go to university or take on an apprenticeship—the number of which has increased massively—a clear, defined career path is laid out for them. If they tick the box, get the grades and pass the application process, that is what they will do. We need to do a lot more in that regard.

A couple of weeks ago, I set up a scheme with Swindon college to support a local charity, the Prospect hospice. Those who took part were each given £10 to raise money by trading in the Blunsdon market, a tough trading environment, and between them they raised more than £711. One team was so successful that the market has asked them to come back in the summer holidays to give it a go. Our town centre is looking to use the high street money provided through the Mary Portas scheme to set up pop-up shops, and has also made an offer to that team of very successful girls. Those who are interested might like to hear that they ran a 1950s tea shop-style café, dressed in 1950s clothes and played 1950s music; they understood customer service. My request is that we do more to set out clear career paths in business.

I welcome the good news on fuel duty. People have mentioned the 13p price difference—it is 59p if we use gallons, and sounds even more impressive. Whenever I use cutting-edge social media such as Facebook to conduct a “Fantasy Chancellor” poll and ask about the one thing people would do, fuel duty is always the most popular issue. I ask for no return to the 12 hikes in 13 years we saw under the previous Government. They regarded motorists as an easy hit, but the cost has a tangible effect on people.

The excellent news on beer duty is a credit to my hon. Friends the Members for Burton (Andrew Griffiths), for Nuneaton (Mr Jones) and for Leeds North West (Greg Mulholland). I am a proud member of the save the pub group and the all-party group on beer. I had a text from the wonderful Arkell’s brewery in my constituency, which very much welcomed the move. It is important to the sector.

[Andrew Griffiths]

I thank my hon. Friend for his sterling support for the campaign to scrap the beer duty escalator. Earlier, he mentioned the work of the TaxPayers Alliance. Will he join me in congratulating the TPA on its “Mash Beer Tax” campaign, and The Sun newspaper on its fabulous campaign to scrap the beer duty escalator?

[Justin Tomlinson]

Absolutely. I also commend the constructive and proactive way they lobbied politicians on both sides of the House, so that they realised what a benefit such a move would be to the local economy, as well as for those who enjoy the odd pint in their local pub. It is cause for rejoicing.

I have two further requests. A considerable number of pubs are starting to provide food as a mainstream part of their offer. More needs to be done to encourage hospitality and catering students to consider becoming landlords, as a lot of breweries are struggling to find younger landlords. Secondly, I urge the Minister to consider the excellent work of my hon. Friend the Member for Burton and to commission him to look more widely than the beer duty: to consider why we are losing pubs and what more we can do in that regard, just as we commissioned Mary Portas to carry out the high street review.

[Guto Bebb]

Is my hon. Friend aware that the increase in the personal allowance can be crucial for businesses such as public houses, which are often run by a husband and wife working in partnership? Our changes mean that such partnerships can make a profit of £20,000 without paying a penny in tax.

[Justin Tomlinson]

Absolutely. The industry can react quickly and provide flexible employment opportunities, and it is a major contributor to local economies across the country.

The Help to Buy scheme will provide £3.5 billion to help those wanting to get on to or move up the property ladder. I know that more details need to be considered, but we should think not only of the people who will benefit directly but of the huge numbers of people in the house building industry. Over the past 20 years, Swindon has been pretty much the fastest growing town, and a huge number of local residents are connected to that industry. They will welcome any measure to help restore confidence in the housing market.

We come up with these fantastic schemes, and I was challenged on local radio last night about whether this scheme would catch on. As entertaining as we all think we are, our wonderful debates in the Chamber often pass the public by. As the scheme comes into force in 2014, it would be nice to promote it in the annual council tax bill. The councils have already paid for the postage, so let us put a little information flyer in with the bill so that people can see what opportunities there are and whether they apply to them.

Finally, I want to talk about business rates, on which I would have liked a little more to have been done. Our high streets are struggling and business rates are becoming a bigger burden, with landlords lowering rents and so on. I was fortunate enough to become a member of the Public Accounts Committee, but one of my biggest disappointments is that that happened 24 hours after Starbucks and Amazon had their hearing. Amazon kindly came to meet me yesterday and it is fair to say that we rowed. Its actions over tax and transferring money to Luxembourg are disgraceful. The company is not operating on an even playing field. We have to investigate some form of internet consumer tax for such organisations, but with every single penny ring-fenced to subsidise the business rates of the traditional high street. If the high street struggles any more, Amazon will also struggle because the high street is the shop window. I have spoken to a number of independent retailers who provide the customer service—and consumers then simply pick up the phone and order from Amazon. Let us create a fair playing field for all retailers.

16:04

[Mr Russell Brown (Dumfries and Galloway) (Lab)]

I will try to be as quick as I can because I know that others want to make a contribution to this debate.

I will not get into the knockabout. If we are all honest with one another, every Government who come in after a period out of office inherit problems that they have to tackle. I am not running away from the fact that because of what the previous Government did to support banks, this Government were landed with a bigger problem than any of us would have wanted.

The debate this afternoon has been interesting. The hon. Member for North Swindon (Justin Tomlinson), my hon. Friend the Member for Luton South (Gavin Shuker) and the hon. Member for Aberconwy (Guto Bebb) all mentioned one word, which is vital to everything we do within the economy, and that word is confidence. Without confidence, we are going nowhere, and growth runs hand-in-hand with confidence.

I took the opportunity last night to speak to about a dozen people in my constituency. I had given them a commitment. Some were small business owners and they pointed out that some of the commitments that the Government gave yesterday were about what lies in the future, not about how they were going to get from where we are in 2013 to 2015. My constituency is in an area that depends very much on small and medium-sized enterprises for running the local economy, and there is little confidence out there in my locality.

On the concept of the private sector providing jobs, only this week I have heard announcements of the loss of 36 jobs in two private sector companies, one in the food industry and one in engineering. It is a different picture in different parts of the country.

Youth unemployment rose to 9.8% in my constituency yesterday—1,080 young people. For the fourth month running, unemployment overall rose and stands at more than 3,500. I want to say something about those young unemployed people. The issue is about more than just a job. One of my colleagues on the Opposition Benches—I will not mention names—shared some information with me. He had asked some questions about mental health problems and the astonishing figure came back to show that 32.9% of 16 to 25-year-olds have a mental health problem. That may be just depression or stress, but the figure is 32.9%. When we look at those figures region-wide and overlay them on to the youth unemployment figures, the result is frightening. The figures merge together. It is more than people just being out of work. Long-term ill health can begin to set in.

I say to the Government and the Treasury team dealing with the Budget that we do not want a re-run of what we experienced in this country in the 1980s and early 1990s, when we ended up with long-term second and third generation unemployed, a situation that my party tried to tackle. It is not good for individuals, families or communities and, above all else, it is not good for the country.

The Budget contained measures for small and medium-sized enterprises, which I would love to have seen happening sooner. I have concerns about what is being proposed in respect of house building. Is the confidence there for private sector house building? I would much prefer to see more money invested in public sector housing.

Finally, I shall mention something that is dear to the hearts of my constituents in a rural area—road fuel prices. Although he is not here, I want to mention the hon. Member for Argyll and Bute (Mr Reid). He does himself no credit, nor does anyone else, by saying that had a Labour Government been in office, road fuel would have cost 13p or 18p a litre extra. The price at the pumps today is a false price, with crude oil priced at $93. When we had the same price at the pumps previously, crude oil was $140 per barrel, so we have a false price. The weak pound is ratcheting the price up, and with a weak pound and no increase in exports, there is a problem lying in the undergrowth. That problem could well be inflation, and I would like to hear the Minister say something about that when he winds up.

[Several hon. Members]

rose—

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. The wind-ups will start no later than 4.40 pm.

16:09

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

It is good to follow the hon. Member for Dumfries and Galloway (Mr Brown), and I agree with him that it is all about confidence. I believe that the Budget will help to produce confidence in this country, especially in my constituency, where many people are not on the highest wages. Taking people out of tax right up to nearly £10,000 is absolutely the right way to go. The previous Government spent far too much time on a complex tax system, but it is much better to take people out of tax altogether so that they know that they can earn up to a certain amount—nearly £10,000 in this case—before having to pay any tax.

It is also right to reduce national insurance contributions, particularly for small and medium-sized businesses, because they will generate the most jobs. The reduction makes it less expensive to employ people, and that is what the Budget is about. Our economy must be, and will be, more competitive, because we are in a very competitive world and we need to compete. I think that the Budget will bring that about.

I echo what many Members, particularly my hon. Friend the Member for Harrow East (Bob Blackman), have said about Equitable Life and all the people who will now be compensated for policies prior to 1992, which have not previously been compensated. Many of those people are elderly and frail, so I urge the Government to get the money to them as quickly as possible. They were hard-working people who put money away for their retirement and basically were robbed in one way or another. I really thank the Chancellor and the Government for agreeing to those payments, but they need to be made quickly.

On infrastructure, there is a wonderful road, the A30 and the A303, running east from Honiton, and it needs to be dualled—there is no doubt about it. We want to dual that road until we get into Wiltshire, where we might encounter problems with a few stones. I will not say which stones, but I think that Members probably know what they are—Stonehenge. There are all sorts of problems around there, but let us not worry about that. Let us move from Honiton up through Devon and Somerset and into Wiltshire, and let us get that road built. We need a second arterial route into the west country, because tourism is so important to us, and it is linked to agriculture and many of our other industries.

That brings me to fuel and fuel duty. My constituency is only 10 miles wide, but it is 42 miles long and covers over 400 square miles. It starts up in Exmoor and meets the sea at Seaton. My constituents live mainly in villages and hamlets. If they wait for a bus, it might never come. If it does come, it probably is not going where they want to go. I am being slightly facetious, but the point is that bus services in many rural areas do not stack up economically, however much subsidy we throw at them, so fuel and cars are not a luxury; they are an essential. Therefore, every time we raise fuel duty, we tax people’s means of getting to work. That is why I congratulate the Chancellor on freezing fuel duty. It is now 13p less than it was when Labour was in power. I am also delighted about the 1p reduction in beer duty, although I remind the Chancellor that the west country and Devon are, of course, full of cider producers, so I ask him please not to forget them.

I think that the support for home buyers, particularly first-time buyers, is a wonderful idea, because many people in my constituency are on low wages, but house prices are upwards of £220,000, so they really need help with deposits. If this Conservative-led Government are about anything, they must be about getting more people to own their own homes and look after themselves, and this support is one way of helping them to do that. I am absolutely delighted to see it happening. We inherited a huge amount of debt and we are doing our very best to reduce it. I look forward to the Budget having a very positive effect in my constituency and across the country.

16:14

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

We are told that a number of announcements in the Budget will encourage investment in infrastructure and growth. I hope that these policies do have that effect, because that would be welcome. They are being announced again because the policies announced in the other Budgets since the election have, as yet, signally failed to bring about such growth. There is plenty of evidence about how slowly they are benefiting infra- structure and investment. The recent National Audit Office report on the national infrastructure plan pointed out that although developers notified the Government of 99 infrastructure projects under the plan, by December 2012 only three had been determined, six were expecting a decision within three months, and the remaining 90 were not even at a decision stage.

An example of announcements about infrastructure taking a long time to have an effect is the Caledonian sleeper service from London to Scotland, on which I have been involved in campaigning. It was announced in 2011 and announced again in 2012. The money for it will probably start flowing through into carriages and stations from late 2014 onwards, until perhaps 2017 or 2018. It is obviously a very good investment, but it will not have an effect on boosting the economy in 2013. It did not have that effect in 2012 or 2011, and it will not do so until 2015 onwards. What can be said of that project is certainly true of many of the other investment projects that the Government have been trying to encourage and bring about.

The Government know that they have to do more to get results in terms of boosting the economy. That is why at least some in the Government appear to want to set off a new housing boom before 2015. Of course, we all want to see the encouragement of affordable, or relatively affordable, housing for first-time buyers and people who cannot get on to the housing ladder, and we certainly want to see the desperately needed boost for the construction industry that would come from such measures. However, it is a different thing to promote a scheme that would apparently help anyone of any income to buy a house costing up to £600,000 in any part of the country. That would inevitably run a high risk of setting off an unsustainable house price boom, which, as we have learned from previous experience, is precisely the kind of thing that many parts of the country do not need. It also creates a great danger of exacerbating some of the regional economic differences that the measures in the Budget are supposedly trying to address.

When the Secretary of State was asked about this measure, he told us, in his usual emollient way, that the details are being discussed and that more consideration is going on. Most of us in the Chamber could already hear the gears crunching as the Government prepared another U-turn, or, alternatively, the Secretary of State personally distanced himself from Government policy. This policy is being spun in the media, no doubt by someone in the Treasury. It is not so much about helping people who need housing as trying to get a housing boom in 2015, and it is the wrong approach. The Government say that they are going to introduce a policy that would help people on whatever income, in whatever part of the country, to buy houses costing up to £600,000. That would particularly benefit people with high earnings in areas that already get a great deal of benefit from economic activity.

I hope that the Minister will soon clarify the scope of this policy. We all want support for first-time buyers and people who need housing, but we certainly do not want an unrestrained re-stimulation of the unsustainable housing booms that we have seen in the past.

16:19

[Guy Opperman (Hexham) (Con)]

The good constituents of Hexham will welcome action on fuel duty, support for the victims of Equitable Life, action on increased infrastructure, tax-free child care, decreases in corporation tax, support for business and the raising of the personal allowance up to £10,000 by 2014, which will take millions more low-paid people out of tax altogether.

The action on fuel duty is the most important thing to the people of Hexham and Northumberland. There is a stark contrast between a Labour Government who raised fuel duty 10 times in 13 years and this Government who have managed, even in these difficult times, either to keep it flat or to reduce it. I listened to the speech by the hon. Member for Dumfries and Galloway (Mr Brown), with whom I have debated fuel duty on many occasions, and it was as if I lived on a different planet, certainly not the one on which the previous Prime Minister increased fuel taxes. The reality is that the hon. Gentleman and I have the same sorts of constituents and this Government are looking after them with regard to what is the most important issue to them, namely fuel. The previous Government kept raising fuel prices. They were woeful.

[Mr Russell Brown]

All I will say, as I have told the hon. Gentleman before, is that the previous Government—this is a fact—froze or abandoned potential increases on 13 occasions over nine years.

[Guy Opperman]

There may have been plenty of times when the previous Government chose not to raise prices, but they did increase them on 10 occasions, and those with long memories in Northumberland and in Scotland remember that. [Interruption.] Opposition Members may chunter, but that is the bottom line.

The full acceptance of the Heseltine report was particularly welcomed in the north-east. It was specifically called for by the north-east chamber of commerce and has been welcomed by business. Exports from the north-east are up, jobs have improved dramatically since May 2010, and the number of apprentices has doubled. There has been a dramatic improvement. The Corus plant was shut by the previous Government—it was the titanic industrial issue in the build up to the 2010 election—but reopened by this coalition Government.

This Budget comes at a time of self-examination in the north-east. The January declaration and Lord Adonis’s review of the north-east, which I am contributing to and support wholeheartedly, are making a real difference to understanding how the region can improve itself. That is an example of proper self-examination from a detached standpoint.

Bank lending is another important issue. I welcome the Business Secretary’s statement on developments on the business bank and the fact that the Opposition have finally begun to realise that local community banking is a good idea. Sadly, when I invited the shadow Minister, the hon. Member for Hartlepool (Mr Wright), to support my campaign for local community banks in a debate on manufacturing on 24 November 2011, he declined to do so, and the point was raised with him again on the same day the following year. The proof of the pudding lies in the fact that, during an April 2012 debate on the Financial Services Bill, the Labour party voted against clauses in favour of greater competition for local banks, greater ease of entry and greater ability to open a local bank. Why would Labour Members vote against greater competition and a local community bank that makes money for the community, with profits going back to the community? It is illogical in the extreme.

I welcome the fact that the Labour party has finally come on board and accepted that local community banking is a good thing. It has taken a while and I hope that Labour Members will back up what they are saying in public with votes in support of greater competition for local people. It is vital that our campaign for local community banks continues. The work done by the Financial Services Authority is to its credit. It has made it much easier to set up a community bank.

[Neil Parish]

I agree with my hon. Friend about bank lending. Does he agree that getting greater competition locally is essential so that businesses can get better rates of interest and better deals with banks?

[Guy Opperman]

That is entirely the case. As we all know, 75% of bank lending in this country comes from the big banks and few smaller community banks are supported. The decline in local lending is definitely affecting SMEs.

There were four challenges to the creation of new local banks. First, there was a lack of legislation to facilitate such changes. We passed that legislation in the Financial Services Act 2012. The second challenge was the length and complexity of the authorisation process. That has been reduced through our work with the FSA, so it is now much easier to set up a smaller bank, whether it is a bank established by an industrialist to back a local community or an infrastructure bank like Cambridge & Counties bank or Hampshire Trust.

Thirdly, the level of capital that new banks were required to hold used to be very high. They were effectively judged exactly as Barclays would be judged. That has also changed. The FSA has made it very clear, as I have demonstrated in this House by reading out letters to me from the FSA, that it requires lower amounts of capital on an ongoing basis from smaller entrants to the market. Finally, the scale and complexity of the infrastructure was proving to be a burden. That is also being addressed.

The future must surely be local community banks, run by somebody from the local community, investing in that local community. A gradual disaster took place under successive Governments over the past 25 to 30 years, whereby local community banks were divorced from the ability to make decisions locally. Community banks could make a decent amount of profit and return it, when a certain percentage is reached, to the community.

I am delighted to say that on 7 June, the FSA, the Prudential Regulation Authority, the Financial Secretary to the Treasury and various other people will be coming to Newcastle for a debate on how we will take regional banking forward in this country. I urge all interested parties to come.

16:27

[Nic Dakin (Scunthorpe) (Lab)]

It is a pleasure to follow the hon. Member for Hexham (Guy Opperman), who was hyperactive and animated in his contribution. On balance, I feel that he protesteth too much about most things on this particular occasion.

The Chancellor can certainly talk the talk. The question the country is asking is whether he can walk the walk. In his Mais lecture on 24 February 2010, the then shadow Chancellor argued that there were a series of benchmarks for the policies of the next Parliament

“against which you will be able to judge whether a Conservative Government is delivering on this new economic model.”

He also said:

“I have set out the benchmarks against which we can be held accountable”;

that

“we will maintain Britain’s AAA credit rating”;

and:

“We have to deal with our debts”.

We can mark the Chancellor against his own benchmarks. He has lost the UK’s triple A credit rating because he has failed to deliver growth and to reduce the deficit. The lack of growth has resulted in more, not less, borrowing. It is up £254 billion. Today’s Financial Times has a graph that demonstrates that the deficit is getting wider and that debt is going up. The headline says, “Things are worse and Plan A is off course.” It is now forecast that national debt as a percentage of GDP will not start falling until 2017-18.

In a sense, the Chancellor has supervised his own deficit expansion programme. Nice work by the Chancellor! But it was all too predictable. At least one learned commentator gave a warning in 2010—the Business Secretary who spoke from the Dispatch Box earlier. He said:

“Slashing spending now could push the economy back into recession and inflict further structural damage on the UK that will make it harder to sustain our credit rating.”

He said of the then shadow Chancellor:

“He…fails to appreciate that what the markets are looking for is a credible plan to reduce the deficit, not a willingness to slash regardless of economic conditions. In the current climate, it is essential that decisions about the speed and timing of tackling the deficit are based on the state of the economy, not political dogma.”

There we have it: decisions made from millionaires’ row and in yesterday’s Budget are affecting ordinary, hard-working people in my Scunthorpe constituency, and they are not making a difference for the better.

People are suffering from the removal of the education maintenance allowance, tuition fees, the rise in VAT, short-term working, tax credits being taken away, rising energy bills, fuel bills still going up despite the welcome move in the Budget, and the bedroom tax; and they are £381 a year worse off than they were in 2010. This Budget prefers a bedroom tax to a mansion tax, and it prefers giving a second home subsidy to those who can take advantage of it to building homes for those who need them. This is a Budget for millionaires, not hard-working people. It is a Budget of desperation and exasperation rather than aspiration, and another omnishambles.

[Barbara Keeley]

On a point of order, Mr Deputy Speaker. There has been lot of confusion over the last few hours about the Government’s new mortgage guarantee scheme, and while we have the opportunity I would like to ask those on the Treasury Bench to clarify whether second home owners are eligible for the scheme. Can the scheme, which can be used for new builds and other types of housing, be used in that way?

[Mr Deputy Speaker (Mr Nigel Evans)]

That is not a point of order for the Chair. As the hon. Lady knows, we still have another half hour of this debate and two full days on the financial statement. No doubt I will be in the Chair at times during those two days, and I know that her point will be raised, and that the Government will respond, probably in a way similar to the responses we have heard during this debate. I am absolutely certain that it will be part of the debate.

16:32

[Sheila Gilmore (Edinburgh East) (Lab)]

Last Thursday when I was going home on the train I read in the Evening Standard an article pointing out that our debates on this Budget, the previous Budget and the ones before that are not just a reprise of each other, but a reprise of the 1930s. The argument that the way to cure the country’s economic problems is to cut, cut, cut, took place in the 1930s and was proved wrong, yet here we are again. If MPs from that time were in the Chamber today as ghosts, they would think that they were still alive and taking part in the debate.

That has not all happened by accident, and the Government are following an ideological path. They told us that the public sector is a drag on the economy and that if we did not cut it back the private sector would never spring into growth. In fact, the public sector is a huge customer of the private sector, both institutionally, from the construction works it undertakes right down to the stationery it buys, and individually, because a public sector worker is a private sector consumer. Individual workers contribute to their local economies by buying and furnishing their homes, buying new bikes and cars and spending on all sorts of other consumer durables. Cutting all that directly affects the private sector, which is exactly what we have seen for the past three years.

[Andrew Gwynne]

Is it not an absolute truth that in 2010 all the economic indicators, including consumer confidence, were heading in the right direction, yet almost immediately at the point that the Government turned off the taps and brought in their austerity Budget, consumer confidence plummeted?

[Sheila Gilmore]

As a result of the stimulus provided by the previous Government, all those measurements were turning in the right direction at that time—[Interruption.] Perhaps the Minister who is laughing ought to look, as I did last weekend, at the OBR report on the June 2010 pre-Budget report. He might not be laughing quite so hard then. The Government fail to analyse the problem correctly, so it is not surprising that they do not arrive at the right decision.

On jobs, it is not surprising that the Chancellor did not want to dwell on unemployment and this week’s increase. All we hear about is the increased number in employment. For once, I will not dwell on the statistics—others have done so, and I mentioned them in an intervention, but I want to highlight what the jobs situation means in the real world.

Last Saturday, I was out knocking on doors in my constituency. Within half an hour, I had met two people who were good examples of what the jobs situation means for them. One man had a 15-hour a week job in a local supermarket. No doubt these flexible short-term jobs are quite useful for the employer in meeting peak demand, and, of course, a person working 15 hours for the minimum wage will be below the national insurance threshold, which is another advantage for the employer. He had asked for more hours because he will be hit by the bedroom tax, but he was told that extra hours were not available.

Even if the hours were available, whom would they be taken from? My constituent might be given more hours, but unless there is a need for extra hours to be done in that job, another employee will get fewer hours, or another person would not get a job. Counting low-hour part-time jobs—we should remember that some so-called full-time jobs involve low hours—and saying, “Aren’t they wonderful?” is to forget that we are talking about real people. What effect does that have on them? The man is working and wants to work. More work in future would be good for his well-being, but he remains in poverty, like so many others.

[Barbara Keeley]

My hon. Friend makes some excellent points. Does she agree that, although people want those jobs, taking them often means they are denied the chance of further training and other opportunities? They would rather stick in the jobs they have than take the risk of going for those opportunities.

[Sheila Gilmore]

I know from work by single parent organisations that that is a problem for single parents who want to re-skill so that they can get jobs that will help them to bring up their children.

In the situation I have described, the individual stays poor, and the economy stagnates. That is the reality of the so-called jobs miracle. It is time the Government got real about what is happening.

On the housing measures, if the Government want to help the housing crisis and stimulate the economy, the best way would be through direct investment, which could be done very quickly. There are lots of sites with planning permission that could be used to build affordable homes. To say that 15,000 additional so-called affordable homes will be built as a result of the Budget is so far away from helping the problem that I do not know where to begin. As I said in an intervention, those are not really affordable homes—homes at 80% of market value are not affordable to most people. If they become affordable for people on low incomes, the housing benefit bill will be ratcheted up, when the Government have told us for so long that they are trying to reduce it. One part of the Government is ensuring that many of my constituents suffer a substantial cut in their income from the bedroom tax to cut the housing benefit bill, but another part is busily putting the housing benefit bill up. The policy does not make sense. Last year, we were told that 100,000 people will benefit from the Help to Buy scheme. The reality is that only 1,5000 have benefited. It is not enough to talk about all those plans and say how wonderful they will be when none of them results in anything.

Frankly, an athlete who became slower after their trainer told them they had only to diet to get faster would sack the trainer. That is what we need to do.

16:39

[Mr Iain Wright (Hartlepool) (Lab)]

I thank all hon. Members who have contributed today. By my reckoning, we have heard valuable and insightful speeches from 30 hon. Members—although, with the exception of the Business Secretary, no Liberal Democrats. All those hon. Members brought to the debate their feelings about, and analysis of, the impact that the measures in the Budget will have on families and businesses in their constituencies and across the country. We have heard about massage parlours, whip cracks and the Kama Sutra—but I shall move on.

At the start of the debate, we heard a tour de force from the shadow Chancellor, who exposed the complete confusion about the new Help to Buy scheme, suggesting that we now have a second omnishambles Budget. We are expecting a U-turn very shortly. It seems that the scheme will not help hard-pressed families get a foot on the property ladder: it is actually a bung, a spare-home subsidy for millionaires. That is not what the housing market needs, and it is certainly not what the economy needs.

We have heard that public sector net borrowing has been, with acute financial management, revised down next year by £0.1 billion. I thought that would have entailed the Treasury going round Whitehall telling Departments not to order photocopying paper this month, but it is a lot more serious than that. As my hon. Friend the Member for Denton and Reddish (Andrew Gwynne) said, we are seeing £2.2 billion moving away from the NHS. Valuable, important and often life-saving operations may not happen as a direct result of the Government’s attempts at financial management. That is an absolute disgrace.

[Neil Parish]

Will the hon. Gentleman give way?

[Mr Wright]

I am afraid that I do not have time.

I would support a comprehensive, intelligent and active industrial strategy, based on rigorous analysis and for our competitive advantage. I commend the Government on Monday’s announcement on the aerospace strategy, which is welcome, but there was precious little in the Chancellor’s statement yesterday to back up such an approach.

I was particularly concerned to read in table 2.4 of the Red Book that both resource and capital departmental expenditure limits—DEL—for the green investment bank will be cut to zero in 2014-15. Given that the CBI and others have rightly identified the low carbon sector as a potential growth area in which the UK can be a leading global player if we have the right long-term vision and targeted investment to provide certainty, the figures in the Red Book do not fill me with confidence and I would be grateful if the Minister could outline the Government’s longer term plans and investment for the green investment bank.

Similarly, I was disappointed that no mention was given in the Budget to science. The Chancellor made great play of the need for Britain to compete in the global race. I agree with him. If we are to avoid slipping behind in the international competitiveness race, we must prioritise science and technological innovation, because if we do not, our future industrial capacity will be undermined. Will the Minister outline why science was not mentioned in the Budget?

Several hon. Members, including my hon. Friend the Member for Denton and Reddish and the hon. Member for North Swindon (Justin Tomlinson), mentioned business rates and retail, and they were right to do so, because the Budget certainly did not. David McCorquodale, head of retail at KPMG, said:

“The decision to go ahead regardless and increase business rates will squeeze embattled retailers further and will not deliver the respite the retail sector needs to recover.

Retailers are now left facing a 2.6% hike to their business rates bill, a move which will add £175 million to their overheads. Amongst a backdrop of flatlining sales and continued austerity, this is not a welcome move by the Government.”

Can I ask the Minister why the Government did not help the embattled retail sector?

In today’s debate, many hon. Members, starting with the shadow Chancellor, reminded the House of what the Chancellor had promised in the run-up to the general election and in his first Budget. He set himself several key targets and tests by which his economic record, competency, judgment and capability should be judged. First, the Conservative party’s manifesto stated that the first objective would be to

“safeguard Britain’s credit rating with a credible plan to eliminate the bulk of the structural deficit over a Parliament.”

In early 2010, he backed that up by saying that

“our first Benchmark for Britain is to...cut the deficit more quickly to safeguard Britain’s credit rating.”

We all know how successful the Chancellor’s performance has been on that score. Curiously enough, there is no mention of the credit rating in the Red Book; nor was it mentioned in the Chancellor’s speech yesterday. Funnily enough, I did not hear many Government Back Benchers mention how important the credit rating is either, although my hon. Friends the Members for Birmingham, Selly Oak (Steve McCabe) and for Scunthorpe (Nic Dakin) certainly did mention it.

At the start of this Parliament, the Chancellor said that the current structural deficit would be eliminated by the end of 2014-15. Yesterday’s Red Book, however, shows that the Chancellor’s target to balance the books by the end of this Parliament will be missed by three whole years. Public sector net borrowing at the end of this Parliament is now forecast to be approximately £96 billion—five times larger than the Chancellor expected it to be in 2010. Every year, he comes to this House and has to admit that borrowing is rising, and that the time scale to cut the deficit is growing ever longer.

The Office for Budget Responsibility has said that deficit reduction has stalled. Net borrowing is higher in each year as a result of weaker economic outlook. My hon. Friend the Member for Barnsley Central (Dan Jarvis) reminded us that the Government are forecast to borrow £245 billion more than they originally planned, and my hon. Friend the Member for Luton South (Gavin Shuker) said that borrowing in the five years of this Government is higher than it was in the 13 years of the previous Labour Government. The dramatic deterioration in sentiment, even since Christmas, is striking. According to Red Book figures, the Government now expect to borrow £55.7 billion more in the next five years than they thought they would have to even three months ago.

The Chancellor assured us that, as a result of his policies, net debt would be falling as a proportion of national income by 2015. That was one of his fiscal targets. Judge me, he said, by my ability to get debt as a share of GDP down. However, the Red Book reveals the true failure of the Chancellor’s approach: net debt as a proportion of national income is not falling but rising in every single year of the rest of this Parliament and beyond, from 75.9% of national income this year, to 79.2% in 2013-14, to 82.6% in 2014-15, to 85.1% in 2015 and peaking at 85.6% in 2016-17. As the OBR states:

“As borrowing now falls more gradually, debt rises more quickly as a share of GDP.”

We are now paying more in debt interest—£51 billion a year, which is more than we spend on the defence of this country—than the £44 billion when this Government came to office. The TaxPayers Alliance, which I do not think is a friend of the Labour party, said today:

“By 2017-18, even on the OBR’s optimistic forecasts, the Coalition Government will have more than doubled the official national debt it inherited.”

The Chancellor is refusing, in the face of all the evidence, to change direction in economic policy, as my hon. Friend the Member for Barnsley Central said. On every single test of economic policy that the Chancellor has set himself and asked to be judged on, he has failed, and because of those failures families in Britain are struggling. Life is worse now and living standards are lower for ordinary families than they were three years ago, and they will be worse in 2015. The Chancellor is pursuing this course for reasons of political vanity and ideological arrogance, rather than from economic necessity. His incompetence and lack of judgment have meant that he has boxed himself in. There is nowhere for him to go with any dignity and he refuses, for reasons of pride rather than economics, to change course. As Andrew Smith, chief economist at KPMG in the UK said in response to the Budget yesterday:

“It is now clear that ambitious deficit reduction is stunting growth. Hemmed in by what is left of ‘Plan A’, today’s measures amount to little more than rearranging the deckchairs…hopes that exports and private business investment will come to the rescue depend crucially on strengthening overseas markets—something over which neither the Chancellor nor the Bank of England have any control.”

The Chancellor is fast running out of excuses. He has blamed the lack of growth in the economy on the snow, on the rain and on the sun. I am sure that the recent eruption of Mount Etna must also somehow be causing a drag on the British economy. He has blamed lack of growth on the diamond jubilee, the Olympics, the number of bank holidays and, as far as I am aware, on the fact that Girls Aloud have reformed and split up, and the Rovers Return has burned down. The excuses have got to stop. The Chancellor needs to look in the mirror.

Despite the difficult European situation, the flatlining economy is down to the Chancellor. A deficit reduction programme without a strategy for growth is no deficit reduction programme at all. Growth forecasts have halved, living standards are falling for millions of people, borrowing is soaring and control of the public finances have been kicked well into the next Parliament. The hon. Member for Bedford (Richard Fuller), for whom I have a lot of respect, has said that we should not kick the can down the road, but with this Budget that is precisely what the Chancellor is doing. He and the Government need to acknowledge their failings and change course, or, better still, make way for a team that will help fulfil the British promise, not hinder it.

16:50

[The Economic Secretary to the Treasury (Sajid Javid)]

I am grateful for the opportunity to respond to this debate. We have heard from my right hon. Friend the Secretary of State for Business, Innovation and Skills, from 30 Back Benchers—if I counted correctly—and from one comedian, also known as the shadow Chancellor. His speech was full of jokes and invective, but there was not a single idea about how to deal with the problems in the economy—the very problems that he and his friends helped to create. He might be taking heart from the Italian election, in which a comedian did rather well. He might think the same will work with the British people, but it will not.

It is worth taking a step back and reminding ourselves of the context. The Government inherited the largest deficit in peacetime history. The Government were borrowing one in every £4 they were spending. We have now cut the deficit by a third, but the shadow Chancellor’s plans would take that off track. It is worth recalling his own record on borrowing. As my hon. Friends the Members for Bournemouth East (Mr Ellwood), for Mid Norfolk (George Freeman) and for Bedford (Richard Fuller) reminded us, the previous Government were running a deficit from 2001 onwards—long before the financial crisis. The IMF said that at the height of the debt-fuelled boom, we were running a structural deficit of 5% of GDP. Only Greece and Ireland were in a worse position.

The shadow Chancellor still does not accept that he spent too much and borrowed too much. He cannot even admit that under Labour’s plans, according to the IFS, the debt would be £200 billion higher. He really believes that we can borrow less by borrowing more. This country will never forget that, true to form, Labour brought our country to the brink of bankruptcy by the end of its term. After 13 years, we were left with the largest deficit since the second world war, the deepest recession of any industrialised country and the largest banking bail-out this country had ever seen—a bail-out that was the direct result of the previous Government’s reckless decisions on financial regulation. I was hoping to hear an apology from Opposition Members for all the disaster they created, but there was not a single one.

[Barbara Keeley]

Does the Minister not think it is time to stop living in the past? Will he give an answer to the point of order I raised about the new Help to Buy scheme? Can it be used for second mortgages? The information about it states that a borrower could be remortgaging an existing property with a new lending institution. It is a very confusing scheme.

[Sajid Javid]

I shall come to the Help to Buy scheme in a moment. I was hoping the hon. Lady would offer an apology, but no such luck.

As my right hon. Friend the Business Secretary stated, yesterday’s Budget had economic growth at its heart. The economy is still feeling the impact of Labour’s disastrous policies, but we continue to find practical ways to turn the economy around and to restore growth. Through the private sector, we have created 1.25 million new jobs since we came into power—more new jobs in three years than were created under the last 10 years of Labour. Under this Government, private sector employment has been growing more quickly in the north-east, the north-west and Yorkshire than across the country as a whole. There are more people in employment today than at any other time in our history. We did not hear a single Opposition Member mention that fact.

We might think that Labour Members would have welcomed that development, but they did not. Instead, we heard cheap political talk. They asked about employment, which of course we all want to fall, but they avoided the facts.

On their behalf, I have looked at the change in youth unemployment in the constituencies represented by virtually every Opposition Member who spoke today and mentioned unemployment. Let us look at the facts. This is what happened to youth unemployment during the last term of the Labour Government in those constituencies. In Paisley and Renfrewshire North it was up 150%; in Clwyd South up 103%; in Feltham and Heston up 77%; in Worsley and Eccles South up 124%; in Luton South up 45%; in Birmingham, Selly Oak up 96%; in Edinburgh North and Leith up 60%; in Scunthorpe up 135%; in Edinburgh East up 87%; and in Denton and Reddish up a record 148%. In each of those constituencies, youth unemployment rocketed during the last term of the Labour Government and in every one of them it is down under this Government.

Let me turn to the employment allowance, which a number of hon. Members mentioned. We are proud to be introducing the £2,000 employer national insurance contributions allowance, which will benefit 1.5 million companies throughout the country and take almost a third—450,000 of the smallest businesses—out of NICs altogether. Cutting this payroll tax will be a boost for employment, but our tax changes do not stop there. We are overseeing a system of competitive tax rates that will be strictly enforced—a system that encourages companies to invest and employ here. That is why we are reducing the main corporation tax rate by April 2015 by an additional 1% to 20%, making it the lowest in the G7 and the joint lowest in the G20.

Let me turn briefly to Lord Heseltine and his report, “No Stone Unturned”. As hon. Members are aware, this week the Government published their full response to the report. I am sure that hon. Members have seen the impact Lord Heseltine made on the docklands and in Merseyside. We all know that he is a man with a vision for cities. I am sure that Members will join me in wishing Lord Heseltine, who turns 80 today, a very happy birthday. To help to celebrate, the Government have accepted, in full or in part, 81 of the 89 recommendations he made in his excellent report.

While I have time, I want to turn to aspiration. We know that businesses, buildings and companies start with the vision of individuals. Yesterday’s Budget was for an aspiration nation. It is a Budget that will support people who want to work hard and get on, by preventing higher costs of child care and disincentives to work, creating a simpler system for retirement and giving people a real opportunity to buy their homes, through the help to buy scheme, the extension of the right to buy scheme and our further investment in affordable homes.

Lastly, I want to turn to the cost of living. This Budget also recognises the pressures on the cost of living, as my hon. Friends the Members for North Swindon (Justin Tomlinson), for Harrow East (Bob Blackman), for Henley (John Howell), for Tiverton and Honiton (Neil Parish) and for Hexham (Guy Opperman) all outlined. We have cancelled September’s planned fuel duty rise. Fuel duty will no longer be 10p a litre lower than the previous Government had intended; it will be 13p a litre lower from April this year. We have also cancelled Labour’s hated beer duty escalator and gone one step further by taking a penny off beer duty. I thank my hon. Friends the Members for Burton (Andrew Griffiths) and for North Swindon for raising the issue and campaigning on it so hard.

We have also achieved our commitment to take the personal allowance to £10,000 by April 2014, a year ahead of schedule, which will be a further tax cut for 24 million people up and down the country. Together, these tax allowance changes have taken 2.7 million people out of taxation altogether. Someone working full time on the minimum wage would see their tax bill more than halve because of the measures this Government have taken. As we heard from my right hon. Friend the Chancellor yesterday, every individual who was benefiting from the 10p tax rate under the previous Government is now on a zero per cent tax rate.

Yesterday’s Budget put faith in hard-working people. It was a Budget that told businesses that they are welcome to set up here and encouraged to employ people here. It was a Budget that told individuals up and down the country that if they want to work hard, they will be rewarded in our aspiration nation. I commend these Budget resolutions to the House.

Ordered, That the debate be now adjourned.—(Greg Hands.)

Debate to be resumed tomorrow.

Wind Farm (Wingate, County Durham)

Thursday 21st March 2013 Commons Chamber

16:59

[Phil Wilson (Sedgefield) (Lab)]

I present this petition on behalf of 156 residents who are opposed to the proposed Wingate Grange wind farm in my constituency.

The petition states:

The Petition of residents of the UK,

Declares that the Petitioners strongly object to the proposed planning application for the erection of 5 wind turbines of a maximum height of 115 metres and the associated infrastructure which will include a crane, hard standing, a substation and control building, transformers, underground cabling, access tracks and a meteorological mast; further that they object to the proposed location for the turbines of Wingate Grange Farm situated to the west of Wingate, south-east of Wheatley Hill, north of Deaf Hill and on the southern side of the A181.

The Petitioners therefore request that the House of Commons urges the Government to take the necessary steps to prevent the erection of the wind turbines.

And the Petitioners remain, etc.

[P001166]

Atos Healthcare

Thursday 21st March 2013 Commons Chamber

Motion made, and Question proposed, That this House do now adjourn.—(Greg Hands.)

17:01

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

I should say immediately that I have been informed that the Minister of State, Department for Work and Pensions, the hon. Member for Fareham (Mr Hoban), to whom this debate is directed, has unfortunately been held up at Glasgow airport because his plane has developed engine trouble. Obviously I am sorry about that, both for him and for me, but I suspect that the speech to be delivered by his last-minute stand-in, the Under-Secretary of State for Work and Pensions, the hon. Member for Wirral West (Esther McVey), will not diverge too dramatically from the one he would have delivered.

I am grateful for the opportunity to raise this matter in an Adjournment debate, although I very much regret that it has been necessary to do so at all. It is unprecedented in all my 40 years’ parliamentary experience for a Minister to refuse point blank to receive a delegation, on a matter of acute public interest and importance, of representatives of a major section of the population who have, in their view, been targeted extremely unjustly by Government policy.

On 31 January, I wrote to the Secretary of State asking whether a delegation could meet him in his office to discuss the reforms that urgently need to be made to the work capability assessments for disabled people. I reminded him in my letter of the debate in the House on Atos, which I initiated on 17 January. In my view, it was one of the best debates I have experienced in the House for a long time. It was free from rancour and partisanship, but it was critical, detailed, passionate and well focused on the need for reform. Nearly 30 Members spoke and, although Members on both sides of the House acknowledged that there had been some improvements, they were without exception deeply critical of the fact that the fundamental structures remained deeply flawed. That, they said, was causing profound upset, distress, indignation, anger and a real sense of helplessness, and was, in many cases, making sick people even sicker as a result of anxiety and fear.

Although many Members targeted Atos Healthcare, the French company to which the assessments have been outsourced, it was notable that not a single Member from any part of the House defended the position of the Department for Work and Pensions on the descriptors, the regulations and the guidance that had been handed down by the Government to that firm. It was for those reasons that I sought the meeting with the delegation, and it never occurred to me that it would not be readily and promptly granted by the Minister of State, the hon. Member for Fareham. Not having had a reply to my letter throughout the whole of February, however, I tabled a parliamentary question asking when the Minister was going to reply.

Within 24 hours, after waiting more than five weeks, I did receive a reply from the Minister of State. It emerged when I spoke to the Secretary of State earlier this week that he had never seen my letter. The Minister of State’s letter, which I have with me, bluntly stated that his diary did not permit him the opportunity to see this delegation, which I take to be “civil service-ese” for a flat no. Frankly, I was taken aback, so I sought out the Minister in the Lobby and, as soon as he saw me, he said: “I’m not seeing you”. When I protested, he repeated “I’m not seeing you” three times. When I insisted that this was unprecedented and totally unacceptable, he finally said, “I’m not seeing Spartacus”—and repeated that three times.

That provides the basis for my seeking this Adjournment debate today. Spartacus is a group—initially hundreds but now thousands—of sick and disabled people whose lives have been dramatically affected by the welfare changes and who have come together as a loose collective, call it what we will, to share their own narrative with a wider public. Crucially, this work, which I have read through in detail, is evidence-based, used the DWP’s own figures and reports whenever possible, and has never been challenged on accuracy either by the DWP or the wider public. Spartacus always aims to provide a calm, credible and plausible response to the Government’s proposals, highlighting where it feels the proposals will have a damaging effect on sick and disabled people and promulgating that to the wider public.

The movement crystallised initially around the so-called Spartacus or “Responsible Reform” report, which set out an evidence-based analysis showing that the DWP had misled the public by claiming broad support for the abolition of the disability living allowance and its replacement with the new benefit of personal independence payments when there was, in fact, almost no public support at all. On the launch day, literally hundreds of thousands took part and the report trended at No. 1 or 2 on Twitter all day. Since then, the report has been widely used and quoted by the Work and Pensions Committee and the Joint Committee on Human Rights, and in several parliamentary exchanges in this Chamber. I think that says enough about the auspices and credibility of this group.

In addition, the Spartacus group has produced, as I said, a detailed and lengthy review of the work capability assessment procedure based on the lived experience— set out at great length—of 70 or more claimants, with additional comments from MPs, the courts, professional bodies and medical professionals, along with the findings of several freedom of information requests.

In the light of all that, I find it inconceivable that a Minister would refuse to meet a representative or representatives from a group who have a very powerful case to make—one that is strongly supported by hundreds of thousands of sick and disabled people—and whose records show, I repeat, that they have always argued their case with evidence-based rigour and well documented analysis. It is not as if Ministers have not yet met members of Spartacus. In the last year or two, they have done so repeatedly. Kaliya Franklin, for example, one of the people I named for the delegation, met the Secretary of State at the Conservative party conference last year, and I understand that it was a productive and courteous meeting, as I would have expected it to be. Kaliya also met the Under-Secretary last year and I believe that the discussions on disability and work were fruitful.

Sue Marsh, another leading member of the Spartacus group whom I included in the delegation, discussed employment and support allowance and work capability assessments with the former Minister of State, the right hon. Member for Epsom and Ewell (Chris Grayling), for 45 minutes before they appeared on “Newsnight” together on 12 January. Both those disability activists had engaged in debate with the former Under-Secretary of State, the right hon. Member for Basingstoke (Maria Miller), numerous times on Radio 5 Live, Radio 4 and BBC TV. I simply cannot understand how the current Minister of State can conceivably, on the basis of any defensible argument, refuse this delegation.

Spartacus set out to engage with politicians. That is what it wanted to do: to create a movement with a credible voice that would be scrupulous in aiming for reasonable change, setting out reasonable demands that it believed were achievable. Yes, it does focus on the most damaging aspects of welfare reform and explain why they are harmful, as it might be expected to do, but it also offers alternatives which it believes will work and which are costed whenever possible. For the Minister to deny the engagement that Spartacus itself wants strikes me as bizarre and perverse.

Spartacus tells me that over the next few weeks it will produce a clear set of demands regarding ESA. Key to that will be the implementation of all—I stress the word “all”—the Harrington reforms now. Three years is long enough, and Harrington himself said in his year 3 review that progress had been too slow.

Of course, in trials in which all the changes are implemented, the rate of assessments falls from the current rate of between eight and 11 a day to perhaps four or five, but, crucially, this has led to nearly 100% accurate decisions. On the basis of that extremely important conclusion, I hope that Ministers will reconsider and agree to meet the delegation.

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

The Spartacus report was put together following a great deal of academic advice from my local university, Brunel. The whole purpose was to engage constructively with the Government to improve the system, and to consider basic reforms. Those people thought they would enter into a consistent dialogue with the Government. The absence of a ministerial dialogue undermines the whole exercise.

[Mr Meacher]

My hon. Friend is right. That is the whole point. The purpose is not to abuse the Government, but to engage in a rational, thoughtful dialogue in which each side listens to the other.

I realise that I could omit Spartacus from my request, but I am not prepared to do so because I do not believe that Ministers should have the right to pick and choose who is to be included in delegations they receive. It is not as if Spartacus members were rude or offensive, or did not have a powerful case to make. I would understand the Minister’s refusal in those circumstances, but they are, in fact, rational, plausible and eager to engage, and they have an extremely compelling message to which Ministers ought to listen.

I hope very much that the Minister concerned, who has displayed highly uncharacteristic defiance and intransigence, will change his mind, but if he does not, I will certainly not leave the matter where it rests at present. I will renew my request to the Secretary of State in a letter that I will personally deliver into his hands, so that this time the matter is brought to his attention.

Let me end by saying that I think it is tragic that we are having to waste time this afternoon discussing the composition of a delegation rather than dealing with the real issue, which is that hundreds of thousands of sick and disabled people have been subjected to real hardship, suffering and fear because they have been so bitterly mistreated under these regulations. They should be listened to directly, and that is the request to which Ministers should now respond.

17:15

[The Parliamentary Under-Secretary of State for Work and Pensions (Esther McVey)]

The first point to make is that the Minister of State, Department for Work and Pensions, my hon. Friend the Member for Fareham (Mr Hoban), who has responsibility for employment, apologises wholeheartedly for not being here today. As the right hon. Member for Oldham West and Royton (Mr Meacher) said at the start of the debate, the Minister had been on his way back from Glasgow, where he had been meeting Work programme providers in Scotland, when his plane had to turn back because of engine problems. That is why he could not be here, and he apologises for that. He very much wanted to answer this debate, and I know that the Department, at his request, asked whether it could be rescheduled so that he could answer it himself. He was told that that was not possible. The only person who could withdraw today’s debate was the right hon. Member for Oldham West and Royton, but he did not do so. I understand that had he done so, he would not necessarily have had it rescheduled, so I am here to speak on behalf of my ministerial colleague.

The Minister of State engages widely and continuously with a range of people on the work capability assessment. In the past few months alone, he has met people from a range of charities, including the National Autistic Society, Mencap, Mind, the Mental Health Foundation, the Scottish Association for Mental Health, Citizens Advice, Scope and many others. As I said, he was in Scotland earlier today meeting people from the Work programme. He has also met people from a range of medical organisations, including the Royal College of Psychiatrists and the British Medical Association, and the president of the Royal College of Radiologists.

All Ministers regularly correspond with fellow MPs about the work capability assessment and we have recently written to all MPs on this matter. I can confirm that the Minister of State has had extensive correspondence with the hon. Member for Rutherglen and Hamilton West (Tom Greatrex), one of the attendees at the proposed meeting. The Minister of State has responded to almost 100 parliamentary questions from the hon. Gentleman, many on the work capability assessment or Atos, over the past six months alone. We are grateful for the hon. Gentleman’s interest and that of others, and we are keen to maintain a constructive dialogue about how we might further improve the WCA. Many meetings with stakeholder organisations or individuals can be challenging; the WCA elicits strong views and is not always fully understood. On occasion mistakes have been made, but we are always open to constructive stakeholder engagement. Since taking on his role, the Minister of State has engaged with organisations that have been critical of the Department and has done so even if they have intervened in judicial reviews against the Department—he has still had those meetings.

[Mr Meacher]

I have listened to all that the Minister says and I accept it, but the key point in this debate is: why is the Minister of State not prepared to see Spartacus? Spartacus is, by any standards, a leading organisation of sick and disabled people which is supported by thousands. Why is he prepared to see all the other organisations but not Spartacus?

[Esther McVey]

I will address that point later in this debate. What is key, and what the Minister of State felt was key, is a constructive dialogue. He has consistently said several things about the WCA since taking up his role. It has to be made clear—one would not necessarily take this from today’s debate—that he inherited the WCA from the previous Labour Government. We would not necessarily know that from listening to this debate. We have been committed to improving it. We want changes to happen, wherever possible, in collaboration with the people who know most about it and who are affected by it. The Minister of State made those points in the debate on 17 January, but it is worth reiterating them today. They are the core principles that drive much of the Department’s work on the WCA and will remain so. Since taking office we have made the WCA more sensitive and less mechanistic, successfully implementing a number of challenging reforms to it.

The independent reviews of the WCA are obviously one of our key drivers for positive change. Professor Harrington has had extensive interaction with a wide variety of stakeholders, including individuals, lobby organisations, MPs across all parties, and the staff in the Department for Work and Pensions and Atos who are affected by the changes resulting from his work. Professor Harrington listened to all of the concerns raised and made recommendations based on the evidence provided. His interpretation was that mental health conditions are difficult to assess and he recommended the positioning of mental function champions within Atos. We have listened and a network of champions is now in place to provide advice and support to other health care professionals. He also recommended that we put decision makers back at the heart of the system and ensure they are empowered to make independent and considered decisions, which we have done.

Professor Harrington spotted a gap in our relationships with clinical experts—

[John McDonnell]

rose—

[Esther McVey]

I will give way once I have finished this point, so that I can get the point across.

Professor Harrington spotted a gap in our relationships with clinical experts and concluded we were not consulting them enough on the guidance and training materials used by Atos health care professionals. We have responded by putting a process in place to engage clinical expertise. That is still in its early days but we are determined to make it work. I could go on, but I will give way to the hon. Gentleman.

[John McDonnell]

Will the Minister not just answer the question? Why not this group? What is wrong with this group? Why does the Minister of State discriminate specifically against this group?

[Esther McVey]

I appreciate that the hon. Gentleman is keen to get his point on the record and, as I said, I was coming to that. The key reason I was mentioning constructive dialogue was that I was setting the question in the context of all the people the Minister of State has met, regularly meets and will continue to meet. We are determined to carry on that engagement.

As the point has been raised and as I believe that both the right hon. Member for Oldham West and Royton and the hon. Member for Hayes and Harlington (John McDonnell) voted for the work capability assessment and were in the party whose Government created the work capability assessment, let me say that it is this Government who are picking up the pieces, holding reviews and making it a far more workable benefit. That point has not been raised at all today.

The right hon. Gentleman talked about the letter and the correspondence. The letter was replied to within the 20 working days set out by Cabinet Office protocol. That is what I have been told today. It is clear that constructive—

[Mr Meacher]

I realise that the Under-Secretary has been brought in at the last minute, but that is not correct. My letter was dated 31 January and the letter from the Minister of State is dated 5 March, but I am not bothered about the technicalities of keeping to civil service rules about replies to letters. I want to know why Spartacus has been excluded when all the other organisations she has mentioned are being included. She keeps talking about constructive engagement, so why not engage with probably the most effective organisation of all?

[Esther McVey]

I will get to that. I have just had it confirmed that the letter was received on 5 February and the reply was set out on the date I mentioned.

[John McDonnell]

Just answer the question, for goodness’ sake.

[Esther McVey]

Actually, I was mentioning the constructive dialogue and what was important in the context of why my hon. Friend the Minister of State felt unable to meet that group. I understand that his diary was under immense pressure, but he had rescheduled things and was going to have a meeting, but he did not necessarily feel that the dialogue would be constructive because of the words used by Spartacus in this regard:

“The WCA is a statement of political desperation. The process is reminiscent of the medical tribunals that returned shell shocked and badly wounded soldiers to duty in the first world war or the ‘KV-machine’, the medical commission the Nazis used in the second world war to play down wounds so that soldiers could be reclassified ‘fit for the Eastern front’.”

Because of that wording, my hon. Friend felt that there would not be a constructive dialogue. What he was seeking from the many other people whom he had met was not just criticism—one has to take criticism on the chin—but a constructive dialogue to establish what those groups thought could be done better and how we could adjust the assessment. None of that had ever been forthcoming, for which reason—

[Mr Meacher]

rose—

[Esther McVey]

Please allow me to finish the sentence—for which reason he had not thus far had the meeting. However, if there were to be constructive dialogue and positive outcomes from the meeting, I am sure my hon. Friend would meet the group, but given the tone of the remarks that I quoted, he did not think that that would be the best way forward.

[Mr Meacher]

We have finally got to the explanation. I could have been given this a lot earlier. The Spartacus report is about 100 pages long—perhaps slightly under 100 pages. The quote that the hon. Lady has given was one sentence in it. I agree that it is strong language; it is the language of exasperation, hurt and anger, but the idea that the Minister should refuse to see a delegation simply because of the use of such language is absurd. Politicians are a bit tougher than that. If he disagrees with it, he can speak his own mind to members of the delegation directly. They have engaged constructively and they expect the Minister to respond.

[Esther McVey]

I hoped the right hon. Gentleman would reject and condemn such language so that the group can start on a clearer, more open way forward and have a discussion in a positive light with, as I said, constructive dialogue. That would be a positive place to start.

Those comments are at odds with what Professor Harrington himself has stated. He has said that, although there is more to do, the work capability assessment is the right concept and the Department can be proud of what it has achieved so far in improving the assessment. Our response to the latest independent review made it clear that we agree with his views and that we are committed to continue to improve the assessment.

[John McDonnell]

Will the Minister give way?

[Esther McVey]

All of us can see that that is a positive statement on which to move forward.

[John McDonnell]

Will the Minister give way on that point?

[Esther McVey]

I will not give way on that point. We have implemented those recommendations. [Interruption.] We took on a very poorly designed assessment from the Labour Government and we have done significant work to get it right.

Furthermore, although the Spartacus report on the work capability assessment—the so-called people’s review—reflects what are clearly strongly held views, it is a collection of anecdotal accounts. It fails to recognise the improvements made to the WCA since 2010—[Interruption.]

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. Mr McDonnell, I know you are frustrated but you must not behave in this manner. Please allow the Minister to finish her remarks.

[John McDonnell]

On a point of order, Mr Deputy Speaker. I apologise to you for intervening in that way, but you can understand the frustration. I have never heard that sort of feeble excuse for a Minister not willing to meet people with disabilities. I think it is outrageous. I apologise for the interruption.

[Mr Deputy Speaker]

I think the House accepts your apology and hopes that the Minister will be allowed to finish her remarks in silence.

[Esther McVey]

I think that we all suffer frustration; I do because I inherited something that was clearly unworkable and that we have had to spend more than two years trying to get right. We will continue trying to get it right. That is what we are doing and I ask the hon. Member for Hayes and Harlington to concentrate on that.

Finally, we have also invited the right hon. Member for Oldham West and Royton to have a constructive talk with Atos to look at what we could do. I believe that he declined an invitation to discuss the changes that would improve the position. He dismissed the Atos invitation as something that would not achieve anything and he condemned the work capability assessment and Atos. I believe that we all have something to learn from this and that we must all work together constructively.

[Mr Meacher]

I refused that offer because the descriptors, the regulations and the guidance had been passed down to Atos Healthcare, as the agents of the Government, from the Department for Work and Pensions. It is the Department that is responsible, not Atos Healthcare.

[Esther McVey]

Then I would say that there is much for us all to learn, whether that means the right hon. Gentleman agreeing to meet Atos or the Department agreeing to meet Spartacus, but I conclude that the approach must be constructive, because I believe, as we all do, that we want to get this right for the most vulnerable people in society.

Question put and agreed to.

17:30

House adjourned.

Westminster Hall

Thursday 21st March 2013 Westminster Hall

Thursday 21 March 2013

[Mr Charles Walker in the Chair]

backbench business

Thursday 21st March 2013 Westminster Hall

Post-2015 Development Agenda

Thursday 21st March 2013 Westminster Hall

[Relevant documents: The Eighth Report from the International Development Committee, Post-2015 Development goals, HC 657, and the Government response, HC 1065.]

Motion made, and Question proposed, That the sitting be now adjourned.—(Mr Duncan.)

13:30

[Mr Charles Walker (in the Chair)]

Just so that everybody knows where they are at, let me say that we will start the wind-up speeches at 4 pm.

[Hugh Bayley (York Central) (Lab)]

That rather limits the time for me to say anything.

I start by thanking colleagues from many of the all-party groups that take an interest in international development for joining me, on behalf of the all-party group on Africa, in seeking the debate. I also thank the Backbench Business Committee for giving it to us, particularly in this important week. Next week the United Nations Secretary-General’s high-level panel, charged with producing a report recommending global development goals for the period after 2015—the end date of the millennium development goals—meets in Indonesia. That will be its last full meeting before it publishes its report.

I should also begin by paying tribute to the Government and what the Chancellor said in his Budget speech yesterday.

“We will also deliver in this coming year on this nation’s long-standing commitment to the world’s poorest to spend 0.7% of our national income on international development.”—[Official Report, 20 March 2013; Vol. 560, c. 935-6.]

That is a statement that I imagine everybody here will warmly endorse.

The Select Committee on International Development has made criticisms from time to time of the way in which the Department for International Development is moving towards that goal. We were concerned that instead of increasing the budget in three equal stages over three years from the 0.53% of gross national income inherited from the previous Government, the budget has flatlined for three years and will now rise steeply in this year from, I think, 0.52%, which is slightly below the level inherited from the previous Government as a proportion of GNI.

[The Minister of State, Department for International Development (Mr Alan Duncan)]

If I may assist the hon. Gentleman, last year’s figure was 0.56%, so it has been rising gently but then will be steeper.

[Hugh Bayley]

I stand corrected and congratulate the Government on moving in the right direction. The concern from the International Development Committee was that it will mean a substantial increase in spend in this year. We were concerned about the absorptive capacity, particularly in countries where we have bilateral programmes. That is something that the Minister might address later.

The International Development Committee has also voiced concerns about the squeeze imposed by the Treasury on DFID’s administrative costs. Like all Members I want to see every Government Department lean and mean, but as DFID is unusual in having a sharply rising budget, we are concerned that reducing the number of people DFID has on the ground runs a risk of our aid spend being supervised and scrutinised less closely, and possibly being less efficient as a result. That needs some creative thinking.

On my visits with the International Development Committee to DFID offices in the field, it has occurred to me that it is now harder for DFID staff to spend time away from the capital, looking at what is happening in health clinics or schools. Perhaps DFID could contract out to non-governmental organisations some of that work of checking what is happening on the ground and delivering reports on whether the training programmes for teachers in rural schools are delivering trained teachers. That is just a thought.

Having said that, I acknowledge that in the current economic climate it is not an easy political decision for the Government to stick to the commitment. Those of us who think it is the right thing to do have a responsibility to make the case for international development, in church halls and local newspapers up and down the country. Although there is a strong constituency of support, often church or faith based, for international development, and support from many diaspora communities in Britain, there are also many people who ask why we are increasing our charity abroad when we are not able to increase spending on some essential services at home.

[Jeremy Lefroy (Stafford) (Con)]

I am grateful to the hon. Gentleman, and to the Backbench Business Committee, for initiating the debate. Does he agree that among young people—schoolchildren and students—there is tremendous enthusiasm for this subject? Nearly every primary school I visit in my constituency has displays about links with schools in the developing world. They seem as keen, if not more so, as any part of the adult population on the importance of those links, perhaps because they see the impact of poverty on children.

[Hugh Bayley]

I agree strongly. If we can win the hearts and minds of young people, we have a future on our side. The bold but right decision made by the Prime Minister and Government to raise our aid spending to 0.7% this year gives the Prime Minister great moral authority when he is involved in discussions with leaders of other countries. If the UK commits increased support to the world’s poor, we are in a position to argue that others should do so as well.

I want the Prime Minister to use that moral authority in the same way that Tony Blair and my right hon. Friend the Member for Kirkcaldy and Cowdenbeath (Mr Brown), the former Prime Ministers, used their authority. They decided to lead internationally the argument for debt write-offs, to increase aid substantially from 0.29% to 0.53% and to win commitments from other global leaders to do more for the world’s poor. It is particularly important for the Prime Minister to use that moral persuasion in his capacity as co-chair of the United Nations Secretary-General’s high-level panel, and in the G8 summit that he chairs this summer.

I want to talk a little more about the parallel I see with the last time the G8 was in the UK at the Gleneagles summit in 2005. The then Prime Minister Tony Blair put global development and climate change on the agenda. Many Members will recall the Make Poverty History campaign led by NGOs. It mobilised hundreds of thousands of members of the public in support of a demand to increase aid and make aid more effective. The Government’s determination, together with that support from civil society, led to a new partnership for Africa’s development.

On the one hand, donors such as the UK committed to double aid to Africa. That commitment was given by the G8 at Gleneagles and by the EU, which was under the UK presidency that same year, 2005. On the other hand, African leaders—led by Presidents Mkapa of Tanzania, Thabo Mbeki of South Africa and Obasanjo of Nigeria—gave commitments that, if the donors increased aid, leaders of African countries would do more to use that aid effectively. They established a number of peer review mechanisms—including the African Peer Review Mechanism—in which officials from one African country would audit the effectiveness of government expenditures and economic policies in other countries.

The single most important point I want to make this afternoon is that deals at international summits do not just happen. They do not happen because G8 leaders feel in a benevolent mood on the day and decide to put their hands in their pockets and double aid. It took two or three years of political mobilisation and preparation to deliver the results in the Gleneagles G8 and the British presidency of the European Union. That probably began in 2001—I remember the year well, because that was when Tony Blair sacked me from the Government. Rather nervously, he called me in afterwards to talk to him, and he asked what I intended to do. He had just made a speech about Africa and his commitment to do more to seek to reduce global poverty, and I said that I would like to do some work in that field. That was when, together with support from colleagues from other parties, we created the Africa all-party parliamentary group, and we worked closely with Downing street to identify what the UK could do in policy terms to build a better partnership with Africa.

About 18 months or so before the Gleneagles summit, Blair created the Commission for Africa—a team of eminent persons, the majority of whom were Africans—to write a proposal for improving development in the continent. They had a commission of some 36 people, headed by Myles Wickstead, who currently advises the Select Committee on International Development. They visited most countries in Africa and certainly met, as it says in the introduction to the report, representatives from 49 countries, as well as representatives from every G8 country and every country in the EU. I believe that the report was a turning point in the west’s relationship with Africa. It was soon out of print, because it was in great demand—in capitals—both in donor countries and in Africa, and Penguin Books printed a summary version in much greater quantities.

When the commission was doing its work, the all-party group on Africa sought to work with parliamentarians from other G8 and EU countries to explain what the UK Government intended to do, and to try and persuade our colleagues in the Bundestag, the Assemblée Nationale and Congress—the House of Representatives and the Senate—to ask questions of their Executive branch about how their country would respond to Blair’s proposals on increasing aid and improving the effectiveness of aid to Africa.

[Richard Graham (Gloucester) (Con)]

I congratulate the hon. Member for York Central (Hugh Bayley) on securing the debate. He is rightly talking about the importance of spending our aid budget effectively. As he knows, the Prime Minister, who is one of the three co-chairs of the high-level panel on the post-2015 development agenda, has said that his approach in part will be to speak to the issues that poor people themselves think important.

No. 7 of the millennium development goals is to ensure environmental sustainability, and earlier this year, in Bali, the first biodiesel plant in Indonesia—manufactured and installed by the Gloucestershire-based company Green Fuels Ltd on behalf of the Swiss NGO, Caritas—was opened, employing low-skilled workers to reduce the amount of unhealthy and environmentally-unfriendly recycled cooking oil in hotels in Bali. Does the hon. Gentleman agree that that would be a great project for the Secretary of State to visit on her trip to Bali shortly? Does he also agree that supporting companies such as Green Fuels would be a powerful way for DFID to help deliver the millennium development goals and help Britain’s environmental businesses?

[Hugh Bayley]

I thank the hon. Gentleman for that intervention. It is probably for the Minister, rather than me, to comment on what will be in the Secretary of State’s diary during her visit to Indonesia. I do not know about that particular project, but I would be grateful if the hon. Gentleman e-mailed me some details. I know that there is controversy over whether land in developing countries should be used for producing food or for producing biofuels, and whether it should be used for producing food for export or food for domestic consumption. If the hon. Member for Stafford (Jeremy Lefroy) were to catch your eye at some point in the debate, Mr Walker, he might well wish to say a few things about that. We need to get the balance right.

The last thing I want to say about the period leading up to the publication of the Commission for Africa’s report is that on one of my lobbying forays I was in South Africa, and I spoke to a man called Abdul Minty, who I have known for many years through the work of the anti-apartheid movement—the London-based solidarity movement—that sought the overthrow of apartheid. By that stage, he had been appointed deputy director general—that is to say, deputy permanent secretary—of the South African Foreign Minister, and he was the foreign policy adviser and speechwriter on foreign affairs for the then President of South Africa, Thabo Mbeki.

Abdul Minty said to me, “You really must take this message back to Tony Blair. In order for the report to make a difference, simply publishing it and hoping that all will turn out okay on the day is not good enough. You have got to build a political campaign to win support from world leaders, north and south, to ensure that it changes international policy. You have got, for example, to get the Germans to pledge something on 1 February, so that you can go to the French and say, ‘Surely you can match that or top it.’ You have to programme a series of steps so that when you get to Gleneagles, people know what the issues are. They will have talked with their Finance Ministers, their Development Ministers—if they have them—or their Foreign Affairs Ministers and will be in a position to make the sort of commitment that you seek. Think of it like one of our anti-apartheid campaigns. You do not get Barclays to disinvest from South Africa by writing a good report suggesting that that is what they should do. You have to organise a series of steps at shareholder meetings or on the street, getting media coverage, in order to get the change of policy that you seek.”

I had a conversation with Blair afterwards, and I hope that that was one reason why there was a choreographed political process that sought to move global leaders in the G8 and in the EU from a position of lack of commitment to a position of commitment on doing more for Africa’s development.

I believe that the high-level panel has the potential to be a turning point in international development that is just as significant as the Gleneagles summit eight years ago. Whether that happens depends on whether the key leaders of the panel, including the three co-chairs—our Prime Minister, and the Presidents of Indonesia and Liberia—see their task not only as writing a brilliant report, like the Commission for Africa report, which I am sure they will do, but as ensuring that a political process is put in train to make sure that the report makes a difference. Many people can write good reports—people at the World Bank and the United Nations Development Programme can, as can academics at the School of Oriental and African Studies, the London School of Economics or Oxford university—but what politicians can do is change international policy.

I know that at next week’s meeting, the UK will be represented not by the Prime Minister, but by the Secretary of State for International Development. She will be a powerful representative and I have every confidence in her, but in delegating that task, the Prime Minister should not delegate the rest of the task. When it comes to getting on the phone to President Obama or François Hollande and saying, “What commitment are you going to make to the proposals in the high-level panel report?” there is no substitute for that being on the basis of national leader to national leader, President to President, or Prime Minister to Prime Minister. Of course, the Secretary of State will have to do most of the heavy lifting directly with the Foreign Affairs Ministries of the other countries, but the top-level talks will have to be led by the Prime Minister.

Because of time constraints, I shall not describe in detail the goals that the International Development Committee proposed in its recent report, to which the Government have just responded. We strongly support the Prime Minister’s proposal to eliminate extreme poverty as one of the goals; to incorporate issues of environmental sustainability, as the hon. Member for Gloucester (Richard Graham) proposed; to set global goals but to accept that individual countries will need to adapt them and set national targets and indicators that are relevant to their own level of development; to ensure that there are robust processes for monitoring progress; to emphasise the importance of good governance, as our Prime Minister does with his argument about the “golden thread”; and to make job creation one of the development goals, because young people without work will not commit to and benefit from development.

Whatever goals appear in the high-level panel’s report when it is published in May, the thing that will make the most difference is not the language of a report or even the choice of one goal over another; it is political will. Can the high-level panel win the hearts and minds of world leaders north and south? That depends more than anything else on the work that the co-chairs do after they publish their report. I am talking about their getting on the road, meeting other Presidents and Prime Ministers, calling them up on the telephone, badgering them and saying, “This is an issue that won’t go away.” I think that if our Prime Minister does that, he will find his place in history as someone who has created the paradigm for development for the decade ahead, much as Blair did 10 years ago. I want him to do that, and I hope that will be the message that goes out from this debate today.

13:52

[Fiona Bruce (Congleton) (Con)]

I congratulate the hon. Member for York Central (Hugh Bayley) on securing this important debate and his contribution to the whole issue, which I and many of our other colleagues on the International Development Committee value. I am still a newish member of that Committee, so I am on a learning curve with regard to these issues, which I hope that hon. Members will bear in mind as I make my contribution.

I shall concentrate on one of the points that the hon. Gentleman raised: job creation. MDG target 1.B was:

“Achieve full and productive employment and decent work for all, including women and young people”.

However, in evidence to the Select Committee, Michael Anderson, the special envoy to the Prime Minister on the UN development goals, said that one of the points that the Prime Minister had made was that

“that goal has probably not captured the collective imagination. Part of the task is to get the goals right, but also to get a narrative so that the world mobilises around that with the same passion that they mobilise around maternal mortality and infant mortality.”

I think that the whole Committee would agree with that.

We took evidence on the subject and were informed that employment, whether salaried employment or self-employment, is critical for development. The issue is of fundamental importance to poor people. After they have a road, a school, a health centre and, of course, sufficient to eat, a job is what people want. That is based on household survey data from sub-Saharan Africa, east Asia and Latin America that were reported to us by the organisation ONE.

One of the International Development Committee’s recommendations was therefore:

“Job creation is one of the most crucial of all development challenges. Whilst the issue of employment was included in the original MDG framework, it was insufficiently prominent and failed to capture the public imagination. In the post-2015 framework, the task will be to design an employment ‘goal’ which captures the imagination of people around the world.”

That is critical, difficult as it is. If we are to facilitate developing countries to get out of, or at least to reduce, their donor dependency, as so many of them aspire to do, the only way we can do so is to help them to develop their own private sectors, and we must do that in a way that enables them to move from micro to SME—and then even larger—from informal to formal sectors, and from individuals who are self-employed to those who employ people in their local community. All those businesses can then contribute to not only their local communities, but the revenues of their national Governments through tax receipts.

It is essential that we prioritise working with the private sector in these countries, and that we involve our private sector and the expertise of the private sector in those developing nations in doing so. I know that that might not be a familiar relationship for many of those in the aid community—it is not one that they are used to—but I congratulate DFID on now being a pioneer in this. There are now individuals working in DFID who have a private sector background. I think that we have started, just within the last week, a DFID private sector project in Ethiopia that will examine how to strengthen certain sectors in that country, such as textiles, horticulture and leather, and try to unlock the problems to ensure that businesses there can strengthen and develop. We need to look at such projects.

[Bob Stewart (Beckenham) (Con)]

May I utterly reinforce what my hon. Friend says? My wife, who, as an International Committee of the Red Cross delegate, started a camp for 100,000 people in South Sudan—and ran it from scratch—has told me repeatedly that the biggest problem arises if we give aid and thus just make a problem, because people are attracted to it. She pleaded with me, saying, “If you are a Member of Parliament, ask repeatedly for us to set up businesses so that people can get the means for employment, rather than setting up camps, which attract people, and then there is nothing for them to do but exist on aid from outside, because that is an appalling model.”

[Fiona Bruce]

I entirely agree, and I thank my hon. Friend for that intervention.

One of the first things that I think we need to do—I reiterate that I am very much feeling my way here—is to ensure that there is joined-up thinking on the other millennium development goals. For example, I have been involved with a school in Tanzania for some 10 years. At the start, there were five primary school children, but today there are 400 children in the school, which now has both a primary and a secondary element. The real challenge now is that it is saying, “We have spent years educating these young people, but where are they going to work? What employment will they go into?” We must consider tertiary education in developing nations and work so that there is a progression from the education that we are providing. I totally applaud the support that DFID is giving in many countries, such as through teachers’ salaries, but unless we consider what will happen when young people come out of their school environments, we will be failing them and, indeed, the communities in which they live.

These children have aspirations. During our recent trip to Ethiopia, we found that many young children in remote villages wanted to be doctors—they wanted to contribute to their communities and they had ambition. Many of the young people I have met, for example in Rwanda, are aspiring entrepreneurs. They want to develop businesses, but we need to give them the tools to do that so that they can run with the idea. At the moment, only 5% of Africans are educated at tertiary level, although the global average is 25%, so we need to consider, in the post-2015 MDG framework, the importance of tertiary education.

Also with regard to Rwanda, I would like to talk about building entrepreneurs’ capacity to do business. I shall relay an experience that my hon. Friend the Member for Stafford (Jeremy Lefroy) and I had when we first went to Rwanda in 2010, under the Conservative party’s Umubano project, to teach entrepreneurs how to run their businesses. We went for a week: on Monday, we taught how to write a business plan; on Tuesday, we taught how to write a marketing plan; on Wednesday, we taught how to set a budget; on Thursday, we taught how to recruit and interview staff; and on Friday, we taught how to review it all. No self-respecting management consultant would have entertained doing that in a week. We taught 14 businesses, and after day one, we thought, “If they’re interested, they’ll come back.” They all came back day after day.

At the end of the week, the head of the Rwandan chamber of commerce came to see us and said, “This has really been of interest. Could you come back next year to teach some more businesses?” We said, “How many more would be interested?” She looked at us and said, “About 74,000.” They could not get basic help in Rwanda about how to develop businesses, so there is real potential for people in this country’s private sector to help to build business capacity. People with experience of developing businesses—perhaps those who are semi-retired or have taken early retirement—could be matched with businesses in developing countries and give them mentoring and support. Perhaps they could use technology so that they do not need to go out there to visit. There is a hunger for that kind of help, however.

Businesses that want to create jobs in the developing world have problems accessing finance. For example, on the International Development Committee’s recent visit to Ethiopia, we met the Nile Edible Oil Manufacturing Industry plc, which is a co-operative of about 32 small companies that produce edible cooking oil, often in little more than backstreet shacks. The group got together with some support from the UN. It produced an action plan, formed a business association and found a site where it wanted to build a business park, which would have involved individual units and a central processing plant. The plan was very exciting. Through the co-operative, the farmers had been helped to produce better crop yields and the producers were enhancing their productivity with better machinery and better technological support, and they were all delivering to markets at a better price. The group has a site for a business park and a plan, but it cannot get funding. I am sure that that situation is typical of many companies, organisations and associations in the developing world that cannot access finance. We think that accessing finance it is difficult here, but imagine how much harder it is there. As part of our job creation aspiration and prioritisation for the developing world, can we look at access to finance?

I wish to make a few additional points before I conclude. It is right that there are many aspects to enabling businesses to work. For example, there needs to be better land registration and security of land tenure for businesses. If someone is setting up a business, they want to feel secure, and we can help with that. Good community governance is also important, because when a local community understands that if local businesses flourish, local rates will improve, it is a win-win for the community’s support for local businesses. That understanding still needs to be developed.

Aid conditionality with regard to transparency, such as tax transparency and so forth, would be helpful, as would support for developing a “Companies House” in some developing countries. Businesses could then be registered and they would deliver annual accounts, which would lead to some sort of recognition in the business community to help them to move from an informal to a formal footing. Businesses should be given incentives to do that—whether through advice, or access to funding or grants—to ensure that the business community in developing countries has structural support.

I was encouraged when I read a communication from the European Commission—I do not often say that—to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions about the post-2015 discussions. The communication was called “A Decent Life for All”, and I shall read some brief excerpts to hon. Members because they articulate what I have been talking about better than I can. The document refers to the need for an “overarching framework” for millennium development goals, which would cover, among other things

“drivers for sustainable and inclusive growth and development that are necessary for structural transformation of the economy, needed to ensure the creation of productive capacities and employment”

It goes on to say:

“Goals should provide incentives for cooperation and partnerships among governments, civil society, including the private sector, and the global community at large”

Implementing the framework would involve “domestic resource mobilisation” within each country,

“legal and fiscal regulations and institutions supporting the development of the private sector, investment, decent job creation and export competitiveness”,

which are essential to making the ambition of developing strong economies achievable for all countries. Interestingly, that is true of all countries at all levels of development.

The Commission held a public consultation in summer 2012 to which around 120 organisations and individuals contributed. There was a consensus that although the MDGs had rallied many and different actors behind the same development objectives, there needed to be common views on future priorities. There are six views, and it is interesting that several highlight the importance of sustainable economic development. In particular, one says that priorities must

“Foster the drivers for economic growth and job creation including by engaging with the private sector”.

I hope that I have contributed to highlighting the hunger for, and opportunities to support, economic development in developing countries, particularly through the involvement of the private sector.

14:07

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

This afternoon’s debate is timely and I congratulate the hon. Member for York Central (Hugh Bayley) on securing it. It is right that we are considering development now and looking forward at the post-2015 agenda, ahead of the upcoming high-level summit and the G8 later this year.

As I am sure some Members present will be aware, yesterday the President of Malawi, Joyce Banda, was here in Westminster addressing Members of both Houses, as part of a visit to mark the bicentenary of David Livingstone’s birth. I spent some time in Malawi, in a previous professional incarnation, and I represent a constituency with strong historical links to Ekwendeni, in the north of Malawi, through the Church of Scotland, so I was particularly interested in what President Banda had to say about development progress in her country and her reflections on future priorities post 2015.

Malawi is one of the less developed countries in southern Africa, and although the millennium development goals have helped to focus attention on access to basic services, President Banda made it clear that too little progress has been made on tackling maternal mortality. A few years ago, I visited health care facilities in Malawi. They were understaffed and under-resourced. With nurses’ and midwives’ representatives, I discussed the immense challenges they face in managing complications in pregnancy and childbirth that in this country would be routinely dealt with—infections, high blood pressure and conditions that should not still be killing women and can be treated cheaply and effectively, but which nevertheless cause unnecessary maternal deaths.

I also remember visiting schools in rural areas that had grass roofs, mud floors and one textbook for a class of 100 children. During the rainy season, lessons just have to stop, and the lack of toilet facilities means that many girls are taken out of school as soon as they hit puberty. President Banda touched on those issues yesterday too, when she talked about the importance of ensuring that girls as well as boys go to secondary school, and about her Government’s efforts to ensure that girls are recruited in equal numbers to boys and are able to return to school even if they have had children. There is a lot of evidence that education helps to reduce the incidence of early marriage and childbirth, and significantly boosts a family’s long-term prospects, but we must look beyond counting the children in the classrooms and emphasise the quality of the education, the length of time during which kids receive it, and the equality of both access and outcomes for girls.

All of that highlights a key issue for us as we look beyond 2015, which is that whatever the merits of the millennium development goals in providing a focus for global political action, they have had serious limitations as measures of poverty reduction and have, perhaps, not reflected national and regional priorities in different parts of the planet. They have also masked inequality in ways that can distort our assessment of their impact, and that is particularly true in relation to the women and girls who are often left behind when we measure progress.

That point was brought home forcefully at a meeting I recently chaired, of the all-party group on international development and the environment and the all-party group on water and sanitation in the third world, where a high-level panel of experts raised similar concerns about the patterns that emerge when we look at the millions of people around the world who still do not have access to water, sanitation and hygiene. Those left out of the tremendous progress that has been made are predominantly women and girls in low-income households, and disabled people, and it was pointed out that they are often the same individuals who have missed out on the progress made towards other millennium development goals. They are the same women, girls and disabled people who are missing out on access to education, and the same people who are missing out on access to basic health care. Given that 70% of the world’s poorest people now live in middle-income countries, it is more important than ever that development assistance addresses structural inequalities and recognises human rights at the heart of the agenda.

In the past couple of weeks, I have pressed the Secretary of State for International Development on the importance of addressing persistent gender inequalities, because that is absolutely key to eradicating poverty. I have been heartened by her recognition that gender-disaggregated impact assessment is crucial to ensuring that the benefits of development are shared by women and men, and that is something practical that her Department can do to strengthen its work. Today, however, I want to go a bit further and emphasise the importance of universal access to basic health care, water and sanitation as a precondition for the kind of economic development that the Government want to promote—as other Members have mentioned—and that people in developing countries want to see. If poor women and the poorest people in rural—or urban—areas do not get access to clean water, sanitation and hygiene, do not get access to basic health care and do not get a decent education, they will not get the jobs we are talking about and their poverty will become more entrenched, even as their countries enjoy unprecedented economic growth. That is not a recipe for political stability or effective governance.

The other set of challenges many countries face is in establishing a stable political environment in which the state can function, investors can have confidence and people can build sustainable livelihoods. My last plea, therefore, is for accountability, and for support for elected Governments in developing countries to build the institutions and the infrastructure they need to function effectively. It is also necessary to strengthen the ability of citizens to hold their Governments and the international corporations that operate in their countries to account for the impact they have on their lives.

In leading the debate, the hon. Member for York Central talked about the last G8 meeting in the UK and the Make Poverty History campaign in 2005. I have no doubt whatever that the political will that was created at the time of that meeting was very much driven by civil society action around the world, and here also. It was that action that created the pressure on Governments, and the space for them to do the right thing and pursue a development agenda. I was one of the 250,000 people walking down the streets of Edinburgh that day, and it was a great lesson in how peaceful civil society action can transform the world. If that is good enough for us, it is good enough for developing countries, and perhaps it is even more necessary in developing countries where governance has historically been less embedded or robust, or is more nascent, than in others. I therefore urge Ministers to put their weight behind that issue in the talks that are coming up in the next few weeks and months.

14:10

[Jeremy Lefroy (Stafford) (Con)]

It is a real pleasure to serve under your chairmanship, Mr Walker. I refer Members to my entry in the Register of Members’ Financial Interests, particularly in respect of a number of all-party groups and my interests in working in Tanzania over many years.

Along with many Members, I welcome the commitment announced yesterday that the people of the UK will meet the 0.7% target that was pledged at Gleneagles and which, as the hon. Member for York Central (Hugh Bayley) rightly said, has been worked for over a number of years by the previous and current Governments. I congratulate the hon. Gentleman and the Backbench Business Committee on providing the time for today’s debate.

I want particularly to mention—I am glad he is here—my right hon. Friend the Member for Hitchin and Harpenden (Mr Lilley), under whom I served when he led the Conservative party’s policy review on international development back in 2006-07. He was committed to that particular target, and he produced an extremely thoughtful and detailed report, much of which, I am glad to say, this Government have put into practice. At the same time, I commend the noble Lord Howard who, as the first leader of the Conservative party to sign up to the 0.7% target, helped the party on its way to yesterday’s announcement. I ask the Minister if the Government will take the challenge to countries that have not yet met the target and which, at the moment, regrettably show no signs of doing so.

We heard just a few weeks ago that in the United States the 5% across-the-board cut to public spending applies to international development as much as to anything else—and it was only 0.2% anyway. We should encourage Germany and France, and indeed all other members of the European Union that do not do so at the moment, to match what the United Kingdom is doing. There are many honourable exceptions, particularly among the Nordic countries, and also the Netherlands, and we should be grateful to them for showing us the way.

We are talking today about the post-2015 millennium development goals. The MDGs were successful because they were simple and measurable and countries were able to take responsibility for them. They were things that people could understand, and there were not that many of them, and it is crucial, as the International Development Committee’s report states, that that should remain the case post-2015. We should not end up with 15 or 20 MDGs; we suggest a maximum of 10, but that is obviously open to negotiation. Nevertheless, however many we have, they should again be simple, clear and measurable, and be ones that people can buy into and take responsibility for. We should remember that it is because they are simple and measurable that they have been so successful. Let us not forget that 10,000 fewer under-fives die each day than in 1990, 33 million more children go to school than 10 years ago, and 12 times as many people have access to HIV/AIDS treatment as in 2003.

I have had the pleasure of going to a couple of meetings organised by the Africa all-party group and the Royal African Society over the past few weeks, including the one this morning, which the hon. Member for Banff and Buchan (Dr Whiteford) mentioned, with Her Excellency Joyce Banda, the President of Malawi. We can see what the previous regime there was able to do to food security, simply by introducing subsidies for seeds and fertiliser. I remember clearly the famine in Malawi in 2006-07, because we had to send maize down from Tanzania as aid, to support people who were running short of food. Now the country is food-secure, and that is down to its Government’s development policy and the support of the UK’s Department for International Development and others, through the subsidy on fertiliser and seeds.

The president of the African Development Bank, Donald Kaberuka, was here last week. He has changed it from being a bit of a laughing stock of development banks to perhaps the leading one or one of the most respected in the world. He and his colleagues are doing tremendous work in funding private sector infrastructure and so on throughout the area for which they have a remit.

The Committee’s report makes it clear that no fragile state has yet achieved any of the millennium development goals, which is why Her Majesty’s Government’s commitment to spend a substantial amount of the aid budget in fragile states is so important. It would be so easy to get quick wins—to spend the money where the results can be seen. It is much harder to do good work, as DFID is doing with its partners, in fragile states and to get results, but it is the right thing to do as it helps some of the poorest people in the world. People in fragile states have the least chance of getting out of poverty. Post-2015, we must not scrap the MDGs or design completely new ones, but build on their success, improve them where necessary and maintain what has been shown to succeed.

I want to concentrate on jobs and health. My hon. Friend the Member for Congleton (Fiona Bruce) covered the subject of jobs so well that I will cut down my prepared remarks and avoid duplicating hers. Jobs, whether in employment or self-employment, are absolutely key to getting out of poverty and they link our economy with those of developing countries: if those countries create jobs, we will, because if they create jobs, people will be in work and will spend money, creating markets for our goods.

I made the point in the House last week that I am not in favour of tied aid. Tanzania is one of our biggest aid partners: we are possibly its biggest contributor of bilateral aid—we are certainly its biggest investor, and we are its second biggest if not the biggest trader.

Three things go together—our support for the Tanzanian Government in the health, education and private sectors; our investment; and our trade, which also helps people in this country. This is win-win. If we help to create jobs and support those who are creating jobs, we support the creation of jobs in our country, which is just as vital. Development is not just something we do overseas and that has no relationship here; the two are absolutely connected.

The Chancellor highlighted trade figures in his Budget yesterday. Since 2009, our volume of trade with the European Union has risen by 5%, but with the rest of the world by 30%. Six of the top 10 fastest-growing countries are in sub-Saharan Africa, and most of the others are developing countries.

How can we help those who are trying to create jobs in the developing world? I want to concentrate on an area highlighted by my hon. Friend—I shall so describe him, as I have huge respect for his work over many years—the Member for York Central: agriculture. We have tended to view agriculture as somehow being different, or rural development as being something apart, with agriculture fitting into rural development. Agriculture is business. Those involved in small-scale agriculture are business women and men and should be viewed as such. SMEs is the “buzz word” for small-scale farmers, entrepreneurs who do fantastic things on almost no budget. We must help them or their Governments to assist with the creation of markets, improvements in productivity—irrigation, new seeds and fertilizer have already been mentioned—and processing.

Let us not forget that the Netherlands, one of the most successful economies in the world, was built on agriculture. Over the years, it went from being a producer to being a producer and processor, and then to being a producer, processor and trader and became the world hub for flowers, which it used to grow but now mainly trades. A substantial part of the Dutch economy is based on agriculture, yet it is not viewed as backward. Indeed, one of its financial institutions, the Rabobank, a co-operative agriculture bank, is one of the few banks to retain top status with all credit rating agencies. Many institutions in our country grew out of the agricultural sector and, unless I am mistaken, the United Kingdom’s biggest single manufacturing sector remains food and drink processing, based on the raw materials produced by our farmers. We should not move away from agriculture, but build on it as development occurs, which is so important in job creation, whether in employment or self-employment.

My hon. Friend the Member for Congleton mentioned finance. DFID has rightly begun to focus on different ways of achieving financial innovation in the developing world. The financial deepening challenge fund, with which I was involved some years ago, looked at different means of offering finance, whether through micro-finance or investment in small and medium-sized businesses. Sometimes, the problem is what we in the UK refer to as the “financing gap”. Funds are often available for micro-businesses and for large businesses, but the problem is in the middle, where the costs of finance are substantial—professionals need to be involved—and the cost per transaction is too high to make the transaction viable. Existing micro-businesses cannot grow into small businesses and then into medium businesses, because they come up against that brick wall. They can get the first $5,000 or $10,000, but the problem arises when they encounter the big gap and need $50,000 or $100,000 to employ substantial numbers of people. They are told to go to the banks, which require security that they do not have, and the venture capital or investment funds say, “$100,000 is too little for us”.

We are trying to crack the problem, but we have not done so yet. I believe that solutions are available—for example, leasing, because often a business needs equipment to create jobs, for which, although it can provide the working capital, it requires capital investment. I encourage DFID to consider that further.

Let us not forget that when we are discussing jobs, we are talking mainly about young people. There are 3.5 billion people under 30 in the world, 1.7 billion of whom are aged between 15 and 24, and they must be at the forefront of our mind. They can go through their education and find that there is nothing at the end, which is very dangerous. I urge that young people are placed at the forefront of consideration of the post-2015 MDGs.

I was talking yesterday to the chief executive of Y Care International, an international development organisation associated with YMCAs in Britain and overseas. It and many other youth organisations around the world are highly focused on the risk of leaving young people out of discussions, which are all conducted at a high level. It is great that the Prime Minister chairs a UN high-level panel on young people, but we must ensure that that results in action, not just in words.

Poor health is clearly both a cause and an effect of poverty, so it is crucial that we tackle it. Malaria can cost households 25% of their income, not necessarily through mortality, but through morbidity, the inability to work or lower productivity. The millennium development goals have led to substantial improvements in the treatment of diseases such as TB, malaria and HIV/AIDS. There have been improvements, too, in child and maternal mortality, both of which are very much affected by all those diseases. Malaria deaths have gone down by a third since 2000, but there are still far too many and the Prime Minister is focused on the UK helping to cut that rate still further. We must not forget that these are strong diseases, and they have a habit of returning. In the 1960s malaria was almost eliminated from Zanzibar, but people took their foot off the pedal and it came back with a vengeance. Work had to start all over again, which is why the MDGs, post-2015, must not lose their focus on those diseases, which can come back to strike us very quickly.

There are roughly 17 of the so-called neglected tropical diseases and they affect up to 2 billion of the world’s poorest. They are not necessarily killers, although they can be, but they are disablers. They strike the poorest and deprive them of their ability to earn a livelihood. There are simple ways of tackling them; the drugs exist. It is the distribution of those drugs that is the problem. We have seen fantastic co-operation between pharmaceutical companies, which have given many drugs for free, and Governments, as they tackle not just one disease but three or four at a time.

I went to Tanzania with the hon. Member for Bassetlaw (John Mann) and the Minister of State, Department of Health, my hon. Friend the Member for North Norfolk (Norman Lamb), over the new year, and we saw a fantastic programme run by the Tanzanian Government in which four neglected tropical diseases were being tackled together. We saw people with lymphatic filariasis who were disabled but able to lead pretty much normal lives thanks to the integrated programme. When we come to discuss how the MDGs, post 2015, deal with health, we must balance what our report calls an overall health goal with not losing the focus on those diseases against which there has been so much success over the past 10 to 15 years.

In conclusion, I welcome this debate and the tremendous work that DFID has done over many years on so many of these issues. We should celebrate what has happened over the past 13 years since the MDGs first came in, but recognise that that is just the start. This is something that we should not let go of but build on. We must maintain the simplicity and the measurability of our aims. I am talking about the fact that developing countries must buy into the goals; they should be not imposed on them, but developed in co-operation with them.

14:32

[Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)]

It is, as ever, a pleasure to serve under your chairmanship, Mr Walker. I congratulate my hon. Friend the Member for York Central (Hugh Bayley) on securing the debate and on corralling the all-party parliamentary groups with a strong interest in this matter to make the important case for the British Parliament to have influence on the Prime Minister’s work in this area.

I chair the all-party group on Nigeria and, with Lord Crisp, I co-chair the APG on global health, so I have a strong interest in the area. I am proud to be a Co-op MP as well as a Labour MP, and a strong supporter of work that has been done on loans to small businesses and co-operatives in developing parts of the world.

Thirteen years ago, we set up the first millennium development goals, which were, as my hon. Friend said, a great triumph. They created huge momentum to tackle poverty, and I am delighted that the Prime Minister has such a key lead role in ensuring that we focus on the next development goals from 2015. It is his chance to make a place in history, and I wish him all the best in doing that. Let me add, too, my congratulations to the Government on delivering their 0.7% development aid target.

While I am on this roll of congratulations, let me also congratulate the Secretary of State on her commitment and business-like approach on the matter. She made it clear that part of her job, and the job of her team and the Government, is to secure good value for money for every single pound of aid spent. Taxpayers’ money is a valuable resource and we need to ensure that we provide value for money. I speak as a member of the Public Accounts Committee, which has looked into the matter, and the Committee will continue to challenge the Department to ensure that it achieves that aim.

The momentum to tackle poverty has made a big difference. In 2000, official development assistance was $72 billion. Between then and 2009, it rose to $128 billion. Although such rises cannot be put down to the MDGs alone, they have helped to focus our efforts. The figures have dropped in the last two years as a result of the global recession, so it is particularly welcome that our Government are showing the way and that the UK Parliament has backed them to send a signal to other developed countries that such assistance is important to global health, well-being and security.

In 2015, there will still be almost 1 billion people living on less than $1.25 a day. Moreover, the maternal mortality ratio has declined by less than 1% since 2000, so while the MDGs have made a difference, there is still a lot to be done. What should we be asking from the Prime Minister in his role on the high-level panel, and what should the focus be? One of the interesting issues is around inequalities, because while the millennium development goals focused rather a lot on averages, those averages can mask inequalities. An average reduction can mask a lack of progress among the very poorest people, and that needs to be in the panel’s minds when it makes recommendations.

There also needs to be thought about how measurement is conducted. It can be easy to go for goals that are seemingly easy to measure, but that measurement must be achievable at a local level. When measuring progress on development goals, there must be some understanding of the local challenges. I will touch a little later on some of my experiences in Nigeria, because even within one single nation, various states face different challenges. Moreover, the goals and indicators cannot be vague. We need to be clear about outcomes and what the new goals achieve.

Several hon. Members have discussed the key matter of local participation and empowerment. Development must involve working in partnership with countries, rather than being something that is done to countries. The all-party group on global health produced an interesting report about empowering health workers. It is important that, as well as passing on useful lessons to other countries, we learn lessons for our own national health service. In Malawi, for example, we see a desire, with strong political leadership, to increase the number of midwives and reduce maternal mortality. Wherever we are in the world, we can all learn from that driving political force. Many countries produce policies out of necessity. Lower level health workers are therefore empowered, trained and supported to provide early interventions that can save lives, whereas we tend to follow a more hierarchical model, notwithstanding some of changes that have been made in recent years to empower our nurses. We must learn from each other and not be seen to be doing things to other countries.

Agriculture is important—I will touch on that in a bit more detail in a moment—and integrating climate change policies into the development goals is critical. In Nigeria, for instance, the Government are parcelling up areas for private companies to deliver to the grid, which will provide a welcome boost to the power sector, but if that is not done in a green way, we will be shooting ourselves in the foot as we try to maintain our commitment to international climate change obligations. The Prime Minister must consider such matters as he leads the high-level panel. The panel is meeting soon, so this debate is timely and will, hopefully, help the Prime Minister to realise that he has support from Britain, as well as giving him some ideas.

I am heartened that 60 lower and middle-income countries have run national and regional consultations in an attempt to achieve a more meaningful input and to buy into the process. That will hopefully lead to a joint method of working, rather the goals being imposed on them.

A separate process is under way to agree global sustainable development goals. There will be a report on those goals at some point between this September and September next year, but there is no firm date for it yet. Those goals may significantly overlap with the post-millennium development goals, so it would make sense to bring the two sets of targets together at some point. I hope that when the two sets are being drawn up, each group will be thinking about the other group’s work.

I want to focus on health. The process of developing post-2015 goals is ongoing, as I said, but there seems to be reasonable agreement about what the overall list of goals should contain. However, there is not yet a clear consensus on what their hierarchy should be, and on what the headline goals and sub-targets will be. The hon. Member for Stafford (Jeremy Lefroy) said that the International Development Committee’s report recommended not having too many goals.

The all-party group on global health hosted a fruitful session with a lot of development agencies and others with an interest in this area. The event was standing room only in one of the larger Committee Rooms in the main House, and we heard a long list of suggestions for new MDGs. The Prime Minister’s challenge is to ensure that the list of new MDGs is not so long that it becomes meaningless, thus allowing people to hide behind what they are doing rather than what they ought to be doing. That will be the political challenge, but it is not an easy one to face.

I fear that health issues are unlikely to be as prominent in the headline priorities of the new MDGs as was the case with the original MDGs, when of course they constituted three of the eight goals—on child mortality, maternal health, and HIV/AIDs and malaria. It is vital that people continue to make the case that global health issues should not be neglected in the future list of priorities, which is partly why I am speaking in the debate.

We need a joined-up approach to improve health. The many single disease-specific goals in the MDGs were successful at focusing global attention on critical areas that might otherwise have been neglected, such as malaria. However, they also were in danger of creating silos of activity that were a barrier to building strong overall health systems, so the post-2015 agenda should correct that by emphasising the need for joined-up, holistic health services, in addition to placing a stress on the importance of programmes to prevent people from becoming ill in the first place.

Of course, those aims are also important for reducing poverty, because those in poor health will be poorer. For instance, if we look at just the impact of polio alone, a disabled child in Africa is a burden on their family as they will be unable to work and support themselves, and that of course affects their life expectancy considerably.

Health must be central to development. Good health is critical to achieving the other development goals, so it must not be neglected. Healthy populations are more productive, not only because people can go out to work, but because ill health is a cause as well as a consequence of poverty. The World Health Organisation estimates that catastrophic health costs push 100 million people into poverty every year. We cannot make development progress in any sphere without addressing health needs.

Many believe that we will end up with one stand-alone post-2015 goal for health, and some consensus is forming behind the idea that it will involve universal access to health care. It came out strongly from the meeting of the all-party group on global health that was held before Christmas that that goal would suffer from focusing on a process rather than an outcome, and would be in danger of diverting attention towards addressing the financial barriers that stop people from receiving health services, rather than the quality of those services. In addition, it could ignore the wider determinants of health in society.

Arguably a better goal would be on improving the life expectancy of the bottom 25% relative to the rest of the population, because that would focus on those in greatest need and ensure that we did not water down the aims on which there is a fairly strong consensus—certainly in this House and among a lot of the groups that came to the all-party group’s meeting and submitted their thoughts. That goal would have the advantage of focusing on outcomes, addressing the critical issue of health inequalities, and being equally relevant—this is a very important point for the post-2015 agenda—for high, middle and low-income countries. It could be applied across the board, and it is important that we look at the post-2015 MDGs in that context.

That goal would also be flexible by allowing each nation to decide what aspects of health are the greatest priority for improvement. We can consider the Malawi situation in that context, and there are interesting challenges in different parts of Nigeria, which is, of course, a federal country in which there are big differences between states. For instance, the transmission of HIV and AIDS is affected by the multiple marriages in parts of the country. Sadly, other parts of the country are still affected by polio. I visited Niger state about a year ago and met the governor, who has determined that every child in the state will receive a polio vaccination. However, not every governor in the country takes the same approach. Indeed, such a policy is a challenge for governors in many states, including Niger state, because of their rural districts.

I will not detain Members by talking about just Nigeria, but I saw in Niger state and other parts of Nigeria that strong political leadership can make a big difference. When the new MDGs and the post-2015 agenda are developed, we need to ensure that we allow room for local political leadership to work within the framework, It is about not emasculating that local leadership, but empowering it and the people to whom it is accountable, at federal as well as national level. We must remember, as I have said, that states in countries such as Nigeria can face different challenges.

I will touch on the issue of education. I have had the opportunity to visit the Minna teacher training college in Nigeria. In parts of Nigeria—not all parts, because it is such a diverse country—not enough girls are going to school. In recognition of that fact, with support from Save the Children and other NGOs, girls are being educated to become teachers, because in some rural areas, girls were not going to school because there were not enough female teachers. I met a number of young women at the college, many of them mothers themselves, and in many cases with their babies, who were training as teachers. They were in a separate compound from the rest of the college with barbed wire to protect them so that their fathers, brothers and husbands could be sure that they were safe and in an acceptable environment for a young Muslim woman. Having gained that education themselves, the idea was that they would go back to their villages and then more girls would go to school there.

I then had the privilege of visiting a village school. Parents had formed a committee to run the school, and part of their focus was to ensure that they were aware of any children not in school so that they would get into school, because education is highly prized in Nigeria.

That local school committee had been empowered and it was very interesting to talk to its members. In some ways, it was a bit like talking to a parent teacher association in Hackney, because the parents in Nigeria were equally focused on and proud of their three-year-old who could count, or equally determined that their under-five would receive some support or that their teenage girl would go on to do something. Those are the same sorts of aspirations that the parents I speak to every day in Hackney have for their children, so there is no particular difference.

The hon. Member for Congleton (Fiona Bruce) made a number of sensible points about jobs, because where do those young people in that village near Minna go on to? One of the really interesting issues in Nigeria, as in other parts of Africa, is agribusiness. I am delighted that our Prime Minister and President Goodluck Jonathan of Nigeria have signed a bilateral agreement to double trade from its level a couple of years ago by 2015. That is a very big challenge, but it is also a important issue, partly for this country—we need to create jobs and opportunities for our own businesses—and also because there is a very young population in Nigeria that needs work and opportunity. We already have interesting bilateral arrangements for skills development. Highbury college, Portsmouth, has a relationship under which people in Lagos are trained to certain levels of skills.

Agribusiness is an underdeveloped area, certainly in Nigeria and, judging from what the hon. Lady said, also in other parts of Africa. I am not entirely convinced—perhaps the Minister will comment on this—that the British Government have “got it” on the issue. Do we have the skill base to export as a business, in terms of food processing, development and so on? In one state in Nigeria, Zimbabwean farmers were brought in to help to improve the agricultural process and build it up. There are some excellent resources in Nigeria—land, people and produce—that could be developed, yet Nigeria is importing rice and coffee, whereas in the past it was a net exporter of those products. Big improvements could be made through bilateral trade links as well as through aid.

[Jeremy Lefroy]

The hon. Lady is making a very strong case on this issue. Indeed, when I and other colleagues were in Afghanistan, we saw great opportunities for the Afghan people to carry out their own food processing. At the moment, the raw materials go outside that country to be processed in other countries, and then they come back as commodities, which reduces job opportunities and increases prices in Afghanistan.

[Meg Hillier]

Of course, that process it is not very green, either. To go back to my comments about climate change, we should be shortening the food chain when it is sensible to do so.

DFID has done some good since it was established, but we need more joined-up government. The post-2015 agenda must not just be regarded as just DFID’s responsibility. The whole of the Government needs to engage in it—whether the Department for Environment, Food and Rural Affairs on agribusiness, or the Department for Business, Innovation and Skills.

[Bob Stewart]

I am listening carefully to the hon. Lady. It seems to me that DFID almost has to be a mini skills agency for all Departments. Rather than just distributing things, as in the past, and checking that things have happened, DFID now has to illustrate the skills of the whole of the Government, which of course the Minister ably does.

[Meg Hillier]

I will leave it to the Minister to take up that challenge.

Even the Home Office could have a role, because immigration policy has an impact on all sorts of development issues. We want people to come to this country with skills that they can contribute. That is part of the development agenda.

On that controversial note, I shall conclude my remarks. I once again congratulate my hon. Friend the Member for York Central on securing this debate, and I wish the Prime Minister the best of luck in his negotiations.

[Several hon. Members]

rose—

[Mr Charles Walker (in the Chair)]

Order. We have five speakers remaining, and we will start the wind-ups a little early—at 3.56 pm—to allow Mr Bayley to come in at the end. Members therefore have about 12 and a half minutes each, if they wish to help each other.

14:51

[Mr Mark Williams (Ceredigion) (LD)]

It is a pleasure to serve under your chairmanship, Mr Walker. I will not take 12 minutes and will avoid repetition, because there have been some strong messages from hon. Members of all parties, often tempered by our own experiences in Ethiopia, Tanzania, Malawi, and Nigeria, for example. I will mention Nigeria as well. I co-chair the all-party group on global education for all, and part of that work took me to Nigeria a year ago, focusing on education. We were delighted to see other projects, including in schools in urban and rural settings, near Abuja, the capital, and Lagos. I shall talk about education, although not exclusively.

The second millennium development goal called for all children to be able to complete a full—I emphasise “full”—course of primary education. Yes, there is great cause for celebration in what has been achieved so far, as we have heard, in the past 13 years. None of us, wherever we come from, are under any illusion. There is much work to be done. Some 61 million primary schoolchildren remain out of school and 250 million children are unable to read and write by the time they should be reaching stage 4 at school. If we are to reach the goal, we require another 1.7 million teachers, 1 million in Africa alone. Some 775 million adults are illiterate, two thirds of those being women.

Education is widely recognised as one of the most effective development interventions. Equal access to education for all reduces inequality and poverty and increases empowerment. I was struck by the case for community empowerment made by the hon. Member for Congleton (Fiona Bruce), in terms of business and enterprise and getting community engagement in projects. The hon. Member for Hackney South and Shoreditch (Meg Hillier) mentioned community empowerment in schools.

We visited a school-based management committee in Lagos. It was particularly inspiring to see people who have not been engaged in education in any way at all—traders and local people from various backgrounds— coming together on a committee to demand the rights that are enshrined in Nigerian law at federal level, right the way through to provincial level, although often ignored by governors. The school I visited lacked a tin roof and the school-based management committee got together and, by weight of numbers, forced the governor to invest the money that was required. That is real empowerment, and also, critically, it is educating parents about the value of education as well. It is not just about the practicalities.

There is concern as we head towards 2015. As UNESCO reported in its 2012 global monitoring report,

“the world is not on track”

to achieve universal primary education by 2015. Yes, we are right to celebrate, but as the hon. Member for Stafford (Jeremy Lefroy) said in terms of health, we have to reaffirm our commitment to the simple, clear, concise goals. But the education goal must be at the forefront. Inequalities in education are a huge barrier. We have heard about the gender issues. Although education for girls is being addressed, it still remains a fundamental issue for many countries.

We visited a school in Nigeria with a sound DFID-sponsored scheme, promoting girls’ clubs in schools. Challenges, such as parents being unwilling to send their children to school, and issues to do with sanitation, water supply and hygiene, could be tackled by the girls and talked about with them, in a spirit of solidarity, and sometimes those issues were taken to the schools’ management.

There is a huge disparity in some countries between rich and poor. Globally, in the poorest fifth of households, less than two thirds of all school-aged children enrol in school, compared to 90% of children from the richest families. In Nigeria, there could not be a starker contrast between the rich families who have benefited from Nigeria’s economic prosperity, in some urban areas in particular, and those in rural areas.

[Mr Graham Brady in the Chair]

Children in rural areas who live in informal settlements also face difficulties in accessing education and if they do so it is of poor quality. We heard an encouraging story from the hon. Member for Hackney South and Shoreditch about a teacher training college. But when we were there we heard that the majority of children in Nigerian primary schools are being taught by teachers with fewer qualifications than the children aspire to. That was a real worry. I used to be a primary school teacher in this country and it was a joy to go back to a classroom and teach in a Nigerian school, I hope with some experience and knowledge to impart. The teachers were enthusiastic and they have strong teaching unions behind them that are enthusiastic on their behalf, to get proper recognition for the teaching profession. Hearing that some teachers in some states in Nigeria had not been paid for several weeks, if not months, hardly inspires people to enter the teaching profession.

Disabled children and those with learning difficulties in many countries that we are talking about face huge barriers to accessing education. Being disabled more than doubles a child’s chance of never enrolling in school, in some countries, and primary school completion and literacy rates for disabled children are consistently below those of non-disabled children. Certainly, in the schools we visited there was no evidence of differentiation in what was taught, to use teacher speak—what teachers are delivering—or what was learnt and little recognition of the facilities required for children with special educational needs.

What should those goals be and how should we reaffirm them, post 2015? Of course, all countries need urgently to try to achieve MDG 2 by 2015—all children having access to primary education, a basic necessity. The UK plays a key role as a world leader and provides aid for education. Like everybody, whatever our backgrounds, we hon. Members welcome what was said yesterday. We wish the Prime Minister well in the leadership role that he will be pursuing on our behalf.

Some would argue that MDG 2’s scope had too narrow a focus, compared with the education for all girls scheme, agreed in Dakar in 2000. This has led us to focus on access rather than completion; on getting children into primary schools, in particular, rather than keeping them there. We have heard about the transition to secondary school and then on to tertiary education. That needs to be dealt with. The primary education that we are striving to get for each child needs to be completed and needs to be worth completing.

We need to focus on quality as well as quantity and look at provision of teacher training across the board. We must also concentrate on teaching materials. We need more teachers to deliver a better quality of education. It would be fair to characterise most Nigerian education as “chalk and talk,” with someone standing in front of a blackboard and addressing the class. We got rid of that in this country in the 1960s, but whether that was a good thing or a bad thing is for another debate. I am a former teacher, and I would like to think that I was progressive. Chalk and talk does not always get the best results from children, and it needs to be addressed.

As every previous speaker has said, we need to aim for a more interconnected set of goals. We need to recognise that nutrition and hunger affect education. Children must be nourished to concentrate on learning. When I was a teacher, this country debated whether children should have plastic bottles of water on their desk to avoid being dehydrated so that they could concentrate better and gain more from lessons. At the school I visited near Abuja, the bore hole had long since dried up, so there were 600 children with no water supply whatever.

We must ensure that both boys and girls are able to access education, and significant progress has been made on that through MDG 3. Skills and employment have already been mentioned, but fundamentally we need to consider equality so that wealth, location and disability are not an impediment to accessing education.

Measurement of those goals is important. Groups such as Results UK, ADD International and others have called on DFID to ensure either that separate indicators are included in future development goals or that standalone goals are established for things such as disability. The Under-Secretary of State for International Development, my hon. Friend the Member for Hornsey and Wood Green (Lynne Featherstone) met representatives at an early stage to discuss those matters, which is important.

I am conscious of time, and I know that more distinguished speakers than I wish to speak. The hon. Member for York Central (Hugh Bayley) talked at the start about political leadership, and he talked about this country using polite muscle and friendly dialogue with other countries. From my Nigerian experience I am conscious that those countries have a responsibility to feed through policies from the centre. Words written on great sheaves of documentation at federal level must permeate through to provincial and village levels with the appropriate resources.

Taxpayers in this country are conscious of where their money is going, where it is being spent and whether it is being utilised properly, so the Government should continue to do everything they can to ensure that the aid directed by this country delivers results on the ground. My simple plea is that the Government reaffirm that “education, education, education” is at the top of the post-2015 agenda.

[Several hon. Members]

rose—

[Mr Graham Brady (in the Chair)]

Order. Before I call the next speaker, it may be helpful to note that only three hon. Members now wish to participate before the wind-ups begin at 3.56 pm. The time pressure has abated a little, but Members should not feel obliged to fill the available time.

15:00

[Damian Hinds (East Hampshire) (Con)]

It is a great pleasure to serve under your chairmanship, Mr Brady. I thank the hon. Member for York Central (Hugh Bayley) and the Backbench Business Committee for finding time for this debate, which is timely given where we are with the high-level panel.

I start by reflecting on some of the positive stuff that has happened, partly through the millennium development goals. According to the World Bank, the poverty target will be met, with the population share of extremely poor people in developing countries falling from 29% in the baseline year 1990 to 12% in 2015. The target of halving the proportion of people without access to improved water sources has been met, and parity between girls and boys has been achieved in primary education.

In other spheres, life expectancy in Africa has risen by a tenth over the past decade, and there has been remarkable progress on child mortality, which The Economist recently called

“the best story in development”.

That story has barely been recognised. Real income per person has increased by more than 30% over the same period. Secondary school enrolment grew by almost half between 2000 and 2008, and the average number of children per mother is projected to fall from about 5 in 2008 to 3.9 in 2020.

My hon. Friend the Member for Stafford (Jeremy Lefroy) rightly pointed out that the simplicity and focus of the millennium development goals has been instrumental in helping to forge a shared vision and in mobilising the world around those goals. Obviously, in formulating the next set of objectives, the world collectively needs to learn from that, but I am afraid it will be quite a challenge when we consider all the different bids that people have made for things that should be focused on. Of course, I will add my own bid in a moment.

The panel has already made great progress on the key points, such as poverty reduction, inclusive growth and sustainable development. The panel is clearly right that the first objective must be to finish the job on the existing millennium development goals, including on income, poverty, education—my hon. Friend the Member for Ceredigion (Mr Williams) talked about education—and health, which the hon. Member for Hackney South and Shoreditch (Meg Hillier) addressed in detail. And there is equality for girls and women, which we know is fundamental to so many other things. The new agenda must address the underlying causes of poverty, such as strong institutions and the rule of law, which the panel refers to as

“the building blocks for sustained prosperity”.

In all such discussions the different levels of aspiration are often conflated. At the top level are the ultimate aspirations, such as eradicating acute poverty, getting rid of preventable child and maternal mortality, ensuring personal safety for all and the self-fulfilment and realisation of the potential of entire populations.

A level down are the fundamentals of a good, effective society and economy, which are the things that facilitate those ultimate aspirations. In that group are the creation of liberal democracy, the rule of law, a market economy and social security. A further level down are the deliverable programmes, which build towards those fundamentals of a good, effective society and economy. Those programmes include land reform and agricultural productivity—to which my hon. Friend the Member for Stafford alluded—access to micro-finance, roads and bicycles. There are also the fundamentals of infrastructure, health care and immunisation, and essential goods. Critically, of course, that includes education and entry-level jobs.

In the current millennium development goals, and in most of the material I have seen from NGOs and others—I am not an expert on this, unlike so many of the Select Committee members who are here—those different levels of aspiration get grouped together. People need ideas for where they are going at each level, but in a sense, it is mentally useful to separate the levels and know where the real focal point is. I suggest that the real focal point should be at the middle level—in other words, the essentials of building a good, effective society and economy. When the Prime Minister talks about the golden thread of development, I think he is talking about the middle level. We need to do that in parallel with programmes that are focused on the essentials of life, which are health, education and nutrition.

We are talking about human life, and it is difficult to talk in such terms, but one of the great things about the involvement of Bill Gates and Warren Buffett is that they bring an analytical approach to finding the things on which the limited amount of money we have to spend can have the most effect.

The danger is that, most of the time, debates such as this are between people who agree on the most important aspects of the subject. I am sure that everyone in Westminster Hall today agrees that although charity might begin at home, it certainly does not end there. We have a shared humanity and a moral obligation to the poorest people in the world. However bad things might ever be in Britain, they will not be as bad as they are in Bangladesh or Burundi. The second thing that everyone participating in this debate probably believes is that official development assistance plays a key part in addressing the entrenched problems of poor parts of the world, but it is clearly not true that everyone else believes in those two things, too.

Doubters ask three questions that have to be addressed. First, why do this at all? Secondly, why do it through their taxes? Thirdly, why have this 0.7% target, why now and why should this country be in the lead? There are answers to all of those questions, but if we are to carry people with us through the agenda, they are not questions to which we can assume an answer; we have to take the questions head on.

On the question of why do it at all, to some extent the agenda is just something that we feel, rather than something we can argue, debate or explain. However, we need to spend more time explaining to the public some of the successes in development. In the public street and the pub, the conversation is often about the hopelessness of Africa and the idea that however much money we throw at the problems, things will not materially improve. However, that is clearly not true, given some of the statistics that I and other Members have given. I would also argue—this is perhaps slightly more controversial—that we can tie our explanation a little more to the national interests of this country, the United States, France, Germany, the European Union and all wealthy nations, and I will return to that in a moment.

The second thing someone might say is, “Okay, you’ve persuaded me that we should spend money on helping the poorest people in the world. That’s fine, but go and do that with your own money. Why do it out of general taxation?” Answering that question is a harder sell, not least because the British public are extraordinarily generous off their own bat. We have to explain that official development assistance can do things that private charity cannot, particularly by leveraging what other countries do. From the point of view of the recipient nations, there is also the predictability and long-term nature of such development and aid.

The most fundamental issue, however, is the free rider problem, which we do not talk about enough. If the 0.7% target was working perfectly and everyone was meeting it, it would be precisely the vehicle to help us get around the free rider problem. The free rider problem is this: if I, as a country, spend a load of money helping poor countries to develop their economies and societies, that will benefit the world to some extent, but I will never notice the benefit that I get as a nation; but if everybody does the same, I will get a big benefit. As long as everyone else is pulling their weight, therefore, it is perfectly rational to spend quite a lot of money on overseas development; but if I am going to be the only one spending a lot and nobody else is going to, it is not. That is why I said that if the 0.7% target works well, it is in everybody’s interests. However, we need to demonstrate to the public that even though most countries have not, sadly, reached that target, they are making progress towards it. While it is right for us to be proud of our leadership position and of reaching that target first, some of our constituents would, in many ways, rather prefer that we were joint first and that there was more progress from others.

[Meg Hillier]

We should be proud of what we have achieved in leading the way. Will the hon. Gentleman acknowledge that many of our constituents provide a lot of money through remittances, which are often under-counted? Those remittances are very much an example of charity beginning at home.

[Damian Hinds]

The hon. Lady makes an extremely good point. Another reason why I am particularly proud about Britain being in the lead on this is that it gives our Prime Minister and our Government extra authority in international discussions. That gives this country more influence over what happens in terms of world policy on overseas development.

Key to all this is the need to emphasise the ways in which foreign aid is in our interests too. When I say “our”, I mean not just the United Kingdom, but all wealthy nations, although this happens to be the British Parliament, so we will focus on ourselves. To maintain support for what the Government do on overseas development, at least a subset of the goals focused on after 2015 should talk about the world’s shared interests. Of course it is right that the headline focus must be on the poorest people and the poorest nations, but there is some value in explaining these other issues to people and showing the progress being made on things that will also benefit people in the wealthier parts of the world.

There are four groups of key development deliverables—things that happen as developing nations get somewhat less poor and, eventually, a little richer. Things happen that benefit them, but there is also a direct benefit to the rest of the world. The first area is the most obvious: economic growth, specialisation and trade. As long as those things happen in a properly inclusive way, they will benefit the country itself through rising incomes. However, that also grows the world economy, leading to a higher world GDP and new export markets for countries such as ours.

The proof of that is that, over the past five years, 28% of the growth in UK exports came from countries classed as low and middle-income, excluding countries such as India, large parts of whose population are very poor. Government projections show that, over the next 10 years, today’s major aid recipients will contribute about £3 trillion to the global economy, accounting for 11% of global growth. If we look at a bar chart showing where global growth comes from today compared with in the 1990s, we see that the pattern has changed substantially, from being focused on richer countries in the 1990s to being focused on middle and lower-income countries today. Eventually, of course, low-income countries become middle-income countries and then contribute even more to the world economy.

The second area is population. We talk a lot these days about food security, about oil and energy more generally and about the resulting strains. While a growing world population is only one of the pressures on food—people who move into the middle classes and who have higher incomes tend to demand different sorts of food—the sheer number of people has an obvious effect on the demand for world resources. It is clearly in the interests of all of us that world population is at a sustainable level.

There are obvious ways in which aspects of development programmes directly impact on population, and the accessibility of family planning is one. Less obvious—this relates to child mortality—is the fact that the more likely a mum is to see her children grow into adulthood, the less likely she is to have more children. Another clear, although even more indirect, relationship relates to the fact that, as nations get richer, mothers tend towards having two children in the very long term, and it has been said many times that development is the best contraceptive. Regardless of one’s view of family planning programmes per se, the overall effort on international development contributes to having a sustainable world population.

The third area is self-sufficiency against disasters and in defence. Ultimately, that means countries making fewer emergency calls on the wealthier parts of the world. We hope that those countries will eventually be able to contribute to the security and defence of the world. The fourth area relates to making places safer, with fewer opportunities for radicalisation, less lawlessness and, ultimately, we hope, fewer wars for countries such as ours to have to intervene in.

My argument is that, somewhere in the 2015 goals, the world—this is not just down to our country—should find space to demonstrate to donor nations how the development and progress I have described is in their interests too. I am proud that this country is a world leader on development, and I hope we will remain one. However, we need to carry others with us, so we should see development goals not only as ends in themselves but, in the way we use them and demonstrate progress, as means to those ends.

15:18

[Martin Horwood (Cheltenham) (LD)]

It is a pleasure to serve under your chairmanship, Mr Brady, and to follow the hon. Member for East Hampshire (Damian Hinds), who made some excellent points. In particular, he talked about the fact that support for sustainable development is not just a human imperative, but in our long-term economic interests. This has been a well-informed and wide-ranging debate, and it is a pleasure to take part in it.

This debate reminds me of one we held as recently as October in this same Chamber, when we also discussed the post-2015 agenda. Quite a lot has happened since then. Several Members have mentioned yesterday’s announcement by the Chancellor that we will hit our target of 0.7% of national wealth going to overseas development assistance during this coming year—that is what I think he said. The phraseology last year was “from 2013”—

[Mr Duncan]

This year.

[Martin Horwood]

The Minister confirms that it is the 2013 calendar year, which is very reassuring. Our original commitment in the coalition agreement was that we would introduce legislation in the first term of this Parliament. Although it is far more important to hit the target than to legislate for it, we should manage in what will now have to be the last two Sessions of this Parliament to put our commitment into legislation. It is a very proud thing to have hit the target. People have challenged me about why the figure is 0.7%, and the hon. Member for East Hampshire made similar points in his speech. It is to some extent an arbitrary figure—there is no denying that; but I think it was chosen because it was an achievable, and therefore realistic, goal for countries to share, but was also ambitious. It pushed the quantum of overseas development assistance beyond what was being achieved 30 or 40 years ago, when the target was set. Most importantly—the hon. Member for East Hampshire made this point too—it was a benchmark. It was something that enabled countries at whatever level to measure and compare each others’ performance. The hon. Member for Stafford (Jeremy Lefroy) made the point that now that we are achieving the benchmark we are beginning to turn the pressure on to those countries that can afford to do it but have not yet.

The final meeting of the high-level panel, in Bali, is imminent and the Secretary of State for International Development will stand in for the Prime Minister. It is perhaps a little disappointing that the Prime Minister will not have made it to all the meetings, but the Secretary of State will do a fine job; she has been a strong supporter of the high-level panel process. The UN General Assembly’s open working group met recently for the first time, and I gather that a high-level event is planned for September. Apparently everything is still in train for a decision in 2015, which we all expect. In the meantime one more initiative requires comment, and although it is not the most significant it is a rather good one: the Secretary of State last month launched a competition in which UK schoolchildren are invited to submit ideas to the Prime Minister; 150 schools have already signed up. I am a little disappointed that I discovered that only while researching for the debate, so perhaps we need to publicise it more widely; but part of the way in which we shall garner support for the 0.7% figure and the development agenda generally is by engaging with young people. The initiative is a good way of going forward.

The original millennium development goals, as many hon. Members have said, have widely been regarded as successful and effective. That is not because every one has been achieved; rather it is because quite a lot of the targets within the MDGs have been achieved by some countries. Also they have helped to highlight some of the failings in development—particularly the way in which conflict has resulted in many fragile states achieving none of the goals. The MDGs have contributed to the amount of direct aid towards social spending, and to the significant rise in spending at national level by developing Governments. That, among other things, has meant that each day 10,000 fewer children under five die than in 1990; 33 million more children go to school than a decade ago; and more than 12 times more people are now getting AIDS treatment than in 2003.

It is true that those changes cannot all be attributed to the millennium development goals, nor, certainly, to aid and overseas development assistance—but then the MDGs were not just about those things. Perhaps I may gently rebuke the hon. Member for Beckenham (Bob Stewart), who is no longer in his place: I do not think that DFID, the United Nations or international agencies—including voluntary ones—that support development have ever really said that aid was all that people should rely on to make progress with development. That has always been about trade, tackling issues such as debt reduction, and encouraging private sector investment and activity and economic growth. A strength of the MDGs was the fact that they related to a wide range of topics.

The Secretary of State recently got a little bit of stick from Labour Members for referring to the importance of the private sector in development. I thought that was unfair, because she was not saying that overseas development assistance should be diverted to the private sector; she was simply underlining the importance of the sector. I come from a development agency background, where that has always been understood. The impact of aid is dwarfed by the impact, for good or ill, of the private sector and business decisions. For instance, mining companies’ ability to go into an area and act insensitively, or to wreck the environment and impoverish future generations by not behaving properly, is of massive significance. A good company that does the right thing—British extractive industries have a good record on that generally, although occasionally some companies, such as Vedanta Resources, have been picked up not doing the right thing—helps empowerment and wealth creation. That can be a very positive thing.

The hon. Member for Gloucester (Richard Graham) referred earlier to Green Fuels, and the hon. Member for York Central (Hugh Bayley) raised the question whether biofuels were always a good, sustainable thing to invest in. He was right: if business does the wrong thing in relation to biofuels, that can increase demand for land, leading to more incursions on rain forest, and can damage the environment. Green Fuels is a Gloucestershire company and I know it well; it uses surplus waste cooking oil. That is what it is encouraging in Indonesia. It takes surplus cooking oil from hotels, which would otherwise be poured into watercourses, polluting them, or go to waste; or, possibly worse still, be sold to street vendors to be put into their cooking oil and used for street food. If cooking oil is overused it can be carcinogenic, so Green Fuels is investing in a good, sustainable project in Indonesia. That shows how business, used in the right way, can support development goals.

The wider context includes organisations such as the International Finance Corporation, which has made an enormous contribution to development, leveraging and investing billions in developing countries and paying attention particularly to what it rather euphemistically calls frontier markets. I think that phrase is used in a bid to make them sound exciting and not just dangerous. The idea is to take investment and leverage business in places where at other times investors might fear, slightly, to tread. If there is a plea to be made to the high-level panel about the post-2015 millennium development goals agenda, I would ask that that agenda be inclusive, and spread beyond aid to include the private sector and international agencies such as the IFC.

Some weaknesses in the MDGs have been highlighted. Those include the way in which they hid inequality; the fact that they perhaps neglected issues such as joblessness, which is an acute contributor to poverty; and the fact that they may have missed the very poorest people in some countries. By using averages and country totals they perhaps did not spot some pockets of extreme poverty. That is among the things being discussed at the high-level panel. It has also been suggested that the goals did not, in addressing environmental sustainability, give it the centrality that they could have. When we debated that in October I made a plea for the importance, among all the various issues such as health, education, social justice and disability that might be included in any future set of sustainable development goals, of the central idea that growth and development should come within planetary boundaries. I reiterate that.

We also talked in October about whether the next set of goals should be global and include all countries, not just the poorest, so that some developing countries might have the toughest targets for jobs, agriculture and gender equality, whereas for countries such as ours there would be quite a lesson, and a set of targets to be met, on resource waste and unsustainable consumption. We talked about the ambitiousness of the goals and the idea that, as with the UN framework convention on climate change, they should impose common but differentiated responsibilities, and be sensitive to different countries’ circumstances. DFID’s latest report on the high-level panel’s progress says that it is considering a single post-2015 development agenda, which I assume means bringing together the continuing progress on the MDGs with the new sustainable development goals. If so, that is welcome. It is focused on poverty reduction and inclusive growth, “embedded” in the “principles of sustainable development”—I have never seen anything embedded in a principle before, but there is always a first time. I hope that sustainability will therefore be central to the development process.

DFID also reports a clear focus on eradicating extreme poverty, with a strong human development emphasis, which is obviously welcome. The new framework should also include income, poverty, health, education and equality for girls and women—all welcome as well—although I am again a little concerned that resources and the environment are not included in the list. I hope that the Minister will be able to reassure me that sustainability in environmental terms will remain central to the process. DFID further reports that the high-level panel has talked about the building blocks being tackled, including strong institutions and the rule of law, and I am sure that is right.

The process, however, should not be simplistically about economic growth, so I will draw attention to three areas that I want the Minister to take on board and comment on, all of which were highlighted by an excellent organisation, Development Initiatives, which is one of the best sources of data and information about development that I have come across. First, responsibility: who is responsible for delivering the goals? That might seem rather obvious, but it has never been spelt out, and the debate about whether the private sector should play a role is relevant here. As I said, the private sector’s role in delivering development is crucial, and international actors such as the IFC and the World Bank should have specific responsibilities in the process, as should national Governments, not only the ones meeting the 0.7% target but the ones that are not yet meeting it; they should be given a responsibility to step up to the plate. People involved in remittances, who are acting privately, as individuals, also play a part, because “private” refers not only to big companies and investors but to private individuals. Some of them are very rich private individuals, the Warren Buffetts and Bill Gateses of this world, who are making a valuable contribution, but Development Initiatives spelt out to me that if we look at the overall resource flows into developing countries, overseas development assistance is only a small part of those flows. ODA is dwarfed by remittances and by foreign direct investment, as well as by debt, which the hon. Member for Congleton (Fiona Bruce) termed better as “finance”. A great deal of the resource going into developing countries is way beyond and above ODA.

My second point, therefore, is that it would be good if resource flows were brought into the framework. We should measure and look at resource flows into developing countries and perhaps consider setting specific development goal targets to do with reducing barriers to things such as foreign direct investment, or limiting or tackling outflows of illicit finance, which is a serious problem for some of the developing countries in the greatest poverty.

My third point is about reporting and measurement, which should be open, transparent and as complete as possible. The way in which data are being used in our information age is enormously advanced. I can look at an app on my iPhone and tell Members that 7% of our energy in this country comes from wind power—as of now, because I have a live app that tells me the exact amount of energy coming from that source. I could look at other sources and know that 2% is coming from the Dutch interconnector and so on. If I can have such information at my fingertips, we ought to be able to look at the development goals and see exactly the flows of resource into a particular developing country—how much from the private sector, how much from ODA—and any mismatches between the levels of poverty and of resource going in. Such imaginative but open and transparent information is important, and organisations such as Oxfam make the point that it increases the power of people on the ground to know how much money should be coming into their country and where it should be spent and to hold individuals accountable for the spending.

In summary, the new sustainable development goals should be global, including all countries. Sustainability is absolutely key, because climate change will ultimately impoverish us all, even in developing countries. The goals should be transparent, and measurement should be as complete and timely as possible. They should include some attention to overall resource flows, and not focus only on development assistance. Above all, who is responsible for delivering the goals should be clear, and we should welcome the private sector into the process while emphasising the specific responsibilities of international agencies, Governments and others, whom we can hold accountable.

15:35

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

I too congratulate the hon. Member for York Central (Hugh Bayley) on securing the debate and giving us the opportunity to consider what should replace the MDGs, which mature in 2015. He has played a central part in development policy ever since Tony Blair made the almost incomprehensible decision to try and run his Government without the hon. Gentleman. Providentially, that has enabled us to benefit from his contribution in this area.

The existing millennium development goals focus primarily but not exclusively on health, education and related matters, and rightly so. The goals have not all been met, but we are undoubtedly much nearer to meeting them than we were when they were established, and very much because they were established. We should not abandon the objectives, which will remain important to ensuring our further progress on those fronts; we should, however, now be looking beyond 2015 to set goals that will help countries to achieve self-sustaining growth, so that they will in the long run be able to finance their own health and education endeavours for the future.

As co-chair of the all-party group on trade out of poverty, I argue for the replacement goals therefore to centre their focus on creation of the opportunities for developing countries, the least developed and poorest in particular, to trade out of poverty. That should be a central focus of the goals, which should apply as much to the developed world, to create those opportunities, as to the developing world, to seize the opportunities as they become available. Aid and debt relief can and have helped to relieve poverty, but only trade can enable countries to leave poverty behind. Virtually all the development success stories, from Korea and China to Mauritius and Vietnam, have involved countries trading out of poverty, orientating their economies towards trade with their neighbours and countries overseas. By contrast, most of the remaining, poorest countries are the least orientated towards trade. The poorest countries contain a fifth of the world’s poor people and of its population, but they only account for one 50th of world trade, so they are hugely under-represented in trade.

By taking advantage of extremely low labour costs, the early starters such as the Chinas or Korea, which decided to develop through trade, were able to break into the markets of developed countries such as those in Europe and America. The late starters, the countries that have not yet taken off, are finding it harder to do so because although they have extremely low labour costs, they are competing not only with the high labour costs of the indigenous population in Europe and America but with the still quite low labour costs of the Chinas and so on, which are now able to deploy a considerable agglomeration of industrial wealth and capacity as well. It is all the more important, therefore, to give priority access to our markets to those from the least developed and poorest countries. The good news is that countries that some people had rather patronisingly written off as being incapable of starting the process of self-sustaining development are doing so. Six of the world’s fastest-growing economies in the past decade are in Africa.

When I started my career or, as my mother still says, when I had a proper job, it was as a development economist working on aid and development programmes in Asia and Africa. I used to get angry with people who assumed that those countries were incapable of development. Everything I saw taught me that people in the poorest countries have the same number of grey cells as those in the richest countries, the same desire to improve the lot of themselves and their families, and the same capacity for enterprise and so on. They started from a different point, but I was sure that, given the opportunity, they would be able to develop. It has taken a long time, but perhaps that is because they did not always have the opportunities they should have had. It is important that we give them those opportunities.

How do we do that, and what should be the components of the targets that the world should set itself post-2015? First, we should aim to have duty-free, quota-free access for goods from not just the least developed countries, but all the low-income countries of the world, to the markets of certainly all OECD countries if not more widely. That should be unconditional. We should not insist that they reciprocate, open their markets and remove all their obstacles and tariffs on our goods. It is for them to make the decision. If they think it appropriate to pursue the free trading route, let them do so; if they want tariffs and protection for infant industries, let them try that. The least bad argument for protection is the infant industry protection rule and we should not deprive them of that opportunity if they want it, but we should open our markets to them.

Most tariffs have come down during my lifetime, but the highest remaining in international trade are those on the sort of goods that the least developed countries are most likely to produce, such as labour-intensive and agricultural products. For example, the average European Union tariff on agricultural products is 14%. On textiles and apparel, it is more than 5%, and those are typically products that countries produce in the first stage of development. On other manufactured goods, the European Union tariff averages less than 2%. Tariffs in Japan are even worse. They are nearly 30% on agricultural products, 9% on textiles and apparel, but less than 0.5% on other manufactured goods. Bizarrely, the tariffs we retain are most discriminating against the sort of products that are most likely to be produced by countries to which we should be giving opportunities to trade out of poverty.

America has some very good policies, but they are narrowly focused on Africa. It levies seven times as much tariff on imports from Bangladesh and Cambodia as it gives to them in aid. It even levies more tariffs on imports from Cambodia and Bangladesh than those from France and the United Kingdom despite the fact that we export six times as much to the United States as those countries. The tariff structure in the world is absurd and it should be the objective of future world development policy to right that wrong.

Whenever I mention such facts in Brussels, EU officials preen themselves and say that we offer tariff-free, quota-free access to Cambodia, Bangladesh and the least developed countries through the Everything but Arms agreement. Fine; good; but we established that agreement at the same time as America established its African Growth and Opportunity Act, since when our imports of apparel and garments have declined slightly and they have increased dramatically in America. America’s imports from those countries were slightly higher than ours, but are now twice as high. Why? Because of the second thing we should focus on: the rules of origin. It is not a sexy subject, but extremely important. Countries that may have no tariffs on imports from least developed countries, none the less have rules of origin saying that goods will be defined as imports only if they have a certain amount of value added. If they are buying textiles from China and converting them into apparel it will not be allowed in tariff-free unless there is some value added.

The Commission for Africa calculated that the very process of complying with those rules of origin, even if they can be complied with, is roughly equivalent to the cost of a 10% tariff. We have created a system that is still hindering the growth of imports from developing countries. As world trade becomes increasingly complex value chains, it is all the more important to liberalise and make more generous the rules of origin that we apply to imports from developing countries.

A third area that we must look at closely is export subsidies. To the extent that Europe and other developed countries subsidise their export of agricultural surpluses, they damage developing countries’ potential to trade in agriculture, which in their initial phases they can most readily do. It is scandalous that America spends about $2.5 billion a year subsidising cotton produced by about 25,000 people in the States when it could be more economically imported from countries in west Africa where millions of people directly or indirectly depend on the cotton trade. I hope to go to America one day to persuade them to spend that $2.5 billion on paying off the farmers with lifetime annuities, so that they can move to more productive activities for their own economy while giving opportunities to those in Africa.

An outline agreement was pencilled in during the Doha round, which even the EU had signed up to, to abolish all export subsidies by the then distant target date of 2013. Unfortunately, as the Doha round got more and more mired in the mud, that was withdrawn, but clearly there would be a genuine possibility of reaching agreement if we had the collective world will and the political will to head in that direction, even without reviving the whole Doha round.

The worst barriers facing many developing countries are not imposed by the developed world, onerous and unjustifiable as they are, but by their equally impoverished neighbours. South-south trade barriers are often much higher than north-south barriers. In Africa, exports of agricultural products to neighbours bear a tariff of about 34%, and the tariff is 21% on other products. The reason is easy to understand. Import duty is one of the easiest taxes for a developing country to impose. The oldest tax authority in this country is Customs and Excise, and we used to rely heavily on it. Such duty obviously inhibits the growth of trade, and we should help countries as much as possible to wean themselves off over-reliance on high tariffs by developing domestic and internal revenue sources.

All sorts of obstacles to trade develop between neighbouring countries on the back of high tariffs, such as rent-seeking, corruption, delays at borders and so on. The result has been that whereas 75% of exports from European countries typically go to neighbouring European countries, only 10% or less of exports from African countries go to neighbouring African countries. If we can help southern countries remove the barriers between each other, the scope for growth of trade is enormous. Already south-south trade is growing rapidly, but so far 80% of south-south trade is internal to Asia, 10% to Latin America and only 6% to Africa. The scope for improvement and growth there is enormous.

The final area where we need to refocus our aid and development effort is the way in which the aid budget is deployed. Over the past couple of decades, the proportion of aid that has gone to financing infrastructure and economic development in developing countries has declined by about three quarters. Yet, if they do not have the infrastructure—both physical and institutional—to get exports to market, they are not going to be able to take advantage of opportunities that may open up in neighbouring or more distant markets. It is essential that we help developing countries through a refocusing of a proportion of the aid budget to build up suitable infrastructure.

One specific area that we need to look at, because time is running out, is the treatment of medicines. There has been agreement under the TRIPS regime for advantageous access of medicines and drugs to developing countries. It is important that that is perpetuated, so that developing countries have access to the cheapest and, where possible, generically priced medicines, while leaving incentives for the pharmaceutical industry in the developed world to develop patented medicines, primarily getting rewards in their own developed markets.

We also need to look at the availability of trade finance—whether it can be made more accessible and lower cost for those countries. We also need to focus on corruption and rent-seeking, and the extent to which that inhibits trade and development. I hope all those areas will be considered very seriously by those looking at the pattern of development goals that should be set for the future. I know the Prime Minister is very seized by the importance of trade as part of development strategy, as is the Minister who will respond to the debate.

I am grateful to the hon. Member for York Central for giving us an opportunity to raise these very important issues. We look forward to the Front-Bench contributions.

15:53

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

It is a pleasure to serve under your chairmanship, Mr Brady. I will be as brief as possible so that we can hear from the Minister and my hon. Friend the Member for York Central (Hugh Bayley), who I congratulate on securing the debate.

The millennium development goals have provided huge momentum in addressing some of the most pressing challenges facing developing countries. As many hon. Members have said, admirable progress has been made. There has been a significant reduction in extreme poverty and infant mortality, and there is access to primary education for children. There are improvements in the living conditions of slum dwellers, as well as major advances in the fight against disease, which was highlighted by the hon. Member for Stafford (Jeremy Lefroy) and my hon. Friend the Member for Hackney South and Shoreditch (Meg Hillier).

While progress has been made, most of the current MDGs sadly will not be met. We know that, despite the achievements, inequalities between and within countries have continued to grow. There needs to be renewed focus on inequality as well as poverty, as hon. Members have highlighted. Critically, we need to ensure that we redouble our efforts on tackling issues affecting women, such as violence against women, as has been highlighted by the One Billion Rising campaign, which has cross-party support. We also need to focus on the continued plight of people in conflict-affected and fragile states, as the hon. Members for Banff and Buchan (Dr Whiteford) and for Ceredigion (Mr Williams) mentioned. There has been a failure to meet the goals in those countries, and it is critical that we focus on them as we move forward to build on the MDGs, if we are to see progress.

I want to highlight some of the points mentioned by my hon. Friend the Member for York Central, including the achievements under the previous Labour Government. I am pleased that the current Government have stuck to the 0.7% of GDP commitment, and we support them in increasing the aid budget to that amount. I am glad to hear that the target will be met this year.

My hon. Friend mentioned the important international leadership role played by former Prime Ministers Tony Blair and my right hon. Friend the Member for Kirkcaldy and Cowdenbeath (Mr Brown). The current Prime Minister also has an important role to play. My hon. Friend the Member for York Central highlighted the fact that this is a great opportunity for Britain to lead the way, as it has done in the past, and to show the world that we are with developing countries and some of the poorest people in the world through the tough times, as we were in the good economic times when we made great strides to reduce poverty in those countries.

Between 1990 and 2005, the poverty rate fell from 46% to 27%, which represented 400 million people lifted out of extreme poverty. We know that recent economic difficulties have affected people in developing countries, as millions have fallen back below the poverty line. We have an important role to play by continuing our focus and being resolute in working with the international community to ensure that countries do not give in to pressure from sections of the media by reneging on the promise to increase aid to some of the poorest countries in the world.

We face huge challenges, particularly in relation to how economic development is taking place in middle-income countries. As hon. Members have mentioned, such development is, of course, vital to lifting people out of poverty, as we have seen in countries such as China. The right hon. Member for Hitchin and Harpenden (Mr Lilley) highlighted the importance of economic trade and growth for lifting people out of poverty but, on its own, that is not enough, as we see in countries such as India. We need to ensure that our aid effort supports the poorest in middle-income countries. We need a clear narrative that is sharply targeting our aid efforts to lift people out of poverty in middle-income countries. We should work with those countries’ Governments, as well as those in the poorest and fragile countries.

I welcome the “Enough food for everyone IF” campaign, which has cross-party support, that highlights the fact that almost 1 billion people still go hungry in the 21st century. That is why it is so important that the international community looks at post-2015 development goals. We need to recognise that much more has to be achieved if we are to protect people in the poorest countries.

We must also address climate change and the need for sustainable development goals. As the hon. Member for Cheltenham (Martin Horwood) and others pointed out, it is important that the sustainable development goals are closely linked to the millennium development goals and that they sit together, because as we look to the future, climate change and development will become ever more interconnected. We need to ensure that the goals are working in sync to address future challenges. Urbanisation is a major issue around the world, and we need to ensure that there is a continued focus on that.

I quickly want to pick up on several points that have been made. Economic opportunities are vital, particularly with regard to jobs and growth, and the point has been made about ensuring that people have opportunities when there is growth. The hon. Member for Stafford highlighted the importance of the private sector. We welcome the private sector’s role in generating self-sufficiency, and trade and job opportunities, but that has to be done transparently. We need to ensure that taxpayers’ money is spent appropriately. Just as we would expect transparency in the way in which NGOs spend British taxpayers’ money, we need to ensure that the same happens when we release funding through the private sector. The roles of the private sector and foreign direct investment will be vital, as we see in many countries. Good governance will be critical, and such issues need to be at the centre of debates as we move forward the post-2015 agenda.

Countries such as Brazil highlight important examples of how economic growth has gone hand in hand with social development and Government intervention. We need to ensure that lessons are learned from countries in which poverty alleviation has been achieved alongside economic growth. I hope that that the UK Government will prioritise ensuring that we stand up for social justice and responsible trade and capitalism, and that we take a strong line against companies that are evading or avoiding tax. I welcome the commitment of the Government—and particularly the Prime Minister and the Chancellor—to take action to tackle tax avoidance, and I hope that there will be substantial attempts to change how poor business practices are denying tax revenue to developing countries, as well as our own country. While we welcome the statements that have been made, people will rightly say that they want action, not rhetoric, so I hope that that will happen.

In conclusion—I am sticking to the time that the Minister has informally suggested I should take, and I look forward to hearing his answers—I hope that the post-2015 framework will genuinely be about partnership between developing and developed countries, and between civil society organisations and Government. I also hope that civil society organisations, charities and NGOs will, as they rightly should, play an important role in keeping the pressure up on our Government—as the IF campaign and others are doing—as well as on other international agencies, multilateral agencies and other Governments.

Labour has called for a new social contract without borders. That is rooted in three key elements, one of which is social justice. That is about tackling inequality as well as poverty, and about having a strong focus on human rights. I hope that the Government will emphasise that, not only in developing countries, but at the European level, and through how we practise empowerment, human rights and women’s rights in our country. We have a lot to learn, as well as a lot of expertise to share. In that spirit, I hope that we will work together with our partners in developing countries to come up with a new framework about not only inclusive growth, human rights, empowerment and tackling poverty, but good governance and tackling corruption. That applies not only in developing countries, as we would expect that when we give money to those countries, but to the way in which companies behave. It is also important that there is transparency around how NGOs operate, as is ensuring that power relationships are firmly based on empowering the citizens we seek to help, not the institutions that are meant to help. Sometimes that debate tends to be missed, and there is too often a tendency to do development to people rather than with people. We need to learn that important lesson from our previous experience.

I look forward to hearing the Minister’s response. We will, of course, support the Government in areas in which we will be able to work together on this important agenda. As my hon. Friend the Member for York Central stated at the start of his speech, this is a unique opportunity for the Prime Minister to lead the way on tackling global poverty and inequality. It is vital that he uses his influence on other international leaders, as his predecessors did, to ensure that we genuinely achieve the aim of ending poverty over the coming decades so that we can, in the years to come, be proud of the fact that both this and the previous Government took the lead in the international community on ending global poverty and inequality.

16:04

[The Minister of State, Department for International Development (Mr Alan Duncan)]

I thank the hon. Member for York Central (Hugh Bayley) for securing the debate. The post-2015 agenda is a priority for the whole of the Government. Ensuring that we have an ambitious, poverty-focused post-2015 agenda is a top priority for my right hon. Friend the Prime Minister, for all of us in DFID, for much of the House of Commons, and for the development community as a whole. We all welcome parliamentary engagement on the issue.

I have spoken in previous Adjournment debates on this fast-moving agenda, but now is a good time to take up the topic again, because the high-level panel will meet once again next week in Bali. The debate is also timely given the recent inquiry into the post-2015 development agenda by the International Development Committee. The Government’s response to that was published yesterday, in which we welcomed the constructive contribution from the Committee and explained our thinking so far.

Let me start by saying that the post-2015 process should absolutely not be at the expense of continuing to work to deliver the existing MDGs between now and 2015. The UK will continue to lead the way on supporting developing countries to attain those goals. We have seen remarkable progress around the world since 2000. The proportion of people living on $1.25 a day since 1990 has been halved, as has the proportion of people without access to drinking water. Primary school enrolment has increased by 89%. Those are just a few of the successes, but there are many areas in which progress has been weak, such as on maternal mortality and the quality of children’s education. Additionally, more than 1 billion people are still living in extreme poverty. We still have a world in which people die unnecessarily every day. They go without education and go to bed hungry at night. That is why the Government are upholding their commitment to delivering 0.7% of our national income in aid, but that is only part of the answer, and it is in that context that we will look ahead to the period after 2015. We need the new development agenda to reflect the fact that the world has changed greatly since 2000. Indeed, in the period since I last spoke in an Adjournment debate on this subject, a lot has changed. The discussion has moved forward in leaps and bounds, but a lot remains to be agreed.

When we last discussed the post-2015 agenda in such a debate, the ambition for the new framework was not really clear. Would we, for instance, tweak the current MDGs to update and adjust them a bit, or would we revamp the whole framework and address completely new challenges and issues? Now, five months on, let me be clear about the ambition of the high-level panel, which my right hon. friend the Prime Minister co-chairs. The new framework should maintain a resolute focus on eradicating poverty, but to do that, it will not be enough to address human development issues such as health and education. Addressing the symptoms of poverty will also not be enough. We need to address the root causes of poverty, and that means going further than just a tweak to the old framework. Alongside dealing with issues such as education and health, we need to include the building blocks of sustainable prosperity, such as open, accountable governance, jobs—the hon. Member for Hackney South and Shoreditch (Meg Hillier) referred to that in detail—and the sustainable use of natural resources, all of which were mentioned in this debate.

Those are all challenging issues, and the discussion about how the global community should work together to achieve the mammoth task of eradicating poverty for ever is full of intellectual and conceptual challenges. Various countries and organisations, such as businesses and civil society, have different views about what our priorities should be and how we should achieve our aims, so let me lay out a few of the core challenges that we will be working to resolve.

One lively topic of debate has been whether a focus on poverty eradication can be married with the need to promote global sustainable development in the post-2015 agenda that we are trying to design, or whether a wider view on sustainable development would dilute the focus on poverty? Should the post-2015 framework tackle issues such as climate change, or should they be separated into a distinct set of goals? In our view, the case for integration is clear. Integrating social, economic and environmental issues in a framework focused on poverty is the only way to make the ending of poverty irreversible. If we do not manage to do that, resource scarcity and environmental degradation have the potential to unpick years of economic progress, so the Prime Minister and the Government as a whole are committed to securing a single set of goals for the period after 2015.

Another conceptual challenge facing us as we look to 2015 is the role for the vital conditions for eradicating poverty and pursuing prosperity. Accountable institutions —we have heard about accountability today—transparent governance, the rule of law and the absence of conflict are just some of the building blocks of sustained prosperity that the Prime Minister calls the “golden thread” of development. Only when people can get a job and a voice can they take control of their own destiny and build a future for themselves that is free from poverty.

Not everyone agrees with the view that I have just outlined, however. Some believe that actively promoting good governance and the rule of law is going too far. They say that those things are sovereign—that no one is entitled to impose them on someone else—and anyway they do not believe that it is possible to quantify or measure something such as the rule of law or an effective judicial system. However, we believe that they can be measured. Indeed, we have done a lot of work on just that, and we are not alone in our belief.

Poor people themselves regularly identify honest and responsive governance as one of their top priorities for the new framework. That is what we seem to be hearing from the MY World global survey that we have been supporting. Fragile, conflict-stricken countries also agree. For instance, Emilia Pires, East Timor’s Minister of Finance, has been vocal on the panel about the need to establish robust institutions as part of tackling conflict and insecurity. Graça Machel, Nelson Mandela’s wife, has been another influential advocate. As the debate continues in the international community, we will be working with partners to make that a priority for the new framework.

Let me talk about “universality”. That is the current buzzword defining the debate, yet various people are giving very different meanings to that word. To some people, universality means that the new framework must reach people regardless of whether they have disabilities, whether they are male or female, whether they live in a city or a village and whether they are old or young, and whatever religion and ethnicity they are. In the MDGs, we said that we would halve poverty, so for some people, universality means that this time we must reach everyone and get to zero poverty—that we must reach the poorest and most marginalised, which is the approach urged on us by the hon. Members for Banff and Buchan (Dr Whiteford) and for Hackney South and Shoreditch. It is, in essence, the issue of reach, in as much as the average is an inadequate measure of the depth of progress that we want to see.

However, some people mean that the framework should apply, as they put it, as much in East Anglia as in east Africa. They believe that all targets should apply to all countries, which is something that we have heard about in the debate. It is an interesting suggestion, but what would it mean in practice for the UK? Would targets on getting kids into schools or access to clean water have any meaning here? Perhaps not, although any targets relating to boosting the numbers of women CEOs or MPs might. We probably need to be cautious about losing the focus on eradicating poverty by casting our net too wide and rendering the sharp focus of intended action dangerously meaningless. The framework needs to deal with real fundamentals. Frankly, countries in which only half of all kids go to school, or in which corruption is rife and blocking growth and prosperity, need to be the priorities for a set of global development goals.

Some use the word “universality” to mean that we need firm commitments from donors. We agree with that, which is why the Prime Minister has been using the G8 to deliver a strong message on the obligations of richer countries. However, national Governments in developing countries will also have to act if we are to deliver real results.

Overall, the success of any post-2015 framework will rest on its simplicity. It should be short, compelling and easy to understand. That was the great strength of the millennium development goals. What we cannot have is a long shopping list of issues designed to satisfy everyone. A lot of development issues have been raised during today’s debate and I recognise the importance of many of them, but a new framework with hundreds of goals addressing every single point would be useless. The core challenge ahead of us is how to distil them into a few really fundamental issues. That will mean that not everyone is happy—some people will not see their favoured issues reflected—but we need to aim for our highest common ambition, not the lowest common denominator.

As we know, the Prime Minister, along with the Presidents of Indonesia and Liberia, is a co-chair of the high-level panel on what we will do after 2015. It has met three times and, at the fourth meeting next week, needs to continue to make progress. That meeting will focus on global partnerships, and my right hon. Friend the Secretary of State will be demonstrating the clear vision and leadership for which the UK has become known on the panel.

The panel is only the first stage, because UN negotiations will follow, but the panel has a fantastic opportunity to provide leadership at the start of the process and make ambitious proposals, setting a high standard for the UN negotiations that follow. The UK is a well-respected intellectual leader in the field of development, and we will be using our influence and expertise to lead the political and technical debate that is all part of the process.

Transparency is vital for the post-2015 agenda. That is one of the reasons why I welcome today’s discussion. I am glad that it has attracted such widespread interest—from Parliament, NGOs, businesses, local and national Governments and, we hope, through what we have arranged, from our schools as well. Only this morning, the Prime Minister’s special envoy for post-2015 development, Michael Anderson, a senior DFID official, updated the all-party group on the United Nations on the panel’s progress. At this very moment, a seminar is taking place in the House of Lords, bringing together NGOs, academics and parliamentarians to discuss the shape of the agenda that they want to see.

As I said, the voices of poor people themselves must be at the heart of any new framework. That will be crucial to developing a framework that ends poverty, for ever, in our generation. DFID has been supporting a number of initiatives to drive engagement with marginalised groups. One of those is MY World—an online, offline and SMS survey to ask people all over the world what they would like to see reflected in the framework. I expect that many of our constituents will be keen to get involved and will be filling that out online. Today, my right hon. Friend the Secretary of State sent a letter to all MPs that outlines our thoughts and actions so far on the post-2015 agenda. A point it makes forcefully is that women and girls must be included in the framework, which must also include an aim to eliminate violence against women.

I sense that the hon. Member for York Central, who initiated the debate, might want five or 10 minutes to respond, so I hope that hon. Members will forgive me if I do not comment on everybody who has spoken, except to canter through some of the points made. We recognise the importance of jobs, but what gives us jobs? A vibrant private sector from the agricultural sector up. My hon. Friend the Member for Stafford (Jeremy Lefroy) was right to say that when Lord Howard was leader he committed the Conservative party to 0.7%; he might also wish to reflect on who was the shadow Secretary of State at the time who persuaded him to do that. I note that education is a high priority for the hon. Member for Ceredigion (Mr Williams).

On the question of population, I agree with my hon. Friend the Member for East Hampshire (Damian Hinds) that prosperity is indeed the best contraceptive. Richer countries have lower population growth; it is the poor ones that have exploding populations. I note that my hon. Friend the Member for Cheltenham (Martin Horwood) made a sensible defence of the development potency of the private sector. He is right about accountability and responsibility, as my right hon. Friend the Member for Hitchin and Harpenden (Mr Lilley) has been for many years on the potency of trade. It is a pleasure to see such unity among parliamentarians on the issue. I hope that it can be converted to hard and productive work to ensure that Britain can be in the lead in seeking global agreement on how the post-2015 framework for poverty eradication should look.

16:21

[Hugh Bayley]

I thank everybody who played a part in the debate. One or two Members have thanked me for securing it, but it was not by any means my initiative. It was a conspiracy—a joint effort—behind closed doors from, I think, 17 all-party groups to approach the Backbench Business Committee jointly. Such was our strength in numbers and unity of purpose that the first time we approached the Committee and explained that this week was a particularly appropriate week to hold a debate of this nature, it gave us the debate.

I particularly thank my hon. Friend the Member for Hackney South and Shoreditch (Meg Hillier), who turned up with me to make the case to the Committee, and the right hon. Member for Hitchin and Harpenden (Mr Lilley), who played as big a part as any of us in securing the debate. He made my point that politics does not just happen; it is organised, so I thank him for getting on the phone to colleagues to ensure that they turned up and made speeches. A former Cabinet Minister playing such a prominent role in debates and policy in the House, and of course in his party, is a tremendous boost to this area of policy. I very much welcome what he has done with his all-party group on trade out of poverty and his more general writing, thinking and leadership on international development.

It would be presumptuous of me to respond to the debate on behalf of a disparate group of Back Benchers, but I shall tell the Minister that I agree strongly—I think all those I spoke to when trying to initiate the debate agree strongly—that, first, the Government and Prime Minister are right to seek to integrate goals that unite social, economic and environmental actions and progress. Secondly, our Prime Minister is right to stress the “golden thread” and say that we can do development without democracy, the rule of law, accountable institutions and transparency, but we are likely to do it better and involve all people, including the poorest of the poor, if we subscribe to those principles. Above all, Government and government institutions, such as courts, need to be accountable to the people, not a weight bearing down upon them. In relation to the Minister’s point about whether we should seek universal progress, it is important that when we measure progress, we disaggregate the data, so that we can spot whether particular communities are being left out—if women are falling behind or if particular tribes or ethnic or racial groups in a country are being left out.

It is also important that we learn one lesson from the millennium development goals, which have been a great success in mobilising world opinion and action by Governments in developing countries: it was too much of a top-down process. They were agreed at the UN General Assembly and then rolled out as if through a mangle. That is why we get the oddity of universal targets—what is appropriate in relation to clean water or school enrolment in east Africa, might not be appropriate in East Anglia. I hope that the new approach will set a global framework that will leave individual countries—and in more populous countries, individual states—the task of setting the development strategy and determining how to measure progress.

We have had very good comments. As somebody who we all know of, although we may not all have been in the House with—a former Member for a Durham mining constituency—would have said, “Well guys, this has been a really rich and valuable discussion and it will take the debate forward,” and I agree. Every Member made comments that I scribbled down and have learnt from, which will help me to work out what we need to do to create conditions that will relieve the burden of poverty from some of the poorest people in the world. The private sector certainly has to be a driver and our development strategy must enable that. The hon. Member for Stafford (Jeremy Lefroy) made an important comment about how difficult it is for micro and small businesses to raise capital when they have no collateral.

The hon. Member for East Hampshire (Damian Hinds) started by saying that he did not know much about this field, but he made a really powerful point that in order to keep the House behind the Government and the public behind our parties, which espouse the cause of global development, we must address the question of why we do it at all and why Government have to play a part. We received answers to those questions in a number of the comments, and, indeed, some are not entirely new answers. It was back in the late ‘70s, as the right hon. Member for Hitchin and Harpenden reminds me, that a former Conservative Prime Minister, Edward Heath, served on the Brandt commission, which made the then revolutionary proposition that we get involved in international development because it is mutually beneficial. One thing that the Brandt commission said was that it promotes trade.

We live in an increasingly globalised world and if we simply close our eyes to the plight of poor and dispossessed people, we get more illegal immigration, more drugs, more organised crime and more public health problems, as my hon. Friends the Members for Hackney South and Shoreditch and for Bethnal Green and Bow (Rushanara Ali) said. Infectious diseases do not stop at the border when the customs officer says, “Can I search you?” When we provide security for our citizens, we need to provide security globally in many fields, which is why it is particularly important that our Government can play a leading role.

Finally, I say to the Minister, please knock on the door of No. 10 tomorrow morning, sit down and have breakfast with the Prime Minister, and tell him to put down The Times, pick up Hansard and read the debate to learn from the good advice he has received from many people sitting on the side of the House from which he would expect to get support and good advice and, interestingly, from those sitting on the side of the House from which he would not naturally expect to get support. We are behind the Prime Minister and his initiative. We want him to be a big player and drive forward a global agenda, so that the next decade of development addresses the fact that, as the Minister said, the world has changed since 2000 and we need to do more than just tweak the millennium development goals. We need a new, strong strategy.

16:30

Sitting adjourned without Question put (Standing Order No. 10(13)).

Written Ministerial Statements

Thursday 21st March 2013 Written Statements

Thursday 21 March 2013

Building the Business Bank

Thursday 21st March 2013 Written Statements

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

I would like to update the House on progress made to set up a new British business bank to support the provision of finance to small and medium-sized firms (SMEs). Inadequate access to finance remains one of the biggest risks to the UK’s economic recovery. While the situation has been exacerbated by the financial crisis, there are also underlying structural problems in the financial landscape for small and medium-sized enterprises.

This Government have already put in place £2.9 billion of commitments through existing schemes to address problems in the market for SME finance. They are now going further by bringing these interventions together in the business bank and deploying an extra £1 billion of capital. The business bank therefore will manage the combined £3.9 billion of Government resources to meet its objectives. By bringing together management, budgets, spending authorities and the power to alter or create new schemes into one place this Government will be providing a more coherent and comprehensive package of support for businesses.

The objectives of the business bank will be to:

support the development of diverse debt and equity finance markets for businesses, promoting competition and increased supply through new finance providers;

increase the provision of finance to viable but underserved businesses, in particular improving the provision of long-term finance;

bring together the management of the Government’s existing business finance schemes, creating a single portfolio and simplifying access for businesses;

consolidate the provision of and increase the awareness of available support and advice to high-growth businesses and those needing specialist support;

function on commercial terms to use taxpayers’ funds most effectively.

The business bank’s success will be measured against its ability to:

raise the overall amount of finance provided to viable but under-served SMEs and mid-sized businesses;

increase the diversity of suppliers and products in the SME and mid-cap finance market;

improve effectiveness, raise awareness and increase use of Government finance and other support;

achieve the above while generating an appropriate return on the bank’s capital dedicated to commercial or near-commercial schemes and maximising the impact of those schemes which involve the provision of subsidy.

The business bank will operate on a commercial basis in order to make the best use of taxpayers’ funds. It will not directly lend to or invest in businesses nor use taxpayers’ funds to prop up businesses with little chance of success. The object of the bank is to work with the private sector in order to support and increase the capacity of current channels of finance, rather than simply replace them.

The business bank organisation will bring together Capital for Enterprise Ltd (the existing delivery agency for BIS), key policy teams and new expertise from the private sector. The management team will be augmented with additional product development, finance and risk management capability as its programme of activities expands and it prepares for full operational readiness.

Economic analysis suggests that the following types of firms are particularly underserved for finance:

SMEs of all sizes who seek finance to expand their business or to develop new products and services;

SMEs who lack the collateral to take out a secured loan;

SMEs at the smaller end of the SME scale;

Young SMEs which have existed for less than five years.

The business bank will be set up in stages so that support is available to businesses quickly. As soon as programmes are ready they will be launched and operated from the Department for Business, Innovation and Skills before being transferred to the new management team in the business bank as soon as possible.

Therefore, I can outline to the House our plans to deploy the £300 million investment programme that was announced in the autumn statement 2012.

The £300 million investment programme will build on the recent investments made by the Government’s business finance partnership programme. This will be focused on promoting diversity of supply by encouraging new entrants and the growth of smaller lenders in the market. This programme will be launched and proposals invited this spring.

This Government are also making available a further £75 million for venture capital for early stage SMEs with the potential for high growth, for investment from 2013-14 onwards.

£50 million will expand the business angel co-investment fund (CoFund) to a £100 million fund.

£25 million will extend the enterprise capital fund programme to include a VC catalyst fund, which will invest in venture capital funds that specialise in early stage venture capital and are near to close, enabling them to commence investment in SMEs.

The enterprise finance guarantee programme helps business without sufficient track record or collateral to access loans and currently supports £1.7 billion of SME lending that would otherwise not have been made. The work on the business bank will lead to a major overhaul of this already successful programme. As a first, a pilot scheme has been set up enabling businesses to obtain additional non-bank credit through trade credit with Kingfisher using the existing EFG scheme.

Given the important role that high quality advice and support can play in raising demand and successful use of finance in small businesses, this Government will take steps to improve further the availability and provision of advice and support schemes they provide to SMEs as part of the bank programme. Government invest in supporting innovative companies, exporters, manufacturers and those looking to grow through programmes such as the manufacturing advisory service, growth accelerator, UKTI’s export support services and some of the Technology Strategy Board’s competitions.

These provide excellent support in building small business capability but we need to make them better understood and easier to access, use the information they collectively provide to be responsive to small business needs and strengthen the link between finance and advice. This Government will therefore be developing an integrated service for high-growth and specialist firms, providing a single professional analysis of the client business that ensures SMEs readily get the expert help needed to accelerate performance.

Many of the next steps in implementation will require approval from European Commission to ensure compliance with EU state aid rules, but our indicative timetable is that in the remainder of 2013 we will:

Roll out fully the extended enterprise finance guarantee programme.

Make the first SME loan portfolio guarantees (subject to EU state aid approval).

Pilot new long-term growth finance products (subject to EU state aid approval).

Finalise a detailed implementation plan for the business bank’s advice functions.

We will also commit all £300 million of the investment programme by the end of the 2013-14 financial year.

In 2014, we intend to set up a new company to house the business bank’s programme and appoint a chair and board. We will also extend the reach of venture capital programmes and roll out new long-term growth finance products.

Further details of this work is set out in a strategy update on the business bank by the Department for Business, Innovation and Skills, which will be placed in the Libraries of both Houses.

Service Complaints Commissioner’s Fifth Annual Report

Thursday 21st March 2013 Written Statements

[The Minister of State, Ministry of Defence (Mr Mark Francois)]

I am pleased to lay before Parliament today the Service Complaints Commissioner’s fifth annual report on the fairness, effectiveness and efficiency of the service complaints system.

Since the introduction of the service complaints system in 2008, the commissioner has played a key role in the development of, and the improvements made to, the complaints process. This contribution is recognised by the Ministry of Defence (MOD) and the services, and the role of the commissioner is now firmly established as an important part of our complaints system.

I and the service chiefs remain fully committed to the continuous improvement of the complaints process and the manner in which we handle complaints. Notwithstanding that the SCC cannot yet assess the complaints system as fair, effective or efficient, I am pleased that this report acknowledges the progress and changes that have been made by the services in 2012 and those planned for 2013. We will continue to work closely with the commissioner to ensure the complaints system is one in which service personnel and their families have confidence.

I will respond formally to the commissioner once MOD has considered fully the findings of the report and the recommendations made.

Review of Personal, Social, Health and Economic Education

Thursday 21st March 2013 Written Statements

[The Parliamentary Under-Secretary of State for Education (Elizabeth Truss)]

Today I am publishing outcomes of the Department’s internal review of personal, social, health and economic (PSHE) education.

PSHE remains an important and necessary part of all pupils’ education. We believe that all schools should teach PSHE, drawing on good practice, and have outlined this expectation in the introduction to the new national curriculum.

PSHE overall will remain a non-statutory subject. To allow teachers the flexibility to deliver high-quality PSHE we consider it unnecessary to provide new standardised frameworks or programmes of study. Teachers are best placed to understand the needs of their pupils and do not need additional central prescription.

However, while we believe that it is for schools to tailor their local PSHE programme to reflect the needs of their pupils, we expect schools to use their PSHE education programme to equip pupils with a sound understanding of risk and with the knowledge and skills necessary to make safe and informed decisions.

Schools should seek to use PSHE education to build, where appropriate, on the statutory content already outlined in the national curriculum, the basic school curriculum and in statutory guidance on: drug education, financial education, sex and relationship education (SRE) and the importance of physical activity and diet for a healthy lifestyle.

We will provide grant funding to the PSHE Association to work with schools to support them in developing their own PSHE curricula and improve the quality of teaching. The association will focus on signposting schools to high quality resources, and on expanding their chartered teacher of PSHE programme. We have also asked the association to promote the teaching of consent as part of SRE, in line with the statutory guidance for that subject.

For drug and alcohol education, we are launching a new evidence-based information service in April 2013 for those working with young people, including schools and teachers. The new service will provide practical advice and tools based on the best international evidence.

In addition, we are asking Ofsted to publish a guide for schools covering effective practice in PSHE, to provide teachers with a range of examples to inform their teaching.

I have placed copies of the summary report of the results of the public consultation in the Libraries of both Houses.

Working Together to Safeguard Children Guidance

Thursday 21st March 2013 Written Statements

[The Parliamentary Under-Secretary of State for Education (Mr Edward Timpson)]

Today I am publishing the revised statutory guidance “Working Together to Safeguard Children”.

In May 2011 Professor Eileen Munro concluded her review of the system in England for safeguarding children. Her final report—“A child centred system”—made a number of recommendations for reform, to create a shift from an overly bureaucratic system to one that keeps the focus on the child. This included a recommendation that the Government revise:

“Working Together to Safeguard Children” (2010), the statutory guidance on how organisations and individuals should work together to safeguard children; and

The “Framework for the Assessment of Children in Need and their Families” (2000), the statutory guidance for practitioners when conducting assessments of children.

The Government response to Professor Munro’s review —“The Government’s response to the Munro review of child protection”—published on 13 July 2011, accepted her analysis that the cumulative increase over recent years in central prescription and guidance in child protection and safeguarding has led to a loss of focus on the individual needs of the child. Alongside this the expansion of the guidance to hundreds of pages, seeking to cover every eventuality, has reduced clarity over the responsibilities of different professionals.

Supported by Professor Munro’s analysis the Government conducted a consultation on revised guidance between 12 June and 4 September 2012. Since September we have considered carefully the consultation responses and worked with organisations to finalise the guidance.

The revised guidance published today, which comes into force from the 15 April 2013, clarifies the core legal requirements, making it much clearer what individuals and organisations should do to keep children safe and promote their welfare. We want social workers and other professionals to focus on the needs of individual children and families and take decisive and effective action to help those children. Today’s guidance will support that. It makes absolutely clear the legal framework and the expectations on different professionals.

We are also working with the Office of the Children’s Rights Director to develop a young person’s guide to “Working Together to Safeguard Children”, the first time this has been done. This will be published shortly.

In the final guidance we have:

created a single source document that brings together all the statutory responsibilities on organisations and individuals to safeguard children; and

made it explicit that safeguarding is the responsibility of all professionals who work with children.

In order to meet Professor Munro’s recommendations of removing the detailed prescription which constrains professional judgement, we have:

put children’s needs back at the heart of assessment by reducing prescription, removing the requirement to have a separate “initial” and “core” assessment of children in need and the related 10 working-day time scale for completion of the initial assessment. This will make the assessment a continuous process, rather than a stop/start one, and allow professionals the flexibility they need to carry out assessments designed around individual children.

We have retained 45 working days for an assessment to conclude and reach a decision on next steps. We propose to continue work with the eight authorities who have been trialling these more flexible approaches to assessment to analyse the impact of changes over a longer time period to decide whether the 45-days limit can ultimately be removed.

In addition in order to ensure that lessons are learned from serious case reviews:

we are establishing a new national panel of independent experts. The panel will provide advice to local safeguarding children boards (LSCBs) about the application of SCR criteria and the requirement to publish reports. The “Working Together” guidance makes clear that LSCBs should have regard to the panel’s advice when making decision about SCRs.

The revised statutory guidance sits alongside measures taken by the Government to drive up the quality of social work practice and the revised Ofsted child protection inspection framework. It clarifies the essential roles of local agencies—including health services and the police—in keeping children safe and promoting the welfare of children in need. The NHS Commissioning Board is also publishing today its accountability and assurance framework for safeguarding. The framework complements the revised statutory guidance.

Copies of “Working Together to Safeguard Children” have been placed in the Libraries of both Houses.

Joint Nature Conservation Committee

Thursday 21st March 2013 Written Statements

[The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Richard Benyon)]

Today I am announcing the start of the triennial review of the Joint Nature Conservation Committee (JNCC). Triennial reviews of non-department public bodies are part of the Government’s commitment to ensuring accountability in public life. The JNCC is a UK body and the review will be conducted jointly with the Scottish Government, the Welsh Government and the Northern Ireland Assembly. I expect to announce the findings of the review and recommendations in early summer 2013.

A joint discussion paper is being issued today, inviting responses by 11 April 2013. A copy of this discussion paper, which includes the terms of reference for the review, has been placed in the Libraries of both Houses.

National Institute for Health and Clinical Excellence

Thursday 21st March 2013 Written Statements

[The Minister of State, Department of Health (Norman Lamb)]

My noble Friend the Parliamentary Under Secretary of State, Department of Health (Earl Howe) has made the following written ministerial statement.

We have today laid before Parliament the “Government response to the House of Commons Health Select Committee’s eight report of session 2012-13 on the National Institute for Health and Clinical Excellence” (Cm 8568).

The Government welcome the Health Select Committee’s report and recommendations.

In April 2013, the National Institute for Health and Care Excellence (NICE) will be established as a new statutory body with an extended remit covering adults’ and children’s social care, as well as health care and public health. The Government’s plans for NICE build on its strong track record and a re-established NICE will continue to play a key role in supporting the delivery of high-quality health and social care in the NHS through the production of robust, evidence-based advice and guidance.

NICE will also continue to have an important role in providing independent and authoritative advice to clinicians and commissioners on how new and existing treatments best fit into the treatment pathway for a particular condition. The Government response confirms that NICE will be responsible for the full value assessment of medicines under new arrangements which we plan to introduce for new medicines from January 2014.

Copies of the Government’s response are available to hon. Members from the Vote Office and to noble Lords from the Printed Paper Office.

EU Readmission Agreement with Armenia

Thursday 21st March 2013 Written Statements

[The Minister for Immigration (Mr Mark Harper)]

The Government have decided not to opt in at this stage to the draft Council decisions concerning the signature and conclusion of the agreement between the European Union and the Republic of Armenia on the readmission of persons residing without authorisation (European Union Document Nos. 16909/12, COM(2012) 703; 16910/1/12, COM(2012) 704).

There is little irregular migration from Armenia to the UK and we have no operational problems with returns which an EURA would help to resolve. It would be possible for the UK to seek to participate in the agreement post adoption if these circumstances were to change.

UK Border Agency

Thursday 21st March 2013 Written Statements

[The Minister for Immigration (Mr Mark Harper)]

On 9 November 2012 the Commons Home Affairs Select Committee published its eighth report of the Session 2012-13 “The Work of the UK Border Agency (April-June 2012)”. I am today publishing by Command Paper the Government’s response to that report and to accompany that response would like to set out some of the measures that this Government are taking to improve the performance of the UK Border Agency.

This Government are bringing immigration back under control. The latest net migration statistics show another significant fall in net migration—down almost a third since June 2010—and visa statistics indicate that this trend is set to continue. The UK Border Agency is playing an important role in ensuring our reforms are having an impact in all the right places.

The agency has already shown signs of significant improvement. It has maintained and improved its performance against service standards in its international and visa operations and launched priority services in over 30 countries. Last year it closed the historic “controlled archives” of asylum and migration cases and helped to deliver a safe and secure Olympic and Paralympic games by collecting over 15,000 biometric details in advance.

However there is further work to be done.

To improve processing times agency staff have been redeployed to front-line caseworking duties and additional employment agency staff recruited to deal with outstanding work. These measures are already making inroads and I expect the agency to be operating within service standards across most workstreams by the spring of 2013.

The agency is building on the success of its dedicated MP account managers to continue to improve and develop its services. Every MP will have a named contact for their queries. We will continue to expand the use of email and telephone to provide a more timely and responsive service. MP account managers will also continue to alert MPs about rules and procedure changes that might impact their constituents.

We are also driving enforcement activity: the agency removes around 40,000 people every year, including up to 5,000 foreign national offenders, and continues to focus on developing innovative approaches; a joint UKBA and Metropolitan Police Service operation is successfully using new methods to identify and remove foreign national offenders in London.

I am confident that these measures represent the start of a period of further improvement that will leave the UK Border Agency on the sure footing necessary to continue to deliver a safe and efficient immigration system.

Independent Commission for Aid Impact

Thursday 21st March 2013 Written Statements

[The Secretary of State for International Development (Justine Greening)]

The Department for International Development (DFID) will shortly commence the triennial review of its oversight arrangements for the Independent Commission for Aid Impact (ICAI).

The Government made a commitment regularly to review public bodies, with the aim of increasing accountability for actions carried out on behalf of the state.

The ICAI’s strategic aim is to provide independent scrutiny of UK aid spending, to promote the delivery of value for money for British taxpayers and to maximise the impact of aid. In accordance with the DFID-ICAI memorandum of understanding, a robust and rigorous review of ICAI must take place by the end of 2013 to assess the continuing need for an independent scrutiny function and the associated governance arrangements.

The review will be conducted in line with relevant Cabinet Office guidance, in two stages. The first stage will:

Identify and examine the key functions of the ICAI and assess how these functions contribute to the core business of DFID;

Assess the requirement for these to continue;

If continuing, assess how the key functions might best be delivered; if one of these options is continuing delivery through the ICAI, then make an assessment against the Government’s “three tests”: technical function; political impartiality; and the need for independence from Ministers.

If the outcome of stage one is that delivery should continue through the ICAI, the second stage of the review will ensure that it is operating in line with the recognised principles of good corporate governance, using the Cabinet Office “comply or explain” standard approach.

Full terms of reference for the review will be placed in the Libraries of both Houses and will be available on the DFID website: www.dfid.gov.uk.

The outcome will be announced in Parliament by the end of December.

Intestacy and Family Provision Claims

Thursday 21st March 2013 Written Statements

[The Parliamentary Under-Secretary of State for Justice (Jeremy Wright)]

My noble Friend the Minister of State for Justice (Lord McNally) has made the following written ministerial statement.

I have today written to the chair of the Law Commission to set out the Government’s formal response to the commission’s report “Intestacy and family provision claims on death” (Law Com No 331). The report, which was published on 14 December 2011, formed part of the commission’s 10th programme and considers two areas of the law of inheritance. It makes recommendations across four main areas: entitlement of the surviving spouse, problems with family provision claims, legal traps for beneficiaries and administrators, and rights of cohabitants.

The Government have accepted the commission’s recommendations in relation to the first three of these areas, subject to minor amendments. These recommendations will modernise and simplify this area of law to create a fairer, more comprehensible set of rules and make the process of administering an estate faster and easier for those involved at what will always be a difficult time.

As a first step towards implementation, I am publishing today for consultation the draft Inheritance and Trustees’ Powers Bill, which was produced by the commission alongside its report and gives effect to the recommendations that the Government have accepted. Consultation will offer those with an interest in this area a final opportunity to comment on the Bill’s provisions and identify any issues that have arisen since the original report was published.

The consultation will remain open until 3 May and is available on the Ministry of Justice website at: www.justice.gov.uk/consultations. I am also placing a copy in the Libraries of both Houses. The House will be notified of the outcome of the consultation in due course.

However, after careful consideration, it has been decided that the Law Commission’s recommendations regarding the final area, rights for cohabitants upon intestacy, will not be implemented during this Parliament. This is consistent with the Government’s response to the Law Commission’s previous report, “Cohabitation: Financial consequences of relationship breakdown” (Law Com No 307), and reflects the continuing priority for family justice of completing our significant ongoing reform programme.

Road Safety

Thursday 21st March 2013 Written Statements

[The Parliamentary Under-Secretary of State for Transport (Stephen Hammond)]

I am today launching two new websites: the road safety comparison site and the road safety observatory.

The road safety comparison site will help the public and road safety professionals compare the road safety performance of local authorities. We also committed to part-funding the road safety observatory, which provides access to academic road safety research. In launching these two new sites we are fulfilling our commitment made in the “Strategic Framework for Road Safety” published 11 May 2011.

The road safety comparison site makes clear to the public, local authorities and other partners how a local highway authority is performing by putting collision and casualty numbers into context. By setting those numbers against population, traffic levels, road length and authority spend we have produced a set of indicators showing performance over the last seven years and where that authority stands against others. The site also provides a mapping facility that can be filtered so that a user can, for example, see how many cyclists or children have been involved in collisions on a particular road.

The road safety observatory provides a resource for professionals and practitioners, giving them the access to empirical road safety research by taking that research and summarising it in plain English. This site has been part funded by the Department and the project run by a board drawn from various road safety bodies, including RoadSafe, the Parliamentary Accounts Committee for Transport Safety (PACTS), the Royal Society for the Prevention of Accidents (RoSPA), the RAC Foundation, the Association of Directors for the Environment, Planning and Transport (ADEPT), Road Safety GB, the South West Public Health Observatory, the Association of Chief Police Officers (ACPO) and the Automobile Association.

The observatory will be a live site and will be updated as and when new research is produced.

House of Lords

Thursday 21st March 2013 Lords Chamber

Thursday, 21 March 2013.

11:00

Prayers—read by the Lord Bishop of Bristol.

Probation Services: Outsourcing

Thursday 21st March 2013 Lords Chamber

Question

11:07

Asked By

[Baroness Howe of Idlicote]

To ask Her Majesty’s Government what arrangements will be made for the recall of those on licence who breach the conditions of that licence, in the event of the outsourcing of probation services.

[Lord Ahmad of Wimbledon]

My Lords, the Government are committed to tackling rates of reoffending, which remain too high. The Transforming Rehabilitation consultation, which closed on 22 February, sets out our proposals for revolutionising the way we rehabilitate offenders and we are currently considering the responses. We have proposed that providers will be obliged to report material breaches of community orders, suspended sentence requirements and licence conditions to the public sector, which will then advise the court or the Secretary of State. We are absolutely clear that relationships between the public sector and contracted providers are vital to make the reformed system work effectively.

[Baroness Howe of Idlicote]

I thank the Minister for that interesting Answer. As the Government are currently saying that the probation service would recall, but the private sector will supervise on a day-to-day basis, how would the service get the proper information to decide whether a recall to custody is justified? Would not such a system be open to legal challenge on the ground that the probation service was not involved in the day-to-day supervision and was therefore not in a position to recall?

[Lord Ahmad of Wimbledon]

My Lords, the public sector will continue to play a vital role in probation. This is about bringing together the voluntary community sector, the public sector and the private sector to ensure that rehabilitation works. While money has been spent on probation, a total of £800 million of the £3 billion budget, the results in terms of the effectiveness of probation have not been what we had hoped. I believe that this revolutionising agenda provides the right pathway for bringing together the three different sectors. However, the public sector will retain overall responsibility.

[Lord Soley]

My Lords, can the Minister explain what the legal situation will be if a person who is recalled then challenges that on the basis that it was a private sector decision?

[Lord Ahmad of Wimbledon]

At the moment the situation is that all recalls which are received through the probation service are considered. I believe that the current figure is around 16,000 a year, of which some 5,000 sit within the prison population. The appeal processes are clear to prisoners. However, this is not the private sector taking responsibility away from the public sector or from the Government. Ultimately, the private and the public sector will work together on reoffending, as I have said. Moreover, we are seeing some great results. Peterborough provides a practical example of the three areas working together and showing positive results.

[Baroness Hamwee]

My Lords, is the Minister happy that the licence arrangements generally that we have in place in this country are effective and appropriate, in particular given the large number of recalls to prison from licence? This must add to the strain on prison places. Yesterday, I heard a criminologist from Finland describe the number of recalls in England and Wales as astonishing.

[Lord Ahmad of Wimbledon]

My noble friend raises a very important point. If we look at reoffending generally, 50% of offenders who serve a 12-month sentence still go on to reoffend. Currently, as I have already alluded to, the recall figure is in excess of 16,000, of whom 5,000 represent the 85,000 or so of the prison population, which is about 5%. No, it is not good enough, but we believe that the Transforming Rehabilitation programme that we have put forward, the consultation on which, as I said, closed on 22 February, will provide a practical way of addressing reoffending. It costs us, as an economy and as a society, very heavily.

[Lord Elystan-Morgan]

Does the Minister appreciate that the recall of a prisoner is a quasi-judicial act, at the moment vested by law in the probation service? Henceforth, when this scheme operates, who will be exercising that power of recall, by what authority will it be exercised and what training will be given to that person to discharge that not uncomplicated task?

[Lord Ahmad of Wimbledon]

First and foremost, public safety will not be compromised in any sense. What we are putting forward in no way jeopardises that. As far as recall is concerned, once we have completed this particular consultation exercise, we will look at the concerns which have been raised. I will write to the noble Lord, detailing some of the specific proposals on that point.

[Baroness Corston]

Can the Minister assure me that no woman will be recalled to prison for a breach constituting mere failure to keep a probation appointment, sometimes for very good family or transport reasons?

[Lord Ahmad of Wimbledon]

The noble Baroness raises an important point. We need to ensure that when there are breaches of sentences, they are looked at effectively and in a structured way if recalls are issued. I have already alluded to two facts: circa 16,000 recalls are issued annually and, once they are assessed, the prison population currently represent only 5,000 of that figure. I believe that we have robust procedures in place to ensure that any recalls issued are reviewed and that the people who then are sent back to prison are sent back because they have reoffended. I am sure that all noble Lords will agree about the reoffending rates we see across the country. I was startled, in my own experience in local government, to see the level of youth offending, which was in excess of 70%. If you bear in mind that close to 50% of people go on to reoffend, we really need to take some drastic action to address this issue.

[Baroness Gardner of Parkes]

Is the Minister aware of the very low reoffending rate in cases such as the scheme operated by National Grid, where young offenders are trained to become very useful people? Does he know whether that scheme, or any similar schemes, operate with people who are on licence or is it only when people are completely finished?

[Lord Ahmad of Wimbledon]

Again, my noble friend raises a very important issue. I am aware of the scheme with National Grid, which addresses prisons and reoffending. To put this into context, when I visited Peterborough, I saw something very effective for prisoners coming in. If prisoners have committed the crime they have to serve that time, but it is not about leaving them at the prison gate. It is about identifying what skills and needs they have and then, by the time they leave prison, ensuring that they become productive, constructive members of society. That is what Transforming Rehabilitation is all about.

[Lord Tomlinson]

The noble Lord gave an interesting response to my noble friend Lady Corston but he did not actually answer the question. The question was specifically about the circumstances in which women might be recalled for relatively minor offences in situations where they might have been exercising their duty as a parent or carer. Will that be the case or not?

[Lord Ahmad of Wimbledon]

I fully understand and respect the sensitivity around the issue of female offending. Currently all probation trusts are required by NOMS Commissioning Intentions to make appropriate provision for women. I am also pleased to say that my honourable friend in another place, Helen Grant, the Minister who is looking at this issue, will be making an announcement in this regard. She has recently visited centres in Gloucester, Reading and London where this issue is being looked at sensitively. The announcements we will be making shortly as part of the consultation exercise will address many of the specific concerns that have been raised.

House of Lords: Oral Questions

Thursday 21st March 2013 Lords Chamber

Question

11:15

Asked By

[Lord Campbell-Savours]

To ask the Leader of the House what steps he is taking to encourage Members of the House to ask short and relevant supplementary Oral Questions.

[The Chancellor of the Duchy of Lancaster (Lord Hill of Oareford)]

My Lords, the guidance in the Companion on supplementary questions is crystal clear. We all of us in this House have a shared responsibility to follow it. I have written to the Leader of the Opposition, the Convenor and my noble friend the Deputy Leader to ask for their support in reminding Members of that guidance. I have also encouraged Members on my Front Bench to provide succinct answers so that more supplementary questions can be asked.

[Lord Campbell-Savours]

My Lords, exhortations by the Front Bench to be brief simply do not work. Members ignore them. Some thoughtless people hog Question Time, bully the House and ego-trip with long, garrulous statements—all in breach of the Companion. If both Front Benches are unable, due to wishing to be courteous, actually to enforce the Companion, why cannot someone else take on that responsibility? I suggest the Lord Speaker.

[Noble Lords]

Too long!

[Lord Hill of Oareford]

I have a number of points, my Lords. First, on the question of having a Lord Speaker, I know that the House looked at it in the previous Session and concluded by a considerable margin that it would prefer to keep things as they were. As for regulating the House, it is the responsibility of all those on the Front Benches not to speak too long and not to hog questions and take them away from the Back Benches, but it is also the responsibility of the whole House to make its views known if it thinks that Members are going on for too long or are asking too many questions.

[Baroness Sharples]

Does my noble friend agree that a single supplementary question is much better than a double-barrelled question, because the Minister does not have time to think?

[Lord Hill of Oareford]

As is often the case, my Lords, I do think that less is more. The Companion is extremely clear. It says that supplementary questions should be,

“short and confined to not more than two points … they should not incorporate statements of opinion. They should not be read”.

I think all of us will want to remember that.

[Lord Foulkes of Cumnock]

Does the Leader also recall that the Companion says—I must not point—that initial Answers by Ministers should be no more than 75 words long? It is in his power to regulate that. What is he doing about it?

[Lord Hill of Oareford]

If the noble Lord had been able to count the number of words that I gave in my Answer, he would see that it was spot on 75. The noble Lord has just forgotten his own self-injunction about pointing. I have spoken to my Front Bench, and I agree very much about the need for those initial Answers to be succinct. I also think that the shorter the questions, the tendency will be the shorter the answers. Long questions tend to lead to long answers.

[The Countess of Mar]

My Lords, does the noble Lord agree that it becomes an embarrassment for people like me and the noble Lord, Lord Geddes, when we try to correct Members of the House, to be criticised by other Members for what we are doing when we are supposed to be self-regulating? It would be much easier if the Front Benches did a bit more.

[Lord Hill of Oareford]

I am sure that all the Front Benches will have heard that point, but I very much agree with the noble Countess that all Members of this House have the responsibility to make their views known and hold the rest of us to account.

[Lord Tyler]

Is my noble friend saying to the House that short and relevant questions will automatically be rewarded with short and relevant ministerial answers? Yes or no?

[Lord Hill of Oareford]

Er. I contend that short questions tend to lead to shorter answers. As for giving a guarantee on behalf of the entire Front Bench that they will always be able to provide the clarity that my noble friend seeks, I cannot go quite that far.

[Baroness Farrington of Ribbleton]

My Lords, does the Leader of the House agree that supplementary questions often occur because the Minister has answered the question that they wish had been asked rather than the one that was asked?

[Lord Hill of Oareford]

My Lords, I think there are a number of reasons why supplementary questions are asked. I looked at some figures that took a snapshot of the first six weeks of this year. They showed, somewhat to my surprise, that nearly 230 Members of your Lordships’ House had either asked Questions or supplementary questions in that period, which I thought was rather an encouraging figure and higher than I expected. There is, however, a point which the noble Lord, Lord Campbell-Savours, raised: not all those 230 Members asked one question.

[Lord Spicer]

My Lords, why?

[Lord Hill of Oareford]

Because, my Lords.

[Baroness Royall of Blaisdon]

My Lords, I welcome all that the Leader has said. I just wish to place on record that I think that all Members would wish to ensure that those of us who feel a little nervous about asking supplementary questions should be encouraged to do so, and that we should have a much more accepting view in this House of those who feel somewhat reluctant to ask questions.

[Lord Hill of Oareford]

I agree with the noble Baroness entirely. One thing that Members of this House can do, particularly those who contribute more frequently in Oral Questions, is to observe our courtesies and give way to some Members who perhaps do not ask questions so often. I urge all Members to do so.

[Lord Oakeshott of Seagrove Bay]

My Lords, is this short enough?

[Lord Hill of Oareford]

The previous question but one was shorter, my Lords.

[Lord Grocott]

Does the Leader subscribe to the basic rule of Oral Questions that you should never ask a question unless you know the answer?

[Lord Hill of Oareford]

That is a very good principle in life, my Lords.

[Baroness Walmsley]

Does my noble friend agree that there are occasions when certain Members of this House who find some difficulty in standing up quickly should be shown a little more patience by the rest of the House?

[Lord Hill of Oareford]

I do agree with that, my Lords. I think that all the Front Benches and the Convenor try extremely hard to look around and see which Members might need that little bit of latitude.

Food: Fast Food

Thursday 21st March 2013 Lords Chamber

Question

11:22

Asked By

[Lord Sharkey]

To ask Her Majesty’s Government what is their assessment of the effectiveness of the Responsibility Deal for Calorie Reduction in achieving significant product reformulation in food sold by fast food operators.

[The Parliamentary Under-Secretary of State, Department of Health (Earl Howe)]

My Lords, the responsibility deal’s calorie-reduction pledge challenges businesses, including fast food companies, to take action to help people eat fewer calories. This includes product reformulation. Responsibility deal partners report annually on the progress that they have made against their pledges. Annual updates for 2012-13 will be published on the responsibility deal website in summer 2013.

[Lord Sharkey]

My Lords, the plain fact is that not a single fast food operator has signed up to the calorie-reduction pledge. I asked McDonald’s why and it said that it was because of concerns about the lack of clarity and vagueness in some of the Government’s definitions. If the calorie-reduction pledge does not work with fast food operators, how else can we make certain that they reduce calories in the 5.5 billion meals they serve every year in the UK?

[Earl Howe]

In fact, my Lords, 32 businesses have signed up to the pledge to help people consume fewer calories, which is a responsibility deal priority. They include seven of our major retailers and some of the nation’s biggest food manufacturers, as well as Subway, which is a fast food company—so we do have one. It is a deliberately wide-ranging pledge, allowing companies and their customers to reduce calories through a broad range of actions. I say to my noble friend, however, that we will have fast food companies very much in our sights over the coming months.

[Lord Collins of Highbury]

My Lords, helping people to make informed choices on what they eat is really important. However, we have learnt in recent times that what is on the label is not always what is inside. I have stated previously that so-called healthy products such as low-fat yoghurts and cereals are jam-packed with sugar, which has huge implications for the threat of diabetes. Will the Minister consider statutory food labelling which is easy to understand?

[Earl Howe]

My Lords, we certainly have not ruled out regulation in this area, but we can be encouraged by the progress that we have made to date through the responsibility deal in terms of calorie labelling. Some 47 businesses signed up to labelling calories at the end of 2012, while 5,000 fast food and takeaway outlets and around 9,000 high street outlets, including pubs, restaurants and coffee shops, will display calories.

Human Trafficking

Thursday 21st March 2013 Lords Chamber

Question

11:25

Asked By

[Baroness Doocey]

To ask Her Majesty’s Government how many children have been referred to the National Referral Mechanism for victims of trafficking since it was launched in 2009.

[Baroness Stowell of Beeston]

My Lords, the national referral mechanism is a multi-agency framework designed to make it easier for organisations involved in a human trafficking case to co-operate, share information about potential victims and facilitate their access to tailored support. Between 1 April 2009 and 31 December 2012, 939 children were referred to this system by a range of front-line agencies.

[Baroness Doocey]

I thank the Minister for that response. Will she join me in welcoming the steps that Eurostar is taking to improve measures to prevent child trafficking at St Pancras International station? Will she ensure that the UK Border Agency co-operates more fully with both Eurostar and the British Transport Police and does nothing to hinder any of these initiatives?

[Baroness Stowell of Beeston]

My Lords, human trafficking of adults and, especially, children is one of the vilest crimes. I congratulate my noble friend on her tireless efforts in this area. I most definitely welcome the steps being taken by Eurostar to improve prevention via St Pancras and will of course ensure that the UK Border Agency and the UK Border Force continue to work closely with all parties trying to prevent this crime. Indeed, UKBA is committed to developing its practices in support of victims. I can announce to the House today that from 1 April the UKBA team that handles trafficking decisions will be exclusively dedicated to that task and will not combine its work in this area with any other.

[Baroness Butler-Sloss]

My Lords, I declare an interest as co-chairman of the parliamentary group against human trafficking. I am delighted to hear what the Minister has just said about UKBA and its concentration. Is she aware that many children do not go through the NRM but those who do go through are accommodated by local authorities, which do not have parental responsibility for those children under the Children Act 1989. Does she accept that it is very unsatisfactory that these children have no one with parental responsibility in this country other than, potentially, the traffickers themselves?

[Baroness Stowell of Beeston]

The noble and learned Baroness, Lady Butler-Sloss, highlights an important point, which is that we need to ensure that victims of trafficking are referred into what we call the NRM, the national referral mechanism, because it is through that mechanism that they then receive the support and care that they need. She might like to know—I am sure she is already aware of this—that, as part of the Government’s ongoing efforts to improve the way in which we support the victims of this terrible crime, we have commissioned the Refugee Council and the Children’s Society to review our arrangements in this area so we can ensure that best practice in certain local authorities is repeated in all areas. Their report is due to reach us some time later this year.

[Lord Skelmersdale]

My Lords, is it not time that we called a spade a spade and described human trafficking as slavery, which is what it is and which has been illegal in this country for many years?

[Baroness Stowell of Beeston]

I like to think of myself as a plain speaker and I understand very much the point that my noble friend is making. However, the term “human trafficking” is one that is recognised internationally. Whether it is called “human trafficking” or “slavery”, the most important thing is that it is a vile crime and we need to stop it.

[Lord McConnell of Glenscorrodale]

My Lords, in this week when many of us have been celebrating the role of Dr David Livingstone in ending slavery in east Africa in the 19th century, will the Government make that association between human trafficking and slavery in the 21st century and ensure that international institutions, such as the European Union, the United Nations and others, give appropriate attention to global action, not just national action, to end this horrendous trade in human misery?

[Baroness Stowell of Beeston]

The noble Lord is right. This crime crosses borders and is based on international gangs. In the UK, our law enforcement agencies continue to work with their counterparts overseas on joint investigations to ensure that we tackle this by prevention and not just support people once they are victims of this terrible crime.

[Baroness Howarth of Breckland]

My Lords, as the Minister will know, and as my noble and learned friend Lady Butler-Sloss mentioned, children who are accommodated in care are not made the responsibility of the local authority. When they then go missing, the police often do not follow them up with great astuteness. I have just read in the newspaper that there are to be two categories of missing person for the police. There will be those who have just gone missing and are lost and those who are worth following up. Will the Minister ensure that these children are in the category of those who are worth following up and are the responsibility of a local authority?

[Baroness Stowell of Beeston]

The Home Office is working with partners to address the issue of all children going missing from home and care through its missing children and adults strategy. In addition, work is being taken forward by the Department for Education to improve the quality and consistency of data about when and why children go missing from care. We are very much aware that children who are victims of trafficking sometimes go missing when they go into care because they come into contact again with those who trafficked them. Our priority is to ensure that that does not happen. Those children are very much our priority.

[Lord Spicer]

Will my noble friend join me in congratulating Mr Anthony Steen on the tremendous work that he has done on this matter? Will she use her influence to try to gain him some status for the work that he does here and abroad on the matter?

[Baroness Stowell of Beeston]

I am very grateful to my noble friend for raising the subject of the work done by Mr Anthony Steen. I will certainly ensure that my colleagues in the Home Office are properly reminded of it after today’s Question Time.

[Baroness Smith of Basildon]

My Lords, I thank the noble Baroness for the answers that she has given at the Dispatch Box today. This issue unites rather than divides the House. However, the scale of the problem is shocking. We are talking about children sold into slavery or prostitution, or who disappear altogether. Bearing in mind the Government’s proposal to withdraw from the policing and justice provisions of the European Union, will she discuss with her colleagues how we will continue our co-operation with other European countries, given that, as she said, European and worldwide co-operation is so important in tackling this issue?

[Baroness Stowell of Beeston]

As the noble Baroness will be aware, we have signed up to the European directive on human trafficking and will be fully compliant by next month. We attach such importance to this issue that we wanted to ensure that the work that we are doing to co-operate across all boundaries was properly reflected by our subscription to that EU directive. There is no suggestion that we would want to do anything to weaken our commitment in that area.

[Lord Laming]

My Lords, the whole House will agree that people who traffic those children are usually not only heartless but extremely determined and controlling. Does the Minister agree that those who are in the forefront of trying to identify and protect these children need to be even more determined than those who are trafficking them? Can we be assured that examples such as the one referred to will be made more general across the country and that the legislation will be reviewed more thoroughly?

[Baroness Stowell of Beeston]

The noble Lord is absolutely right that our priority has to be about raising awareness of this crime and ensuring that those who are at the front line in a range of different agencies can spot where somebody is being trafficked as, sadly, this is a crime where victims sometimes do not know they are victims. That links to a Question I answered some months ago about child sexual exploitation and the victims of that crime not necessarily knowing that they are being abused in the way that they are. We are investing money in making sure that the professionals at the front line are improving all the time in identifying them. Evidence of that is the fact that more people are being referred to the NRM than have been up to now.

[Lord Marks of Henley-on-Thames]

My Lords, given the scale of the problem that noble Lords have mentioned, is it not surprising that since 2009 only 10 people have been convicted of trafficking children into the United Kingdom? Does that not suggest that there is a great deal more work to be done?

[Baroness Stowell of Beeston]

My noble friend is right. The level of conviction in this area is sadly low, although there are other convictions. People may have committed trafficking offences, but their conviction is for other offences: rape and so on. My noble friend’s point is valid, and I share it.

[Lord Harris of Haringey]

My Lords, is it possible for the Government to give a firm commitment that vulnerable people, particularly children, who have been trafficked will not be deported back to the country from which they have been trafficked as they are then likely to fall back into the hands of those who have trafficked them?

[Baroness Stowell of Beeston]

I refer the noble Lord to the point I made at the beginning about the UKBA now having a team dedicated exclusively to decision-making around victims, which is important in this area. In addition, it is important for me to be clear that the UKBA has a “victims first” attitude. We address the needs of the victim and investigate the crime against them before any consideration is made of an individual’s immigration status. That is secondary in situations such as this.

[Lord Elystan-Morgan]

I have a background question. As the Minister knows, the Children Act was passed in 1989 and came into force in 1992. Many things have changed since then. Is it intended that there should be a general and comprehensive review of the operation of that statute incorporating the matter raised by my noble and learned friend Lady Butler-Sloss?

[Baroness Stowell of Beeston]

I am not aware that we have any plans to review that legislation in the way that the noble Lord proposes, but part of what the interdepartmental ministerial group which looks at human trafficking does is continual monitoring of the legislation to see that it is proper and appropriate for tackling this vile crime.

Business of the House

Thursday 21st March 2013 Lords Chamber

Timing of Debates

11:38

Moved By

[Baroness Anelay of St Johns]

That the Motion in the name of Lord Deighton set down for today shall be limited to three hours and that the Motion in the name of Lord Nash set down for 26 March in Grand Committee shall be limited to two hours.

Motion agreed.

Liaison Committee

Thursday 21st March 2013 Lords Chamber

Motion to Agree

11:38

Moved By

[The Chairman of Committees]

That the first Report from the Select Committee (HL Paper 135) be agreed to.

[The Chairman of Committees (Lord Sewel)]

My Lords, the Liaison Committee’s report this time last year reviewed existing Select Committee activity and recommended an additional unit of committee activity, and a reduction in the resources available to the European Union Committee and the Science and Technology Committee to enable the redeployment of resources to support two new ad hoc committees and the appointment of an ad hoc post-legislative scrutiny committee. Over the past two months, the Liaison Committee has reviewed existing Select Committee activity in the light of these changes. Both this year and last, we discussed the work of the Communications Committee with its chairman, the noble Lord, Lord Inglewood, and concluded that the Communications Committee should be appointed as a sessional committee at the start of the 2013-14 Session. I have to point out that there is no resource impact arising from this recommendation.

We also considered a proposal to extend the orders of reference of the Joint Committee on the National Security Strategy to enable it to appoint a sub-committee. The Joint Committee already meets more than the three to four times a year which was originally envisaged and is well supported by Members of your Lordships’ House. The House of Commons Liaison Committee considered the Joint Committee’s proposal for a power to establish a sub-committee at its meeting on 27 February, and declined to support it. The House of Lords Liaison Committee did not support an increase in the Joint Committee’s resources and instead suggested that further thought should be given to the size and composition of the Joint Committee’s membership.

Last year, we recommended that, from the start of the 2012-13 Session, the number of sub-committees of the European Union Committee should be reduced from seven to six. We also recommended that the Science and Technology Committee should be allocated the resource of a single Select Committee. As we acknowledged in our report, this decision caused considerable unhappiness. As the noble Lord, Lord Krebs, chairman of the Science and Technology Committee explained, previously, the committee had the resources to conduct two units of activity at once. The reduction in resource to three staff members had required the committee to undertake one unit of activity rather than two, and the committee no longer had a sub-committee. In the past, the committee has typically alternated a long inquiry with a short one. The committee has been severely constrained in the present Session by having to drop the second simultaneous inquiry.

We recognise the important contribution of the European Union Committee and Science and Technology Committee to the committee work of the House. We believe, however, that the restructuring of committee activity which took effect at the start of the present Session needs further time to bed down. The reduction in resources for the EU and Science and Technology Committee in the present Session enabled an expansion of ad hoc committee activity. This has been a step change for the House of Lords, and has included the first ever House of Lords post-legislative scrutiny committee. The noble and learned Baroness, Lady Butler-Sloss, chairman of the Select Committee on Adoption Legislation, the noble Lord, Lord Cope of Berkeley, chairman of the Select Committee on Small and Medium Sized Enterprises and Exports, and the noble Lord, Lord Filkin, chairman of the Select Committee on Public Service and Demographic Change, were unanimous in their enthusiasm for the work of their committees, the commitment of the members and the support provided by the committee staff. We consider that the three new ad hoc committees have worked very well during this Session.

I encouraged Members from all sides of the House to put forward ideas for new committee activity for the next Session, and was delighted by the response. We considered the proposals received against the criteria set out in the original Leader’s Group report on the matter. I am delighted to report that the House Committee has agreed in principle that funds can be made available to support the work of a further additional unit of committee activity in 2013-14. This is at a cost of approximately £225,000.

This increase in activity can be managed without affecting the House’s overall aim not to increase our resource costs in real terms, partly as a result of savings that have been made in other areas. As an example, Members will be aware of savings being made through reducing the number of days on which mail is forwarded and removing linen hand towels, and of significant savings being made by making more documents available online, thereby leading to the reduction in printing costs. I am fully aware that not all of these savings initiatives met with universal acclaim at the time, but it is true that the savings that we have made in these areas have enabled resource to be redirected to support the core activities of the House. That is something to recognise and support.

The new Select Committees that are going to be set up are in addition to the extra unit of committee activity agreed to by the House Committee and the House this time last year. The Liaison Committee also decided to recommend two shorter, ad hoc committee inquiries to run consecutively. This means that we have been able to recommend ad hoc committees on five subjects, as follows: first, a committee on the use of soft power in promoting the UK’s interests abroad; secondly, a committee on the strategic issues for regeneration and sporting legacy from the Olympics and Paralympic Games, to report by late 2013; thirdly, a committee on the consequences of the use of personal service companies for tax collection, following the completion of the work of the committee on the Olympic and Paralympic Games legacy; fourthly, a post-legislative scrutiny committee to examine the Mental Capacity Act 2005; and, fifthly, a post-legislative scrutiny committee to examine the Inquiries Act 2005. This is in addition to the important pre-legislative and other scrutiny committee activities.

As Chairman of Committees, I am all too well aware of the fact that it is impossible to please all your Lordships all the time. However, I know that the Liaison Committee has put in hard work in recent months to produce a report which, I hope, may please some of your Lordships for some of the time. On that basis, I beg to move.

[Lord Pearson of Rannoch]

As the Liaison Committee is a committee of your Lordships’ House, could the noble Lord give a little more of the reasoning behind its failure to approve an ad hoc committee requested by my noble friend Lady Cox, who cannot be here today? The request was for an ad hoc committee into religiously sanctioned gender discrimination against women. I ask this question as one of the 70 Peers who supported that request. It is therefore surprising that the report that we are considering says that only two Peers supported the request, whereas in the letter from my noble friend Lady Cox to the committee of 22 November, she named three eminent Peers who supported her committee, the noble and learned Lord, Lord Mackay, and the noble Lords, Lord Carlile and Lord Dholakia, and said that 67 other Peers supported it. As far as I can see, of the committees that have been selected, not one was supported by a single other Peer. Therefore, I wonder whether the Liaison Committee has got this right.

Finally, I am sure that your Lordships would be disappointed if I did not bring the European Union into this somehow. Therefore, I once again must ask whether your Lordships really need seven European Union committees, whose suggestions and considerations are largely ignored in Brussels, whereas the House of Commons makes do with one European Scrutiny Committee. I have to ask the Liaison Committee to think again on this one—or, if not, to consider a request for this very widely supported and important committee at the earliest opportunity.

[Lord Jopling]

My Lords, not for the first time, I draw the attention of the House to the fact that, inexplicably, the House of Lords does not have a committee that deals with foreign affairs. There is a committee down the Corridor on foreign affairs, of which I had the honour of being a member for 10 years before I came here. We have Sub-Committee C, which met earlier this morning and which deals with European Union aspects of foreign affairs, defence and trade. However, when one looks at the whole world—which none of our Select Committees has a mandate to cover—the rise of China and the growing importance of India and South America, for instance, are issues that Sub-Committee C is not able to cover.

If I may say so, there is infinitely greater expertise in foreign affairs in this House than there is down the Corridor. I find it absolutely astonishing that whenever this issue is raised, we are told that we should not duplicate the work of the House of Commons. That is absolute nonsense. I urge the Chairman of Committees to consider this matter. I have talked to him about it privately. I hope that something will be done about it because it constitutes a major gap in the work of this House.

[Lord Filkin]

My Lords, I warmly welcome the Liaison Committee’s report. This is exactly the sort of steady early success and progress that those of us on the Goodlad committee, which recommended this initiative, hoped for. It is very good to see it.

I thank the House and the Liaison Committee on behalf of my committee, which produced its report, Ready for Ageing?. It was a great privilege to have the opportunity to do that. We are delighted that the membership of the committee was so well supported by the staff and that the issue has caught the public’s attention. However, I draw attention to a small problem with ad hoc Select Committees which I hope can be discussed at a later date. My committee, which published its report last week, has now ceased to exist. If the aim of the House in undertaking Select Committee work is not simply to publish a piece of paper but to have an impact on public policy and debate, that is a fundamental problem. To illustrate it crisply, how the Government respond and how the political parties think about such an issue is of fundamental importance. Although my committee has ceased to exist, it will continue to meet because we recognise that in the next two months or so we need to meet Sir Jeremy Heywood, Sir Bob Kerslake, a couple of Permanent Secretaries and senior figures from each political party. As I say, the clerks have supported us superbly. I know how to use a telephone but, clearly, if you want your ad hoc committees to have an impact, you have to provide the sort of support I have suggested: that is, an administrator for one day a week for six months to support the follow-through.

[Lord Grenfell]

My Lords, I would not like the plea of the noble Lord, Lord Jopling, for a foreign affairs committee to go unsupported by other Back-Benchers. I fully endorse his view; we need such a committee. My experience as chairman of your Lordships’ Select Committee on the European Union was that we often found ourselves having to draw back from the frontier when there were issues that we felt needed attention because it was simply not within our mandate to go into them. It would be a great comfort for the House to know that the plea of the noble Lord, Lord Jopling, will be taken seriously and not just handed on down the line once again, year after year, without any positive response.

[Lord Jay of Ewelme]

My Lords, I support the noble Lords, Lord Jopling and Lord Grenfell, in what they have said about the need for a foreign affairs committee in this House. Since arriving in this House, I have found it very odd indeed that the only way in which foreign affairs can be looked at is through the prism of the European Union. That is sometimes the right prism, but not always. As the noble Lords, Lord Jopling and Lord Grenfell, said, there is a very strong case for a committee on foreign affairs.

[Lord Howell of Guildford]

My Lords, the noble Lords, Lord Jopling, Lord Grenfell and Lord Jay, have put their finger on a fundamental point. I know that the Chairman of Committees—the noble Lord, Lord Sewel—is struggling in this very difficult task of trying to make all ends meet and to accommodate all the pressures, but there is the most enormous gap with regard to foreign affairs. The world is changing. We have plenty of complex business to do with Europe and we should have good committees focusing on that. However, the IMF tells us that the whole of Europe will contribute only 17% to the world’s GNP in four years’ time. It is, alas, shrinking in an expanding world. There is a vast new area of interest to cover. Our friends in the other place can cover some of it but under their remit they cannot begin to cover all the issues. The expertise, wisdom and understanding about how we cope with this new world are here in this House. Not to have a committee focusing on it is, to my mind, verging on a tragedy. The matter should be given consideration in the future, in the way that my noble friend Lord Jopling put with such eloquence.

[Lord Foulkes of Cumnock]

My Lords, I do not disagree with what has been said about a foreign affairs committee—quite the reverse, I agree completely. I want to range a little more widely. First, I welcome the fact that the House is discussing the report of one of our domestic committees. We should do this more often. There are a lot of things happening around and about the House that individual Members of the House know very little about. It is good that the Chairman of Committees comes here and explains what is happening in the Liaison Committee. Lest anything I say subsequently be construed as criticism of the Chairman of Committees, I say quite equivocally that he is doing a good job—on the whole.

We have discussed the future of the Lords on innumerable occasions. We have referred to our work in dealing with, reviewing and revising legislation. We have excellent debates—and commend ourselves and pat ourselves on the back for their excellence. But one of our most important responsibilities is the third responsibility: scrutiny. The Chairman of Committees will have received a letter from the chairmen of all the Select Committees, asking for more debates on Select Committee reports. The letter states that it is repeatedly recognised, both inside and outside the House of Lords, that our Select Committees are among the most important, effective and well-regarded elements of our work. Therefore, they should be given greater support by the House, the Liaison Committee and the officers and administration of the House.

Will the Chairman of Committees confirm that the Liaison Committee has been cash limited in its consideration of this matter, so that to create new committees—I welcome all five of them—it has had to cut back on the good work of all the others? The Science and Technology Committee, which has done a great deal of good work, has been cut, as the Chairman admitted. The noble Lord, Lord Krebs, and others complained about that. It did remarkably good work, hailed as excellent not just in Britain but abroad.

The European Union Select Committee now has one sub-committee fewer. That means the other sub-committees work harder. I am surprised that the noble Lord, Lord Pearson of Rannoch, does not like them because these sub-committees scrutinise in great detail what comes from the European Union, challenging and questioning it. I would have thought that that was what he was in the business for. We do a good job on his behalf—well, almost—challenging and questioning what comes out of Europe.

[Lord Pearson of Rannoch]

My Lords, the noble Lord is very generous. The point I made was that we have seven European Union sub-committees whereas the House of Commons makes do with one. I also made the point that the conclusions of our seven European Unions sub-committees carry very little weight in Brussels. Furthermore, the scrutiny reserve has been overridden over 400 times in the last two years. Of course I agree that the other committees of your Lordships’ House are hugely valuable. They are taken very seriously nationally and we should have more of them. However, I believe that we should have fewer European Union sub-committees. I do not see why we cannot make do with one, as the House of Commons does.

[Lord Foulkes of Cumnock]

My Lords, I think I was too generous to the noble Lord, Lord Pearson. I have been in Brussels twice recently. Everyone I came across there—the officials and commissioners—without hesitation or exception said that they recognise and respect the work of the House of Lords European Union Select Committee and its sub-committees. That came out loud and clear and I pass it on. The trouble is that we are limited. We wanted to travel more but cannot because of the limitations on cost.

Perhaps I may now deal with the Joint Committee on the National Security Strategy. I was really astonished by the response from the Liaison Committees here and in the other place. There is a National Security Council, which the Government have set up to take an across-the-board look at all aspects not just of defence and foreign affairs, but of energy security, cybersecurity and a whole range of things. The National Security Council is a powerful body in the country, and the Joint Committee is the parliamentary scrutiny and control over it. The committee just wanted to set up a sub-committee, but because of a lack of resources it is not allowed to do so. The committee consists of people with great expertise—chairmen of Select Committees in the House of Commons, people who used to be heads of, or used to work for, intelligence agencies in this country, and people who worked on the Intelligence and Security Committee. The Joint Committee is one of the most influential committees and is being constrained in its work.

I know that the noble Lord, Lord Forsyth, has a word or two to say. He always has an awful lot to say, and I am looking forward to what he will say once I have finished. I hope that further consideration will be given to this matter because the Joint Committee on the National Security Strategy should either be given powers and resources to get on with the job or it might as well be wound up. Even some members of that committee said that the other day. More money should be put into this area.

I do not know whether other Members agree, but there is money available for any issue to do with security here—for example, if Black Rod wants to try yet another way of getting cars in and out. If heads of state visit, money is available without question or challenge. However, if it is just a matter of us continuing to be more effective in our scrutiny, there is a challenge or question about money. We ought to try to have a little thought about our priorities and a discussion about making more resources available for the most valuable work that this House does in scrutiny.

[Lord Marlesford]

My Lords, I support what the noble Lord, Lord Foulkes, said. I would take an approach totally different from that which the Liaison Committee seems to have taken. The House of Lords exists; it has just survived a major onslaught and an attempt to dismantle it. For the moment, we are here. It is an incredibly valuable and low-cost outfit, and it is mad not to maximise its capability to do committee work. The constraint should be the availability of Members of the House of Lords to do that work, not some cash-limit approach. We have something that is extremely valuable, and the committee should take a totally different approach on maximising the output of the House of Lords in the national interest.

[Lord Forsyth of Drumlean]

My Lords, I am very happy to sit at the feet of the noble Lord, Lord Foulkes, when it comes to having lots to say. I have two short questions for the Chairman of Committees. I wrote to him suggesting that we had a foreign affairs committee. In a global world where we have to make progress outside the European Community from an economic point of view, it seems extraordinary that we do not have such a committee. I understand the reasons for constraint on resources, but can he explain why it costs £225,000 to run a Select Committee of this House? Where does the money go?

[Lord Spicer]

My Lords, one piece of evidence in favour of the proposition of the noble Lord, Lord Jopling, is the very high proportion of Questions asked on foreign affairs—which is almost as high as the proportions of those asked on old age and health.

[Lord Triesman]

My Lords, perhaps I may add a few words in support of a foreign affairs committee. For a considerable time, I have been closely associated with debates on foreign affairs from both the Government and Opposition Benches. Each year it seems less intelligible that we do not have the resource to do the detailed and interrogative work that is needed in a committee format. There is great expertise in the House; that is without question. There is a great deal of experience in the House and I do not question that either. We all rely on a variety of sources, particularly in opposition when you do not have the resources of the Foreign Office to rely on in preparation for debate.

However, what is plainly absent is detailed interrogation in relation to significant problems, and the noble Lord, Lord Jopling, illustrated the two that have perplexed me to the greatest extent. We do not have the ability to interrogate with regard to that sort of information, making use of resources from outside in order to compile the most authoritative set of descriptions of those problems. It is a fundamental limitation, and it is one that spreads right across the House—not just to the Front Benches but to the whole of the Back Benches—and it is no surprise to me at all that that is why support for this proposition is heard on all Benches this morning. It is high time that that change was made. I regard it as urgent.

[Lord Kilclooney]

My Lords, for almost 50 years I have served in five different types of parliamentary institution: the House of Commons, the European Parliament in Brussels and Strasbourg, the Council of Europe Parliamentary Assembly, Stormont and, now, your Lordships’ House. Out of those five, without doubt the best parliamentary assembly for the quality of debate is your Lordships’ House. The worst, I am sorry to say, is the European Parliament because nearly all its work is done through committees. It meets in full session on only about four days in each of 10 months a year. Therefore, I caution against overloading this House with committees and reducing the time that your Lordships’ House sits in full session.

[Lord Bowness]

My Lords, I believe that someone has to answer the point made by the noble Lord, Lord Pearson, in making a comparison between the European Union Select Committee in this House—I declare an interest as a member of that committee—and the European Scrutiny Committee of the House of Commons. I will not take up too much of your Lordships’ time but the procedure is entirely different. The European Scrutiny Committee does not undertake individual inquiries and scrutiny of individual matters in the same way that your Lordships’ committee does. Therefore, the comparison is not a true one, and I believe that that should be made clear if we are discussing this matter.

Secondly, it is not just a question of whether or not notice is taken in Brussels. Our business is also to hold Her Majesty’s Government to account in regard to the attitude that they take to proposed legislation, to raise questions about that legislation, to get the Government’s answers and know the position they are taking, and perhaps to make recommendations. Therefore, the position of the European Union Select Committee and its sub-committees is very different from that of the House of Commons committee, and its work could not be done by reducing it to one simple committee, as is the case with the European Scrutiny Committee in the other place.

[Lord Higgins]

My Lords, does my noble friend agree that it is important that adequate time should be available to debate the reports of these committees? Can he say what mechanism exists for ensuring that, if a gap suddenly appears in the House’s programme, that space is filled if reports are waiting to be debated? I raise this because we suddenly find that we have an extra week’s recess in a few days’ time. Were there any reports which could have been debated at that point?

[Lord Lexden]

My Lords, perhaps I may add a small footnote to the comments of a number of noble Lords urging the formation of a foreign affairs Select Committee. I was in Oxford yesterday, where I was vigorously assailed by a leading member of another place about our failure to give sufficient consideration to Commonwealth matters. I explained that we debated them not infrequently. I also explained the enormous amount of work done, and commitment shown, by my noble friend Lord Howell. However, I think that it would go even further in helping to correct that false impression if we established the committee for which so many noble Lords have called.

[Baroness Royall of Blaisdon]

My Lords, it is sometimes a very lonely job being the Chairman of Committees. I just want to say that I and other members of the Liaison Committee are here and, as I know the Chairman will say, we will certainly take all these things into consideration when we next discuss these issues. I did not wish the Chairman to feel that he was alone in these matters.

[The Chairman of Committees]

I thank the noble Baroness very much. First, perhaps I may deal with the matter raised by the noble Lord, Lord Foulkes, mainly because of the ringing endorsement he gave me for the way in which I have carried out the job. Knowing his interest in football and a far from gloriously successful football side, it felt a little bit like being the club manager whose team is languishing somewhere in the relegation zone, as soon as he started to make those comments.

It is true that the chairmen of virtually all our Select Committees have written asking that time be made available for the debate on their reports, that time has not properly and fully been made available at the moment and that there is a delay. To a very large extent, that is true. It will be discussed by, I think, the Procedure Committee at its next meeting. That is under way and being considered. The precise timing of when reports are debated on the Floor of your Lordships’ House is a matter for the usual channels and is not within the scope of any of our domestic committees. I am sure the usual channels would recognise the points that were made, particularly in relation to the additional week’s recess.

As regards the points made by the noble Lord, Lord Pearson of Rannoch, I will not go into details on the EU Committee, save only to say that if he is saying that the views of our EU Committee are not considered fully in Brussels, he should look at the proposals for the reform of a very difficult area of policy: the common fisheries policy. He will see that the Commission’s proposals follow almost word for word the recommendations made by this House’s EU Committee when it looked at the reform of the common fisheries policy some years ago. Therefore, at least in one highly controversial area of policy, the EU Committee’s voice is not only being heard but is being effective and carried out through implementation.

The noble Lord, Lord Pearson of Rannoch, also made various points about one particular topic not being selected. I am afraid that the quality of the submissions was such that there are bound to be a number of people who feel disappointed. We had 27 submissions for Select Committees, the vast majority of which one could have said yes to quite easily. It was a very high quality list of submissions, and it is inevitable that people will be disappointed. I have to say that the committee had previously set its face against being swayed by the number of people who had just signed up to support a topic. It really wanted to look at the quality of the topic, the importance and relevance of the topic and how it could bring forward a mix of topics that covered a broad and comprehensive range of subject areas.

Several noble Lords referred to foreign affairs. I hear and I welcome the comments that have been made and the argument to have a foreign affairs Select Committee. The established position of the House, which was repeated by the noble Lord, Lord Jopling, is that we do not duplicate the work of the House of Commons. In fact, we very rarely duplicate its work in the work of our Select Committees. We tend to bring a different perspective, a different set of skills and a different set of experiences to the consideration of what might seem to be the same topic or the same policy area, and a very different product is produced.

We have moved, let us say cautiously if not slowly, in establishing an ad hoc Select Committee in the foreign affairs area by looking at the use of soft power in supporting Britain’s influence in the world. That is something of an experiment. Let us see how that goes, see if it produces a distinctive value-added piece of work, and perhaps build from there out to have a more universal coverage of the foreign affairs policy agenda. That is something that I think we can judge perhaps better this time next year.

12:15

The noble Lord, Lord Forsyth, asked where the money goes. I would expect the noble Lord to pose a helpful question like that. First, the average cost is just over £200,000 per year, which gets swallowed up, most of it by staff salaries, clerks’ salaries, national insurance, pensions, lawyers, specialist advisers, witness expenses, travel, printing and postage. Those sorts of things all add up and pretty quickly come to what looks like a formidably large figure when you read it out, such as £200,000 for the cost of a Select Committee. Of course, that is nowhere near the real cost of a Select Committee if you try to put a monetary value on the contribution that Members bring to the deliberations of all our committees. I will quickly look to see what else I have.

The noble Lord, Lord Filkin, raised the very real problem of how you follow up once a Select Committee has reported. That is of significant importance, because clearly we would hope that the topics for the ad hoc committees in particular are selected because they are of sufficient importance to lead right the way through, from examination to the formulation of an approach, to implementation and to how far the work of the Select Committee has influenced the development of policy and the activities of government. You cannot just stop it dead once the report is in. However, a number of significant problems have to be sorted out before we can do that. One is that a Select Committee cannot sit quasi for ever, saying, “Well, we haven’t quite got that bit sorted out, and we need to do more work on that”. This is a real problem. The committee is meeting on 11 June, and at that meeting we can at least start to think about how we can address that issue.

[Lord Forsyth of Drumlean]

I return to the question of cost. If the cost was an average figure that was arrived at by taking the number of committees and dividing the cost, and if the argument against having a foreign affairs committee is one of cost, presumably the soft power committee will cost the same as the foreign affairs committee, on the basis of the numbers that the Chairman of Committees has produced.

[The Chairman of Committees]

The argument there is that the ad hoc committee can be a focused committee, and can change perhaps its area of focus in the general area of foreign policy from year to year, with a different composition of people who had an interest in that area. That is the type of thinking the Liaison Committee is developing, rather than increasing the number of sessional committees. That is an argument that we can have and develop during the year, but I would be loath to set up a new sessional committee at the cost of losing the flexibility that you get with an ad hoc committee.

[Lord Hurd of Westwell]

Can we pinpoint this a little? We cannot hold the noble Lord to the exact figures, but it would be very helpful to have an illustrative declaration statement of what a foreign affairs committee would probably cost. We have gone around the subject, but we have to tackle that basic point, as it is crucial. Of course, as my noble friend has pointed out, if one abandoned the idea of a soft power committee, a saving would be set against the cost of the foreign affairs committee. We need to pursue this. The noble Lord will have heard the views expressed in this House, and I think one would find them reflected outside this House. I therefore hope that this will be given very serious consideration.

[The Chairman of Committees]

I have tried to indicate that Members who have an interest in the foreign affairs area are pushing at a door that might not be open but is more than slightly ajar. Certainly the committee will want to look at and address the points that have been made in that area at its next meeting on 11 June. It will see what it can come forward with, perhaps not immediately but during the year, when it looks again at the range of committees and topics that it will bring forward for the following year.

[Lord Howell of Guildford]

Will the Chairman of Committees bear in mind, before the meeting in June that he has just mentioned, that the outside views to which my noble friend Lord Hurd has referred are growing and very urgent? They come from the Foreign and Commonwealth Office, where some of us have served and which, I understand, is very willing and anxious to have this kind of opening, and the House of Commons problem is always there. Certainly there is a valid view that the House of Lords can reinforce and follow up some of the House of Commons Foreign Affairs Committee reports in a constructive way, to the great benefit of both the House of Commons and the House of Lords. Quite aside from that, there is an enormous volume of views that the destiny, prosperity and interests of this nation lie increasingly in the world network—Asia, Africa, Latin America—and the Commonwealth network, and that is where your Lordships’ skill and expertise should be focused.

[Lord Laming]

My Lords, perhaps I may reinforce the point made by the noble Baroness, Lady Royall, that one of the great advantages of bringing a report of this kind to your Lordships’ House is that it gives members of the committee, of which I am one, the opportunity to hear the views of the House. I am sure that every member of the committee who is here today has paid great attention to this debate and that it will be taken forward when we next meet.

[Lord Foulkes of Cumnock]

I am sure the Chairman of Committees would not wish to conclude without answering my questions on the Joint Committee on the National Security Strategy.

[Baroness Neville-Jones]

My Lords, before the noble Lord answers the question on the Joint Committee on the National Security Strategy, of which I am member, I have to say that this House would benefit more from an effective foreign affairs committee than it does from what I regard as an ineffective Joint Committee on Security. I agree with the noble Lord, Lord Foulkes, that unless that committee can be made effective—it does require the ability to set up sub-committees in order to do its work, but I shall not labour that point at the moment—we would be better off concentrating our efforts on a committee that is supported and will work, rather than taking part in a Joint Committee which, at the moment, does not have a particularly good future.

[The Chairman of Committees]

I shall try to deal with the noble Lord, Lord Foulkes, yet again. The committee’s view was that the Joint Committee should revisit and constrain itself to working with its original remit, which was to meet, I think the term was, frequently but irregularly three or four times a year. That was the Joint Committee’s understanding. There are, in effect, two committees to deal with security issues. There is the Intelligence and Security Committee, which looks at the security services, and there is the Joint Committee on Security, a totally different creature that tends to look at a broader concept of security and deals with energy security, food security and so on.

The Joint Committee on Security is disappointing because, perhaps as a function of its composition and size, it has had recurring difficulty in sustaining interest from Members of the other place. This is largely because, as the noble Lord, Lord Foulkes, said, the other place has appointed the chairs of highly demanding Select Committees, and perhaps being on that committee is relatively low down on the order of priorities of its Members. It might be more helpful if the committee itself started a discussion on whether it could make itself more effective by addressing size and composition. Until then, it is clear that the view of the House of Commons committee and our committee is that there should be no expansion of its powers to appoint sub-committees.

[Baroness Neville-Jones]

My Lords, I agree entirely with what the noble Lord has just said about the unsatisfactory nature of both the size of the committee and the levels of attendance, particularly by Members of the House of Commons. It has to be said, however, that the chairmen of the various committees—home affairs, defence, foreign affairs and so on—themselves insisted on being members of this committee in order partly to ensure that it did not actually step on to their patch. That creates real difficulties for the effective work of the committee, which is precisely why it is difficult to find the interstices where we might be permitted to do something. There are some fundamentally unsatisfactory aspects to the existence of this committee that go to its mandate. I do not think that we will make a satisfactory committee out of conforming to the mandate: rather, the mandate has to change in order to make a satisfactory committee.

[The Chairman of Committees]

That might very well be the case, and I suggest that the starting-off point is to look at composition, size and mandate rather than giving the committee powers to appoint a sub-committee. The issue is much more fundamental than giving it the power to appoint a sub-committee. The remaining important and recurring point is that of a foreign affairs Select Committee. I acknowledge fully everything that has been said, and I am sure there will be proper and full discussion at the earliest opportunity.

[Lord Pearson of Rannoch]

My Lords, I want to raise a final point with which the noble Lord may agree, because we have discussed it. When reports, particularly from domestic committees, are put on to the Minute, would it not be helpful if there was some description of what they are about? We have had a full debate today, but all that is recorded on the Order Paper is that it concerns the first report of the Liaison Committee. Perhaps we could have some description of what is involved, and a period of notice for any debate. I would suggest possibly a week. Some of these committee reports are put on overnight, I would not dare to suggest, in the hope that they may just be nodded through. A brief description and a period of notice for these reports, most of which are extremely valuable, would help the House to debate them.

[The Chairman of Committees]

My Lords, the noble Lord has tabled two Questions for Written Answer for me on this very issue. In the spirit of openness, transparency, accountability, motherhood and apple pie, I hope that we can end this debate with a degree of agreement. However, the noble Lord has made a good point. It is right that rather than having a sort of sexy title such as, “That the First Report of the Liaison Committee be agreed to”, we should put on to the Order Paper a brief description of the main issues dealt with in the report. I hope that that is the essence of the reply I will make to the noble Lord when his Questions are answered, and I am sure that he will be at least partly satisfied today.

[Baroness Royall of Blaisdon]

My Lords, I hope I will be forgiven for this, but I have to take this opportunity to correct a misapprehension that was mentioned earlier in this short debate. It was that the usual channels had agreed to the extra week’s recess that was announced a couple of weeks ago. The decision was not reached by the usual channels; it was the result of a discussion by Her Majesty’s Government.

[The Chairman of Committees]

I would hate to mislead the House. I think that all the issues have now been ventilated, and I beg to move.

Motion agreed.

Supply and Appropriation (Anticipation and Adjustments) Bill

Thursday 21st March 2013 Lords Chamber

Second Reading (and remaining stages)

12:29

Moved By

[Lord Deighton]

That the Bill be read a second time.

Bill read a second time. Committee negatived. Standing Order 46 having been dispensed with, the Bill was read a third time and passed.

Budget Statement

Thursday 21st March 2013 Lords Chamber

Motion to Take Note

12:31

Moved By

[Lord Deighton]

To move that this House takes note of the Budget Statement and the economy of the United Kingdom.

[The Commercial Secretary to the Treasury (Lord Deighton)]

My Lords, yesterday’s Budget was extremely clear on the two issues which it set out to address: first, the challenges facing the UK economy; and, secondly, the Government’s response to these challenges. On the first, we are all very familiar with—and should never forget—how we got here. There was a massive financial crisis which has turned out to have even more serious consequences than we thought at the time; and after that bubble burst we were left with the record and unsustainable debt levels unwisely accumulated during the boom years. The recovery from this trauma is slower than any of us would have liked or, in fact, have anticipated. It has left us with both deficit and debt levels that are still far too high.

On the second point, the Government have been consistent in basing their policy response on their three key pillars: an unwavering commitment to the fiscal responsibility which is at its heart, reinforced both by monetary activism to support demand and keep interest rates low and by a reforming agenda of supply-side measures aimed at ensuring that the UK is one of the best places in the world to do business. This strategy has been pursued with careful consideration of the cost of living pressures on ordinary people, and the Budget therefore took measures to mitigate some of those pressures.

If there is an underlying mission statement or ideology to this strategy, it is one of economic realism. If our economy is to succeed in the global race over the medium and long term, we must have businesses that are world beaters. That must be supported by first-class infrastructure and a tax and regulation environment that fosters enterprise. These businesses must be able to draw on a highly educated workforce which is motivated to succeed because hard work is incentivised. That is consistent with what my right honourable friend the Chancellor described yesterday as the “aspiration nation”. I will expand on these individual components of policy and how they have evolved, which will, I hope, provide a framework for the contributions that follow.

First, on fiscal policy, there should be no doubt that the Government are committed to reducing the deficit. This commitment is key to retaining the market’s confidence—confidence which is measured daily through the record low interest rates that we currently enjoy. We should not take this confidence for granted: at our current levels of debt and borrowing we would be vulnerable to the potential fickleness of the markets if our commitment to fiscal consolidation wavered. It is like stretching a piece of fabric: you never know when or where it will split but the risk is always there. We hear arguments—as I am sure we will later this afternoon—for borrowing more, and opposite arguments for harsher spending reductions. I think that we have the balance about right and that we have adapted to the worse than anticipated economic environment in which we find ourselves.

The Office for Budget Responsibility—another of the Government’s important and brave innovations in the interests of transparency, so that we can all agree on what the numbers really are—is extremely clear on the reasons why our recovery is slower than it originally forecast. Unfortunately, none of these factors is within the control of any Government. Those reasons are, first, that the financial crisis was deeper and its consequences more pernicious than was originally understood; secondly, the depth and continuation of the well advertised eurozone crisis; and, thirdly, the impact of commodity price inflation, particularly in 2011.

That, if you like, is the bad news. However, there is also some extremely good news about how our economy is responding to these challenges, and I do not want to pass over that. In particular, our private sector has created 1.25 million new jobs. These are real jobs for real people, making a real difference to their lives and prospects. To put that into context, for every job lost last year in the unavoidable shrinkage of a bloated public sector, six new jobs were created in the private sector. It is a crucial success, and very good evidence that a vital element of what is described as rebalancing is, in fact, proceeding to plan.

An important ingredient in prosecuting this fiscal consolidation plan—particularly when growth and the tax receipts which flow from it are elusive—is the effectiveness of the Government’s spending controls. We must manage well the things that we do have some control over. That is really how our effectiveness as a Government should be measured.

Yesterday’s Budget was fiscally neutral despite the many stimulative measures it included. This was due to the rigorous financial management by my right honourable friend the Chief Secretary to the Treasury, who resisted the traditional final-quarter Whitehall spending splurge. That is precisely the sort of discipline that you see every day in the private sector and I am delighted that it is now being applied in the public sector too. We are focusing government departments on meeting targets that are consistent with our consolidation plan. We are keeping the lid on public sector pay, which is important. We are also continuing to extract further reform efficiencies in how we run government. However, we are still making space for a very valuable additional £3 billion per annum of capital spend from 2015 onwards.

I turn to monetary policy. We in this House have engaged in a very active and expert discussion about the role and efficacy of monetary policy—which was another big topic yesterday. Some of the subsequent analysis has said that monetary policy has not really changed anything while, on the other hand, other analysis has said that it has been a revolution. So, clearly, it is worth clarifying the policy.

I think that the Government’s thorough review of our monetary policy is most welcome. It was exactly the right thing to do in view of all the surrounding discussion and was very thorough. The updated remit has also been agreed by both the present and the next Governor of the Bank of England. The important points are as follows. First, we are retaining the existing model of flexible inflation targeting. Secondly, we have reaffirmed the primacy of the 2% inflation target. Thirdly, the updated remit provides for a much more explicit discussion of the trade-offs involved, particularly when monetary policy is responding to the kind of severe economic shock that our economy has suffered. Fourthly, the Government have requested that, by August, the Monetary Policy Committee assess the potential of so-called intermediate thresholds, the technique which has been utilised by the Federal Reserve in the US. The Government want to build on good practice in monetary policy both here and around the world in order to develop a best-in-class framework. We should therefore welcome it. It is transparent and includes the appropriate governance.

On a slightly more practical and specific level, there is also a clear determination to drive ahead with the implementation successes that we have had in monetary policy, particularly, for example, with the Funding for Lending scheme, which is transmitting the concept and goal of monetary activism into the real economy. We are seeing its impact on funding costs.

This is probably the right point for me to discuss the home-buying initiatives, which were an important part of the announcement yesterday. One of the obvious challenges for any Budget is how to create a meaningful stimulus to the economy and make a meaningful difference to people’s lives and aspirations, within the confines of extraordinarily tight fiscal management. I believe that the two help to buy schemes, as they are branded, are an extremely effective and creative way of responding to this challenge. The equity loan scheme will provide £3.5 billion to invest in approximately 74,000 new homes, while the mortgage guarantees will support a potential total of £130 billion of mortgages. These are bold and innovative policies but they will also require careful risk management.

Our focus on the deficit should not and does not mean that we cannot have a strong and reforming growth strategy. In fact, much of yesterday’s Budget was devoted to just that: how we can help business. In my own relatively short time at the Treasury, I have been extremely impressed by the attentiveness with which this Government listen to what business is asking for and the urgency with which we try to press forward with the corresponding reforms.

In my own area of focus—delivering our economic infrastructure quickly, well and cost-effectively—I have enjoyed the total support of my right honourable friends the Prime Minister and the Chancellor. That is why we have pushed through this plan to increase capital spending by £3 billion a year; why we are working on a significant upgrade of the capability within the key Whitehall departments responsible for the economic delivery of infrastructure; why we are focused on the delivery of the biggest 40 projects under our control; and why we have made available a very significant guarantee facility, which takes advantage of the strength of our credit, to be able to guarantee projects that need that one extra shove to move from conception into execution. Very importantly, we are also translating our policy of electricity market reform into a set of financeable contracts so that we can set about building the new electricity-generating capacity we require.

Overall, our supply-side reforms—I am not going to list them—have significantly improved our ranking in international competitiveness league tables. This is particularly true in tax, where we are now right at the top. Let us give credit: bringing corporation tax down to 20% from 28% in 2010 makes us the most competitive in the G20. When we look in the Treasury at the different ways to stimulate the economy, there is nothing that is more immediately impactful than reducing the rate of corporation tax, which is why my right honourable friend the Chancellor has focused on it. The introduction of the £2,000 employment allowance benefits smaller businesses and reinforces the positive employment momentum that has been established successfully in the past few years.

I believe that this Government have got the tax mood music just right. Lower tax rates for companies and individuals are essential for a successful enterprise economy, one that concentrates on growing the size of the cake so that we can have much easier discussions about how we share it. In return, however, we expect taxes to be paid, and we are right to push through strong tax avoidance and evasion measures domestically and I praise my colleagues in the Government for taking a lead in co-operation to address this subject internationally.

Ensuring that taxes are paid is one element of how this Government ensure that their policies are deployed fairly. Once again, this Government have led in transparency in setting out the distributional implications at each fiscal event—another innovation—demonstrating that those who can afford the most have also contributed the most to our deficit reduction. I also point to pensions and welfare as examples of good administrative reform that simplify and improve overly complex systems. Similarly, the simplicity and power of moving to a £10,000 personal allowance takes 2.7 million people out of the tax system altogether.

In conclusion, I fully accept that this country is facing a highly challenging economic situation. The slowness of recovery has left both debt and deficit at levels which still expose our economy to substantial risk. This has much to do with the precarious levels of public and personal debt that were the legacy of the financial crisis, and the continuing recession in the EU, our principal trading market. This Government are focused on fixing our debt problem and are utilising our relatively limited room for manoeuvre to support businesses and individuals who want to get on and succeed. It will take time. In a global economy, we are not entirely masters of our own destiny. But I believe, as does my right honourable friend the Chancellor, that we have the right mix of policies to address the challenges we face.

12:45

[Lord Eatwell]

My Lords, I am grateful to the noble Lord for introducing this debate on the Budget Statement. He demonstrated that it was not a boring Budget. Indeed, the Budget was—let us say—revelatory. It revealed that, try as you might, you cannot spin economic failure.

Two weeks ago the Prime Minister declared that,

“there are signs that our plan is beginning to work”.

The reality is that the economy is stuck in recession—or as near recession as makes no difference. Just three months ago the OBR, an organisation that always looks on the brighter side of life, was forecasting growth of more than 1% this year. Now it has had to face up to reality and halve its growth forecast.

The Budget Statement also revealed that austerity does not cut deficits. Despite all the Government’s efforts, the deficit is not falling. Taking out special measures, in 2012 it was £121 billion; in 2013, £120.9 billion—a lot of work must have gone into shaving off that £100 million—and in 2014, £199.8 billion, all within the slightest margin of error. The reason deficits are not falling is obvious to all: no growth in output means no growth in tax revenues and significant pressure on social spending.

There was one further major revelation. This Budget of no growth, stagnant deficit and falling living standards revealed that the Treasury has run out of ideas. It does not have a clue what to do next so it is handing economic policy over to the Bank of England in the hope that it might think of something, even though all the evidence at home and abroad suggests that monetary policy is ineffective in the face of prolonged recession.

The scale of our problems is indeed daunting. They will not be solved by a £3 billion infrastructure programme, postponed for two years. In his Budget speech, the Chancellor boasted that,

“we can provide the economy with the infrastructure it needs”.

The noble Lord has special responsibility for the infrastructure programme. Will he tell us how much was actually spent on infrastructure projects in 2012, and how much will actually be spent in 2013—not allocated, not “in the pipeline”, but actually spent? More generally, will he offer his diagnosis of why the Government’s infrastructure policy has so far failed so dismally?

The growth problem will not be solved by policies, postponed to 2014, designed to pump money into the housing market. The shared equity scheme will only partially offset the deep cuts in capital grants for social housing in the previous spending review, and the new mortgage guarantee, available for new-build and existing properties, is more likely to give a further twist to the house price spiral than provide the major new-build stimulus that the construction industry needs. Perhaps when the noble Lord sums up, he will tell us the Treasury’s estimate of the impact of the guarantee scheme on house prices, how much of the expenditure will be a dead weight loss—funding purchases that would have taken place anyway—and the Treasury’s estimate of the cost of this scheme.

The growth problem will not be solved by the cut in corporation tax to 20%, another measure postponed to 2015. As for business investment, the Government just do not seem to understand that the key stimulus to investment is the prospect of demand for the goods and services that the investment will produce. It does not matter how low taxes or interest rates are if investment does not result in a marketable product for which there is growing demand. Yet, as the Chancellor himself admitted, this Budget does nothing to stimulate overall demand in the economy. The OBR forecasts that real wages will fall in 2013 and not recover for two years thereafter. The continuing squeeze on households severely curtails the prospect of any growth in demand, a fact to which our increasingly devastated high streets are an eloquent testimony.

I return to corporation tax. The Chancellor boasted that “headline” UK corporation tax will be far lower than headline corporation tax in Germany or the United States. Did not this boast give him some food for thought? Has he not noticed that the US economy, despite political problems between President and Congress, has sustained its underlying dynamism through the crisis and has already grown to levels of output way above the pre-crisis peak, while UK output languishes 3% below the peak? Has he not noticed the superior industrial performance of Germany, even among the difficulties of the eurozone? Has he not thought to ask himself, “If their taxes are so much higher than ours, how come they are doing so much better than we are?”.

The British economy is in dire straits. What is needed right now is a radical policy of expanding demand, financial reform and investment in the well-springs of growth. In the housing market, the Chancellor has accepted the argument for a boost to demand. Why has he not followed the logic of his expansionist policies in housing and stimulated demand on a wider canvas by cutting VAT and channelling more funding to the poor, who possess the great economic virtue of spending every pound that they receive?

The financial services industry, the mother of the mess that we are in, remains unreformed. The banking Bill that will come before this House later in the year is all about protecting the banks from themselves. There is nothing in it about the sort of banks that we need for Britain’s future. We need a financial system that channels savings to industry, large and small; we need a financial system that understands the needs of local communities and local industry; and we need a supply-side policy that does not just hope that private finance will be seduced into investment in infrastructure, science and technology and skills but actually gets on with the job. In this country, we are blessed with some of the greatest science-based universities in the world, yet, with just a few notable exceptions, we are steadily losing world share in cutting-edge applications across all industries, large and small, traditional and novel. Reversing that downward trend will require a fundamental rethink of company structures, company finances, supply chains and incentives. We need to learn the lesson from the US, Germany and Scandinavia that partnership and a sense of purpose between government and private industry is the bedrock of sustained growth.

The reaction from the Chancellor to these sorts of proposals is predictable. He said in his Budget speech that such ideas are from,

“people who seem to think that the way to borrow less is to borrow more”.—[Official Report, Commons, 20/3/13; col. 934.]

Has he not noticed that it is his policies that are leading to more borrowing and prolonged recession? Did he not read the OBR’s damning assessment of the Budget? It states:

“Given … the fact that the overall net effect of these changes is relatively small, we have not adjusted our overall GDP forecast”.

In other words, the Budget’s contribution to growth is nil and the Budget’s contribution to deficit reduction is nil.

The Prime Minister’s speech on the economy two weeks ago revealed him to be an economic fantasist. The Budget has told us even more about the Chancellor. He declared yesterday:

“We have got a plan to cut our structural deficit. Our … credibility comes from delivering that plan, not altering it with every forecast”.—[Official Report, Commons, 20/3/13; col. 934.]

He cannot admit that no growth and no cut to the deficit is not a forecast; it is reality. He cannot admit failure, face up to the real world and change course.

Albert Einstein defined insanity, as,

“doing the same thing over and over again and expecting different results”.

Well, the Chancellor is not mad—far from it. It is just that he has not a clue about what to do next, and he is willing to sacrifice the British economy on the altar of his own political career.

12:54

[Baroness Kramer]

My Lords, the Chancellor yesterday gave us a Budget that fits the tough economic times that we all acknowledge. I congratulate him on not succumbing to the blandishments of the Opposition. I listened very closely to the noble Lord, Lord Eatwell, and thought that he summarised his own speech by saying that insanity is repeating again and again the failures of the past. He gave us exactly the formula of spend and borrow that the previous Government pursued and that left our economy so structurally weak that, when the financial crisis struck, we found ourselves in dire circumstances, overburdened with debt, and with a structural deficit, no resilience and a fundamental underlying economy that had been neglected for a generation. He now repeats that formula.

The measures in yesterday’s Budget were focused on helping ordinary families with the cost of living, on stimulating new jobs, especially in small and medium-sized businesses, and breathing life into the housing market. Let me make just a few comments on each of the three.

Ordinary families, as we all know, have been feeling the squeeze on their finances. For that reason, I am particularly pleased with a further lifting of the income tax threshold to £10,000 next year. My party promised it and it will be delivered a year early. With this step, nearly 3 million people will be out of income tax altogether; 24 million people will pay £700 a year less in income tax—a genuinely meaningful amount of money; and a person earning the minimum wage will have seen their income tax bill cut in half. I find it frankly extraordinary that, rather than embracing this progress, Labour wishes to substitute a 10p tax band. Under Labour, poorer people would today be paying more income tax than under the coalition. I find that the most extraordinary notion of “fairness”. If one adds to that the measures on fuel duty, childcare and even beer, one sees that ordinary working families now have a little more breathing space.

Childcare is an area where I once worked on Liberal Democrat policy. We made a very difficult decision not to include plans much like those announced this week in our manifesto, because when we looked at the economy that Labour had left us we saw that it was clearly unaffordable in the face of the economic collapse and uncontrolled borrowing environment. But childcare is one of the most challenging issues for working families. I took evidence from many mothers, and sometimes fathers, trying to weigh the long-term financial benefit of growing a career by returning to work against the immediate burden of the most expensive childcare in Europe. The coalition has already made 16 hours a week of free care available to two year-olds in the least well-off families and taken a more intelligent approach to the staff/child ratio in childcare, but we have all known that more is needed and this scheme will make a real difference to working families.

However, I agree that the question of growth is the one on which we have to focus. I looked at Bank of England numbers yesterday which came out ahead of the Budget and the OBR’s forecast. They made it absolutely clear that the most significant cause of undershooting our growth projections is the weakness in the eurozone and the damage it has done to our exports.

Despite that, the private sector has created 1.25 million new jobs, and many of those are in SMEs. Twenty per cent of all the SMEs in the EU are here in the UK. Small and medium-sized businesses are providing more than half the jobs, more than half the exports and, even now, more than half the patent applications. The Government’s employment allowance is therefore just what SMEs need to start adding that “one more job”. Often, that one more job will be a young person, especially if we continue to provide support through apprenticeships and the youth contract. It is right that the employment allowance should become a permanent feature of the structure of British business taxes.

The abolition of stamp duty for AIM will also make a difference, although it must be just part of building a proper framework for raising finance in this country. I have talked now to quite a number of small businesses that simply sold out to the Americans because they could not access the equity that they needed to grow. I have not seen the announcements that my colleague Vince Cable is making today, but if we can combine a revived AIM with the business bank, that, together with proper reform of our still dysfunctional banking system—and I address the noble Lord, Lord Eatwell, who structured this dysfunctional banking system, and the party opposite—we can get a vigorous and rebalanced business base that will provide well paid jobs for our people, especially our young people, who deserve the best.

Earlier in this coalition, we returned large areas of decision-making to local communities but not the funding that would give real power to that decision-making. Last week’s decision to draw departmental money for local growth schemes into a single fund, known now as the Heseltine pot, should overcome that. My noble friend Lord Shipley will speak more extensively for my party on these issues because he is the expert, but I just want to say this, particularly to noble Lord, Lord Deighton, because he is a man of wonderful practicality: I seriously hope that the Heseltine pot will finally release the capacity to get TIF 1 and TIF 2 going—tax increment financing for infrastructure projects, small as well as large, identified by local communities as key to growth.

Of course, though, the big news in the Budget was housing. We have a housing shortage at crisis levels, particularly in affordable housing and especially in London and the south-east. We are building scarcely one-third of what we need. Housebuilding played a key role in enabling the UK to avoid the worst of the Depression in the 1930s, and it has always seemed a no-brainer to drive forward house construction now. I have a strong suspicion that when Vince Cable wrote in the New Statesman that the Government could use their ability to borrow cheaply to support new infrastructure, especially housing, he had this expansion of help to buy in mind.

Help to buy uses existing institutions, so it should be able to take off pretty quickly. It is a massive injection into the housebuilding industry. I am going by the newspaper estimates of £12 billion in total. I notice also that on the back of this announcement, new shares in the housebuilding industry immediately soared—Barratt Developments was up 6.5% by late yesterday—and that response tells you that the market sees this as a way to get construction going. Once again, my noble friend Lord Shipley will say more.

I would very much like the opportunity for a more extensive discussion of monetary policy and monetary activism, because this is a new arena and it cannot be dealt with in the context of a brief debate like this. However, I am so glad that we are engaging in imaginative thinking and opening our minds, not just sticking constantly with conventional wisdom. This is a new opportunity. We are building a stronger economy in a fairer society, and this Budget furthers that goal.

13:02

[The Lord Bishop of Bristol]

My Lords, I recognise the limited amount of wiggle room that the Chancellor of the Exchequer has in the current economic climate, so much of what he proposed yesterday has to be cautiously welcomed. Arguments will continue over whether austerity has yet again trumped stimuli to growth, and will no doubt continue to smoulder for a time to come. I do not myself propose to pitch in on that topic, but I should like to make a few brief comments on one or two aspects of the Budget Statement.

First, and positively, from these Benches—understandably empty today of all days—we welcome the Government’s decision to keep their promises to the world’s poorest by committing 0.7% of our national income to overseas aid. From my own point of view, this is particularly bold in the context of the growth expectations, which have been revised downwards. I hope that this is something that we can all be proud of. Poverty is of course a relative concept but, together with many of my episcopal colleagues, because of our diocesan partnership links, I have travelled to some of the world’s poorest places. I can tell noble Lords that when you stare into the empty eyes of those who are starving to death, the argument that “Charity begins at home” wears a little thin. Through the Government’s commitment to the poor, many millions will benefit.

We are getting better at ensuring that the aid given is kept away from the grabbing hands of corrupt politicians. The distribution of such funding needs to be monitored and held in a framework of accountability. Of course, even though in my own mind this should not be a principal driver of aid, there is a very real sense in a global economy that such aid has an element of investment about it, for today’s aid may well be the foundation of tomorrow’s trade.

Aid is important but, as noble Lords know well, it is only part of the solution. The Government could be doing more to help poor countries to collect more of the tax that they are owed, by requiring multinationals to reveal the tax avoidance schemes that they are using in the developing world. Christian Aid estimates that poor nations currently lose $160 billion a year as a result of tax-dodging by multinationals—far more than they receive in aid from all rich countries. The pronouncements by the Prime Minister and the Chancellor on tax avoidance have so far been commendable. Now we look forward to the Government leading ambitious global action against tax avoidance at the G8 conference in June. That would show that the UK is serious about an international agreement to fight tax avoidance that hurts the poor.

I welcome the plans to invest an additional £750 million into subsidising childcare costs, in a country that has some of the highest childcare costs in the world. However, I want to note the concerns of Barnardo’s, the Child Poverty Action Group and the Children’s Society, which are worried that these changes will fail to help the families most in need of support. The Government’s scheme will assist those on high incomes, potentially up to a joint income of just under £300,000, but will do nothing to help parents working part-time on the minimum wage. In these times of austerity, it feels unjust not to be targeting help at those who are trying to work their way out of poverty.

I am also concerned about the proposal to set a firm limit on certain areas of welfare expenditure as part of controlling annually managed expenditure. Page 26 of the Treasury’s budget report seems very thin on detail, promising an update in June’s spending round. Assuming that these limits are binding, that is likely to put further pressure on millions of low-income families who are already being disproportionately affected by welfare cuts.

There are very good reasons why there is flexibility in this part of the Government’s balance sheet. The need for welfare expenditure varies with the economic cycle and, as the Chancellor has discovered for himself, it is not always easy to predict the future state of the economy. However, I hope that this announcement does not mean, for example, that every increase in unemployment will lead to a corresponding reduction in benefit rates. While I do not wish to overreact to an announcement that is clearly work in progress, I seek the Government’s reassurance that this will not mean further cuts in the real value of benefits and tax credits.

I sincerely welcome this Government’s commitment to overseas aid, and I hope that this bold act of generosity will be extended to ensure greater awareness of the needs of low-income families living in this country.

13:08

[Lord Flight]

My Lords, I believe that this will go down as a successful Budget politically, particularly within the narrow scope for manoeuvre that the Chancellor had. It is perhaps correct that it should have been broadly an unexciting Budget. The one key initiative is the help to buy scheme, which seems to be somewhat the Neville Chamberlain strategy. As the noble Baroness, Lady Kramer, has pointed out, in the 1930s the economy was very much got going by the increase in housebuilding; indeed, few people realise that the most successful period of growth in the 20th century was 1935-40, when the British economy grew at 4% per annum compound. I point out that Chamberlain also addressed the other key problems of the time in that he cut public sector pay, which had got out of line with private sector pay, and he cut taxes substantially as well, generating demand without overborrowing. Perhaps there is a little more to learn from that period. However, these initiatives will have to be managed extremely carefully. They smack slightly of the Clinton measures that caused the housing bubble and all the trouble thereafter to the banking system.

My preference would be, if it were possible, to accelerate the infrastructure projects which the noble Lord, Lord Deighton, is appointed to manage, and I am sure that he will do extremely efficiently. Within the plan, there is about £200 million of investment in roads and other infrastructure and £200 million needed for power generation. That is massive scope to have infrastructure investment that will get the economy moving, but we have to get rid of the planning and environmental red tape, which is delaying that. I am convinced that there is the money for them. We have seen developments such as the recent Qatar involvement, but I am amused to learn that even the new road between Edinburgh and Glasgow is being financed by the Agricultural Bank of China, which has set up in this country to do business in that area.

We have to realise that the fundamental problem is less the banking explosion and more that Gordon Brown created a more than £100 million structural deficit. He relied on frothy income from an overheated financial sector and embarked on spending when there was not regular, sustainable tax income to finance it. We are stuck with that problem, caused by deliberate overspending, rather more than we are the parallel problems of the banking system.

Together with that was the policy of allowing people to borrow more and more. I remember asking Gordon Brown when he was Chancellor of the Exchequer whether he was concerned about the fact that consumer debt was far too high per person—about £18,000 per couple—and that house prices had gone up too much. His reply was that increasing individual indebtedness was fine because people could afford to service more debt. We have ended up with not only the public sector but the private sector overborrowed. The idea that you can stimulate growth by still more spending is, to my mind, a path to ruin. This economy cannot be turned into a growth economy by yet more consumer debt and more consumer spending.

It is clear that growth must come from either an increase in exports or an increase in capital investment. The scope for exports clearly lies with the BRICs and the Commonwealth. I welcome the Government’s initiatives, but a lot more could be done to improve our trade. We are lucky to have the Commonwealth relationship, which many have ignored or thought little of it, but those countries are substantial conduits to improve trade. There is clearly little scope in the eurozone; the economies are paralysed by the euro. Even if there is no collapse, the problem is not going to be mended easily.

As for the private sector here, in my view, we have an attractive tax regime and we have, broadly, to leave it to private sector companies to invest as and when they are ready. The private sector has built up massive cash reserves over the past three years. Even companies in the small and medium-sized sector have built up about £180 billion in cash reserves. The corporate sector has the money when the time is right for it to invest.

I understand but am slightly cautious about the case for using currency depreciation and higher inflation to ease the problems of overindebtedness, which is clearly what is happening. That needs to be watched very carefully or it could get out of control and worsen the situation. At least, as a result, we are now highly competitive internationally as well as taxwise. There is a huge incentive for companies to come here and do their business from here.

I end by pointing out that the private sector has already done a lot better than people realise. Let us look at the movements since 2010. Taking account of the reduction in the public sector and the significant downturn in North Sea oil output, the private sector has grown by about 4%. That is partly where the extra 1 million jobs have come from. I know that a lot of high-tech business in this country is starting to do very well indeed. I believe that the predictions for the private sector over the next year will turn out to be overcautious. I detect a significant pickup. Of course, North Sea oil output is about to turn in the opposite direction. We may be surprised by an upside to economic growth over the next year.

Overall, the potential is there. The Chancellor has been responsible and, as I said at the beginning, I believe that this will be seen as a politically successful Budget.

13:15

[Lord Bhattacharyya]

My Lords, the Budget Statement was trailed as a Budget for growth. I declare an interest. As chairman of Warwick Manufacturing Group, I work with many international companies on their growth strategies. I have learnt that to achieve sustainable growth, you must think of the long term, not of headlines or short-term profits. The Budget reminded us how difficult things are for the British economy. It did not explain why Britain has found it so hard to recover. Of course there is the global crisis but others are navigating the storm more swiftly than Britain. Whether Germany, the United States, China or the Scandinavian countries, those with a record of long-term investment in R&D have more to offer growing markets.

Unfortunately, Britain’s investment in R&D is lower than the OECD and EU averages. It is even well below our own target. Britain is a small country. In order to survive, we must export. In order to export, we must have products and processes that are internationally competitive. That means that our core innovation implementation has to be very good, but it is very patchy.

Worryingly, the OBR said yesterday that business investment will increase next year by very little, yet it is only by encouraging innovation and investment that we will create sustainable growth. As I said, that requires long-term commitments on capital, research and infrastructure. Of course, there are positive policies in the Budget, from tax credits to corporation tax, but the steps forward are too small, and they do not cover enough ground. For example, the Budget talks about £1.6 billion for an industrial strategy, including the aerospace institute, but when you look at the detail you see that this money is over 10 years, and £1 billion of it is committed to just one sector. Surely an industrial strategy should include other sectors, such as the automotive industry and other key export drivers.

As I said, there are things to welcome in the Budget. Often, they are the signs of the Business Secretary trying to shake off the shackles of the Treasury. I have a very high regard for the Business Secretary and admire his efforts on all sorts of matters, including his recent efforts on apprenticeships. I understand that Dr Cable will seek to undo his ties again today, on the investment bank.

I welcome the news that capital spending is being increased. I also welcome the acceptance of the Richards report, asking Sir Andrew Witty to look at how universities and LEPs can work together, and the endorsement of the report of the noble Lord, Lord Heseltine, No Stone Unturned. However, when we look at the budgets allocated, the stones still seem pretty firmly in place, and even where they are being turned over, the projects will not happen until after 2015.

The Labour Party under Ed Miliband is developing a long-term policy agenda that goes beyond the noise of annual budgets to create a critical mass of policies to support sustainable growth, but it seems a shame that long-termism should have to wait until the next Labour Government. What more could we do to encourage investment today? We need to look at the structures that support commercial R&D in Britain. Offering businesses incentives to innovate is useless if there is no innovation capability for them to invest in.

To grow, you must build on your strengths. In Britain, we have outstanding academic research, so we should use that as our super-magnet to attract industrial R&D spending. We need to shake up the whole system of research funding so that it attracts new business funding from companies large and small. Today, the weight of government R&D funding is completely insufficient to support business innovation. The Technology Strategy Board is an excellent organisation, but its budget is far too small compared with the research councils, while the Higher Education Innovation Fund is nowhere near enough to shape academic research priorities.

Next, we need a procurement strategy that helps smaller companies invest in innovation and hence start-ups. In the United States, that is the biggest spur. How do we get small companies a market in order to grow? It is so very difficult for small companies to grow because the market is not there. The only market you can get is export, so government procurement should be a huge help for start-ups. That means the Small Business Research Innovation Fund must be made to work. The Chancellor’s aim to increase the SBRI budget from £40 million to £200 million by 2015 is welcome, but represents only a tiny shift in overall funding.

Finally, we should establish a “one-stop shop” approach for industrial innovation budgets, with a sectoral or challenge theme. I have long been an advocate for government demonstrators and grand challenges as a catalyst for innovation. The Government have identified eight priority technology areas and have allocated them £600 million of capital funding. However, there is always a temptation for such programmes to minimise industrial partnerships. Businesses are awkward customers for bureaucrats, refusing to fit neatly into boxes. We should make attracting industrial innovation funding central to our grand challenges. I believe all these government funds should require matching financial investment from companies, with a proportion devoted to SMEs, to ensure commercial research partnerships are at the heart of all our innovation policy.

Despite all the publicity, in truth the Budget yesterday changed very little. There was little to spend and no new plan. We saw a few tired rabbits come out of the Chancellor’s hat, but little more. If we are to grow, it is essential that we invest in our long-term future. That is the real agenda for transforming our economy. Yesterday, the talk was of mortgages, petrol and beer. The danger is that we neglect our future for the sake of these headlines. When Governments focus on the short term, Budgets become just another missed opportunity. I fear that after three years of bad headlines, this Budget fits that pattern. Everything worth while has been pushed back to after 2015. Perhaps the Chancellor had a premonition of the future. Despite the fine words, actually delivering sustainable growth has been postponed to the next Labour Government. We are hungry for that challenge.

13:23

[Lord Higgins]

My Lords, myths can be important in politics, and there is now a pretty well established myth that last year’s Budget was a bad Budget. In reality, all the good news came out the day before Budget Day and therefore there was nothing left but criticism on Budget Day itself.

I am sorry that the Chancellor does not appear to have learnt the lesson from that. It is vital that we reassert the convention in Parliament that budgetary matters are first announced to the House of Commons. There are good reasons for that. Obviously it is the right of the House of Commons to receive the news first, but it also prevents the risk of market-sensitive information getting into the public domain and someone making a fortune out of it. I was therefore very concerned by the Evening Standard story last night. I have to say that, obviously in a post-Leveson mood, it made an abject apology in later editions for what was on the front page of the first edition, and that is to be welcomed. It emerged very clearly that it was in receipt of an embargoed copy of the speech. I believe that is totally wrong, not least because it discriminates between some journalists and others, and because it endangers the basic principle. I hope the Minister will give me an assurance that he will speak to his right honourable friend the Chancellor and ensure that that practice is abandoned forthwith and that the traditional view—which was exemplified by Hugh Dalton when he resigned as Chancellor when all he did was to have a quick word as he was going into the Chamber—will prevail.

[Lord Eatwell]

This side totally support the remarks just made by the noble Lord, Lord Higgins.

[Lord Higgins]

I am grateful to the noble Lord. I think it should be a unanimous view in Parliament.

I believe this is a very good Budget that does a considerable amount to encourage growth. I particularly welcome, first, the help-to-buy proposals, both of them, which will ensure that there is a higher degree of growth than there would otherwise be. The Minister, in a speech that gave the impression that he wrote it himself, rightly said that there are risks here. It is not clear, if one is going to give guarantees to homebuyers—if one is going to subsidise in this way—that they are really able to meet the responsibilities of taking out a mortgage. We do not want to go back to the disasters of Northern Rock and so on, of which many of us in this House bear the scars, but both schemes are very good and greatly to be welcomed.

I very much welcome the proposal about helping small businesses by removing what the Chancellor rightly described as the jobs tax. Many small businesses are reluctant to take on a few more employees because of the up-front costs. I am sure that the employment allowance will be of considerable help to the state of the economy.

I now turn to the main point with which we are all concerned: the deficit. The Minister referred to it. What was clear from the business about the AAA rating and so on is that we have to press ahead. It is very good news that the slogan that had been emerging, “We have cut the deficit by a quarter”, can now be changed to “We have cut the deficit to a third”, but it still means that we are continuing to borrow more at two-thirds of the rate that the previous, disastrous, Labour Government were maintaining. Therefore, we need to look very carefully at what is being said.

If I may make a rather semantic point, in his speech the Chancellor referred to “cutting borrowing”. He should, of course, have said, “We have been successful in cutting extra borrowing”. Total borrowing continues to go up, and that is of serious concern, not least in relation to monetary policy. It is very important that we look at the new relationship that appears to be developing with the Bank of England. I was always very sceptical of what was always hailed as Gordon Brown’s great achievement of giving independence to the Bank of England because it means that we are handing over more and more power to a small group of people who are totally unaccountable with regard to one of the two main levers of economic management. I hope that we can make progress on this.

On the proposals the Chancellor is making, we certainly need to look at the inflation target and at whether other considerations can be taken into account. Having said that, it would be helpful to move now from what was just an interest rate policy for many years after the Gordon Brown change to a policy that is concerned with controlling the money supply, which is what one really means by “a monetary policy”. I remain a strong supporter of quantitative easing despite the unfortunate side-effects, particularly on private sector pension schemes and so on. If one is not able to do anything because of the deficit problem on the fiscal side, we really must have an active monetary policy. In that context, greater co-ordination between the Treasury and new Bank governor will be of crucial importance. As I have said time and again, and I commend this to my noble friend on the Front Bench, it is absurd that the Treasury is working to one set of economic forecasts and the Bank of England to another. We should have a more unified policy on the link between the monetary and fiscal sides of economic management.

Overall, however, the Chancellor has done everything that could possibly have been done to be helpful, to stimulate growth and to ensure that we continue to do so. However, we must continue to do all that we can to cut the deficit. Immediately after the election and the formation of the coalition, I stressed how incredibly difficult this was going to be on both the tax and expenditure sides. I have been proved absolutely right. We have to go on in the same way. Labour still seems to be saying that we are cutting too much too soon. I am afraid that it is absolutely clear that we have not cut enough fast enough. We must therefore press ahead with that.

13:32

[Lord Kestenbaum]

My Lords, today’s debate in your Lordships’ House increasingly reflects a wider and urgent economic debate in chambers around the world. At one end of the argument, there is a fundamental belief, as we have just heard, that debt reduction for its own sake will eventually clear the path for strong growth. The alternative view is that debt reduction for its own purpose is not only an all too narrow goal but is destined to fail unless economic growth is pursued with equal and relentless vigour.

Although the Minister said that our focus on the deficit does not mean that we cannot attend to growth as well, that focus does not feel equally spread. With yesterday’s slashing of growth forecasts, we are beginning to confront the painful reality that the latter argument prevails. The evidence is sadly clear that the multiplier effect of austerity, its economic misery, let alone the human cost, is more severe than even the Office for Budget Responsibility had warned. In short, austerity as a fixed policy in the sand, and in the absence of a well constructed, ambitious, aggressive tapestry of active government, will never produce growth. However much pain is administered, however deep the incision of cuts, ultimately the failure genuinely and aggressively to grow the economy will lead to the failure to balance the books. The evidence was announced yesterday. At a time of unparalleled spending cuts, paradoxically, the UK’s national debt will rise to 85% of GDP.

If the urgent national imperative is growth—we are all united in that—and we know that it does not travel through austerity for its own sake, what might we expect from active government? The first thing is to dispense finally with the tired false choice of either a constant flurry of well intentioned interventions or staying, as we have heard in recent years, firmly out of the way. We must lay to rest the myth which says that you have a pro-growth environment only if government leave the stage. We urgently need intelligent and active economic policy which nurtures—indeed, drives—growth. Look at the most imaginative global economies, our real competitors: the United States, Finland, Korea and Israel. They all have large measures of supportive public policy and effective financing mechanisms—in short, active, aggressive, growth-oriented government.

Secondly, we know exactly what the engine of growth will be. We know now how clearly the path travels from innovation to economic growth. We know the facts. Innovative businesses create more jobs and grow faster. Hence, innovation as a national strategy is the most important driver of long-term productivity and prosperity. Yet, despite this, NESTA’s innovation index showed that innovation and investment in innovation declined by as much as £24 billion last year. This was at a time when we also know from the same index that fast-growing, innovative businesses make a disproportionate contribution to our national fortune. Just 7% of businesses in the UK, classified as high-growth and innovative, have been responsible for half of the new jobs in the past decade. The evidence conclusively shows that innovative, high-growth firms will produce the jobs of the future. They will be the productivity drivers of the economy of the future.

If we know that the road to growth travels through innovation, what might we expect from those with their hands on the policy levers, which the Minister dubbed “managing well the things we have control over”? This financial crisis offers the chance to put in place on a serious scale often talked of plans to channel large parts of the £220 billion government procurement budget to innovative businesses. As my noble friend Lord Bhattacharyya said, the announcement yesterday about the SBRI—the programme which drives government businesses to innovation—is certainly welcome and using the TSB as the catalyst is wise. However, the quantum is a pinprick in comparison to the opportunity and the need. The target yesterday was merely £100 million of redirected existing budgets in an annual spend of £220 billion. Consider what a little more ambition could have done at no extra cost. Just 2% of government procurement toward innovative businesses would be nothing short of transformational.

These are very modest steps in transforming government budgets from blank cheques to intelligent, demanding drivers of innovation, but it is on a tiny scale and at a time when new customers for innovative businesses will determine whether they thrive or go bust. My noble friend Lord Eatwell correctly identified the urgent need to stimulate demand. Can we not bring this part of our national effort to real scale, such that active government purchasing will have great and lasting impact on the innovation economy in society more broadly? We know—we have seen it around the world—that government being a lead customer was the major factor in the growth and development in Silicon Valley. It is no exaggeration that whether it is the GPS navigation system that none of us can live without or internet protocol software, government purchasing of these technologies in the United States was the basis of the most transformational global innovations of recent decades. Getting this to scale could be a central plank of the new growth, at no extra cost.

I urge for there to be no more tiny programmes, timid in scale, often initiated with great fanfare and then quietly closed 18 months later. We hope for an aggressive, ambitious, national programme running right through government, perhaps facilitated by the TSB, which does nothing other than force a procurement revolution.

I have made today a particular and practical remark about one of the engines which could power our desperate need to go beyond austerity and from innovation to real growth. It could be an engine which is fired up without any additional cost to the taxpayer and with no increase in the deficit, simply by dramatically, ambitiously redirecting current spend away from unimaginative vested interests and towards making government the most dynamic and effective customer for buying new products from innovative businesses.

The alternative is dire. A commitment to simply reducing national debt has not shown enough signs of enhancing our nation’s prosperity. Our growth programme is looking inferior to so many of our competitors. There may be no plan B, but it is becoming increasingly clear that something else is needed to deliver growth more comparable to the world’s most dynamic economies and, in turn, sustain the society that we must nurture here in Britain.

13:39

[Lord Bilimoria]

My Lords, last year we had the omnishambles Budget, with measures such as a “pasty tax”. Last year we had the Government making U-turn after U-turn, and the criticism that the Treasury had not thought things through or listened. This time, the Budget has so much in it that shows that the Government are genuinely trying to listen. For a long time, many of us have been saying that employers’ national insurance is a tax on jobs and that it should be removed and reduced for new businesses and SMEs, and the Government have listened and shown that in their NI initiatives in the Budget. Of course, they should go further, but this is a great start. Our fuel duties are some of the highest in Europe, and the Government have listened and cancelled the fuel duty rise in September.

In the brewing industry, in which I have declared an interest, we have suffered from beer sales drastically reducing for decades, and we have had the wretched and hated beer duty escalator, introduced by the previous Government, increasing the price of beer above inflation for years. There has been a tireless campaign by the British Beer and Pub Association and the Campaign for Real Ale, and the work of Andrew Griffiths, the MP for Burton, where I was yesterday with my joint venture partners Molson Coors at its the headquarters in the UK. All these campaigns have asked the Chancellor to stop that escalator. Eighteen pubs a week have been closing, with two pubs in London alone closing every week. Jobs have been lost and the average Briton has found that the cost of one of life’s simple pleasures has gone up. I pay credit to the Treasury Minister, Sajid Javid, who has listened to those concerns and not only removed the beer duty escalator but cut the price of a pint by a penny. Of course, the campaigns on both the fuel duty and beer duty were ones that the Sun newspaper got behind. In spite of that newspaper’s criticism of the press reforms, calling the Government the “Ministry of Truth”, it would claim that, “It’s The Sun Wot Won It”.

Could the Minister confirm that the Government have checked that they will be able to go ahead with the beer duty reduction? There have been complaints from organisations such as the WSTA that claim that it breaches EU rules by reducing duties for beer but increasing duties for wines and spirits. Could he confirm that the beer duty reductions could and should go ahead?

On the face of it, the Government have listened to business. They are concerned about business and have listened to consumers, and they are concerned about consumers. They have paid particular attention to the less well off consumers by raising the tax threshold to £10,000, but the reality is that we are two years away from an election, and this was the Chancellor’s last chance. The political reality sadly overshadows everything. We all know that the situation is so bad that we need drastic measures. Getting down to a 20% corporation tax is fantastic news, but we know, for example, that Ireland has gone down to 12.5%, which has made a huge difference in attracting inward investment and spurring growth. It was a bold move. We need to get this into perspective. Corporation tax brings in barely over 5% of tax revenue, but reducing it sends out huge signals.

The reality is that although the Government have reduced the deficit, they promised to eliminate it by the end of Parliament in 2015. We all know that they will be nowhere near achieving that, and the noble Lord, Lord Eatwell, who is not in his place, spelled that out clearly. Public sector net debt is predicted to double from £800 billion at the start of this Parliament to more than £1.6 trillion by 2017-18. Just this year alone, in spite of seeing the lowest ever interest rates, the Government’s debts will cost the taxpayer nearly £50 billion. That is far more than the entire defence budget. The reality is that the Government’s austerity plans for the past three years have not worked, because they were based on projections that showed that the economy would be growing at 3% a year by now. We know not just that growth has been slow but that the economy has been flatlining or been in recession. The reality is that the OBR has halved its growth forecast from 1.2% to 0.6%. In other words, we will be bumping along the bottom once again.

The Government have made a rod for their own back, once again for purely political reasons. I am sorry to say this, but the Opposition would probably have done the same: ring-fencing certain areas of the Budget such as health, international aid and schools. When you add all those ring-fencings together, it makes up well over 50% of the Budget, which means that what you can cut is under 50% of the Budget. In defence, for example, although the Government are helping the Armed Forces by giving the fines raised from the banks’ LIBOR scandal to the Armed Forces charities, which is terrific, and increasing the pay of those in the services by 1.5%, the reality is that in real terms all our workforce is being squeezed. Inflation has been well over 2% for three years, and real wages for all the people in this country will have seriously shrunk over the course of this Parliament. People are worse off, and are going to be worse off. With defence, we have had spending cuts, including nasty cuts in our troop numbers and our capability, when we continue to have black swan and grey swan threats. Yet we continue to intervene globally to the extent that even the current Defence Secretary has spoken out in protest.

Of course, the further good news in this Budget is that the Government are going to give the Governor of the Bank of England flexibility to help to generate growth in the economy, but why have the Government not been more specific about that growth remit? Why have they not set a specific nominal GDP growth target for the Bank of England, for economic growth and job creation, as well as targeting stability?

Of the more than £700 billion of public spending, welfare, social services and the National Health Service account for more than half the amount. Huge savings need to be made in those areas. Public spending as a percentage of GDP has reached 50%. This Government are reducing that proportion, but can the Minister confirm that they have a target of reducing public expenditure as a percentage of GDP to 40%? At that level, this country can still provide the world-class services that a top-10 nation such as ours deserves and still provide the safety net that our people deserve, while still providing the environment to generate growth where we need to invest.

This Budget has saved the Chancellor from his last chance saloon, but it will not have saved the country. Unfortunately, political reality has got in the way. The Government have failed to deliver growth in the past three years and failed on the promise to eliminate the deficit over this Parliament. Yes, there have been external causes, the global economic crisis, the eurozone crisis and the uncertainty of the world in which we live, which would have been challenging for any Chancellor. The previous Government blamed external factors for getting us into this mess, and this Government blame external factors for not being able to get out of it.

We must give credit where credit is due; there is much to be happy about both for consumers and for business. However, in this increasingly global world, there is nothing in the Budget about incentivising and increasing exports and doing business with countries such as India and China: the BRICs. As founding chairman of the UK India Business Council, I know that the good news is that Britain is still one of the top 10 economies in the world. When I accompanied the Prime Minister to India last month, I advised him that the global race is competitive. We need to be bold and optimistic and shout from the roof tops that we have the best of the best in the world, whether it is in education, professional services, accountancy, law, design and high-end engineering. We have the best institutions in the world, yet there is not enough in the Budget, as the noble Lord, Lord Kestenbaum, said, to invest in science and technology, innovation and higher education. We need to be bolder in getting our priorities right and generating growth and confidence for our consumers and business. In the words of the Duke of Wellington, “Fortune favours the brave”.

The Minister said that this was an “aspiration nation” Budget. My great grandfather’s motto was to “Aspire and achieve”, and my business’s motto is to “Aspire and achieve against all odds, with integrity”. That is just what this country needs to do.

13:48

[Lord Desai]

My Lords, once the Chancellor laid down his strategy for five years, there was not much that he could do in each Budget. That is a consequence of having a long-term strategy. This Budget does not do very much, and I welcome it for that. I do not think that half way through a five-year strategy you should suddenly start listening to people who say, “Cut more”, or “Spend more”, or things like that. If you have a strategy, you stick to it.

Obviously, as many noble Lords have pointed out, external forces and perhaps the miscalculation of the growth process have meant that we are growing at a much lower rate than we expected when the strategy was laid down. I should also say that most other countries have been growing much slower than they thought was possible. So there are structural problems for the economy, as I have said before. We still regard growth as something that will happen automatically, or as something that we deserve. In retrospect, it is clear that some of the growth that occurred between 1992 and 2007 was unsustainable. A lot of it was engendered by easy credit and occurred mainly at the consumption end. Therefore, it was not sustainable. If we are to have growth again, as we will one of these days, let us make sure that it follows structural improvement in the economy and is not credit-driven but genuine productivity-driven growth.

There is not much to say about the Budget because it does not do very much. In the OBR and elsewhere, much emphasis is laid on public sector borrowing and public sector debt. However, we also have the problem of household debt. We have not done enough about the deleveraging of household debt. A chart on page 56 of the OBR report lays down the debt equity ratio of households and the ratio of debt servicing charges to household income. In my view, both those figures show that we are deleveraging far too slowly. Indeed, as the projection shows, the debt equity ratio will go up in the near future. The debt servicing charge income—the income leverage ratio—shows somewhat good results but that is because of QE, which has depressed interest rates, so the cost of servicing household debt is that much lower. That phenomenon should have danger signs attached to it because a lot of households are in negative equity and are just bumping along the bottom thanks to low interest rates.

QE postpones deleveraging. However, we have chosen to concentrate on public sector debt reduction and not to worry about household debt reduction. I hope that the Minister will comment on the fact that the household debt deleveraging problem is not being tackled by the Government to the extent that it should be. In that regard, I am alarmed by the house purchasing initiative. One of the great problems that we have experienced in the British economy, not just recently but for many decades, is that of overinvestment in housing. We have incentivised people to buy houses as opposed to other assets. Like many other economies, we got caught in a housing bubble and have regretted it.

I had hoped that the Government would encourage renting to a much greater extent than they have done. There should be a healthy rented sector for the younger generation and people entering the labour market. However, instead of having a healthy rented sector, we will enter yet another housing bubble. No doubt there will be tears at sunset given that table 4.1 of the OBR report shows the rate at which residential property prices will go up in the next two to three years. That is just a forecast; they may go up at a faster rate than that shown.

Once growth starts, a lot of the money which the OBR has generated, which is lying idle somewhere, will come into play and there will be much greater inflationary pressures for the economy once the recovery begins. There will also be a housing bubble, which will lead to the next financial crisis. I am normally a friend of plan A, but I am worried that there is a temptation for Chancellors to give money away for house purchase. If only we could get people used to the fact that you do not need to own a house and that if you rent one instead you can save your money and invest it in a more productive asset.

I welcome the reduction in national insurance contributions. Some noble Lords may remember that on the previous occasion we debated a Budget, I said that we ought to move away from taxes on income and towards imposing taxes on consumption. National insurance contributions should be abolished forthwith, if possible, and we should shift from income tax to a consumption tax. Further, we ought to have no zero-rated VAT commodities at all—a policy recommendation that got me sacked—and we ought to rely much more on VAT than on income tax for collecting revenue. I do not think that the Chancellor will do that. He is in enough difficulty as it is, and if he follows my policy he will only get into more difficulty, albeit that it would be the correct policy.

13:56

[Lord Shipley]

My Lords, I was hoping for several measures to be announced in the Budget, and each has been met: initiatives to generate investment to drive growth, particularly growth that can rebalance our economy away from overdependence on financial services and London; initiatives to get Britain building again, boosting the construction industry and getting houses built; action to implement the report of the noble Lord, Lord Heseltine, No Stone Unturned; action to help small businesses to encourage them to take on more people; and raising the income tax threshold to £10,000.

On investment, we must remember that public spending and borrowing can have a positive impact on growth. I refer to transport improvements, school repairs and improvements, water infrastructure, faster broadband, power stations and infrastructure investments that produce an income. It seems to me that borrowing small amounts, particularly at today’s low interest rates, need not cause problems with financial markets. I will come back to this in a moment in relation to housing, but the message is that infrastructure projects do not have to be big national schemes to generate jobs and growth.

First, the announcement on the income tax threshold was very good news because the threshold of £10,000 will be reached a year early. Since 2010, the Government have taken almost 2.5 million people out of paying tax. In my own region of the north-east of England, 106,000 people have been taken out of paying tax. That is a huge achievement for the Government, which directly helps large numbers of people on low incomes and increases their personal spending power.

Secondly, on small businesses, I was pleased to read last night the reaction to the Budget on the part of the Federation of Small Businesses, whose national chairman said:

“The FSB asked for a budget for small businesses and this is what has been delivered”.

The decision on national insurance contributions for small businesses is particularly welcome. I note the success of the Government’s policy on apprenticeships, which has seen 86% growth since 2010. Indeed, in my own region of the north-east, the growth has been 107%: in other words, a doubling over three years. This is very encouraging because it demonstrates the importance of the private sector vis-à-vis training for sustainable employment, in which small businesses play a crucial role.

Eighty-one of the 85 recommendations in the report by the noble Lord, Lord Heseltine, No Stone Unturned, have been implemented. That is very good news because it really matters. GVA per head between 1997 and 2010 grew in London and declined across the north—that is the north-west, Yorkshire and the north-east—against the UK average. In absolute terms, GVA rose in those regions, but in comparative terms the gap widened. This Government’s job must be to empower those outside London—private and public—to do more to drive growth.

For an indication of what has happened in recent years, let us take the contribution by English region to the national non-domestic rate pool. Last year—2011-12—showed the same thing: that every region outside London, including the south-east, contributed less than its share of population, with London contributing nearly 30%. That dependency is unhealthy for our economy and demonstrates clearly why the empowerment of England’s local enterprise partnerships and local authorities through the single-pot mechanism is so important. The crucial point is that devolving power from Whitehall in such key areas as transport, skills, housing and regeneration—building on existing capacities of other organisations such as the chambers of commerce—will drive growth faster than leaving all key decisions centralised in London.

However, it is important that devolution is real. An example of my concern about the impact of centralised power is the Highways Agency. Sometimes it is claimed that planning gets delayed because councils are slow. Actually, the problem often lies with government agencies. As an example, the Highways Agency is not regionally accountable and is charged exclusively with keeping traffic flowing, regardless of wider economic or social issues. It has a power to stop planning permissions. The immediate solution, requiring no legislation, is for the Highways Agency to have to obtain the Minister’s approval before it uses its power to stop a planning application. The real solution is to give the power to localities to decide for themselves on such matters, as part of a general devolution of power.

On getting Britain building again, the help to buy scheme should boost confidence; something needs to. There were only 98,000 starts in England last year and yet 230,000 households are formed each year. The numbers on housing waiting lists, the rise in demand for temporary accommodation and high rents in the private sector also point to the social and economic benefit of building more homes at below market rates. Councils, and their arm’s-length management organisations where they exist, have the capacity to build more homes, given that council housing is now self-financing. They could raise £7 billion and build up to 60,000 more homes over five years, contributing 0.6% to GDP in the process. That could be done very simply if the Government removed the borrowing cap on housing revenue accounts, relying instead on a prudential borrowing code to guarantee that only sustainable investment got the go-ahead.

Council housing has been self-financing since April last year. That is welcomed, but the average debt on a home is just over £17,000. There is scope for additional borrowing against the asset represented by that existing stock. While I understand the need for the Government to be careful about public borrowing levels, relaxing the housing borrowing cap need not be counted as public sector borrowing any longer. The UK uses a much wider measure of public debt than other countries. Council housing is now a trading activity, and international regulations already permit this to be discounted from government borrowing levels. Unfortunately, the UK does not currently adopt such an approach, and I remain puzzled as to why not.

This Budget provides many opportunities for growth. They need to be grasped. We need to manufacture more, export more and build more on our commercial strength. That is why my noble friend Lord Heseltine’s recommendation that LEPs should produce long-term strategic plans for negotiation with government was right. Also right was the recommendation to publish by the summer sector strategies in key sectors for growth—automotive, aerospace, life sciences, agritech, professional business services, information economy, construction, education, nuclear, oil and gas, and offshore wind. Producing these strategies is very encouraging because they cover the UK as a whole and not just London, so growth will be delivered outside financial services and London. There is a vision in this Budget. It points a clear way forward for growth. For that reason it should be commended.

14:04

[Lord Marlesford]

My Lords, I am very glad that my right honourable friend the Chancellor stuck to plan A. It would be unthinkable to abandon it. There was no question that it would be abandoned. Yet there are some dangers. I quote one sentence from the Chancellor’s speech that is very relevant:

“I will be straight with the country: another bout of economic storms in the eurozone would hit Britain’s economic fortunes hard”.—[Official Report, Commons, 20/3/13; col. 932.]

Such a storm may have started in Cyprus. It was absolutely astonishing that the troika—the European Central Bank, the IMF and the Commission—should have agreed a package of measures that involved a levy on deposits in Cyprus’s banks: 6.5% on deposits under €100,000 and 9.9% on those above €100,000. That flew in the face of the EU-wide recognition that deposits in banks up to €100,000 are guaranteed. It was an astonishing thing to happen.

In case noble Lords feel that I am being alarmist, or that Cyprus is a mere minnow and we should not worry about it, I would remind them of a little history. On 11 May 1931, the small Austrian Creditanstalt bank failed. That triggered the financial collapse of central Europe. By 13 July, the German Danat-Bank collapsed and all German banks closed until 4 August. Between 19 and 24 August, we had a major economic crisis in Britain. Five days of Cabinet meetings failed to agree the spending cuts demanded by American bankers at the time, and that led to the collapse of the Labour Government. We cannot play these games with the eurozone trying to have it both ways. Only a few months ago, eurozone Ministers declared that they must absolutely make sure that in future there was no confusion between sovereign debt and bank debt. For Cyprus they have again produced a formula that has done precisely that. It is not surprising that the banks in Cyprus are closed.

What is the answer to that? The Chancellor pointed out that 40% of our exports are to Europe. I suggest that the Government do everything they can—Parliament as well—to focus the eyes of exporters beyond Europe. Let us make much more effort about Asia and probably also Latin America. They should become a real priority. I am not saying that the Government can do that: the Government cannot make exports but they can at least propose that as a strategic aim. We must take advantage of the Asian market. We have the inestimable advantage of having special links with Hong Kong, which is the financial centre of Asia. It is the third most important financial centre in the world after London and New York. That is something we really must look at and quickly.

I will quickly mention one or two other points. The shift in the responsibilities of the MPC is very interesting. It will become much more like the Fed. That is a very big responsibility and I hope it can measure up to that. It was right to stimulate the economy with some extra expenditure, but only £3 billion was given. Why so little an amount?

Here I come to the one mistake that the Chancellor made: the fuel tax. That was tempting politics but damned bad economics. Cancelling the fuel tax increases has already cost, by the Chancellor’s own figure, £6 billion. It looks as though, if it continues at this rate, it could cost up to £20 billion by the end of this Parliament. That is not a sensible way of spending money—the opportunity cost is extremely high—first, because it is being done in little slices of 3p and, as everyone knows, 3p is less than the variation in petrol or diesel prices between pumps. Secondly, all vehicles are becoming much more efficient. A vehicle that previously did 30 miles to the gallon now regularly does 40 miles to the gallon. There is therefore a natural and desirable trend for less fuel consumption as fuel costs rise. The United States would not be having its huge financial problems if it taxed road fuel at a sensible level.

There is also a serious lacuna in the Government’s thinking regarding their unwise energy policy involving massive subsidies for solar and wind power that are being passed straight on to the consumer through the levy on the electricity companies. That is a grave mistake.

I welcome the aim of the housing help to buy scheme and mortgage guarantee, but with some apprehension. As the noble Lord, Lord Desai, said, there are real dangers in the Government introducing or getting involved in subprime lending. There are echoes of Freddie Mac and Fannie Mae in America, which did precisely the same thing and whose collapse cost American taxpayers hundreds of billions of dollars.

We must recognise that you have to be delicate when dealing with the City. It currently produces 13.5% of Britain’s GDP. That does not mean that I am any sort of spokesman for the banks. Bank balance sheets are extremely fragile. The noble Lord, Lord Desai, referred to domestic debt; there is still £55 billion of credit card debt held by British banks. That is not the money that you and I spend each month and pay off; it is overrun debt on which the rates of interest are anything between 17% and 25%. The chance of it being paid back is remote, and the question that one must ask is: at what price do the banks have that debt on their balance sheets? If they have it at anything like par, that represents a serious danger. The banks sold off some of that debt about three years ago at rates of between 8p and 12p in the pound. If the outstanding debt were valued at market rather than nominal value, the banks would be safe.

14:12

[Lord Haskel]

My Lords, many noble Lords seem to agree that we are in a difficult economic situation. Some noble Lords have explained that this is because the Government’s plans to stimulate, rebalance and grow the economy are clearly not working. Yet we are told that there is no alternative and that one day the policy will work—but at what cost? The highly respected Trussell Trust expects the number of people in the north-west using food banks to rise to more than 230,000. That is the cost. Is this the kind of country we want to live in?

The Minister spoke of economic realism. Blaming others and factors outside our control is not economic realism. Adapting to and embracing, not blaming, the changes is realism. Our economic problems are many and complex and each requires realistic attention.

The noble Lords, Lord Flight and Lord Bilimoria, spoke of exports. The Government have tried to help them through devaluation. However, that does not really work any more. A lot of our exports are made up partly of imports and that does little for productivity. According to the Bank of England’s analysis, the major economies in the eurozone have seen their exports grow faster since 2009 than has Britain. Why? It is partly because of the drop in exports of financial services but also because those economies have not been able to devalue because they are tied to the euro. Their only alternative is to produce more goods and services that others want to buy. Here, devaluation allows some firms to stay in business and become “zombies”. Is this why employment is increasing but productivity is plunging?

It could be that some firms are retaining skilled labour in the hope of better times to come. Meanwhile, those people are not as productive as they might be. Also, firms may be investing in things other than plant and buildings—investments that are not being measured. They are so-called intangibles such as investing in business processes and systems, writing new and better software, enhancing their brand and investing in new concepts such as big data. Has the Minister seen the research that shows that this kind of investment is growing but not counted?

The Government also have to be realistic about the fact that the financial sector is changing, not only because of the loss of trust through mis-selling, excessive pay and market manipulation but because much of its business has become trading value. Trading in value is a zero-sum game—some get richer and some get poorer—whereas trading in goods and services that people want and need benefits everyone. Trading value as our major economic activity cannot be the right course, and people have now realised this. As my noble friend Lord Eatwell put it, that is why the Government have to put far more emphasis on trading in goods and services that people want and need. That is where our efforts should be going in this Budget.

The Minister emphasised the cut in corporation tax. Of course that is welcome, but the headline rate does not change things much. It is all the other facets of tax that determine what a business really pays. The cut in employers’ national insurance, when it comes, will affect far more businesses, as will next month’s rise in business rates.

Yes, this Government talk about making efforts to adapt and embrace change in their support of our industrial sector, the supply side. The Secretary of State for Business, Innovation and Skills has fought to maintain the size and excellence of our science base. The Technology Strategy Board is being supported and strengthened. That is fine but, as my noble friend Lord Bhattacharyya asked, is it enough? My noble friend Lord Kestenbaum also made that point.

I recently visited Bavaria and learnt that what we spend as a nation to support industry is matched by the single state of Bavaria in Germany, and it shows. What we as a country export to Germany is matched by the exports of the state of Bavaria alone. The reason is that for 50 years Bavaria locally has consistently maintained and supported the fundamental planks of a modern industrial strategy, the strategy that my noble friend Lord Kestenbaum described, involving skills, technology, innovation, procurement, infrastructure, finance and supply chains—a policy that can be roughly described as the Heseltine view. That view was expressed in his report and debated in your Lordships’ House on 6 December last year. In that debate, nearly all speakers welcomed his recommendations, and the noble Lord, Lord Shipley, did so today. They welcomed the active role of the state in promoting economic growth while devolving power to other centres away from London. In his Budget, the Chancellor, too, accepted some of those recommendations. Does this indicate a change in direction?

My noble friend Lord Bhattacharyya told us that rebalancing and growing our economy is a long-term project. It is a project done successfully by building, not destroying. There were many good things to build on in the fields of innovation, science, technology, local funding, skills and apprenticeships. Yet for short-term political gain, Ministers destroyed or talked down much of this. Indeed, they continue to do so.

If the Government want to build confidence—confidence that we can grow our way out of these economic difficulties—they must signal their commitment to continuity by indicating that all these elements, whoever created them, will be tackled and built on in the interests of our long-term economic growth and not talked down in the interest of short-term political point-scoring.

14:20

[Lord Sheikh]

My Lords, I was able to speak in last year’s post-Budget debate. Twelve months ago, we all hoped that we would now be in a healthier economic position. We have admirably cut our deficit by a third and seen more than 1 million new private sector jobs created. However, the wider global situation, particularly in the eurozone, remains such that full recovery is still some way off and the continued growth downgrades have been inevitable. Above all else, what is important in such times is that we maintain discipline and stick to our course of austerity, particularly in the face of the confused calls from the Opposition for higher borrowing. More borrowing is not the answer to our problems.

It is crucial that we are seen to be taking the right decisions for the right people by helping those who genuinely want to get back into work, by nurturing the talent and innovation of our young people, and by helping businesses in need of assistance, as businesses form the backbone of our economy.

I am very supportive of bringing forward the £10,000 income tax threshold to next year, positively impacting on 24 million people. The more of people’s hard-earned money they are allowed to keep, the more empowered and encouraged they will feel to spend it. That will result in greater revenues to those parts of our economy that so desperately need them and, ultimately, in a healthier all-round cash flow to stimulate growth.

The scrapping of this year’s fuel and beer duty rises is also very welcome. Again, it is a measure that will affect the average person in their day-to-day spending and, I believe, provide that small but foundational level of help that people really do notice.

I should also like to express my support for the very difficult decision to cut further the budgets of some of our government departments. Diverting £3 billion per annum from Whitehall departments to the implementation of major infrastructure projects such as roads, railways and power stations will make more of a difference to the everyday lives of working people and create thousands of new jobs.

I also applaud the proposals concerning home ownership. These will help people to buy houses and will assist housebuilders, generate more business activity and create jobs.

I endorse the decision to protect our health, education and international development budgets, as well as the responsible decision to exempt military personnel from the caps imposed on other public sector pay rises. As someone who is interested in humanitarian matters, I am pleased to learn that we will continue to spend 0.7% of our national income on overseas development.

One area where I hold particularly strong feelings is the erosion of our competitiveness, which has without doubt been one of the fundamental causes of our continued stifled growth. This has been due to the red tape and bureaucracy implemented by the previous Government, coupled with the very challenging shift in global wealth from West to East. In short, when this Government came to power, the UK was no longer an attractive place to start a business. Much of this is already being addressed through the Enterprise and Regulatory Reform Bill, and I was heartened to hear of the Chancellor’s decision once again to reduce corporation tax. We already boast the lowest corporation tax rate in the G7, but we can now proudly say that, based on projections, as of 2015 we will also have the lowest rate in the entire G20.

Perhaps one of the most notable announcements made yesterday was the cut in companies’ national insurance contributions, removing huge barriers for smaller businesses and meaning that a third of all employers will not have to make any further national insurance payments.

I support the Government’s announcement that we will be taking forward the recommendations in the excellent report of my noble friend Lord Heseltine, No Stone Unturned: In Pursuit of Growth. I agree with the Government’s policy of taking robust action and improving our system of training and education, particularly in relation to apprenticeships and vocational training. This will enhance our manufacturing base and help in our recovery.

As someone who is widely travelled and has contributed a great deal on trade issues in your Lordships’ House, I shall now focus my remarks primarily on the export-led recovery. There is no more obvious a way to grow a country out of economic turmoil than by increasing trading links—in particular, levels of exports—with other countries. I have been very heartened by the efforts of UK Trade & Investment since the previous Budget. In particular, earlier this month it announced that its Trade Challenge Partner initiative will be implemented, with 99 partners drawn from trade and other membership organisations, with the aim of getting more of the members exporting overseas and further supporting those that already do.

I welcome the appointment of parliamentary trade envoys, who have the potential to make a real difference. I should like to see an expansion of the role and number of these appointments. There are plans to develop British business support networks in 20 priority high-growth and emerging markets, and I know that my noble friend Lord Green led a conference just last week to announce the establishment of the India trade network. These are exactly the kinds of initiatives that I should like to see more of. Anything that we can do to help SMEs to move into emerging markets must be embraced to the point where it is no longer viewed as a challenge for us to increase our exports but it is naturally accepted that it is in our country’s fibre to be a world leader in selling our products overseas. I hope to see this progress continue to develop as we move forward in rebalancing our economy and refocusing our efforts on what made us such a great and powerful manufacturing and trading nation many years ago.

We need to aspire to raise our game in international markets and to support the most vulnerable in our society as the economy charts a course to recovery. We also have to restore order to our public finances. I welcome the Government’s resolve and commitment; it is now time to deliver.

14:28

[Baroness Worthington]

My Lords, yesterday’s Budget speech by the Chancellor contained a number of tax break announcements that are intended to stimulate our economy. These included measures for business, such as reductions in national insurance payments and a cut in corporation tax, and measures for individuals, such as an increase in the tax-free income allowance and tax relief on childcare.

However, hidden in the detail of the Budget but not mentioned by the Chancellor was an announcement relating to a Treasury electricity tax that could significantly undermine money saved by those measures. The carbon floor price was announced in 2011 and will start to be added to electricity bills from 1 April this year. The logic of the tax is to increase the cost of carbon pollution to provide a benefit for lower-carbon sources of electricity. It is claimed to be necessary because the market price for carbon, set by the balance of supply and demand for carbon emissions at a European level, has crashed to very low levels, failing to incentivise investment. To address this, the Treasury has invented a top-up tax, which is intended steadily to increase the cost of carbon pollution over this decade.

Starting in April, UK electricity companies will be required to pay a £4.94 per tonne carbon top-up tax, which is roughly equivalent to adding £2.50 per megawatt hour to wholesale electricity prices. A year later, the level will double to £9.55 a tonne or £4.77 a megawatt hour and in 2015-16 the level that was announced yesterday—or, rather, was not announced—doubles again to £18 a tonne or £9 a megawatt hour. Over the next three years, this single policy will raise the Treasury an estimated £4 billion to £5 billion in revenue. Yet the Chancellor forgot to mention it.

I am not against polluters paying for pollution: in fact, I am all for it. However, in the fight against climate change it is absolutely imperative that when we impose costs on the economy, we do so for very good reason. Sadly, in this case it is so badly thought through that this policy risks holding back recovery, increasing inflation and giving carbon pricing a bad name, undermining our ability to introduce more sensible policies later.

The reasons why the Government’s carbon floor price is such a bad idea are numerous and have been pointed out repeatedly since it was first mooted. Opponents include business groups, consumer groups and green groups. Everyone appears not to like this policy. The first obvious problem is that the tax fails to do anything for the environment. It does not deliver any additional environmental outcomes. The emissions it targets are already capped at an EU level and simply doing something here means that our emissions saved will be traded away across Europe.

The second, blindingly obvious, problem is that being unilateral it damages UK competitiveness at a time when we need to be boosting our competitiveness. Electricity prices are an essential input to virtually all economic activity. Steep rises in prices increase everyone’s costs and are inflationary. It is no wonder that the Budget yesterday appeared to be indicating to the Bank of England to go soft on meeting the inflation target. But the effect of this policy is likely to make it harder than ever to bring it under control.

The third problem is that rather than paying electricity companies when they invest in new low-carbon projects that come on stream, as the renewables obligation does and as the contracts for difference will, the carbon tax simply pushes up wholesale prices of electricity for everyone, rewarding those who have already invested for doing nothing new. It is a huge windfall for projects that have already received generous subsidies, be they existing wind farms or old nuclear power stations. This is of course good news for some generators but bad news for industry and consumers, who are paying twice for no good reason. The floor price is intended in a not-very-clear way to give investors confidence. However, being a finance Bill measure, no investor worth his salt is going to place any confidence in this policy lasting, especially since it has been implemented so appallingly.

Recognising that increases in electricity prices will be damaging to industries which rely on it, the Treasury has pledged to make around £250 million available to certain sectors to compensate them. That is a fraction of the revenue that the policy will raise. However, there is nothing in the Budget to compensate consumers and this comes at a time when public money to help poorer families cope with higher energy bills is at an all-time low, having been slashed by this Government.

Some may argue that the main purpose of the carbon floor price is to disincentivise the burning of coal in existing stations, which would be a noble endeavour. However, this policy is the equivalent of taking a sledgehammer to crack a nut and even then it may not be successful. Coal is experiencing something of a reversal of fortunes thanks to lower global prices as unused coal from the US enters the market. This, combined with high European prices for gas, is causing us to burn more coal. The disparity between the two fuels is so great in cost that even the hefty carbon floor price may not be enough to switch us out of it. It requires something in the region of a £30 a tonne carbon price for us to do that.

What would Labour have done differently? First, we know that investors in low-carbon electricity infrastructure are absolutely necessary for getting this country back to growth. They need policy certainty, which is why we are committed to introducing a decarbonisation target for the electricity sector. The Government have failed to acknowledge this and are proposing to wait until 2016 before doing so. We would also use simpler policies, such as the energy performance standard to secure the steady phasing out of unabated coal and usher in carbon capture and storage. That is simple to understand and unambiguous, and provides the clarity investors need to commit to new projects.

We would also work around the clock to achieve a solution to the low carbon price at an EU level, which is the only level where it matters. Fortunately, we still have some credibility in Europe, unlike the Tories, and we are able to control our MEPs. As we speak, the Conservative MEPs in Brussels are mustering to rebel in a vote in April that would help to rebalance the European carbon market—doing precisely what this heavy-handed policy is intended to do. The Government line is to support it. Yet, disgracefully, the party is not able to persuade its members to vote that way in this forthcoming vote.

In the short time available I have focused exclusively on one measure in the Budget. However, I have done so consciously in order to try to compensate for the Chancellor’s grave and negligent error in omitting to mention it at all. As companies and families sit down this week to try to work out how the Budget will affect them, the hidden electricity tax is unlikely to feature in their assessments. Indeed, it features in scarcely any of the mainstream media’s assessment of the impact of the Budget. Yet it is raising large sums of revenue and has a very material impact on costs.

This makes me fear that either the Chancellor simply is unaware of the detail of his Budget or he is purposefully trying to hide a significant additional cost to the consumer. Will the Minister inform the House what the Government’s assessment of the impacts of this policy are on inflation, competitiveness and the poorer households which currently are struggling to pay their electricity bills?

14:35

[Lord Dykes]

My Lords, like others I am sure, on these occasions one puts one’s name down for a debate and then perhaps regrets it, thinking it probably will be a mistake or gloomy. I was expecting a gloomy debate because of the background to the Budget—although not the individual Budget measures announced yesterday, many of which are very good. I hope that I will not annoy our colleagues in the larger coalition if I say that, self-evidently, the two best single measures are the abolition of taxation under £10,000 for the lowest income tax payers and non income tax payers if they have a really low level of income, and Vince Cable’s suggestion for an expansion of the housebuilding sector being agreed at just a little above the original figures that were promulgated.

I speak as someone who, in the early 1960s, studied economics at the greatest single Keynesian school in the whole world in those days—the University of Cambridge—just by chance and good luck. I was heartened today because we have had two outstanding Keynesian speeches. Unfortunately, they came from the other Benches and I wish that it had been from these Benches. We heard the first from the noble Lord, Lord Kestenbaum, who is no longer in his place, and then the second more recently from the noble Lord, Lord Haskel. Both gave an alternative message about what now needs to be done in this country on long-term capital and investment accounts and on the long-term realism that this economy needs, and I agree with them.

On the individual measures, it is very difficult to quarrel with the Chancellor. One newspaper writer rather unkindly said that the unique thing about George Osborne was that he was even more unpopular than the austerity measures that he keeps promulgating, which was an interesting description. There will be a reduction in national insurance and the abolition of national insurance at the relevant level. There is the modest start of the housebuilding programme for the future and the reduction in corporation tax. There are many other examples, too, which are all very good and one commends each one individually.

However, the total picture is a huge problem for this Chancellor because, as we all know, this country is locked into the utterances of the past. One of the mistakes of the coalition Government was the spokesmen from the bigger of the two parties repeatedly recalling the mess left by Labour. I suppose each incoming Government always say that about a previous one. But the previous Labour Government were mostly dealing with the international worldwide financial crisis of 2007-08 and its aftermath. Gordon Brown had to handle it very speedily. The amount of taxpayers’ money was colossal in doing that task, which reduced the funds so much so that the outgoing Chief Secretary said that there was no more money left, which was a realistic description.

There was also the excessive harping on and the hysteria in this country about the eurozone’s problems, saying that they are intractable and insolvable. Indeed, I hope that the noble Lord, Lord Marlesford, will not mind my saying that it was not the Germans or the whole Council of Ministers who insisted on the capital levy for the Cypriots. That was their own part of the transactions when the council said that Cyprus had to respond with an enormous amount of money to reflect the vast amount of money that they were getting in the bailout. Germany did not impose a particular suggestion on Cyprus. The Cypriots decided that themselves. As we know, they have now changed their mind and are doing other things. We are waiting to see the details of that as a result of the non-vote in Parliament.

[Lord Marlesford]

If I may very rapidly read from the Minister’s statement, it was the eurozone finance Ministers who announced the package which included that. The eurozone finance Ministers, therefore, approved that part of the package.

[Lord Dykes]

Yes, of course, because the Cypriot Government then submitted those suggestions to them, which were accepted. That was the sovereign decision of the sovereign country of Cyprus, which made its own suggestions in response to the request from the Council of Ministers and the German Government, and quite rightly.

The difficulty now is what we do from now on and where we go. The reality still confronts us in this economy that, to quote another source from many years ago, one has to enlarge long-term public spending on public assets with a high multiplier effect. Government spokesmen in recent years have kept on saying that public sector is bad and wicked, and private sector is good, and that we should rely on the private sector to respond to the inaction of the Government, but that never works. We all know that, and the evidence is there. Huge global corporations will make their decisions irrespective of what national Governments do. Facebook would not be particularly responsive to particular individual national Governments in the world, for obvious reasons, and neither would Microsoft, although the national subsidiaries in different countries respond to some national government decisions, as we know. Equally, sometimes very high-tech innovative companies in different countries themselves make their own decisions and have particularly good fortune such as very strong bank support and other access to capital, which enables them to be free-floating and not respond to government. However, in the vast majority of businesses, whatever their size, and in particular small companies, the reality is that you wait until the Government are expanding the economy. That is not a criticism of the way companies run businesses; if I was running one now as I used to in the old days I would do the same thing.

The noble Lord, Lord Kestenbaum, who is not in his place now, earlier mentioned economies where public sector and private sector activity is mixed up together in a constructive whole. Bavaria, mentioned by the noble Lord, Lord Haskel, is a very good example of that, where a centre-right moderate Government, over many years, never said no to public spending as long as it was on long-term investment assets. It was nothing to do with short-term current account. The British Treasury is still far too short-term obsessed. Therefore, until we change, we will be stuck in that ominous way that was so ably described by the very able business editor of the Evening Standard yesterday, when he referred again to the Chancellor. He wrote that a wiser man, earlier on,

“would have been less aggressive, less dogmatic about the rightness of his policies, so that he would have had room to manoeuvre when they seemed not to be working. But Osborne has closed down all those options so today’s Budget is the work of a man who is in a hole but continues to pretend that the only way forward is to keep digging. The public finances remain in a dire state, and even a bit of sleight of hand with the numbers can’t conceal the fact that we have made absolutely no progress over the last 12 months”.

The terror of the slightest increase in our interest rates in this country will stop further action until there is a big change of heart.

14:39

[Baroness Browning]

My Lords, I sense that I am going to disappoint my noble friend Lord Dykes. I am not going to be gloomy, but I have to say to my noble friend on the Front Bench that my mood today is cautious for the following reasons. My noble friend was not in the House when I made my maiden speech in 2010. I am sure that other Members present recall it very well. That was a joke. At the time, with the help of a friendly app, I gave the account of how much the country’s debt was when I stood up and how much it had increased when I sat down. I do not have that app with me today, but I took a quick look at it yesterday, and I see that we are still escalating, at £500 per second.

My concern today is primarily about the debt. There have been some very good things in the Budget. I support things that others have mentioned today, particularly raising the personal tax threshold to £10,000, and for small business, the £2,000 threshold before NI is paid by employers. I support that even more so than corporation tax coming down. For a lot of very small businesses, it is not quite the same as other companies coming in from outside and choosing to invest here. For small businesses, anything that comes off the bottom line before you make a profit is particularly helpful.

The Chancellor said yesterday that the Budget was,

“for people who realise there are no easy answers to problems built up over many years”.—[Official Report, Commons, 20/3/13; col. 931.]

There has been a flavour today, and it is certainly more noticeable in the House of Commons, that whenever the inheritance from the Labour Government to the coalition Government is mentioned, a sort of groan goes around, as if we really should not mention the problems that we inherited. I use this opportunity to remind the House that a Labour Treasury Minister left that note in the drawer in the Treasury for the incoming Minister that said, “There is no money left”. In fact, that was only part of the story, because it was not only that there was no money left, but there was a huge debt: a debt of such proportions, and rising, that it brought together two political parties which historically had been opponents but which felt that there was a need to work together in order to address the seriousness of that problem.

Now that the Chancellor has come forward with the Budget, I hope that people across the House will recognise that these problems are bigger than many that we have faced in our lifetime. It is as serious as that. It is also important that the Chancellor continues to spell out the size of the problem and what that means. My noble friend Lord Marlesford mentioned Cyprus. I quite agree with the comments he made about the foolishness of what was said about top-slicing bank accounts. If anything was guaranteed to cause a run not only on Cypriot banks but on banks in other parts of Europe, that surely was the trigger. We will see what happens there. However, it is the case that when Governments lose control of the finances of countries, they have no hesitation in popping their hands into the personal assets of the population. We have seen these measures and their effects before.

I was very encouraged that the Chancellor made reference to the work of the Monetary Policy Committee. He said that the new remit,

“makes it clear that the committee may wish to issue explicit forward guidance, including using intermediate thresholds in order to influence expectations on the future path of interest rates”.—[Official Report, Commons, 20/3/13; col. 935.]

I know that my noble friend on the Front Bench is only too aware that, given the state of government borrowing, it will require an increase of just a few points in interest rates for that to give us very serious problems indeed.

I was not looking to the Chancellor to produce an all-singing, all-dancing giveaway Budget, taking lots of risks. He needed to be cautious. However, I have one or two concerns about some areas on which I hope my noble friend will be able to reassure me. I am indebted to an article I read in MoneyWeek which outlined the history of the state pension. The state pension was introduced in 1909. The article states:

“Men aged 70 and above could claim between 2 and 5 shillings per week from the government”.

However,

“because back then the average working man could only expect to live to 48 years of age”,

the Government were not being that generous. Here we are, over a century later, and yet the liability to the public purse on pensions has resulted in an estimated £5 trillion of pension promises. I am not for one minute suggesting that we ban the state pension. However, I am worried about the implementation of Dilnot in putting a cap on the cost of care for elderly people. I know that that is not a popular thing to say. We would all like to do it and I am sure that most noble Lords have been through that situation on a domestic front with elderly relatives. It is very difficult. However, I must say to my noble friend that, rather like the state pension when it was first introduced, I am not convinced that we have the money, and particularly that we do not have the money at this moment, to underwrite that type of benefit in order to preserve the properties of the property-owning democracy. That is a strange thing for a Conservative to say. However, that I have to think twice about this shows the serious position that I believe the finances of the country are in.

I am equally concerned not that the Chancellor introduced measures yesterday to increase the housing stock—we all recognise the problems of the housing shortage—but that the taxpayer, not the Government, will underwrite mortgages for properties up to £600,000 for people who are not able to get a mortgage in the normal way. We know that the money supply from the banks is poor at the moment, and that that is affecting people’s ability to obtain a mortgage, but, as others have said, that will need careful handling if we are not to see some of the problems that we saw over the pond in America with what happened with its housing bubble.

14:51

[Lord Brooke of Sutton Mandeville]

My Lords, I should like to add a few words to this debate in the gap. I spoke for two minutes in a Question for Short Debate on 11 December last year on the impact of multinational companies’ financial practices and UK tax policies. I shall not speak for longer now on the same subject, not least for fear of my noble friend Lady Browning doing her mental arithmetic on my costs.

I support the plea of the right reverend Prelate the Bishop of Bristol earlier on this same subject. In replying to a debate on 11 December, my noble friend Lord Marland, at col. 1050 of Hansard, said that DfID had averaged expenditure of £20 million per annum over five years to support tax regimes throughout the world. He went on to identify specifically DfID spending £11 million in Sierra Leone, £8 million in Tanzania, £8 million in Rwanda, where the tax take rose six-fold, and £21 million in Afghanistan, where the tax take used to be 4% and has now gone up to 11%. DfID is, with the support of HMRC, building up its technical capacity to help further.

At this late moment in the debate I do not expect a detailed comment of any kind in the wind-up of my noble friend the Commercial Secretary, but a reiteration of a continuing commitment to this constructive and productive programme would be both welcome and reassuring.

14:52

[Lord Davies of Oldham]

My Lords, I am grateful for the contribution of the noble Lord, Lord Brooke, and that of the right reverend Prelate the Bishop of Bristol, who emphasised the progress towards the aid target of 0.7% of GDP, which this Government have fulfilled. It was driven towards strongly by the preceding Administration, so at least we have a note of unity across the House on the successful achievement of that position and its ring-fencing.

Another note of agreement—I am certainly happy with it and I get the impression from the debate that this might be so across the House—is that, as my noble friend Lord Desai said, this Budget does not do anything very much. That is certainly the case because the Chancellor has placed himself within a straitjacket and there is not much he can do when he is so constrained by his singular commitment to one objective. Of course, no one underestimates the challenges facing the Chancellor. We all know the difficulties over the debt and that external forces, particularly the difficulties in the eurozone, our largest overseas customer, do not help exports and the potential for an emergence from this crisis through export-led growth.

However, I cannot recall the Government or a government spokesman putting the crisis of 2008 into an international context. I cannot remember them ever since suggesting that there were difficulties other than those attributed to the Labour Administration struggling with the problems of international finance at that time. We all know that the first manifestations of crisis were in the United States, and subsequently in Europe, before Northern Rock reached a pitch at which we had to act. The international context rubs both ways.

We need to recognise from the experience of Northern Rock some of the dangers in the Government’s proposed housing measures. A number of noble Lords emphasised their support for these measures. The noble Baroness, Lady Kramer, quoted the Business Secretary as having expressed these views in the New Statesman, and he certainly did. Why did he choose the New Statesman? It is because he thought it was read by a thoughtful, constructive audience who had already been campaigning for an emphasis on housebuilding to inject some demand into the economy and some earnings into the construction industry. We all know that the construction industry is one of the fastest to regenerate if the demand is there.

I appreciated the point made by the noble Lord, Lord Flight, and the noble Baroness, Lady Browning, a moment or two ago, that we have to be careful with regard to this issue because we know that it was overborrowing for house purchasing that precipitated the crisis in the United States. I hope the Minister will respond to the questions addressed to him by my noble friend Lord Eatwell in his contribution to the debate. What, in the Government’s view, will the guarantee scheme mean for house prices? What is the cost of the scheme over the three-year period that it is meant to obtain? How much dead weight is involved in the scheme? Will there be support for purchases that have already been made? I hope the Minister will address these points, if only because anxieties about this issue were expressed as strongly on his side of the House as on mine.

We have questions as to whether the Chancellor has matched up to the challenge before him. So far, progress has been limited to almost the point of marginality. The Chancellor has failed to hit every target that he identified when he first took office. Of course, I recognise that one or two elements in this Budget have found favour. The noble Lord, Lord Bilimoria, declaring his interest, mentioned that a penny off the pint of beer was most welcome. I cannot think how many pubs will be saved by a reduction in the price of beer by 0.3%. However, I do not have quite the experience of the industry of the noble Lord, Lord Bilimoria.

I am grateful to the noble Lord, Lord Marlesford, who also indicated that we should have reservations about the intention to freeze taxation on fuel. There will be escalating costs involved in that over time, and the noble Lord identified them very clearly. That aspect may gain the Chancellor a little short-term credibility but it raises considerable problems. The Chancellor will be aware that these little gimmicks to brighten life up for the nation are happening two years before the next election, but of course there is a lot that needs brightening up.

Something that has not featured enough in this debate is what it means for a nation to be told that its living standards, which have already decreased significantly over the past few years, are destined to be reduced over the next two years, if not longer, as well. That shows itself most in the more desperate sections of our community, among the poor, who have of course been subject to the Government’s unremitting ideological onslaught on welfare, but it also reaches right across the community save, perhaps, for those millionaires who stand to see a considerable increase in their incomes from the decision taken last year to cut taxation from 50% to 45%.

We have had some interesting contributions on the question of infrastructure, and I hope that the Minister will respond to the questions put by my noble friend Lord Eatwell. How much has been spent on infrastructure this year? The problem with the Budget is that it is all jam tomorrow—or not tomorrow, in fact, but some 700 days after tomorrow. It is two years before the expenditure on and investment in infrastructure is due to take place. We need to know how much was spent in 2012 and how much will be spent in 2013. I fear that the answers may be somewhat bleak.

Within this framework, perhaps I may also emphasise the anxieties expressed by my noble friend Lady Worthington on the question of electricity prices. There are within this Budget and in the Government’s policies hidden costs that will manifest themselves in the most appalling way; that is, directly on those who are least well able to cope with them. Unless one is in a position to invest significantly, the consumption of electricity is a given cost in bills that have to be met when they are presented.

On my side of the House, my noble friends Lord Kestenbaum and Lord Haskel, along with my noble friend Lord Bhattacharyya in considerable detail, emphasised the fact that we need investment. We cannot get out of this situation without it. The IMF has told the Government that they cannot get out of this situation without paying attention to growth. My noble friends pointed out that at last the penny is beginning to drop in government to a marginal extent, but for the past three years there has been an unremitting commitment to one objective to the exclusion of any considered investment related to growth. That is why we consider that the Government have a difficult case to argue.

I appreciated the contribution of the noble Lord, Lord Shipley, who shifted the debate on to the local and regional dimension and referred to the Heseltine report. It is encouraging that the Government are at least paying lip service to some of the noble Lord’s proposals. When we talk about development in the regions and the problem of the domination of London, it is worth recalling that one of the first acts of this Government was to destroy the regional development agencies. I recognise that the local enterprise partnerships are different and it may be that they are able to make progress, but there is no reason other than the wilful action of the Government at the beginning of their term why things are so very difficult in the regions at this time.

I apologise for slightly overrunning my time. I hope that the Minister will recognise that we want to put this debate in the context of a Government who are failing the nation and causing a great deal of distress among many members of our community.

15:04

[Lord Deighton]

My Lords, I thank all noble Lords for their excellent contributions. I am still new enough in my job to find myself taking copious notes with lots of ideas to follow up on, so I welcome the debate. I may have a bias in my listening, but I have to say that the broad sense of the contributions suggests that this is a well crafted Budget that has delivered very well what can be delivered, given what I think everyone accepts is limited room for manoeuvre. The noble Lord, Lord Desai, said that once you have established a strategy you should stick to it so that people should not expect enormous deviation from one annual Budget to the next. I shall try to address the questions and issues that have arisen, and I shall do that in terms of subject matter so that there is some coherence rather than moving from one contributor to the next. I hope that that is acceptable to noble Lords.

On the deficit, I did not hear a compelling case for an alternative strategy to that which the Government have in place. We have pointed to the many exposures that would occur should we embark on another spending spree without getting the budget under control. I should point out that the OBR borrowing forecast shows a fall in every year of the forecast both in cash terms and as a percentage of GDP, and that is both with and without some of the special one-off changes such as the APF transfers. I concede that borrowing is falling more slowly than we would like, but that is because of the economic challenges and because we are allowing what the Economist has described as the “automatic stabilisers” to operate. Over the past three years, the UK has cut the structural deficit more than has any other G7 country.

A number of speakers such as the noble Lord, Lord Bilimoria, for example, talked about bringing down the level of public expenditure as a proportion of national income. I can confirm that the OBR forecast takes total managed expenditure down to, I think, 40.5% of GDP by 2017-18, which is the same level as it was in 2004-05. Several speakers, including my noble friend Lady Browning and the noble Lord, Lord Bilimoria, asked about the cost of borrowing. I can confirm that a 1% rise in government borrowing costs would add just over £8 billion to the annual debt interest by 2017-18. That provides some perspective on the risks we are trying to manage.

There was a lot of discussion about the impact of our weak export markets, the opportunity to switch into faster-growing ones, and how important conditions have been weighing against us. The OBR expects the euro area to contract by 0.5% in 2013, which follows a decline of 0.5% in 2012. Let me give noble Lords an example. In the year to the fourth quarter of 2012, goods export volumes to the EU fell by 2.5%, while our exports to non-EU areas grew by 1.2%. That gives a sense of the opportunity.

Some mention was made of international comparisons, particularly by the noble Lord, Lord Eatwell. With respect to Germany, I would just point out that the IMF has forecast that the UK will grow faster than Germany in both 2013 and 2014. With respect to the United States, our employment at just over 70% is now higher than in the US, where it is just over 67%. Those are some measures on which we are actually performing more strongly.

On monetary policy, I think the general mood of the debate was that noble Lords welcome a good and thorough review of this important area. I absolutely take on board the observations of my noble friend Lady Kramer, who believes that this is so important that it should be subject to a wider review. I also take on board the observations of my noble friend Lord Higgins that one of the reasons this needs to be managed extraordinarily carefully is the degree of independence that we have vested in the Bank of England, which is why I think we should welcome the clarity with which the new mandate has been defined.

I found particularly useful and interesting the contributions from those noble Lords who talked about what I would broadly describe as our industrial strategy, including, in particular, the speeches of the noble Lords, Lord Bhattacharyya and Lord Kestenbaum, as well as a number of other noble Lords. The Government are extremely interested in trying to get this right. The general sense that I got from the contributions was that while the ideas and policies are right, their scale, urgency and effective implementation need to be addressed with what I would describe as a private sector zeal. That is what I am in government trying to impart. The more we can accomplish that the better it will be. I would point to the money that has been applied to our world-leading sectors, in particular the aerospace industry. A number of noble Lords also referred to the importance of our science and research infrastructure. I absolutely accept those comments. In my own area of trying to define and improve our infrastructure, I am working with my right honourable friend the Minister for Business and Enterprise on incorporating the science base in the same way as we think about our digital or transport infrastructure. The utilisation of the Government’s own purchasing power as a way of incubating promising businesses is also an extremely valuable idea which the Government share and just need to implement effectively.

My noble friend Lord Flight reminded us of the structural change in the UK economy. If you isolate the difficulties that we have had in the financial sector, which was very large and suffered a very significant shock, and in the North Sea oil and gas sector—which is also very large and, certainly in recent years, mainly declining—you can identify in the rump of the economy some extremely promising stories for our long-term industrial future. We should not in any way ignore those.

In talking about our export markets a number of noble Lords said that we should switch to the faster-growing ones. The noble Lord, Lord Kestenbaum, in particular, and the noble Lords, Lord Desai and Lord Bilimoria, asked about our exports to the so-called BRIC economies—Brazil, Russia, India and China—and other strong emerging markets. Between 2009 and 2012 the UK’s exports to Brazil increased by 49%, to Russia by 133%, to India by 59% and to China by 96%. Those are very large numbers but, of course, come off quite a small base. My experience of the co-operation between the business department and the Foreign and Commonwealth Office is that the Government are extremely focused on working with our businesses, both big and small, to develop opportunities in those markets.

I now move on to what I would generally describe as some of the areas relating to fairness. The right reverend Prelate made a compelling case—supported by a number of other contributions from, for example, the noble Lord, Lord Davies, and my noble friend Lord Brooke—in essentially congratulating the Government and everybody who contributed on sticking to their commitment on overseas aid. Doing the right thing can sometimes be difficult but that does not diminish its importance. I think that the House offers its support to that continuation.

There was support for the childcare policies announced yesterday but also interest in how it will work for those at the lower end of the income strata. That is dealt with in the universal credit system, which has funding available to support people there.

There was also a discussion about utilising the new control framework which the Treasury is in the process of introducing on managed expenditure. As my right honourable friend the Chancellor said yesterday, it is really intended to turn unmanaged expenditure into managed expenditure. That will be implemented carefully to ensure that we manage any implications for the impact of our support policies.

The noble Lord, Lord Bilimoria, asked about the beer duty cut. That will go ahead and will come into effect next Monday. I understand from the experts in this area that any EU concerns on comparability should not be an issue.

Another subject that featured in a number of contributions, including from my noble friend Lady Browning, was pension reform and the affordability of the care caps. The Government have made it clear that we would implement those measures only if we could ensure that they would be paid for, and we would utilise some of the changes on national insurance and the three-year inheritance tax freeze to ensure that those are properly funded before they are introduced.

In the interests of time, I will move on to infrastructure. First, I confirm to the House that the Government are taking a long-term approach to capital spending as part of the 2015-16 round. That is why we have set in place the extra £3 billion a year, and we will also plan for a longer period than is customarily the case at the Treasury. In my view, one of the problems with the historical approach to capital spending has been the relatively short periods forward for which it is committed, which does not suit the longer gestation periods of some of the projects that it is intended to support. The plan of this Government is to fix that. Of course, that is on top of additional investments in capital spending in the Autumn Statement.

The noble Lord, Lord Eatwell, asked about the amounts of capital spending, and the noble Lord, Lord Davies, reiterated this question. We do not have the precise numbers for the capital spend for 2012-13 yet, but when we do I will make sure that those are passed on. I can say that public investment as a share of GDP is on average higher over this Parliament and the next than it was between 1997 and 2010.

Other questions were asked about the efficacy of our infrastructure delivery and the challenge of getting it done now rather than being eternally in a planning period. My noble friend Lord Flight referred to some of the red tape delays that we have encountered. We are now in the second phase of our Red Tape Challenge and trying to address some of those regulations that could perhaps reasonably be considered overzealous, which have slowed down some of those plans. For example, something I have been involved in has been looking to get the regulators of these sectors to standardise the approach to infrastructure access charges, which should make these developments much easier.

My noble friend Lord Marlesford asked whether £3 billion a year was really enough. That is £18 billion in capital spend over the next Parliament, and that is while finances are tight. The focus on managing down current spend to accommodate that expansion of capital spend, given the tightness of our fiscal position, is an extraordinary commitment to that level of spend.

The noble Baroness, Lady Worthington, gave a very detailed and passionate speech about the carbon price floor. This is a technical subject that is worthy of a much broader debate. All I can say is that the Government are extremely focused on solving this equation of how to ensure that sufficient electricity is generated in a way that meets our desire to hit our environmental targets, to get it all done on time and to leave our consumers with an affordable result. That is absolutely the intention and I am certainly happy to discuss policies which do not end with that result.

We had some discussion around financial reform and access to finance. My noble friend Lady Kramer very eloquently summarised how it was important to bring together all the initiatives that will compensate for the dislocation in the banking system; for example, through the business bank. The noble Baroness referred to the reduction in stamp duty to stimulate the market, in particular for technology growth companies, so that they can grow here with equity rather than selling out earlier than would be optimal, and I absolutely support that more strategic approach to bunching those initiatives together.

Finally, we had a number of interesting contributions around the initiatives announced in the Budget with respect to housing and the support that the Government propose to give to housing. Those contributions neatly summarised the balance of the argument. On the one hand, I think people accept that this is a critical area; it can and is intended to be highly stimulative to the economy. It is an area where you can get things moving quite quickly so in that respect it is a powerful initiative in the Budget. On the other hand, there was much wise counsel, and I certainly share the caution about how this is implemented to ensure that we both understand and manage the risks involved. In answer to the question from the noble Lord, Lord Desai, about how closely we manage the household debt situation, I would note that household debt in the UK has fallen as a proportion of income from 175% in 2008 to 144% currently, so it is coming down, albeit rather slowly.

In answer to some of the specific questions asked by the noble Lord, Lord Eatwell, I say that the scheme is intended to be self-financing, so the mortgage guarantee scheme will have a price for the guarantee which will be judged to meet the expected level of losses as one would actuarially calculate them. It is intended to be a market instrument in that sense. We have between now and the beginning of next year to work that through in detail with the leading market practitioners.

Motion agreed.

Jobseekers (Back to Work Schemes) Bill

Thursday 21st March 2013 Lords Chamber

Second Reading

15:25

Moved By

[Lord Freud]

That the Bill be read a second time.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud)]

My Lords, this Bill will ensure that, following the recent Court of Appeal judgment in the case of Wilson and Reilly versus the Secretary of State for Work and Pensions, the Government will not have to repay previous benefit sanctions to claimants who have failed to participate in mandatory back to work programmes. It will also enable the Government to impose benefit sanctions where a sanction decision has been put on hold because of the Wilson and Reilly case.

I shall briefly set out the details of the Court of Appeal’s judgment, but let us first be clear on what this case was not about. The court did not cast any doubt on the policy intention behind any of the schemes. In the words of Sir Stanley Burnton, one of the judges, the case was,

“not about the social, economic, political or other merits of the Employment, Skills and Enterprise Scheme”,

and the court noted that the use of mandation was appropriate in such schemes.

The policy intention of our schemes has been clear to all from the outset. I have said that the Court of Appeal judgment was not about the social or other merits of the employment, skills and enterprise scheme, but the judges were not silent on the broad principle underlying mandatory employment schemes. Lord Justice Pill said:

“A policy of imposing requirements on persons receiving a substantial weekly sum, potentially payable for life, is readily understandable. Equally, the means sought to achieve that end are understandable; claimants should be required to participate in arrangements which may improve their prospects of obtaining remunerative employment”.

Again, I say that the case was not about the policy intent of the schemes, which has been clear from their inception.

So what was the judgment about? The judgment centred on the Jobseeker’s Allowance (Employment, Skills and Enterprise Scheme) Regulations 2011, which for brevity’s sake I will from now on refer to as the ESE regulations. These regulations provide for most of the mandatory back to work schemes, including the Work Programme.

First, the court rejected the claimants’ argument that the ESE regulations were contrary to the European Convention on Human Rights—specifically, Article 4.2 on forced labour. Secondly, it rejected the claimants’ argument that the ESE regulations could not be enforced in the absence of a formal published policy.

However, the court found against DWP on two grounds. It found that the ESE regulations did not describe the programmes that they underpinned in enough detail. It also upheld the High Court’s ruling that letters sent to claimants when they were mandated to an ESE scheme were insufficiently detailed to comply with Regulation 4 of the ESE regulations. We have since laid new regulations and issued revised letters so that we can continue to mandate claimants to our schemes and ensure their continued proper functioning in accordance with the principle of imposing requirements on jobseekers in return for paying them benefit.

Your Lordships will not be shocked to learn that the department fundamentally disagrees with the court’s verdict in respect of the two latter grounds, which is why it has applied for permission to appeal to the Supreme Court the Court of Appeal’s judgment in respect of those two grounds. The arguments that we will make before the Supreme Court, if we are granted permission—

[Lord Foulkes of Cumnock]

If the department was so upset and disagreed with the decision, why did it take it so long to bring legislation before Parliament?

[Lord Freud]

I will come on to explain that in a little.

The arguments that we will make before the Supreme Court, if we are granted permission, will not be affected by this Bill. However, we need the Bill to provide certainty that the Government are not in a position where we will have to repay previous benefit sanctions, and can impose sanctions where decisions have been stayed, in respect of claimants who have failed to take part in employment programmes without good reason. We have made it clear that we will take steps to ensure that claimants cannot expect a sanction refund as a result of this judgment, and there is a compelling public interest for taking those steps.

The Bill does not overturn previous appeals that have succeeded on the basis of good cause and it does not prevent claimants from appealing a sanction on the basis of good reason. Instead, it ensures that claimants who have failed to participate with no good reason do not obtain an undeserved windfall payment. We estimate that such a windfall could cost the public purse up to £130 million. That is money that would be better spent on people who take their responsibilities seriously, and it is in the public interest that we ensure this.

There is also an important public interest, as the Court of Appeal recognised, in getting people back to work by ensuring that jobseeker’s allowance is paid only to those who are actively seeking employment and who engage with attempts made by the state to achieve that end, and that those who do not do so face the appropriate consequences. The Bill will protect this public interest by ensuring that those who have not engaged with attempts made by the state to return them to work face the appropriate consequences, rather than receiving an undeserved windfall.

The Government respect the general principle that Parliament should not legislate to reverse the effects of the judgments of the court for past cases unless the situation is exceptional. However, it is entirely proper to enact such legislation if there is a compelling reason to do so. There is a compelling reason here on three grounds: first, the cost involved; secondly, the claimants affected do not deserve a windfall payment; and, thirdly, this is an unusual case in social security legislation where a court or tribunal decision has a retrospective effect.

The Bill will provide that any decision to reduce jobseeker’s allowance under the ESE regulations cannot be challenged on the grounds that those regulations were invalid or the notices given under them inadequate. It makes similar provision in relation to the mandatory work activity regulations in respect of notices given under those regulations.

I have said that we fundamentally disagree with the court’s verdict with respect to the lawfulness of the ESE regulations and the notices given under them. We believe that those regulations were correctly drafted. They were drafted to be flexible enough to encompass a wide range of programmes designed to support jobseekers into work. There was no clear and identified need to go further than the ESE regulations in order to lawfully mandate claimants to our schemes.

The Merits of Statutory Instruments Committee, as it was then called, published a report that covered the ESE regulations on 5 May 2011. The Merits Committee had a number of concerns, including the quality of the Explanatory Memorandum. To go off on a tangent, I want to acknowledge that there was a period when we were not servicing the Merits Committee adequately, and I have taken steps since then to improve that position. The Merits Committee had concerns, but the possibility that the ESE regulations were unlawful was not one of them. The committee drew attention to the fact that the regulations,

“interpret the Act very broadly so that future changes to the Scheme could be made administratively without any reference to Parliament”.

However, it did not go on to suggest that they went beyond the primary powers.

The Joint Committee on Statutory Instruments also considered the ESE regulations at its meeting on 15 June 2011. I am sorry to report that no fewer than three instances of defective drafting were identified, which the department acknowledged. However, the committee did not raise even the possibility that the ESE regulations were unlawful. The Social Security Advisory Committee, whose independent and informed advice we value greatly and with which we have a very constructive relationship, also considered the ESE regulations. Among other issues, it made a point about the breadth of the powers, but it did not suggest that they went beyond the primary powers. Similarly, those primary powers in the Welfare Reform Act 2009 received full scrutiny. The Delegated Powers and Regulatory Reform Committee regarded the delegations in the relevant part of the Act and the associated scrutiny procedure as unexceptionable.

We consider that the primary powers do not require that the regulations set out the fine details of the scheme. We believe that it is undesirable to do so, as a wide variety of possible arrangements could be made, depending on the nature of the labour market conditions in particular parts of the country. We also need to be able to respond to changing conditions and challenges quickly and effectively.

We believe that the flexibility that the ESE regulations provided was rational and desirable, and it must be remembered that the High Court ruled that the regulations were lawful. We therefore cannot agree with the Court of Appeal’s judgment. We also believe that the letters issued to claimants provided sufficient information on the consequences of not participating in our schemes. In addition to the information provided in the letter, claimants would have also discussed the precise details of the scheme with their jobcentre adviser, including what was expected of them and the consequences of not upholding their side of the bargain.

Nevertheless, following the High Court judgment, we revised all referral notices to comply with the judgment and sent letters clarifying the position to the then claimants impacted by the decision. That allowed us to continue to operate the schemes as intended—an intention that has been clear to all from the scheme’s inception, based on principles which the effects of the Court of Appeal judgment undermines and which the Bill is intended to protect.

It is right that we are able to operate our schemes as intended, giving jobseekers the opportunity to improve their chances of moving into work, with appropriate consequences for those who fail to take up that opportunity. It is right that government resources are targeted on those claimants who are actively seeking employment and taking all reasonable steps to improve their chances of securing employment and that resources are not wasted on those who have not met their responsibilities.

To pick up the question asked by the noble Lord, as soon as the judgment was handed down, the department explored all the options and avenues available to it to ensure the protection of the public interest. Once the decision to pursue emergency legislation was taken, that required legal advice, the appropriate consent prior to introduction and preparing the Bill products. We also engaged the Opposition, who rightly gave the matter thorough consideration. I am sure that all noble Lords will appreciate the time that that has taken.

[Lord Foulkes of Cumnock]

As I understand it, this lay in the department without any suggestion of legislation for more than a month. If the department had been really concerned about it, the legislation could have been dealt with through the normal procedure. Instead, both the other place and your Lordships’ House are faced with emergency legislation, which is entirely unsatisfactory for examining such an important Bill in detail. All the subsequent stages will be dealt with on Monday. That is not adequate scrutiny. Does the noble Lord not feel some guilt or embarrassment at having to deal with it in this way?

[Lord Freud]

My Lords, obviously, it is never desirable to have emergency legislation where one can avoid it. It would be desirable to run this through a more normal process, but we are caught by time constraints. The point that the noble Lord made about delay is accounted for by the various steps that we have had to take in that period.

In conclusion, the Bill guarantees some fundamental principles, which are about helping us to move people into employment and protecting the public purse. I commend the Bill to the House and I beg to move.

Amendment to the Motion

Moved by

[Lord McKenzie of Luton]

At end to insert “but that this House deplores the Government’s incompetence in failing to provide sufficient information about its back to work schemes, which led to the need to introduce legislation with retrospective effect; deplores the need to introduce fast-track legislation when it took the Government four weeks to introduce the Jobseekers (Back to Work Schemes) Bill into Parliament and in spite of the Constitution Committee’s ongoing concerns about the fast-tracking of legislation; seeks assurances that the appeals process will be robust, speedy and efficient, and that the criteria of the independent report to be prepared under clause 2 will be strengthened to include greater details regarding the number of sanctions, the nature of those affected, the appeals process, the support available to those affected and the effectiveness of the hardship and mitigation provisions; and further seeks assurances that adequate legal advice will be provided to those affected by the introduction of this legislation”.

15:40

[Lord McKenzie of Luton]

My Lords, I thank the Minister for his explanation of the Bill, his officials for our meeting yesterday and the follow-up information that has now been provided, which we have the weekend to peruse.

This is a shameful day for the Government when they confront us with a Bill that is wholly retrospective in nature and which they are intent on fast-tracking through the parliamentary process. The Government have got themselves in a terrible mess because their ESE regulations purporting to introduce certain employment and training schemes have been struck down by the Court of Appeal as ultra vires and because the court judged that notices given to individuals under those regulations were inadequate. The Government ignored the advice of the Social Security Advisory Committee and, as we have heard, have not taken on board the comments of the Merits Committee and the history of defective drafting that the Minister acknowledged. I say as an aside that a longer-term issue arises from this about how we scrutinise secondary legislation, particularly some of the important stuff that comes through from the DWP.

It follows that sanctions for not complying with the ultra vires regulations which have been deducted from claimants are unlawful and that would apply to sanctions which have been stockpiled but not implemented should the DWP look to progress them. The Bill covers not only the regulations dealt with by the Court of Appeal but parallel regulations promulgated in the same manner. As we have heard, the Government have sought leave to appeal to the Supreme Court, which may yet finally settle this matter. The effect of the Bill is to cause those sanctions which are and were at the time unlawful to become lawful.

We now have the benefit of the Constitution Committee’s very robust deliberations on this Bill. So far as fast-tracking is concerned, it strongly disagrees with the Government’s assessment of the need for this. In particular, it points out that the Government were able to table amending regulations on the very day on which the Court of Appeal judgment was handed down, yet took four further weeks to get this legislation to Parliament, a point pressed by my noble friend Lord Foulkes. How does the Minister answer that point?

Even if we accept a truncated timetable, it is to be deprecated that the Government have been obdurate in being so limiting in the opportunity we in your Lordships’ House have to scrutinise the Bill. Undue haste and lack of attention to detail were what got us in this mess in the first place, and the risk is that we will compound it by so brief a process. I pay tribute to my noble friends Lady Royall and Lord Bassam for trying to get the Government to see sense on timing, albeit to little avail. Nevertheless, we intend to do our best in the time allotted to make sure that the full ramifications of this Bill are explored.

The Constitution Committee points out that retrospective legislation is not, of itself, unlawful but that, from a constitutional point of view, it should, wherever possible, be avoided. It urges that, in doing our work on this Bill, we should consider whether retrospectively confirming penalties on individuals who, according to judicial decision, have not transgressed any lawful rule is constitutionally appropriate in terms of the rule of law. Perhaps the Minister can help us on this point. On what basis do the Government consider that the rule of law should be set aside in these circumstances? Is it the belief that individuals would have somehow got off on a technicality, that the cost implications justify it or some other reason? Do the Government consider that different standards should apply when benefit recipients are involved?

For the avoidance of doubt, I should make it clear that we do not in principle oppose such schemes as the Work Programme or mandatory work activity and, indeed, we would have been responsible for some of the primary legislation which underpins the regulations in point, but we strongly criticise how the Government have gone about implementing some of them. The Work Programme in particular seems thus far to be little short of a disaster. There is an urgent need to develop effective programmes, especially to address the needs of young people.

We also strongly hold to the view that benefit claimants have rights but also responsibilities and that it is entirely reasonable for conditionality—the obligation to engage—to apply, and that a sanctions regime should underpin this. However, that sanctions regime should be reasonable, proportionate and transparent. In this regard, the amendment to the Bill in the other place which provides for an independent review of the sanctions regime, secured only by the interventions of my right honourable friends Liam Byrne and Stephen Timms, is vital. We plan to build on this in Committee to secure a wider review. We do this in particular because of a growing unease about the extended use of sanctions, beyond their role of underpinning conditionality, as a means of controlling benefit expenditure. As Stephen Timms pointed out in another place, there is growing evidence that it is the proliferation of sanctions which is driving the explosion of food banks across our country and, like him, we will wish to secure that any review covers a range of matters, especially how sanctions are being applied to individuals who have a mental health or other fluctuating condition.

We hear denials from Ministers in another place that the DWP does not have targets for sanctions. Can the Minister please tell us what management statistics are kept of sanctions and how these are routinely reported within the management structure?

If we have to live with retrospection then we need to ensure that there is a robust appeals procedure. Again we should be grateful for the intervention of honourable friends in another place for securing that commitment in the Bill. We will use our time in Committee to explore the extent of this commitment. The principle in this regard ought to be that individuals are in no worse position than they would have been in respect of appeals, hardship, good cause, mitigation than they would have been had the sanctions been properly made originally. For “stockpile” cases, where a sanction has not yet been applied, we need certainty on which regime is to be applied, as of course the system changed in October of last year.

It is understood that for the stockpile cases a withheld sanction will not be applied where somebody is now in work. Given that many people fluctuate between work and unemployment, the point at which the sanction is activated is therefore of importance. Can the Minister tell us what rules will govern this? Can he also say just how the rules will apply in relation to good cause or good reason when a sanction is activated some time after the failure to comply? What would have been contemporary evidence at the earlier time may be more difficult to adduce subsequently. Similarly, in relation to mitigation, what might have been possible earlier may be more difficult now. With regard to those who have actually been sanctioned, what, if any, information is now to be provided to them, especially given the view of the court that the original communication was defective?

The Minister will be aware of the provisions in the LASPO Act which become effective from 1 April and which deny legal aid support for welfare benefits advice. What will be the position of those seeking support for sanctions which have been stockpiled but now retrospectively applied? Will the old legal aid rules apply as though the sanctions were applied in due time? Can the Minister say what, if any, are the ramifications of the Bill for national insurance credits, which may have been restricted alongside the benefits under the sanctions regime?

There are a number of further issues we would wish to explore in Committee so that the full ramifications of retrospection in this Bill are understood. There are practical as well as constitutional issues arising from the Bill. We are told that some £130 million is at risk if this legislation does not proceed. That is likely an overestimate if not all the stockpile—for example, for those in work—will not proceed. Nevertheless, we have to be mindful that, whatever the sum, there is the likelihood that it will be recouped from further benefit restrictions if the Bill does not proceed.

We acknowledge that this gives the Government a dilemma, even if one of their own making. We are in this unhappy position because of the Government’s incompetence. It does not bode well for the growing chaos which is engulfing the department as it struggles with its benefit reforms. I beg to move.

15:50

[Lord German]

My Lords, I want to address the Bill itself, but before I do that I want to make a few comments on the amendment before us today. When I first read the amendment’s text last evening, when it was produced, I had a bit of a flashback to earlier student days when you had composite Motions and amendments and the call for separate votes to be able to unpick the various parts. While I acknowledge that there are issues fundamental to this Bill that need to be raised, they are appropriately the issues that would and should be raised in Committee on Monday. I expect that we will deal with those issues, so the amendment as a composite presents a very difficult picture for people to decide upon. However, there is one crucial factor running throughout the amendment: the issues raised by the Constitution Committee of this House on retrospection and fast-tracking. Before I ask my noble friend to comment on that, I refer to two paragraphs in the Constitution Committee’s report—the last in respect of retrospection, and paragraph 12, which says:

“it is incumbent upon the Government to explain to Parliament why they have chosen to proceed by means of fast-track legislation and to reject the alternative options”.

I listened very carefully to my noble friend at the outset, and I hope that he comes back to that matter in his summing-up, when he may be able to give this House an explanation.

Subject to the Government providing those explanations, I support the Bill for exactly the same reasons as the Front-Bench Labour spokespeople in the other place, who said that they,

“do not want to risk an additional £130 million cut to benefit spending over the period ahead … Nor do we want to be in a position in which people who were sanctioned months ago—in many cases, well over a year ago—have to be refunded”.—[Official Report, Commons, 19/3/13; col. 825.]

I agree with the Labour Party Front Bench on those issues and why the Bill is before us today.

I want to say something about the nature of secondary legislation and its scrutiny. It is Parliament that passes and scrutinises regulations, and it will probably be Parliament that has to decide how it does those things in the light of any subsequent changes brought about by the courts. Of course we are not at the end of this process yet, as I have said already. There are important lessons to learn from these problems to see how we can move on in a better way.

The court determined on narrow issues and on insufficient detail and content of the schemes and regulations, and that the notices given to claimants did not specify the range of sanctions that could be used, but it upheld the policy intentions of the Government’s work schemes and backed the right to require people to take part in programmes that would help to set them into work. Up to 1 September last year, 200,000 people found work through the Government’s Work Programme. Appropriate work experience is a good thing, and it helps to build the confidence of jobseekers. Increasing employment levels in our country since May 2010 have meant that since that time nearly 250,000 fewer people now claim out-of-work benefits, in a period of huge economic difficulty. However, I wish to discuss the operation of these schemes. We know that there are no targets and no league tables for Jobcentre Plus on sanctions. Therefore, the key question I want to probe is how we can better undertake these tasks, which is fundamental to ensuring that we get the best out of existing programmes.

We know from the evidence provided by the DWP that the overwhelming majority of those who have been on the Work Programme are satisfied with it, but, of course, there is always room for improvement. Three-quarters of those who attended the programme said that they believed they were more attractive to potential employers and that their personal confidence had increased as a result. That is a powerful outcome for a group of people who are some distance from the labour market. Clearly, the majority think that they have got closer to it. However, the programmes could offer better outcomes in many cases. The first of these areas concerns engagement with the third sector. When the main contractors were appointed to run the Work Programme, there was much discussion about subcontracting to the third sector. I would be grateful if, when he sums up, my noble friend could tell us to what extent that engagement has occurred given the unusual skills of people in the third sector in dealing with individuals who find themselves in difficulty.

The second area that we ought to probe is the change of culture within Jobcentre Plus. There is a balance to be struck between codifying everything passed on to the JCP and giving advisers the discretion to interpret issues in the light of claimants’ circumstances. There is a question to be asked about the level of top-down instruction, which in the past has been very much the way of working. I looked up the instruction manual to ascertain what constitutes good reason or good cause for people not undertaking to do things they have been asked to do. You can read through 16 pages of guidance, plus another chapter. However, if you ask people in general what they would do in such circumstances, they reveal an all-embracing understanding of the issues. It is a very complex area and a vigorous interpretation of the guidance has led to the problems being experienced in some offices, particularly in relation to targets for sanctions, which have been mentioned today.

Ministers have had to come down hard on clear misinterpretation, but have signalled that they are pursuing the empowerment of decision-makers as a critical cultural change. There must be a role in all this for flexibility, discretion and sensitivity. The legal case behind today’s Bill has thrown up other cases. As regards the cultural shift that Ministers have outlined, a basic structure needs to be provided vis-à-vis the way Work Programme claimants are handled. That structure should have three components. First, there should be a meeting with the provider or JCP contractor. Often there is no face to face meeting between the provider and the claimant. However, it is necessary to have an intelligent conversation about their future needs. Those needs should be clearly communicated and agreed. The outcome also needs to be agreed between both parties, rather like the new contracts proposed for universal credit.

Secondly, it is important to try to fit the placement to the person. It is important to establish the work habit, obviously, but an appropriate placement is needed that suits the requirements of both parties. Thirdly, the Government should not get in the way of serious job opportunities. They need to give people space to find their own placements. Just yesterday, I heard a case of someone with a qualification in photography who was offered a job in a do-it-yourself shop but found a more appropriate placement in a photography shop, which was accepted as an appropriate placement. I welcome the independent review process. We now need to see new detailed terms of reference. I always make the plea to my noble friend the Minister that any evaluation, rather than being considered a milestone, should be rolling so that you can learn lessons as information comes before you. I hope that we will hear more about that later. I look forward to hearing the Minister meet the concerns of the Constitution Committee, but otherwise I am happy to support the Bill.

[Lord Foulkes of Cumnock]

Could the noble Lord help me? I remember when the Liberal Democrats were on this side of the House all the handwringing about retrospection and fast-tracking of legislation. I am not clear from what the noble Lord said whether he is in favour of the Constitution Committee’s report or supports the Government on both retrospection and fast-tracking. Could he make that clear to the House?

[Lord German]

Yes, I will. It is perfectly obvious that the noble Lord’s party did the same thing when it was in power. There was retrospection in legislation. I can think of the videogames legislation, which has some very great similarities to this Bill. My plea to the Government is to answer the questions posed to them by the Constitution Committee in this debate so that we can have that explanation. I quoted the two paragraphs of the report. I am sure the noble Lord has that in front of him, so he can look at paragraphs 12 and 15. Those are the two questions I want answered.

[Baroness Hollis of Heigham]

In the opening stages of the noble Lord’s speech, which was very interesting, he referred to remarks from the Front Bench in the debate. I have the Hansard here. Could he give me the column reference for his quotation?

[Lord German]

Certainly. It was col. 825, about half way down towards the bottom of the page.

[Lord Crickhowell]

On the point about paragraph 12, as a member of the Constitution Committee I raise the point that in paragraph 5, and in footnote 8 beneath it, we made clear that the Government provided, both in the Explanatory Notes on the Bill and in the letter to the noble Lord, Lord McKenzie, that has been circulated, an explanation of why this fast-tracking was necessary. We were also clear that we made no comment in the report about the policy of the Bill and that this was a purely constitutional point.

[Lord German]

I fully accept that. The issue raised by paragraph 12 is why the Government rejected the other options.

15:59

[Lord Pannick]

My Lords, this Bill contravenes two fundamental constitutional principles. First, it is being fast-tracked through Parliament when there is no justification whatever for doing so. Secondly, the Bill breaches the fundamental constitutional principle that penalties should not be imposed on persons by reason of conduct that was lawful at the time of their action. Of course, Parliament may do whatever it likes—Parliament is sovereign—but the Bill is, I regret to say, an abuse of power that brings no credit whatever on this Government.

As we have heard, this morning your Lordships’ Constitution Committee, of which I am a member, issued a report on the Bill. We looked at this matter yesterday, necessarily as a question of considerable urgency. I pay particular tribute to our legal advisers, Professor Adam Tomkins and Professor Richard Rawlings, for their indispensable assistance. I am astonished that the Minister in his opening remarks made no mention whatever of our report. He mentioned other reports by other committees but he said nothing about the report of the Constitution Committee. Are the Government not interested in the report of the Constitution Committee on this important issue? Do they not wish to engage with the reasoning of the Constitution Committee on this important matter? Do they have, as the noble Lord, Lord German, asked a few moments ago, any answer to the reasoning and conclusions of the Constitution Committee? Surely, the House is entitled to know from the Minister, when he opens a debate at Second Reading on these matters, what the Government say about a report of this nature on constitutional issues.

Let me deal with the two issues in turn—first, on the fast-tracking element of the Bill. Your Lordships’ Constitution Committee published an earlier report, the 15th report of Session 2008-09, specifically on fast-track legislation. We pointed out, as is obvious, that there are real detriments when Parliament is asked to fast-track legislation. It means that there is no adequate time for committees of this House and the other place to consider and report on the implications of the proposed legislation. It means that persons and bodies outside Parliament have no proper opportunity to make representations to provide information to Members of each House. It also means that Members of the two Houses, as the Bill goes through its parliamentary stages, have no proper opportunity to consider its implications, propose amendments, reflect on matters and debate with Ministers outside the Chamber as to the proper way forward. For all those reasons, it must be obvious that fast-track legislation needs a compelling justification. It should be reserved for the most obvious cases of emergencies that of course occur from time to time. However, a compelling justification is needed.

What is the position here? It is clear; on 12 February in the Court of Appeal, the Government lost a case about jobseeker’s allowance. That is when the judgment was handed down. What did the Government do? They acted with commendable speed in one respect; on the very same day, they introduced fresh regulations that cured the legal defect prospectively from 12 February. The Government were able to act speedily because they knew what the judgment was going to say; they and the other parties are told by the Court of Appeal two or three days in advance the contents of the draft judgment in order for them to comment. The Government were therefore able, very properly, to act speedily.

The only remaining issue relates to the payment of benefits to those persons who refused to comply with the unlawful regulations prior to 12 February—the retrospective effect. What did the Government do? They took four weeks to address the matter. They laid the Bill before Parliament last Thursday, 14 March. Despite the fact that they took four weeks internally to decide what to do, they then told Parliament—I suppose, more accurately, they asked Parliament—to consider the Bill within just over one week, with one day in the Commons and two days for all stages in this House.

All that is in the context of there being no urgency whatever for this unseemly haste in parliamentary procedure. Why is there no urgency? It is for this reason: the problem has been cured prospectively by the fresh regulations. There is no urgency in relation to those denied benefits for the period up until 12 February, the retrospective effect, because the Secretary of State is appealing to the Supreme Court, as he is perfectly entitled to do. The law states that while an appeal is pending in the Supreme Court—while the Secretary of State is seeking permission from the Supreme Court to go there—there is no obligation on the Secretary of State to pay a penny back to the individuals who have been denied their benefits. If your Lordships are interested, it is Regulation 16 of the Social Security and Child Support (Decisions and Appeals) Regulations 1999, Statutory Instrument 991. Therefore, there is no immediate urgency.

As I said, the Secretary of State has sought permission from the Supreme Court to appeal there. Again, in stark contrast to the urgency with which he requires Parliament to address this Bill, the Secretary of State’s appeal to the Supreme Court is being conducted in the most leisurely of fashions. I shall tell your Lordships the facts. The Court of Appeal refused the Secretary of State’s application for permission to appeal on 12 February—the date of the substantive judgment. The Secretary of State has 28 days to apply to the Supreme Court for permission to appeal. When did he make his application? He made it 28 days later on 12 March, last Tuesday—the day of the deadline. The form that a party fills in when applying for permission to appeal to the Supreme Court asks whether the proposed appellant is seeking an expedited hearing and it contains a box for the answer. The Secretary of State ticked the box stating no.

As your Lordships will know, courts regularly order speedy hearings in urgent cases. I have contacted the chief executive of the Supreme Court, Ms Jenny Rowe, and she has confirmed to me what your Lordships would expect: that if an application for expedition had been made by the Secretary of State in this case, the Supreme Court would of course, as in any other case, have given it careful consideration. If appropriate, the court would have heard the matter speedily and it would, if necessary, have taken another case out of the list to accommodate this one.

We have the quite remarkable situation that the Minister is asking Parliament to fast-track this legislation, with all the detriments that that involves, even though there is no urgency at all in that he has no duty to pay up £130 million, or whatever the figure is, while an appeal is pending, and even though he has taken four weeks to prepare the legislation, and while he is conducting the appeal proceedings in the most leisurely manner possible. Therefore, there has been a distinct lack of urgency by Ministers in bringing the legislative proposals before Parliament and no urgency whatever in the Government’s approach to the appeal in the Supreme Court. The only expedition or emergency is here in Parliament, denying us a proper opportunity to reflect on and debate the legislative proposals in a properly informed manner. Reference has already been made to the report of your Lordships’ Constitution Committee. When we considered the Bill, we set out the circumstances and concluded at paragraph 11:

“For these reasons, we are unable to agree with the Government’s assessment that it was necessary for the Bill to be fast-tracked”.

I have explained to your Lordships why I take that view.

I ask the Minister to answer three questions on this topic. First, what is the urgency, given that the prospective regulations are in place and that while an application for appeal is pending there is no duty to pay out a single penny for the period prior to 12 February? Secondly, if this matter is so urgent, why did it take four weeks to bring the Bill before Parliament, and how can it possibly be justified to give Parliament only one week to consider the issues? Thirdly, if the matter is so urgent, why wait four weeks before seeking permission from the Supreme Court to appeal and why not seek an urgent hearing in the Supreme Court?

My second objection to this Bill—I shall be more speedy on this subject—is its substance. If the Secretary of State’s appeal were to succeed, the problem would go away. Those denied benefits for the period up to 12 February were correctly denied benefit and they have no claim. But if the Supreme Court upholds the judgment of the Court of Appeal or if, as I suspect will happen if this Bill is enacted, the Government do not pursue an appeal, this Bill will impose a penalty on persons who acted lawfully under the law as it existed prior to 12 February. They are being penalised for refusing prior to 12 February to act in a manner in which they had no legal duty to act.

The Bill therefore offends against a basic constitutional principle that people should be penalised only for contravening what was at the time of their act or omission a valid legal requirement. If this Bill becomes law, Ms Reilly, the claimant in the case, and others will be penalised for failing to attend schemes when at the time of their refusal they had no legal obligation to do so. It is quite irrelevant that the people adversely affected are jobseekers. Indeed, one might think that if the victims are from the most disadvantaged section of society, it is all the more important to maintain basic elements of the rule of law.

I have seen a letter dated 18 March from the Minister to the noble Lord, Lord McKenzie, explaining the Government’s position. For reasons I do not understand, the letter was not sent to the chairman of the Constitution Committee but we did receive it by a very indirect route. One sentence on page 2 of the letter, the substance of which was repeated today in the Minister’s opening remarks, stands out. The Minister said:

“It would … be unfair if claimants who have failed to comply with requirements … obtained an undeserved windfall payment”.

The Minister repeated that language today.

That approach misses the central point which I have sought to emphasise. The claimants complied with all lawful requirements in existence at the date of their conduct. It may cost—who knows?—£130 million as a result. But I take the view—I hope that I am not the only noble Lord who takes the view—that the rule of law is simply priceless. One cannot put a price on complying with the rule of law and basic constitutional requirements.

Your Lordships’ Constitution Committee has drawn attention to these matters at paragraphs 13 and 14 of our report. At paragraph 15, we concluded:

“In scrutinising this Bill, the House will wish to consider whether retrospectively confirming penalties on individuals who, according to judicial decision, have not transgressed any lawful rule is constitutionally appropriate in terms of the rule of law”.

I would be assisted if the Minister would answer that point and would address the reasoning and the concern of the Constitution Committee.

I am not impressed by the arguments that the legal defects identified by the Court of Appeal may have been technical in nature. That is quite irrelevant. The point is that the Court of Appeal found—this is the law unless overturned by the Supreme Court—that the regulations were unlawful and the people who failed to turn up for job schemes were acting perfectly lawfully under the law at that time.

In conclusion, I say to your Lordships that there is no justification whatever for fast-tracking this Bill. Moreover, if that were not bad enough, its contents offend against a basic constitutional principle. I very much regret that this Government should see fit to bring forward such a legislative proposal. If the noble Lord, Lord McKenzie, chooses to divide the House on his regret Motion, or perhaps more accurately his deplore Motion, he will have my support.

16:20

[Baroness Hollis of Heigham]

My Lords, like others in this House and like my noble friend Lord McKenzie, I have been in the Minister’s shoes. Let us be clear, therefore, that I, like him I am sure, support work programmes that skill claimants. I remember when one lone parent told me, “I have a future now”. I support them as long as DWP accepts good cause or good reason when the programmes are not appropriate. I therefore also support sanctions for people who can and should seek work but who knowingly refuse to do so without good cause, because without such sanctions the programmes become merely voluntary. I support these sanctions becoming increasingly tough so that the person knowingly refusing to comply becomes aware of the increasingly severe consequences of their actions. However, because I want to change behaviour and encourage good behaviour, I support the lifting of sanctions when the individual complies and comes into the Work Programme. While those sanctions last, I support a level of hardship payments so that vulnerable people—for example, children—have some degree of protection.

Such a simple, clear approach requires simple, clear communication with all claimants. I would hope that that is common ground around this House today. However, I say to the Minister that with this Bill the Government are not simply remedying some minor technical slip-up by the department, as Ministers would want us to believe. This Bill trespasses quite improperly on to new ground in four ways. Two of these have been well argued, by the noble Lord, Lord Pannick, in particular. It uses emergency legislation, normally reserved for national security issues. Why? It does so because the Government are not willing to trust the British justice system, presumably because they feel that they would lose in the Supreme Court. That is profoundly disrespectful to claimants. Therefore, we cannot scrutinise the Bill as we should, we cannot take it through the proper stages as we should, and, as the noble Lord, Lord Pannick, said, it is an abuse of Parliament. Worse, the Government make the Bill retrospective. Unlike the noble Lord, Lord German, I do not recall any retrospective social security Bill. It means, as the noble Lord, Lord Pannick, has said, that we are punishing people for actions which the courts have ruled were legal at the time they were committed.

My third objection is that the Government knew of the problem. The Social Security Advisory Committee, whose job it is to scrutinise regulations, warned that they were flaky, and the Government, as is their wont, ignored it. The Government, therefore, knowingly disregarded the very body set up to amber or red-light their regulations.

My final objection is that these so-called technical mistakes were far from technical. I ask your Lordships to remember that sanctions are not there to cut the benefit bill. They are there to change behaviour and bring people into the Work Programme. To change behaviour, you need to understand your client base and communicate effectively. That client base, at risk of sanction, is not for the most part made up of schemers, skivers or fraudsters, because that requires ingenuity, alertness and a certain competence. No; the sanctions pool includes the chaotic, the incompetent—unlike, of course, the DWP—the confused, often those with poor mental health, learning difficulties, weak organisational skills, and the functionally illiterate. It includes lone parents, the depressed, the poorly educated, and those with needy ADHD children. It includes young men, thrown out of their mother’s home by a new stepfather and now sofa surfing and living hand to mouth without any routine.

How did the Government handle this client group before the court intervened? First, they told clients that their sanctions from the Work Programme could last up to 26 weeks, but the department failed to mention that the first offence would require a sanction of only two weeks, the second of only of only four weeks, and only subsequent offences of six months. Secondly, and more importantly—and this is certainly not technical—they failed to tell claimants that they could end their sanctions by doing what the Government and all of us want them to do, which is to comply with the Work Programme. Thirdly, the Government in their letters failed to draw attention to the underpinning of a hardship regime which protects vulnerable people and children from, frankly, going hungry.

Not to tell people about this step approach to sanctions, not to tell them how they can end the sanctions and not to tell them that they could access a minimal hardship payment is not merely a technical failure but a travesty of our responsibility to claimants, many of whom, I repeat, have chaotic lives, poor mental and physical health, limited literacy and are highly confused and vulnerable.

The Minister assumes, as always, economic rationality, yet he knows as well as I do that most people sanctioned did not know that they could be sanctioned or what they were sanctioned for. The DWP’s own research, report 523 in 2008 and report 767 in 2011, revealed that between a half and two-thirds of those sanctioned did not know that this could happen and that, when it did, they did not know why. In some cases, because they were already having their benefits stopped to repay crisis loans, they were not even aware that they were being sanctioned at all. Benefit cuts therefore appeared to be something just arbitrarily happening to people like them to make them poorer. As the research concluded, not surprisingly the benefit sanction had little impact on their job-seeking behaviour because of the lack of clarity of communication. That is the Minister’s client base. Just think about it.

We are trying to change behaviour, rightly. We may be trying to instil sensible habits, organisation and reliability, rightly. How will that happen if the sanctioned person does not know he is being sanctioned, why he is being sanctioned, what he can do appropriately to end the sanction, or what, if he is in hardship, he and his children can do to survive in the meanwhile? He has been made, so to speak, a financial outlaw without knowing why and what the law is that he is sanctioned for breaking.

I do not challenge at all the right to sanction people who should but knowingly refuse to participate in the Work Programme. The word is “knowingly”. Those letters sent out by DWP did not tell claimants what they could and should expect if they did not comply—claimants who, above all, needed simple, clear information. The Appeal Court held that it should have done and it did not. That is not merely technical—it really is not—it is key to the moral as well as the legal validity of the entire sanctions process.

The noble Lord, Lord Freud, suggests that the Government should not have to pay out the £110 million to £130 million or so to rectify their mistakes to people who should have behaved differently and that the money would therefore have to be found elsewhere. I ask noble Lords on the coalition Benches mentally to replay this miserable tale, but this time substitute HMRC for DWP and taxpayer for claimant. If the Court of Appeal found that HMRC had acted illegally in fining—that is, sanctioning—taxpayers for, say, late submission because HMRC had failed to make taxpayers properly and fully aware of the fining/sanctioning regime, and that as a result the court argued that the fines collected were deemed to be illegal, what would the coalition Back-Benchers be arguing? Would they support emergency retrospective legislation to make legal what the courts found was illegal in order to avoid repaying those improperly collected fines? Somehow, I think not. Noble Lords on the Benches opposite might even be outraged that the Government were seeking to make legal what had been ruled by the courts to be illegal. They might even think that HMRC was trying to put itself above the law because it had the power to change the law by rushing a retrospective Bill through Parliament. They might think that and they would be right.

The DWP got it wrong; it is deeply regrettable, but it happens. What it must not do is rush through retrospective legislation in indecent haste to insulate itself from the consequences of its own mistakes and seek to make legal what was illegal. If any claimant tried that line, they would be sanctioned. Perhaps the department might regard our amendment as such a sanction.

16:31

[Lord Bach]

My Lords, it is hard to think of a more unattractive, more unappealing and more unworthy Bill than this one. In its damning report, our Constitution Committee condemns the constitutional basis on which the whole Bill rests in direct and straightforward terms. Whether it is the issue of fast-tracking, of retrospection or, tellingly, a combination of the two, the report is unambiguous. I am not going to waste the time of the House by repeating the findings of the committee, rather, I shall mention comments made by two other organisations outside of this House. I certainly would not agree with the philosophy of one of those organisations because it is a campaigning group called Boycott Workfare. It puts the case about this prospective Bill rather differently from the Constitution Committee, but the implication is the same:

“This is almost unbelievably disgusting … [DWP] broke the law, now they want to retroactively change the law so that they didn’t break the law in order to keep £130 million out of the pockets of some of the poorest people in the country”.

The much criticised PCS union has surely got it right:

“The bill would set a dangerous precedent if passed—sending the message that when citizens defeat the government in court, it can overturn the court ruling retrospectively with primary legislation—effectively making the Government above the law”.

Of course, this is not the first time that the Government have behaved in this high-handed and unprincipled way, described by the noble Lord, Lord Pannick, in his brilliant speech as an abuse of power. Next week there will be a slightly more minor issue, but in my view still an important breach in the way a Government should behave. The House will debate the Government’s refusal to take any notice at all of the views of this House, reflected in a vote by this House, on a regulation arising from the legal aid Act. This state of mind and attitude towards law making is deeply worrying. The basic thing that Members of this House must do, from wherever we come, is to scrutinise Bills of this kind with particularly specific care.

It is, of course, obvious what the Government ought to do as a consequence of this debate: they should withdraw their Bill and expedite their appeal to the Supreme Court. However, on the assumption that they will not do the obvious thing, and that the Bill somehow becomes law, I will deal with one aspect of it, as briefly as I can. Clause 1(13) reasserts what of course should be obvious, which is that a person may,

“apply for a revision or supersession of, or … appeal against, a decision to impose a penalty”.

That is of course as it should be. We know that a person is entitled to show good cause or reason why they should not have privileges taken from them.

However, something essential to a person’s right to appeal is about to disappear. It is not, of course, mentioned in the Bill, nor is it talked about by the Government and nor is it really talked about by the media outside. It is a sort of guilty secret. It is the right to legal advice, paid for, if the person is eligible, by legal aid. Today, as we speak, a person who wished to appeal a mandatory recommendation would be entitled to legal aid to get some basic, fairly cheap, quality advice. A person seeking to appeal to the First-tier Tribunal would be entitled to legal aid for such advice. Whether it was the mandatory reconsideration or the next stage, the First-tier Tribunal, they would be entitled, if they were eligible, to legal aid. If we move forward 10 days to 1 April, that entitlement that they have now will no longer be there and they will not be entitled to legal aid. It is obvious that many of those involved in the Work Programme would be eligible for legal aid today. They are on JSA, many of them are young and many more of them will be without means in any event. Part of the value of advice is that it weeds out the hopeless case, so that the system is not clogged up with them. Another advantage is that it encourages the good case, ensuring that people are not, as in this case, being wrongly sanctioned when they otherwise might face no action. However, its greatest value is that it is fair and that it has been an important part of our legal system, and will be up until 1 April. My question to the Minister therefore is this: if the Bill is passed, will the Government ensure that all those who are sanctioned will be able to access advice, either on reconsideration or on appeal, if they want to? That is the position today and surely it should be the position in 10 days’ time.

Finally, I come back to one of the comments that my noble friend Lord McKenzie made in his speech and a question that he posed. If the Government refuse, then is it not clear that those persons whose cases have been stockpiled because of the unlawfulness of the regulations, and who want to appeal the sanctions decision made against them some time ago, will be put in a much worse position because of the Government’s incompetence? How can that be justified in these, or in any, circumstances? I look forward of course to the Minister’s reply. I hope he will reply to the questions that he has been asked by noble Lords around the House. The House is entitled to that, particularly given the circumstances of this Bill. I do not envy him his task in justifying the Bill. Whichever way you look at it, this is no way for a Government in a mature, responsible democracy, to behave towards their citizens.

16:39

[Baroness Lister of Burtersett]

My Lords, I support the amendment in the name of my noble friend Lord McKenzie of Luton. The amendment just about says it all: incompetence leading to retrospective legislation; unjustified fast-tracking; and the need for various assurances, to which we will return in Committee. I simply want to add two points, as well as reflect on the implications of retrospection.

My first point is a brief social policy one. I accept the Minister’s point that the case was not about the substance of the policy, but that is the context in which it is being debated and it helps explain some of the anger that is being expressed outside this House.

Of course, as my noble friends have said, we are not arguing that there should be no sanctions. Despite all the political talk about social security having been for too long all about rights and no obligations, benefits for unemployed people have always been conditional on requirements associated with paid work, and if those conditions are not met there has always been some form of sanction. However, over recent years, those requirements have been extended to groups not previously expected to seek work, and have become increasingly onerous. At the same time, the sanctions regime has been ratcheted up further to new heights under the Welfare Reform Act 2012, while at the same time the hardship provisions are being weakened.

Cait Reilly, the young woman whose appeal has led to this Bill, was required to give up voluntary work that she was doing at a local museum, which was highly relevant to the kind of paid work she hoped to pursue, in order to participate in a sector-based work academy placement that required her to give her labour for nothing. What was the sense in that? Ms Reilly commented that she agreed that,

“we need to get people back to work but the best way of doing that is by helping them, not punishing them”.

It is hardly surprising that claimants are experiencing this sanctions regime as punishment, because it is increasingly punitive. That is one reason why we need an independent report into the sanctions regime that goes wider than the one provided for in the Bill. We will return to this matter in Committee, as my noble friend Lord McKenzie has said.

My second point concerns the human rights implications of this miserable Bill. I speak as a member of the Joint Committee on Human Rights, but I cannot speak for the committee because the fast-tracking of this Bill has made it impossible for the committee to scrutinise it, as the noble Lord, Lord Pannick, has hinted. This is also to be deplored. Although there has been no formal human rights memorandum, the Explanatory Notes contain almost a full page explaining why the Government believe that the Bill is compatible with the European Convention on Human Rights. Yet it is clear from how it is couched that the Government acknowledge that they could face a challenge on the grounds that the legislation interferes with property rights under Article 1 of Protocol 1 of the ECHR. Indeed, they implicitly accept that there is such interference when they state that,

“any such interference is justified as there are compelling public interest reasons for doing so, given the significant cost to the public purse of repaying previously sanctioned benefits, and as the aim of the proposed legislation is intended to restore the law to that which Parliament intended”.

The Government also concede that:

“A claimant might also argue that legislation which removes their right to a refund of sanctioned benefits, or allows the Secretary of State to impose a sanction, notwithstanding the Court of Appeal’s decision, is a breach of their right of access to court under ECHR Article 6”.

They go on to explain why they believe that this is not the case, but end by saying:

“Even if the proposed legislation would interfere with a right of access to court, the Government considers that the interference is justified for similar reasons as for Article 1 of Protocol 1”.

Reading this as one of the few non-lawyer members of the JCHR, the Government seem to be well aware that they are treading on thin ice with regard to the human rights implications of this Bill and that at the very least there is a case to answer. As it happens, the notice of objection lodged in response to the Secretary of State’s appeal to the Supreme Court argues:

“The actions of the Secretary of State and the Act, if enacted, represent an interference in these proceedings that is contrary to the rule of law as protected by Article 6”.

This legislation is in effect interfering in the proceedings of the Supreme Court and pre-empting any decision that it might make. This is a serious matter. The Minister said in his opening remarks that the Bill would not affect the case before the Supreme Court. I did not quite understand that, so perhaps he could explain more fully in his response.

The notice of objection goes on to state:

“Mr Wilson would also wish to contend that the retrospective imposition of benefits sanctions on him represents a violation of Article 1 of the First Protocol”.

It is therefore clear that serious human rights questions are raised by this Bill, but that, because it is being fast-tracked through Parliament, having been pondered over for a month in the department, as underlined by the Constitution Committee—I was not convinced by the Minister’s response on that to my noble friend Lord Foulkes—the committee charged by both Houses of Parliament to advise on such matters has been prevented from doing so. This is surely a disgrace. The committee has already been effectively circumvented by the speed of passage of the Welfare Benefits Up-rating Bill through Parliament, despite its clear implications for the social and economic human rights of children, when it will cast 200,000 more children into poverty.

I return to the Bill in question. On the day after a Budget that says we can afford to cut the cost of a pint of beer, never mind the tax cut to be enjoyed by the highest earners next month, we are told that it is justified to override constitutional and human rights principles—which the noble Lord, Lord Pannick, said were priceless—for the sake of £130 million. Of course, we are then threatened with this £130 million being taken from elsewhere in the social security budget if Parliament refuses to go along with this charade.

As a lay person, I have been trying to get my head around the implications of retrospection. It seems to me like legal science fiction where the Government are able to operate in a parallel universe where they can say that what happened did not happen by the strike of a legal pen, or, more to the point, that what did not happen—that is, adequate notification to claimants of their legal position under the sanctions regime—did in fact happen. Somehow by the stroke of that legal pen, the administrative law principles enunciated by Lord Justice Pill and Sir Stanley Burnton in the Court of Appeal decision of 12 February can simply be set aside.

Sir Stanley Burnton made the point that:

“There is a constitutional issue involved. The loss of jobseekers’ allowance may result in considerable personal hardship, and it is not surprising that Parliament should have been careful in making provision for the circumstances in which the sanction may be imposed”.

He also said:

“The Secretary of State cannot avoid the requirements of the Act in relation to schemes by calling them programmes. It would be absurd to conclude that a scheme is subject to the statutory requirements only if the Secretary of State decided to call it such”.

Reading the judgment and reflecting on this legislation, it struck me that the parallel universe that I mentioned could have been devised by Lewis Carroll. Noble Lords will recall the pointed exchange between Humpty Dumpty and Alice in Through the Looking Glass:

“‘When I use a word,’ Humpty Dumpty said, in rather a scornful tone, ‘it means just what I choose it to mean—neither more nor less.’ ‘The question is,’ said Alice, ‘whether you can make words mean so many different things.’ ‘The question is,’ said Humpty Dumpty, ‘which is to be master—that's all’”.

Unfortunately, in fast-tracking this legislation, the Government are proving that they are master—and abusing power, as the noble Lord, Lord Pannick, put it—and that they can make ultra vires regulations mean in retrospect what they wanted them to mean. Moreover, as the nub of the Court of Appeal judgment was that the claimants were not provided with the legal certainty required by the law, they are saying that they can create legal certainty in retrospect where legal certainty did not exist: a true Humpty Dumpty stroke if ever there was one. However, just because the Government are master, it does not make them right. I therefore hope that noble Lords will express their unhappiness with this fast-tracked, retrospective, constitutionally and human rights-dodgy legislation by supporting my noble friend’s amendment.

16:49

[Baroness Sherlock]

My Lords, what a sorry state of affairs we find ourselves in. I almost feel sorry for the Minister, or I would if this shambles were not entirely of the Government’s own making. This debate has made clear the depressing, and I suppose rather shocking, extent of the Government’s failings. It seems as though crucial regulations underpinning the conditionality regime of the Government’s flagship, if utterly useless, Work Programme, as well as various other schemes, have been ruled unlawful by the Court of Appeal, and the Government now want to rectify the problem that they have created by forcing this Bill through Parliament at breakneck speed.

My noble friend Lord McKenzie made the point that the Constitution Committee has said clearly that it disagrees with the Government’s assessment, and we have now heard that, as it were, from the horse’s mouth in an extraordinarily powerful speech from the noble Lord, Lord Pannick. This is only the fourth time that I have spoken from the Dispatch Box in your Lordships’ House, but I suspect that if I were spared to do so another 400 times I would never begin to match the power of a speech like that, and I congratulate him. I am glad that it is the Minister, not me, who has to respond to it. The point that the noble Lord made, which I think is very interesting, is that the Government, having decided that the matter could take four weeks to consider from the time when they got the new regulations laid and enforced in this House, suddenly decided that there was a panic. I would like the Minister to return to this in his response.

In response to my noble friend Lord Foulkes, I think the Minister implied that the Government spent those four weeks considering all the various options before deciding on this deeply attractive one out of the collection. Will he explain why the Government did not consider the options before the decision? Presumably there were always two possible outcomes from the judgment, yes or no, so it would have been possible for them to spend time in advance of the ruling considering what they might do if they lost the case. Why did they have to wait for four weeks to consider the options and then come to Parliament to tell us that, having waited for four weeks, we had to rush through this in days? I will be interested to hear what the Minister has to say.

The shambles is even more annoying because the Government were warned. The Minister seemed to imply that the Social Security Advisory Committee did not tell them that the regulations were illegal, but perhaps he could help me. I understood that the committee drew attention to the overly wide scope of the regulation that was being used. Was that not one of the points on which the Court of Appeal found against the Government? If not, perhaps he could correct me, and I invite him to do so now if he wishes.

[Lord Freud]

The point that was being made by the SSAC about the width was that it meant that it was not necessary to come back to Parliament for specific approvals on particular schemes. It was not that this was likely to be against the law. The point was about parliamentary oversight.

[Baroness Sherlock]

I thank the Minister for explaining that, but of course it was on precisely the fact that parliamentary oversight and scrutiny of the nature of these regulations is important that I understand the Court of Appeal found against the Government. At the very least, this was a pretty heavy hint from the Social Security Advisory Committee, one that the Government managed to ignore completely.

Then there is the issue of retrospection, to which I barely need to turn after the speech from the noble Lord, Lord Pannick. As my noble friend Lord Bach noted, the worst aspect of this debacle is the combination of retrospection and fast-tracking. That is a particularly toxic mix, but it is what we are faced with. I look forward to hearing the Minister’s explanation of how the circumstances here make it necessary to bring forward this particular form of retrospection with this astonishingly foreshortened timetable, a point made by the noble Lord, Lord German. If the Minister’s response on that point is not compelling, I look forward to seeing the noble Lord join us in the Division Lobby should my noble friend Lord McKenzie decide to press his deplore Motion to a vote.

Like my noble friend Lord McKenzie, I am grateful to my noble friends Lady Royall of Blaisdon and Lord Bassam for trying to get us a few extra days to consider this matter. At least we now have the weekend to read the papers in more detail. I am also grateful that my right honourable friends Liam Byrne and Stephen Timms in the other place managed to get the Bill changed so that it would at least guarantee appeal rights for those affected by the sanctions process and ensure an independent review of that process.

It now falls to us in this House to do two things. The first is to register that this state of affairs is not right. The amendment in the name of my noble friend Lord McKenzie of Luton simply puts on record what we on these Benches think about the mess that the Government have got themselves into and the way they propose to get themselves out of it. I very much hope that the House will support it. We will then get down to the work that this House does best: doing our best, in the limited time that we have, to scrutinise the Government’s plans to ensure that there are no more disasters lurking in the undergrowth of this fast-tracked Bill.

There is a whole series of issues to which we will have to come back in Committee on Monday. For example, we know that appeal rights are to be safeguarded, but how can those appeals be robust when there is such a long time lag between the alleged breaches and the sanction being applied? As various noble Lords have said, how will the Government ensure fair treatment of a complainant who may have said that they had perfectly good cause not to comply with the requirement of a programme but who will struggle to evidence that months after the event? There is also the question of hardship. What kind of hardship regime will apply? The hardship regime is in the process of changing. How will the Government ensure that appropriate help is given to those who would suffer hardship as a result of sanctions?

Then there is the $64,000 question posed by my noble friend Lord Bach: will the Minister guarantee that anyone wishing to challenge decisions will have the same right to access to legal advice or aid as they would have done at the time the alleged breach took place, under regulations that have been found to be lawful?

There is so much more that I would like to ask, but we will have to wait until the dog end of Monday’s sitting, to which the remaining stages of the Bill have been confined. The message from today is clear: this is a shambles. I am beginning to wonder whether the Government’s entire approach to getting people into work is not itself a shambles. The evidence is clear. The Government are failing the unemployed of this country. They are failing to create jobs. They are failing to help them get back into jobs. Their flagship Work Programme—

[Lord Fink]

My Lords—

[Baroness Sherlock]

I am so sorry, I could not catch what the noble Lord said from a sedentary position. Let me share a view with him about the Government flagship Work Programme, on which the noble Lord, Lord German, spoke so movingly.

The Public Accounts Committee described it as follows:

“Actual performance was even below the Department’s assessment of the non-intervention rate—the number of people that would have found sustained work had the Work Programme not been running”.

It was worse than doing nothing. I do not regard that as a success. There are other ways to do this. The Minister is aware that if Labour was in power, it would create real jobs for the long-term unemployed: six months of a proper job for 25 hours a week on the minimum wage. It would be compulsory, because we have never had a problem with sanctions, provided that they are fair and robust—oh yes, and legal.

I do not suppose the Minister will see the light today on that point, so instead I look forward to hearing answers to the various questions that have been asked, especially those from the noble Lords, Lord Pannick and Lord German. Our expectations are high. As there are no sitting days between today and all the remaining stages, the Minister will have to answer all our questions today. Unfortunately, on this occasion, we cannot wait for him to write to us, unless he does so very speedily. Perhaps he will also take the opportunity to do one other thing: will he apologise to the House, to the nation and especially to all those affected for the shambles that his Government have created?

16:58

[Lord Freud]

My Lords, I thank noble Lords for their valuable and interesting contributions. I need to register some disappointment that the noble Lord, Lord McKenzie of Luton, has tabled this regret Motion on the Second Reading of the Bill. I am saddened by that approach particularly because it contrasts to the very constructive approach of his party in another place. I hope that he does not press the Motion to a vote.

I shall deal directly with the various points raised. The first is the point about government competence. The ESE regulations were drafted to be flexible enough to encompass a wide range of programmes designed to support jobseekers into work. Introducing new regulations for each individual scheme would have been more bureaucratic and expensive. We do not agree that the regulations were ultra vires, and have applied to the Supreme Court for permission to appeal. We believe that the primary legislation does not require that the regulations set out the fine details of each different programme, and, indeed, that was the position taken by the High Court. In fact, we believe that it is undesirable to do so and that this was not Parliament’s intention since a wide variety of possible arrangements could be made depending on the nature of the labour market conditions in particular parts of the country. It is important that we have the flexibility to amend these schemes to reflect the changing labour market conditions on the ground without going through a laborious legislative process which would delay change beneficial to the claimants.

I also want to point out that the ESE regulations were considered by the House of Lords Secondary Legislation Scrutiny Committee, the Joint Committee on Statutory Instruments and the non-parliamentary Social Security Advisory Committee, as I said in my opening remarks. None of those committees suggested that the regulations were outside the relevant Act’s powers. They raised different issues.

The Motion also makes reference to the High Court and Court of Appeal judgments that the letters provided did not contain sufficient information to claimants about the consequences of not participating in these schemes, a point which the noble Baroness, Lady Hollis, made with some vigour. That is not the Government’s view and that is why we have sought leave to appeal to the Supreme Court. Regulation 4(2)(e) of the ESE regulations simply required that the notice specify,

“information about the consequences of failing to participate in the Scheme”.

All our letters before the High Court explained that claimants could lose up to 26 weeks of benefit if they did not comply. That is clearly information about the consequences of failing to participate.

Claimants sanctioned under the ESE regulations knew perfectly well what was required of them. The notices that we sent to them clearly set out that they would face a benefit sanction if they failed to participate, and they have had detailed ongoing discussions with their Jobcentre Plus adviser about these schemes. The idea that these claimants failed to participate in these schemes because they knew that a court might decide that the regulations were ultra vires or the notice defective, particularly before any court case had been brought, is, quite frankly, ridiculous. There is no sensible case of unfairness to the claimants in this case.

As the noble Lord, Lord McKenzie, said in 2009 while debating the Welfare Reform Act in this very place:

“Of course there is a very easy way to avoid being sanctioned in the first place, which is to engage with the programme”.—[Official Report, 11/6/09; col. GC 136.]

These claimants failed to do so and must face the consequences of their actions. They are not deserving of a windfall payment as the result of a technical ruling by the Court of Appeal.

[Lord Pannick]

Will the Minister explain how it can be fair or a question of windfall when these claimants had no lawful obligation at that time to go on these courses? Surely that is the point. The Court of Appeal has so held.

[Lord Freud]

My Lords, it was clearly laid down in the primary legislation that that was an expectation, and they were informed by their advisers of that expectation. We are looking now at a subsequent finding by the Court of Appeal, on which we have asked for leave to appeal. However, nobody could have anticipated the finding, which is in dispute. There was a lot more information going to clients than was in that letter, because they were in communication with their advisers.

One of the fundamental points at issue here is that we are trying to design a much more flexible welfare system in which we individualise responses. That means that we do not send out loads of generic letters with long lines of prose about what will happen if you do this, that or the other. We are aiming to have a specific conversation with people through a flexible system.

[Baroness Hollis of Heigham]

My Lords, surely the Minister has accepted his own department’s research that up to two-thirds of those sanctioned did not understand that the failure to do as they were asked or told to do would result in a sanction. They did not know, and his department’s research confirms that.

[Lord Freud]

My Lords, I agree with the noble Baroness on this—the sanctions have not been well designed. We are redesigning the whole regime, as we did in the recent Act, to make sure that people understand what sanctions are about.

[Lord Low of Dalston]

My Lords, can the Minister help me on one point? I have been listening very carefully to what he said. As I understand it, he is telling us that the claimants fell foul of the legislation in terms of what it was anticipated to mean by the department. However, we all know that the meaning of legislation cannot always be anticipated with certainty when it is contested; it often requires a court decision to clarify what the legislation means. I think that the Minister is telling us that the claimants fell foul of the legislation as the Government wanted it to be interpreted but not, in fact, as it was interpreted. We have to look at what the Court of Appeal held to know what the legislation meant, not what the Minister hoped it might mean.

[Lord Freud]

As noble Lords know, we are seeking leave to appeal to the Supreme Court to test that specific matter. I will shortly come on to the point raised by the noble Lord, Lord Pannick, about why we have fast-tracked this Bill. However, we have explored all the avenues and have not taken a decision to fast-track lightly. We have looked at other measures to prevent this course of action but none provides a sufficient guarantee. People have been concerned about the four-week period. We have also spent a significant period discussing, through the usual channels, agreement to expedite this legislation.

Let me make clear why the retrospective legislation is necessary. The Government respect the general principle that Parliament should not legislate to reverse the effects of court judgments on past cases unless the situation is exceptional. However, it is entirely proper to enact such legislation if there is a compelling reason to do so. Perhaps I may spell out the three reasons which make this an exceptional case. First, there is significant money involved—£130 million—in very difficult, austere times. Secondly, the money would go to a group of people who neither expect nor deserve to obtain a windfall payment. These claimants knew exactly what was required of them. They failed to participate without good cause and were rightly sanctioned. Thirdly, this case is most unusual in terms of social security legislation.

[Lord Foulkes of Cumnock]

The noble Lord is repeating word for word what he said in his introductory speech. Why does he not reply and answer the important questions that have been raised? For example, why did he not ask for his appeal to the Supreme Court to be fast-tracked? Can he not answer the debate instead of repeating what he said at the beginning?

[Lord Freud]

I am doing my best to explain the reason why this is exceptional. I did not explain it in detail at the outset, so I am really grateful for the opportunity, reinforced by the noble Lord, to explain the exception.

The third reason why this is exceptional is to do with the nature of social security legislation. In almost all cases regarding social security decisions, the decisions of a court or tribunal are only prospective in nature. That is because the most common way in which to challenge a social security decision, including the underlying regulations, is to bring an appeal to the First-tier Tribunal. If that happens, the normal route is followed and the decision of the tribunal will not have a retrospective effect because of Section 27 of the Social Security Act 1998. It is only because there is an anomaly in the text of Section 27 that it does not apply to judicial review cases. That is something that I suspect that this Government will come back to, to clear up. It is clear from Section 27 that Parliament recognised that wholesale retrospective disruption of the social security system was not desirable. That is even more true in a case like this, when the beneficiaries of that disruption are not deserving of the windfall that they would otherwise receive. That is why this is exceptional.

I turn to the reason why we need to fast-track the Bill. I want to respond to the rather witty way in which the noble Lord, Lord Pannick, put his view that there was no urgency by explaining to him and other noble Lords that we have applied for permission to appeal to the Supreme Court. If we are not given that permission to go ahead—and that could come out any day—we immediately become liable to pay back the sanction money of £130 million. That is why there is particular urgency and that is why we are fast-tracking this legislation. We need to provide certainty to taxpayers that we will not spend this money in this way, unnecessarily. The department will endeavour to process the stockpile cases in a robust, transparent and efficient manner. While there is clearly a trade-off between robustness and speed, we will aim to do that as practically as possible.

[Lord Pannick]

I thank the Minister, who has been very kind. I have one more question for him. He says that it is necessary to have certainty, but why not wait until the Supreme Court rules? If the Government win, as they say they are so confident of doing, there is no problem. If they lose, they can bring emergency legislation before Parliament to clear up the matter in a few days before anyone can complain that they have not been paid out. Why not follow that route?

[Lord Freud]

The moment that there is a ruling—if there were to be a ruling—against the department, we would be liable from that moment to repay. What would we do? Would we obfuscate, say that we could not pay and were dealing with the paper work while we put through emergency legislation? We would be obliged to make the payments from the moment when the ruling came through. That is what this is about. It is why we are going ahead at this time and at this speed, which is clearly not something that we enjoy doing.

I turn to the review, which we have taken on in response to the Opposition in the other place requesting such a review. It will focus on the sanctions affected by the provisions of the Bill, which amount to roughly 25% of all JSA sanctions issued in the period. I have heard today concern from Peers about how DWP issues sanctions to JSA claimants more generally. I would like to make it clear that the department will discuss with the Opposition the terms of reference of the sanctions review. I assure noble Lords that the stockpile of claimants who are issued with a benefit sanction as a result of the legislation will receive the same information that is received by all claimants who are sanctioned for failing to participate in a scheme; namely, they will be told about their right to appeal, how to appeal and how they can go about claiming for hardship.

I will try to pick up as many of the questions that I have not dealt with as I can. I hope that the noble Lord, Lord Pannick, appreciates how closely we have studied the Constitution Committee’s report. I can tell him that Miss Reilly will not be affected by the legislation as she complied with the scheme that she was required to attend and was not sanctioned. I say to the noble Lord, Lord McKenzie, that we needed to put the regulations out within a day to keep mandating claimants going forward. The retrospective legislation required careful thought and an exploration of all the avenues. We also consulted the Opposition and the whole process took some weeks. I assure the noble Lord that there are absolutely no benchmarks or targets for sanction referrals. Sanctions will involve a temporary loss of benefit. We will not seek lump sums from people in work. We will look to use good cause and, for the more recent sanctions, good reason, but they are in practice the same.

As I said to the noble Baroness, Lady Hollis, a little earlier, the information given to claimants was not confined to what was in the letters. The sanction decision notice provides information on how to appeal and access other help. The noble Lord, Lord Bach, was concerned about legal aid. The first stage of the tribunal process is inquisitorial and legal aid is not required. It helps to ensure that everything that is relevant is considered. That is the job of the tribunal. I say to the noble Baroness, Lady Lister, that the Bill is compatible with the ECHR and will overturn some of the undesirable consequences of the judgment. That should not be done lightly but it is entirely proper to do so in the circumstances.

A number of noble Lords enjoyed having a go at the Work Programme. However, it has resulted in 200,000 people moving off benefits. The PAC report is somewhat premature in its conclusion about what is happening. I look forward to talking about that programme further in the months to come. I conclude by urging the noble Lord to withdraw—

[Baroness Lister of Burtersett]

I quite understand that the noble Lord has not been able to answer all the questions that were asked. However, will we get answers to those questions over the weekend?

[Lord Freud]

I have done my best to answer them. We will have a chance to go through some of these issues again in detail on Monday. I urge the noble Lord to withdraw his regret Motion. I commend the Bill to the House.

17:19

[Lord McKenzie of Luton]

My Lords, I thank all noble Lords who have spoken in support of the amendment. I say to the Minister that we did have a constructive approach this afternoon. This debate has focused clearly on a whole range of issues. I am bound to say that we still feel that the Minister is largely in denial over various areas or lacking information. Asserting that something is something does not make it a reality. That is disappointing thus far. The phrase which we particularly object to is that there is somehow a group of people who do not deserve a windfall when what they have done is to comply with the law as it stands. That cannot be right.

My noble friends have made powerful points on a whole range of issues, to which we will feel compelled to return when we get to Committee. Like others, I acknowledge the extremely important contribution of the noble Lord, Lord Pannick, who destroyed the Government’s case. I would say to the noble Lord that it would be very good if, from time to time, we could second him to the other place to help out with some of the deliberations there.

There is much still to discuss on this Bill in the short time we have available. Today, it is right that we register that the state of affairs which the Government have brought in respect of this matter is reflected in a Motion which deplores that position. I wish to test the opinion of the House.

17:21

Division 1

Ayes: 106

---

Labour: 89
Crossbench: 14
Independent: 1

Noes: 140

---

Conservative: 97
Liberal Democrat: 34
Crossbench: 8

Bill read a second time and committed to a Committee of the Whole House.

Higher Education in Science, Technology, Engineering and Mathematics: Science and Technology Committee Report

Thursday 21st March 2013 Lords Chamber

Motion to Take Note

17:32

Moved By

[Lord Willis of Knaresborough]

That this House takes note of the Report of the Science and Technology Committee on Higher Education in science, technology, engineering and mathematics subjects (2nd Report, HL Paper 37).

[Lord Willis of Knaresborough]

My Lords, I begin by thanking the members of the Science and Technology Committee for their superb contributions to this report, and the clerk and policy analyst for their excellent support. In particular, I thank Professor Sir William Wakeham, our specialist adviser, for his wise and expert advice, and David Willetts, the Higher Education Minister, for giving his time to meet the chairman and me to discuss a number of key issues arising from the Government’s response.

In their 2011 report, The Plan for Growth, the Government describe education as,

“the foundation of economic success”.

The report emphasised:

“Our economy needs to be … much more dynamic … and retooled for a high tech future, if we are going to create the jobs and prosperity we need for the next generation”.

As a committee, we agree, but the success of this strategy, as the Social Market Foundation report echoed last week,

“will depend crucially on the available STEM skills base”.

That is why we focused our efforts on examining whether the Government are using the available levers to support the higher education sector to meet the UK’s STEM skills.

We did not seek evidence on the recent higher education reforms, as we felt that it was too early to assess their repercussions. However, the committee recognised, in the absence of the expected higher education Bill, that there was an urgent need for the Government to set out their vision and priorities for higher education and for Parliament to have an opportunity to debate them. We hope that that will happen.

We start from a very strong base. We have an outstanding higher education system, with nine of our universities in the Times Higher Education top 100 world university rankings. In research, we are world-leading or a partner of choice in most areas of STEM, but there is evidence that we are not producing sufficient STEM graduates of appropriate quality to meet the challenges of economic growth.

Therefore, we began by attempting to define what was meant by a STEM graduate and we then considered the balance between supply and demand. Both proved to be very challenging tasks. The most common definition for STEM arises from the Joint Academic Coding System, or JACS. This is owned by UCAS and HESA and is a subject coding system across the whole of the higher education sector. However, the problem with the JACS system is that several subjects with little hard science, such as nursing, psychology, sports science, architecture and archaeological science, fall within the highest STEM bands and are given equal weighting to subjects such as chemistry, physics, engineering and maths, which are considered by most employers as the core STEM subjects.

The Government rightly claimed that there has been an overall increase in STEM qualifiers. However, despite modest increases in core STEM subjects, the majority of the increase has arisen from the popularity of so-called soft STEM courses. For example, forensic and archaeological science increased by 349% between 2003 and 2009, while engineering reduced by 3% and computer science by 27%. This trend towards soft STEM helps to explain why on analysis many STEM graduates face employment challenges in traditional STEM careers as core components of their degrees, particularly mathematics, have been studiously avoided.

The committee called on the Government to work with HESA and other stakeholders to apply a standard definition to STEM based on the competencies and skills a STEM graduate should possess and a STEM course should contain. Although the Government accepted the possibility of confusion, they proposed little action other than to discuss this with HEFCE and other stakeholders. Confusion over what constitutes a STEM course or degree is compounded by a lack of reliable data on supply and demand for STEM graduates. There is, of course, no shortage of data but they are often irrelevant, badly co-ordinated, difficult to interrogate and out of date. The principal source collected by HESA is difficult to access and expensive and confusing to interrogate.

LGC, a STEM employer, commented:

“We are not aware of any government-facilitated mechanism to feed our demands for graduate skills into the education system”.

The British Computer Society described HESA data as “misleading” and that,

“degrees with … little computer science content are bundled with true computer science degrees when calculating the statistics”.

The Academy of Medical Sciences commented that the,

“rules for collecting data on postgraduate students make no sense at all”.

Even the Home Office Minister, Damian Green, expressed surprise that it took HESA 18 months to provide statistics of degree starters. The Higher Education Minister, David Willetts, embarrassingly conceded:

“I accept that this is a problem; at the moment everybody is unhappy”.

Disappointingly, the committee’s recommendation for a single body to assume responsibility for the collection and analysis of data was dismissed. Perhaps the Minister could explain just what action is being taken to make data collection and analysis more effective.

The same confusion abounds as regards demand, with the committee reliant on non-governmental sources for analysis. STEM shortages in IT, computer gaming, visual effects, the power electronics sector and nuclear engineering, as well as more specific in vivo technologies for the pharmaceutical industry, were presented to the committee. The 2011 CBI survey on mapping the future of growth reported that 43% of employers were having difficulty recruiting hard STEM staff and forecasted a demand for a further 600,000 professionally trained STEM staff by 2017, requiring a 40% increase in STEM graduates. Just a month ago, a Royal Academy of Engineering report, Jobs and Growth: the Importance of Engineering Skills to the UK Economy, again emphasised the mismatch between supply and demand. The recent SMF report estimated a need for an additional 40,000 STEM graduates to meet demand, adding, quite chillingly:

“Given the home-grown STEM skills shortage, it is inconceivable that the Government’s planned rebalancing can take place in the short-term without substantial levels of migration”.

These are serious demand-side issues, so can the Minister tell the House what steps are being taken more accurately to predict demand needs in order that HEFCE and our HEIs can plan provision?

Inevitably, any discussion of STEM involves addressing provision in our schools. However, investigations into that were being undertaken by the Education Committee in another place so we confined our discussion to the role of mathematics in preparing students as potential STEM undergraduates. Despite the laudable attempts of successive Governments to improve maths provision, we have insufficient numbers studying maths beyond the age of 16, and the levels required, even at A-level, are inadequate to meet the demands of academia or industry. The recent PISA study demonstrated just how far behind our competitors we are, with the UK 28th in the international league table for maths for 15 year-olds. However, despite this lamentable performance, 85% of students give up maths at the age of 16. Our children do not have some defective maths gene problem; this is a problem with our schools. The recent Institute of Education Report, published last month, found that:

“The highest-achieving pupils in England can almost match the most able children in Taiwan and Hong Kong in maths tests at the age of 10. But by the time they take their GCSEs they have fallen nearly two years behind their Far Eastern counterparts”.

We recognise that much work is needed to raise standards pre-16, but given that maths is a fundamental building block for STEM careers, the committee recommended that all children should study an appropriate maths course between age 16 and 19. For students wishing to study hard STEM subjects in higher education, maths to A2 should be compulsory. The Government’s response was disappointing, to say the least. Simply requiring students who did not achieve a GCSE at the age of 16 to continue with that failed pathway misses the point. To be fair, Michael Gove said in the Commons on 7 February that his reforms to the national curriculum are intended to ensure,

“that the building blocks of a mathematical and scientific knowledge will be there in order to ensure that higher-level engineering qualifications can be enjoyed and achieved by a wider group of pupils than ever before”.—[Official Report, Commons, 7/2/13; col. 447.]

Hallelujah. Sorry, I should not say that.

Will the Minister explain what Mr Gove meant by this, and whether maths will, after all, become a mandatory component of all post-16 education programmes? Perhaps she can also clarify what progress is being made following Mr Gove’s announcement that he is committed to involving HEIs in the planning of the A-level curriculum. Again, I say hallelujah. That was a key recommendation in our report and resulted from a criticism by universities of the dumbing down of A-level maths standards which led Brian Cantor, the vice-chancellor of the University of York, to state,

“we have to give … remedial classes, often even to triple-A students”.

However, the recent Ofqual report concluded that there was a reluctance by HEIs to lead on any development of A-levels, so a clarification from the Minister would be helpful, as would an update on Professor Nigel Thrift’s discussions with universities in this key area. Our HEIs must also become more demanding about what they expect from students at entry. It cannot be in their interest to dumb down entry to hard STEM courses by removing the requirement for A-level maths. However, our report showed that in 2009 20% of engineering, 38% of chemistry and 60% of computer science undergraduates did not have A-level maths, while according to the ABPI 92% of bioscience undergraduate programmes do not require maths beyond GCSE. That is not acceptable.

Of course, the quality of what is on offer at our HEIs in STEM is not exclusively determined by mathematics, but it is a crucial ingredient in virtually every single STEM course. The committee was anxious to look at where other levers for quality lay and where the Government and the sector could do more to enhance quality.

On a positive note, there was significant support for the introduction of the KIS, the key information set, which, with continued improvement around areas such as data on destination, career paths, quality of teaching and skill acquisition, has the potential to help drive up standards and give students better information. We recommended that the KIS process be urgently extended to postgraduate study. Can the Minister say what progress HEFCE has made following its discussions to give postgraduates better information about courses and universities?

Two issues were constantly raised during our inquiry—postgraduate STEM education and immigration. STEM postgraduates play a significant role in driving innovation, undertaking research and development and providing leadership and entrepreneurship, and yet the Government have failed to convey to students or indeed employers the importance and the value of postgraduate study. It appears that postgraduate education has been the casualty of the higher education reforms, has resulted in a decline in STEM qualifiers in some key subjects, a decline in funding arrangements, particularly for taught masters, and confusion in the minds of many HEIs about the future of their postgraduate programmes, a situation compounded by uncertainties caused by perceptions over immigration.

While we were disappointed that our recommendation to set up an expert group to co-ordinate a postgraduate strategy with key stakeholders was rejected, we noted that HEFCE has been asked to consult stakeholders, including employers. Can the Minister say what progress has been made with those discussions and what outcomes have been agreed, particularly with regard to taught masters degrees, which appear to be being phased out despite their importance in up-skilling and retraining the UK work force.

However, the committee was supportive of the move to establish doctoral training centres and the research councils are to be warmly congratulated on maintaining and, in several cases, enhancing their support for doctoral training. There was some concern about a possible negative impact on the breadth of research, and in particular research that takes place outside DTCs. We also received evidence that there were problems in areas where no DTCs existed. For example, there is not a DCT for physics in the south-east and only one DTC for synthetic organic chemistry in the whole of the UK. How do we get round that and ensure that universities work together? What advice does the Minister have for HEFCE and to RCUK.

The committee was deeply concerned about the negative impact of the Government’s immigration policy, in particular the perception that the UK was hostile to overseas students, particularly from India and the Far East. There has been welcome movement. We welcome the support for our recommendation to make a distinction in the immigration statistics between HE students and other immigrants and the improved ONS methodology that will now allow a rational debate about student numbers, their programmes of study and their impact, although we were disappointed that they are not to be fully disaggregated.

We welcome the recognition that a lack of reliable statistical data, particular in-year data, is hampering both the effectiveness of the Border Agency to do its job, which creates some of the problem, and the higher education sector to promote and monitor good practice. We welcome the acceptance of our recommendation for the Migration Advisory Service to review its tier 2 codes and to consult employers on appropriate rates of pay rather than the £20,000 minimum level. The Prime Minister’s letter to Select Committee chairs still maintains the £20,000 figure. Can the Minister clarify whether we are going to consult employers about appropriate rates or stick to a £20,000 limit which, frankly, is nonsense in a number of areas?

However, we welcome the statement made by Mike Harper in another place when he confirmed that changes will be made to tier 4, which is what we had asked for in our report, to allow,

“talented graduates to stay and work after their studies. All completing PhD students will be allowed to stay in the UK for one year beyond the end of the course to find skilled work or set up as an entrepreneur”.—[Official Report, Commons, 14/3/13; col. 24WS.]

That is a very welcome addition and we should support it.

Following the Prime Minister’s visit to India, the battle to reverse the perception—we accept that a great deal of this is about perception—that the UK is unwelcoming to students is now under way. However, it will take more than a charm offensive to correct the current perception. While David Willetts’s pledge that there is no cap and that there are no plans to introduce a cap on student numbers is extremely welcome, the tough language coming out of the Home Office to reduce net migration to the tens of thousands continues to give the impression that, while students may be welcome to study here, they are not welcome to work and settle.

I am sure that noble Lords will wish to explore other aspects of the report in greater detail. Meanwhile, I commend it to the House. I beg to move.

17:50

[Viscount Hanworth]

My Lords, I thank the noble Lord, Lord Willis, for introducing this debate and I thank the members of the Science and Technology Select Committee for the very substantial report that we are considering today. The Government have responded to the report at length, which suggests that they fully recognise its importance.

The reason so few students pursue the STEM subjects in universities is that they are unpopular. Given that students have the freedom to choose and the lack of incentives that might direct their choice, this amounts to a mere tautology. A vicious cycle which has diminished the popularity of these subjects has been operating for many years. A lack of knowledge or experience of the STEM subjects among adults limits the perspective of students. A lack of teachers who are properly trained in science and technology prejudices the quality of STEM education in schools, which exacerbates the problem. One could ask how this vicious cycle has developed, but it is more important to think about its consequences and to wonder how it might be broken.

Britain has a peculiar cultural and social history that has militated against the survival of its scientific and technical competence. The members of the managerial classes in the UK have rarely been educated in science and technology, and often they have shown a palpable aversion to such matters. Even in the early post-war years, after Britain’s prowess in science and technology had done much to contribute towards the Allied victories, managers and workers were endeavouring to place restraints on technological innovation. Such innovation threatened the power of trades unions in entrenched positions. On the managerial side, the logic of cost accountancy demanded that in order to spread the overheads of investment in fixed capital, production should proceed without the seemingly gratuitous interruptions that tinkering technologists are liable to cause. The deleterious consequences of this managerial attitude were becoming all too apparent in the 1960s when one after another of our industries that ought to have been at the forefront of technological innovations were overtaken by foreign competitors.

The problems associated with a lack of industrial investment continued throughout the 1970s and into the 1980s, which was the era of mass destruction of British industry as well as a time of severe economic recession. The lack of opportunities for technically trained graduates was exacerbated by the growing tendency of firms to resort to contracting out when in need of technological or scientific services. The inevitable consequence of the lack of technically trained employees within business organisations was a failure to perceive the opportunities for technological innovation. The closure or curtailment, during this period, of many government scientific research establishments also had a negative impact on the pursuit of technological innovation in industry.

The 1960s had seen a marked increase in the number of students graduating from British universities as a consequence of the so-called Robbins expansion of higher education. However, the expansion was spearheaded by the liberal arts and social studies. This emphasis accorded well with the ethos of the time, which was decidedly libertarian. It was to a gentlemanly education that many of the recruits to universities aspired rather than to a technical education. This was doubtless a reflection of the way in which education has served, in this country, to signal and buttress social status. The continued relative decline of British industry also diminished the attractiveness of a technical education.

The University of Sussex, which was the first of the new Robbins universities, embodied the ethos of the times, and it adopted a novel multidisciplinary approach to the social sciences. It placed each of them in a wider context that was provided by one of several schools of studies: African studies, American studies, European studies and so on. However, it is perhaps ironical, given the emphasis the university has placed on social sciences, that it developed a greater reputation in the mathematical, physical and material sciences. The mathematics department in the University of Sussex was under the guidance of Walter Ledermann and led the way in a programme of applicable mathematics. Ledermann had developed a liking for concrete mathematics and a distaste for abstraction for its own sake. His attitudes were a reaction to what had gone amiss in the teaching of mathematics at the undergraduate level. Abstraction for its own sake had been the hallmark of much of European mathematics throughout the second quarter of the 20th century.

That tendency was exemplified by the work of a priesthood of French mathematicians who compiled a mass of literature working under the collective pseudonym of Bourbaki. The Bourbakistes were aiming at a completely self-contained, axiomatic treatment of the core areas of modern mathematics, based on set theory. In the main, they despised applied mathematics. Their rigorous approach, which is greatly impressive to professional mathematicians, permeated the discipline in a way that rendered many of the undergraduate courses virtually inaccessible to their students. It is this legacy that has been responsible, in part, for the demise of undergraduate mathematics in Britain. Noble Lords can imagine my dismay when, on visiting the University of Sussex a few years ago to give a lecture in the maths department, I discovered that the department had been virtually reduced to two men and a boy, who were housed in a broom cupboard. That this department should have suffered in the general demise of university mathematics in Britain seems to be singularly unfair, given the manner in which it had championed accessible mathematics.

Nowadays, departments of mathematics in universities treat their students in a very emollient way that differs greatly from their practice in the past. They need to do so on account of how ill prepared the students are on arrival at university, which is largely the fault of their education at A-level. I am not sure who has been teaching them but, in the main, they have learnt their mathematics in a way that is seriously lacking in conceptualisation. At school, the students are taught mathematics in an operational manner as opposed to a conceptual manner. That is to say, mathematics is taught as a series of recipes and, instead of learning a language, which is what mathematics is, they are learning the content of a phrasebook. Their memories are overburdened and, for most of them, the distinction between learning and understanding is lost. Examples of recipe-book mathematics are provided by the courses in statistics that are nowadays taught to many A-level students. This part of the syllabus has replaced the traditional diet of kinematics and dynamics, with the effect that many students are ignorant of Newton’s laws of motion, which renders them scientifically illiterate, in my opinion.

I welcome the proposal to make the study of maths compulsory for all post-16 students but am wary of a proposal that higher education institutions should introduce more demanding requirements for students intending to study STEM subjects. The fulfilment of that particular nostrum would require an enhancement of the maths education in schools, which is of course a primary objective. An enhanced provision of in-service training for maths teachers via colloquia and seminars would be helpful in this respect. It has been asserted, in particular by our colleague, Professor Winston—the noble Lord, Lord Winston—that children should be exposed to good mathematics teaching in their early years. That claim warrants some serious investigation.

Mathematics taught as an adjunct to a scientific subject tends to be unpopular with undergraduate students. It is seen as difficult and demanding and it gives rise, invariably, to what is nowadays described as a “bad student experience”. It should be clear that, when great emphasis is placed on the quality of the student experience, and when the testimony of the students themselves is how such experiences are assessed, the teaching of mathematics is under severe threat. It is in this connection that I find some of the things being proposed in the report which fall under the heading “Quality, standards and benchmarks” to be misguided and unhelpful. The report has repeated many of the nostrums of the Government’s higher education White Paper, Students at the Heart of the System. In order to mollify students who will be paying for the costs of their education, the Government have proposed to put them in the driving seat. The degree of their satisfaction will be measured in respect of all their taught courses. If this satisfaction is insufficient, sanctions will be applied to teachers and their departments. An inevitable consequence of this will be the curtailment of the unpopular technical modules that form an essential part of many undergraduate courses. Given that the discretion in such matters now resides with the administrators of universities as opposed to the academics, little attention will be paid to the circumstances that explain this unpopularity.

The report is most effective, in my opinion, when it is describing the hazards that have arisen from recent government policies. The effect of their policies on student visas will be to knock away the props that support many postgraduate courses in technical subjects. The lack of substantial financial provision for British postgraduate students to address the effects of the heightened university fees threatens to diminish their numbers even further. It would be difficult to exaggerate the deleterious effects that these policies will have if they are allowed to prevail for any length of time.

It is difficult to be optimistic when one believes that the effective remedies have little chance of being applied. The remedies would require raising the status of education and employment in science, technology, engineering and maths to a level that has not been reached for at least a generation. This would entail some generous expenditure. First, substantial bursaries should be granted to university students to pursue STEM courses, at both the undergraduate and postgraduate levels. Employers could also sponsor their technical employees to attend university courses, as many did in the past. It should be acceptable to them to indenture the persons whom they have sponsored in this way for a significant period so that they could derive a benefit commensurate with their outlay. They might thereby acquire the in-house expertise that has hitherto been lacking.

The Government could set terms for such arrangements that would be applicable to all industries, and they could give subventions to ensure that the arrangements will be profitable to the companies. The Government could also flout the laws of the European Union by giving favourable tax breaks to companies undertaking investment in new or enhanced technologies. Many other inducements of this sort could be described. They should go hand in hand with a programme aimed at spreading the message regarding the importance and the fascination of science and technology.

What will happen if we do nothing along these lines? Our economy will suffer a further decline. The extremes of wealth and poverty that we are already witnessing will be exacerbated and our society will be ruptured. The ownership of our national assets will pass into foreign hands. We will become a nation of helots, as we were in the darkest days of the Industrial Revolution, but this time it will be for reasons of our deindustrialisation.

18:02

[Lord Broers]

I, too, congratulate the noble Lord, Lord Willis, on obtaining this debate and on his excellent opening speech. I also thank the clerks for their support, and Professor William Wakeham for his invaluable and insightful advice. He knows as much about this field as anyone.

I will address my brief remarks to the issue of ensuring that science-based industries are supplied with the outstanding creative scientists and engineers they need to produce competitive, up-to-date products, across a full range: pharmaceuticals, automobiles, aeronautical components, IT and software-based systems, et cetera. These researchers are almost always postgraduates. Without them, modern technology companies cannot survive. The noble Lord, Lord Willis, has talked about this. The Government seem to have a blind spot when it comes to postgraduates.

The Select Committee report contains a number of recommendations that relate to postgraduates. I am going to concentrate on just one, recommendation 15, which suggests that,

“the Government set up an expert group to consider the supply and demand of STEM postgraduate provision in the UK and to identify weaknesses and areas of skills shortage”.

This recommendation was rejected by the Government. I believe this was a mistake.

Universities and industry have traditionally developed an understanding of their mutual interests by being members of the same international research communities. It was at conferences or through publications that industrial researchers met academics whose work was relevant to their products. This frequently led to companies retaining these academics as consultants and, as a consequence, their research students became aware of the interests of industry. Industrialists got to know who the most talented students were and could approach them to join their company or to support them through CASE studentships et cetera.

A striking statistic is that 76% of doctoral students are studying STEM subjects, of which I would expect at least 40% to be working in applied science or engineering. In today’s difficult financial times, the most relevant way to measure the success of their applied research is to find out how many of these postgraduate students have ended up working in industry in the field of their postgraduate studies. The best time to assess this is probably five years after they graduated. Many just leave and never come back to research, let alone research for industry. Technology transfer is most easily achieved through the transfer of people, and this is also an accurate measure of whether the technology has actually been transferred. I doubt that such data are available, but they should be. We have to know how much of our research is having an impact on real products in the real market. We keep boasting about our science base, but it is increasingly clear that it is placing only a few of our industries in a competitive international position. Let us find out what is actually the situation. If we are doing really well, 20% of our applied science and engineering research should be influencing products. I recall that in the US research laboratories I worked in for 20 years we regarded a laboratory as very successful if 20% of its research influenced new product development. Mind you, I am talking about research and not development; we always conflate these two, just showing how ignorant we are of that world. Research and development are different. Ten per cent was the cut-even point; let us find out how we are doing.

Regrettably, ever fewer companies today carry out research, as opposed to development, with the consequence that fewer UK industrial researchers are reporting state-of-the-art research and that the traditional meeting place for industry and academia is disappearing. Several of our successful companies have developed alternative ways of bridging to universities. They have the knowledge and skills to understand how to operate in the new environment, where academic research must play a much more important role than in the past.

This issue will not be solved by HEFCE consulting industry by using existing mechanisms as the Government’s response to the Select Committee report hopes. We need to understand better how we compare with others in the employment by industry of postgraduates in STEM subjects. A specialist group, headed by successful entrepreneurs and senior industrialists, needs to be formed and asked to determine whether we are internationally competitive in having our government-funded research taken up by industry and, if so, why we appear so low on the table of R&D spend as a fraction of GDP. As I have said, it is widely acknowledged that the best way to succeed in technology transfer is through the transfer of people. We need to know how many of our postgraduate students are working in industry and whether they have carried with them the research expertise and results that they gained while pursuing government-funded research at universities. We then need to reinforce the methods that the most successful companies have used to make up for a shortfall if that is what the data show.

As far as I can see, these data, and an understanding of what is influencing them, are not going to emerge using present mechanisms for interactions with industry. I therefore recommend to the Minister that means for obtaining these data be put in place and that the Select Committee’s recommendation be accepted. I ask the Government to reconsider their decision.

18:09

[Baroness Sharp of Guildford]

My Lords, I, too, thank my noble friend Lord Willis for an excellent report. I am a member of the Select Committee on Science and Technology at the moment, but I was not a member when this report was produced, nor was I a contributor to it.

It is timely for us to have this report now given that we have just considered the Budget and the need for growth has become very apparent. Yet one of the key elements that we see in growth these days—this was spelt out at some length in the Government’s growth strategy, which was produced by BIS in the past year—is the need to depend upon science and technology industries. However, we need to rebalance the economy away from consumption and towards investment, away from services and towards manufacturing, and away from low-tech areas and towards high-tech areas. In their strategy for growth, for example, the Government have given considerable emphasis to sectors such as aerospace, advanced manufacturing and life sciences.

Sustainable growth is also going to mean more for less. It will mean that we have to increase productivity substantially, and if we are going to increase productivity then we will have to increase the number of skilled and highly qualified members of the workforce; it is well known that the higher the skill level, the higher the levels of productivity. Yet the CBI skills survey estimates that around 42% of employers are reporting shortages in STEM skills. The survey by the Royal Academy of Engineering and the Big Innovation Centre, mentioned by my noble friend, estimated that by 2020 the UK would need around 104,000 new graduates in STEM areas every year. This compares to around 80,000 being produced at the moment, so there will be a shortfall of something in the region of 40,000 graduates every year with regard to needs.

Similarly, a recent study from MORI shows that we need around 87,000 graduates each year with at least level 4 skills, the HND level, in engineering. This compares with the figures that we have for 2009-10—incidentally, this is interesting with regard to what my noble friend Lord Willis said about HESA—because the most up to date figures that we have for the number of graduates that we are producing in the area of engineering are around 21,000. It became clear from the report that one can argue about the precise figures, but the general message is that we need more young people to take up science and technology subjects in our universities. That in turn means that many more young people have to think about science and technology when they are in school.

One of the most appalling statistics that I came across in the documents that I looked at in preparation for this debate was that only 20% of those who get good grades at GCSE in science pursue science through to A-level. If we are going to increase the number of those moving on to university, we have to increase the numbers at A-level, and there is a large number of people who could do that. Why do so few of those taking science as part of their GCSEs go on to take those subjects at A-level? One reason has already been touched upon by my noble friend: mathematics. Many students in our schools, for some reason or another, find mathematics difficult. In particular, our teaching of mathematics at secondary school seems to be deficient. At the age of 10, our best young people are as good as their international comparators, but by the time they get to 16 they have fallen behind by something like two years.

My own feeling is that the Government’s response to this by introducing the EBacc, and therefore putting a lot of emphasis not only on maths at GCSE but on having a reasonably broad range of subjects, including science, is helpful, and perhaps will help to get more young people taking science at GCSE level. However, I have great reservations about the reforms at the advanced level. While I welcome the rigour of mathematics at that level, I have great reservations about the dismissal of the AS-level. Quite a few students at the moment take AS-level maths as an intermediate qualification but do not go on to pursue it to A2-level. By getting rid of the A2-level in maths, we may find that those students do not try to take any maths at all at a further level.

I know that the Secretary of State is anxious to have an intermediate level maths examination, and I would certainly welcome that. However—this echoes something that I have heard the noble Lord, Lord Broers, say from time to time—I would welcome it if, instead of narrowing down specialisation at the age of 16 to just a few subjects, making it difficult to pursue both mathematics, science and an arts subject, we went down the route of the international baccalaureate, or something equivalent, whereby students keep a much broader range of subjects right through to 18. With our raising of the age of participation from 16 to 18, there was an opportunity to do that. It is an opportunity that we have missed.

The table on page 17 shows how out of line we are in not requiring continuing study of mathematics post-16. The table on page 23 illustrates how few students in the science and social science field take mathematics through to that level. It is not just about maths education. Another point touched on by the committee is careers advice. At the moment, if young people at the age of 13 or 14 do not make the right choices, they often cut off options later. Schools need independent careers advice from people who have knowledge of the world outside. Recent changes have changed the position of information, advice and guidance on careers, and schools are supposed to have independent advice, but, too frequently, they are now relying merely on a website and a telephone hotline, not providing that advice in person.

Many young people aged 13 or 14 have no idea what they want to do. It is very important that they can keep their options open. That is why I favour the wider route. They are unaware of the flexibility that there is later. It is important for them to have proper careers advice and information about universities where they can study different subjects in flexible ways at that stage.

My other point about schools concerns girls. One reason why those who get good science results do not continue is because they are girls. We know that relatively few young women go on to pursue science. There again, how important careers advice is. I would like more professional advice to go to those young women so that they know the careers that they could go into. At the moment, their own views are much too stereotyped. It is important that they should experience some of the wider options available.

I pick up two other important issues. It is not mentioned in the report, but it is significant that about 60,000 of the 300,000 young people entering higher education come not by the A-level route but by the BTEC route, the more vocational route. We need to put that alongside the academic A-level route.

It is important that as well as the more vocational route there is also progression to higher-level apprenticeships and the higher levels of BTEC, that progression is recognised and we develop not a two-tier system but a dual-track system so that it is possible at any moment to move across and upwards rather than feeling that there is a single-track ladder that takes you upwards. We need a dual-track system to higher qualifications. In the past, and even today, many of those who lead our leading engineering firms came up through the apprenticeship route rather than the academic route.

Finally, I shall say a word about postgraduate provision. Here I should declare an interest in that I was a member of the all-party Higher Education Commission that last year produced a report on postgraduate provision. I shall pick up two aspects of financial provision for postgraduate training. The first is that those who pursue taught master’s courses largely in order to develop the professional skills that are now needed in many of the more professional careers need a proper form of career development loan. The current system is not working, and it is vital that some new guarantee, perhaps, is given. It is reasonable that we could look to the private sector to provide the loans, but we need to get a much better mechanism for making them work. When the Government are prepared to put £5 billion behind mortgage guarantees, surely they could put some money behind this sort of guarantee. I would like to see it.

It is vital that we see proper funding of masters and PhD research studentships, which is up to the research councils. Like my noble friend Lord Willis, I think that the development of the doctoral research centres has its point, but it is also important that basic financial support for young people in studentships is there to encourage people from this country to go into postgraduate careers. As the noble Lord, Lord Broers, emphasised, postgraduate training here is a vital means of technology transfer.

This report raises a lot of important subjects for this country if we are to pursue the wishes that many Ministers have expressed to become a high-tech country dependent on science-based technologies and to develop our knowledge-based industries. The response from the Government has been disappointing in many respects, not least in relation to visas. In the past, because we have not been producing enough STEM graduates, we have been filling vacancies with migrants from overseas. Now we are shutting the door on those coming in from overseas. As far as we are concerned, however, it will be too late if we cannot grow our own graduates to fill those places. This message has been before successive Governments over the past 30 years but it has not had an impact. This time, I hope the Government might be rather more responsive.

18:24

[Lord Rees of Ludlow]

My Lords, I declare an interest as a member of Cambridge University and as this year’s president of the Association for Science Education. I add my tribute to the noble Lord, Lord Willis, for introducing this debate and for his superb chairmanship. His earlier incarnation as a headmaster not only gave him familiarity with the topic but skills in keeping order.

I shall highlight three distinct reasons why STEM subjects are so important. The first, and the prime motivation and focus of our report, is that an ever-growing fraction of jobs needs specific skills at levels ranging from basic technical confidence through to researchers, medics and engineers with the highest professionalism. Surveys show, as we have heard, a continuing undersupply of such people which will be hard to remedy without welcoming immigrant talent. We have heard about the own goals which this Government have scored on that front.

We are mindful also of the surging numbers of scientifically qualified young people in the Far East. That is, in itself, a welcome development for that region and for the world. What should genuinely worry us is whether we are matching their quality and level of achievement. The noble Lord, Lord Willis, reminded us of a recent study of competence in mathematics, which showed that our best 10 year-olds were level-pegging with those in the Far East, but that by the age of 16 they were two years behind. At university level, we should worry about whether students in other countries are working more intensively and achieving higher attainment levels. Sustaining the international standing of our degrees is a serious matter for colleges and universities. Our committee therefore addressed issues of accreditation, kite-marking and so forth.

The quality of secondary education, as opposed to higher education, was not the focus of our inquiry. However, it is of course crucial in preparing and motivating those who will embark on higher education in STEM subjects. However, science education is not just for future scientists, engineers and technicians. There is a second reason why it is important. Today’s young people, all of them, will live in a world ever more dependent on technology and ever more vulnerable to its failures or misdirection. To be at ease in this fast-changing world, and to be effective citizens participating in democratic debate, they will all need at least a feel for science, enough to prevent them being bamboozled by propaganda or over deferential to experts. Of course, they need a feeling for numbers to be comfortable in assessing probabilities, risk and uncertainty.

Therefore, school-level education should not be geared solely towards the training of specialists. Our committee, as we have heard, deplored the fact that so few young people study any maths beyond the age of 16. Some press comment berated us by asking whether it would really be appropriate for everyone to do A-level maths in its present form. Of course, it would not. We were not suggesting that. However, an appropriate curriculum, focusing on mathematical fluency and relevance, could be devised. We should therefore welcome the proposals from ACME, the Nuffield Foundation and, indeed, from my eminent Cambridge colleague Professor Tim Gowers.

To my mind, this downplaying of maths is just an instance of a chronic problem to which the noble Baroness, Lady Sharp, has already alluded: the UK’s unduly narrow post-16 curriculum. We should surely keep pushing for more breadth. Back in the 1980s, the widely supported Higginson proposals were killed off by Margaret Thatcher with a mantra about not jeopardising the gold standard of A-levels. Tomlinson was likewise stymied, this time by the previous Labour Government, because it was perceived that his proposals would play badly electorally.

The post-16 overspecialisation is bad for the would-be scientists and engineers, too. They would benefit from language skills just as much as their humanities counterparts need more numeracy. However, in any broadening of the curriculum in the schools, the universities need to be supportive and not obstructive. At the moment, they are justly blamed by the schools for discouraging breadth by favouring applicants who have had a narrow focus. Indeed, our universities should follow the example of American universities in broadening their own degree courses and in introducing a more flexible system of credits to facilitate transfer between institutions and offer a second chance to those unlucky in their pre-18 education. A large fraction of young people have options foreclosed simply because they are unlucky with the teaching that they secure at the sixth-form level.

Even with the current narrow undergraduate curriculum, it is clear that a bachelor’s degree is not in itself a sufficient qualification and must be topped up for many purposes by a masters-level course. That is why it matters so much that masters courses are under special threat, in particular through a lack of funding sources for home students. Given that money is tight, what is the best solution to this problem? Distance learning and online courses have a huge role across all higher and further education, at least as a supplement to traditional methods, but it is surely at the masters level that MOOCs and the rest offer the most unambiguous benefits in terms of cost-saving and rationalisation. At that level, the students are more mature and motivated. Many would prefer to work part time to enhance their vocational credentials. There is surely huge scope for expanding the options and enhancing efficiency through use of IT by consortia of universities and colleges.

As the noble Lord, Lord Broers, pointed out, it is at the postgraduate level that we need to identify strategic areas. Having identified them, we need to offer incentives, from government or the private sector, to boost expertise in them. But let us not forget that it is no good educating more students in strategic areas if the relevant industries cannot attract and retain them and they are eventually seduced into the financial sector.

Finally, we should not overlook a third reason why STEM education is important right through the system. Science is part of our culture. More than that, it is the one culture that is truly global; protons, proteins and Pythagoras’s theorem transcend all boundaries of nation and faith. It is a real intellectual deprivation not to understand our natural world, and the insights stemming from Darwin, Watson, Crick, and so on. The BBC audiences for David Attenborough, Brian Cox and many other excellent expositors demonstrate the genuine hunger for such knowledge, even if it is as seemingly irrelevant as dinosaurs and the cosmos.

The modern world will feel bewildering, even frightening, unless people have some grasp of the basic principles underlying it—the biosphere and climate, and the artefacts that everyday life depends on. Achieving this understanding of the everyday things that we depend on is genuinely harder today. Fifty years ago, inquisitive children could take apart a clock, a radio set or a motorbike, figure out how it worked, and even put it together again. But it is different today. The gadgets that now pervade young people’s lives, smart-phones and suchlike, are baffling black boxes, pure magic to most people. Even if you take them apart, you will find few clues to their arcane miniaturised mechanisms, and you certainly cannot put them together again. So the extreme sophistication of modern technology, wonderful though its benefits are, is, ironically, an impediment to engaging young people with the basics, with learning how things work. Likewise, town-dwellers are more distanced from the natural world than earlier generations were. That is why an earlier report from our committee expressed concern about a decline in practical work, field trips and the like. So the issues addressed by our committee are crucial not only to the UK’s economy and environment, but also to education and well-being in the widest sense.

18:34

[Lord Krebs]

My Lords, I, too, thank the noble Lord, Lord Willis, for his chairmanship of this inquiry. When we started out, it seemed such a broad topic that we did not know how we would focus on key issues. However, the skill, discipline and good humour of the noble Lord, Lord Willis, enabled us to focus on some important issues that affect the future of STEM in higher education.

Other noble Lords have set out the importance of STEM graduates, both at first and second degree level, to the future of the UK economy. Therefore, I will not dwell on that but remind noble Lords en passant of the Social Market Foundation report, to which the noble Lord, Lord Willis, and the noble Baroness, Lady Sharp, referred, which estimates an annual shortfall of 40,000 STEM graduates. Filling that gap implies a 50% increase in UK STEM graduates, if we are to rely on home-grown talent. It seems to me highly unlikely that the gap, whatever its size, will easily be met by UK students. Why do I say that? It is because we simply cannot turn on a tap to produce more STEM graduates because the supply chain is a long one that starts at school. For example, with an estimated shortage of 4,000 physics teachers, according to the Institute of Physics, and with no fewer than 500 state secondary schools having no qualified physics teacher at all, how can we hope to produce more graduates in the core hard STEM subjects? Going back further in the supply chain, it is estimated that less than 5% of primary school teachers have STEM qualifications. In this context, can the Minister tell us how many applicants per post there were last year for teaching jobs in physics, chemistry and maths in state secondary schools? We will rely on importing talent from overseas, as we have done in the past.

I recently took part in a Radio 4 programme called “Premiership Science”, which drew the analogy between the premiership in the Football League and the UK’s position in science. The premiership is deemed by many to be the best football league in the world because it draws on the best talent from all over the world. The programme argued that we should aim to do the same in science, taking account of our natural advantage of language and the reputation of our leading universities. Will we be able to continue to do this after the Government shot themselves in the foot a couple of years ago by making it appear to be much more difficult for overseas students to come here to study STEM subjects as undergraduates or postgraduates and then to stay on to work?

The inquiry heard of the dramatic impact of the changes in the Immigration Rules: for example, a 39% decline in applicants from India to the University of Aston, a leading university in engineering and technology. Together with a number of other Select Committee chairs, I recently wrote to the Prime Minister, ahead of his visit to India, to express concerns about both the reality and, as the noble Lord, Lord Willis, emphasised, the perception that the UK no longer welcomes overseas talent. In his reply, the Prime Minister was upbeat about recent changes to immigration policy that he believes will encourage students to come here, and reverse the damage—although he did not acknowledge that there was damage—done by earlier announcements.

However, the evidence from my own university—the University of Oxford—where there are nearly 4,000 students on tier 4 visas, indicates that there are still significant problems. I will enumerate some of them: first, the administrative burden and cost associated with attendance monitoring by the university; and, secondly, the bureaucratic complexity of the post-study work options. For instance, the proposal to allow PhD students to stay on and work for 12 months after completion by issuing a confirmation of acceptance for studies extension requires specifying the exact date of completion of the PhD ahead of time, and for the university to maintain contact with the student for 12 months after completing the course. As anybody in higher education will confirm, the inherent nature of completing a PhD means that it is often very difficult to specify in advance the exact date of the end of the course. Thirdly, as regards visa processing times, student visa extensions take three months or more to process. The UKBA held the passport of a senior overseas academic in my Oxford college for 27 weeks, and it was only after intervention by a Minister that action was elicited from it. This really does not encourage people to think of the UK as a welcoming place to work after they have studied here.

Fourthly, the UKBA’s tendency to change the rules frequently makes it difficult for overseas students to navigate the processes. Does the Minister agree that whatever the rhetoric, the reality is that the Government are still not doing enough to make it easy to draw in top talent from around the world to study and work here? Does she also agree that this country, for the foreseeable future, will be dependent on overseas talent to fill the STEM deficit?

I turn briefly to the subject of postgraduate provision, to which other noble Lords have already referred. Our inquiry highlighted the fact that too little attention has been paid to the funding and quality of postgraduate STEM education and training. The funding of master’s was not addressed by the Browne inquiry. Yet, as we have already heard, increasingly employers demand master’s or PhD level qualifications for entrants to the job market.

Sir Adrian Smith’s 2010 report, One Step Beyond, highlighted the funding shortfall for postgraduate provision at that time, with 60% of those on taught master’s and 30% of those taking postgraduate research degrees having no public or charitable funding. In my own university, survey results show that across all disciplines 45% of those turning down a place for graduate studies at Oxford cite lack of funding as the reason. This is exacerbated by the fact that our major competitors, in the United States and elsewhere, typically offer 100% funding for postgraduate studies. The withdrawal of funding for taught master’s by the research councils, which has already been referred to, is making the situation worse. I note that the research councils’ funding for STEM postgraduate research posts in 2010-11 is at its lowest level since 2004-05. Does the Minister agree that lack of funding for graduate studies in STEM subjects in particular will be a threat to the nation’s ability to generate sufficient numbers of educated and trained people to meet the demands of industry?

Finally, I turn briefly to the topic of maths education, which has had a thorough airing in the comments from previous noble Lords in this debate. In referring to a recent report from the Nuffield Foundation, Towards Universal Participation in Post-16 Mathematics: Lessons from High-Performing Countries, I declare an interest in that I am a trustee of that foundation. This report reveals that the UK has the lowest participation rates in post-16 maths out of 24 comparable countries. The Nuffield report goes on to suggest that a qualification based on mathematical fluency, modelling and statistics, which should be built into the requirements for higher education, would be suitable for those who do not wish to go on with specialist subjects requiring high-level maths education. Does the Minister accept that post-16 maths is a priority for producing future generations of STEM graduates and, more widely, for the future prosperity of the country?

As the noble Lord, Lord Willis, mentioned, we were somewhat disappointed by the Government’s lack of enthusiasm for many of our recommendations, although he and I appreciated the fact that the Science and Higher Education Minister, David Willetts, made time to discuss with us how many of our points could be taken forward. I very much hope that the Minister will reassure us that, as a result of our inquiry and this debate, we will see the Government taking the issue of STEM in higher education as a serious challenge for the future prosperity of this country.

18:43

[Lord Stevenson of Balmacara]

My Lords, I start by thanking the noble Lord, Lord Willis of Knaresborough, for introducing the report in such a good way and for giving us an insight into the thinking that went into it. I also thank the noble Lord and his colleagues for the report itself. This has been a very high-level debate indeed and one that will live long in the memory. However, I still never get answers when I raise this so I have to ask: why has it taken since July 2012 for this debate to come forward today? These are important and crucial issues. As was mentioned, they are also rather timeous in the sense that they stem out—sorry for the pun—from the debate earlier today in your Lordships’ House on the Budget. There are points in the report that could have been picked up earlier by the Government, but in the way that this has been handled, we will be unable to see what has happened because the timing has been so long.

The question that I shall focus on largely comes from an interest that I must declare, which is that I am a STEM graduate. I studied chemistry at university and two of my three children are about to go to university to study STEM subjects, and one is about to complete an HE course. That does not, sadly, follow me into the sciences but she opted for a social science degree. Her case is exemplary in terms of what has been said in this debate. She had strong GCSEs, including triple science and maths, and then switched at A-level to maths, further maths, economics and history. However, she then decided to take economics and politics at university, and will graduate this year with a degree in those topics.

The context to the report, as has been said, is the Budget debate in your Lordships’ House today and the Budget yesterday. UK economic output is flatlining, with GDP still below 2007-08 levels. In addition, projections of future growth look anaemic, raising questions about where future growth is to come from. In the wake of the financial crisis and subsequent recession, the coalition Government set out to “rebalance” the economy away from financial services and the south-east towards other sectors and regions, including manufacturing, life sciences and green energy. However, as the committee’s report makes clear, this path to growth is heavily reliant on building and sustaining the health of the STEM industries in this country. It is common ground that the success of this strategy will depend crucially on the available STEM skills base, and it is on this issue that I wish to centre my remarks. How will we ensure that there will be sufficient home-grown talent to satisfy the employment requirements in this sector?

According to the report by the Social Market Foundation, which has been referred to by several noble Lords, there are already shortages in the supply of UK-domiciled STEM-qualified labour. STEM-qualified individuals are in demand across the core STEM sectors, but also across the wider economy, which means that the supply of STEM-qualified individuals actually has to be higher than the number of STEM jobs to ensure that demand from the STEM sector is met. The UK has a long-running home-grown STEM skills deficit and in recent years has tended to rely on migration to make up the shortfall in domestic supply. This has effectively been stopped by the current Government’s immigration policy.

So, how many new workers do we need out of the system? The key message on the numbers seems to be that if we are to fulfil the estimated employment requirements and make progress in rebalancing the economy, the UK will need to increase substantially the number of individuals taking STEM subjects at school. It was therefore worrying to read in the report, and to see in the Social Market Foundation report, that there are several points at which potential future STEM employees are lost to other subjects and sectors. Of those who have achieved good science GCSEs two years earlier, only around one-fifth go on to take science A-levels. Just under 60% of those who take science A-levels actually graduate in STEM subjects. Even of those who graduate in STEM, between 18% and 29% go on to work outside STEM occupations.

One way of addressing the shortfall is for policymakers to focus on reducing the proportion of students lost to non-STEM subjects at each educational transition point. It would be interesting to hear the Minister’s views on that point.

As we have heard, there may be some scope to increase A-level STEM take-up among those who do well at GCSE and by reducing disparities in GCSE achievement between different groups of students. Raising the performance of all groups to the level of the best could help make some inroads into the shortfall across STEM. Bearing in mind my personal experience, it was interesting to read that if boys did as well as girls at science GCSE, and girls took up A-level science at the same rate as boys, the number of pupils doing A-level science in England and Wales in recent years would have been higher by an average of between 11,000 and 13,000 each year, or between 14% and 16% higher per year. If the proportions of A-level students taking science in England and Wales had been as high as that in Northern Ireland in recent years, the number of pupils doing A-level science in England and Wales would have been higher by between some 13,000 and 17,000 each year, or between 16% and 22% higher per year. To change tack slightly, but still on the same point, if those on free school meals in England had done as well in GCSE science in recent years as the rest of their cohort, the number of pupils doing A-level science in England would have been higher by an average of between 3,000 and 4,000 each year, or between 4% and 5% higher per year. If you do the maths, I think you will find that the numbers will increase substantially if all these matters come to pass.

However, even those measures, taken together, will do only a modest amount to close what appears to be the gap. The SMF report estimates that there could be an increase of about 18,000 STEM graduates per year, but the shortfall is at least 40,000 and may be as high as 100,000. This means that the real solution to the UK’s huge STEM skills deficit lies in starting much earlier to boost GCSE STEM attainment across the board. At the moment, too few students achieve good GCSE grades. We need to do more on that, we need to do better in the EBacc, and we need to make sure that the transition across to A-levels is sustained and made permanent.

The broader challenges that that raises have been addressed by the committee and there have been a number of initiatives which we have woven into the report and which I should like to bring together. Obviously, teaching has a major impact on achievement. Therefore, as has been mentioned, expanding the supply of science and maths teachers is vital if we are to avoid a vicious cycle of self-perpetuating skills shortages. The Government should therefore explore methods to make the teaching profession much more financially attractive relative to the other employment options that are open to science and maths graduates. For instance, the number of STEM teachers on the Teach First programme could be further expanded, perhaps building on support from the STEM industry. More radical measures might include relaxing the initial eligibility criteria for teacher training and encouraging more international recruitment of science and maths teachers in the short term. It would be interesting to get the Minister’s views on those proposals.

Turning to other points in the report, it was right for the committee to pick up the continuing failure to sort out the postgraduate course in STEM areas. It is important that this is tackled. It was also right to recognise the difficulty of projecting future employment requirements, but this is absolutely crucial to developing policy in this area. Therefore, I strongly commend the recommendations in the report concerning the importance of gaining a lot more understanding of what influences students’ course choices; the quality and consistency of the independent careers advice that they have access to—or, increasingly, do not have access to; the need for longitudinal studies of careers and flows in and out of the STEM industries; and the holding and analysing of data on postgraduate entry and take-up. I particularly echo the call in the report for a,

“robust, long-term tracking system for postgraduate provision and destination data”,

and draw attention to the rather limp response from the Government to recommendation 10, which has already been mentioned.

Other areas where the Government’s response to recommendations is less than satisfactory are quality assurance and standards and scrutiny, as well as how they are going to afford Parliament a chance to take a view on their radical reforms to the organisation of our HE system. Certainly, the report did not go into very much detail on this but, time having moved on, the case for it is now rather urgent. Can the Minister confirm whether there is to be an HE Bill in the Queen’s Speech this year? If not, we will wait even longer for what is obviously a very important issue. It is noticeable that whenever we have a higher education issue on the agenda, we have a very high-quality debate, and this is obviously something where your Lordships’ House would like to make a contribution. We cannot get information on that at the moment but, in the interim, the committee has made a very good job of pointing out what little power the department has to shift the focus and direction of the higher education institutions now that HEFCE has effectively been sidelined and students have been placed at the heart of the funding system.

Finally, there is the question of funding. As the noble Lord, Lord Willis, said, recommendation 29 invites the Government to explain their thinking in this area. However, in their response, they do not give much detail and they certainly do not come up with a good explanation of how they intend to protect STEM subjects. Indeed, this whole section seems to be unnecessarily defensive and in no way rises to the challenges presented in the committee’s report. You know that the game is up when you read in the response that the only thing that the Government can come up with is to trumpet rather vacuously that the HE sector,

“will continue to receive substantial direct public funding ... both for teaching and research”.

Well, that is good.

However, one phrase, in particular, caught my eye. Perhaps the Minister can explain, either today or in writing, what precisely is meant by the concluding phrase in this section of the government response. It says:

“Putting together HEFCE teaching, research and capital grants and the BIS upfront costs of graduate contributions, total BIS investment in HEIs in England could rise from around £9.7bn in 2010-11 to around £10.3bn in 2014-15, while broadly maintaining existing levels of participation”.

Well, well, well. Isn’t that interesting? I suppose the sun could rise in the west tomorrow, but that might be considered a little unlikely. So let me try another tack: are we really hearing here that more students could fail to repay their student fee loans than is currently planned? That would certainly raise the BIS RAB charge. Of course, the HEFCE teaching grant will also be disappearing. There seems to be a bit of a double whammy here.

Therefore, will the Minister explain what this sentence precisely means? Will she confirm that it is the Government’s intention that the levels of funding to institutions, net of the upfront cost of graduate contributions, will increase, as implied by that sentence, in real terms by the suggested 6.2% by 2014-2015, or can we assume that this is just a coded warning to higher education institutions with significant STEM subject courses that the cuts are on their way?

18:55

[Baroness Garden of Frognal]

My Lords, I am pleased to wind up for the Government in this debate. I thank the sub-committee and its chairman, my noble friend Lord Willis, for a thoughtful and incisive report on a very important subject. The quality of the debate reflects the expertise in this House. I note the regret of the noble Lord, Lord Stevenson, at the delay in debating such an important report.

The Government are well aware of the importance of skills in science, technology, engineering and mathematics. They are vital for growth and are highly valued across all areas of the economy. Work is in hand to address many of the areas outlined in the report. Despite the backdrop of significant financial crisis and difficult decisions on priorities for funding, the Government have ensured that we have supported the teaching of STEM subjects. We have ensured that our universities have a sustainable income stream. We have protected the £4.6 billion science and research programme budget, and have announced almost £1.5 billion additional capital funding for science and innovation projects. That is in addition to the £1.9 billion capital announced in the spending review. In partial response to the noble Lord, Lord Stevenson, I should say that we have increased and safeguarded the money going into these subjects.

Activity in school is the beginning of the STEM pipeline, and much activity is taking place to stimulate interest and excitement among children, an issue that was raised in a number of the contributions today. The noble Viscount, Lord Hanworth, mentioned maths as being an impossible subject and trying to make maths more accessible. A number of initiatives are going on on this. The See Inside Manufacturing campaign has been a very successful way of opening young people’s eyes to the career opportunities available in engineering by showing them around some of the UK’s leading industrial companies.

Complementing this, we have programmes such as STEM ambassadors, apprenticeship ambassadors, Make It in Great Britain, and the exciting Big Bang Fair. The fair has grown year on year since 2009, attracting more than 60,000 people last week at ExCel and inspiring the very youngest. In 2009, my noble friend Lady Sharp and I went tearing across the road, having eventually been released from here, to witness some of the activities going on in the QEII centre. Certainly, it was an inspiration to see very young children getting so excited about science, technology, engineering and maths.

UCAS data show that STEM and clinical subjects held up well in 2012-13. That follows eight years of rising A-level entries in STEM subjects and six years at undergraduate level. The noble Lord, Lord Stevenson, mentioned that we need more girls and those from disadvantaged backgrounds choosing STEM. The types of initiatives that I have mentioned are the very ones that will encourage them into those subjects. My noble friend Lady Sharp also mentioned the dearth of girls in some areas. However, 40% of STEM ambassadors are women.

On the teaching of maths, the Department for Education is funding Mathematics in Education and Industry to devise a new course, as mentioned by the noble Lord, Lord Broers, working with Professor Tim Gowers of the University of Cambridge. We are also funding the maths department of that university to create a first-class curriculum for advanced maths with an emphasis on ideas such as complex numbers and trigonometry. Imperial College, too, is getting money to develop and pilot a one-year course for A-level maths teachers to bolster their knowledge. I shall say something about teachers later.

At key stage 5, of course it is important that A-levels in general are fit for purpose and continue to match the best education systems in the world. They should also be responsive to the needs of the higher education sector and industry, which my noble friend Lord Willis made very clear in his contribution. Universities and employers tell us that they want highly numerate people with an excellent facility with words and first-rate analytical skills. So it is important that students have access to courses and qualifications that do just that.

The Secretary of State for Education has set out an ambition that within a decade the vast majority of students should be studying mathematics up to the age of 18. Again, a number of noble Lords have pointed out that there is a desire to make this happen. However, research suggests that the current A-levels do not adequately prepare students. It shows that the modularisation of the current A-level has left many students unable to demonstrate deep understanding and incapable of making connections between topics. These skills are crucial to success in higher education and employment. This was echoed in Ofqual’s public consultation, which found strong support for greater university input into A-levels.

We are strengthening both curriculum and qualifications to ensure that they set expectations that match those in the highest-performing education jurisdictions in the world and that they better prepare students for further study.

My right honourable friend the Secretary of State for Education wrote to Ofqual on 22 January setting out changes to A-levels. In recognition of concerns about timing raised during Ofqual’s consultation, the Department for Education has delayed that timetable to 2015.

From September 2015, the A-level will be linear, with all assessment coming at the end of two years’ study. This will lead to students developing a deeper knowledge of their subjects. Research suggests that students benefit from the greater intellectual maturity that will be developed over two years.

My noble friend Lady Sharp mentioned the AS-level and that it has performed a very useful service. It is to be decoupled from the A2, but it will be retained as a standalone qualification to help encourage breadth of study. My noble friend and the noble Lord, Lord Broers, mentioned the need for a widening of school subject areas. The international baccalaureate, which has had such a successful take-up in certain schools, still remains a fairly small part of the sixth-form provision, but has always had that breadth of science, humanities, languages, and so on.

Universities will be more involved in reviewing the subject content of A-levels and assessment where appropriate. An advisory committee established by the Russell Group will advise Ofqual on A-level content. Awarding organisations will develop new A-levels in the facilitating subjects such as mathematics and the sciences, drawing on the expertise of these university academics.

Your Lordships are aware of the importance of academic freedom and university independence. Our universities are regarded as the most autonomous in Europe, and I am sure that the House would want to maintain that position. The UK has specific legislation—the Further and Higher Education Act 1992 and the 2004 Act—which forbids the Government from directing institutions’ admissions criteria. While I absolutely support the importance of high standards, government cannot intervene in specific entry requirements.

Moving on to postgraduates, the noble Lords, Lord Broers and Lord Willis, the noble Baroness, Lady Sharp, and the noble Lord, Lord Krebs—in fact most noble Lords who have participated in this debate—have mentioned postgraduates, which formed a very significant part of the report. The Government recognise that postgraduate education is an important element of higher education provision in the UK. The Minister for Universities and Science attended a roundtable on postgraduate taught provision on 23 January chaired by Sir Alan Langlands, the HEFCE chief executive. This confirmed the importance of taught postgraduate education. The sector has grown and thrived on a mixed economy of private, public, charitable and employer finance and on limited regulation, but there are concerns about sustaining this position in a highly competitive international market. The roundtable’s conclusions will inform the next stage of work. HEFCE will review participation in postgraduate study, working closely with BIS, and will publish a report later in the spring that will provide new evidence on progression to postgraduate study and an overview of the postgraduate landscape.

HEFCE’s allocation for taught postgraduate provision is now being maintained at similar levels to 2011-12, at around £135 million. HEFCE will provide £240 million for postgraduate research degree supervision support, and research councils will invest £340 million in postgraduate research provision. However, your Lordships will understand that in the current difficult economic climate we should encourage universities, banks and employers to come up with their own solutions to supporting postgraduates, not just look to government.

The noble Lord, Lord Willis, and other noble Lords, have noted the absence of a higher education Bill. A White Paper, Students at the Heart of the System, was published in June 2011 and sets out the Government’s plans, and we are moving our higher education reform agenda forward primarily through non-legislative means. We will, of course, keep the situation under review. We are aware of how many times higher education is debated, in one way or another, in both Houses. It is an important aspect of our lives, and if there is not a Bill, that is not because there is no interest but because these matters are being dealt with in other ways.

On student tuition fees, we are operating the broad structure of the previous Government’s changes of 2005-06, which both Houses agreed. As we know, eligible undergraduates do not now pay up front. Government loans cover tuition fees and students repay only after graduation when they earning a reasonable salary and at a rate of 9% of their income. It is affordable. However, I acknowledge, as many do, that this has not been very well communicated to the student population. It is disconcerting to discover how many people still think that it will be students who are in debt or, indeed, parents. We need to get the message across, loud and clear, that no student now pays fees up front and that no parent needs to pay either at that stage. There is consensus among political parties that you can reasonably expect graduates to make a larger contribution but it has to be done on a fair and progressive basis. On this we are ahead of the debate than many other countries.

A number of other questions have arisen, which I will take not in as logical an order as I would like as it has been a very full debate. The noble Lord, Lord Broers, asked why recommendation 15 for an expert group to consider the supply and demand of STEM postgraduate provision in the UK had not been taken up. Our view is that it probably does not need a new body. With the current stakeholder landscape the UK has a wealth of expert employer advice from business. We have set up the National Centre for Universities and Business—that was in the Government’s response which was criticised by the noble Lord—and the Government are asking it to provide strategic advice periodically on industry’s needs and perceptions of graduates and postgraduates. We take the point that it is invaluable to have the views of entrepreneurs and industrialists and from all sides on how that can best be achieved.

A number of noble Lords, including my noble friend Lord Willis, bemoaned the lack of data. The possibility of improving and changing the HESA data collection and publication timetable is under active consideration within the context of the information landscape programme that has identified the importance of the timeliness of data. My right honourable friend David Willetts also bemoaned the fact that data are not available, timely or sufficient, but HESA is looking at the problem in the hope that we will have a better collection of data that can influence debate.

My noble friend Lady Sharp mentioned careers advice, as did the noble Lord, Lord Stevenson. We have, of course, given schools legal responsibility for securing access to independent and impartial careers guidance for year 9 to 11 pupils on a full range of 16 to 18 education and training options, including apprenticeships and vocational routes. We will certainly be monitoring the situation to make sure that those routes are sufficiently addressed in careers advice. We noted in the recent statement on apprenticeships that the Government are working to have apprenticeships as a valid career alternative to university and are aiming to increase apprenticeships across a range of new professional areas as well as vocational skill areas. If we can get the mix correct, we hope that the cross-fertilisation between the vocational field and the academic field will serve our country well.

The National Careers Service works through its website and also operates a one-to-one service with careers advisers to provide young people with information on science and technology-based careers. That imperative is made very clear to those who advise. On girls in science, technology and engineering, 54% of the young visitors to the 2013 Big Bang Fair were girls, while 52% of the 412 finalists in the National Science and Engineering Competition were girls. The BT Young Scientist of the Year this year is a girl and the Young Apprentice 2012 is a female mechanical engineer with BAE Systems. We are acquiring some inspirational role models for girls and young women who will encourage them to take up studies in these areas.

Noble Lords mentioned the take-up rates at A-level. The figures I have show that in maths, for instance, male take-up was 46,800 and female take-up 31,200. In chemistry, male take-up was 23,634 while female take-up was 21,093. There are some areas of science, technology, engineering and maths where the gaps are closing, but for these purposes I will not quote the figures for physics, because they are not going to help my argument.

The noble Viscount, Lord Hanworth, commented on the decline in the number of applicants for university generally. We know that by the January deadline this year, just under 480,000 applications were made to study the STEM subjects, which is a rise of 7% on the number of applications made in 2012. We must hope that this is going in the right direction, and with the exciting developments available to young people at earlier stages, we hope that that enthusiasm will be taken forward.

The noble Lord, Lord Rees, talked about the importance of science and the part it plays in our culture, as well as how international it is. People should understand the relevance of science to act as empowered citizens. We absolutely agree with that. Science is a vital part of our national skill set and heritage. Young people will miss out on a great deal if they are not taught the sciences as well as the humanities as they progress through school and carry them through into higher education.

The noble Lord, Lord Stevenson, mentioned the STEM students lost to non-STEM subjects. We do not like to think of these people as lost, but that they are bringing their STEM skills to bear in many other sectors and enhancing them in ways that will be good for the economy in one way or another. That echoes the point made by the noble Lord, Lord Rees.

The noble Lord, Lord Krebs, talked about initial teacher training and he asked particularly about the number of applications per post. I do not have those figures, but I know that in 2012-13 we have been offering training bursaries of up to £20,000 for mainstream postgraduate maths, physics and chemistry trainees, and we have seen some very encouraging figures as a result. For instance, in physics we have seen the best levels of recruitment since 1979, with 900 trainees. The figures are rising and I am sure that the noble Lord will agree that the best way to foster enthusiasm in young people at school is to provide people who are trained in the subjects and are themselves really enthusiastic. That builds a virtuous circle so that people genuinely want to study these subjects because they find them fascinating. That has to be a good thing.

I turn now to student visas. A number of noble Lords mentioned the problems in this area. We have said and continue to say that we recognise the enormous contribution that international students make to the UK economically, culturally and socially in terms of international relations and friendships. They are vital to our country and we need to put the message out that the UK is open to all genuine students. There is no cap on the number of genuine students who we want to welcome to the UK and we have no intention of introducing one. There are issues around the amount that students can work, but those are also being addressed at the moment so as to make quite sure that as few barriers as possible are put in the way of getting genuine international students into this country. We recognise the setbacks of what happened earlier. There was a perception, which several noble Lords mentioned, that we were not welcoming to international students. However, we are now striving hard to reverse the trend, particularly from India where we have seen a decline in numbers. We want to make sure that Indian students know how welcome they are in this country.

I am conscious that there has been a great wealth of questions that I may not have covered. I shall look through the debate and try to find any answers that have not been included in my speech today. It is encouraging to see that the study of STEM subjects is increasing in our higher education institutions. Science, technology, engineering and mathematics are vital components of our learning infrastructure. Application of the knowledge and skills learnt is not only part of driving growth in the economy but fully enhances the social and cultural fabric of our society. The UK remains a world leader in the field, with 85 Nobel Prizes for science and technology, rather a lot of which I think have come from the college of the noble Lord, Lord Rees, in Cambridge. Only the USA achieves more citations. We have a great deal to encourage us but we still have a great deal to do. The committee set out a compelling vision. We share that vision. We shall be looking at all the recommendations that the committee made and considering them. I thank the committee for a valuable report and I thank all noble Lords who have contributed to this fascinating and valuable debate.

19:15

[Lord Willis of Knaresborough]

My Lords, I thank the Minister for that reply and, indeed, for the very comprehensive way in which she has dealt with many of the core issues. We look forward to having individual responses to some of the specific questions which were laid down. I also thank all noble Lords for their contributions this evening. It was a late debate, and I am very conscious that Members wish to get away to other engagements, so will be particularly brief.

Having spent 13 years in the Commons, I can say that one of the great joys about this House is that when we have a debate about higher education, particularly on science and technology, the number of Members who come along not simply with great intellect but with great insight into the way in which science, technology, engineering and maths can really impact on society as a whole rather than a very narrow field is really quite inspirational. Although I hear what the Minister says in terms of there being no higher education Bill, the importance of the Government being able to set out their plans and to analyse the impacts of their current reforms is fundamental to us moving forward. I trust that the Minister will take that on board and that we will have an opportunity to have not simply a debate tagged on at the end of business on a Thursday evening but a full debate, where we have a whole day to look at this key issue of how we generate growth through science, technology, engineering and maths.

Motion agreed.

House adjourned at 7.17 pm.