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Oral Answers to Questions
(10 years, 1 month ago)
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Dr Thérèse Coffey (Suffolk Coastal) (Con)
1. What discussions he has had with the New Anglia local enterprise partnership on devolving powers and responsibilities to that partnership.
The Minister of State, Cabinet Office (Greg Clark)
In the last 10 weeks, I have travelled across England to meet with all 39 local enterprise partnerships. As part of those visits, I had a very productive discussion with the New Anglia local enterprise partnership in Ipswich on 25 February, where we discussed its strategic economic plan.
Dr Thérèse Coffey
I welcome the positive discussions that my right hon. Friend the Minister had with the New Anglia LEP. May I urge him to make sure that we get the full responsibilities and powers that the New Anglia LEP board is seeking in order to accelerate the economy in East Anglia? Will he also pay tribute to Andy Wood, who is giving up as chairman of the LEP this coming Monday?
Greg Clark
I will certainly pay tribute to Andy Wood. He is the chief executive of Adnams, one of the biggest and most prestigious businesses in East Anglia, and he has done a fantastic job, not only in negotiating two city deals but in laying the foundations for what is—having discussed it with him—a very ambitious local growth deal that will build on the success that the economy is experiencing in East Anglia and create many more jobs and apprenticeships.
Eric Ollerenshaw (Lancaster and Fleetwood) (Con)
2. What support the Government are giving to business growth in Lancaster and Fleetwood constituency.
The Minister of State, Cabinet Office (Greg Clark)
I visited Lancashire twice in recent weeks and met with Edwin Booth, the Lancashire local enterprise partnership chair, to discuss its emerging strategic economic plan. Through the Government’s decentralisation agenda, we are giving local leaders the tools and resources they need to drive local growth. As my hon. Friend will know, in Fleetwood for example, we are supporting the creation and safeguarding of over 400 jobs through investment in the seaside regeneration scheme.
Eric Ollerenshaw
Fleetwood has a number of thriving fish processing businesses but needs modern buildings and a complicated land swap to allow them to expand to get a form of northern Billingsgate. Given that we have limited capital resources, is there any chance of some kind of national competition for local authorities to bring forward their most difficult regeneration schemes, which potentially could be the most rewarding if they are unlocked?
Greg Clark
My hon. Friend is absolutely right and the local growth deals proposed by Michael Heseltine afford precisely that opportunity. I know, having discussed the matter in Lancashire with Lancashire LEP, that it will have a keen eye on that particular proposal. The revival of the economy along the Fylde coast and in the rest of Lancashire is very much in all our interests and I know that it has my hon. Friend’s strong support.
Paul Maynard (Blackpool North and Cleveleys) (Con)
One way to support the fish processers of Fleetwood is to address the issue of the A585, which is the main road into Fleetwood going through my constituency. When the Minister negotiates the new city deal for the area, will he bear in mind the critical importance of the A585 to the local economy?
Greg Clark
I cannot fail but to bear it in mind, having visited my hon. Friend’s constituency—he brought a stellar delegation of local businesses and civic leaders to make precisely that point. I received it loud and clear and look forward to the negotiations of the growth deal.
John Howell (Henley) (Con)
3. What discussions he has had with the Oxfordshire Local Enterprise Partnership on devolving powers and responsibilities to that partnership.
The Minister of State, Cabinet Office (Greg Clark)
I was in Oxfordshire on 30 January to launch the Oxford and Oxfordshire city deal, where I visited the Diamond synchrotron particle accelerator at Harwell. The city deal in Oxfordshire supports innovation through projects as well as investment in skills and transport improvements. I am delighted to see that the latest draft of the growth deal is going to reflect the comments made by my hon. Friend’s distinguished predecessor, the former Member of Parliament for Henley, Lord Heseltine.
John Howell
It will come as no surprise to my right hon. Friend the Minister that the Oxfordshire LEP has tried to contact me for the very first time in the last couple of days in view of my question. Notwithstanding that, will he join me in urging it to do more than simply talk and to turn a blank area on the map into something a little more active?
Greg Clark
I would say to all local enterprise partnerships that they should engage with their Members of Parliament. My view is that MPs have a pretty keen view as to what are the economic priorities of their areas and LEPs would do well to take into account what they have to say. I think it would be almost as unwise to ignore my hon. Friend’s comments as it would be not to take into account the views of his neighbour, the Prime Minister, my right hon. Friend the Member for Witney (Mr Cameron).
Lorely Burt (Solihull) (LD)
4. What discussions he has had with Greater Birmingham and Solihull local enterprise partnership on devolving powers and responsibilities to that partnership.
The Minister of State, Cabinet Office (Greg Clark)
On 5 February I visited Birmingham and met the LEP to discuss in detail its ambitious plans for growth. Its proposals focus on important economic opportunities, including the 143-hectare site around the proposed HS2 interchange in Birmingham.
Lorely Burt
I am grateful to my right hon. Friend for that answer. Greater Birmingham and Solihull LEP was one of the first LEPs to attract a city deal under wave 1. However, wave 1 LEPs do not currently attract funding for an advanced manufacturing growth hub. The west midlands, as he has found out, is the advanced manufacturing capital of the United Kingdom, so will he consider the decision so that we can get on with creating more growth in the west midlands?
Greg Clark
I will certainly do that. Having been in Coventry yesterday to sign the Coventry and Warwickshire city deal, which focuses precisely on advanced manufacturing, I know that there is great recognition that the whole of the west midlands has a big opportunity to come together to ensure that the order books that are filling up can be supported by companies in the supply chain. I will take my hon. Friend’s representations on board as we negotiate the growth deals during the weeks ahead.
Diana Johnson (Kingston upon Hull North) (Lab)
5. What devolved regeneration funding will be available to areas recently granted city deals.
The Deputy Prime Minister (Mr Nick Clegg)
I would first like to say how delighted I am that Siemens has now confirmed its £160 million investment in wind turbine facilities at Green Port in Hull and at Paull in the East Riding. Together with an additional £150 million investment by its port partner, Associated British Ports, that development will support 1,000 new jobs in the area and demonstrates the huge economic potential of the green industry. I was delighted that the hon. Lady was able to attend the signing of the Hull and Humber city deal on 13 December, along with the Minister of State, Cabinet Office, my right hon. Friend the Member for Tunbridge Wells (Greg Clark). As she knows, through the city deal the Government agreed an additional £9.2 million of funding to support the growth of Hull and Humber’s economy.
Diana Johnson
I think that we all agree that cities are best placed to make decisions about regeneration funding and what is best for their local populations. As the Deputy Prime Minister rightly points out, a great example of that is the announcement this morning of Siemens’s investment in renewables, which means that Hull will be not only the city of culture, but the city of energy. Given that that success was made in Hull, will he congratulate, in particular, the Hull business community and Hull’s Labour council, because without them this would not have happened? Finally, does he agree that if we had listened to the climate change-denying UK Independence party, those jobs would be going abroad?
The Deputy Prime Minister
I certainly agree with the hon. Lady’s latter point. There is absolutely no way that a multinational such as Siemens would invest that amount of money if we were on the brink of pulling out of the European Union single market. I have been in several discussions with Siemens board members, as have many members of the Government, to persuade them to make that decision, and I am delighted that they have finally done so. She is quite right that Hull city council and the councils in the area—it is a triumph not only for Hull, but for the Humber area more generally—have worked together, and it has been a cross-party approach. None of that would have been successful if we had been on the brink of pulling out of the single market. That is why Siemens has continued to invest in our country.
Miss Anne McIntosh (Thirsk and Malton) (Con)
I am delighted to say that I have a distant family connection with Hull, as my great-grandfather practised medicine there. Will my right hon. Friend explain how city deal regeneration will help rural and coastal areas, such as Thirsk, Malton and Filey, where we have flagging fishing and tourism industries that desperately need boosting?
The Deputy Prime Minister
My hon. Friend makes an important point. City deals are a template for the further decentralisation of powers and control over money and policy to local areas. Of course that should not be confined to urban areas, which is why we are extrapolating the approach through the local growth deals, which will be available to all areas—coastal or inland; rural or urban—and which we hope to conclude over the summer.
Stephen Twigg (Liverpool, West Derby) (Lab/Co-op)
The Opposition support city deals. Portsmouth and Southampton are keen to work more closely together and to form a city deal, which we welcome. However, Hampshire county council is refusing to get involved in such a deal. What steps are the Government taking to open up city deals to such collaborations between authorities that might not be contiguous?
The Deputy Prime Minister
I know that the Minister of State, Cabinet Office, my right hon. Friend the Member for Tunbridge Wells (Greg Clark), has had discussions with the Solent local enterprise partnership on exactly that point. Although this is of course a bottom-up process and we are reluctant to impose too many conditions in an old-fashioned, centralising way, he is making it very clear to everybody who is working towards local growth deals or new city deals that they must be based upon a partnership in the area. We want to ensure that the deals act as a catalyst for people to work across local authority boundaries, and indeed across political boundaries.
Bob Blackman (Harrow East) (Con)
6. What discussions he has had with his ministerial colleagues on the role of decentralisation in the implementation of the Heseltine Review.
The Minister of State, Cabinet Office (Greg Clark)
I am deputy chair of the Local Growth Committee, which my right hon. Friend the Deputy Prime Minister chairs and which brings together Ministers from a wide range of Departments to focus on local growth programmes, including the delivery of recommendations of the Heseltine review. Local enterprise partnerships are submitting their strategic economic plans at the end of the month, and announcements on the growth deals will be made later this year.
Bob Blackman
Is my right hon. Friend aware of the review that the Communities and Local Government Committee is undertaking on devolving fiscal responsibility to London and cities throughout the country? Does he agree that this gives us the ideal opportunity to put back into the hands of local authorities the power that was taken from them?
Greg Clark
I do agree. I am looking forward to giving evidence to my hon. Friend’s Committee next week in pursuance of that. However, I do not think I am letting the cat of the bag when I say that I am strongly in favour of the direction of the inquiry. The fact that the Mayor displays his usual muscularity in forcing this on to the agenda is very much an illustration of the power of the devolution of powers that has already taken place.
Andrew Gwynne (Denton and Reddish) (Lab)
The Heseltine recommendations will work only where there is proper buy-in both to the planning policies and the economic policies for a local area. What discussions is the Minister having to make sure that local authorities—combined authorities where we have them—and local enterprise partnerships are working together to ensure that the populations themselves support that co-ordinated approach?
Greg Clark
The hon. Gentleman makes a good point. As a Manchester MP, he will know that the Greater Manchester combined authority is perhaps the best example of the fruits of the co-operation between local authorities. The relationship between the combined authority and the local enterprise partnership is very close, and that closeness of working has been one of the key contributors to the economic success of Greater Manchester in recent years.
Sadiq Khan (Tooting) (Lab)
The Minister will be aware that one of the recommendations of the Heseltine review emphasised the importance of businesses and others engaging with young people in colleges and schools. In Northern Ireland, the schools initiative model has made a difference in raising the electoral registration of young people to 50% more than would otherwise be the case. The Minister gets on very well with the Secretary of State for Education—better, I think, than the Deputy Prime Minister—so will he discuss with him bringing this model on to the mainland so that we can all see the benefits that Northern Ireland saw?
Greg Clark
The House will know that I am very keen to make sure that every young person gets the chance to vote. One of the announcements that I made in recent weeks was to make £4.2 million available to every local authority in the country specifically to enable them to fund talks and exercises in schools in order to sign up young people to vote. I am glad that that has the right hon. Gentleman’s endorsement.
Damian Collins (Folkestone and Hythe) (Con)
7. What discussions he has had with the South East local enterprise partnership on devolving powers and responsibilities to that partnership.
The Minister of State, Cabinet Office (Greg Clark)
As with all local enterprise partnerships, I have met the South East LEP to discuss its growth deal proposal and to provide feedback and support on its draft proposals. When Lord Heseltine and I met the LEP earlier this year, we were encouraged by the direction that the proposal set out, particularly in addressing transport bottlenecks and support for small and medium-sized businesses.
Damian Collins
Does the Minister agree that the local growth plan should help to prioritise bringing forward schemes that have the ability to transform local economies, particularly schemes like the Folkestone seafront regeneration plan?
Greg Clark
I do agree. I know that that scheme will have a prominent place in South East LEP’s proposals. I should also like to commend the involvement of Sir Roger de Haan, my hon. Friend’s distinguished constituent and activist, who has been very much been involved in transforming the future of Folkestone. He deserves the congratulations and support of everyone in this House.
Charlie Elphicke (Dover) (Con)
Is the Minister aware that in past times the South East England Development Agency spent £20 million in my constituency without creating a business partnership? We have seen a dramatic sea change. Does he agree that we should trust South East LEP, which has been doing an excellent job?
Greg Clark
I do agree. Peter Jones, who chairs South East LEP, has done a fantastic job in building on the already excellent work of the county council. The relationships that have been forged with business are driving the prosperity of the coastal area of Kent in particular, which my hon. Friend represents.
Rehman Chishti (Gillingham and Rainham) (Con)
8. What support the Government are giving to business growth in Medway.
The Minister of State, Cabinet Office (Greg Clark)
As I said to my hon. Friend the Member for Folkestone and Hythe (Damian Collins), I have read the draft strategic economic plan produced by South East local enterprise partnership and had a very helpful feedback session with the LEP. I am particularly encouraged by the extensive proposals for supporting small businesses, which I know are particularly important in Medway.
Rehman Chishti
I thank the Minister for that answer. Does he agree that many businesses now rely on internet connectivity, and will he welcome the initiative in Medway to provide free wi-fi throughout the area, benefiting economic growth and improving the public’s access to the internet?
Greg Clark
I do support that. It is very important that small businesses should have access to good internet connections. It is right to point out that even in our big cities and urban areas where connections are available, they are not comprehensive enough: about 5% of premises in urban areas cannot be connected to a high-speed connection. That is a very important feature to be corrected and I hope the local growth deal will do so.
Paul Flynn (Newport West) (Lab)
T1. If he will make a statement on his departmental responsibilities.
The Deputy Prime Minister (Mr Nick Clegg)
As Deputy Prime Minister, I support the Prime Minister on a full range of Government policy and initiatives. Within Government, I take special responsibility for this Government’s programme of political and constitutional reform.
Paul Flynn
When he was a senior tax civil servant, Mr Dave Hartnett met the head of Deloitte 48 times, including one meeting in which he reduced the tax liability of one of its clients from £6 billion to £1.25 billion. The Public Administration Committee issued a report about the revolving door and its dangers 20 months ago. Why have the Government not replied?
The Deputy Prime Minister
Of course the Government will reply to the report, but, much more importantly, in Budget after Budget and autumn statement after autumn statement, we have taken steps to close the huge loopholes in our tax system that we inherited from the Labour party. We have recouped billions of pounds into the Treasury’s coffers that otherwise would have gone walkabout because of such large-scale tax avoidance and, indeed, illegal tax evasion.
Mr Christopher Chope (Christchurch) (Con)
T3. Will the Deputy Prime Minister, in the interests of transparency and accountability, publish details of all the policy proposals that Liberal Democrat members of the quad have vetoed?
Ms Harriet Harman (Camberwell and Peckham) (Lab)
Will the Deputy Prime Minister confirm that new figures show that the Government’s trebling of tuition fees is on course to end up costing the taxpayer more than the system it replaced?
The Deputy Prime Minister
The new figures show that there are now more people at university than ever before; that a higher proportion of youngsters from disadvantaged families are at university than ever before; that there is a higher rate of participation in higher education by youngsters from black minority ethnic backgrounds than ever before; and that there is a higher rate of applications to go to university from our youngsters than ever before. Surely, rather than speculating on what people may or may not earn in 35 years, the Labour party should celebrate the fact that more people are going to university and that more people from disadvantaged backgrounds are going to university.
Ms Harman
The Deputy Prime Minister’s bluster will not have disguised the fact that he has not answered the question. He said he had to back the Tories on tuition fees because it was too expensive not to. The truth is, as even the former departmental special adviser has now admitted, the Government “got its maths wrong”. There are now rumours that, to cover the costs of this incompetence, the Government could put up fees again. The Deputy Prime Minister said that he got it wrong on tuition fees in his last manifesto. Will he now confirm that the next Lib Dem manifesto will rule out any further tuition fee increase?
The Deputy Prime Minister
There is absolutely no need for a further increase. In fact, we announced at the end of last year that universities will be able to take an unlimited number of students. We are removing the cap on the number of British students going to British universities and there is no cap on the number of overseas students, so there is no need for an increase. The right hon. and learned Lady talks about the figures and the cost. What is the cost for individual students? Someone earning £24,000 was paying £67.50 per month under the fees system that her Government introduced. Under our system, they are paying not £67.50 per month, but £22.50 per month. Is that not the reason why, despite all the Labour party’s predictions that people would not apply to university, applications have gone up? Is that not the reason why, despite all the predictions by the right hon. and learned Lady and her colleagues that fewer people from disadvantaged families would go, the proportion has gone up? Those are the facts that really matter for students these days.
David Rutley (Macclesfield) (Con)
T7. The recently announced sale of AstraZeneca’s Alderley Park site to Manchester Science Parks is a vital step in creating a sustainable future for that site. Given that news, does my right hon. Friend agree that serious consideration should be given to the proposals for a science corridor from the Cheshire and Warrington local enterprise partnership and the neighbouring LEPs in their growth deal submissions?
The Deputy Prime Minister
I am delighted that AstraZeneca, with the support of the Alderley Park taskforce, has attracted a new owner that shares its vision for a sustainable, science-led future for the site. I know that Manchester Science Parks will continue to work with local partners to develop a clear vision for an exciting future at the site. It is very encouraging that the LEP is promoting the opportunities within the science corridor that stretches across Cheshire from Thornton in the west, through Warrington and on to Alderley Park and Jodrell Bank in the east. I very much look forward to receiving the proposal.
Heidi Alexander (Lewisham East) (Lab)
T2. Two weeks ago, the Deputy Prime Minister and his Liberal Democrat colleagues could have voted to retain the legal protection for successful hospitals that neighbour failing trusts placed into administration, but they did not. Instead, there was shameless posturing and then spineless behaviour when it came to the vote. What is his excuse this time?
The Deputy Prime Minister
We actually strengthened the provisions on local consultation. Given that the hon. Lady is so keen to reinvent history, how about this for a record? In Wales, which is run by Labour, the A and E targets were last met in 2009. It was her party that entered into a quarter of a billion pounds-worth of sweetheart deals with the private sector—something that we have outlawed in legislation.
Rehman Chishti (Gillingham and Rainham) (Con)
T9. In January, the Deputy Prime Minister addressed a conference on mental health. There are concerns in my constituency that patients are having to travel long distances to get a bed. One patient in Medway was transferred 350 miles to Carlisle. What are the Government doing to ensure that patients get help and support within the community?
The Deputy Prime Minister
I strongly share the hon. Gentleman’s concern. It is unacceptable for any patient to be transferred such a long distance to receive proper care in the mental health system. As he will know, and as I announced in January in respect of our action plan on mental health, we are the first Government to put mental health and physical health on the same footing in the mandate for the NHS. It is now up to clinical commissioning groups and other commissioners within the devolved structures in the NHS to reflect that parity of emphasis on mental health and physical health in their commissioning decisions. Until that happens, I worry that some patients will fall between the gaps. That is why I am keen that commissioners should act on the mandate that we have given them.
Paul Blomfield (Sheffield Central) (Lab)
T4. The Deputy Prime Minister actively campaigned on the campuses of both the universities in my constituency on his solemn pledge to oppose any increase in tuition fees. He has apologised for making that pledge. Now that the system is transparently broken, will he realise that his real mistake was to break it?
The Deputy Prime Minister
The system of the hon. Gentleman’s party meant that thousands of part-time students paid up-front fees. We ended those. His party’s system meant that people paid more out of their bank accounts every week and every month repaying Labour fees than they are paying under the current system. Under his party’s system, a smaller proportion of people from disadvantaged backgrounds went to university. Instead of constantly denigrating the fact that under this Government more youngsters are going to university than ever before, he should be celebrating it.
Annette Brooke (Mid Dorset and North Poole) (LD)
T12. Dorset is obviously not a core city, but it does have significant pockets of deprivation. How will the Deputy Prime Minister ensure that there is a growth deal that builds on the opportunities of our air and sea ports, and the high potential for growth and job creation in a number of spheres?
The Deputy Prime Minister
I urge my hon. Friend and everybody in the private or public sector who is concerned about the economic future of Dorset to work together to assemble the best possible proposal for the new local growth deals which we stand ready to receive in the coming days. We will look at it as quickly as possible and will hopefully make a positive announcement in the summer for the economic future of Dorset.
Mr William Bain (Glasgow North East) (Lab)
T5. Last week’s Budget confirmed that this Government are to go ahead with a £600 million raid on the incomes of the working poor over the next three years by freezing the work allowance on universal credit. Is it not the case that what this Government give with one hand in the personal tax allowance, they will take away with the other under universal credit?
The Deputy Prime Minister
I remind the hon. Gentleman that it was his party’s monumental mismanagement of the economy that cost every household in this country over £3,000. I read last week that a former Labour adviser said—this is extraordinary—that
“you cannot trust people to spend their own money sensibly”.
I have got news for him: people do not want to trust Labour with their money.
Martin Vickers (Cleethorpes) (Con)
I, too, welcome the news about the Siemens investment in Hull and congratulate the Government on their efforts in achieving that, particularly the Minister with responsibility for cities, the Minister of State, Cabinet Office, my right hon. Friend the Member for Tunbridge Wells (Greg Clark), for his work on the city deal. Will the Government give an assurance that they will now work hard to conclude the Able development on the south bank?
The Deputy Prime Minister
As the hon. Gentleman knows, I have visited the site with him. It is very important that the Siemens deal, which has finally been confirmed, is not the end of the story and acts as a catalyst for wider regeneration, particularly in the green and renewable technology fields in the whole Humber area.
Sheila Gilmore (Edinburgh East) (Lab)
T6. Given the Deputy Prime Minister’s keen interest in child care, will he commit to immediate help for low-paid families by increasing the percentage cover to 80% now, not waiting for the roll-out of universal credit, especially as that roll-out for families is disappearing over the event horizon?
The Deputy Prime Minister
The hon. Lady is pushing for an increase to 80% of all child care costs. We have gone much better than that: we have said 85% of all child care costs will be covered for those receiving universal credit. As she will also know, we are the first Government to deliver 15 hours of pre-school support to all three and four-year-olds; we are the first Government ever to deliver 15 hours of free pre-school support to two-year-olds from the poorest families; and we are the first Government ever to announce tax-free child care entitlements, which will be available to everyone with children up to the age of 12 as of next year. Those are huge changes. Yes, let’s all go further, but I hope she will agree that those are big, bold, progressive changes.
Stephen Gilbert (St Austell and Newquay) (LD)
Will my right hon. Friend join me in sending our best wishes and congratulations to the same-sex couples across our country who, for the first time, will get married this Saturday?
The Deputy Prime Minister
I do so strongly. I join my hon. Friend in recognising the joy of many same-sex couples who will finally be able to marry under British law this weekend. It is a great, great moment. It is a day that they will always remember, and I hope it is a day that the nation will never forget. It is a great step forward for us all.
Dan Jarvis (Barnsley Central) (Lab)
T8. The Deputy Prime Minister promised to make mental health a priority for this Government, but on their watch mental health spending has been cut in real terms, hundreds of mental health beds have been lost, and services are now under such pressure that the police are having to legally section people with mental health problems just so that they can get a bed. Can the Deputy Prime Minister tell us what happened to the promise?
The Deputy Prime Minister
As I said earlier, we have moved to provide a legal recognition of the status of mental health, which has for far too long been overlooked in the NHS as greater emphasis has been placed on physical health issues. In the mandate given to the NHS, they are now on an equal footing, but of course I accept that that parity of emphasis needs to be reflected in many individual commissioning decisions. I am not content when I hear that some clinical commissioning groups are not yet reflecting the equality of esteem for mental and physical health in their commissioning decisions. As the hon. Gentleman knows, we have put hundreds of millions of pounds into improving talking therapies, and hundreds of millions of pounds into improving mental health for children, but I accept that there is still a long way to go.
Sheryll Murray (South East Cornwall) (Con)
I understand that my right hon. Friend had discussions last week with a resident of North Cornwall about the disposal of dredge spoil in Whitsand bay in my constituency and is reported as being shocked that all sides are passing the buck. What action has he taken or is he taking?
The Deputy Prime Minister
I am sure the hon. Lady will have raised the matter with the Department for Environment, Food and Rural Affairs, which will need to look into it. If she has not done so, I strongly urge her to do so. I am keen to ensure that that happens. I was not aware of the issue, but I can certainly imagine that it is a matter of great concern to the local residents she represents.
Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)
T10. The Government’s bedroom tax has affected nearly 2,000 families in Redcar and Cleveland, putting some families into arrears and increasing the number of unused, vacant properties. Does the Deputy Prime Minister think his policy has been a success in relation to his portfolio of increasing social mobility?
The Deputy Prime Minister
The hon. Gentleman may wish to bury his head in the sand, but there is a problem. About 1.7 million people are unable to get into housing, many children in our country are living in overcrowded properties where there is no space for them to do their homework, and there are 1.5 million spare bedrooms. We somehow need to make sure that those who do not have space are provided with it, and we need to deal with overcrowding, and that is what the Government are seeking to do.
Mr James Clappison (Hertsmere) (Con)
A few moments ago, the Deputy Prime Minister was a tad shy when my hon. Friend the Member for Christchurch (Mr Chope) asked him about the coalition policies that the Liberal Democrats had vetoed. Will he confirm that transparency is one of the principles that fall within the ambit of his responsibilities for constitutional reform, or do we have to wait until the general election and the Liberal Democrat manifesto to hear about the Liberal Democrats’ commitment to open government?
The Deputy Prime Minister
The hon. Gentleman wants some examples: I said no to proposals from his party that anyone could basically be fired at will with no reason at all; I said no to his party’s proposals for a snoopers charter; and I have said no to profit making in state schools and to prioritising tax cuts for millionaires when our priority should be tax cuts for many people on middle and low incomes. If he wants me to go on about how the Liberal Democrats are anchoring the Government in the centre ground to ensure that we build a stronger economy and a fairer society, be my guest.
Bridget Phillipson (Houghton and Sunderland South) (Lab)
T11. A recent answer to a parliamentary question reveals that by 2015 construction will have started on only 10% of schools in the Deputy Prime Minister’s priority school building programme. Is he happy with that record?
The Deputy Prime Minister
There has been a long record of ineffective use of the public funds provided to schools for their redevelopment. The Building Schools for the Future programme, for instance, was widely recognised to be inefficient in the deployment of funds. We are providing billions and billions of pounds of capital so that schools can be rebuilt across the country, and of course all of us, on behalf of our constituents, want that rebuilding programme to take place as soon as possible.
Tessa Munt (Wells) (LD)
Will the Deputy Prime Minister encourage his colleagues to apply for a grant for Somerset from the European regional disaster fund before the deadline of 4 April? Gloucestershire had £31 million from the EU solidarity fund after the flooding in 2007; why not Somerset?
The Deputy Prime Minister
I know my hon. Friend feels strongly about that, but I hope she is also aware that there are a number of eligibility requirements when seeking to access funds from the EU solidarity fund. We have compared the damage today with the 2007 floods, and following contact with the European Commission, our assessment is that we have not met those conditions. Of course, that does not mean that there are not other avenues that we can explore. As I think she knows, we are having discussions with EU institutions such as the European Investment Bank to support the existing package of UK Government assistance, which includes £130 million for flood recovery in the south-west.
Diana Johnson (Kingston upon Hull North) (Lab)
T13. May I ask the Deputy Prime Minister about another of his pledges—universal free school meals for infants from September, which were pioneered in Hull but scrapped by the Liberal Democrat council when it came to power? Will he confirm whether they will be hot school meals or cold packed lunches?
The Deputy Prime Minister
They need to be healthy meals that are provided to all toddlers and young children in the first three years at primary school. The hon. Lady is right that that has been piloted across the country, not only in her constituency but in Durham, Newham and elsewhere, and it has been shown to provide dramatic educational benefits. Of course the majority of the meals will be hot, but we are not going to prescribe, in the centralising way that I know her party is so fond of, that they are going to be hot in every single location across 24,000 schools in our country, but they do need to be healthy, hot and freely available. That will benefit families to the tune of hundreds of pounds and boost social mobility across the country.
Nick de Bois (Enfield North) (Con)
The Deputy Prime Minister takes a lot of personal credit for extending free child care places for two-year-olds from families on low incomes from September. However, what advice would he give the headmaster of Carterhatch children’s centre, who is now telling fee-paying parents to remove their children from his school to make way for that expansion?
The Deputy Prime Minister
This is not a zero-sum game between better-off families and less better-off families. The evidence is overwhelming that if we want all children from all backgrounds to do well, regardless of the circumstances of their birth, we should use what available resources we have to give pre-school support to very small children—two-year-olds—from the poorest families. That is why it is a groundbreaking entitlement. I accept that it is of course a challenge for some nursery settings, but I very much hope and I think it is already the case that it is being implemented successfully across the country and will benefit children for many years to come.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
Will the Deputy Prime Minister go back and think about universities, and perhaps talk to some vice-chancellors? Vice-chancellors who are giving evidence to the Higher Education Commission, which I co-chair, have said that they are extremely worried about the long-term financial sustainability of a higher education system based on a mountain of student debt.
The Deputy Prime Minister
What I find so curious is that the hon. Gentleman’s party now seems to be attacking our student loans repayment system for being too generous. It is more generous in many respects than the one over which Labour presided. Under Labour, graduates had to pay back the moment they earned £15,000; under our system, they do not have to pay anything back at £16,000, £17,000, £18,000, £19,000 or £20,000, but only at £21,000. The figures he refers to are predictions, which will of course vary wildly from one estimate to the next, about what graduates will earn not next decade, not the decade after that and not the decade after that, but in 35 years. Surely he should focus on the success of more young people from disadvantaged backgrounds going to university, rather than trying to make political mischief about what may or may not happen in 35 years’ time.
Stephen Lloyd (Eastbourne) (LD)
After the general election, I had the privilege to be the first MP to introduce 100 apprentices in 100 days for Eastbourne, which was a huge success. Since then, more than 3,000 new apprentices have started in Eastbourne, which is more than in the previous seven years put together. However, I have a real concern. A lot of the apprenticeships have come through on a level 2 pathway, which is crucial for people who are less academic, and I am concerned that the Labour party appears to be pulling that rug out from under them. What does the Deputy Prime Minister have to say about that?
The Deputy Prime Minister
I certainly share my hon. Friend’s pride in the fact that this Government, led by my right hon. Friend the Secretary of State in the Business Department, have spearheaded the largest expansion of apprenticeships in living memory. I am utterly dismayed that the Labour party wants to pull the rug out from under hundreds of thousands of youngsters on level 2 apprenticeships by no longer calling them apprentices. What a great way to support young people in our country!
Mr David Hanson (Delyn) (Lab)
1. What recent assessment he has made of the capacity of the Serious Fraud Office to confiscate the proceeds of crime.
The Solicitor-General (Oliver Heald)
The last external assessment was completed by the National Audit Office as part of its report on confiscation orders in December 2013.
Mr Hanson
Last year, the Serious Fraud Office collected £3.9 million in proceeds of crime, but it hoped to collect £32 million. Will the Minister explain why the shortfall occurred, what he intends to do about it and whether the £19 million requested Treasury bail-out has anything to do with that shortfall?
The Solicitor-General
No, the shortfall does not have anything to do with that figure. It is worth bearing in mind the fact that money is recovered in different ways. More than £76 million has been returned to victims as a result of Serious Fraud Office activity since 2009, so it is wrong to ignore compensation and other moneys paid to victims when looking at the overall picture.
Emily Thornberry (Islington South and Finsbury) (Lab)
The Solicitor-General refers to the National Audit Office report—it was shocking, was it not?—which talks about how the confiscation of criminal assets is just not working at the moment. There are 27% fewer asset restraining orders than there were in 2010; £450 million remains unpaid, even after defendants have served extra time; and £285 million in foreign banks cannot be touched—I could go on, but I am sure that Mr Speaker would not wish me to do so. What plans do the Solicitor-General and Attorney-General have to strengthen enforcement of confiscation orders? Will the Solicitor-General improve our co-operation with overseas jurisdictions? How can we make sure that our justice system gets its hands on these ill-gotten gains?
The Solicitor-General
The hon. Lady is covering a much broader area than that raised in the question. As I think she would agree, the Serious Fraud Office has a superb unit that is actively after the money that it leads on—£100 million—and it is believed to be extremely competent. [Interruption.] The extra money is nothing to do with this particular aspect. Overall, we do need a proper strategy to improve confiscation and asset recovery, and that is under way. Ministers are meeting on the matter, and a new strategy from the Crown Prosecution Service was explained in more detail when evidence was given to the Justice Committee. I think the hon. Lady is being over-critical, as it is not always easy to extract money that is overseas in complex trust arrangements and hard to recover.
Jason McCartney (Colne Valley) (Con)
2. What assessment he has made of the legal implications for the UK of Russia’s recognition of Crimea as a sovereign state.
Jack Lopresti (Filton and Bradley Stoke) (Con)
3. What assessment he has made of the legal implications for the UK of Russia’s recognition of Crimea as a sovereign state.
The Attorney-General (Mr Dominic Grieve)
The steps taken by President Putin to annex Crimea to Russia, including recognition of Crimea as a sovereign state, are a flagrant breach of international law and Russia’s international obligations. The United Kingdom, in common with the European Union and the majority of the international community, does not recognise the 16 March Crimea referendum or its outcome as legitimate or of any credibility or value. As has been made clear by my right hon. Friends the Prime Minister and the Foreign Secretary at this Dispatch Box, Russian actions threaten the rules-based system of international order, a fundamental principle of which is respect for the territorial integrity of states.
Jason McCartney
My constituents of Ukrainian descent in Huddersfield are following this crisis closely. Does my right hon. and learned Friend agree that this crisis should have been resolved through diplomacy and international law, and that we, and others, must not exacerbate the situation through such unilateral and provocative actions?
The Attorney-General
I agree entirely with my hon. Friend. As he is aware from what the Prime Minister said, there was no basis or justification for Russia’s actions in Crimea, even before it moved on to annexation. Its decisions to do that are, as I said, in flagrant breach of its international legal obligations. The United Kingdom is co-operating with other states, including those of the G7 and the European Union, in making clear that such behaviour is unacceptable, and that there will continue to be consequences for as long as Russia does not de-escalate the crisis.
Jack Lopresti
Does my right hon. and learned Friend agree that it is more important than ever that we depend on the stability and security of the international order?
The Attorney-General
I agree entirely with my hon. Friend. Although at times people call into question the mechanisms of international order under the charter of the United Nations, or in a European Context those of the Council of Europe, they have delivered over time real improvements in the way in which states behave towards each other. That is why the actions of the Russian Government in tearing up the rule book in this way are so sinister and so chilling.
Wayne David (Caerphilly) (Lab)
Is the Attorney-General satisfied that the United Kingdom in particular has fulfilled all its obligations under the Budapest memorandum?
The Attorney-General
I have no reason to think that the United Kingdom has not fulfilled its undertakings under the memorandum. The memorandum provided some important mechanisms and assurances for the Ukrainian Government when Ukraine gave up its nuclear arsenal, and it is clear that those have not been observed by the Russian Government.
Mr Christopher Chope (Christchurch) (Con)
So why does the United Kingdom not move to expel Russia from the Council of Europe? My right hon. and learned Friend has said in the past that if we do not give prisoners the vote we will be expelled from the Council of Europe, so surely on the issue of proportionality it is important that we spell out to Russia that it should leave the Council of Europe, and if not, it should be expelled.
The Attorney-General
As my hon. Friend is aware, and as the Prime Minister made clear at the G7 summit, the United Kingdom Government will, along with its partners, look at a range of sanctions and responses, depending on how the crisis unfolds and whether the Russian Government seek to de-escalate it. The best answer I can give is that nothing is ruled out at all.
Paul Flynn (Newport West) (Lab)
4. What plans he has to reduce the running costs of the Law Officers’ departments.
The Solicitor-General (Oliver Heald)
Over the next two financial years, the total expenditure of the Law Officers’ departments will be reduced through measures such as shared legal services, reduction in non-front-line staff, increased digitalisation, rationalisation of estates and more efficient court listing practices.
Paul Flynn
How much is the Department spending to contest freedom of information and court decisions, in order to suppress information to the public? The claim has been made that information is available that would show that an important person is unfit to do his future job. Should we not allow the lobbying letters of Prince Charles to be made public?
The Solicitor-General
The hon. Gentleman raises a case that involves issues of constitutional significance, including upholding Parliament’s intentions for the freedom of information regime and the Government’s ability to protect information in the public interest. It is important that the Government continue to fight the case in question. To protect public funds, if we are successful at the next stage of the legal proceedings, we would expect The Guardian to meet our legal costs in full.
Stephen Mosley (City of Chester) (Con)
5. What progress has been made on commencing new inquests into the deaths at Hillsborough.
The Attorney-General (Mr Dominic Grieve)
My hon. Friend has a long interest in this matter in his role as vice chair of the all-party group on Hillsborough and because Anne Williams, who sadly died last April and whose son Kevin died at Hillsborough, was one of his constituents. As the hon. Gentleman may know, a number of pre-inquest hearings have taken place since the appointment of Lord Justice Goldring in February 2013. I am able to tell him that the inquests themselves are scheduled to commence next week on 31 March.
Stephen Mosley
Tuesday 15 April marks the 25th anniversary of the Hillsborough disaster. Friends and relatives of those affected have waited far too long to find out what happened. With the inquests starting next week, will my right hon. and learned Friend confirm that the press now have to be extremely careful in how they report the inquests, to avoid any form of accusation of prejudicing inquests?
The Attorney-General
I agree entirely with my hon. Friend. The families have waited a long time, and I am very pleased that the inquest is going to take place. It is right that the coroner issued a warning on 11 February about reporting, and I issued a contempt advisory on 10 March. It is important that the issues that will be raised and considered at the inquests are not prejudged through comment in the media or social media, and that the lawyers representing the families, the coroner and the jury can get on with their work.
Mr Speaker
I am grateful to the Attorney-General. I think right hon. and hon. Members will have taken note of the substance of that reply.
Alison McGovern (Wirral South) (Lab)
I thank the Attorney-General for his comments. As the hon. Member for City of Chester (Stephen Mosley) pointed out, we will soon mark the 25th anniversary of Hillsborough. It is important to remember that we lost 96 individual people, and that thousands more were terribly affected. Will the Attorney-General join me in remembering the people we lost and offer his support to the memorial events taking place over the next month or so?
The Attorney-General
I am very happy to join with the hon. Lady in that respect. Having studied the papers that led me to make the reference to the High Court to seek a fresh inquest, I can understand the scale of the tragedy that took place very well indeed. For those reasons, I hope the commemoration goes well and is of use and help to the families. I join wholeheartedly in the sentiment she has expressed.
Andrew Gwynne (Denton and Reddish) (Lab)
6. What steps the Director of Public Prosecutions is taking to improve the timeliness with which charging decisions are reached in cases of rape.
Paul Blomfield (Sheffield Central) (Lab)
8. What steps the Director of Public Prosecutions is taking to improve the timeliness with which charging decisions are reached in cases of rape.
The Solicitor-General (Oliver Heald)
The Crown Prosecution Service’s new rape and serious sexual offences units now advise police in all areas at the start of rape investigations. Rape charging decisions require meticulous attention and can include complex evidence. They are monitored by the Director of Public Prosecutions in all areas at six-monthly intervals, and recent improvements have resulted in the highest ever levels of rape convictions.
Andrew Gwynne
But figures unearthed by the Opposition show that it is taking prosecutors more than a month to charge alleged rapists—10 days longer than it took five years ago. Is it not awful for rape victims to have to wait that extra period, and does it not run the risk that they will withdraw their support for a prosecution? What are the Government going to do about that?
The Solicitor-General
It is important to charge as soon as possible, particularly when vulnerable witnesses are involved, and there is a protocol to that effect between the Crown Prosecution Service and the police. However, it is also important for the CPS to be able to take on more cases that are referred to it by the police than has previously been the case, and to take on more complex cases involving more vulnerable victims. It is doing that now, and the result is an improved conviction rate. While timeliness is important, it is also vital for there to be that careful attention to detail which results in a successful outcome.
Paul Blomfield
What assessment has the Solicitor-General made of the impact on CPS charging times of the loss of a quarter of CPS solicitors and the closure of 40 operational offices since 2010?
The Solicitor-General
It has had no impact whatever, because there has been a clear prioritisation of cases of this kind—involving specialist rape prosecutors—and, indeed, of child abuse cases. Cuts would certainly never affect performance, and the overall statistics show that they are not doing so
Rehman Chishti (Gillingham and Rainham) (Con)
In a recent statement, the Minister for Crime Prevention said that he had
“held discussions with the Director of Public Prosecutions, who has agreed to establish a CPS-police scrutiny panel to look at how forces deal with rape.”
When is that panel likely to be set up?
The Solicitor-General
This is part of the six-point plan that I outlined during an earlier Question Time. It is designed to establish why there are fewer referrals from the police, and, in particular, why that is the case in certain parts of the country. The national scrutiny panel will sit on 4 April with the Director of Public Prosecutions and the national policing lead on rape, and will examine evidence compiled from seven police force areas to see what the implications are.
Valerie Vaz (Walsall South) (Lab)
What steps is the Solicitor-General taking to support victims in rape cases?
The Solicitor-General
A range of special measures can be taken in the courts themselves to make the experience of court less troubling for vulnerable witnesses. There are also witness care units. I have already mentioned the rape and serious sexual offences units, which are another part of our efforts to support witnesses. As the hon. Lady has implied, if prosecutions of this kind are to be effective, there must be confident witnesses who are prepared to explain exactly what happened, and that is what we are aiming to achieve.
Rosie Cooper (West Lancashire) (Lab)
7. What recent discussions he has had with the director of the Serious Fraud Office on funding arrangements for that agency.
The Attorney-General (Mr Dominic Grieve)
I meet the director of the Serious Fraud Office regularly to discuss a range of matters, including finance. The SFO has a current core budget to enable it to carry out its work, but the nature of that work means that it will need additional funding from time to time for its very largest and most complex investigations and prosecutions, such as those relating to LIBOR. As with any other department, the principal arrangement is for the SFO to apply for any additional funding that is required during the year through the estimates process, as it has recently done.
Rosie Cooper
As the Attorney-General has just explained, because the SFO is so underfunded, every time a major case comes along it must go cap in hand to the Chancellor for more funds. David Green, the director of the SFO, has described the arrangement as
“a mystery…inside an enigma”,
and has told the Justice Committee that he is
“keen that an appropriate and more certain funding model can be agreed by all those with an interest.”
Will the Attorney-General do as the director has repeatedly asked, and review the funding arrangements?
The Attorney-General
If I may say so, I always keep the funding arrangements under review, and I am always happy to discuss them with my colleagues in the Treasury. The nature of the SFO’s work load is very flexible, and I therefore think it almost inevitable that if it is to do its work effectively, there will be occasions when it will need extra funding, or will require funding in excess of what it needs. This is an interesting balance which we need to look at. That said, I am mindful of the fact that there may be other ways in which the funding can be delivered and I discuss that frequently with the director of the Serious Fraud Office.
Kerry McCarthy (Bristol East) (Lab)
9. What discussions he has had with the Crown Prosecution Service on prosecuting crimes of violence against subcultures as hate crimes.
The Solicitor-General (Oliver Heald)
I pay tribute to the work the hon. Lady has done in this area. The CPS prosecutes violent offences robustly, including cases where victims have been attacked on the basis of subculture. Targeting particular groups is treated as an aggravating feature in such cases.
Kerry McCarthy
I thank the Minister for that response. As he is aware, I have been working with the Sophie Lancaster Foundation. She was killed seven years ago and her mother has been tirelessly campaigning for police forces to record such crimes as hate crimes. Might it be part of the sentencing guidelines given to courts that they can sentence specifically in relation to hate crimes?
The Solicitor-General
At present statutory provisions cover cases motivated by hostility or prejudice based on race, religion, sexual orientation, disability or transgender identity, but none the less it is possible for a judge to sentence on the basis that the crime was motivated by hate of a different kind, as Judge Russell did in the case the hon. Lady mentioned, and to treat that as an aggravating feature. I think the hon. Lady is arranging a meeting at the House of Commons tomorrow at which the Sophie Lancaster Foundation will be having a listening event.
Point of Order
Helen Jones (Warrington North) (Lab)
On a point of order, Mr Speaker. I have given notice of this to the hon. Member concerned. On Thursday, the Under-Secretary of State for Education, the hon. Member for South West Norfolk (Elizabeth Truss), visited my constituency, a visit of which I was given notice while she was driving, I understand, from one part of Warrington to another. I do not know whether that was down to the Minister’s inexperience or her lack of knowledge of the geography of Warrington and the boundaries of Tory marginal seats, or whether she simply did not want to discuss the recent funding announcement in which Warrington did not get any money. However, will you confirm, Mr Speaker, that the normal courtesies of the House require notice to be given to a Member in a reasonable time frame when a Minister is visiting their constituency, not when they are driving from one part of the town to another?
Mr Speaker
I am happy to confirm that that is the established convention. Moreover, the convention applies across the piece; that is to say, when any Member visits another Member’s constituency on parliamentary or official business, prior and timely notification is required, so the convention does not apply only to Ministers or shadow Ministers. It is on the whole rather unseemly for this matter to have to be aired on the Floor of the House. I make no criticism of the hon. Lady, but it would be good to think colleagues could treat each other with courtesy and that there would not be a necessity for the matter to be raised again on the Floor of the House. I hope note is taken, and it is very important that this convention is observed, not merely in terms of the letter, but of the spirit.
Bill presented
Energy in Buildings Bill
Presentation and First Reading (Standing Order No. 57)
Martin Caton, supported by Mr David Amess, Sir Bob Russell, Mr Clive Betts, Joan Walley, Dr Alan Whitehead, Paul Burstow, Jim Dowd, Caroline Lucas, Andrew George, Dame Joan Ruddock and Roger Williams presented a Bill to require the Secretary of State to draw up and publish an Energy in Buildings Strategy; to make provision to implement that Strategy; and for connected purposes.
Bill read the First time; to be read a Second time on Friday 6 June, and to be printed (Bill 188).
Representation of the People (Scotland)
12:47 - The House divided: - Ayes: 16 / Noes: 226 - Question accordingly negatived.
John Stevenson (Carlisle) (Con)
I beg to move,
That leave be given to bring in a Bill to amend the Representation of the People Act 1983 to disenfranchise all residents of Scotland eligible to vote in any United Kingdom General Election held after 18 September 2014 in the event of a positive vote in the Scottish Independence referendum; and for connected purposes.
This Bill seeks to address one of the consequences that would arise from a yes vote in the Scottish referendum. On 18 September, the people of Scotland will decide whether they will remain part of the United Kingdom or become an independent country. Whichever route they choose, the result will have major implications, not just for Scotland, but for the rest of the United Kingdom. I very much hope, and I believe the overwhelming majority of this House would wish, that the Scottish people will vote to remain part of the United Kingdom. Indeed, I would very much like a decisive and resounding no vote to cement the Union between Scotland and the rest of the United Kingdom, and to demonstrate clearly that Scotland, although governed differently and with a large amount of autonomy, is still a proud part of the United Kingdom—one that wants to remain part of the United Kingdom. I acknowledge that should Scotland vote no in the referendum, there would still need to be a review of the devolved powers. In my view, both the Scottish Government and the English councils should have far greater power and responsibility on issues such as taxation. But the purpose of this Bill is not to deal with the outcome of a no vote; it is to deal with the consequences of a yes vote.
If Scotland were to vote yes, a substantial number of issues would need to be addressed, negotiated and agreed to. Such issues would preoccupy civil servants and Ministers for months, but I do not wish to touch on any of them today. I do, however, wish to address one issue of huge constitutional significance: the returning of Scottish MPs to Westminster in the 2015 general election in the event of a yes vote. If, on 18 September, there is a majority vote for independence, Scotland would not suddenly become an independent country: negotiations would have to take place; treaties would have to be signed; Acts of Parliament would have to be passed; political and practical arrangements would have to be put in to place; and then, probably at some time in 2016, a formal separation would take effect. But what would happen in the 2015 general election?
For a number of reasons that I wish to discuss today, I believe it would be unacceptable to this House and to the remaining parts of the United Kingdom for Scottish MPs to be returned to this Parliament in 2015 after a yes vote. That is why I want to tackle this issue head-on by introducing a Bill to remove all Scottish constituencies from the 2015 Westminster election in the event of a yes vote on independence. Some may ask: why is there a need to do this? Why is this so important? The first reason is a simple point of principle. At the moment, the consensus seems to be that Scotland would return MPs to Westminster in the 2015 election until such time as the country becomes independent, but that is wholly unacceptable. Why should the peoples of Northern Ireland, Wales, and England have laws passed upon them in this House by MPs who will, for all intents and purposes, be about to be part of a foreign country with divergent interests and priorities?
Some may argue that if we remove the Scottish constituencies in the 2015 election Scotland would not be properly represented, but I do not believe that is the case. Scotland would have its own existing Scottish Government and Parliament to represent it. It would certainly be a period of transition, but the Scottish Parliament would, I am sure, be capable of managing it, while fully representing the people of Scotland, before taking full national responsibility.
That period of transition brings me to the second reason for the removal of the Scottish constituencies. How can proper and fair negations be had between Westminster and the Scottish Government if there are still Scottish MPs having influence in Westminster? In the event of Scotland voting for independence, it is incumbent on Members of this House to represent the interests of the rest of the United Kingdom during any such negotiations. Unless the Scottish constituencies are removed, we will be left with the perverse situation whereby Scottish MPs, arguably representing the rest of the United Kingdom, are negotiating with the Scottish Government and Parliament representing Scotland. Nobody can seriously believe that the interests of the rest of the United Kingdom would be served under those arrangements.
The final reason this Bill is necessary is the political implication of the arrangements for the 2015 election. Let us imagine that the Scottish MPs, soon to leave the Westminster Parliament, held the balance of power in this Parliament—that is hardly inconceivable. It would mean that, potentially, the Prime Minister would be chosen by representatives from a part of the UK that is shortly to become an independent country, who—let us be realistic—will have little concern about the future of the rest of the United Kingdom.
In addition, of course, in 2015 the Scottish people would be voting knowing full well that they would soon be an independent country. That will hugely affect the way they vote; knowing that Scotland was about to enter into a serious period of negotiations, the Scottish people are likely to vote with that in mind—who could blame them? They will naturally and understandably vote for their own interests, knowing that it would be their chance to get representation on the other side of the negotiating table. That would be unacceptable for the people whom I represent, and this Bill seeks to avoid an unnecessary constitutional problem in the event of a yes vote. Without it, the interests of the rest of the United Kingdom would simply not be served. Worse still, they could be actively undermined.
The Scottish Government are capable of representing the Scottish people during the transition period to independence should a yes vote occur, and this House, whatever Government it supports, should only represent the rest of the United Kingdom, and should only be made up of representatives from the rest of the United Kingdom.
I speak as a proud Scot, sincerely hoping that on 18 September the people of Scotland will vote no. A yes vote would not be in the interests of Scotland, the rest of the United Kingdom, or my constituency of Carlisle. I am in the unusual position of proposing a Bill that I do not want to see take effect. I will campaign vigorously for Scotland to remain part of the Union. However, we must prepare for both eventualities after the referendum in September. That is what this Bill does. I therefore commend it to the House.
Thomas Docherty (Dunfermline and West Fife) (Lab)
I rise to oppose the Bill that has been brought forward today. It is slightly ironic that, on the one side of the argument, we have the hon. Member for Carlisle (John Stevenson) who was raised in Scotland and who represents a Cumbrian constituency, and on the other side, we have a Member who is proud to have been raised in Cumbria and now represents a Scottish constituency.
I am proud to be British, proud to be a Scot and proud to be a Cumbrian. I do not see any need to have the false divide that the handful of nationalists who have turned up today seek to put forward. My right hon. Friend the Member for Edinburgh South West (Mr Darling) leads the campaign to keep the UK together, and I am delighted to say that, under his leadership, we continue to enjoy the confidence of the majority of Scots. We look forward, in the months ahead, to the First Minister and my right hon. Friend debating the matter and setting out the argument.
The hon. Member for Carlisle raised an interesting issue, which is worthy of further debate. I look forward to having longer and fuller discussions in the months ahead. None the less, there are flaws in his argument. Some 430,000 residents of Scotland were born elsewhere in the United Kingdom. They face a difficult choice if the unthinkable happens and Scotland chooses to break away from the rest of the United Kingdom. The question I put back to the hon. Gentleman, who made his case well, is this: who represents those 430,000 non-Scots-born residents of the United Kingdom? What also happens about the important issues that will continue to have to be debated in the period between the 7 May general election and the date in March 2016 when Scotland breaks away from the rest of the United Kingdom? I imagine that the Scots will still be expected to pay taxes to the Treasury; I am conscious of the debate that follows this one. What happens to those Scots? Would they, under the proposal put forward by the hon. Gentleman, continue to pay taxes to the Treasury?
What happens to the spending decisions that would affect Scotland in those 10 months between the general election and the break up of Britain? Would the Departments of the UK Government still make spending decisions on behalf of the Scots? What happens on issues such as defence and international relations? What happens in the dreadful event of this country being required to take military action? Would the brave men and women who served so proudly in the British armed forces be represented and have their voices heard?
Unfortunately, the hon. Gentleman did not mention what would happen in the other place. There are Members of the House of Lords who arguably would face a constitutional issue as well—[Interruption.] I am sorry that the nationalists continue to chunter from a sedentary position rather than listening to the debate that is taking place.
Many of the hon. Gentleman’s constituents work over the border, for example at the decommissioning site in Chapelcross. As the Under-Secretary of State for Scotland, who is in his place, knows, many residents of England work at Chapelcross at a station under the control of the Department of Energy and Climate Change. Who would be responsible for the decommissioning of Chapelcross during those 10 months? The hon. Gentleman did not answer those questions, unfortunately.
In the Edinburgh agreement, the Prime Minister and the First Minister set the date of 18 September. For a Conservative Member to have realised only now that a constitutional issue needs to be dealt with is slightly surprising, and he might perhaps be better off taking up the issue with the Prime Minister.
This is not the first time that the United Kingdom has had to consider such constitutional issues. In the last century, when the southern part of Ireland chose to break away, the same issues had to be examined. Following the ceasefire in July 1921, a number of non-Sinn Fein Members continued to sit in Parliament. Constitutionally, they were perfectly entitled to do so and they played an important role. I am grateful to the House of Commons Library for providing some information about that. Important issues had to be resolved. What will happen to the service personnel in Scotland who do not wish to be part of the Scottish defence force? The same issues were considered by the five Members from the south of Ireland—from Dublin and elsewhere, Independent Unionists and others—who took part in the debate. What will happen to our pensions? What will happen to our property, assets and liabilities?
It is not just a question of ensuring that the interests of those 430,000 residents in Scotland are looked after. Important constitutional issues need to be debated. Further to the point of order that was made earlier, if the hon. Gentleman is, as I believe, sincere that he does not seek the break-up of the United Kingdom, I offer him an open invitation to come over the border to Dumfriesshire, Clydesdale and Tweeddale, to Dumfries and Galloway and to the rest of Scotland. The vast majority of Members of this House and the other place do not wish to see Scotland break away from the rest of the United Kingdom.
I appreciate the spirit in which the hon. Gentleman has introduced his Bill, and it is not in Scotland’s interests that we break up the United Kingdom, but there are important constitutional issues to deal with and this is not the mechanism by which to do that. The Opposition will not support him today and we urge colleagues on both sides of the House to reject the proposition, so that we can go forward—better together—to 18 September and keep Britain together.
Question put (Standing Order No.23).
Ways and Means
Budget Resolutions and Economic Situation
amendment of the law
(10 years, 1 month ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
18:58 - The House divided: - Ayes: 305 / Noes: 252 - Question accordingly agreed to.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
Last week the Chancellor presented his Budget, reiterating this Government’s commitment to a long-term economic plan. [Interruption.] I will say that again—a long-term economic plan, something that Labour does not have or is in search of, I am not sure. We are restoring the public finances and supporting businesses while providing security and stability for Britain’s families. I must say that today’s other news that inflation is down to 1.7% is very good news for hard-working families.
Following Labour’s great recession, which, I remind the House, wiped out 7.2% of our economy, worth £112 billion or £3,000 for every household in the country—it is still in denial—last week we learned that our economic recovery is now established and taking hold faster than originally forecast.
Mr Duncan Smith
I will give way, but many Members want to speak, so first I want to make a little progress.
A year ago, the Office for Budget Responsibility predicted that growth in 2014 would be 1.8%. Now, the forecast is 2.7%, the biggest upward revision between Budgets for at least three decades. The deficit has fallen by a third in three years, and is forecast to halve by next year. By 2018-19, the OBR expects the public finances to move into surplus by some £4.8 billion for the first time in 18 years. Before that, in 2017-18, the fiscal mandate will be met a year early. Employment has been revised up and unemployment revised down in every year of the forecast.
David Wright
The right hon. Gentleman was talking earlier about the process under the previous Government, and he claimed that it was Labour’s recession. When he was leader of the Conservative party was there any point at which he did not agree with the spending plans of the then Chancellor of the Exchequer?
Mr Duncan Smith
I remind the hon. Gentleman that when one goes into government one is responsible for what happens. I know it is hard to take, but I have always believed that one wants to go into government to take responsibility for all the things that take place while one is government. He may not want to know it, but the reality is that the Labour was in government, the recession was very hard, and people have suffered.
There is still more to do—we have not done enough—if we are to secure Britain’s future. That is why the Budget set out further investment to ensure a resilient economy that delivers the promise for business that it can compete with the best in the world, and hope for families—this is important—about their prospects now, and for their children’s futures. From next week, corporation tax will be down to 21% from the 28% inherited from Labour, and will be down again to 20% next year—the joint lowest in the G20—making it competitive to invest in Britain, which is good for jobs and good for young people.
That will be matched by the best export finance, doubling direct lending to £3 billion and the investment allowance to £500,000, so that British business can take advantage of the best opportunities at home and abroad. Again, that is good for investment and good for growing jobs.
We are cutting tax not just for business but for Britain’s hard-working people, ensuring all can share in the benefits of Britain’s growth. By raising the personal allowance threshold to £10,500 next year, we are taking some 3 million of the lowest paid out of tax altogether and ensuring 25 million people pay less.
As a result of those changes since 2010, the typical taxpayer is £800 better off—something that Labour’s simple measure of real earnings fails to recognise. Similarly, through new child care support, we are helping families overcome prohibitive costs and ensuring that more parents find that it pays to get a job. Under universal credit, we have already invested £200 million to remove the 16-hour rule, so that 100,000 families in mini-jobs or part-time work receive help for the first time. Now, we are going further still, increasing child care support from 70% to 85% of costs so that work pays more for half a million families.
It pays to work, and now, finally, it pays to save, reversing the damaging trend whereby for too long Britain has borrowed too much and saved too little. The radical changes to retirement saving announced in the Budget are possible only because of the significant pensions reforms the Government have already delivered: a triple lock on the state pension; auto-enrolment to make saving the norm, helping up to 9 million save in a workplace pension—over 3 million are already saving, and I give due credit to the Minister of State, my hon. Friend the Member for Thornbury and Yate (Steve Webb) for that—and, vitally, the single-tier pension, for which I again give credit to my hon. Friend, set above the level of the means test, so that those who have contributed for 35 years have a secure basic income, without having to resort to additional state support in later life.
Mr Mark Harper (Forest of Dean) (Con)
I listened carefully to what my right hon. Friend said about incentives to work. Will he say a little about the 450,000 fewer workless households, and the 290,000 fewer children living in such households? Perhaps that has something to do with his welfare reforms.
Mr Duncan Smith
I am going to come on to that, but one of the great success stories is the fact that the number of workless households has fallen for the first time in 30 years. My hon. Friend is absolutely right, and I shall give a few more details about that in a second.
Mr Duncan Smith
I shall make a little more progress before giving way to the hon. Member for Edmonton (Mr Love).
As a result, for the first time, we can rethink the rules and trust people to use their own money as they see fit, not as the Government tell them. After the Budget, gone will be the prescriptive limits on how and when people can turn their pension pot into annual income, which, we all agree led, for too long, to inertia among consumers and risked locking people into low-yield annuities, with rates that have fallen by 15% since 2009. In countries such as the United States, Australia and Denmark, Governments do not impose restrictions. Now, that will be the case in the UK too, freeing people to shape their finances in retirement as they choose, which is absolutely right.
We are consulting on guaranteed guidance—an important feature of the Budget—asking the Financial Conduct Authority to work with the pensions regulator, consumer groups and others, to develop a robust set of standards and monitoring arrangements, with £20 million provided to kick-start that thinking. Whether people choose to buy an annuity as now, take the cash, or grow their pension pot, the reforms will increase the attractiveness of saving for retirement. That will pave the way for new financial products, increasing competitiveness in the market, driving innovation and a better service, as well as giving people new choice over their future.
Mr Andrew Love (Edmonton) (Lab/Co-op)
The OBR has forecast that under the Budget the savings ratio will fall to 3%. Is the Secretary of State concerned about that, and what action will he take to get savings back on an upward path?
Mr Duncan Smith
As I recall, the savings ratio under the previous Government fell to all-time lows, and under this Government it will be higher at the end of this Parliament than it ever was under Labour. When I take interventions from the Opposition they always fail to recognise that the economy crashed in 2009-10, taking 7.2% off gross domestic product, which had a staggering effect on savings and everything else. The reality is that we will have a better savings position, which will grow, given the fact that we are working to improve savings in pensions in the workplace, with a single-tier pension and giving people the right and responsibility to choose where their savings go.
Mr Duncan Smith
I have given already way to the hon. Gentleman, and I just want to make another point about something that is typical of what has been going on.
On Wednesday, in his Budget response, the Leader of the Opposition did not mention pension reforms at all. Come to think of it, he did not mention any single measure in the Budget. On Thursday, the shadow Chancellor would say only of the measure that Labour would somehow look at the proposals. On Friday, in a panic, I think, the hon. Member for Leeds West (Rachel Reeves) said on “Any Questions” that she supported the reforms. On Sunday, when asked whether he supported the measure, the shadow Business Secretary began to backtrack and said:
“I’m not going to sign a blank piece of paper on your show”.
Later the same day, the hon. Member for Leeds West began to backtrack, saying that Labour supported the reforms but that they did not go far enough. Labour’s position on this policy is a complete shambles. It has struggled to reach a position and say that it may support the measures not because it believes in it but because it realises that it is popular. The reason Labour does something is all about popularity and nothing to do with values—that is the truth of it.
Over and above the radical changes to pensions savings, the Budget announced four further important measures to make saving pay, including abolishing the 10p rate for savers altogether, for the first £5,000 of savings. As my right hon. Friend the Chancellor said, when we abolish a 10p rate, we take it to zero; when the previous Government abolished the 10p rate, they took it to 20p. Those measures also included merging cash and stocks to create a single, simple new ISA, with an increased annual limit of £15,000; launching a new pensioner bond, paying market-leading rates; and introducing something that we have worked on in the Department with the Treasury and my right hon. Friend, the excellent Chief Secretary: a class 3A national insurance contribution, so that anyone who has reached state pension age before the single tier is introduced can top up their state pension.
The Opposition’s response is becoming chaotic. I want to press the hon. Member for Leeds West: normally by this point in the Budget debate, I understand, the Opposition make it very clear what resolutions they will vote against, but we have heard nothing from them at all. It seems that there is a row and chaos, so I will give way to the hon. Lady if she would like to tell us which ones.
I particularly want to ask her about resolution 43, which, I understand, is about the treatment of salaried members within limited liability partnerships. I wonder if she can tell us whether the Opposition will vote against that, given the fact that their economic policy is now fundamentally limited, that their leadership is a liability, and, after all their rows, that they are clearly not in a partnership? I will give way to her if she would like to tell us which resolutions she is going to vote against. Will she confirm or deny that she is voting against anything? I will give way to her if she wants. Well, they clearly do not know, Mr Speaker, so we will look forward to this evening with some relish.
It now pays to save. That is what is going on—I am glad that you enjoyed that joke, Mr Speaker; you are always a good test on these things—and so under the Government it pays to work, breaking dependency and getting people back into jobs.
Mr Speaker
For the avoidance of doubt, I should just say that I was happy to see the Secretary of State looking happy.
Sheila Gilmore (Edinburgh East) (Lab)
The Secretary of State will be aware that, for very many people, the average level of savings is in the hundreds, not the thousands. Do the Government regret abolishing the savings gateway as one of the first measures they took on coming into government?
Mr Duncan Smith
When the hon. Lady got up to make an intervention, I wondered whether she would take the opportunity to say how much she welcomes the fact that unemployment has fallen by 20% in her constituency—a very good thing. I know she does not want to say that, but I say it for her.
I have to say to that no, we do not regret that. What we have undertaken since we came into power is going to hugely incentivise and improve pension savings and the savings marketplace. The extra vehicles announced in the Budget will rapidly improve that and I believe, all in all, that we will have a much better savings position than we inherited, so I think I have answered that question.
I need to make the point about employment and unemployment. Let me get this right: when we came into power, we inherited a situation where unemployment rose by nearly half a million. At its peak, some 5 million were on out-of-work benefits—1 million for a decade or more—and in one in five households, no one worked. The number of households where no member had ever worked doubled under Labour, from 184,000 in 1997 on an upward trend to 351,000 by 2010. I do not recall Labour Members mentioning those figures, and they avoided them when they were in power.
Correspondingly, since we came to power, unemployment is down 168,000 since the election. The claimant count has fallen by almost a quarter over the last year, which is the fastest annual fall since 1997. Workless households have fallen to the lowest rate since records began, down 450,000—two percentage points—since the end of 2010.
At the same time, we now have record employment: more people in work than ever before, more women in work than ever before and more people in work in the private sector than ever before—up over 1.7 million since the election. Ninety per cent. of the increase over the last year has come from British workers, unlike before, and more than three quarters of the increase since the election is from full-time work, up over 1 million compared with part-time work, which is up only 300,000.
Here is the point: we hear a lot from Labour Members about what they would do if they were in government, but youth unemployment increased under the previous Government by nearly half from 1997 to 2010—up almost 300,000. Now, on what the shadow Work and Pensions Secretary called
“the failure of this government to get young people into work”,
youth unemployment is down 81,000 on the year and is lower than what we inherited. The International Labour Organisation long-term youth unemployment is also down 37,000 on the year. The number of young people out of work and not in full-time education is down 63,000 and the long-term youth claimant count is down 23,900 on the year, having fallen for the last 15 consecutive months.
I remind the Opposition, who are chuntering away from a sedentary position, that under them long-term unemployment nearly doubled in two years, from 400,000 in 2008 to 800,000 in 2010. While they were seeing that rise, they gerrymandered the figures on the claimant count: 80,000 were put on to training allowances so that they came off the measurement of whether they were long term unemployed. Even though they were back out of work or back out of training, they went back as though they had just started their claims.
The trend slowed and is now falling. ILO long-term unemployment is down 38,000 this quarter and is down 59,000 on the year. The number on the claimant count for 12 months, ungerrymandered, is down 74,000 on the year—a fall of 17%. That is down, I believe, to so many of the reforms and changes that we have made, improving the labour market and improving the process of getting people back to work. The latest labour market statistics are remarkable and nothing demonstrates more clearly the Government’s success in getting Britain working.
Mr Duncan Smith
Again, I say to the hon. Gentleman that he really needs to address his question to those who were governing, because, as I said earlier, GDP fell by 7.5% under the previous Government during the recession. What does he think forced those economics for individuals and working households to fall? It was the fact that there was a massive recession—the biggest for 100 years —on Labour’s watch.
I want to make some progress. The latest labour market statistics are remarkable. The Work programme that we brought in is now helping long-term unemployed people dramatically: half a million people under the programme have started a job; 252,000 have now gone into sustained work; and 10 times as many people have achieved job outcomes now compared with the end of the first year.
Compared with the flexible new deal, one of Labour’s great flagship programmes, under the Work programme, twice as many people have gone into a job, and it costs £5,000 less per place according to all the estimates. So, too, with the work experience programme that we brought in, allowing young people to take a work experience placement for up to two months while still keeping their benefit. That has helped 50% of participants off benefits and into work. It has the same success rate as the future jobs fund, but at a 20th of the cost—£325 as opposed to £6,500 of wasted money. What is more, the majority of places are in the private sector, whereas the future jobs fund created jobs almost exclusively in the public sector.
This Budget has been very good for jobs but it is very good for apprenticeships as well. The Government have already committed to a quarter of a million more apprenticeships than Labour ever planned, with 1.6 million starts since 2010. The Budget announced £170 million more for another 100,000 apprenticeship grants and for developing new degree-level apprenticeships as well. It is important that the Government are not only finding and helping to find people work, but helping to shape their skills and experience.
Nick de Bois (Enfield North) (Con)
In the Secretary of State’s list of successes, rightly attributed to the businesses in this country and the Government’s policies, will he also make reference to those that are now being supported by the enterprise allowance and the start-up schemes? As we saw at my recent jobs fair, more people are seeking self-employment as well.
Mr Duncan Smith
I pay tribute to my neighbour and hon. Friend for his phenomenal work on the jobs fairs, on all the creation he has done and on the work he has done with local unemployed people. He is absolutely right: the new enterprise allowance has been a phenomenal success. Thousands of people have started their own businesses under it. It is one of the big success stories of this Government. It is going to grow and we are going to ensure that many more people, particularly young people who are more and more keen to start their own businesses, get the kind of support they want.
Sheila Gilmore
Does the Secretary of State not have any concern that even now there are 2.3 million people unemployed, and as his own statement made clear, the total has gone done by only some 160,000 since the election? The figure was 2.4 million before the election and now it is 2.3 million. What has gone wrong with getting those people into jobs?
Mr Duncan Smith
Of course I want to see more people back in work, particularly young people, but the hon. Lady must remember that we inherited from the previous Government an economy that had hit the buffers, with young people cascading out of work in the two years running up to the election. Youth unemployment rose over their whole period in office, which suggests to me that their policies were hurting young people long before the recession. What we are doing is aimed at getting more people back into work. We have been successful in improving the situation, as the figures now are better than those we inherited—more people are in work, including more young people—but of course there is more to do, and it is this coalition Government who are doing it.
We are also introducing our other programmes, including the Work programme and universal credit, with the pathfinders moving into the north-west and eventually rolling out by 2016. We know that 90% of claims for jobseeker’s allowance and other benefits are already being made online, which is a huge change—only about 10% or 12% were made online before—that is improving speed and accuracy. Some 78% of claimants are confident about their ability to budget with monthly payments, as a result of the programmes we have run. Two thirds think that the universal credit process offers a much better work incentive than jobseeker’s allowance. Even in its early stages, universal credit is having a significant impact on people’s work prospects: claimants are likely to spend twice as long looking for work; two thirds agree that it is easier to understand their obligations; and 86%—rising to 90%—are confident of gaining a job within three months, which is a much higher rate than for jobseeker’s allowance.
These are dynamic changes that we are making, improving the path back to work, the incentives and the choices that people make. We are improving their work prospects and helping them into meaningful, long-term jobs. However, I gather from the Chief Secretary that the Treasury received a submission from the Opposition in the run-up to the Budget for an alternative to our programmes, which they call a jobs guarantee. I thought that we should look at that, just to examine whether it was worth embracing. I think it only fair that we tell the House whether or not it would work. Having looked at the proposal in a completely ambivalent manner, I have to say that it is confusing. The first submission said that it was a six-month programme for young people. The second submission said that it was a year-long programme. The third submission said that it was a two-year programme for the long-term unemployed. I gather that there is now some suggestion that it might be a six-month programme for everybody.
Apparently the jobs guarantee is now a flagship policy for the Opposition, but I understood that it would be funded for only one year. Now we hear that the same funding they announced for one year is meant to last all the way through a full Parliament. We asked the Treasury to do some formal costings for that, which I hope have been made available to the Opposition. They said that their scheme would cost only £1.9 billion in its first year and £0.9 billion thereafter, but the Treasury’s formal costings—[Interruption.] I know that Opposition Members do not want to listen, because the last thing they want to hear is how they would pay for it The Treasury, which is full of decent people doing a hard day’s work, has shown that there is a massive gap of £2.6 billion per year between what the Opposition say their jobs guarantee will cost and what we calculate it will cost.
Not only have the Opposition underestimated the costs by £0.6 billion in the programme’s first year, and £1.7 billion in future years, but they have no robust means of funding it. They say that they will fund it with a bankers’ bonus tax that will raise £2.3 billion, which is questionable, but I understand that they have spent that 10 times over. Let me list a few of the things they have committed to spend it on: reversing the VAT increase, which would cost £13.5 billion; more capital spending, which would cost £5.8 billion; reversing child benefit savings, which would cost £3.1 billion; reversing tax credit savings, which would cost £5.8 billion; and more housing, which would cost £1.2 billion. They have made £30 billion of spending commitments, apparently to be paid for by a tax that would save them £2.3 billion.
Charlie Elphicke (Dover) (Con)
Does my right hon. Friend agree that the lesson of Labour’s crash is that more spending, more borrowing, more debt and more taxes do not work? Does this not show that the Opposition have not worked that out, because they have spent their bankers’ bonus tax more times than the number of sides on the new £1 coin?
Mr Duncan Smith
My hon. Friend is absolutely right. The reality is that the Opposition are not very good at learning lessons. Were they in power again, I suspect that they would crash the car into the buffers, just as they did the last time.
At the same time, the Opposition’s proposal for restricting pensions tax relief has been called “extraordinarily complex” by the IFS and “unworkable” by the CBI. Labour needs a little reminder that make-work schemes are enormously expensive and, worse still, a mean attack on these pension proposals. The saving they expect to make from pensions tax relief is another mean attack on people who do the right thing by saving for their future. Labour has learnt nothing. Its proposal is even possibly a rehash of its old StepUp programme, which ended up costing a massive £10,000 per place before it binned it, rather than introducing it.
There we have it: a policy—the only one I have heard from the Opposition—that is full of flaws, unfunded and simply would not work. It is small wonder that when asked they said, “Okay, this will be about the private sector.” Actually, the future jobs fund, on which this proposal is based, never got jobs in the private sector. In fact, Barnsley council reported that only 7% of those jobs were in the private sector, and Birmingham council reported only 2%. It is small wonder that when asked to confirm whether that would be for private sector jobs, the shadow Chancellor said:
“But if not, you can do it through the voluntary sector. If not… you have to have a final backstop: public work scheme.”
If not one, then the other, but if not that, then another one. It begins to sound a bit like Vicky Pollard: “Yeah but no but yeah but no.” They have no policy for employment at all. To this date the private sector’s response has been unequivocal:
“Wage subsidies for employers are not the source of sustainable jobs… Government must focus on creating the conditions for growth”.
It is the same old Labour; the same old failed policies.
A little over a year before the next general election, this Budget sets out the choice now facing the electorate. On one hand we have an Opposition who every day are mired in confusion, who have voted against every reform measure and who have learnt nothing. After making welfare spending balloon by 60% during their time in government, they now want to spend more.
I want to ask the hon. Member for Leeds West what she meant by something she said when addressing a meeting of Christian socialists—perhaps they were just socialists, but I am not sure. She said:
“It will be much better if we can say all the changes that the Government has introduced we can reverse and all benefits can be universal.”
There we have the beating heart of Labour, and the public should know this—[Interruption.] They are cheering, because that is exactly what they want. Only now will they vote for the welfare cap—although I understand that a number of them will not—but they have no intention of sticking to it. That is only because, as the hon. Lady went on to say, to do what she wants to do would at the moment appear unpopular. They do something because it appears popular, not because they believe in it.
Mark Pritchard (The Wrekin) (Con)
I wonder whether my right hon. Friend can help me. Does he know whether it is now the policy of Her Majesty’s Opposition to have an individual welfare cap or a universal budget cap? It is not only hon. Members in this place who would like to know what their policy is; 27 bishops in the other place would, too.
Mr Duncan Smith
With respect, I have found in the past few weeks that I cannot really answer for bishops. They usually think they can answer for me, which is a fair response, but I am happy to avoid that challenge.
The Opposition have been quite confused about the welfare cap. They say that they are going to support it, but within the cap they have a policy they say they are going to change by ending the spare room subsidy. [Interruption.] Opposition Members call it a bedroom tax. I noticed that when they said last week that there were 24 tax rises under this Government, they did not schedule that as one of those tax rises. The truth is that they know it is not a tax, so, as ever, they are trying to fool the public. Let me point out that reversing that policy will cost them up to £500 million a year, and they have, they say, produced only one measure within the welfare cap that they will use to pay for that—means-testing winter fuel allowances for wealthier pensioners, but that will save only £100 million. Almost as soon as they vote for the cap tomorrow, they will be planning to break it. Perhaps the hon. Member for Leeds West can tell us—I will give way to her if so—what other elements she is going to change within the capped programme to reduce spending to bring it under the cap. Will she will intervene to tell me that? Of course not; she has no idea. There we have it—it is just a game for them. The only reason they might vote for the cap is that they are worried that it would be unpopular not to do so, but they do not intend at any stage to implement it.
On the other hand, this coalition Government are reforming welfare in the firm belief that it is the right thing to do, not only saving money but breaking dependency and restoring the incentive to work. We have record highs in employment and record lows for the rate of workless households. What is more, this Government are rewarding hard work and saving, in the belief that people have a right to take their own decisions on the money that they have earned, not dictating to them through high taxation or forcing them to buy poor yielding products as the previous Government did. This Budget delivers support for those who try, help for those who need it, and security for hard-working families up and down the land. I commend this Budget to the House.
Mr Speaker
Order. I should say to the House that in the light of the very large number of Members who wish to contribute, there will be a time limit on Back-Bench speeches of seven minutes. It is conceivable that that limit could even go down, although it might rise over the course of the debate. That may not be conclusive, but it is a guide, at any rate.
Rachel Reeves (Leeds West) (Lab)
Wednesday’s Budget was certainly dressed to impress, but at its very heart there was an admission of failure. Let us remember what the Chancellor told us in 2010: that the Government would clear the deficit during this Parliament. They laughed at Labour’s plan to halve the deficit by the end of the Parliament, yet last Wednesday the Chancellor had to admit that he will not meet his targets until 2018—fully four years late.
The Chancellor comes from a wealthy family of wallpaper manufacturers, and this really was the ultimate Osborne and Little wallpaper Budget: paper over the cracks, use a stunning design to mask the underlying structural faults, and repeat patterns from last year’s range. But the truth is that for all the patterns and effects, people are worse off by £1,600 per year under this Government. Energy bills are up by £300, and however he dresses it up, people will be worse off in 2015 than they were in 2010.
This Budget was an opportunity to tackle the cost of living crisis faced by hard-working people across this country, but, again, the Government have failed to do so. They failed to do anything for families struggling with the costs of child care this side of an election. They failed to do anything to address youth unemployment and long-term unemployment with a jobs guarantee. They failed to help those working two or three jobs but still struggling with not enough to live on. They failed to help older people struggling to pay their energy bills, and they failed to help the disabled people so unfairly penalised by their bedroom tax.
Mr Dominic Raab (Esher and Walton) (Con)
Before the hon. Lady gets into full flow, will she at least recognise that on elderly poverty, fuel poverty, child poverty and overall inequality, the situation under this Government is better than that left by Labour?
Rachel Reeves
The Government’s own figures show that the number of pensioners in poverty is set to rise, not fall, under this Government; that is the Chancellor’s legacy.
The Chancellor called this a Budget for the makers, the doers and the savers. The reality is that for the makers, over the past three years, manufacturing is down by 1.3%, infrastructure investment is down by 11%, and exports are falling, not rising. For the doers, real wages are down by 6% in this Parliament, energy prices are up by £300, and long-term youth unemployment has doubled. As for the savers, what has he done for them? According to the Pensions Minister, the hon. Member for Thornbury and Yate (Steve Webb), he is allowing them to cash in their pensions and buy a Lamborghini. How incredibly out of touch is that? The average pension pot is about £30,000. I checked on the internet this morning, never having looked at this before, and found that the Lamborghini Aventador costs £263,000. The Cabinet might be lucky enough to be able to afford to buy a Lamborghini with their savings, but ordinary people would be lucky to be able to afford the door of a Lamborghini.
Mark Pritchard
For the record, it is inaccurate to describe everybody on the Government Benches as having a wealthy background; that is clearly not the case. On helping hard-working families, does the hon. Lady’s party support the overall DWP welfare cap, and the individual welfare cap, given the views not only of Members in this place, including the hon. Member for Rhondda (Chris Bryant), but of 26 bishops in the other place, plus one other bishop who does not sit in the other place—Archbishop, soon to be Cardinal, Vincent Nichols?
Rachel Reeves
I am sorry if the hon. Gentleman cannot afford a Lamborghini with his savings. I will come on to the welfare cap. We have been clear that we will be supporting the welfare cap in the vote in Parliament tomorrow.
If the Chancellor really wanted this to be a Budget for the makers, he would have cut business rates, supported a British investment bank to help small businesses, and committed to build more homes—the 200,000 extra homes a year that Labour has promised. If he really wanted it to be a Budget for doers, he would cut taxes for millions of working people with a 10p starting rate of tax, freeze energy bills and reform the broken energy market, and expand child care for parents with three and four-year-olds, as a Labour Government would.
Mike Thornton (Eastleigh) (LD)
On cutting taxes for ordinary working people, surely the hon. Lady must concede that putting the tax allowance up so that they are paying nothing on their first £10,000 or £10,500 is better than their paying 10p on that amount?
Rachel Reeves
The hon. Gentleman will know that the Institute for Fiscal Studies has counted the costs of what this Government have done. Taking into account all the changes to taxes, including VAT, which he voted to increase from 17.5% to 20% despite what was in his party’s manifesto, changes to tax credits and benefits have cost the average family £891. It is a case of giving with one hand but taking much, much more with the other.
Andy Sawford (Corby) (Lab/Co-op)
My hon. Friend talks about a Budget for the doers. Yesterday I met three young people in my constituency aged 22, 24 and 23 who had never had proper long-term jobs because they had worked for agencies and on zero-hours contracts. If the Chancellor cared about doers and young people, his Budget would have addressed those issues.
Rachel Reeves
I thank my hon. Friend for that intervention. As he knows, Labour’s compulsory jobs guarantee would benefit people exactly like the young people he met in Corby. It would guarantee a job for every young person who has been out of work for a year, giving them real hope and opportunity and utilising their skills and talents.
Stella Creasy (Walthamstow) (Lab/Co-op)
If things are going as swimmingly as the Government wish us to believe, is my hon. Friend as concerned as I am about the numbers of people getting into personal debt trying to make ends meet, and about all the evidence that shows that personal debt will rise, not fall, over the years ahead? Does she think that is a sign of an economy recovering, or of people scraping to make ends meet under this Government?
Rachel Reeves
My hon. Friend speaks knowledgably not only of what she sees in her constituency of Walthamstow, but of what she hears when talking to others about the impact of payday lenders and debt on many of our communities.
Mr Duncan Smith
The hon. Lady has mentioned her jobs guarantee, which Labour has said will involve the private sector. Which companies have actually signed up to it?
Rachel Reeves
The compulsory jobs guarantee, which will last for the full five years of the next Parliament, will be based on what we have seen with the jobs growth Wales programme, whereby 80% of the jobs are in the private sector. A couple of weeks ago, the shadow Minister for employment—my right hon. Friend the Member for East Ham (Stephen Timms)—and I visited a software company in Cardiff that had taken on 12 people through jobs growth Wales. It had made a huge difference to those young people, giving them hope and opportunity. The Government carp at our policies to get young people back to work, yet under them long-term youth unemployment has more than doubled. That is the Secretary of State’s record under this Government.
If the Chancellor really wanted this to be a Budget for savers, he would cap fees and charges on pensions and require insurance companies to provide free independent brokerage, as Labour has called for. Why did the Chancellor not do those things? It is because he is strong when it comes to standing up for the rich, but weak when it comes to standing up for the poor.
Mr Jim Cunningham (Coventry South) (Lab)
Does my hon. Friend agree that one of the biggest indictments of this Government and the Budget is the way in which they have adjusted taxation such that women will fund the bulk of the £14 billion the Government have to save? Women will have to save £11 billion—that is an indictment of this Government.
Rachel Reeves
My hon. Friend makes an important point: women are disproportionately hit by the changes introduced by this Government and are struggling with the rising cost of living more than anybody in this country. Moreover, the increasing costs of child care under this Government are making it harder for working parents, particularly working mums, to go back to work and make the contribution we need to the economy.
Four years ago, this Government said that debt would fall and that living standards would rise, yet the reverse has happened. They have broken their promise to balance the books by 2015 and they are set to borrow £190 billion more than they had planned. National debt is rising this year and it will rise next year and the year after that. There is more borrowing, more debt and more welfare spending under this Government.
Mr Harper
On the subject of debt and future spending—the hon. Lady will probably get to this later in her speech—will she answer the question asked by my right hon. Friend the Secretary of State about her remarks at a meeting last week? She is reported to have said that it would be better if she could reverse all of the changes and make benefits universal. That is a spending commitment of hundreds of billions of pounds. She needs to say whether she said it or not; otherwise no one will believe a word the Opposition say.
Rachel Reeves
We are the party who have said that we will cut the winter fuel allowance for the richest pensioners and means-test that benefit to save money, but Government Members do not support that. The reality is that we are the party who are willing to take tough decisions to get the welfare bill down, whereas it is rising, not falling, under this Government.
The truth is that social security spending is £13 billion more than this Government had planned. In last week’s Budget, the Chancellor had to revise up spending on social security by £1 billion more this year and £1 billion more next year than the Government had planned just six months ago. Was that what the Prime Minister meant when he said that he was cutting the cost of welfare? It is going up, not down.
The problem is that without addressing the cost of living crisis, it is not possible to control the costs of social security. Long-term youth unemployment has doubled since 2010, costing taxpayers £330 million a year. The number of people working part-time who want a full-time job is up to 1.4 million, costing £4.6 billion in extra social security. One in five workers are paid less than a living wage—up from 3.9 million in 2009—costing the Treasury an estimated £3.2 billion a year. Housing benefit is increasing and has been revised up again because house building is at a record low. The Secretary of State has also played his part, with his shambolic welfare reforms. Just one in five people who have been on the Work programme for two years have secured a job; £1 billion has been paid out, yet more people are ending up back in the jobcentre than getting a job through the Secretary of State’s failed Work programme.
Mr Simon Burns (Chelmsford) (Con)
I think I am grateful to the hon. Lady for giving way. Given that I have been listening for 12 minutes to her critique of my right hon. Friend the Chancellor’s Budget, why is it that her party has come out saying it will support so many of its measures? Why is Labour thrashing around with such difficulty to find what to vote against tonight? Will the hon. Lady share with the House what her party plans to vote against?
Rachel Reeves
The right hon. Gentleman will not have to wait too long: at 7 pm, he will find out how we will vote on the different measures. Let us be clear: what matters most of all is what was omitted from last week’s Budget, including a compulsory jobs guarantee, a cap on fees and charges and cancelling the bedroom tax. Those things would make a real difference to the lives of our constituents, but the Chancellor did not even mention them in last week’s Budget statement.
The Secretary of State has not just failed with the Work programme; he is failing with universal credit as well. It is years behind schedule and £130 million has already been wasted on IT, yet the Secretary of State continues to say that his flagship reform is on time and on budget.
Rachel Reeves
He continues to do so now. If three years later and £130 million down the drain is on time and on budget, that says more about the Secretary of State’s grasp of mathematics than anything else.
The truth is that from Easterhouse—where the Secretary of State had his epiphany—to the Vatican, people are queuing up to tell the realities of this Government’s reforms. Rosemary Dixon, the chief executive of a charity on the Easterhouse estate in Glasgow—the Secretary of State might remember her—has said that the simple truth is that “things are going backwards.” A letter from 27 bishops stated that
“we must, as a society, face up to the fact that over half of people using foodbanks have been put in that situation by cut backs to and failures in the benefit system, whether it be payment delays or punitive sanctions.”
Archbishop Vincent Nichols has said that
“the role of food banks has been crucial to so many people in Britain today and for a country of our affluence, that quite frankly is a disgrace.”
The Secretary of State says that he is on a moral crusade. The people affected by his policies know what sorts of morals he has.
Nick de Bois
The hon. Lady may regret bringing the bishops and the moral case they were arguing into this. Perhaps she would like to reflect on what the position was of the bishops, and what Labour’s position was, when her Government kept people on benefits at a 95% marginal tax rate? Those people could not afford to take a job and Labour did nothing but trap them in a life on benefits.
Rachel Reeves
The employment rate reached a record high under the previous Labour Government and it has not risen to that level today. I believe that work did pay under the previous Government, and a flagship reform to make work pay under this Government has failed. The national minimum wage did more than anything under the previous Labour Government to make work pay, but that policy was opposed by the hon. Gentleman and his party.
If the Secretary of State really wants to get the welfare bill down, he must tackle the low wages and zero-hours contracts that leave too many people reliant on in-work benefits. If he really wants to get the social security bill down, he needs to build 200,000 extra homes a year to control the cost of the rising housing benefit bill. If he really wants to get a grip on the social security bill, he should introduce a basic skills test to help those who are unemployed to find and stay in work. If he really wants to control the cost of social security, he should introduce a compulsory jobs guarantee to get the young and the long-term unemployed back into work. The Budget failed to do those things. If we did them, however, we would gain control of social security. For those reasons, we will support the Government when we vote on the welfare cap tomorrow.
However, Labour would make different choices. We would get a grip on the failing programmes, such as universal credit and the Work programme, and focus on the cost of living crisis. We would scrap the bedroom tax, which is cruel and costs more money than it saves. We would take tough decisions, such as scrapping winter fuel allowance for the richest pensioners. We would get more people into work on decent wages that they can afford to live on. Different parties, different values, different priorities. Our priority would be to control the cost of social security; under the Tories, it continues to rise.
On pensions, I think that we can all agree that people need more help to save for their retirement. That is why I am pleased that the Labour Government legislated for automatic enrolment and that this Government have taken forward that Labour policy, based on the Turner consensus. We support greater flexibility so that people can get a better deal from the pensions market when they retire. We will continue to support reforms in the annuities market, which we have campaigned for and which the Leader of the Opposition called for in 2012.
The Government should go further than they did last week. Their figures show that savers are losing up to £230,000 from the value of their pension pots because of excessive fees and charges when they save. The Government should bring forward a meaningful cap on fees and charges to ensure that people’s pension pots are not drained by insurance companies. They should ensure that there is full disclosure of fund manager charges alongside that cap. They should ensure that, for those who want to turn a lifetime of savings into a secure and decent stream of income with an annuity, that is not made harder, and that brokerage is not just offered, but is taken up, so that people get the support they need to make the decisions that are right for them. We must not risk another Tory mis-selling crisis like the one that followed the personal pensions revolution of the 1980s.
To ensure that the Government get the reforms right, we will hold them to account with three tests. First, is there robust advice for people who are saving for their retirement? Secondly, is the system fair to those on middle and lower incomes who want a secure retirement income? Thirdly, are the Government sure that the changes will not result in extra costs to the state, either through social care or by increasing housing benefit bills? We will continue to push for the reform of pensions, but it must be reform that works for people who have saved all their lives, who deserve security and confidence in retirement.
We must be clear that the Office for Budget Responsibility has delivered a damning verdict on the Government’s record of getting people saving. The proportion of income that people are saving has fallen from 7.2% in 2012 to 4.1% this year, and it will fall to 3.2% by the end of the forecast period. More needs to be done to ensure that people have the confidence and the ability to save.
To conclude, whether you are a young person looking for work, a couple looking to buy your first home, a mum and dad trying to pay the bills and get decent child care, a pensioner struggling with rising energy bills or a business trying to access finance, you are worse off under the Tories. They have had four years to deal with the cost of living crisis and they have failed. They have had four years to help young people and the long-term unemployed, and they have failed. They have had four years to help those who are disabled and vulnerable, and they have failed.
There is a tax cut for millionaires, and beer and bingo for the working classes. George Orwell wrote of his nightmare vision of the world in 1984 that
“beer, and above all, gambling, filled up the horizon of their minds.”
Thirty years on in 2014, it seems that the Chancellor thinks that all he needs to do is to cut taxes on beer and bingo, and they will be happy. It is them and us, Mr Speaker—how patronising, how out of touch, how very Tory. The Tories cannot deal with the cost of living crisis; only Labour will.
Mr Speaker
Order. I remind the House of the seven-minute limit on Back-Bench speeches.
Mr Mark Harper (Forest of Dean) (Con)
I will start by drawing attention to the question that I asked the shadow Secretary of State. I notice that she did not deny saying that she wanted to reverse all the changes that the Government have made—[Interruption.] Well, according to the well-known Guido Fawkes website, with which I believe one or two Members are familiar—[Laughter.] If she did not say it, then she should deny it. At a meeting of Christians on the Left, she said:
“It will be much better if we can say that all of the changes that the Government have introduced we can reverse and all benefits can be universal.”
If she did not say that, she should just say so. I will take her intervention. She should deny that she said it. Given that she has not taken the opportunity to deny it, we will know when she leads her party into the Lobby to support our benefit cap that it is a mirage to fool the voters. If Labour ever gets its hands on the tiller, it will increase welfare spending and it will not help people into work.
Let me take the hon. Lady squarely on to the cost of living agenda and her allegation that my right hon. Friend the Chancellor said nothing about it. That is complete and utter nonsense. This morning, the rate of inflation fell according to the consumer prices index and the retail prices index. CPI inflation is at its lowest level for four years.
On jobs, unemployment is continuing to fall. When Labour was in power between 2003 and 2008, when the economy was creating jobs, 90% of those jobs were going to foreign nationals. That provoked the former Prime Minister, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), to say that there should be
“British jobs for British workers”,
but he had no idea what to do about it. I am very proud, as should be the Secretary of State and the Home Secretary, that since this Government have been in power, because of our welfare, immigration and skills reforms, more than 75% of the 1.3 million net new jobs have gone to British citizens. The British public will be very supportive of that. [Interruption.] The hon. Member for Rhondda (Chris Bryant) keeps chuntering, but he should listen. More than three quarters of the 1.3 million net new jobs have gone to British citizens. That is a record of which I am very proud.
Chris Bryant (Rhondda) (Lab)
When the hon. Gentleman was Immigration Minister, he said at the Dispatch Box time and again that net migration was falling. Actually, it rose by a third in the year in which he was Minister.
Mr Harper
I have been very clear that net migration from outside the EU is falling, but that it is going up from inside the EU. That is why we will renegotiate and put the terms to a referendum. We trust the British people with that decision—something that the hon. Gentleman’s party is not prepared to do.
One of the most important things that we have done on the cost of living is to enable interest rates to stay low. That means that one of the largest costs for any family—their mortgage—has stayed at a very low rate. That has been incredibly important and the Labour party would put it at risk.
Mr Stewart Jackson (Peterborough) (Con)
Is it not a bit galling to take lessons from the Labour party on equity and fairness when, under this Government since 2010 there are 400,000 fewer workless households and 290,000 children who are no longer in workless households? That is a record that I will be proud to stand on at the general election next year.
Mr Harper
My hon. Friend is absolutely right.
Also on the cost of living, I am very proud that Conservative councillors in Gloucestershire, working in partnership with the Government, have delivered a council tax freeze. Council tax is one of the most significant costs for families, after their mortgage. Gloucestershire county council has delivered a council tax freeze in every year since 2011-12; Forest of Dean district council has delivered a freeze since the 2011 local election; and Tewkesbury borough council has frozen council tax for four years running. I am looking at my council tax bill. The Conservative-controlled bits of the bill are frozen. The only bits that have gone up are those that are controlled by the independent police and crime commissioner who, for the second year running, has broken his promise and put up council tax for hard-working families across my constituency. That is an unacceptable breach of his manifesto promises. I am pleased that Conservative councils, working in partnership with the Government, have kept council tax low.
In constituencies like mine, having a car is not a luxury but a necessity, so I am pleased that we have frozen fuel duty. That means that for my constituents petrol is 20p a litre cheaper at the pumps than it would have been if the fuel escalator put in place by Labour had continued. That is not a trivial matter for my constituents. It saves them £11 or so every time they fill up and it is very much welcomed.
The hon. Lady spoke about our pension reforms. I know why there is some confusion, to which the Secretary of State drew attention. I raised in the House last week at Business questions the interesting response from one of the Opposition’s key policy advisers, a man who used to advise their Social Security Secretary, the right hon. and learned Member for Camberwell and Peckham (Ms Harman). He said—and I think this is what many on the Labour Benches believe—that
“you cannot trust people to spend their own money sensibly planning for their retirement”.
He was not a lone voice. He was supported by the hon. Member for West Bromwich East (Mr Watson), who said that the Labour party must oppose our policies, and there are a number of other Labour MPs such as the hon. Member for Great Grimsby (Austin Mitchell), and the hon. Member for Aberdeen South (Dame Anne Begg), who is in the Chamber, who sounded a little confused. She was sort of welcoming—[Interruption.] She sounded a little confused about our policy. I have great respect for the hon. Lady, with whom I worked when I was in opposition as the shadow Minister for disabled people.
Dame Anne Begg (Aberdeen South) (Lab)
If the hon. Gentleman waits, he will hear that I will be asking the Government Front-Bench team rather a lot of questions. Perhaps at the end of today’s debate, Ministers will be able to answer them.
Mr Harper
All I said is that the hon. Lady is not as enthusiastic about our changes as the hon. Member for Leeds West suggested. It is clear that we on the Government Benches, as the Minister of State, Department for Work and Pensions, my hon. Friend the Member for Thornbury and Yate (Steve Webb) set out clearly, trust people to save their own money and we trust them to make sensible decisions in retirement about how to spend it. The idea that somebody who has spent their entire lifetime working hard and building up a pension pot is going to throw the money away when they reach retirement age is nonsense.
Mr Harper
I will not give way; I will make progress. Our pension reforms are very valuable and will be well supported.
Finally, I draw the attention of the House to the use of the phrase “middle income”. I noticed that a story I was reading in The Guardian referred to 40p taxpayers as being on a middle income. For example, according to the latest figures that are available by parliamentary constituency, the median income in 2011-12—not the mean income—in my constituency is only £18,800. We on the Government Benches are right to keep our tax changes focused on the least well paid and those genuinely on a middle income.
There is not a single constituency in our country where the median taxpayer—the middle taxpayer—is paying the higher rate of tax, not even in the Cities of London and Westminster, Chelsea and Fulham or some of the wealthiest parts of London. In those constituencies, the median income earner is paying the basic rate of tax. My right hon. Friend the Chancellor’s focus on helping those middle income payers was absolutely right. It is right for our party. The Conservative party should be focused on helping the great majority of taxpayers.
It is worth bearing in mind that a higher rate taxpayer—again, I am using the 2011-12 figures—is in the top 14% of income earners. That does not mean that those people are not important, but it is right that we focused our help on those at the middle and lower end. This Budget was one for hard-working people at all levels of the income scale. It was for people who want to save and for people who want to get on in life. I am proud to support it this evening and will continue doing so.
Mr Alistair Darling (Edinburgh South West) (Lab)
The hon. Member for Forest of Dean (Mr Harper)will forgive me, I hope, if I do not follow him directly in what he has just said. I want to say something about infrastructure in this country, and I want to talk about some of the slightly longer-term issues in relation to the capacity in our economy as it now is, as well as levels of public expenditure, but I start with annuities. In drawing the attention of the House to my entry in the Register of Members’ Financial Interests, I declare a further interest. As I was 60 at the end of last year, my professional interest in pensions has become rather more personal.
Five years ago when I was Chancellor I looked at the whole question of annuities, which at that time was receiving quite a lot of publicity. There were two reasons that I did not make any changes. One was that I was concerned about any major change that would undermine the insurance principle that underpinned the idea of annuities when they were introduced some 70 or 80 years ago. Also, at that time I was concerned about some of the safeguards that we would need. Given the general economic climate at the time and because I was more focused on what was happening to our banks rather than our insurance companies, I did not pursue the matter.
However, I quite accept now that, because of the very poor annuity rates in the past few years and because the industry has not helped itself in the range of products that it offers people, it is time to look at the matter again. There are three areas about which I want to express my concern. These are issues that the whole House needs to address, and the Government need to address them during the consultation period that follows. First, I am concerned about the effect of the proposals on the annuity market. It is interesting that one does not have to get too many pages into the White Paper to see that at paragraph 2.27 the Government say that annuities are
“the only realistic option for many.”
I read last week that the IFS is concerned about the effect that taking out the higher end contributions will have on annuity rates. The Government need to have regard to that. It is not insuperable, but we need to look at it.
Secondly, the Australians have shown that it is possible to have a wide range of products that we would not necessarily recognise as annuities, but safeguards are needed, particularly in relation to the advice being offered. The Government said last week that they had made £20 million available. When I read the detail, I was surprised to find that that is a one-off payment. There is nothing after that. We in this House should all know that unfortunately the financial services industry has shown that if there is scope for mis-selling, mis-selling will happen. This is critically important.
Although the Pensions Minister may be indifferent as to whether or not somebody buys a Lamborghini, if they are buying it, they must at least understand that there might be consequences for how much money they have for the rest of their lives. It is not in the public interest that people go into something that might have to last them for the next 20 or 30 years without having received proper advice. That needs to be looked at. The offer of guidance is not enough.
Thirdly, the Government will have to consider the scope for tax avoidance. The reason that pensions are tax-privileged is that there is a societal interest in making sure that we save for our retirement. It was never designed to enable people to shelter their money from tax. Those are all aspects that need to be looked at.
I want to say a word about infrastructure. On Monday last week in the Financial Times there was the now traditional announcement of all the infrastructure projects that were on their way and on show, and an invitation to the pensions industry and others to invest. That is all very well. There were some old familiars which I recognise from my time in government, which are still not built and are still looking for money. Owing to the Budget, the pensions industry has just been relieved of quite a large sum of money. I would be interested in the Government’s assessment of where we will get the additional funds that we all know are needed from both the public and the private sector if we are to improve our housing stock, our transport stock and our ageing power fleet, which we are still struggling to replace. Successive Governments have had difficulties with that and this Government need to attend to the matter. That infrastructure will have some bearing on the capacity in our economy if we are to be able to provide for an ageing population and everything we have taken for granted over the past 30 or 40 years.
Reading the OBR report on the Government’s measures announced last week in relation to the economy, we see, rather surprisingly, that none of the measures announced by the Chancellor will, in the view of the IFS, make any difference whatever to the country’s GDP. The annual investment allowance which he doubled will, it says, have a negligible effect. That did not surprise me, because I doubled it when I was the Chancellor and it had no effect then. At least the advice from the IFS and the Treasury is entirely consistent. What is worrying is that we must increase the capacity of our economy. If we do not, we are locking ourselves on to a path where austerity will be unavoidable, because we will not have the wealth to pay down our debt, reduce the borrowing and generate the capacity needed in an economy.
This is an issue for Members on both sides of the House. We must decide how we are going to get more capacity into the economy. I hope the measures announced last week in the Budget work, but whether firms come to this country will be determined far more by big issues such as our infrastructure than by simply fiddling round the edges with tax reforms.
Mr George Howarth (Knowsley) (Lab)
My right hon. Friend speaks with great authority on these matters. Does he agree that unlocking potential capacity and creating more employment in turn creates more revenue?
Mr Darling
Absolutely, and the argument that has been with us throughout this Parliament has been about how to ensure that we generate growth to pay down the debt. Part of the problem that the Government have at the moment is that the plan that they started out with did not achieve significant results—it is not the same plan as they are operating now, by the way, because it is running some four years late and is significantly different from the one set out in 2010—because we simply did not have the economic growth that people expected.
One of the most worrying points in the OBR’s report is that it expects our economy to be at full capacity in just four years’ time. Normally, when growth recovers after a recession, as it did in the ’80s and ’90s, it peaks at 3% or perhaps 4%, because spare capacity is being used up. The OBR says that there simply is not spare capacity in the economy at the moment. That should worry us, because if our economy is operating at capacity in four years’ time and inflationary pressures start kicking in, how on earth will we meet the future bills of a mature economy with an ageing society?
I understand that some Government Members are more ideological than others about public expenditure, and understandably, many of them expressed concern about the flooding in the west country earlier this year.
Mr Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab)
Before my right hon. Friend finishes his interesting speech, will he respond to the concerns among Labour supporters about how the Conservative party keeps reminding us of what it claims was the mess that Labour left behind? Are we therefore to believe that the international recession, which had an impact on Ireland, Iceland, Japan, America and so on, did not have an impact on Britain? Was that his experience?
Mr Darling
Having been around at the time, I rather got the impression that it was having an impact on everybody, from communist China to the republican United States and throughout Europe and the whole world. If there is a banking crash, it is not surprising that it has consequences.
To return to my point about the west country, we have to recognise that there are some things that the private sector will never do, and flood defence is one of them, so there will always be a role for the public sector in the economy. I firmly believe in a mixed economy and I am enthusiastic about anything that we can do to help the private sector innovate and invest, but it has to be complemented with investment in science, innovation and so on. The Government have a role in such things.
The Chancellor talks seriously about reducing public expenditure to levels last seen in 1948, but I say to the House and the country that the world in which we lived in 1948 was hugely different from the world that we live in today. Expectations are different and the population is getting older—many Members, not just me, may be grateful in a few years for what the state is willing to do as opposed to what we can do as individuals. That issue affects all parties that will be standing at the 2015 election, and we need to address it, because we cannot allow ourselves to drift into a situation in which it is almost inevitable that our economy will stall and hardly grow. That would lock us into unpalatable and difficult consequences. It is dead easy to sign up to cuts in a debate such as this, but living with the consequences of them—60% of them are still to come—will cause a great deal of pain to constituents of Members on both sides of the House.
Of course we have to deal with the immediate consequences and fall-out of what has happened over the past five years. Some sensible reforms have been announced in relation to savings, but we need to get pensions right, because we have got them wrong in the past. We need to get our economics right in the long-term interests of this country and of future employment and jobs, and I am not sure we are doing that yet.
Margot James (Stourbridge) (Con)
It is a pleasure to follow the right hon. Member for Edinburgh South West (Mr Darling).
Four years ago, I promised my constituents that if we were elected our first priority would be to repair the public finances. No longer could we go on borrowing £1 for every £4 we spent. Reducing the deficit has involved tough decisions, and I pay tribute to the Chancellor for sticking to the necessary path, which has seen the deficit come down by a third. It is forecast to fall by 50% next year.
Even after all that work, the OBR estimates that we will still be spending more than we earn by £108 billion this year, so the job is not yet done. However, people are at last starting to enjoy the fruits of progress. Earnings are projected to exceed inflation this year, and the increase in employment has been huge. In my constituency, unemployment has fallen by 25% since the election. Contrary to the Labour party’s predictions, the 1.6 million private sector jobs created since 2010 have exceeded the number of jobs lost in the public sector by a factor of three.
There was a time, 18 months ago, when the International Monetary Fund, which was broadly supportive of our policies, looked on nervously as Britain was the one country that was serious about tackling an out-of-control deficit. The proof of the pudding is in the eating, and UK unemployment stands at just over 7% and falling. That is in sharp contrast to the rest of Europe, where unemployment averages 10.9%. Likewise, the OBR has raised its forecast for economic growth from 1.8% to 2.7%, which makes the UK the fastest-growing economy in both the EU and the G7.
Mr Brooks Newmark (Braintree) (Con)
It is fascinating that the hon. Member for Leeds West (Rachel Reeves) resorted to quoting the old Etonian George Orwell during her peroration.
It is interesting to note that in today’s Treasury Committee meeting, the economists there predicted that growth would exceed that 2.7% figure, and even the Bank of England’s projection of 3.3%.
Margot James
I heartily agree, and I would not be surprised if things got even better than that over the next few years. We have momentum now, as my hon. Friend’s point shows.
Our economic strategy has been about far more than reducing the deficit: how we do that matters. The Chancellor set out a strategy to rebalance the economy, and we wanted to see growth that was more balanced between London and the south-east and the other important regions, between the service sector and the manufacturing sector and between the public and private sector. We also wanted to build an economy made more secure by savings and investment, instead of one built on excessive debt.
This Budget marks another milestone—it capitalises on the hard-won and sustainable economic progress to secure radical reforms that will restore the incentive that has been so recklessly destroyed over recent years. Scottish Widows estimates that fewer than half of us are saving enough for our old age, and that one in five are saving nothing at all. The bold increase in the ISA tax-free limit to £15,000 is welcome. There are more than half a million ISA savers in the west midlands alone. Not all of them will be able to put away the maximum every year, but the fact that they will now have complete freedom to invest cash as well as equities will encourage more saving among people who just want their cash to grow in a tax-free environment.
Before 1997, Britain had one of the best-funded occupational pension systems in the world. That proud state was totally undermined by the last Government’s decision to end dividend tax relief on pensions. Incentives to save were also undermined by the growth of means-testing of the state pension. The welcome pension reforms that the current Government have already introduced were given a further boost last week by the Chancellor’s dramatic announcement that we are no longer to be forced to buy an annuity. That is welcome news for everyone who is saving into a pension scheme, regardless of their age.
Just under 20,000 people in Stourbridge are of pensionable age, and many have been badly hit by the poor annuity rates and exceptionally low interest rates of recent years. I was therefore delighted on their behalf by the new pensioner bond, which from next year will offer a much better return than anything available on the market today. Low-income savers will also benefit from the abolition of the 10p tax rate on savings from income of £5,000 or less.
Charlie Elphicke
Does my hon. Friend agree that unchaining annuities is likely to encourage more people to save into pensions and pension funds, so that contrary to what was said by the former Chancellor, the right hon. Member for Edinburgh South West (Mr Darling), that is likely to mean more money for infrastructure funds and other forms of investment?
Margot James
I know that my hon. Friend is an expert in these matters, and I strongly agree that the change will definitely encourage more people to save into pensions. The forced way in which people have had to invest so much of their pension savings into annuities was a disincentive, certainly to my generation.
In my last couple of minutes, I want to turn to opportunities for young people. The number of people aged 18 to 24 claiming jobseeker’s allowance in my constituency has fallen since 2010 by 18%, and we can all agree that we would like such falls to accelerate. The vast majority of young people on JSA gain employment within six months, but a small group do not. They face very real social problems, but this Government’s Work programme and their reforms in very much improving jobcentres and supporting young people—and those of all ages—into work will make and are making a difference.
Unfortunately, an even smaller minority of young people have been conditioned to not want to work. For too long, they have perhaps been allowed to be too choosy about their first job: if it is not the one they really want, they would rather have none. I am talking about a very small minority. There is no doubt, however, that the changes introduced by the Government—I give the credit to my right hon. Friend the Secretary of State for Work and Pensions—have made people realise that they are entering a contract with the jobcentre and the taxpayer, and that they need to put in the effort to make a serious attempt to find work, with the state providing the necessary support.
In addition, I strongly welcome the continued support for the apprenticeship programme. My constituency has had a 90% increase in apprenticeship starts in the past couple of years. Last week’s Budget gave further support to apprenticeships by providing £85 million for the employers’ apprenticeship grant scheme and £20 million extra to support apprenticeships right up to postgraduate level, which carries on the good and vital work of creating greater parity of esteem between apprenticeships and degrees.
None of the support—for exporters, manufacturers, taxpayers, savers, pensioners—announced in the Budget last week would have been possible without the work done on restoring the public finances. There is a very long way to go to overcome our indebtedness, but the fact that we are now so clearly on the right road, with results starting to come in almost daily across every single economic indicator, means that the Government can provide support where it is most needed. That was amply demonstrated by last week’s Budget, which will make Britain truly competitive once again. I am delighted to support it in the Lobby tonight.
Hazel Blears (Salford and Eccles) (Lab)
It is a pleasure to follow the hon. Member for Stourbridge (Margot James). I want to concentrate my remarks on the social economy. I draw the House’s attention to my—unpaid—entry in the Register of Members’ Financial Interests.
Since the crash of 2008, there have been a difficult few years for countries around the globe. Many companies have struggled to find investment and to grow. Ordinary people have very often been faced with redundancy and unemployment. That particularly applies to our young people, of whom nearly 1 million are struggling to find work. Public services have been cut quite dramatically, and many are facing increased demand at the same time, none more so than in the spheres of the national health service and social care.
Against that very difficult background, and as we enter what I certainly hope will be a period of better economic news of sustained growth and job opportunities, we have a real chance not to do business as usual, but to take a new path towards what many of us have talked about in this House—a more responsible capitalism. At the moment, it is still a fairly nebulous concept, but I believe that we can start to put some flesh on the bones and to invest in the social economy.
For the past 18 months, I have convened a group of local authorities, social enterprises and some large corporate firms to consider how we might come together to get the public sector, the private sector and the third sector to work in a much more integrated fashion. We have done that under the banner, “Doing good is good business”. Social enterprise has always been a passion certainly of mine, but it is now taking a much more central position in our economy. In this country, there are 70,000 social enterprises, which contribute £18.5 billion to the UK economy and employ about 1 million people. It is no longer a niche part of our economy, but is becoming absolutely mainstream. In Europe, one in four new businesses that starts up is a social business. Some 35% of people who left private sector employment last year have gone into the social economy. It is really moving on apace. There are now many brilliant social enterprises. I have Unlimited Potential and Social adVentures in Salford. In the constituency of every hon. Member, there will be social enterprises that not just provide jobs and opportunities, but bring into our economy the absolute gold dust of innovation and creativity.
I want us to give a real boost to social enterprise on a cross-party basis, but we also need to do something about public procurement. The Public Services (Social Value) Act 2012, which I helped to take through the House, empowers public authorities to take into account social, economic and environmental impacts, as well as value for money. That can be absolutely transformational, provided that we get behind it, give it teeth and really make it work.
Mr Duncan Smith
I pay tribute to the right hon. Lady, whose work in this area has been really first rate. I told her that last time we met, over dinner at Apsley House, but I am just dropping names. Will she take her point a little further, because the creation of social impact bonds is a very big and important area? I know that she is a big supporter, but how does she see that rolling out, particularly now that the Budget will bring in tax relief for it?
Hazel Blears
I am absolutely delighted that social investment tax relief has been set at 30%. Some estimates suggest that that might liberate up to £500 million of extra investment into the economy. At a time of austerity and when there is very little public money about—whichever party is in power—we must absolutely seize the possibility of mobilising private capital for public good.
I pay tribute to the Secretary of State, because he has been a pioneer. He set up his social investment fund, which has catalysed the market in Department for Work and Pensions areas. I have spoken to the Secretary of State for Education to try to get something similar in relation to social mobility and educational attainment, and he is very interested. I said to him, “The Secretary of State for Work and Pensions is a bit of a pioneer, so why don’t you get involved in this as well?” I have also spoken to the Minister of State, Department of Health, who has responsibility for social care, to look at social investment bonds for the care of the elderly, particularly in relation to dementia, which is a huge issue for all of us and, indeed, countries across the world. Mobilising private capital to enable us to transform public services is an extremely exciting agenda.
I want to say a word about the Public Services (Social Value) Act, because a whole range of local authorities are now taking up the new powers, including my own in Salford, as well as Liverpool, which has declared itself a social value city, Birmingham, Wakefield, Hackney and Lambeth. People from all political parties and local authorities of all shapes and sizes want to commission in this new way. We now need transparency, through metrics and measurements, so that the people on this playing field can get some recognition.
One of the most exciting things is that some companies in the private sector want to do exactly the same in moving from traditional corporate social responsibility into using their mainstream business model to make a social impact. Companies such as Fujitsu, Veolia, Interserve and CH2M Hill are now looking at their supply chain to see how they can get social enterprises and small businesses to bring them the agility and creativity that such big global enterprises sometimes cannot put into the system. In particular, Fujitsu has done a report called “Collaboration Nation” about building a very different supply chain. It has told me that it absolutely sees the business case for doing so, because it is able to develop new products. It is also attracting the best talent, because these days young people want to work for an organisation that has values, and to go home at the end of the day being proud of what they do. All those private sector companies want to do that and be responsible capitalists in that way, but we must encourage them and recognise that this will be a long-term agenda.
I say to the Chancellor and the Secretary of State that if we could extend the Public Services (Social Value) Act to goods and infrastructure—that is where the big spend will be in the next 10 to 15 years, not necessarily on services and revenue expenditure—why can we not have social clauses in procurement for High Speed 2, for the possible new airport, or for regeneration projects that bring apprenticeships, get a better supply chain and make a social impact?
As I said, I am delighted that social investment tax relief is being brought forward. We now lead the world in that, and at the G8 meeting that I was privileged to attend we could see how much the United Kingdom’s creativity has taken that forward. There are now a whole range of new social investment bonds. We have just signed one off in Manchester to help young people come out of care, and to provide foster care and adoption, which is an amazing ability.
When I went to Brussels last week I met Commissioner Andor, who was hugely encouraging about social procurement and social investment. We are about to launch some local investment funds. The first was launched in Liverpool two weeks ago, and we would like to have 10 to 15 across the country over the next year. We are hoping to do that in Greater Manchester, bringing together European Union structural social funds with social investment, to provide unsecured loans to social enterprises of £50,000 to £100,000—exactly the kind of loans they need.
All that brings the social economy into the mainstream. We used to think about social enterprise as a niche or an add-on to the mainstream economy, but no longer. If we take what measures we can to make social procurement mainstream, including goods and infrastructure, and to support social enterprises to make social investment and the market grow in the long term, we can genuinely harness the innovation that is often in social enterprise, together with people who want to do capitalism in a more responsible way and the engine of the public sector. In doing that we will show that “doing good” really is good business.
Andrew Griffiths (Burton) (Con)
It is a privilege to follow the right hon. Member for Salford and Eccles (Hazel Blears), of whom I am a big fan, and to support what she said in her exciting speech that extolled the virtues of the big society. I congratulate the Secretary of State who has done such a great deal to bring on the big society and social enterprise, through his work at the Centre for Social Justice and in the Department.
I am, however, somewhat disappointed to be speaking in this debate having heard the shadow Secretary of State be so disparaging about the cut in beer duty. It is not just I, the Member of Parliament for Burton—the home of British brewing—who will be disappointed that the Labour party dismissed such an important industry, but the 1 million people who are employed in that industry, the 4,000 people in my constituency who earn a living from the beer and pub industry, and the 120,000 members of the Campaign for Real Ale who campaigned hard across the country because they love British beer, they love the industry and they wanted a cut in duty.
Nigel Adams (Selby and Ainsty) (Con)
My hon. Friend, the MP for Britain’s second foremost brewing town, has done a fantastic job on this issue. In the pub over the weekend I noticed a lot of people talking about a penny off a pint. Has he made any assessment of the scrapping of the beer duty escalator, as well as the cut in duty, and how much a pint would have cost had the Labour party had its way?
Andrew Griffiths
I thank my hon. Friend for that intervention, and I will not let petty rivalries interfere in this important debate. He is right, however, because this is cumulative: it is not just about the historic cut in duty by a penny this year, but last year’s 1p cut in duty and the scrapping of Labour’s hated beer duty escalator. Added together, they have taken more than 7p off the price of a pint in our local community pubs. Beer drinkers, publicans and the industry will welcome and raise a glass to that, and it is part of the measures that have shown this Government to be the most pro-pub and pro-beer Government in generations. It is historic: this is the first ever Chancellor to cut beer duty two years running, and it comes after the previous Government, when beer duty rose by an eye-watering 42% between 2008 and 2012. Is it any wonder that the industry has been in such dire straits?
This industry is important for our community pubs. We talk about supporting community pubs, but seven out of 10 drinks purchased in a pub are a beer. This is a great British product that is brewed and consumed in this country and employs people in this country. Those 1 million jobs are important—46% of those workers are under 25, and more than 50% are women. If we want to help young people into the jobs market and get more women into the workplace, supporting the hospitality industry, pubs and breweries is exactly the way to do it. CAMRA, the Society of Independent Brewers, and the British Beer and Pub Association have welcomed the support that this Government have shown for beer and pubs.
Last year the Chancellor had a beer brewed in his name. Pennies from 11 was brewed by a Tatton brewery, and Sajid’s Choice was brewed in recognition of the support that the Financial Secretary gave the brewing industry during his time in the Treasury. I have no doubt that in weeks to come, Morgan’s Magnificent Mild will be brewed in gratitude.
Lorely Burt (Solihull) (LD)
I totally agree with my hon. Friend, but no list of beers named after hon. Members would be complete without Ginger Rodent, which was brewed in honour of the Chief Secretary to the Treasury.
Andrew Griffiths
I absolutely agree with my hon. Friend, and I enjoyed sampling a pint of Ginger Rodent in the Strangers Bar. It was particularly enjoyable as it was a penny less as a result of this Government’s measures.
We should not underestimate the community pub. It is an important industry, and £620 million from beer exports came into our coffers as a result of the cut in beer duty last year. Beer exports outside the EU were up by 23%—this industry is incredibly important to our country and has great potential. We all know that we brew the best beer in the world in this country, and having a Government who stand up and not only listen but act in support of that industry will mean that the business will grow, employ more people, and create more revenue for the country as a result. I commend the work that has been done.
The facts speak for themselves. Last year we said to the Chancellor that if he cut beer duty, scrapped Labour’s hated beer duty escalator and gave beer and pubs a break, there would be investment and growth in the industry. That proved to be absolutely right. We have seen two quarters of growth in beer sales in the past 12 months, which is the first time in 10 years that beer sales have been on the increase. Brewers all say that that is as a result of the support that the Government have given to the beer and pub industry.
This is not just about scrapping the beer duty escalator. The Government also gave a £100,000 business rates break for pubs up and down the country, and scrapped Labour’s job tax by scrapping employers’ national insurance contributions for those under 21—important people whom this industry employs. As a result, we are seeing growth and investment. Some £400 million has been invested by the industry in the past 12 months. Only yesterday, Marston’s brewery in Wolverhampton announced 3,000 new jobs as a result of the Government’s support for beer and brewing.
I thank all the right hon. and hon. Members from all parts of the House who supported our campaign to reduce the duty on beer. This was a cross-party campaign. On behalf of CAMRA, SIBA, the British Beer and Pub Association and all beer lovers across the country, we will be raising a glass, saluting the Government and saying, “Cheers, George.”
Lindsay Roy (Glenrothes) (Lab)
It is a pleasure to follow the hon. Member for Burton (Andrew Griffiths) and to listen to his speech on small beer.
At a time when we hear that we are turning an economic corner—I welcome this immensely—after several challenging years of recession, this year’s Budget should have been one of optimism and hope for all, and in particular for those who have suffered the most under the Government’s austerity programme. Hard-working families have suffered a cost of living crisis and seen their incomes reduced by £1,600. The disabled, the disadvantaged and those with health issues that prevent them from working have all been badly affected financially.
I welcome the reduction in unemployment, but there are still thousands upon thousands of people who desperately want to work. They have not acquired the skills to take up the posts that are available. Despite their best efforts, they cannot find a job, an apprenticeship or training. It is ludicrous that so many people are willing to work but do not have the skills and expertise to do so. In my constituency, and in many others, jobs are advertised overseas and taken up by those from overseas who have an enhanced skill profile. That is primarily because of the lack of investment in high quality training and support here. These barriers must be removed as a matter of priority, with further investment in vocational training, but yet again the Government have missed a golden opportunity to invest in their people and pump-prime a further reduction in unemployment and benefit payments.
There were token increases in the amount of income exempt from tax, but the Government’s slogan “We’re all in this together” has been further discredited by their unjust refusal to increase tax on higher earners to 50% and their failure to clamp down on the many who avoid tax, thereby robbing the Exchequer of millions of pounds. Primarily, this has been a Budget for Tory vested interests in an effort to sustain support. In other words, these are the same old Tories, some of whose policies evoke blue language on the Opposition Benches. So much for the often quoted but meaningless Tory mantra, “Those with the broadest shoulders will bear the heaviest burden.” In effect, this is the politics of mirage and fantasy. The coalition think that if something is said often enough, people will believe it. On the Labour Benches, we emphatically do not. Thankfully, those who live in the real world are not so gullible and do not share the same self-delusion. They are only too aware of the opportunities missed: replacing the failing Work programme with the job guarantee scheme, an energy freeze, expansion of free child care for working parents and help for millions of workers by reducing basic income tax further.
Like all mainstream political parties, hard-working people support a cap on welfare spending and want effective measures to be taken against the small minority who are fit to work, but who have abused the welfare system and want to live permanently on benefits. However, hard-working people are also only too aware of the gross injustices forced on one section of our society in particular. The hallmark of a civilised society is how we treat our poor, disadvantaged and disabled. This Government have continuously presided over massive failures in policy development and implementation.
Graeme Morrice (Livingston) (Lab)
Does my hon. Friend share my concern and horror at the escalation in the number of sanctions made by Jobcentre Plus which, on appeal, have been found to be erroneous?
Lindsay Roy
My hon. Friend makes a very important point. In my office, we deal with 12 such cases every week, concerning Atos and sanctions.
The forcible and inhumane imposition of the bedroom tax is a real concern for us. The Prime Minister should have sent the Secretary of State for Work and Pensions back to do his homework properly, and to plan a course of action on welfare benefits on a fair, consistent and evidence-based manner. The fact that he did not demonstrates a weakness to stand up to a dogmatic Minister who has taken a callous, uncaring and brass-neck approach to implementing hurriedly a range of flawed practices that have impacted unfairly on so many of our citizens.
The Chancellor has been culpable in that he has done us a major disservice, as his Budget did absolutely nothing to address the multiple and shambolic failings of the DWP. Dogmatic intransigence and gross inefficiencies have led thousands to suffer through the application of a target-setting culture, in many cases resulting in unjust sanctions and declarations of fitness to work, despite medical evidence to the contrary. Those injustices have left many honest and upright citizens, for the first time in their lives, being forced to access food banks and payday loans and to get into debt. The numbers have grown massively. From my own constituency, I will highlight three inconsistencies and injustices, but I am sure that they are mirrored many times over in other constituencies throughout the country.
The first involved a man who had a medically certified spinal injury and was therefore unable to lift weights. That was interpreted as job avoidance, despite the fact that he had participated in the required number of job applications. He was sanctioned for 13 weeks and had to resort to the local food bank for sustenance.
The second example involved a lady who had been waiting for months for an Atos appointment. Her employment and support allowance was stopped and she was advised to claim jobseekers’ allowance. She is still waiting for an appointment. It is no wonder that she has been waiting: an informed insider told my office last month that in Scotland and north-east England there are 24,000 Atos reports waiting to be processed. When questioned by me, the director of Atos in charge of quality assurance said he did not recognise that number, but we still await a figure. So much for DWP-Atos quality assurance and standards.
The third example concerns a lady who had suffered a close family bereavement. She explained her situation, but until there was prompt intervention by my office, she was ruthlessly sanctioned. The Government have received regular exhortations to abandon the inhumane and vile imposition of the bedroom tax, and to bring fairness, compassion and dignity to DWP-Atos assessments. They have singularly failed to do so.
The ongoing injustices I have highlighted make it clear that our disadvantaged, poor and disabled are still being treated unfairly. In my main jobcentre, there are only two computer access points. Those people are often dealt with callously, but they too have the right to be treated in a respectful and dignified manner, and the DWP must recognise that. Until this happens consistently, DWP Ministers should hang their heads in shame.
Rory Stewart (Penrith and The Border) (Con)
I want to speak briefly about the elderly. The response to the Budget has focused on the needs of the next generation and of younger people, but I represent a constituency in Cumbria with serious issues of isolation. I will make three points.
First, we should bear in mind the enormous contribution of older people. All of us, from all parts of the House, know from experience that people aged over 55 are probably the most vigorous and active citizens in our communities. Many of the things that happen day in, day out for us as constituency MPs involve people aged over 55 challenging our decisions, holding us to account, being highly articulate and leading community projects. Whether it is by digging in superfast broadband or working out how to support the hospice at home movement, the elderly make an enormous contribution.
The reality is, however, that the elderly in this country are suffering a real problem. We have developed a culture that is increasingly focused on the young: on the idea of youth, on the idea of productivity, and on the idea of the next generation. We are finding it more and more difficult, in the media or in the House, to talk properly about the elderly, although in my experience—and, I suspect, in the experience of many other Members—it is the elderly in particular who represent the most shocking scandal in our society. Day after day, walking into the homes of the elderly, we witness scenes of loneliness, isolation and deprivation which can be shocking. We do have ways of addressing this—the Government’s pension reforms are a very good step in the right direction, and it is good to hear, for example, Age UK praising those reforms—but there is much that we can do to become more ingenious.
One concrete example of the scandal in our society is deafness. We pride ourselves constantly on huge technological changes. We pride ourselves on being able to produce a new kind of laptop every year, and on increasing developments in miniaturisation. However, hearing aid technology is still basically stuck in the 1970s. Deafness is a terrible thing. Anyone who lives with a deaf person can see that it removes the complexity from conversation, it removes the human relationship, and it creates deep isolation. Yet we are not investing in and developing the technology in the way we could.
Secondly, we need to grasp the potential of telehealth and telemedicine, which, despite spending more than £1 billion on superfast broadband, the national health service has not yet done. If we want elderly people to remain at home, we need to find a way of addressing them directly. I recently had a very depressing conversation with staff in a GP’s surgery, who told me that they felt no need to use superfast broadband connections, because they were just coming to terms with the huge benefits of talking to people on the telephone.
Thirdly, we need to think about how we can use community hospitals in a much more flexible and imaginative way to support social enterprises and third sector organisations—about which we heard from the right hon. Member for Salford and Eccles (Hazel Blears)—when it comes to going into people’s homes. The biggest killer among elderly people in this country at the moment is, of course, loneliness. A person’s chance of dying doubles within a year of his or her partner’s death. We can all understand how that happens, in very concrete terms. Your partner dies suddenly, and perhaps you no longer receive a prescription for a new set of glasses. Your partner dies, and perhaps your medication is no longer checked. Perhaps the stair carpet is not being nailed down. Perhaps you are not being taken to the supermarket to buy food. Those are all things that the third sector can help to deal with, and they are all things that can be dealt with by community hospitals if they are imaginatively managed.
I shall not say much more, as I am aware that we are short of time, but if our nation is looking for a mission for the next 20 or 30 years, it is this: we need to come to terms with the elderly. We all understand the statistics, because they are easy. The number of people aged over 85 will double. The number of people aged over 65 will rise by 2 million between now and 2025. The number of people with Alzheimer’s disease and dementia will double. Every single one of us will experience, in our families and our homes, the terrible pressures of ageing.
As I saw when I was in Afghanistan, all young Afghan men—men in stonewashed jeans with the latest mobile telephones—show enormous respect to the elderly. Indeed, they will cross the road to show their appreciation and support. It is very worrying that in this country, where the elderly are contributing so much in terms of citizenship, wisdom, advice and support, every one of us, day by day, sees our parents, our grandparents or indeed our friends undergoing the terrible process of deafness, forgetfulness or, ultimately, dementia. We need, as a Government and as a community, to build a society that is fit not just for our children, but for our parents.
David Wright (Telford) (Lab)
I enjoyed the speech of the hon. Member for Penrith and The Border (Rory Stewart). He focused on issues relating to older people, and I think that many of the points he made were welcome. No doubt we shall have opportunities to explore them over the coming months and years. However, I have to dispute, for reasons that I shall explain shortly, his opening remark that the Budget had focused on young people.
As we know, this year’s Budget followed a huge global financial crisis and several years of flatlining in our economy. The growth that we are now seeing is very welcome, but I think we must acknowledge that, outside the M25 collar around London, it is quite patchy. In many areas, local communities are struggling to secure balanced growth in their economies, and it is undeniable that many people are experiencing a cost of living crisis. In Telford, which has a history of low wages, a history of temporary working and a history of agency working, people are still struggling to make ends meet. There has been some growth in the banking sector—the food banking sector, that is. More people are having to resort to the food bank in Telford, for a variety of reasons. I pay tribute to the volunteers who work at the food bank. I also say “Well done” to the local authority for funding it, and for recognising its contribution.
Andrew Griffiths
I understand the point that the hon. Gentleman is making—I too represent a northern, or midlands, constituency—but does he not welcome the fact that unemployment in his constituency has decreased by 25.6%?
David Wright
I intend to talk about unemployment, and about youth unemployment in particular. I know that the hon. Gentleman represents a northern seat, although I do not know how much further north it is than mine, if at all. Let me add that I enjoyed his comments about the brewing industry. I welcomed the Chancellor’s policy announcements about the industry, which I think were very positive, and, as a supporter of CAMRA, I agreed with much of what the hon. Gentleman had to say.
David Wright
I want to develop my argument before I give way again.
Telford has a particularly good and proactive Labour council, which is driving forward investment projects that will have a very positive effect on our local community. Hundreds of millions of pounds have been invested in the Southwater scheme in the town centre as a result of a partnership between the public and private sectors. That is what a proactive Labour council can do to deliver jobs and investment in the community.
Let me now say a little about what was in the Budget, what was not in it, and what could have been in it. I think that we can give a cautious welcome to what the Government have said about pensions reform, but I also think that the devil will be in the detail. A number of Members have referred to the mis-selling scandals that have taken place over the past few decades. There are significant problems involving fees, and we shall need to look at the regulatory regime more broadly in relation to the pensions market and the pensions sector. I assume that a Bill will be announced in the Queen’s Speech.
There are serious issues to consider in respect of how the pensions sector sits alongside social care, and how we should fund social care in the long term. I am not making a party point. If we are to reform the pensions structure and change the way in which people receive resources and assets, there are serious questions to be asked about the echoes of that when it comes to how we should pay for longer-term care for the people who will need it as our population ages.
Mark Tami (Alyn and Deeside) (Lab)
Does my hon. Friend not think that it would have been better for the Government to explore some of those issues before announcing a policy that had clearly had not been fully thought through?
David Wright
I agree. I think that the Government could have made an announcement much earlier. They could have conducted a consultation exercise across the pensions sector, and we could then have reached a consensus in the House. The Chancellor is clearly attempting to use this issue as a political tool. We need to have a long-term debate, because these matters will affect our constituents in the very long term. I do trust people with their pension pots; I do trust people to make the right decisions. The people I do not particularly trust are those in the financial sector who will be coming up with new products to sell to people as the pension environment changes. That worries me, and we must think very carefully about how we regulate that sector.
The welfare cap is another issue that came up in the Budget. I do not have a problem with the welfare cap in principle as long as it acknowledges the prevailing economic circumstances that people face in local communities. A blanket cap that does not acknowledge changes in the economy or what is happening in the wider economy just will not work.
I also welcome the development on ISAs. The raising of the threshold to £15,000 is a good thing and gives a positive message about savings, but I have to say that the Conservative party seems to be living in a different world from me. Not many people in Telford can afford to invest £15,000 a year in an ISA, and I cannot think of many couples who can invest double the amount.
David Wright
No, I will not.
For many people in Telford £15,000 will be an annual income on a part-time job. People will struggle to be able to invest the kind of money the Conservative party clearly thinks they have got swilling around in their coffers, but never mind; they can go and enjoy themselves at the bingo.
Immediately after the Budget, I took part in a Federation of Small Businesses event—a phone-in debate and panel discussion at a hotel in Telford. I have to say that the small business community, and certainly the people I spoke to in the phone-in, were quite disappointed. They were concerned that there had not been more movement on business rates and that a lot of the initiatives the Chancellor was talking about were targeted at larger businesses. They felt they were getting a bit of a raw deal and they were being ignored. My view has always been that in our modern economy the strength of our future economy and of our nation will depend very much on the success of small and medium-sized enterprises. We must, therefore, think much more about support for small businesses.
There were two glaring omissions from the Budget, the first of which relates to young people. Unemployment rates among young people in Telford and Wrekin remain stubbornly high and hundreds more young people are underemployed. The Chancellor spent little time in his speech talking about young people, but it should have been his top priority. It is for us in Telford. The local authority is investing £1.3 million specifically to target youth unemployment, and the job junction initiative is helping people in towns across the borough, providing support for them to get back into work. We also have other partners, such as Telford college of arts and technology, which have programmes targeted at getting young people who have found formal education difficult back into education and into securing skills and training. I recently had the pleasure of opening a campus facility for the college in Dawley.
The other omission from the Budget was any discussion of the need for a significant increase in the provision of social sector housing units for rent. Understandably, we all want to talk about affordable housing for sale in this country, but we face a real dilemma in that we do not have enough properties for rent in the social housing sector. The next Labour Government must have an enormous drive to build more social housing, to ensure that we deal with what is one of the biggest issues for my constituents.
Crispin Blunt (Reigate) (Con)
It is a pleasure to follow the hon. Member for Telford (David Wright), but judging from what he said about small businesses, he does not appear to have noticed that in previous Budgets under this Chancellor there have been changes to the tax and investment regimes that have been enormously beneficial to them. It is right that in this Budget the Chancellor should turn his attention to savings and pensions.
This was a great and profound Budget. Its consequences will live with us, to the substantial overall benefit of the United Kingdom, for decades to come. I share the huge enthusiasm for treating savers like adults and creating a vastly improved environment to encourage saving. However, changes on this scale will have unforeseen difficult consequences, as well as some that are already being identified by expert commentators.
I represent four major providers of savings products in the Reigate constituency: blue-chip market leaders in Legal and General with 2,500 jobs and Fidelity with nearly 2,000 jobs; and two newer market entrants, Partnership and Just Retirement. The latter two have provided astonishing case studies of what can be achieved by well-led and innovative companies. They have become market leaders in specialist annuity products and have led the growth of the equity release market, which is such an important product in the suite of products available to give people a sustainable and comfortable retirement. Between them they have added many hundreds of jobs in my constituency in the last few years alone. I am astonished by the market reaction to the Budget, which saw their share prices halve under the assumption that the annuity business was now effectively over.
The Chancellor’s proposals are just ushering in an era where innovation in savings products and market fleet-footedness will play straight to the competitive advantages of the people employed by those two companies. The behemoths of Legal and General and Fidelity are also rightly highly bullish about the much-improved climate for savings that the Chancellor now proposes. The short-term analysis of some market-makers has left me bemused. They plainly do not know enough about the companies or their excellent people and products and their ability to innovate in this great new market.
The challenge is to ensure the spirit of the reforms develops into a well-governed and safe experience to deliver good customer outcomes. Rightly therefore, much of the attention has been on guidance. The financial services industry has held a protracted debate on the differences between advice and guidance without delivering a solution for the 500,000 people who retire each year with defined contribution pensions or the future wave of retirees who have been auto-enrolled into them. The Financial Conduct Authority reported evidence of major failure in pension provider pre-retirement processes, with eight in 10 consumers who purchased an annuity from their incumbent pension provider able to get a better deal by shopping around. This perhaps explains why a recent Which? survey found that only 42% of consumers coming up to retirement trust their pension provider to act in their best interest. Taking provider interests out of the new guidance framework is necessary to ensure savers are properly equipped to consider their options in the external open market.
The Government have just resisted amendments to the Care Bill about guidance on the cost of care, but I now think we need to nudge people in the direction of properly informed independent advice at retirement to help them make the best plan for their circumstances. I suggest that a small percentage of any tax-exempt saving should be reserved for paying for independent financial advice at retirement. If savers have a proffered pot of funds that has been ring-fenced for advice, they will be in no doubt as to what the state thinks they should do. However, consistent with treating people as adults, if they take a positive decision to opt out of independent advice at retirement, on their own head be it if they decide to put those ring-fenced funds into their wider savings pot and make their own decisions or place themselves in the hands of an existing provider without taking an informed view of the whole market.
The complexity of choice in the use of all one’s assets, pensions, savings and property at the point of retirement to insure against future care costs, provide an annuity, make cash available and decide on protection or use of the family property cries out for independent advice. We should nudge people in that direction. Expecting the provider industry to deliver that is a triumph of hope over experience. This will continue to be a key debate and, given my constituency interest, one of which I would want to be a continuing part. Yes, that is a bid to serve on the Committee of the Pensions Bill. There are, however, now a series of concerns about the consequences of the behaviour of savers faced with these welcome new freedoms and what that will mean for the financial markets.
Much reaction to the Budget has focused on the less competitive, inert parts of the annuity market, but the majority of pension value is placed in the open, transparent, competitive external annuity market, which does deliver good value for consumers. People should continue to value security, especially at a time of life when returning to work may not be an option for providing income. Annuities will remain the only means of providing a guaranteed income for life.
Just Retirement and Partnership are both specialist retirement income providers whose arrival in the past 10 years has driven innovation, value and competition, and has positively disrupted the market. The development of equity release, led by Just Retirement, has opened a vast new opportunity for meeting Europe’s gaping black hole in provision for a comfortable retirement for a growing number of retirees as a proportion of our population, so we ought to raise the warning flags over the potential unintended consequences of this welcome policy change.
In conclusion, this Budget will live in the pantheon of the great Budgets, along with Geoffrey Howe’s lifting of exchange controls and Nigel Lawson’s cutting of the higher rate of income tax. Overall, it is a great measure and I am proud to support the Chancellor.
Mr George Howarth (Knowsley) (Lab)
It is a pleasure to follow the hon. Member for Reigate (Crispin Blunt), who stressed the importance of getting independent advice. That advice was well worth giving, but I simply observe that in the past people have had independent advice but it has not always turned out to be to their advantage. There are two kinds of independent advice: good advice and bad advice. How we distinguish between the two will be—
Crispin Blunt
The important change is that independent advice is now definitively independent advice—the era of relationships, commission and so on between financial advisers and providers has gone, and that is an important benefit.
Mr Howarth
I agree, but my concern is that the people giving the advice need to be competent; it is not necessarily a question of whom they are connected to.
I want to use the time available to me to talk about the Budget and poverty, but first I wish to refer to my experience of volunteering in our local food bank—the Big Help Project—last Saturday at the Tesco supermarket in Prescot, in my constituency. The first point to make is how generous the response of shoppers was to the appeal. It was so overwhelming that at one point the volunteers struggled to keep up with the number of bags of groceries that were being given to us, and that is a great tribute to everybody involved. Secondly, from talking to volunteers and supporters it became clear that they did not take a prescriptive view of people who, unfortunately, have to rely on the services of a food bank to feed their family. The statistics bear out why people are right to be sympathetic. The Big Help Project has had 6,000 referrals over the past 12 months, 73% of which are the result of benefit changes, benefit delays or low income. The project has a vital job to do, but we need to be mindful of the reasons why people find it necessary to go to a food bank.
I want to talk specifically about poverty, and not about welfare. We have sometimes managed to confuse those terms, but they sometimes go together and sometimes do not. According to the Joseph Rowntree Foundation,
“the most distinctive characteristic of poverty today is the very high number of working people who are also poor.”
Again, the food bank experience in Knowsley bears that out, as 22% of those referred are in employment but they are so poorly paid that they are forced to rely on the food bank to make ends meet. The other two main groups relying on the food bank are people who are dependent on the benefits system and who are affected either by benefit changes or by delays in payments. In some cases, these people find themselves with absolutely no income at all, and often that is as a result of sanctions, which in some cases are arbitrarily put on people who are trying to make a claim.
The trouble with the Government’s approach to welfare reform is not just that it is morally flawed, but that it is based on the subjective view that welfare dependency is, in some way, a choice that people can make. If it were as simple as that, it would be a relatively straightforward phenomenon to resolve—but it is not as simple as that. The reality is that people who want to re-enter the labour market are often confronted with a complex web of barriers that can, in some cases, be impossible to negotiate without help that is tailor-made to their particular circumstances.
Research from the Department for Work and Pensions itself has concluded that what matters for poverty reduction is not the aggregate employment rate, but the share of working age adults and children in workless households. In other words, an increase in the number of people in the labour market will not necessarily reduce poverty if it consists of people entering the labour market from households which are not already in poverty. So, even if employment rates are rising—I acknowledge that they are—below the surface there is a highly polarised employment structure, with a high number of double earners and a high level of zero-earner households. The Secretary of State referred to that in his opening speech.
What the Government’s approach fails to take into account are the barriers that those in zero-earner households have to surmount to become earners—certainly at a level that does not lead to their still living in poverty. Time forbids me from going into too much detail, but let me offer two examples of the barriers that people experience. The first is the recruitment practices in many companies. A UK Commission for Employment and Skills report in 2010 concluded that employers increasingly use informal channels of recruitment rather than the jobcentre, which further disadvantages those who are unemployed and, as a result, they do not have the informal contacts needed to be in the know. That approach is probably even more commonplace now in my constituency than it was at that time.
The second barrier is the increasing use of zero-hours contracts by employers. There are varying estimates as to the level of their use, with between 500,000 and 1 million people thought to be affected. I do not intend to get into a discussion about which figure is correct, but that barrier, taken together with the unreliability of agency contract work, makes it difficult for families to abandon the benefit system altogether. That is because the employment available is so insecure and unreliable as to be too risky to contemplate—certainly for families. Indeed, it presents the very real possibility that by finding a job someone will be plunging their family into even greater poverty than they were experiencing already.
Although there are obvious improvements in the economy and in the levels of employment, poverty is stubbornly persistent in this country, to a wholly unacceptable degree. I am afraid that I am bound to conclude that because the Government do not understand the causes of poverty, they have not addressed it at all in this Budget.
Nick de Bois (Enfield North) (Con)
I am pleased to follow the right hon. Member for Knowsley (Mr Howarth). I tried to follow his argument, but felt some confusion, because his constituency, notwithstanding the barriers there, has seen a drop in youth unemployment from a terrible high of 17% to 10%, so clearly some progress is being made. [Hon. Members: “Well, that is all right then.”] Before he attempts to misinterpret my words, he should read Hansard to see exactly how I phrased my thoughts.
In the Budget, the Chancellor demonstrated that he has the ideas to continue his drive to rebalance and rebuild the economy on a sustainable platform, rather than on the platform we inherited after 13 years of the previous Government, where our over-dependency on one sector and a bloated welfare state led to many of the problems we are dealing with today.
I talk about ideas. Opposition Members would do well to remember—those who are old enough to remember—what James Callaghan said after the election defeat of 1979. He said that he knew he had lost the election because his Government had run out of ideas. Frankly, it seems that Labour has nothing new to offer judging by the responses of its leader and the shadow Work and Pensions Secretary. It has chosen to move off the historic centre ground of British politics. Nothing illustrates that more than the contemptible speech that we heard in response to the Budget. It was full of class war rhetoric and it lacked ideas. The intellectual pulse of the Labour party is not there; the party is flatlining and, as I have said, it would do well to remember the words of its former Prime Minister.
It seems that Labour, having nothing new to offer, have returned to the past. Yesterday, the right hon. Member for Tooting (Sadiq Khan) talked about returning to widespread union-brokered collective bargaining and direct action. Labour is now officially wedded to the unions. It also remains married to the discredited politics of borrow and spend and has no ideas for the future.
Unsurprisingly, the Chancellor and his team present a stark contrast to the Labour team. They understand not only the scale of the challenge but how to bring forward ideas to help sustain the economy. They have recognised that there is a massive transfer of economic power from the west to the east. Conservatives understand that nobody owes us a living. We have to create the conditions and the mentality to go out and earn our way.
The Budget is about developing building blocks to rebalance the economy and to sustain the growth that we need. Above all else, the Conservatives trust individuals to spend their money far better than the Government. Individuals recognise that tax is not the Government’s money but the taxpayer’s money, and that if they do the right thing, this Government will be on their side.
The platform for growth may have been laid down in this and other Budgets, but it is the aspiration of the British people that will see us exporting more and getting on in life. It is they who will deliver the competitive business environment and stable public finances. However, to achieve that we must look beyond economics to education and the welfare system. There are people in this country who are trapped in worklessness. They leave school at the age of 16 ready to compete in the world. The shame of the Opposition was that they stifled ambition and strangled aspiration for so many people and trapped them on benefits. There were 1 million households in which people had not worked for more than 10 years. This Government are reducing the numbers of workless households. Fewer children are growing up in workless households, employment is increasing, youth unemployment is reducing—in my own constituency the number is down by 32% since the election. It is our deep understanding of making work pay that drives our reforms. We want to rid this nation of the appalling high marginal tax rates. The fact that someone could pay a 95% marginal tax rate if they came off benefits into work provided no incentive to work, which is why we inherited a legacy of high long-term unemployment and youth unemployment.
The Government have proved that financial measures alone are not enough. By tapping into the natural aspirational instincts of the British public we can change behaviour and improve lives for ever. Nothing illustrates that more than the measures we have taken to trust people with their own money—albeit in savings or in reducing the tax burden. We have shown trust in companies to invest in their people and their businesses by lowering corporation tax. That has been done within the difficult, demanding financial constraints that we inherited and are having to deal with. These are the issues that will drive greater growth and more employment and will change lives for the future. The tax-free allowance has gone up to £10,500. It represents a 66% rise in the amount that a person may earn before tax, which is a good thing. The pensions policy, which allows a person to use their own money as they wish, is indicative of a Conservative Chancellor who uses Conservative values in a Conservative Budget and who trusts the people.
Mr Jim Cunningham (Coventry South) (Lab)
The tragedy of the hon. Member for Enfield North (Nick de Bois) is that he actually believes what he said. I think that we need to be a bit more realistic now. For the past four years, we have heard the Conservatives blaming the previous Labour Government for the economic recession—[Interruption.] If Members want to follow North Korean doctrines such as that of the “Dear Leader”, they should just carry on, but let us get a little bit real.
The recession started in America. I am sure that my colleagues remember Lehman Brothers and Fannie Mae. In this country, we had a problem with Northern Rock, which the Labour Government tried to address. All of this talk about us running up a deficit is nonsense. Basically, we had to save the banks. When the Labour Government came to power in 1997, they cleared the national debt. They inherited the policy of 50p of every pound paid in tax going to pay off the national debt; crumbling schools; patients waiting for treatment in hospitals on trolleys; and declining manufacturing, especially in Coventry and the west midlands. Coventry was losing thousands of manufacturing jobs a week, and household names such as Standard Triumph were disappearing. I am sure that my colleagues remember that.
The previous Tory Government attempted to rebalance the economy. They moved from manufacturing for export to the service industries, which led to the crisis of 2008. When we left office, we still had our triple A rating. We had introduced low interest rates to help families and pensioners and quantitative easing to help the economy and we had bailed out the banks to protect savings. Growth was returning. We had persuaded George Bush, an American Republican conservative President, to pump billions into the American economy.
When the present Government were in Opposition, they said that they would maintain our spending levels. They opposed freedom for the Bank of England and said that the economy was over-regulated and that they wanted to cut red tape. That was their solution to a worldwide crisis that started in America and spread across the world. Their plan was to pretend that it was confined to Britain so that they could blame the previous Labour Government and justify breaking their election promises to the British people.
We must remember that 13 million people are still living below the poverty line in the UK and that 350,000 people used a food bank last year. Energy prices are high, housing is inadequate, wages are low and the Government are offering nothing at a time when many people are suffering. The Government have very little to offer.
My first major problem with the Budget is that it is extremely unfair to our young people—a group who have been undervalued and forgotten by this Government. The Government should be ashamed of how they have simply abandoned a whole generation, who will suffer the most during this recession. Some 282,000 people under the age of 25 have been jobless for a year or more. That figure is at its highest since 1993 and has almost tripled since 2008. More than 900,000 young people are still out of work. That is a serious problem and the Government seem completely complacent about it.
The Government are pleased about the employment picture, but they have not considered the experience of young people in this country. What about young people who can find only part-time work? What about young people who have work, but in a different field from that in which they are trained, or for which they are overqualified? The Local Government Association has warned that a third of all young people will be out of work or trapped in underemployment by 2018 if we are not careful.
A young person’s first job is just a statistic to this Government, but someone’s early career can make a huge difference to their life. For someone who went to university, studied hard and hoped for a job in a particular field, it can be highly disheartening to work in a non-graduate job or a completely unrelated field. Nearly half of recent graduates are in non-graduate jobs. That can be a blight on their future in competitive industries.
Similarly, when people are burdened with financial pressures, being able to find only part-time work is a problem. We are talking about hard-working, driven young people who want to get on but instead spend their whole lives in jobs that are well below their capacity. Yet the Government smugly pat themselves on the back for the employment figures.
Our young people are being abandoned. If the Government do not see that as a serious problem and begin to take action, we are looking at a lost generation. That reminds me all too well of life for young people under Thatcher.
The Government’s flagship Youth Contract has been declared a failure by their own advisers and the Work programme is finding work for only one in six of the long-term unemployed. That is simply not good enough. Labour’s compulsory jobs guarantee scheme, which would be funded by a tax on bank bonuses, would ensure a paid job for every young person under 25 who was out of work for more than a year.
It looks to me as though the Government have given up on young people, perhaps because they think that they have not forgotten about tuition fees, or perhaps because they know that Labour will give the vote to 16-year-olds and they will not. Either way, they have simply decided that the youth vote is not worth chasing and they are going after pensioners instead. That is disgraceful. Young people are being forgotten. A Government should be a Government for everybody, not just for the people who might vote for them or the people who they are afraid might vote for the UK Independence party. That is no way to run an economy.
The Budget does shockingly little to address the fact that women are so unfairly hit by the cuts. Women are bearing the brunt of the cuts and the Budget is no exception.
Mrs Mary Glindon (North Tyneside) (Lab)
Women form the majority of employees in the public sector, so the cuts to that sector are doubly affecting women. Does that not show that the Government are going about this in an unfair way?
Mr Cunningham
I agree with my hon. Friend. The majority of jobs created that are part time and have limiting career prospects have gone to overqualified women. Since 2010, male unemployment has decreased by 17% whereas female unemployment has risen by 7%. Disgracefully, women still tend to have lower end-of-career salaries than men and so often have lower pensions. Women are under-represented in the Government and that shows in their policies. What in the Budget will address that?
I want also to raise my concerns about local government finance. I have raised the issue on a number of occasions, but I cannot stress enough how much it matters. It needs to be made clear that a crisis is coming in many local authorities. Coventry city council has already lost approximately £45 million in core Government grant in the past three years and has had to implement a significant savings programme to minimise the impact on front-line services. That has, of course, put a huge strain on services. Coventry will face a—
Sir Tony Baldry (Banbury) (Con)
Coventry and Banbury are not that far away from each other. When the hon. Member for Coventry South (Mr Cunningham) and I entered the House of Commons together about 30 years ago, I think that the unemployment rates in our constituencies were not dissimilar at about 15%. Unemployment in my constituency today is 1%, so it is possible to make progress if the community works together and drives forward jobs.
Guto Bebb (Aberconwy) (Con)
Indeed, progress is being made in Coventry South, where the number of jobseeker’s allowance claimants has fallen 17% year on year. In the 18-to-24 age group, it has fallen 20% and the number of long-term unemployed in Coventry South has fallen 16% in the past year.
Sir Tony Baldry
But, of course, Opposition Members simply are not willing to acknowledge that there has been a persistent fall in unemployment. I am not sure that their dirge of pessimism will resonate with electors, however. This past week was a defining week. By Friday, the shadow Secretary of State for Work and Pensions was acknowledging on “Any Questions?” that the Opposition would support the Government’s pension changes. She obviously had a busy weekend, because on Sunday she acknowledged in The Observer that Labour
“will vote for a cap on welfare spending to keep the overall costs of social security under control.”
Of course, the Chancellor has attached the welfare cap to the charter for budget responsibility in such a way that tomorrow, essentially, the Opposition will be voting for the coalition’s deficit reduction programme. Having spent pretty much all of this Parliament resisting every welfare reform and every attempt to reduce the budget deficit, at the end of the Parliament with just over a year to the next general election the Opposition are suddenly trying to catch up, accepting the fundamentals of the Government’s economic policy and recognising the strength of the Government’s long-term economic plan.
The Opposition can do the big stuff, but when it comes to the detail they still cannot quite bring themselves to acknowledge what they must do. They say that they will reverse the spare room subsidy. I still do not understand why they want to treat tenants in the social housing sector differently from the way in which they treated tenants in the private rented sector, notwithstanding that they will have to find nearly £500 million to reverse that policy. Where do they say the money will come from? The shadow Secretary of State for Work and Pensions said again from the Dispatch Box today that it would come from taxing higher rate taxpayers through the winter fuel allowance, but that would bring in only £100 million. We can already see that they are about £400 million adrift on just that simple question. It is all very well talking the talk about signing up to the welfare cap, but they cannot bring themselves to acknowledge what they will have to do to enforce that. Welfare budgets were completely out of control under the previous Government. The number of households in which no one had ever worked nearly doubled under Labour. This Government have taken difficult decisions to bring the benefits bill down, saving £19 billion a year for the taxpayer. The new welfare cap will ensure that never again will the costs of welfare be allowed to spiral out of control and never again will the incentives to work be distorted. The level of the cap will be allowed to rise only in line with forecast inflation. Of course people who have worked hard all their life deserve security in their retirement, so the cost of the state pension will be excluded from the cap, as will cyclical unemployment benefits. We need to see a welfare system that returns to the safety net that Beveridge intended, instead of the entrapment that it had become.
We have seen the Government make some brave and positive moves to get the welfare budget back under control. The latest workless household figures show a dramatic fall of 450,000 since 2010. We have record employment figures. I can recall at the beginning of this Parliament Opposition Members all saying that the Government’s long-term economic plan would lead to the disappearance of a million private and public sector jobs. What has actually happened since 2010 is that more than 1.7 million more people are employed in the private sector, which is more than four times the number of jobs lost in the public sector.
As we heard in an intervention from the hon. Member for North Tyneside (Mrs Glindon) in the speech of the hon. Member for Coventry South (Mr Cunningham), the Opposition’s answer to any conundrum is more public sector jobs. Their default position is still more public spending and more public sector jobs. In reality it is in the private sector that more jobs are being created. Indeed, almost 80% of the rise in private sector employment has taken place outside London, in constituencies such as mine and Coventry and in the constituency of probably every Member who has spoken in the debate. Almost 90% of the new jobs went to British nationals.
There are those, such as the Bank of England, who argue that the increase in employment has to a certain extent been as a consequence of the tightening of the eligibility requirements for some state benefits, which have caused people to see whether they cannot find their way back into the world of work. I visited one of the Work programme providers in my constituency the other day, which is doing a really good job of ensuring that the long-term unemployed get back into work. So the increase in private sector employment is now more than four times the number of jobs lost in the public sector. The rise in employment is being driven by businesses and entrepreneurs across the country who are feeling increasingly confident with the improving economy.
I have few large employers in my constituency. The continuous driving down of the unemployment rate month on month, week by week, in constituencies such as mine is being achieved by the private sector and by entrepreneurs, all of whom found measures in last week’s Budget that were supportive and which they supported.
We heard much about young people in the debate, but the number of young people in work has increased by 43,000 in the last three months alone, and the proportion of 16 to 24-year-olds not in employment, education or training is at its lowest in five years.
Employment is at a record high, up by over 1.3 million since the election. For the first time in three decades, the number of people employed in the UK is better than that in the United States. Unemployment in other European countries is going up, whereas unemployment in the UK is going down. That bodes well and will bode well for the Government come the general election next year.
Mr Mike Weir (Angus) (SNP)
The changes to pensions and annuities have caused a great deal of interest in my constituency, but many constituents are unsure what it means for them. This is dangerous, because the changes are being introduced quite quickly and many people will have to decide whether to defer taking their pensions until the changes come into play.
At one of my surgeries on Friday a constituent who had already bought an annuity asked me whether he could now take a lump sum instead. I fear that the answer to that is no as he had already entered into an annuity contract, but it shows that there may be some ill feeling about the sudden change among those who have only recently bought annuities.
It is also not clear to many constituents that the changes apply only to defined contribution schemes. Many are unsure what type of scheme they are in. Another constituent asked me how the changes affected his company scheme, but it seemed to me that that scheme was a hybrid, with elements of both defined contribution and defined benefit. Again, my understanding of the changes is that they would not apply to such schemes, at least at the moment. Have the Government given any thought to whether hybrid schemes will be affected? Will the possibility of taking a lump sum from such a scheme be limited, and if so, what impact is that likely to have on the scheme as a whole?
While I appreciate that anyone who is considering what to do would be well advised to seek professional advice, these are serious issues that require a clear answer to allow constituents in such schemes to determine what is in their best interests. They may have to do so fairly quickly. The changes could mean a huge change in how people save for their future, but I suspect that it will also mean a huge change in how such savings are viewed, both by the general public and, crucially, by future Governments.
Dame Anne Begg
The hon. Gentleman has rightly challenged the Government about the uncertainties caused by the changes proposed in the Budget. Can he enlighten the Scottish people as to the attitude of a Scottish National party Government on the proposals if, heaven forfend, there is a vote for independence?
Mr Weir
I may as well ask the hon. Lady what a future Labour Government would do, given that Labour has flip-flopped on the proposals since they were announced last week. When we achieve our independence, we will inherit these proposals, and a future Chancellor will improve them.
There is evidence from other countries that when such changes are made, a substantial number of people take their savings as a lump sum, rather than buying an annuity. There are very good reasons why people might choose to do so, and I accept the argument that we should allow them more choice over how they use their own savings. On Thursday, during the statement by the Minister of State, Department for Work and Pensions, the hon. Member for Thornbury and Yate (Steve Webb), I raised the question of whether these new pensions vehicles will be truly different from other forms of savings. That is important, because we have traditionally given greater tax incentives to allow savings for retirement that are not available for other savings products. If, however, someone entering a pension scheme can in future take the whole sum as a lump sum rather than as an annuity, what exactly makes that pension scheme any different from other long-term savings schemes? Will a future Government look at that and decide to end any tax reliefs, which could have a significant impact on future savings? In his response the Minister said:
“One of the differences between workplace pensions and other forms of saving is the employer contribution. Whereas someone of working age can save through any savings vehicle they like, it is only through workplace pensions that they get not only tax relief but the employer contribution.”—[Official Report, 20 March 2014; Vol. 577, c. 956.]
That is true to some extent, but it does not really address the question, as defined contribution pension schemes are not necessarily workplace schemes, so they do not all have an employer contribution. For example, many self-employed people may use such schemes. They get tax relief, but will that continue should the pension element of the scheme effectively be removed? Is it therefore the Government's intention to make a distinction between those schemes that have an employer contribution and those that do not? Do the Government intend to have a process for determining which schemes are pension savings and which are just ordinary savings? Again, some clarity on these points is much needed.
I also asked the Minister how someone, say in their late 50s, who comes to claim means-tested benefits would have their defined contribution scheme treated. I did not really get an answer to that point, so I shall put it again to the Exchequer Secretary. I put the question to the House of Commons Library, and it responded:
“Income from a defined contribution pension is treated as income for the purposes of means-tested benefits”.
So far, so good, and that is no surprise, but what is the position if someone has a defined contribution scheme and has the ability either to withdraw their money or take it as income? Up to now, that has not been an issue, as most people cannot get access to their funds until they reach retirement age, but the changes, as I understand them, will mean that anyone over 55 will have access to their fund.
A clue to what might happen is to be found in the rules for pension credit, where a person can be treated as having pension income for which they have not yet applied. The leaflet from the Pension Service “A detailed guide to Pension Credit for advisers and others”, which was issued last September, states:
“Notional income is income your customer does not actually get but is treated as getting. We may treat them as having notional income when they have: not claimed state pension but are entitled to it; not taken income available to them under a personal pension plan or a retirement annuity contract; deferred payments from an occupational pension; given up their rights to an income (from a trust fund for example) because they wanted to get Pension Credit”.
At present, such rules do not apply to means-tested benefits for people of working age. In this case, the present rules specify that income from a personal pension should not be treated as income available on application. Will that remain the case once it is possible for anyone who has reached 55 to take their funds from their pension plan?
It may well be that some Government Members will be of the view that any potential income should be treated as income for the purpose of assessing state benefits, but the implications of that are that someone who has done what we all wish people to do and has saved towards their retirement but is then made redundant at a late stage in their working life, could have their whole retirement fund wiped out because of a period of unemployment. Again, clarity is needed on that point. Similar concerns arise over those who are in care and meeting care costs, which is a point raised by the hon. Member for New Forest East (Dr Lewis) on Thursday and also by Age UK and the Joseph Rowntree Foundation.
Of course, the situation in Scotland is slightly different from that in England, but Jane Vass of Age UK is quoted in The Guardian as saying:
“The pension pot is protected from means testing. So when it is in a pension it can’t be touched but there is a risk when it comes out of that wrapper.”
It is possible that many of those who have been saving for retirement find that they have to use the fund to meet care costs, or perhaps a substantial part of their pot will go on meeting the costs of an insurance policy to meet future care costs.
Those are real issues concerning the whole set of changes to annuities, pensions and pension pots. People who are thinking of what to do with pension schemes that are coming to an end—do they take an annuity or do they defer until the new changes come in?—need that information now. Although the Government have said that advice will be available, it is not yet available, and it will probably be some time before it is. Clarity is needed now; otherwise, many people could make the wrong decision. It may be that they should take an annuity, or maybe they want to take the lump sum. They need proper advice now before the changes come into effect, possibly in 2015.
Mr David Ruffley (Bury St Edmunds) (Con)
The Chancellor of the Exchequer is to be congratulated on an intellectually bold and intellectually coherent Budget that will do much to bolster the growing confidence in the British economy. We are already seeing a recovery that is not, contrary to ill-informed observers, a credit-fuelled recovery. The growth we are seeing is to do with higher employment levels. The amount of unsecured lending—credit card borrowing—is remarkably modest and small; it does not account for the recovery we are seeing. Furthermore, the gross household debt to income ratio was 170% in the credit-fuelled days of the previous Parliament. It has fallen to 140% this year.
What the Chancellor reminded us of is that there are no final victories when it comes to economic management, and he reminded us of five things that have to happen if this recovery is to be sustainable. First, the measures to improve exports—so that we have the most competitive export finance regime in western Europe—will help our net trade position. Our net trade position is frankly not good enough: 5% of GDP is the level of the deficit on our current account.
Secondly, the Chancellor reminded us that as a country we have in recent years not been saving enough, so I particularly welcome the boldness in abolishing the 10p savings rate and the 55% punitive rate of tax on draw-downs from pension pots. It will now only be at an individual’s marginal rate. He has also abolished the compulsory need to annuitise. All those things will improve the incentives to save.
Thirdly, the Chancellor said that we have not been investing enough as a nation. I think that the single most important change in the Budget for manufacturers and exporters—those in the real economy—will be the increase in capital allowance from £150,000 a year to £500,000 a year. I have only one gripe about that for Government Front Benchers: it is another temporary increase. Over the years, under successive Chancellors, capital allowances have been chopped and changed, abolished, taken down to very low levels and then whacked up again. What we have in this Budget is an extension of the capital allowance until the end of 2015. Many of us would like to ask, on behalf of those in the real economy, for a little more consistency when such measures are announced.
Fourthly, we all know that our productivity is 20% lower than the G7 average, as measured by total output hours, and we have seen lots of work over the past three years on apprenticeships, skills and training.
The fifth issue dwarfs all the others, and without it British families will have no security whatever in their economic lives. It is deficit reduction. The key failure of this country and its people, and especially its Government, over many years has been the failure to live within our means. The cyclically adjusted primary deficit is going to be cut by 10 percentage points of GDP, which is a colossal fiscal contraction. Half of that is happening in this Parliament, and the other half will happen in the next Parliament. Four fifths of the 5% tightening in this Parliament occurred in the first two years, so we are now in conditions of relatively less tightening. But, my word, it will really pick up. We will have to find another 5% between 2015-16 and 2018-19.
I will point to two charts in the Office for Budget Responsibility’s report that accompanied the Budget. Chart 3.39 shows that general Government consumption, excluding welfare, will fall from 21.8% of nominal GDP this year to 16.1% in 2018-19. That statistic is significant because it is the lowest figure for Government general consumption since 1948. It is a fiscal squeeze on steroids. It is serious. It will have to be delivered if we are to return to surplus at the end of the next Parliament, as the Chancellor so rightly points out.
Chart 4.4 shows us that if we keep the protected budgets, particularly that of health, we will see massive further squeezes in departmental spending, much tougher than those we have already experienced. The departmental expenditure limit figures show that health alone will account for 45% of departmental spending in the next Parliament, with massive cuts elsewhere. Only the Conservatives can guarantee that fiscal austerity.
Stephen Twigg (Liverpool, West Derby) (Lab/Co-op)
Last week the Chancellor said that his ambition was to support the makers, the doers and the savers, but we also need to focus on the millions who want to make, who want to do and who dream of saving but cannot, either because they are not in work or because they are in low-paid employment. Let me say very clearly that I welcome the recent fall in unemployment, but long-term joblessness is still a major concern, as is the increasing level of under-employment in many of our communities.
I want to focus my remarks this afternoon on youth unemployment. In the city of Liverpool, 1,665 young people are facing long-term unemployment. This is an economic challenge, but it is also a social challenge. Recent research published by the Prince’s Trust has shown that about one in 10 young people in Liverpool have suffered mental health problems attributed in part to their unemployment. Many of them feel that they do not have a lot to live for. They may be depressed or feel that they have very little to contribute to society.
Tackling long-term unemployment is never easy. In my constituency, however, the previous Labour Government have a record of which we can be very proud. In 1997, the unemployment level of young people in West Derby was 850; by 2010, that had fallen to 335—a very significant fall though still much too big a figure. The future jobs fund played an important role in achieving that. I have seen its positive impact in my constituency in delivering opportunities, contrary to what Government Members have said, not only in the public sector but in the private and voluntary sectors, particularly through the fantastic role played by social enterprises. The future jobs fund was not perfect, but it was much better than the Government’s Work programme. In Liverpool, more people on the Work programme have received benefit sanctions than have found work. Different localities are seeing wildly different results. For example, in my constituency the ratio of job outcomes to referrals is just half what it is in Horsham. Such wide differences across the country serve to emphasise the need for solutions that are shaped locally.
My right hon. Friend the Member for Edinburgh South West (Mr Darling), the former Chancellor, spoke about the Government’s plans to cut public expenditure back to 1948 levels. Liverpool city council is facing drastic cuts. Over each of the past three years it has had to make savings of £176 million, and it has to make almost the same amount over the next three years—£156 million. In that context, I pay tribute to the remarkable record of Liverpool’s Labour council and Labour mayor, Joe Anderson, in prioritising jobs and apprenticeships, especially for young people. The mayoral youth contract involves working with businesses to take on apprentices to support young people back into work. In its first year, more than 100 young people who were otherwise facing long-term unemployment got into work. I welcome the progress that we have seen on a combined authority for the Liverpool city region. The city region has identified local growth sectors of advanced manufacturing, the Liverpool super-port, and the visitor economy, setting out in detail the skills needed by the sectors involved and what businesses and educational establishments need to do to deliver this change.
When Building Schools for the Future was cancelled in 2010, the mayor of Liverpool picked up the programme, and we are now delivering the rebuilding or refurbishment of 12 local secondary schools as part of Liverpool’s city deal. As my right hon. Friend the Member for Salford and Eccles (Hazel Blears) said, Liverpool has just become a social value city. Even in tough times, Liverpool has sought to give priority to getting people into work—in particular, ensuring that young people do not fall into the trap of long-term unemployment. As a result, youth long-term unemployment in my constituency has fallen to 290, which is hugely welcome.
The Budget inevitably focuses on the role of central Government, which provides a valuable framework, but solutions to long-term unemployment and the poverty that other Labour Members have talked about are best shaped locally by institutions rooted in our local communities—elected local councils, local businesses, and the local voluntary sector. That is why I very much welcome the fact that my hon. Friend the Member for Leeds West (Rachel Reeves) has said that Labour’s compulsory jobs guarantee will be commissioned by a partnership of local and central Government, taking the place of the traditional approach, under Governments of both parties, of a top-down, bigger-is-better model.
To deliver sustainable, properly paid jobs and apprenticeships for the future, the best approach must be central and local government working together. Only when we succeed in aligning schemes and programmes with the realities of local labour markets and local community priorities will we be able to tackle the scourge of long-term unemployment—in other words, by putting local communities in the driving seat. If we do that, we will have a real prospect of delivering help and support to the millions—I referred to them at the beginning of my speech—who want to make, who want to do and who dream of saving.
Dame Angela Watkinson (Hornchurch and Upminster) (Con)
I apologise for being absent from the Chamber for a while, Madam Deputy Speaker, but I had to attend a Statutory Instrument Committee.
I want to start by congratulating the Chancellor. We inherited the most monstrous debt in 2010 as a result of Labour’s overspending and over-borrowing and of living beyond our means with no thought for tomorrow, but after the 2010 election, tomorrow came. Drastic action was needed to stop the country spiralling down further into irrecoverable debt, so the Chancellor drew up our long-term economic plan. He has shown courage and determination in sticking to his guns in the face of relentless criticism and opposition to every proposal to control public spending. The reward is an economy that is growing faster than that of any other European Union or G8—or perhaps it is now G7—country. In this Budget, the Chancellor has been able to ease the squeeze to help hard-working people who have been feeling the pinch.
I am particularly pleased with the range of measures to help retired people. When interest rates were higher, pensioners were able to rely on the interest on their savings to help boost their retirement income. Although low interest rates are undoubtedly a boon to all mortgage holders, pensioners’ incomes have suffered. Now, people who have saved for a pension in a defined contribution scheme during their working lives will have the freedom to manage their own retirement income as they choose. I welcome the fact that annuities will no longer be compulsory. Insurance companies and annuity providers, such as those in the constituency of my hon. Friend the Member for Reigate (Crispin Blunt), who is no longer in his place, will have to make their products more competitive, innovative and attractive to those who still choose to buy one. That, plus the removal of all remaining tax restrictions on access to defined contribution pension pots, is excellent news.
New pensioner bonds, effective from next January, will offer a better interest rate than any equivalent product on the market today, including individual savings accounts. They are predicted to be 2.8% on a one-year bond and 4% on a three-year bond, which is another boost to pensioner income. For 1.5 million low-income savers of all ages—not just pensioners—the abolition of tax on savings up to £5,000 is a great incentive for everyone to start putting away something for a rainy day. In Hornchurch and Upminster, the increase in the personal allowance to £10,500 will raise 410 more people out of income tax altogether and reduce income tax bills for 44,055 workers.
The Secretary of State’s welfare reforms are founded on the knowledge that every person returning to or starting work gains security and self-esteem. Every new job is better not just for the employee, but for the taxpayer and for the country. Unemployment fell by 63,000 in the three months to January, and the number of people signing on for jobseeker’s allowance last month fell by 34,600. The number of people in work rose by 105,000 in the last quarter to a new record of 30.19 million—nearly half a million more than a year ago. Moreover, 1.7 million new private sector jobs have been created by businesses up and down the country, showing confidence in the economy.
I want to pay tribute to the schools and colleges in Hornchurch and Upminster, not only for their academic, practical and creative education, but for preparing pupils for the future by developing in them social awareness and an ability to question, think laterally and understand one another and the adult world they are about to enter. The pupils at the schools and colleges in Hornchurch and Upminster know that having an interest in sports and hobbies makes their CV more interesting to a university or prospective employer, and increases their chances of getting that all-important interview. They know that good timekeeping and good manners, looking and sounding interested, and having a pleasant demeanour, as well as their exam results, will help them to compete successfully for apprenticeships, jobs or university places.
Fiscal education now plays an important role in personal financial management and debt avoidance, and helps people to resist the constant temptation of credit card offers that come through the letterbox. That is particularly helpful for students who will be living away from home for the first time and will be faced with paying for food and heating.
I am pleased to report that the number of young people in Hornchurch and Upminster who are claiming jobseeker’s allowance is down from 7.2% in 2010 to 4.5% in 2014. The role of schools and colleges in engendering ambition and aspiration in their pupils is an important contributory factor in that reduction.
An important part of the Secretary of State’s welfare reforms is the Work programme, which is designed to help long-term unemployed people to break the cycle of benefit dependence. To ensure effective jobseeking, the programme is tailored to the individual’s needs. It is a partnership between the DWP and all sectors, and is based on payment by results to ensure value for the taxpayer. So far, almost 500,000 jobs have been started by Work programme participants, including 208,000 people who were very long-term unemployed.
This is a Budget for business, workers, pensioners and savers of all ages. There are forecast to be 1.5 million more jobs over the next five years, and 1.6 million apprenticeships have started since 2010. Every new job means that a family has independence and a more secure future, and is able to contribute to the growth in the economy. All that vindicates the difficult decisions that have been taken since 2010. The fiscal policies are working, the number of new private sector jobs means that more people are working, the Work programme is working, and the long-term economic plan is working. I congratulate the Chancellor.
Lisa Nandy (Wigan) (Lab)
This is the third day of the Budget debate that I have sat through, and I surely cannot be the only one who is finding it incredibly depressing. Too often in this House, we pretend that the reality is either black or white, but people outside this place know full well that real life is much more complex than that. I want to say from the outset that of course the last Government made mistakes. It is right that my party should and does acknowledge those mistakes. It is also right that Government Members should acknowledge that when my party was making some of those mistakes, they did not just agree with us, but were urging us to go further.
The Secretary of State expressed dismay that we were not talking about the fall in unemployment. He is no longer here, but I wanted to say to him that of course I welcome the fall in the unemployment figures. Unemployment is a tragedy that affects not just individuals, but entire families and communities. I know that only too well from my constituency of Wigan.
Although I welcome any fall in the unemployment figures, we should not pretend for one moment that that is where the picture ends and that, as a consequence, life for people outside this place is rosy and is getting much better. The fall in the headline unemployment figures masks a much more complicated picture for many people, including many of those whom I represent. It masks a sharp rise in under employment, which has been a feature of the economic recovery. It masks particular problems for women and young people, especially in relation to long-term unemployment.
Many people in the workplace not only have low wages, but face extreme job insecurity. When we talk about the strivers and the shirkers or, to use the Chancellor’s new language, the doers, we need to remember that the people we are labelling doers or strivers today might be labelled something much more offensive tomorrow, because many people are moving in and out of insecure, low-paid jobs at an alarming rate. To label people strivers or shirkers depending on which day we happen to catch them is not just offensive, but utterly stupid. In parts of the country such as mine, a combination of those factors —low pay, job insecurity and long-term unemployment among particular groups—contributes to the entrenched problems that we face. I am concerned that the Budget has very little to say to those people, and the Chancellor has had little to say about the problems.
In the brief time available to me, I shall outline a few of the major problems that we have and some of the things we could do about them. First, we have seen over recent years that, as has been the case in every major recession in history, Government intervention increases growth. For four years I have sat in the Chamber and listened to the Chancellor delivering Budgets. Over that time his language has not changed, but slowly, gradually I have heard the policies change slightly. The changes have been too small and too late, but in recent years I have heard him talking about the need to build houses, Government investment in mending roads, and underwriting exports. If only we had been talking about that four years ago, what would we have seen?
The public and the private sectors are not separate; they are heavily interdependent. In my constituency, which is a good case in point, many people are employed in the public sector, and every time they go out and spend in local shops, those small businesses get a boost and they are able to keep the staff they have and employ more people. We have to understand the role of Government if we are to get out of the present mess. I am concerned that small businesses are not getting the support they need and deserve. When I talked to small business people in my constituency after the Budget, they said that they are still struggling to get lending—net lending to small and medium-sized enterprises continues to fall—and that business rates are crippling. Although there were measures in the Budget to help larger businesses, SMEs need help now as they are some of the biggest employers in this country.
The Government need to take seriously the issue of underemployment. If the people on low and middle incomes do not have enough money to make ends meet at the end of the week, they cannot go out and spend in local shops and businesses, and areas such as mine will continue to sink under the weight of unemployment and all the other challenges we face.
I pay tribute to people at this time. One Government Member said that doom and gloom does not chime with the public mood. I believe that. People are experiencing horrendous problems, yet they are still optimistic, they are volunteering and they are trying everything they can to make their communities work.
One thing we need to understand is that subsidies do work. I have heard too many Government Members, including the Secretary of State, saying that they do not. Youth unemployment is our biggest and most urgent national challenge. I see young people losing confidence by the day because they are unable to get a job. Many of them are the first in their families to go to university and they are now competing with 16-year-olds for jobs that they could have done years earlier. If young people get a job and remain in it for long enough, they get the skills and the confidence and they are worth it to their employers, and those jobs persist. That is why the Conservatives should not rubbish Labour’s youth jobs guarantee. That is the way to get young people on to the ladder and out of the revolving door of apprenticeships and unpaid work.
Over the past four years the richest 10% have indeed paid a price as a result of Budgets, but the poorest 10% have come off second worst. When we look at where the economic burden has fallen, it makes no economic sense. Every pound that goes into the pocket of one of my constituents who does not earn very much money at all goes straight back out into the local economy, boosting jobs and boosting the economy.
Finally, the benefits cap does nothing to deal with the real structural challenges that we face. We need to have an urgent debate about how to deal with entrenched problems such as child poverty—
Guto Bebb (Aberconwy) (Con)
It is a pleasure to follow the hon. Member for Wigan (Lisa Nandy), who spoke passionately and eloquently on behalf of her constituents. It should be stated, however, that the figures imply that the success of Wigan’s economy is much greater than she indicated. Figures from the Library show that the number of jobseeker’s allowance claimants in Wigan is down by 35%, and the most fantastic thing is that youth unemployment has gone down by 55% in a year. We would kill for such a reduction in Wales, but we have the dead hand of a Labour Welsh Government in Cardiff who have no intention whatever of working with the national Government to deal with youth unemployment.
In my constituency, we have seen a drop in unemployment, including youth unemployment and long-term unemployment, which the people of the constituency have welcomed. However, young people on the Work programme are not allowed access to educational programmes, because the Welsh Government refuse any Work programme client access to any programme using funding from the European social fund. They do that to try to ensure that the Work programme fails, and it is left to me and other Conservative Members from Wales to put on job fairs.
Guto Bebb
I will happily give way after I have made this point.
My comments about the Welsh Government’s failure to support the Work programme are endorsed not just by Conservative Members but by the Welsh Affairs Committee, on which the majority of those voting were Labour Members.
Susan Elan Jones
The hon. Gentleman has returned from Patagonia as partisan as ever. Why does he not commend the fact that 80% of traineeships under Jobs Growth Wales are in the private sector? Surely, as a former small business man, he welcomes that.
Guto Bebb
The hon. Lady makes an interesting point about Jobs Growth Wales. When I wrote to local businesses in my constituency, I mentioned the possibility of young people getting on to the Work programme, but I also mentioned the possibility of using Jobs Growth Wales. I find it odd, however, that because somebody who is about to leave a youth detention centre in England, for example, is automatically enrolled on to the Work programme, they cannot access Jobs Growth Wales owing to the policies of the hon. Lady’s party. It would be well worth her while to read the criticisms that the Welsh Affairs Committee made, with cross-party consensus, of the Welsh Government’s actions on programmes that are there to support and train young people and to give them skills to take up opportunities that exist in their communities. She should raise that issue with members of her own party.
We have a success story on jobs. We are seeing a fall in unemployment in my constituency, with positive measures to support small businesses. We depend entirely on the small business community for the growth and development of jobs, and one key thing that we are doing is reducing the burden of employers’ national insurance contributions on small businesses. The reduction of £2,000 in the next financial year will be a great boost to small businesses that are looking to employ members of staff, and that is crucial.
The hon. Member for Wigan mentioned the need to ensure that we deal fairly with small businesses. Again, we can compare and contrast the efforts of the UK Government under difficult financial circumstances with what is being done in Cardiff. For example, there have been calls, demands and cries for help from small businesses in the retail sector, which have stated clearly that they need help with business rates. The Chancellor has responded so that, for example, any small business in England that has a rateable value of less than £50,000 will not only have a cap on their business rates this year but get a £1,000 rebate. That might not sound like a lot of money to some Members, but for a small retail business in my constituency that is struggling to survive, £1,000 could make the difference between success and failure. Again, though, what is happening to that £1,000 rebate in Wales? It is not getting through to small businesses. The Welsh Government are retaining it in Cardiff to support another of their pet projects.
We hear from Opposition Front Benchers—we heard it from the shadow Secretary of State for Work and Pensions today—that people in this country face a cost of living crisis. I invite them to look at the situation in Wales. In my constituency, a Labour-Plaid Cymru council has increased council tax not by 5% or 10% but by 23% since 2010. That increase could have been avoided if the money made available by the UK Government had been passed down to local authorities in Wales, so that they could try to support hard-working families at this difficult time by freezing council tax. It is a fact that only one council in Wales has managed to freeze council tax for two years. Conservative-controlled Monmouthshire has done so for two successive years, despite the lack of financial support from the Welsh Labour Government.
In my own authority of Conwy, we have had increases of 5% and 4.8%, with a total increase of more than 25% since I was elected, simply because the Labour party in Cardiff and in my constituency is happy to place further burdens on hard-working families at a time when they need support. The situation is unacceptable, because money has been made available under difficult circumstances by the Chancellor but the Welsh Government have decided that they would rather keep it than to support hard-working families in north Wales. That is clearly a disgrace.
This is a solid Budget that will allow us to look to the future with confidence. I would be delighted if some of the changes in England were also to be implemented in Wales. Unfortunately, that is not the case, but I hope that the people of Wales will be wise enough to identify the failures of the Welsh Government in that respect.
The other key thing that has been welcomed with open arms by my constituents is the change to pensions. We have heard some reservations from Opposition Members, but not perhaps from Front Benchers, who seem to be aware of the popularity of the change. The change is popular, because it is right to tell people that they need to take more responsibility for their own lives. We have seen that in relation to the changes in personal taxation, on which the coalition have said, “Let’s increase the personal tax allowance and allow people to keep more of the money they earn.” The Labour version is to say, “Give us the tax, and we’ll put it through a bureaucratic system and then we’ll give you something back, which you must be grateful for.” I must say that when it comes to a general election, it was very handy for people to be able to phone up and say that the Conservatives are getting rid of tax credits.
The key point is that we believe in increasing the personal allowance because we trust the people. In the same way, we are making the change to pensions simply because we trust people to make the right decision about their own money. What is key is that if people are willing to save and invest for their own pensions, surely they have the right to make their own decision about how they best make use of their pension pot on retirement. The change will be welcome in my constituency, in which the average age is among the highest of all constituencies in Wales; indeed, my postbag tells me that it is being welcomed now. The key thing is that we are making the change not because we have a party political agenda, but for the simple reason that we trust the people to make the right decision about their own money.
Graeme Morrice (Livingston) (Lab)
No other issue is more likely to define this parliamentary term and this coalition Government than welfare and the cost of living. The past four years have been very tough for a great number of people, as I am sure all hon. Members are aware. The living standards of the majority of our constituents have fallen and the value of real wages has dropped, while the cost of living has gone through the roof. Many have lost their jobs or their businesses, but as a result of the Government’s welfare changes—I will not dignify them by calling them reforms—it is toughest of all for those who rely on others and for those who struggle to support themselves even in the best of times.
Once again, the Budget was a missed opportunity to address that and other issues. Instead of taking a step back and examining what could be done to make a tangible difference to the lives of some of the most vulnerable people in our communities, the Chancellor and the Government have decided to draw electoral dividing lines. They could have announced measures to mitigate the worst excesses of their welfare changes, or to help young casualties of the financial crisis back to work, funded by a tax on bank bonuses that would be paid by the very people who nearly gambled away their future. The Chancellor could even have made good on his promise to raise the minimum wage to £7 an hour. Instead, he chose to court the UK Independence party vote with tougher platitudes on welfare and to pave the way for more cuts, while those on his Christmas card list enjoy a tax cut larger in value than the average worker’s wage.
The Chancellor boasted of new private sector jobs, but ignored the fact that many of those are low-paid, part-time, agency or zero-hours contracts, and that some people are living not month to month or even week to week, but literally day to day. The Government must take action now to end the scandal of employment abuse, by restricting zero-hours contracts and promoting the living wage.
Government Members brag of an increase in the personal allowance, but that will be completely swallowed up by inflation, stagnant wages, rising energy and food bills, and previous changes to VAT and in-work benefits. According to the Institute for Fiscal Studies, the actual worth of the increase to those on low incomes will be as little as £2 per week, with one in six workers earning too little to benefit at all. The Government are for ever lecturing that austerity measures are unavoidable and that the rich are paying more than anyone else—as if progressive taxation were created only in 2010.
While my constituents are saddled with the bedroom tax, the shambles of universal credit, and months of delays waiting for personal independence payments, millionaires get massive tax cuts and bankers continue to pocket their grotesque bonuses, now totalling £1.6 billion. If the Government were really on the side of working people they could have raised additional income to help my constituents, by cutting back pension tax relief for people earning more than £150,000 a year to 20%—the same as for basic rate taxpayers. House of Commons Library estimates state that that would raise between £900 million and £1.3 billion—half the amount that will be lost to the economy through the Government’s welfare changes, snatched from the poorest in society. Even the lower estimates of that revenue would cover the cost of Labour’s compulsory jobs guarantee for young people after its first year of implementation.
The Chancellor could have taken meaningful action to help working people, but the figures behind the Budget neatly illustrate the real legacy of this Government: 350,000 people going to food banks; 400,000 disabled people paying the bedroom tax; and millions of working people worse off by, on average, £1,600 a year. The Government believe that the rich will work harder only if they are made richer, and that the poor will only work at all if they are made poorer. The truth is that, sadly, there is precious little in this Budget for ordinary working people. Once again that shows that the nation is worse off under the Tories, with a Government who are out of touch and do not really care.
Neil Parish (Tiverton and Honiton) (Con)
It is a great pleasure to follow the hon. Member for Livingston (Graeme Morrice) although I disagreed with many aspects of what he said, in particular his comments about bankers’ bonuses. Under the previous Labour Government, £12 billion was spent on bonuses but that has dropped to £1.6 billion. That is still too much, but it is less than what Labour intends to spend on its various projects, which it spent many times over.
I welcome this Budget, and I congratulate the Chancellor and the Conservative-led Government on getting to a situation where, by the end of the year, we will have virtually halved the deficit that we inherited from the Labour Government. Let us not beat about the bush: we as a country were borrowing £120 billion, not to build infrastructure projects such as HS2 or anything like that, but just to cover the running costs of day-to-day government in this country such as local government spending and housing benefit. Those things have to be paid for, and we were borrowing the money for it.
Who will pay that money back? Not necessarily my generation, but that of my children and grandchildren, will be the ones who pay back the money borrowed by the last Labour Government. There is no great morality in borrowing more and more money, yet that is all we saw from the last Labour Government, and that is all we will see if—God help us!—there is a future Labour Government. I applaud the Government for taking the right decisions. We have control over spending and that needed to be done.
I want to comment on the help for savers in the Budget. For five years we have had a 0.5% base rate of interest. When I was in business, I lived through interest rates of 7%, 8%, 10%, 12% and even 15%. They were crippling for those who were borrowing money, but for those who were saving and had money in the bank the high interest rates gave them a very good income. In this five-year period with a 0.5% base rate, our retired people and other people with savings have had a very low income from their savings. People will now be able to put up to £15,000 a year per person into an ISA, and that is to be welcomed.
I also welcome abolishing the 10p rate on savings income. If hard-working people on the base rate of tax have paid tax on their savings, why should they then have to pay tax on the income from those savings? This is, therefore, a very helpful measure. From 2015, pensioners will have access to a bond with a 2.8% return for a year’s savings and 4% on a three-year bond. In these very difficult times with very low interest rates for savers, that is very much to be welcomed.
It is a good idea that people will not automatically have to buy an annuity. For too long, pensioners have been held to ransom by those who sell annuities. There will now be competition. I have been on the Lamborghini website, but I have not seen a huge increase in the price of Lamborghinis as a result of what the Chancellor put in his Budget. I trust people to spend their money, which they have worked hard to earn and put into their savings all their life, in a way that they want. If they want to buy property and use it to provide somebody with a rented home, that is also good news for the economy.
Personal allowances are going up to £10,500 in 2015-16. They are always good for my constituents and good for the people of this country. The Government cannot create jobs or increase the buying power in people’s incomes by waving a magic wand, but they can reduce the amount of money they take away from people. That is what the Government are doing. Let us not forget that this is a Conservative-led Government. We are prepared to give hard-working people on low wages as much money as they can in their pockets, so that they are able to buy as much as they can.
Lorely Burt
I am very interested in the hon. Gentleman’s comments on the Conservative-led Government, but this is a coalition Government. The policy on hard-working people keeping more of their money actually comes from the front page of the Liberal Democrat manifesto. He is most welcome to praise it and it is an excellent policy.
Neil Parish
I thank the hon. Lady for her intervention. It is indeed a Liberal Democrat policy, but it is also a Conservative policy. If we look at the make-up of the Government Benches, there are some 307 Conservative MPs compared with 50-whatever it is of Liberal Democrats, so I think the Conservatives can take a fair share of the credit for bringing the policy forward. As I said, the rise in personal allowances to £10,500 in 2015-16 is very good news, because it will take more and more people out of tax.
Taking a penny off the price of a pint of beer is great. The Otter brewery and the Branscombe Vale brewery are in my constituency. Of course, we also have Aston Manor brewery, which creates wonderful cider. While I am very happy that the Chancellor has taken a penny off beer and has frozen cider duty, I hope—being a good west country man—that cider will get its fair share in the form of a duty reduction at some point in the future.
There is no doubt that the council tax freeze that the Government have delivered, through both Conservative-led Devon county council and Mid Devon district council, has helped people greatly with their living costs, and I think that we, as a Government, should be commended for it. We in Devon welcome the help for social enterprise, because Devon has one of the highest densities of social enterprise in the country, and we welcome the help with fuel duty for the air ambulance service, because Devon has a very successful air ambulance.
The doubling of the business investment allowance to £500,000 is great news for the economy, because businesses do not get any relief unless they invest the money. If we want to see investment in the private sector, it is absolutely right for the allowance to be raised. The help for energy-intensive companies is also absolutely right, because of the rise in energy prices.
For all those reasons, I very much welcome the Budget.
Jenny Chapman (Darlington) (Lab)
It is a pleasure to follow the hon. Member for Tiverton and Honiton (Neil Parish), although I wish he had said more about youth unemployment. A golden thread ran through the speeches of many Opposition Members, most notably my hon. Friends the Members for Coventry South (Mr Cunningham), for Liverpool, West Derby (Stephen Twigg), for Telford (David Wright), for Wigan (Lisa Nandy), and for Livingston (Graeme Morrice). Their speeches focused on youth unemployment, which is clearly an issue that matters greatly to Opposition Members. It certainly matters greatly to me, because in my area, the north-east, it has never been dealt with properly since the election. Although we are seeing some very slight decreases, youth unemployment in my constituency is still double the national average, and Darlington actually does quite well in comparison with the rest of the north-east.
Youth unemployment and low pay are the two biggest challenges that face us, and they are two issues about which the Budget said very little. The average wage in Darlington is £440, and youth unemployment is now at 9.6%. That is not acceptable to us, and, to its credit, private sector companies in Darlington were not prepared to accept it either. They were concerned about the end of the future jobs fund, and decided to take matters into their own hands. I pay tribute to Sherwoods, my local Vauxhall car dealer, to The Northern Echo, to my local council and to the local voluntary sector. They got together and decided to do something, because they knew that they would not get much joy if they waited for the Government to take a lead. They then formed the Foundation for Jobs, a local initiative. Let me say at this point that I agree wholeheartedly with my hon. Friend the Member for Liverpool, West Derby that successful initiatives to address youth unemployment are best delivered through local government.
We launched the Foundation for Jobs in April 2012, so it has been going for nearly two years. We have worked with more than 2,700 young people, and have secured 250 new apprenticeships through the foundation. More than 2,000 school-age kids are building closer links with industry, 230 young people are taking part in internships or eight-week work experience placements, and 66 young people have developed their entrepreneurial skills. The foundation is based locally, and has received no funding; it depends entirely on good will. Government Members challenged the shadow Secretary of State for Work and Pensions, my hon. Friend the Member for Leeds West (Rachel Reeves), on Labour’s jobs guarantee, suggesting that private sector firms would not be interested in taking part. I can tell them that they were completely wrong. More than 150 businesses in my constituency alone have grabbed with both hands the opportunity presented by the Foundation for Jobs, and they would welcome the opportunity to do more. To suggest that small businesses are not interested, do not have the time or are under too much pressure makes them sound a lot less far-sighted than they are.
All that businesses get in return for participating in the initiative, apart from the satisfaction of knowing they are giving a young person a chance, is a little promotion in my local paper, The Northern Echo, which has taken an extraordinary lead. In the absence of a sensible Government scheme, Members across the House will have to take matters into their own hands, and I think local businesses are up for the challenge.
The foundation makes the link between young people and growing industries, which know they need a trained work force. They are looking at the provision available and the skills young people have, and they are looking at the challenges facing young people—who in my constituency are increasingly unwilling to take on the debt they would have if they went into further education—and they are trying to dispel myths about careers such as engineering.
This has been a lot of fun. We have done events with over 100 secondary school youngsters at a time, trying to get them to see the real face of modern engineering. We have performed computer-aided design tasks and we have made basic electric car batteries, wired wind turbines and designed a wind farm. We have built suspension bridges with over 200 young people. It has been quite an education for everybody, and one thing that stands out for me is the absence of advice and guidance for young people now that, thanks to a decision made by the Government a couple of years ago, they are no longer entitled to any face-to-face information, advice and guidance before they leave school, which is disgraceful. If we are to have any hope whatsoever of improving social mobility, particularly in the north-east, we have to improve the offer to young people in terms of advice and guidance.
Labour has made a sensible suggestion in the form of the jobs guarantee, and I am convinced the private and voluntary sectors and the larger public sector employers in the north-east would be very keen to get involved in it. The jobs guarantee would last for the whole of the Parliament for 18 to 24-year-olds who have been out of work for over a year, and twice as many of those young people are out of work now than there were in 2010. If that was my track record, I would be ashamed, and I really do not understand why the Government are not.
Young people will be able to work for 25 hours a week on the minimum wage, the employer must provide training—I think they will be only too willing to do so—and this would rightly be funded by a tax on bankers’ bonuses and on the pensions of people earning over £150,000 a year. I know my constituents support this and local businesses are crying out to be involved, and if the Government had any humility they would be taking on this idea and getting on with it now, rather than our having to wait for a Labour Government.
Richard Fuller (Bedford) (Con)
Budgets aren’t what they used to be. It used to be that there were no surprises in Budgets because the measures were trailed in the media; that is what we got used to under the last Government. Yet one of the most far-reaching and long-term changes came as a surprise in the Budget statement, and I commend the Chancellor for that.
Budgets aren’t what they used to be because they used to be met by a vociferous and articulate Opposition pulling the Budget to pieces and expressing their hostility to measure after measure after measure. That has been replaced by a deathly silence on the Opposition Benches, and here we are with two hours to go still wondering whether the Opposition will decide to oppose anything in the Budget whatsoever. I do not know whether the shadow Chief Secretary to the Treasury has yet worked out with his colleagues whether they are going to be more ambitious and more left wing in their response, or whether they are going to go along with what the Government have provided.
Richard Fuller
Perhaps my colleague in the coalition will enlighten us on what she understands the Labour party may do.
Lorely Burt
As my hon. Friend was speaking, I wondered whether the Opposition have nothing to say because the Budget is so excellent.
Richard Fuller
That is a fair comment, but we would hope for critical thought—a thoughtful Opposition going through the Budget and finding good reasons to oppose what is in it. Again, however, we heard nothing from the Opposition. It is all very well trotting the shadow Chief Secretary into the media studios to claim—despite the fact that growth is up, unemployment is down and inflation is down—that everything is going badly, like a latter-day Chemical Ali, but the truth is the Opposition have no coherent response to what will prove to be one of the strongest foundations for long-term stability in our economy.
That foundation is based on the sensible principle that people know best how to spend the money they have earned. This Government recognise that and, more importantly, in this Budget we recognise that people understand that when they have spent a lifetime saving money from their earnings, they are in the best position to decide how best to spend it. They do not want to be artificially constrained by someone else telling them how best way enjoy their retirement. This Budget delivers that freedom to them and should be applauded. It comes after years of socialist trickle-down, taking money from working people to put into Labour’s big bureaucratic plans—out of touch with the realities of people—to find out whether their Highgate polices are somehow going to deliver from the socialist graveyards in Highgate to the people of Bedford and Kempston. We have dismissed all that top-down, trickle-down, socialist rhetoric, in order to give people back the money they earned. This is a Budget for working people, and I am proud to support it.
The Budget also shows that the Government recognise that as we were so highly leveraged—with so much debt—in 2010, it will take a long time to recover. A few years ago, I would have urged the Chancellor to go further and cut expenditure more, but he chose a middle path on reducing public expenditure. We have made progress in bringing the deficit down, and sometimes we are now joined by people who said a few years ago that we were going too far, too fast. The Chancellor has found a middle way with that.
The Opposition’s level of coherence on this Budget is most starkly demonstrated by their position on the benefit cap. May I say to the shadow Chief Secretary—if he has the time—that I understand from the speech of the hon. Member for Leeds West (Rachel Reeves) that the Opposition are going to support the benefit cap? Page 88 of the Red Book contains a helpful listing of the benefits that will be included in the benefit cap, which include housing benefit, other than housing benefit passported from jobseeker’s allowance. I presume that that includes the spare room subsidy. So my question to the shadow Chief Secretary, who, let us face it, ought to have some economic competence, is: if the spare room subsidy is included as a benefit, how can he keep referring to it as a tax? Does he understand the difference between a tax and a benefit? If he does not, and if he is going to vote on this, will he stop—[Interruption.] He is saying from a sedentary position that it is not just him, but he is charged with coming up with economic policies. One core feature of economic policy is understanding the difference between a benefit and a tax.
Dame Anne Begg
I just want to make sure that the hon. Gentleman is clear about this. The reference is to housing benefit but not JSA, but most working people who get housing benefit do so as a result of their being on JSA, which does not fall under the cap. Most people on housing benefit in their old age might fall under the cap, but they are not subject to the spare room subsidy—the bedroom tax.
Richard Fuller
I am grateful for that clarification. I hope the hon. Lady also understands that when people turn an important issue such as the spare room subsidy into political slogans it makes it much harder to engage on where the policy perhaps is being applied too aggressively or not aggressively enough. I have found that a tremendous barrier to engaging with people about how we can make sure the Government are getting that policy right. I hope we can use language in a way that people can understand.
Youth unemployment has been mentioned by many Opposition Members, including the hon. Member for Darlington (Jenny Chapman). I agree that youth unemployment should be a priority not just for Government but for each of us as Members of Parliament. That is why I am so proud of Government Members and some Opposition Members, who have proactively gone out and encouraged local employers to give young people a start in their careers—whether it is in an apprenticeship, part-time work or work experience. We should not always look to Government to achieve changes in youth unemployment, particularly now with the national insurance changes that are coming in. There has never been a better time than today to get a young person into work.
It is important that we thank the Government for sticking with their long-term economic plan, for finding a course in the division of pain so that all people, regardless of their background, contribute and that those who have the broadest shoulders make the largest contribution of all. Most importantly, I encourage Ministers to recognise that the task is only half done and that many difficult decisions remain ahead. Will they maintain the same steadfastness of approach in the future as they have shown in the past?
Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)
I thank you, Madam Deputy Speaker, for calling me to speak in the Budget debate. This Budget was announced at a significant time in this Parliament, coming as it did in a year when, under the usual political time scale, we would all be facing an imminent general election. Indeed it is hard to imagine that originally it was the Government’s intent to use the new five-year Parliament to eradicate the deficit in just four years, leaving scope to offer significant tax cuts in the year ahead. Clearly, that is not where we are today.
Looking at the principal economic objectives the Chancellor set for this Parliament, it is unfortunate that he has not met any of them. Not only is the deficit still extremely large, but we are also still well below the pre-crisis peak, which is not acknowledged by those on the Government Benches. We have not seen a significant rebalancing of the economy, either sectorally or geographically, or a significant boost to exports as we become a more productive, goods-based economy.
To be fair to the Chancellor, I wonder how many of us who make speeches from the Back Benches re-read our own contributions from previous Budget debates before speaking. Certainly, there are a few Government Members who are welcoming levels of debt and deficit today that are much worse than those they opposed four years ago when the Darling plan was before us, but perhaps that is the nature of politics.
One thing that has stayed constant for me in every year that we have had a Budget debate is the sense of permanent inadequacy from the Government that they really have a plan to ensure the UK’s future prosperity in the post-financial crisis era. The 2008 financial crisis was the most profound economic crisis we have had in this country for decades. It was also the biggest political and moral crisis that we have faced, and I do not get any sense from the Government that they aspire to build anything different from what went so badly wrong last time around.
We remain an economy too dependent on the south-east and the housing market and too complacent about where our growth comes from and the quality, not just the quantity, of the work that that creates. In many families, wages no longer keep pace with inflation, and living standards are declining as a result. Very few people in my constituency are genuinely feeling any sort of economic recovery at all. It does not have to be that way. The UK has a serious chance of becoming the largest economy in Europe during the life time of most of us in the Chamber today, which is largely as a result of some of the quite contentious decisions—particularly those on immigration— made by the previous Government. That chance to ensure that we secure and expand our future prosperity is what I wish to talk about today. I have four key points.
First, we must be enthusiastic about Britain being a country that is open and outward facing to the world. That means recognising the benefits that immigration can bring. I strongly support what has been said on the Opposition Benches about preventing abuses and exploitation in immigration because that is how we will win back public support. We should not shoot ourselves in the foot, as the Government have done by including foreign students in the net migration target. Foreign students bring in £8 billion a year to the UK, and that is just in the benefits we can count, and it is madness to dissuade them from coming here. It also means something far more difficult for this Government, which is ensuring that we stay as full and active members of the European Union. There are many specific reasons to stay in the EU. I visited Nissan in Sunderland a few weeks ago, and found it to be an incredible place. I grew up in Sunderland in the 1980s, at a time of large-scale industrial upheaval, with the shipyards and the mines going, and it was fantastic to see such brilliant industrial success back in Sunderland. Amazingly, workers make almost as many cars in that one factory in Sunderland as French workers do in six Renault factories and the factory offers thousands of well-paid skilled jobs.
There are no ifs and no buts about it: those jobs are dependent on our membership of the European Union and we would be crazy to throw that away. More profoundly, if we were ever to leave the EU it would undoubtedly be read by the rest of the world as a sign that we were withdrawing into isolation, regardless of any protestations that might be made. We could simply never afford to do that. Of course, there is much we need to do to reform Europe, but we must be clear that we are in the EU for good and reap the investment and prosperity that will go with that.
Secondly, we must unleash more of the talent we have in this country. One of the figures the Government cite most regularly is the number of apprenticeships that have been created since 2010. That has largely been done by rebadging workplace training schemes such as Train to Gain as apprenticeships, which I do not think is too bad as a policy, but there is a question of quality versus quantity in what is being offered. Any workplace training is a good thing, but we need to protect the brand of apprenticeships as a route into a career and not just as in-job training if we are to succeed. As one of the co-chairs of the all-party group on manufacturing, I am repeatedly told how outdated perceptions of manufacturing and engineering are still big barriers to getting young people involved and we need to acknowledge that. An apprenticeship should give someone a career and a status that is widely understood. That is why I favour the idea of a national baccalaureate for everyone leaving secondary education, with core subjects in maths and English but the possibility of specialisation in technical skills if people want that.
In addition, we need to get serious about devolving economic power to cities and regions. For the first few years of this Parliament, in a large part of the north we had rising unemployment and a rising skills shortage. Local enterprise partnerships, outside my own in Greater Manchester, leave me a little unconvinced but there must be something now that the regional development agencies have gone. The first Chancellor to understand the benefits of devolving resources and decision making will reap huge benefits.
In Greater Manchester we currently spend £21 billion a year and raise £17 billion in taxes. If we had more of a say over spending that £21 billion, we could easily turn the deficit into a surplus, but the Government’s rhetoric on localism has so far proved hollow. “More Heseltine, less Pickles,” should be their motto.
It would be wrong to think that the national Government do not have a role, but they should just do what they do best. To get our economy right, we need many institutions and real industrial strategies, not just side projects for BIS that do not have wider Government support. Renewable energy, for instance, particularly wind power, is a crucial part of the UK’s future and we have all welcomed the decision made by Siemens today. However, although DECC and BIS champion it, DCLG holds up every onshore wind power application it can get in the way of. It is pathetic.
We need consensus on and a step change in investment and the Armitt review and independent infrastructure commission seem to me to be the best way to achieve that.
Finally, we need to orient our economy to the challenges of the future. I have very little interest in who the Prime Minister picks for his Cabinet, but I would simply say that we will not win the global race with people who have not yet got round to accepting that climate change exists.
The Government, by their own admission, have not met any of their aspirations for this Parliament. They have created a weaker, more insecure and more divided nation than the one they inherited. In some areas, such as through their flirtation with the Eurosceptic right’s desire to leave the EU, they have threatened to undermine some of the building blocks of British prosperity. Throughout this Parliament, the Government have failed to deliver and the chance to do that will, I hope, now fall to a different Government.
Mr Dominic Raab (Esher and Walton) (Con)
It is a pleasure to follow the hon. Member for Stalybridge and Hyde (Jonathan Reynolds). He will not be surprised to hear that I disagree with almost every point he made, but he did at least try to present his argument in a reasoned way, which is more than some of his colleagues did.
I welcome three things above all in the Budget. First, there are the measures to strengthen British competitiveness, creating more jobs and boosting exports, and particularly cutting national insurance for under-21s and increasing the business investment allowance and financial support for exporters. These are things that are important for jobs, a sustainable recovery and dealing with the productivity puzzle that still afflicts the British economy. Let us not forget that growth is what produces the revenue to pay for our precious public services.
The second thing that I welcome is the great honesty from the Chancellor about the need to go further in tightening our grip on our debts. Further cuts in Whitehall spending will be necessary, as has been said, as will a long-term limit on welfare spending. These are critical. The idea that the spending restraint we have been under is now at an end is not credible or financially sustainable. We will have to keep on making difficult decisions, and I welcome the Chancellor’s honesty.
We talk a lot about Government debt but not so much about household debt. Household debt has in fact come down by £187 billion since 2009 when it was at its peak under the previous Government, and that is important because if interest rates go up, which they will at some point, small businesses with tight loans and mortgages will need to be vigilant to make sure that they can cope. It is important that we get household debt down. The further measures in the Budget on savings were welcome as well.
Thirdly, we have provided support for working families with the cost of living, in particular the tax break for child care up to £2,000 per child. We know that for low or middle-income families across the country the cost of child care is incredibly important. We inherited the second highest child care cost in the OECD from the previous Government, and it is right that the Government take measures to ease that burden.
For those three reasons, the Budget has been widely endorsed by small businesses through the Federation of Small Businesses and the British Chamber of Commerce as well as by bigger businesses through the Institute of Directors, but also by consumer groups such as Which? and Saga. The Budget helped build on the economic record of the coalition, bearing in mind the horrendous deficit and debt that we inherited from the previous Government. We have the fastest growth in the G7, and 1.7 million private sector jobs have been created under the coalition. Let us remember that in less than four years that is double the rate of private sector jobs growth that Labour achieved in a decade, so it is a huge comparative achievement.
We have done all this fairly. How many times have we heard from Opposition Members that this was a Budget for millionaires and the lowest paid have suffered? Let us be clear about the facts from HMRC. This financial year, someone earning £10,000 to £15,000 is paying 47% less income tax than in the last tax year under Labour. A millionaire is paying 14% more tax. Opposition Members have gone on and on about tax fairness; in fact, it is this Government who are delivering.
Equally, on the current statistics, child poverty, elderly poverty and fuel poverty are all lower than under Labour. Those are the facts, independently verified by all government and other providers of those statistics. Tough decisions have had to be made, but they have been made in a fair way.
We have heard a lot about the cost of living, but the best way to help anyone out of the rut that we know exists is to create more jobs, and unemployment is down from 8% to 7.2%. Youth unemployment is down by 17,000 from the level that was left by the previous Government. I agree with impatient Members on both sides of the House that we have to do more for young people, but it is about job creation, and that will happen only with the dynamism of the private sector.
We have taken 2.4 million of the lowest paid out of tax. We are supporting working families, not just with child care tax breaks but with measures on fuel duty, the council tax and affordable homes. No one would like to see more done to build affordable homes than I would, but we have to look at the facts. The average rate of affordable home building over the 13 years of the previous Government was 31,000 per year, compared with 48,000 per year under this Government. We are doing 50% better than the previous Government. Those are the facts. For all the talk about the spare room subsidy and the problems of supply, we have built more homes on average in the tough times than the Labour Government did when the money was flowing easily and without restraint.
This has been a transformational Budget for savers, and that is absolutely critical. Auto-enrolment into pensions, the abolition of the 10p rate for low-income savers, the pensioner bond, the flexible pension limits and the increase in the ISA limit to £15,000 are incredibly important. Private saving is important so that people can cater for themselves into old age but also for our long-term competitiveness. Our low rate of private saving is one of the things that the World Economic Forum rankings have picked up. The measures introduced in this Budget are critical to correcting that. Opposition Members have ridiculed the increase in the ISA limit to £15,000 as if no one could afford it. I have to tell them that basic rate tax payers are a majority of those currently investing in ISAs, and it shows the contempt that the Labour party has for aspirational Britain that it mocks the increase in the ISA limit. Many people on low and middle incomes will want to take advantage of it.
This is a good Budget for business, for working families and for savers, and I commend the Treasury team.
Jack Dromey (Birmingham, Erdington) (Lab)
It was a great Conservative Prime Minister, Harold Macmillan, who once said that it would be “quite intolerable” for a modern economy and a compassionate society not to have at their heart social security and a welfare state. Quintessentially a one-nation Conservative, he was right. Sadly, the modern Conservative party is very different. We have a Chancellor who seeks to divide our nation between shirkers and strivers—now doers—and is often engaged in a grotesque demonisation of anyone on benefits in a system that can be cruel in its application and is not fit for purpose.
It is cruel in application on the one hand, as can be seen in the case of Bobby Busby in my constituency. His legs and pelvis were crushed in his youth, and he was on sticks, but he was passed fit for work, and his benefits were cut off. He fell into despair and could not stop crying. He went looking for his father, even though his father had died many years earlier. He retreated to his home and died of a heart attack. The benefits system is not fit for purpose on the other hand, as in the case of one Erdington family. Fiona was diagnosed with cancer of the spine last October, and applied for personal independence payment in November. Only now, four months later and as a consequence of my intervention, will she get a home assessment carried out by Capita. That is one of many cases that demonstrate a shambolic system.
I come from an upstanding working-class background where people believe that if you can work, you should work. It is also absolutely right that we should seek to reduce the benefits bill, but it is how we do it and what kind of society we want to live in that matters. Ours is therefore a very different approach. It involves building homes, because it is crazy that we spend 95p in every £1 that goes into homes as subsidy as opposed to bricks and mortar. The housing benefit bill is rising to £25 billion because of the biggest housing crisis in a generation and soaring rents. That is why Labour would build 200,000 badly needed homes a year to buy and rent.
Labour would get young people into work, paid for by the bankers’ bonus tax. One in four in my constituency is out of work. We must connect the two things, because I want to see many more young apprentices, such as those I saw at Carillion and Willmott Dixon: young men and women building the homes needed for the future. We would introduce free child care for three and four-year-olds so that families can balance work and home; and we would tackle in-work poverty, as we are seeking to do in Birmingham, by driving the agenda for the living wage. We want to see dignity at work, and more time for people to spend with their family, because they do not have to spend every hour of the day and night at work. That is better for employers and, crucially, it brings down the benefits bill.
Ours is a progressive approach that builds a stronger economy in a better society, tackling the price of failure. Ours is an approach that builds a sustainable recovery and one that works for working people. The Government boast of recovery—any progress is welcome, but this is the slowest recovery in 100 years. The Government are borrowing £190 billion more than they planned; there have been 24 tax increases; and working people are £1,600 a year worse off. A building worker I recently met in Kingstanding has had his wages cut by £80 over the past three years. It is little wonder therefore that when I was at the school gates at St Barnabas last Friday, a working mum came up to me and said, “I heard all week about recovery. Jack, what planet do they live on?”
It is not just falling wages; it is also growing insecurity in the world of work. The Bannions in my constituency are an excellent family with a disabled son. The dad has been made redundant three times in the past three years—each new job was on lower pay and was more insecure—and sadly, there are millions like him who live in a twilight world of zero-hours contracts and agency work.
In conclusion, this is a Government who are simply out of touch, and the Tory chairman’s patronising poster said it all. I used to play bingo when I was a young man. I drank too much beer and my waistline suffered as a consequence. We have excellent bingo halls and pubs throughout Erdington, but beer and bingo are not the summit of working people’s ambitions.
Erdington has the 14th highest unemployment level of any constituency in the United Kingdom. It is a constituency of high need, with pockets of severe deprivation, but it is rich in talent. There is Angela Maher, the mother of two disabled kids, who sings in a local choir; Linda Hines, who has built 200 homes in Witton Lodge; and Maurice Weston, a former industrial worker, now a volunteer at Slade school who has written an excellent history of Slade school. There are working-class scientists and working-class engineers from Erdington working in Jaguar Land Rover. There is an airline pilot and outstanding artists such as Jim Allmark and a collective of artists with whom he works. There is our very own Billy Elliot, Amanda Cutler, the chair of the Castle Vale pool user group. She is a mum of two, living on the Vale, who danced with the Royal Ballet in “Swan Lake”.
This is a Government who are out of touch, oblivious to the consequences of their actions, divorced from the reality of ordinary people’s lives and who simply do not get it. We want to see a stronger, fairer, better economy that works for all, but that will not happen under this Government. That great task will fall to the next Labour Government.
Chris Heaton-Harris (Daventry) (Con)
It is a pleasure to follow the hon. Member for Birmingham, Erdington (Jack Dromey). I thank him for his valiant attempt to explain his party’s economic policy using real-life examples, but he has to admit that it is a very confused policy. A bit like a chameleon that has fallen into a bag of Smarties, it is changing almost by the day, by the hour. On the Government side of the House, we are waiting to find out what his party will vote for or against in this Budget, with about two hours to go before the vote.
However, the hon. Gentleman identified a really important point, which I would like to come back to. He spoke about the diverse nature of our individual constituencies—Birmingham, Erdington and mine of Daventry. Maybe, just maybe—this follows points made in speeches from Opposition Members—we are all missing a trick in trying to tackle some of the long-term unemployment problems our country faces.
However, I start by saying that this is a very good Budget. A record number of people are now in work. The pace of net job creation under this Government has been three times faster than in any other recovery on record. Unemployment figures for March show a 20% fall in the claimant count in just one year and the fastest fall in the youth claimant count since 1997. That is something we should all be able to welcome. The Office for Budget Responsibility forecast 1.5 million more jobs over the next five years. Again, that is something we can all welcome. There are a record number of women in work, and for the first time in 35 years we have a higher employment rate than the United States of America.
There are good measures in the Budget for our exporters and good financial support to put them on an even keel with their international competitors. We are lifting people out of paying tax—3 million by 2015. So many of them will be better off by £800 each year because of the changes in the tax system. There are 450,000 fewer workless households, which is surely something to celebrate. It might not be enough, but it is something to be pleased about.
We have a fantastic new policy for pensions. We have introduced the workplace pension, the single-tier pension and now the change in policy for annuities will allow people to help shape their futures as they choose, with their own money. Three quarters of a million more people are in full-time work—that is something to celebrate—and 300,000 more people are in part-time work.
I hope that Opposition Members will stop their attack on part-time work, because it is important for all sorts of sectors in the economy, and indeed all types of people, whether students in the summer or mothers returning to work after having children. Part-time work is fundamentally important in helping to drive our economy.
Like the hon. Member for Birmingham, Erdington, I am unsure about zero-hours contracts, having heard good and bad stories about them. However, I remind him that he was the head of a trade union that pushed for a European measure that led to less flexibility in our work force here in the United Kingdom. Indeed, a Labour Secretary of State went to the European Parliament to plead for the United Kingdom to be allowed more flexibility. I suggest that the lack of flexibility in our employment market might have led businesses to look around for something that would allow greater flexibility, and that seems to be zero-hours contracts.
Jack Dromey
I take it that the hon. Gentleman is referring to the agency workers directive.
Jack Dromey
Then I plead guilty. I was one of those involved in those discussions, and absolutely rightly so. If there are two people doing the same job alongside each another, one who is an agency worker and one who is directly employed, it is absolutely right that they should be paid at the same rate. To fail to do that divides work forces and, as we have seen in some areas of economy, damages social cohesion.
Chris Heaton-Harris
I thank the hon. Gentleman for that point. He and I have a difference of opinion on the matter, which I would happily talk to him about over one of those beers he used to have too many of. The point I was trying to make is that the lack of flexibility in our employment market might have led employers to try various tactics to reintroduce flexibility by a different route.
Like the hon. Gentleman, I have been talking to my constituents about the Budget over the past few days. Unlike him—I might be wrong about this—I go to a gym, which is a privilege. My doctor told me I should go. In fact, he says that I have the lower limbs of a runner—“athlete’s foot”, as he puts it colloquially. I was talking to a personal trainer at the gym who recognised the importance of lifting the tax threshold and how much it would mean to him. I also met a man there who has three jobs: he is a pest control expert, he sells logs and he is a gritter for my local authority. He recognised the importance of the change in the tax threshold and welcomes any changes that bring about a healthy welfare cap. I also met a neighbour of mine there who is very pleased with the pension changes because they will allow him to plan for his retirement flexibly, and hopefully spend his own money which he has already earned and paid tax on.
The Government have delivered some good thing for my constituency, such as the university technical college and massive investment in the further education sector, which will help with long-term youth unemployment in future. There has been massive investment in the town of Daventry, helped by the council, and massive investment coming into the Daventry international rail freight terminal, where new businesses and logistics are settling. That means that my constituency is remarkably different from Birmingham, Erdington. There are only 1,000 JSA claimants in my constituency—it is still too many—which is down by 30% from last year. That is a claimant rate of 2.1%. For 18 to 24-year-olds, the rate has fallen by almost 30%. The number of people claiming for more than 12 months has also fallen by over 30%.
As the hon. Members for Birmingham, Erdington and for Liverpool, West Derby (Stephen Twigg) and, to a certain extent, the hon. Member for Wigan (Lisa Nandy) said, we all have completely different constituencies. Perhaps the one-size-fits-all nature of Government delivery in trying to get people out of long-term unemployment simply will not work. We need a much more flexible solution.
Unlike some Opposition Members, I am quite pleased with the developments in the Work programme. It is a very big programme that has had more than its fair share of teething troubles, but up to December 2013 A4e, one of the two providers in my constituency, has achieved over 100 positive job outcomes in Daventry, which in the majority of cases means someone being supported into a job lasting over six months. On Friday, I went to A4e’s offices and met some of the people who work there helping to get people in my constituency back to work. I met Jodie, Hollie and lots of A4e staff giving their all to try to remedy this problem that we have in all our constituencies. I say to Labour Members that the one-size-fits-all approach does not work all the time. We need flexible solutions, and sometimes private providers are just as good as the public sector in achieving that.
Mr Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab)
Listening to the Chancellor, I could not help but conclude that my constituents simply do not inhabit his world. Indeed, very few people share his world, and therein lies the problem. For example, unemployment in my constituency has risen dramatically. Ten years ago, the figure was 1,500 in total, and that included youth unemployment. Under this Government, it peaked at 3,341, so it more than doubled under the coalition. It is now almost 2,600, but that is well above any acceptable level, especially when it includes over 700 young people without a job.
This is a Chancellor for the wealthy, and, apart from a few gimmicks, this was a Budget for the wealthy. That is what brings me into conflict with him. I acknowledge that the economy of Britain as a nation is far more complex than that of each household. Furthermore, I accept that there will be a disparity in household budgets depending on income and expenditure. However, each household has basic needs that must be fulfilled. My assertion is that the Chancellor is out of touch with hard-working people. He does not get what is obvious to everyone: that families are struggling, especially in my constituency.
We have what I can best describe as a cost of living crisis. Wages are down by £1,600 a year. To many households throughout Britain, that amount of money could be the difference between living in poverty and living reasonably comfortably. I know that the Chancellor does not get it—after all, how could he, when we know that the Bullingdon club uniform costs about £3,500? What is even more a matter for despair is the confirmation by the Office for Budget Responsibility that people will be worse off in 2015 than they were in 2010. We have had the slowest recovery for 100 years, with the Government forecast to borrow over £190 billion more than planned. Ordinary, decent hard-working people are doing all the heavy lifting as regards who is actually bearing the brunt of the austerity measures introduced by this Government.
Businesses in my constituency constantly complain to me that banks have withdrawn their overdraft facility, making it even tougher for them to survive. Bank bonuses are rising again, even though businesses cannot get the financing they need. Just before Christmas, I was most grateful to secure a meeting, with representatives of such a business in my constituency, with the Business Secretary. Although I thank him sincerely, I am puzzled that the Department for Business, Innovation and Skills and the Department for International Development are taking so long to respond.
Another business in my constituency, and in several other Members’ constituencies, Verve car showrooms, went bust. The problem was that many consumers who had paid money for cars or signed up with finance agreements still had not received their cars at the point of administration. With the Sunday Mail, we jointly did our best to expose the poor consumer protection in those unique circumstances. I also wrote to the consumer affairs Minister. The owner of the company, for whom I have no brief, claimed that his company had been stitched up by the banks. Had he been a constituent of mine, I would most certainly have called for an inquiry into the behaviour of the banks.
The Government know full well that energy bills have risen by almost £300 since their election. The most powerful and effective speech on the subject of energy bills was delivered not during the Budget statement, but by my right hon. Friend the Leader of the Opposition during the party conference season. Central to his theme was a freeze on energy bills until 2017 and reform of a broken energy market, which would give consumers a welcome break from huge increases. I have always argued that, in effect, a cartel is operating in the energy market. The energy companies were terrified by the resonance of and public support for that policy. By contrast, the Government appeared incapable and unwilling to stand up for consumers.
This is one subject that unites the entire country. Everyone knows that the energy companies are ripping off households. If I may say so, I was making that point under the previous Government—my assertion is not new, but the Budget is a missed opportunity. My right hon. Friend the Leader of the Opposition set out a coherent strategic plan to introduce transparency and fairness for consumers. Cabinet Ministers sought to undermine that excellent solution to the problem.
That proved conclusively to me, yet again, that this is a Cabinet of millionaires running the Government in favour of the wealthy. [Interruption.] I speak for my constituents. Such selfishness and unfairness will ultimately lead to this Government’s downfall. Until then, I shall continue to expose the less than even-handed treatment dished out to the vast bulk of households—those on medium and modest incomes—while this Government favour the wealthy. This is a Government for the few and what we need is a Government for the many.
Priti Patel (Witham) (Con)
Thank you, Madam Deputy Speaker, for calling me to speak in this debate. I am delighted to be able to contribute to a debate on what I consider to be an historic and era-defining Budget. In my view, this is a first-in-a-generation Budget that empowers the people. It is about putting people first and back in control of their savings, spending and pensions. That has been made possible not only because of the hard and tough decisions this Government have had to make—we all recognise and acknowledge that—but because, importantly, there is a long-term economic plan that will safeguard and secure the future of Britain’s hard-working families.
Judging by what I have heard from Opposition Members this afternoon, they spend a lot of time talking down Britain, our economy and British industries and companies. To be frank, why would a business want to invest in some of their constituencies, let alone think about long-term investment in this country, given some of their negative and hostile remarks about business?
As the economy grows, employment is reaching record levels, for which Opposition Members should be grateful. The country now has record numbers in terms of employment growth and, importantly, new business growth. It is businesses that pay the taxes in this country—they employ people, and the money, jobs and prosperity that are created contribute to taxes, which pay for the welfare budgets that Opposition Members have been speaking about.
This is a Budget that rewards hard work, cuts taxes for those on lower incomes, empowers people to go out to work and gives families greater choice over how they spend their money—their savings and their pensions. What is so wrong about that? I find the hostility of Labour Members overwhelming; I really do.
My constituents will benefit from the increase in the personal allowance, which I assume the Labour party does not support, and fuel duty will be 20p lower under this Government than it would have been had Labour’s plans been implemented. We are helping people to keep more of what they earn, in contrast to Labour.
The Leader of the Opposition talks about a temporary and unworkable freeze in energy prices, but it is this Government and Conservatives who are cutting energy bills for families and businesses by removing and reforming the costly green levies that the right hon. Member for Doncaster North (Edward Miliband) advocated when he was Energy Secretary—he championed them. The investment that the Government are supporting to develop new technologies, such as carbon capture and storage and the exploration of shale gas, is very important. Opposition Members have overlooked that. Those technologies will bring energy security to this country and create jobs. It should not be lost on the Chamber that they will help to reduce our dependence on energy imports from regimes such as Russia. That point is particularly salient right now.
It is the Conservatives that are giving people genuine help with their living costs by cutting taxes, including council tax, and using tax incentives to encourage investment, rather than by following the policies of the Labour party, which would tax with one hand and give less back with the other.
We have heard about the importance of work in this debate. Developing an economy that supports business and business investment is one of the most important ways in which we can get more people into meaningful employment. Under Labour, businesses were penalised by a legacy of high taxes. Labour went into the last general election wanting to increase corporation tax on small firms and national insurance contributions. We have slashed those rates. We are bringing corporation tax down to 20%, making the UK one of the most competitive places in the world for enterprise. That is another point that is lost on Opposition Members.
The Conservatives and the coalition Government know that it is the genius, entrepreneurial spirit and wealth-creating acumen of businesses that create jobs. This afternoon, I met a prominent Essex business, Claridon Group, which is based in south Essex. It made that exact point to me. Such businesses are the wealth creators. They are the ones that have created the jobs and the prosperity in Essex. Claridon Group is exporting to a range of emerging markets, which are difficult to do business with. It praised the Budget, the Government’s approach to exports, and the incentives for companies to go overseas and expand their businesses.
The best way for the Government to help such businesses is to remove the barriers to growth, cut corporation tax and cut red tape so that they can invest in creating new jobs. They want to keep more money in this country. Taxes need to be low so that they can continue to invest and create jobs. I commend not just businesses in the entrepreneurial county of Essex, but businesses across the country that are doing the same things. It is small and medium-sized enterprises in the private sector that are creating the record number of jobs, and they should be supported and commended.
There are plenty of other policies in the Budget that will help businesses to grow and to support employment. The cut in beer duty should not be overlooked, despite the disparaging remarks of Opposition Members, and neither should the abolition of the alcohol duty escalator, which will help to create thousands of new jobs in the sector. There is high demand for British wines and spirits, and the market for them overseas is growing hugely. My constituency contains the West Street vineyard, which is producing award-winning wines that will start to go overseas, and Hayman Distillers.
I want to touch briefly on air passenger duty. The abolition of bands C and D will make Britain more attractive to travellers from east Asia, India and Latin America, which are important markets for communities in this country. That is to be commended.
In conclusion, this is a very sound Budget. It is also a refreshing Budget. It is the first Budget in a generation to send out a powerful message to savers, investors and British businesses. It is a Budget that will help to secure the economic foundations of our country.
Dame Anne Begg (Aberdeen South) (Lab)
There was a lot in the Budget that I would like to talk about this afternoon, including on the issue of welfare, but in the short time that I have, I will concentrate on the pensions announcements. The only thing that leaked out about the Budget was that a rabbit would come out of the hat. I suspect that the rabbit was the announcement about the annuities market.
Everybody has said that annuities need to be reformed. I have said that annuities need to be reformed, my Select Committee has said that annuities need to be reformed, Opposition Front Benchers have said that annuities need to be reformed, the shadow pensions Minister has said constantly that annuities need to be reformed and even the Government have said that annuities need to be reformed. Indeed, the industry itself has said that annuities need to be reformed. The rabbit that came out of the hat was the reform of that important market. However, what the Chancellor said in his Budget went far further than anyone had been calling for or expected—particularly the industry, and also the stock market if its reaction to the announcement is anything to go by.
Why do annuities need reforming? They lack flexibility, and people are often tied in to an inappropriate amount and an inappropriate time and do not shop around. We want a system that is much more flexible, perhaps with an open-market option so that people have different choices available to them when they reach their pension age and the time comes for them to buy an annuity. We must also consider the high costs and charges that have existed, and the fact that people have needed a lot of advice.
As Government Members have emphasised again and again today, we need consumer choice so that people can make the right decision about how they will spend their own money. For some people who still have a high mortgage when they draw down their pension, paying it off might be the most sensible thing to do. Paying off another debt might be the most sensible thing to do. However, the best thing for many people to do is to buy an annuity. Annuities are an excellent principle—someone saves into a pot and then buys something that lasts them to the end of their life. We do not know how long we will live after reaching pension age, so an annuity provides insurance: we know it will not run out before we reach the end of our life. It insures against old age.
All of that is right. However—this is the big but—what if there is no annuity market? What will the many people for whom an annuity is the right choice do then? That is the question that I have for the Government. Did they intend to undermine and destroy the annuity market, or did they hope that a new form of annuity would rise phoenix-like out of the flames of their announcements last week? If the annuity market were to collapse, the choice that they say they want to give consumers will not be there for those for whom an annuity is absolutely the right choice. Do the Government anticipate that the annuity market will be undermined or strengthened?
The Minister of State, Department for Work and Pensions, the hon. Member for Thornbury and Yate (Steve Webb), has talked a lot recently about his “defined-ambition” pensions—his collective defined contribution schemes. Where does the Budget leave his great defined-ambition scheme? Collective schemes for investing money during the investment period might be possible, but I cannot see how the defined-ambition system can pay out on a collective DC scheme given the proposals in the Budget.
I wonder whether the Government have done any cost-benefit analysis of the increased benefits bill for older pensioners. If people go down a different route from annuities and then run out of money before they reach the end of their life, they will become dependent on more than just the basic state pension. I know that the Government have made great play of the fact that the basic state pension will be high enough to lift people out of means-tested benefit, but that is not true of housing benefit or council tax rebates, so there will be a cost. How much work has been done on that?
Annuities have got a bad name because there have been low interest rates and low returns, but other products have the same problem. Some of them might actually give a worse return than annuities. What guarantee can the Government give that people who buy another product will not get a worse return than if they had chosen an annuity? We know that high charges and costs need to be dealt with.
I wonder whether the Government thought about just rebranding annuities because they have such a bad name. Perhaps they could have called an annuity a pension for life, which might have changed people’s attitude. I wonder whether the Government intend to turn the UK private pension system into a saving system, and if they do, will tax reliefs remain? Was that the Government’s intention, or is it an accidental consequence of last week’s proposals?
I was going to say a great deal about the need for independent advice, because I am not sure that the guidance guarantee comes anywhere near what is required. There are a number of such questions, and I hope that the Government can answer them, because if they cannot, people will not perhaps be as keen about the Government changes as they may at first have appeared.
Susan Elan Jones (Clwyd South) (Lab)
It is a huge privilege and pleasure to follow my hon. Friend the Member for Aberdeen South (Dame Anne Begg), who speaks with such knowledge, expertise and passion in this most important area.
At a time when there seem to be days for celebrating pretty much everything in this country, I do not think that there will ever be a national Department for Work and Pensions day. That is a bit of a pity, because the areas it covers represent some of the major challenges that any Department faces. For instance, how do we deal with the issue—I prefer to see it as a good thing—of people living longer lives? How do we incentivise work? Critically, how do we empower and enable people whose lives often seem to be blighted from the very start, if not from before they were even born?
I want to start on a note of consensus. Several years ago, the centre-right Centre for Social Justice had a point in relation to some of its arguments in the debate about broken Britain. Some of the arguments went over the top, but it pointed out that bits of our social fabric were not working as well as they could or should have done, and some of the questions it asked then are just as valid today.
How are we helping and enabling people who are battling to make a decent livelihood for themselves and who are often hampered by the system? How is family stability supposed to be enhanced by the burgeoning practice of zero-hours contracts? Most of us would contend that it will not be, and there is also the whole issue of the pension provision or the lack of it for people on those contracts. Can it be right that a family with a severely disabled child—so disabled that they require large medical equipment—should be penalised for essential space in their home? What about the taxes of ordinary people the length and breadth of our country subsidising ever-growing housing benefit payments to buy-to-let landlords? Why have we turned food banks from charitable outlets for emergency use, primarily for rough sleepers and certain immigrant groups who have fallen on hard times, into what they have now become—monuments of a failure to tackle systemic poverty? This Government will still not listen to the Trussell Trust and call an in-depth public inquiry on food poverty in Britain. That is broken Britain Cameron-style.
There can be no serious debate about welfare that does not speak the language of jobs and job opportunities. That is the one issue of greatest concern in my constituency. I welcome the fact that youth unemployment fell in January, although not that it rose again in February. This Government all too often have the approach of a bad post-Christmas dieter: gaining half a stone in weight at Christmas, but back on the scales at the end of January thinking it has been a great triumph to lose 3 lb.
It is a disgrace that the number of young people stuck on jobseeker’s allowance has almost doubled under the current Government. More than 900,000 young people are out of work, at a time when bank bonuses are rising and the wealthiest are given tax cuts. That is why I am proud of my party’s proposal for a jobs guarantee that will give young people real job opportunities. It is right that we as the Labour party—that is what it means by Labour—want to invest in a high-quality scheme such as that, and it is important that we put the emphasis on Labour and make it clear that we will not put up with abuses from the minority, because that is not fair on everyone else.
What does that type of programme mean? In Wales we have seen it with the Labour-led Welsh Assembly, and we are seeing the benefits. We have delivered the sharpest reduction anywhere in the UK among NEETs—those not in education, employment or training—with figures falling faster in Wales than anywhere else in the UK. Let it be known that under Jobs Growth Wales, a programme for 16 to 24-year-olds, 80% of those traineeships are in the private sector, and 78% of participants secure work. That compares, I think, with 15% under the UK Government’s Work programme which, as one Government Member said earlier, had teething problems.
Job opportunities for young people matter. I recently saw that very clearly in Chirk in my constituency at what we will always think of as Cadbury’s, although now it goes under the name of Mondelez International. One thing that struck me as I spoke to the apprentices in Chirk is that they were a pretty diverse group of young people. Some had got on well in traditional school settings and some had not, but they were all enthused by their new programme of work and the prospects their new skills offered. That is why tailored apprenticeships in different fields matter, and we need to be passionate about working with different types and sizes of employers in providing them. Absolutely nothing matters more than providing job opportunities for young people, because how can we hope to develop a work ethic where there is no serious work?
Mrs Mary Glindon (North Tyneside) (Lab)
I apologise for being absent for part of this debate to attend a delegated legislation Committee, but I have heard the majority of the speeches. It is an honour to follow my hon. Friend the Member for Clwyd South (Susan Elan Jones), and to hear her witty but correct analysis of the Budget and the things she thinks need to be done.
This Budget holds mixed fortunes for my constituents, but I will first thank the Chancellor for extending the period in which enhanced capital allowances are available in enterprise zones by a further three years. Why? The former world-famous Swan Hunter shipyard, which the previous Tory Government closed 20 years ago, was purchased by our Labour council in 2009. It is now being developed by our Labour mayor, Norma Redfearn, under the name of Swans, as a site for companies in the offshore and renewable supply industries. The new Swans site sits alongside successful companies such as oil and gas fabricators OGN, and award-winning subsea fabricators SMD. It borders Shepherd Offshore, which lies in the neighbouring constituency of Newcastle upon Tyne East. Most importantly, it forms the bulk of our enterprise zone on the north bank of the Tyne. The news announced by the Chancellor gives more commercial leverage to North Tyneside council’s excellent regeneration team, to support businesses that already want to come to the Swans site, and that will create thousands of jobs for local people over the next few years.
But mixed fortunes it is. My researcher in North Tyneside, Eddie Darke, goes to the Innisfree social club in Longbenton every week. He told me about two of his pensioner friends who remarked to him, “There is nowt in the Budget for us, Eddie”. Those gentlemen, I am sure they will not mind me saying, are hardened drinkers, yet they know that with just a penny off a pint, it would involve an awful lot of drinking before they feel any economic benefit, even at club prices.
It has been said many times in this debate that the Budget will benefit the most well off. This is certainly true, as the Chancellor extends his austerity measures well into the future. What comfort is there for thousands of public sector workers who will, in effect, see their living standards cut further, in a mere 1% pay increase, if they get even that? The real cost of living crisis is hurting single people, families, those who are employed, those who are unemployed, and young and old alike. The crisis has not been addressed to any degree, and that will not help people to feel confident about their future fortunes.
I recently carried out a survey across a community in my constituency where households live in a range of accommodation from lovely riverside apartments to local authority sheltered homes. The community is made up of mixed age groups and those in different economic circumstances. I found that since the coalition Government came to power, 67% of those constituents said that they are worse off, with only 6% saying that they are no worse off. Some 54% thought they would be worse off over the next two years, while only 30% thought they would be better off in future. Sadly, 71% are worried about their energy bills and 42% are very concerned about the rising cost of food.
I do not see anything in the Budget that will change those statistics significantly, or help any of my constituents improve their lot in relation to the high cost of living. Why did the Chancellor not freeze energy bills and take up some of the sound proposals from Labour that would see the books balanced in a much fairer way? I am optimistic about jobs being created on the north bank of the River Tyne. We are desperate for those jobs. I am, however, equally pessimistic for my constituents, whether they are working or, through no fault of their own, on benefits. They will not benefit from the Chancellor’s Budget and they will continue to struggle to make ends meet. This is in no way a Budget for them.
Mr Michael Meacher (Oldham West and Royton) (Lab)
Listening to the Chancellor and then turning to the Office for Budget Responsibility’s analysis of the Budget is like being seduced by “Fifty Shades of Grey” only to be brought down to earth by a harsh and unrelenting textbook on morality and sexual ethics. Leaving aside all the election giveaways, the truth is that the underlying economics of the Budget are truly awful.
The economy is still, after four years of austerity, 1.5% smaller than it was in 2008, while the US economy is 5% larger. To put it another way, the UK economy is today 14% smaller than it would have been if growth had continued in the way already being achieved in 2010, when the then Labour Chancellor’s economic stimulus produced 2.4% growth over 12 months up to the third quarter of 2010. As a result of this Chancellor’s about-turn, in favour of fiscal consolidation and austerity, the UK has lost output totalling £210 billion. That is completely gone for ever, down the drain and irrecoverable, and it is equal to one-seventh of Britain’s entire GDP.
Even the deficit reduction, which was supposed to be the aim of the exercise, has worked disastrously. The Chancellor inherited a deficit of £149 billion and pledged to reduce it by £60 billion now and £20 billion next year. In fact, the deficit is projected to be £108 billion this year—nearly double what he promised.
Even more serious is that the Chancellor predicts a strong and lasting recovery, but the OBR believes that this so-called recovery is built on sand. Unemployment and spare capacity have fallen so quickly that the OBR thinks there is very little scope for rapid growth beyond this current year. Hence, it has cut its growth forecast for next year from 2.7% to 2.3%. That is a very ominous forecast. If the economy is still below the output level of 2008 and unemployment is still 2.4 million, the premature petering out of growth will speak volumes. The OBR also says that, given the current policies, Britain will continue to lose export share steadily over the next five years, although it already has the biggest deficit in traded manufactured goods in its history, at £110 billion 7% of GDP—and rising.
The whole honest OBR scenario is grim. The public finances are still terrible, none of the components for sustainable growth is present, the upswing is largely dependent on excessive consumer borrowing and yet another asset-price bubble boom and bust, and the recovery—such as it is—is expected to fade when it has hardly begun. One has to ask, almost unbelievingly, how the Chancellor could have got it so unutterably wrong.
Part of the answer, I think, is that the Chancellor seems to have genuinely believed, at least for the first two years, the dogma of expansionary fiscal contraction. That is the idea that the less a Government spend, the faster the economy will grow, because the public sector will no longer crowd out the private sector, which will then have the space in which to grow. Well, it is all right to believe that if you are a first-year economic student, but to believe it when you have the power to trash the British economy for three years—as the Chancellor has, in fact, done—is quite another thing. The theory is economic illiteracy, and we have suffered that for two to three years.
What prompts the private sector to invest is obviously the prospect of future demand, and hence the prospect of future profits. When the economy is stagnant or contracting, what incentive have private companies to invest at all? That, of course, is precisely why business investment today is completely flat—20% below the pre-crash level—and what does that tell us? What it tells us is that business itself does not actually believe in this recovery either.
But there is another explanation for all this folly, namely that the Chancellor and the Prime Minister are first and foremost ideologues, obsessed with the idea of shrinking the state to the smallest size they can get away with via the privatisation and outsourcing of everything that moves. For them—as opposed to all the people about whom Opposition Members have been talking—austerity was not a painful instrument of reform so much as a heaven-sent gift enabling them to realise their deepest prejudices. That is why, although the policy clearly is not working, the Chancellor is committed to continuing it, and indeed intensifying it, into the next Parliament.
So what should be done? I think it is obvious that what Britain urgently needs is a big and sustained increase in investment, which can only come—at least in the first instance—from the public sector, as the private sector, like the OBR, regards the recovery as far too fragile and risky. At today’s interest rates, the Chancellor could launch, at a cost of only £150 million a year, a major £30 billion drive of investment in manufacturing, public services and job creation which would bring the deficit down much faster, would shrink the dole queues—which are currently costing £19 billion a year—and would be sustainable. He could even finance it at no cost in public borrowing at all—by targeting a tranche of quantitative easing directly at manufacturing rather than the banks, by instructing the publicly owned banks, Royal Bank of Scotland and Lloyds, to prioritise their lending on British industry and not on overseas speculation, or by taxing the super-rich, who have monopolised more than 70% of the income gained since 2008, and, over the same period, increased their wealth by some—
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. The right hon. Gentleman’s time is up.
Jim Sheridan (Paisley and Renfrewshire North) (Lab)
The Budget was trailed as being
“for the makers, the doers and the savers.”
I say “trailed” because this Budget was simply a campaign tour for the Tories, telling us about what their core voters want and what they think ordinary working people want. It hid the truth about those whom it really helped. It certainly did not help the makers or the doers and it failed to get to grips with the serious cost-of-living crisis affecting many people and households across the country.
It was disappointing that the Chancellor came to the House last Wednesday gloating about growth. After three years of flatlining, it is about time, even if it is much slower than predicted and slower than that in the United States of America or Germany. Working people are still getting worse off month by month. Real wages will have fallen by 5.6% by the end of this Parliament, and most people are not feeling this modest growth, but this out-of-touch Government certainly do not get that.
The proposals in the Budget to tackle tax avoidance are welcome, although I doubt whether this Tory-led Government have the political will or courage to stand up to the big businesses. After all, they are funded by these tax-avoiding enterprises and any measures they suggest may not be as big or bold as we would like.
Last year I was involved in highlighting the tax avoidance conducted by what I would have thought was an upstanding British company: Alliance Boots. We need to do something to stop these companies taking our country for granted, and I hope the Chancellor’s proposals will go some way towards doing that.
An excellent briefing paper has been produced by Change to Win and War on Want. They say that Alliance Boots allocated the bulk of its debt to UK entities and that otherwise the UK would have been one of its most profitable jurisdictions. The company’s actions would have been suspect under two proposed models in action four of the briefing. A meaningful earnings-stripping rule would have limited the amount of debt interest the company could deduct, and the attribution of interest across the group on a more equitable basis would have resulted in the company deducting less from its UK taxable income. That is how some of these measures could stop companies such as Alliance Boots, and I hope to see this happening.
These methods could work, but are the Government willing to take on the large private equity-backed companies using sophisticated financial engineering? As I said earlier, I think this Government are either weak or in the pockets of these companies. I would like to be proved wrong and see these measures making a difference. We will have to wait and see.
Action three looks to strengthen controlled foreign company rules and encourage more countries to adopt these rules. This is key when it comes to Alliance Boots. The company is based in Switzerland, which has no CFC rules. It has a subsidiary in the Cayman Islands and if Switzerland had a meaningful CFC regime the Cayman profits could be subject to some taxation in Switzerland, but do we have the credibility to push other countries to implement strong rules, given the limitations of our own regime? We have seen company after company revealed as tax avoiders over the last year or so. They have been getting away with it, and we really do not have a leg to stand on. With such a pro-big business party in power, I am sure other countries will doubt our efforts and it will be difficult to find a genuine solution to this issue. We need to build our own credibility and then work tirelessly to encourage others to do the same.
My party is, I think, planning to vote with the Government on the welfare cap. I want to put on the record now that I will not be joining it. Capping benefits is not the solution to unemployment; it will only serve to bring more people into poverty. Out-of-work benefits account for less than a quarter of welfare spending, meaning that a large group of people are in work and on low pay. As transport and child care costs go up, cuts and freezes will have a bigger impact on those in work. The Government have offered no solution to low pay or zero-hours contracts. They will not accept a living wage and they will not make companies treat their employees fairly, yet they will make it even more difficult for these people through capping spending. I did not come into politics to demonise welfare claimants. I do not want to give welfare to those who do not need it, but only 0.7% of the benefits bill was overpaid due to fraud in 2011-12—that is 70 times less than the amount lost through illegal tax evasion.
I wish to make two final points. First, on the continuous freeze of the council tax, I heard the patronising comments about bingo and a penny off beer, but people want decent public services that are properly funded to make sure that they are warm in their house and their kids are looked after. That is what the ordinary working people want. Secondly, on a more positive note, as chair of the all-party group on scotch whisky and spirits, I am delighted that the coalition Government have decided to freeze the tax on whisky, which is a major driver of the economy, not just in Scotland, but throughout the UK. I thank the coalition Government for that measure.
Mr Iain McKenzie (Inverclyde) (Lab)
We have heard from this Government for some time that we are all in this together, but with Budgets such as this one we are not getting out of it all together, as it would seem that the coalition Government are determined to fast-track the wealthiest. I say that because this Budget did nothing to tackle the cost of living crisis, and the Government just do not understand the difficulties ordinary people are facing. Yet in this Budget the Chancellor did create a structural welfare cap—it is the only thing this Budget does on welfare.
Worse still, the Budget does nothing to address the multiple failings of the Department for Work and Pensions. The DWP appears to be a in a total shambolic mess, so it is depressing to note that DWP inefficiency throws large amounts of taxpayers’ money away on failed IT projects. In autumn 2013, it was announced that the DWP had written off £34 million of IT work on the universal credit programme. In addition, a further £140 million of money already spent was under review to determine whether the IT developed had any lasting value. Despite the write-off, the projected IT budget for the universal credit programme was increased by 60%, from £396 million to some £635 million. Early this year, we were given more bad news; the DWP had completed an internal audit of its IT strategy which revealed serious deficiencies in the Department’s technology plans. This Government seem to be focused more on waste than welfare.
Where better to witness the waste of time, effort and money than the Government’s Work programme? It was devised to incentivise prime contract holders to focus extra efforts and resources on those who are hardest to get into the labour market. It would seem that instead of doing that, the prime contract holders have been creaming and parking: focusing on the easiest to place and reducing attention on the hardest to place. The Government’s own assessment of how the Work programme is going, conducted for the DWP by independent experts, suggests that it is still badly under-performing. The Work programme evaluation interim report was signed off ready for publication in September, but has been sat on ever since—I wonder why that is. Could it be that the whole payment-by-results contract structure does not seem to be doing what it was meant to do? So we have no work for the long-term unemployed, and delays to benefits and benefits assessments resulting in people using food banks. Some 73% of the people using food banks are doing so because of benefit delays. The Department for Environment, Food and Rural Affairs report on food poverty has not been made public. I suspect that is because it links food poverty with this Government’s welfare reform.
What can we say about the performance of these reforms? Incapacity benefit is being replaced with the employment and support allowance, with those already claiming IB being reassessed to decide whether they are capable of work or eligible for ESA, and with the assessments being carried out by Atos Healthcare. Like many MPs, I regularly meet sick or disabled people who are not able to work but who have been described as fit to work by Atos or by the DWP. The Minister with responsibility for disabled people, the right hon. Member for Hemel Hempstead (Mike Penning), has described the contract with Atos as a “mess”. Some 600,000 people across the country have appealed against decisions made by the Government to cut their benefits. Of that number, 60% have been successful. Such figures clearly prove that something is wrong with the process.
Atos is now saying that it wants to pull out of the contract early because of the threats being made against its staff. The chaos is costing taxpayers millions of pounds in assessments and tribunals, and it is causing distress and anxiety for thousands of disabled people.
Let us look at how the personal independence payment is shaping up. Atos will continue to carry out assessments on more than 3 million people receiving disability living allowance, soon to become PIP. Some constituents have been waiting months to be dealt with. However, even when Atos proves it is decent in its assessments, the Department for Work and Pensions overrules it, which is scandalous.
Let us look at another reform, the work capability assessment, because there is clearly a pattern forming here. In my constituency of Inverclyde, I have seen first hand the way in which people can be treated. One constituent was diagnosed with brain cancer. His surgeon, GP and even Atos said that he would never work again, but the DWP said that he should work and sanctioned him. It has taken many months to get back his payments. On top of all the worry, his family were faced with financial worry.
Another constituent suffering from cerebral palsy who could not travel for assessment was refused a home visit. Similarly, a constituent who was seriously injured in an accident at work was advised to travel to Glasgow for assessment, but, again, they were unable to travel because they were in so much pain. It gets worse. This constituent then had their benefit stopped because Atos sent the assessment forms to the wrong address. If it cannot get the address right, what chance do my constituents have? Those are just a couple of examples of people I have been dealing with. Clearly, my constituents have not been treated with the fairness and decency that they deserve, and the Budget does nothing to address that.
Last but not least is the bedroom tax. The best I can say is that in Scotland, thanks to a Labour Bill in the Scottish Parliament which was at last supported by the Scottish Nationalist party Government, the bedroom tax will not apply there next year. The bedroom tax is inhuman and should be abolished and Labour will abolish it across the UK.
Mr McKenzie
I will not give way, as I am just about to finish. We will also introduce a Budget that recognises and addresses the cost of living crisis that people up and down this country face.
Mrs Emma Lewell-Buck (South Shields) (Lab)
It is a pleasure to follow my hon. Friend the Member for Inverclyde (Mr McKenzie).
Much of the post-Budget media coverage has focused on what the Chancellor’s measures mean to the average member of the public, but debates about the average do not translate very well in my constituency. In South Shields, people are more likely than the average to be unemployed, or to be in part-time work or on a zero-hours contract. They are more likely to have a disability or long-term condition and to be living in fuel or food poverty. The reality is that the Chancellor offered next to nothing for those households, and they are the very people his Government’s policies have hit worst of all.
Under the coalition’s cost of living crisis, families in my constituency have seen their incomes fall relative to prices month after month. They are twice as likely to be unemployed as they were five years ago, and those out of work, nearly four in 10, have been unemployed for 12 months or more. If they are lucky enough to have a job, there is a one in four chance it will be part time, and for those on part-time contracts, hours have fallen since 2010. The situation is even worse for the young. The number of 16 to 24-year-olds out of work for 12 months or more has increased more than 10 times under the coalition.
Now that we are finally seeing a return to growth, this Budget should have been an opportunity to help the people who have suffered hugely during the recession. Instead the Chancellor all but ignored them. He said this was a Budget for savers, but that will mean nothing to those whose incomes are so squeezed that they have nothing left at the end of the month to put aside. What little savings some people have are being spent right now to cover the gap between their income and their living costs. That is a growing problem.
The Office for Budget Responsibility reports that the savings ratio will fall by a fifth this year, and the Bank of England’s figures show that families are drawing on their savings at record levels, at a sum of about £900 for each household in the country. The Chancellor tells us that he wants to reward savers, but many people do not have that option. Raising ISA limits to £15,000 does not make my constituents more likely to save; in fact, that is more than most of them would ever earn in a year.
People who can take advantage of that policy will do well out of it, but they are already quite comfortable if they have that kind of money to put aside. The Chancellor will reward those people, who might put off buying a new car or taking a holiday to save a little more, for their responsibility, but I want to know how he will reward the responsibility of my constituents who sacrifice hot meals to give them to their children.
Government Members have pointed out some of the patronising gimmicks the Chancellor threw into the Budget to convince people that he is on their side: a cut in beer duty and lower duty for bingo halls. Once again, he proved how out of touch he and the Government parties are. People in my constituency do not have beer and bingo at the forefront of their concerns. They care about the dignity that decent, well-paid work gives them. They care about providing for their families. They care about being able to pay their bills and to afford to eat. To put it simply, bingo and beer are far from the minds of those queuing at food banks.
The Government argue that raising the personal allowance has the effect of helping those who are worst off, but again the reality is far from the rhetoric. The Resolution Foundation has pointed out that the 5 million lowest earners will not get a penny because they already earn less than the personal allowance. One in four workers in my constituency is in part-time work and many earn the minimum wage. Those people are not earning enough to feel any effect from the threshold being raised. They are the people who are suffering the most, yet the Government’s flagship policy for helping the poorest brings them no benefits whatsoever.
Single-earner households, which are more common among low-income groups, benefit half as much as dual earners even though they clearly have greater need. As if that was not enough, the vast majority of gains from raising the personal allowance are expected to be wiped out when universal credit is introduced, as that system calculates people’s benefit entitlement on post-tax rather than pre-tax income. People who receive benefits or tax credits might see their incomes rise because they are paying less tax, but for every extra pound they keep they will lose 65p in universal credit. It is therefore poorly targeted as a policy for helping the worst off.
The Prime Minister and the Chancellor have claimed that we are all in this together, yet this was not a Budget for the whole country, just as this is not a recovery for the whole country. Yes, it is true that families on all incomes have found things harder in recent years, but the effect has been felt most strongly in constituencies such as mine. As far as my constituents are concerned, there is no recovery. They face yet another miserable year ahead under this miserable Government.
Jim Shannon (Strangford) (DUP)
As the last Back Bencher to be called to speak in the debate, I am reminded of that biblical verse, “The first shall be last, the last shall be first”. I am more than pleased to make a contribution.
There are many things in the Budget that we should be applauding. Some of the good things include the reduction in air passenger duty, the changes to pensions and to corporation tax, the fact that unemployment is down and the £21 million for potholes in Northern Ireland.
Dr William McCrea (South Antrim) (DUP)
Although we welcome the reduction in APD that is recommended, it is important to remember that my constituency’s international airport competes with Dublin airport, which has no APD, whereas ours is still significant. I therefore want the Government to go further than they propose in this Budget.
Jim Shannon
I thank my hon. Friend and colleague for that intervention. He outlines the fact that although we have seen a lot of movement, we need to see more. It is always good to see such movement happening.
I also applaud the introduction of the married couples transferable tax allowance, which was in the Conservative manifesto and which the Democratic Unionist party has supported. I suspect that we may be the only party on the Opposition Benches that has done so, but we have, and we put that on record. The perplexing thing about it is that there is to be no child care element for those in the middle band, while a child care element is in place for the lower and higher bands. My party will continue to push for that, and I hope that we get some concessions. Having liaised with various bodies about the Budget, I would like to highlight a few issues, most of which are important health issues. On tobacco and alcohol duty, Professor Sheila Hollins, chair of the British Medical Association board of science, has said:
“The Government is giving with one hand and taking with another, with a step forward on measures to reduce smoking but backward on tackling alcohol related harm.”
I understand her viewpoint. The extension of the tobacco tax escalator is certainly welcome from a health perspective, as it will reduce the affordability of cigarettes, which is an essential component in deterring children from taking up smoking. That is the greatest concern. However, while Cancer Research UK welcomes the extension of the 2% above inflation annual tobacco tax rise for the whole of the next Parliament, it has been suggested to me that a one-off increase of 5% above inflation in this Budget would lead to a fall in the number of smokers by 334,000, or 0.7 percentage points. How can we go against those figures supplied by Cancer Research? That is a measure that should have been introduced.
Furthermore, Cancer Research suggests that considerable benefits would accrue to the public finances from a reduction in smoking—a total of £199 million in the first year and more than £1 billion over the next five years —never mind the direct health and disease reduction benefits. Perhaps a way of achieving that would have been to narrow the price gap between manufactured cigarettes and hand-rolling tobacco. I am aware that a submission to the Treasury in advance of the Budget by Action on Smoking and Health and the UK Centre for Tobacco Control Studies, endorsed by 80 health organisations including Cancer Research UK, urged the Chancellor to increase the tobacco tax escalator to 5% above inflation in order to reduce smoking, while at the same time raising much-needed revenue, and I again press the Government to consider that for the future. Perhaps the Minister can tell us when that might happen or what the Government’s intentions are.
I use this opportunity to ask the Government to continue to prioritise tackling tobacco and urge that we press ahead with standardised packaging once the independent review of the public health evidence has concluded.
David Simpson (Upper Bann) (DUP)
It has been advocated for some time that we should consider a minimum price for alcohol, which in the long term will have an effect on liver disease or whatever. Surely a lot of money could be saved if that was introduced.
Jim Shannon
My hon. Friend must have read my notes. I slipped out for a while so I suspect that he had a look at them.
Mr Jeremy Browne
Will the hon. Gentleman consider the alternative perspective from a personal liberty viewpoint? People can decide for themselves how much they wish to drink. The hon. Member for South Shields (Mrs Lewell-Buck) identified households’ problems with affording their budgets. Is it a good idea to penalise poorer people by making alcohol more expensive for them to buy?
Jim Shannon
As I said, there is a health issue to be addressed and whether we like it not, we have to do that. I am an advocate of using whatever we can within the health process to do so. The scrapping of the alcohol duty escalator and the reduction in beer duty, coupled with the Government’s U-turn on plans to introduce a minimum unit price, show that the Government have abandoned any serious efforts to tackle alcohol-related harm, which cost £20 billion in England alone last year, £2 billion of which was on health care. We cannot ignore those figures because people are involved and they are clearly affected. We will continue to call on the Government to introduce a minimum unit price because we know that minimum pricing reduces alcohol-related harm among the heaviest drinkers while leaving responsible drinkers largely unaffected.
In debates on the Care Bill, I, along with many others, raised the issue of free social care at the end of life. It would be inappropriate to go into everything that was outlined during those debates, but the key statistic is that the quality, innovation, productivity and prevention —QIPP—data suggest that net savings of £958 could be made for every person who dies in the community rather than in hospital. Health Ministers support such a move, but I would appreciate it if the Treasury, which has not yet made its stance clear in the Budget, indicated its intentions on the matter for future reference.
Finally, I wish to highlight issues in relation to the welfare spending cap. For many people, the financial impact of cancer is a major issue, as they face a loss of income as well as having to cope with additional costs. Research commissioned by Macmillan Cancer Support has found that 83% lose an average of £570 a month, which is comparable to the average monthly mortgage payment in the United Kingdom of Great Britain and Northern Ireland. It is, therefore, no surprise that people calling the Macmillan helpline are 25 times more likely to seek help with financial issues than with end-of-life issues. Although in many cases they are dying, they are more concerned about their finances and the position for their families. That is what Macmillan Cancer Support says, and it is important that that matter is dealt with. Will the Chief Secretary to the Treasury clarify and explain how the Government intend to ensure that the cap on welfare spending does not impact negatively on people with cancer? The welfare system provides thousands of cancer patients with a financial lifeline at a time when they most need it, and spending should be determined in no other way.
There are many other issues that I should like to raise, but I shall express great disappointment at not seeing a drop in fuel tax for Northern Ireland, which has the highest fuel costs in the United Kingdom. I represent a rural area, and there are many Members in the Chamber who are not from Northern Ireland but are from rural areas, who would make the point that the impact of fuel costs is greater in rural communities than anywhere else. My colleagues who represent constituencies in Northern Ireland would all adhere to that statement. We would like a reduction in fuel tax and a pilot scheme for Northern Ireland. I understand that there is such a scheme for Mid and South Down, and it should be extended to the whole of Northern Ireland, because we deserve that opportunity. Perhaps we will see that in future.
We must have a Budget that helps to reduce our outgoings, but that should not be done at the expense of our health service and vulnerable people. Macmillan Cancer Support, Cancer Research UK and the British Medical Association have all outlined suggestions for saving money that can benefit those most in need, and again I suggest that the Chief Secretary and Chancellor give that serious consideration.
In conclusion, I give this Budget the grade that I often saw in my school reports, “C-plus, Chancellor: easily distracted; could do much better.”
Penny Mordaunt (Portsmouth North) (Con)
I shall be brief. I want to welcome the pension reforms outlined in the Budget, especially as I am the co-chair of the all-party group on older people and ageing.
As part of my campaign to secure a Minister for older people, I have often spoken in the House about the freedoms that we wish to see for older people. Policies and financial products are often skewed towards a “Werther’s Original” image of older people that does not reflect the diverse reality. I remember going to the physiotherapy department at my local hospital and seeing an elderly gentleman exercising. He was recovering from a major operation on his knee and hips. I asked him his name and how old he was. He was 84, and I asked him how his recovery was going. He described the incredible number of breaks he had had in his pelvis and legs. I had a vision of him shuffling down an icy driveway in his slippers, and I said, “That must have been one hell of a fall, Don.” He said, “No, actually, it was a hang-gliding accident.”
That just goes to show that older people are a diverse bunch. They have incredibly diverse plans and ambitions. They wish to be entrepreneurs, they wish to travel, and they have diverse responsibilities. We need to give them as much freedom as possible. We would not tolerate the restrictions on our freedoms that we have expected them to accept in the pension system and other policies, so I am pleased that that has changed. How that dovetails with our care reforms is a vital question. The new financial products that we want in the marketplace will probably not be fit for purpose for another couple of generations. That is also the case for the type of product that Dilnot wished to see and measures allowed under the Care Bill reforms. While we are waiting for those things to come on-line, it is vital that we make sure that people have as much freedom and as much choice as possible as to how they spend their money.
Finally, and briefly, I put it on record that I am very pleased to see help for high energy-use businesses. That is a major issue in the constituency I represent. The president of the Aluminium Federation, who has his factory in Portsmouth, is absolutely delighted and he is not alone in that. In Portsmouth, we are at a very exciting juncture. The maritime task force that was set up at the tail end of last year is just about to report, setting out a blueprint of what we need to do in marine and manufacturing to turn the Solent and Portsmouth at its heart into the maritime heart of the UK. There is a clear blueprint for that and investment earmarked for precisely those things.
We are able to compete really well and I think that is because of the business environment that is being created not only from this Budget, but from successive Budgets. We have managed, in just a few months, without a formal marketing process in place, to gain interest for an order book for the shipyard at Portsmouth of over £1 billion. That shows that we are able to compete not only with northern Europe, but with Dubai and shipyards around the world, and that Britain is an attractive place to do business and Portsmouth is a stellar yard to build ships in.
I particularly welcome the announcements on energy and on pensions in the Budget and commend the Chancellor and the Front-Bench team for their excellent work.
Chris Leslie (Nottingham East) (Lab/Co-op)
First, I thank so many of my right hon. and hon. Friends for making important contributions to the debate, highlighting constituency concerns, offering a critique of the Chancellor’s strategy and questioning the wisdom of his short-sighted short-termism. To name only a few, that includes my hon. Friends the Members for South Shields (Mrs Lewell-Buck), for Wigan (Lisa Nandy), for Coventry South (Mr Cunningham), for Livingston (Graeme Morrice), for Darlington (Jenny Chapman), for Stalybridge and Hyde (Jonathan Reynolds), for North Tyneside (Mrs Glindon), my right hon. Friend the Member for Edinburgh South West (Mr Darling), and my hon. Friends the Members for Inverclyde (Mr McKenzie) and for Liverpool, West Derby (Stephen Twigg). They all made the case very strongly.
The country needed a Budget to deliver a recovery built to last and a recovery that is felt by all. We needed a Budget to ensure that growth is sustained; to support a balanced approach across industrial sectors; to spur on business investment and productivity; to drive exports; and to lift growth in all the regions and nations. We needed a Budget to make sure that a recovery is shared by the whole country, not just the wealthy already at the top.
Yet what we had last Wednesday was a Budget more notable for the reforms it did not contain. There was nothing to tackle long-term youth unemployment, which has doubled since the Government came to power. There was nothing to reform the big six gas and electricity companies, who are hitting families and pensioners with ever-higher energy bills. There was nothing to bring forward real help now with child care costs that are spiralling upwards year after year. There was nothing to drive forward the infrastructure investment that we so urgently need and nothing to address the wages crisis leaving the typical working person £1,600 worse off than they were in 2010. There was not even a mention by the Chancellor of the cost of living crisis, or even a passing reference to it in the 120 pages of the Budget Red Book. Instead, it fell to the Office for Budget Responsibility to spell out the realities to the British people: you will be worse off at the coming election than you were back in 2010—and that is official.
What sort of Budget was it? It was a Budget attempting to get the Government from here to election day, rather than to entrench, extend and enhance a recovery for all. That is why we had a few small give-aways and that patronising little pat on the head for hard-working people to do more of the things they enjoy—and was it not interesting to see the Chancellor looking so authentic playing bingo earlier today? What a great offer from the Chancellor: buy 300 pints of beer and get one free. They give a little with one hand, but take away so much more with the other.
Amazingly, the Chancellor did not mention VAT at 20%, the granny tax, the cuts to child benefit and to tax credits, or the 2 million working people who have been drawn into the 40p tax band since the Government came to office. He also did not mention the very generous tax cut for millionaires, or the deal he struck with the big banks to water down the bank levy even further—a secret tax cut for the banks that we will be voting against tonight.
There is a crisis out there in the country. The Prime Minister once said:
“Helping with the cost of living. That is what matters most of all.”
Whatever happened to that promise? Britain needed a Budget for big changes, but the Chancellor was busy dealing with the small change, the new £1 coin modelled on the threepenny bit. Of course, as the right hon. Gentleman is the heir to the Osborne baronetcy, perhaps it is no surprise that he has such an emotional attachment to old money.
Back in the real world, changing GDP statistics are not yet felt by those on lower or middle incomes, who do not share the Chancellor’s rosy view. They are concerned about job insecurity, zero-hours contracts, escalating rents and bills and frozen incomes, while food banks are increasingly the last resort for those with nowhere left to turn. That is the real Britain that his short-termism is creating.
As my hon. Friend the Member for Clwyd South (Susan Elan Jones) said, young people who want to get ahead are sensing that the odds are stacked against them. They belong to “Generation rent”, ripped off by letting agencies, with the housing market out of reach because Help to Buy has not been matched with the help to build that we need. But because the Chancellor is so focused on showing off his new £1 coin, so focused on his short-term ambitions—[Interruption.] It does not matter if he changes its shape; its value is still shrinking day by day under him. He is failing to take the long-term steps we need to improve this country.
The flexibilities on annuities are welcome in principle, and we look forward to scrutinising the detail in due course. Annuities have failed too many pensioners. We also hope, however, that the Chancellor will address the need for comprehensive advice for those nearing retirement and for reform to go further by capping pension fund charges to stop rip-off fees and improve consumer trust.
Did the Chancellor make that change on annuities for a long-term reason or a short-term one? Is it pure coincidence that the reform will grab hundreds of millions in tax from pensioners years earlier than it would otherwise have come into the Exchequer? Did he really have the long term in mind, or was it a “manoeuvre”, as the IFS calls his tricks, from a Chancellor who will borrow £190 billion more than he said he would?
Although the annuity changes are welcome, it is difficult to escape the feeling that they are being used to distract from the inadequacy of the rest of the Budget. They provide a veneer of long-term reform to an otherwise short-term Budget. The Chancellor dangles the annuities issue as a device to divert attention from his inaction on the cost of living and the reforms we need to build a lasting recovery that is felt by all.
The Chancellor is absolutely desperate for people not to notice the broken promise to balance the books by next year. It turns out that the past three years of economic stagnation will leave the next Government inheriting a budget deficit of £75 billion. It is staggering that the Chancellor had the nerve to claim in his Budget statement that
“as a nation we are getting on top of our debts”.—[Official Report, 19 March 2014; Vol. 577, c. 781.]
The Chancellor’s neglect of economic growth has added a third to the national debt, which is now over £1.2 trillion. He promised to stop adding to the debt, but he has borrowed more in four years than the previous Government did in 13 years.
That is why my right hon. Friend the Leader of the Opposition called for a cap on structural welfare reform in June last year. Yes, we need to be tough on welfare inflation, but we also have to be tough on the causes of welfare inflation, tackling low wages and rising rents and helping to get the long-term unemployed off benefits and back into work. That is the way to ensure that we get the current budget back into surplus as soon as possible.
The Chancellor should be confronting the causes of falling revenues and rising costs for taxpayers, but he has form when it comes to bending the rules to make it appear that progress is being made. In this Budget, again, there are some extremely dodgy accounting tricks used by this master of prestidigitation: treating a forecast of worsening public sector pension costs as an opportunity to spend more money; banking future tax revenues on the basis of what the OBR called “particularly uncertain” behavioural assumptions; committing to spending billions extra on the basis of cuts to services while refusing to say where the axe will fall; and inventing revenues from tackling avoidance even though the Swiss tax deal has delivered only a quarter of what he originally promised. The IFS calls these the Chancellor’s “manoeuvres” which he will keep on repeating—a few give-aways inadequately funded by unspecified funding cuts.
We are beginning to hear that the Chancellor and his outriders are on manoeuvres in other ways too. He and the Chief Secretary to the Treasury have an eye on their personal advance to the top of their parties—believe it or not. In fact, the Chief Secretary is on odds of 14:1 to take over the Liberal Democrats after the next general election. There they sit, right there: one a zealous champion of right-wing Conservatism and the other the Chancellor of the Exchequer. No wonder the public are not getting a look-in. We needed a Budget to lock in the recovery, but all we got was a Budget designed to lock out the Chancellor’s rivals for the leadership of the Conservative party.
The Government are not ensuring that we have a sustainable recovery. The reason the Chancellor is being forced to address a growing savings crisis is that, as the OBR says, growth might slow down again when consumer savings run dry—and it predicts that savings will be depleted even more quickly after the Budget measures are factored in. Exports will not contribute a thing to growth for the next five years, according to the OBR. A Conservative Government will certainly not invest in a pro-growth approach; they do not even acknowledge that productivity is a problem that has been emerging in recent years. Why are they not helping small and medium-sized businesses with a cut in business rates rather than making yet another cut in corporation tax that benefits only 2% of British businesses? Their short-term chopping and changing on renewables, on investment allowances and on the carbon price floor are all symptoms of a fickle and inconsistent Treasury governed by political impulse. We finally have some growth not because of this Chancellor, but despite this Chancellor.
Britain needed a Budget for the long term—long-term recovery, long-term stability, and long-term growth—but Britain got a Budget for the short term from a part-time Chancellor more preoccupied with his party’s recovery than with building Britain’s recovery. Britain deserves better.
The Chief Secretary to the Treasury (Danny Alexander)
It is a pleasure to close this excellent Budget debate. We have heard some very good speeches today. I particularly commend my hon. Friend the Member for Forest of Dean (Mr Harper), who gave strong support to the Budget. I pay tribute to his work as a Minister, not least as Minister responsible for constitutional reform when he worked so closely with the Deputy Prime Minister on those matters.
I particularly note the speech by the right hon. Member for Edinburgh South West (Mr Darling), who rightly highlighted the importance of securing this country’s long-term competitiveness. I would also highlight the work we are doing on infrastructure, on skills, and on making this country more attractive for investment. In that context, I find his party’s decision to vote against the corporation tax cut utterly extraordinary. If we want this country to become more welcoming to investment, that is precisely the sort of measure we should be supporting.
The right hon. Member for Salford and Eccles (Hazel Blears) spoke particularly about social investment. I welcome her support for the tax relief on social investment that we confirmed in the Budget. The hon. Member for Aberdeen South (Dame Anne Begg) gave an important speech about her concerns about pensions and annuities. I am sure that those issues can be addressed as the Finance Bill goes through the House. My hon. Friends the Members for Bedford (Richard Fuller) and for Daventry (Chris Heaton-Harris) made particularly strong speeches. I commend the hon. Member for Paisley and Renfrewshire North (Jim Sheridan) for his speech, particularly the attention he paid to the warm welcome in the Scotch whisky industry for the measures we have taken on spirits duties—just one of a number of ways in which this was a Budget for Scotland. He is right to have welcomed that.
However, we heard at the end the most extraordinary speech by the shadow Chief Secretary to the Treasury. I gather that his party is intending to vote against the whole Budget tonight. That is surprising—or perhaps not that surprising in the context of Labour’s changing position on annuities and pension reform. Last week’s announcements on annuities complete the most progressive and important reforms to our pension system since Lloyd George was the Liberal Minister in the Treasury. The reforms are founded on the decisions we have made and are being ably led by the Minister of State, Department for Work and Pensions, my hon. Friend the Member for Thornbury and Yate (Steve Webb), who has responsibility for pensions. They include the creation of a single-tier pension—a firm foundation on which everyone can save—and the triple lock, which ensures finally that we will not have the kinds of derisory pension increases that we saw when Labour was in office.
People often wonder whether there will be a rabbit-out-of-the-hat moment in a Budget and I am sure the whole House will agree that our annuities announcement has been successful in rabbit production—a whole Labour Front Bench of them. They are rabbits caught in headlights. It has gone on for days. As my hon. Friend the Member for Daventry memorably said in his speech, Labour’s economic policy is like a chameleon that has fallen into a bag of Smarties. You can ponder for yourself what that means, Mr Deputy Speaker, but I think he was drawing attention to the fact that we have not had a sensible reaction from the Opposition. [Interruption.] I am not sure: I think ginger rodents play a very important role in our democracy, to answer the shadow Chancellor’s remarks.
On Wednesday the Leader of the Opposition said absolutely nothing. On Thursday the hon. Member for West Bromwich East (Mr Watson), presumably frustrated by the continued silence of his Front Benchers, took it on himself to tell his party that it should oppose our plans on annuities and pensions. Friday saw the hon. Member for Leeds West (Rachel Reeves) getting around almost at least to welcoming the move. To think that Labour Members used to say that we in my party wore sandals; they are surely now the flip-flop party. They now say—this is a serious point—that they will vote against the Budget as a whole and, therefore, against all of the reforms contained in it. They did not know what to say about the reforms, then they were against them, then in favour of them, then sort of in favour of them and now in just a few minutes’ time they are going to vote against them. The truth is that our great liberalisation of the pensions market has hit Labour Members like a missile. It has cracked open one of the great dividing lines between their values and our values. We on this side of the House know that the best people to trust with money are the people who earn that money in the first place. Labour Members do not seem to agree with that.
I draw the House’s attention to the following quote:
“You cannot trust people to spend their own money sensibly”.
Who said that? It was a former Labour adviser in No. 10 under the previous Government. That says it all. Having been in opposition to that Government for so long, I understand John McTernan’s concerns. After all, when the Labour party was given access to the public purse, it went on a giant spending spree. It splurged on all sorts of unsuccessful projects. It is a party that wastes money and expects someone else to clean up after it. We are the party—the Government, the coalition—that it has left with the cleaning up. [Interruption.] Yes, the Liberal Democrats are clearing up the mess that the Labour party made of this country’s economy. I think that the people of this country know not only about the mess the Labour party made of our economy, but that people who have spent their lives saving for their retirement can be trusted to make sensible, long-term choices. It is just the Labour party that cannot be trusted to do that.
This was, in the end, a Budget for freedom. It was a Budget for the freedom of pensioners to choose to use their own savings in the way that best suits them; a Budget for working people to be free to keep more of the money they earn for themselves; and a Budget to support businesses that want to invest. The only way we can deliver the rise in living standards that has been discussed by some Labour Members is by making sure that our policies are as fair as possible.
Chris Leslie
Now that the Chief Secretary has finally come to the question of living standards, will he do what he failed to do four times when asked on the “PM” programme on the day of the Budget and admit that living standards will be lower at the time of the next election than they were at the last election—yes or no?
Danny Alexander
I rather agree with the analysis that my right hon. Friend the Secretary of State for Work and Pensions set out on that question. In his opening remarks—[Interruption.] The Opposition might not like it, but no matter how much the shadow chunterer makes his noises from the Front Bench, I will make the point that the recession that they helped to cause when they were in office cost every household in this country £3,000. That is the mess that they made. It is no wonder that we are having to work so hard to repair the British economy and to ensure that there are jobs for people.
Danny Alexander
No, I will not give way any more—sit down. I will give the hon. Gentleman the treatment that he deserves.
In the Budget, we have sought to help those at the bottom of the earnings scale by taking them out of tax altogether. I am incredibly proud, as a Liberal Democrat, to stand at this Dispatch Box and say that, come next April, the rise in the personal allowance will mean that typical basic rate taxpayers will be £800 a year better off than they would have been under the previous Government’s plans.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. The right hon. Gentleman is not giving way and persistence will not help.
Danny Alexander
I have quite a few more things to say, Mr Deputy Speaker, and I have less than three minutes in which to say them.
The rise in the personal allowance is not just a reward for hard work, but an incentive for hard work, as are the substantial changes that we have made on child care in the Budget. Those changes mean that we are getting more people into work and that people are keeping more of what they earn.
We have taken measures to incentivise businesses to invest, such as enhancing capital allowances. I pay tribute to my hon. Friend the Member for Burnley (Gordon Birtwistle), who pushed hard for those changes. They will make a serious difference to business investment in this country.
To conclude, this is a Government with a long-term economic plan, and they are an Opposition without any plan at all. For businesses, we have doubled the tax relief on new plant and equipment, while they are frightening off the investors whom we need to invest in the energy to power those machines. They will vote against the cut in corporation tax and confirm that the Labour party is the anti-business party in this House. For working people, we have lifted the personal tax allowance even further than we promised in our election manifesto. While they talk about a 10p rate, we have lifted the personal allowance to £10,500. For pensioners, we have delivered a triple lock, the largest cash rise in the basic state pension in a generation and the greatest pensions liberation in a century. In their time in office, they delivered a paltry 75p rise in the basic state pension.
Some people have referred to this as the Lamborghini Budget. That may well be so, because there is one person in this Chamber who has shown that he can out-accelerate a Lamborghini. That is the shadow Chancellor in retreating from his predictions on the economy, such as the 1 million jobs that were never lost and the triple dip that never came.
Ed Balls (Morley and Outwood) (Lab/Co-op)
Is the right hon. Gentleman calling me a Lamborghini?
Danny Alexander
The shadow Chancellor might think that he is more of a Robin Reliant, but he is not for the purposes of this Budget.
This Budget is another landmark on our long road to repairing the economy that the Opposition wrecked. It gives more people more control over their own money. It cuts income tax for working people. It helps businesses to invest for growth. It is a Budget that helps put Britain and business back on their feet, and I commend it to the House.
Question put.
2. Income tax (charge and main rates etc)
3. Corporation tax (charge for financial year 2015)
19:15 - The House divided: - Ayes: 308 / Noes: 239 - Question accordingly agreed to.
4. Corporation tax (small profits rate and fractions for financial year 2014)
5. Corporation tax (rates for ring fence profits from 2015)
6. Corporation tax (marginal relief)
7. Profits arising from the exploitation of patents etc
8. Capital allowances
9. Capital gains tax (annual exempt amount)
10. Remittance basis
11. Treatment of agency workers
12. Recovery of PAYE debts of companies etc
13. Payments by employer on account of tax where deduction not possible
14. PAYE obligations of UK intermediary in cases involving non-UK employer
15. Oil and gas workers on the continental shelf (operation of PAYE)
16. PAYE (general)
17. Threshold for benefit of loan to be treated as earnings
18. Taxable benefits (cars, vans and related benefits)
19. Taxable benefits (payments for private use: cars and vans)
20. Venture capital trusts
21. Loan relationships and derivatives
22. Transfer of corporate profits
23. Video games development
24. Community amateur sports clubs
25. Financing costs and income
26. Pension flexibility
27. Taxable specific income (effect on pension input amount for non-UK schemes)
28. Pension schemes (general)
29. Pension schemes (registration of pension schemes etc)
30. Pension schemes (surrender)
31. Glasgow Grand Prix
32. Share incentive plans (increases in maximum annual awards etc)
33. Share incentive plans (general)
34. Employee share schemes
35. Employment-related securities and employment-related securities options
36. Corporation tax relief in relation to employee share acquisitions
37. Chargeable gains (private residences)
38. Intangible fixed assets
39. Avoidance involving losses
40. Oil taxation (restriction of field allowance)
41. Substantial shareholder exemption
42. Partnerships and limited liability partnerships (general)
43. Limited liability partnerships (treatment of salaried members)
“Section 94AA | Deductions in relation to salaried of limited liability partnerships” |
“Section 92A | Deductions in relation to salaried members of limited liability partnerships” |
44. Transfer pricing (position of disadvantaged persons)
45. Alcoholic liquor duties (rates)
Wine or Made-wine of Strength not Exceeding 22% | |
|---|---|
Description of Wine or Made-wine | Rates of Duty per Hectolitre £ |
Wine or made-wine of a strength not exceeding 4% | 84.21 |
Wine or made-wine of a strength exceeding 4% but not exceeding 5.5% | 115.80 |
Wine or made-wine of a strength exceeding 5.5% but not exceeding 15% and not being sparkling | 273.31 |
Sparkling wine or sparkling made-wine of a strength exceeding 5.5% but less than 8.5% | 264.61 |
Sparkling wine or sparkling made-wine of a strength of at least 8.5% but not exceeding 15% | 350.07 |
Wine or made-wine of a strength exceeding 15% but not exceeding 22% | 364.37”. |
46. Tobacco products duty (rates)
“Table | ||
|---|---|---|
1. | Cigarettes | An amount equal to 16.5% of the retail price plus £184.10 per thousand cigarettes |
2. | Cigars | £229.65 per kilogram |
3. | Hand-rolling tobacco | £180.46 per kilogram |
4. | Other smoking tobacco and chewing tobacco | £100.96 per kilogram”. |
47. Air passenger duty (rates of duty from 1 April 2014)
19:27 - The House divided: - Ayes: 301 / Noes: 15 - Question accordingly agreed to.
48. Air passenger duty (rates: general)
49. Vehicle excise duty (rates for light passenger vehicles etc)
Rates Payable on First Vehicle Licence for Vehicle | |||
|---|---|---|---|
CO2 Emissions Figure | Rate | ||
(1) | (2) | (3) | (4) |
Exceeding | Not Exceeding | Reduced Rate | Standard Rate |
g/km | g/km | £ | £ |
130 | 140 | 120 | 130 |
140 | 150 | 135 | 145 |
150 | 165 | 170 | 180 |
165 | 175 | 280 | 190 |
175 | 185 | 335 | 345 |
185 | 200 | 475 | 485 |
200 | 225 | 625 | 635 |
225 | 255 | 850 | 860 |
255 | - | 1080 | 1090 |
Rates Payable on Any Other Vehicle Licence for Vehicle | |||
|---|---|---|---|
CO2 Emissions Figure | Rate | ||
(1) | (2) | (3) | (4) |
Exceeding | Not Exceeding | Reduced Rate | Standard Rate |
g/km | g/km | £ | £ |
100 | 110 | 10 | 20 |
110 | 120 | 20 | 30 |
120 | 130 | 100 | 110 |
130 | 140 | 120 | 130 |
140 | 150 | 135 | 145 |
150 | 165 | 170 | 180 |
165 | 175 | 195 | 205 |
175 | 185 | 215 | 225 |
185 | 200 | 255 | 265 |
200 | 225 | 275 | 285 |
225 | 255 | 475 | 485 |
255 | - | 490 | 500”; |
50. Vehicle excise duty (rates for rigid goods vehicles with trailers)
Vehicles with Road-friendly Suspension and Two Axles | |||||
|---|---|---|---|---|---|
Appropriate HGV Road User Levy Band | Plated Gross Weight of trailer | Total Weight | Rate | ||
(1) | (2) | (3) | (4) | (5) | (6) |
Exceeding (kgs) | Not Exceeding (kgs) | Not Exceeding (kgs) | £ | ||
B(T) | 4,000 | 12,000 | - | 27,000 | 230 |
B(T) | 12,000 | - | - | 33,000 | 295 |
B(T) | 12,000 | - | 33,000 | 36,000 | 401 |
B(T) | 12,000 | - | 36,000 | 38,000 | 319 |
B(T) | 12,000 | - | 38,000 | - | 444 |
D(T) | 4,000 | 12,000 | - | 30,000 | 365 |
D(T) | 12,000 | - | - | 38,000 | 430 |
D(T) | 12,000 | - | 38,000 | - | 444 |
Vehicles with Road-friendly Suspension and Three Axles | |||||
|---|---|---|---|---|---|
Appropriate HGV Road User Levy Band | Plated Gross Weight of Trailer | Total Weight | Rate | ||
(1) | (2) | (3) | (4) | (5) | (6) |
Exceeding (kgs) | Not Exceeding (kgs) | Exceeding (kgs) | Not Exceeding (kgs) | £ | |
B(T) | 4,000 | 12,000 | - | 33,000 | 230 |
B(T) | 12,000 | - | - | 38,000 | 295 |
B(T) | 12,000 | - | 38,000 | 40,000 | 392 |
B(T) | 12,000 | - | 40,000 | - | 295 |
C(T) | 4,000 | 12,000 | - | 35,000 | 305 |
C(T) | 12,000 | - | - | 38,000 | 370 |
C(T) | 12,000 | - | 38,000 | 40,000 | 392 |
C(T) | 12,000 | - | 40,000 | - | 370 |
D(T) | 4,000 | 10,000 | - | 33,000 | 365 |
D(T) | 4,000 | 10,000 | 33,000 | 36,000 | 401 |
D(T) | 10,000 | 12,000 | - | 38,000 | 365 |
D(T) | 12,000 | - | - | - | 430 |
Vehicles with Road-friendly suspension and Four or More Axles | |||||
|---|---|---|---|---|---|
Appropriate HGV Road User Levy Band | Plated Gross Weight of Trailer | Total Weight | Rate | ||
(1) | (2) | (3) | (4) | (5) | (6) |
Exceeding (kgs) | Not Exceeding (kgs) | Exceeding (kgs) | Not Exceeding (kgs) | £ | |
B(T) | 4,000 | 12,000 | - | 35,000 | 230 |
B(T) | 12,000 | - | - | - | 295 |
C(T) | 4,000 | 12,000 | - | 37,000 | 305 |
C(T) | 12,000 | - | - | - | 370 |
D(T) | 4,000 | 12,,000 | - | 39,000 | 365 |
D(T) | 12,000 | - | - | - | 430 |
E(T) | 4,000 | 12,000 | - | - | 535 |
E(T) | 12,000 | - | - | - | 600 |
Vehicles Without Road-friendly Suspension with Two Axles | |||||
|---|---|---|---|---|---|
Appropriate HGV Road User Levy Band | Plated Gross Weight of Trailer | Total Weight | Rate | ||
(1) | (2) | (3) | (4) | (5) | (6) |
Exceeding (kgs) | Not Exceeding (kgs) | Exceeding (kgs) | Not Exceeding (kgs) | £ | |
B(T) | 4,000 | 12,000 | - | 27,000 | 230 |
B(T) | 12,000 | - | - | 31,000 | 295 |
B(T) | 12,000 | - | 31,000 | 33,000 | 401 |
B(T) | 12,000 | - | 33,000 | 36,000 | 609 |
B(T) | 12,000 | - | 36,000 | 38,000 | 444 |
B(T) | 12,000 | - | 38,000 | - | 604 |
D(T) | 4,000 | 12,000 | - | 30,000 | 365 |
D(T) | 12,000 | - | - | 33,000 | 430 |
D(T) | 12,000 | - | 33,000 | 36,000 | 609 |
D(T) | 12,000 | - | 36,000 | 38,000 | 444 |
D(T) | 12,000 | - | 38,000 | - | 604 |
Vehicles without Road-friendly Suspension with Three Axles | |||||
|---|---|---|---|---|---|
Appropriate HGV Road User Levy Band | Plated Gross Weight of Trailer | Total Weight | Rate | ||
(1) | (2) | (3) | (4) | (5) | (6) |
Exceeding (kgs) | Not Exceeding (kgs) | Exceeding (kgs) | Not Exceeding (kgs) | £ | |
B(T) | 4,000 | 10,000 | - | 29,000 | 230 |
B(T) | 4,000 | 10,000 | 29,000 | 31,000 | 289 |
B(T) | 10,000 | 12,000 | - | 33,000 | 230 |
B(T) | 12,000 | - | - | 36,000 | 295 |
B(T) | 12,000 | - | 36,000 | 38,000 | 392 |
B(T) | 12,000 | - | 38,000 | - | 542 |
C(T) | 4,000 | 10,000 | - | 31,000 | 305 |
C(T) | 4,000 | 10,000 | 31,000 | 33,000 | 401 |
C(T) | 10,000 | 12,000 | - | 35,000 | 305 |
C(T) | 12,000 | - | - | 36,000 | 370 |
C(T) | 12,000 | - | 36,000 | 38,000 | 392 |
C(T) | 12,000 | - | 38,000 | - | 542 |
D(T) | 4,000 | 10,000 | - | 31,000 | 365 |
D(T) | 4,000 | 10,000 | 31,000 | 33,000 | 401 |
D(T) | 4,000 | 10,000 | 33,000 | 35,000 | 609 |
D(T) | 10,000 | 12,000 | - | 36,000 | 365 |
D(T) | 10,000 | 12,000 | 36,000 | 37,000 | 392 |
D(T) | 12,000 | - | - | 38,000 | 430 |
D(T) | 12,000 | - | 38,000 | - | 542 |
Vehicles without Road-friendly Suspension with Four or More Axles | |||||
|---|---|---|---|---|---|
Appropriate HGV Road User Levy Band | Plated Gross Weight of Trailer | Total Weight | Rate | ||
(1) | (2) | (3) | (4) | (5) | (6) |
Exceeding (kgs) | Not Exceeding (kgs) | Exceeding (kgs) | Not Exceeding (kgs) | £ | |
B(T) | 4,000 | 12,000 | - | 35,000 | 230 |
B(T) | 12,000 | - | - | - | 295 |
C(T) | 4,000 | 12,000 | - | 37,000 | 305 |
C(T) | 12,000 | - | - | - | 370 |
D(T) | 4,000 | 10,000 | - | 36,000 | 365 |
D(T) | 4,000 | 10,000 | 36,000 | 37,000 | 444 |
D(T) | 10,000 | 12,000 | - | 39,000 | 365 |
D(T) | 12,000 | - | - | - | 430 |
E(T) | 4,000 | 10,000 | - | 38,000 | 535 |
E(T) | 4,000 | 10,000 | 38,000 | - | 604 |
E(T) | 10,000 | 12,000 | - | - | 535 |
51. Vehicle excise duty (rates for vehicles with exceptional loads, rigid goods vehicles and tractive units)
(1) | (2) | (3) | (4) | (5) |
|---|---|---|---|---|
Exceeding | Not Exceeding | Two Axle Vehicle | Three Axle Vehicle | Four or More Axle Vehicle |
kgs | kgs | £ | £ | £ |
3,500 | 7,500 | 165 | 165 | 165 |
7,500 | 11,999 | 200 | 200 | 200 |
11,999 | 14,000 | 95 | 95 | 95 |
14,000 | 15,000 | 105 | 95 | 95 |
15,000 | 19,000 | 300 | 95 | 95 |
19,000 | 21,000 | 300 | 125 | 95 |
21,000 | 23,000 | 300 | 210 | 95 |
23,000 | 25,000 | 300 | 300 | 210 |
25,000 | 27,000 | 300 | 300 | 300 |
27,000 | 44,000 | 300 | 300 | 560” |
Tractive Unit with Two Axles | ||||
|---|---|---|---|---|
Revenue Weight of Vehicle | Rate | |||
(1) | (2) | (3) | (4) | (5) |
Exceeding | Not Exceeding | Any No of Semi-trailer Axles | Two or More Semi-trailer axles | Three or More Semi-trailer Axles |
kgs | kgs | £ | £ | £ |
3,500 | 11,999 | 165 | 165 | 165 |
11,999 | 22,000 | 80 | 80 | 80 |
22,000 | 23,000 | 84 | 80 | 80 |
23,000 | 25,000 | 151 | 80 | 80 |
25,000 | 26,000 | 265 | 100 | 80 |
26,000 | 28,000 | 265 | 146 | 80 |
28,000 | 31,000 | 300 | 300 | 80 |
31,000 | 33,000 | 560 | 560 | 210 |
33,000 | 34,000 | 560 | 609 | 210 |
34,000 | 38,000 | 690 | 690 | 560 |
38,000 | 44,000 | 850 | 850 | 850 |
Tractive Unit with Three or More Axles | ||||
|---|---|---|---|---|
Revenue Weight of Vehicle | Rate | |||
(1) | (2) | (3) | (4) | (5) |
Exceeding | Not Exceeding | Any No of Semi-trailer Axles | Two or More Semi-trailer axles | Three or More Semi-trailer Axles |
kgs | kgs | £ | £ | £ |
3,500 | 11,999 | 165 | 165 | 165 |
11,999 | 25,000 | 80 | 80 | 80 |
25,000 | 26,000 | 100 | 80 | 80 |
26,000 | 28,000 | 146 | 80 | 80 |
28,000 | 29,000 | 210 | 80 | 80 |
29,000 | 31,000 | 289 | 80 | 80 |
31,000 | 33,000 | 560 | 210 | 80 |
33,000 | 34,000 | 609 | 300 | 80 |
34,000 | 36,000 | 609 | 300 | 210 |
36,000 | 38,000 | 690 | 560 | 300 |
38,000 | 44,000 | 850 | 850 | 560” |
52. Vehicle excise duty (extension of old vehicles exemption from 1 April 2014)
53. Vehicle excise duty (abolition of reduced rates for vehicles satisfying reduced pollution requirements)
54. Vehicle excise duty (abolition of reduced rates from 1 April 2014 for certain vehicles satisfying reduced pollution requirements)
55. Vehicle excise duty (six month licences for tractive units)
56. Vehicle excise duty (rate of six month licence for vehicles subject to HGV road user levy)
57. Vehicle excise duty (payment agreements)
58. Vehicle excise duty (meaning of revenue weight)
59. Rates of HGV road user levy
Revenue Weight of Vehicle | Two Axle Vehicle | Three Axle Vehicle | Four or More Axle Vehicle | |
|---|---|---|---|---|
More than | Not more than | |||
kgs | kgs | Band | Band | Band |
11,999 | 15,000 | B | B | B |
15,000 | 21,000 | D | B | B |
21,000 | 23,000 | D | C | B |
23,000 | 25,000 | D | D | C |
25,000 | 27,000 | D | D | D |
27,000 | 44,000 | D | D | E |
Revenue Weight of Vehicle | Two Axle Vehicle | Three Axle Vehicle | Four or More Axle Vehicle | |
|---|---|---|---|---|
More than | Not more than | |||
kgs | kgs | Band | Band | Band |
11,999 | 15,000 | B(T) | B(T) | B(T) |
15,000 | 21,000 | D(T) | B(T) | B(T) |
21,000 | 23,000 | E(T) | C(T) | B(T) |
23,000 | 25,000 | E(T) | D(T) | C(T) |
25,000 | 27,000 | E(T) | D(T) | D(T) |
27,000 | 44,000 | E(T) | E(T) | E(T) |
Revenue Weight of Tractive Vehicle | Any No. of Semi-trailer Axles | Two or More Semi-trailer Axles | Three or More Semi-trailer Axles | |
|---|---|---|---|---|
More than | Not more than | |||
kgs | kgs | Band | Band | Band |
11,999 | 25,000 | A | A | A |
25,000 | 28,000 | C | A | A |
28,000 | 31,000 | D | D | A |
31,000 | 34,000 | E | E | C |
34,000 | 38,000 | F | F | E |
38,000 | 44,000 | G | G | G |
Revenue Weight of Tractive Vehicle | Any No. of Semi-trailer Axles | Two or More Semi-trailer Axles | Three or More Semi-trailer Axles | |
|---|---|---|---|---|
More than | Not more than | |||
kgs | kgs | Band | Band | Band |
11,999 | 28,000 | A | A | A |
28,000 | 31,000 | C | A | A |
31,000 | 33,000 | E | C | A |
33,000 | 34,000 | E | D | A |
34,000 | 36,000 | E | D | C |
36,000 | 38,000 | F | E | D |
38,000 | 44,000 | G | G | E” |
60. Aggregates levy (removal of certain exemptions)
61. Climate change levy (rates)
62. Climate change levy (carbon price support rates for 2014-15)
63. Climate change levy (exemptions for mineralogical and metallurgical processes)
64. Climate change levy (exemptions)
65. Landfill tax
66. Customs and excise duties (stores)
67. Value added tax (electronically supplied, telecommunication and broadcasting services)
68. Value added tax (place of supply and place of belonging)
69. Value added tax (health service bodies)
70. Value added tax (prompt payment discounts: relevant supplies)
71. Value added tax (prompt payment discounts)
72. Annual tax on enveloped dwellings
73. Stamp duty land tax (threshold for higher rate applying to certain transactions)
74. Stamp duty land tax (charities relief)
Petition
Roberta Blackman-Woods (City of Durham) (Lab)
I want to present a petition on behalf of residents of Durham and students of Durham university. The petition states:
The Petition of residents of Durham and students of Durham university
Declares that the Petitioners believe that selling the student loan book to the private sector would be a disastrous move; further that the Petitioners believe that in order to make the student loan book profitable for private companies, privatisation would need to be accompanied by an increase in the financial burden placed on graduates; and further that the Petitioners believe that student debt has already reached huge levels and increasing the burden of debt further, as is inevitable if student loans are privatised, would be grossly unfair and equivalent to a huge retroactive hike in tuition fees.
The Petitioners therefore request that the House of Commons urges the Government to abandon the sale of the student loan book to private companies.
And the Petitioners remain, etc.
[P001336]
75. Stamp duty reserve tax (collective investment schemes)
76. Stamp duty reserve tax (securities traded on recognised growth markets)
77. Inheritance tax
78. Estate duty (gifts to the nation)
79. The bank levy
19:39 - The House divided: - Ayes: 298 / Noes: 245 - Question accordingly agreed to.
80. Machine games duty
81. Betting and gaming duties
82. Accelerated payments
83. Residence of UCITs and AIFs
84. Employee-ownership trusts (capital gains)
85. Meaning of “disabled person”
86. Double taxation relief
87. Controlled foreign companies
88. Financial sector regulation
89. Relief from tax (incidental and consequential charges)
Procedure (Future taxation)
Procedure (vat on supplies of electronic, Broadcasting and telecommunication services made in other Member States
Procedure (Reports About the Administration of Income Tax)
Procedure (Loans by Public Works Loan Commissioners)
finance (Money)
Business without Debate
Mr Deputy Speaker (Mr Lindsay Hoyle)
With the leave of the House, we shall take motions 3 to 22 together.
Motion made, and Question put forthwith (Standing Order No. 118(6)),
Public Bodies
That the draft Public Bodies (Merger of the Director of Public Prosecutions and the Director of Revenue and Customs Prosecutions) Order 2014, which was laid before this House on 16 December 2013, be approved.
Legal Aid and Advice
That the Civil Legal Aid (Merits Criteria) (Amendment) (No. 3) Regulations 2013 (S.I., 2013, No. 3195), dated 18 December 2013, a copy of which was laid before this House on 18 December 2013, be approved.
Healthcare and Associated Professions
That the draft Medical Act 1983 (Amendment) (Knowledge of English) Order 2014, which was laid before this House on 30 January, be approved.
Immigration
That the draft Immigration (Employment of Adults Subject to Immigration Control) (Maximum Penalty) (Amendment) Order 2014, which was laid before this House on 24 February, be approved.
Regulatory Reform
That the draft Legislative and Regulatory Reform (Regulatory Functions) (Amendment) Order 2014, which was laid before this House on 22 January, be approved.
Legislative and Regulatory Reform
That the draft Regulators’ Code, which was laid before this House on 22 January, be approved.
Copyright
That the draft Copyright (Regulation of Relevant Licensing Bodies) Regulations 2014, which were laid before this House on 3 March, be approved.
Urban Development
That the Urban Development Corporations in England (Area and Constitution) Order 2014, dated 4 February 2014, a copy of which was laid before this House on 10 February, be approved.
Electricity
That the draft Electricity and Gas (Energy Companies Obligation) (Amendment) Order 2014, which was laid before this House on 6 February, be approved.
Electricity
That the draft Renewables Obligation (Amendment) Order 2014, which was laid before this House on 10 February, be approved.
Contracting Out
That the draft Contracting Out (Local Authorities Social Services Functions) (England) Order 2014, which was laid before this House on 12 February, be approved.
Climate Change Levy
That the draft Climate Change Levy (Fuel Use and Recycling Processes) (Amendment) Regulations 2014, which were laid before this House on 12 February, be approved.
Tax Credits
That the draft Tax Credits Up-rating Regulations 2014, which were laid before this House on 12 February, be approved.
Social Security
That the draft Guardian’s Allowance Up-rating Order 2014, which was laid before this House on 12 February, be approved.
Social Security, Northern Ireland
That the draft Guardian’s Allowance Up-rating (Northern Ireland) Order 2014, which was laid before this House on 12 February, be approved.
Social Security
That the draft Mesothelioma Lump Sum Payments (Conditions and Amounts) (Amendment) Regulations 2014, which were laid before this House on 12 February, be approved.
Social Security
That the draft Pneumoconiosis etc. (Workers’ Compensation) (Payment of Claims) (Amendment) Regulations 2014, which were laid before this House on 12 February, be approved.
Contracting Out, Wales
That the draft Local Authorities (Contracting Out of Tax Billing, Collection and Enforcement Functions) (Amendment) (Wales) Order 2014, which was laid before this House on 24 February, be approved.
Housing
That the draft Prevention of Social Housing Fraud (Power to Require Information) (England) Regulations 2014, which were laid before this House on 24 February, be approved
Immigration
That the draft Immigration and Nationality (Fees) Regulations 2014, which were laid before this House on 24 February, be approved.—(Claire Perry.)
Question agreed to.
European Union Documents
Motion made, and Question put forthwith (Standing Order No. 119(11)),
The EU’s Common Security and Defence Policy and European Defence
That this House takes note of Unnumbered European Union Document, the High Representative’s Report on the Common Security and Defence Policy ahead of the December 2013 European Council Discussion on Defence, and European Union Document No. 12773/13 and Addendum, a Commission Communication: Towards a more competitive and efficient defence and security sector; agrees that the EU should complement NATO, which remains the bedrock of national defence; and shares the Government’s view that defence co-operation and capability development should be driven by the nations of Europe, whether they be EU Member States, NATO allies or both.—(Claire Perry.)
Question agreed to.
Business of the House (2 April)
Ordered,
That, at the sitting on Wednesday 2 April, paragraph (2) of Standing Order No. 31(Questions on amendments) shall apply to the Motion in the name of Edward Miliband as if the day were an Opposition Day; proceedings on the Motion may continue, though opposed, for three hours and shall then lapse if not previously disposed of; and Standing Order No. 41A (Deferred divisions) shall not apply.—(Harriett Baldwin.)
Privatisation of student loans
Roberta Blackman-Woods (City of Durham) (Lab)
I want to present a petition on behalf of residents of Durham and students of Durham university. The petition states:
The Petition of residents of Durham and students of Durham university
Declares that the Petitioners believe that selling the student loan book to the private sector would be a disastrous move; further that the Petitioners believe that in order to make the student loan book profitable for private companies, privatisation would need to be accompanied by an increase in the financial burden placed on graduates; and further that the Petitioners believe that student debt has already reached huge levels and increasing the burden of debt further, as is inevitable if student loans are privatised, would be grossly unfair and equivalent to a huge retroactive hike in tuition fees.
The Petitioners therefore request that the House of Commons urges the Government to abandon the sale of the student loan book to private companies.
And the Petitioners remain, etc.
[P001336]
Bedford Magistrates Court
(10 years, 1 month ago)
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Richard Fuller (Bedford) (Con)
Recently, Bedford magistrates marked their 650th anniversary—650 years of providing justice for the people and by the people. Now, that history of justice is being swept away, not by a democratic decision but by a small, distant group that blatantly disregards the will of the people, using a pretext that effectively, if not deliberately, misleads the very people they are supposed to serve. My objective tonight is to speak up for Bedford, to speak up for justice for the people of Bedford and to speak up for due process for the people of Bedford when important decisions about justice are made. In that task, I am very pleased to be joined by my right hon. Friend the Member for North East Bedfordshire (Alistair Burt).
The proposal in question is to centralise Bedfordshire adult and youth crime, local authority civil and crime cases and probation cases at Luton magistrates court, and for Bedfordshire family work to continue at Luton county court and at Bedford Shire hall. That is being presented—I am sure I will hear the Minister say the same—as a reallocation of case loads, but as I and my right hon. Friend will demonstrate, it is clearly and evidently not what it purports to be. It is not a reallocation of case loads; it is a closure of Bedford magistrates court by the back door, cleverly but unfairly bypassing the rights of the people.
In decisions about case loads, under clause 30 of the Courts Act 2003, the rules for the places, dates and times of sittings of magistrates courts are deemed to be for the Lord Chief Justice. Separately, however, if a decision relates to a closure, then, as confirmed in a parliamentary answer on 1 July 2010 to the hon. Member for Mid Dorset and North Poole (Annette Brooke), that decision is for the Lord Chancellor. That is right, because access to justice is a crucial social good. It is a social value, the arrangement of which needs ultimately to be determined by and to be answerable to Parliament.
In this particular instance, the people who made the decision, under the pretext of it being a reallocation of case loads, were a group called the justices issues group and the decision has not been placed under the responsibility of the Lord Chancellor. The justices issues group, at the meeting that made the determination, comprised—I think it is important to put their names on the record—Mr Barry Neale, who is chair of the Bedfordshire bench; Mr Neil Bunyan, the Magistrates’ Association representative; Mrs Diane Bedward, the Bedfordshire bench training and development committee chair; District Judge Leigh-Smith; and District Judge Mellanby. They were supported by clerk officials.
I am asserting that this is closure by the back door, so let me present some facts of my case to the Minister—I am sure that he is already aware of these. In his response to my parliamentary question on 24 February about the listing of cases in Bedfordshire, he kindly provided statistics for the past three years and the year-to-date figures for 2013. If I may, I shall use the statistics from 2012, as that is the last full year of data. In that year, 35,522 cases were heard in Bedfordshire, of which 19,675 were criminal cases. Of those criminal cases, just over 30%—6,148—were listed in Bedford and 70% in Luton. It is those 6,148 cases that will move.
In addition, the proportion of the 15,080 other cases currently listed in Bedford will also move to Luton. What will remain is the proportion of the 767 family cases that are listed in Bedford, which comes to 230—230 out of a total of 35,522. The key issue is whether that constitutes a closure.
As a result of that decision, just 0.7% of cases in Bedfordshire will be heard in Bedford, while 99.3% of them will be held in Luton. As a direct result, approximately 98% of the cases listed in Bedford will be transferred, but apparently that is not a closure, according to Mr Barry Neale and his fellow members of the Justices Issues Group.
This is a crucial issue for local people. It affects access to justice, the ability of people to get to their magistrates court and the costs for the police of attending when people cannot attend court and cases have to be deferred. It also puts pressure on that core part of the magistracy—the fact that we ask our magistrates voluntarily to give up their time to participate as members of the bench. It is also important because, as presented to me, it might represent an active manipulation of regulations to achieve an objective, a manipulation by people who ought to be sensitive to, and responsible for, not only the letter of the law but the spirit of the law.
Furthermore, that follows a pattern of reassurances being made to the people of Bedford but promises being broken. In 2010 this Government conducted a review following the closure of magistrates courts across the UK. I found the consultation document on proposals for Bedfordshire, which clearly states:
“There are no proposed changes to the provision of magistrates’ courts in Bedfordshire.”
In 2010 Mr Neale, as a member of the justices issues group, spoke to the local newspaper about changes being made to merge the Bedford and Luton magistrates benches. According to the newspaper:
“Mr Neale said if the merger were implemented, there were no proposals to close Bedford magistrates court… He added: ‘There will be no change as far as the public is concerned. Defendants, witnesses, victims and other court users should not be disadvantaged by where the case is heard… There will not be an adverse impact on the communities we serve. We will try to ensure that a case is heard closest to where the offence occurred and/or where the victim lives.’”
The concern is that the people of Bedford are once again being led down the garden path.
This is a crucial decision for justice for Bedford, but there is also a message for the people of Bedford, my constituents. We need to pull together more to achieve a better outcome for our home town. We need to be proud of our town, but we also need to do more.
Before I hand over to my right hon. Friend the Member for North East Bedfordshire, let me end with a quote from Kathryn Cain, a reporter with one of our local newspapers:
“What I love about Bedford isn’t just the amazing restaurants or the beautiful river, it is the sense of pride people living here feel about our town… Most importantly of all however is preserving local access to the justice system. Justice is meant to be administered by local people for local people”.
As a result of this decision, and with no democratic accountability, an effective closure of Bedford magistrates court is being undertaken.
Alistair Burt (North East Bedfordshire) (Con)
I should like to join my hon. Friend the Member for Bedford (Richard Fuller) in drawing to the attention of the House the proposed changes to the magistrates courts in Bedford and Luton. As he has said, this is an unhappy process. The dynamics at work are a series of measures in recent years to consolidate legal proceedings to be heard in Luton, and the gradual erosion of Bedford—the county town, with a long history of dispensing justice—as an appropriate centre of justice that serves a growing population who deserve as much as Luton to have justice dispensed, and seen to be dispensed, locally. This is also, as my hon. Friend said, an administrative decision with an underlying purpose that ought more properly to be within the remit of the Minister than of court administrators.
My constituency is the rural area to the north and east of the county town of Bedford—largely a collection of villages which, certainly to the north of the town, look to Bedford for main services, for police, for council activities, and similar. They have no connection whatsoever with Luton, which is hardly seen as a point of reference. My principal concern on behalf of my constituents is for victims of crime, families of victims, witnesses, and all the support services connected with the process of administering justice who will find their local centre of justice removed and their life made that bit more difficult in doing the job they are employed to do.
My hon. Friend has detailed the key facts, which, in so short a time, I have no wish to repeat. Like him, I have been in touch with representatives of local lawyers and those who service the courts, and attended meetings with those who were in the process of making the decision to make the points that we have outlined.
Let me draw some conclusions from what my hon. Friend has said. First, as the House has heard, the percentage of criminal cases heard at Bedford magistrates court is far higher than the percentage of family cases. In the meeting that we had with those deciding the fate of the courts in Bedford, they responded very vigorously when we said, “It’s a closure,” by insisting, “No, no, the family work is remaining.” They did not actually use words that would be familiar to Members of this House—“I cannot foresee the circumstances in which the courts would be closed”—but perhaps we can use such words. They correctly indicated that the proposed changes were not the result of costs. That may be the case for now, but is it not realistic to suggest that within a short time a further application will be made to close what will inevitably be seen as an outpost of justice—a single magistrates court in Bedford, in premises woefully underused, handling only family cases, when an economic argument would then appear overwhelming?
This is therefore a closure by other means, and an administrative dodge used to ensure that the decision avoids the Minister, who would be under political pressure to keep the court open, until it becomes so overwhelmingly obvious that no Minister would be allowed to take a reasonable decision to keep a redundant court open. Accordingly, I have reservations about those charged to make the decision and about how it was done.
On Thursday 6 February, my hon. Friend and I saw the justices issues group with representatives of local users, who had, as a local law society, complained that they had not originally been included in the consultation. It was, in diplomatic terms I have learned to understand very well, a frank exchange between us and the justices issues group, but I was left with the impression that the local lawyers had raised some new issues on costs and aspects of the decision to be made that required some consideration. That consideration took one working day, for on the following Monday the decision to go ahead with the changes was announced. That rather suggests that some minds were already made up.
On examining the consultation responses, it transpires that some 36 clear comments either for or against the proposals for Bedford Shire hall were made. Of those, 27 were against. That is not a big sample, but we are dealing with small expert groups who might have known what they were talking about, so a strong weight against might have prompted the justices issues group to decide against the proposals for Bedford. Those 27 equate to 75% of those who commented being against the proposals. They included Victim Support, two legal practitioners, 15 magistrates or their representatives—which, I would reckon, is not a bad proportion of the magistrates representing Bedford—and six local authority representatives. All were against the proposals and all were ignored. The issues raised were those that have been aired tonight: implications for victims and relatives; risks of non-attendance by those involved in cases, thus causing delay or abandonment of cases; travel difficulties for all; the future of Shire hall; and loss of local justice. In fairness, the issues raised were responded to in the official response dated 14 February, which gave explanations of why those objecting were being ignored.
However, the response included a classic in which many of my rural constituents might be interested. In response to the concerns about travel, the justices issues group said:
“We recognise that for the few users being in exceptionally rural areas it will prove a more difficult journey. However many people living in rural areas will be accustomed to travelling further afield for work, school or supermarkets which they visit more often and in many cases will have their own arrangements in place to do so.”
That about sums it up for those such as Kathryn Cain and many others who value something important about the county town of Bedford—its sense of localness with regard to justice as well as other things. They have been told, “It’s just too bad. You’ll have to get used to going somewhere else, which, of course, you are already used to.”
We ask my hon. Friend the Minister whether he is concerned about how this has been done. Is he worried about a lack of specific Bedford input into the decision-making body, beyond the consultation responses from Bedford, which were overwhelmingly against but rejected? Secondly, it looks like a duck, it walks like a duck and it talks like a duck. It is a duck. It is a closure. Is the Minister able, within his remit, to recognise it as such and take it back to his desk for proper consideration? We do not doubt that these are difficult decisions, but Bedford’s long history of a local magistracy deserves rather better.
The Parliamentary Under-Secretary of State for Justice (Mr Shailesh Vara)
I thank my hon. Friend the Member for Bedford (Richard Fuller) for securing this debate and my right hon. Friend the Member for North East Bedfordshire (Alistair Burt) for so ably supporting him.
One thing is abundantly clear: both of my hon. Friends feel passionately about this issue. There is no doubt that they represent their constituents to the best of their abilities and they have done so admirably today. Their main concern is that there may be a closure of Bedford magistrates court. Let me address that up front: there are currently no plans to close the magistrates court in Bedford. The proposal is about listing arrangements —that is, the allocation of work between the various locations in Bedfordshire. There has been a consultation and were there to be any plans for a closure, it would have said so. The consultation that has taken place is for a different purpose.
Secondly,
“the maintenance of appropriate arrangements for the deployment of the judiciary of England and Wales and the allocation of work within courts”
is the statutory responsibility of the Lord Chief Justice, not the Lord Chancellor. I think that is recognised, but there still seems to be some anger coming in the direction of the Ministry of Justice. Listing is a judicial function and not one over which the Government have control.
Together with and supported by their justices’ clerk, local magistrates ensure that there is sufficient court time available to meet demand and that the right facilities are provided for the particular types of cases that come before them. That includes reviewing the sitting programmes of magistrates courts within their area. The decision may take into account the best use of resources, but it is not one that is based on saving money. The interests of justice are the overriding factor.
Her Majesty’s Courts and Tribunals Service is committed to supporting local magistrates in doing that in order to provide an effective and efficient service to court and tribunal users and to focus resources on front-line services and provide access to justice.
In line with other areas, Bedfordshire magistrates regularly review the sitting programme for the courts in the area, to ensure it is properly aligned with the work load. The proposals for Bedfordshire will mean that criminal cases will be concentrated at Luton magistrates courts and that more family work will be heard at Bedford magistrates court. All family work will be retained and there will be increased capacity for it. I take note of the figures mentioned by my hon. Friend the Member for Bedford, but as far as I can see they refer to criminal work only.
More family work will be heard at Bedford magistrates court because the facilities at Luton are better equipped for criminal cases and Bedfordshire has the capacity to accommodate all tiers of the single family court. It is the view of the magistrates in Bedfordshire that the proposals will make more efficient use of the courtrooms and thereby reduce waiting times for victims, witnesses and other court users.
The proposals have been subject to wide consultation, including with solicitors, the Crown Prosecution Service and other court users. The local magistrates have carefully considered all the responses. The consultation took into account how justice could best be delivered in a suitable environment, while maximising the effectiveness and timeliness of hearings. In addition, the Bedfordshire bench chairman and senior officials met my hon. Friend the Member for Bedford, my right hon. Friend the Member for North East Bedfordshire and other local people, some of whom I believe were solicitors, to discuss the matter in more detail before a final decision was made.
Bedford magistrates court is a listed building with limited facilities. It has five courtrooms. It is not readily accessible for either court users or magistrates with limited mobility, other than one courtroom, which is used primarily for family work. Audibility is a problem and the fixed layout of the courtrooms does not lend itself to the use of modern technology. Two courtrooms have video link facilities, including the family courtroom. There is an upstairs secure witness suite that is accessed through the public entrance. There is cell provision, with limited access for custody vans. There is no court administration on site.
To provide the best service to victims and witnesses in Bedfordshire, it is intended that the current witness facilities at Bedford magistrates court will remain and be upgraded to provide a secure video link for vulnerable witnesses who give evidence in criminal cases at Luton or elsewhere.
Luton magistrates court, on the other hand, is a more modern courthouse with six courtrooms. It is accessible for those with limited mobility, both magistrates and court users. The courtrooms are well provided with hearing loops and there is video link capacity in place. It is proposed that that will be extended to provide the capacity in a courtroom with a secure dock. There are ample waiting and interview facilities. There is a secure witness suite with video link facilities. There is ample cell provision. There is also full court administration on site.
The facilities at Luton magistrates court clearly identify it as better suited to criminal work. It will improve the ability of Her Majesty’s Courts and Tribunals Service and other agencies to meet commitments under the code of practice for victims of crime.
Alistair Burt
I am listening carefully to the argument that is being put forward by my hon. Friend, but I would raise two issues. First, if the courts in Bedford are so manifestly inadequate, why did that not come out in the consultation process in 2010, when the courts were not considered for closure and these issues were not mentioned? Secondly, he referred to magistrates supporting the proposals. Of course, as I indicated, a substantial number of Bedford magistrates did not support them. Does that not weigh on the Minister’s mind? Will he take that further into account and ask those who are responsible for the decisions to do so as well?
Mr Vara
I am grateful to my right hon. Friend for raising those two issues. First, he speaks of inadequate facilities, which implies that there is an underlying question of closure. There has been no reference to inadequate facilities because, as I speak, there are no plans for closure. I was not the Minister in 2010, but I presume that the closure of Bedford magistrates court was not considered at that time, when a large number of closures were considered.
Secondly, my right hon. Friend speaks of a difference of view about what has been said by the magistrates. There is one version and there is his version. I am happy to visit the magistrates court to meet him and my hon. Friend the Member for Bedford. They can bring the people whom they wish to invite and I will bring my officials. I will ensure that there is a proper dialogue, so that if there have been any miscommunications along the line, we can ensure that they are put right. I will facilitate that meeting, and what is more, I will be at it and will visit the court.
I described the facilities at Luton magistrates court, and there will be greater certainty for witnesses about where trials will be heard. As for family work, which will be heard at Bedford magistrates court, it is equally important for that work to be undertaken in suitable court accommodation, separate from criminal work, with co-location of all tiers of the family court judiciary. On the whole, the centralisation of criminal and family work will enable greater capacity to distribute the workload more effectively and ease waiting times in hearing and completing cases. It will provide greater resilience to cope with unexpected changes to workload, or to judicial or agency resources.
I reassure my hon. Friend the Member for Bedford and my right hon. Friend the Member for North East Bedfordshire that the decision to change the listing pattern at Bedford magistrates court was not taken in isolation. There were many other considerations, such as the local reduction in workload, particularly for trials, the need for improved performance and better utilisation of criminal justice system agency resources, and the commitment to maximise the use of digital technology.
As a result of the change in the listing pattern in the Bedfordshire area, some magistrates may incur additional travelling costs. However, they should not be financially disadvantaged, as justices’ allowances allow for the reimbursement of travelling costs incurred in the performance of a justice’s duties.
Richard Fuller
I am, but I wanted to place on record my thanks to the Minister for saying that as a result of the debate he will come to Bedford, take a personal interest in the issue and listen to members of the local community. As part of that, will he listen to the members of the local magistracy who have submitted their opposition to the proposed changes?
Mr Vara
If they wish to attend the meeting, they are welcome to do so. The meeting is to be organised by my hon. Friend and by my right hon. Friend the Member for North East Bedfordshire, and if they wish to invite them along, I would be more than happy to meet them.
As with magistrates, victims and witnesses attending court should not be financially disadvantaged. They will not incur additional travelling costs, because those are paid by the Crown Prosecution Service.
As the changes take place in Bedfordshire, we will ensure that we continue to provide a good service for victims and witnesses, including vulnerable witnesses. That means that where the situation demands it, applications for special measures may be made in cases involving vulnerable witnesses. When the grounds for such applications are accepted, the court may direct that the witness gives evidence from a location other than where the trial is being heard. For instance, applications may be made for witnesses to give evidence from Bedford magistrates court, or any other courthouse or premises with suitable secure video connectivity, to the trial court in Luton.
I hope that I have been able to reassure my hon. Friend the Member for Bedford that the decision to change the listing arrangements at Bedford magistrates court is not the first step to closing the Shire hall in Bedford and is not a cost-cutting exercise. It is aimed at revising the listing arrangements for criminal and family work to improve efficiency in listing and timeliness, making the best use of court time and other resources and providing speedy justice for victims and witnesses. There is a commitment to ensuring that witnesses and victims have appropriate facilities and security when giving their evidence, including the availability of a video link.
The inconvenience of longer travel times for some will be outweighed by the expected improvements in court productivity, timeliness and the use of technology. We must also acknowledge that for people today, the concept of what is local goes far beyond what was considered local in the past. Local justice is no longer achieved solely by having a court in every town or borough. Indeed, there is no requirement of residence within the local justice area for appointment as a magistrate. Since the creation of the single local justice area, magistrates from across the county have been sitting at both Luton and Bedford without deterioration in the quality of justice, which is delivered through consideration of the evidence presented in open court using sound judgment and social awareness.
I thank my hon. Friend for securing this important debate, and I thank him and my right hon. Friend the Member for North East Bedfordshire for their contributions.
Question put and agreed to.
Westminster Hall
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NHS Funding (Ageing)
(10 years, 1 month ago)
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Dr Thérèse Coffey (Suffolk Coastal) (Con)
It is a great pleasure to serve under your chairmanship, Sir Edward. I thank Mr Speaker for granting this important debate. It is a pleasure to see that my constituency neighbour, the Under-Secretary of State for Health, my hon. Friend the Member for Central Suffolk and North Ipswich (Dr Poulter), will reply for the Government. As a practising doctor, it is natural that he is active on local health matters. Before arriving in Parliament, he, together with my hon. Friend the Member for Ipswich (Ben Gummer), campaigned hard to secure better cardiac facilities at Ipswich hospital, which were formally opened by Her Royal Highness the Countess of Wessex last week. I was pleased to join that campaign, although rather late on, because I was selected only three months before the general election. Nevertheless, those facilities are in place. Together, we have continued to highlight issues that affect our constituents, particularly the performance of the ambulance trust and our local hospitals.
I am proud that the NHS budget has risen under this Government and will continue to do so. I am proud, too, that my right hon. Friend the Secretary of State for Health has continued the focus on patients and has been prepared to lift the lid on when a normally high-performing NHS has let patients down. I join him on that crusade to ensure that patients are not sacrificed at the altar of targets, which is a sad, though unintended, legacy of the previous Labour Government.
From my experience as an MP with a rather elderly constituency—more than a quarter of its population are pensioners—I have come to realise that how the NHS has allocated its funding is simply not fair to older patients. That unfairness has become embedded in NHS finances over several years and significantly increased under the previous Government. We have an increasingly elderly population, and we have to tackle that funding issue. Let us remind ourselves that although the Labour party substantially increased health funding during its time in government, it did not sufficiently reform the NHS, and that includes the particular factor in the funding formula that could have helped older patients by focusing more on their needs.
The right hon. Member for Leigh (Andy Burnham) signed off on the £20 billion savings challenge, commonly known as the Nicholson challenge, which was supposed to redirect funding towards coping with demand for NHS services from the UK’s ageing population and the higher costs of drugs and treatment. As the challenge is being followed through, Labour MPs often complain loudly about cuts to the NHS, but they effectively endorsed those cuts by starting those savings when they were in government. The savings are gradually being made, but the only evidence I can see of their helping the ageing population is the Government’s transfer of some NHS money to help with social care for that ageing population, which I welcome. Labour MPs seem to forget that the right hon. Member for Leigh set that in action. Just before the emergency Budget in 2010, he said that it was irresponsible to increase NHS spending in real terms. I do not think it was irresponsible to increase NHS spending, but it is irresponsible not to have addressed a funding formula that does not help the elderly.
The date of 17 December 2013 will go down as the landmark day when NHS England turned its back on the needs of elderly patients, stuck its head in the sand on the dawning impact of an ageing population and crumbled to political pressure from the Labour party. Here was an opportunity for the board of NHS England to put right the funding formula so that the NHS was no longer a postcode lottery and would provide equally for people in need and on access to services. Frankly, I think the NHS bottled it. I do not know why. It ignored the advice of its expert committee. Was it the letter sent to them by the right hon. Gentleman? Blatant political pressure was put on the board of NHS England, and it fell at the first hurdle.
Meanwhile, the Labour party has actively campaigned against the proposed change in the funding formula, which would have started to recognise the increased demands of an ageing population. One of the points made by the right hon. Gentleman in that letter was that he felt that money was being reallocated from certain areas in the north to certain areas in the south. He wanted
“to retain and strengthen the health inequalities and weightings in the allocations formula…and a health service based on need.”
Elsewhere, he has said that the NHS seems to be ignoring the needs of elderly patients. I am concerned that we end up—is this too strong to say?—speaking with forked tongues on this issue. He said:
“A country is defined by how it cares for its older people”.—[Official Report, 14 July 2009; Vol. 496, c. 157.]
He also suggested that the problem of ageing
“will become more pressing as the population gets older…If the system is left unreformed, there are real questions about its sustainability in the long term.”—[Official Report, 8 December 2009; Vol. 542, c. 165-166.]
Since being in opposition, the right hon. Gentleman has said:
“Should we not all set much higher ambitions for the care of older people and, in so doing, learn the most fundamental lesson of all from what happened at Mid Staffs?”—[Official Report, 19 November 2013; Vol. 570, c. 1099.]
He also said:
“The ageing society is not a distant prospect on the horizon. Demographic change is happening now and it is applying increasing pressure on the front line of the NHS.”—[Official Report, 5 February 2014; Vol. 575, c. 282.]
There are a number of times when the right hon. Gentleman has rightly highlighted the challenges facing the NHS.
The Keogh review states that much of the pressure on operational effectiveness
“is due to the large increase in the numbers of elderly patients with complex sets of health problems.”
There we have it. In responding to the Age UK report, the hon. Member for Copeland (Mr Reed)—I am sure he will participate in the debate—said:
“Older patients in the NHS are paying the price of the financial crisis this Government is inflicting on the health service.”
I am not sure what financial crisis he is referring to, given that the Government have increased health spending and are simply putting in place the Nicholson challenge set by the previous Government. He also said:
“Warnings do not come more authoritative than this report. Yet as long as Ministers remain in denial, patients will continue to face the agonising choice of going without treatment or paying to go private. Labour has repeatedly warned of the postcode lottery now running riot in the NHS.”
That is absolutely ridiculous. The hon. Gentleman will have his chance to respond later, but I put it to the House that it is consistently not addressing the funding formula that leads to the postcode lottery for elderly people. It is disgraceful that we allow it to continue in the 21st century. Patients need a board that stands up for them and does not bow to political pressures, from one side or the other.
I thought it might be useful to give a little history on the funding formulas, and I thank the Library for producing the briefing on that. Going back some time, there used to be a weighted capitation formula. That always presented a challenge, because the pace of change showed that it would take more than 20 years to reach an equitable formula. People will know that the urban authorities tend to get higher funding per head than rural authorities. We are still a significant distance from the target under the new formula released in December 2013.
The clinical commissioning group allocations are not the same as those of the primary care trusts, because they have different commissioning roles. Public health has gone to local authorities and specialist commissioning is done centrally. The PCTs started to do a person-based resource allocation, trying to allocate at practice level, recognising that they knew what problems patients had and could fund according to their needs. In 2011, the Department of Health commissioned a Nuffield Trust report to look at approaches to that particular direction, and in 2012 the former Secretary of State for Health, my right hon. Friend the Member for South Cambridgeshire (Mr Lansley), was specific in saying:
“Wherever you are in the country you should broadly have resources equivalent with access to NHS services.”
He also strongly recognised that the age of a patient was the most significant factor in determining their health needs. People mainly use the NHS in the first six months and the last years of their lives. There is no doubt that an increasingly elderly population, as has already been recognised, continues to bring the NHS challenges, with more and more complex needs.
David Simpson (Upper Bann) (DUP)
I congratulate the hon. Lady on securing this debate. Does she agree that GPs have a lot to answer for in putting pressure on the NHS? Under the new contracts, they no longer have to look after their patients out of hours, which puts a lot of pressure on the NHS and its finances. Surely we need to look at some way of getting round that.
Dr Coffey
I respect what the hon. Gentleman is saying. There is no doubt that allowing doctors to lose the responsibility for effectively caring for their patients 24 hours a day has caused significant change. An ageing population means that that is increasing and will continue to be a pressure on alternative sources of health treatment. A lot of work is going on and I am pleased that the landmark Health and Social Care Act 2012 will start to tackle some of the issues, but I want to give credit to GPs, who are doing so much more for patients in our local surgeries now than 20 or 30 years ago, mainly because of technology changes, but also through a recognition that we can prevent people from going to hospital by doing more in primary care. That is an admirable change, so I want to praise GPs, while agreeing with the hon. Member for Upper Bann (David Simpson) that rescinding that 24-hour care responsibility was a backwards step for patients. The lack of out-of-hours care was one of the big doorstep issues before the 2010 general election.
Turning to the different formulas, one big change in the 2012 Act was splitting funding for the NHS, with public health going to authorities, recognising the deprivation inherent in different parts of the population. That was the right thing to do. Surrey ended up with £20 a head for public health and places such as Hackney had £115. Westminster, for example, has an even higher allocation, recognising that parts of the borough have significant deprivation, but it was the right thing to do. Local authorities not only got the staff from NHS trusts who focused on public health campaigns, but were also given responsibility for tackling the long-term factors that contribute to health inequalities, be they quality of housing or local employment. Frankly, the NHS was not in a position dramatically to change the levers affecting such inequalities in local communities, so it is right that councils took on that leadership. I hope and pray that they continue to take the initiative, rather than just focusing on public health programmes. It is a real step change in the responsibility of and the opportunity for our local councillors to make a difference.
Meanwhile, the opportunity was there to examine the formula for the rest of the NHS budget. I refer to section 23(1) of the 2012 Act, which inserted a new chapter into the National Health Service Act 2006. Section 13G, “Duty as to reducing inequalities”, of that new chapter states:
“The Board must, in the exercise of its functions, have regard to the need to—
(a) reduce inequalities between patients with respect to their ability to access health services, and
(b) reduce inequalities between patients with respect to the outcomes achieved for them by the provision of health services.”
The effect is twofold, but the latest funding formula has not taken account of the
“ability to access health services”,
and inequalities have been strengthened.
David Mowat (Warrington South) (Con)
I thank my hon. Friend for giving way and congratulate her on securing the debate. The problem is not with the formula that was developed by the Advisory Committee on Resource Allocation, but that the board of NHS England inexplicably decided not to implement it. That is what we are now living with.
Dr Coffey
I agree with my hon. Friend. Funnily enough, I do not think that the formula was strong enough in reflecting the demands of age. It could have gone a lot further. The sparsity challenges are also a constant issue for those of us who represent rural seats. There is no doubt that a patient’s health care experience is somewhat diminished when a cardiac check-up means a 200-mile round trip. I realise that we cannot have a cardiac hospital within five or 10 miles of everybody—that might be the case in London, but I will not get into the London health funding debate. There is no doubt, however, that such trips are not helpful with regard to the patient experience. The funding formula has had negative consequences. We have seen a more rapid reconfiguration and regionalisation of services. The quality of care for patients has been affected and there are funding challenges. The problem is particularly acute where there is a high proportion of elderly patients. That is not good enough.
Sarah Newton (Truro and Falmouth) (Con)
My hon. Friend is making a powerful case for patient care in rural communities and I wholeheartedly agree with her. Does she agree that the market forces factor is having a negative impact on rural communities in poorer parts of the country where average incomes are much lower? People within the NHS and the care system are often paid national wages, but the funding formula discounts for local wages.
Dr Coffey
My hon. Friend makes an interesting point. I have not gone into that level of detail and do not have that level of understanding, but she makes an important contribution to the debate. Local clinical commissioning group and NHS trusts must contend with that challenge and should make that point to the board of NHS England.
I come back to the formula. I said in response to my hon. Friend the Member for Warrington South (David Mowat) that the focus on age may have slightly increased, but that it did not go far enough. The correlation between age and per capita funding increased only marginally between the old formula and the partially adopted current formula. South Sefton receives 40% more per capita than Ipswich and east Suffolk, but it has 50,000 fewer pensioners and a lower proportion of pensioners. Life expectancy in my part of Suffolk is considerably higher than in others, which is good, but that does not necessarily mean that people, in particular the elderly, do not have complex health needs that need addressing. At the moment, the formula continues to discriminate against the elderly and even further against people in rural areas.
David Mowat
This is a really important point on which we need clarity. The issue here is not the formula. Indeed, it does not really matter what the formula comes up with, because NHS England will not implement a formula that does not give everybody an inflation-based pay rise. That is what happened. With all due respect, the formula could be anything we liked, but if it will not be implemented, it just does not matter.
Dr Coffey
I can understand why the board of NHS England made a decision not to cut per patient funding in different parts of the country. We could get into the politics of the different aspects of what happened under previous Governments when overall funding went up, but parts of the country, such as the one that I represent, did not receive the same increases and seemed to suffer as a consequence, despite overall funding going up.
I am not into playing party politics with NHS or public funding, so I recognise exactly what my hon. Friend says. I guess that is what led to the outcry in the autumn about the “Tory-run NHS cutting funds to northern Labour seats,” which was disgraceful, because it was down to the ACRA’s independent assessment. I recognise, however, that that must be managed. Nevertheless, the board of NHS England bottled it by not being prepared to be a little braver in deciding on the allocations. It also ignored the formula and, as a consequence, effectively decreased the recommendation on the proportion that should go to elderly patients, which was wrong in principle, but I recognise what my hon. Friend says.
Various proposals were suggested—I say this as a constituency MP and not as a Conservative party representative—that could have seen an improvement in the pace of change towards getting a fairer funding formula while still not cutting funds to patients in different parts of the country. I regret the final decision of the board of NHS England. Of the two options proposed, I would have hoped that it would have gone for the first, recognising that it was a unique opportunity to tackle the unfairness, but the board bottled it.
I want to discuss why the issue matters. There are four community hospitals in my constituency: Felixstowe, Aldeburgh, Southwold and the Patrick Stead, in Halesworth. The first three have been highly commended by the Care Quality Commission and they are well recognised and loved in the community. The Patrick Stead also does an excellent job. The CQC made some slight criticism, but, true to form, the hospital addressed that straight away and is back to doing good things. After I was elected to the House, it was understandable that my constituency neighbour, who is now the Minister, my hon. Friend the Member for Central Suffolk and North Ipswich (Dr Poulter), should be the local expert on health, as he is a distinguished doctor. However, in my own case work, the experiences of older patients in particular, who had not got the care or treatment they needed, kept coming up. That is what got me going on the entire issue.
We have in the past debated the East Of England Ambulance Service NHS Trust. That was a classic example. At the top line things were running fine. The trust was hitting its targets and financially it was very good. It was trying to get foundation trust status, and the chief executive was awarded the Queen’s ambulance service medal. However, at the heart of things, the NHS relied on the meeting of targets, and forgot about patients. As a consequence, elderly people with broken hips waited for hours for an ambulance to arrive, because their condition was not life-threatening. I am pleased about the big shift that has happened only in the past few months: finally we have got rid of the entire board of the ambulance trust. I am sure that they were all good people who wanted to do the best to help guide the trust. Nevertheless, they seemed to be satisfied with hitting targets, and patients were forgotten. The arrival of Anthony Marsh will be particularly useful.
I supported most of the service reconfigurations, as the Minister knows, but there was one I did not support. A proposal to reconfigure stroke services would effectively have removed them from Suffolk. One need not know a lot about medicine to know of the excellent FAST campaign, which I recommend all MPs share with their constituents. That recognises the need to act quickly and get good treatment after someone has a stroke. Ambulances in the east of England were not reaching people quickly enough to help them with the first steps in care. If stroke services had been removed from the county, it would have taken well over an hour to get access to the sort of care that is necessary to enable a stroke sufferer to have a good life. In the case of cardiac services, when people were treated en route and taken to the regional specialist centre in Cambridge, they got higher-quality care, and I support that, but I was concerned about the stroke proposals. That is why I was pleased when the local clinical commissioning groups came together and said, “No. We are going to keep stroke services in the county.”
However, I must admit that our significantly lower funding per head means that that decision has potential consequences in the local NHS. The fact that our funding level is so different is one of my concerns. Despite a small above-inflation increase, which I am pleased about, I contend that we should be doing considerably more to help NHS CCGs to meet the needs of a significantly higher proportion of the relevant population. The constituencies with the highest proportion of people over 85 include places such as Worthing West, Christchurch, North Norfolk and Newton Abbot—largely rural and often coastal areas. By definition, those are often the places away from regional centres of excellence. I am concerned that the funding formula did not address the needs of patients living on the coast.
I have discussed at length my concerns about what the NHS board has not done, but opportunities are coming through, to do with local innovation. The King’s Fund report, “Making our health and care systems fit for an ageing population”, was an important contribution. One of the examples of local innovation to which it referred was at Gnosall GP surgery in Staffordshire, which provides patients over 75 with an annual health review and uses experienced “elder care facilitators” to support patients, helping them to navigate the system and draw up care plans. That is a good example of local innovation. I tabled a parliamentary question on 20 January at column 76W asking about bringing health visitors in for people over 75. I recognise that health visitors’ primary focus is, rightly, young children. However, there may be something that we can do, and perhaps the board of NHS England could think about rolling out the practice I suggest, particularly in parts of the country with a high proportion of elderly patients.
I could speak for the entire hour and a half on this subject, but I will not, the House will be pleased do know. It is regularly talked about. The board of NHS England had a golden opportunity, with the Health and Social Care Act 2012, to step away from the political pressures and do what was right for patients. As I said, I think it bottled it, and I am sad about that. I hope that it will reconsider its decision and think again about the needs of the elderly. Those people have served the country with distinction. We say that we do not want to discriminate by age, but the postcode lottery seems to determine whether elderly patients get the treatment they deserve. The debate will not be settled today. Unusually, perhaps, the Government cannot wave a magic wand and change the formula. It is for the board of NHS England to do that. I hope it will reconsider and truly look after the patients in question. In a few years we will be the ones in their position, and we need to do our bit to address the challenge.
Mr Gareth Thomas (Harrow West) (Lab/Co-op)
It is a pleasure to serve under your chairmanship, Sir Edward, and to follow the hon. Member for Suffolk Coastal (Dr Coffey). I apologise to the House and in particular to the Front-Bench spokesmen for the fact that, because of a long-standing commitment, I shall have to read their responses to the debate in Hansard.
I want to raise a concern similar to the one raised by the hon. Member for Suffolk Coastal, about the funding formula, although there are constituency differences. Many health professionals in my constituency are concerned that Harrow does not receive an appropriate share of NHS funding and that that is already affecting elderly people there, and may affect many others. The context is that both the key hospital serving my constituency, Northwick Park hospital, and its parent trust, the North West London hospitals NHS trust, have been in a challenging financial position for many years.
In 2010-11, the trust made a tiny operating surplus; in 2011-12, it had an operating deficit of some £7.5 million; and in 2012-13, the operating deficit had increased to £20.5 million, approximately. Figures in papers submitted to the NHS Trust Development Authority’s recent board meeting suggest that the trust is again heading for a sizeable deficit this financial year, of about £20 million. Although final 2013-14 accounts are clearly not yet available for Harrow’s clinical commissioning group, the prediction, from NHS England information, is for an end-of-year deficit of £10.4 million. Indeed, Harrow clinical commissioning group is one of only four in London where there is significant concern about financial performance.
By setting out that information, I do not mean to criticise the trust management, the clinical commissioning group or their staffs. I have been treated at Northwick Park hospital several times, and I think the staff and management do a first-class job. I know the chair and many of those who serve on the board of the Harrow clinical commissioning group, and they, too, do a first-class job in extremely difficult circumstances. Those circumstances are made difficult by the amount of funding that Harrow receives from the NHS.
To humanise the consequences of those statistics on the financial situation that Northwick Park hospital and Harrow clinical commissioning group face, I should make it clear that there are increasing concerns about cancelled operations and longer waiting times in the A and E department at Northwick Park. Given the cuts to local government funding, there are fears that Harrow council’s social care budgets, which are already hard hit, will be cut further by an estimated £70 million over the next three years. The concern is that the NHS in Harrow will come under even greater pressure to meet the needs of elderly people in our area because of an inevitable lack of access to social care.
Additionally, the popular Alexandra Avenue polyclinic, which was open from 8 am to 8 pm for 365 days a year and provided an excellent walk-in service, has for some time been closed to patients without an appointment for all but a short period on Saturdays and Sundays. Again, the service was heavily used by elderly people, as well as by many others in my constituency. The closure of large parts of the Alexandra Avenue polyclinic’s service is particularly galling because health professionals in Harrow accept that the polyclinic was making a difference by helping to improve health care opportunities and access to health care for elderly people and many others in my constituency. That is the context of my participation in this debate, and I am concerned about whether the funding formula properly reflects the needs of the NHS and my constituents.
The hon. Member for Suffolk Coastal set out some of the funding formula issues, and I will present them in a slightly different way; that is perhaps a reflection not only of our different political parties but of the different nature of the seats we represent. The Minister and the shadow Minister, my hon. Friend the Member for Copeland (Mr Reed), will be far more aware of the debate on changes to the funding formula than I am. Like the hon. Member for Suffolk Coastal, I understand that a weighted capitation formula based on population, the local cost of providing health services, the level of health care need and health inequality is used to determine allocations to each clinical commissioning group. I also understand, as she set out, that the Advisory Committee on Resource Allocation was charged with developing a revised funding formula based on the standardised mortality ratio for those aged under 75—the so-called fair shares formula.
After substantial consultation—the hon. Lady made this point—the board of NHS England decided not to adopt the fair shares formula, and clinical commissioning group allocations were initially uprated based on their estimated share of previous primary care trust allocations. In December 2013, the board of NHS England decided on CCG funding allocations for 2014-15 and 2015-16. I understand that, again, the board decided to reject proposals for a faster move towards CCG allocation targets. I do not intend to make a party political speech, but I gently insert the point that perhaps the board might have felt differently if it had had access to the £3 billion that has been spent on reorganising the NHS, about which Opposition Members are somewhat sceptical.
The hon. Lady alluded to distances from target figures for 2014-15 and 2015-16. The figures indicate that Harrow’s allocation was almost 10% away from the target for 2014-15 and almost 9% away from the target for 2015-16. The total estimated funding shortfall for Harrow is some £23.4 million over the next two financial years. That information was provided to me by statisticians from the House of Commons Library based on estimates using the closing target allocations per head and our estimated CCG population.
I recognise that, as the Minister will presumably point out, the figure is not completely settled and that there may be movement given how far Harrow clinical commissioning group is from receiving its target allocation, but I hope that I can persuade the Minister today to scrutinise the Harrow figures. I hope he will ask his officials to talk to Harrow clinical commissioning group to see whether there is more information that might justify a further funding increase for the NHS in Harrow, to close the funding gap that has been identified.
A little like the hon. Member for Suffolk Coastal, I have tried not to be party political in this debate, although she will understand that I think I have managed it better than she did. In that spirit, I hope the Minister will take seriously my concerns about the NHS in Harrow and will ensure that his officials talk to those who do an excellent job working for Harrow clinical commissioning group.
Sir Edward Leigh (in the Chair)
When the Minister replies, I have no doubt that he will refer to Harrow’s ageing population.
Sir Tony Baldry (Banbury) (Con)
It is always good to submit to the chairmanship of a brother knight, Sir Edward. I congratulate my hon. Friend the Member for Suffolk Coastal (Dr Coffey) on her excellent speech, analysis and introduction, and on providing the House with an opportunity to consider this important subject.
However large the budget is for the national health service, money has to be allocated to local clinical commissioning groups through a formula. The easiest formula, of course, would be to allocate a certain amount of money per person so that for each clinical commissioning group we simply took the size of the population of both adults and children—a straightforward and transparent calculation. I suspect that since the start of the NHS, however, there has been a belief that the health needs of some people and groups within the community are greater than those of others, and that the NHS allocation formula should be adjusted to recognise those needs. I think it is clear to everyone that one of the most significant factors affecting demand and spending in the NHS is an ageing population.
Last Saturday’s Daily Mirror summarised the situation thus:
“More than half a million Britons are now aged over 90—an increase of a third in just 10 years.
Average life expectancy is now up to 78 for men and 82 for women, according to the Office for National Statistics.
Its figures showed there were 513,000 people over 90 in 2012. Of those, there were 372,290 women… And 141,160 men... The number of centenarians has also increased by 73% to a record high in the past decade. In 2012 there were 13,350 people over 100 in the UK.”
That is a lot of telegrams from the Queen. The Daily Mirror continued:
“It comes amid concerns over how the NHS will cope with an ageing population… A newborn boy can expect to live 78.7 years and a newborn girl 82.6.”
In Oxfordshire, according to the Office for National Statistics, on average, men aged 65 can expect to live a further 10-and-a-half to 13 years and women an extra 11 to 14 years. The Oxfordshire clinical commissioning group has calculated that the impact of demographic change in Oxfordshire will lead to an increase in costs of £54 million over five years. In Oxfordshire, the population of over-65s is expected to grow by 2.5% a year, so the proportion of the population aged 65 will grow from 15.8% to 18.2% by 2017 and to 25.2% by 2035. By 2035, more than a quarter of everyone living in Oxfordshire will be over 65. The proportion aged over 85 will grow from 2.3% to 3.4% by 2017 and to 5.6% by 2035.
I am not suggesting that the increase in Oxfordshire’s elderly population is necessarily significantly greater than in other parts of the country. What I am saying, however, is that an ageing population is a significant cost to the NHS and therefore the amount of funding for Oxfordshire should be much nearer to the average for NHS spending. The size of the difference between the clinical commissioning groups that are receiving the most money per head and Oxfordshire is too great and is unsustainable.
For a long time, I have been arguing that the NHS allocation formula does not give sufficient weight to the fact that we have a significant and growing ageing population. It is of course good news that people are living longer, but there is no doubt that older people on average have greater need for NHS support. We have been arguing that the formula for NHS allocations needs to be reformed to reflect more reasonably and fairly the number of elderly people in an area.
The facts and the needs speak for themselves. One would have thought that on an issue as self-evident as this, there would be a degree of cross-party consensus. Whether the significant number of elderly people is in Oxfordshire, Blackpool or any part of the country, they have similar needs. An average 80-year-old in Oxfordshire does not have significantly fewer needs than an 80-year-old in Bradford, Birmingham or Bermondsey.
Understandably, in making any change to the funding formula, NHS England might wish for some cross-party consensus; sadly, it has clearly not been possible to find it. The shadow Secretary of State for Health has campaigned vigorously against any changes to the allocation formula that would better recognise the needs of those aged over 65. My hon. Friend the Member for Suffolk Coastal has done the House a service in securing from the chair of NHS England, Professor Sir Malcolm Grant, a copy of the letter sent to Sir Malcolm last December by the Labour shadow Secretary of State, who started his letter by saying:
“I wish to register the strongest possible concerns about proposed changes to NHS resource allocations being considered by your board on Tuesday, 17 December”.
The shadow Secretary of State sought to defend his resistance to allowing NHS funding to reflect more fairly the needs of the elderly in the community with a rather convoluted argument: that
“health care utilisation is not the same as healthcare need and resources should not be allocated based on demand levels rather than the level of need”.
Lewis Carroll and Alice in “Through the Looking Glass” would find it difficult to dissect what that sentence is meant to mean. I suspect that it is meant to mean all things to all people.
The Labour party has made it clear that it does not want any change to the existing allocation formula—a formula that in no way adequately reflects the local needs of an ageing population. I think it is fair to draw the conclusion that at the NHS England board meeting last December, faced with such hostility by the Labour party to any changes in the formula—I agree entirely with my hon. Friend who introduced the debate—NHS England simply bottled it. It made some changes, but it bottled introducing the original new formula proposed by—let us remember this—an independent committee, which had recommended much greater weighting for age. NHS England simply added an adjustment for what it described as “unmet need”, which it said was a particular issue in deprived areas, in effect negating any improvement in the formula to take account of the number of elderly people in a local area.
The consequence of not making reasonable provision for the number of elderly in a clinical commissioning area is that, under this year’s funding allocations, the CCG allocation for the NHS in Oxfordshire for 2014-16 will be the lowest amount of money of any clinical commissioning group in the country—£856 per head, at present. That compares with a national average—I stress, average—of £1,115 per head. By definition, many parts of the country will be above average. Oxfordshire is the third most underfunded CCG in the country, at nearly 11% below target. If, however, NHS allocations took proper account of the number of elderly, Oxfordshire’s NHS funding allocation would increase by an extra £57 per person.
Any NHS funding formula, of course, has to have appropriate regard to indices of deprivation, and I understand Labour’s wanting to stick with a formula that largely directs funds to parliamentary constituencies held by Labour MPs. It is absolutely no good, however, everyone’s acknowledging that one of the greatest pressures, if not the greatest, on the NHS into the future is the fact of an ageing population if that fact is not then fairly reflected in the funding formula. It is little wonder that the Oxfordshire CCG and the Oxford University Hospitals NHS Trust are both running at a deficit; Oxfordshire receives the lowest amount of money per head for the NHS of anywhere in the country, but, that notwithstanding, it has a significant and growing elderly population.
Jim Shannon (Strangford) (DUP)
It is a pleasure to make a contribution to the debate. I congratulate the hon. Member for Suffolk Coastal (Dr Coffey) on bringing the matter before the House for consideration and giving us all the opportunity to contribute.
We are long past the days when people who die at the age of 68 would be considered to have had a good innings. Now, we would shake our head and describe them as in their prime. The rising age of our population has meant an increase in the pension age, with further increases to come. That is something my parliamentary aide has questioned, saying that she will have to work until she is 72. She wonders who will hire her to write speeches and come to the House then. At the age of 35 or thereabouts, she is already thinking of the future.
One of the figures in the press last week, which hon. Members have referred to, was that we in the United Kingdom now have the greatest number of people living to the age of 100 since records began. Approximately 600 people have lived to 105, which is another indication of the statistical trends. Although that is perhaps great for families who use the free grandparent babysitting service offered nationwide—that is what grandparents do—and which has ensured that families get to enjoy time together, with stories and wisdom passing easily down the generations, it has also put a lot more pressure on our NHS. The NHS is not equipped to handle that pressure without major investment or a redirection and reprioritising of funding.
The sheer beauty of my constituency and the area’s strong links to Belfast and other cities make it one of the most desirable places for older people to retire to—indeed, Strangford and the neighbouring constituency of North Down are the top two retirement locations in Northern Ireland. The hon. Member for Suffolk Coastal said that people want to retire to her constituency because it too is beautiful, and quieter and more serene than many places. As they do in my constituency, people might look forward to seeing the sea in the morning and taking walks, because these are the attractions of such locations. More people retiring to such places, however, certainly puts pressure on our local NHS.
If the Government took account of this debate and increased the funding given to the NHS, offering additional ring-fenced funding to the devolved Assemblies, the level of care would be much greater. I look forward to the Minister’s response, as I always do, because he understands the issues and I respect his comments. It is fantastic to read about the available drugs, treatments and therapies, but the fact is that the NHS cannot afford to provide them fully. Any additional funding would benefit not simply the ageing population, but the entire community. There are pressures on the NHS, given the prioritising of funding to the sections where it is needed most, but I am sure I am not the only person in the Chamber to have read the media speculation about the NHS and the ageing population. Statistics from the Institute for Fiscal Studies indicate that spending per patient will have fallen by 9% within four years even if health service funding is ring-fenced and protected.
I have already alluded to the reasons: 2 million more over-65s on the UK mainland, which is a 20% rise, will place far greater demands on the NHS. To give the Northern Ireland perspective, new figures released by the Northern Ireland Statistics and Research Agency show that the number of people aged 65 and over is projected to increase by a quarter, to 344,000, by 2022. That indicates the pressures on the NHS in Northern Ireland, where health is a devolved matter.
Dr Coffey
Has the hon. Gentleman seen the figures circulated by the Royal College of Physicians, which show that two thirds of people attending A and E and admitted to hospital are aged over 65? We all recognise that we need to do more to prevent people going into hospital when they might not need to, and certainly to expedite their leaving. Does he recognise that, right here, right now, we still need to allow CCGs to have appropriate funding to address that need?
Jim Shannon
I agree with that. If more preventive action is taken at an early stage in surgeries, that will have dividends further down the line. The hon. Lady is quite right and I wholeheartedly agree with her.
David Simpson
Does my hon. Friend agree that more emphasis is needed on care for the elderly at home, and that adequate funding needs to be put in place so that the older generation can be comfortable and be looked after at home?
Jim Shannon
I thank my hon. Friend for that contribution. That is probably a subject for a different debate, but at the end of the day it is also clearly a matter for us all. Most elderly people in my constituency would like to spend their days at home. They do not want to go into homes, which may not be as homely, if I can use that terminology, but there are additional pressures on carers who support the elderly at home. That is a debate for another day, but it is an important factor. It is about balancing the budget and making the butter go even further, as it were. Many elderly people want to spend their time at home and enjoy being with their families.
That puts us under even greater pressure in providing a high-quality NHS. The number of the oldest people—those aged 85 and over—is expected to rise by 50%, from 33,000 to 48,000. When we take into account the fact that the average 80-year-old costs the NHS seven times more than a typical person aged 30, even those without a degree in mathematics can see that there is a major accountancy problem in the NHS, and difficulties with funding streams.
Thus far only efficiency savings have been requested, but they have not been enough to keep things ticking over. The Institute for Fiscal Studies has said that to keep pace with the ageing population, spending needs to grow by 1.2% a year above inflation, which has been running at about 2.4%. Again, that gives a clear indication of what the financial issues are. Such an increase has not happened so far, and the pressure cannot be sustained without something giving. I look forward to the Minister’s response on the difficult but urgent question of how that situation will be addressed.
I recently held a public meeting on the provision of cancer care in my trust area, at which were the top breast cancer consultant and the director of policy for the trust. Both cited the pressure their hospital faces due to care of the elderly. Indeed, almost 10% of the people at that meeting said they had been operated on by the consultant and owed their lives to that man, but probably only one of them was under the age of 50. Again, that shows the pressures that are on the elderly generation and the greater level of care that they need.
Those pressures, ranging from broken bones to cancer, diabetes and strokes, are increasing. Levels of diabetes are higher among the elderly population. The lifestyles we have lived over the years have contributed to that, I suppose, but it is a growing problem affecting those over 50 much more seriously than any other group. Given those increased pressures, we need to increase the funding. We cannot ignore the situation. Unless we, God forbid, begin to put an age limit on what services and treatments are available, we will have increased pressure every year. It therefore follows that funding must keep pace with that pressure. I see little point in funding research and development into cutting-edge technologies if the Government are unable to fund their use within the NHS.
I am a great believer in the notion that money does not grow on trees. I have used the analogy on many occasions. My parents said it to me, I said it to my children and they in turn now say it to their children. I understand that we need to cut borrowing and to restore a workable bank balance, but I also understand that life is precious and that if there is one thing we cannot afford to scrimp on, it is health care and quality of care for our elderly. There are a large number of elderly people in my constituency—I meet them, probably, more than any other group. They tell me what the issues are and I want to see care delivered for them in every way possible.
It is said that a society is judged on how it treats the most vulnerable, including the elderly and children. I ask the Minister to consider the compelling facts that all hon. Members have put on the record today, and which will be added to by those yet to speak, and to realise that there must be a ring-fenced increase in NHS spending if we are to do our duty by the most vulnerable in our society.
David Mowat (Warrington South) (Con)
I congratulate my hon. Friend the Member for Suffolk Coastal (Dr Coffey) on securing this important debate. Although NHS funding has increased in real terms, what matters is the allocation that we get in our communities. We have learned a lot already from hon. Members’ remarks. Personally, one of the most important things I have learned is that my right hon. Friend the Member for Banbury (Sir Tony Baldry) reads the Daily Mirror. I will reflect on that fact.
The issue of ageing has been a known problem in the NHS for some while. It was a problem for the previous Government and there was an attempt to reflect it better in what was then the ACRA formula. Like the current Government, the previous Government did not implement that formula. The direction for travel adjustments that should have been made in the years before the general election were not made and the formula was essentially static.
As an MP for an underfunded area—Warrington is underfunded—I was optimistic that a new Government bristling with talent and enthusiasm for sorting out such issues would fix the problem. As has been mentioned, the Secretary of State asked the independent ACRA committee to make a clinically based decision on how money should best be allocated—of course, allocation can mean that there are winners and losers—based on ageing, deprivation, population and any other salient factors. The consequence was that a new formula was developed and submitted.
To be clear, nobody who wants the problem fixed is expecting a new formula to be implemented immediately. As hon. Members have pointed out, some areas are significantly under-allocated while others are over-allocated. There therefore has to be a process by which we move towards the correct number over a period of years—that is, the direction of travel adjustment—so that big, unmanageable changes do not happen. That would be perfectly acceptable.
Is that what happened, however, when we went to the board of NHS England with the new, clinically developed formula designed by an independent group? The answer is no. The board of NHS England said, “If we implement the formula, there will be winners and losers. Our view”—perhaps this was because of political pressure—“is that the losers complain more than the winners celebrate. We are going to give everybody an inflation increase. With the bit left over, we will give a little more to those furthest away from target.”
One of those areas was Warrington. We are grateful that we got extra money, but it was not enough. I suspect that the situation was similar in Suffolk and Oxfordshire: some extra money was allocated, but not as much as would have been allocated had the formula been implemented.
What does that mean for public health? We are stuck with a static formula, developed around 2002 or 2003. The previous Government made no direction of travel adjustments to it other than for inflation and we are apparently reluctant to make those adjustments as well. That is a pity. A static formula may be politically expedient but it is not right. That is why we have ACRA—to go into the issues and come up with the right answer. The situation, for me, raises the question of why someone would be on the board of ACRA, given what happens to its recommendations.
There are consequences. I have seen the numbers: 34 CCGs are more than 5% underfunded—that 5% is a lot of money in health allocation—and 38 CCGs are more than 5% overfunded. What to me is even more significant is that 84% of CCGs that will have a deficit are underfunded. That is an issue because if we are trying to make people accountable for managing an efficient operation, but start that process by saying that we are not going to implement a formula that would give a fairer allocation, it is reasonable for them to come back and say, “Yes, and therefore we have a deficit.” It hits the whole process.
What is the impact in our constituencies? We have heard about Harrow, Oxfordshire and Suffolk. Warrington is also underfunded. The issue is not necessarily that older folk get worse services, but that marginal or discretionary activities are not carried out in underfunded CCGs. For example, in Warrington we are unable to provide IVF in the way that the National Institution for Health and Clinical Excellence would like because funding is not available. GPs decide how to allocate what funding they have and consequently the people who lose are not always the ones who would be imagined to have lost in the formula. Overfunded CCGs can undertake more discretionary activity than others, and someone should look at which parts of our NHS are spending large amounts of money on alternative therapies such as homeopathy. That is likely to be the result of overfunding, and that is not acceptable.
There was an element of politics. Everyone agrees that ageing is a good proxy of health need, but there is an issue about the weighting that we should give to deprivation. That was in the letter from the shadow Secretary of State for Health that was read out, and it may have been part of his concern. That does not allow for the fact that ACRA was an independent committee and either we accept what it said or we do not. I have some questions for the Minister on that because it goes to the heart of whether the NHS is manageable. If such important decisions are, in the end, made for reasons of political expediency, why do we have an NHS board and senior NHS managers who are supposed to provide the right answers? We would not need any of that; we could just link the issue to inflation or inflation plus a little bit.
Dr Thérèse Coffey
My hon. Friend is making a key point. One point about the Health and Social Care Act 2012 was to remove that party political element of manipulating or managing the formula or putting in extra factors. That is where a key opportunity has been missed.
David Mowat
I agree with my hon. Friend, but as I said, the issue is not the formula, although it may also be the formula—my hon. Friend and I may not agree on that. I accept the formula, and I would have liked it to have been implemented. I have difficulty in accepting that, for political reasons, it was not implemented.
People in my constituency and elsewhere who are not affluent and do not understand this stuff lose out because the previous Government did not do the distance from target adjustments under the old formula and NHS England has refused to implement the right thing under the new formula. It is hard to justify that. Why have ACRA if we are not going to do what it says, and why have an NHS board if it cannot manage change and do the right thing? That is why big organisations have senior managers who are paid lots of money.
Are there symptoms of waste in the 38 CCGs that are overfunded by 5% or more? Is the incidence of alternative therapies and all that goes with that higher there because they have the money, so why not spend it? Does the Minister really believe that he can hold CCGs accountable for budgets given that how those budgets are allocated is apparently so political and not based on clinical judgements by independent people such as those on ACRA?
Mr Jamie Reed (Copeland) (Lab)
It is a pleasure, Sir Edward, to speak under your chairmanship again, although I am afraid I am not a brother knight.
Mr Reed
I am even more afraid that it is a fraternity I will never be invited to join.
I thank the hon. Member for Suffolk Coastal (Dr Coffey) for securing this timely debate and for her opening remarks. Particular thanks should go to Government Whips for drafting so much of it. As she knows, the last Labour Government took a malnourished, failing NHS with an annual budget of approximately £30 billion and left it with a budget of more than £110 billion. The Conservative party voted against every increase in that budget. The same Labour Government oversaw the biggest ever hospital building programme in this country. It recruited tens of thousands more doctors and nurses. It inherited an NHS in which Bruce Keogh said people were dying waiting for treatment, and left a service with the lowest waiting times and the highest patient satisfaction rates in its history. Of course, there was much more to do.
I warn the hon. Lady against complacency. If she wants to see a health economy that has been plunged into crisis as a result of the Government’s policies, she should come to Cumbria where a crisis is unfolding, patients are paying the price and the Secretary of State is entirely disinterested in what is happening.
It is incredible to hear that NHS England does whatever it is told by the Labour party. That is extraordinary—this must be the most powerful Opposition of all time. Government Members should consider whether they are in office but not in power. A canard seems to be being established whereby the NHS England board have become the new reds under the bed. That fascinating argument will be rolled out between now and the next election.
Dr Coffey
I am not suggesting that anyone on the NHS board made a decision because they supported the Labour party—the reds under the bed. I am suggesting that the Labour party had the opportunity in the legislation to try to break away from party political interference in the formula and it failed to take advantage of that.
Mr Reed
I thank the hon. Lady for her intervention. I am not sure that I agree with her. Not for the first time today—I am not laying this singularly at her feet; she knows that I have great respect for her—we have heard the argument that I hear frequently from Government Members about there somehow being an enemy within. That does not deserve significant air time in this Chamber or on any other platform in this House.
It is a mark of how important these issues are that so many hon. Members attend these debates—not just today, but every time I have responded to a debate such as this in Westminster Hall. As we have heard again today, hon. Members passionately represent their constituents, often with moving testimony of constituents’ experiences. Today, we are discussing an issue that will affect many more people in the future.
The NHS is now more than 65 years old and to ensure that it is still here in 65 years’ time, it needs to adapt to the challenges of this new century. In 1948, the health challenges facing the UK were clearly very different from those we now face. As consistent improvements in medical knowledge have enabled more people to live better for longer, we are now tasked with providing a system to cope with an ageing society. Surely we all agree on that. One of the core principles of Labour’s plans for the NHS is that there should be a system fit for the 21st century. My right hon. Friend the Member for Leigh (Andy Burnham) will speak about that and the impact of an ageing society later today.
The hon. Member for Suffolk Coastal has raised on the Floor of the House and in recent Health questions the issue of the NHS funding formula and its impact on the elderly, and in my view the Government’s response has been poor. Late last year, NHS England consulted on a new funding formula based on recommendations from ACRA and we have covered such issues widely this morning. ACRA said:
“The objective of the formula is to provide equal opportunity of access for equal need. The basic building block of the formula is the size of the population of each CCG, and then adjustments or weights per head for differential need for health care across the country. The weights per head are based on need due to age (the more elderly the population, the higher the need per head, all else being equal) and additional need over and above that due to age (this includes measures of health status and a number of proxies for health status). There is also an adjustment or weight for the higher costs of delivering health care due to location alone, known as the Market Forces Factor…This reflects that staff, land and building costs are higher in”
for example,
“London than the rest of the country.”
I can point to life expectancy gaps in Cumbria exceeding 20 years. Healthy life expectancy ages in some areas of the country are well below 60 years and the local population, by default, will be younger than in areas where healthy life expectancy is much higher. Health funding in areas with low life expectancy will be disproportionately affected.
It is right that NHS England listened to the concerns not just of the Opposition, but of medical professionals and others about the funding formula, and it is right that deprivation will be taken into account as part of the formula, but that has not changed the overall direction of travel. Over time, money will still be taken from areas with the poorest health and given to those where healthy life expectancy is longer. I would be grateful if the Minister explained how that is justifiable. It is the very antithesis of the founding principles of the NHS that funding should be allocated disproportionately to more wealthy areas.
The pattern is also demonstrated across the public health spending formula. Areas such as Westminster and Kensington and Chelsea receive in excess of £100 per head more than my own county, Cumbria, despite Cumbria’s having some of the greatest health inequalities in the country.
David Mowat
Just to get clarity, is the hon. Gentleman’s position that ACRA’s formula was wrong and therefore should not have been implemented, or would he have liked to have seen it implemented over time?
Mr Reed
I will come on to that question. The funding formula on its own is a blunt tool that will struggle to address intricacies within a health economy as varied as the one in England and, therefore, more needs to be done at the interface between medic and patient to improve care for older people.
Funding is crucial, but financial pressures mean that we have to use existing funding more efficiently. Day after day, we are getting repeated warnings about the sustainability of the NHS and the £3.5 billion reorganisation that nobody wanted and nobody voted for has left NHS finances on a knife-edge. As such, more has to be done with less and that requires more than small changes at the system’s periphery. Last year, more than half a million pensioners had an emergency admission to hospital that could have been avoided if they had received better care outside hospital.
A study undertaken by researchers at Imperial college London found that nearly a third of hospital beds are used for patients who might not have needed them if their care had been better managed, which shows that we should focus on improving community care services to allow older people to remain in their own homes. The CQC has also found a general acceleration in the rate of avoidable hospital admissions.
Pensioners tend to have at least one long-term condition and those over 75 tend to have two or more. As society ages and the number of comorbidities increases, we need a system set up to care for the whole person, rather than the individual ailments that have no regard for the person behind them. The system needs greater integration and better co-operation between services to improve care for older people and ensure that they can be cared for in their own homes, rather than being forced into hospital just because the services in the community are not good enough or, in some cases, are not there at all.
The Government, however, have legislated for competition and fragmentation—and, as a result, for service isolation. Cuts to council budgets have meant that community services have suffered and patients are paying the price. I see that every day in my constituency. To improve health and well-being for the elderly in our society does not require penalising deprived areas with an obtuse funding formula; it requires improvement in collaboration between primary and secondary care and improvements in community care services to ensure that people can get the treatment they need, but also live independently in their own homes.
Thus far, the Government have provided no real solution to the challenges posed by changing health needs. We need to introduce a system of whole-person care and to respond to the changing health needs of our society: for young and old, and for the poor and those not in poverty. To do that—I end on a partisan note that reflects the tone of the debate so far—we need a Labour Government.
The Parliamentary Under-Secretary of State for Health (Dr Daniel Poulter)
It is a pleasure to serve under your chairmanship, Sir Edward, for what I believe is the second time. I congratulate my hon. Friend the Member for Suffolk Coastal (Dr Coffey) on securing today’s debate. As I am also an MP who represents Suffolk, which is a predominantly rural county, I recognise and support her interest in the allocation of NHS funding in areas with a high proportion of older people. I understand that she is meeting with colleagues at NHS England, who lead on clinical commissioning group funding allocations, to discuss the matter later in the month.
It is worth outlining at the outset that the funding formula allocations for this year mean that Suffolk and every other CCG is a winner. They have all seen an increase in their NHS funding. It is important to make that clear.
Before I go any further, I will pick up on some of the points made. I will not detain the Chamber by talking further on the issues raised by the hon. Member for Harrow West (Mr Thomas). His was a wide-ranging contribution, and I understand that he had to leave early, so I will write to him separately.
My right hon. Friend the Member for Banbury (Sir Tony Baldry) made an eloquent case, as he always does, for Oxfordshire and the issues faced in that county. He outlined in particular the challenges presented in rural areas by an ageing population.
My hon. Friend the Member for Warrington South (David Mowat), as ever, made a compelling case for his constituents and for the importance of changes in the funding formula being gradual. I think he was saying that it is important not to destabilise local health care economies. The funding formula was a political formula set by the previous Government, while the current formula is not political but set independently with no political interference. It is important, however, as has been outlined in the debate, that we move towards a new set of arrangements in a staged and managed manner. Otherwise, local economies will be destabilised and that could lead to unintended consequences and potential effects on local hospital services, something none of us wants to see.
The hon. Member for Strangford (Jim Shannon), as always, made a useful contribution on behalf of his constituents. I understand that Northern Ireland has the fastest ageing population in the UK, with the number of over-65s due to increase by 10.7% in the next few years. The only sustainable long-term strategy is one that engages actively with the population through not just the health sector, but the community and elsewhere, to ensure that the focus is on whole-person care in Northern Ireland, with communities working together with the NHS to deliver better care and dignity in care for older people. That was, I believe, outlined in the Budget and it is to the Northern Ireland Assembly’s credit that they highlighted the significance of an ageing population. That issue is a funding priority for them, and rightly so.
It is also important to highlight the context in which this discussion is taking place. My hon. Friend the Member for Suffolk Coastal was right to highlight the Nicholson challenge and to say that, to meet it, we need to transform radically the way we deliver care, in particular in rural areas and communities. She was also right to highlight that the £3.8 billion integration fund that the Government are setting up to join together and better integrate the primary care, secondary care, care in the community and adult social care delivered by local authorities—in her constituency, by Suffolk county council—is the way to do that. The focus is no longer on seeing a patient or a person within the silo of where they are cared for, but on joined-up, holistic care and ensuring that people with long-term conditions such as asthma, diabetes, chronic obstructive pulmonary disease and dementia are cared for in the right way throughout their care. The primary focus for that must be to deliver more care in the community and in people’s own homes. That is something we can all sign up to.
I turn briefly to the points raised by the hon. Member for Copeland (Mr Reed). I cannot let him get away with some of the things he threw into the debate today. He talked about fragmentation of services. Service fragmentation is shown no better than through the decisions on the use of private sector providers made by the previous Government. Let us not forget that they paid those providers 11% more than the NHS to provide the same service and care—something a Labour Government should have been ashamed of. This Government were certainly ashamed of that, which is why we put that right and ensured that the tariff is now set so that the private sector cannot be advantaged over NHS providers. We have also ensured that the tariff is much more focused on integrated care, rather than fragmented care.
The previous Government—understandably, to some degree—focused on reducing waiting lists, but unfortunately that did lead to fragmented services. For example, when an older person went in to have a hip replaced, the focus was purely on the operation and not necessarily on the rehabilitation and recovery that is so important after such operations. That led to fragmentation. That is why this Government and NHS England are looking at tariffs across primary and secondary care and the community to ensure that there is a genuine focus on holistic care for those who have operations, rather than just seeing people as a widget in the context of an operation, as the previous Government’s tariff setting did. We need to see such people, whether young or old, in the round and ensure that, importantly, there is a more holistic focus on rehabilitation and care.
I notice that although the hon. Gentleman said that he would get on to whether he supports an independently-set formula, he failed to do so. I am sure that all hon. Members find that disappointing. Not committing himself either way on that question suggests that he prefers the political, set formula encouraged and supported by the previous Government, which disadvantaged areas with ageing populations. I hope that at some point in the next few months when we have these debates, the Labour party will clarify its position and we will understand whether it does support an independently set formula or whether it would like to return to the political, fixed formula of which the previous Government were so fond. It would be useful for us to understand that.
David Mowat
I think the Minister is not doing do justice to the Opposition spokesman, who did semi-answer the question. He made it clear that he did not accept the independent, clinically driven formula. I think he called it obtuse. It is extremely interesting for, among others, my constituents and health care professionals in towns such as Warrington, who would have gained from a fairer formula, that the Labour party will not accept an independent, clinically driven formula as a basis for allocation. That very important point was made today.
Dr Poulter
If that was the case—I may have missed it—my hon. Friend has made an important clarification. It is important that we have a formula that is as far as possible beyond reproach and set according to clinical need—the needs of patients. It is important that a number of factors be taken into account when that formula is put in place, as has been articulated clearly by NHS England in the discussions about how the formula is set. Deprivation is a factor. It is important to note that one of the primary drivers for setting the funding formula is now age and the needs of an ageing population. That is an important factor to highlight in this debate.
I shall now deal with some of the points made by my hon. Friend the Member for Suffolk Coastal. She may be aware NHS England has undertaken a fundamental review of its approach to allocations, drawing on the expert advice of ACRA and other external groups. The review’s findings have resulted in a new formula that provides a more accurate model of health care need. Last December, NHS England published the allocations for 2014-15 and 2015-16, based on the new formula. That gives CCGs two years of certainty about what their funding allocation is, which we can all welcome.
I know that my hon. Friend is very busy and may not have had the time or opportunity to review in detail during the past three months the information relating to the new formula, but I hope I can reassure her on the direction of travel. The formula is putting us much more on the trajectory she wants to see. It is independently set and therefore has a lot of clinical merit.
Dr Poulter
It may be helpful if I outline the way the new formula works and how some of the weighting has changed, which will help to address the point my hon. Friend has just made and shed more light on the direction of travel that is under way.
The new formula uses a new indicator to recognise how health inequality should be reflected, which is based on the standardised mortality rate for those aged under 75. Previously, adjustment has been made on the basis of a measure of disability-free life expectancy. The new indicator is technically better, in that it can pick up pockets of deprivation within more affluent areas. The formula focuses much more on real population need, rather than taking a blanket approach across the population.
The new formula moves to the more powerful method of using individual rather than small area utilisation data—this is fundamental to the formula—to derive estimates of need. The main factors in the model are age, gender and 150 morbidity measures from the diagnoses of admissions to hospitals. That picks up on the point that my hon. Friend just raised. The formula looks at the pressure of long-term illness. Those 150 morbidity measures will pick that up. The increased need for health care in deprived areas is captured in the base formula by directly taking account of much of the increased need in deprived groups. In addition, further adjustments are made for factors such as the claimant rate for key benefits. That ensures that the model captures increased need that is linked to deprivation but is not linked to earlier utilisation of hospital services.
The new formula reflects more up-to-date data on population growth and measures population based on registered GP lists, rather than population projections based on the census. I am sure we can all recognise that where there has been growth in a population or changes are happening at local level, basing the formula on up-to-date GP lists is a much more accurate way of reflecting the health care needs of the local population than basing it on a 10-yearly census.
The new formula also reflects the responsibilities of CCGs rather than PCTs, as my hon. Friend outlined in her contribution. CCGs are not responsible for specialist services or primary care, although of course NHS England is now also taking over responsibility for the GP contract, as she will be aware. As a consequence, it is important to stress that the new formula for allocating funds to CCGs follows the advice provided by ACRA. A strong element of the allocation is focused on age. The primacy of age, an ageing population and the needs of older patients are very much built in, as are the needs of patients with long-term conditions. There is still a strong weighting for deprivation.
Sarah Newton
How does my hon. Friend the Minister feel that the market forces factor is reflected in the new formula?
Dr Poulter
These are obviously factors that NHS England will keep under review and take advice on from ACRA, but importantly, the new funding formula is not based on census data every 10 years but on real-time information coming in from GP practices. It looks at the health care needs of local populations, at deprivation, at areas where there are groups of patients with multiple medical co-morbidities. We know that as people live longer and our NHS is more successful, that will of course throw up new challenges. People are living longer not just with one long-term condition, but sometimes with two, three or four. Someone with dementia may also have heart disease, diabetes and a whole host of other conditions. A much more accurate reflection of real-time patient information is used to help set and adjust the formula for future years, and I think we would all welcome that. It is all part of having an independently set formula, rather than one based on the whims of a particular Government.
Almost two thirds of total NHS funding, as we are aware, now goes to clinical commissioning groups, which have the clinical expertise and local knowledge to best commission health services according to local needs and priorities. We are very proud that, as part of our reforms in 2012, we ensured a clinically led NHS at local level. Doctors and nurses are now making decisions for patients, which is already leading to improved services not just in Suffolk but throughout the country, because it is ensuring that the money from the increased budget that we are giving the NHS is being spent in a way that focuses on the needs of patients.
The Government have been able to ensure real-terms growth in funding until 2015-16, despite the stark financial challenges that we face as a country, and we should be very proud of the fact that we are continuing to put more money into the NHS. That means that NHS funding in England will be almost £15 billion higher in cash terms in 2015-16 than it was in 2010-11, and spending will rise from £100.4 billion in 2010-11 to £115.1 billion in 2015-16. Importantly, transforming care and delivering more personalised care under the integrated health fund—the £3.8 billion fund that my right hon. Friend the Chancellor of the Exchequer set up last year—is an important part of ensuring that that money is spent not just more efficiently, but in a more patient-centred way, particularly for patients with long-term conditions, both in Suffolk and in other parts of the country where there are many older patients.
In concluding, I want to highlight the fact that although, as we have already discussed, every CCG is receiving an increase in funding, the three CCGs in Suffolk in particular have seen funding growth. Ipswich and East Suffolk CCG’s funding allocation will increase by 2.85% in 2014-15 and by 2.19% in 2015-16 to reach £412.4 million in that year. As a result of the new funding formula that has been put in place, Suffolk is doing well, as are many other parts of the country.
Having a formula that is independently set according to clinical need and population information, and that is up to date and accurate, puts us in a much better place properly to look after the needs of patients, be they young or old, in the years ahead. That formula and the Government’s bold decision to ensure that it is independently set puts us in a strong position to deliver high-quality care for older people. That, together with the £3.8 billion integration fund, means that we will radically transform and improve the way in which we deliver care.
Warm Home Discount
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Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
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Sarah Newton (Truro and Falmouth) (Con)
It is a great pleasure to serve under your chairmanship, Sir Edward. I am pleased to have secured this debate about the warm home discount. Along with the energy company obligation, the warm home discount is a key tool for tackling fuel poverty.
The Government have a good track record in bearing down on heating bills. According to the House of Commons Library—I am grateful for the note that it has prepared for the debate—the Government are doing much more than the previous Labour Government to help people in fuel poverty. Although considerable effort has been made to keep heating bills down this winter, with particular help for pensioners and other groups of vulnerable people and with an estimated 2 million homes receiving the warm home discount, we must do more to stop people of all ages living in cold homes.
There is a particular group of people whom we must do more to help. Across Great Britain, off-mains-gas customers make up at least 11% of the total population, but that proportion varies wildly by region. Just under half of all homes in Cornwall are off the mains gas system, and a much greater proportion than the national average lives in detached homes, which, as we all know, are difficult to insulate. Dual fuel deals offer the best value, but they are just not available to off-mains-gas homes. The alternatives—bottled gas, oil, biomass or electricity—all cost much more than mains gas. The Government are to be applauded for setting up a ministerial working group to find new ways of supporting off-mains-gas households. It is already making some really positive differences. I apologise for my croaky delivery; I am trying to fend off a cold.
There is a wide range of measures that we can all take to save money heating our homes. It is important to ensure that people know about the help that is available, such as energy-efficiency measures, oil-buying clubs and cash benefits, but that is sometimes much more difficult to do than we might think. The winter wellness partnership in Cornwall is working well to tackle that problem, joining up voluntary sector organisations, the NHS, Cornwall council and rented housing providers to deliver warmth to cold homes, and at the same time improving people’s health and well-being. With more financial support allocated from growing public health budgets to the winter wellness partnership, much more could be achieved and more people enabled to live in warm homes next winter.
Greater use of data matching by Government to enable energy companies to target help where it is most needed will also help to heat more homes. Recent analysis by the Department of Energy and Climate Change and the Department of Health suggests that warming up cold homes will prevent ill health that costs the NHS an estimated £15 million a year. In addition, there is research to show that warming up cold homes where children live could enable them to do better at school and help to close the academic attainment gap.
In the medium term, money is being spent in Cornwall on improving the insulation of homes and extending the mains gas grid, as well as exploring the feasibility of local renewable geothermal heat networks. For next winter, targeting cash benefits to people who need them most can also help. The £135 warm home discount, which will rise to £140 this winter, is available for low-income and vulnerable households. At the moment, low-income pensioners are eligible to be part of the core group for the warm home discount. The Department for Work and Pensions and DECC will match their details against those held by different energy companies to determine which energy company they are with, after which the relevant energy company will be notified of its eligible customer and instructed to apply the warm home discount to their electricity bill. The discount is, therefore, applied automatically for core group customers, including those off the mains gas grid.
The approach for low-income families with children is very different, however. Instead of having their details automatically matched and the discount applied, families have to check their circumstances against their energy company’s eligibility criteria, which vary considerably between suppliers, and apply to have the discount applied to their bills. The decision over whether to apply the discount is at the energy company’s discretion. About half of eligible families do not receive the discount, probably because they do not know about it, or, as Community Energy Plus, a leading fuel poverty charity based in Cornwall, has said, because energy companies do not always inform potentially eligible customers about the discount and because people are often put off by the forms that they have to complete to get it. The energy companies say that it can be difficult and expensive to find non-core group customers to help.
I have decided to support the Children’s Society campaign, which asks the Government to treat low-income families with children in the same way as low-income pensioners by having fixed eligibility criteria that apply across suppliers; by automatically identifying eligible families with children through data matching, rather than relying on families to apply; and by requiring energy companies to apply the discount to families who meet the eligibility criteria, rather than allowing that to be discretionary. An estimated 120,000 homes in the south-west would be helped by those changes. That is a lot of children who could be helped.
The Government are planning to consult in the coming months on how the warm home discount will be applied from 2015. I hope that the proposals I have outlined for using data matching and automatic payments can be considered to target financial help better to those who most need it, and to improve the health and well-being of many children. I also hope that as part of the consultation the Minister will consider representations that I and others have made about enabling park home residents and tenants of private sector landlords whose heating costs are paid by their landlords to benefit from the warm home discount as well. Those groups of people are often living in fuel poverty and would otherwise meet the criteria, and they would benefit enormously from the discount. I appreciate that the Government have given us helpful feedback on the points that we have made regarding those groups.
The Government have done a great deal to help people keep warm and well during the past winter. I hope that, through the consultation, we can build on that and ensure that even more people are helped in 2015 and beyond by the warm home discount.
The Minister of State, Department of Energy and Climate Change (Gregory Barker)
I welcome this debate secured by my hon. Friend the Member for Truro and Falmouth (Sarah Newton), who is a formidable champion for the people of Truro and Falmouth. Yet again, she is raising in Parliament an issue that is important not only for her constituents but nationally. Although I appreciate the importance that she places on its impact in Cornwall, we are aware that it has a wider impact, and I assure her that the Government are working further to improve our policy on the warm home discount. We are working hard to reach even more of the people who need the help most, many of whom will be in her native part of Cornwall.
I also commend the important work of the winter wellness partnership in Cornwall to make cold homes warmer and improve the health and well-being of those in the south-west. The Government will be adopting a new fuel poverty definition this year, as well as introducing a new strategy and an ambitious target. That will not be just another document; it will be the first new fuel poverty strategy since 2001. We are doing more than just refreshing an old strategy; we are coming at it with a new level of determination and ambition, tempered by realism and what is practical.
That is why we will be using the low-income, high-cost definition that has been put forward by independent experts. It places greater emphasis on the energy efficiency of the home in identifying the households most likely to be suffering fuel poverty. The new definition will be particularly helpful in my hon. Friend’s part of Cornwall. Under the new definition, households living off the gas grid, particularly families in larger old homes, are likely to be judged the most at risk of fuel poverty. We are keen to strengthen the warm home discount scheme by aligning it to the new definition. We also share my hon. Friend’s desire to make it more accessible to those who are eligible.
Since its introduction, the scheme has been a success in helping a large number of households across the country with their energy costs. Between its launch in April 2011 and now, more than £700 million has been disbursed to help vulnerable households. That is £300 million more than under the previous three-year voluntary agreement. More than 2 million households have received help each year. Most of the poorest pensioners have received automatic rebates, providing much greater customer service for them.
The scheme has also helped low-income families and those with disabilities. There has been an increase in the value of the rebate, year on year, and more people receive it each year. Because the scheme provides rebates off electricity, it also readily reaches people who are off the gas grid. It is innovative and efficient, and, by and large, it has low delivery costs compared to other welfare payments. We believe that it is increasingly helping those who need it most, when they need it most. Next year, the scheme will provide 2.1 million rebates of £140—more than ever before. That will bring spending for the four years of the scheme to more than £1.1 billion. That is no small measure. Nine suppliers will be part of the scheme, providing even greater choice for consumers.
As a result of the success of the warm home discount, the coalition Government have committed to extending support through to 2016, spending £320 million in addition to the £l.1 billion that will be spent over the first four years of the scheme. That will mean continuing support for the people who need it most. However, like my hon. Friend, we recognise that people who are not part of the core group can have difficulties accessing the scheme, including low-income families with young children. Although eligible, those groups are required to apply to their energy supplier.
Under current legislation, the Government cannot provide the same data-matching service for working-age people as they do for the poorest pensioners. However, my Department is considering how policies could be better targeted, including whether and how legislation could be expanded to allow automatic payments for non-pensioners. I am happy to assure my hon. Friend that my officials have met the Children’s Society and will be working closely with it during the consultation.
Our ambition does not end there. We also want to be able to do more to identify those households, particularly in rural areas, that are off the gas grid. Despite more data being available on off-gas homes, there is still much to be done. My hon. Friend rightly made the point that there is a far greater preponderance of off-gas-grid homes in Cornwall than almost any other part of England. The coalition is absolutely committed to doing more to help off-gas-grid customers who, historically, have had a very poor deal indeed.
As well as looking at whether we can remove legislative barriers to the sharing of off-grid data, we are working closely with the Fuel Poverty Advisory Group to improve the use of the data we already have. I am also pleased to announce that, as part of our efforts to double-up our focus on helping off-gas-grid customers, my hon. Friend the Member for Suffolk Coastal (Dr Coffey) has accepted the new role of DECC off-grid champion. She will bring her insight from the all-party group on fuel poverty, as well as her own experience, to help us to drive action across a number of the Department’s policies. I met her and the big six energy companies last month in order to drive forward the deployment of energy company obligation funding in off-grid areas. We have been troubled about that, because it is clear that the larger energy companies are failing to live up to their responsibilities to deliver the ECO in rural areas in the required proportions.
Stemming from that positive meeting, a number of actions were agreed on. They included potential changes to the brokerage system in order for ECO to split off rural communities as a separate visible group to enable better targeting of ECO measures that are put to brokerage to be accessed by the large energy companies, and publishing the rural postcode list within a month of the consultation. We are also considering how parish councils and other local community groups can help to drive the deployment of ECO in rural off-grid areas by being advocates for action, by helping to collate the number of households that are keen for improvements—particularly improvements to the fabric of buildings—and by bringing them together in larger numbers so they can make efficient propositions to the energy companies for dealing with them.
The problem at the moment for many of the energy companies is that it is difficult to deal with isolated individual households scattered across an area. If we can use local communities and parish councils to collate data, find households that want measures installed and present them as a coherent group to the energy companies, it might enable us to get around some of the barriers involving data and present an attractive proposition to the major energy companies for delivering ECO to rural communities.
We also want to link ECO and the domestic renewable heat incentive, which will be launched in the next few weeks and will be an exciting development in the provision of innovative low-cost low-carbon technologies for those who are off the gas grid. It will present them with a genuine, viable alternative to very expensive heating oil. The launch of the renewable heat incentive next month will provide us with opportunities to broaden the offer to off-grid homes. My officials are working with the industry to identify opportunities to combine RHI and ECO and provide a better offer for those without access to up-front funding to install the new technologies. All that work sits alongside the regular round tables on off-grid chaired by the Minister of State, Department of Energy and Climate Change, my right hon. Friend the Member for Sevenoaks (Michael Fallon). I would also like to mention that Community Energy Plus now plays a role in the inter-ministerial round table. Following a suggestion by hon. Members, Public Health England has also been included in those discussions.
To return specifically to the warm home discount, this spring, we will consult on changes to the scheme for 2015-16, ensuring that the £320 million is spent effectively in helping low-income and vulnerable households. The consultation will include questions on further improving customer service and simplifying the scheme wherever possible, providing more help to those off the gas grid and even better targeting of those in fuel poverty based on our new low-income, high-cost definition.
I appreciate the points that my hon. Friend raised about park homes. The difficulty is that park home residents are not bill payers, so it is harder, as she mentioned, to identify them. Nevertheless, we welcome pragmatic suggestions on how we can reach them as part of the consultation. I encourage park home owners and those who speak on their behalf to participate in the consultation.
We want to make a transition to a scheme beyond 2016 in which as many of the people eligible as possible get help automatically and our data allow us to give more help to those suffering the deepest fuel poverty. Our warm home discount proposals will coincide with our consultation on a new fuel poverty strategy and an ambitious new target. We will ensure that the warm home discount is consistent with that strategy and continues to be our first line of defence on a mass scale against the impact of winter bills on the most vulnerable.
The coalition shares my hon. Friend’s determination to do far more for the off-gas-grid customer. We are in no way complacent about the need for much more action to help the fuel poor. There is a great deal of action in the pipeline and more coming forward this year. I am grateful to her for securing this debate and allowing us to put that on record.
Under-Occupancy Penalty (North-West)
(10 years, 1 month ago)
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Yvonne Fovargue (Makerfield) (Lab)
Thank you, Ms Dorries, for calling me to speak. It is a pleasure to serve under your chairmanship.
We are fast approaching the first anniversary of the bedroom tax, as I prefer to call it. Anniversaries are usually pleasant occasions, a time to celebrate and congratulate, but not this one. The legacy of the new tax is not benign; it is cruel and unfair. The tax has heaped hardship and misery on families already struggling with the rising cost of living and the increased personal indebtedness that have characterised the past few years. This is not the building-up of debt to pay for luxury items, as some would have it. Instead, increasing numbers of people are getting into arrears on basic household essentials such as food, rent and fuel.
Clearly, many of those people are turning to payday loans to get themselves through the week—borrowing to pay borrowing. The situation is all the more worrying because people are not only struggling to pay their everyday bills, which are increased by this cruel and unfair tax, but using high-cost credit to make ends meet. That results only in a downward spiral into further and further debt, with potentially catastrophic results. As Stepchange said in its response to the Work and Pensions Committee inquiry:
“Households struggling to meet rental payments are far more likely to have high-cost credit—33 percent of tenants with rent arrears have payday loans, a two-thirds increase on those without rent arrears…Because of the urgent and regular nature of rental payments, we are particularly concerned about people facing payment difficulties turning to payday loans. Analysis of our clients shows that those with rent arrears are far more likely to have at least one payday loan.”
The bedroom tax simply adds another layer to the problems that people face.
Many social housing landlords work to help their tenants to improve their income, but they are faced with an impossible situation. Many housing associations have invested millions of pounds to mitigate the effects of the bedroom tax, or spare room subsidy. Housing associations with tenants who have been affected spent on average £73,250, including on welfare and financial advice services, before April 2013 to help their residents to prepare and cope. Wigan and Leigh Housing, in my constituency, manages 22,500 properties on behalf of Wigan council. Recently, it had to deal with a tenant in arrears who also had more than 15 concurrent payday loans and no visible income other than benefits.
The fact is that the extra charge has tipped many households who were struggling but just coping into an unmanageable situation. Now many of those people are at risk of being evicted because they simply cannot find the extra money to pay their rent. Why has that happened? It has happened because people in social housing have been given a false choice, or rather no choice at all. They are told to move to a smaller property, or else pay the difference. Well, they cannot do so. There simply are not enough smaller homes to go around.
In Wigan in my constituency, we have a shortage of one and two-bedroom properties, so people who have had their housing benefit slashed have nowhere to go to. That is true of much of the north-west and indeed the north-east. It is not often that I agree with Lord Tebbit, but he said that spare rooms are “vital”. He said on the tax:
“I think we introduced that rather without thinking it through very well”.
Many social landlords in the north-west would agree with that .
In my constituency, 3,300 tenants are affected, with the reductions in housing benefit ranging from £517 a year to £1,273 a year. If those sums are to be found from somewhere, it is most likely they will be found by cutting down on essentials such as heating and food, because after all people must have a roof over their head. Often, the sums cannot be found, so arrears are rising.
Last month, a survey of the English housing associations carried out for the National Housing Federation by Ipsos MORI found that more than two thirds of their residents who have been hit by the bedroom tax are in rent arrears. That is the national average; the figure is higher in the north-west. In fact, the north-west has been the hardest hit part of the country, with 83,000 people seeing a cut in their housing benefit last year, according to the Department for Work and Pensions’ own figures. In fact, that could be a serious underestimate; the figure could be as high as 110,000 people.
The DWP’s figures also show that Manchester is the hardest hit city, with more than 11,300 households affected and an average shortfall of a whopping £724 per year. Other cities such as Liverpool are not far behind. More than 10,700 families in Liverpool are coping with a housing benefit reduction. Data collected from 15 social landlords operating in Merseyside, including the Halton Housing Trust, Liverpool Mutual Homes and Riverside, found that arrears rose from £21.2 million at the end of December 2012 to £22.9 million at the end of December 2013, a rise of £1.7 million.
I will now cite some findings from the excellent Real Life Reform report. Statistics are often used to prove and disprove policies, but it is worth remembering that this change and all the other welfare policy changes impact on people’s homes and their lives. These reports give social housing tenants the chance to be heard and I am grateful for this opportunity to share tenants’ views and experiences.
Perhaps it is worth noting a comment from the facilitator of the report. She is a communications officer, not a front-line housing officer, and she was profoundly moved by the stories. She says that the people who contribute to such reports do not match the stereotypes of social housing tenants on benefits. They do not drink or smoke. They all work. They run voluntary groups. They have children doing well at school or university, or children bringing up their own families. They are dignified and private people who want to make meaningful contributions to their families and communities. However, they are desperately worried about how they will pay their basic bills. They are concerned about how their families are being affected. They are choosing between eating or heating and, most tellingly of all, they have given up hope of being happy. In total, 76% of the people surveyed in the report said that they were rarely optimistic and 55% said that they were never optimistic.
What of discretionary housing payments, a limited emergency fund provided for the most vulnerable households? Yes, they have helped some households to manage their situation better. However, there is simply not enough money going round and the stress of continually applying for a fund that is discretionary cannot be underestimated. It is no wonder that 83% of participants in the Real Life Reform report felt that their health, particularly their mental health, was being negatively affected.
Wigan and Leigh Housing has used discretionary housing payments to help to reduce the number of people facing debt from the bedroom tax, but it has only managed a reduction from 73% to 63%. During the past year, applications for such payments have risen by 302% on average in the north-west, but the overall arrears keep rising and with them the threat of eviction.
Housing associations and councils are doing all they can to avoid evicting residents, but they cannot simply write off unpaid rent. Many of them have to spend huge sums in legal fees to recover unpaid rents. There are other costs, too. What is not fully appreciated is the increase in tenancies ending through a notice or people simply abandoning their properties and walking away. Each vacant property costs an average of £3,000 to repair prior to re-letting. In my area, many are being left empty because we simply cannot let the four-bedroom properties. People do not want to take four-bedroom properties, particularly those in the one block of maisonettes that we have.
Sheila Gilmore (Edinburgh East) (Lab)
In talking about her own region, my hon. Friend is surely illustrating exactly why this tax was poorly planned and poorly thought out. There was talk about 1 million spare bedrooms, but the mix of housing and the size of housing are distributed so differently across the country. In my area, we have a shortage of large houses as well as a shortage of small houses. We cannot have a one-size-fits-all policy in this way.
Yvonne Fovargue
I agree. People are not chess pieces. They have lives, families and communities and simply will not move from Wigan to London or London to Wigan; it is not as easy as that. For example, some people, including a constituent of mine, have family support networks, but she is being asked to move, although her mother lives down the road and looks after her daughter daily, sometimes overnight while she works. If she has to move away because she cannot afford the spare room subsidy, she will be penalised and may have to give up her job.
There are lots of other costs as well. Many people live in adapted properties with a spare room. My constituent, Clare, is paraplegic and blind. She has two carers, 24 hours a day, but under the rules was only allowed a bedroom for one of them. Her property had significant adaptations and, should she move to a smaller property, the cost to adapt it would run into tens of thousands. She is depending on discretionary payments to stay in her current property and has to reapply every 13 weeks, with the stress that that brings. This penalty affects the sick and disabled and it makes no moral or financial sense.
I just want to make a quick aside about fairness. It is often said that the policy brings parity with the private rented sector. However, the penalty was introduced retrospectively, when local housing allowance was introduced for new tenancies. People could then make a choice when choosing a home. This tax affects people who have lived among friends and family for years, have built their lives in a community and are forced to pay to stay there or look elsewhere—in my constituency, that is often in the more expensive private sector, due to the shortage of one and two-bedroom properties.
We in the Opposition have been clear that we will scrap the bedroom tax because it is cruel and unfair. The chief executive of the National Housing Federation described the policy as
“an unfair, ill-planned disaster that is hurting our poorest families.”
I agree, but we will not scrap it just because of that. It does not work on any level. There is now a risk that the bedroom tax will cost more money than it saves. The National Housing Federation has said that the savings claimed by the Government are “highly questionable”, partly because those forced to move to the private rented sector will end up costing more in housing benefit. Nor does the policy deal with the problem of under-occupation. In fact, the Government’s costings on the yield raised from the under-occupation subsidy explicitly assume that people do not move into smaller properties. The DWP’s own impact assessment states:
“In many areas”—
as my hon. Friend the hon. Member for Edinburgh East (Sheila Gilmore) said—
“this mismatch could mean that there are insufficient properties to enable tenants to move to accommodation of an appropriate size even if tenants wished to move and landlords were able to facilitate this movement.”
In Wigan, it would take more than seven years, at current vacancy levels, to re-house even the 30% of people affected who might wish to downsize.
It is clear that this policy, and any savings predicated on it, depend on people choosing to pay to stay in their communities, near friends and families. It affects those with disabilities, those struggling to get by and it is having a negative impact on their mental health. It is putting additional costs and pressures on social housing providers and, perversely, it is likely to increase the housing benefit bill by forcing people into the more expensive private sector. One year on, it is time to think again and repeal this unfair and unworkable policy.
Sheila Gilmore (Edinburgh East) (Lab)
It is a pleasure to serve under your chairmanship, Ms Dorries, and to have the opportunity to say a few words. Self-evidently, my constituency is not in the north-west of England. It is not in the north-west of Scotland, either, but in the east of Scotland, but it is important to see how the experience in one area of the country compares with another.
As I said in my intervention, part of the problem with making this policy work, even if it is thought to be a good idea, is that the housing situation in each local area is different. It is impossible simply to assume, as it has been assumed, that there are more than 1 million spare bedrooms, as has frequently been repeated, as if those were somehow easily accessible by people wherever they are.
We have to think about realities. It is galling and frustrating for me, as someone who was the chair of housing in a local authority and retains a strong interest in housing, to hear that there are empty large houses in some areas. If it were possible, I would dearly like to do that American thing of putting them on wheels and wheeling them up to Scotland.
It is not feasible for people simply to up sticks and go somewhere else. A few may be able to, and a few may welcome the opportunity to do so, but for many their attachment to their home area is not just an emotional one, although it can be that; there are practical issues for them to consider. Often, the areas where there is a surplus of certain kinds of housing are also likely to be those where there are poor job opportunities. My city, where unemployment is well below the Scottish average, is a net importer of people. People come to the city from other parts of Scotland, and from England, because the jobs are there. For a low-paid worker in Edinburgh in receipt of housing benefit, for example, to move to the north-west of England just because there are houses there, even if it would mean their being less overcrowded, is counterproductive for them and for our spending on social security, because if they could not get a job they would be drawing more in benefits than previously and their opportunity to move on from that situation would have decreased.
Even people who do not have a job issue in relation to moving have other ties. Despite commentators and sociologists sometimes suggesting that we have become a society without ties and that we live completely separate lives from one another, far away from our families, I am always struck by the degree to which that is not necessarily so. And help is often reciprocal; it is not just one way and not just about older people getting help from younger people. Obviously, grandparents will often give important help to members of their family. I met a constituent recently who said that, having retired, he and his wife have virtually full-time jobs, because each day of the week they look after a different group of grandchildren, although they do not look after any of them full time. That is not uncommon. People cannot always move huge distances, and even moving across a city can be difficult for those who pick children up after school, for example, to help their family. We have to be realistic about what people can do. I do not think that people are being awkward in any sense.
The other mismatch, throughout the country, is that houses of different sizes are often of different types. I know a number of older people—although pensioners are exempt from this measure—and even people approaching retirement who might want to move to a smaller house, but they are not going to move to a flat that is up four flights of stairs at that time in their life, because even if they are fit at the moment, they would say, “Why am I going to move to a tenement building where I would be climbing up and down stairs, when in a few years’ time I might not be able to do that?” Having looked in depth at the housing supply in my area—I am sure my hon. Friend the Member for Makerfield (Yvonne Fovargue) has done so, too—there is such a mismatch. Not a lot of housing becomes available, but what does will not necessarily suit the needs of the people we might be trying to move.
Realistically, this measure was invented as a savings measure, and a lot of the justifications are trying to make it sound better than it is. There is a case for helping people to move, for example, and I know people who would want to move. Older people particularly might want to move from a family house and might be pleased to see it going to a family, but they have certain needs that also have to be met. I have been pressing my local authority and housing associations to look in depth at an area and say, “Actually, maybe we should build houses for older people who could move into them and thereby release family houses, rather than building family houses.” People will not move out into just anything, and for good reason. They are looking to their future.
If this measure is about people moving, which I do not believe it is, it does not work, and it certainly does not work on an all-country level. It is about saving money, which is why it was in the Budget. The cost is not trivial for people. I have described other housing benefit changes as slow burn because they have had an effect over several years and it will take time for them to play through.
A constituent of mine is on jobseeker’s allowance of £71 a week. She was approaching retirement age, but unfortunately retirement age is receding from her, so she feels as if she is running to catch up. Of her £71 a week income, she now has to pay £12 a week towards her rent, which is on top of all her other bills. Scotland has not yet had the council tax changes, but she has to pay water rates, energy bills and bus fares to get to the jobcentre or training centre. She is trying to get another job after being made redundant in her late 50s, which is never easy, and £12 a week is a substantial sum of money; it is not something that people can easily make up. She does not fall into any of the priority groups that we are told discretionary housing payments will cover because she is not disabled and does not have a particularly adapted house, or anything else. All she happens to have is a rather small second bedroom in a house that she and her husband lived in for 18 years until he sadly died. They put a lot of effort into the house.
If we want to address the housing benefit bill in any area of the country, we need to build more homes and consider the cost of housing benefit in the private rented sector, which is far greater per person than in the social rented sector. We are attacking the wrong part of the problem, and it is therefore no surprise that housing benefit spending is predicted to continue rising in real terms throughout the entire five-year period, despite such changes. Not only do the costs outweigh the savings for individual housing associations and authorities; the policy does not make sense on a macro level because it will not achieve what it is supposed to achieve. We will still end up having a large spend on housing benefit, which the Government have much criticised, but if we want to change that, we have to look at where the real problem lies, and it does not lie in the social rented sector. I contend that the policy is ill conceived.
As my hon. Friend the Member for Makerfield said, there is a constant reiteration of “Well, Labour did it in the private rented sector.” I was a member of the Welfare Reform Bill Committee, and I do not remember Labour’s changes being mentioned at any point in Committee as a primary driver. Someone obviously thought, “We are not doing very well with our publicity on this one, and we are losing a bit of public support. Let’s find another argument.” The argument that was chosen is, “Labour did it in the private rented sector, which is why it is fair.”
People in the private rented sector did not suddenly find themselves presented with a Bill one April: “Here’s the Bill, which means that you now have to pay extra money, whether you can move or not.” Any changes introduced in 2008—there were rules prior to 2008 on the size of homes and the amount of housing benefit that people could claim, so it is not entirely true to say that the Welfare Reform Act 2012 was entirely a response to the changes in 2008—applied only when people moved into a new tenancy, which is very different from saying, “Regardless of whether you can move, you have to pay.” That is why we have called it a tax, and although many people get agitated and say that it is not, it certainly feels like a tax rather than a benefit.
Wherever we live, there are problems with the policy. Many of our constituents have problems with it, and if the Government are really serious about addressing housing benefit—I hope they are, because we certainly are—they should be seriously looking at the private rented sector. If they do that, the graph, instead of going up over the next four years, might start to go down.
Chris Bryant (Rhondda) (Lab)
It is a delight to serve under your chairmanship, Ms Dorries. I note that I am the only man taking part in this debate, which must be a first for the House of Commons. I hope there are many more debates in which men are in the minority. It is a shame that, all too often, debates involve men talking to men—probably with nobody listening.
I warmly congratulate my hon. Friend the Member for Makerfield (Yvonne Fovargue) on securing this debate, not least because all too often in Westminster politics we think that, once we have pulled a lever, everything will suddenly change out in the rest of the country. Actually, the vast majority of policies advanced by any Government, of left or right, end up having to be implemented by local authorities, and this policy is a classic instance. In many cases, not just local authorities but a series of social landlords are involved.
The direct relationship between Government and those implementing the policy is not as clear as people might assume, which is one of the reasons why the Government have got some areas of the policy profoundly wrong. They did not do the groundwork to establish what the real situation is out in the wider country before enacting the policy.
This is the kind of policy that someone might dream up just before they go to bed or when they are in the shower. They suddenly think it is a brilliant idea because there is no official there to say, “Ah, but Minister.” By the time they have got into the office, they think it is the best idea ever. Unfortunately, they then meet other Ministers who are also desperate for a good idea, and they think, “That sounds like a good old wheeze. Let’s do that.”
The policy, as a whole, was advanced too rapidly. However shiny and new it might have seemed to the Government, I know a large number of Conservative Back Benchers who wish it had not been implemented and look forward to the day when the whole thing can go. All that glisters is not gold, and this has been a meretricious policy.
My first problem is that, as my hon. Friends the Members for Makerfield and for Edinburgh East (Sheila Gilmore) have said, the policy’s implementation has been fundamentally unfair. Both my hon. Friends have said that the significant difference between the Government’s policy and our policy, which addressed commercial landlords, is that the Government’s policy has been implemented retrospectively. In other words, it affects people who are already living in a property.
In recent months, we have discovered that people who live in social housing, particularly council housing or housing association properties, are more likely to live for long periods in the same property than anyone else in the housing market. Some may see that as a problem, but it also presents a significant challenge because the policy is radically changing people’s understanding of their home.
What I have just said does not apply to me because I moved so frequently as a child that I have always thought of wherever I lay my hat as my home. However, the vast majority of people live in the same house for 10, 15 or 20 years, and sometimes for much longer. In some constituencies in the north-west, there will be people who not only live in the house they moved into when they were first married, but live in the same street or estate in which the rest of their family have lived since the estate was first built. In some cases, they will have taken over the tenancy from their parents and have effectively lived in the same house all their lives.
The policy, of course, drives a coach and horses through that understanding of a home. Ultimately, it is profoundly—I want to say un-English, but I am Welsh and my hon. Friend the Member for Edinburgh East is Scottish—un-British not to think of the home of an Englishman or Englishwoman as their castle.
Yvonne Fovargue
Does my hon. Friend agree that it is not only family lives that are being destroyed? The aim was to build stable communities in which people support and help each other and run voluntary groups. The policy destroys communities, as well as lives.
Chris Bryant
Absolutely, not least because one of the key things that all parts of the House agree about is that we need to get more people into work. Particular families and communities have historically found it much more difficult to get into work. The issue is not only about whether work pays—although that is key and is why we originally supported the national minimum wage, facing down the howls of those who said it would lead to mass unemployment—but the support mechanisms that someone has when they first go into work. Otherwise, benefits are seen as more reliable, and if someone thinks that, they will stick with them.
If someone has child care responsibilities or care responsibilities for an adult relative, they need other family members close by. All too often since the bedroom tax was introduced, we have seen people forced to move to areas where they have no support, which makes it more difficult for them to get into work. Perhaps we Opposition Members too often rant and rave at Conservatives for being cruel, out of touch and not having any interest in the working poor—that has not always been true of them, historically—but some of the policies advanced, particularly those of the Department for Work and Pensions, have effectively cut off a nose to spite a face. They have seemed like savings and cuts, but in practice they have just added costs to the social welfare budget, which is why the Chancellor had to announce last week that he was increasing the estimate for welfare spending for this year by £1 billion and for next year by another £1 billion.
People are living myriad different lives, with different congregations of families and different community set-ups, social understandings and cultural mores, and it is incumbent on Ministers, particularly DWP Ministers, to work with the grain of human nature, rather than against it. The policy fundamentally works against the grain of human nature and the housing market.
All too often the Government have presumed that, because they said in theory that the policy is all about dealing with the mismatch of some properties being under-occupied and many properties being over-occupied, they have to get the families that are overcrowded to move into undercrowded properties. If everyone could step on to the pavement on one day, immediately swap and move into the next property, that might be true, and if there was an exact match of overcrowded and underused in each area—whether geographical, local authority or housing association—that presumption might work.
The facts on the ground, however, as we know from all the different surveys that have been done over the past year, are that there is a total mismatch. People have no choice about moving, downsizing or going to smaller properties, particularly in the short term. It might take them two, three, four, five, six, or, as my hon. Friend the Member for Makerfield said, seven years to move, and that is why the measure is a tax. In the end, people have no choice and have to surrender that extra bit of money.
The £16 might seem like nothing to Ministers in a Department that thinks that pensioners might spend their pot on a Lamborghini, but that is a significant amount of money to my and my hon. Friends’ constituents, particularly when real wages have been depressed and the number of hours and amount of overtime that people are allowed to work have fallen. Many more people have been put on zero-hours contracts. In that environment, £16—or £25, if it is two rooms—extra cost a week is a significant amount of money, and that is why the policy is unfair. It might seem fair to put all the overcrowded people into the underused accommodation, but if no one has checked whether there is enough accommodation to do that, it ends up being unfair.
The evidence of the unfairness is that the Government have had to provide discretionary housing payment schemes for local authorities. With discretionary housing payments, the word I dislike most is “discretionary”, because it means that someone living in one local authority on one side of the road in the north-west might be granted a DHP, while someone on the other side of the road will not get that payment, for the single reason that they live in a different local authority.
There is an added problem with discretionary payments, which is that the local authority knows—let us say it is getting £1 million over a year—not to spend any in April, May or June. That happens every time the Government introduce such a system. The authority will start spending a little only in July, August and September, because it knows that the big numbers will come knocking on the door in December, January and February. That means that there is no consistency across the year.
The Minister revealed that fact—I do not think she intended to—when she was attacking one of my hon. Friends from Manchester about the discretionary housing payment system there. She said that it was outrageous that we were complaining about the amount available to Manchester last July and September, because the city had not spent that part of the year’s money. Of course the city had not spent it, because no local authority does. Local authorities are prudent and save money for when they will have to spend more, which is in winter, at Christmas and towards the end of the year. They have to save against what might be a particular rainy day. The Minister, by her own admission, has laid out that the policy is unfair.
As my hon. Friends said, the Government never expected everyone to move. They said:
“In many areas this mismatch could mean that there are insufficient properties to enable tenants to move to accommodation of an appropriate size even if tenants wished to move and landlords were able to facilitate this movement.”
If there was ever an ownership of the fact that the measure is a tax, that was it. It made clear that the Government know that many people will simply have to pay more money.
I disagree with the policy’s fundamental principles and also with how it was introduced. The Prime Minister more than once boldly stated at Prime Minister’s Question Time that no disabled people would be affected by the bedroom tax. He said that on countless occasions, but we know that two thirds of those affected, according to every survey that has been done in local authorities up and down the land, are disabled. The Prime Minister is closing his eyes to the truth, he does not know the truth or someone is not putting the truth in front of him. I do not know what it is, but the point is that the Prime Minister is completely and utterly misled. I am not saying that he has misled people; I am simply saying that he must be misled.
The other incompetence in how the Government have advanced the policy—we know the legislative incompetence: they brought forward the legislation quickly and then discovered a loophole some nine months into the process, or perhaps a little earlier—is that they are still going through this ludicrously bizarre process of denial about how many people are affected by the loophole. On one day earlier this year, the Minister for Welfare Reform, Lord Freud, said in the House of Lords that an insignificant number of people were affected, the Minister here replied to a written question saying that she did not have any idea how many people were affected, and the Secretary of State said that between 3,000 and 5,000 people were affected.
Yesterday, after the urgent question in the Chamber, the Minister let it be known that the Department will provide £2.1 million for local authorities to do the trawling. That is just for the process of trawling, and not for the payments that will have to be made to those who were illegally charged. She says, and said again yesterday, that the £2.1 million applies to 5,000 people. Sometimes she says it quite angrily and sometimes she says it more emolliently; we will see which version we get today, although it looks like it will be the angry one, given the furrowed brow I am getting. I presume that the Minister can calculate for me how much that is per person. Is a trawl really going to cost £420 per person? By her own admission, the Minister has yet again suggested that the 5,000 figure is not right. I do not know whether it will be 40,000 in total, but it certainly will not be just 5,000.
The Minister has regularly pooh-poohed the statistics that the Opposition provide, but we are only going by the freedom of information requests that we have made to local authorities. Let us look at how some authorities in the north-west replied when we asked them how many households had been affected. Burnley borough council said 60, Bury metropolitan borough council said 83 and Chorley borough council said 32. Eden district council said 30, while Fylde borough council said 80. For Lancaster city council, the figure was 35. Preston city council said 124. South Ribble borough council said 22, and Stockport metropolitan borough council said 126.
It is true that I do not have figures for all local authorities, because, despite our being long past the date by which they should have replied to the FOI request, only 15 out of 39 local authorities in the north-west have replied. Even so, there are 2,609 cases in the north-west alone thus far.
The Minister has criticised me several times, saying that the figure of 480 that I provided for St Helens is incorrect, but we have never provided that figure. We said that there were 178 confirmed cases in St Helens—178 cases where people have already been paid back. Not included in the figure for the north-west, however, is what Liverpool city council states it has already paid back, which is 1,300 households. It is absolutely clear that the 5,000 figure that the Minister cites for the whole country will probably be exceeded in the north-west alone.
It could be said that this is all neither here nor there and that it is dancing on the head of a pin and just about statistics, but what it suggests to me is that the Department for Work and Pensions simply has not done its homework and does not know. I would be quite happy were the Minister to stand up and say, “You know what? I really don’t know what the numbers are. They may be 40,000 or 5,000. Let us see what they are.” However, I object to the Minister’s simply going into denial and saying that nothing is happening because it implies a degree of callous disregard for what is going on in people’s lives. Incidentally, the total number of cases that we have received from local authorities is, with no spin from us, 23,309. That figure is based on the responses of fewer than half the local authorities asked, so it is likely that the final figure will be much higher than the Minister has suggested.
The danger is that if the Department has got this wrong, what else has it got wrong? I am absolutely certain that the Government’s predicted savings will nowhere near be met. Indeed, I suspect that the total effect, including people claiming other benefits, such as out-of-work benefits, will end up costing the taxpayer more. I hope that the Government will one day provide the full details.
So many areas of the policy have been incompetently laid out, not least what counts as a bedroom. Last year, the Minister tried to say that people should take a sledgehammer to walls and knock them down and that that would change the rules. According to the Department for Work and Pensions guidance, however, it does not. Liverpool city council was sent an e-mail by the Department that flatly contradicted what the Minister said in the House yesterday afternoon about who qualifies to inherit a tenancy. According to the e-mail, those qualified include any child or relative of a “polygamous marriage”. I thought that polygamous marriages were illegal in this country, but that is the advice that the DWP has provided to the council. Perhaps the Minister can respond to that specific issue.
Some people who have been illegally forced to pay the bedroom tax will now, because of the loophole, have been given discretionary housing payments. What is the Minister’s advice to local authorities? To how many people does she think that it will apply? How much is it costing? Is the Department paying it or do local councils have to pay it? Will individuals have to pay that money back or are the Government writing it off? If so, how much will that be?
We have already heard about some of the problems caused by the faulty policy. Thousands more people are in arrears, which is a real problem for local authorities and for social landlords around the country. Thousands more have been evicted—not only a tragedy for the families and individuals concerned, but also a problem for social landlords.
The policy fails to address some big, long-term issues and has made them worse. When I come up to Westminster from south Wales, it often feels that there is something of an economic recovery going on and I can see house prices rising magnificently, but my experience elsewhere in the country is completely and utterly different. My anxiety is that an economy that is already heavily overloaded towards London and the south-east will become more so. It is a problem for the people of London and the south-east as house prices get further and further out of reach for ordinary people in ordinary jobs. I worry that the Government’s policies will make that worse.
In the 1980s, contrary to my party’s policy at the time, I completely supported the idea of people being able to buy their own council house or social housing. It was actually first piloted by a Labour authority in Newport. [Interruption.] That is not in the north-west, as I think you are about to warn me, Ms Dorries.
Chris Bryant
I can read your mind.
What was a mistake at that time in the north-west and everywhere else in the country, however, was that local authorities were not allowed to build more social housing, and we are paying the cost of that now. The previous Labour Government did not get it right either, but unless we build more houses and provide more supply at a time when demand is increasing every year, partly because more households are breaking down into smaller units and partly because there are simply more people, we will fail in the future.
I end with two remarks. First, the Government should repeal the bedroom tax for the people of the north-west and the whole of the country. If they do not, we will, and we have costed that commitment. Secondly, we need to do something to tackle the root problem in housing benefit, which is that antisocial landlords, who often provide substandard housing, are effectively being subsidised by the taxpayer. That must be wrong and that we will change.
The Minister of State, Department for Work and Pensions (Esther McVey)
It is a pleasure to serve under your chairmanship, Ms Dorries. I think it is the first time, so I am delighted to be here. I congratulate the hon. Member for Makerfield (Yvonne Fovargue) on securing the debate.
Having listened to everything that has been said, there is one thing on which we can agree: this is about homes and people’s lives. This is about people and their local communities and what we can do best to support them. It is frequently forgotten, however, that it is also about the people who are not fortunate enough to be in a house of the size they need, whether because they are on a waiting list or because they live in an overcrowded home. At the same time, we must think about the people who are paying the bill. Taxpayers are funding the homes of people who may have extra bedrooms when they themselves may not.
We have thought about the matter in every which way and from everybody’s viewpoint and have asked ourselves how we best solve the situation. More than 300,000 people are in overcrowded homes and 1.7 million people are on waiting lists, yet there are 1 million spare rooms in people’s accommodation. We have to think about that. In Wigan, there are 3,500 families or more on the waiting list and 1,500 in overcrowded accommodation. I believe that the hon. Member for Makerfield said that 3,300 were affected by the removal of the spare room subsidy. Which group should be given more consideration? We cannot say that; they must all be considered when we decide what we shall do.
There is a conundrum, as we all agree, but how are we to deal with it? We cannot brush it under the carpet—it would have to be a huge carpet—and continue as if there is not an issue. We must deal with it, and we are confronting it. Of course, we know that there has been less house building, and we know the issues associated with that. God ain’t making no more land, and getting planning permission is very difficult. Yet Labour, during its reign, let more than 2 million people into a crowded island. We must cover all the angles and dimensions. We have said that we are putting £4.5 billion into the building of social housing. We are building another 177,000 by 2015. All those things are positive, although there is always more that can be done.
When houses with spare rooms were let, people were making to the tune of £500 million a year. Rent on that was being collected from taxpayers, who were paying that bill. It was unfortunate that those social landlords were getting £500 million a year extra for bedrooms that were not deemed to be occupied under the criteria brought in by Labour in 2008.
Sheila Gilmore
The Minister mentioned the building of affordable homes. A problem with the policy that the Government are currently implementing is the fact that they plan to charge 80% of market rent for them. There will be a substantial increase to the overall housing benefit bill. When the Work and Pensions Committee visited Luton in Bedfordshire, the housing association explained not only that it was obliged to set the rents at 80% of market rent to get a grant to build; it was also obliged as part of that arrangement to turn over some of its existing stock to such higher rents, as it became available. Government policies are likely to put up the housing benefit bill faster than the policy we are debating is likely to reduce it.
Esther McVey
I have heard various things—I will say that they are scare stories, because we have heard them before—about what would happen, and they have not happened. In fact—although at the moment this is just anecdotal—in the private sector house prices and rents are coming down, despite much of what the Opposition say; that is actually happening in Wales, which I visited last week.
What are the local authorities and housing associations doing? Some are redesignating homes with respect to their size. Knowsley is doing that. Salford is bringing empty houses into use and converting commercial property units into affordable homes. People are starting to build one-bedroom homes for the first time in a long time. Who would have believed it? Some people and areas are still building three-bedroom homes, despite knowing that they are not needed. One-bedroom homes are needed; they should constitute 60% of new builds. It is incredible that people who do not understand the stock still feel incentivised to build the wrong homes, because they will be paid for the bedrooms, whether they are used or not. That must all change.
We should all recognise the inequality in allowing social sector tenants full housing benefit for a spare bedroom while denying it to private sector tenants. The Opposition’s position seems to be that the policy is pernicious and evil when it affects social tenants, but acceptable when it affects private tenants; Labour introduced that policy in 2008. As has been pointed out many times before, there are two coherent positions: one is the Government’s, which asks anyone on benefits to contribute towards the cost of an extra bedroom; the other is to give anyone on benefits full housing benefit regardless of the size of the house that they need or whether or not they are under-occupying their property. The Opposition’s position is incoherent. It states that social tenants should not have to pay towards an extra bedroom, but private tenants should. We cannot have that.
Yvonne Fovargue
Does the Minister know about the housing position in Wigan, where, because of the shortage of one-bedroom properties, it is possible to rent a two-bedroom private property for less than the median housing allowance? That leads to the ludicrous situation in which someone moves out of a two-bedroom social rented property, because they must pay £14.65 a week to live there, into a two-bedroom private property, where the full rent is paid by housing benefit.
Esther McVey
We have had this discussion before with the Opposition. What the hon. Lady does not understand is that a full cycle is under way in that situation. When someone moves out of a home in one sector, someone else moves in. The 3,500 on the waiting list or the 1,500 who are living in overcrowded homes are moving, in this instance, from the private to the social rented sector. We cannot take only half the equation; we must think about who is moving where, and what the needs are. What might be an overpayment in one area is an underpayment in another, so there is a full circle that continues.
Sheila Gilmore
The Minister is being very generous in giving way. She has raised issues about spare rooms—it is an emotive phrase. However, some organisations have argued that, if a room is not genuinely spare—for example, if a couple must sleep apart for health reasons, have medical equipment to store, or have a specially adapted house, so that it would be ludicrous to expect them to leave—they should simply be exempted. Those rooms are surely not really spare.
Also, even if the original intention of the policy was to bring parity with the private rented sector—I do not think it was, because it was never mentioned—an amendment was tabled in the other place, and probably also in this House, to the effect that the rule would be applied only if someone refused a reasonable offer of alternative housing. So it would not be retrospective. Is the Minister willing to consider either of those issues?
Esther McVey
We have put forward a full array of discretionary housing payments and exemptions, which I shall come to. However, I want to point out what Labour intended, when it was in power. Despite today’s claims about how it would have dealt with things, we know what is on the record:
“We hope to implement a flat rate housing benefit system in the social sector, similar to that anticipated in the private rented sector... We aim to extend our reforms to the social rented sector as soon as rent restructuring and increased choice have created an improved market.”—[Official Report, 19 January 2004; Vol. 416, c. 1075W.]
Esther McVey
I have given way a lot, and have answers to provide. Despite the bluster and fluster and cries of “We cannot do it,” that policy would have been implemented by the Opposition.
We have provided for the most vulnerable, including disabled children who cannot share because of their disability; foster children; overnight non-resident carers for claimants and their partners; and live-in carers. We have also ensured that tenants can retain a bedroom for an adult child who is in the armed forces and deployed on operations. We have established support, and in addition the courts have confirmed that we have satisfied our equality duties by making additional discretionary housing payment funding available. In total we have provided discretionary housing payment funding of £180 million in this financial year. The Government have given local authorities the money to help people in need. In fact, we have gone further, and within the year we have allocated an extra £20 million for which the 380 local authorities in Great Britain could bid.
What happened with that extra money? Not all the local authorities bid for the extra £20 million that we put in place because they did not feel the need to, and only £13 million was taken, meaning that £7 million was not. Yet again, there were screams of protest from the Opposition about what was needed, but the money had been put in place and yet not all of it was utilised. In my local area, for example, Wirral council still had £180,000 to spend on discretionary housing payments by the end of the month. That was made up of £30,000 left over and an extra £150,000 that had been granted.
We are getting all that information back from people and finding out what they need, so I take great exception to the accusation that this policy was developed on the back of a fag packet—I think that is what the hon. Member for Rhondda (Chris Bryant) said.
Nadine Dorries (in the Chair)
Order. Mr Bryant, please do not interject from a sedentary position. Mr Bryant may not have said “on the back of a fag packet”, so perhaps the Minister will quote the words he did say to make the point. Mr Bryant, if you want to make an intervention, please do so, but do not interject in that way.
Esther McVey
Whether, in colloquial terms, the hon. Gentleman said that it was developed on the back of a fag packet, a cigarette packet or an envelope, it was discourteous, given the hundreds of hours of work that have been put in. I think he used the phrase “on an envelope in the shower”, but that was not the case, because many hours went into developing the policy. That might be how the Opposition make their benefits policy, because so far it seems they do not know what they are doing—what are they agreeing with, or not, and how are they helping the guarantee scheme, or not?
What the Government have done has had a profound effect on what is happening in the country: there are record rates of employment; youth unemployment has fallen for the past six consecutive months; there are record rates of women in work; and, as in the news today, the number of workless households is falling considerably. Far from our policy being made on the back of an envelope or cigarette packet, it is having significant effect. For a moment, I want to think about those people who have now got a job and are fulfilling their potential, supporting their families, getting their foot on the career ladder and working their way up. I meet such people every day, and they say how their lives have been transformed, so it is important that we listen to them as well.
As I said, 86 local authorities applied for extra money, although not all of them spent the extra £20 million, and not all councils felt that they needed it. Many of the Opposition scare stories did not happen at all and, despite the dire warnings, nor did the arrears. The report from the National Housing Federation stated that it is difficult to observe a rise in outstanding arrears. In fact, more than half of all working-age tenants in receipt of housing benefit were already in arrears before the new policy came into effect. While we are talking about people and their lives, moreover, there are lots of examples of people moving and downsizing. Among such people is Suzanne, from south Yorkshire, who had four children who are now grown up and have left home. She did not want to move, but she said that now that she has and has downsized, things are totally different. She has less of a heating bill—less in the way of bills altogether—can manage her cost of living and live within her means. It is key that we look at everyone’s requirements.
On the loophole that has been mentioned, we have been through this on various occasions. The person in question has to have been in the same house and continuously on housing benefit since 1996 to be part of the loophole. The Opposition were right: we did not know the entirety of the numbers. What we deemed to be roughly right, however, was the figure of £5,000, and we said that we would cover those costs, so we agreed with the local authorities—£2 million to do the extra work necessary. We agreed the amount of money to do the administrative work to support those people. Far from screaming and yelling, we have gone into the issue in our discussions. Indeed, we debated it yesterday, so I think it has been covered.
What is key is that we have to think about the policy into the future, and to support people who are in overcrowded accommodation, whether they are on waiting lists or already in social rented housing. It is about how we best go forward and provide support. We are dealing with the issue, which Labour did not want to do when in office—they were happy to see the housing bill double over 10 years and the waiting lists and overcrowding increase.
Chris Bryant
The Minister has not answered any of my questions, so I will ask them again. She has a moment or two to find the piece of paper bearing the inspiration. My first question is, how many people have already been given back their money because they were illegally charged under the bedroom tax, but who in the meantime have also been given discretionary housing payments? Will they have to pay that back?
Esther McVey
No one will pay anything back. The people who have got discretionary payments will keep them—they will have been paid to the social rented sector—and should they wish to use them going forward, they can.
Chris Bryant
I am grateful to the Minister for allowing my continued interventions. How much, therefore, are the Government writing down in that regard?
Esther McVey
We have said that we will take that into consideration. We are working on a set of numbers, and we presume the figure to be in the area of £5,000. We will take that cost on board, as we said—both the administrative cost, which we have agreed, and the extra costs that would have been used by the discretionary payments.
Nadine Dorries (in the Chair)
Order. Will this intervention relate to the north-west, Mr Bryant?
Chris Bryant
How much will the total amount of money be throughout the UK and, in particular, how much will it be in the north-west? We need to know the amounts of money the Minister is talking about for writing down purposes.
Esther McVey
The Labour party have never cared so much about money—hence we are in the debt we are in. We do not know how to sort out all of Labour’s problems.
I have said that that is a cost we will be covering and dealing with. We have put discretionary housing payments aside, although of even the most recent £20 million that we have offered, only £13 million was used, leaving £7 million. We have said that of course we will deal with the situation, and that is what we will be doing. At the end of the day, however, we are talking about what is happening in Wigan and the north-west. We have to look at everyone, whether in the social rented sector, in overcrowded homes or on a waiting list, and at how best to deal with the situation. I fully applaud what the Government are doing and the way we are dealing with what we inherited—[Interruption.] I am sorry that the hon. Member for Rhondda is laughing at the situation, because we are picking up many of the problems left behind by him and his party.
NHS Patient Data
(10 years, 1 month ago)
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Barbara Keeley (Worsley and Eccles South) (Lab)
I am pleased to speak in this debate with you in the Chair, Ms Dorries. Other Members may not know that we made our maiden speeches together, so we have always been inextricably tied in that way.
I am raising issues today because I want the Minister, NHS England and the Health and Social Care Information Centre to appreciate some of the real concerns about past and current uses of NHS patient data. I will talk about concerns about a lack of transparency in decision making, the commercial use of patient data and the lack of consent for that use.
The chair of the HSCIC talked last week about the organisation’s having an “innocent lack of transparency”. That was an inappropriate description of an organisation that is causing serious concern about its handling of NHS patient data. A lack of transparency cannot be tolerated in the part of the NHS that is trusted with safeguarding patient data and I do not accept the description of “innocent” for that lack of transparency.
At a recent meeting of the Select Committee on Health, Members asked questions about decision making on data releases from the NHS Information Centre. The panel members, who included the Minister, were asked how many of the key decision makers from the NHS Information Centre, which released patient data to insurance actuaries, had later become decision makers in the HSCIC. Max Jones, director of information and data services, said:
“The executive directors of the HSCIC with responsibility for this area were not part of the old information centre.”
When asked again whether the individuals who made the decision on transferring data to insurance actuaries became decision makers in HSCIC, he replied that
“the very senior management in the HSCIC is not the same as very senior management that was in the”
information centre.
The Minister has recently given me an answer to a written question that directly contradicts that and I am concerned about that. I asked him about the numbers and levels of staff who had transferred to the HSCIC from the NHS Information Centre. His answer stated that, of the 11 members from the management board of the HSCIC:
“Three of the non-executive directors and two of the executive directors were previously members of the NHS Information Centre management board. One of the executive members is graded as a very senior manager post and the other transferred as a senior doctor.”—[Official Report, 17 March 2014; Vol. 577, c. 457W.]
Given that that directly contradicts Max Jones’s answers to the Select Committee, will the Minister ask Max Jones why he gave those incorrect answers?
Dr Mark Davies, one of the senior executive directors, joined the NHS Information Centre in 2008 and transferred to the HSCIC when that was established. Indeed, an article last August described how Dr Davies sits in the exact same office in Leeds that he occupied when the HSCIC was the NHS Information Centre. He is the director of clinical and public assurance—a post that, surprisingly, is being made redundant this month. Will the Minister tell us why a senior post on public assurance is judged to be redundant, given the lack of public confidence in the plan for care.data and the many questions being raised by me and others about commercial uses of patient data?
Grahame M. Morris (Easington) (Lab)
I congratulate my hon. Friend on securing this timely debate, which is raising some important issues that we need clarity on. We have just come from a seminar in which the Health Committee had some expert witnesses. Does she agree with the conclusions put forward there about the need for clarity before we go ahead with this data collection? I am thinking particularly about the cyber-security review, safeguards on anonymous or pseudo-anonymous data, separating out purposes for controls, a tighter definition of the care data—
Nadine Dorries (in the Chair)
Order. Mr Morris, this is a 30-minute debate, so can you keep your intervention short, please?
Grahame M. Morris
I will. I just want to mention governance arrangements as well.
Barbara Keeley
Very much so. I must tell the Minister that we have not had time to absorb all of what has happened at the HSCIC, but we are disturbed by much of what we have learned. It seems as if there has been a proliferation of organisations and committees and that, as the use of that data and commercial data has burgeoned, the NHS has lost control of what is going on. That is of real concern.
Jim Shannon (Strangford) (DUP)
I congratulate the hon. Lady on bringing this matter to debate and on her perseverance at every stage. Does she agree that although the commitment given regarding a patient’s right to their data will be respected, perhaps patients in the NHS see this issue from their own points of view? They do not see the IT implications of what is taking place; because of that, there need to be more assurances for the patient on what happens.
Barbara Keeley
I very much agree. Last night I tweeted that I was to have this debate today and I was astonished with the response I got—an awful lot of people are very concerned about the issue. I will come on to opt-out in a moment, but let me conclude the point I was making about the director of public assurance’s post being made redundant. There will be considerable interest from Parliament on the basis for and the terms of that redundancy. I hope there will be no suggestion of a compromise agreement or gagging clauses. There are serious questions to ask about some of the activities.
While Dr Davies is still in post, there are a number of questions to ask about his role and those of his colleagues in the NHS Information Centre that later became the HSCIC. Dr Davies has been the chair of the four-person data access advisory group. Having two senior HSCIC employees on the advisory group on sensitive data releases, including its chair, brought criticism about a lack of independence. As chair of the group, Dr Davies also had the right to approve data releases unilaterally from the HSCIC, outside the committee. He was therefore in a powerful position. Indeed, it was reported in The Guardian last year that Dr Davies used that power to release to the Cabinet Office the confidential medical records of teenagers taking part in the national citizens service.
Perhaps more recently, Dr Davies’s views were becoming out of line on some aspects of the Government’s stance on care data. The Guardian reported in January that Dr Davies said that there was a “small risk” that certain patients could be “re-identified”, because insurers, pharmaceutical companies and other companies had their own medical data that could be matched against the pseudonymised records. He said:
“You may be able to identify people if you had a lot of data. It depends on how people will use the data once they have it. But I think it is a small, theoretical risk”.
The risks in this area have been rightly getting much attention and the Health Committee heard more about them this afternoon. Examples can be taken from the websites of both Harvey Walsh, a company that boasted of having more than a billion linked patient-level records and an ability to track patients over time, and OmegaSolver, the company with the patient analyser tool that it claimed can track patients throughout their hospital care.
In the case of OmegaSolver, its website held example screens showing use of its Patient Analyser tool, which it said could track actual patients within every hospital in England, providing up-to-date information for every disease area.
Grahame M. Morris
My hon. Friend is making an essential point. Whole data sets from the hospital episode statistics have been handed over to third parties, and that is absolutely reckless. We need those data to be deleted to restore public confidence in who has got the data and for what purpose.
Barbara Keeley
Indeed, and I say that they “held” that information because websites such as those that I mentioned were suddenly altered when attention was drawn to the capabilities that those organisations claimed to have when it came to tracking patients. The Minister and hon. Members may have seen reports about how the medical histories of people in public life could be tracked using online tools of that type. Widely reported accidents or medical procedures undergone in NHS hospitals clearly provide enough information to spot one patient event in the records and then read across to every hospital visit for that individual.
I ask the Minister not to echo the mantra he has used before or the one the HSCIC used when asked about OmegaSolver—that only aggregated patient data are used and that that does not represent the experience of an individual. It is clear that commercial companies granted commercial reuse licences have claimed that they can track
“actual patients within every hospital within England”.
As I said in the recent debate on the Care Bill, the hospital episode statistics database was originally an administrative database. When did any of us sign up to having our data used to recalculate the cost of insurance cover or by pharmaceutical companies as customers of OmegaSolver? I do not recall signing up to that and I am sure that other hon. Members did not, either.
Does the Minister agree that perhaps we should go back to thinking that patients should have the option of having their data used only for clinical care and for commissioning that care? In his response in the Care Bill debate on these issues, the Minister said that
“people can, at any time, object or change their mind, and the Health and Social Care Information Centre must respect their wishes and remove their data from records.”—[Official Report, 11 March 2014; Vol. 577, c. 206.]
At the time he said those words, I thought, “That is not currently the case.” I understand that deletions are not permitted and, once a patient’s record has been extracted, they cannot get it removed from the database. If it is in fact a new development that patients can change their minds and request that their data be removed from the records held by the HSCIC and by commercial companies, that will be welcomed, but I really look forward to the Minister telling us how that happens.
I gave the example of Harvey Walsh. They have described themselves as main suppliers of hospital episode statistics and NHS data to the pharmaceutical industry. Can the Minister tell me how an NHS patient can have their records removed from Harvey Walsh’s AXON database or any of the other databases that are outwith the HSCIC?
In the Care Bill debate, the Minister was also asked a question about whether free text would be uploaded from patient records either now or in the future, and he answered:
“As things stand at the moment, free text is not going to be used. That is the reassurance given by the HSCIC”.—[Official Report, 11 March 2014; Vol. 577, c. 206.]
However, Professor Julia Hippisley-Cox and Professor Ross Anderson have pointed out to Health Committee members that researchers already make use of free text from GP patient records. Indeed, medical students and computer science postgraduates at the university of Sussex and at Brighton and Sussex medical school have begun work on analysing doctors’ notes for data from free text.
The data being used come from the Clinical Practice Research Datalink, and Select Committee members were told that those patient data are being used without specific patient consent or section 251 support—it is section 251 of the National Health Service Act 2006. If the HSCIC has given the Minister an assurance that free text from GP records will not be used, can he tell us whether and when the use of free text from GP patient records in the CPRD will be stopped, particularly given that that appears to be happening without patient consent? Patient consent is important, and I still get the feeling from the HSCIC that individuals are somehow being labelled as selfish if they have concerns about sharing their data.
I want to come back to concerns about the existence of the commercial reuse licences granted by the HSCIC. I have tabled a written parliamentary question on this, but I also put the question to the Minister now. He has confirmed that the HSCIC has granted commercial reuse licences. Will he now provide me with a list of each past and present holder of a commercial reuse licence granted and, for each licence holder past and present, will he list the purpose or purposes for which they applied and were approved to use NHS patient data from the HSCIC and its predecessor, the NHS Information Centre? As patients of the NHS, we deserve to know in which places and with which organisations our data are sitting and what they are being used for.
Grahame M. Morris
My hon. Friend is being very generous about interventions. Again, she makes an excellent point. We need an effective audit trail. If these data sets are being sold on, we need some effective control. That should be stopped. I hope that the Minister—
Barbara Keeley
I, too, hope that the Minister will address that.
I want to give an example of data use approved by the Data Access Advisory Group of the Health and Social Care Information Centre, because I think that it is instructive. Minutes from the group’s July meeting show that the advisory group approved the use of hospital episode statistics data for HSpot Ltd and its FindMeHealth application. HSpot Ltd had requested HES data, including consultant codes, with the intention of publishing those data online to enable patients to compare procedures by hospital and clinician. Online information about FindMeHealth says that it is
“a new independent UK comparison site offering choice…to the growing number of people who are choosing to self-pay for private healthcare.
FindMeHealth compares prices across the top self-pay procedures and gives users access to the very latest data from NHS and private sources”.
What we have here is a kind of “Go Compare” website for private health care.
Much was said about uses of patient data in the debate on the Care Bill. The Minister said that information from the HSCIC
“may be disseminated for the purposes of ‘the provision of health care or adult social care’ or ‘the promotion of health’.”—[Official Report, 10 March 2014; Vol. 577, c. 136.]
Does the Minister think that the definition that he gave us extends to the HSCIC granting the release of patient data so that commercial companies can run comparison websites on the top self-pay procedures?
We need much greater transparency, and I thank hon. Members present for the questions that they have put on this matter. We need greater transparency from the Health and Social Care Information Centre, but we also need it about the other data sources and the other places where data are held. The chair of the information centre, Kingsley Manning, said in his speech last week that one of its key measures of success might have been that it was
“safely below the radar of public attention”,
but that organisation is no longer below the radar of public attention. Indeed, the organisation has become the story because of the errors that it has made, which mean that hon. Members and the public have discovered just how their confidential medical data are being used by insurers, by commercial companies and even on systems in the United States.
If people look at social media, as I did last night, they will see that there are many comments about just how much distrust people now feel towards the HSCIC. The organisation, as I said at the start, has claimed an “innocent lack of transparency”, but others accuse it of evasiveness and half-truths. As I have detailed, giving misleading answers to the Health Committee on established facts about who works for the organisation does not help.
All that has to change. Hon. Members, including me in this speech, have talked about ways in which the situation should and must change, and I hope that the Minister understands the vital need for that.
The Parliamentary Under-Secretary of State for Health (Dr Daniel Poulter)
It is a pleasure to serve with you chairing the debate, Ms Dorries. In some ways, I wish that we had new issues to discuss; many of the issues that we are discussing today we have thrashed out on a number of occasions in the Care Bill Committee and the Report debate earlier this month, so I am not convinced that there is a lot of new information that I can bring, other than giving further reassurances along the lines of those that have been given. However, it is important to make two points at the outset.
I congratulate the hon. Member for Worsley and Eccles South (Barbara Keeley) on initiating the debate and on her ongoing interest in this topic, but if she has concerns about a witness not giving correct information to the Select Committee, it is of course at her disposal to speak to its Chair, my right hon. Friend the Member for Charnwood (Mr Dorrell), and ask him to take that up with the witness. If she has those concerns, I suggest she does that. Of course, it is very easy to take comments—a few sentences—out of context. It may be that that is the case here; it may be that there are genuine concerns, but if the hon. Lady has those, it is for her to take them up with the Chair of the Committee and ask him to take the matter further.
Dr Poulter
I will give way in one moment. It is also the case, in relation to a number of the other issues and concerns that have been raised during this discussion, that some of the events and some of the evidence given to the Select Committee have of course been superseded by the amendments made to the Care Bill that we debated a couple of weeks ago, so it is difficult to see those points—
Dr Poulter
I am giving way to the hon. Gentleman’s hon. Friend in one moment. Let me complete the explanation and then I will be very happy to give way. Events have moved on since some of those evidence sessions, because of course amendments were made to the Care Bill that gave greater clarity and greater reassurance about the protection of patients’ data.
Barbara Keeley
Before the Minister moves off the point about the misleading evidence given to the Health Committee, may I put this to him? The Minister was there with Max Jones and Tim Kelsey—they were there supporting him at the Committee—and I think that this really is down to the Minister. I have, of course, raised the matter with the Chair of the Select Committee, but if a Minister brings civil servants and NHS employees with him to a Committee and those civil servants mislead the Committee—giving incorrect answers not once but twice—I think that it is really down to the Minister to raise the issue as well.
Dr Poulter
The hon. Lady will recognise that NHS England is an arm’s-length body, so it has less accountability than—or certainly not the same accountability as—a civil servant does to a Minister, and it has a degree of independence. If there are concerns to be raised, as she has just outlined, it is for the Chair of the Committee to write to obtain clarification if he believes that to be appropriate. I am sure he will do so if he feels that that is right. It is not for me, as a Minister, to interfere with the workings of a Select Committee and I do not propose to do so.
Dr Poulter
No. I have listened to the same speech from the hon. Gentleman as did my right hon. Friend the Member for Chelmsford (Mr Burns). The hon. Gentleman is always very helpful in tying himself in knots and confusing debates. On this occasion, however, I will make some progress, because I have got 10 minutes left and I would like to put down some further reassurances. I may give way later on, time permitting.
Once again, I congratulate the hon. Member for Worsley and Eccles South on securing the debate, and I would like to say at the outset that we all believe care.data to be a good thing. It is good news for patients, for improving transparency in health care and for improving the quality of research. Those are undoubtedly good things, and we must not lose sight of them in our discussion. The lessons of Mid Staffordshire point out that if we do not properly expose examples of bad care—if we do not have the data, and the transparency in the use of those data, to expose good and bad care in the NHS—bad things can happen to patients. That is a lesson that we must heed.
We must also recognise that if we had had better data sharing in the past, we might have been able to learn better how to recognise patterns in prescribing that were to the detriment of patients, such as the example that has been cited of the use of thalidomide during pregnancy. We might have avoided some very bad things happening to patients if we had had the necessary data. That is what our proposals are about.
This is not a sudden, big-bang change. Opposition Members have put it about that we are dealing with a big change in approach to the use of data in the NHS, but I remind the Chamber that in 1989, hospital episode statistics were first collected for in-patient data, in 2003 for out-patient data and in 2007-08 for A and E data, and primary care data are now being made available.
Of course we understand that the use of data can be concerning, so I want to reassure everyone that the right safeguards are in place, many of them established by the Health and Social Care Act 2012. The new body, the Health and Social Care Information Centre, must have regard to the safeguards put in place by the 2012 Act. The Government take the safeguarding of patient data very seriously.
The commercial reuse of licences was raised in the debate. The Health and Social Care Information Centre has confirmed that some reuse agreements remain in place for specific organisations in relation to approved purposes. The purpose of each application is carefully considered by the HSCIC before it is agreed. That consideration includes the application’s benefit to the health and care system, a safeguard established by the 2012 Act for the use of data.
Dr Poulter
I will give way in a moment; I am just going to finish this point. Following concerns expressed by the Health Committee in its meeting of 25 February, Sir Nick Partridge, a non-executive director on the HSCIC board, has agreed to conduct an audit of all the data releases made by the predecessor organisation, the NHS Information Centre, and report on that to the HSCIC board by the end of May.
Furthermore, a report detailing all data released by the HSCIC, including the legal basis on which those data were released and the purpose to which they are being put, will be published by the HSCIC on 2 April. That report will be updated quarterly. I reiterate that the HSCIC will release information for health and care uses only.
Grahame M. Morris
The Minister is arguing that the scheme is an extension of what happened before, but there is clearly a quantum difference. There is general agreement that it is a wonderful thing to have data sets for research and public health purposes. The difficulty that the public have, about which we need to restore confidence, is when that information is being used for marketisation—for marketing purposes—by commercial reusers. I am not reassured by the Minister’s comments, but he has an opportunity to correct the problem in the House of Lords.
Nadine Dorries (in the Chair)
Order. Mr Morris, that is a very long intervention.
Dr Poulter
It is difficult to reply fully to such debates when we have very lengthy interventions, of which the hon. Gentleman is very fond. I would like to spell out to him what the quantum difference is. The Government have, through the 2012 Act, put in place safeguards for data protection that the previous Government never had. In particular, under the 2012 Act, data can be used only for the benefit of the health and social care system. We have put in place the safeguard that people can opt out from having their data collected and used. Those safeguards were not in place when the previous Government—
Dr Poulter
No, it is important to make these points. The hon. Lady is very party political on the matter, and it is important that she recognises failings that existed in the past. I have mentioned the collection of in-patient data from 1989, out-patient data from 2003 and A and E data from 2007-08. I am not aware of any safeguards put in place by the previous Government to allow patients actively to opt out of the collection of those data. If she is aware of any, I would like her to clarify the record.
Barbara Keeley
The Minister is talking about opt-out, but I asked him a specific question about commercial reuse licences. I understand that there are at least six of those—six massive copies of all hospital episode statistics data—out there. How does an NHS patient get their data deleted from those copies, which sit with companies such as Harvey Walsh and OmegaSolver? How does that happen?
Dr Poulter
The point is that people have the opportunity to opt out of the programme if they wish to. The HSCIC can also put in place contractual safeguards if there are sensitivities around data. Our amendments to the Care Bill created a “one strike and you’re out” situation for any companies that use data, whereby if there is any misuse of data, they will be struck off.
The safeguards established by the Government—those in the 2012 Act and the announcement by my right hon. Friend the Secretary of State that people could opt out of the collection and use of their data—are welcome. Such safeguards never existed under the previous Government, and we have made good progress in protecting patient confidentiality, although that is not to say that we do not need to reassure the public further.
We must make sure that we have rigorous processes in place. In the brief time available, it is worth outlining some of the strong measures in the 2012 Act, which established the HSCIC and set out the framework in which it will operate to ensure that data are being used appropriately. Under section 260 of the 2012 Act, the HSCIC must not publish the information it obtains in a form that would enable an individual other than a provider of care to be identified. That is a strong protection for individual confidentiality in the publication of data.
Under section 261, the HSCIC cannot disseminate or share data that could be used to identify an individual other than a provider of care except where there is another legal basis for doing so, which, as we have said, would be only in extreme circumstances such as a civil emergency. Under section 263, the HSCIC must publish a code of practice clarifying how it and others should handle confidential data. Under section 264, the HSCIC must be open and transparent about the data it obtains by publishing a register with descriptions of the information. The HSCIC is working now to ensure that it is transparent about all the data it has released to others.
Moreover, the Government have already introduced the commitment that if someone has concerns about their data being used in such a way, they can ask their GP practice to note their objection and opt out of the system, after which no identifiable data about them will flow from their GP practice to the HSCIC. Directions to the HSCIC under section 254 of the 2012 Act, which are separate from the amendments considered by the House as part of the Care Bill, will ensure that that commitment to patients has legal force.
There are strong safeguards in place, and Opposition Members would do well to recognise that the 2012 Act has put us in a much better place. Safeguards are in place that never existed when the previous Government extended the use of data sharing in the NHS. We all recognise the benefits of care.data, and we must recognise that, with the additional safeguards in place, we will have a system that will help to improve health and care research and the quality of care available to patients.
Tamils (Sri Lanka)
(10 years, 1 month ago)
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Mr Lee Scott (Ilford North) (Con)
It is a pleasure to serve under your chairmanship, Ms Dorries. I secured this debate to call for justice for the Tamil community in Sri Lanka—indeed, for everyone living there—after a long struggle over many years. I thank my right hon. Friends the Minister, the Foreign Secretary and the Prime Minister for getting us to the stage we are at now. I also want to express gratitude to the United States, Macedonia, Montenegro and Mauritius for jointly tabling the resolution that is currently before the United Nations in Geneva.
After all this time, when it is quite obvious that the Sri Lankan Government are not going to deal with matters themselves, we need a comprehensive international investigation. I am pleased that such an investigation is included in the UN’s draft resolution, and although I know that that is still being worked on, I would like to put a number of points to the Minister. I would like to see put forward as tough a resolution as is humanly possible. I have seen that the current draft resolution says that crimes up to 2009 would be investigated, but many crimes have been committed since then that must be looked into as well. The demilitarisation zone should be expanded to include the east of the country, where crimes have been perpetuated, as well as the north.
It is also important for there to be a free political stage—people should not be persecuted for trying to speak up and stand as opposition parties in Sri Lanka, as they are currently.
Mr Virendra Sharma (Ealing, Southall) (Lab)
I am grateful for the hon. Gentleman’s generosity in giving way so early in the debate. I am sure that he will agree with my hon. Friend the Member for Harrow West (Mr Thomas), who said in a debate a few weeks ago that the Home Office and the UK Border Agency should stop deporting Tamils to Sri Lanka while the resolution is being discussed by the UN.
Mr Scott
It is important that anyone who fears for their life and their future should not be deported to Sri Lanka at this time.
It is vital that the resolution goes through. Neither I nor anyone else should do anything today to try to hinder that, but we must also think about where we go from here. Let us hope that the resolution goes through later this week, but where do we go then? The Sri Lankan Government have never given any signal that they intend to carry out their duties as a Government representing all peoples in their country, so nothing should be taken off the table when considering what we must do to ensure that the resolution is adhered to and justice is done. Without question, before there can be even a chance of reconciliation, there must be justice.
I call for peace for all in Sri Lanka. The accusation has been levelled at me that I am speaking on behalf of only one people. I am talking on behalf of everyone—I do not want anyone in Sri Lanka to suffer, whatever their religion or background might be. It is not for me to say who is guilty or not; the whole point of a comprehensive international investigation is to find that out. Someone was responsible for the death of women and children, for the rape of women and for the persecution that has gone on, and they must be held to account.
I commend the action taken so far, particularly the Prime Minister’s words in Brussels last week. He explained exactly why the UK has called for and is backing the UN resolution. Constituents who have come to see me have a right to know what has happened to their families. There have been so many disappearances— they have a right to know what has happened to their brothers, sisters, aunts, uncles, nieces and nephews in Sri Lanka. The only way forward is through a comprehensive international investigation.
Time is very limited today, so I will restrict my words as I know that colleagues wish to speak. I want to say something that I have said on a number of occasions: if we do not get the justice that people so rightly deserve, we should hang our heads in shame, no matter what our political party. We must work together, just as my right hon. Friends in the Government are doing.
Bob Blackman (Harrow East) (Con)
Does my hon. Friend agree that one of the aims of this week’s resolution is to build the biggest and broadest coalition of world support for whatever measure is passed, rather than a narrow base? We must demonstrate the world’s opinion of the situation in Sri Lanka. By necessity, that means being forced to compromise on some of the wording in order to achieve a worldwide position, but hopefully we will bring all powers into the decision-making process and so increase the pressure on Sri Lanka for a proper resolution of the situation there.
Mr Scott
I thank my hon. Friend for his comments. I believe that we must get through the toughest resolution we can. I was at the United Nations in Geneva and of course I heard the comments from some of the countries that do not support the resolution. I will not name them all, but I will point out the slight irony of the Russian ambassador saying that he does not believe that a country should involve itself in another country’s affairs, although that is another matter. None the less, I recognise the fact that many countries do not support the resolution, and it is vital that we have as wide a base of support from the world community as possible. I hope and pray that sufficient numbers will support the resolution and that it will go through. There will of course have to be compromises, but I want it to be as tough as possible, on the grounds that I laid out at the start of my speech.
John Mann (Bassetlaw) (Lab)
Does the hon. Gentleman share my hope that, should the resolution be passed this week, the UN will take immediate action, as it has done over recent months, to initiate its own investigations as a matter of priority?
Mr Scott
I thank the hon. Gentleman for his intervention and totally agree with him. The UN should play a vital role.
I would like to conclude by saying that once the resolution goes through—I hope and pray that it will—it is important that the UK helps in any way it can. I know that that will happen. We must help to gather evidence, some of which now goes back a long time, and make the investigation work. We must also take nothing off the table and do what is necessary to ensure that the Sri Lankan Government comply with the resolution once it is passed.
Siobhain McDonagh (Mitcham and Morden) (Lab)
Good afternoon, Ms Dorries. I congratulate the hon. Member for Ilford North (Mr Scott) on securing this debate at such an apposite time. Although I believe, like him, that the UN resolution on Sri Lanka is a move in the right direction, my constituents are concerned that it excludes some issues—including, notably, the period since the conflict ended. The atrocities committed during the conflict were appalling. President Rajapaksa headed a regime that most observers believe committed war crimes and crimes against humanity. During the conflict, it dropped cluster bombs on the area it had designated a no-fire zone. Even now, nearly 150,000 Tamils remain unaccounted for.
But the transgressions have continued. With no commitment to an independent international investigation that would lead to reconciliation, the political situation in Sri Lanka is worsening. The UN human rights commissioner, Navi Pillay, has said that
“although the fighting is over, the suffering is not”,
and that Sri Lanka is
“heading in an increasingly authoritarian direction.”
Amnesty describes a Government
“cracking down on critics through threats, harassment, imprisonment and violent attacks.”
Archbishop Desmond Tutu has said that
“anyone remotely connected with the losing side…is being hunted down, tortured and raped, five years after the guns fell silent.”
More than half the abductions mentioned in the report took place in the last year alone. Tamil places of worship are routinely targeted. A policy of displacement through militarisation led the UN special rapporteur in December to describe the living conditions of tens of thousands of Tamils as “very precarious”. Human rights campaigners have been targeted, including Balendran Jeyakumari, who was arrested and assaulted earlier this month and whose defenders were also detained when they tried to investigate. Earlier this month, the leading Sri Lankan Catholic Bishop Rayappu Joseph was accused of treason. Sri Lanka is now the most dangerous place in the world to be a journalist, and there have been thousands of disappearances. According to Freedom from Torture, Sri Lanka is now the country from which it gets the most referrals. Human Rights Watch has also released a shocking report on the rape and sexual abuse of Tamil detainees.
The Sri Lanka regime has shown that it cannot be trusted to act fairly towards the Tamil community. During the conflict, it fired cluster bombs, white phosphorus and rockets at Tamils. Now it represses Tamils in other ways. My constituents want Britain to do all we can to ensure that the UN resolution is a first step towards justice and reconciliation. If we had done more sooner, we might be in a better place now, but we are where we are. The Minister must ensure that Britain monitors the human rights situation vigorously and supports the work of the commissioner. I look forward to his response.
The Minister of State, Foreign and Commonwealth Office (Mr Hugo Swire)
I thank my hon. Friend the Member for Ilford North (Mr Scott) for securing this timely debate on the situation of the Tamil people in Sri Lanka, and I pay tribute to him for his tireless work as chairman of the all-party parliamentary group on Tamils in raising the profile of human rights issues in Sri Lanka and seeking progress on accountability for the events that took place during the war, both of which are vital if Sri Lanka is to put its past behind it, thrive in future and achieve lasting peace. I also thank him for acknowledging this Government’s work to secure a strong resolution on Sri Lanka at the United Nations Human Rights Council in Geneva this week. As he knows, I was in Geneva a few weeks ago and made a speech there in support of the motion with which we are closely involved.
As my hon. Friend knows, human rights in Sri Lanka is an issue that has rightly occupied a great deal of my time since I took over the Sri Lanka portfolio from my predecessor, my right hon. Friend the Member for North East Bedfordshire (Alistair Burt); it took up a lot of his time too. The decision to attend the Commonwealth Heads of Government meeting in Sri Lanka last November, although criticised by the Labour Opposition at the time, was absolutely the right thing to do, as it brought the concerns of many Sri Lankan people into sharp focus both here in the United Kingdom and around the world.
My right hon. Friend the Prime Minister saw the situation for himself when he visited the north, as the first Head of Government to do so since 1948. People came out in force to make their voices heard, tell their stories and demand the truth following Sri Lanka’s appalling war. Separately, my right hon. Friend the Foreign Secretary and I met civil society and religious leaders and heard about continuing impunity for human rights violations including, as the hon. Member for Mitcham and Morden (Siobhain McDonagh) said, disappearances, sexual violence and attacks on religious minorities.
While there, we were also reminded that Sri Lanka is a beautiful country, with the opportunity to build a strong, peaceful and prosperous future. But to do so, the Government of Sri Lanka need to show magnanimity and build the foundations for successful reconciliation. That means going beyond the important steps of reconstructing areas badly affected by the war, reintegrating child soldiers, resettling internally displaced people and de-mining. Incidentally, I am pleased that the United Kingdom contributed an additional £2.1 million last year to support de-mining work in Sri Lanka. Sri Lanka also needs to establish the truth for those who seek it, restore livelihoods to those who have lost them, deliver a sustainable political settlement, ensure an end to impunity, and ensure the independence of the judiciary and space for freedom of speech.
Much of that was reflected in the remarks made by my right hon. Friend the Prime Minister at the Commonwealth Heads of Government meeting, where he raised the United Kingdom’s concerns directly with President Rajapaksa, which he would have been unable to do if he had not gone there in the first place. The Prime Minister made it clear that if Sri Lanka had not properly begun a credible, independent domestic investigation by March, he would use the UK’s seat on the Human Rights Council to call for an international investigation.
Siobhain McDonagh
I was always taught that self-praise is no praise. There are many people who must be praised for struggling since 2009 to bring to light the evidence of the terrible atrocities that happened in Sri Lanka. One of them is the film producer Callum Macrae, whose film “No Fire Zone” is up for a documentary award in the One World film festival. Will the Minister congratulate Callum Macrae and extend his thanks to the other people who fought nobly when nobody was prepared to listen?
Mr Swire
I pay tribute to all those who have lifted the veil over what has gone on in Sri Lanka, including Channel 4, whose programmes have been dismissed by some elements in the Government in Sri Lanka. A lot of people have been campaigning for the investigation, which I hope will achieve support in the next 48 hours.
The time has come to address these things. The 24 February report of the UN high commissioner for human rights, Navi Pillay, bore out the concerns expressed to us in November. Its assessment was that human rights concerns continue, including compulsory land acquisition, shrinking space for civil society and media, rising religious intolerance and the undermining of independent institutions such as the judiciary. The report also assesses that the Government of Sri Lanka have
“failed to ensure independent and credible investigations into past violations of international human rights and humanitarian law”
on both sides during the war, which Ms Pillay attributes to a lack of political will.
The British Government strongly support that assessment. It is of deep concern that yet again the Government of Sri Lanka have failed to implement the recommendations of a Human Rights Council resolution. Additionally, Ms Pillay’s remarks during her visit to Sri Lanka last year that the country is
“showing signs of heading in an increasingly authoritarian direction”
are also of great concern to us.
Sri Lanka’s failure to investigate human rights violations is the reason why, when I represented the UK at the high-level segment of the UN Human Rights Council in Geneva on 3 March, I called for the international community to act and strongly encouraged the Human Rights Council to unite in supporting the call for an international investigation contained in the draft resolution on Sri Lanka. We are determined to win the council vote, which will take place later this week. The UK has taken a forward-leaning position and provided leadership, and will help break new ground if the council is successful in establishing an international mechanism. That is why my right hon. Friends the Prime Minister and the Foreign Secretary, my ministerial colleagues at the Foreign and Commonwealth Office and I have personally engaged with the majority of Human Rights Council countries. On 21 March, my right hon. Friend the Prime Minister led a call for European Council conclusions that put the EU’s full support behind the resolution.
We have been encouraged by the responses, but will continue to press hard for support right up until the vote takes place. We are taking nothing for granted. We have been working extremely closely with non-governmental organisations and other interested groups and listening to their views and aspirations. I take this opportunity to pay tribute again to all the individuals in this House and outside it who have campaigned for this moment. The time has come for a genuinely credible investigation with an international dimension to assess once and for all what went on. It will only help all the people of Sri Lanka move forward.
Question put and agreed to.
Written Statements
(10 years, 1 month ago)
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Consolidated EU and National Arms Export Licensing Criteria
(10 years, 1 month ago)
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The Secretary of State for Business, Innovation and Skills (Vince Cable)
The UK’s defence industry can make an important contribution to international security, as well as provide economic benefit to the UK. The legitimate international trade in arms enables Governments to protect ordinary citizens against terrorists and criminals, and to defend against external threats. The Government remain committed to supporting the UK’s defence industry and legitimate trade in items controlled for strategic reasons. But we recognise that in the wrong hands arms can fuel conflict and instability and facilitate terrorism and organised crime. For this reason it is vital that we have robust and transparent controls which are efficient and impose the minimum administrative burdens in order to enable the defence industry to operate responsibly and confidently.
The Government’s policy for assessing applications for licences to export strategic goods and advance approvals for promotion prior to formal application for an export licence was set out on behalf of the then Foreign Secretary on 26 October 2000, Official Report, column 199W. Since then there have been a number of significant developments, including:
the entry into force of the Export Control Act 2002
the application of controls to electronic transfers of software and technology and to trade (brokering) in military goods between overseas destinations
the adoption by the EU of Council common position 2008/944/CFSP of 8 December 2008 defining common rules governing control of exports of military technology and equipment
further development of EU export control law, including: the adoption of Council regulation (EC) 1236/2005 of 27 June 2005 concerning trade in certain goods which could be used for capital punishment, torture or other cruel, inhuman or degrading treatment or punishment; directive 2009/43/EC of 6 May 2009 simplifying terms and conditions of transfers of defence-related products within the Community; and the re-cast Council regulation (EC) 428/2009 of 5 May 2009 setting up a Community regime for the control of exports, transfer, brokering and transit of dual-use items
the adoption by the UN General Assembly on 2 April 2013 of an international arms trade treaty, which the UK signed on 3 June 2013.
The Government believe that the procedures for assessing licence applications and our decision-making processes are robust and have stood the test of time. We also believe that the eight criteria continue adequately to address the risks of irresponsible arms transfers and are fully compliant with our obligations under the EU common position and the arms trade treaty. Nevertheless it is appropriate to update these criteria in light of developments over the last 13 years. In particular: the list of international obligations and commitments in criterion 1 has been updated; there is explicit reference to international humanitarian law in criterion 2; and the risk of reverse engineering or unintended technology transfer is now addressed under criterion 7 rather than criterion 5. There are also minor changes to improve the clarity and consistency of the language used throughout the text. None of these amendments should be taken to mean that there has been any substantive change in policy.
These criteria will be applied to all licence applications for export, transfer, trade (brokering) and transit/transhipment of goods, software and technology subject to control for strategic reason—referred to collectively as “items”; and to the extent that the following activities are subject to control, the provision of technical assistance or other services related to those items. They will also be applied to MOD form 680 applications and assessment of proposals to gift controlled equipment.
As before, they will not be applied mechanistically but on a case-by-case basis taking into account all relevant information available at the time the licence application is assessed. While the Government recognise that there are situations where transfers must not take place, as set out in the following criteria, we will not refuse a licence on the grounds of a purely theoretical risk of a breach of one or more of those criteria. In making licensing decisions I will continue to take into account advice received from FCO, MOD, DFID, and other Government Departments and agencies as appropriate. The Government’s strategic export controls annual reports will continue to provide further detailed information regarding policy and practice in strategic export controls.
The application of these criteria will be without prejudice to the application to specific cases of specific criteria as may be announced to Parliament from time to time; and will be without prejudice to the application of specific criteria contained in relevant EU instruments.
This statement of the criteria is guidance given under section 9 of the Export Control Act. It replaces the consolidated criteria announced to Parliament on 26 October 2000.
CRITERION ONE
Respect for the UK’s international obligations and commitments, in particular sanctions adopted by the UN Security Council or the European Union, agreements on non-proliferation and other subjects, as well as other international obligations.
The Government will not grant a licence if to do so would be inconsistent with, inter alia:
a) the UK’s obligations and its commitments to enforce United Nations, European Union and Organisation for Security and Co-operation in Europe (OSCE) arms embargoes, as well as national embargoes observed by the UK and other commitments regarding the application of strategic export controls;
b) the UK’s obligations under the United Nations arms trade treaty;
c) the UK’s obligations under the nuclear non-proliferation treaty, the biological and toxin weapons convention and the chemical weapons convention;
d) the UK’s obligations under the United Nations convention on certain conventional weapons, the convention on cluster munitions (the Oslo convention), the Cluster Munitions (Prohibitions) Act 2010, and the convention on the prohibition of the use, stockpiling, production and transfer of anti-personnel mines and on their destruction (the Ottawa convention) and the Land Mines Act 1998;
e) the UK’s commitments in the framework of the Australia Group, the missile technology control regime, the Zangger committee, the Nuclear Suppliers Group, the Wassenaar arrangement and The Hague code of conduct against ballistic missile proliferation;
f) the OSCE principles governing conventional arms transfers and the European Union common position 2008/944/CFSP defining common rules governing control of exports of military technology and equipment.
CRITERION TWO
The respect for human rights and fundamental freedoms in the country of final destination as well as respect by that country for international humanitarian law.
Having assessed the recipient country’s attitude towards relevant principles established by international human rights instruments, the Government will:
a) not grant a licence if there is a clear risk that the items might be used for internal repression;
b) exercise special caution and vigilance in granting licences, on a case-by-case basis and taking account of the nature of the equipment, to countries where serious violations of human rights have been established by the competent bodies of the UN, the Council of Europe or by the European Union;
c) not grant a licence if there is a clear risk that the items might be used in the commission of a serious violation of international humanitarian law.
For these purposes items which might be used for internal repression will include, inter alia, items where there is evidence of the use of these or similar items for internal repression by the proposed end-user, or where there is reason to believe that the items will be diverted from their stated end use or end user and used for internal repression.
The nature of the items to be transferred will be considered carefully, particularly if they are intended for internal security purposes. Internal repression includes, inter alia, torture and other cruel, inhuman and degrading treatment or punishment; summary or arbitrary executions; disappearances; arbitrary detentions; and other major violations of human rights and fundamental freedoms as set out in relevant international human rights instruments, including the universal declaration on human rights and the international covenant on civil and political rights.
In considering the risk that items might be used for internal repression or in the commission of a serious violation of international humanitarian law, the Government will also take account of the risk that the items might be used to commit gender-based violence or serious violence against women or children.
CRITERION THREE
The internal situation in the country of final destination, as a function of the existence of tensions or armed conflicts.
The Government will not grant a licence for items which would provoke or prolong armed conflicts or aggravate existing tensions or conflicts in the country of final destination.
CRITERION FOUR
Preservation of regional peace, security and stability.
The Government will not grant a licence if there is a clear risk that the intended recipient would use the items aggressively against another country, or to assert by force a territorial claim.
When considering these risks, the Government will take into account, inter alia:
a) the existence or likelihood of armed conflict between the recipient and another country;
b) a claim against the territory of a neighbouring country which the recipient has in the past tried or threatened to pursue by means of force;
c) the likelihood of the items being used other than for the legitimate national
security and defence of the recipient;
d) the need not to affect adversely regional stability in any significant way, taking into account the balance of forces between the states of the region concerned, their relative expenditure on defence, the potential for the equipment significantly to enhance the effectiveness of existing capabilities or to improve force projection, and the need not to introduce into the region new capabilities which would be likely to lead to increased tension.
CRITERION FIVE
The national security of the UK and territories whose external relations are the UK’s responsibility, as well as that of friendly and allied countries.
The Government will take into account:
a) the potential effect of the proposed transfer on the UK’s defence and security interests or on those of other territories and countries as described above, while recognising that this factor cannot affect consideration of the criteria on respect of human rights and on regional peace, security and stability;
b) the risk of the items being used against UK forces or against those of other territories and countries as described above;
c) the need to protect UK military classified information and capabilities.
CRITERION SIX
The behaviour of the buyer country with regard to the international community, as regards in particular to its attitude to terrorism, the nature of its alliances and respect for international law.
The Government will take into account, inter alia, the record of the buyer country with regard to:
a) its support for or encouragement of terrorism and international organised crime;
b) its compliance with its international commitments, in particular on the non-use of force, including under international humanitarian law applicable to international and non-international conflicts;
c) its commitment to non-proliferation and other areas of arms control and disarmament, in particular the signature, ratification and implementation of relevant arms control and disarmament instruments referred to in criterion one.
CRITERION SEVEN
The existence of a risk that the items will be diverted within the buyer country or re-exported under undesirable conditions.
In assessing the impact of the proposed transfer on the recipient country and the risk that the items might be diverted to an undesirable end-user or for an undesirable end-use, the Government will consider:
a) the legitimate defence and domestic security interests of the recipient country, including any involvement in United Nations or other peace-keeping activity;
b) the technical capability of the recipient country to use the items;
c) the capability of the recipient country to exert effective export controls;
d) the risk of re-export to undesirable destinations and, as appropriate, the record of the recipient country in respecting re-export provisions or consent prior to re-export;
e) the risk of diversion to terrorist organisations or to individual terrorists;
f) the risk of reverse engineering or unintended technology transfer.
CRITERION EIGHT
The compatibility of the transfer with the technical and economic capacity of the recipient country, taking into account the desirability that states should achieve their legitimate needs of security and defence with the least diversion for armaments of human and economic resources.
The Government will take into account, in the light of information from relevant sources such as United Nations Development Programme, World Bank, IMF and Organisation for Economic Co-operation and Development reports, whether the proposed transfer would seriously undermine the economy or seriously hamper the sustainable development of the recipient country.
The Government will consider in this context the recipient country’s relative levels of military and social expenditure, taking into account also any EU or bilateral aid, and its public finances, balance of payments, external debt, economic and social development and any IMF or World Bank-sponsored economic reform programme.
OTHER FACTORS
Article 10 of the EU common position specifies that member states may, where appropriate, also take into account the effect of proposed exports on their economic, social, commercial and industrial interests, but that these factors will not affect the application of the criteria in the common position.
The Government will thus continue when considering licence applications to give full weight to the UK’s national interest, including:
a. the potential effect on the UK’s economic, financial and commercial interests, including our long-term interests in having stable, democratic trading partners;
b) the potential effect on the UK’s international relations;
c) the potential effect on any collaborative defence production or procurement project with allies or EU partners;
d) the protection of the UK’s essential strategic industrial base.
In the application of the above criteria, account will be taken of reliable evidence, including for example, reporting from diplomatic posts, relevant reports by international bodies, intelligence and information from open sources and non-governmental organisations.
SAC and ACRE (Triennial Reviews)
(10 years, 1 month ago)
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The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Dan Rogerson)
Today I am announcing triennial reviews of:
the Science Advisory Council (SAC); and
the Advisory Committee on Releases to the Environment (ACRE).
Triennial reviews of non-departmental public bodies are part of the Government’s commitment to ensuring accountability in public life.
The SAC provides expert independent advice on science policy and strategy to the Department for Environment, Food and Rural Affairs.
The ACRE advises the UK Government and the devolved Administrations on the risks to human health and the environment from the release and marketing of genetically modified organisms (GMOs).
The reviews will be conducted in accordance with Government guidance for reviewing non-departmental public bodies. The reviews will be carried out in an open and transparent way and interested stakeholders will be given the opportunity to feed in their views.
My noble Friend the Parliamentary Under-Secretary of State, Lord de Mauley, will announce the findings of both reviews later in the year.
Further information, including the terms of references for the reviews, is available on the Government website.
FCO Services
(10 years, 1 month ago)
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The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mark Simmonds)
FCO Services operates as a trading fund of the FCO. I have set the following performance targets for 2014-15:
An in-year surplus before interest and tax producing a net margin of between 1% and 5%
A return on capital employed of at least 3.5% (weighted average)
Cost of corporate functions as a percentage of revenue of no more than 7%
A utilisation rate for revenue-earning staff of between 75% and 80%
A customer satisfaction result of at least 80%
Employee engagement in FCO Services using civil service survey of more than 57%
FCO Services will report to Parliament on its success against these targets through its annual report for 2014-15.
Vulnerable Persons Relocation Scheme (Syria)
(10 years, 1 month ago)
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The Minister for Security and Immigration (James Brokenshire)
Our country has a proud history of granting protection to those who need it. We are still all too conscious of the appalling scenes of violence and suffering which are occurring every day in Syria.
The greatest contribution we can make is to work to end the conflict altogether and we continue to seek a peaceful settlement that enables a political transition and an end to violence. We are the second largest bilateral donor to the Syrian relief effort and have provided £600 million so far.
As the Home Secretary outlined to the House of Commons on 29 January 2014, Official Report, column 863, while the greatest need is in the region and the United Kingdom can make the largest impact there, we have launched the Syrian vulnerable persons relocation (VPR) scheme to provide protection in this country to particularly vulnerable refugees who are at grave risk. Since that point, we have been working closely with the United Nations High Commissioner for Refugees (UNHCR) to identify those who are most vulnerable.
I am pleased to report that we expect the first group of Syrians to arrive as part of the VPR scheme today, just eight weeks after the Home Secretary’s announcement. During this time, we have been working in close collaboration with the UNHCR, the International Organisation for Migration and local authority services to ensure that the particular needs of the beneficiaries, with their extreme vulnerabilities, will be met. Given the absolute primacy of safeguarding the UK’s security, appropriate checks have also been conducted before bringing Syrians displaced by the conflict to the UK. We expect the next arrivals in April.
Those admitted under the VPR scheme will be granted five years’ humanitarian protection with all the rights and benefits that go with that status, including access to public funds, access to the labour market and the possibility of family reunion. We believe that the VPR scheme will make a real difference to the lives of some of the most vulnerable Syrians displaced by the conflict by giving them protection and support in the UK.
I have agreed a ministerial authorisation (Equality (Syria—Entry clearance outside the immigration rules) Authorisation 2014) to allow differentiation in favour of Syrian nationals whom we want to bring to the UK under the VPR scheme.
This authorisation will remain in force until revoked. I am placing a copy of the authorisation in the Library of the House.
On-the-Runs
(10 years, 1 month ago)
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The Secretary of State for Northern Ireland (Mrs Theresa Villiers)
In my written ministerial statement on 25 February 2014, Official Report, column 14WS, following the judgment in the case of John Downey, I indicated that around 200 people were subject to the scheme established by the previous Government to deal with so-called “on-the-runs” (OTRs).
I also stated that my Department is working with the police and prosecuting authorities to check whether anyone sent a letter under the scheme is wanted for an offence committed before the date of the letter.
That process has included work to reconcile the different information held by the Northern Ireland Office, the Police Service of Northern Ireland (PSNI) and Sinn Fein to determine the actual numbers dealt with by the scheme.
On 11 March I announced the appointment of Lady Justice Hallett to conduct an independent inquiry of these and other aspects of the operation of the OTR scheme.
The provision of a full public account of the scheme will be possible only after the completion of this inquiry. However, I am now in a position to give some further clarification following work undertaken by the NIO. This information remains provisional pending completion of the investigation by Lady Justice Hallett.
The information we will provide to the Hallett inquiry will include the following. Records held by my Department indicate that a total of 207 names were provided by Sinn Fein or by solicitors on their behalf. A further 10 names were identified by the prison service and four by the Irish Government, bringing the total to 221. In addition, the PSNI’s records show that they received a further seven names which do not appear to have been passed to the NIO for consideration.
To date, the process of reconciling the numbers has disclosed that 45 individuals have had their cases considered since this Government came to power in May 2010, rather than the 38 I stated in answer to the hon. Member for Belfast East (Naomi Long) on 4 March 2014, Official Report, column 744W. This recent work has also indicated that three of these cases were passed to the PSNI by solicitors and then notified to the NIO after May 2010.
Since May 2010, 12 individuals have been sent letters by the NIO stating that on the basis of the evidence available they were not wanted by the police, with the final one of these sent in December 2012.
As I have made clear, none of the letters contained any amnesty, immunity or exemption from prosecution. If the Government had been presented with such a scheme on coming to office, we would have stopped it.
Passenger Focus (Triennial Review)
(10 years, 1 month ago)
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The Parliamentary Under-Secretary of State for Transport (Stephen Hammond)
My noble Friend, the Minister of State for Transport, Baroness Kramer, has made the following written ministerial statement:
We will shortly be commencing a triennial review of Passenger Focus (PF). PF is the independent non-departmental public body (NDPB) set up to represent the interests of rail passengers in England, Scotland and Wales, bus and tram passengers in England—outside of London—and passengers on scheduled domestic coach services in England.
Triennial reviews are part of the Government’s commitment to ensuring that NDPBs continue to have regular independent challenge, including to their objectives and governance. A triennial review normally has two aims:
to provide a robust challenge of the continuing need for the NDPB; and
where it is agreed that it should remain as an NDPB, to review the control and governance arrangements in place to ensure that the public body is complying with recognised principles of good corporate governance.
However, following the public bodies review, PF completed a significant restructure in 2011 and now has a key role in relation to future transport policy, including increasing the passenger voice in future rail franchises. As a result, it has therefore been decided that this review will focus its attention on the second stage.
The report of the review will be placed in the Libraries of both Houses when it is completed.
House of Lords
Introduction: The Lord Bishop of Chelmsford
Libya: Arms to the IRA
(10 years, 1 month ago)
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Lord Empey
To ask Her Majesty’s Government whether they intend to discuss with the Government of Libya the question of compensation for United Kingdom victims of arms supplied to the IRA by the Gaddafi regime.
The Senior Minister of State, Department for Communities and Local Government & Foreign and Commonwealth Office (Baroness Warsi) (Con)
My Lords, the Government will continue to encourage the Libyan Government to engage with UK victims seeking redress, including those seeking compensation and their legal representatives. More broadly, we will continue to promote wide and lasting reconciliation between Libya and UK communities affected by Gaddafi-sponsored terrorism. We have raised these issues with the Libyan Government repeatedly and the Prime Minister, my right honourable friend Mr Cameron, raised this most recently with the Libyan Prime Minister in September last year.
Lord Empey (UUP)
My Lords, on 15 November 2011, the Prime Minister wrote to me, saying:
“As I told the House of Commons on 5 September, the issue of compensation for UK victims of IRA terrorism will be an important priority for a revitalised relationship between Britain and the new Libyan authorities”.
The noble Baroness, Lady Warsi, in a Written Answer to my Question HL4664, said, on 22 January this year:
“The Government is not involved in any negotiations with the Libyan government on securing compensation payments for the British victims of Qadhafi sponsored Irish Republican Army (IRA) terrorism”.—[Official Report, 22/01/2014; col. WA 136.]
The noble Baroness will see at once that there is a contradiction between the position of the Prime Minister and that adopted in her Written Answer to me. Will she assure the House that Her Majesty’s Government will vigorously pursue this issue with the new Libyan authorities to seek redress for the many hundreds and thousands of victims of this terrorism throughout the United Kingdom?
Baroness Warsi
I thank the noble Lord for having given me the opportunity to discuss the matter with him briefly yesterday. I know that he has been involved in this matter for much longer than I have. As he is aware, the Minister with responsibility for Libya has written to him, informing him that we are currently assessing all these matters, including the very specific ones to which he referred. I was involved in discussions on this matter earlier this week. I assure him that we will write to him in due course to provide much more clarity on the issue. The Government’s position has been, and will continue to be, that we want to develop a sustainable and effective partnership with Libya to enable us to resolve all issues, including that of the horrendous terrorism which resulted in huge tragedy for individual families.
Lord Alderdice (LD)
My Lords, the previous Government set up a small unit in the Foreign and Commonwealth Office to facilitate the discussions that the noble Lord, Lord Brennan, and others were having to try to address this question not just in respect of specific victims in Northern Ireland but of economic benefit for the whole of the United Kingdom from the Libyan sovereign fund. We now have even more to offer than at the time of Gaddafi, when we could offer economic co-operation in exchange for reparations. Now, there is the opportunity to help rebuild civic society, democratic structures and the proper administration of justice in Libya. We have much to offer the Libyan Government. I trust that my noble friend will look again at the revitalising of that small unit in the FCO to facilitate these kinds of discussions.
Baroness Warsi
As the noble Lord will be aware, some progress was made in relation to this matter at a time when Gaddafi was coming in from the cold, as it were. The noble Lord will be aware—as will other noble Lords—that Libya has been through a horrendously difficult period in its history. There has been huge change in Libya and there have been two national transitional Governments. Only two weeks ago, there was a further change in the leadership at the top, with Prime Minister Zeidan standing down, marking another transitional period in Libya’s history. We are working with Libya while it is going through this incredibly difficult period, but I will bear in mind the noble Lord’s comments.
Lord Browne of Belmont (DUP)
My Lords, the First Minister of Northern Ireland—my party leader—recently raised the issue of compensation from Libya once again directly with the Prime Minister. Does the Minister agree that, in the wake of the hurt done to innocent victims as a result of recent revelations of secret deals with republicans, it is vital that the Government move urgently to address this outstanding issue and to bring it to a successful conclusion as quickly as possible?
Baroness Warsi
Indeed, as the noble Lord will be aware, the First Minister had an opportunity to discuss these matters with the then Libyan Prime Minister Zeidan earlier last year—I think in June. I suppose that the noble Lord is probably referring to the Telegraph allegations. We have issued a strong statement denying the accuracy of that report.
Baroness Symons of Vernham Dean (Lab)
My Lords, is the noble Baroness not right, though, to stress to the House the fact that the Libyan authorities are essentially transient? The problem is the frequent changes in those authorities and those who hold government office. Has that not been further complicated by the law of political isolation that has been introduced in Libya, whereby one group of Ministers do not speak to—or, indeed, have anything to do with—the group of Ministers that they have just seen out of office?
Baroness Warsi
The noble Baroness makes an important point. Libya is going through an incredibly difficult period and we need to be realistic about what is actually possible on the Libyan side. There is very little chance at the moment of securing a Libyan payment for compensation. The Libyan Government see themselves as victims of the Gaddafi era, and it is therefore important that we try to build a political space, which is what we are doing, to allow the Libyan Government to engage on these and other issues.
Lord Cormack (Con)
My Lords, do we not have to be careful that we do not visit the sins of the previous regime upon a very shaky one? Is it not fundamental to all our interests that there should be a stable and prosperous Libya?
Baroness Warsi
It is, and my noble friend makes an important point. It is when we have that stable and prosperous Libya that we can deal with the legacy issues, including the tragic killing of WPC Fletcher, the aftermath of the Lockerbie bombing and, indeed, the Gaddafi support for terrorism.
Lord Lexden (Con)
Libya’s Semtex brought death and destruction to many parts of our country, including the Baltic Exchange and Warrington. Is it not incumbent upon the Government to give a clear undertaking to pursue claims for compensation with the utmost vigour, in fulfilment of the Prime Minister’s own pledge of 2011?
Baroness Warsi
I refer my noble friend to what I was saying. Of course it is one of our priorities, and it is important for us to have a stable Libya where we can discuss these matters. In fact, I had the privilege of visiting Wendy and Colin Parry at the Warrington Peace Centre only a few weeks ago. I am delighted that the Chancellor was able to support the funding of that centre in the Budget. It is for that reason and because these tragic circumstances have left these families still grieving that we must continue to press to have these matters resolved.
Children: Online Safety
Lord Clement-Jones
To ask Her Majesty’s Government what progress has been made to ensure that the standards and systems adopted by public wi-fi providers will protect children from potentially harmful content.
Lord Gardiner of Kimble (Con)
My Lords, as announced by the Prime Minister last year, the six major providers of public wi-fi, covering more than 90% of the market, are now delivering filtered public wi-fi wherever children are likely to be. Through the UK Council for Child Internet Safety, we are working with the providers, businesses and industry bodies to develop a logo to help children and parents understand the safest public places to be online.
Lord Clement-Jones (LD)
My Lords, I welcome what my noble friend has said, but I am sure he is aware that the mobile network operators filter content which would be, or is, rated 18 by the BBFC and place it behind access controls so that they restrict content to those aged under 18. Can the Government not ensure that public wi-fi service providers adopt the same comprehensive approach to protecting children online and adopt the same standards and protections as the mobile operators?
Lord Gardiner of Kimble
My Lords, as I said, the six major providers have agreed to filter, as a minimum, illegal child abuse imagery and content and legal pornographic adult content. That is not to say that this will remain the basic standard of filtering—indeed, some leading providers are filtering more widely. We continue to review this. I am very mindful of what my noble friend said about the mobile network, but that is where the position is with regard to public wi-fi.
Baroness Benjamin (LD)
My Lords, there is a wonderful world for children to discover on the internet but, sadly, evil also lurks there. Parents need to have trust and faith in wi-fi providers and suppliers and be sure that their children are protected. Can my noble friend tell the House how many sites—I believe there are a few—have asked for their porn filters to be removed? They need to be identified so that parents can be alerted to them.
Lord Gardiner of Kimble
My Lords, the whole purpose of the development of the logo is to ensure that parents and children know which public places are secure. The work that is going on in developing the logo is precisely to ensure the safety of children wherever they are on the internet. I am very conscious of what my noble friend said and I will look into it further.
Lord Alton of Liverpool (CB)
My Lords, can I take the Minister back to a question that I asked him a few weeks ago about the presence on the internet of suicide sites, which encourage young people to take their own lives? Did he see the two-page article in the Times highlighting some of these terrible fatalities? Does he agree that this is not caught by the provisions that he announced to the House recently and that it is a discrete question which needs to be dealt with urgently?
Lord Gardiner of Kimble
My Lords, I am very much aware of what the noble Lord said and, indeed, of the article. Both suicide and self-harm are taken extremely seriously. The Government are committed to working with the internet industry to keep young people safe online and to promote positive support for people who are at a suicidal point. We are very concerned that, in dealing with the websites relating to suicide and self-harm, which are so appalling, we do not stop young people and others going to sites that would help them.
Lord Stevenson of Balmacara (Lab)
My Lords, the Government have made very good progress with the mobile sector and we hope that they will be able to make similar progress with the wi-fi providers. However, is not the problem that, with 90% coverage, there is still 10% which is not covered, and that 10% involves a very large number of companies. That perhaps explains why Chester Cathedral had to close down its wi-fi operation last year, and only last month Canterbury Cathedral was also in a situation where open access was available. These matters are tricky and I would not want an instant response. The Bishops are shaking hands—that is historic; a deal has been made on this very day. However, the question for the Minister is: if this voluntary arrangement does not work, does statutory provision provide the answer?
Lord Gardiner of Kimble
As I think the Prime Minister has said, we will look at all situations as necessary. The primary objective of all this is to ensure that children and vulnerable people are safe. We have gone down the self-regulatory route because we think that it is the most adaptable. It is the way in which we can act most speedily to protect the very people whom we want to protect.
Lord Clement-Jones
My Lords, the noble Lord, Lord Alton, put his finger on the problem in terms of the difference between mobile standards and those for public wi-fi. Can the Minister assure us that further extension of the base standards for public wi-fi is under active discussion?
Lord Gardiner of Kimble
My Lords, I can. The UK Council for Child Internet Safety, chaired by three Ministers from different departments, has a working group on public wi-fi. This matter is under review and is something on which we are working with the providers. As I said, some are already going beyond the minimum base.
Schools: Bad Behaviour
(10 years, 1 month ago)
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Baroness Massey of Darwen
To ask Her Majesty’s Government what policies they promote to prevent bad behaviour in schools, apart from punishment.
The Parliamentary Under-Secretary of State for Schools (Lord Nash) (Con)
My Lords, we recently updated our Behaviour and Discipline in Schools advice. This stresses the need for schools to have a behaviour policy that both rewards and reinforces good behaviour and sanctions poor behaviour. We have also published a series of case studies which highlight the range of ways in which schools can foster good behaviour.
Baroness Massey of Darwen (Lab)
My Lords, I thank the Minister for that response. Does he agree that many schools in challenging areas with challenging pupils nevertheless have good behaviour and good discipline? Why does he think that is? Does he also agree that positive strategies in schools, rather than punitive ones such as picking up litter or writing lines, are more effective in combating bad behaviour?
Lord Nash
I agree entirely with the noble Baroness. Schools have good discipline where they have high standards and expectations across the board and a whole- school behaviour policy that is clearly communicated and consistently applied. For instance, when we took over at Pimlico Academy, behaviour was pretty awful. We used an approach that we had seen in the States, where they start with the pupils’ breaking the rules and getting into trouble and then move them slowly to a position where they behave because they want an orderly society and realise that that is the only way in which they can learn. I believe that behaviour policy should be at the core of all good schools. The noble Baroness is certainly right that rewards and incentives for attendance, behaviour, improvement and effort are all very important in promoting good behaviour.
Lord Storey (LD)
My Lords, the Minister may be aware that in Wales every secondary pupil has access to counselling services, and that independent empirical research has shown that there has been an 80% reduction in behavioural issues. He will also be aware that in Northern Ireland we fund independent counselling for young people, for obvious reasons. Does he think that there is a case for counselling in English schools? Should we look at a programme to develop such a provision?
Lord Nash
I know that my noble friend is very experienced in this area from his role as a primary school head in Liverpool for 20 years. Counselling is very important and there are some excellent counselling organisations, such as Place2Be. Our advice is clear that schools should be aware that when counselling is needed or mental health services need to be involved, they should involve other agencies. Counselling of course links with mentoring, for instance, when pupils at risk of being involved in gangs are mentored and counselled by particular types of people.
Baroness Howe of Idlicote (CB)
My Lords, can the Minister tell the House what role school governors and councils should play in promoting high standards of behaviour in schools? Equally, do the Government believe that pupils themselves should have a role? In one group of schools, as I understand it, a slightly older pupil is given responsibility for settling in a new student and afterwards given “brownie” points on how effective the result has been. Can the Minister expand on other ideas for pupil involvement that the Government might be advocating?
Lord Nash
I agree entirely with the noble Baroness. A governor’s main role is to set the ethos and vision of the school. We would expect all governing bodies to accept such an ethos that had very high expectations for behaviour and to be very interested in the school’s behaviour-management policy. School councils and pupil feedback are essential. I recently visited Wickersley Academy in Rotherham, where every year-group elects two pupils to a school council. I said to one of the boys that that seemed to generate a certain amount of change every year. He said, “Not a bit of it. I make sure that I’m elected every year”. I look forward to seeing him in the other place shortly. Older pupils mentoring younger pupils, or acting as guardians in their early days, is very important both for the younger pupils and often for the older pupils for taking responsibility.
Baroness Whitaker (Lab)
The noble Lord’s department has very creditably funded four organisations to reduce bullying in schools. Can he say what success they have had in the case of Gypsy, Roma and Traveller children for whom bullying is so substantial a cause of their dropping out at secondary school level?
Lord Nash
The noble Baroness is quite right: we have indeed funded BeatBullying, the Diana Award, Kidscape and the National Children’s Bureau to deliver training for schools to prevent and tackle all types of bullying based on prejudice and intolerance. Tackling all types of bullying is one of our top priorities. Each of the projects will be evaluated to measure the impact of the training on reducing bullying overall. Due to the relatively small numbers involved, it is unlikely that these evaluations will measure the impact on specific groups of children but we believe that the programme should, for instance, have a significant impact on reducing any bullying of Gypsy, Roma or Traveller children.
The Lord Bishop of Leicester
My Lords, in view of the Minister’s clear endorsement of the policy of positive reinforcement of good behaviour, does he agree that we should be doing much more to promote a culture of mutual respect more widely in society so that the benefit of the positive work of many schools is not lost when our children step out of the school gate?
Lord Deben (Con)
My Lords, does my noble friend agree that much of the behaviour in schools would improve if all teachers felt that when they were eating in the school they should eat with the children at the tables and take a real part in the conversation, rather than sitting on one side and leaving less suitable people to supervise meals?
Lord Nash
I agree entirely with my noble friend: eating is an extremely civilised way for pupils to learn. I recently visited Dixons Trinity free school in Bradford, which was rated as outstanding shortly after it opened and which I strongly recommend any noble Lord to visit. It has a scheme of family dining whereby pupils eat in eights, teachers join them and one pupil collects the food and serves it to the other pupils. I talked to the pupils about this and they felt that it was extremely valuable.
Baroness Hughes of Stretford (Lab)
My Lords, does the Minister agree that a strong PSHE programme is essential to inculcating good behaviour both in and out of school? Is it not another good reason why the Government should put a much stronger emphasis now on PSHE and require all schools to prioritise and improve their PSHE teaching?
Lord Nash
As the noble Baroness knows, we feel that strong PSHE teaching is at the core of all schools—we just do not think that we should legislate specifically for it, as we have discussed on many occasions in this House. We feel we should leave head teachers to adapt the particular pastoral care that they have in their schools. However, we have commissioned the PSHE Association to produce a series of case studies, and Ofsted also has produced a range of key characteristics. We are also establishing a PSHE expert group chaired by Joe Hayman, chief executive of the PSHE Association, to ensure that teachers have the support and resources to deliver high-quality PSHE teaching.
Baroness Hussein-Ece (LD)
My Lords, what progress is being made in the historic overrepresentation of boys from African-Caribbean communities who are excluded?
Lord Nash
Exclusion rates are very low across the piece. Certainly most academy groups that I know are very anti-exclusion. We have no evidence that any one group is particularly focused upon. All pupils have the same regime attached to them and exclusion should be a last resort.
Lord Berkeley of Knighton (CB)
My Lords, a lot of research has shown that exposure to music and drama in young children tempers behaviour. I wonder whether the Government would like to commit to supporting music and drama in schools and, indeed, increasing it?
Lord Nash
We fully support music and drama in all schools; it can be a very calming influence. When we took over in my own school they had a bell which sounded like a submarine, which I thought was very uncalming. We now have a piece of piano music, the noble Lord may be delighted to hear. An active music/drama programme should be central to every school’s curriculum.
Ukraine
(10 years, 1 month ago)
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Lord Trimble
To ask Her Majesty’s Government what steps they are taking to support the Government of Ukraine.
The Senior Minister of State, Department for Communities and Local Government & Foreign and Commonwealth Office (Baroness Warsi) (Con)
My Lords, our focus is on a strong, independent and successful Ukraine that is free to make its own choices about its future. The Government have announced a £10 million package of technical assistance for Ukraine. We are continuing work on an IMF package and we have asked the European Parliament to confirm the removal of customs duties on Ukrainian exports. On Friday, the EU took a landmark step towards closer relations with Ukraine with the signing of the political chapters of an association agreement.
Lord Trimble (Con)
I thank the Minister for that response. Presidential elections are to be held on 25 May and it is only to be expected that Putin will try to disrupt or degrade them in some way. In any event, a default by Kiev before the elections would be disastrous. Can we and our allies ensure that Ukraine will get the very substantial financial support it needs between now and those elections? I notice, incidentally, that the EU is talking about a package to be delivered over the next three years; that would be far too late. It would also be disastrous if the money being provided was stolen. I wonder what immediate practical help we could give so that corruption can be dealt with.
Baroness Warsi
The international community recognises the concerns that my noble friend has referred to. It is important that money should flow into Ukraine to give it the stability it so needs, which will ensure among other things that the elections can take place in a stable environment. However, when we offer financial assistance, whether that be through the IMF, an EU assistance package or, indeed, bilaterally, it is important to ensure that it is for a specific purpose and that conditionality is properly looked at. There have been too many concerns about corruption in the past and it is for that reason that one of the areas we are working on with the Ukrainian Government is the issue of recovering assets which previous Governments have frittered away.
Lord Campbell-Savours (Lab)
My Lords, will European Union or UK allocations of money to Ukraine be subject to very clear good governance criteria, in particular given that members of Svoboda, the party of the extreme right, hold a number of ministerial posts, including that of Deputy Prime Minister? It is that party which is repeatedly expressing on television, radio and elsewhere its extreme views and hatred of the Russians in the east of the country.
Baroness Warsi
It is important to strike a balance. Some money is flowing into Ukraine already in order to provide technical assistance and support, for example, for the Ukrainian authorities to return stolen assets to their country. It is also important that, as the noble Lord says, appropriate conditionality is applied to any IMF or other package that may be agreed.
Lord Hurd of Westwell (Con)
My Lords, Ukraine is a huge and important European country. Can my noble friend tell me—not necessarily today but perhaps she will let me know—how many UK-based staff are at present employed in Her Majesty’s embassy in Kiev? Does she think that the number reflects an adequate representation, and if not, what steps are being taken to improve it?
Baroness Warsi
I cannot give my noble friend the precise number, but of course I will write to him. However, I can assure him that a DfID team is already on the ground in Ukraine looking specifically at the technical support package I have already mentioned.
Lord Hylton (CB)
My Lords, does the Minister agree that the OSCE should be involved with Ukraine at every level, from the humblest military or election observer up to the chairman in office? Will the OSCE look with particular care at whether certain sections and groups within the population have genuine grievances and how they might be remedied?
Baroness Warsi
There is already an OSCE presence in Ukraine, but the noble Lord will be pleased to know that a further 100 monitors will deploy with the first advance parties which left for the country at the weekend. A chief monitor will be appointed immediately, and the secretary-general of the OSCE has made it clear that he aims to increase the number of monitors up to 500, as has been agreed, at the earliest possible opportunity. These observers will be an essential element of the developments in Ukraine.
The Lord Bishop of St Albans
My Lords, can the Minister tell us what representations are being made on behalf of Ukrainians who are still living in Crimea and find themselves living there now under the Russian state? How are their interests going to be protected?
Baroness Warsi
My Lords, that is the most difficult community for us to access. The right reverend Prelate asks an important question about a community which is probably most at risk. Unfortunately, we understand that OSCE monitors will not be allowed into Crimea at this stage, but I will write to the right reverend Prelate if I have any further details.
Lord Triesman (Lab)
My Lords, there is obviously going to be a significant gap between the current Government in operation and the new one being elected. There will be weak and in some cases, sadly, inexperienced acting Ministers. Will the Government consider providing technical assistance in international financial arrangements, in both internal and external security and in the development of pluralism in institutions, perhaps using the Westminster Foundation for Democracy? They are not currently in a position to do the sort of job that is needed in order to take the country safely through to the next stage.
Baroness Warsi
Those are exactly the kind of areas which the £10 million package which I referred to will be covering. I think there is some Westminster Foundation for Democracy work already in play in Ukraine, but I will check and write to the noble Lord.
Lord Howe of Aberavon
My Lords, I acknowledge some commitment in this area, having had the privilege of spending some seven years during the last decade of the previous century as a member of the Advisory Council to the Presidium of the Supreme Rada of Ukraine. In that context, I am able to acknowledge what is certainly true: it is not a wholly qualified organisation, judged by some standards. My own assessment is that it is equipped with economic resources—although not as significant as we might like—and real political skill. They are far from being communistic, and there is real deference to the Holy Pope. The Ukrainians deserve a sympathetic and practical partnership with us, so far as we can provide it.
Combined Authorities (Consequential Amendments) Order 2014
Baroness Stowell of Beeston
That the draft orders and regulations laid before the House on 10 and 24 February and 10 March be approved.
Relevant documents: 22nd and 23rd Reports from the Joint Committee on Statutory Instruments, considered in Grand Committee on 24 March.
Water Bill
(10 years, 1 month ago)
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16:58 - Division on Amendment 41 - Ayes: 192 / Noes: 271 - Amendment 41 disagreed.
17:51 - Division on Amendment 55 - Ayes: 181 / Noes: 261 - Amendment 55 disagreed.
Lord Whitty
“( ) Granting a retail or restricted retail authorisation for supply to non-domestic sector customers must be done in such a way and on such terms that it does not disadvantage domestic customers.”
Lord Whitty (Lab)
My Lords, I hope noble Lords are not leaving because Amendment 1 is such a complicated amendment. It is one of the most straightforward amendments on the Marshalled List today.
As the House will know, we on this side have supported the objective of introducing a degree of competition into the retail end of water supply for the non-domestic sector. However, our support for that—and I think a lot of people’s support for that—was on the clear understanding that there would be safeguards to ensure that there was no disadvantage or detriment to domestic consumers as a result of the competition operating within the business or non-domestic sector. That has of course proved to be the case in Scotland, but the Scottish structure is not exactly the same as the English structure, and we felt that it was necessary to make explicit that there should be no disadvantage. In principle, the Government appeared to agree. We therefore asked the Government to make that proviso clear in the Bill but the Minister said that that was not necessary.
Since Committee, we have pressed the department on how the existing safeguards would work and where those existing safeguards appear. According to replies from the department, the safeguards that it is relying on are twofold. First, they can be found in the Water Industry Act 1991. There is a similar reference there but that is in the context of a piece of legislation in which no competition was envisaged. It was in the context of monopoly regional supply and is therefore not completely effective in dealing with the entirely changed situation that the Bill would introduce.
The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord De Mauley) (Con)
My Lords, I start by reiterating the interests that I declared in Committee. I am the owner of a farm, through which a tributary of the River Thames runs; I have a bore-hole, which supplies farm and tenanted properties; and I have a property that flooded in 2007.
I thank the noble Lord, Lord Whitty, for moving his Amendment 1 on the important issue of protecting householders. The Government take this issue very seriously. We are very keen to ensure that household customers remain fully protected following our reforms to the non-household market. I am confident that we have achieved this. The Water Bill introduces reforms that will enable us to manage future pressures as efficiently as possible while ensuring that customer bills are kept fair for the long term.
Mechanisms are already in place to prevent business customers’ bills being subsidised by household bills. Ofwat’s policy of setting different retail price caps for household and non-household customers in the current price review means that households will not subsidise the competitive market. We also expect household customers to benefit from the efficiencies and innovations that competition will foster.
It is also important to remember that the Secretary of State, Ofwat and the Consumer Council for Water have a shared duty to protect customers. They must have special regard to people who are unable to switch suppliers—that is, household customers—when carrying out their statutory functions. I am therefore confident that household customers will be protected against any negative outcomes resulting from the expansion of the competitive market.
This brings me to government Amendments 57 and 58. I was grateful to the noble Lords, Lord Whitty and Lord Grantchester, for highlighting in Committee the important work that is done by the Consumer Council for Water. The noble Lords tabled an amendment to require incumbent water companies to consult the Consumer Council for Water on their draft charging schemes. In Committee, I explained that the Consumer Council for Water already does this, but I agree that it is a good idea to place into legislation the central role of the Consumer Council for Water, ensuring that the consumer voice is heard. That is why I am bringing forward Amendments 57 and 58 today. The Consumer Council for Water already plays a fundamental role in working with the companies to ensure that their charges schemes meet stringent, research-informed safeguards on behalf of customers. We want to see this continue.
I hope that our amendments illustrate that the Government are listening. I am grateful that we have continued to collaborate in a positive way throughout this process and am delighted to see real improvements coming forward. I ask the noble Lord, Lord Whitty, to withdraw his amendment.
Lord Whitty
My Lords, I think that the Government have gone slightly further than previously in referring to there being no disadvantage in relation to the cost of water. Indeed, we will return to the affordability issue later today. The Minister did not deal completely with the issue of non-price disadvantage. The servicing of consumers could suffer from the introduction of a degree of competition if too much of a company’s effort was focused on the business end and led to a diminution in service as well as a disadvantage in price. The Minister has probably said enough for me not to press this point today or in this Bill, but the department and Ofwat will need to be quite clear as to their intentions in that and in their beefing-up of existing mechanisms designed to protect household consumers. I therefore welcome the Government’s amendments and will support them when we reach that point. I shall withdraw this amendment with some slight regret, but the Minister has been relatively helpful. It has been a good start.
The Earl of Selborne
The Earl of Selborne (Con)
My Lords, in moving the amendment, I shall speak also to 33 amendments grouped with it. We return to the potential risk of de-averaging of charges, on which I moved a plethora of amendments in Committee. I think that there was some mystification around the Chamber as to the purport of the amendments. I hope that the amendments this time round will not come as such a mystery, because we rehearsed in Committee the potential risk of de-averaging of charges. There was general agreement that de-averaging was to be avoided, but I think that we still need to test whether the Bill gives the sort of protection that my noble friend the Minister assured us it did in Committee.
The reason why I think that the Bill currently presents a real possibility of non-household customers paying different prices for the same services within the same appointed area is because of the nature of the link between upstream and downstream. The customers who would be most adversely affected by de-averaging of charges would most probably be smaller businesses and non-household customers in more remote rural areas—at this moment, I should declare my interest as a farmer and therefore, by definition, living in a rural area. As I said, the problem arises from the direct link in the Bill between the retailer and the provider of resources. Such a link was allowed in the Water Act 2003 for water in a different form and reappears, modified, in the Bill. The link is introduced for the first time for sewerage services.
The danger is that, if a new entrant retailer can access a new source of water more cheaply than the incumbent and offer it to selected customers with the focus on price, and price alone, there will be no incentive to improve on or even match the incumbent in providing, for example, water efficiency services that might be beneficial to the customer but which might involve an upfront cost for either the retailer or the customer. In other words, if you can offer a simple “buy it cheap” service for specific customers, you have immediately blown a hole in the averaging regime.
The Bill creates perverse incentives which direct the focus of retailers away from helping customers to play their part in reducing levels of water abstraction and, more generally, in building water industry resilience. The Minister told me in Committee, and I am sure that he will repeat, that the amendments would allow incumbents to dictate the future direction of upstream markets. I disagree. As noble Lords will see, the amendments mention participation and allow—indeed, encourage—incumbents to look for innovative solutions, but not at the price of cherry-picking or allowing people to purchase water or sewerage services on price alone.
The Government agree and say in their guidance on draft charging principles that de-averaging must be prevented. I cite their advice:
“No category of customer should be unfairly disadvantaged by the way reform impacts on water charges. A fair and non discriminatory approach to sharing network costs”—
I repeat, sharing network costs—
“will be critical. For example, rural customers must … be protected”.
That we can all agree on. De-averaging is not desirable and must be prevented. The issue is whether the Bill as drafted will lead inexorably to two-tier charging, whatever guidance the Government might be giving on charging at the moment. The guidance goes on to say:
“Averaging of charges is common practice in sectors that have much greater scope for contestability than the water sector does. Ofwat has a number of tools to limit the effect of de-averaging on customer charges. They will use these to ensure that any marginal changes are introduced in a measured fashion and, above all, that they are in the overall interests of consumers”.
My problem is that I am simply not persuaded that Ofwat will indeed have the tools to limit the effect of de-averaging on customer charges. Given the proposed link between retailers and potential upstream service providers, I cannot understand how Ofwat will be able to manage the impact of de-averaging to prevent any unfairness between customers, especially rural customers. The problem is, of course, that once you have allowed that direct link between upstream and the retailers, you have to justify in law any interpretation of the rules in court.
I mentioned in Committee what is perhaps an obscure case, but nevertheless a legal precedent, the Shotton case in Wales, where the precedent was set that local costs were required to be used in a ruling in setting prices under bilateral deals. My noble friend the Minister assured me that this precedent could be ignored, but I remain convinced as I have the feeling that legal precedents are legal precedents. An even more serious threat would be if this were determined under a European law and the United Kingdom Government might not be able to prevent the de-averaging of charges if a link is allowed, as the Bill allows, between the wholesale and retail markets. There is a threat and it is incumbent on us to be absolutely certain that we are not widening the scope for de-averaging by the way in which the Bill is drawn up.
Lord Deben (Con)
My Lords, I declare a past interest as a former chairman of a water company in this country and I sit on the board of one on the continent of Europe. I hope that my noble friend will take the remarks of the noble Earl, Lord Selborne, very carefully because there is a tendency to think of water as if it is like any other utility. Of course it is not because water is different, wherever you take it from, and it will be under bigger pressure than ever before because of the effects of climate change and of demand increases.
It is often possible in a small area to provide a small programme of water supply at a lower price because it is being tailored particularly and for very narrow demands. We are going to have to find better ways of sharing water supply in any case because of what is happening in this country, so the point that my noble friend Lord Selborne raises is very important. I have read carefully my noble friend’s comments about the Bill. None of us wants to reduce the amount of competition which the Bill provides, but I hope that the Minister will give some reassurance which goes beyond merely saying that Ofwat has the powers to deal with this. That is because I share my noble friend’s doubts that Ofwat has those and whether those powers would stand up in law—certainly, whether they would stand up were the law part of the very valuable European legal structure under which we operate. Thank God for the European Union, or we would never have the water supply which we have today. Our water would be much less clean and we would have much lower standards. We owe a great deal to our membership of the European Union on this, as on most other things.
However, on this particular issue we have to ensure that the Bill does not put us into a position in which de-averaging—one of the ugliest words in the English language—becomes a serious problem. I hope that the Minister will be able to reassure me that the legal situation is fully covered because I, too, think that there is sufficient precedent to make anybody reasonably concerned.
Lord Grantchester (Lab)
My Lords, I declare my interests as a farmer, thereby living in a rural area. Like the noble Earl, Lord Selborne, I am concerned with the effects generally on rural areas. While there are risks, I am not sure that this is the case here. We support the introduction of competition into the non-domestic market and take the issue of de-averaging very seriously. The noble Lord, Lord Deben, has spoken about how we must, indeed, be assiduous in making sure that price averaging is maintained as far as possible. However, we are satisfied that Ofwat has all the necessary regulatory tools to enable it to limit the effects of de-averaging.
Competition can also be about bringing innovation to the market in services and introducing efficiencies. However, we remain concerned that these amendments, which have been tabled by the noble Earl, Lord Selborne, might allow incumbent suppliers to constrain the development of future markets, thereby reducing the benefits that competition could bring.
Baroness Parminter (LD)
My Lords, in welcoming the proposals to open up retail competition in the business sector, on Second Reading I, too, raised my concern, like other noble Lords, about the potential for the de-averaging of prices. Ensuring that rural or remote businesses do not pay more than their urban counterparts is vital. We need to share costs for water fairly, regardless of location.
In Committee, the Minister reassured the House that the regulator had the necessary tools to limit the effects of de-averaging on customer charges. Having talked to Ofwat myself, I know that it confirms that this is its belief. Equally, the Consumer Council for Water, which has the interests of water customers at its core, commissioned Martin Cave to review the issue, and he has confirmed that Ofwat can facilitate upstream competition without de-averaging.
The Government will be producing charging guidance to Ofwat, which the Minister confirmed will explicitly say that de-averaging can occur only where it is in the best interests of customers. This Bill provides Parliament with the opportunity to debate and vote on that charging guidance, following a consultation process, so that we have the necessary safeguards to ensure that it does. Not only will Ofwat have to act in accordance with such guidance, but the Consumer Council for Water will be a statutory consultee in the preparation of Ofwat’s charging rules. This seems to me to be a reasonable defence against the potential for de-averaging of water bills, particularly given that as a final resort the Government can veto Ofwat’s charging rules if they do not reflect the guidance given.
On that basis, I am satisfied with the assurances given by my noble friend the Minister, and I will not support the amendments tabled by my noble friend Lord Selborne.
Lord De Mauley
My Lords, I thank my noble friend Lord Selborne for explaining once again his concerns to your Lordships. I laid out the government position on this matter clearly during Committee, and I confirm to my noble friend Lord Deben that I do indeed take this matter very seriously. I am happy to clarify the position for your Lordships again this afternoon.
My noble friend’s Amendments 2 to 29 and 31 to 36 would break the link between upstream and retail. While I know that this is not my noble friend’s intention, it would have the practical effect of derailing the reforms which this Bill seeks to introduce. The amendments would introduce a market where incumbents would tender for new water resources under the so-called single-buyer model. That is extremely incumbent-friendly, and would seriously undermine the competition that we are seeking to extend in the Bill.
The single-buyer approach, with decisions resting with the incumbent, will provide fewer rights and less flexibility for new entrants. These amendments would allow incumbents to dictate the future direction of upstream markets. This would, I suggest, present a considerable barrier to entry for new entrants. Only licensees who were able to bid for and win contracts under the terms set by the incumbent would be able to enter the market. Most importantly, it would not lead, I suggest, to a better outcome for customers. For example, there would be an increase in charges if incumbents introduced overly burdensome standards in tenders or made poor decisions over which bids to accept.
As I have said, I know that my noble friend’s intention was certainly not to undermine the market reform provisions of the Water Bill. I have heard his argument that this approach would mirror arrangements being introduced in Scotland, but this is not Scotland. The Scottish Government have taken a policy decision not to introduce upstream competition in Scotland, and that is their prerogative, but that does not mean that is the right approach for England. We face a more challenging water resource situation than our friends north of the border, and we are legislating here for a regime in England. Reducing the scope for innovation and entry into the market is not going to help deliver the change we need. I hope I have explained why I cannot accept the tabled amendments.
I know that my noble friend’s concern is about de-averaging in a more general sense, so perhaps I can take this opportunity to provide some comfort on that issue. The averaging or de-averaging of charges refers to the extent to which an individual customer’s bill reflects the direct costs associated with serving that customer. Some would suggest that a de-averaging of charges will somehow be a direct result of increasing levels of competition in this sector. However, there is no evidence to support this view. Averaged charges are a common feature across the networked utilities and, indeed, in all sorts of industries that are subject to market pressures. We think it is right that network charges should continue to be averaged, and the regulator has stated, repeatedly, that it has all the tools necessary to control the effect of de-averaging on customer charges.
The Government’s charging principles are unambiguous on this. Ofwat must not allow de-averaging that is harmful to customers, and that includes rural customers, to which my noble friend specifically referred. Our charging guidance will follow soon. I am happy to commit, as I have done before, to making it plain in that document that there must be strong, definitive boundaries on the scope of any de-averaging and that households, in particular, must be protected. There are powers in this Bill which the Government will not be afraid to use if Ofwat’s charging rules are not consistent with our charging guidance. I thank my noble friend Lady Parminter for her words.
However, we should not be simplistic. There is no doubt that there are areas where better cost-reflectivity could have substantial benefits for the environment and for the resilience of our water supplies. It must be right that the new upstream markets should reflect the environmental costs of supply. It must also be right that there are economic incentives for business users that use large volumes of water, and it must be right that water companies should seek to identify the most environmentally efficient sources of water. The Bill is all about opening the market, encouraging new entrants and increasing the resilience of our supplies. Better cost-reflectivity in the competitive part of the non-household market is a crucial part of this.
My noble friend suggested that new entrants will not focus on value-added services. He may not have put it like that, but that was the intent behind one of the points he made. New entrants already in the market, such as Business Stream, are very clear that they see value-added services as the best way to maximise profit, so I cannot accept that the way the Bill is designed makes that less likely.
My noble friend raised an important point about fears that the Government’s charging guidance and Ofwat’s charging rules might be overridden by competition law. I draw your Lordships’ attention to paragraph 5 of Schedule 3 to the Competition Act 1998. This provides for an exemption from competition law where an agreement is made in order to comply with a legal requirement imposed by or under any enactment in force in the United Kingdom. Ofwat’s statutory charging rules will take the form of a legal requirement imposed under such an enactment. The Bill provides the Secretary of State with the power of veto over the charging rules in order to ensure that regulatory practice remains well aligned with government policy. I can also confirm that there is no general prohibition in EU law against average pricing.
My noble friend raised the case of Shotton and Albion Water as a legal precedent to support the case that de-averaging is a real risk. This was a complex and long-running case. However, it is a misunderstanding to describe it as a case of de-averaging. Shotton was a very unusual case from which it is not useful to extrapolate more widely. For example, it concerned a discrete system that serves only two customers, one of which was served by Albion Water. This is very rare. To give some context, the case represented 0.01% of Welsh Water’s turnover. At the time of the dispute, this agreement was not subject to regulation by Ofwat. The Bill includes measures that would bring all such transfers within the scope of the regulatory regime. Ministerial guidance and Ofwat’s charging rules will therefore set out how charges between water companies and inset appointees such as Albion Water should be determined in the future.
The Earl of Selborne
I am most grateful to my noble friend the Minister and, indeed, others who have participated in this short debate. I agree with my noble friend Lord Deben that “de-averaging” is about the ugliest word one could imagine. The fact that it was not in any of the amendments, of course, rather confused those who did not know what the thrust of the amendments might have been.
I hear what the Minister says about these amendments derailing the whole competitive base of the Bill. I do not agree with that. It is perfectly possible to keep the undertaker as part of the competitive agreement while introducing competition at both ends of the spectrum. The real issue is whether we are satisfied that Ofwat does indeed have the powers to prevent the insidious creep of the removal of the averaging of charges. Clearly, most of the advisers take the view that it does and Ofwat itself thinks it does. I only hope that they are right.
There will be an opportunity, on a later amendment, to look at some rather more specific proposals as to how averaging might be protected. For the moment, however, I beg leave to withdraw the amendment.
The Earl of Selborne
“(c) the costs which would be incurred by a water undertaker in performing any of the duties to which the section 66D agreement relates are also recorded”
The Earl of Selborne
My Lords, here we come to two much more specific and modest proposals to address the potential threat of de-averaging.
In Schedule 2 on page 141, in proposed new Section 66EA of the Water Industry Act 1991, there are rules set out which make provision about the reduction of charges. These provide for the circumstances in which discounts can be allowed. Amendment 30 would additionally allow a discount only where overall costs to the network are reduced. This should prevent a discount in price which discriminates against other participants on the network. Highly desirable discounts—for example, for direct debit, for advance payments or paperless billing—which are available to everyone would in no way be precluded. If, however, a discount is offered to a customer which effectively loads costs on to other users, then this must be unacceptable. The thrust of the amendment is an attempt to ensure that the charges are not slanted in favour of one customer at the expense of another. Likewise, Amendment 37 makes the same provision for discounts on sewerage services. The sewerage undertaker must be able to offer discounts to all on the network who are sharing the facility, or to none.
Amendments 59 and 60 propose a change to the proposed rules about charges schemes. As drafted at present, subsection (6) of proposed Section 143B of the 1991 Act says:
“The rules may make different provision for different cases, including different provision in relation to different, or different descriptions of, persons, circumstances or localities”.
I accept the case for different rules for persons and circumstances. However, I am very concerned that localities should also be a reason for different rules. That seems to be a hostage to fortune. It will hamper the ability of Ofwat to prevent geographic difference in charges, which could lead once more to charges for rural customers being higher than for urban ones. Amendments 59 and 60 would therefore explicitly rule out different rules for different localities. I beg to move.
The Lord Speaker (Baroness D'Souza)
Page 141, line 32, at the end insert the words as printed on the Marshalled List, with the proviso that the last word in that amendment is “reduced” rather than “recorded”.
Lord Cameron of Dillington (CB)
My Lords, I declare an interest for the purposes of Report, in that I am a farmer with abstraction licences on my farm. I support Amendments 59 and 60, which ensure that de-averaging on the basis of geographic location is outlawed in the Bill.
The delivery of water in a civilised, developed country should be a universal right. That is not to say that it comes free for anyone, but that all the costs of the necessary infrastructure, such as large pipes running across farms and small pipes running to farms, should be shared between all the parties. In the same way as Royal Mail has a universal service obligation, so should water.
The Minister said in Committee that Ofwat has the powers to prevent this sort of de-averaging, and he repeated that in response to the previous group of amendments. However, he also said that the Government’s charging guidance will say that any de-averaging must occur only where it is in the best interests of customers; but which customers—urban or rural? It is important to set out firm rules here against de-averaging on the grounds of location in the Bill. That is because there is no doubt in my mind that the Bill is merely the first step in a more comprehensive reform of the water industry, which will happen in due course. Like John the Baptist, the Bill is not the light but the precursor of the light to come.
The next Bill will undoubtedly bring in a comprehensive and sustainable abstraction reform—we know that that has been virtually admitted by Defra—while at the same time it will herald a sustainable consumption reform in the form of introduction of universal metering. I know we are coming to that; everybody knows that that is essential and only political games seem to be preventing it happening this time around. Moreover, as a result of these reforms at either end of the supply chain, I envisage a gradual move to the introduction of competition in the water industry in both the commercial and domestic water supply marketplace. At this stage the important principle of preventing de-averaging for different locations, which these amendments achieve, is absolutely paramount.
I am slightly suspicious of the Government’s reluctance to endorse these amendments in Committee, but I get a hint that they might move a bit further at this stage. If they do not, frankly, the writing will be on the wall for remote rural customers. To use the Minister’s words, it will undoubtedly be in the interests of customers —that is, urban customers, who are in the majority—if the minority of remote customers can be charged more. If that were to happen, it would be a major betrayal of the rural consumer. I say that as the person who has been asked by Defra itself to rural-proof government policies.
Lord De Mauley
My Lords, my noble friend Lord Selborne has tabled Amendments 30 and 37, which would amend provisions in Schedules 2 and 4 allowing Ofwat to produce the charging rules that enable licensees to apply for discounts, where the licensee, its customer or anyone else, takes action to reduce pressure on water or sewerage networks. These amendments would restrict such discounts to situations where the incumbent water company’s costs are also reduced.
I agree with the sentiment behind the two amendments, but let me explain why they are not necessary. Ofwat’s powers to make rules on discounts are wide-ranging and can take into account impacts on an incumbent’s costs. They must also be consistent with ministerial guidance. It goes without saying that a discount should not result in an increase in costs for the incumbent or its customers. The sorts of things that we are looking for are agreements where customers commit to take positive actions, such as investing in water recycling facilities or agreeing not to take water during peak periods or during a drought. It might also involve a discount in wholesale charges, where a customer or licensee agrees to invest in an upgrade of a network where the incumbent is also making an investment. But my strong concern is that making a reduction in an incumbent’s costs a condition of such discounts protects the competitive position of the incumbent and risks stifling innovation in the sector if a proposal results in a one-off increase in an incumbent’s costs or if a small investment is needed by the incumbent to help the licensee.
I note that the amendment is similar to a provision in Scottish legislation, which also allows licensees to apply for discounts against charges made by Scottish Water. As far as I can determine, no details have been published of any discounts being applied in Scotland, and I do not wish to place such constraints on the system in England. I am confident that ministerial charging guidance and Ofwat’s charging rules can address issues relating to an increase in incumbent’s costs and what may or may not be passed on to other customers not benefiting from a discount.
Amendments 59 and 60 would prevent an incumbent making any charges within its area based on a location of premises. I know that my noble friend seeks to address issues relating to de-averaging, which we have just debated, but these two amendments could result in a significant impact on charges for all customers across England and Wales. It is sometimes necessary for an incumbent to set different charges within its area of appointment, particularly when it is merged with another incumbent. It may be necessary to maintain separate charges for different parts of a merged incumbent’s areas, even after the merger is complete. For example, Affinity Water provides services in three different parts of the country. The charges are different in each of those three areas to reflect the local costs of supplying water.
We are hoping to stimulate more merger activity through Clause 14—for example, to take advantage of economies of scale for the benefit of customers, who could lose out if the merged incumbent had to average its charges across a merged area. There will be winners and losers, but it will mean that the true costs of providing water and sewerage services may no longer be reflected in customers’ charges. Ofwat and the Secretary of State share a statutory duty to protect the interests of customers. The Water Industry Act 1991 provides that this duty should be discharged when appropriate by promoting effective competition. The Government are clear that the purpose of introducing competition into this sector must be to benefit consumers.
I know that noble Lords will be concerned about the potential for impact on rural and vulnerable customers. The noble Lord, Lord Cameron, referred to that. I share those concerns, and I know that noble Lords will be concerned about household customers who cannot switch suppliers. The Secretary of State, Ofwat and the Consumer Council for Water all have specific duties to have regard to the interests of rural customers and those who are unable to switch their suppliers, such as household customers. These duties are already clearly reflected in the charging principles which we have produced to inform these debates and will flow through directly into our charging guidance and Ofwat’s charging rules.
My noble friend referred to discounts for direct debits. To be clear, the discounts covered by the Bill are not discounts offered by incumbents, such as direct debit discounts for charging payment methods, but discounts for novel or innovative proposals which help all customers.
My noble friend was also concerned that charging rules could be different for different localities. This will allow Ofwat to provide extra protection—for example, for rural customers—as supported by its duty to have particular regard to certain classes of customers, such as, indeed, rural customers. Given these comments, I hope that my noble friend will be prepared to withdraw the amendment.
The Earl of Selborne
I am grateful to my noble friend for those observations. I am pleased that he at least agrees with the sentiments behind my amendments. However, I remain worried that where discounts are allowed by Ofwat for a section of the customer network, this could in certain circumstances impact unfavourably on others. If that occurs to non-householders or house- holders in rural areas, as so often could be the case, I fear that that is a slippery slope.
My noble friend said that the proposal to limit the reasons for having different rules might stifle innovation. Again, I simply do not understand why that should be the case. It is simply a proposal to try to ensure that we do not use the remoteness of a locality as an excuse to charge people more than their urban counterparts where, of course, service costs are, indeed, cheaper.
However, I suspect that I will not persuade my noble friend to change his mind. Therefore, I beg leave to withdraw the amendment.
Baroness Northover
“ In section 158 (powers to lay pipes in streets), in subsection (7)(a), the following words are repealed—
(a) “or (b)(i)”;(b) “or laid in pursuance of section 66B(4)(b)(ii)”.”
Baroness Northover (LD)
My Lords, I beg to move government Amendment 38 and will speak also to Amendments 39, 73, 75 to 77, 79 to 86, 88, 92, 94 and 95 to 97. This group of amendments consists of changes to Clauses 37 and 39, following the recommendations of the Delegated Powers and Regulatory Reform Committee, as well as various minor and technical amendments to correct drafting errors in Clauses 49 and 80 and Schedule 12, and consequential amendments to Schedules 5 and 7.
We welcome the scrutiny of the Bill by the Delegated Powers and Regulatory Reform Committee. Following its recommendations, the Government have decided to amend Clause 37 on appeals relating to revision of codes so that the power to make regulations under this clause will be subject to the affirmative resolution procedure. This will apply to the first exercise of these powers only. On reflection, we agree with the committee that it is important for Parliament to have a further opportunity to scrutinise these regulations, and we have therefore tabled Amendment 73.
We have also followed the recommendations of the committee for amending Clause 39 on the exercise of adjudication functions in routine cases. The Government have left the choice of adjudicator open as we have not yet decided whether the relevant functions should be taken on by an existing body. However, we are grateful for the committee’s suggestion that this relatively wide power should be subject to the affirmative resolution procedure, and we have tabled Amendments 75 to 77 accordingly.
I would be happy to explain any of the minor and technical amendments to the House if there is anything that needs clarification. I beg to move.
Baroness Northover
“ In section 213 (powers to make regulations), subsection (1ZA) (inserted by Schedule 7) is repealed (if not previously repealed by an order under section 3).”
Lord Moynihan
“Facilitation of licensed functionsPower to make regulations
(1) The Secretary of State may, by regulation, make provision (including provision for the making of transfer schemes or similar arrangements) for the purpose specified in subsection (2).
(2) The power conferred by this section shall be used for the purpose of enabling any company holding an appointment immediately before the passing of this Act as the water or sewerage undertaker for any area of England and Wales to transfer such of its assets and undertaking to—
(a) an associate which holds a water supply licence with a retail authorisation; and/or(b) an associate (which may be the same company as that specified in paragraph (a)) which holds a sewerage licence with a retail authorisation;as may be necessary or desirable to facilitate the carrying on by relevant transferee(s) of the activities authorised by its (or their) licence(s).(3) For the purposes of this section, a company is an associate of the transferor if—
(a) the transferee is a wholly owned subsidiary of the transferor;(b) the transferor is a wholly owned subsidiary of the transferee; or(c) the transferor and the transferee are both wholly owned subsidiaries of another company.(4) The references in subsection (3) to a wholly owned subsidiary shall be construed in accordance with section 1159 of the Companies Act 2006.”
Lord Moynihan (Con)
My Lords, I seek to assist the House, first by defining the concept of exit that my amendment aims to address, and then by responding to the concerns raised by the Minister in Committee about this important issue.
My interest in this matter began when I was one of the Ministers in another place who was responsible for the privatisation of the water industry, working at that time with my noble friend Lord Howard and the late and much missed Nick Ridley. Our aim was to introduce competition into the industry, to improve services and water quality, and to ensure that, through access to the capital markets, the industry could undertake significant, long-term investment into much needed new infrastructure. The fact that in the six years after privatisation the companies invested £17 billion, compared to £9.3 billion in the six years before privatisation, with higher-quality water, demonstrates the benefits of that measure.
My amendment seeks to take competition further by recognising the distinction between the wholesale process of delivering key water and sewerage on the one hand, and, on the other, encouraging the 18 incumbent water companies to separate off their retail services. These retail services are customer-facing. They are likely to include water efficiency advice and implementation—including benefit sharing—water harvesting and sustainable drainage, and more efficient and effective billing and payment options.
In Scotland since April 2008, non-household customers have been able to choose their supplier and/or renegotiate the terms of their supply. During that time, levels of service have improved considerably and there has been a much clearer focus on environmental services. Some two-thirds of customers have actively opted for a better deal, and the safeguards that have been put in place ensure that no customer, household or non-household, is worse off as a result of the introduction of competition. Indeed, in Scotland, Scottish Water opted legally to separate its non-household activities from the rest of its business by creating a new subsidiary company called Business Stream.
My amendment echoes government policy to allow the most efficient companies to merge or new companies to enter the market to provide customers with better service. The amendment goes further and allows those companies that are inefficient or in favour of exiting the market to apply to the Secretary of State to leave. This proposed move away from vertically integrated, private sector monopolies is to be welcomed. It allows companies that want to specialise in major long-term infrastructure to do so. However, it also allows others—such as the Singapore company Sembcorp, which owns Bournemouth Water, one of the world-leading facility managers for large industrial companies with process management skills—the opportunity, if they so choose, to offer retail services to a far wider base of customers than they do now. For today, they can compete only under current legislation by buying every customer, one by one.
The Bill takes a leap forward from 25 years of supply-driven legislation to a focus on much needed, demand-led service. In Scotland, such legislation has worked well since its introduction in 2008. However, it is deeply concerning that, unless we amend the Bill, we will create a competitive market but we will also create a market that prevents those participants that wish to exit the market doing so. For example, if, hypothetically, the board of Thames Water and its investors wanted to exit the retail business and specialise in the very different skill sets required for its core business—major infrastructure projects, which cover more than 90% of its current business—the company would not be allowed to do so. All the incumbent companies today would have to keep offices, keep the staff, keep the IT systems, pay rates and rent, and build up a cost base to be passed on to their customers, even if the board and shareholders wanted to exit the market and, in extremis, even if the company had only a handful of customers.
Only last week, Oxera published a study on the potential cost of passing the Bill without a provision for exit, and came to the view that this measure could amount to around £190 million in NPV terms over a 10-year period. Of course, this is not surprising. If we continue to insist in this legislation that the non-household, retail divisions of the incumbents have to maintain the capability of running the infrastructure systems needed and lose market share, they will end up with rising costs relative to their revenues, they could see losses increase and continue, and no cost synergies would be possible.
Exit is based on straightforward market efficiencies. The Defra Select Committee supported exit. An increasing number of water companies advocate exit. The Scottish experience is a case study for the benefit of exit. The Water Industry Commission for Scotland has come out in support. Macquarie has published a research note and it supports exit. I quote some investors with whom I have been in touch. One says, “Companies should be allowed to exit”. A second says, “If loss-making, it will be detrimental to regulated business to be forced in keeping them”, whereas a third says that it is eminently sensible to be allowed to do so. A final one states, “Anything that promotes competitive tension to improve the customer experience is positive”.
The chief executive of Ofwat, Cathryn Ross, on 3 December last year gave the following evidence to the Water Bill Public Bill Committee:
“Our view is that retail exit for incumbents is a critically important element of a functioning, effective retail market. Particularly important is the fact that if we do not allow incumbents to exit, essentially we are mandating inefficient retailers’ remaining in the market. That will basically be baking in cost that customers will have to pay for, which we can easily avoid”.—[Official Report, Commons, Water Bill Committee, 3/12/13; col. 7.]
Even in your Lordships’ House in Committee there was harmony, agreement and support between, on the one hand, my noble friend Lord Crickhowell— the first, and indeed outstanding, chairman of the National Rivers Authority, appointed during privatisation —the noble Lord, Lord Whitty, and the Labour Benches behind him, and the noble Lord, Lord Cameron, from the Cross Benches, who would in fact go one step further in enabling exit and competition between householders as well as non-householders.
Lord Crickhowell (Con)
I am grateful to my noble friend for giving way and for the kind things that he has just said about me. I strongly supported him when he made an immensely powerful speech in Committee. The case he has made this afternoon is equally powerful and, in my view, unanswerable. I hope that the Government, even at this late stage, will listen to that argument. I assure him and them that, if they do not, I will support him in any further action that he deems necessary to get this matter through.
Lord Moynihan
I am very grateful to my noble friend for those comments. Indeed, I hope that through his intervention and through the remarks that I made, and indeed through the remarks that the noble Lord, Lord Whitty, made in Committee, my noble friend will determine to join these eminent ranks in support of creating an effective, competitive market for retail services with the intent of providing low-cost improved services to non-householders, because today we are focusing on businesses.
My amendment does not seek to persuade the Minister to introduce competition at this stage to householders, although there are those in your Lordships’ House who hope that, once successfully tested in the business sector, such a transition to competition in the householder market will be fully reviewed. I am proposing that the Secretary of State begins work on preparing regulations not in haste but ready for market opening in 2017. I hope that in so doing—this emphasis is really important—the Minister will provide customer protection and take into account the need for further work to ensure that the Consumer Council for Water is able to maintain its position whereby customer confidence in the water industry is significantly higher than in any other utility sector.
I met the council’s chair, Dame Yve Buckland, and its CEO, Tony Smith, yesterday and I listened carefully to their request to work with customers directly on retail exit—an area which, they freely recognise, requires far more work to be undertaken by them. They wish to review the experience in Scotland. They want to make sure that their customers—particularly the small businesses —are consulted and protected. They are right to do so. In accepting either of our amendments, the Secretary of State will have the time and opportunity to listen to their concerns, for he will need to ensure that all consumers are protected from unnecessary increases in price and from service reduction.
Perhaps I may help my noble friend with examples of the measures available to him to protect the business customers under consideration. He can insist on the full army of tools which already exist. Default tariffs can be set through price controls, ensuring price and service protection. New codes can be drafted to contain all necessary customer protections and to keep the system as simple as possible. Powers of the Enterprise Act can be used for consumer protection should issues go awry—for example, through a failed merger.
Lord Whitty (Lab)
My Lords, I, too, have an amendment in this group which argues for retail exit, but adds a few provisos. The noble Lord, Lord Moynihan, has once again made a tremendous speech in favour of his amendment, which I would certainly support. I will not repeat the full range of his arguments. If he has not convinced all noble Lords, I am sure that I will not manage it, but it sounded pretty convincing to me. It boils down to the fact that if this Bill provides for orderly entrance to the market it needs to provide for orderly exit as well for a proper market to function.
In a sense it is pretty straightforward, and I find it difficult to understand why the Government have hitherto been resistant to this. In Committee the Minister’s objections were largely about investors’ uncertainty, which I never really bought. I felt that most investors in these fields would be more inclined to support a system of regulation which allowed them to exit from failing parts of the business rather than be put off by it. Indeed, that has been borne out by a number of potential investors writing to us since the Committee stage, including the one to which the noble Lord, Lord Moynihan, referred.
Since Committee, the Minister seems to have shifted to a concern for consumers, both business and domestic, who might be left stranded in certain circumstances. Indeed, as has been said, the Consumer Council for Water has expressed concern on that front. Amendment 54 attempts to meet those objections by making explicit some of the matters to which the noble Lord, Lord Moynihan, referred and puts a proviso and a brake on the implementation of those before they have been thoroughly examined. Of course, Ofwat already has the duty to ensure continuity of supply, so the likelihood of anyone being left stranded is remote. The requirement in my amendment is that the regulations should provide safeguards for all classes of consumers. It also provides a brake in the sense that the Secretary of State would have to approve any specific withdrawal. If the amendment of the noble Lord, Lord Moynihan, were to be accepted by the Government and the regulations drafted under it, we would certainly support that.
The Government have to think carefully now. In Committee there was a fair degree of support for the principles of these amendments. Given that widespread support, the support of the regulators, the support of many of the companies within the industry and the support of potential investors in the industry, the Government need to think where they are going to take it from here. Basically, they have three choices. They can accept the amendment of the noble Lord, Lord Moynihan, and promise to tidy it up a bit—and I hope incorporate parts of my amendment—for Third Reading; they can resist the amendment but promise to come back with something on Third Reading, which may be a more attractive proposition; or they can resist the amendment outright, in which case the noble Lord, Lord Moynihan, would have the support of these Benches if he decided to press it.
The ball is well and truly in the Minister’s court and I hope that he makes the right decision.
Lord De Mauley
I think I might be able to help the House. When it is my turn to speak, I will explain that the Government have recognised the strength of feeling in the House and are carefully considering the difficult issue of retail exits. I plan, as the noble Lord, Lord Whitty, suggested, to return to this issue at Third Reading. I will expand on that in a moment.
Lord Hope of Craighead
I am grateful. I intervene as a domestic consumer of the services of Scottish Water in Scotland merely to confirm that the passage the noble Lord, Lord Moynihan, read out at the end of his speech—from, I think, Scottish Water—conforms entirely to my own experience. Scottish Water has become much more visible in the past two or three years and, in my experience, provides an interesting and active service, not only in supplying water but in considering ways in which householders might be benefited by the services it can offer in support of that supply. I merely wish to make it clear that it is not only Scottish Water which says these things. Some of its consumers are very satisfied with its performance as well.
Lord De Mauley
My Lords, that is a helpful intervention.
I thank my noble friend Lord Moynihan and the noble Lord, Lord Whitty, for their amendments. We once again have two amendments seeking to allow retail exits but with slightly different approaches. Both amendments would allow the Secretary of State to make regulations that would allow an incumbent water company to transfer its customers to a person holding a licence. Amendment 40, tabled by my noble friend Lord Moynihan, would allow for transfers to a licensed associate of the incumbent, while Amendment 54, tabled by the noble Lord, Lord Whitty, would allow for transfers to any company that holds a water supply licence. Amendment 54 does not allow for the exit of the retail sewerage market but I assume that the intention is to allow incumbent companies that provide both water and sewerage retail services to exit those markets. As with other amendments we have seen, both these amendments allow for non-household customers to be transferred through powers laid out in regulations, but do not allow us to fill in any gaps relating to who will provide retail services to new customers following a transfer or how we would treat transferred customers, including those who wish to return to the incumbent.
Allowing customers to be transferred does not mean that the incumbent has completely exited the retail market. The incumbent will still have certain responsibilities to non-household customers in its area of appointment and will therefore remain very much within that market unless certain duties are removed from it or transferred to the licensee which takes over the customers. It is a halfway house that does not benefit anyone, least of all the incumbent which wants to avoid dealing with non-household customers completely. The value of exits to incumbents would be limited unless the ultimate duty of supply is also removed. Household customers who remain with the incumbent may even end up funding this residual capacity of the incumbent to serve the remaining non-household customers.
But, as I hinted earlier, I have listened carefully to the thoughtful and well informed contributions to the debate on retail exits both today and in Committee. It is clearly an issue on which many noble Lords hold strong views. There is widespread support for enabling voluntary exit from the non-household market, subject to the approval of the Secretary of State. We remain convinced that such approval would be critical to avoid any perception that this will permit forced separation, given the impact that that could have on investment in the sector. I therefore propose to take this issue away and consider it very carefully before Third Reading. I will aim to table an amendment that will build on the objectives of Amendments 40 and 54 in the names of my noble friend Lord Moynihan and the noble Lord, Lord Whitty, respectively, which seek to provide a means for voluntary non-household exit.
I should like to put on the record now that the only practical way of delivering what the noble Lords are seeking would be to take a very wide-ranging power. Extensive changes to the Water Industry Act 1991 would be needed, not least to address issues relating to the incumbent’s duties to supply and its other statutory obligations to customers. Given this commitment to respond to the mood of the House on this important matter, I ask my noble friend to withdraw his amendment.
Lord Moynihan
My Lords, I thank the noble Lord, Lord Whitty, and his colleagues for their support for the series of amendments we have debated on this issue as the Bill has progressed through your Lordships’ House. I also thank very much indeed the officials at Defra who have worked on this Bill. It is highly complex and it has gained far more prominence than I believe they expected at the outset. Not the least of that is because of the appalling weather we have had over the past three months and the focus now on the Flood Re insurance proposals, which have understandably generated a huge amount of interest across the country and have resulted in a greatly increased workload for the officials. They have been responsive, helpful, polite and informative at all stages, and I am grateful for that.
I thank my noble friend the Minister for his comments. I am pleased and not a little surprised to hear that he intends to come back at Third Reading with a government amendment along lines that I would strongly support. I thank him for his consideration of the importance of exit. I hear the relevance of the consequential amendments that will be forthcoming if we do not give a fairly broad-based power to the Secretary of State, but it remains my view that in order to have a competitive and effective market, we need exit. In the circumstances, I believe that it is appropriate to grant that power through this Bill. Again, I express my thanks to the Minister and to all noble Lords who have supported me on this issue. I beg leave to withdraw the amendment.
Lord Whitty
“Abstraction reform
(1) The Secretary of State may by order appoint a day on which section 1 is to come into force.
(2) The Secretary of State may only make an order under subsection (1) if—
(a) new primary legislation on the licensing of abstraction has been passed; and(b) 5 years has expired since the passage of any legislation under paragraph (a).”
Lord Whitty
My Lords, in moving Amendment 41 I will also comment on the government amendments in this group. I am pleased to see that the Government have at last recognised the importance of this issue and brought forward some amendments of their own. I will listen carefully to what the Minister says, but my first take on them is that, although they are very welcome, they are unclear in certain respects and do not yet go far enough.
This issue is one where economic and environmental regulation overlap. One of the central provisions of the Bill will allow and indeed encourage the eventual development of competitive markets, including in upstream water bulk supplies. That will not happen instantaneously—the Government have indicated that it will probably not happen until after 2020—but the legislation which will govern it happening is already the legal basis for that extension of competition into upstream areas. I am not opposed in principle to that, but there is a very basic problem. All competition, at least in the early stages, requires a surfeit of supply. However, difficult though it has been to believe over the past few weeks, there is a serious shortage of upstream water, in particular at key points in the summer. The level of water abstractions in the majority of our rivers in England—it rains rather more in Wales so I will confine this to England—is such that they have been overabstracted and at times are running dangerously low. This is the result in large part of overabstraction in the upstream areas and a shortage of water in the summer months. The reform of the abstraction regime has been talked about for a long time. Some limitation of abstraction rights is an essential prerequisite to introducing multiple suppliers with competition upstream.
Past legislation has given some powers to the Environment Agency and to the Welsh authorities in this respect, but most of the abstraction rights were embedded in the 1960s—so they are already 50 years old—at a point when there was much less concern about there being a limited supply of water. When the EA is carrying out its functions and rationalising, restricting and, in some cases, possibly taking away abstraction rights, that legislation requires compensation to be paid. That is paid out of the Environment Agency’s grant in aid and, in effect, out of Defra’s budget, so it has been very careful in using its powers. This Bill, rightly, makes one major step forward in removing from the water companies—which are the biggest, although not the only, abstracters—the right to such compensation. Although we note that the companies can, subject to Ofwat approval, recoup any loss from attenuation of abstraction rights by charging the consumer, this is a very welcome change as it means that the Environment Agency can be more aggressive in pursuing the restriction of abstraction rights in general, including those of water companies.
A further distortion and danger is that in many of the catchment areas, current abstraction rights are at a much higher level than the actual level of abstraction. Indeed, on average, 40% of the theoretical abstraction levels are actually drawn in most years. However, even with people taking up under half of their abstraction rights, several of our catchment areas are under severe pressure. If we have new entrants into the upstream area, some of that unused abstraction will undoubtedly, one way or another, be transferred to those new entrants. The logic is that we need a reformed abstraction regime, putting a cap on abstractions and allowing the restriction of or attaching conditions of time or place to the abstractions that are relevant to individual catchment areas. We need to do that before we introduce upstream competition.
It is clear from the amendments the Government have tabled that they recognise that. Indeed, the earlier Defra White Paper recognised that. Yet the Bill does not provide for any future legislation on abstraction reform as it does for upstream competition. The consequence of that is that if the Bill stays as it stands, even if the government amendments are adopted, we will be able to move to competition upstream, which would almost certainly have the consequence of greater use of dormant and underused abstraction rights and therefore more pressure on our catchments. It is true that in the very long run effective competition will lead to greater efficiency upstream, but the immediate effect of introducing competition would be more drawing-down and more abstractions, and there is no adequate limit on the totality of those in the abstraction regime as it stands.
Of course, Defra is currently consulting on changes to the abstraction regime. It is quite a good consultative paper, I have to say, although it was issued well after the Bill entered the parliamentary process. What I am trying to guard against is the possibility that down the line abstraction reform has not happened and yet the number of people using water upstream for commercial purposes has increased. The government amendments give some greater powers to the Environment Agency and the NRBW to check on this, and they institute a five-year delay, but the provisions are fairly weak.
It is not enough to consult with the regulators without giving them effective legislative backing for intervening and for restricting or putting qualifications on abstraction rights. That is why we say that reform should be in place and enforced before we move to introduce upstream competition. The government amendments and the five-year gap do not mean that abstraction legislation will be in place. They call for a report to Parliament. I do not want to be too cynical in your Lordships’ House but we know that plenty of reports to Parliament never actually see their way through to explicit legislation or regulation.
The department clearly recognises the problem and has been prepared to move a bit with the amendments in this group, all of which I can support, but they are necessary but not sufficient. The Government could say to me today that they will strengthen their approach and include a requirement to have legislation in place before the upstream competition provisions are triggered. They could still bring that forward at Third Reading. Indeed, that is probably the best way of proceeding. I hope the Minister will say that but in the mean time this is such a serious issue that I have to ask your Lordships to seriously consider my amendment. I beg to move.
Baroness Parminter
My Lords, along with a number of colleagues around the House, I raised serious concerns in Committee about the potential for environmental damage resulting from the upstream competition proposals being agreed in advance of reforming the water abstraction regime. I will not repeat those this afternoon. However, I am very pleased to say that the Government have clearly listened to our concerns and are proposing a number of significant amendments to address them.
First, the Government propose to report in 2019 on progress in reforming the water abstraction regime. The Government’s stated aim, following the publication of their consultation on abstraction reform last December —which the noble Lord, Lord Whitty, welcomed—is to legislate early in the next Parliament and implement abstraction reform in the early 2020s. The report will therefore give Parliament an opportunity to scrutinise the management of the interface between what should be by then the two pieces of legislation and their implementation. We can then seek to ensure that their implementation delivers the desired outcomes for both customers and the environment.
I am also grateful that specific concerns that I raised about sleeper licences and bulk trading were heard. The Government have introduced amendments to require Ofwat to consult the Environment Agency or Natural Resources Wales before they issue the codes on bulk supply agreements and before allowing a water supply agreement between relevant parties and incumbent water companies. Equally, relevant parties will be required to consult before entering into bulk supply agreements, and Ofwat will have to take into account any response from the Environment Agency or Natural Resources Wales. In that regard, I do not agree with the noble Lord on the Front Bench opposite that these government amendments are weak. I know from my conversations with Ofwat, which did not want the amendments to be tabled, that it most assuredly does not see them as weak.
In advance of the abstraction regime being reformed, the Environment Agency is already seeking to vary and remove unsustainable existing licences. It will be helped in that by the Government’s removal in this Bill of a statutory right to compensation for a water company resulting from such modifications or the revoking of a licence. The Government have therefore gone a long way towards addressing concerns that noble friends and colleagues expressed in Committee. These proposals satisfy my concern that legislating now for upstream reform in advance of reform of the water abstraction regime could lead to an unsustainable increase in abstraction. Therefore, I would not support any further amendments being tabled by the Opposition Front Bench.
Lord Crickhowell
My Lords, I want to probe a little on the timing. I agree with everything that the noble Baroness has just said. For eight years, as chairman of the National Rivers Authority, I had to try to deal with this problem with rather less adequate weapons than the Environment Agency now has, so I welcome the steps that the Government are taking and have taken. I also want to see rapid progress made on the competitive regime, but there seems to be a very difficult timetable. We will have a report five years out on how abstraction is going, yet there will be legislation in the next Parliament which takes us a year further forward. I do not quite see exactly how the Government envisage progress being made on these two important priorities. I confess that I have been away abroad since Committee—I have been enjoying myself in the Galapagos—so my mind has not been on this matter, but I would be grateful if my noble friend could give us a little greater clarity on the timing of these two interlocking steps, on the way in which they are likely to relate and on how the legislative timetable is likely to fit in.
Lord De Mauley
My Lords, this has been another important debate on abstraction reform. It gives me an opportunity to declare another interest: that of a holder of an abstraction licence. Noble Lords have once again emphasised the importance of rapid progress in reforming the abstraction regime and expressed concern about the linkage to implementation of the upstream reforms in the Bill. I thank noble Lords for the knowledge, experience and constructive challenge that they have brought to the debate on this important matter. I have listened carefully to what they have said and I am left in no doubt as to the strength of feeling.
First, I assure noble Lords that the Government are fully committed to abstraction reform. The proposals in our consultation document on abstraction reform demonstrate just how seriously we are taking this, as well as the complexity of reforming such a long-established regime. Our proposals reflect the importance of abstraction reform for people and the environment and the fact that organisations and individuals across the country are dependent on access to water to live their lives and run their businesses.
I want to see a real improvement in the quality of water bodies in all parts of the country. That means we must take action to reduce overabstraction that damages the environment now and ensure we can continue to protect the environment and ensure access to water in the more challenging conditions we will face in the future. Abstraction reform and upstream reform are both designed to help to achieve that goal. While some fear that these could be conflicting mechanisms, I can assure noble Lords that the intention is for them to be entirely complementary in both design and implementation. I hope I can provide further reassurance on this, not least through the further amendments that we have tabled to Clauses 8 and 12 and a new clause before Clause 45.
Lord Oxburgh (CB)
My Lords, I have to confess that this is a part of the Bill that I have not followed particularly closely, but I have listened to the government and opposition arguments with great interest today and, indeed, have sympathy with both. I would just like to ask the Minister—
Baroness Northover (LD)
I think the noble Lord is out of order. We are on Report, the Minister has spoken, and we are waiting for the noble Lord, Lord Whitty, to respond. The noble Lord can ask a quick question for clarification.
Lord Oxburgh
Thank you. The clarification that I seek is whether the Minister would be willing, when he brings back these amendments at Third Reading, to strengthen some of the words relating to consultation to something rather stronger and relating to an obligation.
Lord De Mauley
My Lords, it is difficult for me to respond to that point without knowing the strengthening that the noble Lord has in mind. I am, of course, perfectly prepared to meet him and discuss that between now and Third Reading.
Lord Whitty
My Lords, I thank the Minister for his very comprehensive description of the position and I reiterate that I support the government amendments as a significant move in the right direction. However, they are flawed in one serious respect which I will come on to.
The Minister referred to complementarity between the abstraction reform regime and the new competition regime. I am absolutely in favour of complementarity and I think that both are very important for environmental reasons and for reasons of preservation and effective delivery of our water resources. Therefore, in principle, we are not divided. However, the provisions in this Bill are asymmetrical. We have quite detailed provisions on upstream competition. Nothing I have said affects retail competition. Upstream competition is provided with all the legislative framework that you will need—there will need to be some more regulation, but in effect it is there. The abstraction reform has only just started on its consultative phase. Both the noble Baroness, Lady Parminter, and the Minister have said that they intend to legislate in the next Parliament, which is nice to hear but we do not quite know who will run the next Parliament and it is not normal to pre-empt the Queen’s Speeches of the next Government, even if they happen to be the same one. In any case, the timescale is out of kilter.
The essential flaw in the Minister’s position is that all he is referring to is a report in five years’ time after the passage of this Bill, whereas my amendment says that legislation should be introduced in roughly that time and before we trigger upstream competition. That means that they are complementary; that means that the timescales are in line. The danger is that if we miss that early in the next Parliament commitment, they will be seriously out of line; and if we wait for the parliamentary report before we legislate, they will also be seriously out of line. Therefore, that essential commitment to wait until legislation is there is missing from the otherwise admirable amendment that he is proposing today.
This is so important that all parties need to be reassured that we have complementarity as an objective but complementarity along both tracks in the way in which we proceed. It is therefore with some regret that I would like to test the opinion of the House on this matter.
Lord De Mauley
“(2A) A code must include provision requiring persons proposing to make, vary or terminate a bulk supply agreement to consult the appropriate agency.”
“( ) In this section “the appropriate agency”, in relation to a bulk supply agreement or proposed bulk supply agreement, means the body that would be consulted by the Authority under section 40(4) or 40A(2) if an order under section 40(3) or 40A(1) were being considered in relation to the agreement or proposed agreement.”
“(aa) consult the appropriate agency;”
“( ) In this section “the appropriate agency” means—
(a) the Environment Agency, so far as a proposed code relates to bulk supply agreements to which all parties are persons mentioned in section 40(10)(a)(i) or (ii);(b) the NRBW, so far as a proposed code relates to bulk supply agreements to which all parties are persons mentioned in section 40(10)(b)(i) or (ii);(c) both the Environment Agency and the NRBW, in any other case.”
“40J Duty to provide information about bulk supplies
(1) A supplier under a bulk supply agreement must provide such information as the appropriate agency may request in relation to water supplied under the agreement.
(2) The requirement in subsection (1) is enforceable by the Authority under section 18.
(3) In subsection (1) “the appropriate agency” means the body that would be consulted by the Authority under section 40A(2) if the agreement were to be varied or terminated by an order under section 40A(1).”
Lord De Mauley
“(aa) provision requiring the Authority to consult the Environment Agency, the NRBW or both of them before making an order;”
Lord Whitty
“National affordability scheme
(1) The Secretary of State must, by order, introduce a National Affordability Scheme for water.
(2) The National Affordability Scheme must include an eligibility criteria, determined by the Secretary of State, in consultation with—
(a) the Water Services Regulation Authority; and(b) the Consumer Council for Water.(3) An order under this section—
(a) shall be made by statutory instrument, and(b) may not be made unless a draft of the order has been laid before and approved by a resolution of each House of Parliament.”
Lord Whitty
My Lords, in moving Amendment 55 I will also refer to Amendment 56 in this group.
The Bill covers a wide range of dimensions of our water supply industry and its economic and environmental effects. However, it completely fails to address the social problems of those who face growing water bills and difficulty in facing growing pressures on their low-income budgets or their family responsibilities. It is estimated that for 11% of our population water bills account for more than 5% of their income, and for 23% of the population they amount to 3% of their income. That is a pretty significant cost. We have to accept that how people pay for water in this country is singularly irrational but also singularly unprogressive.
The Earl of Selborne
My Lords, I am sure that we are all sympathetic to the proposal of the noble Lord, Lord Whitty, to protect vulnerable consumers from the escalating costs of water. Clearly, it is difficult for some people to budget for something that accounts for 5% of their income.
However, before we look at setting up another national scheme, we need to understand why water can account for such a large proportion of people’s budgets. The first thing we have to do is recognise that as well as the “can’t pays” there are the “won’t pays”. The “won’t pays” are those who recognise that it is impossible for them to be deprived of water. People have a right to water whether or not they pay their bill. The expense incurred by water companies chasing those who will not pay but are perfectly capable of doing so in the small claims courts often leads to a long, inefficient drag on resources. It would be interesting to know the national figure for those who fail to pay when their income level is deemed perfectly reasonable. Perhaps the Minister has that figure available.
When the Science and Technology Select Committee looked at this issue some six years ago, it was not unusual to find that 10% of consumers from high-income streams did not pay their bills, which shocked me. We came up with a proposal which was accepted by all the members of the committee but not by the Government of the day, or subsequent Governments—namely, that we should follow the Australian practice of reducing to a trickle the water supply of those who could perfectly well pay their bills but did not do so and therefore unloaded costs on to those who were less able to pay their bills. The technology exists to do this but I am afraid that this practice is not considered acceptable. Rather rude remarks were made about their Lordships contributing to the great unwashed. I thought that that was a rather unfair observation. Nevertheless, we need to give the water companies every encouragement to chase those who will not pay. That would help those who cannot pay, who this amendment seeks to help.
Baroness Byford (Con)
My Lords, my noble friend has beaten me to the point that I wish to raise. Over the years, during consideration of whichever water Bill, we have had this debate on how you cope with those who are well able to pay but who choose not to do so. My noble friend is quite right: for various reasons, water is never cut off while, unfortunately, electricity can be. It is an unusual situation in that the water industry is the only one in which that position still exists.
I have some questions for the noble Lord, Lord Whitty, on his amendments. First, how would he balance that situation with what he is proposing? Secondly, does he have his own definition of what minimum standards might be, because he has clearly said that it would be for the Government of the day or officials to come up with them? It would be a good idea if the Official Opposition had some direct input themselves into that. Thirdly, the noble Lord said, “We can refer the matter to secondary legislation”. I have sat here on many occasions when we have all said, “Secondary legislation is all right but we do not have any control of it”. We have control of the Bill at this stage and it is essential to deal with this matter in the Bill rather than leave it to secondary legislation, if that were possible.
This is an important issue. When we were considering the Water Bill many years ago, it was difficult to decide who would qualify for being a special case and the circumstances that would be taken into account. I hope that the noble Lord, Lord Whitty, will put a little more meat on the bone, other than what he has done so far in these two amendments.
Baroness Bakewell of Hardington Mandeville (LD)
My Lords, I fully support affordability schemes but regret that I do not believe that they should be a statutory requirement.
The new social tariff guidance from Defra is to be welcomed, as this means that from this year more companies can introduce social tariffs. It is, however, disappointing—as has been pointed out—that so few companies have so far introduced social tariffs or seem to be preparing to do so. It is right that water companies are best placed to come up with the most suitable scheme for their customers, given their own regional circumstances. Any government regulations could end up being overly prescriptive, instead of allowing sufficient flexibility.
I am lucky enough to come from the West Country where Wessex Water is a major supplier and a forward-thinking company. Over the past 10 years, it has developed its own affordability scheme called Tap. Wessex Water recognises that every household is unique and has adapted Tap to ensure that its services are right for each individual’s situation. Through Tap, Wessex Water offers customers an extensive range of schemes and low-rate tariffs to enable them to afford their ongoing water charges and repay any debts they have accumulated. This runs in conjunction with practical help to reduce water and energy use. Wessex Water delivers this help through successful partnerships with the debt advice sector and other organisations supporting vulnerable customers. Customers are signposted so that they can receive holistic debt advice and income maximisation, as well as make proposals for a sustainable offer of payment, however small.
Wessex Water currently has around 14,000 customers benefiting from one or more of its schemes, with around 8,000 on its very low-rate tariff, Assist. The company is doing a lot of work out in communities to raise awareness and promote Tap, particularly the Assist tariff. It is a scheme for those unable to afford ongoing water bills. Working with debt advice agencies, the customer’s personal finances are assessed and a lower bill than normal is agreed, based on their ability to pay. The range of services covered by Tap, as well as Assist, includes Water Direct, which is for people on benefits, who are able to have payments for water taken from their benefits before they receive them.
A second scheme is WaterSure Plus for those who are on one of the main social benefits and who have either a medical need for extra water or three or more children under the age of 19 living at home. In this case, the annual bill is limited to the average annual bill for metered customers in that region, so they pay less than the bill would have been for the amount of water used. Lastly, the scheme includes Restart and Restart Plus for those who are already in debt with their water bill payments. This allows a payment plan to be agreed and, if the plan is kept to for the first year, the debt is reduced by an equivalent amount in year two. If in year two the payment plan is adhered to, the remaining debt is cleared and the customer has a fresh start.
There will be similar schemes—but not many, I agree—run by other water companies in the country, each developed with knowledge of their customers and their customers’ needs. To ignore all this hard work and impose a statutory affordability scheme is to stifle innovation and enterprise.
Therefore, although I accept that affordability schemes are essential, I believe it is far better for each water company to develop its own scheme rather than have the possible straitjacket of a national scheme imposed on it. However, a government review of the situation in 2015 would identify just how many water companies had failed to implement a scheme. Government encouragement to water companies to enter discussions with the Consumer Council for Water to come up with affordability schemes is essential. They would not have to do the hard work; the evidence is out there for them to utilise and access. Just as essential is clear communication of just how much paying customers are subsidising those who refuse to pay. The subsidy for low-income families struggling and willing to pay is very small compared with that for wilful bad debt. Wessex Water is a shining example of best practice which others would do well to emulate. I regret that I will not be supporting Amendment 55.
Baroness Parminter
My Lords, affordability is clearly a key issue and I thank the noble Lord, Lord Whitty, for raising it this afternoon, although I do not share his faith in a national affordability scheme. I use the word “faith” advisedly because, like the noble Baroness, Lady Byford, I think that the amendment is a little light on the details of what a national affordability scheme might comprise.
My understanding is that eight of the water companies already have social tariffs, or will have by the time we get to Third Reading. Perhaps the Minister will be able to comment on that in his concluding remarks. However, there are one or two laggards, including Yorkshire Water, which has undertaken research into a social tariff but says that the results do not justify it proceeding. This is not good enough; it should be working with the Consumer Council for Water, as 11 water companies are, quickly to identify a way forward.
You would expect water companies to try hard to do this as, in addition to being the right thing to do, social tariffs are, as the noble Earl, Lord Selborne, rightly pointed out, one way to help to tackle the bad debts, which put £15 on all our water bills. Where there has been some reluctance to introduce them, it appears that that has had more to do with limited customer support for the company’s initial proposals, because crucially water company customers have to buy in to the social tariffs as they are cross-subsidising them.
Like my noble friend Lady Bakewell, I welcome the new social tariff guidance from this Government and the Welsh Government. It means that more companies can now introduce social tariffs, but of course these schemes must be tailored to local circumstances. The cost of living, average incomes and the cost of supplying water and sewerage systems vary substantially from region to region. In Committee, my noble friend Lord Whitty acknowledged the importance of taking account of regional variations, saying:
“We recognise the desirability of companies taking notice of the configuration of their own consumers and the particularities of their region, and therefore it is better that companies are left to decide their own schemes which will suit their own circumstances”.—[Official Report, 6/2/14; col. 326.]
Like my noble friend Lady Byford, I believe that the Front Bench opposite has not quite spelt out what the national affordability scheme would comprise, saying that it is up to the department to come up with something appropriate which equally allows for regional diversity of delivery.
The issue is not that the majority of companies are not taking this forward; the issue is fundamentally about who pays for the scheme. The Consumer Council for Water has done research which consistently shows that customers are reluctant to pay above £2 as a cross-subsidy. Does the Front Bench opposite think that its national affordability scheme should top up that sum from general taxation? Should schemes be imposed on people unwillingly or from a levy on water companies? That begs the question of whom it would be levied on, given that the overwhelming majority of companies will have agreed to a scheme by next year.
In addition to concerns about a lack of clarity as to what a national affordability scheme would comprise, I am not persuaded by arguments from the Benches opposite about affordability when it will not support further moves to encourage water metering. The independent Walker review, commissioned by the previous Government, recommended a widespread switchover to metered charging, considering it the “fairest way” to address the affordability problems inherent in the current system. Therefore, it is disappointing that the party opposite—I exclude the noble Lord, Lord Whitty, from my condemnation—is opposed to even minor amendments which I raised in Committee and which the noble Lord, Lord Oxburgh, will be raising again later to help to encourage metering. Such a move could help people to take control of their household bills. On that basis, I do not support these amendments.
Lord De Mauley
My Lords, I thank the noble Lord, Lord Whitty, for explaining his amendments and I thank all noble Lords who have contributed to this debate. It will not surprise those of your Lordships who sat through Committee on this Bill to learn that I will not be supporting the noble Lord’s amendments.
I shall deal, first, with the Opposition’s national affordability scheme. The Government take the view that companies are best placed to work with their customers to develop local solutions concerning affordability. After all, it is those customers who foot the bill. That is why the Government’s approach is focused on company social tariffs. The companies’ own business plans show us that by 2015-16 most will have put a social tariff in place voluntarily following a process of engagement with their customers. I am struggling to see the advantage of a national affordability scheme in comparison with the guidance and framework for social tariffs which is already in place and which has, as my noble friend Lady Bakewell said, now been in place for a year.
The Government’s social tariff guidance sets minimum standards in a light-touch way. It does so taking into account the reality of diverse regional circumstances. The minimum standards set in the guidance allow water companies to talk to their customers—the ones, as I said, footing the Bill—and to innovate. Imposing more specific minimum standards on water companies would limit their scope to address the unique circumstances of their respective areas. It would disincentivise companies from coming up with something more creative and more targeted. We should not ignore how different the affordability issues facing the water sector are in different parts of the country.
Our social tariff guidance provides a clear steer on the factors that must be taken into account in the development of a social tariff. However, it leaves final decisions for companies to take in the light of local views and local circumstances, rather than seeking to impose schemes from the top down. The most important requirement of our guidance is for effective customer engagement in the development of a social tariff. The Government believe that some customers should not have to subsidise others without being properly consulted.
All the companies have begun that process of consulting with their customers on whether a social tariff is right for their area and, if so, what form it should take to address local needs. The guidance requires that the companies must work closely with the CCW to ensure that their proposals align with customers’ views of what is acceptable. Undertakers will need to be able to demonstrate that they have listened to customers and organisations representing customers. The social tariff guidance applies to both the companies and Ofwat. Where a company brings forward a social tariff that complies with this guidance, there is a clear presumption in favour of approval by Ofwat.
It is crucial that those who are struggling to pay their water bills get assistance, but the difference between what is suggested and what we have in place is our recognition that local people should have a say. Local factors should be, and are being, taken into account.
I turn now to Amendment 56, which concerns billing information. First, I thank noble Lords for raising a very important point about the WaterSure scheme As noble Lords are by now aware—but sadly many customers are not—the scheme is a mandatory safety net for low-income customers. It is available for customers who have a meter and, for reasons of ill health or because they have a large family, use greater than average amounts of water. I have said before that it is unfortunately a feature of all such means-tested benefits that take-up fails to match eligibility. People who are eligible simply do not sign up. Through informing people that WaterSure exists, I am confident that we can increase uptake. That is why it is important that billing information includes details about WaterSure.
However, that is already happening, and it has been happening for years. The Consumer Council for Water has confirmed to me that information on WaterSure and other similar schemes operated by companies is included with bills. CCWater works closely with each water company on the information provided on household bills to ensure that customer interests are met. Its very practical advice is that customers are likely to be put off by too much additional information on the face of the bill. Taking the other suggestions in the amendment, such as requiring all water companies to provide information about tariff structures and the lowest available tariff, I must confess that I find this requirement rather bizarre. What tariffs are we talking about? This is not the energy sector. Water companies simply do not have complex tariffs. In fact, as I pointed out in Committee, the situation is quite the reverse. There are just two tariffs: charging by a meter, or by the rateable value of a customer’s home.
Water companies provide advice to customers on whether or not they might benefit financially from the installation of a meter. They have to fit one free of charge, if asked. The recent publication of water companies’ business plans has demonstrated how this system can work to claw back benefits for customers using the price review process. By taking account of lower financing costs, Ofwat estimates that the next price review could significantly reduce pressure on bills from 2015 by between £120 million and £750 million a year. Most water companies are proposing flat or declining customer bills from 2015 to 2020.
The amendments are well intentioned and raise important questions about the water sector and help for those who are struggling to pay. I thank the noble Lord for bringing the issues again before the House, but I believe the amendments will not help. I have explained my reasons The Government are absolutely committed to helping hard-pressed customers where we can, and I hope that I have demonstrated that adequately today. On that basis I ask that the noble Lord withdraw his amendment.
Lord Whitty
My Lords, I thank the Minister for that, and I thank everybody else who has taken part in this debate, even though there was a marked lack of enthusiasm for the exact proposition that I put before the House. I think that there was also some degree of misunderstanding, but I shall clear up one or two points.
The noble Earl, Lord Selborne, rightly raised the issue of the impact on bills because of people who will not pay their debt, as well as those who cannot pay their debt. In some water companies, the level of debt is horrendous. We are bringing before the House later tonight—probably, if we make it—a couple of amendments that will address precisely that problem. On the one hand, a lot of the unpaid bills arise in private rented property. There was a provision in the 2010 Bill that would have allowed the Government to introduce secondary legislation to require landlords to indicate who was responsible for those bills. In areas such as the Thames Water area, this is a huge part of the company’s unpaid debt. The present Government, however, declined to implement that part of the Bill on the ground that it was too much of a burden on landlords. The alternative is that landlords themselves should be responsible for the bill and recover it through the rent, which is another way of approaching it. We are attempting to address that problem and the costs of debt which get transferred on to the rest of the consumers.
To put it at its mildest, some companies are rather more aggressive than others in chasing the debt among the “won’t pay” element. We have another later amendment referring to Ofwat. If a company was clearly at a higher debt level than the average due to its own failure to pursue the debt, Ofwat could, in the next price review, refuse to cover it in the price settlement. Therefore, there would be pressure at the company end and pressure on landlords to produce the names of the people they regard as being responsible for their bills. There are things that we will do. My noble friend Lord Grantchester will be pursuing this later for those who can stay. We are addressing that dimension as it has an impact on bills. The noble Earl, Lord Selborne, is absolutely right, as he was in his report six years ago.
The proposition for a national affordability scheme is to push along the developments that people are saying, again, are already happening. The noble Baroness, Lady Bakewell, spoke eloquently about the range of social tariffs and similar schemes being provided by Wessex Water. I am also a customer of Wessex Water and I am pretty satisfied with it in that regard, as in others. Not many companies are as advanced on that front as Wessex Water, and some are well behind. Even in Wessex, if there are only 14,000 on the various tariffs—in, effectively, most of Somerset, Dorset, Hampshire, what was Avon and parts of Wiltshire—those who are eligible to be covered by the scheme are not taking it up.
It is true that with all quasi-means-tested benefits there is a lower take-up than the optimum, but this is far worse than in other fields. It is important to give a kick not only to the introduction of schemes but to companies to ensure that those who are eligible know about them and apply for them. My proposition is not that the companies should not be innovative and creative and relate the schemes they operate within their own areas to the kind of demography and costs they face.
In reply to the noble Baroness, Lady Byford, I would say that you cannot specify a national figure because the average charges differ company by company. So you would probably have a minimum level, which was a proportion of the average scheme, company area by company area. We have deliberately left that for the Minister to pursue in defining the minimum standards of a national affordability scheme. It would allow for the maximum flexibility, both geographically and creatively, of the schemes the companies could go for.
The record of the companies so far, and the failure of Ofwat to pursue them, is the reason why we need a push at national level to get them all involved. There could be a variety of schemes, from a discount to a particular tariff based on a proportion of the average or, in the metered sector, to the level of usage required, as the WaterSure scheme does. There is all the scope in the world in my proposition for different schemes to apply in different areas as long as they meet the minimum requirement. At the moment, however one defines the minimum requirement, eight companies are not, as of today, offering such schemes, and those that do have attracted to them only a small proportion of those who are potentially eligible. That is why we need a kick-start to this, and the national affordability scheme would allow for that kick-start.
I hope that the House will recognise that some of the criticism of what I am proposing is misplaced. Obviously, I have failed at successive stages of the Bill to carry across the argument, but I hope that I have now spelled out clearly what the position is.
On the information scheme, I recognise that most companies provide some information on tariffs and that there will be more tariffs. The exposition of the noble Baroness, Lady Bakewell, of the position in Wessex shows that many schemes are particularly geared to classes of consumer. If all consumers were told about those, that would be useful. We do not have the 2,000 or so tariffs which exist in the energy sector, so I was a little surprised when the Minister described as bizarre our proposition that we should inform consumers of what tariffs are available and what is most likely to suit their needs. That is exactly what has recently been put into the energy regulations at the behest of the Prime Minister. I am therefore surprised that the Minister takes a different view on water. It would be simpler and easier to do than in energy and I see no reason why water companies should not take on the obligation of informing their consumers, via their bills, of what options are available.
I am sorry that the Government seem unable to take up this scheme, even though it gives them maximum flexibility in how they implement it. The issue is so important, and there is such a huge lacuna in the totality of what is covered by the Bill, that it would be remiss of me not to attempt to take the opinion of the House. I think the Government are in the wrong place. If they had come up with an alternative proposition, I would obviously have considered it. However, there is not even that on the table, and I therefore wish to test the opinion of the House.
Lord De Mauley
“(6ZA) The Authority must issue rules (and, if it revises rules it has issued, must issue revised rules) about consulting the Council about proposed charges schemes.
(6ZB) The rules must require a relevant undertaker that proposes to make a charges scheme to consult the Council about its proposed scheme.
(6ZC) If the Authority considers that a relevant undertaker has not complied with those rules, it may give the undertaker a direction to do, or not to do, a thing specified in the direction.”
Baroness Northover
(i) ”
Baroness Northover (LD)
My Lords, in moving government Amendment 61 I shall also speak to the other amendments in this group. I shall address Amendments 61 to 63 first. I am grateful for the support of my noble friends Lord Redesdale and Lady Parminter, who have added their names to these amendments. During scrutiny of the Water Bill we have debated the important question of how to ensure sustainable outcomes in the context of regulation of the sector. As part of that debate, we have returned repeatedly to the need to promote the efficient use of water so that all parties—Ofwat, the water companies and their customers—are encouraged to use water as efficiently as possible.
There is already a duty on undertakers to promote the efficient use of water by their customers, and Ofwat has a role in enforcing this duty. As noble Lords will know, we consider water efficiency to be an important priority. A compelling case for additional clarity on this issue has been put forward by noble Lords in Committee and in subsequent discussions. We therefore propose to make a further alteration to the resilience duty to make it absolutely clear that Ofwat is expected to promote the efficient use of water by water companies. We want to avoid any doubt on that score. This ensures that the resilience duty embraces all relevant action, such as the capture and retention of water by investing in new water storage or by tackling leakage. It will ensure that Ofwat promotes action to ensure that water is managed by the companies as efficiently as possible and encourages them to take action to encourage customers to use water efficiently. All such activity will support the overall objective of reducing pressure on water resources.
I also wish to speak to Amendments 65 to 70. I hope that it will be clear how seriously we take the crucial matter of getting the right balance between social, environmental and economic considerations in the regulation of this sector. We know that noble Lords across the House share this concern. It is with the intention of further strengthening that balance that we are bringing forward these amendments today. They require that when setting strategic priorities and objectives for Ofwat, the Secretary of State and Welsh Ministers must have regard to Ofwat’s duties and must have regard to social and environmental matters as well.
My noble friend Lady Parminter tabled a similar amendment in Committee and, supported by the noble Lord, Lord Whitty, made her case forcefully. I thank both noble Lords for rightly flagging this issue. Briefly, Clause 24 clarifies and strengthens existing guidance- giving powers. It enables the Secretary of State to issue a single consolidated statement setting out social, environmental and economic policy priorities in the round. The purpose of this is to help Ofwat weigh all of the relevant considerations appropriately when making regulatory decisions, and Welsh Ministers will have an equivalent power. We agree that the consolidated guidance must include social and environmental considerations. That is why we made it clear in the drafting of the Bill that social and environmental matters should stay. However, we share the concerns of noble Lords on the issue of the status of that guidance, and for that reason we are bringing forward an amendment to resolve the issue.
I thank noble Lords for their constructive and well informed engagement, and I hope that they will welcome these amendments. I beg to move.
Lord Redesdale (LD)
My Lords, I thank the Government, after some considerable debate about the issue, for the alacrity with which they have taken steps to introduce water efficiency. At the previous stage I raised the issue of sustainability, and I see that the noble Lord, Lord Whitty, has tabled an amendment covering it as part of this group. However, what I am most concerned about is the issue of water efficiency.
The resilience amendment talks about demand management. In the parlance of the water industry, demand management is very much about the reduction of leaks, whereas I believe that water efficiency is much more about the use of water and how it is a partnership between the water companies and water users on how water is to be used. We still have to bring about a massive behaviour change in customer use to make sure that the biggest leak we have in any system is the tap that is not turned off or used inefficiently. That is a movement which we have to take forward.
I hope that these provisions will bring about a degree of behaviour change within Ofwat itself, as happened as a result of the changes made to its core duties in the 2003 Act. I believe that Ofwat is seeking to change the way that it looks at such a scarce resource. With climate change, we are going to have to look at a very different system of determining how much water is available and how we use it. Indeed, in a few minutes Ofwat will be holding a reception just down the road to discuss these issues with stakeholders. I am glad that the Government have brought forward these amendments, which I am sure will help the regulator in its duties.
Baroness Parminter
My Lords, I, too, thank the Government for listening so assiduously to the concerns that I and colleagues around the House raised in Committee. The Government have listened very carefully to those concerns, and I particularly welcome the new amendment which outlines that the resilience duty includes promoting the efficient use of water. This powerful commitment to water efficiency is testament to the tenacity of my noble friend Lord Redesdale. It also delivers the Liberal Democrat party policy agreed five years ago to reform Ofwat’s remit to put water resource efficiency at the heart of water company plans.
I also sincerely thank the Minister and the Bill team for accepting my genuinely strongly felt concerns about the necessity of the Government taking account of social and environmental matters when formulating the strategic guidance with which the regulator has to conform. Their amendment to Clause 24 reflects that and I am extremely grateful.
Lord Whitty
My Lords, I, too, welcome all the government amendments in this group. However, I do not understand why they have not gone the full hog towards what the noble Lord, Lord Redesdale, the noble Baroness, Lady Parminter, and I were arguing to begin with, which is that if you give Ofwat a responsibility or a primary duty for sustainable development, these things would naturally flow from that. These are criteria that are applied to other regulators. Everything that has been said in this debate and in the White Paper, including everything said just now by the noble Baroness, shows that you need to have a holistic approach to the management of water. This is not about just one dimension or aspect, but about the cost to consumers and to business, about providing infrastructure for the country, about water quality for consumers, about whole ecosystems and catchment areas, about maintaining water resources against climate change pressures, about resilience and about efficiency.
Resilience and efficiency have now been written into this, but not very much of the rest. I, too, admire the noble Lord, Lord Redesdale, for the pressure that he has brought to bear regarding water efficiency—he has won a notable victory here—but this still baffles me, and my amendment reiterates the need to provide a broader primary duty. The Government have obviously recognised some aspects of upgrading that responsibility because they have, rightly, taken up the earlier amendment tabled by the noble Baroness, Lady Parminter, that changed,
“may have regard to social and environmental matters”,
to “must” in respect of the Minister’s statement. They recognise sustainability in general and that it is an important part of how we manage in the context and framework within which Ofwat works.
As there are multiple regulators in this system, it has traditionally been assumed that Ofwat is primarily an economic regulator, the Environment Agency primarily an environmental regulator and the Drinking Water Inspectorate primarily a quality regulator. However, they actually overlap: the Environment Agency has serious economic responsibilities in its remit, very specifically about water resources, while Ofwat has a secondary sustainability duty and now, as a result of the amendments on resilience, broader aspects of its responsibilities relate to sustainability. I appreciate the references to resilience. When sustainability was being pushed in the Commons, the Government came up with the resilience criteria, and when it was being pushed in the Lords, they pleased the noble Lord, Lord Redesdale, with the water efficiency criteria.
Baroness Byford
My Lords, I apologise that I was not able to play a large enough part in Committee. However, I wonder whether the noble Lord, Lord Whitty, can tell me what Ofwat does not have. My understanding, having had earlier briefings from Ofwat, was that it already had a sustainable development plan duty, which the Bill will further introduce and strengthen. What is missing from the responsibilities that Ofwat already has? I am a little confused.
Lord Whitty
Did the noble Baroness mean to say, “Before the noble Lord sits down”?
Baroness Byford
I am sorry; I did not think that that was necessary at this stage—I hope I am correct. That is my question for the noble Lord, Lord Whitty. I am slightly confused about what is expected of Ofwat in terms of its sustainability duties. I thought that that was written in and already exists. Hence I am not sure where the amendment of the noble Lord, Lord Whitty, would take us.
Lord Whitty
I am not sure of the procedure at this point, so I will not reply now.
Lord Shipley (LD)
My Lords, I contributed to the Bill in Committee but that was all on the Flood Re insurance aspects and did not relate to this part. However, in listening to the debate on sustainability and resilience, I was struck by the points about whether the Bill was worded strongly enough as regards the importance of sustainability. I recall the reply in Committee from the Minister, my noble friend Lord De Mauley, when he made it absolutely clear that Ofwat has had a stand-alone statutory duty to contribute to the achievement of sustainable development since 2005. In response to what the noble Lord, Lord Whitty, has said, I would like to turn it a different way round and say that this is actually about the outcome produced, and whether sustainability is strongly enough part of the Bill.
I pay tribute to the work of my noble friend Lord Redesdale in this respect. With this amendment, the Government have delivered the outcome that we want. The question is whether Amendments 61, 62 and 63 are sufficient to meet the arguments that were put forward in favour of the word “sustainability” at that stage. I think that these amendments are sufficient, and I have two reasons for concluding so. First, the resilience duty now requires the promotion of increased efficiency in the use of water. Additionally, the amendments made on Report in the House of Commons mean that the resilience duty includes a requirement that the sustainable management of water resources should be promoted as part of that resilience duty. In practice, therefore, the sustainability test is now being met.
Secondly, the Blueprint for Water coalition of environmental groups, which includes the World Wide Fund for Nature, the RSPB and the Wildlife Trusts, makes it clear in its comprehensive briefing for this Report stage that the Bill satisfies its previous call for Ofwat’s secondary sustainable development duty to be raised to a primary duty. I find its support for the Government’s position reassuring in this respect.
With the other proposals relating to abstraction reform, together with Ofwat’s existing trading and procurement code, which includes a sustainability clause, I think that the Government have made their case and should therefore be supported. Again, I pay tribute to the role of my noble friend Lord Redesdale and his advocacy on this issue. His efforts in Committee have produced the amendment that we are debating today.
The Deputy Speaker (Lord Geddes)
My Lords, perhaps I can be of assistance to the House, particularly the noble Lord, Lord Whitty. Paragraph 8.137 of the Companion to the Standing Orders says quite clearly:
“On report no member may speak more than once to an amendment, except the mover of the amendment in reply or a member who has obtained leave of the House, which may only be granted to … a member to explain himself in some material point of his speech”.
My interpretation is that provided the noble Lord, Lord Whitty, gets the leave of the House, he is able to answer—if he so wishes, of course.
Lord Whitty
I am not sure whether the leave of the House is divisible business. With the leave of the House, I will explain to the noble Baroness, Lady Byford, that the sustainable development duty under the current Ofwat remit is a secondary duty. For several other regulators, including Ofgem, it is now a primary duty. That is what my amendment seeks, and it would cover social, environmental and economic matters, not simply resilience and water efficiency.
Baroness Northover
My Lords, I thank my noble friends Lord Redesdale, Lady Parminter and Lord Shipley and the noble Lord, Lord Whitty, for their thanks for the government amendments. I hope that noble Lords around the House are pleased that there has been so much positive engagement between Committee and Report. The noble Lords who have spoken are right to emphasise the importance of the environmental context of everything we are doing here. I am very glad that my noble friend Lord Redesdale can go from here to a meeting to celebrate what has been achieved.
Turning to Amendment 64, tabled by the noble Lord, Lord Whitty, I make it absolutely clear that we agree that sustainable development must be at the heart of all that the regulator does. I hope that that reassures him and is also of interest to my noble friend Lady Byford. That belief is at the heart of the Government’s statutory guidance to Ofwat, the strategic policy statement. That guidance requires the regulator to report on an annual basis on its contribution to the Government’s sustainability objectives. I am pleased to be able to say that Ofwat is making such a contribution.
Much of the broader debate about Ofwat’s sustainable development duty dates from the 2009 price review. Much has changed over the past five years. Ofwat has made good progress; for example, it has taken active steps to correct the perceived bias towards capital investment. The current price review is very different from previous price reviews. For the first time, there is a balance between capital and operational solutions as a result of Ofwat’s new approach, which now looks at total expenditure rather than at capital expenditure and operational expenditure in silos.
Ofwat has been working with water companies and Infrastructure UK to halt the up-and-down cyclical investment that has affected the sector for many years. This change in approach has had tangible outcomes; for example, Ofwat has recently given permission to water companies to bring forward £100 million of investment into 2014 to smooth the investment profile and benefit the water-supply chain.
All of this is reinforced by what we have been doing to move the horizon from the short-term view of the next five years to a sustainable long-term focus. That is why the Bill will introduce a new duty of resilience that deals directly with the long-term pressures facing the water industry. The new resilience duty encourages investment in additional water storage. It pushes the sector to tackle unsustainable abstraction. It places the focus squarely on the responsible management of water resources. Importantly, it promotes the reduction of pressure on water resources, and reducing demand for water.
Noble Lords will also be aware that the new duty was amended in another place to be absolutely clear and unambiguous about what that means. It is about managing water resources sustainably. We have now made further amendments to be absolutely clear that the resilience duty means that Ofwat is expected to promote efficient water use by companies. I thank my noble friends again for their welcome of this.
We recognise the importance of preparing the water sector for the future. We recognise the need for a strategic response to climate change. We recognise the demand on resources that future population growth will cause. It is because we agree with the aims of the noble Lord, Lord Whitty, that we have addressed this at all these levels. The changes that the Bill introduces, and the changes we are already seeing in the regulation of the sector, show how much this debate has moved forward. I hope, therefore, that noble Lords will accept the Government’s further amendments—it sounds as if everybody welcomes those—and that the noble Lord opposite will be willing not to move his amendment.
Baroness Northover
Lord Whitty
“Primary duty of sustainable development
(1) Section 2 of the Water Industry Act 1991 (general duties with respect to water industry) is amended as follows.
(2) In subsection (2A)—
(a) omit the “and” at the end of paragraph (c);(b) after paragraph (d) insert “; and(e) to contribute to the achievement of sustainable development.”(3) In subsection (3) omit paragraph (e).”
Lord Whitty
My Lords, in view of the response from the Minister and the fact that it may be returned to in the next Water Bill, I will not move my amendment.
Baroness Northover
(c) may have regard to such other matters as the Secretary of State thinks fit.”
(c) may have regard to such other matters as the Welsh Ministers think fit.”
Lord Grantchester
“Collection of debt from tenants
(1) The Water Industry Act 1991 is amended as follows.
(2) After section 147 (charging for emergency use of water) there is inserted—
“147AA Charges to recover losses from bad debt
(1) The Secretary of State, or the Authority, may prohibit losses to an undertaker due to non-payment of bills from being recovered through charges on customers.
(2) Where an undertaker does not have information about a resident in a property who is using water, if the occupants of that property are tenants, the landlord must, on request, provide to the undertaker contact details for the tenants.
(3) This section comes into force on the day after the Secretary of State has laid before Parliament a report setting out how water companies have failed to take action on these matters.””
Lord Grantchester
My Lords, the issue of bad debt, particularly in the private rented sector, was debated in Committee. Amendment 71 seeks to prohibit water companies from making good their losses due to non-payment through increased charges on good, bill-paying customers.
Under this amendment, water companies must follow up on any debt with the specific resident customer. However, getting the details of the customer can be difficult in properties where the resident customer is a tenant in the private rented sector. The landlord of the property will be required by proposed new subsection (2) to supply details of the tenant to the water company to enable it to chase up the debt. This is an improvement on the present system, where the company simply makes good the shortfall across all other customers.
Ofwat estimates that 80% of bad debt originates from the private rented sector. As stated in Committee, it is estimated that about £15 is added to honest bill-payers’ water bills to cover bills left unpaid. We are aware that there are people who have difficulty with affordability—we have discussed this already today—but on the other hand there are those who can pay but simply do not. This is effectively stealing water from other genuine bill-payers, adding an unnecessary cost to their bills. The situation can be rectified by this amendment.
This approach is supported by the Consumer Council for Water, Ofwat, the EFRA Committee in the other place, and water companies. In June 2012 the EFRA Committee said:
“It is simply unacceptable that, at a time when so many are struggling to afford their water bills, customers face the additional burden of subsidising those who refuse to pay what they owe”.
Baroness Northover
My Lords, we all agree that bad debt in this sector must be tackled effectively. However, we believe that the best ways to do this are through the sector-led voluntary approach to information-sharing and by Ofwat getting the regulatory penalties and incentives right.
While we strongly support the aim of the amendment, we cannot agree that it is necessary because, as noble Lords will be aware—the noble Lord, Lord Grantchester, made reference to this—very similar provision already exists in primary legislation. Without anything changing in the Bill before us, the power exists for the Government to bring forward regulations to require landlords to provide water companies with details of their tenants. This could happen if it seemed appropriate.
However, after consulting widely with all those who would be affected by this measure, we decided that a voluntary approach would be more suitable than imposing those regulations. Landlords felt that it would not be fair to penalise them financially for the debts of others. Having looked carefully at all the evidence, we took the view that there was much more that the water sector could do to address the issue, and there is evidence that some companies are already doing it. It is important that we make decisions based on the evidence; and the evidence showed us that good practice in tackling bad debt is not applied consistently across the water sector.
On earlier amendments on affordability, the noble Earl, Lord Selborne, and others suggested that water companies’ hands were perhaps tied on bad debt. Several companies have excellent performance in the recovery of bad debt—there are many things that they can do—but many others do not. Water companies can, and many already do, use the courts to pursue debtors. However, too many companies still fail to use all the debt collection tools at their disposal and we want improvements in performance in this area.
By way of illustration, perhaps I might give noble Lords some examples of what we identify as good practice. Yorkshire Water is an outstanding example of good work on bad debt. It partners with Experian’s credit account information-sharing service. Yorkshire Water assesses all new customers’ credit histories, which enables it to tailor services to each individual, supporting those in financial difficulty and providing sanctions for those who avoid payment. Another effective scheme is the arrears allowance scheme run by United Utilities, which supports 8,300 customers. For the first six months, the company matches customers’ repayments pound for pound; then the company matches every £1 paid with a £2 allowance until arrears are cleared.
However, at the moment, by no means all companies use these approaches. We wish to see such approaches become much more widespread, and the regulator wants to promote this, too. The methodology for the current price review places a much stronger focus on the responsibility of the company to collect its debts.
The sector as a whole is now starting to respond to this challenge. It is working with landlords’ organisations to establish a new voluntary scheme. Soon, it will launch a database that enables landlords to provide tenant information voluntarily. Crucially, this scheme is supported by the industry through Water UK and the main landlords’ organisations. We wish to give this new system a chance to work and we hope that noble Lords opposite will do so, too.
Ofwat decides which costs may be recovered through the price review; it is absolutely central to what it does. It is clear that Ofwat is using the current price review process to bear down on the costs of bad debt, which is clearly very important. The regulator has been very clear to companies about how bad debt is viewed. Companies must demonstrate high performance in debt collection. They are obliged to show that any increase in bad debt is genuinely beyond their control.
I shall refer to a point made by the noble Lord, Lord Whitty, again in relation to the earlier group of amendments on affordability—the noble Lord, Lord Grantchester, may have referred to it just now as well. The noble Lord suggested that bad debt was mostly in the private rented sector. There is no evidence that bad debt is disproportionately in the private sector; nor does provision in the Flood and Water Management Act, which the noble Lord wishes to see implemented, focus on private rented properties. It would make all landlords, both private sector and social landlords, financially liable for their tenants’ debts. We may have misheard or misunderstood the noble Lord, but we wanted to put that clarification on the record in case that that was how the noble Lords opposite viewed the situation.
Intervention in the setting and recovery of charges is a job for the independent economic regulator. Ofwat has all the tools necessary to enable it to do this job, and it is absolutely right that it is allowed to do so independently. Although we share the view of the noble Lord opposite that those who seek to avoid paying for the water provided when they can pay should not push those costs on to others, I hope that he will accept that progress is being made in the way that I have described and will therefore be content to withdraw his amendment.
Lord Grantchester
I thank the Minister for her comments. We were perhaps talking at cross purposes on the amount of bad debt in the private rented sector. The point here is that local authorities and housing associations are much keener on water companies chasing up tenants and therefore reveal to them the details of those tenants far more readily than do landlords in the private rented sector. That could explain the preponderance of bad debt in the private rented sector.
Nevertheless, I contend that the voluntary approach is simply not working fast enough. It is evident that things are going on in this respect—I pay tribute to what is being done—but I am concerned that not all companies are working as assiduously as they could to reduce this problem.
Given that provision already exists in primary legislation, I urge the Government to press forward a little more keenly than they appear to be doing. I beg leave to withdraw the amendment.
Lord Harrison
“Duty to provide a supply of water etc for fire fighting
(1) The Water Industry Act 1991 is amended as follows.
(2) In section 57 (duty to provide a supply of water etc for fire fighting), at the end of subsection (1) there is inserted “, including service pipes connected from those mains to consumers’ premises, where equipment is installed for extinguishing fires such as fire suppression systems, and this water may be taken via manually operated or automatic apparatus.””
Lord Harrison (Lab)
My Lords, I must apologise to the House and to my own Front Bench for bringing this matter before them not in Committee but on Report, and for not having had the opportunity fully to brief them. However, as my head hurts trying to understand the amendment that I am about to move, perhaps I may explain why I am in this current state.
The issue is this. As I understand it, water connections made through fire suppression systems—which, in the form of sprinklers, have become the new kid on the block, as it were, in recent years—are now classified as non-domestic supply. That in turn means that the water companies, which are exercising discretion on the matter, can attach conditions which are deleterious to our objective of promoting access to water supplies for the purpose of firefighting.
Indeed, there is a patchwork of reactions from water companies across the land. I understand that some companies, because they charge the connection out to some other supplier, charge as much as £3,000 a time, whereas in Scotland, for instance, where we are told that it is a matter of very few coppers to attach the system to the water sprinkler system, no such charges are made.
The problem has been growing over the years and was in part dealt with by a protocol signed off by the then Minister, my noble friend Lord Knight who, unfortunately, is not in his place this evening. That protocol tried to get a balance between the water companies and ensuring the water supply for the purposes of fire suppression. Time has passed since that 2004 protocol, which is why I seek to change Section 57 to ensure that the legitimate use of water to fight fires is clarified and made absolutely apparent.
In doing so, I must thank the noble Lord, Lord De Mauley, and the noble Baroness, Lady Northover, for agreeing to meet me and some of my colleagues recently to get their advice. I should be very grateful if, in response to this probing amendment, we could have a reply that gives some hope that this matter, which we had hoped to have dealt with in the House of Commons by Dan Rogerson, can be dealt with here—albeit that it is a matter that has been brought late into the games.
I should also say that the cost of hydrants, which are available outside buildings to be accessed to suppress fires, are not apparent in the same way as some water companies are now charging those who want access to a sprinkler system. We now have a body of evidence that shows that the fixing of sprinkler systems has been successful in suppressing fires. The problem that we now have is that sometimes people resile from fitting sprinkler systems. I would be very grateful for any hope that the Minister can give me that this could be dealt with sympathetically, and how.
Lord De Mauley
My Lords, I am so grateful to the noble Lord, Lord Harrison, for tabling the amendment and bringing this important matter to the attention of your Lordships. I well know that the noble Lord is an active member of the All-Party Parliamentary Group on Fire Safety & Rescue. He kindly brought the honorary secretary of the group, Ronnie King, to see me last week so that I could hear more about this matter, and I am very grateful for that opportunity. Mr King was a senior firefighter and has now dedicated himself to trying to save even more lives by campaigning on issues of fire safety. He wants more people to install sprinklers. He wants the barriers that might stand in the way of the installation of more sprinklers to be knocked down. The amendment would result in fire suppression systems, known to most of us as fire sprinklers, being referred to explicitly in legislation as water for firefighting.
I understand that a key driver behind the amendment is the problems that can arise between fire sprinkler installers and water undertakers when connections for fire sprinkler systems are required. Those problems include undertakers requiring meters to be installed on the connections, smaller connection sizes than would be ideal for the fire sprinkler system and requirements for internal storage.
Lord Harrison
My Lords, I am extremely grateful for that reply, the clarification that the Minister has offered and his offer to work closely with the parties involved. In the light of that positive response, I beg leave to withdraw the amendment.
Lord De Mauley
“( ) In section 213 (powers to make regulations), in subsection (1A) (affirmative resolution procedure to apply on first exercise of power), for “each of sections 89 and 90 above, the instrument” there is substituted “—
(a) each of sections 89 and 90, and(b) each of sections 207A and 207C and Schedule 16;the instrument””
Lord Oxburgh
“Restriction on undertakers’ power to require fixing of charges by reference to volume
(1) The Water Industry Act 1991 is amended as follows.
(2) In section 144B (restrictions on undertakers’ power to require fixing of charges by reference to volume), after subsection (1) there is inserted—
“(1A) Subsection (2) below shall not apply where the water undertaker considers that the fixing of charges by reference to volume is required to allow it to meet its duties under section 37(1)(a) (providing supplies of water) or section 93A (duty to promote the efficient use of water) and that measures for fixing of charges by reference to volume have been included in both the water undertaker’s draft water resources management plan as set out in section 37B and any such plan published as set out in section 37B(8)(a).””
Lord Oxburgh
My Lords, I begin by declaring an interest in a company that designs and manufactures smart meters for gas, electricity and water; the amendment is about water.
I shall not rehearse the arguments about water metering, which were well aired in Committee. The present situation is clear: a householder who wants a water meter is entitled to have one. However, no one is charged for their water by metered volume unless they want to pay in that way or they live in an area designated by the Secretary of State as one of water stress. As has been pointed out by the noble Baroness, Lady Parminter, that situation obtains despite the fact that in 2009 the independent Walker review of water charging set up by Defra concluded that charging by water volume was the only fair and sustainable basis for charging.
In Committee, I pointed out that regardless of the considerable fairness, efficiency and environmental benefits of metering, there were two other important considerations. First, because meters are relatively expensive to install on a one-off basis, it is much more cost-effective if a whole street or neighbourhood is done together. Secondly, because we live in times of changing climate and weather, an area that previously enjoyed an abundant supply of water may become water-stressed quickly and unexpectedly. If meters are already in place, it would be possible to respond to the changed conditions much more quickly. This means that there are good reasons to allow water suppliers to install meters at their discretion and convenience, while leaving the decision on whether to use those meters for water charging with the Secretary of State or the householder. This would allow meter installation at minimum cost and permit a timely response to water stress, if needed, and it was the essence of the amendment that I introduced in Committee.
In subsequent discussions with the Minister, his officials and the supporting Front Bench team, for which I am very grateful, the view was that water companies already had the authority to carry out general meter installation and that this amendment was unnecessary. Numerous communications which I have had since that time—I continue to receive them—suggest that this fact is not well known. I have tabled the present amendment at least in part to allow the Minister to make an authoritative statement on the present situation.
I will make a couple of comments on today’s amendment, the wording for which was offered by WWF and several collaborating organisations. First, I have to apologise to them and to the House that the wording in the amendment is in fact not the most recent wording—but never mind, it gives us an opportunity to discuss the general problem. The amendment would allow water companies to introduce universal metering if, after consultation with customers through the existing water resources management plan and business plan processes, it is found to be the most affordable option for customers overall as well as being the best option for water resources management. This will be consistent with the new resilience duty of Ofwat, and I strongly endorse that proposal. The present procedures for metering approval need widening and are glacially slow even when all those directly affected are in agreement.
Secondly, the text of the amendment provides an excellent illustration of the need for the Secretary of State to supply a clear and authoritative statement on metering to clarify the tortuous complexity of the present legislation. It is hardly surprising if water companies are confused about the law, if indeed they are. The subject matter is not intrinsically complicated, but successive layers of amending legislation, laid one upon the other, make the present state of the law difficult to discover without a great deal of work. At an earlier stage the noble Baroness, Lady Northover, assured me and the House that codification of water legislation would receive the attention of the department. I wonder whether the Minister could simply comment on any progress that has been made.
In conclusion, I believe that metering is important both to give consumers a fair deal and to help the environment. We ought to make it less expensive and easier to accomplish. I beg to move.
Lord Cameron of Dillington
My Lords, in supporting my noble friend Lord Oxburgh I realise that we are swimming against an overwhelming political current here. However, it is sometimes the duty of Cross-Benchers to point out the political follies of some of the main parties in this House. It is clear to me from having spoken to many Members of this House—including some very important Members, many of whom are here today—that on a personal vote this amendment, or something like it, would sail through the House. To put it bluntly, a lack of imagination at the other end of the Palace is preventing this happening. One might even say it was a lack of leadership. I say “lack of imagination” because it is quite easy to devise a tariff system or to further enhance or better promote WaterSure or some of the other systems so that large households on low budgets, for example, can continue to pay as little as they do for their water at the moment, or even less.
It has been my ambition throughout the passage of the Bill to ensure that water is valued more by all parties: government; businesses, including energy, which are great water users; farmers; and, above all, domestic consumers. Having read the Committee stage—I apologise that I was not in Committee when this was discussed—I know that it has already been said that no one will value it unless we measure it. That includes those who might be getting assistance. Everyone would value water more if they measured it. What seems strange is that that is the overwhelming view not only of Members of this House but of environmentalists and of most customers, when they are asked—you have only to read the Walker report to see that.
It is also the view of water companies that we should work towards 100% metering. Your Lordships might think that slightly counterintuitive because, if customers value their water more, surely they will buy less. However, water companies know that the costs and delays in providing ever-expanding infrastructure and water supplies to cater for an ever-expanding demand would cripple their balance sheets. In January, some of us heard that a mere extension of a reservoir in Essex took 20 years to achieve: 10 years to prove the case and 10 years to go through planning. How much longer would it take for the many new reservoirs required to cater for this system of unlimited demand? There is no doubt that a reduction in demand by around 15%, which is often cited as what can be achieved by universal metering, would be the equivalent of several new reservoirs. Metering is therefore so much quicker and cheaper, and infinitely better for the environment.
I want to tell your Lordships a small parable from India. In India, water was considered to be a commodity that was given by God and therefore should be free to all people. Because no one was paying for it or valuing it, the investment in infrastructure by the state and the private sector was therefore negligible. It was even worse than our water industry was before privatisation. So as a result of this paucity of investment, communities in both cities and rural villages often got water only for an hour per day, or sometimes two at the most. Anyone who has listened to any debates on overseas development in this House will know that poor sanitation caused by lack of water is the biggest killer of children in the world. Anyway, the Indian Government realised that everyone had to value water more and so changed the law about not charging for water. Almost immediately, a giant leap forward was taken in water supplies and sanitation across India, although it is not perfect and they have a long way to go yet.
Your Lordships may be thinking, “What on earth does this have to do with universal metering?”. However, as I said, it is a parable rather than a parallel because the Indian Government had learnt that you do not want to use water as a political or social tool to iron out the inequalities of life. Apart from anything else, water is one of the heaviest commodities on the planet. It is difficult and expensive to move around. It is best to put the proper value on water and then ensure through other measures that people have the wherewithal to pay for it; that is what I mean by a lack of imagination. Nearly all Western countries have universal metering and most of them, from what I can gather, have some sort of WaterSure scheme or an equivalent which relieve those who might get into financial difficulties. Universal metering is going to happen here eventually, as in the rest of the world, However, I am reminded of the German philosopher—I think it was Otto Mencke, although I cannot be dead certain—who said: “When the end of the world comes, I want to be in England because everything always happens 50 years later there”.
Baroness Parminter
I thank the noble Lord, Lord Oxburgh, for raising this issue, which I, along with other colleagues around the House, moved an amendment on in Committee. I am not going to repeat the argument that I and others made at that time, but there has been new information since then. In preparation for Report, Water UK contacted all water companies, asking for their views on this issue. They all saw the requirement to seek permission from the Secretary of State for metering as an unnecessary constraint. They think that the water stress status should not be a requirement for metering; rather, they should be able to decide what to put in their water resources planning framework on the merits of the case, including what customers want.
Wessex Water and Northumbrian Water have gone on the record separately on this issue, Wessex Water saying:
“In our WRMP we considered the pros and cons of compulsory metering, even though being in a non-water-stressed area we couldn’t introduce it. Our analysis showed that metering on change of occupancy was a better approach as it gave greater long-term water savings whilst retaining customer acceptability. Metering on this basis will be put in our WRMP and business plans, even though we can’t introduce it”.
This seems to me to be a reasonable amendment. All it does is give companies the right to speak to their customers and manage their businesses to their benefit and that of increasingly scarce water resources. I respond to the noble Lord, Lord Cameron, by saying that it is not just Cross-Benchers who are prepared to swim against the tide; the Liberal Democrats are well used to being out of step with the other two main political parties, and on this occasion I am happy to join fellow Cross-Benchers to support them on this important issue.
The Earl of Selborne
My Lords, I think those on the Conservative Benches should support the noble Lord, Lord Oxburgh, as well—as indeed I am sure many of us do. I agree very much with the noble Lord, Lord Cameron, who says that we simply have to value our natural resources. We in this country are totally out of step with the whole movement towards valuing natural capital and understanding the extent to which our natural resources underpin our economy and our quality of life. It makes obvious sense, therefore, that we should all be aware of our footprint, and if we think that we have the right to buy water at a rate that reflects some old rateable value as opposed to our actual consumption, we are simply denying our responsibility to understand our long-term impact.
As I understand it, this amendment is tabled more in order to demonstrate that the water companies can already do what the amendment seeks that they do, so I expect that the Minister will say that it is unnecessary, but it is certainly not unnecessary if it demonstrates what is obvious. I cannot understand why anyone should say that it is against the tide of the day; it is my understanding that every party supports the idea that we should value our natural resources properly, and who could say, therefore, that water should be exempt from that process?
Baroness Northover
My Lords, I thank the noble Lord, Lord Oxburgh, for laying this amendment, and I think I thank the noble Lord, Lord Cameron, for his contribution, with all his liquid metaphors. I was pleased to speak at the WaterAid reception last night, which he attended, so I assure him—I think he knows it—that we recognise the importance of water, whether it is in developing countries or in the United Kingdom.
We have thought carefully about metering in bringing this Bill through Parliament. Our position on metering seeks to strike a balance between the benefits that metering brings and the consequences that it can have for customers and their bills. We agree that metering is a fair basis for charging, but we are also concerned about the potential impacts on struggling customers. As the noble Lord, Lord Oxburgh, has observed, any customer can request a meter. The company must then fit a meter for free. That customer has a year to decide whether to revert to paying according to the rateable value if it turns out that they are worse off.
We are already seeing increasing levels of metering across the country. Next year will see the number of metered households reach 50%, with a trajectory towards 80% by 2040. Where there is a credible economic case, any company may install meters across all or part of their area. The only restriction is on imposing metered charges on customers without their consent. Companies could, as the noble Lord, Lord Oxburgh, suggests, install a complete street or neighbourhood at the same time; and to answer my noble friend Lady Parminter, companies can put in meters throughout.
The evidence shows that the case for imposing metered charges on all customers in an area can be made in water-stressed areas where there is an insufficient supply of water to meet projected demand. The amount of available water varies around the country. When it makes social, environmental and economic sense to do so, charging all customers according to a meter is already a possibility, but in areas where water resources are not under pressure, imposing meter charges is restricted because of our concerns about affordability.
There are two sets of costs that must be considered here. First, the investment cost of installing meters across an area can put up bills for all the customers in that area. Secondly, imposing metered charges across an area can increase the bills of some of the worst off in society. This is not something that anyone wishes to do in areas that have sufficient water to meet demand.
The balance will doubtless change over time. With climate change and population growth, the case for universal metering in particular areas will no doubt shift. That is why we revised the water stress designation last year: to take better account of long-term climate projections and information about environmental pressures. We wanted to ensure that the designation of serious water stress is forward looking. It is also updated on a regular basis, and we will continue to keep the situation across the country under review. I hope that that does something to reassure noble Lords.
The noble Lord, Lord Oxburgh, asked me to clarify the circumstances in which companies can install meters, and he made the point that a number of organisations were not clear about the situation. I hope I have answered his question, but for the avoidance of doubt let me do so again for the record. Water companies are able to install meters wherever there is a good case for doing so. There is a variety of reasons why they may choose to do this, including to improve leakage detection and enhance their understanding of consumer behaviour. A number of companies already do this. What the companies are not allowed to do is to impose charges by reference to that meter without the householder’s agreement. The exception to this rule is in areas of serious water stress, for the reasons that I have mentioned. It is not the installation of meters, therefore, that is restricted; it is making people pay a metered charge without their consent in other areas. I hope that answers the noble Lord’s question.
The noble Lord also mentioned the complexity of the legislation in this area. We agree that the prescribed conditions regulations, which govern the restrictions around metering, are complex and hard to follow. I am glad to be able to confirm that under the Government’s Red Tape Challenge, we have a commitment to consolidate these regulations by April 2015.
Water companies can install meters wherever it makes sense to do so, but it is the householder who decides whether they wish to be charged by reference to it in the areas where that is permitted. There is flexibility to allow universal metering in the wider interest of water efficiency in areas of serious water stress. This is a careful balance. I hope that the noble Lord will be willing to withdraw his amendment, although I am sure he will do so with great reluctance.
Lord Oxburgh
My Lords, I thank the Government for their constructive response, and indeed for the clarification, which I think will be welcomed by many of the water undertakings that have expressed their concern about the present legislation and its lack of clarity. I would just comment that there is some concern, in so far as the noble Baroness referred to it, about the recent reclassification of areas of water stress. There is some disagreement that it is sufficiently forward looking. I am delighted to hear that the legislation is being looked at under the Red Tape Challenge. May we encourage the department in its efforts in that direction?
One disappointment is that, given the progress that has been made, the Government do not feel able to take the last step and say that there does not have be water stress if there is general agreement in an area that this would be the most cost-effective and generally acceptable way of charging. However, under the circumstances, I beg leave to withdraw the amendment.
Lord De Mauley
Lord Whitty
“Duties of undertakers to furnish the Secretary of State and Authority with information
(1) In granting, reviewing or renewing licences under this Chapter, the Authority will be required by the Secretary of State to take into account broader issues when conducting or reopening a price review and such broader issues may include for any licensee or applicant licensee—
(a) their corporate structure and financial structure;(b) the total amount of investment in England and Wales;(c) the total amount of dividends paid to owners and shareholders;(d) their taxation structure;(e) their company and group overall performance; and(f) their corporate social responsibility strategy.(2) Licensed water undertakers must furnish the Authority and the Secretary of State with information on the above and publish such information in an annual return or otherwise.”
Lord Whitty
My Lords, I think this is the last business of tonight for us. Amendment 78 deals with an area which has overshadowed the debate on the Bill and the public commentary on the water industry. It is concern about the overall structure of the industry as it stands, and is likely broadly to stand for a considerable time, despite the attempt to introduce a degree of competition in a small sector of the market.
Nearly 30 years after privatisation, the water industry consists primarily of huge private regional monopolies whose public reputation is variable, according to area, but in some cases is pretty low. Relatively recently, commentaries on the totality of the way in which the water industry operates have been pretty scathing.
I am the first to acknowledge that since privatisation we have achieved a very significant amount of investment in the water industry, and much of it has been very effective in delivering the service. In that context, there have been some investments that it would have been sensible to pursue that, because of the combination of company interests and boundaries and Ofwat’s priorities, have not been made, including interconnection between the various water areas; nevertheless, there has been very substantial investment. It has been in a context where company behaviour and the regulatory structure have focused primarily on capital investment in large-scale improvements and maintenance and relatively little on water efficiency matters and related subjects.
In terms of the finances of the companies, we have seen very substantial increases in their capital value. In some cases, they have gone dramatically through successive changes of ownership to the benefit of their past and present shareholders, but not noticeably to that of British consumers and British business. We have seen very substantial payouts of dividends to those successive owners. Indeed, in the last full financial year, more than 90% of profit was paid out in dividends. We see very low levels of UK taxation, partly because of the structure, and that is again anomalous in the eyes of many commentators and the public. This results, in most cases, from a very high level of gearing. The investment has been largely paid for, and is increasingly largely paid for, out of money raised on the markets.
At the point of privatisation—the noble Lord, Lord Moynihan, is no longer in his place, but he was there at the time—I do not think that that was envisaged by its proponents. I was not one of them, but nevertheless I do not think it was what they envisaged would happen. It was envisaged that there would be a series of UK companies, probably financed by the Stock Exchange, whose investment would largely be funded through equity off the balance sheet rather than through going to the market, whose ownership structures would be based primarily in Britain and would be transparent and open and which would therefore pay UK taxes proportionate to their turnover and profits.
Instead, we have ownership which is, in many cases, overseas, which is not a problem in itself depending on the behaviour of the companies which are so owned. Dividends, to which I have referred, are paid, and UK taxes are going downwards. Largely, the investment the companies have benefited from has been financed from international markets. Issues arise, the most obvious being that if money is being financed through the markets, you have to cost it in the price reviews. The biggest failure of regulation in the past two or, perhaps, three price reviews has been that the regulator allowed a significantly higher level of capital cost than actually applied in the markets. That enhanced profits, at no great expense to the company, and allowed for dividends to be paid in the way I have described.
Viscount Hanworth (Lab)
My Lords, I support the amendment of my noble friend Lord Whitty. The privatisation of the UK water industry occurred as long ago as the late 1980s, and it was accomplished in a fashion and manner that paid scant attention to the need for an attentive regulation of the industry.
A provision for the public regulation of privatised industries was an integral part of the concept of privatisation but, in many cases, only lip service has been paid to this aspect. The light-touch regulation of the water industry has provided a case in point. It is arguable that, had there been a more active regulation of the industry, it would be in far better shape than it is at present. An active regulator might have prevented the firms of the industry from becoming the pawns in financial manipulations of foreign owners that have had the motive solely of private enrichment.
The firms have been used as tools in strategies of leveraged corporate acquisitions and takeovers that have borne no relation to the ostensible purposes of the industry. The investments in the water industry have fallen short of what they might have been if the profits had been ploughed back. Instead, they have been used to pay large dividends to the owners and to the shareholders.
Finally, it is questionable whether the majority of the firms in the water industry have any clear concept of their social responsibilities. A full provision of information is required to enable interested parties, including the Secretary of State, to assess the performance of the industry. Then steps could be taken to redress the abuses that have occurred in the past and that are liable to occur when there is insufficient regulation. That is what the amendment calls for.
I hope that the Government will be able to accept the amendment. There used to be the so-called “June review” which was assembled by the regulator, Ofwat, but it has since fallen into abeyance, as we have heard. The amendment would reinstate that review, but it would give it more force and it would ensure that it could not fall into abeyance in the future.
Lord De Mauley
My Lords, I thank the noble Lord, Lord Whitty, for moving his amendment. We have heard about asking water companies for information, much if not all of which is already freely available in their annual reports and accounts. I have said before that the amendment would, to that extent, simply duplicate existing powers.
What we are really talking about is Ofwat’s ability to examine what companies are doing to ensure that they are not profiteering at the expense of their customers. Although I disagree with the amendment before us, I most certainly agree with the principle that water companies must be effectively regulated. I believe that the regulator is doing its job robustly.
The focus of the amendment is, in particular, on reopening a price review. In fact, Ofwat already has the power to reopen the price review in two ways. It can do this under the “substantial effects” clause of a water company’s licence or by making an interim determination. It is clear that Ofwat has the power to revisit price determinations, if it so wishes. In fact, in October last year, Ofwat consulted on whether or not it would be right to utilise this power with respect to Thames Water. However, given the fundamental importance of regulatory stability in the water sector, it rightly utilises these powers with caution. Ofwat considers carefully whether any intervention it might make would be in the overall interests of customers.
Of course, it must be right that Ofwat does this with the bigger picture of stable economic regulation firmly in mind. The objective of setting prices for a five-year cycle is to create a period of stability during which companies are able to invest and deliver the outcomes that they have agreed with the regulator. They have a period during which they are allowed to receive the benefits of that settlement and then, at the end of the period, prices are adjusted to capture those benefits for customers.
That is what is currently taking place through the price review process. Ofwat believes that by taking account of the current low cost of borrowing it will be able to limit price increases from 2015 to 2020 by between £4 and £25 a year. Accordingly, I am unable to see what purpose the proposed annual returns will fulfil. We should look to the future and look at what Ofwat is doing. Let us be clear about the direction of regulation in the water sector. Ofwat is already taking action to improve standards of corporate governance across the sector. It is putting pressure on water companies to strengthen audit arrangements, board member appointments and governance. Ofwat recently published new principles relating to board leadership, transparency and corporate governance. These set out clear standards for the sector and a clear timetable for their introduction. The response from the water companies has been positive and I welcome this. Ofwat is also consulting on principles for holding companies covering risk, transparency and long-term planning. It has made it clear that the companies’ licences may need to be brought up to date to reflect these reforms and it is already discussing this with the companies. Further reporting burdens will not contribute positively to this process. I hope that the noble Lord will agree to withdraw his amendment.
Lord Whitty
My Lords, I did not really expect the Government to fall over themselves to accept this amendment today. However, I am glad that I have raised the issue because I think that the Minister is right that Ofwat is now taking greater cognisance of the broader picture. The early years of Ofwat regulation were undoubtedly seriously light touch, even though it required an enormous amount of information from the companies. My aim here is not to duplicate the provision of information but to allow Ofwat to use that information and, if it was inadequate, to require more from the companies. The overall picture is very difficult to justify. The level of borrowing, the level of dividends and the level of taxation, taken as a whole, is very difficult to justify to the British people over a set of companies which is supposedly regulated tightly, and which plays such an important part in their lives. I therefore think that we need to find some mechanism which does not transgress the lines that the Minister set down about regulatory stability and Ofwat acting primarily in the interests of customers; I do not wish to upset either of those objectives.
However, there is an oddity about the structure of this industry that, at some point, some Government or regulator is going to tackle. I am very appreciative of Ofwat’s latest moves in the general direction of tightening up and looking after consumers better. The reason for me saying that is not that when we finish here I am going to the Ofwat reception over the road. I think that it is improving and broadening its role without imposing pernickety regulation. In fact, it is getting rid of some regulation in terms of provision of detailed information.
Ofwat is moving in the right direction, but it is a big problem. I would have hoped that the Government could have recognised it a little more explicitly, because I think it may come up at some point and bite whichever Government are in power when something goes seriously wrong with one of these companies. We have been close to that once or twice in the past 30 years, and I do not think that current Ofwat powers, and certainly past Ofwat practice, were up to dealing with that.
I thank the Minister for his reply. I will not return to this issue, but I suspect that somebody else will at some point in the next few years. I beg leave to withdraw the amendment.
Lord De Mauley
“( ) In subsection (1), for the words from “the following” to the end there is substituted “the powers and duties conferred or imposed on the Secretary of State or the Authority by virtue of any of the relevant provisions.””
“( ) in paragraph (a), for the words from “the provisions of” to “water suppliers” there is substituted “the relevant provisions”;”
“(ii) any of sections 37A to 38, 38ZA, 39, 39ZA, 39B to 39D, 40E to 40J, 42, 51CD to 51CG, 63AC to 63AF, 66B, 66CA to 66H, 66K, 66L, 66O(2), 95, 95ZA, 96, 96ZA, 99, 105ZF to 105ZI, 110F to 110J, 110L to 110O, 117E to 117O, 117R, 117S, 143B to 143E, 144ZA to 144ZF, 153, 181, 182, 185, 192A, 192B, 195, 195A and 201 to 203 below, or (iii) section 42 of the Water Act 2014.””
“( ) paragraphs (b) and (c) are repealed.”
“ In section 158 (powers to lay pipes in streets), in subsection (7)(a), for the words from “section 66B(3)(a)(ii) above” to “section 66B(3)(a)(iii) above” there is substituted “section 66B(4)(a)(i) or (b)(i) which is used for the purpose of supplying water other than for domestic or food production purposes or laid in pursuance of section 66B(4)(b)(ii)”.”
“(2) In subsection (1)—
(a) the words “17D(8),” (inserted by section 35(2) of the Flood and Water Management Act 2010) are repealed;(b) the words “or 17D(8)” (inserted by paragraph 49 of Schedule 8 to the Water Act 2003) are repealed (if they remain in force to any extent);(c) before “or 105A” there is inserted “, 66M”.(2A) After subsection (1) there is inserted—
“(1ZA) The requirement in subsection (1) does not apply in the case of regulations made by the Welsh Ministers under section 17D(8).””
“ In section 35 (provision of infrastructure), in subsection (2), in the words inserted into section 213(1) of the Water Industry Act 1991, the words “17D(8),” are repealed (if section 35(2) remains to be brought into force to any extent).”
Lord De Mauley
“Report on water abstraction reform
(1) The Secretary of State must prepare a report setting out progress made in reforming the arrangements for managing water abstraction in England.
(2) The Secretary of State must lay before Parliament a copy of the report.
(3) The report must be prepared and laid before the end of the period of five years beginning with the day on which this Act is passed.”
Lord De Mauley
“(12) If the statutory instrument contains any regulations which, on their own, would make the instrument subject to the affirmative resolution procedure, the instrument is subject to that procedure.”
Licensing Act 2003 (Mandatory Licensing Conditions) Order 2014
(10 years, 1 month ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Taylor of Holbeach
That the draft order laid before the House on 24 February be approved.
Relevant documents: 22nd Report from the Joint Committee on Statutory Instruments, 32nd and 35th Reports from the Secondary Legislation Scrutiny Committee.
The Parliamentary Under-Secretary of State, Home Office (Lord Taylor of Holbeach) (Con)
My Lords, the order makes provision for the introduction of a mandatory licensing condition banning the sale of alcohol below the cost of duty plus VAT.
The Policing and Crime Act 2009 amended the Licensing Act 2003 to confer a power on the Secretary of State to specify further mandatory licensing conditions relating to the sale and supply of alcohol. Sections 19A and 73B of the Licensing Act allow for such conditions where she considers it appropriate for the promotion of the licensing objectives. The order would apply to all licensed premises in England and Wales; Scotland and Northern Ireland are subject to different legislation.
The Government are committed to reducing alcohol-related harms. We have taken a decision to ban the sale of alcohol below the permitted price—that is, the cost of duty and VAT. That fulfils a commitment in the coalition agreement. It will ensure that the worst cases of cheap alcohol are banned from sale. The ban will prevent anyone from selling alcohol at heavily discounted prices. A can of average-strength lager will now cost no less than 40p, and a standard bottle of vodka no less than £8.89. The ban aims to reduce excessive alcohol consumption and its associated impact on alcohol-related crime and health harms.
It is estimated that overall alcohol consumption will fall by 10.5 million units in the first year alone, resulting in 900 fewer crimes and 100 fewer hospital admissions. After 10 years, there will be 500 fewer hospital admissions and 14 lives will be saved each year. It is vital that we reduce alcohol-related harm, which it is estimated costs society £21 billion per year, £11 billion of that being alcohol-related crime. In nearly half of all violent incidents the victim believed the perpetrator to be under the influence of alcohol. The most common type of anti-social behaviour experienced or witnessed—by one in 10 people—was drink-related. This measure will ensure that we take a step towards a much needed reduction in the £21 billion bill that this country faces as a result of alcohol.
I thank the noble Lord, Lord Goodlad—who is not in his place this evening—and the members of the Secondary Legislation Scrutiny Committee for drawing the order to the attention of the House. The committee has reviewed the order and has made some important observations about the evidence on which we rely to demonstrate the benefits that the order will bring.
I will comment on the committee’s concerns that the evidence is highly speculative. The benefits have been assessed using the University of Sheffield’s School of Health and Related Research model, which is accepted as the best available model for estimating benefits of this policy. The modelling was carried out by researchers based at the university, who are independent of government and have qualifications and significant experience in the fields of health economics, health modelling, systems modelling and decision modelling. The modelling from the University of Sheffield estimates that this policy is worth £3.6 million per year in crime reduction benefits in England alone. That figure was laid before Parliament in the impact assessment and the Explanatory Memorandum.
The health benefits have also been considered, and again, those have been laid before Parliament. The Explanatory Memorandum notes an estimated benefit to the public sector in England alone of £1.15 million per year on average over the first 10 years. The impact assessment estimates the wider health benefits to society, as well as to the public sector, to be £5.3 million per year. While the reduction in average consumption is modest, this policy will impact the most on hazardous and harmful drinkers. We know that there is a direct link between the price of alcohol and the quantity consumed by the heaviest drinkers, and that they tend to favour the cheapest alcohol. We also know that hazardous and harmful drinkers generate the biggest costs for alcohol-related harm. This policy seeks to achieve 900 fewer crimes in the first year alone. The reduction in hospital admissions will go from 100 in year 1 to 500 in year 10.
Two consultations have been held on the Licensing Act and on alcohol strategy, in 2010 and 2012-13 respectively. Following the results of the consultations, banning the sale of alcohol below the cost of duty plus VAT was considered the most pragmatic way to tackle the worst examples of cheap alcohol. I hope that the House will agree with the Government that the introduction of the ban is an appropriate use of the powers conferred on the Home Secretary by the Licensing Act 2003. Accordingly, I commend the order to the House.
Amendment to the Motion
Baroness Smith of Basildon
As an amendment to the above motion, at end to insert “but regrets that Her Majesty’s Government have failed to demonstrate a coherent link between the permitted price policy and the evidence quoted in the Impact Assessment and Explanatory Memorandum, meaning their claims are completely speculative; and further notes that the Secondary Legislation Scrutiny Committee in its 35th Report (HL Paper 149) again criticises Her Majesty’s Government for failing to make the policy link as asked by the Committee in its 32nd Report (HL Paper 137).”
Baroness Smith of Basildon (Lab)
My Lords, I am grateful to the Minister for his explanation, and for his comments on the report of the Secondary Legislation Scrutiny Committee. I beg to move my Motion of Regret, which reads as an amendment to the Motion moved by the noble Lord.
I seek clarity from the Minister on the evidence he has produced and the information presented to your Lordships’ House in the Explanatory Memorandum and in the impact assessment. It seems to be a regular theme when looking at Home Office legislation—I feel that I come back to these three points again and again—that we need to probe further to understand: the evidence base for the measures brought before us; how those measures will work in practice and the impact they will have. That is, whether the measure can achieve the objective the Government state and any unintended consequences, such as whether groups or individuals other than those whom the policy targets are affected and whether that is reasonable. I have tabled this amendment to the Motion today because of the lack of clarity on these points in the order before us.
Most noble Lords would agree that alcohol can be both a pleasure and a pain. The vast majority of those who enjoy a beer or a glass of wine—or something stronger—do so responsibly, without causing any significant harm to themselves or others, and do not cause any disruption or drain on public services. However, we are also aware of those who, because of the amount of alcohol they consume, cause significant harm to themselves, and harm and disruption to others. That can be a considerable drain on public services, to the detriment of others. The challenge is to effect such change that will impact on the behaviour of those who have and cause significant problems, without unfairly impacting on responsible drinkers. The question for your Lordships’ House is whether the order before us today achieves those objectives.
I found the Secondary Legislation Scrutiny Committee’s 32nd report, and the 35th report with the publication of the correspondence from the Minister, Norman Baker, very helpful, and I was glad that the noble Lord referred to them briefly in this comments. The committee has proved—I have tried to follow this in reading the papers myself—the discrepancies and the contradictory information supplied by the Government in evidence for the policy. I am particularly grateful to the committee for its scrutiny, and I always find its reports particularly helpful and invaluable to your Lordships’ House.
After the committee’s initial scrutiny, the Government withdrew their original Explanatory Memorandum that claimed that the benefit to the public sector was £17 million a year from this policy and replaced it with the significantly more modest claim of less than £1 million —and I have to say that the evidence base for that £1 million remains a bit woolly. The 35th report published correspondence with the Minister, Norman Baker, with the initial questions and concerns of the committee. Having read the order, the Explanatory Memorandum, the impact assessment and the committee’s reports, I had anticipated a fuller response from Norman Baker. I share the concerns that the committee expressed in its 35th report, when it said:
“We found the letter to be no more convincing on the merits of this policy than the Explanatory Memorandum. The House may wish to press the Minister to explain the policy of the instrument more clearly in debate”.
That is the challenge for the Minister this evening: to explain that and to assist your Lordships’ House in understanding the rationale and impact of this, as well as bringing clarity to the evidence on the impact.
I am going to refer to parts of the Explanatory Memorandum and impact assessment as I make my comments. Page 2 of the impact assessment provides the Government’s assessment of the economic benefits of this policy. It identifies a best-estimate annual cost of £5.3 million and £9.5 million of benefits, giving a net annual benefit of £4.2 million. I am still a little puzzled by the figures. If the Minister has the impact assessment in front of him, he will see that the calculations of the costs in the figures include only two of the four costs listed; it does not include the cost to retailers. It says:
“There will be transition costs as retailers familiarise themselves with the policy … This is estimated to be a one-off total cost of £4.1m”.
Neither does it include,
“transition costs to the licensing authorities to familiarise themselves with the policy and inform alcohol retailers, estimated at £0.2m”.
Those costs do not seem to be included in the £5.3 million that the Government give as their best estimate of annual costs. But those are costs that the Government say will arise.
When we look to non-monetised costs and benefits, we see that there is more certainty around the costs than there is around the benefits, where it says:
“There may be a benefit to business if consumers”,
do such and such, such as “switch their expenditure”. So there is much more clarity about the costs than there is about the benefit, with the costs being referred to as “will” and the benefits as “may”.
Paragraph 10 of the Explanatory Memorandum is completely different, because the cost to business there is identified at around £0.4 million a year, with an estimated one-off cost as well. But it talks also about the impact on the public sector, saying:
“There is an estimated cost of £5.3 million per annum, plus £0.2 million implementation costs. There is an estimated benefit in reduction of healthcare costs of £1.15 million per annum. The benefit to society, for example to victims, the police and the criminal justice system through a reduction in alcohol related crime is estimated as £3.6m per annum”.
There is a net annual cost of £0.5 million—so that is different. But I do not know where the evidence is for the impact that is outlined in the impact assessment. The evidence base would be crucial on this, and if the Minister could enlighten us on the evidence base for those figures and why they are different in the impact assessment from the ones in the Explanatory Memorandum, I would find that helpful.
I have quoted from Norman Baker’s explanation in the committee’s 35th report. He explains the modelling used and offers,
“reassurance that work is in hand to improve the quality of checking Home Office Statutory Instruments and supporting documents”.
I still do not understand the reasons for the differences, but maybe I am missing something that is very obvious to others—I just do not know what it is, and other noble Lords may also find a lack of clarity there. If the Minister can give an explanation on points that I have raised regarding costs and benefits, that would be very helpful.
The second point is on the impact of the policy. What difference would this policy make? The rationale for the policy is outlined on page 7 of the impact assessment, which cites the NHS costs of £3.5 billion, alcohol-related crime at £11 billion and lost productivity due to alcohol at around £7.3 billion a year. That is £21.8 billion annually. It would be helpful to have the evidence base for that, because, again, those are significant costs. If they are likely to be reduced significantly, we would like to know the evidence base for that.
Page 3 of the impact assessment identifies the policies that were considered by the Government before bringing this policy forward. Originally, there was the minimum unit price, which qualifies what they used to call competition. The Home Secretary said previously:
“We will ... introduce a minimum unit price for alcohol”.—[Official Report, Commons, 23/3/12; col. 1071.]
There were no ifs, buts or maybes—she said, “We will introduce this”. The consultation document on the alcohol strategy stated:
“In the Strategy, the Government committed to introducing a minimum unit price. However, in other areas, this consultation seeks views on the introduction of policies”.
That seems to me very clear. The Government had intended, and were clear about that intention, to introduce minimum alcohol pricing, to the extent that they were consulting on other matters in the strategy and not that one. But tucked away on the impact assessment to the order, on page 3 we learn:
“The Government has decided that the introduction of minimum unit pricing (MUP) will remain a policy under consideration but will not be taken forward at the present time”.
That is not quite the same fanfare as when it was announced that it would be brought in. So that was rejected.
The other policy rejected was the ban on multi-buy offers, such as “buy two, get one free” in supermarkets. I am not clear how that works in conjunction with this order. Presumably, although multi-buys are not being offered, they would have to be sold in line with the formula in this order at a permitted price. I would like an explanation on how that works. I go to Marks & Spencer and buy my husband six bottles of Sussex Golden Ale for the price of five—that is a multi-buy. He is not going to get drunk on those; he is not a big drinker. He might have a couple of bottles of beer at the weekend, of an evening. But presumably that affects the price for those seeking to purchase such items on a budget. Although the Government do not seek to do anything around multi-buy offers, the permitted price would have an impact on such offers.
What about those pubs or restaurants that offer in many areas fish and chips and a pint for £4.99 or £5.99? Will that fall foul of this order, if somebody decides that the beer rather than the chips has been discounted on price? How would that be assessed? I would like to know the detail of how that will work, because we are told that this policy is the alternative to banning multi-buys and minimum unit pricing. What difference is it going to make?
The Minister quoted from the University of Sheffield School of Health and Related Research, which produced the data for the Government on the impact of the policy and the different income groups. There is recognition that those with an addiction are not likely to be affected by pricing; the greatest impact appears to be on those hazardous and harmful drinkers on lower incomes, as those on higher incomes could just spend less for the same effect.
Page 13 of the impact assessment explains further that there will be no change in expenditure for the higher-income moderate drinkers but there will be an increase for hazardous drinkers of 30 pence a year. It says that,
“whereas low-income harmful drinkers are expected to increase their expenditure by £1.40 per year, higher-income harmful drinkers are expected to decrease their expenditure by £0.10 per year”.
Is that really going to make any difference? The Minister gave some sort of figures on the differences that this policy is going to make, but I have not seen the evidence behind the information that he has given.
The response to the committee from the Home Office when it asked about the impact on crime—and the Minister gave significant figures on this—was:
“The reduction in crime costs was estimated by predicting how crime will change in response to changes in alcohol consumption. These estimates do not predict how the level of crime will respond to any changes in disposable income resulting from the ban on below cost sales. However, the prediction is that, on average, alcohol spending among low income groups will increase by 0.03%, equivalent to a £0.15 increase in annual spending. It is not likely that this would lead to any considerable increase in crime”.
We need more information about a significant impact in this regard. If we want to reduce harm, including harm from crime caused by drinking, will this pricing policy do it? How much less would someone drink as a result of this policy?
The Secondary Legislation Scrutiny Committee’s report states that the Sheffield model—the ScHARR model—
“assumes that on average each person will reduce their alcohol intake by 0.04%. The Committee asked what that meant in practical terms. The Home Office responded: ‘The reduction in consumption equates to an average three units per year per person that is equivalent to a large (250ml) glass of 12% ABV wine’”,
or two regular glasses, if, like me, you do not like the large glasses that some pubs use. Given that such minimal outcomes are listed in the report, the impact assessment and the Explanatory Memorandum, one has to question whether the measure will make the significant difference that the noble Lord claims that it will. It seems to me that there is not much evidence for that.
The impact assessment says that minimum unit pricing is still under consideration, but I understand that it may be affected by the Scottish legal challenge. Is this genuinely still under consultation—I think that the committee made a similar point in that regard—or is that just a phrase now being used as a graceful way of ditching the policy when it is difficult to say what the real position is, given the comments made by the Home Secretary and the Prime Minister?
These are worthy objectives. None of us wants to see harm caused to individuals or society through alcohol. I emphasise that most drinkers drink responsibly and drink gives them pleasure rather than causes them pain. The Government need to bring forward evidence to support their policy on these issues. I hope that the noble Lord will address these issues; otherwise, it seems to me that considerable effort and money have been expended to bring forward legislation that appears to have such a small effect.
Alcohol abuse is a serious issue and we all want to see policies brought forward to address it. However, I worry that the Government do not have a grip on this issue. We have had the hokey-cokey over the minimum unit pricing and the late night levy, which was supposed to bring in £16 million a year in the first year and £17 million in subsequent years. I think that that figure is now about £520,000. Not a single early morning restriction order has been put in place. The Police Reform and Social Responsibility Act included powers for the Home Secretary to introduce full cost recovery for alcohol licences. The Government say that they will implement those powers but have not done so although the Act dates from 2011. We now have the Government’s sobriety scheme to help those with alcohol problems. The pilots were launched in April 2012 and lasted for six months. I have no information on them but I understand that six people have benefited from the scheme.
If we are going to tackle this issue, we have to do so seriously and seek to have a joined-up approach on the different issues that can make an impact. However, I am not clear that the measure before us today will have any impact. If it will have an impact, where is the evidence base for that?
Lord Clement-Jones (LD)
My Lords, my noble friend will no doubt be relieved to hear that I will not ask as many questions as did the noble Baroness, Lady Smith. I think that we have perfect symmetry here because I wish to ask my noble friend why he is not going further today and why minimum unit pricing appears to be only half on the table.
The Government’s response to the consultation acknowledged that there might be unintended consequences of minimum unit pricing. This nostrum seems to be becoming increasingly prevalent. What process is now involved? We have this form of pricing, which clearly is half a loaf, but what is the Home Office doing in terms of further research? We have robust Canadian research, which many of us have seen over the past few months. I have the relevant brief in front of me. It states:
“All 10 Canadian provinces have some form of minimum alcohol pricing applied to liquor store and/or bar and restaurant sales … The Centre for Addictions Research of BC at the University of Victoria has collaborated with five other research agencies in Canada, USA and the UK to evaluate minimum pricing impacts on health and safety. Six studies have been conducted which demonstrate impacts of increased minimum prices on level of consumption and alcohol-related harms including deaths, hospital admissions and crimes. The results support the predictions of the Sheffield Alcohol Policy Model and suggest that estimated benefits are larger than the model predictions”.
It is interesting that all the Canadian evidence seems to imply that the Sheffield model is rather conservative in its estimate of the health and social benefits arising from minimum unit pricing.
It is interesting that the Government seem to have parked this matter. I very much hope that the Minister will describe what next steps will be taken to introduce something rather more robust than what we have before us today. How on earth will officials in the Home Office assess what the unintended consequences will be? It seems to me a very circular argument. There may be unintended consequences but surely, if the evidence appears robust, the way to deal with that is to go forward on a trial or sunset-clause basis, see what the impact is and then make adjustments accordingly rather than just talking about unspecified unintended consequences. I take the point about the Scottish legal challenge but that is a timing issue in terms of seeing whether or not that will bear fruit for the complainants.
I very much hope that the Minister will give us a little bit more of a window on the future as opposed to this rather cautious approach that we have at present.
Lord Taylor of Holbeach
My Lords, I welcome this debate. It is good to explain to the House how this measure fits in with the Government’s alcohol strategy, and the Motion tabled by the noble Baroness, Lady Smith of Basildon, has given us a chance to debate it more fully than we might otherwise have done.
I think all noble Lords agree that, when used responsibly, alcohol can be a welcome part of social situations and community events. However, we all also accept that alcohol-related harm can affect many people in England and Wales, with victims in almost half of violent crimes believing the perpetrator to be under the influence of alcohol. This is completely unacceptable. That is why the Government are committed to tackling this issue and why it is crucial that they use all the tools at their disposal to tackle the causes of this harm.
Through the alcohol strategy, the Government are promoting proportionate and targeted action to reduce the costs and problems caused to society by irresponsible and excessive drinking without disproportionately affecting responsible drinkers. This includes giving local areas more powers to address the alcohol-related problems that they face on a daily basis through the local alcohol action area scheme, which was launched last week. It offers support to local areas in cutting alcohol-related crime and disorder and reducing the damage caused to people’s health. As well as taking local action, we are acting nationally by challenging the alcohol industry to raise its game by supporting targeted local action, tackling the high strength or high volume products that can cause the most harm, promoting and displaying alcohol responsibly in shops, and improving education around drinking.
I think all noble Lords will agree that alcohol that is too cheap is a threat to achieving the aims of our strategy. We must do something about it without penalising those who choose to enjoy alcohol in a responsible manner and without threatening economic growth by creating red tape for business. The noble Baroness, Lady Smith, and my noble friend Lord Clement-Jones asked about minimum unit pricing. I would like to be clear that this is not a debate about the benefits of minimum unit pricing. However, I accept that it is a matter of great interest and will therefore speak briefly on it. A wide range of evidence was provided throughout the consultation on minimum unit pricing. These have been considered alongside updated modelling by the University of Sheffield—I note the comments of my noble friend on this point—which suggests that a minimum unit price of 45p would have an impact on the consumption of hazardous and harmful drinkers, thereby resulting in a significant reduction in health harms and some reduction in crime-related harms.
A number of other issues were raised, including the potential impact of minimum unit pricing on the cost of living, the economic impact of the policy and increases in illicit alcohol sales. The Government acknowledge the need to give careful consideration to any possible unintended consequence of minimum unit pricing. Further, while we remain confident of the legal basis of the minimum unit pricing policy and will continue to support the Scottish Government in this area, the Government are also mindful of the need to watch the outcome of the legal challenge to the Scottish Government’s minimum pricing legislation. For these reasons, the Government have decided that the introduction of a minimum unit price for alcohol will remain a policy under consideration. I emphasise to the noble Baroness that it remains a policy under consideration. It has not been shelved but will not be taken forward at present. We will continue to monitor carefully the legal developments and the implementation of this policy in Scotland.
Perhaps I may answer my noble friend Lord Clement-Jones’s comments about minimum unit pricing in Canada. Two provinces are actively engaged in this: British Columbia and Saskatchewan. They have been doing so for some time but their policies are different in practice from the proposals that have been made on MUP in England and Wales. Social reference pricing in Canada involves minimum prices for types of drinks but not per-unit pricing. The context of sale is also different. Alcohol sales are more tightly controlled in those provinces than is the case currently in England and Wales.
My noble friend also asked about the process for considering MUP. The policy remains under consideration, which includes looking at the experience of the policy in other jurisdictions and the potential unintended consequences. Officials remain focused on keeping this under review and will continue to do so, but it would not be appropriate to set a timescale for when this will be completed.
Perhaps I may address some of the questions asked by the noble Baroness, Lady Smith. It is easier to do so in the general rather than the specific, and I hope she will allow me to write to her on some of the specific challenges she made on the impact assessment and the Explanatory Memorandum. However, I should say that the impact assessment was approved by the Regulatory Policy Committee in 2013 and given a green rating. The benefits of the model have been based on the University of Sheffield’s ScHARR model and experts in a number of different fields have fed into the policy. While the reduction is modest compared with the size of the problem, this policy will impact the most on hazardous and harmful drinkers. That is why it is designed in this way. We know that those particular drinkers generate the biggest costs for alcohol-related harm. What this policy seeks to achieve is 900 fewer crimes in the first year alone. The reduction in hospital admissions will go from 100 in year one to 500 in year 10.
The noble Baroness asked for the evidence base for the cost of alcohol. NHS costs are based on Department of Health estimates and alcohol-related crimes are based on Home Office estimates.
Baroness Smith of Basildon
I am grateful that the noble Lord is making the effort to address the questions. I did not ask for the evidence on alcohol-related crime or hospital admissions; I asked for evidence of the change that this policy would bring about. That was what I was trying to understand—the evidence for the changes that the Government say this policy would bring about, not evidence of the problem.
Lord Taylor of Holbeach
Perhaps in the context of the figures that I am intending to provide to the noble Baroness when I reply in detail, I will seek to do so. However, I think that I have just said in my most recent contribution to the debate that this policy is focused principally on those people who hazard themselves and others through excessive drinking. The policy is targeted at those drinkers with very high consumption of alcohol and is considered to be a very effective policy in this area.
The noble Baroness asked why the Explanatory Memorandum contained one set of figures and the impact assessment a different set. The Explanatory Memorandum identifies the health benefits for the public sector, as is the practice. The impact assessment presents a wider picture and includes the gains in quality-adjusted life years, which also benefits patients. The costs in the impact assessment outlined in the table on page 2 relate only to the costs in the public sector, because that is normal practice for impact assessments.
In response to the question on multi-buys, full details on how this policy will work with regard to the type of offers that have been mentioned can be found in the guidance that has been published by the Home Office. In effect, it means that, aggregated together, the multi-buy still has to meet the requirements of this policy so that there is no suggestion that the multi-buy can break through the price that this measure implements. Businesses can continue to promote multi-buys if the total price is not beneath the permitted price.
I picked up one point that the noble Baroness made about page 2 of the impact assessment. She pointed out that a whole series of costs were not included in those figures. If she looks, those total figures excluded transitional costs—and I think she admitted that the costs listed immediately above the paragraph entitled,
“Description and scale of key monetised costs by ‘main affected groups’”,
were transitional costs.
Baroness Smith of Basildon
I am grateful to the noble Lord. I did see that but I just wonder why the figures exclude transition costs. They are still a cost of implementation.
Lord Taylor of Holbeach
It was considered that this was a reasonable way to evaluate the costs and benefits over time. Obviously, this is a continuing process, and amortising transition costs over time is not normal practice when one is doing an impact assessment. These costs are identified separately, which enables noble Lords to assess them properly.
I pay tribute to the noble Baroness’s diligence in drawing the House’s attention to some of the matters relating to the analysis of the Explanatory Memorandum and the impact assessment. I will make sure that all noble Lords who have spoken receive a copy of the letter which I shall write to the noble Baroness setting out answers to the detailed questions that she has asked me, and I hope that I will be able to answer them to her satisfaction.
I believe that at heart this is at least a brick in the wall towards building an effective alcohol strategy. We must build on this to maintain the momentum of our commitment to reduce the harm caused by alcohol to consumers, to families, to the thousands of victims of alcohol-related crime, and to local communities and businesses, which are also vital to our economy. With that in mind, I commend the order to the House and I hope that it will prove acceptable to noble Lords.
Baroness Smith of Basildon
My Lords, I am grateful to the Minister and I look forward to receiving his letter. I do not doubt the Government’s objectives in this regard at all; what I doubt is the effectiveness of the policies outlined. I will go through his letter in some detail but, when I look at the tables in the impact assessment, the impact does not seem to be at all significant. I was not necessarily making the case for a minimum unit price; I was just trying to understand the Government’s direction of travel on this, having gone from absolute certainty to a position where the policy is now under consideration and under review. There is a lot more work to be done on this. For now, I beg leave to withdraw my amendment but I look forward to receiving the Minister’s letter and perhaps to having further conversations with him on this issue.