House of Commons

Thursday 5th September 2013 Commons Chamber

Thursday 5 September 2013

The House met at half-past Nine o’clock

Prayers

Thursday 5th September 2013 Commons Chamber

[Mr Speaker in the Chair]

Oral Answers to Questions

Thursday 5th September 2013 Commons Chamber

The Secretary of State for Culture, Media and Sport was asked—

[Richard Graham (Gloucester) (Con)]

1. What recent estimate she has made of the amount of money spent by the national lottery on good causes.

[The Minister of State, Department for Culture, Media and Sport (Hugh Robertson)]

Approximately £30 billion has been raised for good causes since John Major’s Government introduced the national lottery in 1994.

[Richard Graham]

I am grateful to the Minister for that answer. Many people across the country will not necessarily know that the huge increase in Sport England funding for sports facilities through the Inspired Facilities fund was generated by the change this Government made to the lottery funding, and I am very grateful for it. Last week, he saw, with me, the huge improvements made at our newly regenerated Gloucester athletics track and the case prepared by the Gloucester rowing club to make to Sport England. Does he agree that both those things will represent a fantastic Olympic legacy for my city?

[Hugh Robertson]

Yes, I do. One of the best things we have done is to raise the amount of money sport receives through the national lottery, from 13.7% when we came to power to 20% now. That has allowed improvements such as the ones my hon. Friend has detailed, and I congratulate him on his leadership in his constituency and the great work being done by volunteers in all those clubs.

[Jason McCartney (Colne Valley) (Con)]

2. What steps she is taking to ensure that the Tour de France stages held in Yorkshire in 2014 are successful.

[The Minister of State, Department for Culture, Media and Sport (Hugh Robertson)]

The Government are contributing up to £10 million to help deliver a professional, safe and enjoyable Tour de France grand départ in Yorkshire, Cambridge and London in 2014. A board chaired by Sir Rodney Walker has been set up to oversee the delivery of all stages of the event.

[Jason McCartney]

I very much welcome the £10 million of Government funding towards the costs of the Tour de France coming through my constituency and the rest of Yorkshire. One big concern, however, is the security and policing costs. How does the Minister see those being met?

[Hugh Robertson]

When we drew up the budget that Sir Rodney Walker now oversees, it was clear that the local security costs were to be met from the £11 million that will be raised by Yorkshire, not the £10 million raised by the Government. I just say to my hon. Friend, as a gentle point of reference, that if there is controversy about this matter now—I do not know whether there is in Yorkshire—it is pretty extraordinary to have bid for an event without working out how the security is to be paid for.

[Clive Efford (Eltham) (Lab)]

The Tour de France is yet another major sporting event taking place in England. It will showcase one of the most beautiful parts of our countryside, but one issue of controversy will not go away: the fact that there is no women’s race as part of the Tour de France. The success of British women cyclists makes that hard to understand, particularly at a time when we are trying to encourage more women to get involved in sport. Will the Minister join me in backing women cyclists and say to the sport’s governing bodies, the owners of the Tour de France, their sponsors and the media that this is an argument that has long been lost and that they should come together to ensure that there is a women’s part of the Tour de France in 2014?

[Hugh Robertson]

I find myself in complete agreement with my opposite number. Of course, the slight complication with the Tour de France is that it is run by a private organisation, not by the international federation, and it therefore relies on sponsorship and other things. There are a number of factors to sort out, but the central point that the hon. Gentleman makes is absolutely correct—this should be competed for by men and women alike—and I will do everything I can to help.

[Sheila Gilmore (Edinburgh East) (Lab)]

3. What steps have internet companies taken in response to the meeting with Ministers on 18 June 2013.

[The Secretary of State for Culture, Media and Sport (Maria Miller)]

I called the summit to explore, with industry, the Internet Watch Foundation and the Child Exploitation and Online Protection Centre further actions to remove child abuse material from the internet. A zero-tolerance approach was agreed, and good progress is being made across a number of measures. That will see a real change in the way this issue is dealt with in the UK.

[Sheila Gilmore]

I thank the Secretary of State for her answer, but will she be a bit more specific and say what steps have been taken to put age verification in place at the level of filters of browsers, to prevent children from viewing indecent material?

[Maria Miller]

The matter that the hon. Lady raises is slightly different from the one I was talking about, which was the measures we are putting in place to deal with illegal content. Such measures include: a more proactive approach for the IWF; splash pages; and considering further ways in which technology can be used to do more in the area. She is right to raise the matter, because we are also doing a great deal to tackle harmful material that is on the internet, including on access by people who are under 18. The providers are working, in particular, to put in place network-level filtering to make sure that customers access only age-specific material. Those changes are being put in place now, not just for new customers, but for existing customers.

[Duncan Hames (Chippenham) (LD)]

This is indeed a serious matter. The Secretary of State speaks of harmful material. Does she think that a similar approach involving CEOP would prove fruitful in dealing with websites that contain material inciting people to take their own lives?

[Maria Miller]

My hon. Friend is absolutely right that we need to ensure that we tackle such problems, whether they involve bullying online or inciting people to take their own lives. We are working directly with ISPs and with those who have websites to ensure that there is more moderation and that there are opportunities to turn off anonymous postings. Those are the practical measures that can be put in place to help people have safer access to the internet.

[Helen Goodman (Bishop Auckland) (Lab)]

Since we last met, we have seen the National Audit Office’s devastating report on the Government’s failure on broadband, which is extremely important to many people, but I am not going to ask the Government about that—[Laughter.] No, I am not, because also since we last met two children have taken their own lives following cyber-bullying; that is also a matter of extreme concern to people in this country. I have arranged to see the Latvian ambassador to discuss whether ask.fm is co-operating properly with the police. The Government did not even mention social media in their summit conclusions or their communications paper. Why does the Secretary of State not put a legal obligation on social media sites to tackle cyber-bullying?

[Maria Miller]

The hon. Lady needs to be very careful with what she is talking about. We are absolutely taking action on cyber-bullying. There is already guidance in place to help schools and to help children understand cyber-bullying more effectively. It is clear not just from what I am saying but from what the Prime Minister has said that it is absolutely unacceptable to have such abuse online. I am pleased to say that ask.fm has taken the problem very seriously and put in place more robust reporting mechanisms, increased moderation on the site, and given people the opportunity to turn off anonymous postings. Those are the sort of practical changes that can make websites safer for young people to use, but ultimately we must ensure that parents work with their children, too.

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

The Secretary of State has taken significant steps to protect children online, and the introduction of ISP-level filtering is a significant move. Does my right hon. Friend agree that the debate is far more complicated, however, than simply switching the filter on or off? Software developers have a significant responsibility and parents must ultimately be responsible, but does the Secretary of State agree that schools have a part to play by updating their sex education lessons and curriculum to ensure that people understand the greatest risks?

[Maria Miller]

I thank my hon. Friend for his question and he is right: we are at the forefront of online safety. It is not just me saying that; the Family Online Safety Institute says it, too. It is really important that we acknowledge that not only ISPs and people who have websites should take these matters seriously. As he said, parents and schools should take their role seriously, too.

[Bob Blackman (Harrow East) (Con)]

4. What steps she is taking to reduce the number of nuisance calls.

[The Parliamentary Under-Secretary of State for Culture, Media and Sport (Mr Edward Vaizey)]

We have introduced and increased penalties for companies that breach the regulations, we have encouraged greater co-operation between regulators and we have improved guidance for consumers. In our strategy paper, published at the end of July, we made proposals to enable the regulators to share their information better.

[Bob Blackman]

The most insidious calls start with the words, “Don’t worry, this is not a sales and marketing call.” If a person answers the survey, they are told that someone will call them about their needs and a veritable barrage of unwanted sales calls follows. What action will the regulator take to combat this insidious action, and if the regulators will not act, what will my hon. Friend do?

[Mr Vaizey]

I would have thought that the most insidious call started with the words, “I am calling from the Labour party”, but in any event we are going to take action. That includes lowering the threshold at which enforcement action can be taken. We have introduced higher fines and technology will play an important part in enabling better calling line identification.

[Tracey Crouch (Chatham and Aylesford) (Con)]

A constituent of mine was receiving nuisance silent calls. He rang his ISP, which said that it could not help. He rang the Telephone Preference Service, which said that it does not police silent calls. He then rang Ofcom, which told him that it could not do anything and that he should change his number. Is not the problem that no single authority is responsible for dealing with nuisance calls?

[Mr Vaizey]

It is certainly problematic that two regulators deal with the issue, given the nature of the regulations, but one thing that I have tried to do—I think this is working effectively—is to ensure that the Information Commissioner’s Office and Ofcom work together more closely. We want to ensure that they can share data, and they have published a joint strategy paper.

[Mr Philip Hollobone (Kettering) (Con)]

Residents in the borough of Kettering are plagued by nuisance calls and they tell me that, despite registering with the Telephone Preference Service, the calls still get through. What can the Minister or Ofcom—or anyone—do, especially about companies that phone from other countries and jurisdictions?

[Mr Vaizey]

Two important points arise from my hon. Friend’s question, the first of which is that we have to examine carefully consumers’ consent, because we need much more clarity about when a consumer gives consent for a direct marketing call. On calls from abroad, we need to change the technology, but I was pleased by BT’s evidence that we will begin to be able to identify such calls.

[Karen Lumley (Redditch) (Con)]

5. What steps she is taking to deliver a lasting legacy from the London 2012 Paralympic games.

[The Secretary of State for Culture, Media and Sport (Maria Miller)]

Paralympic legacy is a key element of the Government’s and the Mayor of London’s legacy programme. Disabled people’s participation in sport is increasing and more is being invested to make disabled sport accessible.

[Karen Lumley]

The British Paralympians made our country proud last year, but last week the lesser known Special Olympics, which does a great job alongside the Paralympics, were held in Bath. Will the Secretary of State join me in congratulating the “tremendous ten” from Redditch on winning more than 20 medals in those games, including 15 golds?

[Maria Miller]

I absolutely join my hon. Friend in congratulating the Special Olympics on organising a fantastic and successful event in Bath, which my right hon. Friend the Member Minister for Sport attended. I also join her in celebrating the success of the Redditch athletes.

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

6. What steps she is taking to strengthen grass-roots sport.

[The Minister of State, Department for Culture, Media and Sport (Hugh Robertson)]

Sport England is investing more than £1 billion in youth and community sport between 2013 and 2017. This includes money invested through the whole-sport plans, school games and the facilities development fund, which, at the current reckoning, has improved about 1,400 sports clubs.

[Mr Raab]

Having mentored at the Fight for Peace boxing and martial arts academy in Newham, I have seen at first hand its innovative five-pillar model to get NEETs—those not in education, employment or training—into work or study. A review by the Laureus Foundation found that it saved £4 for every pound invested by cutting crime and welfare dependency. Will my right hon. Friend and the Secretary of State come to have a look at the academy and see what the Government can do to put their weight behind it?

[Hugh Robertson]

Of course. That would be an enormous help to those of us who believe in the power of sport to achieve such outcomes, so perhaps my hon. Friend will also highlight the case to the Department for Work and Pensions and others interested in this area.

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

But what is the Minister doing about swimming? Does he not realise that it is vital that we build on the Olympic legacy for swimming? Will he meet the Education Secretary to ensure that the Government follow through the recommendation of the Education Committee’s “School sports following London 2012” report that there should be a plan for all schools to access swimming pools? Will he also support my campaign to keep Holden Lane pool in Stoke-on-Trent open?

[Hugh Robertson]

We and the Department for Education are looking at the Select Committee report carefully. I was at a meeting on school sport at the Department for Education only yesterday, so I can give the hon. Lady an absolute commitment. However, I would be a little nervous about giving her an absolute commitment about her swimming pool without knowing the facts. There has been a problem that pools built in the 1950s, ‘60s and ‘70s are no longer economical, for environmental and other reasons, whereas new pools have a much better performance, so I would need to be sure that her pool was not part of that group.

[Neil Carmichael (Stroud) (Con)]

Will the Minister join me in thanking Sport England for its investment in Nailsworth tennis club and the Football Foundation for its investment in Frampton football club? He will recognise that those are examples of the investment that is making a real difference to community sport throughout my constituency.

[Hugh Robertson]

I certainly congratulate Sport England, which deserves particular credit for the way in which it runs the “Places People Play” fund, which I suspect was responsible for the first of the improvements that my hon. Friend mentioned. That fund could not have been put in place without the increase in funding that sport got from the national lottery in 2010.

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

Does the Minister share my concern that survey after survey shows that fewer and fewer children are participating in sport in school?

[Hugh Robertson]

I am not sure that that is entirely right. If one talks to many of the big sport governing bodies, such as British Cycling, one hears that huge numbers of people who are cycling are not picked up by the exacting criteria on which the surveys are based. As the hon. Gentleman knows, starting this September—this was the point of yesterday’s meeting—the new primary school sports premium means that £150 million will be shared by every primary school in the country. Each school will receive between £8,000 and £10,000 specifically ring-fenced to spend on sports. I would be very disappointed indeed and there would be real questions in the House if that did not produce a substantial upturn.

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

There are some excellent legacy initiatives, but the one thing that was not there initially was connecting ordinary people with the “be inspired, get involved” local community sporting opportunities. The Prime Minister has so far not met me and now the “get involved” initiative has written to all councils in England and Wales. Will the Minister now meet me, the Sport and Recreation Alliance and the Community Sports Partnership Network to discuss how the Government can support this initiative?

[Hugh Robertson]

Yes.

[Alison McGovern (Wirral South) (Lab)]

Greg Dyke has recently taken the helm at the Football Association, which is responsible for grass-roots football. Does the Minister agree, as I do, with Henry Winter of The Daily Telegraph, who says that Greg Dyke has set the wrong targets, and that rather than focusing on the performance of the England team, the FA should be promoting more coaches, to do some real good for grass-roots football?

[Hugh Robertson]

I thank the hon. Lady for that one: enter the controversy on day one! One thing that we learned from the Olympics last summer is that one of the very best ways of getting more young people to play sport is to put role models in the shop window. The honest answer to her question is that it is a combination of the two things. If the England team can win a World cup by 2022, which I hope very much it can—it would be nice if it won one in 2014, actually—that will be of enormous benefit. The Government contributed to the new National Football Centre, precisely to achieve the objectives that she shares.

[Ms Harriet Harman (Camberwell and Peckham) (Lab)]

Despite the good work that is obviously going on all around the country, participation in sport is falling, especially in school sport. [Interruption.] The Minister says that it is not, but the Chance to Shine survey shows that half of all pupils are not even doing two hours’ sport a week, the Smith Institute survey shows that 68% of school sports staff report a decrease in participation, and his own Department’s figures show a 10% fall in the number of primary school children taking part in sport. That is very worrying indeed. My hon. Friend the Member for Stoke-on-Trent North (Joan Walley) mentioned the Secretary of State for Education, and I am sure that the Minister will agree that as in so many ways the Secretary of State is making matters worse here. So often, sport is teamwork. For the sake of sport, may we have some teamwork across Government? A year on from the Olympics, the price that is being paid for this Government’s dismantling of the programmes that the last Government put in place is now becoming clear.

[Hugh Robertson]

Nothing could be further from the truth. The last active people survey showed that since we won the bid in 2005, against an exacting target, 1.4 million extra people were playing sport who were not doing so in 2005. As for dismantling the target, I seem to remember that it was the Government in which the right hon. and learned Lady served who cut the amount of funding that sport gets through the national lottery from 20% when they came into power in 1997 to 13.7% when we took power in 2010—something we have now reversed.

Broadband

[Jeremy Lefroy (Stafford) (Con)]

7. What progress her Department has made on the roll-out of broadband to rural communities; and if she will make a statement.

[The Secretary of State for Culture, Media and Sport (Maria Miller)]

Thirty-eight local broadband contracts have now been signed under our rural broadband programme, representing over 95% of the total project funding allocations. Ten projects have already provided their first superfast broadband connections and delivery is now moving ahead across the country.

[Jeremy Lefroy]

My constituents in Brocton and other villages, especially those who work from home or run businesses there, are looking forward to faster broadband speeds. What assessment has my right hon. Friend made of the benefits of superfast broadband in rural areas?

[Maria Miller]

There is an enormous amount of evidence of the economic advantages in not just rural areas but across the country of faster broadband, and that is why the Government are putting in place a programme that will see more than £1 billion-worth of investment going into this vital infrastructure.

[Stephen Timms (East Ham) (Lab)]

11. The National Audit Office has exposed lamentable failings in the rural broadband programme, including the absence of competitive provision, which we have discussed in the Chamber. Its report tells us that BT is to be handed £1.2 billion for this project, but, for example,“The Department does not know how much contingency BT has included.”Will the Secretary of State insist that BT provide full 20:20 cost-transference before public money is handed over?

[Maria Miller]

The right hon. Gentleman should also acknowledge that the NAO report stated that the value-for-money controls in contracts appeared to be robust. We all know that BT will be paid only on the basis of actual eligible costs incurred. I hope he will join me in celebrating a programme that will deliver such an important piece of infrastructure to communities up and down the country.

[Mr Laurence Robertson (Tewkesbury) (Con)]

8. What progress she has made on replacing the horserace betting levy as a means of funding horse racing; and if she will make a statement.

[The Minister of State, Department for Culture, Media and Sport (Hugh Robertson)]

I agreed to extend the time scale for discussions between racing and the bookmakers on a long-term deal to 31 October, as a voluntary agreement is far preferable to Government intervention. I strongly encourage both sides to agree a deal that includes a contribution to cover the offshore business. I am also looking closely at the details of the recent EU Commission state aid ruling on a levy for online gambling in France and will consider the implications for any read-across to our own process.

[Mr Robertson]

I thank the Minister for that response. He will be aware that discussions on how to replace or improve the levy have been going on for a long time and that racing continues to be underfunded. Does he agree that, although there is the 31 October deadline for the levy negotiation, it is important that racing and betting come to a more commercial agreement? Will he continue to work with both parties to bring about such an agreement?

[Hugh Robertson]

Certainly. Given the importance of both the racing and betting sides to the industry, it remains a matter of some despair to me—I think that this view has been shared by successive Governments—that in this day and age the two sides cannot get together and conclude a voluntary agreement. It absolutely should be commercial, and I hope that any agreement reached by the end of October will be for a long-term settlement to give the industry the stability it needs.

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

9. What steps she is taking to improve the quality of broadband provision in urban areas.

[The Parliamentary Under-Secretary of State for Culture, Media and Sport (Mr Edward Vaizey)]

Under our super-connected cities programme, we have made £150 million available to support broadband in cities across the country, including Edinburgh. It is one of five cities piloting the voucher scheme, which will eventually reach 22 cities.

[Mark Lazarowicz]

Edinburgh is indeed one of those cities, and that support from the Government is welcome, but there are households right in the city centre that, under present plans, will not get superfast broadband because, on the one hand, BT says that providing them with it would not be commercial and, on the other hand, they are regarded as areas in which it can be developed commercially so they do not get aid under EU state aid rules. Will the Minister get involved and ensure that all households in urban areas get superfast broadband and are not left out, as some of my constituents will be?

[Mr Vaizey]

We are determined that by the end of 2015 every house will have at least 2 megabits broadband, but I will certainly work with the hon. Gentleman to ensure that if there are pockets of Edinburgh that will not get access to superfast broadband, either commercially or under the super-connected cities programme, we will look at creating a solution.

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

What assessment has the Minister made of the conclusion that the Government will fail to reach their urban targets for rolling out superfast broadband and that rural broadband speeds will remain woefully slow?

[Mr Vaizey]

My conclusion is that rural broadband speeds will increase considerably. We are on target to reach 88% of the country with superfast broadband by the end of 2015, and I fully expect us to reach 90% in early 2016. We will be reaching 10,000 homes a month by next month, and I fully expect that pace to continue.

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

May I remind the Minister that literally four miles from here, in Rotherhithe and Surrey Docks, in the capital city, there are still areas that are have woefully slow broadband, to the disadvantage of a very dynamic community? Will he look again to see whether we can speed up both BT and the programme so that the capital city, like the rest of the country, can have the broadband it needs to be the most efficient and effective that it can be?

[Mr Vaizey]

I will happily work to ensure that for the capital. There will always be pockets of slow broadband. I was interested to read recently about a couple from Cornwall who went to visit Google in silicon valley and found that the superfast broadband speed in the hotel was slower than it was in Cornwall, which is the result of our programme.

[Ann McKechin (Glasgow North) (Lab)]

10. If she will publish maps showing which areas of the country are not expected to be covered by broadband by 2015.

[The Parliamentary Under-Secretary of State for Culture, Media and Sport (Mr Edward Vaizey)]

The Government are encouraging all broadband projects to publish maps showing their expected coverage of superfast broadband, and I hope that the Scottish Government will do likewise.

[Ann McKechin]

I am grateful to the Minister for his reply and hope that he is successful in his efforts to persuade the Scottish Government to release the information. Social landlords in Glasgow tell me that many areas in the city lack any basic infrastructure. Given that access to basic broadband is increasingly a matter of social justice, does the Minister agree that the public should automatically know where not-spots are located so that they can hold Governments and providers to account?

[Mr Vaizey]

We have asked local authorities to make this information available where it is appropriate. The plans are set out and they may change, but each local authority has to make the decision by itself. I will happily meet the hon. Lady to discuss the provision of broadband in social housing in Glasgow and work with her to see what we can do to increase speeds there.

[Julian Smith (Skipton and Ripon) (Con)]

North Yorkshire has recently published its maps and is very close to getting to 95% coverage across the county. We need a couple of million pounds more from Government. Will the Minister use his charm and persuasive ability to urge Broadband Delivery UK to give it to us?

[Mr Vaizey]

As Opposition Members stress repeatedly, it is important that we ensure that we get value for money. If my hon. Friend wants to make the case to me, I will listen. North Yorkshire is already three months ahead of schedule, and that is symptomatic of the programme, which is beating its targets all the time.

[Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)]

I represent Shoreditch, which has a reputation for being a very connected, tech-focused area of London, yet I am inundated with complaints from businesses and residents about the problems of physical connectivity, the time it takes to make the connection, and particularly about the virtual monopoly of BT Openreach, the charges it makes, and the service it provides to businesses such as Perseverance Works. Will the Minister meet me to discuss this and see what can be done to make sure that we have proper connectivity in Hackney?

[Mr Vaizey]

Of course I will meet the hon. Lady to discuss it. However, as regards BT’s so-called monopoly, it is important to stress that BT has the lowest market share of any incumbent provider in any major European country. BT Openreach is open to all providers, such as TalkTalk and Sky. We have some of the lowest broadband prices in Europe, and we should celebrate that.

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

12. What recent discussions she has had with the BBC Trust about that BBC attracting a more diverse work force.

[The Secretary of State for Culture, Media and Sport (Maria Miller)]

The BBC’s work force and output should reflect the diversity of Britain today. My Department and I have had regular discussions with the BBC about this, and in May 2013 I wrote to the director-general seeking his support for our “Think, Act, Report” initiative. I encourage all broadcasters to tap into the creative talents of everyone in the UK, regardless of their age, gender, ethnicity or disability.

[Mr Sheerman]

Is the Secretary of State aware, though, that if one asks those at the BBC how many people they employ have been state educated, they look very shifty and drop John Humphrys into the conversation. It is a fact, in my experience, that very many of the senior personnel in the BBC are from private, independent school backgrounds. Is it not about time that this great corporation opened its doors to talent from the state sector as well?

[Maria Miller]

The hon. Gentleman is absolutely right to say that there should be transparency across the BBC’s activities. As a state-educated Secretary of State, I think we should be proud of people who have had a state education and have leading positions in this country.

[Mr Speaker]

On that subject, I call Mr Philip Davies.

[Philip Davies (Shipley) (Con)]

Does the Secretary of State agree that the biggest problem with the lack of diversity at the BBC is the political viewpoint of the people who work there? To that end, what is she saying to Lord Hall, who has started by recruiting James Purnell to a highly paid job without any advert whatsoever, and he has started to recruit his new Labour chums to senior positions in the BBC too? Does she agree that it should be the British Broadcasting Corporation, not the Blairite Broadcasting Corporation?

[Maria Miller]

My hon. Friend is of course absolutely right that the impartiality of the BBC is one of its cornerstones and is vital. I always keep these things under careful review.

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

13. What recent assessment she has made of the skills required by the creative industries.

[The Parliamentary Under-Secretary of State for Culture, Media and Sport (Mr Edward Vaizey)]

The Government provide funding for the sector skills councils for the creative industries to ensure that people in the creative industries have the right skills to grow their businesses and compete successfully on the global stage. We have also set up skills funding schemes such as the skills investment fund and the digital content production fund.

[Debbie Abrahams]

The creative industries are among the most successful in the country, they are vital for the economic recovery and are a key sector of the future. The Sharp project in Manchester has told me that the UK video gaming industry is fast losing the skilled coders that it needs to continue. Has the Secretary of State had any discussions with the Secretary of State for Education and the Chancellor about the promised developments on the information and communications technology curriculum and tax breaks to support the industry?

[Mr Vaizey]

Yes, I have. In fact, I am very pleased to say that one of the first things I did as a Minister was commission a report on skills which has been adopted by the Department for Education. I was pleased to read an article by the Chancellor in The Observer—that wonderful Sunday newspaper—saying that the most important change this Government are making in technology is changing the information and communications technology curriculum from one in which children passively receive technology to one in which they actively learn to code.

[Justin Tomlinson (North Swindon) (Con)]

Working with UK games industry representatives from UKIE—the Association for UK Interactive Entertainment—and TIGA, we were delighted to secure the UK games tax relief, a significant boost to the creative industries. Will the Minister provide an update on the unhelpful European Union Commission investigation?

[Mr Vaizey]

I would never accuse the European Commission of being unhelpful. It was very quick to allow us to introduce our very important tax credits for high-end television and animation. It has concluded its consultation on video games tax relief and I expect a decision in the very near future.

[Julie Hilling (Bolton West) (Lab)]

14. What discussions she has had with the Secretary of State for Foreign and Commonwealth Affairs on the 2014 winter Olympic games in Sochi, Russia.

[The Minister of State, Department for Culture, Media and Sport (Hugh Robertson)]

I have regular discussions with my colleagues at the Foreign and Commonwealth Office on a range of issues, including the 2014 winter Olympic games in Sochi.

[Julie Hilling]

But what assurances has the Minister received on the safety of lesbian, gay, bisexual and transgender athletes and spectators who hope to attend the 2014 winter Olympics?

[Hugh Robertson]

The British Government remain greatly concerned about the growing restrictions on LGBT freedoms in Russia, and we have repeatedly raised those concerns, including at the 2013 UK-Russia human rights dialogue in May. The Prime Minister raised the issue directly with President Putin during a meeting in Downing street in June ahead of the G8 summit, and it will be raised again at the G20 this weekend.

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

T1. If she will make a statement on her departmental responsibilities.

[The Secretary of State for Culture, Media and Sport (Maria Miller)]

Over the summer we published our “Connectivity, Content and Consumers” paper and our consultation on media plurality, and, as the House has already heard, rural broadband roll-out continues apace. We have also celebrated one-year anniversaries of the Olympic and Paralympic games, and along with the rest of the nation we have celebrated the victories of Andy Murray, the Lions squad and the women’s and men’s cricket teams’ Ashes triumph.

[Eric Ollerenshaw]

May I begin by thanking my right hon. Friend for taking the time to meet Broadband for the Rural North in my constituency? How will she ensure the progress of community-led schemes such as B4RN, which is trying to bring superfast broadband to some of the most isolated parts of my constituency? How will that progress continue when B4RN has to co-exist with much larger contracts held by British Telecom and Lancashire county council?

[Maria Miller]

I thank my hon. Friend for his question. I applaud the work I saw when I visited B4RN, particularly that of Barry Forde, who is leading the community project. I fully support community projects—they are doing incredible work—and I have asked all local authorities to do what they can to support them and in particular to publish the maps of coverage. As a result of my hon. Friend’s hard work, Lancashire country council has agreed to work with B4RN to find a way to take the project forward.

[Dan Jarvis (Barnsley Central) (Lab)]

The challenges facing seaside towns are distinctive and reach across Government Departments. Last week, Labour’s document “Seaside Towns: What matters to coastal communities and economies” highlighted the fact that seaside towns are now among the most deprived areas in Britain. Given their importance to our tourism economy, what is being done to co-ordinate effort across Government to tackle the crisis facing our seaside towns and to give them the opportunity to once again flourish as thriving tourist destinations?

[Maria Miller]

The hon. Gentleman is absolutely right to pay tribute to the hard work of those who provide hotels and other attractions in our seaside towns. Our GREAT campaign features the beauty of our coastline as one of our key assets. I do not think that the hon. Gentleman’s proposed tourism tax would do anything to develop the future of our coastal towns. I urge him to reconsider it and to support our tourism industry.

[Mark Garnier (Wyre Forest) (Con)]

T2. My right hon. Friend will be well aware of the recent report published by the all-party parliamentary group on heritage rail and of the significant contribution that the largely voluntary organisations in that area make to the UK tourism industry. I urge her to make every effort to continue to support their hard work, in particular through the support of VisitEngland.

[Maria Miller]

My hon. Friend is right that heritage railways can provide a focus for tourism in local areas. The Watercress line in Hampshire provides that, as does the Severn Valley railway in his constituency. I will continue to do everything that I can to encourage VisitEngland to offer the support that is important, particularly with regard to marketing this fantastic asset of our British heritage.

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

T3. Users of social media sites increasingly use them to advertise the sale of sex online. The law in this area is often unclear and contradictory. Will the Department make legal guidance available to social media sites and Members of the House so that we can help to reduce demand for the vulnerable women who are often exploited in this trade?

[Maria Miller]

Whatever is illegal offline is illegal online. Any activity that is undertaken by the sites that the hon. Gentleman talks about should be carefully looked at to ensure that it does nothing to harm people, particularly people under the age of 18 who might be accessing those sites.

[David Mowat (Warrington South) (Con)]

T5. The major UK sporting event of the year will soon kick off. The rugby league world cup will comprise 14 nations and Warrington looks forward to welcoming some of them. Will the Minister confirm that that event is one of his Department’s main priorities this year and outline the support that it is providing?

[The Minister of State, Department for Culture, Media and Sport (Hugh Robertson)]

I certainly shall. Of course, the world triathlon series is coming to this country before the rugby league world cup kicks off in the autumn. That event is a priority. The Government have provided all the usual support in respect of visas, security and the necessary insurances for the international body. Exceptionally, we have also provided a direct grant to the rugby world cup itself. It has been fantastically run. It is 50 days today until it kicks off and I wish it every success.

[Mr David Hanson (Delyn) (Lab)]

T4. Wales had a successful Olympics, which included Jade Jones from my constituency winning gold. Have Ministers seen the comments of the chair of Sport Wales, who said that the cuts to local authorities in the United Kingdom were putting the Olympic legacy at risk? Does the Minister agree?

[Hugh Robertson]

No, I do not. Let us look at the Olympic legacy. The fact that we ran the best ever Olympic and Paralympic games has been a fantastic boon for this country. We are the first home nation ever to increase the investment in Olympic and Paralympic athletes—the investment in Paralympic athletes has increased by 43%. Participation is up by 1.4 million, an extra £150 million is going to primary schools and we have assembled the best ever list of major sporting events to come to this country. No other host nation has assembled a legacy to beat that.

[Jason McCartney (Colne Valley) (Con)]

T6. With the Tour de France coming through my constituency next year and the rugby league world cup game between England and Ireland being played at the John Smith’s stadium in Huddersfield on 2 November, B and Bs and hotels in my part of the world are chock-a-block with bookings. Will the Minister confirm that the Government have no plans to introduce a holiday tax, which would increase the cost of overnight stays, because that idea was recently suggested by a shadow Minister?

[Hugh Robertson]

I can do better than that and point the finger at the right hon. Member for Tooting (Sadiq Khan) as the guilty party. He proposed a tourism tax for London at a time when visitor numbers are up by 12% and spend by 13%. That is a fantastic legacy from 2012 and it would be folly beyond measure to kill it with the old tax-and-spend policies of the Labour party.

[Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)]

Last week, I had the pleasure of launching Turning Earth, a new ceramics studio that is partly funded through crowdfunding. The Financial Conduct Authority is currently consulting on the future of crowdfunding. Given its importance to the creative industries in my area and up and down the country, is the Department having a serious input into that inquiry and having discussions about what creative businesses need?

[The Parliamentary Under-Secretary of State for Culture, Media and Sport (Mr Edward Vaizey)]

I absolutely agree with the hon. Lady that crowdfunding is an option for the creative industries and the arts. We will certainly be involved in that consultation. We listen to representations from trade bodies such as UKIE, the video games trade body, on crowdfunding.

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

T7. I welcome the fact that UK broadband speeds have increased by a fifth in six months. However, what progress has the Department made in getting BT to disclose the 10% of areas that it will not cover by 2015, so that smaller providers can help plug the gap?

[Mr Vaizey]

I thank my hon. Friend for that question. It is important to stress that local authorities are in the driving seat in broadband roll-out. Whether to share roll-out plans is a decision for them and some are keen to manage demand. The Secretary of State has written to all local authorities and urged them to share their roll-out plans with their communities, precisely so that community broadband providers have the opportunity to plug the gaps.

[Stephen Timms (East Ham) (Lab)]

The National Audit Office has told us that the rural broadband programme is already running 22 months late. It also states that

“the Department does not have strong assurance over the appropriateness of the levels of contingency”.

May I press the Minister again to ensure that adequate cost data are provided by BT before money is handed over, not least so that there is a fair opportunity for community initiatives such as the one we heard about a few minutes ago?

[Mr Vaizey]

First, it is important to stress that the broadband programme is going extremely well. As I have said before, we should reach 88% coverage by the end of 2015 and 90% in early 2016. That is far ahead of Labour’s plan, which was only to get to superfast broadband by the end of 2017. It is also important to stress that the NAO acknowledged that the in-life controls in local authority contracts with BT were robust. We follow exactly the same procedure as that used in Cornwall, where BT has gone from 80% to 95% coverage for the same amount of money, and we have robust cost controls.

[Charlie Elphicke (Dover) (Con)]

In Dover and Deal, people complain bitterly about how long it takes to get a broadband connection and how long it can take to get it sorted out if the connection goes wrong. Given that the infrastructure provider is effectively a monopoly provider, is it not important that we have a better service?

[Mr Vaizey]

May I say what a pleasure it was to visit my hon. Friend’s constituency the other day, to see some of his historic churches and to open the Deal arts festival?

I hear what my hon. Friend says. Those questions do arise, but I know that BT Openreach works hard to ensure that it can give the best customer service possible. We have regular discussions with BT Openreach and other major providers to ensure that customer service is good.

The Minister for Women and Equalities was asked—

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

1. What recent consultations she has had with employers’ organisations on the treatment of women who return to work after maternity leave.

[The Parliamentary Under-Secretary of State for Women and Equalities (Jo Swinson)]

As part of the consultations on introducing shared parental leave, I have had a number of discussions with employer representative groups and employers, as well as family representative groups, about the issues surrounding women returning to work after maternity leave. Those groups have included the British Chambers of Commerce, the CBI, the Federation of Small Businesses, the TUC and Working Families, as well as employers such as BT and Lloyds.

[Mr Sheerman]

As someone who has three daughters, all of whom have children and have had maternity leave, and who have demanding jobs, may I tell the Minister that the Government’s record since 2010 is not good? Recent independent reports show that family incomes and women’s incomes have declined, and we still have not addressed the thing that prevents the most talented people in our country from getting back to work—the cost of child care. When will the Government tackle that?

[Jo Swinson]

The hon. Gentleman is right to mention the cost of child care, and the Government are well aware of the challenge that it poses for working mums and dads. That is exactly why we have announced a new tax break of £1,200 per child per year for child care costs. Just this week, we have extended the free early education entitlement to two-year-olds, and it will double next year to include the most disadvantaged 40% of two-year-olds. There is also an additional £200 million in universal credit. We recognise the important point he raises and are acting on it.

[Julian Smith (Skipton and Ripon) (Con)]

Will the Minister do everything she can to encourage employers to keep in touch with their employees during maternity leave? That would improve many of the challenges that exist.

[Jo Swinson]

My hon. Friend makes a very valid point. Ensuring that employers and employees stay in touch during the period of maternity leave can ease the return to work and make the process work better for everybody involved. The “keeping in touch days” that were introduced fairly recently—within the last few years—as part of maternity leave have helped in that. We are of course considering how that successful initiative can be extended further through the shared parental leave that we are introducing.

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

I know that the Minister will have every reason to agree with me about the importance of supporting maternity leave for working women. We wish her well. However, she will also be appalled by the figures that one in seven women on maternity leave lose their job and half return to jobs that are worse than those they left. Discrimination against someone just because they are on maternity leave is obviously illegal, but the Government have now decided that new mothers who want to take their case to an employment tribunal will have to pay £1,200 to do so. That is the equivalent of nine weeks’ maternity pay. Does she think that will make it easier or harder for new mothers budgeting for a young family to challenge maternity discrimination?

[Jo Swinson]

The right hon. Lady raises a variety of important points, and I thank her very much for her kind words. I agree that maternity discrimination is unacceptable—of course, it is also illegal. Any employer worth their salt would not dream of doing it, but some will. It is important that we proceed on the basis of evidence. I would be happy to look at the analysis I have requested from Slater and Gordon, which I understand did some of that research, because it does not necessarily tally with the figures that also exist which say that 84% of women return from maternity leave to the same job they had before. It is important we get to the bottom of that.

I understand the right hon. Lady’s concern on employment tribunal fees, but it is important to see the whole picture. It is not the case that most women who want to take up a case of maternity discrimination will be forced to pay such a fee. The vast majority of cases can be dealt with well outside the tribunal system. The Government’s employment law reforms have encouraged more cases to be conciliated at an early stage through ACAS. Only a tiny number of cases ultimately get to tribunal—300 went to a hearing last year. Anyone who wins their case has a good chance of having their fees paid by the employer if ordered by the tribunal. In addition, a remissions regime is in place for those who are unable to afford the fees.

[Mr Speaker]

There is certainly scope for a one and a half hour debate in Westminster Hall on the matter, and quite possibly for a full day in the Chamber.

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

2. What plans the Government have to bring forward legislative proposals for equal pay.

[The Parliamentary Under-Secretary of State for Women and Equalities (Jo Swinson)]

From October 2014, employment tribunals will be required to order an equal pay audit where an employer has broken the law on equal pay. The Government’s “Think, Act, Report” initiative promotes greater transparency on gender employment issues. More than 125 companies are now supporting the initiative, representing nearly 2 million employees.

[Simon Hughes]

Given that most part-time workers are women, that most low-paid jobs are part-time jobs, and that the average hourly wage for a woman doing part-time work is less than three quarters of the hourly wage of a full-time employee, will my hon. Friend the Minister use her energy and effectiveness with her team to ensure that women in part-time work get a fair deal and equal pay as soon as possible?

[Jo Swinson]

My right hon. Friend is right to raise the issues of part-time and full-time employment. One problem identified by, among others, the Women’s Business Council, is that there is often a shortage of senior roles available on a part-time or job-share basis. The Government are taking steps to help to improve the situation by extending the right to request flexible working to everyone, which should help to ensure that it becomes more of a cultural norm rather than an anomaly purely for parents. I take his point and we will continue to work on that.

[Glenda Jackson (Hampstead and Kilburn) (Lab)]

I entirely agree with the right hon. Member for Bermondsey and Old Southwark (Simon Hughes) on part-time working, which makes things particularly difficult for women, but will the Minister also look at the problem of zero-hours contracts, which have a desperately difficult impact on women?

[Jo Swinson]

The hon. Lady will be glad to know that the Government are looking at zero-hours contracts. The Department for Business, Innovation and Skills, in which I am also a Minister, undertook an information-gathering exercise over the summer. We are looking closely at what can be done to prevent the abuse of zero-hours contracts where it exists.

[Charlie Elphicke (Dover) (Con)]

3. How much funding the Government provided for the Equality and Diversity Forum in 2012-13; and for what reasons this money was allocated.

[The Parliamentary Under-Secretary of State for Women and Equalities (Mrs Helen Grant)]

The Equality and Diversity Forum is an independent network of equality and human rights organisations. The Government did not fund any of its activities in 2012-13.

[Charlie Elphicke]

Is the Minister aware that some of the forum’s political activities could breach the Charity Commission’s rules on campaigning and political activity?

[Mrs Grant]

I thank my hon. Friend for making that point. It would be absolutely unacceptable for any charity to behave in a way that breached its regulatory requirements. The Government would not accept any behaviour of that sort or condone such activity. If he remains concerned, I advise him to take the issue up with the forum, the Charity Commission or both.

[Yvonne Fovargue (Makerfield) (Lab)]

The Government have cut by almost 70% the budget of the Equality and Human Rights Commission, which funds the work of the EDF. What assessment have the Government made of the impact of those cuts on the EDF’s work and the work of the other bodies it supports?

[Mrs Grant]

Yes, there have been changes, but the EDF is still capable of doing all the activities it needs to do. The forum is a valuable component that does valuable work. I have, on occasion, been lucky enough to be invited to attend meetings and to speak at them.

[Margot James (Stourbridge) (Con)]

4. What activities have taken place to promote the launch of the report of the Women’s Business Council on maximising women’s contribution to future economic growth; and if she will make a statement.

[The Minister for Women and Equalities (Maria Miller)]

Under this Government more women are in employment and in self-employment than ever before, but there is much more still to be done if we are to help women to achieve their full potential in growing our economy. We strongly welcome the recommendations of the Women’s Business Council. Across Government we are working with business to ensure that they are implemented.

[Margot James]

I thank my right hon. Friend for that answer. The Women’s Business Council report found that 22% of the gender pay gap is caused by the low pay levels of industries and occupations in which more women work. What are the Government doing to encourage more girls to select science, technology, engineering and maths—the STEM subjects—at school and university, so that they can consider careers in engineering and ICT?

[Maria Miller]

My hon. Friend is absolutely right to say that the choice of career is key in closing the gender pay gap. Choosing a career in a STEM subject will start to address this important issue that she highlights. We are funding specific programmes with the Royal Society and the Royal Academy of Engineering, and with leading companies such as Atkins, to encourage girls and young women into STEM careers and to increase the number of girls taking up STEM apprenticeships. This is ongoing important work and it is right that she highlights it.

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

What are the Government doing to address the inequality in the employment of black and minority ethnic women? One in five black, Bangladeshi and Pakistani women are unemployed, compared with one in 14 of their white counterparts.

[Maria Miller]

The hon. Lady is right to highlight the challenges that women from BME communities face. The activities we are undertaking to improve access to child care and training will play an enormous part in ensuring that these women play their full part in growing our economy.

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

5. What recent progress she has made on promoting equality for disabled people.

[The Parliamentary Under-Secretary of State for Work and Pensions (Esther McVey)]

Recent progress includes our cross-Government disability strategy, “Fulfilling Potential—Making it Happen”, which was published on 2 July, and the launch of our two-year Disability Confident campaign on 18 July, engaging employers and giving disabled people more opportunities in business. I am pleased to say that key measures and indicators show reduced inequalities and improvements in key outcomes.

[Mr Brown]

In recent years, I have on three occasions stepped in when disabled people were on the receiving end of verbal abuse. Recent polling indicates that 17% of disabled people have had such an experience, and that 7% have been physically abused or attacked. What are the Government doing to tackle disability hate crime?

[Esther McVey]

The hon. Gentleman is right to raise this important issue. The Government are doing a lot to enable people to understand what a disability hate crime is and to make it easier to report. We are doing a lot in this area.

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

In July, Ministers said that the London Paralympic games had improved attitudes to disabled people. However, a recent report from Scope says that their legacy hangs in the balance. Some 22% of disabled people say that public attitudes have got worse, and 17% say that they have experienced hostile behaviour, or even been attacked. That is not surprising when Ministers abuse statistics about disabled people and benefits. The Hardest Hit campaign shows that disabled people have been hit nine times as hard as non-disabled people by austerity cuts. Is it not time that the Minister got her Government colleagues into line? Disabled people are equal and valued participants in society. When will the Government start to deliver positive messages about the contribution they make and give them the support they need to participate in society?

[Esther McVey]

What I would like to do is paint the correct picture, which the hon. Lady is not doing. I can give her either the latest international statistics, which show that out of 55 countries the UK is leading in all 23 indicators, or the latest national statistics, from 2 July, which show that the gap closed in nine out of 14 headline indicators. In 2005-06 and 2009-10, that was true of only seven categories. I can therefore tell the hon. Lady that, on the very latest statistics from 2 July this year, inequalities have reduced and equalities have increased in education, employment and social inclusion, and we also have lower rates of relative poverty. Please get the facts right.

[Mr David Hanson (Delyn) (Lab)]

6. What recent representations she has received from the women’s sector on tackling violence against women.

[The Minister of State, Home Department (Mr Jeremy Browne)]

The Government regularly engage with organisations representing women’s interests, through quarterly stakeholder meetings, representation at the violence against women and girls inter-ministerial group and other ongoing meetings.

[Mr Hanson]

Sadly, since the election the number of incidents of domestic violence has risen, while the number of prosecutions has fallen by 11% and the number of referrals to the Crown Prosecution Service has fallen by 13%. Might that have something to do with cutting 15,000 police officers, when the Minister himself promised 3,000 more at the election?

[Mr Browne]

The right hon. Gentleman neglected to mention at the end of his question that this Government have presided over a fall in crime of over 10%. We now have the lowest level of crime in this country since the independent survey began. The Government treat domestic violence extremely seriously. We are keen to see the police investigate all reports of domestic violence, and I am also pleased to tell the House that there have been record numbers of convictions for violence against women and girls over the past year.

[Mr Speaker]

On this question, I call Emma Lewell-Buck.

[Mrs Emma Lewell-Buck (South Shields) (Lab)]

7. Freedom of information data compiled by Labour this year revealed that up to a third of domestic incidents recorded by police are repeat incidents. In my previous profession I witnessed the same victims calling for protection time and time again. Will the Minister back Labour’s calls for new national minimum standards on preventing violence against women and girls, to ensure that opportunities to intervene and protect families are not missed?

[Mr Browne]

We need to pay particular attention—and we are—to the problem of repeat offenders. That is why, for example, we have introduced the domestic violence disclosure scheme—otherwise known as Clare’s law—to try to protect women who find themselves at particular risk in those circumstances. However, we remain open, as always, to new ideas to try to reduce domestic violence.

Petition

Thursday 5th September 2013 Commons Chamber

Daniel Kawczynski (Shrewsbury and Atcham) (Con)

- Hansard - - Excerpts

I should like to present a petition to the House that has been ably worked on by the Shropshire Star and its editor, Mr Martin Wright. We have gathered more than 3,000 signatures on the importance of a direct service between Shrewsbury and London, our capital city. Shrewsbury is the only county town in England without a direct train service to London.

The petition states:

The Petition of residents of Shrewsbury and Shropshire,

Declares that the Petitioners are without a direct rail service to London from anywhere in the county, with Shrewsbury being the only mainland county town in England without such a service which is of real detriment to businesses and individuals travelling to the capital.

The Petitioners therefore request that the House of Commons urge the Department of Transport and Office for Rail regulation to work with Network Rail and the train operators to improve services on the west coast mainline and subsequently ensure a regular and direct service from Shrewsbury to London to be established as soon as possible.

And the Petitioners remain, etc.

[P001218]

Universal Credit

Thursday 5th September 2013 Commons Chamber

10:32

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

(Urgent Question): Will the Secretary of State confirm that the facts in the National Audit Office report about universal credit, set out this morning, are true?

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

I start by reminding the House of the importance of universal credit. Universal credit is a major and challenging reform to transform—

[Mr Speaker]

Order. Just before the Secretary of State develops his remarks—the exchanges will run on—I say very gently to the right hon. Member for Birmingham, Hodge Hill (Mr Byrne) that the proper form in these matters is to stick to the urgent question in the terms submitted. It is not appropriate for a Member to refine, adjust or spin the terminology of the question. We really must stick to the terms. I am not impugning the integrity of the right hon. Gentleman—[Interruption.] No, no; I am not doing anything of the kind. What I am saying is that I think he has behaved in a mildly cheeky manner, and I hope he will not do that again.

[Mr Duncan Smith]

We would never accuse the right hon. Member for Birmingham, Hodge Hill (Mr Byrne) of being less than cheeky—or, for that matter, of ever attempting to spin anything—but I stand by your judgment, Mr Speaker: a cheeky spinner he is.

Universal credit, I remind everybody, is an important and challenging programme to provide major benefits for claimants and the country as a whole, with a clear financial set of incentives that will get an estimated 300,000 additional people into work and make 3 million claimants better off. However, all major programmes involve difficult issues and difficult decisions, week in, week out. In 2011, I added to the programme and the original schedule—as the right hon. Gentleman knows, because we saw each other and I told him about this—the need for a pathfinder, which I said would start rolling out in April.

I added that provision because I was concerned that we needed to ensure that we tested the IT throughout. By the way, I have done that for every programme—from disability living allowance to the personal independence payment, and everything else. We need to make sure that we are right, and I was concerned that the existing programme was not quite right.

In the summer of 2012—or rather, before that, in early 2012—I instigated an independent review because I was concerned that the leadership of the programme was not focusing in the way that it needed to on delivering the programme as it had been originally set out. The internal report showed me quite categorically that my concerns were right: the leadership was struggling, a culture of good news was prevailing and intervention was required. That was very much backed up by the National Audit Office.

As a result, I changed the leadership team in October 2012 and brought in the brilliant Philip Langsdale, who had successfully delivered Heathrow terminal 2. He was one of the great IT brains in the UK. He made it very clear that the programme was deliverable, and that it needed to be reset so that it could be delivered on time and on budget. When he sadly died, I went to my right hon. Friend the Minister for the Cabinet Office and Paymaster General and asked for David Pitchford—in the short term, while we looked for a replacement—who headed the Major Projects Authority in January. My right hon. Friend agreed to that, and the Cabinet Office helped us to put together the reset programme that had been started by Philip Langsdale.

I accepted the findings of the report absolutely in review, and have made certain that in the last few months we have been working to deliver the programme. It has been handed over to Howard Shiplee, who has now taken over. He wrote recently in The Daily Telegraph that he believed the programme was deliverable on time and on budget. The important thing about Howard Shiplee is that he is the man who delivered the Olympic park under budget and early. His clear indication is that he believes that we might do similar things here. He has made that very clear.

I should also like to remind the House that universal credit is not just succeeding but progressing. It is progressing because we have already started to roll out the pathfinders. I was in front of the Select Committee in July, when I explained that those pathfinders were already teaching us some important lessons. We are expanding those into six new jobcentres and dealing with them. Also, from October, around 100 jobcentres a month will begin using the claimant commitment with new jobseekers. That commitment will act as a contract between the jobseeker and the state. We are already seeing that this is driving people into work. Universal credit is not just about IT. It is massively about cultural change to get people back to work and to ensure that those who do go to work, particularly the poorest, benefit the most.

The NAO concludes on the programme:

“It is entirely feasible that it goes on to achieve considerable benefits to society”.

Every recommendation that the NAO has made in the report has already been made. The key lesson that I take is simply this. The previous Government crashed one IT programme after another, and no Minister ever intervened to change them early so that they delivered on time. We are not doing that. I have taken action on this particular programme. This programme will deliver on time and will deliver within budget.

[Mr Byrne]

Our bible, “Erskine May”, states clearly on page 201 that Ministers must give accurate and truthful information to the House,

“correcting any inadvertent error at the earliest opportunity”.

On 5 March this year, the Secretary of State told my right hon. Friend the Member for East Ham (Stephen Timms) that

“the implementation of universal credit…is proceeding exactly in accordance with plans.”—[Official Report, 5 March 2013; Vol. 559, c. 827.]

We now learn from the National Audit Office that the month before that statement was made, the Department began a 13-week reset programme. Four weeks earlier, the Department reduced case-load forecasts for next April by 80%. Five months before, the Department had largely stopped developing systems for national roll-out. It is inconceivable that the Secretary of State did not know about that, because the reset programme was organised by the man he personally brought into the Department. Furthermore, in a letter to me last month, the Secretary of State told me:

“I closely monitor the progress of this ground-breaking programme”.

The NAO must agree its facts with the Department. Paragraph 13 of the NAO’s report states:

“The Department is now reconsidering the timing of full rollout”,

and that plans have changed three times in four months. This morning, the National Audit Office told me that the NAO and the permanent secretary have agreed that statement, yet it flatly contradicts what the Secretary of State has said to this House. To hit his deadline at the end of 2017, he must now move more than 200,000 people a month on to the new system—the population of a city the size of Derby.

The Public Accounts Committee will no doubt consider next week the changed timetable, the IT shambles and the write-offs, the lack of counter-fraud measures, the shambolic financial control and the ineffective oversight. What I want to say to the Secretary of State, however, is this: he has let this House form a picture of universal credit, which the nation’s auditors say is wrong. The most charitable explanation is that he has lost control of the programme and lost control of the Department. He must now correct the record. He must now apologise to the House and convene cross-party talks to get this project back on track. The quiet man must not become the cover-up man.

[Mr Duncan Smith]

I must say that that was suitably pathetic, coming from the right hon. Gentleman. He knows very well—he has been in to see me on a number of occasions; I would like to say what he said, but it was unmemorable in every single case—that the reality is that this programme, as I said at the beginning, will be delivered in time and in budget. There is no major change to that. What I have done, and I did early on, is something that the right hon. Gentleman never did and Labour has never done. When I got concerned about the delivery schedule, I made changes and intervened, bringing in the right people to do that. I stand by that, and I will not take lessons from the right hon. Gentleman and his party. Let me just remind them of what happened when they were in office.

The benefit processing replacement programme was scrapped at a cost of £140 million, and no one apologised. The Child Support Agency wasted £500 million before the programme was scrapped—no Minister intervened; no Minister changed it. The Labour Government wasted £3 billion on benefit overpayments. The tax credit system was delivered at one go on one day and it collapsed, costing billions, with £30 billion lost in fraud. The programme that delivered the health service IT changes cost £13 billion when it was cancelled with no apologies.

The lesson that I have learned and that we Government Members learn, in conjunction with my right hon. Friend the Minister for the Cabinet Office and Paymaster General, is that we check these programmes while they are progressing and if changes need to be made, we make them. In making those changes, I stand by the fact that the purpose is to deliver this programme—on time and on budget, which is something that the Opposition never did in the whole of their time in government.

[Sir Tony Baldry (Banbury) (Con)]

Does my right hon. Friend not feel that every time Labour Members snipe at him they simply show that they are not serious about welfare reform? Does the National Audit Office report not show that universal credit can substantially benefit society and, indeed, can benefit society by some £38 billion by 2022-23?

[Mr Duncan Smith]

The reality is that this NAO report is very clear about the benefits and very clear that if we get the resets right—it gave us a list of them—and every one of those items has been done, it will save £38 billion. More than that, it will help improve the lives of the least well-off as they are delivered back into work. We should remember that I inherited from the previous Labour Government a chaotic system costing billions—and we are putting it right.

[Mr Alistair Darling (Edinburgh South West) (Lab)]

Like many Secretaries of State for Work and Pensions, I looked at something like universal credit some 12 years ago, and I was advised then that it was technically very difficult, if not impossible, to implement it at anything like an acceptable cost and that whatever the cost I was quoted, it was likely that it would end up costing an awful lot more. I have listened to the right hon. Gentleman this morning claiming that this project is on track and on budget, which I find extraordinary when the NAO says that it is anything but that. I have also listened to him blaming all those around him for letting him down, so will he tell us what advice he received when he gave this the go-ahead in 2010?

[Mr Duncan Smith]

I can tell the right hon. Gentleman, whom I usually respect—and he may recall that we were facing each other across the Dispatch Box at the time when he was looking into the matter—that the advice I received then made it absolutely clear that universal credit could be delivered and a timetable could be set in the Department. I take full responsibility for the delivery of universal credit, and I will not shirk that responsibility. I intend to deliver it on budget and on time.

The NAO is an historical report. It relates to the period during which I was making the changes. Those changes have now been made, and all the outside advisers and experts believe that universal credit is deliverable. The right hon. Gentleman’s party has said that it supports universal credit, and I was happy to receive that support, but Opposition Members have continually voted against it and carped about it. I think that it would be far better for him to ensure that they stay the course.

[Simon Kirby (Brighton, Kemptown) (Con)]

Will not 3.1 million people, including many in Brighton and many on the lowest incomes, be better off and receive a higher entitlement under universal credit?

[Mr Duncan Smith]

That is absolutely true. That is why this programme is worth seeing through, and why having the nerve and decisiveness to see it through is so important. Of course there were difficulties—I do not shy away from that—but the changes that have been made by my Department, the Cabinet Office and external parties will deliver the system on time in order to benefit the very people to whom my hon. Friend has referred, while the Opposition carp and forget their own history.

[Dame Anne Begg (Aberdeen South) (Lab)]

I am very disappointed by the bullish way in which the Secretary of State has behaved this morning. I believe that it was the same attitude that dismissed the voices of members of my Select Committee and those of many others who suggested that the implementation of universal credit was not going as well as was being claimed. From now on, will the Secretary of State set realistic time scales for the roll-out of universal credit, will he be honest, open and transparent about the challenges posed by the introduction of such a large and complex system, and will he stop over-promising what cannot be delivered?

[Mr Duncan Smith]

When I appeared before the hon. Lady’s Committee in July, I was very clear about the changes that were being made, and also about the fact that we would return to the Committee with the full roll-out timetable in the autumn once we had delivered it. That is what we were asked to do, and I will do it.

I am not being over-bullish about this. The fact is that it takes determination to drive a reform through. I have that determination, and the Department is determined to make this happen, with support and help. It is in all our interests for that to be done. We believe all those who have been charged to deliver it and who say that it can and will be delivered on time and on budget. I see no reason why that should not happen, and indeed the National Audit Office said that it was wholly feasible for it to happen.

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

The previous benefits system was confusing and unfair. Given that the Government are committed to resolving that problem, will my right hon. Friend tell us when a million people will be covered by the new universal credit system? That is what we should be aiming for, as a first step.

[Mr Duncan Smith]

All I can say is “at the earliest”, but we want to shift as many people as possible. I would rather think in terms of how quickly we can move people from tax credit and jobseeker’s allowance to universal credit, and I hope that that will happen well before the election. I expect big volumes to be running through, but we need to take our time in order to ensure that when we roll out the IT, it works properly.

I have made the changes that I have made in order to ensure that the system is delivered safely. I could have just let it run. I could have accepted the word of some people that it would be all right on the night. However, I did not. I took the job of making sure that we knew whether it was all right, and I have made the changes that are necessary for the delivery of the programme.

[Helen Goodman (Bishop Auckland) (Lab)]

What is the Secretary of State’s estimate of the number of people who will be on universal credit by the time of the next general election?

[Mr Duncan Smith]

I will not give that estimate now, because I intend to make a clear statement in the autumn about how and when we will roll this out. All I can tell the hon. Lady is that there will be significant volumes, and that I intend to close down jobseeker’s allowance and tax credit well before the election.

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

Is my right hon. Friend aware that the Public Administration Committee will produce an important report tomorrow about civil service reform? It comes as no surprise that the Comptroller and Auditor General has said that his programme lacked “an appropriate management approach”, adding:

“Instead, the programme suffered from weak management, ineffective control and poor governance.”

These are problems that afflict all Departments, and have done so for many years under the last Government as well as this one. Will my right hon. Friend support the civil service reform so determinedly championed by my right hon. Friend the Member for Horsham (Mr Maude), to ensure that we secure the change in Whitehall that we need?

[Mr Duncan Smith]

First, let me say that I am a complete supporter of my right hon. Friend the Minister for the Cabinet Office and Paymaster General on the civil service reform plan, and I have been from day one. The truth is that if the Opposition were in thinking mode they would have agreed with that as well. The reality is that today’s NAO report shows there were problems in the running of this programme. I intervened when I discovered that and changed it, but I never expected to have to do that. When I arrived, I expected the professionalism to be able to do this properly. So my view is that I have intervened in the right way. All the other programmes of IT change are working and are well run—and they are well run by the Department. This one was not. We have made the changes necessary.

[Barry Gardiner (Brent North) (Lab)]

The Secretary of State does, however, still need to explain why he came to this House in March and said the programme was proceeding according to plan when, in fact, he knew at that point that a month previously he had had to rip up those plans and reset the whole programme. Why did he do that? Why did he not give a more candid account to Parliament in March?

[Mr Duncan Smith]

The plan is, and has always been, to deliver this programme within the four-year schedule to 2017. At the time I came to the House, I believed that to be the case, and I am standing here today telling the House—whether Opposition Members like it or not—that that is exactly what the plan is today. We will deliver this in time and in budget, and I have to say the changes were made deliberately to ensure that.

[Philip Davies (Shipley) (Con)]

May I invite my right hon. Friend to welcome the shadow Secretary of State’s conversion to caring about the use of taxpayers’ money, and in doing so would he like to remind the House of how many of the Government’s welfare cuts and changes the right hon. Gentleman has opposed? May I also urge my right hon. Friend to adopt the cross-party talks the shadow Secretary of State urges, because whatever advice he gives, my right hon. Friend will know to proceed in exactly the opposite direction?

[Mr Duncan Smith]

I am always willing to see the shadow Secretary of State; he has been in three or four times, and I will be very happy to see him again if he wishes. Honestly, however, my hon. Friend is right: the Opposition have opposed every single welfare change. We will be saving £80 billion as a result of our welfare reforms, and we have already, last week, seen the lowest number of households without work since the last Government were in power. We have seen fewer people economically inactive, and we have seen a fall of over 300,000 in the number of those out of work or economically inactive.

[Andrew Miller (Ellesmere Port and Neston) (Lab)]

I had a conversation with the late Philip Langsdale before he took up his post, and I must say I had the most profound respect for the man. He took over the post because of previous project management failures. May I remind the Secretary of State that it was he who signed off the contract that led to those project management failures? Rather than simply blaming civil servants—although I agree with the Chair of the Public Administration Committee about the need for change—why does the Secretary of State not accept the blame himself?

[Mr Duncan Smith]

I am not blaming civil servants—[Interruption.] No: I made decisions that led to the removal of some of those who were charged with the responsibility of delivering this. Today’s NAO report is very clear that the culture of secrecy and of good news did not help run those departments. That does not run all the way through every programme. We are delivering DLA PIP and that programme has been modified and changed because they have brought forward all the concerns. It is the same with the CMEC CSA changes and the cap changes. All of those IT programmes have been dealt with in my office in conjunction with them in the proper way. This one was not. I am simply saying that Philip Langsdale—the hon. Gentleman is right that he was a brilliant man—said to me at the beginning that this one did not tell the truth.

[Mr David Nuttall (Bury North) (Con)]

Does my right hon. Friend agree that all this debate about the minutiae of a complex transformation and simplification of what, by any measure, is a very complicated benefits system, risks losing sight of the bigger picture, which is that universal credit will mean that work always pays, and that whatever the costs of developing the system, they will be a small fraction of the billions of pounds that will be saved in the long run?

[Mr Duncan Smith]

My hon. Friend is right about that. I remind the House that under the previous Government, in the six years preceding the election, tax credits cost £180 billion-plus because of the shambles and the mess they were in. They lost huge sums through tax fraud and evasion, and we are putting that right. Our welfare reforms, including universal credit—all opposed by the Opposition—will change it, and they are already having an effect. Not one of our reforms has been supported by the right hon. Member for Birmingham, Hodge Hill (Mr Byrne), who has carped and voted against every single one.

[Mr Clive Betts (Sheffield South East) (Lab)]

One of the most damning criticisms in the National Audit Office report relates to the lack of a proper fraud detection system as part of universal credit. When Lord Freud, the Minister with responsibility for welfare reform, came before the Select Committee on Communities and Local Government earlier this year, he said that a new fraud detection system would be put in place. Why did the Secretary of State allow this programme to run for so long without an adequate fraud detection system being part of it?

[Mr Duncan Smith]

That is exactly one of the reasons why we intervened back in 2012—the system they were trying to integrate was not going to work correctly. That was already evident by the end of 2011 and early 2012. The problems were such that when I introduced the independent inquiry, it told me categorically that this was not going to work, so we have changed it and reset it. In conjunction with the Cabinet Office, we have seen that there is a better way to do this, and we believe that the integrated fraud programme will deliver results in the new roll-out.

[Nigel Mills (Amber Valley) (Con)]

When the Select Committee visited the north-west we saw universal credit working, albeit in a limited manner, and being well received by the staff working with it. It was having a positive impact on the claimants they were working with. Surely, however, it is right not to roll out this programme so fast and risk millions of people not getting the benefit that they are expecting to get. So may I urge the Secretary of State to say to the House that he will not rush this and that he will get it right before it is rolled out to more people?

[Mr Duncan Smith]

I agree, and I must say what the problem has been throughout all this. When I introduced the pathfinder, which said that there would a delay in the way we rolled this out, Labour criticised us for delaying the roll-out. Then, later on, it criticised us for not doing it properly. The reality is that we are doing this properly. We will not do it against artificial timetables, but it will be done in the overall four-year timetable and it will be effective.

[Mark Durkan (Foyle) (SDLP)]

The Secretary of State has told us today that he had serious concerns in the summer of 2012. He also told us that he then changed the leadership in October 2012. Does he recall what he said to this House in September 2012? He said:

“For what it is worth, I take absolute, direct and close interest in every single part of the IT development. I hold meetings every week and a full meeting every two weeks, and every weekend a full summary of the IT developments and everything to do with policy work is in my box and I am reading it. I take full responsibility and I believe that we are taking the right approach.”—[Official Report, 11 September 2012; Vol. 550, c. 154.]

Culture of secrecy and good news, or what?

[Mr Duncan Smith]

I do not resile from any of what I said; that is exactly the way in which we have tried to manage it. But of course, someone is only as good as the information given to them. I must say to the hon. Gentleman that by September 2012 I had already started the reset process and brought in Philip Langsdale. He was coming into the office and we were going to make those changes. The reality is that this will be delivered on time and on budget. That was my view then and it is my view today. The key thing is that those charged with the responsibility of doing that have the skill to do it.

[Jacob Rees-Mogg (North East Somerset) (Con)]

Is my right hon. Friend aware that his transformative scheme has enormous public support, as it will revolutionise dependency by reducing it in this country? Does he note, as I do, that in office the socialist Opposition swallowed any number of camels and are now straining at a gnat?

[Mr Duncan Smith]

My hon. Friend is absolutely right. As I said earlier, the Labour party has opposed every single reform since we came into government. Those reforms are set to save some £80 billion, and universal credit is part of that. At no stage have the Opposition told us what they would do instead. When they said that they would support universal credit, they voted against it. This is a party in opposition that is so opportunistic that it catches itself in the morning disagreeing with itself in the evening.

[Glenda Jackson (Hampstead and Kilburn) (Lab)]

Since the Secretary of State took personal responsibility for this failure, we have seen a delay in the time scale for the universal roll-out of universal credit, a reduction in the number of pathfinder programmes, which has gone way down, and claimants being reduced to the simplest to pass through the system. When he gives us the time and the budget, as he undoubtedly will again, could they at least be accurate? I say to him that when it comes to spinning it takes one to know one—but his spinning will not create humour in the country. It could be catastrophic for benefits claimants.

[Mr Duncan Smith]

The hon. Lady, not for the first time, is completely wrong. The pathfinder was exactly as we set it down. It was always going to deal with single people at the beginning and we have rolled it out as we said we would. I stand by the fact that this pathfinder is the right thing to do. I introduced it back in 2011 and it will help us enormously to develop the IT. That is the way we are doing it and that is the way we will do it.

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

Having visited the pathfinders with the Select Committee on Work and Pensions, I can reassure my right hon. Friend that both the claimants and the front-line staff were enthusiastic about universal credit and how it is working. Is my right hon. Friend also aware that the Select Committee commented that the Government are making significant progress in making work pay?

[Mr Duncan Smith]

My hon. Friend is exactly right. All our reforms—reducing the workless numbers and ensuring that the economically inactive are going back to work, saving money for the Exchequer and for taxpayers—are in play. Every one has been opposed by the Opposition and we have had no answer about what they would do instead. As my right hon. Friend the Minister for the Cabinet Office and Paymaster General has said, they dance around on all the issues and the truth is that they have no policy. The welfare party is bankrupt.

[Derek Twigg (Halton) (Lab)]

Under the section of the report containing the key findings, paragraph 18 states:

“Throughout the programme, the Department has lacked a detailed view of how Universal Credit is meant to work.”

Will the Secretary of State explain how that happened? Does it not show that he lost control of the project from the very beginning?

[Mr Duncan Smith]

The original plan to have an “Agile” process meant that by 2011 the plan would be formulated and could be delivered against. In 2011, I was concerned about the failure to deliver—that was meant to be part of the process—and that is why I instituted the changes in 2012. We will have that plan ready. It will be announced to Parliament, it will be stuck to and it will deliver in time and on budget, so the NAO is right and I fully agree with it.

[Sir Peter Bottomley (Worthing West) (Con)]

We understand that the aim is to give support to the right people at the right time in the right way and to help make their lives better. Will my right hon. Friend remind us of the additional benefits of the reduction in administrative costs and in fraud and error?

[Mr Duncan Smith]

The costs overall and the savings are enormous. The total benefits to individuals and in fraud and error will total up to perhaps £38 billion. The point is that those savings are real savings. Yes, there is a problem about some wasted money in this programme that is quite unacceptable, but set against the big savings the key point is that it is a big and important programme.

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

The use of real-time information is critical to rolling out universal credit across the country and ensuring that it works properly, so will the Secretary of State confirm that the RTI project is on time and on budget at HMRC?

[Mr Duncan Smith]

The good thing about the pathfinder is that it has allowed us to test the RTI system. The hon. Lady will find, if she wants to visit any of the sites, that we are getting a phenomenally good feed from the RTI about the payroll. In some areas, they have already discovered that some people claiming jobseeker’s allowance are earning a salary at the same time. They have been able to deal with that, hugely due to the fact that the RTI system is working. I recall that many Opposition Members said that the RTI software would not work, but they were wrong.

[Justin Tomlinson (North Swindon) (Con)]

Why was this urgent question called when the Public Accounts Committee, of which I am a member, is investigating this clearly outdated, historic report next Wednesday?

[Mr Speaker]

Order. I am afraid that that is not a question for the Secretary of State. I decide whether an urgent question should be granted or not. I am fully conscious of what other parts of the House are doing and the judgment I have to make is whether the matter should be aired on the Floor of the House today. The answer is yes. That, to be honest, is the end of the matter.

[Margot James (Stourbridge) (Con)]

I was delighted to hear my right hon. Friend say that he thought that the cultural change afforded by the introduction of universal credit was even more important than the financial savings that it will offer. In my part of the world in the black country, we have a higher than average rate of workless households. Will he talk to his officials about ensuring that some of the pathfinder pilots that he has in mind take place in the black country?

[Mr Duncan Smith]

I thank my hon. Friend for her support and I will ensure that she gets the earliest possible roll-out.

[Jeremy Corbyn (Islington North) (Lab)]

As the Secretary of State considers the operation of universal credit, will he look at the effect on people living in areas with high private sector rental costs who find that a wholly disproportionate amount of their benefit goes on such rents, rather than keeping body and soul together? We need not only to look at that, but to control private sector rents.

[Mr Duncan Smith]

I believe that universal credit will help in that regard because the idea is that, as people go back to work, they will be better off for every hour they work than they were on benefits, which should make them more able to afford to live. The vast majority of benefits under universal credit will go to the bottom 20% of earners, so it should be a net benefit to the poorest in society.

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

May I urge my right hon. Friend to reject the shadow Secretary of State’s offer of cross-party talks, not only because of Labour’s failure on IT, benefit fraud and the tax credits system, but because Labour Members fundamentally do not believe in the welfare reform that this country desperately needs?

[Mr Duncan Smith]

I will not reject the offer of the right hon. Member for Birmingham, Hodge Hill (Mr Byrne) because I am an optimist. On the road to Damascus, there is always a chance that such an individual may change his view and realise that what we are doing is the right thing. I will do my level best to persuade him that everything that he has done so far is wrong and that there is a better way—marked “coalition”.

[Sheila Gilmore (Edinburgh East) (Lab)]

The Secretary of State’s problem is that we have been here before. We were told on every occasion that everything was fine and that “Agile” programming—whatever that is—would solve all the IT problems, but now we find that “Agile” was all wrong. The problem for the Secretary of State is that he still wants to deliver this by 2017, despite the fact that he is already way behind his original timetable for delivery by then. If he accepts that there are all these problems and statements such as it is

“unlikely that Universal Credit will be…simple or cheap to administer”,

would it not be better to delay the final implementation date?

[Mr Duncan Smith]

The hon. Lady is right and I agree that we have been here before: the national health IT collapse costing £13 billion; the Child Support Agency failure and £120 million crash programme; and a £7.1 billion IT project that failed. The difference is that, unlike those programmes under the Labour Government, I acted to ensure that changes were made early to deliver the programme on time and on budget.

[Several hon. Members]

rose—

[Mr Speaker]

Order. I appreciate that there is much interest, but 25 Members have questioned the Secretary of State and we must move on—[Hon. Members: “Aw.”] The House is used to a situation in which virtually everyone gets in, because that is the way I like to play it—I must say, especially to new Members, that it did not use to be like that at all—and it usually is that way, but I have to make a judgment about the time available, and we have the business question, a statement on legal aid and debates under the auspices of the Backbench Business Committee to follow. These matters can be rehearsed again in the future—and doubtless they will be.

Business of the House

Thursday 5th September 2013 Commons Chamber

11:08

[Ms Angela Eagle (Wallasey) (Lab)]

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

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

The business for next week will be as follows:

Monday 9 September—My right hon. Friend the Prime Minister will propose an humble address and message on the occasion of the birth of His Royal Highness Prince George of Cambridge. I expect my right hon. Friend to update the House following the G20, followed by consideration in Committee of the Transparency of Lobbying, Non-Party Campaigning and Trade Union Administration Bill (day 1).

Tuesday 10 September—Consideration in Committee of the Transparency of Lobbying, Non-Party Campaigning and Trade Union Administration Bill (day 2).

Wednesday 11 September—Conclusion of consideration in Committee of the Transparency of Lobbying, Non-Party Campaigning and Trade Union Administration Bill. The Chairman of Ways and Means has named opposed private business for consideration.

Thursday 12 September—General debate on child protection in the UK, followed by general debate on employment rights.

The subjects for both debates were nominated by the Backbench Business Committee.

Friday 13 September—Private Members’ Bills.

The business for the week commencing 7 October will include:

Monday 7 October—The House will not be sitting.

Tuesday 8 October—Remaining stages of the Transparency of Lobbying, Non-Party Campaigning and Trade Union Administration Bill (day 1).

Colleagues will wish to be reminded that the House will meet at 2.30 pm on this day.

Wednesday 9 October—Conclusion of remaining stages of the Transparency of Lobbying, Non-Party Campaigning and Trade Union Administration Bill.

Thursday 10 October—Business to be nominated by the Backbench Business Committee.

[Ms Eagle]

I thank the Leader of the House for announcing next week’s business.

A report from the Resolution Foundation yesterday showed that one in five workers is paid less than the living wage, a rise of nearly 1.5 million in three years. We now know that the Government’s economic policies have meant that people are £28 a week worse off than they were in 2010, and for all but one month since the election prices have risen faster than wages. It is not a recovery if it leaves everyone but those at the top behind, and the public are not buying it either. Polling shows that 70% of people believe that recent improvements in the economy have not benefited middle and lower income families, and 81% believe that politicians who say that household incomes have grown faster than price rises are “out of touch”. I could not have put it better myself. This is an out-of-touch Government, complacent on living standards, building an economy that works only for their rich millionaire friends. So may we have an update from the Chancellor about this week’s understanding of his favourite phrase, “We are all in this together”?

The lobbying Bill that we have been discussing this week shows us that instead of getting the big money out of politics, the Government would rather put a gag on campaigners while protecting Lynton Crosby. But that is not surprising when with this Government money seems to buy influence. Hedge funds gave the Conservatives £32 million and then got a massive tax cut, and then there was the tax cut for millionaires. In spite of all this, I was still surprised to see Boris Johnson say this week that he would change his name to “Barclays” in return for £100 million in sponsorship. How long will it be before we see the Cabinet touting for sponsorship too?

We have been back only a few days and it is already back to normal for this Government. We have had a rebellion, chaos in the Whips Office and abject incompetence, and we have had our first U-turn this morning with the dropped plans on legal aid price competition. Where there is chaos there is waste. We have already had the pointless top-down reorganisation of the NHS at a cost of £1.5 billion. This week we have discovered that they have squandered £74 million forgetting to add VAT on the troubled aircraft carrier programme. Today, the sheer scale of the failure at the heart of the Secretary of State for Work and Pension’s flagship universal credit programme became clear. The National Audit Office report says that the scheme has been beset by

“weak management, ineffective control and poor governance”.

We have also learned that £34 million has been wasted on IT and they have spent £300 million on a computer that they do not know what to do with. The NAO blames a fortress mentality where only good news is released. Will the Leader of the House arrange a debate on this fortress mentality and the impact it may be having on the ability of the civil service to operate effectively in the culture that this Government have created?

Next week, we have the Committee stage of the comically named Transparency of Lobbying, Non-Party Campaigning and Trade Union Administration Bill, which had its Second Reading on Tuesday. The Opposition are committed to cleaning up lobbying, getting big money out of politics and keeping dodgy donors out of Downing street, but the Bill achieves none of this. The Leader of the House got a very rough ride, including from three Select Committees and his own Back Benchers, for this rushed, incompetently drafted and sinister mess of a Bill. He has already tabled 23 amendments and there will be a lot more, I am sure, before we have finished. This Bill has united the lobbying industry and transparency campaigners, who agree that it will make lobbying less transparent, not more. The Electoral Commission, hundreds of charities, campaigners and many thousands of members of the public are fighting the Government’s sinister gag on free speech in the run-up to a general election.

It seems that the Bill’s only success has been to create a huge coalition against it, so wide that it includes the TaxPayers Alliance, the Royal British Legion, HOPE not hate and 38 Degrees. Yesterday the Prime Minister accused the trade unions of mounting a concerted lobbying campaign against the Bill, but he omitted to mention that Con. Home is against it, too.

The Leader of the House does not seem to have learnt many lessons from his last disastrous attempt at a Bill, the Health and Social Care Act 2012, but I would like to ask him to learn just one: he needs to pause, listen, reflect and improve. Why not start by listening to the important report from the Political and Constitutional Reform Committee, published today? He should scrap the timetable he has just announced for Committee stage and arrange some much-needed pre-legislative scrutiny. Even better, why does he not just go back to the drawing board?

[Mr Lansley]

I am grateful to the shadow Leader of the House for her further questions. On the transparency Bill, she is just trying to rerun the debate we had on Tuesday. All the points she has made were presented in that debate and she lost. The Bill secured a Second Reading and, in particular, the support of the House against the Opposition’s reasoned amendment, which specifically sought a delay.

As I made clear on Second Reading, we will look at some of the concerns that have been raised, but I re-emphasise this point: many of the representations that are being made are based on a complete misunderstanding and a misrepresentation, which is that some change is taking place in the definition of what constitutes expenditure for electoral purposes, as distinct from campaigning on policies and issues. Charities will continue to be able to campaign as vigorously as they wish in putting forward their policies, and if any organisations were to step over the line and try to secure the election of a party or a candidate, that should be treated as election expenditure. That was the case in the past and will be the case in future. If there is any way we can make that even clearer, we will set out to do so.

I am surprised that the hon. Lady did not take the opportunity to respond on behalf of the Leader of the Opposition to the letter I sent him before the recess making it clear that the Bill was available for the Labour party to put forward proposals to give trade union members a deliberate choice on their participation in political funds, which he said they should have. Only yesterday we saw Paul Kenny of the GMB clearly trying to push him off his proposals. If he wants to entrench them, he should come forward next week—he still has time to do so—and table amendments to the Bill so that that can be legislated for and he can show his determination. If he does not do so, we will know that he is not serious about doing it at all.

The hon. Lady asked about the urgent question earlier today, trying to rerun points that I think my right hon. Friend the Secretary of State dealt with very well. Let me say one thing, and I say it from personal experience: he is doing absolutely the right thing to ensure that we deliver the programme on universal credit. It is vital that we do so in order to make work pay and to get the incentives in the welfare system right, which the Labour party failed to do. Stepping into a programme to make changes in order to deliver it on time and on budget is the right thing to do, unlike what Labour did with the NHS IT programme, which was to go into denial about all the problems. When my colleagues and I came into office after the general election we found a broken programme that we had to scrap, but in the process we saved over £2 billion, which enabled my right hon. Friend the Secretary of State for Health last week to announce a major programme for supporting hospitals and the NHS to improve their technology themselves. That is what we should be doing; we should have workable programmes, not top-down, broken ones. [Interruption.] Talking about the National Audit Office, it has said that delivering the NHS reorganisation programme on time is a major achievement and that it is delivering the planned savings: £5.5 billion from the reform programme itself over the course of this Parliament and £1.5 billion every year thereafter.

The hon. Lady asked one thing about business, regarding an update from the Chancellor of the Exchequer. I am happy to remind her that he will be at the Dispatch Box on Tuesday to answer questions. I am looking forward to him being able further to remind the House, as the Prime Minister did yesterday, of the events of the summer in relation to the economy, which the hon. Lady did not mention and her leader did not mention at Prime Minister’s Questions. The reason they did not is that the Chancellor will be able to refer to figures showing that employment is up, exports are up, confidence is up, manufacturing is up, services are up, construction is up, housing starts are up, and growth is up. The hon. Lady knows that, as a consequence, the Labour party is going down.

[Mr Peter Bone (Wellingborough) (Con)]

All parliamentarians in this House will have welcomed the Prime Minister’s courageous decision to recall Parliament last week to have a debate and a vote on Syria before military action could take place. He is really putting Parliament first. Can the Leader of the House confirm that if such circumstances occur in future the Prime Minister will again put a motion before this House before military action takes place?

[Mr Lansley]

The Prime Minister and I have been very clear at the Dispatch Box that we will respect the right of Parliament, as the source of authority, to express a view in relation to the use of military force in any substantial way, save that, as the Prime Minister has rightly made clear, in any emergency or on issues that are urgent or a matter of the defence of the national interest and the security of this country, he must have the right and the discretion to act immediately if he is required to do so.

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

I remind the Leader of the House that since the last time we met here for business questions a report from the Institute of Economic Affairs has estimated the cost of High Speed 2—a cost that started at £10 billion, went up to £32 billion, then £42 billion, and then £50 billion—at £80 billion. It also reflects on the fact that this could be very damaging to all the regional cities of our country. May we have an early debate on this?

[Mr Lansley]

Let me remind the hon. Gentleman that the House is considering the High Speed Rail (Preparation) Bill, which affords further opportunities to consider this. Having looked at what the Institute of Economic Affairs said, it seemed to be one of those reports where if one makes a series of assumptions one can arrive at any conclusion one likes. My right hon. Friend the Transport Secretary has put some very substantial contingencies into the programme to make sure that we can deliver it within budget.

[Andrew Stephenson (Pendle) (Con)]

Is my right hon. Friend aware of the findings of the Lloyds TSB regional purchase managers index, which showed the fastest growth across the country in 12 years, with the fastest growth not in London or the south-east but in north-west England? In my constituency, unemployment is down and production is up, and the manufacturing companies that I speak to are very encouraged by the way in which the economy is recovering. May we have a debate on rebalancing the economy to support businesses in the north-west of England?

[Mr Lansley]

Yes, the situation is very encouraging. We all know that the nature of the economic crisis we inherited, with the economy having declined to a gross domestic product of 7.2%, meant that the recovery was inevitably going to be long and difficult; we cannot expect it to be easy. However, it is happening, and on a more sustainable basis. My hon. Friend rightly points out that it is more sustainable if growth is better dispersed around the country rather than merely being based on financial services in the City of London, important as that sector is. It is especially sustainable given the development of exports and manufacturing in many regions of the United Kingdom.

[Valerie Vaz (Walsall South) (Lab)]

May we have an urgent debate in Government time on Burma, where Daw Bawk Ja, a land rights activist, was arrested in July? In particular, will the Government support the United Nations General Assembly resolution noting that while there has been progress in Burma, there are still human rights and constitutional issues that need to be addressed?

[Mr Lansley]

The hon. Lady will know that my right hon. and hon. Friends at the Foreign and Commonwealth Office update the House regularly on Burma and our concerns. We were very pleased that President Thein Sein’s visit to the United Kingdom in July gave us an opportunity to raise some of those concerns while reinforcing our determination to provide support for Burma, including the increases in humanitarian aid—I was looking up the numbers while the hon. Lady was asking her question—announced by my right hon. Friend the Member for Sutton Coldfield (Mr Mitchell), who was Secretary of State for International Development at the time.

The House will have welcomed your visit to Burma, Mr Speaker, from 29 July to 4 August, when you led a cross-party delegation of Members of Parliament. The relationship between this Parliament and the emerging democracy in Burma is an important one that we all value.

[Bob Blackman (Harrow East) (Con)]

May I take this opportunity to wish all my Jewish constituents shanah tovah? As we enter the year 5774 with record levels of employment, unemployment going down, business confidence increasing and all the forecasts on growth going up, is it not surprising that the Opposition do not want to debate the issue? Is it not time to have a general debate on the economy, so that we can expose the Opposition for what they are?

[Mr Lansley]

My hon. Friend makes a good point and I join him in wishing a happy new year to our Jewish constituents. As we enter the new year, it is encouraging that GDP has been revised up and many independent forecasters are increasing their estimates for growth and that employment is up and unemployment down. We know we have to work hard to sustain the recovery and that it will not be easy, but we can all take a great deal of encouragement from the statistics published over the summer.

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

Sadly and disappointingly, the English Defence League has been given permission to march from Tower Hill near Tower Hamlets on Saturday. Sunday is merchant navy day, the annual commemorative service to remember the sacrifice of seafarers, particularly in the second world war, at the Tower Hill memorial in the park. May I prevail on the Leader of the House to use his good offices to do everything possible to ensure, first, a peaceful demonstration and counter-demonstration on Saturday and, equally importantly, that arrangements are in place to protect the monument and clear up the park so that those relatives and colleagues who will remember the sacrifice from the second world war will be in an environment suitable for the occasion?

[Mr Lansley]

I very much agree with the hon. Gentleman on the importance of the memorial for Sunday and that it should not be disturbed. I will, of course, use whatever influence I can bring to bear and speak to my colleagues in the Government and the Mayor’s office to try to secure the action for which the hon. Gentleman asks.

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

We are all very keen that young people in Britain should be more engaged in the political process. I understand that you have given permission, Mr Speaker, for the Youth Parliament to meet in this Chamber during Parliament week to debate its “Curriculum for Life” campaign. May I suggest that we should have a debate ourselves about the outcomes of that debate?

[Mr Lansley]

My hon. Friend makes a very good point. I was tremendously impressed by the quality of last year’s UK Youth Parliament debate and in particular the choices it made in pursuing the “Curriculum for Life” campaign. We are looking forward to its sitting in the Chamber on Friday 15 November and I am sure hon. Members will find it a very interesting debate. We may have opportunities ourselves to debate the points it raises. I remind hon. Members that Parliament week, which this year runs from 15 to 21 November, seeks to connect people across the whole country with parliamentary democracy and that this year there will be a special focus on women in democracy, which I know Members will wish to support.

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

Unite the Union and the Chartered Institute of Personnel and Development have carried out surveys recently to establish how many of their members are engaged in zero-hours contracts. Their findings differ significantly from those of the Office for National Statistics. Will the Leader of the House arrange for the appropriate Minister to come to the House to clarify how many people in the UK are engaged in zero-hours contracts?

[Mr Lansley]

If I may, I will ask a Minister at the Department for Business, Innovation and Skills to respond to the hon. Gentleman. He will know that the Secretary of State has stated clearly to the House that he will undertake a review of those issues and I am sure that he will want to report to the House on that.

[Pauline Latham (Mid Derbyshire) (Con)]

On 4 October, I will be hosting an event at the university of Derby at which businesses in my constituency can discuss exporting their products. I am sure that we can all agree—even Opposition Members—that exports are key to maintaining the positive economic figures that we have heard about recently. May we have a debate on reducing the tax and bureaucratic burdens on small and medium-sized businesses to ensure that they can afford to send their products to foreign markets and continue to lead this Government’s economic journey from rescue to recovery?

[Mr Lansley]

My hon. Friend makes a very good point. I welcome what she says about the conference in her constituency. The increase in our exports is making a difference to our economic prospects. There has been a 5.8% increase in exports on a year ago. Given the circumstances, we cannot expect Government spending simply to replace private spending. Consumers, as a result of high levels of debt, have also been retrenching. Our ability to invest and secure growth in the economy therefore depends principally upon winning in the global race and getting into foreign markets. The fact that exports to China have gone up by 80% and to Brazil by 47% demonstrates that our businesses can win in the global race.

[Andrew Miller (Ellesmere Port and Neston) (Lab)]

It was not clear to me whether the Leader of the House refused the request from my hon. Friend the Member for Wallasey (Ms Eagle) for a debate on what she called the fortress mentality or simply ignored it. Given the issues with the aircraft carrier and what we have just heard about universal credit, can we have an urgent debate about project management in this Government?

[Mr Lansley]

I confess that I ignored the request of the shadow Leader of the House. She is very forgiving and will no doubt forgive me for that.

We may not be able to have a debate on project management in government in short order, but it would be a good topic to debate at some point, because it would give us an opportunity to demonstrate how the Minister for the Cabinet Office, along with the Major Projects Authority, has been leading a process of improving project management across government. I am confident that such a debate would show that there have been substantial improvements by comparison with what we saw under the last Labour Government, not least in the Department of Health. The National Audit Office has demonstrated that the project delivered during my tenure was a major achievement. As I outlined earlier, we delivered savings that were returned to the health service to improve services for patients.

[Mr Marcus Jones (Nuneaton) (Con)]

May we have a debate on the community value that is derived when councils lease land and property to charities? Labour-controlled Nuneaton and Bedworth borough council is using what I would call a legal technicality and substantial amounts of taxpayers’ money to throw out a much-loved disabled riding charity from its home of 34 years, without any proper explanation to my constituents.

[Mr Lansley]

The House will appreciate that my hon. Friend is making an important point on behalf of his constituents. I know that they will appreciate that too. His borough council will no doubt hear what he has said in this House. It should reflect on the best value guidance issued by my right hon. Friend the Secretary of State for Communities and Local Government in 2011 and on the benefits that should be derived by communities from the way in which councils exercise their powers.

[Barry Gardiner (Brent North) (Lab)]

May we have a debate on sound science and the implementation of Government policy? Many scientists in the environmental community have been concerned to find out that the badgers that are culled will not be examined to find out whether they had tuberculosis in the first place. Equally, they are concerned about the Government’s proposals to relieve local authorities of the obligation to monitor air quality at a time when we are facing severe and escalated infraction proceedings in the EU because we have failed to meet air quality standards. It looks as though the Government are not properly monitoring the implementation of their own policies.

[Mr Lansley]

The hon. Gentleman will be aware that my right hon. Friend the Secretary of State for Environment, Food and Rural Affairs made a written statement on Monday, which set out the basis of the policy. He will also remember the debate of 5 June, when the House voted against an Opposition motion that the badger cull should not go ahead. I know that my right hon. Friend is basing his policy on the best possible scientific advice.

[Mr David Burrowes (Enfield, Southgate) (Con)]

When he was Health Secretary, the Leader of the House referred a case of gender selection abortion to the police, no doubt considering it was in the public interest to prosecute. Does he share the grave concern about the fact that, despite sufficient evidence to warrant prosecution, the Crown Prosecution Service has dropped the case? There is urgent need for a statement to clarify whether the restrictions on choice in the Abortion Act 1967 are now meaningless.

[Mr Lansley]

My hon. Friend will understand when I say that these matters are the responsibility of the prosecuting authorities, and that inside the Government the Attorney-General is responsible for them, not individual Ministers. In so far as we express a view, it is best for us to leave it to the Attorney-General to look at such issues with the CPS.

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

Given the sad news in today’s The Sun that Birmingham, once the city of a thousand trades, has broken into the top five jobless blackspots in the country for the first time since records began, is it not time we had a debate on the need for a growth strategy for the whole nation rather than just London and the south-east?

[Mr Lansley]

I have to tell the hon. Gentleman that that is not the experience of Members across the country, who are seeing an increase in employment. There has been a 1.4 million increase in people in employment in the private sector, which is very encouraging. There are more women in employment than ever before, and the proportion of households in which nobody is in work has been reduced to the lowest we have seen. That is encouraging progress. It inevitably varies across the country, but the regional growth fund and the efforts we are making will make a big difference. I know how much he will also look forward to High Speed 2 enabling growth in the regions of the United Kingdom through access to markets and opportunities.

[Bob Stewart (Beckenham) (Con)]

Next week, a group of parliamentarians from this House and the other place is to visit Gibraltar for the national day celebrations. May we have a statement from my right hon. Friend sending greetings to the people of Gibraltar on that important event?

[Mr Lansley]

I am grateful to my hon. Friend, and I am happy to send my personal greetings if he will be kind enough to convey them along with his colleagues—I assume that he is taking part. I also send greetings on behalf of the many colleagues throughout the House who support and appreciate the allegiance of the people of Gibraltar to the British Crown.

My hon. Friend gives me the opportunity to say that, as he knows, not least from what my right hon. Friend the Foreign Secretary said at questions earlier in the week, we remain concerned by the action being taken by the Government of Spain at the border with Gibraltar. We have responded robustly, in partnership with the Government of Gibraltar, and we welcomed the Prime Minister of Gibraltar here last week. We have made it clear to the Spanish Government that their unlawful actions are disproportionate and unacceptable. We have repeatedly expressed our desire to find a diplomatic solution that is acceptable to Spain while reaffirming, as we do from the Dispatch Box repeatedly, our commitment to upholding the rights and interests of the United Kingdom and Gibraltar.

[Kevin Brennan (Cardiff West) (Lab)]

May we have a debate on how Ministers use language? Earlier, we repeatedly heard about “pathfinders”, “rolling out” and “agile processes”—the quiet man was back and turning up the jargon. Could we not make such meaningless phrases unparliamentary, particularly as the statement seemed to be less about universal credit and more about him attributing universal blame to everyone except himself?

[Mr Lansley]

I listened to my right hon. Friend the Secretary of State for Work and Pensions. He made perfectly good sense and used no jargon at all. He set out absolutely the right objective and policy. He is determined to get there on time and on budget. I heard that several times—he could not have been clearer.

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

When questioned about High Speed 2 on Tuesday, the permanent secretary to the Treasury, Sir Nick Macpherson, told the Treasury Committee that:

“There will be opportunities to reassess it”

and that the Government

“have not signed a blank cheque”.

Will the Leader of the House confirm that that is the Government’s view?

[Mr Lansley]

My hon. Friend will be aware that the Secretary of State for Transport will be at the Dispatch Box next Thursday to answer questions. Nobody is writing a blank cheque—that is the whole point. That is why, in the High Speed Rail (Preparation) Bill, we have clearly set out a budget with contingencies, as people would expect. They expect us to plan, as we did for the Olympics—a good example—to have a clear budget rather than one that keeps moving, and a budget that has sufficient contingency so that the project is entirely deliverable within it.

[David Wright (Telford) (Lab)]

May we have a statement from the Secretary of State for Health on the continuing controversy over the reorganisation of A and E services in Shropshire? Telford people want to retain full 24-hour A and E services in Shropshire. I believe the people of Shrewsbury want the same. Should not health services be designed around the needs of people and not the needs of health bosses?

[Mr Lansley]

The hon. Gentleman and I agree that health services should be designed around the needs of people—that has always been our view. It is important that commissioning organisations—the new commissioning organisations, with general practitioners who know their population and patients best—have the influence necessary to make that happen. As he knows, Sir Bruce Keogh is undertaking a review generally of A and E services. I cannot comment on the specifics in Shropshire, although I remember them well, but I am sure the Secretary of State will have an opportunity before too long further to update the House on that review.

[Sir Tony Baldry (Banbury) (Con)]

The Humble Address on Monday to mark the birth of Prince George of Windsor—[Hon. Members: “Cambridge!”] I am sorry; I meant to say Prince George of Cambridge. The Humble Address will provide an opportunity for hon. Members who were fortunate to be born in the reign of Prince George’s late great-great-grandfather, the much-loved and last King George, to observe how fortunate we are to have the leadership, continuity and security of the royal family. Will my right hon. Friend the Leader of the House give some thought to the possibility of affording an opportunity to Members of the House to subscribe to a decent christening present for the young Prince George of Cambridge? Perhaps it could be something he could use in later childhood, such as a really good cricket bat.

[Mr Speaker]

May I offer a manuscript amendment to that, namely “tennis racket”.

[Sir Tony Baldry]

We could have both.

[Mr Lansley]

I can feel a coat of arms coming on—[Laughter.] I appreciate the recognition of that joke from the hon. Member for Dunfermline and West Fife (Thomas Docherty). As one of the two Members who represent the city of Cambridge, I can say that we are only too delighted to have the titles not only of Duke and Duchess of Cambridge associated directly with the city, but of Prince George. Mr Speaker and others more fitted than I am might have a word about whether there is an opportunity to follow up my hon. Friend’s idea. No doubt they will let him know in due course.

[Jason McCartney (Colne Valley) (Con)]

With the rugby league world cup getting under way in just 50 days’ time, may I suggest a rugby ball as a christening present?

I was delighted this summer during my volunteering week to join the Green Streams project clearing the bank of the River Colne at Milnsbridge. However, all our hard work was undone by appalling fly-tipping upstream. May we have a debate on the scourge of fly-tipping and see what measures can be taken to stamp out that damaging act to our local environment?

[Mr Lansley]

Given what my hon. Friend was saying about sport, perhaps, as the Tour de France will be going through Cambridge, a racing bike, not just a rugby ball, would be appropriate.

I think many Members will sympathise with my hon. Friend on fly-tipping. He will be comforted to know that local authorities and the Environment Agency have powers to deal with those responsible, but the Government are taking further action to tackle fly-tipping. We are strengthening the powers of local authorities and the Environment Agency to stop, search and seize the vehicles of suspected waste criminals.

[Richard Graham (Gloucester) (Con)]

Half a million people have marginal deduction rates of 80%—they lose 80p in every £1 they earn. That is an unacceptable legacy of the previous Government that this Government are determined to put right through universal credit. Does the Leader of the House share my disappointment, therefore, that this morning the Opposition gave no support for a project that will help so many of our poorest workers? This is particularly ironic given all our concerns about living standards. Does he share my view that all Members should welcome the changes made by the Secretary of State in 2012 to ensure this vital programme is delivered on time and within budget?

[Mr Lansley]

My hon. Friend is absolutely right, and the points he makes came through strongly in the course of the exchanges. The Opposition utterly failed in their criticisms of the Secretary of State for Work and Pensions, my right hon. Friend the Member for Chingford and Woodford Green (Mr Duncan Smith), and further demonstrated that while they may talk about welfare reform, they have opposed every step we have taken to live within budgets, and to heighten incentives to give people every possible encouragement and support to be in work.

[Julian Smith (Skipton and Ripon) (Con)]

This week Yorkshire Water came to Westminster to meet Yorkshire MPs to explain why, at a time when it is raising customers’ bills, it paid zero tax in the past financial year. May we have a debate on how Yorkshire Water, and other water utility companies, are paying such low levels of corporation tax?

[Mr Lansley]

I cannot promise a debate immediately, but my hon. Friend will know that considerable effort is being put in by the Public Accounts Committee, the Treasury Committee and other Select Committees. The Government are seeking to ensure that people pay the tax that is due, and that we minimise tax avoidance and act against tax evasion. As far as corporation tax is concerned, the Prime Minister will update us on the G20 summit. Acting on an international basis on profit shifting and so on could make a dramatic difference. Following on from the G8, the Government and the UK are taking an excellent lead in trying to ensure that we have that kind of tax regime of an international basis.

[Jeremy Lefroy (Stafford) (Con)]

A report by the Royal College of Physicians last year pointed out that whereas there are 30 medical specialties in Norway, there are 63, and rising, in the UK. It explained the pressures that this brings on to the NHS. May we have a debate on medical specialties in the UK and the consequences for the NHS—particularly on smaller, acute hospitals—and on the important work that generalists do?

[Mr Lansley]

My hon. Friend tempts me, because this is a very interesting subject. At the same as we have had greater specialisation and continue to try to ensure that we drive forward with excellence and the highest standards in clinical terms, there has been something of a revival in the medical profession of generalist positions, for example, general surgeons. From personal experience I know it is important sometimes to establish specialties. We did that about five years ago in relation to strokes, for which there was not previously a stroke speciality. It is a complicated issue that would no doubt merit debate. I cannot promise a debate, but what my hon. Friend has said may well start the ball rolling.

[Christopher Pincher (Tamworth) (Con)]

Unemployment in Tamworth now stands at its lowest level since 2008. On 12 October, I shall play my own small part in helping to drive it down still further when, with the Tamworth Herald, I will host a jobs fair at South Staffordshire college. May we have a debate on jobs fairs to highlight the value they provide by bringing together local employers and jobseekers, and by the practical way they help us to help our constituents?

[Mr Lansley]

I am grateful to my hon. Friend. What he is doing in his constituency is important. He and other colleagues have demonstrated through jobs fairs that there are many practical steps we can take to help to connect those who are without work with the jobs that are available. The latest data show that we have near-record levels of vacancies in the economy. Matching people to jobs is vital, as the success of job fairs demonstrates. I will not reiterate the points I made earlier, but the increase in employment of 935,000 since the election demonstrates that they have the benefits that we are looking for.

[Simon Kirby (Brighton, Kemptown) (Con)]

Tourism in Brighton and Hove is worth a staggering £1 billion a year. This morning, Labour twice failed to rule out a tourism tax in oral questions, and the Leader of the Opposition has failed to reply to a letter of four weeks ago. Indeed, the right hon. Member for Tooting (Sadiq Khan), who is in his place, seems to think it is a good idea. May we please have a debate on this disastrous policy?

[Mr Lansley]

If I may say so to my hon. Friend, I must not hold the Government accountable for the policies of the Labour Opposition—or, indeed, of any Labour council—but I can at least note that, as our old friend David Mellor once told us, dogs bark, ducks quack and Labour puts up taxes.

Transforming Legal Aid

Thursday 5th September 2013 Commons Chamber

11:51

[The Lord Chancellor and Secretary of State for Justice (Chris Grayling)]

With permission, Mr Speaker, I would like to make a statement about the future of criminal legal aid in England and Wales.

As the House knows, this Government have embarked upon a process of repairing the public finances, after years of reckless borrowing and financial crisis under Labour. As my right hon. Friend the Chancellor explained at the spending review in June, we are making good progress, but we must continue to take the tough decisions necessary. No area of our spending has been immune from scrutiny. Our legal aid system is a major part of my Department’s budget, and it is therefore necessary that we look to make savings there, too. The Ministry of Justice will see its budget reduced by nearly a third between 2010 and 2016. Our reforms would see the legal aid fund reduced by the same order of magnitude. It is worth saying that we have one of the most expensive legal aid systems in the world and that, by comparison with similar jurisdictions elsewhere, we spend between two and three times as much per head of population on legal aid. That is simply not sustainable for the future.

The House will remember that I set out our initial proposals to meet those challenges in April. In doing so, I emphasised two important objectives. The first was to ensure that we could live within our means and still deliver a quality legal service to those who need legal aid. The second was to guarantee access to justice by creating a firm contractual framework for criminal legal aid. That would enable us to ensure that we retain legal aid-funded legal support in all parts of the country, provided by organisations that will be financially sustainable in a tougher funding climate.

After publishing our initial proposals in April, we have undertaken intensive negotiations with the Law Society, which represents legal aid solicitors, who are the most affected by our proposals on criminal legal aid contracting. I am pleased to tell the House that we have reached agreement with the Law Society on a package of revised proposals on criminal legal aid contracting, which we are publishing for consultation today, and a copy has been deposited in the Library. I would like to express my thanks to the Law Society team for the constructive way in which they have approached a set of negotiations that I believe have led to a good deal for this country.

The proposals will mean that all those accused of a crime receive high quality legal representation, that defendants are free to choose their lawyer, whether they want a big firm, their local high street solicitor or a particular specialist, and that all those who currently provide criminal legal aid services can continue to do so, provided they meet minimum quality standards. However, I have to ensure that every person arrested and put in a police cell has access to a lawyer. In future, therefore, duty slots will be allocated through a tight contracting mechanism, based on quality and capacity to ensure that only firms or groups of firms that demonstrate clearly that they have the financial strength to operate in this new, tighter financial environment will provide that guaranteed support in police stations.

The financial situation that this Government face means that fee reductions are inevitable. However, I have agreed to phase these between early 2014 and the spring of 2015, in line with a new timetable for contracting, so that firms have time to prepare and adjust. It is important to note that these proposals will enable my Department to operate within our spending review settlement, and therefore represent a long-term and sustainable way forward for the Government and for the profession. This is a good deal for the country and for the taxpayer. In addition, in order to reduce financial pressures on legal aid lawyers, I plan to make staged payments more readily available, to improve their cash flows.

In order to meet our financial objectives for Crown court costs, I am putting forward for consideration two options on advocacy fees. One builds on the proposals we put forward in April, but sets a floor below which fees cannot go, and recognises that there should be a different fee for guilty pleas and trials. The other is based on a scheme put forward in discussions between us and the Bar Council, and I am grateful to the Bar Council for that proposal. It draws on the scheme used by the Crown Prosecution Service. Both schemes represent a sensible way to reduce fees, particularly for the highest earners, as well as speeding up and simplifying the administration of the legal aid system. We will be guided by the views of the profession and other stakeholders in reaching a final decision on which scheme to implement.

It is also clear to me, particularly following the consultation that we have carried out, that it is not simply legal aid funding arrangements that determine the success and viability of the legal professions. I am therefore taking a series of steps that will demonstrate that the Government are serious about maintaining the legal profession in this country as a world leader. We have to go further to ensure that the criminal justice system is more efficient, so that cases do not demand more time and resources than necessary, in terms of public money and of the individual commitment by the lawyers involved. Alongside the criminal justice action plan announced by the Minister for Policing and Criminal Justice earlier this year, we are therefore putting together a panel of criminal lawyers to look at the whole legal process, to identify scope for improvements and to draw up proposals for reform. We need to speed things up and to reduce work loads.

It is also clear that advocacy is facing an uncertain future, given the rise of different routes into the profession, increasing supply but decreasing demand, regulatory changes and financial challenges. I have therefore asked Sir Bill Jeffrey to conduct an independent review of the future of criminal advocacy in England and Wales. This review will be carried out in partnership with the Law Society and the Bar Council.

Our initial proposals in April also set out a number of other changes to legal aid, in order to ensure public confidence in the system. I now plan to go ahead with most of those, subject to a number of limited modifications and exceptions. In particular, we will introduce a new residency test that will prevent most people who have only just arrived in the UK from accessing civil legal aid until a year after they arrive. We will limit criminal legal aid for prisoners so that it is not available unnecessarily. There will be no more legal aid available because someone does not like their prison. We will also set out new rules that will mean that, in most cases, the wealthiest Crown court defendants—those in households with more than £3,000 of disposable income left each month after tax, housing costs and other essential outgoings—will have to fund their own legal costs.

When I set out our initial plans in April, I was clear that they were for consultation. I have kept that promise. I believe that what we have agreed with the Law Society on criminal legal aid contracting is a sensible revised proposal that is tough but realistic. I shall be interested to hear whether the Opposition support the agreement. I do not deny that some of the proposals will be challenging for many, but in the context of unavoidable spending restraint, I have worked with representatives from the solicitors’ profession and the Bar to achieve the best outcome for everyone. I believe that it offers value for the taxpayer, stability for the professions, and access to justice for all. I commend this statement to the House.

11:59

[Sadiq Khan (Tooting) (Lab)]

I shall start by thanking the current Lord Chancellor for giving me advance sight of his oral statement just over an hour ago. However, I am still somewhat puzzled as to why today’s edition of The Times was considered a more important outlet for the public announcement of this climbdown than the proper place for such an announcement, which is here in Parliament. Can the media-shy Lord Chancellor explain that rather odd decision to the House?

Let me reiterate Labour’s position. We support efforts to find savings across our criminal justice system. We support making those who can afford to pay their legal fees to do so and restricting legal aid to those truly most in need. We also support using the frozen assets of criminals to fund their legal costs, and we want a more efficient system. We offered months ago to work with the Justice Secretary, but he arrogantly refused, although I note that he has taken on board many of our concerns, which we welcome, and adopted our idea of having a review and asking experts to look at the legal processes to see whether further positive reforms can be made. Will he please give the House more details of this review?

Today’s statement provides confirmation that the Justice Secretary’s plans—and they were his plans—really were half-baked, legally illiterate nonsense. He has been forced to climb down, and the sloppy way in which he goes about making policy has been exposed by experts in the field—from judges to rape victims, and from high street solicitors to the victims of miscarriages of justice, who really know what they are talking about.

This Justice Secretary was warned—by us and others—that his plans would see the destruction of a swathe of legal small and medium-sized enterprises across the country, yet he denied that it would happen. He was warned that the removal of client choice would undermine confidence in our legal system; he denied it. He was warned that a flat fee would put pressure on the innocent to plead guilty; he refused to accept that, either. Does he now agree with all those criticisms of his original proposals?

This is the first time that the Justice Secretary has participated on a debate in this Chamber on legal aid, so I have a number of further questions for him. Will he confirm that the 16,000 representations that the Ministry of Justice received about his plans is a record? I note, of course, that the Justice Secretary has made a deal with the trade union for solicitors, the Law Society, which we welcome. Does the Law Society fully accept the plans he has published today? Does he still stand by his previous public criticism of the barristers’ trade union, the Bar Council? What discussions has he had with it about these plans? Will he confirm that his latest plans still lead to a single fee for magistrates courts’ work, regardless of whether the case is a guilty plea or a trial? The right hon. Gentleman will be aware that this could lead to a perverse incentive to persuade a defendant to plead guilty when he or she is not guilty. Given that the Government have changed their mind on this issue for Crown courts, why not for magistrates courts, too?

The Justice Secretary will be aware that small and medium-sized firms undertaking legal aid work are already struggling to survive. There is a real concern about their future viability after a 17.5% cut in their fees. In that light, will the right hon. Gentleman tell us about the impact assessments he has done on his latest plans? What will be their impact on high street firms, on junior barristers, on black, Asian and minority ethnic solicitors and barristers, and on access to solicitors across the country, particularly in rural areas?

Will the right hon. Gentleman tell us what changes he has made to his plans for civil legal aid and judicial review, bearing in mind the many concerns raised across the House about them? He should now be aware that his plans for civil legal aid would have prevented the Gurkhas and the family of Jean Charles de Menezes from getting legal aid, while his plans for judicial review would create a perverse incentive for lawyers not to settle cases because they will need to get permission at a court hearing to recover costs. How is he going to address those concerns?

I am pleased that the Justice Secretary used his summer to swot up on the law and the justice system. I am glad that the primer worked. I am pleased that he appears finally to have seen sense and to have listened to those who know better. We will study the new plans closely, and consider the 270-page document published by him today. The public want confidence that the rule of law is being preserved, that access to justice is being maintained and that those truly guilty are being prosecuted and punished after due process. The justice system needs to be both credible and efficient. These are the tests we will continue to use in looking at the Government’s plans to reform legal aid.

[Chris Grayling]

The Opposition are obviously finding all this rather difficult, because they agree that we have done the right thing. It is clear to me that the days of beer and sandwiches are long gone, because the Labour party has forgotten how a negotiation works. It works like this: you put forward proposals, you listen to a representation from the other side, you engage in a negotiation, and you reach a settlement. That is what we have done, and this is a good settlement for Britain. It enables us to meet our spending review targets, which is what the country would expect. What the Opposition do not like is the fact that we have done the right thing and arrived at the right objective—and we should remember that they never consulted on anything when they were in government.

The right hon. Member for Tooting (Sadiq Khan) asked me about this yesterday. I should point out that I took the unusual step of briefing the Opposition on our plans 24 hours rather than one hour in advance, because I recognised the importance of talking to the legal profession, whose members are personally affected by this change. I have tried to balance the interests of the House with those who are most personally and individually affected. That is why I shared the information with the right hon. Gentleman well in advance of any norm in the House.

The right hon. Gentleman referred to the concept of debates in the House. I seem to remember his telling the House that he would use a Labour Opposition day to debate this issue, because it was crucial, and the next Opposition day debate would be about legal aid. That never happened, because, in fact, the Labour party does not take this issue seriously at all.

The right hon. Gentleman mentioned magistrates courts, but, as he will know, our proposals were always about Crown courts. He asked about our discussions with the Bar Council. I have had many meetings with the Bar Council and the circuit leaders over the last few months. One of the two options that we have presented today was suggested to me by the circuit leaders and echoed by the Bar Council, namely the option of replicating more closely the way in which the Crown Prosecution Service works. I have received valuable support in relation to all this from the Attorney-General and the Solicitor-General, and I hope that those two options will provide a basis for a clear discussion about the best way forward.

The right hon. Gentleman made a point about small and medium-sized enterprises. The Law Society and I are clear about the fact that we expect these changes to lead to amalgamations in the SME sector. Legal aid services are currently delivered by 1,600 firms, many of which are very small. We will continue to allow those firms to carry out their own client work, but what is most important is that I provide access to justice—to which the right hon. Gentleman referred—in every part of the country. That requires me to be sure that I have firms that are financially sustainable in every part of the country, which is why we need the contracting mechanism that I am going to introduce. It is essential to ensure that there is access to justice, and that is a key part of these proposals.

Finally, the right hon. Gentleman mentioned judicial review. We intend to produce a consultation document on changes to judicial review imminently.

[Sir Edward Garnier (Harborough) (Con)]

As the Lord Chancellor will know, I am a member of the Bar but have no personal interest in legal aid matters.

The Lord Chancellor said that he would propose a floor below which the fees of lawyers dealing with criminal cases could not fall. Is he hopeful that his proposals will not lead to a flight of the best from the criminal Bar and the solicitors’ profession, so that we find that we are not developing the senior barristers and solicitors who go on to become Crown court judges? I am concerned about what will happen to our criminal justice system in future if we do not have the experts—the top professionals—to deal with the most difficult criminal cases.

[Chris Grayling]

We have modified the tapering arrangements so that the least that a junior barrister can be paid for a day in a Crown court trial is £225 plus VAT. We all want talent to be maintained in the Bar. One of the reasons that, together with the Law Society and the Bar Council, we invited Sir Bill Jeffrey to head a review of advocacy was our wish to secure a proper strategy for the future. We are arguably training more barristers today than there are places for them. The balance of the profession and the number of people in the criminal Bar are important issues, and I want someone who is independent, and working in partnership with the two sides of the profession, to establish the best way for advocacy to evolve, precisely so that what my hon. and learned Friend has described does not come about.

[Kevin Brennan (Cardiff West) (Lab)]

Only yesterday we saw how a miscarriage of justice can take place, and how someone—in this case, Barri White—can spend many years in prison for crimes he did not commit. Can the Justice Secretary give the House an absolute assurance that none of his proposals could result in further such miscarriages of justice?

[Chris Grayling]

The key to ensuring there is no miscarriage of justice is to make sure someone is properly legally represented. None of the proposals we have put forward have ever done anything to undermine the principle that in a trial somebody should have a properly qualified advocate of their choice to represent them, and that we must make sure that we have state of the art police and prosecution services—and my right hon. and learned Friend the Attorney-General is working hard to make sure we have a prosecution service that is as state of the art as possible. It is, of course, essential that we do everything we can to make sure there are no miscarriages of justice. Nothing in these proposals should mean that miscarriages of justice are more likely.

[Mr David Davis (Haltemprice and Howden) (Con)]

I welcome unreservedly the Justice Secretary’s response to the House’s concerns about the criminal justice system. What he has done in that regard has been excellent. However, I and other Members still have concerns about some of the proposals that have constitutional implications—judicial review, the residency test and so on. The Joint Committee on Human Rights is reviewing the Justice Secretary’s proposals. Will he wait until it reports before implementing the proposals with constitutional implications?

[Chris Grayling]

The JCHR wrote to me to ask about the timetable, but we tabled our proposals back in April and made it pretty clear what the timetable will be. Of course I will talk to that Committee, but we need to make progress on the financial side. We will shortly be carrying out a further consultation on judicial review matters. I am open to listening to all Members of the House on those elements we are consulting on, and those that require legislation will be fully debated in this House.

[Natascha Engel (North East Derbyshire) (Lab)]

The legal aid budget comprises criminal legal aid and civil legal aid. What proportion of the budget goes on civil legal aid?

[Chris Grayling]

By the time all the changes we have introduced reach a steady-state point, the ratio will be roughly 50:50.

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

May I declare my interest as a lawyer and a member of the JCHR? I should also mention that I submitted a response to the consultation with some criticisms of the original proposals. I pay tribute to the Secretary of State for listening to the Committee responses and for responding, and also for producing a second consultation paper to which people can respond. It seems that the threat to the high-street lawyer and the specialist firm has been lifted, which is welcome, and also that the Secretary of State understands there are still savings to be made in time and cost in the legal system, which remain a scandal. However, may I just ask him to undertake to the House that the poor, those with special needs, the young, those who do not have English as a first language and those who may not be resident here normally but who have human rights issues of national and international importance will still have a legal system they can turn to in their hour of need?

[Chris Grayling]

I can give my right hon. Friend that assurance. I have listened to the representations made to me by members of the JCHR and privately by members of the judiciary about some of the more specialist situations—where people have been trafficked, where there is a child aged under 12 months, and other similar cases—and we have sought to identify cases where there are individual special needs that need to be met. That is reflected in the proposed changes—to the residence test, for example. When my right hon. Friend reads the detail of what we are proposing, I hope he will see that we have made modifications designed to reflect the concerns he and others have raised.

[Karl Turner (Kingston upon Hull East) (Lab)]

I cautiously welcome the Lord Chancellor’s U-turn on price competitive tendering, but the devil is in the detail and I still have some reservations that this might well be PCT through the back door. What will be the criteria for obtaining a duty contract? Will it be about price or quality of service?

[Chris Grayling]

As I said in my statement, it will be based on quality and capacity. What has always mattered to me is that we can guarantee coverage around the country, but without some form of contractual mechanism to ensure we secure the supply of duty legal aid services at the very least, we will always risk the availability of a law firm that does legal aid in a particular area being at the whim of the market. I think that this set of compromise proposals will deliver the certainty we need, and that it will do so in a way that is much more acceptable to the legal profession. I am delighted that we have worked together with the legal profession to reach a point on which I think we can all agree and that is good for the country.

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

Do the changes have any implications for the military justice system, given the continuing concern both in this House and the country at the huge costs bill faced by the courageous SAS Sergeant Danny Nightingale as a result of trying to defend himself against an inappropriate prison term?

[Chris Grayling]

I obviously cannot comment about that specific case, but I am not aware of anything in these proposals that would have a detrimental effect on the very important processes we have in place to deal with military matters. It will be very much on my mind in the coming months to take a closer look at the whole issue of veterans and armed forces personnel and the legal profession, because I am not entirely convinced we do enough to make sure we recognise the needs of those leaving our armed forces who end up in the criminal justice system.

[Valerie Vaz (Walsall South) (Lab)]

I am a non-practising solicitor. Of the 16,000 responses to the Justice Secretary’s original consultation, how many were in favour of those earlier proposals?

[Chris Grayling]

Of the 16,000 we received, the vast majority were single-template campaigns. We have not sought to add up pros and cons. What we have done is looked at the consultation responses in detail, and looked for sensible ideas. We have had constructive discussions with the professions who provided the most substantial responses, and we have brought forward what I think are the right proposals for the future.

[Mr Robert Buckland (South Swindon) (Con)]

I refer to my declaration in the Register of Members’ Financial Interests. I thank my right hon. Friend for listening to the weight of opinion in particular relating to PCT and the need for quality representation at the police station. In the review of criminal process, will he make sure the rules relating to disclosure of criminal evidence are looked at very carefully, as it seems to me that considerable savings can be made, particularly in very high-cost cases?

[Chris Grayling]

I can certainly do that. I give my hon. Friend the assurance that when Sir Bill begins his work, I will pass those comments on to him. On PCT, it is worth reminding the House that the Labour party first came up with the idea.

[Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)]

Rather than a compromise, this is a complete climbdown, which prompts the question of who the Secretary of State spoke to before formulating his original proposals. The devil is in the detail. Will the Secretary of State say whether he is also reviewing what minimum quality standards will apply in this new contractual arrangement he highlights?

[Chris Grayling]

On the first point, I know the Labour party would like to portray this as some great climbdown, but the reality is that there has been a process of consultation and negotiation. That is how we reach good agreement. I know that Labour Members never did that in government, because they do not know how to consult, negotiate and agree, but that is what we have done and we have come up with the best deal for this country.

On the latter point, we believe this is being taken forward in the right way. I know the hon. Lady wants to look at the detail. The documents are available in the House, and if she has any further questions, we will respond in detail.

[Charles Hendry (Wealden) (Con)]

I have a constituent whose children were illegally abducted by his ex-wife. In the court case to have them returned, his ex-wife had all her legal costs covered by legal aid, but my constituent as the innocent party incurred legal costs of over £140,000. Do the proposals include measures to address that sort of unfair and unbalanced situation?

[Chris Grayling]

I entirely understand the concerns my hon. Friend raises. I obviously cannot comment on the specific case, but what I can say is that within our legal aid system both now and in the future discretionary funding will be available for the unexpected and unusual case that might not conform to the central rules of the scheme but where there is a clear need for support to be provided.

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

Can the Justice Secretary assure us that there is no connection between the original opposition to his proposals from Churches, charities and advocacy groups and the Government’s subsequent efforts to muzzle those organisations through the lobbying Bill?

[Chris Grayling]

That is a pretty absurd question, to which the answer is that that is complete nonsense.

[David Mowat (Warrington South) (Con)]

For the avoidance of doubt, will the Secretary of State confirm that the absolute level of savings implied in today’s statement is similar to that in the initial consultation and that we will be moving our costs in this area to a similar level as that in other countries?

[Chris Grayling]

I can give my hon. Friend an absolute assurance on that. In my very first contribution to this debate I said that I have to achieve the financial savings set out in our spending review settlement. I am not wedded to any exact way of doing so; if somebody has a better idea, I am happy to look very closely at it. That is what I have done, and this is the agreement we have reached, and it is just a shame that the Opposition do not understand that.

[Sir Tony Baldry (Banbury) (Con)]

First, may I declare an interest as a practising member of the Bar? Does my right hon. Friend agree that it is not sustainable in the long term if some legally aided members of the Bar are earning substantially more than the Lord Chief Justice or the Prime Minister? One simply cannot continue to have such a system.

[Chris Grayling]

My hon. Friend is right; we have focused the majority of our changes relating to the Bar on those at the upper end of the income scale. I know that this is difficult and that these are painful decisions for some people, but there will be a limit to what we can afford to pay someone who is living off public funds entirely or almost entirely.

[Paul Blomfield (Sheffield Central) (Lab)]

While welcoming the Justice Secretary’s statement, made in the face of the enormous opposition that his original proposals generated, may I press him further on one of the earlier answers he gave? Will his new proposals still mean that not only trafficked people, but separated children, survivors of domestic violence, detainees and children under 12 months will have reduced eligibility for legal aid?

[Chris Grayling]

We have made exceptions to that test with our modifications relating to the residency test, particularly for very young children and victims of domestic violence and of trafficking, and in one or two other cases where we have international obligations, but the vast majority of people who come to this country have to expect to be here for a while before they can access civil legal aid. That is right and proper, and it is what the public would expect.

[Sarah Teather (Brent Central) (LD)]

From a quick scan of the consultation document, and further to the Lord Chancellor’s answer to the hon. Member for Sheffield Central (Paul Blomfield), it looks as though the Government have made substantial moves on categories of the vulnerable, which I welcome. However, the Lord Chancellor has not answered a point that a number of other Members have raised: what would happen with cases such as those of Baha Mousa, Binyam Mohamed and the Gurkhas? Will he confirm whether there is any exception for such important international cases?

[Chris Grayling]

Of course, cases such as the one raised regarding an inquest are covered separately. If the hon. Lady will forgive me, I am happy to give hon. Members responses to specific detailed questions, but I am not going to try in this Chamber to apply the new rules to individual cases. I do not think that would be the right thing to do.

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

The comment the Minister made about access to criminal legal aid for prisoners was inappropriate for somebody holding his office. Will the seriousness of a case or its merits be taken into account when people who have not been resident for 12 months are trying to access legal aid?

[Chris Grayling]

What we have done is set aside a certain number of areas of special case eligibility. The point about prisoners may be a point of difference between the hon. Lady and me, but we have a prison complaints system and a prison ombudsman, and I do not believe we should also provide public funding for people to go to court because they want to be transferred to a different prison. I think that the overwhelming majority of the public would be with me, rather than with her, on that.

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

I listened with interest to the Lord Chancellor’s statement. How will his announcements affect access to legal aid for my constituents and on the Isle of Wight?

[Chris Grayling]

I have listened carefully to comments that my hon. Friend has made. With the detail of the contracting, we will have more contracting areas. However, the rules we have put in place will mean that local firms on the Isle of Wight will be able to continue to provide own-client work, so there is no reason why there should not still be a good service for people on the Isle of Wight who need it. Of course, through the contracting mechanism for duty slots, we will have guarantees that duty solicitors will be available in police stations on the Isle of Wight, regardless of other circumstances.

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

I congratulate my right hon. Friend, both on his statement and on the sensible and careful way in which he has approached this issue. The statement will deliver fair access to justice for my constituents, while also making the necessary savings. Will he confirm that the savings being made will not be taken from other areas within his Department, that they are an overall saving and that it is still the same as originally proposed?

[Chris Grayling]

That is a very important matter. As the House knows, I have to make some substantial cuts across the Department. I am trying to balance them sensibly and to deliver them through reforms. What this package does is enable me, in a different way, to get to the same point financially. I am grateful to those who have been involved in the negotiations for the constructive way in which they have approached this. I know it is difficult and that it will be very unwelcome to many people in the profession, but it is the best option we have available.

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

I welcome the fact that the Secretary of State has listened to the consultation. Devon and Cornwall were going to be treated as one area for competitive tendering, but it was just too huge. Local companies and specialist companies in my constituency and area will get a chance to deal with the work, and I am happy that he can give us that reassurance.

[Chris Grayling]

Absolutely. As I say, it was a genuine consultation and a genuine process of discussion. I was impressed by comments made by my hon. Friend, and by colleagues in similar constituencies, about our having to do more to try to address the issues in rural areas, and that was something I tried to take into account.

[Mr David Burrowes (Enfield, Southgate) (Con)]

With my interest as a criminal defence duty solicitor, I recognise that this is a tough settlement. However, may I thank the Justice Secretary for doing what he said he would do—listen, engage with professionals on the front line and adapt the proposals to make them work? Given that competitive tendering has been a Labour idea and that attempts at introducing it have been made on a number of occasions, will he confirm, once and for all, that PCT is now in the bin—not the one marked “recycling” but the one marked “refuse”?

[Chris Grayling]

This settlement will be for four years, plus, potentially, one additional year from 2015, so it will take us into the foreseeable future. Of course, competitive tendering was Labour’s idea. I apologise to the hon. Member for Hackney South and Shoreditch (Meg Hillier) for not making the point about the thresholds. We will agree the quality thresholds that need to be crossed by bidders with the profession, so that we get something that guarantees what we all agree is the necessary level to ensure that a quality service is provided. It is worth saying, however, that legal qualifications in this country are among the best in the world, so if someone is legally qualified, I regard them already as blue chip.

[Richard Graham (Gloucester) (Con)]

The Secretary of State has listened carefully to the consultation on the original Labour idea of competitive tendering. He has achieved the necessary savings, he has ensured that only those with a strong connection to the UK can access taxpayer-funded—[Interruption.] Mr Speaker, the shadow Secretary of State has been chuntering away in a loud voice for most of this session, so may I finish without his interrupting me further? The Secretary of State has ensured that only those with a strong connection to the UK can access taxpayer-funded protection and he has looked after the interests of capable local legal firms in Gloucester. My constituents will welcome the changes. I regret only that the shadow Secretary of State is not capable of joining us in welcoming what has been announced today.

[Chris Grayling]

I very much welcome my hon. Friend’s support and his comments, and I am very grateful to him for them. The big problem that Labour Members have is that they were looking forward to an autumn of attacking the Government but we have a sensible set of proposals with which, I hope, most people will agree. That is Labour’s difficulty today.

[Steve Brine (Winchester) (Con)]

I welcome the Lord Chancellor’s statement and thank him for it. His movement on choice after he appeared before the Select Committee in early July was welcome. It was logical to many of us there that changes to the PCT regime would follow. Does he agree that the revised model of tendering will result in some consolidation of smaller firms, as the market inevitably responds—that is not bad thing—ultimately leading to a more stable environment for law firms in the future?

[Chris Grayling]

That has been a central part of what we have agreed with the Law Society; there has been an acceptance from both of us that these changes will lead to consolidation. They will lead to bigger, but not giant, firms, which are more equipped to deal with a tough financial climate but will continue to deliver a quality service. That is what we are looking to achieve.

[Bob Stewart (Beckenham) (Con)]

Does my right hon. Friend agree that a minimum of £225 plus VAT a day for a barrister in a court case is very fair?

[Chris Grayling]

I hope that it is fair. The aim is to ensure that there is a degree of certainty in all of this. We have put in place a taper mechanism, which I believe will reassure younger members of the Bar about the amounts they will be paid for the work they do in trials. That seemed to me to be a sensible development in our original proposal, and I hope that it will be welcomed.

[Julian Smith (Skipton and Ripon) (Con)]

I thank the Justice Secretary for listening to the concerns of rural solicitors’ businesses and barristers across north Yorkshire, and I welcome his focus on quality. There are serious allegations of corrupt behaviour among some solicitors’ firms in Bradford, and this focus on quality has to be taken seriously.

[Chris Grayling]

That is very important. I want us to develop, in partnership with the professions, some clear standards for firms. We expect law firms to meet high standards, to behave without absolute propriety and to deliver a quality service. We will set standards that are exacting but appropriate as we move into the contracting phase. We want quality legal services for the future.

[Sir Bob Russell (Colchester) (LD)]

The Lord Chancellor seems to have forgotten the Government’s localism agenda and support for small businesses, because although he said nice things about local high street solicitors, he gave the game away in the same paragraph when he referred to duty slots being allocated on capacity. Where does that place a two-person firm of solicitors that deals only with criminal law matters?

[Chris Grayling]

First, it leaves that firm completely free to continue its current specialisms and its own client work. If it wishes to bid for duty slots at police stations, it is free to do so in partnership with other organisations. From my point of view, it is crucial that I know that those people who are contracted to deliver duty slots in police stations will be there in one, two, four or five years’ time. If they disappear leaving a legal aid desert, I will not be able to guarantee that people will get access to legal services in a police station and that cannot be right.

Point of Order

Thursday 5th September 2013 Commons Chamber

12:30

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

On a point of order, Mr Speaker. During the very important urgent question earlier, the Secretary of State for Work and Pensions said at one stage “he did not tell me the truth”. Opposition Members could not quite work out which person the Secretary of State was alluding to and that could lead to a great injustice to a particular person. Is there any way that you, Mr Speaker, could clear it up?

[Mr Speaker]

I am a little concerned that the hon. Gentleman has a sense of my psychic quality that is not matched by the reality. I cannot possibly know who the Secretary of State had in mind. The hon. Gentleman refers to a “particular person” who might have been subject to a grave injustice, but it must be said that the particular person, if there is such a person, is unlikely to be aware of that fact if he or she was not identified by the Secretary of State.

[Mr Sheerman]

rose—

[Mr Speaker]

I do not think that there is a need at this stage for a further point of order. I wish to offer the hon. Gentleman practical advice. He should write to the Secretary of State and ask him who, if anyone, he had in mind. If that approach is unavailing and the hon. Gentleman wishes to pursue the matter further, I rather suspect that he will require no encouragement to do just that.

Backbench Business

Thursday 5th September 2013 Commons Chamber

High-cost Credit

Thursday 5th September 2013 Commons Chamber

12:32

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

I beg to move,

That the House has considered high-cost credit.

I thank the Backbench Business Committee for granting us time for this afternoon’s debate, which takes me back to my maiden speech in this House, just over three years ago, in which I raised this very issue. My reason was simple: I grew up in the south Wales valleys, where doorstep lenders were as much a feature of the towns and villages as the coal slagheaps from the mining industry. Although the valleys have changed and are now green and beautiful again, one thing has not changed—the loan shark, whether legal or illegal, is still a regular visitor to the terraced streets of my youth.

Despite heavy campaigning by Members on both sides of the House, I still have constituents trapped in the appalling cycle of debt. Indeed, in March 2012 I tabled a ten-minute rule Bill calling for the introduction of legislation to tackle the problem of financial exclusion. Based on the US Community Reinvestment Act, it called on banks to work with community lenders in areas where the banks have only a limited presence. It was my hope that such a development in fair finance would ensure that financial exclusion did not continue to push families into high-cost credit.

My Bill was formulated against a backdrop of the increasing market for short-term loans. Just recently, Wonga announced that profits after tax had risen by 36% to £62.5 million in 2012. Whether we like it or not, people will always need money for an emergency—such as a car repair or a new washing machine—and with many of the mainstream lenders not even in the market it is the short-term loan companies to which people will turn. To put it simply, we are not going to abolish the sector. If we do that, we will do nothing but push money lending underground. Families in communities such as mine might be tempted to borrow from people who might offer unattainable terms and conditions and many of those lenders might even resort to criminal behaviour if money is not repaid to their satisfaction. That is not what anyone would want to see.

That does not mean there is no room for improvement in the present market. At present, payday loan companies are expanding into new markets and target customers who previously would have borrowed money from friends and relatives. Last month, a study by the housing charity Shelter Cymru and the citizens advice bureaux in Wales warned that nearly half of adults in my native Wales—some 48%—struggle to afford rent or mortgage payments.

One in six mortgage or rent payers in Wales does not have any financial safety net such as insurance or savings and 12% “struggle constantly” to make ends meet. Citizens Advice in Wales says that it has seen a 555% increase in the number of people asking for advice about payday loans. Sadly, whether we like it or not, unlike the future of households across Wales, which have experienced the second biggest drop in earnings in the UK since 2010, the future of loan sharks and payday lenders is more secure than ever.

Despite the Archbishop of Canterbury’s announcement of plans to use the weight of the Church to boost credit unions so that they provide a real alternative, the Church is up against a considerable commercial opponent. In the past 12 months, the amount that the biggest five payday lenders spent on advertising rose by 26% to an incredible £36.3 million. My hon. Friend the Member for Sheffield Central (Paul Blomfield) pointed out while introducing his private Member’s Bill in July that the payday loan sector was worth just £100 million in 2004 and is now, less than 10 years later, estimated to be worth more than £2.2 billion.

Since 2011, the average amount owed on payday loans has increased by £400 to £1,657. People now owe more than a whole month’s income on payday loans. Over the past few years, there has been a very aggressive marketing strategy by these companies. The more payday loans are advertised, the more people will see them as a mainstream solution and will not look to other more cost-effective ways to borrow or make ends meet.

[David Wright (Telford) (Lab)]

My hon. Friend makes the strong point that advertising and new technology are promoting those companies. One way we can tackle this is by making credit unions more visible on the high street and we have been trying to do that in Telford. We need to develop strategies to give credit unions a higher profile and make them more mainstream on the high streets so that more people will use them.

[Chris Evans]

I agree entirely with my hon. Friend. As I said before, we are faced with an absolute juggernaut of advertising. A credit union might promote itself to 70 people whereas a payday loan company can promote itself to 7 million if it puts its advert on television at the right time. As I develop my argument, I shall suggest strategies to take on the goliath that is the payday lenders.

[Guy Opperman (Hexham) (Con)]

I wholeheartedly congratulate the hon. Gentleman on securing this important debate. Does he agree that just as we wish to expand and enhance credit unions we should also consider local community banks? They are trusted providers backed by the local community, and profits go back to the community after a limited time. They have strong local representation and an ability to lend at a better rate than even credit unions.

[Chris Evans]

I agree wholeheartedly. If the hon. Gentleman proposed that, he might gain cross-party support. As my hon. Friend the Member for Telford (David Wright) said, payday lenders have been extremely innovative in using advertising and the internet to reach people and we, as supporters of the credit union movement and community banks, must take a leaf out of their book, become innovative and consider other ways to reach the vulnerable people who see short-term lenders as the only solution to their problems.

After I was granted the debate, a constituent wrote to me about the problems he has faced with short-term lenders. When we met, he told me how payday loan companies added a range of administrative charges, interest and fees on top of initial loans. He borrowed in an attempt to pay back some of the money, but he fell further into debt as he took out loan after loan. He borrowed £400 from Wonga, but now must pay back £739. If he cannot afford the initial £400, how is he to afford £739? Where is the logic in that? It baffles me that payday loan companies seem to think that if someone is unable to pay back a loan, the answer is to take out another one. With Wonga breathing down his neck, he was forced to borrow £100 from QuickQuid, but now he owes that company £201.

My constituent told me that at no stage when taking out the initial loan was he asked about his income or expenditure, which bears out the findings of the Office of Fair Trading’s compliance review that only six of the largest 50 firms in the market made any attempt whatsoever to carry out proper income checks. That is simply not good enough. Had I not carried out such checks when I worked at Lloyds TSB, I would have faced disciplinary action—and rightly so—but such companies continue to follow those discredited practices.

The Office of Fair Trading also found that 75% of payday lenders renewed loans without checking whether they would be affordable, despite the fact that rolling over loans is a strong indicator that the borrower cannot pay back the money. It is especially worrying that each time someone fails to pay back a loan and takes out another one, they are committed to paying not only the interest on the initial loan, but admin fees and hidden charges on the new one.

My constituent was the victim of the culture of multiple loans, but he is not the only one. Some 30% of the people who contact StepChange Debt Charity for urgent help hold four or more loans. Parts of the industry are getting people into a vicious cycle of borrowing from one creditor to pay another. UK borrowers can end up paying back 74% of their initial loan in charges and administration fees on top of the money they borrowed. That figure is capped at 7% in Canada, meaning that the maximum payable in default interest and charges for a £300 loan is just £25. That practice needs further study in the UK. The consumer group Which? has called on the Financial Conduct Authority to replicate existing rules for mortgages and other credit products to help borrowers struggling with repayments. There is already a cap on default charges and fees in the credit card and mortgage markets, and we must consider extending such a cap to credit consumers.

I have further examples of how payday loans mean just piling on the debt. A payday loan company issued a man with a claim for £1,830 in penalty charges that were incurred for defaults on a loan of just £120. Each time the company went to his bank and was unsuccessful in recovering the money, it cost him £5, and the company made 330 attempts to get back the money. On top of that, the lenders added £178 of interest. It would be farcical if it was not true, but for many people in communities such as Islwyn, that is a sad fact of life each and every day. A Which? survey found that one in five users of payday loans were hit by unexpected charges and that, in the past 12 months, more than half of payday loan users had incurred charges because of missed or bounced payments.

We need to accept that borrowing from a payday lender is not like borrowing from a bank. When I worked in a bank, I would meet someone to discuss their needs. We would look at their income and expenditure, and talk about the affordability of loan and why they needed it, but even if the customer credit scored for a loan, I would still have no hesitation in saying no. However, with payday loans, because of the internet and fast access through iPhone technology, there is no one at the end of the line to say no, and what is worrying is that a person taking out such a loan may have the money in their bank account within 10 minutes.

For many, payday loans are a last resort. Many of the people I talk to have basic bank accounts that do not credit score for financial products. They have never got into mainstream banking, principally because they have seldom come across a bank in their lives. They see walking into a bank as a scary experience, so when they find themselves in dire straits and see the friendly advertising of Maud and Errol and the granny puppets from Wonga, or Amigo Loans, they think that there is a friendly place to go and they pick up the phone—they find it so easy. I therefore welcome the Government’s actions to investigate the effects of advertising and the year-long study of the market. I also look forward to the Financial Conduct Authority formulating a strategy in the autumn. However, I and others who have campaigned on the matter find the speed of implementing such measures frustrating.

As those processes are going on, short-term loan companies are devoting huge budgets to advertising, which I talked about in response to the intervention made by my hon. Friend the Member for Telford. The many daytime adverts predominantly reach the old, the young and the unemployed. Much as I welcomed the Government’s announcement in June 2012 that the Department for Work and Pensions would proceed with a credit union expansion project and make up to £38 million available to credit unions until March 2015, that is just a drop in the ocean.

[Julie Hilling (Bolton West) (Lab)]

Will my hon. Friend join me in congratulating Bolton Wanderers on deciding, as a result of pressure, not to sign a deal with QuickQuid? Does he agree that we need to act on advertising not only on the television, but on our football pitches and throughout our communities?

[Chris Evans]

I join my hon. Friend in congratulating Bolton Wanderers. The first draft of my speech included a reference to the team turning down a sponsorship deal with QuickQuid, but I took it out for reasons of time. She raises an important point. The premiership is sold throughout the world. Anyone who watches “Match of the Day” or Sky Sports will see managers and players being interviewed after a match against the backdrop of their sponsors. There is nothing wrong with that, but seeing the names of loan companies such as QuickQuid or Wonga next to those of reputable companies such as Barclays sends the powerful message to the chap in the pub who has watched the game that those loan companies have the same legitimacy as blue-chip companies that follow the rules, work in a well-regulated market and look after their customers.

I have noticed the huge problem that payday and short-term loan lenders have recognised the absolute power of advertising. I do not say this often as an Opposition Member, but I feel sorry for the Government, because they are in a David and Goliath situation. They are investing £38 million over three years in credit unions, for which they should be applauded, yet the big five payday lenders have just spent £36.3 million on advertising in one year, and that will only continue.

As the treasurer of the all-party group on credit unions, a Co-operative Member of Parliament and a member of the Islwyn community credit union, I think that credit unions are the way forward. They offer vulnerable people with few safe options an alternative to get cash when they need it most. They are the remedy to predatory loan sharks and high-interest lenders. Aside from the more regulated industry that I would like to see, the alternative to high-cost credit is a financial services sector that contains a wider array of ethical and enlightened products and services.

[Mike Thornton (Eastleigh) (LD)]

I entirely agree with the tenets of the hon. Gentleman’s speech and thank him for securing the debate. My constituents say that while credit unions are all very well, a person needs to be saving with one before it will lend to them. My experience and that of my constituents is that problems often arise when people have not been able to save in the first place, meaning that credit unions are unable to lend to them under their rules, so could we consider dealing with that?

[Chris Evans]

As I have said, we need an innovative approach because the payday lenders have become huge and they are a first-stop shop for anyone who needs money. We need to examine how credit unions are funded and to let people borrow through the Post Office.

In addition, yesterday I spoke to the UK Cards Association and asked whether there was a way to get credit cards to impose a small limit and micro-manage them in some way. It was very receptive to the idea. My argument was that then the big banks could be involved and they could use their own account management techniques. It would be a win-win for everybody in many respects. A decent interest rate could be charged on a credit card and the banks could then manage people who need short-term loans into mainstream banking. That is the way forward. I have every sympathy for people who need this money, but the way forward is to find a way with the big banks to manage people into mainstream banking.

[Justin Tomlinson (North Swindon) (Con)]

I welcome much of what is being said, but I have a word of caution. An unauthorised overdraft in a mainstream bank is equivalent to 80,000% APR. We may not want to signpost people towards that.

[Madam Deputy Speaker (Dawn Primarolo)]

Order. Before the hon. Member for Islwyn (Chris Evans) concludes his remarks, I gently remind him that the recommended period for opening a debate is 10 to 15 minutes and he has now had 19 minutes. I appreciate that he has taken interventions.

[Chris Evans]

I apologise Madam Deputy Speaker. I am coming to an end, but I will just deal with the hon. Gentleman’s point. The significant word is “unauthorised”. I know that the hon. Gentleman has done a lot of good work on financial education, which is the way forward. An unauthorised overdraft is a failure to manage the account properly, so we need to teach people how to do that. I think that he would agree with that.

Credit unions rightly receive support from both sides of the House, but to flourish they need the support and help of Government. If that means regulating the high-cost credit industry while at the same time restricting its advertising budgets, as we have done in other industries, so be it.

Once again, I thank the Backbench Business Committee for granting me time for this debate. I know how important it is to Members from both sides of the House and I look forward to hearing colleagues’ contributions.

[Several hon. Members]

rose—

[Madam Deputy Speaker]

Order. I inform Members that there will be an eight-minute time limit starting immediately with Back-Bench contributions.

12:52

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

It is a great pleasure to follow the hon. Member for Islwyn (Chris Evans), who has given an excellent introduction to the debate. I pay tribute to colleagues on both sides of the House who have done so much to shine a light on some of the more irresponsible practices that have sadly become all too commonplace in this industry.

My remarks today will focus on what I think we would all agree has been a regulatory failure in this section of the market, and I want to refer to a Public Accounts Committee report which some hon. Members present today were involved in producing. We looked at the regulation of consumer credit earlier this year, and we reached the firm conclusion that the Office of Fair Trading had been found wanting in getting to grips with tackling some of the more unpleasant practices of high-cost lenders. The message that I would like Parliament to send out today is that we are now at a crossroads with the regulation of this sector. The Financial Conduct Authority is preparing to take responsibility for it from the OFT, and bearing in mind that the OFT has been so slow in getting to grips with this, I want us to send a clear signal that we all expect the FCA fully to use the regulatory tools at its disposal to challenge the sector, and to be fleet of foot in intervening where we see poor practice.

The OFT has had a number of tools that it has failed to use, and there are clear breaches of rules. There are powers under the unfair contract terms regulations that could easily have been used to tackle some of the more unacceptable levels of fees and penalties for default, which are probably the most acute cause of additional cost to anyone who takes out these loans. Equally, every credit provider is required to follow responsible lending rules. As the hon. Member for Islwyn outlined in some of his examples, the advancing of credit to people in such situations was far from responsible lending. The OFT has the power to withdraw credit licences, but it has failed to use it, resulting in irresponsible lenders and unscrupulous companies exploiting the vulnerable and laughing all the way to huge profits. That is not acceptable, so Parliament needs to give a clear signal about what we expect the FCA to do in future.

Much of the debate in the past has focused on how we control some of the costs. As I have said, I believe that the unfair contract terms regulations give regulators the power to intervene to control some of them. However, we have a real problem with the consumer credit directive, which has prescriptive rules about how firms advertise costs of credit with reference to APRs. The reality is that APRs are meaningless in this sector, because we are talking about loans that are advanced for a short period. The real issues are how much the credit will cost and the transparency of additional charges. I have seen one example of a payday lender who charged £25 for each reminder letter sent when a customer defaulted. That would not be caught by any regulation regarding APRs. It is an unfair contract term and a clear exploitation. The powers exist to control such activities. The PAC stated explicitly that we wanted the misleading APR rules to be ditched and replaced with clear guidance on and responsibility for publishing the cost of credit in amounts repayable in cash.

I also associate myself with the hon. Gentleman’s comments on credit unions. As we all readily understand, the only reason customers access credit in this way is because they cannot get it from anywhere else. Unfortunately, mainstream lenders are not interested in providing small loans for short periods. However, we have to be careful about prescribing additional regulation for the sector, because if people cannot get credit from it they will go elsewhere and that will send them into the hands of some very unscrupulous people.

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

Will the hon. Lady give her evidence for that assertion? It is a myth that many of the lenders propagate. Where does her evidence come from to show that if caps were introduced, people would go elsewhere?

[Jackie Doyle-Price]

The reality is that people will follow regulation if it is economical to do so, otherwise they will go elsewhere. My evidence is that people are accessing these loans in the first place. We have a failure in the market to extend affordable credit, and that is the issue that we are trying to tackle today. I remind the hon. Lady of what was said earlier. The rules and the tools are already in place, but the regulator has failed to use them. This is not about more burdensome regulation; it is about regulators being prepared to use their teeth and the tools that they have to do the job.

[Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)]

Further to that intervention, the hon. Lady may remember that the PAC heard evidence from Fair Finance, which explained that if the interest rate was capped, as a social enterprise it would have to lend a higher amount to individuals, so risking greater indebtedness. So we have to get the balance right to make sure that people without a credit record get the loan that they need but are not over-indebted.

[Jackie Doyle-Price]

The hon. Lady is quite right. The cost of extending small amounts of credit is higher, pound for pound. We have to be sufficiently grown-up to realise that when we are considering regulation. I have not yet come across one consumer organisation that is in favour of caps. They all recognise that there is a market failure and a need to clean up the industry, but caps are not their preferred tool. However, there are some measures that they would like to see. The first is a ban on excessive default fees and charges. Again, this is not the preserve of the payday lenders. Unauthorised overdraft users also experience punitive charges, which again illustrates that these are issues that extend throughout the credit market, which the regulators need to grips with. In fact, Which? has found that unauthorised overdraft users suffer more from excessive charges than payday loan users: more than 20% of overdraft users are surprised by the level of charges they face. Again, we need to look at using the regulatory tools available. The FCA’s requirement will be that any institution has to treat its customers fairly, and that would extend to not having excessive charges. The regulatory power is there; it just needs to have the guts to use it.

Secondly, the FCA must give a clear signal that it really will implement the rules on irresponsible lending. We have seen that 48% of payday loan users and 44% of unauthorised overdraft users have taken out credit that it turned out they could not afford. It is clearly irresponsible lending for any firm to continue extending credit with roll-over loans or to let an overdraft get ever worse. It must be clear to lenders that they will face penalties from the regulator if they continue to exploit vulnerable consumers.

We all need to think about what more we can do to support effective debt management and encourage people to take appropriate advice, because when people are desperate the only place they can go is to those lenders. We need to make it much easier for them to access advice that will help them, so that they do not get into a worse situation.

There also needs to be a clear sign to lenders that they must give clearer information on what the consequences will be if people default. We know that many consumers are over-optimistic about their ability to pay off credit on time and in full, so clear warnings are needed about what the consequences will be if they do not. Those warnings need to be given in a simple and clear way, such as by stating the amount of cash it will cost per £100 if the loan is not paid on time, so that people really understand the deal they are getting into. Again, that is consistent with the Public Accounts Committee’s recommendation. Even mortgage statements, and indeed any credit, should come with clear health warnings explaining the consequences of missed payments. All costs must be transparent.

I believe that those measures would greatly strengthen the protections for consumers. That is what we really need to focus on today. I agree that we must look at what more we can do to support credit unions. I think that employers have a big role to play, because we know that many payday loan customers are in jobs. If employers can be encouraged to have relationships with their local credit union, that would be a good way of signposting people to more reputable lenders. We need to use the tools we already have for the job: tough rules on responsible lending, tough action on default charges and much more regulatory activism.

13:02

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

I am pleased to follow the hon. Member for Thurrock (Jackie Doyle-Price), because I genuinely believe that there is now a clear divide between the political parties on how best to approach something that we all agree is a problem. I am pleased that Government Members are now talking about the problems payday lending causes and recognise that there is a problem with the market. Our disagreement is over how to deal with those problems and what the challenges are.

It will come as no surprise to the hon. Lady that my perspective on how to deal with the incentives in the market is very different from hers. In the time available, I want to try to explain why I think that tackling the incentives is so important and why the evidence on how caps work shows that they are the best answer, given the challenges we now face.

In talking about those challenges, we must remember that in the past three years we have seen a tenfold increase in the number of people going to a citizens advice bureau for whom debt involving payday lending is a problem. When I started campaigning on this issue, along with many colleagues, we were looking at 1 million people borrowing in that way, but the figure is now 5 million, and 20 million people in this country are desperately worried about their debt picture, with the cost of living continuing to rise. We know that people need access to credit and that these loans are causing problems with gaining that access. I absolutely accept that not everybody who borrows from a payday lender gets into financial difficulty, but enough of them do, as a result of the terms of the loans and how the market works, that it is right for Parliament to intervene and to try to learn from the experience of other countries about what works in tackling that kind of credit.

In this industry people do not make money by lending at a high rate of return; volume is what matters. If lenders can lend to people in a way that makes them more likely to keep coming back to borrow more, because the following month they are a little short again, and the month after that, that is when they make their profit. Indeed, market analysts have pointed out that 50% of the revenues of those companies come from just a small number of their customer base, their repeat borrowers. Indeed, one company operating in the UK makes 23% of its profits from just 34,000 people. Who are those 34,000 people? They are the people who are constantly indebted because every month they have to borrow, because borrowing from those companies means that they are more likely to borrow the following month.

It is the spiralling principle that we have to tackle. When we look at that principle, we must ask what incentive it creates for the market and how the companies make their money. The OFT research shows something that many of us have been warning about: debt is positive in this industry. If companies can get people to keep rolling over their loans and borrowing from them, that is how they make their profit. That is why we are seeing Wonga making £1 million a month more in this country. It is not just Wonga; there are now four companies in the UK making over £100 million a year by working in that way, pushing people into debt, constantly extending their loans and pushing them with their marketing and advertising. They know that because those people have borrowed from them once, they will probably need to borrow from them again, because that is the way in which the loans are constructed.

Some people borrow £300 but end up owing £811 in interest alone by the end of the year because they get caught in that spiral and because of the price of the credit. That means that the average payday lending customer, who earns £18,000 a year, would pay 6% of their entire annual income to pay off a £300 loan. It is little wonder that the OFT research shows that few of those companies are doing affordability checks, because affordability does not matter once they have people hooked. It means that they can always get some money from them.

Who are the people who take out payday loans? There is the nurse who came to see me. She borrowed £100 because she had a flat tyre. She ended up paying back £17,000. Thankfully her mother, because she got a redundancy settlement, was able to help her out. There is the father who came to see me. He has tried to tell Kwik Quid multiple times that his son has mental health issues and asked it to please to stop lending to him because he cannot afford to keep paying the bailiffs when they turn up at his doorstep. But of course they keep marketing, because once they have someone hooked they are more likely to have to keep coming back again and again.

Yes, all those practices break the self-regulatory codes that those companies have come up with, but that should tell us something. Just as it is no point asking turkeys to organise Christmas, it is no good asking companies to act themselves when they can make those kinds of profits by setting their own terms, hooking people in and continuing to charge them to set the limits. It makes no sense. That is why we have to learn from other countries where intervening on price is what has changed behaviour. Yet those countries still have payday lending industries and have not seen the exit that the companies threaten. They also have lower levels of illegal lending and personal debt.

Which countries am I talking about? There are multiple examples we can learn from when it comes to total cost capping—not interest rate capping, which I have never argued for, and which nobody else I know could credibly argue for. Whether we learn from Japan, the American States such as Indiana and Washington, from the Canadian states of British Columbia, Alberta and Manitoba, or from Australia, which has brought in new models, there are examples out there of how we could tackle the problems that people in our country are facing now with the cost of credit without removing their ability to get hold of credit.

Like my hon. Friend the Member for Islwyn (Chris Evans)—I pay tribute to him for the work he has done in the all-party group to promote credit unions—I am a passionate defender of credit unions. I have one in Walthamstow that is working as hard as it can against 18 of those credit companies on my high street, and that is before we even get to online lending. He is absolutely right: it is not a fair fight. That future credit market that works for everyone contains payday lenders, credit unions and social finance organisations.

[Sheila Gilmore (Edinburgh East) (Lab)]

I am glad that my hon. Friend has raised the issue of imbalance, because one of the answers frequently given to me is that we need credit unions, but when volunteers are pitted against professionals that is very difficult. Would it not be helpful if far more financial support was given to credit unions to back that up?

[Stella Creasy]

I absolutely agree. In that future model of a finance system that will work for people struggling in a system in which the cost of living is continuing to rise, credit unions absolutely need to be supported to expand and grow—we know that they make up only about 6% of the total finance market in this country— but that is alongside a capping process.

The time for arguing about whether capping is the most effective intervention in this market is over, because the evidence from other nations is overwhelming. The question we should be asking ourselves is what we can learn from that for the UK, because the UK credit market is different. We have always been a nation of people who are much more willing to borrow, and so the terms and reference frames for any kind of cap must reflect that. That is where the Financial Conduct Authority could come in. That is why we fought so hard to give it the power to cap, and why I am pleading with the Government not to sit on their hands yet again on this issue.

The Financial Conduct Authority takes over in April next year. It is hampered by the fact that it needs to see the evidence about the UK credit market. It needs the credit reference data and other evidence from the companies, all of which claim that they are responsible lenders, yet about all of which we have heard stories of bad conduct. Indeed, Citizens Advice has shown that some are not even following 10 of the 12 good practice codes. If we are really serious about resolving the problems in this market, let us ask the FCA to do its job but also give it the data so that it can do so from the get-go in April. We should tell the companies to give it the data about their credit market, their profit ratios and how they are operating so that we can see how and where a cap would influence the UK credit market from April next year. Let us not kick this issue into the long grass yet again, because we now have a window of opportunity.

I am sure that many Members, like me, have people in their communities who have £10,000 or even £15,000-worth of unsecured personal debt hanging over their families. Asking those families to make long-term choices about education, social care and housing costs is a non-starter in that context. Those debts are racking up because of these kinds of practices. We could help them to manage the cost of living, to manage their borrowing and to make ends meet if we do our job today and get the regulator the information that it needs so that it can make the choice about what kind of cap would work in the UK. I think that the Japanese model is the way forward, because it has been done in practice along with the industry and consumer groups. Let us not have another three years of talking about how terrible these problems are and having to work in our communities with fantastic groups such as Movement for Change, the trade unions and the credit unions to try to deal with them when we could do something to avert them in the first place.

I hope that Ministers will today make the commitment to push the industry to give the information to the Financial Conduct Authority so that it can hit the ground running from April 2014 and finally bring in the cap that British consumers deserve.

13:12

[Mr Robin Walker (Worcester) (Con)]

It is a pleasure to follow the impassioned speech by the hon. Member for Walthamstow (Stella Creasy). I congratulate the Backbench Business Committee and the hon. Member for Islwyn (Chris Evans) on securing this very important debate. He took a sensible and non-partisan approach, and I appreciate that. There is cross-party consensus on the mood for taking action on payday lenders. Many Members from all parties came to this Chamber to support the private Member’s Bill on the subject introduced by the hon. Member for Sheffield Central (Paul Blomfield)—I would call him my hon. Friend—which I still hope can make some progress in forming Government policy.

Other Members have mentioned constituency cases. I have recently been particularly moved by a couple of cases in my own constituency. In one, someone had six separate loans from payday lenders, which clearly cannot be justified on the basis of seeing them through until payday, and they were being absolutely crippled by the interest. In another, a pensioner living on the basic pension got thousands of pounds in debt to payday lenders—a clear sign that some of these businesses are not looking at the affordability criteria. It is right that we should express our concern about such cases.

I am sorry that the Bill did not get voted on on Second Reading; a number of us were here to support it. In responding, the Minister expressed some understandable concerns on the part of the Government, which were shared by the previous Government, as regards not wanting to tie the hands of regulators. However, this House has been clear in its desire that regulators consider caps. It is very important that we give guidance to regulators about what we expect them to do. The Government are right to have launched investigations into the impact of advertising in the sector, but many of us are a little frustrated by the pace of action on that front and would like more to be done. The hon. Member for Islwyn made some good points about that.

We have to acknowledge that high-cost lending goes much wider than the payday loan industry. It also covers doorstep lenders and credit cards where they are not used appropriately; people can build up enormous amounts of high-cost debt through that sector. As the hon. Gentleman pointed out, there is also a large informal sector that we should be wary of encouraging or supporting. Many Members have noted that when banks generate overdraft charges they can raise the cost of borrowing to exceptionally high levels. His comment about moving people into mainstream banking was absolutely right, but we need to find tools to do that which protect them from such charges. In a recent discussion with Six Towns credit union, I was interested in a ring-fenced bank account that it was considering launching which would allow people, in effect, to set aside rent and energy bill payments and only then access money to spend on other things. Innovative financial products like that can help to move people towards mainstream finance.

We need to look at the overall level of debt. Any debt is high-cost if it is unaffordable. We still need to do more work on deleveraging the economy as a whole. Some progress has already been made on that front. It would be wrong for anyone to pretend that overall debt problems are greater now than they were in 2008, at the height of the boom. Credit Action produces monthly reports that show a significant decline. In July 2013, overall unsecured debt was £158 billion. That sounds an awful lot, but in 2008 it was £231 billion. In the 1980s, during the boom years under Lawson, household debt as a percentage of income rose from 70% to 80%. During the period when the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown) was Chancellor and Prime Minister, it rose from 80% to 170%. It is now falling back to 145%, but that is still too high. There is significant progress to be made on the level of debt as well as its quality.

On quality, we need tools to help people to access the better lenders and to ensure that customers are well informed on the real costs. As many Members have said, percentage rates do not tell the whole story: hidden costs and charges are important. We should pay tribute to the many financial advice services that work in the voluntary sector and the state sector to try to provide that information, including Citizens Advice, which we all know well in our constituencies. I am delighted that the Archbishop of Canterbury has entered this debate and offered support to the credit union movement and the voluntary sector in taking on the loan sharks. The Church can play a very important role in this, as Christians Against Poverty and many other religious groups already do.

[Ian Swales (Redcar) (LD)]

The hon. Gentleman is making a very good speech. He talked about the percentage rates that are quoted. Does he agree that there should be much clearer ways of explaining to people what they will have to pay back, given that only about 10% of people understand percentages?

[Mr Walker]

My hon. Friend is absolutely right. The work that my hon. Friend the Member for North Swindon (Justin Tomlinson) has done on financial education will be crucial in getting people to understand the reality of what taking out a loan means and all the potential hidden costs, including the real cost of interest over whatever period it is charged, which is often far more directly important than levels of APR.

I had an interesting meeting about debt issues with members of Worcester’s Tolladine mission, which works with a number of local churches in one of the poorest areas of my constituency. They strongly supported the initiatives we have heard about to support credit unions and make them more accessible. They also made it absolutely clear that financial education will be key. It is a huge victory for my hon. Friend and his cross-party campaign to have secured financial education in the national curriculum, but that is only the start. We should not kid ourselves that writing something into the national curriculum will solve the problem. We will have to make sure that it is taught well and that a generation of teachers who came through the system when financial literacy was not a key component get the best opportunity to take it forward. There will be real challenges along the way in doing that.

The Government are doing a lot to support credit unions, as did the previous Government, but there is still much further to go to catch up with the levels of credit union engagement in other countries. Achieving that should be a constant challenge. Tragically, in Worcestershire we lost our local credit union, not necessarily because it did not have support but, unfortunately, because of bad lending. Capacity in credit unions is another vital aspect. I am very glad that Six Towns credit union, from elsewhere in the midlands, is now looking to move into our area.

On overall levels of debt, it is important that all Governments set out policies that help people not to get into debt, which the coalition Government are trying to do by making sure that people keep more of the money they earn and by raising the income tax threshold.

We need an incentive to support the growth of credit unions and responsible lenders. As I argued when we debated the Bill, I think it would be wrong for the Government directly to subsidise the credit union industry, because that would undermine its business model when we want such businesses to be able to stand on their own two feet. I suggest that we should go further than even the CAB argues in its briefing paper, which welcomes the extension of the Money Advice Service levy to payday lenders, and consider putting a higher levy on high-cost lenders. We should create an incentive for people to go to credit unions, and the higher levy would create a fund to support financial advice services, financial education and all the other good things that can help people. Yes, we should support the credit unions, but we should do so indirectly by giving them that competitive advantage.

There is a straightforward way to do that. The Government have set a cap on lending for credit unions. If we start the levy at the top of that cap and apply it to all lending over that amount, it could create a valuable revenue stream to support the free financial advice industry and the financial education industry. I urge the Government to look again at the provisions in the Bill and to examine what they can take from it, because it made some well-thought-through recommendations.

I welcome today’s debate and the consensual way in which it is being conducted. Parliament can do a lot on this issue and we should continue to concentrate on it.

13:21

[Yvonne Fovargue (Makerfield) (Lab)]

It is indisputable that everybody needs access to credit, but it has always seemed perverse to me that the people who can least afford it pay the most and therefore need the most protection, because they are the most likely to be vulnerable to exaggerated claims and to be in need of a very quick solution to the immediate need for cash.

Payday loans are not always the illogical choice, despite the rate of interest. If someone’s washing machine breaks with two weeks to go until their payday and they know they will have an overtime payment in their next pay packet, it makes sense for them to shop around and buy another washer for £200 with a short-term loan—at a total cost of £267—than to go to BrightHouse, pay £600 for the same product, have a mandatory five-year guarantee for £400 and pay it back over five years at about 30% interest, which would result in a total cost of about £1,500. But—and it is a big but—although such loans provide a service, they cause detriment to tens of thousands of people each year and their providers have been, and still are, guilty of bad practices that cause much concern.

The Office of Fair Trading report highlighted bad practice by the vast majority of the industry and warned a number of them that either they clean up their act voluntarily or action would be taken, and they have been referred to the Competition Commission. I am pleased that some have had their licences revoked, but I hope that stricter enforcement will continue until the Financial Conduct Authority takes over in 2014. That transfer of responsibility gives us a golden opportunity to clean up the market and protect vulnerable consumers, but what are the payday lenders suggesting? A voluntary code of conduct devised by the industry.

There are two things wrong with that. First, it is voluntary. It is not even a requirement to be a member of a trade body. If consumers do not even research the cost of paying back a loan, they certainly do not research whether their lender is a member of a trade body—that is if they are aware of who the lender is, a point I will return to later. Secondly, the code has been devised by the industry and I am not totally convinced that it will put protection before profit. Statutory regulation and a constant review of the market are absolutely necessary.

I will outline the main issues that I think are causing problems. The market is ever changing and new practices emerge almost daily, so we need a flexible regulator. The first and most important issue—it is probably more important than headline-grabbing high interest rates—is the continuous payment authority. People who do not know what this is are not alone, because the banks, let alone the consumers, do not know, either. What it means is that the loan company can access someone’s bank account at any time, for any amount of money, as many times as it wishes. It is not just a blank cheque; it is a continuing, unending number of blank cheques. A constituent of mine had her account debited four times just before Christmas. Her account was cleared completely, leaving her with no money for Christmas, and she only became aware of this when she tried to pay for her Christmas food shopping and could not. It is clear in all the guidance that the customer should be able to cancel the CPA with either the lender or the bank, but Citizens Advice has numerous examples of the banks telling people that it cannot be cancelled by the customer because it is different from a standing order, and of the lender preventing people from cancelling.

Another practice I have recently become aware of—I am looking into this at the moment, because I heard about it only two days ago—is that of companies asking for a borrower’s online bank account details, including their PIN number and password, which makes the matter even more problematic. The lender can see when the individual is paid and when the rent and bills go out and take advantage of the gap, plunging the borrower into even more serious debt.

The other major problem with the continuous payment authority is that it reduces the incentive to perform a thorough and proper affordability check. After all, if a lender has unlimited access to someone’s bank account, why bother too much about checking whether they can afford it? The lender can dip into their bank account at any time, for any amount. Continuous payment authority has been described to me as the one thing that the payday lenders really want to keep. On that basis—as I used to say when disciplining my daughter—it is probably the one thing they should not have.

There is an issue with the industry writing its own code. Wonga has given 10 commitments and I have evidence—I do not have time to give it—that demonstrates how its code needs to be thoroughly examined. Even given the three extensions and the 60-day interest at 1% of the principal under commitments 6 and 7 of the code, the total repayment amount for a loan of £200 would be £588. That is a cause for concern.

Too many people delay the evil day when they have to sit down and face the difficult fact that they cannot afford their outgoings. As a result, they use payday lenders, because it is hard to admit to family or anyone that they cannot afford to keep going.

[Stella Creasy]

Is my hon. Friend, like me, worried about the evidence that a quarter of payday loans are taken out to pay off other forms of credit—not just other payday loans, but credit cards and other bills? People get caught in a trap and that becomes the only way for them to try to manage the situation.

[Yvonne Fovargue]

I agree with my hon. Friend. Citizens Advice and StepChange say that in the last quarter the number of people with six or seven payday loans has gone up tenfold.

This situation cannot continue. There must be an obligation on payday lenders to signpost customers to free sources of debt advice if they fail the affordability check, which should be thorough, or miss a loan repayment. Of those who responded to the Citizens Advice survey who had repayment problems, only 18% felt that the lender dealt with them sympathetically and only 8% were told that they could get free debt advice.

This is an industry that contributes to the debt problems of individuals, as my hon. Friend said. It is welcome that it pays a levy and I do not disagree with the very interesting suggestion that they should pay more. It is vital that that additional contribution represents an increase in the funding of the Money Advice Service to assist the rising number of people seeking help with their debts.

It is only right that the industry pays the levy, which is a drop in the ocean compared with the amount it spends on advertising. My two-year-old grandson can recognise the Wonga grannies; I have taught him to boo at them every time they appear—and they appear so often between children’s programmes. This blatantly targets young families, who can easily be vulnerable to sudden income pressures. As is the case with gambling, there should be a sector-specific code that limits such broadcasts until after 9pm, and companies should be expressly prohibited from advertising during any programme likely to appeal to anyone under the age of 18.

I mentioned new products and I want to raise a note of caution about a company that my hon. Friend the Member for Islwyn (Chris Evans) has mentioned, namely Amigo Loans. There are no credit checks for the borrower, but the friend might have to repay all the loan and end up with a damaged credit record. I wonder how many people remain friends after that happens. New products are emerging all the time—often they are old products with a new spin—so careful monitoring and transparency are key.

One of my constituents thought that they had borrowed money from Cash Lady, when that is actually a broker. We need to prevent more people from finding themselves in that situation. When my constituent wanted to contact the lender, they had great difficulty in finding out who it actually was.

The trade and exchange of consumer details have to be curbed. It cannot be right that when a friend of mine applied for a loan as a test, without completing the transaction, they had 24 unsolicited texts offering high-cost loans within the next 48 hours.

The cap on the total cost of credit has been ably and comprehensively covered by my hon. Friend the Member for Walthamstow (Stella Creasy). I support the decision of my hon. Friend the Member for Sheffield Central (Paul Blomfield) to choose this topic for his private Member’s Bill. The interest that his work is generating is helping to shine a light on the industry. Hopefully, that will assist the FCA in devising and enforcing a proportionate but firm regime to protect the consumer.

There are vast profits in this industry, as we have seen this week. Let us have commensurate protection.

13:30

[Justin Tomlinson (North Swindon) (Con)]

As the chair of the all-party parliamentary group on financial education for young people, I welcome the debate secured by the hon. Member for Islwyn (Chris Evans), who made an excellent speech. We have also heard pragmatic speeches from my hon. Friends the Members for Thurrock (Jackie Doyle-Price) and for Worcester (Mr Walker) and the hon. Member for Makerfield (Yvonne Fovargue), and a characteristically passionate speech from the hon. Member for Walthamstow (Stella Creasy).

Payday lending is controversial. There are many who think that the Government should regulate it out of existence. Ultimately, we need to understand how the payday lending industry has evolved and how that has been led by consumers. It exists because people wanted access to small amounts of money for a short period of time, not long-term loans for short-term problems, as was offered by the traditional banking system. A Consumer Finance Association report showed that younger people like the convenience of online interaction and the quick decisions that payday lenders offer in contrast to the relatively formal bureaucracy of putting on a suit, going to a bank and justifying oneself. Banks have been unwilling to lend to people whom they consider to be high-risk.

All the speeches today will understandably press for action to protect the consumer—I will list a ream of things that should be done—but such action must be taken with consideration. Anything less and we will simply push vulnerable consumers into the hands of the black market and illegal loan sharks. We have to look at why the market is not working in the interests of consumers and seek to change that.

There is a growing consensus that many of our consumer markets do not always work in the interests of consumers. Be it Government interventions to regulate pricing in the energy industry or scandals such as payment protection insurance, there are signs everywhere that the consumer is often at the mercy of markets, rather than at the heart of them. As a recent working paper by my hon. Friend the Member for South Thanet (Laura Sandys) commented:

“Good markets put consumers in the driving seat to make, shape or break products… Bad markets disguise, mislead or control consumer choice”.

That point is key, especially given the vulnerable nature of the consumers. In this industry more than most, consumers need to be in the driving seat, because for many people, the consequences of bad market characteristics in payday lending are severe.

There is a fundamental asymmetry in the information within the payday lending market. That is at the root of why the market does not work in the consumer’s interest. The market distorts decision making so that rather than making an informed decision based on price, the consumer is led into favouring other factors above all others in making their decision. Of those factors, convenience is the most prominent. Although convenience is important and of benefit to consumers, it is problematic when it becomes the primary basis of competition in the market as it itself conveys no price information. Without clear price information, consumers are unable to appreciate relative value in order to make informed and savvy financial decisions.

As we have heard, an investigation of the 50 main payday lenders by the OFT found that 60% of them emphasise speed and quick access to money in their advertising. The cost of the loan is at best a second thought and is often presented in a muddled way through the use of misleading and confusing APR figures. In short, without price information, competition is undermined. That leads to reduced choice. Consumers are led into making a decision based primarily on convenience. For the market to work in their best interest, it needs to enable consumers to make a decision in which price is the key consideration. Convenience should be only a secondary factor.

I have a number of recommendations. We are coming up with quite a shopping list for the Minister. The Government should intervene to improve the information that is available in the market—most notably the pricing information—to encourage price competition. With better information and clearer competition, the supply-side control will weaken, allowing consumers to call the shots. That intervention should take three main directions, forming a tripartite approach to the problem.

First, we must reform the information structures. We all agree that the cost of loans should be displayed in cash terms. APR is confusing, even with financial education in the national curriculum. I thank all Members who supported the cross-party campaign that I led on that issue. Let us be frank: even Treasury Ministers would struggle to work out the cost of an APR rate. It is an incredibly complex calculation. The Government should consult on and implement a standard unit for lenders to allow for price comparison, such as the cost per pound that is borrowed per day. Greater minds than mine can work that out.

We should also have real-time credit checking. We all agree that people should be able to borrow only what they can afford. The horror stories of people taking out multiple payday loans are totally unacceptable. Part of the solution is real-time credit checking. The system is not quite there yet. Perhaps we should place a levy on the industry to get it in place. It is then crucial that the FCA enforces it.

Secondly, we need to improve access to information. I have mentioned financial education, which will put the next generation of consumers in a better position to make informed and savvy financial decisions. We also need access to independent debt advice and advice on whether products are right for people. Just as we have health warnings about smoking, when people attempt to take out one of these products, there should be a telephone number or a website that is advertised. Before Citizens Advice is snowed under with millions of calls, I say again that there should be a levy on the industry to pay for free, independent advice for consumers who are not equipped to make informed decisions.

Thirdly, we must complete the information circle. We should look to restore credit ratings. Consumers often choose high-cost credit because the traditional banking system does not wish to lend to them. People might choose payday lending, which is an expensive form of borrowing, because it is the only option. However, when they manage to repay the loan, they should have their credit rating repaired and should be allowed back into the mainstream.

We need to give the regulator teeth and ensure that it uses them. My hon. Friend the Member for Thurrock made some important points in that regard. It is clear that the regulator has often stood by when it could have become involved. We need the regulator to take a proactive approach. I have been very critical of doorstep lenders—something that was mentioned by the hon. Member for Islwyn. Such lenders may have good customer satisfaction ratings, but when people sell on a commission basis, there is always the potential for problems. We have seen that even in the traditional banking system with insurance products. Often, the consumers of such products are the least well equipped to make complicated complaints and to bring matters to a regulator to take action if they have been poorly treated. We therefore need mystery shoppers who will step in and find out whether nudge, nudge sales techniques are encouraging people to take on debt that they do not want or need.

I would like to see an affordability test, a limit on the number of roll-overs that can occur on an individual loan and for debts to be frozen when consumers are struggling so that they do not escalate. We also need to look at the cost of the licence. It costs only £1,500 to set up a payday lending company. With a few hundred pounds, people can get themselves up on the Google ratings and end up lending to all sorts of people. In the two years that it takes for action to be taken, they can reinvent themselves. Let us charge more and use that money to pay for independent debt advice and the other things that I have called for.

We should consider a cap on the cost of a loan, but we need people to suggest what that should be.

[Richard Graham (Gloucester) (Con)]

My hon. Friend is making a series of powerful points, as did the hon. Member for Makerfield (Yvonne Fovargue) and my hon. Friend the Member for Worcester (Mr Walker). He has not touched on the role of credit unions, but perhaps he is going to do so. My hon. Friend the Member for Worcester raised the issue of capacity. Is my hon. Friend aware that Lloyds bank has given considerable help to the Gloucestershire credit union and is thinking of providing even more help not only to our credit union, but to others around the country? There are opportunities for MPs to build capacity in their credit unions.

[Justin Tomlinson]

I thank my hon. Friend for that intervention, because it relates to my very next point and means that I now have longer than seven seconds to summarise that.

The Government should do more to promote a savings culture to prevent consumers from finding themselves in positions of stress in which they do not have the time to make an informed decision. Also, as many Members have said, we should strengthen credit unions and examine innovative products that come along involving community-based people who know the interests of their local community. There are many good examples that we should champion.

Finally, we must consider the mainstream institutions. They were caught sleeping, and the market has changed. It has gone online. People do not necessarily want to turn up at a bank in a suit to justify themselves. The market developed because there was a gap and the consumer wanted online services. We all instinctively trust the traditional institutions to do a better job, but they need to be in a position to do so.

[Damian Hinds (East Hampshire) (Con)]

I am grateful to my hon. Friend for giving way during his persuasive speech. Does he agree that the traditional, mainstream financial institutions could and should also innovate in the area of budgeting accounts, or jam jar accounts? Those accounts help to prevent people from tripping into debt in the first place and can also help to foster the savings culture that he mentioned. By siphoning off small amounts of money on pay day, people can build up a small savings account.

[Justin Tomlinson]

I thank my hon. Friend, who has been a champion of plans for jam jar banking. It is a fantastic idea, because we all know people who, even with the best will in the world and the best financial education, are not fantastic at handling money—that is true of many of us. At times of distress, such as death, family breakdown, partnership break-ups or unemployment, they can quickly be overwhelmed. Products that can help people manage as well as possible on limited money give the consumer power. As I said, we need to ensure that the consumer is in the driving seat. If we can do that, the market will respond in a way that is better for the consumer.

13:41

[Paul Blomfield (Sheffield Central) (Lab)]

It is a pleasure to follow the hon. Member for North Swindon (Justin Tomlinson) and congratulate him on his powerful speech and his impressive shopping list, much of which, as he will know, is included in my High Cost Credit Bill, of which he was a strong supporter. I am grateful for the support that the Bill received on both sides of the House, and today’s debate is demonstrating a great deal of unanimity about how we need to tackle payday lending. I am only sorry that the Government did not take the opportunity to build on that cross-party unity by supporting the Bill on 12 July.

After recent developments, the measures that we all seek are even more important. Since 12 July we have seen the report by Citizens Advice stating that three out of four borrowers seeking advice from its service have been treated unfairly by payday lenders; growing concerns about the industry, perhaps most powerfully reflected in the indictment of payday lenders by the Archbishop of Canterbury; and more evidence of how the sector is growing, with the profits that Wonga has declared this week being just one illustration.

Earlier this week I met staff at Centrepoint, who told me of the shocking way in which payday lenders are now targeting the vulnerable young people with whom they work. In a country-wide survey, it found a significant increase in the number of young homeless people turning to payday loans. It found young people, mostly under 21 and out of work, taking out payday loans for food and other essential purchases or, as other Members have said, to pay back other debts. As one Centrepoint worker said:

“These payday loans are a killer…I have young people that owe thousands.”

The reasons that young people gave were ease of access, irresponsible promotion, a lack of affordability checks and misunderstanding of costs—all factors that other Members have raised and that my Bill would tackle.

We need effective regulation of payday lenders that would stop them giving loans to people who cannot afford to pay them back; stop hidden and excessive charges; stop repeated roll-overs; stop lenders raiding borrowers’ bank accounts without their knowledge; stop irresponsible and misleading advertising; and require lenders to promote free and independent debt advice.

I should like to use this opportunity to respond to some of the points that the Minister made in her speech in the debate on my Bill on 12 July. I am grateful that she said that those of us proposing legislation were spot-on about the problems in the industry, but she disagreed about the

“basic principle of whether the FCA is best placed to regulate these matters or whether the Government should mandate it to do so”.—[Official Report, 12 July 2013; Vol. 566, c. 689.]

That is certainly a point of significant difference, and I refer to the comment of my friend the hon. Member for Worcester (Mr Walker), who has been a great supporter of the Bill, that it is the responsibility of Parliament to right the wrongs that are brought to it, not by getting involved in the detail of regulation but by giving clear policy direction where it is appropriate, in this case to the Financial Conduct Authority.

In July, the Minister said that the FCA would produce a draft rulebook in September, which would go out for consultation. We are now in September, albeit in the early days, but on making an inquiry to the FCA yesterday I was unable to find out when the rulebook would be published or what the arrangements for consultation were. I would be grateful if the Minister told the House when those rules will be published.

I turn to how the Minister thought in July we should handle some of the problems that we all agree exist. On advertising, she said that when considering regulation it was important to proceed on the basis of evidence, and that her Department had commissioned research. However, she made it clear that she agreed that there was irresponsible practice, which has been referred to again today, and said that people should be signposted to debt advice. Does she agree that we need research not into whether advertising should be regulated but simply into how? Will she update the House on the research and confirm that the FCA will regulate advertising?

I think we all agree that lenders should assess affordability, which they do presumably so that they can determine ceilings above which they should not lend. If that is the case, does the Minister agree that we should give the FCA the responsibility to set ceilings? We know from experience that we cannot trust the lenders.

On roll-overs, the Minister acknowledged in July that

“if some companies are making significant proportions of their profit from roll-overs, their business model in fact depends on people’s not repaying in time”.—[Official Report, 12 July 2013; Vol. 566, c. 692-93.]

She said that the FCA would look into the issue. However, the Office of Fair Trading has told us that 50% of payday lender revenue comes from the 28% of loans that are rolled over or refinanced at least once, and that 19% of revenue comes from the 5% of loans that are rolled over or refinanced four or more times. A number of Members have referred to that aspect of the problem today. Does the Minister agree with all the organisations working in the area that we should simply direct the FCA to limit roll-overs?

Finally, there is the crucial issue of CPAs. My hon. Friend the Member for Islwyn (Chris Evans) referred to a horrific example in his excellent opening speech today, and my hon. Friend the Member for Makerfield (Yvonne Fovargue) also referred to them. In her speech in July, the Minister referred to the clauses in my Bill that would require lenders to give three days’ notice of CPAs and inform borrowers of the right to cancel. She said:

“Those measures are already in the voluntary code. If they were stuck to and ended up in the FCA rules, that would be helpful.”—[Official Report, 12 July 2013; Vol. 566, c. 697.]

If that is the case, why not simply tell the FCA to put them in the rules? Will she confirm her view that measures on CPAs should be included in the rules and should be part of the published rulebook and the consultation?

To give other Members an opportunity to contribute and to give the Minister ample time to reply to my points, I will draw my remarks to a close. Those of us who have spoken today, and Members who supported my Bill back in July, are committed to ensuring that there is effective regulation of payday lenders. We will not give up until the measures contained in the Bill are in place, whether or not through the Bill itself, to ensure effective regulation and tackle the scourge of payday lending.

13:49

[Tracey Crouch (Chatham and Aylesford) (Con)]

It is an honour to follow the hon. Member for Sheffield Central (Paul Blomfield). I was proud to support his Bill and am sorry that it will not make its way through Parliament. I hope that the Government are listening carefully to the cross-party support that it is getting and will take forward some of the sensible measures proposed in it.

I also congratulate the hon. Member for Islwyn (Chris Evans) on introducing this debate on an important issue about which many of us feel strongly. It is also important to congratulate the hon. Member for Walthamstow (Stella Creasy), who has done a great deal to raise the issue both inside and outside Parliament. During many parts of her speech today I was nodding furiously, as I found myself in violent agreement with her on some of the important issues that she raised.

I am sorry that my hon. Friend the Member for East Hampshire (Damian Hinds) has left the Chamber. He has done a great deal of work on credit unions. I also fundamentally support the work that my hon. Friend the Member for North Swindon (Justin Tomlinson) has done on improving financial education.

The debate has been interesting and I will try not to repeat the points hon. Members have made. My hon. Friend the Member for Thurrock (Jackie Doyle-Price) said that the sector is at a crossroads, which was an interesting comment. We must ensure that we take the right path. High-cost credit is an incredibly important issue for many of our constituents and will be in future for all the reasons hon. Members have outlined.

High-cost credit is defined as credit

“comprising of payday and other short-term small-value loans”.

However, it is important to note that it is not the preserve of alternative financial services providers. There are problems in the wider credit industry. The example I will give is highlighted by StepChange. Its research shows that

“a borrower making minimum payments for 18 months on a typical”

credit

“card for an average balance of just over £1,800 pays £44 for every £100 borrowed”.

It is important that we do not exclude from the debate means of credit other than payday loans.

When I first spoke in Parliament about high-cost credit, I drew on my experience. When I came to London as a 21-year-old graduate, I worked as a researcher in Parliament, earning £7,000 a year. I got myself into a stupid amount of debt—£15,000—very quickly, not because I was trying to pay rent, meet bills and buy food, but because I wanted to keep up with the Joneses. I wanted to go out wearing nice clothes and to have good evenings out with my friends, all of whom worked in the City and earned a lot more money than I was earning. I borrowed a lot of money on credit cards, I was always at my overdraft limit, and borrowed money on store cards. I bought things on store cards that people normally pay for with small cash. I could not afford to live the life I wanted to lead in my not-very-well-paid job as a researcher.

[Stella Creasy]

I make no comment about the friendships the hon. Lady had, but does she agree that one worrying aspect of the debate on the payday loan industry—the evidence is clear—is that 80% of payday loans are for basics? They are for paying rent, and travel and food costs. People cut back as far as they can, so those costs are not equivalent to keeping up with the Joneses. It is important that we make that distinction—people are trying to cover unavoidable costs.

[Tracey Crouch]

I agree with the hon. Lady. To be perfectly honest, I was stupid. I learned a lesson. It took me seven years to pay back my debt. I learned that lesson thanks to the bank. I got to the stage of hiding from the bills and not going out. I was in a miserable place, and—the hon. Member for Islwyn will be pleased to hear this—Lloyds TSB took me aside and said, “Your credit rating is dreadful. You keep going over your overdraft limit. You will be in serious trouble if you don’t deal with this now.” The bank cut up my credit and store cards, which was incredibly upsetting, and put me on a repayment programme. The problem today is that banks do not necessarily provide the personal banking they did back in 1996-97 when I was getting myself into debt, and people are finding alternative ways in which to deal with their debt problems.

[Mr Robin Walker]

My hon. Friend is making an interesting speech. She mentioned being put on a repayment programme. Does she agree that one of the more pernicious things happening in the sector is that some high-cost lending companies are masquerading as a way out and as a repayment mechanism for debts? That needs to be carefully considered when it comes to regulation.

[Tracey Crouch]

I agree with my hon. Friend—I will talk about debt advice later in my speech.

We have heard a lot about charges for people who go into unauthorised bank overdrafts. I was recently charged for going into my authorised overdraft, which I found incredibly shocking. I did not know the bank could do that, but it did. The charge was the equivalent of taking out a £100 loan from Wonga for five days. I can see why people turn to payday lenders if they sometimes get charged by their bank for going into an authorised overdraft.

We need to be aware of people’s problems when it comes to debt. We should not judge people for getting into debt or for trying to get themselves out of it. We also need to be aware of the scale of the problem. I have two wards of deprivation in my constituency, and there is an increase in the number of people turning to payday lenders. The local citizens advice bureau tells me that the average debt in Medway is £43,000. It also tells me that people from more affluent areas are turning to payday lenders for the reasons the hon. Member for Walthamstow has outlined—they find it easier to meet their everyday needs by turning to those lenders.

When used correctly, those loans can be a help. When someone needs that short-term boost—when something is broken and they need to borrow £100—it is easier for them to go to a payday lender than it is to go to their bank. We need to be clear that such loans serve a purpose. However, problems arise when they are not used correctly. That is why we need to address problems such as rollovers, which the hon. Lady and the hon. Member for Sheffield Central have mentioned.

We need to be concerned about the proliferation of shops on our high streets. It is incredibly easy for the people to get the credit they need. Thank goodness payday lending companies were not around when I was in debt. Nothing would have stopped me going in to borrow £200 to get what I wanted. I have learned my lesson, but it took a long time to do so.

On the positive measures we could take, it is important that we consider sharing data. Real-time data are incredibly important. Currently, someone who has taken a Wonga loan in the morning can go to the Money Shop or Cash Converters or the next place on the high street in the afternoon and get money out. Nobody knows how much they are getting out on any given day. We also need to look at restricting access to online credit services overnight. Many years ago, I lay awake at night worrying about debt. When people come to see me, they tell me that they cannot sleep and are hiding from their bills. They know they can go online at 2 am, when they are not thinking straight, and access instant relief of their fears. We should look carefully at that.

We need to look at supporting our credit unions. I am a saver at both Medway credit union and Kent Savers credit union. Hon. Members should do all we can to try to help to promote them so that they are recognised in the high street. That is incredibly important. If that means using flexible business rates so that credit unions are encouraged to go into the bigger shops on the high street so they have that presence, we should do that.

Finally, debt advice is incredibly important. The Government are doing a great deal to promote free debt advice. I have worked to keep the Insolvency Service in Medway. It was under threat, but was saved thanks to the campaign. We need to recognise that there are experts who can help to inform people who are finding it very difficult to get out of the situation they have got themselves into.

We must not judge the entire payday lending industry by the bad mistakes we read about and hear about in debates such as this one. We need to recognise that it plays a role in our wider credit industry. As my hon. Friend the Member for Thurrock has said, we are at a crossroads. We need to ensure we go down the right route.

13:59

[Nick Smith (Blaenau Gwent) (Lab)]

I congratulate my neighbour, my hon. Friend the Member for Islwyn (Chris Evans), on showing leadership on this issue, and it is a pleasure to follow the hon. Member for Chatham and Aylesford (Tracey Crouch).

Each and every one of us has a responsibility to stop the emerging payday loan crisis. In my constituency of Blaenau Gwent, the number of payday loan applications shows no sign of slowing down. Data obtained from Wonga revealed that it gave out nearly 5,000 loans in 2012 to a population of 69,000. More than £1 million was predicted to have been borrowed. That is for one year, from one provider in one constituency. For a borough proud of its industrial heritage, proud of carving out its fortunes in the coal mines and steel, this is a desperate state of affairs. Blaenau Gwent can realise its potential in the years to come—it has done so time and time again. However, we cannot get back on our feet if we are hobbled by debt.

The High Cost Credit Bill goes a good way to stopping further damage to those trapped in a spiral of debt. We also have a duty to champion alternative providers such as credit unions, yet my constituency’s credit union has just 560 members, a number dwarfed by the thousands of payday loans. We must make a game-changing push to tell more people about these socially responsible services. We need credit unions that are fit for the 21st century. They need 24-hour access, whether through computer systems or smart phones; a walk-in, high street presence that is the equal of any bank; and a strong capital base supported by payroll saving from staff of local authorities and others. Only then can credit unions come close to offering a better deal for those most in need.

Another way forward could be for the Post Office, given its UK-wide presence and recent adoption of current accounts, to move into the market. It would be good to hear what the Minister thinks about that possibility. We also have a duty to support the next generation, with financial education in the classroom that will engage students with the real world and teach them about the consumer temptations that we have just heard so much about. How many of us here today understand our own mobile phone tariffs and payment systems? I do not see many Members nodding. For those already trapped by debt, we need to direct them towards the likes of Christians Against Poverty, services that can get people back on track rather than borrowing further.

It is easy to pass judgement on those who borrow beyond their means, but to do so ignores the fact that the demand for easy credit at a moment’s notice has never been greater. Our households are feeling the pinch, losing £1,500 a year in real terms. It is estimated that more than 1 million workers are living week to week on unpredictable zero-hours contracts. In short, this is a climate ripe for payday loan companies to step in and reap the benefits. A Bill and new regulators that do a much better job on high-cost credit arrangements and their providers would be a good step, but given all that has been said so far, we must do much more to address what is now becoming a massive problem.

14:03

[Sir Tony Baldry (Banbury) (Con)]

This has been a valuable debate, and I congratulate the hon. Member for Islwyn (Chris Evans) on securing it.

What has become clear during the debate is that there are two strands to this issue. First, there is the need for enhanced regulation, which my hon. Friend the Member for Thurrock (Jackie Doyle-Price) and others have talked about, and the Financial Conduct Authority and the Office of Fair Trading have a responsibility to step up to and deal with that. Secondly, each day Wonga makes 10,400 loans. When the Archbishop of Canterbury said that we had to compete Wonga out of business, a cheer went up. In the three years I have been fortunate to be the Second Church Estates Commissioner, I have not known an issue attract as much press interest—one morning I did about 20 radio interviews. All around the country, local radio and newspapers see this is as a serious issue. However, as my hon. Friend the Member for North Swindon (Justin Tomlinson) said, the fact is that each day there are large numbers of people who want to take out short-term loans that they hope to repay over a short period. Of course regulation has an important part to play, but we have to think about what we can do to enhance the competition.

As many Members have said, this is a David and Goliath situation. The hon. Member for Blaenau Gwent (Nick Smith) said that we need credit unions to be fit for the 21st century. They need adequate IT platforms. After the Archbishop of Canterbury spoke, the Manchester credit union said that while having extra premises would be useful, credit unions needed an IT platform that is fit for the 21st century. We have to recognise that many credit unions are still at the starting gates.

My hon. Friend the Member for Worcester (Mr Walker) said that the credit union in his area collapsed altogether, and Worcestershire is a pretty prosperous county. Oxfordshire is an equally prosperous county, but it has pockets of high deprivation, such as Blackbird Leys in the constituency of the right hon. Member for Oxford East (Mr Smith), and at least three wards in my constituency are in the highest social indices for the south-east. We have a credit union that has only just over 1,000 members, which is less than 1% of the population of the city of Oxford. It has just £300,000 of members’ savings and £200,000 out on loan. The Oxford credit union is seeking to do all the right things: it has established a partnership with the south Oxfordshire housing association to help tenants; it rolled out prepaid debit cards to allow members to buy goods without using cash; and it worked with a fuel-buying organisation to allow new members to spread the cost of buying high-cost fuel. However, this House has to give much more thought to what we can do collectively to enhance the status of credit unions. Elsewhere in Europe, credit unions are a much greater feature. I was recently in Ireland for a family wedding and in practically every town I went to there was a prominent credit union building—they are part of the warp and weft of the social structure.

There is a disconnect here. Large numbers of savers in Oxfordshire complain that they get very little return from the banks for their savings. Are there not ways to encourage savers to invest in credit unions? The difficulty is that many people living in Oxfordshire would not think of joining or investing in a credit union. Are there ways in which one could give minimal tax incentives to people who invest in credit unions? If I let a room in my house, I can get up to £6,000 a year tax free. What if the interest on what is invested in a credit union, up to a certain amount, is tax free?

Finding an alternative financial mechanism to the banks and payday lenders will require an enormous amount of energy. The Archbishop of Canterbury says that he thinks it will take a decade to turn things around. It is welcome that the Government are investing £38 million in credit unions, but that is almost exactly the same amount that the main payday lenders spend on advertising in just one year. By and large, the £1 million that they make each week in profit is money that is leaving poorer areas of the country. It is not being spent in shops in areas such as Blackbird Leys.

When the Minister replies to this debate, she will obviously reply to the comments that hon. Members in all parts of the House have made about regulation, but we also have to focus on how collectively we compete Wonga out of business and how collectively we work out an alternative financial mechanism. That might also require banks changing their practices. As the House might know, the Church Commissioners are one of those competing for the new Williams and Glyn’s bank. If we win that competition, we hope to return to the sort of old-fashioned responsible banking that people remember from the 1960s. However, unless people feel able to access short-term loans for short-term needs, they will be pushed into the hands of the payday lenders or, even worse, the loan sharks. We therefore have a collective duty to try to work out how we get credit unions in this country funded and fit for the 21st century.

14:11

[Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)]

This has been an interesting debate. I congratulate my hon. Friend the Member for Islwyn (Chris Evans) on calling it and all hon. Members who have spoken.

Owing to time constraints, I will not comment on most of those speeches, but I think we are all clear that there is a world of difference between those of us in this place, as well-off MPs, able to access interest-free credit cards or get loans at 5% or under these days, and many of our constituents, who have no savings and no credit record or a poor credit record, for whom the options are limited. It is important that there is a sector that can lend to people who have a crisis when the washing machine breaks down or, typically—I hear this a lot in my constituency—when they have to pay for a funeral, which is a huge expense, and have nowhere to go. We need to ensure that the system works.

I want to touch on some of the concerns, as I see them, and what needs to be done; to highlight some of the organisations in my constituency and how they work to achieve things; and also to pick up on the point that the hon. Member for North Swindon (Justin Tomlinson) made about the disgraceful withdrawal by the major financial institutions of products for poorer, riskier borrowers.

It is now harder even for people with good ratings to get products from the banks, as many of my local businesses will testify, while those who do not have a good credit record cannot get products from anywhere. We need to be careful, because the vilification of payday lenders means that there is a huge reputational risk for mainstream lenders entering the quick, short-term loan market. We have to think responsibly and in the round about how we act and how we ensure that there is something out there for those who will be a higher risk and will therefore face a higher cost. There is a place, as we have all agreed, for short-term lending of fixed sums at high rates.

We heard on the Public Accounts Committee about how Provident works. For many people, it is a psychological thing. A nice woman—they are nearly all women—comes to the person’s door and asks for the money. It might be £185 to borrow £100, but it never goes up: even if someone misses a payment, there is no penalty. Many of my constituents—they are often the same sort of people, and rely on meter keys—do not want the surprise or worry of a bill they are not expecting. I agree with the hon. Member for North Swindon that there is a worry about secondary selling, but that certainty and direct contact are important.

It is interesting that ABCUL—the Association of British Credit Unions Limited—has sent round a note about interest rate comparisons, which says:

“A £300 loan over 52 weeks from Provident Financial home-collected…at 272% APR costs £246 in interest while the same loan from a credit union at the maximum 26.8% APR costs £38 in interest.”

However, it is not really right to make the comparison, because if the credit union went round to people’s doors in person, there would be an increase in the cost and the interest rate would be much higher than the 26.8% quoted. We need to be careful when comparing products to be aware that there are different products out there. I agree with all colleagues that the focus on APR and percentage rates is confusing for people. We need to change that—I will touch on my suggested changes at the end.

My hon. Friend the Member for Makerfield (Yvonne Fovargue) mentioned BrightHouse, which has a really invidious system, providing high interest on credit via purchases and then tacking on insurance. Indeed, the insurance costs for one item of furniture or a television can be as much as the insurance for a whole household, yet it is sold in a shop-front environment in places such as Dalston Cross shopping centre. Worse still, BrightHouse is often recommended by social landlords. When someone moves in and says, “But I’ve got no furniture,” they are often told—by people who are not qualified to give financial advice—“Oh, why don’t you just go down to BrightHouse?” They think they are giving shopping advice—often, probably in good faith—but have no idea that they are indebting their tenants for a long time to come.

On the high street in Dalston, we have every type of high street lender that could be imagined, from the legitimate banks to the loan sharks, who do not exactly have shop frontages, and the swish, nice-looking frontages of the Money Shop, Oakam and so on. I want to touch on Oakam, which has an interesting business model that is different from many of the other high street lenders. It is based on an American model, which is fairly newly arrived in the UK, and works with people who are themselves fairly newly arrived in the UK who are trying to build a credit record or set up a business, but do not have access to credit from mainstream institutions. Typically, someone from Poland—we have a lot of Poles in Hackney—or people from parts of west Africa, having arrived in the UK, will spend six months building up their credit record at a higher interest rate than many others, but then move to the high street bank over the road to get a loan. Oakam provides a service that people need—it is at a higher interest rate, but people know what they are doing. Oakam says that a lot of its customers are clearly building their records.

Fair Finance is a social enterprise that gave evidence to the Public Accounts Committee. It has a base in Hackney and provides face-to-face loan advice, but has taken nearly nine years to reach break-even point. One of Fair Finance’s worries is that if interest rates were capped, it would have to provide loans to people at higher levels and further indebt them, so if someone came wanting to borrow £5,000, it might have to call it £10,000 to cover their costs, because it costs a lot. Fair Finance has a model that trains advisers to sit face-to-face with someone, talk them through all their financial issues and ensure they can manage the loan and the repayments. Fair Finance feels that talking face-to-face is one of the reasons why it gets the money back.

We have talked a lot about credit unions, too. As a Co-op MP, it saddens me that too often we see credit unions failing. Having to save before a loan is one issue. In Hackney, our credit union collapsed. We are now working with the Tower Hamlets credit union, which has taken over the space. One of the challenges was that a lot of people were basically using the credit union as a bank account for their benefits. They never really saved and were therefore never able to take out a loan, although they had no great interest in taking out a loan either. The service quality was poor, and too often the credit union was badly managed and there was a lack of advertising, as is the case for other credit unions. We need to work with the credit union sector to get it to step up to the mark. If credit unions are to compete with flash shops such as the Money Shop, which people can walk into and get good quality service—whatever the issues with the products—they need to remember that people will shop around.

I want to touch on what needs to be done and to refer colleagues to the Public Accounts Committee report, which the hon. Member for Thurrock (Jackie Doyle-Price) highlighted. I will not repeat them, but its recommendations clearly show that there is an issue with a lack of regulation from the regulator. The work of the regulator—we now have a new regulator, so there is some hope in this—needs to focus more on consumer protection, ensuring that those with a licence to lend have the right protections and checks in place, so they do not over-lend and over-extend people. There should be a limit on roll-overs. There is sometimes talk as though everyone is always rolling over all the time. There are legitimate payday lenders that limit roll-overs. We need to recognise that there is a range of providers.

There also need to be proper affordability checks. People should not be able to walk down the high street and get three payday loans on the same day. The whole point about the speed of many payday lenders is that they can make online checks quickly, so the system needs to be updated. It is interesting that one’s own credit record is sometimes not updated very quickly, so there is a basic IT issue. Continuous payment authority is an invidious system and needs to go. We also need a change from APR to clearer costs. These are all things that need to be done.

Let me end on a cautionary note by quoting Mark Hannam, the chair of Fair Finance:

“Those who campaign on this issue need to decide whether they want a well run, well regulated market with a few dominant providers (who are very profitable); or a highly diverse and less well regulated market, with lots of smaller providers who are under less pressure to treat their customers well. From the consumers’ point of view, the former seems a better outcome.”

When we look at regulation, we need to be careful that we do not throw the baby out with the bathwater.

14:19

[Guy Opperman (Hexham) (Con)]

The question that this debate is making patently clear is whether it is the responsibility of the state to look after those who cannot look after themselves. It has also been made patently clear in the brilliant opening speech of the hon. Member for Islwyn (Chris Evans) and in other contributions that there are many different practical and relatively immediate measures that could be introduced to address the problem of high-cost credit. They include restricting advertising budgets, implementing a greater degree of financial education, doing more work on shared data, addressing the question of interest rates and improving debt advice. I endorse the comments of the Public Accounts Committee and urge the Financial Conduct Authority to do more, as requested.

I believe that everyone agrees that the Archbishop of Canterbury was right when, in July, he championed the cause of credit unions and criticised the payday loan companies. He was right to say that we needed to “compete” the payday lenders out of the market. I welcome his comments, but I would argue that this debate has shown that although we all support credit unions, they are not necessarily the mechanism by which we will succeed in competing the payday lenders out of the market.

There is cross-party agreement on specific measures that can be taken to address the problem of high-cost credit, but I suggest that the mechanism by which people ought ultimately to borrow on a long-term basis is local community banks. They have all the flexibility, the clout and the borrowing power of a bank, as well as all the sympathetic community approach of a credit union, and the amalgamation of all those qualities will produce the best way forward.

[Richard Graham]

My hon. Friend will be aware of the resurrection of TSB as a brand in a market in which it previously had a good reputation for providing small loans and deposits to people in local communities. Does he see this as offering opportunities in that space?

[Guy Opperman]

Indeed I do.

I held a conference in Gateshead only a few months ago. It was attended by 170 delegates who were trying to set up local community organisations to address the lack of lending in their communities. They wanted to enable such lending by local, trusted providers, rather than by nameless, faceless, computer-led organisations based in London, Frankfurt or wherever. The smaller providers such as the TSB, the Hampshire bank and the Cambridge and Counties bank that are beginning to be set up are clearly the way forward.

No one should dispute that the expansion of credit unions is an extremely good thing. I welcome the changes in the way in which they are to be run; the Government should take credit for that. All Members of Parliament should become greatly involved in their credit union; I certainly support the Hexham credit union, which was set up with the help of the Churches in Northumberland. However, I question whether the credit unions alone will be able to address the problems of high-cost credit. In regard to interest rates, credit unions have clearly adopted a fantastically successful approach—their lending rates are so much better—but their deficiencies might mean that it is difficult for them to go forward. None the less, debates such as these on Wonga or on the private Member’s Bill introduced by the hon. Member for Sheffield Central (Paul Blomfield) have substantially raised public awareness of credit unions in the House and in our local communities.

I want briefly to talk about local community banks. For far too long, under successive Governments, we have been dominated by the big six or seven banks. I welcome the idea of a Church bank put forward by my hon. Friend the Member for Banbury (Sir Tony Baldry), but the kind of long-term community banking that he referred to has disappeared from our high streets and rural communities. That has had a detrimental effect on the ability to lend and to get credit.

The Government have rightly addressed that problem. It used to be incredibly difficult to set up a bank. It took in excess of £50 million and the process was highly regulated, even though the smaller banks in question were in no way comparable to a Barclays-style bank. The Financial Services Act 2012 changed the approach taken by the then Financial Services Authority and its successor organisations involved in regulation, and I strongly support those changes.

Reference has been made to the platforms required to set up a credit union or a community bank. Those requirements are now changing dramatically, to enable much greater interchangeability between pre-existing accounts held with the big seven banks and those held with credit unions or community banks. The mechanisms by which we can set up those organisations are improving, and many groups now wish to get involved. They include not only local communities but local authorities and individual businessmen with a philanthropic approach to their local community. Some universities, and even the Army, are considering getting involved. There are tremendous opportunities in our local areas to set up and expand these organisations.

Over the coming winter, we will all be faced with the issue of the energy costs that our constituents will face. In my community in the north-east, we have 24% fuel poverty, and a large swathe of the community is totally reliant on either oil or liquefied petroleum gas. That is an unregulated market, with all the problems that that entails. We have now formed more than 14 separate oil-buying clubs to try to address the cost of the oil. However, the requirement to buy 500 litres involves a very large financial outlay, often when oil is at its most expensive, and we are looking at ways to address that. The credit unions are certainly being encouraged to be the providers in those circumstances.

I hope that we will all try to expand our credit unions, using the plethora of good advice on regulatory changes, and to support our constituents who need assistance on this issue.

14:27

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

It is a pleasure to be called to speak in the debate. I congratulate my hon. Friend the Member for Islwyn (Chris Evans) on securing it, and the Backbench Business Committee on scheduling it to take place in the Chamber today.

I was particularly struck by the honest and frank contribution from the hon. Member for Chatham and Aylesford (Tracey Crouch). I was also pleased to be reminded by my hon. Friends the Members for Blaenau Gwent (Nick Smith) and for Hackney South and Shoreditch (Meg Hillier) of the context in which our constituents face difficulties with high-cost credit. There was a danger that we might forget that these problems do not occur in a vacuum. The reasons for people being forced into using high-cost credit include the decline in wages, which has accelerated over the past three years. We have seen a £1,500 real-terms reduction in the mean level of wages over that period and, as we discovered yesterday, the median wage in Britain is now £3,300 less than it was in 2006-07.

The presence of the Under-Secretary of State for Business, Innovation and Skills, the hon. Member for East Dunbartonshire (Jo Swinson) on the Treasury Bench prompts me to talk about the context in which the debate is taking place. She and I are parliamentary neighbours, and there is a road—Colston road—that divides her constituency from mine. On one side of that road, in my constituency, is the ward with the highest level of child poverty in Scotland, at 51%. On the other side of the road, in the hon. Lady’s constituency, the level of child poverty is only 9%. That is a yawning gap. I have constituents visiting my office who are in dire need of food because they do not have enough money to get through the day. That explains the surge in the use of high-cost payday lenders in my constituency and those of many other hon. Members across the country.

We have heard that the average APR for payday lender loans is about 1,737%, but some of our constituents are facing an APR of nearly 5,000% on even relatively small loans. In many parts of Glasgow, this demand for high-cost credit is, in my experience, clearly linked to financial hardship and the lack of available alternatives for finance. We saw previously that crisis loans proved to be a stop-gap, but even in the run-up to the period during which the arrangements were devolved by the DWP to local councils—and, in Scotland, to the Scottish Parliament—we saw the significant pressures caused by cuts in crisis-loan funding. Between 2011 and 2012, crisis-loan funding fell by almost £90 million, which led to an explosion in demand for payday lending, particularly in Scotland.

In recent months, the Resolution Foundation has evidenced a number of key facts that show the extent of financial exclusion across our country. About 4% of UK households have no bank account at all; one in 10 does not have a current account; and it has been estimated that people on very low incomes pay a poverty premium of around £1,000 a year just to access basic financial services. Some 7.8 million in our country are unable to access mainstream credit, while 60% of adults among the poorest fifth of the population would like to save just £10 a month, but are unable to do so. Growing numbers of people are only a broken washing machine or a broken fridge away from stepping over a very steep financial cliff indeed, while 3 million households in social housing do not have any contents insurance despite the fact that they are twice as likely to be burgled as people who live in privately owned properties.

We have heard about the scale of the payday loans market over the last couple of years, and the average loan is between £265 and £270 and borrowed over 30 days, but we have also seen an explosion in the market in recent years, with between 7.4 million and 8.2 million new loans in 2011-12, up from an estimated £900 million-worth of new loans in 2008-09.

The debate has been useful in focusing the eyes of the Government—and, I hope, those of the Competition Commission, too, in its inquiry—on the need to take concrete action on misleading advertising, the irresponsible roll-over of loans, about which my hon. Friend the Member for Walthamstow (Stella Creasy) spoke so lucidly, the targeting of vulnerable customers and the unfair treatment of customers who are in arrears and default. It is the charges for these defaults on which I believe urgent action is particularly needed by the Competition Commission and, perhaps, by the Financial Conduct Authority next April when it takes over regulation of this sector. The Bristol study, which reported to the Minister’s Department, said that having tighter lending practices and a restriction on default charges could result in short-term lenders exercising less forbearance than they currently do on lenders who are very much in need.

I am pleased that we have heard such a focus on credit unions in this debate. I recently held a summit of small credit unions in my constituency, and they came up with practical suggestions about how the Government could help. They told me that, in their view, the Government’s fund through the DWP does not do enough to support small, community-based credit unions. They consider that the lion’s share of the funding had gone to the larger credit unions and said that the smaller credit unions were often run exclusively by volunteers, and they lack IT expertise and permanent staff. Credit unions from Haghill, Ruchill, and Greater Milton and Possilpark in my constituency have told me about the huge impact they could have and the huge extension in services they would be able to provide to constituents if only they had the possibility of having a staff member on board.

[Meg Hillier]

Does my hon. Friend not think that that is one of the problems and it is why people go to those other companies? With credit unions, on a customer service level, they often get what seems to be a second-rate service.

[Mr Bain]

My hon. Friend is absolutely right in the sense that community-based credit unions often have much more personal knowledge of the people who use them and who save in them, and it can often lead to much more responsible lending practices, borrowing and issuing of loans.

My local credit unions also said that it was very important that the savings-loans link was maintained because it encouraged a sustainable business model and lending. They welcomed the fact that finance for a financial education worker was available, which they said had been pulled in the past sometimes after just six months, and argued that the Government needed to be much more consistent in their support. They raised an important final point—that credit unions are often seen as low priority in comparison with banks when customers become bankrupt. They asked the Government to think about reviewing the law in this area to bring them equality of treatment, which would very much help the credit unions’ provision of services.

The hon. Member for Banbury (Sir Tony Baldry) mentioned the influence of the credit unions in Ireland, which is also true of Australia, Canada and the northern states of the US. We need to expand the services available and end the stigma that has led credit unions to be seen as of second order, which they are certainly not.

14:36

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

It is a pleasure to follow the hon. Member for Glasgow North East (Mr Bain). He made an interesting point, especially when he talked about some payday loan companies charging up to 5,000% interest, for which there is simply no justification. However leafy our constituencies might be—mine is quite a leafy one—there are pockets of deprivation in them and people who really need credit, but they need it at a competitive rate.

I would like to go back to the basics. For three or four years, we have had a 0.5% base rate, and the Governor of the Bank of England is hopeful that that may well stay at that level for another three years. How can anybody, legally or illegally, offer loans at 5,000% or 6,000% interest? That has got to be wrong. The old adage that we can have an umbrella if the sun is shining but that it will be taken away from us if it starts to rain is, as far as finance is concerned, correct.

I feel hugely passionate about this issue. I welcome the comments of the Second Church Estates Commissioner, my hon. Friend the Member for Banbury (Sir Tony Baldry) about the involvement of the Church of England and the Archbishop of Canterbury. One thing that the Church of England certainly has got is a great deal of assets. If people have assets, they can borrow money at a very competitive rate. I would say in all honesty to the Church of England that there is a real role for it in credit unions and community banks because they can borrow money at an effective rate, and if they lend it out at a much more competitive rate, that will help people in need.

Many Members, certainly including my hon. Friend the Member for North Swindon (Justin Tomlinson), have spoken about the need for a levy on the industry, and I agree that we need such a levy so that people can have proper financial advice, as they often go from company to company and shop to shop, being charged enormous amounts as they do.

[Mr Robin Walker]

I entirely agree with my hon. Friend. Does he agree that it is extraordinary, indeed outrageous, that there has to date been a levy on banks and a levy on credit unions, but not a levy on payday lenders? Does he not find that situation impossible to explain?

[Neil Parish]

I could not agree more with my hon. Friend. I would have thought that this wonderful Government of ours must be looking at such a levy—and if they are not, I am sure that they will do so immediately. We have got to do something about this problem. Yes, some might argue that we are saving people from themselves, but in this case, we have to do that. If people are in dire need of a loan to see them through to the end of the week or month, they should not be charged two or three times the value of that loan.

Of course, it is not just a question of whether the loan is repaid. People may reach a stage at which they are unable to repay it, and charges will then be levied for non-payment. The loan will be rearranged, another fee will be added, and they will end up paying five or six times the amount that they originally borrowed, or perhaps even more. That cannot be right. In any sort of capitalist system—or whatever system we have—there is a need for profit, but there is no need to extract money in a way that almost constitutes extortion. Someone who arrived in this world for the first time and observed that it was possible to charge such amounts of interest, or indeed—let me be blunt—to steal such amounts of money from people, would say that those who did that should be locked up. We must do something about it.

As well as the people who cannot repay their loans, there are people—although not so many—who are addicted to borrowing money, not just from payday loan companies but from, for instance, store cards that they can use in shops. They must be given more access to advice, and restrictions must be placed on the amount that they can borrow. If people are such a credit risk that they must be charged enormous amounts of interest because companies believe that that is the only way in which they can get their money back, we should ask whether we are helping those people by giving them the money.

A number of Members have rightly pointed out that, in this day and age, people need to be able to gain access to money online and from their mobile phones. Members may tell me that I am a little bit old-fashioned, but I am not certain that the ease with which credit can be obtained at any time of day or night, and regardless of people’s state of mind, is helpful. I think that it merely drives people deeper and deeper into debt.

I respect where the Government are coming from. When I last spoke about this issue, I went for the payday companies big time, and I still have them in my sights because I believe that they are making enormous profits at the expense of the very poorest members of society, but I also understand that there is a role for them. Nevertheless, they must be controlled. Their wings must be clipped.

[Ian Lavery (Wansbeck) (Lab)]

Does the hon. Gentleman agree that there should be a cooling-off period? The problem seems to be that many people who are desperate for finance can get hold of £500 on the internet before they have even put down their laptops and arrived at the hole in the wall. If there were a cooling-off period of, say—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. Interventions must be short. As the hon. Gentleman knows, the debate on the north-east will follow this one, and his intervention has eaten into the time for it by giving the hon. Member for Tiverton and Honiton (Neil Parish) an extra minute.

[Neil Parish]

The hon. Member for Wansbeck (Ian Lavery) has raised a good point. There are laws requiring a cooling-off period when, for instance, people buy shares in holiday accommodation, but that does not apply to loans of this kind.

There is a great deal that we can do. We must help people to obtain credit, but we must also help them to obtain advice. I agreed with much of what was said by my hon. Friend the Member for Hexham (Guy Opperman), but I agreed particularly with what he said about community banks. We will not be able to cure everything by means of credit unions, however good they are and however important the part that they play may be. I agree wholeheartedly with the Archbishop of Canterbury on one point: we need to be able to compete the payday loan companies out of business.

We have had an extremely good debate, which has not been vastly political. I do not think that any Government has come out of this smelling of roses. We must do something about the problem, and we must do it on a cross-party basis, because at the end of the day, we want to help our constituents. We want to help them to get to the end of the week, or the end of the month, but we do not want to land them in greater debt and greater problems than they had before taking out their loans.

I am certain that Ministers are listening to what is being said, and I look forward to the summing up of the debate. It has been made clear this afternoon that we are hugely concerned about the interest rates and other penalties that are being levied by payday loan companies, and we look forward to hearing what the Government are going to do about it.

14:45

[Ian Murray (Edinburgh South) (Lab)]

I congratulate my hon. Friend the Member for Islwyn (Chris Evans) on securing this debate about an increasingly problematic issue. He said that he had raised it in his maiden speech back in 2010, and I am sure that since then he has contended as strongly as many other Members that the problem has become worse rather than better.

Many Members on both sides of the House have campaigned tirelessly on behalf of their constituents who have suffered at the hands of legal loan sharks. My hon. Friends the Members for Makerfield (Yvonne Fovargue), for Blaenau Gwent (Nick Smith), for Hackney South and Shoreditch (Meg Hillier) and for Glasgow North East (Mr Bain) all deserve special mention, as does the dogged determination of my hon. Friend the Member for Walthamstow (Stella Creasy), who has just returned to the Chamber, and who has kept this issue high on the political agenda.

I commend my hon. Friend the Member for Sheffield Central (Paul Blomfield) for his private Member’s Bill, and for his superb contribution to today’s debate. The Bill attempts to provide a regulatory framework for high-cost payday lenders, and I shall say more about it later. I agree with the hon. Member for Chatham and Aylesford (Tracey Crouch) that the Government should adopt some of its provisions.

This has been a fantastic debate. There is clearly a consensus, not only in the House but among key organisations representing consumers and the debt support industry, that action is needed, and needed now. The hon. Member for Worcester (Mr Walker) was right to point out that there was cross-party support for such action. The issue has also been prominent in another Parliament, the Scottish Parliament, where Kezia Dugdale MSP has run the very successful Debtbusters campaign in an attempt to pressurise the Scottish Government to use their powers to assist. Unsurprisingly, they have so far refused to do so.

The pace at which the high-cost credit industry has grown is extraordinary. That is no doubt largely due to the cost-of-living crisis—my hon. Friend the Member for Glasgow North East referred to the desperation that drives people to food banks, and my hon. Friend the Member for Blaenau Gwent mentioned the problems of insecure employment in his constituency—but it must also be attributable to the attraction of the industry to countries with weak regulatory environments. Indeed, some commentators have described the regulatory environment in the United Kingdom as a “payday loans haven”. My hon. Friend the Member for Makerfield drew attention to the failure of the voluntary code in the sector.

It is a struggling economy, with ever-rising prices and stagnating wages, that is driving people towards high-credit borrowing just to meet the demands of everyday costs. Last year, Which? found that 60% of people who were using the high-credit market were doing so for everyday purposes. That shows how acute the cost-of-living crisis has become. There is a market for access to such short-term credit, as we have heard in the debate, whether that be for a broken washing machine or for the commuter whose car breaks down. Those problems cause unexpected shocks to families’ budgets and they can be helped by the short-term credit market, but as my hon. Friend the Member for Walthamstow said, many companies make most of their money through a small percentage of people who are forced to become repeat customers. It is becoming clearer that vulnerable people are being targeted and exploited by this industry; they find themselves drawn into a spiral of debt and are using such lending for everyday purposes. Many Members have told of their constituents’ experiences in that regard.

The harsh reality of the pressures of rising living costs is highlighted by the rising number of people using the StepChange Debt Charity. It has reported that more than 30,000 people contacted it in the first six months of 2013, which is the same number as for the whole of 2012.

While the high-cost credit crisis has deepened, month by month this Government have failed to take any meaningful action, and it is clear that consumers need protection now. The Minister with responsibility for the industry has played her part in that failure, despite the cross-party consensus which has been mentioned. Her payday loans “summit” in July, which she called the industry to attend, was slammed as a sham by many and what it actually achieved is unclear.

I ask the Minister to answer the following questions when she responds to the debate. Did she lambast industry executives for their continued flouting of their own good practice customer charter, as Citizens Advice has shown? Did she challenge industry executives, whose advertising spend rose by 26% in this year alone? Did she even ask them about capping the total cost of credit? If the industry is doing all the positive things it tells us it is doing, why will it not give the Government and the FCA its lending data so that we can determine whether or not we can trust what it says? We urgently need to put in place sensible and measured policies which will protect people. If we do not do that, ever more people will be affected.

Let me talk about some of the issues raised by Members today and by my hon. Friend the Member for Sheffield Central in his private Member’s Bill. First and foremost, we must have a cap on the total cost of credit, including charges and defaults. In her wonderful speech, my hon. Friend the Member for Walthamstow highlighted how that could be done. Last year, we proposed an amendment to the Financial Services Bill to give the new FCA the clear powers to do that, and it is a shame that the Government rejected it—only for the Lords, including the Archbishop of Canterbury and other Cross Benchers, to persuade them that it was the right thing to do.

Although the Government are reluctant to over-regulate in the credit marketplace, they must lay down to the regulator some clear foundations about what they are looking to do. First, there must be a crackdown on irresponsible lending, for which an affordability framework needs to be put in place. The FCA also needs to introduce measures to stop small debts becoming large debts. That should include addressing roll-overs and a limit on default charges. They should also consider a cooling-off period, as my hon. Friend the Member for Wansbeck said. The FCA needs to collect some transactional information, too, so that we can be clear about how the market is operating. The Government and the FCA should introduce a live database as well, so that payday lenders can do proper credit and affordability checks in order to protect borrowers. That is the only way we can overcome the hurdle of the industry being accused of not doing proper affordability checks. There should be strong warnings on all advertising so that customers are aware of the risks and costs. My hon. Friend the Member for Makerfield said that her children had been told to boo when the adverts appear on the television; perhaps we should add those boos to the adverts themselves.

Borrowers experiencing difficulty should be automatically signposted to a free debt advice service. The continuous payment authorities should be reviewed, too. The Minister must tell the FCA to look at that, in particular with regard to the high-cost credit industry.

This has been a wonderful debate, but I am sorry we have not had time to explore some of the issues in greater detail. The Minister has said:

“Payday lenders are on notice—if they don’t take action to fix their problems they will face further complaints and further sanctions.”

Can she honestly say to the House today that she is doing everything in her power to make sure that the market is regulated properly? I would challenge her on that, because I do not think that she is doing that. The House has spoken clearly—not just in this debate, but in many debates on high-cost credit over the past 18 months to two years—and it is time the Government acted.

14:53

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

We have had an excellent and constructive debate, and I thank the hon. Member for Islwyn (Chris Evans) for introducing it and the Backbench Business Committee for allocating time. I appreciated his welcome for the action the Government have already taken, such as on the research into advertising and the FCA strategy that we are due to see soon with the publication of its rulebook. I understand and appreciate his concern about the speed of change, and the frustration he feels. His party colleague the hon. Member for Edinburgh South (Ian Murray) said the pace of growth of the payday lending industry has been extraordinary. The Government and regulators have, of course, been working to keep up, and I think we have seen in recent months that that has been happening.

Various alternatives have been mentioned. One of them was the possibility of introducing low-limit credit cards, and I have explored that with the UK Cards Association and others in the industry, as I think it could be one of the alternatives that might work. Of course, it would not work for everybody; as we have heard, some people who take out payday loans are keen to make sure that they get something quickly and with that level of convenience. Indeed, some may not pass the credit scoring that would be required for some of those credit cards. That underlines the importance of the affordability assessments, because people are currently passing the checks by payday lenders and perhaps some of them should not be.

My hon. Friend the Member for Thurrock (Jackie Doyle-Price) talked about the PAC report and the importance of this House sending a clear signal to the FCA that it expects it to use its powers to intervene where there is poor practice, and I absolutely agree with her. We do expect that, and I have made that abundantly clear to the FCA. Today’s debate has also been very helpful in making it clear exactly how strongly the House feels about this issue. I am sure that the FCA will be following this debate, but just in case it is not, I will happily write to it to draw it to its attention. Indeed, next week I will be meeting Martin Wheatley to have further discussions on this issue.

My hon. Friend mentioned that she was disappointed that the Office of Fair Trading had failed to use its powers to revoke licences. That was true at the point at which the PAC took evidence from the OFT, but she will be pleased to know that since that report was published it has revoked three licences—so those powers are being used.

I commend the hon. Member for Walthamstow (Stella Creasy) for all her campaigning on this issue; we had a positive meeting to discuss it earlier this week. Obviously, the profitability of payday lenders has been high up in the news this week, and we agree on the level of profits being derived from default fees, roll-overs and so on. That is why it is so important that the Competition Commission is investigating this market. It has already begun its investigation, issued its issues statement and invited comments from interested parties by later this month.

We discussed in detail the other day the points that the hon. Lady made about total cost capping. I appreciate that we perhaps have a difference of opinion on where exactly the evidence points, the possible negative impacts of fees being charged elsewhere—a displacement effect—and whether or not there would be less sympathy for lenders than difficulty. That said, it is vital that the FCA has that power and has the evidence. Her point about ensuring that the FCA can get off to a flying start when it takes on the responsibility in April 2014 is important. I have been keen to ensure that it is able to do that, and it has said it is prioritising the issue.

On the hon. Lady’s point about data sharing in the industry, I encourage lenders to liaise and share their data with the FCA in advance of its taking over that responsibility. The OFT has a data-sharing agreement with the FCA, so data that it has can be shared, with all the appropriate confidentiality protections in place, as one would expect. It would be helpful if the industry would share further data with the FCA, and when we had the summit the industry indicated its willingness to be as helpful as possible. I hope that it will be able to take that up.

[Stella Creasy]

rose—

[Jo Swinson]

I appreciate that the hon. Lady wishes to intervene, but as time is so short and as I wish to respond to other Members’ contributions, I will not give way. I hope she will forgive me.

My hon. Friend the Member for Worcester (Mr Walker) talked about the importance of ring-fenced bank accounts, where payments for rent and bills can be set to one side. The Government are working with consumer groups and banking organisations to see whether more of those types of accounts can be provided, because they can be an important budgeting tool.

The hon. Member for Makerfield (Yvonne Fovargue) has campaigned for her constituents on high-cost credit issues for a long time. She rightly highlighted concerns about CPAs and the way in which banks have treated them, because where individual customers decide to cancel a CPA, that should be honoured. She will be pleased that the FCA took up that issue seriously once it came into being earlier this year. It now has agreement with the high-street banks that they will ensure that when a customer asks for a recurring payment to end, that will be sufficient to cancel the arrangement. Furthermore, if any payment subsequently goes through by mistake, the customer will be refunded immediately. That will not solve all the problems on CPAs but it is a good start, in terms not only of dealing with the problem, but by showing the FCA’s recognition of it and its willingness to act.

My hon. Friend the Member for North Swindon (Justin Tomlinson) has a strong record on campaigning on financial education, and he highlighted the issue of convenience and the importance of price information. He also rightly highlighted real-time credit checking as a key area. I found interesting his idea of a levy on the industry to enforce that kind of credit checking. The industry is examining whether it can do that itself and I hope it will do so, but it is important that the Government keep all ideas such as his in mind, in order to be able to do that in future.

The hon. Member for Sheffield Central (Paul Blomfield) had his private Member’s Bill and we had a good debate on this subject in July. Today, he asked about the date for the consultation and I can confirm that we still expect that to be in September. I cannot give him an exact date, but he does not have long to wait. We look forward to the FCA’s report.

My hon. Friend the Member for Chatham and Aylesford (Tracey Crouch) made a frank and moving speech about some of her own experiences and highlighted the human side of the argument—hiding from bills and lying awake at night worrying about debts. It is important that we bear that in mind when we discuss these issues.

Let me pick up on the points made by the hon. Member for Blaenau Gwent (Nick Smith) about whether post offices could play a role in supporting credit unions. There is scope for further work there.

The hon. Member for Banbury (Sir Tony Baldry) wanted to chime with the Archbishop of Canterbury’s call to compete Wonga out of business. The fact that the hon. Member for Islwyn summed up the relationship between credit unions and the payday lending industry as like that of David and Goliath was particularly appropriate given the Church’s intervention. I was pleased to meet the Archbishop of Canterbury on this issue along with my right hon. Friend the Secretary of State. It will not be a short-term solution, which is why regulation is also important, but it is part of the long-term answer.

The hon. Member for Hackney South and Shoreditch (Meg Hillier) made considered remarks about the importance of there being different products in the market and the certainty that home lending, for example, can provide to some customers. She was also right to highlight some of the problems with some of the hire purchase agreements through companies such as BrightHouse. Although they might not technically be high-cost credit because the APR is not sufficiently high, the length of the loan means that customers can end up getting a raw deal.

Issues of financial education were highlighted by my hon. Friend the Member for Hexham (Guy Opperman). My parliamentary neighbour, the hon. Member for Glasgow North East (Mr Bain), talked about the Colston road divide and the important issues facing small credit unions. My hon. Friend the Member for Tiverton and Honiton (Neil Parish) highlighted the issues of the spiral of debt.

We have had a positive debate. I share the concerns that have been raised and Government and regulators are acting. The OFT has taken action and 19 of the 50 top lenders have left the market. Three further licences have been revoked. The FCA will have strong new powers from April, the Competition Commission is investigating and the House is right to keep up the pressure. I commend those hon. Members who have taken time this afternoon to put forward concerns on behalf of their constituents.

15:02

[Chris Evans]

I will not keep the House for long, as I hear a number of north-east accents around me from Members who are waiting for the next debate to start.

I congratulate everybody who took part in today’s debate. It is a case of the House at its best. It has been an informed debate, as Backbench Business Committee debates always are, and I echo many of the comments made by both the Opposition and Government Front Benchers. We want to see a sector that delivers for the consumers who need that. We are seeing consensus among everybody in this House that we need not just regulation but better regulation. We have a real opportunity through the FCA and I hope that we do not blow it.

We have seen a manifesto for action today that everybody in the House can support. I thank the Committee again for allowing us the time for the debate, I thank everybody who has taken part and I am heartened by what I have heard from those on the Front Benches. I look forward to further action in the future.

Question put and agreed to.

Resolved,

That this House has considered high-cost credit.

North-East Independent Economic Review

Thursday 5th September 2013 Commons Chamber

15:03

[Mr Nicholas Brown (Newcastle upon Tyne East) (Lab)]

I beg to move,

That this House has considered the North East Independent Economic Review report.

It is not often we get a chance to discuss English regional affairs, so I am grateful to have the opportunity to do so today and to focus on the north-east economic review, an independent review of the economy in the North Eastern local enterprise partnership area.

The debate is important for two reasons. First, it is about the most important single issue facing the north-east of England. The region, including Teesside, has the highest rate of unemployment of any part of the United Kingdom at more than 10%. That equates to more than 83,000 people, of whom 24,415 are young people. Long-term unemployment has increased by 8.6%, or more than 2,300, in the past year. In my constituency, approximately 3,000 people are looking for work, nearly a third of whom are aged between 18 and 24. Those people want to work, but the jobs are simply not available.

The debate is also important for every English region that has a local enterprise partnership. Although the report that we are considering is not the only one of its kind—I think that Manchester has produced something similar—it is clearly relevant to other UK regions that face similar problems.

There is no sustained political disagreement about the problems facing the north-east of England, which is why I am pleased that our debate has been supported by my hon. Friend the Member for Bishop Auckland (Helen Goodman), the hon. Member for Hexham (Guy Opperman) and the right hon. Member for Berwick-upon-Tweed (Sir Alan Beith). When I was Minister for the North East under the previous Government, I found that it was possible to get a broad consensus among all those who had the region’s best interests at heart.

The report identifies the key problems that the region faces, but it is weaker on what to do about them. The issue at the heart of all this is what we should be doing to bring down high rates of unemployment and to ensure that the citizens we represent have a chance of a job, a decent wage and a secure future in the north-east of England—including in Teesside, for the avoidance of doubt.

While the report focuses largely on structures, I would have preferred it to focus on outcomes. It could have offered practical ways forward, but it focuses on process and reorganising functions. I think that a better approach was the one adopted by the previous Labour Government, with the regional Minister, local authorities working with that Minister through the Association of North East Councils, and essential economic development input coming from One North East, the independent, business-led development agency. Given the need to reduce public expenditure, it would have been better to refocus the development agency on its core business, rather than abolishing it.

There needs to be single-minded focus on broadening and deepening the region’s private sector employment base. Promising individual projects were in the pipeline when I was regional Minister—I believe that they are still in place—so they should be assessed and pushed forward with a sense of urgency. There should be political leadership from an individual Minister appointed to focus on this issue. The crucial point is that such a Minister will have access to the great Departments of State and can act as an advocate for incoming private sector investment. Other parts of the United Kingdom with similar problems have their own economic development bodies, local political decision-making bodies and ministerial champions at Cabinet level. That is true for Scotland, Wales and Northern Ireland, and the north-east, including Teesside, needs a ministerial champion of its own.

In my time as regional Minister, I was able to intervene effectively at the heart of government. I was able to intervene on the region’s side in crucial debates about Nissan, its battery manufacturing facility and the new electric car assembly line to sit alongside that. I worked behind the scenes—we were not allowed to say anything in public—in the campaign to find a future for what was then the Corus steelworks at Redcar. I worked closely with the North East of England Process Industry Cluster, and secured central Government support for public transport initiatives on Teesside and for the Newcastle metro. I also championed the north bank of the Tyne’s industrial strategy, as well as a partnership between the regional development agency, Newcastle city council and North Tyneside council that brought new industrial jobs to the Tyne. A substantial amount of work was undertaken with small and medium-sized employers and an effective Business Link organisation, which I am sorry to see go.

The principal recommendations of the LEP report involve creating a leadership board that is made up of the leaders of the seven local authorities and that will lead on the three functions of transport, economic development and skills training. I understand that the Government support those recommendations because they are similar to their existing policy, but I note that our ministerial presence has been upgraded so, if I have got that wrong, I am sure that the Minister for Universities and Science will tell us when he says a few words.

The recommendations in the report involve organisational change, with no very clear-sighted view of where there would be an improved outcome following the change. They also strike me as being labour intensive. Each local authority leader, perfectly properly from their point of view, will want their own advisers in each of the three policy areas. Tellingly, the report talks of “capacity building” and “joint teams of officers”, with senior leads

“from each Government Department and Agency”.

[Mr Kevan Jones (North Durham) (Lab)]

Does my right hon. Friend agree that the one thing missing from the report is the fact that many local authorities, including my own in Durham, have had to take £209 million out of their budget during this period? The capacity for officers to take up these tasks will be very difficult.

[Mr Brown]

It would certainly be impossible for local authorities to do what the report suggests. My hon. Friend’s point is correct. If extra resources were to be supplied to enable them to do so, frankly it would not be the first priority for expenditure in local authorities, all of which are very hard-pressed at the moment even without taking on extra functions without the resources to carry them out. Let us remember that the recommendations, which effectively are for extra civil service support, be it central or local government—as I read the report, it is both—come just after the Government have closed the Government office for the region.

Of course there is a case for the seven local government leaders to meet. In effect, this replicates, but for a smaller area, the arrangement that pertained under the last Labour Government through the Association of North East Councils. Local authority leaders already take a close interest in economic development questions in their council areas, and they work with others when there is a common interest. But is not the lead on economic development supposed to lie with the LEP, not the local authority leaders alone? The local authority leaders are already all represented on the board of the LEP. What is the relationship between the two supposed to be?

A better approach to the Tyne and Wear passenger transport authority would be to amend the existing arrangements rather than create a whole new authority. The existing authority has the advantage of involving councillors who are not the leaders of their authority and can give the time to specialise in transport matters. Nexus and the integrated transport authority are already working hard to push ahead with many of the recommendations in the report, including smart ticketing and a consultation on a quality contracts scheme.

Similarly, I do not understand, and the report does not explain, what the specific input of the local authority leaders into skills training is expected to bring. The justification in the report is that the local government leaders know their own areas the best and therefore are best placed to identify skills needs and shortages. I am not sure that this is true. In any event, local authority leaders have a great deal to do already, and to demand that they specialise in skills and training issues as well as economic development and transport policy seems to me unreasonable.

A combined authority does not give the region any more access to Government, and it is Government who have the power and hold the purse-strings, and that is more so now than under the previous Government. We have had the LEP up and running now and that has not enhanced the region’s direct access to Government, where the big decisions are made. The LEP has had the lead on the enterprise zone policy for almost two years now. I am not an advocate of the policy, as I made clear at the time, but if it can be made to work, I want it to be made to work. But there is not much evidence of it working so far.

[Andrew Griffiths (Burton) (Con)]

The right hon. Gentleman talks about there not being much evidence of the policy working, but we should celebrate good news. Will he join me in congratulating Nissan on the great news today of the £250 million investment in its new car line, and the 1,000 jobs that go along with that? Let us celebrate good news for the north-east.

[Mr Brown]

I am happy to join the hon. Gentleman in that. Nissan is one of the great hopes for the region. It has the potential single-handedly to make a substantial impact on the employment issues in east Durham and in the city of Sunderland. When I was the regional Minister, I was a great enthusiast for the potential that was there and a great champion of it, and I was able to take its case to the heart of Government. I hope that that helped to bring about the arrangements that are now in place and the success the company now enjoys, but we should never lose sight of the fact that the principal reason for Nissan’s success is the management and the work force. I think that everyone in public life in the north-east wants it to succeed, will fight its corner and stands ready to help. I hope the issue will never divide us when we look for the way forward for our region.

My principal criticism of the report is that it is all about process, rather than outcomes. It is repetitive and has a scattergun approach to initiatives. For example, there is a flurry of ideas around one of the most pressing issues: the need for venture capital and the continuing difficulty in getting banks to lend. That problem is not unique to the north-east, but it has a particular impact on us because we are trying to develop the private sector in our economy.

The report proposes a range of initiatives, including exploring the potential for a regional business bank, a north-east access-to-finance scheme, an investor readiness programme and a north-east finance and investment board. It also proposes what are described as “new investment plans”, a “front of house system”, “client relationship management”, “re-location” schemes and a “North East International” body. There is a flurry of initiatives, but what does it all mean? Do they overlap? I cannot tell. At least, it is not clear from the report.

The report also restates existing projects as if they were new initiatives. I have already mentioned such cases in relation to transport, but there are other examples, such as the “Open Innovation and Growth Centres”, that are already working or have already been announced.

The report mentions in general terms desirable ideas and principles, such as an increase in apprenticeships, greater foreign direct investment and more young people from the region going to university. All those outcomes are desirable and none of these issues is new but, crucially, while stating that they are desirable, the report gives no indication of how best to achieve them. At the very best, the report’s recommendations would deliver administrative change for our region in a few years’ time. The need for action is now. Yet now the Government are actively sucking demand out of the regional economy by changing the national funding formulae for local government, the national health service, policing, transport and infrastructure investment, to our region’s disadvantage.

What the region needs is a politically led and determined drive, involving everyone who wants to help—this really should not divide us—to develop the private sector economy in the region. We have done a tremendous amount to help ourselves as a region, but the scale of the problem is such that more needs to be done. As well as determinedly driving forward the projects that we know are there, there is a case for a short-term emergency response to the emerging problem of long-term youth unemployment. Only central Government can do that. The Chancellor and the Business Secretary could explore incentivising the region’s small and medium-sized employers to take on an extra young person, or more than one, if only to prevent the corrosive and demoralising effects of worklessness and defeated ambition among the young.

In my view, things were moving in the right direction under the structures and leadership of the previous Labour Government. The report confirms that by setting out the region’s progress in the last growth cycle with 67,000 extra jobs, gross value added increasing by 57%, and tens of thousands of jobs created through greater foreign investment. The north-east was moving in the right direction, with the fastest growth rate of any English region, although admittedly from a more modest start. That was delivered under the former economic development structures, which would have worked well to get us through the economic downturn. The report is quick to offer new structures but gives no assessment of how well the old ones worked. In short, it correctly identifies the issues facing the region but is insufficiently bold in offering a way forward.

[Several hon. Members]

rose—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. The time limit on Back-Bench speeches is seven minutes.

15:19

[Guy Opperman (Hexham) (Con)]

It is a pleasure to follow the right hon. Member for Newcastle upon Tyne East (Mr Brown). I suggest that we should be very proud of the report, and very proud in the north-east. As we all agree, it is the most beautiful of regions, and certainly not desolate. It is blessed with a positive balance of payments, as the North East chamber of commerce and the businesses constantly make clear to us.

Not only was the region the cradle of the industrial revolution, but this year we are leading the way. First, in the spring we had the January declaration in the north-east, which made a significant contribution to how we visualise the type of country we wish to be. Secondly, in April we had Lord Adonis’s report, which is fundamentally business-led, with the most pragmatic of Labour politicians at its head; he is someone we can genuinely work with. I am happy to say that I worked with him and supported what he was doing in creating the report. Thirdly, in June, we had the banking conference in Gateshead which a group of us organised to try to facilitate bank lending in a multitude of ways, ranging from a business bank to a local enterprise partnership infrastructure bank to community and local banks—different types of lending and expanding on credit unions that will address the fundamental problem of the lack of bank lending and finance to create the private sector jobs that we all so wish for.

The north-east is leading the way. The right hon. Member for Newcastle upon Tyne East is right that Manchester has produced a derisorily small and not very good report. We have produced a proper report that deals with what all 39 local enterprise partnerships have to do—address specific plans for a strategic economic plan within a particular time scale. Every Member of Parliament and every person in this country will have to address the problems that we are leading the way on. That is very significant. The north-east is not sitting back and accepting the state of things as they are; the north-east is making the case for change.

The strategic economic plan must be submitted by the end of March 2014, and it requires a Government response at a certain stage over the winter. It affects businesses, universities, local authorities and anyone interested in transport, housing, schools or skills—pretty much everybody. I cannot speak to every part of the report in seven minutes, but I can say that I support its broad thrust. The most important part concerns the development that has taken place over the past year-plus with the local authorities all coming together and forming the combined authority. It is absolutely vital that we go on this journey. I take the point about the Association of North East Authorities being a type of combined authority, but it is nothing like what we are going to have in future.

[Mr Kevan Jones]

That is a structural change, although I am not opposed to it. To be fair to the north-east councils, they have a very good track record, across the political divide, of working together. However, the hon. Gentleman cannot get away from the fact that his Government have already taken some £240 million from the local authorities covered by the LEP area in the past two years, and that is before the next round of cuts. How does he expect those councils to come up to the mark as the Government are asking them to do?

[Guy Opperman]

The hon. Gentleman need not take my word for it; he can listen to the author of the report and the business men and business women who believe in the north-east being able to cope with those difficulties and strongly make the case that there is optimism to be found there.

The next step as regards the combined north-east local authority is to pick a leader. I would certainly support having a mayor.

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

The hon. Gentleman is talking about a champion—a mayor—to lead the LA7, or strategic authority—[Interruption.] I am not canvassing for the job; I am going to suggest a job for the hon. Gentleman, actually. On that basis, does he support the idea eloquently expressed by my right hon. Friend the Member for Newcastle upon Tyne East (Mr Brown) that we should have a Minister for the north-east as an advocate who did precisely that job at the heart of Government? Perhaps that would be a good job for the hon. Gentleman.

[Guy Opperman]

I am delighted by the recommendation for promotion, but as the hon. Gentleman knows, that is way above my pay grade and way beyond my decision-making powers.

[Ian Lavery (Wansbeck) (Lab)]

Too modest!

[Guy Opperman]

I am happy to be modest on this occasion.

A mayor is someone working from the bottom up and driving the region forward. A Minister in the Government—I say this with no disrespect to the work of the Minister on the Front Bench or any replacement—is here for at least four days a week and unable to drive things from the bottom up. However much the Member of Parliament who was the Minister would like to be in touch with everything that is going on, it must surely be accepted that someone local needs to be driving it forward. That is certainly the case with the Mayor of London and the mayors of Paris, San Francisco and other regions, and they have been successful. It is, however, a matter for debate, which is what this process is about. A legitimate debate is taking place about how to make progress. Tomorrow I and 400 other delegates will discuss the report’s individual parts at the International Centre for Life in Newcastle. I am not suggesting that anything is set in stone, but one thing is clear: the north-east is leading the debate about where the structures should go.

In the limited time available, I want to endorse the comments made about transport. I recently met staff representatives from Newcastle airport and I welcome the developments there and the attempts to expand transport.

Clearly, future growth must be engineered through education and skills. We cannot plan for the future without more of the brightest and the best getting involved in initiatives such as Teach First and acting as role models for local children. As it stands, the north-east has only a third as many of those dynamic individuals as London. We need to motivate children from all economic backgrounds to apply to Russell Group universities. One of the report’s targets is for 35% of the area’s secondary schools and 40% of its primary schools to reach the top quartile, and it sets out some very good ways, such as Teach First and the north-east schools challenge, to achieve that. It is good that we are encouraging university technical colleges to build links between academia and industry and take advantage of the north-east’s unique characteristics.

On apprenticeships, I am pleased to say that I have made my limited, modest contribution by employing an apprentice—not as an apprentice MP, I hasten to add, but as an office manager. There should be greater incentives to encourage everyone to take on an apprentice, and the report eloquently notes specific measures that could enhance the situation.

On local community banking, at our June conference at the Sage in Gateshead 170 people came together to discuss how they could turn around their local economies and get local communities lending. On larger infrastructure, the local enterprise partnership could run the infrastructure bank. There is no reason why community banks could not be backed by local authorities, universities or the Army, which is looking at them. If we can get regional and local lending to address not just the high-cost credit issues that were discussed in the previous debate, but the issues of bank and mortgage finance, that would be a great deal better than the present, patently insufficient system whereby the big seven banks are remote, London-based and computer-run, and totally unresponsive to and not located in the community.

I cannot finish without raising two particular points. First, I welcome the comments of Northumberland county council on the need for a rural deal so that the report does not just deal with the urban centres. It needs to be for the countryside as much as for the urban centres. Secondly, a survey by Business Quarterly, which is available online, found that there is great confidence that this north-east independent review will address some of the region’s economic needs.

I support the review and will discuss and debate its benefits tomorrow. We must acknowledge that the north-east is leading the way.

15:29

[Julie Elliott (Sunderland Central) (Lab)]

I endorse what my right hon. Friend the Member for Newcastle upon Tyne East (Mr Brown) said about wanting a regional Minister again. Having worked very closely with the regional Minister before coming to this place, I know that it was a huge asset to have somebody in the House who was responsible for our region. As somebody who was very involved in the campaign for a north-east assembly and regional government, I found it interesting to hear a Conservative politician calling for a mayor—an elected politician to speak up on behalf of the region.

The report identifies many of the problems in the region, but a lot more work needs to be done on the solutions. It demonstrates that the north-east economy has a solid foundation on which long-term growth can be built. The north-east has a good record of creating jobs. Some 67,000 jobs were created between 1998 and 2008, which was more than in any other region. The north-east is also a trading powerhouse for the UK economy. In 2011-12, it was the only area in England to record a goods trade surplus. That is a real achievement. Our excellent export record is a result of the high levels of foreign direct investment in the region over the past 10 years.

Of course, the north-east economy has several key structural weaknesses that will continue to hinder economic growth and job creation if they are ignored. The two central problems are that there are too few private sector jobs and too few highly skilled, highly paid service sector jobs. That leads to lower productivity and income levels across the region that are simply too low. The north-east has just 38 businesses per 1,000 working-age residents, whereas the national figure is 60. That lack of businesses is a major factor in the high levels of unemployment in the region.

Despite the abjectly chaotic regional growth fund and the dissolution of our successful regional development agency, One North East, the north-east continues to be a driving force in the re-emergence of the British automotive industry. As the hon. Member for Burton (Andrew Griffiths) said, Nissan is a huge success story. It is based in Sunderland, but it benefits not only Sunderland but the entire region.

The Nissan plant employs 7,000 and a further 30,000 people are employed in the supply chain. In the main, those are very highly skilled jobs. In 2011, the Nissan plant in Sunderland produced more than 480,000 vehicles. Nissan has invested more than £3.6 billion in Sunderland since 1984 and it continues to invest in innovation, most recently with the Nissan Leaf, bringing further investment and jobs to our region. Having lived in the region all my life, I have to say that Nissan was brought there not by one person, but by all the parties and all the people who are involved in industry in the north-east. The Nissan plant demonstrates the importance of the UK’s membership of the European Union to the creation of jobs in the north-east. The uncertainty around a referendum is not helping investment and is creating problems.

Universities have a huge role in bridging the gap between education and graduate employment. I have no issue with the Russell Group, but we have excellent universities in the north-east and not all of them are Russell Group universities. As is noted in the report, the Institute for Automotive and Manufacturing Advanced Practice and the university of Sunderland have developed a centre of excellence in low-carbon vehicle technology, which trains graduates with the skills that large employers such as Nissan require. AMAP has introduced the first master of science qualification in low-carbon technology, allowing engineers in the LCV industry to study part time and gain vital advanced qualifications in that fast-growing industry.

On the banks of the Wear, on the site of the old shipyards, the university of Sunderland hosts the Institute for International Research in Glass and the Ceramic Arts Research Centre. The National Glass Centre is part of the university and it offers a glass and ceramics degree in which students can work with professionals in state-of-the-art facilities. That is a fine example of education working with industry to develop the right skills, abilities and network of contacts to build a career.

As has been said, participation in higher education is lower in the north-east than in the UK as a whole. Something needs to be done about that. The increasing adoption of science, technology, engineering and maths qualifications is vital if we are to provide the highly skilled work force that our advanced manufacturing sector needs. Employers often report problems in recruiting people with the right skills. It is vital that we enable more employers to take on long-term apprentices to produce people with the qualifications at level 3 and above that are needed.

Rebalancing the economy is not a meaningless platitude, nor does it mean hampering London’s competitive advantage in banking and finance. It simply means recognising that growth, jobs and rising productivity in regions such as the north-east are vital if we are to see sustainable, long-term economic growth nationally. I urge the Government to take note of the report, empower councils and give LEPs the powers and access to finance that they need to form partnerships with SMEs and universities, so that they can help make the north-east the economic powerhouse it clearly has the potential to become.

15:35

[Ian Swales (Redcar) (LD)]

I congratulate those who have secured the debate. For a small but beautifully formed part of the country to be discussed in the main Chamber is terrific. I bring apologies from my right hon. Friend the Member for Berwick-upon-Tweed (Sir Alan Beith), who unfortunately cannot be here as he is on Justice Committee business. He certainly wanted to be.

I welcome the high-quality report. I was slightly surprised at some of the critical remarks about it in the opening speech, because I understood it to be a bottom-up initiative by a lot of people in the region, and therefore a good summary of what was happening and what should be done. Lord Adonis said in his report that he had been immensely stimulated by being in the region and meeting various people, and had left “full of optimism”. That is certainly the spirit in which we should see the future.

I welcome the five key aims set out in the report, especially the one about the skills agenda. We saw in the news today that Dyson had said it would employ 2,000 more people if only it could find the technical and engineering staff that it needed. It is frustrating for me, in an area of high unemployment, constantly to meet employers who say that they cannot find the people they need. We also need more entrepreneurs in the north-east. That is not well covered in the report, but we have one of the lowest levels in the country of entrepreneurship and small and medium-sized enterprises. There is plenty of room for growth there.

As a Tees valley MP, I look at the report through the lens of that area, and I would make one observation that is meant to be helpful. The report is quite heavy on structures and low on dynamism and the private sector. I know that there are real issues in the North Eastern local enterprise partnership area, but Tees Valley Unlimited is different in that the local authorities come together in the LEP rather than as a separate group. That leads to cohesion and also gives the LEP a strong mandate for action. It remains to be seen how the north-east’s structures will work in future.

Of course, our region has been hit hard by the decline of traditional industries, but it is recovering. As has been said, it is the only region with a net trade surplus, and we are benefiting from the Government refocusing on manufacturing. Recent figures show growth in manufacturing, and Redcar steelworks had record production just a few weeks ago. The Government are also making more effort on foreign trade, which is benefiting our region, and we can all do our bit. As chair of the all-party group on the chemical industry, I was pleased to lead the north-east process industries trade mission to India in March.

The Government have been working hard on the north-east in many ways. Enterprise zones have been mentioned, and I am delighted that those in the Tees valley have already attracted 10 new companies and more than £400 million of investment. The regional growth fund was derided earlier in the debate, but let us remember that it is genuine regional policy. Only the areas that really need the money are getting it. The north-east is a huge beneficiary—in rounds 1 and 2, the two LEP areas got nearly one third of the entire country’s projects.

[Mr Kevan Jones]

Is it not a fact that in the last year of the regional development agency, it had an annual budget of nearly £250 million? Now the Government have taken that away, which the hon. Gentleman voted for, and there is a bidding game in some areas. Some of the decisions that are being taken are difficult to justify given the deprivation that exists and the support that areas need, but they are perhaps being taken for political reasons. The idea that the regional growth fund somehow replaced what was taken away is complete nonsense.

[Ian Swales]

I accept the hon. Gentleman’s point about the amounts of money concerned, but of course we were left in a situation where the Government were basically bankrupt. It is excellent that instead of spraying money around all the regions of the country, the Government have picked the regions that actually need it. The limited amounts of money are coming to areas such as the north-east. The recent announcements of EU funding are of course welcome, and I congratulate the Government on taking only a small slice of it, as opposed to the 50% slice that I believe the previous Government took. The EU’s recognition of Tees valley and County Durham as areas needing special assistance is welcome, because it will result in large amounts of money. There is more to come from the EU youth unemployment funds, because we qualify on that ground too.

The hon. Member for Burton (Andrew Griffiths) said we should celebrate good news. It was great to see the ground being broken for the Hitachi factory a few weeks ago. It already has its first orders. We have heard about the effect that Nissan has had on the north-east. Hitachi has the potential to be a similar success story, with the supply chain as well as the company itself. We should celebrate that.

As the briefing for hon. Members states, the North Eastern local enterprise partnership is the fourth biggest. It is working on a huge number of activities. Were my right hon. Friend the Member for Berwick-upon-Tweed in the Chamber, he would certainly mention the need to continue with rural broadband investment for Northumberland, and to build on the recent Government announcement on dualling the A1.

The overall region is stronger with two LEPs based on the two main conurbations. I have spoken in previous north-east debates on how I believe that the Tees valley lost out under the old arrangement. The statistics are clear on that. I congratulate Tees Valley Unlimited on its work. As well as enterprise zones and successful regional growth fund bids, it has an economic strategy and a business plan. It is aiming to have 25,000 extra jobs over the next 10 years. It has launched a £20 million contract catalyst fund, giving performance bonds for small and medium-sized enterprises; secured £12 million for a pinch point on the A19; and engaged with more than 750 local businesses.

We are getting much needed improvements to local bus and rail services, including a new rail station at James Cook hospital.

[Andy McDonald (Middlesbrough) (Lab)]

The hon. Gentleman makes an excellent point on transport infrastructure, but, on TVU, does he share my frustration that we are not making the progress we should with the Tees valley metro, which would be a driver for our economy locally?

[Ian Swales]

I share the hon. Gentleman’s frustration—in fact, he has stolen the next sentence of my speech. One way in which we have suffered over the years has been the lack of serious efforts on Tees valley transport, particularly in respect of the metro. It remains a scandal that we have railway line passing within half a mile of the airport but no link to it.

We can see the effects of the improvements in my constituency. Unemployment is down by 8% in the past year and by 15% among the 18 to 24-year-old age group. However, unemployment is still way too high, as is long-term unemployment.

I and the North East LEP welcome pragmatism based on real geography. For example, the area I represent is firmly aligning itself with the Welcome to Yorkshire tourism brand. We are part of the historic county of Yorkshire. We have a race course that is marketed under the Go Racing in Yorkshire brand; a large slice of the Yorkshire coast; and part of the North York Moors national park. It is therefore right that we align with that tourism body. I wish the North East LEP well—it is important for all hon. Members that it succeeds—and welcome the joint meetings that are taking place on matters of common interest such as transport and finance.

The threat from the EU was mentioned. The hon. Member for Stockton South (James Wharton) is well aware of my dismay that he should raise that subject in the House. Even the uncertainty is incredibly damaging to the north-east. I have met business people who say that the uncertainty is not helpful. An exit would be utterly catastrophic for our region.

I hope that the joint meetings take place on a case-by-case basis and that we stop short of creating any new joint bureaucracies in the north-east. We need short steps from ideas to action. We already have successful businesses, great universities and institutions, a tradition of hard work and very strong communities. If we can build on the optimism of Lord Adonis, add more aspiration and talk our region up and not down, I am sure there will be a bright future.

15:44

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

I congratulate my neighbour, my right hon. Friend the Member for Newcastle upon Tyne East (Mr Brown), and the Backbench Business Committee, on securing this important debate. The focus of my contribution will be on skills.

I grew up in Newcastle in the ’60s and ’70s, a city and a region that valued engineering—making and building things. I remember the late Baroness Thatcher telling the country that engineering and manufacturing were the past. It was that relentless pursuit of a service-led economy that saw the level of employment in the north fall by 1.3 million between 1979 and 1987. The associated devastating impact on our communities is still felt today. It is not good for the north-east, or the UK as a whole, to have a deep and growing divide. A one nation economy needs an innovative and dynamic north-east. The region already has world class institutions, businesses, universities and of course people, not to mention—and they have already been mentioned—countryside and culture. As we have heard, we lead the way in exports and are increasingly becoming a centre for hi-tech and digital businesses. There is no better place to live, work or innovate.

The report found that we need an additional 60,000 private sector jobs to provide a balanced and sustainable economy, and that those jobs must be highly skilled and highly paid if we are to compete and prosper. That is a challenge I know the region is up for, given the right resources. In the decade between 1998 and 2008, as my right hon. Friend mentioned, and with the support of the regional development agency, the region added 67,000 jobs, many of them in the private sector. It is right that the seven north-east councils have come together to form a new combined authority. I look forward to working with it and the LEP to improve the skills landscape across the north-east. I welcome the North East LEP piloting a new skills development funding initiative, which will mean a greater say on skills funding in the region.

The report calls for a doubling of youth apprenticeships. If that is to be achieved, Ministers must allow more power and resources for skills to be devolved. If the Government are serious about localism—the evidence so far is not good—then Ministers have an opportunity to devolve significant power to the combined authority. Building the new economy that we want for our region requires an effective partnership between the public sector, the private sector and higher education, and it is vital that the structures are in place to support them. Unlike London, the devolved nations and even Manchester, the north-east has had no collective voice since the RDA was abolished to shout out our strengths or focus on our weaknesses. I, too, echo the desire of my right hon. Friend for a regional Minister.

The combined authority should have real power, knowledge and legitimacy over those in Whitehall who currently make decisions for our region. It must also have the resources. Structures are not enough—it needs the resources to build the new innovative regional economy that is set out in the report.

[Ian Swales]

Does the hon. Lady feel that extra power and resources should be focused on a group of politicians or on the public-private partnership—in other words, the LEP?

[Chi Onwurah]

The resources should be focused on our region. The partnership between the LEP and the combined authority should take control, as much as is possible under current structures, of our region’s future.

As we have heard, the fact that the Government have taken so much out of the region—£100 million has been taken out of Newcastle city council’s budget alone—does not make the task any easier; rather, it makes it much harder. What would help is control over the valuable European funds that are directed to the north-east, to ensure that they go to where they are needed. One area where the report falls down is in ignoring the importance of culture, inclusion and community. The people of the north-east are the north-east. They are an asset beyond a mere skills base. That is why the European social fund, currently administered by the Department for Work and Pensions, which focuses on extending employment opportunities and developing skills should be devolved. I understand that the DWP will match the fund only if it can control it. If that is the Minister’s idea of localism, it is certainly not mine.

There are too many people in the region who are too far from the jobs market to take advantage of the high-skilled economy that we want to build. Councils and industry in the north-east are showing the kind of leadership that we need, by working together—at long last, one might say—to form a new authority that will work with the LEP, universities, businesses and people.

[Andrew Griffiths]

I agree with the hon. Lady about the need to increase skills and training in the north-east. Will she therefore join me in congratulating the Government on increasing the number of apprenticeships available to young people in the north-east by 70% in the last three years?

[Chi Onwurah]

I know that many other Members wish to speak, so I shall not say all that I would like about what the Government have done to the apprenticeship programme, by devaluing apprenticeships, as well as not supporting them for older workers.

[Guy Opperman]

rose—

[Chi Onwurah]

I will move on to my closing remarks. We need leadership from Ministers and real power—

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

I really must correct the record. What the hon. Lady said about apprenticeships is outrageous. We have spread apprenticeships across all age groups, including among older people. We are not devaluing apprenticeships; we are doing absolutely the opposite. We are saying that for an apprenticeship to be real, it has to involve genuine employment with an employer—that is what an apprenticeship means to most people—and we are insisting on that.

[Chi Onwurah]

The Minister should recognise that the changes made to the apprenticeship programme have not met with universal approval. Indeed, there is a report out today criticising the Government for changing the funding of apprenticeships for those over 24 years old.

We need leadership from Ministers and the devolution of real power, including over vital EU funding, which can help to boost our region and its people.

15:53

[Mr Kevan Jones (North Durham) (Lab)]

I congratulate my right hon. Friend the Member for Newcastle upon Tyne East (Mr Brown) on securing this debate and the Backbench Business Committee on allowing it.

As my right hon. Friend said, the problem with the report is that it contains a lot of structures but very little action. It is action that we need now. The report has another fundamental problem, in that it divides the region artificially in half, talking about transport for the north part of the region. We are a small region, and one thing that we cannot do is put artificial barriers between parts of the north-east. People in my constituency work on Tyneside, in Durham and down on Teesside. That is one of the problems with the report.

The hon. Member for Hexham (Guy Opperman) said that he welcomed his involvement in the report. I say well done to him, because Labour MPs were certainly not asked for their involvement, although that did not surprise me at all, coming from Andrew Adonis. Indeed, he has come up with another structural solution, which is to have a mayor for the new LEP area. I do not think he could have come up with a more barmy idea, because it would do nothing to help the economic development of our region—not even the northern part of the north-east. Fundamentally, this Government do not believe in regional policy, so they have come up with two LEPs. They have no cash, but a nice report will be produced that will possibly gather dust, and also a lot of plaudits—that is certainly what I have seen over the years that I have been in the north-east.

A headline in the Newcastle Journal today, alongside a picture of Andrew Adonis’s smiling face, tells us that £1 billion is coming to the north-east. Only when we read the small print do we see what is really involved. It is £500 million of European money, but the real clincher is that it has to be matched by another £500 million, either from council money or from the private sector. That is a bit like someone winning a car on a quiz show, only to be told not only that it has no petrol in it but that they have to buy an engine for it as well.

It will be interesting to see where that other £500 million will come from, because local authorities are under a great deal of pressure. More than £200 million has been taken from the local authorities in the LEP area in only two years. Over the next financial quarter, Durham county council is going to lose £209 million. What are the Government doing with that money? They are giving it to their friends in the south of England. Let us look at the local authority cuts per head. Durham is losing £168.80. Wokingham is losing £26.53, and Surrey Heath—that place of real deprivation—is losing £24.54.

This Government have no regional policy at all; that is the problem. The report is fine when suggesting structures, but the fundamental problem is that there is no cash behind them. I pay real tribute to councils in the north-east, not just those in the northern part but those in Teesside as well. They have a long tradition—going back to well before the last regional development agency—of working with private industry and other sectors to help the north-east. Nissan came to the north-east because of the dynamism of those different sectors working together.

[Ian Mearns (Gateshead) (Lab)]

The fact that Newcastle airport exists in its present form is due to a partnership of seven local authorities working together to provide a regional airport for the northern part of the region. Local authorities have been engaging in such processes for decades.

[Mr Jones]

That is right. I used to be a director of Newcastle airport. It did a remarkable thing under the previous Conservative Government: when they stopped local authorities raising money, it paid for an expansion costing nearly £27 million out of its profits. It had the foresight to do that.

If we are looking to local authorities to provide that extra cash, we must remember that they are under a lot of pressure. The chair of the North Eastern LEP prides himself on having only a small team around him, as though that were some kind of badge of honour. I do not know how the hell he is going to deliver the process if he is going to rely on local authorities to provide that extra funding, because the cash just is not there. Every time a grant is made from the regional growth fund, we hear announcements of so many million pounds coming from the Government to the north-east, but the real sting in the tail is that we never hear how much the Government are taking away from the region, including the £200 million a year that was going to the RDA, and the £2 billion-plus that the Labour Government invested in the north-east over 13 years.

The Government also talk about skills. Well, fine; but this is the same Government who have cut back on Building Schools for the Future. In Durham, for example, only seven of the 25 BSF projects have survived. In Darlington, seven out of the eight projects were cancelled, and 14 out of 21 were cancelled in Sunderland. I say to the authors of the report that it is no good talking about school initiatives when there are schools in the north-east that are crumbling around people’s ears and have water leaking in through the roofs. It is very difficult for teachers to teach in those conditions. Lo and behold, Mr Speaker—I come back to my favourite place: Wokingham—guess how many BSF school projects were cancelled in Wokingham. Not one.

It is no good the Conservative Government, with the support of the Liberal Democrats, arguing that they are somehow supporting the north-east. They are deliberately doing things that take resources away from the region. Local government funding is being skewed in favour of the south-east, and the benefits changes will have a disproportionate impact on our area.

The report appears to give tentative support for High Speed 2, although it does not actually do so, because it admits that the north-east will benefit the least. That is true: HS2 will be a complete disaster for the north-east of England. We have heard about a wish list of transport projects—including a Teesside metro and others—if HS2 goes ahead, but I would say forget it, as that will not happen. What we need is real investment and increased capacity on the east coast main line. Back in 1980, the then British Rail did an experiment, clearing all traffic off the east coast main line. Journey times from Edinburgh to King’s Cross came down to three hours, and from Newcastle to just over two hours. That is what we have to do—invest in that, not in the vanity project for which this Government have fallen. It was dreamed up by Lord Adonis, who I do not think has ever been elected to anything—apart from when he was milk monitor at school.

I wish this report well, but I fear that it will raise expectations, without delivering. What business needs now and what young people in my constituency who face a long term of unemployment need now is action. They do want to hear structural arguments and they do not want a glossy report, which might well make the authors feel good and get them a lot of press coverage locally. What we want is action. We had action when we had the RDA, which could step in and rightly did so when the economic downturn came—not just to help individuals but to help businesses in the constituency. There is now no access to that at all, and some businesses in my constituency are certainly struggling as a result of the lack of investment from banks and other lending institutions.

16:01

[Helen Goodman (Bishop Auckland) (Lab)]

It is a great pleasure to follow my hon. Friend the Member for North Durham (Mr Jones). I congratulate my right hon. Friend the Member for Newcastle upon Tyne East (Mr Brown) on showing the same excellent leadership skills in securing this debate as he showed when he was a first-rate regional Minister. I also want to thank the Backbench Business Committee.

The north-east obviously has considerable economic strengths. My hon. Friend the Member for Sunderland Central (Julie Elliott) pointed out that car production and vehicle manufacture at Nissan is an extremely important facility, and the new Hitachi factory has come to the north-east partly because of Nissan’s success and because of the area’s links with Japanese manufacturers. We have the largest integrated chemical plant in the UK and, up to the last election, we had a very good programme on sustainable energy innovation, offshore wind and renewables. We are consequently the only region in the UK with a trading export surplus on trading goods.

It is also relevant to point out that the north-east is an extremely nice place to live, with great cities and beautiful countryside. I wish to commend the AONB—area of outstanding natural beauty—paper for proposing a partnership between the countryside organisations and the local enterprise partnership.

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

Does my hon. Friend and parliamentary neighbour agree that in our two constituencies, as well as across the north-east, there are areas of outstanding natural beauty, but our local authorities are no longer in a financial position to support or promote tourism in them because of the massive cuts to their budgets?

[Helen Goodman]

My hon. Friend puts her finger on the issue.

It would be fair to say that the North Eastern LEP’s independent economic review is a useful report. Its analysis of the state of the north-east’s economy is good; it highlights our strengths and weaknesses; and what it says about the supply side seems to reflect the consensus that has existed in the region for some time, particularly about the importance of skills and the need for higher skills if we are to secure more and better jobs. The proposal to increase apprenticeships is positive, but there is a question about whether, given the current state of the labour market, employers will be able to supply the work placements that are needed for them.

The suggestion that we build public-private partnerships between industry and education at every level from school to university is right, as is the point that we need to build on the clusters where centres of excellence already exist. We have been doing that at NETPark—the North East Technology park—in my neighbouring constituency. The report points out that it is important to build on our export links to Scandinavia, the Baltic States and Russia. It also rightly points out that a number of important infrastructure projects could fruitfully be invested in, especially transport projects. We are talking not just about the inadequate road links with Yorkshire, over the Pennines and to Scotland, but about the bus services that have been decimated recently. Something must also be done about connectivity and broadband. The hon. Member for Hexham (Guy Opperman) drew attention to the importance of access to finance. The distances to London and to Leeds are clearly problems for small and medium-sized enterprises in our region.

It is not so much what is in the report as what is not in it that I find problematic. It was commissioned by the Deputy Prime Minister, and the authors seem to have been far too polite to criticise the abolition of the regional development agency and the loss of a regional Minister. The final section, entitled “Re-balancing the economy”, lists the milestones that have been set for the end of the first year. Every one of them relates to the rebuilding of institutional capacity. No one objects to the notion that local authorities should co-operate on transport policy or innovation, but what this actually means is that if all those aims have been achieved by 2014, we shall be back where we were in 2009.

Furthermore, as was pointed out by my hon. Friend the Member for North Durham, the split in the region is completely nonsensical. A person in my constituency is just as likely to commute to Middlesbrough, and work in the chemicals industry, as to commute to Newcastle. The skills strategy needs to be for the whole region, not just for part of it.

The authors have also given little or no consideration to the purpose of economic development, which has a significant impact on the type of change. Another weakness is their failure to say enough about housing, although I was glad to learn earlier this week that the LEP is ignoring the omission and will invest further in housing.

The biggest weakness in the report, however, is surprising. Our noble Friend Lord Adonis has a reputation for intellectual rigour, but it is surely intellectually dishonest to fail to mention the scale of the cuts meted out to our region and their impact on the demand side of the economy. Supply-side measures are fine, but we must pay attention to the demand side as well. The unfair way in which the Government have addressed the fiscal deficit is extremely significant in our region.

[Guy Opperman]

I accept that the hon. Lady is perfectly entitled to criticise the ultimate author of the report, but there are contributions to it from a large section of the business, technical and other communities, and from a number of other authors including Heidi Mottram, Don Curry, Will Hutton, Bridget Rosewell and Jonathan Ruffer, succeeding the Archbishop of Canterbury. It is not simply Lord Adonis who has produced the report.

[Helen Goodman]

I agree. In fact, I have spoken to all but one of those people about that weakness in the report, which I think is a very serious problem.

The Chancellor’s switch from current to capital spending sounds brilliant. It sounds like common sense. However, only 1% of the £45 billion involved is coming to our region, although, as the report pointed out, there are plenty of potential projects there. PricewaterhouseCoopers has said that the 2010 round of cuts in our region amounted to £2.8 billion, or 7% of our total gross value added. According to further analysis carried out for us by Oxford Economics, the knock-on effect will be a further £1 billion reduction. If the International Monetary Fund is right, the second-round effect is equal to the amount of the cuts: £2.8 billion. That is totally unfair. The same level of cuts is being imposed on the southern European economies.

The Institute for Fiscal Studies believes that there will be 45,000 job losses, and Oxford Economics believes that there will be 68,000. The creation of 65,000 jobs to which the report refers will merely bring us back to where we were at the start of the process. No wonder we have the highest unemployment in the country. Added to the public service cuts I have just outlined, we have seen significant reductions in incomes to ordinary people in benefits. In my constituency the average working-age adult is losing £560 per year. The Government are taking £310 million out of my constituency. No wonder there are 70 empty shops in my constituency. No wonder 30% of the young people in my constituency have no job. No wonder the citizens advice bureaux, whose resources have been cut, say that debt is the biggest problem that they encounter.

16:10

[Ian Lavery (Wansbeck) (Lab)]

If the Adonis review is meant to solve the great woes that our regions faces, I fear for future generations, and in particular for young people, because it does not address many of the problems.

I am delighted to be here with good colleagues and comrades on the Opposition Benches—and Members on the Government side of the House—discussing the real issues facing the region, but what is amazing is that we are scrapping over the crumbs from the table. Before the election, the region received funds from the regional development agency, which supported hundreds of thousands of excellent jobs. According to the Secretary of State for Business, Innovation and Skills, our RDA was a shining example among the RDAs in the country. There was a pledge not to get rid of the RDA in the north-east because it was so good, yet now we have two LEPs with very little power and even less finance, and here we are scrapping over a report that is trying to address the massive problems we face in our region.

What is the situation in Wansbeck? The proportion of jobseeker’s allowance claimants stands at 7%, compared with 6.7% at the north-east regional level and 4.5% nationally. Youth unemployment is a great problem. It is even more worrying that the proportion of 18 to 24-year-old claimants stands at 13.1% compared with 9.4% at the regional level, while nationally it stands at less than half that at 6.3%. These statistics are shocking, but they hide even more serious issues, such as the extent of the under-employment resulting from shoddy working practices such as zero-hours contracts and people working part-time because they are unable to find full-time work. We will never know, or get to grips with, the numbers involved and the extent of the problem. The consequences of this type of employment are disastrous.

It is, perhaps, because of where we are now that I offer, with some reluctance, my support to this review. Last year the largest private sector employer in Northumberland, Alcan, which was based in my constituency, closed its operation. The knock-on effect on the local community has presented an extreme challenge. Alcan has left behind a power station operated by RWE, which is not without its own challenges in terms of carbon targets.

Wansbeck, however, is not without its success stories. It is easy for me as a Member of Parliament to get up here and continually criticise, but we must press the views of, and the situation facing, the people in our communities. It is no good saying unemployment is fine in the region when it is not. When people say we should be talking up the region instead of talking it down, I say, “Give us a reason to talk it up.” That is what I say on behalf of the people I proudly represent.

In 2014 AkzoNobel will begin the manufacture of its Dulux and wider decorative coatings range from its new state-of-the-art plant in Ashington in my constituency. I am delighted with that, and I give due credit for it. We have also had a number of other successes with small and medium-sized enterprises. I had the opportunity to visit the All-in-One Company in the recess. It is a unique, small factory that specialises in custom-made onesies; I had not even heard of onesies, by the way. People get on the internet, design their own onesie, press a button and then get the onesie delivered to them. The place is absolutely fantastic. The beauty of it is that the person who started the company came from Oxfordshire and she said to me, “Mr Lavery, I was delighted to come to this region because the north-east was the only region that could deliver what I wanted. It had the right people and I think that coming to Ashington in your constituency was an even better idea.” That was a great credit to us, and we have some great people and great businesses in the region—small, medium and large.

Let me now deal with the skills shortages. In the time I have left, I want to place on the record my thanks and congratulations to Northumberland college, in my constituency. It is delivering a range of different things. It is now offering up to 28 different apprenticeship frameworks and has more than 700 apprentices. It is also leading the way locally, having established an employment skills forum, with the aim of driving up skills and employment in Northumberland. We are looking to increase employer and individual engagement and investment in skills; support individuals to gain sustainable employment by improving employability; and strengthen joint working between employers, employer groups, skills networks, universities, colleges, other skills providers and the local authority. The college has done a marvellous job. It is only a matter of a year ago that we could have lost a college that is much needed in the area of south-east Northumberland; it could have been subsumed into a huge university in the area, so I was delighted at what happened.

There is a huge need for the skills gap to be narrowed in my constituency. We have the people, but they are, sadly, unemployed, because the jobs just are not there. Where there are jobs we face a problem with skills. We have the colleges and schools now working together to try to encourage people to join. We have the employers now sitting around the table with the colleges and schools. We are now looking at the whole situation, hoping that we will eventually get together to make Wansbeck a place where employment succeeds.

16:17

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

First, I congratulate my right hon. Friend the Member for Newcastle upon Tyne East (Mr Brown) on securing this debate, as well as all other right hon. and hon. Members who supported our bid for it, and the Backbench Business Committee for giving us an opportunity to discuss this important report. In the time available, I want to address some of the issues from the perspective of east Durham, as you might expect me to do, Mr Speaker.

Without being over-critical, and while acknowledging the contributions of everyone who has been involved in preparing the report, not least Lord Adonis, we might be able to offer some reflections that might be helpful in determining a strategy that can produce the best results possible in terms of generating the maximum jobs and growth in the region that we care so much about. As other right hon. and hon. Members have said, we need to address issues that concentrate on process. The one thing that stood out in my mind when I was looking at the report was that it is spatially blind. In other words, it does not concentrate on people or place. In an area such as mine, Easington in east Durham, which is away from the urban core, that will present a particular problem.

I do not want to dwell too much on what has happened in the past, but it is important to inform our opinion and reflect on what has worked and what perhaps has not. Some policies, incentives and strategies have been successful, whereas others have been less so. The collective view, if I may venture an opinion, is that our regional development agency, One North East, which was abolished by the coalition Government, was pivotal in acting as a pole of attraction, not only to bring in overseas investment, but to encourage growth from small and medium-sized enterprises already located in our region. I could list a number of companies in my constituency that were helped by One North East.

Let me emphasise my support for the concept of a Minister for the north-east and pay tribute to my right hon. Friend the Member for Newcastle upon Tyne East for his sterling work in support of projects in the area. Some, such as the centre for creative excellence, did not come to fruition but it could have created more than 1,000 jobs and many hundreds of training places, giving a vista of opportunity to young people in east Durham. Sadly, however, that project is on the back burner, shall we say, because of a lack of funds. I will not go into the precise problems, but it looked at one point as though it would have come to fruition. That would have been a real boost not just for east Durham but for the region and for our further education colleges and universities.

It is important to audit our physical and non-physical assets. East Durham’s physical assets include advanced modern office and factory units, and road and rail transport infrastructure, including Seaham, County Durham’s only port. We have a modern multi-modal distribution terminal—ship, rail and road—and industrial and commercial land, including the large industrial site to which I referred earlier. We have an automotive supply chain and opportunities to develop port-related activities, including distribution. Those are assets on which we could build.

We also have people assets. The hon. Member for Hexham (Guy Opperman) said that not enough students from our region went to the Russell Group universities. We have some world-class universities in the region and many do not get the praise they deserve. Teesside has links and synergies with the chemicals industry, and Sunderland is one of the best universities for pharmacology. I am sure that there are examples from all our universities and they are a real asset that we should build on. Our work force are skilled, interchangeable and adaptable. All those things provide opportunities to develop new skills or more advanced skills for potential employees moving in to the area.

Given that we have a stock of physical and non-physical assets in east Durham, it is important that we market them effectively to potential investors. How we can best achieve that is the $64,000 question. The LEP must recognise that all economic growth and investment cannot be channelled into the urban hubs in the core cities. Although I welcome the establishment of the combined local authorities, they might need to consider particular needs and the targeting of sector-specific support in particular places, especially those on the periphery of the urban core. I am thinking, perhaps selfishly, about Seaham in my constituency and the former new towns, such as Peterlee, which are less strongly connected to growth centres. I know that there are other similar examples in other Members’ constituencies, such as Redcar. I feel that the LEP should have a stated commitment in its strategy to tackle what I describe as economic cold spots in the region—those that suffer particular disadvantage, such as east Durham and south-east Northumberland. I know that there are others.

We must also pay attention to what is happening in the EU. There will be a number of reports, including the fifth cohesion report, that will inform the next round of European regional development fund funding. We must take account of that and ensure that we have an effective place-based policy to get the maximum benefit from investment in goods and services to stimulate growth in our area.

There are issues with those not in employment, education or training and I hope that they will be addressed. Our own East Durham college should play a leading role in that.

16:24

[Ian Mearns (Gateshead) (Lab)]

Rather than going through the normal formalities and congratulations, I shall get straight on with my speech.

The north-east is not such a desolate place; in fact, it is a place of good news. We have heard the very good news this afternoon that Durham county cricket club now sits at the top of the county championship after defeating Sussex by 285 runs at the Riverside stadium. I was delighted to attend the fourth test match at the Riverside a few weeks ago when we had a good result and some excellent entertainment.

I am afraid that the north-east independent economic review was a lost opportunity as there appears to have been a lack of imagination and ambition, and of inspired and innovative ideas to build the north-east economy. The report sets out a north-east vision of “making, trading and exporting”, but I fear that it just encourages more of the same solutions that fell short of transforming our economy in the past.

There are many recommendations in the report, but mostly things that we as a region have been striving to achieve for many years. The problem is that it is a bit like extolling the virtues of apple pie without providing the means—the apples, the sugar, the flour, the heat and the rest of ingredients required—to produce the pie. It is all wishful thinking—

[Ian Swales]

Will the hon. Gentleman give way?

[Ian Mearns]

I am afraid that I will not.

There is no targeted support for key sectors such as tourism, advanced manufacturing and green energy, and no clear strategy for growth that recognises the enormous potential of the region and its people. Most importantly, there is no proposal for a co-ordinated strategic authority such as One North East, the former RDA, or for a Minister to lobby at the heart of government.

I completely support the recommendation to encourage foreign students to attend our universities to diversify the region, but it flies in the face of much of the Government’s policy on immigration and learning academies. The Government seem to disregard completely the fact that international students not only attend lectures, write essays and sit exams, but import money into local economies, create new enterprises, support work with local industry, and make vast academic, cultural and financial contributions to regions such as the north-east of England.

Another significant—if not the most significant—aspect of the report is transport. It is essential that the north-east’s links to national and international economies are improved, so I welcome proposals to pool funding from the various authorities to deliver a regional transport strategy, which would hopefully result in improved roads and rail, bus and metro services.

I use the word “hopefully” because funding is essential to achieve those aspirations, but I am not convinced that the Government are willing to put their hands in the coffers for the north-east to the extent that they are for other parts of the country. In response to that assumption, Ministers might say that I am over-sceptical, given the announced improvements to the A1 in my constituency at the Lobley hill pinch point. Although I am delighted by such overdue improvements, the region should not be settling for scraps from the table. We should be demanding the best and most effective transport systems that are on offer for other regions in the country, so let us consider spending per head on transport infrastructure projects by region.

A report published by the Institute for Public Policy Research in June called “Still on the wrong track” highlights the distinct disparities: the north-east receives only £5.01 per head of population whereas Londoners receive £770 a head. When thinking about national funding and taking into account the needs and special requirements of the capital, we might rationally determine that it should get twice, three times or five times the funding of other regions, but should it get 154 times the funding of a region such as the north-east? Such a thing is repeated year on year. If the roles were reversed, the screaming of London Members in the Chamber would be heard in Southend. I wonder how many Ministers have driven up the A1 north of Catterick and realised that it is no longer a motorway because it peters out into a dual carriageway with the occasional crawler lane as part of the motorway system.

Last month we heard about Government proposals to introduce fines for people hogging the middle lane on the motorway—chance would be a fine thing in the north-east of England. There is no middle lane because there are no three-lane roads; it is that bad. North of Newcastle, north of Morpeth, the road peters out into a single lane in each direction between Newcastle and Edinburgh. It is not good enough. The people of the north-east deserve better, not just from this Government, but from every Government.

Then we are being told that we will get investment from High Speed 2. In 20 to 30 years, that will deliver trains that will do the journey from London to Newcastle via Leeds 20 minutes faster than 20 years ago. In 40 to 50 years, we will have achieved a 20-minute decrease in the journey time to London. That is not good enough.

I emphasise that the report lacks ambition. My borough of Gateshead has largely been transformed in economic, environmental, cultural, architectural and educational terms in the last 30 years. How much more could we do if the whole region was given ambition and galvanised to make the sort of improvement that we in Gateshead have made? We need to do more and much more quickly.

[Several hon. Members]

rose—

[Mr Speaker]

Order. The time limit will have to be reduced with immediate effect to six minutes for each Back-Bench speech.

16:31

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

It is a pleasure to follow my hon. Friend the Member for Gateshead (Ian Mearns), who always delivers his speeches with force, but with much humour too.

I congratulate my right hon. Friend and neighbour the Member for Newcastle upon Tyne East (Mr Brown) on securing the debate. He has always been a champion for our area, especially when he was the regional Minister, and he demonstrated that he understands what makes our region work.

The 2010 general election brought our region new challenges, including the removal of the successful regional development agency by the coalition Government, and its replacement with the less powerful LEPs. I know from the shadow Minister that when Labour is returned to power, we will not be rushing to get rid of regional institutions in the way that the Tories did with the RDA. Instead, Labour will strengthen such institutions so that they work to generate economic growth throughout the area.

In the meantime, we must do all that we can to press the coalition Government to take notice of the recommendations in the report, which reinforce the eager ambitions of our public and private sectors for more quality jobs and training, increased trade and ever-higher standards of education, as well as improved transport and infrastructure.

In my constituency, I already see examples of businesses, such as Fabricom and Insure the Box, gaining national recognition for their commitment to skills and training, and providing real apprenticeships that lead to well-paid, secure jobs and careers, which we so much need. I hope that Skills North East, as set out in the report, can learn from these businesses, which have achieved everything that they have achieved without Government funding, and could have achieved so much more with it.

The north-east schools recommendation cannot and must not detract from the success of schools in our deprived areas, such as Churchill community college, which had a 100% pass rate in grades A to C at GCSE this summer.

On transport links, we already have an excellent airport at Newcastle, and the newly published master plan outlines an ambitious future for aviation in our region. On the River Tyne, the Port of Tyne is playing its part in increasing industry and tourism for the whole area, but we must see investment in rail and roads, as so many of my colleagues have already said.

I welcome the coming together of the seven local authorities to set up the combined authority. This new body will bring energy and drive to the implementation of the Adonis review and has within it the experience and expertise to drive the wider economic and social growth that we so need to see.

My own council, North Tyneside, as well as now being part of the combined authority, has already been working closely with the North Eastern LEP. The LEP has provided moneys from the Growing Places fund to support the advanced infrastructure works for the former Swan Hunter yard, so the site is available for companies in the advanced manufacturing sector requiring access to the Tyne, as set out in the north bank strategy.

I will conclude by quoting the elected Labour mayor of north Tyneside. She told me that

“the Adonis Review has provided useful analysis and reinforcement of many and varied strategies and will be useful in focusing the delivery activity, but it can only be delivered if the Government fully support the devolution of resources, as proposed in the Heseltine Review, and actually give the Combined Authority, the North East LEP and others freedom to act in the best interests of the North East.”

I am sure that we all concur.

16:35

[Mrs Emma Lewell-Buck (South Shields) (Lab)]

Thank you, Mr Speaker, for giving me the opportunity to sing the north-east’s praises in this important debate. I start by congratulating my right hon. and hon. Friends and the Backbench Business Committee on securing the debate. I would also like to acknowledge my colleague in the other place, Lord Adonis, and all those who worked with him on the review.

It is fair to say that at times the north-east has an underserved reputation in the media and, sadly, among some politicians. I get fed up with those who do not know how fantastic my part of the world and its inhabitants are, referring to the region as a cold, grim and—dare I say it?— desolate place. I know better, because it is my home. I am so proud of my region, and I am acutely aware of its incredible strengths, which are ready to be harnessed by Government and business. The real failure has been that of national Government, who have overlooked those strengths and neglected our needs, particularly when it comes to infrastructure.

In my constituency, more than one in 10 people are unemployed, including over 1,000 18 to 24-year-olds. Economic stagnation under this Government means that the number of people who have been out of work for over 24 months is four times higher than it was a year ago. Although students in my constituency received excellent GCSE and A-level results at the end of last month, less than a quarter of them will go on to higher education and fewer than one in 10 will start an apprenticeship. The simple fact is that this Government refuse to admit that there are not enough jobs and that, of those that exist, not enough are highly skilled. Job creation and training are essential for the north-east and its people.

The review states that

“lower paid jobs won’t change the economy”.

It is correct. Skills and training are an essential part of transforming our economy. The review recommends establishing a “North East Schools Challenge”, a dramatic expansion of the Teach First programme in the region and the introduction of university technical colleges, which will enable students to study technical skills alongside their GCSEs.

Apprenticeships will have an important role to play. In South Shields there are more apprentices over 25 than under, and the majority of them are at the intermediate level 2, rather than the advanced level 3. It is the level 3 qualifications that employers, and particularly manufacturers, favour. Local businesses in my area are going some way toward remedying that. Ford Aerospace, a local manufacturer, is working in partnership with South Tyneside college to take on 14 school leavers. They will have the potential to earn national vocational qualification level 3 apprenticeships. The Port of Tyne, meanwhile, has taken on seven apprentices, including five teenagers, with more to join later this year.

Ford Aerospace and the Port of Tyne also represent two of the areas that the review highlights as the north-east’s strengths: manufacturing and exports. The north-east’s well-known success as a manufacturer has been maintained in recent years, as it continues to outperform other areas of the country.

It is true that manufacturing provides high-skilled and high-paid jobs and contributes to our local supply chains. The Port of Tyne is one of our great success stories, contributing an estimated £467 million pounds to the region and helping to sustain an estimated 9,500 jobs. But those businesses are not helped by infrastructure that is failing through a lack of investment. The Government announced in the spending review that the transport funding allocated to the north-east will be a third lower than anticipated, and the Institute for Public Policy Research North has revealed that transport project spending per head is over 500 times higher in London than in the north-east.

The second Tyne tunnel, which is in the constituency of my hon. Friend the Member for Jarrow (Mr Hepburn) and feeds directly into mine, has been a success story. By linking the north and south sides of the Tyne, it dramatically reduces travelling times and increases economic activity and potential for business. However, this success is at risk if the investment for the junctions on the north side and the south side is not forthcoming.

It is a shame that the report says little about how smaller towns such as South Shields with a heavy retail and tourist focus can make the most of the plan, especially given that the local authority in my constituency has suffered cuts per head of £262.24—considerably higher than the national average and higher than all our north-east authority neighbours.

We desperately need investment in South Shields. The review sets out a strategy that takes advantage of the north-east’s characteristic strengths. There are difficulties, as my right hon. Friend the Member for Newcastle upon Tyne East and other hon. Friends have stated, but I am totally committed to ensuring that South Shields is part of any transformation plan for the north-east.

16:40

[Mr Iain Wright (Hartlepool) (Lab)]

I might be slightly biased, but I have to say that the north-east has the best cohort of right hon. and hon. Members anywhere in the country in terms of their passion, commitment and determination for their local area to succeed. We have certainly seen that today. [Interruption.] You should always get them on-side first!

I pay tribute to my right hon. Friend the Member for Newcastle upon Tyne East (Mr Brown), who was an excellent Minister for the region. It would be wrong to suggest, as has been suggested several times today, that the north-east comprises solely Tyne and Wear, Northumberland and County Durham. The true quality of the region as regards its people, industry and scenery can be seen best of all in Hartlepool—and to some extent, I have to concede, in Middlesbrough, Stockton, Darlington and Redcar.

What has been particularly striking and welcome about the debate is that no speaker has been negative or despairing about our region. It is not a failed region suffering inevitable or irreversible decline. As we heard from my hon. Friends the Members for Sunderland Central (Julie Elliott), for Newcastle upon Tyne Central (Chi Onwurah) and for South Shields (Mrs Lewell-Buck), it has real potential. That is reflected today in the great news that Nissan will be spending £250 million on expanding its factory in Sunderland and increasing its work force by 1,000 in order to become the first Nissan plant in Europe to produce the luxury Infiniti model. The onesies in Wansbeck are also good news.

The biggest single problem facing the north-east is skills and unemployment. Unemployment in our region is 10.3%, and getting worse. The gap between the region and the rest of the country is widening. This needs to be an urgent priority for Government. What is the Minister going to do about it? Will he explain how the abolition of the future jobs fund has helped young people in the north-east to get a foot on the career path? How has the cancellation of the education maintenance allowance helped young people in the north-east to stay on in education or training to get a skill or a trade that will get them a better job? How have savage cuts in the public sector helped demand, economic activity and public sector employment in the region?

Investment and access to finance are essential if businesses in the north are to succeed and grow. Yet the north-east is suffering just as much as other regions, if not more. Notwithstanding the great news from Nissan and Hitachi, the gap in foreign direct investment between London and the regions is widening. The Ernst and Young attractiveness survey for 2013 found that investments in England outside London were 24% below their level in 2010. The north-east secured 26 projects, which represented 4% of the UK market share of FDI—better than the likes of Yorkshire and the east of England but trailing behind comparable regions such as the west midlands, the north-west and, crucially, the devolved nations, and well behind London, which alone captured 45% market share of total FDI. Ernst and Young concludes:

“It appears that the abolition of the RDAs may be starting to undermine not only the regions in which they operated, but also the UK’s ability to sustain its overall leading position for inward investment.”

Will the Minister comment on that? Will he also address a theme that has emerged throughout the debate—that this is not so much about structure or process but about our need for outcomes on employment, innovation and productivity, not at some distant point, but now, to help the people of the north-east immediately?

Very often, the absence of business investment is because firms have no access to finance. Speaking this week to northern MPs, the managing director of the Tees valley local enterprise partnership said that that is the single biggest factor affecting firms and their ability to grow. I mentioned this in a Westminster Hall debate yesterday. Every initiative that the Government have attempted to put in place has failed. Net lending to businesses has contracted in 21 of the past 24 months. That is confirmed on the ground in the north-east. John Anderson, chairman of the North East Business and Innovation Centre, said bluntly in an interview with the Newcastle Journal last month:

“In the North East, Government lending channelled through banks has not been reaching businesses.”

Will the Minister acknowledge that none of the Government’s initiatives have worked? Will he pledge to change policy and come up with schemes that will succeed in securing access to finance for small and medium-sized firms in the north-east that have the potential to grow?

[Guy Opperman]

Does the hon. Gentleman at least accept the report’s recommendations on the business bank? Specifically, does he now accept—he did not when he voted against them in April 2012—that community banks are the way forward for the north-east?

[Mr Wright]

Businesses do not have confidence that the Government’s business bank is having any impact whatsoever. It is slow off the mark—[Interruption.] If the hon. Gentleman would stop chuntering and allow me to speak, I will respond to his question. The business bank is not working. It has had no impact in the regions. It is merely a desk in the Minister’s Department in Whitehall. A proper British investment bank would help fast-growing, innovative businesses, working together on proposals for a network of regional banks, to spark activity and economic growth in the north-east as well as other regions.

A number of hon. Members have discussed Government spending and infrastructure. The north-east has been singled out for particularly savage cuts. My hon. Friend the Member for North Durham (Mr Jones) mentioned the more than £200 million-worth of cuts in the local enterprise partnership area over the next two years. Hartlepool and Middlesbrough have been particularly badly hit.

The Institute for Public Policy Research has set out clearly:

“The North…suffers from weak public investment: government spending per capita on science and technology and transport in the North is almost half that spent in London and the south east.”

As my hon. Friend the Member for Gateshead (Ian Mearns) said, that has a long-term cumulative effect: lower spend and investment lead to weaker demand, competitiveness and economic growth, which in turn undermines a justification for additional spending and investment.

As my hon. Friends the Members for Gateshead, for South Shields and for Bishop Auckland (Helen Goodman) have all said, the north-east did not do well in the Government’s announcement in June on infrastructure. That has been exacerbated by the capital spend cuts of northern local authorities. The North East chamber of commerce said at the time:

“One disappointing element of today’s announcement is the lack of investment in projects in the Tees Valley, which requires significant infrastructure upgrades.”

Will the Minister explain why that was the case?

In the three months since the announcement, there has been precious little evidence of work commencing. When will the construction of the A19 Testos flyover start? When will the A19-A1058 coast road improve access to the Port of Tyne? When I used the A19 last week to visit Ford Aerospace in the Port of Tyne in the constituency of my hon. Friend the Member for South Shields, I saw precious little evidence of work on the ground. There seems to be a big lag between Government announcements and actual work starting. Will the Minister display a sense of boldness, priority and urgency and deal with those matters now?

Will the Minister comment on yesterday’s announcement in the World Economic Forum’s global competitiveness report—[Interruption.]

[Mr Speaker]

Order. I say to the hon. Member for Hexham (Guy Opperman) that he may chunter from a sedentary position on a continuing basis to no evident purpose, but he must bear his burden with stoicism and fortitude, in the best parliamentary tradition.

[Mr Wright]

Thank you, Mr Speaker.

I am conscious of the time, but will the Minister comment on the global competitiveness index, which shows that our infrastructure ranking has moved from fourth in the world to 28th? That will not help productivity and innovation.

It is clear from the remarks of all north-east MPs that the region does not face inevitable and terminal decline. We are not asking for handouts or sympathy as we somehow slide towards obsolescence. The north-east has always been characterised by grit, ingenuity, invention and imagination. It led the world through the industrial revolution and has the potential in the 21st century to be the biggest global player in fields such as low-emission vehicles, renewable technology and high-value engineering.

To achieve that potential, the north-east needs a Government who are on the side of its businesses and its people, supporting it through a long-term industrial policy and giving it the freedoms and flexibilities needed to chart our own destiny, not a Government who prioritise austerity and neglect, as this Government have done over the past three years, and turn a blind eye to high unemployment and low pay.

The Minister has heard today of the potential and ambition of the north-east. We need boldness and action now. Will he and the Government deliver?

16:49

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

I congratulate my hon. Friend the Member for Hexham (Guy Opperman), the hon. Member for Bishop Auckland (Helen Goodman) and the right hon. Member for Newcastle upon Tyne East (Mr Brown) on securing this lively debate. I have occasionally felt that I had found myself in a meeting of the north-east parliamentary caucus, which is clearly a very lively group. It just needs a little more political balance, but we are working on that. This has been a very interesting discussion of what I think is a very important report.

I will start with the important opening speech by the right hon. Member for Newcastle upon Tyne East. I recognise that he has great expertise in this area. He criticised the Adonis report for focusing on structures, but many of his own comments were, in turn, about structures and organisations. He raised issues such as whether there should be regional Ministers. Let me make it clear that in the last few months, we have established the Local Growth Cabinet Committee, which is chaired by the Deputy Prime Minister and is directly involved in decisions on the powerful tools for regional development that we have put in place. Notable among those is the regional growth fund, from which the north-east has benefited substantially, and the city deals, which offer enormous opportunities for the cities that negotiate them.

I was rather disappointed by the approach that the right hon. Gentleman and several other Opposition Members took to the report. I hold no particular brief for this report. Contrary to what the hon. Member for Hartlepool (Mr Wright) said, it was not commissioned by the Government. It was commissioned by the north-east for the north-east and produced by a former Labour Cabinet Minister. I think that it is a valuable report. We should congratulate the LEP on leading the way by producing such an important and substantial report that really tackles the economic challenges facing the north-east.

I congratulate my hon. Friend the Member for Hexham on taking the right approach. He told the House that there will be a meeting in the north-east tomorrow, where 400 delegates will assess the ideas in the report. That will not be the final word, but I hope he will take to that meeting the message that the Government take the report very seriously indeed and consider it to be a high-quality piece of work. We will not get bogged down in endless arguments about process. We look forward to working with the LEP, local councils and local representatives in rising to the challenge, which has just been set by the hon. Member for Hartlepool, of improving further the growth and economic performance of the north-east. That is what this is all about.

There was a range of further contributions. I agreed with the hon. Member for Sunderland Central (Julie Elliott) that we should focus not just on the Russell Group, but look at the strength of all the universities in the north-east. As Minister for Universities I have, of course, visited all of them. They all have distinctive strengths, but they share a commitment to playing a constructive role in the local economy.

The hon. Member for Redcar (Ian Swales) made some important points about the range of initiatives that are available to support economic growth. I have referred briefly to the regional growth fund. He mentioned the opportunities that are presented by enterprise zones and by securing funding from the European Union. He spoke about the commitment on access to superfast broadband, both urban and, very importantly, rural. He also mentioned the good news that comes from major investment decisions, such as that of Hitachi. A lot is going on, but there is always more that needs to be done.

We heard from the hon. Member for Newcastle upon Tyne Central (Chi Onwurah) and then from the hon. Member for North Durham (Mr Jones), who seemed to think that the review was a plot to ignore the views of Labour MPs—a plot so subtle that it involved putting a former Labour Cabinet Minister in charge of the exercise. He clearly has an obsession with Lord Adonis, which is rivalled only by his obsession with Wokingham. I do not think either obsession need detain us any longer, as time is so tight, but I think I represent the only party in the House with which Lord Adonis has not had a political connection at any point, so I can say that we should thank him for the important work that he has led. Of course, I can also repeat our commitment to another of his great visions, High Speed 2, which we know many key business organisations in the north-east welcome strongly.

The hon. Member for Bishop Auckland thought that the report was a plot commissioned by the Deputy Prime Minister. Again, we should treat it as what is—a report from the north-east, commissioned by the north-east, for the north-east.

I was fascinated to hear about onesies. It is great to know that they are one of the many contributions of north-east business to the national well-being

We heard quite a bit about transport, particularly from the hon. Member for Gateshead (Ian Mearns), who made the touching plea that if only there were three-lane motorways, people could be charged with the new offence of driving slowly in the centre lane. We have a substantial programme of transport investment, including the £314 million scheme to upgrade 11 miles of the A1, which will begin in 2014, and the £60 million scheme to improve a further stretch of the A1 between Newcastle and the Gateshead western bypass, which is due to start by 2015. And yes, we will also be moving soon on the development of funding for schemes on the A19. There are also smaller-scale pinch point schemes—I have a note about them and will read it out, as Opposition Members will know more about them than I do—that are planned for completion by the end of 2014 on the A19 junction with the A1 at Seaton Burn and the A19 junction with the A1231 in Sunderland. There is investment in transport.

The hon. Members for South Shields (Mrs Lewell-Buck) and for North Tyneside (Mrs Glindon) also made contributions, but sadly I do not have time to comment on them.

We recognise that the report contains recommendations aimed at local government and businesses, but also those specifically aimed at the Government. We are absolutely up for rising to the challenge of those recommendations. Indeed, one of them is a north-east schools challenge, rather on the model of the London schools challenge, and we very much look forward to hearing full details of it. It is exactly the type of issue that I hope will be discussed at the major meeting tomorrow, because we would be interested to see the proposal worked up.

Skills funding, which Members of all parties talked about, is of course important. We absolutely understand the importance of skills, which is why we have doubled the number of apprenticeship starts since we came into office. As we make apprenticeships increasingly rigorous and expect high academic standards as well as high vocational standards, we are also creating traineeships to help to prepare people for apprenticeships. We are absolutely up for devolving decisions and power on the skills programmes of the greatest significance, and we will do so as part of our skills commitment.

We look forward to engaging with the imaginative proposals in the report, and I hope that message will go to tomorrow’s meeting.

16:58

[Mr Nicholas Brown]

It is a great pleasure to be able to tell the House that when I was a Minister of the Crown, I made ministerial announcements on points that Lord Adonis has now recommended, and the Minister has been able to make them as ministerial announcements again today. I say gently that some of these things are not new.

[Mr Willetts]

None the worse for that.

[Mr Brown]

Of course.

I thank the hon. Member for Hexham (Guy Opperman) and the right hon. Member for Berwick-upon-Tweed (Sir Alan Beith) for joining me and my hon. Friend the Member for Bishop Auckland (Helen Goodman) in securing this important debate on matters that concern our constituents. I draw the Minister’s attention to the fact that although the hon. Members for Redcar (Ian Swales) and for Hexham served their parties well in drawing on the positive things in the report, on which I think we all agree, if I had to pick one point that characterised the contributions of Opposition Members, it would be the fear that there will not be much delivery for our constituents on getting them back into work. If the Minister takes away my plea that he and his ministerial colleagues try to do something for the long-term unemployed, and young people in particular, in our constituencies, something will have come from the debate.

Motion lapsed (Standing Order No. 9(3)).

West Coast Rail Links with London

Thursday 5th September 2013 Commons Chamber

17:00

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

I should like to present a petition to the House that has been ably worked on by the Shropshire Star and its editor, Mr Martin Wright. We have gathered more than 3,000 signatures on the importance of a direct service between Shrewsbury and London, our capital city. Shrewsbury is the only county town in England without a direct train service to London.

The petition states:

The Petition of residents of Shrewsbury and Shropshire,

Declares that the Petitioners are without a direct rail service to London from anywhere in the county, with Shrewsbury being the only mainland county town in England without such a service which is of real detriment to businesses and individuals travelling to the capital.

The Petitioners therefore request that the House of Commons urge the Department of Transport and Office for Rail regulation to work with Network Rail and the train operators to improve services on the west coast mainline and subsequently ensure a regular and direct service from Shrewsbury to London to be established as soon as possible.

And the Petitioners remain, etc.

[P001218]

Immigration (Detention of Pregnant Women)

Thursday 5th September 2013 Commons Chamber

Motion made, and Question proposed, That this House do now adjourn.—(Mr Evennett.)

17:01

[Richard Fuller (Bedford) (Con)]

I am grateful for the opportunity to introduce this debate and to call for the ending of the detention of pregnant women for immigration purposes. In making my case, I want to challenge my hon. Friend the Minister on the numbers; on the efficacy of current Government policy; and on the ethics of the Government’s policies on the detention of pregnant women for immigration purposes. However, in those challenges, I want to encourage him in making the change; it is an achievable change in the context of the Government’s policies to reduce immigration. Such a change will say more about the morality of the Government and the country and our handling of our immigration policies than any other change within his control as Minister for Immigration.

I am motivated in introducing the debate because I believe profoundly that there is no incompatibility between effective control and limited numbers, and the standards of our behaviour and how we treat people caught in the historical mess of the UK immigration system. I am motivated because of the excellence of the Medical Justice report, “Expecting Change”, which, for the first time, pulls together information that can provide a clear picture of the reality of the situation for pregnant women in detention in the UK.

I am also motivated by news that has come to me today from Yarl’s Wood Befrienders—Yarl’s Wood is a detention centre for women just outside Bedford—that directly contradicts the Government’s stated policy on the detention of pregnant women. Today, a lady who was 28 weeks’ pregnant was released from Yarl’s Wood after six weeks’ detention. That detention was in complete contradiction of the current UK Border Agency policy on the detention of pregnant women. I will point out the reasons for that discrepancy.

This debate is core because of the consequences of the disastrous open-door immigration policies pursued under the previous Labour Government, and the efforts of this coalition Government to deal with them. This debate is often held in the context of people talking about statistics and numbers, or the effectiveness of current Government policies to deal with that open-door policy. It is right that we have a debate about the number of people allowed into this country, the growth of our population and whether public services can manage. That is exactly right; we should be doing that. Equally, it is right that we talk about the efficiency and effectiveness of our border controls, so that we can hear the Minister—as he did yesterday so admirably—explain how we are managing to improve the situation and get our borders under control.

We must also ensure, however, that we do not lose sight of the individual people caught up in this bureaucratic mess, and its impact on them and their children. The Government recognised that when they ended the policy of detaining children for immigration purposes. That was the right thing to do: it was right from the point of view of effectiveness and right from the point of view of morality. It is important that we recognise morality in our immigration policies. Imprisoning children was not only ineffective; it was morally wrong. It should not be seen as just an inconvenience of bureaucratic policy.

[Fiona Mactaggart (Slough) (Lab)]

I am grateful to the hon. Gentleman for giving way. He makes a compelling case that, in practice, when it comes to pregnant women, the policy of not detaining is not enforced. Is he aware that the same is true of children, who are also being detained at present, despite Government policy to the contrary?

[Richard Fuller]

The hon. Lady makes a good point. I am sure she would want to welcome the changes the Government have made after the previous Government’s policies on detaining children. There are always things that need to be done to improve policies. The issue here is this: how are our bureaucratic systems harming children, whether they have been born or are being carried by pregnant women?

The report produced by Medical Justice provides the most effective understanding of the current situation for pregnant women, and is why 334 organisations and charities support its recommendation to end the detention of pregnant women. I would also like to point out to the Minister that that position is supported by the Royal College of Midwives and the Royal College of Obstetricians and Gynaecologists—the experts in this field. They have set a challenge for the Minister. Ahead of his response, I want to explain that challenge.

Let me start with some statistics. Every year, about 27,000 people are detained for immigration purposes, of whom 4,000 are women. Of those, approximately 100 are pregnant women. One hundred women—that is what this debate is all about. In the grand picture of immigration control, that number barely registers, but in an assessment of what type of people we are, and how we manage and care for those 100 women and the children they are carrying, it matters a great deal.

The reason for detaining pregnant women is to achieve their removal. Home Office policy states that:

“Pregnant women should not normally be detained. The exceptions to this general rule are where removal is imminent and medical advice does not suggest confinement before the due removal date.”

However, the stated policy is not, in my view, and according to the evidence that I have been given, being implemented in practice. In practice, pregnant women are not being detained in exceptional circumstances only. This concern has been raised by Medical Justice and Her Majesty’s inspectorate of prisons, and the pregnant women are not detained for periods of time that would match any description of what an imminent removal would be.

It concerned me that the UK Border Agency was not collecting information on the detention of pregnant women, so questions could not be answered about whether policy was being followed. With no information, how are we to understand whether this important policy relating to vulnerable people is being pursued correctly? I asked Medical Justice to review the 20 cases in its report. It found that the average detention period was 11 weeks, and that in four of the 20 cases the women were detained for 20 weeks or more. By no stretch can that be described as pursuing the stated policy of the UK Border Agency.

A trimester ago, I asked the Minister to ask the UK Border Agency to check its facts. I appreciate his response, but I would like to ask him again today, because collecting information is so important. Does he know how many pregnant women are currently in detention? Can he advise the House what the detention period has been for each of those women and for all other pregnant women detained in the past 12 months? Is he satisfied that the procedures for identifying pregnant women and applying the UK Border Agency’s policies are being implemented fairly? Only 5% of pregnant women who are detained are deported, with 95% released back into the community. I would be interested to hear whether the Minister could confirm those numbers. If he can, what is his assessment of their implications for the efficacy of the UK Border Agency’s policy? Spending more than £700 a week to keep a pregnant woman in detention when we are going to release her, compared with spending £150 a week to keep that lady in the community with people who can support her, is the complete opposite of an efficient and effective policy.

There is another issue: our ethics. In my view, a pregnant woman who is in detention is vulnerable almost by definition. The circumstances that led her to that position will already be associated with heightened vulnerability. She might have been seeking asylum or she might have been trafficked. She might have been left on the streets and made vulnerable in terms of accessing housing, which might then have made her vulnerable to the actions and motivations of people who wanted to provide her with housing. Then, while she is pregnant, she is put in prison—we can use the language of “detention centres” all we like, but it is a prison. That tells us something about how we are treating people.

It seems utterly wrong to ignore the moral and ethical arguments. I am concerned about the response of the UK Border Agency when ethical issues are presented. Let me present two ethical differences and concerns of mine. The first concerns the use of force to remove a pregnant woman, which has now been resolved. In 2012, Her Majesty’s inspectorate of prisons said:

“Force should never be used to effect the removal of pregnant women or…children.”

However, only in February 2013, and only after a High Court case, did the Government yield on that point. I do not understand the ethics of that. That leads to another question. If we have accepted that force cannot be used in the removal—as we have heard, only five out of 100 women are removed—why detain pregnant women at all?

The second ethical question relates to the medical guidelines for pregnant women who are deported to countries with a high risk of malaria. That issue was given particular focus in Medical Justice’s report. The NHS guidelines for British citizens are quite clear: “If you’re pregnant, do not travel to a country with a high risk of malaria.” However, the UK Border Agency guidelines say: “It’s okay to go, but take your tablets”—have pill, will travel. Why the double standard? It is important that the Minister is clear. Do we want to treat the health of those who have come here in that way—I understand that they are here illegally—differently when we deport them to other countries, or do we think that the United Kingdom Government should take the same approach in their treatment of all pregnant women? If he accepts that point, which I hope he does, he must accept it as another strike against the ethics and morality of detaining pregnant women for immigration purposes.

I am no expert on pregnancy and the issues that may arise. The Minister may have more understanding than me—you yourself may have more, Mr Speaker—but I am sure we would all yield to the experts on this issue. Let me quote the director for midwifery at the Royal College of Midwives:

“The very process of being detained interrupts a woman’s fundamental human right to access maternity care. The detention system makes it very difficult for midwives to put women at the centre of their care. We believe that the treatment of pregnant asylum seekers in detention is governed by outmoded and outdated practices that shame us all.”

The previous Government lost control of our immigration system. That has led to major concerns around the country about immigration levels, and this Government are rightly focusing on reducing them and ensuring that we control our borders. However, I urge the Minister to recognise that it is morally wrong for a bureaucracy to act wilfully to harm a child’s prospects when there are superior alternatives available that would reduce or eliminate any such harm. Those alternatives exist.

I urge my hon. Friend to listen to the experts who understand the care of pregnant women, to understand the facts—which we have and he does not—as they are presented, to consider that the ethics involved here are the same as those that motivated this Government to end the detention of children, and to end now the detention of pregnant women for immigration purposes.

17:16

[The Minister for Immigration (Mr Mark Harper)]

I am grateful to my hon. Friend the Member for Bedford (Richard Fuller) for securing this debate. As he acknowledged, he and I have had detailed discussions on this issue. Yarl’s Wood, the principal immigration removal centre holding female detainees, is located in his constituency, so I completely understand his interest in this particular issue, both from a policy and a constituency perspective.

First, I would like to emphasise that the decision to detain someone is never taken lightly and only as a last resort. My hon. Friend acknowledged that in his speech. Generally, when we decide that detention is appropriate, we ensure that we take care of detainees’ welfare. That obviously includes pregnant women, who have particular needs. He set out the Government’s policy quite fairly. It is that we do not, in general, detain pregnant women except in two sets of circumstances. The first is when a woman’s removal from the UK is imminent and medical advice suggests that her baby is not due before the expected removal date. The second is, under the asylum system, when the decision not to grant asylum would allow for the woman to be removed.

I thought that the statistics that my hon. Friend cited suggested that we were doing as the policy required. He described the significant number of people who were detained, then said that only 100 of those were pregnant women. I think I have got that figure right; I was listening carefully to his speech. That shows that we detain very few pregnant women and that we do so only in the circumstances that I have described.

We factor into our decisions the timing issue that my hon. Friend raised. Obviously I do not have the details of the specific case that he mentioned, but I will explain in a minute why I do not think that that case would have contravened our existing policy. We factor into the decision on timing the International Air Transport Association’s guidelines to airlines on carrying pregnant women, which provide for travel up to 28 weeks or, if medically certified, up to either 32 or 36 weeks depending on the circumstances of the pregnancy. Women who are less than 24 weeks pregnant may also be detained under the fast-track asylum process operating at Yarl’s Wood, which would allow for a case to be processed and, if appropriate—that is, if asylum is not granted—for removal to take place within those time frames.

In regard to the case that my hon. Friend described, I can give him only a general answer as I do not have the details. If he would like to write to me after the debate with those details, however, I will of course look into the specifics of the case and correspond with him about them. We might have detained the woman for removal, and the removal might then not have gone ahead for a reason that was not anticipated at the time. There might have been a further legal challenge, for example, or perhaps a travel document was unavailable. Alternatively, she could have been detained under the fast-track process prior to the 24-week point. All those circumstances would fall within published policy, but it would be better if my hon. Friend could furnish me with the details of the specific case so that I can look into it.

[Richard Fuller]

The Minister has just indicated in his answer the very reason the current policy does not work. It is based on imminence, and imminence cannot be predicted, for the very reason that he has just set out. He has therefore just stated why ending the detention of pregnant women would be a clearer, fairer, better and more moral policy. We are talking about 100 women. That is it. Would it not say more about the ethics of his policy if he were to accept that reality and stop the policy now, rather than pretending that the policy is actually happening in practice?

[Mr Harper]

I do not agree with my hon. Friend, for this reason. The use of statistics was mentioned, but we do not collect statistics on this matter because women are not, of course, obliged to tell the Home Office whether they are pregnant. They may tell us, and if they do, the information will be held on their individual case file and they will be provided with appropriate health care, broadly comparable to what is available from an NHS general practitioner. The women are under no obligation to tell us, and I do not think forcing them to disclose the information would be right. That is an issue about the statistics.

Making decisions about the imminence of removal is clearly based on our best intelligence, but as we know, the people who have no right to be in the United Kingdom and who should leave the country voluntarily often throw all sorts of legal obstacles in the way. We may detain a woman when removal is imminent and she may attempt to secure a last-minute legal challenge to throw a roadblock in the way of her removal, and we have no way of anticipating that before she does so. That provides my hon. Friend with an example.

If we were to do what my hon. Friend suggested and have a blanket policy of not detaining women, first, having read many cases, I fear we would find quite a lot of people saying they were pregnant as another method of delaying their departure from the UK. I have seen people throw many obstacles in the way when they have no right to be here, and I do not want this to be one of them. We are committed to treating pregnant women properly, providing proper health care and treating them well. I do not want this to be an excuse that women who are not pregnant dream up in order to throw a legal obstacle in the way. I fear that that would be the result of adopting the blanket policy suggested by my hon. Friend.

A logical follow-on policy from what my hon. Friend suggests would mean not removing the women from the UK when they were pregnant and allowing them to give birth to their child, but then seeking to remove both the woman and the very young child from the UK to their home country or country of origin—and I am not sure that that would be an improvement. If I anticipate correctly, if we did that, we would then be criticised for trying to remove the mother with her very young child back to their country of origin. As I say, I am not sure that that would be an improvement on the present situation, because the fact remains that these women have no right to be in the UK: they should not be here and they should leave voluntarily. [Interruption.] I cannot quite tell whether the hon. Member for Slough (Fiona Mactaggart) is dying to intervene.

[Fiona Mactaggart]

I was squeaking—the Minister is right—because I cannot believe that someone is going to get pregnant in order not to be detained. Secondly, it is quite easy to find out whether someone is pregnant, so that bit of the Minister’s excuse proves his hon. Friend’s very powerful argument that this is a moral case. I fear that I hear in the Minister’s response a kind of Home Office “jobsworthness”, which I think he should be above and is usually above.

[Mr Harper]

I am not going to let the hon. Lady put words into my mouth. I did not say—I chose my words very carefully—that women would get pregnant; I said women would say they were pregnant in order to throw a legal challenge. I know it is perfectly easy to test whether women are pregnant, but we do not have the right to do that. The Home Office does not have the right to insist that a women disclose that she is pregnant. We do not have the right forcibly to test people to see whether they are pregnant. If I were to propose that, I doubt whether the hon. Lady would support it. To be clear, I did not say that people would get pregnant; I said that they would say they were to throw a legal obstacle in the way of their removal from the country. I have seen enough cases—and I know the hon. Lady has—to know that there are people who would stoop to doing that to delay their removal from the UK.

[Fiona Mactaggart]

However, the Home Office could easily say, “We will release you if you provide evidence of pregnancy.”

[Mr Harper]

That may be the case, but our objective is not to let the people out of detention, but to remove them from the UK. That it is the point, and it is one I think my hon. Friend is missing, too. The fact is that these women have no right to be in the UK and should leave. I am not sure that a policy that allowed them stay in order to give birth to their child, when we would immediately want to remove both the woman and the child from the UK, would be a better policy than the one we have today.

[Richard Fuller]

If the purpose is to remove people, will the Minister counter my statistics with statistics of his own, and explain why only five out of 100 women have been deported and 95 have been returned to the community? I am not sure that his argument stacks up.

[Mr Harper]

I am not sure that I agree with my hon. Friend’s statistics, but I do not have the details. Because, as far as I know, the Home Office has not been given the details of the 20 people to whom Medical Justice referred, it is difficult for us to validate its assertions. The difficulty with giving my hon. Friend overall statistics is that although when women provide the information that they are pregnant, that information is held on their health records, we do not log it statistically, and obviously we can do so only when they disclose the information to us. Of course, in the early stages of pregnancy they may not even be aware of the fact themselves.

When a pregnant woman is detained she will, like all other detainees, have access to free on-site health care facilities and medical advice broadly equivalent to that which is available from national health service GPs in the community. At Yarl’s Wood, for instance, all midwifery services are provided by Bedfordshire NHS Trust. Midwives from the trust visit the centre every week. At Dungavel immigration removal centre, where women may also be detained, midwifery services are provided by NHS Lanarkshire. In line with practice in the community, the visiting midwives will determine how frequently they need to see patients.

Women can make requests for additional midwife appointments through the health care centre if they wish. The centre is staffed by nurses around the clock, and the GP can be called upon seven days a week when necessary. In the event of a particularly difficult medical problem, health care staff can refer women to the antenatal clinic or early pregnancy unit in the local hospital, or to another appropriate health care service. I therefore do not agree with my hon. Friend that there is a health care issue.

My hon. Friend asked about pregnant women being returned to countries where malaria is prevalent. We take steps to ensure that they are given the appropriate course of anti-malaria medication before their removal, but decisions about that medication must, of course, be made by doctors.

As for my hon. Friend’s point about advice to British nationals who are travelling, he should bear in mind that these women are nationals of their home countries, the countries where they should live. The NHS is a national health service whose purpose is to provide health care for citizens and residents of the United Kingdom. It is not an international health service. I do not think that the comparison between the health care that a woman would receive in the United Kingdom if she lived here and the health care that is available in her home country is relevant. Her home country is the country in which she should live. It is not the job of the national health service to become a health service for everyone in the world. If it were to do so, it would rapidly collapse, and I do not think we want that to happen.

[Richard Fuller]

The Minister is right to say that the NHS is a national and not an international health service, but that is not quite the point that I was making. One of the consequences of losing control of immigration is that people have been in this country for a long period, and when people have spent a long period in another country, their immunity to malaria is lowered. We are sending back pregnant women with low immunity. Their health condition is not the same as the health condition of a lady who becomes pregnant in her country of origin. That is the comparison that I was trying to make. I certainly do not want us to have an international health service, but I think the Minister must accept that delaying the repatriation of people who are here illegally has consequences in terms of their health status, particularly when it comes to malaria. That is a key point for pregnant women.

[Mr Harper]

And that is exactly why we ensure that pregnant women are given a course of anti-malaria medication. We also provide them with mosquito nets, free of charge, to use in their countries of origin. I am not sure that I follow the logic of my hon. Friend’s argument. If we allowed those pregnant women to remain in the United Kingdom and give birth here, we would still later be removing both mother and child to that same country of origin where malaria may be prevalent.

The fact is that we will not allow women to stay here when they do not have a right to do so. Not only will their cases have been judged by the Home Office, but a number of appeal routes will have been open to them, and only when all those routes have been exhausted will we be in a position to remove them from the country. We try to persuade people to return home voluntarily, and that includes providing assistance when they are in their home countries. Those whom we do detain—those to whom my hon. Friend is referring—will be people who have no right to be here. We will have tried to persuade them to leave voluntarily, and to give them support that would help them to do so. Only when they have refused all those offers of assistance and help from the United Kingdom will we seek to enforce their removal. Therefore, by definition they are people who are not co-operating in their removal from the United Kingdom. That is why I anticipate that if we change the policy to the one my hon. Friend suggests, people will use that to throw legal obstacles in the way—not to do what the hon. Member for Slough said, but at least to suggest to us that that is the case, which would at least delay, if not stop, their removal.

I am therefore unable to give my hon. Friend the outcome he desired. I am very happy to continue this dialogue with him and to look into the case he has raised with me, and if he thinks there are other cases where the Government are not following the policy we have set out, I will look into them. On his central request, however, I am afraid the Government have no plans to change the current policy.

Question put and agreed to.

17:30

House adjourned.