House of Commons

Wednesday 4th September 2013 Commons Chamber

Wednesday 4 September 2013

The House met at half-past Eleven o’clock

Prayers

Wednesday 4th September 2013 Commons Chamber

[Mr Speaker in the Chair]

Oral Answers to Questions

Wednesday 4th September 2013 Commons Chamber

The Minister for the Cabinet Office was asked—

[David Mowat (Warrington South) (Con)]

1. What progress the Government have made in response to the 2010 report on use of the Government estate.

[The Minister for the Cabinet Office and Paymaster General (Mr Francis Maude)]

We are committed to saving money by, among other things, cutting our occupancy of property in London and elsewhere. We are consolidating into freehold space wherever practical. Since the general election, the central civil estate in London has been reduced by about 22%. Across the country we have cut estate costs by nearly £500 million and we are on track to deliver a further £80 million by the end of the current financial year.

[David Mowat]

I thank the Minister for that answer. The Smith report identified that 15,000 jobs could be moved from London to the English regions by 2015. That would first of all save money, but also correct the spending imbalance by which London has the highest current spending per head of any English region. Is there more we can do to make swifter progress?

[Mr Maude]

The Smith recommendations were, so far as I can see, made on an assumption of stable public sector employment. Owing to the size of the public sector deficit that the coalition Government inherited, public sector employment has been falling since then by more than 400,000, and the size of the civil service is down by about 73,000 since the election, so the priority has been to reduce the amount of property we occupy, rather than moving employment from one part of the country to another.

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

The problems with finding savings from the Government estate are that many Departments are finding it difficult to surrender leaseholds early and to find private sector businesses to take up surplus accommodation, and are even having problems with selling freeholds because of the state of the property market, meaning that it is very unlikely that the full potential savings of £830 million will be met before 2020.

[Mr Maude]

I do not think the hon. Gentleman is right on that. Actually, vacant space in the central Government estate is running at about 2.5%, compared with the national average of over 10% across the public and private sectors, so in fact Government Departments and agencies are not finding it impossible to surrender leases—they are doing so very effectively—or to sell properties where that makes sense, although our preference is to occupy the freeholds and get out of the leaseholds.

[Mr Philip Hollobone (Kettering) (Con)]

rose—

[Mr Peter Bone (Wellingborough) (Con)]

rose—

[Mr Speaker]

Ah, a Northamptonshire choice. I call Mr Philip Hollobone.

[Mr Hollobone]

What does the Minister expect the footprint of the Government estate to be by the end of the present Parliament compared with May 2010?

[Mr Maude]

Certainly, so far as the central Government estate in London is concerned, it will be down by well over a quarter, but that is only the beginning, because obviously property disposals and vacancies take time, for some of the reasons that the hon. Member for Denton and Reddish (Andrew Gwynne) just referred to; that cannot be done literally overnight. We have made considerable progress already, however, as it is down by nearly a quarter and there will be much more to come.

[Mr Bone]

I am glad that my hon. Friend the Member for Kettering (Mr Hollobone) did not have the nerve to suggest that Government should relocate to Kettering, because he knows the place to come to is 50 minutes from London and it is Wellingborough. Will the Minister encourage Departments to move to Wellingborough, especially the Office of the Deputy Prime Minister?

[Mr Maude]

I can imagine that no relocation destination would be more popular with my right hon. Friend the Deputy Prime Minister than my hon. Friend’s constituency—or failing that, perhaps the constituency of my hon. Friend the Member for Kettering (Mr Hollobone).

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

2. What steps he is taking to promote public trust in Government statistics.

[The Parliamentary Secretary, Cabinet Office (Mr Nick Hurd)]

Public trust in Government statistics is incredibly important. As the hon. Gentleman knows, all official statistics in the UK are now subject to independent scrutiny by the UK Statistics Authority. As he also knows, that is now independent of Government and directly accountable to Parliament, rather than through Ministers.

[John Robertson]

I thank the Minister for that answer, but have the Government not failed to respond to the Public Administration Committee recommendations because of the Prime Minister’s numerous breaches of the code of practice for Government statistics?

[Mr Hurd]

I am not aware of any failings in communicating with the Committee. The Prime Minister has responded to those suggestions directly and to the chairman of the UK Statistics Authority very vigorously, which is the right and proper way of approaching it.

[Mr Bernard Jenkin (Harwich and North Essex) (Con)]

May I tell my hon. Friend how much I agreed with my right hon. Friend the Minister for the Cabinet Office and Paymaster General when he said in opposition that we should end the practice of pre-release—the release of statistics to Ministers and officials hours or even days before they are released to the public, so that they can be spun? Would it not increase trust in statistics if the Government adopted the views of the UK Statistics Authority and the Public Administration Committee and ended this practice, as they have in many other jurisdictions?

[Mr Hurd]

I know that my hon. Friend feels strongly about this, as does the Committee he chairs. He will know that we inherited a regime that had, rightly, been tightened up, with arrangements embedded in legislation. He will also know that we reviewed the arrangements when we came into power and took the view that the right balance had been struck. The arguments are well rehearsed and although I know that he does not like the message, we are not going to change the arrangements and I do not think that that message is going to change.

[Chi Onwurah (Newcastle upon Tyne Central) (Lab)]

Let us look at cyber-statistics. In answer to my parliamentary question, the Minister put the cost of cybercrime at £27 billion, but that turns out to be a 2010 “guestimate” from defence company Detica. The National Audit Office misused Cambridge university figures, managing to confuse pounds with dollars. We all know that online crime is rising, but the Government rely on outdated third-party figures. Is he surprised that the public do not trust the Government’s efforts to fight cybercrime, given that they clearly cannot even measure it?

[Mr Hurd]

The Government take the whole issue of cybercrime incredibly seriously. I am not sure that we are going to take any lectures on trust in public statistics from the Labour party; the reason the UK Statistics Authority is in place is because public trust in Government statistics cratered after 13 years of Labour, for ever associated with the dark arts of spin and media manipulation.

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

3. What steps he is taking to ensure that more small and medium-sized companies win business from Government.

[Julian Sturdy (York Outer) (Con)]

4. What steps he is taking to ensure that more small and medium-sized companies win business from Government.

[Mrs Mary Glindon (North Tyneside) (Lab)]

6. What steps he has taken to address barriers to small and medium-sized enterprises participating in Government procurement.

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

12. What steps he is taking to open up central Government Departments to partnerships with small and medium-sized enterprises.

[The Parliamentary Secretary, Cabinet Office (Miss Chloe Smith)]

It is this Government’s policy to dismantle the barriers facing small and medium-sized companies to ensure that they can compete for contracts on a level playing field and grow. I refer the House to the letter I sent last month to all hon. Members, in which I set out some of the progress we have made and the further steps we will be taking to ensure that Departments continue to increase their spend with small companies.

[Nick de Bois]

I am grateful for the Minister’s answer and I welcome her reforms to Government procurement processes, which are a marked improvement on the previous Government’s efforts. However, will she share her Department’s best practice with local government, which is still issuing cumbersome and complicated tenders that are excluding so many SMEs from competing for business because of the amount of time that they have to put into them?

[Miss Smith]

I welcome that support from my hon. Friend, who is extremely active on these matters in trying to secure more jobs, particularly in his constituency. He rightly says that we have a clear job, which we will do: to transfer the successful procurement reforms that we have made in central Government to the wider public sector. We are accepting the recommendations made in Lord Young’s “Growing Your Business” report, which deals with the complexity, cost and inconsistency that can face small businesses in the wider public sector.

[Julian Sturdy]

The Minister will doubtless be aware of the success of Redfern Travel, from my constituency, which saw off French competition to win a billion-pound contract. How will the Government’s reforms help other British businesses to achieve similar David and Goliath-type victories over multinational corporations?

[Miss Smith]

I also welcome my hon. Friend’s commitment in his constituency to SMEs. I note that support has come from, for example, the Federation of Small Businesses, which says that Government policy continues to move in the right direction in this area. The forthcoming consultation, to which I referred, will make that public sector procurement market more accessible to SMEs, by requiring all contracts over £10,000 to be listed in one place—on Contracts Finder, for example. I also draw his attention to an SME friendliness tool that we published in June. I urge all colleagues to use that to hold contractors in their constituencies to account.

[Mrs Glindon]

What is the Minister doing to promote the use of the Public Services (Social Value) Act 2012 to help small businesses and social enterprises to win public sector contracts?

[Miss Smith]

I am glad that the hon. Lady has raised that point and she will know that we have asked my hon. Friend the Member for Warwick and Leamington (Chris White) to act as an ambassador on this matter; it is very important. The message that we need to get through to contractors, who are of course the ones making such arrangements, is that they must have regard to the taxpayer and value for money at all times, but that other such issues might also be used to benefit those for whom they are contracting.

[Mr Sheerman]

Is the Minister not aware that the truth is that the Government are becoming more and more dependent on big companies—private sector companies such as G4S, Serco and Capita? Is she aware that a recent Fujitsu-sponsored poll of small and medium-sized enterprises showed that 26% find it more difficult to get contracts with the Government and that 6% think that it is easier?

[Miss Smith]

I welcome the hon. Gentleman’s focus on this matter. He will welcome our review on some of the companies he has named, but it is most important to say that the Government are on track to deliver our aspiration of awarding 25% of central Government business to SMEs by 2015. We look for that directly and through the supply chain, and that is what helps us to procure for growth in this country.

[Michael Dugher (Barnsley East) (Lab)]

In a recent speech at an event called “Transforming Technology Procurement through SMEs”, the Minister for the Cabinet Office said with typical understatement that the Government were

“entering a new world for government technology procurement”

and launching

“radical reforms to increase opportunities for SME suppliers”.

Why, then, according to freedom of information requests submitted by ComputerWeekly, has only 0.52% of all the IT procurement spend for the Government’s beleaguered universal credit programme gone to SMEs?

[Miss Smith]

It continues to be pretty rich for the hon. Gentleman to come to this Dispatch Box when he and his Government did absolutely nothing to count the spend with SMEs when they were in government.

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

5. What assessment he has made of the work of the National Citizen Service.

[Gavin Barwell (Croydon Central) (Con)]

7. What assessment he has made of the work of the National Citizen Service.

[Glyn Davies (Montgomeryshire) (Con)]

8. What assessment he has made of the work of the National Citizen Service.

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

9. What assessment he has made of the work of the National Citizen Service.

[The Parliamentary Secretary, Cabinet Office (Mr Nick Hurd)]

We published an independent evaluation of the National Citizen Service in July and I am delighted to say that the feedback was overwhelmingly positive. It proved that NCS is boosting young people’s confidence, helping them to develop valuable skills, as well as inspiring them to make a difference in their communities. Return on investment is estimated at almost three times the cost of delivery.

[Caroline Nokes]

Mountbatten school in my constituency runs the NCS for the whole of Hampshire. This summer, more than 160 young people benefited from the experience. The feedback from them has been overwhelmingly positive, but what reassurance can the Minister give that the scheme will continue into the future so that many more young people can benefit?

[Mr Hurd]

I am delighted that my hon. Friend’s young constituents got so much out of the experience. She will be delighted to know that 26,000 young people took part in NCS last year and our public intention is to make 150,000 places available in 2016. I hope that reassures her of our intention to make this fantastic experience available to many more 16 and 17-year-olds.

[Gavin Barwell]

Over the summer I had the opportunity to meet three groups of young people from my constituency who took part in the programme, which is run so well by The Challenge Network in my part of the country. What more can the Government do to encourage even more schools to get their pupils to take part in this excellent scheme?

[Mr Hurd]

I am delighted that my hon. Friend also had such a good experience with his local NCS. I am delighted to have it confirmed regularly that young people are now recommending it to each other, which, as he knows, is the way that it will grow. We continue to evangelise in schools, but it is fantastic that young people are now talking to each other on Facebook and Twitter and saying, “You should do this.”

[Glyn Davies]

My hon. Friend has told us how successful and popular the scheme has been. What plans does he have to extend the scheme more widely so that it can have an impact in Wales?

[Mr Hurd]

I am delighted to say that we have managed to persuade the Administration in Northern Ireland to adopt a very successful pilot there, which we are delighted with. I am very happy to confirm that we are continuing to talk with the Scottish and Welsh Administrations to try to encourage them to work with us to structure some pilots to make the scheme available to young people across the United Kingdom.

[Rehman Chishti]

Will the Minister join me in congratulating all the young people who took part in the scheme in my constituency, which was delivered by the Medway Youth Trust? The scheme was completely filled this year and the trust wants to see it continue to grow next year.

[Mr Hurd]

I continue to be enormously impressed and proud of all NCS participants and how the experience raises their confidence and sense of what they can achieve. I would like to place on the record my thanks to all providers for the way in which they are delivering a very challenging programme so well and so consistently across the country.

[Julie Hilling (Bolton West) (Lab)]

Does the Minister accept that cuts to year-round services for young people have directly contributed to 6,000 NCS places not being filled this summer? What is he going to do to save the Youth Service, the year-round service that is now his responsibility?

[Mr Hurd]

The Cabinet Office is not devoting any money from local authorities. Every week the hon. Lady pops up to talk about cuts in her constituency, but she never asks any tough questions of her local authority about the priorities it sets. The Cabinet Office has taken over responsibility for youth policy, and part of what we will be doing is working with local authorities across the country that want to think creatively about how they continue to deliver really value-added youth services.

[Duncan Hames (Chippenham) (LD)]

It was a privilege to meet participants in the National Citizen Service in Wiltshire last month. They told me that they got the opportunity to work with people on social action projects whom they would not otherwise have met. Does the Minister agree that the value of the initiative depends on its ability to continue to draw participants from all backgrounds?

[Mr Hurd]

My hon. Friend makes a hugely important point. The social mix is fundamental to the value of NCS, because it is about giving young people opportunities to meet and spend time together that they would not otherwise have, and they value that enormously. We pay by results when it comes to providers delivering that, and we monitor it obsessively.

[Nic Dakin (Scunthorpe) (Lab)]

10. What recent assessment he has made of implementation of the Government’s procurement reforms.

[The Parliamentary Secretary, Cabinet Office (Miss Chloe Smith)]

As a result of the Government’s procurement reforms, we have made the way we do business more competitive, more transparent, better value and far simpler than ever before.

[Nic Dakin]

I thank the Minister for that answer. Are the Government still allowing large corporations that are being investigated for fraud to bid to run our probation services while excluding small businesses and organisations from doing the same?

[Miss Smith]

The hon. Gentleman will find that the contracts he might be alluding to were all let by the previous Government, and I have already informed the House of the progress we are making in shifting Government business to SMEs.

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

The Public Administration Committee’s report on procurement stated that the Cabinet Office should work with all Departments, and especially the Department for Business, Innovation and Skills, to ensure that UK business is prepared to deliver UK contracts. What progress is being made on that?

[Miss Smith]

The most important thing to remind the House about in that regard is how the pipelines we have published show British firms, and indeed firms around the world that have a good piece of value to offer the British taxpayer, where they can find contracts.

[Kelvin Hopkins (Luton North) (Lab)]

Britain has a massive trade deficit with the European Union, and it could be reduced if British companies were employed to provide for the Government. How much are the Government doing to ensure that public organisations purchase from British companies, rather than those from the continent of Europe?

[Miss Smith]

I understand the point that the hon. Gentleman is seeking to make. What we seek is best value for the British taxpayer and to use the British Government’s procurement spend to allow for growth as far as possible in this country. We are of course bound by certain EU procurement rules, with which I am sure he is very familiar. [Interruption.]

[Mr Speaker]

Order. There are a lot of very noisy conversations taking place, including on the Opposition Benches, but I am sure that Members will wish to be quiet to hear Stella Creasy.

[Stella Creasy (Walthamstow) (Lab/Co-op)]

11. What steps he is taking to increase information-sharing between Government and businesses on cyber-attacks.

[The Minister for the Cabinet Office and Paymaster General (Mr Francis Maude)]

As part of our £860 million investment in the national cyber-security programme, earlier this year I launched the cyber information-sharing partnership. It provides a secure online and face-to-face environment for Government, law-enforcement agencies and business to share information on cyber-threats and how best to combat them. Already over 150 firms and other organisations have joined, and it is our intention to expand the membership to include SMEs.

[Stella Creasy]

I thank the Minister for that response. Given the important role that the police will play in helping small businesses tackle cybercrime, can the Minister tell us precisely how much of the £650 million cybercrime budget has been allocated to the police, and how much of it has been spent and on what?

[Mr Maude]

I cannot give the hon. Lady the exact figures off the top of my head. Obviously a considerable amount is being spent with the law enforcement agencies to combat cybercrime, about which the hon. Member for Newcastle upon Tyne Central (Chi Onwurah) was complaining earlier. This is a very wide-ranging problem. There is a huge issue about awareness in the business community and we are working hard to promote it.

[Glyn Davies (Montgomeryshire) (Con)]

T1. If he will make a statement on his departmental responsibilities.

[The Minister for the Cabinet Office and Paymaster General (Mr Francis Maude)]

My responsibilities are for the Efficiency and Reform Group on the public sector, civil service issues, industrial relations strategy in the public sector, Government transparency, civil contingencies, civil society and cyber-security.

[Glyn Davies]

Will my right hon. Gentleman give us an update on how he plans to take his very valuable reform forward?

[Mr Maude]

We are making some progress on civil service reform. It was absolutely essential that we published in July our one-year-on report on progress. The head of the civil service, Sir Bob Kerslake, and I were very forthright in saying that progress had not been as fast as we would have hoped, but we are stepping up the pressure and the pace.

[Mr Gareth Thomas (Harrow West) (Lab/Co-op)]

While there are now rumours of significant concessions, Ministers still need to explain why charities were not consulted before the lobbying Bill was published. Why could not even the junior Minister be bothered to pick up the phone to the Royal British Legion, cancer charities or the National Council for Voluntary Organisations before producing a Bill that will have such a chilling impact on the work of charities?

[The Parliamentary Secretary, Cabinet Office (Miss Chloe Smith)]

The hon. Gentleman knows very well that we spent a significant amount of time on this in the House yesterday and that there is more opportunity to discuss it next week. He will also know that my right hon. Friend the Leader of the House and I met charity leaders on Monday and will continue to do so. [Interruption.]

[Mr Speaker]

Order. There is still far too much noise in the Chamber. I understand the general excitement, which I am sure is in anticipation of the question from Mr Henry Smith.

[Henry Smith (Crawley) (Con)]

T3. I congratulate my right hon. Friend on the £10 billion- worth of efficiency savings that his Department has made on behalf of the taxpayer in the past year. What ambition does he have for the coming year?

[Mr Maude]

We hope that those savings will rise to £15 billion in the current year, and potentially to £20 billion the following year, with a further £5 billion, at least, after that. If only the Leader of the Opposition had started to do this when he held my job, perhaps we would not have inherited quite the size of public sector deficit that we did, but I am afraid that he was showing weak leadership even then.

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

T2. The Minister’s response to my hon. Friend the Member for Harrow West (Mr Thomas) was to say that she had met charities on Monday. What was she doing all summer while the ramifications of this dog’s breakfast of a lobbying Bill became clear?

[Miss Chloe Smith]

We were doing more over the summer to introduce a statutory register of lobbyists than Labour ever did.

[Charlie Elphicke (Dover) (Con)]

Does the Minister share my concern that too many charities spend too much money on lobbying and on inflation-busting pay rises and bonuses for the boardroom, and that they ought to be concentrating more on the front line of helping people in need?

[The Parliamentary Secretary, Cabinet Office (Mr Nick Hurd)]

I hear my hon. Friend. I happen to think that campaigning continues to be an entirely legitimate activity for charities as long as it fits with their charitable objectives. That has always been the Government’s position and I do not see this legislation affecting that.

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

T4. Leading human rights lawyer Helen Mountfield QC said this week that the transparency of lobbying Bill will put“small organisations and their trustees/directors in fear of criminal penalty if they speak out on matters of public interest and concern.”Will the Minister finally wake up and do something about this appalling Bill?

[Miss Chloe Smith]

That leading QC’s advice in fact bears out that those concerns exist under the current legislation. Furthermore, we see a great show of displacement activity among Labour Members because they are afraid of some of their friends coming under scrutiny.

[Anas Sarwar (Glasgow Central) (Lab)]

T5. Is it not the case that the transparency of lobbying Bill would not stop lobbyist Lynton Crosby advising the Prime Minister on tobacco policy, but could stop an organisation such as Cancer Research UK campaigning about it? Is that acceptable?

[Miss Smith]

We explained at length yesterday that the Bill would not affect or change the law concerning the political activity of charitable organisations in the sense of when they support, promote or procure electoral outcomes. I am sure that my right hon. Friend the Prime Minister has answered the first part of the hon. Gentleman’s question too many times to count.

[Graeme Morrice (Livingston) (Lab)]

T6. But the Government’s lobbying proposals would apply only to third-party consultant lobbyists, who make up a small minority of the industry. The Association of Professional Political Consultants estimates that this means that only 1% of ministerial meetings organised by lobbyists will be captured by the legislation. Does the Minister agree with Iain Anderson of the APPC that this Bill is so bad that it“would be difficult to produce a worse Bill”?

[Miss Smith]

If that was an attempt at lobbying it was rather too long-winded. The point is that we are doing more to introduce a statutory register than Labour ever did, and we are clearing up a specific transparency gap that arises, because we are the most transparent Government ever and I think the hon. Gentleman knows it.

The Prime Minister was asked—

[Christopher Pincher (Tamworth) (Con)]

Q1. If he will list his official engagements for Wednesday 4 September.

[The Prime Minister (Mr David Cameron)]

Before listing my engagements, I am sure the whole House will wish to join me in congratulating the Duke and Duchess of Cambridge on the birth of their son, His Royal Highness Prince George of Cambridge. I am sure I speak for the whole nation in sending our congratulations and wishing them and Prince George a very happy and healthy life. I assure hon. Members that they will be able to offer their own congratulations next Monday when the formal motion is moved in the proper way.

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

[Christopher Pincher]

May I associate myself with the Prime Minister’s congratulation to their Royal Highnesses?

Since we last met there has been a spate of good economic news, both in Tamworth and around the country. Unemployment is down and the economy is growing. Manufacturing is up, exports are up and construction is up. Is it not time for those who still propose it to stop messing around, give it up and abandon plan B?

[The Prime Minister]

My hon. Friend makes an important point. We have had welcome news over the summer: exports are up 5.8% on a year ago, business confidence is at its highest level since January 2008, consumer confidence is up and all the figures on construction, manufacturing and services are going in the right direction. We must not be complacent—these are early days—but it is because of the tough decisions that this Government took that we can now see progress.

We ought to remember that Labour Members told us that unemployment would go up, but it has come down, and that the economy would go backwards, but it has gone forwards. It is time for them to explain that they were wrong and we were right.

[Edward Miliband (Doncaster North) (Lab)]

I join the Prime Minister in congratulating the Duke and Duchess of Cambridge on the birth of Prince George. I wish all of them all the happiness in the world.

At the G20 summit in St Petersburg tomorrow, will the Prime Minister do everything he can to get other countries to match the UK’s important aid commitment to alleviate the humanitarian emergency in Syria, given that almost one third of Syrian families have been forced to flee their homes and yet the United Nations has less than half the resources it needs?

[The Prime Minister]

Of course I will be taking that action. Britain has a very proud record on humanitarian aid, not just in this conflict, but in many previous conflicts. In this one we are the second largest aid donor. We have spent more than £400 million. At the G20 it will be very important to make a number of points clear: our absolute revulsion at the use of chemical weapons, our desire for a peace process and, above all, the need to get donor countries together and make sure that they live up to their responsibilities and that we do everything we can to help the Syrian people in their hour of need.

[Edward Miliband]

The civil war in Syria and the refugee crisis are having profound consequences not just in that country, but across the middle east, specifically in Jordan, Turkey and Iraq and especially in Lebanon, where the population is up by 25% since the civil war began. What specific support, beyond the welcome humanitarian assistance that the Government are providing, can Britain give to those countries to help them deal with the burden on their infrastructure, economies and wider societies?

[The Prime Minister]

I have seen for myself, having been to a refugee camp in Jordan, how great the pressures are. That refugee camp is now one of the biggest cities in that country. We have well-funded embassies and diplomatic networks, and very close relations with Lebanon and Jordan, as well as with the Turks. We are doing everything we can to help and advise them. We are well placed to do so, because we are spending serious money on the humanitarian aid programmes.

However, at the end of the day, what we need is a solution to the Syrian crisis. We need a peace process to be put in place. We also need to be absolutely clear about our revulsion to chemical weapons and should ensure that our aid programme is giving the Syrian people protection from the appalling chemical weapons attacks that they have suffered.

[Edward Miliband]

The revulsion at the chemical weapons attacks is shared in all parts of this House, as the debate last Thursday made clear.

I want to come on to an issue that the Prime Minister raised, which is getting the talks going between the warring parties. The opposition Syrian National Council is meeting the Foreign Secretary in the next couple of days. Will the Prime Minister tell us what work he is doing with the Syrian National Council to make the talks in Geneva happen?

[The Prime Minister]

What we are doing with the Syrian National Council is twofold. First, we want to support those elements of the Syrian opposition that support a pluralistic, democratic and free Syria. That is what our engagement with them has been all about. We go further than that, however, because we recognise that the so-called rebels who back those views also deserve our support through training, assistance and advice. The truth is this: we will not get a peace process in Syria unless President Assad realises that his regime is under some sort of pressure and threat not just from the rebels, but from the millions of Syrians, whom we must stand up for, who want democracy, freedom and a better future for themselves and their children. It is those people whose side we should truly be on.

[Edward Miliband]

There is no difference across this House on the need to stand up for the innocent people of Syria. The question at issue—[Interruption.] The House has approached this issue, so far, in a calm and measured way, and we should carry on doing that. The point at issue is how to stand up for those people. There are big barriers, as we have found out over the past year or more, to the Geneva II peace talks happening. Is there not a case for immediate talks between those countries that are backing the rebels and those countries that are backing the regime? That happened during the civil war in Lebanon and it would at least provide a basis for discussions.

[The Prime Minister]

I agree with the right hon. Gentleman that Britain should use all its diplomatic muscle in discussions with those countries that have backed the regime and by joining with countries that back the rebels and the opposition to try to bring those talks about. That is why I have had repeated discussions with President Putin, for instance, most recently last Monday, and why I travelled to Sochi to see him specifically to discuss this issue.

However, I come back to this point: it is all very well the countries that support either side wanting peace talks to take place, but we also need those involved in the conflict in Syria to recognise that it is in their interests for a peace process to begin. I think that we can convince the Syrian National Council that it is in its interests, because a transition could lead to genuinely free elections and change for Syria. However, we need Assad himself to realise that it is in his interests, because there is no victory that he can win against his own people. For that to happen, we need to take, and the world needs to take, a very tough response to things such as chemical weapons attacks. I accept that Britain cannot be and will not be part of any military action on that front, but we must not in any degree give up our utter revulsion at the chemical weapons attacks that we have seen and we must press that point in every forum of which we are a member.

[Edward Miliband]

Nobody disagrees about our revulsion at the use of chemical weapons. As I say, the question is how to deal with it. What I said to the Prime Minister was, given the difficulty of getting direct talks moving between the Syrian Government and opposition, is there not a case for getting the regional partners involved? We all know the role that Iran has played in fuelling this conflict. However, given that successful diplomacy involves talking to those with whom we profoundly disagree, what is the Government’s position on Iran participating either in a contact group or as part of the Geneva process?

[The Prime Minister]

As the Foreign Secretary said yesterday, he will be meeting the Iranian Foreign Minister when he is in New York for the UN General Assembly. However, let us not forget what Iran has done to our embassy and to our country. We should not put that on one side.

The point I would make to the right hon. Gentleman is that of course we all want these peace talks to take place and we all want Geneva II to happen, but we cannot want it more than the participants in Syria’s bloody conflict. We have to make sure it is in their interests that the talks go ahead. That is why, although diplomacy is important, the work we do with the Syrian opposition who support democracy and a pluralistic, fair and free future for Syria is also important. They are standing up for millions of Syrians who have been bombed and blasted out of their houses. Those are the people we need to talk to, in the refugee camps in Jordan and elsewhere, to see how they feel and how badly the rest of the world is currently letting them down.

[Edward Miliband]

Nobody disagrees with that, or indeed about the view we take of Iran’s behaviour. The question is, how are we going to bring the parties together, including the regional parties?

Finally, does the Prime Minister accept that there remains support across the country for Britain taking every diplomatic, political and humanitarian effort to help the Syrian people? Last week’s vote was not about Britain shirking its global responsibilities, it was about preventing a rush to war.

[The Prime Minister]

Last week the House of Commons voted clearly, and I have said that I respect the outcome of that vote and will not be bringing back plans for British participation in military action. I agree with the right hon. Gentleman that we must bring to bear everything we have in our power—our diplomatic networks, our influence with other countries and our membership of all the key bodies such as the G8, the G20, the UN, the EU and NATO. My only regret from last week is that I do not think it was necessary to divide the House on a vote that could have led to a vote, but he took the decision that it was.

[Daniel Kawczynski (Shrewsbury and Atcham) (Con)]

Q2. We hear today that the UK services business activity index is at its highest level for six and a half years. Does that not show that the Government’s economic policies are working, and will the Prime Minister commit to ensuring that our increased prosperity helps to pay for Shrewsbury’s north-west relief road?

[The Prime Minister]

I will certainly look at the proposal my hon. Friend makes. I know that he wants Shrewsbury to be a connected hub in our country, and he puts that case regularly. The good news about this economic recovery, early days though it is, is that we are seeing it through more people in work. There are 935,000 more people employed than there were when this Government came to office and 1.3 million more private sector jobs, and we need to see further progress on that, because the best route out of poverty and the best way to improve living standards in our country is to see an increasing number of our men and women in gainful work.

[Mr Jack Straw (Blackburn) (Lab)]

May I press the Prime Minister on the issue of relations with Iran? With respect to him, his previous answer sounded as if he had taken no account of the fact that since our embassy was outrageously sacked by Ahmadinejad and his thugs, there has been an election in Iran, however imperfect, that has led to a different individual becoming President, Hassan Rouhani, who to my certain knowledge is someone the west and the British Prime Minister can deal with. May I ask him to look very carefully, with the Foreign Secretary, at how we can take steps now to improve relations with Iran, identify matters of common interest and try to get it involved in solving Syria?

[The Prime Minister]

I agree that the election of a President who has a greater commitment to reform is a positive step, and I have written to President Rouhani to raise a series of issues that need to be settled between Britain and Iran. Above all, we need to see progress on what President Rouhani himself has said is important, which is trying to come to an agreement whereby Iran gives up the idea of nuclear weapons and in return we see some relief on sanctions. That would be major progress, but we should not just do that from a position of hoping for the best. We have seen what Iran has been capable of in the recent past, so we should go into such discussions very cautiously.

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

Q3. Does the Prime Minister agree that accuracy of statistics is vital to inform public debate? Is he aware that 4% of people believe that Elvis is still alive? That is double the number we hear today who think that the right hon. Member for Doncaster North (Edward Miliband) is a natural leader.

[The Prime Minister]

I can see that my hon. Friend has certainly put his summer to very good use, and I am grateful for his question. Obviously, we need to see a run of opinion polls before we can see a true trend.

[Margaret Beckett (Derby South) (Lab)]

Why does the Prime Minister believe that his plans to restrict lobbying are opposed by organisations from the Salvation Army, the Countryside Alliance, Oxfam, the British Legion, and so on, right through to “ConservativeHome”?

[The Prime Minister]

I was listening to the exchanges before I came in for Prime Minister’s questions, and it seems to me that a concerted lobbying campaign is being run by the trade unions, who have mysteriously managed to convince Member of Parliament after Member of Parliament on the Opposition Benches to raise this problem. We all know what is going on—they do not want the trade unions brought within the law; they want the trade unions to go on spending millions after millions trying to alter an election campaign, rather than having them properly controlled by the law. That is what the lobbying Bill is about.

[Caroline Dinenage (Gosport) (Con)]

Q4. The UK economy is set to benefit from around £50 million by hosting the epic Clipper round the world yacht race, which kicked off this week. Will the Prime Minister come to Gosport to see for himself one of the UK’s top marine and sailing hubs, and personally congratulate Clipper Ventures, which is literally flying the flag for Britain’s tourism, trade and watersports?

[The Prime Minister]

My hon. Friend is absolutely right. I have seen a model of this incredible vessel and I join her in welcoming the fantastic contribution that Clipper Ventures makes to the British economy. It was great to see the race leave London for the first time, and even better to see that the flotilla was led by a British boat and superbly supported by the great campaign. I will certainly take into account my hon. Friend’s kind invitation to come to Gosport, and I wish Sir Robin Knox-Johnston well, and all those taking part.

[Jeremy Corbyn (Islington North) (Lab)]

May I take the Prime Minister back to the answer he gave to my right hon. Friend the Member for Blackburn (Mr Straw) a few minutes ago? Can he be more positive about building better relations urgently with Iran, as one of the keys—one, not all—to bring about a peace process in Syria and across the whole region? Simply attacking Iran all the time will not bring it to the negotiating table, and it is better if the Prime Minister is more positive about it.

[The Prime Minister]

I do not know about the hon. Gentleman, but if we are trying to build a relationship with someone, it depends on the actions that they take. Given that the Iranian Government were complicit in the complete smashing of our embassy and residence in Tehran, we will want to see some action so that we can build that sort of relationship. I have reached out by writing to President Rouhani, congratulating him on his accession to power and wanting to discuss those issues. As I have said, however, if we believe there is just some magical key to the Syrian conflict by suddenly adopting a totally different posture towards Iran, I do not think we will be making a very good decision.

[David Rutley (Macclesfield) (Con)]

Q5. Last week we saw the proportion of households with no one in work fall to the lowest level since records began. Does my right hon. Friend agree that that is further evidence that the Government’s welfare reforms are working, all of which have been opposed by the Labour party?

[The Prime Minister]

My hon. Friend makes a very good point. In the second quarter of 2013 there were 3.5 million workless households in the UK, which is down 182,000 on the year and down 425,000 since the election. Each one of those statistics tells a story about people who will be able to get into work, provide for their family and make something of their lives. We should be proud of our welfare reforms, every single one of which was opposed by the Labour party. We have not just saved £83 billion in welfare measures that Labour Members opposed; we have given hope to millions of families in our country.

[Dame Joan Ruddock (Lewisham, Deptford) (Lab)]

Like the Prime Minister, I condemn the chemical attacks in Syria, but is it not time for some joined-up thinking? Surely an American strike now would squander the opportunities offered by the new Iranian leadership and by the new US initiative in Palestine. Will the Prime Minister do what the British people want and insist that the G20 searches for a way to bring about a ceasefire, rather than a new bombing raid?

[The Prime Minister]

As I have said, I respect fully the decision the House came to after the debate last week and Britain will not play any part in military action, but I ask the right hon. Lady to put herself, for a moment, in the shoes of the President of the United States and others. He set a very clear red line that, if there was large-scale chemical weapons use, something had to happen. We know that the regime used chemical weapons on at least 14 previous occasions. To ask the President, having set that line and made that warning, to step away from it, would be a perilous suggestion to make. In response, I believe we would see more chemical weapons attacks from the regime.

The right hon. Lady has a long track record of supporting peace and peace talks, which I respect. I will do everything I can to try to bring the Geneva II peace talks together, but I do not believe there is a contradiction in taking a tough line on the use of chemical weapons, which are revolting in our modern world, and wanting the peace talks that could bring the crisis to an end.

[Jesse Norman (Hereford and South Herefordshire) (Con)]

Q6. Cancer funding per head in Herefordshire is half that in Birmingham. Academic research suggests that the current NHS funding formula discriminates against rural areas and older people. Does the Prime Minister share my view that the NHS should move as quickly as possible towards fairer funding for rural areas?

[The Prime Minister]

My hon. Friend makes an important point, but he will know that we have taken a lot of those decisions away from Ministers and given them to NHS England, which has said that it is looking at a fairer funding formula. I am sure it will look at the arguments he has made. In addition, I ask him to look at the Cancer Drugs Fund, which has been a phenomenal success in England. Sadly, it has not been copied by Labour in Wales, but I am full of hope. The fund has helped many of our constituents to get the treatments they badly need.

[Gordon Banks (Ochil and South Perthshire) (Lab)]

Can the Prime Minister tell the House what he is doing to support food banks in the UK?

[The Prime Minister]

We have done something that the food bank movement had been asking for for years, but that the Labour Government did not grant because they were worried about the public relations—namely, the ability to say to people in Jobcentre Plus who needed help that they could go to a food bank. The Labour Government might not have wanted to do that because it was bad publicity; we did it because it was the right thing.

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

Q7. Does the Prime Minister agree that the combination of the good weather, our deficit reduction and our control of public spending has given confidence to business and individuals to create 1.3 million jobs? However, given those encouraging figures, is he somewhat surprised that the Leader of the Opposition still believes that the Government’s policy will cost 1 million jobs?

[The Prime Minister]

My hon. Friend could add to the good weather the fact that Andy Murray won Wimbledon and England retained the Ashes—much good news was to be had over the summer. It is important that we recognise what brought about the good news to which he refers. Parties had to make a key judgment on whether, in this Parliament, to get to grips with the deficit and take the tough decisions we needed to turn our country around. The Government parties made those tough decisions; the Labour party ducked every single one of them.

[Bridget Phillipson (Houghton and Sunderland South) (Lab)]

Q8. The Government are right to extend free nursery provision to disadvantaged two-year-olds, but figures show that four in 10 councils will not have sufficient places. Can the Prime Minister guarantee that all those children promised a place will have one?

[The Prime Minister]

We have put in place the funding to provide that for the disadvantaged two-year-olds and I am confident that they will receive the services they deserve.

[Graham Evans (Weaver Vale) (Con)]

Q9. Unemployment in my constituency is lower than at any time since the 2010 general election. Locally, I have organised two successful jobs fairs and we are organising a third. Does my right hon. Friend agree that that goes to show that the Government are right to stick to the economic plan, despite calls to abandon it by Opposition Members?

[The Prime Minister]

My hon. Friend is absolutely right. The figures on employment are encouraging. There are more people in work in our country than ever before and more people in private sector employment than ever before; there is a record number of women in work in our country; and there are almost 1 million more people in work compared with the situation we inherited. At some stage, Labour Members will have to get off the fence and admit they got it wrong. They were wrong, but even today, the shadow Chancellor is saying he will borrow even more, even when we have started turning round the economy. He has learnt absolutely nothing.

[Lilian Greenwood (Nottingham South) (Lab)]

Q10. Energy companies have enjoyed a £3.3 billion profit windfall while ordinary families face energy bills going up by £300 a year. Why has the Prime Minister failed to stand up to energy companies and get a better deal from the energy market for ordinary families?

[The Prime Minister]

I do not know where the hon. Lady was during the debate on the Energy Bill, but this Government have legislated to make sure that people are put on the lowest tariffs. This Government have done that, but when the leader of the Labour party was Energy Secretary—when, incidentally, bills went through the roof—there was no such action.

[Geoffrey Clifton-Brown (The Cotswolds) (Con)]

Q11. The Office for National Statistics has revised its figures for growth upwards by 0.7%, there is a record number of apprenticeships and very low unemployment in the Cotswolds, and there are very good conditions for young people to get into work. Does my right hon. Friend think that all that would have been achieved if he had taken the advice of the shadow Chancellor?

[The Prime Minister]

What my hon. Friend says is very interesting. Every time there is a question about the economy—that more people are in work, more businesses are being established and the economy is growing—the Opposition do not want to hear a word of it. They know what the whole country can see—Britain is succeeding and Labour is failing.

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

Q12. Will the Prime Minister accept any responsibility for the fact that it is now forecast that by the time of the election working people will have lost, on average, £6,660 of wages in real terms while he has been in No. 10?

[The Prime Minister]

Let me tell the hon. Gentleman that there is only one sustainable way to get living standards up, and that is to get the economy growing, which we are doing; to cut taxes, which we are delivering; and to keep mortgage rates low, which we are doing. The fact is that if we listened to the Opposition—who only have one plan, to spend more, borrow more and build up more debt—we would be back to where we started.

[Sir Peter Tapsell (Louth and Horncastle) (Con)]

As the Syrian tragedy has unfolded, I have always had the armageddon question in the back of my mind, which I shall now, in an understated form, put to the Prime Minister, if I may. If the Americans illegally bombard the Assad forces and Assad legally invites the Russians in to degrade the rebels, what will NATO do?

[The Prime Minister]

The first point that I would make to my right hon. Friend is that we would never support illegal action. We debated this at some length last week, and it is not the case that the only way action can be legal is a UN resolution. We would only support action that was legal and proportionate. As I have said, Britain would not be taking part in any of this action. In a way, we have to put the armageddon question round the other way, which is that if no action were taken following President Obama’s red line and this appalling use of chemical weapons, what sort of armageddon would the Syrian people face?

[Mr Jim Hood (Lanark and Hamilton East) (Lab)]

Q13. The Prime Minister says that he does not support a mansion tax for people living in mansions worth more than £2 million because, he claims, some people living in them are capital rich and cash poor. How does the Prime Minister square that with his support for the bedroom tax, which punishes people who are capital poor and have no cash?

[The Prime Minister]

First, the hon. Gentleman has to be clear about what is and what is not a tax. Before our changes, there was a subsidy for people who had additional rooms they were not using, and we believe that it is fair to have the same rules in private sector rented accommodation and in council accommodation. The question is now for Labour. You have ranted and raved about the spare room subsidy. Are you going to reverse it? Just nod. Are you going to reverse it? Yes or no? Absolutely nothing to say, and weak with it.

[Duncan Hames (Chippenham) (LD)]

It is no trivial decision for people to up sticks and leave their home and country, fleeing for their own safety. How many people must have left Syria before it is impossible for its regime to declare any kind of moral entitlement to govern that country?

[The Prime Minister]

I do not believe that the regime has any legitimacy. The way it has treated its own people—bombing and maiming its own citizens, and now the use of chemical weapons—means that I see it as a completely illegitimate regime. What we now have to do is bring every pressure to bear for a transition so we can end up with Syria in totally different hands. That is what is required.

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

Q14. The cost of secondary school uniforms has spiralled to £285 this year, as new free schools and academies insist on branded clothes. In fact, at one new academy 70% of parents had to take out loans to pay for uniforms. Why has the Prime Minister failed to act? His schools policy is now leading to loans that can only add to the profit of loan companies, such as Wonga.

[The Prime Minister]

First, like many people and many parents, I think it is absolutely right for schools, if they want, to choose to have a tough and robust uniform policy. I was at the opening of a new free school in Birmingham yesterday where all the parents in the room were grateful for the school’s policy. I have to say that what I see is the hon. Lady trying to find a way to oppose free schools. The fact is that we now have 194 free schools. [Interruption.] The Opposition do not like it because parents think it is a good education. The Opposition are going to have to listen to the figures: two thirds of these schools are either “good” or “outstanding”. At some stage, just as it got it wrong on the economy, the Labour party will have to admit that it got it wrong about free schools, too.

[Dr Julian Lewis (New Forest East) (Con)]

It cost the Ministry of Defence £1.4 billion to extend the life of the four Trident submarines so that the Liberal Democrats could study alternatives. Now that that study has shown there is no alternative to Trident, will the Prime Minister consider signing the main-gate contract for the first two submarines, so that we can never again be blackmailed by the Liberal Democrats in a hung Parliament?

[The Prime Minister]

I have to credit my hon. Friend with remarkable consistency on this issue, on which, basically, I agree: we have Trident, it is the right approach and we need to renew Trident. Actually, the delay of the main-gate decision has saved us money, rather than cost us money. His point about the review is absolutely right. It shows that if we want a proper functioning deterrent, we need to have the best, and that means a permanently at-sea submarine-based alternative. That is what a Conservative-only Government, after the next election, will deliver.

[John Mann (Bassetlaw) (Lab)]

Q15. Is it not the case that—[Interruption.]

[Mr Speaker]

Order. The hon. Gentleman is something of an exotic creature in the House and I think that that excites interest on Government Benches, but I do wish to hear what he has to say and he must be heard.

[John Mann]

Is it not the case that real wages have fallen by nearly £1,500 a year since the right hon. Gentleman became Prime Minister?

[The Prime Minister]

Of course we live in tough times because of the incredible mess we have had to clear up from the Opposition. I have to say that the Opposition complaining about the economy and living standards is like the arsonist complaining to the fire brigade. It is this Government who are turning the economy around, and that is the way we will get living standards up.

[Gordon Birtwistle (Burnley) (LD)]

Burnley was recently awarded, by the Department for Business, Innovation and Skills, the prestigious award for the most enterprising town in the UK. Does my right hon. Friend wish to congratulate the many businesses in Burnley who are members of the Burnley bondholders scheme on their achievement?

[The Prime Minister]

I certainly congratulate businesses, large and small, in Burnley for the enterprise they have shown. The fact about this recovery is that it is a private sector-led recovery. That is what we needed after massive and excessive Government spending, and it has been very good that businesses up and down the country, including in Burnley, have done so much to take people on and to get our economy moving.

[Mr Speaker]

We will move in a moment to the urgent question from Yvette Cooper. Perhaps Members who are leaving the Chamber could do so quickly and quietly.

Border Force

Wednesday 4th September 2013 Commons Chamber

12:35

[Yvette Cooper (Normanton, Pontefract and Castleford) (Lab)]

(Urgent Question): To ask the Secretary of State for the Home Department to make a statement in response to the National Audit Office’s borders report.

[Hon. Members]

Where is she?

[The Minister for Immigration (Mr Mark Harper)]

I hear Opposition Members shouting out about where the Home Secretary is. I know that the shadow Home Secretary has no confidence in the shadow Immigration Minister, after his extraordinarily successful summer, but I am responsible for these matters in the Home Office and I am dealing with the urgent question.

Early in 2011, the independent chief inspector of borders and immigration—

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

Where’s the Home Secretary?

[Mr Harper]

It is no good Members complaining. They ought to remember that this Government inherited from Labour a border system that, like many other parts of government, was not functioning very well at all. This is another area where we have had to put things right.

In 2011, the independent chief inspector of borders and immigration reported that border security checks were often suspended without ministerial approval, and found poor communication, poor managerial oversight and a lack of clarity about roles and responsibilities in Border Force. In response, the Home Secretary removed Border Force from the old UK Border Agency and brought it back within the direct command of the Home Office. Since then we have seen a considerable improvement in performance. As the NAO recognises, all passengers are now checked and queue times are reduced. Indeed, as set out in its last report, targets for detection and seizure of harmful goods and substances are being met and exceeded.

The UK operates one of the most secure borders in the world, with more than 200 million people crossing the border and hundreds of billions of pounds of goods imported and exported. The capability delivered by our border systems is one of the most advanced in Europe and among the best in the world. We are one of only a handful of countries that operate a pre-departure checking system, preventing those who would do us most harm from even boarding aircraft, but of course there is some way to go. Border Force has carried out extensive works on its systems, including the warnings index, which ensures that dangerous persons are identified at the border, to ensure that it continues to operate effectively. We will continue to drive up the performance and resilience of the warnings index and other key systems to ensure that they fully support our officers’ efforts to protect the border.

The culture and morale in Border Force are very important. We are dedicated to ensuring that every member of staff is motivated, trained and developed. Challenges remain, but I and Sir Charles Montgomery, the new permanent director-general, a former Second Sea Lord, have visited many staff at the border to speak to them. I have found a work force proud of the work they do, committed to the task in hand and always keen to tell me about their successes and the challenges that exist.

People have said that we are not checking everyone who comes into the country, but the report is clear that that is not the case. Since we introduced the ministerially endorsed operating mandate last year, full checks are being delivered at our ports. Last year, more than 135 million passengers and crew were screened even before they reached the border, resulting in more than 2,880 arrests, including for murder, rape and kidnap.

As well as checking all passengers arriving, we continue to perform intelligence-led checks on goods and freight coming into the country. The National Audit Office confirms that Border Force is meeting and exceeding targets for seizures of some of the most dangerous and harmful materials that criminals attempt to bring into the country. Our class A drugs and firearms targets are being met and exceeded, as are our targets for illegal entrants at our juxtaposed border controls in France and Belgium. Last year we detected 6,000 clandestine attempts at Calais alone and this year we are running ahead of that rate.

Since its establishment last year, Border Force has been working to ensure that the chief inspector’s recommendations have been addressed. During last year’s Olympics, Border Force received significant recognition for its work ensuring that athletes, VIPs and visitors from across the world entered the country without delay, in order that the UK could deliver a world-class games. I am delighted to say that the NAO’s report confirms that we have improved against every one of the recommendations in the chief inspector’s report. I commend this statement to the House.

[Yvette Cooper]

That was a very complacent response from the Minister, with no explanation of where the Home Secretary is. Today’s National Audit Office report reveals that customs examinations, including for drugs and firearms, are being suspended to cope with passport controls, that checks for illegal migrants hiding in lorries are frequently being stopped, and that staff are reducing the questioning of those with suspect visas in order to meet other pressures. The report also reveals a culture of fear and low morale, as well as leadership problems, with five different directors-general in the past 18 months, staff shortages, understaffing at countless ports even after the latest recruitment, and a funding gap. It states that the Department’s internal auditors have confirmed that the Olympics and wider resourcing issues have had an impact on the security of the border. Will the Home Secretary now publish that internal audit report, so that we can find out how many times checks were stopped?

The NAO report also states:

“In Calais, we observed officers being taken off controls to detect clandestine illegal entrants to the UK concealed in lorries in order to deal with passenger queues”.

That was seen to happen three times in three days, and freight searching was suspended on a further 19 occasions due to understaffing. So, if checks were stopped 21 times in three days, how many times have they been stopped in the past year? At that rate, it would have been 2,500 times at Calais alone. It is no wonder that officers stopped trying to fingerprint stowaways; it seems as though they stopped trying to catch them at all.

It also seems as though the Home Secretary’s only answer to illegal immigration is to get a man in a van to drive round in circles with a poster asking people if they would mind going home. People do not want gimmicks; they want the Government to get the basics of border security right. The Home Secretary cannot duck her responsibility for that. She ignored the warnings and cut 500 staff from the Border Force before the Olympics. She is just shunting the problem round in circles. First the passport checks, then hours of queues, and now drops in checks on stowaways, guns and drugs and, still, a big drop in the number of illegal migrants being stopped at our border.

The Government are not sorting out the fundamental problems. Each time, the Home Secretary blames someone else, reshuffles the deckchairs and sends someone else to answer the questions. So, will this Minister answer the questions? How many times have the checks been stopped? Will he publish the internal report? And will the Government stop ducking their responsibility and sort the fundamental problems out?

[Mr Harper]

First, the right hon. Lady is not right to say that checks were suspended. That is not what the report says. As she will know, there is a layered approach at Calais. Checks are done by Border Force officers, and searching by the port authorities also takes place, using equipment supplied by us. We also have contractors, who were absolutely excellent and very successful when I visited in the summer. The day I was there, one of our contractors with detector dogs had that morning found 24 people attempting to enter—[Interruption.] Well, with the greatest respect, I know that labradors are intelligent, but I do not think that that labrador was aware that a Minister was arriving to observe the search for clandestine immigrants. I believe that that level of performance is sustained every day. [Interruption.] The hon. Member for Rhondda (Chris Bryant) has not had a great summer for well-researched thought-through speeches, as everyone in the House is well aware. Perhaps it would be welcome if we heard a little less from him. It is not the case that checks were suspended, even if Border Force officers were dealing with queues. Freight searching was still being carried out, both by our contractors and by the port authorities.

The shadow Home Secretary also referred to the decision not to fingerprint clandestines. I remind her that that decision was actually taken by the former Government of whom she was a member. It was taken early in 2010, which, if I remember rightly, was before the last general election. As I said in response to the chief inspector’s report, that is something that we are reviewing to see whether the decision remains sensible.

On the issue of a culture of fear, all I can say is that I have visited a number of our ports—both airports and seaports—and our juxtaposed controls and, in my experience, the officers I met were, as I said in my statement, dedicated staff. I did not find any reticence on the part of officers in either saying what they were good at or stating where they thought there were issues. They raised their concerns directly with Ministers, and my experience was also the experience of the director-general. I say simply, then, that what the right hon. Lady mentioned was not my experience.

I think I have dealt with the shadow Home Secretary’s point about leadership, as we have now appointed a permanent director-general who, in his capacity as Second Sea Lord, has a record of achievement from outside the Department. I believe that he has already started to lead the organisation in a very powerful way.

Finally, the right hon. Lady made a last throwaway remark about our pilot of publicity on vans. I would point out here that most of the public support the tough stance we have taken on illegal immigration and that the majority of voters of all parties—72% of the public—support the vans. They want to see our tough approach continue and they do not want the weak approach of the Labour party.

[Mr John Redwood (Wokingham) (Con)]

I would like to thank the Minister for a very visible improvement in the performance of the Border Agency over the last year or so, and urge him to work with his staff to ensure that ever-higher standards are achieved by promptly and courteously allowing the legal people in and by ensuring that we find all the illegals at the first point of entry.

[Mr Harper]

I am grateful to my right hon. Friend. I know from a conversation we had that he has seen the work that our border officers do in our juxtaposed controls, where attempted illegal entries are prevented from even getting to the United Kingdom. He makes a good point, too, about the rest of the UK Border Agency after the agency’s split into the two component parts of UK visas and immigration and immigration enforcement. It is doing exactly what my right hon. Friend said, which is to welcome those who come to Britain to contribute—skilled workers and students, for example—while deterring those who do not and ensuring that those who overstay their welcome are removed from the country.

[Keith Vaz (Leicester East) (Lab)]

Ministers were right to respond to public concern and the recommendations of the Home Affairs Select Committee by putting in additional staff to check passports, but it appears from this report that that came at the expense of those who should have been checking vehicles and people before they entered the country. Will he confirm whether that was, in fact, the case; and will he further confirm that the legal loophole, mentioned in the report by John Vine, has now been closed? Does he agree that co-operation with our EU partners is essential, given that the UK border is actually the border between Turkey and Greece—that is where illegal migration enters the EU—and that unless the French are prepared to work with us in furthering that co-operation, we will not be able to stop people entering our country?

[Mr Harper]

I welcome the remarks of the Chairman of the Home Affairs Select Committee. He raised three questions, which I shall endeavour to answer. The first was about resources, and given that the checks were not being conducted as they should have been in all cases, it would be fair to say that in responding to the chief inspector’s report and implementing the operating mandate, it was clearly necessary to increase the resources going into the Department. As to whether we have the balance right, it is obviously something that we keep under review, and it is a challenge for all operational managers. I refer back to the National Audit Office’s last report, not the one published today, that looked into our detection and seizure of serious goods—class A drugs, firearms and so forth—that people were attempting to get through the border. The report said that in all those cases we were meeting and exceeding our seizure and detection targets. The proof of the pudding is in the eating, and I think that we are succeeding.

I do not have time to go in detail into the right hon. Gentleman’s point about the legal loophole, but I can say that we are making considerable progress and that his general point about the importance of partnership working is absolutely true. I recall a visit last autumn when I met the new French Interior Minister, and I visited Calais and Coquelles this summer in order to see for myself the co-operative work going on between the French port authorities and our Border Force officers. Such co-operation is excellent and we need to keep it in that good shape as we go forward.

[Martin Horwood (Cheltenham) (LD)]

Does not the report demonstrate that endless headline-grabbing reorganisations and legislation—with four Acts coming from the last Government alone—were always less important than ensuring that the system we have is effective, efficient and well managed? Is that not something on which we should all be able to agree, instead of turning this serious issue into a party political football?

[Mr Harper]

I agree with my hon. Friend and Gloucestershire near-neighbour. It was clear from the chief inspector’s report that we had inherited an organisation that was not doing the day job properly, and was not checking everyone who was coming into the country. The whole point of splitting Border Force from the UK Border Agency was to improve that situation. The NAO report has made it clear that we have made progress in regard to all the chief inspector’s recommendations, that we are dealing with the issues that have been raised, and that Border Force is in better shape. However, we are not complacent. There is always more to do, and we now have an excellent director-general who is leading that important job of work.

[Paul Goggins (Wythenshawe and Sale East) (Lab)]

Will the Minister confirm that he and the Home Secretary have been receiving monthly reports about the length of queues? If that is the case, will he tell us whether those reports have included details of the number of checks carried out in relation to illegal entry and, indeed, items such as drugs and firearms?

[Mr Harper]

As the report says, there was a period when there was a real problem with queues and the Home Secretary and I were receiving frequent reports every day, but I am pleased to say that that is no longer necessary, because the organisation is now in much better shape. We focused very much on that problem, but it has largely been fixed, and I think more than 99% of passengers entering the country are now dealt with through our service level agreements.

As I said to the right hon. Member for Leicester East (Keith Vaz), we are meeting and exceeding our targets in relation to the detection of firearms and substances such as class A drugs which people attempt to bring into the country. Border Force is delivering on that.

[Yvette Cooper]

That is not what it says.

[Mr Harper]

If the right hon. Lady looks at the NAO’s report, which it compiled specifically on this issue for the 2012-13 financial year, she will see that during that period we were meeting and exceeding our targets on class A drugs and firearms. [Interruption.] It is true. I will be frank and admit that we were doing less well on tobacco and counterfeit goods, but in relation to the really important things such as class A drugs and firearms we were meeting and exceeding our targets. I think that that should reassure Members.

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

The key question must be whether Border Force has the capacity to carry out both the customs checks and the passenger checks that are necessary to protect our national security. The NAO report expresses concern about that. Does the Minister think that Border Force’s current recruitment process will deal with any concerns that he may have?

[Mr Harper]

I thank my hon. Friend—who is also a member of the Home Affairs Committee—for her question. As I explained in my response to the shadow Home Secretary, there was a problem to start with when we introduced the operating mandate. Full checks of people coming into the country were not being carried out. We accordingly provided more resources, and, as my hon. Friend acknowledged in her question, we are now hiring new Border Force staff in a number of ports. Our best assessment is that both funding and manpower are sufficient to enable us to do the job, and, although of course we keep the position under review at all times, I think that the balance is right at the moment.

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

If everything is fine, why is the National Audit Office so critical of so many aspects, including what it describes as “a culture of fear” and “low morale” among Border Force officers? Incidentally, should not the Home Secretary, rather than the Minister, be here to respond to my right hon. Friend the shadow Home Secretary?

[Mr Harper]

I think I explained that in my response. I am the Immigration Minister, I am responsible for these parts of the Home Office, and the Home Secretary is content for me to deal with this. [Interruption.] The shadow Immigration Minister should stop chuntering from a sedentary position. He has not had a great summer. I can understand why the shadow Home Secretary—[Interruption.]

[Mr Speaker]

Order. Let the point be made from the Chair that the hon. Member for Rhondda (Chris Bryant), who has exercised his vocal cords very fully, should now cease to do so. Let us hear from the Minister.

[Mr Harper]

I am very pleased, on this occasion, to agree 100% with that sentiment, Mr. Speaker. I think I speak for most Members when I say that.

Let me respond to the serious point made by the hon. Member for Walsall North (Mr Winnick). I do not think I said in my response that everything was rosy. I said that we had inherited an organisation with problems, that we were tackling the problems and that there was more to do. I also said that in response to the question from my hon. Friend the Member for Cheltenham (Martin Horwood), and I pointed out that we had a new director-general.

My experience in the Home Office is that there is always more to do. We have to keep on top of the task of dealing with people who try to come into the country and should not be doing so—while welcoming those who should—and we have to deal with the ever-changing security threats. That is a challenge that I think we are meeting, and meeting every day. I should add that our front-line officers do an excellent job in keeping the United Kingdom safe.

[Mark Reckless (Rochester and Strood) (Con)]

Should not the Border Force, like any organisation that has to deal with pronounced peaks in customer demand, be allowed the flexibility that would enable it to transfer staff from other activities to assist when there are such peaks in demand? Obviously, if we are given intelligence that drugs are coming through, we shall not want to transfer the staff who will deal with that, but is not transferring people who are carrying out fewer random checks than others an example of sensible management?

[Mr Harper]

My hon. Friend has made a sensible point about intelligence. Obviously, as I said in my response, we use it to guide the efforts that we put into freight checking. My hon. Friend has also made the sensible point that there are peaks and troughs in the number of passengers crossing the border. As well as our permanent work force, we have staff on whom we can call at those peak times to ensure that we continue to deliver a secure border, but we are also mindful, of the need to deliver value for money, which the National Audit Office mentions in its report. Of course, all Departments have to deal with the appalling financial legacy that we were left by the Labour party.

[Fiona Mactaggart (Slough) (Lab)]

The Minister has laid much stress on the quality of border checks. As he will know, at the end of the last Session I was privileged to be elected chair of the all-party parliamentary group on human trafficking, and in that role I have been meeting groups who work with trafficked people. Kalayaan tells me that it has yet to meet a holder of an overseas domestic worker visa who, under the new visa system, has actually carried his or her own passport through the passport check. The passport is always held by the visa holder’s employer. What will the Minister do about that?

[Mr Harper]

The operating mandate specifies that everyone who crosses the border must have his or her passport checked and must have the necessary documents. On the basis of what I know, I do not think that what the hon. Lady says is correct, but I will make inquiries and then write to her. I think that that is a reasonable way to approach the matter. In the meantime, given her position as chair of the all-party group, I shall be happy to maintain a sensible dialogue with her on human-trafficking issues.

[Bob Blackman (Harrow East) (Con)]

UK Border Force did an excellent job during the Olympics, welcoming millions of new visitors. We hope that they will come back, in which case we will welcome them warmly again. However, is it not time that there were separate streams at our airports and ports—one for UK nationals with UK passports who are returning to the country, one for EU entrants and one for everyone else? Would that not enable us to streamline the whole process?

[Mr Harper]

First, as my hon. Friend knows, one of our obligations as members of the European Union is to deal with European passport holders together with those from the UK. Secondly—this is a practical point—adopting his suggestion would require us and the airports to spend an extraordinary amount of money on remodelling all our airports and ports, which I do not think would be very sensible at present.

The basis of my hon. Friend’s point, however, is the need to ensure that British citizens returning home, EU nationals coming to Britain and people coming here from outside the EU all have a good experience at the border. The NAO report suggests that we are performing the necessary checks to make certain that the border is secure, while processing people within the provisions of our service level agreements and enabling them swiftly to enter the United Kingdom, where they will be able to work and spend some of their hard-earned money to benefit our economy.

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

There may well be an argument for some staff flexibility, but can the Minister positively assure us that there is no danger that some officials are more worried about television pictures of queues than about the risks at our borders?

[Mr Harper]

I can assure the hon. Gentleman of that. I make it very clear on my visits, as does the director-general, that we must deal with both those challenges—people crossing the border and freight. As I said in response to the shadow Home Secretary, there was no suspension of freight checks at Calais. We adopt a multi-layered approach. Even when Border Force officers are not searching vehicles, the staff at the port and our contractors are doing so. I am confident that there are proper checks on people coming into the United Kingdom, and proper intelligence-led checks on freight and goods as well.

[Jackie Doyle-Price (Thurrock) (Con)]

Is my hon. Friend aware that the Border Force team in Tilbury, in my constituency, has been reporting much higher morale since being spun out from the Border Agency? Does not the report also confirm that that was exactly the right decision?

[Mr Harper]

I am grateful for my hon. Friend’s comment. I had the great pleasure of visiting Tilbury with her early in my time as Immigration Minister, and was very impressed with the engagement of staff there. As she says, the report confirms making Border Force a stand-alone organisation in the Home Office was the right thing to do. It has enabled the organisation to focus on delivering on the operating mandate, and I think that under the new permanent leadership of Sir Charles Montgomery, that process will continue.

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

Is the substance of what is reported in the national newspapers accurate or inaccurate, and what challenges does the Minister think still remain?

[Mr Harper]

Having gone through the report very carefully, I think that it is probably fair to say that not all the national newspapers over-egged the pudding in how they reported the report. I thought that the report was very balanced. The interviews that the National Audit Office did this morning were very balanced. It made the point that Border Force is doing lots of things very well, but it recognises that there are still challenges. I think that I echoed that tone in my remarks. We have made significant improvements, but there is still more work to be done. That, in a nutshell, is what the NAO said in its report, and we are grateful for the work that it does.

[Sir Tony Baldry (Banbury) (Con)]

My hon. Friend said that last year Border Force detained some 6,000 people at Calais trying to enter the UK. Presumably, all of them were already illegal immigrants in France. Following on from the comments of the Chair of the Home Affairs Committee, the right hon. Member for Leicester East (Keith Vaz), can my hon. Friend tell the House what the French are doing to remove from their jurisdiction illegal immigrants who are intent upon entering our jurisdiction?

[Mr Harper]

My hon. Friend asks a two-part question. The first part was whether everyone trying to enter the UK illegally is necessarily in France illegally. That is not necessarily the case. France is in Schengen, of course, and there are people who are entitled to be in France but who do not have the right to enter Britain illegally in the back of a lorry, so we stop them entering. Some of them are, of course, in France illegally, however, and we work with our French colleagues by doing what we can to help them to make sure they are removed from France. Not all of them will be in France illegally, however, and I reiterate what I said in response to the Chair of the Home Affairs Committee: partnership-working with our colleagues in France is very important and works very well, and we want to make sure that that strong relationship continues because it is how we keep our border secure.

[Mr Geoffrey Robinson (Coventry North West) (Lab)]

Did I hear the Minister right when he said we are doing less well on illegal cigarettes? That is very noticeable in Coventry, which has become a centre nationally for massive trafficking in cigarettes. Does he agree with the NAO director, Louise Bladen, that—despite all the reassurances he has given us, with great politeness and courtesy—it is just not the case that the resources are there to deal with cigarettes, for example, which are continuing to flood in?

[Mr Harper]

We do a very good job in intercepting hundreds of millions of illegal cigarettes every year, bur I was making a point about the relative focus. The last NAO report found that we were meeting and exceeding our targets on class A drugs and firearms. On cigarettes, we were doing less well, but we are still intercepting hundreds of millions of cigarettes. We work with our colleagues overseas to intercept where they are being manufactured and brought into the country. I have seen lots of examples from visits of where our officers have intercepted considerable volumes of cigarettes. That work needs continuous attention. I was simply making the point that, clearly, if we are going to focus our resources, I would prioritise dealing with class A drugs, firearms, illegal immigration and people who put weapons together above cigarettes, but that was in no way to say that dealing with the illegal smuggling of tobacco was in any way unimportant.

[Michael Ellis (Northampton North) (Con)]

I congratulate the Minister because it is clear that the Department under his leadership has been doing much—

[Chris Bryant (Rhondda) (Lab)]

Under his leadership?

[Michael Ellis]

Under his leadership on the immigration issue, the Department has done extremely well to improve UKBA over the last year, because is it not true that we inherited a massive pig in a poke from the last Labour Government, including massive net immigration, uncontrolled transitional arrangements for eastern Europeans, the Human Rights Act 1998, a 450,000 asylum backlog and all the rest of it? The Minister inherited a complete mess from the Labour party, and does he agree that we are doing everything to improve that position?

[Mr Harper]

I agree with my hon. Friend, and let me say two things. On the cigarette point, despite the fact that the last report found that we were not hitting the target for cigarette seizures, cigarette seizures were still up by 7%, so Border Force was improving its performance; it just was not improving it fast enough to hit our very ambitious targets. In answer to my hon. Friend’s general point, what he said provides me with a good opportunity to say that I am glad to be able to report that that huge asylum backlog was largely sorted out before I became Immigration Minister by my excellent ministerial colleague, my right hon. Friend the Member for Ashford (Damian Green), so I had a much better inheritance than the one that he inherited from the Labour party.

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

The NAO report and the Minister’s answers today have made it clear that freight checks were adversely affected as a result of staff shortages and policy changes. Can he tell us how many illegal migrants have been found on freight this year and in previous years?

[Mr Harper]

I do not think I acknowledged that at all. In terms of the figures that I set out for Calais, 6,000 attempted illegal migrants were intercepted last year and so far this year we are running ahead of that rate, so I am confident that the full-year total will be ahead of it. The performance is improving, therefore. I saw that myself when I visited, and our officers do an excellent job in stopping people even getting to the UK. That is why the juxtaposed controls are so important.

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

Does my hon. Friend share my constituents’ anger about the last Labour Government’s record on immigration? They allowed net immigration to rise from about 35,000 a year to over 200,000 a year in the Labour years. May I congratulate my hon. Friend and the Home Secretary on reducing net immigration by a third in just three years in office?

[Mr Harper]

My right hon. Friend is right; that is certainly the view that I get, too. There is one thing that Labour never acknowledge when criticised on this. They happily acknowledge that they made mistakes on immigration from eastern Europe, but they forget to tell the public that, under their watch, immigration from outside the EU went up by far more. They have never apologised for that.

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

Will the Minister assure me he will not bring these xenophobic “go home” hate vans to Scotland, and will he remove the unwanted, disgraceful “go home” materials from the UKBA office in Glasgow?

[Mr Harper]

I do not think the hon. Gentleman reflects the views of the public in the way that he characterises those vans. The majority of people in this country want a very robust stance. Asking people who have no right to be in the UK—who are here unlawfully, taking the mickey out of everyone else—to go home, as they should do, rather than forcing the taxpayer to spend up to £15,000 on arresting, detaining and enforcing their removal, is a very sensible thing to do, and I am not going to apologise for it.

[David Morris (Morecambe and Lunesdale) (Con)]

I represent the port of Heysham, where we have had success in stopping tobacco smuggling. Does my hon. Friend agree that this is good news under your tenure, and would you like to come to the port and see how it does it?

[Mr Speaker]

Order. I have no plans to do so, I must say, and I am not aware of any tenure of mine, but the Minister may seek to address the matter.

[Mr Harper]

Mr Speaker, you are, of course, always welcome to visit any of our ports if you want to do so. I would be very pleased to take you on a conducted tour if ever you have a moment and are willing to do so.

In answer to my hon. Friend’s question, I will look at my schedule of visits. I am always happy to visit our operations around the country to see what our officers are doing on the front line. I find those visits very illuminating, and as I have said, officers take advantage of them to share with Ministers and the director-general both the things that are going well and the things that they think we ought to focus more on.

[Mr Speaker]

The Minister’s public-spirited generosity is truly boundless.

[Mr Khalid Mahmood (Birmingham, Perry Barr) (Lab)]

What checks have been made on individuals with serious criminal records from eastern Europe entering the UK?

[Mr Harper]

Checks are made, but to some extent we are dependent on what other countries tell us. The hon. Gentleman may be aware that the second generation of the Schengen information system will hugely improve our ability to share criminal record information with our European partners, and when that comes online in the next year or so, it will give us a much greater ability to stop known criminals entering the UK and therefore enable us to protect the border better.

[Gavin Barwell (Croydon Central) (Con)]

May I draw my hon. Friend’s attention to what the NAO had to say about the improvements that Border Force has made at Gatwick? Does he agree that that is illustrative of the wider picture, which is that there is absolutely no room for complacency and further improvements are needed, but today our border is more secure than it was under the last Government, when hundreds of thousands of people were allowed to come into this country illegally?

[Mr Harper]

I am pleased to agree with my hon. Friend’s sentiments. He might be interested to know that, as announced just today, our Border Force officers seized 8 kg of cocaine, with a street value of up to £800,000, at Gatwick airport. That demonstrates the sort of work that they carry out every day to keep the country secure, both from those who come here who should not be here and from harmful goods that people try to bring into the country.

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

A week after the Home Office’s racist “go home” vans had been touring English cities, I visited the mosque in Corby and was appalled to find outside it the words “go home” in very large letters. That was the act of a tiny minority of people in my community, spurred on by the Government’s racist attack on people in this country.

[Mr Harper]

I simply do not agree with the hon. Gentleman and, if the polling is to be believed, neither do the British people. Most people in this country do not agree with that characterisation of our pilot. It was clearly aimed at people who have no right to be in the country, not at British citizens or people who are here lawfully. We were asking people who were here illegally to leave the country. We are running a pilot and we will look at its results to decide whether or not it should be rolled out. I simply do not agree with him, and I do not think the British public do either.

[Mr Andrew Turner (Isle of Wight) (Con)]

Massive net immigration, 450,000 asylum seekers in a backlog, no transitional controls and the Human Rights Act—that is the shambles we were left by the Opposition. May I say how brilliant it is that the Government are sorting it out?

[Mr Harper]

I am grateful for my hon. Friend’s comments. As I have said, it is a bit rich listening to the Labour party moan about all the things that it left us and we are fixing—that constant refrain applies across all Departments. May I say, in answer to a previous question, that the second generation of the Schengen information sharing system will be online, under the current plan, at the end of October 2014? That will very much improve our ability to deal with criminals from elsewhere in the European Union.

[Jim Shannon (Strangford) (DUP)]

Cigarette smuggling through the airports in Northern Ireland is excessive; there is also some indication of paramilitary involvement. Border Force staff have told me that, if there were more staff, they could combat the issue clearly at the airports. What steps will the Minister take to ensure that extra staff are made available in Northern Ireland to take on this issue?

[Mr Harper]

Obviously, we look at the intelligence available to us, particularly on freight. I am well aware of the potential paramilitary implications in Northern Ireland of cross-border smuggling and the fact that organised crime may be funded in this way. So we look at that information on organised crime. We have also created the National Crime Agency, albeit with restrictions on its actions in Northern Ireland in the criminal justice sphere. In the border field, however, the border policing command, the improved intelligence that we get and the increased ability to combat crime will be helpful in combating both the crimes the hon. Gentleman has mentioned and others that cross our borders.

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

The London Gateway port is opening this autumn, so my constituents will welcome the improvements identified by the NAO and the tightening of our border controls. Does the Minister agree that it is time for the Labour party to just say sorry for the chaos that it left us to sort out?

[Mr Harper]

I agree with my hon. Friend. I have looked at some of the plans for the London Gateway, which is an excellent development; it is a really important port. I sense that London Gateway and Felixstowe will be competing with each other as to which is the largest port in the United Kingdom. We work closely with the port operator, and we will properly resource the checks at the port. He can have confidence that we will do that.

[Charlie Elphicke (Dover) (Con)]

My constituents, many of whom work at the controls in Dover and Calais, think that the Government have had real success in stopping illegal entry into this country, after years when people could basically just wander in. However, my constituents do have concerns about smuggling and trafficking, so will the Minister seek to prioritise lorry checking at Dover and investment in smashing international supply chains for traffickers and smugglers?

[Mr Harper]

I am grateful for my hon. Friend’s comments. Again, I had the pleasure of visiting the port in his constituency and talking to officers, who raised some of the points that he has just raised with me about getting that balance right across Border Force between checking people and checking goods. We keep that under review, looking at the intelligence about the threats to the United Kingdom. We deal with that on a daily basis, and I hope that I can give him that reassurance.

Point of Order

Wednesday 4th September 2013 Commons Chamber

13:12

[Fiona O’Donnell (East Lothian) (Lab)]

On a point of order, Mr Speaker. During today’s Prime Minister’s questions, in response to a question from my hon. Friend the Member for Ochil and South Perthshire (Gordon Banks) about Government support for food banks, the Prime Minister said that the Secretary of State for Work and Pensions had enabled Jobcentre Plus staff to make referrals to food banks. The Trussell Trust has informed me that the Secretary of State for Work and Pensions has actually stopped that happening now and has advised staff that they can no longer make referrals, and that this is causing chaos for hundreds of people in need. I have tabled a parliamentary question on this issue, which should have been answered yesterday—I am still waiting for an answer. Can you assist me by advising how we can ensure that those in this House, volunteers in food banks, Jobcentre Plus staff and, most importantly, those in need have the correct information?

[Mr Speaker]

I am grateful to the hon. Lady, both for her point of order and for her courtesy in giving me advance notice of her intention to raise it. She believes that she has identified an inconsistency between what the Prime Minister has told the House and what the Secretary of State for Work and Pensions has said. Those on the Treasury Bench have now heard what the hon. Lady has to say. If Ministers agree with her, no doubt the position will be clarified. Each and every right hon. and hon. Member in this House is responsible for his or her own words. Beyond that, the hon. Lady has identified the fact of the question she wishes speedily to be answered. She is a persistent and assiduous Member, and I am confident that she will soon get an answer, perhaps aided and abetted in pursuit of it by her point of order. If she does not get one, she can table further questions, and I have a sense that this is a bone that she will cling on to for as long as she judges to be necessary.



Bill Presented

Executive Pay and Remuneration

Presentation and First Reading (Standing Order No. 57)

Thomas Docherty presented a Bill to require that companies’ remuneration committees have employee representation; to require that companies hold an annual binding shareholder vote on executive remuneration; and for connected purposes.

Bill read the First time; to be read a Second time on Friday 13 September, and to be printed (Bill 105).

Parental Bereavement Leave (Statutory Entitlement)

Wednesday 4th September 2013 Commons Chamber

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

13:16

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

I beg to move,

That leave be given to bring in a Bill to make provision for statutory entitlement to leave of absence from employment for bereaved parents; and for connected purposes.

I seek leave to introduce a Bill to amend the Employment Rights Act 1996 to give all parents who have suffered the loss of a child a statutory right to paid leave. May I begin by thanking Members from all parts of the House, many of whom are present, for their support for this Bill? First, I wish to highlight the work of Lucy Herd and the Jack’s Rainbow campaign she established after the loss of her 23-month-old son, Jack, in tragic circumstances in August 2010. After his son’s death, Lucy’s partner was given just five days’ compassionate leave before having to return to work. Like many Members of the House I have spoken to, Lucy was surprised that parents did not already have a legal right to paid leave after the loss of a child, and I want to pay tribute to her for working tirelessly to get paid bereavement leave for grieving parents on to the statute book.

Most of us can imagine nothing more distressing than losing a child. Yet at this traumatic juncture in a parent’s life, there is no guarantee of paid statutory leave in the event of a child’s death. The physical and emotional toll on parents demands such a provision. In the immediate aftermath of a child’s passing, bereaved parents must cope not only with their own grief, but with that of their family. Siblings must be comforted, and family and friends informed. To add to the burden, a great deal of administrative work and other arrangements must be undertaken: a funeral needs to be organised, and schools and benefit offices must be notified. And in the case of a sudden or accidental death, a post-mortem or inquest is required. That may take many months to conclude, prolonging the anguish.

At present, all employees have the right to take immediate “time off for dependants” under the Employment Rights Act 1996. That is a legal right to unpaid leave to cope with family emergencies. However, there is no set limit on how many days can be taken, only a vague definition of a “reasonable amount of time”. Each employer will have their own bereavement policy, which typically provides for just three to five days’ leave.

In response to an e-petition calling for statutory bereavement leave, which has received almost 23,000 signatures, the Department for Business, Innovation and Skills stated that all requests for leave related to bereavement are best left to employers and their employees to decide between themselves. I understand that the amount of leave needed can vary from one individual to another: some parents will not be able to face going back to work, whereas others may find returning to work a welcome distraction. Grief is not uniform—it affects people in different ways—and each person will need a time specific to them to deal with it.

Many employers act admirably and offer significant amounts of paid bereavement leave. Regrettably, however, some do not. In a large number of cases, employers have fallen far short of their duties. In one case that was recently televised on an episode of Channel 4’s “Undercover Boss”, a driver for the waste disposal company Biffa was forced back to work just a day after the loss of his daughter. In another tragic case a father, a builder, was expected back to work five days after he lost his daughter to sudden infant death syndrome. Despite feeling unready to return to work, having barely slept, the man was told to resume work or lose his job. On yet another occasion, a parent was given just three days off after the death of his four-year-old son. The funeral was arranged on the fourth day, leading to the man having to use up his paid holiday leave to attend. I wish those were isolated events, but they are not, and I could list many more.

In their response to the e-petition, the Government stated that they

“would expect any employer to respond to”

the loss of a child

“with sensitivity and flexibility”.

I find it difficult to believe, given the tragic cases I have just highlighted, that any Minister could find any merit in that statement. All grieving parents should be treated with dignity, and I hope the Government will acknowledge that under the current system that is not happening.

The Government have stated that it would be difficult to specify statutory bereavement leave entitlement because “limits, standards and definitions” would need to be put in place. The Government have also argued that it would be difficult to define

“what family relationship would qualify for such leave”

and that it would be

“impossible to legislate for every circumstance”.

I find that argument disingenuous. What limits, standards and definitions would be too complicated to establish in the case of a parent losing a child? Surely the Government should start from the moral case that parents should be afforded time off if their child passes away, and not finding obscure excuses not to act.

Again, I am under no illusions that the time needed varies from one individual to another, but instead of absolving themselves of all responsibility and leaving this to employers, Ministers should be working towards guaranteeing best practice. That can only be achieved through legislation.

The government have also argued it would be “impossible to legislate” for

“every family relationship that would qualify for such leave”.

How about a simple provision whereby only the parents of the deceased child are afforded statutory leave? That is a straightforward, common-sense way to proceed. I fully acknowledge that long-term staff absenteeism can hit productivity, particularly for small companies, but considering that parents are given paid maternity and paternity leave, it is difficult to argue why grief-stricken parents should not be afforded similar statutory rights. A mother is afforded up to 12 months’ leave for the birth of a child, but is given just three days for her loss. How can that be? On what moral basis can we give precedence to one and not the other?

I do not intend the measure to place unaffordable costs or unwanted regulation on employers. In fact, the circumstances that would give rise to such leave are as rare as they are tragic, and as I have said, most employers already choose to recognise their responsibilities to their workers. I know the current economic climate is pushing many businesses to the edge, but that also goes for ordinary families across the country. With the cost of living rising, grieving parents should never be forced to choose between meeting their responsibilities to their families and putting food on the table.

Parents who suffer the loss of a child must be allowed to grieve with dignity. That can only be guaranteed by a statutory right to paid bereavement leave, and I commend the Bill to the House.

Question put and agreed to.

Ordered,

That Mr Tom Harris, Stella Creasy, Dr William McCrea, Mr Stewart Jackson, Kwasi Kwarteng, Andy Sawford, Mr David Anderson, Iain Stewart, Tracey Crouch, Natascha Engel, Sheila Gilmore and Greg Mulholland present the Bill.

Mr Tom Harris accordingly presented the Bill.

Bill read the First time; to be read a Second time on Friday 18 October, and to be printed (Bill 104).

Opposition Day

Wednesday 4th September 2013 Commons Chamber

[6th Allotted Day]

Living Standards

Wednesday 4th September 2013 Commons Chamber

13:24

[Rachel Reeves (Leeds West) (Lab)]

I beg to move,

That this House believes that the Government is failing to turn things around for the UK’s hard working families; notes that this has been the slowest economic recovery on record, and that the Government is out of touch with the difficulties faced by ordinary families; recognises that average earnings are almost £1,500 a year lower in real terms than they were in 2010; notes in addition that tax and benefit changes since 2010 are costing families an average of £891 in 2013-14 according to the Institute for Fiscal Studies; further notes that the Government is making hard-working families pay more than their share to bring down the deficit while cutting income tax by an average of £100,000 for the 13,000 people with incomes over £1 million; and calls on the Government to ensure that the recovery is strengthened, sustainable and its benefits fairly shared by getting more people into work, bringing forward capital investment, as recommended by the IMF, introducing a compulsory jobs guarantee, backing fair taxes by reintroducing a 10p rate of income tax, paid for by a mansion tax on houses worth over £2 million, taking action on rip-off rail fares and soaring energy bills, standing up for families in the private rented sector, reforming the pensions industry, curbing payday lenders and implementing long-term reforms to banking, infrastructure planning and the skills system.

During the 2010 election campaign, the Conservative party made the rather bold claim that it would strive to

“see an economy where not just our standard of living, but everyone’s quality of life, rises steadily and sustainably”.

Looking back more than three years on, time has served that particular Tory manifesto pledge disastrously, as it has so many others. It is no wonder that people are feeling let down. Today, average earnings are almost £1,500 a year lower than they were when that pledge was made.

Since the end of 2010, the UK has seen the biggest fall in workers’ income of any country in the G7. Prices have risen faster in the UK than in any other major economy. It is another broken promise from this out-of-touch Prime Minister.

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

Does the shadow Chief Secretary accept Labour’s responsibility for its catastrophic stewardship of the public finances, which left this country with a budget deficit in excess of 11% of GDP?

[Rachel Reeves]

As the hon. Gentleman knows, there was a global financial crisis that hit every country in the world, and all countries are now dealing with the aftermath. As the Office for Budget Responsibility and the Institute for Fiscal Studies have said, budget deficit reduction has now stalled, not because the Government have not cut public services or put up taxes for ordinary people but because unemployment remains too high and economic growth too weak to get the deficit down.

This Prime Minister is ripping up the record books when it comes to overseeing falling wages for ordinary workers. Average wages have been falling behind prices for 37 of the 38 months of David Cameron’s prime ministership. Which month is the odd one out? It is April of this year, when the bankers reaped the rewards of deferring their bonus until George Osborne’s cut to the top rate of tax was implemented. That tax cut resulted in 13,000 people with an income of more than £1 million receiving a tax cut worth on average £107,000. That is four times average earnings in this country.

The rest, ordinary people, will be on average £6,660 worse off by the end of the Parliament. That is enough to have paid for the family weekly shop for more than a year and a half. Although he has said repeatedly, “We’re all in this together” and “Those with the broadest shoulders should bear the greatest burden”, how can families trust this out-of-touch Prime Minister, who has prioritised millionaires over millions of working people?

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

I thank my hon. Friend for giving way, and I am sure that Members on both sides of the House would like to welcome her back from her maternity leave. Does she share my concern that 4.8 million people are now earning below the living wage? Does she agree that that is a concern not just for them, because of their low living standards, but for the state and the Government? Social security benefits are having to rise to compensate for that low pay, so the number of in-work claimants of housing benefit alone has gone up to 1 million, with a 50% rise since 2010.

[Rachel Reeves]

As my hon. Friend will know, the number of people earning less than a living wage has gone up from 3.4 million in 2009 to 4.8 million today, which means that 20% of the work force in this country is now earning less than a living wage. My hon. Friend is absolutely right to point out that that means more pressure on the Treasury, more money spent on tax credits and more money spent on housing benefit. As I said in answer to the earlier intervention, the budget deficit reduction plan has stalled because those payments are going up as the economy is not growing in the way that it was supposed to.

[Alok Sharma (Reading West) (Con)]

The Labour motion contains a long list, including a lot of things that the Government are already doing. I also note that it does not call for a temporary cut in VAT, which was one of Labour’s flagship policies. I know that Labour is a policy-free zone at the moment, but is that another abandoned policy?

[Rachel Reeves]

The list of the Government’s failures could have been an awful lot longer, but we wanted a motion that would fit on the Order Paper. He talks about VAT—[Interruption.] I would be grateful if he listened to my answer. Two years ago the shadow Chancellor said that as an emergency measure VAT should be cut to stimulate the economy. In the two years since, the economy has flatlined. The shadow Chancellor also said that as the economy gradually moved into the recovery stage, the emphasis should be on infrastructure investment, which I think is important. It is because the economy has flatlined for two years that family finances are in the state they are in today.

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

Is my hon. Friend not struck by the fact that the interventions from Government Members seem to be addressing everything but living standards? The TUC has shown today that Flintshire, which my right hon. Friend the Member for Delyn (Mr Hanson) and I represent, has suffered the biggest fall in living standards in Wales.

[Rachel Reeves]

It is interesting that the interventions from Opposition Members refer to the challenges their constituents face owing to falling living standards. It is a shame that hon. Members on the other side of the House want to talk about anything but that.

I would like to talk about a family I met this week. On my first day back from maternity leave, I visited a family in Thurrock who told me what they were up against. The father, once a partner in a thriving small business, lost his livelihood three years ago during the recession. Desperately trying to keep up their mortgage repayments, he has spent the past three years taking whatever work he could get through employment agencies, often on the minimum wage and often on zero-hours contracts. He recently found a permanent job as a driver which, topped up with evening shifts doing deliveries, gives the family a bit more security, but it falls far short of making full use of his talents and experience.

The wife abandoned her dream of training to be a primary school teacher so that she could hold on to her relatively secure but modestly paid job in retail. Their daughter is studying for university and should do well, but she worries about fees. All of them pointed to a gaping and growing disconnect between their rates of pay and the costs they face for travel, housing and other basic necessities. Under this Government, the situation is getting worse for such families—families who want to get on in life.

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

It is possible that the hon. Lady has said something significant: that the Labour party has dropped its commitment to the temporary VAT cut. Given that as recently as June the shadow Chancellor said that he was committed to it, what has happened since then to cause it to be dropped?

[Rachel Reeves]

The shadow Chancellor said in his conference speech two years ago that VAT should be reduced from 20% to 17.5% as an emergency measure to stimulate the economy. The reality is that since then the economy has flatlined and we have continued to argue for that, but he has also said that as the economy slowly begins to move into recovery mode—we hope that the growth over the past two quarters will continue—the emphasis should move to infrastructure investment. Were we in government today, our priority would be the £10 billion of infrastructure investment that the International Monetary Fund has called for.

[Emily Thornberry (Islington South and Finsbury) (Lab)]

May I bring my hon. Friend back to the real-life situations that real people face? Is she aware that in Islington the cheapest subsidised place for full-time child care costs £164 a week? The minimum wage is £212 a week and the London living wage is £272. Is that reality not why it is so hard for so many people in Britain today to make ends meet?

[Rachel Reeves]

Of course, since the Government came to office, 400 children’s centres have closed and the child care element of the tax credit has been cut, making it harder and harder for ordinary families to afford child care.

Under this Government, the situation is getting worse for families such as the one I mentioned and those in my hon. Friends’ constituencies. One in 10 people who want to work more hours cannot get more shifts; 700,000 people are working more than one job, most of them out of desperation rather than choice; and 1 million people are thought to be on zero-hours contracts. Incidentally, zero MPs from the Government side turned up to the Westminster Hall debate on zero-hours contracts organised by my hon. Friend the Member for Sunderland Central (Julie Elliott).

[Lisa Nandy (Wigan) (Lab)]

My hon. Friend is making a strong case. The workers at the Hovis factory in my constituency recently rejected the replacement of full-time staff with agency workers on zero-hours contracts, but does she share my concern that so few people are able to stand up against that and that increasingly it is young people who are trapped in insecure, low-paid work, which means they have no ability at all to plan their lives or to budget?

[Rachel Reeves]

I thank my hon. Friend for that intervention; she is absolutely right. The Resolution Foundation produced an excellent report, published this morning, warning about low pay becoming entrenched. It does not just affect workers at the start of their careers; low pay this year results in low pay the next year and the year after that, which is particularly worrying.

Zero-hours contracts often mean that workers are vulnerable. As my hon. Friend the Member for Wigan (Lisa Nandy) said, they are unable to plan for the future and unsure of their ability to pay the rent or the bills each month. Let it be remembered that no Tory MPs or Liberal Democrats, apart from the Minister responding, could be bothered to turn up to debate that issue.

As my hon. Friend the Member for Westminster North (Ms Buck) mentioned, we learnt today that 4.8 million people are now earning less than the living wage. Figures I commissioned from the House of Commons Library show that almost 60% of new jobs created since the spring of 2010 have been in low-paid sectors. This is the economy that the Tory-led Government are building: low-paid, part-time and insecure, making life tougher for families.

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

Three in 10 of my constituents who are in work earn less than the living wage. Two weeks ago I spoke with a constituent from Robroyston. He had been a construction worker before the crisis started but is now in insecure, part-time work and facing child care bills of £200 a week. Is it not the case that under this Government the economy is just not generating the number of good-paying jobs that allow families to meet the cost of living?

[Rachel Reeves]

Two thirds of children growing up in poverty have parents who are in work. I think that goes to the heart of the issue of low pay and its impact on families. It is no wonder that payday lenders are among the fastest growing businesses on the high street. Some of them charge interest rates as high as 7,000%. Families, desperate to pay the rent and provide for their children, are being dragged into debt because they are not being paid enough.

The use of food banks—I am not sure whether the Minister has visited one—continues to rise. In my constituency the main food bank is struggling to find larger premises because demand has outstripped all expectations. St Bartholomew’s church in Armley in my constituency is now distributing food parcels to many desperate families. Its work, and that of St George’s Crypt, is a wonderful example of the active citizenship and community spirit in Leeds, but food banks are damning evidence of the Government’s record on living standards.

[Gavin Barwell (Croydon Central) (Con)]

The hon. Lady is right to focus on the issue of low pay. Will she tell the House what has happened under this Government to the level of income tax paid by someone working full time on the minimum wage?

[Rachel Reeves]

I will tell the hon. Gentleman what the IFS says: the average family is £891 worse off as a result of changes to taxes, tax credits and benefits. That takes into account not only the change in the personal allowance, but the cuts to tax credits and all the other changes, such as the VAT increase, that have put pressure on families. Taken in the round, that is the impact on ordinary working families. The Prime Minister says that he is trying, but that is not enough for a family struggling with the bills and the rent and worrying about the increasing gap between what they take home in pay and the cost of some of the basics.

[Alison McGovern (Wirral South) (Lab)]

Given what my hon. Friend is saying, did she share my surprise at the Prime Minister’s response to the issue of school uniform costs raised at Prime Minister’s questions today? It was bizarre to hear him dismiss so quickly the cost of school uniforms, which every parent in my constituency knows is a massive issue.

[Rachel Reeves]

I often hear about that from constituents, particularly this week, when children go back to school. The costs of the summer holidays are past, but those can be very expensive for many families, especially if they receive free school meals and have to provide an extra meal a day during the holidays. The cost of going back to school is also expensive. There is the cost of school uniforms, a new pair of shoes and a school coat—all the basics which sometimes I think the Government just do not understand.

In the face of such challenges, there is a distinct lack of urgency from the Government. For all the warm words, they do not get the reality facing families. Energy bills are up £300 a year, while energy companies enjoy huge profits.

[Mr John Redwood (Wokingham) (Con)]

I am glad that the hon. Lady is highlighting this issue. She is right that in the last couple of years under Labour there was a huge reduction in living standards, and the coalition Government have not yet reversed it. Does she now think that her party was wrong to implement policies of very high and rising energy and fuel prices, which are one of the main reasons people are in this bind?

[Rachel Reeves]

We have said that we would abolish Ofgem and create a new energy watchdog with real teeth to force energy companies to pass on price cuts when the cost of wholesale energy falls. Meanwhile, under this Prime Minister’s watch, energy giants are enjoying a £3.3 billion windfall. That shows the warped priorities of this out-of-touch Government. Rail fares are another example, increasing by up to 9% a year. We would apply strict caps. We have said that we would introduce a new legal right for passengers to be entitled to the cheapest ticket for their journey; this Government are giving powers back to train operating companies to increase some fares by up to another 5% beyond the cap. Again, that shows the warped priorities of this out-of-touch Government.

On housing, there are now 3.8 million households in the private rented sector, including more than 1 million with children. Research shows that many are being ripped off through hidden fees and charges costing tenants £76 million a year.

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

Does my hon. Friend agree that the atrocious slowdown in house building led by this Government has contributed to rising rents, making life incredibly difficult for families and meaning that they cannot do the extras such as getting broadband in their homes, which is vital for their children’s education and their own social inclusion?

[Rachel Reeves]

We have said of the private rented sector that we would require a new national register of landlords.

This Government are presiding over the lowest level of house building since the 1920s. We have said that we would build new affordable homes, and the IMF has said that the Government should bring forward investment in infrastructure. Perhaps we should listen to the IMF.

The Prime Minister and the Chancellor now claim that their economic plan has worked after all, but two quarters of positive growth do not begin to repair the damage from three years of flatlining. Three wasted years have left permanent damage as businesses have lost vital investment opportunities, and almost 1 million young people are out of work. That is why families are suffering; that is why deficit reduction is so far off track. Yet we have a complacent Government. They have no idea of what they have put families through, no idea of the damage they are still doing, and no plan to put things right. Three years in government and still no British investment bank; three years in government and banking reform is being watered down; three years in government and one in five apprentices say they have received no training; three years in government and the number of 16 to 18-year-old apprentices is down by 13% this year; three years in government and major infrastructure projects are stalled; three years in government and life is getting tougher for ordinary families.

[Stella Creasy (Walthamstow) (Lab/Co-op)]

My hon. Friend is making an incredibly powerful case about the warped priorities of this Government and the consequences and costs for households. It is little wonder that 80% of payday loans are for the basic costs she is talking about—housing, travel, rent and food. Is it not another example of this Government’s warped priorities that in three years of clear warnings they have done nothing about the legal loan sharks in our society, and is that not why we would make a difference in government?

[Rachel Reeves]

She has done fantastic campaigning work on that issue. Labour has said that we would cap the cost of credit, as she has called for.

A one nation Labour Government would be taking action now to secure the recovery and to build a more balanced economy that boosts the living standards not just for the few at the top but for the many. We would act on the recommendations of the IMF to support and secure the recovery by bringing forward £10 billion of infrastructure investment. We would build 400,000 affordable homes, creating more than half a million jobs and making our economy stronger for the long term. We would support house building, encourage private sector investment, and create apprenticeships. A one nation Labour Government would be confronting the scandal of youth and long-term unemployment by introducing a compulsory jobs guarantee.

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

I am sure that my hon. Friend knows that household lending from banks is at the same sort of level—3% lower than in 2008—but lending to businesses is 30% lower. Is not the real problem that three quarters of new jobs are low-paid because businesses are not being given support by the banks and the Government are not forcing them to act in the interests of high-paid jobs and growth for the future?

[Rachel Reeves]

We have had Project Merlin and the funding for lending scheme, and yet lending to small businesses falls and falls.

A one nation Labour Government would offer guaranteed work for young people and those who have been unemployed for over two years—work that they would have to take. We would cut the welfare bill and help people to gain the skills and experience they need to join the work force for the long term. A one nation Labour Government would reform our banking and energy sectors, improving our infrastructure planning and building a skills system that ensures that everyone can play their part. A one nation Labour Government would make fairer choices to ensure that the benefits of growth are fairly shared. We would reintroduce the 10p tax rate, helping 25 million basic-rate taxpayers; and we would not be cutting income tax or increasing pension tax relief for the very wealthiest while cutting tax credits for hard-pressed families. Different choices, different priorities: this Government and this Prime Minister do not get it.

As the LSE growth commission said earlier this year:

“prosperity is strengthened when everyone has the capacity to participate effectively in the economy and the benefits of growth are widely shared”.

[Alok Sharma]

rose—

[Rachel Reeves]

I will not give way to Members who have already intervened, but I will give way to those who have not yet made an intervention.

That will be the difference between us at the next election. We have a Tory party that is out of touch with the challenges facing families and that believes in the outdated orthodoxy that if the rich get richer, the wealth will trickle down; a Tory party that will not stand up to vested interests or stand up for British families; a Tory party that has overseen three years of falling wages; and a Tory party that offered warm words about the living wage at the time of the election, followed by a surge in the number of people working for less than the living wage over the past three years.

Meanwhile, one nation Labour, even in opposition, has driven forward this campaign. Labour councils are paying the living wage to their staff and extending it through procurement chains. Fifteen Labour local authorities are now accredited living wage employers, with another 80 in the pipeline. Labour is committed to doing all it can in government to support the spread of the living wage, and is now working with Alan Buckle, deputy chairman of KPMG International, to look how this can best be done.

All the examples that I am sure we will hear in this debate about the rising numbers of food banks, payday loans, part-time jobs and zero-hours contracts make it all the more galling for the Chancellor to have claimed earlier this summer that wages were rising.

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

The hon. Lady is making a very powerful speech, to be fair, and she has made some important points about zero-hours contracts. Is she aware that Rhondda council is implementing zero-hours contracts for some of its workers, and it is a Labour-run council? Will she join me in condemning its actions?

[Rachel Reeves]

Zero-hours contracts can work for some people, but their growth has led to far too many people not having the flexibility they need. No one has said that zero-hours contracts should be banned, but the exploitation of far too many workers is resulting in all the power shifting to employers and not to employees.

The most recent figures show that real household disposable income fell by 1.7% in the latest quarter—the biggest fall for 26 years. The Chancellor claimed that living standards were improving and that incomes were rising. We all know why he made that desperate claim. [Interruption.] The Secretary of State for Education says that disposable incomes are rising, but the figures show that they fell by 1.7% in the latest quarter—the biggest fall for 26 years. People will find it very surprising that he claims that living standards are improving when for so many families across the country exactly the reverse is happening. We all know that Lynton Crosby, the head of Conservative electoral strategy, a job he shares with the part-time Chancellor, has told the Prime Minister—just one of the things he has been telling him—that he should be relentlessly focusing on living standards. Yet, as the Secretary of State for Education has shown, the Government are out of touch on living standards, leaving ordinary families out of pocket. It is one rule for millionaires, another for our ordinary workers; one rule for train companies, another for the hard-up commuter; and one rule for the energy companies, another for people getting higher bills through their letterboxes. Rents are up, house building is down. We have the worst Prime Minister on living standards since records began. The Prime Minister is out of touch, and hard-working families are out of pocket.

13:49

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

May I begin by welcoming, on behalf of the whole House, the hon. Member for Leeds West (Rachel Reeves) back from maternity leave, and congratulating her and her husband on the birth of Anna? We wish them much joy in the years ahead. Now that she has become used to being interrupted by someone making loud, insistent and sometimes incomprehensible demands, I am sure she is glad to have returned to the House of Commons, where such things never happen.

The necessary condition for rising living standards is, of course, a sound economy. The hon. Lady will be aware that during her absence the economic policy of the Labour party has collapsed. It has spent three years opposing every reduction in public spending that this Government have made; three years calling for more borrowing and more debt; three years denying any responsibility for its failings in government; and three years warning that unless the Government changed course and adopted its so-called fiscal stimulus, the economy would not grow and unemployment would rise. However, because we followed the right policy and did not follow the shadow Chancellor’s advice, and because of the grit and hard work of the ordinary working people of this country, the economy is on the road to recovery.

[Mr Redwood]

Does the Minister agree that President Obama’s economic policy, which has been much misrepresented and much praised by the Labour party, has included a far bigger budget deficit reduction, through spending cuts and tax rises, than anything done here, and that the American economy is growing faster for longer?

[Greg Clark]

My right hon. Friend is right that there is a global consensus, if I could put it that way, that responsibility in fiscal matters is the necessary condition to revive the economy. The only exception to that consensus continues to be Opposition Front Benchers.

We have cut our structural deficit by more than any G7 country. The deficit is forecast to fall this year, next year and the year after that. We have record low interest rates. We are investing more in infrastructure during this Parliament than the previous Parliament.

It is still a world of economic turbulence—let us be clear about that—but the evidence throughout the past few months is that Britain is on the mend. National income has grown for two successive quarters.

[Alison McGovern]

The Minister is talking about economic success and sound economic policies. Would he like to come to my constituency in the Wirral and tell my constituents why sound economic policy and a successful economy have led to their wages being cut by £30 a week under his Government?

[Greg Clark]

As the hon. Lady knows, I spend a lot of time in Merseyside; we met on the other side of the water in Liverpool recently. I would be very happy on one of my visits to Merseyside to meet her and make the point that making the economy competitive, including in the north-west and her constituency, and getting people into jobs and bringing unemployment down is the best way that people can build living standards that are sustainably high. I will come on to say a bit more about that.

There have been 1.3 million jobs created in the private sector, but what has been the Labour party’s reaction, including today, to that news? The first reaction was silence. The entire Labour Front-Bench team went to ground for the summer, although the hon. Member for Leeds West had an excuse. However, three years have passed since she stated in her excellent maiden speech:

“It would not be responsible or sensible to oppose every spending cut or tax increase.”

It was in that same maiden speech that she told the Chamber that she would

“encourage this Government when they get it right”.—[Official Report, 8 June 2010; Vol. 511, c. 239.]

Now would be a good time for her to do what she promised. I would be more than happy to give way to her if she acknowledges that the hard work of the British people is showing success that she did not predict. No answer.

[Geraint Davies]

Does the right hon. Gentleman accept that since his Government took office, GDP per person—productivity per person—and average wages have fallen? We are seeing a glimmer of hope, but the reality is that the 1 million extra jobs are on the same baseline. In other words, that is not success; it is failure. There would have been growth under Labour, as was the case up to 2010.

[Greg Clark]

The hon. Gentleman parts from his Front-Bench colleagues and at least acknowledges that there is progress. He calls it a glimmer of hope, but I think the 1.3 million people employed in new private sector jobs regard it as much more than that. The hon. Gentleman will know that the first step to creating sustainably high living standards is to get people into work and into good jobs. I will say more about that in a moment.

[Chris Williamson (Derby North) (Lab)]

May I take the right hon. Gentleman back to the Conservative manifesto from 2010? It said:

“We want to see an economy where not just our standard of living, but everyone’s quality of life, rises steadily and sustainably.”

Is it not a fact that 20% of the British work force are paid below the living wage and that 60% of the jobs that the right hon. Gentleman is referring to are themselves low paid? How is that a mark of success when people are being forced into poverty wages?

[Greg Clark]

The hon. Gentleman should pay attention to the more thoughtful members of his party. If he looks at the work of respected think-tanks such as the Resolution Foundation, which does some excellent work, he will see that the problem of low wages is affecting many western countries and has been for some time. In fact, the right hon. Member for Southampton, Itchen (Mr Denham) pointed out in the summer of 2010 that the problem under the previous Government was that hard-working families who played by the rules and paid their taxes did not get a great deal back, that their pay had not increased much and that they thought there was fundamental unfairness in the system. This is a problem that afflicts many western countries. It started under the previous Government. I will come on to explain how the best way to pursue the matter is to raise sustainably high living standards.

[Ms Buck]

Does it cause the Minister any concern at all that since his Government took office in 2010 there has been a 50% rise in the number of working people who require help with their housing costs and that this Government will spend £14 billion more on supporting private tenants with their housing costs than the previous Labour Government?

[Greg Clark]

The hon. Lady and my party share the ambition of ensuring that people can earn a living that allows them to pay their and their families’ costs, but the question is how we get there. If Members oppose the reforms necessary to create that possibility they will not make any progress, given the financial situation we inherited.

[Mr Redwood]

I am glad that the Minister has said that we share Labour’s ambition for more people to have better paid jobs. Of course we want people to be better paid, but is not the best way for people to get a better paid job to start with a low-paid job and work their way up and get mentored and trained in the workplace?

[Greg Clark]

My right hon. Friend makes a powerful point. Opposition Members should not be so disparaging about the chances that are being given to millions of people to find work, make progress, learn skills and acquire the necessary experience.

[Several hon. Members]

rose—

[Greg Clark]

I want to make some progress.

The Labour party’s policy, according to the Institute for Fiscal Studies, is to increase Britain’s debt by £200 billion. That would be ruinous, because—this is linked to living standards—that borrowing would fall to the ordinary working people of this country. They would suffer a double hammer blow: more money would be taken out of their incomes to repay debt and there would be higher interest payments on mortgages and business loans. A 1% increase in interest rates would cost householders with a £100,000 mortgage £1,000 a year.

Today and throughout the past three years, the Labour party has persisted in talking down the economy, but its policies would take down the country. In fact, one of the biggest sources of concern in the British economy today is the total absence of a credible economic policy from the people who in 20 months’ time aspire to be the Government of this country. That is of concern even to people in the Labour party. Even the noble Lord Mandelson said recently that the risk of pursuing Labour’s economic policy was too great:

“I don’t think you can really take a chance, I think the markets, whose confidence in us to pay back what we borrow—that confidence is the determining factor.”

He went on to say that

“a lurch in policy…would be quite a risk which I would not blame the chancellor for refusing to take.”

By the way, Lord Mandelson is a friend of the shadow Chancellor. He said:

“I also happen to like him…well, more than I used to.”

We are here to discuss the cost of living and the cost of living is Labour’s legacy. Of course families are finding it tough. The Labour party talks about the cost of living without any mention of its record in government on living standards. It was the Labour Government who doubled council tax. Even in the depths of the recession, when my hon. Friend the Member for Peterborough (Mr Jackson) presciently asked them to consider freezing council tax, as this Government have gone on to do, they flatly refused.

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

On that point, will my right hon. Friend join me in congratulating Conservative-run North West Leicestershire district council, which has frozen council tax for four years running, and in condemning the leader of the Labour group, who suggested that we should raise council tax by 2% this year?

[Greg Clark]

I congratulate my hon. Friend’s council. We know that council tax is an important bill that people face. That is why when we came to office, knowing the pressures faced by ordinary working people and families, we froze it.

The same is true of the Labour party’s record on fuel duty. Its fuel duty escalator meant that what working people paid to fill up their car rose by more than inflation every year. Petrol would be 13p a litre more if Labour had stayed in office.

Energy prices for the home escalated under Labour. Between 1997 and 2010, the average domestic gas bill doubled. These matters were raised in our earlier exchanges, but the hon. Member for Leeds West omitted to say who the Energy Secretary was in the last Government. It was the current Leader of the Opposition. When I shadowed him across the Dispatch Box, these issues were not addressed, despite our urging him to do so.

In its 13 years in office, the Labour party failed to safeguard pensions. In one notorious year, it increased the state pension by 70p. This Government have restored the link to earnings. Labour presided over the biggest fall in the number of homes being built since the 1920s, with the consequence that rents have risen and, for the first time in 100 years, the proportion of people who own their own home has fallen.

[Gavin Barwell]

My right hon. Friend is doing a very effective job of comparing the record of Labour in office with the rhetoric that we have heard today. The shadow Chief Secretary talked about priorities. Will my right hon. Friend tell the House what was the effect of the Labour Government’s abolition of the 10p rate of income tax? Which sections of society were made worse off by that decision?

[Greg Clark]

My hon. Friend makes a very good point. Of course, it was the ordinary working people who were struggling to get by who were penalised by that change. We have not had an apology for that. [Interruption.] The hon. Member for Nottingham East (Chris Leslie) talks about raising VAT. It would be interesting to hear from him whether the Labour party would reverse the rise in VAT.

[Chris Leslie (Nottingham East) (Lab/Co-op)]

Will the right hon. Gentleman explain how much the rise in VAT has cost the typical family?

[Greg Clark]

It is 20 months before the election and the Labour party cannot say whether it would keep or reverse the rise in VAT.

The Labour party established the beer duty escalator, the council tax escalator, the fuel duty escalator and the biggest escalator of them all—the deficit escalator. The deficit trebled in its last two terms in office and that all has to be repaid by the hard-working people of this country. The facts are stark: the deficit that we inherited equates to about £6,000 per household every year. Of course it is painful to find an average of £6,000 per household in revenues and savings, but that is the effect of the previous Government’s profligacy.

[Emily Thornberry]

rose—

[Debbie Abrahams (Oldham East and Saddleworth) (Lab)]

rose—

[Greg Clark]

I will give way to the hon. Member for Islington South and Finsbury (Emily Thornberry) because she has been patient.

[Emily Thornberry]

I wonder whether I might drag the right hon. Gentleman back from the political knockabout to the realities of life. A point was made earlier about the number of working people who are now dependent on housing benefit. Is he aware that the cheapest four-bedroom flat to rent on Rightmove yesterday cost £440 a week? Given that the minimum wage is £212 a week, how can people live?

[Greg Clark]

Where has the hon. Lady been for the past three years? We have reformed the planning system. Since the national planning policy framework was adopted, which I had something to do with, planning permissions for new homes have risen by 22%. That is the action that is required if the problems that she identifies are to be solved.

The Labour motion talks about the standard of living, but no Government in living memory have done more to scupper the standard of living of ordinary working people in this country than the last Labour Government.

[Stella Creasy]

The Minister wants to talk about his Government’s record, so let us talk about the last six months alone, during which the proportion of people in this country who are worried about their personal debt has risen to 50%—20 million people in this country are desperately worried about the level of personal debt that they are in. Does he accept that his low-wage economy is part of the reason why so many families in this country are lying awake at night, frightened about how they will put food on their table and make it through to the end of the week?

[Greg Clark]

The hon. Lady is an experienced and effective campaigner on debt issues, but she will know that the explosion in debt happened under the last Labour Government. The reforms that we have made in financial services, the line-by-line scrutiny of which the hon. Member for Nottingham East participated in, have improved the regulation of such matters. She is right in the sense that the only way of ensuring that people can confidently earn enough to support themselves and their families is for them to be in work and in a good job. That is the purpose of our reforms.

[Gavin Barwell]

The hon. Member for Walthamstow (Stella Creasy) is right to identify low wages as a problem. They are a particular problem in the parts of the country that have the highest living costs because we have a national minimum wage. The second part of the problem is the high level of tax that the Government levy on people who are in low-paid work. Will my right hon. Friend therefore answer the question that the shadow Chief Secretary ducked and tell us what has been the change in the income tax bill for somebody who works full time on the national minimum wage?

[Greg Clark]

Of course, the amount of income tax that is paid by somebody on such modest earnings has been halved. That is the purpose of our reforms. Those people are better off.

Every Member of the House wants the standard of living enjoyed by the people of this country to rise. That is the purpose of economic policy. Let us therefore have a serious analysis of how that can be achieved.

[Several hon. Members]

rose—

[Greg Clark]

I will make some progress, then I will give way.

We must have a serious analysis of how that can be achieved in a way that is substantial and sustained. The first requirement is to do everything that we can to ensure that people are able to earn a good living. The second is to do everything that we can to reduce the costs that people face—especially those that are imposed by the Government.

On the first requirement, if people are to earn enough to generate a good standard of living, our country needs to be competitive against its rivals. The UK is at the top of KPMG’s league of the best countries in which to do business, ahead of Switzerland, the USA and France for the first time ever.

[Kwasi Kwarteng (Spelthorne) (Con)]

I am grateful to the Minister for the point that he is making about international competitiveness. How did Labour’s 12 increases in fuel duty improve competitiveness and the living conditions of British families?

[Greg Clark]

Those increases hit people in two ways: they hit the people who paid the duty when they filled up their tanks and they hit small businesses who employed people. It was a disastrous policy, which is why we scrapped it.

We will shortly have the joint lowest corporation tax in the G20. Last year, Britain was the biggest destination in Europe for inward investment. That competitiveness is creating jobs—jobs that give people incomes. Since 2010, 1.3 million jobs have been created in the private sector. More people are working in Britain than ever before and we have the lowest proportion of workless households for 17 years. There have been more net new private sector jobs in the past three years than there were in the previous 10 years under the Labour party.

People’s living standards are higher if they are in work, but I also want people to be able to earn higher wages. The only way to achieve that is to improve the levels of education and skills in the workforce. That is why the reforms of my right hon. Friend the Secretary of State for Education are so vital. It is why we need rigour in the exam system. It is why his announcement this week that we must ensure that people leave school qualified and skilled in all ways, but especially in maths and English, is so important. It is why the 86% increase in new apprenticeship starts between 2009-10 and 2011-12 is so important.

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

I would not want to waste the opportunity, with the Secretary of State for Education in his place, to raise again the cost of living issue of school uniforms, which the Prime Minister ignored earlier as though there were no issue to consider. In Manchester, one of the new academy secondary schools is charging £300 for a boy’s uniform. Families are really struggling, as I mentioned to the Prime Minister, although he did not seem to take the point on board. That cost is pushing a lot of families into debt and payday loans. The Financial Secretary talked about families struggling to get by, and this month some families are struggling to get by because they have had to shell out £300 to send their children back to school. What does the Secretary of State for Education have to say about that?

[Greg Clark]

I suggest that the hon. Lady turn up to Education questions if she wants to question the Secretary of State, but since her question refers to the cost of living, I hope she would not want the policies on such matters for every school in the country to be set from the Department for Education. It would be an interesting statement from the Labour party if it did want that. My experience of good schools in my constituency that have a uniform code, which parents welcome, is that they typically have schemes and mechanisms to help people obtain uniforms if they find themselves in financial difficulties.

Getting good jobs requires investment in skills and education for those in work. For those who are retired, incomes have been helped by the biggest ever increase in the state pension.

[Several hon. Members]

rose—

[Greg Clark]

The hon. Member for Leeds West did not give way to Members who had already intervened once. Given the number of Members who want to speak, I think I will do the same thing. However, I will give way to my friend the hon. Member for Birmingham, Erdington (Jack Dromey) before I make some progress.

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

I am grateful to the right hon. Gentleman. May I first correct the figures that he gave earlier? Under the Labour Government there were 2 million new homes; it was under the current Government that house building fell to its lowest level since the 1920s.

This is “Yes to Homes” week, and housing organisations all over Britain have predicted that without fresh measures by way of investment in housing supply, rents will rise by 46% by 2020 and the price of buying a house by 42%. Why not heed the advice of the International Monetary Fund, which has said that if we want a serious, sustainable economic recovery, £10 billion should be invested in our economy? Why not invest that in building 400,000 affordable homes and creating 600,000 jobs and apprenticeships?

[Greg Clark]

I have enjoyed debates with the hon. Gentleman over the years, and he will know that no one in the Government is more committed than I am to increasing the number of homes. He knows that our reforms to planning—I have heard some recent statements suggesting that the Labour party may wish to resile from them—are increasing the number of planning permissions given for new homes. I would have thought that he would welcome that.

The Government are relentless in driving up employment and the quality of skills, which are the foundations of high living standards. However, we must also act to reduce the costs that people have to pay, where the Government can influence those costs. A credible plan for reducing the deficit has kept interest rates low, as the IMF has acknowledged. We must not underestimate the importance of those low interest rates to the monthly budgets of thousands of families. Indeed, as I said, if mortgage interest rates were to rise by just 1%, average mortgage bills would increase by about £90 each month.

We have enabled local authorities to freeze council tax for five years, meaning that the average person pays £200 less each year than they would under the Opposition’s plans. We are increasing the tax-free personal allowance to £10,000 from next year, meaning that the average person will pay nearly £500 less each year than they would under the Opposition’s plans. We have frozen fuel duty, meaning that the average person pays nearly £170 less each year than they would under the Opposition’s plans.

On top of that, we have capped rail fares, extended free nursery care, taken action to reduce energy costs and cut the tax paid on a pint of beer. Under the Opposition’s plans, it would cost more to drive a car, more to take a train, more to heat a home and more to drink a pint. In fact, if we add it all up, someone with a car to run, a mortgage to pay and a home to heat would be about £2,000 worse off every year under the Labour party, yet it has the audacity to claim that things are getting worse for millions of working families.

The combination of rising employment and the increase in the personal allowance meant that last year, real household disposable income rose by 1.4%. However, there is more to do, and as the recovery continues we want to see living standards rise. The people of Britain know that there is no shortcut to higher standards of living and no magic money tree. They know that the only way is for us to live within our means; invest in education and training; spend prudently, not profligately; and exercise the same values in government as people do in their own lives. That is what this Government are doing, that is the path to prosperity for all, and that is why a good future awaits the people of this country.

[Several hon. Members]

rose—

[Madam Deputy Speaker (Dawn Primarolo)]

Order. A large number of Members wish to participate in the debate, so there will be a time limit of six minutes on all Back-Bench contributions, starting with the next speaker.

14:15

[Mr Geoffrey Robinson (Coventry North West) (Lab)]

The Government’s response to this timely Opposition motion is becoming clear already. They intend to airbrush the past three years from history as far as they can, as if they did not exist, and say, “We are now finally on the road to growth, and all will be well.” I have two comments to make about that.

First, today’s debate is about what has happened to those on average and below-average incomes over the past three years. It is clear that whatever recovery is eventually secured—all economies eventually recover, even though we maintain that the cuts have been too far, too fast and too deep—the essential thing is to see that the excessive burden that has been borne by those on average and below-average incomes is rectified.

Let us look at the incontrovertible facts about what has happened to wages under the current Government over the past three years. Wages are down by an average of almost £1,500 a year, prices have risen faster in the UK than in any other major economy and energy bills have risen by more than £300 since the general election. Those are facts, and I do not think anybody in the House would dispute them. Government Members may argue that it was all necessary, and that even though the burden has fallen heavily on those least able to bear it, it was all part of a plan that had to be implemented. We do not accept that, and we maintain our criticisms.

[Harriett Baldwin (West Worcestershire) (Con)]

During the summer, in one of his many mansions, was the hon. Gentleman able to read the book published by the right hon. Member for Birmingham, Hodge Hill (Mr Byrne)? It states that

“From 2004 onwards”,

median families

“were feeling the strain…people were working just as hard as ever—but were not getting on.”

This is not a new issue, and the hon. Gentleman may recall that Treasury officials were examining it during his party’s time in government.

[Mr Robinson]

I hope that the Treasury is examining how we can ensure that there is a fair spread of the benefits that will come in the recovery, and how we can sustain that recovery. I will come to that in a moment.

In the global race on living standards, the UK is doing worse than any of our competitors and has had the biggest fall in worker income of any country in the G7. Why is that? Because none of the forecasts made for the past three years has been met, since the Chancellor announced with great fanfare the plan for the rectification of the deficit and the return to growth. He has not come anywhere near fulfilling a single one of the predictions he made then for any year on investment, growth or employment, which I will come to in a moment. It is clear that the failure of the Government’s policy has caused terrible burdens to fall on those least able to bear them. They have failed in their policy, their objectives and the tasks that they set for each sector of the economy. I do not know whether it had to be that way or whether they will repeat that failure, but personally I think it was unnecessary.

We all hope—no one more fervently than the Opposition—that that is behind us now and we can look forward to a recovery that can be sustained. We do not want the Government killing off this recovery like they killed off the one that they inherited from us back in May 2010. [Interruption.] They killed it off. The economy was beginning to grow, under a stimulus. They killed off that recovery, so let us see whether they can kill off this one. No doubt they will try. To avoid that happening, the Government must change course on several fronts, and they must do it quickly, even now.

[Richard Graham (Gloucester) (Con)]

Will the hon. Gentleman give way?

[Mr Robinson]

In a moment. The Government cannot just sit back, say it will all be glorious, accept the fine new forecast in the way they accepted the previous one, and think, “That’s going to happen.”

Before we come back to the inevitable party points that each side will make, I wish to raise one serious issue before the House, which is the role of real wages in economic recovery. As has been said, and as the figures bear out, the burden has been borne heavily by those on average and below-average wages. The fall in wages is significant; it is the largest in any of the major economies and I think the largest in the UK for probably 100 years. That must be rectified because it will be a drag on our ability to recover if we remain in a low-wage, low-skill economy. I hope that point is taken up by the Treasury in all seriousness, as well as by British industry. We have got to upskill unless we want to engage in a race to the bottom of a low-wage economy, which we will never win.

[Richard Graham]

Will the hon. Gentleman give way?

[Mr Robinson]

I will give way in a moment as I said I would. There is time enough. Even China is now coming under pressure from Indonesia and Vietnam. If we try to get down to the levels of wages there, we will not do it; the recovery must be about a higher skilled, more productive economy in which rising incomes play a vital role. Rising incomes, particularly at average level, will be vital in sustaining the recovery. I hope that point is taken and will receive a serious reply.

[Richard Graham]

I am grateful to the hon. Gentleman for giving way. He has provided various revisionist explanations for what his Government did for 13 years. Is he aware that in my constituency of Gloucester, some 6,000 jobs in business were lost during the 13 years of the Labour Government? Since the last election, some 2,000 jobs have been created and 1,240 new apprentices started last year alone. He is right to flag up that some wages are low, and we would all like them to be higher, but what does he say about the prospects for those 6,000 people who lost their jobs, and for the 2,000 new jobs created since the election? Surely that is the starting point for an improved life.

[Mr Robinson]

The hon. Gentleman represents Gloucester, which is quite a successful manufacturing base in that part of the world. Manufacturing got hit, and if we do not support it through our policies more directly than we have before, it will continue to be hit as is happening under this Government. Let us look at the 1.2 million jobs. That is something of an achievement, but 60% or 70% have low pay. There is no long-term future in having low pay in those jobs; we must start to move away from that.

I am pleased that apprenticeships are doing so well for those aged over 20, but among the crucial group of those aged 16 to 20, as the shadow Chief Secretary to the Treasury said, there has been a 13% fall in the number of apprenticeships. That is a terrible figure and we need more skills and more apprenticeships where it matters. Meanwhile, as we all know, unemployment among the young has risen. When we were in government we created 2 million new jobs and had the highest level of employment ever in the country. The trouble was, quite honestly, that too many went to immigrants, and nothing was done to bring up the skills, willingness and ability of our youngsters to take on a higher proportion of the jobs created.

[Debbie Abrahams]

I am grateful to my hon. Friend for giving way given that the Minister refused point blank to let me intervene, even after several attempts. Does my hon. Friend agree that the employment rate is still lower now than it was in 2008, for all that Government Members like to claim that we are on the road to recovery?

[Mr Robinson]

I entirely agree and my hon. Friend makes a very telling point. There has been one area where we can honestly say the Government appear to have done better than we might have expected. On every other economic front, including that raised by my hon. Friend, their record is worse.

Let us look to the future. What do we need to ensure we sustain this recovery? First, we need the Government to accept the role of real incomes rising—a vital element in sustaining the recovery—and higher productivity to accompany that. Although we have done well in some areas of employment, productivity has gone down. We need the Government to accept the £10 billion infrastructure recommendations by the International Monetary Fund, and we need a housing programme and for building to get under way. All those things remain to be done. We need direct action. We should get rid of Ofgem, bring in a new regulator, and have direct action on energy and transport prices. Such a programme could sustain the recovery and we would see a slow build-up of real wages, which have been so devastatingly hit by Government policies.

14:24

[Kwasi Kwarteng (Spelthorne) (Con)]

Living standards, of course, form part of a context in which the wider economy must be considered. I notice that the shadow Chief Secretary to the Treasury is leaving the Chamber, but I wanted to address some of her remarks. She was, I felt, very ungracious in the way she took interventions from Government Members. I am pleased to see her back after her long break and I wish her all the best, but she did not do enough to observe the courtesies of the House in listening to other points of view.

The first point to remember is that the economy is recovering, despite the protestations, gloom and doom and talking down of the economy by Opposition Members. The OECD and Office for National Statistics have doubled their forecasts for 2013 growth, and the OECD is even suggesting that Britain will outstrip her competitors in economic growth. That should be welcomed on all sides of the House.

On living standards, the Labour party has engaged in a series of speeches that have shown collective amnesia, and it has been deeply hypocritical, complacent and unapologetic about the appalling record it left us in 2010. You will remember, Madam Deputy Speaker, that the Chief Secretary to the Treasury in the previous Labour Government left a note that suggested there was no money, simply because they had spent it all. They spent and spent and spent, and that is the context in which our debate about living standards in Britain must take place.

[Fiona O'Donnell (East Lothian) (Lab)]

Perhaps now the hon. Gentleman can prove that he does not suffer from short-term memory loss and tell us by how much wages have fallen in real terms since his Government came to power.

[Kwasi Kwarteng]

What I will tell the hon. Lady is that it is particularly nauseating to listen to Labour Members talk about increased living costs when under their Government fuel duty was increased 12 times. It is not right for members of the public and people listening to this debate to look on those remarks, when Labour increased fuel duty 12 times without any respite.

[Gavin Barwell]

The hon. Member for East Lothian (Fiona O'Donnell) makes a perfectly fair point about wages, but does my hon. Friend think there is some hypocrisy there, given that just about the only cut that those on the Opposition Front Bench have supported is the freezing of public sector pay over a number of years? It is clear that even under Labour, many people would have seen a real-terms reduction in wages.

[Kwasi Kwarteng]

Absolutely right. My hon. Friend mentions hypocrisy, and I think that has framed the approach of Labour Members on this issue. They have spoken really from either side of their mouths. On one hand they decry the difficult measures that we have had to implement and, on the other, they refuse to apologise or accept any responsibility for the appalling fiscal situation that they bequeathed to this Government.

[Gloria De Piero (Ashfield) (Lab)]

How did the hon. Gentleman feel when he learned in April that bonuses in finance and business services rose by 82.2% compared with the same month a year ago?

[Kwasi Kwarteng]

The hon. Lady will remember that the bonus pool under the Labour Government was far bigger. It was outrageous. Indeed, it was Lord Mandelson who suggested that he was very relaxed about people getting “filthy rich”. That was the legacy of new Labour: debt, credit, massive bonuses and a totally irresponsible way of running the economy. Such irresponsibility is largely responsible for the situation we are in. We have had to follow a deficit reduction strategy. That is working and the deficit has fallen by a third over the past three years, from £160 billion to about £115 billion. That is a signal success. We see not only deficit reduction, but—the jury is out on this, but I am confident—economic recovery. This is very successful stewardship of the economy. It is not only Government Members who agree with that assessment. Let us look at the opinion polls. Even though it is true that Labour is maintaining a slim lead, on the economic question and the question of the credibility of economic policy, Labour, and the shadow Chancellor and Leader of the Opposition as a team, consistently under-poll the Chancellor and Prime Minister as economic stewards, because the public have not forgotten the appalling mess that Labour left behind. Despite three difficult years, the public refuse to accept that Labour has any ideas or solutions to our difficult problems. They are well aware of the appalling fiscal situation that Labour Members left behind.

Let us look at some of the figures on fuel duty increases. We have suspended the fuel duty escalator and prices have not gone up. We have taken many low-paid people out of the tax system. People will recognise that the Government’s efforts have been partly successful. We have not reached the promised land and the goal that we set, but we are getting there. People realise that any return to the Labour policies of spend, borrow and spend even more will be fatal to the recovery. The hon. Member for Coventry North West (Mr Robinson) mentioned killing off the recovery. The quickest way to kill off any recovery would be a return of the Labour party to government. In my view and the view of many of my constituents, that would be a form of national economic suicide. As a nation, we must address and debate living standards, but we must also put them in the context of the appalling economic and fiscal situation that Labour Members left behind. It is hypocritical and disingenuous of them to blame the coalition Government for the mess they created and bequeathed.

Finally, I should say a few words of optimism. It is clear that there is a renewed sense of optimism in the economic community. I am not rash enough to suggest that the path ahead will be smooth. There will be checks and times when there are doubts, but the general trend and direction is clear. The latest Office for Budget Responsibility forecast, from March—it seems likely to be upgraded—predicted that average earnings in 2014 would increase faster than consumer prices index inflation. It also predicts that, by 2016, living standards will be growing twice as fast as inflation. We might well have reached an inflection point that will prove the success and wisdom of the Government’s polices.

14:33

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

Like other hon. Members, I congratulate my hon. Friend the Member for Leeds West (Rachel Reeves) on returning to her Front-Bench duties, although I appreciate that she has had to leave the Chamber for the time being.

When I first came to the House 16 years ago, people throughout the country and not just in my constituency, and especially women, were holding two or even three part-time jobs to make ends meet. The history is that 1997, when Labour came to power, was not a good time. It is true—I suspect Government Members would agree—that people were looking for a change, which is what happened in 1997.

Individuals and families were looking for some security and certainty in their lives. In all honesty, that is no different from what businesses were looking for. Businesses were looking for confidence. At the end of the day, if there is confidence in the business world, businesses will in turn believe that they can take that little gamble and create jobs. That is what happened over a sustained period when Labour came to government. Here we are in 2013. Despite what the hon. Member for Spelthorne (Kwasi Kwarteng) has said, the country is looking again for those things. The country and businesses are looking for confidence, and families and individuals are looking for security and certainty, to take them forward through these difficult times.

I do not deny that the prospects are very good in some parts of the country, but that is not true of many areas. The situation in communities is patchy. Back in ’97, there was a rapid reduction in unemployment. Department for Work and Pensions staff at the time were able to assist individuals who had been long-term unemployed. People who suspected that they would never find a job were finding work.

Where are we on living standards? We can talk about incomes, but income is not the only aspect of a living standard. The equation must include what people need to spend regularly. That is why people’s living standards in many areas are falling. I regret to say that we are returning to people, especially women, having to hold down two and three part-time, low-pay jobs to make ends meet.

[Gavin Barwell]

Is the hon. Gentleman seriously saying that, in his opinion, between 1997 and 2010, many hard-working people did not have to hold down multiple jobs to make ends meet?

[Mr Brown]

Yes, that was beginning to happen again, but not at the rate we have experienced from 2010 onwards.

[Ian Mearns (Gateshead) (Lab)]

I had the great privilege of visiting my hon. Friend’s constituency during the summer break. It must be difficult for people on part-time work to put together the combinations of part-time jobs in areas where the economic community is so disparate. I visited Stranraer, Wigtown and Withorn. They are relatively small places, and putting together the combination of part-time jobs to make a living wage must be very difficult in such a community.

[Mr Brown]

I thank my hon. Friend for visiting—I appreciate that he did not tell me that he was coming, but it was on unofficial business. He is right that, in that remote rural locality, jobs are few and far between.

My area lost 1,300 local authority jobs over nine quarters. In those same nine quarters—between June 2010 and September 2012—we lost 2,000 private sector jobs, including quality jobs. The figures are staggering. The average wage in Dumfries and Galloway is some 24% less than the national average. In May 2010, 460 people were long-term unemployed; there are now 970. Jobseeker’s allowance claimant numbers are above the UK average.

Worst of all—the House needs to take this to heart—is youth unemployment. Under the previous Conservative Government, we almost ended up with a complete lost generation. In my area, we have 8.9% youth unemployment. That is not acceptable when the Scottish average is 7.4% and the UK average is 6.2%. I will not stand by and allow the youth—those aged 18 to 25—to sit wasting. That is why, two weeks ago, I held a cross-party summit in my area to discuss the difficulties that we face.

I do not have the answers, but welfare reform has played a big part in what is happening on our high streets. We have seen the Government freeze benefits at 1% because they thought that it was the right thing to do, but all that has done is take money out of the local economy.

[Kwasi Kwarteng]

Will the hon. Gentleman give way?

[Mr Brown]

No, because the hon. Gentleman would eat up my time, and I am not prepared to allow that to happen. I need all the time I have got.

Taking money away from the poorest, who would have spent it on the high street, is bound to have an impact on what is going on. It takes even more jobs out of the economy.

Let me put the record straight on energy and fuel costs. The hon. Gentleman made a point about fuel costs—[Interruption.] Never mind the hand signals. On 11 occasions over nine years, the Labour Government froze the planned fuel duty increase. When Labour came to government in 1997, duty and tax on fuel was 78%: when it left government, duty and tax was 66%. Let us not forget that the price of fuel sometimes increases because the price of oil increases.

I regret to say that in Dumfries and Galloway 41% of all households are in fuel poverty, with the average in Scotland being 28%. I am not boasting about those figures: I am frankly ashamed of them. We are a low-wage economy, after decades of low pay in agriculture and tourism.

I pay tribute to the hon. Member for Suffolk Coastal (Dr Coffey), who chairs the all-party group on off-gas grid. She has made a valiant effort, with support from the all-party group, to get the Minister with responsibility to make early payments of the winter heating allowance to those people who want to use it in time to buy cheaper fuel. Regrettably, her effort has failed, as the Minister has declined to make early payments.

Things may be going well in some Conservative Members’ constituencies, but the picture across the country is patchwork, and that should not be forgotten.

14:42

[Harriett Baldwin (West Worcestershire) (Con)]

When I saw the wording of the Opposition’s motion today, I simply could not believe its sheer gall, or the absolute nerve they had in making the points they made. In fact, in honour of Jewish new year tomorrow, I will say that they have incredible chutzpah in putting this motion on the Order Paper today. If there is one sure way in which the Government can reduce the living standards of their citizens, it is by living way beyond their means. A deficit is the spending reductions or tax rises that the Government are not prepared to impose today but willing to pass on to future generations.

I do not ask the House to believe me on that point, but to believe the recently retired Lord King, who has made it very clear that today’s living standard squeeze is a consequence of the Labour party’s policies. In 2011, he said:

“The real consequence of this crisis is only now beginning to be felt. They weren’t felt in 2008, they are only now being felt.”

What we have seen was the consequence of the previous Government, who left this Government with a note saying, “I’m sorry, Chief Secretary, there is no money left.”

[Ian Mearns]

It is a little rich for the hon. Lady to suggest chutzpah on our behalf. I live in the midst of an Orthodox Jewish community in my constituency of Gateshead. It is a learning community, given the local colleges, and contains considerable poverty. The people there would probably disagree with her.

[Harriett Baldwin]

What would that community feel about a Government who left a deficit of 11.8% of GDP? This Government have reduced it by a third, to 7.4%, although there is still a long way to go. More than any community, that community would understand the importance of living within one’s means. We need to judge the Government by their track record, compared with the previous Government.

[Charlie Elphicke (Dover) (Con)]

The issue is not just the deficit. Real earnings did not rise from 2004 onwards under the previous Government’s mismanagement. We still see the scars of the terrible recession of 2008 in the earnings lag, which continues to this day and which we are battling to turn around.

[Harriett Baldwin]

I agree, so let us turn to the track record of what we have tried to do in government to tackle the very issues raised in today’s debate. We all want to see our constituents prosper and have more money each month to pay their bills. The most important bill that they have to pay each month—on pain of imprisonment if they do not pay it—is their income tax bill. In 2007, people had to start paying income tax once their income rose to just over £5,000. By the end of the next tax year, people will be able to take home £10,000 before they have to pay income tax. That is a halving of the income tax bill for the hard-working person who works full time on the minimum wage. It is also a 20% real-terms reduction in the tax bill of someone on median income. That is the action that a responsible Government can take.

[Fiona O’Donnell]

Will the hon. Lady give way?

[Harriett Baldwin]

I am sorry, but I have now taken my fair share of interventions.

One of the other large bills that people pay is the council tax. Under the previous Government—let us judge them by their deeds—council tax went up by 100%. This Government have managed to hold it broadly steady, which has meant a 9.5% real-terms reduction. Under the previous Government, fuel taxes were increased on 12 separate occasions for my constituents. Indeed, the previous Chancellor legislated for a further 13p in tax increases on fuel, which happily we have been broadly able to avert—an 11% real-terms reduction in that important bill, or a saving of £7 every time people fill up their tanks.

Mortgage rates are also at a record low. That important monthly bill would be £1,000 a year more if interest rates were to increase by 1%. That is a modest estimate of the increase if the Opposition were to borrow the additional £200 billion estimated by the Institute for Fiscal Studies. The cost of child care is extortionate, and I can speak from personal experience on that, but it went up 77% from 2004 under Labour. The Government have taken many steps to try to increase the availability of free child care for our constituents. For those on median incomes who find that it is not economic to return to work, we will make the cost deductible against tax from 2015.

We have tried to take steps on the unmanageable expected costs of social care expenses, and we have also made sure that pensioners will benefit each year from an increase in their pensions that at least matches inflation—something that will reassure them over time, compared with the 75p increase that they once received under the previous Government.

Those are the steps that we have taken to address the cost of living for our constituents. We also want to invest in skills, apprenticeships and the measures that will help people to move up the ladder of responsibility at work and take on higher-paid jobs over time. Our welfare reforms have made the incentive to work much stronger, so that the number of households with no one in work has dropped to a record low.

Growing private sector employment and record growth in the manufacturing index, which came out yesterday, are what will allow businesses to grow, to grow in confidence and to pay their employees more over time. That is how to tackle the cost of living for our constituents—not by taxing more and borrowing more as the Opposition propose. We must have a credible and responsible Government who keep their own costs down. We must never give the power to tax and spend back to the Labour party, with its damaging track record.

14:50

[Lisa Nandy (Wigan) (Lab)]

I do not need to tell most Opposition Members about the crisis unfolding for individuals, families and whole communities, including in my constituency of Wigan. It is not just that unemployment has hit communities like mine hard and had an impact on people’s living standards, it is that the unemployment figures mask the reality facing many families of cuts to pay and hours, which have had a devastating impact on their daily lives. Many Opposition Members are also familiar with the picture we are seeing in Wigan, where payday lenders have sprung up to fill empty shops on the high street and are charging extortionate rates of interest, and where the queues at food banks, such as the Brick in the centre of my constituency, are lengthening by the day. In the past eight weeks, the Brick has given out more than 1,000 food parcels—it is running out of food.

We are now in a situation where one in five children in Wigan arrive at school too hungry to learn. Across Greater Manchester and Greater London, that figure rises to nearly 50%, leaving teachers having to feed children out of their own fridges and their own pockets.

[Kwasi Kwarteng]

rose—

[Lisa Nandy]

I will give way to the hon. Gentleman. I would be grateful if he told me what he thinks his Government should do about it.

[Kwasi Kwarteng]

I am grateful to the hon. Lady for giving way. Does she not recognise that if over 10 years a Government consistently spend a lot more than they get in and leave a huge deficit, any attempt to deal with that deficit will be difficult? Does she not accept that basic point?

[Lisa Nandy]

I find the hon. Gentleman’s comment alarming. Perhaps it is time for Government Members to attend an economics course or, more pertinently, a history lesson. If we fail to learn what happens when considerable deregulation causes a global financial crisis—supported and egged on by Conservative Members—we will be condemned to repeat it.

I was telling the House about the indignity, anguish and anxiety that afflict many of my constituents, and that daily grind people down. There are a number of things the Government could do, and I want to address them in the short time that I have. First, the Government should and could take immediate action to create jobs by investing in infrastructure. We badly need new schools, we badly need new homes and, in some areas, we badly need new hospitals. Constituencies like Wigan, where the construction industry has always been important to the local economy, need that investment, not just because we will get the buildings we need but because it will provide jobs and apprenticeships for young people.

Construction used to be one of the key routes for young people leaving school to get into the labour market and learn skills that could take them beyond the sort of low-paid work that hon. Members have described. If the Government were to take action immediately, it would be a huge relief not just to me but to the 1 million young people who are out of work and who ought to be a national priority. We know that this should be a national priority, because we know what happens when young people are left out of work: they suffer prolonged periods of unemployment, insecure employment and wage-scarring effects well into their 40s. What we are seeing at the moment is limited action to create apprenticeships. I am seeing young people in a revolving door of apprenticeships, taking on work experience, internships and apprenticeships over and over again. These do not lead to a real, paid, lasting job. Government Members heavily criticised the future jobs fund for being expensive, but I say to Ministers: please recognise that investing money in young people up front is repaid in droves. It is the right thing to do morally; it is the right thing to do economically.

Many young people are on zero-hours contracts and I want to say something about the increasing casualisation of the work force, something that the workers in the Hovis factory in my constituency are rightly standing up against at the moment. People on zero-hours contracts tend to earn lower wages as a whole, and we have seen compelling evidence of widespread exploitation. I would be grateful if the Minister paid some attention to what I am saying, because this is something that affects people across the country, including, perhaps, in his constituency.

[Andrew Bridgen]

The hon. Lady speaks passionately about youth unemployment. If the Opposition have all the answers on youth unemployment, why did it rise by 40% under the previous Labour Government?

[Lisa Nandy]

Again, I would really like to send the hon. Gentleman on a history course. If he looks more closely at what happened under the previous Government, he will see not only that youth unemployment fell, but that at the one point in the mid-2000s when it rose it was because there were more young people compared with the number of jobs. It was due to an increase in the number of young people, not a shortage of jobs. The previous Government immediately took action to reduce youth unemployment, something I hope Ministers revisit and learn from in view of the problems we have now.

I was talking about the widespread exploitation of people on zero-hours contracts. Whole sectors are now dominated by this. I represent women in my constituency who work in the home care sector, and I have heard appalling stories about the way they are treated. One woman was forced to take eight hours of shifts on no notice whatever. She has two young children and had to take them with her and lock them in her car while she tended to older people. I would be really grateful if the Minister stopped laughing for a moment, because this is very serious. When the Under-Secretary of State for Business, Innovation and Skills, the hon. Member for East Dunbartonshire (Jo Swinson), responded recently to a debate in Westminster Hall packed with Labour MPs raising similar concerns, she did not say very much. However, it cannot be beyond our wit to bring in some kind of statutory code or regulation and ensure that it is enforced. I take the Minister’s point that some people like zero-hours contracts, but, given the widespread exploitation of people in that situation, surely it is time to take action.

[Lilian Greenwood (Nottingham South) (Lab)]

Will my hon. Friend give way?

[Lisa Nandy]

I am sorry but I will not, because I have only a short time left.

Women, in particular, are affected by zero-hours contracts. We should take this seriously, because women are increasingly important to low-income households. In 1968, men in low-income households contributed 71% of the household income. By 2008, that was just 40%. The contribution made by women had doubled, yet female unemployment remained stubbornly high. We lag eight percentage points behind OECD leaders such as Iceland, Norway and Sweden in the re-employment of women with children. We should celebrate a fall in unemployment whenever it occurs, but we need to look seriously at what is happening to women; otherwise we will fail to solve the problems for families.

We should also take seriously the fact that for many women part-time work is not a choice. One third of women with children were found recently to be in part-time work through lack of choice. We should first address the high cost of child care, which is rising by 5% a year. As my hon. Friend the Member for Islington South and Finsbury (Emily Thornberry) pointed out, that far outstrips affordability, especially for those on the minimum wage.

Finally, we should take immediate action to tackle low pay. We have seen a long-term trend of falling pay and rising profits. There is no pressure from the Government to take action against multinationals such as Tesco, which made huge profits last year. It employs many women in my constituency on below the living wage. I say to Ministers that low pay is not a ladder for most people. They are trapped in low pay, which is why we need action on the living wage. It is not just important for individuals and their families; it is important for the local economy. If people are not spending, small and medium-sized enterprises fold and the cycle continues. I ask Ministers this: where is the pressure? Condemn those multinationals, implement a living wage and refuse to do business with companies that will not take action. It is time for us to take concrete action. Our families and our young people simply cannot afford for us not to do so.

14:58

[Gavin Barwell (Croydon Central) (Con)]

Beneath the narrow partisanship and complete lack of penitence over Labour’s record in government lies a profound point in this motion about the challenge for public policy in our time: how do we improve the standard of living for people in low-paid work? This Government have done an awful lot to end the obscenity of people out of work being better off than people in work, but there is much more to do to ensure that being in a low-paid job actually pays for people. Government Members should not allow our anger at the hypocrisy of those on the Opposition Benches to cloud the fact that there is a real problem.

[Ian Mearns]

Will the hon. Gentleman give way?

[Gavin Barwell]

I would like to make a bit of progress first.

I want to talk about two things: how the problem arose, and what we can do to solve it. I would argue that there are four causes of the problem. The first was the deficit built up under the last Government, which was partly the fault of the collapse in the banking system, but partly the fault of Labour for having a deficit before the recession started. Let me quote from something written by the Institute for Fiscal Studies before the last election:

“With government borrowing at its highest level since the Second World War…the key domestic policy issue for the next parliament will be how best to implement a combination of spending cuts and tax raising measures to return it, over the medium-term, to appropriate levels.

This will be painful…families”

will be made

“directly worse off”.

That was the view of the IFS, no matter who was going to win the last election. That is the logical consequence of having the deficit, and voters understand that. I spent the summer knocking on more than 5,000 doors in Woodside and South Norwood in my constituency. The electorate understand that tough decisions have to be made.

The second cause is the international economic climate, which has led to lower than expected growth across the developed world. The third and fourth causes have nothing to do with Government: they are rising commodity prices and long-term changes in the labour market, which have led to a lower value being placed on low-skilled work. My hon. Friend the Member for West Worcestershire (Harriett Baldwin) referred to a quotation from the shadow Secretary of State for Work and Pensions identifying the problem back in 2004.

[Ben Gummer (Ipswich) (Con)]

My hon. Friend said that the third reason, rising commodity prices, had nothing to do with Government. I would respectfully demur. One of the biggest pressures on families is energy prices, and the reason we have high energy prices in this country is because no one built anything in this country in the 13 years that Labour was in power.

[Gavin Barwell]

There are certainly some commodity prices that Government can influence—my hon. Friend is quite right to pick me up on that—but there are others, such as the prices of basic foodstuffs, that are beyond national domestic control.

How do we solve the problem? I would like to suggest five possible solutions. The first is economic growth. It is not a solution on its own, because part of the deficit is structural.

[Geraint Davies]

Will the hon. Gentleman give way?

[Gavin Barwell]

I will give way once more, to the hon. Member for Gateshead (Ian Mearns), because I promised I would.

The OECD forecast shows that our economy is projected to grow in quarter 3 by 0.9%, which is more than any other country in the G7 other than Canada, and in quarter 4 by 0.8%, which is the best projected rate in the G7. Unemployment in my constituency of Croydon Central is 6% lower today than it was when Labour left office, while youth unemployment—which the hon. Member for Wigan (Lisa Nandy), who spoke before me, rightly spoke so passionately about—is nearly a quarter lower today than when Labour was in office.

[Ian Mearns]

Does the hon. Gentleman accept that there are significant variations around the country? I am afraid to say that youth unemployment in the north-east of England is now 25%. We have been accused of being hypocritical a number of times this afternoon, but although he spoke eloquently about the scourge of low pay in his opening remarks, he forgets entirely that his party opposed the implementation of the minimum wage when it was introduced by the last Labour Government.

[Gavin Barwell]

The hon. Gentleman makes two excellent points. The regional variations in economic performance are a profound issue for public policy, and the Conservative party was wrong to oppose the national minimum wage, which is one of the things that the last Labour Government deserve credit for.

The second solution I would suggest involves interest rates. At the moment we have record low interest rates. If we followed the economic policies of the shadow Chancellor, the cost of borrowing would go up, which would make an already difficult problem far worse and hit anyone with a mortgage extremely hard. The third thing we can do is look at public policy changes that Government can make to try to help people in low-paid work. One of the things about this Government that I am proudest of is the increase in the personal allowance. That sounds rather technical, but what it means is how much you can earn—not you, Madam Deputy Speaker, but how much anybody can earn—before the Government start taking money away in tax. When we came to power, the figure was £6,475; from next April, it will be £10,000.

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

rose—

[Gavin Barwell]

I am afraid I cannot give way again.

That change has taken 2.7 million low-paid people out of income tax altogether and cut the income tax bill for someone on the minimum wage by a half. The shadow Chief Secretary talked about priorities. It is true that this Government have made a change to the tax rates for some of the wealthiest in our country, but if we want to talk about priorities, we have to say that the Treasury has spent 50 times more cutting tax rates for people in ordinary low-paid work than it has paid in reducing the top rate. That shows this Government’s priorities.

As other hon. Members have said, we have ensured that petrol duty is 13p a litre cheaper today than it would have been if we had followed Labour’s policies. We have cancelled the beer duty escalator. We have helped local councils across the country to keep council tax bills down. We have a scheme that we will introduce for tax-free child care, which will help with the cost of child care for people with children under the age of 12. We are ensuring that energy customers are placed on the lowest tariff. We have introduced the triple lock for the state pension, to ensure that we never again have the national scandal of our pensioners being given a derisory pension increase each year. We are also introducing the Help to Buy scheme, to try to help my constituents who want to own a home of their own and take that vital first step to get on the housing ladder, so there is much that this Government are doing.

[Geraint Davies]

rose—

[Gavin Barwell]

I cannot give way again.

There is also the crucial issue of wages. I have talked about the national minimum wage already, and there were some interesting reports in the media recently about the Government perhaps looking at what they can do on the minimum wage. As a Conservative, I would worry very much about a uniform increase, which might price some people out of the labour market. However, there is a case for asking whether larger companies or those that are making healthy profits should not be paying their staff more, because at the moment we are subsidising some employers to pay low wages, through the tax credit system that the previous Government introduced. I very much hope that the Government will look at how we tackle the issue of quality of life for people on low pay from both ends, by raising the personal allowance, so that we do not tax them so much, but also seeing whether we can ensure that they are paid a fair wage for the hard work they do.

One Opposition Member who talked about this issue implied that it was just Labour councils that are passionate about a living wage. My local authority, Conservative-controlled Croydon council, pays all its staff the London living wage, while the Mayor of London has guaranteed that that will apply to all staff working for the Greater London authority as well.

[Chris Leslie (Nottingham East) (Lab/Co-op)]

Will the hon. Gentleman give way?

[Gavin Barwell]

I am afraid I cannot give way again.

That is a big issue, particularly in London and the south-east, where pay costs are highest.

I also want to raise with my right hon. Friend the Financial Secretary to the Treasury, who gave an incredibly thoughtful speech, the issue of public sector pay. We have been quite right to restrict increases in public sector pay, because high increases would simply have meant more joblessness, but there is a limit to how long that policy can be continued. I hope that as wages increase in the wider economy, those who work in the public sector are not left out of that process.

Finally, if we want a high-wage economy, the long-term solution is to ensure that we have people with high skills who can command high wages in our globalised labour market. That is why I am so proud to work as the Parliamentary Private Secretary to the Secretary of State for Education, whose work, building on what the former Prime Minister and Lord Adonis achieved, is transforming standards of education in our country. Ultimately, if young people in Croydon Central want to command high wages in our economy, they need the qualifications and skills that will enable them to secure those jobs. We should not pretend that there is not a problem, but the Government are doing much to deal with it, and I hope they will do more still.

15:08

[Alison McGovern (Wirral South) (Lab)]

I respect the hon. Member for Croydon Central (Gavin Barwell), but with respect, I understand that Croydon put its council tax up because of a lack of Government funds. Although we would all like to see living-wage councils, we need to recognise the extreme pressure that local authorities are under because of this Government’s ferocious cuts to them.

On skills and education, which I shall come to later, I agree with my hon. Friend the Member for Wigan (Lisa Nandy) on the need for a history lesson. It is absolutely right that we focus on the needs of young people. However, Government Members in this debate somehow seem to have forgotten that a previous Labour Chancellor of the Exchequer had to rescue modern apprenticeships from the history books in order to give this country a proper industrial skills policy again. I am glad that Government Members support that and that it has been kept going, such that young people will still have the chance to get an apprenticeship in this country, but let us not pretend that we did not suffer all those years until 2003, when that proper industrial skills policy was put back.

On the broader question of living standards, if the Government think that they are out of the woods with this recovery or that all our problems are solved, then good luck to them. I ask the Minister just to speak to a few people on low and middle incomes in Merseyside, as he has already kindly agreed to do the next time he is there. I really do not think that those people are feeling better off at all. They do not feel better off, and they are not better off. In fact, I think that the Chancellor might quietly agree with me on that. Before the summer, I asked him at Treasury questions:

“Does the Chancellor believe that since he came to office the average British family is better off after inflation, yes or no?”

I was hoping for a straightforward answer from him. Instead, I got this:

“I think that they have better economic prospects than they did under the previous Government.”—[Official Report, 26 June 2013; Vol. 565, c. 333.]

[Emily Thornberry]

Jam tomorrow.

[Alison McGovern]

Quite right! Jam tomorrow, but never jam today. People in the Wirral will certainly not put up with that, and I doubt that anyone in the rest of the country will either.

I have spent much of the summer talking to people about zero-hours contracts. They are a growing issue for my constituents and others. My hon. Friend the Member for Liverpool, Wavertree (Luciana Berger), my right hon. Friend the Member for Knowsley (Mr Howarth) and I have conducted a survey in order to listen to people with experience of such contracts. Given the stories that we heard from people who simply did not know what their wage packet was going to contain at the end of each week or month, I simply cannot accept the argument that any job is better than no job. That is like saying that it is better to work for £1 an hour than to have no job at all. I cannot accept that argument. I cannot accept an economy that is devoid of standards.

This is not a proper recovery. Unless it reaches those on low and middle incomes, we shall not see the kind of economic recovery that we need. Instead, we shall see the kind of hysteresis and waste of talent that my hon. Friend the Member for Wigan has described. Zero-hours contracts affect young people; they are a blight on their prospects. Those people need a chance to build their skills so that they have the potential to have a good career. Will the Minister answer these questions? What will he do if the number of hours worked per person in the economy does not increase? What will he do if people are still underemployed in a year’s time? How will he address their need to increase their pay packet so that they can afford the prices in the shops?

On inflation, I repeat that I still cannot quite believe the Prime Minister’s response at Prime Minister’s questions today to the question about school uniforms. I remember only too well the situation in my own family. There were three of us, and September was an expensive time. My mum used to worry that we had grown. If the Prime Minister has not experienced that, or heard about it from families in his own constituency, let me tell him that it was extremely stressful. Unfortunately, the previous Governor of the Bank of England was forced to write to the Chancellor of the Exchequer citing the VAT increase as part of the cause of the inflation that we have experienced. So, although I accept the points that have been made about the global situation, the Government’s policy has not exactly helped to bring down prices.

[Barbara Keeley]

I thank my hon. Friend for re-raising the point about school uniforms. The point that seemed to escape the Prime Minister, and possibly also the Secretary of State for Education, who was sitting next to him at Prime Minister’s questions, is that the problem is due entirely to the Government’s policy of creating new free schools and academies that insist on a branded uniform. That has raised the cost of the uniforms to £300. It is not possible to buy those uniforms from a supermarket. The increased cost is directly due to the policy of creating lots of new free schools and academies. The Government have to take responsibility for that.

[Alison McGovern]

My hon. Friend is quite right.

[Gavin Barwell]

rose—

[Ben Gummer]

rose—

[Alison McGovern]

As I am following the speech of the hon. Member for Croydon Central, I will give way to him.

[Gavin Barwell]

The hon. Lady is typically gracious. May I just remind her—and, through her, the hon. Member for Worsley and Eccles South (Barbara Keeley)—that the policy of establishing academies was introduced by the last Labour Government?

[Alison McGovern]

My hon. Friend the Member for Worsley and Eccles South (Barbara Keeley) mentioned free schools and the proliferation of such new schools opening. I believe that we should all, on a cross-party basis, call on schools to do everything they can to keep the cost of uniforms as low as possible. That message must be sent out loud and clear.

[Gavin Barwell]

indicated assent.

[Alison McGovern]

If the hon. Gentleman will support that suggestion, his support will be welcome.

The issue of living standards is not going to go away. It will affect us for many years to come. If we simply say that increasing GDP figures and nominal growth in the economy are all that matter, regardless of the distribution or sustainability of that growth, we shall be storing up problems for the future. We know this from the history of our country, and we should not be oblivious to the needs of those on low and middle incomes. Let us not forget that those people are not some small special-interest group; they are the vast majority of people. So when Labour Members talk about the importance of living standards for them, we are not engaging in some strange obsession with a small number of people. This is about the needs of everyone in the country, and about making sure that they are well served by the Government’s economic policy.

15:16

[Emily Thornberry (Islington South and Finsbury) (Lab)]

It is a great pleasure to follow my hon. Friend the Member for Wirral South (Alison McGovern) and the hon. Member for Croydon Central (Gavin Barwell), who have both made thoughtful contributions to the debate. It is a great shame that more Members are not present on the Government Benches. We seem to be running out of speakers rather early, which speaks volumes.

The Conservative Government seem quite happy to crow at great length about how well the economy is doing, but they seem to take very little interest in the question of living standards. They crow about how well the economy is doing, we hear a great deal of briefing on the subject and we endure a great deal at Prime Minister’s questions, but the truth is that no one believes them. That is because people’s lives do not reflect a growth in the economy. For ordinary people, life is getting harder, not better. People do not believe that next year is going to be better than this year; they believe that it is going to be harder. And I am afraid that, at the moment, it looks as though they are right.

That is partly because services are being cut. It is partly because people are having to queue to see their GP. It is also harder for older people to get social care or to see a consultant. After-school clubs are being cut, youth groups are being closed and there are restricted hours for day centres. Life is also more difficult for people because they no longer have access to the kinds of services that they have been taking for granted, which are being cut by the Government. Primarily, however, life is harder because people feel that their wages and benefits are not keeping up with inflation. The reason for that is that they are not: they are not keeping up by a long chalk.

Those people who are lucky enough to be in work are often not working sufficient hours. They might be working for their poverty, but they are not earning enough to be able to rely on their own wages. They also have to rely on benefits and tax credits. Many of those on low wages who work full time also have to rely on benefits and tax credits, especially in areas such as the one I represent. In central London, it is simply not possible to live on the average wage without relying on benefits to help to pay the rent and to help with child care costs.

Much has been said about what a great idea universal credit is, and about how we should have one level of benefits for everyone across the country, including those in central London. No allowance is made for the fact that rents and child care costs are so much higher in areas such as this. People on average wages in central London rely on benefits too. That is the truth, and if universal credit is introduced in the way the Government propose, I do not know what is going to happen to those people.

[Charlie Elphicke]

I appreciate that the hon. Lady is making a sincere and heartfelt speech, but the difficulty is that every prescription from Labour involves more spending and more welfare. The effect of that would be to drive up interest rates, which would harm the recovery and harm the job creation that could lead to increased wages and a strengthened recovery. The polls show that that is not a prescription that this country finds credible.

[Emily Thornberry]

The hon. Gentleman raises a point that divides us completely. Those of us on the Labour Benches believe in investing money in housing, for example. I have just mentioned the huge rents that people have to pay, and how difficult it is for people on average wages to live in London without relying on housing benefit. If we could build more houses in central London and the south-east, house prices would not be as high as they are now and people would not need to rely on benefits in the way that they do. That makes sense. If we build homes, we also provide jobs and infrastructure, lower our dependence on housing benefit and lower housing prices generally. We will offer hope and opportunity for the next generation. I have no idea why the Government will not do this, but they are refusing to invest properly. We will need a new Government before that happens.

[Ben Gummer]

There is absolutely no difference between us on whether there is pressure on living standards, as it is completely obvious to all Members that there is. Where there is a difference relates to prescriptions. The hon. Lady rightly talks about housing demand in the south-east, but she knows perfectly well that, even if we start building tens of thousands of houses in the south-east this year, it will take many years before it feeds into reductions in rent. What prescriptions—costed prescriptions —could the hon. Lady and her Front-Bench team bring forward now to ease living standards?

[Emily Thornberry]

I am sure that the hon. Gentleman, who I know takes this issue very seriously, will have seen the policy development happening in the Labour party and the seriousness with which we are putting this issue as a front-and- centre policy for us as a future Government. We know the difference that that will make to the economy. When it comes to investing money, this is what we should invest it in. I fully support our Front-Bench team on this and I believe it is the right thing for this Government to do. In the end it would save us a great deal.

I do not believe that we can just build tens of thousands of homes. We need to get out there and start building seriously. We need to start building now and, frankly, I think it is disgraceful that, given the recession that we are having to endure, this Government have, I believe, the worst house building record of any Government since the 1920s. That is outrageous. This was not the original purpose of my speech but since the hon. Member for Ipswich (Ben Gummer) has touched this particular nerve—I apologise for giving it to him with both barrels—I simply cannot see the sense in the Government’s current policy of putting their fingers in their ears and saying “La, la, la, la, la, la, la.” and thinking that this problem will somehow go away. It will not go away. The only way to solve our housing crisis is to build more housing.

Returning to my original brief, those in part-time work do not earn enough money to be able to afford a good standard of living and that applies even to some of those in full-time work, so some have to rely on benefits. We have seen that 60% of new jobs since the last election are in the low-paid sectors of our economy—retail and residential. Between 1997 and 2010, 25% of the new jobs established were in those sectors. Why is this difference occurring? A Resolution Foundation study has shown that 4.8 million Britons—20% of all employees—earn below the living wage, which is a leap from 3.4 million, or 14%, at the height of the recession. Why is that happening? Why have those on average wages lost an average of £1,500 a year?

It is happening because our economy is unfair and unbalanced. What are the Government going to do about it? How are they going to address the problem? They cannot simply keep sailing on and hope that things are going to be all right. Things are not going to be all right. The evidence shows that there will continue to be people who just manage to grab on to work by their fingertips, but not by enough for them to be able to sustain themselves and their families. Even those in full-time work, particularly in areas such as London and the south-east, cannot afford to live without being supported by benefits. In the end, this is unsustainable; we must raise wages in real terms.

I hold a women’s listening panel every year. This year, it is on 13 September at St Mary’s hall in Upper street, and all my female constituents are welcome. I carried out a survey last year and 89% of the constituents who replied said that their income had gone down in the previous year; 32% said their rent had gone up and 70% said it was difficult for them to make ends meet because of their food and fuel bills. They particularly mentioned the expense of child care in Islington. The problem is not just the obvious and manifest cost of rent. The cost of child care—£164 a week—is so expensive as to make it impossible for someone on the minimum wage of £212 a week to put a child into full-time child care. These things do not make sense.

There are many single parents in my constituency who want to get into work, but who simply cannot make ends meet when it comes to getting to work, placing their children in child care, being able to pay the rent and being able to pay their way. This is the trap that so many people find themselves in, and there has to be an answer to it. Even getting someone to pick the children up after school and look after them for a few hours until the person finishes work can cost £92. How can that be all right for someone on the minimum wage of £212 a week? It does not make sense; it does not add up.

Those who live on benefits and do not work at all—those on jobseeker’s allowance—have, of course, seen a rise in their income of 70p a week. I do not know whether the Exchequer Secretary has ever spoken to anyone who lives on jobseeker’s allowance and gone through with them how they spend their £70.70 a week? If so, he would know how difficult it is for them to make ends meet at the moment. It seems to me that we have heard a great deal of political knockabout today when what we should be doing is listening to real people out there and how they live their real lives. I invite the Minister and his boss to come to my women’s listening panel. I will not tell the women that they are Tories, so they will be safe, and we will finesse the fact that they are the only men in the room. They should listen to what is said, listen to these women’s stories of how they are trying to make ends meet in these difficult times. Year in, year out, it gets worse and more difficult for them. The Minister may talk about the economy getting better, but he should listen to what is going on in real life.

15:25

[Lilian Greenwood (Nottingham South) (Lab)]

Twelve months ago, I spoke at the launch of the Clifton food bank in my constituency. I was proud to support Wendy White and everyone else in her team of volunteers who had given their time and energy to help support others in the local community. Led by the Clifton churches in partnership with the Trussell Trust, the Clifton food bank is providing vital help to people who simply cannot make ends meet. Many of those referred to the food bank have sought help from the Clifton advice group. Claire Ashton, who has been involved in the group for 13 years and who chairs the management committee, recently said that it had seen a marked increase in the number of people struggling to put food on the table, and that this was a direct impact of Government policies, particularly benefit cuts.

When I spoke at the launch, I was proud of the response from a community that is not wealthy, but where people look out for each other. My view then and now is that it is a disgrace that even though we are the seventh richest country in the world, we face an epidemic of hidden hunger, particularly among children. But as families struggle to make ends meet while the Government stand by, the work of food banks is vital. It is the Government’s failure to act, their standing by in the face of a cost-of-living crisis, that prompts me to speak in today’s debate.

Today, the Prime Minister demonstrated how out of touch he is, completely refusing to recognise his failure to turn things around for hard-working families in cities such as Nottingham. Contrary to what he says, life is getting harder, not easier, for ordinary families. Prices are rising faster in the UK than in any other major economy; average wages are down almost £1,500 a year since this Prime Minister came to office; and we have the slowest recovery for nearly 100 years and almost 1 million young people are out of work—with devastating consequences, as a number of my hon. Friend have already described.

The Prime Minister claimed that people were getting back into work but in my constituency—I recognise that it is not the case everywhere in the UK—unemployment is higher now than it was in May 2010. The unemployment rate in Nottingham South is now 6.5%, compared with a national average of 4.5%. Those forced to rely on out-of-work benefits are condemned to falling living standards because of this Government’s 1% cap on benefit rises, which falls so far behind the current rate of inflation.

Life is hard not just for those who are unable to find a job; it is hard for those in work, too. In Nottingham, the average wage for a full-time worker is about £22,000, but that compares with a national average of £26,500. Of course, many part-time workers, especially women, earn far less than that.

Employees face increased uncertainty about their incomes. Many are under-employed, trapped on zero-hours contracts or reliant on a multiplicity of mini-jobs, and they are at far greater risk of losing their jobs following the Government’s decision to reduce employment protection and workplace rights. I ask Members to compare that decision to reduce job security and make work more uncertain with the decision of our local Labour councils, such as Nottingham city council and Nottinghamshire county council, to provide a living wage. I pay tribute to Nottingham Citizens for its campaign to secure that decision, and its practical action to support ordinary working people and our local economy.

It is no surprise that when people in Nottingham South have had the opportunity to choose who they want to represent them over the last couple of years, they have chosen Labour. They recognise that the present Government are out of touch and make the wrong choices. This Government have chosen to raise VAT while cutting taxes for millionaires; they have allowed energy companies to make huge profits while failing to help people with energy bills that have risen by £300 a year, condemning many thousands to fuel poverty; they have failed to take action to curb bank bonuses while allowing payday lenders to charge exorbitant rates of interest; and they have done nothing to tackle rogue landlords and rip-off letting agents, although many more households are being forced into the private rented sector because they cannot get on to the housing ladder. When we compare average house prices in Nottingham with average salaries, it is easy to see why that is happening.

Any recovery in the United Kingdom’s economic performance is to be welcomed, but ordinary people know that recent improvements are not benefiting low and middle-income families. The 16 food banks in my city are a shocking reminder of how out of touch the Government are, and show clearly why Nottingham needs a Labour Government with a programme that will boost living standards.

15:31

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

Again, we heard a ragbag of rubbish from the Financial Secretary, who gave us the Laurel and Hardy story about another fine mess from Labour. In fact, between 1997 and 2008 the economy grew by some 40%. It was only when the financial tsunami came that we saw difficulties, but with the fiscal stimulus from Obama and my right hon. Friend the Member for Kirkcaldy and Cowdenbeath (Mr Brown), bang, we were back to shallow growth, albeit with a deficit two thirds of which was caused by the bankers and a third of which was caused by spending beyond earnings to pump-prime the economy. That was the right thing to do at the time.

[Ben Gummer]

Let us try to get the facts right. First, the Government were running a structural deficit between 2002 and 2010. Secondly, the private sector in Britain did not grow after 2003. All growth was down to credit and public sector increases. The hon. Gentleman’s contention that somehow the economy grew by 40% is therefore incorrect.

[Geraint Davies]

That is certainly not the case. GDP was up by 40%, and the history of the last three years is one of zero GDP growth. I admit that we have seen growth of 0.6% in the last quarter. However, according to the TUC, 80% of the new jobs that have been created—it has been claimed that there are 1.3 million, but that figure is contested by the director of the Office for National Statistics—are low-wage jobs. What we actually have is a low-wage, low-investment, falling-productivity economy, with living standards falling through the floor and prices rising at the same time. It is a complete disaster.

Government Members such as the hon. Members for Dover (Charlie Elphicke) and for Croydon Central (Gavin Barwell) and other economic illiterates have said that interest rates might rise under Labour, but anyone who reads the financial press will know that the new Governor of the Bank of England, Mark Carney, has given undertakings that they will not rise until unemployment has fallen by 750,000, from 7.8% to 7%. So that argument too is a complete load of rubbish.

[Ben Gummer]

If the hon. Gentleman does not mind my saying so, he is confusing market rates with bank rates. Market rates will rise, because the cost of borrowing for the British Government on the international markets will rise under a Labour Government. That was shown at the time of the general election. The hon. Gentleman is right in saying that bank rates will be fixed, but the two are not connected to the extent that he claims.

[Geraint Davies]

I am grateful to the hon. Gentleman for making that point. The point that I was making was that the Bank of England rate would be secure in the way that I described. The other rates depend on confidence. Whatever happened to the triple-A rating? Government Members said “Oh dear, it will be all over. We will lose the triple-A rating if Labour gets in.” Well, we have lost it, and why has that happened? It has happened because objective observers have seen that productivity is falling, not rising, that the jobs that are being created are low-grade jobs, and that the distribution of investment is skewed towards the next general election, with 80% of all infrastructure investment being made in London and the south-east—which needs the least investment—and most of the cuts being made in the north and in Wales: in places such as my constituency in Swansea, where 40% of people work in the public sector. Yes, we want investment in the private sector, but the way to boost local economies is not to cut people’s wages, jobs and services, which is the current prescription.

What is happening is not sustainable, and given the current economic capacity—the manufacturing and construction sectors are 10% smaller than they were in 2008—there is clearly some way to go before unemployment reaches the level at which interest rates will fall, so that point was a complete red herring.

In fact, mortgage rates are low now—as low as 1.5% for safe bets. The Government, alongside the Bank of England, should be thinking about providing more funding for firms so they have more cash flow and can invest in higher-value jobs and products. Household lending from the banks is about the same as it was—it is 0.3% less than in 2008—but lending to business is 32% down. It is massively down in all the major sectors. In January lending to business was 3% lower than a year ago. By June that figure had doubled; it was down 7%. So the Chancellor is a man looking to the future who is walking backwards. The reality is that Britain is 159th in terms of the ratio of investment to GDP, and is lagging around the bottom in terms of research and development.

One might ask why the banks are lending all this money for houses. Part of the reason is because we have a bubble, artificially generated by the Chancellor to get his votes in the south, through what The Economist calls the “daft policy” of subsidising new deposits on mortgages, which will inflate house prices and lead to sub-prime debt downstream.

The banks also now require four times more capital cover to lend to a business than to provide a mortgage. Turning to the question of the complexity of all this, I have run my own businesses and been involved in others, and have therefore looked at business plans. The banks need to look at the business plans too, as opposed to just having somebody in a call centre saying, “All right, fill in the box. You’re all right mate, you can have a mortgage.” The Government should be telling the banks that the funding for lending scheme should be specifically directed at firms to cover new and existing loans. In other words, they should be doing something positive to get the level of business investment up and create real jobs and get wages moving in the right direction. That is what is needed.

The current situation is that house prices are rising and household debt is growing, partly because the cost of housing is going up both in terms of rents and house prices. That is only sustainable if we have real wage growth. [Interruption.] The Exchequer Secretary is mumbling to his mates, but what are the policies for sustainable wage growth? How are we going to move away from this low-investment, low-wages, low-productivity trajectory that we have got? There is no point in blustering and denying it all; we have got this problem across Britain. We have also got inequality between north and south, and obviously between Wales and the south.

I am talking about SME support, but in contrast we have the corporate world, where Vodafone has just done the biggest share transaction of this century. It has taken £54 billion in cash, and it is not paying a penny in tax. What is the Exchequer Secretary doing about that? Nothing. Why does he not do something about procurement, too? We could use our muscle to buy from SMEs locally—companies that pay tax rather than avoid tax—so they can provide jobs locally. This is a complete disgrace. We should be doing something positive with the powers at our disposal, to create higher wages, higher business investment, more security and more focus on emerging markets.

That is not happening, however. This is a complete farce. It is a mess and I hope the hon. Member for Croydon Central (Gavin Barwell) will join the Labour party like his predecessor, Andrew Pelling, did, and stand up for what is right and what makes sense.

15:38

[Fiona O’Donnell (East Lothian) (Lab)]

It is a pleasure to follow my hon. Friend the Member for Swansea West (Geraint Davies), and I will try to irritate Government Members less. Given his track record, it will, I think, be impossible to irritate them any more.

I am particularly pleased today to welcome back my hon. Friend the Member for Leeds West (Rachel Reeves), the shadow Chief Secretary. It is great to see her back. Only the hon. Member for Spelthorne (Kwasi Kwarteng) could describe maternity leave as a long enjoyable break. That takes being out of touch to a new level.

I am pleased that so many Opposition colleagues have focused on the impact of falling living standards and access to employment on women in particular. I am sure that all Members will have received from Asda today the Asda Mumdex, and I am sure that my hon. Friend, as a first-time mum herself, will be very disappointed to see that first-time mums reported to that survey that they are twice as worried about financial pressures than about their own health.

Such stories do not talk in statistics, percentages and GDP, but they show the real impact of the economic crisis on people’s lives and on what that is doing to families. People often say that a happy mother is a happy family. A happy father is pretty important in that picture, as is a same-sex partner or, as will soon be the case, a same-sex wife or same-sex husband. We need to examine the human cost of this crisis and what it is doing to a generation of children growing up.

I am sorry that we have not heard much today from Government Members about investing to reduce child poverty. What are they going to do about that? They are happy defending their own record and attacking ours, but I suspect that our constituents want to hear, in the 37th month in which their income has dropped in real terms, what the Government are going to do about it. All sorts of barriers are involved here. We all know that employment is a means to improve the well-being—the income—of a household, but that will not always be so.

The other figure in today’s Asda Mumdex that stands out is that 74% of mothers say that they do not think that it would be financially worth their while going back to work because of the cost of child care. The Government really need to address that if they are serious about helping mothers back to work. I am looking forward to going to my local Asda store in Dunbar on Friday to sit down with a panel of mothers and listen. My hon. Friend the Member for Islington South and Finsbury (Emily Thornberry) has also recommended to the Minister that he does the same. The Government need to sit down with mothers, as do we all, to hear the stories of how this economic situation is having an impact on their lives.

I was pleased that at today’s Prime Minister’s questions my hon. Friend the Member for Worsley and Eccles South (Barbara Keeley) raised the issue of school uniforms, which has arisen again. It resonates with many of us because of our memories of knowing that pressure. Last year, I was horrified to hear the story of people from the high-street payday lender, The Cash Store, standing outside a primary school in my constituency giving balloons to children. Fliers had been put up around the area beside the school saying, “Need a school uniform. Come to us.” That is shocking. This week, we have heard about Wonga’s profits for the quarter. We talk about “legal loan sharks”, and that is the right term for them, because they are predators. They sniff poverty in the way that a shark sniffs out blood, and then they home in and profit from that poverty.

I am not saying that I want to make this debate completely about payday lending and regulation—of course there is a need for people who have no assets to have access to credit—but the Government must try to get a grip on this area. The debt charity StepChange has seen a dramatic increase in the number of my constituents seeking help with debt because of problems with payday lenders—the figure went up from 10% to 28%. So I appeal to the Government to do more; they are so concerned about debt—rightly—but why are they not more concerned about unsustainable debts that so many of our constituents are taking on? [Interruption.] I thought someone wanted to intervene, but it was just another Government Member leaving the Chamber.

[Emily Thornberry]

Would my hon. Friend like to join me in noting that only four Government Members are in the Chamber—a Whip, a Front Bencher and two on the second row—whereas a large number of Opposition Members wish to speak?

[Fiona O’Donnell]

I am grateful to my hon. Friend for that remark. I am afraid that I have just been very unkind and tweeted that not only were there only three Government Members—I think it was—in the Chamber, but the Opposition Whip had fallen asleep. [Interruption.] I should have said that the person sitting in the place usually occupied by the Government Whip has fallen asleep—I say that for the benefit of Hansard.

Fuel bills are a huge problem for families, having risen by £300. The Prime Minister promised this country that he would do something about excessive rises in energy prices, and he has not made good on that promise. The Government parties ask what we did about the energy companies, and I am proud to share the fact that in my sock drawer at home I have a pledge card from the 1997 general election. One thing that Labour did was to use its windfall tax on the privatised utilities to invest in creating jobs. That is the difference between Government Members and Labour Members.

[Ben Gummer]

I am very happy to intervene on the hon. Lady, and I hope that she will have another minute in which to continue her thoughtful speech. On energy prices—I know the next debate will address this—the previous Government may have come to office in 1997 wishing to control energy prices, but in the end by building so few power stations, they have left us having to invest more than any other western European nation—£200 million—to renew our infrastructure. In the end, that money will have to come from somewhere. Part of it will come from those who pay for fuel. The hon. Lady, or at least the Labour Government, must bear some of the responsibility for that situation.

[Fiona O’Donnell]

I am willing to take responsibility when that is due, but it seems as though for this Government the past three years have not happened. In my constituency, a coal-fired power station has closed down. That is good for the environment, but Scottish Power and the Spanish firm, Iberdrola, cannot invest the necessary money to convert that into a gas cylinder plant because the Government are not giving clarity on the charges for connecting to the grid. We should all share the responsibility. Unfortunately, in opposition, there is less that we can do about it, whereas the hon. Gentleman has the privilege of being in government. I wish the Government would use the little time that they have left in office to get on and make a difference to the lives of my constituents.

Yesterday’s debate makes me worry about who will stand up for those people in my constituency who are falling foul of payday lenders and who cannot afford to put food on the table. The whole debate about food banks is thoroughly depressing, and although I welcome the fact that they are there in so many communities, including my own—I am a trustee of my local food bank—I worry that we are propping up a system that is dismantling the welfare state in this country. We need to pause and think about that further. I am grateful to have had the opportunity to contribute to the debate and look forward to hearing the Minister’s response.

15:47

[Mr Steve Reed (Croydon North) (Lab)]

I want to take part in this debate because the Government are clobbering people in Croydon North and everywhere else by squeezing their standards of living. The Prime Minister likes to say that he has helped with the cost of living where he can, but the truth is that he has not. I want to demonstrate that by showing just how much Labour councils, including those that are part of the Co-operative Councils Network, are doing compared with the Government’s relative inaction.

Wages have fallen in real terms in London, including in Croydon North, by 7.5% since the Government were elected. The average employee in my constituency therefore takes home £2,200 less a year since 2010. That is a catastrophic fall in income for many households at a time when the cost of living is going up, not down, thanks to the Government’s actions. One of the Government’s very first actions was to hike up VAT to 20%, despite repeated criticisms of that policy by one of the coalition partners when they were trying to persuade people to vote for them. It is notable and disappointing that no member of that party has chosen to participate in this afternoon’s debate.

One of the heaviest costs for families or households with young children is the cost of child care. Child care costs have risen by 19% since the Government were first elected, and 25 hours of child care in Croydon can cost up to £175—nearly £800 a month. How many families can afford that, especially given the downward pressure on wages? In part, that is a result of the Government’s decision to cut the early intervention grant by 40% in real terms, so limiting the capacity of councils to contribute towards child care provision. The cost of child care in Britain is the highest in Europe, and instead of demonising parents who cannot work as skivers, how about the Government considering the costs that they have allowed to pile up to such an extent that parents cannot afford the child care that would allow them to go back to work?

More locally, I regret that Croydon’s Conservative-led council has closed six designated child care centres since 2010—a reduction of almost a quarter in what used to be provided. That sudden loss of provision has forced up costs elsewhere, once again costing families dear and pricing parents out.

Although the Tories in national and local government have made the problem worse, Labour in local government is acting to solve it. I commend Edinburgh city council, ably led by its Labour leader Councillor Andrew Burns, for using co-operative values to explore setting up a city-wide child care co-operative, aiming to reduce costs and increase accessibility for parents with young children. The council is working with parent-led, out-of-school care providers to set up after-school clubs and mutual child care services, helping them to achieve co-operative status and setting up a service level agreement to bring stability and sustainability to the sector. That is Labour offering real help to hard-pressed families, based on parent power, while the Tories continue to do very little.

People commuting from Croydon to work in central London have experienced enormous fare increases under the Conservatives. Since London has had a Conservative Mayor, the cost of a single bus journey has increased by 56% and a zone one to six travel card costs £440 more a year. This year, it costs £313 more to travel from Croydon to central London than it did in 2010, when the Government were elected. That increase is way above the rate of inflation and even more above the rate of wage inflation.

Compare that with Labour-run Oldham council. Its leader, Councillor Jim McMahon, realised that high travel costs were a real barrier to accessing employment and leisure opportunities across the rest of Greater Manchester. The council worked with First Greater Manchester, the local bus operator, and negotiated a 28% reduction on weekly and daily bus fares for every Oldham resident. It worked up the business case to show how lower fares would increase journeys and overall profitability for the bus operator. The scheme is saving residents up to £260 a year on the cost of public transport and may now be extended right across Greater Manchester.

Let us also consider the soaring cost of energy. As many colleagues have said this afternoon, household bills have soared by £300 a year. The Government have failed to get a grip of the problem and to take action to curb what amounts to profiteering. Contrast that with Lambeth’s Labour-led council, which I am very familiar with. It worked with the community to set up a microgeneration co-operative called Brixton Solar Energy. It placed solar panels on the roof of a housing estate in Brixton, sold the surplus energy back to the national grid and used the profits to reduce the energy bills of neighbourhood residents. I am delighted to say that that success is now being extended to other estates in the area.

I have conducted my own research locally into the fees charged by letting agents in Croydon North. I have found that some charge up to £500 for handling deposits and some charge up to £500 more in additional administration charges. Newham’s Labour-run council is setting up a register of approved landlords and agents, so that its tenants know who is playing fair and who is not. What a shame that Tory councils such as the one in the area I represent are refusing to do the same.

15:53

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

Any increase in employment is to be welcomed, but the real story of the labour market is a living standards crisis, with falling real wages and millions working harder for less. I know that from the experiences in my constituency. We have heard complacency from the Government today. They say that they have fixed the economy, but for ordinary families we know that things are getting harder, not easier. Ministers just sound out of touch when they ignore the fact that the number of people who are working part time because they cannot find a full-time job is at record level.

Real wages are falling: wages increased by 0.6% on the year to June, while the retail prices index increased by 3.3%, over five times the pace of wage growth. OBR forecasts show that, after inflation, wages are set to be £1,520 lower in 2015 than they were in 2010. That means that, as my hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty) told the Prime Minister today, ordinary working people will have lost, on average, £6,660 on this Government’s watch. That is a shameful record.

Underemployment is a massive and growing problem for millions of families already feeling the pinch from rising prices and falling wages. More than one in 10 people are now unable to work the hours they would like because this Government strangled the recovery for three years. Today we have heard complacent, boastful comments from the Government, delighted that there is, at last, a slight upturn in the economy. Let us not forget, though, that for three years, having inherited a growing economy, they flattened that growth and people across this country suffered for three years.

The Government and the Prime Minister are out of touch in not understanding that very many people not only work part time but often work on zero-hours contracts. They find themselves working through agencies and are often exploited. People in my constituency have told me about their experience of these zero-hours contracts—of turning up for work only to be told that there is no work that day, yet they might have arranged child care or had to pay considerable transport costs to get to work, or working for half a shift and then being told that they are no longer needed that day. That is no way for businesses to treat their employees, but it is also no way for a Government to behave when they turn a blind eye to the growth of that practice in our economy.

People have told me about not being able to get a mortgage, car finance or a bank overdraft, or even a rental agreement, because they cannot clearly demonstrate that they will have money coming in over the weeks and months ahead.

[Charlie Elphicke]

Will the hon. Gentleman give way?

[Andy Sawford]

No. I know that two of my colleagues want to speak, so I am going to push on.

Seventy per cent. of zero-hours contracts are for permanent jobs. How can it be right that someone in a permanent job is not given a permanent and proper contract of employment? More than 80% of people on zero-hours contracts are not looking for another job. They want to remain in employment, but they want it to be fair and secure. Resolution Foundation research shows that those employed on zero-hours contracts receive lower gross weekly pay and that workplaces utilising zero-hours contracts have a higher proportion of staff on low pay. In my constituency zero-hours contracts, combined with the very high number of people working through agencies, have created a two-tier work force, with permanent employees often being paid better and having security of employment while many other workers are being paid very low wages and exploited from week to week.

There is an argument that zero-hours contracts offer flexibility. Of course, casual employment has always been part of the labour market, including casual employment where there are no guaranteed hours. I have worked under those conditions and other people do so too. For example, Corby borough council employs lifeguards at the local swimming pool on such casual contracts; of course, it is seasonal work and there are changes in demand over the course of the year. When I talk about zero-hours exploitation, I do not mean all casual employment in the economy. The local Tories in Corby have got themselves into an extraordinary position, saying that my local council should end all casual employment. That is completely bizarre. It has been suggested that it is hypocritical of me, as a Co-op Member, to highlight this issue and campaign against zero-hours exploitation because across the country the 2% of workers the Co-op employs in its funeral business are mainly retained firefighters or semi-retired people. It is a ridiculous suggestion.

Most people understand that some casual employment works for some people, but the key is that it should be reciprocal and fair. That is why I have introduced a Bill that aims to tackle zero-hours exploitation. I want to see what legal changes we can make to help people, particularly by ending things such as exclusivity clauses in zero-hours contracts.

I am delighted that the shadow Business Secretary, my hon. Friend the Member for Streatham (Mr Umunna), has really taken a lead on this issue. Just a few weeks ago, he held a summit bringing together employers and people who are concerned about it. I welcome the support of many organisations in civil society—trade unions and organisations such as Citizens Advice—in trying to tackle it. However, it is not achieved only through legislation; this Government should act, and the Business Secretary’s review should have more resources put behind it. We should try, through public procurement, to encourage Government and local government to stop using zero-hours contracts as far as possible.

15:59

[Mr Iain McKenzie (Inverclyde) (Lab)]

It is an honour to contribute to this very important debate. We should take time to pause and reflect on what is really happening to the living standards of people up and down this country.

Since 2010 wages have fallen in real terms in just about every region of the UK. In Scotland wages are down some 6.4%, which is having an impact on living standards. Families are more than £800 worse off this year because of cuts to tax credits and benefits. Time has shown that the Government are increasingly incapable of making any positive changes to improve living standards for hard-pressed families.

Prices continue to rise faster than wages—that is, if people are fortunate enough to be employed and in receipt of a wage. We also continue to witness banks giving out bonuses while families across the UK are struggling. Is it therefore surprising that most people feel that nothing is changing for them? The Government are locked into a failing economic plan whereby, bizarrely, they ask millions of families and pensioners to pay more while millionaires are given a tax cut. My constituents find that to be an unacceptable economic approach in the face of their plummeting living standards.

Families, pensioners and businesses in my constituency continue to struggle. People tell me of their shock during their weekly trip to the supermarket on finding that they are putting less food in their basket but more money in the till. I witness more and more families having to go to greater lengths to keep within their budget, desperately shopping around to track down bargains for the most basic food items.

Those who cannot make it from week to week have been forced to turn to food banks. Frighteningly, the number of people going to food banks continues to rise. Inverclyde now has two large food banks and starter packs for families trying to set up a home. Starter packs offer help to families and individuals with the most basic home furnishings, such as kitchen utensils. It is no use having food if there is nothing to cook it with or eat it off. Is it not a sign of living standards getting worse when not only is food an issue but people have to be given utensils to eat it?

Families are losing their tax credits. Families in Scotland are losing on average more than £500 a year, which they could have spent in the local economy on essentials such as food and clothing. That is hurting my local economy and many shops are closing down; in the last week alone, three have closed down in Greenock. My chamber of commerce has been pleading for an increased local spend to try to help save those local shops. The truth is that people are not spending as much as they used to, locally or elsewhere.

Scotland will lose £43 million a year from cuts to tax credits, which is an enormous amount to take out of the Scottish economy. The evidence is that people up and down this country are facing an unprecedented reduction in their living standards. The Government’s programme does little to help those most in need. It has been pain all the way, hurting people, families, pensioners and even the disabled. They are all finding it difficult to make ends meet.

Since the last election, average energy bills, as we have heard, have increased by about £300 per year, meaning that people are under severe pressure even to afford to heat their own home. If the Government do not take action, what is the alternative? Debt? I have spoken to two credit unions in my constituency and they warn that families face extreme difficulty in managing their finances, and they have seen an increase in the number of people coming to them just to budget from week to week. Unfortunately, many people do not turn to the credit unions but seek alternative loans, which only push them deeper into debt and trouble.

The Government need to help families immediately by taking measures that address the crisis of the falling standard of living and that stop the rip-off prices of fuel and power. This country needs a Government who are in touch with families during these hard times. The Government clearly need to make different choices and set different priorities. Families up and down the country are feeling the pain. Only today I have heard that unemployment in my constituency has increased and that the rate of non-working families is 25%. Clearly, we need employment and we need jobs.

If the Government do not change their priorities and stop handing tax cuts to millionaires, living standards will continue to fall for working people, young people, families, pensioners and even the disabled. In fact, living standards will fall for everyone apart from the Government’s favoured millionaires.

16:05

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

This is probably the most relevant debate we could have when it comes to the issues that affect our constituents day in, day out. There is a living standards crisis in the UK today and it has been caused directly by the actions of this Government. I have no doubt that the Prime Minister and his Government are entirely out of touch with families up and down the country who are struggling to make their pay packets last until the end of the month.

Before the last general election, we were promised that a Conservative Government would improve people’s living standards and that people would not only see their incomes rise but their quality of life improve. That has not happened. In fact, the opposite is true. There are only two possible conclusions to be drawn. The first is that the Government—Conservatives and Liberal Democrats—have decided that they are happy to pursue policies that drive down living standards, and the second is that their policies are failing entirely.

The Minister should be in no doubt that the crisis is real. Every week, people in my constituency come to me to talk about rising energy bills, rail fares and fuel bills; cuts to tax credits and benefits; and the problems caused by low pay, underemployment and unemployment. I do not know what is in his postbag or in-tray, but that is what is in mine. He does not have to take my word for it, as the statistics speak for themselves. Since 2010, real wages in Scotland have fallen by an average of 6.4% or £1,420 a year, which is a huge sum. Statistics for the whole of the UK from the Office for National Statistics show that under this Prime Minister real wages have fallen for 35 consecutive months—longer than under any other Prime Minister since records began. What a shameful record that is.

[Fiona O'Donnell]

Will my hon. Friend give way?

[Gemma Doyle]

I will not at the moment.

In my constituency of West Dunbartonshire, between 2010 and 2012 average wages rose by just 0.6%, while inflation hit 8%. With the cost of essentials such as food and energy continuing to go up and up, one does not need a calculator to work out that the figures just do not add up. In recent months, the community of West Dunbartonshire has come together to launch a food share project. People are so appalled by the need for that in our area that they do not want to call it a food bank. They do not want it to be just a food bank, so as well as collecting donations and redistributing supplies, the group has wider aims, such as campaigning on poverty and poverty pay. I am delighted to say that Labour-led West Dunbartonshire council is a living wage employer. I very much hope that other local employers will follow suit. I intend to have discussions with local businesses about how they can work towards that.

Earlier in the summer, figures published by Citizens Advice showed that one in five families feel that they cannot afford to feed their children. Frankly, that should shame us all. Its advisers are seeing people who have nowhere else to turn. The chief executive of Citizens Advice Scotland, Margaret Lynch, has stated that it is no longer unusual for advisers to see people in their offices who do not have enough money to pay for food, never mind other bills such as rent and council tax.

I have had men and women bring their bills to my surgery. Some have lost their jobs and many have had their hours cut. They are desperate for more hours or for a job that will pay them enough to make ends meet. They have trimmed their outgoings to the bare essentials. They put their bills on the table in my office and ask, “What should I do?” It is difficult, but I give them the best advice I can. I tell them about the food bank, although I have to think twice about that, because it embarrasses people so much. It is a dreadful situation for people to be in, because they feel a huge responsibility towards their families, but it is not they who are failing, it is the Government who are failing them.

At the same time as that is going on in all our constituencies, the richest people in this country have had a tax cut. Conservative and Liberal Democrat MPs have decided that they want to give millionaires a tax cut, which beggars belief.

[Andrew Griffiths (Burton) (Con)]

Will the hon. Lady give way?

[Gemma Doyle]

I will not, because I want to ensure that we have enough time for the Front Benchers to speak.

We have a living standards crisis in this country. The Government’s own figures show that things will continue to be extremely difficult for the foreseeable future. People are really struggling, and the Government have a moral responsibility to do something about it.

16:11

[Chris Leslie (Nottingham East) (Lab/Co-op)]

First, I commend my right hon. and hon. Friends for holding the Government to account on the cost of living crisis. My hon. Friend the Member for West Dunbartonshire (Gemma Doyle) made a powerful speech about the cases that Opposition Members see in our constituencies, with hard-pressed families struggling to make ends meet. She talked about not just the crisis that they face but the difficulty of even getting advice and support, including from the citizens advice bureau, as local authorities are scaling back their grants to voluntary organisations.

The crisis is exceptionally significant, so it is sad that there has been scant interest in the debate among Conservative Members and zero interest among Liberal Democrat Members, who have been completely absent from the debate for the past three hours. What better way could there be for hon. Members to see the complacency and lack of interest among Government Members in one of the most pressing and significant issues for our constituents?

We have had not just inaction from the Government for the past three years but policies that are actively making the cost of living worse for most people. Month after month, year after year, the Prime Minister and the Chancellor have presided over prices rising faster than wages. No other Prime Minister since records began has come close to the disaster in family living standards that the current Prime Minister and Chancellor have overseen. For 37 of the Prime Minister’s 38 months in office, real wages have shrunk in value. The pound in the pocket, the pound that someone has earned, does not go as far as it used to—it is diminished in value and worth less than it was before. No wonder people are working longer hours just to stand still.

Three years of suspended animation have created a treadmill economy in which millions are struggling just to stay where they are. My hon. Friends the Members for Wigan (Lisa Nandy) and for Inverclyde (Mr McKenzie) made that point exceptionally coherently. To listen to Government Members, however—those who took the trouble to take part this afternoon, possibly because reshuffle season is coming up—one would think that the way things are going is their idea of economic success.

Average hourly wages have fallen by 5.5% since the middle of 2010, but millionaires have never had it so good. Living standards for most people are falling, not rising, and as the Financial Times has pointed out, real wages have dropped back to their 2004 level.

[Gavin Barwell]

The hon. Gentleman said that millionaires had never had it so good. Will he remind us what the marginal rate of tax on millionaires was under the Labour Government, and how that compares with today?

[Chris Leslie]

For a moment during the hon. Gentleman’s speech earlier, I thought he was a little embarrassed about the cut in the top rate of tax from 50p to 45p, which happened in April. I was on the verge of intervening on him to ask whether he regretted voting to give priority to such a cut at a time when living standards are under the most stress. Does he regret doing that? Does he think it was the wrong thing to do?

[Gavin Barwell]

rose—

[Chris Leslie]

I will give way to the hon. Gentleman one more time if he wants to say sorry to the House.

[Gavin Barwell]

The whole House will have noted that the hon. Gentleman is unable to answer the question, but I will set a good example and answer his question. I do not think very wealthy people need a tax cut in terms of living standards, but I think that when attracting wealthy people to locate to this country, high marginal rates of tax are a bad idea, and therefore I voted for change.

[Chris Leslie]

I said it was reshuffle season. We nearly got an apology; the hon. Gentleman does not think rich people need that tax cut, but he voted to give it to them anyway because he is that sort of generous guy. I say to him, and to other Members, that the Office for Budget Responsibility, which the Government created, predicts that by the next general election in 2015, annual incomes will be £1,520 lower than they were in 2010 in real terms. That is lower wages. Just think about that statistic for a moment. Five years of Conservative and Liberal Democrat administration will have left a legacy for working people in which they are actually worse off, and significantly so.

[Kwasi Kwarteng]

Will the hon. Gentleman give way?

[Chris Leslie]

I will give the hon. Gentleman another little statistic. If we add up the five years of the falling wages predicted by the OBR, a typical working person will have lost an amazing £6,660. Imagine the difference that could make to ordinary working people. It is the equivalent of a year and a half’s grocery bill for the average family; they could even have bought a small car for that amount. Those diminishing wages are in addition to the tax and benefit changes since 2010, which are costing families an average of £891 this year.

[Several hon. Members]

rose—

[Chris Leslie]

I would like to make a little progress in the time I have left. That is what people have lost thanks to the Prime Minister. That is the scale of the cost of living crisis, and those are the costs of the Government’s failed economic policies.

[Mr Russell Brown]

Those sums of money would make a great difference to households, but it is not only that. It is about what those sums when multiplied would do in the economy. We are starving the economy of much-needed money to make it vibrant.

[Chris Leslie]

Of course my hon. Friend is right, and he understands that having that level of activity in the economy would have helped us get a better growth rate than we have had under the flatlining record of Government Members. Think of the different course the Government could have chosen. They could have tackled soaring energy bills with tougher regulation to pass on wholesale price cuts to ordinary customers, as my hon. Friend the Member for East Lothian (Fiona O’Donnell) suggested. They could tackle rip-off rail fares for commuters with an enforceable cap on train fare rises, they could protect tax credits for working people by reversing the millionaires tax cut, and they could cut income taxes with a new 10p starting rate to be paid for by a mansion tax on properties worth more than £2 million. However, they will not go that extra mile. Why? Because they do not understand the pressures that household budgets are under. After all, how could they? Government Members think that everything in the garden is rosy. They are either ignorant of the pressures on most households, or in their complacency they are ignoring the issue.

After three wasted years of a flatling economy, it is about time we had some economic growth. This growth, however, comes despite the Government’s economic policies, not because of them, and as everybody knows, growth is still falling short of what we ought to be seeing by now. Deficit reduction has stalled because the Government are borrowing more to pay for the costs of economic failure.

[Kwasi Kwarteng]

Will the hon. Gentleman give way on that point?

[Chris Leslie]

No, I will not give way but I will ask the hon. Gentleman what sort of economic recovery this is. So far, it has all the hallmarks of a recovery for the few, not the many. It is no wonder that the Prime Minister has abandoned the fiction that we are “all in this together.” The lucky minority of the already wealthy are doing very well thank you very much, but that is not much solace for everyone else who is working harder just to stand still. The Government have failed spectacularly to put in place conditions for a balanced recovery, and instead have fuelled a lopsided escalation in the cost of living, without a simultaneous focus on capacity or affordability, as my hon. Friend the Member for Coventry North West (Mr Robinson) said.

The Chancellor needs to act now to guard against escalating prices, inflation and interest rates, but he is not building broad-based growth in every region. He is not focusing on long-term, sustainable investment; he is putting short-term, debt-fuelled, business-as-usual economics first. His housing policy is all demand and no supply.

Business investment is thwarted by banks that are still not serving the real economy. How nice it is for bankers who can stave off their bonuses until the new tax year kicks in and pocket the Chancellor’s generous tax cut. No wonder there was a record-breaking bonus bonanza—bonuses soared by billions at the exact moment the Chancellor cut that 50p rate.

It is not looking like a recovery for ordinary people. It is a recovery for the rich, an unbalanced and narrow recovery, and a recovery for millionaires but not working millions. Times are tough, and, for most people, life is getting harder, with the cost of child care, the daily commute, the family shop, school uniform costs, the rent and the mortgage. People are taking on more hours if they can or, worse, joining the rise of the zero-hours economy. No wonder people are driven increasingly to payday lenders and extortionate credit. As my hon. Friends will have seen in the news yesterday, Wonga is lending as much to consumers as some of our major high street banks, such as Nationwide. Does that not say it all? It is not a recovery for those struggling to make ends meet; it is the Wonga recovery, benefiting those at the top at the expense of the majority.

Those are the consequences that flow from three years of economic stagnation. The cost-of-living crisis is felt in middle and lower-income households across the country. Enough is enough. We need action now to help ordinary taxpayers, commuters and householders to fight back against those rising prices. Ensuring that wages rise faster than prices should be a central objective for the Government. The Prime Minister and the Chancellor are out of touch. Working people up and down the country are out of pocket as a result. We cannot go on with this cost-of-living crisis year after year. Every day it becomes clearer, especially to ordinary working people in our constituencies, that we cannot afford this Government.

16:22

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

I add my congratulations to those of my right hon. Friend the Financial Secretary to the shadow Chief Secretary, the hon. Member for Leeds West (Rachel Reeves), on the birth of her daughter earlier this year. I welcome her back.

I should also add a word of admiration not only for the hon. Lady, but for the shadow Financial Secretary, the hon. Member for Nottingham East (Chris Leslie). I admire them because, in their speeches today in a debate on the economy, they managed to ignore two points. First, they did not touch on any of the economic data that have emerged over the summer. We heard nothing about gross domestic product numbers, purchasing managers index surveys, employment numbers, CBI and British Chambers of Commerce forecasts or the OECD’s assessment yesterday. I appreciate that the Labour party has had a summer to forget—it has clearly forgotten.

Secondly, the hon. Lady and the hon. Gentleman managed to ignore the economic argument we have heard from them for the past three years that the Government are going too far and too fast. They argued that there was no way we would get growth while cutting the deficit, and that only by borrowing more would we have growth. They also had a five-point plan. As my hon. Friend the Member for Reading West (Alok Sharma) has pointed out, the flagship policy in the plan was a cut in VAT, which would be necessary to get the economy growing again, but that has disappeared from Labour’s platform. We have heard lengthy speeches from Labour Members on economic policy, but they have not talked about their economic policy.

[Ian Mearns]

The Minister refers to economic data from the summer months. We saw an increase in retail expenditure in the summer months, but is it any coincidence that, at a time when people have limited disposable income, household savings have decreased?

[Mr Gauke]

What is striking about the data we have seen is the encouraging, broad-based signs. The manufacturing numbers are very encouraging. Let us not say that the situation is about consumer spending only. There are encouraging signs in the economy, which was not reflected in the remarks of Labour Members.

[Geraint Davies]

The Minister will have heard my speech, so I will not recite it, but will he accept that there is a problem with the amount of lending to business by banks? Can he give any undertaking that the Bank of England will put pressure on banks to redirect the funds they have been given under the funding for lending scheme towards business rather than to household mortgages that are now out of the woods?

[Mr Gauke]

The fact that we have credibility in our fiscal policy means that the Governor of the Bank of England has been able to say what he has said about the greater certainty for interest rates, which is helpful for businesses. If we throw away that fiscal credibility, we will make life more difficult for businesses wanting to get credit.

We have talked about what the motion contains. It says that we should get more people into work: we agree with that. Over the year, employment has increased by 301,000, and unemployment has fallen by 49,000. In July, the claimant count fell, for the ninth consecutive month, to 1.44 million, the lowest level since February 2009. This is the result of a Government who have created the right tax and regulatory environment for businesses to flourish. The proposals from the Opposition would put all of that at risk.

We hear about bringing forward capital investment. We also recognise the need for infrastructure investment to spur the jobs and growth of the future, and that is why in June the Chief Secretary unveiled the biggest public housing programme for more than 20 years; the largest programme of rail investment since Victorian times; the greatest investment in our roads since the 1970s; fast online access for the whole country; and the unlocking of massive investment in cleaner energy to power our economy forward. We have increased expertise in Whitehall and we are working hard to deliver those projects as soon as possible.

The cost of living is an important issue, and we recognise that times are tough for many people. But let us look at the difference between the parties. Whereas we have reduced income tax for 25 million people—we have increased the personal allowance—the previous Government doubled the rate of income tax on low-paid workers. This Government have ensured that we have credibility so that we have been able to keep mortgage rates low: the Opposition would lose our credibility. Council tax doubled under the previous Government: it has been frozen under us.

The previous Government raised fuel duty 12 times while in office and had plans to raise it six more times subsequently—the equivalent of 13p per litre—and we have frozen fuel duty. When we came to office, the UK had almost the highest child care costs in the world, and we will help families with child care. Energy bills soared under Labour. Between 1997 and 2010, the average domestic gas bill more than doubled. Electricity bills went up by more than 50% and Labour remains committed to an expensive 2030 decarbonisation target that will only add to energy bills, whereas this Government are forcing energy companies to put customers on the lowest tariff. When it comes to beer duty, Labour planned to raise the tax: we not only froze it, we cut it.

My hon. Friend the Member for West Worcestershire (Harriett Baldwin), in an excellent speech, asked how we ensure that we have the sustainable growth that we need. We need sustainable public finances—an argument that we have made consistently and that has been consistently opposed by the Opposition. We need a highly skilled work force, and that is why 500,000 apprenticeships have been undertaken under this Government. It is why we are undertaking ambitious educational reform. We need welfare reform, with a system that makes sure that work is rewarded—not something that we inherited from Labour. We need a competitive tax system that encourages investment in the United Kingdom, not one that drives it away. We need to deal with the regulatory burdens that prevent growth—we have undertaken planning reform, which will help to increase housing supply.

What do we get from the Opposition? We get a Labour party that presided over a squeeze in living standards from 2003; a Labour party that must accept some responsibility for the deepest recession in a century; a Labour party that doubled the rate of income tax on low-paid workers; a Labour party that planned for increase after increase in fuel duty; a Labour party that remains signed up to decarbonisation targets that would increase energy prices; a Labour party that has consistently set out an economic policy that would consist of more borrowing, an approach that would lead to higher mortgage rates and ultimately higher taxes; and a Labour party that has opposed our council tax freeze. For Opposition Members to lecture us on living standards is extraordinary. As President Obama might have said, it is the audacity of the hopeless.

If we want to help hard-working people—I think we all do—it is vital that we stick to the task. [Interruption.]

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. There are too many private conversations. I am struggling to hear the Minister.

[Mr Gauke]

If we want to help hard-working people—I think we all genuinely do—it is vital that we stick to the task. [Interruption.] I know that we do. I am not sure the Opposition do, but I will give them the benefit of the doubt. We need to create a favourable environment for job creation. We need to maintain economic credibility by continuing to deal with the deficit, which enables us to keep mortgage rates lower. We need to reduce the tax burden on low-paid workers and we need to reform our welfare system to ensure that work pays. That, not borrowing and spending more—not more debt—is the answer, and that is the approach the Government will take.

Question put.

16:32

Division 74

Ayes: 225

---

Labour: 212
Scottish National Party: 5
Democratic Unionist Party: 4
Social Democratic & Labour Party: 2
Plaid Cymru: 1
Alliance: 1
Green Party: 1

Noes: 289

---

Conservative: 250
Liberal Democrat: 36
Independent: 1
Democratic Unionist Party: 1

Energy Prices and Profits

Wednesday 4th September 2013 Commons Chamber

16:45

[Caroline Flint (Don Valley) (Lab)]

I beg to move,

That this House recognises the importance of the energy industry to the security and prosperity of the UK economy; notes that the average household energy bill has increased by over £300 since the 2010 general election; further notes that the big six energy companies have had a £3.3 billion uplift in profits over the same period; welcomes the recent report on Energy Prices, Profits and Poverty from the Energy and Climate Change Committee (Fifth Report, HC 108) which found that Ofgem is failing consumers; regrets that the Government has halved support for people in fuel poverty, and that as of 20 August 2013 only 132 households had signed up for a Green Deal plan; further regrets the Prime Minister’s broken promise to legislate so that energy companies have to give the lowest tariff to their customers; and calls on the Government to bring forward amendments to the Energy Bill to make the energy market more competitive and transparent by requiring energy companies to pool the power they generate and to make it available to any retailer, to create a tough new energy watchdog with the power to force energy companies to pass on price cuts when wholesale costs fall, and to put all over-75 year olds on the cheapest tariff.

Earlier this afternoon, we heard from my hon. Friends the Members for Leeds West (Rachel Reeves) and for Nottingham East (Chris Leslie) about the full scale of the cost-of-living crisis unfolding in Britain. For 37 of the 38 months in which this Government have been in power, real wages have fallen. At the same time that people have seen their incomes squeezed, the cost of living has also increased sharply. In the last three years alone, the average household energy bill has increased by over £300. It is no wonder that Which? research has shown that 79% of people now worry about how to pay their energy bills. With nearly four in 10 people saying they are likely to have to cut back on their energy spending in the coming months, and with warnings of more price rises coming later this year, I make no apologies for returning to a topic that we have debated a number of times in the last couple of years.

As we know, energy companies claim that there is a whole raft of reasons why energy bills are going up—wholesale costs, network charges and social and environmental obligations. With all those extra costs, one might think that profit margins would have come down, but quite the opposite. It is now clear that, regardless of those costs, these companies have seen a substantial increase in their profits. We know that because since 2009, energy companies have been required to publish information on their financial performance, including their profits. The information shows that in 2009, Britain’s big six energy companies made just over £2.2 billion in profit. In 2012, by contrast, they made more than £3.7 billion in profit—an increase of nearly 70%. Overall, over the last three years, Britain’s big six energy companies have seen a huge profits uplift of more than £3.3 billion. If anything, this is likely to be an underestimate because it excludes their profits on trading and from gas storage.

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

I noticed that, among the factors affecting energy bills, the right hon. Lady did not mention the cost of moving from lower-priced fossil fuels to very expensive renewables. That is the only item that is directly under the control of this House. Was it not somewhat disingenuous not to mention it?

[Caroline Flint]

Actually, I mentioned “social and environmental obligations” in my opening statement, and part of those obligations mean moving to cleaner energy in the future. I think I have the support of Ministers in saying that if we stay stuck in the past in relation to fossil fuels, we will create an even bigger bill for the future. We need to move to cleaner, renewable energy and other low-carbon energy in order to achieve both security and fairer prices in the long term.

[The Secretary of State for Energy and Climate Change (Mr Edward Davey)]

In the interests of consensus, does the right hon. Lady accept that it is essential and urgent for Britain to increase investment in renewables, low carbon and energy infrastructure generally, and does she accept that we need to invest about £110 billion over the next 10 years?

[Caroline Flint]

Yes, I do accept that, and in view of the Secretary of State’s comments, let me be absolutely clear about one thing. The opening words of the motion before us today rightly recognise

“the importance of the energy industry to the security and prosperity”

of the British economy. The companies that keep the hospitals warm, factories working and the lights on in 25 million homes are doing a pretty fundamental job for the British economy. They employ hundreds of thousands of people and create skilled apprenticeships right across the country. Over the next 10 years, we need these companies to invest in the UK—in new power stations, pipes and wires.

The idea, however, that the significant uplift in profits is all somehow to do with investment simply does not stack up. For one thing, if we look carefully at the profits and investment trends of the big six energy companies, as Bloomberg did last year, we see a very odd pattern emerge. The companies with the biggest profit margins have the lowest investment profiles, while the companies with the smallest margins are ploughing the most back in.

Moreover, at a time when the industry overall is enjoying unprecedented profits, we are not seeing anything like the investment that we need. Analysis by Bloomberg New Energy Finance shows that investment in clean energy has fallen by more than half since the last general election, and that under this Government just one new gas-fired power station, in Carrington in Manchester, is scheduled to open before the next election. Every other gas-fired power station that is coming on stream was commissioned, received planning permission and began to be constructed under the last Labour Government. In any case, the need for investment cannot mean allowing the energy market to fail consumers.

[Mr John Redwood (Wokingham) (Con)]

Does the right hon. Lady not understand that if she backs the most expensive and least rewarding forms of energy investment, to the tune of £110 billion—which is what she wishes to do—profits of less than £4 billion a year will not pay for all that?

[Caroline Flint]

The choice that we face is between moving to the energy market that is best suited to the future and continuing to incur the additional costs of the past. The Energy and Climate Change Committee has produced information about the cost of decarbonising our power sector, but has also drawn attention to the cost of not doing anything. I believe that the cost of staying stuck in the past would far exceed the cost of investing the amount that we need to invest in renewable and low-carbon energy for the future.

[Mr Davey]

Does the right hon. Lady accept that investors will need to make profits on their investments? The Bloomberg report aside, does she agree that investors in energy companies can make profits?

[Caroline Flint]

Of course I agree that those companies should make profits. I do not want to become involved in a back-and-forth question session because I know that other Members wish to speak, but the Secretary of State has not answered my question. Is he not worried about the fact that some of the companies with the largest profit margins are investing the smallest amounts, while those with the smallest profit margins seem to be investing more? The need for investment cannot mean allowing the energy market to fail consumers. Today I shall explain not just how the Government are going wrong, but how the position could be improved.

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

Is my right hon. Friend as surprised as I am that none of the Members who have intervened so far have mentioned consumers? People such as my constituents have seen fuel poverty—extreme fuel poverty—double over the last 10 years. They have suffered attacks on their living standards and increases in gas and electricity prices, while the six big companies that the Government appear to be defending have made profits of £3.3 billion.

[Caroline Flint]

In fact, that £3.3 billion is over and above those companies’ profits. It is not just their profit base; it is the uplift on what I would describe as, in itself, a pretty healthy profit.

[Sir Edward Leigh (Gainsborough) (Con)]

Will the right hon. Lady give way?

[Caroline Flint]

No. I am going to make some progress. I shall say more about consumers later, and there will be plenty of time for interventions then. Let me begin, however, by saying something about energy efficiency.

There is agreement on the fact that the best way in which to protect people from rising energy bills is to make their homes better insulated and more energy-efficient. The Government’s flagship programme is the green deal. It replaced the Warm Front programme, which helped more than 2 million families to insulate their homes under the last Labour Government.

Members may recall that the last Secretary of State said that the green deal would help to insulate 3.5 million homes. Clearly a great deal has happened since that statement, and it would be understandable if Members took those words with a pinch of salt. However, the Prime Minister told the House that the scheme would be “bigger and better” than any schemes that had preceded it. It would be groundbreaking, revolutionary, and the envy of countries all over the world. When it was launched earlier this year, the Minister of State, Department of Energy and Climate Change, the right hon. Member for Bexhill and Battle (Gregory Barker) told Radio 4 that he would be having sleepless nights if fewer than 10,000 people had signed up for it by the end of the year.

Eight months in, how many people have actually signed up for a green deal package? Has the number hit 8,000, or 4,000? Can the Minister look forward to a good night’s sleep before the end of the year? I am afraid not, because so far just 132 people have signed up. Therefore, almost five out of six hon. Members in this House do not have a single constituent who has signed up for the green deal. The saddest thing is that this was all so predictable. For the last three years my hon. Friend the Member for Liverpool, Wavertree (Luciana Berger) and I have warned that interest rates of 8% or even 9% would put people off, that hidden charges would put people off, that penalty payments would put people off, but this Government are not good at listening.

The Secretary of State will no doubt claim that it is still early days, and I really wish that were the case. On the latest count over 58,000 people have had assessments. That shows that the public are interested in making their homes more energy-efficient, but the problem is that once they have had their assessment, 99% of people say they do not think it is a good deal and are not signing up.

[The Minister of State, Department of Energy and Climate Change (Gregory Barker)]

There is absolutely no factual basis for that assertion. The latest DECC polling shows that over 70% of people who have had a green deal assessment have said they either have work in progress or intend to or are likely to have work done.

[Caroline Flint]

The facts speak for themselves. There were 58,000 assessments, but only 132 people have signed up. I am sure Government Members will do their best to defend the green deal this afternoon, but they might want to ask themselves why their constituents do not want it if it is such a fantastic scheme.

Alongside the green deal is the energy company obligation, which is a successor scheme to the obligations on the energy companies that we put in place. Again, in principle it has our support. However, when support for people in fuel poverty has been cut by half, the help that is available should be targeted where it is most needed, yet under ECO 60% of the funding could go to households who can already afford to pay, not to people in fuel poverty. When times are tough and money is in short supply, that is simply indefensible.

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

I spoke in the last debate. Some 41% of households in my constituency are in fuel poverty. What does my right hon. Friend have to say about what I believe is the sharp practice by some of the energy companies who want to increase customers’ monthly direct debit payments by 15%, 20% or 25%, with no real rhyme or reason, when there is no justification for that as their customers are not using that increased amount?

[Caroline Flint]

Although some of the companies have reformed how they treat their customers, I am afraid that I receive information every day from members of the public including my own constituents—and also colleagues in this House who tell me about their experiences and those of their constituents—about what can only be described as sharp practices. Why should a customer who is paying a fair rate for their energy have to pay an uprated rate just to allow that money to sit in the coffers of the energy companies so they can benefit from any interest on it? That is just not fair and there is still a huge job of work to be done.

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

Some 56% of people are saying they have cut back on their use of electricity and gas yet their bills are going up. They ask, “What is the point of the green deal, when it does not matter how much I save because prices are going up anyway?” No wonder nobody wants to know about the Government’s green deal.

[Caroline Flint]

My hon. Friend is right, and that lack of confidence and trust in the market and how it operates is at the heart of our motion.

I want to tackle this issue head-on by turning to the question of the retail energy market. It is nearly a year ago now that the Prime Minister promised to force the energy companies, by law, to put all their customers on the cheapest tariff. Let me remind the House of exactly what the Prime Minister said on 17 October last year:

“we will be legislating so that energy companies have to give the lowest tariff to their customers”.—[Official Report, 17 October 2012; Vol. 551, c. 316.]

He reaffirmed his proposal at Prime Minister’s questions earlier today, but the details show that it will not in fact apply to all customers; it will apply only to people on closed or dead tariffs, which is a tiny fraction of consumers as a whole.

Given the crucial difference between what the Prime Minister promised and what the proposals entail, it is reasonable to ask exactly how many people will benefit. Since then, I have asked one urgent question, six oral questions in the House and six written parliamentary questions to get to the bottom of this, but every time the Government have refused to answer.

This is meant to be their core offer to consumers, yet the Government cannot even tell me how many people will be moved to a better deal, when that will happen or how much they will expect to save. So I ask the Secretary of State again today: how many people will the energy companies be forced to move to the cheapest deal? Why is his Department so far refusing to answer my freedom of information request on this issue? Why has so much time and so many resources been wasted trying to shore up a policy announcement made off the cuff?

The sad thing is that there is agreement across the House and, to its credit, within industry that the proliferation of tariffs in the past few years has hindered, rather than helped, consumer choice and competition. Instead of focusing on that, the Department has wasted a year trying to dig the Prime Minister out of a policy hole entirely of his own making, creating unnecessary confusion for the public.

[Mr Stewart Jackson (Peterborough) (Con)]

Before the right hon. Lady gets too far along the road of critiquing the dysfunctional market, perhaps we ought to consider that the Labour Government inherited a dynamic and efficient market, geared to competition for consumers with 14 companies, and handed on to this Government an oligopoly of six companies, which she now criticises.

[Caroline Flint]

It is fascinating how figures can be used. The briefing that Energy UK gave Members on both sides of the House says that 17 companies are operating in the market. The problem is market share; the big six control 98% of the market. I do not call that competition, and we will not get it until we get a fairer sharing out of the market—that will make a real difference.

[Barry Gardiner (Brent North) (Lab)]

In response to the previous intervention, would my right hon. Friend simply care to draw the House’s attention to the fact that the previous Labour Government had to reform the market not once, but twice, through NETA and BETTA—the new electricity trading arrangements and the British electricity trading and transmission arrangements? They did so to ensure that, in what had been a dysfunctional market, something better and more competitive was created. That created the big six, which now, through the change in circumstances, have reached a different stage in their genesis and need reform as well. The idea that the Labour Government inherited a well-functioning market is nonsense, and Government Members know it.

[Caroline Flint]

I absolutely agree with my hon. Friend. Just for the record, energy bills fell under my right hon. Friend the Leader of the Opposition. When he became Secretary of State for Energy and Climate Change the average bill was £1,215, and when he left it was £1,105. I am happy with that drop of more than £100, but since then there has been an increase of more than £300 in the past few years.

Alongside simpler tariffs, which we would all agree with, protections should be put in place for people less able or less inclined to switch. That is why our motion proposes to require the energy companies to put all those over the age of 75 on to the cheapest tariff. We know that the over-75s are the most likely to live in homes with poor energy efficiency and the most vulnerable to the cold weather, but the least likely to switch supplier, so they often pay more than they need to. That is sometimes simply because they do not have enough confidence to access the internet, where the information on the cheapest deals is available, or to operate an online account. I have discussed our proposal with suppliers, and they indicate that there is no reason why it cannot be done, so I hope that the Secretary of State will be able to give a more positive response than he has in the past.

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

Yesterday, Lord Stern dismissed claims that fracking could bring down the price of gas in the UK as “baseless economics”. Given the long list of experts explaining why shale gas will not help people who are struggling with high energy bills and will actually trash our climate commitments, will the right hon. Lady take this opportunity to rule out fracking in the UK under any future Labour Government?

[Caroline Flint]

I have been clear that our approach to fracking and what it could offer must be evidence-led. In the past few years, I have been disappointed by the fact that, for all sorts of reasons, the Government have chosen to up the ante on what gas from such exploration can provide. We do not really know the exact cost-benefits of fracking for gas. We do not know how much is there and whether those benefits will be realised when we get it out of the ground. I am afraid that I shall have to disappoint the hon. Lady by not ruling it out, but our approach must be evidence-based and pragmatic. I certainly do not believe that we should be offering tax breaks, given everything that is going on in this country, for something that might not happen for 10 years, if it happens at all.

The Government have harmed the reasonable debate that we should be having about fracking by trying to polarise the use of the gas against that of renewables. That has been incredibly unfortunate as regards having a practical, reasonable and evidence-led debate. That is what we will lead on in trying to debate the issue, which is important for our country.

As I have said, we can simplify the tariffs. We can take our proposal to put all those who are over 75 on the cheapest tariff. But before we even get to tariffs, we must ensure that the prices that make up bills are set fairly and openly in a properly competitive environment. That is crucial because wholesale costs are the single biggest component of domestic energy bills and make up more than half the prices consumers pay.

If we do not have a competitive wholesale market putting a downward pressure on prices, people might be on the cheapest tariff but might still not be getting a fair deal. The Government seem to say that they agree that the market is not as transparent or competitive as it should be, but what are they doing about it? Not very much.

[Mr Mike Weir (Angus) (SNP)]

Will the right hon. Lady give way?

[Caroline Flint]

I just want to make a little progress.

The Energy Bill takes broadly based back-stop powers to improve liquidity, but the Government cannot even say in what circumstances or in what way they would use those powers. I am sure that the Secretary of State will pray in aid Ofgem’s work on liquidity. In our previous exchanges, he has defended the regulator against my criticisms, but I hope that he has read the Select Committee’s report, “Energy Prices, Profits and Poverty”, which was published over the summer. Its conclusion is stark. The very first page of the report states:

“Ofgem is failing consumers by not taking all possible steps to improve transparency and openness in the energy market.”

I am afraid Ofgem’s proposals on wholesale market liquidity do not go anywhere near addressing the two main problems with the market.

The first problem is that the market is dominated by six companies that both generate power and retail it to consumers with a market share of 98%. As Which? pointed out in its report over the summer, the obvious problem with the structure is that it provides little incentive for companies to keep wholesale prices efficient if the effect of doing so is to reduce the overall profitability of the company. Why would the supply arm of an energy company try to drive down profits on the generation arm if the outcome was to reduce the amount of money the company as a whole was making? Although the companies are right to say, as they frequently do, that their retail profits are only 5%, which is pretty healthy, their profit margins on generation are much more substantial. Which? suggests in its report that last year they were about 19%.

[Mr Davey]

Will the right hon. Lady give way?

[Caroline Flint]

I have given way quite a lot and I want to make a bit of progress. I will see whether I have time later to take another intervention from the Secretary of State.

I have set out the first problem. The second problem is that if energy companies can source most or all of the power that they need for their customers from their power stations, there is much less need to trade in the open market. According to one estimate from the London Energy Brokers Association, average daily market traded volumes were just 6% of total generation. For those reasons, we have proposed the pool to which the motion refers. A pool would be a single mechanism bringing all generators and suppliers together to buy and sell all their power.

To put it simply, in a pool—or an open exchange, or whatever else we might call it—all generators will be required to sell all the power that they generate on to an open market, and all suppliers will have to buy it from there, too. That would do two very important things: it would put a break between generation and supply; and it would result in much greater volumes being traded openly. Indeed, that is one reason why the markets in other countries where there is a more exchange-based trading system, such as Nord Pool, are more liquid, more transparent and have more market participants. I believe that such a market would be more attractive to invest in, particularly for independent generators or companies wishing to enter the supply market.

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

Is my right hon. Friend aware of the recent report by the respected think-tank the Institute for Public Policy Research, which shows that the efficiency savings resulting from increased competition in the energy market could alone bring bills down by around £70?

[Caroline Flint]

That is absolutely right. I do not believe that the present situation encourages or incentivises efficiency within those companies. Importantly, it does not provide an open and transparent basis on which to judge the true cost of energy, which I think is vital if we are to move the debate on energy in this country forward.

[Mr Davey]

Today we have learnt that the right hon. Lady believes that we need investment in the energy sector and that investors will need profits. Given what she has just said, can she tell the House what level of profit she thinks is excessive and when she thinks profits become unfair to the consumer?

[Caroline Flint]

I think that the difficult thing here is for the country to understand why the Secretary of State has set his face against opening up the market and making it more transparent. This is not about companies not making a profit; it is about creating more competition. Every time we discuss the price of energy, we will have various voices, including the Government’s, defending how the companies operate. I want to create a more open and transparent market, so that we can all judge what is a fair price and, alongside that, what are fair profits. It is not fair if people cannot get to the bottom of how energy is bought and sold. It cannot be right for the market to be rigged in such a way that the vast majority of energy is sold within a company and then sold on to us. Other countries do it differently, and I think that we can, too.

[John Penrose (Weston-super-Mare) (Con)]

Does the shadow Secretary of State not accept that even if her proposals were to introduce extra transparency and potentially yield some of the benefits that she is claiming, those benefits would be unlikely to be passed on to consumers unless we also reform switching and the information available to consumers, so that more are willing to vote with their feet by moving their business elsewhere? It is not just the over-75s who are less likely to switch; the entire market is insufficiently informed or able to switch conveniently to have that kind of consumer pressure on producers.

[Caroline Flint]

I agree with the hon. Gentleman. We could look at lots of different policies to improve customer choice and the ability to move more flexibly between suppliers. My point is that, whatever we do to the retail side of the consumer offer, we must deal with how the market works. Even the best tariff that we have at the moment might still not be a good one, because of how the wholesale market works. When I met companies that are part of Nord Pool, they did not voice the concerns that the Secretary of State mentioned today about hampering investment. Actually, I am pleased to share with the House the fact that over the past 18 months I have seen some movement in a number of the energy companies in the UK as well. I think that they are beginning to realise that some openness and transparency in the market would serve them and the British public well.

[Mr Mark Spencer (Sherwood) (Con)]

Will the right hon. Lady give way?

[Caroline Flint]

I will make some progress.

A pool or open exchange would have one other big advantage over the current market arrangements. The Energy Bill introduces contracts for difference to encourage investment in low-carbon sources of electricity. Those are essentially contracts with low-carbon electricity generators to pay a fixed price for the power that they produce. If the price that the generator receives in the market is less than the agreed strike price, consumers are liable to make up the difference. At the moment, with such little trading happening on the open market, there is no reliable way to work out what the market price actually is.

In August, the Secretary of State published more information on how contracts for difference will work, but what did it say on the question of how to work out market prices for baseload power? Let me quote from paragraph 15 of annex B of the draft operational framework, with which I am sure he is familiar. It states that

“indicating the precise source of prices, based on current price publications, in detail today would not be useful.”

Actually, I think that knowing how many billions of pounds of consumers’ money will be allocated would be pretty useful, but without a pool, I simply do not see how the Government will work it out.

[Several hon. Members]

rose—

[Caroline Flint]

I am going to make some progress.

Alongside our proposals for a more competitive open energy market, the motion calls for a much tougher regulator than we have had in the past. As I said earlier, in its report the Select Committee echoed many of our criticisms of Ofgem over the past year. I do not intend to rehearse all those criticisms, as it could take some time, but I want to urge the House to support one important change. In a properly competitive market, cost reductions should be passed on as quickly and as fully as cost increases. At the moment, when wholesale costs increase, bills go up like a rocket, but when wholesale costs fall, bills fall like a feather, if at all. That is why our motion calls on the House to support the establishment of a tough new regulator with a statutory duty to monitor the relationship between the prices that energy companies pay for their energy and the bills that the public pay and the power to force the companies to cut prices when wholesale costs fall.

Why is this all so important to the public? Rather than never having had it so good, as the Government try to tell them, rising energy bills are one of the main reasons why they are finding it harder and harder to make ends meet. Even in better times, though, the public deserve a fair deal. This problem is not confined to the poorest. Millions of people are facing real hardship because of a cost-of-living crisis reinforced, I am afraid, by the Government’s complacency over soaring energy prices, incompetence in helping the public to insulate their homes and indifference to the plight of our oldest citizens paying over the odds for the energy that they use. Last year, there were 24,000 excess winter deaths in our country. Even on the Government’s revised definition, well over 2 million households are in fuel poverty, and the gap between their bills and what they can afford to pay is growing ever wider.

The Opposition’s job is to scrutinise the Government and hold them to account, but it is also to develop alternative ideas to tackle the challenges that the country and its people face. The risk, of course, is that the Government pinch them. Today I tell the House that, with the Energy Bill still going through Parliament, if our proposals can help to restore people’s faith in the energy market and get people a fairer deal, I gladly offer them up. I commend the motion to the House.

17:16

[The Secretary of State for Energy and Climate Change (Mr Edward Davey)]

I am grateful to the Opposition for providing this opportunity for me to set out the action that the Government are taking to help people and businesses keep their buildings as warm as possible and their bills as low as possible. We need to help hard-pressed people and businesses as much as possible. I will spend some time setting out how the Government are doing far more than the previous Government in helping consumers with the cost of living, especially energy bills. The debate has already been very instructive. We have begun to explore Labour’s energy policy in more depth, and it has been found wanting. The right hon. Member for Don Valley (Caroline Flint) offered up her policy proposals and thinks that we may wish to take them. Let me tell the House that we shall not be doing so.

I asked the right hon. Lady whether she believes that we need more investment in the UK’s energy sector, and she said that she does. I asked whether she accepts that investors might wish to see a return on that investment—some profit—and she was commendably clear that she believes that profit is needed. But when I asked her what she thought excessive profit—unfair profit—was, there was no answer. Yet given her motion, her speech and her press release, one would be forgiven for thinking that she had a view on what prices were fair and what profit levels were right. The problem is that it is not clear whether she wants any more competition or regulation. At times, she seemed to be advocating a wholesale re-regulation of Britain’s energy markets, with price controls—perhaps profit controls. Is she advocating price and profit controls? We need to know. What exactly is Labour proposing? If she is not proposing those, as she sometimes appears to do, we need to know how she is planning to deal with the problems she raises. [Interruption.] I am coming to the issues in the motion. The problem is that they are so weak that we do not believe they are really what she is proposing.

[Mr Tom Clarke]

The right hon. Gentleman briefly mentioned regulation. Given Ofgem’s record, is that really the sort of regulation he wants? We have seen reductions in wholesale prices withheld from consumers for a very long time and yet increases passed on to them, and a failure to ensure effective competition within the market.

[Mr Davey]

I will discuss Ofgem in detail later, so I ask the right hon. Gentleman to be patient. I do not accept his party’s position on Ofgem and I will say why not in some detail later.

[Gloria De Piero (Ashfield) (Lab)]

The Secretary of State has mentioned profit levels. Is it not clear that it is not possible to talk about profit levels without also talking about the need for a regulator with teeth? What is the Secretary of State going to do about that?

[Mr Davey]

Actually, when we talk about profit levels, we need to talk about competition. One of the core points of our policy is to increase competition, which the previous Government failed to do. Yes, regulation has a role, and I will discuss that, but competition has a much greater role.

[Dr Alan Whitehead (Southampton, Test) (Lab)]

What proportion of the total investment that the departmental estimates claim will be needed for plants, transmission, grids and connections will come from the big six energy companies? Will it be most, some or a small proportion of it? Does the Secretary of State think that the big six may not be the only game in town as far as investment in our future energy supplies is concerned?

[Mr Davey]

The hon. Gentleman makes a fair point in his usual informed way. The big six will be a big part of that investment profile, but as he will know, their balance sheets are weaker than they were in the past as a result of the recession, and there will be other investors. That means we will have to work harder to get that investment, but some of it will come from the big six.

[Mr Spencer]

The Opposition’s suggestion of an energy pool is an interesting one. Which party was in power in 2001 when the energy pool was abolished?

[Mr Davey]

My hon. Friend makes a very good point, which I will come to later. It was the Labour party.

The UK faces a huge challenge, which was made much worse by the failure of the Labour party when in government to even begin to tackle Britain’s energy and climate change problems—a lamentable Labour record, which I will return to shortly. The challenge that I as Secretary of State am tackling is the urgent need to attract massive investment while at the same time helping people with high energy bills. We are trying to attract that investment in a much more unfavourable economic and energy climate than Labour faced. The recession, and especially its impact on investors, has meant that people are less willing to invest, so we have to try harder to attract that essential investment.

We face global energy markets that are much tighter than they were during Labour’s time. International wholesale fossil fuel prices, which account for up to half of a typical household bill, have gone up by 50% over the past five years. The vast majority of countries are, like us, seeing energy bills go up, but unlike other countries whose recent Governments invested in energy, Britain faces another massive cost pressure on energy bills, all because Labour failed to invest. The synthetic anger and synthetic policies of the Opposition do not fool anybody.

[Caroline Lucas]

Will the Secretary of State give way?

[Mr Davey]

No. I want to make some more progress and then I will let the hon. Lady in.

We need a genuine debate. I pay tribute to the Energy and Climate Change Committee for its report “Energy Prices, Profits and Poverty”, which I welcomed on the day it was published. It is more balanced and informed than many contributions to this critical debate and we will respond formally to it soon. Essentially, the debate is about how to get the balance right between regulation and competition, the regulations we need and how we can boost competition.

To be fair to the right hon. Member for Don Valley, her motion and part of her speech covered those issues. Her problem is her party’s record and the inconsistent and, frankly, incoherent policies she seems to want to adopt. Let us consider her three-pronged policy package: abolishing Ofgem and replacing it with Ofgem 2; dropping Ofgem’s reforms of the wholesale market in favour of reintroducing a pool; and tackling, in some way, the big six.

It is a fascinating package, because it completely reverses some of the very few things Labour actually did on energy policy. You couldn’t make it up. Labour set up Ofgem in the first place in 1999. On Labour’s watch, Ofgem abolished retail price regulation. It gets worse for Labour because five years ago the Leader of the Opposition, when he did my job, said that he was strengthening Ofgem. If the Labour party wants to abolish Ofgem, which it set up and which was strengthened by the Leader of the Opposition, what on earth went wrong?

We are ensuring that Ofgem’s powers are increased. We have taken a far more measured approach to the independent regulator. We are ensuring that it and we are on the side of the consumer. We started with a review of Ofgem three years ago. We decided on some reforms and are implementing them. We are giving Ofgem tough powers to compensate consumers when an energy firm does something wrong—something that the Leader of the Opposition forgot to do when he was doing my job. Labour was not on the side of the consumer when it was in government. It is noteworthy how much tougher Ofgem has been since the coalition came to power in promoting competition in retail and wholesale markets, in which it has been strongly supported by us.

I will ask the right hon. Member for Don Valley another question—perhaps she will answer this one. Would she keep the tougher powers that we have given Ofgem? Given that it is improving competition in the wholesale and retail markets, would she abandon those reforms? I will give way to the hon. Member for Brent North (Barry Gardiner), because perhaps he will be able to answer.

[Barry Gardiner]

The Secretary of State knows full well that what he is saying is disingenuous. When Labour created the new electricity trading arrangements, we were moving from two major companies to six. When it created the British electricity trading and transmission arrangements, it expanded the transmission arrangements as well. When it introduced Ofgem, it was introducing a regulator into a competitive situation. He knows full well that in 2007 and 2008, when the Leader of the Opposition was the Secretary of State for Energy and Climate Change, energy prices were going down. It is in the last few years that they have rocketed by 41%. All the accusations that he has just made are phoney and he knows the reality.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. The hon. Gentleman has been in this Chamber long enough to know that he should be asking a question rather than making a speech.

[Mr Davey]

I was not making phoney accusations, but giving the facts and the history. Labour may want to run away from its history, but we will hold it to its record.

Before I talk about the action that I and the Government are taking to help consumers, let me return to Labour’s three-point plan, having already demolished its first proposal to abolish Ofgem. The House might like to note that the abolition of Ofgem is not recommended by the Energy and Climate Change Committee.

Labour’s second proposal is to drop Ofgem’s long-awaited reforms of the wholesale energy market in favour of reintroducing the pool. It was Labour that abolished the pool just over 10 years ago, as my hon. Friend the Member for Sherwood (Mr Spencer) reminded the House, at an estimated cost of £1.4 billion. Labour said that is was not working—wait for it!—in the interests of consumers. Apparently things have changed. However, under the policies that Labour put in place after it abolished the pool, things have not got much better. Labour’s abolition of the pool produced the vertically integrated energy markets that we see today. Independent generators find it tough to get into the wholesale market because of the changes that Labour made. Independent suppliers do not find the wholesale market competitive enough to supply their customers. Electricity prices are therefore likely to be higher than they should be.

The Government and Ofgem want to fix Labour’s mistake. We do not want to reintroduce the pool, because that would be an expensive distraction and would not tackle the real problem, which is liquidity in the forward markets. We are going to tackle that with a well thought through package that is designed to drive competition to help consumers. Ofgem’s “secure and promote” proposals include the idea of a market maker and mandating the six vertically integrated companies—the big six—to publish the prices at which they will buy and sell up to two years in advance. That will help independent suppliers and large power producers.

As Secretary of State, I want to be sure that such reforms by the regulator work and have teeth, so that they drive competition. That was why I introduced into the Energy Bill reserve powers to act should Ofgem’s reforms not work. In other words, whereas Labour wants to go back to a failed policy that it got rid of itself, we are taking the tough measures needed to boost competition and help the consumer.

[Albert Owen (Ynys Môn) (Lab)]

The Secretary of State said that he had improved and strengthened Ofgem. One issue that I have raised with him and his predecessor is extending its remit to cover customers who are not on the mains gas grid. Has he had a chance to look at that, and does he personally support giving it the strength to deal with those customers, as it does with those on mains gas? Yes or no?

[Mr Davey]

The hon. Gentleman asked that question when I appeared before the Energy and Climate Change Committee, and I told him then that I would examine the matter. I am afraid that we have not come to any conclusions—he only asked me a month or two ago—but I am happy to look at that. The Minister of State, my right hon. Friend the Member for Sevenoaks (Michael Fallon), is extremely concerned about the high prices paid by consumers who are off the gas grid, as I am. When we examine the research on fuel poverty, we see that some of the worst is among those customers, so this Government will do something about it where the last Government did not.

[Dr Whitehead]

Is the Secretary of State aware that at least one of the big six energy companies forward-trades for only one week in this country? Trading beyond one week ahead is taken out of this country. Will he explain the impact that his proposals will have on that trading arrangement, so that it is made wholly transparent?

[Mr Davey]

Let me be clear that we have an independent regulator, which the Labour party tends to forget. I should say to my colleagues that under the EU third package on energy, we have to have an independent regulator. The proposals that have been made are Ofgem’s, but I am on the record as supporting them strongly. As I have explained, Ofgem has proposed a market maker system, whereby the six vertically integrated companies will be mandated to sell power in the forward markets in the UK.

What about the third element of Labour’s package? It is a bit vague, talking about tackling the big six. The House should know from what I have said that we are already doing that through competition. What did Labour do in office? In 1998, there were 14 firms in the electricity supply market retailing electricity to customers. By 2010 there were just six, as my hon. Friend the Member for Peterborough (Mr Jackson) said. Rather than promote competition to help consumers, Labour did the reverse, and it now promises to undo what it did. What a shambles the Opposition policy is, and what a shambles the last Labour Government were.

If Labour’s energy policy would really help consumers, will the right hon. Member for Don Valley tell the House by how much the average energy bill would fall under her party? She tells us that she is proposing radical changes, so what would the impact be for consumers? We published detailed analysis of the impact on people’s bills of our energy and climate change policies, and it showed our policies helping people by keeping their bills lower than they would have been. We need to know what the impact of her policies would be.

As I have made clear, we have policies to help hard-pressed consumers and to help improve competition in the retail electricity market, including policies with Ofgem to help consumers. On the supply side, we have deregulated to make it easier for smaller suppliers to enter the market. We now have our “offtake of last resort” mechanism through an amendment that I introduced into the Energy Bill in the other place, and we are supporting Ofgem’s reforms to the retail market to deliver tariff simplification and get a better deal for more consumers. Labour failed to do that even when pushed to do so in the House. The confusing array of tariffs—there were a huge number—got to such a point that it was hindering competition and hurting consumers, not helping them and driving competition. We are right to back Ofgem with more reserve powers so that we can ensure that vulnerable people are not left being fleeced on so-called dead tariffs, and so that people find it easier to choose and switch.

[Caroline Flint]

The Secretary of State talks about providing Ofgem with more powers. Does it not concern him that we and the Energy and Climate Change Committee have identified that it has not been using the powers that it already has? How the regulator sees its role in relation to the energy market is at the heart of the problem. Following the recent report, which was a forensic examination of how the market works, it disregarded the recommendations of the independent consultant, and the Select Committee says that it should reconsider the matter. A regulator not using the powers that it already has is worrying, and that is at the heart of some of the problems that we face.

[Mr Davey]

On the Committee’s proposals about whether Ofgem should pursue the BDO recommendations on accounting transparency, the right hon. Lady will have to wait until we publish our response to the Committee. However, I disagree strongly with her that Ofgem is not using its powers. It is certainly using its powers under us, which is why we have the retail market review delivering the tariff simplification that Labour failed to introduce, and why we are seeing reform proposals for the wholesale market, which Labour failed to do.

[John Robertson]

rose—

[Mr Davey]

I will give way to the hon. Gentleman who is a distinguished member of the Energy and Climate Change Committee.

[John Robertson]

This reinvention of history is an absolute disgrace and you do this place no favours whatsoever. You have stated in front of the Committee that Ofgem is not doing the job it should be doing, and said that you were going to do something about it. We are still waiting.

[Mr Davey]

I always find the hon. Gentleman to be an interesting colleague when I come before the Committee, and with interesting questions. We will respond to the Committee’s report. Of course it is right for colleagues to have criticisms of Ofgem, but the question is what they are going to do about it. Do they want to spend lots of time abolishing the regulator completely, or do they want what we want, which is to make it stronger and give it tougher powers? We have a much better record. We have not just relied on the regulator. Through our collective switching pilot, which we will report on in the autumn, we are trying new ways to help get customers and consumers—especially the most vulnerable consumers—a better deal.

[Andrew Gwynne]

Will the right hon. Gentleman give way?

[Mr Davey]

No, I want to make some progress. Fuel poverty has been rightly mentioned, and ours is a comprehensive approach on which we have consulted fully and on which we will continue to work with all stakeholders. Having published our fuel poverty strategic framework, we are planning to publish our full fuel poverty strategy early next year, and it will be a marked improvement on the past for several reasons.

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

Will the right hon. Gentleman give way?

[Mr Davey]

This will have to be the last intervention because I need to complete my remarks.

[Luciana Berger]

This House was anticipating the fuel poverty strategy by the end of this year. Will the Secretary of State confirm what he just said, which was that we should now expect it to be delayed into the new year?

[Mr Davey]

I said it would be published early in the new year. First, with our low-income, high-cost measure, and also by measuring the depth of fuel poverty—something never done by the previous Government—we will have a much better handle on this worrying and difficult problem. Secondly, by linking fuel poverty far more closely to the energy efficiency of homes of those in fuel poverty, we will target resources better and more effectively. Thirdly, I want to look at new ways to ensure fuel poverty is prioritised, for example by examining and emphasising links with poor health.

To me the evidence is clear. If we beat fuel poverty, we can improve the health of hundreds of thousands of our citizens, and we will continue to give people direct help with their bills, whether through our warm home discount, the winter fuel allowance, or our higher cold weather payments. We want to get real help—money off—for the most vulnerable, and we want to do more for energy efficiency and help people save energy, save money and keep warm.

I am pleased with the huge and maintained demand for green deal assessments, with nearly 60,000 completed. I am also pleased to see how the supply chain continues to grow, and to hear about new schemes that new players continue to launch. Along with the success of the energy company obligation, with almost 150,000 installations completed, I believe the infant market of the green deal will grow and grow and bring the major change we want. With our emphasis on competition and helping vulnerable consumers directly, and with our energy efficiency policies, the coalition is delivering for people in difficult times. Labour failed to deliver in easy times.

[Several hon. Members]

rose—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. I must reduce the time limit to six minutes to get everybody in.

17:39

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

It is a pleasure to be in the Chamber under your leadership, Mr Deputy Speaker. I apologise for using the dreaded “you” word earlier. Of course, I was not referring to you, but addressing the Secretary of State.

I have never been as disgusted by a contribution from a member of the Opposition as I have today—[Laughter.] I meant to say “member of the Government.” I do not think this is funny; it is a serious subject. We are talking about people’s lives. If hon. Members want to have a laugh, they can go somewhere else and do it.

The Secretary of State and the Minister of State, Department of Energy and Climate Change, the right hon. Member for Bexhill and Battle (Gregory Barker), know that the Secretary of State’s performance broke something the House used to have—hon. Members working together on energy. We know there are problems, many of which are outwith our control. The previous Government had the support of Her Majesty’s Opposition. He was not a member of that Government.

The Opposition have supported the Government in trying to move forward to ensure that the lights stay on and that people have the money to switch their lights and heating on, and to cook their food. However, come this winter, people in my constituency will have to decide whether to eat, heat or pay their rent. Government Members might think that is funny, but I do not. It is important and we should work together to ensure that people do not have to make such decisions, and to ensure that they can eat, heat and pay their rent. Sadly, I do not believe that will be the case.

The Government’s report—the Hills report—said that tens of thousands of people will die because of Government policy, no matter which party was in government. The fact is that the current Government asked for the report, but they have done virtually nothing about trying to relieve people’s problems in paying for their heating, eating and rent. I want to work with the Government to ensure that people do not have those problems, but on today’s performance, it would appear that the Government want to draw battle lines because there will be an election in a few years’ time. So be it. The Secretary of State’s performance today was a disgrace. He had no ideas. All he could talk about was what happened 10 years ago—he could not look forward to what his Government should be doing or ask the Opposition to help them to get there. He did not want to do it. I am sorry about that, but if we want to fight about where we are going, let’s do it.

I must tell the Secretary of State—he knows—that the Energy and Climate Change Committee’s report said that there was a lack of transparency in the Government and Ofgem. I do not necessarily want to get rid of Ofgem. It has a job to do, but I want it to be able to do its job without being frightened. I see a bullying tactic from the Secretary of State, which leads me to believe that there is a good reason why Ofgem has not been doing its job properly and not doing what it should be doing. It is too frightened of repercussions from the Government. I hope I am wrong, but I see something today that I did not think I would see from a Secretary of State. To treat my right hon. Friend the Member for Don Valley (Caroline Flint) as he did was, to say the very least, not gentlemanly. At least he could pay credit to the fact that the Opposition have put ideas forward. He might not like the ideas, but the fact is that ideas were put forward. If he wants to stymie them and ensure that we have a shouting match between Government and Opposition, he has drawn the battle lines.

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

The hon. Gentleman is right that the Opposition should put forward ideas. One of their ideas in the motion is to reintroduce the pool, which Labour abolished in government. What is different about the arrangements Labour proposes from the ones it abolished 12 years ago?

[John Robertson]

That is a ludicrous question. Way back then, things were completely different. Prices for electricity and gas were so much lower than they are today. We have moved on. We talked about it back then, but nobody listened. We knew there would be a shortage in delivery of electricity and gas, and that we would run out of North sea gas and oil, but we did not look at how to go forward. We understood that we were not going to build any nuclear power stations, but we have gone back on that as well, because we have realised that we have to have a base load so that people can keep their lights on. If we do not do that, business will go down the tubes, people will not be able to heat their houses and we will have neglected the job that we were put here to do—to look after the people of this country.

It is important that we work together to make sure that we build these power stations. The hon. Member for Brighton, Pavilion (Caroline Lucas), who is no longer in her place, does not like nuclear power stations, and nor does the hon. Member for Angus (Mr Weir), but it is important that we have them. We must have a power base that ensures that we can keep the country running, with a security of supply that we can depend on.

[Charles Hendry (Wealden) (Con)]

Does the hon. Gentleman therefore regret the years from 1997 to 2007 when nuclear was off the agenda completely, and would we be in a better position if nuclear had been able to advance during that period?

[John Robertson]

The short answer is yes, I do regret it. But I also regret what happened before that, because in the 1980s and early 1990s we knew that we had to build new power stations, but we did not do a lot about it. We built some gas-powered stations, but we knew that we would run out of gas unless we went to the middle east or Africa to get it. The one issue that struck home with everyone was security of supply. When Tony Blair stood up and said that in this Chamber, people asked, “What has happened? He has changed his mind.” But he understood that something had happened in the world that meant that we had to ensure we had security of supply.

The hon. Gentleman did an excellent job as a Minister, but he will remember that it was support from him and his colleagues that helped us to get to where we are today. The Secretary of State would not be a Minister if it had not been for what happened in those days because there would not have been an Energy and Climate Change Department or Committee. We did that together, and we have to go forward together. I hate this fighting and having a go at each other—“Your policy was wrong, our policy is right.” That is a portrayal of history that I do not recognise. What was done at the time was right for the time. We have moved on and we need to make things better.

If the Secretary of State wants my support, he needs to have a better attitude. If he wants my help, he should at least listen to what we have to say. He does not have to follow it, but he should at least look as if he is listening.

17:47

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

It is a privilege to follow my colleague on the Select Committee, whose passion for the concerns of his constituents about their energy bills I share, both because my constituents also rate this the most important issue in their cost of living and because I had the privilege of visiting his constituency at his invitation and meeting many people there. Their incomes are lower—temperatures are lower too—and so it is even more important for him to get the costs down. That is why we have to address these issues objectively and honestly.

The motion is disgraceful in two respects. First, it does not mention the one item of energy bills that is within the control and discretion of the House—the additional costs that we impose on people through the switch from fossil fuels to renewables. It is the only factor that we directly control, but the Opposition ignore it. We know that the least costly renewable, onshore wind, is at least twice as expensive as fossil fuels in generating electricity. Offshore wind is three times as expensive. I suspect that photovoltaics are a multiple of that. Already, the cost of renewables adds 5% to gas bills, 14% to electricity bills and 9% overall. That is a lot and it is expected to rise, but people might be surprised that it is not even higher still, given that wind is so much more expensive than fossil fuels. The reason for that is that the figures hugely understate the extra costs that every household in the country is bearing because of the switch to renewables. I have a letter from the Secretary of State in which he acknowledges that only a third of the cost of renewables falls directly on households’ energy bills, while two thirds falls on the non-domestic sector. In other words, that two thirds leads to a rise in the cost of all the other products that we consume because of the rise in the cost of electricity.

[Mr Davey]

My right hon. Friend is not correct when he talks about 9% of bills resulting from support for renewables. The majority of that is made up of support for tackling fuel poverty, dealing with energy efficiency, the warm home discount and the carbon price floor. A much smaller part is due to support for renewables.

[Mr Lilley]

That is the total impact of Government policies. Whatever the figure is, my constituents and the constituents of the hon. Member for Glasgow North West (John Robertson) are paying it. Overall, if one third of the cost of renewables is falling on households directly, the other two thirds also falls on households. There is no such thing as industry in this case. All costs are borne by individuals: by consumers and employees, and by pensioners through the impact on the value of shares and profits that are held largely by pension funds. We should not allow the costs we are imposing on people to be ignored or understated.

The second disgraceful aspect of the Opposition motion is the pretence that the rise in energy bills we have experienced in recent years is largely or entirely due to a rise in profits. I wish that were true. If it were true that the rise in profits accounted for the 41% rise in gas prices and the 20% rise in electricity prices, undoubtedly those profits would be excessive and we could bring down profits and prices by greater competition or better regulation. Sadly, however, it is not true. Table 6 of the Select Committee’s report records that the average profit margin of the big six is 7.6%, which cannot account for the massive 20% and 41% increase in prices.

[Caroline Flint]

Will the right hon. Gentleman clarify what aspect of the profit margins he is basing those figures on?

[Mr Lilley]

That is the average of both generating profits and distributions profits. It is in table 6 of the report, which I am sure the right hon. Lady has read assiduously. She can check it if she wishes.

The right hon. Lady refused to answer a question about what a correct level of profit would be, but I cannot believe that she thinks profits are more than twice as high as they need to be. Even if we were to halve the profit level from 7.6% to 3.8%, the effect on prices would be very small compared with the huge increase we have seen. As we all know, the increase is largely the result of the increase in fuel prices, which is outside the control of Governments.

The suggestion that all energy companies have seen massive rises in profits is also dispelled by table 4, on page 27 of the report. Indeed, the Committee referred to the figure given in the Labour party’s motion of an increase in profits of £3 billion, which I think comes from Consumer Focus. The report states:

“Table 4, however, doesn’t appear to support this.”

Table 4 shows what has happened to companies’ profit margins from 2007 to 2011. For EDF, the average profit margin was 15.7% and went down to 8.5%. For SSE, it went from 4.2% to just 0.8%. For British Gas Centrica, it has gone down from 7.3% to 5.6%. For Scottish Power, it has come down from 11% to 4.4%. For E.ON, it has come down from 6.8% to minus 2.2%. For npower, it has come down from 12.2% to minus 5.5%. Therefore, the idea that there is huge scope for us to bring down excess profits, and thereby prices, through regulation or improved competition is sadly not correct, and it is dishonest to pretend that it is.

[David Mowat (Warrington South) (Con)]

I think we are using the term “profit” quite loosely, particularly the Opposition. What matters in judging the profitability or effectiveness of these companies is return on capital employed. That is how they measure themselves for the investments they make and the returns they get. I do not believe there is any evidence that the return on capital employed has increased in the last five or six years. If it had, those on the Opposition Front Bench would put that to the House.

[Mr Lilley]

My hon. Friend, as always, is absolutely correct. People would do well to note what he has said.

The most important issue to our constituents is the cost of living, and within the cost of living it is energy prices. Energy prices have largely been driven up by factors outside our control. The one factor within our control is the cost of renewables. We are hypocritical if we shed salt tears for our constituents while we, through the only area where we have discretion, are driving those costs up higher and are set to do so much further still in future.

17:54

[Albert Owen (Ynys Môn) (Lab)]

It is a pleasure to follow the right hon. Member for Hitchin and Harpenden (Mr Lilley), my colleague on the Select Committee on Energy and Climate Change with whom I have many discussions. I do not agree with him on many issues, but we have great discussions. His speech today was not an attack on our motion—I did not identify anything in the motion that he was referring to—but a critique of the Government, as well as previous Governments. I stand by social tariffs. It is right to help the poorest in our society, who are suffering. That is important. The Secretary of State was right in his intervention on the right hon. Gentleman to point out that he was not talking about just renewables; rather he was talking about many of the social tariffs that successive Governments have supported and that I think we should support into the future.

The right hon. Gentleman was right to point out that energy prices remain a big issue for all our constituents; they have risen by some 20% in real terms since 2007, while average bills have risen by a staggering £300 since 2010, as the motion says. The motion rightly refers to the Energy and Climate Change Committee report on prices, profits and poverty. The inquiry discovered the complexities of the current, vertically integrated system and found it difficult to establish the profits and losses on the companies’ balance sheets. It is not that the companies do not have small or large margins—the right hon. Gentleman referred to that—but that we do not have clarity. We cannot really see what profits are made in which parts of their businesses. That is why the report called for a simpler methodology agreed between the regulator and the energy companies, so that we can identify clearly what profits and losses are made by the companies.

[David Mowat]

The hon. Gentleman is right to ask for more transparency in the way that we judge this issue. One way of judging whether any market abuse is taking place is to look at the end price. I have a list from the EU Portal—this is from page 2 of 8—of gas prices in 27 European countries, which shows that the UK is the 26th most expensive. That does not imply that there is abusive behaviour here, or if there is, there is a lot more in other places.

[Albert Owen]

I am grateful to the hon. Gentleman; I am sticking to the report and the evidence base that we were given.

Our report identified—this is important—poor communications between the energy companies and the public. It is fair to say that some companies are now getting it, because of strong lobbying from consumer groups and the work done by the Select Committee in identifying the complexity of tariffs and how many there are.

[John Robertson]

Was not part of the problem the fact that we did not know how much profit was made on the generation side? It was estimated to be something like 20% of turnover, which, when added to the profits that everyone has been talking about, starts to become excessive. The other thing that was wrong was that the companies refused to turn over their books, so unless someone had a good degree in accountancy, they would not know where the money was spent.

[Albert Owen]

My hon. Friend is absolutely right; it was complex. I recall a conversation that I had with the new chief executive of E.ON, who has a master’s degree in mathematics. He told me—he has also said this in public—that he could not understand an E.ON bill because it was so complex. He has now taken steps to simplify the bills.

Energy markets are not delivering the low, stable prices that we were promised at the time of privatisation. The short-term profits that are said to have resulted from the privatisation of gas have meant long-term pain for many of our constituents, who have been paying higher prices for their gas and electricity in recent years. Switching is not an option for everyone, and it has not been taken up by the majority of people. We are paying high prices for our gas and electricity and the switching of tariffs is not working.

There is also mistrust between the public and the energy companies, as we have discussed in a number of debates. It remains a concern that prices are rising quickly, and that the price to the consumer goes up considerably when the global price of oil increases but does not go down nearly so quickly when the global price is reduced. I believe that there is consensus between the Government and the Opposition that we should examine that issue with the regulator, to establish how best to deal with it. Ofgem has done some good work on that already. However, I have to take issue with the Secretary of State’s comment that he was putting pressure on the regulator and that all the good results were coming from that Government pressure. When things do not work out quite so well for the consumer, the regulator is described as independent. The Secretary of State cannot have it both ways. The regulator is independent, and I believe that it needs more teeth. It also needs to use some of the powers that it already has.

In the time that I have left, I want to talk about the possibility of giving Ofgem a wider remit in regard to people who are not on mains gas, of whom there is a considerable number. I have been campaigning for them since about 2007, when gas prices became a real issue. The prices went up, but for those who are not on the grid, they went up considerably more. That has become a huge issue. The alternatives to mains gas are oil and other forms of gas.

[Mr Spencer]

Will the hon. Gentleman give way?

[Albert Owen]

I will not, if the hon. Gentleman does not mind. I do not have much time left, and I want to develop this important point. I have raised it with the Secretary of State and with the Ministers who have appeared before the Select Committee. They have always tried to push the subject away by saying that it is a matter for Ofgem. In the Select Committee, however, I have put questions to the chief executive of the regulator, and he says that it is a matter for the Government. It is time for us all to sit down and look at this together, because the rise in prices is causing great anxiety and hardship for many of our constituents.

I want to see the establishment of a champion for those customers who do not have mains gas or electricity, as well as for those who do. Those customers do not benefit from dual fuel deals. We can talk about an average price for a household, but they will be paying more. I would appreciate a straight response from the Secretary of State on this. A Back-Bench Committee and an all-party group have looked into it and made recommendations. I am sure that he has seen their report on the off grid, and I believe that we can work together to establish that champion.

I want to make a few more brief points. We talk about the domestic customers who have been severely hit by the uprating in prices, but businesses, including small businesses, are also affected. I would like businesses to be able to compare prices in the same way that domestic customers can. When small businesses are set up, they are hit by rates and start-up costs, and they then get hit by high energy bills. However, it is difficult for them to switch from one company to another. To be fair, the Government are looking at this issue and trying to do something to help, but I believe that if those businesses could use a price comparison—instead of receiving bespoke prices from each individual energy company, as they do at present—they would have a greater choice. Businesses are telling me loud and clear that excessively high energy bills are resulting in a lack of investment in their business.

My final point is on the cost and impact of the transmission of electricity and gas to the regions. The National Grid Company is a private, American-owned company that passes all its profits to shareholders. It passes any extra costs on to its customers via the generator. I would like to see National Grid acting in the British national interest, not in shareholders’ interests; I would like to see a not-for-profit organisation distributing our electricity. We could then have a bigger impact and reduce the transmission costs, which are considerable—about 16% of the energy prices that customers pay.

Another problem is that people pay more for gas and electricity on peripheries and in rural areas, yet many of those areas produce that gas and electricity, which is unfair. I would like us to help customers in these areas more by looking at the cost of the transmission and distribution of electricity and gas.

18:05

[Christopher Pincher (Tamworth) (Con)]

At risk of continuing the Select Committee love-in, may I also say that it is a great pleasure to follow the hon. Member for Ynys Môn (Albert Owen)—a fellow member of the Energy and Climate Change Committee? I am pleased to speak in this Opposition debate, which is important to our constituents.

Let me gently chide the right hon. Member for Don Valley (Caroline Flint) on her motion and her speech for revelling in past glories, without recognising the last Labour Government’s errors of omission and commission with respect to energy policy. If we look at energy policy in the long view, its impact on energy prices and the effect of those prices on fuel poverty, we will remember that between 2004 and 2009, fuel poverty effectively trebled as a direct consequence of the energy price increases—largely gas prices, which went up by 42% in the Blair years between 2003 and 2007, and by a whopping 74% by 2009. The Leader of the Opposition, who tabled today’s motion, should be somewhat embarrassed to remember that for some of that time he was Secretary of State for Energy and Climate Change, so that happened partly on his watch, as he watched and saw 2.8 million more people being trapped by the scourge of fuel poverty.

In the first decade of this century, Labour, with laudable intent, spent £25 billion on measures to alleviate fuel poverty, but those measures were swamped by the increase in energy prices—not a description that I chose to use, but one chosen by the Library. Labour’s solution, which was to spend more and more money to try to alleviate fuel poverty, was like sticking a plaster on a gaping wound, or like giving Angiers junior aspirin to a pneumonia patient: it dealt with the symptoms, not with the problem itself.

In line with a feeling of consensus, we certainly need to find some new solutions. There are more, but I shall mention four of them, some already mentioned today. The first is to deal with the complexity of energy bills; we all agree that they are far too complex. Many consumers—possibly the poorest and the least educated —do not feel confident about switching their bills. About 75% of consumers have not switched their energy provider in the past two years, while 55% have not even looked to try. We certainly need to make the bills much simpler, so that consumers become more confident about switching. Tariffs, too, need to be made simpler, and we need to ensure that people are put on the lowest tariff that is best for them. The Energy Bill commits to that, and the Prime Minister is committed to it. I am sure that it will happen.

The hon. Member for Ynys Môn—I would like to call him my hon. Friend—mentioned the difficulties energy companies seem to have in communicating with their consumers. That is true. I am a consumer. Nine months ago, I inherited a supply from RWE npower, but I have still not received a bill. The company has been unable to put me on a direct debit, and it does not call back when it says it will, leading me to wonder what confidence I can have in being able to deal sensibly with that company. We need Ofgem to make sure that these companies deal clearly, transparently and effectively with their customers.

[Mr Tom Clarke]

Will the hon. Gentleman give way?

[Christopher Pincher]

I will, because giving way will earn me an extra minute.

[Mr Clarke]

I hope that my intervention will be helpful.

Some of what the hon. Gentleman has been saying is very relevant. Now that he has referred to the role of the regulator, let me ask him this. At a time when wholesale prices were falling rapidly but that fall in prices was not being passed on to the consumer, the best that Ofgem could say on Hogmanay—which is before new year’s eve—was that if the six companies continued to operate in the same way, they would have jam on their fingers. Does he think that that was enough?

[Christopher Pincher]

I can certainly tell the right hon. Gentleman that the Select Committee is concerned about Ofgem’s performance, and I think that the Government are as well. The Government must ensure that Ofgem acts more effectively to represent consumers.

The fourth way in which I think we can help consumers to pay less and can deal with fuel poverty is by reducing our over-reliance on imported gas and oil, and hence our exposure to the fluctuations in international hydrocarbon prices, which is one of the reasons why bills have gone up like rockets, causing so many consumers so much pain.

There is no easy solution to the problem of developing home-grown energy, much as its proponents may like to think that there is. Wind is not the solution in either the short or the long term, because it is intermittent. In the short term, nuclear is not the answer, because building it takes so long and is so costly. However, we could profit from proper exploration of the 200 trillion cubic feet of shale gas that is buried beneath our feet—some 60 years’ worth of supply according to the current trajectory—to help to reduce our exposure to international prices and the cost that that implies.

In the United States, which I realise is not a perfect mirror image of our country, the shale gas revolution has cut wholesale energy prices in half. Gas in the US now trades at a price five times lower than the price in Europe, and seven times lower than the price in Asia. That is of massive benefit to American industry. It gives it a competitive edge, so it can create more jobs and the people who become employed have the income with which to pay their power bills. It also reduces the cost to hard-pressed consumers. I therefore hope that we will pursue shale gas with a vengeance. I commend the Government for what they have already done in ending the moratorium, increasing the number of licences and—I hope, for only a short period—reducing the tax on start-ups, because this is one way in which we can ensure that energy costs are reduced.

I hope that the Government will take those four points on board, and I look forward to their being addressed by my right hon. Friend the Secretary of State in, probably, a very short time.

[Several hon. Members]

rose—

[Mr Speaker]

Order. I intend to call the first Front Bencher to wind-up at 6.40 pm. No fewer than seven Members are now seeking to catch my eye, as a consequence of which, I am afraid, in a bid to accommodate each and every one of them, it is necessary for me to reduce the speaking time limit to four minutes, with immediate effect.

18:13

[Sammy Wilson (East Antrim) (DUP)]

This is an important debate. Many of our constituents are affected by the increase in fuel bills and by fuel poverty, and businesses throughout the United Kingdom are affected by the fact that they are up against competition from those in countries with lower energy costs and are unable to compete with them. We have lost thousands of jobs as a result of high energy prices in the United Kingdom.

Some of the measures proposed in the motion are, of course, desirable. If we can redistribute the costs to help those who are in the greatest fuel poverty, we should of course do so. If an industry which is not totally competitive can be better regulated, that should of course happen—although regulation that is inconsistent or changes the rules too often will add to costs. A huge amount of investment is needed, but capital markets will not make money available for investment if the rules are continually changing, so we must be very careful when we talk about the degree of regulation that should be applied.

Like the right hon. Member for Hitchin and Harpenden (Mr Lilley), I want to make some comments about the element of our energy costs that is not dealt with in the motion. That part is the cost of decarbonising—as it is now called—our energy supply. Despite what people have said, it has added costs to the consumer and is going to continue to do so. We cannot be schizophrenic about this by on the one hand condemning the increase in energy prices and on the other hand supporting policies that are contributing to that.

Let us look at the costs. Because renewable energy is so expensive, there is a compulsion to purchase electricity under the renewables obligation at much higher prices than fossil fuels. The figures have been quoted today. Offshore wind is now the favoured option. It is three and a half times more expensive than gas, and that will probably change further, especially as gas prices will come down with fracking.

There are also the increased costs of distribution to link up all the diverse sources. The National Grid recently published a consultation document, “Demand Side Balancing Reserve and Supplemental Balancing Reserve”, in which it talks about linking into generators across the country which could lead to electricity being bought at 30 times the cost of that generated by gas. There is the question of all the back-up and infrastructure that will be required for when wind drops off, too. All those things need to be addressed, which means that many Members will have to tackle their prejudices on some of the issues around climate change and carbon in the atmosphere.

The question of what to do about the energy reserve that we still have under the ground has been dodged today as well. What will our attitude be towards fracking? It has changed the energy market in America. Can it do the same here? That will be fiercely debated from both sides of the House.

These issues need to be tackled, but they were not addressed in the motion, and it is therefore defective.

18:17

[Mr Mark Spencer (Sherwood) (Con)]

I am delighted to have the opportunity to speak in this debate, which is very important for my constituents. When the energy bills land on their doormats, the impact on their household budgets is enormous. All Members will therefore recognise how high up the agenda this subject has to be.

We should take a moment to look at how we got into this position. GCSE economics tells us that demand and supply drive prices. If there is low supply and high demand, prices inevitably go up, and electricity prices have been rising by more than inflation for a long time now. That is because we as a nation have not addressed our electricity supply. We did not go to the trouble of building power stations when we should have done, but we cannot build a power station overnight. It takes a long time to get it through the planning process and to put the funding in place, and that process should have begun under the last Labour Government. We should now have been turning on nuclear power stations that could supply the base load to keep the lights on in this nation. We are having to pick up that difficult position and try to deal with it.

At the same time that was happening, our coal-fired power stations have been going downhill. They have not been upgraded and repaired. We are therefore now in a situation in which the renewables sector is not growing fast enough, the nuclear power stations have not been built, and our coal-fired power stations are about to come to the end of their natural life. Dealing with that will be an enormous problem, and the impact on consumers will be massive.

What are we going to do to deal with that? Credit is due to this Minister for starting to deal with some of the problems. He is trying to get the green deal moving so people can insulate their homes. He is trying to reduce their energy bills and educate them about how they can reduce their energy bills and consumption, and he is working with Ofgem to try to put pressure on the energy companies to reduce the tariffs so people’s bills can be squeezed lower. He has also addressed the need to build new power stations to get new electricity supplies on stream. This is not easy, because not only are energy bills increasing, but some of those new technologies are not very popular, certainly with my constituents. Some new technologies, such as anaerobic digestion, are palatable and people will tolerate them. However, people are not as enthused about wind turbines and they are certainly not enthused about energy recovery plants, such as the one proposed in my constituency at Bilsthorpe; people do not want incineration. I hope that the Minister will talk to his colleagues in the Department for Communities and Local Government and ask them to consider what they build and where they build it.

Lastly, I wish to mention one thing that will have a big impact on some specific constituencies: the loss of concessionary coal for consumers who used to work in the coal industry. The collapse of UK Coal means that they will lose their right to free coal. I hope that the Minister will take that on board and talk to the Treasury to try to support those people, because that will have a big impact on them as the winter draws in.

18:21

[Mr Mike Weir (Angus) (SNP)]

We must never forget that it has been estimated that for every 5% rise in energy prices a further 46,000 households go into fuel poverty. The Department’s own figures show that between 2010 and 2012 average domestic energy bills rose by an average of £250, with 78% of that increase resulting from higher gas prices and 22% from higher electricity prices. The escalation in energy prices cannot be looked at in isolation: just as energy bills are rising, so is the cost of road fuel, food and another essentials. Clearly, that has a serious impact on families, who cannot continue to absorb such large increases at a time when wages are, at best, static. I accept what the Secretary of State said about the energy companies having to make profits, but the issue is the amount of these profits and their substantial rise at a time when everybody else is having to tighten their belt. That needs to be examined more closely.

In the Energy Bill, the Government sought to take powers to implement the Prime Minister’s promise to put everyone on the lowest tariff, but, unfortunately, as I have said many times, the Bill does not seem to have that effect. The wording does not require the energy companies to put people on the lowest tariff, but only to make an offer, which may be lost in the mass of paper we receive from them already. I suspect that many people are still not on the cheapest tariff. Even these changes fail to do anything to help some of the poorest in our society, who have to rely on pre-payment meters. Someone on a direct debit tariff may be fine, but someone on a pre-payment meter will still be stuck on a higher tariff, as meters are generally on a higher tariff than someone paying by direct debit. If the Government are truly intent on ensuring that everyone has the lowest possible bills, they need to ensure not only that that applies within the type of contract that people already have, which is what is happening at the moment, but that people can move to a cheaper type of contract.

Particular problems are faced by those with pre-payment meters. It has always seemed to me slightly perverse that such meters are one of the few examples where consumers end up paying much more by paying cash in advance. The issue is important, and the Minister and I have debated it previously. Citizens Advice Scotland issued a report on energy recently, which showed that it had dealt with a massive number of people who had different energy issues. It said:

“The cases highlighted by bureaux regarding difficulty paying are more commonly with regards to prepayment meters recouping an unaffordable amount for arrears every time the consumer tops up”.

The problem is that not only does the tariff tend to be higher—to be fair, many companies now fix it at their standard tariff—but it is higher than the tariffs that can be achieved by, for example, direct debit. That is coupled with the fact that many, but not all, of these people on pre-payment meters are put on them because they have a debt, part of which is recouped every time they top up the meter. Because this debt is added on, they are, in effect, pushed further into debt. The report cites the case of a single parent with two children who currently loses £7 towards the arrears every time she puts £10 in the meter—the remaining £3 is simply insufficient. That situation has to be dealt with.

The motion talks about putting those over 75 on the lowest tariff available, but the right hon. Member for Don Valley (Caroline Flint) talked about the difference in tariffs between companies and it seems to me that that will not really hit the problem. We used to have a higher winter fuel allowance for more elderly people. We cannot go back to that, but perhaps we should be telling the energy companies that we should have a standard tariff across all the companies especially for elderly people to ensure that every one of them gets the lowest tariff irrespective of the company they are with, without their having to go through them all and having to switch. That would be the simplest way to do it.

18:25

[Chris Heaton-Harris (Daventry) (Con)]

I found myself in an interesting position—and one that I am not used to—as I agreed with just about every word the Secretary of State said, probably because he veered well away from the thorny subject of renewables. That is the point that I shall concentrate on, following on from the speeches made by my right hon. Friend the Member for Hitchin and Harpenden (Mr Lilley) and the hon. Member for East Antrim (Sammy Wilson).

Before I do, let me say one thing about people’s bills. I received a bill from EDF a few weeks ago and it was possibly the most complex document I have ever received through the post—it had day tariffs, night tariffs and prices that were so much per kilowatt-hour for this and for the first 20 of that. If people are to be expected to understand their electricity bills, simplification is required. I would welcome anything that points us in that direction.

Renewables, as my right hon. Friend the Member for Hitchin and Harpenden said, are the part of the debate that we in this House can affect. RWE npower issued a report in July on what will happen to energy prices in the United Kingdom in the coming years. It predicted all sorts of interesting things, but the commodity and production costs that make up 45% of an average bill will reduce by 2020 to 35% of an average bill as rising policy and transportation costs become more significant. Supplier costs—their cut, their profit—will remain about 16%, so where is the big increase? Transportation costs and the costs of updating the UK’s network of infrastructure to accommodate lower carbon and more distributed generation technologies are expected to add an extra £114 to the average domestic bill by 2020—a 124% increase on 2007 prices. That is the money for connecting turbines and other dispersed energy to the grid.

Policy and regulation costs are expected to rise by 78% between 2013 and 2020. That is meant to pay for the low-carbon economy and significantly improve energy efficiency, as we have heard. Those are worthy aims but have huge costs attached. There are also huge costs for the consumer, who will end up paying for all those things. In 2011, National Grid produced a report entitled “Operating the Electricity Transmission Networks in 2020”. It talked about wind turbines and said that during periods of demand renewable generation output is likely not to be enough, but because it is a must-take resource, wind power will need to be constrained in some way.

The Daily Telegraph took a snapshot of energy produced by wind farms on a still day this summer. It showed that a host of payments had been made by National Grid to shut down wind turbines so that they would not overload the electricity supply system.

[Albert Owen]

Will the hon. Gentleman give way?

[Chris Heaton-Harris]

I will not give way; Mr Speaker would scowl at me like Speaker FitzRoy in the 1920s and ’30s. I do not want that to happen.

The constraint payments reached £7.5 million for the first three weeks of August. If people are really concerned about fuel poverty, they should think about this: the increased cost of electricity due to the renewables obligation in 2009 may have pushed about 100,000 households into fuel poverty, and the wind element was responsible for 40,000 to 50,000. That information is from the fuel poverty dataset for 2009 produced by DECC.

18:29

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

The hon. Member for Angus (Mr Weir) made the point that when the Prime Minister announced the Energy Bill policies on the hoof at Prime Minister’s Question Time, he told us that he would legislate to put customers on the cheapest tariff. That promise was reduced to a promise to simplify the tariffs that energy companies offered. I am sure that everyone would welcome simplification as an important tool in enabling customers to make a choice between different companies, but simplification by itself does not reduce energy prices.

The simplification process now under way has in some cases led to people having to pay more for their energy, rather than less. I want to draw attention to those low users of energy, often those on low incomes, who are now worse off because of the insistence, as a result of the Ofgem review, on companies having both a standing charge and a unit rate. After years of trying to get standing charges reduced or abolished because they are particularly damaging for those on low incomes, we are now seeing pressure on companies to bring them back.

A constituent who contacted me was told by npower—this applies to other companies and is more the fault of Ofgem trying to implement Government policies—that if he spent less than £27 on gas and £12 on electricity a month, he would see an increase in his overall costs. Indeed, he has worked out his energy costs and found that his bill would rise by between 50% and 60% as a result. That is an example of how, bluntly, inventing policy on the hoof, not thinking it through and then attempting to deliver it is damaging constituents. That is just one example of where I think the Government have to monitor carefully the effects of the policies to standardise tariffs that are being implemented. They must also ensure that companies do not end up profiting as a result of the way in which the tariffs have been introduced.

As I said at the start of my speech, standardisation does not cut energy prices. There are clear examples—npower is not the only one—of customers now being worse off as a result of the way simplification has been put into effect. The Government need to review that straight away. We need to look at that to ensure that low energy users, particularly those on low incomes, do not lose out as a result of the Government’s policies.

18:32

[Jim Shannon (Strangford) (DUP)]

I congratulate the Opposition on bringing this matter before the House for consideration. In the minutes available, I want to focus on the latter part of the motion, specifically the reference to putting

“all over-75 year olds on the cheapest tariff.”

I suggest that we should go further and have a lower tariff for the over-75s. Everyday in my constituency office I see clearly the importance of addressing those issues, as other Members have indicated. I also see that the elderly people who come to my office have a clear decision to make between a bit of heat or something to eat. It is as simple as that.

I want to offer a Northern Ireland perspective. Northern Ireland’s biggest energy company, Power NI, increased its household electricity bills in July by 17.8%, which means that every household will have to pay, on average, an extra £90 a year. That might be an inconvenience for some, but the reality for some of our elderly people is that it will mean sacrificing a luxury or a basic item to cover the difference. It will mean a bit of heat or something to eat. That will be the clear decision for them.

I was horrified to learn from a press release on Age Sector Platform’s recent Belfast Pensioners Parliament that in 2012 the number of excess winter deaths in Northern Ireland was 496. All those people were over 65 years of age. The last time all excess winter deaths were older people was 14 years ago. It was high then, but in 2012 it was higher still. It is clear that older people are being hit hardest by the rising cost of energy and the reduction in their incomes. As other hon. Members have suggested, energy providers must ensure that our elderly are on the cheapest tariffs possible. Let us do something for those elderly people. By the way, I say for the benefit of all parties here that the elderly are consistently the people who vote. If they want to do something for their voters, I suggest they do something for the elderly.

Age UK estimates that 1.5 million people aged over 65 and living in rural areas in England are reliant on oil. In other parts of the UK reliance on oil is even higher: it accounts for 11% of households in Wales and 70% in Northern Ireland. The price of oil is prohibitive. Few elderly people can afford to fill their tanks, even with the winter fuel allowance, and therefore cannot heat their homes. It is little wonder, as the shadow Secretary of State said, that 24,000 people in the UK have died as a result of cold-related illnesses over the past year.

We should contrast that with the profits shown over the latest period. I am not against a company making a profit—not for one second—but let us do something for the people who are hardest hit and need the money more. I saw in the Metro newspaper that the profits of the big six energy companies have shot up by 74% since 2009, dwarfing the 13% rise in inflation. British Gas, E.ON, EDF Energy, npower, Scottish Power and SSE have enjoyed a £3.3 billion surge in profits as households have been hit by a 29% rise in bills. Profits from these groups, which provide energy to 98% of homes, rose from £2.15 billion in 2009 to £2.2 billion in 2010, £3.87 billion in 2011 and £3.74 billion in 2012. Against that, the typical domestic dual fuel bill has risen to £1,420 a year compared with £1,100 in May 2010, according to the regulator Ofgem. Surely it is past time that we did the right thing by the most vulnerable—the elderly—and used some of the companies’ profit margins to provide affordable heating. The time has come for the Government to act.

18:35

[Sheila Gilmore (Edinburgh East) (Lab)]

During much of this debate, the consumer, particularly the consumer in fuel poverty, has not always had the attention they need.

Some of the systems that have been set up seem unduly complicated. When I first heard about the concept of the green deal, which preceded this Government—it was discussed under the previous Government—I wondered how we encourage people to put in the kind of long-term investment that will radically improve the energy efficiency of their homes. For many people, the pay-back time seemed too long. They took the view that they would probably be moving on and that their home might not be a permanent one—even if it eventually turned out to be so. The idea that people could get help through loans that could be secured to the property and pass from one household to another seemed to tackle some of those difficult problems.

One can always come up with a good concept, but the implementation is often where it becomes difficult. In this case, a good idea has been let down by a great deal of the detail. The interest rates are extremely high compared with other means that people might have of borrowing money. A lot of people appear to have been interested enough to seek an assessment, but having done so, concluded that the deal was not good enough and would not give them the kind of pay-back that would make it all worth while, and thought, therefore, “I won’t bother with it after all.” Unless there is yet to be a dramatic level of take-up, that is the pattern that has occurred. It is a pity that a good idea has been let down in this way. We should be looking at ways to improve things.

People are also finding it increasingly difficult to find out how to get their home better insulated and how to find out what sort of help is available. While it is absolutely right that energy companies should be expected to contribute to all that, whether the systems that are put in place actually work is another matter. Often the local authority is best placed to know where the problems are in their areas—where the types of housing are that need the most help. That is not just because councils are landlords. They know about all the other properties in the private rented sector where the problems are at their worst and where the difficulties lie. In my constituency, where a large proportion of the properties are tenements and flats, people face difficult issues about how to improve insulation.

We need to be able to reach such people directly. People are getting phone calls from organisations and are not even sure what they are, although some are quite legitimate. Residents have told me that when they get these phone calls they think that it is somebody trying to sell them something they do not need so they put the phone down. That is not the right way to do this. Local authorities should be getting the funding they need to help people, even if some of it comes from the energy companies. That will be the way to really engage people in this process.

18:39

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

This has been a very important debate at a time when a cost-of-living crisis is hitting households all over our country. There have been many eloquent and powerful contributions and what we have heard paints a damning picture. We have heard that energy bills are soaring, profits for the big energy companies are sky-rocketing, energy efficiency is stalling and fuel poverty is deepening.

The Secretary of State, who, sadly, is no longer in his place, was more concerned with defending Ofgem and the energy companies, which is reflective of an out-of-touch Government who are failing to stand up for hard-working families who are struggling up and down this country.

I am not surprised that so many hon. Members have spoken about how their constituents are struggling to keep up with spiralling energy costs. My hon. Friend the Member for Glasgow North West (John Robertson) spoke passionately about the choice some of his constituents might face between heating, eating and paying rent. The hon. Member for Sherwood (Mr Spencer) mentioned his constituents’ anxiety when an energy bill drops through their letter box.

The average dual fuel bill has shot up by more than £300 since the Prime Minister entered Downing street. Back in May 2010 a typical household paid £1,105 a year; the figure now stands at £1,420—a 29% increase in a little over three years. The cost of gas and electricity is a serious concern for too many families, regardless of whether or not they are technically in fuel poverty. According to the consumer watchdog Which? 80% of people are worried about the rising cost of energy and rank it among their top financial headaches.

As people struggle to heat their homes, the energy giants are reaping ever greater profits. We saw over the summer how the big six energy companies have enjoyed a windfall of £3.3 billion in additional profits over the past three years, on top of the £2.2 billion profits they were already making. Of course, companies are allowed to make a profit. As the shadow Energy Secretary, my right hon. Friend the Member for Don Valley (Caroline Flint), said, the energy industry plays a tremendous and vital role in our economy and in keeping the lights on, but that does not mean that we should ignore the need to reform how our energy market works. We need real reform to break the dominance of the energy giants, create transparency and openness, and protect the public from being ripped off.

As my hon. Friend the Member for Ynys Môn (Albert Owen) said, it is a real problem that we do not know exactly what the energy companies are making in profits. My right hon. Friend the Member for Don Valley referred to certain reports that show that the profits made on the supply side and those made on the generation side are massively different and we do not always see what they are.

The second of two Energy Bills is currently making its way through Parliament without any significant Government proposals to help bill payers. All that has been offered is a broken promise, repeated by the Prime Minister today, to put everyone on the cheapest tariff, which has proved impossible to deliver. When my right hon. Friend raised this issue in her speech, we heard lots of chuntering from Government Front Benchers but no interventions to share with the House exactly what the Government are doing. It simply will not pass as a real answer for how to reform our energy market. Even the cheapest tariff in an uncompetitive market will not be a good deal.

By contrast, today we have heard loudly and clearly what a Labour Government would do to fix our energy market. There are three key differences. We would open up the market and make it more transparent, and we would require energy companies to pool the power they generate and make it available to any retailer.

At this point it is important that I highlight the crucial differences between a pool that we would seek to introduce and that which was in operation previously. When the old pool was put in place, there were just two generators, which meant that they were able to exert disproportionate influence on the pool price. Today there are many more generators, so it would be much more difficult to do that. The old pool was also a one-way pool, which meant that only generators could place bids for how much they were prepared to sell their power for.

There is no reason why a new pool could not be a two-way pool, whereby both generators and suppliers place bids. That is how the Nord Pool works. The UK currently has two power exchanges where trades can take place: N2PX and APX. The volumes that are traded on the day-ahead exchanges are already increasing. If all generators and suppliers were required to trade 100% of their output and supply via those exchanges, it would have the same effect as introducing a pool.

We need a tough new watchdog that has the power to pass on price cuts to consumers when the wholesale cost of energy falls. That has been underlined by the report of the Energy and Climate Change Committee, “Energy Prices, Profits and Poverty”, which states clearly that “Ofgem is failing consumers”. It also states that it has proved

“unwilling to use the teeth it has.”

As my hon. Friend the Member for Ynys Môn highlighted, there are many problems for customers who are off grid. We believe that the new regulator should assume responsibility for off-grid customers.

The Select Committee report also points out that

“rising prices are exacerbating fuel poverty.”

Under the Government’s new definition, there are still nearly 2.4 million fuel-poor households. According to the Government’s own figures that were published last month, the gap between people’s fuel bills and what they can afford to pay has grown by £200 million over the past two years. That is an average of £494 for households that are struggling to meet their energy costs.

The hon. Member for Angus (Mr Weir) highlighted the problems for customers who have prepayment meters and the hon. Member for Strangford (Jim Shannon) highlighted the problems faced by his constituents, particularly older people, and the increase in excess winter deaths.

Ministers have admitted that the number of people in fuel poverty is expected to rise over the next two years. That is why it is such a scandal that the Government have halved the support for people in fuel poverty. The Labour party would help those who are most in need. That is why we would require companies to put all pensioners who are aged over 75 on to the cheapest tariff. That is the right thing to do because it is the oldest in our society who are the most vulnerable in cold winters.

We all know that if we get household energy efficiency right, it can reduce energy costs, create thousands of jobs and cut carbon emissions. However, the Government’s efforts to make our homes more energy-efficient are failing. I was not reassured by what the Secretary of State reportedly said at an event in the House last night. He told an audience that he knew the green deal would work because he could feel it in his bones. I do not know whether Members can recall any other Minister extolling the virtues of bones-based policy making, but the Opposition prefer to deal with the facts.

The most recent figures show that just 132 households have signed on the dotted line for a green deal plan since the scheme went live. That is disappointing enough, but the real wake-up call for Ministers should be the number of green deal assessments. The Opposition desperately want to see better insulated homes in our country. As my hon. Friend the Member for Edinburgh East (Sheila Gilmore) said, the green deal is not good enough. The green deal will not achieve the ambition that we all want to see unless the Government stop being so complacent, listen to what industry leaders are saying and tackle the problems with the scheme.

In conclusion, this is a motion for consumers. It speaks to the concerns of families across our country and clearly lays out what action we should be taking to make energy more affordable. It stands up for the people this Government like to claim they are on the side of. Today, they have an opportunity to prove it. I urge the Government and all Members to support our motion, and I commend it to the House.

18:49

[The Minister of State, Department of Energy and Climate Change (Gregory Barker)]

This has been an interesting and timely debate. As we head into the autumn, I know that colleagues across the Chamber share their constituents’ worries about the rising cost of living and the strain that energy costs in particular can put on tight family budgets. That is why the coalition is determined to do everything it can to help hard-working families with their energy bills.

Sitting here this afternoon listening to the Opposition Front Benchers, I could not help but recall the words of Marshal Talleyrand 200 years ago. When the ancien régime was briefly restored to the French throne after the defeat of Napoleon, Talleyrand famously said of the old, backward-looking, clapped out Bourbon royal family, “They learned nothing, and they have forgotten nothing.” Put another way, the old regime singularly failed to understand why they had been deposed by the people in the first place, or to learn from any of their previous mistakes.

Is that not just old Labour all over? Labour, which saw heating bills more than double during its time in government. Labour, which in 13 years of government allowed real competition in the market to shrivel. Labour, which in 1997 inherited a diverse range of 14 competing companies and turned them into the big six. Labour, which drove British energy into the ground and failed to build a single nuclear power station. Its record on renewables was little better. After 13 years in office, Labour left Britain third from the bottom of the European league table for deployed renewable energy. It was Labour that allowed the cost of its green energy programmes to spiral out of control but failed to take real steps to decarbonise the sector; Labour that, after 13 years in power, left office with nearly 5 million vulnerable people living in fuel poverty; and Labour that, in the last Parliament, saw fuel poverty rise in every single year of the now Leader of the Opposition’s tenure as Energy Secretary.

So what is the big idea that Labour has brought forward to the debate to help hard-pressed consumers? It has three ideas—hardly an energy revolution, but let me remind the House what they are. The first is to abolish the regulator that Labour created in 2000 and replace it with—yes, you’ve guessed it—another quango. It also wants to bring back the electricity pool, the same pool that it abolished back in 2001, and put all over-75s on the cheapest tariff—hardly a groundbreaking idea when we are already acting to do that, but for all consumers, not just the oldest 8%, so that all our constituents can benefit from a better deal.

I will not pretend to the House that there are easy answers, simple solutions or quick fixes to driving down fuel poverty, driving up competition in the sector or delivering a better, fairer deal for hard-pressed consumers. However, unlike the Labour Government’s drift, inertia and failure to deliver, the coalition has rolled up its sleeves and is making a real difference.

I want to spell out some of the bold, practical measures that the coalition is taking to help hard-working families, but before I do that I will address some of the important points that colleagues have made. We have heard from the hon. Members for Edinburgh North and Leith (Mark Lazarowicz) and for Strangford (Jim Shannon), my hon. Friend the Member for Daventry (Chris Heaton-Harris), the hon. Member for Angus (Mr Weir), my hon. Friend the Member for Sherwood (Mr Spencer), the hon. Member for Ynys Môn (Albert Owen), my hon. Friend the Member for Tamworth (Christopher Pincher), the hon. Members for East Antrim (Sammy Wilson) and for Glasgow North West (John Robertson), my right hon. Friend the Member for Hitchin and Harpenden (Mr Lilley) and the hon. Member for Edinburgh East (Sheila Gilmore).

It was striking that not a single Labour Member spoke in favour of the Opposition’s proposal to abolish Ofgem, but two clearly disagreed with it. It was notable that my hon. Friend the Member for Sherwood made a thoughtful and constructive speech, and he was right to address both the causes of, and possible solutions to, our energy challenges. The hon. Member for Angus was also thoughtful, and I assure him that our simplification of tariffs is already having an impact. I also take on board his important points about prepaid meters.

I wholeheartedly agree with my hon. Friend the Member for Daventry about the need for bill simplification. We get it, and we are on it, but our entire grid is crumbling and requires big investment, whatever energy source we put into it. This year, onshore wind added just £9 to consumer energy bills. The hon. Member for Ynys Môn, the second Labour Member to disagree with Labour Front Benchers about abolishing Ofgem, made sound points about off-grid customers. We are looking carefully at the Committee report to which he contributed. My hon. Friend the Member for Tamworth spoke with great authority and gave a balanced approach to the complex issues we face.

The coalition does not have a magic wand, and Labour’s legacy of debt, deficit and economic failure casts a long shadow over all Departments. Despite the imperative of dealing with Labour’s debts, we are taking action and setting a new radical and ambitious energy agenda. Unlike under the previous Government, there have been two energy Bills in three years. The green deal might be in its infancy—I listened to the hon. Member for Edinburgh East—but it is already building a new market in energy efficiency, and bringing far greater competition to the market and new choices for consumers.

[Caroline Lucas]

Will the Minister give way?

[Gregory Barker]

The hon. Lady was not actually here for the debate. We are taking action to give more teeth to the regulator and compensate energy consumers who have been badly treated. We have embarked on radical market reform to unleash investment in modern clean energy, building our energy security that was so perilously ignored by Labour. We are also offering immediate help for our constituents. For example, Labour put the whole cost of the renewable heat incentive on to consumer bills. We have removed it, saving consumers £120 million a year collectively. Labour refused to cut solar feed-in tariffs, despite fixing them far too high. We took the tough decision to cut those tariffs. We were right, they were wrong. Solar deployment is up, costs are coming down, and the consumer is better off.

[Luciana Berger]

Will the Minister tell the House what the additional amount will be on all our bills from the Government’s miscalculation of the energy company obligation?

[Gregory Barker]

We have not miscalculated the ECO. It is coming very close indeed to the impact assessment that we published last year. I am happy to tell the House that costs of the ECO are continuing to come down, and we are seeing a number of technologies deployed far more cost effectively than under the poor Warm Front scheme that the Labour party put together, and which so many Members from around the House wrote to me to complain about. We are doing other things to help consumers. Our warm home discount means £135 this winter for more than 2 million poorer households.

[Mark Lazarowicz]

Will the Minister give way?

[Gregory Barker]

No, I will not.

The winter fuel allowance is helping 12 million pensioners with up to £300 this winter. Cold weather payments have been permanently uprated to £25 per week, and the green deal ECO programme has already made more than 100,000 homes warmer and cheaper to heat and run. The first proper, independent, thoughtful review of our fuel poverty strategy for decades was completed this year. We are targeting finite resources at the most in need in the fairest, most cost-effective responsible way.

Where Labour shrunk the domestic energy market and presided over massive corporate consolidation, we are unleashing a decentralised energy revolution on new distributors of energy on an unprecedented scale— 2.5 GW of solar alone under this coalition. Community energy, distributed energy and heat networks—all are on the up. At the same time we have begun the first new nuclear programme in a generation. Our green investment bank, created by this coalition, is now up and running and transforming the energy investment landscape. No wonder Ernst and Young last week moved the UK from fifth to fourth in the global league table for renewables, and called the UK the best place in the world to invest in onshore wind.

[Mr Alan Campbell]

(Tynemouth) (Lab): claimed to move the closure (Standing Order No. 36).

Question put forthwith, That the Question be now put.

Question agreed to.

Main Question accordingly put.

18:59

Division 75

Ayes: 220

---

Labour: 209
Scottish National Party: 5
Democratic Unionist Party: 2
Social Democratic & Labour Party: 1
Plaid Cymru: 1
Alliance: 1
Green Party: 1

Noes: 290

---

Conservative: 249
Liberal Democrat: 37
Democratic Unionist Party: 2
Independent: 1

Business without Debate

Wednesday 4th September 2013 Commons Chamber

European Union Documents

Wednesday 4th September 2013 Commons Chamber

Motion made, and Question put forthwith (Standing Order No. 119(11)),

Financial Management and Audit

That this House takes note of European Union Document No. 12810/12 and Addenda 1 to 4, a Commission Report on Protection of the European Union’s financial interests: Fight against fraud—Annual Report 2011, Unnumbered European Document dated 12 November 2012, European Court of Auditors’ Annual Report concerning the financial year 2011, and Unnumbered European Document dated 12 November 2012, European Court of Auditors’ Annual Report on the Activities Funded by the Eighth, Ninth and Tenth European Development Funds (EDFs) in the financial year 2011; believes that it is unacceptable that the EU budget has been given a qualified audit by the EU oversight body, the Court of Auditors, every year for the past eighteen years; agrees with the Government that when domestic governments are facing severe fiscal constraints and making tough decisions on national spending, efficient spending of EU money in a targeted way is more vital than ever; supports the Government’s decision to oppose granting discharge to the EU budget for the second time; encourages the Government to continue to work with other like-minded Member States to put pressure on the Commission and other Member States to take their responsibility for managing EU funds more seriously and to push for clear steps to be taken towards much needed improvements to the quality of EU financial management; and supports the Government’s approach of ensuring, where possible, that the EU implements the recommendations relating to EDFs advocated by the European Court of Auditors.— (Mr Evennett.)

Question agreed to.

Delegated Legislation

Motion made, and Question put forthwith (Standing Order No. 118(6)),

Social Security

That the draft Social Security, Child Support, Vaccine Damage and Other Payments (Decisions and Appeals) (Amendment) Regulations 2013, which were laid before this House on 11 June, be approved.—(Mr Evennett.)

Question agreed to.

Motion made, and Question put forthwith (Standing Order No. 118(6)),

Prevention and Suppression of Terrorism

That the draft Protection of Freedoms Act 2012 (Guidance on the Making or Renewing of National Security Determinations) Order 2013, which was laid before this House on 24 June, be approved.—(Mr Evennett.)

Question agreed to.

Motion made, and Question put forthwith (Standing Order No. 118(6)),

Local Government

That the draft Local Elections (Ordinary Day of Elections in 2014) Order 2013, which was laid before this House on 26 June, be approved.—(Mr Evennett.)

Question agreed to.

EU Directive 2007/46/EC

Wednesday 4th September 2013 Commons Chamber

Motion made, and Question proposed, That this House do now adjourn.—(Mr Evennett.)

19:13

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

On behalf of my constituents, I thank you for granting me this adjournment debate, Mr Speaker. I thank the Minister in advance for his response. I hope that we can achieve a positive outcome. I realise that this is a very specific topic. It is a technical and perhaps quite dry subject, and I doubt whether millions of people are at home, glued to BBC Parliament right now, but it is vital to small and medium-sized businesses whose working practices are now affected by this directive.

The issue that I want to raise and discuss is not the directive itself, which in principle I have no issue with and which does make sense. It will improve safety standards across Europe, and open up a wider market to UK manufacturers—both things that are, of course, advantageous. I want to focus on its implementation in the UK, which I believe could be done much better. In particular, I am very concerned that no further assessment or scrutiny has been carried out since the initial impact assessment back in 2009, just before the first part of the directive was due to come into effect. However, I do not simply want to criticise; I want to work with the Minister, to tackle some of the issues. I hope that the process can be made much easier for businesses in my constituency of Stalybridge and Hyde that have contacted me about it. I would like the Government to carry out another assessment on the directive now—this is paramount—before it is fully implemented next year, to address the issues that I will present this evening.

I have my own interest in this area. As vice-chair of the Associate Parliamentary Manufacturing Group, I work with colleagues across the House who share my passion for manufacturing. I have been keen to address this topic because it is hitting exactly the sort of businesses in my area that everyone wants to give more support to. I am talking about small and medium-sized manufacturing businesses, providing skilled, private sector jobs in the north of England.

[Jim Shannon (Strangford) (DUP)]

Is this directive not another example of EU legislation adversely affecting small and medium businesses? Does the hon. Gentleman feel that if the Government do not act, there will be lay-offs and businesses closing?

[Jonathan Reynolds]

There is no doubt that my motivation in seeking this debate has been the news communicated to me about the impact that the implementation of the directive will have on businesses in my area. The goal of the directive is not a bad one, but if it is implemented incorrectly, there is no doubt that some manufacturers and some jobs might go.

The directive was introduced to ensure that automotive goods—including cars, vans, lorries, trailers, caravans and so on—meet a minimum EU-wide set of regulatory, technical and safety requirements. That is entirely understandable and a good thing, in terms of both safety and potentially opening up a bigger market for our manufacturers. However, the directive has meant that manufacturers have to do much more to ensure that their products meet the standard, drastically altering their previous processes. Instead of needing approval to work on a certain manufacturer’s product, businesses now need approvals for different vehicles from the same manufacturer, even though the differences between models might seem minor. In the original impact assessment, back in 2009, the previous Government had two options. They chose the right option by offering a lower-cost approval scheme to businesses that wish to sell only in the UK. I am pleased that the current Government stuck to that. However, four years later, more issues are appearing, which I shall now explain in more detail.

The first issue, unsurprisingly, is the increased costs that the directive has imposed on businesses. The number of approvals needed has spiked massively, and obtaining each type approval costs money. Whereas costs were managed by needing only a few approvals, with the new European Community whole vehicle type approval, as well as the number of approvals that come with it, costs have risen sharply and quickly. Many SMEs are struggling. I have heard reports of businesses that will either scale down the products that they offer or simply pack in altogether when the directive is fully implemented next year. That is not encouraging manufacturing—quite the opposite—and that should concern us all.

The staff hours involved in obtaining new approvals have also risen due to the complexity, the amount of new approvals needed and the length of the process to obtain just one approval. The Federation of Small Businesses has told me that its members feel that the process is confusing and burdensome. That is particularly true of SMEs, which find the paperwork—something that they have to go through every time they want to start work on a different product, even if the differences are fairly minor—demanding and discouraging. Other areas of the business then suffer, as staff are taken away from other roles to spend what they believe to be a disproportionately large amount of time on securing type approvals.

A lack of communication to businesses by Government and government authorities such as the Vehicle and Operator Services Agency and the Vehicle Certification Agency is another issue. Some businesses were not even aware of the initial impact assessment in 2009. They feel ill-informed and still in the dark about what is required from them and any help that they can receive. Businesses have told me that they feel abandoned. Some businesses have also told me about what they feel to be a lack of consistency, with the process frequently changing. One managing director described it as the “goalposts constantly being moved”. There is a lot of confusion and worry out there in the industry at the moment, which needs to be addressed.

Let me present the House with a case study from my constituency. This issue was brought to my attention by Truck Craft Bodies Ltd—a small to medium-sized business in Stalybridge. It is deeply concerned about the effect that the directive will have on its business once it is fully implemented and about the ability of such SMEs to survive. The business has told me that it has gone from simply needing one approval per manufacturer to needing up to 30 approvals for just one manufacturer.

Like me, the company agrees with the premise of the directive, but it is particularly concerned about the resulting costs and increased staff hours. It is also unhappy about the lack of help and support on offer. The help that it could receive from organisations such as the Society of Motor Manufacturers and Traders has so far been inadequate. The Government should be speaking to companies such as Truck Craft Bodies. They are the ones in the field, and what they have to say on implementation is invaluable.

That leads me to my main point, which is the lack of scrutiny or assessment of the directive’s implementation since the initial impact assessment more than four years ago. I am concerned that as the date for full implementation—November 2014—looms closer, the answers to a number of questions are still not known, purely because of the lack of scrutiny. First, does the system provide value for money? The Vehicle Certification Agency is the UK’s designated approval authority, and it needs to be cost-effective for the businesses that use it. Secondly, do the Government know how the implementation of the scheme is going, given that no assessment has been carried out since 2009? Are the Government aware of the problems that are being experienced by many businesses? How will they address those issues and provide further help to businesses that need it? We need to know the answers to those questions if we are going to help the SMEs that are facing a testing and uncertain time.

The point of this debate, however, is not for me to stand here and criticise the Government. That would be unfair, especially on a matter that is so technical and complex. I want the debate to achieve positive outcomes and improvements, as my ultimate aim is to help businesses that are struggling and that are worried about the effect of the directive on their trade and their ability to survive. I have no doubt that the Minister shares that view. There are potential solutions to the problems that I have outlined so far, and I hope that the Minister will give them serious consideration.

Most importantly, I firmly believe that the Government need to carry out another impact assessment before the directive is fully implemented in 2014, and I call on the Minister to do that at the earliest opportunity. The lack of scrutiny so far worries me deeply. This cannot wait until after the full implementation of the directive; it needs to be done as soon as possible. If we wait until 2014, it will be too late, especially as some businesses are planning to stop their current operations once the directive comes into full effect, unless there are changes. An impact assessment now would help properly to identify the hurdles that businesses are facing because of the directive, and it would do so in far greater detail than I can describe in the debate today.

Carrying out a new, updated assessment now would have numerous benefits, and I hope that I can convince the Minister to do so. It would offer solutions and ways of dealing with the problems that the directive has caused to businesses, not to mention giving the Government an idea of how the directive’s implementation is going and an opportunity to improve it. Most importantly, it would involve the manufacturers and businesses. After all, they are the ones that are most affected; they currently feel abandoned and are not sure where to turn. This is of course their industry, and they are the ones that know it best. Overall, I believe that a new assessment should be carried out as soon as possible and definitely before full implementation. I sincerely hope that the Minister will give that suggestion some serious thought.

Certain specific suggestions are worthy of consideration. Indeed, any new assessment might come to similar conclusions. They include changes such as making the granting of licences easier. As previously mentioned, the VCA is the only body in the UK that can grant type approvals to SMEs that want to operate only in the UK. There is scope to funnel down the process, which at present appears top-heavy and cumbersome, to give manufacturers and businesses more involvement. That would take some of the work load off the VCA and run down costs on both sides. Businesses that I have spoken to are unhappy with the current process that the VCA operates. For example, the agency already has a lot of the information that manufacturers have to supply. The duplication that the companies have to undertake costs money and time, and seems unnecessary. Perhaps this has been overlooked, and it could be identified by a new, updated assessment.

Furthermore, a common complaint from the industry is that the support offered to it has been found wanting. Manufacturers feel left out of the loop and abandoned, and are unhappy with the general lack of communication about a matter that is so vital to their continued existence. The Government need to communicate their plans better. It is also imperative that the Government look at the UK system and make it as easy as possible for small and medium-sized businesses, in particular, to comply with the new regulations. The FSB supports that proposal and believes that that should happen.

Mr Speaker, I thank you once again for allowing this debate, and I look forward to the Minister’s response. I am sure that he and I both want the same thing: for manufacturing to thrive in the UK. The directive does not necessarily have to hinder manufacturing by firms such as Truck Craft Bodies. Improved safety and access to bigger markets are of course in everyone’s best interests. However, because the directive involves such a radical change from how manufacturers have previously operated, it is imperative that it should be monitored closely. That has not happened so far, as we have seen from the lack of any real assessment or scrutiny by the Government since the initial impact assessment in 2009. I sincerely hope that the Minister will take on board the suggestion to hold another assessment soon, before full implementation in 2014.

19:24

[The Parliamentary Under-Secretary of State for Transport (Stephen Hammond)]

I congratulate the hon. Member for Stalybridge and Hyde (Jonathan Reynolds) on securing this debate. He said in his opening remarks that he had a passion for manufacturing and for small and medium-sized enterprises, and he was generous enough to suggest that he suspected I shared those passions. He was right. He was also right that tonight’s debate provides an opportunity for us to discuss the effect on businesses of directive 2007/46/EC. I would like to thank him and his office for their assistance on some of the thoughts he might express tonight; I hope that my response will thus be more informed.

I am aware that the hon. Gentleman has recently asked a number of questions about this directive, so I am pleased to respond to this evening’s debate. Before I talk about the directive, it would be right and proper to reflect on the significant progress made by the UK automotive sector. This is explained in the automotive strategy that was published in July, which was the culmination of work led by the Automotive Council. It is very encouraging for all of us to note and learn that the UK car industry is currently vibrant, particularly at a time when other European markets face significant challenges.

The UK produced 1.58 million vehicles in 2012, with £6 billion of investment in the industry by vehicle manufacturers over the last two years. That is good news for the UK. Some challenges have been presented at ports, and I am pleased to help the industry overcome them. I am sure that the hon. Gentleman—and, indeed, the Associate Parliamentary Manufacturing Group—would welcome that.

I turn, if I may, to the matter in hand. Clearly, the hon. Gentleman is concerned that the directive could have a detrimental effect on businesses. Just as he set out his concerns, I shall set out exactly how I think on the issue and briefly explain what the directive is all about. It concerns the approval of new road vehicles at EU level. It covers new road vehicles with four or more wheels, and there is a mandatory obligation on the UK, as on all member states, to apply its provisions.

The directive was implemented in the UK on 29 April 2009 by the Road Vehicles (Approval) Regulations 2009, SI No. 717. The hon. Gentleman was right to point out that the key element of the directive was to establish a single European market for motor vehicles, meaning that a vehicle approved to pan-European standards can be registered anywhere within the European Union, without further testing or obstruction to placing it on the market anywhere within the EU. The dates of application depend on the vehicle category: it has already been implemented for most vehicles, and will be fully implemented in October 2014, as the hon. Gentleman rightly said, for the largest goods vehicles.

Approvals under the directive are available from member states’ approval authorities. In the UK, this means the Vehicle Certification Agency, supported by the Vehicle and Operator Services Agency and the Driver and Vehicle Agency in Northern Ireland. Approvals are enforced through the registration scheme operated by the Driver and Vehicle Licensing Agency. Only motor vehicles with the appropriate certificate can be registered for use in the UK. Manufacturers can choose whether to use the UK approval authority or one from another member state for the pan-European approval.

Approval of the directive is a regulatory simplification matter, as it avoids manufacturers having to comply with potentially 28 different sets of national regulations and requirements. On that basis, it was supported at the outset by the high-volume producers. Producers of specialist and low-volume vehicles are also covered by the small series or the individual approval schemes created by the Department. These are essential provisions and are key to helping overcome the burden of EU-wide rules for UK SMEs, and throughout the process the Department has always sought to provide clear advice and assistance to such companies. If the hon. Gentleman has evidence that companies, including SMEs, have not considered that to be the case, I shall be delighted to consider his representation.

Prior to implementation, during 2007-08, officials worked closely with the various sectors affected by the new requirements. That included hosting, in conjunction with the Society of Motor Manufacturers and Traders, a road show involving 12 events around the United Kingdom to build engagement with industry.

At the time of the implementation of the national regulations, a full impact assessment was undertaken and published by the Department. Its objective was to determine how to implement the directive in a way that would minimise the burdens on UK businesses while maximising the safety and environmental benefits. Two options for implementation of the recast framework directive were assessed, the first being to implement only the pan-European scheme and to accept and issue only European approvals, and the second being to implement the pan-European scheme together with national schemes for small series approval and individual approvals.

A “small firms impact test” considered the financial and business implications for the companies. Some 250 SMEs were consulted as part of a telephone survey, and face-to-face interviews were conducted with 20 members of an overall group of 35 SMEs that had been carefully selected from the sub-sectors to provide a representative and balanced assessment. In addition, the Department sought the views of the Small Business Service and its successor, the Enterprise Directorate, in the Department for Business, Enterprise and Regulatory Reform, as well as the views of the Federation of Small Businesses and a number of other stakeholders.

The SMEs that were consulted advised the Department that type approval would be too onerous for some companies, and it was therefore important to have the option of national approval schemes. It was clear that the EU-wide scheme could have a fairly major adverse impact on SMEs, which are defined as businesses with fewer than 250 employees, so UK regulations were developed to incorporate option 2—the national approvals option—alongside the mandatory pan-European scheme.

I accept that, on the face of it, the provision of national schemes under option 2 would appear to be gold-plating, as it goes beyond the EU minimum. However, I agree with the hon. Gentleman that the last Government adopted the correct course of action, which the present Government have continued. It does have a beneficial impact on SMEs.

I have engaged in correspondence with the hon. Gentleman about Truck Craft Bodies Ltd and the effect that the directive has had on its business. As he will recall, I explained in a reply to him in May that the cost that the company had incurred for the approval of its vehicles was significantly less than the original estimate. I think he will accept the macro-point that the cost burden on UK business of accepting option 2 is significantly lower than the pan-European option would have been.

Officials at the VCA met representatives of Truck Craft Bodies Ltd on 8 November 2012. I believe that they have supported the company and helped it to prepare the relevant documentation for its product range. Two more other site visits were made to the company’s premises in April and May 2013 to carry out approval work. The company now has seven vehicle types approved, with a fee cost for work by VCA of less than £11,000. On the basis of its current rate of production, that indicates an average certification cost of £18 per vehicle over three years. It is worth noting that the VCA fees are set on a cost reimbursement basis, following the public consultation. That reflects the cost of providing the approval service to industry.

The hon. Gentleman made several comments about the impact assessment. I can assure him that the VCA does not request information that it already holds. Again, I make the offer that if he can produce evidence that the VCA has asked for information that he believes it already holds, I will be happy to consider that. However, we do not believe that the agency requests information it already holds. It is also true that every vehicle converter must have a commercial relationship with the original vehicle manufacturer, and there are competition and confidentiality issues if information supplied to one company is made freely available to another. That would have an impact on any decision to undertake a further impact assessment.

This is a matter that the wider motor industry and trade associations may wish to address, rather than have Government create more rules or regulations. The Department and its agencies continue to work with industry, both directly and through its trade bodies, to identify any matters where there is a lack of clarity in the application of regulations or a need for administrative adjustments.

It is important to recognise that the directive was finalised six years ago and the UK regulations were created four years ago, so the opportunity for any changes before the regulations are fully implemented is relatively minimal. However, the Government are not complacent about our commitment to removing unnecessary regulatory burdens, and if there is evidence that that is not happening I will instruct officials to redouble their efforts. Indeed, there will be a meeting between the VCA and the industry trade bodies to discuss that on 30 September.

The hon. Gentleman should also by now have received a reply from my colleagues at the Department for Business, Innovation and Skills about whether any funding was available to help mitigate the costs that Truck Craft Bodies Ltd has incurred. I understand that information has been provided on checking for possible sources of funding and on the business link helpline, which provides advice to those who wish to improve and grow their operations.

To summarise, under its European obligations the UK had to implement the directive. The Department worked towards doing that in a manner which offered a high level of consultation and of assurance in respect of safety and environmental aspects, while limiting the burdens on UK businesses. There is a long history of regulating certain aspects of safety and environmental protection on road vehicles to provide a level playing field for industry, and in order to protect consumers, road users and society in general.

I hope I have satisfactorily explained the Government’s position on the approval of new vehicles. I have invited the hon. Gentleman to write to me about any evidence he feels he has about any specific occasions, and I will be delighted to see it. We are aiming to limit the impact of the directive wherever possible. We are aiming to limit the burdens on industry, and I hope the hon. Gentleman will be reassured by what I have said, but if he has any further issues he wishes to raise, I will gladly respond to them.

Question put and agreed to.

19:39

House adjourned.

Petition

Wednesday 4th September 2013 Petitions

Wednesday 4 September 2013

Closure of Barclays Bank (Marston Green)

Wednesday 4th September 2013 Petitions

The Petition of a resident of the UK,

Declares that the Petitioners wish for the Directors of Barclays Bank to suspend the proposed closure of the much valued Marston Green branch of Barclays until proper consultation has been undertaken with the community and customers affected to see if there is an opportunity to keep the branch open.

The Petitioners therefore request that the House of Commons urges the Government to encourage Barclays to keep the Marston Green branch open until after consultation.

And the Petitioners remain, etc.—[Presented by Mrs Caroline Spelman, Official Report, 17 July 2013; Vol. 566, c. 11P.]

[P001214]

Observations from the Chancellor of the Exchequer:

The Government thanks Caroline Spelman MP for her petition on the closure of the Barclays bank branch in Marston Green.

The Government is sorry to hear of the residents of Marston Green disappointment at the closure of this Barclays branch. Although we can understand their concerns, decisions on opening and closing branches and agencies are taken by the management team of each bank on a commercial basis. As with other banking service providers, Barclays will need to balance customer interests, market competition, and other commercial factors when considering its strategy and the Government does not intervene in these decisions.

It may be useful to note that many bank account providers already have an arrangement with the Post Office to provide access to their bank accounts, where customers can withdraw money, deposit cash and cheques and check balances at all 11,500 Post Office branches in the UK.

Westminster Hall

Wednesday 4th September 2013 Westminster Hall

Wednesday 4 September 2013

[Philip Davies in the Chair]

Criminal Legal Aid Reforms

Wednesday 4th September 2013 Westminster Hall

Motion made, and Question proposed, That the sitting be now adjourned.—(Jeremy Wright.)

09:30

[Karl Turner (Kingston upon Hull East) (Lab)]

I am sure it will be a pleasure to serve under your chairmanship, Mr Davies. I have not done so previously, but I am very hopeful.

I am delighted, and relieved, to have secured this debate on an important issue, because without it and the recent Backbench Business Committee debate, the Government had no plans whatever to give Members of Parliament the opportunity to challenge profound, fundamental changes to our justice system.

I am pleased that the Backbench Business Committee granted time to discuss the issue, and it was telling that we had contributions from 31 Members, the vast majority of whom were opposed to the proposals. Furthermore, more than 100 Members of Parliament have put their names to the early-day motion urging the Government to think again about their plans, while the e-petition sponsored by Rachel Bentley has attracted more than 103,000 signatories.

It is a shame that the Lord Chancellor and Secretary of State for Justice was unable to attend the Backbench Business Committee debate as he had more pressing matters—campaigning in a marginal Tory constituency—but I am pleased that the Minister is here to respond for the Government. It would have been fitting, however, for MPs to have had the opportunity to challenge the Lord Chancellor on the latest attack on our justice system, although I suspect that he is not keen to be challenged in whatever guise.

At this point, it is right to pay tribute to Michael Turner, QC, the former chairman of the Criminal Bar Association, for his achievements in uniting the two professions—I suspect that the Government were hoping for a divide between the two, which has not happened. I was surprised, and suggest that it was a shame, that the Lord Chancellor refused to meet Michael Turner—who, as chairman of the Criminal Bar Association, represented thousands of criminal barristers—apparently on the basis of his having been rude about the Lord Chancellor. To be clear, Michael Turner has never been rude about the Lord Chancellor. He has, however, dared to criticise publicly the plans and proposals of the Government in their consultation. The Lord Chancellor does not seem to like being criticised.

Furthermore, the Joint Committee on Human Rights report seems likely to be ignored by the Government, and the Lord Chancellor will plough on with his barmy proposals without even considering it.

[Tim Farron (Westmorland and Lonsdale) (LD)]

I congratulate the hon. Gentleman on securing the debate, which is of considerable importance. I agree that the proposals contain many things that are hugely damaging. On the JCHR’s ongoing investigation, does he agree—I am sure he will—that the least the Lord Chancellor should do is to delay any decision on the proposals until the investigation into whether they are fully legal has been completed?

[Karl Turner]

Absolutely. That should be the least that the Lord Chancellor is prepared to do, because the further proposed cuts to legal aid come hot on the heels of the last hacking that legal aid received from the Legal Aid, Sentencing and Punishment of Offenders Act 2012. Within a few months of taking power, the Government introduced that Bill to Parliament to slash legal aid and remove many areas of civil legal aid from scope, which has already denied many of the most vulnerable access to justice. We saw the effects in our surgeries when the changes kicked in, in the spring. I have seen a huge increase in the number of people at my surgery who cannot get a lawyer, but who are desperate for legal advice on housing, benefits and other complex legal issues.

[Bill Esterson (Sefton Central) (Lab)]

I completely agree with my hon. Friend about the impact on access to justice, with many of our constituents turning to MPs for advice on complex areas of law, although most of us are not in any position to give such advice. Will he mention the big worry about the insidious impact of the new proposals on victims of crime?

[Karl Turner]

My hon. Friend makes my point for me. He is right: Members of Parliament are not competent to give legal advice. One option that had been open to us was to signpost people to citizens advice bureaux and other pro bono clinics, but due to budget cuts—local authorities and charities being slashed—they have closed or are buckling under the pressure of reduced resources and vastly increased referrals. Local authorities are desperately struggling to provide advice services as they try to absorb cuts of more than 30%, while charities and authorities up and down the country are being forced by the Government to withdraw vital funding for local projects simply to ensure that they can sustain basic, statutory obligations.

During the first attack on civil legal aid, my party’s Front Benchers and I were accused of scaremongering. Since implementation, however, 600,000 people have been denied access to advice on many aspects of civil law. There has been a 30% fall in the number of providers of civil legal aid and a 12% fall in providers of criminal legal aid, yet the most recent consultation paper, “Transforming Legal Aid: Delivering a more credible and efficient system”, which was published on 9 April, goes beyond anything that anyone could have imagined. The proposals can only damage the legal aid system yet further.

The proposals aim to save £220 million from legal aid spending by 2018-19, but the Government have not said from which year’s spend that money is meant to be found. Many of my colleagues in the profession believe that the proposals will cost the taxpayer more money in the long run—a valid point to make. A common misconception promoted by the Government is that legal aid is the principal cost, but as the right hon. Member for Haltemprice and Howden (Mr Davis) rightly pointed out in his contribution to the Backbench Business Committee debate, the cost of our legal aid system is just three quarters that of similar systems in many other European countries. The President of the Supreme Court—no less—supports that notion. He said that the bill for legal aid increased substantially between 1965 and 2000, which I accept, but it has since been cut and projections show that it will continue to decrease over the coming years.

I am persuaded that in some areas there may be further savings to be made, but I do not believe that the proposals are the way to achieve such savings. At the Justice Committee session at which the chairman of the Bar Council, Maura McGowan, QC, Michael Turner, QC, and others gave evidence, Michael Turner suggested savings of a surprising £2 billion. The Government should be prepared to sit down with the professionals, the practitioners and the people who are expert in the area to discuss where those savings might be made.

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

I congratulate my hon. Friend on securing the debate. Is it not the case that some of the motivation for the proposals has nothing to do with savings? The Lord Chancellor himself has acknowledged that, for example, restricting access to legal aid for prisoners is a simple matter of ideology.

[Karl Turner]

My hon. Friend makes a valid point and I will develop it in a moment. She is right to raise the issue, and many people argue that the changes are a false economy because costs will increase. Matrix Chambers and Bindmans LLP have pointed out that the Government’s proposed savings are nonsense. They believe that costs—I suspect that they have done proper research—will increase by £24 million if the proposals go through. I agree with Bill Waddington, chairman of the Criminal Law Solicitors Association—

[Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)]

My hon. Friend makes an interesting point. I am a member of the Public Accounts Committee, which looked at the matter. Does he agree that the inefficiencies of the Courts Service may increase as more people try to represent themselves? I was recently a witness in court and saw for myself at first hand how inefficient that is. Perhaps the Minister should concentrate on some of those inefficiencies.

[Karl Turner]

My hon. Friend makes a point that, again, I was about to develop. It is accurate to say that costs will increase and people will self-represent.

I was about to say that I agree with the chairman of the CLSA who said that the Government are wrong to say that the issue is simply about savings when their figures show that costs have been coming down for years and projections show that they will continue to fall. Ministry of Justice figures show that public expenditure on legal aid between 2004 and 2009 has fallen by 25%. Figures also show that, between 2004 and 2010, the cost of criminal legal aid fell by £165 million. Those are Government figures, and they are expected to fall by a further £264 million by the end of 2014. My respectful submission is that it is about not saving money, but ideology.

Desperate people who have no choice but to represent themselves—this is my hon. Friend’s point—will clog up the courts and cost more money. Court time is expensive and not only will extended court time cost more money, but self-representation will provide fertile ground for miscarriages of justice and I hope that the Minister will acknowledge that.

[Ian Lucas (Wrexham) (Lab)]

My hon. Friend is making his case very well. A long time ago, I ran a solicitors firm on a high street in north Shropshire. Does he agree that it is extraordinary that a Conservative-Liberal Democrat Government are making proposals that will specifically hit small firms on our high streets which are some of the most important providers of advice and services to local communities?

[Karl Turner]

My hon. Friend has stolen one of my best points. He is right of course.

I want to concentrate for a moment on the courts and staffing levels. I was not practising in the criminal courts during the recess, but I was there briefly. It is clear that since 2010, the courts have been stretched. There is no doubt that the proposals will put more pressure on the clerks in trying to advise clients who may be faced with no option but to self-represent.

Last year, the National Audit Office found that the cost of our legal aid system was average compared with other countries, and costs continue to fall. I accept that, according to the Government, 48% of criminal legal aid costs account for 1% of cases. Those are the cases that we should look at to make savings. The Government should concentrate their attention on high-cost cases. In times of austerity, we should look at all Departments for efficiencies, and the Ministry of Justice should shoulder its responsibilities and accept the burden for that.

It is right to make those who can afford it pay legal fees. It is also right to freeze the assets of convicted criminals to fund their legal costs. I am sure that my Front-Bench colleagues would be happy to work with the Government on that. However, it is not right that the legal aid system is sold off to the lowest bidder at the expense of quality. It is not right that huge global corporations that also run prisons, probation services and tagging—they do not do that well—are likely to bid for criminal defence contracts. That suggestion is appalling.

It is clear that there is a conflict when organisations involved in criminal defence also run the prisons. It is not right that companies such as G4S, which have great financial power, outbid smaller local firms at the expense of quality and local expertise. Local expertise is valuable. The legal aid scheme has evolved and changed over many years since its inception in 1949, but it remains a system in which the Government fund private expert practitioners to provide a pivotal public service.

[Meg Hillier]

My hon. Friend raises an interesting point. A solicitor in my constituency says that 50% of the clients he deals with are innocent, and are neither cautioned nor charged. Does my hon. Friend agree that the proposals are also an attack on the innocent and, as is sometimes painted by the Government, that they do not affect just people with criminal records?

[Karl Turner]

Absolutely. That is correct. Before coming to the House, I was at the Bar with local chambers in Hull, but before that I was a criminal solicitor. I attended police stations and the vast majority of clients I represented had no further action taken against them or were dealt with by an alternative to court, but most often no further action.

[Sir Edward Garnier (Harborough) (Con)]

That may be so, but I am sure the hon. Gentleman accepts that even those who turn out to be guilty are equally entitled to legal representation.

[Karl Turner]

Of course, but the point is to dispel the bonkers notion that old lags cost the money. The reality is that people are entitled to a defence, and I will address that later.

I want to deal briefly with the suggestion that the previous Labour Government were profligate with the system. I have spent years defending my party because many practitioners say that the previous Government cut the system to the bone, but we were careful with legal aid spend. I also want to dispel the myth that only self-interested, fat-cat lawyers are concerned about the changes. I have been lobbied by charities, constituents, colleges and trade unions that do not benefit in any way from legal aid, but want a system that continues to be fit for purpose and protects the most vulnerable at the time when they need access to justice.

[Jim Shannon (Strangford) (DUP)]

I thank the hon. Gentleman for bringing this important matter to the House for consideration. On his reference to those who are less well off, Citizens Advice in my constituency has told me—I am sure that many other hon. Members here have received similar information from their citizens advice bureaux—that the least well off will suffer more and those with little or no money will be unable to take a case to court to protect or defend themselves. Does the hon. Gentleman believe that the critical issue is that the less well off will suffer more?

[Karl Turner]

The hon. Gentleman makes a valid point. The reality is that the proposals will lead to a system in which only the rich—those who can afford to be represented privately—will have access to the courts. That is simply not justice.

[Bill Esterson]

My hon. Friend is rightly making a point about justice and has drawn attention to the danger of miscarriages of justice if we go back to a system that we thought we had left behind. Does he agree that there is another side for the victims of crime because if the wrong person is convicted they suffer a double injustice?

[Karl Turner]

Of course. My hon. Friend highlights the point that victims of crime suffer again because funding for charities that represent the interests of victims of crime has been severely slashed under the coalition Government.

[Kate Green]

On victims of crime, does my hon. Friend not also agree that with access to a good, trusted legal adviser, many defendants will plead guilty early, saving pain to the victim as well as cost to the system?

[Karl Turner]

In my experience, for what it is worth, my advice to a client was based on the evidence. If that was overwhelming or strong, and if, in my opinion, the defendant needed to plead guilty, they were advised accordingly. I think solicitors and barristers will always act in the best interests of the client.

May I address the caricature that the Government have peddled, which is that all lawyers earn salaries like that of the Prime Minister’s very wealthy brother? It is not true. The vast majority of legal aid lawyers, up and down the country, earn a modest wage; often, they will take home less than a nurse or a teacher. I wonder what information the Government have on that issue, because I think that the Bar Council could provide them with information about average salaries at the Bar, and that the Law Society could assist as well.

A very important point, and perhaps an unintended consequence, is that the proposals will prevent many young people from black and minority ethnic backgrounds, less advantaged backgrounds, and poorer backgrounds from coming into the professions. This is not a plea for the so-called fat cat lawyers, but, as John Cooper, QC, put it:

“This is recognition, before it’s too late, that if the proposals go through we will be complicit in excluding many young people from less advantaged backgrounds from becoming part of what can only be described as the National Health Service of the Law”.

I also want to deal with the misconception that all people seeking legal aid are old lags. I have dealt with that briefly, but the Government seem to suggest that such people do not deserve representation. Of course, there are repeat offenders who are found guilty, or who plead guilty to a further offence, but just because someone has previously been convicted of burglary does not mean—cannot mean, surely—that they are automatically guilty of the further alleged offence. They might not be.

Fundamental to our legal system must be the presumption of innocence. Denying people’s liberty is one of the strongest powers of the state. It is vital, therefore, that that can be done only when a court of law is presented with evidence, for and against, by highly skilled and trained lawyers.

[Steve Brine (Winchester) (Con)]

Fundamental to our system is the issue of choice, which the hon. Gentleman may come on to. He is a former member of the Select Committee on Justice, which I now sit on. The right for someone to choose who represents them goes very much to the heart of our system.

I wonder whether the hon. Gentleman would agree that the price-competitive tendering proposals, as originally drafted, would appear to deny that, but as he knows from the Justice Committee’s hearings and the Backbench business debate, the Government have moved on that issue. I wonder what his feeling is on where that movement on choice, which very much holds the PCT proposals together in their original form, leaves us. He should acknowledge that the Government have already moved a little on the issue.

[Karl Turner]

I will address that point later in my remarks.

I am concerned about what seems to be an outdated concept, in the Government’s vision, of a Tesco-style justice system, but I still believe that the defendant is innocent until proven guilty. Surely we should be looking to protect that system. I add that these stereotypical clients are not the only people who seek criminal legal aid. Thompsons Solicitors, in its response to the consultation, made it clear that many who seek legal aid are people such as teachers, nurses and police officers, who are wrongly accused of assault or similar, and who need to clear their names and save their livelihoods.

[Mr David Davis (Haltemprice and Howden) (Con)]

I congratulate the hon. Gentleman on securing the debate. He has not mentioned a category of people who suffer a form of injustice greater than anything he has spoken about. Those people cannot defend themselves, either because they have died as a result of a state action—I am thinking of Baha Mousa, in particular, who was beaten to death by British soldiers—or because they are incarcerated by either British or foreign states. Such people, without legal aid, have no recourse whatever. There is no self-representation, because they cannot do that, and no cheap representation, as they cannot do that either.

[Karl Turner]

The right hon. Gentleman makes an extremely valid point, which I, again, want to address briefly in my remarks. I disagree with many aspects of the proposals—the right hon. Gentleman is correct—but as my hon. Friend the Member for Stretford and Urmston (Kate Green) said, denying prisoners access to legal representation simply goes against everything that a civil society should represent.

Defending prisoners is not a vote winner, but we live in a civilised society, and I believe that prisoners must have the right to legal representation. The reforms will essentially mean that justice stops at the prison gates and that prisoners are denied legal representation, if the Government plans go ahead. As colleagues have said, denying prisoners access to justice in the way that the consultation proposes seeks to save £4 million. In times of austerity, it would be flippant to say that that is peanuts, but actually, when I think about it, those efficiency savings come at what cost? For goodness’ sake—it seems incredible to me.

[Kate Green]

It is likely that the proposals will save nothing in the round, because they will lead to more inefficiencies inside prisons, as people will be kept in higher-security conditions, when they need not be, for longer, and as there will be greater difficulty in managing discipline and behaviour in prison as a result.

[Karl Turner]

Absolutely. My hon. Friend makes a valid point.

I think that this next point was the one made by the right hon. Member for Haltemprice and Howden (Mr David Davis). I am also concerned that the proposals to introduce a residency test will see victims of human trafficking denied access to legal representation and will prevent many cases from being brought against the Government when they are accused of wrongdoing abroad. The new proposals will mean that families such as that of Jean Charles de Menezes would not have been able to fight the case for their dead son, who was wrongly shot by armed police.

I also disagree with the proposals to reform judicial review. They will mean that an individual will no longer be able to hold public bodies to account. Shelter, for example, provides specialist social welfare law advice—on housing issues, in particular—to about 15,000 people each year, under various legal aid contracts. However, it is clear that the proposals will prevent it from doing that.

The Government proposals limit funding for judicial review to only those cases where permission to proceed is granted by a judge. That must severely limit Shelter’s ability to help people. None of us in this place can imagine the prospect of losing our homes. It seems incredible that the Government, in their plans, seek to attack the most vulnerable people at the time when they need assistance the most.

Clearly, the Lord Chancellor has thought about the proposals since the Backbench business debate. Following absolutely overwhelming criticism from many Opposition Members and Government Members, I was very pleased to see the Secretary of State U-turn on the accused having the right to choose their lawyer. However, we do not know what the impact of that will be, because as far as I understand it, the Lord Chancellor is still keen to press ahead with what he thinks is a workable system of PCT. I suspect that it is not workable; I do not think it ever has been.

The client choice issue was designed to assist with PCT, in the sense that it would be attractive for large corporations to bid for contracts on the basis that they are getting a vast client base, but I am not sure what the impact of that will be and how the proposals will change things as a result. I hope, however, that the Lord Chancellor continues to listen, and that he will concede that PCT, in any form, is not suitable for allocating legal aid contracts. Legal aid contracts should not simply go to bidders who are willing to do the work for the lowest price.

As I have said, I am concerned about many aspects of the proposals, but I want to focus, in the time remaining to me, on chapter 4 of the consultation document, which is about PCT in relation to criminal legal aid.

[Jessica Morden (Newport East) (Lab)]

A constituent of mine recently wrote to me in praise of a small local firm of solicitors that had supported her and her family through a long, traumatic and very serious case. She felt that the attention to detail and dedication shown by that small local firm would not be replicated in the new system, in which speed and economics would be of the essence. Does my hon. Friend agree?

[Karl Turner]

Absolutely. That is an excellent point. It is just the reality of business. Small firms of solicitors have established themselves over a long period. The hon. Member for Warrington South (David Mowat) thinks that my remarks are amusing. They may be amusing to him, but I can tell him that the reality of the proposals will not be funny to people in my constituency who are looking to access justice.

[David Mowat (Warrington South) (Con)]

I am listening very carefully to the hon. Gentleman’s remarks, and he is making a strong case for access to justice with which no one, in any part of the House, would disagree. What I would be interested to understand, though, is whether his position is that legal aid as it is currently is pretty much right and cannot be reformed or that reforms are possible but the Government are pursuing the wrong ones. If it is the latter, why has the Bar Council not come forward with more substantive proposals than it has apparently done so far?

[Karl Turner]

I am not the Bar Council; I do not represent the Bar Council. It is not for me to say why it has not come forward with proposals, but my opinion is this. Why should the Bar Council, the Criminal Law Solicitors Association, the Criminal Bar Association or any other organisation that represents the professionals come up and do the Government’s job? I suggest that the hon. Gentleman goes away and reads the evidence of the Justice Committee and looks at the proposals put forward by the experts—the practitioners, the people who do this work every day. Michael Turner, QC, came up with a suggestion for making £2 billion of savings if the Lord Chancellor was only prepared to allow him enough time to sit down and discuss the proposals with him.

[David Mowat]

I thank the hon. Gentleman for giving way again. I thought I heard him earlier give that figure of £2 billion, which of course is a very significant amount. I believe that it is 10 times the amount that the Lord Chancellor is seeking. If Michael Turner has identified £2 billion of savings, would it be possible for the hon. Gentleman to identify for other hon. Members the main areas in which those savings would be made?

[Karl Turner]

The former chairman of the Criminal Bar Association put forward various suggestions in the Justice Committee evidence session. I happen to think that some of them are feasible. He talked about saving money in courts. In my experience, an awful lot of money is wasted in the courts system. Then there is the Crown Prosecution Service. I do not mean to criticise colleagues in the profession, but very often defence lawyers are blamed for delays and loss of court time when in fact it is the CPS, whose staff are rushed off their feet, overworked—in my area, the service is terribly understaffed—that causes the delay. There are all sorts of things that the Government could look at, but the reality is that the Lord Chancellor is simply not prepared to sit down and discuss them. I am hoping that the new chairman of the Criminal Bar Association, Nigel Lithman, QC, has the ability to persuade the Lord Chancellor to sit round a table and discuss the proposals.

[Mr David Davis]

First, let me help the hon. Gentleman with a reminder of some of the things that were proposed. There was a proposal for a levy on the commercial courts in London that would raise large amounts of money. There were proposals that the banks should pay for the fraud cases that make up a large part of what we are discussing.

I also want to ask the hon. Gentleman a question. The Law Society has come up with a proposal that maintains choice but still puts in place a bidding system— a rather more thoughtful bidding system, if I may so—a rolling three-year bidding system, which would keep in place some of the smaller specialised companies and so on. Does he think that that is a good route to go down?

[Karl Turner]

Absolutely. The right hon. Gentleman is absolutely right. The Law Society’s proposal, I think, is a much better alternative. To answer the point made by the hon. Member for Warrington South, of course I accept that efficiency savings have to be made across the board in Departments—I made that point earlier—but it seems to me that the Lord Chancellor has just gone off without really being prepared to consult. I think that we are talking about a period of two months. It seems to me—the Minister shakes his head, but this is the justice system. There are a lot of professionals involved. I think that the Government received 16,000 responses. Surely there was a requirement to have some form of proper consultation—I do not think that it was proper, frankly—so these things could have been discussed more properly.

I think—this point was also made by my hon. Friend the Member for Wrexham (Ian Lucas)—that what is proposed defies everything that the Conservatives allegedly stand for. It is contrary to all that they say they are doing to promote growth on the high street. The idea of savagely attacking small businesses seems barmy to me. Do the Tories not believe that small private firms are the backbone of our economy? It beggars belief that this policy will without doubt break the backbone of the legal profession and, in my submission, severely undermine local economies such as my own in Hull. Let me be very clear.

[John Stevenson (Carlisle) (Con)]

For the record, I am still a practising solicitor, although my firm does not do criminal law. I want to take up the point about rural areas. Already in places such as Cumbria there are gaps in terms of the legal profession giving advice. Does the hon. Gentleman agree with me that the potential is that the reforms will exacerbate that problem, particularly in rural areas?

[Karl Turner]

The hon. Gentleman is absolutely right. I have not read the 16,000 responses to the Government consultation, but I know from my discussions with colleagues in the profession that a vast majority of those responses make the point about advice deserts. Let me refer to my area of Humberside. Bridlington, which is in the area, will, in my submission, become an advice desert. It is covered currently by all the firms of solicitors in the area, but there is one firm of solicitors that is based in that town.

[Glyn Davies (Montgomeryshire) (Con)]

Does the hon. Gentleman agree that whatever changes to legal aid are brought in, they will, in Wales, have to accommodate the legal requirements of the Welsh Language Act 1993? It is a great concern of many people that the capacity will not be there to do that.

[Karl Turner]

The hon. Gentleman makes a very valid point. Clearly, this is not my area of expertise, but the point has been raised by the right hon. Member for Dwyfor Meirionnydd (Mr Llwyd), the leader of Plaid Cymru in the House, who is very worried. He is a practising barrister and is concerned that that obligation will go as a result of the proposals. That cannot be justice.

I am conscious of the time, so I will now make a little progress. The Government proposals for PCT will irrevocably damage the criminal justice system. PCT will inevitably lead to the market being dominated by the big multinationals—the usual suspects—G4S, Serco, Capita; and I fear that many new entrants to the market who have no experience whatever of delivering criminal justice will dominate the market. The small businesses, the expert businesses, that have established their practices over a number of years and have a great relationship with local authorities will just close their doors. It will become economically unviable for them to continue to exist.

The proposals are designed to cut a further 17.5% on top of the 2011 reduction of 10%. Firms that win the contracts will assert that they can provide the service at the cheapest possible rate. Stack it high and sell it cheap will see our criminal justice system reduced to the lowest common denominator. I have no doubt that it will be taken over by less qualified people providing a less qualified service. We will see the cornerstone of a civilised society reduced to a factory mentality where quantity will trump quality each and every time. The only consideration in our justice system will be the cheapest provider.

The plans also perversely propose the same fee being paid whether the case is resolved by way of a guilty plea or contested at trial. To me, that suggestion beggars belief. There is undoubtedly a concern that that will lead to undue pressure being put on a defendant to plead guilty to speed up the process, thus saving time and money for big legal aid providers. There will be a clear financial incentive for the defendant to plead guilty as quickly as possible, even when a trial would be in the client’s best interests. It is unlikely to happen, because, in my honest view, solicitors always act in the best interests of their clients and always advise based on evidence alone and the strength of the evidence presented in the case, but do the Government not accept that advice might be misconstrued? A particular client might plead guilty to an offence when the evidence is strong and overwhelming, but there might be a later discussion, perhaps in the pub, along the lines, “You pled guilty, mate, because your brief was paid the same money whether they did their best for you in a trial or forced you, with your arm up your back, to plead guilty.” Surely that will be the result.

[Philip Davies (in the Chair)]

Order. I do not wish to interrupt the flow of the hon. Gentleman and I have no idea how much longer he intends to go on for, but other people wish to contribute, not least some of his hon. Friends. I urge him, in the spirit of co-operation with his colleagues, to consider bringing his remarks to an end.

[Karl Turner]

I am grateful, Mr Davies. I will bring my remarks to a close. I apologise. I think I took too many interventions.

Well-established, local, high-quality providers that have strong links with local police authorities, courts and councils will be replaced by large corporations. That is not a good idea. It is not helpful to the justice system. The reality is that people will suffer as a consequence of the proposals. I hope the Government listen. I hope that the Lord Chancellor—according to rumour, this will be the announcement tomorrow—has changed his mind and decided once and for all to bury the idea of price-competitive tendering.

[Several hon. Members]

rose—

[Philip Davies (in the Chair)]

Order. It appears that five hon. Members wish to catch my eye. I intend to go to the Front Benchers no later than 10.40 am, which leaves just less than half an hour for other contributions. I do not intend to set a formal time limit, but I hope that people will do the maths—it leaves just under six minutes each—and bear it in mind when considering other speakers.

10:12

[Sir Edward Garnier (Harborough) (Con)]

I declare an interest as a member of the Bar, albeit that I do not do any criminal or legal aid work at all. Whether that makes me a fat cat, I leave to others, and my tailor, to conclude.

I congratulate the hon. Member for Kingston upon Hull East (Karl Turner) on his marathon performance this morning; he ranged over the full width of the criticisms to be made of the policy. The debate is somewhat reminiscent of the discussions we had in the first Parliament of the Tony Blair Government about the Access to Justice Act 1999, when I was in the position of the hon. Member for Hammersmith (Mr Slaughter), arguing against slashes to legal aid and actions that would deny access to justice, rather than improve it—so much changes and so much does not change. It is a pity that we have got to where we are today because there appears to be intransigence on both sides of the argument. Both sides have good points to make.

The economic constraints that the Government face are obvious and need to be dealt with—that is undeniable, and I think the hon. Member for Kingston upon Hull East is prepared to accept that. Unfortunately, the Whitehall system of government means that everyone works in a silo and nobody pays any attention to the consequences of a cut in one Department on the expenditure of another. We saw that with the closure of magistrates courts.

[Debbie Abrahams (Oldham East and Saddleworth) (Lab)]

Does the hon. and learned Gentleman not concede that estimates from his esteemed colleagues show that there will be an increase in costs? For example, a doubling in the cost of legal aid for prisoners’ cases and an increase of £1.3 million to £4.5 million for judicial reviews are additional costs that will result from the proposals.

[Sir Edward Garnier]

I rather thought that was the point I was making. If we cut one Department or one aspect of expenditure, it has a knock-on effect on another, which is why I referred to the closure of magistrates courts. It saved one Department, through the Courts Service, a certain amount of money, but impacted on the police forces that had to transport defendants from, for example, Market Harborough to Leicester, some 15 or more miles away. Such discussions are perennial. That is not to say that we should not have them, but nobody should be surprised when the Government and the Opposition stand against each other in this way.

The consultation is to be responded to at some stage in the future, whether it is tomorrow, as the hon. Member for Kingston upon Hull East suspects, or some other date, we do not know—the Minister may be able to give us a sneak preview of what is going through the mind of his Secretary of State—but I hope that it has not yet been printed, because there are plenty of things about which the Lord Chancellor needs to think before he responds. I, unlike the chairman of the Criminal Bar Association, have had the joy of meeting the Lord Chancellor: once in his office in Parliament and once in his office in the Ministry of Justice. I have always found him an entirely reasonable person to talk to. It will be interesting to see quite how much of what I invited him to consider ends up in the response to the consultation document; no doubt, in due course, we shall see.

A number of points need to be borne in mind. The first is the important constitutional point the hon. Member for Kingston upon Hull East addressed and my right hon. Friend the Member for Haltemprice and Howden (Mr Davis) mentioned, by implication this morning and on an earlier occasion in the Backbench business debate. Access to justice and representation, particularly in cases against the Government or the authorities, are hugely important. If we deny them, we undermine an aspect of the civilised nature of this country. I am not sure that that is what the Lord Chancellor has in mind, but we are necessarily fearful that it could happen.

Reducing expenditure on prisoners’ cases as a blanket policy is of course worrying, but if we are preventing public money from being spent on people complaining about whether they have one blanket or two or whether they get this or that pornographic magazine, I do not think I will lose much sleep. There will clearly be cases involving prisoners, the downtrodden, asylum seekers and so forth for which legal aid will be essential to see that justice is done and the Government are not oppressive.

[Kate Green]

Does the hon. and learned Gentlemen agree that the cases prisoners bring are not necessarily trivial? They may be to do with a prisoner’s mental health, mothers wanting to be with their babies in mother and baby units or children and young people in custody who desperately need legal representation if, for example, they do not have access to proper programmes in their sentencing plan.

[Sir Edward Garnier]

I thank the hon. Lady for that intervention. Her point is not controversial. The argument against it, and perhaps against my points, is often made the basis that there are far too many people taking judicial review proceedings about trivial and silly cases on pornography or whatever it might be. Those cases need to be got rid of, but the cases she mentions need to be dealt with properly.

Constituents drew to my attention a problem that the changes, if they go through as advertised, will cause for not only the future representation of defendants, but the administration of our justice system. At the moment, thousands of criminal barristers, and this may be true of criminal solicitors as well, are doing the most complicated cases, particularly child abuse and sex crime cases, which can in my view be prosecuted and defended only by professionals who have experience of such cases. They are not paid huge sums of money. They are the senior juniors: 35 to 40-year-old juniors at the Bar, who are the potential QCs—silks—and Crown Court judges. If we push those people away from the profession, we will not be able to develop the judges and senior members of the profession of the future. Perhaps that consequence has not occurred to the Lord Chancellor, but I know that it will have occurred to my hon. Friend the Minister, because he is a former criminal barrister of huge thoughtfulness and experience.

If we push those people away, we are in danger of utterly changing how we deliver the criminal justice system. I have had any number of constituency members of the legal profession coming to me, and they do not live in vast houses or drive Bentleys. They live in small houses on little executive estates, drive second, third and fourth-hand cars, and send their children to state schools. They are not rich; they do a difficult job for little money. They do it because they have a vocation and because they think it is right that innocent and guilty criminal defendants alike are represented.

I will stop there because I have overrun my time by far too long. I urge the Minister to take the points that I have gently put to him with the seriousness that the constitution requires.

[Philip Davies (in the Chair)]

We have just less than 20 minutes for three or four people—I am not entirely sure how many at the moment.

10:19

[Mr David Lammy (Tottenham) (Lab)]

I will try to be brief, Mr Davies, because of that stricture.

Does the Minister accept that price-competitive tendering must always lead to the reduction or complete withdrawal of client choice? As long as we begin from the principle that we are not only entitled to a fair trial, but must be seen to have a fair trial, the latter is incompatible with the prosecuting body limiting the defendant’s choice, or even choosing the person employed to defend them. If the Department plans to put contracts that guarantee an equal share of work out to tender—as stated in the document it has produced—by necessity, choice is being limited. The central concern about choice therefore remains. As I said in the legal aid debate called by the hon. Member for Brent Central (Sarah Teather), the establishment of choice goes back to the Magna Carta. It is fundamental to our system, and I have yet to hear why the Lord Chancellor thinks it can be discarded in this way.

Even if the Government are not interested in the perception or the subjectivity of receiving a fair trial, tendering, and the guarantee of work without quality control, can lead only to an objectively less fair system. The system proposal means that firms will be forced to compete on price rather than on quality, and I do not want lawyers doing that. The lower firms bid, the fewer resources they can commit to each case. That is why, when we went down that road with those who would provide food for our children in schools, we ended up with turkey twizzlers. It is why, when the NHS decided to contract out the cleaning services in our hospitals, we ended up with MRSA. So I say to the Minister, let us remain committed to quality in the system—a point well made by my hon. Friend the Member for Kingston upon Hull East (Karl Turner) and the hon. and learned Member for Harborough (Sir Edward Garnier)—and not discard it for a cheap and, by definition, substandard service.

The savings we need can be found in other places. The significant bulk of the £220 million, as the Minister knows, comes from high-cost cases, half of which deal with banking fraud. Why does the banking sector not have an insurance scheme for fraud against its banks? That would halve the sum that the Minister is looking for. Again, it would be nice if the Lord Chancellor could say whether he was considering taking banking fraud out of criminal cases so that we could find the savings in a way that was much more friendly to our justice system.

Do we want the situation that we see in the United States of America, with substandard lawyers and huge miscarriages of justice? There are an estimated 10,000 cases of innocent people convicted of a felony there. Do we want that system? We need to think very carefully about price-competitive tendering.

I want to end briefly with the proposals that still stand on judicial review. This matter affects us all. If the state comes to take my kids away, I will seek judicial review. If the state wants to bulldoze my home to make way for High Speed 2, I will seek judicial review. If the state is unwilling to provide a care home for my mother, I will seek judicial review. Seeking to restrict judicial review is a travesty. It is a fundamental area that has largely been protected by law, and the inroads into it should be of great concern to every individual in this country. We really need to consider the matter again, given that the savings are so minuscule.

The caricature of fat-cat lawyers has been a disgrace—most lawyers are high street lawyers in places as different as Cornwall and Tottenham, and are on less than nurses and teachers. The clamour outside this building is not being made by just the legal profession. It is not about the lawyers, but about the many people who will see miscarriages of justice if the measure goes through.

10:19

[Dr Julian Huppert (Cambridge) (LD)]

I congratulate the hon. Member for Kingston upon Hull East (Karl Turner) on securing the debate. Many Members will remember that my hon. Friend the Member for Brent Central (Sarah Teather) led a well-attended debate on legal aid reform in June, which focused on civil legal aid and was helpful in moving the debate forward. Those of us with an even better memory might remember that two years ago I held a debate in this place on legal aid reform, before the previous legislation was passed.

We will not have time to touch on some things, such as the residency test, which I still consider pernicious, but I wish to talk through a whole range of issues. We accept, as I think everyone must, the principle of making savings. It has been accepted, I think, across the board. The Labour party’s manifesto at the last election stated:

“To help protect frontline services, we will find greater savings in legal aid”.

The question is how to do that.

As co-chair of the Liberal Democrat committee on home affairs, justice and equalities I wrote formally, with my colleagues, to the Lord Chancellor, and we received a detailed response to our suggestions. Sadly, I will not have time to go through all the suggestions or every aspect of the response, but I was pleased that he said:

“It is important to note that I have yet to make any final policy decisions.”

He is absolutely right not to have done so, and I am sure that he will listen carefully to the concerns we are all expressing. He also referred to a short period of further consultation, which I think we would all welcome.

The Lord Chancellor also talked about working closely with the Law Society. I was at the Law Society yesterday and had the opportunity to talk to it about some of the new proposals. I hope we will be able to come up with something that it will find not necessarily ideal but an acceptable way forward. As has already been said, the society’s suggestions for savings are definitely worth looking at; it has an improved model.

Our biggest concern as a committee was the lack of choice. When a scheme including that was tried in Scotland in 1998, under a different Government, there was substantial dissatisfaction with the representatives. It was clear that getting rid of choice did not work then, and I am pleased that the Lord Chancellor has taken the right decision to abandon that approach.

We must also look at quality. We saw the problems with the bulk contract awarded to Applied Language Solutions—now Capita—for interpreting services. It did not provide the quality that was needed, and we must avoid anything like the same problems again. The Lord Chancellor said that quality was

“critical to any future model of procurement”,

and that must be absolutely explicit. We do not want cut-price justice; we must ensure good quality, and that includes the smaller firms that many colleagues have spoken about. An idea that I have suggested is to encourage firms to work together in consortia rather than to have large bidders. There will be a firm operating in one town that can work happily as part of the same contract with one in a town somewhere else, in Cornwall, Cambridgeshire or wherever it might be. It does not make any sense that such firms should have to bid against each other. I hope that the Lord Chancellor has considered that and will respond in detail, with some helpful ways forward.

Judicial review is an important remedy. It is essential to have ways in which the state can be held to account at local government and national level. The proposals will not save a huge amount of money. I look forward to detailed suggestions about how to deal with cases of suggested misuse of the system without affecting the vast majority of cases that are important and which form a clear safeguard.

A particular concern has been put to me by several lawyers doing judicial review cases: because of the requirements for payment only when permission has been given, in a really strong case—for example, when a local authority that is failing to provide the care it should, gives up and settles at the point that there is a claim for judicial review, because it knows that it will lose—there may be no opportunity for the lawyer ever to be paid. I did not know until recently that a local authority will quite often settle, subject to not having to pay the fees. If the Government and the local authority will not pay the fees, the people with the strongest cases will never get paid. That is clearly not right and must be addressed in some way, because I am sure that it is not what the Government want to happen.

It is important to have a system of legal aid for prisoners. There may well be some trivial cases, but there are some incredibly serious ones. By all means, let them go through a complaints system that has to be used first, but if that is unsatisfactory, there must be a proper legal route and support for prisoners. The change will not save much money, so it should not be done purely for ideological reasons.

We can do much in relation to savings, as has been touched on. The use of restrained funds, with appropriate judicial control and capping, would be a fantastic way forward. It seems odd to pay for legal aid for people who have money, but not allow them to spend it. That would be one way to save a substantial amount of money. That can be used in some cases—the Home Office has access—so let us make sure that it is available here.

I support the idea of dealing with high cost fraud cases by having a form of compulsory directors insurance or some other scheme—I do not mind about the exact details—so that we are not paying in cases where there is another substantial source of money. That would enable great savings.

Lastly, there could be more efficiency savings in how courts operate. The system too often does not work: the late arrival of prisoners due to transport failures has caused delays for a third of defence solicitors; half of solicitors have been delayed because the prosecution did not follow disclosure rules; and there are unnecessary adjournments and listing failures. The court system does not operate as efficiently as possible, which costs us money in legal aid. We could provide better justice for less money.

I look forward to the Minister’s response and the Lord Chancellor’s final decisions. Yes, we can save money, but it must not be at the cost of justice.

[Kate Green]

rose—

[Julie Elliott (Sunderland Central) (Lab)]

rose—

[Philip Davies (in the Chair)]

Order. The hon. Ladies will have to divide the next eight minutes between them, as they see fit.

10:30

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

I want to speak briefly about the impact of the proposals on prisoners. I raised that in the debate we were able to have before the summer, when the Minister did not have time to respond to all the questions asked. I will quickly highlight two or three points.

The representation of prisoners inside prisons on such matters as resettlement, categorisation and access to health care treatments and programmes is classed as a form of criminal legal aid, but in practice the skill set required and the nature of the lawyers carrying out that work makes it much more akin to civil public law. That deeply concerns me, because where there will still be an entitlement to access legal aid in prisons—that will be severely curtailed, in any event—it is likely that the national or international firms receiving many of the contracts will simply lack those skills. I ask the Minister to comment on how that expertise will be protected under the contracts.

I am particularly concerned about children and young offenders. Thankfully, the number of young people in custody is falling. I pay great tribute to the Youth Justice Board and the criminal justice system for that achievement. Young people, in particular, need good quality representation with a specialist advocate who is used to working with children and can recognise that they often arrive in prison in particularly difficult and chaotic personal circumstances. The advocate needs to have the time to build a relationship with the child or young person, and I am very concerned that we could lose that for young offenders. I wanted to ask the Minister about that in the debate earlier in the summer. I am keen to hear from him that special arrangements will be put in place to protect the interests of children and young offenders, and I really hope that he can say something reassuring.

As time is so limited, I will make my final point, which is a similar one about older prisoners and those who are disabled or very unwell. They form an increasing part of the prison population, as the Minister will know. I have a constituency case of a prisoner who is very unwell, has disabilities and, as a result, is unable to participate in the programmes that are part of his sentence plan. That means that he cannot be moved, on successful completion of his programme, to a lower-security prison. That is mad for the Prison Service, and it is bad and unfair for him. I again invite the Minister to say what special arrangements could be put in place for such particularly vulnerable and disadvantaged disabled and older prisoners.

10:30

[Julie Elliott (Sunderland Central) (Lab)]

It is a pleasure to serve under your chairmanship, as ever, Mr Davies. Having cut down my speech, I seem to have more minutes that I thought.

The debate over legal aid cuts is about more than just lawyers’ fees; it is about access to justice and to our legal system, without which equality before the law cannot function. Any cuts to legal aid must be targeted and thoroughly thought through, otherwise they will be fraught with risks to our legal system.

I understand that savings need to be found across the criminal justice system, and that legal aid should be reserved for those who need it most—those whose inability to pay legal fees threatens their access to justice. I feel strongly that steps should be taken to address the problems of very high cost cases, although I recognise that there are very few of them. I support efforts to root out inefficiency in the court system, as well as in prosecutions and the wider criminal justice system. I cannot, however, support cuts that might lead to an increased number of miscarriages of justice, which I fear the model will promote; it will also promote quantity over quality.

I question the first plank of the Government’s plan, which is to replace the current model and reduce the number of providers from 1,400 local providers to 400 larger ones. The Secretary of State has claimed that that will be a more efficient model of criminal legal aid procurement, but I do not follow that logic. For example, if someone has a solicitor from Berwick at the other end of my region, that will add at least an hour and a half to the time for them to get legal advice. The ideology that bigger means more efficient and that local means wasteful is part of a trend with this Government, but it is misguided.

Small and medium-sized legal aid firms will be obliterated by the changes; yet it is those very local firms that have the strong links with local courts, the police and the Crown Prosecution Service that larger companies simply do not have. Indeed, they often have relationships with repeat offenders, and sometimes a bit of common sense can be used in a situation, rather than letting it escalate into a massive legal case. With no pilot, no monitoring and no quality control, the lowest cost provider will win out, regardless of quality. Tendering time scales are so tight that many existing providers will not have sufficient time to restructure themselves into larger consortia.

On top of the previous 10% cuts to legal aid lawyers, the further proposals would cap bids at 17.5% below the current fee. The same fee will be paid regardless of the nature of the plea, as was mentioned by my hon. Friend the Member for Kingston upon Hull East (Karl Turner). The cuts will price firms out of the legal aid market, and may even increase pressure on people to plead guilty, so heightening the chances of miscarriages of justice. The reforms, particularly price-competitive tendering, threaten universal access to justice, and I therefore urge the Government to reconsider and amend the proposals.

10:30

[Mr Andy Slaughter (Hammersmith) (Lab)]

It is a pleasure to be here under your chairmanship, Mr Davies. I thank my hon. Friend the Member for Kingston upon Hull East (Karl Turner) for his outstanding speech—a tour de force—demolishing the Government proposals. I also thank all hon. Members who have made very fine speeches on a range of issues—and, indeed, all 20 Members who have turned up, not one of whom have I heard give unqualified support to the Government proposals; there has been much for the Minister to think about and reply to. In its way, it is almost as impressive as the 31 Members who attended the Backbench Business Committee debate. There has also been a debate in the other place.

As my hon. Friend said, it remains a scandal that the Government have not provided any of their own time to debate these issues. We had a year going through the Legal Aid, Sentencing and Punishment of Offenders Bill—now an Act—but these measures are equally controversial and should have been the subject of primary legislation or, if not, certainly given ample Government time. We will no doubt return to the issues in other debates, but such debates all seem to be up to Back-Benchers and the Opposition to supply. I remind the Minister that the Government’s own lawyer said about the consultation document:

“We consider that the proposals in the consultation paper will undermine the accountability of public bodies to the detriment of society as a whole and the vulnerable in particular.”

More than 100,000 people have so far signed the petition opposing the proposals.

In the few moments that I have this morning, I want to look at where we are. A two-month consultation process earlier this year yielded 15,000 responses. We had the climbdown on choice, which was welcome as far as it went. The Joint Committee on Human Rights then intervened, asking the Government to pause, partly because some of the proposals might be unlawful. That was rejected out of hand by the Lord Chancellor, who said that he had to get on and make the cuts.

The areas of particular concern that the Joint Committee identified for review were the proposals on judicial review, residency and prisoner rights that, on the Government’s own estimation, make savings of no more than £6 million. The Government still cannot say—the Minister may want to correct me—what the savings will be from introducing the residency test. Some have pointed out the appalling consequences of such a test for the relatives abroad of those who have died in custody, the Gurkhas or other groups for whom justice should be done. The Government say that those proposals will save £6 million.

I hope the Minister has read the excellent paper by Dr Nick Armstrong at Matrix Chambers. It has been endorsed by the probation service, which says that, cumulatively, the proposals will cost about £30 million. The Lord Chancellor is simply wrong to say that it is on the grounds of cost that we must proceed in a hurry to make those fundamental constitutional changes.

We are told by the usual channels—a leak to the Law Society Gazette—that tomorrow there will be an oral statement and the publication of the Government’s response. I am not sure whether the Minister is in a position to confirm that today. He might as well, because we do not know whether the Lord Chancellor will even turn up to the statement tomorrow; someone might be rude to him on the way there or he might have to go and do a bit of canvassing in a marginal seat.

Let us hear what the Minister can tell us this morning. Will he answer my questions? First, given that choice is back in, what is the savings target now? Is it still £220 million or has it changed? What effect will the second consultation, which we are told will take place shortly, have on the timetable for implementation of the changes? What will the new tendering regime look like? Is the decline in the number of firms by 75%—1,600 to 400—still on the table?

Will anything be done on the issue of specialism? A lot has been said about that in relation to, say, black and minority ethnic firms and small rural firms, but these measures go across the board. One submission that has already been mentioned was from Thompsons Solicitors, which represents a lot of public sector workers such as paramedics, nurses and care workers, who are often accused of serious offences that have implications for not just their liberty but their continued career and employment. They need specialist representation, and it is very unlikely that they will obtain that under the proposals.

On average, what will be the costs of a bid? We are told in the consultation paper that they need to be digitally prepared and done in a certain way. The process will be extremely expensive for small firms, which may not be able to make the investment with any certainty that they will be successful at the end of the day. Will the Government’s proposals still discriminate against small, rural or specialist firms?

The Government have said nothing so far on the issue of the perverse incentives. It is nonsense to suggest that the same fee should be payable for an early plea, a cracked trial or a short trial of up to three days. Given his background, the Minister should know that and that it must be addressed at some stage. Retaining choice is a step forward, but it is not the magic bullet that will sort out all the problems.

The Government have been asked to pause. They are bringing forward a second consultation, but they have not addressed the main reason for the pause. They have not addressed the issue of legality that the Joint Committee has raised, and the timetable thus far has shown the confusion and inadequacy of the proposals.

The other matter I want to raise with the Minister is the cumulative effect that this avalanche of proposals is having on the criminal justice system as a whole. We saw in the research from the shadow Home Secretary this morning that the number of domestic violence cases being handed by the police to the Crown Prosecution Service has fallen by 13%—primarily due, it appears, to a lack of police numbers and time.

Reference has been made to the crisis in the CPS. Again, a leading defence firm that responded to the consultation estimated that in 85% of cases, disclosure is not supplied timeously by the CPS. The consequence is more applications in court and more wasted costs orders against the CPS.

The court amalgamations—we are told that there may be more closures coming forward—are also causing great problems of management for magistrates, court staff and the CPS. The continuing interpreters fiasco is not only a problem in itself but an indication of where we might be in relation to the proposals. Having a system in which the lowest common denominator drives down prices to the lowest possible level means that we just cannot get the people to do the work. There will be solicitors who either cannot or will not work for those rates, because the costs are just too low.

We have not seen the full impact of the cuts enshrined in the Legal Aid, Sentencing and Punishment of Offenders Act 2012, which were introduced in April. We have not seen the effect of other savings such as the defence costs orders, which were introduced at the end of last year. They effectively mean that if a person is paying privately for their defence and is acquitted, they may now recover only 25% of their actual costs.

There seems to be an issue of justice there; people should be put back into the position where they should have been had they not been falsely accused of offences. None the less, there will be a saving there. Will the Minister say what that will be? Equally, what additional costs will we increasingly see to litigants in person, and what are the additional costs that will come about because of some of the so-called cuts that Dr Armstrong has identified in his papers?

The Government are hardwiring inefficiency and injustice into the criminal justice system. There are inefficiencies in the system and they should be taken out. Several hon. Members have alluded to possible ways of making savings in a way that would improve the efficiency of the courts and the administration of justice. The Government’s proposals offer the worst of both worlds. They are increasing inefficiency, making things more uncertain and putting delay into the system. At the same time, they are unlikely to achieve many of the savings that the Government have outlined.

On the way to the Chamber, I was reading an article by Stephen Sedley, one of our most eminent judges, in the London Review of Books. He says:

“The decision in 2012 to put a political enforcer, Chris Grayling, in charge of the legal system carried a calculated message: the rule of law was from now on, like everything else, going to be negotiable.”

He adds that

“departmental housekeeping is being used not to rebalance but to unbalance a central element of the constitution.”

We have to make cuts in legal aid and elsewhere in the public finances. However, putting in jeopardy the justice system of which this country is so proud and on which so many people rely is not the way to do it.

10:48

[The Parliamentary Under-Secretary of State for Justice (Jeremy Wright)]

It is a great pleasure to serve under your chairmanship, Mr Davies. I begin by registering my interest. I, like the hon. Member for Kingston upon Hull East (Karl Turner), practised in the criminal courts for some time, and I, like him, was very much a thin cat. I recognise and agree with the comments that he has made about the quality of advocates who practise in our criminal courts. I also agree, of course, with my hon. and learned Friend the Member for Harborough (Sir Edward Garnier) on that.

I congratulate the hon. Member for Kingston upon Hull East on securing the debate and thank all Members who have spoken or intervened in it. The hon. Gentleman knows that this is a debate and a discussion that has been ongoing for a considerable time and that the Government have listened to a variety of different contributions. He knows that, for example, Ministry of Justice officials have travelled across England and Wales and met approximately 2,500 practitioners, members of the judiciary and members of the public.

We have heard and considered views expressed by the hon. Members who participated in a previous Westminster Hall debate on these proposals, secured by my hon. Friend the Member for Ceredigion (Mr Williams), and of course the views expressed in the Backbench Business Committee debate, which has also been referred to today and which I had the pleasure of responding to. There have also been meetings of the Justice Committee; a moment or so ago, we heard from my hon. Friend the Member for Winchester (Steve Brine) about those. In addition, there have been meetings of the all-party group on legal aid.

Furthermore, Ministers have met a variety of different stakeholders. We have received just under 16,000 responses to the consultation, which have all been considered in order to inform the development of the policy. We have also had a variety of letters from the public and from parliamentarians, a multiplicity of parliamentary questions and debates in the other place, which Lord McNally has responded to. Of course, there is also what has transpired in the media. So there has been a good deal of engagement and that process will continue. I certainly welcome the contributions that have been made to it today.

Let me be clear on one or two points in general. I think that the first point is recognised; I welcome the fact that the hon. Member for Hammersmith (Mr Slaughter) referred to it late on in his remarks. It is that we have to make savings in the legal aid budget. There is simply no getting away from that; in fact, I think that it is also well understood within the legal profession. So that point is not in dispute; it is a question of how we make those savings.

In that process, it is important that we listen to all the people I have mentioned, and to those in the legal profession. The hon. Member for Kingston upon Hull East asked us to sit down with those in the legal profession and listen to what they have to say to us. Well, we have done that and I think that he will see the fruits of that when we respond to the consultation, which we will do as soon as possible.

Let me try to deal with some of the other points that the hon. Gentleman made. As he will understand, I will not be able to respond to everything he said in the time that I have—indeed, I will not be able to respond to everything that other Members have said in the debate. However, I will do my best to pick out some of the things that he referred to.

The hon. Gentleman and others referred to inefficiencies in the legal system and in the courts process that need attention. They are all absolutely right about that. The hon. Member for Hackney South and Shoreditch (Meg Hillier), my hon. Friend the Member for Cambridge (Dr Huppert) and the hon. Member for Sunderland Central (Julie Elliott) all referred to such inefficiencies, as did the hon. Gentleman. Of course, it is an area that we must look at, but it will not exclude the need to find savings within the legal aid budget.

The right hon. Member for Tottenham (Mr Lammy) and others said that we should look at the very high-cost cases, and they are absolutely right. We are looking at the issue; our proposals include a 30% reduction in the fees paid for cases of that nature. Again, however, dealing with those cases on their own will not do the necessary job of delivering savings.

Many Members who have spoken in this debate have been concerned about quality, and of course they are right to be. No part of the proposals that we are making suggest that quality is not important in the provision of legal aid services, and any system that we institute will require those providing those services to maintain standards of quality. In addition, those standards must be properly monitored.

It is important when we talk about eligibility for legal aid that we are clear about what these proposals actually are. It is not sensible to refight all the battles over the Legal Aid, Sentencing and Punishment of Offenders Act 2012; we certainly do not have the time to do so and you, Mr Davies, would not let me. However, in relation to the particular proposals about criminal legal aid, the argument over eligibility is limited to whether it is right to set an eligibility threshold at a disposable income of £37,500 a year. The only people who will not have access to legal aid for criminal cases will be those who have a disposable income of that level or above. That is a generous level, and I think that the majority of our constituents would consider it right that people with substantial wealth should pay up front for their legal fees, which of course will be refunded to them if they are, in the end, acquitted.

[Debbie Abrahams]

Does that not counter a tradition in British law that someone is innocent until they are proven guilty? The fact that the Minister is suggesting that somebody who is yet to be found guilty will not have access to the law is an absolute affront to the criminal justice system in this country.

[Jeremy Wright]

I am afraid that I do not agree with the hon. Lady, because we are not talking about changing that presumption of innocence. What we are saying is that people with the means to pay—sometimes, very substantial means to pay—should not have access to taxpayer-funded subsidy for their legal fees if they are, in the end, found guilty. If they are found innocent in the end, the amount that they have paid for their legal fees will be considered for refund. That is important, but it is not about a presumption of innocence, which remains intact, as—of course—it should.

I will say something about prison law, because that is an issue that many people have raised. The hon. Member for Stretford and Urmston (Kate Green) asked some sensible and detailed questions about it. If she will forgive me, I must say that in the five minutes I have left to me I will not have the opportunity to respond to those questions, but I will write to her about the specific points that she has made.

However, my hon. and learned Friend the Member for Harborough is entirely right that the nature of the case that is being considered and that may be litigated is crucial. It is not the case that every instance of grievance raised by a prisoner should be litigated through the courts. Also, the changes that we are proposing say that it is important that when a prisoner’s liberty or the length of their sentence are considered, they should still have access to legal aid. However, there are a whole range of other complaints that can be more properly and more effectively dealt with through other methods, rather than involving the courts and costly lawyers.

I will also say something about the residence test, because the right hon. Member for Tottenham and others expressed concern about it. Again, I think that in principle it is right that those who have a strong connection with the United Kingdom should have access to taxpayer-funded legal aid, and that those who do not have a strong connection to the United Kingdom should not have access to it. There are exceptions to that principle, which we have made clear. For example, these changes will not apply to refugees or asylum seekers. In general, however, applying that principle is the right thing to do, and I think that it will have the support of the public.

Judicial review has also been referred to. We absolutely support the principle of judicial review. Those who have spoken up in favour of it were right to do so; it is a crucial tenet of our system that the public should be able to hold Government to account through the judicial review system. However, it is equally important that that system should not be abused, and we simply have to face up to the fact that there has been a huge increase in the number of cases pursued through the judicial review process that are not found to have merit.

It is important that the crucial pre-court phase does not cover the initial preparatory work on a judicial review case. In that phase, lawyers should think carefully about whether a case has merit, and they should have something at stake when they do so. That is the basis for the proposals that we are making.

[Dr Huppert]

Can the Minister just clarify the position about really strong cases, where the case does not proceed because it is won so quickly through a settlement?

[Jeremy Wright]

My hon. Friend makes an interesting point in relation to settlement. Again, if he will forgive me for now, I will write to him about it, because it is not something that I can go into in the two minutes I have left. Nevertheless, he is right to make the point, and we will certainly explore it—

[Karl Turner]

Will the Minister give way?

[Jeremy Wright]

I hope that the hon. Gentleman will forgive me, but I would rather not give way to him; I want to deal with the point about price-competitive tendering that he referred to. Obviously, it is a crucial question. Should we deal with legal aid reform in that way? I am sure he is aware that as recently as last year, the hon. Member for Hammersmith was still saying that there was no reason not to do price-competitive tendering in legal aid, and that he said that he had seen nothing in the past two years to say why we should not press ahead with it. The hon. Gentleman may want to speak to the hon. Member for Hammersmith about whether price-competitive tendering is a deeply flawed concept that could never work.

However, the hon. Member for Kingston upon Hull East will also know that we are considering a range of submissions—we will also consider his submission—and that the Government will respond to the consultation that we have held. In addition, he knows that there will be a further period of consultation on some of the proposals. I hope that he will be a little more patient and see what those responses entail, because we will want to consider carefully a number of things and to decide what our response to them should be. He will forgive me if I cannot give him a sneak preview today, but he will not have to be patient for very much longer to see how we intend to respond.

There are crucial points to be considered—they have been raised again in this debate today—about the nature of rural areas and the advice to be provided to people there. As I say, hon. Friends and hon. Members have made those points, and they have been listened to and understood. Similarly, the point was made about Welsh language requirements. Any contracts that are issued will include a requirement that Welsh language services be provided. That is the law and that is as it should be.

Again, I stress that this process is an opportunity for people to contribute their views about what we have set out. With our legal aid reforms, the intention is to do two things: first, to address the real financial challenge that we face; and secondly, to reinforce public confidence in what is a very important system of providing taxpayer-funded subsidy to those who need it in our courts. Our proposals have those twin objectives. We will listen to the submissions that have been made to us, but in the end those objectives are what we seek to achieve.

International Development (Scotland’s Role)

Wednesday 4th September 2013 Westminster Hall

11:00

[Anas Sarwar (Glasgow Central) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Davies. I am delighted to have been able to secure this important and topical debate, given the continuing humanitarian crisis in places such as Syria, Palestine, Burma and elsewhere, and what that means in the context of the upcoming referendum in Scotland. I am also delighted to have so many hon. Members from Scotland here, and I hope that they will take the opportunity to intervene during the debate.

It is vital that, during these difficult economic times, we recognise the fantastic work that the UK has done and continues to do in promoting and supporting international development. We are all rightly proud of that work. Let us not forget that the Department for International Development does exactly what its title suggests. Yes, one of its roles is to respond quickly to crises—to feed, to clothe and to provide emergency health supplies—but, crucially, it is designed to help and support developing countries to lift themselves out of poverty, grow their economies and create prosperity and opportunity for their own citizens. That is why DFID is a force for good in the world.

I have more than my fair share of criticism of the Government, be it on the economy or on welfare, but we must all recognise and pay tribute to the efforts of successive Secretaries of State to protect DFID’s budget. It is the perfect example of how we can maximise our impact by pooling and sharing our resources. It demonstrates the positive and powerful voice for change of the people of the United Kingdom—be they from Scotland, England, Wales or Northern Ireland—and the powerful voice that they have through their seat at the top table.

Who can doubt the UK’s positive influence on international development? Not only do we play our part, but we lead the way shaping global priorities, fighting poverty and creating opportunity. That is one example, among many, of how our collective voice is stronger—stronger in the UN, stronger in the EU, stronger in the G8 and stronger in the G20. Let us not forget that it was a Scot who, in 2005 as Chancellor of the Exchequer, got the G7 group of leading economies to agree to cancel up to 100% of the debt that was owed to them by developing countries. As a result, the debts of 18 of the world’s poorest countries to the World Bank and the International Monetary Fund were wiped out as part of a $55 billion package.

[Mr Iain McKenzie (Inverclyde) (Lab)]

I congratulate my hon. Friend on securing this important debate, and it is indeed a pleasure to serve under your chairmanship, Mr Davies. Does my hon. Friend agree that Scotland, if it were separate from the UK, would lose out on the UK’s experience and influence in the world to deliver such projects?

[Anas Sarwar]

I am coming to that point in a second. Everywhere I have travelled to while serving on the Select Committee on International Development—whether it was Palestine, Rwanda or the Democratic Republic of the Congo—I have seen Scots who work for DFID leading teams and leading the difference that the UK makes to some of the hardest-hit places around the world.

The same Scot who was Chancellor of the Exchequer in 2005 later, as Prime Minister, put tax transparency on the agenda for the G20 in 2009. Many hon. Members will have received correspondence from constituents asking them to support the Enough Food for Everyone IF campaign, which calls on leaders of the G8 countries to take concerted action against global hunger. I highlight that campaign because it recognises the instincts of internationalism shared by people from all parts of the UK, who want to make a difference based not on nationality but on need.

As part of the UK, we play a leading role on the board of the International Monetary Fund and the World Bank. The UK has far greater combined influence when we speak with one voice than we could ever hope to achieve by speaking in isolation. It is not merely our position of influence that is a force for good. The combined budget of DFID this year is £10.7 billion—more if other departmental spend is included—which is used to deliver real change, lift people out of poverty and intervene to save lives.

Scotland is not simply part of the delivery but at the heart of it. DFID’s historic Scottish headquarters in East Kilbride, in the constituency of my hon. Friend the Member for East Kilbride, Strathaven and Lesmahagow (Mr McCann), has had a 30-year presence and employs more than 500 people to fight global poverty. The East Kilbride headquarters has developed from a transactional and corporate support function into a core part of the Department with responsibility for bilateral and multilateral projects. I take this opportunity to pay tribute to the staff in East Kilbride, many of whom I have had the pleasure of meeting when I have visited, for the tremendous work they do.

As we have found in debates about defence, or about civil service jobs in Her Majesty’s Revenue and Customs, there would be no simple transfer of Scottish-based jobs or services to a Scottish Government if the country voted for independence. Such jobs serve the whole DFID operation, which would have to be disentangled. It is inconceivable that a continuing UK DFID would locate a third of its jobs in what would become another country. The inescapable fact is that those jobs are at risk. For the Scottish National party to suggest anything else would be merely an assertion not backed up by reality.

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

The hon. Gentleman wants to spread scare stories yet again about what would happen in an independent Scotland. He may have noticed that the Scottish Government have operated a policy of no compulsory redundancies in the parts of the public sector for which they are responsible. That policy has sadly not been replicated in the rest of the UK. Would the Labour party support a policy of no compulsory redundancies for Scottish public sector workers?

[Anas Sarwar]

In case you do not follow day-to-day Scottish politics, Mr Davies, you just heard the same old line that we get continually from the SNP about scaremongering. For members of the SNP, the definition of scaremongering is asking a question to which they do not have the answer. They do not know what will happen to the DFID jobs that I have mentioned, which is why the hon. Lady did not want to raise that point. Are we likely to have large bases of civil service jobs in France, Spain or Portugal, for example? Is the First Minister likely to locate a third of the jobs in the new Scottish tax service, which he launched yesterday, in Norway? No, he is not. He will base them in his own country, and the same principle applies to jobs in DFID.

[Dr Whiteford]

Will the hon. Gentleman give way?

[Anas Sarwar]

I will happily give way if the hon. Lady will make a point that is more relevant to the debate.

[Dr Whiteford]

The contradiction in the hon. Gentleman’s argument is that he has highlighted the positive role played by Scots all over the world, especially in international development, but suggested that in Scotland we would suddenly forget all that if we opted to join the international community as an independent country. Of course we would not. We would hope to work with DFID and with other countries to ensure that good development work continued.

[Anas Sarwar]

I agree with that point, and I will address it in a moment. The hon. Lady fails to understand that I am talking about 500 staff in Scotland who control a budget of £10.7 billion, which services the entire UK DFID programme, not Scotland’s share of it. It is not possible to escape from that dichotomy as the hon. Lady is, sadly, trying to do.

One reason why I am so proud of my Scottish heritage is the overwhelming sense of compassion that Scots have for those who are less fortunate than ourselves and the incredible passion we have for making the world a better place for everyone. According to a recent study by New Philanthropy Capital, people in Scotland give more to charity than those in any other part of the UK. That is not simply a Scottish value; it is a Labour value. By contrast, the SNP likes to paint a picture of independence in which, free from the shackles of the UK, Scotland can pursue its natural preference for progressive politics. Scotland does not need to look to an independent future to achieve a progressive contribution to international development. We can be proud of our progressive record to date as part of the UK.

[Dr Whiteford]

Before we all get too self-congratulatory, does the hon. Gentleman share my disappointment that the previous Labour Government failed to meet their 0.7% target? They have been shamed by the Tories, who met that target. All the missing aid over those years would have gone a long way to help people in developing countries by improving health, education and water and things that really make a difference.

[Anas Sarwar]

I seem to have pre-empted the hon. Lady’s intervention, because I was just about to say that Labour MPs from Scotland helped to secure majority Labour Governments in the UK that were committed to pushing international development high up the political agenda. Labour appointed the first Minister for overseas development. Labour established DFID with a Secretary of State in the Cabinet. Labour doubled and then trebled international aid. Labour secured debt relief. Labour set in place the 0.7% target that has been hit in 2013. We should be proud of that record, instead of trying to talk it down.

Scots can be immensely proud of their contribution to that record; millions more children are in school, mothers are giving birth safely and AIDS sufferers have access to life-saving medicines because of the decisions made by successive Labour Governments that Scots helped to elect. In Budget after Budget, and at international summit after international summit, a Labour Government fought on the side of the poor and the marginalised, transforming their lives for better and establishing Britain as a leading force for social justice in the world.

The UK has joined the select group of only five countries on the OECD’s development assistance committee that have reached the target of providing 0.7% of their national income in aid. It is worth noting that many countries the SNP holds out as examples of the benefits that accrue from independence are well below that target.

I care about reducing poverty and inequality not only in Scotland, but in other parts of the UK and across the world. Poverty has no respect for borders; I have yet to see an inequality that stops at a line on a map. That is why I recognise, as do others on the Labour Benches and, I am sure, right across the House, that pooling and sharing our resources across the UK is the best way of making a difference in the UK and across the world.

For me and the majority of Scots, our beliefs and compassion extend not just to people living within the borders of Scotland, but to people right across the globe. Members will be aware that a Scottish engineer, William Burton, developed one of the first drinking water systems in Japan. We all know the story of David Livingstone and about the close links that remain with Malawi. Those are just two examples, but fine ones, of how Scots have a long and proud history of making a difference in the world.

Scottish organisations are still making a difference today. DFID works with a number of leading Scottish charities to deliver its aid and humanitarian support programmes. It recently announced that Mercy Corps, which is headquartered in Scotland, and which is one of the top organisations specialising in disaster response, has been selected for a new UK rapid-response network. Another Scottish charity, the Global Alliance for Livestock Veterinary Medicines, recently received funding of more than £31.2 million from DFID and the Bill & Melinda Gates Foundation. Those are just two examples of the many Scottish organisations that work in partnership with DFID and deliver change around the world.

As a former member of the International Development Committee, I have witnessed at first hand some of the fantastic work DFID has done, and is doing, in places such as the Democratic Republic of the Congo, Burundi and Rwanda. In 1998, DFID gave Rwanda £20 million to help improve the Rwandan revenue authority; on average, Rwanda now collects that amount once every four weeks. Currently, DFID is providing £348 million in response to the humanitarian crisis in Syria—a fact we should all welcome.

The hon. Member for Banff and Buchan (Dr Whiteford) mentioned the Scottish Government’s commitment, and it is commendable that they have committed £9 million of their budget to international assistance. However, as part of the UK, Scotland, based on its population share—if that is the calculation we choose to use—contributes about £900 million. We have influence over, and control of, a budget of more than £10 billion, alongside a seat at the top table at the IMF and World Bank. There can be few more bizarre arguments in favour of independence than the one that says, “Let’s turn our backs on this. Let’s walk away from a budget of billions and a Department that is a force for good across the globe, with the second largest aid budget in the world.”

I have no doubt an independent Scotland would want to ensure that it maintained Scotland’s proud record of providing international development support; of course it would—the people of Scotland would insist on it. However, it is not clear how that would happen, because on this issue, as on other issues, the SNP does not have a plan. All DFID’s good work is at risk. The contribution Scots make to meeting our global obligations would be cast aside at the altar of independence.

In a recent article for The Herald newspaper, the hon. Member for Moray (Angus Robertson) said:

“Independence offers us the opportunity to make Scotland’s place in the world one that meets the aspirations of our people.”

Well, I believe the aspirations of Scots go well beyond the nationalists’ blinkered, narrow approach. Are we really saying that we could have the same impact and the same budget and that we would require the same number of jobs with a fraction of the budget? Are we really saying that we would have the same influence across the world if we were standing in isolation, instead of sitting at the top table when discussions are had and decisions are made? Only the nationalists could believe so.

What would happen to the DFID jobs in East Kilbride in a separate Scotland? What would happen to Scottish charities such as Mercy Corps or GALVmed, which work with DFID to deliver its aid and humanitarian support programmes? Would staff working in East Kilbride have to relocate, or would they be made redundant? How much would it cost the Scottish Government to set up their own dedicated Department for International Development, or how much would Scottish charities in receipt of DFID funding lose? Crucially, how much would an independent Scotland spend on overseas development? Surely, after having thought about independence for so many years—for all its existence—the SNP would have answers to such basic questions. The sad reality is that, before, the answer to every problem was independence; now that the issue is independence, however, the nationalists simply have no answers.

Given that the Scottish Government’s international development fund is so small, by what amount, if any, would it be increased? What would be the implications for people in extreme poverty and for developing countries? Which DFID programmes would continue to receive funding in a separate Scotland? Which would have their funding reduced or cut altogether? Those questions cannot just be ignored—they must be answered.

Those are just some of the questions the International Development Committee hopes to find answers to in its inquiry about the implications for development following possible Scottish independence. I welcome that inquiry, and I urge all colleagues across the House—from all political parties and all parts of the UK—to engage with the debate.

Those are important questions for the Scots working for DFID in East Kilbride. They are important questions for the Scottish charities working with DFID or in receipt of DFID funding. Most of all, however, they are important questions for those of us who abhor poverty and the wasting of life chances, wherever they occur, and who recognise that our responsibility is not just to those in need in our own towns and villages, but to everyone in our global village.

11:16

[The Minister of State, Department for International Development (Mr Alan Duncan)]

I am grateful to the hon. Member for Glasgow Central (Anas Sarwar) for securing this debate. I very much appreciate his kind and appreciative comments about DFID and, more importantly, the staff who work so hard.

As we talk today, the International Development Committee is, as the hon. Gentleman said, holding an inquiry into the implications for development in the event of Scotland becoming an independent country. The Committee has yet to present its analysis and report, so, out of respect for the processes of the House, I will not anticipate the outcome of the inquiry.

I welcome the chance, however, to set out the Government’s plans for the UK’s international development programme and to consider the role Scotland plays in it. Let me be clear at the outset: the UK Government want Scotland to remain an integral part of the UK, because that is what is best for all of us. Scotland benefits from being part of the UK, and the UK benefits from having Scotland in the UK. The UK Government are hopeful that, when people in Scotland come to make their choice, they will choose to remain part of the UK.

On the evidence and analysis available so far, I am very clear that the UK, with Scotland in it, can continue to have a significant international development impact, providing excellent value for money to taxpayers at home and making a significant difference to the poorest and most vulnerable people across the world. Scottish taxpayers, like all UK taxpayers, can be proud of the contribution they make to the UK’s official development assistance—otherwise known as ODA—and I see no case for changing that.

The UK is one of the world’s leaders in the fight against poverty. On provisional data, the UK provided £8.6 billion of ODA in 2012. That places us second only to the USA, just ahead of Germany and then France. This year we will do even better, as the first G8 country to achieve the global 0.7% target. That is a tremendous achievement, which brings with it great responsibility for DFID.

The size and reach of DFID’s programme enable UK aid to have a huge impact. We are proud of the results we have delivered towards the millennium development goals. To give just a few examples, since 2010, UK aid has supported 5.9 million children—half of them girls—to go to primary school; given 19.6 million people access to clean water and sanitation; prevented 12.9 million children and pregnant women from going hungry; and enabled more than 30 million men and women to work their way out of poverty through access to financial services. I am sure we can agree that those figures are very impressive indeed.

DFID delivers major results through its significant funding of multilateral organisations, which helps draw in other donors who add their contributions to those effective multilateral organisations. In 2012, for example, the multilaterals supported by DFID gave food assistance to more than 97 million people and immunised 46 million children against preventable diseases. The UK, together, has a significant impact on the lives of the poor as a responsible 0.7% donor. We can always do better, but the Government believe that we are stronger and more influential when we work together.

I will now analyse why size and reputation help the UK make a bigger impact. First, DFID’s size and global reputation create opportunities to shape international efforts in ways that are consistent with UK values. The Prime Minister’s pivotal role in shaping the framework that follows the MDGs and the co-chairing of the Global Partnership for Effective Development Co-operation by the Secretary of State for International Development are examples that ultimately aim to give global development more impact per £1 spent. That is about being clear on what we are trying to achieve, measuring and reporting on it and working with the right partners. The UK as a whole, together, is leading the way on that.

Alongside that, we have real influence within the multilateral system. The World Bank’s International Development Association, a major provider of interest-free loans to the world’s poorest countries, is an effective example. UK aid typically accounts for between 10% and 14% of donor contributions, giving us a powerful voice in fund governance structures. IDA was assessed in the groundbreaking DFID multilateral aid review as very good value for money. It is poverty focused, provides quality technical expertise and has a huge global reach. Because of DFID’s size and reputation—something that would be reduced if we were fragmented—the World Bank works closely with us to keep improving the impact on matters that reflect UK values, such as addressing the needs of girls and women and delivering better in fragile states.

[Dr Whiteford]

Will the Minister give way?

[Mr Duncan]

I will give way to the hon. Lady, but am I to understand from her earlier intervention that the SNP would guarantee the jobs of everyone in Abercrombie house if the Scottish people were to vote for independence?

[Dr Whiteford]

I will come back to the Minister’s question in a moment.

Is the Minister really saying that an independent English DFID would lose its status in the world? That seems a preposterous assertion from a Conservative Minister.

The SNP has pledged that there will be no compulsory redundancies in public sector jobs for which it is currently responsible. Obviously, if Scotland were to take on new responsibilities, it would need to resource those functions. Scottish people of all parties are committed to meeting their obligation to provide 0.7% of gross national income in ODA, but if we were to have an international development budget of some £900 million, we would surely need a civil service to administer that.

[Mr Duncan]

I detect in the hon. Lady’s answer an unequivocal no disguised as equivocation. If she is saying that I am wrong to say that she would not guarantee the jobs of everyone at Abercrombie house, I will give her the chance to rebut it immediately.

[Dr Whiteford]

I would rather that the Minister addressed my question. Does he really think that England, on its own, needs Scotland to prop up its international development work?

[Mr Duncan]

I believe that the United Kingdom would be weaker without Scotland, which is a clear answer to the hon. Lady’s question; I regret that she has been unable to give a clear answer to mine.

[Anas Sarwar]

The Minister has hit the nail on the head. Five hundred people in East Kilbride service £10.7 billion of aid across the world. Would 500 people be needed to service £900 million of aid?

[Mr Duncan]

I will leave it to the Select Committee to analyse that in greater detail, but I point out, more generally, that the hon. Member for Banff and Buchan (Dr Whiteford) has been unable to give a clear answer, despite the illusion and impression that she is trying to convey. I ask her once again: does she, or does she not, guarantee the jobs of those in Abercrombie house should there be independence for Scotland?

[Dr Whiteford]

The Scottish Government have made it very clear that they will need civil servants to do such jobs post-independence. Look at our record to date: we have secured people’s jobs through the toughest recession and the UK Government’s shameless austerity measures. Why would that change?

[Mr Duncan]

That answer shows that the hon. Lady’s so-called public sector jobs guarantee amounts to nothing and is a political deceit.

The UK’s global reach matters. We have a strong, professional DFID presence in 28 focus countries, and we have widely respected multi-million pound programmes, many of which are worth between £50 million and £250 million a year. Partner Governments seek advice from DFID, which translates into better development.

None of that would be possible without our staff. DFID’s size and ambition allows us to attract and retain the best talent. Front-line staff have technical and specialist skills, such as in economics, health, governance, social development and accountancy. Our staff are able to build fulfilling careers in an organisation with a wide scope.

So what should Scotland’s role be in the UK’s international development effort? Scotland already makes a significant contribution to UK international development, and the contribution Scottish taxpayers make to the UK’s total international development budget is important. DFID has a sizeable headquarters in Abercrombie house in East Kilbride. More than 600 staff in Scotland form an intrinsic part of the team that delivers the UK’s entire international development impact. Responsibilities at Abercrombie house range from professional oversight of DFID’s finance, procurement, human resources and IT functions to the development of policy and research agendas. Staff working equally from East Kilbride and London contribute to the coalition Government’s international development priorities, such as the Prime Minister’s push to end global hunger and malnutrition. The Department delivers excellent value for money for all UK taxpayers and provides significant high quality job opportunities in Scotland.

The Scottish Government have their own small £9 million programme, which is funded from the devolved budget and contributes to the UK’s official development assistance. Working relations between DFID and the Scottish Government are strong and there is regular contact and co-operation.

The real question is whether it would make development sense for an independent Scotland to start afresh and to develop the capacity to manage its own programme, aiming for 0.7%, or even more, of its own gross national income. It is not for us to speculate on how an independent Scottish development agency would or could operate; it is for those advocating independence to make the case that independence would have a greater overall impact on international development.

[Mr McKenzie]

Will the Minister give way?

[Mr Duncan]

I am just finishing.

We believe that the UK can have the greatest impact in the world if everyone works together as part of a UK that includes a vibrant Scotland. I am very pleased, and I warmly welcome the fact, that the hon. Member for Glasgow Central has so eloquently put that view.

11:28

Sitting suspended.

Manufacturing and SMEs

Wednesday 4th September 2013 Westminster Hall

[Dr William McCrea in the Chair]

14:29

[John Stevenson (Carlisle) (Con)]

It is a pleasure to serve under your chairmanship, Dr McCrea. I hope this will be a worthwhile and interesting debate.

Today we could discuss Government support for small and medium-sized enterprises across all sectors: services, construction and, of course, manufacturing. Indeed, all sectors and industries will have many similar issues and problems—lending, taxation and employment law, to name but a few. There are certain issues, however, on which there are significant differences between the sectors. Indeed, even within sectors there may be different needs, requirements and problems that warrant different solutions. The reality is that it would be easy to have a debate on each sector, and probably many debates within each sector.

Today, however, I will concentrate on the manufacturing sector, the matters that apply to that sector and what the Government can do to support manufacturing, to enable the sector to grow and to ensure that it makes a larger contribution both to local economies across the country and to the national economy. I will address the help that the Government can give to all manufacturing businesses, including larger businesses that seek to develop new products or deal with EU regulation.

[Sir Tony Cunningham (Workington) (Lab)]

I obviously welcome Government support, which is very important, but companies can often help each other. Will the hon. Gentleman say a little about the supply chain, which is so vital to many small and medium-sized enterprises, particularly in Cumbria?

[John Stevenson]

I completely agree. Companies can help each other, particularly within the supply chain, but today’s debate is primarily about the Government’s role in helping to support businesses, both large and small.

The Government can help smaller enterprises that are seeking to expand and start-ups that need very basic advice on how to get going, and they must recognise that businesses of all sizes have their own individual roles to play. The Government have stated that they want to rebalance the economy—a laudable aim that is clearly supported across the House. Arguably, the Government want to go further and see growth in the country within an economy that is far more structurally balanced between the various sectors and which has a larger manufacturing sector, in particular.

Not only the economy but the country needs to be rebalanced. The country needs to move away from an over-reliance on a dominant financial services sector that is so overwhelmingly run from and centred on London. London has been, and is, a huge success, but there is a danger that it adversely affects the rest of the country. London dominates politics, the media, finance and business. It is almost overpowering, which can cause policy makers to forget or overlook the many other important contributors to our future prosperity.

[Mr Andrew Smith (Oxford East) (Lab)]

I congratulate the hon. Gentleman on securing this enormously important debate, which is of concern to us all. Does he agree that, as part of the culture shift that he rightly says is necessary, more needs to be done in schools and colleges and through the curriculum to encourage able young people—sometimes those of a more practical, rather than academic, bent—to have high self-esteem, to set their targets high and to realise that there are good jobs out there for people who make things?

[John Stevenson]

I do not disagree. The improvement in the view of apprenticeships is helping enormously, because people now view apprenticeships as a serious career choice, rather than people always going off to university.

We need to move to a more balanced economy so that we become a balanced country in which manufacturing has a central role. In my own county of Cumbria and constituency of Carlisle, we still have a very strong manufacturing base. There is defence, power, engineering and food, and in Carlisle itself 20% of the local economy is still based on manufacturing.

In my constituency, we have large players such as Pirelli, Nestlé and McVitie’s, and there are also smaller players that are significant locally such as Carr’s Milling Industries, Clark Door and Mallinson Fabrications. For both local and national reasons, I am delighted that the role of manufacturing is back on the Government’s agenda. A huge amount of credit must be given to the Government and to Parliament for achieving that change.

We all acknowledge that there has been a steep decline in manufacturing over many years, which has created a number of problems. Obviously, there is the balance of payments issue, because we are simply not paying our way in the world. The decline has also created a skills problem. Many skills have gone overseas, with some potentially lost for ever. We have an ageing work force in some sectors, with the food and drink sector being an obvious example of where many thousands of people need to be recruited over the next few years just to stand still.

The decline in manufacturing has created a problem for the long-term success of our economy. Thankfully, there is growing recognition that we, as a nation, need to produce goods, as well as to provide services. Growth in our economy can only be helped by the expansion of industrial production—the rise of the makers once more. Such a revival would immediately help to correct our trade imbalance, and more tax would be paid, so the Government could start to balance their books.

[Jeremy Lefroy (Stafford) (Con)]

Does my hon. Friend recognise that, with an increase in manufacturing, we would also see a positive knock-on effect for services? Manufacturing and services cannot be split from each other; one gives rise to benefits for the other.

[John Stevenson]

Yes, I agree. Ultimately, we want to see all sectors of the economy grow, and they are all interlinked. Clearly, if manufacturing improves, the services side will also benefit. The reverse does not always work in quite the same way; there is a greater benefit for services when manufacturing succeeds.

As for my personal involvement, I have to confess that in my previous life I had little knowledge of or involvement with manufacturing. My constituency has a significant number of employers in the manufacturing sector that make a major contribution to the local, national and international economies. I recognise the importance of those employers, and I want to support them wherever possible. That is why I became heavily involved with the all-party group on food and drink manufacturing, which is well supported across the House and which I now chair, and with the associated all-party group on manufacturing—I am delighted to see leading members of that group here this afternoon. There is much overlap between those all-party groups and others, and it is useful to have such differentiation because it demonstrates that although there are many similarities between manufacturers, there are also many important differences.

[Mr David Blunkett (Sheffield, Brightside and Hillsborough) (Lab)]

I also congratulate the hon. Gentleman on securing this debate. He will already have realised that there is much cross-party agreement on the importance of manufacturing. I have seen that importance in the past fortnight, when I visited Burgon & Ball in my constituency. The company has been in business for 280 years, and with the help of the Royal Bank of Scotland and the growth fund I hope it will be here for another 280 years.

Will the hon. Gentleman confirm that part of the difficulty for rebalancing and manufacturing is the continuing culture of our banking system? To be fair, the Department for Business, Innovation and Skills endeavours to do something about the banking system, which focuses on short-term returns from manufacturing and business, rather than on long-term investment. We have turned the original intention of the banking system on its head. That intention, which is still reflected in the German model, is that banks are there to serve manufacturing and service industry development, rather than the other way around.

[John Stevenson]

The right hon. Gentleman makes a valid point. I assumed that many people would raise the question of lending, so I have specifically avoided it, but it is good that he has raised the issue.

My simple conclusion is that, if our economy is to rebalance and grow, and if our nation is to prosper, manufacturing must be central to that change.

[David Rutley (Macclesfield) (Con)]

I thank my hon. Friend for securing this debate. Manufacturing is critical to the economy, and he is making a powerful case.

Interestingly, the statistics show that not only is manufacturing vital to our economy but average weekly earnings in manufacturing are £557, which is second behind only finance and business services. Does my hon. Friend agree that that is good not only for the economy but for those who are fortunate enough to work in that important sector?

[John Stevenson]

My hon. Friend makes a valid point. People sometimes forget that in manufacturing there are many highly paid jobs—it is not a low-wage sector, as many think.

There are already signs that our economy is beginning to recover and that manufacturing is playing its part. In the food and drinks industry, exports are up to more than £12 billion; the manufacture of cars is now at its highest level since the 1970s; we are still a world player in pharmaceuticals; we are a leading nation in aviation; and this Monday there was the announcement of a significant rise in manufacturing activity—all welcome signs. It is easy, however, for parliamentarians and Ministers to get caught up in the larger, more glamorous companies with the sexier products such as cars and planes, rather than with the more mundane products, such as storage doors or food, even though those are equally important and often produced by SMEs.

In reality, SMEs are central to the future success of manufacturing, whether as part of a supply chain or as a stand-alone entity with a local or national market share, whether innovating and expanding alone or as part of the next national or international conglomerate. The purpose of today’s debate is to examine what Government can do to support, encourage and enhance the SME manufacturing sector. Government support, assistance and encouragement are critical to the success of our manufacturing sector. The debate is about a few specific issues whereby a role for Government can help businesses of varying sizes to prosper.

Other Members will have their own ideas, as will Government, lending being the obvious one—it has already been referred to, but I am avoiding lending today, because I am sure that others will touch on it. It is important that we all share ideas, to ensure maximum benefit for the manufacturing sector and the industry. It is a given that Government should create an environment in which all businesses can succeed: a tax regime that is friendly, rewarding and supportive; regulation that is sensible and proportionate and ensures a level playing field for businesses to work and compete on; and the confidence that it is important for Government to give to business, so that they are supportive and consistent, without any big surprises for industry.

I want to touch on four specific key areas; first is the definition of an SME. According to European Union law, the main factors determining company size are the number of employees, the turnover and the size of the balance sheet. Those factors can then be divided: micro-businesses have fewer than 10 employees, turnover of less than €2 million or a balance sheet of €2 million; small businesses have fewer than 50 employees, turnover of €10 million or a €10 million balance sheet; and medium-sized businesses have fewer than 250 employees, turnover of €50 million or a €50 million balance sheet.

There are, however, varying definitions in the UK, with one under the Companies Act 1985 and a different one under the business bank scheme. For the purposes of research and development schemes, Her Majesty’s Revenue and Customs defines SMEs in a different way again. In fact, depending on which definition is used, an SME can have anywhere between 10 and 500 employees or a turnover of between £1.7 million and £86 million.

The real issue is that the actual definition of an SME is not helpful. It would be far better to break the definition down into different sizes and types of businesses with their own reference. A clearer idea of exactly what type of businesses we are discussing is necessary, rather than lumping them all together.

More definitions would be beneficial and help to target support to the right businesses in the right circumstances. For the manufacturing sector, that would demonstrate and recognise the importance of companies and raise their profile, and identify a sector as important in its own right. Any definition needs to acknowledge that larger manufacturing companies often have little in common with smaller ones and they should therefore not necessarily be linked together.

Size and numbers matter: they have an impact on how businesses structure themselves, how they function and what type and level of support they seek. I certainly find it hard to equate a manufacturing company with a turnover of several million pounds and, for example, 200 employees, with a two-man engineering business with a turnover that does not even exceed the VAT threshold. A better group of definitions, certainly in the manufacturing sector, would help to simplify a business’s ability to access the correct support, help and guidance that it may be seeking. That might also help Government to steer a business of a particular size or industry towards the appropriate support.

My second issue is simply what support there is, and whether it reflects the actual needs of manufacturing. What can Government actually do? What is the real support and help that Government can give to the manufacturing sector? Clearly, small businesses have their own particular issues; large businesses that want to expand are likely to have different requirements and problems; and there are individuals who want to start their own small manufacturing businesses.

A significant number of issues therefore need to be addressed for businesses of different sizes and complexity within the manufacturing sector: strategic advice and business plans will vary depending on the size of the business; procurement, too, is different for small and large businesses; there is involvement with UKTI—UK Trade & Investment—for exporters; skills and qualifications depend on the needs of the different sizes of businesses; there is the issue of funding, grants, loans and, as mentioned, banking facilities; there is involvement with trade federations, because larger organisations invariably hold greater sway and influence, or relations with the chamber of commerce; there is legal, accountancy and intellectual property rights advice; there is dealing with relevant regulation, because cars, for example, are very different from the food industry; and, equally important but sometimes forgotten, there is succession planning.

I appreciate that the Government are helping where they can—the manufacturing advisory service is an example—but there needs to be accessibility and relevance to the manufacturer. A common complaint is that the Government do not understand the user, and that their support is inaccessible or inappropriate. I appreciate that the amount of such support will vary considerably.

Larger manufacturers will contact Ministers or officials and have an ongoing dialogue. They are more likely to work through the trade organisations, and many will have the resource to research matters or to take paid advice. To be honest, a small manufacturing business in Carlisle with five employees is unlikely to contact central Government, while a 200-employee company with a £30 million turnover may well do so. Often, however, the smaller businesses have the greater needs, but they find it more difficult to access such help from Government.

I acknowledge that the Department for Business, Innovation and Skills is having some success. The best example is the R and D credit uptake, which has been welcome and demonstrates a successful policy and implementation. My concern, however, is that much of the effort is not as effective as it could be for many businesses. AXA Business Insurance carried out a study in the UK suggesting that many are unaware of the initiatives designed to help them. Darrell Sansom, the managing director of AXA Business Insurance, said:

“The numbers of small businesses in the UK continue to climb rapidly, but it seems that many could be missing opportunities to help their business along the way through a lack of awareness of the support that may be available to them.”

That leads me on to my next two points. Talking about government can be slightly misleading. What do we actually mean? Which aspect of government is the most appropriate? Today, I am clearly ignoring the EU, but we still have central Government as well as local government. There are clear issues with central Government: where to go, who to talk to and what Government should be doing. What advice and level of support should they be giving? That applies equally to local government, which really does matter. In many respects, the local council matters more for small manufacturers and businesses than central Government.

[Sir Tony Cunningham]

Does the hon. Gentleman agree that local government—local councils in particular—should be proactive with SMEs, rather than reactive? Instead of small businesses coming to the council and saying, “We have a problem or an issue”, councils should be going out and looking for ways in which to support local businesses.

[John Stevenson]

I completely agree. The hon. Gentleman and I, as fellow Cumbrians, agree that our local council does not do enough to support businesses locally or to take a proactive stance in Cumbria.

Is local government up to the job? What support or direction is it getting from central Government to ensure that it gives support to businesses, especially manufacturing ones? Councils can have a direct link to businesses through their everyday activities—planning, highways, environmental issues, health and safety, and, often, property ownership and rentals. What about other advice and help that local government could give, such as with business plans, legal and accountancy advice, finance, business structure, regulations and changes within an industry, and consumer and employment law? I have already commented on many other matters as well.

My experience of local government is that it is not nearly active enough in support of business. I agree with the point made by the hon. Member for Workington (Sir Tony Cunningham).

[Caroline Dinenage (Gosport) (Con)]

Does my hon. Friend agree that there is also a role for universities to advise businesses on some of the issues that he raised? In many cases, local enterprise partnerships could be a good way of facilitating that relationship.

[John Stevenson]

I agree with my hon. Friend. It is sensible for businesses fortunate enough to have a local university to engage with it. It will be interesting to hear the Government’s view of local enterprise partnerships taking on the role of helping small businesses in particular in their localities.

My final point is about the interface between the Government, civil servants and the businesses and the individuals within them. I have spoken to many businesses and the common comment is that the Government can be detached from the business environment. That is particularly true of local government, which does not always have a real grasp of the needs of businesses or the complexity of what they are trying to do. That is where there is a huge gap between the thinking behind strategy plans and the reality of businesses engaging and benefiting from support.

On procurement, are smaller businesses, whether manufacturing or otherwise, getting a real opportunity to win Government contracts at both national and local levels? I am aware of the Government’s 25% target and understand that it has reached around 16%, but there is still some way to go. Inaccessibility or inappropriateness of many policy instruments may affect a business’s ability to engage with the Government. Departments and think-tanks often have good ideas, but what about reality? Schemes may suit different sectors and different-sized businesses, but one size does not fit all.

On complexity, the Government must bear in mind fraud and audit trails, but the complexity of application forms for funding often puts people off from even applying. Those who are more engaged with the Government are often the ones who are always applying for funding, assistance or support, but many businesses do not engage with the Government or are not even aware of what they can offer. Real feedback should include those who have not applied for funding and support, but companies that have not applied should also be contacted to find out why not and what are the obstacles and barriers to that.

I am setting out some of the issues facing SMEs rather than offering solutions. I appreciate that the Government are trying to support the manufacturing sector, but there is room for improvement and it is incumbent on MPs on both sides to give their views and to encourage the Government to be open-minded, willing to take on board suggestions and, when appropriate, to make changes.

Other hon. Members will have additional points and issues to make that are relevant to this debate and I look forward to hearing them. I have touched on four. How worth while is it to have a definition of an SME that covers nearly 99% of all businesses in the UK across all sectors? Clearly, greater refinement and relevance is needed across all sectors, and I shall be interested in hearing the Minister’s comments on that. What support have the Government given to the manufacturing sector, taking account of the varying size and complexity of businesses and the accessibility of that support?

Importantly, is there a strategy for dividing the roles of central Government and local government, and does one know what the other is doing? Is there a clear division between the two? Where should businesses go—to central Government or local government? For small businesses particularly, it may be a big thing to talk to their local councillor, let alone MPs and central Government. When they want to access legal or accountancy advice, should that be at local, regional or even national level? My hon. Friend the Member for Gosport (Caroline Dinenage) referred to the role of local enterprise partnerships and universities. Do the Government want LEPs to take a role in helping small businesses particularly?

My final point is about the interface between users and the Government, and the requirement for feedback and for the Government to realise what the reality is for users on the ground. It is vital that Government initiatives fulfil their goals. Advice, support and assistance for small businesses particularly could help to transform the manufacturing sector. SMEs, however they are defined, are the great growth area for employment. They are the backbone of local economies, and they can be the engine for growth in our economy.

I look forward to hearing other contributions and what the Minister has to say about his views and intentions in supporting the world of manufacturing SMEs.

14:54

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

It is a pleasure, Dr McCrea, to serve under your chairmanship. I congratulate the hon. Member for Carlisle (John Stevenson) on securing this debate and the cogent and well-reasoned way in which he spoke. There was very little to disagree with. I will keep my comments brief as quite a number of hon. Members want to speak. It is a reflection of the importance of the matter across parties that so many hon. Members want to contribute.

In the past couple of weeks, there has been euphoria about manufacturing. There has been a revival, but we must put that in context because the current level is below what it was in 2010, when it was described as a disaster. There are welcome signs of a significant upturn that might be sustained, but the situation is still not good.

In so far as it is possible to discern what has provoked the sudden surge in confidence and production, it is led partly by an increase in confidence in the housing market, which is rising largely because of the funding for lending scheme, and an improvement in exports. Both are welcome, particularly the increase in domestic construction in the housing industry. However, exports are particularly difficult at the moment with the problems in the eurozone, although there are welcome signs of revival. There is a danger in basing a rise in domestic consumption and confidence on a housing boom that may be temporary and is fragile. Many of the criticisms levelled at the previous Government were that consumption was based on that.

I will not reiterate our debates at that time, but although there is a welcome revival, the long-term sustainability of a manufacturing industry must be based on two things, or three if exports are included. First, a sustained and rising standard of living domestically will underpin demand for manufacturing products in this country. Secondly, an appropriate level of investment in the manufacturing industry in the private sector will ensure that we remain competitive, that value is added to improve exports and our domestic consumption, and that cheap foreign imports are resisted.

The hon. Member for Carlisle rightly outlined investment issues. The funding for lending scheme is generating confidence in the housing market, but the indications are that, like the enterprise finance guarantee scheme and other well-intentioned Government schemes designed to boost bank lending to small business, that is not yet happening. When I talk to banks about that, their reaction is that they want to lend and they have the money but companies will not come forward. When I talk to companies, they say that they do not have the confidence to invest because of the current economic situation.

The recent improvement in confidence may stimulate further demand from small manufacturing businesses, and may make the banks look differently at the risk parameters on which they base their loans and improve bank lending.

[Mr Blunkett]

I will not detain the Chamber long. Surely one of the difficulties with the enterprise finance guarantee scheme—which, in theory, is an extremely good idea—is that many major banks are asking of small businesses, and particularly of the owners, far more than they can give in personal guarantees, given that the banks can recover not only from the individual owner, but the 75% from the guarantee scheme, if they believe that the business is no longer viable. I think that the term is the “going west route”, whereby the banks end up owning the business. That is bound to put the fear of God into entrepreneurs, no matter how brave and confident they are.

[Mr Bailey]

My right hon. Friend raises a valuable point. I talked about the risk profile. A huge body of evidence demonstrates that banks are excessive in the security they demand in order to lend to businesses, and that is one of the main barriers to businesses wanting to apply for loans. If there is a criticism of the Government, it is that while the Government have provided cheaper money for banks to lend to businesses, I do not think that has addressed the obstacles that are far more significant in terms of getting the money out where it is needed, into investment in small businesses.

[Caroline Dinenage]

Will the hon. Gentleman give way?

[Mr Bailey]

Certainly. I have to give way to my colleague from the Select Committee on Business, Innovation and Skills.

[Caroline Dinenage]

I apologise for interrupting the hon. Gentleman’s brilliant speech. Does he agree that it is also up to the local community to look at ways in which they can help businesses grow and invest? In my area, the local newspaper, The News, made a regional growth fund bid, which they used as a “bridging the gap” fund for small start-up businesses and those that wanted to grow, as a way of helping them to get access to the finance that they needed. Will the hon. Gentleman join me in welcoming that sort of initiative?

[Mr Bailey]

I certainly join the hon. Lady in welcoming that. In fact, one of the unintended, beneficial by-products of the problem has been the resourceful and inventive ways that communities and businesses have got together to overcome it. Peer-to-peer lending is an example of that. In my area, we have the Black Country Reinvestment Society, with which my fellow west midlands MPs will be very familiar. However, the scale of the entrepreneurial alternative lending sources still does not match what is needed for our manufacturing base as a whole.

I turn to a specific issue that applies not only to my constituency, but to the whole of the west midlands and the black country—other west midlands MPs may refer to this, too. First, I pay tribute to the Tata brothers for their investment in Jaguar Land Rover, which, I think it is fair to say, has transformed manufacturing prospects in the west midlands in a way that we have not known for 30 years. It is an indication of the value of our relationships with the Indian subcontinent and that growing market and growing access of capital, and of the historic association between the Indian diaspora in this country, and of course, the native India.

[Jeremy Lefroy]

I entirely agree with the hon. Gentleman. It is also testament to the wonderful co-operation between Wolverhampton city council and Staffordshire county council, which, together, put £40 million forward to build a motorway junction on the M54, without which that project might not have been able to go ahead.

[Mr Bailey]

I pay tribute to both of them. All the players in the i54 development on the borders of Staffordshire and Wolverhampton deserve credit for the united way in which they have seized the opportunity. For the benefit of non-west midlands MPs here, it is a huge expansion in the engine production capacity of JLR that will result in 1,400 jobs. It has really transformed the supply prospects of foundries in the area. In that context, I would also mention the £45 million that the Tata brothers have invested at Warwick business school’s centre for research and innovation. Collectively, they have transformed the prospects for manufacturing in the west midlands.

My constituency still has the highest number of foundries—I think—of any constituency in the country, but there are plenty in the surrounding areas as well. The prospect offered to them of being part of the supply chain to Jaguar Land Rover is very significant. In the regional growth fund applications, there have been a number of successful bids from JLR and companies locally. However—I mention this to the Minister, because it highlights some of the problems that we have with the support that the Government give industry—I understand from the Cast Metals Federation that the engine blocks for the new Jaguar Land Rover development at the i54 will have to be made in Germany, because there is not, would you believe it, the capacity for foundries to produce them locally.

I also understand that Jaguar Land Rover is happy to look at repatriating some of its supply chains, where it has to source from abroad at the moment, but obviously, that will depend on the capacity of local SMEs to deliver. Despite all the Government sources of support, the regional growth fund and the grants that it has given, a crucial gap still remains in the potential economic benefits that will accrue to the west midlands because of the failure to secure this vital market. Aluminium engine blocks for that development will be crucial.

The Society of Motor Manufacturers and Traders has identified something like £3 billion-worth of potential extra business in the supply chain—if the Government and the industry can get together to maximise that potential. Although I do not condemn any of the attempts that have been made to provide finance for business and for SMEs so far—but certainly with the regional growth fund, there are all sorts of issues relating to length of time and so on—I ask the Minister to look at working with the Automotive Council to develop some sort of package that would enable the existing gaps in provision to be filled. The potential benefits, both for regional policy and for our overall national economic situation, are absolutely enormous.

I have spoken for longer than I intended, partly because I have taken interventions, so I will cease my remarks with that plea to the Minister.

[Dr William McCrea (in the Chair)]

Six Members from Government parties desire to speak before we have the wind-ups, and there are 32 minutes before those commence. I therefore ask for Members to be considerate to their colleagues in order to allow them to speak, if possible.

14:59

[Caroline Dinenage (Gosport) (Con)]

It is a pleasure to serve under your stewardship, Dr McCrea. I join others in congratulating my hon. Friend the Member for Carlisle (John Stevenson) on securing this important debate and on introducing it in such an insightful and thorough way.

I should probably start by declaring an interest. I have been the owner of a small marketing business since I was 19 years old, which is sadly many more years ago than I would care to admit. I would like to echo my hon. Friend’s comments in welcoming the current resurgence in UK manufacturing. It is great news that after a debt-fuelled boom and bust, our economy is finally starting to rebalance, with manufacturing and exports playing an important role in our recovery.

The latest data show that we have seen the biggest jump in output and new orders for almost two decades. That is great news for Britain, but there is no room for complacency. Speaking as a business owner, I would say that the key things the Government need to facilitate to allow other small businesses to flourish are: a skilled work force, the availability of finance, a solid infrastructure, ease of access to both domestic and international markets, and the reduction in red tape and bureaucracy.

While I support the many steps the Government are taking to boost access to finance, and there has definitely been a marked improvement, many businesses, sadly, still find it difficult to obtain credit. A concern all too often voiced by local business owners in my constituency is that, despite their best efforts to weather the economic storm, and no matter how thriving their order book, the failure to secure meaningful credit and the regular hits to their cash flow that result from late payment leave them on the brink of collapse.

I am still concerned about the regulatory burden on small and medium-sized businesses. The country’s 5 million SMEs provide 60% of jobs and generate more than 50% of GDP, and we must do everything we can to ensure that their chances of growth are not strangled by bureaucracy. I therefore welcome the work the Government have done on cutting red tape; indeed, through the red tape challenge, they have committed to scrapping, improving or simplifying at least 3,000 regulations. The one in, one out rule has saved businesses about £1 billion in regulatory costs, and I am glad it has been stepped up so that it is now one in, two out, although I will resist any pressure to enforce that in my shoe cabinet.

My particular bugbear, and one area where we still need to see progress, is the procurement of Government and other public sector contracts. That is one thing I know about, because, as I say, I have owned a business for more than 20 years. The paperwork involved in trying to get considered for a Government contract can still be overwhelming. The tendering process for private sector contracts is still significantly less complex than for public sector contracts.

Although I warmly welcome the scrapping of many of the pre-qualification questionnaire requirements, as do businesses in Gosport, there is still room for such processes to become even more efficient. John Allan, the chairman of the Federation of Small Businesses, quotes research showing that only about a fifth of SMEs have bid for public sector contracts in the past year, in large part because it simply is not worth the effort and because of the intrusive amount of company information that needs to be supplied. A contract my business recently looked at bidding for required financial details of not only my company, but every company I was thinking of subcontracting to, which is hugely bureaucratic for a small business. There is still more to do on this issue.

Our SMEs are the drivers of prosperity in this country, and we should give them every opportunity to overcome obstacles and to expand. I welcome the Cabinet Office announcement in August that there will be a shake-up in Whitehall procurement and that the Government want to loosen the grip of an oligopoly of large suppliers and let in more SMEs. However, we must do more to cut bureaucracy in the application process. As we move from rescue to recovery, our economic success depends on a vibrant, innovative private sector.

That innovative private sector must have the Government’s backing when it develops new and exciting products. The Government rightly take great pride in our country’s innovation, and they invest heavily in R and D; indeed, globally, we are second only to the US in terms of our scientific knowledge base, but we slip down the chart when it comes to turning that innovation into economic prosperity and jobs. The Government’s enthusiasm for helping to develop new ideas is, sadly, not matched by an enthusiasm for buying the results. Unless we become earlier adopters of innovation, British R and D tax credits will continue to deliver German and American manufacturing jobs and profits, as those countries invest in making the things that originate in Britain.

SMEs are often cited as the lifeblood of our economy. We must match those words with action and eradicate the lethargic culture of bureaucracy, which sometimes clogs the procurement process and holds back British business. We must celebrate all that the Government and business, working together, have done in that regard, and we must ensure that SMEs continue to flourish.

15:13

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

I will do my best to finish within five minutes or so, Dr McCrea.

Bradford is promoting itself as a producer city, but the truth is that it never ceased to be one. It sits alongside many other northern cities, including places such as Carlisle, and I congratulate the hon. Member for Carlisle (John Stevenson) on calling the debate; indeed, I thank him for doing so, because we cannot have enough debates on this subject, which is crucial not only to local communities, but the national economy.

As I said, Bradford never really stopped being a producer city. It suffered dreadfully in the 1980s recession, which almost decimated the city. Bradford did not always focus on textiles; it was, of course, the wool capital of the world, and it was a fabulously wealthy place. However, its manufacturing and engineering were devastated in the 1980s.

None the less, Bradford is still a producer city. Although we still lost 15,000, or 40%, of our manufacturing jobs during the 60-odd consecutive quarters of growth from 1998 to 2008—the golden years, in many ways—Bradford still exists, and it is a cruel rumour that Bradford is no longer a producer city. Some 1,200 manufacturing SMEs still provide employment for 15,000 people in the Bradford district.

With others, I recently set up the all-party group on textile manufacturing, because it is important to tell people that manufacturing, and particularly textile manufacturing in places such as Bradford, still exist, and spinning, weaving and scouring continue on a massive scale. There are no longer 2,000 people coming out of Salt’s mill or Lister’s mill, but many small businesses, particularly in the manufacturing and engineering industries, continue to thrive.

I wanted to speak in the debate because of two contrasting stories picked up in this week’s Yorkshire Post. The first concerns manufacturing. There is a really good story to tell across the whole Yorkshire region. The purchasing managers index for the latest quarter is 57.2, which is a staggeringly good figure. The previous figure—55—was thought to be really good. Fifty is what separates growth from decline; at 50-plus, however, we are talking about exceptional performance, so this is a really good story.

The paper carried out a survey, which tells us that employment has increased for the fourth month running, while output has risen at the fastest pace since July 1994. In addition, the paper included a Barclays survey showing not only that there is growth in output and employment, but that businesses have a real intention to invest for the future, with 54% planning to increase investment over the next 12 months. Some 63% plan to invest in new machinery, 62% plan to invest in new product development and 42% plan to invest in furniture, fixtures and fittings, and buildings. That is all really good news.

What, though, are the contrasting stories? On the same day, the Yorkshire Post included an article headed, “Optimism dims in the small business sector”. According to the article, a survey of 500 UK firms showed that most small businesses

“were still having problems accessing finance despite the introduction of lending schemes.”

A further article in the same paper, on the same day, was headed, “Funding plan still failing to help SMEs”. It says that although the Bank of England lent £1.6 billion through its funding for lending scheme in the last quarter, which is really good news, the bad news is that lending to SMEs continued to fall, shrinking by a net £583 million. The article continues:

“The scheme was revamped in April in a bid to boost the flow of credit to small businesses. But bank loans to SMEs shrunk 2 per cent during the quarter on a year earlier.”

Those are the two contrasting stories. We are all really excited about one, which is about the renaissance in manufacturing. That renaissance is taking place not just in certain sectors or certain parts of the country, but across the piece. It is showing itself strongly in domestic output, customer numbers and exports; that is the good news story. The worrying factor is that that is not getting through to our small manufacturing and engineering businesses, and they are still struggling. Despite Government schemes to provide finance for those businesses, they are waiting, their energy is pent up and they are ready to explode, but they are being held back by a lack of finance. The money is there, but it is clearly going to the bigger companies, which can always access finance from other sources. The companies that critically need the finance to enable them to carry out the investment intentions I mentioned are simply being denied it. Whatever the reasons for that, we need to crack this nut if these companies are to achieve their full potential and we are to carry out the rebalancing of the economy we are all so desperate to achieve.

15:20

[Jeremy Lefroy (Stafford) (Con)]

It is a pleasure to serve under your chairmanship, Dr McCrea, and I congratulate my hon. Friend the Member for Carlisle (John Stevenson) on securing this welcome debate.

Government support for business has always been crucial. My first job was as a production foreman at Ford Motor Company in Bridgend, a plant brought to the UK under Prime Minister Jim Callaghan in the late 1970s. I am glad to say that that factory has expanded since then; it is one of the largest engine factories in Europe, if not in the world, and is still exporting around the world.

In Staffordshire and Stoke-on-Trent there has been strong Government support for manufacturing business—for instance, through the regional growth fund to Alstom in my constituency, which has become a world leader for research in high-voltage direct current manufacturing. The hon. Member for West Bromwich West (Mr Bailey) earlier mentioned Jaguar Land Rover on the i54 site on the edge of Wolverhampton and South Staffordshire. South Staffordshire council has played a major role in that, and that was a great example of co-operation between government and the private sector.

However, that is all about the largest companies, which have access to the Government. We really want to talk more about smaller projects and companies. We have already heard talk about procurement, and how Government procurement from SMEs has increased substantially under the present Government. There is still a long way to the 25% target, but I welcome that progress.

My hon. Friend the Member for Gosport (Caroline Dinenage) talked about oligopoly in procurement. It is not just in manufacturing companies; among service companies it seems that the Government will procure only from a very small number. For instance, there are the big four consultancy firms. In my constituency, health administration is being carried out by Ernst and Young. I should prefer some specialist medium-sized consultancies to do that work if, unfortunately, it should become necessary for a Government to procure it.

We have heard about training and apprenticeships, and the 21.5% increase in engineering and manufacturing technology apprenticeships starts in the past year. However, there is still reluctance from smaller firms, as they do not necessarily have the facilities or expertise to allow those apprentices to start. I welcome the idea of training networks, which could operate under the employer ownership pilots that BIS has started in the past year. I look forward to more of that, with small businesses taking advantage of the facilities and expertise of larger manufacturing businesses in their area.

We have also heard about the supply chain in the debate. Yes, that is an area where small businesses can do things for each other, but there is an increasing realisation of the benefit of having suppliers on the doorstep. The previous Government supported programmes in relation to the automotive sector supply chain, and the present Government are considering the aerospace sector in that regard. I should like to know from the Minister whether there are plans to consider other sectors—and to bring major sectors’ supply chains back into the UK.

I want to spend a little time discussing exports. There has been an increase in the services offered by UK Export Finance. Indeed, just this week BIS announced a direct lending scheme of £1.5 billion under UKEF, in which foreign buyers can get access to support to buy UK products. It is the first time that that has happened, and I encourage all hon. Members to point it out to exporting companies in their constituencies.

UKEF is still very much focused on large businesses, although I was glad to see from its last report that it was used to enable British companies to export, for example, cheese to Greece, a hospital to Ghana and tractors to Israel. However, those were the exceptions rather than the rule. UKEF tends to be dominated by Airbus, Rolls-Royce and BAE Systems. That is welcome—we need those exports—but in the past year the total was only something like £4.3 billion, compared with €29.1 billion under the Hermes scheme in Germany. Under that scheme, Kenya had €156 million of credit, South Africa had €461 million and India had €1 billion. Those are all developing countries, to which our businesses need to export.

I shall cut my remarks short, because colleagues want to come into the debate, but I reiterate what has been said so many times about the importance of the availability of long-term, patient capital and equity finance. It is ironic that Britain has a major institution that deals with that, which has nearly £3 billion of investments throughout the world, in some of the most difficult situations in developing economies—it is called the Commonwealth Development Corporation—but that we do not have a similar development corporation for some of the more challenged areas in our country.

15:25

[Chris White (Warwick and Leamington) (Con)]

I thank my hon. Friend the Member for Carlisle (John Stevenson) for securing this important debate and giving us another opportunity to discuss this topic, as we have done over many years.

One of my concerns, given the welcome news about the upturn in growth in the UK economy, is that politicians—and we are politicians in this Chamber—may move away from a focus on manufacturing and the good results that it could produce for the rebalancing of the economy. We could move back to property booms and financial services, which I think all those present would agree would be a very bad thing. We have a window of opportunity to establish policies to get manufacturing growing strongly once more.

The key is small and medium-sized businesses. The Government need to take steps now to prevent manufacturing from being neglected as growth returns to the economy. They need to ensure that incentives are set up for lenders to support our manufacturers, rather than pouring investment into quick returns in sectors such as property or financial services.

One of the simplest and easiest ways to get support to those manufacturers is through changes to capital allowances. The Chancellor rightly increased the annual investment allowance, which will enable them to upgrade plant and equipment in the next two years. However, if we are to attract more significant manufacturing activity, and enable small and medium-sized businesses to integrate into supply chains, we need to make the capital allowance structure more competitive, and encourage larger manufacturers to base themselves in the UK, which will in turn help the small and medium-sized businesses.

According to the Oxford university centre for business taxation, the present value of capital allowances as a percentage of cost for capital investment is just 46.5% in the UK. That is lower than in Japan, Germany, the United States, Turkey, France, South Korea and virtually all our major competitors. It makes investing in the UK far more expensive for manufacturing businesses than it is elsewhere, and we should not be surprised that, despite a strong skills base and depreciation in sterling, manufacturers are still not flocking as quickly as they might.

Like the rest of the economy, manufacturing is an ecosystem that requires diversity. To increase the number of small and medium-sized manufacturers, we need to increase the number of larger manufacturers in the country, to create resilient supply chains that can weather global economic storms. That, I think, is the key to what has happened in Germany and the United States. We should not ignore small and medium-sized manufacturers while we go about it, but we will need to continue a generous regime of investment allowances for the businesses in question, so that they can compete and provide a base on which large manufacturers can build supply chains.

Another area where we can help businesses is through the availability of skills and apprentices. There has been a fantastic, massive surge in apprenticeship applications in the past 12 months, but manufacturing and engineering are still not the main destination. Business administration, child care and customer service are still the three most popular areas. Perhaps that has something to do with the image of manufacturing in society, which those present for the debate are trying to help to promote.

A way to combat the current situation might be through the creation of apprentice training agencies, similar to those deployed in Australia. Apprenticeships are advertised by the agencies, which then hire them out to small and medium-sized manufacturers. The agencies take on the burden of administration, payroll support and supervision costs, and merely charge the manufacturers something similar to normal agency costs. That will hopefully boost the supply of labour to SMEs and potentially attract young people to work with the companies in the long term.

We need to put policies in place in the next few years so that we have an economy that does not just return to business as usual but is robust, creates sustainable jobs for the future and has manufacturing as one of its key pillars.

15:29

[Graham Evans (Weaver Vale) (Con)]

It is a pleasure to speak under your chairmanship, Dr McCrea. I add my congratulations to my hon. Friend the Member for Carlisle (John Stevenson).

I am deeply proud of Weaver Vale’s huge range of manufacturing enterprises. I personally spent more than 20 years working in manufacturing, starting off at BAE Systems making RAF Nimrods. I am delighted that EEF has announced that the domestic market is at its strongest in almost three years and export sales are at a two-year high. That marks a significant growth in confidence and provides some reassurance that the industry is on the right track. However, although that shows a short-term improvement, it is set against the long-term trend that has seen manufacturing’s share of the economy fall from 23% in 1997 to about 10% currently. That sits alongside the Government’s ambitious target to double UK exports to £1 trillion by 2020—manufacturing currently makes up about half the market. I would be interested to hear my hon. Friend the Minister’s opinion on that and whether he thinks that this country could once again have 20-odd per cent. of its GDP based on manufacturing.

How do SMEs fit into that pattern of ambition and decline? In 2012, SMEs—defined as companies with fewer than 250 employees—made up 99% of all manufacturing businesses, with a turnover of £167,455 million, less than a third of the whole industry’s turnover. However, not all SMEs are created equal. Clearly, the needs and capacity of a 249-employee company are very different from those of a nine-employee company. In 2012, there were 203,000 manufacturing business with nought to nine employees, which made up 88% of manufacturing businesses and 96% of all businesses in the UK.

What can we proactively do to support SMEs? There are two clear lines of support which could and should be better developed. Research and development is key to the UK’s manufacturing future. Manufacturing is responsible for three quarters of business R and D. That is a staggering amount and a credit to our world-leading universities and work ethic. The flexibility, adaptability and innovation of SMEs make them perfect leaders of R and D. To ensure our place in the world market, we need to be able to provide financial, research and trade support to SMEs at this crucial time.

First, we should consider finance. Simply put, without strong, reliable and consistent funding, we cannot expect SMEs to grow and thrive. There are some strong incentives to help SMEs involved in R and D. From April 2012, the tax relief for SMEs is 225%. For every £100 of qualifying costs, corporation tax is not paid on an additional £125 income that would be liable for corporation tax. It is worth noting that HMRC has extended its definition of an SME to companies of under 500 employees.

I have spoken previously in the House about the German political infrastructures set up to nurture industry and especially the Mittelstand—small and medium-sized companies. Foremost among those tools stands KfW, the state-backed bank that ensures that the Mittelstand can access funding, even when the commercial banks are unwilling to lend.

Certainly Government schemes such as the advanced manufacturing supply chain initiative and the high-value manufacturing Catapult, which is designed to bridge the gap between early-stage innovation and manufacturing, are helpful, but they do not address the industry’s concerns about simple access to finance. The right hon. Member for Sheffield, Brightside and Hillsborough (Mr Blunkett) ably pointed that out earlier.

Secondly, with 71% of manufacturers planning innovation to export to new markets and 73% planning to bring new products to the market, they require not only funding but research collaboration. I welcome the work of the Technology Strategy Board’s Catapult network on high-value manufacturing, which brings together SMEs and industrial investors to work together on the centre’s core research and on their own challenges and the knowledge transfer partnership. That form of business/research collaboration speeds up innovation. It is a credit to the Government that 62%—up from 44% in 2010—of manufacturing companies are now engaged in work with research institutions. I have seen that in action at the excellent Daresbury science and innovation campus in my constituency.

Once development has been completed, UKTI must take the innovations and provide a clear and supported route to market. I welcome the £70 million increase for UKTI and I believe that it is the role of those in this House to push the manufacturing agenda to the forefront of campaigns such as the GREAT campaign to demonstrate our unique and innovative industry to key and emerging markets.

It is clear that we need a blueprint for the long-term future of the manufacturing industry and especially SMEs that goes beyond general commitments to industry as a whole. That is why we are all waiting with bated breath for the report of the Future of Manufacturing project, which will set out the long-term future of the manufacturing sector to 2050. It is due in the next few months. I sincerely hope that much of what has been discussed today will feed in to that report in order to help to ensure that the powerhouse that is SMEs in the manufacturing industry is properly supported.

15:35

[Richard Graham (Gloucester) (Con)]

It is a joy to join the debate rightly won by my hon. Friend the Member for Carlisle (John Stevenson). The discussion of manufacturing has gone on for some years and will go on, because it is so important to all of us. It is especially important in constituencies such as mine, Gloucester, where making things has been what the city is all about. We are in fact arguably the bellwether for what happens to British manufacturing, because the narrative, as many hon. Members have noted, is a story of decline and recovery, and now the challenge is how to take it to the next chapter of success. My constituency, as a bellwether, is one to which my hon. Friend the Minister will want to pay attention. We make things, whether for the aerospace sector, the oil and gas sectors, nuclear power, consumption, health, dentistry or container ports; and when we export tea to China and valves to offshore Australian pipelines, the Minister will want to sit up and take notice and, indeed, come to visit the great city of Gloucester as soon as possible to see what can be done in modern manufacturing.

The story of decline we will gloss over, except to note that by 2010 new apprentices were virtually extinct in Gloucester. The specialist Gloucester training group was down to 20 engineering apprentices in one year. Small engineering companies were almost dying on their feet. Science was disappearing from school exams, and 6,000 jobs in business had been lost during the 13 years of the previous Administration.

Today, the story is rather different. We have created 2,000 new jobs in business—not all of them in manufacturing, but many—and last year alone 1,240 new apprentices started in our city. Nationally, of course, manufacturing is now going through its fastest growth, in terms of order books, for more than two decades. The output index is the highest since 1994, and non-EU exports have risen by 10% according to the latest figures. The rebalancing is full steam ahead, but we must not run ahead of ourselves. There is still much more reinvestment to be done to see a sustainable increase in manufacturing. We need confidence to spread more widely across the country and in manufacturing businesses, and of course we need banks to provide support and schools to give more time for manufacturers to tell their story and inspire youngsters.

I believe that the Government have played a useful role. I am thinking of what they have done on corporation tax, on capital allowances, which my hon. Friend the Member for Warwick and Leamington (Chris White) mentioned, on R and D and on apprenticeships, and about the renewed focus on engineering and sciences. All those things, linked to steps taken by my right hon. Friend the Secretary of State for Education on careers advice, have helped. They have been a stimulus to our manufacturers, who now have greater confidence than they used to and can see that this is a Government, finally, who are backing manufacturing and urging them to help with the rebalancing of the economy, which was so badly needed, away from finance, public service and property.

There is still, though, as I mentioned, much more to be done. As individual MPs, we can do our little bit. We can, for example, take on our own apprentice. I am delighted to pay tribute to my apprentice, Laura Pearsall, who has now completed her two-year apprenticeship with me, got her NVQ level 3 in business administration and won a good job in business. Clearly, that is not manufacturing, but manufacturers can also take on apprentices in non-manufacturing subjects, such as business admin. I am delighted that, for example, EDF Energy, whose operational headquarters for its nuclear power stations is in my constituency, now has apprentices working in finance, human resources and a variety of other sectors that are not directly running nuclear power stations.

We can also help by working with the media and our further education colleges. I congratulate Gloucestershire Media and Gloucestershire college, which were the first to launch the 100 apprentices in 100 days challenge, which so many regional newspapers have taken up. They went on to get places for 100 apprentices from companies that had never had them before. They have given huge support to the rebalancing of our economy and supported manufacturers by giving them a platform of encouragement. We can also help to create or support apprenticeship fairs and jobs fairs to highlight the opportunities in manufacturing. I have helped support three apprenticeship fairs and created seven job fairs in the past three years, and there will be much more to do over the next two years.

We can create job sections on our websites, highlighting opportunities for youngsters in manufacturing and other sectors. We can encourage all our employers to take more young people into manufacturing through apprenticeships. We can create export clubs and organise events with UKTI. We can invite Ministers to proselytise and give further encouragement. The Minister’s predecessor did that successfully at Kingsholm, and I invite the current Minister, who is full of enthusiasm, to come and encourage our businesses, many of which are micro-business and manufacturing subcontractors, such as the 500 members of the Gloucester branch of the Federation of Small Businesses. I am delighted to say that its chairman, Mark Owen, is leading from the front by taking on his first apprentice. We can also visit manufacturers ourselves, and help them to expand by assisting with council problems of additional space, parking and other local issues. There is much that we can do.

I finish by congratulating my hon. Friend the Member for Carlisle on securing the debate. I welcome the measures the Government are taking. I salute the success of our manufacturers and urge them to use their capital balances to invest more in new plant and equipment. I urge large manufacturers to look at their supply chains, our schools to engage with manufacturers, and our Ministers to help manufacturers that went abroad to return to Britain with help from the regional growth fund and local councils through waiving business rates for a period, so that we may see the brands “Made in England” and “Made in Gloucester” thrive and expand.

[Dr William McCrea (in the Chair)]

Before I call the next speaker, may I thank all Members for the discipline shown, led by the excellent example of the hon. Member for Gosport (Caroline Dinenage), in allowing everyone who desired to do so to get in to the debate? I now have the pleasure of calling Iain Wright.

15:41

[Mr Iain Wright (Hartlepool) (Lab)]

Good afternoon. It is a pleasure to serve under your chairmanship, Dr McCrea. I join others in congratulating the hon. Member for Carlisle (John Stevenson) on securing this important debate. I am pleased that there have been so many contributors to a well-informed and consensual debate.

It is clear that manufacturing matters to this country and to the House. Indeed, manufacturing is essential to any advanced economy that wishes to maintain or enhance its living standards. An effective manufacturing policy, based on innovation, is the means by which productivity and wage rates will grow. It is equally clear from listening to hon. Members’ contributions that in every corner of the country we have dynamic, enterprising manufacturers—Mallinson Fabrications in Carlisle or Burgon and Ball in Hillsborough, among others—keen to expand, export into new markets, invent new products or processes and employ more people. An effective and proactive industrial policy will ensure that Government can work with industry for the long-term and tap into that huge potential.

We warmly welcome recent increased output in manufacturing and order books, and the Opposition will encourage any sign of recovery. There is a long way to go however: manufacturing output remains 10% below pre-crisis levels and is still performing below the wider economy, which is 3% off its peak. Despite the positive news, manufacturing is still expected to contract by 0.5% this year. Despite the good news, we are not seeing the much-vaunted march of the makers that the Chancellor promised. Will the Minister comment on that and on today’s news that the World Economic Forum’s global competitiveness report shows that we have slipped down the competitiveness rankings from fourth to seventh and down the infrastructure rankings from fourth to 28th? It is a long-term concern for the productivity and innovation of our manufacturing base, so will he comment?

Every Member who spoke mentioned access to finance. It remains the most significant barrier to manufacturing businesses’ growth. Every initiative the Government have attempted to put in place, from Project Merlin to funding for lending and from the national loan guarantee scheme to the enterprise finance guarantee, has failed in its objective. Net lending to businesses has contracted in 21 of the past 24 months. Commenting on the funding for lending figures, Dr Adam Marshall, director of policy at the British Chambers of Commerce, said that

“the credit environment is not where it could or should be, and many dynamic, new businesses are still struggling to find the funds they need to fulfil their growth potential….A fully functioning Business Bank is essential to plug this gap, but it must be delivered with greater urgency and scale than is currently being proposed by the government.”

Will the Minister comment? Businesses are not confident that the Government’s business bank will help them. A recent survey by Bibby Financial Services showed that only 6% of small and medium-sized businesses believed that the business bank would benefit their firm. David Petrie, head of corporate finance at the Institute of Chartered Accountants in England and Wales, of which I am a proud member, stated:

“The proposals put forward don’t appear to address the needs that businesses have and the finance gaps that exist. It is shaping up to be a missed opportunity to make a real difference, especially to micro and smaller businesses.”

Will the Minister outline how he will ensure that the British business bank works for manufacturers to ensure that long-term capital is put in place to allow manufacturing firms to innovate and grow?

I think that every hon. Member also mentioned procurement, which can be an effective lever for Government to enhance skills, attract apprentices, improve and incentivise innovation and ensure that we have a resilient manufacturing base. What are the Government doing to ensure that smaller and medium-sized businesses, particularly in the manufacturing sector, benefit from Government contracts?

[Mr Andrew Smith]

My hon. Friend is making an excellent speech. Will he also ask the Minister whether he saw the report in The Daily Telegraph that quoted research by Opinion Leader? It said:

“Despite efforts to cut red tape and promote competition, only 6pc of small and medium-sized enterprises…believe it has become easier to win public sector contracts”

in the past two years,

“and 26pc say it has become more difficult”.

Should the Government not explain why they think that is?

[Mr Iain Wright]

My right hon. Friend makes an excellent point. The article goes on to say that the Government have a target of awarding 25% of public contracts to small and medium-sized businesses, but the figure for 2012-13 is only 10.5%. We are a long way from the target. Is the Minister confident that he will hit the target and ensure that small and medium-sized businesses in the manufacturing supply chain have a chance of winning Government work?

Business investment is the means by which we can enhance and strengthen manufacturing growth, as the hon. Gentleman for Warwick and Leamington (Chris White) mentioned in his thoughtful, well-informed speech. Since 2010, Britain has experienced the biggest fall in investment as a share of national income of any G8 country, other than Italy. We have seen a 0.8 % drop in the level of capital investment. Our competitors, such as Canada, France, Japan, Russia and the United States, are improving their business rates. Most other nations do better than us; according to The Economist, we are ranked 159 out of 173 countries for investment as a share of GDP. We are on a par with Mali.

The situation is not improving. According to last week’s figures from the Office for National Statistics, general investment for quarter 2 of 2013 fell by 4.8% from a year ago and investment in machinery and equipment, which is probably most related to manufacturing, fell across the same period by 3.4%. To improve our competitiveness, our business investment performance must improve. Will the Minister acknowledge that the levels of business investment are unsatisfactory? They are getting worse on his Government’s watch and are inconsistent with the House’s and the country’s aspirations to being an innovative and competitive high-value manufacturing nation. What will he do to ensure an environment of better business investment?

Supply chain resilience is key. Over the past 30 years, with de-industrialisation, we have seen the hollowing out of the UK manufacturing supply chain, and that is hindering the potential of manufacturing and growth. In an excellent speech this afternoon, the Chair of the Business, Innovation and Skills Committee, my hon. Friend the Member for West Bromwich West (Mr Bailey), made that point in relation to aluminium foundings—I think I have that right. He pointed out that the Society of Motor Manufacturers and Traders stated that the lack of an adequate supply base is forcing some vehicle manufacturers, such as Jaguar Land Rover, but also Nissan and others, to limit their activities in the UK to final assembly operations, relying on foreign R and D and component development and manufacture. The Automotive Council concluded that at least 80% of components in vehicle assembly could be sourced from UK suppliers, but at present only about 36% are. There is enormous scope and potential for manufacturing here, and I hope that we can work together in the House to support it.

In that vein, I applaud what the Government were trying to do with the advanced manufacturing supply chain initiative: trying to improve the global competitiveness of UK advanced manufacturing supply chains, by supporting innovative projects where the UK is well placed to take a global lead. It is an important initiative, and I want to see it succeed for the good of the British manufacturing base. Will the Minister let the House know how much of each funding round—I think we are up to the fourth round—has been not just allocated but provided to the relevant firm, how much of each round has been spent, and how many jobs have been created or safeguarded?

In the short time I have available, I want to finish on skills. Several hon. Members have mentioned that manufacturing firms are finding it difficult to recruit appropriate skills, and a recent CBI/Pearson survey found that two fifths of employers who required employees with skills in STEM—science, technology, engineering and maths—found it difficult to recruit. The hon. Member for Carlisle placed the issue in the context of demographic changes—more and more workers will be retiring shortly. How are the Government dealing with that urgent issue? Does the Minister believe that recent changes, such as the downgrading of the engineering diploma and the dismantling of impartial information, advice and guidance, provide a co-ordinated, cross-Government approach to business and industrial needs? He straddles the Departments for Business, Innovation and Skills and for Education, so what is he doing to ensure that we have a co-ordinated approach to providing the skills that manufacturing needs?

It has been clear, in what has been an excellent debate, that manufacturing matters to this country as a means of improving our competitiveness and raising living standards. We all want manufacturing to succeed and a Government who support it, and I hope that the Minister can address the concerns raised.

15:51

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

As everyone has said, this has been a stimulating debate, and I will take away from it several specific points. I will address the points as well as I can in the time available, but I start by saying that I do so in the context of someone who began their career in a small business, albeit a software business rather than a manufacturing one. I understand the difficulty of engaging with the Government—they are a large organisation—and the importance of putting in place an improved environment in which small businesses can succeed in a way that is appropriate to their size and to the amount of time that the people running them have. My hon. Friend the Member for Warwick and Leamington (Chris White) asked whether the return of growth would mean that the Government would stop pushing on measures for growth, and all I will say is that he certainly will not get that from me, or my Department.

The context for the debate is, as my hon. Friend the Member for Weaver Vale (Graham Evans) set out, the sharp decline over many years of manufacturing in the UK, from about 23% to barely more than 10% of the economy, but it is on the rise again. Having the debate this week is good timing because we have the welcome news that data show the sharpest rise in manufacturing orders since 1994.

The current level of manufacturing output is of course below the level it was at before what the Governor of the Bank of England has called the great recession, of 2008-09, and there is a huge amount to do to recover that ground and go forward, but I think we can all agree that there is a new spirit and vision for the growth of high-tech, high-end manufacturing. Other countries, not least the United States, where energy costs have fallen sharply, partly due to new sources of unconventional gas, are bringing manufacturing back onshore, especially at the high-value end. That is a positive context for the debate.

The hon. Member for West Bromwich West (Mr Bailey) talked about the i54 development and the Jaguar Land Rover project, which I happened to drive past last week—there is a massive amount of building and earthwork going on. The Minister of State, Department for Business, Innovation and Skills, my right hon. Friend the Member for Sevenoaks (Michael Fallon), met Jaguar Land Rover only yesterday to discuss ensuring that we can keep the project moving forward. The links between the different local authorities have been an impressive part of its development.

In the context of the new growth we are seeing in manufacturing, I would be delighted to visit Gloucester and proselytise about manufacturing. I very much look forward to my visit.

My hon. Friend the Member for Carlisle (John Stevenson), who has rightly been congratulated on securing the debate, talked about the definitions involved in the Government approach’s to small businesses. It is important to ensure that we have as simple as is reasonable an approach across Government, and that each intervention is targeted at the right size and sector of business. Broadly defined, SMEs can run from a single-person business up to one employing 250 people. Those are hugely different types of business and we need to ensure that we segment properly.

The links between central and local government are important. Local enterprise partnerships play an increasingly vital role in bringing together local businesses and local authorities and providing a link to central Government, and we should push that forward further.

I want broadly to set out how we view the Government’s role, and to respond to some of the questions asked by the hon. Member for Hartlepool (Mr Wright). It is true that Britain fell down the league of competitiveness, not least on infrastructure, but now, finally, we have a national infrastructure plan, on which we are beginning to deliver. The earthwork along the M54 is not alone; across the country there is infrastructure development, not least for Crossrail, which is the largest construction project in the whole of Europe. It is vital that we turn the situation around and that is what we are doing.

The hon. Member for Hartlepool also mentioned finance. It is true that the funding for lending scheme, as the hon. Member for West Bromwich West said, has been helpful, and in April we announced that we were extending it to SME lending. I note that lending to small businesses rose by £262 million in July, which is positive news. On skills, the increase in engineering apprenticeships, which my hon. Friend the Member for Stafford (Jeremy Lefroy) mentioned, is vital and is something into which I personally have put huge effort. We have apprenticeship training agencies in the UK, but there is the potential for more because they can ensure that we draw together the needs of different companies to guarantee that training is co-ordinated and bureaucracy taken away from small businesses. We are also considering more radical changes to how we fund apprenticeships, to make them easier for small businesses to access, one option being to introduce funding through the tax system.

My hon. Friend the Member for Gosport (Caroline Dinenage) brought her own experience to the debate. The question of simplifying procurement bureaucracy is absolutely vital, and the hon. Member for Hartlepool made a point about procurement almost with the zeal of a convert. The target of awarding 25% of public contracts to SMEs is important and the fact that, according to his figures, only 10% of them go to SMEs at the moment just shows what work there is to do. I am glad that the Labour party is coming to the table on that.

[Mr Andrew Smith]

Will the Minister comment on the survey that I mentioned, which showed that, according to the perception of small businesses, things have got worse in the past three years rather than better?

[Matthew Hancock]

It is certainly taking time to turn the situation around, but there is no doubt that there is the enthusiasm to do so. Some Departments have already hit the 25% target, including the Ministry of Justice, so there is progress, and there appears to be cross-party support for it.

I will finish by saying that everyone who participated in the debate mentioned the scope and potential for the future of manufacturing in general and in small businesses, and we in the Government passionately support that. There is plenty more to do on tax and deregulation, the expansion of the R and D tax credit, the all-important funding and finance for growth and all the other issues we have talked about, but momentum is starting to build and we will not let up.

School Starting Age

Wednesday 4th September 2013 Westminster Hall

15:59

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

I am extremely pleased to have secured this debate. It follows from early-day motion 213, which I tabled in June, on the school starting age for summer-born pupils. The timing is particularly apt, given that most four-year-olds start their primary school education this week. A child born on 31 August 2009 will most likely be in the same year group as a child born on 1 September 2008. Indeed, I received information this morning that some three-year-olds—those born between 29 August and 1 September—have started school in an area where school re-started on 29 August.

The early-day motion notes

“the robust and consistent evidence from around the world on birth date effects, which in England shows that summer-born children can suffer long-term disadvantages as a result of England’s inflexible school starting age”.

To expand on such birth date effects, I will briefly refer to the Institute for Fiscal Studies report published in May. The study found that, relative to children born in September, those born in August are 6.4 percentage points less likely to achieve five GCSEs or equivalents at A* to C, and about 2 percentage points less likely to go to university at 18 or 19. It is staggering just how long term the effects appear to be.

Following the Rose review, the previous Government required local authorities to provide a full-time school place for all four-year-olds in the September following their fourth birthday. One could argue that that change tackled one problem faced by summer-borns—that they receive less time in formal education than their peers, which for some has a long-term effect on their school performance.

I argue that any such benefits are cancelled by the impacts on individual children who are simply not ready in their emotional, social and cognitive development to start formal school. A good nursery or pre-school can obviously help with school-readiness in some respects, but certain aspects of an individual child’s development can progress only when that child is ready. By definition, many summer-borns will not be as ready as their older counterparts. Furthermore, an unhappy experience may lead to behavioural problems and a lack of confidence and self-esteem as a child tries to cope within the school setting, and may therefore have further impacts on long-term achievements.

The statutory school starting age remains five. In principle, parents have a choice about which term their child starts school within that time span, but practice may be a little different. For many families, a child starting full-time school reduces the burden of child care costs. It is difficult to imagine that that would not impact on some families’ choices.

Where a parent chooses to defer their child’s entry to school, the child remains entitled to a funded early education place of 15 hours a week for 38 weeks, which prompts the question of the cost of any extra child care needed by working parents. There are also pressures on parents to do what is best for their child. A parent has to be confident and have full information if they are to decide to keep their child in nursery while others start school. Will the school and the local authority make sure that a school place is available part-way through the school year in an over-subscribed school so that parents can exercise their choice about which term their child starts school?

Over the years, I have received representations from across the country about parents who have struggled to be allowed to exercise that choice. I have asked questions and supplied details of cases, but I am not clear what the Department does to support parents experiencing problems in simply trying to have a place held open, so I would be grateful for clarification.

More recently, I have been contacted by parents who want to have the option of their child starting school at the statutory age, but in reception rather than year 1. It is pretty obvious that that makes sense for some children born at one minute to midnight on 31 August, and even more so for a premature baby born at that time. It is easy to extend that line of argument to include more children who would benefit from starting in reception class aged five.

I welcome the discussions between Bliss, parents and the Department for Education on schools admissions policy and that, as a result, new advice was issued in July. I congratulate Bliss on all its work representing families in which premature babies have been born.

[Duncan Hames (Chippenham) (LD)]

My hon. Friend is making a strong case, and I congratulate her on securing the debate. Earlier this year, I was fortunate enough to meet the Minister’s officials and Bliss on that point. I want to put on the record my thanks for the fact that, in answer 4 in that advice, the Government specifically refer to premature children who would have been in the lower age group had they been born when they were due. That is a welcome advantage for parents who are having such conversations with local admissions authorities.

[Annette Brooke]

I thank my hon. Friend for his intervention. I not only congratulate Bliss, but I am grateful that the DFE has taken a big step forward. I particularly welcome the fact that the new advice states:

“There is no statutory barrier to children being admitted outside their normal year group”,

and that

“flexibilities exist for children whose parents do not feel they are ready to begin school”

in the September following the child’s fourth birthday.

The questions and answers provided in the advice on the DFE website are helpful, on the whole, but I particularly want to draw the Minister’s attention to answer 8, which states:

“Parents who are refused a place at a school for which they have applied have the right of appeal to an independent admission appeal panel. They do not have a right of appeal if they have been offered a place and it is not in the year group they would like.”

Parents may make a complaint, but the advice states that they cannot appeal. Surely, there should be a right of appeal. It seems to me that although there may be no statutory barrier to a child being admitted to a particular year group, there is no statutory right. That means that although some authorities work to help and support parents, others can continue to make it extremely difficult for parents to exercise a justified choice.

The other barriers that I have mentioned will also prevail—financial, in relation to child care costs; and parents’ confidence and empowerment in relation to requesting a different time of entry and possibly a different year group. I would be interested to know the Minister’s plans to monitor local authorities’ actions on the new advice, to promote best practice and to make sure that full information is available to parents.

I was contacted late yesterday—I have not had time to check this material, so I will refer to it only briefly—by someone who has looked at several London local education authorities’ admissions policies, of which 49% apparently did not conform to the new advice. I apologise that this is second-hand material, but it needs to be checked. It states:

“Admission Arrangements For…2014/2015—Request to delay entry to school (known as deferred entry). Parents of children below compulsory school age may defer their child’s entry to a Reception class…until later in the school year. However, a Reception class place must be taken up by the start of the summer term. If entry is deferred beyond the summer term, parents will need to reapply for a Year 1 place”.

That just shows that although the DFE has played its part, there must be follow-through if the system is really going to change.

In the case of premature births, I imagine that it will be possible to involve health visitors, as well as pre-schools and nurseries, and to use the new advice to secure a place in reception for a child aged five. I certainly hope that that will be much easier, but of course it will not be so unless all local authorities operate within the new advice, which is really important.

I want to mention one or two case studies. I need not give too many, because there are just so many and they are very similar. In a case of premature birth, a child born at 32 weeks struggled enormously with the transition to mainstream school after their parents’ application to delay entry to reception by a year was rejected by the local education authority. I also have a story of twins. The tragedy is that the parents felt that they had to put their children into the reception class. Sometimes the whole experience is of a totally broken down system. It is only when the children are withdrawn from school that it is accepted that they have to start reception in another school year. I am sure that everyone will agree that the experience of starting school and then being pulled out must be avoided.

Clearly, a lot of proactive work has to be done to ensure that the advice makes a difference. I repeat the question: how will the Department ensure that the questions and answers are promoted to admissions authorities and parents? That information should be available not just to those parents who are seeking information, but to all parents. Furthermore, there is a need to monitor published admissions policies.

I remain concerned about how a parent can succeed in exercising their choice when we are considering a child who is so immature, but not prematurely born, that he or she is not ready to start school until the age of five and then needs to experience a reception year. I want to hear the Minister’s views on this matter. What information does a parent need to supply to the local authority to provide a convincing case?

The advice given in answer 4 is far more open to individual interpretation than the one on premature births. It is quite likely that such a child does not have special educational needs as such—there is often misclassification. It is just that the child is not developmentally ready or mature enough at the age of four. By the age of five, they have simply had one year’s growth and maturity, and they need the experience in a reception class.

[Mr Mark Williams (Ceredigion) (LD)]

Will my hon. Friend extend what she said earlier about the knock-on effects of not getting this right, and of not matching the learning experience to the child’s stage of development later on? Like her, I used to teach older children in the primary sector. The knock-on effects to a child’s confidence are repeated as they get older, with really damaging effects.

[Annette Brooke]

Absolutely. I thank my hon. Friend for reinforcing the case. It can be seen as an issue just for some middle-class parents who perhaps want to get their children to the top of the class. I want to reiterate that that is not the case. Unfortunately, it is about trying to shoehorn individuals into a one-size-fits-all system, and that is the problem. We must all love and make the most of the individual differences of our children both in our families and in our schools.

We must consider whether some of the issues of summer-born children can be overcome with a play-based curriculum and excellent teaching in the reception class, where the needs of individual children are being taken into account. I would like the answer to be yes, but we have changes in the primary curriculum and assessment and testing regimes, which put constraints and pressures on schools and teachers. Even with an excellent teacher, the individual interests of the child may require a start in reception at the age of five. I do not think that such a move would open floodgates because most parents want their children to fit into the system as it is. Not all summer-born children are adversely affected by being the youngest in their year and there will be variations in any effects. It is difficult to see that age-adjusting test results, as proposed by the Institute for Fiscal Studies, is an entirely valid approach.

Undoubtedly, the early start to formal schooling and the testing regime in this country compound the summer-born problems, which leads me to conclude that, ideally, we need to rethink our approach to the all-important learning settings and experiences for the four to seven-year-olds. The school experience should suit the individual child; the child should not be made to fit the school because of the potential adverse outcomes over their lifetime.

Meanwhile, we have to do the best we can. We must identify the problems and cope with them within the existing system. We must have more flexibility in school starting time, and parents need to be empowered and enabled to make the best choices for their child. Currently, what is in the best interests of the child can be ignored in favour of slotting everybody into an arbitrary 12-month period.

There are so many cases that I could cite, and I am happy to talk about them with the Minister—even those relating to the transfer from primary to secondary school. The whole matter needs to be considered carefully. We must assess the scale of the problem and monitor the impact of the new advice. Having monitored the situation, we must consider whether the schools admission code needs changing in the future.

We also need to consider assessment within the early years foundation stage and how summer-born children are being assessed. This is a huge issue, but my message today is that if parents can demonstrate that they have a strong case that is in the best interests of their children, they should be empowered and enabled to allow their child to start school at the age of five as required, but in reception year.

[Dr William McCrea (in the Chair)]

I will call Alok Sharma now, but let me just say that I will be calling the Minister at 4.20, because she needs to have time to respond to the debate.

16:15

[Alok Sharma (Reading West) (Con)]

I will be brief. Let me first congratulate my hon. Friend the Member for Mid Dorset and North Poole (Annette Brooke) on securing this incredibly important debate. It is an issue that is not aired or talked about enough, and we need to put it at the top of the agenda when we talk about education.

I want to raise the case of my constituents, Mr and Mrs Slade, who approached me two years ago because they wanted their daughter, Ava, who was born at the end of August, to delay her start to school by a year. I have some sympathy with such a view because my older daughter Isabella is also an August-born child. She is doing absolutely fine at school now, but when she first started, her age did make a difference. If she had started a year later, it would have made a difference, but in a positive way.

As I said, Mr and Mrs Slade approached me two years ago, and I wrote to the Department. The then Minister of State for Schools, my hon. Friend the Member for Bognor Regis and Littlehampton (Mr Gibb), gave me a prompt reply. He said:

“It must be the parent’s choice when their child starts school and the law provides flexibility for parents on this issue.”

That was absolutely great news, but he then went on to explain that the parents had to talk to the school, the head teachers, the governing body and the local authority. That was where Mr and Mrs Slade found the huge difference between the theory and the actual practice of getting a delayed start for their child. They battled for almost two and a half years with Reading borough council, which was not as helpful as it could have been.

Mr and Mrs Slade said to me that the local authority effectively hid behind some of the clauses of the admissions code. They admitted that even if their child started in the year when the local authority wanted her to start, she would cope, but no one wants their child just to cope; they want them to thrive in school, and that is what this debate is about. Parents are best placed to judge how well their child will do in a school setting, which is why we should do more to empower them to make those decisions, obviously in consultation with local authorities and governors.

I welcome the guidance that the Department has issued, and I congratulate the Minister on the work that she is doing. I also back my hon. Friend when she says that we need to monitor the advice that is being given and to see whether local authorities are complying with it. We need to give more information to parents, governors and governing bodies. I was a school governor many years ago and feel that this issue should be built into governor training, to explain to governors how they can help parents who want a delayed start for their offspring.

When the then Minister of State wrote to me in 2011, he stated:

“Ms Slade should also be aware that if her daughter were to be educated out of her chronological age group whilst at primary school, any secondary school which she later moved on to would not be obliged to continue this arrangement.”

We also need to consider that matter. I look forward to the Minister’s response.

16:19

[The Parliamentary Under-Secretary of State for Education (Elizabeth Truss)]

I congratulate my hon. Friend the Member for Mid Dorset and North Poole (Annette Brooke) on securing this debate and on her campaign, including the early-day motion, on the issue of summer-born children. I absolutely share the concerns that she has raised about the issues affecting those children. In the Department for Education, summer-born children are heavily represented—I was born in July and the Secretary of State was born in August, although we both went to primary school in Scotland, where the cut-off dates are slightly different.

My hon. Friend made a variety of points, encompassing some of the overall issues about the school system and the early-years system, as well as the specific issue of the admissions code. What we are seeking to do with our education reforms is to increase the level of flexibility that head teachers and teachers have—for example, over how they implement the school curriculum—so that children are not pushed through material that they are not yet ready for and so that more care is taken about the individual’s level of capacity at a stage of learning.

We are also trying to remove some of the barriers between early years and school, so that there is not a sudden jump between them but rather a continuum of age-appropriate learning for children. Those changes are also important in ensuring that each child is treated as an individual rather than as part of a block of children who are pushed through the system.

The statutory school admissions code allows for flexibility in school starting dates, as my hon. Friend pointed out. It requires school admission authorities to provide for the admission of children in the September following their fourth birthday, so that the maximum amount of reception education is available to all children. However, children do not reach compulsory school age until after their fifth birthday, and no parent is obliged to send their child to school before then.

As my hon. Friend pointed out, we released new guidance this summer, making it much clearer to schools about where their responsibilities lie and where the responsibilities of local authorities lie. We need to allow some time for that new guidance to filter through and to ensure that all local authorities and schools understand it. Nevertheless, in that guidance we certainly addressed some of the concerns that she has raised today.

What we want to do is to empower parents to be more demanding about how their child’s level of development is reflected in whether they join reception or year 1 when they enter school after reaching the compulsory school age. My hon. Friend made valid points about issues such as child care costs and other children in the family, which will also have an effect on the decision that parents reach, but I do not think that we can impose a solution from Whitehall.

The way to do things is to empower parents and ensure, first, that they have the complaints and appeals procedures at their disposal and, secondly, that the DFE is following up on those procedures. We have a working group on admissions, which is monitoring this issue. As a Department, we will also be monitoring any complaints made by parents, such as the one that my hon. Friend the Member for Reading West (Alok Sharma) mentioned in his speech, and following up to ensure that our guidance is being adhered to.

At the moment, we do not have data that would demonstrate how many parents of summer-born children request that their child is admitted to the reception class at the age of five, or how many of those requests are granted. That is something that I will look into, to see whether it is possible to get more information to understand what might be the scale of the problem. However, like my hon. Friend, we are concerned about the level of correspondence that we are having on this issue and the level of complaints about it, which is precisely why we issued the new guidance to clarify the situation for schools and local authorities.

The point about flexibility is important, because all children are different. Some children may benefit from entering year 1 as soon as they reach the compulsory school age, while others would benefit from entering reception. It should be the parents who are the primary decision-makers when it comes to deciding which route is most appropriate for their child and which environment will enable their child to thrive.

[Annette Brooke]

If someone sends their child to an independent school, it is clearly available to them to decide which year group they go into. When it is really in the best interests of the child, I want that flexibility to apply to all parents, right through to a situation where perhaps there are disadvantages in the background. So I welcome the Minister’s words, but I would just like her to be a little more proactive as well as responsive to the problem.

[Elizabeth Truss]

We are absolutely clear that parents should be able to say to a school, “We want our child, who is aged five, to enter reception”, if they feel that that is in the best interests of their child. That is what we are elucidating in the new guidance that we issued this summer and that is what we will be following up on with local authorities and schools.

One of the reasons why we issued the new guidance is that we felt that earlier guidance was misunderstood and that it was not necessarily clear enough. I also agree with my hon. Friend’s comment earlier about the “floodgates”. Like her, we do not think that the new guidance will open the “floodgates”; we think that it is about schools being responsive to parental needs and that there are not a massive number of complications in doing that. We want schools to be responsive to parental needs. However, only the parents of a limited group of children—those born between April and August—can lawfully delay entry by a full year. It is those children we are talking about in this debate.

I agree with what my hon. Friend said about the research evidence on summer-born children. We know that they have lower average attainment than their older peers. The attainment deficit decreases over time as they progress through the key stages, but it persists throughout their schooling. Absolute age is the dominant reason for that but it is not the only reason, and there is a statistically significant effect from the starting age or the length of schooling. That is why we want to give maximum flexibility.

I have mentioned the non-statutory advice that we issued on 29 July. We make it absolutely clear that there is no statutory barrier to children being educated outside of their normal year group and that it is unlawful for an admissions authority to have a blanket policy that children are never admitted outside of their normal age group. We make that very clear in the guidance.

I note from my hon. Friend’s comments that she feels that some of that guidance should be clearer, and that is certainly something we can look at. However, the new guidance is considerably clearer than the earlier guidance. We say that the following factors should be taken into account when making a decision about entry: the impact on the child of entering year 1 without having first attended reception class; whether a prematurely born child would naturally have fallen into the lower age group if they had been born on time; and whether delayed social, emotional or physical development is affecting the child’s readiness for school.

Of course, the guidance has just been issued—no doubt partly due to the campaign by my hon. Friend and her colleagues—and we will need to see how it affects behaviour and the level of complaints that we receive.

[Duncan Hames]

I very much welcome the new advice. The Minister will know from a whole spreadsheet of evidence submitted by one of my constituents, Mr Graeme Vousden, that before the new advice was published, local authorities across the country were thwarting the wishes of parents. Subsequent to the publication of the new advice, will she collect evidence to see whether the behaviour of local authorities changes as a result of it?

[Elizabeth Truss]

The Department will certainly want to look at that, to see what the impact of the advice is and whether further advice to local authorities is required. I know that the hon. Member for Mid Dorset and North Poole may seek a change to the statutory admissions policy itself, but I think that we should look at what the impact of this new advice is.

In general, what we want to do is to encourage flexibility and responsiveness to parental needs. There is a wealth of evidence about the importance of following a specific child’s development. We are trying to encourage that development through more flexibility over pedagogy, based in the early years and in school, so that teachers can adjust teaching practice according to where the child is in terms of their level of development. A combination of empowering parents about deciding which year their child joins school and giving teachers the flexibility to teach in the best interests of the child, rather than jumping through hoops in a particular year, will help to ameliorate the situation.

Such decisions are best made at a local level. We have been clear with local authorities about where their responsibilities lie, and about the fact that we want to see them being flexible and giving the parents the choice for their five-year-old child of joining reception or year 1. Having too much central guidance the other way would be wrong. What we need to do is to ensure that local authorities are absolutely aware of their responsibilities.

[Dr William McCrea (in the Chair)]

Order.

Spinal Cord Injuries

Wednesday 4th September 2013 Westminster Hall

16:30

[Ian Lucas (Wrexham) (Lab)]

It is a real pleasure to serve under your chairmanship this afternoon, Dr McCrea. I am pleased to see that the Minister is here for this debate on the important topic of continuing health care for spinal cord injured people. The all-party group on spinal cord injury has had some difficulty engaging with Ministers over the past two years. The Health Minister with responsibility for quality, Lord Howe, and more recently the Minister for Housing, the hon. Member for Hertford and Stortford (Mr Prisk), have both refused to meet the group, which is very unfortunate.

The advantage of engagement is that it enables Ministers to understand better the needs and difficulties of individuals who have to deal with severe spinal cord injuries. Such individuals face great hardship and difficulty, and Ministers should at least be prepared to engage with them and hear what they have to say. I am sure that the Minister will do so today.

I first became aware of the difficulties faced by spinal cord injured people during my work as a practising personal injury solicitor before I came to the House about 12 years ago. I was particularly engaged with the Midlands Centre for Spinal Injury at the Robert Jones and Agnes Hunt orthopaedic hospital in Oswestry. Individuals were often admitted with severe spinal injuries from accidents, and the capacity of the—[Interruption.]

[Dr William McCrea (in the Chair)]

Order. I apologise to the hon. Gentleman, but I must suspend proceedings for a Division in the House.

16:32

Sitting suspended for a Division in the House.

16:43

On resuming—

[Ian Lucas]

I was just talking about the extraordinary work of the Midlands Centre for Spinal Injuries, which I witnessed some years ago and which continues. In connection with the immediate response to serious accidents where people have spinal cord injuries, a miraculous transformation can be carried out, provided that the right level of care is offered by specialists in the immediate aftermath of the accident.

The continuing effects of spinal cord injuries are important, and I want to concentrate on those today. Spinal cord injury results in a combination of the loss of motor, sensory and continence function, making it unique among long-term conditions. It is also a non-improving condition. Once rehabilitation is completed and health care needs have been identified, they are unlikely to decrease. Indeed, they are likely to increase over time, with complications brought on by ageing and as the condition continues. It is essential, therefore, that needs are well managed by a dedicated and trained team who understand spinal cord injuries. That will ensure that health complications and significant cost implications for the national health service are avoided or minimised.

How care is administered is a major concern to many people living with spinal cord injuries. It is not just the individual who is affected by the spinal cord injury; often, the family and the immediate community around that individual must cope with profound pressures. There is an increasing worry that health care provision is becoming a postcode lottery, with clinical commissioning groups interpreting the national framework differently to meet their budgets, rather than the specific needs of spinal cord injury patients.

The landmark legal case of Pamela Coughlan in 1999 set a precedent for how patients with a certain level of injury should expect to be treated. Ms Coughlan, a C5/C6 complete tetraplegic with no significant additional health needs, took her primary care trust to court when they attempted to transfer care provision responsibility from NHS continuing health care, within which health care is free, to the local authority, where charges may have applied.

[Jim Shannon (Strangford) (DUP)]

The hon. Member for Wrexham and I spoke beforehand about this issue and I wanted the information to be recorded. Perhaps the Minister will take it on board as well.

We have a specialised 15-bed unit that looks after the whole of Northern Ireland and its population of 1.7 million people. That unit has everything: trauma, orthopaedics, neurosurgery, neurology and an intensive care unit. There are dedicated teams for physio, nursing, occupational therapy, social work, psychology, dietetics, art therapy and complementary therapies. All that happens under one roof for all the people in Northern Ireland. The hon. Member for Wrexham said to me, “That is the sort of thing we need in my area.” I wanted to put that case on the record. Perhaps the Minister could look to Northern Ireland as an example of something that has been done and done well.

[Ian Lucas]

I thank the hon. Gentleman.

Going back to Ms Coughlan and the issue of continuing care, the ruling found that patients with a certain level of spinal cord injury have health care needs of a “wholly different category” than can be legitimately provided for by a local authority. These are profoundly and almost singularly serious conditions. Even spinal cord injured people with greater health needs than Ms Coughlan are finding themselves assessed as ineligible or seeing their care packages severely restricted, without any evidence of reduced need.

As local health budgets for continuing health care are being squeezed and, in many cases, reduced, many of these people are experiencing reduced care packages and unfair, and potentially unlawful, decisions on eligibility for continuing health care. There are many examples of continuing health care packages being denied or dramatically reduced after reassessments, without evidence of clinical improvement.

One individual who has been affected is John Burns. He addressed the all-party parliamentary group on spinal cord injury last year, and it is occasions like that that show the importance of all-party parliamentary groups. They allow individuals such as John to speak to Members of Parliament and explain the difficulties.

John, who is married with three teenage sons, is a C2 tetraplegic following a water sports accident while on holiday with his family in 2007. Due to the extent of his injuries, John was initially put on a ventilator and awarded NHS continuing health care. After a period in a spinal cord injuries centre, John was discharged into a care home and was successfully weaned from his ventilator. Although he remained paralysed from his neck down, his continuing health care funding was consequently withdrawn, and he was told to expect to remain in a nursing home for the rest of his life. Without the appropriate funding, John was unable to receive the care and support he needed to be with his family and return home. He described that period as being like a “prisoner,” as he was denied time with his wife and sons in his own home. That is the type of individual that we, as a community, should be aiding, rather than denying them health care.

In a meeting with the Spinal Injuries Association, the then Minister of State with responsibility for care services, the right hon. Member for Sutton and Cheam (Paul Burstow), expressed concern about John’s case. Thanks to the involvement of the Spinal Injuries Association, an independent nurse was assigned to assess John’s case and immediately argued in his favour that funding should be reinstated. Yet John had to go through that process to restore the care that had been taken away from him. One can imagine the worry and distress experienced by John and his family during that period.

Despite the precedent of the Coughlan judgment, a large number of spinal cord injured individuals with health care needs demonstrably equivalent to or even greater than those of Pamela Coughlan are still denied NHS continuing health care. The culture of ineligibility continues. What action is the Minister taking to ensure that, where appropriate, spinal cord injured people have access to NHS continuing health care and that the legal ruling is adhered to? Is there a process for monitoring the level of care that individuals with severe spinal cord injuries are receiving from their immediate provider? How will the Department monitor the level of provision that is being given?

The Government must ensure that locally produced policies do not impose inappropriate and potentially unlawful care packages on a spinal cord injured person. Will the Government ensure that clinical commissioning groups adhere to the Coughlan judgment when deciding NHS continuing health care eligibility for spinal cord injured patients? Does the Minister believe that there should be a presumption of eligibility for tetraplegics when determining continuing health care? In addition to their injuries, such individuals and families should not have imposed on them the burden of worrying whether the care they received in the past will continue.

There is also concern that multidisciplinary teams assessing spinal cord injured patients for continuing health care frequently exclude health professionals with expertise in spinal cord injury when reaching their decisions. Along with the judgments that set legal precedents for NHS continuing health care, such as the Coughlan judgment, assessors and decision-making panels must carefully consider evidence from spinal cord injury clinicians and health care professionals from the NHS spinal cord injury centres. It is important that those individuals, who are so skilled in providing care, have input into the process of deciding what care the NHS is to supply in future. Will the Government take action to ensure that health professionals with expertise in spinal cord injury are included in multidisciplinary teams throughout the process?

There have been instances in which local commissioners have introduced policies that randomly restrict the amount of money available for “care at home” packages to the cost of non-complex care in a nursing home, disregarding the special care needs of spinal cord injured people and their right to family life. In an increasing number of clinical commissioning groups, local implementation policies place restrictions on the size of “care at home” packages, often based on arbitrary caps set against the equivalent cost of a placement in an establishment such as a nursing home. That has happened, for example, in the Sheffield clinical commissioning group cluster and in north-west London despite Department of Health practice guidance outlining the rights of people to choose where to live and to take risks, and despite the court’s indication that an individual’s human rights need to be balanced against cost.

The excellent spinal research charity Aspire commissioned Loughborough university to independently consider the impact on people with spinal cord injury of being discharged to nursing homes. The research found that living in a nursing home has a damaging psychological and physical impact on people with spinal cord injury. Spinal cord injury patients should not be expected to live in institutions rather than with their families. Generally, such people view care homes as a last resort.

The individual must be at the centre of the assessment process. Improving the implementation of NHS continuing health care will benefit its members, the clinical commissioning groups and the wider spinal cord injury community. Such issues affect people across the UK. They cause families and individuals profound worry, and they must be addressed urgently. The legal ruling must be adhered to, and the culture of ineligibility must end.

16:55

[The Minister of State, Department of Health (Norman Lamb)]

It is a pleasure to serve under your chairmanship for the first time, Dr McCrea.

I congratulate the hon. Member for Wrexham (Ian Lucas) on securing this debate and on his persistence in pursuing the matter. I have noted what he said about his frustration in securing meetings with a couple of Ministers. At least we have had the chance this afternoon, albeit interrupted, to debate this important issue, and I am more than happy to talk to him if there are issues arising from this debate that he wants to pursue further.

The hon. Gentleman makes the point that how care is administered is incredibly important to the individual, and he also mentioned the profound impact that spinal injury has on the whole family and everyone involved. He talks about the emergence of a postcode lottery, but if we are honest with ourselves, the postcode lottery has always existed to some extent. The interpretation of rules has always varied somewhat across the country. Indeed, the Coughlan case was brought because of a failure to apply rules properly. I will return to that in due course, but it is essential that all areas of the country apply the rules properly, according to the guidelines, and apply the precedent that has been set.

I also pay tribute to the important work of the all-party group on spinal cord injury, which has had a major impact on issues affecting the estimated 40,000 people with spinal cord injury in the United Kingdom and Ireland alone. Every eight hours, a new person is told that they will never walk again, which is a stark reminder of the scale of spinal cord injury.

Thankfully, research is making important strides in developing new techniques to help spinal cord injury patients regain as much function and independence as possible. In 2011-12, the Medical Research Council spent £900,000 on research directly related to spinal cord injury. The Government also fund a wide range of research relating to spinal injury, and through the National Institute for Health Research, the Department of Health is funding research on spinal cord injury in biomedical research centres in Cambridge and London.

There is an increasing range of guidance available to provide advice on the causes, treatment and management of spinal cord injuries. Stakeholders such as the Spinal Injuries Association and Aspire provide information and support services for patients and their families following spinal injury, and we should pay tribute to the work of those organisations. In February 2008, the Royal College of Physicians published a guideline for GPs and other health professionals involved in the management of adults with spinal cord injury in the acute hospital setting. I am confident that that range of guidance will be useful for educating people and, critically, professionals on spinal injuries and how to manage them.

More work is taking place to develop guidance for the treatment of those with spinal injuries. The Department has asked the National Institute for Health and Care Excellence to produce guidance on the assessment and imaging of patients at high risk of spinal injury. NICE is developing five pieces of guidance relating to trauma, with expected publication dates in June and October 2015. Each piece of guidance will focus on a different aspect of trauma care. The guidance on spinal injury assessment will form one part of the wider work and is expected to be published in May 2015.

The hon. Gentleman appropriately raised NHS continuing health care for individuals with spinal cord injuries. NHS continuing health care is a package of health and social care that is arranged and funded solely by the NHS for individuals outside the hospital setting who have complex, ongoing health care needs. It is important to say that eligibility for NHS continuing health care is dependent not on an individual’s condition or diagnosis—it is important to maintain this point—but on the individual’s specific care needs. That must be appropriate, so that what is assessed is what the individual needs.

The assessment for NHS continuing health care is complex and involves a multidisciplinary team co-ordinated by the relevant clinical commissioning group looking at an individual’s needs across 12 care domains and assessing how those needs interact. The process determines whether individuals have what is called a primary health need. If they do so, they will be entitled to continuing health care.

The hon. Gentleman specifically referred to concerns about specialist involvement in continuing health care assessments. The national framework, which underpins the assessment and decision making for NHS continuing health care, makes it clear that someone with specialist knowledge is involved in the process, with other highly skilled professionals, such as doctors, nurses, social care staff and therapists. If that is not happening in an area, that is a failure to follow the national framework and should be challenged. I am interested to hear about cases in which that is not happening, because corners cannot be cut—things should be done properly. He made an important point.

The family or representative may also be involved, to ensure that a holistic picture of the individual’s needs is properly identified. After all, the family probably knows best about what the impact really is.

Individuals receiving NHS continuing health care will have their case reviewed three months after the initial decision and annually thereafter. It is important to remember that the focus of the review is not only whether the individual remains eligible, but whether their needs are being properly met and the package of care remains appropriate. Let me be clear, however, that an individual must be kept fully informed about the process and any proposed change to the care arrangement.

The hon. Gentleman expressed concerns about refusals of NHS continuing health care or the package being drawn too narrowly, suggesting that the Coughlan judgment was not being followed and that cases more serious than the Coughlan one were being refused—I think I have put that correctly, from what he said. I again make the point that if any areas are failing to follow the national framework, that must be challenged. I appreciate that families may not always understand or know how to go about challenging, or what they are entitled to, but we all have responsibility to disseminate that message and to encourage people to challenge decisions that cannot be justified.

[Ian Lucas]

The Minister is being very constructive in his response. Is there any process for monitoring the decisions? Organisations such as the Spinal Injuries Association can bring individual cases forward, but there needs to be some sort of system to ensure that the rules, which I am grateful that the Minister is stressing today, are being enforced as a matter of course.

[Norman Lamb]

The hon. Gentleman makes a fair point. I was about to say that I will ask NHS England to provide me with an assessment of how the work of CCGs complies with the guidelines. The very fact of that request for information will help focus minds and ensure that things are being done properly.

I am aware that there are some concerns about how autonomic dysreflexia is reflected in NHS continuing health care assessments. It is unique to spinal cord injuries and should always be treated as a medical emergency. The needs of individuals experiencing autonomic dysreflexia are to manage both the risk of episodes occurring and the risks involved if and when such episodes occur. Such risks, and therefore the needs, vary from one individual to another. It would be relevant to establish whether the individual has signs and symptoms of an advancing episode or whether the episodes are random and unpredictable.

It has been suggested that more people with spinal injuries are being placed in nursing home settings, rather than being offered a care package in their own home. The national framework is clear that NHS continuing health care packages should be as far as possible personalised—designed to meet that individual’s needs—and that the individual’s wishes should be taken into account. It is our hope that personal health budgets—a concept developed under the previous Labour Government, but strongly pursued under this Government—will give people more personal control over their care.

We recognise that it is more efficient for people with long-term conditions such as spinal cord injuries to have control over their own budget for health and social care, because they are less likely to duplicate services or to choose ones that are not right for them. Beyond being efficient, however, it is simply what we should be doing: we should be putting the individuals in charge and allowing them to determine their priorities. On that basis, CCGs are already able to offer personal health budgets to people on a voluntary basis, if they consider that it is cost-effective and will improve the individual’s quality of life.

We have also brought in legislation that will allow CCGs to offer direct cash payments as a way of managing personal health budgets. However, to make personal health budgets more of a reality for people, we have put measures in place to ensure that CCGs go further than offering them only on a voluntary basis. As of April 2014, those receiving NHS continuing health care will have the right to ask for a personal health budget, including a direct payment. Using a personalised care planning process, personal health budgets help people choose how to meet their health needs in ways that work for them.

I have just set out how the process for NHS continuing health care is intended to work. Let us not pretend, however, that it works perfectly in every case—it clearly does not. I am delighted that the Spinal Injuries Association continues to have a strong presence on the NHS national continuing health care stakeholder group. It is important that its voice and that of the people it represents are heard.

Eligibility for NHS continuing health care depends on a needs-based assessment. Therefore, some individuals will not be eligible, but they must still receive the appropriate level of care and support. Disjointed care is a source of complete frustration for patients and staff alike. To stay relevant to changing needs, different parts of the NHS and other organisations such as social services have to work more effectively together to drive joined-up care.

The first NHS mandate sets out a requirement to provide

“care which feels more joined-up to the users of services”,

and which

“ensures people experience smooth transitions between care settings and organisations”.

That is vital, and there is a total focus in Government on integrating and joining up care around the needs of the individual patient. On that basis, we have asked NHS England to make huge efforts to focus on delivering integrated care and support to improve outcomes for patients and for people who use those services.

I thank the hon. Gentleman for securing the debate. The issues that we have discussed this afternoon are important, because of their impact on people who have sustained a spinal injury which in itself is completely life changing. We must ensure that the care and support systems work to meet their needs and to enable the best possible quality of life and outcomes for those individuals.

Question put and agreed to.

17:09

Sitting adjourned.

Written Statements

Wednesday 4th September 2013 Written Statements

Wednesday 4 September 2013

Gas (Security of Supply)

Wednesday 4th September 2013 Written Statements

[The Secretary of State for Energy and Climate Change (Mr Edward Davey)]

Gas will continue to be a crucial part of our energy mix to the 2030s and beyond. It is therefore essential that we have secure supplies at competitive prices. Great Britain has a well-functioning gas market with high levels of liquidity, and comparatively low wholesale gas prices. Previous independent assessments¹ show that we enjoy high levels of gas supply security provided by a diverse range of supply sources, including our own production, pipeline imports from Norway and the EU, imports from global markets via LNG and storage. These sources have provided reliable gas supply over recent challenging winters, including our highest ever daily gas demand in January 2010 and the protracted cold spell earlier this year.

At the same time, new challenges are emerging, including our increased dependence on gas imports, and greater demand volatility. We therefore already have a range of measures in hand to promote our gas security. We also asked Ofgem to report to us on the outlook for gas security of supply and whether there is a case for further interventions in the gas market. Ofgem’s report, published last November, confirmed the resilience of our gas market. Since then, my Department has been working to assess whether the potential benefits of a further intervention in terms of more secure supply and effects on gas prices might outweigh the associated costs and risks.

We have analysed three interventions in the gas market to establish whether they might improve our gas security cost-effectively. Our analysis shows that, although such interventions could enhance our gas security, under most scenarios they would not do so cost-effectively. If considering only the direct benefits in terms of avoided costs of disruption against the cost of building the storage, the costs outweigh the benefits in all cases. In addition, all options risk unintended consequences through distorting a well-functioning GB gas market or crowding out investment in alternative gas supply sources. These effects could undermine any additional security of supply intervention might bring. Therefore, we see no clear case for a further intervention in the gas market.

Given the importance of gas we will instead press ahead with a range of interventions already in hand to improve our gas security of supply. These include:

Ofgem’s proposals to sharpen incentives on gas suppliers to secure their supply via changes to emergency cash-out processes, and review of the efficiency of our gas interconnectors with Europe;

Our work within the EU to ensure adoption and implementation of a variety of measures to enhance gas security through a well-functioning, integrated and transparent European gas market;

Changes to the electricity market which should provide a further incentive for power generators to safeguard their fuel supplies;

Our work to maximise the economic production of our domestic gas resources including from the North sea and unconventional sources such as coal-bed methane and shale.

We expect these measures will further improve the supply security of GB’s well-functioning gas market. Further details of our analysis and a copy of the cost-benefit analysis can be found at https://www.gov.uk/government/publications/gas-security-policy-assessment.

¹GB Gas Security and Options for Improvement: A report to the Department for Energy and Climate Change”, Poyry, March 2010, “Gas Security of Supply Report: Ofgem report to Government”, Ofgem, November 2012

UK Action Plan on Business and Human Rights

Wednesday 4th September 2013 Written Statements

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

I have today laid before the House a copy of the UK Government paper “Good Business: Implementing the UN Guiding Principles on Business and Human Rights” (CM 8695).

The action plan is the UK’s national implementation plan for the UN guiding principles, which were endorsed in the Human Rights Council in June 2011. In it we make clear the Government’s duty to protect and promote human rights in the business context, outline our commitments to encourage good business practice by UK companies both domestically and internationally, and provide advice to UK companies to help them understand and manage human rights risk as part of their commercial activities.

It is clear that personal freedoms contribute to economic development. Liberties which we take for granted—democracy, good governance, the rule of law, protection of property rights and an open, free and active civil society—create fertile conditions for private sector-led growth. The absence of these fundamental principles can deny peoples their dignity and respect, contribute to political instability and conflict, and limit prospects for prosperity and economic growth.

Promoting trade is vital for our economy and prosperity. Building Britain’s prosperity by increasing exports and investment, opening markets, ensuring access to resources and promoting sustainable growth is one of this Government’s primary objectives. But as British business expands overseas, so too does our responsibility to ensure that our commercial success does not come at a cost to the human rights of others.

We strongly believe that the promotion of business and respect for human rights go hand in hand. In the past, the UK has actively participated or led on several international initiatives which have created guidelines for businesses, including the voluntary principles on security and human rights for extractive industries and as a member of the OECD we have been equally committed to promoting the OECD guidelines for multinational enterprises with businesses. This action plan is a continuance of our commitment. We want British companies to succeed, but in a way consistent with our values. We will engage with British companies to raise awareness of their responsibility to adopt best practice guidelines, and to promote the business case for good corporate behaviour—it helps create jobs, contributes to market sustainability and has potential to generate long-term growth—and to work closely with UK companies who already see the business case for the business and human rights agenda to act as advocates to promote change, both domestically and internationally.

With this action plan, the UK becomes the first country to launch a national implementation plan for the UN guiding principles. It is our commitment to the value of human rights in pursuit of a prosperous Britain. We shall push for the international community to follow our lead and for UK businesses to work with us in taking this proactive action protect human rights and improve the lives of millions.

Prison Capacity

Wednesday 4th September 2013 Written Statements

[The Lord Chancellor and Secretary of State for Justice (Chris Grayling)]

The House is aware of my plans to modernise the prison estate so that we always have enough prison places for those sent to us by the courts but at much lower cost and in the right places to deliver our ambitions for reducing our stubbornly high reoffending rates.

We are doing this through a significant programme of replacing accommodation which is old, inefficient or has limited long-term strategic value and by reshaping the rest of the prison estate so that we are able to release offenders closer to home which we know improves their resettlement and prevents reoffending.

I am able to update the House today on the progress made and next steps in this programme.

In January I set out my ambition to build a new prison and as part of the spending review in June secured a £250 million investment for it to be built in north Wales. I can today announce that, following the assessment of several site options and subject to local planning approval, the new prison will be built on the former Firestone site in Wrexham.

Work will begin on-site next summer with the prison fully operational by late 2017. The new prison will provide up to 1,000 much needed jobs, great opportunities for local businesses and millions of pounds worth of construction opportunities. It also provides north Wales with its first ever prison, offering an opportunity for offenders from the region to be closer to their homes.

I can also announce that I have tasked my officials to come up with plans that would see the existing Feltham young offenders site replaced with a large new adult prison and a new, youth facility on adjoining sites in west London.

In 2012-13 we were able to remove 2,800 old and uneconomic places which has significantly reduced the running costs of our prisons. I announced in January that we will open up an additional 1,260 places in four new houseblocks. The first one at HMP The Mount, is on track to accept prisoners in September 2014. In addition we will open 180 new places at Rochester and Bure this year.

We are now in a position to close a further 1,400 uneconomic places which will save around £30 million per annum. This means the closure of the following prisons by the end of the financial year:

HMP Blundeston

HMP Dorchester

HMP Northallerton

HMP Reading

In addition, we will convert HMP Verne to an immigration removal centre, providing around 600 additional places to hold immigration detainees awaiting removal from the country. Existing staff will continue to run the site but the change means that the Home Office will meet the costs of its operation.

These changes form part of our overall plans that will reduce prison costs by over £500 million within this spending review period.

In addition we will begin discussions with the Duchy of Cornwall about the future of HMP Dartmoor. This lease has a long notice period so nothing will happen immediately but the age and limitations of a prison built in 1809 mean that it cannot have a long-term future as part of a modem prison estate. It therefore makes sense to discuss with the Duchy future options for the site.

It is right that we continue to meet the needs of the prison population. That is why during this year, I commissioned a review on how we best meet the needs of women and conducted a public consultation on proposals to transform youth custody. I anticipate being able to announce the outcome of both in October.

I can however announce two changes as a result of those reviews which form part of our overall prison estate strategy: HMP Downview will stop holding women prisoners and instead will hold adult male prisoners; and HMYOI Warren Hill will stop holding young offenders and will also change to hold adult male prisoners. Both changes will take place by the end of the financial year.