House of Commons

Wednesday 9th April 2014 Commons Chamber

Wednesday 9 April 2014

The House met at half-past Eleven o’clock

Prayers

Wednesday 9th April 2014 Commons Chamber

[Mr Speaker in the Chair]

Oral Answers to Questions

Wednesday 9th April 2014 Commons Chamber

The Secretary of State was asked—

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

1. What assessment she has made of the level of women’s participation in the upcoming Afghanistan presidential election.

[The Secretary of State for International Development (Justine Greening)]

Provisional estimates show that approximately 7 million people voted in Afghanistan’s presidential and provincial council election last Saturday. About a third of women voted—a tremendous achievement. That is evidence that support for democratic institutions and women’s participation is making a real difference on the ground.

[Karl Turner]

Early indications show that the role of women in Afghanistan’s elections has taken great steps in the right direction, but what plans are in place to ensure that those hard-won battles for the rights of women are not lost as a result of the international security assistance force draw-down at the end of this year?

[Justine Greening]

The hon. Gentleman is absolutely right to raise that point. The Department for International Development committed £20 million of funding to help the UN work to support the elections, including nearly £5 million for a programme to support women’s participation. As we go forward, we must ensure that the constitution that is already in place to support women’s rights is enforced, that we are working at grassroots level and putting more money into community programmes and that across government, for example in the police, women get the chance to play their full role. As far as I and the Government are concerned, we are determined to ensure that those hard-won additional rights for women are not just maintained but built on further.

[Mr William Cash (Stone) (Con)]

May I thank the Secretary of State for that reply? I hope that now that the International Development (Gender Equality) Act 2014 has received Royal Assent, she will be able to give the maximum opportunities to protect women and make certain that they are fully empowered.

[Justine Greening]

My hon. Friend is absolutely right, and this gives me a chance to pay tribute to the tireless efforts he made to push through his private Member’s Bill. It has not just set out how important equality is to our Parliament, but has been picked up across the world as an example of the UK’s taking a stand on gender equality.

[Mr Jim Murphy (East Renfrewshire) (Lab)]

As we pay tribute to others, it is right for the House again to reflect at the time of these elections on the enormous contribution our armed forces have made and continue to make. It is heartening that in the elections the three front-runners were supportive of the extension of women’s rights in government, but progress has been fragile. It is unacceptable that only 1% of those who serve in the Afghan police force are women. I know that the Secretary of State will share that concern, so what more can be done to ensure that the legal, judicial and policing systems properly reflect a better balance of gender in Afghanistan?

[Justine Greening]

That is the very point that I raised with the Minister of the Interior when I was last in Afghanistan. We are providing technical assistance to enable work on this issue across the board, but one thing that is being considered is bringing in women at more senior levels in the Afghan police to get role models, so that incoming female recruits can aspire and look up to them.

[Sir Robert Smith (West Aberdeenshire and Kincardine) (LD)]

Given that the engagement in democracy is so strong, with the draw-down of ISAF it will be crucial that donor communities continue to provide aid to what is one of the poorest countries in the world, in order to maintain stability. What discussions has the Secretary of State had with US authorities about recognising the importance of that continued aid commitment?

[Justine Greening]

I routinely discuss the work of the donor community with our US colleagues and there will be an important meeting, which the UK will be co-chairing, at the end of this year and perhaps running into early next year that will assess progress against the Tokyo mutual accountability framework. At that point we should have a new Afghan President and Government in place, so that will be a good time to take stock of progress and of the challenges that remain.

[Ian Mearns (Gateshead) (Lab)]

2. What her health priorities are for the post-2015 development framework.

[The Secretary of State for International Development (Justine Greening)]

The UK has played a central role in developing successor development goals to the millennium development goals, including through my right hon. Friend the Prime Minister’s co-chairmanship of the UN high-level panel. We want to see progress across the board on health, particularly on maternal and child health. We want a dedicated health goal, and articulated and measured health outcomes targets.

[Ian Mearns]

Despite ongoing global commitments, 40 million women gave birth without the assistance of a midwife last year, and families living in the poorest parts of the world are twice as likely to lose their babies as those in the richest nations. Will the Secretary of State use her influence to ensure that there are targets for ending preventable child, maternal and newborn deaths in the post-2015 framework, and to call for universal health coverage and universal access to midwifery?

[Justine Greening]

We are supportive of universal health coverage, which is one of the key means that can improve health outcomes. The hon. Gentleman is quite right to raise the issue of maternal health. We look across the board at how we can do that, including in relation to family planning and what we are doing this summer to combat child and early marriage, which is one reason why maternal health is poor. We will continue to work really hard on that whole agenda.

[Jeremy Lefroy (Stafford) (Con)]

Great gains have been made under the millennium development goals in the areas of malaria, neglected tropical diseases, HIV/AIDS and tuberculosis. Can my right hon. Friend reassure me that the goals that we will push for post-2015 will ensure that those gains will be maintained and, indeed, enhanced?

[Justine Greening]

Yes, I can. In fact, we want HIV, TB and malaria to be incorporated under a health goal. My hon. Friend will be aware that the UK was one of the leading donors at the global fund replenishment at the end of last year, and will continue to support that important work.

[Mark Durkan (Foyle) (SDLP)]

Further to that answer, will the Secretary of State confirm that the Government will commit to the opportunity identified by the “Malaria No More” campaign to halve malaria deaths again—they have already been halved since 2000—by 2020, and back the proposals to accelerate the reduction in the death rate to zero beyond 2020?

[Justine Greening]

We do want malaria to be eradicated. It is one of the key issues African leaders raise in relation not just to its impact on individuals and families, but its economic impact. The recent Bali World Trade Organisation deal was worth about $10 billion a year to the African economy—that is also the cost of malaria every year regionally.

[Nic Dakin (Scunthorpe) (Lab)]

3. What recent steps she has taken to ensure the future funding and effectiveness of the GAVI Alliance. [R]

[The Parliamentary Under-Secretary of State for International Development (Lynne Featherstone)]

The UK is the largest donor to GAVI. Our support will help fully immunise nearly 80 million children and save around 1.3 million lives during 2011-15. We are working closely with GAVI and partners to ensure that their 2016-20 strategy, currently being developed, provides a sound and cost-effective basis for delivering their mission and saving children’s lives.

[Nic Dakin]

May I draw attention to my entry in the Register of Members’ Financial Interests? To reach every child with immunisation requires not only vaccines but staff. Do the Government support the GAVI 15% to 25% spending target on health strengthening in the international community?

[Lynne Featherstone]

I thank the hon. Gentleman for that, because strengthening health systems and the capacity of health workers is a key answer in addressing the immunisation deficit.

[Martin Horwood (Cheltenham) (LD)]

I proudly congratulate the Government on spending 0.7% of national income on eradicating poverty worldwide, much of it on polio eradication. The last three countries with endemic polio all have significant Islamic populations. Is the Department committed to working with religious and Islamic leaders to try to build community support for polio eradication and to protect health workers in those countries?

[Lynne Featherstone]

My hon. Friend raises the issue of the frustrating endgame on polio. GAVI will play a major role in delivering that endgame, but we are working with everyone to try to ensure that vaccinations are seen as good and not some kind of problem.

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

I declare an arrangement, as I went to Cambodia with Results UK to see the GAVI-funded programme there. I am told that the Government put in £860 million, which raises questions about the future. Will the Government make a commitment to maintaining that level of funding in future for GAVI, which runs a wonderful project?

[Lynne Featherstone]

Right now, GAVI has not stated what its actual target is. We are the largest donor at 33%, and we will continue to support it. We will make a decision in the next few months.

[Guy Opperman (Hexham) (Con)]

Does the Minister agree that vaccination assistance and the partnership with the Gates Foundation is not only the right thing to do but one of the best ways to help developing economies? It is also something we should sell and explain to the general public.

[Lynne Featherstone]

My hon. Friend is entirely right. The economic benefits are huge, and vaccination is considered a development “best buy”. The Gates Foundation is at the forefront of that, and we work very closely indeed with it.

[Sir Peter Luff (Mid Worcestershire) (Con)]

4. What assessment she has made of the effectiveness of her Department’s support for the Palestinian Authority.

[The Minister of State, Department for International Development (Mr Alan Duncan)]

The UK is providing effective support for the Palestinian Authority in very challenging circumstances. The Palestinian Authority has developed institutions to the point where the international community has recognised it as technically ready for statehood, and it has made impressive progress in delivering improved outcomes in health and education.

[Sir Peter Luff]

Having just returned from a Select Committee visit to the Palestinian occupied territories and seen the excellent work being done there by the Department, may I ask whether the Minister agrees that its work to support the private sector would be much more effective if Israel lifted many of its restrictions, which can have nothing to do with its essential security, on the freedom of Palestinian business people to develop their economy in areas such as the banking sector, water supply, and even 3G telephone networks?

[Mr Duncan]

I am grateful to my hon. Friend for his appreciation of DFID’s work in the occupied Palestinian territories and glad that he and the Committee had such a useful visit. Israeli restrictions do tremendous damage to the economy and to the living standards of ordinary Palestinians. The simple truth is that they are not allowed to develop their banking or information and communications technology sectors, or to build even their basic infrastructure. Were these restrictions to be lifted, not only would DFID’s work to support the private sector be much more effective, but within a relatively short space of time the Palestinians would probably not need our aid at all.

[Richard Burden (Birmingham, Northfield) (Lab)]

Is the Minister aware that the World Bank has said that area C of the west bank, particularly the Jordan valley, is vital to the future economic viability of a Palestinian state? Presumably that is why the Department is looking to fund infrastructure projects there. What is his view of the fact that illegal Israeli planning restrictions are stopping those infrastructure projects being built, and for how long will the Government allow Israel to have a veto over economic development in the west bank?

[Mr Duncan]

I fully understand what the hon. Gentleman says. I think the Select Committee saw a direct example of the destruction of olive groves when it was there. It is essential that area C is able, through planning arrangements, to develop its economy; otherwise there can be no sensible or useful economic future in the Palestinian territories.

[Sir Malcolm Bruce (Gordon) (LD)]

May I confirm what the Minister says—that without access to area C there is no future for a two-state solution or for an economically viable Palestine? The Palestinian Authority pleaded with us to put all possible pressure on Israel to allow access. We met someone from a company who is saying that the cost of land in areas A and B is prohibitive and that without access to area C he cannot develop his business.

[Mr Duncan]

I fully concur with my right hon. Friend. I hope that a full understanding of this can be included in the peace talks that we hope are continuing towards a productive and useful conclusion.

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

What recent representations have the Government made to the Israeli authorities about the continued forcible removal of populations, and property demolition, in the occupied territories? Yesterday the Foreign Secretary met the Israeli Minister for International Relations: was this issue raised with him?

[Mr Duncan]

I was also at that meeting, and I can assure the hon. Gentleman that we raise such matters regularly. It is essential that some kind of normal activity can be permitted in the occupied Palestinian territories; otherwise, as my right hon. Friend the Member for Gordon (Sir Malcolm Bruce) said, there will not be a two-state solution and there is a danger of permanent conflict and tension.

[John Howell (Henley) (Con)]

5. What steps her Department is taking to reduce levels of aid dependency through the creation of jobs.

[The Secretary of State for International Development (Justine Greening)]

My Department is working hard to grow jobs and end aid dependency. Over the next two years we will more than double to £1.8 billion the amount that DFID invests in job creation and economic development.

[John Howell]

Will the Secretary of State set out her objectives for next week’s meeting of the Global Partnership for Effective Development Co-operation and say what her Department’s work with the private sector will achieve?

[Justine Greening]

The meeting in Mexico is incredibly important. It will help us to take the next steps to shape responsible business practices that can, in turn, support sustainable and inclusive economic growth in countries that so badly need it.

[Mr Gregory Campbell (East Londonderry) (DUP)]

Job creation is of course a very worthwhile task, particularly in the emerging economies. Does the Secretary of State agree that secure, dependable jobs that help the indigenous peoples of those nations are what is required to assist those nations?

[Justine Greening]

The hon. Gentleman is absolutely right. One of the most important aspects is to help shape the economic growth that takes place so that, through work, it lifts the largest number of people possible out of poverty. That is precisely the agenda the Department is pursuing.

[Richard Fuller (Bedford) (Con)]

In every economy across the globe, small businesses are the most secure way to create jobs. What is my right hon. Friend’s Department doing to enhance the provision of finance to small businesses in developing countries?

[Justine Greening]

We are working with a fund for small and medium-sized enterprises that can do precisely that. We have also, with the London stock exchange, focused on the issue of capital markets improving finance more broadly in developing countries—particularly, most recently, in Tanzania.

[Alison McGovern (Wirral South) (Lab)]

The garment industry in Bangladesh and elsewhere provides hundreds of thousands of jobs to people trying to work their way out of poverty, but it has too often involved unsafe conditions and poverty pay, and no one in Britain wants to buy clothes made in such conditions. Ahead of the first anniversary of the Rana Plaza disaster, does the Secretary of State now agree that her Government’s decision to withdraw funding from the International Labour Organisation, which protects vulnerable workers, was a short-sighted mistake?

[Justine Greening]

I hope I can reassure the hon. Lady that we are working with the ILO in Bangladesh, and as she knows we have also sent over experts to help with building practices and construction. As the hon. Lady points out, it is nearly a year since the tragic collapse of the Rana Plaza building, and we have worked very hard since then with the Bangladesh Government and industry to make sure that we learn from that terrible disaster.

[Mr Peter Bone (Wellingborough) (Con)]

Although I welcome enormously what the Secretary of State is doing, is not one of the problems in creating jobs in developing countries the fact that major trading blocs such as the European Union are stopping market access to them?

[Justine Greening]

Protectionism, including by the EU, ultimately does not help anyone. [Interruption.] That is one of the reasons why getting a deal in Bali was so important. I had the chance to make that point personally to the director general of the WTO yesterday. [Interruption.]

[Mr Speaker]

Order. There are a lot of noisy private conversations taking place, notably at this stage on the Opposition Benches, but I want to hear both the questions and the right hon. Lady’s answers, so let us have a seemly atmosphere in deference to Mr Paul Burstow.

[Paul Burstow (Sutton and Cheam) (LD)]

6. What steps her Department is taking to support developing countries in tackling the effects of dementia.

[The Parliamentary Under-Secretary of State for International Development (Lynne Featherstone)]

The UK Government support the improvement of dementia care through increased provision of basic health services for the poor. In 2012-13, the UK provided about £1 billion in bilateral health aid to support work to strengthen health systems and health services for the poor.

[Paul Burstow]

I thank the Minister for that answer and for the actions the Government are already taking. Given that six out of 10 people living with dementia worldwide live not in developed but in developing countries, that the vast majority of them do not have a diagnosis, and that we know from research by Alzheimer’s Disease International that the burden of dementia is shifting to developing countries, will the Government take further steps to build on the success of the dementia summit held last year to lever action in those developing countries?

[Lynne Featherstone]

I thank my right hon. Friend and pay tribute to him for the work he has done; indeed, I have met with him to discuss this very issue. Of course, dementia is a growing issue in the developing world. Regarding the Prime Minister’s summit, we have contributed to the Department of Health, which is the lead Department on the issue, and we are dealing full out with communicable diseases. We also, as my right hon. Friend knows, have a campaign on mental health issues.

[Mr Philip Hollobone (Kettering) (Con)]

7. How much international development aid the UK gave in total to Jamaica, Pakistan, Nigeria, Somalia, India and Bangladesh combined in the last year for which figures are available.

[The Minister of State, Department for International Development (Mr Alan Duncan)]

In 2012 the UK Government gave a combined total of £973 million in bilateral official development assistance to Jamaica, Pakistan, Nigeria, Somalia, India and Bangladesh.

[Mr Hollobone]

Between them, those six countries account for 2,900 foreign national offenders in Britain’s prisons, which is more than a quarter of the foreign national offender total, at an annual cost of some £100 million. Will the Department agree to use some of the £900 million spent annually on those countries on insisting on compulsory prisoner transfer agreements as a condition of that aid, and on building prisons in those countries so that they can take their people back?

[Mr Duncan]

There is no straightforward correlation between the practicality of building a prison abroad and the number of UK-based prisoners from that country. We do not make our aid conditional on securing a prisoner transfer agreement with each such country. To do so would seriously undermine our poverty and stability programmes, and in any case they are deeply political and very complicated to negotiate. However, more than 19,000 foreign national offenders have been returned since 2010.

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

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

[The Secretary of State for International Development (Justine Greening)]

On international women’s day, I announced that my right hon. Friend the Prime Minister will host a summit in July to step up our global efforts to end both female genital mutilation and early and forced marriage for all girls within a generation. In March, I attended in New York the Commission on the Status of Women, which supported our call for a stand-alone goal on gender and integrating gender throughout the post-2015 development framework. Last week, the Office for National Statistics confirmed that the UK is the first G8 country to reach a figure of 0.7% of gross national income on international development, and I am proud that it is this Government who have achieved that promise.

[Mr Clarke]

Given the horrific events in Rwanda 20 years ago this week, will the Department redouble its efforts to support conflict prevention in countries such as Sudan, the Central African Republic and, indeed, Syria, so that their people can enjoy the peace and humanity that hitherto has escaped them?

[Justine Greening]

We have had a chance this week to remember the terrible tragedy of the events that took place in Rwanda back in 1994. When we look at progress against the millennium development goals, we know that hardly any has been made in the sort of countries to which the right hon. Gentleman refers, because conflict holds back development. That is why we will continue to focus our efforts on those states to help their people.

[David Rutley (Macclesfield) (Con)]

T2. What progress is the Government’s International Citizens Service entrepreneur programme making in helping entrepreneurs and small businesses in developing economies?

[Justine Greening]

At the end of March, I launched the International Citizens Service entrepreneur scheme. This builds on the successful ICS programme that this Government have introduced. It is about matching young people with businesses and entrepreneurs in developing countries, and it focuses on economic development. The programme has had a fantastic response, and the first volunteers will be on their placements this summer. [Interruption.]

[Mr Jim Murphy (East Renfrewshire) (Lab)]

DFID has a work in freedom programme, aimed at preventing the trafficking of women and girls from south Asia to countries popular with migrants. Last week, I was in Qatar to see the conditions endured by migrant male workers. As Qatar starts to build the World cup stadiums, the abuses I saw cannot continue. Does the Secretary of State agree that it is important to extend the work in freedom programme to these workers in Qatar, and that it is important that FIFA and Qatar act to ensure that the beautiful game is not built on the misery of migrant workers?

[Justine Greening]

The right hon. Gentleman is right to raise these issues. We have certainly raised our concerns with the Qatari authorities, including at ministerial and ambassadorial level. Of course, the work in freedom programme, which we are bringing in—this new programme is about to start—is all about helping particularly girls and women who are being trafficked, and we hope to see that programme succeed over the coming years. [Interruption.]

[Jason McCartney (Colne Valley) (Con)]

What discussions has my right hon. Friend had with other UK Departments about how Her Majesty’s Government can bring an end to female genital mutilation and early and forced marriage worldwide?

[Justine Greening]

I am delighted to say that the UK will host an international summit on these topics in the summer, hosted by the Prime Minister. We have been working hand in hand with my right hon. Friend the Home Secretary, who has done some excellent work domestically on this agenda, too. [Interruption.]

[Mr Speaker]

Order. May I politely say to the House that although I understand the air of expectation, we have just had a question about female genital mutilation? We are discussing matters of intense importance in this country and to billions of people around the world. Simple courtesy would dictate that we do actually pay attention.

[Lindsay Roy (Glenrothes) (Lab)]

T3. Tragically, 3,000 children a day die from malaria worldwide. What contribution are the Government making to eliminate child deaths from this dreadful disease, particularly in the Central African Republic, where UN funding is grossly underfunded?

[Justine Greening]

We have announced up to £1 billion over the next three years for the global fund, which is one of the key mechanisms by which malaria is tackled—it was malaria day yesterday—and, particularly in places such as the Central African Republic, we complement that with humanitarian support as well.

[Mr Brooks Newmark (Braintree) (Con)]

Will the Secretary of State update the House on DFID’s contribution to the commemoration of the 20th anniversary of the Rwandan genocide?

[Justine Greening]

It is 20 years since the Rwandan genocide—my right hon. Friend the Foreign Secretary was in Rwanda over recent days to commemorate that terrible event—but since then, Rwanda has taken huge steps forward in development. It is one of the beacons showing how countries can develop rapidly when there are the resources and the political will. We will continue our work with Rwanda.

[Chris Williamson (Derby North) (Lab)]

T4. I have just returned from a fact-finding mission to Qatar with the construction workers union, the Union of Construction, Allied Trades and Technicians, to look at the terrible plight of migrant workers in Qatar. I was reassured by some of the Secretary of State’s comments in reply to the question from my right hon. Friend the Member for East Renfrewshire (Mr Murphy). Will she, however, give the House an assurance that she will make representations to the Qatari authorities to end the kafala system, which is effectively bonded labour, and to stop the appalling circumstances of migrant workers living in abject squalor? Some 1,200 have been killed on construction sites already, and if some action is not taken, 4,000 will be dead before the World cup starts.

[Justine Greening]

The hon. Gentleman is right to raise those issues, and I assure him that we are raising them with the Qatari authorities. I will also do that.

[Richard Graham (Gloucester) (Con)]

Will my right hon. Friend join me in congratulating Green Fuels Ltd on its successful entry into the Indonesian market, boosting British exports and reducing Indonesian carbon emissions through a strong partnership between DFID and UK Trade & Investment on the ground?

[Justine Greening]

I congratulate the company in my hon. Friend’s constituency. He has been a tireless advocate for the role that such businesses, including this one, can play in combating climate change. It is fantastic to see that work get off the ground in Indonesia.

The Prime Minister was asked—

[Nia Griffith (Llanelli) (Lab)]

Q1. If he will list his official engagements for Wednesday 9 April.

[The Prime Minister (Mr David Cameron)]

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

[Nia Griffith]

The Prime Minister promised by the end of this Parliament to reduce net annual migration to the UK to tens of thousands. Will that promise be met—yes or no?

[The Prime Minister]

We have made very good steps forward on migration from outside the EU, which is down by a third and at its lowest level since 1998. That is a success, and we have seen net migration overall come down by around a fifth. What we have not seen is what we saw under Labour, when 2.2 million people net came in over 10 years. That was unacceptable, and we are getting the situation under control.

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

I spoke recently to a constituent of mine who has just been diagnosed with dementia. Understandably, she is incredibly frightened about what the future might hold for her. The dementia strategy has made great progress, but it comes to an end this month. Will the Prime Minister give his personal assurance that a new dementia framework will be put in place as soon as possible to help my constituents and others to live well with dementia?

[The Prime Minister]

I can certainly give my hon. Friend that assurance, and I can add that we will continue our dementia challenge, which is about doubling research into dementia and treating it like a disease such as cancer or heart disease. The work we are doing to make sure that local communities are more dementia- friendly must continue, and we must also improve the care that elderly people get in care homes, nursing homes and hospitals. That vital work must continue, too, and we will continue to use our position in the G7 to push the issue globally.

[Edward Miliband (Doncaster North) (Lab)]

The events of the last week have caused deep concern and anger to the public. What lessons has the Prime Minister learned from his handling of the situation?

[The Prime Minister]

First, I agree with the right hon. Gentleman that there is still very deep and very raw public concern about the expenses scandal that rocked the last Parliament. The biggest lesson I have learned is that that anger is still very raw and needs to be acted on. I hope the one lesson that will not be learned is that the right thing to do as soon as someone has to answer allegations is just to remove them instantly, rather than give them a chance to clear their name and get on with their job.

[Edward Miliband]

I was asking about the Prime Minister’s handling of the situation and the lessons he has learned, and he had no answer. In his letter to the former Culture Secretary today, he wrote:

“I think it is important to be clear that the Committee on Standards cleared you of the unfounded allegations made against you”.

Can he now explain what, in his view, she did wrong?

[The Prime Minister]

The former Culture Secretary set out the reasons for her resignation in her letter, but the right hon. Gentleman makes an important point, which is that the former Culture Secretary was accused of a very serious offence by a Member of Parliament. She was accused of housing her parents at public expense. She was cleared of that allegation, and I thought it was right in those circumstances—other people can take their own view, but I am talking about my view—to allow her to make her apology and to continue with her job. I think that was the right way to handle the situation. Other people can take their own view, but I think that if people clear themselves of a serious offence, you let them get on with their job—you let them try to do their job. That is actually the right thing to do.

[Edward Miliband]

I have to say to the Prime Minister that it will be completely unclear to the country why the former Culture Secretary is not still in her job, because he thinks that she did nothing wrong. Let me explain to him—[Interruption.]

[Mr Speaker]

Order. This session will be conducted in an orderly way, however long it takes. I happen to know that there are children here today observing our proceedings. I would like to think that the House will show a good example. Let us see if we can.

[Edward Miliband]

What she did wrong was to refuse to co-operate with an inquiry, breach the code of conduct for MPs, and give a perfunctory and inadequate apology to this House, as people on all sides have been saying. The Prime Minister said six days ago that she had “done the right thing” and that we should “leave it at that”. Does he now recognise that that was a terrible error of judgment?

[The Prime Minister]

As I say, I think that it was right to allow her the chance to get on with her job. There is one weakness in the right hon. Gentleman’s argument. If he thought that was the case, why did he not call on her to resign? He seems to be the first Leader of the Opposition, probably in history, to come to this House and make his first suggestion that someone should resign after they have already resigned.

[Edward Miliband]

Now I have heard everything—it is my job to fire members of his Cabinet! This is about him and the fact that he still does not understand what the former Culture Secretary did wrong. The reason the public were so appalled was that if it had happened in any other business, there would have been no question of her staying in her job. Why was he the last person in the country to realise that her position was untenable?

[The Prime Minister]

It is very clear. She did do some things wrong. That is why she was asked to apologise, and she did apologise. It was not right not to co-operate properly with the Committee, and she apologised for that. It is rather extraordinary that the right hon. Gentleman comes here, having not said that she should resign, saying that she should have resigned. It shows all the signs of someone seeing a political bandwagon and wanting to jump on it. He is jumping on this bandwagon after the whole circus has left town.

Where I agree with the right hon. Gentleman is that there is still more that needs to be done to deal with the problems of expenses that we suffered in the last Parliament. We have made some big steps forward. I am not sure that everybody knows this, but any expense complaint from 2010 onwards is dealt with by an independent body and not by MPs. That is right. The Committee of MPs that does the work on the past cases now has members of the public sitting on it. That is right. Let us do more to reassure the public about the scandal of expenses and how we are dealing with it. I am very happy to hold meetings with party leaders and the authorities of this House. It is absolutely right that we should do everything we can to show that this is a good and honest Parliament with good and hard-working people in it. That is the assumption that I start from, and I make no apology for that.

[Edward Miliband]

The Prime Minister describes it as a “bandwagon” and a “circus”. This is about members of the public in this country being absolutely appalled at the conduct of his Government over the last week. That is what it is about. It is about members of the public who cannot understand why he did not act. He said in his foreword to the “Ministerial Code”:

“the British people…expect the highest standards of conduct. We must not let them down.”

Does he not realise that his failure, even now, to recognise what went wrong has undermined trust not only in his Government, but in politics?

[The Prime Minister]

What we see is absolutely transparent: the right hon. Gentleman came here today determined to play politics in every single way that he could. That is absolutely clear. Since 2010—[Interruption.]

[Mr Speaker]

Order. The Prime Minister’s answer must and will be heard.

[The Prime Minister]

I think that Members across the House know that since 2010—since the last Parliament—a lot of changes have been made. We have independent members on the parliamentary Committee; the publication of all meetings, visits and gifts for Ministers; the publication of all special adviser salaries; and the publication of Government spending. Is there more to do? Yes, absolutely, there is more to do. If the right hon. Gentleman is serious about doing it, he will sit down with other party leaders and the authorities of this House. Let us ask what we can do to put it beyond doubt that this is a good and honest Parliament with hard-working people. If he wants to play politics and he wants a good soundbite on the news, he should carry on. If you’re serious, get serious.

[Edward Miliband]

I will have meetings with the Prime Minister any time about how we reform the systems of this House—of course I will—but he just doesn’t get it. That is what he has shown today. He needs to learn profound lessons about how he runs his Government. The former Culture Secretary went not because of her bad conduct but because of her bad press. The Prime Minister promised in opposition to be an apostle for better standards, and he has spent the last week being an apologist for unacceptable behaviour.

[The Prime Minister]

If the right hon. Gentleman thinks that it is leadership to fire someone at the first sign of trouble rather than actually give someone a chance to get on with the job, that is actually not leadership, but weakness. If that is his recommendation for leadership, I do not think the country will have any of it.

[Mr Speaker]

I call Mr Tim Farron. [Interruption.] Order. There should not be a collective groan. The hon. Gentleman is good-humoured about it, but—[Interruption.] Order. The House will hear the hon. Gentleman. I call Mr Tim Farron.

[Hon. Members]

Hear, hear!

[Tim Farron (Westmorland and Lonsdale) (LD)]

Thank you—that is much better.

Does the Prime Minister agree that people living in rural Britain have as much right to decent-quality and safe health care and hospital services as anybody else? If he does, will he help to intervene directly, and help me personally, to ensure that Morecambe Bay hospitals trust does not downgrade, sell off, offload or close Westmorland general hospital in Kendal?

[The Prime Minister]

Representing a rural constituency, I know how important it is that people have access to good health services, and I know how important it is that we get health and social services to work better together, which is the key to success in so many of our areas. My hon. Friend asks me to look into a specific case, and I am happy to do that.

[Dr Alasdair McDonnell (Belfast South) (SDLP)]

Q2. In the light of this week’s historic visit by the Irish President Michael D. Higgins to the UK, building on the legacy of President Mary McAleese and of Her Majesty’s historic visit to Ireland in 2011, does the Prime Minister agree that Anglo-Irish relationships have never been stronger, and that if we are to build lasting reconciliation across these islands, we need the full commitment of his Government, along with the Irish Government, to ensure that the potential prospects of the Haass process are delivered and implemented?

[The Prime Minister]

First, I strongly agree with the hon. Gentleman that it is a landmark visit of the Irish President to this country, coming three years after the Queen’s extraordinary visit to the Republic of Ireland. I absolutely agree with him that Anglo-Irish relations are at an all-time high, and the Taoiseach Enda Kenny and I are absolutely committed to building on that relationship. All the time we are thinking of new things that Britain and Ireland can do as good neighbours and good friends. On the Haass talks, I do think it would be good if we could make some progress on that issue. It is something that the parties in Northern Ireland started themselves, and I would urge them to continue it.

[Sir Peter Luff (Mid Worcestershire) (Con)]

Q3. On the day when BBC Radio 4’s “Woman’s Hour” has put the distinguished geneticist Professor Nazneen Rahman at No. 3 in its power list, I am pleased to remind the Prime Minister of his challenge to me to suggest practical policies that could address the damaging and long-standing under-representation of women in science and engineering careers. So what is his response—[Interruption.]

[Mr Speaker]

Order. The hon. Gentleman will be heard.

[Sir Peter Luff]

The Opposition do not regard this as a serious matter—I thought they did.

What is the Prime Minister’s response to the thoughtful report, published last week, which I commissioned to meet his challenge, called “Through Both Eyes”, by the campaign group ScienceGrrl?

[The Prime Minister]

May I pay tribute to my hon. Friend for campaigning and working so hard on this issue? It is really important for the future of our country—not just for gender equality but for our economic future—to get more women into STEM subjects and into engineering. I support the National Centre for Universities and Businesses’ target of doubling the number of female engineering graduates by 2030. We are working with employers, professional bodies and academic institutions to implement the Perkins review of engineering skills, and I think one of the most powerful things is role models like the one that my hon. Friend mentioned in his question.

[Mr Andy Slaughter (Hammersmith) (Lab)]

Q4. Did the Prime Minister or any of his staff ask the right hon. Member for Basingstoke (Maria Miller) to resign her position as Culture Secretary, and if not, should he have?

[The Prime Minister]

My right hon. Friend has set out the reasons for her resignation in a letter today, and I think people should accept that. I have given the fullest possible answers I could about my attitude of working with colleagues and giving them the chance to get on with their jobs. That is the right approach.

[John Glen (Salisbury) (Con)]

Q5. Thanks to the Government’s long-term economic plan, youth unemployment has been slashed by 42% in my constituency. Does the Prime Minister think that the opening of a new university technical college and a new free sixth-form college in Salisbury will enhance the ability of young people in south Wiltshire to compete in the global race?

[The Prime Minister]

My hon. Friend is entirely right in every word, because we see a decline in youth unemployment. The figures in Salisbury and the south-west are remarkable—the long-term youth claimant count has come down by 37% in the past year. To further drive down youth unemployment, we need to ensure that the training opportunities and education are there. That is why university technical colleges are so important.

Youth unemployment is still too high. When we strip out those in full-time education, it is 8.7%. That is much lower than France, Italy, Spain or the EU average, but it is still too high and we are committed to getting it down.

[Simon Danczuk (Rochdale) (Lab)]

Q6. My constituent, Paul Cowdrey, is to lose his home after raising concerns about overcharging by solicitor Michael Sandler. That solicitor from hell found a loophole by which he could sue my constituent for complaining. The Solicitors Regulation Authority described Sandler as “morally reprehensible” but said it is powerless to act. Will the Prime Minister look at that case and intervene to stop solicitors running rings around their regulators?

[The Prime Minister]

I am happy to look into that case. As the hon. Gentleman will know, the legal regulators and the legal ombudsman, which were improved over previous years, are independent of the Government. It is therefore not possible to intervene directly, but I can arrange for a meeting between the hon. Gentleman and the Minister with responsibility for legal services to discuss what remedies are open to the hon. Gentleman’s constituent. If that meeting will be helpful, I will certainly put it in place.

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

Prime Minister Nawaz Sharif of Pakistan is due to visit the United Kingdom later this month. Will the Prime Minister discuss with him specifically the reform of the blasphemy laws in Pakistan, which are often used to persecute and prosecute minority communities, including the Christian community? Will he urge Prime Minister Sharif to ensure that all those who are prosecuted under those laws get justice, including a British national?

[The Prime Minister]

I reassure my hon. Friend that I will raise that issue with Prime Minister Sharif when he comes to the UK. In the run-up to Easter, it is important to remember how many Christians are still persecuted around the world, including Christians persecuted under things such as the blasphemy laws. I will raise that important issue and look forward to meeting the Pakistan leadership.

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

Q7. Is the Prime Minister aware that, for 3 million low-income families, for every £3 they gain through the higher personal tax allowance, they will lose £2 straight away through universal credit? Is he simply giving with one hand but taking away from low-paid Britain with the other?

[The Prime Minister]

I think the hon. Gentleman is profoundly wrong, because the point of universal credit is that people always keep a reasonable share of every extra pound earned. The difference between universal credit and the systems put in place by the previous Government is that, under the latter, people often faced over 100% marginal tax rates effectively when they were in work. Universal credit will change that. That is why I thought Labour was in favour of it. If Labour Members have changed their minds about that, as they often do about other things, perhaps they should tell us.

[James Morris (Halesowen and Rowley Regis) (Con)]

Q8. The number of apprenticeship starts in my constituency is now at a record high. Next week, I am holding the second Halesowen and Rowley Regis apprenticeship fair at St Michael’s school in Rowley Regis. Does the Prime Minister agree that investing in apprenticeships and skills is a critical part of our long-term economic plan to give local people in the black country the skills they need to get good quality jobs and secure their future?

[The Prime Minister]

I join my hon. Friend in what he says. We have seen 185,000 apprenticeship starts in the west midlands under this Government. We now have 1.6 million nationwide, so we are on target for 2 million during this Parliament. I want to ensure that we continue to grow apprenticeships and see an increase in the quality of apprenticeships. Crucially, we want to see better information for young people in school when they are deciding the pathway they want to take, whether it is an academic pathway through university or looking at apprenticeships. We will be doing more on that front.

[Naomi Long (Belfast East) (Alliance)]

Q9. Despite all the progress achieved in Northern Ireland, a recent poll found that 67% of 15 to 24-year-olds think their future lies outside Northern Ireland, with 70% citing their view that local politicians were not capable of agreeing a shared vision for the future as a factor in that. Does the Prime Minister agree that that should act as a wake-up call to those who continue to indulge in the politics of division and fear to start showing real leadership to inspire young people and give them hope for a shared and better future in Northern Ireland?

[The Prime Minister]

I pay tribute to the hon. Lady for the work that she does on this front. Anyone who believes that change is not possible or that politicians cannot rise to a challenge in Northern Ireland will have been struck—as I was—by seeing Martin McGuinness around the table at Windsor castle, toasting the Queen at the banquet celebrating British-Irish relations. People have come a huge way and we need to continue that vital work, including the work to fight racism and sectarianism wherever it arises. Above all, what we need is politicians in Northern Ireland to build a shared future, to take down the peace walls, and to make sure that the economy can grow and opportunities are there for everyone in Northern Ireland.

[Jason McCartney (Colne Valley) (Con)]

Thirty-five thousand runners in last year’s London marathon raised £53 million for good causes. I will run again this Sunday for the Forget Me Not children’s hospice in Huddersfield. Will the Prime Minister join me in wishing all the runners good luck, including a record contingent from this House, including the children’s Minister, my hon. Friend the Member for Crewe and Nantwich (Mr Timpson), and the shadow Chancellor?

[The Prime Minister]

Over the cornflakes this morning I saw a very attractive picture of my hon. Friend in his shorts and the shadow Chancellor in a curious pair of black leggings. I bow down to the bravery of colleagues who are taking part—26 miles is a very long way, and I certainly could not manage it. I am full of admiration for them and for the money that they will raise for excellent causes. I pay tribute to all hon. Members on both sides of the House who are taking part.

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

Q10. My constituent, Sue Martin, suffers from myalgic encephalomyelitis and has been waiting more than nine months for her personal independence claim to be processed. She now has to borrow from her 84-year-old mother just to get by. Why does the Prime Minister think that is acceptable?

[The Prime Minister]

All delays in these sorts of payments are not acceptable: we have to make sure that benefits are paid on time. What we are trying to do with the personal independence payment is to introduce it gradually so that we ensure that the quality of decision making is good.

[Mike Thornton (Eastleigh) (LD)]

Last week, I was privileged to meet Walter Kammerling, a holocaust survivor. Is the Prime Minister aware of another appalling persecution occurring today, which is the ethnic cleansing of the Hazara community in Afghanistan and Pakistan? They are a gentle, religious, tolerant Islamic people who educate their sons and their daughters. Will he meet the all-party group on this issue, which is ably chaired by the right hon. Member for Southampton, Itchen (Mr Denham), to discuss the situation?

[The Prime Minister]

We should be absolutely clear that the Afghanistan that we have been supporting, and will continue to support, must be a multiracial and multi-ethnic country that includes Pashtuns, Hazaras, Tajiks, Uzbeks and the many other nationalities that make up that country. It is vital for its future, and I am happy to look at the evidence that my hon. Friend has and perhaps arrange any appropriate meetings.

[Paul Flynn (Newport West) (Lab)]

Q11. Some 2,400 jobs have been destroyed in Leicester and Corby, and last Friday 650 in Newport, by one single firm that specialises in cynically buying up firms, degrading the pay and conditions of staff and then abandoning them to unemployment. What protection will the Government give to those blameless, hard-working people who suffer from the scourge of that new vulture capitalism?

[The Prime Minister]

I am happy to look at the individual case that the hon. Gentleman raises, but—in terms of the job situation in the UK at present—in the last week we have had 8,000 jobs from Birmingham city airport, 12,000 jobs from Asda and more than 1,000 jobs from Vodafone. What we are seeing is businesses wanting to locate in Britain, take people on in Britain and grow in Britain, but if the hon. Gentleman has an example of bad practice, I am happy to look at it.

[Mark Pritchard (The Wrekin) (Con)]

Q12. In 1967, the abortion term limit was set at 28 weeks. In 1990, it was reduced to 24 weeks. Given that it is now 2014, a quarter of a century on, and given recent breakthroughs in antenatal and neonatal care, does the Prime Minister agree that it is now time to reduce the abortion term limit to 22 weeks?

[The Prime Minister]

I have always made my own personal views on this clear. There have been opportunities recently in Parliament to vote on this issue. It is always open to Members of Parliament to bring forward legislation, to amend existing Bills and for the House to debate this. That has happened relatively recently, but it continues on the Government Benches, as I am sure it does on the Opposition Benches, to be an entirely free vote issue.

[Jenny Chapman (Darlington) (Lab)]

Q13. Did the Prime Minister or any member of his Cabinet ask the right hon. Member for Basingstoke (Maria Miller) to resign?

[The Prime Minister]

My right hon. Friend took her own decision and has communicated that decision in a letter. I really think that Opposition Members should respect that decision.

[Nigel Adams (Selby and Ainsty) (Con)]

A cloud hangs over the job prospects of 700 mineworkers in my constituency at Kellingley colliery. Will the Prime Minister assure the House that the Government are doing everything they can to ensure the future of the pit and the livelihoods of those men and women?

[The Prime Minister]

I can give my hon. Friend that assurance. It is important, despite the difficulties UK Coal faces, that the Government do everything they can, within the rules that are laid down, to look at whether there is help and assistance that we can give. That is exactly what is happening. I am being kept up to date with this, on sometimes a daily basis. I can assure him that it is getting the Government’s attention.

[Mr Mike Weir (Angus) (SNP)]

Q14. In the spirit of a new positive case for the Union previewed this week by Lord Robertson, can the Prime Minister perhaps give us his view as to which of the four horsemen of the apocalypse will be the first to descend on an independent Scotland?

[The Prime Minister]

My view is an entirely positive one about what this United Kingdom has achieved together in the past and what we can achieve in the future. I think the ones who take a narrow, inward-looking and rather selfish view about the future are Scottish National party Members.

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

The surgeon general of the armed forces has raised concerns about the impact of longer NHS waiting times on soldiers based in Wales. Does the Prime Minister agree that NHS outcomes for my constituents, including soldiers, are simply not good enough, and that the Welsh Government could be undermining the operations of the armed forces and are potentially in breach of the military covenant?

[The Prime Minister]

My hon. Friend makes an important point. We have seen an 8% cut to the NHS budget in Wales. The last time A and E targets were met was 2009. The last time cancer treatment targets were met was 2008. Over a third of people miss out on access to diagnostic services within eight weeks. There is a truly dreadful record when it comes to Labour’s NHS in Wales. There is a huge contrast now with the NHS in England—properly funded, well run and meeting the key targets—and the shambles in Wales.

[Mr David Lammy (Tottenham) (Lab)]

Q15. Five years ago, in one of the worst scenes since the Good Friday agreement, my constituent Sapper Patrick Azimkar and his colleague Mark Quinsey were shot and killed outside their barracks in County Antrim. Their families still await justice. Will the Prime Minister look into this case, and into the use of Diplock trials in Northern Ireland?

[The Prime Minister]

First of all, may I take this opportunity to express my sympathy to the families of Sappers Azimkar and Quinsey? This was a despicable terrorist attack and I fully share the desire that the perpetrators are brought to justice. Just because we are trying to deal with the legacies of the past does not mean that crimes that have been committed should not be properly prosecuted and those responsible convicted. I know that the Secretary of State for Northern Ireland met the parents of Sapper Azimkar to discuss their concerns. The Diplock trial system in Northern Ireland was abolished in 2007 and replaced by provisions allowing non-jury trials only in specific sets of circumstances. These provisions lapse every two years and consideration will be given to whether they ought to be renewed for a further two years in 2015.

[Jake Berry (Rossendale and Darwen) (Con)]

People in my constituency will have been reassured this week by the International Monetary Fund’s upgrading of the country’s growth forecast, but does my right hon. Friend agree that they will be even more reassured to know that our long-term economic plan is working in east Lancashire following this week’s announcement by Red Rose Drylining that it has created 30 new apprenticeships?

[The Prime Minister]

My hon. Friend has made an important point. Let us look at what has been happening in Britain this week. The IMF has said that the UK will grow faster than any other G7 country, new jobs are being created at Asda in Birmingham and at Vodafone, and there are the extra apprenticeships in east Lancashire that my hon. Friend mentioned. The trade deficit is falling, and employment is rising. Britain is on its way back.

[Mr Elfyn Llwyd (Dwyfor Meirionnydd) (PC)]

During the Committee stage of the Legal Aid, Sentencing and Punishment of Offenders Act 2012, the then Parliamentary Under-Secretary of State for Justice, the hon. Member for Huntingdon (Mr Djanogly), assured the Committee that those who were refused legal aid could still apply under the new exceptional funding scheme, and described that as “a vital safeguard”. Between April and December 2013, 617 family law applications were made and eight were allowed. What kind of safeguard is that?

[The Prime Minister]

I will look very closely at the cases that the right hon. Gentleman has raised, but the key point is that we must ensure that our legal aid system is affordable. When we compare our system with those of similar common-law countries, we see that we are still spending far more per head than, for instance, Australia and New Zealand. The right hon. Gentleman shakes his head, but it is no good for Members of Parliament to come to Parliament every week and vote against every single spending decision, while not recognising that we must get our deficit down in order to help our economy to recover.

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

Will the Prime Minister take a few minutes over the Easter recess to read at least the winning entry in the Institute of Economic Affairs Brexit competition, the results of which were announced last night? I am sure that, if he does read it, it will give him some good ideas about why leaving the European Union should become part of our long-term economic plan.

[The Prime Minister]

My hon. Friend and I agree on many things, but I am afraid that that is not one of them. However, I will happily look at the Institute of Economic Affairs pamphlet as a potential piece of holiday reading, and see how it competes with alternatives such as, perhaps, the novel written by my hon. Friend the Member for Mid Bedfordshire (Nadine Dorries), which is obviously another possible choice for the festive period.

Petition

Wednesday 9th April 2014 Commons Chamber

Keith Vaz (Leicester East) (Lab)

- Hansard - - Excerpts

I wish to present a petition on behalf of a number of my constituents concerning the proposals of the city council to close Humberstone Heights golf course in Leicester. Some 1,800 people have signed the petition—[Interruption.]

Madam Deputy Speaker (Dawn Primarolo)

- Hansard - - Excerpts

Order. I am sorry to interrupt you, Mr Vaz, but I am having difficult in hearing your presentation of the petition because of the noise in the Chamber. I ask Members to leave quietly. Mr Vaz, may I suggest that you start again with the presentation of your petition?

Keith Vaz

- Hansard - - Excerpts

Thank you very much, Madam Deputy Speaker. I wish to present a petition on behalf of a number of residents of Leicester concerning the proposal to close Humberstone Heights golf club in Humberstone. I was there last Saturday and, as you have correctly said, it is much quieter on a golf course than it is in the Chamber of the House of Commons. I accepted a petition that had been led by Mr Mark Boddice, the club captain, Mrs Heather Smith, the lady captain, Mr Raj Kotak, a past captain, Paul Maurice, Alan Taylor, Jay Marsh, Tony Palmer, Ashok Mistry, Mark Smith, Gaz Kilby, Bruce Frazer, Colin McKenzie, Peter Walker, Michael Pearson and Master David Dewbery. It was signed by 1,800 other people who play regularly at Humberstone Heights golf course. I am grateful to so many right hon. and hon. Members, from all parts of the United Kingdom, for staying for the presentation of this petition. Clearly, the Humberstone Heights golf course has achieved great fame beyond Leicester, reaching the very corners of the United Kingdom. I therefore wish to present this petition on their behalf. If people are able to be more involved in leisure, they will have longer and fitter lives.

The petition states:

The Petition of residents of the UK,

Declares that Humberstone Heights Golf Course is a popular leisure facility in Leicester and further that the Petitioners believe that the planned closure of the Golf Course will have a detrimental impact on the local community.

The Petitioners therefore request that the House of Commons urges the Government to encourage Leicester City Council to reconsider their decision to close Humberstone Heights Golf Course, which is an important community facility.

And the Petitioners remain, etc.

[P001342]

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

- Hansard - - Excerpts

On a point of order, Madam Deputy Speaker. In the last round of Divisions, I had intended to move new clause 7, but new clause 7 was not called, and new clause 6 was called instead. I realise of course that human error can play its part in some of these things, but I would like your opinion on the matter.

Madam Deputy Speaker (Dawn Primarolo)

- Hansard - - Excerpts

Mr MacNeil, I think there was a genuine misunderstanding with regard to new clauses 6 and 7. I regret to say that the intention was not clear to me at the time in the Chair, and I do not feel that I can take the matter any further than that, but I am sure that the record will show the hon. Gentleman’s intention, even if that was not fulfilled through to a vote because of a misunderstanding. I hope that that clarifies the matter.

Agricultural Accidents (Records)

Wednesday 9th April 2014 Commons Chamber

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

12:33

[Bill Wiggin (North Herefordshire) (Con)]

I beg to move,

That leave be given to bring in a Bill to require the Health and Safety Executive to record certain details of agricultural accidents and to report those details annually; and for connected purposes.

I remind the House of my entry in the Register of Members’ Financial Interests, and of the fact that I breed Hereford cattle myself.

In 2006, my constituent Ian Jackson, a vet, was tragically killed by a runaway heifer in Weobley, Herefordshire. He died from injuries sustained after he was attacked and crushed against a lorry. In 2007, my constituent Mick Daw was killed by a Belgian Blue bull in Stoke Prior, near Leominster. Mr Daw had gone to the assistance of another man who was trying to move the bull.

The Health and Safety Executive has reported six deaths so far this year from accidents involving cattle. Last year seven people were killed, there were five deaths in the previous year, and there were six in the year before that. The Health and Safety Executive’s agriculture statistics show that 29% of fatal injuries to the public between 2001 and 2012 were caused by livestock, and that that was the most common cause. That is nearly a third of fatal injuries.

The statistics for injuries are similar or worse. Since 1 April 2013 another two members of the public have been killed following incidents with cattle. There is a case ongoing in our courts at the moment resulting from a rambler being found dead. Over the past four years 24 people have been killed in incidents with cattle, and more than 600 people are injured by animals each year. I am sure we all feel that too many people are dying in livestock-related incidents and we should be doing more to stop this problem.

The Health and Safety Executive has a record of all these incidents, but the same data are not recorded in each case. For example, I could not tell the House what breed of cattle were involved in most of the 24 deaths. That is despite the Government acknowledging the fact that some breeds are dangerous. The Wildlife and Countryside Act 1981 lists seven breeds of dairy bull that are prohibited at all times from fields with public footpaths. Breed information, which is easy to access from cattle passports, is not automatically recorded and it must be.

There is no requirement under the Reporting of Injuries, Diseases and Dangerous Occurrences Regulations 1995 or other health and safety legislation for the breeds of cattle involved in incidents to be reported to the Health and Safety Executive. Currently, such a report includes the following: the date of the incident; the severity of the incident— either death or injury; who was involved—the owner, the occupier, or someone contracted or working for them or a member of the public; and a brief description of the incident. Any further detail is at the discretion of the investigator and based on whether any information—cattle breed, for instance—is deemed relevant to the inquiry.

I want to ensure that the necessary details are recorded so we have useful information from which we can learn from these tragic incidents and help prevent future deaths in the countryside. This Bill will ensure the Health and Safety Executive records the following: cattle breed; age of livestock; type of livestock—cows, heifers, bullocks or steers, cows with or without calves or bulls—and their age; details of those injured; whether a right of way was involved; whether the person was accompanied by a dog; whether the person was trespassing; if tuberculosis testing was taking place; and any other relevant and useful information. The Health and Safety Executive will also continue to record the details it currently records.

This change will ensure a uniform list of details is recorded for each and every incident involving cattle. This Bill will provide us with the right data so we can then advise farmers about health and safety concerns and protect them and the public.

The Country Land and Business Association says it is

“always keen to reduce the number of incidents between people and animals.”

The National Farmers Union supports increased detail in the recording of incidents. Indeed, much of the previous list of extra information to be recorded was provided by the NFU. I can tell the House that the Ramblers, too, agrees with the need for increased data collection. Janet Davis, its senior policy officer on rights of way, went so far as to say:

“Scrupulous data collection .... of all kinds is essential.”

As the House knows, supermarkets are very keen to promote ethically sourced British beef. Indeed Tesco, Asda, Morrisons, Sainsbury’s and the Co-op all sell products with the red tractor assurance. The popular food assurance scheme covers production standards including food safety, hygiene, animal welfare and the environment. However, red tractor assurance, other assurance schemes and the supermarkets themselves do not take into consideration whether the cattle they use are dangerous. That is because they cannot; there are no available statistics. However, if the supermarkets had access to data identifying dangerous breeds of cattle would they not then source their meat from breeds that pose less of a threat to farmers?

Twenty-four deaths in four years is far too many not to take action to address the situation. Increased information and learning might help us to prevent future incidents. We need to ensure the relevant changes are made to legislation now so the Health and Safety Executive records the appropriate details. Once this vital information starts to be recorded, I believe it will prove a useful tool to farmers, their spouses and all those working in agriculture or walking in the country.

I want to help people make sensible and informed decisions on the types of cattle they buy, farm and place in fields that have public access. Nobody wants more “’elf and safety”, but the Health and Safety Executive records some data already. I want it to do it better and to make those data relevant and useful. Until we get the facts, we cannot use our judgment. Poor judgment can cause accidents, and accidents with large animals can be fatal.

Question put and agreed to.

Ordered,

That Bill Wiggin, Neil Parish, Martin Vickers, Richard Benyon, Sir Edward Garnier, Sheryll Murray and Jesse Norman present the Bill.

Bill read the First time; to be read a Second time on Friday 6 June, and to be presented (Bill 200).

Finance (No. 2) Bill

Wednesday 9th April 2014 Commons Chamber

(Clauses 1, 5 to 7, 11, 72 to 74 and 112; Schedule 1; any new Clauses and any new Schedules relating to tax relief in connection with the costs of childcare, or income tax allowances for parties to a marriage or civil partnership, or air passenger duty, or the rate of the bank levy, or the subject matter of Clause 1, or the subject matter of Clauses 5 to 7 and Schedule 1.)

[2nd Allocated Day]

Further considered in Committee

[Mr Lindsay Hoyle in the Chair]

Clause 11

Tax relief for married couples and civil partners

12:42

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

I beg to move amendment 3, in page 8, line 25, at end insert—

‘55F Review

(1) Within six months of the passing of the Finance Act 2014, the Chancellor of the Exchequer must undertake a review of the impact of the tax relief for married couples and civil partners introduced under this Chapter.

(2) The review must in particular include—

(a) a calculation of the proportion of married couples and civil partners who are eligible for the tax relief in the financial year 2015-16;

(b) an assessment of the impact of this tax relief on those who are neither married nor in civil partnerships;

(c) the cost to the Exchequer of this tax relief; and

(d) an assessment of alternative tax reliefs that would benefit a greater number of families.

(3) The Chancellor of the Exchequer must publish the report of the review and lay the report before the House.’.

[The Chairman of Ways and Means (Mr Lindsay Hoyle)]

With this it will be convenient to consider clause 11 stand part.

[Catherine McKinnell]

It is a pleasure to serve under your chairmanship today, Mr Hoyle. I rise to speak to the Opposition’s amendment to clause 11 regarding the coalition’s proposed tax relief for married couples and civil partners. Before I begin, let nobody be in any doubt that the Opposition believe that marriage and civil partnerships are a force for good in society. Making a binding lifelong commitment to a partner in that way is truly to be celebrated. Let us not pretend, however, that the Government’s marriage tax allowance, introduced by clause 11 of this year’s Finance Bill, is anything other than a complete and utter dud of a policy.

[Tim Loughton (East Worthing and Shoreham) (Con)]

If that is the case, why in 13 years did the Labour Government not do a single thing—such as introducing a transferrable tax allowance, for example—to recognise married couples in the tax and benefits system? They did not do a single thing.

[Catherine McKinnell]

We know what the Chancellor thinks about this marriage tax allowance. He thinks that the idea is a turkey, both politically and economically. Indeed, an article in The Daily Telegraph went so far as to say—[Interruption.] I hear groans from those on the Government Benches. The article went so far as to say that the Chancellor

“loathes the idea. He is not a social conservative and hates the notion of bribing anyone down the aisle. He has made sure the marriage tax break will not come into effect until the very last weeks of this government—and it will be so small as to be unnoticeable. To resolve the impasse, Treasury officials were asked to see whether they could dump the agenda on to Iain Duncan Smith, so the Chancellor could wash his hands of it. But a tax cut has to come from the Treasury.”

[Mr Stewart Jackson (Peterborough) (Con)]

I am sure my right hon. Friend the Chancellor is touched by the hon. Lady’s warm support. Will she share with the House her thoughts on, and specifically answer, the question asked by my hon. Friend the Member for East Worthing and Shoreham (Tim Loughton)? Why did the Labour Government do nothing to support the institution of marriage in 13 years?

[Catherine McKinnell]

The answer lies in what I have already said; the Labour Government did a huge amount to support all families up and down this country, particularly families with children. Even the Chancellor seems to agree that £3.85 a week is not going to bribe anybody down the aisle or persuade anyone to stay in a marriage if they decide they are going to leave it. The question asked by the hon. Member for East Worthing and Shoreham (Tim Loughton) does not seem to acknowledge the fundamental issues with the Government’s proposal.

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

Does my hon. Friend agree that one difficulty with this proposal is shown in the analysis by the Institute for Fiscal Studies? Robert Joyce, the senior research economist there, says:

“The policy is not a general recognition of marriage in the income tax system”.

So the argument that has been made by the Government is false, in the sense that it gives an impression about this policy which is not actually true. He goes on to say that

“it is difficult to escape the conclusion that an income tax system which makes some people worse off after a pay rise has something wrong with it.”

[The Chairman of Ways and Means (Mr Lindsay Hoyle)]

Order. I think we need shorter interventions rather than speeches—I would sooner save your voice for later.

[Catherine McKinnell]

On the basis of my hon. Friend’s insightful intervention, I am looking forward to his speech on this matter. He makes the point well, and it is the point that I am seeking to make. As the Chief Secretary to the Treasury has said:

“This policy is not about children and families…it does nothing for millions of families with children struggling to make ends meet.”

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

Does the hon. Lady agree that although this marriage allowance is not going to persuade people to go or not to go down the aisle, it does recognise what marriage and stable relationships really bring both to children and to the couples? Does she think that in 13 years the Labour party might perhaps have considered it?

[Catherine McKinnell]

Today, we are discussing the merits of this Government proposal in this Bill. We think it is a dud of a policy, and the Chancellor and the Chief Secretary seem to think so, too. I will set out all the reasons why it is a dud, but talking about whether the previous Labour Government considered this policy does not address the issues we are debating today—this policy and our amendment to it. If Government Members are so keen for there to be genuine support for families, for children and for marriage, they should welcome our amendment proposing a proper review on the impact of the tax relief that the Government are suggesting as part of this Bill and exploring alternative tax reliefs that could benefit a greater number of families and, potentially, a greater number of married couples, given the Government’s proposition’s clear deficiencies in recognising most marriages.

[Mr Henry Bellingham (North West Norfolk) (Con)]

Does the hon. Lady agree with the principle that there should never be a financial disincentive for people to be married and remain in a marriage?

[Catherine McKinnell]

The proposal under consideration only gives any sort of tax benefit, small though it is, to a third of married couples. I am surprised that Government Members are not more keen to explore the potential alternatives to this dud policy.

[Tim Loughton]

rose—

[Catherine McKinnell]

Let me make some progress. We are left in a position in which the Minister now finds himself trying to defend a policy that neither his boss nor his deputy support. It is an absolute farce, but clearly Government Members do support it, and quite vehemently. I hope to persuade them to consider the Opposition amendment and take a second look at the policy. If that fails and the policy is implemented in the Finance Bill, I want them to agree to review its impact within six months of its implementation to ensure that it is having the maximum benefit for the maximum number of people.

What is it about this policy that is so bad? Frankly, it is hard to know where to start. Let us begin by looking at who will benefit from this highly restrictive and very complicated measure, which will allow couples to transfer up to £1,050 of their income tax personal allowance to their spouse with effect from April 2015. Of course it applies to married couples and those in civil partnerships, but not just to any old marriages or any old civil partnerships. No, the Government have decided that there is a very particular form of marriage or civil partnership that they wish to recognise in the tax system. Unintentionally, misleading statements were made by the Prime Minister to this House—[Hon. Members: “What!”] Unintentionally, I said. The marriage tax allowance introduced by clause 11 applies only to those couples where one spouse is a basic rate taxpayer and the other does not use their full personal allowance. That scenario has been described by the “Don’t judge my family” campaign as a fantasy 1950s family with a breadwinner and a home maker. The policy will therefore exclude married couples and civil partners on the very lowest incomes where both spouses earn below the income tax personal allowance; couples where both spouses, possibly both basic rate taxpayers, have incomes higher than the personal allowance and therefore have no unused portion to transfer; and couples where either spouse pays the higher rate or the additional 45% rate, with an ever increasing number having been drawn into the 40 pence rate under this Government.

How many people are we taking about? How many households across the country will benefit from the Government’s flagship policy for supporting families? Their own recent estimates suggest 4.2 million couples, which equates to a grand total of one in three married couples and civil partnerships in this country. Two thirds of married couples and civil partnerships will not benefit from a policy intended to recognise marriage in the system.

[Tim Loughton]

I agree that there is a flaw in what the hon. Lady is discussing. Presumably, like me, she wishes to see that relief being extended not just to those on the basic rate but to a greater number of married couples with children. That is the logical conclusion of what she is saying, unless she admits once and for all that the Opposition do not support marriage in the tax system.

[Catherine McKinnell]

We have a much better suggestion as to how the money that has been allocated to the marriage tax allowance can be used to support millions of taxpayers up and down the country, including families with children. So what about those families with children who are hoping in vain for any sign of support from this Government whose tax and benefit changes will result in households being, on average, £974 a year worse off by 2015 than they were in 2010? The Exchequer Secretary, who is in his place, has conceded that of Britain’s 7.8 million families with children, just 1.4 million will benefit from this policy. Yes, that is right—one in six families with children will gain from this marriage tax allowance. To put it another way, five in six families with children will not get a penny from this Government’s flagship policy to support them.

The policy does nothing for widows, widowers, lone parents, long-term co-habiting couples, the 300,000 children living with grandparents or kinship carers or for the spouse who has left their partner for good reason, perhaps because of domestic abuse. It will not help the wife who has been left to bring up the kids after the husband has run off with another woman. If her husband chooses to marry that other woman, who have the Government decided will get the reward within the tax system? It is him.

How much will the allowance be worth for those lucky married couples who will be eligible? Just how much value are Ministers putting on the role of marriage in our society? Yes, for the one in three couples who will benefit, it could be worth up to £200 a year, almost £3.85 a week. To put that into language that people on the Labour Benches might understand—that is just over one pint of beer or a one-off peak game of bingo a week! Who does the Government expect to reap the benefits from this largesse? Let us take a look at their own assessment of the equality impact, which clearly states that while

“couples will benefit as a unit...the majority...of individual gainers will be male.”

But it is not just any old majority. The Government’s own assessment indicates that a staggering 84% of individual gainers will be male.

Before last year's autumn statement, we knew that the net impact of this Chancellor’s tax and benefit changes since 2010 would hit women three times harder than men, not least as a result of his decision to give a £3 billion tax cut to the top 1% of earners in this country, 85% of whom just happen to be men. As a result of the autumn statement 2013, in which the marriage tax allowance was confirmed, that appalling record has worsened even further, such that the Chancellor’s tax and benefit strategy is now hitting women a staggering four times harder than men, raising a net £3.047 billion from men, and £11.628 billion, or 79%, from women—[Interruption.] I hear the word scandalous uttered from a sedentary position, and I quite agree.

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

I am grateful to my hon. Friend for giving way and for making such powerful points. When these points are put to the Government, they always say that the financial circumstances are such that there must be cutbacks somewhere. Is it not ironic that the Government are putting forward a policy that is so badly thought out that if anyone were asked to choose a priority for public spending, this would not be it? Should we not be taking real measures to tackle problems such as the bedroom tax and the changes in universal credit, all of which will cause much more damage than any benefit that this will bring about?

[The Chairman of Ways and Means (Mr Lindsay Hoyle)]

Order. I appeal for shorter interventions. We have time, but Members cannot make a speech as an intervention.

[Catherine McKinnell]

I thank you, Mr Hoyle, and also my hon. Friend whose intervention was powerful and to the point.

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

My hon. Friend is right to highlight the disproportionate benefit of the marriage tax break to men. Does she not agree that the argument that couples will benefit as a unit completely fails to recognise financial coercion in relationships, and that those who get the money have the power?

[Catherine McKinnell]

My hon. Friend raises an important point and it goes to the heart of so many of the changes that this Government have made. So many of the decisions that they have made time and again in Budget after Budget have hit women hardest. Back in September 2011, a leaked No. 10 memo admitted that the Government had a problem with women, and promised a new communications campaign to turn things around, but it clearly has not worked. A key recommendation of a No. 10 communications campaign to be female friendly was to “focus on more visible women leaders”, but until this morning women made up only four of the 23 Cabinet members and that figure is now down to three. Let us not let the Deputy Prime Minister off the hook. Only four out of 25 Lib Dem Ministers are women—[Interruption.] Government Members are shouting, “What has that got to do with this measure?” I wonder whether one of them would like to intervene.

13:00

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

During her research for the debate, did the hon. Lady become aware of the fact that 93% of young teenagers still living with both parents are with married parents? That is quite a powerful statistic.

[Catherine McKinnell]

That is an interesting statistic. I know that the hon. Gentleman is committed to the principle of this measure, but I and other Opposition Members are trying to make the point that the policy is not only dud as regards its practical application but further compounds the unfairness in how the Government have made their decisions in Budget after Budget. Let us remember when hon. Gentlemen question what my point has to do with this measure that we know that the majority of gainers from the policy are men.

[Kate Green]

Does my hon. Friend think that the hon. Member for South West Bedfordshire (Andrew Selous) was seriously suggesting that £3.85 a week would encourage more couples to stay married? There is no evidence of cause and effect at all.

[Catherine McKinnell]

My hon. Friend’s point goes to the heart of the matter. It demonstrates what is wrong with this policy and how ill-conceived it is.

[Alison Seabeck (Plymouth, Moor View) (Lab)]

The intervention from the hon. Member for South West Bedfordshire (Andrew Selous) was interesting, but should he not acknowledge that only one in six of those families will benefit from any of this?

[Catherine McKinnell]

My hon. Friend makes an extremely good point. Our opposition to this measure is that it disproportionately impacts on women and benefits men and that it does not recognise five out of six households with children up and down the country who are, as we know, struggling to make ends meet.

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

The problem with the hon. Lady’s point is that she is looking at married couples individually. The change is that, rather than wholly going down the route of an individualised tax system, as has happened in the past, this policy considers married couples. Married couples are benefiting and, if we asked them, they would say that they are benefiting as a couple and as a household. They are not hiving off men against women, which is what she seems to be doing.

[Catherine McKinnell]

The tax system works on an individual basis and this proposal introduces incredible complexity to the tax system. I shall cover that in more detail and explain the cost implications. Government Members obviously think that the costs are worth it, but I would be very careful about the concept that all married couples will happily share all their money and any tax gain—although, admittedly, we are talking about £3.85 a week. That seems to be rolling the clock back somewhat and assuming a level of communication within households that I do not think it is the Government’s place to assume.

Women are more than £26 a week—a week—worse off in real terms since 2010, and after significant progress under Labour, when the gender pay gap fell by more than 7%, it is now rising again for the first time in five years. The gap between women’s median weekly earnings in the private sector and the public sector has increased between 2009-10 and 2012-13 from 28% to 31%. The same gap for men has decreased from 17% to 14%. At the same time, the cost of child care places, which we debated at length yesterday, has risen by an average of 30% on this Government’s watch, five times faster than pay.

Analysis by the House of Commons Library shows that the Chancellor’s tax and benefits strategy since 2010 has raised a net £3.047 billion, or 21%, from men and 79%, or just under £12 billion, from women. That includes the Budget 2010 tax credit cuts, which took £2.7 billion from women and only £750 million from men, the 2010 spending review, under which reductions in child care support through tax credits took £343 million from women but just £47 million from men, and the three-year child benefit freeze, which has taken £1.26 billion from women and £26 million from men. That, of course, contrasts with the £3 billion tax cut that was given to the top 1% of earners in this country, under which 85% of the gainers are men, and this marriage tax allowance, under which 84% of the gainers will be men. This issue goes to the heart of the clause and of why we are tabling our amendment.

[Mr Stewart Jackson]

The hon. Lady is being most generous in giving way. Why does she imagine that 80% of the population covered by the OECD have a tax system that rewards marriage, including countries such as France, Germany and the United States?

[Catherine McKinnell]

We must consider this clause in the context of the current situation. We know that families up and down the country—in fact, all households—are facing a cost of living crisis. We have had three years of a flatlining, stagnating economy and households up and down the country have been paying the price for that. We have a Government who are introducing measures that will benefit a small proportion of married couples—only one in six households with children—and under which 84% of the gainers will be men, when we know that those who have paid the bulk of the price so far for the deficit reduction strategy that the Government have been pursuing have been women. It is a question of priorities, and this Government seem to have them completely wrong.

[Andrew Selous]

I want to check that I heard the hon. Lady correctly. She talked about a flatlining, stagnating economy, so I wonder whether she heard the International Monetary Fund say yesterday that we have the fastest rate of growth in the IMF and in the whole of the G7 at 2.9%.

[Catherine McKinnell]

I think that Government Members would love to try to whitewash and erase from the memory of the public the past four years, three of which have had zero—that is, flatlining—growth in the economy. People will be £1,600 worse off on average in 2015 than they were in 2010 and whatever growth is happening in the economy now is happening despite, not as a result of, the Government’s economic policies. I urge hon. Members to exercise caution in saying that everything in the garden is rosy when people out there are struggling to make ends meet.

[Ian Swales (Redcar) (LD)]

I am following the hon. Lady’s speech with great interest. For completeness, so that we have the full picture, can she say what proportion of tax is paid by men and what proportion of benefits are paid to women?

[Catherine McKinnell]

I am pleased that the hon. Gentleman has entered the debate, because the Liberal Democrats are key to today’s measure, and I shall go on to explain why. I think we know that there is long-term inequality. The mere fact that 85% of those who benefit from the tax cut from 50p are men speaks volumes about how this country is weighted. The majority of wealth is held by men. I understand the hon. Gentleman’s point, but I urge caution as the Liberal Democrats are in an interesting position today when it comes to how they will vote not only on this measure in the Bill but on our proposed review.

[Kate Green]

Does my hon. Friend agree that evidence stretching back over several decades shows that when money is paid to the main carer of a child, usually the mother, that money is more likely to be spent on the children? A Government about to preside over a startling rise in child poverty should be mindful of that when they introduce a measure such as this.

[Catherine McKinnell]

My hon. Friend makes an incredibly pertinent point, and expresses her case powerfully. Child poverty is set to increase by a staggering amount under this Government, and the Institute for Fiscal Studies has clearly said that that is a direct result of the tax and benefit changes that they have implemented. The measure, which Government Members are keen to support, will do nothing to alleviate child poverty or to turn the tide of increasing child poverty over the next few years.

[Tim Loughton]

The hon. Lady has cited the IFS, which has conducted an analysis of the distributional impact of the transferrable allowance, demonstrating that it is profoundly progressive, disproportionately benefiting those in the bottom half of the income distribution scale. Perhaps she would read us all the research, rather than a selective part of it.

[Catherine McKinnell]

The hon. Gentleman is incredibly selective. If he genuinely believes that the policy will transform the Government’s appalling record on child poverty and the impact of their tax and benefit changes on women, he is deluded.

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

My hon. Friend is making a good case for the amendment. Only a third of families will get £200 a year extra, but the average family will be £974 a year worse off by the time of the next election, which shows the iniquitous state of affairs that the measure will create.

[Catherine McKinnell]

My hon. Friend makes an important point. I would add that it is not a third of families who will gain from the policy—it is a third of married couples. Five in six households with children, whom many would consider to be families—particularly the Opposition, but perhaps not the Government—will not gain anything from the policy, which only compounds the child poverty issue about which the Government seem complacent.

[Kate Green]

Does my hon. Friend not agree that the reading of the figures by the hon. Member for East Worthing and Shoreham (Tim Loughton) was highly selective? Perhaps the bottom half of the income distribution scale benefits from the measure, but the very poorest will not benefit at all, because they are not tax payers.

[Catherine McKinnell]

Absolutely. That is why many people, including married couples, will not gain anything from the policy, which is why I am astounded by the vehement support for a policy that does not properly recognise marriage in the tax system, which Government Members are usually keen to do.

To conclude the point that I am making about the impact of the measure, I shall give one example of the women who are particularly hard hit by it: low-paid, new mums, who are losing almost £3,000 during pregnancy and their baby’s first year as a result of cuts to child benefit; cuts to the health in pregnancy grant; the axing of the higher rate of tax credit for families with babies under one; restrictions in the Sure Start maternity allowance; and the Chancellor’s “mummy tax”, which will cost new mums £180 by 2015 in real terms—not to mention cuts in public services and the disappearance of Sure Start centres, with three closures a week, which will impact on mums, dads, families and, indeed, married couples up and down the country for years to come.

The policy is a total turkey in terms of its reach and the benefits it brings. Even the Chancellor thinks so, as does the Chief Secretary to the Treasury—and I am sure that we will hear what the Exchequer Secretary thinks later in the debate—but what about its cost and complexity? Surely, Ministers must have learned from the child benefit fiasco, and would not seek to introduce a new, complex aspect to the taxation system—that fiasco must have given them a few grey hairs—or one that might require significant additional administration and input from the taxpayer. Oh—but they are doing so! Her Majesty’s Revenue and Customs has issued a tax information and impact note on the policy that suggests that it will have an Exchequer impact of £515 million in 2015-16, rising to £820 million by 2018-19.

13:15

The note is a little less candid about how much the policy will cost HMRC to administer and how many additional staff will be required at a time when the HMRC budget has been slashed and its work force significantly depleted. It simply states:

“HMRC will incur additional costs on the introduction and administration of the transferable allowance. The highest expenditure will be in 2015-16, when HMRC will introduce the application processes to enable everyone who is entitled”—

which is not many—

“to benefit from the transfer. During 2014-15, HMRC will refine its costs as part of its work on the new IT to provide on-line services for customers, other customer support and the new internal IT to link spouses and civil partners’ income tax records.”

Given the lack of clarity in HMRC’s impact note, I submitted a written question on the issue, to which the Exchequer Secretary kindly replied and explained:

“The detail of how this policy will be administered by HMRC is being developed.”—[Official Report, 12 February 2014; Vol. 575, c. 642W.]

Perhaps the Exchequer Secretary would enlighten us about exactly what impact the policy will have on HMRC, which is already coping with the loss of 18,700 full-time equivalent staff, or 26% of its work force, between 2010 and 2016? Equally concerning is the impact that the policy is expected to have on employers. The Government’s tax information and impact note neatly sums up the problem, clearly stating that

“it is estimated that in 2015-16, the cost across 1.6 million employers and pension providers of processing PAYE tax codes to reflect transferred allowances may be up to £5.8 million. In subsequent years, the additional cost across employers and pension providers may be up to £0.8 million. There are also likely to be negligible one-off costs in 2015-16 due to employers and pension providers familiarising themselves with the change to the legislation.”

The cost to employers of processing this shabby policy is thought by the Government themselves to be up to £5.8 million in its first year. Surely there are better ways for that money to be spent. The Institute for Fiscal Studies indicates that the precise costs of this policy for the Government, HMRC and employers

“will depend on the rate of take-up, as people will presumably have to make an active claim to HMRC to benefit, and the extent to which individuals change their behaviour in order to qualify.”

[Sheila Gilmore (Edinburgh East) (Lab)]

My hon. Friend will have attended previous debates on this issue. Indeed, only yesterday in the Chamber, lectures were being given by Government Members about the need to simplify the tax code. Does she not find surprising the support for measures such as the one that we are debating today?

[Catherine McKinnell]

Indeed. Government Members often lament red tape and the complexity of the tax system. I am not entirely sure that they will be thanked for adding to it in this way and putting the burden of implementation on employers.

The apparent onus on taxpayers proactively to apply for this allowance is a concern that has been raised more widely. The Low Incomes Tax Reform Group has pressed the Government to ensure that a claim for the marriage tax allowance can

“be made on paper, as well as online; digital exclusion affects disproportionately people on low incomes, the very people to whom this relief is directed. It is particularly important that a paper copy is available since, in some cases, taxpayers will seek assistance from the voluntary and charitable sector with, perhaps, only one spouse being physically present at such meetings.”

LITRG goes on to urge that

“the claim/election process will be made as simple as possible—preferably a joint election rather than separate claim and election.”

I look forward to the Minister’s response to those concerns.

The complexity of the Government’s marriage tax allowance proposal has been commented on by the IFS, which stated, when the measure was first announced:

“One striking feature of the policy is that it complicates the income tax system. A transferable personal allowance for married couples capped at £1,000 and then withdrawn using a cliff-edge at the higher-rate threshold is not the simplest to understand. It is three years since another cliff-edge at the higher rate threshold was announced at the 2010 Conservative Party conference as a way of effectively means-testing Child Benefit, only to be removed and replaced with a less egregious taper at Budget 2012. The amounts involved here are less than in that case, which perhaps explains the willingness to cliff-edge again rather than implement a taper. Nevertheless, it is difficult to escape the conclusion that an income tax system which makes some people worse off after a pay rise has something wrong with it.”

One might think that, as my hon. Friend the Member for Edinburgh East (Sheila Gilmore) pointed out, a Government who have so boasted about being committed to tax simplification would want to avoid further complicating the system. At the launch of the Office of Tax Simplification, the Chancellor commented:

“A decade of meddling and intervening has made the tax affairs of millions of families and businesses across the UK extremely complicated. We need to sort out this mess.”

What does the Office of Tax Simplification make of the marriage tax allowance, which will clearly make the tax affairs of couples and employers more complex? We do not know because, in the words of the Exchequer Secretary in response to a written question I tabled:

“The Office of Tax Simplification (OTS) has not made an assessment of the proposals for a transferable tax allowance.”—[Official Report, 12 February 2014; Vol. 575, c. 642W.]

Why on earth not? What could Ministers possibly fear from the outcome of such an assessment?

It may be clear now that the Opposition oppose the Government’s marriage tax allowance and will vote against clause 11. We believe that the marriage tax allowance is perverse and unfair. It is a poorly targeted use of resources and is overly complex, and our amendment to clause 11 presses the Government to undertake a proper review of the cost, the impact and the benefits for those who will receive it and for the overwhelming majority of married couples and families who will not benefit at all.

Amendment 3 calls on the Government to ensure that any such review includes an assessment of alternative tax reliefs that would benefit a much greater number of families, because we are not just opposing the marriage tax allowance today. Indeed, we have said that a future Labour Government would scrap this policy and use the money saved, together with funding from a mansion tax on properties worth over £2 million, to reintroduce the 10p starting rate of tax, meaning a tax cut for 24 million people on low and middle incomes, by contrast with the 4.2 million couples who will benefit from the marriage tax allowance. Crucially, almost half of those benefiting from a new 10p tax rate would be women.

We know that the Liberal Democrats are apparently implacably opposed to the policy introduced by clause 11 and secured a deal in the coalition agreement to go so far as to abstain on the measure. I believe it was before the 2010 general election that the now Deputy Prime Minister described the Conservatives’ proposal for a transferable tax allowance for married couples as

“patronising drivel that belongs in the Edwardian age.”

I know that Liberal Democrats have, as some might say, an irritating habit of saying one thing before a general election, then doing precisely the opposite—university tuition fees and the VAT bombshell spring to mind—or of saying one thing at any point in the electoral cycle and doing precisely the opposite: for example, 46 Lib Dem peers voted to retain the bedroom tax just 24 hours after their party president, the hon. Member for Westmorland and Lonsdale (Tim Farron), said it was something his party could not “continue to support”. Although the Liberal Democrats may be thinking about abstaining on clause 11 as it stands, it is difficult to see how they could sit on their hands this afternoon and vote against our reasonable amendment.

We know that the Lib Dems apparently secured the policy of free school meals for every child in reception, year 1 and year 2 from September 2014, reportedly in exchange for agreeing to abstain on the marriage tax allowance. We of course back the policy, having piloted the idea in government in County Durham and Newham, with excellent results, but there are very real concerns about the way in which the policy was announced, and how it will be implemented. The initial pledge was for a “hot, nutritious meal at lunchtime”, but that is now being described as an aspiration. Ministers are now simply referring to a free, nutritious school lunch.

Many thousands of schools across the country simply do not have the facilities to ensure this provision. The Liberal Democrats have stated that around £80 million of the additional £150 million capital funding required for the project will come from an underspend in the Department for Education and an additional £70 million would be new money from the Treasury. [Interruption.]

I hear hon. Members on the Government Benches chuntering from a sedentary position. They seem very disturbed by the Liberal Democrat policy of free school meals and do not see how it is linked to the marriage tax allowance. Would they like to confirm that that was not an agreement, as has been reported?

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. The advice is not needed. There is a definite link, and if Members were to listen a little more closely, they would understand where the link is between the choice and where the money can be spent. Less advice and more listening might help all of us.

[Catherine McKinnell]

I thank the Deputy Speaker for his clarification. The link is clear. It is to do with the allocation of resources and the agreement that has been made. It also goes fundamentally to the heart of the Liberal Democrats and how they intend to vote on the matter. We believe they are likely to abstain on the measure, although we have not had that confirmed. We hope and assume that although they will abstain on the Government’s motion in relation to implementing the marriage tax allowance, they will support our call for a review. If the measure goes through, they would have as much of an interest as we would in ensuring that it is properly reviewed and monitored in the months to come, and that the Government take seriously the proposals for possible alternatives that benefit a larger number of families throughout the country.

The Opposition believe that the money allocated to the marriage tax allowance could be put to much better use elsewhere. That is why we have pressed the Chancellor to scrap it, and to use the money to give tax help to many more working people instead, including more married couples and more families.

[Dr Thérèse Coffey (Suffolk Coastal) (Con)]

I am interested that the Opposition want to give tax cuts to hard-working people, yet they voted against the Second Reading of the Bill, which provided a tax cut for 25 million people.

[Catherine McKinnell]

The Bill is inadequate as it entirely fails to recognise the cost of living crisis facing many households, including families and married couples, throughout the country, and does nothing to address the problems that people are facing. The review proposed by amendment 3 would be an important first step in looking at how the Government can allocate the available resources to help more people than a few carefully selected types of married couples whom they have deemed should benefit.

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

Does my hon. Friend agree that one of the problems of the married couples tax allowance as proposed by the Government is the situation of what might traditionally have been called the deserted spouse, often the wife who was left? What would happen in that situation? That is a very real issue to be answered.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. May I say once again that we must have shorter interventions? I know that many Members wish to speak. We have been going for a long time and have not even got to the Back Benches yet.

[Catherine McKinnell]

Although my hon. Friend’s intervention took longer than Mr Deputy Speaker might have liked, it was a very good intervention.

I would be interested to hear what Government Members think about the fact that this provision could very much reward men who desert their spouses, leave them with the children to care for, and then receive a tax benefit, but only if they marry the woman they ran off with.

13:30

I will be interested to hear what the Minister and Government Back Benchers have to say about the total inadequacy of this policy in terms of its outreach, implementation, cost to Her Majesty’s Revenue and Customs, and cost to employers to implement. I urge all hon. Members, particularly the Liberal Democrats, although they are severely under-represented today, to support us. We are grateful to the hon. Member for Redcar (Ian Swales) for being here. I hope that he will not sit on his hands and will back our amendment.

[Mr Stewart Jackson]

For the avoidance of doubt, I will be voting against Labour’s amendment. Although the hon. Member for Newcastle upon Tyne North (Catherine McKinnell) is a very engaging spokesman for her party, her speech was mischievous, disingenuous, mealy-mouthed, patronising, leftie drivel—typical middle-class, tofu-munching, Guardian-reading Labour nonsense that said, “We know best what’s good for working people, not you.”

The hon. Lady referred to our friends the Liberal Democrats. I am disappointed that more of them are not here. It is awfully hard to dislike the Liberal Democrats, but it is well worth the effort.

I am delighted that in clause 11 the Government have brought forward this very important change in the tax system, for which I have consistently campaigned since the last general election. We retain the bond of trust with the electors by introducing a proposal that we promised at that time to introduce by the 2015 general election.

[Catherine McKinnell]

I assure the hon. Gentleman that I do not eat tofu, although I do not think that those who do need to be quite so insulted. Are we to assume from his comments that he is wedded to this policy regardless of how inadequate its reach and implementation will be?

[Mr Jackson]

The hon. Lady’s comic timing is exemplary. I will develop my more detailed arguments, if she will allow me, given that she had the thick end of 46 minutes to develop her own. That is probably the record for an Opposition spokesman—or spokesperson—although I accept that it was on the Opposition’s amendment.

This has been a long time coming—

[Tim Loughton]

Forty-seven minutes.

[Mr Jackson]

Indeed—47 minutes, as my hon. Friend says. However, it has definitely been worth waiting for.

In presenting a 10% partly transferable allowance, clause 11 may not yet be worth a huge amount, but it is of seminal importance in supporting marriage in the tax system. For the past 15 years, our tax system has been unusual in not recognising marriage, or indeed any other aspect of family responsibility. Our fiscal policy has been extraordinarily individualistic. Clause 11 changes that by inserting into our system of independent taxation the transferable allowance that former Chancellor Nigel Lawson, the architect of independent taxation, has argued it always should have had. I genuinely believe that qualifying the individualism of our current fiscal policy should be something we can all agree on, and that should appeal to Labour Members. The Opposition spokesperson failed on two occasions to answer the specific question of why, in 13 years in office, her party failed to support the institution of marriage in the tax system in any meaningful way. That is regrettable on her part, because it is disingenuous to say, “We disagree with the policy but, incidentally, this is how you can improve it.” It is churlish and mean-spirited from a party that claims to support the family in the tax system, and children as well.

[Ian Swales]

I can understand the hon. Gentleman’s passion on this issue, but what would he say to a couple in his constituency who are both earning the minimum wage and will not benefit from this policy?

[Mr Jackson]

I will come to the specifics later. However, my hon. Friend—I am pleased to call him that because we serve on the Public Accounts Committee together—will know that many of his constituents in Redcar on low wages have benefited from our personal allowance changes. Indeed, many of them have been taken out of tax altogether, as have people across the north-east of England. He will know, too, as will the Opposition spokesperson, that unemployment has significantly fallen in the north-east and there are now more jobs available than in 2010. [Interruption.] We will not take any lectures from Labour, which doubled youth unemployment between 1997 and 2010.

I would have hoped that Labour Members supported these proposals, particularly this clause, because they are progressive. The Institute for Fiscal Studies has produced a very helpful chart demonstrating how the provision will disproportionately benefit those in the lower half of the income distribution—a point astutely made by my hon. Friend the Member for East Worthing and Shoreham (Tim Loughton). This is not a provision for the middle classes, as Labour critics sometimes suggest. The truth is that the failure of our income tax system to have regard for marriage in recent years has been very odd, as the Prime Minister said in response to a question from the right hon. and learned Member for Camberwell and Peckham (Ms Harman) in June 2010:

“I simply do not understand why, when so many other European countries—I remember often being lectured when I was on the other side of the House about how we should follow European examples—recognise marriage in the tax system, we do not. I believe that we should bring forward proposals to recognise marriage in the tax system…We support so many other things in the tax system, including Christmas parties and parking bicycles at work, so why do we not recognise marriage?”—[Official Report, 2 June 2010; Vol. 510, c. 428.]

[Steve McCabe]

The difference is that the tax provisions on Christmas parties and parking bicycles are extended to all. This provision is for a very narrow segment of married people and those in civil partnerships; it is hardly an example of a general principle of marriage.

[Mr Jackson]

I do not think we all attend Christmas parties or cycle. [Interruption.] The more serious point, which I will elucidate further if the hon. Gentleman will generously allow me, is that there is demonstrable evidence that the institution of marriage has a positive net impact on society, cumulatively, particularly on children. There is nothing ignoble about using the tax system in a mature democracy to support behaviour that is good for society overall.

[Sheila Gilmore]

Will the hon. Gentleman give way?

[Mr Jackson]

Not at the moment. I know the hon. Lady is very keen, and I am sure she will try to get in later.

Given the scale of the public benefits associated with marriage, it is not at all surprising that most people in the developed world live in countries that recognise marriage, as I said earlier in an intervention. There are numerous examples of this benefit that I could highlight, but given the constraints on time I will mention just a few. Regardless of socio-economic status and education, cohabiting couples are between two and two and a half times more likely to break up than equivalent married couples. Women and children are significantly more vulnerable to violence and neglect in cohabiting, rather than married, families. Three quarters of family breakdown in families with children under five comes from the separation of non-married parents. Children are 60% more likely to have contact with separated fathers if the parents were married. Separated fathers are more likely to contribute to their child’s maintenance if the parents were married. Growing up with married parents is associated with better physical health in adulthood and increased longevity. Children from broken homes are nine times more likely to become young offenders, accounting for 70% of all young offenders.

[Kate Green]

I respect the fact that the hon. Gentleman is being very careful with his use of words in saying that there is an association between marriage and some of the outcomes he describes. What he cannot demonstrate, however, is whether there is cause and effect, because we do not know whether there are other personal characteristics that make those couples more likely to be married and whether they also result in those beneficial outcomes.

[Mr Jackson]

I will not take issue with the hon. Lady’s intervention, because it is quite sensible. Nevertheless, the evidence-based data in support of marriage in the tax system have been accumulated over a very long period and are very clear. It is incumbent on the Government not to disregard that evidence, but to take account of it in formulating their fiscal policies.

The list goes on and the findings are put in context by the fact that the Relationships Foundation calculates that the costs of family breakdown amount to £44 billion per annum and that family breakdown outside marriage is the real driver. As the Centre for Social Justice has demonstrated, of every £7 spent as a result of the breakdown of young families, £1 is spent on divorce, £4 on unmarried dual-registered parents who separate, and £2 on sole-registered parents. That is why the Prime Minister was absolutely right to say in response to a question about how the policy could reduce the deficit:

“If we are going to get control of public spending in the long term in this country, we should target the causes of higher spending, one of which is family breakdown. We should do far more to recognise the importance of families, commitment and marriage”.—[Official Report, 2 June 2010; Vol. 510, c. 429.]

I am aware of the arguments that the relationship between marriage and better policy outcomes is merely a coincidence and that the real driver for those better outcomes has nothing to do with marriage and is based on other considerations, especially income. Those arguments simply do not make sense. Apart from anything else, the fact that the millennium cohort study demonstrates that the poorest 20% of married couples are more stable than all but the richest 20% of cohabiting couples makes it plain that marriage is a significant, independent determinant of stability.

[Sheila Gilmore]

Will the hon. Gentleman consider the involvement of other variables? For example, those who are married are likely to be together for longer than those who are not and who split up, and the length of the relationship is likely to contribute to the stability of the children and their relationship with their parents.

[Mr Jackson]

I accept that, which is why I think it is unbecoming to focus on £3.85. We are not arguing that this is merely an issue of monetary transaction. It is about accepting that the inherent benefits of marriage are good for the individuals involved and, principally, their children, as well as for families, communities and society as a whole. We have the evidence.

[Fiona Bruce (Congleton) (Con)]

Is my hon. Friend aware of the work of Harry Benson of the Bristol Community Family Trust, who has found that during early parenthood the single biggest predictor of stability is whether parents are married, even when age, income, education, benefits and ethnic group are taken into account?

[Mr Jackson]

My hon. Friend makes a very strong point. I pay tribute to her for the work she has done in this area and I hope she will continue to do it. I look forward to hearing her contribution later.

[Catherine McKinnell]

Does not the hon. Gentleman’s argument highlight the inadequacy of the Government’s proposals, in that they benefit only a third of married couples and only one in six households with children? If they want to recognise marriage in the tax system, they should recognise marriage, not a certain type of marriage and a certain few married couples.

[Mr Jackson]

The hon. Lady is engaging in a certain degree of amnesia. When her party was in government, it took 7% out of this country’s gross domestic product during the financial crisis. It left us with a disastrous legacy of debt and a huge deficit, which meant that we had to take very difficult decisions. We have to lay the blame for that at her party’s door. That is why we cannot be more innovative in how we approach the tax system. We are, as always, constrained by the legacy of a disastrous Labour Government. Labour always leaves office with more people jobless and the country in trouble.

13:45

[Sheila Gilmore]

Will the hon. Gentleman give way?

[Mr Jackson]

I will give way later, because I am sure the hon. Lady will not forget my comments.

The purpose of clause 11 is not to try to make people get married, but to remove the obstacles to those who wish to marry, which is different. Marriage should at the absolute minimum be a credible, accessible option for all eligible couples. However, the failure of our income tax system—unlike that accessed by the majority of people living in Europe—to recognise marriage means that the fiscal obstacle to marriage is a real concern. The size of the couple penalty in this country, as outlined by the Institute for Fiscal Studies, is deeply worrying.

[Alison Seabeck]

Will the hon. Gentleman give way?

[Mr Jackson]

No, I will not give way—not even to the hon. Lady.

As others have noted, the social policy charity Christian Action Research and Education conducted an annual international tax comparison for 2012—the latest year for which we have comparative data—which demonstrated that the burden on a one-earner married couple on an average wage was a significant 45% greater than the OECD average.

It is not acceptable that we should make the option of marriage inaccessible in this country, and so much more so than the OECD average. Clause 11 will take a vital first step in the direction of addressing that problem, but the limited nature of the partially transferrable allowance means that it will only begin to erode the incentive not to marry. We must go much further in the next Parliament to create a genuinely level playing field. Given the huge public policy benefits of marriage, there is a compelling case for a nudge to marry, although a level playing field would be a massive step forward.

[Alison Seabeck]

I am sorry, but how many people in this Chamber thought, “Oops! I can’t get married because I’ve got a fiscal obstacle in the way,” given that the average cost of a wedding is about £10,000?

[Mr Jackson]

I know that this debate is apposite because the hon. Lady recently tripped along the path of happy matrimony, on which I congratulate her, albeit belatedly. I am not sure whether the issue of £3.85 came into it for the right hon. Member for Greenwich and Woolwich (Mr Raynsford).

If I could move on before we dwell too long on the hon. Lady’s love life, I have read in many places that the provision discriminates against widows and widowers, people who leave abusive relationships and working couples. The hon. Member for Newcastle upon Tyne North regurgitated that argument earlier, but it completely misunderstands the policy.

First, if the widow or the widower was the homemaking spouse, their personal allowance would not die with their working spouse; it would automatically return to them so they could benefit if they re-entered the job market. Secondly, dual-earner couples already benefit from individual personal allowances, so they are already benefiting from both allowances. Thirdly, on those leaving abusive relationships—this is a very important issue and it would be remiss of the hon. Lady not to raise it—if a marriage ends, the homemaking spouse, who had previously transferred the tax allowance to their spouse in paid employment, would be required to take back their allowance because the marriage had ended. It would not be stolen from them by their former spouse.

If the argument is that this policy does nothing for widows and widowers, my response is that that is true of many policies. Most policies have a sharp focus: if we responded to every policy solution by saying, “What about those who won’t benefit?” the implication would be that we should introduce only polices that affect everyone equally. However, in the real world, where we often need specialist and focused policies, that is simply not possible. There is nothing to stop us bringing forward another policy specifically to help widows and widowers—I am sure that Treasury Ministers are listening on that issue—and public policy makes provision for them in other ways. Many widows and widowers were once in one-earner families and will therefore welcome clause 11 for family members who are now in such a position. In short, I warmly welcome clause 11.

On the current drafting, the failure to make provision for a tapered withdrawal of the 10% transferable allowance is an oversight that should be corrected for fairly obvious reasons. I very much hope that the Exchequer Secretary will put that right through a Government amendment on Report.

I congratulate the Prime Minister and Chancellor on introducing this seminal provision. I very much hope that the whole House will recognise its significance in qualifying the individualism of our tax system and reinserting some recognition of the importance of family responsibility. It is a first step that will help to make the option of marriage less inaccessible to those on average and below-average incomes, because it is about social equity as well. We must build on it in the next Parliament; and with a majority Conservative Government, we will.

[Alison Seabeck]

It is always interesting to follow the hon. Member for Peterborough (Mr Jackson). He and I have recently campaigned jointly on the future of our Land Registry offices, but I am afraid that we will be in different Lobbies this afternoon. I cannot agree with his assessment of the value of this tax change for a range of reasons.

Like many measures introduced by this Government, this one is disingenuous at best. It was brought forward to a fanfare of trumpets, after a great deal of pressure from Conservative Back Benchers, but it is basically unfair. I pick up a sense of that unfairness, which is driven through the tax system, when I do a street surgery every Saturday and in my postbag. That unfairness is what the public have the greatest problem with, whether in relation to the tax system or to other Government changes. It is also indicative of the problems we have seen in the House this week. We in this place do not read the public mood as well as we ought to at times, and this measure is yet another example of that problem.

[Mr Burrowes]

The hon. Lady is talking about fairness. Who is it fair for—the 80% of people in the OECD area who live in countries that recognise marriage in the tax system, or the 20% who live in countries that do not?

[Alison Seabeck]

Plymouth has one of the largest percentages of single parents in the country—I will return to that point—and my constituents think that the measure is unfair. How people in other countries view it is entirely up to them, but I can tell the hon. Gentleman that my constituents do not see it as fair.

The transferable allowance—a tax break of about £1,000—discriminates against millions of families, especially those headed by single parents, as well as against non-married couples. We know from the Office for National Statistics that there are about 2 million single-parent households. They find life complicated enough at the moment. They are being hit with the bedroom tax, while some will definitely not benefit from this tax change, and most feel that this Government are not on their side. They face the same challenges as married couples with children, but they face them alone. They have to survive on one income, and they are mostly not single parents from choice. Sadly, death, divorce and separation take their toll on relationships, and financial pressures mount in every one of those circumstances. What have this Government done? They have introduced a measure that will favour just a third of couples and just one in six families with children.

I am almost speechless about this measure. My hon. Friend the Member for Newcastle upon Tyne North (Catherine McKinnell) drew attention to the fact that men will benefit from it far more than women. She highlighted other areas in which men have disproportionately benefited from changes brought in by this Government—this predictably male-dominated Government—and that fact has not been lost on the electorate. Quite frankly, women feel that, for some reason or other, they are becoming second-class citizens in tax terms and all other terms. I am picking that up on the doorstep, and my guess is that we will see it reflected in the ballot box in the elections ahead.

As I said, my constituency has an above-average number of single parents—roughly 38%—who, as I am sure other hon. Members will acknowledge, are struggling to make ends meet. It is wrong for the Government to encourage one type of relationship over another. The policy discriminates against widows, single parents and couples who both work, as well as parents who choose not to marry. Importantly, this tax break might discriminate against children who grow up in single-parent families, and against adults who leave abusive relationships.

In its recent report, “The Home Front”, Demos has argued:

“Evidence shows that it is the quality of relationships rather than relationship status which has the greater effect on…children’s outcomes. There is no evidence of a ‘marriage effect’, rather marriage is probably a proxy for more successful relationships… many married couples do not have children, making this proposal both moralising and inefficient, as it draws resources away from some of the most at-risk families.”

This is a tax change to please the Tory few, but it discriminates against millions of hard-working families. It should be scrapped. We should support the amendment, which demands a closer look at and a review of the measure’s impact, so I will support my hon. Friend in the Lobby this afternoon.

[Tim Loughton]

I do not think that the Opposition are being honest with us. Last week, they tabled a reasoned amendment declining to give the Bill a Second Reading, one reason being that

“it offers a marriage tax allowance which will help only a third of married couples, rather than a 10 pence starting rate of tax which would help millions more families”.

Coming from a party that dispensed with a 10p tax rate when it was in government, those reasons show inconsistency and brass neck, while the opening speech of the hon. Member for Newcastle upon Tyne North (Catherine McKinnell) made a good case for extending the transferable married couple’s tax allowance to make it fairer and more inclusive.

Amendment 3 does not offer outright opposition. It is a fudged amendment, which calls for a review, including

“a calculation of the proportion of married couples and civil partners who are eligible…;…an assessment of the impact…;…the cost to the Exchequer…; and…an assessment of alternative tax reliefs”.

For starters, we know all that. There is a contrast between that and the Labour Opposition’s new clause 1 on child care provision, which was considered yesterday. It asked for a different sort of tax relief or public subsidy, but it did not have any conditions attached to it about a review after six months, a calculation of the proportion of people who benefit, or an assessment of its impact.

The Opposition are entirely disingenuous and inconsistent. Why do they not just come out and say, “We fundamentally—completely and utterly—disagree with and oppose the concept of transferable married couple’s tax allowances”? Why have they not done so in the amendment that we are debating? That would have been more honest, and we could then have had a proper debate. I think that the Opposition are being disingenuous.

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

On the subject of inconsistency, the hon. Gentleman voted against giving same-sex couples the right to marry, so having opposed that union, does he now support their having a tax break?

14:00

[Tim Loughton]

During consideration of last year’s Finance Bill, when my hon. Friends and I put forward in an amendment the concept of the married couple’s tax allowance—the hon. Lady can look this up in the record—I specifically said that the allowance would apply both to civil partnerships and to married couples on enactment. That has never been in question, and the allowance should be absolutely consistent. The law now, however I may have voted, is that we recognise same-sex marriages and that the tax and benefit advantages that go with marriage must be applied to those new circumstances. That is not an issue. There are many issues that we may debate, but that is not one of them.

The Labour party did not and continues not to recognise marriage in the tax and benefit system. Labour chooses to ignore the fact that marriage, whether we like it or not, happens to be the most stable environment in which to bring up children. I was slightly surprised by the lengthy contribution of the hon. Member for Newcastle upon Tyne North because, given her previous role as shadow children’s Minister and her great interest and expertise in that area, she did not once elaborate on the benefit for children of an arrangement such as we are seeking to introduce. As far as I am concerned, the heart of what we should be achieving is the creation of greater stability for children, and it so happens that marriages do that best of all.

[Catherine McKinnell]

The Opposition are committed to supporting families and children. The fact is that this marriage tax allowance benefits only one in six households with children and only one in three marriages. Although the hon. Gentleman is making a passionate speech, the policy completely fails to address the issue.

[Tim Loughton]

That is a good reason for going further. The debut of a married couple’s tax allowance in this Bill is a starting point, and it is the first recognition of marriage in this country’s tax and benefit system. I would like to include many more married couples, particularly concentrating on those with children under the age of five. That is where the allowance can have the greatest impact. We need to provide the greatest stability for young children in their most formative and impressionable years.

[Mr Burrowes]

The married couple’s tax allowance is a starting point, but I want to revise my hon. Friend’s description of this being its debut. Marriage was recognised in the tax system until 2000. We are only properly restoring what countries across the world, including more than 80% of European countries, recognise. We are simply going back to what was the case. We should not have moved away from that recognition in the first place.

[Tim Loughton]

My hon. Friend is right. He has been a pioneer in this area for a long time. The previous Government abolished the recognition, and they had 13 years to try to do something about recognising families in the tax system. Despite the easy words of the hon. Member for Newcastle upon Tyne North, the previous Government did absolutely nothing in practice. That is the record on which they should be judged.

[Jenny Chapman (Darlington) (Lab)]

If the hon. Member for Enfield, Southgate (Mr Burrowes) is correct about his party being pro-marriage and wanting to prevent divorce, how does he account for the decline of divorce between 2003 and 2009? The divorce rate only started to go up again after 2010.

[Tim Loughton]

Very simply, because the number of marriages went down. The change in the divorce rate is a simple statistical manifestation of the number of marriages.

The Liberal Democrats, who are heroically represented here today by the lone star hon. Member for Redcar (Ian Swales), have perhaps been more honest about the married couple’s tax allowance, which they have never supported. Their leader has some bizarre reasons for not supporting it, but they have been absolutely honest. If they had not been involved in some sort of deal, of which we are completely oblivious, they might have been here to vote against the measure, and of course we are very disappointed that they are not here.

The measure will benefit 4 million couples, including 15,000 in civil partnerships and hopefully a good many who adopt the new status that the hon. Member for East Lothian (Fiona O'Donnell) mentioned earlier. My hon. Friends and I welcome the last-minute inclusion of the transferable married couple’s tax allowance in this Finance Bill. The allowance was promised in our manifesto, and it will initially be worth up to £210, but I contrast that with the up to £10,000-worth of subsidies rightly being made available for child care assistance—albeit that that will be available also for higher rate taxpayers whose household earnings may be as high as £300,000—which is still very far from a level playing field. That is why some of us, when the economy has recovered to the extent that it needs to recover after the car crash of 13 years under Labour, ultimately want to see a fully transferable married couple’s tax allowance—the full £10,500-worth, not just 10%. The married couple’s tax allowance is linked to the personal allowance in the Bill.

[Ian Swales]

As with other Government Members, the hon. Gentleman is making a passionate case, but we are considering the detail of the policy. Is he not concerned that the policy will effectively introduce a new 20% tax rate below the personal allowance as the married couple’s tax allowance is progressively withdrawn on the second earner between £9,500 and £10,500?

[Tim Loughton]

My hon. Friend the Member for Peterborough (Mr Jackson) addressed some of those problems, which I hope my hon. Friends on the Treasury Bench will consider as the Bill progresses. Perhaps they can come back with an amendment either in Committee or on Report.

[Helen Goodman (Bishop Auckland) (Lab)]

Will the hon. Gentleman give way?

[Tim Loughton]

I am being terribly generous, but of course I will give way.

[Helen Goodman]

The hon. Gentleman is being most generous. He mentioned that his long-term aspiration is for the transferable allowance to be extended to the full £10,000 of the personal allowance. Does he know what the distributional implications of that would be?

[Tim Loughton]

Interestingly, the Joseph Rowntree Foundation has done a lot of work in that area—this also relates to what the hon. Member for Stretford and Urmston (Kate Green) said about child poverty—and its report states:

“The risk of poverty is much higher for children in couple families where only one parent works; sole earner families account for a significant minority of poor families with children. Many fathers”—

this applies to mothers, too—

“have to work long hours, making it harder for them to get involved in family life and more difficult for mothers to work. To enable more low-income families to have both partners in work”.

The Joseph Rowntree Foundation makes a case for why such recognition helps lower paid families, too. My long-term aspiration is that we should fully extend the allowance, but at this stage, as I stated in my proposed amendment to last year’s Finance Bill, I would like us to concentrate on families with children under the age of five. If it meant that we could extend a more generous allowance to families with children under that age, I would be happy for the allowance not to extend to married couples generally. Such an amendment has been costed at between £700 million and £750 million, which is affordable in the context of what else is happening.

[Fiona O'Donnell]

What is the hon. Gentleman’s definition of a family? He keeps talking about families, rather than married couples with children. Does he consider a family—I hope this is not what he intends—only to be one in which a couple is married?

[Tim Loughton]

I am talking about married couples, which now take different forms. As we have already discussed, the definition includes same-sex marriages, civil partnerships and conventionally married couples. That is to whom the allowance should apply, which has never been in doubt. The allowance is about making it easier for parents to choose the best way to bring up their children. Frankly, it is insulting to describe the measure as discriminating against single parents.

[Alison Seabeck]

Will the hon. Gentleman give way?

[Tim Loughton]

I am about to address the hon. Lady’s point. She may then want to intervene.

Most single parents are not single parents by design or intention. Many are single parents because they have been deserted, subjected to violence or for other reasons, and they are doing an incredible job of bringing up children in very difficult circumstances. We are doing things for them and we probably need to do more for many of them. However, that should not preclude our wanting to do more for people who get no recognition whatever in the tax system, who are also often bringing up children in difficult circumstances. Just because one is in favour of introducing a transferable married couple’s tax allowance, the implication is not that one is in some way against people who happen to be single parents or to be bringing up children on their own. It is a typical Labour argument that if someone is for something, they must be against something else. This is about achieving a much more level playing field for people who choose to engage in a relationship of marriage.

[Alison Seabeck]

I thank the hon. Gentleman for giving way. If he will allow me, I will read a text that I have received from one of my constituents. She says:

“As one of YOUR 38%…nonsense I and kids should be disadvantaged because I chose to leave abusive relationship and bring them up alone in happy home!”

I am really sorry, but that is the view of the public on this measure.

[Tim Loughton]

That is the view of one constituent who has not yet listened to the whole debate. Introducing a married couple’s transferable tax allowance in no way disadvantages that constituent. [Interruption.] In what way is she financially disadvantaged? It is a typical Labour response to say that if someone is in favour of something, they must be anti something else. I am in favour of doing a lot more for constituents who find themselves in that position through no fault of their own and who need help, support and recognition. However, there are also many married couples who need support in bringing up their children, often in difficult circumstances. Just because we want to help them, it does not mean that we are disadvantaging somebody else.

[Andrew Selous]

Of course, everyone in every part of this House is against abuse in any type of relationship. If we want to reduce abuse, does my hon. Friend agree that we should recognise that women and children are significantly more vulnerable to violence and neglect in cohabiting families than in married families? What we are doing today is part of addressing that issue.

[Tim Loughton]

My hon. Friend has done a great amount of work on this issue and there is a much bigger picture.

This policy is popular among the public. It is popular with a majority of Labour voters. It is even popular with an awful lot of Liberal Democrat voters, despite that party’s policy being against it. Last May, the Liberal Democrat Secretary of State for Business, Innovation and Skills attacked the “prejudice” directed at stay-at-home mothers. I am sure that he would have included stay-at-home fathers to be inclusive. It is deeply insulting to the many millions of married couples who have decided to make a lifelong commitment to each other that is recognised in law in front of their family and friends to suggest that we are discriminating in some way against other people.

Some 90% of young people aspire to get married. Some 75% of cohabiting couples under the age of 35 also aspire to get married. There are many forms of family in the 21st century and many people do a fantastic job of keeping their families together and bringing up children, often in difficult circumstances. However, as many of my hon. Friends have said, almost uniquely among the large OECD economies, the UK does not recognise the commitment and stability of marriage in the tax system until one partner dies. Worse still, one-earner married couples on an average wage with two children face a tax burden that is 45% greater than the OECD average, and that gap continues to widen.

To introduce such a recognition of marriage, particularly in the modest form suggested in the Bill, is not to disparage parents who find themselves single through no fault of their own, nor to undermine couples with two hard-working parents, all of whom rightly get help and support from the state in other forms and for whom we might need to do more. Uniquely, married couples, civil partners and same-sex marriage partners are discriminated against in our tax system.

[Mr Stewart Jackson]

My hon. Friend is making a powerful and fluent case. He spoke about the popularity of the policy with Labour voters. Is it not also the case that significant polling evidence shows that young people across all classes, ethnicities and races support the institution of marriage and hope one day to be part of it?

14:15

[Tim Loughton]

Absolutely. It sends out a very poor message to those people for Labour to say that marriage is very nice, but we will not recognise it in the tax and benefit system.

Frankly, it is those who oppose this measure—we have heard them again today—as some sort of 1950s throwback who are being judgmental about how certain people choose to live in their relationships. Disgracefully, they are seeking to pit working mothers and dads against stay-at-home mothers and dads, who are no less, and often more, hard-working. That certainly applies to the increasing number of stay-at-home dads who have made a conscious decision to give up a career because they think that is how they can best bring up their children. The state should respect that.

My support for a transferable married couple’s tax allowance has never been based on a moral stance on types of relationship. My concern, as one might expect from someone who formerly had responsibility in government for children, has always been based on what is best for children. That is why I favour the allowance for families with young children.

Quite simply, if a 15-year-old is living at home with both parents, there is a 97% likelihood that their parents will be married. There is a one in 10 chance that married parents will split up by the time their child reaches five, but a one in three chance that unmarried, cohabiting parents will split up by that time. As the Centre for Social Justice has shown, those who do not grow up in two-parent, married families are 75% more likely to fail at school and 70% more likely to be involved with drugs or to have alcohol problems. The Joseph Rowntree Foundation, which I have already quoted, has identified poorer outcomes for children from separating families. Importantly, a stable home can raise a child’s chances of escaping the poverty trap by 82%. Let us not forget that family breakdown, the prevention of which is the thrust behind this measure, is costing us £46 billion. That is about £1,460 for every taxpayer in this country every year. Marriage accounts for 54% of births but only 20% of break-ups among families with children under the age of five.

I am therefore surprised that nowhere in any of the contributions from Labour Members in support of the amendment did they touch on the outcome for children. That is the most important target at which the measure is aimed. The poorest 20% of married couples are more stable than all but the richest 20% of cohabiting couples, as my hon. Friend the Member for Peterborough (Mr Jackson) said.

Clause 11 alone will not solve all the problems I have set out. I am not naive enough to suggest that £210, or whatever the result is, will represent the difference between staying married and getting divorced or between getting married and cohabiting. However, it does send out the clear and strong message that we value couples who take the decision to bring up their children within marriage. There is a need to address the lack of a level playing field in bringing up children between couples who are not married and those who are. There are 2.2 million households in which one partner is in full-time work and the other is not earning. Those households include 1.2 million children and 700,000 of them include a youngest child who is under the age of five. Those are the families we should start with. Those are the families who deserve our support and recognition most of all. This clause, at last, goes some way towards rectifying that.

[Steve McCabe]

I support the amendment and oppose clause 11. I fear that the clause shows all that is wrong with the modern Tory party. It is based on an illusion—the idea that the Tory party has some special affection for marriage that is shown in its policy actions. Conservative Members have been keen to say that Labour was wrong not introduce such a measure during our 13 years in government, but of course we were not wrong. Had we done so, we would have got into exactly the same mess the Government are in today. We would have been perpetrating a con on the electorate by pretending a level of support for married couples and families with children that our policy simply could not deliver. I have a great deal of respect for the hon. Member for East Worthing and Shoreham (Tim Loughton), but we have heard that he suffers from that delusion. He thinks that he is helping people with children, but in fact he is helping a narrow band of those people.

As we have heard, the policy is not a general recognition of marriage in the tax system. It is a policy for a few married couples and some in civil partnerships—perhaps as few as 3.4 million of the UK’s 12.4 million couples who are married or in civil partnerships. In some ways it is a classic coalition policy, because it does not really satisfy anyone. Those in the Tory party who favour traditional marriage never intended that the tax relief should go to those in civil partnerships—that was not what they were arguing for at the outset. [Hon. Members: “Yes, it was.”] No, it wasn’t. If Conservative Members want to tell me that the hon. Member for Aldershot (Sir Gerald Howarth) is a keen advocate of civil partnerships, I guess that they have missed his speeches and blogs in recent years.

[Mr Burrowes]

I am not sure whether the hon. Gentleman wants to look at his party’s manifesto, but if he looks at ours, he will see that it made a clear promise to the electorate that we are keeping today.

[Steve McCabe]

I am happy to say that I have looked at the Conservatives’ manifesto, and it did not spell out the narrow band of people whom they intended to benefit. It created the pretence that they would help all married couples. The hon. Gentleman has persistently said during the debate that everywhere else offers the system that we are discussing, but I looked it up while he was talking, and New Zealand, Sweden, Finland, Greece and Hungary do not have it, so his “everywhere else” may be wrong.

[Alison Seabeck]

Does my hon. Friend share my concern that the new Financial Secretary to the Treasury and Minister for Women voted against same-sex marriage, and therefore takes a slightly ambiguous position on the matter?

[Steve McCabe]

I am afraid that is true. I know that some people will not be comfortable with having to be reminded of that, but it happens to be the case.

To return to the point that the Government’s position is slightly misleading, we know that the Prime Minister himself has been confused about it. Like his hon. Friends, he thought that he was introducing a policy for all married couples paying the basic rate of tax. I can imagine that, in this day and age, it is pretty hard for the poor Prime Minister to keep up with the all the shifts and machinations in his Government, but surely there is something wrong with a policy that deludes even the Prime Minister into thinking he is giving a tax break to all married couples paying the basic rate, which he is not. Thank goodness we have had the opportunity to set the record straight in this debate; otherwise the poor man might have gone around the country perpetrating that calumny. People might have begun to doubt his work on other things, as well—his whole judgment might have come into question. Thank goodness we have had the chance to challenge that idea.

We certainly need to review the policy, because were it to be extended to the nearly 9 million married couples who pay the basic rate of tax, as the Prime Minister implied, it would cost considerably more than the Chancellor’s projections. For that reason alone our amendment, which asks for a review, is crucial. We need to know exactly what the policy will cost and what it would cost were it to meet the Prime Minister’s aspirations.

As we have heard, the policy will give £200 back to 3.4 million couples, but other Government policies will have made the average family £974 a year worse off by the time of the election. Some 85% of the tax allowance will go to men. Perhaps that harks back to the good old days of Tory marriage—I do not know—but in this day and age I do not think the policy will be broadly accepted by women up and down the country. As we have heard, it will not be available to married couples whose income falls below the personal allowance. [Interruption.] I think the hon. Member for Suffolk Coastal (Dr Coffey) has something stuck in her throat. If she wants to intervene, I—

[Dr Thérèse Coffey]

rose—

[Steve McCabe]

Hang on, you have to wait until you are invited.

[The Chairman of Ways and Means (Mr Lindsay Hoyle)]

Order. We are not having two Members on their feet. Let us see if I can help—Mr McCabe, are you giving way?

[Steve McCabe]

I think I will give the hon. Lady her chance.

[Dr Coffey]

I thank the hon. Gentleman. This point has been made before, but we cannot have such a recognition in the tax system for people who do not pay tax. However, the Government have taken many other measures for them, including ensuring that Labour’s fuel duty escalator did not operate. If it had, fuel would be 90p a gallon more, or £450 a year for the average household.

[Steve McCabe]

The hon. Lady is right, and Government Members have attempted to make that point before. She is absolutely right that the VAT rise put enormous pressure on both petrol costs and all sorts of other family incomes.

At its best, the Government’s measure will reward about 3.4 million of the country’s couples who are married or in civil partnerships with £4 a week. That is the figure from the Institute for Fiscal Studies, but if the Government have better figures and want to challenge the IFS, that will be welcome. I would be interested to know not only the cost of the tax relief but the administrative costs of a £4 a week benefit for 3.4 million couples. It does not strike me as the best way to reduce the overall costs of tax collection or harmonise the system.

As was acknowledged earlier, the transfer of allowances reintroduces an element of joint taxation, a measure that the Tory party sought to abolish when it moved to individual taxation as long ago as 1990. The hon. Member for Enfield, Southgate (Mr Burrowes) talked about all the countries that recognise marriage, but the move to individual taxation is a much bigger trend in tax systems across the world. It seems to me that it is the Tory party that is moving in the wrong direction, because as we have heard in this debate, Conservative Members want to move to a fully transferrable tax system. They want to go back to the days of old, and that is exactly what they are going to do. [Interruption.] I think the hon. Member for East Worthing and Shoreham has something to say. Would he like me to give way to him?

[Tim Loughton]

No.

[Steve McCabe]

Oh, he just wants to mutter in the corner. Well, nothing new there.

[Tim Loughton]

Okay, I will intervene.

[Steve McCabe]

Oh, he has changed his mind. He wants to mutter more loudly now.

[Tim Loughton]

The hon. Gentleman tantalises me too much. Will he undertake that, in the highly unlikely and disastrous event that there is a Labour-led Government after the next election, he wants this tax allowance to be abolished in their first Finance Bill, so that 3.4 million married couples—or 4 million or however many—will no longer benefit from it because of Labour’s warped priorities?

[Steve McCabe]

I have never thought of myself as someone who tempts the hon. Gentleman, but I can give a commitment that a Labour Government would move to a fair tax policy. That is what this is all about, which Conservative Members fail to recognise.

[Tim Loughton]

Is that a yes or a no?

[Steve McCabe]

As I said, I am in favour of fair tax. I say it again, so that the hon. Gentleman understands. That is the problem with his party’s policy—it is unfair. If the policy is for only some civil partnerships and married couples, we could target it better. He and I share common ground on one group—people with children—whom we might want to help through the tax system. However, how on earth have we got into a situation in which only 1.4 million couples with children benefit from a proposal? That is an example of a policy that completely fails to do what he would like.

14:30

I agree entirely with many of the Tory MPs who wrote to The Daily Telegraph about the policy in one respect: the benefits of marriage to society do not depend on one’s tax code. It is a failing to make that judgment—it is failing that means that we exclude widows, single parents, deserted mothers and cohabiting couples. They have the same right to benefit from the Government and the tax system but are excluded. That is why the policy is wrong. A Government can do many good things to encourage stable relationships and family life. Unfortunately, this policy is a phoney, misguided and poorly targeted measure. It simply is not one of the good things that we could do.

[Fiona Bruce]

I support clause 11, and acknowledge and support the excellent speeches made by my hon. Friends the Members for Peterborough (Mr Jackson) and for East Worthing and Shoreham (Tim Loughton). I support marriage, not for moral, religious or ethical reasons, but because, as they said, and as all the evidence shows—I shall provide evidence shortly and will not be deterred by the fact that others have quoted it—marriage promotes stability, security and better life outcomes for children; improves health and well-being for the parties to the marriages, notably as they age; and strengthens the wider community, as those in married families are more likely to be actively involved in it.

The Opposition, as the debate has shown, do not get it that the proposal benefits not only those couples who will receive the allowance, but the much wider society. Supporting the proposal, and supporting marriage through the tax system, is a matter of social justice. Underlying so many social problems that the country faces is the problem of family breakdown and, in particular, family breakdown outside marriage. Many hon. Members are reluctant to talk about that for fear of being branded judgmental, but the fact is that helping to strengthen health and well-being through supporting marriage is to help to tackle a key, root cause—relationship breakdown—of so many contemporary problems, such as addiction, abuse and mental health issues, and the increasing problem of acute loneliness, especially in old age.

The proposal is even more a matter of social justice because, as the Centre for Social Justice reports, indications show that, whatever the liberal press might say, the better off in our society get the fact that the benefits of marriage are worth buying into and are marrying while the less well off are increasingly not getting married. According to the CSJ, that is causing a widening gulf between better-off married people and less well-off unmarried people. The latter do not access the health and well-being benefits that I and other hon. Members have mentioned and that marriage can bring. Rather, they are falling into an increasing cycle of negative outcomes and social instability, which is inter-generational. If we really care about building a society that promotes social equality rather than inequality, and one that offers a key route out of poverty for those who may otherwise be trapped within it, and if we are really serious about social justice, one key policy is backing marriage.

As my hon. Friends the Members for Peterborough and for East Worthing and Shoreham have stated, the statistics are stark. Children aged five are five times more likely not to be living with both parents if their parents are not married. The position is far worse for children aged 15. Women and children are significantly more vulnerable to violence in unmarried families. Teenagers living outside married family relationships have much higher delinquency rates than others. Seventy per cent. of young offenders come from unmarried families. The prevalence of mental health issues among children living outside married family relationships is 75% higher than among children of married parents.

[Fiona O'Donnell]

Does the hon. Lady believe that, if a tax break acts as an incentive or a reward, more couples would marry, and that those problems would then go away?

[Fiona Bruce]

The measure sends out a clear marker from the Government that marriage works. That is why it is important. I absolutely agree that it will not be an incentive, but I hope it will be an encouragement. I hope it is a start that will be built upon.

On old age, 90% of all care beds in hospitals and care homes are occupied by unmarried men and women. Couples who separate and who have never been married are less likely to support each other in old age and, apparently, their children are less likely to support their elderly parents.

On the positive side, the commitment that marriage requires in terms of the emotional, economic and social investment in the relationship in turn generates security, health and longevity. As we have heard, even the poorest 20% of married couples are more stable than all but the richest 20% of cohabiting couples. The health gain from marriage could be as large as the benefit from giving up smoking, leading some researchers to suggest that, if marriage were a drug, it would be hailed as a miracle cure. I could continue, but the evidence is legion.

None of that is to suggest that all married families enjoy better outcomes than any single-parent family or cohabiting couple. Clearly, there are dysfunctional married families and successful single parents and cohabiting couples. However, the weight of evidence is firmly in favour of stable, publicly committed married families being the most beneficial structure.

[Steve McCabe]

I am interested in what the hon. Lady is saying. I am not exactly sure what the source of the evidence she quotes is, but does the evidence draw any distinction between the impact on married couples of whom both partners work and the impact on married couples of whom only one partner works? Has that distinction influenced this tax policy?

[Fiona Bruce]

This tax policy increases the opportunity for choice. Many mothers and fathers want to stay at home and do not want to go have to go out to work. I appreciate that the financial implications of the policy are small but, none the less, the policy says, “We value you and your role in society if you want to stay at home.”

If we are serious about finding effective solutions to community breakdown and to the poverty that blights parts of Britain characterised by family breakdown, educational failure, economic dependence, indebtedness and addictions, supporting marriage is one way to do so. The public support that, contrary to the view of the hon. Member for Plymouth, Moor View (Alison Seabeck), who is no longer in her place—[Interruption.] I apologise. She is in the Chamber, but in a different place. I endeavoured to intervene on her because, according to a YouGov poll, 85% of people support giving financial recognition to married couples through the tax system, and 83% of the public think that tackling family breakdown is important. Even more starkly, according to the Centre for Social Justice, half of lone mothers think it is important that children grow up with a father.

Yes, the proposal will cost the Exchequer—I believe the shadow Minister said it will cost some £550 million—but that is dwarfed by the cost of family breakdown which, in 2012, had risen to some £44 billion. It is estimated by the Relationships Foundation to have an equivalent cost to the UK taxpayer of £1,470 a year each. Of course, that figure is still rising—currently £46 billion and increasing.

Support for marriage, therefore, simply cannot be dismissed as giving money to those who are already comfortable. As we have heard, this proposal will disproportionately benefit those on the lower half of the income scale, but it is much more than that. It is a matter of social justice. Supporting marriage is progressive. It is the right thing to do, not only for individuals but for the beneficial public consequences it promotes. If arrangements have beneficial public consequences, such as good environmental conduct or saving for one’s pension, it is established practice that such public benefits are recognised by the tax system. So it should be with marriage.

[Bob Stewart (Beckenham) (Con)]

Is there any provision that would mean that people who have been together as a family—a man and a woman, with children—for a certain period of time, say five years, would be able to count in the same way as being married to get the tax break? The benefits would then be almost the same, would they not?

[Fiona Bruce]

The benefits that are proposed in this clause are for married couples. That is the way in which our society recognises a permanent and lifelong commitment that is intended by the parties.

Of course I would like to see more, but I welcome this positive start. I would like to see a department for families, a dedicated family policy across government and greater investment in relationship education for young people, both in school and later for those embarking on relationships or contemplating having a family. In the meantime, I fully support this proposal. It will encourage marriage and sends out an important signal that, for the first time in a long time from the Government, marriage is valued in our society—something the last Government never did. It places Britain in the position of recognising marriage in the tax system, whereas we were the only country in Europe not to do so. Is it any coincidence that the UK has one of the highest levels of family breakdown in Europe? We have to do what we can to change that, and this is one way. As the Prime Minister said, this change will provide support. Our support for families and marriage puts us on the side of a progressive politics and on the side of change that says, “We can stop social decline, we can fix our broken society and we can make this country a better place to live for everyone.”

[Helen Goodman]

I am pleased to follow the hon. Member for Congleton (Fiona Bruce) and I certainly will not yield one inch to her in the value I place on the importance of marriage. Like her, I am a member of the Mothers’ Union, the Church of England organisation that promotes and supports stable family life in this country. However, she is making a mistake. The undoubted benefits of stable relationships could be far better encouraged by the Government in several ways: if, for example, resources for tackling domestic violence were not being reduced; if, for example, we had compulsory sex and relationship education in schools that prepared people for healthy adult relationships; and if, for example, we had a decent child support system that did not incentivise the non-resident parent to ignore their responsibilities to their children, because that is what is happening. Instead of tackling those real problems, or looking at the factors that put families under stress—debt, long hours and zero-hours contracts—the hon. Lady ignores them. She does not understand that those factors are the cause of rows, tension and stress in families. If Government Members turned their attention to policies that would make a real difference, instead of faffing around with this fatuous married couple’s allowance, families would be a lot better off.

[Andrew Selous]

If this policy is so fatuous, why is it that more than 80% of the population covered by the OECD live in countries that recognise marriage in the tax system? Are they all completely wrong? Are they are all wedded to fatuous systems?

14:45

[Helen Goodman]

That is exactly the point that I was about to come on to. The hon. Member for East Worthing and Shoreham (Tim Loughton) said that we should place the well-being of children at the centre of this policy. That is a perfectly reasonable starting point for this debate, but which country is near the bottom of the UNICEF child well-being table and which is at the top? The country near the bottom is the UK: the country at the top is Denmark, which has the highest rate of single parenthood in Europe. It is at the top because it has a proper welfare state, decent child care and properly functioning systems so that people can look after their children properly. If we want to do something for children, we should have policies that promote the well-being of all children, not just a small minority of children who happen to live in a particular family structure.

The hon. Member for East Worthing and Shoreham asked, “Why do Opposition Members suggest that just because you are in favour of marriage, you are against other patterns of family life?” That is not my view. I am in favour of traditional families, as I have said, but I also think that we need to support all families. The reason we are concerned about this policy is—as the hon. Gentleman should understand—that we can only spend the money once. We cannot spend it twice or thrice over—[Interruption.] Government Members talk a good talk, but they do not seem to understand the practical implications.

People in this country are facing a severe cost of living crisis. We are seeing an increase in the number of children living in absolute poverty. More than 600,000 families are going to food banks. If hon. Members had any real concern for child well-being, they would address those issues, not come here proposing £700 million of expenditure on a tiny group.

[Andrew Selous]

Those of us on the Government Benches care deeply about child poverty, and we believe that family breakdown is a cause of child poverty. By trying to deal with breakdown, we are dealing with a severe cause of child poverty.

[Helen Goodman]

If the hon. Gentleman would pause for a second, he must surely understand that giving people an extra £200 a year is not likely to enable them to continue their marriages when they are under stress. It does not make sense. For £4 a week, the couple could not even have a pint of beer together. The whole thing is absurd—

[Tim Loughton]

It should be higher.

[Helen Goodman]

The hon. Gentleman says that, but the policy is not well targeted. The transferable marriage tax allowance will help just one third of married couples. If we scrapped this allowance and had a mansion tax on homes worth more than £2 million, we could have a tax cut of £100 for 24 million people.

This allowance will go to a third of married couples, and 85% of the benefit will go to men, not to women. Only one in six families with children will get it, and families will only get it if they have only one earner in the family. My test for whether or not this is a good policy is a conversation I had with a constituent of mine recently. She is a shop worker in a supermarket and works 16 hours a week. She has two school-age children. Her husband is not working, because he had an industrial injury. He is on employment and support allowance which, under this Government, will come to an end after 365 days. I simply do not know how a family of four can be expected to live on 16 hours at minimum wage and two lots of child benefit. She cannot. She will lose her tax credits, because she cannot get a shift to increase her hours to 24 a week. Instead of dealing with people like that, who are doing the most responsible things and struggling against all the odds, we have this totally mis-targeted transferable allowance proposal. The Chancellor does not agree with it and the Prime Minister does not agree with it, so why are they doing it? They have made it absolutely clear, in all discussions, that this is about seeing off the Tory right.

I am sorry that the right hon. Member for Haltemprice and Howden (Mr Davis) is not in the Chamber. He had three articles on this subject in the newspapers this morning. The one in The Times is headlined, “Davis the kingmaker plots the next leadership challenge”. He wrote an article for the Daily Mail online promoting large-scale new breaks for married couples and making many of the points we have heard repeated by less elevated hon. Members this afternoon. Let us look at the response the article received from the public; they are not Guardianistas, but people reading the Daily Mail:

“No…I do not want my taxes going to ‘stay at home’ (eg gym/lunch/shopping) women. I want them to go to help vulnerable, disadvantaged people, not the ‘I’ll park my 4x4 on the pavement even if it inconveniences other people’ bunch. Bad idea.”

Another comment reads:

“This is ridiculous. Surely tax should be calculated on household income rather than basing this on a wife staying at home…some people are carers for the elderly, some are in full time education - just focusing on stay-at-home mums is very unfair.”

Then there is this:

“Thanks to this government telling us what we must believe and what we must not believe…This whole article is politically and socially incorrect and out of date.”

I do not think that this proposal will deliver the political benefits that Government Members are hoping for. It certainly will not deliver the social and economic benefit.

When I was first elected to this House, I sat on the Finance Bill Public Bill Committee with the Exchequer Secretary, the hon. Member for South West Hertfordshire (Mr Gauke). Throughout the Committee’s proceedings he told us, on many issues, what Mrs Gauke thought. I hope we will hear what Mrs Gauke thinks this afternoon.

[Andrew Selous]

I speak as the chair of the all-party group on strengthening couple relationships. Family stability lies at the heart of this debate, and I was pleased to hear the hon. Member for Newcastle upon Tyne North (Catherine McKinnell) say that she is a supporter of marriage.

This proposal is one of a range Government policies. The Government have put £30 million into strengthening relationship support. For the first time ever, the Department for Work and Pensions is conducting a family stability review. The good news is that family stability is increasing and strengthening, by a bit in the most recent figures. The scariest statistic in this whole area is that by the time children born today are 15, roughly half will see their parents separate. That saddens me hugely. My own parents divorced and I am very much less than a perfect husband myself—none of us is perfect. We all bring our baggage and personal experiences to these issues, so I understand the emotion on both sides of the House. We need to speak with care and moderation. When I look at the pain experienced by the children of friends of mine who are going through divorce, there is something that makes me want to try to do everything possible to increase family stability and reduce family breakdown.

I will not regale hon. Members with many figures, but I will mention the UK’s biggest household study, “Understanding Society, the UK household longitudinal study” by the university of Essex. Most academics and researchers in this area respect it as one of the most authoritative studies. It shows us that 93% of 13 to 15-year-olds whose parents are still together are living with parents who are married. I am not making that up or making a judgment on anyone; I am merely presenting the House with the facts. There may be many reasons for that, and I accept that there are cause and effect arguments both ways. I accept absolutely that poverty is a cause of breakdown, but I also accept that strong families are a bulwark against poverty.

We should use every tool in the box to try to strengthen family life for everyone, whatever relationship they are in at the moment. We need to care deeply about the 38% of constituents of the hon. Member for Plymouth, Moor View (Alison Seabeck). I want to strengthen family life for everyone. Some of the relationship support money that the Government have put forward will be for her constituents. The work we are doing on the family stability review will be for her constituents. I wish these debates did not become quite so heated, because I can assure her that Government Members who support this measure are for everyone—we are for all her constituents as well. We will defend the measures for everyone in the tax and benefit system—child benefit and child tax credits—because we recognise the important part that marriage plays in family stability. I do not want Opposition Members to think that this is a divisive policy. We are bringing this forward as part of a suite of measures to try to do deal with an epidemic of family breakdown in this country and because we want to do something to promote family stability.

As we look at other countries, we see that this is not an outlandish or an unusual thing to do. In fact, the UK is the odd country out in the OECD. Across OECD countries, Mexico is the only other large economy not to have any recognition of marriage in the tax and benefit system. We have tax benefits for all sorts of policies. We have tax benefits for Christmas parties. Just because we favour a firm providing for Christmas parties does not mean that we are against Muslims, Sikhs or Hindus who might not choose to celebrate. It is just something we recognise. We have tax policies that support people parking their bicycles at work. Just because we favour people bicycling to work does not mean that we are against people who come to work in cars or scooters, or who walk, or take the train or the bus. We need to get out of the mentality that, because we are introducing a tax break for an institution we know is good for family stability, we are being in any way divisive.

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

The hon. Gentleman talks about family breakdown. Has he made an estimate of how many families will break down because of the bedroom tax, which is an awful policy? Could this money be used to scrap it?

[Andrew Selous]

There is relatively good news on the under-occupancy penalty. More families have been able to move, with nearly 200,000 one and two-bedroom properties available for families to move into. I have seen families who are better off because they are paying lower rent and lower heating bills, or are nearer a bus stop or a sick or disabled relative. We must remember the 1.7 million people on social housing waiting lists and the 300,000 people who are very overcrowded.

The general point the hon. Gentleman makes is of course important. There are many stresses on families today. The Government are cognisant of that fact and are introducing a whole suite of policies—freezing council tax and fuel duty, increasing the personal allowance and increasing the minimum wage—to try to make life easier for people. The good news on jobs and growth will also make things easier. We should not seek to divide people. As has already been said today, we know that over half of lone parents believe strongly that there should be both a mother and a father involved in bringing up children. That is something we need to remember as well.

I strongly support what the Government are doing. The sum can always be increased when the public finances allow it—at present, the Chancellor is playing with a limited amount of money—and we are returning to a policy that was well supported until 2000 and is common among OECD countries. I ask Members to focus on the widespread extent of family breakdown in our country, and to see this as one important policy for increasing the family stability which we know is so important to children.

15:00

[Jim Shannon (Strangford) (DUP)]

In the past, both here and in Westminster Hall, I have spoken frequently about issues such as child poverty, food poverty, benefits for single parents, social exclusion and other social problems. On this occasion, I want to express my support, and that of my party, for the married couple’s transferable tax allowance. We gave a manifesto commitment to support it in our Parliament, and we are pleased to be able to support it today as well.

I respect the opinions of Labour Members, and I do not wish to be divisive. I want always to be respectful to Members whose opinions may differ from mine. However, I have a hard-held opinion about this particular issue. I want to help everyone, but I think it is time that married couples had an opportunity to see some benefit from legislative change. Those who support the recognition of marriage in the tax system have waited a long time for the Government to introduce this policy. I expected it to be introduced a long time ago, in view of the Prime Minister’s enthusiasm for what was a headline manifesto commitment, but I am very pleased that, at long last, it is being introduced now.

We have heard some excellent speeches from Members on both sides of the House. I particularly commend the way in which the hon. Members for East Worthing and Shoreham (Tim Loughton) and for Peterborough (Mr Jackson) set the scene. I recall a debate in the House about two years ago to which the hon. Member for Congleton (Fiona Bruce) and I contributed. That was one of my early introductions to the cut and thrust of politics here. Most of the Members surrounding me opposed what I was saying, but I held fast to my opinion, and I am very pleased to be able to express it again today.

Let me begin by highlighting some of the powerful public policy benefits of marriage. I shall then explain why I consider clause 11 to be an appropriate public policy response, albeit rather modest—I should have liked to see more.

[Alison Seabeck]

As always, the hon. Gentleman is talking a great deal of common sense. Marriage is indeed something to which most people aspire. Let us be honest: it is a great institution. However—I think he was starting to make this point just now—the Bill is neither one thing nor another. It does not really achieve what most Government Members want, and it certainly does not deal with the concerns of Opposition Members. I should welcome his views on that.

[Jim Shannon]

As ever, the hon. Lady has made a very sensible intervention.

It is not the financial aspect of the clause that will be the convincing factor for those who wish to proceed with it. Personally, I see it as a recognition of those who are in a marital relationship, which is why I support it. Marriage is unquestionably a source of great benefit to adults, to children and to our communities in general: as others have said, there are extensive research findings to demonstrate that. Given the shortage of time, I shall highlight just some of the benefits of marriage to adult health, on the basis of evidence and statistics.

As has already been said today, the health gain from marriage may be equal to the benefit of giving up smoking. Of special interest to me, given the challenges presented by our ageing population, is the fact that marriage significantly limits hospital use. Those living with a spouse are less likely than others to enter an institution after the age of 60, because that person will be able to look after them and help them. For children, growing up with married parents is associated with better physical health in adulthood and increased longevity. There is a direct link between family breakdown—particularly separation from a biological parent—and future offending. I have not made those things up: they are facts, based on information that we have received.

Some Members have argued that marriage in itself is irrelevant, and that all the positive associations with it are driven by other factors, principally income. I must say that I find that argument particularly unconvincing. When one set of couples have thoughtfully embraced the cost of making an exclusive, lifelong commitment before the world, “forsaking all others, so help me God”—a commitment that is sealed in law—and another have just decided to move in together and see how it goes, is it any wonder that the first set of couples are likely to be, on average, more stable? That is not a reflection on those who cohabit, but it is a reflection of the statistics showing the commitment that we all make in a marital relationship.

Moreover, as others have noted, the Millennium Cohort Study has blown out of the water the idea that it all boils down to money. According to the study, the poorest 20% of married couples are more stable than all but the richest 20% of cohabiting couples. Finance is clearly not the motivator. However, recognition of the marital relationship by the Government through the transferrable tax allowance strikes me as a constructive way forward.

On 25 July this year, the hon. Members for Darlington (Jenny Chapman)—who has now left the Chamber—and for Blaenau Gwent (Nick Smith) will enter the happy union of marriage here in the House of Commons. Let me take this opportunity to wish them well, as others have already. It is good to know that marriage is alive and well in the House.

My concern is not with trying to persuade people to marry, but the evidence suggests that people who want to marry are not doing so because it is not an accessible option. As the Secretary of State for Work and Pensions said in his marriage week speech in 2011,

“When asked about their aspirations, young people are very clear: three quarters of those under 35 who are currently in cohabiting relationships want to get married, and some 90% of young people aspire to marriage”.

Those are very clear statistics. The Secretary of State continued:

“So perhaps the question we should be asking ourselves is this: if people from the youngest age aspire to make such a commitment in their lives, what stops them doing so?

Government cannot and should not try to lecture people or push them on this matter, but it is quite legitimate to ensure people have the opportunity to achieve their aspirations.”

[Ian Swales]

The hon. Gentleman is making a powerful speech, and I think that we have a unanimous view about the importance of marriage. Does he feel that the Government are communicating the details of the policy clearly enough for the young people about whom he is talking to understand whether it affects them or not? Many of them—for example, couples earning the minimum wage—will not be affected by it.

[Jim Shannon]

I cannot comment on the technical figures—no doubt the Minister will say something about them when he sums up the debate—but I understand the point that the hon. Gentleman has made. The Government clearly have much to do. Indeed, we all have much to do in putting forward our views, but let us hope that those who have an opportunity to enter into a marital relationship will be able to benefit financially as well.

Although 90% of young people aspire to marry, marriage rates are at an all-time low, while cohabitation rates are rising. The reason why that matters can be expressed in many ways, but I shall do so by employing language that the Treasury understands. The cost of family breakdown has risen to some £44 billion per annum, and crucially, according to the Centre for Social Justice, of every £7 spent on family breakdown amongst young families, £1 is spent on divorce, £4 is spent on unmarried dual-registered parents who separate, and £2 is spent on sole registered parents.

In this context it is absolutely imperative that the state does not place any unnecessary obstacles in the way of those who wish to marry, yet that is exactly what we do on many occasions. Since 2000 we have had a tax system that is very much in the minority internationally, as the hon. Member for Peterborough said. Just over a fifth of people in the OECD area live in countries that do not recognise marriage or have some kind of couple allowance. The vast majority of those people live in just two countries: the UK and Mexico. Research by Pearson and Binder published by the public policy charity CARE demonstrates that in this context the tax burden on a one-earner married couple with two children on average wage has been consistently much higher in this country than across the OECD on average. In 2012, the latest year for which there are comparable data, the tax burden on a UK one-earner married couple on average wage was 45% greater than the OECD average, up from 42% in 2011. Moreover this burden was a staggering 80.4% of that placed on a single person on the same wage while the comparable OECD figure was just 55%. Figures sometimes blind us to the issues, but these figures illustrate the issue of fairness and balance and show what the Government are trying to achieve through the legislative change before us.

In this context is it any wonder that rather than opting for marriage, couples are opting for other arrangements? Clause 11 will begin to put this right, but this is only a very limited, partially transferable allowance that, far from creating a level playing field, let alone a little nudge to opt for marriage, will instead only erode the incentive not to marry. Clause 11 is thus a hugely important first step; it is a foundation upon which we must build.

On 10 April 2010, when announcing the detail of the Conservative transferable allowance policy, which was then worth 11.6% of the personal allowance, the Prime Minister was clearly bothered that the package was not more generous. He indicated his wish to see more and, speaking on “Sky News”, he blamed the current fiscal constraints and said:

“Of course I want to go further and I am sure that over a Parliament we would be able to go further but this is a good first step.”

I believe this is a good first step. I am on record in my constituency as asking for this. I have done articles for my provincial press, supporting this option of the married transferable allowance. I believe today we have a chance to move towards that, and I hope this House will decide very positively and clearly on this.

It is clear that all we are going to get in this Parliament is a 10% transferable allowance. Many people will be watching to see the Prime Minister make good his commitment to go further in the next Parliament. Perhaps the Minister can confirm in his response in what ways the Government are committed to doing more in the next parliamentary term to introduce a fully transferable allowance. That must be the No. 1 income tax priority for the next Parliament.

[Mr Burrowes]

I very much welcome clause 11 and not the amendment in the name of the Opposition.

Before coming here I had an interview with children who are taking part in the BBC “Newsround” consideration of Prime Minister’s questions. I did not have an opportunity to ask them about the transferable allowance, but as they grow into adulthood I suspect they will look back on the proceedings here and think it rather odd that we are trying to put down dividing lines and divide along party lines on the basic issue of marriage being recognised in the tax system. They will think it rather odd that people are trying to pit one family relationship against another, when this is a very simple and moderate measure that is recognised across the world.

15:15

Those children will think it extraordinary that we have not previously corrected the situation and gone back to how things were. Historically—up until 2000—marriage was recognised and all we are doing is correcting an anomaly created by the Labour Government. Those children will think our position extraordinary, given that only 20% of people in OECD countries live in a nation that does not recognise marriage or the couple relationship in any way in the tax system, and they will say, “Why aren’t we going along”—as we thankfully will be—“with Australia, Austria, Belgium, Canada, the Czech Republic, Denmark, Iceland, Italy, Japan, Korea, the Netherlands, Slovakia, Spain, Turkey, Estonia, France, Germany, Ireland, Luxembourg, Norway, Poland, Portugal, Switzerland and the United States? Why have we for so long—since 2000—not been recognising marriage in the tax system?” The people living in those countries, seeing that marriage is recognised in the tax system, are not saying to themselves, “How dare you Governments recognise marriage! You’re discriminating against me because I am not in a married relationship.” They are just saying it is common sense, because they look at the evidence of international research and recognise the basic well-being for children that comes from being in families supported by marriage.

Not everyone is going to be married but everyone—whether married or not—can recognise, as I think we do across this House, that marriage is an important institution. Why do we not simply recognise it in the tax code?

As the hon. Member for Bishop Auckland (Helen Goodman) mentioned, certainly, we can support marriage in lots of other ways. If we are on the side of marriage, we are going to have to do more than simply recognise it in the tax system. That is not a magic wand that will simply transform the issue of family breakdown, which we are all concerned about and have seen in our constituencies. We need to do much more, such as by investing in marriage support before, when and after people get married. Sadly, sometimes people who have been married for 20 or 30 years or more consider ending their marriage. We need to do more to support people throughout marriage. We are not under any illusions here, but we must not try to put in place any false dividing lines.

If we look at the OECD averages, we have to recognise that we are out of kilter. In this country we are generous to single parents but not to married couples. This is not about creating a level playing field; it is simply about starting a process that other countries started many years ago and ensuring we get back into the mainstream.

Clause 11 is not about judging different relationships. The Opposition seek to pit married couples against single parents, and suggest that if we are for something, we must be against something else. That is not the case. We are simply saying, in a very moderate and measured way, what we are for. We are not saying we are against something, because we are not against other couples who conduct their relationships differently. They have freedom to choose, but this is clearly showing who is on the side of marriage.

The Opposition may say, “No, no—we support marriage and we recognise the institution of marriage,” as the Opposition spokesperson said, but at the end of the day we have to put our money where our mouth is. We know we have a division in respect of clause 11 and amendment 3 and the question is, “What are you putting your money on?” The Opposition are not putting their money on the side of marriage.

The reality is it does not matter what I think. It matters what our constituents think. We have heard a few anecdotal comments such as, “My constituent thinks this” or “My constituent thinks that”, but survey after survey shows that young people in particular, in their droves, aspire to marriage. If they have a look at these proceedings and see who has voted for and against, they will see where people have put their money and who is on the side of marriage, and they will know for sure the position of the Conservatives, the Democratic Unionists and others. Indeed, when a married tax allowance measure was moved by, I think, my hon. Friend the Member for Gainsborough (Sir Edward Leigh) during the passage of a previous Finance Bill, some souls—perhaps errant souls—on the Labour Benches supported it.

I make a call across the Benches: this issue should not divide us along party lines. I say, “Come on; show us where your money is. Do you support marriage?” Then, we will know by the end of today who is on the side of marriage.

[Catherine McKinnell]

We have said very clearly that, rather than giving this tax break to only a third of married couples—some hon. Members say they are in favour of marriage, but only certain types, where one partner in the marriage stays at home—we would put that money towards all married couples and, indeed, all taxpayers by reinstating the 10p tax rate, which would benefit all marriages and all children in those households too.

[Mr Burrowes]

I hear what the hon. Lady says, but I am afraid that will not wash with the electorate. The reality is that the Labour Government abolished recognising marriage in the tax system, and Labour now needs to make up that lost ground and join the mainstream in the other OECD countries and across the world. The Opposition need to recognise that people support marriage.

[Alison Seabeck]

The hon. Gentleman is robustly sticking to his guns. All young people aspire to marriage. I aspired to marriage when I was 17, and I thought that my marriage was going to last for ever, because that is what everyone hopes. Does the hon. Gentleman accept, however, that this tax change will not deal with the fact that people whose marriages break up after, say, five years will lose the tax break at that point? How is that fair, when they are still bringing up their children?

[Mr Burrowes]

As I said, we need to look at ways of supporting such couples to stay together, not least for the sake of their children. Too many children see their parents breaking up. We need to look at the evidence in support of marriage, because these decisions need to be based on evidence rather than on moral judgments. We have heard statistics relating to adults’ and children’s health and well-being, which I will not repeat. Members have talked about public health benefits, and mention has been made of smoking and other issues. Leading research has stated:

“If marriage were a drug it would be hailed as a miracle cure.”

Why are the Opposition so keen to avoid a basic measure to recognise marriage in the tax system? Members should not take my word for all this. Let us go across the Atlantic and hear what Barack Obama wrote in “The Audacity of Hope: Thoughts on Reclaiming the American Dream”:

“Many single moms—including the one who raised me—do a heroic job on behalf of their kids. Still, children living with single mothers are five times more likely to be poor than children in two-parent households. Children in single-parent homes are also more likely to drop out of school and become teen parents, even when income is factored out. And the evidence suggests that on average, children who live with both their biological mother and father do better than those who live in stepfamilies or with cohabiting partners.”

We have heard statistics to back that up today. Barack Obama went on to say:

“In light of these facts, policies that strengthen marriage for those who choose it…are sensible goals to pursue. For example, most people agree that neither federal welfare programs not the tax code should penalise married couples.”

He did not want to go against the Bush tax plan, and he recognised that it contained aspects of the Clinton welfare policies, but he wanted to ensure that proposals to reduce the marriage penalty would enjoy strong bipartisan support. It is a shame, given the bipartisan support for recognising marriage in the tax code across the Atlantic, that no such support exists here. We should learn the lessons and take a leaf out of the book of Barack Obama.

I mentioned that the children who were interviewed earlier for BBC “Newsround” would have been confused as to why anyone would disagree with this basic measure. Let us look at the recent history, since 2000, when marriage was not recognised in the tax system. We have heard many of the reasons behind the brokenness of Britain under Labour. One was the lack of recognition of the importance of marriage, not so much culturally as financially. That has certainly played a part, which is why there is a commitment at the heart of Conservative policy to reverse the 15 mistaken years of a system that did not recognise marriage.

One of the criticisms of transferable allowances for married couples is that they amount to giving a few privileged people a bribe to get married. It has been suggested that we are being discriminatory, but where is the discrimination in the tax system? According to the Institute for Fiscal Studies, the couple penalty facing those considering whether to marry is significant, at £44.70 a week, rising to over £85 per week for couples with children under 16. It is that group who have been discriminated against for many years. Our limited but important transferable allowance provision will begin to erode the discrimination and create a level playing field for those couples. Far from creating any kind of privilege, it will simply remedy an injustice that has been going on for 15 years in refusing to recognise the huge policy benefits of recognising marriage in the tax code.

We have heard that marriage is popular, but it is not popular only with a privileged minority. It is an aspiration that goes across social cohorts, and particularly among young people, 90% of whom aspire to marriage. Many of those people do not take up the opportunity to marry, however, and we need to look at the reasons for that. The transferrable allowance will not mean that all those people will suddenly get married. They will have to find an appropriate partner, for a start, and their marriage will of course be based primarily on love and being well-matched. The bottom line is an issue of social justice, however. Why are there particular barriers to marriage among poorer communities? People in those communities have just the same aspiration to marry, but fewer of them do so. We have to recognise that financial and cultural barriers are involved.

[Sir Edward Leigh (Gainsborough) (Con)]

No transferrable allowance will make anyone get married or stay married, or even encourage them to get married. The whole point is that when one person in a married couple—usually the woman—stays at home to look after the children, they are uniquely disadvantaged by the benefits system. This is simply a question of justice; we are righting an injustice in the benefits system.

[Mr Burrowes]

My hon. Friend is quite right. We are simply talking about justice. The Government need to take a lead in this area. The culture can change in many ways, but one way we can take a lead is through the introduction of a small financial instrument to recognise marriage in the tax system. That is what we are doing today, and it will help to bring about a change of character across the whole country.

[Sheila Gilmore]

For many poorer couples who are living together, whether they are married or not, the benefits system does indeed have a couples penalty. Would the hon. Gentleman be interested in campaigning to end that?

[Mr Burrowes]

If the hon. Lady looks at the Conservative party manifesto, she will see in it a recognition of the couples penalty. Sadly, there was no money left by the previous Government, but we want to do a great deal to correct that legacy of injustice that they left us. The couples penalty is one example among many. The discrimination is increasingly happening among couples with children, and the transferrable allowance will at least start to right those wrongs.

I am keen to give the House the opinions of others as well as my own. The Institute for Fiscal Studies has clearly demonstrated that the transferrable allowance is progressive, so I invite all those who support progressive policies to join us in the Lobby when we vote on this measure. It was suggested earlier that we are taking a partial view in relation to the IFS, but I understand that about 70% of the benefit will go to those in the lower half of the income distribution. I am not sure whether anyone has yet corrected the comments from the IFS. Anyone who is concerned about family responsibilities should also recognise that this measure does something that has not been done for 15 years—namely, recognising family responsibilities in the tax system.

This is an issue of trust, certainly for the Conservatives, who put this measure in their manifesto and who want to retain the trust of the electorate. This is a vital first step, albeit moderate, towards fulfilling that manifesto commitment. We will also seek to give further recognition to marriage in an increased transferable allowance. We are fulfilling our vow to the electorate, however. At the election, people will look back at this debate and see that the Opposition were not supporting marriage. The electorate will remember that. I urge all Members to support marriage.

15:30

[Dr Thérèse Coffey]

Let us consider the following words:

“I believe in marriage, I believe marriage should be recognised in the tax system. I see this as yes, a start of something I would like to extend further”.

They are not mine; I plagiarised them from my right hon. Friend the Prime Minister. I am surprised that the hon. Member for Bishop Auckland (Helen Goodman), who is no longer in her place, was trying to suggest that the Prime Minister did not support this policy, because it was certainly in our manifesto and he is the person who said that from the Front Bench.

I am not married. Do I feel disadvantaged, as a consequence, that I will not benefit from this transferable tax allowance? No, I certainly do not. I will have a warm heart voting for clause 11 to stand part of the Bill, because I believe that marriage is an important institution at the heart of a strong society, as the Government are indicating, and it has been clear for some time that we wanted to bring forward proposals to recognise marriage in the tax system. We have been hearing about how, “You can only spend the money once”, but the Opposition have managed to spend their version of the bankers’ bonus tax about 11 times. So it is a bit extraordinary to hear some of these comments. As has been said, this is about choices. The choices this Government made in this Budget were to reduce income inequality to its lowest level in 28 years, whether through council tax cuts, or through freezing or cutting fuel duty, as we have done in previous Budgets. This Government are certainly helping families of all models in this Budget.

We debated child care yesterday, and it is right that we start supporting marriage. Some are saying, “Oh, 4 million married couples. You are not helping people.” But of course we are helping 8 million people as a result of this measure, and that is to be welcomed. My hon. Friends will note that the Labour party is committed to reversing this tax transfer. It will come in before the election, so Labour is automatically saying to 8 million people, “We will be putting up your taxes because of our dogma.”

I appreciate that the Front Benchers still need to speak in this debate, Mr Caton. What I want to put across strongly is that there is no arbitrary disadvantage, marriage is a good thing and we should support it. We do the same for people who save, by increasing the individual savings account limit. We do it for people who put into pensions, whom we support with tax relief. We do it for businesses that invest in their businesses, helping to create jobs. That is what we are doing and although only a token amount of money is involved here, it will be very welcome.

[Catherine McKinnell]

Will the hon. Lady give way?

[Dr Coffey]

I was about to sit down, but I would be delighted to give way.

[Catherine McKinnell]

The hon. Lady is making a powerful speech in favour of marriage, but does she not accept that the Government proposal does not recognise two thirds of marriages? Where both partners in the marriage are working to provide for their family, that marriage is not recognised as valid in terms of this policy.

[Dr Coffey]

I do not see that that is the case. Of course the Government recognise those couples who are married or who are in civil partnerships—

[Catherine McKinnell]

They do not.

[Dr Coffey]

They certainly do. This measure is a start. We do not have tons of money, and the fact that resources are scarce has been well pointed out. Nevertheless, we are doing things that reduce the income inequality for families across the country, using the long-term economic plan. It has meant that gilt rates have been able to stay relatively low, which means that mortgage rates have stayed low and that is probably doing more for people than anything else, along with our fuel duty freezes and indeed cuts in previous Budgets. Those kinds of things are helping families, be they married or not.

I appreciate that time is short and others are waiting to speak, Mr Caton. I just wish firmly to say that although I am a singleton—I thought I had met Mr Right 20 years ago, but it did not work out—I hope that every married couple benefiting from this will recognise that at least they can go and have a nice wedding anniversary with a little bit more cash from the Government.

[Sheila Gilmore]

We hear so much in this House about how little money there is and how hard it is, yet certain members of the Government support this measure. It appears that not all do—the Lib Dem part of the coalition may or may not support it; it said it did not previously. We are talking about only a small amount of money, but let us see what it is equivalent to. Many people in this country have been outraged by the Government’s bedroom tax. Even if that makes the savings the Government claim it will, which I doubt, it will save less than the amount this measure will pay out. That is the problem: the Government say that the issue that has to be addressed all the time is saving money, but clearly when it comes to some things saving money is not quite so important. There are priorities, and the Government have chosen to make this policy one of them.

I believe we should be giving particular help to families with children, and not just to couples because they happen to be married. Apart from in respect of the very poorest, I have not noticed any great appetite to do away with the couple penalty that probably does apply in terms of people in the benefits system. But if two people choose to marry, we have an independent taxation system here and they can choose to work or not work, so I do not see where any great penalty is being applied to marriage. For those who have children the situation may be different.

If the Government wanted specifically to help parents who are staying at home with children, perhaps that is what they should have done. This measure does not do that; it helps couples where one person is not working, but it has no relationship with the needs of any children they may be raising. If our main aim is to help people with children and make sure that children are brought up in stable relationships, I cannot see what this measure has to do with that. The reason many relationships break down, whether or not they are marriages, has to do with financial insecurity and the difficulties that causes. Those struggling through a cost of living crisis and those who have lost out because of many of this Government’s policies particularly include the low paid. We can all pick and mix our experts—some hon. Members have cited views of the Institute for Fiscal Studies—but if we really want to help low-paid people, we must examine things such as the proposed tapering for universal credit. We need to examine the structure in place for working people who will be in receipt of universal credit—the replacement for tax credits. Under the current structure there is a serious lack of support for second earners in the family who want to start building up their earnings. We could be looking at such things, including child care help for low-paid families.

Very briefly, let me tackle something that was mentioned by the hon. Member for Peterborough (Mr Jackson). He did not take my intervention, so I will deal with it now, and, as he raised the matter, it must be relevant to this debate. One statement that Government Members are always keen to make is that every Labour Government leave office with unemployment higher than when they arrived, but it is not true. In 1946 unemployment was 2%, and in 1951 it was 1.3%. In 1951, at the beginning of the Tory Government, unemployment was 1.3%, and in 1964 it was 1.7%, so it went up under a Tory Government. Between 1979 and 1997, which was again a Conservative Government, unemployment went up from 5.2% at the beginning to 7.4% at the end, but for 13 of those 18 years, unemployment was above 10%. Therefore, the statement is not true, and it also completely distorts the appalling unemployment record of the Government between 1979 and 1997. I will now sit down and allow others to speak.

[The Temporary Chair (Martin Caton)]

Order. I wish to call the Minister by 3.45 pm at the latest, so I ask the hon. Member for Gainsborough (Sir Edward Leigh) to ensure that he has sat down by then.

[Sir Edward Leigh]

I am grateful, Mr Caton. I apologise for not being here at the beginning of the debate, but I was at the Council of Europe. I wanted to come back here to speak on this measure especially, because I have campaigned for it for many years. This is a very proud moment for our party. We are fulfilling an election manifesto, and I am delighted that at last it will happen. I have no doubt that the party will unite today at 4 o’clock to vote through the measure.

There is no doubt that marriage is the fundamental institution of society. It is the one that contributes the most to the cohesiveness and sustainability of society, and I do not think that anyone disagrees with that. But for too many families, the tax system simply punishes marriage. Why do we have a tax system that does that? It should facilitate marriage. The system has led to numerous social problems that, aside from the obvious human cost, create an undue financial burden on the state. Ultimately, if we promote marriage and support it in the financial system, the state saves money, and we create a happier society. Creating a transferable allowance will strengthen the institution of marriage—that may be only a message, but it is a strong one. It will provide benefits for adults, children and society as a whole.

I am afraid that marriage rates are at an all-time low. The scale of family breakdown as a social problem is increasing all the time. It is estimated that it has cost us between £24 billion and £41 billion to deal with it every single year.

The absence of a transferable allowance obviously makes marriage less attractive to prospective husbands and wives and more costly than it should be for some people. However, that is not the main point. The main point is that we are creating a powerful message that marriage works and it is good for children. As I said in an earlier intervention, a married couple where one partner stays at home is uniquely disadvantaged by the tax system. That cannot be fair.

I agree that policy must be based on evidence, and the evidence is absolutely clear. Regardless of socio-economic status and education, co-habiting couples are between two and two and half times more likely to break up than equivalent married couples. The poorest 20% of married couples are more stable than all but the richest 20% of cohabiting couples. The 2004 Blanchflower and Oswald study in the US and UK shows that the effect of marriage on mental well-being is estimated to be equal to that of an extra $100,000.

A 10-year study of British households found that the health gain from marriage may be as much as the benefit from giving up smoking. The Centre for Social Justice found that those not growing up in a two-parent family were 75% more likely to fail at school, 70% more likely to become addicted to drugs and 50% more likely to have an alcohol problem. We should pay tribute to the Prime Minister, the leader of the Conservative party, for constantly expressing his support for the institution of marriage.

Marriage is even a predictor of survival rates in patients with lung cancer, according to The Independent newspaper. The transferable tax allowance will be in line with international best practice. This is not some way-out wacky idea from the Christian right, but what most countries do. Of the biggest countries in the OECD, it is only the UK, Mexico and Turkey that do not have a transferable allowance. It is only 24% of the population of all the OECD countries that are not benefiting from this transferable allowance for married couples. It is a common idea that is widely accepted all over the world. It works; it is normal; it is good.

The UK is one of the only countries in the OECD not to recognise marriage in the tax system. The comparison between the United Kingdom and the OECD average is telling. The tax burden on the single earner married couple with two children on the average wage in the United Kingdom has increased from being 33% greater than the OECD average to now being 42% greater. Clearly, the problem is growing. Introducing a transferable allowance for married couples will disproportionately benefit poorer families and those in the lower half of income distribution. I am proud of what we are doing and I am proud that at last, this afternoon, we are recognising marriage in the tax system.

15:45

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

It is a great pleasure to respond to the debate. I shall make some remarks on clause 11 and on amendment 3 and address some of the arguments that we have heard in this interesting and passionate debate on a subject in which many right hon. and hon. Members have taken a long-standing interest.

Clause 11 introduces a transferable tax allowance for married couples and civil partners. We have targeted the benefit of the measure on married couples and civil partners with the lowest incomes, when one member of the couple has an income below their personal allowance of £10,500. The clause allows individuals to transfer 10% of their income tax personal allowance to their spouse or civil partner, providing that neither partner is liable for income tax above the basic rate. For the year 2015-16, when the measure comes into effect, the amount of personal allowance that can be transferred will be £1,050, significantly higher than the £750 included in the Conservative party manifesto at the last general election. It is also higher than the £1,000 allowance announced at the autumn statement as a result of the Budget announcement that the personal allowance would be increased even further in 2015-16. That means that more people will now be able to gain from the measure and by a higher amount.

Let me remind the Committee of the purpose of the policy. Marriage is an important institution in this country and I have been struck by the contributions from both sides recognising that point. The hon. Member for Newcastle upon Tyne North (Catherine McKinnell) described marriage as a force for good. We have also recently had a debate about marriage in the context of single-sex relationships and, indeed, the first gay and lesbian marriages took place just over a week ago. In that debate, a variety of views were expressed but it was striking how those on both sides of the argument recognised the importance of marriage. Indeed, the hon. Lady made a powerful and persuasive speech on that very issue in the course of those debates. Whether or not one agrees with the decision that the House reached, the strength of views expressed in those debates makes it clear that people believe in the importance of marriage as a building block of our society. The policy we are debating today is about recognising it in the tax system.

That recognition in itself is not a new idea. People born before 6 April 1935 can still claim the income tax married couple’s allowance, which the previous Government abolished for everyone else from 2000, and marriage is already recognised in the tax system in inheritance tax and capital gains tax. I shall come back to inheritance tax a little later. Marriage is also recognised in the income tax system in most other developed countries, a point that has been made repeatedly this afternoon. In fact, the United Kingdom is the only G7 country not to recognise marriage in the income tax system in some form. Now we want to recognise it more widely in the UK income tax system. That formed part of the Conservative manifesto in 2010 and I am pleased that we have now introduced legislation for that policy.

Let me remind the Committee that that is not the only reason for the policy. It also provides a way of allowing lower income married couples and civil partners to feel more of the benefit from our increases to the personal allowance. As discussed in Committee yesterday, by 2015-16 our successive increases to the personal allowance will mean that a typical basic rate taxpayer will be more than £570 better off than under the previous Government’s plans. That could mean a tax cut of more than £1,000 for a couple, but that is the case only if both partners use all of their personal allowance. If one spouse is a low or non-earner, the couple will be able to benefit only from one personal allowance increase. Let me give an example. By April 2015, one couple with each spouse earning £15,000 will see more than £800 more benefit from the personal allowance increases this Parliament than a couple with one spouse earning £30,000 and the second earning nothing. The policy allows us to change that. It gives married couples and civil partners the opportunity to benefit from the £1,050 of the second unused personal allowance, and thus benefit from the increases to the personal allowance, providing further support to some households with a low or non-earner. That will help just over 4 million married couples and civil partnerships, with each couple gaining up to £210 a year.

Amendment 3, which was tabled by the Opposition, commits the Government to publishing a report on the impacts of the policy within six months of the Finance Bill receiving Royal Assent. I do not believe that such a report is necessary, as there are comprehensive arrangements to report on the impacts of Government policy. First, we have reported the impacts of the clause in the tax information and impact note, which was published on the Government website on 27 March. Secondly, as the Committee will know, the Government believe that the impacts of policies should be considered in the round. The Government regularly produce an analysis of the cumulative impact of changes on households across the whole income distribution. That analysis is published by the Treasury at every major fiscal event, and the analysis at autumn statement ’13 and at Budget ’14 will have included that policy. Thirdly, it is worth pointing out that the amendment requires a report on the impacts of the policy within six months of Royal Assent, but the policy will not be in effect then, so we will not have any additional information or data to analyse. For that reason alone, I hope that the Opposition will not press their amendment.

Let me deal in a little more detail with what the amendment would do. It requires a calculation of the proportion of married couples and civil partners eligible under the policy. We have said that we expect just over 4 million couples to benefit, which means that about 300,000 more couples are in a position to benefit than if we had just increased the personal allowance in line with the retail prices index, which was the approach taken by the previous Government. The 4 million couples who will benefit represent just over a third of married couples. The heart of the Opposition’s case seemed to be that two thirds of married couples will not gain from the policy, so what was the point of it? It is worth explaining how the policy is targeted. First, in 3 million couples, one or both partners are higher or additional-rate taxpayers. Some of them can benefit from the changes to the personal allowance, but if we had a policy that extended the transferable tax allowance to higher and additional rate taxpayers, the Opposition would complain that it was not well targeted and that it should be directed at low-earning households. I think that my hon. Friend the Member for East Worthing and Shoreham (Tim Loughton) made the point that the logic of the Opposition’s argument was that we should extend the policy. I know that he takes that view, but it would be rather strange for the Opposition to make that argument.

The second group that does not benefit is the 1.8 million couples in which both partners are non-taxpayers. It is worth pointing out that since 2010 about 350,000 couples have become non-taxpayers because we have taken them out of income tax. It is impossible to provide an income tax cut for people who do not pay income tax. The Opposition argue that what we should do instead is have a 10p rate of income tax, but a 10p rate would not help those married couples either.

[Alison Seabeck]

I have a genuine question for the Minister. Has his Department looked at the question of whether the change would stand up to a challenge in the European courts on the grounds that it is discriminatory?

[Mr Gauke]

There is no reason to believe that the measure is discriminatory. I will address that point in slightly more detail in a moment.

The third category of people who will not benefit is couples where both members are basic rate taxpayers, but those are the households that have benefited most from the very significant increases in the personal allowance that this Government have been able to deliver. One has to look at the overall package and what this Government have done in terms of cutting taxes. I come back to the point that couples with two earners have benefited significantly, more so than couples with one earner, as a consequence of the personal allowance increase.

I mentioned that the Opposition want to use the money to fund a 10p rate of income tax. They have complained in the course of the debate that the benefit is worth only £3.85 a week. This is about sending a signal. The benefit from the new 10p rate, assuming that it were funded from this, would be in the region of 50p a week, and I am not sure that that would change things significantly.

[Helen Goodman]

rose—

[Mr Gauke]

I am short of time so, if the hon. Lady will forgive me, I will not give way.

Let me deal with a couple more points. On support for women, it is worth bearing in mind that of the 3.2 million people who have been taken out of income tax, 56% of the beneficiaries are women, and we have done a lot to help with child care. On the practical points raised by the hon. Member for Newcastle upon Tyne North, only the transferor will need to make an election, which will make it administratively easier for couples. We also want to implement the measure through a digital process, but we recognise the need for support for those unable or unwilling to use that method. HMRC will be properly funded to deliver this policy.

Let me conclude by reiterating the purpose of the clause. It is to reinforce the important institution which is marriage—whether gay, straight or civil partnerships—while also providing support for many households that have not been able to benefit fully from our changes to the personal allowance. I therefore request that amendment 3 be withdrawn, and move that clause 11 stand part of the Bill.

[Catherine McKinnell]

We have had some sincere but variously aspirational speeches from Government Members today, dreaming of a world where marriages are stable and children thrive. Nobody can take issue with the aspiration, but we need to deal with the real world and what the Government’s policy will deliver. It purports to support marriage, but only certain marriages will qualify. Two out of three marriages will get no recognition at all. The policy purports to support children, but five out of six families with children will get no help whatever. It is a dud. It adds complexity to the tax system. Its implementation will add cost both for HMRC and for the employers who will have to deal with the complexity for highly questionable gain.

We will therefore oppose the clause, and we urge hon. Members on both sides of the House, particularly Liberal Democrat Members, whom we know are on our side of the argument on this issue, to vote against the Government’s proposals and for our sensible amendment.

Question put, That the amendment be made.

15:59

Division 249

Ayes: 217

---

Labour: 207
Scottish National Party: 5
Social Democratic & Labour Party: 3
Plaid Cymru: 3
Green Party: 1

Noes: 276

---

Conservative: 268
Democratic Unionist Party: 3
Independent: 2
Liberal Democrat: 1
Alliance: 1

16:13

Proceedings interrupted (Programme Order, 1 April).

The Chair put forthwith the Question necessary for the disposal of the business to be concluded at that time (Standing Order No. 83D).

Question put, That the clause stand part of the Bill.

16:13

Division 250

Ayes: 279

---

Conservative: 269
Democratic Unionist Party: 4
Social Democratic & Labour Party: 3
Independent: 2
Alliance: 1

Noes: 214

---

Labour: 204
Scottish National Party: 5
Plaid Cymru: 3
Green Party: 1

Clause 11 ordered to stand part of the Bill.

New Clause 5

Bank payroll tax

‘(1) The Chancellor of the Exchequer shall carry out a review of—

(a) the possible impact on the bank levy rate of incorporating a bank payroll tax within the bank levy; and

(b) how the additional revenue could be invested to help pay for the first year of a guaranteed jobs scheme for people in long-term unemployment.

(2) The Chancellor must within six months of the passing of this Act publish the report of the review and lay the report before the House.’.—(Cathy Jamieson.)

Brought up, and read the First time.

[Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op)]

I beg to move, That the clause be read a Second time.

[The Temporary Chair (Martin Caton)]

With this it will be convenient to discuss the following:

Amendment 1, in clause 112, page 94, line 1, at beginning insert—

‘(1) Before bringing forward any further reform of the bank levy rates system, the Chancellor shall lay before Parliament a report considering the impact on the total receipts paid to the Exchequer since 2010 by—

(a) UK banking groups;

(b) building society groups;

(c) foreign banking groups; and

(d) relevant non-banking groups.

(2) The report will pay particular attention to receipts from—

(a) corporation tax;

(b) the bank levy; and

(c) bank payroll tax.

(3) A copy of the report in subsections (1) and (2) shall be laid before Parliament.’.

Clause 112 stand part.

[Cathy Jamieson]

It is a pleasure to be here this afternoon to continue what have been interesting debates, as they always are on Finance Bills. I notice that the hon. Member for Peterborough (Mr Jackson) is no longer in his place, but I thought I ought to declare my interest, given his comments to my hon. Friend the Member for Newcastle upon Tyne North (Catherine McKinnell) about tofu-eating, Guardian-reading, sandal-wearing people. If I say nothing other than that I am a vegan, perhaps Members will see that those comments would have been more aptly aimed at me rather than my hon. Friend, who I am assured is not a tofu eater.

The new clause and amendment build on points that the Opposition have made before, both on previous Finance Bills and in various other debates. New clause 5 would require the Chancellor to review and report on the feasibility of reintroducing a bank payroll tax, otherwise known as a bank bonus tax, and on whether the additional revenue could be used to fund a job guarantee scheme for people in long-term unemployment, along the lines that we have proposed. The new clause and amendment are reasonable and relatively straightforward, and there is no hidden agenda behind them. The Exchequer Secretary will know from previous Finance Bills and other debates that I always make reasonable suggestions, and I wish to explain why we believe that the new clause is the right approach at this time.

To put the matter into context, nearly 1 million young people are unemployed, and the time is right to do something about that by repeating the tax on bank bonuses to fund a compulsory jobs guarantee for every young person who has been out of work for more than 12 months. We have been clear that they would have to take that job, or they would lose benefits. The bank bonus tax would help to fund the first year of such a guarantee. As I have said, there are a large number of long-term unemployed people, and the guarantee would help to ensure that not just young people but those over 25 who had been out of work for two years or more got back into work. I will come on to why that is so important, but we believe that the bank bonus tax, coupled with our plan to change pension tax relief, would ensure an annual revenue stream to fund that policy throughout the next Parliament.

I was expecting that Government Members might raise a particular query at this stage, but I will save them the trouble of intervening by saying, for the avoidance of any doubt, that the compulsory jobs guarantee is the only policy that we intend to be funded by the bank bonus tax and the proposed changes to pension tax relief.

Let me give the context of the previous bankers bonus tax—the bankers’ payroll tax, as it was called at the time. Despite comments that Government Members often make, it is generally acknowledged that the banking system survived the financial crash in 2007-08 largely due to the significant support that it received from the taxpayer. Even today, according to the New Economics Foundation, the banks deemed too big to fail continue to receive pretty generous taxpayer support. Barclays, the Royal Bank of Scotland, HSBC and Lloyds enjoyed combined savings of £37.7 billion in 2012, because the financial markets deemed them to big to fail. Arguably, that has left some smaller banks and new competitors at a disadvantage, because they cannot enjoy the subsidised borrowing rates of the big four. Notwithstanding the changes that have been made, about which I will say more, the banking system arguably remains too concentrated and potentially risky. The reality—the Minister and others will be well aware of it—is that, if there is another problem in any of the banks, or another financial crisis, taxpayers would bear the costs of the bail-out.

16:30

Given the level of taxpayer support received by the banks in the previous financial crisis, it was clear that the imposition of some form of taxation was both necessary and justifiable in order to see a return for the taxpayer. The 2009 bank payroll tax—the bankers’ bonus tax—was intended to do that. It was intended to secure something back for the taxpayer, but it was also intended to be a signal to prompt behavioural change in the banks.

When the then Chancellor announced the payroll tax in his pre-Budget statement in December 2009, he made it clear that it was a special, one-off levy of 50% on any individual discretionary bonus of more than £25,000. The legislation to introduce it was included in the Finance Act 2010, and agreed with cross-party support, including, as I understand it, from the then shadow Chancellor, albeit grudgingly—perhaps an hon. Member will correct me on that. Initially, it was estimated that the tax would generate revenues of just over £500 million but, in fact, it raised £3.5 billion. That funding was used for a range of measures, including helping the unemployed get back to work.

Hon. Members might ask why we now need another bankers bonus tax. It is worth recalling that the Labour Government introduced a voluntary code of conduct for the banks. A number signed up very quickly, but others took longer to come to the conclusion that they ought to do something. We have since had separate banking commissions, and the recent Financial Services (Banking Reform) Act 2013, which was debated at some length. It is fair to say we reached agreement on some points, but the Opposition believe that the Government, at various stages, continued to duck the radical banking reform that was needed. We were disappointed when the Government did not initially back a number of Opposition amendments in the Commons, but some changes were made in another place.

It is also fair to say that, despite some of those changes and the positive noises that have been made—like other hon. Members, I meet many people from the banks in the work undertaken in Committee and the Chamber—the evidence, certainly as far as members of the public are concerned, suggests that the banks have not entirely changed their ways as we might have hoped. That has a number of implications for their credibility. Many people even in the banking world accept that. They accept that they have some considerable way to go to show the public that they have learned their lessons and changed their approach to reward and remuneration—they know they have much more to do.

Without wishing simply to list the problems, it is salutary to remember recent scandals and the implications of them for people, including the mis-selling of interest rate swaps, which affected small businesses. Small businesses thought they were doing the right thing in trying to mitigate risks such as fluctuations in foreign exchange rates, but the largest banks have had to put aside more than £3 billion to provide against compensation claims by customers, which shows how serious that was.

[Mr John Redwood (Wokingham) (Con)]

Will the hon. Lady remind hon. Members how much she wants to raise from the tax in the first full year? What impact would it have on banks’ capacity to lend?

[Cathy Jamieson]

I will come to that. In discussions I have had with banks they say that they want to lend and have the resources to do so, but some of the schemes have not necessarily encouraged people to come forward and have not been as successful as they might have wished. I have also heard the criticism from some banks, not all, that perhaps another levy or a different approach to the bankers bonus tax would have implications for capitalisation of the banks and so on. However, when we look at the scale of some of the bonus pots, it is difficult to make the argument that the money will not be there. The money appears to be there in some instances for excessive remuneration and bonuses, rather than other schemes.

Compensation costs for the mis-selling of payment protection insurance—the PPI scandal—have now reached £22 billion, an astonishing sum, with Lloyds alone incurring compensation costs not far short of £10 billion. Significant fines have been imposed on Barclays, RBS, Lloyds and Deutsche Bank for attempts to rig LIBOR, doing huge damage to the banks’ credibility and showing how important it is to change the culture and behaviour. That change has been much talked about, but has yet to be delivered entirely.

I am not trying to bash the bankers, as it is sometimes portrayed. I well understand the difficulties faced by front-line staff in the banks—the people in the lower tiers of the management system. They operated in and had to comply with the prevailing culture, and were set particular targets and given sales incentives. When we look back at that approach, we can begin to pinpoint the move away from the notion that the bank was there to look after people’s money, both individual depositors and local businesses, towards the retail culture, in which the emphasis was on selling and making profits without, in some instances, due care and attention to fiscal responsibilities and duties to the customer. I hope that changes brought about by recent legislation will see an end to that culture. Many of the banks are talking about that, and it will understandably take time, but we need the nudges, the pressures and the reminders, not just from the regulators, but through public opinion. Unless a watchful eye is kept on the banks, the change in culture will not necessarily succeed.

Despite having racked up billions of pounds in fines, several of the big banks still proposed significantly higher bonuses for 2013—the latest year for which figures are available—than for the previous year. They went up 10% to £2.4 billion at Barclays; up 8% at Lloyds to £395 million; and up 6% at HSBC to £2.3 billion. RBS, which is 81% owned by the taxpayer, has also announced a bonus pool of £588 million this year. I know that some of the banks claim that their overall bonus pool is coming down, but for the ordinary person in the street the figures are more than they would ever hope to win in a lottery in their wildest dreams, never mind expect to earn in the course of a year. They also find it astonishing that the banks might seek to breach the EU cap on bankers bonuses. It is difficult to understand why people who are paid in excess of £1 million, and have a range of other benefits, seek bonuses of twice their annual salary.

[Bob Stewart]

One consequence of bonus payments is that the Treasury, presumably, gets 40% of them, which is a bonus for the Exchequer. Or have I got that wrong?

[Cathy Jamieson]

I will come on to that point, and on to corporation tax, when I speak in more detail about why we want a review of the bank levy. I hope Government Members understand why we think it is important to have a review and to consider the implications. I started by saying that we are taking a relatively mild-mannered approach, with no demand, as is sometimes made, for something to happen immediately. We are saying, “Let’s look at the figures, let’s look at the implications, let’s look at what can be done in the round, and let’s have the Government do that work and bring it back for further discussion.”

To go back to the hon. Gentleman’s point, the figures compiled by the Labour party suggest that the cut to the 50p tax rate saw an estimated 2,714 bankers who earn more than £800,000 share a £98.5 million windfall—an average tax cut of £36,300 each. I just make that point in relation to the notion that the Treasury will somehow get the yield from that.

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

Would my hon. Friend like to comment on why the gap—which I do not think, from their policies, Government Members understand—between the top and the bottom matters? Overwhelming evidence shows how harmful it is to society that the gap between rich and poor is increasing.

[Cathy Jamieson]

My hon. Friend makes an important point and it is important to recognise it. I made the point that this is not about bashing the bankers per se. The front-line staff who operate call centres and other places have not seen their living standards rise as quickly as they might have wished. Those on the minimum wage or the living wage, who aspire to improved employment opportunities if they were available; those on zero-hours contracts; those who work part time but would prefer to work full time; young people taking any job, even if it is a stop-gap until they find one that suits their qualifications and aspirations—they are the ones who find it most difficult to understand why the banks have not changed their culture. It appears to them that in some instances people were being rewarded not for success but for failure, and that they could not aspire to have their own success in their own jobs rewarded. It is also fair to say that in some ways the financial services sector was slightly better protected from the wage freezes and so on than manufacturing and other sectors in industry. I absolutely understand my hon. Friend’s point.

No Government Members are seeking to intervene at this point, so I can only assume that they heard what my hon. Friend said and agree that this is a very important point in considering how to take things forward. As she suggested, ordinary people, particularly young people, are still dealing with the legacy of the financial chaos caused by the banks, and with the cost of living crisis that has been made worse by the policies of this Government. To return to her point, real wages—I will say it again, even though I know it has been repeated on numerous occasions in the course of these debates—have fallen by £1,600 since 2010. That is a huge amount of money for those on the lowest incomes. That may not have an impact on those who received the average tax cut of £36,300, but it certainly has an impact on ordinary people who are trying to do the best for their families.

16:45

It is worth repeating the figures from the Institute for Fiscal Studies. Families will be £974 a year worse off by the time of the next election, which will be a real problem for people who are doing their best to look after their children, keep a roof over their heads, maintain a decent standard of living, and ensure that their kids have the same things as their schoolmates and other friends. These people are not necessarily leading lavish lifestyles; they are simply trying to get by without getting into debt. Some are even trying to put aside a small amount of savings for a rainy day, but many who have done that are now finding that it has not just rained but poured, that their savings are gone, and that they are literally living from one week to the next. I do not need to repeat everything that has already been said about those who are struggling most and are resorting to payday lenders, and the increasing number of people who are using credit cards to pay their utility bills and buy household items that all of us here take for granted.

[David Mowat (Warrington South) (Con)]

There is a perfectly good case to be made for reducing the difference between high and low salaries, and the hon. Lady is making it. What I do not understand about Labour’s policy is that it seems to be concerned with variable pay but not with fixed pay. Labour Members appear to be quite sanguine about a pay level of £2 million a year, but not about a pay level that consists of a £1 million basic salary and a £1 million bonus. That strikes me as rather odd.

[Cathy Jamieson]

I think that a separate debate could be had about pay levels overall, but for the purposes of the debate on new clause 5, we are focusing specifically on the question of bonus payments. It has been argued that if we follow this line the banks will find an increasing number of ways of paying bonuses, such as deferring them, and we have not said that is necessarily a bad thing. However, for the purpose of longer-term economic stability, it is surely better for people not to be rewarded for failure, but to be held to account over a longer period.

[David Mowat]

Of course that is right, but if we are trying to reward people for success, it seems logical to assume that variable pay provides a better and more valuable way of doing that than very high fixed pay. I do not understand why the Labour party is so relaxed about very high fixed pay but wishes to tax variable pay, which can be associated—I agree that this is not always the case—with success or failure.

[Cathy Jamieson]

When the last Labour Government introduced a bank bonus tax, one of the issues that we considered was behavioural change, but that behavioural change has not come about in the way that we might have expected.

Let me return to our proposal that these funds should be used to return 900,000 long-term unemployed young people to work. The rate of long-term unemployment has almost doubled since 2010. Government Members talk of the number of jobs that have been created for people in their constituencies, but the fact is that in most constituencies young people are out of work for extended periods—in some instances, for more than a year. A year in the life of a young person can make all the difference to the extent to which that young person will succeed in later life. We all know that if young people do not have an opportunity to enter education, employment or training when they leave school, that can have significant implications for their earning capacity and ability to look after themselves and their families in later years, and indeed can have a number of long-term implications for the state.

[Mrs Glindon]

The cuts in the bank levy and corporation tax over the last three years have cost the country nearly £3 billion. Given what that £3 billion could have done for the young people my hon. Friend is describing, it is a disgrace that it was not collected.

[Cathy Jamieson]

I am sure that, like me, my hon. Friend meets young people every day who are desperate to get into employment, and understands absolutely what additional funding would do to help that happen. Like many other Members, I organised a jobs and employment fair in my constituency recently, and it was humbling to see the number of young people standing outside the hall queuing up before it opened in the morning in the hope of obtaining an interview and the opportunity to put themselves forward to the employers who were there either for an apprenticeship or even for part-time work—anything to get them off the dole queues. If we look at what we could do through this bankers bonus tax to support those young people, I think it is clear that is well worth introducing.

Unlike the Government, we are not willing to sit back and do nothing while ordinary people are struggling with the cost of living crisis. That is why we are calling on the Chancellor to publish a report on the feasibility of reintroducing the bank payroll tax and using the proceeds generated to fund what we have called a compulsory jobs guarantee.

It is important to stress a point I made earlier: under the scheme we are proposing every young person out of work for more than 12 months would be guaranteed a job, and they would take that up or they would lose benefits. So there is both the carrot and the stick, because we think that is important.

[Guy Opperman (Hexham) (Con)]

I have been listening to the hon. Lady’s argument and so I took the trouble to check the JSA claimant levels for her constituency: the number of 18 to 24-year-old JSA claimants is down 20.7% and claims of duration of over 12 months—the long term—are down 12.1%. Surely that disproves her argument that the figures are going up:

[Cathy Jamieson]

I note that the hon. Gentleman did not quote the long-term youth unemployment rate for my constituency. He is looking at the overall long-term unemployment rates, and in my constituency, which I have lived in for most of my life, I have seen what has happened in relation to people who have been unable to secure permanent full-time employment. I have seen the young people who have been unable to get the apprenticeships they so desperately want. I also know, from work I did in the past—I did have a life before I came into the hallowed halls of this place—with young vulnerable people, the importance of trying to support them into employment. I know, too, that many young people right across the UK are in the same situation: they are desperate to get into employment; they need the help to get there; they need us to be on their side. I therefore cannot for the life of me understand why those on the Government Benches would want to vote against bringing forward a report to look at this in more detail.

[Guy Opperman]

rose—

[Cathy Jamieson]

Perhaps the hon. Gentleman can explain to me why he does not support the idea of bringing forward this report.

[Guy Opperman]

Does the hon. Lady not accept that things like traineeships, which are the greatest passport into apprenticeships and jobs, are the true best way in which to train up our young men and women so they can then obtain the jobs and apprenticeships she is so laudably seeking?

[Cathy Jamieson]

I have no difficulty with the idea of getting young people into any form of education, employment, traineeship and so on, but we have to ensure that that is available to the young people who are out of work for a lengthy period as a priority, because we know that the longer young people are away from the jobs market, the more difficult it is for them to get back in, and I do not see that the hon. Gentleman’s point is in any way incompatible with the idea of bringing forward a report to look in more detail at how this could work and how the funding would be used.

[Debbie Abrahams]

I should like to make a quick point about the evidence that links entry-type jobs to future career progression. That evidence is weak, so my hon. Friend is right to say that a sustained approach needs to be taken. Is she also aware that a Prince’s Trust report on long-term youth unemployment shows that one in five young people who are long-term unemployed feel that they have nothing worth living for? Long-term unemployment has a direct effect on finances, but it also affects how young people view themselves in society. The implications of that are—

[The Temporary Chair (Martin Caton)]

Order. This is an extremely long intervention.

[Cathy Jamieson]

My hon. Friend was making a valuable point. I am well aware of the excellent work being done by the Prince’s Trust. Many young people who felt that they had very little hope have been given hope through their involvement in that work. It has given them confidence, skills, training and, in many cases, an opportunity to get their first job, so that they can start earning and contributing to society. That should be our aim for all our young people.

I therefore hope that the Government will agree to our proposal for a report. We believe that the scheme would cost about £1.9 billion. As I have said, the cost would be met in the first year by the tax on bonuses and by the reduction in the rate of tax relief available to those earning more than £150,000 a year. Those measures should generate more than £2.5 billion, and the annual revenue generated by the changes to pensions tax relief would fund the jobs guarantee throughout the next Parliament.

We have consistently argued for the reintroduction of the bankers bonus tax, to ensure that the banks fulfil their obligation to the taxpayer by supporting jobs and growth in the economy. That is why we are calling on the Government again today to stand up for the taxpayer, and for those people who are desperate to get into work, including young people and the long-term unemployed. We are calling on the Government to send a clear signal to the banks by supporting us today.

Amendment 1 to clause 112 relates to the bank levy. This, too, involves a request for a report. In this instance, we are requesting that the Chancellor, prior to implementing any further reforms to the bank levy, should lay before Parliament a report that considers the impact on the total tax receipts paid to the Exchequer since 2010 by UK banks, building societies, foreign banks and relevant non-banking groups. We want the report to pay particular attention to receipts generated from corporation tax, the bank levy and the bank payroll tax.

It is important to set this proposal in context. In the recent Budget, a consultation was announced on the proposed changes to the bank levy. We are concerned that those changes could lead to the bigger banks paying less as a result of the introduction of a band-based system in which the tax of an individual bank would be capped at an upper limit of £375 million. I know that the Government have said that this measure would be cost neutral, but we are not convinced that it would be of benefit. We have made it clear in the past that, when we are in government, we will put in place a bank levy and use the additional funds raised to expand free child care for working parents of three and four-year-olds from 15 to 25 hours a week. Perhaps that is a debate for another day, however. I shall focus on the bank levy.

We have made it clear all along that a bank levy is not a bad idea in itself. As my hon. Friend the Member for Nottingham East (Chris Leslie) has argued in Committee and on the Floor of the House, however, the proposal was unambitious and has been poorly implemented. When the Chancellor announced its introduction in May 2010, he confidently asserted that it would generate more than £2 billion of annual revenues. That is the assertion he has made on several occasions and it has been enthusiastically backed by the Prime Minister.

17:00

In evidence to the Treasury Committee on the 2010 Budget, the Chancellor said:

“When it is fully operational the bank levy is going to raise £2.5 billion and we made it clear that we are targeting a revenue sum rather than a particular rate because we think that is an appropriate contribution that balances fairness with the competitiveness of the UK banking sector.”

In Prime Minister’s questions on 12 January 2011, the Prime Minister said:

“The bank levy will raise £2.5 billion each year once it is fully up and running…we will raise £9 billion compared with his £2.3 billion. Even the shadow Chancellor can work out that 9 is bigger than 2.3.”—[Official Report, 12 January 2011; Vol. 521, c. 280.]

Let me remind the House that in its first two years the levy generated just £1.6 billion a year, which was well below the £3.6 billion generated by Labour’s bankers’ bonus tax and considerably below the £2.5 billion annual target the Government set. [Interruption.] I am not sure whether the Minister wishes to intervene. He seemed to be saying something from a sedentary position.

[Mr Gauke]

I just make the point that one has to examine the net yield from the bankers’ payroll tax, taking into account the revenue that is lost because there are lower receipts for income tax and national insurance contributions. Just to be clear, the number is £2.3 billion.

[Cathy Jamieson]

Yes, I hear what the Minister is saying and I shall deal with some of that in a moment, because I am concerned to ensure that we get all the sums right and reach figures that everyone would agree on. Again, that is one reason we want this report brought forward, because we are now being told that the levy will generate £2.3 billion in 2013-14, £2.7 billion in 2014-15 and £2.9 billion in each of the following three years. I would give way to him again if he were able to give the details, but perhaps it would be more appropriate if he did so his response later, as it may take time to get them. We do not have the detailed figures, the evidence or the workings to show how those figures are arrived at and whether things are on course to deliver them. That is why it is important to get the report we are calling for today.

Let me say something about the problems with the levy as we see them. As I have said and as my hon. Friend the Member for Nottingham East has in previous contributions, the Government’s levy lacks ambition. The argument is that the initial levy was set at a relatively low rate, both by international standards and when measured against the scale of the taxpayer subsidies received by the sector during the financial crisis and thereafter. In discussion of the Finance Bill in May 2011, he said:

“The bank levy is a sensible idea in theory, and we broadly support it. However, the yield suggested in the Bill—only £2.6 billion—is not just small but pathetic by international standards”.—[Official Report, 3 May 2011; Vol. 527, c. 482.]

I will happily give way to the Minister if he wants to comment on the international standards, but again, perhaps he will do so when he winds up.

One other problem with the levy is that its two objectives can be seen as a bit of a paradox or even somewhat contradictory. By setting the levy as a tax on bank liabilities in excess of £20 billion and charging a lower rate for more secure long-term liabilities, the Chancellor was actively encouraging the banks to reduce their exposure by moving towards more stable forms of funding.

[Mr Jim Cunningham (Coventry South) (Lab)]

My hon. Friend has just touched on the central point about the levy: that the Government never had the will to take on the bankers in the first place, as we see if we compare what happened in this country with what happened in the United States. That is why they cannot wholeheartedly support a proper levy on the banks; it is a token levy.

[Cathy Jamieson]

My hon. Friend makes an interesting point. I suspect that if I were to stray into a long debate on what happened in the US versus what happened here, I would see—yes, I do see—Mr Bone’s eye upon me to ensure that I did not yield to that particular temptation. However, I say to my hon. Friend that that could usefully form the subject of another debate at some point, but he makes an interesting point about the will to take on the banks. I want to choose my language carefully because I want to avoid getting into that whole thing of our being seen as aggressively pursuing the banks. I recognise that there are some in the banking sector who understand how badly they got it wrong and who want to see change, but the scale of the problem has not been universally accepted, and nor has the degree of culture change that is required. The Minister has heard Opposition Members talk about that issue many times when discussing other legislation.

Returning to the initial imposition of the levy, the Chancellor also wanted to generate more than £2 billion in annual revenues. One problem was that, as was pointed out earlier, the more the banks changed their behaviour and remodelled their balance sheets, the less money the levy generated. Was the Chancellor unable or unwilling to decide whether he wanted behavioural change or a targeted revenue sum? Was it possible to do both? Some evidence suggests that it was not, because it has not brought in the amount of revenue that he intended.

Not content with devising a levy the dual aims of which are somewhat contradictory, the Chancellor also proceeded to cut corporation tax annually, arguably handing the banks a tax break. In order to ensure that the banks do not benefit from the tax break, the Chancellor has had to increase the levy every time he cut corporation tax. We have consistently raised doubts about the levy’s ability to raise sufficient funds, especially in the context of the cuts to corporation tax. During consideration on Report of the 2011 Finance Bill, my hon. Friend the Member for Nottingham East said:

“The sector will have a tax cut of £100 million in 2011-12, £200 million in 2012-13, £300 million in 2013-14, and £400 million in 2014-15. That is a £1 billion corporation tax cut over this Parliament.”

He continued:

“The Treasury ought to supplement its very modest bank levy plan with the bank bonus tax because it is only fair that those who played such a central role in the global economic downturn make a greater contribution to help to secure the economic recovery by supporting jobs and growth.”—[Official Report, 5 July 2011; Vol. 530, c. 1383.]

I would have thought that that sentiment—that those involved in making some of the decisions that caused the problems have a responsibility to do what they can to secure economic recovery and a change in culture—would be shared by everyone in all parts of the House. A combination of two factors—contradictory objectives and corporation tax cuts—means that the levy has increased on no fewer than seven occasions. It is important for me to lay this out so that the House understands the time scale for what happened with the levy, because it adds weight to our call for a report to consider that in more detail.

Back in February 2011, it was confirmed that the rate would be higher than originally proposed. That was change number one. In March 2011, at the Budget, the levy was increased to offset the effect of the 1% cut in corporation tax and by the autumn statement in November 2011—autumn was already beginning to be stretched as far as we thought possible, although of course, autumn is now in December as far as the Government are concerned—the rates were increased to ensure that tax would raise at least £2.5 billion a year. I think that was a tacit admission that the initial rate was perhaps somewhat timid. In March 2012, at the next Budget, the levy was increased again to offset the 1% cut in corporation tax.

In the next autumn statement, when the autumn had been stretched as far as possible into the first week in December, the levy was increased again to offset the 1% reduction in corporation tax. At the March 2013 Budget, the levy was increased again—guess why: to offset the 1% reduction in corporation tax. In December 2013, again at the autumn statement, in what appeared almost to be a desperate attempt to get somewhere near the £2.5 billion target, the Chancellor increased the levy again and broadened the tax base in an apparent attempt to mitigate the impact of the very behavioural change that the tax is supposed to encourage.

[Jenny Chapman]

Has my hon. Friend done the calculation? I am doing it as she speaks and it sounds as though the Government have raised about £3 billion less than they wanted to from the combined measures.

[Cathy Jamieson]

My hon. Friend makes a valuable point. I stress that we have proposed today that this report should be undertaken and brought to the House so that hon. Members can be fully informed about what has happened, what has been successful, what has not worked and how we can best look to the future. My hon. Friend might well be interested to know that I was about to say that, following the Chancellor’s latest projections for the bank levy, a contributor to the Tax Journal stated that the continued difficulty in raising the expected yield

“should become a lesson in the problems of saddling a new tax aimed at managing behaviour with a fixed revenue target”.

It seems to me and my right hon. and hon. Friends that the Chancellor has not fully learned the lessons, because he is now consulting on wholesale changes to the levy that would lead to the introduction of a band-based system under which the tax of individual banks would be capped at an upper limit of £375 million. As I said earlier, although the Government claim that that will be cost neutral, there is speculation already that it might lead to a tax cut for the banks that pay the larger share of the levy. That issue was raised in a report in The Daily Telegraph that said:

“Last year, Barclays paid £504 million in levy charges, while HSBC paid £544 million, the most of any bank. Under the draft proposals, Barclays’ bill would have been £129 million lower and HSBC’s would have been £169 million less.”

We are struggling to understand whether that is really what the Government intend. Why do they intend to do things in that way? If we do not see the figures or the working and if we do not understand the overall impact of what the Government are trying to do, the only conclusion we can draw is that this is essentially a secret tax cut for some of the big banks that has been hidden away in the Budget. I look forward to hearing what the Minister has to say about that and why it is not sensible to publish the report that we have reasonably requested. Confidence in the banking system and financial services has not been fully restored, and people in the real world will want to know why it is a priority to give such a tax cut to some of the biggest banks, at a time when working people are worse off and banks are still paying massive bonuses—indeed, in some instances, bigger bonuses than in previous years.

17:15

The bank levy has raised billions less than was originally promised. Perhaps the Minister can come clean and explain the impact that the banding will have on the levy revenues from bigger banks in future. Can he guarantee that the proposed changes will not amount to a tax cut for the big banks or, indeed, lead to an overall reduction in tax revenues? We have made it clear that we would increase the bank levy to raise an additional £800 million a year. As I have said, we want that to fund an expansion of free child care places for working parents of three and four-year-olds to 25 hours a week.

When Labour introduced a bankers’ bonus tax, the right hon. Member for Tatton (Mr Osborne), who was then shadow Chancellor, argued:

“The real test of this new tax will be whether it curbs bank bonuses instead of curbing bank lending.”—[Official Report, 9 December 2009; Vol. 502, c. 373.]

While our bankers’ bonus tax met that test, the Chancellor’s bank levy has failed on his own terms, because bank bonuses have escalated, and bank lending to businesses has remained stagnant, despite the need for lending out there, particularly to small and medium-sized enterprises. We have called on the Government to review the bank levy, but they have refused to do so. Given the consistent failure of the levy to raise the projected amounts, it would appear not only that the Government have miscalculated its behavioural impact, but they have failed accurately to predict the impact on the banks of their cuts to corporation tax. I said that there have been seven increases in the levy—every time there was a change in the autumn statement or the Budget, there was a cut in corporation tax. Again, we could have an argument as to whether that was the right thing to do. That does not relate to the new clause per se, but there was hasty scrabbling around to try to mitigate the impact of the measure, and the overall picture was not explained. As far as we can see, the Government have not got their sums right, and we would like to see their workings. It is reasonable to ask the Government to support the amendments and introduce a full and comprehensive review of all taxes levied on the banking sector. The failure of the bank levy to bring in the expected revenue means that effectively, the banks have received a tax cut, despite what the Minister will doubtless claim to the contrary.

Our amendments would shed welcome light on bank taxes with a view to ensuring that banks do not benefit from any further unintended cuts. I hope the Minister will regard as fair and reasonable our requests for information and reports, so that we can take a genuine look at what has happened with the bank levy and examine the figures in detail in the House. I hope he will look similarly at the request for the report on the bankers’ bonus tax. I accept that we have asked for these things before, and the Government have not seen fit to agree to them, but it is always worth continuing to make the point calmly and reasonably in the hope that they will understand it and respond. I hope they will see fit to do that this time, because that would show that they are willing to recognise that people in the real world want trust in the banks to be restored, and would ensure that the banks are treated fairly and treat the taxpayer fairly. That is why we want to see that comprehensive review. As always, I look forward to the Minister’s response and I hope he will agree to produce the two reports we have reasonably requested

[Debbie Abrahams]

It is a pleasure to serve under your chairmanship, Mr Bone. It is a pleasure, too, to follow my hon. Friend the Member for Kilmarnock and Loudoun (Cathy Jamieson). I shall spend a few minutes building on the economic context that she described. Unfortunately, we have seen too much self-congratulation at the glimmers of economic recovery that the country is finally seeing, after three years of a flatlining economy. We need to look at the full picture. This is the worst recovery in 100 years.

The gross domestic product in quarter 4 of 2013 was 0.7%. That is 1.3% below the pre-recession peak in 2008. We would need to grow 1.6% each quarter up to the general election just to reach where we were at the end of 2010. Since 2010, we have had growth of 3.8%, compared with the US, where growth has been 8.4%. UK productivity is the second lowest in the G7 and 20% lower than the G7 average—the widest gap since 1992. Exports were down 4% in the last quarter of 2013 and the trade deficit in December 2013 stood at £7.7 billion. As we know, the Government will have borrowed £190 billion more than planned in 2015. Public borrowing in 2015 will be £75 billion. We know about the promises in 2010 that the deficit would be cleared.

We have been speaking about the implications of the fragile recovery for employment and unemployment. The Government are keen to mention absolute numbers, but the employment rate is still below pre-recession levels and most of the jobs created since 2010 tend to be insecure, part-time and low paid. The proportion of short-term contracts has increased by 20 times to 1.65 million, of which 655,000 are involuntary. The increase in temporary jobs accounts for more than half of the rise in employment. Nearly one in five—that is, 1.46 million people—work part-time because they cannot get full-time work. That is the highest level of underemployment since 1992. Four out of five new jobs are paid below the living wage. Another key issue is the geographical spread of these new jobs. Since 2010, 79% of them have been in London, with only 10% in the nine urban centres outside London. It is hardly a recovery for the whole country, is it?

My hon. Friend spoke in depth about unemployment. I am concerned that the true levels of unemployment are hidden. We have seen a sudden increase in self-employment, which, as I know from my role on the Work and Pensions Committee, has been pushed in jobcentres. There has been a 4% rise in self-employment in the last quarter, and a huge rise in inappropriate and punitive sanctions attached to social security payments since the benefit sanctions regime was introduced at the end of 2012. Members may not be aware that 5% of jobseeker’s allowance claimants are sanctioned every month for at least a month. Half of them do not even know they can appeal against that, let alone that they have to keep signing on to remain on the unemployment register. Five per cent. of 1.17 million JSA claimants equates to 58,500 people; we can get the picture from that.

A constituent came to see me who was a special needs teacher who had been made redundant in his late 50s. It had been suggested to him that he become a bingo caller, but he had to travel 70 miles to do that. There is real deskilling of a skilled work force, along with graduates undertaking non-graduate-level jobs. My hon. Friend mentioned the 900,000 young people who are long-term unemployed. A recent report talked about a hidden talent pool of young people. A total of 2.46 million—two in five—young people are unemployed, inactive, underemployed, in a voluntary job, in a Government scheme, or a graduate in a non-graduate role. It may be described as hidden talent, but I would call it a waste of talent.

As I have said before, the impact on these young people cannot be measured only in financial terms. The long-term implications for their future are very significant. A recent report by the Prince’s Trust showed that one in 10, or 100,000, unemployed young people believe they have nothing to live for, and that increases to one in five of those who have been long-term—

[Alison McGovern (Wirral South) (Lab)]

My hon. Friend is a respected member of the Work and Pensions Committee, so is she aware, as I am, that the DWP published its own report on the future jobs fund showing that it did tackle some of the crisis of self-respect and self-esteem that she is talking about?

[Debbie Abrahams]

My hon. Friend makes an excellent point. Yes, we need to be very clear about the interventions and programmes that can make a meaningful difference. I am sure that what we are suggesting in place of the youth contract, which is clearly ineffective, would fit the bill.

The report said that one in five young people who were long-term unemployed felt that they had nothing worth living for, and one in three felt suicidal. There is a moral imperative to act, not just an economic one. We cannot continue like this—it is completely unfair on the lives of these young people, in particular.

All this is happening at the same time as the top rate of tax has been cut for people on incomes of more than £150,000. As we have heard, bank bonuses are increasing again. Top-to-bottom pay ratios for the FTSE 100 stand at 300:1. We look at this in the context of the average family really struggling, with wages down by £1,600. The IFS has shown that since 2010 the average family has lost income of £974 a year.

The recent Oxfam report, “A Tale of Two Britains”, highlighted the growing gap between rich and poor, whereby the five richest families in the UK are wealthier than the bottom 20%, equating to 12.6 million people. Rafts of reports from the Equality Trust and others describe this situation. That gap matters, because overwhelming evidence shows that society as a whole benefits from more equality through better life expectancy, mental health, social mobility and educational attainment, and reduced crime—everybody gains. There is international evidence to support the existence of all these benefits.

I launched an Oldham fairness commission last year, to tackle inequality in my constituency. The commissioners are looking at inequalities in education, employment and income. We find it unacceptable that, in this day and age, someone who is white, able bodied and male is more likely to be in work than someone else with the same qualifications, and that a third of the jobs available in Oldham are paid below a living wage. That is not the way in which to achieve a sustainable economic recovery.

17:30

If we address inequalities and the gap between the rich and the poor, our economy will benefit. Overwhelming evidence from the International Monetary Fund and Nobel prize-winning economists such as Joseph Stiglitz shows that inequality causes financial instability, undermines productivity and retards growth.

New clause 5, which seeks to publish the receipts from the existing bank levy scheme, would help to show exactly how much we are contributing to narrowing the gap between the rich and the poor. We believe that it will show, yet again, the Government’s lack of commitment. They are not just indifferent; they are propping up the status quo.

Our jobs guarantee will give hope and opportunity to young people and those aged 25 and over who have been unemployed for more than two years, whom this Government have clearly abandoned. We will work for a one-nation Britain, not the two Britains we are enduring under this Government.

[Alison McGovern]

rose—

[The Temporary Chair (Mr Peter Bone)]

Order. It would be helpful if the Minister was on his feet no later than 5.50 pm.

[Alison McGovern]

I want to discuss the relationship between how the banks and bank bonuses are taxed and young people. I think that anyone who has just listened to the speech by my hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams) would agree that the two issues are intimately connected, even if they did not believe that to be the case in the past.

Levels of inequality in our global economy are unsustainable, but Members need not take just my word for that. It is not just me who thinks that inequality is a significant problem: no less than Christine Lagarde of the IMF has said that inequality is a huge challenge and a risk for the world’s future. If even the IMF, which is not known for taking lefty positions, is able to conclude that we must tackle inequality, I think that this House should be able to accept the challenge and seek to find ways to address the significant inequality in our own country.

The top of the economy in the financial services sector is fragile in terms of income distribution. Let me make a few remarks about the banks. The hon. Member for Warrington South (David Mowat), who, unfortunately, is no longer in his place, commented earlier on the issue of fixed versus variable income, which I will turn to later. Surely anybody who is trying to learn the lessons of 2008 would say that the financial services sector still has an unsustainable bonus culture and perhaps that is true of other parts of the economy as well.

Would not anybody who worries about that risk conclude that banks and the financial services sector rely on an implicit state guarantee, given what had to be done to ensure the economy kept working and people could still take cash out of ATMs? Would not anybody conclude that we must take very seriously the contribution to taxation that banks are expected to make, given the Government’s reliance on the financial services sector? I certainly think that that is the only obvious conclusion to draw from the global financial meltdown and the serious failures of the past. Banks cannot be allowed just to make their own decisions; we must take very seriously both the regulatory framework around the financial services sector and the contribution that the sector is expected to make to the Exchequer.

The corporation tax cut benefited a whole range of companies in the financial services sector, but small and medium-sized enterprises—especially those in my constituency that are struggling with, and wanting action on, business rates—find it hard to take or to understand why the Government have not looked more seriously at what banks are expected to pay to the Exchequer. I think the Exchequer Secretary said earlier that, by his calculation, the bank levy has brought in a net £2.3 billion.

[Mr Gauke]

That is the payroll tax.

[Alison McGovern]

For the purposes of Hansard, I thank the Minister for correcting me from a sedentary position. In any event, it is really evident that the bank levy is not good enough. We heard repeated claims about how much it would bring in, but it has failed to reach those levels. The public do not understand why that is, and they want us to take very seriously the position of the financial services sector, given the impact that we all felt and that people are still feeling from the events post-2008.

Bank bonuses are the best representation of the culture that led to the economic meltdown in 2008. A great deal of work on the culture has been done by Members of this House—I am thinking of my right hon. Friend the Member for Wolverhampton South East (Mr McFadden) and others who served on the Banking Commission—and we do that work no service if we give up the idea of a bank bonus tax.

The problem with bank bonuses is the clear connection between the fact that compensation balloons so greatly, and depends on a big bonus at a certain point in the year, and extraordinary risk-taking. A kind of groupthink develops in an organisation, with people forgetting their responsibilities to those outside it. The insider culture accepts reimbursements that are far and away above anything that people in society ordinarily expect. We in this House, if nowhere else in our community, should understand the danger of such groupthink. Have we not all seen it at times, and do we not all want to end it? Therefore, we should not give up the idea of a bank bonus tax.

I remind hon. Members of Martin Wheatley’s recent comments:

“Incentives are used ideally to reward ‘good’ performance. However, as we saw with the mis-selling scandals which have had such a profound impact on financial services…a poorly designed inducement can result in consumers ultimately being worse off.”

Even if we were not worried about the impact on the Exchequer of the bank bonus culture—given the responsibility to ensure that the financial system can continue to do business no matter what—we should absolutely be concerned about the impact on consumers. In the past, consumers of financial services often had a poor deal. The mis-selling of endowments and, more recently, payment protection insurance caused massive problems for families in our country. We cannot allow a culture to persist in which there are incentives that, as Martin Wheatley said, may result in consumers ultimately being worse off, as that would be very dangerous. That is why our amendment probes the issue and seeks to find a way to consider whether more could be done, which is important.

Although I am the first to say that simply bashing one part of our economy—financial services—is not the approach we should take, far from it, it does not mean that inequality is not a serious issue. I do not think that the inequalities in the financial services sector will pass by the people who earn the minimum wage cleaning a local bank branch and who are worried about whether that branch will be there for much longer or those who, if they are lucky, earn the London living wage from working in security or in other ways supporting banks in the City of London. We must address that inequality for people who work in banking and in the financial services sector.

Finally, I will follow up on the remarks on young people made so ably by my hon. Friend the Member for Oldham East and Saddleworth. We cannot lose sight of the difference between a jobs guarantee and work experience. We learned that lesson in the 1980s, when youth training scheme-style programmes were a revolving door for young people, who went in and out of businesses with no proper jobs. That was not fair then, and it certainly is not fair now. The future jobs fund worked with organisations such as Age Concern and other good third-sector organisations in my constituency to provide work opportunities that often led not only to growth in a young person’s skills, talents, self-esteem and self-respect but to growth in the organisations themselves.

I point Members in the direction of a report by the International Labour Organisation from as long ago as 2010 that compared a range of interventions for young people without work. The report said that the last Labour Government had a huge amount of which to be proud, such as the new deal for young people, the future jobs fund and the efforts to get people into work. I believe absolutely that we cannot offer young people only interminable work experience in which they turn up to the jobcentre week after week to be sent on CV writing courses or to gain work experience that does not get them a proper foot in the door. We need a true jobs guarantee so that people know that, however difficult the circumstances in which they find themselves, the situation will come to an end. We need to offer young people that guarantee, and of course we would expect them to take it up without much choice—[Interruption.] If Members wish to intervene, they are welcome to do so.

We still have insufficient numbers of apprenticeships, and we have genuine worries about the quality of some apprenticeship programmes. I am sorry if I repeat this so often that I bore Members—I try not to bore Members—but the issue is vastly important. The prevalence of zero-hours contracts in our society affects young people more than anyone else. Young people are much more likely to have less experience, which means that they cannot get a proper full-time, permanent job with the hours that they want. Of course students might want flexible hours that they can take up when they want, but that is not the case for many young people across the country who feel that they have no alternative but to accept a zero-hours contract.

I am afraid that Conservative Members have swallowed the Treasury’s rhetoric about the number of jobs that have been created and the claimant count, without learning the lessons of their economic policies of the past. Of course the claimant count will fall if there is a sanctions regime that makes going to the jobcentre so difficult and unhelpful that people will do anything not to claim.

17:45

I worry about the people who are totally disengaged from the system and about those who are engaged in the system, but who feel so unsupported that they are compelled to take jobs that are insecure and that do not provide the hours that they want. Since I started the zero-hours contract campaign, countless people have got in touch with me to say that they have taken a job on the basis that there would be 30 or 40 hours a week, but that it turned out there were 10 or 12 hours a week. That under-employment is showing itself in the difficulties that small businesses are facing on high streets up and down the country.

I could talk at length about the insufficiencies of the Work programme. It causes problems to have such huge contracts and not to tailor the programme properly to the local area. Again, there are lessons to be learned from the past. We need to work with other organisations. For example, before the Work programme, the football clubs in my area had good working relationships with the local jobcentre and had schemes that were really working to get people’s confidence up, get them the right skills and get them into jobs. The Work programme swept all those arrangements away. We have seen no evidence of the claim that Ministers made before the Work programme started that small, specialist organisations would still be involved in back-to-work programmes. That has not happened in the way they said it would. That is a big problem, given how unemployment clusters.

We must look at what is going on in our country. The north-east is suffering desperately from unemployment and under-employment. A careful, tailored approach is needed. That could be led by jobcentres if they were freed from the ministerial diktats from the centre and were able to use their expertise to work with young people to get them into the labour market with proper jobs, thereby starting the endogenous growth in our economy that we so desperately need.

We must not lose sight of the plight of young people when there are, on the face of it, better growth figures. I am extraordinarily happy that we have better growth figures. They will create momentum and help get investment into our country, which is good. However, in the end, economic growth is good only if it means that young people have a real chance in our country. I believe that only Labour’s jobs proposal for young people will resolve the terrible situation that we face.

[Mr Gauke]

It is a great pleasure to serve under your chairmanship, Mr Bone, and to respond to this debate. It is always a pleasure to hear the hon. Member for Wirral South (Alison McGovern) speak. I am tempted to respond to her characterisation of the labour market, which almost suggested that we had lost 1.3 million people from employment over the past four years, rather than increased employment by 1.3 million people, but in the interests of time, I will focus on the bank levy.

Clause 112 increases the rate of the bank levy that was set for 1 January 2014 to 0.156%, which will help to ensure that future bank levy receipts meet the Government targets. I also want to highlight the changes that we are making to the bank levy’s design following an operational review in 2013, which we will cover when we debate clause 113 and schedule 22 later in Committee. The changes will help to simplify the bank levy’s design and ensure that it continues to complement improvements in the regulatory regime.

I wish briefly to provide hon. Members with some background. In the June 2010 Budget, the Government introduced a permanent tax on banks’ balance sheet equity and liabilities, which took effect from 1 January 2011. It is designed to ensure that the banking sector makes a fair contribution that reflects its risks to the UK financial system and the wider economy. Alongside wider regulatory reform, the bank levy also provides incentives for banks to move towards more stable funding profiles, reducing the likelihood of liquidity shocks, which can trigger and propagate systemic banking crises. The Government believe that those overarching policy objectives remain appropriate, and the changes being made in clauses 112 and 113 and schedule 22 are in line with that.

In 2010, the Government set a target of £2.5 billion for annual bank levy receipts. We have since increased that target to offset the benefit of corporation tax cuts to the banking sector since the levy’s introduction. Bank levy receipts have fallen short of the targets to date, largely as a consequence of greater than anticipated deleveraging in the sector in response to regulation and the bank levy’s behavioural incentives. However, the Government have remained clear that the target for bank levy receipts is unchanged.

The banking sector needs to make a fair contribution that appropriately reflects its historical costs and future risks to the UK taxpayer. That is why the rate of the bank levy has increased from 0.075% in 2011 to 0.142% in January 2014, and why the changes being made in clause 112, which were announced in the 2013 autumn statement, will further increase the rate to 0.156%, which will be treated as having applied from January 2014. Based on those changes, the independent Office for Budget Responsibility forecasts that the bank levy will raise £2.9 billion a year from 2015-16, more than £8 billion in total over the Parliament and close to £20 billion in total by 2018-19.

When the bank levy was introduced, the Government announced that they would review its design in 2013 to ensure that it was operating efficiently. In line with that commitment, a formal consultation was published in July 2013. It considered changes to the levy’s detailed design to make it simpler, fairer and more aligned with recent regulatory developments. The consultation ran for 12 weeks and the views put forward helped to inform a number of changes to the bank levy’s design, which the Government announced in the autumn statement. They included the exclusion from the bank levy charge of protected deposits, which we limited to amounts insured under a deposit protection scheme, with effect from January 2015.

Also from January 2015, all derivative contracts will be treated as having a short-term maturity, the relief that banks receive for their high-quality liquid assets will be restricted to the rate applicable to long-term liabilities, and the bank levy definition of tier 1 capital will be aligned with the new capital requirements directive. Specific liabilities arising from the central clearing of derivatives will be excluded from the bank levy charge, which will be treated as having applied from January 2014. Those changes will simplify the levy’s application and help to ensure that it continues to apply consistently to banks of different size, activity and domicile. They will also strengthen the behavioural incentives for banks to move towards more stable funding profiles and more closely align the bank levy with recent developments in the regulatory regime.

The hon. Member for Kilmarnock and Loudoun (Cathy Jamieson) touched upon the redesign of the bank levy. There is no intention to reduce the revenue raised by the bank levy. We are considering allocating banks to different bands on the basis of their balance sheet, equity and liabilities. Each band would correspond with a unique and predetermined charge for the year, paid by every bank falling within that band. We consider that that might provide a more predictable and sustainable model for the bank levy, but we are welcoming views on that as part of our consultation. The changes being considered would have no impact on the forecast yield from the bank levy, and the underlying tax base would remain unchanged and continue to provide incentives for banks to move towards more stable funding.

[Cathy Jamieson]

rose—

[Mr Gauke]

I will give way, but I have very little time left.

[Cathy Jamieson]

I thank the Minister for giving way—I appreciate it given the limit on his time. Will he confirm that his proposal will mean that some of the bigger banks will pay less in bank levy than they have paid previously?

[Mr Gauke]

The Government are consulting on how the measure will operate. The intention is for it to be revenue neutral. Assuming it has some effect, revenue neutral will mean that some banks will pay more and some will pay less. Which ones those will be depends on the precise design, which depends on the consultation.

Amendment 1 was described with customary reasonableness by the hon. Member for Kilmarnock and Loudoun but I will give the customary response, which is that the Government do not consider that there is much to be achieved by accepting it. It would add little to the Bill. HMRC already publishes each year statistics on PAYE, the bank levy, corporation tax and bank payroll tax receipts from the banking sector, although they are not broken down by different groups of banks. The most recent publication—from August 2013—showed that the relevant tax receipts from the banking sector were £21.7 billion in 2012-13.

In the time available, I want to make a point about the bankers payroll tax. In September 2010, the right hon. Member for Edinburgh South West (Mr Darling), the former Chancellor of the Exchequer, said

“it will be a one-off thing because, frankly, the very people you are after here are very good at getting out of these things and…will find all sorts of imaginative ways of avoiding it in the future”.

An attempt to repeat that tax would be a mistake.

I fear that, because of the time available, I do not have time to do justice to Opposition new clause 5. I have set out the reasons why the Government believe it is right to introduce a balance sheet tax as opposed to a tax on bankers bonuses. We see no reason to change that approach. The future jobs fund failed to create sustainable employment. Almost 50% of participants claimed benefits again within eight months of starting a future jobs fund job. This Government are doing much more. We have delivered more than 1.6 million apprenticeship starts so far this Parliament and are making it cheaper to employ young people.

In order to give the hon. Member for Kilmarnock and Loudoun a moment or so to speak at the end, I shall conclude. The changes made by clauses 112 and 113, and schedule 22, will help to ensure that future bank levy receipts meet Government targets while providing a simpler and fairer basis on which the tax applies. I therefore hope that clause 112 stands part of the Bill and urge the hon. Lady not to press amendment 1 and new clause 5 to a Division.

[Cathy Jamieson]

It was a pleasure to hear the valuable contributions of my hon. Friends the Members for Wirral South (Alison McGovern) and for Oldham East and Saddleworth (Debbie Abrahams) on the impact of the Government’s policies on ordinary people.

The Minister referred to my characteristic reasonableness and gave a characteristic response. I will give him the characteristic response from the Opposition—despite his best efforts, I will press the new clause and the amendment to a Division. Both reports are reasonable requests and would be important. I realise that he had a relatively short period in which to respond, but it is disappointing that he does not see fit to produce such reports. He referred to a number of statistics and figures produced by HMRC, and we know of other places where statistics are produced, such as the Office for Budget Responsibility. It would be useful to have all those reports put together in a report for the House to consider.

As I have said, I intend to press new clause 5 and amendment 1 to a Division. I hope that, even at this late stage, the Minister will reconsider his opinion, but I doubt it. I am sure that the Government will give their characteristic response once again.

Question put, That the clause be read a Second time.

17:59

Division 251

Ayes: 219

---

Labour: 205
Scottish National Party: 5
Democratic Unionist Party: 3
Plaid Cymru: 3
Social Democratic & Labour Party: 2
Alliance: 1
Green Party: 1

Noes: 293

---

Conservative: 250
Liberal Democrat: 42

18:13

Proceedings interrupted (Programme Order, 1 April). The Chair put forthwith the Questions necessary for the disposal of the business to be concluded at that time (Standing Order No. 83D).

Clause 112

Bank levy: rates from 1 January 2014

Amendment proposed: 1, in clause 112, page 94, line 1, at beginning insert—

‘(1) Before bringing forward any further reform of the bank levy rates system, the Chancellor shall lay before Parliament a report considering the impact on the total receipts paid to the Exchequer since 2010 by—

(a) UK banking groups;

(b) building society groups;

(c) foreign banking groups; and

(d) relevant non-banking groups.

(2) The report will pay particular attention to receipts from—

(a) corporation tax;

(b) the bank levy; and

(c) bank payroll tax.

(3) A copy of the report in subsections (1) and (2) shall be laid before Parliament.’.—(Cathy Jamieson.)

Question put, That the amendment be made.

18:13

Division 252

Ayes: 217

---

Labour: 203
Scottish National Party: 5
Democratic Unionist Party: 3
Plaid Cymru: 3
Social Democratic & Labour Party: 2
Alliance: 1
Green Party: 1

Noes: 286

---

Conservative: 244
Liberal Democrat: 41

Clause 112 ordered to stand part of the Bill.

New Clause 2

Air passenger duty: Wales

‘(1) Schedule (Air Passenger Duty: Wales) has effect.’.—(Jonathan Edwards.)

Brought up, and read the First time.

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

I beg to move, That the clause be read a Second time.

[The Temporary Chair (Mr Peter Bone)]

With this it will be convenient to discuss the following:

New clause 6—Air passenger duty: Scotland

‘(1) The Scotland Act 1998, Schedule 5, section A1 (exceptions) is amended as follows.

(2) After “rates)”, insert—

“(1) Air Passenger Duty on all flights that are—

(a) originating from an airport or aerodrome in Scotland; and

(b) not part of a connecting flight from—

(i) a domestic UK airport or aerodrome; or

(ii) a territory specified in Part 1 of Schedule 5A of the Finance Act 1994.”.’.

New clause 7—Rates of air passenger duty (Scotland)

‘After section 30A of the Finance Act 1994 there is inserted—

“30B Scotland rates of duty

(1) This section applies to the carriage of a chargeable passenger if—

(a) the carriage begins on or after the relevant day; and

(b) the only flight, or the first flight, of the passenger’s journey begins at an airport or aerodrome in Scotland.

(2) Air passenger duty is chargeable on the carriage of the chargeable passenger at the rate set by an Act of the Scottish Parliament for the purposes of this paragraph.

(3) The rate of £0 may be set for the purposes of paragraph (2).

(4) Any rate set must not exceed the rate which would apply if this section were not in force.

(5) “The relevant day” means the day appointed as such by an order.

(6) Section 42(4) and (5) does not apply to any order under subsection (5).

(7) An “Act of the Scottish Parliament” means an Act passed under section 28 of the Scotland Act 1998.”.’.

New schedule 1—‘Air Passenger duty: Wales

Part 1

Rates of Duty from 1 April 2014

1 Section 30 of FA 1994 (air passenger duty: rates of duty) is amended as follows.

After subsection (4D) insert—

“(4DA) Subsection (4D) applies if—

(a) the passenger’s journey is a relevant Wales journey; and

(b) apart from subsection (4DB), subsection (2) would not apply to the journey.

(4DB) The applicable rate in subsection (2) applies to the journey instead of the applicable rate in subsection (3), (4) or (4A) (as the case may be).

(4DC) A passenger’s journey is a “relevant Wales journey”—

(a) in the case of a journey which has only one flight, if the flight begins in Wales; and

(b) in any other case, if the first flight of the journey—

(i) begins in Wales; and

(ii) is not followed by a connected flight beginning at a place in the United Kingdom or a territory specified in Part 1 of Schedule 5A.”.

The amendments made by this Part of this Schedule have effect in relation to the carriage of passengers beginning on or after 1 April 2014.

Part 2

Devolution of Wales long haul rates of duty

2 Chapter 4 of Part 1 of FA 1994 (air passenger duty) is amended as follows.

3 (1) Section 30 (rates of duty) is amended as follows.

(2) After subsection (1) insert—

“(1B) Subsection (1) does not apply to the carriage of a chargeable passenger to which section 30B below (Wales long haul rates of duty) applies.”.

(3) Omit subsections (4DA) to (4DC) (as inserted by paragraph 1 above).

(4) The amendments made by this paragraph have effect in relation to the carriage of passengers beginning on or after the relevant day as defined in section 30B of FA 1994 (as inserted by paragraph 4 below).

4 After section 30A insert—

30B Wales long haul rates of duty

“(1) This section applies to the carriage of a chargeable passenger if—

(a) the carriage begins on or after the relevant day;

(b) the only flight, or the first flight, of the passenger’s journey begins at a place in Wales;

(c) the passenger’s journey does not end at a place in the United Kingdom or a territory specified in Part 1 of Schedule 5A; and

(d) if the passenger’s journey has more than one flight, the first flight is not followed by a connected flight beginning at a place in the United Kingdom or a territory specified in Part 1 of Schedule 5A.

(2) Air passenger duty is chargeable on the carriage of the chargeable passenger at the rate determined as follows.

(3) If the passenger’s journey ends at a place in a territory specified in Part 2 of Schedule 5A—

(a) if the passenger’s agreement for carriage provides for standard class travel in relation to every flight on the passenger’s journey, the rate is the rate set by an Act of the National Assembly for Wales for the purposes of this paragraph; and

(b) in any other case, the rate is the rate set by an Act of the National Assembly for Wales for the purposes of this paragraph.

(4) If the passenger’s journey ends at a place in a territory specified in Part 3 of Schedule 5A—

(c) if the passenger’s agreement for carriage provides for standard class travel in relation to every flight on the passenger’s journey, the rate is the rate set by an Act of the National Assembly for Wales for the purposes of this paragraph; and

(d) in any other case, the rate is the rate set by an Act of the National Assembly for Wales for the purposes of this paragraph.

(5) If the passenger’s journey ends at any other place—

(e) if the passenger’s agreement for carriage provides for standard class travel in relation to every flight on the passenger’s journey, the rate is the rate set by an Act of the National Assembly for Wales for the purposes of this paragraph; and

(f) in any other case, the rate is the rate set by an Act of the National Assembly for Wales for the purposes of this paragraph.

(6) The rate of £0 may be set for the purposes of any paragraph.

(7) The same rate may be set for the purposes of two or more paragraphs.

(8) Subsections (5) to (7) and (10) to (12) of section 30 apply for the purposes of this section as they apply for the purposes of that section.

(9) “The relevant day” means the day appointed as such by an order.

(10) Section 42(4) and (5) do not apply to an order under subsection (9).

(11) A Bill containing provision authorised by this section may not be passed by the National Assembly for Wales except in pursuance of a recommendation which—

(g) is made by the Minister of Finance; and

(h) is signified to the Assembly by the Minister or on the Minister’s behalf.

(12) “Passed”, in relation to a Bill, means passed at the final stage (at which the Bill can be passed or rejected but not amended).

(13) Duty paid to the Commissioners in respect of the carriage of chargeable passengers to which this section applies must be paid by the Commissioners into the Consolidated Fund of Wales.”.

5 (1) Section 33 (registration of aircraft operators) is amended as follows.

(2) After subsection (2A) insert—

“(2B) If the Commissioners decide to keep a register under section 33B below, an operator of a chargeable aircraft does not become liable to be registered under this section just because the aircraft is used for the carriage of chargeable passengers to which section 30B above applies.”.

(3) In subsection (3)(b) after “applies”, insert “or, if the Commissioners have decided to keep a register under section 33B below, that no chargeable aircraft which he operates will be used for the carriage of chargeable passengers apart from the carriage of chargeable passengers to which section 30B above applies.

(4) In subsection (7) after “section 33A”, insert “or section 33B below”.

6 After section 33A insert—

33B (1) The Commissioners may under this section keep a register of aircraft operators.

(2) If the Commissioners decided to keep a register under this section, the operator of a chargeable aircraft becomes liable to be registered under this section if the aircraft is used for the carriage of chargeable passengers to which section 30B above applies.

(3) A person who has become liable to be registered under this section ceases to be so liable if the Commissioners are satisfied at any time—

(a) that he no longer operates any chargeable aircraft; or

(b) that no chargeable aircraft which he operates will be used for the carriage of chargeable passengers to which section 30B above applies.

(4) A person who is not registered under this section and has not given notice under this subsection shall, if he becomes liable to be registered under this section at any time, give written notice of that fact to the Commissioners not later than the end of the prescribed period beginning with that time.

(5) Notice under subsection (4) above shall be in such form, be given in such manner and contain such information as the Commissioners may direct.”.

7 In section 34 (fiscal representatives) in subsection (5)—

(a) in paragraph (a) after “33A”, insert “or 33B”.

8 After section 41B insert—

41C Wales long haul rates of duty: disclosure of information

“(1) An officer of Revenue and Customs may disclose to the Secretary of State, the Treasury or the Department of Finance in Wales any information for purposes connected with the setting of rates under section 30B above, including (in particular) to enable the setting of rates under that section to be taken into account for the purposes of section 118 of the Government of Wales Act 2006 (payments by Secretary of State into Welsh Consolidated Fund).

(2) Information disclosed under subsection (1) above may not be further disclosed without the consent of the Commissioners (which may be general or specific).

(3) In section 19 of the Commissioners for Revenue and Customs Act 2005 (wrongful disclosure) references to section 18(1) of that Act are to be read as including a reference to subsection (2) above.”.

9 In section 44 of CRCA 2005 (payment into Consolidated Fund) after subsection (2)(cb) insert—

(cc) sums required by section 30A(15) of the Finance Act 1994 (air passenger duty: Wales long haul rates of duty) to be paid into the Consolidated Fund of Wales,”.

10 In column 2 of the Table in paragraph 1 of Schedule 41 to FA 2008 (penalties for failure to notify), in the entry relating to air passenger duty, after “33A(4)”, insert “or 33B(4)”.

11 The amendments made by this Part of this Schedule have effect in relation to the carriage of passengers beginning on or after 1 April 2014.

12 The rate of duty in force under section (30B) shall not be greater than the rate which would be in force if the section had not been enacted.’.

Clauses 72 to 74 stand part.

[Jonathan Edwards]

Diolch yn fawr iawn, Mr Bone. It is an honour to serve under the chairmanship of the best slow left-arm bowler in the Westminster cricket team.

It is with pleasure that I rise to support new clause 2 and new schedule 1, and I will be pushing for a vote at the appropriate time. The UK Government commission on devolution in Wales, headed by Paul Silk, published the first phase of its report in November 2012, which concentrated solely on fiscal powers. Some 18 months later we are still waiting for an essential part of the cross-party Silk commission recommendations to come to fruition: the devolution of responsibility for long-haul air passenger duty. The original cross-party report recommended that responsibility for APD be transferred to Wales at the earliest opportunity and that the Finance Bill was the appropriate vehicle for doing that. The commission had the 2013 Finance Bill in mind, following the precedent set during the 2012 Finance Bill when APD was devolved to Northern Ireland.

It therefore comes as no surprise that I am here yet again attempting to transfer APD to Wales, as was agreed by all the parties in the commission. I will seek to divide the House and to hold other parties to what their representatives on the commission said and, perhaps more importantly, what their representatives in the National Assembly say back in Wales. I would of course be ecstatic if by some divine intervention their masters here in London listened to them for once and voted in favour of the policies they advocate—I do not hold my breath in much hope.

I will go on to speak about the discrepancies between what the Unionist parties say in Wales and how they vote here on devolving APD. First, let me inform the House a little about the background to the UK Government commission’s recommendation to devolve APD as part of a comprehensive package of financial powers and about the stage we are at now. In short, the cross-party Silk commission recommended that powers over stamp duty land tax, the aggregates levy, long-haul APD, landfill tax and business rates be devolved in their entirety. It also advocated a sharing arrangement for income tax, with Wales having the ability to vary each individual income tax band and rate.

After having been made to wait for more than a year by the London Government to grace us with a response to the commission which they themselves set up, we find ourselves already having debated the Second Reading of the Wales Bill in this Chamber. We expect it to be confirmed tomorrow morning that the whole House will return to consider the Committee stage of that Bill after the Easter recess. Yet the Wales Bill has some glaring omissions. It seems like a long time ago now when, last autumn, the Prime Minister and Deputy Prime Minister swept into the Senedd building in Cardiff, to flashing camera lights and an adoring paparazzi, in order to announce new financial powers for Wales. Very few questioned what exactly was being proposed. Only later did it emerge that the Westminster Government were prepared to accept the cross-party commission recommendations only in part and that they would be ignoring some. That is despite the fact that they had representation on the commission in the form of a commissioner representing the Conservative party and a commissioner representing the Liberal Democrats.

In essence, the Government have cherry-picked the commission’s recommendations, even though they were agreed on as a comprehensive package of reforms. It is therefore greatly disappointing that the Westminster Government have decided to ignore the will of the people of Wales, who believe that Wales should have greater power over its own affairs, according to successive polls, not least the ones conducted by the commission while it gathered evidence as part of its reports. Those polls represent some of the most detailed research undertaken on attitudes towards devolution since we first had our own devolved legislature in 1999.

[Hywel Williams (Arfon) (PC)]

Is all that not doubly disappointing given that our representative on the Silk commission was prepared to compromise in order to get a unanimous report? We gave ground and support to the recommendations of the Silk commission, but the Government are cherry-picking.

[Jonathan Edwards]

My hon. Friend makes a very important point and of course he is right. As I will go on to say, the Silk commission was a huge compromise for Plaid Cymru, yet we find ourselves the only party represented here in Westminster, and the only party represented in the National Assembly in Cardiff, trying to preserve the integrity of the Silk commission. That is a vital point which the people of Wales will realise in good time.

The devolution of air passenger duty was an important element of the package recommended by the Silk commission. It was therefore a slap in the face for Wales when it was omitted from the Wales Bill, which is currently progressing through this House. Both my colleagues and I have spoken several times about that Bill so I will not go into it too much further, save to say that my party and I have been dismayed by the attempts of both the Government and the Labour party to put narrow party self interest ahead of the Welsh national interest and to lay down road blocks in terms of the Silk commission.

The Government have sought to water down the financial powers recommended by the commission by constraining them through a lockstep.

18:30

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

I note the hon. Gentleman’s points about the Silk commission and about how the principal parties reneged on it. That also happened in Scotland with the Calman commission, which was set up by the Conservatives, Liberals and the friends of Labour, who then reneged on the Calman proposal to devolve ADP to Scotland.

[Jonathan Edwards]

That is an interesting point. I am sure that the people of Scotland are watching these developments intently, as they will be voting in a referendum on independence in September. The issue is, can they trust anything that the no campaign says in advance of that referendum? I am sure that that will become a growing theme as we approach the closing stages. I wish the hon. Gentleman and his colleagues well in the forthcoming months.

As I was saying, the Government have sought to water down the financial powers recommended by the commission by constraining them through a lockstep, essentially making it impossible to vary income tax in Wales. Meanwhile, the Labour party says that it will block any income tax powers via its Government in Cardiff unless the Barnett formula—the way in which Wales is funded—is reformed. That is despite having 13 years to do so while it was in government.

Labour also now supports the lockstep principle, despite the protestations of the First Minister. There is of course the added twist that the bands can only be moved upwards, which is why I have labelled Labour’s policy “lockstep plus”.

Needless to say, the agreement that was the Silk commission’s recommendations fell far short of what Plaid Cymru was advocating as a party, to which my hon. Friend the Member for Arfon (Hywel Williams) alluded earlier. We wanted a more comprehensive list of job-creating and economy-boosting powers including VAT, corporation tax, resource taxes and capital gains tax. However, in the interests of compromise, we settled on the final recommendations.

The Silk commission argued that should corporation tax be devolved to Northern Ireland, Wales should not be left behind. I follow with interest the unanimous support in Northern Ireland, among all parties, pressure groups and interest groups, for the devolution of corporation tax—[Interruption.] Exactly, that is a very interesting point: the Unionists in Northern Ireland want corporation tax and a whole range of job-creating powers for their devolved Government, yet we have unionists representing Welsh constituencies trying to block any move towards further powers for our country.

The Silk commission argued that should corporation tax be devolved to Northern Ireland, Wales should not be left behind. The fiscal powers recommended by Paul Silk and his team in the commission’s report are still desperately needed for the sake of the Welsh economy. The ability to vary some taxes and to borrow for investment would enable us in Wales better to deliver job-creating and economy-boosting measures and policies to help turn around the continuing bad performance of the economy.

It was also interesting to hear the Secretary of State sing the praises of the lockstep income tax provision of the Wales Bill in a TV interview. He said that it could be used to vary rates and would put Wales at a competitive advantage, but that the devolution of long-haul air passenger duty would put Bristol airport at a competitive disadvantage. That incoherence shows that the cherry-picking of the Silk recommendations falls apart unless they are introduced as a comprehensive and whole package.

Long-haul APD was devolved to Northern Ireland in last year’s Finance Bill, and the Silk commission has recommended the devolution of long-haul APD to Wales. It is clear therefore that today’s debate is the appropriate legislative vehicle to move this issue forward. Although I failed to do so last year, I live in hope that I might succeed today, but given that all the Labour MPs have disappeared home—AWOL again when the interests of Wales are under discussion—I am not holding my breath.

[Mr Nigel Dodds (Belfast North) (DUP)]

I have a lot of sympathy for what the hon. Gentleman is putting forward. He has mentioned Northern Ireland in relation to corporation tax and APD. Does he recognise though that one big argument in relation to Northern Ireland is the fact that we have a neighbour to our south, another EU member state, which competes directly with Northern Ireland? We also have a land border, and the corporation tax and APD rates down south are much less than they are in Northern Ireland, so there is a unique case in Northern Ireland—but I am not for one minute setting aside the merits of his case

[Jonathan Edwards]

As usual, the right hon. Gentleman makes a reasoned argument. Northern Ireland has a land border with the Republic, of course, but we would argue that we have a sea border. I normally find myself making the case for equality with Scotland in this place, but in this instance I am calling for equality with Northern Ireland. What is good enough for Northern Ireland is certainly good enough for Wales.

Just over a year ago, the Labour Welsh Government acquired the national airport of Wales, located just outside Cardiff near Barry in the Vale of Glamorgan. The ability to attract long-haul flights to the airport would significantly improve its competitiveness. It has more than 1.5 million people within its catchment area, and long-haul flights could attract people from even further afield given that that is the only airport in Wales or the west of England with a runway large enough to accommodate transatlantic aircraft. The development of the airport could act as a spur to growth in the south Wales economy, bringing in greater foreign direct investment through better business links, which would in turn bring jobs and growth. Quite frankly, I am amazed that the Labour party has not proposed its own amendment to the Finance Bill and that only goes to show that the First Minister has absolutely no influence over his bosses down here in London or, at least, over Labour MPs based in Wales.

In response to the UK Government’s proposals for the Wales Bill last November, the Labour First Minister said that he was “disappointed” that air passenger duty on long-haul flights would not be devolved. I am not surprised, given that his Government had brought the airport under public ownership only a year earlier. In a lecture at the London School of Economics, the First Minister said:

“Air passenger duty is another tax that should, in my view be devolved. While London struggles with where to build additional airport capacity, we in Wales face a very different problem. Our national airport in Cardiff has not enjoyed the growth in passenger numbers and destinations that we need to help drive economic growth. Devolution of air passenger duty would give us a useful tool to incentivise the growth of Cardiff airport and other smaller facilities, such as Anglesey in north Wales. APD has already been devolved to Northern Ireland for long-haul flights; at a minimum, I believe Wales should have parity.”

The First Minister makes my case for me, but where are his MPs? Where are they? It is just a shame that he could not get his MPs to the Committee to vote when he has the opportunity to do what he keeps preaching to the people of Wales in the Western Mail and on the BBC.

MPs representing Welsh constituencies who fail to vote in favour of devolving air passenger duty do not only ignore the economic needs of Wales, the First Minister of Wales and the overwhelming majority of Welsh public opinion.

[Mr MacNeil]

I am intrigued by the behaviour of Welsh Labour MPs. Does the hon. Gentleman think that Welsh Labour MPs hold their First Minister, Mr Carwyn Jones, in contempt deliberately or accidentally?

[Jonathan Edwards]

The key point is that if the First Minister cannot persuade his own MPs and those on his own Front Bench in Westminster to propose policies that he is promising to the people of Wales, why should the people of Wales listen to a single word he says to them in the media? It is a test of his credibility and authority and, based on tonight’s and last year’s evidence, I would argue that the First Minister has no credibility or authority whatsoever.

[Hywel Williams]

Does my hon. Friend agree that the First Minister has form on this matter? He will recall that we proposed a new clause to the Water Bill to implement the Labour Administration in Cardiff’s policy on borders and the control of water. Of course, the Labour Benches were entirely empty and, as he has mentioned, Labour failed to vote on that matter, too. Labour is entirely bogus.

[Jonathan Edwards]

Once again, I am grateful for that intervention. That is one in a long list of political issues on which the First Minister and his Cabinet members say one thing in Cardiff while Welsh Labour MPs operate completely differently down here. The proof of the pudding will, of course, be the Westminster Labour party manifesto. We will see what influence the First Minister has over that, but the manner in which he has been completely bullied by the shadow Secretary of State, who now supports a lockstep on income tax powers, seems to show that the balance of power is quite firmly here in London.

[Bob Stewart]

The hon. Gentleman has referred to Cardiff airport. Is there another airport in Wales to which air passenger duty applies?

[Jonathan Edwards]

Cardiff is the only international airport. We are talking about APD relief on long-haul flights, and it would apply primarily to Cardiff, but I imagine that the Welsh Government would have ambitions to redevelop other airports in Wales—[Interruption.] If they had the ambition, they would want to improve those airports.

As I was saying, public opinion clearly supports the devolution of the tax to Wales. Only yesterday, the Western Mail published the results of a survey that showed that 78% of respondents supported the devolution of APD. On this, as with so many other issues, the powers that be in Westminster are at odds with what the people of Wales demand. In response to that poll, the Welsh Labour Government said:

“We will continue to put forward the strong case for it”—

APD—

“to be devolved in the hope the UK Government will eventually listen to us and the overwhelming majority of the Welsh public who support this move, as reflected in this poll”.

A day after the poll, we have an opportunity in the Finance Bill to achieve that objective, but where is the Labour party?

I am glad that, since Cardiff airport has been brought into public ownership, new management has driven up passenger numbers by 9%. That is a crucial point—the national airport of Wales is publicly owned. I agree with that, as the airport is an essential part of Welsh national infrastructure, but Labour MPs from Wales are not here to ensure that something that is publicly owned by the people of Wales has the best chance of succeeding in the long term.

The devolution of APD could help to ensure the long-term future of the airport and draw passengers away from congested airports in the south-east of England—something I am sure many MPs and their constituents in and around the south-east of England would welcome. I therefore look forward, perhaps somewhat over-excitedly, to some of those MPs joining us in the Aye Lobby. I am similarly amazed that the Secretary of State for Wales is not pushing for the devolution of APD at the highest level, as it would provide us with the ability to develop the Welsh economy, which should be one of his core objectives.

The hon. Member for Vale of Glamorgan (Alun Cairns) is not in his usual place, which is slightly strange, considering that the airport is in his constituency. The livelihood of many of his constituents depends on the vitality of the airport, as well as the aircraft engineering industry that has grown around it, and they will be dismayed to learn that their MP does not support measures that could give the airport a competitive advantage. I should like to make reference in passing to the difficulties that engineering companies operating from the St Athan airbase, which is close to the international airport, face as a result of the management of that airfield by the Ministry of Defence.

The new clause effectively seeks to give Wales an essential tool to support and provide jobs locally in south Wales and the wider Welsh economy. The financial powers recommended by the Commission on Devolution in Wales are needed as soon as possible as a spur to jobs and growth in Wales. The Westminster Government, in the Wales Bill, have cherry-picked the recommendations and omitted the devolution of APD as well as other proposals. The powers included in the Bill may not be implemented until well into the second half of the decade, provided that no more roadblocks are put in place by other parties. Every month that passes without the devolution of those powers, the Welsh economy languishes even longer at the bottom of the economic league table of the nations and regions of the UK, with job and economic prospects diminished, hopes and dreams dashed, and lives stalled.

Plaid Cymru has made jobs and the economy its absolute priority, which is why we have again tabled an amendment on air passenger duty. We want to create a modern and prosperous Wales and, unlike our political opponents, we have little faith in London government of whatever colour achieving that ambition. That is why we want Wales to have the tools to get on with the job without delay. Diolch yn fawr.

[Henry Smith (Crawley) (Con)]

It is a pleasure to serve under your chairmanship, Mr Bone. I have the privilege and honour of being the Member of Parliament representing Gatwick airport, so aviation is important to my constituents. Aviation is extremely important to the whole of the United Kingdom, as an island trading nation. Many companies located in my constituency are aviation companies, such as Virgin Atlantic, easyJet and TUI Travel, or international companies that have chosen to base themselves close to a major international airport. Therefore, the issue of taxation on aviation concerns not only Wales, Scotland and England, but my constituency in particular.

I would prefer to see us abolishing air passenger duty altogether. We have one of the highest rates of air passenger duty anywhere in the world. I believe that only Chad charges more. Compared with our European competitors, the amount we charge is considerably more. One of our nearby competitors, the Netherlands, used to charge a form of APD but abolished it because of the cost to its economy. Just over a year ago a PricewaterhouseCoopers report concluded that although air passenger duty brings in about £3 billion to the Exchequer, it is estimated to cost the British economy some £16 billion.

I congratulate the Government on their move to reduce the burden of APD, as announced by my right hon. Friend the Chancellor of the Exchequer in his Budget a few weeks ago. It is a great step on the way to reforming and, I hope, one day abolishing this duty. It is a tax that we, as an island trading nation, can ill afford. Reducing bands C and D into band B for flights to capitals more than 4,000 miles from the UK will help many people who want to take well deserved, well earned long-haul holidays. It will also help the diaspora communities, particularly those travelling to the West Indies, India, Pakistan, Australia and New Zealand. Perhaps most importantly for us as an exporting and trading nation, it will help reduce the cost to business of trading with emerging economies such as China.

[David Rutley (Macclesfield) (Con)]

My hon. Friend is making a characteristically powerful speech. I agree that exporters are vitally important. Lord Livingston recently pointed out that mid-sized businesses in particular in the UK are underperforming, as are small businesses, compared to other European businesses. Does my hon. Friend think the changes to APD will help those small and medium-sized enterprises that want to get out and do more exporting?

[Henry Smith]

Indeed. The simplification of the upper bands of APD, as announced in the Budget, will help small and medium-sized companies in particular to export. I pay tribute to UK Trade & Investment under this Government, which has been making a fantastic effort to give SMEs the tools to maximise exports. The simplification of APD is of great help to small and medium-sized companies not only in England, but in Wales and Scotland.

My remarks are brief this evening. I congratulate the Government on a Budget that is good for business and good for individuals, with the income tax threshold being raised, corporation tax being lowered, fuel duty being frozen and the simplification of APD. I put in a bid once again for the abolition of APD in the future, but I recognise that it is only this Government who are tackling our economic problems in a fiscally responsible way. Charging APD on a Great Britain-wide basis is the most appropriate approach; I would not support the regionalisation of APD. Let us focus on getting APD ultimately abolished, but welcome the simplification that is good for individuals and for business in this country as a whole.

[Mr MacNeil]

I rise to speak in support of new clauses 6 and 7, in my name and the names of my Scottish National party colleagues, and I intend to press new clause 7 to a vote.

Unfortunately, air passenger duty has become yet another of the Westminster Government’s damaging interventions in the Scottish economy. It is a tax whose time has passed, if indeed it was ever fitting for Scotland, and it is at best only a demand management tool for Heathrow, needed because of the dithering and prevarication at Westminster about doing anything there. As London lost its advantage in sea-going transport to Rotterdam for reasons of dithering and prevarication, it seems that it is now losing its advantage at Heathrow as well, as the world No. 1 slot goes to Dubai. If Schiphol sorts out a few minor irritants for travellers, it will do to Heathrow what Rotterdam did to the docks.

Since 2007, APD has increased markedly: by between 160% and a staggering 360%. This tax—this demand management tool for Heathrow—is definitely damaging the Scottish economy. I object to it not because Westminster wants to slap it on to flyers owing to its dithering and prevarication—it should be free to tax and spend as it wants, regardless of the stupidity and myopia of its actions—but because of what it is doing to Scotland. The damage is obvious. PricewaterhouseCoopers says that its reduction would increase tax receipts in other areas, especially VAT, and create jobs. In short, Westminster is costing us jobs, certainly jobs in Scotland, through this tax.

Let us have a quick glance at tables that compare APD in the UK with that in some other countries in Europe. According to the Airport Operators Association, the next highest rate on short-haul economy flights is that of Austria, which charges a hefty €8. This sum increases markedly—by 100%—in the UK, which charges €16. On the medium-haul rate, Germany is the leader with €23, but that is trebled, and more, in the UK, where it is €89. On long-haul, Germany, again, leads with €42, but the UK is well out in front with €113—double to treble the rate in other countries. On the maximum-rate charge, France manages to pick up the crown with €47, but steaming out in front, yet again, is the UK with €226. While this demand management tool might be good enough for Heathrow, it is certainly not good for Scotland. It is a gate-keeper tax. I compare it to a high street shop that demands a fee of shoppers before they come into the shop and then wonders why sales have gone down.

There are many ways to approach this, and I think I am going to have to resort to poetry to advance my case. Given the Government’s intransigence, I wonder whether this may be the last untried key to unlocking their obstinacy. I turn to Mary Howitt’s poem of 1829—nearly 200 years ago. It is salient to this issue, because despite its being written before the Wright brothers and the first manned flight, it does make reference to a form of aviation. It is “The Spider and the Fly”:

“‘Will you walk into my parlour?’ said the Spider to the Fly,

‘’Tis the prettiest little parlour that ever you did spy’”.

Scotland, as we know, is one of the prettiest parlours; it is famed for its scenery. Indeed, the website TripAdvisor has named Lewis and Harris, the main island in the north of my constituency, as Europe’s No. 1 island to visit, and fifth in the world overall. Indeed, I would encourage anybody watching this debate or reading it later in Hansard to go to Google Earth and have a look at the scenery. Whether it is the beaches of Harris at Luskentyre, or Uig of the Lewis chessmen fame on the west side, or over at Gress and Tolsta or Port of Ness in the far north, they will see what TripAdvisor is talking about. Anybody visiting will find fine hotels in Tarbert, Harris or Stornoway, Lewis, and many bed and breakfasts, dotted throughout the islands. Stornoway is probably one of the best-connected towns in all of Scotland, with direct daily flights to Scotland’s principal cities of Aberdeen, Inverness, Glasgow and Edinburgh, and sometimes several times daily. There is more. Other islands to the south include North Uist, Benbecula, South Uist, and of course my own native Barra.

But despite our advantages, with standing stones older than Stonehenge and a visitor record going back to the Greeks in 325 BC, the London Government’s attitude is, “Walk into my parlour if you like. We’re not too bothered if you do or you don’t, but if you do we’ll have our highwayman mask on and we’re out to charge you a king’s ransom”—and this is just to reach Scotland in the first place.

That is a pity, because those who do discover the beauty of Scotland and especially its islands—from Islay to Unst in Shetland—find, rather like the fly at the end of Mary Howitt’s poem, that those who go up the winding stair can ne’er come down again. Similarly, those from overseas who discover Scotland are very likely to return. The damage is huge. It is not quite cataclysmic, but it is big. We are not quite in the territory of Lord George Robertson, who killed the word “cataclysmic” stone dead after he took a flight recently to make a speech in the United States of America. I am sure he is well aware of how much APD he paid.

Moving on to more serious voices on this issue than that of Lord George Robertson, a range of industry figures have lined up against this self-defeating tax. Amanda McMillan, the respected managing director of Glasgow airport, has said:

“Aviation plays a critical role in supporting the growth of the UK economy and this role is even more profound in Scotland given the country’s location on the periphery of Europe. Travelling by air is not a luxury but an essential element of business and family life, yet we continue to have the highest levels of taxation in the EU. It was extremely disappointing, therefore, that despite repeated representations to the UK Government the Chancellor in his Autumn statement opted to further increase levels of APD. APD is already proving a significant barrier to attracting new routes and unless there is a fundamental re-think, I have no doubt that Scotland’s domestic and international connectivity will suffer. Thankfully, there is broad cross party support in Scotland for action on APD and we welcome any moves which would address the issue and stimulate further growth.”

I hope to see evidence of that broad cross-party consensus in Scotland when we press the new clause to a vote tonight—or is it similar to the hollow words of Labour in Wales?

Gordon Dewar, chief executive of Edinburgh airport, has said of the White Paper:

“We welcome this policy from the Scottish Government and we would like to see APD not only halved but abolished completely. We’ve had a successful year at Edinburgh Airport but it is clear from our discussions with our airlines that Scotland could be far better connected without the iniquitous yoke of APD. It puts our country and importantly our vital tourism industry at risk. People and airlines will go elsewhere. We reiterate our call for governments to support our economy and abolish this unfair tax.”

The managing director of Aberdeen airport, Carol Benzie, has said:

“What is becoming increasingly clear are the implications of this tax on UK businesses. Put simply APD adds to the burden of running a successful company. 65% of our passengers in Aberdeen are travelling in a professional capacity and ultimately the responsibility for paying APD in each and every one of these cases is being passed back to their employer. Firms in Aberdeen are connected globally with links in emerging and existing markets. These businesses are paying APD twice if they chose to use a hub airport in the UK, and are taking their business elsewhere in increasing numbers to avoid this tax.”

It is self-defeating.

Commenting on the Irish Government’s decision to abolish air travel tax, which came into force on 1 April, Scottish Transport Minister Keith Brown, a former veteran of the Falklands war, said:

“Scrapping Air Travel Tax in Ireland has had an immediate impact and shows what could be achieved in Scotland if we had control over Air Passenger Duty…After the Irish Government outlined its plans to abolish the tax last year, Ryanair stated that it will deliver an additional 1 million passengers to and from Ireland as a direct result of that decision, with 20 new routes into Dublin, Shannon and Cork launching this summer.”

When I spoke about this last year I warned that the UK Government had been ignoring the industry, the people and the Scottish Government for far too long and that it was no wonder that support for independence was growing. We now know that support for independence has grown far more in the past year than I could have imagined. Are the UK Government going to continue with their intransigence? A year on, what do we have? The gap in the polls has closed, tightening to 6% within the margin of error, which is almost a swing, and the head of British Airways, Willie Walsh, and Ryanair’s Michael O’Leary are supportive of Scottish independence because they see the opportunities. I am sure that Members of this place will be supportive of independence after the event, but why do they have to be so slow and so late to the party? Michael O’Leary and Willie Walsh are right on the money, as we will see on 18 September.

The Scottish Government, in their White Paper on the best-planned independence process of any country in the world, aim to reduce APD by 50% within the first term of an independent Parliament, and to abolish it completely when circumstances allow, with a proposal for a straight reduction in bands. Independence is gaining support because of such straightforward, common-sense approaches.

19:00

I note that this is a time of improved, or the best-ever, UK-Irish relations, as the Prime Minister has said; relations are at an all-time high. He calls them “Anglo-Irish relations”, but I am of course working my hardest to make sure that those words are indeed accurate after September. Yesterday, the Irish President Michael D. Higgins, a lovely, charismatic and inspirational man, said that people-to-people connections have never been closer between these two islands—no doubt because of their independence.

I must say that I am grateful to a visiting Member of the Dail Eireann, Frank Feighan TD, the Member for Roscommon Leitrim South. He reminded me that not only are the number of routes shooting up in Ireland—the 20 routes that I mentioned—but the ending of APD will increase visitors’ spend. Irish politicians can see clearly, far more clearly than Westminster, that such spend will more than replace what was lost in APD revenue.

It puzzles me that the UK Government are quite comfortable with Ireland, with which we share a sea border, having zero APD—saying that relations are the best ever and are at an all-time high—but are absolutely petrified of Scotland managing to reduce its APD by 50%. That is illogical, incoherent and daft. If the UK Government lost their imperial control mania, they would find themselves living in an island whose aggregate GDP was going up. We would all benefit from that—not just in Scotland, but in England and, I hope, particularly in the north of England, a part of the world for which I have a real soft spot.

I will finish with a PricewaterhouseCoopers study, which says that the UK picture last year suggested that the abolition of APD would yield 0.46% of UK GDP in the first year, and add at least £16 billion to GDP within three years, while creating 60,000 new jobs. The figure for Scotland would be about £667 million. APD raises £2.8 billion to £3 billion in the UK, which is £13 billion less than what could be made. In Scotland, the figure is £234 million.

I say to Treasury Ministers that, given a UK net gain of £13 billion, perhaps the Treasury is thrawn or uninterested in what is happening in Scotland. I appeal to them to get out a calculator and to act in their own self-interest, because if they do, they will see the wisdom of what Ireland, the Netherlands and many other countries have done and the wisdom of what every voice in the industry is saying. Only intransigence and a thrawn, thrawn Westminster attitude has left us in a situation where, year after year, we have to use poetry or any other device to try to get it into the minds of bods at the Treasury that here is something to be listened to and noted for the prosperity of many people, and for those who would fill the 60,000 new jobs.

[David Rutley]

It is a pleasure to serve under your chairmanship, Mr Bone, as we debate the Bill on the Floor of the House. One thing we have learned is that if Scotland made the mistake of voting yes, at least those wanting to leave could do so at a lower cost, given the benefits coming through from the proposal on APD.

[Mr MacNeil]

In the light of the events of the past few days, does the hon. Gentleman think that Irish independence is a good idea?

[David Rutley]

I have no idea what that matter has to do with APD.

[Mr MacNeil]

The hon. Gentleman may have heard me say in my speech a few moments ago that the Irish have reduced APD to zero. The President of Ireland has been here on a state visit this week, showing how warm relations are, and we are looking for such warm relations. We are looking to control our APD, and to have very friendly and very warm relations, especially with the people of Macclesfield.

[David Rutley]

I am a regular visitor to Scotland—I normally drive—but I think we should move on to wider issues.

As they stand, the changes to air passenger duty from April 2015 will save business-class, long-haul passengers more than £100. It makes sense to abolish the very high bands of APD. They have caused understandable concerns, with the widespread perception that they were just another example of the unfair tax changes that we inherited from the Labour party. It is right that, as a result of the Government’s decisions, all long-haul flights will carry the same lower band-B tax rate that is paid to travel to the United States, for example. A family of four flying economy to visit relatives or communities in the Caribbean or south Asia will pay £56 less in APD. It is also right and fair that the Government have brought private jets into the scope of APD and that the share of the burden is more easily spread across air passengers.

Government Members believe in tax fairness, and we believe in reducing the burden of tax wherever possible. As my hon. Friend the Member for Crawley (Henry Smith) pointed out, however, it must be a fiscally responsible approach, although that seems to have been completely ignored in the comments of some Opposition Members.

By cutting APD, the Chancellor is again helping to support British exporters, not least first-time exporters looking to make their first steps into high-growth export markets, perhaps by attending international trade fairs or visiting prospective clients and customers abroad. Virgin Atlantic says:

“The Government has rightly recognised the damage APD is having on exporters and the travelling public alike.”

There is a real need to encourage more exports and exporters. As I indicated in my earlier intervention, Lord Livingston recently pointed out that

“only 17% of UK mid-sized businesses generate revenues outside of the EU compared to 25% in Germany and 30% in Italy.”

I am delighted that action is being taken across Government to meet that challenge. Our small and medium-sized businesses have the potential to be economic powerhouses for our economy and to create more wealth and more jobs across all regions of the UK, including Wales and Scotland. To realise that potential, we need to rediscover our great trading heritage and embrace the global opportunities for Great British services and manufactured goods. By cutting APD, we are underlining the commitment of the Department for Business, Innovation and Skills, the Foreign Office and UK Trade & Investment to provide support. Those are positive steps.

International aviation links are not merely important for exporting goods and services from the UK to other countries, or to make more sales missions feasible; lower APD will support UK tourism and help to improve our competitive position in the market for inbound tourists, be they leisure tourists or business travellers in the meetings, incentives, conferences and events sector.

According to Kurt Janson, the Tourism Alliance’s policy director, the Bill’s proposed savings

“will be a benefit for attracting visitors from the growth markets of China, India and Brazil as well as the traditional market of New Zealand and Australia.”

Indeed, PricewaterhouseCoopers suggests that the studies it reviewed for its research

“all point to a link between whole economy productivity and airline sector output.”

By encouraging greater connectivity between the UK and the global economy, reductions in APD can add to the mix of supply-side measures introduced by this Government since 2010. APD is another barrier to productive growth that the Government seek to remove.

This Government believe in long-term thinking. Difficult decisions have had to be made to save us from the appalling legacy that we inherited from the previous Government, but we are now seeing the results of that approach. It has become affordable and fiscally responsible to cut APD and other taxes that have been holding back this country’s businesses and people from realising their ambitions. The Government are helping people to realise their ambitions and objectives in life by working progressively to de-risk entrepreneurialism and support the export industry. For that reason, the measures have my full support.

[Catherine McKinnell]

It is a pleasure to serve under your chairmanship, Mr Bone. It is clear from the contributions and amendments tabled by the hon. Members for Carmarthen East and Dinefwr (Jonathan Edwards) and for Na h-Eileanan an Iar (Mr MacNeil) that APD remains an important issue for many hon. and right hon. Members. Indeed, we have debated APD on the Floor of the House on many occasions, so it is worth briefly reflecting on the coalition Government’s record on APD since they came to power in 2010— a record, as I am sure many hon. Members will agree, of prevarication, indecision and lack of direction.

Before the election, the Conservatives made a commitment to look at a per-plane duty. The report that resulted almost a year later, contrary to the manifesto commitments of the Conservatives and the Liberal Democrats and the coalition agreement, was not taken forward, and for very good reasons. The industry certainly did not support it. Although right hon. and hon. Members on both sides of the Committee will be all too conscious of the need not to take a Liberal Democrat promise at face value, we had certain expectations concerning the coalition agreement.

The Government promised a further review of APD. The consultation covered several areas including private jets, different tax bands, premium economy flights, flights from regional airports and the possible devolution of APD. The consultation paper raised the concern that the existing four-band structure was damaging the UK’s competitiveness and contained several anomalies, such as a higher rate for Caribbean flights than for other destinations in the USA. That was a source of concern for many hon. Members, which, given the announcement in this year’s Budget, the Government seem to have taken on board. The consultation lasted the best part of a year and numerous interested parties took considerable time and effort to respond constructively and in good faith.

What was the result of that long and arduous process, which, including the first consultation, spanned the best part of two years? It was next to nothing. Aside from the extension of APD to cover business flights, we have seen no changes to APD across the UK. That period of time has been described by industry players as

“a sham and a waste of taxpayers’ money.”

There were three full years of promises, yet the Government delivered next to nothing. Three wasted years—a phrase that is synonymous with the coalition Government, whether in respect of APD or, more broadly, the flatlining economy that we have seen for most of the Chancellor’s time in office.

In this year’s Budget, choices were made that, notwithstanding the years of delay and the further year of delay ahead, have been cautiously welcomed by much of the industry. The third coalition U-turn in this area in as many years means that there will be some relief for long-haul flights in the form of lower rates of APD. Let us not forget that APD on all flights of more than 2,000 miles will be uprated by RPI this month. That comes on top of the large increases over the past few years, including the 8% rise that the Chancellor announced in Budget 2012, which was double the rate of inflation.

Budget 2014 saw the announcement or re-announcement—I am not entirely sure which, as Ministers will not give me a straight answer—that the Government will provide funding to aid start-up routes at smaller airports. The regional air connectivity fund, as it will be known, will help new routes from regional airports according to the Red Book, but Ministers do not seem to know which airports or new routes will be eligible or what the fund may be spent on. Although any new support for new air routes is clearly welcome, the proposal seems to bring yet more uncertainty for the aviation industry, the like of which it has already endured for years.

Clearly, that support could be of most value to the constituents of the Members who have tabled the new clauses and the new schedule. Perhaps the Minister will enlighten the Committee and reassure hon. Members about what support their regional airports can expect to receive from the fund.

[Hywel Williams]

While the hon. Lady is talking about enlightening the Committee, will she enlighten us as to where her Welsh Labour colleagues are? There is a Welsh Whip lurking at the far end of the Front Bench. Perhaps he will give us a clue.

[Catherine McKinnell]

We have been very clear on numerous occasions that Labour remains to be convinced of the merits of devolving APD. We do not believe that it is necessarily the correct way forward at this stage.

We acknowledge that the Government have made some notable changes to APD in Northern Ireland. The Chancellor announced in September 2011 that APD rates on long-haul flights using airports in Northern Ireland would be cut because of the threat of competing routes from the Republic of Ireland to the transatlantic route from Belfast to Newark airport in New York, which is critical to the Northern Irish economy. Continental Airlines had been paying APD, unsustainably, at a cost of £3.2 million a year. Following the Finance Act 2012, APD on long-haul flights departing from Northern Ireland was devolved to the Northern Ireland Assembly, which abolished it on 1 January 2013.

I know that right hon. and hon. Members, and anyone who has engaged in this debate over the past few years, will be all too aware of those facts. However, it is important to remind the House of them, so that it can better understand the new clauses and new schedule. Flights in Northern Ireland clearly face specific challenges. As I and other Labour Members have noted before, it is the only part of the UK that shares a land border with another EU member state. George Best Belfast City airport and Belfast International airport compete directly with Dublin in attracting airlines, routes and passengers. The Opposition supported the Government’s move on APD on long-haul flights from Northern Ireland, given its unique international land border and the fact that Northern Ireland largely relies on air transport for its link to the rest of the UK.

19:15

[Mr MacNeil]

Is aviation not about more than competition? It is also about growth. When Governments get their head around that, we will surely see a sea change in their approach to APD. They should focus on growth, not just competition.

[Catherine McKinnell]

The hon. Gentleman makes an important point, and I entirely agree that the Government should be absolutely focused on economic growth. The debate about APD is part of that discussion, and the regional air connectivity fund must also be part of the conversation. The Government need to provide clarity on those issues in this Finance Bill and in the future.

As I said, Labour remains to be convinced of the merits of devolving air passenger duty. The Calman commission proposed that it be considered, and the Labour Government committed to keep it under review.

[Jonathan Edwards]

The hon. Lady made a telling point in response to my hon. Friend the Member for Arfon (Hywel Williams) when she said that the Labour Treasury Front-Bench team remained to be convinced of the position taken by the Labour Government in Wales. As she knows, the Labour Government are in direct intergovernmental negotiations with the UK Government’s Treasury team. If the First Minister and the Welsh Government cannot convince their own party, what credibility can they have in those vital negotiations with the UK Government?

[Catherine McKinnell]

I have said clearly that the Labour party remains to be convinced of the merits of devolving APD, but let us remember that the Wales Bill that is currently going through Parliament contains a number of devolved tax powers for Wales and is the appropriate place to debate these issues in the round. Labour’s devolution commission in Scotland considered the matter again and argued that devolving APD within the mainland of Great Britain would generate unhelpful tax competition within the UK.

[Hywel Williams]

I am intrigued. The hon. Lady says that Labour remains to be convinced about devolving APD. Has she told Carwyn Jones?

[Catherine McKinnell]

As I said, the Wales Bill, which is currently going through Parliament, contains a number of devolved tax powers for Wales and is the appropriate place to debate these issues. That is why Labour will abstain on the issue of APD devolution tonight, but we look forward to the Exchequer Secretary providing clarity on the various queries that have been raised today, particularly about the regional air connectivity fund, which is clearly linked to the issues of certainty for investment, growth, which all Members are focused on, and the role that aviation plays in our economy.

[Mr Gauke]

In 2010, the Government inherited an air passenger duty system that needed to be fixed. The changes that the previous Government made in late 2009 caused aggravation to the UK’s overseas friends and frustrated diaspora communities. Clauses 72 to 74 will fix the system by implementing air passenger duty rates for this year and by reform of the rates for next year.

I will address new clause 2 and new schedule 1, tabled by Plaid Cymru Members, and new clauses 6 and 7, tabled by Scottish National party Members. The Plaid Cymru proposal broadly follows the form that was taken to devolve the duty on direct long-haul flights from Northern Ireland, and requests a similar devolution for direct long-haul flights from Wales. The SNP proposals seek the devolution of duty on flights to all destinations.

I remind hon. Members that the devolution of duty for Northern Ireland was in specific response to Northern Ireland’s unique circumstances. It shares a land border with Ireland, leading to a risk of flights relocating from one part of the shared land mass to another. We recognised that risk and acted to ensure that Northern Ireland was not disadvantaged.

The current situation is that airports on the Great Britain mainland face the same APD rates, but the SNP and Plaid Cymru proposals could well lead to the introduction of the same market distortions that our devolution to Northern Ireland sought to prevent, namely the reallocation of flights from one part of the UK to another, leading to distortion in competition, and winners and losers across the UK.

Regional airports are doing well: 2013 was the third consecutive year of passenger growth and our APD banding reform is another confidence boost for the air travel market. Relevant examples include Cardiff airport, which in 2013 saw a 4% increase, equating to around 44,000 extra passengers, with new routes announced to Germany and the Caribbean. In Scotland, there has been 3% growth at Glasgow airport, with almost 206,000 additional passengers. New routes have been announced for this summer to Croatia and Greece. Edinburgh airport has grown 6%, equating to more than 580,000 additional passengers. In the past six months, new routes to Qatar, the USA and Norway have been announced.

[Mr MacNeil]

Is the Minister happy, or does he agree with industry figures in Scotland, particularly the managing directors of airports, who believe that that growth has been constrained by APD?

[Mr Gauke]

My point to the hon. Gentleman is that the Government must reduce the deficit and APD is a valuable source of revenue. One cannot look at the effects of APD in isolation; one must look at the overall effects on the economy. We have taken measures in the Bill to reduce the burden of APD, but it is worth noting that airports in Scotland and Wales, and regional airports elsewhere in the UK, have been doing well in recent months.

[Guy Opperman]

I wish to praise Newcastle airport, which has welcomed the changes to APD. It is pleased that officials are indicating that the regional air connectivity fund will extend to airports beyond the 3 million passenger mark to those with upwards of 5 million passengers in certain circumstances. Does the Minister agree that that is a further example of the Government assisting regional airports and allowing them to grow as we know they can?

[Mr Gauke]

I am grateful to my hon. Friend because he brings me to my next point. I agree with him. The Government recognise the importance of aviation connectivity for all parts of the UK—for example, domestic flights are not subject to VAT. As he says, we are extending the scope of the regional air connectivity fund to include start-up aid for new routes from regional airports, and increasing funding to £20 million a year. Clearly, exactly how that works is a matter for the Department for Transport, but I welcome the fact that the Government are consulting the regional airports to see whether those that have more than 3 million passengers per year can receive extra support. That includes Newcastle airport, which has 4.4 million passengers. One could also mention East Midlands International, Liverpool John Lennon, Belfast International, Aberdeen, London City and Leeds Bradford, all of which have more than 3 million passengers a year. We are trying to do what we can to ensure that those airports can gain support from the connectivity fund.

[Catherine McKinnell]

Obviously, we broadly welcome any support for expansion and new routes from regional airports, but would the Minister accept that making an announcement without any details about the type of activity that will be covered by the funding can add uncertainty to the already difficult environment for the industry at present? It is imperative to bring some clarity to the issue as soon as possible. Will he tell us when he will be able to clarify what might qualify for the funding?

[Mr Gauke]

The hon. Lady is being uncharacteristically glass half empty. We have announced an expansion of the connectivity fund. We have said that we are seeking to take that beyond airports that have more than 3 million passengers per annum. As it happens, the Department for Transport is consulting on and developing guidelines for accessing support, and the results will be published in the summer. I am sure that the hon. Lady is as keen as my hon. Friend the Member for Hexham (Guy Opperman) to ensure that the best happens for Newcastle airport.

[Guy Opperman]

It is surely a relevant factor that the Budget was only a few weeks ago and the guidance on which we are consulting was published by the European Commission only at the end of February. One could hardly have done it any earlier.

[Mr Gauke]

My hon. Friend is right. As I say, the Department for Transport is developing these guidelines with the intention of publishing in the summer.

[Catherine McKinnell]

rose—

[Mr Gauke]

I am sure that the hon. Lady—I think she has Newcastle airport in her constituency or at least nearby—will take this opportunity to welcome what the Government are doing.

[Catherine McKinnell]

Newcastle international airport is in my constituency—[Interruption.] However, I speak on behalf of all the regional airports. I am not being churlish about the potential funding that has been announced, but I hoped that the Minister would realise the increased commercial uncertainty that can be created by making announcements that lack clarity about what may or may not be included. The Government need to move as fast as possible to create—

[The Temporary Chair (Mr Peter Bone)]

Order. Interventions are getting longer than some of the speeches.

[Mr Gauke]

I am not sure that I can add much, other than to say that if the hon. Lady is concerned about uncertainty she might want to look at some of the anti-business policies pursued by her party.

We also recognise that air services in some of the more remote parts of the UK represent a vital connection to the rest of the country. That is why there is an air passenger duty exemption for flights from the highlands and islands of Scotland.

[Mr MacNeil]

I am grateful for the exemptions for the highlands and islands of Scotland, but does the Minister think that the devolution of APD to Scotland and Wales would result in an increase in the number of routes, flights, passengers, commerce, tourism and eventually revenue to the public purse? Does he see any advantage to the devolution of APD?

[Mr Gauke]

I wish to avoid running the risk of repeating myself, but I make the point that I made earlier: the devolution of APD within Great Britain would create unfortunate market distortions. As we said in our November 2013 response to the Silk commission, we are not convinced of the case for devolving air passenger duty to Wales, given the potential effects across the country as a whole. In the case of Scotland, the distortive effects across the country as a whole are harder to diagnose, given that it has more major airports with significant route connectivity. Our opinion remains that this requires careful evaluation if we are to be confident of its potential effects, so I ask hon. Members to withdraw their amendments.

[Bob Stewart]

Is it the Government’s intention to continue the trend of reducing air passenger duty across the country?

[Mr Gauke]

What I would say to my hon. Friend is that we have set out in the Budget and in the Bill significant changes that we think fix the problem we inherited from the previous Government.

My hon. Friend gives me the opportunity to turn to clauses 72 to 74. Ahead of our rates reform, clause 72 fulfils the commitment given in Budget 2013 on the rates of duty for 2014-15. This respects the air travel industry’s point that tickets are often sold a considerable time in advance of travel. The industry needs up to a year’s forward rates certainty to have sufficient time to prepare its accounting systems and set pricing ahead of advance ticket sales. The rates contained in clause 72 have therefore been anticipated by the industry.

19:30

Clause 73 rolls back the previous Government’s four-band system. That system saw travellers to China, India, Brazil, the Caribbean and a host of other destinations paying more in tax than travellers going to Hawaii, even though Hawaii is further away. We believe this system to be crazy and unfair. Clause 73 restores sense and fairness by reforming the duty bandings. It introduces a simple to understand two-band system: one band for travel to countries up to 2,000 miles from London, and another for travel to countries further away. This puts a host of countries on to the same rate as the USA and delivers a rates cut for travel to growth markets in Latin America, southern Asia and the far east with effect from 1 April 2015. For example, a family of four visiting relatives in the Caribbean will save £56, and a commercial traveller to China will save at least £14 per trip.

Clause 74 updates the list of countries over 4,000 miles from London to reflect changes in the legal composition of several island states in the Caribbean and the south Atlantic. These states are also set to benefit from rates savings with the reform of APD from 1 April 2015.

In 2011, a number of regional airports offered the view that there ought to be an additional charge of duty at congested airports, or a lower rate at uncongested airports. Their thinking was that it would spread demand for air travel more widely across the country. However, other airports countered that this is not the most appropriate way to address congestion, and many airlines felt that it would distort the market without materially affecting decisions about where services are located.

In October 2012, Her Majesty’s Revenue and Customs published a report that shows that significantly higher prices at congested airports could lead to some passenger redistributions, but it also suggests that the benefits might not be spread widely across the UK. In addition, the report suggests that some regional airports would in fact lose passengers if a difference in price meant traffic and services went to other competing airports. Having carefully considered the idea, we were not convinced that a regional variation of rates would materially help in meeting our objective to rebalance the UK economy. Budget 2013 therefore ruled out varying duty rates by levels of airport congestion. It is of note that the Airports Commission’s December 2013 interim report also concluded that

“an air passenger duty congestion charge is not a promising solution to the capacity problem in London and the South East.”

In more recent times some regional airports have turned their thinking to the idea of a holiday period for new long-haul routes during which duty would not be payable. On this, the Airports Commission’s interim report offers an illuminating view. It says that there are two potential pitfalls. First, if the idea applied to all new routes equally, there would be substantial potential for airlines to game the system by switching existing routes between airports. Secondly, if there were measures to control this behaviour, the idea would run a substantial risk of legal challenge, because it would distort competition in favour of particular routes and not others. The commission felt that it could not recommend the use of air passenger duty holidays. It instead referenced how airport landing charges might be used to incentivise new routes. We see nothing to disagree with in the commission’s analysis.

In Northern Ireland, there is a defined devolution of air passenger duty that responds to Northern Ireland’s unique circumstances. Since 1 January 2013, the Northern Ireland Government have had a devolved power to set rates for direct long-haul flights leaving Northern Ireland. They have used that power to set a zero rate, which means that the highest rate of duty on any direct flight from Northern Ireland is £13. The rates of duty for through-ticketed flights using connections at one or more hub airports remain the same as those applying to the rest of the UK, which means that from 1 April 2015 passenger savings will result from the Budget’s rates reform.

The Republic of Ireland’s recent decision to reduce its air travel tax to zero from 1 April this year is, of course, acknowledged, but I must make clear that I cannot accept calls from Members for the abolition of air passenger duty. Outright abolition is an unfunded request that would leave a £3 billion-plus hole in the public finances. If, as a consequence, the Northern Ireland Government wish to argue their case for further devolution, they must consider the fiscal costs, which would have to borne locally.

I can confirm that in total, the rates reform in clauses 72 to 74 provides a £920 million shot in the arm for travel to growth markets. It simplifies the tax system, and supports the UK’s export drive. The clauses maintain fiscal responsibility within a fiscally neutral Budget, with targeted action to fix the problems left by the last Government. I therefore ask the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) to withdraw his motion, because the proposals in the new clauses and new schedule would inhibit fair opportunity and distort the market.

[Jonathan Edwards]

We have had an informed and very interesting debate. We have also had an incredible revelation, which I hope the Welsh media will pick up tomorrow. Let me make it clear for the benefit of Labour Front Benchers that Carwyn Jones is the Labour First Minister of Wales.

We heard excellent speeches from the hon. Members for Crawley (Henry Smith) and for Macclesfield (David Rutley), a typically passionate speech from my hon. Friend the Member for Na h-Eileanan an Iar (Mr MacNeil), speeches from both Front Benches, and many good interventions.

The people of Wales own—via the Welsh Government —our national airport, which is a key piece of our national infrastructure, and we need to control air passenger duty if we are to maximise the potential of that asset. This is primarily an issue of jobs and growth, but it is also an issue of gross hypocrisy, given that parties operating in a devolved context say one thing in Wales and something completely different here in Westminster. The Labour First Minister of Wales says that this is an economic priority for his Administration, but he cannot persuade his own bosses here in London, or Labour Members of Parliament based in Wales. This is therefore an issue of the First Minister’s credibility and authority. If he cannot convince his own side, why should anyone in Wales take anything that he says seriously, and how can he possibly engage in detailed negotiations with the United Kingdom Government on these very fine and important fiscal matters?

It is necessary for us to divide the Committee so that the people of Wales can see the truth for themselves, and I therefore wish to press new clause 2 to a Division.

Question put, That the clause be read a Second time.

19:38

Division 253

Ayes: 9

---

Democratic Unionist Party: 3
Plaid Cymru: 3
Scottish National Party: 3

Noes: 254

---

Conservative: 223
Liberal Democrat: 29
Alliance: 1

[The Second Deputy Chairman of Ways and Means (Dawn Primarolo)]

Does Mr MacNeil wish to move new clause 6 formally?

[Mr MacNeil]

indicated dissent.

[The Second Deputy Chairman]

No? Okay. [Interruption.] It is very generous of Members to assist Mr MacNeil, but he can manage it by himself and I believe that the new clause is not moved.

Clauses 72 to 74 ordered to stand part of the Bill.

The Deputy Speaker resumed the Chair.

Bill (Clauses 1, 5 to 7, 11, 72 to 74 and 112 and schedule 1) reported, without amendment (Standing Order No. 83D(6), and ordered to lie on the Table.

Business without Debate

Wednesday 9th April 2014 Commons Chamber

European Union Documents

Motion made, and Question put forthwith (Standing Order No. 119(11)),

Climate and Energy Policy 2020 to 2030 and High Volume Hydraulic Fracturing (fracking) in the EU

That this House takes note of European Union Documents No. 5644/14 and Addenda 1 and 2, a Commission Communication: A policy framework for climate and energy in the period from 2020 to 2030, No. 5706/14 and Addenda 1 to 5, a Commission Communication on the exploration and production of hydrocarbons, such as shale gas, using high volume hydraulic fracturing in the EU, and No. 5700/14, a Commission Recommendation on minimum principles for the exploration and production of hydrocarbons, such as shale gas, using high volume hydraulic fracturing; supports the Government’s objective of securing an ambitious EU emissions reduction target for 2030 in order to support the EU in meeting its long-term climate and energy objectives; and further supports the Government’s objective of maintaining maximum flexibility for Member States to choose their own energy mix, including by exploring the potential for domestic resources, in order to secure their emissions reductions in the most cost-effective manner, given their particular circumstances.—(Stephen Crabb.)

Question agreed to.

Humberstone Heights Golf Course (Leicester)

Wednesday 9th April 2014 Commons Chamber

19:51

[Keith Vaz (Leicester East) (Lab)]

I wish to present a petition on behalf of a number of my constituents concerning the proposals of the city council to close Humberstone Heights golf course in Leicester. Some 1,800 people have signed the petition—[Interruption.]

[Madam Deputy Speaker (Dawn Primarolo)]

Order. I am sorry to interrupt you, Mr Vaz, but I am having difficult in hearing your presentation of the petition because of the noise in the Chamber. I ask Members to leave quietly. Mr Vaz, may I suggest that you start again with the presentation of your petition?

[Keith Vaz]

Thank you very much, Madam Deputy Speaker. I wish to present a petition on behalf of a number of residents of Leicester concerning the proposal to close Humberstone Heights golf club in Humberstone. I was there last Saturday and, as you have correctly said, it is much quieter on a golf course than it is in the Chamber of the House of Commons. I accepted a petition that had been led by Mr Mark Boddice, the club captain, Mrs Heather Smith, the lady captain, Mr Raj Kotak, a past captain, Paul Maurice, Alan Taylor, Jay Marsh, Tony Palmer, Ashok Mistry, Mark Smith, Gaz Kilby, Bruce Frazer, Colin McKenzie, Peter Walker, Michael Pearson and Master David Dewbery. It was signed by 1,800 other people who play regularly at Humberstone Heights golf course. I am grateful to so many right hon. and hon. Members, from all parts of the United Kingdom, for staying for the presentation of this petition. Clearly, the Humberstone Heights golf course has achieved great fame beyond Leicester, reaching the very corners of the United Kingdom. I therefore wish to present this petition on their behalf. If people are able to be more involved in leisure, they will have longer and fitter lives.

The petition states:

The Petition of residents of the UK,

Declares that Humberstone Heights Golf Course is a popular leisure facility in Leicester and further that the Petitioners believe that the planned closure of the Golf Course will have a detrimental impact on the local community.

The Petitioners therefore request that the House of Commons urges the Government to encourage Leicester City Council to reconsider their decision to close Humberstone Heights Golf Course, which is an important community facility.

And the Petitioners remain, etc.

[P001342]

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

On a point of order, Madam Deputy Speaker. In the last round of Divisions, I had intended to move new clause 7, but new clause 7 was not called, and new clause 6 was called instead. I realise of course that human error can play its part in some of these things, but I would like your opinion on the matter.

[Madam Deputy Speaker (Dawn Primarolo)]

Mr MacNeil, I think there was a genuine misunderstanding with regard to new clauses 6 and 7. I regret to say that the intention was not clear to me at the time in the Chair, and I do not feel that I can take the matter any further than that, but I am sure that the record will show the hon. Gentleman’s intention, even if that was not fulfilled through to a vote because of a misunderstanding. I hope that that clarifies the matter.

Abortion (Disability)

Wednesday 9th April 2014 Commons Chamber

Motion made, and Question proposed, That this House do now adjourn.—(Harriett Baldwin.)

19:55

[Fiona Bruce (Congleton) (Con)]

I thank you, Madam Deputy Speaker, for this opportunity to speak on a sensitive subject. Few would disagree that Britain is a friendlier place for disabled people than it was a few decades ago—better, that is, unless we are talking about a disabled baby in the womb. The contrast between the way we see disabled people before and after birth could barely be starker. A disabled unborn child has effectively no rights up to birth. Many people are shocked to learn that he or she can be aborted right up to birth—as many as 16 weeks beyond the 24-week threshold for able-bodied babies. But the moment after birth, a whole panoply of rights and support suddenly comes into play for the disabled child. I know that from personal experience, and here declare an interest. My own son, Sam, was born with a club foot, one of the defects for which an abortion up to birth can be obtained. Yet within minutes of his birth, the hospital telephoned its specialist in treating club feet, who was on leave at the time and who rushed in within two hours to begin manipulating Sam’s foot.

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

On the issue of abortions up to birth, does my hon. Friend share my belief that where the disability may be relatively minor—a cleft palate or something such as that—the public would be very concerned to learn that these were allowed literally right up to birth?

[Fiona Bruce]

Indeed I do, and I thank my hon. Friend for that intervention. Although there are not many such abortions, there are still some taking place for treatable and relatively minor defects, such as a club foot. My son had physiotherapy every day for the first year of his life. He wore a calliper in his early years and he had two operations until into his teens, but now one would never know, unless one was a specialist, that he had been born with a foot defect. Yesterday, Sam was 21, and in the past few days has heard that he has been admitted to Oxford university. It is hard to think that such a treatable disability could have deprived him of life, and he is far from alone. I believe that the footballer, Steven Gerrard, was born with a club foot.

We have allowed a completely inconsistent and contradictory approach to disability to develop in this country with reference to the born and unborn child, and for that reason I am asking the Minister to review the application of this legislation. To clarify, the Abortion Act 1967 was amended in 1990 to provide for abortion up to, and during, birth where there is “substantial risk” of “serious handicap”—often called ground E abortions. But neither of those terms have statutory definitions. Instead, what constitutes “substantial risk” or “serious handicap” is left to doctors to decide, with differing outcomes across the country, and that difference can mean life or death to an unborn child. Professor Gordon Stirrat gives an example of a couple seeking abortion because of a cleft palate at 34 weeks, where there was a significant difference between doctors who refused an abortion under ground E and other doctors who interpreted the law as covering the couple’s situation.

[Jim Shannon (Strangford) (DUP)]

I congratulate the hon. Lady on bringing this very important matter to the House for consideration. It was mentioned in Prime Minister’s questions today, for example. Does she agree that the UN convention on the rights of the child, which protects the rights of children, and the Equality Act 2010, which outlaws discrimination on grounds of disability, would demand that this House should change this grossly offensive law that allows children over 24 weeks to be aborted?

[Fiona Bruce]

The hon. Gentleman makes a relevant point.

Developments in the law, in medicine and in cultural attitudes have led me to introduce this debate. Because of the lack of clarification, the law is being applied in what one barrister has called a haphazard fashion. In 2007, the Select Committee on Science and Technology recommended that the Department of Health produce guidance that would be clinically useful to doctors and patients in this regard, and in response the Royal College of Obstetricians and Gynaecologists provided updated guidance in 2010, but there still seems to be a considerable difference in views and working practice about what comes within the law and what does not. That is concerning for parents, practitioners, law makers and disabled people, many of whom believe it is now time to review the framework within which this law operates.

It is hard to see the differing treatment of disabled fetuses and able-bodied fetuses as anything other than discrimination, about which disability groups are particularly concerned. Medical knowledge has changed radically since 1990, and even more since 1967, and there have been improvements in fetal medicine, including the ability to correct disabilities, even within the womb before birth.

[Mr Nigel Dodds (Belfast North) (DUP)]

I, too, congratulate the hon. Lady on bringing this important matter before the House. As the father of a disabled boy who had eight years of a wonderful life—he had spina bifida and hydrocephalus, he gave much love and everybody who knew him loved him greatly—I join her in her plea for an end to discrimination against children in the womb who are disabled. She makes an important point about developments in medical treatment, even within the womb, especially in the area of spina bifida.

[Fiona Bruce]

I thank the right hon. Gentleman for that intervention. He makes a pertinent point. Disabled children can enjoy life and can give great joy to their families. Even disabilities such as Down’s syndrome cover a very wide spectrum and we need to remember that. When mothers and fathers hear the news about a child’s diagnosis with fetal disability, it is important that they are given information about the spectrum and about their options.

We have seen changes in neonatal intensive care, palliative care, paediatric surgery, educational care and community support. Conditions that might previously have been grounds for abortion are now treatable, and attitudes towards people with disabilities have moved on greatly.

As has been mentioned, the Equality Act 2010 protects disabled people from being treated differently or discriminated against as a result of their disability. In light of all this medical, legal and cultural progress in our society, is it not now time to review the application of the legislation? If we do not consider a disabled person of inferior worth after birth, why do so before?

I want now to turn to a separate point. Many women feel steered, pushed or even rushed into having an abortion once it is determined that they might be carrying a disabled baby. Time and again I heard of that in a commission that I chaired in this House last year, which carried out a parliamentary inquiry into abortion on the grounds of disability. A copy has been placed in the Library. The commission’s committee comprised several Members of both Houses and all parties with different views on abortion but a common concern about the issue. We took oral and written evidence over several months from a total of 299 witnesses. Repeatedly, mothers told us that they had come, as one said,

“under huge pressure to have an abortion”,

because, as another said,

“this is the expectation of the health care professionals”.

Other mothers told us that they were not given support when making the decision, or they felt fearful that they would not be able to cope in future due to limited financial resources or community support in their locality. One said:

“My son (who is now eight years old) has Down’s syndrome. He was diagnosed in the womb at 35 weeks and I was actively encouraged to seek a termination by the doctor who gave me the diagnosis. I was given no support by my local hospital in my decision to keep my baby. I had to actively seek support elsewhere and I’m sure you will appreciate how difficult this was as I was heavily pregnant and in a vulnerable state.”

Parents may find that they are given only a leaflet on abortion, with plenty of advice on having an abortion, but no information specific to the condition that has been diagnosed, or information about what support they could expect if they kept the baby, or an alternative such as adoption. One said that

“choosing to keep the baby effectively meant I was on my own.”

Some mothers were made to feel irresponsible bringing a disabled child into the world on the basis that the child would be a drain on public resources. Many felt guilty about allowing their disabled child to be born. Recently we heard how distressed mothers were in Leeds general infirmary when they felt under pressure to abort babies with treatable heart defects. Was it ever Parliament’s intention that a treatable condition should come within the scope of ground E?

We also heard from a doctor, Mr Jayamohan, about particularly good practice such as counselling; expert support from trained clinicians; the provision of information about the child’s potential disability and treatment; the offer to speak to another family with a child with a similar condition; palliative care; and the opportunity to meet specialists as soon as possible after diagnosis, and so on, to enable parents to make their decision. One parent said:

“Guidelines and standards need to be set in place, which all hospitals need to meet, to ensure all families are given support on education of disabilities when faced with such a situation. To give a family a diagnosis of a disability and then to immediately follow that up with the advice that they can have a termination without any other information is simply not acceptable in a civilised society”.

Does the Minister agree that there is a need for better, more consistent, balanced information, trained counsellors, increased awareness of palliative care for newborns, and comprehensive information and support from the medical profession, whatever parents’ decision about the pregnancy? Would she consider developing best practice guidelines to encompass that?

We even heard of misdiagnoses. Parents told the commission about diagnoses that had proved to be incorrect. One said that

“we were advised my daughter be aborted up to birth due to the results of an antenatal test. The most serious result indicated Dandy Walker Malformation of the brain. In fact when scanned after birth there was no such malformation. Our daughter is now 6 years old and a happy normal child.”

Mr Jayamohan told the commission that of 32 post-mortems of late-stage terminations he had examined, two indicated that the diagnosis had been profoundly wrong. It is worth remembering that these are wanted babies, and parents who choose an abortion suffer grief from their loss. As one has said, it is a

“bereavement like any other person”.

Last year, more than half of ground E abortions were diagnosed by ultrasound alone, which I understand can carry a 10% to 15% rate of false positive diagnosis, meaning that of the 1,367 ground E abortions diagnosed by ultrasound in 2012, as many as 200 may have been falsely diagnosed. What steps are in place to help the Department assess the accuracy of prenatal diagnostics? Should not all be done that can be done to reduce the option of an abortion where it is not necessary or wanted? To that end, does the Minister agree that improvements need to be made in data collection, as there seem to be weaknesses, gaps and limitations in the collection of information on abortions that take place due to disability. One professor has described it as “very inaccurate”. We should be collating more information on the reasons for abortion beyond 24 weeks and analysing such data appropriately. We should consider a report to a coroner for all late-term abortions and carefully consider the need for post-mortems. There should be a national register for all congenital abnormalities, not just for Down’s syndrome. All this would help to improve future diagnosis and, I hope, lead to lower numbers of abortions.

Let me touch on the increasing concern about fetal pain. A new scientific consensus is emerging that babies in the womb can feel pain, even from 20 weeks—certainly, as seems incontrovertible, from about 26 weeks. Yet we permit disabled babies to be aborted at up to 40 weeks. One mother, when asked whether her child would feel pain, was told, “He’s going to feel it.” Is it because we believe that disabled babies do not feel pain, or because we do not care that they do, that we allow abortion at up to 40 weeks for them? During the passage of the Bill that became the Human Fertilisation and Embryology Act 2008, the age of viability was agreed at 24 weeks; it can of course be even younger. Why does this threshold not apply to the disabled?

The logical corollary is that society is saying that disabled babies who can survive outside the womb should not be allowed to do so. I cannot escape the conclusion that this is discriminatory. It simply cannot be right that, as a society that purports to respect disabled people, we act to prevent their very existence in this way. These are arguments open to anyone who values human life and deplores discrimination against disabled people.

My final request of the Minister is whether she would be good enough to take time after this debate to consider the 2013 parliamentary inquiry into abortion on the grounds of disability and respond to the recommendations within it, not all of which I have been able to touch on tonight for reasons of time.

20:12

[The Parliamentary Under-Secretary of State for Health (Jane Ellison)]

I congratulate my hon. Friend the Member for Congleton (Fiona Bruce) on securing a debate on this subject, in which she has a long-standing interest. She made a very personal, moving and thoughtful speech to which we all listened intently. I thank other Members for their interventions. I know that there are views on this issue that are deeply and strongly held.

I am aware of the independent inquiry into abortion on the grounds of disability, which my hon. Friend chaired and which reported in 2013. Although I was not in post at that time, I have looked at the report. I have not had a chance to look at all the detail, but I have seen some of the recommendations. I have responses to one or two of the recommendations that she highlighted. As she knows, I will always go away and look at the points she has made, and those that I cannot cover tonight I will of course write or talk to her about.

Obviously, the House remains divided on the issue of abortion, which is a very personal matter. A number of concerns have recently been raised that we in the Department are working hard to address. On some issues, such as abortion on the grounds of gender alone, there is a strong parliamentary consensus. My hon. Friend has raised this with me in the House and in private, and we are working hard to deal with it. In other areas of abortion law, there are a range of views and differing interpretations.

It is crucial that everyone, regardless of their views on abortion, feels assured that the law on abortion is operating as Parliament intends. This is particularly important for clinicians directly involved in certifying and performing abortions, who need to know that they are operating within the law, and for women seeking an abortion, who need access to safe, legal, high-quality abortion services. I recently had discussions with the General Medical Council and the Royal College of Obstetricians and Gynaecologists, and we will be publishing strengthened guidance and revised procedures for the approval of independent sector places. That puts the debate into some context.

In 1990, Parliament decided that in some circumstances abortion should be available without time limit, including abortion where

“there is a substantial risk that if the child were born it would suffer from such physical or mental abnormalities as to be seriously handicapped.”

I should clarify that abortions for fetal abnormality are listed as ground D in the Abortion Act 1967 but are set out differently in the regulations and certification forms, where they are listed as ground E. The grounds in the regulations are those most commonly referred to, but that is why there is sometimes a discrepancy with regard to grounds D and E.

In 2012, it was reported that 2,692 abortions had taken place under ground E of the regulations and that 160 of them took place at gestations beyond 24 weeks. It is important to note, as my hon. Friend has said, that Parliament did not define “serious handicap” in the Act. Indeed, it chose to leave it to the expert clinical judgment of the two doctors involved, who were required to form their own opinion about the seriousness of the handicap the child would suffer when born, taking into account the facts and circumstances of each individual case.

Some Members have expressed the view that the Act and, in particular, the provision that allows abortion on the grounds of disability should be revisited. Of course, by convention it is for parliamentarians, not the Government, to suggest amendments to the legislation, but that does not mean that the Government do not reflect carefully on any points made and there will be opportunities to provide clarification in some areas through guidelines.

Concerns have been expressed, not least this evening, that abortions are taking place for abnormalities that are rectifiable after birth. The Act requires doctors to assess the level of risk that the child would suffer from serious handicap if it were born. It should be noted that conditions such as cleft lip and palate, which have been mentioned this evening, can in some circumstances be an indicator of far more serious problems with the fetus.

The availability of remedial treatment that might alleviate suffering is obviously a factor that doctors will take into account in making their assessment. Guidance from RCOG states that the assessment of serious handicap should be based on a careful consideration of a list of factors, one of which is the probability of effective treatment either in utero or after birth. RCOG already says that that must be taken into account. However, the fact that remedial treatment may be available does not automatically mean that it will be successful, and the child may suffer from a serious handicap. Remedial treatment may be prolonged and painful.

I firmly believe, and I hope my hon. Friend will agree, that such decisions are exceptionally difficult ones for patients, women and parents to make, and that they are often finely balanced. Doctors and other professionals need to work hard to ensure that parents are properly supported and have all the information they need to come to a decision. I think we all share my hon. Friend’s concern that some people have reported feeling rushed and that they have not been given proper information. Ultimately, such decisions should be taken on a case-by-case basis and always according to the Act.

[Fiona Bruce]

Will the Minister confirm that she will look at the production of best practice guidelines, because there is a clear indication that practice differs across the piece? If she agrees that we should give every mother and father in this situation the best possible opportunity to make the right decision, appropriate guidelines, which do not appear to exist in a functional format at present, would be the best approach.

[Jane Ellison]

I will certainly reflect on that point. RCOG has published best practice guidelines and I am sure it would be concerned to hear that my hon. Friend feels they are being inconsistently applied. I will give her some information from the guidelines. I have regular conversations with RCOG representatives and will raise her point with them. There is no absence of guidance, but she is clearly concerned that it might be being inconsistently applied.

RCOG has published guidance for its members on terminations for fetal abnormality. It notes that palliative and other care must be made available to women who decide to continue with their pregnancy. The guidance also makes it clear to women and their partners that they should receive appropriate information and support from a properly trained, multidisciplinary team who must adopt a supportive and non-judgmental approach, regardless of whether the decision is to terminate or to continue the pregnancy. Support for parents faced with a similar diagnosis is available through the charity Antenatal Results and Choices.

The RCOG guidance also states that women and their partners must be fully supported before screening for fetal abnormality and during any decision that they may need to make about termination, as well as in continuing the pregnancy following a screening and during any aftercare. That should include referral to other professional experts, including palliative experts, as I have mentioned, and referral for counselling, where it can be part of a co-ordinated package of care. I will of course put my hon. Friend’s concerns about that not being consistently applied to RCOG, which I am sure will want to consider that matter. However, as I have said, RCOG has looked to address the issues, and I know that it is aware of her commission of inquiry and its report.

My hon. Friend mentioned adoption. That is a matter for the Department for Education, but I will of course draw the concerns she has raised in this debate to its attention.

With regard to information, the RCOG guidance does not make specific reference to the element of the life ahead that the child might have, but that is a matter for RCOG and other professional and training bodies, such as Health Education England, to take forward in their training procedures. Again, I undertake to bring that point to their attention.

On my hon. Friend’s concerns about a discrepancy between the numbers, I know that the independent inquiry recommended that funding should be made available to ensure that there are independent congenital anomaly registers covering all congenital anomalies across the whole country. She made another point about inconsistency. I can confirm that work is under way to support the increased coverage of congenital anomaly registers across the whole of England. That work is led by Public Health England. I have regular meetings with Public Health England, and I will draw to its attention Parliament’s interest in this matter. I undertake to update her on the progress of that work.

My hon. Friend made several other points. If she will excuse me, I will come back to her about fetal pain. RCOG has looked at and written about fetal pain in some detail, and has offered guidance about it. I will revert to her on that, as well as on some of the other matters that she raised about which I cannot now comment in any detail.

I thank my hon. Friend for her very thoughtful speech, for drawing the attention of the whole House to this issue and for how she expressed the potential that people have in their lives. I think that the whole House was thrilled to hear the story she told about her own family, and to hear about the great success that her son has enjoyed. I congratulate her on securing this debate, and on the tone in which she always conducts such difficult and sensitive debates. I will return to her with more detail when I have given her points further consideration.

Question put and agreed to.

20:22

House adjourned.

Ministerial Corrections

Wednesday 9th April 2014 Ministerial Corrections

Wednesday 9 April 2014

Education

Wednesday 9th April 2014 Ministerial Corrections

Teachers: Job Satisfaction

[Mr Sheerman]

To ask the Secretary of State for Education what steps he has taken to assess the morale of teachers.

[Official Report, 17 March 2014, Vol. 577, c. 388W.]

Letter of correction from David Laws:

An error has been identified in the written answer given to the hon. Member for Huddersfield (Mr Sheerman) on 17 March 2014.

The full answer given was as follows:

[Mr Laws]

We have enormous respect for teachers and the vital role they play. We continue to support teachers by reducing unnecessary bureaucracy. We trust them to use their professional judgment and we reward good quality teaching, including through pay flexibilities which allow heads to pay good teachers more.

A recent survey for the Times Educational Supplement found that teachers generally feel positive about the work they do. Last year, the Varkey GEMS foundation's Global Teacher Status Index found levels of public respect for the teaching profession in England were higher than in Finland or Germany.

It is very encouraging that so many good people are choosing a career in teaching. 74% of new teachers now have a 2:1 or a first degree—the highest ever recorded. 14% of Oxford graduates go into teaching, and the annual Graduate Market in 2014 report identified Teach First as Britain's biggest graduate recruiter.

The correct answer should have been:

[Mr Laws]

We have enormous respect for teachers and the vital role they play. We continue to support teachers by reducing unnecessary bureaucracy. We trust them to use their professional judgment and we reward good quality teaching, including through pay flexibilities which allow heads to pay good teachers more.

A recent survey for the Times Educational Supplement found that teachers generally feel positive about the work they do. Last year, the Varkey GEMS foundation's Global Teacher Status Index found levels of public respect for the teaching profession in England were higher than in Finland or Germany.

It is very encouraging that so many good people are choosing a career in teaching. 74% of new teachers now have a 2:1 or a first degree—the highest ever recorded. 14% of Oxford graduates enter the education sector, and the annual Graduate Market in 2014 report identified Teach First as Britain's biggest graduate recruiter.

Health

Wednesday 9th April 2014 Ministerial Corrections

Livestock: Diseases

[Barry Gardiner]

To ask the Secretary of State for Health how many instances of (a) pneumonia, (b) septic pneumonia, (c) Pericarditis, (d) Septic Pericarditis, (e) Peritonitis, (f) septic peritonitis, (g) Oedema, (h) Emaciation, (i) Bruising or trauma, (j) Abscesses in offal, (k) Abscesses in carcases, (l) Pyaemia, (m) animals with septicaemia, (n) Animals with tumours, (o) Hydronephrosis, (p) Nephritis and septic nephritis, (q) Lymphadenitis, (r) Tuberculosis, (s) Erysipelas in pigs, (t) Steatosis, (u) Actinobacillous and (v) Actinomycosus in red meat animals have been identified at official post mortem inspection and prevented from entering the food chain by officials working for an on behalf of the FSA since 1 April 2012.

[Official Report, 1 April 2014, Vol. 578, c. 573W.]

Letter of correction from Jane Ellison:

An error has been identified in the written answer given to the hon. Member for Brent North (Barry Gardiner) on 1 April 2014.

The full answer given was as follows:

[Jane Ellison]

The following quantity of conditions have been identified in red meat animals at official post mortem inspection and prevented from entering the food chain by officials working for and on behalf of the Food Standards Agency (FSA) since April 2012:

Some conditions are not recorded by the FSA. The list of conditions for cattle, sheep, goats, pigs and poultry were created following expert working group workshops for each species over the last five years. Members of the workshops included stakeholders from the Department for Environment Food and Rural Affairs, Animal Health, EBLEX, BPEX, private veterinarians, industry vets, FSA, Association of Meat Inspectors.

The data for sheep, goats, deer and horses is from April 2012 to December 2013, all other species is April 2012 to March 2014.

[Jane Ellison]

The following quantity of conditions have been identified in red meat animals at official post mortem inspection and prevented from entering the food chain by officials working for and on behalf of the Food Standards Agency (FSA) since April 2012:

Some conditions are not recorded by the FSA. The list of conditions for cattle, sheep, goats, pigs and poultry were created following expert working group workshops for each species over the last five years. Members of the workshops included stakeholders from the Department for Environment Food and Rural Affairs, Animal Health, EBLEX, BPEX, private veterinarians, industry vets, FSA, Association of Meat Inspectors.

The data for sheep, goats, deer and horses is from April 2012 to December 2013, all other species is April 2012 to March 2014.

Petitions

Wednesday 9th April 2014 Petitions

Wednesday 9 April 2014

Heanor Memorial Hospital (Derbyshire)

Wednesday 9th April 2014 Petitions

The Petition of the people of Heanor and the wider Amber Valley area,

Declares that the Heanor Memorial Hospital provides essential services to the community of Heanor, and that the Southern Derbyshire Clinical Commissioning Group should allocate sufficient resources to ensure that the hospital is once again able to open and serve the people of Heanor.

The Petitioners therefore request that the House of Commons urges the Government to take all possible steps to ensure that Heanor Memorial Hospital remains open and that health provision in Heanor is enhanced not diminished.

And the Petitioners remain, etc.—[Presented by Nigel Mills, Official Report, 11 March 2014; Vol. 577, c. 290 .]

[P001331]

Observations from the Secretary of State for the Home Department:

The commissioning and provision of hospital services, including those that might be provided at Heanor Memorial Hospital, is a matter for the national health service locally.

Heanor Memorial Hospital has been closed since a routine maintenance survey discovered asbestos in the boiler room. A subsequent full structural survey in October 2013 revealed the presence of asbestos in other parts of the hospital. Southern Derbyshire Clinical Commissioning Group is currently exploring options for the future of health services in Heanor. The local CCG is committed to consulting and engaging local people throughout this process. I would encourage the honourable member and his constituents to remain engaged with the CCG on this matter.

Proposed Closure of Mallins Doctors Surgery (West Bromwich)

Wednesday 9th April 2014 Petitions

The Petition of residents of the UK,

Declares that the Petitioners along with the Wednesbury Labour team deplore the decision made by NHS England to close Mallins doctors surgery at High Bullen Wednesbury without the required consultation with patients, staff, local councillors and the local authority; further that the Petitioners believe that NHS England have failed to give the required 90 days’ notice to patients; and further that the Petitioners believe that NHS England failed to consult the council under section 7 of the Health and Social Care Act, as amended by the Health and Social Care Act 2012.

The Petitioners therefore request that the House of Commons urges the Government to encourage NHS England to review the decision to close Mallins doctors surgery and require NHS England to undertake the required consultation with patients, staff and the local council, among others.

And the Petitioners remain, etc.—[Presented by Mr Adrian Bailey, Official Report, 26 March 2014; Vol. 578, c. 1P .]

[P001339]

Observations from the Secretary of State for Health:

NHS England is responsible for commissioning and ensuring adequate provision of GP services. It would not be appropriate for the Department of Health or Ministers to intervene in this matter.

Malling Health GP practice is housed on land owned by the Sandwell Metropolitan Borough Council, and the sub-lease is due to expire on 30 April 2014. The Council has stated that there is no option to extend the lease.

The contract with Malling Health was put in place to provide primary medical services for at least 6,000 people. The patient list size is currently 1,690.

A Feasibility and Options Appraisal was undertaken by NHS Property Services, which detailed costs of potential relocation of the practice to other premises. NHS England advises that the costs associated with relocation were very high and not financially viable.

NHS England is confident there is sufficient GP capacity within a one mile radius of the Malling Health GP practice for the patients affected. The practice is therefore to close on 11 April 2014 following agreement with the provider. The Area Team is committed to ensuring that patients have continued access to local, high quality GP services and will work to minimise disruption for patients as a result of the closure.

Westminster Hall

Wednesday 9th April 2014 Westminster Hall

Wednesday 9 April 2014

[Albert Owen in the Chair]

Personal Independence Payments (Wales)

Wednesday 9th April 2014 Westminster Hall

Motion made, and Question proposed, That the sitting be now adjourned.—(John Penrose.)

09:30

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

Diolch yn fawr, Mr Owen. It is a pleasure to serve under your chairmanship. I am pleased to have secured this debate on personal independence payments in Wales. It is an important debate for many of our constituents, including many of the most vulnerable, who are being failed by the system. I hope that hon. Members here today will share cases from their constituencies and that we will get some action from the Government.

I could, like other hon. Members, share with the House many accounts given to me by constituents of their experiences. I will begin with one told to me by a lady from Gwynfryn in my constituency, who was diagnosed with breast cancer on 22 August. After fighting through two rounds of surgery, and showing continued strength through chemotherapy, she approached me in January to see if there was any help that my staff and I could offer her. My constituent had applied for personal independence payments soon after her diagnosis. She knew she would be unfit to work and that she would need financial support through a difficult time. She received a response from Capita and waited her turn, hoping that the backlog would clear. My constituent is still not receiving PIP—or any financial support; and she is still undergoing chemotherapy.

Capita’s own information pack, given to applicants, states that assessments should be made within “approximately 28 days.” I think we can all agree that my constituent—like many other people in a similar position—has waited long enough. The Government have instituted a system in Wales that is meant to offer advice and assessment, and to provide support, but it is failing woefully. The absurd situation in my constituency is that Department for Work and Pensions staff are advising local people to get in touch with me to see whether I can help the process along with Capita. Government employees are advising my constituents to contact me, as their elected official, to put pressure on a body that was instituted by the Government and is paid for by taxpayers the length and breadth of the country.

Capita, of course, is an external body—a registered company that is independent in how it chooses to run itself. However, it is clearly failing to adhere to guidelines on processing dates and fulfilling contractual duties, and it is letting down those who desperately need support. That is not good enough. Dim digon da. The Tory-led Government decided to place Capita in charge of PIP assessments in Wales and allowed that system to be put in place without any serious pilot scheme. That cannot be right.

Last week, at our request, a senior representative of Capita met some Welsh Labour MPs. To our horror, in answer to our questions we were told that the company originally thought that assessments would take “around an hour”; in reality they take between two and two and a half hours. In the same meeting, again in answer to our questions, Members were told that Capita estimated it would need to assess 70% of applicants face to face. We were told that that figure is closer to 99%. How could those figures be so wrong? Where was that clarification from the Department for Work and Pensions before the contract—paid for by public money, I remind the House—was granted?

[Kevin Brennan (Cardiff West) (Lab)]

Like many other hon. Members I could cite cases to reinforce the point about MPs being used by the company to solve issues. Does my hon. Friend hope that the Minister will tear up the parts of his speech that may have been provided by officials about the general background to personal independence payments policy, and that he will focus instead on the failure of the past year, and the suffering that constituents have gone through because of that incompetence? He should explain what has happened and what will be done in future, and apologise to those constituents—who are often the most vulnerable—for the suffering inflicted on them.

[Susan Elan Jones]

I agree wholeheartedly with my hon. Friend.

The Minister may be heartened to hear me mention a previous Prime Minister, Baroness Thatcher, who used to say she believed we should run the national budget like a household budget. Leaving aside our views on the politics of the late Baroness, perhaps we can use that analogy here, to look at the scandal of the joint DWP and Capita mess that has been made with our money. We might imagine Capita as a firm of builders hired for a two-week job at an agreed daily rate, but which has already taken a month and is still nowhere near finishing. If I or many of my constituents had hired those builders, they would be out on their ear. What if Capita were a local charity, such as the type I used to manage before I became an MP: the local organisation that has to negotiate with a local authority or other body for a service level agreement? We can imagine the conversation: “We are not seeing the agreed number of clients; we are not getting things done on time,” and so on. If a small or medium-sized voluntary or community group, dealing with the council or another external body, was in that position, the agreement would be terminated.

Yet we are not talking about one household and an incompetent builder, or a small or medium-sized charity working with a council. We are talking about a failure, paid for by the tax-paying public and being subsidised massively on a multi-million pound basis. It is time that someone, somehow, somewhere—preferably the Government—carried the can for what has happened as the result of a deal between a private company and the Government, which is not working. Capita has not delivered on its contract with the Department for Work and Pensions. It has time and again displayed the fact that it is letting people down. At what point will the Government stand up, take notice of the constituents who are asking for help, and take action on an issue that is becoming more serious with every passing day?

In Penycae, another village in my constituency, a constituent suffers from terrible arthritis throughout her body, and is on lifelong medication as a result. Until last year, my constituent held a responsible, white-collar job. In June, her contract was terminated for reasons of medical capability. One would think that at that point she would receive support, but since she left her job in June she has been waiting on PIP. She has been waiting for Capita. She is completely unable to work and that has been confirmed by her GP and by hospital consultants. My constituent can provide personal reports, X-rays and supporting documents that make it crystal clear that she is entitled, in need and completely genuine; there is no doubt about it.

Why, then, is the system failing my constituent and so many others like her across Wales? The Government’s fact sheet on personal independence payments says:

“PIP is to help towards some of the extra costs arising from a health condition or disability.”

PIP, the replacement for disability living allowance put in place by the current Government, can be anything from £21 to £134 a week. It can be used to cover transport, care and all sorts of other costs that can be vital to those who are disabled or sick. By the Government’s own admission, PIP is support for people when they are unable to work because of a health condition or disability and need financial help. That is what the Government say PIP is, and that is what they claim Capita is providing.

The constituent I mentioned is still waiting for any kind of financial help. She is receiving no level of care from Capita or any other Government body. Since being forced to leave her job in June, she has been completely outside the system and is without any financial support. As a result, my constituent has lost her bank account and is experiencing the attention of debt recovery services. For Capita to tell someone like my constituent from Penycae that her case is in the queue, that a backlog is being experienced and that someone will “get to her when they can”—I believe those were the exact words—is absolutely not good enough. My constituent cannot wait another few months for money to come in. She needs it now. In fact, she has needed it since June, when she first applied. How many people can seriously be expected to live for nine or 10 months without any income? Yet that is what is happening in her case.

[The Minister of State, Department for Work and Pensions (Mike Penning)]

It is right and proper that this debate is taking place, but PIP is not the only form of benefit; it is a benefit on top of other benefits. No income at all, which is what the hon. Lady said, is ever so slightly—I respectfully say—misleading. I accept that there is an issue, which I will come on to in my response, but the lady to whom she referred would have been able to get other benefits.

[Susan Elan Jones]

I would be delighted to put the Minister in contact with my constituent or, indeed, with all the current cases I have, and they could rightfully have that debate. PIP is a huge issue. I am sure that he is rather sorry that there are absolutely no Government Members here to defend him, so he has to do a little of his own work on that score this morning.

[Mike Penning]

I really hope that the debate this morning does not deteriorate. I am not that sort of Minister. I genuinely want to help. I do not really mind who is in the Chamber; it is a question of whether we can get PIP right. Of course I will take up any cases that are raised here today, as I do on a regular basis when constituents write to me; the hon. Lady has also written to me many times.

[Susan Elan Jones]

I assure the Minister that I want this issue sorted, and I am only sorry that it has not been sorted sooner.

I am of course aware that assessments are complicated. I am under no illusions that such systems are easy to run, and they are not simple to understand. I am clear, however, that Capita is being given public money to provide a service. I called for the debate today because my constituents are being left without any information about their cases; they are waiting on calls that are not returned; and they have no way of highlighting their situation, complaining or seeking help. That is why they are coming to me and to other Members of Parliament.

I was also shocked to learn that Capita has not even set up an official hotline for MPs. When constituents come to me about problems with other public bodies, I am able to contact someone quickly. That is part of our job as Members of Parliament, and the hotlines provided to MPs are an important part of the contact system. Capita, the company providing PIP assessments for the entirety of Wales, does not provide such a service. When it was pushed, I was given a number, but it was made clear to me that it was not an official hotline. I am loth to bring up Atos in this debate. The Government recently scrapped the contract with Atos because it was not delivering, but even Atos had an official hotline set up and working.

The debate is not simply about backlogged services and Capita not estimating correctly or preparing adequately. It is clear from Capita’s entire handling of PIP assessments that it was not the right company for the job. How much public money is being spent every single day by the Government on the service? How much public money is being spent on this company that is not returning calls? How much public money is being spent on this company that is forcing cancer sufferers to cross their fingers through massive delays? How much public money is being spent on this company while it forces those too sick to work into debt?

To return to our analogy with household economics, Capita is not the slow or dodgy builder, or the little charity worrying how it will see all the people it needs to see because it has two people off sick one month; Capita is supplying all the contracts for PIP assessment in Wales, which is a multi-million pound contract. Capita is the middleman, the company between the doctor and financial support—in many ways, it is the company between the hospital and the debt collector. At the moment, we are not seeing it provide such a bridge or, in many cases, any bridge at all.

Over and over again, the Government have said that they need to save money, and yet they are spending millions of pounds of taxpayers’ money on a company that is not delivering on its contract. At what point do the Government step in to ensure that the service is being provided?

[Nick Smith (Blaenau Gwent) (Lab)]

One of my disabled constituents was given a two-week assessment slot that had already elapsed. According to the media, civil servants are now helping Capita to deal with the backlog. Does my hon. Friend agree that this botched benefit is causing nothing but distress throughout the country, and that the implementation of PIP has been a total shambles?

[Susan Elan Jones]

I agree wholeheartedly with my hon. Friend. Indeed, when the Prime Minister announced that the system would change to migrate those on disability living allowance to a personal independence payment, surely that was not part of the promises he made. When PIP was first introduced last year, surely the waiting times, the missed calls and the assessments for which staff have failed even to turn up were not part of the deal. In the debate today and whenever we discuss PIP in Wales, we are talking about real people—people with serious health conditions and real individuals with real families, who are desperately struggling.

I am certain that it is hard enough to fight cancer without having to fight Capita and, by extension, the Department for Work and Pensions. Capita is letting down people in real need. The Government are letting struggling people down by not stepping in and getting the mess sorted out. Waiting times for assessment have been so long that, in some cases, people with terminal conditions have died before receiving a penny—and yet Capita remains in place and the Department for Work and Pensions has not even imposed a fine. This is a scandal of national proportions.

Some of the most vulnerable people in Wales are being let down—and yet every single taxpayer throughout our land is being asked to foot the bill for a totally inadequate service. For the sake of my constituents in Gwynfryn and Penycae, and people everywhere in Wales, I urge the Government to take action now. It is time that the Department for Work and Pensions did its job. And it is time that the relationship with Capita was sorted out, or for that company to be given the boot.

09:45

[Chris Ruane (Vale of Clwyd) (Lab)]

Thank you for calling me so early in the debate, Mr Owen. I apologise, but I will have to leave early because at 10 o’clock I have to chair a meeting on congenital heart disease in children.

There is no doubt that the Capita scheme for the personal independence payment is in total disarray and that the Government must shoulder the blame. They drew up the service level agreements and they need to fix the PIP—and quickly. When the Government were drawing up those agreements, did they estimate the correct average time that would be spent assessing each case? They said it would take one hour, but Capita—we spoke to the company last week—is taking two or three hours. Was the estimate realistic?

The travelling times experienced by our constituents in getting to the assessment centres and the number of face-to-face assessments set by the Government are all totally unrealistic. Did the Government show due diligence? Did they correctly assess Capita’s ability to deal with high volumes of cases? Were the service level agreements strict enough? Also, if my hon. Friend the Member for Clwyd South (Susan Elan Jones) is correct, why have penalties not been imposed? The company has the carrot of profits, but it also needs the stick of enforcement. It has not had that so far.

The number of staff required was totally underestimated. Capita told us last week that it initially put in place 140, but it now needs to take that to 450—a tripling of staff. In fact, it cannot find the staff. I have an advert in my hand, placed in the Llandudno press: Capita is looking for

“qualified Nurses, Occupational Therapists, Paramedics, Physiotherapists …Disability Assessors”

to work in Llandudno. There is not one mention of staff who can deal with mental health issues. Fifty per cent. of the cases are musculo-skeletal, but 50% are mental health cases.

[Nia Griffith (Llanelli) (Lab)]

Does my hon. Friend share my surprise that those staff were not in place when Capita was awarded the contract?

[Chris Ruane]

Again, things come down to due diligence and to the assessment of the problem by the Government when awarding the contract. In addition, in the north Wales situation, there was no mention of staff who can deal with mental health issues.

We talk about the vast numbers of people affected, so let us consider who they are. One of my constituents who had mental health problems was told that she could not have an assessment in her own home. She lives in north Wales, but she was told to go to the nearest assessment centre—in Cardiff. It takes me two hours and 36 minutes to get from Rhyl to London, but I could almost have gone from Rhyl to London and back again in the time that it would take that lady simply to get down to Cardiff. Would the Minister send someone from London up to Cumbria for an assessment test, because those are the time scales that we are talking about? That shows total disregard for the individuals involved.

Another individual in my constituency, who is wheelchair-bound, waited for six months, but her case had still not been sorted out. In that time, there were knock-on effects to other benefits and funding was taken off her; she lost her mobility allowance and so she lost her car. There she was, with mental health issues, in a wheelchair and stuck in a house. Things that help people with mental health issues include visiting relatives, joining voluntary organisations, going to a place of worship and getting out in nature, none of which she could do because her car was taken away. All the things that could have helped her were taken away from her by Government action, or inaction.

The rules for the terminally ill suggest that if they have seven months left to live, they are pestered and hounded, but if they have six months left, they will be left alone. That should not be the case. We should prioritise the people—

[Mike Penning]

Will the hon. Gentleman give way?

[Chris Ruane]

No, I will not give way.

[Mike Penning]

The hon. Gentleman is being misleading.

[Albert Owen (in the Chair)]

Order. No one is misleading anyone.

[Mike Penning]

I am sorry, Mr Owen; I am sure that was unintentional. This is rightly a passionate debate. I have referred in previous discussions to 28 days for terminal illness. That was completely unacceptable, and it was 10 days under disability living allowance. I told the Select Committee that the period would be below 10 days. That is where we are now, and that will continue.

[Chris Ruane]

The Minister talks about how things should happen; we are talking about how things are happening. Capita, which took the Government’s instructions, visited us last week and told us what I have just said. Perhaps the company got it wrong, but if it did the Minister should ask why the Government awarded a contract to a company that does not understand the basic rules of dealing with the dying.

I will move on. It is not just Labour Back Benchers from Wales who are raising the matter. The National Audit Office has said that

“the Department did not allow enough time to test whether the assessment process could handle large numbers of claims. As a result of this poor early operational performance, claimants face long and uncertain delays and the Department has had to delay the wider roll-out of the programme. Because it may take…time to resolve the delays, the Department has increased the risk that the programme will not deliver value for money in the longer term.”

The programme was introduced to cut costs by £2.6 billion. The National Audit Office is now saying that because of the terms and conditions and the fact that the rules were not set properly in the first place, value for money in the longer term—the whole raison d’être for the initiative—will be undermined. The NAO continued:

“A far higher proportion of new claims than was expected contained information that conflicted with existing data on the claimant held by DWP, leading to delays in processing new claims…Claimants were taking longer than expected to return claim forms”.

That should have been predicted and there should have been research before the contract was issued. The failings are the failings of this Government, and the Minister may have to fess up and say that he got it wrong. I ask him to be open, truthful and to sort out this terrible problem.

09:52

[Mr Peter Hain (Neath) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Owen. I apologise at the outset for having to leave immediately after I finish speaking, to undertake an official appointment relating to my duties as a former Secretary of State for Northern Ireland. I will not hear the Minister’s reply, but I will of course read it.

In the short time since personal independence payments have come into force, it has quickly become evident that the system is miserably failing people and leaving some of the most vulnerable in our communities in absolute desperation. My Neath constituency has one of the highest rates of take-up of the old disability living allowance, a legacy of the industrial heritage that once provided livelihoods for many of my constituents, but has now resulted in serious health problems—a heavy price to pay.

New applicants face a system of delay and despair. Many constituents have been waiting six months or longer, having had their face-to-face assessments and been told, frustratingly, that

“the report is in the final stages with a senior healthcare professional.”

For those six months they have been living off savings to help them to adapt to their conditions. The prospect of a backdated payment is of no comfort to them as they struggle with day-to-day tasks that many of us take for granted, while their families suffer under the stress and strain of caring for them.

In some of the cases processed by Capita, health care reports have not been up to standard and further information has been required. That involved going back to the assessor and requesting further information. In one case, a second face-to-face assessment was required, and in one astonishing instance it came to light in March 2014 that despite the assessment being carried out in November 2013, no assessment report had been prepared by the assessor. Those constituents’ misery and distress seems to have no end.

The protracted ordeal is just to get the assessment report from Capita to the Department for Work and Pensions. As the assessment reports start to trickle through to the Department, the emerging trend is of further delays in the final decision after the report has reached the Department. So after months of waiting with Capita, applicants face further delays, and that only adds to their misery.

I raised with Capita and the Department a case that encapsulates the ordeal. A constituent made his original application on 5 July 2013 after suffering a serious brain seizure, a stroke and several other seizures. He returned to work initially, but because of his mobility problems he could not continue. He underwent a home assessment on 15 October 2013, and made numerous calls to the Department for Work and Pensions to chase up the progress of his application. Every time, he was referred to Capita because the report had not been sent, but he was told that

“the report is in the final stages with a senior healthcare professional”.

One event epitomises his situation. He woke up one morning and asked his wife to leave him in bed as he was feeling unwell. Shortly after she left for work at 8 o’clock in the morning, he suffered a series of convulsions that lasted approximately 30 minutes. He had difficulty breathing and removing his continuous positive airway pressure mask, which he has to wear because of obstructive sleep apnoea and the danger of a stroke or heart attack. He was unable to get out of bed for the rest of the day until his wife came home at 4.30. He did not eat or drink all day and had to urinate into a bottle.

My constituent’s wife is caring for him but because he has no income from PIP she is at the point of utter exhaustion. The decision to award the benefit is vital to enable his wife to give him the proper care and supervision he needs. Until a decision is made, the couple cannot arrange that care, and their life is in limbo. In March, my constituent finally received his decision notice, only to be informed at the end of the month that a stop had been put on his payment—a decision that could not be explained when he phoned DWP. It has now been nine months and he has not received a payment. DWP’s decision notice states that he is owed a back payment of more than £5,000. He has been let down by Capita and the Department for Work and Pensions as his anguish goes on.

In another case, the application was made in June 2013. The report from Capita was eventually received by DWP on 13 February, but a decision has still not been made. The claimant told me:

“I have no confidence that the process will ever end, there is always one more stage, one more delay.”

That sentiment is felt by many who have lost faith, which is a dreadful stain on the Department for Work and Pensions, where I served as Secretary of State.

The excruciating stress and anxiety is hitting people seriously, including cancer sufferers and ex-servicemen with post traumatic stress disorder. Ministers should be ashamed of the system, which is punitive, nasty and causes abject despair to far too many people.

[Kevin Brennan]

To emphasise the dilemma facing our constituents, I should say that in a similar case in my constituency a women who suffered a stroke made an application in June 2013, and has just received the benefit. Her husband elected to reduce his hours at work as a result of which they lost the tax credits that they were entitled to, so they went into even deeper problems as a result of the unacceptable delays.

[Mr Hain]

My hon. Friend makes an important point. I am not going to make personal attacks on Ministers because they probably believe they are doing a professional job, but I sometimes wonder whether they have any idea of what is happening on the ground as a result of their policies.

If the Atos debacle taught us anything, it is the importance of getting the decision right in the first place—in my constituency, the local welfare rights unit had an 80% success rate with its appeals against Atos’s decisions—but that should not mean waiting unacceptably long times such as six, seven or eight months for a decision that could dramatically affect somebody’s life and income. Action must be taken immediately to address this inexplicably lengthy and prolonged system that is causing misery and despair for applicants. The turnaround of applications must be drastically accelerated by both the assessment provider and the Department.

[Several hon. Members]

rose—

[Albert Owen (in the Chair)]

Order. Five Members are indicating that they wish to speak, three of whom have done so in writing. I need to call the Front-Bench Members at 10.40 am, so I ask Members to be disciplined with their time.

10:00

[Ian Lucas (Wrexham) (Lab)]

I will be brief, Mr Owen, because I think it is very important that the Minister hears from as many Members as possible. I have a list in front of me of cases involving my constituents who have come to me. I raised the issue initially with the Minister through written questions back in January, and I have raised it in the Chamber, too. This is a massive problem for those individuals. We have heard about a number of individual cases already, and rather than recounting individual cases in Wrexham, I will make a brief point about competence and responsibility.

The personal independence payment system was introduced by this Government—by the Conservatives and their Liberal Democrat allies—and the system has failed. Individuals come to our constituency offices in great personal distress. They are the type of individuals whom we want to see supported by our tax system, and I know that that feeling goes across the House. The reason that we pay our taxes is to support vulnerable people.

The Government chose to change the system and they must take responsibility for that choice. They chose the company that would deliver the system, and they must take responsibility for that choice. The system does not work. We, as Members of Parliament, are representing constituents and making telephone calls to the Department for Work and Pensions and to Capita, and dealing with cases to give people their entitlement. It is not something that they do not deserve—it is their entitlement. We want a system, and they deserve a system, that is satisfactory and that works.

I have respect for the Minister. He has responded to the issues and individual cases that I have raised with him, but the Department has introduced a number of different systems that are causing enormous distress to vulnerable people in our constituencies. It must start taking responsibility, because the people whom we represent deserve to be supported. To date, there is no indication whatever that the situation is going to change. The strength of feeling expressed in this debate is clear and sets out to the Government and to the Minister the depth of anger that there is in our constituency offices.

Will the Minister please take on board the individual cases? We are working on behalf of those constituents and we hope he will, too. However, will he also look at the system? If the system continues to fail, and if it continues to fail those individuals, we will begin to doubt the Government’s motivation in supplying the system. We will begin to ask whether they actually want to support vulnerable people, or whether this is all about saving money in order to ensure that those individuals do not have support, and will wait and wait and eventually go away. They deserve our support, and I hope that the Government will change their approach and give it to them.

10:04

[Jessica Morden (Newport East) (Lab)]

I congratulate my hon. Friend the Member for Clwyd South (Susan Elan Jones) on securing this very important debate and on an excellent contribution that clearly laid out the difficulties that people in Wales are experiencing with PIPs.

The difficulties with the PIP process are all the more excruciating to witness—let alone go through—because in all the debates we had over the work capability assessments in the past, Ministers were repeatedly asked how they would ensure that the PIP process was fit for purpose. I certainly asked, and the reply from the then Minister, the right hon. Member for Basingstoke (Maria Miller), was that we should not worry. She said that the Department was working with more than 50 disability organisations and that

“we will ensure that it is very much fit for purpose.”—[Official Report, 24 October 2011; Vol. 534, c. 22.]

Clearly, that is not the case.

Like my hon. Friend the Member for Wrexham (Ian Lucas) I want to say to the Minister, please do not underestimate the very real, palpable fear out there about the change from the disability living allowance to PIPs. That was brought home to me by a constituent called Richard, who has cerebral palsy. He has a range of care needs and has been fretting about this process for about a year. I know that he will get PIPs almost automatically, but although I have repeatedly tried to reassure him through my office and through the agencies that work with him, he is still extremely stressed about it. I say to the Minister that that is the backdrop we are working with. There have been repeated changes to the welfare system that are hitting people in multiple ways, and it is terrifying for people.

I am not alone in seeing constituents who are experiencing lengthy delays at every stage of the PIP process. They are waiting for the forms from the DWP following the part 1 process on the telephone. A lot of constituents are having difficulties with the part 2 forms. If those are not returned, it seems that people fall out of the system, which seems to be a particular problem for people with mental health issues. If they just cannot cope with the part 2 form, what happens to them? I know that they are supposed to be followed up by Capita, but that does not seem to be the case.

People are then waiting months for an assessment. When they finally have one, it takes an inordinate amount of time for Capita to process the assessment, generate a report and hand it over to the DWP for the decision. That was confirmed by Newport citizens advice bureau, which has had more than 30 cases waiting for about five months for a decision and two cases waiting for seven months. It also puts an extreme strain on advice workers, who are already struggling with cuts and struggling to be able to support people. They are finding that doing so is a great difficulty.

I saw a woman who had to wait seven months for her decision. We only got the decision after an intervention from my office, and I dread to think how long it might have taken otherwise. That was seven months of stress and anxiety—Capita apologises for the delays, but it is not good enough. Like my hon. Friend the Member for Clwyd South, I saw another lady who applied in July and was not assessed until November, and in one phone call to Capita she was told that if she wanted to speed things up or wanted any progress to be made she should contact her MP, which is clearly ridiculous.

In addition to the delays, a lot of paperwork, including important reports, seems to be lost between Capita and the DWP. There are call centres with no named contact, so people are repeatedly calling back and are not able to get to anyone who understands their case, and there is poor communication. All in all, it is an infuriating experience for the constituent.

I know that the Government will say that there are teething problems, but as today’s debate shows, it is important that the Minister realises some of the consequences that the situation has on people’s lives. A constituent of mine had to rack up debt on credit cards and sell his car while waiting for his wife’s claim to be processed. He happened to be a taxi driver, so you can imagine the financial strain that has put the family under, Mr Owen. Another constituent was left in debt as she waited for her claim to be processed. She had direct debits and no money in her account, and she now has bank charges to cope with. We are not helping people to lead independent lives; they are often having to rely on other people to bail them out during the process.

As my hon. Friend said, a representative from Capita met Welsh MPs last week and admitted that the key assumptions in its business case had been wrong. They said that the face-to-face assessments took two and a half hours, not one hour. It took longer to train assessors than they thought, and to the Minister’s credit, he and other Ministers have admitted delays at their end, too. This week, we heard in Wales that DWP civil servants will be drafted in to help process the applications. I welcome both the fact that the Department will help out and the recommendations from the Select Committee on Work and Pensions that the Department closely examine its systems. I particularly urge the Minister to look for Wales to delay the roll-out until the backlog has been cleared. That is crucial, particularly in Wales, where we have so many DLA recipients.

I know that the Minister has admitted that all is not well, but it would be helpful if he could say in his winding-up speech how much of what has happened is the DWP and how much is Capita, because there are delays at both ends. What is the backlog in Wales currently? If we are moving to paper-based decisions in Wales in future, which perhaps might be piloted in Wales, can we at least understand that there will not be further difficulties with that process and get assurances from the Minister on that point?

10:09

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

It is a pleasure to serve under you in the Chair, Mr Owen. My hon. Friend the Member for Clwyd South (Susan Elan Jones) made a powerful case about some of the problems that people are facing. I am sure that all of us in this Chamber want to see people getting back to work if they are able to do so, but none of us wants to see whatever ill or disabled people suffer from being made worse because of all the stress and anguish of the process that we are discussing.

We have all heard of vital paperwork not being sent out, delays of up to six months and longer, medical assessments being cancelled at the drop of a hat and even people not being told that their assessment will not take place. Then, when the process has been gone through, some people are being told that they should never have gone through the process in the first place, because of what they suffer from.

My hon. Friend the Member for Vale of Clwyd (Chris Ruane), who unfortunately has had to leave the Chamber, touched on mental health. That is a particular area of concern. We are talking about people whose lives are already difficult enough without some of the problems that the Government are now forcing on them. We see people who are literally in tears. They do not understand what is happening to them and are worried at every stage of the process. People are even saying to me, “Mr Tami, if I attend the interview, will that be held against me?” I say no, but they are worried; they are scared. They do not understand why their money is being stopped, why this is happening to them. We are making people ill by doing this; there is no point in pretending otherwise. I have been seeing people who were not great the first time I saw them, but each time I see them they are in a worse state. They are in more debt. They are worried; they are scared, because of what is happening to them.

I saw one guy who was in a wheelchair most of the time. He had had two strokes recently. Clearly, that person will not enter the realm of work very easily. Why do we have to put through this process people who are suffering? Equally, another man, who was 64 years of age, had a long history of heart illness. With the best will in the world, how will he enter the realm of work? Who will employ him? [Interruption.] I know, but that is how people view it; they feel that they are being forced out to work.

This is a very difficult situation. I accept that. Colleagues have mentioned the meeting with Capita. It has helpfully sent us a note about that and some of the questions that were asked. I notice that it is entitled “Health and wellbeing”, which is a somewhat strange situation, but there we are. Let me go through some of the points that it raises in the note. The first question is:

“Why are claimants facing delays in the assessment process?”

The Minister will not be surprised to hear that it is probably the Minister’s fault:

“Referral volumes from the Department are higher than forecast.”

One of my hon. Friends mentioned this:

“More health professionals are needed. The planning assumption was 141. We have now trained over 250 and will have nearly 450 by July 2014.”

Why was the original figure so wrong? It was not just slightly out. There is a massive difference between those figures.

This is one of my favourites:

“Why was the reality of delivery different to the original assumptions?”

Capita states:

“The complexity of producing the new and detailed reports means that there are a number of interrelated factors that add to the assessment timescales. Critically, the assumptions we originally built our operating plan to have not proved to be accurate in live running.”

I presume that in English that means that they have cocked it up.

[Nia Griffith]

Would my hon. Friend, like me, like the Minister to explain exactly what specifications there were in the service level agreement between the DWP and Capita for time scales after the PIP2 form and the medical assessments have been received for Capita to produce its assessment? What were those specifications?

[Mark Tami]

My hon. Friend makes a good point, because something has gone very badly wrong. As I said, some of these things are not just slightly out; there is a massive problem.

I will quote just one more paragraph from Capita’s note:

“What are the current timescales from applying for PIP to a decision being made?

The Department for Work and Pensions estimate that in total it may take around 21-26 weeks from the time a claimant first calls to initiate a claim to when they write to them with their decision. For most people this will include a face-to-face appointment which could take…12-16 weeks to arrange.”

I find that staggering. Then there is this very helpful comment:

“It may take less time than this or longer”.

There we are; there is our answer. Now we know that things are going very well!

As my hon. Friends have made clear, we have all dealt with such cases. I have details of one here. The person applied for PIP last November. They were chasing and chasing and finally got an assessment date for April, but they are still waiting to go through that process. Someone else applied for PIP in June. They had the assessment. However, they got an answer from the DWP only in March, and again that was after they had chased it. Someone else applied in September 2013. Three medical assessments were cancelled by Capita. Some were cancelled without the person being told. They chased for an appointment and finally got one in January. Again, they were having to chase all the time. My favourite is this one. Someone received a letter on 4 February this year informing them that a consultation would take place at their home sometime between 20 January and 25 January. They go back in time to have the assessment, back to the future, or perhaps it involves the use of a Tardis or there is some other new thing that the Department can use.

[Kevin Brennan]

I do not think that this has been mentioned so far in the debate, but Capita did not only meet us last week; it met many of us before the introduction of PIPs and it made certain commitments and promises, based on the assumptions that it had been given by the DWP that none of these things would happen. We were given assurances that there would not be these kinds of delays, that it had the right plans in place, that it knew what it was doing and that there would be no repetition of the mistakes made by other private contractors such as Atos. It failed miserably on that, and ultimate responsibility does come to the Minister. I am sure he accepts that, and we respect his willingness to take it on board, so as the Minister responding to the debate today, he does not need to go through the history of the benefit. We know that.

[Mike Penning]

I am not going to do that; give me a chance.

[Kevin Brennan]

Good, but I am just giving the Minister that warning not to go through the history of the benefit but, yes, to deal with his responsibility, who is responsible—

[Albert Owen (in the Chair)]

Order. Mark Tami.

[Mark Tami]

My hon. Friend the Member for Cardiff West (Kevin Brennan) makes a powerful point. The situation is a mess. Whatever promises are given, it just seems to get worse, even to the point, as hon. Friends have said, that the Department is now having to send in civil servants to try to stem the tide of chaos that is overwhelming the whole system.

On the day on which the Secretary of State for Culture, Media and Sport has decided to go, I am not calling for this Minister to go, but his Department needs to look at this situation. It is affecting, and destroying, real people’s lives. It is causing great suffering out there. I ask the Minister just to look at the Government Benches. There is not a single Tory or Liberal Democrat MP from Wales here today. Why is that? It is because they also know what a mess it is and they have run for the hills.

10:18

[Hywel Williams (Arfon) (PC)]

It is a pleasure to serve under your chairmanship, Mr Owen. I congratulate the hon. Member for Clwyd South (Susan Elan Jones) on a fine, eloquent and valuable speech.

Well, here we are again. Some hon. Members will recall our PIP debate with the now former Secretary of State for Culture, Media and Sport when she was the Minister responsible for disability issues. We discussed the mobility needs of people in residential care, and eventually she performed a U-turn—eventually.

I like this Minister and think that he is sincere and conscientious. We can trust that he will take full account of the debate and make timely changes. We are here because of delays in dealing with our constituents’ cases, and we know about the concerns of the National Audit Office and the Work and Pensions Committee. Our particular concern is Wales, where there are higher levels of disability and long-term illness. I have had cases, but I will not go into them, because we have heard sufficient detail about how bad the situation is. I will, however, ask a number of questions. I have had a response from Capita, although it is not completely satisfactory. I worry about our constituents who do not think of going to see their MP, because there must be many of those—proportionately more than actually come through our doors.

As has been mentioned, there are delays. People are told that they will be paid from the date of their claim, but the problem is that people have current needs, and jam tomorrow, even if it is delivered, is no use. Where there are delays, are claimants given timely information about how long their cases will take? Knowing how long the case will take would at least be some comfort. It is a grim question, but I have also been looking for figures on how many claimants in Wales have died waiting for their claim. It would be useful to have the data sets as soon as possible, although I know that we are in the early stages, and I have had access to some of the management information. Too often, we have data sets for the UK in general, but we are concerned with Wales and it would be useful to have those data sets broken down as far as our country is concerned.

Another issue for Wales is rurality, which makes PIP particularly important for people’s mobility needs. There is a practical question of the travel time for people who are assessed in centres, or the extra travel time taken by Capita staff who have to go to remote locations in rural areas. Atos has chosen a slightly different emphasis from Capita, by doing more assessments in centres rather than home visits. Will the Department eventually conduct a compare and contrast exercise on Atos’s and Capita’s handling of the matter?

I had an interesting discussion with Dr Duckworth, the managing director for PIP at Capita, on the radio this morning. He reported, as we have heard, that Capita now thinks that face-to-face interviews take two hours rather than one. Will the Minister tell us, perhaps in writing, how the planning process worked and how such an alarming underestimate was reached? Any planning process must be somewhat speculative, but if one hour was planned for and the outturn is two hours, it seems to me to be a gross underestimate.

I understand that Capita is recruiting more staff, and I heard the other day that staff from the Department for Work and Pensions are helping out. That is good; in such a situation, it is all hands to the pump. However, are there additional costs, and who pays them? Given that the contract is with a private organisation, what penalties are being imposed on Capita? Has the Minister made any assessment of its willingness, or otherwise, to continue with the work? We saw what happened with Atos, which pulled out of a different sort of assessment because of the difficulties that it faced.

Furthermore, I understand that Capita is conducting more paper-based assessments. Initially, Capita planned to do 70% of assessments face to face, and then we heard that the figure was 99%, but I understand now that, to hurry matters along, some paper-based assessments are being made. That is where we came in when we discussed PIP in the first place. One of the unsatisfactory aspects of disability living allowance was that it was too often a paper-based exercise, which produced variable outcomes, to say the least. PIP was sold on the basis that it would involve a quality, individual, face-to-face assessment, that there would be reviews and that the system would be better all around, but I worry that we may be going back to where we started.

I referred earlier to the need for data sets. It would be useful if the Minister gave us a snapshot of claimant numbers in Wales—perhaps not now, because he may not have the figures to hand—and the number of claims outstanding. Usefully, the Department produced a document entitled “Personal Independence Payment: Management Information” in February 2014, which some hon. Members may have seen. The results for the UK are interesting and rather startling. I do not know whether the figures are still current, because they were published in February and we are now in April. I see from one of the tables that in December 2013, there were 229,700 new PIP claims, and 43,800 new claim decisions were made in respect of all new PIP claims. That is, as far as I can see, a rate of about 20%.

[Mike Penning]

Perhaps I can help the Chamber. We estimate that 233,000 claims have been made, of which 50% have now been decided. Of the terminally ill, 99% have been concluded, which is still not high enough.

[Hywel Williams]

I am glad to hear that that is the rate. Of course, with people who are terminally ill, we want to see a rate of 100%. I also had a look at the figures from the PIP reassessment and impact report from December 2012, which gives a forecast for March 2014 of 87,000 reassessments, with 180,000 reassessments in the March 2012 strategy. Perhaps the Minister can give us further information.

A particular issue in Wales is assessment through the medium of Welsh. I put a question to the Department some time ago, and was told that the assessments would follow the Department’s Welsh language scheme.

[Susan Elan Jones]

The hon. Gentleman makes an important point. Does he agree that one of the ways in which Government and officialdom get it a bit wrong on the Welsh language is by assuming that the only people who need any sort of Welsh language provision are those who complete the forms in Welsh? As many of us know, there are people who are vastly more comfortable speaking Welsh but not necessarily writing it.

[Hywel Williams]

The hon. Lady makes a telling point. Many people would much prefer to speak in Welsh but write in English, even in my own constituency, where some 80% of people speak Welsh. We have to draw the Minister’s attention to the fact that it is not only those who fill in the forms in Welsh who want the service. Departments in general, and perhaps the DWP in particular, assume a certain passivity in respect of the language issue. If people ask—if they bang the table—they might get it, but as with so many equality issues, Departments should take a more proactive stance. Does the Department keep a record of the number of claims made through the medium of Welsh on paper? I imagine that that number is vanishingly small, but I do not think that it corresponds to the number of people who would like to talk in Welsh. Even in my constituency, I am sure that very few send in the forms in Welsh, but the majority want to speak in Welsh.

It is incumbent on us to think of the Capita staff who are struggling to deal with all those matters, and the staff of the Department who are out there working with them. The Public and Commercial Services Union, which represents some of those people, has concerns. I draw that to the Minister’s attention, because we must support the staff, who do a difficult job under very trying circumstances. As a final flourish—I do not know whether the Minister will give me an answer—is he confident that the system is now fit for purpose?

10:30

[Mrs Siân C. James (Swansea East) (Lab)]

I will be brief. We have heard much today about the replacement of the disability living allowance with the personal independence payment. I am not going to cite any personal examples from Swansea East, but I will be talking on behalf of a Swansea-wide organisation, the Maggie’s centre, which serves the south and south-west Wales area, providing very important cancer support services for anyone suffering with cancer. We have heard about the various problems and dissatisfaction, and how we all feel about the introduction of PIP and how Capita is proceeding. If I may say so to the Minister, through the Chair, it is not going very well.

Since January, I have written to Capita on 20 occasions. Last Friday was a red letter day, because I received my first answer. We got quite excited in the office that we had received a letter and rang the constituent concerned to inform her, only to find that she had received a telephone call from Capita with information that was diametrically opposed to everything we had been told in the letter. Capita totally contradicted itself. It was a case of the right hand definitely not knowing what the left hand was doing. There are a lot of examples like that, and we have heard about how the lack of a dedicated telephone line adds to people’s problems.

I want to turn to the stress and strain placed on people who are very unwell. It was sad that, when a group of local MPs were invited to Maggie’s centre last Friday to speak to its disability benefits adviser, who has huge experience working across the sector, I saw despair. In the briefing and facts and figures we were given, we saw despair. It was not the frustration that I feel as an MP, which we have heard expressed in this debate and is shared by my office staff; it was despair. It was a person who is working really hard on behalf of people going through the most dreadful experiences of their lives, and basically hitting their head against a rock. It was very sad.

There are many reports of hold-ups with PIP, but I have heard of and experienced cases in which people have been waiting for responses for several months. I have come across one case of someone waiting for more than a year for a decision on payments. Earlier, the Minister mentioned other benefits, but in many cases, the people we are discussing have had to give up really well-paid jobs. They have been managing to keep their heads above water, but suddenly, because decisions are taking so long, they are tumbling into debt and need. I have been told about people going through chemotherapy who are dependent on the local food bank. Can we imagine coping under such circumstances? It is very sad indeed.

The staff at Maggie’s are doing excellent work, as are my staff and those of the other MPs here, under really difficult circumstances. We are becoming more and more frustrated by the system. Capita must surely have internal systems to monitor and evaluate the length of time that assessments are taking—surely there must be internal safeguards. We are coming across staff who, although they are working under difficult circumstances, really do not seem to care that they are not meeting deadlines. They are not rushing things, and that is sad.

People were keen to tell me on Friday that—we all know this as constituency MPs—we are not talking about people trying to swing the lead. This is not a case of people trying to buck the system and get money to which they are not entitled; these are people in genuine need who have enough stresses and strains without additional problems with PIP. Many organisations, such as Hardest Hit, We Are Spartacus and the Disability Benefits Consortium, are expressing serious concerns about the Government’s introduction of PIP. We are even hearing noises of disquiet from health professions about the Government’s having failed to reform the work capability assessment. As I have said, there is little, if any, evidence of performance monitoring in organisations such as Atos and Capita. They are responsible for the assessments; how are we monitoring and assessing how they are achieving things?

I have many stories and examples that I could pass on to the Minister, just like those mentioned by many of my colleagues. I am confident that the fundamental problem with PIP is that it was introduced to save money. How mean. I understand that these are difficult times for the country and that finances are challenging for us all, but we are talking about the least able people. Many of them tell me, “If I could work, Mrs James, I would be there.”

The staff at Maggie’s asked me to ask the Minister one particular question: why does Capita not accept implied consent from a third party? They are ringing up and working on behalf of cancer sufferers, but they are hitting a brick wall. We do not mind as MPs—PIP is the biggest issue in my postbag and I have an increasing responsibility and work commitment to it—but accepting implied consent from a third party would save time for people who are having tremendous difficulties.

I am sure that the Minister and others have heard our dissatisfaction. PIP assessments must be reformed urgently, because people are suffering unnecessarily on top of all their other problems.

10:37

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

It is a pleasure to serve under your chairmanship today, Mr Owen, and it has been a pleasure to listen to the debate. I particularly congratulate my hon. Friend the Member for Clwyd South (Susan Elan Jones) on securing a debate on a subject that is clearly of concern to many of her Welsh colleagues. Indeed, I am sure that those concerns would be replicated among colleagues throughout the UK. I am sure that the Minister will accept that what we have heard today is not just a matter of isolated cases that can be sorted out by the often very helpful interventions he makes when individual MPs take up issues with him and his Department; we are looking at a process of systemic failure and flaws.

The disability living allowance and the new personal independence payment are important benefits for the people who claim and need them, both in and out of work. Whether someone is working or not, if they are hit with a sudden, potentially catastrophic event—perhaps a stroke or a serious accident—they will start to face additional, often substantial, costs whatever their income situation. In some cases, their income will reduce or dry up. There will also be significant knock-on effects on that person’s family, who may also suffer a loss of income if they have to take time off to care for them. The importance of the personal independence payment in financially supporting the family in the round cannot therefore be exaggerated.

It is also worth noting that disabled people are particularly vulnerable to poverty. They face twice the risk that non-disabled people face, and research by Scope has shown that around half go into debt, using credit cards, overdrafts and so on simply to pay for essentials.

The personal independence payment is also an important benefit for those who suffer less catastrophically, as it enables them to continue to participate in, and often to take on and continue in, paid work. If people are unable to sustain the flow of personal independence payments, particularly those transferring from disability living allowance who previously qualified for mobility payments and find that those payments are not continued, they might lose their Motability vehicle and in many cases fall out of work.

In all cases, it is important that we get the assessment right, and that where people are entitled to the personal independence payment we get the money flowing fast. Yet what we have heard today is a catalogue of delays. While that is terrible for individuals and families, I want to ask the Minister first about the effect of such delays on the Government’s finances.

As colleagues have pointed out, the underlying policy intent of PIP was to make substantial savings in the benefits bill. Yet already the savings have been revised downwards for the current year from £750 million to £640 million. While I understand that the Government expect to get those savings back on track in due course, what will happen if they do not, or if the savings are further delayed? Will disabled people have to pay the price of the newly introduced annually managed expenditure cap?

There are also significant concerns about delivery, as we have heard this morning. Those concerns began to arise soon after the introduction of the benefit in late spring 2013—even as soon as early summer. My colleagues and I were picking up reports of delays and problems. As the National Audit Office pointed out in its report, once backlogs start to build up in the system, it is difficult to recover.

I understand, from a written answer from the Minister to my hon. Friend the Member for Bolton South East (Yasmin Qureshi) just yesterday, that the Minister has set an expectation—not a requirement—that assessments would be carried out within 30 days. Frankly, that is already much longer than what we were used to with the disability living allowance. The total end-to-end expectation for DLA was 37 days. We understand that, for PIP, we have reached 74 days, or 107 days if we exclude the terminally ill cases, which have been sped up. Typically that is a long period for people to go without financial support.

As colleagues have pointed out, the delays are attributable to problems with the forms—people not understanding them and having trouble returning them quickly—and with security questions that people cannot get through. Another problem is that every assessment is subject to audit, which may be desirable to improve quality, but builds in further delays. There are bottlenecks in getting assessments through to decision makers because assessors are getting cases back and cannot cope with the work load.

I understand from the most recent figures I have seen—from the end of October—that Capita is managing to carry out 67% of assessments within the time frame. What is the position today?

The discussion about home visits and people having to travel to assessment centres was interesting. One advantage of having two contractors—Atos in some parts of the country and Capita elsewhere, including Wales—is that we have been able to compare and contrast their different approaches.

First, unlike Atos, Capita employs its own health care professionals; it does not subcontract to others to carry out the assessments. Also, as I understand it, Capita is committed to a model predominantly built around assessing people in their own home. Home visits amount to around 60% of the assessments carried out by Capita. Yet we heard today from my hon. Friend the Member for Vale of Clwyd (Chris Ruane) that his constituent has been required to make journeys of more than two and a half hours in each direction to attend an assessment centre. Will the Minister say a little more about exactly how the balance between having to travel to a centre and being able to have a home visit is working out in practice?

We heard many examples this morning of problems with dealing with Capita as an organisation, whether someone is an individual, a member of the individual’s family or, for that matter, the individual’s Member of Parliament, trying to sort out a particular case. There have been complaints about difficulties in booking appointments; appointments being cancelled at short notice; and problems booking another appointment. There has been confusion when people have tried to find out the status of their appointment or assessment. People have been told to ask the Department for Work and Pensions, only for the Department to refer them back to Capita. As a result there is uncertainty for claimants about where their claims stand.

As was also mentioned this morning, there is concern that there are simply not enough experienced and qualified health care professionals in the market to carry out the assessments. What is the Minister doing to stimulate the profession and to encourage more people to enter it? What discussions has he had with Capita about how it intends to ensure that it has an adequate staff base to carry out the assessments? Will he explain why, as my hon. Friend the Member for Llanelli (Nia Griffith) pointed out, Capita was not required to provide evidence that it had that staff team in place before the contract commenced?

We have also heard that the length of time to carry out an individual assessment is much longer than was envisaged. While the working assumption was that assessments would typically take one hour, two to two and a half hours is becoming the norm.

When PIP was first introduced by the Government and was being discussed during the passage of what became the Welfare Reform Act 2012, we were told that there would be no time limit on how long the assessments would last; if it took a long time to extract the information needed in a face-to-face interview with a claimant, all that time would be given. Capita seems to have honoured that and said, “We will take as long as it takes to get the information we need.” The difficulty is that that simply is not a financially or operationally sustainable model. It is building in delay and cost, and it would be interesting to hear how the Minister intends to resolve that policy conundrum, as it seems to be working with the best of intentions to very adverse effect.

We heard that plans were agreed in January 2014 for civil servants to be drafted in to help clear the backlog that has arisen in Capita, which has been welcomed by colleagues this morning. Will the Minister say a bit more about what those civil servants are doing? Presumably, they are not health care professionals carrying out the assessments themselves. Will he also tell us where they have come from? Will there now be a scarcity of civil servants in another part of the DWP’s operation? Who is bearing any additional cost of deploying the civil servants?

Can we also have clarity about the balance between paper-based and face-to-face assessments? I understand that Wales is now piloting increased used of paper-based assessments. Will the Minister say in what circumstances that is taking place? What percentage of assessments does he now expect to be paper-based or face-to-face? What is the situation now?

As the hon. Member for Arfon (Hywel Williams) pointed out, the Secretary of State himself seems a little confused about the Government’s intentions here, even as recently as last Sunday. On the “Marr” programme, he said:

“What we are introducing here is regular checks, face-to-face...This is much fairer for everybody, those face-to-face checks...Because of the face-to-face checks it’s much more likely that you will get a more accurate reading.”

I must tell the Secretary of State that people are not cars with speedometers; they are human beings with a set of conditions. The issue is not about accurate readings, but about understanding a condition in the round. None the less, there appears to be a discrepancy between the Secretary of State’s strong assertion on Sunday that face-to-face assessments were the direction of the travel, and my understanding that a considerable emphasis is now being given to piloting paper-based assessments in Wales.

I am pleased about the progress on terminal cases, and actually I have to offer my congratulations to the Minister for the speed with which he picked up that concern. I would like to ask the Minister about mental health, which was mentioned by a number of colleagues, and what he is doing to improve the expertise of assessors. I want to repeat the question asked by, I think, my hon. Friend the Member for Swansea East (Mrs James) about whether Capita will have the opportunity to bid for the work capability assessment. Many in the Chamber would be rather horrified if it were. I also want to repeat the question asked by the hon. Member for Arfon about when we can expect to see proper audited statistics. The management information is useful, but it gives us only part of the story. Will the Minister also answer the question raised by my hon. Friend the Member for Clwyd South about the lack of an MP hotline and the confusion about where complaints should be directed?

I have a few final questions for the Minister. We heard about the poor data matching between information already held on the benefits system about claimants and what was being uncovered when they went for a PIP assessment. Will the Minister say which he thinks is more reliable, and to what extent DLA information can be used as a possible means of clearing the backlog that we face? We would have expected many more cases where there is a dispute to be reaching the stage of appeals in tribunal, but the courts are sitting around with nothing to do. Who is bearing the cost in the court service of that lack of activity? Finally, can the Minister give us a little more information on his intentions for the independent review of PIP that has been promised for later this year?

10:49

[The Minister of State, Department for Work and Pensions (Mike Penning)]

Thank you very much indeed for calling me to speak, Mr Owen. It is a pleasure to serve under your chairmanship in this very important debate.

Let me say at the outset that it is very important that this type of debate takes place, not least because we can get better information on the record. I know that some hon. Members have not raised individual constituency cases during this debate; some have, but some have not. If they have not done so, please would they give us that information? We will be in contact with Members during the course of today and tomorrow, so that we can pick up on those cases.

I will start today by touching on the point that was raised in the debate about colleagues coming to me and getting responses. I think that it was raised by the hon. Member for Newport East (Jessica Morden) and I thank her for her kind comments about how we have responded to colleagues, not only in Westminster Hall today but at other times. Actually, it is very useful for me as the Minister to see what goes through, because if individual MPs write to me then I—as Members probably know—write them an individual reply, and while I cannot deal with every individual case, it does give me a better feel for what is going on.

With that in mind, I will go back from Westminster Hall today and act; my officials have heard what hon. Members have said and they will now hear what I am about to say. The hotline will happen. It is not acceptable that there is not a hotline in place. We will get on and do that.

I will touch, quite rightly, on what was probably the most sensitive issue raised in the debate, which is that of the cases concerning the terminally ill. I thank the shadow Minister, the hon. Member for Stretford and Urmston (Kate Green), for her kind comments about the actions that I have taken on such cases in the short time that I have been the Minister. I was appalled—I have said that before publicly as well as privately—at the length of time that it was taking for cases concerning the terminally ill to be assessed and for payments to be made. I think that when I arrived in this post, the period was around 28 days. Under the previous disability living allowance system, which was not strictly comparable, the period would have been about 10 days. I want it to come down; I have anecdotal evidence that it is around three to eight days now. As I said to the Work and Pensions Committee, an average of five days is perhaps where we need to be. We need to ensure that these people who so desperately need help get it quickly.

I have worked particularly closely with Macmillan Cancer Support to develop some new methodologies. For instance, it is very difficult for someone visiting a terminally ill person to be on the phone to someone else while they are talking to the person they are looking after; that is particularly difficult with Macmillan cases. So we are going to set up a pilot whereby we give Macmillan the forms there and then, so that they have them on file and we can get them back and through the system more quickly. Macmillan said that it did not like the call system; it kept their nurses and other health professionals waiting for too long. So we are going to work with Macmillan and pilot that new scheme. And we will move from that scheme to secure portable document format, or PDF. That is what most of our GPs use when they deal with insurance companies or anybody else. Hopefully we will continue to review matters and we can continue to reduce the time that it takes to deal with these cases.

In an intervention, the hon. Member for Cardiff West (Kevin Brennan) said that he hoped I would not just read out the speech that had been prepared for me. He knows me better than that; I have never read a speech in this House that has been prepared for me. I will continue to respond to Members as best I can and, of course, if I am unable to answer the questions in the time that I am allowed, we will write to individual colleagues and ensure that they have the information they need for their constituents.

Do I, as the Minister of State responsible for this portfolio, take responsibility for it? Yes, I do. That is the way that Ministers should act. There was a former Secretary of State for Work and Pensions in Westminster Hall earlier, the right hon. Member for Neath (Mr Hain). He is not in Westminster Hall at the moment, but I went to him when I was a Back-Bench MP and said to him, “You are the Secretary of State. You’ve got to take responsibility.” That is exactly what he did.

Whether I make the right decision or the wrong decision will be for others to decide. However, one of the reasons that I wanted this portfolio was to make a difference. The old DLA system was broken; that was alluded to by the hon. Member for Cardiff West. Under that system, less than 6% of claimants had face-to-face interviews; most people were given a paper-based assessment for life. In the case of some people, that was absolutely right and proper, but for an awful lot of people it was not. For instance, it was particularly bad for people with mental health issues, because they could not get the upper rate on the old DLA, really. With PIP, they will be able to.

The hon. Member for Newport East asked me about the roll-out of this system. It has been rolled out in Wales; it is out, in its entirety, for reconsiderations as well as for new claims. So, the one area that I can see the new system in its entirety is Wales. We will break down the data and ensure that it is available to Welsh MPs, so that we can provide feedback. It is too early to give the full basis of the data, and the Audit Commission has also said that.

[Mark Tami]

Will the Minister give way?

[Mike Penning]

I will just finish this point on the Audit Commission, because the Audit Commission was quoted several times. As I was saying, the commission also said that it was too early to see whether the new system would be value for money, because the information is not here yet. I just wanted to balance that argument a bit.

[Mark Tami]

Before the Minister moves off the subject of mental health, one of the other important issues is that, depending on what is wrong with them, people have good days and bad days. It is important to get an all-round picture of their issues, rather than just an on-the-spot assessment—“Yes, they’re OK. Fine.”

[Mike Penning]

I completely taken on board what the hon. Gentleman says. Indeed, what is just as important is that people with mental disabilities often have other disabilities as well and they need to be treated as an individual case, with all their disabilities considered in their entirety.

We are working very closely with Capita. The Capita model is different from the Atos model. As was alluded to by the shadow Minister, Capita is doing 60% of its work within the home and 40% in other assessments. It is completely unacceptable if someone is being asked to travel the distances that we have heard about today. The maximum time someone should travel is 90 minutes. In rural communities, which were referred to in the debate, even that length of time is really difficult, because travelling for 90 minutes in a big capital city is completely different from travelling for the same time in a rural community. I have asked my officials to begin a review today about the access issues that people are having. They will review not only the time that it takes for people to go to an assessment centre but the time it takes for Capita to come to a person’s home, because travelling time is not considered as part of the time for the assessment. I will come on to that in a moment.

[Susan Elan Jones]

Can the Minister tell us how bad Capita has to get before, in his estimation, any fine would be imposed upon it by the Government?

[Mike Penning]

If the hon. Lady will be patient, I have another four minutes to speak and I will certainly address that issue.

With the contracts that were issued, there is not a change to a paper-based system. From day one, the perception was that the split should be 75:25 between face-to-face interviews and paper-based assessments. I have said that to the Work and Pensions Committee before. With the DLA, only 6% of claimants were interviewed face to face and nationally we are around about 97% for face-to-face interviews. So there is not a movement away from face-to-face interviews; actually, where we are trying to get to is where we were supposed to be in the first place, which is around 75% of interviews being conducted face to face and 25% of claimants being dealt with by paper-based assessments.

The contract with Capita allows for penalties and we are imposing financial penalties on it where it is not meeting its targets. That process is taking place now and we will continue with it. However, the best thing to do is for us to work with Capita to get accurate assessments.

The point about accuracy is the one that I will touch on for the remaining few minutes. One type of issue that we have is quality issues. We have been really tough, and previous Ministers were very tough, on both Capita and Atos about PIP regarding quality. Because of that, those companies have been very concerned—I have used the word “frightened” before, but they are certainly concerned—about ensuring they get things right, which is one of the reasons why we have nowhere near the number of appeals that we may have expected or that were made under previous benefit systems.

One reason for that is that we have put our staff into the offices of companies, particularly those of Capita, and we will probably do that elsewhere. It gives staff the confidence to make the decisions on the paper-based assessments. Very often, although staff feel they have the information in front of them, they are not sure about making a decision because they fear they will be hit on quality—“The audit will come down and say we should have done this”—so they have pushed the case through to a face-to-face interview. That is actually increasing the delays. We want to give people confidence; that is why our officials are there.

The question was asked, “Where do these officials come from?” Many of them are actually officials waiting for these decisions to come back, so I have a capacity of people sitting there and waiting for decisions to come back. That is why we are putting people at the right grade into the offices of Capita to ensure that we can get better movement and that we get the split down to a manageable one; I hope it will be a 75:25 split.

We will probably announce the review later on today, if not tomorrow, outlining who will do the review and how we move on from it.

The truth of the matter is that there will be people who benefit from PIP and there will be people who do not benefit from it. However, what they need is decisions and we need to communicate with them much better. We are introducing a text system so that people will be better informed as to where they are within the queue system. That is slightly more complicated in certain parts of the country than others. We can text—

[Albert Owen (in the Chair)]

Order. I am very grateful to the Minister, and to Members, for what was a full debate. The Minister has indicated that he will write to Members.

Shared Services Connected Ltd

Wednesday 9th April 2014 Westminster Hall

11:00

[Paul Blomfield (Sheffield Central) (Lab)]

It is a pleasure to open this debate with you in the Chair, Mr Owen.

I sought this debate on behalf of 239 Department for Work and Pensions staff at the Kings Court offices in the heart of my constituency, although the issue affects civil service staff more broadly.

I begin by citing the Prime Minister. Back in January, speaking at the World Economic Forum at Davos, he said that Britain had the potential to become the “reshore nation”. Talking about UK jobs lost abroad, through offshoring, he said,

“there is now an opportunity for the reverse…an opportunity for some of those jobs to come back.”

Should not the Government be taking a lead on this, setting the example through its own employment policies? Last week I received a letter from the Minister for the Cabinet Office and Paymaster General all but confirming that the work lost in my constituency was to be offshored to India, as I understand it.

Let me explain the background. Shared services are those parts of individual civil service departments, arm’s length bodies and agencies that provide corporate services for IT, human resources management, pay and payroll, procurement and finance to deliver their business outputs. In December 2012, the Cabinet Office set out its next generation shared services strategic plan to create five shared service centres. Two independent shared services centres, ISSC1 and ISSC2, would be formed for a number of departments and arm’s length bodies. The three remaining were to be stand-alone centres, based on the Ministry of Justice, the Ministry of Defence and Her Majesty’s Revenue and Customs.

The first of these independent shared service centres, ISSC1, based on the Department for Transport in Swansea, was outsourced to German multinational Arvato in June 2013. The Public and Commercial Services Union, representing the majority of staff, engaged positively in the transfer process to secure the best possible outcome. The consultation led to agreements, including one on no compulsory redundancy for at least a year and an agreement that staff would retain their civil service status.

ISSC2, which affects Sheffield, was to consist initially of the shared services functions of the Department for Work and Pensions, the Department for Environment, Food and Rural Affairs and the Environment Agency. This was turned into a joint venture company called Shared Services Connected Ltd, in which the Government retained 25% of the shares, with the French multinational Steria’s UK subsidiary owning and controlling 75%. The creation of SSCL involved civil service shared services sites in York, Alnwick, Cardiff, Blackpool and Newcastle, as well as the one in my constituency in Sheffield. SSCL became live in November 2013 and 1,000 civil servants were privatised and TUPE-ed over.

The PCS secured agreements with the Government on this process, including a six-month no compulsory redundancy agreement and a one-year guarantee of no site closures. However, on 4 March 2014, SSCL announced 500 job cuts, office closures and the offshoring of work, quite cynically timed to the minute the one-year guarantee against site closures ran out.

As well as the closure in Sheffield, by October 2014, the DWP office in Cardiff will close, with a loss of 105 staff, and the Environment Agency office in Leeds will close, with a loss of 68 staff.

[Jessica Morden (Newport East) (Lab)]

Can my hon. Friend understand the anxiety felt by staff at the Newport MOJ shared services centre—the situation is similar to the one in Sheffield that he is explaining—who understood that that was to be a stand-alone site, although it is now being considered for outsourcing to Arvato or Steria?

[Paul Blomfield]

I can indeed, and I will come to that issue. Closer to Newport than Sheffield, I met some staff from Cardiff last week. Like the staff in Sheffield, these are loyal civil servants who have contributed years of public service and, frankly, they feel betrayed by the decision and by the way that the decisions are being executed.

As well as job losses in Sheffield and Cardiff, 122 staff will go in SSCL offices in Blackpool, Newcastle, Peterborough and York. The DEFRA site in Alnwick has a temporary reprieve, but only until June 2015. The Government have not conducted economic impact assessments of the closure of these offices, although the loss of jobs will have a significant impact on local communities and economies. Indeed, in June 2013, Lynn Phillips, head of service improvement for DEFRA, wrote to the then Minister, the hon. Member for Somerton and Frome (Mr Heath), highlighting the plan’s

“incompatibility with UK growth objectives”

because of the

“loss of jobs in regional locations”.

Will the Minister assure us and say that the Government will conduct an economic impact assessment and, if so, when that is likely to happen?

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

Specifically, on the DEFRA issue, does not my hon. Friend think that the fact that the Secretary of State raised concerns and asked for a standstill period shows how serious this offshoring is and that it will lead to dire consequences?

[Paul Blomfield]

My hon. Friend is right. I am coming to that point. Clearly, this issue has led to concerns being raised, even at Cabinet level. Yet, extraordinarily, the offshoring is being rushed through.

The speed at which SSCL intends to cut the 500 jobs is unprecedented. It aims to have all redundancies dealt with by the end of October. This does not allow enough time for staff to be re-employed or reinstated back into the civil service and means that compulsory redundancies are likely. Indeed, staff in Sheffield and in Cardiff, whom I met last week, told me that the redeployment opportunities have been limited, because there is no joined-up approach across Government. I find it extraordinary that most other Departments are not offering vacancies to those loyal civil servants who are losing their jobs. Do the Government think that this is the right way to treat any staff, particularly those who have given decades of public service? It sets a bad standard for employers throughout the country. I should like the Minister to reassure us on this issue. Will the Government commit to providing redeployment opportunities across all Departments? That would provide a lifeline for at least some staff. The limited opportunities that have been made available to date are inaccessible to many of those in Sheffield, and those at other sites, too.

SSCL is not acting in accordance with the special commitments given to staff before transfer, which stated that transformation would take place over two years and that everything would be done to avoid compulsory redundancies. The Government have a 25% stake in SSCL. At the very least, should they not use that position to challenge the speed of job cuts, to allow a thorough, ongoing programme of redeployment of staff? I should like the Minister to respond to that question.

There is also the issue of the data being handled. These sites handle the personal data of tens of thousands of civil servants. They also deal with commercially sensitive information relating to Government contracts and tendering. Despite the sensitivity of the data, when the Cabinet Office advertised for bidders to become majority partners in SSCL in April 2013, the selected bidders all had a significant element of offshoring functions as part of their bid.

Concerns about offshoring are not restricted to Opposition Members or their staff; they have, as my hon. Friend the Member for North Tyneside (Mrs Glindon) pointed out, been expressed at Cabinet level. The Secretary of State for Environment, Food and Rural Affairs wrote to the Minister for the Cabinet Office last July, expressing concerns about DEFRA joining ISSC2 and a “possible staff exodus”. The Secretary of State asked specifically for a standstill period on “estates and off-shoring” and expressed concerns about data security. The head of service improvement for DEFRA wrote in her letter to the hon. Member for Somerton and Frome that the DEFRA executive committee considered

“significant (or any) element of off-shoring”

to be unacceptable and that there was a

“significantly increased risk to service continuity from loss of current expertise”

on transfer. She also raised concerns about

“employee and detailed financial data transmitted, stored and processed outside the UK”.

Why are the Government sanctioning the offshoring of sensitive personal data and commercially sensitive information, on which objections have been raised at the highest level of the civil service and by members of the Cabinet?

[Jessica Morden]

Does my hon. Friend agree that it is breathtaking hypocrisy for the Prime Minister to have been talking just weeks ago about Britain becoming the reshoring nation while the Cabinet Office pursues contracts that are explicitly relaxed about offshoring jobs, such as those at the shared services centre in Newport?

[Paul Blomfield]

My hon. Friend is absolutely right and again anticipates a point I will make. Before I do, I make one point about the remaining three shared service centres. Originally, they were to stand alone, but I understand that the strategic plan has been fundamentally revised. Peter Swann, who heads the Crown oversight function of the shared services agenda, has confirmed that the Ministry of Justice is considering transferring its shared services to one of the outsourced ISSCs instead.

I understand the concerns of the staff involved. If the MOJ was to join one of the already outsourced ISSC contracts, the sensitive data the staff handle, including criminal records and details of the police, the judiciary and security service personnel, could also be privatised and offshored. Why has the strategic plan been changed?

Finally, taking on board the point made by my hon. Friend the Member for Newport East (Jessica Morden), I return to my opening point. What makes the cuts so much harder for the staff to swallow is that so much of the work for the three sites under threat of closure has been earmarked for offshoring. Indeed, the PCS told me that SSCL has explicitly said that a determining factor in deciding which sites are to close is the potential for the work to be offshored. Offshoring is the driver for decisions on closure and job losses.

As my hon. Friend said, how does that fit in with the Prime Minister’s assertion at the World Economic Forum that he wants the UK to become “the reshoring nation”? At Davos, he underlined that ambition by announcing the establishment of a new body, Reshore UK, which will sit within the Department for Business, Innovation and Skills. The Prime Minister clearly places great weight on that body in developing his reshoring strategy. Will the Minister commit to arranging for Reshore UK to meet with SSCL and the Cabinet Office with the aim of considering how the jobs they plan to offshore can stay in the UK? If not, does he accept that the Prime Minister’s statement at Davos will be seen as nothing more than empty words?

11:14

[The Minister for Civil Society (Mr Nick Hurd)]

It is a great pleasure, Mr Owen, to serve under your chairmanship, I think for the first time. I congratulate the hon. Member for Sheffield Central (Paul Blomfield) on securing the debate and on the sincerity with which he has presented his arguments on behalf of concerned constituents. I totally understand where that comes from; if I were in his shoes, I would probably utter similar sentiments.

The hon. Gentleman endeared himself to me by opening with a quote from the Prime Minister. Of course, the Prime Minister was right in saying that jobs are coming back. I do not have the statistics for Sheffield, Newport or other constituencies represented on the Opposition Benches, but it is undeniable that since the 2010 election, more than 1 million private sector jobs have been created in this country. We have record numbers of people in work.

[Paul Flynn (Newport West) (Lab)]

Will the Minister give way?

[Mr Hurd]

I will not, because the hon. Gentleman was not here for the start of the debate. There are a record number of women in work and this country is creating jobs again.

[Paul Flynn]

Some 650 jobs have been lost in Newport.

[Albert Owen (in the Chair)]

Order.

[Mr Hurd]

With respect to the hon. Gentleman, I will not give way, because he was not here at the start of the debate.

[Paul Flynn]

Deliberate ignorance!

[Mr Hurd]

It is not deliberate ignorance at all.

[Paul Flynn]

rose—

[Albert Owen (in the Chair)]

Order. The Minister is not giving way.

[Mr Hurd]

I was putting the debate into a wider context, which I hope the hon. Member for Sheffield Central would welcome, of vibrant job generation in this country. It does not just matter for statistics; it offers hope and security for people across the country. When the Prime Minister talks about jobs coming back, he means it. The issue is about restoring the means by which this country can secure its long-term future and competitiveness. The fact that that was entirely absent from the debate is regrettable.

[Paul Blomfield]

On that specific point, will the Minister note the regional imbalance in the creation of private sector jobs? He might have seen the report two or three weeks ago from the Centre for Cities, which pointed out that so many of the jobs being created are in London and the south-east, sucked away from the rest of the country. I think it said that there have been 217,000 new private sector jobs in London, with a net decline in private sector jobs of 7,500 in my city of Sheffield. The Government have a particular responsibility to address that regional imbalance and not take more jobs away.

[Mr Hurd]

That is a fair point, which the Chancellor has addressed directly by saying, “Yes, there is some very good news on job creation, but we still face a stubborn underlying challenge on the imbalance in the economy.” That is a fact, reality and challenge that the Government are addressing.

It would nice if we heard some voices from the Opposition Benches that recognised that these problems have been entrenched for a long time and were substantially not addressed by the previous Administration. I am trying to make the point that the broader context is one where the country is beginning to generate jobs again after some difficult years. Part of the reason why we have been able to create jobs is that at the core of the long-term economic plan is a plan to pay down the deficit. It would be nice to have a reality check on the Opposition Benches: that is the environment in which this Government have to work and in which the next Government will have to work, whatever their political colour.

[Mrs Glindon]

Will the Minister not acknowledge that sustaining jobs is as important as creating jobs in a successful economy? Offshoring these jobs is not about sustaining work in this country. If there is to be job creation, offshoring jobs negates some of that.

[Mr Hurd]

I will come to the specific point about offshoring, because it was at the core of the speech made by the hon. Member for Sheffield Central.

[Paul Flynn]

On a point of order, Mr Owen. Is it in order for a Minister to cast a slur over a Member by claiming that he was not present at the beginning of a debate without giving that Member an opportunity to explain that he was at a Select Committee meeting and that, had he left, it would not have been quorate?

[Albert Owen (in the Chair)]

The hon. Gentleman has been in Parliament an awfully long time and he knows that that is not a point of order for the Chair. It is up to the Minister whether he gives way to any Member in the Chamber. The Minister indicated that he would not give way to the hon. Gentleman, but he has since done so to other Members.

[Mr Hurd]

I am trying to stress to the hon. Member for North Tyneside (Mrs Glindon) that the bigger context is job creation throughout the country, which I hope she welcomes and is evidenced in her constituency as well. She makes a valid point about offshoring, to which I will return, because it was at the core of the speech of the hon. Member for Sheffield Central.

My point was that we are in the place where we are in terms of vibrant job creation around the country partly because of the confidence in the business community that there is a plan for economic recovery and that, at the heart of the plan, is a determination to get on top of the public finances. Simply put, that will be the reality for whoever is in power after the next general election, which is acknowledged by the people at the top of the Labour party. The Government therefore have to get serious about where they find savings and efficiencies. For a long time now, including under the previous Government, as highlighted in 2004 by the Gershon review, there has been consistent advocacy for the need and opportunity to consolidate back-office functions throughout government. The belief is that we can deliver between £400 million and £600 million per annum in savings for the taxpayer in such a process, while freeing the civil service to concentrate on its core role of delivering exceptional public services.

Significant public gain is to be had through the pursuit of efficiency, which the previous Administration did not pursue rigorously, despite the words. If any evidence were needed, the Efficiency and Reform Group in the Cabinet Office last year was able to realise £10 billion in savings to the taxpayer through our process. That is £10 billion that does not have to come in cuts to front-line services. It tells us a lot about the attitude of the previous Government to efficiency in the public finances.

[Paul Blomfield]

Does the Minister acknowledge that that is stretching the definition of efficiency a little? We are simply talking about taking jobs done in proper working conditions by loyal civil servants in the UK and putting them into a cheap labour market in India. That is not efficiency; that is exploiting the labour force.

[Mr Hurd]

I would like to see some recognition that it is not in the interests of the British taxpayer for there to be duplication or inefficiency in how services are delivered. For some time, and under the previous Administration, there has been widespread acceptance of the opportunity to share services such as HR, procurement, finance and payroll functions, and of the need to consolidate where those services are shared, given the number of centres that were in place. Obviously, in that process there is an ability to deliver efficiency, cost-effectiveness and, I hope, a better service.

There is no dispute about the opportunity—as I said, the debate has been going on for a long time—but the question is whether anyone is prepared to do something about it, and we are. We are delighted that the National Audit Office recognises our progress and, in a report of 31 March, considers that the programme is

“on track with the first shared service centre being outsourced by its target date of March 2013 and the second having a joint venture partner in place before its target date of March 2014.”

It also found

“no major issues with the services offered by”

either of the two independent shared service centres.

As the hon. Gentleman said, the second of the two centres was created in November 2013, when the Government signed an agreement with a private sector partner, Steria Ltd, to create a joint venture to deliver back-office services to 13 Government customers. The resulting company, known as Shared Services Connected Ltd, was formed from a consolidation of some existing shared service centres including the Department for Work and Pensions, the Department for Environment, Food and Rural Affairs and the Environment Agency. In addition, in-scope services delivered by UK Shared Business Services Ltd are expected to move across by 2015.

It is important to keep in mind that the model is not a conventional outsourcing one. As the contracts are constructed, the bigger the volume, the lower the unit price goes, so it is in everyone’s interest, whether Government, private sector partners or employees, for the centres to win additional business from other Departments and from the private sector in the UK and overseas. If business grows, and there is an opportunity to grow the business and to recruit more jobs into it, public services can be delivered at lower cost. The taxpayer will share in the upside.

In order to develop SSCL as a world-class services organisation, it formally entered a transformation phase on 31 March 2014, which involves IT harmonisation, offshoring and the adoption of a centre of excellence model, which is considered good practice across the shared services sector. We believe that that will reduce costs, increase efficiency and deliver a consistent performance and an improved customer experience.

As the hon. Gentleman said, the centre of excellence consultation process commenced during March, and following discussions with employees, clients and trade unions, four of the existing eight core sites were selected as centres of excellence. Those are York, Peterborough, Blackpool and Newcastle. Initial proposals were to close the other five sites. However, after consultation and due diligence with clients and employees that was reduced to three—Sheffield, Cardiff and Leeds. Alnwick will remain open, although not as a centre of excellence. The sites selected as centres of excellence were the ones considered most likely to be able to serve existing customers, while also ensuring the sustainable future growth necessary to provide value for money to the taxpayer.

The core of the hon. Gentleman’s concern was exit and re-employment. I listened with concern to some of the points he made, and I undertake to write to those involved to make his concerns clear and seek assurances about the way in which some tough decisions on redundancy are being implemented. I will come back to the hon. Gentleman with my view on the quality of the information I get back.

We believe that SSCL has approached the centre of excellence strategy with some sensitivity to the impact that it will have across the business, sharing plans with employees at the earliest opportunity, undertaking roadshows to explain the implications directly, and briefing employees on the proposals for site closures and the associated consultation process. At the same time, SSCL launched a voluntary exit programme for affected employees. The window for expressions of interest closed on 24 March.

As part of the negotiations associated with the ISSC2 deal, the Cabinet Office and Steria agreed a re-employment protocol with the Department for Work and Pensions, the Department for Environment, Food and Rural Affairs, and Her Majesty’s Revenue and Customs, for those staff members who transferred to SSCL under TUPE arrangements from DWP and DEFRA. That was put in place to try to mitigate the impact of key redundancies associated with the move to the new target operating model. Although that was not mandatory, both parties felt it was important to try to support the staff with continued employment.

The Cabinet is also proactively negotiating re- employment protocols with further Departments and agencies, including the Department for Education and the Office for National Statistics, where there are suitable roles locally. We are confident that we are doing all that we can to support SSCL staff with re-employment, within the confines of TUPE law and Government policy. If I may, I should like to send the hon. Gentleman a follow-up letter with more detail about those processes, to put some assurances behind those words.

The next stage of the SSCL transformation programme is to establish the four centres of excellence. The Alnwick office, previously a DEFRA site, will not be a centre of excellence, but will remain open until June 2015. SSCL hopes to move some NHS shared business services actively to Alnwick, to retain it beyond 2015.

[Paul Blomfield]

I thank the Minister for his assurances about letters and initiatives. Will the Cabinet Office extend the intentions he outlined across all Departments, and move quickly? There is a limited window, before people lose their jobs, to ensure that there are proper redeployment opportunities across government.

[Mr Hurd]

We are certainly negotiating re-employment protocols with other Departments and agencies, including DFE and ONS, but perhaps I may clarify the detail in the letter I shall be sending. As the hon. Gentleman said, we all know that any job loss is a personal tragedy for the individual concerned and their family. We want to minimise insecurity connected with that. The process is clearly difficult, and we are as confident as we can be that it is being handled with appropriate sensitivity. However, if the Members of Parliament for the affected constituencies have substantial evidence that that is not the case, we want to know. We will follow up such evidence, because we understand the sensitivities and want to test the assurances we are given.

In this context there is no black and white world; offshoring has been a feature of many successful Government contracts signed during this and the previous Administration, including a joint venture involving NHS shared business services, which created jobs and expanded the number of its offices from two to 13 in the past 10 years. Offshoring is not in itself an absolutely bad thing. I shall certainly contact Reshore UK to make it aware of the hon. Gentleman’s concerns.

11:30

Sitting suspended.

Rural Crime

Wednesday 9th April 2014 Westminster Hall

[Mr Mike Weir in the Chair]

14:30

[Gordon Henderson (Sittingbourne and Sheppey) (Con)]

It is a delight to serve under your chairmanship today, Mr Weir, for this important debate.

My constituency has a number of important industries, including paper making, brick making and pharmaceuticals, but it is also semi-rural, with an important farming industry. I want to highlight some of the worries about rural crime that people in my constituency have—in particular, my farming community and those who live in remote areas. First, however, I pay tribute to Kent police in general and my local officers in particular, who, within the constraints of continual pressure on their budgets, do what they can to protect those of us living in rural communities.

Do not get me wrong; I understand the need for the Government to bring down the deficit and know that the police force must do its bit to help. However, I want to see a rebalancing of how the Government grant is allocated, to ensure that rural areas and semi-rural areas such as my own receive a fairer share of the cake. That is the nub of our problem. We worry that, given the increasing pressure on police budgets, rural areas will continue to take second place in the allocation of resources.

The truth is that people in rural areas often feel that they are last in line for services: they sometimes have to put up with inferior roads; they often have no local school; they almost always have a poor internet connection; and they rarely have a police station. In short, they feel isolated, and that isolation increases their fear of crime.

A recent National Farmers Union survey showed that a quarter of rural crimes go unreported. Farmers take the view that reporting a crime is a waste of their time, in particular if that crime is considered by some other people as little more than a minor misdemeanour. The survey also showed that 50% of farmers said that the police failed to devote sufficient resources to tackling rural crime, while a further third felt that insufficient action was taken when crimes were reported. Some 38% of farmers have been victims of crime, including theft, arson, criminal damage, poaching and illegal fly-grazing. If 38% of people living in a city were victims of crime, it would be considered a crime blackspot. Why is such a high level of crime among farmers deemed acceptable in some quarters?

In Kent, it has been recognised that rural crime is a problem. Our police and crime commissioner, Ann Barnes, has pledged to improve rural policing with the use of mobile police stations. We welcome any initiative that highlights the problem of rural crime, but many are sceptical about the worth of mobile police stations and would prefer the money to be spent on boosting the number of police officers dedicated to tackling rural crime.

In Kent, we have only six rural partnership police officers to cover the whole county. Two of those officers cover not only my constituency, but an area that stretches from Thanet in the east of Kent to Dartford in its extreme north-west. Special police constables have been used to support the rural partnership officers, but my understanding is that those specials rarely have access to a police vehicle, so they have no means of patrolling the area in which they are supposed to be helping. Perhaps it would be better to spend the money used for mobile police stations on more rural community officers and the vehicles that they need to get around Kent more quickly.

Rural crime cost the UK an estimated £42.3 million in 2012. Organised gangs are increasingly targeting high-value tractors and other farm vehicles, stealing them to order and shipping them overseas. One of the frustrations felt by farmers is that there appears to be no recognition from the Government or senior police officers that rural crime is often closely linked to serious criminal activity, much of it across international borders.

In isolation, rural crimes appear to be one-off, unrelated events; in fact, they are often interrelated and funded by the activities of criminal gangs and terrorist organisations. For example, despite the best efforts of farmers to store their supplies of ammonium nitrate-based fertilisers in secure facilities, large amounts have been stolen. As hon. Members are probably aware, ammonium nitrate fertilisers are used to make home-made explosives and have been a component of some of the most devastating terrorist bomb blasts in the world.

Criminal gangs will steal anything that they can lay their hands on—from combine harvesters to quad bikes, from animal medicines to agricultural chemicals. One farmer in my constituency, who happens to be a good friend of mine, had a gate stolen from his field. Shortly afterwards, he installed a brand-new gate, which cost him several hundred pounds. The very next day, the second gate was stolen. That is rural crime. My farmer friend was pretty sure he knew who was responsible for stealing his gates, but he did not bother to contact the police, because he has no faith that they—or, more pertinently, the Crown Prosecution Service—would do anything. That, too, is a frustration for farmers.

Last year in my constituency, the police raided a farm that was believed to be owned by criminals—not farmers, I hasten to add. The police found 35 chassis removed from stolen Land Rovers, a stolen tractor unit and a 40-foot stolen trailer containing £50,000-worth of contraband alcohol smuggled in from the continent. They also recovered several thousand pounds in cash, diggers, fork-lifts trucks, quad bikes, car parts and drugs. All the goods were seized, but there were no convictions because the CPS felt it would be too difficult to prove that the occupiers of the farm were handling stolen goods.

Earlier this year, another serious incident in my constituency involved two women driving a Range Rover into another car, which they claimed had cut them up in traffic. The two women used their mobile phones to call their boyfriends, who arrived on the scene and beat up the driver of the car, hospitalising him. The police went to the Traveller site where the attackers lived and arrested two of the three suspects. At the same time, they discovered 200 fighting cocks, nine stolen dogs, a cock-fighting training wheel, drugs, several stolen cars and £50,000 in cash. The third suspect was traced to another Traveller site and was also arrested; at the same time, another £25,000 in cash was recovered.

Where do such large amounts of money come from? They are the proceeds of rural crime, including illegal betting on cock fighting and hare coursing, both of which activities see huge amounts of cash change hands. Hare coursing in particular is becoming an increasing problem. At this point, I will read from a letter that I received from the wife of a farmer in my constituency. It prompted me to apply for the debate. I have amended the letter slightly to protect the identity of the people concerned:

“Dear Sir,

The Isle of Sheppey has a population of over 36,000. During the summer this number is more than doubled. We have read in the local newspaper about yet another reorganisation, but the fact remains that police presence on the Island is inadequate.

On Saturday 2nd November 2013 we had cause to phone 999 as there were four men with dogs coursing hares on our farm. Only one patrol was available. No criticism is intended or implied of the individual officer, but he had no realistic chance of apprehending four experienced criminals who were playing ‘cat and mouse’. With assistance from my husband they were caught, but yet again have got away with it.

This incident was not an isolated one. There have been six incidents here since September 2013. We have witnessed them all and found numerous gates open on all six occasions. This is done deliberately so that the dogs have an unimpeded chase after the hares.

In 2012 we had twenty four incidents of this kind, all of which were reported. Some incidents were attended by the police and some were not. Of the twenty four incidents, arrests were made on only two occasions. In the first case the culprits received £250 fines and we are still waiting for the £15 victim cost.

In the second case the CPS abandoned the case only informing us the day before the hearing. This cost us money as we had already made arrangements for someone to care for our animals during our absence. The CPS claim there was insufficient evidence for the charge that was brought. Our view is that the case was dropped to save money. (It has been reported that the CPS drop 500 cases a week).

All this unsatisfactory state of affairs causes us much distress. We are not young and resilient like we used to be and we fear reprisals. My husband is in his seventies and not in the best of health. He has worked hard for twenty years in a government backed environmental scheme to improve wildlife on the farm. Now we suffer from people coursing hares—something it is illegal for us to do as owners of the property.

We are now in despair and have reached the stage where we may as well let these people have their fun without interruption.”

Let me read that last paragraph again:

“We are now in despair and have reached the stage where we may as well let these people have their fun without interruption.”

That is shocking, and it is why we must do something about spiralling rural crime.

Hares are in serious decline, despite being a key indicator species for conservation efforts funded by the EU through agricultural subsidies. The sad truth is that currently the only beneficiaries of the noble efforts by our farmers to conserve our hares are the criminals who are killing them as part of illegal gambling gangs who view the potential fines as an acceptable occupational hazard. If those who regularly attend hare coursing events attended 10 events and were arrested and caught at just one, resulting in a £250 fine, it would amount to £25 per event. Compared with the thousands of pounds that change hands through illegal gambling, £25 is nothing. If we are to protect people such as my constituents, farmers believe the fine for hare coursing should be increased substantially and I would like the Government to take that message on board. Hare coursing is rural crime.

Poaching is also a crime, yet there is evidence that criminals go out with dogs and snoop round farm buildings and fields in search of something to steal. If challenged, they admit to poaching because they are confident that the police regard poaching as a trivial matter and hardly a crime. We must make police officers who operate in rural locations understand that poaching is as serious as any other crime and often has links to more serious crimes.

In my constituency, three poachers recently killed 150 pheasants in one go. Those poachers ranged in age from 11 to 14 years. They were using an illegal, unregistered section 1 firearm—a .22 rifle. When it was recovered, there was a spent cartridge still in the breech and the individual carrying the rifle was found to have in his possession 200 rounds of illegally held .99 mm pistol ammunition and various other weapons. Those three boys were arrested again three weeks later after stealing a bicycle, and yet again shortly after that for breaking into a shed using tools from a robbery that had gone undetected.

The problem with poaching is that it is too often seen by the public, and sometimes the police, as being almost romantic—“one for the pot”—like boys scrumping. What they do not understand is that many poaching events are sponsored by criminal gangs operating from Traveller sites and pubs in Kent where competitions are held, again involving illegal gambling when the winner is the one with the highest number of dead animal heads.

Mike Bax, chairman of the crime rural advisory group that advises Kent police and the Kent police and crime commissioner on rural crime, gets over far better than I can the way in which poaching has wider implications than “just one for the pot”. He said that

“200 pheasants poached at the game dealers price of”

50p per head

“looks like a loss to the breeder of £100. However, it also probably means that a day’s legal shooting has to be cancelled with a gross loss of £6,000. 15 or 20 beaters lose a day’s work at £20 per head, the local pub loses the meal booking and possible accommodation booking. And other physical damage has probably been caused on the ground.

These multiplier effects on simple incidents illustrate the impact of even day to day rural crime with such events generally affecting the community at large rather than just an individual. Nevertheless, the events are so commonplace that the rural community consistently fails to report the original crime and somehow we have to change that mindset.

The police tackle the problem to the best of their ability, but they are thinly spread and intelligence is the key.”

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

I apologise for being a few minutes late for the hon. Gentleman’s debate. A problem in a rural part of my constituency has been people coming on to land pretending that they have hunting rights when in fact they are just there for criminality. What we found helpful, as the Minister will be aware, was that a group of local residents in Esclusham and Ponciau came together and worked on a digital mapping scheme so that land use was determined and put on that digital map. That is a good idea in such situations.

[Gordon Henderson]

I welcome the hon. Lady’s intervention. I have heard about digital mapping. All the ways of helping to solve crime are about intelligence-led policing, which is what I am talking about at the moment. Mike Bax continued:

“With thousands of people spread across the rural areas people must learn that it is not a failure if the police do not make an arrest. The very fact that the incident has been reported to the police provides them with intelligence.

Perhaps the identity of the vehicle, a description of the clothes the offender was wearing or a boot print in the mud, might well prove vital on another occasion.

Further more regular reporting by the community provides the police with information on crime patterns. Using that they can make predictions and be in the right place at the right time more often, thereby responding more effectively.”

That is intelligence-led policing, which is what we are talking about.

Intelligence gathering and digital mapping are fine, but dedicated rural police officers must act on that intelligence. Rural dwellers are being subjected to increasing levels of intimidation and violence. The National Farmers Union is aware of gamekeepers waking up to find their dustbins and pheasant feeders stuffed with dead birds as a warning. One gamekeeper was shot at with 1.5 ounce lead balls—any shooters here will know that that is pretty hefty shot—while driving. Another narrowly escaped serious injury when bringing his daughter back from school. Two men stepped out into the road in front of him and deliberately shot his windscreen out with similar sized lead balls. The point is that poaching is rural crime.

We then have livestock rustling, which is also becoming an increasing problem. It is estimated that 60,000 sheep were stolen in 2011 alone. The broader implications of livestock theft are very serious, because once animals are stolen, they are no longer tracked by the movement databases in place, increasing the risk of another foot-and-mouth epidemic. In addition, meat entering the food chain through livestock theft cannot be traced from farm to fork and it may be subject to unhygienic slaughterhouse conditions and contamination that risks human health.

[Huw Irranca-Davies (Ogmore) (Lab)]

I congratulate the hon. Gentleman on securing the debate; he is making some very good points. Where there is livestock rustling, whether it be sheep or cattle, does he agree that one of the curious factors is what is happening at the point of the slaughter of those animals, in terms of proof of identification? It is a real curiosity that the meat could find its way into the food supply chain.

[Gordon Henderson]

I welcome the hon. Gentleman’s intervention; that is exactly the point I am making. If sheep are removed from a database system that tracks them from farm to fork and they are let into the black market, there is no way of ever tracing that, so yes, it is a problem. It is a problem because, again, livestock rustling is a rural crime, but one of those that people forget about.

[Huw Irranca-Davies]

My point is a continuation of that. If 60,000 sheep are disappearing through rustling, somehow or other they are washing up somewhere and entering the food supply chain, at a point where an abattoir owner, a slaughterhouse man or a processor is asking that individual, “Where did this shipment come from?” It is an interesting point, because the abattoirs in my area certainly know where every single animal has come from. Something is going wrong; perhaps the Minister could answer.

[Gordon Henderson]

Or not—people might be taking it along to illegal, unlicensed or backstreet abattoirs. They might be cutting the animals’ throats in a back shed somewhere. That is the problem. We have the issue of not being able to trace from farm to fork, but also that of animal welfare and animals being slaughtered inhumanely.

Another rural crime that I want to touch on is fly-grazing. That is the unauthorised grazing of land by horses and ponies, whether or not the owner of the horses is in breach of a previous agreement or has simply placed the horses on the land without discussion with the owner or tenant of the land. Fly-grazing is becoming an increasing problem, with several thousand horses being grazed on land without permission. I understand that the problem has become worse in the past three years, particularly since the introduction of horse passports and microchipping, which were intended to increase the traceability of horses—particularly those likely to enter the food chain.

The NFU is calling for the following action, with which I have some sympathy. It wants fly-grazing to be made a criminal offence, so that action can be taken to bring offenders to justice swiftly. It wants the Horse Passports Regulations 2009 to be amended, so that they form a streamlined set of rules, meeting the minimum requirements of the relevant EC directive, thereby helping to improve traceability. It wants the Animals Act 1971 to be amended to bring it into line with the best of the private Acts of Parliament that enable local authorities to act when horses are left on private land; it wants it to be clear that the 1971 Act covers animals deliberately placed on land by their owners.

The NFU wants police forces to develop procedures for dealing with horses on the public highway that take account of bio-security in addition to respecting property rights. Police should be aware of the danger of spreading diseases such as African horse sickness when seizing or moving horses. The union also feels that local authorities should be prepared to offer surplus land for rental to horse owners, where appropriate and compatible with surrounding land use.

I have touched on fly-grazing because, again, it is a rural crime. However, there are many other rural crimes that cause problems for farmers, such as fuel theft, metal theft, vandalism, trespassing, arson, criminal damage, fly-tipping, illegal Traveller sites and illegal raves. There are too many and they are too varied to mention in depth today, but they are all rural crimes.

In conclusion, I want to relay to the Government the worries of those of my constituents who live in more isolated rural communities. They are worried that rural crime is increasing and that it is given a lower priority than urban crime. They are worried because they rarely see a member of the police force on duty in their community and because they feel forgotten by the Government, local authorities and the police. I very much hope that the Government will take steps to reassure my rural communities that they are just as important as urban communities, and ensure that they receive the policing to which they are entitled and they deserve.

14:55

[Richard Benyon (Newbury) (Con)]

It is a pleasure to serve under your chairmanship, Mr Weir. I start by referring hon. Members to my entry in the Register of Members’ Financial Interests and by saying how glad I am to see the Minister in his place; I look forward to his addressing some of the points we are raising in this important debate. I pay great tribute to my hon. Friend the Member for Sittingbourne and Sheppey (Gordon Henderson) on securing this debate on an issue that is of great importance to so many of our constituents.

It is for the Minister to answer on behalf of the Government, but the Government have made changes that devolve responsibility for much of these matters away from this place, away from the hands of Ministers and away from Government to police and crime commissioners. I confess to having been relatively agnostic about the creation of those posts when they were first mooted, but the more I look into it, the more I see what they are achieving, particularly in my area. I see the value of electoral accountability on such issues. If police and crime commissioners want to be re-elected by the large number of people who live in rural areas, they will have to address precisely the issues that my hon. Friend raised, if they are not doing so already.

I am pleased to say that Anthony Stansfeld, the police and crime commissioner in the Thames Valley, has made rural crime one of his top three priorities. I am also pleased that police and crime commissioners all across the country, working together on a number of issues, are developing a rural crime initiative. That surely is very welcome and a credit to them working across parties—of course, many of them are of no party at all—and making sure that they are joining up and sharing best practice and tackling rural crime.

My hon. Friend made a good speech, setting out precisely what rural crime is. He made the very good point that it does not accord with the quaint and slightly bucolic view that some might have—through some of our writers, painters and through other forms of culture—about historical areas of rural crime, such as how poaching may have happened for the pot in past years. This is a very serious area of criminality: it is often about the widespread stealing of plant and machinery; it can be about people trafficking; firearms can be involved; and there are many cases in which intimidation is used, not only of the victims or potential victims of crime, but to make people commit crimes. There is increasing evidence in the Traveller community that some people who are not willing participants in criminal activity are more or less forced, by a very few people in that community and elsewhere, into committing acts that they would not otherwise carry out.

It is also important that we understand that crimes that take place in towns are very often carried out by people who do not live in those towns and who travel a long way away from them, or that crimes committed in the countryside are carried out by people who live in towns. We should not assume that this is an isolated issue, or a niche area of criminality that we can deal with on its own. It has to be seen in the context of crime across the piece.

I mentioned Anthony Stansfeld, the police and crime commissioner for the Thames Valley. I have been looking closely at how he, by making rural crime one of his top three priorities in the highly complex area of the Thames Valley, where there are many other pressures on his resources, has approached tackling it.

Little things can make a big difference. The first thing is ensuring that a police officer turns up and responds to every single incident. It sounds strange to say that police officers did not do that in the past, but there was a way of reporting rural crime that often made it seem much more trivial than it actually was. The term “theft from unoccupied premises” immediately makes one think of an allotment shed perhaps when in fact it could be, as my hon. Friend mentioned, a farmer’s store, with large amounts of ammonium nitrate, large pieces of machinery or livestock. Ensuring that we define rural crime is therefore very important.

There is very good news about rural crime. In my area, it has dropped by 20% in one year. That is through a clear reporting system, lots of very good work by police forces and the priority being given to rural crime by the leadership, both at chief constable level and at police and crime commissioner level. If everything else I say is forgotten, this is the really important point, and I am sure that it is one with which the Minister would agree. This is not just about the police tackling the problem; it is about all of us who live in rural areas playing our part. I think that educating landowners, farmers and rural managers about crime and what they can do is very important.

I am particularly interested in the CESAR system—the construction and agricultural equipment security and registration system—which puts transponders and indelible marking on large pieces of machinery or high-value pieces of equipment and ensures, for all the equipment that a farmer buys, whether it is a new pick-up, a large piece of machinery or just a chainsaw, that the serial numbers are gathered and recorded at the start of his ownership of that equipment and stored so that they can be traced. That is important because, as my hon. Friend relayed, there can be cases in which large amounts of equipment are found and the issue is not just returning the equipment to the person to whom it belonged before it was stolen, but establishing a pattern of criminality that can lead to convictions. What we know about many aspects of rural crime is that a very few people are committing a lot of crimes, and if we can feel their collars, crime rates plummet. That has been proved to be effective in my area.

Another way in which we can all play our part is by joining schemes such as the countryside alert system, which 10,000 people are now part of in the Thames Valley. Under that system, we can use technology to help to beat the criminal by keeping people informed about suspicious activity and crimes that are being committed. It is about instantly being able to mobilise a large number of people to be aware of a problem that may be occurring in their area.

I want to touch on the issues of animal welfare that my hon. Friend also mentioned. We should be under no illusions about the fact that many of the activities relating to the theft or killing of wild animals in the context of rural crime are really unpleasant stuff. No one should be under any illusions that there is anything attractive about that activity at all. Gangs of people have caused havoc at times in parts of my constituency by coursing deer. It affects farmers and landowners such as Kirsten Loyd, who informed me of recurring problems on several nights running that involved 4x4s driving on to land, gates being smashed and deer being pulled down by running dogs and often just left. In some cases, they had to be humanely dispatched as a result. On my own property, I have found people coursing hares, from 4x4s, with long dogs, and when they kill the hare, they just drive round it in circles, wrecking the crops and leaving the carcase of the animal. These are not nice people, and if they are challenged, it is very often by one person, and that person is at severe risk of assault. Indeed, we have had circumstances in which firearms have been used in a threatening way.

There is also some good news, however. My hon. Friend talked about the difficulty of getting a fine imposed that means anything—that is a true reflection of the damage, fear and uncertainty that these crimes are causing among rural people, but also of the on-costs from the effects of these crimes. I sometimes have to rack my brains to think of really good things to say about the last Government, but here is one. They passed section 59 of the Police Reform Act 2002, which has given the police an invaluable tool in dealing with crimes that would otherwise attract a relatively cursory sentence. It allows them to seize a vehicle that has been used in connection with a crime. The vehicle can then be crushed or sold, but will not be returned to the perpetrator of the crime. It has had an enormous effect in allowing police to tackle some of the criminality in rural areas. I commend that legislation and hope that it is being used properly by police forces up and down the country.

My then neighbouring MP, just across the Thames in Oxford, Boris Johnson, and I, just after I had got elected, both identified a problem of dog theft. Sometimes when we raised it, people would smile or slightly roll their eyes as if that was not a big thing. It is a horrible crime. It deprives people of what are sometimes very valuable—they are certainly valuable to them—companions and working dogs. It particularly involves working dogs—sheepdogs, gundogs and so on—and it continues to be a problem. Dealing with it requires intelligence gathering, an understanding of how important the issue is to our constituents and a coherent approach, right across police forces; it cannot be governed just by the boundaries of the particular area. I am so impressed by the work that has been carried out by many people and organisations that encourage people to have their pets microchipped. There are all sorts of other methods that we can also use to take the battle to the criminal and reduce the risk of these very unpleasant crimes.

In conclusion, we can all play our part. I agree with my hon. Friend: the most depressing thing that we hear as MPs is people saying, “Well, there’s no point in my reporting this.” If people do not report crimes, however trivial—even if it has not been established that a crime has been committed, but there is a suspicion of a crime—we cannot then complain if the police say, “Well, we have no reports of serious criminality in that area. Therefore, we are putting our resources where we know that crimes are being committed.” Everyone has to report crimes.

There are small things that can be done. One might consider putting CCTV in farm buildings where there has been a persistent problem. We need to ensure that we put in the right quality of CCTV, so that it can be used as evidence to secure a conviction. People can spend a lot of money on anti-crime measures that are no good when we look at the product at the end of the day.

Much rural crime, as I have said, is down to a few—sometimes a very few—people who stalk the countryside prepared to steal anything that is not nailed down. They take advantage of the fact that many fewer people are working in the countryside and of the isolation of business premises and some of the places where high-value goods are stored. We need to ensure that rural crime is a priority at policing level, that we continue to offer support through our position in Parliament and the Government, and that we recognise the importance of this issue to our constituents. There can be a sense of siege if this activity is happening night after night in their areas. Only through a combined, partnership effort and this issue being a priority of elected politicians can we ensure that the problem of rural crime ceases to prey on the minds of people who live in rural communities.

15:09

[Huw Irranca-Davies (Ogmore) (Lab)]

It is a real pleasure to serve under your stewardship again, Mr Weir. I congratulate the hon. Member for Sittingbourne and Sheppey (Gordon Henderson) on securing the debate and on his wide-ranging contribution, stretching across the panoply of issues that cover rural crime. It is sometimes difficult to establish exactly what is rural crime, but I think the essence of it is that it is non-urban crime. There are some similarities between urban and rural crime—theft of oil, for example, often takes place in the heart of my urban communities, but it is a significant issue in rural areas—but there are some special areas of concern in rural communities. The hon. Gentleman covered a wide range of them, and I commend him for doing so.

Livestock rustling is a concerning and fascinating area. As I mentioned in my intervention, the fact that 60,000 sheep disappear is of great concern and has a significant effect on those who make their livelihood from the husbandry of livestock, but of equal concern is the question of where they are disappearing to. Where are they washing up within the food chain? How are they entering the food chain where there is no traceability whatsoever? That is a real issue. I hope that the Minister, in discussions with his colleagues in the Department for Environment, Food and Rural Affairs, will address how we clamp down on that further without imposing additional burdens on the farming community. We have to make sure that when animals present at abattoirs and meat processors, they can be identified and traced back to the farm and the landowner.

The hon. Gentleman drew attention to metal theft, another crime that affects urban areas but is of significant concern in sparsely populated rural areas. Many criminals, including perpetrators of quite serious organised crime, see rural areas as an easier target because they offer an opportunity to get away with criminality without the prying eyes of CCTV on every street corner.

The hon. Gentleman also mentioned fly-tipping, a long-running issue that has costs and is associated with criminality. It is not an incidental occurrence involving hard-pressed people; the perpetrators are criminals who are trying to get away with not paying their dues towards landfill by simply dumping in the countryside. Ultimately, landowners and local authorities pick up the cost for collecting and disposing of such waste, so we must constantly push forward with measures to tackle the problem.

[Simon Hart (Carmarthen West and South Pembrokeshire) (Con)]

I am interested in the shadow Minister’s view on whether the increased use of technology in urban and suburban areas is driving the practice out. Has the technology got so good in urban and suburban areas that the problem is simply being spread over a wider rural area?

[Huw Irranca-Davies]

The hon. Gentleman makes a good point. Increased tightening up in urban areas displaces criminal activity. Curiously, that brings me to another issue raised by the hon. Gentleman where there has been displacement of activity, namely fly-grazing. At a well attended debate in this Chamber about six months ago, hon. Members from England and Wales discussed the matter. When we talk about fly-grazing, we are not talking about the individual pony or horse that we occasionally see on an estate, tethered by a rope to a peg in the ground, where we worry about the animal welfare considerations and wonder why the animal is there. Neither are we talking about some within the Traveller community who have a culture of keeping the odd horse and parking it somewhere temporarily. There is serious criminality behind fly-grazing, as we know in Wales, which is why, as I am sure the Minister is aware, the Welsh Government recently worked with local authorities to change the law in Wales.

The change in the law in Wales was designed to deal with the massive incidence of fly-grazing, in which hundreds of animals were being parked on environmentally sensitive areas, or in which landowners would find that their fences were demolished and animals appeared on their land. In such cases, the local authority would have to go through all the bureaucracy involved in seizing the animals, many of which were in very bad condition, and absorb the cost of looking after them. If no owner came forward to claim ownership of the animals, the local authority would be obliged to auction them off at a knock-down price after giving them a full veterinary overhaul and making sure that they were all okay; only to find that, lo and behold—what a surprise—the owner, although never declaring themselves as such, would turn up and buy the lot of them, and a couple of weeks later they would appear in another farmer’s field or in another area of environmental sensitivity.

The Labour Welsh Government have changed the law in Wales, but one direct outcome of the change has been to displace that activity; it has moved elsewhere. Let us be frank about this: it is serious, organised, large-scale criminal activity. We are not talking about the odd individual; the police have identified family concerns involved in such activity. Instead of just going over the border, the problem is starting to wash up in English counties such as Hampshire. It seems to have been quite well planned. What conversations has the Minister had with ministerial colleagues in DEFRA on the matter? Is he minded to consider a change in the law to ensure that such criminal activity is not displaced across the border into England, and that local authorities have the tools to deal with the problem, should it wash up on their borders?

The hon. Member for Sittingbourne and Sheppey raised the need for better collaboration to tackle serious and organised crime, and I agree entirely. Interestingly, there are good examples of predominantly urban police forces deploying their resources to assist predominantly rural areas. In my own area, South Wales police provides significant financial support, resources and expertise to deal with serious and organised crime in Dyfed-Powys, for example, which covers the largest rural area in Wales. We must ensure that police forces collaborate to deal with such issues.

The hon. Gentleman covered so many things in his speech that he did not have time to tackle one of the biggest areas of serious crime—illegitimate gangmaster activity. In a neighbouring constituency to the hon. Gentleman’s, within the past year a large group of Lithuanian workers were seized, found living in the most appalling portakabin-style accommodation. They were not being paid the minimum wage, deductions were being made from their pay left, right and centre, and they were being kept in the most appalling conditions by an illegal, illegitimate gangmaster. The Gangmasters Licensing Authority was a great innovation after the Morecambe bay tragedy. This shows that there the GLA is still needed, and I say to those present of all parties that it must still be adequately resourced so that it can be effective—lean, mean, efficient and nasty in dealing with illegitimate gangmasters. The people who suffer most from that aspect of what is predominantly rural crime are the legitimate operators—the food producers and farmers—who are undercut by those criminals. Gangmasters and trafficking are often linked to other serious crime such as drugs or money laundering, so they must be tackled.

The hon. Member for Newbury (Richard Benyon) has a great deal of experience as a former DEFRA Minister and a landowner. He mentioned the role of our new police and crime commissioners in influencing priorities on rural crime. There are good examples of best practice, and we must ensure that it is spread out to others so that they can choose whether to implement it in their own areas. We could argue that the old police authorities, if they had been so minded, always had the opportunity to deploy a rural focus on certain aspects of crime. Some PCCs have stood up and said publicly that they will focus on certain aspects of crime. As the hon. Gentleman rightly said, we all need to play a part, and because of the nature of the challenges in rural areas, landowners, farmers, neighbourhood watch, farm watch and farm contractors must come together to tackle the problem.

I was glad that the hon. Gentleman mentioned the section 59 reforms on the seizure, confiscation and destruction of vehicles, because it saves me from having to do so. The reform is a welcome innovation, because it hits those involved in such crime, hard and rapidly. My hon. Friend the Member for Clwyd South (Susan Elan Jones) made an intervention, which I will return to in a moment, following on from her recent excellent debate.

I would welcome the Minister’s response on whether he is minded to consider extending the fly-grazing enabling powers to local authorities in England. That would be a huge step forward. Why not do it? It would not impose costs on local authorities in England, but would save them money. At the moment there are huge costs to them for looking after the animals and getting them veterinary treatment, and for the enormous bureaucracy and delay before an owner suddenly pops up to take them off their hands at a knock-down price.

I wonder whether the Minister has recently met DEFRA Ministers to discuss the numbers of police and PCSOs in rural areas. Has he had any representations from those Ministers about the possible effect of those numbers on matters that have been referred to this afternoon, such as hare coursing, wildlife crime, the massive increase in fuel theft from rural homes as well as businesses, livestock rustling, fly-grazing, and organised crime in relation to heavy plant, farm equipment and agricultural machinery? If he has not met Ministers, does he plan to do so soon?

There is a contentious issue that we need to deal with. We have mentioned that police and crime commissioners have flexibility and public accountability in determining priorities for their areas. Setting aside for a moment the controversy about whether badger culling should be part of an overall TB eradication strategy, a fascinating aspect of recent discussions is the fact that there have been significant policing costs, but we are left to guess what they are. However, that involves a direct input; there is a displaced cost—a cost-benefit issue.

What is the effect on other aspects of policing of being forced to put significant amounts of restricted policing money from a finite resource into the policing of badger culls? The Minister shakes his head; I shall continue with the point. Those other policing issues include fly-grazing, hare coursing, the theft of oil from farm businesses, and poaching. At the moment, our best estimate, based on statements—or semi-statements—in the public domain by chief constables or police and crime commissioners is that the cost over nine weeks in Somerset was £740,000, and it was just short of £2 million over the extended duration in Gloucestershire.

[Simon Hart]

In mentioning that he was not talking about whether there should be a badger cull, the shadow Minister made his point obliquely; but does he agree that the entire cost of policing the badger culls was for policing illegal harassment and activity by animal rights organisations? Should not that be the focus of our attention, and does not it support the point made by my hon. Friend the Member for Sittingbourne and Sheppey (Gordon Henderson) that if anything contributes to rural disillusionment it is the fact that rural people stand back and watch those things unfolding, while very little happens to deal with them? Perhaps there is now a good opportunity to deal with illegal harassment by animal rights activists, rather than to make an oblique point about the cull.

[Huw Irranca-Davies]

My point about the cull is far from oblique, because I am focusing on the costs. Today is not the time to rehearse again the debate about whether the tool of culling is integral to the eradication of bovine TB. The costs issue is paramount: there is a real cost-benefit analysis to be done. If the figures that I have given, such as the £2 million spent in Gloucester, are correct, that will raise an issue. I hope that the Minister will tell us whether the figure is correct or in the right ballpark—perhaps he will say it is nothing like it and is way above the right figure. I agree that intimidation, bullying and harassment cannot be tolerated, but I hope that it is accepted that there is a role for legitimate protest in any sphere. There are regularly people protesting outside Parliament.

No one should condone illegitimate threats or intimidation from whatever angle they come, but my point is that if £2 million was spent in Gloucester, and if we are to continue the cull this summer in the reasonable expectation that those costs will continue, we cannot deny that that will mean a displacement of police activity, short of the Minister telling us he has found another £2 million to defray the costs. He may say so, and that would be fine—but let us hear it. At the moment we have no clarity about costs. I agree with all the points that have been made about stretched resources in rural areas, and if they are stretched even further in Gloucester and Somerset we should be honest with the public about the impact.

[Simon Hart]

I take the shadow Minister’s point, but does he concede that there would be no cost to legitimate, lawful, peaceful protest? The only cost is for dealing with illegal elements. Legitimate protest comes at zero cost.

[Huw Irranca-Davies]

Absolutely—theoretically the hon. Gentleman is right. In practice, we have seen the reality; immense policing costs are absorbed so that the culls can happen. That is my point—not debating the culls but asking the Minister directly what the costs were, and what they will be. It is right for the electorate in the affected areas to know that. The Government said that police and crime commissioners would bring transparency, and with such transparency the electorate could debate the priorities in their area. Alternatively, it would be possible to go cap in hand to the Minister to say, “Give us some more money, because this has taken a fair bit out of our area.”

A positive and constructive part of the debate has concerned collaboration. I welcome the establishment of the national rural crime network, which has brought together many partners across the UK, including at the last count 18 police and crime commissioners—with more, I understand, to come. That has happened with the assistance of, among others, the Rural Services Network—to which we should pay tribute—with the purpose of increasing collaboration and sharing best practice on rural crime, in the face of continuing acknowledged budgetary pressures.

Collaborative work on rural crime is also being done in Wales, and that includes the rural crime mapping scheme which my hon. Friend the Member for Clwyd South mentioned today and discussed at length in a previous debate. It is an excellent initiative, in which rural crime is electronically mapped and is highly visible to all partners, making it possible to identify and share information about what is happening and what to watch out for. I applaud my hon. Friend for raising awareness of that.

I was recently in Suffolk where a dedicated team of special constables has been established, focusing on particular aspects of crime on farms and in rural communities. There is some flexibility to determine local priorities and collaboration. Established schemes such as country watch, farm watch, horse watch and so on, go from success to success—so there is good practice. These are difficult times for policing, because of stretched budgets, but collaboration is one way forward. I would welcome the Minister’s response to my queries—particularly about his collaboration with DEFRA Ministers.

15:29

[The Minister for Policing, Criminal Justice and Victims (Damian Green)]

It is always a pleasure to serve under your chairmanship, Mr Weir. I join other hon. Members in congratulating my near constituency neighbour, my hon. Friend the Member for Sittingbourne and Sheppey (Gordon Henderson), on securing the debate. His entirely reasonable final point was to request reassurance that the Government are aware of and sympathetic to people who fear rural crime. I can give him that assurance, not least because his constituency, as he described it, quite closely resembles mine—that is, it is mostly urban but has a huge rural area. I suspect that what he hears from farmers and others who live in villages in his constituency is exactly the same as what I hear.

[Huw Irranca-Davies]

Will the Minister give way?

[Damian Green]

I have barely started, but yes, of course.

[Huw Irranca-Davies]

I thank the Minister for giving way so early. I forgot to ask about something, but I am sure that he can give me some clarification. The issue of liaison with Ministers from the Department for Environment, Food and Rural Affairs is interesting. I understood that a DEFRA Minister was originally going to respond to this debate. I am sure that there is a good reason why that is no longer the case and why the Minister, who is very capable, is present instead. Nevertheless, will he explain? A DEFRA Minister would be able to respond on issues such as hare coursing, wildlife crime and so on. Having said that, I am sure that the Minister will be an able replacement.

[Damian Green]

The hon. Gentleman will observe that when discussing rural crime we can take either the first or the second word to decide which Department is responsible. The subject falls neatly between the two, and I will happily discuss with DEFRA Ministers the points raised today. I will also discuss his specific point about fly-grazing with Ministers from the Department for Communities and Local Government. He is correct to say that such issues inevitably fall between Departments, but one of the joys of government is ensuring that, just because something may affect more than one Department, it does not fall down a hole between two Departments.

I would like to put the debate into some kind of perspective. I was grateful to hear my hon. Friend the Member for Sittingbourne and Sheppey say that he accepted the context in which police funding is now operating. He was right to do so. When we came into office in May 2010, we inherited the largest peacetime deficit in history. Borrowing increased to unprecedented levels under the previous Government, without due consideration for the long-term economic health of the country. We are proud of the progress we have made in addressing this most fundamental of issues.

Borrowing as a percentage of GDP is down by a third, our economy is growing and unemployment is falling. However, we cannot rest there, because although we have made strong inroads into arresting the deficit, more must be done. My right hon. Friend the Chancellor of the Exchequer announced earlier this year that further cuts will be required into the next Parliament. That will mean that difficult decisions will have to be made, and we should not shy away from that.

Despite all that, we have pushed to secure the best possible deal for the police and protected them again for 2014-15, this time from the further cuts to departmental budgets announced in December’s autumn statement. Central Government funding for the police will be reduced by 3.3% in cash terms in 2014-15, while overall funding will be reduced by even less, once the future police precept is factored in. We have also protected funding for counter-terrorism policing, owing to the ongoing threat of terrorism. By way of comparison with that 3.3%, the remaining Home Office budget will be cut by 7% in cash terms in 2014-15.

That was the overall context. I now turn specifically to Kent, because many of the points made by my hon. Friend the Member for Sittingbourne and Sheppey were about God’s own county. I know that the funding settlement is challenging, but it is manageable. Her Majesty’s inspectorate of constabulary has made it clear that the proportion of officers on the front line is increasing, and we are supporting the police through a range of activities to help them to respond to the challenge and ultimately emerge stronger. I appreciate that funding reductions have meant that all forces have had to consider where savings need to be made in terms of officers and staff numbers, but, ultimately, decisions on the size and composition of the police work force are for the individual chief officers and police and crime commissioners.

Of course, Kent has particular rural policing challenges and the crime sets are different from those in other parts of the country. However, the police allocation formula, which distributes the majority of funding to the police, takes account of local circumstances to address the specific needs faced by rural forces. The point about specific needs has been made several times during the debate, and I am happy to assure the House that the formula is designed to recognise the extra difficulties caused by sparsity.

I also recognise the importance of ensuring that we update the formula to reflect the needs of modern policing. That is why the Government are currently conducting a fundamental review of how funding is allocated among police force areas. It will focus on the current police allocation formula and the process of damping, as well as looking at the funding landscape as a whole. Determining how funding should be allocated to the police in future is a complex and important matter that will require careful consideration and take time. It will not be completed before 2016, but the first phase of the work, an internal analytical review, is already under way. Obviously, we will consult the full range of partners at an appropriate point in the development of that work.

I should emphasise that how the money is spent by the forces and police and crime commissioners is at least as important as the amount that they have to spend. PCCs are key; my hon. Friend the Member for Sittingbourne and Sheppey expressed his view about Kent PCC’s priorities in fighting rural crime.

Obviously, we can also do things at the national level to help the police to deal with rural crime. One of them is the police innovation fund, which is worth up to £50 million a year and represents a new step to incentivise innovation and collaboration, as mentioned by the hon. Member for Ogmore (Huw Irranca-Davies). I agree with him that it is an important way for forces, perhaps those in rural areas in particular, to become more efficient. The fund will also incentivise digitisation to drive efficiencies and improve policing over the long term.

There is already a £20 million precursor fund, which received 115 bids covering a wide range of activity. Indeed, Kent and Essex police were successful in a joint bid, showing that collaboration is alive and well in Kent. They will receive £440,000 from the precursor innovation fund to support their joint visual media evidence and investigation programme. That will allow video evidence to be captured at, for example, a public order event such as illegal hare coursing. That could quickly be made available to investigators and analysed using a range of innovative software techniques, enabling officers to focus in on offenders and increase the chance of successful prosecutions. I am well aware of the point, made by several Members, that thinking that a crime will lead to a successful prosecution is important. As I said, there is a £50 million fund for 2014-15, and I urge forces that feel they have a particular issue with rural crime to put together some good bids to the fund.

Against the background of the fund and the debate more widely, it is important to remember that crime is falling and police reforms are working. Overall crime has fallen under this Government by more than 10%, according to the crime survey for England and Wales, and that is mirrored by the fall in police-recorded crime. Nevertheless, I accept the fact that we must keep pace with the way crime, including rural crime, is changing.

The point has been made that much of what is regarded almost as traditional rural crime is now actually run by organised criminal gangs, and people must be reassured that the Government are treating it as such. The need to combat organised criminal gangs is precisely why we have set up the National Crime Agency, which allows us, for the first time, to tackle the growing threat of serious and organised criminality. It has been in full operation since October, and is already making inroads into criminal gangs. Some of the people who will benefit from that are those living in rural areas who are suffering from the effects of organised criminality in their neighbourhoods.

I turn to crime in rural areas specifically, rather than the general crime statistics. DEFRA’s statistical digest, based on data from police-recorded crime, shows that the average rates of all crime types for rural local authority areas are lower than for urban local authority areas. I think that that is intuitively what people would expect. The percentage decrease in crime over the past six years in rural areas is roughly on a par with the reduction rate in urban areas. The notion that urban crime is coming down because it is being displaced to rural areas, and therefore rural crime is going up, is simply wrong. Crime is going down in both areas, although I take the point about the potential for displacement.

Although crime rates in rural areas tend to be relatively low, rural communities should be able to know what crime looks like in their area and to hold someone to account for doing something about it. I echo the point made by both my hon. Friend the Member for Newbury (Richard Benyon) and the hon. Member for Ogmore: people need to report crime. It is in their own interests not to say, “It is not worth reporting it.” Inevitably, police chiefs will concentrate their resources on where they think they will have the most effect in fighting crime. If crime is not reported, an area may well appear more peaceful than its residents think it is.

As I said, people need someone to hold to account for doing something about crime, which is precisely why we have shifted power to local communities through locally elected police and crime commissioners. I am grateful that, since they have come into operation, my hon. Friend the Member for Newbury has been converted to the virtue of having that local accountability mechanism. I know that he has seen benefits for his constituents in the initiatives put forward by the police and crime commissioner for the Thames valley, Anthony Stansfeld. I also agree with my hon. Friend’s remarks about target hardening in rural areas for particular types of crime, often committed against farmers who have valuable machinery on their premises. We need to do exactly that.

[Huw Irranca-Davies]

Rather than talking about the overall levels of reported crime, hon. Members were saying that specific crimes, such as the theft of fuel oil, metals or plant and machinery, are easily displaced to rural areas. Will the Minister tell us whether he has any figures to say that those crimes are not increasing? Certainly, the National Farmers Union, the Country Land and Business Association and others will say that they are increasing significantly—to the extent that fuel theft went up by 166% in one year. That is disproportionately within rural areas.

[Damian Green]

The figures I was citing from the DEFRA digest were, of course, aggregate figures. Within those figures, individual crime types go up for a number of reasons—not just in rural areas, but generally. Sometimes, the crime rate goes up because it is being better reported, as people think that it is worth doing something about it.

Perhaps now is a convenient time to deal with metal theft, as that is one of the points that the hon. Gentleman asked about. We recognise that it has a huge impact on communities, which is why we have taken a number of actions. We have increased the financial penalties and banned cash payments. We have supported targeted enforcement through the Government-funded national metal theft task force, which has led to a fall in metal theft. The Scrap Metal Dealers Act 2013 further tightened the net around rogue dealers who flout rules. The task force is funded until September 2014. We have spent £5 million supporting it to give sufficient time for the reforms to become well established.

The statistics show that there has been a decline in metal theft in each quarter of 2012-13. There was a 40% fall between April-June 2012 and January-March 2013. I hope that the hon. Gentleman and others can take that as some reassurance that effective action can lead to falls in crimes that are often concentrated in rural areas.

Another important point is greater information and transparency. We have the police and crime commissioners who hold the forces to account, but the public need to be able, in an informed way, to hold PCCs to account and decide whether to re-elect them. That is why we are providing more local information about crime and what the police have done in response to it. That information is regularly updated on police.uk, the national crime and policing web portal, which provides the public, including those who live in rural communities, with local information about crime and antisocial behaviour. On police.uk, the information is presented clearly and concisely, allowing the public to access it in a useful way.

Hon. Members on both sides have made the point that some PCCs have prioritised rural crime, which is, of course, evidence of the point made by my hon. Friend the Member for Newbury—that having elected local officials means that they have to reflect what local people want. If they are representing an area with a significant rural population, it would be sensible for them to reflect that, and several of them have. For example, in north Wales the PCC has put in place a rural crime plan, which focuses on engaging with the rural community and addressing their concerns, including theft of equipment and livestock from rural areas. The force is providing a presence at farmers’ markets, and a rural crime team has been created.

As has already been mentioned, the PCC in Suffolk has introduced a dedicated team of special constables, which seems to be the sort of innovative response that we would all welcome. Similarly, we have already heard about the PCC in the Thames valley and the introduction of the Country Watch messaging system, which I am glad to hear from my hon. Friend is proving effective.

A lot is happening at the local level, but a lot is also happening at the national level. We have the UK national wildlife crime unit, a police unit that assists in the prevention and detection of wildlife crime by obtaining and disseminating intelligence from a wide range of organisations. It directly assists law enforcement agencies in investigating wildlife crime. Some of its priorities relate to international crime and the enforcement of the convention on international trade in endangered species, but other priorities are some of the things that we have been discussing today—including poaching, which is one of the specific priorities of the unit.

The unit is jointly funded; this goes back to the point that I made to the hon. Member for Ogmore at the start. The Home Office provides some funding for the NWCU and will continue to throughout the period of the spending settlement. DEFRA provides the same amount of funding for the unit over the next two years.

[Richard Benyon]

My message to the Minister is: long may both Departments continue to do so. Some of the crimes that a police constable comes across in the course of his work may be unusual. To have that centre of knowledge to whom he can go, who will say to him, “Yes, you can prosecute this person under this piece of legislation in this way” is absolutely invaluable. Also, it is what the unit does through the partnership against wildlife crime that is of such value to the whole wider aspect.

[Damian Green]

I am grateful to my hon. Friend for that tribute to the unit, of which I know he has much experience. As I said, it is an example of a particular problem not being allowed to fall between Departments. We have two Departments here working to support the unit.

As has also been mentioned, at the national level a rural crime network has been set up to tackle countryside crime. So far, it has been endorsed by 18 police and crime commissioners. It is good to see PCCs in rural areas coming together in that way. The idea originated with the Rural Services Network, a not-for-profit organisation that represents a diverse range of rural service providers in the public, private and voluntary sectors.

The PCCs have convened a good group—not just the network itself, but Farmers Weekly, the national community safety network, an online crime reporting system called Facewatch, the CLA and other rural stakeholders. One of the best things the network does is to ensure that best practice is shared, so that things can be co-ordinated and sustained effectively. The network wants to provide an online resource for the police, community safety practitioners and others precisely to share information, training and development, access to case studies and so on.

Altogether, the network is one of the more exciting developments, which will enable things to happen at a national level, although it is absolutely locally based and based on real world experiences. All those involved will be able to learn from one another and to work collaboratively on new ideas and solutions that will benefit local people.

There is clearly a lot that can be done with technology. I am delighted to see that the hon. Member for Clwyd South (Susan Elan Jones) has come to this debate. She will remember that on 5 March I paid tribute to her constituents who have gathered information to provide the digital map that, as she explained earlier, is helping North Wales police to tackle rural crime in their local area. Her presence in Westminster Hall today allows me to pay that tribute once again. It is a good initiative and I am glad that the information is available; it can be accessed through a tablet, which will help the police get to grips with situations in real time. Again, that is an example of how something developed as a good idea at a local level can become a piece of best practice that is spread and can have a national effect.

Before I conclude, I will mention a group of people who have not been mentioned much—police community support officers. PCSOs play a huge part in effective neighbourhood policing. They provide a highly visible presence within communities and an invaluable link between the police and the communities they serve, with their focus on understanding and identifying local priorities over a long period, as well as on solving local problems, solving low-level crime and engaging with the community.

We need only to look at those aspects of the core PCSO work to see how relevant they are to rural communities. My hon. Friend the Member for Sittingbourne and Sheppey said that people want more visible policing. It is inevitable that in sparsely populated areas people are less likely to see a police officer than if they are in an urban area; common sense would suggest that. Precisely because they have a smaller area to cover and they will not be hauled off somewhere else for response duties, and because they are often in post in a particular area for longer than police officers, PCSOs can develop that network of relationships in a rural area that not only does good things by itself but helps to promote confidence among people that there is somebody they can go to whom they know and who represents the forces of law and order.

[Huw Irranca-Davies]

Will the Minister give way?

[Damian Green]

I was about to talk to the hon. Gentleman about badger culls, but I will give way first.

[Huw Irranca-Davies]

I welcome the warm praise that the Minister has just given PCSOs. Back in the year dot, I sat on the long 13-week Committee that brought PCSOs into existence and I see now the massive change in the Minister’s party: it originally opposed PCSOs, but now supports them. That is hugely welcome, because PCSOs are a great asset.

In the seven minutes remaining—it is great when we have lots of time for a Minister to respond to a debate—can the Minister give us some of the details about the cost of the badger culls? Also, has he considered the extension of the fly-grazing legislation to England?

[Damian Green]

I shall repeat what I said earlier—perhaps I was not clear enough before—but I will happily take away the point about fly-grazing and I will discuss it with DEFRA Ministers. The hon. Gentleman will accept that this issue clearly requires input from a range of Departments, and I am happy to seek that input. Let me take this opportunity to deal with a number of issues; I will tease the hon. Gentleman by coming to the issue of badger culls last.

The hon. Gentleman asked about the process to stop stolen animals from entering the food chain. On 1 April, DEFRA launched the animal reporting and movement service, a new digital system to record and trace sheep movements. It gives farmers the option to report electronically. All markets and abattoirs are connected to the system, so anybody who has suspicions now has an easy and painless way to report them.

On the issue of badger culls, the policing costs are £2.3 million in Gloucestershire, £446,000 in West Mercia and £739,000 in Avon and Somerset. Those are indicative costs. We are yet to receive the report from Her Majesty’s inspectorate of constabulary that reviews the resources deployed in respect of the badger culls; that report will obviously give the final figure. I should add that DEFRA has agreed to pay all the additional policing costs.

I hope that that answers the hon. Gentleman’s question.

[Huw Irranca-Davies]

I thank the Minister for that response; it is great to have it accurately now on the record. Can he tell us whether those costs are for the year just gone, and does he have the costs for the year ahead? Based on the Government’s decision last week, the two culls in Gloucester and Somerset will continue for the year ahead. Does he have an estimated figure for the costs in the year ahead?

[Damian Green]

I do not, for the very good reason that we cannot possibly know what the policing requirements will be. The hon. Gentleman had an instructive exchange with my hon. Friend the Member for Carmarthen West and South Pembrokeshire (Simon Hart) about the difference between peaceful protest, which we all recognise is acceptable, and illegal protest and obstruction. Clearly, the amount of extra policing cost is intimately related to the amount of illegality that may go on, so assessing costs in the future would simply be guesswork. I do not think it would be sensible for me to do that. However, those are the costs.

[Huw Irranca-Davies]

Is the Minister telling me that even though these costs are being met from DEFRA’s budget, DEFRA has made no estimate within its budget allocations for policing in the future? Surely not.

[Damian Green]

I am sure that DEFRA Ministers and officials are doing all that is necessary. I am just saying that it would be foolish if the hon. Gentleman tried to tie me down to detailed figures now, because until we make an assessment of the likely level of criminality it is impossible to make an assessment of the likely amount of police activity. I am sure that he recognises that.

In general, I hope that I have been able to reassure my hon. Friend the Member for Sittingbourne and Sheppey and others that, first, the Government attach huge importance to issues relating to policing crime in rural areas and that, in particular, we have taken a number of actions at national level that we can see are having beneficial effects. On top of that, the introduction of PCCs has meant that a new raft of innovative ideas are being introduced all over the country, and therefore being shared all over the country, in ways that will further benefit people who live in rural communities and who have as much right as people who live in urban areas to expect a decent police presence, decent policing and decent anti-crime activities.

What we see from all this activity is that the PCCs and the forces are bringing innovative ideas into reality, and they are creating modern forces that can meet, in particular, the ever-changing demands of modern policing. When people think of modern crime, they tend to think of online crime, fraud and so on, but the debate has been instructive in pointing out that the crimes that people who live in rural areas are facing are also changing. Consequently the police response and the response of the wider public need to change too, in aspects such as target-hardening. The point that fighting crime is, in a sense, the responsibility of all citizens—although we give specific powers to the police, PCSOs and other crimefighters to lead the charge—is a good one. We all have responsibilities.

I return to the first point made about the funding settlement. Of course that creates challenges for PCCs and forces, but those who are prepared to innovate, collaborate, transform their forces and use new technology to drive efficiencies will find that it is possible not only to beat their budgets but to police more effectively than before. I absolutely believe that that is as true in rural areas as it is anywhere else. There are many ways in which rural policing is improving and can continue to improve, so the fact that, as the crime survey shows, our streets are safer than ever—[Interruption.]

[Mr Mike Weir (in the Chair)]

Order. There is a Division in the House. Is the Minister about to finish?

[Damian Green]

I am. I was about to say that those in rural areas will be as well treated as those in urban areas.

[Mr Weir]

Order. We will suspend for the Division. If there is one vote, we will return at 4.15 pm. If there are two votes, we will return at 4.25 pm. If both the hon. Member for Forest of Dean (Mr Harper) and the Financial Secretary to the Treasury are here for the next debate before then, we can start earlier.

15:59

Sitting suspended for Divisions in the House.

Income Distribution and Taxation

Wednesday 9th April 2014 Westminster Hall

16:23

[Mr Mark Harper (Forest of Dean) (Con)]

I am pleased to serve under your chairmanship, Mr Weir, and to welcome my hon. Friend the Member for Loughborough (Nicky Morgan), who is having a double personality day. She started as Economic Secretary and ended as Financial Secretary. I congratulate her on her well-deserved promotion, and I am very pleased that she is still able to respond to this debate. I wrote to her earlier today to congratulate her on her innovative way of avoiding responding to my debate, but she is stuck with me for the next 29 minutes or so.

I secured the debate because, although I touched on the matter briefly in my short contribution to the Budget debate, it was, as you know, Mr Weir, time limited, and I did not have a chance to make all the points I wanted. In the debate running up to the Budget, there was a lot of discussion about “middle-income taxpayers” and what that meant. I want to set out what I think the Government’s priority should be and congratulate them on landing the income tax cuts in the right place on the income scale.

In the run-up to the Budget, a number of newspaper articles—there was one in The Guardian—referred to middle-income earners being dragged into the 40p tax bracket, but that is not a sensible use of “middle income”. Even the Leader of the Opposition used the phrase, saying that

“if you are in the middle, paying 40p, you should be pleased to pay more”.—[Official Report, 19 March 2014; Vol. 577, c. 797.]

He was referring to what he said was someone else’s argument.

In the Labour party’s list of 24 so-called Tory tax rises, four of them are changes to the higher rate threshold. It seemed slightly odd for the Labour party to complain about ensuring that those on higher incomes paid their fair share in dealing with the deficit. While I am touching on that list, it is interesting to note that the spare room subsidy, which is a housing benefit issue—the Opposition insist on calling it a tax—was not on it. That was a very good demonstration of the fact that even they accept in their heart of hearts that it is not really a tax, even though they keep trying to call it that.

That was an aside, but the point I wanted to make about 40p taxpayers is that I am not saying that they are rich; they are not. Equally, they are not in the middle. Looking at the 2013-14 tax year, someone would pay 40p tax only if they had £32,010 of taxable income, which is on top of a £9,440 personal allowance. They would have to earn a gross income of £41,450 to pay that tax rate. In 2011-12—the most recent year for which the detail is available—the income distribution figures show that a higher rate taxpayer is in the top 14% of income earners. For that year, the median income was £20,300. Some helpful projections have been done using the Office for Budget Responsibility’s economic and fiscal outlook. They show that the median income was £21,000 in 2012-13 and £22,200 in 2013-14. That is only just more than half the income someone would have to earn to pay the 40p tax rate.

If I look at the level of income in my not untypical constituency—these figures are for 2011-12, the latest ones available that are broken down by parliamentary constituency—the mean income of all taxpayers is £24,300, and the median income is only £18,800. If the overall national figures have gone up by some 10% since 2011-12, we can use that assumption with the constituency figures, but that would take the median figure to only a little over £20,000. That figure is for total income. If we look at how that is split between the self-employed, the employed and pensioners, the figures present a different picture. However, it is clear that the median taxpayer is not earning anything like enough to pay the 40% tax rate; they are paying basic rate tax. That is why I thought the Chancellor’s Budget judgment was right.

I even looked at parliamentary constituencies that people would generally accept as having a higher than average number of people earning good incomes. A piece of data that is available from the Office for National Statistics shows that even in constituencies with a high level of mean income—Kensington, Cities of London and Westminster and Chelsea and Fulham—the numbers are clearly driven by a small number of well-remunerated people. The median income in those constituencies is: £37,900 in Cities of London and Westminster; £36,200 in Kensington, and £34,300 in Chelsea and Fulham. Even in those constituencies, the median taxpayer is not paying anything close to 40% tax.

The focus should be on delivering tax cuts for the lower paid and those on more modest incomes and that is what the Chancellor did in his Budget. He made it clear that the personal allowance was going to rise in this current tax year, which has just begun, to £10,000 and next year it rises to £10,500, which will lift more than 3 million of the lowest paid out of income tax altogether. He also confirmed, rightly, that the higher rate threshold will rise a little bit as well, for the first time in this Parliament, which means that everyone on incomes up to £100,000 will benefit from some tax cut, but obviously the main benefit is for those on a lower rate.

The list of tax rises that the Labour party put out referred to the higher rate income tax threshold cuts earlier in this Parliament, which were equitable and made to ensure that those significant rises in the personal allowance did not disproportionately benefit higher rate taxpayers. Of course, if the personal allowance is increased and the higher rate threshold is not changed, someone on 40% tax has income moved out of that band into the basic rate band and gets a bigger benefit than someone on basic rate tax. That would be wrong. The judgments that we made earlier in this Parliament, when we had to make difficult financial decisions, to share the pain and have the burden on those with the broadest shoulders, were right. I am pleased that the Chancellor confirmed that.

By virtue of increasing the allowance, the Chancellor was able to show that, looking at this Government’s tax arrangements, compared with the previous Government’s policy, everybody earning up to £100,000 is better off. They have all had a tax cut, but the tax cuts are more focused and bigger for those on lower earnings.

[Mr Andrew Smith (Oxford East) (Lab)]

I congratulate the hon. Gentleman on securing this debate on an important issue. I resisted intervening on the bedroom tax and so on because I wanted to make this point. Does he share my concern, notwithstanding what he said about raising the allowance, that the impact of the tapers on people in receipt of universal credit will be such that, for somebody just above the tax threshold, the rate of withdrawal on both a first and second earner in a family will be as high as 76%? Is there not a danger that that gives people a perverse incentive to work fewer rather than more hours, because they do not reckon that they are being rewarded for the extra hours, or to do undeclared work?

[Mr Harper]

The right hon. Gentleman is right to drawn attention to the tapers and the withdrawal of benefits as people earn income—of course, they are high—but this issue was raised during the Budget debates. However, the fact is that, under universal credit, the withdrawal rates and the tapering arrangements mean that there is a smaller rate of withdrawal of benefit than under the existing levels of benefit. I am sure the Minister will correct me if I am wrong; this is not an area that I have studied in detail. The issue the right hon. Gentleman raises is important, but it is always a challenge to deal with the withdrawal of income-related benefits and to be careful that the effective marginal rate for people is such that it is always worth their while working. Ideally, we want to get that marginal rate as low as possible, but it is expensive to drive it down to a low level. My understanding is that, under universal credit, those withdrawal rates of benefit are lower and therefore more encouraging of people to work, either more hours or in the first place, than under the existing combinations of income-related benefits.

[Mr Smith]

My understanding is that the rates are higher for people working more hours, for 35 hours or more. The hon. Gentleman is right in that the rates are lower for people working fewer hours. That is my worry—the perverse incentive for people to work less.

[Mr Harper]

If I am picking that up correctly, the right hon. Gentleman is saying that at lower levels of earning, or for people who work fewer hours, the effect of universal credit is—

[Mr Smith]

I should correct that. It is not that the rate is lower; it is that people will be better off working fewer hours, as compared with the position under tax credits, whereas those who are working 35 hours or more will be slightly worse off under universal credit than they would have been under tax credits. The withdrawal rate is 76%, just above the tax threshold, under universal credit.

[Mr Harper]

I cannot answer the right hon. Gentleman’s detailed question, because I have not studied the matter, but the other thing that he needs to do—I am not sure whether he has incorporated this into his judgment—is look at the interaction of the tax changes that we have made with the benefit system. Over this Parliament, there will be a significant increase in the personal allowance from what it was in 2010-11 when we came to power, and what it will be when this Parliament finishes, from something in the order of £6,000 or £6,500 to £10,500. A lot of people on lower incomes, such as those on the minimum wage, are moved out of the taxation system altogether. Previously, people could be on a relatively modest income and paying tax, but at the same time getting various income-related benefits.

I think that I have set that out carefully, but if I have not, the Minister will do so in her response. Otherwise, because the debate is not about universal credit and she might not have all those facts at her fingertips, I am sure she is happy to write and to set it out in detail later. I am, however, grateful for the point made by the right hon. Gentleman.

[Mr Jim Cunningham (Coventry South) (Lab)]

I will be quick, as the hon. Gentleman does not have much time. I thank him for giving way, but when the present Government came to power basically someone did not start paying tax until just over £6,000. I do not have the exact figures with me, but if we take into account, for example, 6% inflation over the past four years, the value of the £10,000 threshold that has been introduced drops by £1,200. In other words, had the £6,000 been pushed up for inflation over the past four years, we might arrive at a different value for the benefits to be got out of £10,000 before paying tax.

[Mr Harper]

The hon. Gentleman makes half a sensible point. He is right that the personal allowance would have gone up because of indexation in line with inflation—the statutory provision, unless the Chancellor decides not, in which case he has to set out why—but by only a relatively modest amount. The difference between what it would have gone up to had we simply indexed it and the great increase to £10,500 next year is a significant policy change and has made a real difference to people on lower incomes, many of whom will have been taken out of tax completely.

Finally, to look at the impact in my own constituency, under the tax changes this April a further 381 people are taken out of tax altogether, but 37,223 people benefit from the rise in the personal allowance. If we take the figures for the whole of the Parliament, 4,334 of my constituents will have been taken out of paying income tax entirely by the significant changes in the personal allowance. That significant benefit incentivises people, particularly at the lower end of the income spectrum, to work, and it is why there are several thousand more people in my constituency in work now than there were in 2010, when this Government were elected.

In the environment we are in, where we have a limited amount of money and we cannot cut taxes for everybody, we should focus our help on those who are lower paid and who are genuinely on middle incomes, which, as I said, are incomes of about £20,000, and not numbers beginning with threes or fours. In my constituency, I can see that that is where the benefit should be focused. It should be a priority both for this Government and for our party to make sure that we are delivering benefit to as many people as possible. I am pleased to say that the message I took from the Budget, after listening to the Chancellor’s speech very carefully, was that that was where he has aimed our tax changes.

I agree with the right hon. Member for Oxford East (Mr Smith) about the focus. The welfare changes that we are making, with the benefit cap and the changes to universal credit, which I think, overall, have increased the incentives for people to work, are the right messages. The very simple one is that work should always pay and that we are trying to use our changes to the tax system to benefit the many hard-working families who are trying to do the right thing, but who are finding things difficult—although with the improving economic news, they will see rises in their incomes above the rate of inflation, therefore making them better off in real terms. Those are the people we should focus on and I am pleased that, in my judgment, that is exactly where the Chancellor aimed his Budget. That is why I was very pleased, in my short speech in the Budget debate, to commend it to the House, and why I am very pleased to support the Finance Bill.

16:42

[The Financial Secretary to the Treasury (Nicky Morgan)]

It is an honour to serve under your chairmanship, Mr Weir. May I congratulate my hon. Friend the Member for Forest of Dean (Mr Harper) both on securing the debate and on presenting his case so eloquently? I was also in the House when he spoke in the Budget debate, which I think was his first debate as a Back Bencher for a while. He spoke incredibly eloquently then and it is a pleasure to hear him again today on the same subject. I am delighted to be answering the debate, regardless of the title that I happen to hold in the Treasury. I have to get used to a new one as of this afternoon, and it is a pleasure to be here speaking on this important topic.

As my hon. Friend said, the message that the Government wanted to go out from the Budget was that we are on the side of hard-working people and that work should always pay. As I shall come on to show, the other message is that this Government very firmly believe that people should keep as much of their own money as possible, so that they spend it in the best way for themselves and for their families in order to provide security for their families—rather than the Government telling them how they should spend it.

In the time available to me this afternoon, I would like to speak about the impact that the Government have made on getting more people into work, and then about the impact of the personal allowance and the other steps we have taken and how they help those at the bottom of the income scale. Finally, I want to speak about the percentage of the tax burden taken on by those at the top of the income scale, which I think my hon. Friend also mentioned.

Before I do so, it is worth making hon. Members aware that the latest available statistics show that in 2011-12, UK income inequality was the lowest since 1986. As the Office for National Statistics noted, that was partly due to earnings falling more for those at the top of the income distribution than for those at the bottom, but it was also magnified by the changes that this Government have overseen, particularly in the tax and benefit system.

Of course, one of the best ways in which a Government can reduce inequality is by tackling unemployment, which will increase incomes for those at the bottom end of the scale. We have seen clear evidence that the labour market has continued to strengthen this year. Record numbers of people are in work. Employment increased by 396,000 over 2013 and was 574,000 above its pre-recession peak in the final quarter of last year.

Wage inequality for all employees is also reducing. In 2013, the 90:10 ratio, a common measure of inequality, showed that wages at the top were 3.9 times higher than wages at the bottom, a smaller difference than in any year of the previous Government.

This Government are by no means complacent and we continue to introduce reforms that will support employment and wages. From last Sunday, both businesses and charities have been able to claim the employment allowance to reduce employer national insurance contributions by up to £2,000 a year. From next April, national insurance contributions will be abolished for all under 21-year-olds who earn up to £813 a week. Those measures will make it easier to take on new employees, particularly young employees, and will therefore help get even more people into work. When we have got people into work, it is important that they keep as much of their money as possible, and the Government believe that raising the personal allowance is the most effective way to support those on low and middle incomes and to reduce inequality.

As all hon. Members will be aware, last month’s Budget announced that the personal allowance will increase to £10,500 in 12 months. This month, it increased to £10,000. That means that by next April, a person on median earnings will pay more than £800 less income tax per year than in 2010-11, and will be more than £570 better off than under the previous Government’s plans. It will also lift another 288,000 low earners out of income tax altogether, increasing the total number taken out of tax by our personal allowance increases to over 3.2 million.

It is worth noting that in addition to the personal allowance, those earning the October 2014 national minimum wage and working full time will have seen their income tax bill fall by more than two thirds since 2010-11, and someone working 31 hours a week on the national minimum wage will not pay income tax at all.

The Budget also helped people to save. As well as getting more people into work and allowing them to keep more of their income, we want to provide further support for the lowest earners by abolishing the 10% starting rate of tax on savings and extending the 0% rate to the first £5,000 above the personal allowance. That measure is expected to help 1.5 million people with low earnings and some savings, meaning that everyone with a total income of less than £15,500 will not have to pay any tax at all on their savings income.

I turn to the share of taxes and benefits within income distribution. As well as lowering the tax contribution of the poorest, it is worth noting that the Government have increased the percentage of tax paid by the wealthy. My hon. Friend mentioned that in his speech. This year, the top 1% of income tax payers will pay more than 28% of income tax revenue, so overall the wealthiest will pay more in tax in this Parliament than under the previous Government’s plans. If any hon. Members dispute that, I point them to the Treasury’s distributional analysis, which is published alongside the Budget, and was praised by no less than the Treasury Committee as an outstanding document, which clearly shows that the richest 20% of households continue to make the greatest contribution towards reducing the deficit. Before this Government took action to reduce the deficit, the richest 20% contributed around three and a half times as much in tax as they received from public spending. That has now increased to around four times as much.

I am conscious of time, and the following debate, which has been delayed because of Divisions, so I will conclude by saying that while repairing the broken economy we inherited, this Government have managed to oversee the development of a fairer tax and benefits system in which everyone contributes to reducing the deficit, and those with the most make the largest contribution.

In 2015-16, the net contribution from the richest 20% of households towards reducing the deficit will be larger than the contribution of the remaining 80% of households. Employment is increasing, taxes for the lowest-paid are decreasing and, as the International Monetary Fund forecasts confirmed yesterday, our economy is recovering. That is good news on all fronts, and I am sure it will be welcomed by all hon. Members present.

I thank my hon. Friend for organising such an important debate and for allowing me to make these points this afternoon.

Work Capability Assessment

Wednesday 9th April 2014 Westminster Hall

16:49

Sheila Gilmore (Edinburgh East) (Lab): It is a pleasure to serve under your chairmanship, Mr Weir. My debate this afternoon is about an aspect of employment and support allowance. Since March 2012, I have managed to secure four debates on different aspects of employment and support allowance and the work capability assessment that underpins it. This is the fifth. Last week, I led a wide-ranging debate on the migration of incapacity benefit claimants on to employment and support allowance, but today I want to focus on something much more limited—the statistics that the Government publish on the number of decisions to refuse employment and support allowance that are subsequently successfully challenged. Before I do so, it might be useful to set out the journey of a typical ESA claimant, both before and after recent changes, to put this issue in context.

The claim process will generally start with a telephone call to Jobcentre Plus. Cases are passed to the Department for Work and Pensions contractor—currently Atos—which sends claimants a form to fill in. It is known as the ESA50 form. After that is returned, Atos can call in a claimant for a face-to-face assessment or submit advice to the Department on the basis of the evidence already available. The decision is made not by the contractor, but by someone in the DWP called a decision maker, who will either award the claimant ESA or declare them fit for work.

The claimant may think that the decision is wrong, either because it is a fit-for-work decision and they feel that they are not fit for work, or because of the group in which they have been placed. Even if they secure the benefit, they can be placed in one of two groups: the work-related activity group or the support group. They have different levels of conditionality and different financial implications, so that is another issue that people obviously have concerns about.

Up until October 2013, people in the situation that I have described had two options: they could lodge a written appeal to Her Majesty’s Courts and Tribunals Service or ask the decision maker to reconsider the original decision. Since October, however, a claimant who objects to the decision on their case has to go through reconsideration first. Only if the decision maker upholds the original decision is the appeal route available. That change, referred to as mandatory reconsideration, was one of the provisions of the Welfare Reform Act 2012. For the purposes of today’s debate, I want to distinguish very clearly between what we might describe as the formal appeals to judges and the informal appeals to DWP civil servants who deal with mandatory reconsideration.

The Minister will no doubt be aware that one of my central concerns about ESA has been and is that too many sick and disabled people are wrongly being assessed as fit for work. In making that argument, I regularly refer to the quarterly statistical bulletin that the DWP prepares. It is called “Employment and Support Allowance: outcomes of Work Capability Assessments”, and two tables in it are of particular use to those of us who are monitoring and watching what is happening. Table 1a professes to set out the number of new claimants—people who are claiming ESA for the first time, not those who have previously been on incapacity benefit—who are either declared fit for work or awarded ESA immediately after the completion of an initial work capability assessment. Table 3 sets out the number of new claimants who appeal fit-for-work decisions and, of those decisions, how many are upheld or overturned.

In the most recent bulletin, published on 27 March, the two tables told us that between the introduction of ESA in October 2008 and December 2012, 1.89 million new claimants were assessed and 949,000 were declared fit for work. Of those—the fit-for-work group—339,700 appealed the decision and 125,600 were successful and were awarded ESA as the outcome of the appeal. In percentage terms, 36% of fit-for-work decisions were appealed and 13% of fit-for-work decisions were successfully appealed. Of the appeals that were made, 37% were successful. Eventually, we reach a figure of 7% of all decisions being successfully appealed. There appear to be signs that where people are represented at appeals, a higher proportion of appellants are successful.

The key point that I am trying to make is that I and many others had long assumed that the data in table 3 included both informal appeals to civil servants—those were always available, even before mandatory reconsideration—and formal appeals to judges. If that were the case, we would be able to work out an overall overturn rate and form a view on the effectiveness of the initial work capability assessment process. If that was felt not to be performing as well as it might, we would be able to support the case for improvements. In September last year, Nick Dilworth, a welfare rights specialist, contacted me to suggest that that might not be the case. He suggested that table 1a—the first table, which appears to be about decisions as they were first made—took account of the outcomes of applicants’ requests for reconsideration, or in other words their informal appeals. He suggested that table 3 looked only at appeals to tribunals, which is the formal stage of the process.

I raised that issue in a letter to the hon. Member for Fareham (Mr Hoban), who was then the Minister responsible for ESA, on 27 September 2013. The reply I received, dated 2 November 2013, from the Minister of State, Department for Work and Pensions, the right hon. Member for Wirral West (Esther McVey), suggested that I was correct and that table 1a included decisions on which there had been a reconsideration and an individual had been awarded the benefit. Table 1a is the initial decision as made by the DWP decision maker on the strength of the recommendation from Atos. Table 3 is only formal appeals.

I subsequently wrote to the UK Statistics Authority on 20 December 2013, and I received a reply from the chair, Sir Andrew Dilnot, on 21 February this year. He said:

“We have concluded that the title of Table 1a in the quarterly statistical release Employment and Support Allowance: outcomes of Work Capability Assessments, Great Britain is potentially misleading, as you suggest.”

As a result, we now know that table 1a does not give an accurate picture of the number of people declared fit for work and awarded ESA immediately after the initial work capability assessment, and table 3 does not include all forms of appeal.

Why is that important, and what might it not be showing? To use a simplified hypothetical example, imagine that 100 people claimed ESA, of which 50 were awarded benefit and 50 were declared fit for work. If we were subsequently told that 25 of those who had been declared fit for work successfully appealed their decision, we could say that the assessment process was getting one in four of the decisions wrong. If we then found out that of the 50 who had initially been awarded ESA, 25 got the benefit only after an informal appeal or mandatory reassessment, we would have to say that the assessment process was, in fact, getting one in two decisions wrong. Its level of performance would be significantly worse than we had previously thought. I use those figures for the purpose of debate, and I am not suggesting that the performance of the WCA is that bad in reality.

The fact is that without statistics on the number of successful reconsiderations, we simply do not know. That is particularly pertinent given that statistical bulletins published recently suggest that the number of successful appeals has fallen significantly in recent years. In 2009 there were 41,000 successful appeals, in 2010 there were 37,000 and in 2011 there were 28,900. In 2012, apparently, there were only 7,400, although the dates mean that at that stage, many of the processes might not have been completed. That may reflect improvements to the WCA, which mean that fewer people are incorrectly assessed as fit for work. The Government regularly claim to have implemented all the recommendations of the four independent reviews, although I would take issue with that if I had longer.

The Minister might well want to portray the drop as a positive consequence, but it could reflect delays in the claim process. The statistics identify how many people who started a claim in a particular year subsequently lodged an appeal and received a decision. It is not inconceivable that someone applying for ESA in late 2012 could still be awaiting the outcome of an appeal when the statistics are compiled.

The other possibility is that the drop in appeal numbers could suggest that the WCA process is still producing as many incorrect decisions as it was before, but that those are being addressed through requests for reconsideration. However, because there are no separate statistics published on reconsiderations, we just do not know. It is becoming much more of an issue than it was when a reconsideration was optional, rather than mandatory. People have to go through mandatory reconsideration if they want to contest the decision, which increases the number of reconsiderations and could skew the statistics even more. It might look as if the WCA is performing better than it actually is.

Why are overturned decisions a problem? If people eventually get the benefit they are entitled to, is there a problem? I think there are several problems. First, it is distressing for someone to be found fit for work when they know that they are not. It opens up the prospect of having to claim jobseeker’s allowance, under which claimants face the prospect of being sanctioned if they do not apply for a certain amount of jobs every week. Claimants are increasingly expected to spend a fixed number of hours looking for jobs and to take reasonable offers. While that might be appropriate for someone who is genuinely fit for work, it is understandable that someone who is not would be worried about having to put themselves through the process. Ministers have said on several occasions that staff should amend the conditionality that people are subject to if they have requested reconsideration of an ESA refusal, but in a number of cases that message does not seem to have found its way to Jobcentre Plus offices. The Work and Pensions Committee, of which I am a member, has already received some written and oral evidence from witnesses suggesting that that is the case. They are encountering people found fit for work and going through the mandatory reconsideration process who have gone to the jobcentre to claim JSA because they no longer get ESA. They have been told that they are not fit, so cannot claim JSA. That is still happening.

Secondly, the distress resulting from the process could lead to deterioration in people’s mental health. Claimants with pre-existing mental health conditions and those who apply without them become stressed during the process. There is a risk that people who might have successfully overturned their fit-for-work decision simply give up at some point in the process. I have met a number of constituents with mental health issues who end up in that position, often in the context of their asking about access to a food bank or what they will do when they cannot get any benefit. While no system will ever be perfect, there should be a legitimate expectation that the decision is right first time. Everyone says that that is what they want, and there is no lack of suggestions on how it could be achieved. I have raised some in previous Adjournment debates, and I know that colleagues have, too. I am sure that the Minister will be interested to look at the information that has come to the Select Committee in written submissions to the current inquiry. They contain many suggested improvements.

Now that we have mandatory reconsideration and a lot more people going through the process, it is important that the Minister considers a change to how statistics are reported, and specifically to the WCA outcomes bulletin. First—this is a simple change—Sir Andrew Dilnot suggests in his letter of 21 February that table 1a should be relabelled to make it clear that it already accounts for reconsiderations. Specifically, he said:

“The Authority will review compliance with this request as part of following up on our recent statutory assessment of these statistics, and this will therefore inform in part our consequent decision as to whether to confirm the designation of this set of statistics as ‘National Statistics’.”

I hope that the Minister will simply say that he will be doing that; he has had Sir Andrew’s letter for nearly two months.

That simply labels things better, so people understand better what they are reading. Over and above that, I would submit that the format of the bulletin should be revised, so that the first table excludes not just appeals but reconsiderations, and simply sets out the number of people declared fit for work and awarded ESA immediately after the completion of the initial work capability assessment.

Effectively, there would be three tables: one for the people who are found fit for work initially, or initial decisions; one for reconsiderations; and one for formal appeals. What exactly is happening would be clear, and it would enable people to tell how each part of the process works. I am sure that the Department will have management information from which such tables could be constructed.

In conclusion, until the changes are made, the crucial statistical bulletin will continue to present informal appeals as being part of the initial process when that is not the case. The bulletin could understate the total number of overturns and overstate the effectiveness of and improvement in the WCA. Only once those changes have been made and we have separate figures for the outcomes of the initial process, the informal appeals and the formal appeals will we be able to produce an overall overturn rate and paint a more robust picture of the work capability assessment.

Now is a particularly important time for doing that and getting it right. The provider who has been providing such tests on behalf of and making recommendations to the DWP since the outset will be changing in, potentially, less than a year. Now is when the Department will be going out to procure a new provider for the tests. Hopefully, a new provider will be more successful in many aspects, one of which obviously is getting it right first time. A change to how the statistics are presented would assist the Department, the Select Committee, Parliament generally, members of the public who are interested in the matter and all the campaigning groups, who want to see a better system, in judging whether that has been achieved. That, in itself, will not change the system, but it will provide us with the data from which we can make those judgments.

17:07

[The Minister of State, Department for Work and Pensions (Mike Penning)]

As usual, it is a pleasure to serve under your chairmanship this afternoon, Mr Weir. I congratulate the hon. Member for Edinburgh East (Sheila Gilmore) on securing this short debate.

I have looked extensively at some of the correspondence that the hon. Lady has had with Sir Andrew Dilnot, who runs the UK Statistics Authority. She had let me see a copy of her speech—she has stuck rigidly to the letter of it—so that I could do some research. I was slightly surprised, as I believe that Sir Andrew has answered, in his letters to her, many of the questions that she raised today. However, I will try to elaborate on that a bit.

Mandatory reconsiderations were brought in for reasons that I think we would all agree with: to ensure that we get the decisions right before we go down the enormously costly and lengthy route of tribunals and appeals—costly to the taxpayer and to the individual. A mandatory reconsideration can produce the right decision earlier.

We have debated at length as to how we can get a shorter distance, so that we can get the right decision through. Tribunals and appeals are enormously stressful for claimants, and sometimes the length of time is unnecessary. If we can get the decision appraised before it goes down the tribunal route, which we are doing with mandatory reconsiderations, we can save a lot of time, and it would be unnecessary to go through the tribunal. It still leaves an opportunity for the individual, should they wish, to go through the appeals and tribunal process, but if we can get the decision right, there will be no need to do so, which I am sure is what we would all like to see.

The issue about reconsideration of the statistics, which is the main thrust of the hon. Lady’s speech, was something that I thought Sir Andrew Dilnot’s letters to her, copies of which I have seen, have extensively answered, particularly the one of 21 February 2014. She quoted extensively from the letter, but some other quotes from that letter are relevant. He stated,

“since the publication of the statistics is up to 10 months behind the application reference point, we expect it to take some time for the effects of such procedural changes to flow through into the published statistics.”

He went on to say that departmental statisticians

“will consider your request for more detailed presentations of the statistics”.

That is exactly what the letter said. He went on to look at that.

The hon. Lady will know, as will the Chair of the Work and Pensions Committee, who is in the Chamber, that it is not possible for a Minister to instruct his departmental statisticians to do statistics in a certain way. We can look at something—that is exactly what we are doing—but I cannot instruct the statisticians to produce statistics in the way that the hon. Lady has asked. I think there is some merit in what she is asking to be done, but it will be for Sir Andrew Dilnot and his team and my statisticians to work together on that. I know that the hon. Lady corresponds extensively with Sir Andrew Dilnot and I am sure that he will confirm what I have said.

It is important that the statistics are right; all hon. Members would want that. The rationale behind mandatory reconsideration was to get the whole thing right. Sir Andrew Dilnot stated in his letter of 21 February that it was too early to have the sort of statistics that the hon. Lady mentioned. I am more than happy—and I have—in the light of the letters that I have seen, and in the light of the hon. Lady’s requests in correspondence with Sir Andrew Dilnot, and his comments, to ask my statisticians to look at this to see whether what she has asked for is possible. But I stress again that, as a Minister of the Crown, I cannot instruct statisticians in my Department to do what she asked. It was for them to make sure that we have a robust situation, but I can imagine the controversy that there would be in the House if a Minister was speaking in the House and it became public knowledge that statisticians had been instructed by a Minister to do things in a certain way.

[Sheila Gilmore]

I can understand why it would be a matter of concern if a Minister told statisticians not to record something, but surely a Minister will have a view about the form of statistics and the kind of information to be published; and presumably, these are bits of management information which are there anyway.

[Mike Penning]

Certainly, Ministers have a view on lots of things, but there is a difference between having a view and instructing departmental statisticians to do their statistics in a certain way. I have asked whether I have the powers to do so, should I wish to do so, and I understand, having received advice, that I do not. It is for my statisticians to work on producing statistics on mandatory reconsideration in a way that is as informative as possible, working with the UK Statistics Authority.

Regarding the clarification of that point, and with regard to the very narrow title of this afternoon’s debate, I honestly thought that Sir Andrew Dilnot had answered the questions that the hon. Lady has asked in this debate, which is why I reiterate that I was slightly surprised that we had the debate. The hon. Lady knows that my door is always open. We could have openly discussed this matter, if she had had anything to clarify. I know that Sir Andrew Dilnot’s officials are listening to this debate and want to work with her.

At the moment the information is not ready. It is not in the format that she is asking for. As soon as it is ready it will be published. It may not be in the perfect format that the hon. Lady is looking for. I have asked for this matter to be reviewed, and Sir Andrew Dilnot is doing the same thing, and I look forward to the response. However, I cannot instruct the statisticians to do so and I would not do so.

[Sheila Gilmore]

I was not suggesting that a lot of the data would already be there, but we are expecting far more such decisions to be taken. It is important to start planning for that, as I am sure the Minister would agree.

[Mike Penning]

That is exactly what the statisticians are planning for. Actually, with mandatory reconsideration we were trying to see whether we could get the decisions right before they went to appeal. It is early days yet—it is a bit like the early days with the personal independence payment, which we were discussing only this morning, where the early data reveal that the number of cases going to appeal is a lot less than expected. It does appear that the mandatory reconsideration work is working, but when the statistics come forward that will be for everybody to know.

I know that those in Sir Andrew Dilnot’s office are listening to this debate and I am sure that they will correspond with the hon. Lady on the points that I have raised in the debate and on points raised by her as well.

Question put and agreed to.

17:15

Sitting adjourned.

Written Statements

Wednesday 9th April 2014 Written Statements

Wednesday 9 April 2014

Equitable Life Payment Scheme

Wednesday 9th April 2014 Written Statements

[The Financial Secretary to the Treasury (Sajid Javid)]

As of 31 March 2014 the Equitable Life payment scheme has made payments totalling £901 million to 860,972 policyholders. The scheme has published a further progress report, which can be found at: http://equitablelifepaymentscheme.independent.gov.uk

The scheme has gone to significant lengths to trace eligible policyholders, and since the last report in January 2014 the scheme has traced over 110,000 additional policyholders. Over the coming months the scheme will be reviewing its records to ensure that all proportionate and effective actions to trace the remaining policyholders have been completed before the scheme shuts.

Any holders of a policy who believe themselves to be eligible should call the scheme on 0300 0200 150. The scheme can verify the identity of most policyholders on the telephone, which means any payment due can usually be received within two weeks.

Local and Mayoral Election Guidance (European Parliament)

Wednesday 9th April 2014 Written Statements

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

Guidance has today been issued to civil servants in UK departments and those working in non-departmental public bodies and other arm’s length bodies on the principles that they should observe in relation to the conduct of Government business in the run-up to the forthcoming elections for membership of the European Parliament, and to local authorities in England and Northern Ireland, and for five directly elected mayors. These elections will take place on Thursday 22 May 2014. The period of sensitivity preceding the elections starts on 2 May.

Copies of the guidance have been placed in the Libraries of both Houses and on the Cabinet Office website at:

https://www.gov.uk/government/publications/election-guidance-for-civil-servants

Markets for Government Services

Wednesday 9th April 2014 Written Statements

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

The Government are committed to opening up public contracts, with a wide, diverse range of providers competing to deliver high-quality services.

Following the material concerns that emerged last year, relating to overcharging on Ministry of Justice electronic monitoring contracts, G4S has engaged constructively with the Government.

The Government’s approach has been rigorous, and on 12 March my right hon. Friend the Secretary of State for Justice was able to announce that G4S has agreed to repay £108.9 million, excluding VAT, to reimburse the taxpayer for overcharging found in an audit of Ministry of Justice contracts, and to cover direct costs to Government arising from these issues. This also included £4.5 million to cover the cost of overpayments made on two contracts for facilities management in the courts. This was a significant announcement and a positive step for G4S.

Throughout, the Government have engaged closely with G4S to understand its plans for corporate renewal. These discussions have been constructive; and following scrutiny by officials, review by the oversight group and reports from our independent advisers (Grant Thornton), the Government have now accepted that the corporate renewal plan represents the right direction of travel to meet our expectations as a customer.

This does not affect any consideration by the Serious Fraud Office, which acts independently of Government, in relation to the material concerns previously identified. However, we are reassured that G4S is committed to act swiftly should any new information emerge from ongoing investigations.

The changes G4S has already made and its commitment to go further over coming months are positive steps that the Government welcome. However, corporate renewal is an ongoing process and the Government place a strong emphasis on their full and timely implementation of the agreed corporate renewal plan. The Crown representative together with Grant Thornton will continue to monitor progress as their plan is implemented, reporting to Government on a regular basis. I hope this will enable our confidence to grow.

The public rightly expects Government suppliers to meet the highest standards, and for taxpayers’ money to be spent properly and transparently. Since 2010 the Government have been working to reform contract management and improve commercial expertise in Whitehall. These reforms have had a substantial impact, saving £3.8 billion in 2012-13 alone. But much more is required, which is why we are redoubling efforts over coming months, including working to build commercial skills across the civil service and create a world-class Crown commercial service that supports all Departments.

Local Planning and Renewable Energy Developments

Wednesday 9th April 2014 Written Statements

[The Secretary of State for Communities and Local Government (Mr Eric Pickles)]

This coalition Government have reformed the planning process so that communities themselves have the opportunity to influence the decisions that affect their lives. We have abolished regional strategies, and their top-down renewable energy targets, and are encouraging local councils to work with their communities to set out in their local plan where developments for renewable energy should and should not take place. We have also been very clear that the views of local communities should be listened to.

We have published planning guidance to help ensure planning decisions on green energy get the environmental balance right in line with the national planning policy framework. The guidance is designed to assist local councils in their consideration of local plans and individual planning applications. In publishing the guidance, we have been quite clear that the need for renewable energy does not automatically override environmental protections and the planning concerns of local communities. We have also introduced a new requirement for compulsory pre-application consultation with local communities for more significant onshore wind applications—that is, of more than two turbines or where the hub height of any turbine exceeds 15 metres. This requirement took effect in December. We will shortly be publishing new planning guidance to help secure the intended improvements in how communities are engaged. This is available on the Department’s planning practice guidance website at:

http://planningguidance.planningportal.gov.uk/

These are all crucial steps in improving the quality of proposed onshore wind development and ensuring local communities are listened to.

However, this coalition Government appreciate the continuing concerns in communities when a local decision is challenged on appeal. It is important that local communities continue to have confidence in the appeals process and that the environmental balance expected by the framework is being reflected in decisions on renewable energy developments.

On 10 October 2013, Official Report, column 30WS, I announced a temporary change to the appeals recovery criteria, for a period of six months. In doing so, I explained that I wanted to give particular scrutiny to planning appeals involving renewable energy developments so that I could consider the extent to which the then new practice guidance was meeting our intentions.

I am pleased to confirm that the guidance is helping ensure decisions reflect the environmental balance set out in the framework. I note, for example, that prior to the guidance, more appeals were approved than dismissed for more significant wind turbines. Since the guidance, more appeals have been dismissed than approved for more significant turbines. Every case should, of course, be considered on its individual merits in light of local circumstances and the material planning considerations.

I am encouraged by the impact the guidance is having but do appreciate the continuing concerns in communities. I also recognise that the guidance is still relatively new and some development proposals may not yet have fully taken on board its clear intent. Therefore after careful consideration I have decided to extend the temporary change to the appeals recovery criteria, and continue to consider for recovery, appeals for renewable energy developments, for a further 12 months. This criterion is added to the recovery policy issued on 30 June 2008.

For the avoidance of doubt, this does not mean that all renewable energy appeals will be recovered, but that planning Ministers may recover a number of appeals.

Glasgow Commonwealth Games (Call-out Order)

Wednesday 9th April 2014 Written Statements

[The Minister for the Armed Forces (Mr Mark Francois)]

A call-out order has been made under section 56(1A) of the Reserve Forces Act 1996 to enable reservists to be called out for permanent service as part of Defence’s contribution to the safety and security of the Glasgow 2014 Commonwealth games.

In providing venue security support to the Police Service of Scotland and other civil and Commonwealth games authorities, Defence will contribute up to 2,000 military personnel, of which up to 400 will come from the reserve forces.

We plan to call out only willing and available reservists, who have the support of their employer. The order takes effect from 8 April 2014 and ceases to have effect on 6 August 2014.

Qualifications Reform

Wednesday 9th April 2014 Written Statements

[The Secretary of State for Education (Michael Gove)]

The Government are today announcing the next steps in the reform of GCSEs and A-levels.

We are introducing more rigorous content into reformed GCSEs and A-levels to be taught from September 2016 and 2015 respectively.

Our changes will make these qualifications more ambitious, with greater stretch for the most able; will prepare young people better for the demands of employment and further study; will address the pernicious damage caused by grade inflation and dumbing down, which have undermined students’ achievements for far too long; and will give pupils, parents, teachers, universities and employers greater confidence in the integrity and reliability of our qualifications system.

GCSEs

In November of last year, the Department for Education published details of revised content for GCSEs in English and mathematics, for first teaching from September 2015.

Today, I am publishing revised content for GCSEs in science, history, geography and languages, which will be taught in schools from September 2016.

These GCSEs set higher expectations. They demand more from all students and specifically provide further challenge to those aiming to achieve top grades.

In science, the level of detail and scientific knowledge required has increased significantly, and there are clearer mathematical requirements for each topic. New content has been added, including the study of the human genome, gene technology, life cycle analysis, nanoparticles and space physics.

In history, every student will be able to cover medieval, early modern and modern history—rather than focusing only on modern world history, as too many students do now. Greater emphasis has been placed on British history, which will account for 40% of GCSE rather than 25%, as now; balanced by an increase in the number of geographical areas studied, and an explicit expectation that students will study the wider world. The new GCSE is also clearer about the range of historical knowledge and methods students will need to develop, from critical assessment of sources to understanding of chronology, individuals, events and developments.

In geography, the balance between physical and human geography has been improved—developing students’ locational and contextual knowledge of the world’s continents, countries and regions and their physical, environmental and human features—alongside a requirement that all students study the geography of the UK in depth. Students will also need to use a wide range of investigative skills and approaches, including mathematics and statistics, and we have introduced a requirement for at least two examples of field work outside school.

In modern languages, greater emphasis has been placed on speaking and writing in the foreign language, thorough understanding of grammar and translation of sentences and short texts from English into the language. Most exam questions will be set in the language itself, rather than in English; and there will be a sharper focus on using the language appropriately in different contexts, from personal travel to employment or study abroad.

Finally, ancient languages have been given a separate set of criteria for the first time, reflecting their specific requirements. Students will now need to translate unseen passages into English, and will have the option to translate short English sentences into the ancient language. We have also provided greater detail about the range and type of literature and sources to be studied, without specifying particular set texts.

A-levels

I am also publishing revised content for A-levels in English literature, English language, English literature and language, biology, chemistry, physics, psychology, history, economics, business, computer science, art and design and sociology, for first teaching from September 2015.

The content for these A-levels was reviewed and recommended by Professor Mark E. Smith, vice-chancellor of Lancaster university, drawing on advice from subject experts from higher education establishments and subject associations.

By placing responsibility for the content of A-levels in the hands of university academics, we hope that these new exams will be more rigorous and will provide students with the skills and knowledge needed for progression to undergraduate study.

I thank Professor Smith and all of those involved for their conscientious work and thoughtful suggestions—and I have accepted all of their recommendations for A-level content.

In the sciences, computer science, economics and business, mathematical and quantitative content has been strengthened: for example, understanding standard deviation in biology and the concepts underlying calculus in physics.

In computer science, basic ICT content has been removed and emphasis has been placed instead on programming and far more detailed content on algorithms.

In the sciences, there will also be a new requirement that students must carry out a minimum of 12 practical activities, ensuring that they develop vital scientific techniques and become comfortable using key apparatus. This will make sure that all A-level scientists develop the experimental and practical skills essential for further study.

In history, as well as covering the history of more than one country or state beyond the British isles, A-level students will also now be required to study topics across a chronological range of at least 200 years increasing breadth of focus.

In English literature, to ensure a broad and balanced curriculum, specified texts will include three works from before 1900—including at least one play by Shakespeare—and at least one work from after 2000. In addition, we have reintroduced the requirement for A-level students to be examined on an “unseen” literary text, to encourage wide and critical reading.

Finally, in economics, content has been updated to include the latest issues and topics—for example, financial regulation and the role of central banks.

Copies of the content for these reformed GCSEs and A-levels will be available later today at: https://www.gov.uk/government/publications

Alongside these announcements, Ofqual is today setting out its decisions on how these new GCSEs and A-levels should be assessed—with linear assessment rather than modules, and a greater focus on exams rather than controlled assessment.

All of these reformed A-levels will be ready for first teaching in schools from September 2015, and reformed GCSEs from September 2016.

Awarding organisations will publish their detailed specifications for these A-levels this autumn, and for these GCSEs next autumn giving schools plenty of time to prepare.

New A-levels and GCSEs from 2016

Based on the advice of the A-level content advisory board established by the Russell group of leading universities, I have also already announced that A-levels in mathematics, languages and geography will be reformed for first teaching from September 2016.

I can announce today that GCSEs and A-levels in religious studies, design and technology, drama, dance, music and PE—and GCSEs in art and design, computer science and citizenship—will also be reformed and brought up to these new, higher standards for first teaching at the same time, in September 2016.

Awarding organisations and subject experts will draft content for these new A-levels and GCSEs over the coming months, and we will consult on their recommendations for content—while Ofqual consults on its recommendations for assessment later in the year.

All our reforms to GCSEs and A-levels complement the changes we have already made to technical and vocational qualifications, removing those which are not endorsed by businesses or employer bodies from league tables, and leaving only those which represent real achievement.

Taken together, these changes mean that every young person in this country will have the opportunity to study high-quality, rigorous, demanding qualifications across the academic and vocational curriculum from September 2016 onwards.

These changes will increase the rigour of qualifications, strengthening the respect in which they are held by employers and universities alike.

Young people in England deserve world-class qualifications and a world-class education—and that is what our reforms will deliver.

Scotland Analysis (Energy)

Wednesday 9th April 2014 Written Statements

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

The Government have today published the 12th paper in the Scotland analysis programme series to inform the debate on Scotland’s future within the United Kingdom.

“Scotland Analysis: Energy” (Cm 8826) examines the benefits of the current single energy market across Great Britain (GB) for managing energy policy and examines the potential implications of independence.

The paper concludes that the current single market has underpinned the success of the Scottish energy industry, has helped to keep Scottish energy bills down and is the most effective way of managing energy liabilities, but were Scotland to become a separate independent state, the current integrated GB energy system could not continue as it is now.

Scottish consumers and businesses currently benefit from spreading the cost of supporting Scottish energy network investment, renewables and programmes to support remote consumers over 30 million households and businesses as part of the GB energy market. In the event of independence, Scotland’s three million households and businesses would have to meet these costs alone. Scottish consumers would end up paying more, possibly considerably more, for energy infrastructure in an independent Scottish state than they do as part of the UK.

The paper also sets out that only a small proportion of electricity demand in England and Wales (4.59%) is provided by Scotland. In the event of independence, England and Wales would not be reliant on Scotland to keep the lights on nor would the UK be reliant on Scotland to meet its renewables targets.

Future papers from the Scotland analysis programme will be published over the course of 2014 to ensure that people in Scotland have access to the facts and information ahead of the referendum.

UK Downstream Oil Sector

Wednesday 9th April 2014 Written Statements

[The Minister of State, Department of Energy and Climate Change (Michael Fallon)]

Today, the Department of Energy and Climate Change (DECC) is publishing the conclusions of its review of the role of UK’s refining and fuel import sectors. I am grateful to all those who contributed to this review.

As we progress toward a low-carbon economy in the UK, oil products are, and will continue to be, crucial to our economy and to consumers in the UK for some years to come. The review was designed to assess the respective contributions that domestic production and imports make to resilient fuel supplies. It sought to understand better the global context and challenges facing the oil supply sector, and the impact that market distortions and the regulatory framework have on competitiveness. It also considered what role the Government should play in supporting the sector.

Given the recent closures of refineries in the UK, the review had a particular focus on the refining sector in the UK but it also considered the midstream sector more broadly, including the role of the imports sector and the benefits it brings.

The review concluded that resilience and security of supply in the UK is supported by retaining a mix of domestic refining and imported product. This is in line with the Government’s energy security of supply strategy which recognises the benefits of supply diversity. Global commercial factors will continue to affect the refining market in the UK and the EU more broadly, and further closures across the continent are likely in future. A package of actions has been developed by Government, which taken together, could help improve the operating environment for the refining and import sectors.

These measures include the setting up of a new joint Government and industry midstream oil taskforce. This will provide a strategic and collaborative way of working and will deliver a number of the actions from the review. The taskforce will be independently chaired and draw its members from across the midstream oil sector.

DECC is also today publishing the Government response to our consultation on the future management of the compulsory oil stocking mechanism in the UK. In this the Government set out their support for the establishment of an industry-owned and operated central stocking entity in the UK which will encourage a more efficient system that incentivises the development of UK oil storage capacity. There are still important issues to address before the Government can agree to move to legislation, and so we are now asking obligated companies to prepare a road map towards legislation, addressing these issues.

The review and the Government response to the consultation can be viewed at: https://www.gov.uk/government/consultations/call-for-evidence-role-of-uk-refining-and-fuel-import-sectors and https://www.gov.uk/government/consultations/future-management-of-the-compulsory-stocking-obligation-in-the-uk respectively. Copies of both publications have been placed in the Library of the House.

Countering Terrorism

Wednesday 9th April 2014 Written Statements

[The Secretary of State for the Home Department (Mrs Theresa May)]

Protecting the safety of the UK and our interests overseas is the primary duty of Government. Terrorism remains the greatest threat to the security of this country.

I have today published the annual report for the Government’s strategy for countering terrorism, Contest (Cm 8848). It covers the progress made during 2013 towards implementing the strategy we published in July 2011. Copies of the report will be made available in the Vote Office.

The principal threat to the UK continues to be from militant Islamist terrorists and many of the threats we face continue to have significant overseas connections, highlighting the importance of our work with international partners. The most significant development in connection with terrorism during 2013 has been the growing threat from terrorist groups in Syria. Several factions of al-Qaeda are active in Syria, supported by rapidly increasing numbers of foreign fighters, including numbers in the low hundreds from this country and thousands from elsewhere.

2013 saw two terrorist murders, the first in Great Britain since 2005. There were also attempted terrorist attacks against mosques in the west midlands and 13 British nationals were killed in terrorist attacks by al-Qaeda linked groups overseas, the highest number since 2005.

Significant resources and capabilities have been put in place to deal with the threat. The number of successful prosecutions and plots foiled over the past year demonstrates the skill and professionalism of the police and security and intelligence agencies, as well as the strength of the systems and structures developed for our counter-terrorist work over many years. In the 12 months to September 2013, there were 257 terrorism-related arrests in Great Britain; 48 people were charged with terrorism offences and 73 with other offences. These figures are comparable to any other 12-month period since 2001.

The wide range of activity under Contest is appropriate for the threats we face and the strategy has been proven over many years. But aspects of our strategy have to evolve to respond to changing threats. During 2013 the Government have continued to provide the police and security and intelligence agencies with the powers and capabilities they need to do their job. These powers are necessary, proportionate and subject to close oversight and scrutiny. We have a sustained cross-Government effort to deal with the new and wider range of terrorist threats we now face overseas. We have increased the pace and range of our prevent work. We are making our border and our aviation sector even more secure. And we are reshaping our emergency response to deal with new terrorist methods and techniques.

The UK’s counter-terrorism response is widely regarded as among the most effective in the world. We will continue to do everything we can to stay ahead of the threat and to protect the public.

HS2 (Property Compensation)

Wednesday 9th April 2014 Written Statements

[The Secretary of State for Transport (Mr Patrick McLoughlin)]

I am today announcing to the House the outcome of the 2013 consultation on property compensation for the London to west midlands HS2 route (phase 1).

That consultation, which ran from 12 September to 4 December 2013, set out a package of assistance for owner-occupiers of properties affected by phase 1 of HS2 that went beyond the legal requirements for compensation in recognition of the exceptional nature of the HS2 project.

While elements of today’s decision will be launched immediately, I want to make sure we get this decision absolutely right, so I will be asking for further views on the newer aspects of this package before we finalise it.

The details of the package are as follows:

Express Purchase—This is being launched today and is for those people living closest to the line, in what is known as the “surface safeguarded” area. Under this scheme owner-occupiers may be able to sell their home to the Government, if they wish to do so at its full unblighted market value (as it would be if HS2 did not exist), plus 10% (up to £47,000) and reasonable moving expenses, including stamp duty.

Voluntary Purchase—For people in rural areas outside the safeguarding area and up to 120 metres away from the line. Owner-occupiers in this area may be able to sell their home to the Government for its full unblighted value at any time up until a year after the line opens. We intend for this to be launched later this year.

Need to sell—This scheme does not have a boundary and is available to owner-occupiers who have a compelling reason (including job relocation, ill health) to sell their house but are unable to do so because of HS2. The Government would pay the full, unblighted value for these properties. We also intend to launch this later this year, when it will replace the exceptional hardship scheme which will continue to operate in the meantime.

All three options will be accompanied by a rent back option. This is for owner-occupiers who, having sold their property to Government, would prefer to carry on living there and may be able to rent it back, subject to property suitability checks. This will also be implemented immediately.

These compensation arrangements incorporate a range of improvements to our original proposals, taking account of points made by members of the public, property experts and others during the consultation. For example, I have decided that the “need to sell” scheme, as the name suggests, will require applicants only to show they have a compelling need to sell, rather than demonstrating that they would suffer hardship if they could not sell.

In recognition of the exceptional nature of HS2, we are also considering going further than providing compensation and will undertake a further limited consultation on the following proposals:

As an alternative to the voluntary purchase offer, we are proposing a cash payment of between £30,000 to £100,000—for owner-occupiers in rural areas outside the safeguarding area and up to 120 metres away from the line who do not want to sell their home and move.

Home owner payment—This is proposed to apply to owner-occupiers between 120 metres and 300 metres from the route in rural areas. This could enable people in these areas to share in the benefits of HS2, which will run near them but will not provide them with a direct benefit. The details of (amounts and eligibility) any payments would need to be determined following consultation.

Initial thinking is that payments could be from £7,500 to £22,500 depending on how near the route the property is located. This would come into effect following parliamentary approval of the HS2 route between London and the west midlands.

These decisions and the forthcoming consultation do not apply to other proposed HS2 route sections. I intend to bring forward further proposals for supporting property owners alongside future decisions on extensions to the HS2 route.

In addition to these proposals, we need to ensure residents’ views have an effective way of being heard. HS2 Ltd will develop a residents’ charter, designed to help residents know their rights and will appoint an independent residents’ commissioner who will ensure that they adhere to the commitments made in the charter. The charter and commissioner will provide residents with a voice and representation.

Together, the charter and the commissioner will ensure that residents are informed of any developments fairly and efficiently. The charter will contain a number of principles against which HS2 Ltd will be measured in their communications with people affected by the development of the railway.

I have decided not to introduce a “property bond” which was one of the proposals that was consulted on in 2013. I appreciate that this will disappoint many who were advocating such an approach. We studied the idea very carefully but felt that it was untried, would not facilitate the smooth operation of a normal property market and would add to uncertainty rather than reduce it.

I believe these proposals represent the best possible balance between properly compensating people affected by the line and providing value for money for the taxpayer. The voluntary purchase offer and the need to sell scheme are intended to be launched later this year, following the further consultation which I aim to commence shortly and intend to conclude before the end of the year.

A full description of these proposals is in today’s Command Paper, “Property Compensation Consultation 2013 for the London-West Midlands HS2 route: Decision Document”. I have published this report on: www.gov.uk and provided copies to the Libraries of both Houses.

Office for Nuclear Regulation

Wednesday 9th April 2014 Written Statements

[The Minister of State, Department for Work and Pensions (Mike Penning)]

Following my announcement on 1 April 2014 of the launch of the Office for Nuclear Regulation (ONR) as an independent public corporation, I will place a copy of the ONR annual plan for 2014-15 in the House Library. The annual plan has also been published on the ONR website at: http://www.onr.org.uk/documents/2014/onr-annual-plan-14-15.pdf.

I can confirm, in accordance with schedule 7, section 25(3) of the Energy Act 2013, that there have been no exclusions to the published document on the grounds of national security.

I will place a copy of the ONR/DWP framework document, which sets out the sponsorship arrangements between the Department and the ONR, in the House Library. It is also available on the ONR website at: http://www.onr.org.uk/documents/2014/onr-dwp-framework.pdf.

Single-tier Pension (Contingencies Fund Advance)

Wednesday 9th April 2014 Written Statements

[The Minister of State, Department for Work and Pensions (Steve Webb)]

The Department for Work and Pensions has obtained approval for a further advance from the Contingencies Fund of £549,000 for the continued development of IT for the single-tier pension before Royal Assent. This advance is necessitated by the lead-in time for delivery in April 2016 which requires IT work to be undertaken prior to Royal Assent of the Pensions Bill.

Parliamentary approval for additional resource of £549,000 for this new service has been sought in the main supply estimate 2014-15 for the Department for Work and Pensions. Pending that approval, urgent expenditure estimated at £549,000 will be met by repayable cash advances from the Contingencies Fund. The repayment is expected to be made in the financial year 2014-15.

This advance will allow the single-tier programme to continue to work to meet the timetable of April 2016 to implement the single-tier new service.

House of Lords

Wednesday 9th April 2014 Lords Chamber

Wednesday, 9 April 2014.

11:00

Prayers—read by the Lord Bishop of Bristol.

Japanese Knotweed

Wednesday 9th April 2014 Lords Chamber

Question

11:07

Asked by

[Baroness Sharples]

To ask Her Majesty’s Government what progress is being made in eliminating Japanese knotweed from the United Kingdom.

[The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord De Mauley) (Con)]

My Lords, we are in the fourth year of the controlled release of the psyllid Aphalara itadori as a means of controlling Japanese knotweed. No non-target impacts have been observed by the monitoring programme but, as yet, the organism has had difficulty establishing self-sustaining populations. This year, therefore, we will conduct caged trials releasing larger numbers to establish higher population densities.

[Baroness Sharples (Con)]

Will my noble friend agree to holding a publicity campaign so that this plant can be easily recognised, especially by landowners and, even more importantly, by people seeking to buy a house with land, because in some cases they are being refused a mortgage?

[Lord De Mauley]

My Lords, in returning regularly to this question, my noble friend is almost as persistent as the weed itself. I am not sure whether she is a hardy annual or a perennial. We need to spread public awareness of a number of non-native species including, of course, Japanese knotweed. The website nonnativespecies.org is our central point. Other awareness-raising measures include nearly 70 identification sheets, including one for Japanese knotweed, the Environment Agency’s PlantTracker mobile device app, which I recommend to your Lordships, non-native species local action groups, and the Be Plant Wise and Check, Clean Dry campaigns, which target aquatic security and non-native species more generally. Awareness-raising is a key focus of our current review of the GB strategy on invasive non-native species.

My noble friend mentioned mortgages. Two years ago, the Royal Institution of Chartered Surveyors and the Council of Mortgage Lenders agreed that a less draconian approach was needed.

[Lord Dubs (Lab)]

My Lords, while we are awaiting the result of those trials—four years is a long time—can we not have some action for those people who have knotweed on their neighbours’ land? I have not got any on mine, but my neighbours have. Can we at least persuade local authorities—without legislation—to be more co-operative with local people? My local authority will not co-operate at all: it will give me no information and is quite unhelpful. I know that some are better than that. How about leaning on local authorities?

[Lord De Mauley]

That is a subject which I have been thinking about very carefully. It is quite interesting that the community protection notices under the new Anti-social Behaviour, Crime and Policing Act are potentially useful in this regard and we have to look carefully at them, as is the community trigger, which we should also look into.

[Lord Greaves (LD)]

My Lords, I, too, congratulate the noble Baroness, Lady Sharples, on her persistence in this matter. It has been going on for as long as I have been in this House, which is probably too long now—or certainly too long for my own good, anyway. I would not, however, describe my noble friend as invasive or, to use the Royal Horticultural Society’s description of knotweed, as a real thug. Her question was: what progress is being made on getting rid of it? The answer is that there is none; it is getting more and more widespread. Is it not the case that the time has come when allowing this invasive, alien weed to grow on your land should be an offence?

[Lord De Mauley]

I should say to my noble friend that Aphalara itadori is not planned to eradicate knotweed but is part of a programme on how to manage it. We have got to a stage where it is here—and we should acknowledge that fact—but we should manage it. There are other tools that can be used in this matter. In fact, when my noble friend Lady Sharples asked the same Question last year, she referred to the use of an herbicide which can be effective. My noble friend Lord Greaves referred to more pressure on landlords. It would be disproportionate, and possibly unfair, to impose very strong conditions on landowners because, apart from anything else, this weed can arrive on their land through no fault of their own. However, farmers receiving the single farm payment are required to take reasonable steps to prevent its spread.

[Lord Clark of Windermere (Lab)]

The Minister is absolutely right to try to pursue this pernicious weed as much as possible but there is a belief that, in a restricted sense, persistent application of the herbicide to which he referred will actually be quite effective in killing it, in a limited state. Is there any way of doing some emergency research on those one or two herbicides and to try to publicise that? It would remove a lot of difficulties for many people who are trying to sell houses and clean up their land.

[Lord De Mauley]

It is a difficult one but the answer to that question is that the herbicide which the noble Lord and I are talking about is effective if used persistently, as he says, so I do not think that further research is needed. The question is the extent to which we want to spray around quite powerful pesticides. That is why I suggest to your Lordships that things such as biocontrol are also very valuable.

[Lord Elis-Thomas (PC)]

My Lords, the Minister will be well aware that invasive species of this kind are no respecters of boundaries, whether political or otherwise. Can he therefore assure the House that the UK Government will take a positive attitude towards the oncoming European Union regulations in these matters, which are being discussed in the European Union even at this moment?

[Lord De Mauley]

Yes, my Lords. Indeed, the regulation has now been approved by COREPER and the European Parliament’s environment committee. It has also now cleared the scrutiny committees of both the House of Commons and your Lordships’ House. I understand that the regulation will now be presented to the European Parliament’s plenary session on 16 April. If approved there, the regulation will be presented to the next suitable Council meeting and should then come into force on 1 January next year.

[Lord Davies of Oldham (Lab)]

My Lords, can the Minister assure the House that he views this with a proper sense of urgency? A recent survey has said that there is not six square miles of land in this country which is not infected with this weed. In Swansea, they have calculated that they have 62,000 tonnes of it to get rid of. It is clear that this is a major problem. The effect upon Network Rail and the railway system is absolutely dramatic. We want the Minister to demonstrate a real sense of urgency on this issue.

[Lord De Mauley]

I am sorry if the noble Lord thinks that I am not. He is right about the effects. He specifically mentioned Network Rail, which is a member of the project consortium for the natural control of Japanese knotweed, and it is fully involved in our discussions about how the trial proceeds. It has been a major funder of the research and was among the instigators of the project. If it would meet with noble Lords’ approval, I would like to offer a briefing session to those who are interested on our approach generally to invasive non-native species.

NHS: Hospital Medication

Wednesday 9th April 2014 Lords Chamber

Question

11:15

Asked by

[Baroness Gale]

To ask Her Majesty’s Government what procedures will be put in place to ensure that every patient newly admitted to hospital will have their medication regime reconciled within 24 hours of admission.

[Baroness Jolly (LD)]

My Lords, timely medicine reconciliation on admission to hospital can help to prevent medication errors, such as omitted and delayed medicines, wrong dose or wrong formulation. NHS trusts in England should have their own policies and procedures in place for the safe and effective use of medicines, taking into account joint guidance from the National Institute for Health and Care Excellence and the National Patient Safety Agency, which is now subsumed into NHS England.

[Baroness Gale (Lab)]

I thank the Minister for her reply. In doing so, I declare an interest as I chair the APPG on Parkinson’s. Is she aware that people with Parkinson’s can take up to 30 tablets a day and that it is of vital importance that they have their medication on time every time? Does she agree that patients with Parkinson’s who are admitted to hospital should have the right to self-administration of their own medicine? That would put them in control and help to control their symptoms, and would certainly help staff. Will she take advice from Parkinson’s UK, which has great experience in this field, on how to train nurses to understand this task?

[Baroness Jolly]

The noble Baroness speaks from a position of much expertise as the chair of the APPG on Parkinson’s. It is really important that people with Parkinson’s disease get the medicines that they need when they need them, whether they are being cared for in their home, in a care home or in hospital. The NHS is working to improve services for people with Parkinson’s disease. This includes ensuring that staff are properly trained to support people with Parkinson’s and other neurological conditions.

[Lord Walton of Detchant (CB)]

My Lords, does the Minister agree that the management of drug therapy for patients with parkinsonism may require exceptional skills? It is not a matter of taking tablets two or three times a day. The dosage and its timing must be tailored specifically according to the needs of the individual patient. If the timing of a particular dose is unduly delayed, this may result in what is called the on/off phenomenon, with a sharp return of disabling symptoms. It is therefore crucial that this matter be taken on board. Does the Minister believe that this issue, highlighted by the Question tabled by the noble Baroness, Lady Gale, is being properly handled in the NHS at present?

[Baroness Jolly]

I can tell the noble Lord that NICE guidance suggests that people with Parkinson’s disease should have their medicines given at the appropriate time, not on the ward round with the trolley of regular medication. Where it is absolutely appropriate and possible, this may mean allowing self-medication.

[Baroness Manzoor (LD)]

My Lords, medication reconciliation is very important because it is a health and safety issue. Between 2003 and 2004, the National Patient Safety Agency declared that over 7,000 patients had been affected by an error with their medication. What are the Government doing to work closely with hospital pharmacies so that electronic records are shared between GPs and hospitals?

[Baroness Jolly]

NICE, the NPSA and the Royal Pharmaceutical Society have all identified the key role of pharmacists in medicines reconciliation. I am pleased to say that the majority of hospitals now have pharmacists on admission wards and doing daily ward rounds to ensure patients’ medicines are reconciled promptly. On the data point, I understand that NHS England is exploring the possibility of developing a business case for pharmacists to have access to the electronic summary care record. However, any work on this will need to be sequenced into the development timetable along with other priorities.

[Lord Patel (CB)]

When I was chairman of the National Patient Safety Agency, it produced the guidance that the noble Baroness mentioned. It identified the failure of reconciliation of medicines in acute admissions as a major patient safety issue. The failure rate in hospitals ranged from 10% reconciliation to 80% reconciliation. Those hospitals that achieved 80% reconciliation did so for one reason: pharmacists were involved. These are acute patients on multiple drugs. There is no other way except that those who know drugs and reconciliation are involved in the reconciliation of medicines on admission.

[Baroness Jolly]

The noble Lord is absolutely right. Pharmacists need to show leadership and expertise and to support all their colleagues to ensure that this happens appropriately.

[Lord Harrison (Lab)]

Will the Minister report on this morning’s report on the use of nanotechnology to suppress the disfiguring tremors experienced by Parkinson’s sufferers? What progress can be made there, and what can the Government do to improve it?

[Baroness Jolly]

The noble Lord has me at a disadvantage because I have not seen the report to which he refers. I am sure that Parkinson’s UK is working with the research community to ensure that this is sorted out.

[Lord Flight (Con)]

My Lords, are the Minister and the NHS aware of the new technologies which can deliver patients’ full medical records to a consultant’s iPad on the spot in a hospital? Is the NHS keenly pursuing those new technologies?

[Baroness Jolly]

Certainly those technologies exist. I have seen some of them in action, and they are really impressive. Local hospitals are responsible for their own IT systems, and some are very much further ahead than others, but I am sure others are aiming to catch up.

[Baroness Wheeler (Lab)]

My Lords, the Minister referred to the guidance on the reconciliation of medicines drawn up by NICE and the National Patient Safety Agency in 2007. However, since the Government abolished the NPSA two years ago and transferred the work to NHS England, information about the agency’s work and how it is being carried out and taken forward is very hard to come by. Will the Minister reassure the House that monitoring, keeping the guidelines under review and updating them to ensure patient safety are priorities for NHS England and the Government?

[Baroness Jolly]

Patient safety is indeed critical. After Mid Staffs and the Francis report, safety, openness and accountability are key, along with the duty of candour. “Sign up to Safety” is to be announced later this week to ensure that efforts are reported. That will help local hospitals and care homes understand where mistakes are being made and make patients feel more comfortable by owning up to problems.

Climate Change: Extreme Weather

Wednesday 9th April 2014 Lords Chamber

Question

11:23

Asked by

[Lord Judd]

To ask Her Majesty’s Government what recent assessment they have made of the effects of climate change on the frequency of extreme weather events in the United Kingdom; and what action they propose to take as a result.

[The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Baroness Verma) (Con)]

My Lords, summer heat waves and heavy rainfall events are expected to become more frequent in future. The Government are taking action through the national adaptation plan to develop UK climate resilience, through the Climate Change Act 2008 and the Energy Act 2013 to reduce domestic greenhouse gas emissions by 80% by 2050, and through international negotiations to mitigate climate change by reducing global emissions.

[Lord Judd (Lab)]

While I thank the Minister for those observations about resilience, does she agree that the estimate is that over the next 20 years a further 250,000 homes will be at risk and that the cost of the damage is likely to be in excess of £3 billion? Can she assure us that the Government are galvanising action without delay and with all due priority to ensure that the programme is sufficient for the resilience necessary? Furthermore, does she agree that because of the threats within the United Kingdom coupled with the threats across the world—disease, hunger, migration and acute instability—there can be no further delay in galvanising the international community into making this absolutely central to all political activity?

[Baroness Verma]

The noble Lord is of course right. My right honourable friend the Minister Greg Barker is currently in New York, ensuring that negotiations at an international level are very much focused on going forward for 2015 and on the sort of commitments that we want from the international community. Closer to home, the noble Lord is of course aware that we have invested over the course of this Parliament over £3 billion in trying to respond to issues such as floods. We are now protecting 20,000 more houses over the 165,000 houses that were already protected through the measures that we have taken.

[Lord Howell of Guildford (Con)]

My Lords, what my noble friend says about adaptation is welcome. Would she not agree that now may be the time to consider switching our colossal expenditure on attempted mitigation to adaptation to what is widely believed by many experts to be coming in the way of more extreme weather, in line with the recommendation of the Intergovernmental Panel on Climate Change’s working group? Would the Minister accept that our current mitigation efforts seem to be producing not a vast improvement in carbon emissions but, in fact, an increase in our carbon footprint, more burning of coal, increased fuel poverty, and the driving away of investment from this country to where power is cheaper, raising the prospect of blackouts and general environmental damage? Is it not becoming obvious that some change of direction in our climate and energy policy is overdue if we are to achieve our green goals?

[Baroness Verma]

My noble friend raises a range of very important issues. Of course, climate is measured in average conditions over the long term, but I agree with my noble friend that it is about both adaptation and mitigation. We cannot have one or the other; we have to have both. It is important that, going forward, we encourage not only ourselves but the international community and our partners to respond to the serious issues of increased carbon emissions.

[Baroness Worthington (Lab)]

My Lords, it is absolutely clear that the evidence is now showing that climate change is manmade and that we must act. Would the noble Baroness agree with me that, on discovering a flood in a bathroom, you would not make your priority to turn your house into a swimming pool? You would turn the tap off. That is precisely what we need to do. It is regrettable that we have some prominent Members of the Benches opposite who do not seem to accept this logic. I hope that the noble Baroness will continue her spirited and consistent defence of action on climate change.

[Baroness Verma]

My Lords, we have been consistent on this side of the House that we need to address mitigation and adaptation.

[Lord Teverson (LD)]

My Lords, the Minister has mentioned mitigation several times. So far as mitigation and the United Kingdom are concerned, is it not true that one of the most important things—and one of the most important pieces of legislation undertaken in recent years—is this Government’s Energy Act, which the Minister guided and pushed through this House? Is that not an example of how the Government have made sure that mitigation and the future problems of flooding and climate change are being tackled directly by the Government?

[Baroness Verma]

I am extremely grateful for my noble friend’s intervention and I agree with every word that he has said.

[Lord Lawson of Blaby (Con)]

My Lords, is it not clear that my noble friend the Minister is completely mistaken in saying that it is not a question of mitigation or adaptation but both? There are competing claims on resources, and we have to decide which is our priority. Is it to decide single-handedly to decarbonise the world and thus, to no useful purpose, push up British energy prices, make fuel more expensive for British homes and litter the countryside with wind farms and solar panels? Is it not better instead to devote our resources to increasing our resilience to extreme weather events, whether or not the frequency of such events is marginally increased by global warming?

[Baroness Verma]

As always, I am extremely grateful to my noble friend for his intervention. However, I am also grateful to him for allowing me to say that the UK has among the cheapest energy prices in Europe. I think my noble friends will agree that this is about measures that address the issues of today, but which also look forward to ensuring that we have a much better future.

[Viscount Simon (Lab)]

My Lords, the noble Lord, Lord Judd, mentioned food in his supplementary question. In a programme some months ago on the BBC, it was stated that this country has the largest production and consumption of baked beans in the world. Can the noble Baroness say whether this affects the calculation of global warming by the Government as a result of the smelly emission resulting therefrom?

[Baroness Verma]

The noble Viscount’s question is so different. He raises a very important point, which is that we need to moderate our behaviour.

Housing: Discretionary Housing Payment

Wednesday 9th April 2014 Lords Chamber

Question

11:30

Asked by

[Lord McAvoy]

To ask Her Majesty’s Government what assessment they have made of the level of discretionary housing payment available to local authorities.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud) (Con)]

My Lords, the department has asked local authorities to provide details regarding their use of discretionary housing payments twice yearly. Details of how local authorities are using discretionary housing payments in the first half of the year were published on 20 December. Despite some people’s predictions, the vast majority of local authorities were managing within their budgets. In 2014-15, local authorities will receive a share of £165 million, which will ensure that they can offer ongoing support where appropriate.

[Lord McAvoy (Lab)]

My Lords, despite assurances from the Minister, 47 councils spent 90% of their DHP budget by February. A third of the councils reported that a third of the applications were refused. Can the Minister tell the House whether he is aware of how many evictions there have been due to bedroom tax arrears? Does he know? Does he care?

[Lord Freud]

My Lords, the noble Lord used those figures as if they were his; I am sure that he would want to attribute them to another group called False Economy. They show that 85% of councils surveyed had spent less than 90% of their money with one month to go. However, in that particular report, which found that 11 councils had overspent, there were a lot of mistakes. The figures for four of them—Swindon, Haringey, Leeds and Middlesbrough—were simply wrong.

[Lord Best (CB)]

My Lords, has the Minister had a chance to see the Joseph Rowntree Foundation report released today, which provides a fairly definitive analysis of what has been going on with the so-called bedroom tax over the past six months? If he has, did he note that—sadly, from one perspective—savings were about £115 million less than had been hoped for during the course of this year? About 6% of people have moved home, but another 22% have been trying to move home but have not been able to downsize, because there is not accommodation for them. Although the Rowntree report from Professor Wilcox predicts that over £330 million will be saved this year, sadly, that is at a pretty great cost to both tenants and landlords.

[Lord Freud]

The savings that we are looking at—which are running on the Budget scoring at £490 million—are both observable and unobservable; in other words, from people moving or from people taking up jobs and coming off benefits. There are various figures around. The BBC last week talked of 6% of people moving in 11 months; the JRF report, which the noble Lord has just cited, talked about 6% in six months; a report a couple of months ago from Harry Phibbs, doing a similar job, found that 11% had come off benefits because they had gone into work. We will have proper returns on discretionary housing payments in May, and are working on getting a proper report on all of this.

[Baroness Taylor of Bolton (Lab)]

Will the Minister answer the question posed by my noble friend about the number of evictions? Does he know the number, and does he care?

[Lord Freud]

My Lords, I am not sure of the exact number of evictions, but I do not think that there are very many at all, if any. Clearly it is a matter of great concern. I can let the noble Baroness know that the data from the Homes and Communities Agency, which are based on the 266 largest housing associations with more than 1,000 homes, show that the average arrears in the final quarter of last year—the third quarter of the financial year—fell to 3.9% from 4.1% in the previous quarter and that rent collection rates for the year stood at 99%.

[Lord Flight (Con)]

The Minister will be aware that in central London and, in particular, the borough of Westminster—and I declare an interest as my wife is a councillor—there have been cases where very substantial housing benefit amounts have had to be paid particularly to house those categories that the local authority is obliged to house. Is there any system or intent to limit the amount of housing benefit that can be paid on an individual property?

[Lord Freud]

My Lords, my noble friend draws attention to the point that we have introduced a cap on the amount of housing benefit to stop the very large amounts that were paid on local housing allowance.

[Baroness Sherlock (Lab)]

My Lords, 500,000 people are affected by the bedroom tax, most of them disabled. If the Minister wants some figures, two-thirds of tenants hit by the bedroom tax are currently in arrears and, of those, 40% have been issued with a notice seeking possession. This is a serious crisis, and I think that the Minister should acquaint himself with all the figures, including those on evictions.

The House knows that a Labour Government would abolish the bedroom tax. The Minister told the House on 12 December that,

“the interim review is due to be published in the spring of 2014. I will be most pleased to discuss the findings of that review with Members of the House, who I suspect will be keen to have that dialogue”.—[Official Report, 12/12/13; col. 907.]

I am very keen to have the dialogue. When does it start?

[Lord Freud]

The noble Baroness need not persuade me about the savings—she needs to persuade the OBR, which has scored down in the Budget £490 million. The noble Baroness talked about the fact that a Labour Government would abolish the spare room subsidy. We will produce an interim report later this year, as I said, and we will bring forward next year the full report on what has been happening with the bedroom tax, as you would call it.

Hereditary Peers By-Election

Wednesday 9th April 2014 Lords Chamber

Announcement

11:38

The Clerk of the Parliaments announced the result of the by-election to elect a Cross-Bench hereditary Peer in the place of Lord Moran in accordance with Standing Order 10.

Twenty-seven Lords completed valid ballot papers. A paper setting out the complete results is being made available in the Printed Paper Office. That paper gives the number of votes cast for each candidate. The successful candidate was Lord Cromwell.

Durham, Gateshead, Newcastle Upon Tyne, North Tyneside, Northumberland, South Tyneside and Sunderland Combined Authority Order 2014

Wednesday 9th April 2014 Lords Chamber

Motion to Approve

Moved by

[Baroness Stowell of Beeston]

11:38

That the draft order laid before the House on 13 March be approved.

Relevant document: 24th Report from the Joint Committee on Statutory Instruments, considered in Grand Committee on 7 April.

Motion agreed.

County Court Remedies Regulations 2014

Wednesday 9th April 2014 Lords Chamber

Motion to Approve

11:38

Moved by

[Lord Faulks]

That the draft regulations laid before the House on 13 March be approved.

Relevant document: 24th Report from the Joint Committee on Statutory Instruments, considered in Grand Committee on 7 April.

Motion agreed.

Draft Public Bodies (Abolition of the Committee on Agricultural Valuation) Order 2014

Wednesday 9th April 2014 Lords Chamber

Motion to Approve

11:39

Moved by

[Lord De Mauley]

That the draft order laid before the House on 6 February be approved.

Relevant documents: 34th Report from the Secondary Legislation Scrutiny Committee, 22nd Report from the Joint Committee on Statutory Instruments, considered in Grand Committee on 7 April.

Motion agreed.

Higher Education

Wednesday 9th April 2014 Lords Chamber

Motion to Take Note

11:39

Moved by

[Lord Ahmad of Wimbledon]

That this House takes note of higher education in the United Kingdom.

[Lord Ahmad of Wimbledon (Con)]

My Lords, more than half a century ago, a former Member of this House, Lord Robbins, published his seminal report on higher education. He and his colleagues, including the noble Lords, Lord Layard and Lord Moser, believed that going to university was inherently worth while. This belief remains true today, whether you study particle physics, history or nursing. Higher education is truly transformational.

Our current demographic pressures are less immediate than those facing Lord Robbins and his team in the 1960s, but the forces driving increased demand for higher education have not diminished. They have been at work for the past 50 years and they will continue. We all recognise that there is a huge demand for learning from individuals and, indeed, from employers who continue to demand graduate-level skills.

Governments across the world want to increase their number of students in higher education. No country says, “There are too many students”. Everywhere in the world, in developing and developed countries alike, they want more people to have a higher education. International competition is played out at a higher skills level, and we cannot fall behind.

Our higher education system is renowned throughout the world. We regularly feature highly in the range of world university rankings, often coming just behind the United States as second in the world and, because of our impressive international reputation, our higher education system is a significant international export. However, while the UK has been cautiously increasing its student numbers in the past decade, other developed countries have been expanding at a much faster rate. Participation in tertiary education among young people up to the age of 20 increased by 14% in the UK between 2005 and 2011. However, it increased by 51% in Denmark, 35% in Germany, 29% in Austria, and 23% in the Netherlands, to name just a handful of the countries that have expanded their student numbers faster than we have.

When Lord Robbins reported in 1963, there were fewer than 200,000 British students in higher education. We now have 1.2 million British undergraduates. His view was that,

“courses of higher education should be available for all those who are qualified by ability and attainment to pursue them and who wish to do so”.

That principle is just as important today as it was then.

However, in 2009, when the noble Lord, Lord Browne, was commissioned to undertake his independent review on higher education funding and student finance, all political persuasions recognised that to continue to fund a world-class higher education sector during a time of significant economic downturn we would need to rebalance the costs of higher education between student and state.

The Government’s reforms to higher education were based on achieving a well funded sector which had a reliable stream of income to enable it to compete internationally and to drive up the quality of teaching. We have done just that. Indeed, the OECD said recently that we are,

“the first European country that established a sustainable approach to HE funding”.

By increasing the tuition fee cap but, importantly, subsidising tuition fees, students have a significant stake in their higher education. They are becoming more discerning consumers of their education, valuing their experience and demanding more quality learning.

Better information is central to the Government’s reforms. The key information set gives prospective students a range of data that they need to make meaningful comparisons on costs, courses and employability. The Government have plans to work with universities to extend it to make it even more useful and powerful, so we have made more information than ever before available to students and their parents while at the same time preserving the independence and autonomy of institutions. That is, indeed, a key feature of the landscape—government does not intervene in what is studied or how it is taught. However, good-quality teaching and an improved student experience are central to the reforms. Bold vice-chancellors—indeed, some are in your Lordships’ House today—are already changing the incentives to focus on good teaching within their institutions. Above all, our reforms have put students back at the heart of the system, where they belong.

The good news is that, since our reforms, young people have not, as some have suggested, been put off applying to higher education institutions. The Government sent recent graduates into schools and colleges to explain how the new finance system works, and applications for higher education in 2014 have returned to pre-2012 levels. Many popular universities have been able to grow the number of places they offer to students. Data published by UCAS for entry in the 2014 cycle from applications up to the January main scheme deadline show that the application rate for English 18 year-olds has increased to the highest ever level, at 34.8%. This figure is even more impressive when seen in the context of the continued fall in the 18 year-old population in our country.

The rise in applications shows that young people understand that they do not have to pay upfront to go to university. They recognise that paying back as graduates through PAYE once they earn £21,000 or more is nothing like leaving university with a credit card debt. This matters. All the evidence shows that going to university is a truly life-changing experience, and it would have been a tragedy if young people had given up the dream of getting a higher education. Higher education truly empowers.

Application rates for those from disadvantaged backgrounds have continued to rise to a record level of 20.7%. The naysayers who said that an increase in tuition fees would deter disadvantaged students cannot argue with the facts before us. The trends are upwards and, in addition, there is a welcome rise in applications from mature students—an increase of 9% compared with the same point last year for the 35-and-over age group. Students and their families have come to understand that a degree remains one of the best routes to a good job and a rewarding career.

Perhaps I may offer a personal reflection for a moment as the son of a migrant who arrived in this country with only £5 to his name. One thing instilled in us as we were growing up was the value and empowering elements of education. No matter what education you have received, wherever you go in the world it is your personal asset. I personally realise the struggles that many make to ensure that they, and in turn their families, have opportunities for education.

Looking at the current figures, 87% of graduates are in now in employment as against 66% of non-graduates. However, we should not suggest that graduation guarantees a job. I remember in the early 1990s applying for my first job, and my experience is something that I have shared with others. I am not ashamed to admit that I received 63 rejections. However, I kept going and got a job. That showed that, despite the odds, perseverance is important. Apart from educational skills, that is an attribute that our universities up and down the country instil in students.

Increased supply appears to have been matched by continuing demand for graduate skills, so the graduate premium has broadly remained constant. It has regularly been estimated at well over £100,000 of extra lifetime earnings after tax. The latest independent research shows that male students with a degree can expect to boost their lifetime earnings by £165,000, and for female students it is an even more striking £250,000.

Of course, the financial returns are not just personal. As my right honourable friend the Chancellor has made clear:

“Access to higher education is a basic tenet of economic success in the global race”.

It drives long-term growth and boosts productivity. Graduates fuel innovation. Research conducted by the National Institute of Economic and Social Research shows that around 20% of UK economic growth between 1982 and 2005 came as a direct result of increased graduate skills. A 1% increase in the share of the workforce with a university degree raises long-run productivity by between 0.2% and 0.5%. This suggests that at least one-third of the increase in UK labour productivity between 1994 and 2005 can be attributed to the rising number of people with a university degree.

I turn now briefly to the issue of student numbers and the related cap. This is the evidence base against which the Chancellor made his historic commitment in the Autumn Statement to expand student numbers. As noble Lords will recall, he announced that, in 2014-15 the Government would increase the number of places by 30,000, so that popular institutions could expand and grow further, and that by 2015-16 the Government would remove number controls for publicly funded universities.

[Lord Purvis of Tweed (LD)]

I am most grateful to my noble friend for giving way. I am listening carefully to the Minister’s speech and am most impressed by it, but this is a debate about higher education in the United Kingdom; it is not about higher education in England and Wales. As someone who is resident in Scotland, and as a legislator in the Scottish Parliament who voted for a different structure for fees for students and for a different funding model, I wonder whether the Minister will be addressing some of the benefits for the whole of the United Kingdom of a distinct approach to higher education in parts of the United Kingdom.

[Lord Ahmad of Wimbledon]

I thank my noble friend for that intervention but as he is aware, that is a devolved matter and one for the Scottish Government. While I have been focusing on England and Wales, when we look at education overall, we talk to the Scottish Government in terms of the overall UK plc offering. I hope that, at the end of the year, we will have similar unified discussions on promoting the UK. I am sure that my noble friend agrees with my sentiments on that.

Turning to universities and removing the cap, as I was saying, universities can accept many more of the qualified people turned away each year. Only this morning, it was brought to my attention by my noble friend Lord Popat, who is sitting next to me on the Bench, that a student who fulfilled the criteria and had clearly qualified on all fronts, was unable to get a place because of the cap on numbers in a particular institution. We need to look at that seriously. We can afford to do this because our reforms have made a systematic change to the funding model. Our reforms rebalance support so that the contribution from graduates increases. However, the taxpayer still subsidises the overall cost of degrees by 50%. We think that it is fair for graduates to pay because there are such definitive private gains. The planned expansion brings new money to educate these students. The Treasury has provided £5.5 billion of student loan outlay as well as additional resource funding over the next five years. In tough times we are protecting science. We have ring-fenced our £4.7 billion annual science budget to give researchers the security they need to plan for the long term, and we have injected major new long-term investment into science capital so that our researchers remain at the cutting edge.

There is extra funding of £185 million over four years for teaching expensive subjects such as science, technology and engineering. This extra spending complements a recent £200 million investment in STEM teaching capital. Matched by equal investment from institutions, this will invest some £400 million in the creation and upgrading of teaching facilities. It will ensure that students receive high-quality teaching that fully equips them for the economy of the future. It will sustain and support an increase in the number of good-quality higher education STEM student places.

Our reforms have meant that we have been able to increase the cash going to universities, while avoiding upfront fees for students and managing the costs to the taxpayer. Our calculations show that, in the wake of our reforms, total overall university income in England—I apologise to my noble friend—from all sources has gone up considerably, from just under £23 billion in 2010-11 to nearly £24.3 billion in 2012-13. The sector is in good financial health. This all ties in with the picture we have from the Higher Education Statistics Agency’s latest higher education business community interaction survey. It is a picture of universities bringing in big revenue by working flexibly with business and the outside world. In 2012-13, they earned £1.2 billion from business research contracts, which is up on the year before.

However, noble Lords will realise that relationships now stretch well beyond this. I am sure that many noble Lords are part of this. Universities earned another £1.5 billion from a wide range of services, from consultancy and CPD courses to regeneration programmes and the use of equipment and facilities. Universities have become a major source of exciting new companies. In 2012-13, 150 new spin-out companies were set up to exploit research ideas born in UK higher education institutions. On top of that, more than 3,500 new start-up companies were established by staff and recent graduates. In total, the survey found that UK universities earned an impressive £3.6 billion in 2012-13 through business and community activities.

I look forward to hearing from all noble Lords who are contributing to this debate. Any new funding system drives a change in the behaviour of both students and institutions and, of course, we will need to monitor the overall affordability of the system. If necessary, we will take action to ensure that it remains sustainable in the long term. We are seeing a historic shift. We cannot predict precisely how our reforms will be viewed three decades from now but the reforms are intended to make our world-class system even stronger. This Government want to see more investment, greater diversity, less centralisation and a sector even more accountable to students and the taxpayer. We are confident that the difficult financial decisions we have had to make and continue to make are the right ones to ensure that we have a sustainable long-term future for higher education in our country. I beg to move.

11:56

[Baroness Morris of Yardley (Lab)]

My Lords, I thank the Minister for bringing this debate to the House. There is a great deal of expertise across the Chamber and, given the breadth of the title of the debate, I am sure that we will explore a wide range of issues.

I start on a conciliatory note by joining the Minister in acknowledging the importance of this sector. Wherever you look in life, at whichever quarter of our society—whether it is our industry or competitiveness or whatever —universities play an important role. Certainly, as we become a greater globalised economy and its success depends on research and innovation, universities will have a greater role in what we do, not a lesser role.

We should take this opportunity to recognise some considerable successes. Sometimes we are not good at repeating what our successes are and I want to do that. In any league table, we regularly have a small number of universities in the international top 10. We should be very proud of that and the fact that we punch above our weight. We have excellent research. In terms of the proportion of publications compared to the size of the nation and the amount of our investment, we punch above our weight. Higher education gives us a strong export industry, with £10.7 billion of export earnings. Many of our international partnerships have been built on personal relationships which started when people from overseas came here to study. For many of us who are of that first generation of socially mobile people, we owe that to higher education.

There is a good news story to be told about higher education and the Minister endeavoured to tell it, but it is not quite as rosy as he would have us believe. I was waiting for the next 15 minutes of his speech, when he could have addressed some of the real problems affecting the higher education sector at the moment. There are considerable challenges and, although our research is good, our spending on research has dropped. It is now at a lower percentage than other OECD nations. The number of part-time students has fallen by more than 30% and, whatever the increase in the number of people going into higher education, we all know that social class plays too high a part in access to and attendance at university. As we have increased the numbers of people going to university, we have never narrowed the gap between the percentages of children from higher and lower socioeconomic backgrounds who go to university.

We also pay too little attention to the difference that is fast emerging between the percentage of males and the percentage of females, particularly school leavers, who attend higher education. Some 74% of males do not go into higher education, which is quite a frightening figure. The number of males applying for higher education is now lower than the number of women who attend. That is another characteristic which reflects the fact that we have not yet solved the problems of access.

What we did not hear about from the Minister, of course, is the fact that the new student funding system could actually end up being more expensive than the system it replaced. The only reason I draw attention to this is because universities are so important that any decline or structural difficulties need to be addressed, so I regret the fact that the Minister did not refer to those in his speech.

However, I want to address a completely different point. If we were having a debate about schools, we would be talking about how to create a diverse system. The word “diversity” has been at the top of the education agenda of both parties for two or three decades. We have had and still have a diverse system in higher education in many ways, but we seek to hide it, which is almost the opposite of what happens in schools. Let us reflect on the situation two or three decades ago before higher education was brought together into one structure. Its diverse missions were evident in its titles. We had the polytechnics, the institutes of technology, the colleges of education which had replaced the teacher training colleges, and we had very focused colleges of further education.

Without wanting to feel that I am getting really old by thinking that all the glory is in the past, there is a part of me that yearns for what was the situation when I was the head of the sixth form at an inner-city comprehensive school. For those students who wanted to take a vocational route into a vocational profession, the path was very clear, and it went something like this. They would go to college to do a BTEC, then on to a polytechnic to do an HND, and then they would convert it into a degree. There was a clarity of mission and of route that has somehow become muddied and hidden in the situation we have now. Although I do not want to argue the case for going back, and although I appreciate the benefits which the unified system has brought, I worry that what is happening in actual fact is that we will never get away from groupings. We have groupings within the unified higher education system today, but they do not give clarity about mission or send a message about a clear route through. What we have is self-styled and self-described university groupings which have resegmented the higher education system without giving it the clarity it used to have.

Let us look at my own career since I became a Member of your Lordships’ House. For three years I worked at the University of Sunderland. At the moment I am chair of the council at Goldsmiths and I am employed by the University of York; in saying this I have declared my interests as set out in the register. Over the years I have worked at a post-1992 university, I chair the council at what was a 1994 university—I know that the 1994 group has been abolished, but I am sure that something will take its place—and I work at a Russell group university. Those are the groupings that have replaced the titles we used to have. When I look at the three universities with which I have connections, I can see that every one of them excels at part of its mission. Sunderland University does the best of any institution I know of at civic leadership. Sunderland city would not have made the progress it has as a city in the north-east if it did not have its university with its widening participation, which is taken seriously. That is helping social mobility in one of the most deprived areas of the country. Goldsmiths regularly produces some of our nation’s finest artists and musicians and it is a university with an international record. York has an excellent reputation for research and regularly appears in the top 10 or 15 of any university league table. But although all three universities have an area of excellence, the perception of the groupings they are placed in defines them as institutions, and that risks hiding their strengths.

Whatever is the strength of a university or however much it might treasure that strength, it is the performance tables which actually define them. Two of the universities I have been connected with are penalised for their strengths. Sunderland University excels at widening participation but is penalised because one of the big ratings in the university league tables is the entry qualifications of the students it admits. Because it takes risks with children from poor backgrounds and second-time learners, and puts its reputation on the line, it is penalised in the rankings, despite its student satisfaction being well above 4. As for Goldsmiths, because it excels in art and music but does not do any STEM subjects, it is penalised by losing all its teaching grant.

The issue I want to raise today is that the shorthand for excellence has become self-defined by the sector and risks hiding much of the excellence that we actually have. I am really worried that we are in a situation now where not getting into what is defined as a top university is seen as a failure and those universities that are not considered a top university are not seen as contributing to the nation in the way that they have. However, in truth, the higher education system is more complex than that. Only 12 universities have more than half of their courses in the top 10. Let us just think about that: if you go to the University of Kent to study law, to Aberystwyth to study librarianship and information technology, to Manchester Metropolitan to study nursing, to Aston in Birmingham to study pharmacy or to the University of the West of England to study engineering, you have made the decision to go to a top 10 university for your course. However, not one of those universities has an overall ranking within the top 25, and some of them have an overall ranking outside the top 70. That matters, not because I want to pretend all universities are as good as each other or are all the same but because I want the opposite. The challenge I am putting out is that there should be greater rigour in defining excellence and it should not be just at university level.

The truth is that the self-styled university groupings have become shorthand for judging the best graduates, and it is that link that matters. Although the information is there on the website about strength in courses, employers and the wider world look to people who have gone to what is considered to be a top university and make the assumption that they are a top graduate. However, in many cases, that will not be the case. Perhaps the Minister will reflect on that and come back at the end of the debate to say how we can ensure that we have a higher education system that recognises, funds and assesses the hugely diverse nature of our higher education sector and that really does as much as it can to allow the sector’s many strengths to flourish and grow. Only in that way, and not by narrowing what we mean by a good university, will we be able to make sure that universities continue to play the important role that they have done since they came to our country.

12:08

[Lord Storey (LD)]

My Lords, I am pleased to have this opportunity to debate such an important topic and congratulate my noble friend on securing this debate. I want to talk in the main about how important universities are becoming in developing innovation and in creating and supporting businesses, and how they are using their research capacity to do that. We have seen this accelerate enormously over the past few years, and universities have become an integral and important part of our economic growth.

As a topical example, only yesterday the Mayor of London launched Med City, a scheme aimed at strengthening links between hospitals, universities and businesses in the south-east’s golden triangle. Promising though this sounds—I would say that, wouldn’t I—I suggest we must focus attention on the truly innovative work being done right across the country, including Scotland. I want to highlight some of the work being done in the north-west of England. I need only look to my own city of Liverpool for an example of best practice. In 2006, a not-for-profit company, Liverpool Science Park, was established by Liverpool John Moores University—the original red-brick institution—and the city council. It is a flourishing science and innovation park which is currently home to more than 75 companies, including graduate start-ups, key commercial-facing facilities and a handful of business support companies. Liverpool Science Park has been leading the way in uniting the sector, the graduate talent pool and the local economies. Only last Thursday the local paper, the Liverpool Echo, reported on the increasingly large number of Liverpool city region students starting their own businesses as a result of the Liverpool Science Park.

I would also like to praise the work being done by John Moores’ Centre for Entrepreneurship and UnLtd. Their success story and their ethos must surely be shared as widely as possible across the sector. Indeed, students who cannot find traditional jobs upon graduation are increasingly being encouraged to start up their own businesses. Fortunately, this message is beginning to resonate. A report published last month by the Higher Education Statistics Agency, the Higher Education —Business and Community Interaction Survey, highlighted how more than 3,500 businesses were started by recent graduates last year, up from 2,357 five years ago. It is a result that we should all be proud of.

It is painfully clear how crucial graduate enterprise is to the success of the UK’s core cities and the wider economy. I hope that the Minister bears this in mind in his response. Let us not forget how daunting a prospect it is to set up and run a new business venture. We should also remember how some of the world’s best innovations and opportunities came from literally throwing ideas around with colleagues and collaborators —think Facebook, think Apple. This is where universities come in, bringing businesses together with other like-minded entrepreneurs, providing support and assistance, and helping to broker new relationships. Many universities host local economic growth hubs or business incubators to help small organisations and start-ups get off the ground. The result of this can be more jobs, more innovation and, crucially, more growth.

Another example outside the north-west is the Brighton Fuse project, which brings together academics and entrepreneurs in the arts, humanities, design and digital sectors. They map and measure how they may best support one another. Similar schemes are starting to take shape right across the UK, and I hope the Minister will throw his support behind such projects.

However, the benefits that university research can offer the commercial sector have not always been as strong as they should be. The most recent comparative data on the performance of research institutions in Australia, Canada, the USA and the UK show that from a relatively weak position, the UK now leads on many indicators of commercialisation activity. In November 2012, Her Majesty’s Government announced a £60 million investment in UK universities to assist our most pioneering scientists and engineers to create successful businesses via research, helping to foster entrepreneurship and developing industrial collaboration.

The University of Bristol offers various schemes, such as the Proof of Principle awards, to encourage students and researchers to develop the commercial potential of research, explore markets, develop prototypes and take the first steps in generating impact businesses. Another of Bristol’s schemes is the Engagement Award, where researchers can receive up to £10,000 for developing and piloting new activities and approaches, establishing partnerships outside academia and providing training, skills and development.

This demonstrates that researchers and businesses can establish mutually beneficial relationships. The unique aspect of higher education is that the level of innovation can be constantly maintained as young people pursuing research vocations also fuel further research. I suggest that we should capitalise on this and create new links between university researchers and businesses. This would construct a sustainable method of creating more jobs, new opportunities and increased growth—a “win-win-win”, as they say.

I turn to another matter in our universities. While there is rightly an emphasis on increasing the proportion of women sitting on FTSE 100 company boards, there is sadly little being done by way of increasing the number of women involved in university leadership. Shamefully, only 14% of university vice-chancellors are women, whereas in business the proportion has climbed to 21% due to increased political pressure as well as pressure from businesses themselves; for example, via the work of the 30% Club. We are fortunate to have so many excellent women role models in this House, where we have a more equal balance of women on boards, positively influencing the culture of companies’ decision-making. Surely the same should apply to our universities and higher education institutions. Women need to feel confident, in that they have earned their position, that their views will be considered as equal to those of a man. They are not around to “make up the numbers”. An environment needs to be fostered where a macho style of leadership is eliminated and men and women are equally represented and valued. On how we go about this in the academic sector, in our universities, in the higher education sector, I would be interested to hear from the Minister or other noble Lords.

I recently found out via a Written Answer from my noble friend the Minister that the numbers in higher education have increased dramatically in the past 10 years. Since 2003, for example, the number of doctorates has increased by nearly 50%, demonstrating a desire among young people to pursue research. The supply is there—we have an increasingly large pool of highly talented and enthusiastic graduates ready to work and ready to innovate. It is blindingly obvious that universities and colleges offering higher education courses are making an increasingly significant contribution to our recovering economy, both in terms of GDP contribution and jobs. The sector attracts significant investment from overseas —we must always remember that.

While it is right that we should think again about the target of 50% of young people attending university, focusing perhaps on a balance of college education, vocational training and apprenticeships, we cannot ignore the enormous benefits that a successful higher education sector provides, as we heard from my noble friend the Minister in his own personal experiences.

Our higher education sector also produces significant, non-economic benefits. They literally change lives by the opportunities and chances that they provide, especially for students from the lowest achieving schools and less well off backgrounds. I pay tribute to all those who work in this sector for their innovative work and for being a tremendous force for good right across the country, including Scotland.

12:17

[Lord Bilimoria (CB)]

My Lords, last Friday, Professor Venkatraman Ramakrishnan—known as “Venki”—the winner of the Nobel Prize in chemistry 2009, joint chair of the structural studies centre at the University of Cambridge and a fellow of Trinity College, received an award at the Asian Awards at the Grosvenor House Hotel for outstanding achievement in science and technology. In his acceptance speech, he said:

“I was very touched by the Prime Minister who gave us such a warm welcome address in a video message earlier this evening but I have to say, over the past 10 years, the level of xenophobia and anti- immigration rhetoric has been ramming up—visa laws are increasingly restrictive, so that’s hard for us senior scientists to attract the best talent! They do not see necessarily that actually Britain is really a wonderful place. I get offers regularly to go back to the U.S and I always decline, because I love working here. That perception has to be changed and can only come”,

from the Government changing their policies on immigration. There I end the quote from one of the world’s great scientists.

Foreign academics make up 30% of all the academics at our top universities, including Oxford and Cambridge, and foreign students are some of our most talented undergraduates and postgraduates. If people such as Professor Ramakrishnan are saying things like this, who knows how many future Nobel Prize winners are choosing not to take up a position at our universities?

I am an alumnus through executive education of the Harvard Business School. In January, I was present for a speech that the president of Harvard University, Professor Drew Gilpin Faust, gave to her university’s London alumni at the Guildhall. Professor Faust made it very clear that Harvard would make the best effort to attract the best students and academics from around the world. She said:

“The future we face together, the future we shape, will depend perhaps most of all on who we are and who we will be. Attracting and supporting the most promising students and faculty are crucial to all we aspire to do. When we think of what Harvard has meant to the world, we inevitably find ourselves focusing on people: the extraordinary individuals to define our identity and embody our aims”.

There you have it: the president of Harvard making it absolutely clear that her university will do whatever it takes to get the best academics and the best students, regardless of their social or economic background or their ability to pay. In July 2010, Nitin Nohria became the 10th dean of Harvard Business School. Nitin Nohria is an Indian who studied at the Indian Institute of Technology before going to the United States to study at MIT. In July, a fellow Indian academic, Rakesh Khurana, will take over as the new dean of Harvard College.

That is what we are competing against, and that is an example from just one university abroad. How easy it would be for us to lose our stars, such as Professor Venkatraman Ramakrishnan, when the likes of Harvard have an ethos such as that. The competition is not coming just from the United States. Canada is on an aggressive recruitment drive for international students. Australia and New Zealand are both attracting thousands of students from India, China, Korea and Japan to study in Sydney, Melbourne and Christchurch. Why are we not following their lead in trying to attract the best and brightest overseas students to our country?

The threat is not just from the Anglosphere. The French Government are moving to simplify the visa application process for international students. The ministry for education in France has just announced that it plans to double the number of Indian students at France’s universities by the end of the decade. Why do not our Government set a target to double the number of international students? Why do not they set a target of any sort to attract more international students, let alone from countries such as India?

The situation is not good. For the first time ever, our total student numbers are down. In a rush to reduce net migration to tens of thousands by the next election, the Government have succeeded in convincing some of the world’s most talented young minds that Britain does not want them. A report last week from the Higher Education Funding Council for England showed that international and EU student numbers decreased by 4,595 in 2012-13, the first such decline since 1985. That followed a survey from the National Union of Students in January showing that 51% of international students found the Government unwelcoming. In 2012-13, meanwhile, the number of Indian postgraduate students at Russell group universities declined by 18%. That is worrying news when the Department for Business said that education exports were worth £15 billion. That is wonderful news, but it makes the position all the more absurd when we are finally seeing signs of economic recovery.

Just today, we have heard that we are the fastest-growing economy in the developed world. If we want that to be sustainable, we need to invest in research and development. We spend a fraction of the OECD average on R&D funding. The Minister says that the Government have preserved their funding for research, but the Times Higher Education Supplement points out that, according to the Office for National Statistics, the UK spent 1.72% of GDP on R&D in 2012, down from 1.77% in 2011. Can the Minister confirm that?

At the moment, that places us in a miserable position in the EU 28 group. We are currently 12th, behind countries such as Slovenia, Estonia and the Czech Republic. Finland spends the highest proportion of its GDP on R&D at 3.55%, but even the EU average is 2.06%, and we are well below that. Investing just an extra 0.5% of GDP in science would make such a huge difference and should be a priority. That would give us the competitive edge for sustainable growth.

The fact is that our great universities—we have many—are succeeding despite, not because of government policy. The changes to student loans will come back to bite us. When the Government announced the changes to the system in 2010, they said that only a small number of universities would charge the new maximum of £9,000, tripled overnight from £3,000, and that the new system would create a more sustainable market-based environment in our universities, which would be better funded than ever. On all those measures, the scheme has failed. Only last month, the Government quietly announced that about 45% of university graduates will not earn enough or will not be able to repay their student loans. If the figure is only slightly out and reaches 48.6%, the Government’s own experts calculate that the Government will lose more money than they gained by increase in fees in England to £9,000 a year. Can the Minister confirm that?

The result of this is clear. Universities are no better off, students are worse off and the Government will end up having to pay even more to fund higher education than they did under the old system. The Government said in 2010 that the changes would allow for a free market of choices between courses and that competitive universities would prosper. There is no free market: almost all the universities are having to charge almost the maximum £9,000 for courses, when previously the Government said that only a minority would. The reason is that when the Government tripled the fees, they reduced the funding to universities and withdrew teaching funding almost entirely. Will the Minister concede that this was a big mistake? Can he tell us how many of the universities are charging near that £9,000 and what proportion of students are paying it? I am excluding the expensive courses, such as medical courses.

As I said in a debate that this House had on the Immigration Bill, the Government’s madcap immigration cap has harmed us. Over the past year, the number of Indian students has fallen by 25%. That is also partly because of the abolition of the two-year post-study work visa. Every time that I talk to foreign students they say, “If only we could have that ability to work for two years”. The current system is not easy when they have hardly any time to find a job. It is too difficult but that two-year post-study work visa really helped them to pay for their expensive education, gain some work experience and continue to build generation-long links with their countries. It did not help to have “Go Home” vans or the £3,000 bond, which were, thankfully, scrapped. These messages are sending out completely the wrong image: that this Government do not want international students. I wholeheartedly agree that the Government need to clamp down on illegal immigration and must continue to do so. However, that does not mean that we should harm the good immigration, particularly in our universities, which are desperately in need of academics and students.

Speaking recently, the chief executive of the Higher Education Funding Council for England, Professor Madeleine Atkins, said:

“International students enrich our universities and colleges—and our society—academically, culturally, and through their contribution to the economy. Supporting high-quality international education is a crucial part of ensuring that the UK continues to engage with, and benefit from, the increasingly interconnected world”.

The higher education sector is one of the jewels in the United Kingdom’s crown, as all of us who work within higher education know. I am privileged to be associated with a number of universities. I sit on three university business school boards: Cambridge, Birmingham and Cranfield. I also have appointments at Cambridge. I know that this tiny country, with less than 1% of the world’s population, has six of the top 20 universities in the world according to the latest QS rankings. There is higher attainment by ethnic minority students than ever before and our universities will continue to dominate the international rankings, but these achievements have not been borne out by government policy, which is lagging behind. The Prime Minister is fond of referring to Britain as being in a global race for growth, trade and investment. Unfortunately, the juxtaposition between the Government’s economic and immigration policies more closely resembles a three-legged race.

I conclude that if we want to have a sustainable, competitive economy, yes, we need better school education and skills but our higher education is a crucial priority and must continue to be so. We must invest more in higher education as a proportion of GDP, from both public and private sources. We need to remove student immigration from the immigration figures. Can the Minister say whether the Government are going to do this? Our competitors do not include figures for student immigration within their immigration figures: the United States does not, nor does Canada or Australia. Can the Government also ensure that the two-year work permit is brought back in, so that students can work after they finish their studies, and that we invest more in R&D as a percentage of GDP than we currently do? Then we will stand a chance of competing in the global race.

12:29

[The Lord Bishop of Winchester]

My Lords, I am grateful to the noble Lord, Lord Ahmad, for giving us the opportunity to debate this topic. The Church of England takes seriously its commitment to higher education. Many Bishops have a close involvement with the universities in their diocese, as visitor or chancellor or by sitting on the university council. Indeed, it would not surprise me if the right reverend Prelate the Bishop of Portsmouth said something about his commitment in his maiden speech later today. I gather that there is also one Bishop who is currently a student.

As spokesperson for the Bishops on higher education I have a particular interest in this area, and I offer to your Lordships one understanding of what higher education is for, and particularly what the Anglican institutions can offer to the sector. It is important to invest in higher education as a public good whose purpose is to build up the common good.

Ten Anglican universities have emerged out of the Church of England investment in higher education over the past two centuries. Alongside these 10 there is another with an ecumenical foundation, Liverpool Hope University, which is where I was yesterday. Together with three other universities that have a Catholic foundation, they make up the Cathedrals Group. The majority of these universities were founded as teacher training colleges in the 19th century before the later rise of the red-brick universities. They were originally established to train teachers required for the many new Church of England schools. These colleges, as vocational institutions, began to develop their own faculties in the university disciplines connected with the subjects that the teachers would teach. With this growth, and with further diversification, many of these colleges became universities in their own right. With their historic foundation and unique ethos, they share with other older universities, and many recently established ones, the questions and challenges facing higher education today. What binds them together is a commitment to higher education as something that is a public good for the common good.

A number of significant factors are highlighted by those who brief in the higher education sector—for example, the economic contribution of universities, non-economic benefits, the expansion of higher education, university funding and international students. However, unless there is clarity about what higher education is for, the debate about its delivery is confused with its purpose. Put simply, at the highest level the value and purpose of higher education is as a public good for the common good. This perspective on higher education can be considered through three perspectives: generating creative graduates for a creative economy, offering formation for a context of social diversity, and an enabling environment for research and teaching.

First, it is clear that higher education is a key element in the wealth creation of our society. However, it is not so clear that universities should be assessed, in an instrumental fashion, in terms of the numbers of wealth creators they generate or how their contributions to an economy are directly attributable. Yet it is good to note that Universities UK has reported that the sector made a contribution of £73 billion to gross national productivity in 2011-12, and that this was a 24% increase on the previous evaluation in 2009. So it would be true to say that the contribution of a university, particularly to the local economy of its region, is an important aspect of what universities are for. The Million+ manifesto has suggested some strategic actions that could be taken to enhance the role of a university in the development of a local economy. Such initiatives would seem to chime well with the Government’s own commitment to developing major cities, and with their contribution to the GDP. One such city in my own diocese, Southampton, has seen a notable rise in its GDP. Not insignificant to that improvement is the role of Southampton University as a force in the region.

However, there is a certain obliquity to this goal of economic productivity. It is through aiming at something else that such a goal can best be achieved. For example, to encourage economic productivity it might be best to aim at creativity. It is creative people who contribute the most to the economy. This is because, as John Howkins has advocated, what we have today is indeed “the creative economy”. Today we need to encourage creativity, to enhance the intellectual freedom in which creativity takes place and to embrace the creative challenges that the market presents. A university can generate an environment to encourage such aptitudes in its students. It can unlock their latent talent, especially for those who have not traditionally accessed higher education. It is in this way that the university can contribute through the creativity of its graduates to the common good of the economy.

Corresponding to the challenge of making a creative economic contribution, with the spread of Anglican universities across the country, in Canterbury, Chester, Chichester, Cumbria, Gloucestershire, Lincoln, Liverpool, London, Lampeter, Plymouth, Winchester and York there is certainly a sense in which they are making a countrywide contribution to local economies. As a public good, these universities are contributing to national life by providing access to higher education for many who would not otherwise be able to develop their latent talent.

There is both a vocational perspective and creativity in the ethos of these universities. This includes what some would call a liberal arts world-view, both religious and secular. I was inspired yesterday by Cornerstone, Liverpool Hope University’s creative campus, in which its ethos of what is a public good and what the common good is for is expressed right in the heart of Everton.

Secondly, today’s societies require the kind of space in which there is the opportunity to have multidisciplinary engagement reflecting the globalisation of civilization. A university today needs to be able to offer a way of handling the multiversity of our pluralist societies and to include in its community those who have, in previous eras, been unable to participate in or access higher education.

Today no one individual, discipline or institution can hope to hold a total view. However, what can be encouraged is a form of intellectual inquiry that enables exchange between disciplines and between cultural perspectives and which therefore models new ways of living together in diversity. The value of higher education, its public good, includes the formation of students in a collegiality based on engaging with others and engaging with different kinds of knowledge through conversation.

The university, especially the university that is networked with others across the globe, is an essential space for enabling the conversation required between disciplines to help us face those global challenges that will diminish the common good: the unfettered power of economic change; the question of climate change and limited resources; and the disturbing forces of cultural differences. Reconciling and resolving differences will require societies that know how to negotiate. However, just when we need greater interaction between nations, and when higher education as a global public good is something many want and will pay for, the UK has made it difficult to study here. Universities are struggling with the limitations the new immigration legislation has placed on international students.

The Cathedrals Group of universities makes a significant contribution to the widening participating agenda. Not all noble Lords will agree with the target that 50% of young people should participate in higher education, but it is striking that we have nearly achieved that, with approximately 48% of 18 to 24 year-olds in each year group accepting a place at university. The Anglican universities have played their part in achieving this target and ensuring that young people from all backgrounds can participate in higher education.

Anybody who has spent time exploring the issues around widening participation will know that they are extremely complex. Nevertheless, many universities have found success can be linked to their commitment to develop the whole person by looking further than A-level grades at the admissions stage and exploring a deeper context that can illuminate the real potential of a candidate. From time to time, this might run contrary to the incentives of league tables, but it is completely in line with an optimistic vision of human potential and with higher education as a public good that is for the common good. However, it is a shocking fact that many students who take loans will graduate owing more than £50,000, with interest rates way beyond most market returns and a repayment scheme that will tax success, disincentivising social mobility.

Thirdly, there is a need for universities to promote a world-view for the civilisation of our societies that sees the intergenerational transfer of knowledge through teaching and inspiring the long-term commitment which academic research requires. This is more than a contribution to the economy or to social cohesion; this is about the development of a public good for the common good of civilisation and the flourishing of humanity. The separation of teaching and research universities will not help spread both the world-view of civilisation and its grounding in values of beauty, goodness and truth. Such a vision is deeply integrated in the Christian vision and mission, which inspired the medieval universities and contributed to the renewal of universities in the Enlightenment. This is not something that can be easily illustrated, but it is about a world-view of inquisitiveness and persistence, open to reality. Some discoveries, or applications of discoveries, require a capacity resourced by a world-view of ongoing exploration of this world and its meaning.

The world-view of the great medieval universities such as Oxford and Cambridge and those of the modern universities such as Berlin and London meant that they were such institutions. Universities such as these require investment for the common good by those who have responsibility for the common good. However, focusing research in just a few universities and in certain kinds of disciplines will undermine the very inquisitiveness and spread of research required. I am delighted that Liverpool Hope University has one of the best research centres on world Christianity. It might be a key resource for understanding today’s renewal of global religion and its impact on our societies.

The budget for HEFCE has been reduced. The implications are grave, especially for vulnerable communities. Funding for research has been ring-fenced, as has the allocation for funding-intensive subjects such as engineering and science. But this leaves the widening participation projects, such as Access to Learning, vulnerable to further cuts. There is need for public investment in universities, otherwise what is currently a public good will again become a private good, affordable to a few.

The Government’s intentions for higher education are a concern. There is a simplicity about lifting the cap on numbers and fees and allowing market forces to have their way, but if we wish to build on improvements in primary and secondary education we need to invest in the public good of higher education. There is a need for framework and a rationale for state support beyond free universities.

There may well be a reduction in higher education in the coming years, but let us not let that happen in a brutal fashion. We need universities who take seriously their public role, not just in contributing to the creative economy and social cohesion of globalised societies, but as institutions that also pursue, with academic rigour, new knowledge based in grounded research and good teaching. The privatisation and marketisation of the university may well solve some issues, but could raise many more problems. It is essential that national Governments remain committed to investing in tertiary education. Universities are essential public institutions: a public good for the common good.

12:42

[Lord Holmes of Richmond (Con)]

My Lords:

“A man who has never gone to school may steal from a freight car; but if he has a university education he may steal the whole railroad”.

Theodore Roosevelt knew of what he spoke. In saying that, he clearly demonstrated the benefit of higher education to the individual and to the entire nation. I thank my noble friend the Minister for initiating this incredibly significant debate.

Twenty years ago this summer, I graduated from the University of Cambridge. I was incredibly fortunate to win a place there. It was an extraordinary experience to be tutored, one to one, by some of the greatest minds in the world. To demonstrate the quality of that tuition, one of my ex-tutors will be speaking later in this debate.

To be part of that community at Cambridge—what an extraordinary opportunity that was. That institution has burned bright for centuries, not just across Britain but across the world, creating and motivating some of the world’s greatest scientists, writers, poets and engineers; a university which has created more Nobel Prize winners than almost anywhere else on the planet. Trinity College alone boasts 32 Nobel Prize winners: that is just one college of one university, part of our extraordinary higher education system.

It is also tremendous from a personal point of view to see that a previous vice-chancellor of Cambridge really pushed forward on sporting excellence alongside academic excellence. The two are not mutually exclusive. This did not limit sport only to rowing, rugby or cricket, and did not enable sportspeople to be only in the camp of rowing or land economy, but sat the two together and demonstrated through flexibility how you could have sporting and academic excellence alongside one another.

I will build on a lot of what the noble Lord, Lord Bilimoria, said about international students. This country should be saying, “We need, want and welcome international students from across the planet”. It is understandable that there was nervousness about them at a time when the economy was not in great shape, but that is of no consequence and is no excuse. Whatever the economic backdrop, we need, want and welcome international students. Of course we should not be naive about fake students, the conjured-up course and the non-existent institution, but those things are no reason to clamp down and shut the door on all that possibility. I do not want to be overly Rumsfeldian, but it is very difficult to say how many non-existent institutions exist. However, we do know how many fine, excellent and value-driven higher education institutions exist across Great Britain and Northern Ireland. They need the input, involvement and participation of international students for economic, social and political reasons in the short, medium and long term.

It was estimated that in 2012, in fees and living costs alone, international students contributed £10.2 billion to this country. If they stay on and work here, that contribution increases by multiples. If they go back to their own countries, what fabulous brand ambassadors for Great Britain they will be. Soft power is so essential, so misunderstood and has been so underdeveloped for so many years. The report by the ad hoc committee of this House clearly demonstrated that soft power is real power. International students can play a key role as ambassadors in that soft power agenda.

We currently gain around 13% of the international student market. That is good—we are in silver medal place behind the States—but there is so much more to be gained. Over the past nine years the figure for the States has dropped around 10%. We should go out there, grasp all the opportunities and say to international students, “The doors to great British institutions are open; come and be part of this. We want the brightest and the best students to study, to strive and to want a great British higher education”.

Employability, which for too many years has often been seen as the preserve of the careers office, underresourced and often undervalued, is now seen as absolutely critical—as significant as the degree award itself. That is not in any sense to be overly reductive; it is not about seeing education as merely learning to labour. It is about enabling an individual, alongside whatever academic course they are on, to gain employability skills, which will not just assist and potentially give that person the edge with their first job but will last throughout their entire career. The study shows that 80% or so of graduates in the UK are in employment six months after graduating. That is a good figure, although it could certainly improve. It is interesting that there is now an indicator which tracks this alongside degree results and other key indicators for our higher education institutions.

To move on to the specific, I will talk about BPP; my involvement with that institution is indicated in the register of interests. It is a university based on the delivery of professional courses in law, accountancy, business, nursing and health. It has developed extraordinarily over the past 15 years, gaining university status and constantly thinking about where the next edge in education is. It focuses on excellence: nine out of 10 of the worldwide prize winners in the CIMA exams studied at BPP. As regards employability, 96% of BPP graduates are in work six months after leaving, which is well ahead of the average figure I quoted some moments ago.

BPP delivers professional education to students who come from more than 50 countries from around the world. To the business point, it is connected with almost every one of the 100 FTSE companies. Business, international students and excellence are all wrapped up in one professional education offer; it is an incredible testament to the focus, drive and determination of its chief executive, Carl Lygo, who has driven this strategy for more than a decade.

In conclusion, higher education is the source of incredible innovation, the generator of global research, creator of jobs, driver of growth, and cornerstone of our soft power—it is nothing short of a gleaming gem right at the centre of our national crown. I salute it, I raise a glass to it, and am unstintingly committed to United Kingdom higher education.

12:50

[Baroness Donaghy (Lab)]

My Lords, it is always a pleasure to follow the noble Lord, Lord Holmes of Richmond, and I thank the noble Lord, Lord Ahmad, for introducing this debate. It is quite right that he talked up the universities. We have a room full of expertise and knowledge, but also a room full of passion about higher education, although we might disagree about certain things, of course.

My contribution is about the importance of universities in teacher education and training. I spent 33 years at the University of London Institute of Education, and recently had the pleasure of attending a meeting at the institute at the invitation of the noble Lord, Lord Nash, to see the exciting developments that are taking place in research and development in teacher education. The noble Baroness, Lady Shephard of Northwold, was also in attendance in her role as chairman of the institute council.

The university connection with teacher education started in 1890, and the McNair report of 1944, exactly 70 years ago, consolidated that connection by establishing area training authorities, whereby colleges of education were attached to a university hub to raise standards and ensure consistent qualities. I am aware that the right reverend Prelate the Bishop of Winchester recently made a speech about teacher education, and I wanted publicly to thank him for that contribution.

Some policy changes that are taking place are damaging the connection with the universities and may lead to some universities opting out of teacher education. Indeed, some already have. I thank James Noble-Rogers from the Universities Council for the Education of Teachers, or UCET, for his excellent briefing on this subject. The teacher education base was sound in 2010; 94% of higher education institutions offering initial teacher training were good or better, according to Ofsted, and 47% were outstanding, compared with 26% of school-based routes. The partnership between universities and schools was strong—in fact, among the most developed in the world. In the most recent survey, conducted in 2013, more than 90% of newly qualified teachers, after having been in post for one and a half terms, rated the quality of training that they had received as being good or very good. The Education Select Committee in 2012, while welcoming moves towards the more school-led approach of this Government, cautioned against any diminution of the role of universities in teacher education.

I am not claiming that everything is perfect. Some schools did not take responsibility for the next generation of teachers or did so half-heartedly, and some initial teacher training providers viewed schools as providing classroom experience without engaging in leadership and the design of programmes. In some cases, there was too much focus on initial teacher training and not enough on continuous professional development, which produces better teachers, increases their confidence and helps to retain them in the profession.

When the Government published their teacher education proposals in 2011, there were many things to welcome, such as raising entry qualifications—although there is no direct correlation between degree classification and someone’s effectiveness as a teacher—a greater focus on partnerships and a stronger school involvement in initial teacher training. This is something that universities and UCET have urged for many years. Schools should have a central role that goes beyond the traditional model under which they—sometimes reluctantly—accept student teachers on placement. The fact that a school needs sufficient resources to carry out this very resource-intensive exercise goes without saying, but I feel that I ought to say it.

This country has led the way in developing partnerships between schools and universities. Universities explicitly and actively supported the Government’s proposals to develop networks of teaching schools which could, if done properly, engage schools more effectively in teacher education, both initially and in continuing professional development, including masters and research and development projects. But then we come to School Direct. When it was launched in 2011, it was described as a scheme under which 500 training places would be allocated directly to schools to help them meet teacher supply needs which could not be met through the existing supply system. At the time, no one suspected—not even the Government, I would like to bet—that it would become the centrepiece of the school-led, market-driven agenda. It could be made to work—and there are some good examples. However, the speed with which this policy is being introduced is causing supply problems and planning headaches and is a threat to the quality of teacher education and training.

There were 900 School Direct places in 2012-13, of which only 50% were filled. This soared to 25% of total places in 2013-14, and to a provisional 37% of places in 2014-15, even though mainstream programmes offered by higher education institutions are better at filling places. The dangers of this too rapid expansion are obvious: it will cause instability in the initial teacher training education infrastructure, leading to unsustainable provision and reduced choice for schools. Bath University and the Open University have already dropped out of initial teacher training: both were rated outstanding.

It is true that 70% of School Direct places are allocated to partnerships involving universities, but this system is by its very nature fragmented and unpredictable. For example, a university might have 10 School Direct places to train English teachers in any one year. However, once a school holding those School Direct places has recruited the teachers it needs, it is not going to recruit any more. A university is unlikely to maintain staffing and resources for training English teachers in the hope that it will be able to pick up different contracts each year from different schools. Good programmes will close, which could cause teacher supply problems. Schools that want to participate in teacher training, but not through School Direct, will have their choice taken from them, while schools which want to be involved with School Direct will have fewer providers with which to work. There is nothing school-led or market-driven about that.

School Direct has led to places not being filled because of the inflexibilities in the new allocation and application system. It is desperately urgent that these inflexibilities are dealt with now before the summer. Universities are turning away highly qualified applicants while School Direct vacancies exist in the same area. Recruitment is 43% below target in physics and 22% below target in mathematics. School Direct also undermines the ability of an integrated teacher education infrastructure to deliver system-wide change, which, of course, all Governments like to do. With an integrated system, significant policy changes can be implemented quickly and effectively. Without commenting on the quality of the policy, an example would be systematic synthetic phonics, which this Government introduced. The Minister for Schools has written to universities and schools to congratulate them on their achievements in this area. Higher education institutions can be a route for getting new policies and new ideas into schools. Training that is entirely school-based risks replication of established orthodoxies and institutional conservatism.

UCET has already suggested quick and easy solutions to some of these problems both to the Minister and to the Select Committee on Education—an appropriate balance between the allocation of core and School Direct places. Following the last allocation, there are parts of the country with no training taking place in particular subjects through either the mainstream or School Direct. This cannot be right. To maximise recruitment, there needs to be virement between core provision and School Direct. The current inflexibilities will lead to disaster this autumn.

Prospective teachers should have an informed choice about the route for taking their careers further. There is a market but it must be sustainable. Schools should have the choice between School Direct and core provision. There is the broader market of the education system as a whole, where demographic changes require teachers to be trained to work across a system and not with the needs of a particular school in mind. The trainees are also customers who want flexibility, adaptability and transportability. For every one teacher who wants to stay in the same school throughout their career, there will be nine others who want to move.

Without a good base of core allocation, universities cannot sustain their involvement in teacher training, including the School Direct provision, to a good standard. Current policy risks a race to the bottom in the quality of training, determined in large part by locally negotiable financial considerations. Initial teacher training infrastructure is likely to be broken up, with provision offered by associate or brought-in staff or abandoned altogether. Warwick University has placed all its initial teacher training provision in a self-financing business unit. It will be interesting to see where research and development find a place.

In order to remain in the market, some providers have begun to offer validation-only routes. They appeal to schools because of the low cost, but a validation-only approach will drive down standards and is out of step with high-performing systems internationally.

Finally, I believe that this Government are sincere about improving schools and the quality of teachers. However, their policy initiatives will do the exact opposite if changes are not made soon, and the university connection, which has been in existence for more than 100 years and is admired by the rest of the world, will be irreparably damaged.

13:03

[Baroness Sharp of Guildford (LD)]

My Lords, it is a pleasure to follow the noble Baroness, Lady Donaghy. To my mind, she has raised an extremely important issue, because the quality of teaching in our schools and universities is fundamental to the success of our education system.

I have been in this House for almost 16 years and have spoken on higher education from these Benches on numerous occasions. It is unusual that we have not had a major debate on higher education for some time and I am very grateful to the Minister for raising this important issue. My own background is that of a university teacher and a researcher. I spent the last 20 years of my academic life at the University of Sussex in the Science Policy Research Unit. During my career in this House, I have concentrated quite a lot on the role of the science and technology subjects and the importance of, in particular, the teaching of mathematics, and I continue to take an interest in these subjects.

I have also played an active part in developing Liberal Democrat policy. During the early part of this century, when my noble friend Lord Willis was the spokesman on education for my party in the other place, he asked me whether I would work with him on developing a rationale for our policy of zero fees. I have had little difficulty in justifying that policy. Having been the product of a regime in which I paid no fees whatever and received very generous maintenance grants which enabled me to go to Cambridge—I share the admiration for that university expressed by the noble Lord, Lord Holmes—I nevertheless felt that in terms of intergenerational equity it was not difficult to justify a regime in which, because it was becoming increasingly important that we should do so, we extended tuition through to the age of 21 for the current generation of young people and they would pay for it later.

I suppose that, for that reason, I also became at that time a convert to the concept of a graduate tax. Given the not wholly progressive income tax system in this country, it seemed to me somewhat unfair that those who were on relatively low pay and had not benefited from a university education should have to pay through their income tax for those who benefited and gained considerably from such an education. Today, I continue to feel that some form of graduate tax is the best way of coping with the situation.

However, my remit was also to look at an integrated system—one that incorporated the further education sector as well as the higher education sector. We should not forget that the further education sector provides higher education for some 200,000 of our 1.3 million students. Therefore, it is a considerable player within the higher education sector. The scheme that we came up with was one that, in effect, looked to some form of voucher system for young people and provided a degree of flexibility between the sectors and between different elements in the sector. I shall come back to that later.

As the noble Lord, Lord Bilimoria, who is not in his place at the moment, the noble Lord, Lord Holmes, and the Minister himself have indicated, we have much to praise our higher education system for in this country. In terms of international ratings—I was looking at the Times Higher Education reputation rankings—we have 10 universities in the top 100 and are second only to the United States. In terms of publications, with 1% of the world’s population we produce 6.4% of the world’s scientific publications and 14% of the most highly cited publications. The quality of our research attracts many international R&D laboratories, especially in the life sciences, where we have forged a position as an international leader.

The universities themselves are great generators of wealth. It is estimated that their contribution to the UK’s economy is more than £70 billion—2.8% of GDP —creating 750,000 jobs. We attract large numbers of international students, in spite of the efforts of the Home Office. I entirely endorse what the noble Lord, Lord Bilimoria, said about the sheer ludicrousness of the current policy in relation to international students. It is rather absurd that the Department for Business, Innovation and Skills is doing its best to encourage international students to come here while, at the same time, the Home Office does its best to discourage them. That is quite stupid. As the right reverend Prelate the Bishop of Winchester indicated, these students give considerably to their local communities.

However, we need to beware of complacency. The farewell lecture that Bahram Bekhradnia gave when he departed as director of the Higher Education Policy Institute warned that we cannot assume that our relative success will continue indefinitely. Many other countries are investing very heavily in their higher education sectors. South Korea, Singapore and Hong Kong have been rising up the league tables very rapidly, as indeed has China. If we look at spending on tertiary education, we are spending rather below the OECD average of 1.5%—we spend about 1.4%—compared to the USA which spends 2.8% of GDP, Canada 2.5% and South Korea 2.5%. We spend relatively lowly on tertiary education in terms of our proportion of GDP. China is investing in and expanding the sector in spectacular fashion. We may currently be taking large numbers of postgraduate students from China but they are returning to become the key academics in their universities in that country. There will come a day, as we have seen in Hong Kong and Singapore, when students will stay at home because their universities are ranked as highly as our universities over here.

The UK is not investing enough in R&D, as the noble Lord, Lord Bilimoria, said. It is not just our universities; the private sector is not investing enough in research and development. Our total spend at 1.7% of GDP is well below most of our competitors who are now spending roughly 3% of GDP and rising. Ours has been falling. In the late 1980s we were spending 2% of GDP on R&D and even that was low at the time, but it has now fallen to 1.7%.

We should not be complacent about teaching. The research assessment exercise, as it was then called, was introduced in 1989. It is now the research excellence framework. This has given a considerable bias within universities for people to concentrate on research rather than on teaching. One of the reasons why we have been rising up the research rankings is that all the incentives are there within universities to concentrate on research. However, has that been at the cost of teaching? Far too many classes in universities are taken by postgraduate students who have no training whatever in teaching. We hear too many stories of work not being marked promptly and of little feedback being given to students. I went to university in the late 1950s when only 7% of the age cohort went. We are now looking at 45%. The pedagogy has to be very different. We can no longer assume that students are self-motivated and can be sent off to the library with a list and told to work by themselves. The internet has done an enormous amount to make material available but students still need teaching. As I say, the pedagogy in our universities has not had the attention that it deserves.

Above all—this point was raised by the noble Baroness, Lady Morris—we have not been looking enough at the dynamism and the diversity of this sector. We need a sector that shows greater flexibility in meeting the challenges from such things as the new online facilities. There is a need to mix and match courses and provide for young people who perhaps move from one institution to another. There is a need for us to consider where our skills gap lies and whether the universities are meeting it. The OECD, in its report Skills beyond School, highlighted the issue. It stated:

“While many young people in England pursue vocational qualifications at universities at bachelor level, very few undertake the kind of shorter vocational programmes that would represent a more cost-efficient response to the need for certain mid-level skills”.

In 2008, the Leitch report on skills made the point that 70% of those in the workforce in 2020 would have already completed their education. We need to think much more about education for mid-career which is not there at the moment. We need to have a stable financial framework if we are to develop new frameworks for higher education. The Dearing report in the 1990s suggested that funding should come from society and industry as well as from individuals. Industry funds remarkably little in the way of higher education. It contributes a certain amount to R&D but it does very little for teaching in higher education. Although students pay fees of £9,000 a year, the switch has been from the state paying the money to the state lending the money, so the money is still coming from the state. As so few of the loans will be repaid at the end of the day, the subsidy continues to be extremely high. I was among those who had some scepticism about the student loan system. It was described by Nick Barr on one occasion as a very dodgy form of PFI. To my mind it is both unduly expensive and ineffective. It transfers the cost of loans from the present to the future generation while taxing disproportionately those young people whose families are not sufficiently well heeled to pay off their debts. My own party has made a great deal of the IFS endorsement of the present system as more progressive than its predecessor as the threshold is £21,000 rather than £15,000 so that those on low incomes pay back less. But it ignores totally the fact that the distribution of wealth in this country enables those at the top end to pay off their student debts so that their children do not have the 9% surcharge on income tax that others have. In 2010, I was among those who predicted that the system would not prove sustainable. Its potential collapse came rather sooner than I expected. I thought that it would probably go through to about 2020 when the debt burden would become apparent.

I have gone on much too long already but I want to go back to the point about diversity. I feel that it is extremely important to develop a system where there is a greater mix of short and longer courses and where universities play a part alongside the further education colleges and other specialist colleges. To oil such a system we need to have a proper form of credit accumulation so that people can transfer from one form of the system to another. I feel this particularly with the development of online facilities and the mix and match of campus-based learning and distance learning. I urge the Government to try to develop a system that is much more diverse and flexible than the current one and to consider a student loan system such as that proposed by Million+ which looks to paying back over a longer term loans directly funded by the Government.

13:18

[Baroness Coussins (CB)]

My Lords, I, too, am grateful to the noble Lord, Lord Ahmad, for introducing this debate, and I should like to raise some concerns about the teaching and learning of modern languages in British universities. It is an area that is changing rapidly and the Government need to be fully aware of the implications of these changes for the future of the UK’s capacity in business, in diplomacy and security, in teaching and specialist language services and, of course, in intercultural understanding. I declare interests as chair of the All-Party Parliamentary Group on Modern Languages and vice-president of the Chartered Institute of Linguists.

Last week, Salford University became the latest university to announce that it would no longer be teaching any degrees in or with languages, including postgraduate courses in interpreting and translation. This will bring the total number of universities offering language degrees down to 61. In 2000, there were 105, so that is a pretty dramatic decline. In the case of Salford, the announcement is not only a body blow for languages, for prospective students and for those who would have been teaching them; it is also disastrous for international bodies such as the EU and the United Nations, which have in the past seen Salford as one of their principal recruiting grounds for specialist linguists. The shortage of English native speakers in this field is at crisis point and, as a nation which aspires to be influential on the international stage, this is a challenge that the Government need to acknowledge urgently. Is the Minister aware of the recent report from the British Academy, Lost for Words, which spells out the importance of languages for meeting the UK’s public policy objectives in international relations and security.

As well as the overall decline in the number of universities offering language degrees, there has also been a concentration of the provision that does exist within certain types of university. The Russell group dominates, offering 78% of the degrees in European languages and 95% of the degrees in non-European languages. Adding to the perception of elitism, 28% of languages undergraduates now come from independent schools. This compares to only 9% across all subjects.

This, of course, links back to what is going on in schools. The removal of a modern language as a compulsory subject after the age of 14 in 2004 was a retrograde step. Take-up at GCSE in the state sector halved as a result. It is to the Government’s credit that we are now, finally and belatedly, seeing a significant improvement at GCSE attributable to the EBacc. However, we will have to wait until 2025 to see the full impact of the Government’s other strategic initiative—mandatory languages at key stage 2 from next September.

In the mean time we are likely to see further decline in modern language degrees because universities will, quite reasonably, continue to respond to the decline in applications. In 2012, we saw a 14% drop in student applicants for language degrees, attributable to the tripling of fees, which had a disproportionate impact on language courses because they are four-year courses. The introduction of Erasmus Plus and the settlement over fee waivers has been encouraging in this respect.

However, on the down side, we learned only two weeks ago from the 2013-14 Language Trends survey that the number of pupils doing A-level languages is dropping at what was described as “an alarming rate”. What is more, this decline is particularly marked in the independent sector. There are three reasons. First, if too few students opt for a language course, the course is considered unviable and the school will not run it. Secondly, sixth formers perceive languages to be tough, and it is true that there is certainly a big leap between languages at GCSE and at A-level. Thirdly, and related to this, the Russell group universities are calling for triple A grades for admission. Schools and pupils all know that there is convincing evidence now to show that language A-levels are more harshly marked than other subjects, so why are they going to risk their A or A* by choosing a language?

I appreciate that the Minister today is speaking for BIS rather than the DfE, but the links and the interdependency between schools and universities are self-evident. Is the Minister aware of this latest finding on the alarming decline in A-level languages and its likely knock-on effect for higher education? Does he agree that it would be much better to act swiftly to nip this trend in the bud rather than watch it fester for years, like the GCSE decline, and then have to administer life support?

We cannot wait until 2025 for the impact of the new policy to resolve all this. We need to attract and retain students at A-level now and encourage them to continue languages in higher education. This will not happen unless we campaign to change public attitudes towards the value of language skills and the wider cultural value of studying another language. What do the Government plan to do to lead such a campaign? Specifically, would the Minister respond to a suggestion, made at a recent meeting of the HEFCE steering group for the Routes into Languages programme chaired by Sir David Bell, that the issue of languages in HE needs to be the subject of a Downing Street forum, in the same way as happened successfully for the STEM subjects? Languages have to feature more prominently on the political agenda. I hope that not only will we see such a forum at No. 10 but that over the course of the next year we will see every party’s manifesto spell out positive, detailed and informed policies on languages, recognising that this can be what makes or breaks success in so many fields, from exports to community cohesion.

As for universities, I hope that more of them will acknowledge that to survive in the 21st century means more than just using fine words in the mission statement about being an international institution and producing global graduates but that in practice this means fostering languages, not abandoning them. More universities could set the right tone from the beginning by emulating the UCL policy of requiring a GCSE language or equivalent from every applicant at matriculation, irrespective of degree subject or, failing that, requiring all first years to take an accredited language course.

HEFCE and the Government still regard modern languages as “strategically important and vulnerable subjects”. Never has this descriptor seemed more apt. The continued funding for Routes into Languages is welcome and I ask the Minister to confirm that this is secure for the foreseeable future. Will the Government also support the bids from universities to the HEFCE catalyst fund for five-year projects for improvement and innovation in languages in HE?

The final point I want to make is to explain the apparent languages paradox at British universities because, despite what I have said, there are more students doing a language course than ever before. However, this is because of non-specialist language provision—in other words, students doing a degree in another subject, such as law, business or economics, but doing a short language course on the side. About 60% of these are getting some form of credit, but 40% are taking it as extra-curricular and often have to pay extra fees on top of the high fees that they are already paying for their degree. The courses I am talking about are provided in the university languages centre, not within the language faculty, and they focus exclusively on practical language skills.

It is important not to be misled into thinking that this is a viable replacement for or updating of the modern languages degree. The courses in question are not even being taken mainly by UK students. At the last count, at least 55% were non-UK students picking up their third, fourth or even fifth language. The others are taking one course in one language for one year and are very unlikely to acquire more than basic levels of competence or have the confidence to take a year abroad to consolidate the language in context.

By contrast, it is a requirement for all those doing a languages degree to have that year abroad. That is a major advantage in terms of immersion in the relevant culture and society and also for future employability. The UK needs graduates with the highest levels of fluency and cross-cultural competence to enable them to operate in a complex global society. The insights and refined understanding of other cultures developed through specialist study of literature, culture and society through a particular language takes the learner way beyond the merely functional and transactional. This is vital for our diplomats and business people. It is only from among language graduates that we can develop translators and interpreters and the language teachers that we need to go into our schools system. It is not a question of either/or; both types of provision are needed. However, the language degree courses are strategic and vulnerable and must not be allowed to wither away.

In the words of the latest Language Trends survey,

“speaking only English in today’s world is as big a disadvantage as speaking no English”.

Our universities are uniquely placed to ensure that we produce a critical mass of young people who can not only function in a global economy but lead and succeed in it. Will the Government support the universities in achieving this objective through languages as vigorously as they have, rightly, supported the STEM subjects?

13:29

[Baroness Warwick of Undercliffe (Lab)]

My Lords, it is a privilege to follow the noble Baroness, Lady Coussins, in her typically passionate plea for modern languages. I am also delighted that the right reverend Prelate the Bishop of Portsmouth, who is to follow me, has chosen this debate in which to make his maiden speech, and I welcome him warmly to this House. I thank the Minister for securing this debate, which has enabled many noble Lords to celebrate the great success story that is the UK higher education system, while alerting the Government to dangerous trends in their policies ahead.

I spent well over 20 years representing in one guise or another the higher education sector, not as an academic but as an organiser, influencer, advocate and, until a few years ago, chief executive of Universities UK. I still have some direct involvement and I declare an interest as a member of the council of University College, London, a university that is an exemplar of the ways in which a university can contribute to society and the economy as well as providing a first-class education for its students. Perhaps I should say at this point how delighted I am at the partnership between UCL, the London Legacy Development Corporation and the mayor’s office, and at UCL contributing to the Olympic legacy. However, although the decision in principle has been made to create a campus, we now need to make the finances work, and I hope that the Government will fulfil the commitment made in the autumn Statement to support this great initiative financially. If the Minister could confirm that in his reply, I would appreciate it.

My involvement in HE started in 1982 when I became head of the Association of University Teachers. Since then I have seen enormous changes in HE, many of which have been for the better. I am thinking particularly of wider participation and the exploitation of research. Many of these changes have helped to transform HE into the hugely influential sector that it is today. HE now extends well beyond the universities. We had a briefing for this debate from the Association of Colleges reminding us that 180,000 students study HE in local further education colleges. Not all of HE is now publicly funded. In 1982, the only private provider was the University of Buckingham. Now an entirely new set of alternative private providers has emerged, some for profit and some not for profit, but all looking very different from the three-year, full-time undergraduate institutions that many Members of your Lordships’ House experienced. Even that has changed dramatically, with almost 40% of students studying part time. But it is worth noting how susceptible part-time study has been recently to changes in government policy. The numbers have declined substantially, which is a cause for concern, particularly for women and in terms of widening participation. Can the Minister comment in his reply on how the Government propose to halt this precipitous decline?

Other major changes have occurred. Women outnumber men at undergraduate level, while many more students from disadvantaged backgrounds now achieve degrees. The student body is now much more ethnically diverse. A much higher proportion of students now live at home, and the Open University is providing an increasing number with the prospect of earning while learning. The proportion of international students has increased dramatically. That has been a great success story, as many noble Lords have spelt out in the debate, and during the course of the Immigration Bill many Members of this House had hoped to persuade the Government to recognise the damage their policies were doing to this success story. The Government are presiding over the first decline in international students for 30 years. I still remain hopeful that they will respond.

It is significant to note how much more publicly visible HE now is. If we had had this debate even 10 years ago, I doubt whether we would have received a briefing from Which?, the consumer magazine, but we have had one this week, which reminds us that students increasingly regard themselves as consumers, given the financial commitment they now have to make if they go to university. That, of course, is one of the most significant changes. In 1982, students made no personal contribution to the cost of their degree course and there were grants for maintenance. Today, students emerge with average debts of £50,000, albeit with a beneficial repayment regime. That funding regime, which has shifted the cost from public taxation on to students, has ramifications not just for students themselves, but for the financial stability of institutions, a point I shall come back to in a moment.

I want first to focus briefly on the HE system as it is now, the contribution it makes to the country, and its importance to future prosperity. I was really pleased to see that BIS, as the government department responsible for HE, has begun to document the benefits of HE participation for individuals and society in a systematic way, and here I refer to research paper No. 146. It presents this as “Quadrants” or a “taxonomy of benefits” which focus on greater social cohesion, reductions in crime, civic participation, political stability, social mobility and health benefits, all of which are improved by the experience of HE. It also identifies economic benefits such as increased tax revenue, faster economic growth, higher earning value to employers, increased entrepreneurial activity and productivity, all of which should be music to the ears of the Treasury. It is clear that we benefit as a society both economically and socially because our universities produce well educated and employable graduates and world-leading research.

On research in particular, the system is remarkably efficient, and on every metric we outperform the money we spend on research. But it is nothing but complacency to assume that the UK has a God-given right to be a leading research nation and not make the investment that this requires. Can the Minister say whether the Government still have the aspiration to bring spending in line with the OECD average? That is because, in fact, we are dropping behind. Universities UK’s reliable patterns and trends data show that investment and expansion have slowed down in the last two to three years. This is at a time when we need to maximise the potential of HE as one of the main engines of economic growth, and when other OECD countries are increasing their investment. The noble Lord, Lord Bilimoria, highlighted the figures in his speech. It has become common to talk of universities as “economic anchors”, as institutions that can generate jobs and growth across all sectors of their city or region. Because they are spread throughout the country, they are uniquely able to promote growth that benefits all of our country, not just the south-eastern corner of it. In my own home region of the north-east, which struggles on many economic measures, universities have generated a higher proportion of jobs than in any other region. Last week, the Minister for Universities described his ambition to see new campuses built in “cold spots”, precisely because they can rejuvenate and enliven a local economy.

Universities themselves have not been idle. They have secured increased investment from the EU, charity and industry, as the Minister, the noble Lord, Lord Ahmad, himself acknowledged. There has been a substantial increase in knowledge exchange activity, which is particularly beneficial to small and medium-sized enterprises. Sir Andrew Witty, in his review of university-business interactions, highlighted the comparative advantages they offer the UK. He specifically recommended that the Government should make a long-term commitment to the Higher Education Innovation Fund, which generates £3.4 billion-worth of knowledge exchange income alongside the broader economic impact of universities of £73 billion, which represents 2.9% of GDP, and is therefore a not insignificant figure. Yet the Government, despite explicitly recognising,

“the enormous economic impact and leverage”,

of the HEIF, and that,

“every £1 of HEIF funding generates £6.30”,

have refused to commit themselves to raising the level of HEIF funding. I hope that the strength of the arguments in this debate will convince the Minister that he should urge his colleagues in the Treasury to think again, and that he will commit to that in his response.

The Treasury must surely be looking for ways to boost income. The revelation last week that around 45% of graduates will not earn enough to repay their student loans and that the system could end up costing taxpayers more than the one it replaced calls into question the decisions the Government have made about the way in which universities are funded to teach students. This week, the Higher Education Commission held its first evidence session on the topic of funding, and as we heard last night at a meeting of the All-Party Parliamentary Group on Universities, the current system is not sustainable and, worryingly, is unlikely to provide the basis for the affordable expansion of university education that the country so clearly needs. Given that we heard from three former Secretaries of State for Higher Education, the Government will need to take note of the findings of the commission and the all-party parliamentary group.

This is a complex problem. I am not going to be able to solve it in this speech but will outline a few questions that need to be considered in any attempt at a solution. First, what is an affordable and reasonable rate at which we could expect graduates to repay their loans? Does the current system provide this or could it be changed? Secondly, what is the appropriate level of state funding for higher education and how can we ensure that this does not get degraded by Treasury salami slicing over time? Thirdly, what changes can and should be made to the way in which we deliver higher education that could make it more affordable to graduates and the state? How can we persuade employers to invest in higher education for their staff and reverse the dramatic decline in part-time study?

It is a complex problem but one that it is essential for us to solve in a way that will be sustainable in the long term. Neither universities nor students benefit from major reforms taking place every few years or, indeed, from retrospective clawbacks, as happened with HEFCE funding this year, when, for example, UCL found its in-year funding reduced by £1 million. We derive enormous benefit as a country from our university sector. The world-class research it carries out and the graduates it produces are the basis of our future economic success. It provides anchors for jobs and growth throughout the country, and we damage it at our peril.

Finally, I share with the House my delight at the news this week of the first Max Planck centre in the UK, a joint centre with UCL on computational neuroscience and psychiatry. There will be others. This historic and ground-breaking collaboration with one of the most influential research centres in the world has arisen only because of the reputation of research in the UK and because of far-sighted investment. Such initiatives will be impossible in the future if we fail to invest. The Government really cannot go on ignoring this danger.

13:41

[The Lord Bishop of Portsmouth]

(Maiden Speech): My Lords, it is with astonishment that I find myself here today, rising to speak for the first time, keeping such company and sharing with you responsibility for the health and stability of our nation. In my heart of hearts, I am still a jobbing priest, and certainly with no desire to be an amateur politician. If I attempted that, then I would indeed be amateur. I delight to see people flourish, especially, to be parochial for just a moment, in Portsmouth diocese, serving south-east Hampshire and the Isle of Wight, whether they are lay or ordained churchgoers, British or foreign nationals residing in our midst, island schoolchildren who have never travelled far enough to see the beaches of their own island, those residents or visitors enjoying the vibrant waterside city life of Portsmouth—the second most densely populated city in the land—or globetrotting commuters and businesspeople who circle the world several times over.

I am more than aware that my distinguished predecessor, Kenneth Stevenson, who I know was much respected in this House, had education very much at his heart and led the church’s board of education. So it feels right and good that my maiden speech is in a debate that has at its heart a concern for human flourishing in education. Universities are anchor institutions in local communities, and Portsmouth University is no exception. It anchors the city and area financially, directly employing some 2,500 staff and indirectly supporting many more employers in and around the city. It anchors businesses, ensuring a regular supply of appropriately trained graduates to take on key roles and as a motor for the growth of small and medium-sized business enterprises; it funds multimillion-pound building projects as it continually updates its facilities; and it anchors the city morally, too, by providing a multicultural forum in which the issues of our day can be debated and the best insights can be lived.

As I know first hand from periods as a student, economics lecturer, chaplain and finance committee chair at the University of Hertfordshire, the higher education sector contributes extensively to the flourishing of our nation and our world. Now, as bishop and as a governor—an interest noted in the register—I see at first hand how Portsmouth University, along with universities all around the country, anchors and focuses financial, practical and moral flourishing, not just for students but in terms of enriching partnerships across the whole region, including, as you will expect me to note, my own cathedral’s innovation centre, where space and both voluntary and expert support provide opportunities for new businesses to take root and to grow, even in challenging economic times.

I use the word anchor in relation to Portsmouth advisedly. You will of course be aware of the losses that Portsmouth has recently sustained in the shipbuilding industry. In the wake of those losses, higher education has gained even more importance. The university has a pivotal role to play in providing good-calibre, creative students who can help to diversify employment and business opportunities in the city and in developing the local and regional economy. This is true for homegrown students, but the reality is that for Portsmouth —or any university—to flourish, it also needs international students. I am aware that my friends the right reverend prelates the Bishop of Chester and the Bishop of St Albans have previously argued in this House for the importance of considering higher education immigration separately from other forms, as have other noble Lords in this debate. Indeed, as we have heard, the House’s Select Committee on Soft Power has described the present policy as “destructive” and “disingenuous”.

In Portsmouth, we currently have 2,941 international students, out of almost 22,000 in total, from approximately 140 countries. That reduced number, confirmed recently across the whole national HE sector, costs us all as we turn away the world’s talent and ideas. That presence is vital both in monetary and in human and educational terms. They enliven and enrich the whole community; their flourishing matters to us all, and needs to be safeguarded in our legislation.

I say this mindful of the huge vulnerability of the majority of students in the present day—the intellectual vulnerability that we all embrace as we embark on a new learning experience, and the financial vulnerability of students facing increased fees and debt. As someone who today feels vulnerable in the face of a new learning opportunity, I find myself freshly in solidarity with such students, and, indeed, with businesses learning and relearning how to make the best of opportunities in a fast-changing local and national economic landscape. I am committed to their welfare and will be glad to engage further with you as to how best to serve their needs.

I will be particularly glad also to learn how I can best help improve the lot of people who are suffering the effects of economic injustice. A local parish priest recently estimated that up to 20% of people living in her parish were in receipt of doorstep loans, and countless food banks and other informal food outlets have sprung up in the past year or so. There is huge poverty in Portsmouth diocese, not just among those who are on benefits but also among those who are working full-time but still cannot afford to live. It is surely a matter of the greatest concern that a job no longer always pays a living wage. This is an issue very close to my heart, to which I will be glad to devote time and energy in this House.

As I join you in this House, I thank your Lordships for your most generous welcomes, and the officers and staff who serve us here, and for your patience with me as I continue to get lost in the labyrinth of the corridors and figure out how best to engage with the issues at stake—to your good, the good of the communities and people of Portsmouth diocese and the good of the nation.

13:51

[Baroness Greenfield (CB)]

I congratulate the right reverend Prelate on his inspiring and insightful speech. I warmly welcome him to your Lordships’ House and look forward to his continuing contributions on a wide range of issues, including economics, social welfare and the Navy. Turning back to universities, I join other noble Lords in thanking the noble Lord, Lord Ahmad, for introducing this important debate.

Having spent most of my working life in the university sector, I am fully aware of the diverse issues that we need to explore. I have been in turn an undergraduate, a postgraduate and a tutor of medicine at Oxford University, where I remain a senior research fellow at Lincoln College. In addition, I served for seven years as chancellor of Heriot-Watt University, as well as working in higher education establishments abroad; namely, the Collège de France in Paris and New York University Langone Medical Center. I am also aware of the thrills and spills involved in commercialising university science, having recently spun out a biotech company, Neuro-Bio Ltd, where I am chief scientific officer.

This debate will encompass many different questions, each of which could be the single subject of its own debate, but there is a common theme, which can be summed up in a single word: ideas. Surely universities are all about ideas, be it the dissemination of existing ideas —teaching; the generation of new ideas—basic research; or the application of those ideas—commercialisation. Inevitably, time constraints will mean highlighting just a few examples of concern in each of these areas.

With regard to teaching, the particular issue I would like to flag up is the impact of IT. In one study 55% of academic staff reported that lecture attendance had decreased as a result of introducing digital audio recording of their presentations. When asked why they did not attend lectures, almost 70% of the students surveyed claimed that they could learn just as effectively using digital audio recordings. However, in yet another study, students who learnt course material via virtual delivery performed significantly worse than those who attended traditional lectures. What is particularly interesting is that while the two groups did not differ in regard to grasping basic concepts, the group learning virtually fell significantly behind in their grasp of complex material, surely indicating that it may be more difficult for sophisticated ideas to be transferred via the screen. When college students in an economics course were randomly assigned either face-to-face or video-streamed lectures, the students who attended lectures in person had higher test scores.

The reciprocal of teaching is learning, and the mindset of the generation used to living for varying numbers of hours a day in front of the screen in a parallel universe is surely a consideration. The brain becomes good at what it practises and research suggests that those who have rehearsed the various skills required, for example in video games, will have a higher IQ and an improved working memory. However, they may also have the less welcome profile: a short attention span, a greater propensity to low-grade aggression, greater recklessness, a higher degree of narcissism, lower self-esteem, a premium on sensational experience, a less deep understanding and a more volatile sense of identity. Teaching someone with this disposition will clearly require different strategies compared to earlier generations. Incidentally, I would be very happy to refer noble Lords to the peer-reviewed papers reporting the research I have just cited.

The second broad area of university activity is the generation of ideas—basic research. Francis Bacon, the 17th century philosopher and scientist regarded as the founder of empiricism, distinguished two types of experiments: experimenta lucifera, those that shed light; and experimenta fructifera, those that bear fruit. Other noble Lords may well speak in favour of the former—basic blue-skies research—so I will simply give a telling example from a century ago illustrating the essential need to allow the scientific mindset to range free, since it is impossible to predict where such imagination will lead.

Quantum theory, concerning the inseparable nature of waves and particles, seemed when it was developed to be a highly abstract notion that no one could really understand. However, this baffling theory gave insights into the basics of matter and energy and was eventually to have astounding effects on more translational areas of both the physical and biological sciences. Advanced devices such as lasers and transistors and therefore ultimately computers rely on the principles of quantum theory. Likewise, in biology, the currently emerging feats of gene manipulation, triggered by our ability to manipulate atoms, are reliant on an understanding of molecular bonds and the technique of X-ray crystallography, both of which hark back to quantum theory.

That leads us to the third area of university activities, the application of ideas—experimenta fructifera, those that bear fruit. It is well known that UK universities carry out significant levels of innovative research but are generally less successful than countries such as the US in implementing the research into practice. Great research needs to benefit mankind, and technologically complex advances require capital and business expertise. Translation of university research into businesses, jobs and national prosperity is vital to make best use of British science. Sadly, our ability to exploit our science falls well short of our ability to do the science. It is scant reward for researchers, universities and the country if our science ends up being exploited abroad.

The need to improve technology transfer is widely recognised. Many reports have been produced recently, such as the Wilson report in 2012, the Witty review in 2013 and the latest document from the other place on Bridging the Valley of Death. The challenge now is making things happen on the ground and building really strong technology transfer organisations in all our universities.

One key problem is that universities generally have very limited budgets—for example, for patents—which forces technology transfer offices either to form spin-out companies too early, resulting in a very high rate of failure, or to drop patent applications before any value has been realised through licensing. Moreover, these limited budgets lead to reactive rather than proactive personnel, where the scientist-investor has to approach the understaffed technology transfer office rather than the other way round.

One happy win-win solution could be to engage the entry-level intake of management consultancies to act as talent scouts on campus. The scientist would benefit from exposure to the private sector mindset, perhaps during informal conversations over coffee, while the aspiring young business guru would seize the initiative of taking back potential projects to the tech transfer office. The management consultancy firm might eventually get a modest royalty, although one company, with which I have already discussed this idea, said that the benefit to junior staff of the experience itself would be sufficient compensation.

Another issue is that most universities either do not have budgets or have very limited budgets to carry out market engagement. National and international travel, attendance at exhibitions, dedicated business development resources and purchasing of market research reports can all prove prohibitively costly. But a lack of knowledge of customers and market opportunities has a negative impact on the quality of the licences negotiated and the spin-out companies created, as well as the number of industry-funded collaborative research projects.

That brings us to the appeal of university-based research to investors. Oxford University, for example, prefers to retain the IP and offer instead exclusive licence agreements. While the merit obviously lies in insuring against an investor failing to realise the true potential of the invention, as an opening condition in negotiations it is a disincentive. Moreover, the fees paid to the scientist on such a licensing deal would be fixed at 15%, with an eye-watering 85% retained by the university. This is hardly an attractive incentive to the scientist, any more than the alternative option of starting up a company where, before any investment is made, the university already owns 50% of the equity.

A further component of this translational research bottleneck is the academic mindset. Scientists often view IP as a fifth wheel and prefer to focus their time on publishing as much and as quickly as possible, because they are driven remorselessly by the current audit mentality of the various research assessment exercises of the past decade. It might help if knowledge transfer targets were included within performance in this review process.

More generally still, innovation through translational research is hampered by discrepant agendas between investors and scientists, where the latter have a distrust regarding patents and their intellectual freedom that may be misplaced, as well as a poor understanding of why an investor prioritises a solid management base.

Meanwhile, we lack appropriate funding models to allay the investor’s frequent and understandable concerns that the technology is incomprehensible to them, that the work is too high-risk and at too early a stage, that the funding required is too little to give a good return, that the burn rate is too high and that the exits are not obvious.

One possibility could be to set up a venture capital or angel syndicate giving small, private sector “grants” rather than investments. Relatively small but much needed amounts of money could be awarded, and those sums, along with the risk, would be diluted by the collective membership. In return, however, members of the syndicate would have privileged access to the research as it was developed and therefore first refusal on purchasing the IP and developing a spin-out as and when they saw the work maturing. Each member of the syndicate could operate independently, but other members might receive a small consideration from any future profits of the young company. The notion of private sector grants is not necessarily in the culture of either academics or of venture capitalists, so the Government might be the perfect third-person broker to get such a scheme up and running.

Other possible innovations could be, first, to make someone responsible for tech transfer—not least as it crosses multiple Whitehall departments and ministries—especially for life sciences, which will also include the Department of Health; secondly, to gather and publish statistics on how well each university is doing in proportion to its research strength; thirdly, to tie university funding to universities’ ability to do tech transfer; fourthly, to set up an inspectorate to drive quality; fifthly, to award prizes or grants and run competitions; and, sixthly, to identify a team of tech transfer champions to tour around and support tech transfer offices.

Lord Dearing eloquently stated back in 2002:

“Just as castles provided the source of strength for medieval towns, and factories provided prosperity in the industrial age, universities are the source of strength in the knowledge-based economy of the twenty-first century”.

We need to provide an environment where knowledge itself—ideas—can be disseminated for maximal understanding, can be generated with open and unfettered minds, and can be applied as effectively and comprehensively as possible.

14:02

[Lord Mackay of Clashfern (Con)]

My Lords, I first entered the field of work as a university lecturer in mathematics at the University of St Andrews, but my interest in the university sector had been sparked a good time before that by the inspiring lectures that I heard at Edinburgh University from the late Sir Edmund Whittaker and Professor Max Born. The thrill of being given inspiring lectures by people who were at the very forefront of research in their subjects was a terrific opportunity that I greatly relished and still cherish.

At the moment, I am the commissary of the University of Cambridge. I am glad to mention in relation to that matter that the very successful vice-chancellor of Cambridge University who recently retired was a lady, so Cambridge is in the forefront of developments of that kind, too. I am also privileged to be a fellow of two of the Cambridge colleges.

I have no doubt whatever that the university sector is an extremely important part of our national life in the United Kingdom and of our national heritage. A separation in the United Kingdom would damage the unity of that sector in a way which I think would be sad. However, my principal question is whether the universities are not more important than business. The purpose of universities has been eloquently described by the right reverend Prelate the Bishop of Winchester and by the right reverend Prelate who has just made his maiden speech.

There is no doubt that a university has to look after its business to see that its income and expenditure are properly balanced and to make the best use of what it produces in the way of research, attempting so far as possible to turn that into advantage and income to the university as well as, of course, benefit to the wider world. That makes me anxious that the university sector is at the moment in the Department for Business, Innovation & Skills. No doubt a university should have business, should be able to innovate and should be able to develop skills, but it is much more—that is only part of the university. In my respectful submission to your Lordships, the university sector should be where it properly belongs in the Department for Education, because surely it is the apex of our education system and should be integrated with the other parts of the education sector. I know that the change was made for particular reasons, which I think are no longer applicable. I believe that it would be an advantage to the universities to return to where their home was in the Department for Education.

The second point that I want briefly to mention is academic freedom. It is vital that the universities should enjoy a full measure of academic freedom. Those of your Lordships who were here then will remember that I once found myself in debate with the late Roy Jenkins about this matter. He carried his definition of academic freedom on a Division before the Government whom I was representing had finalised their definition, so his definition stayed in the Bill that we were debating and then in the Act. The subject was so important that our late, very much esteemed colleague, Earl Russell, wrote a book about it which is no doubt familiar to at least some of your Lordships.

Academic freedom is vital, and it is important that the Government should not in any way trench on that. I am not exactly certain why the Government took the power to control university fees, but that is a matter perhaps left to those more economically minded than me. I am thinking of the general standard of freedom within the universities to pursue what seems be the right course at a particular time. That applies not only to universities as such but, in my view strongly, to those who are members of the university society—the professors, lecturers, readers and so on. The orthodoxy of today may not be the orthodoxy of tomorrow. Too rigid an adherence to a particular line of theory at the present time may well be detrimental to future development. Universities should be open to receiving that, and the individuals who run their departments should be attentive to seeing that they do not attempt to impose their views too strongly on others.

I have a particular example in mind which relates to the noble Lord, Lord Rees of Ludlow, whom I am glad to see in his place. When he accepted a very much merited Templeton Prize, one or two fellow academics who had a different point of view with regard to Templeton sought to express that in language which on the whole I would have preferred they had avoided. However, I do not in any way seek to interfere with the freedom of people to have their own point of view; it is just that if I want to have my own point of view, I should be reasonably open to other people having theirs.

14:09

[Lord Giddens (Lab)]

My Lords, I hope that my speech dovetails neatly with that just given by the noble and learned Lord, Lord Mackay, whose emphases I very much appreciated and agreed with. I begin by declaring an interest as former director of the London School of Economics and a current life fellow of King’s College, Cambridge. I can also own up to having been the tutor mentioned by the noble Lord, Lord Holmes, in his inspiring speech. I hope that my impact on him was moderately positive; I much appreciated his speech.

Many noble Lords with experience of working in universities, myself included, were very critical of the Browne report when it came out, and even more so of government policy developed on the basis of it. When I heard the Minister giving his introduction, as someone who has worked in universities all my life, I found it really hard to relate to the glossy version of government policy which he presented. The Browne report was commissioned under Labour, but I would like to think that, had the party still been in power, a more critical and balanced response to it would have been made. Instead, the current Government radicalised it further—to me, in some of its most unfortunate emphases.

The result is a university system more thoroughly privatised than any other in the world, as far as I know, as though university education were a purely private good and students motivated simply by self-interest and job prospects. Those who devised it might have been looking to the US, but in fact in the United States the public presence is very strong. The US has a robust system of state universities with significant levels of public funding. The top private universities have had many years of being able to raise money through philanthropic support, allowing them also to sustain a public purpose—for example, in providing generous support for students from poorer backgrounds.

The Government’s reforms severed higher education in England from the rest of the UK—Scotland in particular, but also Wales and Northern Ireland, which, to the limits of their local powers, kept their distance. To me, they were right to do so. Just as in the case of the NHS, the Government are carrying out a radical real-life experiment which is in many respects a shot in the dark rather than drawn from best clinical practice elsewhere. I am pleased that some noble Lords on the Liberal Democrat Benches have deviated from official party policy, because the volte face which the Liberal Democrats carried out still astonishes me.

The impact of reforms on universities has been worsened by the consequence of the Government’s policies concerning visa requirements for overseas students. The noble Lord, Lord Bilimoria, spoke powerfully about that. I stress that attracting overseas students is not just a matter of generating revenue, although that revenue is in fact large. It is again bound up with the public and cosmopolitan role of universities. In my role as director of the LSE, I can attest at first hand to how important overseas students are in spreading British influence, ideals and culture around the world. I have seen that in a detailed way in many countries during my tenure as director.

Will the Minister comment on the report published yesterday by the Wellcome Trust, which shows that there is a perception among scientists that the country is unwelcoming and that we are directly losing notable scientific researchers, who we should surely be trying to attract here? As a result of the recent report by the Higher Education Policy Institute and other sources, it is clear that the Government’s policies are in serious trouble—again, the opposite of what the Minister portrayed in his introduction. A major rethink is needed which, if it does not come from this Government, will surely have to be taken on by an incoming one.

I have three main questions for the Minister about that. First, if there is one thing that we have learnt over the past few years, it is that private debt can be even more lethal than public debt, as the state has to pick up the consequences. Is that not exactly what is happening with student debt repayments, where the RAB charge, originally estimated at 28%, has risen to an estimated 45% which, as has been much discussed recently, is close to subverting the whole enterprise? I do not think that it is an appropriate response to say simply that that is a long way down the line and there are uncertainties, because that looks dangerous for the core policies of student funding undertaken by the Government.

Secondly, I think that we all agree that universities should constantly strive to improve the student experience, but the idea that superficial surveys of student satisfaction should determine overall policy is surely wrong. Does not the Minister accept that one of the core concerns of university teaching should be to challenge and provoke, even if some or even most students find that process uncomfortable? Anyone who has worked in universities will recognise that teachers who are quite unpopular turn out to have a massive impact on the students following their lectures, and that that is seen only later, not at the time by those who are challenged in that way. As the noble Baroness, Lady Greenfield, said, the purpose of universities is to pursue knowledge, not simply provide it on some sort of conveyor belt according to the results of superficial surveys.

Thirdly, does the Minister accept that private/public partnerships will also be necessary in one of the most transformative things likely to affect higher education in the next few years—the emergence of new forms of online learning? They have not been discussed much in this debate, but they are potentially truly transformative in both a positive and dangerous sense for campus-based universities. They go by very peculiar names, given their massive potential importance: MOOCs, which are massive open online courses, and what is to me their likely successor, the one which is likely to have more impact, SOOCS—an even worse name—which are selective open online courses. They are potentially deeply transformative and it would be good to hear the Minister’s assessment of their likely impact on universities: what the positive and negative consequences could be. I hope, although I suppose that it is unlikely, that he will agree that those courses will succeed only where there is combined public and private involvement. I very much endorse the point made strongly by the right reverend Prelate, who is not in his place, and stressed by other noble Lords, that the public role of universities locally, nationally and internationally is a pre-eminent part of what universities stand for and represent.

14:09

[Lord Addington (LD)]

My Lords, I must start my intervention today by drawing the attention of the House to my declaration of interests. That is because I would like to talk primarily about a Written Statement made on Monday by the Minister’s department about the future of the disabled students allowance. The disabled students allowance is dear to my heart—I remember crossing swords with the noble Lord, Lord Young, over failures of it a good few years ago—and I am now chairman of a company which is a fairly big player in the field. The announcement was that the disabled students allowance is to be reformed. Effectively, judging by the Statement, that means that savings are to be sought, if we may use that language here.

In the opinion of the company, the announcement did not come out of a clear blue sky but there will be major structural changes. However, I hope that there will also be opportunities, particularly given the fact that the registration of providers of goods and services under DSA may well be a way to ensure that we get a more professional approach here. I hope that we might hear a little more about the thinking on that today because, if we are to continue to support—or suggest that we should support—those with disabilities, we need to know exactly what we are doing here.

My second declaration of interest, which I am afraid will take slightly longer, relates to the fact that those with specific learning difficulties or dyslexia get two mentions in that Statement but nobody else gets any. Those two mentions are probably because 10% of the population are dyslexic or have specific learning difficulties. Why we cannot use just one term I do not know—“dyslexia” is certainly a better way of expressing it than using four words, even if it is one long word. We get mentioned twice in the Statement and the general gist is that those with dyslexia cannot expect to receive the full package of support as standard, which will now be available only to those with a higher complexity of needs. Let us make no mistake about it: this is a very big part of this sector, as it should be if we do not challenge the basic demographic of this hidden disability. There are other hidden disabilities which are not mentioned here but which are out there and, probably, underrepresented as well.

However, the suggestion in the Statement is that this is such a common condition in its less extreme cases—those with higher functioning and less impairment in their ability to channel the written word—that, under the Equality Act, they should receive help from the institution itself. I do not know whether those institutions have even started to take on board the complexity of what they are being asked to do here. The reason is that there is a standard series of software packages, which access voice-to-text or text-to-voice combinations with spelling support structures, and which can now be downloaded into virtually all computers. But—and this is a very big but—I say from personal experience of using it, and from my company’s experience, that it is quite easy to fail to get the best out of that software. If you are not getting the best out of it, students who are undertaking study and have to present written work will not be able to do that to the fullest of their ability. That is where it really comes in: how is this supposed to work?

How is that level of responsibility to be interpreted by those institutions of higher education? In the Statement, the Equality Act is mentioned, but how are we to make sure that they have the structure in place to deliver the law if they are now the people who will deliver it? That is quite something—and it is at the lower functioning end, with people who might just struggle through. However, if you do not give them the help it will cost them a grade or two, or possibly even lead to failure. These are not people who obviously cannot write at all, or cannot do so on a functional level. These are people who struggle and will always have that little bit more difficulty. How are we going to assist them? They may well be the majority, as this is a spectrum, but how are they going to get through? What is the structure and nature of the support that you should expect to be given?

The Statement goes on to say that those with more complex needs will receive help. Presumably, the implication is: help similar to the package that they are getting today, which usually means a computer plus the software. How are we to decide who has the more complex needs? Will it be somebody who has the old statement or the new education, health and care plans? If anybody has those plans and they are dyslexic, are they defined and getting this full package of support? Who will make that assessment and who will interpret it properly? If that is not to be done and there is not some degree of ambiguity about it, there will be a whole new area of challenge occurring. Where, for instance, does the university or institute of higher education hand over this responsibility? We need to know that to make the future system work properly. It will probably be slightly easier because the people might be those who, for instance, have to use voice-to-text technology, as I do, to produce all their work. If that is to be the case, can we please have a definition of what goes on and how that responsibility will be interpreted? However, the first category will be the most difficult.

I will leave your Lordships with one thought. It is quite common now for universities to discover somebody who is working very hard but underachieving compared to their spoken responses. They may then go for diagnosis and assessment, and then receive the package of access. How can a university or any other institute of higher education have the structure in place to do that without considerable planning within their internal structures? If you fail or drop grades, careers close up to you. I have spoken to a Member of another House—indeed, I am supposed to be in a meeting with him in about 20 minutes, which I shall not get to—who had two sons, both of whom were dyslexic. One took the help and got the career that he wanted; one did not, because he was proud, and did not get the jobs that he wanted. Those drop-offs in grades are very important to the individual concerned. They also mean that we do not get the best return from any investment which we make in the university system, in terms of those students.

I hope that we will clarify this because, if this one condition is important enough to be mentioned twice in this Statement about the future, I am sure that it is also important enough to have a really careful assessment of how this will be implemented in practice.

14:26

[Baroness Deech (CB)]

My Lords, there has been a great deal of comment today about fees and the economic impact of university education. My contribution might however be titled, “Never mind the quality, feel the width”. That is, my concerns are about the quality of higher education, its overregulation in some areas and underregulation in others. Your Lordships should not doubt my devotion to the cause and my understanding of what difference a university education can make. I confess in public that it took me nine goes over three years at the entrance examinations before I was able to get my place at Oxford, when the numbers of women were very limited.

Fast-forwarding half a century, when I was head of an Oxford college I spent half my time fundraising. Teaching in the humanities is hardly funded at all and institutions are heavily reliant on the good will of alumni donations. Yet the alumni themselves will be paying off their loans and, later on, financing their children’s education for much longer than hitherto. It was predictable from the start of the new loans system that many would never earn enough to repay. Indeed, there is a subtle message in the system to women: government policy makes it sensible to find a husband while at college and never work, or take the lowest-paying part-time jobs in order to avoid reaching the threshold for repayment. It was clear that others would escape the jurisdiction and that enforcement would lead to a situation as expensive to the nation as the one it replaced.

Many do not realise that the £9,000 raised by fees has been clawed back from the universities by reductions in the funding that they used to receive for teaching. The dash for cash is overpowering and debilitating. It has led to the frantic chase after foreign students, which is a good but not an unmitigated good—for their quality, if one is not careful, can often be less than optimal. After their intake reaches a certain level, the foreign student loses that which he or she came here for: the company of British students and all the available time that lecturers have to give them, as foreign students tend to need a bit more help than others do. Cutting fees as an attractive political offering will simply mean less money for universities to spend on good teaching and research, and will make them even more susceptible to dropping standards for applicants.

Talking of the diverse and international nature of universities, is it not a shame that in Scotland a student from England or Wales has to pay full fees whereas a Scottish student does not? We have heard a great deal today about attracting foreign students, yet within our own borders we have this discrimination, which detracts from the mobility of students and the collegiality that ought to exist between those who study in Scotland and those who study in England and Wales.

Let me scotch right away the notion that a university education benefits only those who receive it, and that therefore only they should pay for it. The entire population benefits from the services of doctors, scientists, architects, civil servants, authors, teachers and all the other professions that graduates may enter; indeed, the children of a woman graduate benefit from her care even if she is not in work outside the home. University education is for the public good, regardless of who pays for it. Nevertheless, it is dangerous for students to see it largely as a stepping stone to a more lucrative career, or for academics to lose interest in teaching because only research counts in the allocation of resources. This is because the supply of graduate jobs, or jobs that graduates think that only they are qualified for, is not limitless and there is a great deal of disappointment.

To graduate from a not very well known university with a low-class degree may not seem to be a good investment at all, unless one looks at the real purpose of university education. Universities exist to add to the sum of knowledge in the world and to the sophistication of human thought. They exist to equip people to change society. Their graduates are learning to look for a good life, truth, wisdom, virtue or beauty. They are not just acquiring knowledge or skills for their own sake; they must also be doing something that they love and see themselves as being formed by education. It is a privilege, a pleasure and a social, moral and personal good. Never mind the job you may or may not get afterwards—it will change your life.

Yet the student as pure consumer has become central to the recent perception of university education, and student satisfaction reigns. A few years ago I was the first independent adjudicator for higher education, charged with resolving student complaints from all universities that could not be settled internally. I am glad to say that under my successor, Robert Behrens, universities are given good guidance on the swift and fair settlement of complaints. In my time, though, too many of the complaints were really about students being awarded a level of degree lower than they thought they deserved. Universities are under pressure to give students the benefit of the doubt, especially when the league tables—quite wrongly, in my view—give a university a higher rating if it gives more first-class degrees, so that they have lost their rarity and degree classifications no longer serve the purpose that they should. Some complainants took the view that every student had a right to a second by dint of turning up and paying fees. It would be better to abandon those broad classifications and move to the American-style transcript, with more detail of individual scores.

Students now tend to see themselves as having consumer-type rights and contracts. University prospectuses look like holiday package brochures, with the same allure that may not materialise. Using business language, education is treated as something that can be “delivered”, but it is not a neat, complete package that needs only to be skilfully handed from one to another in order to ensure continuation and success. It is a participatory and continuing process, the content of which is never fixed. No amount of good teaching can succeed without the intelligent participation, reception and contribution of the student, and that is why some have to accept that they will in fact fail, for all sorts of reasons. Student satisfaction and the attraction of more students at any price should not be as central as they are, and student satisfaction should not dominate over education and scholarship, as seen and shared by the academics who have spent a lifetime assessing how to educate the next generation. Student satisfaction measured by survey is a subjective metric and can cast no light on quality and judgment. In the London traffic yesterday, I saw a bus with the statement blazoned on its side that a certain university was number one for student satisfaction in a certain topic. I checked and found that the same place was 101st overall in the Sunday Times league, which is measured in a different way.

Student demands ought not to lead to more spoonfeeding or more reluctance to challenge, criticise and place under intellectual pressure. A few years ago, vice-chancellors were colossi bestriding the land. At the moment, unfortunately, too often they are known because the salaries that they command are out of all proportion to the salaries that their lecturers receive.

Where does this business attitude come from? It comes in part from those who have been selected by the Government from time to time to review university education and its future. I join others in calling for universities to be under the Department for Education and for another review to gauge the purpose and extent of our tertiary-level education and its funding. I hope that the Government will not again select a businessman and set him or her—more likely him—to reform higher education. It would make more sense to put a philosopher or academic economist in charge of reforming banking and business practices than the other way around. In the recent past, as we know, reviewers have seen higher education merely in terms of economic or private benefit. Lord Robbins was a university professor himself and an exception, supported by my noble friend Lord Moser, to whom one must pay tribute for his role.

Would Lord Robbins have approved of what is going on today? I think he would have approved of the expansion but not of the drop in quality or the flight from teaching to research, and he would certainly not have liked the proliferation of expensive quangos, among which one must single out the potentially damaging and unnecessary OFFA. My own solution would be to sever the links between universities and state and to use the HEFCE grant to fund a rolling endowment programme with the aim of eventually endowing most universities, leaving them free to set their own fees and scholarships, funded for the poorer by the fees from the better off.

I shall cast a quick glance at one area where I regard university conduct as underregulated, or at least see it as carrying on in disregard of universities’ obligations under the Education (No. 2) Act 1986, which requires higher education institutions to secure freedom of speech within the law for members and visitors. Academic freedom and freedom of speech are two different concepts. The Equality Act 2010 requires universities to eliminate discrimination, victimisation and harassment, and to advance equality of opportunity between different groups and foster good relations between different religious and racial groups. Student unions are not exempt from the law; they are charities and covered by the relevant obligations. However, there are young people on campus who are vulnerable to extremism indoctrination and are repeatedly on the end of terrorist, racist and hate speech from visiting speakers. Time does not permit me to go into the various laws that control speech and conduct on university campuses, but there are some recent examples of disgraceful behaviour that vice-chancellors have failed to control. Some of them seem to me to be weak in allowing campuses to become free arenas of hate speech and places where minorities may be victimised.

I shall give some recent examples. A lecture on Egypt at SOAS was disrupted and terminated by Muslim Brotherhood supporters in October last year. A lecture by David Willetts MP was disrupted at Cambridge in November 2011 by objectors to his policies, when, ironically, he was to speak on the idea of university education. The LSE’s ties to Libya were reported on by my noble and learned friend Lord Woolf. Then there is hosting of lecturers who promote homophobia, and the contemplation of the tolerance of gender segregation. Violent, sexist, homophobic, racial supremacist, racist and extremist beliefs do not qualify for protection under our law because they are incompatible with the human dignity and rights of others. I hope that the Minister will encourage vice-chancellors to remember their duty, now that their campuses are microcosms of the mixed society in which we are located, to promote good relations, to uphold the law and above all to respect and foster education for its own sake.

12:40

[Lord Norton of Louth (Con)]

My Lords, I, too, welcome this debate. As my noble friend Lady Sharp said, it is some time since we last debated higher education. I declare my interests as an academic, as professor of government at the University of Hull and also as co-chair of the All-Party Parliamentary University Group and the Higher Education Commission.

Like other noble Lords, I begin by stressing the value of higher education to the United Kingdom. As has already been mentioned, we devote a smaller proportion of our GDP to higher education than our principal competitors, yet in research terms outstrip them all, apart from the United States. Recent research from BIS found that graduate skills contributed to roughly 20% of GDP growth in the UK from 1982 to 2005. The benefits that universities bring to society as a whole, through, for example, better health and interpersonal skills, have been estimated by the New Economics Foundation to exceed £1 billion. The latest research from Million+ shows the economic value to English regions of graduates taking up jobs in the regions where they graduated. Overseas students are not only valuable to universities but benefit enormously the United Kingdom in that they constitute the most important form of soft power that we have overseas.

We thus derive enormous value from higher education. However, the sector faces enormous pressures as a consequence of the new funding system, the ending next year of the cap on student numbers and the myriad new providers entering the sector. In 2012, according to BIS, there were 674 privately funded institutions, with a total of 160,000 students enrolled. These developments create significant challenges, not least for how higher education is regulated. Last year, the Higher Education Commission undertook an inquiry into the regulation of HE. We published our report at the end of last year. We are just beginning an inquiry into the financial sustainability of higher education, but it is the importance of regulation on which I wish to focus this afternoon.

The Government’s White Paper Higher Education: Students at the Heart of the System envisaged a higher education Bill. No Bill was forthcoming. The need for such a Bill is pressing. The regulatory regime for higher education is complex and difficult to sustain. We need a coherent and sustainable framework. That can be provided only by legislation. The present system has not kept pace with the changes I have mentioned and rests now largely on the good will of the sector. It is not clear that good will can be maintained. There are doubts as to how long HEFCE can continue to regulate the sector when it is no longer providing the funding.

Regulation is a means to an end, and the ends in this case are to protect investment in higher education, by both industry and students, to encourage innovation and to maintain and encourage excellence in HE. As we write in the report:

“For the Government’s reforms to be successful, a robust regulatory framework must be implemented to support the sector to be sustainable, enhance the student experience, and widen access”.

It is not a case of advocating more regulation, but rather better regulation. The uncertainties of the present regime militate against investment—the Government have acknowledged that,

“economic regulation is a critical enabler of infrastructure investment”

—and tend to make universities risk-averse. We need a regime that encourages universities and other HE providers to be innovative. The briefing for today’s debate from the Association of Colleges stresses the need for greater flexibility and a more dynamic system. We need a framework that enables students to make informed choices and know that they are receiving a high quality of education. That point is essentially made by Which? in its briefing for today’s debate.

What, then, is the most appropriate regulatory framework? In our report, we do not agree with the Browne review that there should be one consolidated regulatory body. We agree with the Government that a single body is neither desirable nor feasible. It is not desirable because bodies such as the Quality Assurance Agency derive their legitimacy from being independent. It is not feasible because some of the bodies have a UK-wide remit and others apply to England and Wales only. It is also a requirement of the Bologna process that funding and quality assurance remain separate.

We favour a more pluralist approach and one that takes on board the entry into the sector of new providers. We thus see the need to achieve not so much a level playing field as a more equitable playing field encompassing all providers. We took as our model the Legal Services Board. We put forward the proposal for HEFCE to be superseded by a council for higher education, encompassing an office for student loans, the Office for Fair Access and a new office for competition and institutional diversity. We believe there is a case for retaining the independence of the Higher Education Statistics Agency, the Quality Assurance Agency for Higher Education, the Office of the Independent Adjudicator and UCAS, but in order to ensure the complementary nature of bodies across a pluralist system, the council for higher education should have a contractual relationship with HESA, the QAA and UCAS.

We favour the council generating a common regulatory framework, encompassing all HE providers in England. This would enable providers to be subject to the same regulatory framework, but not necessarily the same regulatory requirements. All HE providers would be required to register in order to operate. Once registered, if institutions wanted to recruit UK or EU students and/or to teach recognised degrees, they would have to comply with further quality assurances and data submission requirements. Those that did so would receive a seal of approval from the council, enabling them to use a kitemark on their literature and display it as a demonstration of their quality assurance.

We take the view that risk cannot be avoided entirely and that the lead regulator should adopt a risk-based approach to regulation, enabling regulatory attention to be focused where the risk is greatest. Risks are not avoided, but rather assessed and managed properly. This applies at both a systemic and institutional level.

The greater competitiveness in the sector and the new funding regime enhance the possibility of institutional failure. Risk-based regulation is designed to reduce the likelihood of such failure, but there is always the possibility of an institution failing. That would clearly have a major impact on those directly affected, for whom it would be an upheaval and might involve financial loss. It would also tarnish the reputation of British higher education, and a reputation once tarnished can take a long time to restore. To cover against failure, we recommend a levy similar to that applied by the Civil Aviation Authority, with each institution paying a sum per student to cover costs in the event of failure. This would be designed to benefit the whole sector, since institutional failure would affect the reputation of the whole sector, traditional universities and new providers alike, especially among overseas students.

These proposals are designed not to increase regulation, but rather—as I say—to provide for better regulation. The present framework is piecemeal, complex and no longer sufficiently robust to protect the reputation of higher education and enable students and business to invest with confidence. HE institutions are presently too risk-averse and uncertain as to the future. A clear, robust regulatory framework providing coherence within a pluralist setting would be the most sensible way to proceed.

What I have detailed provides the basis for a higher education Bill. The ideal would be for one to be included in the next Session, but I appreciate that the reality is that the most that can be hoped for is one at the start of the next Parliament. Perhaps my noble friend the Minister can give some indication of the Government’s thinking, in terms of both the proposals I have outlined and the intended timescale for action. Doing nothing is not really an option if we are to ensure that higher education in the United Kingdom remains a world leader.

I end on a separate point. What I have said so far relates directly to higher education and to the responsibilities of BIS. I turn to a proposal that falls within the interests of DfID and the Foreign Office; I am not speaking here for the Higher Education Commission or any other body. I have referred to overseas students studying in the UK as a—indeed, the—major source of soft power. I suggest that we devote more of our overseas aid budget to providing bursaries for overseas students to study in the United Kingdom. This benefits the nations from which they are drawn: they acquire a greater body of university-educated students, better able to assist the country in economic and political development. It assists the United Kingdom in terms of bringing more overseas students to British universities, something likely to be more important over time as the number of overseas students declines, and it ensures that aid is used effectively and as intended, and is not siphoned off for the benefit of the regime or particular leaders. It creates, in effect, a virtuous circle. I know more money has been channelled to scholarships, and I very much welcome that, but I would make the case for extending it on a major scale.

We have an HE sector that has a world reputation, that continues to perform not only effectively but efficiently, outstripping virtually all of our competitors, and which has the potential to remain a world leader. The sector faces major and disparate developments. If we are to maintain our record and, indeed, improve upon it, we need better, risk-based regulation, not only to protect students, but also to encourage universities to innovate. The sooner we have a higher education Bill, the better.

14:52

[Baroness Kennedy of The Shaws (Lab)]

My Lords, I declare my interests: I am the principal of Mansfield College, Oxford; I was the president of the School of Oriental and African Studies at London University; and, prior to that, I was the Chancellor of Oxford Brookes University. In the early 1990s, I sat on the National Commission on Education and was invited by the noble Baroness, Lady Shephard, when she was the Secretary of State for Education, to chair a committee that looked at further education. I have therefore had quite a lot of experience, cutting across the whole range of further and higher education. I am currently the president of a small foundation that provides bursaries for disadvantaged students travelling from further education into higher education, and am interested in further education as a second chance for many people to get into higher education. It is with that background that I stand before your Lordships today.

I agree with many noble Lords who have spoken about the hugely important role of higher education. Higher education changed my life. It is for that reason that I take such an interest in making sure that opportunities such as those I have had are available to as many others as possible. However, it is more than a private good. Yes, it can change our lives, but it is more than that. Others have spoken to the fact that it is a public good, a common good, which enriches the lives of this whole nation and everyone in it. It is therefore right that it should be supported from the public purse.

A consensus is rapidly consolidating that the supposedly sustainable funding model imposed just 18 months ago is already proving unsustainable. The noble Lord, Lord Bilimoria, introduced this aspect to our debate by pointing out that the raising of fees has not worked, and there are now many people unable to repay loans. The Treasury is therefore going to be out of pocket. The reason is that the assumptions on which this funding model was based are unsound. No robust theoretical justification for the model has ever been provided because the objections to it, in my view, are far too powerful. Nor has any sizeable body of empirical evidence been produced in support of the model.

If the Government or the Opposition are interested in serious research, I recommend that of Professor Howard Hotson, a fellow at St Anne’s College, Oxford, whose work is not only compelling but also rather difficult to refute. There is now a large body of readily available data showing that marketisation of higher education does not function in the way in which its advocates initially supposed. I remind your Lordships of the arguments that were presented to the nation for going down this road. The idea was that market competition would require universities to compete with each other to attract student customers, and that attracting student customers would require offering the best quality education possible at the most affordable price. Those universities which served the needs of students best would attract many customers and would expand and prosper; those universities which failed to do so would wither and die. The invisible hand of the market, we were told, would therefore reshape higher education in the interests of customers far better than any government state planners ever could. Thus we would unleash the power of the market and all would be well with the world.

Well, all I can say is that some aspects of our society are less conducive to crude market modelling. There are three preconditions for an efficient market. First, there has to be accurate information on the products for sale. That is quite difficult in higher education because, as we know, we still have not managed to find an adequate way—a metric, if you like—for measuring the quality of teaching. Such a thing has not yet been devised. It is therefore difficult to compare satisfactorily whether an institution is really successful at that or not. Secondly, it is important for a market to work well that there are stable and well grounded personal preferences in operation: that the person who is the customer has a clear preference. However, one of the fundamental purposes of higher education is to shape discretion and preference. Many students are therefore still coming to this market rather green. The capacity also has to be there to judge which of the products on offer will best suit the preferences. To go into a market, you have to consider whether you have what is necessary in this arena.

Other conditions of efficient markets are also lacking. In order for market competition to work efficiently, new providers must be able to enter the market easily. However, it is impossible in principle to create new universities which are of the same order as 800 year-old institutions. The top end of the academic hierarchy, which was described very well by my noble friend Lady Morris, gives prominence to those which are ancient. The conditions for efficient market competition simply do not exist, and cannot exist in principle. I will give an example. As noble Lords will know, I am a lawyer. It grieves me to look around at the many thousands of young people basically putting all their savings and debt into acquiring law degrees from universities all around the country and then applying for training contracts or to go into sets of Chambers. Inevitably, short cuts are taken by law firms in deciding who to take, and the shortcut they take is to look at that hierarchy of universities and basically not even consider those who have gone to universities of which they do not know, or which are considered to be in the third tier of the university status hierarchy.

The justification of marketisation creates gaping holes, and we now know that the mantra that marketising university funding will drive down prices and drive up standards was not true. The noble Lord, Lord Bilimoria, described that very well. I will consider for a moment the outcome of that bold experiment. It was an experiment, because it was not rooted in evidence. Before 1999, the United Kingdom, like most European countries, did not charge domestic students any fees at all. Many of us in this House were privileged to have been beneficiaries of that. In 1999, the £1,000 fee placed the UK roughly where the Netherlands is now—the Netherlands is coming into this, too, but at that low level. The tuition fees introduced in 2004 and capped at £3,000 were designed to provoke price competition but failed to do so. The average therefore shot up to the maximum, overtaking all the Commonwealth countries, to the position shown, where only Chile, the United States, Korea and Japan charge more than us.

The Browne review then took place. Again, I share the regrets expressed by the noble Baroness, Lady Deech, that it is unfortunate that very clever businesspersons sometimes come in to review higher education but, unfortunately, do not take account of the great experience of academics and those who have lived their lives in the field to learn from them. The Browne review’s figure for a soft cap of £6,000 took us off the scale, far above any other public university system in the world. That £6,000 cap also failed to provoke price competition —so we did not get the competition that we were told would happen—and was immediately superseded by the £9,000 cap. The invisible hand of the market failed to generate competition. Therefore, even with the £9,000 fee, the heavy hand of government moved in to impose price differentiation, which forced the average price down to £8,354, which noble Lords will agree is not much of a reduction.

I want us all to note, because we always turn to the United States as being an incredible place to which we aspire, that the fee we now charge our students is now over twice the average tuition fee in public universities in the United States. We charge our students over twice that price. However, no sooner was the £9,000 fee in place than the vice-chancellor of the university at which I now head a college called for it to be raised to £16,000. We can just imagine what the trajectory will be. If Oxford obtains £16,000 in fees, Cambridge will follow suit, and so will Imperial College London, University College London, the London School of Economics, and all the rest will rush into the gap. We can be sure that that is the bad story.

Is that evidence of market forces driving down prices? I am afraid not. It is rather evidence that the hypothesis on which current university higher education policy is founded is incorrect. If Vince Cable or David Willetts had taken the trouble to study the way in which university pricing works in the relatively liberal higher education market in the United States, they would never for one moment have imagined that the market drives down prices in higher education. It does not. I am afraid that price becomes a proxy for quality, so the old universities start to charge more and more.

I am afraid that we are on a very poor journey. I urge the Government to start to review this, and I hope that any opposition party, particularly the one to which I belong, will look carefully at all this and perhaps think, “Maybe we made a wrong choice in the early stages”. I am anxious that we do not all take too much time, but, quickly, I encourage noble Lords to look at the work of Howard Hotson at Oxford. He has been able to show that America is not a good place to look to as our guide. Recent figures show that the United States is attracting fewer foreign students than before, and that the numbers are on a downward curve. Another myth about America is that it educates more of its young people in tertiary education, and again, that is on a downward trajectory because the market is not working there either.

We have to look again at the system we have chosen and decide whether the education of our young is a priority for us. If it is, it needs our investment.

15:04

[Lord Purvis of Tweed]

My Lords, I confess that following the noble Baroness, Lady Kennedy of The Shaws, and knowing that I will be followed by the noble Lord, Lord Hennessy, I feel underqualified to contribute to this afternoon’s debate. I hope that the veritable faculty of academics who have contributed to this debate in such a powerful way will be patient and allow me to make some observations from my perspective on the opportunities for people, places and, yes, Scotland, regarding this debate on United Kingdom higher education. I will also address some of the areas where I see barriers ahead regarding all those aspects. Further on in my remarks I will return to some aspects of the fees issue, which not only the noble Baronesses, Lady Deech and Lady Kennedy of The Shaws, but other noble Lords have addressed.

I will start with a small town in the Scottish Borders, Galashiels. In Victorian times a technical college was established in that town for serving young people who wished to have a career in the textiles sector. It developed into the Scottish College of Textiles, and more recently is sited on a combined campus with Borders College and Heriot-Watt School of Textile and Design. I represented for eight years a university campus which provided both further and higher education, and I am extremely conscious that the noble and learned Lord, Lord Mackay of Clashfern, and the noble Baroness, Lady Greenfield, were chancellors of Heriot-Watt University for 21 years combined, so they will know that campus exceptionally well. They will also know that a number of years ago there was concern about a proposal to close the campus. However, inspired leadership on the campus and at Heriot-Watt University and Borders College meant that with support from the Higher Education Funding Council as was, and the Scottish Government’s Minister Nicol Stephen—now my noble friend Lord Stephen—it continued and benefited from a record level of investment into a rural area of Scotland.

Why am I telling your Lordships this? Higher education is cherished and valued in very local and in many rural communities, as well as in the great seats of learning such as Aberdeen, Glasgow or Edinburgh, or the great cities of England, Wales and Northern Ireland. Centres of excellence in education—and there is no doubt that the School of Textile and Design is one of the foremost seats of learning in the world in its sector—take many years to build. Such centres require a cluster of people who are dedicated to their cause, as well as quality teaching that they will provide their students. They require knowledge of the industries that those young people and returnees to learning will go into for employment opportunities, and a global knowledge and understanding of that sector. All that is possible in a small town in the Scottish Borders. Young people from mixed backgrounds—not purely academic, but also those with a more creative and practical bent—need an opportunity to advance their potential. They are prepared to travel for that, and in travelling and moving home they are prepared to pay for it, although not necessarily in fees.

In this debate there has been a consistent focus on universities as the areas where young people or returnees receive their higher education qualifications. However, it is interesting to note that even in Scotland, the share of higher students at Scottish institutions by institution type shows that 17% of those that take their HE qualification do so in a college, and 28% do so in an ancient university in Scotland. The figure for new universities is 21%, and for post-1992 universities it is 27%. One may argue as regards HE that to discuss the estate, provision, teachers and investment of colleges is almost as valuable a contribution to this debate as it would be to discuss the new universities. That is where the students themselves are learning. In Scotland, of the 12 levels of credits and qualifications, six are for higher education, and many of those young people or returnees, as we have heard, will start their journey towards higher education qualifications in a local college setting. Indeed, many young people, adult learners, undergraduates and postgraduates from the borders or elsewhere benefit from a highly innovative approach to shared HE and FE facilities. That is the case at the Heriot-Watt and Scottish Borders shared campus.

One thrilling element of higher education is its transformative impact on the individual, but it is not necessarily always the same institution to which that transformation applies. For some young people who struggle through school and have an opportunity to start the journey for an HE qualification at their local college, five minutes around the corner, it can be as transformative as it was for me when I moved 500 miles to go to university in London, away from Berwick-Upon-Tweed. This is beneficial for the individual but, as the noble Baroness, Lady Kennedy, said, it is also beneficial for the country as a whole. From the times when England had two universities—and at the time when Aberdeen alone had two universities—Scotland has always had, and will continue to have, a global leading and inspiring impact on its approach to higher education.

That leads me to my second area—the future of the sector in Scotland. From the impressive paper Scotland Analysis: Science and Research published by the UK Government, and the House of Commons Scottish Affairs Committee report on the impact on higher education research and tuition fees from 12 March this year, we can see that the picture for Scottish higher education is a vibrant one, rich in depth and impressive in breadth, showing that its presence is disproportionately stronger than if we look merely at a population balance and share for Scotland as a whole.

When I intervened on my noble friend the Minister about the nature of this debate covering the whole of the United Kingdom, I was not being critical but was prompted to do so, reminded of the comments of my right honourable friend Alistair Carmichael, the Secretary of State for Scotland, who said at an Economic and Social Research Council event in Edinburgh in January:

“For too long there has been the simplistic assumption of devolved and reserved. Devolved—for the Scottish Parliament and Scottish Government alone. Reserved for the UK Parliament and UK Government. But the reality is much more complex than that. Whilst policy responsibility resides either north or south of the border, we all continue to work within a shared common framework. And perhaps nowhere is this more clearly illustrated than higher education and research”.

If proof was needed in this mix of responsibilities and shared benefit, we can look at a breakdown of some of the research income for Scottish higher education institutions. In 2011-12, there was a total of £861 million funding, with £251 million, or 30%, from devolved bodies, responsible for that funding, and £219 million, or 26%, from competitively awarded grants from UK-wide Research Councils. That compares to 22% for all institutions across the UK receiving that share from competitively awarded grants. So Scottish institutions’ prowess in research is demonstrated very clearly in that area. For Edinburgh University, the proportion of research funding from UK Research Councils was the largest share of its research income at 33.2%, higher than that provided by the devolved institutions. Therefore, a debate on United Kingdom higher education is fundamental for that sector in Scotland, even though some of the key levers are devolved. Even in the diverse and dispersed University of the Highlands and Islands, 27.3% of its research funding income comes from UK sources, with only 13.1% devolved. So of the top 200 universities in the world that we have had referred to us—and, as the Minister said, 31 are in the UK—five are in Scotland. It has one-sixth of the top institutions with less than one-10th of the UK population.

To address the point made by my noble friend Lord Storey and follow up the point made extremely powerfully and eloquently by the noble Baroness, Lady Greenfield, on university spin-out companies, the Scotland Analysis paper is also clear in showing information on that issue. In 2011-12, of the £2.471 billion of turnover for university spin-off companies, £360 million was from Scotland. Most interestingly, the estimated external investment received for the UK as a whole was £879 million and, for Scotland, £189 million—so 21.5% of estimated external investment received was to Scottish higher education institutions, with a population of 8.5%. So the contribution that the sector makes for the commonwealth of the United Kingdom as a whole and the social well-being of Scotland in particular is therefore a clear one.

What for the future? I was lucky enough to serve on the Scottish Parliament’s Education, Lifelong Learning and Culture Committee and can reflect on some of the issues with regards to fees. The choice that the Administration of whom I was a part—the Labour-Liberal Democrat coalition in the Scottish Parliament—made was that the Scottish Government should pay the fees of Scottish domiciled students. There is often a misconception that we prevented universities from charging the fees, but we made the decision that the Scottish Government paid the fees. That may address the point made by the noble Baroness, Lady Deech, as to why there is a differential between England and Wales, with EU cross-border travel issues with regards to students.

We are now able to make observations with regards to the two paths north and south of the border. Depressingly, the intervention rate for Scotland is still poorer than south of the border. The drop-out rate is still depressingly high, and the hardest to reach young people in Scotland are still not going into higher education, even though some more are going through college and universities. The welfare and hardship budgets are actually being reduced in Scotland. Most depressingly off all, the record in Scotland, which I find deeply depressing, is that only 1% of looked-after children, who have the richest parent of all—the Government—go on to receive a higher education qualification.

A final aspect of the future is a referendum on independence. A previous contribution that stuck with me was that the noble Lord, Lord Hennessy, said that he did not want to be part of a country that was either the continuing United Kingdom or the rest of the United Kingdom, if that was to be the sole definition. He said that he did not want to be a RUK—and I do not want there to be a differential in two structures and systems in these islands for higher education. We have benefited from two distinct approaches and cultures, but we have also benefited massively from providing easy access to students north and south of the border to benefit from global leading institutions. We have benefited from quality of teaching that is par excellence, and a breadth of provision because of the research quality that is there; postgraduate opportunities that are second to none around the world; seven research councils across the United Kingdom, which we could also claim to be Scottish research councils in many respects, because of the disproportion; 29 international offices, with 90 United Kingdom staff in the science innovation network, which Scotland punches above its weight in benefiting from; and top-table access in international discussions, shaping global research priorities such as the G8, or perhaps now the G7, Science Ministers summit, hosted last year in the United Kingdom. Those are opportunities for young people.

I have taken up too much of noble Lords’ time, but I wish to finish with one element, with regards to the young people who may well go to that campus in the borders. A couple of months ago a slightly less young person who was the first in his family to go to university—he had never had the money even to visit London before he was 18 and had not been out of his country, but went to a higher education institution, travelling far, with his parents driving him down in a packed car of luggage; luckily enough, he had the opportunity to do a work placement for an MP at that time in the House of Commons, then plain Sir David Steel, now my noble friend Lord Steel of Aikwood, who was himself an inspiration—was introduced into your Lordships’ House. I do not think that I would ever have had the opportunity to progress in my career from that start if it had not been for the experience of learning, meeting new people and broadening my horizons through higher education. I want every young person in Scotland to believe that the world is their oyster, and we should not create artificial barriers with creating Scotland as a separate state, making the noble Lord, Lord Hennessy, a member of RUK.

15:19

[Lord Hennessy of Nympsfield (CB)]

My Lords, I declare a couple of interests. I am a professor of contemporary British history at Queen Mary, University of London, and a member of the Council for the Defence of British Universities.

Like everyone else engaged in higher education, I am deeply concerned about the question of student funding. There is a dramatic starkness about the figures in the Public Accounts Committee report, Student Loan Repayments, published in February. It stated:

“There is at present around £46 billion of outstanding student loans on the Government’s books, and this figure is set to rise dramatically to £200 billion by 2042 (in 2013 prices)”.

I suspect that all political parties privately accept that something will have to be done about this staggering accumulating burden on the public finances. I can feel another inquiry coming on post-general election. It is a first-order question for higher education provision in England.

I should like to make a case for a wider and broader gauge inquiry comparable to the great Robbins report of 1963, which the Minister mentioned in his opening remarks. That report fashioned the university scene that shaped the world I inhabited as an undergraduate in the late 1960s, when but 7% to 8% of my age group received a higher education. As we have heard, today that figure is certainly above 43%, and is rising towards 45%.

On rereading Robbins for the purposes of today’s debate, two things stood out for me. First, as Lord Robbins himself put it in his 1963 report:

“Our terms of reference instruct us to consider the pattern of full-time higher education in Great Britain. We believe that no such instructions have been given to any committee or commission in the past. … The reason is obvious. Even today it would be a misnomer to speak of a system of higher education in this country, if by system is meant a consciously co-ordinated organisation”.

Lord Robbins explained that he believed it was time for an all-encompassing look at higher education because of what he called the,

“great Education Act of 1944, which inaugurated momentous changes in the organisation of education in the schools”.

Indeed, many of us in this House are beneficiaries of that Act. We are Rab Butler’s “children” in that we were the first people for whom a proper ladder of opportunity was ever lowered. I am not given to regrets but one of my great regrets is that that generation was almost certainly the best provided for ever in terms of health, education and welfare. Certainly, that is the case as regards the foreseeable future. There was no private finance initiative for the generation that went without for us and no shoving of debt down the line to the grandchildren. We were the most privileged generation in that regard and that has shaped today’s debate because, if I may say so tactfully, many of us are of a certain age. Lionel Robbins said that it was the job of his committee to consider changes for the higher education system of a comparable magnitude to those in the Butler Act.

I should like to linger a little longer on the Robbins report as I am convinced that it has resonance for us today. Robbins promised that his committee would eschew overprescription—how unlike our dear life under HEFCE these days. Instead, it would advance common principles. In a deliciously fluent opening chapter entirely free of the acronymia and management babble that infects so many state papers, and, indeed, even the internal communications of our universities, where precision in the use of language is a first-order question, Lionel Robbins’ pen was fluent and acronymia free. That is exactly what he did—he drafted longhand with his fountain pen at home, as my noble friends Lord Moser and Lord Layard, who were his statisticians, confirmed for me the other day.

Lionel Robbins was a great economist with a liberal, humane outlook—one of the greatest luminaries the LSE has ever produced—and had great generosity of spirit. As I am sure the noble Lord, Lord Purvis of Tweed, knows, he was a great admirer of the Scottish higher education system and wanted the English universities to go over to the four-year model. In his own way, Robbins breathed the tradition of Cardinal Newman’s classic, The Idea of a University, when he answered the question: what are universities for? That is a question we very rarely hear these days. Each generation must ask it anew for itself.

Robbins wrote:

“We begin with instruction in skills suitable to play a part in the general division of labour … secondly, while emphasising that there is no betrayal of values when institutions of higher education teach what will be of some practical use, we must postulate that what is taught should be taught in such a way as to promote the general powers of the mind. The aim should be to produce not mere specialists but rather cultivated men and women … Thirdly, we must name the advancement of learning … the search for truth is an essential function of institutions of higher education and the process of education is itself most vital when it partakes of the nature of discovery”.

Lord Robbins rounded this off by speaking of British universities transmitting,

“a common culture and common standards of citizenship”,

concluding that the UK higher education system as a whole,

“must be judged deficient unless it provides adequately for all of them”—

that is, all four of his principles.

The strength and lustre of the Robbins report lay in the way it scooped up and blended the best traditions of the past before setting out a plan for future expansion, including what was then going to be six—but was later seven—wholly new universities, one of which, Stirling, was in Scotland. Indeed, they came to pass and have powerfully advanced and enhanced the life of the mind in our country from the late 1960s, when the bricks were first laid.

Also in Lionel Robbins’ pages you find Isaac Newton’s idea that scholars stand on the shoulders of the giants who have gone before, and Humboldt’s notion that research and teaching are symbiotically linked and that, in today’s parlance, students should be the first to hear and comment on their teachers’ work in progress. The noble and learned Lord, Lord Mackay of Clashfern, gave us a vivid example of this with the incomparable Max Born at Edinburgh.

Rereading Robbins for the purposes of this debate was a tonic, as I have indicated. However, we have not seen its like since in the intervening 50 years. There have been inquiries and changes aplenty but no wider look at the purpose and system in the Robbins style, and I think we are the poorer for it. As a country, it is a void that we need to fill. I borrow a metaphor from my noble friend Lord Smith of Clifton, who, sadly, is not in his place today. When he was recruiting to the politics department at Queen Mary, he used to ask would-be students, “Are you a poet or a plumber?”, which is a pretty good question for would-be undergraduates and, indeed, postgraduates. To borrow his metaphor—the noble Lord, Lord Smith, is himself a distinguished former vice-chancellor—I think we in the universities are too often obsessed and ground down by the plumbing of academic life. I refer to the ever greater intrusion of administration. In so doing, we have allowed too much of the poetry to be syringed out of our everyday existence as scholars and teachers. I refer to the thrill of the intellectual chase and the pleasure and primacy of teaching. We need a new Robbins for many reasons, not least to remind our university teachers and scholars what will get them zestfully out of bed on a wet Monday in February. It is certainly not the next committee or the research exercise framework, which, without exception, diminishes the mental life of all those who have had to take part in them.

Our universities need to be institutions of inspiration as well as utility. Indeed, the rest of the world tends very kindly to regard them as such. They are a particularly subtle instrument in our armoury of soft power, as the noble Lord, Lord Norton of Louth, indicated, and as your Lordships’ Select Committee on Soft Power, chaired with great brio by the noble Lord, Lord Howell of Guildford, illustrated vividly last month in its eloquent report. The noble Baroness, Lady Sharp, has already mentioned some of the figures contained in that committee’s report, Persuasion and Power in the Modern World. I hope she will forgive me if I repeat them. With 1% of the world’s population, the UK provides 3% of global funding for research, 7.9% of the world’s scientific papers, 11.8% of global citations, and, most important of all, 14.4% of the world’s most highly cited papers.

It is difficult to apply similar measurements to the arts, humanities and the social sciences, but here, too, we undoubtedly think and publish heavier than our weight. When it comes to the life of the mind, as a country we really do meet Einstein’s requirement of sustaining what he called a holy curiosity. In so doing, we arouse the curiosity of the world. This is not squishy soft power; it is steel-rimmed soft power. There are plentiful reasons to be cheerful amidst our anxieties about the future of higher education. Let us have a Robbins inquiry for the 21st century and let us curb the plumbing and enhance the poetry.

15:29

[Lord Rees of Ludlow (CB)]

My Lords, I declare an interest as a long-time member of Cambridge University.

We have heard eloquent praise for the Robbins report—a manifesto for university expansion in the 1960s, written indeed with a literacy and depth sadly lacking from its later counterparts. Today, higher education has expanded far more, but a present-day Robbins report would surely find that our system has not adjusted optimally to its greater scale and reach. In particular, it has stayed too homogeneous. Polytechnics were relabelled as universities in 1992, and 20 years later David Willetts created 10 more universities by a stroke of the pen. This uniform labelling sends the wrong signals, as the noble Baroness, Lady Morris, stated.

Nearly all universities still focus on three or four-year degrees. They are incentivised to pursue research and postgraduate courses, and they all aspire to rise in a single league table, which incidentally underweights things that really matter but are hard to measure, such as how rigorous the courses are, how well they are taught and how hard the students work. The entire system needs a more diverse ecology: a blurring between higher and further education, between full-time and part-time, and between residential and online. There also needs to be an expansion of transferable “academic credits” to facilitate movement between institutions and to allow mature students to re-enter the system.

I echo the concerns already raised about the fee system. The Government’s mantra is that “money should follow the student”, but it is clear that the market-driven choices of financially pressured students will not necessarily drive up teaching standards; nor will they necessarily raise levels of rigour and achievement. Instead, they may favour soft and cheap options. The current system is in any case not a free market: fees are in practice narrowly constrained; there are quotas, inconstantly applied; and the degree of central regulation and the strings attached to public funding through HEFCE and the research councils erode autonomy and increase the administrative overhead in all universities.

Some things surely have not changed since Robbins. It is still a public good as well as a private benefit for our brightest young people to receive a rigorous education, and widening access is rightly high on the agenda. I wish to say a word about this. Universities such as mine expend huge effort on outreach initiatives, but these welcome efforts are not enough to ensure real equal opportunity. Young people unlucky in their schooling or their home environment cannot be fully compensated just by summer courses, open days and so forth. Even if their potential is high, they still will not, at age 18, reach the bar for admission to the most selective universities. What is even sadder is that they then generally have no second chance, even if they catch up later. Worse still, their career prospects will have been hampered by the deplorable tendency for high-prestige employers to restrict their searches and their milk rounds to a favoured group of universities.

Here, we can learn from the United States. A substantial fraction of those who attend the “elite” public state universities, such as Berkeley, have come not directly from high school but as transfer students from a lower-tier college. I think that our most selective universities, including Oxbridge, should earmark some proportion of their places for students who do not enter straight from school but have gained academic credits by study at another university or online. This would enhance fair access and lead to a more diverse student body.

When America is discussed, there is undue focus on the Ivy League private colleges. They have huge resources and can indeed offer scholarships to needy students. However, to extol them as examples of fair access is to overlook the dark side of their fundraising success: the overt “inside track” they offer to the offspring of donors or alumni. Even in the most reactionary enclaves of Oxbridge, there would be repugnance at lowering the entry bar for privileged students. The debate there is, quite rightly, about the extent to which the reverse should be done.

Fair access opportunities are crucial but this does not mean that everyone who is qualified to get a degree should feel that they have to do so. If a degree becomes a mandatory entry ticket to too many careers, this will inhibit social mobility by stymieing the prospects of non-graduates. We also need more flexibility in the curriculum in universities. Our traditional honours degree is not appropriate for as many as 40% of the age group. Indeed, I personally think that it is too specialised for almost all students. The stovepipes of individual disciplines are gradually breaking down but this trend has not gone far enough.

And there is nothing magic about the level reached after three to four years. An American will say, “I had two years of college”, generally thinking this a positive experience. Some drop-outs may return later; others may pursue part-time distance learning. Even those who go no further should not be typecast as “wastage”. Now that we are living longer, in a faster changing environment the importance of mature students, part- time courses and distance learning will surely grow. These will never replicate the experience of attending a collegiate university, for which there will always be a demand. Perhaps we also need some liberal arts colleges which can match Oxbridge in their level of teaching and pastoral care. These need not be left to the private sector. However, they would still be a privileged minority. Indeed, as higher fees start to bite and lifestyles change, residential courses in many universities may face a squeeze and be trumped by online courses.

The Open University’s well tried model—distance learning supplemented by a network of local tutors—has huge potential for extending higher education’s global reach. It is good that many universities are collaborating with the Open University, supplying content for the FutureLearn platform. It is far better that it should do this than link with one of the American platforms. The Open University can have huge global reach. One hopes that the Minister will ensure that it has the resources to do so. None the less, the role of much hyped massive online open courses—MOOCs—should not be exaggerated. I think that these MOOCs will have the biggest impact on demand for conventional, vocational master’s degrees, catering for motivated and mature students who are in many cases are already indebted through their undergraduate years and find it hard to get further funding.

What about PhD-level education? Here we should surely welcome alliances and clustering so that PhD students in each specialised subject are concentrated in a few graduate schools. Echoing the noble Baroness, Lady Morris, these schools should not all be concentrated in the same few universities. Many academics bridle at this suggestion, so in making it, it is important to emphasise that concentration of graduate education should not necessarily entail an equivalent concentration of research. That is a distinction that is often conflated. Many who teach in the best American liberal arts colleges are productive researchers and scholars, but if they have PhD students, these students are based in another university. We should remember that the Robbins report said that all university teachers should do three things: research, teaching and reflective inquiry. The last of those three is getting squeezed out. The key point is that a student studying for a PhD needs more than just a good supervisor. He or she needs to be in a graduate school where courses are offered over a wider range. Without this second component, a newly minted British PhD will not have flexibility and range that is needed for their later career.

Finally, I shall say some words from my perspective at Cambridge University. When academics bemoan the managerial and instrumental view of education that dominates today, they risk being accused of living in an ivory tower, being arrogant, and disregarding their obligations to the public. I think that we should contest that. My Cambridge colleagues are strongly committed to teaching and to the welfare of their students. They are obsessively dominated by their research as well. Their choices of research topics are anything but frivolous. What is at stake is a big chunk of their lives and their reputations. They are surely delighted if their work has some social or economic impact outside academia. However, it is not always recognised just how unpredictable, diffuse and how long-term such outcomes are. That is why the REF has often been such a perverse incentive. Even in targeted medical research, it may take up to 20 years to develop a drug. To take another example, the inventors of lasers in the 1960s used the work of Einstein from 40 years earlier. They did not themselves realise that lasers would be applied in DVDs and eye surgery. It is by attracting and motivating talented individuals and letting them have their own judgment that funding agencies will best sustain high-quality universities and optimise the prospects for impactful discoveries.

Therefore, our leading research universities are major national assets. They are magnets for global talent, for the collective expertise of their faculty and for the way in which they are each embedded in a cluster of research laboratories, small companies, NGOs, and so forth to symbiotic benefit. The prime output from even the most research-focused universities is still the high-quality gradates they feed into all walks of life. They should be cherished for that reason, and their teaching quality sustained, too. There are all too few arenas in which the UK ranks as high in the world as it does in higher education. To maintain our competitive advantage, quality must be sustained across the system against growing international competition. The UK must be perceived as open and welcoming to talented students and faculty from across the world. We should realise that universities must be businesslike but that does not mean that they must be like businesses.

15:42

[Baroness Perry of Southwark (Con)]

My Lords, I, too, thank my noble friend for having initiated this amazing debate. Already we have had so many extraordinary and memorable speeches. So many of the major issues have already been dealt with in such a learned and detailed way, but I shall not do that. I thought that it would perhaps be my role to talk about one particular university and to bring some practical examples of what one university can do.

My experience spans both being vice-chancellor of London South Bank University, an access university, and being head of a house, head of a college in Cambridge University. I celebrate and rejoice in the diversity that those two institutions represent and I very much agree with the noble Baroness, Lady Morris, about league tables. If you start a league table only with those universities which accept students with three or four As at A-level, you inevitably put all the access universities down at the bottom. That is unjust and ridiculous. If we are to have league tables, let them at least celebrate the diversity which is an essential ingredient of good higher education.

I could have chosen to talk about London South Bank University, which I love dearly, but I have decided instead to use the time available to talk about the other university that I know and love—the University of Cambridge. I was lucky enough to be an undergraduate at Girton for three wonderful years many years ago. Incidentally, my three years there cost neither me nor my parents a penny. I was fortunate in having a full maintenance grant as well as my fees being paid. I still remember the first cheque that I wrote in my brand new cheque book was to repay my father for the 12/6d of my train fare to get there. Otherwise I was absolutely on my own. I was lucky, as I said, also to be head of one of the colleges of the university, to which I will refer later, for seven very happy years.

Cambridge, of course, is not alone in its success—many other universities have equally strong success stories to tell—but it is the one I know and I use it as an illustration of what a good university can do to contribute to society and change the world for the better, as Cambridge University’s mission describes it.

Almost 20 years ago, the noble Lord, Lord Broers, declared in his inaugural address as vice-chancellor that Cambridge was “open for business”. In that speech he invited companies to come to share in partnership the physical facilities and human intellectual capital which the university could offer. What followed was a huge influx of business into the city and its area—not least, of course, the large Microsoft research campus, the only one that that great company located outside the US. Over the years since, the university has played a central role in creating one of the wealthiest regions in the country, competing with the legendary areas which have grown around the successful universities in the United States.

Today, in addition to the links between Cambridge and the Massachusetts Institute of Technology, the university has its first research centre outside the UK, in Singapore, dealing with advanced research in energy efficiency. Back in Cambridge, more than 250 academics are working also on energy-related topics, solving some of the complex problems of the issue of energy which face our world today. Those 250 academics are drawn from 27 different departments, faculties and centres in the university. They focus on the issue of energy but bring their expertise from the physical and life sciences, from technology and social science. The university believes that it is in such multidisciplinary approaches that solutions will be found to these complex problems.

It is my opinion that one of the reasons for the success of Cambridge—as is the case, of course, for Oxford and other universities—is its democratic management structure. At Cambridge, more than 3,500 people have the right to vote over every important decision proposed. Budgets are devolved to departments and not centrally controlled. Teams of researchers usually have total control over the use of their grants and their income from externally funded projects. It is all about trust. The best and most talented people can and should be trusted. If they are left alone they will do their work in the best possible way, following their own professional passion and enthusiasm. The simple fact is that that works. If we are going to bring out the best in people and see the best results from their efforts in higher education, it is infinitely more likely that they will work well if they are left free rather than regulated and controlled.

Of course, it is our students who count the most. I always feel a deep sense of pleasure when I see that Cambridge students record among the highest for satisfaction with their experience. Some 92% of Cambridge students declare themselves as happy with their experience in the years they spend there. These are astonishingly bright young women and men who come full of promise. No job is more important than the task of helping them to acquire the experiences, skills and knowledge that will help them to fulfil that promise.

Students now come to the university from many different backgrounds and different educational preparation. Cambridge devotes money and energy to outreach, searching for the best and brightest students from whatever background. The figures for admissions in 2012, the most recent to have been published, show that nearly 1,700 came from maintained schools as against only 1,149 from independent schools. During 2012-13, the university and its colleges, in its outreach activities, interacted with more than 8,000 schools and further education colleges, reaching out to more than 145,000 state school and college students at an investment cost of more than £4 million. The university also distributed £6.4 million to students from low-income households through the Cambridge bursary scheme, enabling them to study at the university without financial anxieties.

Within this pattern, Lucy Cavendish College, which I had the enormous pleasure to head for seven very happy years, plays a unique role in being the place where, by University of Cambridge statute and by its own statutes, women over the age of 21 may attend at a time of their own choosing, not at the conventional age of 18 or 19. There are more than 350 undergraduate and graduate students at the college coming from every conceivable walk of life—from the police force and the health service to the theatre, business and charities. Over one-third of them enter via non-traditional routes into higher education. The college provides a community and an environment in which women students from diverse and sometimes challenging or socially deprived backgrounds can achieve their full potential at a time in their lives and in an environment that is best suited to their needs. It also provides about one-third of them with scholarships and bursaries made possible by the generosity of our benefactors who share the vision of this unique college.

As I have focused on students, I should like to end with stories about two Lucy Cavendish College students of whom the college is rightly particularly proud. The first is a medical student who is the mother of four children. She had dropped out of school and left home by the age of 16. She is now in the fourth year of her medical degree with outstanding grades in her course and has just been awarded the William Harvey award for the top medical students in the university. What a turnaround that represents in someone’s life. Last year, an undergraduate was due to give birth at the same time as her final examinations, which might not be said to be good planning. She was determined to go ahead with her exams, so the college’s senior tutor arranged for a room at the maternity hospital to be designated by the university as an examination room—the first time that the university had ever done so. In spite of taking her exams literally immediately after delivering her baby, and while still wearing an intravenous drip in her arm, the student was awarded a first-class honours degree. For me, these stories are the real Cambridge, and the reality of what our good universities are doing to change lives and make the world just a little bit better.

15:51

[Lord Watson of Richmond (LD)]

My Lords, we have heard many fine and powerfully well informed speeches in this debate. In particular, I congratulate the last speaker on extolling the virtues of Cambridge—and I may attempt in some small measure to do the same. However, one speech that I have been particularly struck by today was that of the noble Lord, Lord Hennessy. He referred to the teaching of Humboldt that there is a vital link between teaching and research. One of the things that is important to the University of Cambridge is the need to maintain that link, and indeed we have prizes which are awarded on the vote of the students for who they think have been the most effective teachers. When the so-called Pilkington Prizes first started, many of the teachers were slightly alarmed at the prospect; now, they find them a very useful thing. I should declare an interest as the high steward of the University of Cambridge and, for a number of years, as the chair of the Cambridge Foundation.

Last month I spoke at an enormous, interesting and different sort of conference held in Dubai, of the Global Education and Skills Forum. I was asked, not once but several times, and perhaps with a touch of envy, how it was that Cambridge was able to,

“achieve excellence, retain choice and maintain its freedom to choose its future direction at a time of funding shortages and austerity”.

It is the sort of question that the Minister faces on a regular basis. Predictably, and perhaps also a little glibly, I replied that for Cambridge, as indeed for many other universities, excellence and freedom are interdependent. For this reason, I was happy with one specific sentence in the letter dated 10 February from the Secretary of State for Business, Innovation and Skills, and jointly signed by the Minister of State for Universities and Science, to the chair of HEFCE. The sentence states:

“It is for you to take the decisions on how you allocate your budgets”.

However, the letter continued, perhaps predictably, to say: “you should deliver savings”, and,

“make greater progress in delivering efficiencies”.

It was a predictable exchange. It reminded me of some very sharp and relevant words of our current vice-chancellor at Cambridge University, who said in a lecture last year that without financial resources,

“in sufficient quantity and—critically—in sufficient variety”,

freedom is,

“like a torch without batteries”.

As many of your Lordships have said today, we are of course rightly proud of higher education in the United Kingdom. It generates £73 billion for our economy and contributes 2.8% of our total GDP. We are not only economically enriched by this but enhanced intellectually, culturally and, I would argue, spiritually. It is vital to our quality of life and our ability to survive and to succeed. At its best, it enjoys the very highest reputation, which, combined with the critical advantage of teaching in a global language—our own—has ensured huge success.

However, I wish to focus briefly on what I believe are two causes for quite serious concern which, if not addressed, could erode our position and, indeed, imperil it. The first is highlighted in HEFCE’s report, Global Demand for English Higher Education, which was published this month. The fact is that the number of overseas students starting courses in England has fallen for the first time in almost 30 years. The numbers are not huge but the trend is worrying. There is also a 1% fall in those embarking on full-time postgraduate degrees. The biggest falls here are in the numbers from India and Pakistan—to which reference has already been made—which are down 51% and 49% respectively. At the same time, the United States is reporting a 10% increase in postgraduate intake, including a 40% increase from India. Australia is seeing significant increases, facilitated in part by streamlining and simplifying visa provision.

In this regard, I agree strongly with the recent remarks of my noble friend Lord Howell of Guildford, who said that our restrictions on visas are creating a “blot” on our reputation. It is a blot, but also a blow to our resources; not only because we earn so much from international study—which we do—but because, as my noble friend Lady Williams said during the Immigration Bill debate last month,

“no less than 33% of academics currently serving in Russell group universities come from overseas”.—[Official Report, 12/3/14; col.1786.]

As well as falling numbers, there is a second fall, in real resources. The mathematics—the arithmetic, if you like—are certainly complicated. Universities UK said, on receipt of the annual grant letter to HEFCE to which I referred earlier, that although it was of course “pleased” that,

“high cost subjects … widening participation and small and specialist institutions are to be protected”,

at the same time, all certainly seemed to be threatened by the projected budgetary cuts for 2014-15 and 2015-16. While it is of course good that the Government have maintained their ring-fence around science and research, we have got to commit long term to fund research above the rate of inflation. We currently spend a lower proportion of our GDP on higher education than our rivals. Our future competitiveness requires that we spend more.

I said at the start that while there is much of which to be proud in the United Kingdom’s higher education achievement, there are also causes for concern. Trends are now emerging which, if not reversed, could indeed erode our position: falling numbers overall of overseas students choosing to come here from abroad, including from the European Union; and in real terms failing to stay ahead of inflation in our funding of research and development. These trends need to be reversed.

16:00

[Lord Sutherland of Houndwood (CB)]

My Lords, I do not wish to break the rules of the programme “Just a Minute” so I shall try to avoid repetition, and will not talk about my days at Cambridge; nor will I retreat to talk about my time at Aberdeen University, both of which served me excellently well.

The first-rate opening speech by the Minister was followed by an excellent speech by my noble friend Lady Morris. Both speeches raised a question in my mind that I want to face up to: why do we talk now about higher education when at one time we would have spoken about universities? This is a significant shift. It is not necessarily a bad shift—I am not complaining about it—but the point was well made by my noble friend Lady Morris that “higher education” is a much more inclusive range of institutions, possibilities and opportunities.

Subsuming universities into that has had some advantages. Universities have learnt a broader context in which to live and work, and that has been good for them. Higher education institutions have had some benefit in terms of kudos and powers from the Government if they have been effectively declared universities. But there has been a downside. The mission of many higher education institutions has been distorted by the company that they have been forced to keep. It showed up initially when the polytechnics became universities: there was a stampede towards teaching law and sociology. I am enough of a vice-chancellor to know that one of the main reasons for that is that they are very cheap subjects to teach. That was not a good direction to move in, and many of them have reversed it, much to their credit. Equally, it has led us to ignore and avoid the distinctive features of what makes a university a university. The discussion has shifted because of the language we use and the context we set.

It first struck me when I had my first ever visiting teaching post as a visiting professor in the USA. At the end of my first lecture, a large Texan student came up to me, jabbed his finger into my chest—this was at nine in the morning, they start early there; and it was minus 20 degrees outside—and said, “This better be good. My old man is paying 4,000 bucks a year for this”. I suddenly realised that there was a different perspective on what one was doing as a university teacher. That shifted my mind a bit.

More recently, one of the leading think tanks in this country invited me to a seminar on the student experience; I am sure that many of your Lordships had an equivalent invitation. That is great, very important. I looked down the list of speakers. There was a government Minister, which is appropriate; the chief executive of something called the Higher Education Academy; two people of journalistic backgrounds; the head of public services and consumer rights policy at Which?; someone from the Office of the Independent Adjudicator; happily there was a student, the vice-president of the NUS; someone from the Quality Assurance Agency; the odd vice-chancellor, and so on down the list. They were all worthy people—I am not saying that they should not have been there—but what was missing? There was no university teacher, no one who taught, and it was a conference about the student experience. There was no reference to the Max Borns of this world or, in my own case, the Donald MacKinnons of this world, who inspired a genuine, lifelong interest in what it was I wanted to do with my life. There they were and there they will be.

What has brought this about? A picture of what a university should be seems in our public discourse to have changed. It has become very near to what my noble friend Lord Hennessy has referred to as business “babble”—MBA speak. It is too prevalent. Universities, HEIs, are now selling products. These products vary: degrees, they might sell; employability, they might sell; high salaries and initial jobs, they might sell; and the latest one is they will sell social mobility. This is what universities now present themselves as doing. It is not the picture of universities that one or two of us in this debate wish to spell out. One occasionally fears that some are selling academic snake oil.

The language of MBA-speak has taken over. This may lead you to think that I am a dreadful old fuddy-duddy and that I may be becoming too conservative—with a small C, looking deferentially across the Chamber—in my old age. That is not so, I hope. I declare now my interests. I was what some have called a serial vice-chancellor: in the Strand, in Bloomsbury and in Newtown, Edinburgh. In the course of that, I had to learn all the skills that are necessary for a modern vice-chancellor. I learnt about property values in London and helped fund the merger of King’s College with two other colleges and a medical school out of the value of London property. That was a long way from my courses in moral philosophy. I learnt in Edinburgh, too, to avoid committing the university medical school to a PFI scheme that the hospital was entering. We fought that off, and that is probably the most important thing that I have ever done for higher education. One had to take these issues on. One had to learn that the university world and the world of vice-chancellors is really rather different these days.

The move down that line, towards seeing the business side of universities, was inevitable because of the expansion of the system—it has been referred to already. There was a 2.5% age participation rate after the war; it was 7% when I went to university in 1959, was double that in 1970 after the first tranche of Robbins universities and went up to 43%—in Scotland, it hit 50% one year. That is the age participation rate that we are talking about. It is not a bad thing; I am not protesting. Opportunity is what made many of us, and that is what we are offering. However, it is expensive, and if it is expensive, we cannot live in the hope that the traditional system will continue to apply without question. We cannot hope to avoid the issue of what the real costs are. A very well known head of one of the Ivy League universities in the USA was accosted after commencement, or graduation, by a set of parents who said, “Mr President, I want to tell you that our Elmer’s had a great experience here. It really has been a very fine, fine experience for him. He got a good degree. He’s got a job with Kinseys”. Then a slight shadow fell as they said, “However, it just all seemed a bit expensive. Why does it cost so much to produce a graduate?”. To which the president said, “If you think knowledge is expensive, try ignorance”. That is a fundamental principle, but, on the other hand, if you have a free flow of cash, you will not check whether the costs are real.

The atmosphere has changed; we have had to learn to live with that. But what has been missing—I thank my noble friend Lord Hennessy for raising this, and the noble Baroness, Lady Greenfield, mentioned it as well—is the question: what are universities for?

For the first half of this debate, that was not mentioned. What are universities for and what is a good university? I have another American story. The president of the University of California, asked what makes a good university, said, “That’s straightforward. Three things: football for the alumni, sex for the undergraduate and parking for the faculty. If you’ve got those three, you’ve got a good university”—well, a contented university, perhaps. There are bigger questions than that, which the noble Lord, Lord Hennessy, has raised. What are the drivers of change and expansion? The noble Baroness, Lady Morris, raised the dangerous side of the drivers, which is that we are becoming a uniform system that was not meant to serve 50% of the population and is merging in the middle.

I support the proposal that we need a thorough look—perhaps Robbins-style—at what is to be the future shape of the higher education system and the place of universities in it, alongside further education, different forms of teaching and different ways of providing courses, whether part-time or adult education. We are arguing about whether the participation rate should be 40% or 50%. It should be 70% or 80%, because we are talking about continuing education, not what percentage of 18 year-olds we should have; that is a different and much narrower question.

My only additional proposal is that we have the relationship between universities and government increasingly out of kilter. Once we had grants, more recently we have had funding with conditions attached. In my view, we need to move to a different system—a contractual relationship. I will not take time now to spell all that out, but I think a different route ahead could and ought to be considered in such a long-term look at higher education.

16:12

[Baroness Bottomley of Nettlestone (Con)]

My Lords, I have a sense of anxiety in addressing the House today, because I feel that I need to explain that I did not go to the University of Cambridge. I am not saying the same for they who begat me or they who we begat or he who I married, but I wish they House to be aware that I did not go to University of Cambridge.

Secondly, I most warmly congratulate the right reverend Prelate on his maiden speech. I did not entirely agree when he described himself as some jobbing priest, because I fear that he trained for the priesthood at the University of Cambridge. He was also at Oxford, and started off at another very distinguished university, the University of Durham, but I claim great affinity with him, as I am Baroness Bottomley of Nettlestone, on the Isle of Wight, where I was christened and married and spend much time. He will know that the educational attainment and expectation for people on the Isle of Wight is all too pitifully low. I know that he will join others in doing all that he can to work on that critical issue. I also want him to know that I have an honorary doctorate from the University of Portsmouth, of which I am extremely proud.

Like others here, the interests that I must confess are too numerous. My greatest pleasure in life is being chancellor of the University of Hull, alongside the noble Lord, Lord Norton of Louth—another great port city, like Portsmouth, and a wonderful university with an incredible legacy acting as a catalyst for the city, the region and the nation in a most remarkable way. The contribution of the university in gaining for the city the accolade of City of Culture is yet another example of what a university can do, in collaboration with Siemens with its new investment in the area, which needs employment and investment all too greatly.

Aligning the University of Hull with the world tables, I have become part of the international advisory council of Sebanci University in Turkey. To reinforce the international link, I am also pro-chancellor at Surrey, where the excellent Professor Chris Snowden, now president of UUK, is vice-chancellor. I shall be there on Friday awarding degrees. Finally, I have been a governor of the London School of Economics for, I think, 30 years—it shows how good its governance structures are that they seem to be beyond review.

My serious point here is that my prejudices all arise because my noble kinsman Lord Hunt of Chesterton—I am afraid that he has disappeared, but not without sending me a delightful note—and I shared a grandfather, Dr William Garnett, who was secretary of the Technical Education Board and worked with the Webbs. He established the Institute of Education and Greenwich University, and was one of the original signatories for the London School of Economics. He was a contrary man who did a great deal of good but caused quite a lot of enmity as well, to his credit. He then retired into writing and the great work that he wrote was Education and World Citizenship. I deeply believe that universities, with all their importance in creating employment and in innovation and research, provide education for world citizenship.

What excites me is the international nature of our universities, where 24% of academic staff are non-UK nationals. Seventeen per cent of students in UK universities are non-UK domiciled, 12% from outside the EU, and it is up to 37% at postgraduate level. This is nothing compared to Singapore, where I was asked to go the other day by Phil Baty, who runs the Times Higher league tables. I went to Nanyang Technological University, which is an incredible dynamo where 70% of the faculty do not come from Singapore. Wherever you go around the world, it is a story of international collaboration. In Korea, I was talking to the people who have a partnership with the University of Surrey. We see that everywhere. Then at the other end of economic activity, in industry and commerce, global perspective and cultural sensitivity are absolutely critical. The fact that our universities are so international within their faculties, research partnerships and student populations is a huge strength and great benefit for us all.

I wanted to share most strongly in the comments made by my friends the noble Baronesses, Lady Morris and Lady Warwick, the noble Lord, Lord Rees, and others about the diversity of our provision. What is so stale and dated is this idea of a snobbish hierarchy about universities. I do not mind whether you are pre-1992 or 1994, or a Russell group. Universities are and should be distinct, and have different personalities. Of course the league tables show something. They are good fun and people can game them, and they help students to have an idea of where they are going and what the benefits and strengths are. However, the real issue today is how we can make our universities have different personalities and characters.

I want to refer briefly to the work done by Sir Michael Barber at the IPPR because I thought that Members of the House would like to know about his typology of the universities of the future. There is the mass university, taking advantage of globally developed content and adapting it for its own students. Those universities will use predominately online or blended approaches, perhaps in collaboration with respected institutions. They will cater for hundreds of thousands of students at a time and provide good education for the growing global middle class. Of course, this is about UK higher education but how can we discuss that ignorant of the rest of the world? There is the niche university to which the noble Lord, Lord Rees, referred: effectively, like the New College of Humanities in the UK and the classical liberal arts colleges in the USA. They have deep specialisms in narrowly defined areas, possibly taking global stars on to their staff. There are local universities which are community-based, fostering strong relationships with regional students and businesses and playing a role in the constant renewal of local and regional economies, through opportunities for the development of skills in the workforce and applied research. They may be developing more of the part-time or sandwich courses which so many have hankered for.

We will of course continue to have the elite universities, which we spend a great deal of time discussing because they are jewels in our national infrastructure. I am sure that they will continue to produce great research, be led by great academics and be sources of great pride and influence.

Then, I suspect, we will also have those universities really using the new technologies and new business ideas. We at the Open University have seen so much of what can be achieved. It has been said that almost every sector has re-engineered its product. For trainee accountants, airline pilots or doctors, new technologies are used. Are we are doing all that we can in higher education to ensure that we are looking with an open mind at the most effective ways of opening people’s minds and teaching them new skills?

With that, I wanted to talk about leadership. To me, our cadre of vice-chancellors in this country are a source of great pride, and increasingly they come from different backgrounds. Professor Steve Smith at Exeter said:

“This may be a perilous time to be a university leader, but it creates tremendous opportunities for the brave”.

We know about the problems of funding, student caps and immigration policies. I am not going to share the debate around those subjects because they are constant and ongoing and we will continue to debate them. However, the opportunities today for real leadership and reinforcing the mission, whichever university it is, are very exciting. At the Open University, for example, we saw Martin Bean, who comes from Microsoft. A former colleague from the Commons, Bill Rammell, is now the vice-chancellor of Bedfordshire. University of the Arts London, which is hugely successful, actually has someone out of professional services. Reading University, which is very successful, has a former Permanent Secretary, Sir David Bell, as its vice-chancellor. Aston, to which I am very grateful for my degree, has Dame Julia King, who is an academic and someone who has been in business, as has the excellent Chris Snowden, a fellow of the Royal Society but also very much a businessman in his own right. These backgrounds are different and, above all, global. Our vice-chancellors come from all over the world, quite a number from South Africa, while Louise Richardson is from the States. This is hugely welcome. We should look at these individuals maybe as great academics or maybe as great business leaders, with a profound commitment and concern about leadership and higher education.

However, there is a serious gap. We spoke the other day on International Women’s Day. Personally, I am a little exhausted by the debate about women on boards. They are doing fine; there are 25% of them. However, fewer than one in five of our vice-chancellors are women. How can this be? The majority of undergraduates are women and they do better than the men but no, only a handful of vice-chancellors are women. There has an increase, rapidly in recent years, to 17%. All too few women are chairs of councils, too, a group that we ought to talk about as the voluntary commitment of people who chair universities often brings huge skill, devotion and dedication to the role. Let us hope that with Madeleine Atkins now at HEFCE and Nicola Dandridge taking over from the noble Baroness, Lady Warwick, at Universities UK, we will see some progress. However, I share a paradox with noble Lords: the female vice-chancellors are disproportionately from the STEM subjects. Dame Nancy Rothwell, Dame Julia Goodfellow and Dame Julia King are all from STEM subjects at a time when we are constantly complaining about the lack of women in STEM subjects—a subject of ongoing work and debate.

In talking about leadership, though, I need to mention a particular individual who I think has scarcely been acknowledged. Our Minister for Universities and Science in another place, David “Two Brains” Willetts, is hugely to be admired and congratulated. I have seen the way that he builds alliances with people of all political parties and none. He is hugely dedicated and effective, and someone of real calibre at such a sensitive time. Similarly, those at HEFCE—Sir Alan Langlands has recently stepped down—who have navigated this controversial, argumentative and innovative sector so magnificently in recent years also deserve our recognition. If I have failed to declare my professional interests, they are as outlined in the Members’ register.

Nelson Mandela said that education was the easiest way to change the world. I agree, and I applaud this debate.

16:24

[Lord Young of Norwood Green (Lab)]

My Lords, I congratulate the Minister on securing this debate. I must admit that when I saw the list of speakers and started to calculate the average length of time they were taking, I inwardly groaned. However, I have sat here and, for the most part, have been enthralled by the nature of this debate, its depth, its wit and its analysis. There have been one or two debates that I have sat through about which I could not say the same thing. I feel confident when I enter a debate about apprenticeships because I was on one; I feel less easy on entering this debate because my formal qualifications ended at City and Guilds. My noble friend Lord Giddens once described me as an autodidact, and that is probably about right, so I shall rely on that qualification from the university of life to get me through this debate.

I, too, pay tribute to the right reverend Prelate the Bishop of Portsmouth—not bad for a jobbing priest is all I can say. However, he is a lot more than that, as we have heard. It was a fascinating contribution, and I thank him for the only reference to the living wage in this debate. The church played a significant role in instigating that concept. The last thing I shall say about this is that if you wanted to pay tribute to the House of Lords as an organisation that can bring a wide variety of knowledge and experience, this debate has encompassed that. Hansard will certainly be worth looking at.

Let me start with where the country now finds itself. Surely we have to think seriously about reducing the huge levels of debt write-off that make today’s system unsustainable. I do not say that to make a party-political point; it has been the subject of a recent report. The lessons from the revelations of the past two weeks have driven a coach and horses through the Government’s higher education policies. The revelations have caused huge concerns for students, taxpayers and vice-chancellors. They are revelations that have comprehensively changed the terms of the debate. First, there was the admission in a Parliamentary Answer to my right honourable friend Liam Byrne that the Government now expect the write-off of student loans to rise so high that their system of tripling student fees might not actually save the taxpayer any money. That is surely a cause for concern. Mr Nick Clegg, who tried to defend his change in policy by arguing that the amount students would pay back each month was less than under the old system, somehow forgot to mention that the average student today will not pay their loan back for 27 years, so students today will be approaching 50 before they are free from the debt burden. Surely that should not be the legacy that we leave to this generation and the next generation of students.

A number of noble Lords have commented warmly on the fact that they attended university for free. Yes, they did, but in an era when somewhere between 5% and 7% of people went to university, when it was very class based and very few working class children were able to attend university or even had an aspiration to do so. I can recall only one mention during this debate of the fact that it was the previous Labour Government who set the target of 50% of young people going to university. For a while, I heard it mocked and derided. Yet, when I went round speaking to young people, which I do with the House of Lords outreach programme, and asked group of sixth formers in very working class colleges and schools how many of them were going to university, all the hands went up. I thought that was an astonishing achievement. One might argue about the outcomes, but in terms of social mobility and raising aspirations, I think that was a very important policy.

In stark contrast to the previous regime, it was estimated that, for students starting after 2006-07, when the previous Government introduced a loans system for fees—a difficult decision that I remember having to try to justify, as I was Minister for Students and was going around meeting groups of students, and I probably used that hackneyed phrase about politics being about the language of priorities—the average student loan would take something like 11 years to repay for men and 16 years for women. Then, last week, we got the story’s latest instalment when a fresh batch of Answers arrived to Parliamentary Questions tabled on the scale at which private providers are now enjoying hundreds of millions of pounds of support, funded by the taxpayer. The sheer scale of the subsidy surprised everyone: nearly £1 billion of publicly funded loans and maintenance grants are now flowing through students to private providers. That, as the Guardian pointed out, is a 2,100% increase in recent years.

It is rather surprising that the Government seem to have no idea of the level of profit that these private providers are now making. However, I am conscious of the time, so I will chop out that bit, which I was going to focus on.

A number of contributors to the debate have understandably praised the depth and diversity of our university system, although we have had a worrying analysis of the fall in international and overseas students; I will not go into that in depth, because I think that the noble Lord, Lord Bilimoria, and others have made quite an intense analysis. I look with anticipation to the Minister for his response on that. We cannot afford to be complacent. If one looks at the fees that European universities are charging now, it is quite an attractive proposition for people in this country to go to some of the universities that are teaching in English—in Holland and other countries, for example.

Given the levels of debt for which we are asking—with something like £9,000 fees being more or less average, so students will have about £50,000 in debt—surely we should be asking, even though we have a rise in applications and I acknowledge the Minister’s point on that, whether it stands the value-for-money test. I do not apologise for that. I know that some of the contributors to the debate might not like me using that phrase, but young people are going to seriously assess that. It is not a question of whether they are a poet or a plumber in aspiration. I actually look for a poetical plumber; combining the two might be good, to pinch a phrase from the noble Lord, Lord Hennessy. Students are entitled to query what they are getting for that investment, given that it is going to take a large chunk of their life to repay it.

It is therefore legitimate for Which? to produce a briefing for today’s debate, for which I commend it. Whether that is consumerisation or not, it is important that we have independent analysis. I do not know whether the Minister has had a chance to look at the briefing, but it says:

“However, it is questionable whether the higher education market is promoting the best interests of students as consumers and more needs to be done to protect them from poor standards … Which? believes that there are a number of changes that need to be addressed to ensure that higher education improves for the benefit of students … There is inadequate information available for prospective students, for example on the nature and quality of the academic experience. Which? wants to see high quality, easily-comparable information on university courses for prospective students”.

And so it goes on. I have not got the time to quote the entire thing. I will end on this point, also made by a noble Lord whose name I have wrong—my apologies—which is that:

“The current regulatory regime does not work in the interests of students”.

It probably does not work in the interests of universities, either. It continues:

“Which? is calling for an examination of the case for a stronger”—

or better—“regulatory framework”. That is a legitimate part of this analysis.

I will set out today the principles which should guide us. These principles are deeply rooted in our history and academic traditions but, more importantly, in a sense of the future. In a world turning east, in which technology is moving faster than ever, we in Britain need new answers to help us collectively earn our way to a better standard of living. The starting point for our principles is a speech that my right honourable friend the Shadow Secretary of State, Chuka Umunna, made to the Engineering Employers’ Federation few weeks ago. In that speech he said that in a country where living standards are under such acute pressure and where the deficit still looms so large, innovation is the only way out of austerity. As he put it:

“We, the Labour Party, are clear about our goal: a high-productivity, high-skilled, innovation-led economy”.

I am sure we can all sign up to that.

That is why our universities are so important. They are, as a number of noble Lords said, the power houses of the knowledge economy. They need to be bigger, stronger and more central to our economy in the years to come. However, they need also to focus on ensuring that the students and the country as a whole get value for money and that all universities are part of their local communities. I believe the right reverend Prelate quoted the number of employees in universities—they are big employers. Whenever I visit a university, I always ask the same question, “How many apprentices do you employ as a university? You are a big employer; you have lots of opportunities and you could work in collaboration with your local colleges”. Perhaps I can have that conversation with the right reverend Prelate afterwards.

As the Royal Society put it so simply and eloquently in 2010, Britain needs to put science and innovation at the heart of a strategy for long-term economic growth.

It is now clear that the student loan system that pays for our universities, voted through by the Lib Dems, is a time bomb. According to the Public Accounts Committee, it is storing up perhaps £70 billion to £80 billion of debts that may never be repaid. Today’s system with tripled fees and big debts for graduates is now as expensive as the system where students were charged a third as much. It has become indefensible, so people should now stop trying to defend it and, as a number of noble Lords have said, we ought to review it.

Another test must be: what is good for our science base—our store of knowledge and wisdom? The Minister alleged that everything is okay on research, but today, while other powers, emerging and established, are investing in science like never before, we are cutting our science spending across government, according to the Campaign for Science and Engineering, to the tune of over £800 million. Nationally, research and development as a percentage of GDP is at its lowest level since the turn of the century. Last year it fell for the first time since 1985. Does the Minister recognise the need to ensure that research spending at least achieves the OECD average?

My next point is about student choice. One of the benefits of these debates is that you get some useful briefings. I think the noble Baroness, Lady Sharp, and certainly other noble Lords, referred to a need for a more flexible approach. The Association of Colleges produced a useful briefing which talked about a system that allows students to accumulate and transfer course credits. We have heard talk about part-time study and the use of online study, which will certainly impact across education. That point is well worth making. My noble friend Lady Morris, in her fascinating contribution, analysed where the current universities have come from, what their antecedents were and what they now attempt to provide. She also addressed, as did a number of noble Lords, the fact that the league tables do not capture what they need to capture or what so many potential students aspire to do.

Today, while we do a decent job of getting A-level students, or those on an academic route, to university, we do not do a very good job of lifting apprentices up to the same standards. Rolls-Royce, like other great firms, trains 50% of its apprentices to degree-level skills; as a country we manage just 6%—a grand total of 6,000 people. That is not good enough today, and certainly not good enough for the future.

We need to do far more to fix Britain’s skills base when regional skills gaps are opening wide all over Britain. I am a firm believer in education for education’s sake, but I know, too, that a good job is fundamental to the way we flourish, and right now half of graduates—even though they may be in employment—are not in graduate-level jobs.

I will make brief reference to the Minister’s Statement on the disabled students allowance. The noble Lord, Lord Addington, expressed concern about it, and having gone through the Statement I can understand why. Can the Minister reflect on what the level of consultation was—is the recommendation a done deal?—and whether there has been an impact assessment of the proposals that are outlined?

We need to ensure that our higher education system meets the needs of the country, and is challenging and sustainable. We want to make sure that it boosts the science base, diversifies student choice and brings universities and business together to deliver fast enough progress towards social mobility. What we need to do, surely, is to seek to inspire this generation of students. It is a bit worrying that in Plymouth, for example, it has been estimated that only 10% of the university’s 35,000-strong student population plans to use its vote in the upcoming elections. The reason often cited by this is the decision by the coalition to treble university tuition fees. What assurances can the Minister offer to the young people of Plymouth and the young people of this country as a whole, who feel somewhat betrayed and disheartened, that the coalition Government are working in their best interests to ensure a higher education system that is both fair and affordable?

16:40

[Lord Ahmad of Wimbledon]

My Lords, first, I thank each and every Member of your Lordships’ House who has taken part in this debate. Indeed, reflecting on the words of my noble friend Lady Sharp, I, too, was surprised when looking into this to find that it had been so long since your Lordships’ House had debated such an important subject. It was the Government’s view that it was something that we should put on the agenda, and I am glad that we have done so.

In paying tribute to all noble Lords, it would be entirely apt for me to pay particular tribute to the maiden speech of the right reverend Prelate the Bishop of Portsmouth. In his remarks, he said that he was not sure about how his opening contribution would be taken by the House. It was an excellent one, and I am sure that he will play a significant role not just in representing the people in Portsmouth and wider Hampshire but indeed the country as a whole, albeit that at times he may cause a degree of discomfort to those of us on the Front Bench with the questions that he may ask. We look forward to his future contributions and welcome him to the House.

The noble Lord, Lord Hennessy, referred to poets and plumbers. I do not know what I shall be called by the time I sit down, but certainly if one was to look to my plumbing skills—my wife is testament to that—a plumber I am not.

This is an important subject. As we have heard from all noble Lords, higher education is an important part of what defines Britain today. It is key to the nation’s success and, as last week’s Universities UK report on the impact of universities on the UK economy noted, the sector generates jobs—indeed, 754,000—and contributes to the GDP, some 2.8% in 2011, up from 2.3% in 2007. The report also reveals that the UK higher education sector contributed an output of over £73 billion. The almost £5 billion that students contribute to local economies through their off-campus expenditure shows that the impact of higher education is felt in businesses across the country. These figures remind us that universities are absolutely pivotal to driving the growth that will safeguard a more sustainable future for everyone.

My noble friend Lord Purvis referred to university funding. University income across the whole of the UK represents £29 billion in 2012-13, as opposed to £12 billion in 1999 to 2000. Again, that demonstrates the flexibility and autonomy to which several noble Lords alluded for our universities. Education is of vital importance to the nation as a whole.

I shall take certain areas in a specific order. Several noble Lords raised the issue of social mobility. Right from the outset, I say to the noble Lord, Lord Young of Norwood Green, that, although he said that his background was not one of university education, I have stood across the Chamber from him at this Dispatch Box and talked about apprenticeships. The Government recognise the importance of apprenticeships for the future growth of our economy, which is why we have created the number of apprenticeships that we have. I am sure that he will recognise that various companies are coming on board—I accept that we start from a low base—that are now participating in the apprenticeship programme. I believe that we all share the sentiment that diversity, not just in terms of the university route but in terms of the apprenticeship route, is vital for our continued growth.

The noble Baroness, Lady Morris, spoke about social mobility from her great experience. Institutions now have a much greater responsibility to focus on widening access. The Director of Fair Access has agreed more than 160 access agreements with institutions for 2014-15. These detail the plans by universities and colleges to spend more than £700 million by 2017-18—up from £440 million in 2011-12. The Government will invest another £50 million through the National Scholarship Programme in 2014-15.

Access issues were also raised by the noble Lord, Lord Rees. It is important to note that in all these access agreements we are looking at issues of gender, social class and ethnicity. The director has certainly reflected these issues in the access agreements. However, I am sure all noble Lords agree that we need to make sure that all this money is spent where it really counts. Just last week, the Government announced a new national strategy for widening access, led by the HEFCE and OFFA. One of the key focuses of this strategy will be the employment prospects of graduates from less advantaged backgrounds. Research published last year by our Social Mobility and Child Poverty Commission showed that, three years after graduation, individuals from higher socioeconomic backgrounds were more likely to be in a high-status occupation than those from less privileged backgrounds. OFFA is also asking all universities, especially those which have not yet made progress, to invest more smartly in their access activities generally and ensure that they are properly evaluating what works, and then sharing that best practice with other institutions.

The noble Baroness, Lady Morris, raised the issue of diverse universities, as did my noble friend Lady Sharp. My noble friend Lady Perry gave examples of the universities with which she has been associated—namely, Cambridge and London South Bank. The noble Baroness, Lady Morris, rightly values a diverse system, as we all do. Of course, university rankings are not a government tool per se, and there are many different measures of a good university. Indeed, the noble Baroness, Lady Deech, highlighted a particular example of how ratings can be used. One of the reasons the Government have focused on improving student information is so that students can use their purchasing power to seek out the best course to match their aspirations—indeed, the best institution as well. Popular institutions will grow and attract more income, and this is reflected in how they are perceived.

My noble friend Lord Storey rightly wants to encourage more women to take up leadership roles. The Government are committed to supporting this aspiration. The universities are, of course, autonomous institutions and the Government do not have a specific role in micromanaging this sector. However, I believe that all universities increasingly recognise the importance of reflecting diversity in their own leadership.

The noble Baroness, Lady Warwick, raised the issue of part-time students. The Government have addressed what we considered was the primary barrier to part-time study—that is, access to tuition fee loans. We recently announced that we are examining the rules regarding equivalent or lower qualifications which rule out loans for past graduates, so that those wishing to undertake engineering, technology or computer science courses can do so.

The noble Baroness, Lady Donaghy, referred to teacher training. The Government are carefully considering the implications of our policy on the quality of teacher training. The expansion of School Direct, to which she referred, has been challenging for many universities, but there is scope for successful school and higher education collaboration in this regard. Outstanding university providers have been guaranteed the same number of places as last year, and many have increased their share of the initial teacher training market. I understand that the higher education institutions remain involved in more than 80% of the initial training places. Additional places have been created to reduce the chance that some courses may have to close.

Several noble Lords, including the noble Lord, Lord Hennessy, referred to the loan system. We are absolutely not seeking to treat the student loan system like a private debt system. The system operates very much like a graduate contribution scheme, and we feel that it takes the best features of a graduate tax. Students repay only when they can afford and at only 9% of income earned above the £21,000 threshold. As I said in my opening remarks, the OECD recognises that what we are seeking to do through our reforms puts our higher education funding on a sustainable model basis.

I turn to the funding and RAB charge, referred to by the noble Baroness, Lady Kennedy, and the noble Lord, Lord Giddens. There has been much discussion of the Government’s estimate of the returns that they will get from student loans. However, the resource accounting and budgeting process—the RAB charge—is not a straightforward financial calculation, as noble Lords will know. It is an estimate of the economic circumstances 35 years in the future. The Government have improved the modelling. It is sound and has been quality-assured by experts in the field, such as the Institute for Fiscal Studies.

We have taken careful note of the recommendations in the 2013 National Audit Office report on student loan repayments. It is not surprising that the Government’s assessment of the proportion of loans that will be repaid has changed. After all, it is a complex analysis. Estimates are just that and they will continue to change, as they are based on assumptions about the future. However, it is important to note that lower-earning graduates will be protected, while those who benefit most from their higher education and go on to earn more will pay back their loan more quickly.

The Government are still delivering a tough deficit reduction programme. The funding model that they have used has made it possible to address the deficit, while, as I indicated, at the same time giving more income to higher education institutions to boost the quality of their provision. The Government are working with an estimate of around 45%. It could be argued that currently the savings are small but, depending on the performance of the economy—and we are encouraged by the IMF’s report published yesterday—this could change over time. However, there continue to be savings to government compared with the previous assessment, even if we take the figure of 45%. We believe that this system continues to be the best way to use limited public funds to meet the country’s requirement for long-term, high-level skills, but we must not forget what it ultimately means for students: a progressive repayment system, better information and higher-quality provision.

I turn to the STEM subjects, specifically science and research. I acknowledge the contribution of various noble Lords in this respect. Science and research, including the arts and humanities, are essential drivers of the innovation that leads to growth. The base funding awards that are made to support vital research will be distributed using the outcomes of the research excellence framework. The peer review is currently the most established method of research assessment and it underpins the academic system. Obviously, we can shape cultures both positively and negatively depending on how we measure things. The latest exercise contained, for the first time, an explicit assessment of the impact of research. There were some concerns about what that impact might mean in the UK, but it has sent a powerful reminder to researchers to think about how their research might be used or the difference that it might make, and it is encouraging much greater engagement with the industry.

Perhaps I may take some of the specific questions that were asked on research and development, including by the noble Lord, Lord Bilimoria, and the right reverend Prelate the Bishop of Winchester. The UK’s overall research and development spend was 1.72% of GDP in 2012, amounting to £27 billion. I acknowledge that this sum is lower than that of some of our trading partners such as the US, Germany and France. We continue to look to invest more and, as I said in my opening remarks, we have protected funding in this area.

Several noble Lords, including the noble Baroness, Lady Greenfield, and my noble friend Lord Storey, raised the important issue of technology transfer and asked what universities are for. It is important to note that the UK does very much better than people think. The impact of the research excellence framework is a key incentive in driving this. The excellent HEIF programme is widely recognised as supporting technology transfer. Indeed, we are in the top five globally for university/business interactions. One of the drivers behind removing the cap as an incentive is that this is demand-led: the private sector wants to see more graduates and, increasingly, there is a strong link with what universities provide in the communities. My noble friend Lord Storey gave examples in Liverpool, which the Government fully endorse and support.

The noble Lord, Lord Rees, and others talked about credit accumulation and transfer. Much has been done in this area. Many institutions allow students to build a qualification from smaller modules but the decision to accept and recognise credit has always been one for the universities, which act autonomously in this regard. Mention was made of the need for academic freedom by my noble and learned friend Lord Mackay of Clashfern. Others talked about value and gave examples, as my noble friend Lady Perry did, when she spoke of the value of freedom of the universities. The Government are fully committed to the Haldane principles, whereby decisions on which research projects are funded are made by the research councils themselves, not by Ministers. Around two-thirds of all research council grants are made through this measure—that is, not responding to any government priority.

Mention was also made by my noble and learned friend, and the noble Baroness, Lady Deech, I believe, of where higher education should sit. Should it be in BIS or in Education? I have noted the comments, as I have noted the wider debate, and will take those suggestions back.

The noble Baroness, Lady Coussins, raised modern languages.

[Baroness Warwick of Undercliffe]

I wonder whether I may refer back to the noble Lord’s support for HEIF to ask the specific question that I asked in my intervention. Do the Government see it as important to accept the Whitty recommendation to increase that fund?

[Lord Ahmad of Wimbledon]

If I may I will write to the noble Baroness in that regard, and, of course, share it with all those who have taken part in the debate.

The Government are committed to the teaching and learning of modern languages in schools. As the noble Baroness, Lady Coussins, acknowledged, from September 2014, primary schools will be required to teach a foreign language at key stage 2. Thanks to the English baccalaureate, modern languages GCSE entries are improving. The Government have prioritised higher education funding for modern language courses to ensure the continued availability of language study in higher education institutions. The noble Baroness raised some other questions, but with her permission, and in the interests of time—at five hours, this has been somewhat of a marathon—I will write to her and share that letter with other noble Lords.

The explosive growth in massive open online courses was raised by the noble Lords, Lord Giddens and Lord Rees, among others, and by my noble friend Lady Sharp. We have seen growth in this area and the UK’s new MOOC platform FutureLearn brings together free courses from 23 top UK and international universities. In the four months since the first course began, FutureLearn has already 450,000 sign-ups. Users come from an impressive 90 countries and a range of backgrounds.

My noble friend Lord Holmes mentioned the BPP. The BPP is the third university to achieve the university title last year and it is respected for its professionally geared education. My noble friend flagged that particularly in his comments. Various issues were raised by the noble Lord, Lord Bilimoria, the right reverend Prelate the Bishop of Winchester, the noble Baroness, Lady Warwick, the noble Lord, Lord Giddens, among others, and my noble friend Lord Holmes. I underline that on specific questions I shall write to noble Lords, in the interests of time. I reiterate that the Government are fully committed to international students and we have announced that we will extend options for people to stay on following their study. I will write with the details. Just to be clear, the numbers of international students are not capped. I can do nothing better than quote my right honourable friend the Prime Minister when he visited India last year and said that we were open for anyone wishing to come to the UK for a legitimate course at an accredited university. The doors are open. As I said, I will write with further details.

I fully acknowledge the points made by my noble friends Lord Watson and Lady Sharp, and the noble Lord, Lord Hennessy, about the importance of soft power when we travel the world. Indeed, my noble friend Lady Bottomley spoke about this with great passion. English itself is an incredibly powerful tool in ensuring that the issue of soft power both at home and abroad is not forgotten. I totally ally myself with the comments made on that point.

My noble friend Lord Addington raised issues about the disabled students’ allowance, specifically on dyslexia. These changes will not come into effect until 2015 and we are working through the sector-driven centres to consider specific individual needs and to inform higher education institutes how we expect them to offer support in this regard.

My noble friend Lord Norton of Louth, spoke with great expertise in this area, as ever. I particularly commend and welcome his commission’s report on the future regulation of the university sector. Again, perhaps I may write to him in respect of the specific questions he raised.

In conclusion, we have had five hours of debate and even Lord Robbins, if he was here and reflected on the words of the debate, would say that it has perhaps been a useful consultation exercise in its own right. I can assure noble Lords that I have been listening. The noble Lord, Lord Young, made the point about the range of speakers. I have been riveted to my Front Bench seat during this extremely informed debate.

Our universities are one of our greatest national assets. UK universities are second in international rankings only to the US. They contribute to the nation’s wealth and to the rich cultural fabric of our society. The thousands of extra higher education places that the Chancellor announced at the end of last year will help the nation to grow and flourish.

Again I thank all noble Lords who have participated in the debate. Their thoughts, perspectives and suggestions have provided a valuable resource as we seek to further strengthen our world-renowned higher education sector—a sector which is central not only to our economic growth but to our position on the global stage. As a Minister responding to such a debate it is appropriate for me to finish with a quote from Aristotle. He said:

“It is the mark of an educated mind to be able to entertain a thought without accepting it”.

Motion agreed.

Convergence Programme

Wednesday 9th April 2014 Lords Chamber

Motion to Approve

17:02

Moved by

[Lord Newby]

That this House approves, for the purposes of Section 5 of the European Communities (Amendment) Act 1993, the Government’s assessment as set out in the Budget Report, combined with the Office for Budget Responsibility’s Economic and Fiscal Outlook, which forms the basis of the United Kingdom’s Convergence Programme.

[Lord Newby (LD)]

My Lords, I welcome this opportunity to discuss the information that will be provided to the Commission this year under Section 5 of the European Communities (Amendment) Act 1993.

As in previous years, the Government inform the Commission on the UK’s economic and budgetary position in line with our commitments under the EU stability and growth pact. The Government plan to submit their convergence programme by 30 April, with the approval of both Houses. The convergence programme explains the Government’s medium-term fiscal policies as set out in the 2013 Autumn Statement and Budget 2014, and includes the OBR forecast. As such it is drawn entirely from previously published documents that have been presented to Parliament.

With the Budget on 19 March this year and the Easter Recess timings as they are, I appreciate that the timetable for this debate has been particularly tight. Against this backdrop, the Treasury has made every effort to provide early copies of the convergence programme document in advance of the debate today, and did so last Thursday. The document makes clear that this year’s Budget reinforces the Government’s determination to return the UK to prosperity and reiterates the Government’s number one priority—tackling the deficit.

Stability or convergence programmes form part of the European semester, which provides a broad framework for the co-ordination of the monitoring and surveillance of member states’ fiscal and economic policies, including necessary structural reforms across the EU. The positive value of the European semester is that it is a useful means to encourage other member states to grip the urgent growth challenge across the EU.

The Budget 2014 set out the Government’s assessment of the UK’s medium-term economic and budgetary position. In 2010 we set out clear, credible and specific medium-term consolidation plans to return the public finances to a sustainable path. Our plan makes clear that we will fix the economy and deal with the deficit, cut tax to encourage investment, back businesses, control welfare and invest in skills. We put that plan in place and adhered to it, and we are delivering results with it. The Government’s fiscal strategy has restored fiscal credibility, allowing activist monetary policy and the automatic stabilisers to support the economy and ensure that the burden is shared fairly across society. This long-term economic plan has protected the economy through a period of global uncertainty and has provided the foundations for the UK’s economic recovery, which is now well established.

Since last year, economic growth has exceeded forecasts and has been balanced across the main sectors of the economy, inflation is below target, and the deficit has been reduced year on year. Over 1.5 million private sector jobs have been created and employment is at record levels. Interest rates are at near record lows, helping to keep costs down for families and businesses. The Government are also making significant progress in reversing the unprecedented rise in borrowing between 2007-08 and 2009-10. The deficit has been cut by one-third as a percentage of GDP over three years and is projected to have fallen by a half as a percentage of GDP by 2014-15. The OBR has also forecast public sector net borrowing to reach a small surplus in 2018-19, and has judged that the Government remain on track to meet the fiscal mandate one year early. While the OBR forecast that the underlying structural deficit is falling, it is doing so no faster than was previously forecast, despite higher growth. The persistence of this structural challenge supports the Government’s argument that economic growth alone cannot be relied upon to eliminate a structural deficit, and while we are meeting the supplementary debt target one year late as before, the OBR has revised down national debt in every year of the forecast.

This year’s Budget is fiscally neutral despite lower borrowing across the forecast period, with an overall reduction in tax funded by a reduction in spending. The OBR has revised the UK’s growth forecasts upwards, as has the IMF, and they are now among the highest, if not the highest, in the developed world. However, as the Chancellor has said, the job is not yet done, and the same is true for the rest of the EU. Without sustainable economic growth, the EU will be unable to repay its debts, create jobs or maintain its standard of living. Much of the answer to these problems lies in national level reforms such as creating flexible labour markets. Clearly, the European semester has a key role to play in encouraging member states to make ambitious reform commitments, and the UK has an interest in making these reforms happen. However, an ambitious EU-level reform agenda is also a key part of this equation and an essential counterpart to national level reforms. Recent European Councils have underscored the strong commitment of Heads of State or Governments to supporting growth and competitiveness, and I know that the Prime Minister has been driving forward this agenda along with leaders from a substantial group of like-minded member states.

As I reminded the House a year ago, deploying EU-level policies in support of economic growth, such as the single market, regulatory reform and EU-level free trade agreements, can achieve maximum growth impact at the least cost. The need to address Europe’s growth challenge comprehensively by tackling overall low productivity, lack of economic dynamism and flexibility is more pressing than ever before, and it is in our interests to make urgent progress. That is why the UK will continue to push this agenda at the highest levels and encourage the new Commission to take structural reforms seriously. I am today requesting that, in line with Section 5 of the European Communities (Amendment) Act 1993, this House approves the economic and budgetary assessment that forms the basis of the convergence programme. Following the House’s approval of the assessment, the Government will submit the convergence programme to the European Commission. It will make its recommendations to all EU member states in early June. These recommendations will then be considered by the ECOFIN Council on 20 June and agreed by Heads of State or Governments at the European Council on 26 and 27 June.

To reiterate, the convergence programme contains no new information, only information that has previously been presented to Parliament—information from the OBR’s economic and fiscal outlook and from the Budget, which sets out the Government’s strategy to return the UK to sustainable growth. I commend the assessment to the House.

[Lord Pearson of Rannoch (UKIP)]

My Lords, can the noble Lord remind the House of what exactly is the UK’s convergence programme? With what is the United Kingdom economy supposed to be converging, and why? As we are never going to join the euro, are we not wasting time? While I am at it, could the noble Lord remind us what is the European semester? But above all, why do we go on submitting the state of our economy to an institution which has not had its own accounts signed off, even by its own internal auditors, for the past 18 years? By its own estimation, at least £120 billion per annum goes walkabout and in each of its institutions the Mafia is rife and active.

In short, what is the point of this debate and, more generally, what is the point now of the European Union at all?

[Lord Tunnicliffe (Lab)]

My Lords, the Minister will be pleased to know that I shall not be resisting the Motion. I am reassured by his assurance that there is no new information in the documentation being provided, but will just spend a few minutes commenting on that information and what it says.

We have been presented with a quite a glowing picture. In particular, if one did not listen too carefully, one could be left with the impression that the reduction in the deficit has been achieved as per the 2010 emergency Budget and the subsequent Autumn Statement. My recollection is that the intention was to have eliminated the deficit by now. The noble Lord can correct me if that is not the case.

We have heard that things are going well, but this is not how people up and down the country are feeling. They are facing a cost of living crisis. Working people are £1,600 a year worse off. The OBR has confirmed that people will be worse off in 2015 than they were in 2010. Energy bills are up almost £300 since the election, while childcare costs have spiralled since 2010. The number of young people out of work for 12 months or more has nearly doubled since this Government came into office. We have a record number of people who want to work full time but are being forced to work part time. Families will be £974 worse off by the next election as a result of tax and benefit changes. After three years of flatlining, it is good that we finally have some growth. However, for millions of people, this is no recovery at all. There is much more that could be done to help working people but the Budget was just another missed opportunity.

We should be getting young people back into work. Despite the Government’s rhetoric on full employment, there are no new policies to deliver this. The Work Programme is so unsuccessful that people are more likely to go back to the jobcentre than find work. Only 5% of disabled people on the Work Programme have found work through it. We need a compulsory jobs guarantee to ensure there is a paid job for every young person under 25 who has been out of work for a year.

We also need practical measures to tackle the cost of living crisis, such as tackling rising energy bills or helping families with childcare costs, within this Parliament. We would expand free childcare for working parents of three and four year-olds from 15 to 25 hours a week.

We should be cutting business rates for small and medium-sized enterprises. The Government are focusing their help on the 2%—the largest multinationals—and not doing enough for 98% of British businesses, the small and medium-sized enterprises. We need action from the Government to ensure a strong, sustained and balanced recovery. Manufacturing, construction and infrastructure investment are all down. Consumers are having to dip into their savings, and the OBR predicts that growth may well slow in the future when those savings run out. Indeed, the OBR sees households’ gross debt to income ratio rising from 124% in 2014, which was a 10-year low, to 165% in 2019, which is near to pre-crisis levels of indebtedness. Exports are falling, not rising. Nothing in the Budget tackles the productivity crisis that has emerged in recent years.

17:15

There is too much inconsistency and too many short-term measures and not enough consistency and stability for business to plan for the long term. On housing, we need a “help to build” scheme to counterbalance the Help to Buy scheme. There is a serious risk of a lop-sided recovery unless we match the boosting of demand with the boosting of supply. A “help to build” scheme focused particularly on ensuring that small and medium-sized construction companies can do better is one way to make a difference.

In the other place, the Chancellor said that,

“we are getting on top of our debts”.—[Official Report, Commons, 19/3/14; col. 781.]

The coalition Government would like us to forget their broken promises on borrowing and the deficit. They have had to borrow nearly £190 billion more than they planned in 2010 over the five years of this Parliament. The Government have added a third to the national debt, which now stands at £1.2 trillion, and three years of economic stagnation will leave the next Government with a budget deficit of £75 billion. They have borrowed more in the past four years than the previous Government did in 13.

There is a reason why the Tories cannot deliver for the many. They have the wrong priorities. They are giving an average £100,000 tax cut to millionaires. They have offered a marriage tax allowance that will help only a third of married couples, rather than, say, a 10p starting rate of tax, which would help millions more families. There is a fairer way to tackle the deficit and the Government’s failure to keep their promise about balancing the books, and to do this Britain needs a Labour Government.

[Lord Newby]

My Lords, I am grateful to both noble Lords who have spoken in today’s debate. In a short speech, the noble Lord, Lord Pearson, succeeded in asking very fundamental questions about Britain’s position in the EU. Without spending too much time on his final, semi-rhetorical question, I should like to respond to his earlier questions about the convergence programme and the European Semester.

The convergence programme stems from the Lisbon treaty, which requires the UK Government to report regularly to the European Commission on the economic situation and forecasts in the UK. The report is drawn from previously published material, as I said. It is part of a Europe-wide programme. Under the stability and growth pact, all member states are required to submit either stability programmes, for euro-area member states, or convergence programmes, for non-eurozone member states. The European Semester is a common timetable for the submission and consideration of fiscal policies via the stability or convergence programmes and macroeconomic policies via national reform programmes.

The noble Lord asked: what is the point of all this? As the crisis in much of Europe has shown, it is in everybody’s interests that member states do not run up excessive deficits, because if they do the consequences of putting those deficits right are not confined to those member states. The UK economy suffered very significantly because of the eurozone crisis. To pick up one of the points made by the noble Lord, Lord Tunnicliffe, this is one of the reasons that the forecasts we made in 2010 were blown off-course. Given the very high proportion of trade we have with the eurozone countries, we are very much dependent on those countries prospering and therefore it is very much in our interests that they keep their public sector finances under control.

[Lord Tunnicliffe]

It is a detail, but the Minister said that the requirement comes from the Lisbon treaty. I thought that it had come from the Maastricht treaty, which we put into law in 1993. Am I mistaken?

[Lord Newby]

The difference, I believe, is that the Lisbon treaty requires the convergence programme to be submitted to the Commission in the form that we are describing today, whereas the underpinning requirements about budget deficit and levels of growth were in the Maastricht treaty. What came out of Lisbon were the very specific mechanics of trying to co-ordinate via the submission of national plans every year which the Commission can then scrutinise and comment on.

[Lord Tunnicliffe]

I hope the Minister will forgive me, but I put a little bit of study into this. Article 103 of the Maastricht treaty—which may have been elaborated at Lisbon—states pretty bluntly:

“In order to ensure closer co-ordination of economic policies and sustained convergence of the economic performances of the Member States, the Council shall, on the basis of reports submitted by the Commission, monitor economic developments in each of the Member States and in the Community as well as the consistency of economic policies with the broad guidelines referred to in paragraph 2, and regularly carry out an overall assessment. For the purpose of this multilateral surveillance, Member States shall forward information to the Commission about important measures taken by them in the field of their economic policy and such other information as they deem necessary”.

I thought today that we were responding to that part of that treaty. I want to draw out the point that our being here this afternoon at this late hour is the fault of all Governments, not perhaps just one.

[Lord Pearson of Rannoch]

Before the Minister replies, perhaps I may say that I support the noble Lord, Lord Tunnicliffe. He is of course right that the whole process in the Maastricht treaty was, I am afraid, waved through by the Conservative Government under Mr John Major when, if your Lordships remember, he was winning game, set and match. I am grateful to the Minister for his answer, but I would still like to press him on why the United Kingdom has to take part in this demeaning and absurd process. I understand that it might be useful for the countries which have unfortunately joined the extremely destructive process of the euro and everything that goes with that, but why should we, if indeed our economy is recovering in the way that the Government claim, have to go cap in hand to Brussels and discuss with them anything that we want to do, especially as we are, luckily, thanks to the Treasury, not in the euro?

[Lord Newby]

My Lords, perhaps I may deal with the point made by the noble Lord, Lord Tunnicliffe. Obviously, the Motion that we are debating today stems from Maastricht, but the codification of how it was to be done is to be found in Articles 121 and 126 of the Lisbon treaty—I am sorry that I do not have them before me to read out to the House.

The noble Lord, Lord Pearson, describes the process of submitting the forecasts as “demeaning”. Certainly, there is nothing demeaning about the state of the British economy. We are very happy to send the forecasts to anybody. However, as I said, just as we depend in no small measure on the economic success of the rest of the EU, so the rest of the EU, as he is very fond of reminding the House, depends on our economic success. We are part of a single market and, again as the noble Lord often reminds the House, we contribute to a budget one of the main purposes of which is to promote growth across the EU. So it is only sensible that the EU as a whole looks at how Governments are meeting their commitments by running a successful, stable and growing economy.

The noble Lord, Lord Tunnicliffe, raised some pretty familiar criticisms of the state of the economy. I always find it slightly amusing when members of the Labour Party, which consistently wanted to spend more at every point during this Parliament, object to the fact that the deficit is higher than it might be. If they had spent £12 billion a year by cutting VAT, as they proposed, the accumulated deficit would by now almost certainly have been greater. It is bizarre for the Labour Party, which has been pushing for higher expenditure—that would necessarily mean a bigger deficit, certainly over the period we are discussing—to upbraid us for following a policy that allowed the economic stabilisers to work and ensured that we did not have further cuts in the face of the European crisis. We allowed the stabilisers to operate in a way that minimises the impact of the crisis on employment—and on growth—and formed the basis for the creation of 1.73 million additional private sector jobs during the course of this Parliament.

The noble Lord says that we have done nothing to get young people back into work. I remind him that youth unemployment fell by 29,000 in the quarter, in the three months to January, and by 81,000 in the year. Excluding people in full-time education, there was a decline of 16,000 in the number of 16 to 24 year-olds who were unemployed over the quarter. The youth claimant count has fallen for 21 consecutive months. On the latest figures, the reduction in the youth claimant count is falling at the fastest pace since 1997. The number of those claiming for more than one year has fallen for the 15th consecutive month, down by 2,300 on the month to 53,400. Youth employment in the quarter rose by 43,000, which is an extremely significant number. Those 43,000 young people who now have a job who did not before would find it extremely difficult to recognise the Opposition’s description of what is happening to the economy.

I absolutely understand the noble Lord’s criticism that some people have suffered in their standard of living. Sadly, that is what happens to some people during a recession. However, I remind him that the Government have taken a wide range of steps to mitigate that fall. Of course, the increase in the income tax allowance to £10,000 is the single most significant one, but I also remind him of the freeze on fuel duty. On jobs, I remind him of the £2,000 national insurance allowance, which will make it easier for small businesses, in particular, to retain or take on additional staff.

The noble Lord also criticised the Government on the basis that the recovery was unbalanced. He will know that manufacturing output was up last year. The forward surveys of manufacturing are more positive than they have been for many years. He will probably be aware that the figures from the RAC, I think, yesterday suggested that in the past month, the area with the highest growth rate in permanent placements was the north. He will also be aware of today’s figures showing that the balance of payments on the latest deficit is down, so we do not have unbalanced growth. Every sector of the economy is growing. Forward forecasts in services and manufacturing are at record levels; in some cases, they are higher than ever before. So the prospect for the period ahead is of not just growth but a greater degree of balance in growth than we have seen for a considerable time.

Ultimately, such sustainable growth is the only way for both the UK and EU member states to pay down their debts and exit what has been, by common consent, a very difficult economic period. The UK is leading the EU growth agenda and making the case for ambitious EU reform. On that basis, I am pleased to commend the Motion to the House.

Motion agreed.

House adjourned at 5.31 pm.