House of Commons

Monday 25th January 2016 Commons Chamber

Monday 25 January 2016

The House met at half-past Two o’clock

Prayers

Monday 25th January 2016 Commons Chamber

[Mr Speaker in the Chair]

Oral Answers to Questions

Monday 25th January 2016 Commons Chamber

The Secretary of State was asked—

[Liz McInnes (Heywood and Middleton) (Lab)]

1. What estimate she has made of the number of children in schools with mental health problems; and what assessment she has made of the capacity of schools and sixth-form colleges to appropriately support those children.

[Ben Howlett (Bath) (Con)]

8. What steps the Government are taking in schools to support young people with their mental health.

[The Secretary of State for Education (Nicky Morgan)]

First, may I take this opportunity to welcome the new shadow Ministers for childcare, the hon. Member for Darlington (Jenny Chapman), and for mental health, the hon. Member for Liverpool, Wavertree (Luciana Berger), to their places on the Opposition Front Bench?

This Government are committed to helping all young people fulfil their potential. Mental health is a personal priority for me as Secretary of State and we are committed to helping schools provide the necessary support. This includes a pilot to improve access to specialist services where needed, and guidance on counselling, behaviour and teaching about mental health. The Government are also investing an additional £1.4 billion in children and young people’s mental health services, which will deliver a step-change in the way these services are commissioned and delivered.

[Liz McInnes]

The number of children going to A&E with mental health issues has more than doubled since 2010, and schools are having to manage a growing crisis. Decreased access to support from child and adolescent mental health services is making this much harder. I appreciate the Secretary of State’s warm words, but what guarantee can she give pupils, parents and teachers that this Government are serious about acting on these issues?

[Nicky Morgan]

Importantly, there is interest in this matter in all parts of the House, and I recognise and welcome that. That is the first step to tackling the stigma associated with mental health and getting people to talk about it, but the hon. Lady is absolutely right that we have to go further. That is why my right hon. Friend the Prime Minister announced £1.4 billion for young people’s mental health services, and a portion of the funding for that was announced recently. Also, the Department is contributing £1.5 million to joint training pilots to look at having single points of contact in schools and CAMHS. Teachers are not mental health workers, but they do have the opportunity to spot problems. They must know, and be able to work with, those in their local health services.

[Ben Howlett]

It is clear that this Government are committed to ensuring that young people have good access to mental health support. Does the Secretary of State agree that the Department for Education’s mental health service and “schools link” pilot, bringing in a single point of contact in 255 schools, will mean there is a more joined-up approach between schools and health services, which will positively impact on the mental health of our young people across the UK, and the south-west in particular?

[Nicky Morgan]

I am pleased to be able to say that the first round of training workshops has been successfully delivered to 255 schools and the second round is now under way. Schools and clinical commissioning groups are taking part in an evaluation of the programme to help us understand whether, and how, having the named lead roles has improved the working between schools and CAMHS and to look at any wider changes across participating schools.

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

Access to these services for all children and young people is absolutely crucial. With pressures increasing on school budgets, what guarantees can the Secretary of State give that all children and young people who need access to good quality mental health and counselling services are able to get them?

[Nicky Morgan]

I have already mentioned the joint training pilots. As a Department we have also provided £4.9 million this year to support 17 voluntary sector projects, and this is the first time that mental health services have been a part of that. The teacher voice omnibus survey carried out last summer found that 54% of teachers reported feeling that they knew how to help pupils with mental health issues access appropriate support and 62% reported that their school provided counselling services for pupils needing extra support, but I would be the first to admit we have further to go on this.

[Dr Sarah Wollaston (Totnes) (Con)]

In the last Parliament, the Health Committee heard compelling evidence of the need to focus on prevention and early intervention. Much of that, as the Secretary of State will know, is being funded from public health budgets. Will the Secretary of State set out what discussions she will have, and reassure the House that as those budgets come under pressure the very valuable services being put in place will not be affected?

[Nicky Morgan]

I read with interest the Health Committee report in the last Parliament, and I and the Under-Secretary, my hon. Friend the Member for East Surrey (Mr Gyimah), have regular conversations with our colleagues in the Department of Health and across Government on this issue. Early insights from the local transformation plans, which my hon. Friend the Member for Totnes (Dr Wollaston) will know about, indicate that some areas are already running their own activities to decrease stigma and discrimination, or are planning to do so. Sadly, there remains discrimination against the prioritisation of mental health services even within some parts of the NHS. We have to change that.

[Carol Monaghan (Glasgow North West) (SNP)]

I am feeling rather abandoned on the Scottish National party Benches today, and I am wondering whether my colleagues are off celebrating an early Burns Night. I wish any Members who will be taking part in such events a very enjoyable time.

The link between mental health problems and poverty is well documented, with young people from the poorest 20% of households three times more likely to suffer from poor mental health than those from the most affluent 20%. What plans does the Secretary of State have to study the impact of removing the education maintenance allowance on the mental health of the most disadvantaged young people in society?

[Nicky Morgan]

I agree with the first part of the hon. Lady’s question, although I am afraid that I could not agree with the second part because I could not quite see where she was heading with it. The overall issue is that the mental health of young people from all backgrounds needs to be addressed, in the sense of tackling early intervention and prevention and of ensuring that we produce strong, resilient young people. That is why I have been talking a lot about character education, which is something that I want to prioritise in the schools system in England.

[Damian Green (Ashford) (Con)]

I am delighted by the announcements that the Prime Minister and the Secretary of State have made on this issue, not least because many families in my constituency and in other parts of east Kent have great difficulty in accessing mental health services, particularly for adolescents. Can the Secretary of State reassure the House that her Department’s involvement in these matters will mean that people throughout the education system will be much more alert to the early signs of mental health problems and have quicker access to the medical mental health services?

[Nicky Morgan]

I agree with my right hon. Friend. That is precisely why the Department has made this a priority. We understand that, although teachers are not mental health workers, they work with young people day in and day out, week in and week out, and they will be able to spot the issues. However, they need to know that when the cases get referred, they will be dealt with speedily by the medical service, which is why we are working closely with the NHS as well. I also want to ensure that teachers are fully equipped to tackle mental health problems and mental health stigma in classrooms, and that is why we have funded the Personal, Social, Health and Economic Education Association to produce guidance and lesson plans to support age-appropriate teaching on mental health issues which can be used in this academic year.

[Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)]

I should like to thank the Speaker for kindly giving me permission to join this departmental question session and others in order to raise these important issues on mental health. At least half the adults who have mental health problems are diagnosed in childhood, so it is vital that we intervene early to promote good mental health in children. I listened carefully to what the Secretary of State said, but it is on her Government’s watch that they will underspend by £77 million on the child and adolescent mental health budget. Concerns have been raised by no fewer than four Select Committee Chairs about this Government’s dire record on PSHE, and we have seen a dramatic increase in the number of children turning up at A&E with mental health problems because the thresholds to access services are increasing. When will the Secretary of State stop the warm words and give us proper action to support the child and adolescent mental health services that this country desperately needs?

[Nicky Morgan]

I welcome the hon. Lady’s appointment. She will know of my personal interest in this matter, and that I am the first Secretary of State to task one of the Ministers in my Department with specific responsibility for mental health education. It is a shame that she did not have a chance to amend her question—or perhaps her statement—before she stood up. If she had done so, she could have reflected the fact that I have already talked about the joint training pilots, about the £1.25 billion my right hon. Friend the Prime Minister has already announced, about the PSHE Association, about training for schools and about the provision of counselling. I look forward to working with her on this very important issue.

[Mr Ranil Jayawardena (North East Hampshire) (Con)]

2. What progress the Government have made on implementing their policy to provide 30 hours of free childcare for working parents.

[Graham Evans (Weaver Vale) (Con)]

5. What progress the Government have made on implementing their policy to provide 30 hours of free childcare for working parents.

[The Parliamentary Under-Secretary of State for Education (Mr Sam Gyimah)]

We are making rapid and substantial progress towards our manifesto commitment to provide 30 hours of free childcare for working families. The Chancellor has committed to an increase in funding for free places of more than £1 billion a year by 2020. The Report stage and Third Reading of the Childcare Bill will take place this afternoon, and early implementation is on track for this autumn, with full roll-out in 2017.

[Mr Jayawardena]

In rural areas, nurseries are often smaller which can result in higher costs per pupil. Can the Minister assure me that those nurseries will not be adversely affected, and will he visit my constituency to see some of those nurseries at first hand?

[Mr Gyimah]

May I reassure my hon. Friend that our review of childcare costs, in consultation with the sector, took into account the cost of childcare for every type of provider right across the country? We have announced an increase in the average national funding rate from £4.56 an hour to £4.88 for three and four-year-olds from 2017-18 and will be consulting to ensure that that reaches the frontline. In response to my hon. Friend’s request, I would be delighted to visit nurseries in Hampshire, which, I know, are at the forefront of innovation in the sector.

[Graham Evans]

Next month, I will be holding my fifth annual jobs and apprenticeships fair at the outstanding Mid Cheshire College. Does my hon. Friend welcome the extension of this Government’s commitment to 30 hours of free childcare to help parents get back to work?

[Mr Gyimah]

I congratulate my hon. Friend on the Weaver Vale jobs fair. He is absolutely right that the purpose of the 30-hour commitment is to help make work pay, help with the cost of living and give children the best start in life. May I suggest that he invites local childcare providers to his jobs fair so that parents can talk to them as well as to potential employers, and I encourage all colleagues to do the same?

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

Does the Minister agree that a parent’s childcare needs do not end when a child reaches four, and that after school and school holiday childcare is absolutely essential, particularly for working parents? Does he therefore share my disappointment that Westminster City Council is ending all funding for its school-age childcare service, or play service, as part of a £665,000 cut to their children’s services budget?

[Mr Gyimah]

The hon. Lady asks a very important question about childcare for school-age children. I cannot comment on the specific case of Westminster City Council, but I do know that tax-free childcare, which we have legislated for and which comes into force from 2017, will allow parents to purchase childcare out of school for children from nought to 12, and for disabled children up to the age of 18.

[Valerie Vaz (Walsall South) (Lab)]

Will the Minister say what support schools will be given to accommodate the extra intake?

[Mr Gyimah]

That is an excellent question. There are many excellent school nurseries available. She may be aware that, as part of our last spending review, we announced £50 million of capital funding, and that we will be working with schools that need to expand to be able to deliver the cost of childcare.

[Carol Monaghan (Glasgow North West) (SNP)]

The Government’s plans for introducing 30 hours of free childcare for working parents have rightly received cross-party support, but, as we have already heard, there is still some way to go with regard to parents seeking employment. What work will the Minister do with parents who are currently seeking employment to enable them to access the childcare?

[Mr Speaker]

The hon. Lady appears to have phoned not one friend, but two. We are deeply grateful to her and to those hon. Members.

[Mr Gyimah]

It is encouraging to see that the Scottish National party has followed the Conservative party’s lead and is now pledging 30 hours of childcare in the upcoming Scottish elections. The hon. Lady will be aware that we have the childcare element of tax credits in England, so that parents who do not qualify for the second 15 hours can get support for up to 75% of their childcare costs through that policy.

[Jenny Chapman (Darlington) (Lab)]

On 14 April last year, the Prime Minister boasted—I cannot do a David Cameron impression—that with a Conservative Government

“you will get 30 hours of free childcare a week”.

As I recall, there was much rejoicing throughout the land. However, can the Minister now confirm that one in three of the families who he said would get the 30 hours of free childcare—and they believed it because the Prime Minister told them that they would—will receive no additional hours at all?

[Mr Gyimah]

I welcome the hon. Lady to her post. I look forward to her future contributions as vice-chair of Progress, especially as I now understand that to be a front for hard-right views in the Labour party. She will know that for the first 15 hours, the offer is universal— 99% of four-year-olds and 94% of three-year-olds get it. We have been very clear that the second 15 hours is a work incentive. Surely she does not believe that Islington parents on £100,000 a year should be entitled to free childcare. I know that she wants to represent the new core constituency of the Labour party.

[Alex Cunningham (Stockton North) (Lab)]

3. What discussions she has had with education providers on reviews of post-16 education and training.

[Mike Kane (Wythenshawe and Sale East) (Lab)]

10. What discussions she has had with education providers on reviews of post-16 education and training.

[The Minister for Skills (Nick Boles)]

I have had several meetings with college leaders, often represented by hon. Members, and will continue to do so as the area review process unfolds.

[Alex Cunningham]

The Minister will be aware of the area review of colleges in the Tees valley, which could lead to one or more mergers. The banks will be big winners in this, and I am told that if colleges become liable for penalties for breaking loan contracts that could run into millions of pounds. How much will the banks benefit from these mergers?

[Nick Boles]

This is absolutely the first I have heard about that, and it is certainly not my intention that a single pound of taxpayers’ money should go to benefit banks. The whole point of the area review process is to strengthen institutions so that, like Middlesbrough College in the Tees area, they can offer an excellent service by providing high-quality technical and professional education to local people.

[Mike Kane]

How does the Minister reconcile the Government’s commitment to a devolved skills settlement in Greater Manchester with slashing a quarter of the further education college budget and slapping an apprentice tax on business?

[Nick Boles]

It is fairly amazing to hear an Opposition Member attack the apprenticeship levy, which is something that the Opposition thought was so extraordinarily left-wing that they were not willing to propose it in their manifesto. I should have thought that the modern Labour party would consider it a thoroughly mainstream suggestion. As for the hon. Gentleman’s other comments, he will have observed that his party organised an Opposition debate to attack the 25% to 40% slashing of further education budgets, which did not happen when the Chancellor stood at the Dispatch Box and confirmed that we were going to maintain adult skills funding and 16 to 19 funding.

[Neil Carmichael (Stroud) (Con)]

Returning to the subject at hand, does the Minister agree that it is really important to focus on technical and professional training, and that the best way to do so is to provide apprenticeships that have quality as a hallmark, and attract people who know that that will lead to a job, and know the value of being an apprentice?

[Nick Boles]

I agree entirely with my hon. Friend, the Chairman of the Select Committee on Education. It is particularly welcome to see that the number of apprenticeship starts have, yet again, gone up in the latest quarter. That is true not just for apprenticeships generally but for higher and degree apprenticeships, which give young people the reassurance that an apprenticeship can take them to whatever level they aspire to reach.

[Amanda Milling (Cannock Chase) (Con)]

The National Design Academy, Stafford University and GMP Design are jointly seeking to locate a 737 aeroplane in Rugely, which would be converted into a design studio to house their new experiential design course. Does my hon. Friend agree that such innovative thinking could inject new energy into post-16 education and training?

[Nick Boles]

I was not aware of that example, but it sounds fantastic. It is exactly what the most innovative colleges are doing, and we want, through the area review process, to enable more colleges to become as innovative as that.

[Ruth Smeeth (Stoke-on-Trent North) (Lab)]

I have the privilege of representing the best people in the country, but they have been failed by the Government. My constituents awoke today to learn that the people of Stoke-on-Trent are less likely than people in any other city to leave school with the formal qualifications that they need. A report by the Centre for Cities revealed that 39,700 people in Stoke-on-Trent have no formal qualifications, putting us at the bottom of the league table. Will the Minister meet us to discuss how post-16 education and training providers can best be used to help my city?

[Nick Boles]

First, I should be delighted to meet the hon. Lady, but I would gently point out to her that those constituents who were failed went to school under a Labour Government.

[Mr Alan Mak (Havant) (Con)]

4. What steps her Department is taking to ensure that schools in every part of the country have access to high-performing teachers.

[Chris Davies (Brecon and Radnorshire) (Con)]

13. What steps her Department is taking to ensure that schools in every part of the country have access to high-performing teachers.

[Chris Green (Bolton West) (Con)]

16. What steps her Department is taking to ensure that schools in every part of the country have access to high-performing teachers.

[The Minister for Schools (Mr Nick Gibb)]

We are committed to ensuring that children in every part of the country, regardless of their background or circumstances, benefit from an excellent education. High-quality teachers are central to that ambition. We have recently announced the establishment of the national teaching service, which will place some of our best teachers, including heads of department, in schools that need most support, particularly in areas of the country that find it hardest to retain and recruit good teachers.

[Mr Mak]

I thank the Minister for that answer. Roxanne Vines, the outstanding headteacher of Mill Hill Primary School in my constituency, took up her post following support and guidance from the Future Leaders Trust. Will the Minister join me in congratulating Roxanne on her headship and confirm that the Government will continue to support charities that help great teachers become great headteachers?

[Mr Gibb]

I am delighted to congratulate Roxanne Vines on taking up her post as headteacher at Hill Mill Primary School and wish her all the very best. High-quality headteachers are vital if we are to achieve our ambition of excellence everywhere. We are currently funding a range of prestigious development and leadership programmes and qualifications for headteachers and senior teachers through the hugely effective and successful Teaching Leaders and Future Leaders organisations.

[Chris Davies]

My local authority has declared its intention to close a number of schools in Brecon and Radnorshire, including Nantmel, Dolau and Llanbister Primary Schools and Gwernyfed and Brecon High Schools. Does my hon. Friend agree that the best way for pupils to have access to great and talented teachers is to keep excellent local schools open and not allow Powys County Council and the Labour-run Welsh Assembly to close the door on our children’s education?

[Mr Gibb]

My hon. Friend is of course right that high-quality teaching is the single most important influence on academic standards. In England, we have more and better qualified teachers than ever before, with the proportion of graduates entering the profession holding a first or a 2:1 rising from 63% to 74% since 2010. I am sure that parents in his constituency will come to their own view about whether Powys County Council’s decision to close schools is an effective or ineffective way of improving the education of their children.

[Chris Green]

Eatock Primary School in my constituency is now among the 100 top-performing schools in terms of progress made between key stages 1 and 2. Will the Minister join me in congratulating the whole school, and especially the headmistress and teaching staff?

[Mr Gibb]

I am very happy to join my hon. Friend in congratulating Mrs Flannery, the headteacher of Eatock Primary School. In fact, I recently wrote to her to congratulate her and her staff on their exemplary key stage 2 results, as 100% of the pupils are making at least expected progress in reading, writing and maths.

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

May I bring the Minister down to earth? He trumpets the successes of this Government’s education policy, but the fact is that every time the chief inspector speaks he says that the Government are failing to deliver the best possible education for our children up and down the country?

[Mr Gibb]

I do not recognise the statements from Sir Michael Wilshaw that the hon. Gentleman is citing. As a former Chair of the Education Committee, he should know better. We are determined to see excellence in every part of the country. Where there are patches where schools are not performing, whether in rural or coastal areas, we are taking action swiftly, and certainly more swiftly than the Government he supported before 2010.

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

The Minister will know that there are schools in my constituency and elsewhere that want to improve rapidly but are struggling with the challenge of recruitment. One academy principal told me last week that he has spent over £60,000 just on the advertising costs. Is not it time that the Department set up a single pooled vacancies site so that we can have that money going to the frontline?

[Mr Gibb]

It is not necessary to spend that kind of money recruiting teachers, because there are many free websites for teacher recruitment. I have been to many schools that have very imaginative ways of recruiting—going into sixth forms, local employers and universities to recruit graduates for their School Direct scheme—and they find very high-quality graduates coming into teaching. The challenge we face in this country is that we have a very strong economy, which is something we would not have were the hon. Gentleman to become Chancellor in a future Labour Government.

[Nic Dakin (Scunthorpe) (Lab)]

Demand for teachers is growing. Are the Government, despite Ofsted’s warnings, still burying their head in the sand about the teacher recruitment and supply crisis on their watch? If they are not, what are they doing about it?

[Mr Gibb]

We are certainly not burying our head in the sand. We have the highest number of teachers—there are now 455,000, so 13,000 more today than there were in 2010. We are also taking action to deal with the challenge of having a strong economy. We have introduced bursaries—up to £30,000 for top physics graduates. We have introduced the “Your future their future” advertising campaign. We have removed the cap on physics and maths recruitment. We have expanded Teach First. We have incentives for returners; some 14,000 returners came back into teaching last year, which is a record number. We are improving behaviour in our schools to improve retention, and we are dealing with the workload, which is one of the reasons why teachers say they leave the profession.

[Graham Stuart (Beverley and Holderness) (Con)]

6. If she will make it her policy to require all schools to work towards a quality award for careers education, information, advice and guidance recognised by the quality in careers standard.

[The Secretary of State for Education (Nicky Morgan)]

We want to spread excellent practice in schools in respect of careers and employment engagement activity to help prepare young people for successful working lives. That is why I launched the Careers & Enterprise Company, which is connecting employees from firms of all sizes with schools through a network of enterprise advisers drawn from business volunteers. I know that my hon. Friend has met the chairman and chief executive of the company. Its role is to harness exceptional schemes such as the Humber careers gold standard, which my hon. Friend has championed and which encourages the delivery of inspiring careers advice.

[Graham Stuart]

It was great to hear at the weekend that the Secretary of State was going to act to give further education colleges and apprenticeship providers access to our schools, but the central challenge in the careers space is the lack of incentives for schools to play with when they have so many high incentives in relation to exams. Will the Secretary of State change Government guidance to introduce a requirement to work towards an award that fits the quality in careers standard?

[Nicky Morgan]

I thank my hon. Friend for welcoming the announcements that were made at the weekend. He is right: the quality of careers advice is paramount. That is why we have published more robust statutory guidance, and why Ofsted already has to inspect and pass judgment on the ways in which schools prepare young people for their careers.

We are considering how to create the right incentives. We will consult a range of organisations, including the Gatsby Charitable Foundation and the Quality in Careers Consortium Board, and will publish a new careers strategy in the spring.

[Yvonne Fovargue (Makerfield) (Lab)]

15. It is bad enough that the Government do not value face-to-face careers advice, but, according to Ofsted, only 8% of young people have even heard of the national careers telephone helpline. What plans has the Secretary of State to raise its profile and prepare our young people properly for the world of work?

[Nicky Morgan]

I have already mentioned the Careers & Enterprise Company, which will be working with schools and local enterprise partnerships all over the country to create a network of enterprise advisers and co-ordinators with the aim of ensuring that young people can engage in a range of activities. This is not just about calling a telephone helpline; it is about a mixture of work experience, inviting speakers to schools, understanding why young people are studying certain subjects, and enabling them to get out and experience mini-apprenticeships.

[Danny Kinahan (South Antrim) (UUP)]

I lost my voice at the weekend, and I am afraid that that makes it a bit harder for me to speak.

The all-party parliamentary group for education will shortly launch an inquiry into how well our education system is preparing children for the world of work. Will the Secretary of State ensure that schools have enough resources to teach “soft” skills, such as IT skills, so that young people are well prepared for their careers?

[Mr Speaker]

The hon. Gentleman’s mellifluous tones can still be heard. I am pleased to inform both him and the House of that.

[Nicky Morgan]

I very much enjoyed listening to the hon. Gentleman’s question, and I welcome the work of the all-party parliamentary group. We are, of course, already teaching computing throughout all the key stages of the national curriculum, having introduced coding last year. The hon. Gentleman is right to draw attention to the important role of our education system in preparing young people for the world of work and for 21st-century Britain, and I look forward to hearing more from the all-party parliamentary group.

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

Four years after scrapping work experience at key stage 4, shredding Connexions and local careers service funding, and giving schools careers advice responsibilities but no resources, the best that the Secretary of State could do yesterday was blame schools for outdated snobbery over apprenticeships. Is it not a fact that she has been stung into action by the continued barrage of concern—the director general of the British Chambers of Commerce spoke of a “national embarrassment”—and that the Minister for Skills needs some sticking plaster for his appearance before the Select Committee this afternoon as part of its urgent inquiry on careers advice?

Will the Secretary of State ensure that careers advice and apprenticeship take-up are included in Ofsted’s assessment? Does she think that volunteer enterprise advisers—however hard-working—and a mere £20 million for her enterprise company will undo the damage that we see in the Government’s previous record?

[Nicky Morgan]

If the hon. Gentleman wants to talk about previous records, he should think about the previous record of his own party in government, when it completely failed to prepare young people for the world of work. In fact, it perpetuated fraud on them by allowing them to do technical and professional qualifications that did not lead either to satisfying the requirements of employers or to university. He clearly failed to listen to my earlier answer in which I said that Ofsted already inspects on careers advice and almost £70 million is being spent during this Parliament in relation to careers.

[Tom Brake (Carshalton and Wallington) (LD)]

7. What steps she is taking to implement the recommendations of the Social Mobility and Child Poverty Commission’s report, “State of the Nation 2015: Social Mobility and Child Poverty in Great Britain”, published in December 2015.

[The Parliamentary Under-Secretary of State for Education (Mr Sam Gyimah)]

The Prime Minister made it clear in his first major policy intervention this year that improving life chances is a key priority for this Government. We will, in due course, publish a strategy setting out all the ways in which we will be fighting disadvantage and spreading opportunity. The strategy will focus on the root causes and human dimensions of child poverty. We will work with the reformed Social Mobility and Child Poverty Commission, which will play an important role in this.

[Tom Brake]

I am sure that the strategy that the Minister mentions will recognise that early intervention is key to improving social mobility. Has he looked at the impact of the removal of the ring-fencing of the early intervention grant, which has led to a 40% drop in the money available for early intervention? What will the impact of that be on social mobility?

[Mr Gyimah]

The right hon. Gentleman will know that Conservative Members take social mobility very seriously, and we have an excellent record on it; we even allowed the Liberal Democrats into government once. On the early intervention grant, we have increased the amount of money for troubled families and are deploying it in a very targeted way to help the families who need it most.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

9. What plans the Government have to meet demand for school places in Thirsk and Malton.

[The Minister for Schools (Mr Nick Gibb)]

The Government are spending £23 billion on school buildings to create 600,000 new school places by 2021, open 500 new free schools, and address essential maintenance needs. Supporting local authorities in their responsibility to ensure sufficient school places in their area is one of our top priorities. North Yorkshire received £12 million in funding for new school places between 2011 and 2015 and has been allocated a further £40 million to create the further places required by 2018.

[Kevin Hollinrake]

Across North Yorkshire we are seeing a 10% increase in the demand for primary school places, and many of my constituents are concerned that we provide the infrastructure to meet rising populations and the increased numbers of houses being built. Will the Minister confirm that the capital funding will be provided to meet that ongoing demand for new places?

[Mr Gibb]

As I said, the Department has allocated £40 million to North Yorkshire for places required by 2015. This is based on the local authority’s own forecast of how many places it will need. We encourage local authorities to negotiate significant developer contributions for new places where they result from developments. I would be delighted to meet my hon. Friend to discuss this matter in more detail. Perhaps, through him, I can persuade North Yorkshire County Council to encourage more free school applications.[Official Report, 1 February 2016, Vol. 605, c. 5-6MC.]

[Marie Rimmer (St Helens South and Whiston) (Lab)]

11. What assessment she has made of the affordability of childcare.

[The Parliamentary Under-Secretary of State for Education (Mr Sam Gyimah)]

This Government understand that for many parents childcare is the main issue. That is why we will be helping parents with the cost of childcare to the tune of £6 billion a year from 2019 onwards.

[Marie Rimmer]

Childcare and early education are vital to help children to get the best start in life, particularly in the most disadvantaged families, yet this policy does nothing to help the most disadvantaged children, and the Minister’s decision to change eligibility means that those who may benefit most will miss out on the extra 15 hours. What plan does he have to raise its quality in the early years, particularly to address the issue of disadvantaged children who will not benefit?

[Mr Gyimah]

Disadvantaged children are at the heart of our childcare policy. This Government introduced 15 hours of childcare for disadvantaged two-year-olds, and all three and four-year-olds get the first 15 hours free. As for the second 15 hours, which is a work incentive, it is logical to say that before someone gets 16 hours of childcare, given that they get 15 free, they work one additional hour. That makes total sense.

[Stephen Hammond (Wimbledon) (Con)]

14. What progress the Government are making in giving summer-born and premature children the choice to defer starting school.

[Mr Gibb]

I pay tribute to my hon. Friend for his work in supporting and campaigning for summer-born children. Subject to parliamentary approval, we have decided to amend the school admissions code to support summer-born children to enter school in the reception year if their parents decide to defer their start at school. We are now considering other, consequential changes to the code, including whether the due date rather than the birth date of premature children should be used for determining when they will begin school, and we will conduct a full public consultation in due course.

[Stephen Hammond]

I thank my hon. Friend for his hard work in ensuring that the Department is listening to the campaign. Is there any chance he could provide a timeline so that parents who are planning their children’s future can do so with some security?

[Mr Gibb]

I understand my hon. Friend’s impatience to secure the legislative changes, but it is important that we consider the other changes we need to make to the school admissions code at the same time as making changes to the rules regarding summer-born children. The work is ongoing, and we will begin the consultation in due course.

[Lucy Frazer (South East Cambridgeshire) (Con)]

17. What steps the Government are taking to keep children safe online at school and at home.

[The Minister for Children and Families (Edward Timpson)]

Schools, internet providers and parents all have a role to play in keeping children safe online. All schools must have regard to the statutory guidance, “Keeping children safe in education”, when carrying out their duties to safeguard and promote children’s welfare. Every school is required by law to have measures in place to prevent all forms of bullying, including cyber-bullying, and e-safety has been a statutory requirement in the computing curriculum since September 2014.

[Lucy Frazer]

I am very grateful to the Minister for that response because this is key. The Education Committee recently heard from a number of children in care, who raised the issue of the internet and safety on the internet, particularly in relation to self-harm. We heard that when someone types “self-harm” into Tumblr, they get a message of support and are directed to particular websites that will help them. Will the Minister encourage other social media sites to do the same?

[Edward Timpson]

My hon. and learned Friend is right to push on this issue. We encourage, and will of course continue to encourage, social media, search engines and blogging sites to help to signpost vulnerable users, including children in care, to accessible sources of information and support through the UK Council for Child Internet Safety board and elsewhere. Most schools filter content and monitor children’s internet usage to protect them from harmful websites, but not all of them do so. That is why we are consulting on requiring all schools to use filters and monitoring systems, so that we can be confident that all children are kept safe online as well as off.

[Anna Turley (Redcar) (Lab/Co-op)]

18. What discussions she has had with education providers on reviews of post-16 education and training.

[The Minister for Skills (Nick Boles)]

I refer to my answer to question 3.

[Mr Speaker]

It is in our minds.

[Anna Turley]

I appreciate the Minister’s response. My constituency of Redcar has obviously just experienced a huge and extreme tragedy with the loss of our steelworks. The challenge now for our further education campuses is to use the £3 million that the Government have provided to ensure that people get back into work. However, the campus at Redcar college has been under threat, and in the light of the review, there is some concern that we may not be able to retain that campus. I want to impress on the Government how extremely important that is for the economic and social regeneration of our area.

[Nick Boles]

First, I want to congratulate the hon. Lady on the absolutely tireless work she has been doing to represent her constituents at this very difficult time. I am glad that we were able to introduce some flexibilities. For instance, budgets have been used to help people to get HGV licences, which would not normally be eligible for state funding. I had the good fortune to visit her constituency and meet some of the SSI apprentices who have found new places. I do not want to anticipate the conclusion of the area review, but I certainly understand how important this kind of skills support is particularly in her community.

[Kevin Foster (Torbay) (Con)]

Will the Minister’s discussions include South Devon College, which is the main FE provider for Torbay, and particularly its exciting masterplan to create a new campus on the site of a closed factory? That might give some hope to the hon. Member for Redcar (Anna Turley).

[Nick Boles]

My hon. Friend brought the principal of the college to a meeting to explain its plans to me, and I was extremely impressed by the ambition and innovation that it is displaying. I am sure that colleges all around the country could learn from it.

[Caroline Flint (Don Valley) (Lab)]

South Yorkshire is currently undergoing an area review of further education. How important does the Minister think it is, when looking at post-16 education, that all providers of post-16 education—FE colleges, schools and others—should come together to plan strategically what kids need in their area?

[Nick Boles]

It is absolutely important that the area review starts with a proper analysis of all the different provision in the area, including sixth forms in schools. The right hon. Lady will understand that there are hundreds and hundreds of schools with sixth forms. It is hard enough to get a group of 15 institutions to agree on a plan—they have to agree on a plan: they are not “undergoing an area review”; they are conducting an area review, and it has to be their plan—and it might be hard to include schools in the meetings, but she will be reassured to know that regional schools commissioners are involved in the area reviews.

[Mrs Cheryl Gillan (Chesham and Amersham) (Con)]

19. What plans the Government have to meet demand for school places in Buckinghamshire.

[The Minister for Schools (Mr Nick Gibb)]

Buckinghamshire received £34 million between 2011 and 2015 to create new school places, and it has been allocated a further £27 million for the places that will be required by 2018. That support helped to create more than 5,000 new school places between 2010 and 2014. Many more have been delivered since then or are in the pipeline. In addition, as my right hon. Friend will know, the Sir Thomas Fremantle Secondary School opened in September 2013 through the free schools programme and will provide 420 places when at full capacity.

[Mrs Gillan]

Notwithstanding that answer from the Minister, we know that the demand for schools in Buckinghamshire continues to grow. The local government settlement for the area is so poor that the county council has warned that it cannot resource the housing growth plans and provide the key infrastructure that is required for new schools and additional places. What support can he give to the Buckinghamshire MPs who have been campaigning together at the Department for Communities and Local Government and the Treasury to ensure that proper support is given to our county council so that Buckinghamshire school children do not lose out?

[Mr Gibb]

We are committed to making school funding fairer. In 2015-16, we have made an extra £390 million available to the 69 worst funded local authorities. Buckinghamshire has received an additional £18 million and it will continue to receive that additional funding, as we have included it in the baseline. In future years, we will ensure that funding is fairly matched to need by introducing a national funding formula for schools, as well as for high needs and early years. My right hon. Friend the Secretary of State will bring forward and consult on our proposals this year.

[Mr Steve Baker (Wycombe) (Con)]

With 50,000 new houses expected in Buckinghamshire over the next 15 years, how will the Government ensure that the school places are established in the right locations?

[Mr Gibb]

That is a matter for the local authority. We are allocating sufficient funding to the authority to ensure that there are sufficient school places. Where there is development, we expect there to be a contribution from the developers.

[Sir Simon Burns (Chelmsford) (Con)]

20. What plans the Government have to meet demand for school places in Chelmsford.

[The Minister for Schools (Mr Nick Gibb)]

As I have said, the Government are investing £23 billion in school buildings to create 600,000 new school places. Essex received £71 million between 2011 and 2015 to create new school places. It has been allocated a further £127 million for the places that will be required by 2018.

[Sir Simon Burns]

Although I am grateful for that answer, my question referred to Chelmsford, rather than Essex. Does the Minister have the figures for Chelmsford?

[Mr Gibb]

I am very happy to meet my right hon. Friend to go through the figures for Chelmsford. In Essex, we created more than 2,000 new places between 2010 and 2014. Many more have been delivered since then or are in the pipeline. I am very happy to discuss his constituency in more detail.

[Mr Speaker]

Put the details in the Library, so that we can all see them.

[Karen Lumley (Redditch) (Con)]

21. What progress the Careers and Enterprise Company has made on improving the provision of careers education and inspiring young people about the world of work.

[The Parliamentary Under-Secretary of State for Education (Mr Sam Gyimah)]

The Careers and Enterprise Company has made significant progress since its incorporation last February. It has set up a national network of enterprise advisers to improve the employer-school link, it has launched a £5-million fund to help in areas where careers provision is particularly poor, and it is developing an enterprise passport for all young children in school.

[Karen Lumley]

More than 3,000 apprenticeships have been created in Redditch since 2010. What will the new company do to ensure that there are another 3,000 by 2020?

[Mr Gyimah]

First, I congratulate Redditch on its excellent work to create apprenticeships. That is at the heart of the work this Government are doing. Pupils should be given every opportunity to fulfil their potential. As my hon. Friend knows, the Government will create 3 million apprenticeships. The Careers and Enterprise Company will help young people find the right route to continue their development.

[Stephen Timms (East Ham) (Lab)]

The CBI said in its “Future possible” report 18 months ago that

“the transfer of responsibility for careers guidance to schools has been a failure.”

Will the Minister recognise that the CBI is correct?

[Mr Gyimah]

There are a number of ways to develop comprehensive careers advice and guidance. The Careers and Enterprise Company, in which we invested £20 million, is one part of that. As my right hon. Friend the Secretary of State has said, in the spring we will publish a comprehensive strategy for how schools can work with the company and the plethora of other organisations out there to deliver the right level of careers education, starting from primary level right through to the end of school.

[Cat Smith (Lancaster and Fleetwood) (Lab)]

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

[The Secretary of State for Education (Nicky Morgan)]

First, let me congratulate the 107 people who were recognised for their services to education and children’s services in the latest new year’s honours list. They include headteachers, classroom teachers, school governors, foster carers, children’s social workers and people working in adoption and early years settings. I am sure the whole House will want to congratulate them and thank them for the work they do.

May I also extend my support to all the pupils, teachers and communities affected by the recent floods in the north of England? I saw for myself the impact on schools in Carlisle recently, and the Minister for Schools has visited Yorkshire and Lancashire to see the impact for himself.

[Cat Smith]

The Minister will be aware of the case of Poppi Worthington, a constituent of my hon. Friend the Member for Barrow and Furness (John Woodcock), and her tragic death. Does she support the calls from both sides of the House for an independent investigation into the circumstances and failings before and after Poppi’s death?

[Nicky Morgan]

Poppi’s death was clearly an absolute tragedy. It is vital that we understand what has happened and have the opportunity to learn any lessons. The serious case review into her death will be published shortly, and I welcome the announcement by the Crown Prosecution Service that it will review the case. We do have concerns about Cumbria children’s services. They were inspected in May last year and found to be inadequate. There have been some improvements, but not enough. We will review progress in the workings of the children’s services in March and take a further decision. It is right to wait for the serious case review and the CPS review, but of course we will keep this matter actively under review, including the demands for an independent inquiry.

[Graham Evans (Weaver Vale) (Con)]

T3. As we approach Holocaust Memorial Day this Wednesday, will the Secretary of State and my hon. Friend the Minister for Schools reaffirm her Department’s commitment to continue funding the Holocaust Educational Trust’s “Lessons from Auschwitz” project, which has enabled 28,000 students and teachers to visit Auschwitz-Birkenau?

[The Minister for Schools (Mr Nick Gibb)]

My hon. Friend is right: every young person should learn about the holocaust and the lessons it teaches us today. In recognition of its significance, teaching of the holocaust is compulsory in the national curriculum. For the past 10 years the Department for Education has funded the Holocaust Educational Trust’s “Lessons from Auschwitz” project, which, as my hon. Friend said, has taken more than 28,000 students to visit the site of the Auschwitz-Birkenau concentration camp. We will continue to promote, support and fund teaching of the holocaust.

[Mr Speaker]

Of course, as some Members will know, we commemorated Holocaust Memorial Day in a reception in Speaker’s House last week. Many survivors of the holocaust were there, and I do not think anybody present is likely to forget the occasion.

[Lucy Powell (Manchester Central) (Lab/Co-op)]

As somebody who went on a “Lessons from Auschwitz” visit with schoolchildren from Manchester in the last few weeks, may I echo earlier comments about how moving and important it is?

In their manifesto of 2010—notably dropped in 2015—the Conservatives pledged to

“close the attainment gap between the richest and poorest”.

Revised GCSE results published last week showed that, despite Lib Dem policies such as the pupil premium, the GCSE attainment gap between pupils on free school meals and their peers has actually widened since 2010. With the Conservatives now governing alone, can the Secretary of State tell the House whether closing the attainment gap is still an objective and, if so, why she is allowing it to widen on her watch?

[Nicky Morgan]

I welcome the hon. Lady’s comments about the “Lessons from Auschwitz” project. Like her, I have visited Auschwitz with schools in my constituency. It was an incredibly moving experience, and I recommend that all Members of the House take the opportunity to do so.

Of course closing the attainment gap remains absolutely a goal—and not just a goal, but something we are moving and working towards in Government, which is why we continue to fund the pupil premium. [Interruption.] The difficulty with the hon. Lady’s statements on this and other matters is that she needs to understand and interrogate the figures that are published, because the changes we have made to the accountability of the examination system make it impossible to compare GCSE threshold measures across the years. If she had interrogated them, she would know that the attainment gap between disadvantaged pupils and their peers has narrowed by 7.1% at key stage 2 and 6.6% at key stage 4 since 2011.

[Lucy Powell]

The Minister is moving the goalposts, as ever. All the evidence tells us that the most important factor in determining how well children do is the quality of teaching, especially for the most disadvantaged, yet at the start of this academic year half of all schools were struggling to cope with unfilled teaching positions, relying on supply teachers, non-specialists and unqualified staff. Teacher shortages are particularly acute in maths, science and English. Talk to any head anywhere in the country and they will say that such challenges are the biggest challenge they face. Given that the situation is getting worse, will the right hon. Lady, first, admit to this House that there is a problem—indeed, a crisis; secondly, agree that she should urgently look again at her Government’s chaotic and confusing approach to recruitment; and, finally, come forward with a proper strategy for retaining excellent teachers by looking at workload issues and the constant chopping and changing being inflicted on schools by her Department?

[Nicky Morgan]

What the hon. Lady calls moving the goalposts, I call restoring rigour to the exam system, making sure that our young people are getting qualifications that will set them up for life and for the world of work. Yet again, I am afraid to say that she has missed the point, because we have already talked about teacher recruitment and we have already announced plans for the National Teaching Service to help schools to recruit. Again, if the hon. Lady interrogated the figures properly rather than jumping for the quickest soundbite, she would know that not only have we increased the number of teachers we are seeking to recruit in subjects such as English and maths, but we have exceeded our recruitment targets for precious years—in fact, we have recruited more postgraduates in both English and maths, and we recruited 116% of the teachers that we needed at primary schools. It is extraordinary that she should seek to give lessons to this House, as she was the lady who not only commissioned the “Ed stone”—the carving of the promises—but then managed to lose the receipt.

[Nigel Huddleston (Mid Worcestershire) (Con)]

T6. Will the Secretary of State join me in encouraging schools in my constituency and right across the country to participate in Clean for the Queen from 4 to 6 March this year and help to tidy up their local communities ahead of Her Majesty’s 90th birthday?

[The Minister for Children and Families (Edward Timpson)]

What an invitation! Just as my hon. Friend has the Litter Free Evesham campaign in his own constituency, so we have the Crewe Clean Team and Nantwich Litter Group in mine and they do fantastic selfless work. They set an excellent example to schools and others, all of whom, I am sure, would be delighted to get involved with the Clean for the Queen campaign. As we know, through the National Citizens Service, social action is a wonderful way for young people to build those all-important character traits—respect, motivation and community pride.

[Paula Sherriff (Dewsbury) (Lab)]

T2. St John’s infant school in my constituency is struggling to obtain support for its breakfast club because eligibility is now linked to pupil premium funding. With free school dinner already provided for all pupils, there is no incentive for parents to apply for the premium, despite the vast majority of pupils coming from some of the most deprived areas in the country. Will the Minister take action to ensure that children from deprived backgrounds do not lose out on breakfast because they have lunch?

[Nicky Morgan]

We do not want any pupils to lose out, which is why we have continued with the pupil premium in this Parliament, having spent more than £6.5 billion on the pupil premium in the previous Parliament. It is also why we introduced the universal infant free school meals. There are some fantastic breakfast club schemes. If the hon. Lady wants to write to me, I or one of the Ministers will happily have a further conversation with her about this.

[Philip Davies (Shipley) (Con)]

T7. We have a desperate need for extra school places in my constituency, most acutely secondary school places in Wharfedale. Bradford council says that it received only £727,000 for school place funding for 2017-18, compared with £9.6 million in the previous year. Will the Minister ensure that sufficient money is given to resolve the issue of school place requirement in Wharfedale, and will he ring-fence any such money given to Bradford council to ensure that it is spent in Wharfedale?

[Mr Gibb]

As my hon. Friend knows, the Government allocate funding for new school places on the basis of forecasts of need provided by local authorities, and these forecasts change from year to year, reflecting local demographics and the effect of previous years’ capital spending. I know that the Department’s officials are in close contact with Bradford Metropolitan District Council, but I would be happy to meet my hon. Friend if he would find a further discussion helpful, and perhaps liaise through him with Bradford council.

[Tulip Siddiq (Hampstead and Kilburn) (Lab)]

T5. Swiss Cottage School in my constituency is an outstanding school that looks after children with special, complex and emotional needs. Regrettably, it is having to turn away pupils because of limited capacity. Does the Secretary of State believe that her Department is doing enough to look after children with special, complex and emotional needs, and does she believe that there is adequate provision for such vulnerable children across the country?

[Nicky Morgan]

I actually visited the school in the course of the past year and found it to be truly exceptional. It is staffed by a wonderfully talented headteacher and members of staff. We have invested in all schools, both those catering for special educational needs and those in the mainstream, but there is more we can do to prepare teachers for teaching children with special educational needs. We have a dedicated capital funding stream for schools catering for children with special educational needs. I strongly encourage her school to apply.

[Nigel Mills (Amber Valley) (Con)]

T10. Many headteachers in Amber Valley report that they have real problems supporting pupils who are keen to learn but who suffer from chaotic home lives. What more can the Government do to help headteachers in that situation so that they do not end up being a co-ordinator of a social services operation?

[Edward Timpson]

My hon. Friend raises an important question that many schools raise on how they ensure that every child is in the best possible place at home so that they can learn at school. He will know that the troubled families programme during the last Parliament, which turned around 99% of the 120,000 families, was extremely successful in supporting schools with those difficult families. We now have a more ambitious programme over the next five years involving 400,000 more families, including in the Amber Valley, to ensure that they get the support they need so that their children can go to school to learn and make a good future for themselves.

[Rachael Maskell (York Central) (Lab/Co-op)]

T8. Becoming an adoptive parent or a kinship carer marks a lifelong commitment to a child, and yet social services do not have that ongoing obligation to parents. Will the Minister urgently review the long-term support available to parents and kinship carers and fund that vital provision?

[Edward Timpson]

The hon. Lady will know that, through the work we did in the last Parliament, support for kinship carers through the family and friends guidance has set out very clearly the expectations on local authorities. Through the review of special guardianship orders, we have looked at the support that is needed post-placement for children who find themselves in that type of arrangement. Part of our overall strategy that we set out last week on children’s social care shows the ambition we have to ensure that every child gets the support they need, whatever the type of long-term placement they happen to be in.

[Several hon. Members rose—]

[Mr Speaker]

Order. I would like to get a couple more in if possible, so pithy questions and pithy answers.

[James Berry (Kingston and Surbiton) (Con)]

According to analysis in The Daily Telegraph, Kingston was the best local educational authority in the country for GCSE results. Will my right hon. Friend the Secretary of State join me in paying tribute to teachers and pupils in Kingston? Will she explain to the House how learning from the best schools will be rolled out across the country to help those schools that still have some way to go?

[Nicky Morgan]

As somebody who was educated in Kingston, I pay tribute to all the schools and teachers who operate there—they are much better than they were in my day. I pay tribute to the fact that my hon. Friend is talking about excellence and positivity, and about learning from other schools, which is much better than the constant negativity we hear from the Opposition.

[John Woodcock (Barrow and Furness) (Lab/Co-op)]

Is the Secretary of State as alarmed as I am that Poppi Worthington was not previously known to social services despite the fact that her mother had previously had a child taken into care, and her father had been investigated on two separate occasions due to child sexual abuse?

[Nicky Morgan]

I pay tribute to the work the hon. Gentleman has done as the local Member of Parliament in speaking up on this case. Yes, I am alarmed. As I said in my earlier answer, Cumbria is in formal intervention from my Department and is being supported by an interventions adviser. In the most recent inspection, the services were found still to be inadequate. As I have said, we will review progress in March this year as part of the broader package of reforms we know we need to introduce to tackle failing children’s social services departments, which only let down the most vulnerable.

[Nusrat Ghani (Wealden) (Con)]

East Sussex County Council offers award-winning children’s services, but there is always more to learn. What plans do the Government have to reform child and family social work?

[Nicky Morgan]

I thank my hon. Friend for raising an important point, which my hon. Friend the Minister for Children and Families has already touched on. We are looking at raising the qualifications of social workers, attracting the brightest and the best into the profession, and making sure there is strong leadership for them to benefit from. We are also looking at setting up a new body to regulate the training of children’s social workers, who form a hugely vital, but often under-appreciated service, and we want to make sure that it gets the same attention as our teachers and schools rightly do.

[Mr Speaker]

Last, but not least, the voice of East Antrim, Mr Sammy Wilson.

[Sammy Wilson (East Antrim) (DUP)]

Thank you, Mr Speaker.

Many churches, youth groups and youth organisations are concerned that they may be subject to Ofsted regulation as a result of the nationwide registration scheme. The Prime Minister has said that they will be exempt: the head of Ofsted has said that they will not. Will the Minister tell us who is right?

[Nicky Morgan]

It is right that we are asking the question about registration of out-of-school settings and therefore inspection, but the Prime Minister and I are clear that that is not to apply to organisations such as Sunday schools. Indeed, I am a Sunday school and Bible camp teacher myself. The hon. Gentleman should also look at the statement issued by the head of Ofsted after his recent appearance, in which he clarified that he was not correct and that we are right to say that Sunday schools and others will be exempt.

Speaker’s Statement

Monday 25th January 2016 Commons Chamber

15:36

[Mr Speaker]

I must inform the House that the hon. Member for Ogmore (Huw Irranca-Davies) has written to me, giving notice of his wish to resign from the Chair of the Environmental Audit Committee. I therefore declare the Chair vacant. I know the House will wish to join me in expressing its collective appreciation of the commitment to, and passion for, the remit of that Committee that the hon. Gentleman has exhibited since he took up the Chair shortly after the general election.

The following will be the arrangements for electing a new Chair of the Environmental Audit Committee. Nominations should be submitted in the Lower Table Office—[Interruption.] If Members would have the courtesy to listen, it would be appreciated—by 5 pm on Monday 8 February. Following the House’s decision of 3 June 2015, only Labour Members may be candidates in this election. If there is more than one candidate, the ballot will take place on Wednesday 10 February from 10 am to 1.30 pm in Committee Room 16. Briefing notes with more details about the election will be made available to Members and published on the intranet.

HMRC and Google (Settlement)

Monday 25th January 2016 Commons Chamber

15:37

[John McDonnell (Hayes and Harlington) (Lab)]

(Urgent Question): To ask the Chancellor of the Exchequer to make a statement on the settlement reached between HMRC and Google.

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

I am proud of the work the Government have done to make our tax system internationally competitive, but also to make sure that those taxes are paid. Time and again, we have taken the lead, domestically and internationally, when it comes to getting international companies to pay their fair share of tax. This is the Government who, working through the G20 and OECD, led on the base erosion and profit shifting project—BEPS—making the international tax rules fit for the 21st century. This is the Government who introduced a diverted profits tax to address the contrived movement of profit out of the country, so that profits from UK activities are taxed in the UK. And this is the Government who have invested heavily in HMRC to strengthen its compliance activity, which has allowed HMRC to secure around £100 billion in additional compliance yield over the last Parliament, including more than £38 billion from big businesses.

We have competitive taxes—that is why we have cut our rate of corporation tax so that it is the lowest in the G7—but we are also making sure those taxes are paid, reforming the international tax rules, introducing a diverted profits tax and investing in HMRC’s capacity. That is action taken by this Government that was sadly lacking in 13 years of Labour rule.

The statement made by Google at the end of last week is solid evidence that companies are changing their models and reviewing their structures because we have strengthened the rules. The statement comes at the conclusion of a lengthy inquiry by HMRC. The tax that individuals and companies pay is collected by HMRC enforcing the law, not politicians who are, rightly, not engaged in or informed of particular cases. I am therefore unable to go into the details of the inquiry’s conclusion beyond those made public at the end of last week. I would point out, however, that the National Audit Office examined the HMRC settlement process in 2012 and examined specific settlements. In all cases, the NAO concluded that HMRC obtained a reasonable settlement for the Exchequer. It also made recommendations on the process by which HMRC should operate when reaching a settlement—recommendations that have been implemented.

It might be helpful to the House if I reiterate what the law is and how the corporation tax rate works, both in the United Kingdom and around the world. The first thing to note is that corporation tax is charged on profits, not on turnover. Equally important, corporation tax is not calculated on the basis of profits attributed to sales in the United Kingdom, but to economic activity and assets located in the United Kingdom. To illustrate my point, imagine a UK company—a car manufacturer, for instance—manufactures its vehicles in the United Kingdom, but half its profits come from sales in the United States. The law as it stands in the UK, as elsewhere, would mean that those profits would be taxed in the United Kingdom, the place of activity, and not the United States, the place of sales.

Ever since 2010, we have been engaged in reforming the tax system both domestically and internationally. Government action is levelling the playing field among businesses, giving worldwide tax authorities more effective tools to tackle aggressive tax planning and helping us to better align the location of taxable profits with the location of economic activity. We are incentivising businesses to do the right thing and come to the table early. Last week’s announcement represents an important result of those actions. I can assure hon. Members that we will continue to tackle the tax risks posed by multinational companies over the coming years, giving the Exchequer more money to fund the public services we all rely on.

[John McDonnell]

I thank the Minister for his statement. However, many will feel it is a display of disrespect to this House that the Chancellor of the Exchequer confirmed the deal with a tweet over the weekend, but has refused to come here today personally to make a statement.

I pay tribute to the former and current Chairs of the Public Accounts Committee, my right hon. Friend the Member for Barking (Dame Margaret Hodge) and my hon. Friend the Member for Hackney South and Shoreditch (Meg Hillier), as well as all the campaigners for tax justice who have forced this issue on to the agenda. The Chancellor has managed to create an unlikely alliance between myself, the Sun newspaper, the Mayor of London and, according to reports, even No. 10 this morning. All of us think this deal is not the “major success” the Chancellor claimed at the weekend.

The statement offered today has left a number of questions unanswered, which I turn to now. Does the Minister not agree that it is important in our tax system that everybody is treated equally and fairly, whether they be large multibillion-pound corporations or small businesses? In that respect, independent experts have suggested that the effective tax rate faced by Google is now about 3%, despite estimated profits of £1 billion in 2014 alone. Will the Minister confirm whether this is the effective tax rate faced by Google over the past 10 years? In the interests of openness and transparency, will he now publish details of the deal and how it was reached? Will the Minister confirm that Google is not changing the company structures that enabled this avoidance to take place over the past decade? Are the Government not concerned that the agreement creates a precedent for future deals with large technology corporations, such as Facebook and Amazon? Will the Minister assure us that this deal does not undermine international co-operation on tax avoidance, such as the OECD base erosion and profit shifting scheme that the Chancellor once supported?

I also ask the Minister, once more, to halt the programme of HMRC staffing cuts, which is undermining morale and removing the very staff with the collective experience and expertise in collecting these taxes. Finally, will he address a confusion that seems to have arisen? Does he agree with the Chancellor, who thinks the deal was a major success; with the Prime Minister’s Office, which said this morning it was only a step forward; or with the Mayor of London, who described it as derisory?

[Mr Gauke]

I welcome the progress the Government have made over the past six years in ensuring that large companies pay more tax. At a time when we have been cutting the rate of corporation tax, corporation tax receipts, excluding North sea oil, have remained buoyant, partly because we have been more effective than ever at collecting tax from large companies. HMRC’s operational capability in this area has been strengthened—by the way, HMRC staff numbers are going up, not down, this year.

The shadow Chancellor mentioned the 3% figure. That is the very reason I drew attention to how corporation tax is worked out. It is worked out on the basis not of sales profits in a country, but of the economic activity and assets held in a country, and there would be severe dangers to moving in the direction of basing it on sales profits. He is right that every taxpayer should be treated fairly and has to pay the rate determined by the law; there is no lower, special rate for Google or any other taxpayer in this country.

We are collecting more tax, which is evidence of the steps we have taken, in both the BEPS process and the diverted profits tax, forcing companies to change their behaviour. That should be welcomed around the House. The real threat to collecting tax revenue from big businesses would be the anti-business policies of the Labour party.

[Mr Andrew Tyrie (Chichester) (Con)]

Last week, the Treasury Select Committee agreed the terms of reference for an inquiry into, among other things, problems with the corporate tax base. Does the Minister agree that Google might be a symptom but is probably not the cause of these problems; that those lie with the immense complexity of the tax system, which is rendered more problematic by the globalisation of tax liability; and that therefore fundamental reform of the corporate tax base probably now needs to be considered?

[Mr Gauke]

My right hon. Friend raises an important point. Our international tax system is based largely on that set up in the 1920s, but the world has moved on and the way multinational companies operate has changed significantly. That is why, some years ago, led by my right hon. Friends the Prime Minister and the Chancellor, we encouraged the OECD to establish the BEPS project. We are now seeing the first signs that that is working—that companies are changing their behaviour and the tax system is becoming better suited to the modern world.

[Stewart Hosie (Dundee East) (SNP)]

First, the diverted profits tax, set at 25%, came into effect last April. May we have the Minister’s assurance that the Google deal does not cover any of the period when diverted profits tax should have applied? Secondly, the rules on disclosed evasion are clear: tax should be paid at 100%, plus interest, plus a 30% penalty. May we have his assurance that that was rightly not applied in this case? Finally, given the difficulty the Netherlands got into with the Starbucks deal and Luxembourg got into with the Fiat deal, when the Commission insisted they recoup between €20 million and €30 million extra, should the Google deal not be put to Commissioner Vestager to ensure that it complies with state aid rules?

[Mr Gauke]

The United Kingdom does not engage in special deals with any taxpayer. When accusations to that effect were made before, Sir Andrew Park, a retired High Court judge, investigated them on behalf of the National Audit Office and concluded that in every case he had investigated the settlement was reasonable and the overall effect of the arrangements was good. For the very reasons I set out, I cannot comment on the individual matter beyond what is in the public domain. I do believe that there is an important principle here—that tax should be collected on the basis of the law, and that a Department that is independent from Ministers should be able to make the assessment of the right level of tax due under the law without politicians interfering in operational matters. I hope that that has the support of Members of all parties.

[Mrs Anne Main (St Albans) (Con)]

Will my hon. Friend assure me that some investigation will be made into how HMRC managed to allow this to go on for such a long period of time? Given that this started under the last Government and it has taken this Government to tackle the issue and bring it to book, will my hon. Friend help me to understand what lessons should be learned?

[Mr Gauke]

The information is in the public domain that HMRC launched an inquiry into the tax affairs of Google in 2009. This is a complex matter, but I am pleased that that inquiry has reached a conclusion. It would be fair to say that the progress made on bringing in a diverted profits tax and the reforms involved in the base erosion and profit shifting project appear to represent a shift in the behaviour of a number of companies, which is to be welcomed.

[Caroline Flint (Don Valley) (Lab)]

I am sure that my other colleagues on the Public Accounts Committee will be looking forward to hearing from Google and HMRC about this deal. The inquiry into the tax situation that many of these companies seem to be applying to what they should pay in a fair way to the UK public purse was started under Labour, and yes, it continued over the last five years, but last year, in the Budget before the general election, the Chancellor said that he would not tolerate this behaviour, declaring:

“Let the message go out”—[Official Report, 18 March 2015; Vol. 594, c. 772.]

and claiming that there would be an end to this sort of play. Given the £24 billion-worth of UK revenues over this period, experts have said that Google should have paid taxes of almost £2 billion, so does £130 million really meet the test of no tolerance?

[Mr Gauke]

I want to address this point and engage seriously with Members on the calculations that we have seen in the press, suggesting some of these very large numbers. As far as I can see, those calculations are based on looking at the profits attributed to the sales in the United Kingdom, and there is a very important distinction between profits attributed to sales versus profits attributed to economic activity and assets. The UK is a country that is very creative. We have a very strong scientific base. As a country, much economic activity goes on here that is involved in then exporting goods and services, and the profits from those exports should, I believe, be taxed in the UK where the economic activity occurs, not in the countries where the sales may occur. If we accept that principle, it does, I have to say, rather discredit the claims of a 3% tax rate.

[Mark Garnier (Wyre Forest) (Con)]

Although we fully appreciate in the House that the international rules are ferociously complex and that there can sometimes be variations in how they can be interpreted, will my hon. Friend please assure the House one way or the other whether Google has actually broken any laws that were in place between 2005 and 2011—or is this just an outcome of negotiations?

[Mr Gauke]

Again, I cannot comment on that—in large part because I am not privy to information that is not in the public domain—but I can say that an inquiry has been in place for some years and that it has now reached a conclusion. The consequence of the conclusion of that inquiry is, as Google has stated, that an additional £130 million is being paid to the Exchequer. Google has also made it clear that it has made changes in how it structures some of its arrangements, and that will obviously have an implication for future tax liabilities.

[Mr Dennis Skinner (Bolsover) (Lab)]

Why, on the one hand, should Italy put in a claim for £1 billion from Google while Britain, on the other hand, is prepared to settle for a paltry £130 million? It is not very good for Cameron, is it?

[Mr Gauke]

There is a difference between putting in a claim and determining the final result under the law of the land. That is what HMRC has done.

[Mark Field (Cities of London and Westminster) (Con)]

No one should underestimate the complex nature of trying to tax globally active corporations such as this. It is speculation to talk in terms of the numbers that have been bandied around. However, in view of the Government’s desire to get an international arrangement in place, can the Minister tell us today whether he believes this deal sets some sort of precedent, or is it just a one-off arrangement?

[Mr Gauke]

The important point to note is that the individual tax affairs depend on the application of the facts in the case; as I have mentioned a number of times, it depends on the economic activity and assets that are held in the UK, or indeed other jurisdictions. But I do think this signifies that companies are looking at their tax arrangements and there is a closer alignment between tax and economic activity, which I certainly welcome. That is what the BEPS—base erosion and profit shifting—process is designed to achieve, and that is what the UK Government have been advocating for some years now, and I believe we are making progress on that.

[Wes Streeting (Ilford North) (Lab)]

The reality is that the practice of companies organising their business over multiple jurisdictions to minimise their tax liability is not new, and even if the diverted profits tax were to apply it would barely make a dent on Google’s real tax liability. Given that this week all our constituents and small businesses will be filing their tax returns and do not have the luxury of negotiating their own sweetheart deals, what message does the Chancellor think he is sending to those individuals and businesses by saying this paltry sum of money from Google can possibly be considered, as he says, a major success? Does this now show how complacent Ministers are?

[Mr Gauke]

All businesses have to pay tax under the law. It is under this Government that we have seen the diverted profits tax brought in, and it is under this Government that we are seeing the BEPS process change the behaviour of companies. We did not see any of this from the last Labour Government, and all we end up with is unsubstantiated claims about sweetheart deals, insulting HMRC staff, who have worked for years to ensure that Google and other companies pay the tax due under the law.

[Mr Steve Baker (Wycombe) (Con)]

Does the Minister agree that in the mad world of corporation tax on international companies this sum of money is at once derisory, substantial, lawful and completely unacceptable to the public, and will he therefore also agree that it is time for a complete overhaul of the corporate tax system?

[Mr Gauke]

The point I would make is that this is a highly complex area, but there is a need for international co-operation in it, which is why we instigated the OECD looking at this as part of the BEPS process. That process has come forward with a number of recommendations. We have already legislated for two of those recommendations. There is a third that we are specifically looking at and consulting upon in terms of interest deductibility. It is right that we bring the international tax system up to date to reflect the way multinational companies are working. This has been left for too long; we are taking action.

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

Does the Minister recognise that people’s anger is very legitimate and even more justifiable given that Google is effectively freeriding on publicly funded infrastructure, not least the £1.2 billion the Government have invested in superfast broadband, and may I urge him again to make sure these calculations are put in the public domain so people can see how the figures are arrived at?

[Mr Gauke]

We will see if the National Audit Office wishes to look at this particular area, but again I point to the fact that previously when people have made allegations about particular arrangements, it has turned out on closer inspection that that has not turned out to be true.

[Alberto Costa (South Leicestershire) (Con)]

As the former Labour Chief Secretary to the Treasury, the right hon. Member for Birmingham, Hodge Hill (Liam Byrne), left that well-known note stating, “I am afraid there is no money,” does my hon. Friend agree that this is evidence that not only did the former Labour Government spend too much of our money, but they did not collect appropriate taxes?

[Mr Gauke]

My hon. Friend puts it very well. It is a pity that previous Governments have not taken this matter as seriously as we have.

[Christian Matheson (City of Chester) (Lab)]

The problem is that the Conservatives have form when it comes to arranging mates’ rates for taxation. They gave a massive tax cut to big City banks, particularly in relation to profits brought in from abroad. They also gave a massive tax cut to hedge funds, £25 million of which arrived in the Conservative party’s coffers last year, and now we have this deal. City banks, hedge funds and globalised corporations—the three bodies the modern Conservative party exists to serve. So let me ask the Minister: why should my constituents in Chester, who work hard and play by the rules, subsidise these big globalised corporations?

[Mr Gauke]

The fact is that in the last Parliament we increased taxes on banks and on hedge funds. The hon. Gentleman’s constituents should be asking why their Member of Parliament could not ask a better question.

[Hon. Members]

Ooh!

[Mr Speaker]

Order. This is very unseemly. Let us hear these important exchanges. People beyond this place might be taking an interest in them, and I think that they would like a decorous atmosphere. Let us hear what Mr Philp has to say.

[Chris Philp (Croydon South) (Con)]

Thank you, Mr Speaker. Is the Financial Secretary to the Treasury familiar with the report from the Oxford University Centre for Business Taxation that was published a short time ago? It itemised 42 anti-tax-avoidance measures that the coalition Government put in place, including the general anti-avoidance provisions, the banking code of conduct and the diverted profit tax, which will raise an additional £34 billion between 2011 and 2020.

[Mr Gauke]

Yes, I am aware of that report and I am grateful to my hon. Friend for drawing the House’s attention to it.

[Alison McGovern (Wirral South) (Lab)]

I and many other Members on this side of the House have seen representatives of small businesses queueing up at our surgeries to complain about the sweetheart deals that big businesses seem to be able to get while they themselves cannot get assistance from HMRC. I wrote to the Minister to ask him to meet me to talk about small businesses, but sadly he said no. May I take this opportunity to ask him again? Please will he meet me to talk about the impact of tax on small businesses in Wirral?

[Mr Gauke]

Well, the position is—[Hon. Members: “Go on!”] As it is the hon. Lady, I will.

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

Does the Minister agree that the best way to help HMRC to collect more tax is for this House to pass tax laws that are clear, precise and understandable without the need to refer to tax lawyers and accountants?

[Mr Gauke]

My hon. Friend has set out a laudable objective. We have to recognise that the nature of international businesses is often inherently complicated, but we also have to ensure that our legal system and our tax laws are brought up to date to reflect the way in which businesses work in the 21st century.

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

If any of the thousands of wonderful small businesses in this country failed to pay their taxes for 11 years, they would not be sitting negotiating with HMRC; they would be sitting down with the police. Can the Minister therefore understand the anger of small businesses and taxpayers when a quarter of calls to HMRC are not even answered? Will some of this money go into sorting that out?

[Mr Gauke]

First, on customer service, the hon. Gentleman makes a fair point. Taxpayers are understandably exasperated when customer service is not good enough, although I am pleased to say that at the moment the service is performing better than in any January in recent years. I stress to the hon. Gentleman and the House as a whole that it is very important that we have one tax system and fairness applied to every taxpayer. We must also recognise, however, in relation to some of the accusations, that some of the calculations that are used do not reflect the reality for particular companies. It is absolutely right that HMRC pursues all companies, even over many years, to make sure that the right amount of tax is paid.

[Matt Warman (Boston and Skegness) (Con)]

As a journalist, I had the dubious privilege for a couple of years of breaking the story of how much tax Google had paid. With that in mind, I had to look at the international arrangements that Google also makes. Is the Minister aware of any country outside of America—other than Britain—that has a deal with Google that is as good as this one?

[Mr Gauke]

Not as yet, but we wait to see future developments.

[Sammy Wilson (East Antrim) (DUP)]

At a time when the Government expect small businesses to do tax returns four times a year, does the Minister not understand that many of those small businesses will be outraged that a firm such as Google can get off with paying no tax for 10 years and then finish up with a paltry bill that includes fines and interest? At the same time, we have a refusal by the Government to show how that sum was raised. Surely, to avoid the feeling of cynicism among many taxpayers, we should at least have some transparency about how the figure was reached.

[Mr Gauke]

We are determined to ensure that all businesses pay the tax that is due. May I specifically address the hon. Gentleman’s point about quarterly returns? There will be a Westminster Hall debate on that matter in 25 minutes, and the point that I shall make is that there is no requirement for quarterly returns. Businesses should keep their information digitally and send summaries of that information on a quarterly basis. That is very, very different from quarterly returns.

[Several hon. Members rose—]

[Mr Speaker]

If we are finished by then, the Minister will be on time for the Westminster Hall debate. If we are not, he can make a grand entrance at a later stage. We look forward to that with eager anticipation.

[David Mowat (Warrington South) (Con)]

When it is in the public domain that one technique used by Google, Facebook and others is the so-called double Irish arrangement, by which profits in the first instance leave the UK and go to Ireland, is there not more that we can do with our European partners to use state aid rules on countries such as Ireland and Luxembourg, which undermine our tax base in that way?

[Mr Gauke]

My hon. Friend raises an important point. There is a need for international co-operation at an OECD level, which is the principal focus, and at an EU level. He will be aware of action that the European Commission has taken in respect of other member states that have had concerns about state aid.

[Diana Johnson (Kingston upon Hull North) (Lab)]

The Minister says that this deal does not amount to a 3% tax rate for Google, so for the sake of public confidence will he say what the actual tax rate is?

[Mr Gauke]

No—[Laughter.] That is because of taxpayer confidentiality. The point that I was trying to make was that the rate cannot be calculated by looking at profits from sales in the United Kingdom. The tax rate is currently 20%, and that applies to everybody, but the effective tax rate depends on the particular circumstances of any business.

[Peter Heaton-Jones (North Devon) (Con)]

Does the Minister agree that it is worth remembering that this matter has been outstanding not for one year or five years, but since the middle of the previous Labour Government, who failed to do anything about it? It is this Government who have taken effective action to collect these tax receipts. The Opposition should check their facts; perhaps they could google them.

[Mr Gauke]

I am grateful to my hon. Friend for his question. He is absolutely right that it is the action that we have been taking that has meant that companies are changing their behaviour and that we are getting in revenue.

[Hywel Williams (Arfon) (PC)]

The deadline for submission of self-assessment tax returns is in six days’ time, on 31 January. What consideration has the Minister given to reaching deals, victorious or otherwise, with any of my self-employed constituents who miss that deadline?

[Mr Gauke]

Let me return to this case. There has been a lengthy inquiry by HMRC into the affairs of Google. That inquiry has now come to an end and reached a conclusion. There is nothing to suggest that anything other than the proper enforcement of the law as it stands has led the way to this particular conclusion.

[Mr Robin Walker (Worcester) (Con)]

The Minister has said much about bringing our tax system up to date for the 21st century and about closing the tax gap, which I welcome. None the less, we have in our business rates system, a tax regime that is hopelessly out of date, and the cross-party Business, Innovation and Skills Committee called for fundamental reform of it under the previous Government. May I urge him to be as ambitious as possible in that reform so that we can close the gap between online businesses and the bricks and mortar businesses on our high streets?

[Mr Gauke]

As my hon. Friend will be aware, the Government are reviewing the business rates system, and will report shortly. As far as my right hon. Friends the Chancellor and the Prime Minister are concerned—and as the Chancellor has made clear—we are looking to do that in a fiscally neutral way, and we have received many representations on that point.

[Helen Jones (Warrington North) (Lab)]

Does the Minister not accept that this deal with Google, which most of us believe to involve a corporation tax rate of less than 3%, simply encourages tax avoidance by companies? If the issue was the amount of economic activity and assets held by Google in the UK, why are the Government not prepared to test that in the courts if necessary, and call its bluff?

[Mr Gauke]

HMRC has been conducting an inquiry in this specific case for a number of years, and has reached the conclusion that it is satisfied with the position that Google has reached. As for the additional payment, it is based on the facts that HMRC has seen, and on the detailed inquiry and exhaustive work that it has undertaken over many years, not numbers drawn up on the back of an envelope.

[Steve Double (St Austell and Newquay) (Con)]

Hon. Members on both sides of the House share the public’s anger that Google has been able to get away with paying so little tax for so long, and many of them also share the feeling that this deal is unsatisfactory, but will the Minister confirm that the £130 million that the Government have extracted from Google is precisely £130 million more than the Labour Government ever got from it?

[Mr Gauke]

It is the action that we have taken that has enabled this achievement by HMRC.

[Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)]

Mr Speaker:

“O wad some Pow’r the giftie gie us/

To see oursels as ithers see us!”

I agree with the hon. Member for East Antrim (Sammy Wilson) that this will be seen by many small businesses the length and breadth of the country as unfair and not understandable. Surely, part of the problem, as a number of Members have said, is the sheer complexity of the system. Will the Government commit themselves to addressing that matter?

[Mr Gauke]

We always look to try to find ways to simplify the tax system. I would make the point that if a company operates in many jurisdictions, its tax affairs are inherently more complex than if it existed in just one country, but the Government are determined to ensure that where the economic activity occurs in the United Kingdom, we tax it in the United Kingdom.

[Richard Graham (Gloucester) (Con)]

Everyone wants business to pay its fair share of tax, and most people will welcome the additional £130 million of tax revenue to fund important services, but many will wonder, given that the period of the settlement covers 2005 to 2011, what other multinational tax bills are out there that have still not been settled and what, if anything, the Labour party did in government to highlight those questions?

[Mr Gauke]

On the latter question, it may be the case that astronomers have located the ninth planet, but I am not sure that they have found any evidence of the Labour party doing very much on tax avoidance in government.

[Nick Smith (Blaenau Gwent) (Lab)]

May I gently chide the Minister, particularly given his last remark? Will he acknowledge the work of the cross-party Public Accounts Committee in the last Parliament? Its campaign on fair taxes by multinational companies was chaired by a Labour MP, the right hon. Member for Barking (Dame Margaret Hodge)?

[Mr Gauke]

There has been a shift in public opinion in recent years, and the pressure on companies to pay the tax that is due under the law is greater than ever before. I welcome that, and I welcome that change in public opinion, but it is the measures taken by this Government that mean that we are getting additional sums from large companies, as has been demonstrated in the past couple of days.

[Mr Alan Mak (Havant) (Con)]

Following the successful Google settlement, will the Minister confirm that the Government will continue to work with our international partners and organisations such as the OECD to continue taking a lead to ensure that our tax laws are complied with—action that Labour failed to take over 13 years?

[Mr Gauke]

My hon. Friend makes an important point. It was very much the Prime Minister who got the OECD and the G20 to focus on how multinational companies are taxed. It is right that we did that and that we are making progress, and I am pleased that this is coming to fruition.

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

Will the Minister rise above the political bickering for a moment and, with Opposition Front Benchers, look at the real problem? These massive global companies are extremely clever. With great respect to the people at HMRC, who work so hard, those companies can hire the best accountants, the best tax experts and the highest paid lawyers. However we change the law, they will find a way around it. In Europe and in this country, we have to look at this in a much more sophisticated way.

[Mr Gauke]

I appreciate the hon. Gentleman’s comments, but he should not be quite so defeatist. If he looks at what happened over the previous Parliament, he will see that HMRC’s large business team brought in £38 billion in additional tax as a consequence of their intervention. The UK has a reputation as somewhere with competitive tax rates but where taxes do have to be paid. That is a reputation that we should all seek to maintain.

[Robert Jenrick (Newark) (Con)]

Although £130 million might seem low for a business as large as Google, is not the reality that the Revenue cannot do as much to collect back-taxes as we would like it to, because they come from a significantly more lax era? This morning one tax expert described the situation under the previous Labour Government thus: “Everything was above board, and the board was set at floor level.” Under this Government, the diverted profits tax gives us the opportunity to change the landscape, but is there not a concern that letting Google off paying the diverted profits tax suggests that the Revenue will find this significantly more complex to implement than we would like? What more can we do to give the Revenue the support it needs to apply that evenly and to all?

[Mr Gauke]

We always seek to ensure that HMRC has the powers and resources it needs. For example, in the July Budget last year we announced a requirement for large tax companies to set out explicitly what their tax strategy is, and we will be legislating for that in the Finance Bill.

[Valerie Vaz (Walsall South) (Lab)]

To clarify the misinformation, under the law of the land what is Google’s theoretical tax liability?

[Mr Gauke]

The statutory rate for Google is exactly the same as the statutory rate for everybody else.

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

Human nature and ingenuity being what they are, from the moment taxes were invented there has always been a difference between the tax that Governments expect to receive and the tax that is actually paid—that is known as the tax gap. Will the Minister explain to the House in what direction the tax gap has been going since we came to office in 2010?

[Mr Gauke]

As a percentage of tax liability, the tax gap has been falling. Corporation tax avoidance, or corporate avoidance, has been falling at an even faster rate.

[Marie Rimmer (St Helens South and Whiston) (Lab)]

Will the Minister comment on the effectiveness of the OECD’s current BEPS proposals in responding to the globalisation of business? What would the impact have been on the situation in which we currently find ourselves with Google and HMRC had those proposals been implemented?

[Mr Gauke]

The hon. Lady asks a very good question. We are in the process of implementing those recommendations. The BEPS process is more closely aligning economic activity with taxing rights. That is the direction in which we believe we should go. Having led the way in getting the BEPS process started, this Government want to lead the way in implementing its recommendations.

[Several hon. Members rose—]

[Mr Speaker]

Order. I note in passing that over the past few minutes further Members have started bobbing. There is no problem with that, but if it delays the Minister he will know why.

[Nigel Mills (Amber Valley) (Con)]

When the Minister makes large businesses publish their tax strategy, will he also make them publish their tax returns so that we can all see how much tax they are declaring and how they got from their cash profit to that tax bill? That would improve transparency and confidence in the system.

[Mr Gauke]

The United Kingdom’s position on taxpayer confidentiality is hardly unique. Indeed, it is the mainstream approach. Knowing what a company’s tax liability might be depends on a detailed understanding of the whereabouts of its assets and activities, and not all of that information would necessarily be apparent from a straight tax return. As I have said, there is greater transparency now because companies have to set out their strategies, which has never been the case before.

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

The Minister is trying to have it both ways. These are companies, not individuals, so the confidentiality excuse does not wash with me. We know what the profits, assets and the liabilities are, because they are in the companies’ accounts. We also know that the corporation tax rate is 20%. On the basis of both those pieces of information, how much does Google actually owe the Exchequer?

[Mr Gauke]

The principle of taxpayer confidentiality is not new. It has existed for as long as we have had a tax system. If the hon. Gentleman wants to make a case for abandoning it, he ought to consider what the overall consequences would be for the attractiveness of the UK as a place in which to do business. Let me add that, without fully understanding the whereabouts of a company’s assets and activities, no one is in a position to make a judgment about how much tax it should pay. HMRC is able to do that, and HMRC is bringing in more money than ever.

[Alex Chalk (Cheltenham) (Con)]

I welcome the fact that the Government have raised £130 million, but does my right hon. Friend agree that it should not have had to take five years—and, no doubt, considerable public resources—to prise that money out? Do not multinationals themselves need to change their culture?

[Mr Gauke]

My hon. Friend has made an important point. The way in which to change the culture of multinational companies—and, indeed, we have already started to see signs of such a change—is to take the action that we have taken in implementing the BEPS recommendations and introducing a diverted profits tax. Those are the achievements of this Government.

[Nic Dakin (Scunthorpe) (Lab)]

I really cannot believe that the Government see this deal as a major success. Why are they so supportive of sweetheart deals for companies like Google, but so slow and reluctant to address the business rates burden on the steel industry?

[Mr Gauke]

As I have said, we are reviewing business rates, and, in fact, we have cut them by £1 billion in recent years. I should add that there is no sweetheart deal. HMRC does not undertake sweetheart deals. What it undertakes are thorough inquiries, and when companies accept their liabilities, those inquiries can be brought to a conclusion. However, we are ensuring that HMRC succeeds in delivering the revenue that is due under the law.

Child Refugees in Europe

Monday 25th January 2016 Commons Chamber

16:23

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

(Urgent Question): To ask the Home Secretary to make a statement on child refugees in Europe.

[The Minister for Immigration (James Brokenshire)]

The Government are at the forefront of the international response to the unprecedented migration flows into and across Europe. We want to stop the perilous journeys that are being made by migrants, including children, which have had such terrible consequences.

In respect of the majority of refugees of all ages, the clear advice from experts on the ground is that protection in safe countries in their region of origin is the best way of keeping them safe and, crucially, allowing them to return home and rebuild their lives once the conflict is over. That is why we are providing more than £1.1 billion in humanitarian aid for the Syria crisis, but it is also why we have a resettlement scheme for the most vulnerable Syrian refugees—those in the most need. Some 1,000 arrived before Christmas, about half of them children. A further 19,000 will be resettled by the end of this Parliament, and many of those will be children too.

Our resettlement scheme is based on referrals from the United Nations High Commissioner for Refugees. We already consider referrals of separated children or orphans under the Syrian resettlement scheme where the UNHCR assesses that resettlement is in the best interests of the child. The UNHCR has a clear view that it is generally better for separated children and orphans within the region to stay there, as they are more likely to be reunited with family members or to be taken into extended family networks.

Last week the International Development Secretary announced an additional £30 million for shelter, warm clothes, hot food and medical supplies, including for 27,000 children and babies. This assistance will be distributed to aid agencies, including UNICEF, the UNHCR, the Red Cross and the International Organisation for Migration, to support vulnerable people, including children on the move or stranded in Europe or in the Balkans.

We have heard calls for the UK to take more unaccompanied children from within the EU. The Prime Minister has committed to looking again at this issue, and it is currently under review. Such a serious issue potentially affecting the lives of so many must be considered thoroughly, and no decisions have yet been taken. The Government are clear that any action to help and assist unaccompanied minors must be in the best interests of the child, and it is right that that is our primary concern. We take our responsibilities seriously, and this issue is under careful consideration. When this work is completed, we will update the House accordingly. I commend this statement to the House.

[Yvette Cooper]

The aid for refugees, particularly children, is of course welcome, but Save the Children has estimated that 26,000 children have arrived alone in Europe: some who fled alone; some who have been trafficked by gangs, perhaps into prostitution, slavery or the drugs trade; and some separated from parents or family along the way, such as the 10-year-old whose case I heard of who was separated from his parents as a gang pushed them on to a lorry, and they now do not know where he is.

The Government have said repeatedly that they are looking at the call from across parties and from Save the Children for Britain to take 3,000 lone child refugees, but there has still been no answer, and we hear rumours that they will look only at helping child refugees from camps in the region. That is not enough. In Greece, in Italy and in the Balkans, the reception centres and children’s homes are full, and children are disappearing. The Italian authorities estimate that about 4,000 children who were alone in Italy disappeared last year. I met 11 and 12-year-olds in Calais who were there alone with just one British volunteer looking after them. That is a similar age to my children, and they should not be there alone.

We should especially be helping those who have family in Britain who are desperate to care for them. Last week, a tribunal ruled that three teenagers and a vulnerable adult should be able to stay with close relatives here while their asylum cases are heard rather than being alone in France because the French system and the Dublin III agreement are not working for lone refugee children. May I urge the Minister to see this judgment as another reason to reform the system so that it helps child refugees? One case that was due to go to the tribunal was unsuccessful—that of a teenager from Afghanistan whose sister lives here. It was unsuccessful because he died, suffocated in a lorry just a few weeks ago, taking crazy risks: because he did not wait for the lawyers; because he was 15 years old and that is what teenagers do.

This week, many of us will sign the Holocaust Memorial Day book of commitment. Our colleague in the House of Lords, Lord Alf Dubs, was saved from the holocaust by the Kindertransport many generations ago. Now he is asking us, through his Lords amendment, to back Save the Children’s campaign to help a new generation of vulnerable children. Please will the Government agree to this before more children disappear or die? Please let us do our bit again to help child refugees.

[James Brokenshire]

I say to the right hon. Lady that this Government are taking a number of steps to assist child refugees both in the region and, with some of the specialist support we are providing to process asylum claims, in countries such as Greece and Italy. Indeed, looking at the situation in Calais and northern France, the support the Government are providing to the French in identifying those who are victims of slavery and trafficking is a key part of the agreement reached last August between the Home Secretary and Bernard Cazeneuve, the French Minister of the Interior.

It is important to acknowledge the right hon. Lady’s point about the role of trafficking and of those seeking to sell false hope who are very directly putting lives at risk. The way in which traffickers seek to place refugees in appalling conditions—literally not caring whether they live in die—is quite horrific. In that context, it is notable that work by Europol indicates that about 90% of those coming to Europe have been trafficked in some form or other by those involved in organised immigration crime. That is why the work we are doing in setting up the organised immigration crime taskforce is so important in working with Europol to confront and combat the heinous acts of the traffickers.

On the issue of reunion, the Dublin arrangements are in place. The right hon. Lady mentioned the court case last week, which was specific to the four individuals concerned. Although we will look at the judgment, which has not yet been received, to understand the court’s decisions and the reasons it has set out for the order it made last week, it is important to recognise that a claim of asylum still had to be made in France to ensure, as we understand it, that the reunification arrangements were operative under the Dublin arrangements. We will wait to see the judgment.

On the Save the Children report and its request for us to consider taking the 3,000 children, I have already said—the Prime Minister said the same in the House a short while ago—that we are actively considering the proposal. We will obviously return to the House when we have investigated and concluded our consideration of that matter.

[Sir Eric Pickles (Brentwood and Ongar) (Con)]

It is important not to stretch the analogy with the Kindertransport too far. We need to remember that on the last train, which was disrupted by the war, only two of the children survived and the rest, along with their families, were killed. However, there are some clear parallels that we need to address. We need to remember the enormous contribution that the Kindertransport made to this country: distinguished doctors, surgeons and Members of both Houses were saved by it.

I am pleased that the Prime Minister is looking at this matter again. He is quite right to try to keep children in the region, but to use one of those phrases, we are where we are. There are children at risk, and I urge the Government to look carefully at that. After all, today is 25 January. A month ago, we were celebrating that great Christian festival of children, and I hope that that spirit lingers beyond Boxing day.

[James Brokenshire]

My right hon. Friend is obviously right to recall Holocaust Memorial Day, which we will mark on 27 January. I was at the Home Office earlier this afternoon for our own recognition of that very important event, given the context of what happened then and the need to ensure that the lessons of the past are remembered today.

Our focus is clearly on trying to assist the children who are most in need and the refugees who are most in need. That is why we have taken the approach of providing aid assistance and of having the vulnerable persons relocation scheme. The resettlement scheme is aimed at the issues of vulnerability, part of which is about children and about orphans, and it is very much focused on those who have suffered most.

[Andy Burnham (Leigh) (Lab)]

The thought of any child alone in a foreign country is abhorrent to any parent, but for them to be alone in dangerous conditions—without food, warmth, comfort or protection—is genuinely terrifying. Sadly, that is the reality today for thousands of Syrian children and those fleeing other conflicts. The truth is that some of these frightened young souls are on our own doorstep, as my right hon. Friend the Leader of the Opposition saw for himself at the weekend. No child should be left to fend for themselves, whoever they are and wherever they are. I have no doubt that, when faced with this issue, the vast majority of British people would see a moral duty to act, as the right hon. Member for Brentwood and Ongar (Sir Eric Pickles) has just said.

I congratulate my right hon. Friend the Member for Normanton, Pontefract and Castleford (Yvette Cooper) on asking the question and welcome the Minister’s commitment to look seriously at the issue, but may I press him on some of the points that my right hon. Friend made? In particular, will he consider children who are here in Europe, as well as those who are in the camps? The Government’s policy to date has been to take only refugees from the region, rather than those who have crossed the sea. Does he not accept that, as the crisis develops, that distinction is becoming harder to maintain?

There are 26,000 unaccompanied children in Europe today. They cannot, as the Government claim, be described as the fittest and the strongest. They are instead highly vulnerable to trafficking, prostitution and other forms of abuse. They urgently need someone to reach out a hand. I appreciate the concern that doing so could create an unhelpful precedent and an incentive for families to send children alone, but surely that can be dealt with by making it clear that this is an exceptional move and by working with the UNHCR and others to identify children who are genuinely alone?

This is the biggest humanitarian crisis since the second world war, but instead of playing our full part, the Prime Minister has spent recent weeks stomping around Europe with his own list of demands. Does the Minister not accept that, to countries that are trying to deal with the enormity of this crisis, that might make us look a little selfish and blinkered? By doing more to help our partners in Europe, might not the Prime Minister build good will and get a better hearing for his renegotiation demands?

As others have said, this week we will remember the awful events of the holocaust and the Kindertransport. Surely now is the time to take inspiration from those British heroes of the last century and act to change the course of history in this.

[James Brokenshire]

This country can be proud of the record that we have maintained and the work that we are doing to provide aid and assistance to vulnerable people in the region. Some £1.1 billion has been committed.

I say to the right hon. Gentleman that we are working closely with the UNHCR on the resettlement programme and in our consideration of this issue of children. The UNHCR and UNICEF have made it very clear that the best way to help children is to work in the region itself, because that is often where the connections with family are.

The right hon. Gentleman highlighted the issue of Europe. We are acting in solidarity in Europe by providing expertise to the European Asylum Support Office; providing support to Frontex for the search and rescue operations; and supporting Europol and the activities in the Mediterranean to confront the people traffickers and smugglers to deal with this issue at the border. We are also working beyond the borders of Europe in the source and transit countries to provide the long-term stability and security that are fundamental to dealing with all of this.

We have to be very careful that the stance that we take does not make an extraordinarily difficult situation even worse. We know that the people traffickers exploit anything that we say and twist it in a perverse manner to encourage more people to travel and put more lives at risk. That is why we are looking at this issue very closely to determine what is in the best interests of the child, to ensure that more lives are not put at risk and to see how we can support this activity. I have highlighted the direct support that we are giving to provide aid and assistance to children and refugees in flight across Europe and in the Balkans.

The combination of approaches that we have taken sets a clear record, but as I have indicated, we continue to look at this issue very closely.

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

I do not think that it helps to confuse this issue with reform of the EU.

Notwithstanding the considerable aid that we have given to displaced Syrians in the area, which is the right thing to do, there is a humanitarian case for helping the children who are in limbo and very vulnerable to traffickers, the elements and so on. Given that doing so will be fraught with problems, and that there is a record high number of children in the care system in this country already and a shortage of foster carers, what assessment has the Minister made of our capacity to take these children and to give them the specialist support that clearly they will need in the absence of the networks that they have been used to?

[James Brokenshire]

My hon. Friend makes an important point, because the figures for asylum applications from unaccompanied asylum-seeking children show that last year there were 2,500. That is already putting strain on a number of local authorities, and Kent in particular has been bearing a lot of that burden. We are working closely with local government, and he may be aware that in the Immigration Bill, which is currently in the other place, we are also seeking to set out a mechanism to distribute that burden more fairly across local authority areas.

[Patrick Grady (Glasgow North) (SNP)]

May I associate myself with the comments about Holocaust Memorial Day? Today we mark Robert Burns day, for one of Scotland’s great humanitarians. My hon. Friend the Member for Kirkcaldy and Cowdenbeath (Roger Mullin) has already quoted the lines:

“O wad some Power the giftie gie us

To see oursels as ithers see us!”

How do the Government think this looks? The proposal to take our fair share of children from Europe has been around for months, so when will they stop prevaricating and reach a decision, before more children continue to die in the freezing cold of the European winter? Are the Government considering taking children from Europe and not just from the camps? Can the Minister say a bit more about the support being provided to European countries to support these children, who are lone and vulnerable, and victims of a crisis that they did not create?

[James Brokenshire]

I have already set out the additional funding that DFID has committed to support those across Europe and how some of that money is being provided to UNICEF, for example, to look at how we can best support children in that overall approach. I want to underline the fact that UNICEF itself has emphasised

“the importance of first and foremost assessing the individual situation of unaccompanied children, and their best interests, before any actions are taken; noting that in these situations children who may appear unaccompanied are in fact being supported by family members, or others, and decisions on how they are cared for should take this into account.”

That is precisely the approach the Government are taking.

[Sir Edward Leigh (Gainsborough) (Con)]

No one doubts the humanity of the right hon. Member for Normanton, Pontefract and Castleford (Yvette Cooper)—it is very difficult to argue against it—but surely the duty of Government is to balance natural emotion with hard-headed realism. Net migration into this country has been far bigger in last 20 years than for any other country, and we are at the limit of what the public will accept. We are also spending more than the whole of the rest of Europe put together on helping people in Syria. For every child refugee we take from a camp in Dover or Calais, we will simply have to take many other people who will come as part of the family. I urge the Government to stick to their present policy—their humane and correct policy—of spending money to help in the region and not to listen to the Leader of the Opposition and his daft policy of taking people from Dover and Calais.

[James Brokenshire]

We want to see children who are affected by this appalling crisis given help and assistance at the earliest opportunity. That is why we have committed the aid and support that we have in the region. It is also why in Calais, for example, we have been giving support to the French Government to ensure that claims can be made as quickly as possible. The French Government have set up 78 new centres away from Calais to help migrants to make their claims as quickly as possible. That way, we see people get help at the earliest chance.

[Keith Vaz (Leicester East) (Lab)]

Last year, 300,000 child refugees entered through Greece and 16,000 entered through Italy. The problem has been that the countries at the EU’s external border are just not given the support they need from the European Union. As a result, reception centres have not been opened up in places such as Greece. Will the Minister tell us what has happened with the deal made between the EU and Turkey, which would have provided Turkey with additional resources to try to help us to deal with this terrible crisis?

[James Brokenshire]

Work is continuing in respect of Turkey and the Government have a commitment to providing funding in support of that. The right hon. Gentleman is right to highlight the issue of the external border in countries such as Greece and Italy. This country has provided more support for asylum processing, in terms of experts, than any other country in the EU, and that sense of how we can support the external border is very much at the forefront of our work.

[Helen Whately (Faversham and Mid Kent) (Con)]

As my right hon. Friend has mentioned, Kent is already looking after hundreds of unaccompanied asylum-seeking children. Kent has asked other councils to help to look after these children, but few have been forthcoming. We have to do a good job with the young people who are already here seeking our help, so as we rightly consider whether we can help more Syrian child refugees, can my hon. Friend assure me that he will press on with ensuring effective dispersal of the young asylum seekers already in the UK?

[James Brokenshire]

I can assure my hon. Friend that the Home Office is working closely with the Department for Education. I have the Minister for Children and Families on the Bench alongside me. To see that children are given the support they need in counties such as Kent, which are taking on a considerable burden, we are working with the Local Government Association and others, as well as maintaining that backstop provision in the Immigration Bill to ensure a fair allocation of young people in need of support.

[Frank Field (Birkenhead) (Lab)]

I commend the Minister for his statement about our responsibilities to some of the most vulnerable children, but may I also make a plea for the very poorest in each of our constituencies, who already have almost no hope of getting a decent home, who find social services under huge pressure when it comes to meeting their needs, and have almost no chance of ever getting a place at a school of their choice? When the Government are considering the priorities and the needs of those children, will they also consider that they are committed to bring in 20,000 refugees, and ensure that any proper concessions on this front are taken from that total of 20,000?

[James Brokenshire]

As I have said to other right hon. and hon. Members, we are closely considering the issue of children. I have already indicated that of the 1,000 refugees who arrived through the resettlement scheme before Christmas, around a half were children. We are very conscious of the need for support for local authorities. We have announced additional funding to meet the needs under the resettlement scheme for years 2 to 5, recognising the pressures that the right hon. Gentleman has outlined.

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

We were told that 100,000 people would be admitted to this country each year. In fact, 320,000 people have been admitted in the past year. If we admit another 20,000 people over the next five years, or 4,000 per year, does that mean that 4,000 are not admitted from other parts of the world?

[James Brokenshire]

The vulnerable persons resettlement scheme is meeting our rightful obligation to respond to the crisis that we see in Syria, which is the basis for the figure of 20,000 that we have outlined for the course of this Parliament. Obviously, we have certain other arrangements with UNHCR, but we need to meet that commitment and respond to the crisis that we see before us.

[Liz Saville Roberts (Dwyfor Meirionnydd) (PC)]

Volunteers to Calais talk of refugee families struggling with a dilemma—whether to buy black market substances to dope their children, or to face the prospect that they will reveal the family to the authorities in transit across the channel by crying in fear. Surely the Government can better safeguard children by also adopting proper selection and identification processes for families before they reach the UK to avoid these terrible situations.

[James Brokenshire]

The most effective way to do that is to see that those families claim asylum in France. There have been around 2,800 claims of asylum in and around Calais. The French Government have put in place the new arrangements that I described so that people can be moved away from Calais into better reception centres. That is the clear message that I would give, which may well identify some of the family reunion issues that the hon. Lady has highlighted.

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

Many Members of this House are suggesting that we rescue unaccompanied minors from other European Union countries and bring them to Britain. Does the Minister agree that one of the dangers of that is that their relatives will appear, and human rights lawyers in this country will insist that they have a right to join those minors in the UK because they have a right to a family life?

[James Brokenshire]

We need to consider these issues carefully. What is at the forefront of my mind is not seeing more children being put at risk and their lives being put at risk. That is what the people smugglers and traffickers will do, and why we need to act with such great care so that we do not make the situation even worse than it is.

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

I wholeheartedly support the call from Save the Children and my right hon. Friend the Member for Normanton, Pontefract and Castleford (Yvette Cooper), but I want to ask the Minister specifically about the treatment and dignity of children asylum seekers and their families when they arrive in this country. He will be well aware of the concerns expressed about Clearsprings, which operates accommodation in my constituency and in that of my hon. Friend the Member for Cardiff Central (Jo Stevens), stigmatising asylum seekers by forcing them to wear red bands, but I have heard reports of short-notice evictions, lack of female housing workers and asylum seekers being forced to sign documents before seeing properties. Shockingly, I was told by the Home Office that a manager may enter an individual’s bedroom without consent. Will the Minister investigate that company and find out what exactly is going on in the treatment of those vulnerable individuals?

[James Brokenshire]

rose—

[Mr Speaker]

Order. If we were playing cricket, which we are not, the hon. Gentleman’s bowling would be a little wide of the wicket, but I am sure the Minister is dextrous enough to deal with it sensitively and pithily.

[James Brokenshire]

I will certainly try to do so, Mr Speaker. As I indicated to the House in response to the urgent question last week, I expect the highest standards from all contractors, including no stigma being attached to those under their care. If there is evidence to suggest that that is not the case, it will be treated with the utmost seriousness.

[Gavin Robinson (Belfast East) (DUP)]

I apologise for my vocal frailty; I will struggle through my question.

The Government’s response to the crisis has at times been frustratingly slow and has appeared to lack compassion, but I support it and believe that the Minister is on the right track. I was bolstered at the weekend by the view of Kofi Annan, who believes that the UK Government’s approach is in the right vein. I support the reconsideration that the Government are undertaking on refugee children, but will the Minister give a timescale for that, bearing in mind that a knee-jerk reaction for selfish political gain that is not based on the right interests or the best interests of the child will be wholly fruitless and counter-productive?

[James Brokenshire]

It is right that we take some time to consider the issue properly because of what the hon. Gentleman highlights: the best interests of the children. The advice we have had from the UNHCR is that the best way is to help children in the region. The aid investment we have given in the region, and the focus on education to ensure that children there have hope, have that sense of compassion behind them. That is why assistance has been structured in that way.

[Mike Kane (Wythenshawe and Sale East) (Lab)]

As a primary educator, my heart was broken on Thursday when I saw the conditions of the children in the Jungle camp in Calais. It would be the same for people no matter what side of the argument they are on. From a round table with Secours Catholique and the Caritas Social Action Network, we understand that 200 to 300 families with many children probably have leave to remain in the UK but do not know their legal rights. Will the Minister commit to putting a legal resource into that camp to help those families to avoid the traffickers, because they have the right to come here in the first place?

[James Brokenshire]

Ultimately, those are matters for the French Government, but we have committed resourcing in terms of arrangements in people’s own country. I underline that claiming asylum in France means that assistance will be provided at the earliest opportunity. We have committed to support the French Government in that activity. We have provided funding to assist them in creating those reception centres outside Calais so that people can travel away from the area and get the support they need.

[Andy Slaughter (Hammersmith) (Lab)]

When will the Government decide to support Lord Dubs’s amendment? I ask because when I was in the Calais camp on 21 December, I met a former Afghan interpreter for UK forces who was trying to look after some of the unaccompanied children, including 15-year-old Masud. By the time I recounted that visit in Westminster Hall on 6 January, Masud was dead. Time is of the essence. Would not this Wednesday—Holocaust Memorial Day—be a suitable date for the Minister to make up his mind and let the children in?

[James Brokenshire]

The appropriate thing to do is to consider the best interests of the child and get further input from the UNHCR and others, because of the risk of making the situation worse, and the risk of seeing more children put their lives on the line by making those perilous journeys across the Mediterranean. That is at the forefront of our minds, and why we will consider the matter in that way.

[Diana Johnson (Kingston upon Hull North) (Lab)]

Putting victims of exploitation and trafficking first was at heart of the Modern Slavery Act 2015. In this case, it is clear that unaccompanied children are among the most vulnerable victims of exploitation and trafficking. Will the Minister say exactly what is happening to identify very vulnerable children who have been trafficked and who are at risk of exploitation, and to take a decision to get them to this country?

[James Brokenshire]

As part of the joint declaration that was signed last August, we are providing specific financial assistance to fund a project aimed at the most vulnerable people in and around Calais. That project aims to increase observation in the camps to identify vulnerable migrants; to provide medical help and protection where required; to put in place a system to transfer them briskly to places of safety; and to ensure they are offered the appropriate advice and support from the French system.

[Alison McGovern (Wirral South) (Lab)]

Can I ask the Minister not to listen to the hon. Member for Gainsborough (Sir Edward Leigh), with his separation of rationality and emotion on this issue? My right hon. Friend the Member for Normanton, Pontefract and Castleford (Yvette Cooper) laid out the facts and we are merely responding to them—the hon. Gentleman has no monopoly on rationality here. Does the Minister recall—[Interruption.]

[Mr Speaker]

Order. The hon. Lady is asking a question and she has referred to a Member who is listening courteously, but a conversation is taking place between two other Members who think that what they have to say to each other is more important than what she is saying to the House. Mr Bridgen, your remarks can wait for another time, man. We are discussing a very sensitive matter. Your thoughts have been heard: let us hear others.

Ms McGovern, please feel free to start again and go through your question. This issue is important, and courteous attentiveness is also important.

[Alison McGovern]

Thank you, Mr Speaker. I will not detain the House by repeating my entreaties on rationality, but we are talking about the facts. It is a fact that two years ago on 29 January 2014 the Government refused our calls to join the UNHCR scheme for the settlement of refugees, and it took a brave media to change their mind. I simply say to the Minister, “Don’t leave it too long again. Open our doors now.”

[James Brokenshire]

The focus of the Government is providing the most appropriate support to the vulnerable. That is why we have established the resettlement scheme and are providing aid assistance in the region. It is about helping the most people possible. We do that most effectively in those areas and through some of the additional funding that I have outlined to the House this afternoon. In all honesty, we are considering the issue carefully, but it is right that we get it right, rather than running to any specific timetable, because of the issues involved and because we are talking about children.

[Alex Chalk (Cheltenham) (Con)]

This is of course an extremely difficult issue, and our hearts go out to the poor children in the Jungle in Calais. But we need to be careful about confusing the clear message of the UK’s aid effort that it is in children’s best interests to remain in the region, where hundreds of millions of pounds of UK aid is available, and not encourage them into the clutches of evil traffickers who frankly do not care if they live or die.

[James Brokenshire]

My hon. Friend has made his point concisely and well. It is that risk of the exploitation of people traffickers that we have at the forefront of our minds. Equally, social media is being used to sell false hope and false opportunity, putting lives at risk.

[Tom Brake (Carshalton and Wallington) (LD)]

I thank the seven colleagues from seven different political parties, including the Conservative party, who signed a joint letter to the Prime Minister on this subject. The right hon. Member for Normanton, Pontefract and Castleford (Yvette Cooper) also signed it. We obviously welcome the fact that the Government are still considering this issue, although we would like them to do so with a greater degree of urgency. If the Government are considering taking the 3,000 children, I hope that they will not suggest that that should happen over five years, because then some of those children would be at risk of freezing to death for the next four years or falling into the hands of traffickers.

Childcare Bill [Lords] (Programme) (No. 2)

Ordered,

That the Order of 25 November 2015 (Childcare Bill [Lords] (Programme)) be varied as follows:

(1) Paragraphs (4) and (5) of the Order shall be omitted.

(2) Proceedings on Consideration shall (so far as not previously concluded) be brought to a conclusion, at today’s sitting, one and a half hours after the commencement of proceedings on the motion for this order.

(3) Proceedings in Legislative Grand Committee and proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion, at today’s sitting, three hours after the commencement of proceedings on the motion for this order.—(Mr Gyimah.)

[Mr Speaker]

As I informed the House on 26 October, before a Report stage begins on a Bill I will seek to identify in advance those changes made in Committee which I would expect to certify, together with any Government amendments tabled for Report stage which, if passed, would be likely to lead me to issue a certificate. My provisional certificate, based on those changes, is available on the “Bills before Parliament” website and in the Vote Office. At the end of the Report stage on a Bill, I am required to consider the Bill, as amended on Report, for certification. As I informed the House on 26 October, I have accepted the advice of the Procedure Committee not, as a rule, to give reasons for decisions on certification during this experimental phase of the new regime. Anybody wishing to make representations to me prior to any decision should send them to the Clerk of Legislation.

Childcare Bill [Lords]

Monday 25th January 2016 Commons Chamber

Consideration of Bill, as amended in the Public Bill Committee

New Clause 1

Evaluation of the implementation of the section 1 duty

“(1) Within 12 months of this Act coming into force, the Secretary of State must lay before both Houses of Parliament a report containing an evaluation of the impact of discharging the duty under section 1(1) on—

(a) the supply of childcare places;

(b) the quality of childcare provision;

(c) the readiness of children to start school;

(d) the proportion of parents that are in employment;

(e) the availability and quality of childcare for disabled children;

(f) the cost of childcare to parents who do not receive free childcare under this Act or Section 7 of the Childcare Act 2006; and

(g) any other related matters, which she considers should be reported.

(2) The report under subsection 1 must also include an assessment of—

(a) administrative obligations on parents wishing to access 30 free hours of childcare a week;

(b) administrative obligations on childcare providers delivering childcare under the Act; and

(c) the adequacy of funding provided to childcare providers delivering childcare under the Act.”—(Jenny Chapman.)

This new clause would require the Secretary of State to review the impact of providing 30 free hours of childcare a week on the supply of childcare places, the quality of childcare provision, the proportion of parents in employment and other related matters.

Brought up, and read the First time.

17:01

[Jenny Chapman (Darlington) (Lab)]

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

[Mr Speaker]

With this it will be convenient to discuss the following:

New clause 2—Attainment and development of children—

“(1) In discharging the duty under section 1(1), the Secretary of State must have regard to narrowing the attainment and development gap between young children—

(a) of different genders;

(b) of different ethnic backgrounds;

(c) of different socio-economic backgrounds;

(d) living in different regions; and

(e) who do and do not have a disability.

(2) Within 12 months of the passing of this Act the Secretary of State must lay before both Houses of Parliament a report containing an evaluation of the impact of discharging the duty under section 1(1) on narrowing the attainment and development gap between young children—

(a) of different genders;

(b) of different socio-economic backgrounds;

(c) of different ethnic backgrounds;

(d) living in different regions; and

(e) who do and do not have a disability.”

This new clause would require the Secretary of State, in discharging her duty under this Act, to have regard to the attainment and development gap between different groups of children. The Secretary of State would also have to publish a report on the impact of discharging her duty on such gaps.

Amendment 1, clause 1, page 2, line 8, at end insert—

“(4A) Regulations under subsection (4) must provide for victims of domestic violence who have left paid employment in order to escape such violence to continue to be eligible for 30 hours of free childcare per week under section 1.”

This amendment seeks to ensure that provision is made for people who are suffering domestic violence who leave paid employment in order to escape their situation to continue to receiving 30 hours of free childcare per week.

Amendment 2, page 2, line 8, at end insert—

“(4A) Regulations under subsection (4) must set out in what circumstances a parent or partner who is a student nurse will be considered to meet any conditions relating to paid work.”

This amendment seeks to ensure that provision is made for student nurses to be eligible for 30 hours of childcare per week under this Act.

[Jenny Chapman]

I spent five years on the shadow Justice team and had to speak to many really quite dreadful Bills. It is a soft landing for me to be greeted by the remaining stages of this Bill, which is, essentially, uncontroversial. We enthusiastically support its aims.

I pay tribute to my hon. Friend the Member for North West Durham (Pat Glass) for her sterling work in challenging the Minister as the Bill made its way through Committee. She is, as everybody here will know, a ferocious champion of quality provision for all children, and she has particular expertise in services for children with disabilities. Having read the Hansard record of the debates in Committee, it is obvious how valuable her contributions were. She will be a miss to the shadow Education team, but in her new role she will be a robust champion and defender of Britain’s membership of the European Union as we approach the forthcoming referendum, whenever that may be.

New clause 1, tabled in my name and those of my hon. Friends, requires the Government to evaluate the implementation and effectiveness of the Bill, should it become an Act. As well as spending five years on the shadow Justice team, I spent five years serving on the Procedure Committee. In that time, we pondered the value of pre-legislative scrutiny and longed for a position in which Governments consulted meaningfully on their plans. I believe post-legislative scrutiny would be of similar value. The principal problem with the Bill is that it does not do what the Prime Minister claimed it would. During the election campaign—I know those are heady moments for all of us and there are those in my party, too, who occasionally get carried away—the Prime Minister, in one particularly effervescent moment, proclaimed in a press release:

“For families with young children, this is not one issue among many—it is the issue. They’re asking ‘How can this work? How can we afford it?’ It shouldn’t have to be this way. It is why we already fund 15 hours of free childcare a week to working parents of three and four-year-olds.”

He said:

“I can tell you today we’re going further a lot further. We’re going to take that free childcare and we’re going to double it.”

[Nic Dakin (Scunthorpe) (Lab)]

It’s all good stuff.

[Jenny Chapman]

It’s fantastic stuff, isn’t it? There is more:

“With a Conservative Government, you will get 30 hours of free childcare a week”.

Marvellous! Had I believed it, I might just have voted for it myself.

The trouble is that thousands of families did believe the Prime Minister when he promised to double the 15 hours of free childcare per week. How disappointed they will be to discover that the promise was false! Even those who dug deep and read the small print will be disappointed. When he made the promise, there was a caveat in the notes at the bottom of the press release: children will get the free childcare only if their parents are working more than eight hours a week. Thousands of families in which both parents worked more than eight hours a week each could plan on that basis, or so they thought—the Bill says nothing about eight hours. The Government now say that both parents must be working at least 16 hours a week, at the minimum wage, or, just to confuse things a bit more, earning above the equivalent earnings of 16 hours per week on the minimum wage but in fewer hours.

The Government, in their spin, misled the public, then they misled families with the detail, and now they are confusing parents and providers with the implementation. That is why I support new clause 1. It is necessary to ensure the Government examine the Bill after its enactment, which could have some serious unintended consequences. The first potential consequence I would like the Government to monitor is the impact on the supply and quality of childcare places.

[The Parliamentary Under-Secretary of State for Education (Mr Sam Gyimah)]

All parties at the last general election promised to increase the free entitlement. Labour promised to increase it from 15 hours to 25 hours for working parents. The Conservative party promised to increase it from 15 hours to 30 hours for working parents. Who would she have included or excluded from Labour’s definition of working parents?

[Jenny Chapman]

As I will explain, the problem is with who the Government are excluding. People earning more than the minimum wage but working fewer hours would be entitled to the Minister’s 15 additional free hours, whereas someone working 15 hours on the minimum wage will not be entitled to them. If I am wrong, I will gladly let him intervene to correct me.

[Mr Gyimah]

The hon. Lady mentioned the hon. Member for North West Durham (Pat Glass), who, at the end of the Committee stage, said it was a good Bill and that she could find nothing in it with which to disagree. I hope, in their handover, they had that discussion. The eligibility criteria are very straightforward. Eligibility will be judged on income. If someone is under 25 and earning the national living wage, they will need to earn £107 a week. If they are over 25 and earning the national living wage, which the Government are introducing, the calculation will be the national living wage times the number of hours they can work. It is very straightforward.

[Jenny Chapman]

Well, I am glad that’s as simple as it gets. I said at the outset that I supported the Bill reasonably enthusiastically, but it is a bit arrogant of the Minister to suggest that it is a perfect Bill and that it has no complexity. As he just demonstrated incredibly well, there is huge complexity. Somebody on low earnings and working fewer than 16 hours a week will not qualify, but someone on higher earnings—

[The Exchequer Secretary to the Treasury (Damian Hinds)]

Universal credit.

[Jenny Chapman]

The Minister says that universal credit will help improve the system. I venture to suggest that it might well further complicate the situation.

The new clause is designed to ensure that these perceived and anticipated complications do not have unintended consequences. As I have said, I accept that they are unintended, but the Minister would be rather naive to think that these consequences could never occur.

[Chloe Smith (Norwich North) (Con)]

I am extremely grateful to the hon. Lady for giving way, but I struggle somewhat to understand how anything that she has spoken about will be achieved through new clause 1.

[Jenny Chapman]

Is the hon. Lady looking at the wrong piece of paper? I shall go on to explain what is in new clause 1, and if she listens carefully, she will understand what we are trying to get at.

The new analysis by the House of Commons Library reveals a black hole of £480 million in the funding of this childcare offer. That shortfall represents £470 per child each year for those taking up the full 30 hours of free childcare. Independent research undertaken by research company Ceeda, as commissioned by the Pre-School Learning Alliance, suggests that the Department’s funding review has underestimated the cost of delivering childcare. The researchers found that, if funded at the average rate of £4.83 an hour—£4.88 minus the early years pupil premium, which the Department claims is worth 5p an hour—announced by the Government on 25 November, nurseries and pre-schools would face an annual shortfall of £233.70 per child for three and four-year-olds taking up the existing 15-hour entitlement, and £467.40 for those taking up the full 30 hours.

What could be the consequence of that funding gap? Childcare providers will have some difficult choices to make. There is every possibility that in an attempt to make ends meet, the gap will be met through driving down quality, while some providers might leave the market altogether, resulting in less choice for parents and a lack of supply. The Pre-School Learning Alliance warns, rather ominously, that as the existing scheme is significantly underfunded, it is now “crunch time” for the sector. The sector is already in a precarious position, and the Minister needs to reflect on the fact that the Family and Childcare Trust reports that a quarter of local authorities have a shortage of places for children in their existing schemes. There are 40,000 fewer places now than there were in 2010. Given that the Government failed to build capacity in the sector, how are the extra hours going to happen and how does the Minister think providers are going to pay for it? New clause 1 flags up those issues for the Government and asks Ministers to monitor the effect of the new arrangements.

[Mr Gyimah]

I thank the hon. Lady for being so generous in giving way. The Conservative party promised at the election to increase the average funding rate and it is delivering on that promise. The Labour party did not promise to increase the hourly rate. If the hon. Lady is arguing that the funding rate is not enough, will she tell us what the Labour party considers to be the right funding rate for the entitlement?

[Jenny Chapman]

I do wish it was my Bill that we were debating here. I really do, but it is not; it is the Minister’s Bill and it is for him to defend it and to argue against my new clause. That is why we are here. This is not a re-run of the election campaign. I am sure we are all glad about that—I know I am!

New clause 1 also asks the Government to evaluate the impact on parental employment and the administrative burdens placed on parents and providers. What parents want, aside from high-quality and affordable provision, is a scheme that is easy to understand and predictable. After someone has had a baby, deciding when to return to work and for how many hours is a difficult and finely balanced choice. Employers and parents need certainty. As parents fret over the balance between work and family life, employers and co-workers also make choices about their hours and staffing. We want those parents who choose to work to be able to do so. Any opaqueness about eligibility is damaging to take-up of the scheme and harms the confidence that the Government will not move the goalposts once complex family arrangements have been put in place. The proposed scheme, under which someone earning £107 in half a day would be eligible for 30 hours per week of free childcare but someone who works 15 hours a week on the minimum wage is not eligible, will seem bonkers to most people. I therefore urge the Government to do as new clause 1 suggests and monitor the impact of this change, in particular on parental employment patterns.

17:15

It is not just the complexity of the scheme that will put some parents off; so, too, will the potential administration involved in proving they are entitled to the free additional hours. How exactly does the Minister envisage parents will be asked to prove to providers that they are entitled? What about parents working on zero-hours contracts, who have unpredictable hours? We are all aware of the difficulties encountered in the tax credit system when earnings fluctuate. What will happen when a parent is entitled to 30 hours of free childcare, but then their hours dip below the threshold for some reason? Who will be responsible for policing that or putting mistakes right?

I notice that there are provisions in the Bill for HMRC to become involved, as well as tribunals and local authorities, and the Minister has explained previously that he secured £1 million—well done—of emergency funding from the Contingencies Fund to pay for the development of a joint online childcare application checking system, to be devised by HMRC. The Minister says he thinks this system will be simple and straightforward and save parents valuable time. New clause 1 simply asks that the Minister be held to this assertion. We are not asking him not to do it; we just want to hold him to it.

Experience tells us that schemes that are administratively burdensome are open to abuse, deliberately or inadvertently, and are off-putting to potential beneficiaries. So the purpose of new clause 1 is to ensure that these unintended consequences of the Bill—of which the Government have been warned by stakeholders in the sector, not just by us—are closely monitored, so that steps can be taken to ensure the new measures in no way harm availability or quality and do not place unreasonable burdens on parents or providers.

[Mr Gyimah]

The hon. Lady raises important questions about parents on zero-hours contracts and how they will be monitored. The first point is that parents on zero-hours contracts are self-employed; they are all entitled to the childcare under this scheme. HMRC will check the income levels, and in the case of the self-employed will know how much they earn over a period of time. In addition, and more importantly, there is a grace period so that if someone falls out of work for a period they will not lose their childcare.

[Jenny Chapman]

I am, of course, grateful to the Minister for his intervention, but I might just suggest that he will get the opportunity to make his own speech when I have finished, and he might want to answer some of my questions then. I will move on—

[Alex Cunningham (Stockton North) (Lab)]

Will my hon. Friend give way?

[Jenny Chapman]

I will move on by giving way to my hon. Friend.

[Alex Cunningham]

I am grateful to my constituency near-neighbour for giving way. I was pleased to serve on the Bill Committee and I have never seen a Minister intervene so often during others’ speeches with reassurances such as “the Prime Minister’s promise will be fulfilled,” or “There will be sufficient quality places,” and all manner of other such statements. Would not the Minister be seen to be really reassuring us if he accepted new clause 1 and the scrutiny put down in law?

[Jenny Chapman]

My hon. Friend makes a good point, and does so very well. We all like a keen and perky and eager Minister, but it would be good if he were more willing to hold himself to account, after the introduction of this Bill, by adopting new clause 1. However, I shall move on to new clause 2.

This new clause, also in my name and that of my hon. Friends, requires the Government to monitor and report on the state of the attainment gap between young children, and it specifies between “different genders”, “different ethnic backgrounds”, “different socio-economic backgrounds”, those living in different parts of the country, and those

“who do and do not have a disability”.

Our experience tells us that unless Ministers monitor, and are required to report on, the gap, focus will be lost and equality of opportunity for all young people will never be achieved.

I would like to acknowledge the invaluable work of the Social Mobility and Child Poverty Commission in helping us to prepare new clause 2. I believe that setting up the commission was relatively easy for the Government, but listening to it and acting on what it says seem to be a step too far for them. The new clause would provide an opportunity to put that right in a very small way. The commission states that the Britain we should all aspire to help to build is

“one where opportunities are shared equally and are not dependent on the family you were born into, the place where you live or the school you attend. It is a society where being born poor does not condemn someone to a lifetime of poverty. Instead it is a society where your progress in life—the job you do, the income you earn, the lifestyle you enjoy—depends on your aptitude and ability, not your background or your birth.”

The commission’s most recent report warns that Britain is on the verge of becoming a “permanently divided nation”, and exposes some of the deep divisions that characterise our country. Those at the top in Britain today look remarkably similar to those who rose to the top 50 years ago. For example, 71% of senior judges, 62% of senior armed forces personnel and 55% of civil service departmental heads attended private schools, compared with just 7% of the general population.

Britain could become the most open, fair and mobile society in the modern world, but the policy and practice of this Government need to change, and that all starts with the early years. All children, whatever their background, should be school-ready by the age of five. However, less than half of the poorest children in England are ready for school by that age, compared with two thirds of the others, and a deep gender divide means that girls from the poorest families do almost as well as boys from the better-off families at that point. The commission has found that,

“efforts to improve the school-readiness of the poorest children are uncoordinated, confused and patchy.”

It also comments that,

“the complexity of the childcare funding system is hampering efforts to increase maternal employment.”

The commission has some straightforward suggestions for the Government to help to narrow the gap at the age of five. It says that the

“Government should end the strategic vacuum in the early years by introducing two clear, stretching, long-term objectives: to halve the development gap between the poorest children and the rest at age five; and to halve the gap in maternal employment between England and the best-performing nations, both by 2025.”

Further, the commission argues in relation to childcare that the Government

“should radically simplify the multiple streams which finance it”.

New clause 2 tells the Government that willing the gap in attainment and development of children to narrow is not enough. However, I believe that they have the will to do it. I have heard some of their mutterings and comments, and I believe that they have the will—

[Lucy Powell (Manchester Central) (Lab/Co-op)]

They are not intervening now, though, are they?

[Jenny Chapman]

No, they are very quiet now.

Willing the ends without the means will cause more resentment and division, rather than less. The new clause would force the Government to assess and report on the gap in development and attainment, which would ensure that progress was measured. Unless that happens, opportunities to intervene will be missed and inequality will be further entrenched.

[Mike Kane (Wythenshawe and Sale East) (Lab)]

My hon. Friend is making an excellent speech. As the equality gap widens in Tory Britain in 2016, is not the most important decision for a young person to choose their parents in the womb if they want to get on in life?

[Jenny Chapman]

I dread to think what my kids would say to that.

New clause 2 is a modest request, given the scale of the challenge that we face. It is also something that the Government should be doing anyway. The strategy to narrow the gap with properly co-ordinated policies and regular reporting to Parliament is urgently needed. The measures in the Bill have the potential to diminish the supply and quality of childcare, and we want to know that that gap-widening risk will be closely tracked and acted on by the Government.

New clause 2 encourages the Government to do some of the strategic thinking that we need. If it is adopted, the Government would have carefully to track the take-up of the offer among, say, the 40% most disadvantaged, better to understand the reasons for low take-up, and then they can seek to address them. The key to improving the attainment of the poorest children—high quality early education as opposed simply to childcare—is at risk due to the question marks over funding, which is why I encourage the Government to support the new clause. We know that poorer areas have a higher proportion of providers than the maintained sector, mainly pre-schools and children’s centres. Those providers face particular capacity challenges, and the National Association of Head Teachers has warned that they are unlikely to be able to deliver the increased hours, as they tend to take just two groups of children—one in the morning and one in the afternoon—and physically do not have the space to double their numbers.

Schools have also tended to cross-subsidise the funding of their early years provision from elsewhere in their budgets to ensure quality. The Government have committed £50 million of new capital funding to help with that, thereby acknowledging that there is a problem, but the figure is unlikely to meet the need and may leave some areas without new provision. All this clause does is seek to ensure that this problem does not result in a widening of the attainment gap.

[Alex Cunningham]

Does my hon. Friend agree that the Minister could win his place in education history by accepting this new clause, which has some great ideas? He believes that those ideas will narrow the attainment gap, and that everything will work. What has he got to fear from the scrutiny associated with this particular clause?

[Jenny Chapman]

My hon. Friend makes a good point. Not only would the Minister win his place in the history of education teams in Parliament, but it would be the first time ever in Parliament that a Government accepted a new clause tabled by the Opposition on Report. We can live in hope.

The Institute for Fiscal Studies says:

“We have already stumbled a long way in the dark in this policy area. It is time to stop stumbling, shine a light on the policy landscape, and plot an effective route forward.”

If the Government plan to spend £6 billion a year on childcare by 2019-20, I would argue—and I think that they would, too, if they were in opposition—that the risks of an ill-targeted and inefficient system should not be ignored. New clause 2 asks that the Government turn their head to narrowing the gap in early years attainment, and monitor the impact of their policy on this issue to ensure that the nation’s investment is rewarded.

Let me briefly speak to amendment 2, which is a probing amendment and is intended to assess the Government’s appetite for supporting a particular group—in this case, student nurses. This matter arose in Committee, and it is worth flagging up our concern about that particular group and its needs at this time. Members will recall that last week thousands of student nurses and midwives marched through London in protest at plans to scrap training bursaries. Many student nurses already have financial obligations such as mortgages, and many also have children. The Nursing and Midwifery Council requires them to have completed at least 4,600 hours while studying, with half of those in practice. The student nurses work the equivalent of 37 and a half hours a week at least. They work nights, days and weekends. It is very difficult for that particular group to get a part-time job to support dependants while training.

Have the Government made an assessment of the cost of extending the additional entitlement to student nurses with eligible children? I tried to do so, but I do not think that the data exist, so it would be interesting to see whether the Minister has been able to obtain an estimate of the cost. My parents were both nurses, and at the time there were hospital social clubs and a crèche. Obviously that was not recent, but the amendment encourages the Government to work with other Departments to ensure that particular groups—in this case, student nurses—are not disproportionately disadvantaged by a combination of Government policies. I commend new clauses 1 and 2 to the House.

17:30

[Mr Gyimah]

I am grateful for the opportunity to hold this important debate, and I once again welcome the hon. Member for Darlington (Jenny Chapman) to her position. The amendments that have been tabled raise a number of interesting issues, which I shall deal with in turn. Let me say at the outset, however, that extending the 15 hours to 30 hours is primarily a work incentive. That is why the first 15 hours are universal, but the second 15 hours are based mainly on economic eligibility criteria. In judging and evaluating the impact of the policy we should bear in mind the work incentive.

[Jenny Chapman]

What the Minister says is correct—that is his intention—but does he accept that in new clause 1 our intention is simply to hold him to that and to assess the success of the Bill in delivering that intention?

[Mr Gyimah]

The hon. Lady is right to ask the questions. However, I shall resist the new clause, and the main reason is that a number of evaluations, which she has asked for, are under way. There are important programmes, as I shall explain, that focus on reducing the gap between disadvantaged children and other children.

New clause 1 asks us to evaluate the impact of the new entitlement for working parents. That is extremely important and I hope that Members will be reassured to know that we have a very strong evidence base about the impact of free early education entitlements. We know, from studies such as the effective pre-school, primary and secondary education project that early education has a significant impact on child outcomes. Children attending high-quality provision for two or three years before school have a seven or eight-month developmental advantage in literacy compared with their peers.

The Department for Education has commissioned another longitudinal study, if the hon. Member for Darlington will listen: the study of early education and development, which follows 8,000 two-year-olds from across England to the end of key stage 1. It looks at how childcare and early education can help to give children the best start in life and at what is important for high-quality childcare provision. The study is being carried out by NatCen Social Research, working with Frontier Economics, the University of Oxford and 4Children, on behalf of the Department.

[Mrs Flick Drummond (Portsmouth South) (Con)]

Will my hon. Friend congratulate Portsmouth, where children do extremely well in their early years? The chief inspector’s report of April 2015 ranked Portsmouth as 12th out of 150 authorities, which is a massive improvement and great for the good development of children, who are entitled to free school meals at the age of five.

[Mr Gyimah]

My hon. Friend makes a very good point. The quality of early years provision has improved significantly; 85% of early years settings are now rated good or outstanding. The previous Government introduced the common inspection framework for early years education, which has raised the bar and will continue to do so over the course of this Parliament.

Regular surveys commissioned by the Department also provide rich data. These include the childcare and early years provider and parent surveys. The provider survey collects information about childcare and early years providers, including the composition and qualifications of the workforce. The parent survey collects data on parents’ use of childcare and early years provision and their views and experiences.

[Alex Cunningham]

Various groups have raised concerns about capacity and quality of provision and stressed the need, to which the Minister has just referred, to have the best trained people in order to deliver it. They do not accept his reassurances, but the new clause gives him an opportunity to have his achievements measured all together. I know that he says that some of the issues are covered elsewhere in legislation, but this would pull it all together in one big round circle that he could fill in over time. Why does he not just accept the scrutiny that the new clause offers him?

[Mr Gyimah]

The Government will be spending £6 billion a year from 2019-20 on early years and childcare. The suggestion that we will be doing that without measuring or evaluating it is simply not true. The question is where we carry out this evaluation and whether it needs to sit in primary legislation. Had the hon. Gentleman been listening, he would have heard me explain that we currently have a survey following 8,000 two-year-olds across England, so what he is asking for is already under way. We do not need primary legislation to evaluate the impact of the important investment to achieve very important goals in this sector.

The latest early years foundation stage profile data reveal that an increasing proportion of children are achieving a good level of development at age five—66% in 2015, compared with 52% in 2013. That is an impressive 14.6 percentage point increase over the past two years. I know that there is more we can do to understand the impact of this extended entitlement. However, as drafted, the proposed amendments are not workable. They call for an evaluation of the impact of discharging the Secretary of State’s new duty within 12 months of the Act coming into force, which is far too soon to make any judgment about impact. That would not be adequate time to collect the data, assess the impacts and produce a report.

[Melanie Onn (Great Grimsby) (Lab)]

Many kinship carers of young children are pensioners, so they will not meet the work thresholds to access the 30 hours of free childcare, despite arguably being in greatest need of support and respite. Does the Minister plan to take any steps to address the needs of these unsung carers in our nation?

[Mr Gyimah]

Every three and four-year-old is entitled to 15 hours of free childcare. The question is who is entitled to the second 15 hours. [Interruption.] If Opposition Members will bear with me, I will answer the question. Lone parents are entitled to it, as are self-employed parents and parents looking after disabled children. I will seek inspiration from the officials’ box specifically on kinship carers. But the issue is that everybody gets the first 15 hours if they work, and the second 15 hours is a work incentive. If people are not working, they do not need that amount of childcare.

[Alex Cunningham]

But that is not the point. Kinship carers are some of the most pressed individuals in our society. They need respite care. The Minister says that there might be 15 hours available, but they need respite care and comprehensive support, perhaps even more than working parents. Surely he should be considering this.

[Mr Gyimah]

Under the current regime, kinship carers will get three hours of respite care a day for five days of the week. Is the hon. Gentleman seriously arguing that he wants more than three hours of respite care a day? If so, why was that not in the Labour party’s manifesto?

[Melanie Onn]

I thank the Minister for being so generous in giving way. I want to echo the sentiment expressed by my hon. Friend the Member for Stockton North (Alex Cunningham), and reinforce it by pointing out that many kinship carers are pensioners who cannot work and cannot meet their thresholds. When it comes to respite care, children often need additional educational or emotional support, which takes an incredible toll. Those carers are saving the state huge amounts of money, because they are not foster carers.

[Mr Gyimah]

Again, the hon. Lady has made a very good point. If the children of kinship carers need additional care, the early years pupil premium that was introduced by the Conservative-led Government will ensure, to the tune of £50 million, that any additional educational needs are funded. That is a completely different issue from that of how many hours of childcare are needed.

[Melanie Onn]

Does the Minister not think that it would be more appropriate for very young children to be in settings where there are mixed social and accessibility needs, so that if they have special educational needs, there is no division between them? Such children will not require access to the additional funding that the Minister has mentioned, but they will need socialisation in those early-years settings.

[Mr Gyimah]

The hon. Lady is now asking a very different question. If a disadvantaged child has additional educational needs in a mixed setting, there will be additional funding for that child. In response to the hon. Lady’s original question, I can say that a kinship carer who formally takes parental responsibility for a child will be able to access the 30 hours of free childcare.

New clause 1 concerns evaluation. While we are committed to monitoring and collecting data on the impact of the Act, assessing all the issues together would not be feasible, or the most effective way of evaluating the policy. As I have said, the Department has already begun to consider the feasibility of conducting an impact evaluation, and to consider what data would be necessary effectively to monitor the take-up and impact of the new entitlement. I assure Members that the implementation of the extended entitlement will be tested before roll-out. It will be introduced a year early in some areas, from September this year, which will provide an important opportunity to test it and to show that it can be rolled out in a way that meets the needs of working parents. I am pleased to say that local authorities and providers expressed a strong interest in taking part in the early implementation phase, and that the successful candidates will be announced shortly.

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

When the Minister and I met after the Committee stage, we talked a great deal about how we would implement the entitlement and make it work for the parents of disabled children. The Minister referred to the early implementers, and we talked about how he would measure their success. Has any progress been made? We discussed talking to parents’ groups, for instance, to ensure that they could contribute to the early implementation process.

[Mr Gyimah]

It was a pleasure to meet the hon. Lady in the Department, along with some of my officials, to discuss how we could test the early implementers for children with special educational needs and disabilities. I assure her that that will be at the heart of the process. We will conduct specific research with parents’ groups to establish how they access childcare and what challenges they experience during the early implementer phase.

More broadly, the Department and HMRC recently commissioned a feasibility study to consider how best to evaluate the labour and childcare market impacts of both tax-free childcare and the free early education entitlement, both of which policies are aimed at working parents. The study is due to be published in February, and will inform the development of an evaluation framework for both the 30 hours and tax-free childcare.

[Chris Davies (Brecon and Radnorshire) (Con)]

Will people undertaking apprenticeships be eligible for the 30 hours, and what scope is there for the childcare sector to support more apprenticeships themselves?

[Mr Gyimah]

My hon. Friend makes an excellent point. The eligibility criteria are based on whether a person is under 25 and working 16 hours a week on the minimum wage, so the amount they earn is roughly £107. If an apprentice is earning that, then of course they will be entitled to the free entitlement. I agree that the early years sector can benefit from the huge investment in apprenticeships that this Government are making.

17:45

[Simon Hoare (North Dorset) (Con)]

Although I endorse and support the main thrust of what my hon. Friend is saying, and indeed the Government’s agenda, will he and the Department, and ministerial colleagues, make certain that parents who decide that getting back to work is not for them and prefer to stay at home to look after their children, particularly in the early years, do not feel penalised or ostracised from Government thinking? A number of my constituents have said to me that having taken that decision they feel slightly obligated to take a different one to try to meet different agendas.

[Mr Gyimah]

My hon. Friend makes a good point about a concern felt by some parents. The first 15 hours is universal, but it is voluntary—parents do not have to take it. The previous Government were very mindful of supporting parents who chose to do something else, so we introduced the marriage tax allowance, which supports those parents. In terms of school readiness, the key thing is that the evidence shows that it is helpful for children to attend an early years setting little and often. The universal part of this offer is 15 hours so that those children do not lose out.

Where a family choose to work because that is right for their family circumstances, it is right that the Government respond to the cry from many parents that childcare is too expensive. That is precisely what this Bill does. Rather than widening divisions in society, as the hon. Member for Darlington suggested, this Bill, by enabling more parents to fulfil their aspirations to work, is helping to narrow the economic gap that she mentioned.

[Jenny Chapman]

The Minister is making quite a bold assertion about the impact of this measure. He does not know that his Bill will narrow the gap, nor does he know that the most disadvantaged children will be able to benefit from the 15 hours, because in fact they will not.

[Mr Gyimah]

The early years foundation stage profile data show that the gap is already being narrowed. Economically enabling more parents to work if they want to is a positive thing for us to do for the growth of our economy.

Funding has been mentioned several times. This Government have invested a record amount—more than any other—in the early years entitlement and in childcare more broadly, but we also know that there are inefficiencies in the system. For example, not all the money that is allocated is distributed fairly to different local authorities, and not all of it reaches the frontline. We will therefore engage in a comprehensive package of reform by introducing a national funding formula for the early years so that funding is transparently and fairly matched to need, and fairly distributed between different types of provider in different parts of the country.

[Chloe Smith]

I welcome the announcement of the funding increase, which is very important as a reassuring message to many providers who sometimes have concerns about what it costs to provide these places. May I urge the Minister to press local authorities to pass as much of this money as possible on to their frontline and to review their own funding formulas where appropriate?

[Mr Gyimah]

My hon. Friend makes an excellent point. If central Government make the funding available but we do not have an efficient way of distributing the money to the providers on the frontline, we should not be surprised if those providers then say that they are not seeing the increased funding. That is why it sits alongside a package of reforms to ensure that the money reaches the frontline—the providers who are delivering these high-quality places for parents.

The hon. Member for Darlington touched on the attainment gap, and I now want to turn briefly to new clause 2 on the important issue of attainment and development. Let me reassure hon. Members that the Government want all children to have the best possible start in life and the support that will enable them to achieve their potential. We want high-quality early education and childcare for all children, wherever they live and whatever their background.

The early years foundation stage framework sets the standards that all early years providers must meet to ensure that children learn and develop well and are kept healthy and safe. The framework recognises that children develop and learn in different ways and at different rates. It is an inclusive framework that seeks to provide quality and consistency in all early years settings so that every child makes good progress and no child gets left behind.

Our approach is working. As I mentioned earlier, more children are achieving a good level of development. There have also been improvements in provision for disadvantaged children, for whom high-quality childcare can help to mitigate the risk of falling behind early on. For children with eligibility for free school meals, there has been a 6 percentage point increase in the number achieving a good level of development in 2015 compared with 2014. That is the equivalent of an extra 5,800 children with free school meal eligibility achieving a good level of development, which the whole House should welcome. Furthermore, the gender gap has also continued to narrow. Although girls continue to outperform boys, the gap is narrowing—falling from 16.3 percentage points in 2014 to 15.6 percentage points in 2015.

Children with special educational needs and disabilities are also benefiting from our policies. Early years providers must ensure that the necessary arrangements are in place to support children with SEN or disabilities, and providers delivering funded places must have regard to the SEN code of practice. In preparation for that, we will of course meet our duty, under the Equality Act 2010, to consider the potential impact on groups with protected characteristics. We will also undertake the families test and consider the potential impacts on family relationships.

Finally on the new clauses, I will briefly mention the qualification levels of the early years workforce, which have risen in recent years. Continuing this increase is a key aim of the Government’s workforce strategy, through the introduction of early years educator qualifications, which are equivalent to A-level standard, and early years initial teacher training.

As far as evaluation is concerned, I hope I have reassured the House that a substantial amount of work is already going on to evaluate all our policies in the early education area. [Interruption.] It is a two-year study. If the Labour Front Benchers had been listening to me, rather than chuntering from a sedentary position, they would know that I have discussed it in detail. We are following 8,000 children from the age of two, and we will publish the study’s conclusions.

The hon. Member for Darlington mentioned student nurses and their eligibility for the free entitlement, and I will now turn to amendment 2. The current funding system means that two out of every three people who want to become a nurse are not accepted for training. In 2014, universities were forced to turn down 37,000 nursing applicants. This means that the NHS suffers from a limited supply of nurses, and has to rely on expensive agency nurses and overseas workers. The changes announced by the Chancellor in his autumn statement will place trainee nurses on the same system as all other students, including teachers and doctors. As I outlined in my letter to the hon. Member for North West Durham (Pat Glass), the Department of Health and the Department for Business, Innovation and Skills plan to run a consultation on the detail of the Government’s reforms early this year.

Specifically in relation to support with childcare costs from 2017, students can be reimbursed under the student support regulations for up to 85% of their childcare costs—up to a maximum of £155.24 a week when they have one child and up to £266.15 a week when they have two children. The child must be under 15 years of age, or under 17 years of age when they are registered with special educational needs. In addition, students may also be entitled to the means-tested parent learning allowance of up to £1,573. That recognises some of the additional costs that a student incurs from supporting children while training.

I make it clear that, aside from the support available under student support provisions, parent student nurses, along with all parent students, can and will continue to benefit from the existing 15 hours of free early education for all three and four-year-olds. This is a universal entitlement, regardless of whether or not parents are in work. Parent student nurses may also be entitled to 15 hours of free early education for two-year-old children, depending on their circumstances.

I hope I have reassured the House that although student nurses do not qualify for the second 15 hours, other student support programmes, reimbursing them to the tune of 75% of their childcare costs, will achieve the same objective as that of amendment 2. In addition, those entitled to any tax credits would receive support in that way.

I hope my arguments have reassured hon. Members that we care about the robust evaluation of our policies and that it would be inappropriate to evaluate the impact of the policy according to the timescales in the new clauses. We care about children, and no one wants to get this right more than the Government. We put the Bill into the Queen’s Speech—the first childcare Bill in a Queen’s Speech—and we are determined to get it right. That is why we have put evaluation at the heart of what we are doing. I do not believe that stating that in the Bill in the way drafted in the new clauses—within a year—would actually work.

[Jess Phillips (Birmingham, Yardley) (Lab)]

Although I am not sure Mr Speaker saw me do so, I almost fell over when I tried to catch his eye earlier. As I am doing dry January, I assure hon. Members that it was not for the usual reasons why people fall over in Parliament. In fact, my heel got caught on my bag.

I rise to speak to amendment 1 in my name, which is about victims of domestic violence. I give credit to my hon. Friend the Member for Great Grimsby (Melanie Onn) for finding another vulnerable group in kinship carers, whose needs may not be well met by the Bill. I would put them in a similar category to the people I am going to talk about. She made some very interesting points. I hope the Minister will take them away and try to understand what it is like for senior citizens to take on children who have been in very traumatic circumstances.

The purpose of the amendment I have tabled is to ask the Government once again to look at the possibility of exempting those fleeing domestic violence from the 16-hour employment threshold. As someone with years of experience working in this field, I know that one of the single biggest barriers to women attending and seeking recovery services is access to childcare. For example it is pretty difficult for a woman to engage in trauma counselling for the repeated rapes she has suffered with a four-year-old running around her feet.

When women flee their homes and seek refuge for them and their children, they are very often forced to give up their jobs as well. That is usually brought about by an anomaly in the benefits system regarding rates of housing benefit in supported accommodation. Similarly, however, many women find that, in order to give up their home and surroundings, they are forced out of work for a period of time, as staying in work becomes totally impossible logistically. A woman who came to my surgery just a few weeks ago—she was living in her car, while her children stayed on relatives’ floors—had to give up her job as a care worker once we were able to place her in a refuge. That is not uncommon.

I ask all Conservative Members to imagine for a second leaving all their belongings, shutting the door of their home, and giving up their job and their financial security. Most women I have met do this for the sake of their children, but imagine the effect of that on a three-year-old. There are only so many times they can be convinced that it is just a big adventure before the difficult reality sets in.

Now, this Bill will tell those children that they will lose their place in nursery too. That might be the only consistent thing left in their chaotic lives. I can see that there is confusion among Government Members. If a woman loses her home and her job and is no longer working 16 hours, she will lose the nursery places she had for her children. I just wanted to clear that up. [Interruption.] Would a Minister like to intervene? They seem confused.

18:00

[Mr Gyimah]

The hon. Lady raised this point in Committee and we debated it extensively. I promised to write to her about the needs of women in refuges. Having looked at the matter, I want to give her an assurance. First, I want to put it on the record that £40 million of extra support is going to women who find themselves in that tragic situation. In terms of childcare, they will get the first 15 hours for their three and four-year-olds, as everyone does. If they are entitled to the extended entitlement and, as a result of their situation, their children have to leave childcare, there will be a grace period of three months, which we have discussed.

[Jess Phillips]

rose—

[Mr Gyimah]

Perhaps I may finish my point. I am happy to look into how we can extend the grace period for this particular group of people, given the very persuasive case the hon. Lady has made.

[Jess Phillips]

I am delighted at the Minister’s—erm—willingness, when it had seemed that those on the Government Front Bench were confused.

[Lucy Powell]

Commitment.

[Jess Phillips]

Yes, that is the word I will use. There is now a firm commitment from the Government.

I was about to say that I recognise that the Bill includes a three-month grace period, which I welcome, but that the children will still have to give up their place in the end. I do not need to say that anymore because the Minister has made his commitment. He has recognised that it is laughable that a woman, after escaping violence, would be tickety-boo, back in another property and gainfully employed after just three months. Unfortunately, the reducing availability of social housing for families to move on to means that many women and children live in refuge for much, much longer than three months. The cuts in local authority spending have meant that newly localised social funds, which are there to help such families, have limited women in respect of where they can and cannot move across local authority boundaries. That leaves them stuck in supported accommodation, even if they are ready and safe to move on.

These children need and deserve consistency. I welcome the Minister’s intervention because he said that he will give it to them.

[Mr Gyimah]

I wholeheartedly agree with the hon. Lady that such children need consistency and support. To extend the commitment that I have made, I will meet her to discuss how we can do that. We will be consulting on the grace period and I want to get her input on what we can do for this particular group.

[Jess Phillips]

I was going to say that, whereas other Departments have shown a clear commitment to taking their role in the fight against domestic violence—the Minister has mentioned the £40 million—I had felt, until now, that the record of the Department for Education, with the constant wrangling over personal, social, health and economic education and healthy relationships education, could be described as woeful. I am delighted that the Minister has proven me wrong. As someone who has masses of experience, I would be delighted to meet him and talk about how this policy will work in practice.

I will say no more on the matter, other than to thank the Minister for his commitment.

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

18:03

Division 173

Ayes: 188

---

Labour: 176
Liberal Democrat: 3
Democratic Unionist Party: 3
Independent: 2
UK Independence Party: 1
Green Party: 1
Plaid Cymru: 1

Noes: 263

---

Conservative: 262

New Clause 2

Attainment and development of children

“(1) In discharging the duty under section 1(1), the Secretary of State must have regard to narrowing the attainment and development gap between young children—

(a) of different genders;

(b) of different ethnic backgrounds;

(c) of different socio-economic backgrounds;

(d) living in different regions; and

(e) who do and do not have a disability.

(2) Within 12 months of the passing of this Act the Secretary of State must lay before both Houses of Parliament a report containing an evaluation of the impact of discharging the duty under section 1(1) on narrowing the attainment and development gap between young children—

(a) of different genders;

(b) of different socio-economic backgrounds;

(c) of different ethnic backgrounds;

(d) living in different regions; and

(e) who do and do not have a disability.”—(Jenny Chapman.)

This new clause would require the Secretary of State, in discharging her duty under this Act, to have regard to the attainment and development gap between different groups of children. The Secretary of State would also have to publish a report on the impact of discharging her duty on such gaps.

Brought up, and read the First time.

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

18:16

Division 174

Ayes: 185

---

Labour: 175
Democratic Unionist Party: 3
Independent: 2
Liberal Democrat: 2
Green Party: 1
Plaid Cymru: 1

Noes: 265

---

Conservative: 263
UK Independence Party: 1

[Mr Speaker]

Consideration completed. I will now suspend the House for about five minutes in order to make a decision about certification. The Division bells will be rung two minutes before the House resumes. Following my certification, the Government will be tabling the appropriate consent motion, copies of which will be available shortly in the Vote Office and will be distributed by Doorkeepers.

18:28

Sitting suspended.

18:33

On resuming—

[Mr Speaker]

I can now inform the House of my decision about certification. For the purposes of Standing Order No. 83L(2), I have certified that clauses 3 and 5 of the Bill relate exclusively to England on matters within devolved legislative competence, as defined in Standing Order No. 83J. For the purposes of Standing Order No. 83L(4), I have certified that amendment 3 to clause 2 made to the Bill in Committee, which is now Clause 1(5) in the Bill as amended, relates to England. Copies of my certificate are available in the Vote Office. Under Standing Order No. 83M, a consent motion is therefore required for the Bill to proceed. Does the Minister intend to move the consent motion?

[Mr Gyimah]

indicated assent.

[Mr Speaker]

I am grateful to the Minister for the requisite nod. [Interruption.] I am quite sure the Minister does know to what he is agreeing.

[Mr Gyimah]

indicated assent.

[Mr Speaker]

That was a useful lead in to another nod, which the Minister has graciously provided.

The House forthwith resolved itself into the Legislative Grand Committee (England) (Standing Order No. 83M).

[Mr Lindsay Hoyle in the Chair]

18:34

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

I remind the House that although all Members may speak in the debate, only Members representing constituencies in England may vote on the consent motion.

Resolved,

That the Committee consents to the following certified clauses of the Childcare Bill [Lords] and certified amendment made to the Bill:

Clauses certified under Standing Order No. 83L(2) as relating exclusively to England and being within devolved legislative competence

Clauses 3 and 5 of the Bill as amended in Committee (Bill 107);

Amendments certified under Standing Order No. 83L(4) as relating exclusively to England

Amendment 3 made in Committee to Clause 2 of the Bill as introduced (Bill 84), which is Clause 1(5) of the Bill as amended in Committee (Bill 107).—(Mr Gyimah.)

The occupant of the Chair left the Chair to report the decision of the Committee (Standing Order No. 83M(6)).

The Deputy Speaker resumed the Chair; decision reported.

Third Reading

18:36

[The Secretary of State for Education (Nicky Morgan)]

I beg to move, That the Bill be now read the Third time.

The Bill clearly demonstrates the Government’s commitment to supporting working families. We recognise the barriers that the cost of childcare can pose to parents who want to work, and the Bill seeks to tackle them. By offering working parents an unprecedented 30 hours of free childcare, the Bill will give mothers and fathers across the country real choice about how they balance raising their children with their working life. For too long, childcare costs often outweighed the gains of returning to work or working more hours. Policy Exchange’s “Time to Care” report, published today, argues that the Bill could be transformational in the lives of working families.

I thank the Opposition for their engagement on the Bill and for supporting the Government to implement our manifesto commitment. I and the Under-Secretary of State for Education, my hon. Friend the hon. Member for East Surrey (Mr Gyimah), who has responsibility for childcare, found the debate on Report both helpful and interesting. I understand the intention behind the amendments discussed this afternoon, and although I share the sentiments, I hope hon. Members were reassured that my Department and others will be managing these issues through other legislation such as the Equality Act 2010 and the Children and Families Act 2014, as well as through other practice and policy.

[Lady Hermon (North Down) (Ind)]

I appreciate the Secretary of State’s allowing me to intervene on her. I am curious. The consent motion has just been passed to say that this is an exclusively English measure, but I would like the Secretary of State to take a moment to explain what is in the Government’s mind in clause 1(8), which states:

“The Secretary of State may by regulations make provision about the circumstances in which a child is, or is not, in England for the purposes of this section.”

If the child were in Northern Ireland and this Bill applies to them, surely it is not exclusively English.

[Nicky Morgan]

I thank the hon. Lady very much indeed. I think that that is a matter for the authorities. I will happily write to her, but Mr Speaker has certified that the Bill applies to England. My understanding is that it is not a devolved matter, but I am very happy to write to her to provide any clarity she might require.

After Opposition Lords’ attempts to delay the Bill—

[Lady Hermon]

Will the Secretary of State give way?

[Nicky Morgan]

I will give way briefly but I want to make progress on the substance of the Bill.

[Lady Hermon]

With the greatest respect, this is a matter of substance in this Bill. I emphasise that I do not wish in any way to challenge the certification by Mr Speaker. He certified clauses 3 and 5 of the Bill as exclusively English. This is a question about clause 1 and a child being in England.

[Nicky Morgan]

My understanding is that clauses 1 to 5 relate to England only. I am happy to write to the hon. Lady and clarify the point, but this is a matter that Mr Speaker has certified as applying to England.

After attempts to delay the Bill, I am glad that the Labour party has recognised the demands of parents who want to see it become law and to have the opportunity to access the 30 hours entitlement without delay. I am pleased that amendments to clause 1 which could have set back the implementation of the free entitlement by months have now been removed.

The hon. Member for Manchester Central (Lucy Powell) is on the record as saying that she wants to see our childcare policies become a reality. I hope that she is pleased to see the progress made with the Bill and its speedy implementation, which is due to benefit 390,000 three and four-year-olds.

The importance and impact of quality early education and childcare are beyond dispute, which is why my party has put it at the heart of our agenda for government over the past five years. In that time we have introduced the two-year-old offer, supporting more than 157,000 two-year-olds from disadvantaged backgrounds to access 15 hours a week of quality early education. We have extended the universal three and four-year-old entitlement from 12 hours to 15 hours, with 96% of three and four-year-olds now taking up a place. We have introduced the early years pupil premium to target additional resources at children from disadvantaged backgrounds. We have legislated for tax-free childcare, under which up to 2 million working families can benefit by up to £2,000 per child, per year. We have also increased the direct support for childcare costs under universal credit from 70% to 85% from April this year.

Now we are going even further by doubling the 15 hours entitlement for working parents, which represents a substantial commitment to childcare by the Government. That commitment is backed up by the investment and funding it requires. As the Chancellor announced in the autumn statement, and, as I confirmed straight afterwards on Second Reading, by 2019-20 we will be investing over £1 billion more per year to fund the free entitlements. That includes £300 million for a significant increase in the hourly rate paid to providers, delivering on the commitment the Prime Minister made during the general election campaign.

Those funding levels were directly informed by the review of the costs of providing childcare published on 25 November last year. I am sure that the House will agree that this is a significant piece of research and a sound evidence base on which to ensure that the childcare market is properly funded.

It is worth reiterating to the House that we have been able to make this extra investment only because of the difficult decisions we have taken elsewhere in government as part of our long-term economic plan, a further reminder that we can only have strong public services if we have the strong economy to support them—[Interruption.] I shall say it again, shall I? Perhaps it will get a bigger cheer this time. I thank the Opposition Front Bench for inviting me to make the point about our long-term economic plan again—[Hon. Members: “Hear, hear.”]

The next stage of our funding reforms will be to ensure that funding is being allocated fairly across the country and that as much as possible is reaching childcare providers on the frontline.

[Graham Stuart (Beverley and Holderness) (Con)]

Does my right hon. Friend agree that one of the greatest achievements of the last five years has been the reduction in the number of workless households? Research shows the scarring, long-term negative effect that that has on children. This is another step to build on the already strong foundations we have put in place to make sure that fewer children are brought up in workless households, with all the negative results that follow.

[Nicky Morgan]

I thank my hon. Friend, who is a former Chairman of the Education Committee, and he is absolutely right. At least 300,000 fewer children are living in workless households this year than in 2010. I had a conversation in my constituency on Friday with the local co-ordinator for those at risk of being excluded from school, and he said how much of an impact seeing a parent or parents getting up and going out to work has on children, their work ethic and their ability to think about their work and career choices in the future.

We will consult on the proposals on the early years funding formula in due course. We are lucky to have in this country a thriving childcare market that is well placed to begin delivering the 30 hours entitlement. The market showed with the introduction of the two-year-old offer that it can respond quickly and effectively to deliver increased places and meet parental demand. That is why we have felt able to bring forward by a year the introduction of the extended entitlement for early testing in a series of areas. However we are not complacent about ensuring that sufficient places are available and are taking further steps to build capacity. That includes creating nursery provision as part of new free schools, and an additional £50 million of capital funding to support the creation of early years places for the free entitlement. We are confident that the capital investment, combined with an attractive, increased rate to providers, will also enable them to seek further investment to expand their offer.

We are committed to ensuring that the free entitlements are flexible and can be accessed in a way that fits with parents’ working patterns. The early implementation areas will look at ways to encourage different and diverse types of providers to enter the market and will incentivise innovative approaches to providing flexibility in terms of the type and timing of childcare on offer. Alongside that, we are consulting on a new right to request for parents. That right will allow parents to request that their children’s school makes their premises available for providers to offer childcare. That will not only ensure that parents who already have children of school age do not have to move their children between different places, but will also lead to an increase in the number of childcare places on offer.

Throughout the passage of the Bill through the House and the other place, there have rightly been lengthy discussions about the issues that matter most to parents—flexibility, quality and access for children with special educational needs and disabilities. I am clear that the Bill and the subsequent roll-out of the extended entitlement will be better because of that scrutiny. Parliament’s scrutiny will not end with the Bill: as agreed in Committee, regulations made to support the 30 hours free entitlement will be debated and approved by both Houses on their first use, ahead of early implementation later this year. Ahead of bringing the regulations back to Parliament, my Department will run a full consultation on the regulations and statutory guidance for local authorities. I look forward to engaging with providers, local authorities and parents over this period so that we can be certain we are getting it right and ensure that parents get what they need from this offer.

Before I conclude, let me thank all hon. Members who served on the Bill Committee and all those who provided written evidence. I would also like to take this opportunity to thank the Under-Secretary of State for Education, my hon. Friend the Member for East Surrey (Mr Gyimah), for steering the Bill through the House and his work on the childcare task force to prepare for implementation. I also thank officials in my Department and here in the House for their support.

As I said earlier, the Bill starts with one goal—to help working families with the cost of childcare. I hope that the Bill will now make further progress quickly so that early implementation of 30 hours free childcare can begin and parents across the country can start realising the benefits that this significant offer provides.

18:47

[Lucy Powell]

I rise to support the Bill on Third Reading.

I welcome my hon. Friend the Member for Darlington (Jenny Chapman) to her new role as our early years spokesperson. She is a passionate campaigner for social mobility, and she has done a brilliant job today on Report, raising several important issues. Of course, I also pay tribute to her predecessor, my hon. Friend the Member for North West Durham (Pat Glass). She did a fantastic job on the Bill in Committee and she will be missed by our team, but she goes on to fight a great cause for this country.

Opposition Members have long campaigned for and supported more investment in childcare. Childcare is an investment in our economic success. More childcare means more opportunities for families and it may begin to reduce the growing gender pay gap. Better childcare can also do a great deal to give all children a better start in life. Far too many women are still priced out of work by the high cost of childcare, particularly those on low and middle incomes. Childcare can help women into work and enable them to work more hours. That is why in government Labour introduced the original 12.5 hours free childcare for all three and four-year-olds. We created the Sure Start centres, massively extended maternity leave, introduced paternity leave and developed the first, and only, 10-year childcare strategy.

Our introduction of free early years education was designed to help to support child development and enable children with disadvantages to attend a high-quality early years setting in an attempt to close the school-readiness gap that is so present by the age of five.

Aside from our specific concerns about the deliverability of the scheme, which I will come on to, there is a larger problem with the Government’s approach to childcare: the widening attainment gap between children on free school meals and their peers. The Government seem focused only on the maternal employment needs of childcare—important as they are—while having no vision or action plan for narrowing that gap. My hon. Friend the Member for Darlington made a powerful case, based on the recommendations of the Social Mobility and Child Poverty Commission, for a comprehensive and joined-up approach to early years to address this issue.

It is the job of the Opposition to scrutinise the Government’s plans and try to make them better, but the Government have not really listened to many of the points we raised in both Houses. I will give it one last go and set out the measures by which we will judge the success or otherwise of the scheme. The detail of the policy and the Government’s legislative approach have not been the best. Ministers have failed to give us, parents or the House confidence that their plan to extend free hours is deliverable, affordable and sustainable. Even now, so many months since it was announced, we are none the wiser on how the extra hours and the necessary expansion of places will be found, funded and facilitated.

A key concern about the policy is whether it is adequately funded. There are three key funding issues: whether the overall budget is sufficient; whether the new hourly rate is sustainable; and the scaling back of the eligibility criteria. Before the general election, the Early Years Minister said that Labour’s plans to extend free childcare from the current 15 hours to 25 hours would cost an additional £1.5 billion, yet the pledge of 30 hours in the Conservative party manifesto was costed at just £350 million. That was then revised to £650 million, once Ministers returned to the Department. That still leaves a massive funding shortfall, which the Institute for Public Policy Research identified as £1 billion. This gives a whole new meaning to back-of-the-fag-packet policy making and I hope Ministers will be able to provide us with some reassurance on that. An extra £300 million was allocated in the autumn statement to increase by 30 pence the hourly rate paid to providers, less than half of which will go on the new offer. I welcome that, yet even with that review, independent analysis for the Pre-School Learning Alliance shows there is still a £450 million shortfall, over the course of this Parliament, for providers in meeting this offer. I will say more on the consequences of that in a moment.

It seems to me that the Government made all those figures add up by slashing eligibility. We now know that one in three families who were promised more childcare at the election will not get it. Ministers had said that all families in work would gain an extra 15 hours of childcare if they had three and four-year-olds. Their original press release said that this would mean 630,000 three and four-year-olds. That figure has now been slashed to 390,000. Of course, parents earning over £100,000 a year do not need extra help with childcare and we agree it is right to reduce eligibility at the top end. However, the Government have now taken their offer away from many low-paid families at the bottom end of pay scale.

The new offer is intended to support parents returning to work or support them to work more hours. Both parents, or a lone parent, need to work the equivalent of 16 hours a week at the minimum wage to qualify. Those in low-income jobs are more likely to lose out under these eligibility rules. For many parents on the edge of the labour market, short hours, part-time work and zero-hours work are often the first and best route back to work. The Government have cut those parents out and damaged the scheme as a work incentive for them. For example, an investment banker or a lawyer would earn eligibility for the extra hours by working one day a week—or one hour a week, in some cases—whereas someone on the national minimum wage would have to work for 16 hours.

There is an inherent unfairness here. Strivers will be working longer to get free childcare than people higher up the income scale. That is not something that Government Members should be proud of. The cost of childcare is a big barrier to parents; we know this for a fact. A low-income second earner would have to find an extra eight hours of work to gain from this new benefit. The policy will hit women particularly hard. Gingerbread says that 20,000 lone parents will now lose out.

Another key issue with the Bill is the lack of capacity in the system, and key question marks remain about the sustainability of the scheme. These could lead to a shrinkage in the market and we have not received sufficient reassurance on that. Some 40,000 early years childcare places have disappeared on the Government’s watch. To deliver this offer is not as simple as saying that eligible three and four-year-olds will just stay in the same setting for an additional 15 hours in the afternoon. In many cases, the afternoon sessions are full of children who are eligible for the 15-hour offer only. We have seen the problems Ministers have had in expanding provision for two-year-olds, particularly in schools where space is at a premium. With three and four-year-olds, the problems will be greater. Facilities will need kitchens to serve lunch, and some settings currently providing 15 hours will not be able to expand because they are sessional and taken up by other community groups at other times. This is not just about money, albeit the £50 million is welcome; it is about logistics and practicalities.

There are issues, too, in the private and voluntary sector. Many say that offering 30 hours to parents would leave their businesses on the brink of collapse. Currently, many providers are only able to offer the 15 hours free childcare by cross-subsidising with full-paying parents. This is why so many providers say that doubling the free offer to 30 hours a week would make their businesses unsustainable. The Government face a big task in convincing parents that providers will actually offer the extra 15 hours without caveats and in real terms. The overall impact of this market intervention without a proper strategy could lead to an exacerbation of trends that we have already seen over this Parliament and the last—a reduction in childcare places and an increase in cost to parents. For parents not in receipt of free hours, the mix of complicated cross-subsidy and price inflation will mean that the cost of childcare could rocket further. What plan do Ministers have to ensure that that does not happen? We still need reassurance on that.

As my hon. Friend the Member for Darlington so eloquently said on Report, the Government seem to have no strategy for raising quality in childcare, or for reducing the stark gaps in development that exist by the age of five. Indeed, with the decimation of early intervention, early years support services and the virtual disappearance of Sure Start children’s centres from our communities, and with family support services impossible to access, the Prime Minister’s latest speech, in a long line of speeches, on the importance of family frankly rings hollow.

The Government urgently need to turn their rhetoric into reality. Not only are they not doing enough; it is quite possible, for the reasons outlined this evening, that only focusing on maternal employment drivers could damage the objectives of raising quality and of encouraging disadvantaged families to access high-quality early education. I ask the Secretary of State once again to bring forward a comprehensive long-term strategy for reducing early years inequalities and thereby give a step change to social mobility.

In conclusion, as I have made clear, we support the Bill. We want parents of three and four-year-olds to have an additional 15 hours of free childcare, and for this to be a real offer that helps parents to find and afford childcare, so that they can do well for themselves and their families. I worry, however, that the Government will turn a deaf ear to constructive concerns. I fear Ministers are going in the wrong direction if they continue to ignore the problems this policy could have for the childcare market, and for families if they fail to act. We need a bigger vision for childcare: a system that delivers flexibility, price and stability for parents, while providing the best start for children and closing the developmental gap that already exists in pre-school.

Childcare is too important to get wrong—[Interruption.] Would the Minister like to make an intervention? No, he is just chuntering from a sedentary position. As he admits in private, he is concerned about the developmental gap but he has no strategy to deal with it. Childcare is too important to get wrong, yet the Government’s piecemeal approach endangers the market and the efficacy of the system. We stand willing to work with the Government to secure a winning approach for parents. We will support the Bill in that spirit, and we will keep a watchful eye on delivery as the scheme progresses.

Question put and agreed to.

Bill accordingly read the Third time and passed, with amendments.

[Lady Hermon (North Down) (Ind)]

On a point of order, Mr Deputy Speaker. I might have misunderstood, but when last autumn we discussed the new certification process for English votes for English laws, it was my understanding that it would be used only rarely. Since the House returned from the Christmas recess, however, we have used it on the Housing and Planning Bill, on a statutory instrument last week and on the Childcare Bill this evening. Have you, or has the Speaker’s Office, had any indication of whether this dreadful procedure will become routine, or will it be used only on rare occasions—all the rare occasions having occurred this month?

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

The trouble is it depends on the Bills. Standing Orders dictate when the procedure is used. We could go a long time without it being used or it could be used every day. I am not sure. The procedures are laid down in Standing Orders, but the hon. Lady has now put her point on the record.

[Sir Edward Leigh (Gainsborough) (Con)]

Further to that point of order, Mr Deputy Speaker.

[Mr Deputy Speaker]

Sir Edward, are you sure it is a point of order? Last time you promised me it was, but it was not.

[Sir Edward Leigh]

I am sometimes a bit naughty.

[Mr Deputy Speaker]

I would not say sometimes.

[Sir Edward Leigh]

The hon. Lady should not get too worried, because EVEL will not change a single part of a single Bill in this or any other Parliament. There is an overall Conservative majority in this one, and, as all the other parties are opposed to it, if we do not have a majority next time, they will cancel it.

[Mr Deputy Speaker]

Thank you, Sir Edward, for that non-point of order. I was absolutely correct: you are naughty.

Backbench Business

Monday 25th January 2016 Commons Chamber

Central and East Africa

Monday 25th January 2016 Commons Chamber

19:01

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

I beg to move,

That this House recognises the importance of stability in Central and East Africa to the security of the United Kingdom; welcomes the Government’s continued engagement in the region and commitment to the spending of development aid to ensure good governance and the eradication of corruption and extreme poverty; deplores the use of violence or terror by any party to secure political aims; and calls on the Government to adopt further measures, together with the international community, to prevent civil war and ensure that the rule of law is maintained.

The motion stands in my name and that of my hon. Friend the Member for Stafford (Jeremy Lefroy). In many senses, this debate, which I am grateful to the Backbench Business Committee for having granted, is opportune, but in some respects it has come on extraordinarily quickly, given that it was only asked for last Tuesday. Many Members who would have wished to speak are not here because the International Development Committee is currently in Brussels. I am grateful to my right hon. Friend the Minister for responding to the debate, but, as I understand it, my hon. Friend the Minister for Africa is also currently overseas.

I myself returned from east Africa this morning in something of a hurry. I should record my considerable thanks to the hon. Members who threatened—if I can put it in those terms—to stand in for me, had I not managed to make a rather convoluted journey from Nairobi to Addis Ababa and back to London. In particular, I thank my hon. Friends the Members for Newbury (Richard Benyon), for Aldridge-Brownhills (Wendy Morton) and for Harrow East (Bob Blackman), who, in the absence of my hon. Friend the Member for Stafford, all offered to move the motion if I was not here.

The UK’s diplomatic and developmental policies in Africa are a wide topic, which, in one sense, has been made no less wide by limiting the debate to two regions. Although patterns in their experiences can be seen across the continent, the nations of east and central Africa have particular problems that call for consideration in the House. It is important, therefore, that the House has a chance to debate the issues and how the UK’s response can best achieve peace and stability not only in the region, but for us.

Everyone in the House knows that Africa is growing, but recent UN estimates have changed how we look at the continent’s demography. In 2004, the UN predicted that Africa’s population would grow to 2.3 billion by the end of the century, within a global population of 9.1 billion. It now estimates, however, that the global population will in fact be 11.2 billion and that almost all of those extra people will be in Africa. According to the UN, the continent will be home to 4.4 billion people—an increase of 2 billion on its previous estimate.

If the new projections are right, the effect on geopolitics across the world will be huge. It will mean that by the end of this century almost 40% of the world’s population will be African. To put it in perspective, that is four times the share of Europe and north America combined and almost the same as the share of Asia. Currently, Africa has only one of the world’s 10 most populous countries, but the UN says that by 2100 it will have five: Nigeria, Tanzania, Niger, Ethiopia and the Democratic Republic of Congo. All of them, of course, feature in the regions being considered today.

Much could change over the next eight decades, and things might be different by the end of the century, but at present none of these countries is either particularly prosperous or has demonstrated incredible stability over the last decades. Even if they make progress, the pressure caused by a quadrupling of their populations will, at best, hinder their efforts to secure that stability and, at worst, derail them entirely. Those pressures will be felt by every country in the region in different ways and at different times.

We and our constituents might ask why that should be a problem for the UK. Even if we set aside the humanitarian and moral considerations, which I know many people in the House and the country do not, we have to understand that this is not just a problem for Africa; it affects our own security, because, if population pressures are not properly dealt with and if African Governments do not embrace stable democracy and tackle corruption, the continent will not move forward, and that will have implications for us. Stable economies are not possible without stable government, and only stable economies can lift people out of the poverty endemic in the region and allow them to live dignified and meaningful lives.

Corruption and political infighting are rife across east and central Africa—indeed, across the entire continent—and if nothing is done to tackle them, things will not only stay the same but get worse.

[Sir Edward Leigh (Gainsborough) (Con)]

One of the advantages of this sort of debate is that it allows us to raise constituency problems. My hon. and learned Friend will know of my constituent, Nicholas Monson, whose son, Alexander Monson, was beaten to death—the evidence is overwhelming—in a police cell in Kenya. Will he encourage the Minister to go on encouraging our high commissioner in Kenya to ensure that justice is done and that Kenya has a proper judicial system? This poor boy lost his life.

[Stephen Phillips]

As my hon. Friend says, I do know about the case, and I am very happy to encourage the Minister and his colleagues in the Foreign Office to do everything they can to ensure that the Kenyan authorities do everything they can to bring those responsible to justice, not just for the family but for everybody who has sustained some injustice in Kenya or elsewhere in the developing world.

As we have seen on our shores in recent months, another problem caused by increasing populations across Africa is people wanting to travel here in search of a better life. We know from past and present experiences that their numbers are increasing. The House has to grapple with this issue. Ensuring stable development, democracy and politics across east and central Africa is most definitely our problem, because without it we will see more of the sort of migration we have on our shores now.

The region is wide and comprises many states—right hon. and hon. Members will no doubt wish to discuss a number of them—but I want to concentrate on eight. Four are extremely fragile: Burundi, Chad, the Central African Republic and the Democratic Republic of Congo. The other four are doing rather better but are at risk of instability: Rwanda, Uganda, Tanzania and Kenya. While each nation is perhaps unhappy in its own way—to borrow a phrase—patterns and themes emerge that play out not only regionally but across the continent. We must recognise those themes, some of which I have already highlighted, if we are to play a successful role in helping Africa to develop and thrive, for its benefit and, as I hope I have made clear, ours.

One pattern that emerges strongly when we look at the region is that of democratic process. We all know that elections are extremely important, and we need to continue to encourage democracy whenever we can. When there are problems with the process, they can become a flashpoint for violence and instability, particularly in this part of the world. Multi-party democratic states are touted, where they are set up, as a way of ensuring peace and prosperity for individual nations. When those in charge are seen to be flouting the rules or feathering their own nests, as is sometimes the case, populations understandably react.

A particularly prolific source of violence at the moment stems from the continued attempts of some of those who hold political office to extend constitutional term limits. It happened, for example, in Chad, where the two-term presidential limit was scrapped in 2004 by President Déby, who has now been in charge since 1990 and is expected to win again comfortably in the elections taking place this April. He has a tight grip on power, and it is fair to say that he strives to silence dissenting voices. Amid heightened social tensions and the regional spread of Islamist activism from Boko Haram in Nigeria, Chad will remain vulnerable to destabilisation attempts. We have to be aware that although violence has thus far been minimal, there is a risk of more widespread instability that could give safe haven to armed militias and violent Islamist groups.

An example of the serious instability to which the extension of presidential constitutional time limits and tinkering with them can lead, is currently being played out in Burundi. It began in April last year when President Nkurunziza announced his intention to run for a third term, arguing, as Members know from the debate led by my hon. Friend the Member for Stafford, that he had not reached his constitutional two-term limit because he was appointed rather than elected for his first term. It was a position with which few agreed, but he stayed in office none the less.

While he was out of the country in May, there was a failed army coup, and he was easily re-elected in July. Since then, we have heard a familiar tune, with independent media shut down, opponents murdered and opposition-leaning neighbourhoods raided. Young men are taking up arms in a way that we have not seen since the 1990s, which is extremely concerning for those of us who are old enough to have witnessed the genocide that took place in Rwanda in 1994. In Burundi, of course, there have been attempted assassinations, and we know that security forces have gone from house to house, murdering suspected opposition fighters.

The UN estimates that more than 200,000 Burundians have fled since April, with many going to Rwanda. Rumours are flying that Tutsis forced to leave Burundi will join with their fellow tribesmen in the Rwandan Government to intervene against the Hutu-dominated Burundian regime. The whole region is therefore something of a flashpoint. Memories of the genocide are all too recent. Thankfully, a descent into out-and-out ethnic violence has so far not happened, but the fears are well placed and widespread, as I know from spending the last three days in Kigali, where, I should make it clear to the House, the better part of team Phillips is currently working for the Government.

[Mark Field (Cities of London and Westminster) (Con)]

Will my hon. and learned Friend give way, albeit not on that last point? My hon. and learned Friend is telling a tale of woe about Burundi. It is perhaps more within the British sphere of influence than Chad, which is part of the more Francophone part of Africa. He is imparting to the House his intimate knowledge of this particular area, but what about the solutions? Many of our fellow citizens will throw their hands in the air, thinking that this is a hopeless case and wondering what we are doing putting yet more money into general budgets for these sorts of nations. Although it is not a view with which I would agree, there is that sense of despair. Does my hon. and learned Friend have any idea how, slowly but surely, we can play our part, along with other UN partners, to ensure that we get a better state of affairs in Burundi and in the wider region?

[Stephen Phillips]

I am grateful for that intervention. A number of things could be done in the long term, some of which I shall come on to. Deterring the corruption that has been rife in Burundi is one of them. Having proper enforcement of the anti-corruption convention and, indeed, the African Union’s convention on preventing and combating corruption would assist not just in Burundi, but elsewhere. Specific things could be done immediately, too.

I would like to commend the Under-Secretary of State for Foreign and Commonwealth Affairs, my hon. Friend the Member for Rochford and Southend East (James Duddridge), who has responsibility for Africa, for travelling to the region just before Christmas and speaking to the Burundian Government about some of the language used, which was reminiscent of the language used prior to the 1994 Rwandan genocide. I am also very pleased to see in his place on the Front Bench the Minister of State, Department for International Development, my right hon. Friend the Member for New Forest West (Mr Swayne). He will know that as a result of the corruption in Burundi, his Department withdrew its support for the Government. One issue that the Government need to look at and consider is restoring that support. Without it, it is fair to say that the UK will have a voice that is less likely to be listened to by the existing Government of Burundi and elsewhere.

[Richard Benyon (Newbury) (Con)]

A number of us were privileged to hear Bill Gates speak earlier today. One thing he said was that, generally speaking, the better off a country is, the more it is inclined towards democracy, good systems of government, health care and everything that flows from it. My right hon. Friend the Member for Cities of London and Westminster (Mark Field) asked about solutions, and clearly one key point is that we should be focused on trying to improve the economic state of these countries and, therefore, the systems of governance that flow from that.

[Stephen Phillips]

My hon. Friend is absolutely right; I agree with him. Perhaps when the Minister responds to this debate, he will tell us that that is a particular focus of the Government, which I think would be a useful thing for the Government to say.

[Mr Andrew Mitchell (Sutton Coldfield) (Con)]

It is important to clarify the situation in Burundi. Following the bilateral aid review in 2010, Britain ceased to have the very small programme it previously had in Burundi, partly because the costs of running the programme were so great, but secondly because France and Germany had a much bigger stake in the country. Britain—quite rightly, in my view—prioritised its interventions in many of the other countries that my hon. and learned Friend is addressing, in the interest of focusing on those we could most directly affect rather than those we could not affect.

[Stephen Phillips]

Having made those decisions, my right hon. Friend will know far more about them than anyone else. I do not say that they were bad decisions at the time, but in answer to my right hon. Friend the Member for Cities of London and Westminster (Mark Field), the UK has probably had something of a lesser voice in the counsels of Burundi than might otherwise have been the case. I have made a suggestion—the Minister may be aware of it—that given his ministerial responsibilities, he might like to encourage his counterparts in China, who do have a strong voice in Burundi, to discourage President Nkurunziza from going down the route that he appears to be attempting to go down.

[Graham Jones (Hyndburn) (Lab)]

Does the hon. and learned Gentleman accept that one consideration in withdrawing aid from Burundi, which comes through from speaking to British aid workers in the region, is simply the level of corruption and the inability to deliver an aid programme against that backdrop?

[Stephen Phillips]

I do accept that. Indeed, extensive corruption and the lack of assurance that the aid was reaching its intended targets were among the reasons I gave to explain why aid was withdrawn from Burundi.

[Mary Creagh (Wakefield) (Lab)]

I congratulate the hon. and learned Gentleman on securing this debate. On my visit to Burundi in 2009, I visited a Save the Children hospital that was helping women who needed Caesarean sections to deliver their babies safely. That was one of the many projects that we funded in country, and it made a real difference in a country where one in five under-fives did not make it to their fifth birthday. I agree that by withdrawing from the country, we have a lesser voice and less influence. I gently say to all hon. Members that what Chad and the Central African Republic have in common is their abject poverty and the fact that they are so-called aid orphans. There are ways to channel aid into those countries through the UN and perhaps through partnering with other Governments. We need to be a bit more flexible in the future.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. It is intended that the opening speech lasts between 10 and 15 minutes. We are running over already and many Members wish to speak. I know that the hon. and learned Gentleman will want to conclude his speech shortly.

[Stephen Phillips]

I am grateful for your guidance, Mr Deputy Speaker. The hon. Lady makes a strong point. There is a balance to be struck between deciding whether aid will be displaced and the influence for good that British aid can have.

With your injunction in mind, Mr Deputy Speaker, let me move on to the Democratic Republic of the Congo, which has similar problems. The constitution says that President Joseph Kabila must stand down this year, but many doubt that he will. He has been in charge since his father was assassinated in 2001. DRC has itself been the subject of an appalling civil war in the past and the worry must be that if he does not stand down, and instead seeks to circumvent the constitutional time limits, that will lead to violence and instability in the region.

There is also concern about the ongoing elections in the Central African Republic. Ongoing violence between rival Christian and Muslim armed groups since 2012 has displaced about 1 million people, and countless different militias control various parts of the country. Although the first round of presidential elections last month seems to have gone well and, thankfully, to have passed off peacefully, no winner has emerged yet and it is not entirely clear what is going on in the CAR and what the state of its Government is. It might be suggested that it is something of a tinderbox—some in the print media have said that—and if there is not a smooth run-off vote, that could spark a new round of violence.

The important point is about political stability. Constitutions are there to be observed, and if they are not—if people treat themselves as having a right to govern and to govern for as long as they want—that is detrimental to fragile democracies and is likely to lead to political violence, and runs the risk of leading to civil war. Such civil war is what Rwanda went through in 1994. One of my earliest political memories is of the appalling pictures we saw on our televisions of the genocide, in which approximately 1 million were killed during a period of several months. We must keep those images in mind, because we must try to avoid such a genocide and the political instability that leads to appalling acts of violence against the people of countries in the region, which in turn leads to our having to go into the region and spend British taxpayers’ money to try and restore order and stability, and can lead to problems on these shores in terms of economic migration and terrorism.

I said I would speak about eight countries, but with your injunction in mind, Mr Deputy Speaker, although I have spoken only about four or five I will conclude, as I know many Members wish to contribute. I look forward to hearing those contributions and the Minister’s position and that of the Opposition in due course.

19:23

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

It is a pleasure to speak in this debate, and I congratulate the hon. and learned Member for Sleaford and North Hykeham (Stephen Phillips)—and the hon. Member for Stafford (Jeremy Lefroy), who could not be here this evening, which is a shame—on securing it and enabling us to discuss a wide range of topics.

As the hon. and learned Gentleman has pointed out, the title of the debate could encompass many countries, subjects and themes. I will focus on a few specific issues, on which I would be interested to hear the views of the Government and other Members. I wish to discuss Somaliland, which as many Members will know is of great interest to many of my constituents. Cardiff South and Penarth has a strong tradition of Somalilanders and of a Somaliland community. Secondly, I want to talk about the relationship between the security and development situation there and some of the other less satisfactory examples across central and eastern Africa, and the crucial role the UK can play in responding to them. Thirdly, I want to talk about the Welsh local community contribution to development across the region.

Many hon. Members will know that I have long been a supporter of recognition for Somaliland and Somaliland people. That is a long-stated objective of Somalilanders. There has been a referendum that made that very clear. This is a long, complex, historical situation, which has lasted ever since the 1960 decolonisation when Somaliland declared independence first from the UK—it was a British colony—and then the rest of Somalia took its independence and eventually they came together in one country. There has been a long history of tragic conflict between the different parts of the horn of Africa and particularly in that region, and we have come today to a situation where there is a de facto functioning independent Somaliland which has a strong record of development and growth and of looking after its citizens, and indeed of fostering democracy and a plural political system, which is sadly lacking in many other areas across the region and Africa. I pay tribute to the Government in Somaliland and the work they have done over many years, particularly recently, to foster that, and to the commitment of all Somalilanders, including many in the diaspora, who have made a contribution to that both financially, through political support and by getting engaged in the prospects of their home country.

There have been some very positive developments in recent months. Last year we saw a crucial Somaliland trade and investment conference, which was supported by the UK Government. We saw much interest from business and others in investing in Somaliland and taking part in fruitful trading relationships with it. Positive engagement in that region is where stability and growth and support for wider development is going to come from. That was welcome progress. We have also seen a welcome development here in the UK, with cities such Cardiff and Sheffield, and boroughs such Tower Hamlets in London, recognising Somaliland and that historical relationship between Somaliland and the UK, and fostering those links and taking them forward.

However, we also see the risks. We have obviously seen the insecure situation in the rest of the horn of Africa. We see threats from terror groups such as al-Shabaab. We see the instability caused by refugees fleeing the terrible situation in Yemen, for example, across the Red sea, and other such situations in the region, whether in Eritrea, Djibouti or elsewhere, threatening the stability of a region that does have one beacon of stability within it. It is important to recognise the crucial role the UK Government have played through support from the Royal Marines, through training security forces and preparing them to deal with threats to international security—piracy off the coast, for example—and by ensuring there are well-resourced and trained security forces there that can respond to threats not only to the stability and security of Somaliland citizens, but to the wider region.

There are two crucial issues that I would be interested in hearing the Minister’s comments on. First, elections in Somaliland have been postponed until next year. That is not unusual in Somaliland, but it is important that elections continue and that we continue on that democratic path and ensure the people of Somaliland can have a democratic choice about their future Government. I understand from contact with the Government in recent days that the crucial task of voter registration has started, but I would be interested to hear the Minister’s views on what the international community can do to ensure that registration continues and that we have a passage to important presidential and parliamentary elections, and on what we can do to observe and make sure those elections go forward.

[Mr Mitchell]

There have of course been elections in the past in Somaliland with very close results whereby just a few thousand votes separated the two candidates, and power has transferred peacefully and effectively, so I think the hon. Gentleman will want to make it clear that this present glitch does not besmirch a very considerable record in respect of elections in Somaliland.

[Stephen Doughty]

The right hon. Gentleman, who knows a lot about this issue, makes a crucial point, and all of us who care about Somaliland want to see that progress and stability continue. It has a vibrant political scene with active political parties. I have met representatives from a number of the different parties in recent weeks and they all want to see this go forward. We must play whatever role we can in ensuring both voter registration and elections go ahead.

Lastly on Somaliland, I want briefly to touch on the talks between Somalia and Somaliland being held under the auspices of the Turkish Government. There were some important high-level talks in Turkey between senior representatives of the Somalia federal Government and its Somaliland counterpart in 2014, and there were various contacts over a series of confidence-building measures and practical issues that could be addressed around aviation and telecommunications and so on. However, there has been a fall-back since those talks, and I would be interested to know the Government’s view on the status of the talks and whether they see them as having any value. If not, could other confidence-building activities take place between Somalia and Somaliland, in the light of their very different positions, to encourage contact between the two countries?

The hon. and learned Member for Sleaford and North Hykeham rightly highlighted the wider trends in security and development across eastern and central Africa, and I want briefly to mention a few countries that are of great concern to me and to other hon. Members. We had an excellent Adjournment debate here in the Chamber a couple of months ago on Eritrea, secured by my hon. Friend the Member for Greenwich and Woolwich (Matthew Pennycook). The debate rightly highlighted the grave situation in that country and the many human rights abuses that are occurring there. I know that the Government share those concerns, and I would be interested to hear from the Minister how he sees that situation developing. I am also deeply worried by the activities of Eritrean Government representatives pursuing Eritrean citizens here in the UK for payment of taxes, and for other reasons, in allegedly intimidating ways. We do not want to see those kinds of activities on these shores; they certainly do not contribute to the fostering of good relations between the Eritrean diaspora and the country itself.

Many concerns are also being expressed about the situation in the Central African Republic. The Minister for Africa—the Under-Secretary of State for Foreign and Commonwealth Affairs, the hon. Member for Rochford and Southend East (James Duddridge), who sadly cannot be with us this evening—answered a question from me recently in which he made it clear that the security situation in the CAR was grave and that outside the capital, Bangui, violence, looting, hostage-taking and human rights abuses continued to occur with relative impunity. These countries do not always make the headlines here or globally, but these matters should be of concern to all of us here in the House as humanitarians and as proponents of development, democracy and good governance around the world. We cannot just pay attention to the countries that make the headlines. If we are concerned about these issues, we should be concerned about them wherever they occur. Similarly, great concern has been expressed about the situation in Chad, and we have also heard at length about the fears about the way in which the situation in Burundi might develop.

All those situations underline the fact that it is crucial that the UK Government continue to pursue a joined-up approach to development, diplomacy and defence and security issues in their relationships with this region. I was pleased to hear the announcement by the Secretary of State for International Development on further investment in fragile and conflict states. I know that the right hon. Member for Sutton Coldfield (Mr Mitchell) also pursued this matter while he was in office. Indeed, it was started under the last Labour Secretary of State for International Development, Douglas Alexander. I worked in the Department at that time, and we certainly felt that it was important to focus on that issue.

We need to be putting more resources into these situations in order to do preventive work, rather than simply responding to conflict. That could include supporting the development of democratic governance, the rights of women and girls, elections and electoral processes, low-level security measures and justice measures. All those things give confidence to populations and enable us to get on to the important issues such as health, education and the wider development that is absolutely crucial. Our development assistance plays a crucial role in that.

[Mark Field]

The hon. Gentleman makes a good point. I suspect that he would agree that the Government have got it right in this regard and that the new aid strategy is a definite step forward in trying to integrate security, intelligence and defence with what one might call the slightly more traditional aid and international development goals. Does he agree that we have got the balance right in ensuring that roughly 50% the Department’s budget goes into those fragile nation areas, rather than repeating what happened in the past, with un-earmarked amounts of money finding their way into more general budgets that could not be properly accounted for?

[Stephen Doughty]

Yes, I agree with the hon. Gentleman in principle. It is important that we focus on those fragile countries that are affected by conflict, but I would gently make two points. It is important to support Governments directly, albeit with important criteria attached. Unless we support the development of strong governmental systems—for example, in healthcare and education—we will not see the necessary consistency and co-ordination of approach involving the non-governmental and international organisations operating in the country. In this country, it was only through forming the national health service and a unified education system that we were able to make the necessary progress in our own history. So I would not want us to move completely away from providing Governments with support, but it is important that it should be properly scrutinised and accounted for.

It is also important that considerations such as human rights should be taken into account. I remember a particular example that the previous Labour Government were involved with, when the then President of Malawi was proposing to spend an awful lot of money on a presidential jet. It was made very clear that that was not acceptable, and the money was subsequently funnelled through alternative channels to ensure that it got to the people who needed it rather than being used for that sort of corruption.

[Mark Field]

It is probably fair to say that virtually everyone here in the Chamber tonight is a great supporter of the Government’s strategy of allocating 0.7% of GDP to international aid. However, we should also accept that there is probably a silent minority in the House, and a rather less silent majority in the country at large, who do not buy into that idea. Having a strategy along the lines of the one that the Government have put in place will therefore make it easier to sell the idea, not only in our own self-interest but in recognition of the fact that there is a dangerous and uncertain world out there, and that the security and defence aspects of our policy have an important part to play and need to be integrated into our entire development budget.

[Stephen Doughty]

I agree with the broad point that the hon. Gentleman is making. When I am speaking to my constituents about these matters, I regularly make clear the links between what happens in those countries and what happens on our own streets. We have historic links with those countries, but there have also been tragic occurrences involving, for example, young men from my constituency trying to travel abroad to fight for al-Shabaab and an individual who had studied in Cardiff going to Nigeria to become involved with Boko Haram. What happens in those countries can have a direct and serious impact on what happens on own streets. It is always been clear to me that development is primarily a moral duty for us, but it is also in our common interest across the piece. It is in our common global interest and in the common national interest of this country, and I am never afraid to make that point.

The hon. Gentleman made an important point about co-ordination across Departments. Again, I agree with that in principle but I have experience of certain figures from certain Departments, such as the Ministry of Defence, looking at the DFID budget with an eagle eye and saying, “Well, you can have so much for this and so much for that.” There is sense in having co-ordination and co-operation, but they should not be seen as a way of hiving off chunks of funding and re-labelling them as something else. I know that those on the Opposition Front Bench will be doing an awful lot to scrutinise these matters and to ensure that we see real co-operation rather than the hiving off of parts of budgets for other purposes.

[Nusrat Ghani (Wealden) (Con)]

Does the hon. Gentleman agree that we do not do enough to tell people when we get things right? One such example is Ethiopia, where the UK’s support has reduced child mortality by a quarter, put 4 million more children into primary school and protected almost 8 million people from needing humanitarian food aid. Perhaps if we shared more of those positive stories about getting it right, it would enable people to understand the donations that we make and to appreciate what we are doing overseas.

[Stephen Doughty]

I absolutely agree with the hon. Lady. Many Members taking part in the debate tonight also put forward that argument. It is crucial that we continue to build confidence in that way. I have seen with my own eyes the impact that UK aid can have not only on helping people directly but on fostering stability, development and security, which in the end benefit the whole of Africa and indeed the whole world.

[Mary Creagh]

On the question of success stories, may I remind my hon. Friend of the great success of the last Labour Government in setting up the Rwandan revenue collection authority? We sent representatives of HMRC—which has been in the news again today—over to help to design tax collection systems in Rwanda. That £20 million investment by the UK Government has now reaped hundreds of millions of dollars in tax revenues for Rwanda. I suggested a similar scheme to a senior Minister in the South Sudanese Government when I was in that country in 2012 but, to my disappointment, he rejected the offer to help him to set up his own South Sudanese revenue collection authority.

[Stephen Doughty]

My hon. Friend gives an important example. She makes the wider point that international development matters that affect this country and the rest of the world need to rest across many of our Departments, not just DFID, the Foreign Office and the Ministry of Defence. We need to look at other ways, and other places, in which co-operation can happen.

That leads me neatly to my last point, which is the role of the devolved Administrations in development in eastern and central Africa. I want to take this opportunity to pay tribute to the work of a new partnership that is developing in Wales, the Hub Cymru Africa. It is bringing together the work of Wales Africa Community Links, the Wales for Africa Health Links Network, the Sub-Sahara Advisory Panel, Fair Trade Wales and the Wales International Development Hub. Wales has a strong tradition of internationalism and of caring outside its borders. We have many local and Wales-wide organisations that care deeply about matters of development, human rights, international justice, climate change and so on. The sector in Wales is growing, with more than 350 community groups and micro-organisations working on international development. There is a large fair trade movement, supporting Wales as the first ever fair trade nation, as declared in 2008, and a Welsh Government-supported scheme, which delivers grants to many of those organisations enabling them to take their work forward.

Let me touch on a couple of examples that are relevant to this region of east and central Africa. The Hayaat Women’s Trust from Cardiff uses the expertise of Welsh mental health social workers and psychiatrists to provide training for hospital and outreach workers in Somaliland. It offers help in the identification and treatment of serious mental health disorders, depression and stress and post-conflict trauma reactions. Such assistance is particularly important in regions such as Somaliland that have seen serious conflict and human rights abuses in their history, the effects of which may be coming to the fore only now.

SaddleAid, an interesting scheme in Anglesey, has developed inflatable saddles for emergency transport in Ethiopia. Emergency medical facilities can be taken by donkeys or small horses to the most remote areas. It is a very simple and effective way of getting resources out there, and also of transporting pregnant women to the nearest healthcare facility where they might be supported.

Community Carbon Link based in Lampeter is planting half a million trees for Kenyan schools, and it has run grassroots projects in Kenya for more than eight years. Other organisations include PONT, which is well known in Rhondda Cynon Taf, and has had strong links with Mbale in Uganda for the past 10 years. Over that time, it has trained more than 1,000 healthcare workers, supporting a population of nearly 250,000. Many of those organisations, including Hayaat, have a base in my constituency. Another organisation that plays a crucial role is Penarth and District Lesotho Trust, which is based in Penarth in my constituency. Clearly, the UK Government have a role to play, but so too do individual citizens, and I am proud to say that they are playing it.

[Several hon. Members rose—]

[Madam Deputy Speaker (Natascha Engel)]

Order. Before I call the next speaker, let me say that it might seem as though we have an endless amount of time, but we have eight Members wishing to speak and three Front-Bench speakers, so if we want a fair allocation of time, people need to stick to about 12 minutes, so that we can get everyone in. I call Mr Andrew Mitchell.

19:42

[Mr Andrew Mitchell (Sutton Coldfield) (Con)]

I draw the House’s attention to my entry in the Register of Members’ Interests. I congratulate my hon. and learned Friend the Member for Sleaford and North Hykeham (Stephen Phillips) on securing this debate today and on his excellent speech, which he must have written in the small hours of the morning at Addis Ababa airport. He certainly launched this debate extremely effectively.

The debate gives us a chance to pay tribute to the outstanding officials and staff from the Foreign Office and the Department for International Development. The DFID officials, whom I had the privilege to lead for some two and a half years, are doing such outstanding work in the area that we are discussing. We should also pay tribute to the many non-governmental organisations and charities that do such dangerous and vital work in desperate parts of the world. We need only to think of the recent injuries and deaths that have afflicted Médecins Sans Frontières to understand why. Our hearts have to go out to all those who have been maimed or worse serving their fellow men and women in a very difficult part of Africa.

This debate is timely. As my hon. Friend the Member for Wealden (Nusrat Ghani) said so eloquently, the scale of the difficulties in this part of the world sometimes mask the scale of our development success. The very great difficulties hide the huge differences that international development can make. Let us be absolutely clear that international development works and that Britain is a key mover and shaker in the deployment of soft power.

British initiatives are being copied all around the world—in America, Australia, throughout Scandinavia, and among UN agencies. Even the European Union is beginning to make some progress in this regard. Let us also be clear that this progress from Britain has happened under both Labour and Conservative Prime Ministers.

Before I come directly to east and central Africa, let me say this: now is the time; we are the generation that can make a colossal difference to these huge discrepancies of opportunity and wealth that exist in our world today, and disfigure it so very greatly. Britain has done extraordinary humanitarian work around the poor and conflicted parts of the world. We think of Syria where Britain’s support for Syrian refugees is greater than all the rest of the European Union added together. We think of the way that Britain has managed to help to get children, particularly girls, into school. In 2000, there were 100 million children in our world who could not go to school, because they did not have a school to go to. Today, that number is heading down from 57 million. The Girls Education Challenge Fund was set up to get 1 million girls into school in parts of the world where there was no state structure in which to do it. It encouraged the private sector, humanitarian organisations, charities and philanthropic organisations to join in that project.

We have been leading the way in tackling disease through vaccination. In the previous Parliament, we vaccinated a child in the poor world every two seconds, and saved the life of a child every two minutes from diseases from which, thank goodness, our own children do not suffer. We are on the way to eradicating polio. Today’s announcement on malaria—the £500 million going forward to 2020—is an important continuation of a policy that the Chancellor of the Exchequer, as he now is but then was not, announced in 2008 when he said that a Conservative Government would contribute £500 million until the disease was eradicated. He has now extended that promise so that it will last for 12 years.

Britain has taken leadership on family planning. If all countries stick to their promises, we will have, by 2020, reduced by half the number of women in the poor world who want access to contraception and who currently do not have it. There is also the extraordinary success, particularly in the Horn of Africa, in combating HIV/AIDS. With our 0.7% commitment enshrined in law, Britain is clearly continuing to lead the way and putting its money where its mouth is, but the 0.7% spending of taxpayers’ money is justifiable only if we show that it is delivering real results so that hard-pressed taxpayers can see that for every pound that they are contributing to the development budget, they are getting 100 pence of delivery on the ground.

All the way across sub-Saharan Africa and central and east Africa, as my hon. and learned Friend the Member for Sleaford and North Hykeham made so clear, poverty and conflict are breeding instability. There is a belt of misery that is fuelling discontent and anger among very poor people. There is appalling suffering in the Democratic Republic of the Congo, particularly in the east. There are 25 or 28 bands of villains going around terrorising the population. It is a rich irony that some of the poorest people in the world live on top of some of the richest real estate.

In northern Nigeria, where DFID has done such good work, Boko Haram has been destroying the lives of ordinary people, although the position has got far more difficult for it under the new President of Nigeria. In Mali, we have seen the terror that has gripped local people. It is worth noting that Mali produces cotton, but, despite excellent attempts by Britain to try to ease trade distortions—particularly because of the American and EU subsidies— it cannot sell its cotton for a living wage, and that needs to be addressed by the international community.

In the Central African Republic, half of the population is now underfed. It is a real flashpoint, with warnings of Islamic fundamentalism from leading Muslims in the country. I wish to praise the work of Aegis that has done so much good work in Rwanda at combating genocide. I say to the Minister that Aegis may well have something beneficial to say about the disorder in the Central African Republic, although it is of course an area very much in the French zone, and we would be looking for the French and the European Union to use their international development spending to tackle those difficulties.

In Sudan, Britain, Norway and the US have done what they can to deal with the extraordinary number of displaced people, as in the south freedom fighters seek to morph themselves into a Government. In Eritrea, as has already been said in this debate, that migration is fuelling the migration that comes across into Europe. Despite international arbitration, the conflict with Ethiopia is still not yet resolved, which I hope the Minister will mention when he comes to contribute to the debate. I believe that Chris Mullin, when a Minister, and I, when a shadow spokesman, are the only two Members of Parliament to have visited Eritrea in living memory. That benighted country certainly needs to see the benefit of order and development.

In northern Uganda, the Lord’s Resistance Army has caused chaos with decades of war. There are huge numbers of jobless youngsters who do not have enough to eat. Voluntary Services Overseas, an outstanding British organisation, has made a significant contribution. We have seen the way in which terrorism, for example, in Kenya, but also in Tunisia and Egypt, destroys tourism, on which those countries rely. It is not an accident that the terrorists make those dispositions. We have heard about Burundi, where there is disorder and death, and hundreds of thousands of refugees. What a contrast to Rwanda next door, which is peaceful and stable, and an extraordinary development partner for Britain. It has lifted 1 million citizens out of poverty in the past four years, and seen great progress. It is a country where, from the top, corruption is stamped out. We know that it will do exactly what it says with the money that it receives from the international community.

Ten years ago, Rwanda could fund only 38% of its budget; today, it funds more than 60%, and it is an example of the progress that can be made. As I have said, it stands in stark contrast with what is happening next door in Burundi. There is more to do on political and media space, and it has not always been an easy relationship. I shall pass over the extraordinary and wholly wrong imprisonment of the Rwandan director of security under a European arrest warrant issued by Spain last year. We should not forget the essence of this relationship: following the genocide, Britain has been a powerful partner and influencer of the Rwandan Government, and the British people, in their relationship with the Rwandan people, have seen a tremendous growth in security, stability and, increasingly, in prosperity.

Finally, I visited Somalia four times as Secretary of State and saw the way in which Mogadishu—in the past, a beautiful city—had been reduced to rubble, with al-Shabaab rampant. That was a direct danger to the UK, and an example of how conflict not only mars and destroys the lives of the people of Somalia but threatens us on the streets of Britain. Not long ago, there were more British passport holders training in terror camps in Somalia than in Afghanistan or Pakistan. Those people were a direct danger to the UK, but now progress is slowly being made. The African Union Mission in Somalia is much better equipped, and the initiatives launched by the Prime Minister at the London conference in 2012, following the dreadful famine, have been very successful, and have made steady if disjointed progress.

In all those countries, climate change hits the poorest people first and hardest. One reason for the massacres in Darfur—the pastoralists versus the crop growers—was the effect of climate change on crops and the ability of animals to withstand the droughts that are increasing in frequency. Britain has made an important contribution in the area of conflict, which has rightly been described as development in reverse. The key aim of British policy is to stop conflicts starting or, once they have started, to stop them, and once they are over, reconcile people. Much closer relations between development, defence and diplomacy, to which Members have alluded, came about because the coalition Government set up the National Security Council. The decision in the strategic defence and security review in 2010 to spend 30% of the DFID budget on tackling conflict—now increased to 50%—was absolutely right although, as I mentioned to the House, it was pretty hard to find ways of spending 30%, and it may be quite difficult to spend 50%.

The third key limb of all of this is prosperity and boosting economic activity with the transformation of the Commonwealth Development Corporation, which has invested in some of the countries that we have discussed. The poorest people can lift themselves out of poverty if they have a job and are economically active. The fourth thing that Britain has championed is getting girls into school, which is the single most effective way of changing the world, because girls who are educated tend to be economically active. They educate their own children, they have children later, and they understand the opportunities for family planning. They have influence as a result of their education in their family, in their community and, increasingly, as we see in Afghanistan, in national government as well.

There is much to celebrate in the success and effectiveness of British development policy and the real contribution that it has made. Perhaps everyone in the House should do a little more to make that clear to our constituents who I think, in the medium term, can easily be won round to its importance.

19:55

[Graham Jones (Hyndburn) (Lab)]

I congratulate the hon. and learned Member for Sleaford and North Hykeham (Stephen Phillips) and the hon. Member for Stafford (Jeremy Lefroy) on securing this timely debate, particularly given the situation in Rwanda, on which I shall focus; the fact that this week we are commemorating Genocide Memorial day on 27 January; and the events that continue to take place in the region. It is a pleasure to follow the right hon. Member for Sutton Coldfield (Mr Mitchell), who gave an outstanding speech. He always speaks with honesty and integrity on the region.

Rwanda has long been one of the UK’s closest allies in Africa and certainly in east Africa. Since the genocide in 1994, the UK Government have helped Rwanda probably more than any other nation. In the past decade or so, Rwanda has experienced some of the highest economic growth rates anywhere in the world. The World Bank report, “Doing Business 2010”, which tracked global business regulation, put Rwanda at the top of the reform table, stating that Kigali had lowered more barriers to investment than anywhere else in the world. When I visited Rwanda, that was certainly the impression I gained.

It is evident that Rwanda has made significant improvements in reducing poverty, as the right hon. Member for Sutton Coldfield said: 1 million children have been lifted out of poverty in the past four years, and a poverty reduction programme has been under way for more than two decades. Partly as a result of UK aid, partly as a result of UK policy in Rwanda and partly because of our bilateral relationship, we have been able to attract other donors. Crucially, we have managed to get that through general budget support to the Rwandan Government, which has been highly effective.

Our own Foreign and Commonwealth Office country advice states:

“President Kagame and the [Rwandan Patriotic Front] have achieved significant advances in poverty reduction and economic development through a strong vision for the transformation of Rwanda following the genocide. Rwanda has significantly lower levels of crime, violence and corruption than other countries in the region.”

The report adds:

“Rwanda is an open economy and has achieved impressive economic growth. Between 2001 and 2012 GDP growth averaged 8%”.

That contrasts with Burundi, its neighbour, which continues to struggle, with a per capita income that is just 25% of that of Rwandans.

On my two visits to Rwanda, I noticed the number of billboards advertising an anti-corruption hotline. That concurs with the FCO report. FCO country advice is that there is very little corruption in Rwanda due to an ongoing Government commitment to eliminate it. I have personal experience of that, as I was prevented from getting on a flight leaving Rwanda. That was not my fault—due to strict adherence to rules by a junior member of staff, I was not allowed to leave the country.

Today, we find ourselves conflicted on Rwanda, and too easily taken in by those who seek to change Rwanda from the outside and wish to impose the level of democracy that they want, irrespective of the wishes of the people of Rwanda. The recent referendum on an extension of presidential terms is an example. The United States and European Union warned that the move undermined democratic principles. The US Department of State said in a statement that Washington was “deeply disappointed”, and the US ambassador, Samantha Power stated :

“We expect President Kagame to step down at the end of his term in 2017”.

Sections of the international press followed suit and viewed the referendum as a

“manipulation of democracy to breed a dictatorship.”

All of this threatens to undermine development and stability in Rwanda. This strategy risks emboldening terrorist organisations such as the FDLR militia, which is hiding out on Rwanda’s border and still seeks Hutu power. Its sympathisers, including in Europe, are given credence as a result of these statements. Also, policies on aid are shifted for political purposes, not for a beneficial purposes. It is acknowledged through UK aid’s general budget support that the Rwandan Government have long been one of the best conduits for efficient aid spending. UK aid’s primary purpose is to spend UK taxpayers’ money in a way that is most effective in meeting millennium development targets and reducing long-term poverty.

For Britain, there is a third consequence: our friendship with Rwanda is becoming unnecessarily frayed. International election observers described the referendum as “free and fair”. In my time there, it was abundantly clear to me that Kagame had phenomenal support, in public and in private. He emphasised Africa’s biggest problem as

“a lack of good governance”

and posed the question,

“Why has Africa remained the poorest continent, meaning its people are the poorest, yet the continent is the richest?”

The west is in the paradoxical position of criticising free and fair elections yet denouncing the will of the Rwandan people, 3.7 million of whom—more than 60% of voters—signed the petition to change the part of the constitution limiting the President to two terms. In that vote, 98.3% were in favour of the change. That sounds like a phoney figure, but when I went there and spoke with taxi drivers and ordinary people in private, I found that the level of support for the Government was immense. It is easy to see why: growing incomes and living standards; free education; free healthcare; phenomenal development across the country, often targeting the poorest; and streets that are safe at night. It was also easy to see the fear of a return to Hutu Power. Speaking to recent FDLR militia soldiers, it is worrying that the FDLR seems able to recruit new members and, importantly, that they share the arguments and tone of the opposition against Kagame.

It does the west no good in east Africa, or indeed anywhere, to make over-the-top statements about Rwanda, and I am pleased that the UK Government refrained from such statements on the recent referendum. I was pleased that France and Belgium, as far as I could see, also refrained from direct criticism. For too long their former colonial interests have trumped their international responsibilities in the region. The effect of this 20-year dispute has been not only to strain relations—although I am concerned that the wider European Union was allowed to repeat the criticisms of Rwanda by the United States on the recent referendum—but to destabilise the politics of the region and the international community and to promote the causes of those who wish to see the current Rwandan Administration fall.

Rwanda has real concerns with Belgium and France, particularly in relation to the genocide, leading to its acceptance within the British-led Commonwealth in 2009. Rwanda has adopted English as the first language in place of French as a result of these tensions. It is important that these politics do not influence or shape our aid commitments through the international media or institutions that wish to influence us. Speaking to officials both in UK aid and in Rwanda, it is clear that this flexibility has helped them achieve remarkable developmental and economic achievements. Sadly, that has now changed due to the politics that comes with aid.

Following the UN report, which I have read, of Rwanda’s involvement in illegal military support in the Democratic Republic of the Congo, supporting the M23 militia, our aid programme was changed away from general budget support towards direct budget support or targeted programmes, reducing the Rwandan Government’s ability to function and deliver services that it had previously delivered. The UN report is considerable and provides plentiful anecdotal evidence against Rwanda, but it lacks documentary evidence—guns, munitions, photos, attributable quotes, dates and times of events are all missing. I have no doubt that Rwanda has engaged against the supporters of Hutu Power in neighbouring countries; they are fearful even today, 20 years on. The threats from the militia still exist, and they see a west that has long had a policy of liberal interventionism in self-defence in its own interests, but that seems to have a hypocritical position.

As a result of the UN report and growing criticism by opponents of Rwanda, in 2012 the UK Government held back £21 million in aid, reversing a decision by the then Secretary of State, the right hon. Member for Sutton Coldfield, who part-authorised the aid payment. It is no surprise that this aid change caused consternation in Kigali. Central Government budget programmes supported by UK aid were put in jeopardy and the trust in donors was eroded. It is seen as an intrusion into sovereignty. UK and western donors would be wise to consider fully the consequences of such changes in aid provision.

Rwanda has been at the forefront of poverty reduction in Africa. It is unusual in that it has a popular and stable Government, which is something we should be mindful of. It is also a close ally of the UK—a special relationship —and we should value that friendship as well as the progress Rwanda has made.

The reason we should value that relationship can be seen in Burundi, which is another country I have had the opportunity to see at first hand. Crossing the border, we noticed the differences immediately. In Rwanda we saw well-dressed people going about their business, walking freely along the road, but that gave way to impoverished Burundians, lacking substantial clothes, often barefoot and hanging about aimlessly along roadsides. Half the population are under the age of 16. Per capita income has fallen to a quarter of that in Rwanda over the past 20 years. Burundi is the fourth poorest country in the world, and the UK and the European Union have stopped providing aid because we cannot guarantee that it will not be lost to corruption. Such instability makes it difficult to find structures to deliver aid.

Burundi has elections that we consider, on paper, to be more democratic than those in Rwanda, but is that a meaningful comparison? Outside of the capital, Bujumbura, it is a country without much structure and with endemic poverty. With the collapse of presidential support, the country is once again on the verge of widespread violence. Hundreds of Burundians have died so far in the disturbances. It is a democracy led by patronage and corruption. Magazine sellers in Kigali can sell anti-Kagame magazines—they do so outside the Milles Collines hotel—and the country has a universal healthcare system, a low level of crime, and free education. By contrast, the people of Burundi have to live in poverty, with little state support and under the dark cloud of sectarian violence and killing.

However noble the aim, Burundi is an example of the west’s failure to support or uphold a healthy democracy, despite much effort, and the casualties are some of the poorest people in the world. The comparator with Rwanda should teach us that we should be far more careful in our criticism, for the forces of terror and Hutu Power seek solace and support from our easy criticisms.

20:08

[Craig Tracey (North Warwickshire) (Con)]

I intend to speak well within the time that you have given us as a guideline, Madam Deputy Speaker. It is a pleasure to follow the hon. Member for Hyndburn (Graham Jones). I am very pleased to speak in this important debate, which has been sponsored by the Backbench Business Committee. I congratulate my hon. and learned Friend the Member for Sleaford and North Hykeham (Stephen Phillips) on securing it. He has a deserved reputation for taking a detailed interest in, and having a deep concern for, the situation in central and east Africa.

I will confine my remarks today to one country. It is a country with which our country has an equally deep connection and that, despite its many opportunities, has suffered a troubled history. That country is Kenya. To many British people, Kenya meant safari, “Born Free” and Elsa the lioness. For the older generation, perhaps it means the Mau Mau and the dark episode of the Hola camp. But today it means terrorism and kidnap, al-Shabaab and the terrible attack on a Nairobi shopping mall. Even as recently as 15 January, the Kenyan Government warned that, because of their involvement in attacking terrorists in Somalia, the likelihood of further attacks has only increased.

The battle against terrorism in Kenya has been costly. In a single attack in 2015 on a university college, 140 people were killed. That is why I welcome the steps taken by our own Government to help Kenya to tackle the threat to its stability and realise its potential for future prosperity.

In September 2015, the United Kingdom and Kenya committed themselves to a new defence co-operation agreement, which will significantly boost the defence relationship between our countries. It will enable the United Kingdom to give additional support to Kenya’s maritime security, and will ensure the continuation of British military training in the country. That is important to the fitness and readiness of our own servicemen and women to tackle problems on foreign terrain that may threaten us on the streets of our constituencies. The agreement will result in improved military capabilities on both sides, and I congratulate the Foreign Office and the Ministry of Defence on their successful efforts to secure it.

[Kevin Foster (Torbay) (Con)]

My hon. Friend is making some very interesting points. Does he agree that, as I have said a few times myself, international development aims and military capability are not mutually exclusive but work together and complement each other, and that this agreement is a perfect example of that process?

[Craig Tracey]

I could not agree more. My hon. Friend has put it very well.

A stable Kenya can be a prosperous Kenya. The country has the largest, most diversified and most innovative economy in East Africa. However, that potential is currently not being fulfilled. The number of poor people in Kenya is thought to be constant or growing, owing to low growth and rising inequality. In 2005, 43% of the population were living on under £1 a day. I believe that, while we must of course help Kenya militarily, we must also play our part—because of our long and shared history—in supporting its development economically, as well as in terms of education and training. I am pleased that the Department for International Development has recognised that and is promoting broad-based, sustainable economic development and job creation by improving the investment climate, market development, trade, and access to finance. I am also reassured by the fact that DFID aid is strengthening systems for the delivery of health, education and social protection services.

However, British help must ensure that no one is left behind in the development processes. That includes women and girls, as well as the extreme poor who live in Kenya’s arid and semi-arid lands, and refugees from neighbouring countries. If we do not help to stabilise the economy, improve education and offer hope to the most marginalised, we cannot hope that some of them—perhaps many—will not become radicalised, and fall under the spell of Kenya’s enemies and ours.

Crucial to winning my constituents’ support for these initiatives is a determined effort to stamp out corruption. We cannot expect British taxpayers to support the funding of international projects if they fear that the money they advance will fall not into the hands of those who need it or know how to use it, but into the bank accounts of corrupt officials. Kenya is ranked 136 out of 177 countries on Transparency International’s Corruption Perception Index, and impunity remains a key challenge. No significant convictions have arisen for economic crimes, criminal violence or terrorism, despite several corruption scandals, large-scale organised political violence following the 2007 elections, and numerous terrorist attacks. Both the President and the Deputy President have been indicted by the International Criminal Court. While I support the help that we give to Kenya, I ask Ministers to make it absolutely clear to the recipients of aid—and to my constituents in North Warwickshire and Bedworth who are helping to pay for it—that we will accept no hint of corruption or money laundering, and that any individual or organisation who is responsible for it will be strongly held to account.

Despite its troubled past and difficult present, Kenya has the opportunity to secure a bright future. Our own Government recognise that, which is why our aid support for Kenya has increased by nearly 50% over the last six years. I hope that we, as Members of Parliament, will recognise it as well, and will ask our Government to continue their work—with the authorities in Nairobi—to bring about stability, transparency and an end to the dual threats of poverty and corruption that bedevil Kenya in particular and, sadly, so many central and east African countries in general.

20:14

[Stuart Blair Donaldson (West Aberdeenshire and Kincardine) (SNP)]

I congratulate the hon. and learned Member for Sleaford and North Hykeham (Stephen Phillips) on securing the debate.

I, too, want to focus on Kenya, a country that I had the privilege of visiting for the first time last year. During my visit, I went to see a number of projects supported by DFID in collaboration with other organisations. They included—please excuse my Swahili—Utu Wema primary school, a school in the middle of one of Nairobi’s informal settlements which is funded jointly by DFID and the United States Agency for International Development. Although the school was barely a quarter of the size of the Chamber, there were more than 300 children in attendance. Despite the lack of space, the children seemed to be happy and enjoying their education.

We were also shown an education tool, funded by DFID, called Tusome, which means “Let’s read” in Kiswahili. It is an early-grade reading resource for English and Kiswahili, and it provides teachers with real-time resources and teaching tools which they use to support and monitor children’s early development. It was good to see at first hand what international development spending can achieve. However, I was acutely aware that what I saw during my visits were good examples, and that not everywhere could be like that.

While I was in Kenya, I also visited a wellness centre in Nakuru. It was run by Hope Worldwide, with support from the Kenyan Red Cross and the Global Fund, and was set up to provide services for Kenya’s most at-risk populations, including commercial sex workers, MSM—men who have sex with men—and intravenous drug users. The centre primarily offers HIV prevention services, but we were able to sit in on an MSM peer counselling group session.

As Members may know, existing Kenyan law criminalises same-sex conduct with up to 14 years’ imprisonment, so it was with some anxiety for our hosts—the men who were attending the session—that I sat in on that informal session with at least 10 Kenyan Government officials while the men discussed the causes and disadvantages of erectile dysfunction. I commend the bravery of those young men in, first, admitting to being gay—people must refer to themselves as being MSM—and, secondly, taking the opportunity provided by our visit to lecture the Government officials on what more they could be doing to assist the local lesbian, gay, bisexual, transgender and intersex population.

As many Members will know, criminal sanctions against same-sex conduct exacerbate abuse by police and other state agents who subject LGBTI persons to harassment, extortion, arbitrary arrest and detention without charge on trumped-up charges of denial of services, sexual assault, and even rape. Along with members of the all-party parliamentary group on global LGBTI rights, I recently met a Kenyan man who campaigns for justice for LGBTI persons in Kenya. He told us that, because of the work that he did, he was subject to phone-tapping, interception of mail, and general harassment and intimidation. Given the security concerns outlined by the hon. Member for North Warwickshire (Craig Tracey), one would think that those agencies would have better spending priorities. That demonstrates that, although the hon. Gentleman described Kenya as one of the more stable countries, it still has some distance to travel to protect some of its most vulnerable people.

The 10th of the global goals for sustainable development is the reduction of inequalities. One of its aims is, by 2030, to empower and promote the social, economic and political inclusion of all, irrespective of age, sex, disability, race, ethnicity, origin, religion or economic status. That is why it is so important for us to support LGBTI communities in central and east Africa. In their policy paper “Leaving no one behind”, published by DFID on 24 November 2015, the Government pledged to ensure that every person had a fair opportunity in life, no matter who or where they were. People who are the furthest behind, who have the least opportunity and who are the most excluded will be prioritised. Every person counts. Specifically, the Under-Secretary of State for International Development, Baroness Verma, said in a written answer that the Government

“will prioritise the interests of the world’s most vulnerable and disadvantaged people including lesbian, gay, bisexual, transgender and intersex (LGBTI) people.”

Along with, I am sure, many Members on both sides of the House, I shall wait with interest to see what support and protection the Government will give LGBTI people in Kenya, in Africa as a whole, and around the world.

20:19

[Victoria Prentis (Banbury) (Con)]

It is a pleasure to follow so many interesting and wide-ranging speeches and to take part in this debate secured by my hon. and learned Friend the Member for Sleaford and North Hykeham (Stephen Phillips), who ranged widely both geographically and over the issues in central and east Africa. I look forward to other opportunities for him to tell us about the countries he was not able to reach in his speech this evening.

Westminster Group, a British-based but internationally focused security group, has its headquarters in my constituency. The company is active in many parts of east Africa in providing security and safety services and solutions: its aim is to protect people, assets and infrastructure. It tells me that east Africa is a paradox. It is a region that has experienced impressive economic growth over the past decade, and yet one of the most high-conflict areas in the world. There is fighting across the region, with no-go areas for travellers, particularly westerners, in large areas of Sudan, South Sudan, Somalia, Eritrea, and Ethiopia. Piracy is a major worry in the Gulf of Aden and the Indian ocean. Widespread corruption and poor governance hold these countries and their people in a state of poverty, and, as we have heard, this fuels insurgency.

I would like, if I may, to focus on just one country in the region that nobody has yet touched on—South Sudan. It is a country with which Britain has old connections, but is also one of the very newest countries on our maps. It faces some of the oldest problems that have afflicted Africa. Since independence from Sudan, which it was given on 9 July 2011, South Sudan has struggled with enormous developmental challenges. Decades of war have left a legacy of chronic poverty, inequality, and limited capacity in infrastructure.

The first part of 2013 saw some initial progress, but this was soon reversed by the outbreak of yet more conflict. Since the start of the violence, thousands of people have been killed. Over 1 million have fled their homes, including to neighbouring countries. Despite the signing of a ceasefire, fighting has continued, and by April 2014, 4.9 million people were in urgent need of humanitarian aid. Despite the internationally mediated peace deal signed by President Salva Kiir in August last year, under which another rebel leader was returned as his vice-president, there have been continued delays in the formation of the transitional Government of national unity. My predecessor as Member for Banbury, who knows the area very well, spoke at length about this almost two years ago. It is very sad that so little progress has been made in the intervening period. There continue to be breaches of the ceasefire in the states of Unity and Upper Nile.

Just before I came into the Chamber to speak, I was told that the Under-Secretary of State for Foreign and Commonwealth Affairs, my hon. Friend the Member for Rochford and Southend East (James Duddridge), has today landed in Juba where, we hope, he will assist in the production of a new peace deal. I am sure that all Members of this House join me in wishing him and the people he is working with all the best in the next few days. [Hon. Members: “Hear, hear.”]

One issue for humanitarian relief is that access is poor in many areas of South Sudan. As a result, almost 4 million people are facing severe food shortages—an 80% increase on this time last year. South Sudan is one area of the world where, because of instability, food production has actually fallen in the past 50 years. Starvation is endemic across the country, especially in the beleaguered Unity state. Like many Members, I am proud that the United Kingdom is playing a leading role in the humanitarian response to the current instability in South Sudan. We are the second largest bilateral donor. In 2014, we were one of the largest donors to the UN humanitarian appeal, which helped to avert famine and ensured that 3.5 million of the South Sudanese people were reached with life-saving assistance. We are obviously determined to do our bit to meet the challenge, but limited access for humanitarian workers, particularly in Unity state, has increased the problem of famine.

I hope that despite these challenges the Department for International Development, along with other parts of Government, will continue to look for ways in which we can help this area. If we do not, I fear that radicalisation and terrorism will grow, increasing the threat to the entire region and ultimately to us all. To secure long-term stability, it is important that South Sudan develops its infrastructure. Last year, the Prime Minister offered military engineering expertise to the South Sudanese Government to help with building bridges, roads and other key pieces of infrastructure.

This is also an opportunity for British businesses to link trade to aid to help stabilise the country. I would welcome assurances from the Minister that he will encourage UK Trade & Investment, our trade Ministers and our diplomatic teams to pay a great deal of attention to South Sudan. I wonder whether there might be some benefit to liaising closely with Africa House in London to see how British employers can better do business in the region. My hon. Friend the Member for Tewkesbury (Mr Robertson) runs Westminster Africa Business Group, which looks at how closer links could be forged. Let us hope that the new chapter in the history of South Sudan is a more productive one.

20:25

[Wendy Morton (Aldridge-Brownhills) (Con)]

I congratulate my hon. and learned Friend the Member for Sleaford and North Hykeham (Stephen Phillips) on securing this important debate, as well as my hon. Friend the Member for Stafford (Jeremy Lefroy), who is sadly unable to join us, and I welcome the opportunity to speak in it.

Many Members have spoken about various countries in the African region. My hon. Friend the Member for North Warwickshire (Craig Tracey) made some interesting points about Kenya and the need to tackle corruption—something that is important to us all, and to our constituents. I want to touch on the two countries that I have visited most in Africa—there are hon. Friends in the House with whom I have visited them—which are Rwanda and Burundi. I first travelled to Rwanda about 10 years ago, on my first ever trip to central Africa. Over the years, I have gone back regularly, and I have been incredibly impressed and moved by two things. The first is the friendships that I have developed there and the way that people have shared with me their experiences of the terrible genocide 20 years ago. With that memory, we must ensure that we never let that happen again.

Secondly, I have noticed the huge steps forward that have been made in Rwanda in infrastructure development. On my first visit, travelling down towards the border with Burundi was incredibly difficult. The route was literally a red dirt track, which, over the years, has developed. Economic development has gone at a tremendous pace, as has education, as other Members have said. I have seen many examples of the work that DFID has done there, as well as the FCO and the many NGOs and civil society groups. I have seen how people have expanded the country’s economic development way beyond gorilla tourism, tea and coffee. I have been fortunate to have the opportunity to meet many small entrepreneurs—people who have been given a chance, a hope, and a lot of support. The British Government and DFID have a very long and proud history of working not just in Rwanda, but in many other countries.

More recently, I was able to travel to Burundi, which has also been deeply affected by conflict. As the hon. Member for Hyndburn (Graham Jones) said, there is a huge contrast between Burundi and Rwanda in terms of development. I, too, took that away from my visit. For me, the main message is the reminder that stability and peace really matter—not only for the countries I have visited and about which I am speaking tonight, but for the whole region and indeed way beyond it.

The region has a history of instability and fighting. We have heard many examples of the ongoing issues. I find it particularly worrying to hear reports of the deepening political, humanitarian and security crisis unfolding in Burundi. I believe that more than 200,000 have fled the country to the neighbouring countries of Tanzania, Rwanda, Uganda and the Democratic Republic of the Congo. Not only is there a deepening political crisis, but a deepening refugee crisis.

[Graham Jones]

The hon. Lady makes a very good point. Will she respond to this point, which I nearly mentioned, but wanted to raise? The stability in Rwanda enables it to supply forces to the African Union—I believe its forces are operating in four other countries with the African Union—and bringing such stability must be welcome.

[Wendy Morton]

When it comes to the region, the role of the African Union must be recognised, as should the strength that comes from countries working together. It is not only about Rwanda. To take the example of Burundi, its peacekeeping force has been doing worthy work in Somalia. This is about working with the region for the benefit of the region and way beyond it.

[Mr Mitchell]

It is worth adding to my hon. Friend’s point, in connection with the intervention by the hon. Member for Hyndburn (Graham Jones), that when what George Bush described as genocide was taking place in Darfur, the first country to offer troops for an AU force was Rwanda, because those living there knew what had happened to them and they wanted to stop that happening to those living in Darfur.

[Wendy Morton]

I am grateful to my right hon. Friend, who always speaks with such knowledge on matters concerning Rwanda and, indeed, Africa. Conflict rarely stops at international borders—refugees do not stop at a border—so when there is instability and insecurity, the worry is that that will spill over into a much wider area.

[Kevin Foster]

My hon. Friend is making an interesting point. As we regularly see on our TV screens, the focus is on the issues in the Mediterranean, but does she agree that the long-term solution is about tackling the causes of poverty and conflict in sub-Saharan and central Africa? That is what prompts people to start on the journey through the Sahara, where many of them die even before getting to the Libyan coast.

[Wendy Morton]

My hon. Friend makes a very interesting and valid point. I was about to move on to the issue of migration and to talk a little about refugees. We are hearing and seeing—as well as holding such discussions in the Chamber—many debates about economic migrants, asylum seekers and refugees, and about the movement of people across Europe. It is even more important that we tackle the root causes and do what we can to maintain stability in the home country. That means that democracy is a crucial element in development. Strengthening global security also matters, as does corruption, which we have already discussed this evening.

To bring my short contribution to a conclusion, I want to thank my hon. and learned Friend the Member for Sleaford and North Hykeham for bringing this debate to the Chamber because it is important to remember and keep in our minds Burundi, Rwanda and the whole of the region. It is sometimes very easy to think about different parts of the world, which are also important, but there are ongoing issues in many such countries and the countries of the region need us to keep them in mind. We must ensure that the Government’s diplomatic and humanitarian actions continue, and that we keep the focus on such countries. I will listen carefully to what I am sure will be an interesting update from the Minister.

20:33

[Bob Blackman (Harrow East) (Con)]

It is a pleasure to follow such a knowledgeable and thoughtful speech by my hon. Friend the Member for Aldridge-Brownhills (Wendy Morton). I am deeply grateful to my hon. and learned Friend the Member for Sleaford and North Hykeham (Stephen Phillips) not only for securing this debate, but for ensuring that he arrived to lead it. I had several contacts from his office today desperately asking me to take his place if he did not make it in time. His presence allows me to concentrate on the areas that I want to speak about, rather than speaking generally about the whole of central and east Africa.

One of the beauties of representing a constituency such as mine is that we have diasporas from every country in the world. We have one very strong diaspora that emanates from east Africa. I refer, of course, to the so-called Ugandan Asians, who were forced out of their homes in the 1970s by the evil dictator Idi Amin. Of the 45,000 people who were given literally two days’ notice to leave, 28,000 settled here, some in Leicester, but most in Harrow and Wembley in north-west London.

[Stephen Doughty]

I want briefly to make the point that a significant part of that community settled in my constituency in Grangetown in south Cardiff. They have made a huge contribution, as I am sure they have to the hon. Gentleman’s community.

[Bob Blackman]

I note the contribution that the diaspora has made right across the UK, but it settled predominantly in Leicester and north-west London.

Uganda’s loss was Britain’s gain. We have gained tremendously in the fields of politics and business, and every other field one can imagine. The people who ran the economy in Uganda came here and built a life and built businesses. The benefits that that section of the community has brought are testimony to its hard work.

People have come to this country not just from Uganda, but from Kenya and Tanzania. That gives us a tremendous advantage, because people who not only lived in those countries but worked in them now live in this country. They want to give something back to the countries where they were born, where their families grew up and where they have deep roots. Across those nations, there are various different issues.

Uganda seems to be progressing quite well under President Museveni. He has provided stability, helped spread prosperity and given Uganda an increased role in regional affairs. The economy in Uganda is growing by about 5% a year. There is an opportunity to diversify the economy, expand education and invest in infrastructure. The forthcoming elections on 18 February will show how the Ugandan people are participating in democracy and how they feel the country is progressing.

In Kenya, the situation is much more of a mixed bag. There will be elections next year in about 18 months. President Kenyatta won in 2013 in an alliance with William Ruto, who has since been arraigned at the International Criminal Court for instigating violence in 2007. There are concerns about corruption. President Kenyatta recently said that corruption posed a threat to national security after the main Opposition party claimed that the Government could not account for almost half of last year’s eurobond sale. There are pressures on the public finances and I understand that the fiscal deficit is at 9% of GDP. The Government recently secured a syndicated loan for infrastructure projects in November and a loan from China for the extension of the standard gauge railway in December. However, the Government remain relatively popular. We recently had a delegation of Kenyan MPs here in Parliament who were very upbeat about their future, while making clear the need to tackle corruption.

In Tanzania, following the presidential elections in October 2015, the new President, John “The Bulldozer” Magufuli, has proved popular domestically, but is causing tensions in the region. In 2014, many donors suspended aid to Tanzania following a scandal in which $100 million went missing. I would be grateful for an update from the Minister on the current position. Tanzania languishes in the bottom third of Transparency International’s corruption index. Despite Tanzania having abundant natural resources and being the second largest aid recipient in sub-Saharan Africa, poverty remains endemic, with 70% of the population living on less than $2 a day. The new President has undertaken a war on corruption and wasteful government spending.

[Stuart Blair Donaldson]

Does the hon. Gentleman agree that one way to tackle corruption is through transparency of data? For example, if communities know how much money they are supposed to be getting and what it is supposed to be paying for, that is one way to put pressure on those who are guilty of corruption to stop engaging in it.

[Bob Blackman]

The UK has been a champion in that regard, with DFID leading the way. One thing that Members from all parts of the House have done is to ensure on all visits that DFID funding is spent in the best way possible, so that it is clear that the 0.7% of GDP that we are spending is ensuring improvements to people’s lives.

If I may continue on the problems that Tanzania is facing, the country intends to become a major gas exporter, but that has been disrupted by the announcement of a 12.5% royalty for onshore oil and gas production. Echoes of the Idi Amin regime have resurfaced with Operation Timua Wageni, a Government directive that foreigners working illegally should leave their jobs with immediate effect to make way for local workers. This has been particularly poorly received in Kenya and threatens previously strong East Africa Community co-operation, as Kenyan residents make up the majority of foreign workers in Tanzania. Co-operation has been further hampered by the cancellation of a regional conference for port managers in eastern and southern African in Dar es Salaam, following a shake-up of the management of the Tanzanian ports authority by President Magufuli. However, Tanzania’s growth prospects are robust, with GDP predicted to expand by 6.8% this year.

We have an opportunity not just to provide aid but to trade with Africa, which will clearly be the route out of poverty for many of the African states. Although some of the economic boom in Africa is slowing down, parts of east and central Africa have among the fastest growth rates in the world. If we are to increase our exports and reduce our balance of payments deficit, it is vital that we build Britain’s presence in these emerging economies, and in east Africa we have a built-in advantage. Not only is English the language of choice, but our reputation as traders and the high-quality image of our goods and services help us to gain an advantage over our competitors. Yet for decades our approach to Africa has been driven by aid rather than trade. We need to change that, both in business and in Government. We have failed to acknowledge the huge strides that Africa has made. Our competitors have not been so slow. We are losing out to rivals such as China because of our failure to recognise the change.

I am therefore delighted that my good friend and colleague in the other place, Lord Popat, has this week been appointed as our trade envoy to Uganda and Rwanda. This is part of the Prime Minister’s new approach to exports, and it is a very welcome development. Trade envoys can play a vital part in bringing together different Departments and should be encouraged, particularly when, like Lord Popat, they have strong connections to the Governments and businesses in a region. I urge my right hon. Friend the Minister to lay out a policy and a strategy to increase UKTI’s presence to include every African country in the lifetime of this Parliament, so that we can emphasise the importance of trading with countries that are developing and open up the opportunities for British industry and British people to export, but also enable those countries to trade and grow their economies, rather than being dependent on foreign aid.

20:44

[Patrick Grady (Glasgow North) (SNP)]

I congratulate the hon. and learned Member for Sleaford and North Hykeham (Stephen Phillips) on securing this debate. The wide range of contributions that we have heard today may have stretched the definition of the region of east and central Africa, but the United Nations’ definition —I looked this up in advance—of sub-regions of eastern and middle Africa encompass more than 20 countries—from Chad, Cameroon and South Sudan in the north to Malawi, Zambia and Zimbabwe in the south—and between us we have covered just about everywhere in between. I shall focus on a couple of countries in particular and reflect on some of the themes that we have heard from the Members who have spoken.

Eritrea was mentioned. It has one of the worst human rights records on the continent. It has been described as the North Korea of Africa. As has been said, the hon. Member for Greenwich and Woolwich (Matthew Pennycook) led a very useful Adjournment debate before Christmas on the situation in Eritrea, and I know that there are ongoing efforts to establish an all-party parliamentary group, so it would be useful to hear from the Minister what recent representations have been made to the Eritrean Government about their continued use of indefinite conscription and the detention without trial of human rights campaigners, and what discussions he has had with the Home Office about the treatment of refugees from Eritrea here in the United Kingdom. I have heard from constituents and campaign groups that the current Home Office assessment guidance is totally unsuitable. People are being returned to a country where the Foreign and Commonwealth Office itself advises against travel to areas within 25 km of the Ethiopian border.

Irrespective of UK citizens travelling to Africa, many citizens from central Africa wish to travel here, not to stay, claim asylum or soak up benefits, but simply to visit family and friends, to promote business or to promote human rights and good governance. Too often, we hear stories of visa applications being knocked back, or application processes being beyond the reach of many citizens in countries with poor infrastructure. What discussions has the Minister had with the Home Office on that matter?

The broader issue of population movement and displacement has been a theme of this debate. It demonstrates how very few crises are contained within one set of borders, particularly when the borders are the result of a colonial or post-colonial dividing up of the map, rather than any democratic or consultative process. This is particularly true of the discussions that have been held about the situation in Burundi and the close link that exists with the previous situation in Rwanda. Hon. Members have emphasised the contrast that now exists between the two.

I declare an interest, as Members might have heard me do before. I worked for SCIAF, the Scottish Catholic International Aid Fund, which has projects in Burundi. I have heard stories of beneficiaries and partners who are subject to fear, restricted freedom of movement and of the economic impact of the violence on them. SCIAF is part of the global Caritas Internationalis family, which estimates that at least 400 people and probably more have been killed since April, 3,500 have been arrested and 220,000 have fled to neighbouring countries which, as we have heard throughout the debate, increases pressure within those societies. In addition, there are many internally displaced people.

The warnings about Burundi from Zeid Ra’ad Al Hussein, the UN High Commissioner for Human Rights, are stark: “all alarm signals flashing red,” he has said. Hundreds are dead as a result of political violence in recent months, and there have been reports of sexual and gender-based violence and, most worryingly of all, reports of systemic ethnic targeting that are far too reminiscent of the genocide in Rwanda and the previous civil war in Burundi. We cannot, and must not, stand by and allow this to happen again. Later this week we mark Holocaust Memorial Day, and this year’s theme is exactly that—not to stand by, but rather to learn the lessons of the past, speak out and never again permit genocide to happen.

The Government of Burundi have international obligations to protect their citizens, and the international community has a role in preventing violence and any degeneration of the situation. It would be interesting to know what role the Minister sees the UK Government playing to support international efforts to end the cycle of violence in Burundi. What steps are the Government taking to support a humanitarian response and the protection of humanitarian organisations already on the ground? In particular, what role do the Government see for the African Union? The hon. Members for Aldridge-Brownhills (Wendy Morton) and for Hyndburn (Graham Jones) both touched on this. Are the Government, for example, prepared to back the African Union diplomatically if it decides to send in peacekeepers, even without the invitation of the Burundian Government? This is an important moment for the African Union to demonstrate its authority and mandate, and not only to try to resolve the situation in Burundi, but to send a message to the rest of continent about the role it intends to play in supporting development, peace and stability.

Civil society has a hugely important role to play in Burundi and across the region. Strong civil societies that can hold Governments to account ought to be—and must become—an alternative to violent protests that can spin out of control. Front-line civil society organisations play an important role protecting or supporting some of the poorest and most vulnerable people in their societies.

One of the poorest and most vulnerable societies not only in the region but in the entire world is the Democratic Republic of the Congo. As the right hon. Member for Sutton Coldfield (Mr Mitchell) mentioned, the greatest irony is that, in fact, the DRC should be one of the richest countries in the world. We all carry around with us in our pockets a little bit of the DRC in the form of either coltan or cobalt, which are essential ingredients in mobile phone devices. Instead of being one of the richest countries in the world, the DRC is one of the poorest—it is 176th out of 188 on the UN human development index. To me, that sums up everything that is not just wrong but perverse about the systems we have in place to regulate global trade and protect human rights. How can it be that something so valuable that we take for granted in this part of the world can be so cheapened?

[Graham Jones]

The hon. Gentleman makes a valuable point about the connection between some of the mining companies, which are in essence the wealth of Africa and eastern DRC, and some of the Administrations in Africa, particularly South Africa, that benefit from the mining interests in eastern DRC and across the Congo. Nothing seems to be done about that relationship and there is an ongoing problem. The wealth of eastern DRC and Africa is taken and nothing is done about it by those who could do more in terms of the ethics of that mining.

[Patrick Grady]

That is a very valuable exposition of the point I am trying to make on the regulation of multinationals. It is hugely important that they are able to report on their supply chains and who their suppliers are; the relationships they have with the producers of the minerals they use; and the tax they raise and profits they make—so-called country-by-country reporting. There is a role for the UK Government as part of the European Union and the broader global community to place those issues front and centre. As I have said, Amnesty International and others regularly produce, including recently, evidence of the use of child labour in mines. Those mines go on to supply major electronic brands, including Apple, Samsung and Sony, with the kind of things that we carry around and interact with every single day. It would be useful to know how the Government will take steps on many of those issues, and what steps they will take to work with NGOs on the ground that are trying to extend protections for artisanal miners and to end the worst forms of child labour.

As we have also heard, the DRC is, like much of the region, experiencing climate change. Climate change exacerbates the problems of food and security, access to water, and population displacement. In many ways, it ultimately fuels the kind of instability that leads to the conflicts we have heard about. The Government have a responsibility to live up to their commitments on climate change. It will be interesting to hear what steps they have taken, for example, to promote the adoption of renewable energy on the continent rather than tying developing countries into fossil fuel infrastructure that will quickly become redundant.

Hon. Members have mentioned other countries. My hon. Friend the Member for West Aberdeenshire and Kincardine (Stuart Blair Donaldson) and the hon. Member for North Warwickshire (Craig Tracey) mentioned Kenya, which is experiencing instability—there are worrying reports of human rights abuses. The Scottish National party manifesto called for a special envoy in the Foreign and Commonwealth Office on global lesbian, gay, bisexual, transgender and intersex issues to show leadership on discrimination, which is all too prevalent in many of those countries. It would be useful to hear what consideration the Minister will give to that proposal.

Respect for human rights is at the core of much of what we have heard and debated today. If Government and non-state actors alike were to show more respect for basic human rights—both rights to material needs such as food, clothing and shelter, and political rights to freedom of thought, speech and assembly—perhaps the humanitarian need would not be so great.

Today, of course, we mark one of Scotland’s great humanitarians, Robert Burns. Perhaps in our approach to central and eastern Africa, like so many other areas, we should be guided by his great anthem to solidarity and egalitarianism:

“Then let us pray that come it may,

(As come it will for a’ that,)

That Sense and Worth, o’er a’ the earth,

Shall bear the gree, an’ a’ that.

For a’ that, an’ a’ that,

It’s coming yet for a’ that,

That Man to Man, the world o’er,

Shall brothers be for a’ that.”

20:54

[Fabian Hamilton (Leeds North East) (Lab)]

I will not attempt to compete with the eloquent poetry of Robbie Burns on this Burns night.

[The Minister of State, Department for International Development (Mr Desmond Swayne)]

Hallelujah.

[Fabian Hamilton]

Yes, I thought you would be pleased.

I, too, congratulate the hon. and learned Member for Sleaford and North Hykeham (Stephen Phillips) on obtaining this debate from the Backbench Business Committee. It is very appropriate that we are discussing these issues today. I am sorry that the hon. Member for Stafford (Jeremy Lefroy)—the hon. and learned Gentleman’s co-applicant for the debate—is not with us for this evening’s debate. He is extremely knowledgeable on these issues and always adds a lot to any debate on the subject of east Africa.

It is good that the hon. and learned Member for Sleaford and North Hykeham was able to get back promptly this morning, and I expect that he is feeling the effects of his long journey from Rwanda via Addis Ababa. I thank him for returning and enlightening us with the eloquent points that he made, which have set the tone for our whole debate this evening.

The Library’s introduction to the debate identified eight countries as the ones we would talk about this evening—the Central African Republic, the Democratic Republic of the Congo, Chad, Burundi, Rwanda, Kenya, Tanzania and Uganda. Indeed, those are the countries that we have discussed at some length. As we have heard this evening, the Department for International Development currently has bilateral aid programmes in five of those eight countries—DRC, Rwanda, Kenya, Tanzania and Uganda. As has been said, the bilateral programme in Burundi—which has slipped back into political violence and crisis over the last year—was closed during the last Parliament, a decision criticised not only by the former Secretary of State for International Development but the International Development Committee, of which I was a member until last week. There are now many calls for the programme to resume once the current crisis is over, but even in 2014 £6.1 million was spent in bilateral aid from the United Kingdom. That compares with a total of £587.4 million for those other five countries in 2014—a considerable sum of taxpayers’ money.

The hon. and learned Member for Sleaford and North Hykeham spoke eloquently about the lack of stability in many of the countries we have discussed this evening. He mentioned the estimated growth in population—the United Nations estimates that it will double by the end of the century, with 4.4 billion people living in Africa by 2100. He also said that stable economies allow stable Governments, but I would perhaps argue that stable government often flows from economic development and wealth creation. Is stable government a prerequisite for economic progress? That is a question that we need to discuss and decide, and I wonder whether the Minister would care to comment on which comes first.

The hon. and learned Gentleman also mentioned several other countries, and sadly we do not have time to go through them in detail this evening. He made the point about DRC, a country that has been in the news over the last 10 years or so, following the appalling civil war and strife there. Its current situation was summed up in a book called “Blood River”, written about eight years ago by the former Daily Telegraph journalist, now author, Tim Butcher. I recommend the book to anyone who wishes to know more about the origins and current state of DRC.

The hon. and learned Gentleman also mentioned the Rwanda genocide, which other right hon. and hon. Members have mentioned this evening. In this week in which we remember the holocaust—remembrance services happened up and down the country yesterday and will continue this week—the genocide of 1994, which I remember all too clearly, must also be remembered, although it must never be repeated.

My hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty), who was my immediate predecessor in this role on the shadow Foreign Office team, talked eloquently about Somaliland. It is interesting that he supports recognition, Somaliland being part of a former United Kingdom colony. He said that, de facto, it is already a separate, democratic, plural and stable region within the benighted country of Somalia. Somaliland has seen many positive developments in trade and investment, and made huge progress.

My hon. Friend mentioned that Cardiff, Sheffield and Tower Hamlets recognise Somaliland. I was not aware that they were able to recognise other countries. Of course, that beacon of stability, as he so eloquently put it, in the horn of Africa is subject to serious threats from al-Shabaab and other extreme organisations that would destroy all the progress that has been made. Elections in Somaliland have been postponed but, as the right hon. Member for Sutton Coldfield (Mr Mitchell), the former Secretary of State, mentioned in his very important contribution, we should not be too worried. Somaliland has proved it has a democratic tradition and will abide by the will of the people expressed through the ballot box, even if the election is won or lost by just a few thousand votes. That is very important indeed.

Tonight’s debate has fused political and Foreign and Commonwealth Office interests with issues of governance, which come under the FCO and DFID. Of the “10 International Development Priorities for the UK” in the Overseas Development Institute’s excellent document, we have discussed at least seven this evening: leave no one behind; support for women and girls; a focus on transformative economic growth, which many Members raised; support for conflict-affected countries; support of the private sector in helping to develop economies; and bringing trade and development together. I just want to mention one of those extremely important aims, on which the International Development Committee and DFID have concentrated over the years.

When I joined the Select Committee in 2013, it was producing an excellent report on violence against women and girls. The Committee visited villages in Ethiopia and looked at the work being done to educate women and girls. It found what many right hon. and hon. Members have mentioned this evening: where there is more equality between men and women, and where girls are educated and able to make an economic contribution to their communities, societies are more prosperous and peaceful, and violence abates. There is an interesting statistic from the ODI report: every day 800 women still die from preventable diseases and causes related to pregnancy and childbirth. It remains the leading cause of adolescent deaths for 15 to 19-year-olds. The report compares the risk of dying in childbirth in Europe, one in 3,300, with the risk of dying in the regions of Africa we are discussing: one in 40. We should be ashamed of that statistic. It is beginning to change, but not fast enough.

My hon. Friend the Member for Hyndburn (Graham Jones) has a huge interest in, and knowledge of, Rwanda. He talked about the extraordinary progress it has made since the terrible genocide in 1994. He rightly pointed out that it has lower levels of crime and corruption, and an average growth in GDP of 8% over the past 10 years. Efforts to eliminate corruption have come from the very top. Rwanda is perhaps also a beacon to other countries in the region.

I recently met the chief commissioner of the Independent Commission on Aid Impact, an organisation set up by the right hon. Member for Sutton Coldfield when he was Secretary of State for International Development. Indeed, I had the privilege to chair the International Development Sub-Committee on ICAI. The new chief commissioner, Alison Evans, called Rwanda the Switzerland of Africa. In many ways, that is very true. As my hon. Friend the Member for Hyndburn pointed out, there are concerns with perhaps the increasingly authoritarian nature that some say Paul Kagame has shown, but that has to be balanced against the enormous progress that has been made in Rwanda.

I pay tribute to the many Members, on both sides of the House, including my friend—I hope she does not mind me calling her that—the hon. Member for Aldridge-Brownhills (Wendy Morton), with whom I served on the International Development Committee, who have spent a lot of time and effort visiting and upholding the cause of countries such as Rwanda. It is the reason relations are so good between our two nations and the reason much progress can be made. Let us hope that Rwanda can be an example to other parts of Africa, so that violence and conflict may end and prosperity, economic growth and peace may break out. We continue to hope.

21:05

[The Minister of State, Foreign and Commonwealth Office (Mr Hugo Swire)]

I join in the general congratulations to my hon. and learned Friend the Member for Sleaford and North Hykeham (Stephen Phillips) on having secured this excellent debate. As has been said, my hon. Friend the Minister for Africa is in South Sudan discussing many of the issues that hon. Members have raised. My hon. Friend the Member for Stafford (Jeremy Lefroy) was also unable to attend because he is travelling in the region with the International Development Committee, although I am sure the House will join me in wishing him every success in his new role as the Prime Minister’s trade envoy to Ethiopia.

The UK has strong ties with the countries of east and central Africa. Building stability and security in the region matters as much to us now as it always has. Members on both sides of the House have demonstrated a great understanding and affection for Africa. Indeed, I got the distinct impression that had we had the time, they would have like to have covered Africa from the top to the bottom and from west to east. As they have eloquently set out, achieving greater stability across this part of the continent requires a broad and multifaceted approach that works with African partners. In the words of my right hon. Friend the Prime Minister, that approach is linked by a golden thread of the rule of law, good governance and economic success.

I wish to respond to the key themes raised by hon. Members: peacebuilding and security, development, governance and corruption. If I cannot address each question in the time available, I will ensure that hon. Members get a reply either from my hon. Friend the Minister for Africa, when he returns, or from my good friend, the Minister of State, Department for International Development, my right hon. Friend the Member for New Forest West (Mr Swayne), who has sat in for most of this excellent debate.

I turn first to peacebuilding and security. As elsewhere on the continent, too many of the countries in the region have too often been blighted by violence. That is why, last year, the Government’s conflict, stability and security fund allocated £80 million to Africa—the second-largest regional fund, behind that for the middle east and north Africa. We are leading stabilisation, security and justice programmes that deliver results. For example, security in Burundi is on a downward trajectory; there is a real risk of civil war, as was pointed out by the hon. Member for Glasgow North (Patrick Grady) and others. During his visit last month, my hon. Friend the Minister for Africa pressed for dialogue without preconditions between the parties. We also led efforts to put in place EU sanctions against four human rights offenders. Should Burundi continue to refuse to come to the negotiating table, we will push for further sanctions against those blocking progress towards peace. If an African Union protection mission is deployed, the UK will provide financial and logistical support.

[Stephen Doughty]

Importantly, the Minister is talking about the situation in Burundi, and he mentioned EU sanctions. Does he accept that Britain plays an important role in many of these countries as part of the EU in tackling these challenges, not just in terms of sanctions but through our development aid and co-operation with other European countries?

[Mr Swire]

Indeed. We play a role both through the EU and bilaterally, and we should never forget that 16% of any EU spend is British taxpayers’ money.

The UN Security Council visited Burundi at the weekend and left its Government in no doubt that the international community was united in its desire for a swift end to the violence in the country.

In South Sudan, we strongly supported the regionally-led peace process that resulted in the peace agreement signed in August 2015. As I explained in my introduction, my hon. Friend the Minister with responsibility for Africa is in South Sudan this week, urging the parties to implement that agreement in full and to form the transitional Government of national unity. We will deploy up to 300 troops to support the UN mission in maintaining the fragile peace.

Recent attacks in Mogadishu and on African Union forces in Gedo show that al-Shabaab remains a threat to the stability of Somalia and the wider region. Despite recent events, it is more stable and secure now than it has been for many years. We have helped build the capacity of the Somali authorities to fight al-Shabaab, and we will continue to deploy UK military expertise to provide essential logistical support and training. In parallel, DFID is helping to widen access to justice and security for Somali citizens, providing over 20,000 Somalis —not least some 8,000 women—with legal assistance. It is helping to tackle corruption through its work on public financial management.

The hon. Member for Cardiff South and Penarth (Stephen Doughty) asked about the political process in Somalia. Important progress has been made over the last four years on the political track towards a federal Somalia. Stability now depends on holding a peaceful, legitimate and transparent electoral process in August 2016. A decision must now be made by Somali political leaders on the electoral model.

[Stephen Doughty]

rose—

[Mr Swire]

How can I resist?

[Stephen Doughty]

The Minister is generous. I wanted to say gently that I was asking specifically about the electoral process in Somaliland rather than in Somalia, important though progress there south-centrally is. What are we doing to support the electoral process in Somaliland?

[Mr Swire]

I will write to the hon. Gentleman on that subject; I was aware that he had made that distinction at the beginning.

Through the work of our British peace support teams in eastern Africa, we are developing capability and accountable leadership for the long term. In November, my right hon. Friend the Prime Minister announced £5 million to establish and support a new Commonwealth unit to counter extremism.

A number of hon. Members mentioned the Central African Republic. Indeed, it remains fragile, but the first round of presidential elections in December passed off largely peacefully and with high voter participation. The second round of the election, scheduled for 31 January, will be the next test. It is vital that whoever is elected then forms an inclusive Government, so that the country can move on from the divisions of the past.

Let me deal with the theme of development. As hon. Members have said, building stability is not just a task for security forces. Development plays an equally vital role. Stability requires respect for human rights, fundamental freedoms and democratic values. People need to feel part of a vibrant domestic economy, with access to education, jobs and a predictable business environment—a future that any of us would want for ourselves.

That is why in the last financial year, bilateral UK official development assistance to Africa totalled £2.64 billion. That represents some 58% of our bilateral ODA spend. We provide a further £2 billion to Africa through multilateral partners such as the UN and the World Bank. This is helping to transform lives. Because of British aid, an additional 7 million children a year are in primary and lower secondary education across Africa. We have helped 30 million people with water, sanitation and hygiene prevention interventions.

In Ethiopia, our aid is helping millions of people lift themselves out of poverty. Right hon. and hon. Members also mentioned the protests in its Oromia region. Let me reassure them that we have repeatedly raised with the Government of Ethiopia our concerns about the handling of these protests and the use of force. We believe there should be a credible and independent investigation into these allegations. If evidence emerges that members of the security services have used excessive force, they should be held accountable.

Beyond humanitarian support we are helping African countries strengthen basic service delivery, create economic opportunities and build their resilience to cope with shocks and disasters. In Kenya, for example, our aid has supported economic development by creating jobs, giving people access to financial services and markets and making Mombasa port more efficient. My hon. Friend the Member for Gainsborough (Sir Edward Leigh), who is not in his place, raised the question of his constituent Nicholas Monson’s son. I am aware of that case and we will give him an update, although I understand the inquest is under way; I will ensure the high commissioner in Nairobi gives us and him an update on that. To support that drive for economic growth the Prime Minister has appointed four trade envoys to countries of eastern and central Africa, echoing the calls so to do of my hon. Friend the Member for Harrow East (Bob Blackman).

Promoting education is a key part of this. As Minister with responsibility for the Chevening scholarship programme, I am proud that last year we tripled the number of Chevening scholarships for Africa to 454, and the British Council is active across the region, supporting teachers and schools in countries such as Rwanda.

The hon. Member for Leeds North East (Fabian Hamilton), who speaks for the Opposition, posed the question of whether stable government gives rise to economic development or it is economic development that leads to political stability. I would argue that stable government can give rise to economic development. Indeed, it is difficult to have economic development without stable government. It is a chicken and egg situation, but certainly we need to have stable government and the right environment for countries to thrive and come out of poverty.

Governance is also a factor. Alongside peace, security and development, good governance is crucial to Africa’s success. That is why, with our international partners in the EU and UN, we are working to strengthen the rules-based system in Africa. That is why we regularly make clear the importance of free and fair elections, and that constitutions should not be altered on the whim of a leader. That is also why we will continue to work closely with the noble Baroness Scotland, the incoming secretary-general of the Commonwealth, and our partners across the Commonwealth to uphold member states’ commitment to equality and respect for the protection and promotion of civil, political, economic, social and cultural rights, including LGBT rights, which we have been raising time and again and which are embedded in the Commonwealth charter signed by all Commonwealth countries.

My hon. and learned Friend the Member for Sleaford and North Hykeham and others are correct to draw attention to the fact that progress on all of this needs action on corruption. Corruption corrodes the fabric of society, deters private-sector investment and creates barriers to doing business. Corruption facilitates organised crime and terrorist activity. It costs Africa over £100 billion a year. The key point about corruption is that it is the richest who get away with it and the very poorest who end up paying for it. The given figure for additional costs in terms of procurement is about 10%.

That is why I am pleased to say the UK is leading the way in tackling corruption. My right hon. Friend the Prime Minister will host an anti-corruption summit in May, which will include many African partners. Our goal is to put fighting corruption at the heart of our international institutions, to support the investigators and prosecutors who can help bring the perpetrators to justice, and to maximise the way we use aid to drive better governance and to fight against corruption.

Perhaps the migration crisis is the best example of why all of this matters. Last year over 40,000 people from the horn of Africa risked the dangerous journey across the Mediterranean. No one in the House can fail to be moved by their harrowing experiences. If this does anything, it underlines the importance for people to have opportunities in their own countries, without feeling the need to risk their lives and those of their loved ones.

That relates to all that I have talked about this evening: insecurity, poor governance and a lack of opportunity. With our EU partners, we are taking a comprehensive approach to this new challenge. At the Valletta summit last November before the Commonwealth Heads of Government meeting we agreed a new €1.8 billion trust fund that will help deal with the reasons people leave their homes in the first place.

My right hon. Friend the Department for International Development Minister, has sat throughout this debate, and I am sure he has been listening and will be prepared to answer Members’ questions in greater detail.

In conclusion, let me reassure right hon. and hon. Friends across the Chamber that the Government share their sense of urgency. Together with our international partners, we must work towards a future in which the people of eastern and central Africa will all be able to live dignified lives free from violence and extremism and to build prosperous futures from the bottom up for themselves and their communities. That is precisely what we will continue to do.

21:20

[Stephen Phillips]

It is almost impossible in two minutes to do credit to the contributions that have been made not only by Back Benchers but by the Minister of State, Foreign and Commonwealth Office, my right hon. Friend the Member for East Devon (Mr Swire) and the hon. Member for Leeds North East (Fabian Hamilton) on the Front Benches. This has been one of the most powerful debates on foreign affairs in which I have ever participated in this Chamber.

A number of themes have arisen, the first of which is one of hope and success. Britain is engaged in the world, not only through the Foreign and Commonwealth Office but through the Department for International Development, in a way which is not at all party political and which crosses the boundaries of the Floor of the House. There is general support among those here this evening, even though it is not always understood by our constituents, for hitting that 0.7% target, not only because it is the right thing to do and the moral thing to do but because it actually matters to them.

The other messages that have gone out loud and clear to the world from the House this evening are that Britain is still engaged in the region and that we care about what happens in eastern and central Africa, and indeed across the continent as a whole. That is why the House will, I hope, return to this issue in the future and why I have been so grateful for, and moved by, the contributions that we have heard tonight.

In closing, I want to echo a point that was made by my right hon. Friend the Member for Sutton Coldfield (Mr Mitchell). We are privileged to have the ability to stand in this Chamber and give our views on this matter, but it is the workers on the frontline in the Foreign and Commonwealth Office, in DFID and—as we saw during the Ebola crisis—in the military who deliver what we advocate in this House in support for Africa and the developing world. As parliamentarians, we send out our thanks to those people this evening. I commend the motion to the House.

Question put and agreed to.

Resolved,

That this House recognises the importance of stability in Central and East Africa to the security of the United Kingdom; welcomes the Government’s continued engagement in the region and commitment to the spending of development aid to ensure good governance and the eradication of corruption and extreme poverty; deplores the use of violence or terror by any party to secure political aims; and calls on the Government to adopt further measures, together with the international community, to prevent civil war and ensure that the rule of law is maintained.

Business without Debate

Monday 25th January 2016 Commons Chamber

delegated legislation (committees)

Monday 25th January 2016 Commons Chamber

Ordered,

That the draft Warrington (Electoral Changes) Order 2016 be referred to a Delegated Legislation Committee.—(George Hollingbery.)

Financial Ombudsman Service: Strathclyde Mining Group Pensions

Monday 25th January 2016 Commons Chamber

Motion made, and Question proposed, That this House do now adjourn.—(George Hollingbery.)

21:22

[Marion Fellows (Motherwell and Wishaw) (SNP)]

I am a girl from Ayr, and on a night like this I cannot help but quote Burns. This is a short extract from a poem for all the Right Honourable and Honourable Scotch Representatives in the House of Commons, and I am taking it to heart.

“Some o’ you nicely ken the laws,

To round the period, an’ pause,

An’ wi’ rhetoric clause on clause

To mak harangues;

Then echo thro’ Saint Stephen’s wa’s

Auld Scotland’s wrangs.”

I applied for this Adjournment debate having been approached by a number of former employees of the Anderson Mining Group who are still seeking justice following a mis-selling of pensions. In 1996, Godwins, the insurance company—now part of the Aon group—persuaded almost 400 employees of the Scottish-based company to transfer their excellent final salary pension scheme to a section 32 personal pension scheme, a move that would never be allowed today.

There was a suggestion at the time that the existing pension scheme was under threat due to a deficit. This proved not to be the case and, interestingly, none of the senior executives of the company transferred their pensions. In fact, the former personnel manager of the group has since written an open letter outlining the concerns that he raised with the senior management at the time. He was instructed by the new owners of the company not to interfere with the process.

In September 1997, Godwins confirmed that the Personal Investment Authority had found errors in its procedures—namely, that it did not confirm the contents of the discussion of the options available to its clients and did not write to confirm the discussion, that it contravened the rules of the regulator and, significantly, that the two members of its staff who provided the advice were no longer authorised to give advice to clients.

Godwins did not advise that it was recalculating the transfer values for retirement to age 60; it had used 65. Despite its assurances that its clients had no cause for concern, almost 50% of the claims to the Financial Ombudsman Service were successful. I understand that at least one claim resulted in compensation of around £200,000. The client checklist or agreement the employees then received with the letter was a three-page document, not the one-page document used at the time of transfer. That is when the employees realised that the independent financial advisers had, at the time of transfer, used only page 3, allowing them to reduce the time spent at each one-to-one interview to less than 10 minutes.

It was not until 2000 that some employees began to realise that the pensions they were to receive fell well short of the final salary scheme from which they had been removed. They formed a committee and started investigating various avenues, including requesting a transfer report from another well-known financial investment company, Jardine Lloyd Thompson, which confirmed that the calculations used by Godwins were wrong and would not yield the amount of pensions they were expecting based on what they had been told.

Jardine Lloyd Thompson told the employees that the ombudsman’s decision on mis-selling cases was usually based on two things: critical yield and the attitude to risk. This committee started examining critical yield—the investment rate of return required to provide the selected level of income. Although each individual’s original transfer report gave their critical yield for age 65, which they now know to be wrong, they were not given the new calculated figure at that time. Had they been, they would have noticed that the new figure was not high enough to return the same investment for a pension that would be paid out five years earlier, with five years less contributions and investment.

The employees calculated that the five-year age difference would require the critical yield to be 2% to 3% higher at a retiring age of 60, making the transfer unsafe, even under the guidelines enforced at the time. These calculations were confirmed by JLT and Scottish Mutual—the original company used by Godwins. The employees also traced four ex-employees who were given transfer reports for age 60 and 65, clearly showing a difference in the critical yields of 2% to 3%. Many employees launched a mis-selling claim to the ombudsman including all that information, believing that their claim was an open and shut case for everyone.

A number of these claims were based on that of my constituent, Mr John Aitken. The initial claims were mostly rejected. Within the rejection letters, claimants then saw, for the first time, their new critical yield calculations, which were well below what they believed to be correct—for example, a difference of only 0.4 of 1% rather than 2% to 3%.

In the meantime, Godwins had been taken over by Aon, which had previously refused individual requests for these figures. In subsequent communications with the ombudsman’s office, the employees learned that Aon had employed another company to do the recalculation of the critical yield—the original company used being Scottish Mutual. The employees contacted Scottish Mutual and asked whether the new critical yield figures could be correct. Its reply was, “Generally speaking, based on the length of time the investments were set up for, I believe that it is highly unlikely that a difference of five years—that is between aged 60 and 65—would only require an increase of yield of 0.3% to 0.4% to achieve the same pension.” That confirmed that Aon’s figures were wrong.

During each claim, the ombudsman requested that the employee complete the ombudsman’s multi-page document on attitude to risk. However, evaluating the claims, the ombudsman rejected that document, finding in favour of the simple answer given to the independent financial adviser’s question at the transfer meeting:

“What is your attitude to risk?”

During the 16 years in which the employees have fought this injustice, almost 200 claims to the ombudsman have been launched. Fortunately, almost 50% have been successful. That fact alone highlights a severe problem, as the average success rate is 3% to 4%. Having heard a summary of this fiasco of financial transfer, which has seriously affected almost 300 people, one can only conclude that the ombudsman’s office did not act with due diligence in dealing with those cases.

To confirm that conclusion, I wish to ask the following questions: why were the independent financial advisers allowed drastically to shorten the transfer interview, omitting much of the company’s checklist? Godwins made a serious error in the transfer report, so why were the employees not given the opportunity to review their transfer decision based on an updated transfer report, as that was a significant change? Having given ample information that the critical deal calculations were wrong, why did the ombudsman not check the figures or use an independent source? Why did the ombudsman not react to Aon’s suspicious decisions, which I have described? Why was the ombudsman’s multi-page attitude to risk analysis ignored in favour of Aon’s?

Although those questions were raised in the claims, none of those points was mentioned in the ombudsman’s rejection letters; they were simply ignored. Why did the almost 50% success rate of the complainants not flag up the fact that something was seriously wrong in the transfer? All those employees transferred on the same day to the same scheme plan, but only half the claims were upheld. My constituents firmly believe that the ombudsman did not act with due diligence in this case, and failed properly to investigate their claims. Employees who have lost out on millions of pounds in total of their hard-earned pensions must be compensated. Not only have they been mis-sold pensions, but they have been mistreated by a Government body that was set up to be fair and impartial.

As the Minister is aware, the Financial Ombudsman Service was set up to resolve individual cases and, indeed, it wrote to my constituent, Mr John Aitken, saying exactly that. It pointed out that if there was a systemic problem it would be a matter for the Financial Services Authority to consider. However, when the FSA was approached by my predecessor, Mr Frank Roy, it responded that it did not have the power to investigate individual disputes between consumers and regulated firms. At what point do individual complaints become a matter for the FSA? A previous complaint to the ombudsman was rejected, because too much time had elapsed, and the documentation was not available. That is not an acceptable response, as all documents that the ombudsman creates are archived, and the employees have sufficient documentation to prove every claim that I have made today.

I provided the Minister with documentation before the debate, and I am happy to provide anything further if necessary. These workers have fought the mis-selling for 16 years, and they will continue to do so until they get justice and compensation. This is a blatant case of mis-selling by an insurance company such that those who transferred their pensions did so in the belief that they would receive a pension comparable to the one they expected under the original scheme.

The Financial Ombudsman Service met Aon, but did not meet the individuals concerned, who were let down badly by the regulatory authorities, who appear to have taken no action against Godwins or Aon.

I could speak at much greater length, as I am sure the Minister is aware, but I have decided not to go into the minute detail because much of it is technical, and much of it I would have to spend some time trying to understand. However, I have set out what I believe is a very just case on behalf of my constituents.

21:35

[The Economic Secretary to the Treasury (Harriett Baldwin)]

Despite my Scottish grandmother, I will not be able to quote Burns quite as beautifully as the hon. Member for Motherwell and Wishaw (Marion Fellows) did tonight—[Interruption.] But I did have the haggis in the Tea Room. I congratulate the hon. Lady on securing the debate. She has expressed powerfully the issues surrounding the Strathclyde Mining Group pensions and the Financial Ombudsman Service.

As Economic Secretary, my key priority is to ensure that financial services firms are on the side of people who work hard, do the right thing and get on in life. Financial services should be there to help them achieve their aspirations at every stage of their lives, whether that is saving for their first home, taking out a mortgage, buying a car or, as in this case, saving and investing for their retirement. It is only by displaying and upholding the highest standards of behaviour that the financial services industry can regain the public trust it lost following the financial crisis.

I am therefore very sorry to hear about the problems that the hon. Lady’s constituents have been facing in this case. Understandably, given the importance we all attach to having savings to provide for our retirement, her constituents are very concerned about the issue. I would like to reassure her, and all other Members, that the Financial Ombudsman Service also takes the matter extremely seriously.

As the hon. Lady has set out, a number of Anderson Mining Group employees have raised concerns that they were not made aware in 1995 and 1996 that a transfer to a buy-out scheme could result in a loss of benefits, and that the advice provided used an assumed retirement age of 65, whereas benefits could have been taken from their occupational pension schemes at age 60. They have therefore complained to the Financial Ombudsman Service about the financial advice they received from Godwins Ltd between 1995 and 1996 to transfer their occupational pension schemes into buy-out policies. I understand that in many of these cases, but not all—she mentioned 50%— the ombudsman found in favour of the complainants.

I know that both the hon. Lady and her predecessor have been in contact with the Financial Ombudsman Service to ask it to re-examine some of the complaints that were not upheld. We all recognise that it is of the utmost importance that people are given suitable advice about their retirement savings and that, when things go wrong, they have access to a swift and low-cost means of redress. It is important to recognise that since these events occurred in the 1990s the Government have made changes to introduce a tough new financial regulator, the Financial Conduct Authority, to protect consumers and promote competition. We took that action because we were not prepared to tolerate the level of consumer detriment we have witnessed in the past.

The hon. Lady will understand that I am unable to comment on specific circumstances relating to the individual cases she has raised today, but I am able to explain the Financial Ombudsman Service model and what she can do when she is not happy with the outcome of that model. The model includes what routes there are to complain about the level of service in dealing with a complaint, as well as the further routes that may be available for seeking redress. The Financial Ombudsman Service was set up by Parliament in 2000—its duties were enshrined in law under the Financial Services and Markets Act 2000—to provide a proportionate, prompt and informal means of resolving disputes between a consumer and a financial service firm. It plays a valuable role in providing consumers with a swift and effective means of resolving disputes, and some of the hon. Lady’s constituents have benefited from that service.

Importantly, once the consumer accepts an ombudsman’s final decision, that decision becomes binding on the firm. As I have said, the Financial Ombudsman Service was specifically designed to provide a swift and relatively low-cost alternative to the courts, which is provided free of charge to consumers. There are many stages in its determination process, providing both parties the opportunities to make further representations before the complaint reaches the final stage of an ombudsman’s decision.

Adding another level of appeal would make the process costlier and lengthier, which could deter consumers from using the service and would generate additional costs for firms. However, it is possible for parties to challenge the way in which an ombudsman has reached a decision by means of judicial review. It is also possible for them to take complaints about the level of service provided to the independent assessor. When a consumer does not accept the ombudsman’s decision, that consumer's right to pursue redress through the courts remains unaffected.

The individuals who are affected in this particular case have concerns that need to be addressed. I shall be meeting the chief executive of the Financial Ombudsman Service later this week, and I will ask her to write to the hon. Lady responding to the concerns that she has rightly expressed this evening.

Let me thank the hon. Lady again for raising these issues, and stress that both the Government and the Financial Ombudsman Service understand their importance to her constituents.

Question put and agreed to.

21:41

House adjourned.

draft Recall of MPs Act 2015 (Recall Petition) regulations 2016

Monday 25th January 2016 General Committees

The Committee consisted of the following Members:

Chair: Mr David Nuttall

† Burrowes, Mr David (Enfield, Southgate) (Con)

Campbell, Mr Gregory (East Londonderry) (DUP)

† Caulfield, Maria (Lewes) (Con)

† David, Wayne (Caerphilly) (Lab)

† Evans, Chris (Islwyn) (Lab/Co-op)

† Fysh, Marcus (Yeovil) (Con)

† Gibson, Patricia (North Ayrshire and Arran) (SNP)

† Haselhurst, Sir Alan (Saffron Walden) (Con)

† Hollinrake, Kevin (Thirsk and Malton) (Con)

† Jenkyns, Andrea (Morley and Outwood) (Con)

† Johnson, Gareth (Dartford) (Con)

Lewis, Mr Ivan (Bury South) (Lab)

† McGinn, Conor (St Helens North) (Lab)

† Penrose, John (Parliamentary Secretary, Cabinet Office)

† Pickles, Sir Eric (Brentwood and Ongar) (Con)

† Smith, Mr Andrew (Oxford East) (Lab)

† Solloway, Amanda (Derby North) (Con)

Umunna, Mr Chuka (Streatham) (Lab)

Glenn McKee, Committee Clerk

† attended the Committee

First Delegated Legislation Committee

Monday 25 January 2016

[Mr David Nuttall in the Chair]

Draft Recall of MPs Act 2015 (Recall Petition) Regulations 2016

16:30

[The Parliamentary Secretary, Cabinet Office (John Penrose)]

I beg to move,

That the Committee has considered the draft Recall of MPs Act 2015 (Recall Petition) Regulations 2016.

It is a pleasure to have you in charge of us this afternoon, Mr Nuttall.

Members of the Committee might recall the passage of the Recall of MPs Act 2015 during the previous Parliament. The Act set out three conditions that could result in a recall petition being triggered, with the potential result of an MP losing their seat and a by-election being held. The regulations fill in the fine details, with what electoral administrators call the conduct rules. They set out how a petition can be conducted, the signing arrangements, the mechanism for challenging the outcome and the creation of offences in relation to a petition.

The regulations are comprehensive, as their length and weight shows, and they are broadly the same as the election rules—particularly those for by-elections—with which we are all already familiar, with minor modifications to cater for differences such as that of the petition being open for six weeks. The read-across from by-election rules and regulations to petition regulations will, I hope, be clear for everyone here. The regulations reflect extensive consultation with the Electoral Commission, the Association of Electoral Administrators, returning officers, electoral registration officers, the chief electoral officer for Northern Ireland and the Electoral Management Board for Scotland, and comprehensive user testing has been undertaken on the key petition forms.

The regulations are extremely long and detailed, coming in at well over 100 pages, and since I am sure that everyone here will have read them in detail, in advance, I will not bore the Committee by going through them all now, but it might help if I briefly summarised them.

Part 1 sets out how the regulations apply to the different parts of the UK and also gives an interpretation of the common phrases contained in the different chapters. Part 2 deals with compiling a register of those eligible to sign a petition—equivalent to the electoral roll—and also with how such a register should be published three days before the start of a petition and be available for public inspection. The petition officer must publish the number of people allowed to sign the petition and the number that must sign for it to be successful. Those figures will be updated when a petition opens, to include any alterations to the electoral register because of last-minute applications made on or before the day of the Speaker’s notice.

Part 3 forms the substantial part of the regulations. It deals with the conduct of a petition, and is broken into several chapters. Chapter 1 deals with general provisions such as the signing sheet and the official mark. The signing sheet is based on an election ballot paper. Each person wishing to add their name to a petition will sign an individual sheet and the sheets will then be counted in a fashion rather similar to that used for election ballot papers, to find out whether the petition has been successful.

Chapter 2 sets out the steps that the petition officer must take before a petition is available for signing. The regulations stipulate that a petition must be available for signing on each working day during the signing period—Monday to Friday, between 9 am and 5 pm. Additionally, the petition officer must make “reasonable” provision for the petition to be available for signing outside those times, which could include evenings and weekends. The regulations do not prescribe what the additional hours must be; they will be determined by local circumstances and covered by Electoral Commission guidance.

The petition officer is also required to issue official petition notices, so that electors know how to participate and know that signing is optional. The notices are in the form of letters and can be found in schedule 2. I can confirm that the wording has been user tested with members of the public at various locations across the UK, including with Welsh speakers.

Chapter 3 sets out the manner in which the petition is to be administered at the signing place, including regarding who can enter such a place, the delivery and receipt of signing sheets, and daily verification of the contents of the ballot box where electors will insert their completed sheets. Unlike at an election, accredited observers will not be allowed to be present at signing locations, or at any stage of the petition process other than the count. The reason is that, with a petition, only a single declaration can be made by signers. In other words, when they go into a petition-signing place, it is clear what they will do. It is not a question of a secret ballot where the vote is for one side or another. They will, by definition, be voting for just one side. A signer’s presence at a signing place will inevitably be seen as an indication of their preferred outcome and, as a result, accredited observers would inevitably compromise the secrecy of the petition-signing station.

Chapter 4 details when and how the count should be conducted, including the timing, which must be as soon as possible after a petition closes and no later than one day afterwards. Accredited observers may be present at the count, along with the representatives of the Electoral Commission. The MP and representatives of the political parties will have to be accredited observers to be able to observe the count. Once the count has concluded, the regulations require the petition officer to publish a notice of the outcome, including whether the petition was successful and the number of electors who validly signed it.

Part 4, which is concerned with absent signers, sets out the eligibility criteria for anyone wishing to sign by post or by proxy, namely that they are successfully registered as postal voters on or before the cut-off date for publishing the register, or that they have registered to sign a petition by post or proxy.

Part 5 prescribes the issue and receipt of postal signing sheets, along with who can observe the proceedings. That is restricted to the petition officer, his staff and representatives of the Electoral Commission. We have ruled out accredited observers from attending those sessions as there is a need to protect the details of anyone who has signed the petition.

Part 6 of the regulations creates a number of offences relating to the petition process. The offences are created in line with those already in existence for other elections. Part 7 contains miscellaneous provisions, the most significant of which covers how to question the outcome of a petition. Broadly, it can be questioned by the MP subject to the petition process or any of his or her constituents if they believe that there was

“an undue outcome of the petition”.

A petition court examining a complaint brought within 21 days of the announcement of the outcome of the petition will have the power to void the result of that petition. If a complaint is brought after that period, a petition court may still convene, but it will not have the power to void the result.

In the previous Parliament, both governing parties and the Opposition all had manifesto commitments to introduce a power of recall. The Government continue to believe that this is one of many vital steps to help restore the public’s trust in politicians and the functioning of the House of Commons. The regulations, which will deliver that commitment, comprise a comprehensive set of provisions that will allow petitions to be administered fairly and effectively. With that mercifully brief summary of a very large wodge of regulations, I commend them to the Committee.

16:37

[Wayne David (Caerphilly) (Lab)]

It is pleasure to serve under your chairmanship, Mr Nuttall.

The Recall of MPs Act 2015 is an important piece of legislation. For the first time, Members of Parliament are subject to being recalled by their constituents if they have failed to uphold the standards expected of them in three key respects. They may be recalled if they have been convicted of an offence and received a custodial sentence of up to 12 months, if they have been barred from the House of Commons for 10 sitting days or 14 calendar days or more, or if they have been convicted of providing false or misleading information for allowance claims under the Parliamentary Standards Act 2009. The explanatory memorandum explains that if one of those transgressions has occurred, a recall petition is automatically triggered.

The regulations create the detailed procedures for that petition to occur during a six-week period. If 10% or more of the MP’s constituents sign the petition, there will be a by-election.

I have spent the past three days reading every single dot, comma and line of the regulations and I have some succinct questions seeking explanation and, I hope, clarification from the Minister. May I make it clear that, as the Minister suggested, the Opposition support the principle of recall? If the trigger is pulled, we want the process of the petition to be conducted fairly and to be expedited.

On the matter of signing by post, I understand that the electoral register will be published and distributed to each of the signing locations—one or 10, or any number in between—before the closing date for postal applications. If that is the case, no check can be made before the end of the process as to whether people have signed in person or by post. It is possible that, over a six-week period, some people may have inadvertently, or perhaps deliberately, signed twice. Am I correct in assuming that there will be a period of time before the result is announced to ensure that the necessary checks and safeguards were in place?

The second question concerns the running total of people who sign the petition. It is sensible not to make public the results of daily verification, as it might fuel a campaign rather than allow a genuine expression of public opinion. The Government have changed their position on that due to objections raised in the other place. I question the wording of the last sentence in paragraph 7.7 of the explanatory memorandum. I ask the Minister to read that sentence and agree with me that it is surely misleading at best or wrong at worst:

“Importantly, the results of daily verification will not be made public so as to allow for a tally to be made on the number of persons that have signed the petition.”

Surely the tally will take place afterwards, not during the course of events. I would like the Minister to comment on that, and provide some clarification.

Thirdly, I am pleased that the Electoral Commission was fully consulted, and that it is largely content with the regulations, but there are two issues on which the Electoral Commission’s advice was not accepted. The first relates to allowing accredited observers to observe all stages of the petition process. The statutory instrument allows for accredited observers to be present only at the count. The Electoral Commission has made the point that there is no real reason why petition observers should not have exactly the same access as observers at an election: that is, they should have access to postal petition packs and admission to the signing place as well as to the count.

The second issue relates to user testing of the petition notice letters. The explanatory memorandum says that the original intention was to have a notice card similar to a poll card. That was user tested with members of the public. Sensibly, as it was thought that the cards could inadvertently prompt electors into signing the petition, just as a poll card prompts electors to attend a polling station, it was decided to use a letter instead. That is all well and good, but the new letters are new voter materials. They may have the same wording as the notice cards, but it will be a new experience for electors to have such a letter. I therefore think that the letters ought to be user tested, as the Electoral Commission suggests. That seems to me to be a perfectly fair point.

Fourthly, on the more general point about petition notice letters, I understand that the Electoral Commission indicated to the Cabinet Office that the petition notice letters were “cluttered and too long”. As it stands, they still seem quite verbose, and possibly too long. How were the letters reduced and made more intelligible following the Electoral Commission’s representations?

Fifthly, I am glad to see that the letters to and forms for Welsh-speaking electors are included in the statutory instrument, and that we will not have the embarrassment that we had during the first police and crime commissioner elections, when the Government did not realise until late in the day that they needed bilingual forms for people in Wales. Sadly, I am not very conversant in Welsh, the language of heaven, but I ask the Minister whether the various forms in Welsh have been properly tested with Welsh speakers. As I am sure the Minister knows, there is BBC Welsh and more colloquial Welsh, which many people in Wales speak. If the intention is to communicate effectively with people, it is often better to use the latter rather than pristine BBC Welsh.

The only sure way to determine the most appropriate form of Welsh to use is to test it with Welsh speakers. The Minister referred in passing to taking the needs of Welsh people into account, but will he indicate specifically whether proper testing has been done in all parts of Wales, with various Welsh speakers, to find the most appropriate Welsh to use on the forms? Assuming that the Minister will fully and comprehensively respond to these questions, we will support these regulations.

16:45

[John Penrose]

I will endeavour to respond to each of those points as we go, and I am sure that the hon. Member for Caerphilly will interject if he feels that I am skating too lightly over any particular point of detail.

First, I offer huge congratulations to the hon. Gentleman on being one of the very few other people who have actually read this whole thing, including right down to the end of paragraph 7.7 of the explanatory memorandum. That attention to detail is very impressive indeed.

Let me start with the hon. Gentleman’s point about signing by post. He will be aware that during any election there is a process, which is normally condensed into a single day, when people who have voted by post can, in theory, turn up on the day of the poll with their postal vote form and present it, saying, “I am eligible to vote by post, but I am choosing to vote in person. Here is my postal vote form.” They hand it in at the polling station and that is then a valid vote.

The signing process takes place over a period of up to six weeks, and there will therefore have to be a continuous check to ensure that, when we get to the end, people have not had a chance to sign twice. As the hon. Gentleman will know, normally the registration forms that are held at individual local polling stations are adjusted to make sure that it is clear whether someone has a postal vote, so that the person who issues the ballot papers can make the necessary checks if required and then the necessary reconciliations can be made.

We will have to make sure that, in the case of signatories, the necessary reconciliations can happen, albeit over a longer period—so it is actually easier in some respects to ensure sure that these checks are being made. It should be easier to make sure that people cannot sign twice, in the same way that we do not allow people to vote twice on a polling day. However, the checks and the principle underlying the process—the mechanics—will, of course, still be the same

The hon. Gentleman asked about running totals during the signing period of six weeks. He asked specifically about the final sentence in paragraph 7.7 of the explanatory memorandum. It might help the Committee if I read the entire sentence, which I think is clear. However, if it is not clear, we may need to adjust latter guidelines and so forth to make sure that it is clear. The sentence reads:

“Importantly, the results of daily verification will not be made public so as to allow for a tally to be made on the number of persons that have signed the petition.”

Providing that the emphasis is put in the right place as one reads that sentence out, I think that it is clear that the results are not being made public so that people cannot do that. However, if it later seems that there is scope for confusion among people outside this place, of course we will need to make sure that any advice and guidelines are adjusted as we go.

[Wayne David]

I appreciate what the Minister is saying, but having spoken to a number of people, I know that they share my concern that that is slightly unclear, at the very least, and slightly ambiguous. It would be helpful if he went away and devised a clearer form of words so that we do not have that ambiguity.

[John Penrose]

We will try to ensure that there is plenty of opportunity for further guidelines to be issued by bodies such as the Electoral Commission. We need to make sure that everyone is aware of this particular important point, so that future guidelines and commentary are as clear as they can possibly be.

The hon. Gentleman also mentioned a number of points that the Electoral Commission had suggested. While we followed the commission’s advice in many areas, there were two areas where we differed slightly.

One was on the question of accredited observers and where they will be allowed to observe. We decided that they should be allowed in to things such as the count and so on and so forth, but not to the actual signing places themselves because, as I mentioned in my initial remarks, the difference between an election and a petition is that, if someone goes in to sign a petition, it is very clear which side of the argument they are on. Therefore, one of the central principles of our democracy—that every ballot should be secret—is very hard to maintain given the fact that, if someone goes in to sign a petition, they are, by definition, on one side, and if they do not turn up, they are on the other side. We thought that the danger of eroding the secrecy of the ballot box in an election, and not maintaining that properly in a petition, was quite great, and therefore we felt that it was inappropriate to have people observing that stage. Once a petition has been signed and safely consigned to the petition box, it becomes anonymous, and at later points in the process it is therefore safer to have accredited observers, such as at the count, in the way that the hon. Gentleman and I have just discussed.

[Wayne David]

Will the Minister clarify what would happen if a person went along to the signing station and signed the petition, but then decided to spoil their paper? Would their vote be counted one way or another?

[John Penrose]

The regulations lay out what has to happen. In the same way as for people who spoil a ballot paper in a regular election, I presume there will be the equivalent of a bad and doubtful ballot paper process, which the hon. Gentleman and I, and I am sure every other candidate, has had to go through—it would have to be clear that a clear opinion and a clear intention has been produced. If that is not clear on the signing sheet, the presiding officer will have to take a view, and presumably the accredited observers in the room will also have to have a look. Broadly speaking, the same underlying principle, which is that a clear intention has to be visible, will be applied here, too.

The hon. Gentleman also asked about user testing the notice letters versus the notice cards. When the petition is first begun, we need to make sure that everybody knows that they can sign, but not that they need to sign, particularly if they disagree and feel that the MP concerned should not be subject to a recall by-election. As I mentioned earlier, the content of the words has been extensively user tested. As a secondary, follow-up point, he said that he feels that some of those words are perhaps a little verbose. All I can say is that they were extensively user tested. They may be longer than he and I might have started off with, but they were felt to be the ones that worked, with feedback from genuine voters, which is probably the safest and most fact-based approach that we could possibly take. The content was extensively user tested.

We went with letters rather than cards, principally to distinguish a petition from a poll. Clearly, many people will understand that those of us who are democratically responsive and responsible feel a certain duty to go and use our democratic rights when it comes to a poll, and we do not want to establish that when it comes to a petition because the very fact of feeling under pressure to go to sign a petition actually pushes people towards one side of the argument rather than the other, which could, if done wrongly, prejudice the underlying fairness of the petition. The letter was therefore felt appropriate, having road tested the contents of the piece of paper to ensure that its format is clearly different from a poll notice card so that people will have an additional, perhaps even subconscious, mental cue that this is not quite the same as an election, albeit that it is similar in many respects.

[Wayne David]

I agree with much of what the Minister says but, nevertheless, he is talking about a letter being used for the first time, rather than a polling card. As he tested the words on the poll card, surely it would have been sensible to test the words on the letter, too.

[John Penrose]

I find myself in something of a cleft stick at this point, because the hon. Gentleman and all here will realise that we are now several months on from the end of the last Parliament. Everybody here wants to ensure that the Recall of MPs Act 2015 is fully in force promptly. We can carry on testing things until we are blue in the face, but we have tested an awful lot of this in huge detail and with huge care. At some point we have to stop testing and start doing. I am not aware, and I am sure he is not aware, of any pending cases, but it would be truly contrary to the spirit of democracy—he and I would both be very upset were this to happen—were we still to be dotting i’s and crossing t’s on this stuff if a case came up tomorrow, next week or soon without these regulations being in place. Both he and I would be accused of dereliction of duty were that to happen. We have tested the substance, the guts, of this in huge detail. If it later transpires that there is some question over this, of course we can come back to it, but at some point we just have to get on with it. Otherwise we will be accused of delaying things in an attempt to protect the livelihood of MPs, which of course is entirely contrary to the spirit of the Act.

Finally, the hon. Gentleman asked about Welsh forms. I am sad to hear that my ignorance of the language of heaven is perhaps only exceeded by his, but I can reassure him that the Joint Committee on Statutory Instruments now includes a Welsh speaker. I am not sure whether that member is familiar with what I hesitate to call the Queen’s Welsh.

[Wayne David]

BBC Welsh.

[John Penrose]

BBC Welsh, as opposed to more colloquial Welsh. I am not sure whether that Welsh speaker can do either or both, but it is noticeable that the JCSI’s scrutiny of such things has moved up a notch since that has happened. We are therefore probably better placed than we ever have been. Beyond that, as the hon. Gentleman might expect, we check with a number of other Welsh translation services, too. We have covered as many bases as we humanly can but, given the fact that neither he nor I are quite as fluent in Welsh as might be required to make this perfect, we will have to take it on trust. I am sure that the Welsh people will let us know very loudly if they feel that we have let them down in any way, but I hope that we have not.

Question put and agreed to.

16:56

Committee rose.

Action Plan on Human Rights and Democracy

Monday 25th January 2016 General Committees

The Committee consisted of the following Members:

Chair: Andrew Rosindell

Blomfield, Paul (Sheffield Central) (Lab)

Clwyd, Ann (Cynon Valley) (Lab)

† Cummins, Judith (Bradford South) (Lab)

† Donaldson, Stuart Blair (West Aberdeenshire and Kincardine) (SNP)

† Fox, Dr Liam (North Somerset) (Con)

† Glass, Pat (North West Durham) (Lab)

† Hoey, Kate (Vauxhall) (Lab)

† Hollingbery, George (Lord Commissioner of Her Majesty's Treasury)

† Holloway, Mr Adam (Gravesham) (Con)

† Lidington, Mr David (Minister for Europe)

† Morris, James (Halesowen and Rowley Regis) (Con)

† Poulter, Dr Daniel (Central Suffolk and North Ipswich) (Con)

† Wheeler, Heather (South Derbyshire) (Con)

Alda Barry, Committee Clerk

† attended the Committee

European Committee B

Monday 25 January 2016

[Andrew Rosindell in the Chair]

Action Plan on Human Rights and Democracy

16:30

[The Chair]

Before we begin, I will briefly outline the procedure. First, a member of the European Scrutiny Committee may make a five-minute statement about the decision of that Committee to refer the documents for debate. The Minister will then make a statement of no more than 10 minutes. Questions to the Minister will follow. The total time for the statement and subsequent questions and answers is up to one hour. Once questions have ended, the Minister moves the motion for debate. We must conclude our proceedings by 7 pm.

Does a member of the European Scrutiny Committee wish to make a brief explanatory statement?

[Heather Wheeler (South Derbyshire) (Con)]

It is a pleasure to serve under your chairmanship, Mr Rosindell. It might assist the Committee if I briefly explain the background to the document and why the European Scrutiny Committee recommended it for debate on the Floor of the House.

The newly adopted EU action plan on human rights and democracy for 2015 to 2019 replaces the first such action plan, which covered the period 2012 to 2014. The newly adopted action plan, which is due to be reviewed in 2017, sets out the practical steps that the EU and its member states will take in the next four years to develop existing EU external action on human rights and democracy worldwide. It will be implemented by the EU External Action Service, the Commission, the Council, member states and the EU special representative for human rights.

The plan consists of five strategic objectives, based on five guiding principles and involving 32 actions. The principles broadly cover ways of improving the effectiveness and assessment of external EU human rights activities. One principle requires a focus on the most pressing human rights challenges for the action plan: combating discrimination; respect for freedom of expression and privacy; freedom of religion and belief; combating torture, ill treatment and the death penalty; promoting gender equality, women’s rights, children’s rights and economic, social and cultural rights; encouraging corporate social responsibility; and ensuring that human rights are upheld in migration, trade or counter-terrorism policies. The Government regard the document as broadly complementary to UK foreign policy, although they have taken some action on the division of competencies between the EU and member states in the plan’s implementation.

The European Scrutiny Committee recommended a debate on the document on the Floor of the House because of its evident interest to the wider House, specifically the Joint Committee on Human Rights, the Justice Committee, the Women and Equalities Committee and the International Development Committee. We shall now put to proof the Government’s position that the document is better suited to scrutiny in Committee because that affords a “longer and structured” debate. The European Scrutiny Committee requested a better and more detailed account of the document, which it had not received before this debate, and this debate can explore why.

The European Scrutiny Committee was particularly concerned that the Government have not deposited in the UK Parliament a related document, the 2014 “Annual Report on Human Rights and Democracy in the World”, which is a record of how the EU has implemented policy in this area over the past year. It is therefore useful as a benchmark for the action plan, particularly in such areas as the EU’s review of its neighbourhood policy. That is crucial because the document not having been placed in the Library meant that the Committee could not do due diligence on the background of the paperwork. That is why we asked for a debate in the Chamber.

Since the debate recommendation, the European Scrutiny Committee has tagged to the debate its reports on transitional justice as an example of actions included in the action plan; on a Court of Auditor’s report on the effectiveness of EU funding of action to oppose torture and the death penalty in third countries; and on a new and increased proposed budget for the EU special representative. The Committee wanted the Minister’s assessment of whether he considers all the actions within the current action plan to be a good use of EU funding, and how the Government intend to monitor that. Those are matters of high prominence for many Members, so the Committee requested a debate in the Chamber.

[The Chair]

I call the Minister to make an opening statement. I remind the Committee that interventions are not allowed during the statement.

[The Minister for Europe (Mr David Lidington)]

It is always a pleasure to serve under your chairmanship, Mr Rosindell.

The European Scrutiny Committee has described the EU action plan as “legally and politically important”, and I agree. I want to address why and how this area of EU external policy is of vital interest to the United Kingdom and our national interest and why EU action in this area can enhance our ability to tackle the real foreign policy problems confronting us.

In its five chapters and 34 actions, the action plan sets out practical steps to be taken primarily by the European External Action Service, the European Commission, the European Council and member states to implement the EU’s commitment to promote and protect human rights and democratic values. As Members will have seen, the clear intention behind the action plan is to describe a set of overarching principles and high-level actions that should inform European Union activity when it comes to particular issues or particular third countries with which the EU is dealing. To avoid any misunderstanding, I stress that we are talking about the European Union’s relationship with third countries and not about EU member states and their own human rights legislation.

The range of challenges addressed in the action plan is enormous and consistent with the principle that human rights are universal and indivisible. Many of the issues set out in the action plan align closely with interests that the Government have identified as United Kingdom priorities, such as women’s rights and the prevention of sexual violence; freedom of religion or belief; freedom of expression; combating torture; abolition of the death penalty; strengthening electoral processes; and ensuring that civil society organisations can operate free from threats or intimation.

Tackling those issues is an everyday task for our national diplomatic network. Sometimes we will want a national profile on a human rights problem. Our recently relaunched Magna Carta fund for human rights and democracy aims to show that the UK is at the forefront of the argument that human rights represent a key part of the rules-based international system and that we match our political commitment with a practical response to real world problems. Internationally, however, winning the argument is about building consensus—for example, by putting the Prime Minister’s “golden thread” of democracy and good governance at the heart of the United Nations’ sustainable development goals. In multilateral discussions of that kind, the EU action plan is an essential point of reference for the international community. It is one of those documents to which countries around the world turn.

When 28 member states together speak out against violations and abuses of human rights, other countries around the world and other international gatherings take note. Important examples include recent statements on executions in Saudi Arabia which made clear the EU’s strong opposition to the use of the death penalty in all circumstances, called on the Saudi authorities to promote reconciliation between the different communities in the kingdom, and called on all to show restraint and responsibility. Another example is the EU’s statements on Azerbaijan in the Organisation for Security and Co-operation in Europe. Those statements expressed concern about the continued deterioration of the human rights situation there, and because they were EU statements on behalf of all 28 member states, they had more impact than a set of statements by individual countries would have had. In Turkey, the EU has condemned attempts to restrict press freedom and internet access and content. Freedom of expression is explicitly set out in the Lisbon treaty as a requirement for any country that aspires to join the EU. We welcome the work that the EU is doing to support reforms in Turkey through its pre-accession funding programmes.

The EU Special Representative for Human Rights, Stavros Lambrinidis, has done much to enhance the visibility of EU human rights policy. As members of the Committee will be aware, the FCO recently deposited an explanatory memorandum on the proposed budget for the EU special representative, on which we had negotiated rigorously to secure an acceptable outcome. Mr Lambrinidis has engaged extensively with countries that face serious human rights challenges and with countries that are influential partners in the United Nations and other multilateral organisations. In 2015, he led EU delegations in human rights dialogues with Brazil, Burma, Mexico, and the Association of Southeast Asian Nations, as well as the EU’s first meeting with Cuba on human rights. His visits to other countries included China, where he expressed the EU’s concerns on a range of issues, as well as our readiness to continue working with China to promote adherence to international human rights obligations. The UK’s own dialogue with China on human rights informed the European Union’s agreed approach—a clear example of how the EU action plan can add value to our own human rights work.

The EU’s engagement is not confined to high-level dialogues and consultations, of which there were 37 in 2014. In many countries, European Union delegations and the embassies of member states work closely together to support the victims of abuses and violations, and individuals under pressure from the authorities and from non-state actors. EU co-ordination through joint case lists ensures consistent messaging, and co-ordination in trial monitoring highlights international interest in individual cases. Although our own diplomatic network endeavours to attend criminal trials of human rights activists, co-ordination within the EU helps to ensure that our views are always represented even if our diplomats cannot be there in person, and it provides additional diplomatic weight.

In addition, in countries where intervention comes with a cost to individual bilateral relationships, being part of an EU bloc lessens the bilateral risk to all individual EU members. In the Occupied Palestinian Territories, the EU organises visits for member states to sites of concern, such as the Cremisan valley and the site of the Duma arson attack. Such visits help draw attention to EU concerns about illegal settlement construction, demolitions and settler violence. The EU also co-ordinates engagement with countries on particular human rights issues. For example, it has systematically raised freedom of religion or belief with many partners at different levels of political dialogue, including in human rights dialogues and consultations. At the United Nations, being part of the EU increases the UK’s lobbying power on matters such as our call for a global moratorium on the death penalty, on which there will be a vote in December this year.

The EU also enables us to benefit from the key principle of burden sharing. At the United Nations, for example, Belgium currently leads within the EU in negotiations on a sensitive resolution on counter-terrorism and human rights. Burden sharing also enables us to support EU partners who have specialised in specific areas. For example, some EU member states are able to provide enhanced practical support to human rights defenders because their domestic legislation allows them greater flexibility on matters such as visas.

In addition to global advocacy and dialogue, an important part of the action plan is the funding of programmes by the EU’s external financial instruments, notably the European instrument for democracy and human rights, which had a budget of €181 million in 2015. The new EU human rights defenders mechanism, announced in December, provides practical support such as physical protection, legal and medical support, and trial and prison monitoring, as well as support for early warning of risks and training on risk prevention. This aligns well with the UK’s pledge to challenge threats to civil society, which is part of our campaign for re-election to the United Nations Human Rights Council for the period 2017 to 2019.

As my hon. Friend the Member for South Derbyshire said, an ambitious action plan and large-scale programmes require close monitoring and evaluation. Last year’s report by the European Court of Auditors on EU support for the fight against torture and the abolition of the death penalty provided a broadly positive assessment; however, the report also included some recommendations, the first of which was the need to target resources better. It is therefore important that we continue to engage closely with the EU funding process across all areas of the action plan, to ensure that spending is effective and aligned with UK’s objectives.

I welcome the fact that this action plan will be subjected to a mid-term review in 2017, which will coincide with the mid-term review of the external financing instruments. That will give us the chance to make sure that the lessons from the European Court of Auditors’ reports and other scrutiny exercises have been learned and applied. Integrating a human rights perspective across the EU’s external action is the best way to ensure that the EU maximises its influences on such issues and considers human rights alongside other aspects of external policy. That is after all what we do at the Foreign and Commonwealth Office. In that sense, the action plan complements and amplifies the human rights work that we in the UK already undertake on a national basis.

[The Chair]

We now have until 5.36 pm for questions to the Minister. I remind Members that questions should be brief. It is open to a Member, subject to the discretion of the Chair, to ask related supplementary questions.

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

As this is my first outing in one of the European Committees, Mr Rosindell, I hope that the Minister will handle me gently.

I understand that the action plan is about third countries and not our internal EU partners. None of us would have any problems in principle with the action plan, which the Minister described as a document of principles, high-level actions and practical steps. That is where I had a problem when reading through the document, because I think that I got more about what the practical steps are and what is going on from the Minister in a 10-minute speech than I did from two hours of reading that document. When I look at an action plan, I expect high-level actions, milestones, timescales, costs and some numbers detailing how many and by when. I did not see any such reference in this document. When I was a director of education, I had three banned words from action plans—ongoing, developing and progressing, because they mean nothing. In terms of timescales, 75% to 80% of the document before the Committee is ongoing. I had a problem with that.

The Minister referred to the Court of Auditors, so I am assuming that underneath this high-level document are other documents that will tell me exactly how many, by when, who is responsible and the costs, as well as where we are, where we want to get to and how we will get there. I think fellow Committee members were also looking for those answers. Is there a series of documents beneath this high-level document that will give me those specific, practical answers?

We are working with two different drafts, and my first question relates to objective no. 4 of the table in my version of the new action plan. I appreciate that it relates to third parties and not to our EU partners, but it does feel a little like, “Do as I say, not as I do.” Objective 4.b refers to the need to

“Monitor at bilateral and multilateral level the compliance by partner countries of their international obligations in terms of access to justice and fair trial, including legal aid”.

How does that sit with our Government’s recent action to cut back access to justice and legal aid?

My second question is about item no. 12, “Cultivating an environment of non-discrimination.” Objective 12.a is to:

“Develop an ‘EU Handbook on Anti-discrimination’ in third countries, outlining tools for anti-discrimination measures”.

Well, that is going to do it for the Ugandan anti-homosexual laws—that is going to make it happen. I was expecting something more than just a handbook. Who is going to do this? The EEAS, the Commission and the Council. It is a handbook, so surely they have some idea who is going to put it together.

My last point concerns no. 25, “Counter-terrorism”, which deals with

“how to prevent radicalisation and extremist violence among young people in third countries…in the field.”

I am curious about how that will relate to our Prevent strategy.

Those are my three observations. Overall, I think that the strategy is moving in the right direction, but I have concerns about who will monitor it, how it will be monitored and how we will judge whether it is effective and gives value for money. It will be difficult to judge whether the strategy is successful if we have no idea where we started, where we intend to be or what the milestones are along the way. Presumably, those things are in the low-level documents that the Minister is going to tell me about now.

[Mr Lidington]

I welcome the hon. Member for North West Durham to her new responsibilities. We miss her predecessor, but during her time in the House she has shown herself to be interested in and committed to European issues. I am sure that we will debate European matters across the Committee and across the Chamber on many enjoyable occasions. I will try to answer her questions briefly.

As I said in my opening comments, the plan is deliberately intended as a high-level statement of objectives and principles that should inform the whole range of external policy activity that the EU and its institutions undertake. Other documents, most obviously the annual reports on the EU’s human rights work, are worth looking at. The External Action Service will report on missions to particular countries and it will sometimes report to the European Parliament on the EU’s interaction with a specific third country. In those reports, hon. Members will see human rights issues being raised in accordance with the principles set out in the action plan. There are quite a lot of different documents, such as the EU’s human rights guidelines and a recently adopted EU framework policy on transitional justice, which add up to a more complete picture.

On the question of who will monitor this work, the EU institutions and the representatives of member states in Brussels—the permanent representations—have an important role in trying to ensure best value for money at all times. The European Court of Auditors plays a crucial role in monitoring that, as it does every other aspect of EU expenditure.

When I visited the Court of Auditors late last year, I was told that I was the first British Minister they could remember ever visiting the place, which I thought was rather a pity. What impressed me was that the Court of Auditors had a very clear objective to shift its focus from measuring inputs into particular programmes to looking at outcomes and focusing much more on whether the declared objectives of a particular EU programme have been achieved, rather than on how much money might be going into something and whether it had been spent on this particular line rather than that particular line.

I mentioned in my opening comments the European instrument for democracy and human rights as one of the external funding instruments. Precisely because human rights work is meant to be mainstreamed in everything the EU does in terms of its foreign policy, it is not possible to abstract a dedicated budget for human rights work alone. For example, what the EU does in relation to Saudi Arabia or Iran will include a human rights element, but it will include other things as well. The pre-accession funding programmes that are available to Turkey and to western Balkans countries that are moving towards membership, and some of the partnership funds to some of the eastern European countries from the former Soviet Union, will also have a human rights element as we try to encourage those countries to build functioning democracies and entrench the rule of law and human rights in their political culture.

I turn briefly to the three specific items that the hon. Lady raised. In fairness, even with the recent restrictions on legal aid, the United Kingdom’s legal aid system remains one of the most generous anywhere in Europe or the democratic world. What the EU is trying to focus on here is the fact that there are too many countries in which it is impossible for defendants to have access to an independent lawyer at all, and where everything that we take for granted in terms of such statutes as the Police and Criminal Evidence Act 1984 or the rules of procedure in court are simply not available in the way that we would understand them. As part of the consular casework that I have dealt with, I have had British citizens, through their families, complaining that they have sometimes not had any opportunity to understand the charges being brought against them in court. That is the sort of issue that this policy is designed to address.

When it comes to anti-discrimination work, the reality is that such work has to proceed through persuasion, good practice and peer group pressure within international organisations. If, for example, we look at the way in which the United Kingdom Government first drove forward preventing sexual violence from being used as a weapon of war, placed that on the international agenda and then used our membership of the EU and of the UN to get other countries to take this issue up and make it a priority, that demonstrates one particular way in which this approach can work. We certainly see the EU’s action plan as complementing our own bilateral efforts to increase women’s political participation around the world, from the middle east to north Africa to work with indigenous groups in Latin America.

On the question of counter-terrorism, again we see the EU action plan work complementing what we seek to do under Prevent and other United Kingdom programmes. There are many countries around the world that face a genuine threat from terrorism but that also do not observe the standards in terms of human rights and due process that we would expect from our own police and judicial systems, so part of what we do bilaterally and part of what we do through EU activity is to have a dialogue with those countries and discuss how it is possible to combine effective action against terrorism with respect for the rule of law and for human rights. That is an issue that Members from all parties in the House have raised in the context of Colombia in debates in this House. It is an issue that we raise in our dialogue with Russian authorities, who face a genuine terrorist threat in the north Caucasus but who tackle it in a somewhat different way from how we might tackle terrorism here.

[Kate Hoey (Vauxhall) (Lab)]

I apologise for being late to the Committee, Mr Rosindell. The Minister is well up on how the EU works; I know that he is an expert on all this, so it is good to hear him today. If I have missed this point, please tell me. I am interested, as was our European Scrutiny Committee, in whether he really feels that this scheme is absolutely the right way to spend the money that will be spent on it. Is he confident that that money will be well spent? That is one important issue. Secondly, within all the bodies in the various parts of the European Union that have drawn up the action plan, who actually makes the final decision that a certain amount of money will be spent on a certain part of the overall strategy?

[Mr Lidington]

To take the second question first, that will depend in part on which spending programme we are talking about, because the decision-making procedures may vary a bit accordingly. The senior-level people in the EEAS and the Commission would have responsibility in the first place for drawing up proposals and allocating funding from the budget agreed by member states under the various headings of the European Union annual budget and multi-annual financial framework. Those positions by the institutions are subject to oversight by the European Union Political and Security Committee ambassadors in Brussels, and ultimately by Ministers in the Foreign Affairs Council and the European Council.

Decisions on foreign policy are taken by unanimity, as the hon. Lady knows, so every member state has a veto, but what would happen is that a paper might be brought forward by the High Representative on foreign policy that would describe the European Union’s external actions in relation to a third country, let us say for the sake of example Pakistan. There would probably be a human rights element to that, and there would be an indication of the spending that would be involved to fund the programme. Then the member states could agree or disagree. There would be a process of negotiation, and then the final plan would be signed off.

Clearly, subsequent monitoring and auditing will be important. To answer the hon. Lady’s first question, I am always looking for ways to extract better value for money; that applies as much to UK domestic spending as to EU spending. It is a duty on any Minister in any Government. There are always improvements that can be made. Often, when I have had to deal with auditors’ reports on some of the common security and defence policy missions, I have said that we need to bring pressure to bear to deal with the shortcomings revealed by the auditor’s report. I think that the European Court of Auditors, at its best, acts in the same way as the National Audit Office and the Public Accounts Committee here. That is the principle—we should always be looking for ways to improve matters—but by and large, I think that this area of EU activity amplifies the human rights work that the UK would be trying to do bilaterally.

[Heather Wheeler]

If we are almost drawing to a close, I ask the Minister again whether, having given us all those answers, he is not as convinced as the European Scrutiny Committee that the measures ought to have a debate in the full Chamber, as there are so many areas in it of great interest across the House.

[Mr Lidington]

If my hon. Friend looks at the track record of the current Government and their predecessor coalition Government, she will see that many more debates on documents referred by the European Scrutiny Committee have been held on the Floor of the House than was the case under predecessor Governments. It is always a difficult balance for the Government to strike in terms of the allocation of parliamentary time and we feel that we are granting a fair share of the Committee’s requests for debates on the Floor of the House. I can remember a previous Chair of the European Scrutiny Committee saying to me that he could remember being told informally by the Whips in the life of a previous Government that he could have two Floor debates a year and that he should decide which two he wanted out of the many documents that came through his Committee. We have had a lot more than two.

Any Member of the House of Commons is entitled to attend and speak at the European Committees. I take my hon. Friend’s point that a lot of Members, one would think, might be interested in human rights questions, especially given the number of lobbying campaigns to which we are all subjected by different pressure groups on behalf of human rights defenders of various countries, but our colleagues do not turn up in those numbers. The opportunity is there for hon. Members to take part if they wish to avail themselves of it.

[Dr Liam Fox (North Somerset) (Con)]

I would like to press my right hon. Friend on one issue. The debate is obviously not just about human rights but strays into the whole area of EU competence. I would like to concentrate on value for money. I am clear from what he said about who determines how much money the EU wants and the mechanism by which the money is allocated. Would he say a little bit more about the audit trail? Exactly how is the money audited, by whom and when, to ensure that we, in this House, are able to trace where our taxpayers’ money has gone, what it has been used for and whether we might have been able to use it better ourselves were we not encumbered by this excessive bureaucratic EU cost?

[Mr Lidington]

Of course we will account, as the second biggest net contributor to the EU, for roughly 15% pro rata of spending on every EU programme. The judgment that the Government have to make—and that all voters will have to make at the forthcoming referendum—is, among other things, whether it is better and more greatly to our advantage in national terms to have some activities carried out collectively at a European level, rather than trying to do that bilaterally. A related question is whether, in the event of the United Kingdom leaving the EU, we would get all of that contribution back or whether, as with Norway and Switzerland, a considerable proportion would still need to be paid to the EU budget in the course of a subsequent relationship.

I am never satisfied with value for money. From the various Court of Auditors reports that I have looked at, more could and should be done at the EU level. I do not think that the EU institutions have adopted the culture that has been forced on this country and on many other EU member states of having to cut the coat to fit the cloth and having to engage in some painful reprioritisation as a consequence of dealing with limited resources.

The procedural reality is that the funds are subject to EU internal audit processes, which are monitored by the EU Court of Auditors. It is up to the Court of Auditors, as with the National Audit Office here, to decide where it wants to focus its attention. The mid-term review of the action plan to assess progress will take place next year. That will give us the opportunity to look more deeply into whether we have secured the value for money and the outcomes that we seek from this expenditure.

My own view is that it does provide a net benefit for the United Kingdom when we are able to speak not just as one country, or even perhaps with France and Germany as three significant European countries, but when we are able to work effectively as a bloc of 28. The reality is that, precisely because of the United Kingdom’s diplomatic weight and strength and because we have a global diplomatic network and a global reach to our diplomacy, we, like France, are able to exercise a disproportionate influence upon how EU-level foreign policy positions, including on human rights, are developed. In that sense, we get benefit where we are prepared to be active and where we fight hard to try to ensure that our priorities and objectives are taken up as European priorities and objectives. It is not perfect—I completely accept that—and my right hon. Friend is absolutely correct to warn of the need to be vigilant about competence because there is always a risk of the envelope being pushed by the Brussels institutions, but on balance I think we gain from the amplification of national diplomacy by effective EU action.

[The Chair]

If no other Member wishes to contribute to the questioning of the Minister, we will now proceed to the motion itself.

Motion made, and Question put,

That the Committee takes note of unnumbered European Union Document, EU Action Plan on Human Rights and Democracy.—(Mr Lidington.)

Division 1

Ayes: 4

---

Conservative: 2

Noes: 2

---

Labour: 1
Conservative: 1

17:14

Committee rose.

Merger of NHS Trusts in Nottinghamshire

Monday 25th January 2016 Petitions

The petition of residents of Sherwood,

Declares that the petitioners support a full merger of their NHS Trust with a high-performing neighbouring Trust in order to secure the future of high quality healthcare provision in Newark; further that the petitioners support and will work constructively with the new Trust; and further that they support the hard working doctors, nurses and staff of Sherwood Forest Hospitals NHS Trust including at Newark Hospital.

The petitioners therefore request that the House of Commons urges the Government to encourage the full merger of Sherwood Forest Hospitals NHS Trust with a neighbouring high-performing Trust.

And the petitioners remain, etc.—[Presented by Mark Spencer, Official Report, 16 December 2015; Vol. 603, c. 1652.]

[P001664]

Observations from the Parliamentary Under-Secretary of State for Health (Ben Gummer): Monitor, the independent regulator of NHS foundation trusts (FTs), advises that Sherwood Forest Hospitals NHS FT is, with the regulator’s support, exploring options for creating a long-term partnership with another trust. It is yet to be decided which organisation will become Sherwood’s long-term partner. In the interim, the trust is working hard to improve the quality of care for patients, in response to the Care Quality Commission’s report that was published last year.

The petition of residents of Newark,

Declares that the petitioners support a full merger of their NHS Trust with a high-performing neighbouring Trust in order to secure the future of high quality healthcare provision in Newark; further that the petitioners support and will work constructively with the new Trust; and further that they support the hard working doctors, nurses and staff of Sherwood Forest Hospitals NHS Trust including at Newark Hospital.

The petitioners therefore request that the House of Commons urges the Government to encourage the full merger of Sherwood Forest Hospitals NHS Trust with a neighbouring high-performing Trust.

And the petitioners remain, etc.—[Presented by Robert Jenrick, Official Report, 16 December 2015; Vol. 603, c. 1652.]

[P001665]

Observations from the Parliamentary Under-Secretary of State for Health (Ben Gummer): Monitor, the independent regulator of NHS foundation trusts (FTs), advises that Sherwood Forest Hospitals NHS FT is, with the regulator’s support, exploring options for creating a long-term partnership with another trust. It is yet to be decided which organisation will become Sherwood’s long-term partner. In the interim, the trust is working hard to improve the quality of care for patients, in response to the Care Quality Commission’s report that was published last year.

Westminster Hall

Monday 25th January 2016 Westminster Hall

Monday 25 January 2016

[Philip Davies in the Chair]

Small Businesses: Tax Reporting

Monday 25th January 2016 Westminster Hall

16:30

[Oliver Dowden (Hertsmere) (Con)]

I beg to move,

That this House has considered e-petition 115895 relating to tax reporting for small businesses and the self-employed.

Members may be aware that it was announced less than two hours ago that, sadly, my predecessor but one as the Member for Hertsmere, Lord Parkinson—Cecil Parkinson—has died aged 84 after a long battle with cancer. He was a towering figure nationally, playing a central role in the great reforming Thatcher Governments of the 1980s, but he was also a brilliant local MP. He served Hertsmere from the constituency’s creation until 1992. Time and again, local residents would recall him with tremendous warmth and fondness—something I experienced myself after I was selected as the candidate in 2014. My thoughts and prayers are with his wife, Ann, and the rest of their family. [Hon. Members: “Hear, hear.]

I thank you, Mr Davies, for chairing the debate, which I am introducing on behalf of the Petitions Committee, of which I am a member. I declare that I am an adviser to IPSE, the Association of Independent Professionals and the Self-Employed—details are in the Register of Members’ Financial Interests.

The petition calls on the Government to

“Scrap plans forcing self employed & small business to do 4 tax returns yearly”.

As of this morning, it had attracted 110,000 signatures.

As we all know from our constituencies, small businesses are the backbone of our local economies, employing thousands of people and generating wealth and prosperity for our communities. That was demonstrated to me last week when I had the pleasure of speaking to more than 50 small businessmen and women in Borehamwood. Their businesses ranged from financial services, through recruitment and solicitors, to digital markets. They were hard-working people from Bushey, Radlett and Potters Bar—I am sure Members have similar places in their constituency—and they all demonstrate tremendous energy and creativity. They are willing to put their careers and income on the line to build thriving businesses, and the national statistics bear that out.

According to the latest figures from the Federation of Small Businesses, small business accounts for 99% of all private sector business, with total employment of more than 15 million—more than 60% of all private sector employment in the UK—and turnover of almost £2 trillion. There is therefore understandable concern about any measures the Government might introduce that could distract small businesspeople from their already extremely demanding day-to-day work with additional new regulations or costs.

The wording of the petition and related press coverage reflect the worry that measures outlined in last year’s autumn statement might require small businesses to complete four tax returns annually. Understandably, given the time, effort and almost inevitable cost of employing an accountant to do the job, that is a cause for great concern.

I note from the Government’s response to the petition that they propose quarterly updates rather than full returns. Will the Minister, when he responds to the debate, expand on that point and put on the record unambiguously that the Government’s proposals do not amount to quarterly tax returns?

[Mrs Maria Miller (Basingstoke) (Con)]

I welcome the debate and the Minister’s commitment to modernising the tax system—that is important to my constituents. Does my hon. Friend agree that the Government could get rid of some of the concerns being expressed by our constituents were they to make the guiding principle of any change in the reporting of tax that it should reduce administration and red tape for business?

[Oliver Dowden]

I completely agree with the sentiments expressed by my right hon. Friend. I will come on to that point shortly—

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

Will the hon. Gentleman give way?

[Oliver Dowden]

If the hon. Lady will give me one moment, I will finish answering the previous intervention.

When we seek to change the taxation of small businesses, it is vital that we should do so in a way that reduces the net impact on business.

[Caroline Lucas]

I thank the hon. Gentleman for giving way and I congratulate him on securing the debate. On the burden on small businesses, does he agree that there appears to be no evidence that all small businesses or self-employed people already keep track of their affairs digitally? Will the Minister tell us what his evidence base is for asserting that any change to the requirements will not be cumbersome for them? The assumption is that they are already keeping track of things digitally, but many constituents tell me that they are not. Therefore, the change will be a burden.

[Oliver Dowden]

I will come on to such points, but full consultation on any measures is important to inform exactly the situation faced by small businesses. The Chair of the Treasury Committee, my right hon. Friend the Member for Chichester (Mr Tyrie), has pointed out the specific problem of those without access to computers and IT altogether.

[Sammy Wilson (East Antrim) (DUP)]

Is the hon. Gentleman concerned about that point? In parts of my constituency especially, many small businesses do not have access to the internet at all, because the speeds are so low. To expect those businesses to exchange all that data with Her Majesty’s Revenue and Customs quarterly is unrealistic.

[Oliver Dowden]

There is an issue, but the Government have said in their response to the petition that they will consider it. I hope for clarification on the question of the speed of broadband connection—businesses in my and many other constituencies rely on fast broadband, so for it not to be in place makes things difficult—and on the broader point about ensuring that small businesspeople who fill out tax returns have sufficient skills to do so. I also hope for reassurance from the Minister about a training programme and other online resources to enable small businesses to have those skills.

Despite what the Government have said in their response to the petition, the proposals announced in the autumn statement raise a number of issues, some of which have already been mentioned in the debate. I, too, will address such matters before other Members have the opportunity to examine them in more detail.

The Petitions Committee recently undertook a public consultation via Twitter, and I thank the Clerks for their hard work, which made it possible. Unbelievably, in 24 hours we received 1,285 tweets from 565 contributors, all of which can be seen by searching #HOCpetitions. The responses reflect concerns also expressed to me by the Federation of Small Businesses. I will briefly address some of those concerns.

The proposed measures, as I understand the situation, form part of the Government’s “Making tax digital” proposals, which most people agree is the right direction of travel. An end to bureaucratic form filling and associated unnecessary complications, and full access to digital accounts, all of which are promised in “Making tax digital”, would certainly be welcome. I commend the Government for their commitment to that agenda.

As we all know, however, the path to new Government initiatives, in particular those involving new IT, rarely runs smoothly, and we only have to think back to the introduction of tax credits or to the Rural Payments Agency under the previous Government for the evidence. I therefore urge the Minister to proceed with caution.

I note from the Government response to the petition that there will be consultation throughout 2016 and voluntary introduction before full phasing in by 2020. Many people are concerned that users should be fully consulted and systems properly tested before full roll-out. Furthermore, the system should be properly secure.

[Mr Alan Mak (Havant) (Con)]

I thank my hon. Friend for securing the debate. I draw the House’s attention to my entry in the Register of Members’ Financial Interests: I am the founder of two small businesses. He rightly said that the Government should ensure positive digital competency in respect of businesses being asked to participate in the scheme, but is he also aware that more than 99% of VAT returns are filed online? A high percentage of HMRC documents are already filed online, which should give the Government great confidence when they roll out the reforms.

[Oliver Dowden]

That is an important point. While there are questions to raise, it is important not to get carried away. The overall direction of Government travel is towards having a digital system for tax returns, and I hope that Members agree that that is the right thing to do. The questions are about the speed and pace of roll-out and appropriate consultation.

The difference between VAT and what is contemplated here is that VAT returns have a threshold, so the very smallest businesses do not fill them out, but they will do so in this case. That is an argument for caution. Another concern raised by petitioners is the nature and financial cost of digital reporting. It would therefore be helpful if the Government gave greater clarity on the scale, cost and nature of the information to be provided. Estimates suggest that businesses already pay on average £3,600 a year to ensure that they are compliant with their tax and regulatory obligations and we, as a Government, must take away from that, not add to it. Surely, that is the measure of any successful tax reform. It is therefore vital that the net effect of the measure is to reduce, not add to, that regulatory burden.

[Rachael Maskell (York Central) (Lab/Co-op)]

Is it not right that, before the Government proceed any further with their proposals, they make a full analysis of not only the financial cost and burden they will put on small businesses, but the cost in time and infrastructure?

[Oliver Dowden]

I hope that all that will be considered in the consultation that the Government have committed to undertake.

[James Cleverly (Braintree) (Con)]

Much of the correspondence I have received on this from small businesses and those who write about small business is based on what seems to be a misunderstanding, but concern may go a long way to either hampering or aiding implementation. Do not the Government need to give almost as much thought to the communication about implementation as to the implementation itself to give small businesses confidence that they have thought through the regulatory burden that this requirement might be perceived to bring?

[Oliver Dowden]

My hon. Friend makes an important point. As I alluded to earlier, a lot of press coverage has suggested that this requirement amounts to quarterly tax returns. Whatever reservations we may have, it is pretty clear that it does not amount to that. I would welcome the Minister’s explicit assurance about that.

Another concern raised by petitioners was that they would not have the software or skills to produce the required information. I would welcome a commitment to proper availability of information, software and, where necessary, training for small businesses. We all know the difficulties of getting in contact with HMRC by telephone, so I ask the Government to look at ways to ensure that such information is readily and easily available.

[Fiona Mactaggart (Slough) (Lab)]

I am struck that among those who are self-employed, the greatest growth has been in the over-50s. About a year ago, Saga produced a report that said that they were something like 25% of the growth, but it did not point out that those people are overwhelmingly women who have built a microbusiness and many of them do not have the skills to follow up on such requirements. Indeed, earlier this morning, I was talking to a self-employed woman—a physical trainer—in her 30s who said, “What? Do we have to do this every time? I can’t possibly afford an accountant. My business isn’t big enough to do that.” Many women do not have the skills needed to do that effectively, so will the hon. Gentleman press the Minister to ensure that they get the training that they need?

[Oliver Dowden]

The right hon. Lady makes an important point about the contribution of women to the economy. One of the Government’s great success stories is the rise in female labour participation. Many of those women are involved in small businesses or are self-employed. I hope that the consultation considers all those points carefully and looks at the impact on women who seek to enter the labour market through that route as well as those who have been in the labour market for a long time. As I said, I do not disagree with the direction of the Government’s reforms, but it is important that the consultation addresses those matters properly.

The Treasury Committee raised specific issues about how businesses that do not use computers will be able to adapt. It would be good to have more detail on that.

In conclusion, it is welcome that the Government are committed to digitising our tax service, as that should reduce costs and administrative burdens for business, but I look forward to the debate providing an opportunity to address and allay concerns that, in the process of introducing a digital tax system, the Government do not add to the burdens on business. As I said at the beginning of my remarks, small businesses are the lifeblood of our national economy, and I hope that these measures will aid the circulation of that blood rather than clog arteries.

16:45

[George Kerevan (East Lothian) (SNP)]

I commend the hon. Member for Hertsmere (Oliver Dowden) for bringing the matter to our attention. As is usually the case with Petitions Committee debates, we come here to speak on behalf of not ourselves or our parties, but the 100,000-plus individuals and small businesses who have expressed their concern.

I heard the Minister’s words in the Chamber about the Google issue and I take his point that small businesses are not being asked to commit to quarterly full tax returns. That is understood, but the very fact that so many people have signed the petition—every Member will be able to cite examples of constituents and local businesses who have expressed their worries—shows how worried people are, and that indicates clearly that the Government need to consult further.

This is not about whether we should implement a fully electronic, real-time tax system on the internet, as all that would provide benefits. The issue is not the technology, but bringing that technology into play and taking small businesses and the electorate with us. The charge against the Minister and the Government, which is not new or made in a cavalier way, is that there is a rush to judgment.

The Minister simply has to tell us that there could be a delay in implementing the quarterly information updates and that, rather than setting a band at £10,000, there could be a variation as to when small businesses of various sizes are brought into the system. He could tell us about checks and balances with regard to the delivery and effectiveness of HMRC’s system that must be addressed before activities such as updating quarterly are triggered. He could provide all sorts of safeguards so that we could reassure our constituents and give all-party support to the introduction of the new technology.

[Bill Esterson (Sefton Central) (Lab)]

Like the hon. Gentleman, I and, more importantly, my constituents would be fascinated to learn how increasing the rate of reporting to quarterly—whether that involves a full report or an update—reduces the amount of administration faced by businesses. That is a crucial point. Did he hear the estimates at the time of the Chancellor’s announcement that HMRC would collect an additional £600 million as a result of the policy? Is the purpose of the change really to increase tax returns from small businesses? Deals such as that with Google, which was the subject of today’s urgent question, have caused great unease and real anger not just in my constituency, but right across the country.

[Philip Davies (in the Chair)]

Order. Before Mr Kerevan resumes his speech, may I say that interventions should be somewhat shorter than they have been?

[George Kerevan]

I am happy to reinforce the hon. Gentleman’s point. Indeed, various Treasury papers suggest that the shift towards a paperless tax system will increase receipts by about £600 million. That is not a bad thing, and no one would oppose it if it happened, but the issue is that the Minister and HMRC are rushing to judgment in introducing the proposed system. They think that moves to put it in place will be so advanced by 2020 that they will be able to start instructing small businesses to update quarterly.

Buried in the small print of last November’s Treasury press notice is a suggestion as to one of the advantages that will come from the proposal:

“HMRC expects the number of calls”

to its various call centres

“to reduce from 38 million in 2015-16”

to a mere 15 million by 2020. Magically, as a result of the electronic vision being presented to us, about 23 million phone calls will no longer be made to HMRC. Does anyone here, the Minister included, actually believe those numbers?

In the run-up to introducing a new system, the likelihood is that things will go wrong. If we are lucky, we might make something like the proposed saving in calls 10 years from now, but I doubt that that will happen between now and 2020. I have great respect for the Minister, but I would like to hear him swear on his heart that he actually thinks we will deliver 23 million fewer calls.

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

From what I can gather, the whole point of having a trial period from 2018 is to iron out that anomaly in the system. Would the hon. Gentleman not agree that it is welcome that we are using small and medium-sized enterprises and self-employed people as a test bed, rather than putting through some sort of virtual reality programme?

[George Kerevan]

I could not agree more. At the risk of repeating myself, I stress that the Scottish National party—I think this goes for all parties—agrees that this is the road to take and that we need to consult, but there is a question over the speed at which this is being done. I understand why the Treasury and HMRC have to sell things and to make promises about what they can deliver but, as the hon. Member for Hertsmere said, experience proves that the introduction of major IT systems rarely works out, particularly when they are on this scale. We are talking about getting 50 million taxpayers and small businesses on this system between now and 2020, but that will not happen.

The Government need to slow down and consult more. The Minister has to stop putting in place arbitrary timetables for when the consultation will work itself out. In particular, he has to stop telling us that he can implement the system in 2020 and impose quarterly returns, which is the thing that is worrying small businesses. Instead, he should concentrate on bringing the consultation to a point where everyone is on board, and then the system will come into play.

I want to reinforce an important point that other Members have made in interventions: we do not have full digital coverage in this country. When Culture, Media and Sport Ministers get up in the main Chamber and talk about getting to nearly 100% coverage, what is the target date? It is 2020, but that may slip. If the new system needs 100% broadband coverage, it makes much more sense to wait until that coverage is in place before switching over the entire British tax system, including the system on which small businesses depend, to a new one. That is another argument for delaying full implementation until 2025 or 2030.

I worry that there is a hidden agenda. Clearly, the Government are attempting to make cost savings. The very Treasury press statement that introduced the idea of moving quickly to a new electronic tax system by 2020 told us that HMRC seeks to make

“£717 million of sustainable resource savings”

by 2020. The system is being put in place at the same time that HMRC is being expected to make major cuts. Again, that does not all stack up.

My real point to the Minister is that no one opposes the introduction of this system, but clearly there has been a catastrophic failure in how the Government have presented it to small businesses. We hear constantly from Ministers that they are pro-small business, so now is the time for them to honour those words. If they simply consult more, delay the introduction of the new system until they are sure that they have everyone on board and set aside the requirement for quarterly reporting until they are sure that the system is actually working, they will achieve success.

16:55

[Seema Kennedy (South Ribble) (Con)]

It is a pleasure to serve under your chairmanship, Mr Davies, and to follow the hon. Member for East Lothian (George Kerevan)—I made my maiden speech after he made his. I thank my hon. Friend the Member for Hertsmere (Oliver Dowden) for raising this important issue. I have had representations about it from many constituents. As somebody who has run a small business, I am happy to take part in the debate. I draw Members’ attention to my entry in the Register of Members’ Financial Interests.

The “Fixing the foundations” report by my right hon. Friends the Chancellor and the Business Secretary, which came out last July, focused on creating an even more competitive tax system. The aim is to cut corporation tax to make sure that we have the lowest rate in the G20 and attract inward investment, as well as to make paying tax simpler. The aim is that that

“will dramatically cut the cost of paying tax for business.”

As we all know, a record number of people—millions more of our constituents—are now self-employed and running small businesses. It is a generational shift, and this growing phenomenon will have an impact on many of our constituents.

As other hon. Members have said, the direction of travel—going digital—is laudable, and if the proposed system is properly implemented, it will increase the tax take, which is of course to be applauded. However, the stated aim is simplification, not only for the Revenue but for business, so I tentatively suggest that the Minister does not rush to make any changes. It is better that the switch takes places slightly later, but with fewer glitches. That would increase buy-in from the business community and reduce the frustration for constituents who are involved in making these quarterly reports—however we want to describe them. There are few more frustrating activities for small businesses, particularly sole traders without admin support, than being kept hanging on HMRC’s helpline.

[Dr Rupa Huq (Ealing Central and Acton) (Lab)]

The hon. Lady’s point reminds me of a comment made by Richard Morse, the FSB’s representative in my area, who said that HMRC did not seem to realise that a lot of businesses in my constituency were sole traders and that the person doing the accounts—there is no separate accounts department—was also generating the business and doing the work. He fears that the proposed system will eat into profits and lead to less taxable income, and I hope the consultation can address his fears.

[Seema Kennedy]

The FSB has made submissions, and it will carry on doing so. Ministers will also be listening to all our representations, which is why it is important that we are here to speak on behalf of our constituents. I welcome HMRC’s commitment to make more use of digital help, such as webinars, webchat and YouTube videos, and I hope it will increase the use of those.

I am sure that the consultation went through this, but I have concerns about when tax would be payable and when penalties would be incurred. I understand that three months does not seem like a very long time, but a four-week or six-week penalty period could pass quickly for a sole trader in busy periods, such as the summer if they are involved in seasonal business. Will the Minister address that point?

My hon. Friend the Member for Morecambe and Lunesdale (David Morris) referred to test runs. Perhaps I missed this information, but I would like to know exactly who did those test runs and over what period. It is essential that the tests are done over an extensive period, with different sizes of business, so that glitches are eliminated and the system runs really well when it is in place.

I have a particular concern about adjustments for capital allowances. I am thinking particularly of my own business, which is in the building trade, as we have had to make large capital investments in the following year, and there are also issues such as amortisation. I know that the impact on working capital came up in the digital consultation carried out by the Petitions Committee.

In conclusion, the move to digital taxation is the right direction of travel if we are to meet business challenges of the 21st century, but it needs to be done after a thorough consultation, of which this debate is only one part, even if that means the current timescales are missed by a few months.

17:01

[Peter Kyle (Hove) (Lab)]

May I thank the hon. Member for Hertsmere (Oliver Dowden) for securing the debate? I share his condolences for the family of his predecessor, who passed away today. Even though his predecessor was not a Labour Member, he certainly made a big impact on politics in his day, and that legacy will be remembered for a great deal of time.

I am the Member of Parliament for Hove, in the city of Brighton and Hove, which is one of the most entrepreneurial cities in the whole country. It also has one of the highest rates of self-employment in the country. The self-employment rate for 16 to 64-year-olds in work is 13.5%, against a national average of 10%, with 55% of those people working in construction and 36% in professional, scientific or technical trades. That shows the nature of self-employment in the south, and self-employment is often a gateway to entrepreneurialism. Many of those self-employed people will go on to set up limited companies and become creators of wealth and employment, which drives the economy in Brighton and Hove.

Statistics, however, do not cover the nature and challenges of making the move to self-employment or setting up a microbusiness. I became self-employed early in my career and then moved on to set up a limited company and a microbusiness. I co-founded a local business, which, looking back, was the most educative experience of my life. We learn a huge amount when we decide to jump in with both feet and set up a business, as an enormous breadth of understanding and skills goes into setting up an enterprise and becoming an entrepreneur.

One key thing I learned from that experience was the nature of the risk involved in becoming self-employed or running a microbusiness. When we talk about people who are self-employed or run small businesses—sometimes as their friends, but particularly as policy makers—there is often an assumption that growth is linear, and that money increases and risk diminishes each year, as they get used to growing business and to the sector they are involved in.

My experience was very different. Growth came on the back of extreme risk and extreme vulnerability, followed by a period of comfort. I then had to make a decision: should I stay in my comfort zone or take the decision to move out of it, back into extreme risk and vulnerability? The business jumped into periods of growth, with each jump and each improvement in annual figures coming on the back of a period of risk. As the business employed more people and its growth increased, the risk did not diminish; it got greater and greater, because more depended on the business’s success. I have a huge appreciation for entrepreneurs who are growing businesses, because there is no inevitability about the success of any business. It comes only on the back of extreme hard work and the ability to take risk on behalf of a business and the people who depend on it.

Few people enter self-employment or set up small businesses with all the skills they need to do so. They sometimes lack skills in sales, admin, accounting, marketing, social media and product development. No one inherently possesses all those skills—particularly accounting—when they go into business or become self-employed. It is very unlikely that all of the 55% of self-employed people in the city I live in who work in construction have all the administrative and accounting skills they need. Talk of changes to accounting and reporting can therefore be extremely intimidating to them.

Gaps in people’s skills can be not just intimidating but terrifying. While people are learning skills, or worrying about lacking them, they are not doing. They are not out there selling, building the relationships that every business and self-employed person needs or winning new business. We must be mindful of that when we heap new regulation, and changes in accounting and reporting, on people who are self-employed or run small businesses. Talk of regulatory change can be intensely worrying for those who lack accounting skills. People who are worried become risk-averse and do not have the boldness of character we need in our entrepreneurs, particularly in the small business sector.

The self-employed have a lot to worry about. One third of them will earn less than the minimum wage for two or three periods in a year. They have no statutory holiday, and the working time directive does not cover their work. All of us will have heard stories from knocking on doors and talking to constituents at community events or reading their correspondence. I was struck by one particular story when I was campaigning during the general election. I knocked on the door of a tradesman who was self-employed and always worrying about the next contract. He told me, as he held his young baby in his arms, that he had never once been on a full week’s holiday with his wife and children. Instead, his wife takes the children away for a week once a year and he goes to meet them for the weekend, because he cannot take the risk of not completing a contract. That type of experience is repeated throughout the self-employed sector and the microbusiness sector. People in those sectors make a lot of personal sacrifices in order to drive the economy, particularly in the south of England.

[Caroline Lucas]

The hon. Gentleman is making a powerful speech, and he tells a strong story about the constituency of Hove, which is relevant to my constituency next door. Does he agree that the pressures on small businesses are made even worse by the fact that they often struggle to get hold of HMRC advice right now, whether on the phone or by other means, because tax offices are closing? As well as having a bigger consultation on the issue, the Government should look again at the resources going to HMRC.

[Peter Kyle]

The hon. Lady makes an incredibly important point. We have both been involved in local government issues and campaigned on national issues. Every moment that a self-employed person spends on the phone to the local council, HMRC or any other Government Department is a moment they are not spending getting new business, delivering new contracts and earning the money that will give them the security they need in the long term.

We know that HMRC has a lamentable record on customer service, which the Minister graciously acknowledged in answering questions in the main Chamber recently. I know that he will focus on that issue, and people such as myself and the hon. Member for Brighton, Pavilion (Caroline Lucas) will continue campaigning on it, because it is extremely important. In the interests of fairness, I will also carry on campaigning against my council in Brighton and Hove, which is a Labour-run council, to ensure that it offers better services for, and better contact with, its local businesses and self-employed people.

I am well aware that people who run big businesses in the city that I represent, whether American Express in Brighton, Kemptown or EDF in my constituency of Hove, have a named contact in the local authority. That contact is called the chief executive. If the chief executive of one of those big businesses wants to get the council on the phone, they call the council’s chief executive. However, the drivers of our local economy—people who run companies that employ fewer than eight people, which make up 90% of the businesses in our city—do not have a named contact in the local authority. There are no consequences if a phone is not picked up, or if a message is not returned. That symbolises how power is distributed in the wrong direction.

It would be wrong if we designed and implemented policies that put people off wanting to become self-employed. The calls that Members from all parties have made in this debate, imploring the Minister to ensure that there is a period of consultation, have been extremely well put.

[James Cleverly]

I thank the hon. Gentleman for sharing his experiences as an entrepreneur. As someone who has run a small business, I completely understand the point that he is making about fear of change. Does he therefore agree that if the Government showed that the new policy could be intuitive and easy to understand and implement, many of the potential hurdles that he has highlighted could be put to one side? If some of the tech entrepreneurs who I know are prevalent in his constituency could be involved in designing the implementation and roll-out of the measure with the Government, that would go a long way to addressing the issues that he has raised.

[Peter Kyle]

I am extremely grateful for that thoughtful intervention, and I have some sympathy with the hon. Gentleman’s points. However, when policies are thoughtful, intuitive and in the interests of business, businesses usually flock to take them up. In this case something has clearly gone wrong in one of two ways: either it is being communicated in the wrong way, but it is a great policy; or it is a poor policy that is being communicated in the right way but is not managing to hit home. The purpose of the debate is to decide which it is.

The policy needs to be tested and communicated better. We need to ensure that people who run businesses—smart people who want to do the right thing by paying their taxes and ensuring that their businesses are not disproportionately burdened—are fully involved as the policy is implemented in the long run. In my view it certainly should happen in the long run, because at the moment, people are being put off going into self-employment or setting up their own business.

Interestingly, on the train up here today, when I was speaking to my brother, who works as a postman in the Brighton, Pavilion constituency, he told me that one of his colleagues had seen on the news that this debate was coming up and had talked about self-employment. His colleague was self-employed for a number of years—more than a decade—but moved away from it because of the fear of the accounting, bureaucracy and regulation that was being heaped on to self-employed people.

The freedom that is associated with self-employment has diminished. As well as the burden of regulation, people fear not having the skills that they need, and they fear the unknown. Because they are not a trained accountant or an experienced administrator—rather, they are a skilled labourer—they fear that they might step outside regulatory measures without being aware of it. That was enough to drive my brother’s colleague away from self-employment and back into paid employment. We should be wary of that, because it would be a huge shame if entrepreneurship were to become the preserve of the middle classes. I do not believe that entrepreneurial spirit is class-based or education-based; it is evenly distributed, even though it is not evenly expressed in our economy.

Public policy on the self-employed needs to be got right, particularly for people who run small businesses or microbusinesses. At the moment, I do not believe that Government policy across the board is on their side. Let us take one example—the much vaunted, much hyped productivity plan, which I know the Minister is keen to refer to often in the Chamber and in the media. It is interesting that in the Government’s flagship productivity plan there is not one single mention of the self-employed, who make up 15% of the workforce and number 4.5 million people. The fastest-growing employment trend in our country does not warrant a single mention in the productivity plan.

In my constituency there is a fantastic business called Crunch, which has been set up specifically to supply accountancy services to people who are self-employed or running microbusinesses. I know that the hon. Member for Brighton, Pavilion, went to visit a couple of weeks ago, which was absolutely fantastic. It now provides services not only right across our city but right across the south of England, and it is great that people are starting to notice just how fantastic the business is and how important its services are. It provides light-touch, fast, responsive support to people setting up businesses. The great thing about being able to visit it is that because it has thousands of customers, it can harness insight into real-time trends in self-employment and see the impact of public policy on the small business and self-employed sector. I know that quite often, HMRC and Government Departments struggle to get real-time data on the impact of Government policy.

One prediction that Crunch makes about the negative impacts of policy is that the leap from 0% to 7.5% in basic rate dividend tax will hit lower-earning company directors the hardest. Those are probably self-employed people who are moving their company to limited status, have a very small number of employees and pay themselves through dividends. Everyone wants to make sure that the right people are paying tax, but the proposal could have the most negative impact on people on lower incomes who run microbusinesses. For example, a limited company director paying themselves primarily through dividends would pay £1,528 more tax a year on pre-tax profits of £48,000, whereas a director with £78,000 of pre-tax profits would pay only £1,343 more.

We can also see from the statistics that the change in income tax for a microbusiness from 2015-16 to 2016-17 will have a negative impact of 21% on somebody earning about £40,000. The equivalent impact on somebody earning £58,000 will be minus 1%. There is something regressive, not progressive, about the changes to dividend tax, and we need to shift the tax burden so that it is progressive, not regressive. If the Minister does so, I know that he will be met with support from both sides of the House. I would very much welcome his comments on that point.

[Dr Huq]

My hon. Friend’s point reminds me of something that Andrew Dakers, who is from West London Business in my constituency, has said:

“One can only assume the measure is being planned to speed up tax receipts, which is a duff basis for policy-making in this area.”

Will my hon. Friend comment on that?

[Peter Kyle]

I am extremely grateful for that intervention, and I have a lot of sympathy with my hon. Friend’s comments and the example that she has given. It is definitely worth mentioning that, and I am sure the Minister will respond to it.

Crunch, the company in my constituency that I mentioned, has a proposal for the Minister. I hope he will take it away with him, because Crunch represents a large number of self-employed people and microbusinesses. It says that the transition will be most challenging for microbusiness owners,

“as it leads to a steep hike in tax overnight.”

It proposes

“either deferring the introduction of these changes for at least 2 years”,

which would enable businesses to have time to adapt,

“or introducing a 3 year credit to keep dividend taxes at 0% for those business owners on the basic rate.”

I support those proposals, and I hope that the Minister will consider them in the same spirit.

It is difficult to devise policies that support self-employed people, because many people go into self-employment because they enjoy the freedom. Increasingly, however, we see a trend whereby larger employers are restructuring and people are being forced into becoming self-employed at a time when they would otherwise not have done so. This area of policy is not dissimilar to youth unemployment in the challenges it provides for policy makers. Self-employed people, like young unemployed people, are hidden away behind front doors in neighbourhoods and communities. They often work from home, so there are problems of connectivity and how they network as a group. It is certainly easy to overlook them. The fact that they are hidden and dispersed in neighbourhoods makes it difficult to target them as one group.

It would be welcome if the Government examined professional development, which would not be burdensome and would link directly with the policy that the Minister is considering. Self-employed people as a sector underinvest in their own professional development, and other spending trends among self-employed people include a fall in pension contributions every year for the past five years. The key measures of their long-term strategic thinking about their own professional development show that there are challenges that are intrinsic to the self-employed.

Anyone who goes into full-time employment with a company looks at the professional development that it offers. That is a key magnet for talent. Self-employed people are so worried about month-to-month living that they do not invest as they should. We must tackle the productivity challenge among the self-employed and microbusinesses. The Government should launch a consultation into that so that we can work cross-party to get deep into what trends are emerging and how we can support the sector. The challenge of professional development would then be won.

17:21

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

May I declare an interest and refer hon. Members to my declaration in the Register of Members’ Financial Interests? I am the Government’s self-employment ambassador and as such it is my task to engage with people in the self-employment sector to find out exactly what concerns them and exactly what they would like from the Government on all matters of self-employment.

I was a small businessman for the better part of 30 years before entering Parliament. I know that I do not look old enough but, believe you me, I spent every year building my business up, just as the hon. Member for Hove (Peter Kyle) outlined. It was a steep learning curve of trepidation and fear most of the time, but when one gets a hand on the roller coaster, one begins to make a success of it.

It has just been made clear that this is not going to be a new form of taxation every quarter, but the self-employed sector is frightened that it could become the new VAT. The sector could be given a bill over a period of, perhaps, 10 years from the date when the new policy comes in and becomes law, and HMRC could mutate that to become a collective every quarter. Rightly, the self-employment sector is very worried that that might happen with this policy. From my research and what I have just been given from the Treasury, I am sure that will not happen, and I am sure the Minister can assure me of that at the end of the debate.

The sector is concerned that the proposal could be a predictor of turnover. As I outlined, when I was self-employed, I worked year on year, until I started to be comfortable. Some years were good and some were extraordinarily bad. As the hon. Member for Hove eloquently said, this is not a matter of one size fits all. Self-employment differs across the sphere. Some business may be seasonal, a classic example being a man who grows Christmas trees. He should have a good December, but during the rest of the year he will have to have other self-employment.

We do not want online registration to become a yardstick with which to beat the self-employed. I know from my experience of being self-employed that turnover can fluctuate. We have just been through a deep depression and we have seen its effects on small businesses as well as large businesses. We do not want HMRC to start saying that business X did better in quarter one four years ago than it is doing now. Self-employment does not work that way. Businesses evolve and sometimes they become smaller and sometimes they enlarge. One size does not fit all.

Not all self-employed people are computer-savvy. Some 20% are not online, especially in rural areas. That may include the farming community and its business models, up to 40% of whom are not computer literate and cannot get their heads around online formulations. The hon. Member for Hove, who spoke eloquently and forcefully, said we do not want it to become more complicated for the self-employed to get in touch with HMRC to sort out their problems.

It is welcome that, to introduce the policy by 2020, a voluntary scheme will be looked at. That would be pivotal in the success of the policy. What should also be looked at is wider consultation across the whole self-employment sector. The Federation of Small Businesses should be consulted at length, as should British Chambers of Commerce, the Association of Independent Professionals and the Self-Employed and a whole host of other self-employment bodies with a firm stakehold in the self-employment sector and society.

Some business anomalies come and go and HMRC should recognise that and help. I referred to the chap who grows Christmas trees once a year. I was in the retail and service industry, which fluctuates between holiday periods and between periods when there is more spending on the high street and recessions. That should not be used as a sort of dashboard for small businesses in particular towns or regions or even across the country because they vary from someone running an IT business on the internet and selling small goods all the way to a big business on the verge of going multinational. Such businesses cannot be predicted.

HMRC has estimated

“that £6.5 billion in tax goes unpaid every year because of mistakes made when filing tax returns.”

We do not want that to become £12 billion, which may be a stretch of the imagination, but when any new system comes in, there are new challenges. We must make sure we get this right from the start. We do not want the self-employment sector to feel that Big Brother is on to them with a turnover predictor that becomes the new form of VAT. I do not think that will happen, but it must be said. Will the policy eventually lead to quarterly payments? From what I have seen from the Treasury, I do not think it will and I am sure the Minister will reassure us on that.

What must also be taken into account is that cash flow can be very unpredictable and many businesses are paid on a 90-day cycle, which is one quarter. That could skew and distort the figure that comes across a business’s dashboard with HMRC if it goes online.

To sum up, I hope this will not become the new VAT. I was a self-employed businessman for the better part of 30 years and I have seen all sorts of changes over that period from successive Governments of all political parties that had an effect on the way my business and others in my area ran. HMRC should set up special classes. The change should not be something that is just learned online. There should be a dedicated centre where self-employed people can be told what to do, so that they are not pressured into becoming semi-accountants, instead of earning money and being an entrepreneur and creative.

One part of the “Making tax digital” myth-buster that concerns me is where it says that people

“who genuinely can’t use digital tools…will be offered alternatives, like nominating someone else to update their information for them, or giving information by phone.”

In plain English, that reads to me like using an accountant. That should be taken into due consideration with these classes to ensure that people do not spend more and more of their time and money on employing more accountants to deal with quarterly returns.

It must also be asked what the penalties are if a quarterly return is not filed on time. Again, that concerns the self-employed sector. Those people want to know what the new system will look like, what it will involve and how, in reality, it will affect their business. We must get this right. We cannot let the estimated £6.5 billion of losses get any larger. It is good that the Government are grasping this nettle. It is a fact, whether we like it or not—everyone in this Chamber knows—that this kind of taxation filing will be done online eventually, because that is the way things are going. It is inevitable; that is the way of life. We all, from whichever side of the political divide, accept that. However, we must ensure that we do not place extra burdens on businesses and that they remain productive and creative, as we have one of the largest sectors for self-employment not in Europe, but in the world.

17:31

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

I commend all the speeches that we have heard so far, from across the party political divide, but particularly that from my hon. Friend the Member for Hove (Peter Kyle), who touched on the spirit of entrepreneurialism that many hon. Members speaking in the debate care about and has motivated them to take part. I think that it was the hon. Member for East Lothian (George Kerevan) who correctly said or implied that no one should turn their face against employing new technology to simplify or streamline what might otherwise be bureaucratic, wasteful paper-based systems. I do not think that that is really at the heart of the debate. I am less concerned about the shift from paper to digital than I am about the potentially even more seismic change from annual to quarterly reporting, updates, summaries, returns—call them what you will, there is definitely something that a small business will have to produce. In fact, I was wondering what the difference is between a return, a summary and an update. Perhaps the Minister was updated at the last general election rather than returned. I do not know, but it is on that specific point that we will want some answers.

My apologies, by the way, Mr Davies, if I am not able to remain in the Chamber until the end of the debate. I should also say that possibly we should all declare an interest—I point to my entry in the Register of Members’ Financial Interests—as individuals, because this proposal will not just affect businesses. In the Treasury’s update in the autumn statement and spending review, it was clear that the proposal will take in very many businesses and self-employed people, down to levels well below the VAT thresholds and others. I do not think, even though there are 110,000 signatures on this e-petition, that most people have quite realised the ramifications that the proposal could have for them as individuals submitting an individual tax return, as well as for those businesses that are affected.

This is not just about the move to doing things online; it is very much about the process of lodging the tax return or even update, because that is the thing that many people find particularly laborious. This is not about how things are written down; the issue is the process that takes up so much time and soaks up so much effort when a company is taking stock of the income that has been generated gross, of the expenditure that has gone out and of any gains or losses that have been incurred. When the Government say that in four years’ time there will be “at least quarterly” requirements to file “summaries” with HMRC, the Minister should not be too surprised if people hear that and feel that there will be at least a quadrupling of the administrative effort and exertions and the sweat and tears that sometimes go into that process.

My hon. Friend the Member for Hove has articulated sufficiently the broad points about why we should support SMEs; I have just a few specific questions about the Government’s proposals so far. Will the option of an annual tax return be abolished? Will companies still be able to make the return annually? Will this quarterly—or perhaps more frequently—arrangement be supplementing that? What exactly is proposed? The Minister says “at least quarterly”. Will he elaborate on how often he means by that?

Many small businesses and individuals will liaise with their accountants annually. They will collect together all the receipts or invoices and hand them over en bloc to their accountant, who will of course help with the recording of income, business expenses and so on. The accountant will examine those, perhaps audit them and agree a verified and checked final figure; and that is the point at which information is dispatched to HMRC. I want to drill down into whether the Minister is now saying that businesses and individuals will in effect be asked to submit raw, unaudited, almost “real-time” income and expenditure data directly to HMRC—disintermediated, if I can use that term, by taking the accountant out of the picture?

Will the Minister say a little more about where the accountancy and audit stage will fit into this process? That is a crucial thing for many businesses. They want to ensure that they are submitting information about their business activities in full, so that it is accurate. They will be anxious about what will happen if they make mistakes in those data, because they are going in on a real-time or near-real-time basis. They will be anxious about how that could ever be disentangled should administrative mistakes be made. Will not businesses now feel that they ought to incur even more accountancy costs, perhaps four times a year instead of annually, just to be on the safe side? The Minister can say, “There’s no need to do this. Just let us have access to your books and we’ll press send on Sage,” or whatever software the Minister envisages. However, I think that many businesses will want to take a precautionary approach. I can understand why they would do that, so will the Minister elaborate on that point?

What happens to the actual payment of tax owed? When will that be forthcoming? I think that the hon. Member for South Ribble (Seema Kennedy) touched on this point. Will an annual sum still be required, or are we in effect moving to some sort of pay-as-you-earn for small businesses? I have often found it a bit of an anomaly that many people who are employed have the tax deducted—dripping out as monthly payments—at source, but others have the option of making their tax payment sometimes 18 months further down the line. There is no particular incentive in that respect. There was, when interest rates were higher, the opportunity for people to forestall the payment of their tax and perhaps gain the benefit of holding on to that cash before parting with it and giving it to the Treasury. In this case, if we are moving to a sort of PAYE for small firms, it would be better if the Minister was honest and straightforward about it, because that would be a big change in the way business accounting works.

The hon. Member for Morecambe and Lunesdale (David Morris) made the point about seasonal businesses. He mentioned Christmas tree growers. There are many seasonal companies, which will do well in the summer months and perhaps less well in the winter or vice versa. Examples include window cleaners, sports coaches and people involved in holiday lettings. Of course, quarterly reporting arrangements will therefore be quite volatile over an annual period. Taking snapshots at a particular point in time will not necessarily give the final, smoothed, annual, true report of what the business may or may not owe in tax terms. There is a real question about peaks and troughs across the year and how that can be taken into account in a quarterly reporting arrangement.

[David Morris]

One thing that concerns me from what the hon. Gentleman is saying is that, if quarters are compared to relative years and HMRC thinks that something is amiss, it could enforce an investigation. Would the powers of investigation for HMRC be doubled overnight because it would have more of a dashboard—for want of a better word—on the computer to look between years and sectors and also types of businesses?

[Chris Leslie]

Many hon. Members will have filled in all sorts of electronic forms when purchasing goods and services. I can envisage an HMRC drop-down menu saying, “Pick the type of business that you are.” My concern is that not all businesses fit neatly into the categorisations provided by the computer. Whether the computer says yes or the computer says no, that does not always tally with the realities of those businesses’ needs. There is some virtue in the annual tax return arrangement, because it provides a smoother, more strategic overview of the tax liabilities of a business that is complex, even if it is small or micro.

There are bigger concerns about the design of the Minister’s proposal. For me, it is a bit of a distraction to get bogged down in the question of online versus paper. The core question is what is involved in moving to the quarterly summary and update arrangement. There are administrative issues, too, which people will worry about. HMRC has not exactly covered itself in glory in recent years in terms of customer responsiveness. I think 18 million phone calls went unanswered last year, and only 50% were picked up in the first half of 2015. Given that track record, I do not think the Minister should be surprised if people are a little bit wary about another big transformation coming, when they may want some help and support.

The Public Accounts Committee looked into HMRC customer responsiveness, and it was not exactly satisfied with some of the answers that it got. We need full assurance about HMRC’s competence on that matter. Principally, we need assurance about whether the Government are carefully thinking through this significant change, which could affect not only businesses and the self-employed, but many other individuals—perhaps tens of millions. The debate has been a worthwhile opportunity to pause and urge the Minister to think more carefully about the proposal.

17:41

[Andrew Bingham (High Peak) (Con)]

I apologise for the fact that I cannot stay for the end of the debate, because I am needed elsewhere at about 6 or 6.30 pm. It is a pleasure to serve under your chairmanship, Mr Davies.

I am broadly supportive of the propositions. A lot of the points that I wanted to make have already been made, but I do not apologise for making them again, because I know that the Financial Secretary is in listening mode. I am particularly pleased to see that the Minister for Small Business, Industry and Enterprise is in the Chamber, because we know that she is very committed to small businesses.

When I had a proper job, as I often say to people, I had my own small business. We use the term “small business” quite loosely in this place. I was interested to hear the hon. Member for Hove (Peter Kyle) talk about small businesses that made a profit of £70,000 a year, and I must admit that I wish that mine had made that sort of money. I want to focus on the microbusinesses—those very small companies. My business employed only four or five people. The hon. Gentleman, whose predecessor I remember well—he was a great friend of mine—made some good points. As he said, as a small business grows, its burdens are not alleviated but increased. Someone who employs five people has to worry about not one mortgage but five, and about five people’s futures.

I am concerned, as are some of my constituents, that the proposals may place further administrative burdens on small business owners. Some people think that a small business owner sits there in a big, expensive coat, smoking cigars and counting the money that comes in, but I and many Members who have outlined their experiences know that that is not the case. The small business owner or microbusiness owner has to be the salesman one day and the buyer another day. They are the credit controller in the morning, the HR manager in the afternoon and also the accountant. They have to do all those jobs at once.

I am pleased to hear the reassurance that we are not talking about making tax returns every three months. I hope that the Financial Secretary will give us more reassurances, because we need to get those out to our small business community. The quarterly update is fine, if that is where it stays, but I worry about regulation creep. I am slightly nervous that this is the thin end of the wedge and that, if we are not careful, the process will become one of quarterly tax returns. The implementation will be the key, and I would hate for the Sir Humphreys to pick this up by the scruff of the neck and turn it into something that we do not want.

I have heard that the proposal promotes savings to business, but I am slightly nervous about that. From my time running our business, I know that if there is a saving to be had, a small business owner will grab it by the scruff of the neck pretty sharpish. My business used to distribute engineering equipment. If I was selling an item of machinery, the market would dictate what I could sell it for, and my profit was dependent on how much I could buy it for and how much it would cost me to distribute it. If there are savings to be had, most small businesses that I know will already have grabbed them with both hands, so I am slightly nervous about that suggestion.

I flag up the point made by my hon. Friend the Member for Morecambe and Lunesdale (David Morris) about businesses that are not online or computer literate. This proposal will put them online, so will they be forced to buy such things as computers, and will their overheads and administrative burden increase? I leave that question hanging for the Minister to deal with.

My High Peak constituency is rural. Although the Government have put a lot of money into broadband coverage and the situation is getting better quickly, it is still a problem, particularly in some of the most remote areas. We have not talked a great deal about the farming community, but we must remember that farmers are small business owners by virtue of what they do. In High Peak—the clue is in the name; it is high, and there are peaks and hills, with very remote farms—farmers are struggling with their broadband, as are those in a lot of areas in my constituency. Only 64% have superfast broadband, which is another problem.

I was recently approached by three businesses, all on the same trading estate. Bells Shoes sells hundreds and hundreds of pairs of shoes on the internet. Interestingly, the company has always had a retail outlet in Buxton—I think I bought my first pair of work shoes there many years ago—but its business is now very much online. What used to be a retail outlet is now more of an online outlet, with the retail supplementing it, but the business struggles because its broadband is not fast enough.

Many in the Chamber will not have heard of Otter Controls, but I promise them that they will have used a product produced by Otter Controls, which makes thermostats. Every time we switch on a kettle and it trips off at boiling point, we can bet our bottom dollar that there is an Otter Controls thermostat inside. I could talk at great length about the history of the company, because it is fascinating. Again, it employs a lot of people, but the nature of its broadband is getting in its way. I realise that this is not a debate about broadband, but I think that it is a key aspect of what we are talking about and how we move things forward.

I understand and agree that we have to move things online. We have to progress because we need to remain competitive. However, I worry that bringing in this change so quickly might be a bit previous and that we could be a little ahead of the game. I am nervous about it, as are some of our small businesses. I speak regularly at the Glossop Business Network, and I am sure that the next time I visit the network, the matter will be raised with me.

The proposal sounds simple, as it should be, but I worry that it might get overcomplicated and that the process will not be as straightforward as it should be. If that happens, who will pick up the tab for the cost? It will not be us here or the good people at HMRC; it will be the business owners, the employers and the wealth creators of the economy. I cannot remember what my hon. Friend the Member for Hertsmere (Oliver Dowden) called small businesses, but I call them the engine room of the economy. I worry that if we are not careful, we might seize that engine up.

I apologise again for the fact that I probably will not be here for the Minister’s closing remarks, but I promise to read them avidly in Hansard in the morning. If my small business owners do not sell, they do not eat. If they do not make a profit, they put in jeopardy not only their own future, but that of their staff. All I ask of the Minister is that he assures them that the proposal will not be a big stick that HMRC will wield over them and smack them over the head with when they are already working incredibly hard to make a living for themselves, their employees and my constituents.

17:49

[Sammy Wilson (East Antrim) (DUP)]

Unlike some hon. Members who have spoken, I have difficulties with the concept of digitising tax returns. I have some experience from when Northern Ireland introduced digitisation and a need for internet access for planning applications and a whole range of civil service functions. Anyone who looks at the Government’s record, regardless of which Department is involved, will see that none of this ever goes smoothly and that the initial costs never turn out to be as low as predicted. The process of moving towards the objective is never smooth and, inevitably, many of those affected find it hugely frustrating. Sometimes the ironing-out period is short, but it can often last for a long time.

As hon. Members have pointed out, the issue of tax returns is not just a cause of frustration as, in some instances, it can be a matter of whether a business survives. Although the Minister has outlined some of the benefits and the reductions in administrative costs, we therefore have to ask ourselves whether we are sure that the transition period will not be so disruptive that it has an impact on many of the businesses in the United Kingdom that the Government are keen to expand.

One of the fastest-growing sectors of the economy in my constituency is people moving into self-employment—they are encouraged to do so. However, it would be detrimental to push those people into a situation in which it is difficult for them to do business because the Government have made it hard for them to carry out one of the most basic things—their tax transactions. The Government will undertake a consultation, and they have the 2020 deadline and so on, but we underestimate the trauma that some people might experience along the way because these things never work out easily.

I have read through the missive that the Minister has sent us all to sell this wonderful idea and, like others, I am still not clear what the Government are trying to achieve. The document cites headline figures, and says that the change will cut administrative costs and make things easier, and that people

“will be required to keep track of their tax affairs digitally”—

that is the kind of language that is used. It says that people will not have to

“wait until the end of the year, or even longer, before knowing where they stand with their taxes”

and that

“updates will be generated from existing digital business records”.

As some Members have asked, what does that actually mean for a business? Will a business know exactly how much tax it is due to pay every quarter? Will it pay that tax every quarter? Will the digitised records simply be a reflection of the information that is already gathered? Will they need to reflect the information that would be required at the end of the year? If so, that is radically different from simply saying, “Give us a lot of data about your business.”

There is significant work involved in getting some end-of-year records that businesses submit in their annual tax return. Those records might cover stock taking, work in progress, accruals, bad debts and one-off payments. Will all those things be required for every quarterly return? Is that what is meant by

“updates will be generated from existing digital business records”?

If that is the case, there is absolutely no way that the Government can argue that generating the accounts will not involve substantial extra work for businesses. If there is a quarterly requirement to pay tax, will businesses find themselves overpaying tax at the beginning of the year and then having to get a rebate at the end if end-of-year adjustments have reduced the tax burden? What does that do to a business’s cash flow? What do the Government intend?

Once the records go in, presumably the data will be looked at. If that is the case, will queries be raised, or will the data simply be ignored? If we are going to ignore the data, why provide them? If we are not going to ignore the data, will there be queries from HMRC not at the end of the year, when one tax return would have gone in, but on a quarterly basis? That would, of course, create additional work for businesses. The change will play an important part in how businesses generate the information. If it is simply a case of passing on digitally-generated information, will the process involve more or less information than a business would usually gather during the year?

[Seema Kennedy]

Does the hon. Gentleman agree that the transition will be complicated for businesses that are paid in cash and with cheques, as well as online? I am thinking of a self-employed hairdresser, for example.

[Sammy Wilson]

That is exactly the kind of question that any reasonable business would want answered when deciding whether the change is good or bad. It is easy to hide everything behind a term such as “quarterly, digitally-gathered business records” but the detail, as the hon. Lady says, is significant for businesses.

If the information is to be looked at in detail, that will affect how businesses go about collecting and verifying it. Most businesses do not want to make mistakes. They are not all treated—unfortunately, Minister—like the Googles of this world. Many businesses fear HMRC—they fear the taxman. They are afraid of making a mistake and of that being interpreted as them somehow trying to pull the wool over people’s eyes. Inevitably, instead of one visit to the accountant or auditor, there will be three or four visits. I do not think that this is just speculation, because one only has to look at what happened when VAT filing started. That was sold on the same kind of basis, because we were told, “You just fill in all the stuff,” but that was not what happened. People started going to accountants to get them to verify that they were sending in the proper information.

Will more queries be raised with businesses and will more time be tied up dealing with those queries? As businesses see the quarterly returns as something of great significance that have an impact on the tax they pay and how that might be scrutinised, will they face more compliance costs due to their asking professionals to do their returns? Alternatively, as some Members have described it, is it simply that they will have all the information on one spreadsheet, and that they can click a button to send it to HMRC, with that being the end of it? I doubt very much that that is how businesses will regard this, and HMRC has already accepted that there will be set-up and hardware costs.

[David Morris]

Does the hon. Gentleman agree that the best way to sort out such hardware and software costs will probably be to look at examples elsewhere? The Estonian Government, for instance, do not use paper at all; everything is done online. We have imported the car tax system from Estonia, and perhaps it would be good to look at how other countries manage similar taxation programmes.

[Mr David Hanson in the Chair]

[Sammy Wilson]

If we have long enough consultation and lead-in periods, there will be opportunities to find out where similar changes have been made and what lessons can be learned from them. I hope that that elementary step is taken so that we iron out some of those things. If the software is free, it does not mean that there will be no disruption to businesses because they will have to adapt to a universal form of data collection, which might be different from what they use at present. Of course, that requires training and changes to how things are done.

Many people in my constituency who have set up small businesses or become self-employed did so because they are good plumbers, carpenters, builders, mechanics or whatever, but they are not into the administrative stuff. Even if there is help and this standard software is provided free of charge, they will pay somebody to carry out the process, and if they have to pay that person four times a year, it will add to their costs.

As several hon. Members have said, while we talk about all this information being supplied online, that is not an option for many businesses throughout the United Kingdom. A report that was published on Friday by a group of hon. Members stated that it was accepted that the internet programme has not been rolled out as well as the Government had hoped. The report made substantial recommendations and asked whether we could implement them without breaking up BT’s monopoly.

One thing we know is that HMRC has accepted that 19% of businesses have no digital contact, and that 42% need assistance, so a substantial number of businesses will not find the transition easy. Connections in this part of the United Kingdom are much better than those in Scotland, Northern Ireland or other areas of England and Wales where the population is perhaps more dispersed, so the burden of not being able to comply with digital returns will be felt much more heavily in some constituencies than others, and that needs to be taken into consideration. I do not want to make a point that others have made, but if the system needs to involve other ways for people to contact HMRC, we already know that there will be difficulties. I do not want to go through all the statistics about phone calls not being answered—

[Rob Marris (Wolverhampton South West) (Lab)]

Go on.

[Sammy Wilson]

I am sure that the shadow Minister will make that point very effectively. We already know that there is a problem with communications other than those involving computers, so that is an important consideration when introducing a system in which people have to make contact four times a year.

18:04

Sitting suspended for Divisions in the House.

18:30

On resuming—

[Mr David Hanson (in the Chair)]

As there were two Divisions in the House, the debate may continue until 8 pm. When we divided, Sammy Wilson was at his peroration.

[Sammy Wilson]

I have three points to make in conclusion. First, although more than 100,000 people have signed the petition, I believe, despite what the Government have said, that that is probably an indication that many businesses are not even aware of the changes. If the policy announcement has not percolated down to those who will be affected, how can we be sure that they will be fully aware of the substantive changes to come until they are hit by them? There is a lesson to be learned about just how effective the announcement and the consultation have been. Secondly, although the Government argue that they want to reduce the regulatory burden on businesses, I cannot for the life of me, for the reasons I have given, understand how the approach will reduce that regulatory burden.

My third point is about political perception, but it is important, and I would have thought that the Minister’s party would have been particularly concerned about this. There is increasing cynicism that somehow big business gets away with things that small business does not. The measure will apply to small businesses but not to large ones, yet all the time the headline news is about how the latter—whether it is the Googles or the Starbucks —seem to walk away from their tax responsibilities. People will find it difficult to understand why there should be a greater onus on small businesses to declare their earnings and business details when some of the larger ones can get away without paying tax for 10 years and then get a slap on the wrist. As we discussed earlier in the main Chamber, they seem to get away with paying very little.

[David Morris]

I would like the hon. Gentleman to try to look at the matter this way: self-employment is the largest growing sector in the country, and that has to be taken into account when considering how taxation should be simplified. As my hon. Friend the Member for High Peak (Andrew Bingham) said, the sector is the powerhouse—the engine room—of our economy. I hope that the hon. Gentleman agrees that two different styles and sorts of businesses are being discussed in parallel. Our earlier proceedings in the Chamber were about the Googles of this world, and this debate is about the self-employed and small and up-to-medium-sized enterprises.

[Sammy Wilson]

I take the hon. Gentleman’s point, but I think that I made it clear that a lot of this is about perception. Businesses that are struggling and already feel a heavy regulatory burden sense that further requirements are being imposed on them. It may well be that we are talking about different kinds of business, but we all know that perception is important in politics. There is cynicism and scepticism, and people take the view that somehow the big players get away with things that the small players do not.

The Government ought to be concerned to ensure that we are not seen to be imposing further regulation on the small, usually labour-intensive businesses that generate a lot of employment across the United Kingdom and which the Government seek to encourage. Many of the responses to the consultation have been from organisations that represent small businesses, and they have been negative. As several hon. Members have said, those organisations do not know what the Government hope to achieve, or what businesses will have to do, what information they will have to give and what the impact on them will be. Those points need to be cleared up, and that is one of the reasons why today’s debate has been good. The Minister’s response will be noted by hon. Members who have participated, but during the ongoing consultation and the roll-out of the policy, we need to bear in mind all the points that have been raised today.

18:35

[Hannah Bardell (Livingston) (SNP)]

It is a pleasure to serve under your chairmanship, Mr Hanson. I hope that hon. Members agree that we have seen a coming together across the political divides on a number of issues today. There are many shared views about the concerns that are out there.

I pay tribute to Paul Johnson, who created the petition, which, when I last looked before leaving the office today, had nearly 110,000 signatures. That is a sign of the strength of feeling to which hon. Members have referred. It is also important to pay tribute to the work of the Petitions Committee in ensuring that there are opportunities for the public to respond to and feed into Government policy. The hon. Member for Hertsmere (Oliver Dowden) mentioned the engagement on Twitter; the more we can open up our politics, the better.

It will not have escaped anyone’s notice that it is Burns night tonight and, for those hon. Members who did not know, Robert Burns worked in the Excise—

[Rob Marris]

He was a socialist.

[Hannah Bardell]

Yes. What we have heard today is a call for the Government to reflect on the plans and on the pace of development. I am able to find a Robert Burns quote for every situation, and he once said:

“Dare to be honest and fear no labour.”

I commend those comments to the Government.

The contributions to the debate, across all political parties, have been insightful and thought-provoking, but while the Scottish National party supports digital transformation and recognises that it is absolutely key in all aspects of our society, we believe that it must be done in parallel with a simplification of tax policy. We feel that the Government’s lack of consideration about how the changes will work in practice flies in the face of the commitments they have made to simplify tax for small businesses. I believe that the Chancellor said that his “dream” was

“that people might actually understand the tax laws which they were being asked to comply with.”

Some time ago, the Government also said:

“We need to reduce the complexities in our tax system and the coalition is committed to delivering that goal.”

I hope, and assume, that the Government are still committed to that goal, but I think we have heard from hon. Members across the House today that people are not convinced about that.

I highlight again that a key concern across rural parts of Scotland and, I am sure, the rest of the UK, is weak digital infrastructure and connectivity. We appreciate that there has been significant investment by the UK Government, and we commend them for that. In Scotland we have also made a significant investment—£115 million, to be spent in the next year—against a challenging financial backdrop. The overarching issue for us is that we want small and medium-sized businesses to thrive and develop in rural parts of Scotland, but connectivity and infrastructure are not developing apace with that potential and with the proposed changes. Along with people from across the political divides, I urge the Minister and the Government to include that issue in the consultation and map out the weak areas of connectivity.

My hon. Friend the Member for Ross, Skye and Lochaber (Ian Blackford), who is not here today, recently highlighted a grave concern in his constituency. Thousands of houses and premises there lost connectivity over Christmas, which affected their businesses. If that were to happen regularly, one can only imagine how the changes might affect people. To give an example, a good friend of mine owns a bed and breakfast in the port town and fishing village of Mallaig. For some time he had a satellite on the side of his house—I do not know whether he still does—which provided mobile coverage to Rum, which is one of the Small Isles. There happened to be a storm one winter, and the satellite was knocked off. The whole island lost connectivity for a number of weeks. That is a small but important example of how connectivity is delivered in some of the rural parts of our United Kingdom and across the isles.

Many businesses and groups have argued that the proposals for digital accounts and quarterly reporting will make the requirements on small businesses more complex. The Federation of Small Businesses has condemned the UK Government’s failure to publish initial options for the form that the quarterly return will take, which has not been defined. A number of Members have mentioned that. The FSB has said:

“As such, the announcement runs completely contrary to evidence-based policy making, which only serves to undermine businesses’ confidence that Government is determined to tackle the administrative burdens of small business.”

Additional research has shown that on average, businesses pay £3,600 a year to comply with tax arrangements. The additional burden could have a significant impact.

The FSB has provided us with comments that its members made between 15 and 17 December last year in response to the proposals. One said that instead of making the lives of small business owners as simple as possible,

“HMRC should be pursuing the large businesses that do so very well out of not paying the taxes they are due!”

That is particularly resonant given the urgent question earlier today. Another member said:

“This is my worst nightmare come true. I am going to be spending more time filling out tax returns than actually running the business. I fear it may be the straw that breaks the camel’s back.”

An accountant said:

“I totally disagree with your comment that ‘it’s good for accountants’. As a professional accountant nagging those late clients to bring in their records and other information to beat the January deadline, having to do this now 4 times a year would be our worst nightmare come true. It would be January four times a year with no doubt penalties and interest for those that are late in filing the quarterly returns.”

I hope the Minister will take those comments on board and think carefully about them.

Many bodies have echoed the concern about the additional workload that the new reporting requirements will place on businesses. Chris Jones, the president of the Chartered Institute of Taxation, said of the quarterly reporting requirement that he was

“struggling to reconcile this with the announcement by the Chancellor…that the annual cost to business of tax administration will be reduced by £400m”.

Similarly, Anthony Thomas, chairman of the Low Incomes Tax Reform Group, has said:

“We gave a cautious welcome to the new digital tax accounts on the basis they might simplify matters for some low income taxpayers, although we remained very concerned that a significant proportion of the population, often the most vulnerable, remain digitally excluded.”

That applies for a number of reasons. People on lower incomes who start businesses, particularly women, may well be excluded and unable to navigate the new system. A number of Members have referred to the roll-out and cost of training and development. I hope the Minister will refer to how that will be done and assessed, because that is important.

Business for Scotland surveyed 278 of its members, and 92% of them felt that the changes would cost them significantly more and said that they already had enough to deal with. The majority are concerned about increased stress and fear that accountancy fees will be increased and that they will be constantly preparing for the next tax return. I appreciate that some of those fears may be allayed, but there is an issue of public perception, as we have heard today. It is about how the Government communicate and consult with business, which is key.

The SNP has significant concerns about HMRC’s ability to implement the changes in light of budget cuts and the closure of HMRC offices. It is predicted that many small businesses will need to seek advice on how to meet the extra requirements of quarterly reporting. James Hoare of PricewaterhouseCoopers has said:

“Digitising the relationship between business and HMRC is desirable and inevitable, but the scope and timescale of the proposed changes raise important questions, such as whether training and support will be provided for those less familiar with digital reporting.”

HMRC has had its budget cut. Its departmental expenditure limit will fall from £3.8 billion in 2016-17 to £3.1 billion in 2019-20, which is a cut of more than £700 million across three financial years.

We are all aware of the proposed closures and the devastating impact that they will have, particularly in Scotland, where offices are going to be centralised to the central belt in Edinburgh and Glasgow. Much has been said about how that will be a positive move, and it has been said that minimal numbers of jobs will be lost, but that is not what we are hearing on the ground, where there is a real fear that we will lose much of the expertise of offices and their staff, and that there will be an inability to collect tax efficiently.

The centralisation of offices has led to other issues being raised, include travel, particularly in my constituency of Livingston. One of the offices there was purpose-built for HMRC. It is not old or dilapidated in any way, and the local workforce have impressed on me the number of areas of expertise that they feel will be lost, and the real-terms cut in salary that will result from increased travel costs. Livingston, as most Members will know, is placed right between Edinburgh and Glasgow, and connectivity is very good. I cannot imagine what things will be like for those who are considered to within one hour’s travel.

The key themes are public and business confidence, and the development of broadband infrastructure and connectivity at pace. The burden must not fall largely on small businesses, because, as a number of Members have said, entrepreneurship and the people’s desire to start their own business may be reduced if the administrative burden is put on them. As we have heard, HMRC is already struggling to answer calls and deal with the current workload, so we need to understand the effect of the various changes and cuts coming down the line. In some respects, it seems like a perfect storm of service closures, reduced budgets and a greater burden on the service.

I hope the Minister and the Government will think carefully about all the issues that have been raised, and that they will extend the time for consultation and roll-out, as Members from all parties have asked for. Otherwise, there is significant fear, not only in the House but in small businesses across the country, that the burden will be greater for small businesses and damage could be done to them.

18:47

[Rob Marris (Wolverhampton South West) (Lab)]

It is a pleasure to appear before you again, Mr Hanson. I give my thanks to the Chartered Institute of Taxation and the Federation of Small Businesses in particular. I also thank the petitioners and those who tweeted in response to the petition.

Broadly, Labour welcomes greater digitalisation, but I think that the Minister—he is an honourable and painstaking Minister—has been a victim of some wooliness in this whole saga. Fears have been expressed that the Government are about to do things that the Government say that they are not in fact about to do. That is always a difficult thing for politicians, and we face that whatever our political party. We are well able to defend our views and those of our party, but it is more difficult to deal with people misunderstanding our views and then attacking those misunderstood positions. We have to go through a double process with them: first, we have to sort out what our position is and then we have to justify it.

The change is a question of timing, software and the assistance that will or will not be available. As I understand it—the Minister will be able to confirm this or say I have got it wrong—a lot of HMRC stuff is already done online: VAT is online; there is real-time information for PAYE returns; and company accounts are being submitted in what is called iXBRL. No doubt, the Minister will know what that stands for; I do not. There is also the digital tax account and the agent online self-service, which is not to be confused with the agent secret service and which is for such people as accountants to deal with HMRC regarding the tax affairs of their clients.

What the Government are doing—it is very understandable; it is happening all over society—is an attempt to externalise costs. That is what it is in economic terms. We see it all over the internet with the use of online services. Many Members will be familiar with this, but years ago people would go to a travel agent, and the travel agent bore the overheads. Now, people go online and book with an airline or a travel company, and they are bearing the overheads, because they are paying for their computer, the heating and lighting in their home and so on.

HMRC is externalising its own costs, which is understandable because HMRC is not a profit-making centre. If its costs of operation are lower, taxpayers benefit. However, we know from other examples that externalising costs does not always go smoothly. I will quote from paragraph 1.5 of the Chartered Institute of Taxation’s very helpful briefing:

“Making Tax Digital is a huge project that is going to bring in fundamental changes to the tax system and how both taxpayers and their agents interact with it. It has the potential to create a simpler, more workable tax system if it is developed and implemented in the right way but it must be managed carefully and in consultation with taxpayers, tax professionals and software developers alike.”

That sets the scene quite well in terms of what one ought to aim for in government, whatever one’s party: to have an inclusive process that runs smoothly and not too quickly. It is not clear that the other online initiatives in HMRC have gone so well. The CIOT states:

“There is evidence that past changes in reporting obligations have led to an increase in compliance costs for businesses, and that HMRC tend to under-estimate these costs.”

In the spending review, HMRC tells us that the measure will save businesses £400 million a year, which would be very welcome, particularly for small businesses. I hope the Minister will clarify that, because I keep hearing about the effects on small businesses. We absolutely focus on that, about which more later, but I am not sure whether there is a de minimis or upper threshold. Perhaps the Minister will elucidate, because I keep reading, “This is an attack on small business; big business does not have to do this, and therefore it is unfair.” That might be the case, but at the moment it is not clear to me that, if the measure were brought in, it would not apply to big businesses; or, to get rid of the double negative, when this comes in, it will apply to big businesses. So we need to know who the policy will apply to.

We all know from the debate today that there is a big risk of increased costs for businesses, and that those increased costs are likely to fall to a greater extent on small and medium-sized enterprises, which do not have accounts departments. So, proportionately, the hit taken by smaller businesses, if this were to go wrong, would be much bigger because of the initial set-up costs. Even if there is free software from HMRC, it has to be installed on a computer, if the small business has one. There is increased staff time in preparing and checking all the records four times a year and a potential increase in the fees of agents, particularly accountants. Some small businesses might need to engage an accountant, whereas previously they might not have done so.

All that costs money, and if HMRC were to raise queries four times a year, in contradistinction to once a year, the likelihood is that those queries would not be a quarter as many or a quarter as complex and that, when a whole year’s worth of quarterly queries is added up, it would take more staff time and cost more for businesses, particularly, but not exclusively, for small businesses.

There is a question of timing. I understand there will be consultation this spring, so the hares are now running. We have a petition of 110,000 signatures. Organisations have considerable concerns, many of them expressed today, particularly on two aspects that are linked. There is the sanctions aspect and whether sanctions would be applied for failing to do a quarterly update. My hon. Friend the Member for Nottingham East (Chris Leslie) was right: we could use a multitude of words for this measure, but we must not use the word “return”. Returns are for taxing, winning elections and birthdays when we get happy ones. Generally, we do not say, “Happy tax returns.”

[Chris Leslie]

Many happy updates.

[Rob Marris]

Indeed.

I hope the Minister can elucidate whether the software will be free, as has been indicated in some of the material I have read. If it is to be free, or paid for by the individual, when will it be available? Perhaps it is available now; there is no sense in having the system and no software to deal with it.

Perhaps the Minister will correct me if I am wrong, but I understand there has as yet been no impact assessment, which seems to be a rather large lacuna in what hon. Members and outside organisations engaged in this matter agree—it does not mean it is right if we all agree, but the tendency increases—is a pretty big change and may presage bigger changes on a more widespread basis.

It would be helpful for business if HMRC went about saving money—externalising costs, being more efficient, whatever we want to call it—before cutting staff so much. To cut staff and introduce this new measure is a triumph of hope over experience when it comes to computerisation programmes, whether in government or in the private sector.

I have another question for the Minister on the vexed question—in spite of the agent online self-serve system—whether there will be synchronicity by April 2017. At that point, quarterly updates will have to be filed by businesses and agents will have access to all the information online—not just the information of their clients, but HMRC’s—and will interact with HMRC digitally, because otherwise there is a risk that businesses will file updates four times a year, but their agents will not be fully engaged in that process that has happened before, and that is a concern.

As for staffing, there are lots of different ways to count staff. When I have probed this, there has been a difference of opinion between HMRC and the Office for National Statistics. However, if we look at the broad trend, the ONS and HMRC agree that since April 2010, when the Conservative-led Government started, there was a cut of almost 20% in HMRC’s staff by April 2015, and there are more cuts in staff to come. On the centralisation of offices, for example, which has been adverted to, only 90% of staff will transfer to the centralised regional offices, according to HMRC’s own figures. So a greater loss of staff is likely. Loss of staff per se is not a bad thing if an organisation is running more efficiently, but it seems to me to put the cart before the horse to say we will lose staff at the same time or even before we bring in this online stuff. Again, it is a triumph of hope over experience.

Will the Minister tell us about the practicalities and exactly what data will be submitted? My hon. Friend the Member for Nottingham East referred to this key question. The Government are saying to businesses, “We want you to provide some information four times a year,” to put it at its most neutral. What information will be required four times a year? The likelihood is that businesses will no longer have a choice about how to keep their records, because, although they may retain that choice in theory, for practical purposes, they will have to keep that information in a way that is compatible with the HMRC model. That may be a good thing, but uniform models in business are always a little suspect, because they can crowd out innovation. So there is a question mark there in terms of that forced uniformity, unless HMRC, for example, comes out with two or three different sets of free software, which I doubt, but perhaps the Minister can tell us more about that.

If, as has been suggested in some of the material—again, perhaps the Minister will clarify—this is a system whereby we press a send button and all the information squirts out the computer, down the broadband, if we have broadband, to the HMRC server, that will leave HMRC with a whole lot more information, and the hon. Member for East Antrim (Sammy Wilson) quite reasonably asked what HMRC will do with that information. He has been around for even longer than I have—he is pulling a face, but I do not mean his age; as an hon. Member of this institution, he has been here longer than I have. So, as he knows, the likelihood is that with any splurge of data from businesses hitting the send button, because they have it in the format provided in the software or whatever, a lot of the information will never be looked at. Businesses will supply all that information, but it will not be looked at; it will only clog up HMRC and potentially the system. That might lead to a lower rate of compliance, and none of us wants that.

Furthermore, experience tells us that if people are submitting information four times a year, the likelihood—not the certainty—of errors creeping in goes up about fourfold. Again, that is not necessarily the case, because the system might be a simple one, understood by businesspeople who are simply running a business and not having to be an accountant on the side, so they might be clearer about what they are supplying and therefore less likely to make errors. To expect that, however, would again be a triumph of hope over experience. The greater likelihood is that, with quarterly updates, there will be a considerable increase in errors—if not fourfold, threefold.

[Seema Kennedy]

I understand the point that the hon. Gentleman is making, but although there might be an error in the input of records, surely if everything is done electronically, there will be fewer calculation errors at least, or so one would hope.

[Rob Marris]

I agree with the hon. Lady that that is the theory, but the fact is that input errors are likely to increase in number if more information is being inputted—not necessarily, but likely. She is absolutely right that that is the point at which errors, if there are any, will creep in—garbage in, garbage out, as the saying goes.

Another practicality mentioned today relates to remote areas. I hope that the Minister will say something about that, because I have seen some suggestion that things could be done on a smartphone. I am no techie, but the only ways in which I can see that being possible are on a phablet with a screen of about 7 inches in size, and there are not many of those around, or by people using their smartphone as a modem and submitting information over the mobile telephone network, rather than broadband cables. However, many remote areas do not have 4G, so in theory someone could be dumping the information through the smartphone, which is being used as a tether modem, although that seems unlikely because the speed will not be that great, so there is a problem.

Nevertheless, I support the general idea of getting stuff online to achieve greater efficiencies. We have to be careful about those who are unable to cope with the online stuff, for reasons of disability and so on, but contrary to what some Members have been saying, the Government—whether now, or in four years’ time when we in the Labour party are in government—must be careful about going along with everyone who will not engage online. Some people will not engage online even when they can, although it would be more efficient for them to do so and it is more expensive for the rest of us that they do not.

The way business is going—not every business, but an awful lot of them—if a small business does not engage online, the likelihood of it being successful decreases year by year, because of the digitalisation of the world. If an HMRC initiative encourages some small businesses to have more digitalisation than they would have done had the system not come in, that could be a good thing not only for them and how they run their businesses, but for how they interact with HMRC.

The hon. Member for South Ribble (Seema Kennedy) mentioned a hairdresser. A peripatetic hairdresser, for example, with his or her own car does not necessarily have to be online to run a successful hairdressing business. The way the world is going, however, that lack of a digital presence is likely to tell us against the hairdresser. Some hairdressers will now have an automated system to send a text message to tell the client, “Don’t forget, I’m coming round to give you a wash and shampoo tomorrow afternoon at 2.30.” That is fairly basic stuff, but it is using the digital to enhance business with fewer missed appointments and so on. That is how the world is going, so a nudge—to use one of the Government’s favourite words—from HMRC is not at all a bad thing, although we have to be sensitive about those who are unable to get online, for whatever reason, whether in terms of disability or their geographic presence, such as in a remote area.

We have all had our sob stories about running a small business. Years ago, I helped to run a small family business with a few employees, and later I worked for a large and successful firm with 1,000 employees. Before I first came to this place, I spent most of my working life in the private sector. The nudge then was to get computerised. In 1995, although I am not a techie, I was the first partner in my law firm to have a computer on my desk, because I kept saying, “The world’s getting more and more digital.” Now, 20 years later, except perhaps for reasons of disability, no lawyer in the land can be found without a computer on their desk. Any lawyer who did not have one 10 years ago probably went bust, because otherwise the job could not be done. Sometimes, we have to nudge things, and I nudged my partners on that.

Nevertheless, I suggest to the Government that any such nudge must be accompanied by simplification, as most recently referred to by the hon. Member for Livingston (Hannah Bardell). The Federation of Small Businesses states that, while it is “fully supportive” of HMRC’s “digital transformation”, it believes that that should be made “in parallel” with the simplification of tax policy. That is very important.

The Government, in their formal response to the petition, stated:

“Many taxpayers have told HMRC that they want more certainty over their tax bill”.

I can see that, although I am not sure that quarterly reporting will do it, because what bedevils business, small businesses in particular, is the complexity of the tax system.

The Minister and I have been talking about this on and off for about 10 years, so I appreciate that simplification is the holy grail. When the Chancellor was a shadow Treasury Minister, he used to bemoan the fact that under a Labour Government “Tolley’s Tax Guide” had gone up to 1,000 pages—but it is now in round terms 1,500 pages. As I have said before, however, I do not blame the Government or their predecessor coalition Government for that. Tax affairs are complex, because we have a lot of smart people in this country, who are innovative in financial services, and they find loopholes. Then the Government have to write a whole bunch of legislation to plug those loopholes, but that only keeps putting sticking plaster on sticking plaster.

For all the commendable efforts of John Whiting and the Office of Tax Simplification, the Government—true under Labour as well—have not engaged fully in tax simplification; it would be rough and ready and there would be less discretion and more apparent injustices, but there would be much more certainty, which the Government recognise all taxpayers, particularly small businesses, want.

The hon. Member for East Antrim referred to problems with computerisation. They are legion and there have been problems with the ancient online self-service system. Something that happened under the previous Labour Government and, incredibly, was made worse by the coalition Government was the single farm payment scheme for farmers. It was a disgrace under a Labour Government and that disgrace got worse under the coalition Government. Farmers were supposed to file their claims online for the single farm payment—its name has changed now, which is what all Governments do when they get into difficulties—in a so-called simplified system. What happened? The system collapsed for those who could not get into it. Farmers, because of the nature of their business—I think the hon. Member for High Peak (Andrew Bingham) referred to this—often live in remote places. They, too, might not even be able to use a phone as a tether modem because they do not have 4G.

The Opposition’s plea to the Minister is not to put the cart before the horse. The Government should get the system up and running before they start cutting back on the available assistance. I am not going into all the problems at HMRC, but they are legion, known about and much discussed. The Government are taking them on board and there has been a little improvement in recent months. That is long overdue, but it is good. The Minister should keep it up.

It is no secret that there are big problems in HMRC and the Government accept that, which is why HMRC is moving 3,000 more people to answer telephones and so on, but if the new system is not to involve quarterly tax returns—the Minister was commendably clear about that ex post facto, after hares started running and people started getting worried—there is a twofold problem. First—this was referred to by my hon. Friend the Member for Nottingham East—will quarterly updates be a precursor to quarterly tax returns and a kind of PAYE for the self-employed and small businesses? Secondly, will there be short-termism, which affects very large companies now and bedevils British manufacturing? Footsie companies have to make quarterly reports and so on to the stock exchange, but if this system comes in, it has the potential to drive SMEs towards short-termism, and generally there has been cross-party consensus that that has not been good for our economy. It might have been good for a few arbitrageurs and people like that, but it is not good overall.

To finish, I ask the Minister where he thinks we are going beyond quarterly updates, if at all. What the Government said in their response to the petition was either contradictory or a harbinger of where they want to take this:

“At the March 2015 Budget the government committed to transform the tax system by introducing simple, secure and personalised digital tax accounts, removing the need for annual tax returns.”

So that we are all clear, I will repeat that last bit again:

“removing the need for annual tax returns.”

If that is what the Government are talking about in secure and personalised digital tax accounts, is that what they have in mind for businesses—to remove the need for annual tax returns? That may be a coherent policy, but I am not aware that they have announced it and it would be the kind of very big change to which my hon. Friend the Member for Nottingham East referred. Will the Minister therefore say a little more about where he thinks the Government are, or are not, going with digitalisation?

19:12

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

It is a great pleasure to serve under your chairmanship, Mr Hanson. I thank all Members who participated in the debate. I was struck by its measured tone and the many sensible inquiries made. I hope to respond to as many of them as possible.

Before I do that, may I add to those words said by my hon. Friend the Member for Hertsmere (Oliver Dowden) my own words of tribute to Lord Parkinson and of condolence to his family, following the announcement of his death today? I was fortunate enough to meet Cecil Parkinson a number of times in my years as a Member of Parliament and I was struck by his warmth and generosity of spirit. He will be greatly missed by both Houses of Parliament.

We have had a useful and helpful debate in which many points were raised. I am grateful for the opportunity to dispel some of the myths that I think exist with regard to the policy and to provide greater clarity where I can. This is an important policy and it is important that we get it right for small businesses. I would particularly like to thank the Minister for Small Business, Industry and Enterprise, my right hon. Friend the Member for Broxtowe (Anna Soubry), who was present for much of the debate.

I would also like to thank all those who took the time to respond to the petition. I hope that as many people engage in the consultations on the reforms that HMRC will launch later this year. The Government have always been on the side of businesses that help to create long-term, sustainable economic growth. That is why we have lowered the rate of corporation tax, increased the investment allowance and helped our companies expand into new markets. We believe in competitive tax, simple tax, and tax that is paid.

Before I say a few words about what is changing and why, I would like to make clear what “Making tax digital” is not and address some of the concerns raised by businesses. First, to respond to the point made by my hon. Friend the Member for Hertsmere at the beginning of the debate some hours ago, this transformation does not—I repeat “not”—mean four tax returns a year, but, by 2020, most businesses will be keeping track of their tax affairs digitally, updating HMRC at least quarterly via their digital tax account.

Quarterly updates will not involve the complexity of a full tax return, where the business, or its agent, has to gather together and manually input data on to an electronic or paper form and then perform various calculations. Instead, updates will be generated from digital records and, in most cases, little or no further entry of information will be needed. It will be much quicker, easier and far less burdensome than the current process. The agony of the annual tax return will be a thing of the past.

[Sammy Wilson]

If the information required will not be the detail required in the end-of-year tax return, what value will there be in the calculations made? If the aim is to give certainty to taxpayers about what they are likely to owe but the information is not substantial enough to work that out, what value does it have? How will that enable people to keep account of their tax affairs, as the Minister described it?

[Mr Gauke]

That is a fair question. The hon. Gentleman raised that point in his remarks and there is a distinction between the nature of the information provided. Whereas a full return can be complex, the update will be based on business records that are already being recorded. There will be one process for both business and tax purposes, which will involve a summary of income and expenses.

The hon. Gentleman asks what is the use of the data and how will they be helpful. First, keeping records digitally will reduce error, partly because that will be done on a more timely basis. Secondly, the data will allow HMRC to focus its attention on the small minority of small businesses that are evading their taxes, and not on those who are trying to get it right. One must also bear it in mind that the software will help taxpayers identify any errors in the information they provide. One of the key benefits permitted by a more digital approach is that errors can be spotted earlier by the taxpayers themselves.

I reassure the House that HMRC does not intend to increase interventions on the basis of quarterly updates. On the contrary: HMRC is seeking to reduce error at source and so reduce the need for interventions. It is the case that by keeping records in real time instead of processing paperwork at the year end, businesses are less likely to lose receipts or make basic accounting errors.

I confirm that the proposal applies to large businesses—it is not exclusively for smaller businesses. On whether the software will work, let me point out that there are already six free products on the market and we expect there to be more as small software firms innovate to meet business needs. Such firms are clearly keen to engage and produce new products and services—we see that in the growth of apps—and already 30,000 small businesses have downloaded free record-keeping apps suited to all varieties of devices, whether tablets or smartphones.

One point that came up repeatedly and which was made by the hon. Member for East Lothian (George Kerevan) was that we are rushing this through. Let me reassure him and others that the Major Projects Authority has examined the plans and that it views them as deliverable. However, neither the Treasury nor HMRC are complacent, and we do understand that there are challenges, and I will pick up on some of them. However, it is worth noting that this is a five-year roll-out. We are engaging in substantial consultation this year. The piloting and testing of the technology and the various processes will then follow.

Phone calls were mentioned on a number of occasions. I said in the main Chamber earlier this afternoon that HMRC’s performance in January, which is traditionally a busy month, because of the self-assessment deadline, has been at a very high level. The last number I saw, which was for last week, suggested that 89% of calls were being answered and that the average waiting time is four minutes, which, it would be fair to say, is better than the historic norm for HMRC.

It is worth pointing out that the overall £1.3 billion package of investment for HMRC will allow more of its customers—not just businesses, but individuals—to go online, thus reducing calls. In addition, HMRC gets many calls about information that will in future appear in taxpayers’ digital accounts. For example, people call to find out their reference number or to chase a refund, and digital accounts will take out a large number of those calls. As I said, call centre performance is now also much improved.

My hon. Friend the Member for South Ribble (Seema Kennedy) raised the issue of sanctions. We will consult on the sanctions that will be appropriate in a digital environment. Penalties and other sanctions will not be the same as those that apply now to end-of-year returns. We will want the new process to bed in before we turn on any sanctions. There is no plan to penalise those who try to comply. I point hon. Members to HMRC’s record on the introduction of real-time information. There was a careful and measured approach to penalising people, and only deliberate non-compliance resulted in sanctions while the system was being introduced.

A couple of hon. Members asked whether quarterly updates will be required to take account of accounting adjustments for stock and work in progress, which are currently made only once a year. Detailed issues such as the allocation of capital allowances and the counting of stock levels will be addressed through consultation. I stress that all allowances, deductions and reliefs that are currently annual will remain so. Of course, for the many businesses that use cash accounting, that is much less of an issue, but I recognise that it is an issue for some businesses. Again, for issues such as work in progress, we are not requiring information quarterly.

Concerns were raised about payment. No decision has yet been made about changing payment dates. In December, alongside the “Making tax digital” road map, we published a discussion paper on options to simplify the payment of taxes. An initial consultation will take place shortly, with a further, full consultation to take place later this year.

My hon. Friend the Member for Morecambe and Lunesdale (David Morris), who does so much for the self-employed in the role he plays for the Government, raised the issue of payments following quarterly updates. Again, I stress that no decision has yet been made about changing payment dates.

Questions about how the changes will affect seasonal businesses will be addressed through this year’s consultation. Businesses trading seasonally may be due a tax refund in-year. If they update HMRC more frequently than they do now, that will allow HMRC to assess them for such a refund, so there may be a financial benefit for them. Let me also stress that the quarterly update will be based on actual information, not forecasts. I hope that that provides some reassurance.

In terms of implementation, I reassure hon. Members that we will carry out extensive testing. Roll-out to businesses will take place when the process and the design are known to work.

I touched on cash accounting earlier. About 2 million businesses operate on a cash basis and do not need to account for work in progress, stock and so on. For others, updates will provide an increasingly accurate picture through the year. However, direct taxes will remain annual taxes, so some adjustments will need to be made at the end of the year. That should, however, be less of a task than the traditional annual tax return, because much of the information will already have been pulled together.

[Chris Leslie]

I am trying to envisage what the Minister is discussing, because there is still quite a lot here that is open to consultation. Data on income and expenses would be supplied through these quarterly updates, but we might not necessarily be able to get rid of the annual return, which might still be necessary because of tax reliefs and so forth. [Interruption.] Yes, people could be doing these things five times a year—there would be one big final return and these updates along the way. Are we getting rid of the annual tax return or not?

[Mr Gauke]

The traditional annual tax return, we can get rid of. What I am saying is that, rather than starting largely from scratch and pulling all the information together, businesses that need to make adjustments at the end of the year will have already done much of that work. Now, as I say, the tax system remains an annual system, and one needs to be able to look at the year as a whole for things such as capital allowances. However, it is worth bearing it in mind that the capital expenditure of the vast majority—something like 98%—of businesses would fall within the annual investment allowance of £200,000, so that is not necessarily too much of an issue for them. However, I understand the point about work in progress.

The hon. Gentleman is absolutely right to make the point that there is still quite a lot to consult on. Sometimes, I fear that we are criticised both for rushing things, charging in and not listening and for things being a bit vague because we are still consulting on them, and there is a certain mutually exclusive element to those criticisms. However, the sense of direction is clear, and it is right that we consult on the details.

[Rob Marris]

May I gently tell the Minister that the problem, rightly or wrongly, is that it has not been clear to many observers what the Government have been consulting on?

[Mr Gauke]

I think the information has always been out there, but we are where we are, and I am grateful to have an opportunity to set out where we are consulting. If the hon. Gentleman likes, I can set out some of the communication that has already been done. There are issues we are consulting on, but I believe that the direction is absolutely right.

The hon. Member for Livingston (Hannah Bardell) asked about the cost of the proposal. The hon. Member for Wolverhampton South West (Rob Marris) asked about the cost to business and the publication of an impact assessment. As with any other tax measure, a detailed assessment of the impact on administrative burdens will be published alongside draft legislation, and that is expected to be in December 2016. That assessment will be informed by prior consultation of affected businesses. HMRC anticipates producing an initial draft impact assessment alongside the formal consultation process, which starts in the spring.

[Sammy Wilson]

Will the Minister give way?

[Mr Gauke]

I will, although I was about to respond to one of the hon. Gentleman’s points. Let us see whether it is the same one.

[Sammy Wilson]

Perhaps it is this very point. The Minister has told us the kind of information that will be required in the quarterly returns and the calculations that will be done. Will that give taxpayers an indication at the end of each quarter of what tax HMRC expects from them, and will it have to be paid quarterly?

[Mr Gauke]

As I said a moment ago, we are looking at the issue of payments, which I appreciate is a potentially vexed one. We are not rushing into that. We are consulting on it, but it is not part of the proposal announced at the autumn statement. The new arrangement will provide more information. Indeed, one benefit is that it will give a better indication to businesses of what tax they owe when it is due. That will be an advantage to businesses, which I think they will appreciate. However, we have not made any decisions on payments.

The hon. Member for East Antrim (Sammy Wilson) and other hon. Members raised the subject of broadband. I will come back to the issue of people who cannot make use of digital, but I want to respond on broadband, as it is a key point. Through the Government’s £1.7 billion investment programme, we are on track to deliver superfast broadband to 95% of premises by 2017. The Prime Minister announced at the end of last year that we are looking to implement an updated broadband universal service obligation for those not covered by the superfast plans. Industry are also set to roll out 4G mobile connectivity to 98% of UK premises well ahead of the 2017 obligation, through Ofcom’s regulatory spectrum licensing conditions.

In every walk of life, people are embracing the digital revolution. From shopping for groceries to making a GP appointment online or paying invoices at any time of day or night, millions of us benefit from digital services daily. Businesses, too, are harnessing the opportunities of the digital age to transform fundamentally their operations and the services they provide, with customers reaping the benefits. It is only right that the Government keep pace with the world around us. That is why we are seeking to transform HMRC into one of the most digitally advanced tax administrations in the world. “Making tax digital” is at the heart of those plans. At the spending review, the Chancellor announced a £1.3 billion investment in HMRC to make that vision a reality. That will see the end of the annual tax return and, in its place, the introduction of simple, secure and personalised digital tax accounts for businesses and individuals.

Importantly, the changes will deliver what businesses and individuals have told us they need. In particular, many businesses have said they want more certainty about their tax bill and do not want to wait until the end of the year, or often longer, to find out how much they have to pay. Businesses have also said they want tax returns to be more integrated into the way they run their business, rather than something done separately and many months later. The use of digital tools—accounting software or smartphone apps—will, for the first time, create that desired integration.

Businesses will be able to see in their digital account what each update means for their tax position as the year goes by. That will also make it easier for businesses to understand how much tax they owe, giving them far more certainty about their tax position and helping them to budget, invest and grow. Beyond helping businesses to get their taxes right, making tax digital will also help them to improve and develop their business. Targeted guidance and alerts will make them aware of relevant entitlements and reliefs or wider Government services to support business growth.

Apart from the modernisation of business practices, there is another important prize that we cannot ignore. Each year, around £6.5 billion of tax goes unpaid because of mistakes made by small businesses when preparing and filling in their tax returns. These reforms will improve the quality of record-keeping, reducing the likelihood of mistakes and contributing £920 million in additional revenue to the Exchequer by 2020, then £600 million a year thereafter. The alternative would be to stick to a system where taxpayers take out 18-month-old records, stare at them for a while as they try to figure out what they were doing then and tentatively use them to fill in a lengthy HMRC form, or drop on to their accountant’s desk a large carrier bag of records—

[Rob Marris]

Or a shoe box.

[Mr Gauke]

—or, indeed, a shoe box, and bear the expense of having the accountant do the job. The taxpayer then pays their final tax bill on money made up to 21 months previously. It is a system designed for a world of paper and bookkeeping, in the literal sense, and it is not tenable in the 21st century.

I do not, however, underestimate the scale of changes that making tax digital represents for businesses and their agents, in particular the transition to digital record- keeping. I also make no apologies for the scale of our ambition. With the Government and local authorities investing £1.7 billion to bring superfast broadband to over 95% of the UK by 2017, these changes are possible. As I said, the Prime Minister has announced that we are looking to implement an updated broadband universal service obligation for those not covered by the superfast plans. Equally, I acknowledge the concerns raised about the pace of the reforms. Similar concerns were raised about online filing and real-time information. However, HMRC’s impressive track record in implementing those changes speaks for itself. Working with interested parties, we can match that success.

Some have suggested that the reforms should be introduced on a voluntary basis, rather than requiring businesses to make the change. A voluntary approach would cost the same but deliver only a fraction of the benefits for business and the Exchequer. In the current fiscal environment, without the additional revenue generated by closing the tax gap, we could not have provided the £1.3 billion investment required to transform services for all taxpayers.

Some have said that it is overly ambitious to rely on digital as the primary channel. The fact is that we are going with the grain of the way small businesses are already moving. The benefits of digitisation are readily accepted by the majority of small and medium-sized organisations. While there has been plenty of debate—a lot of it online—about the challenges, I am heartened see that many businesses and their agents are already forging ahead. Already, 2 million small and medium-sized businesses are using software for their payroll and VAT.

I am, however, equally focused on ensuring there is support for those who need it. The Government have already said they will ensure that free software products are available to businesses with the most straightforward tax affairs. Some—a very small minority—will be unable to adopt digital tools due to geography, personal disability or other circumstances. In those cases, help will be provided. There is no question of forcing those who genuinely cannot go digital to do so. We will consult with business and representative bodies to understand fully who cannot get online and what support they need, and we will ensure we provide alternatives, such as telephone filing.

We want the reforms to provide the maximum benefit for business and the UK. We are already talking to a wide range of businesses, agents, software developers and professional bodies, and a wide-ranging consultation exercise will start in the spring. We are introducing the reforms gradually and not phasing them in fully until 2020 because we know how important it is to give taxpayers time to adapt. We are using volunteers to stress-test new services, so that we can be confident the new services work before they are rolled out.

If we get this right, the benefits will be considerable. We will reduce burdens on business, reduce the tax gap and bring tax administration well and truly into the digital age. These important changes will boost economic growth, so I urge hon. Members to support our reforms to make tax digital.

19:38

[Oliver Dowden]

Thank you for your chairmanship, Mr Hanson. I will wind up very briefly indeed. I was reminded by Scottish Members that it is Burns night, so I shall not detain people for much longer at all.

I thank all hon. Members for their contributions. We have particularly benefited from the experience of those who are involved in small business, including my hon. Friends the Members for South Ribble (Seema Kennedy), for Morecambe and Lunesdale (David Morris) and for High Peak (Andrew Bingham). I was particularly struck by what was said by the hon. Member for Hove (Peter Kyle), who gave such a passionate defence of entrepreneurship. I think he managed to convince the hon. Member for Nottingham East (Chris Leslie), but I wish him good luck with the wider leadership of the Labour party; we will see how he gets on with that. I also thank the hon. Member for East Antrim (Sammy Wilson) for his very passionate speech.

Finally, I thank the Minister for his response. I had the pleasure of hearing him speak in the House this afternoon about Google’s tax affairs. He rushed straight to this debate and has distinguished himself in both. I am grateful to him for his explicit reassurance that the plans do not amount to quarterly tax returns, for his commitment to further consultation and for the fact that the Government are listening. Certainly, from my perspective, I will scrutinise the plans carefully as they continue to be rolled out, and I am sure that all Members will do so. We agree with the overall direction, but we are very keen to make sure that this is implemented properly.

Question put and agreed to.

Resolved,

That this House has considered e-petition 115895 relating to tax reporting for small businesses and the self-employed.

19:40

Sitting adjourned.

Written Statement

Monday 25th January 2016 Written Statements

Monday 25 January 2016

Contingencies Fund Advance: Help to Buy ISA

Monday 25th January 2016 Written Statements

[The Economic Secretary to the Treasury (Harriett Baldwin)]

The Help to Buy: ISA was announced in the March 2015 Budget. Under the scheme first time buyers purchasing a property in the UK will be able to save up to £200 per month in a Help to Buy: ISA and receive a bonus of up to £3,000 The bonus amount is calculated as 25% of the balance in the buyer’s Help to Buy: ISA, (with a minimum of £400 and capped at £3000). The bonus will be paid upon the completion of the purchase of an eligible property.

The Help to Buy: ISA has been available since 1 December 2015 and 200,000 accounts have so far been opened. The first homes to be acquired using the scheme are expected to be purchased in early February 2016.

The resources for the bonus payments will form part of HM Treasury’s supplementary estimate 2015-16, which is expected to achieve Royal Assent in the associated Supply and Appropriation Bill in mid to late March. HM Treasury will therefore be utilising the Contingencies Fund to make the initial bonus payments that become payable prior to Royal Assent.

Parliamentary approval for additional resources of £20,000,000 for this new expenditure will be sought in a supplementary estimate for HM Treasury. Pending that approval, urgent expenditure estimated at £20,000,000 will be met by repayable cash advances from the Contingencies Fund.

[HCWS487]

House of Lords

Monday 25th January 2016 Lords Chamber

Monday, 25 January 2016.

14:30

Prayers—read by the Lord Bishop of Worcester.

Overseas Domestic Workers Visa

Monday 25th January 2016 Lords Chamber

Question

14:36

Asked by

[Baroness Kennedy of Cradley]

To ask Her Majesty’s Government what plans they have to implement the recommendations of the independent review of the overseas domestic workers visa published on 17 December 2015.

[The Minister of State, Home Office (Lord Bates) (Con)]

My Lords, the Government are considering Mr Ewins’ recommendations very carefully. Our first concern is to ensure that we can both protect victims and bring perpetrators to justice. I have made it clear that we will return to this issue on Report of the Immigration Bill, with our considered views.

[Baroness Kennedy of Cradley (Lab)]

I thank the noble Lord, Lord Bates, for his reply. To be honest, it is disappointing to hear that, despite the Government having clear recommendations for action from their own review, which they commissioned during consideration of the Modern Slavery Bill, a further process of data collection and discussion with officials is proposed now that this issue is being raised as part of the Immigration Bill. Is this extra consultation the final hoop that we need to jump through, and will it be completed in good time for a final decision to be made on Report of the Immigration Bill?

[Lord Bates]

The report was published on 17 December, so we have had it during consideration of the Immigration Bill, which is obviously a more sensible legislative vehicle to carry any changes. James Ewins has put forward 34 recommendations, which we are looking at very carefully, and we appreciate his work. When we debated this in the Immigration Bill Committee last week, I said that, before Report, we would have a meeting of all interested Peers—with James Ewins—and the Government would produce their response and any proposed amendments to the legislation.

[Lord Hylton (CB)]

My Lords, the Minister has proposed a meeting on this subject and we are grateful for that. However, what is the point of having an independent, specialist review and then delaying implementing its conclusions and recommendations? Failure to act will surely prolong and continue exploitation and misery, whereas this could easily be remedied by modifying the immigration rules.

[Lord Bates]

That is one route. We are on the same track as the broad thrust of what James Ewins has put forward. He identifies some gaps in the data, and we recognise that that needs to be worked on. We need to consult, across Government, about the right approaches. However, there are some areas where we have a problem that we would like to focus on further. Our view is that the national referral mechanism is the correct vehicle for dealing with someone who is found to have been abused under the overseas domestic workers visa scheme. That ensures that the individual gets the help they need and that the National Crime Agency finds out who the perpetrator is, so that appropriate action is taken. However, we are on the same page on the broad thrust.

[Baroness Barker (LD)]

In light of this review, will the Minister tell us if, when an application is made, embassy or consular staff have the power to interview the person on whose behalf the application is made, outwith the presence of their employer, in the country of origin, before they reach the United Kingdom?

[Lord Bates]

We are trying a pilot on this in west African countries, which is not necessarily proving conclusive either way. Very importantly, we have instituted that a model contract should be in place governing the terms and conditions of employment, working hours, what holidays these workers would get and what rights they have when they are in the United Kingdom. That model contract must be in place before the visa is granted. It is also very important that people reporting abuse report it to the authorities here in the UK, so that if a person who has been guilty of abuse then applies for a further overseas domestic workers visa, that information will be known to the authorities.

[Lord Rosser (Lab)]

As the Minister will know, the Conservative Minister in the Commons said before the election that the intention was that whoever was in government would implement the recommendations of the James Ewins review. Yet last Wednesday in this House, the Government said that while they took Mr Ewins’ recommendations extremely seriously, the arguments are “finely balanced”. Is the reality not that the Government are seriously considering the option of not implementing his recommendations and, if not, what did the Government mean in saying last Wednesday that the arguments are finely balanced?

[Lord Bates]

When Karen Bradley mentioned this issue before the last election, I think that she prefaced those remarks by saying that no one can actually bind future Governments. The point here is that the purpose of the inquiry is to inform the debate and discussion within government, but government must reserve the right to look at the findings of the report and reach their own judgment. I would have thought that would be quite in keeping with the standards set by the Inquiries Act. I have said that we agree with the broad thrust. However, if someone goes through the national referral mechanism and the Salvation Army, they get access to accommodation, legal aid and translation services; more importantly, we also get the right to find out who the perpetrator of the crime is, to ensure that they can be appropriately dealt with. I would have thought we could all agree with that.

[Lord Dholakia (LD)]

My Lords, what remedies are available to domestic workers if the abuse is perpetrated by those who enjoy diplomatic immunity?

[Lord Bates]

We have been very clear on this. Where someone comes in on an overseas domestic workers visa—bearing in mind that some can come in through a tier 5 diplomatic visa—and abuse is reported to the authorities through the national referral mechanism, we have said that the Foreign Secretary will waive the right to diplomatic immunity so that there can be a prosecution in this country. We have been very clear on our intention to clamp down on abuse, particularly against women and girls.

[Baroness Farrington of Ribbleton (Lab)]

My Lords, the Minister said that no Government can bind successor Governments. Surely that would apply to any legislation before your Lordships’ House, because no one can bind a future Government. What is different about this case?

[Lord Bates]

I was just placing the quotation which the noble Lord, Lord Rosser, cited in the wider context of what Karen Bradley had said. The broad point is that we were the Government who were dealing with the issue at that time, introducing what became the Modern Slavery Act. There was huge input from your Lordships into that Act, and it is one of the pieces of legislation of which I am most proud, and so should your Lordships’ be. In it, we went a long way to addressing the concerns about overseas domestic workers by changing the visa permissions to give them the right to stay; by giving them, under Section 53, additional protections if they are found to have been abused; and by giving them legal aid under Section 47. This is the final piece in addressing this issue, and we want to take our time to make sure that we get it right.

Housing Benefit: Social Housing Units

Monday 25th January 2016 Lords Chamber

Question

14:44

Asked by

[Baroness McDonagh]

To ask Her Majesty’s Government what assessment they have made of the additional expenditure on housing benefit paid to private sector landlords as a result of the reduction of social housing units.

[The Minister of State, Department for Work and Pensions (Lord Freud) (Con)]

The latest data show that the number of social and affordable rented housing units in England has increased by 46,000 since 2010 and now stands at more than 4 million. Over the last two years, overall real spending on housing benefit fell for the first time in a decade. In 2014-15, housing benefit expenditure in the private rented sector was £9.1 billion, the lowest figure since 2010-11. This year, it is forecast to fall to £8.9 billion.

[Baroness McDonagh (Lab)]

Unfortunately, I have to say to the Minister that my understanding of the figures is very different. Is it not correct that, in the last year of the Labour Government, 33,000 social housing units were built, renting out at 40% to 50% of market value? Last year, 9,500 units were built—a drop from 33,000 to 9,000. Is it not the case that most families are being pushed into expensive “affordable” housing or private renting? Will the Minister confirm that, as of last year, the housing benefit bill had increased by £2 billion over the last five years? Does the Minister not agree with me that the Government’s affordable housing strategy should be renamed unaffordable—unaffordable for the British taxpayer and unaffordable for families?

[Lord Freud]

I am afraid there were a lot of inaccurate figures there. Under the last Labour Government, the number of social and affordable rented houses fell by 420,000. Since 2010, it has gone up by 46,000. We have just seen the expenditure come down, because we have got people into work: people in work do not require support from housing benefit, and their numbers have come down. The numbers in the social rented sector are down 2% in the last year and the numbers in the private rented sector are down 5%. The figures that the noble Baroness was promoting are really quite wrong.

[Baroness Gardner of Parkes (Con)]

Is the Minister aware that there are abuses in the system through which private landlords let properties to people who need them very badly? In the past, there was a ridiculous situation whereby, if you were prepared to let your property for £X, the council would tell you that you could get £2X for it, so immediately any sensible landlord charged £2X. Is he also aware that other people required their tenants who were getting housing benefit to pay extra to them as private landlords and to say nothing about it? Something has to be done to ensure that that does not continue.

[Lord Freud]

We inherited a system under the local housing allowance which was based at 50% of the average rate. Clearly, that was too high and encouraged some landlords to move up to that central rate, even though their houses were not worth that amount. We have now put a series of controls on how the LHA works.

[Baroness Warwick of Undercliffe (Lab)]

My Lords, can the Minister comment on the changes in housing benefit in respect of supported housing for the most vulnerable people? Can he confirm that the Government’s plan to limit housing benefit in the social housing sector to the local housing allowance will only apply to tenants of working age in general needs housing and not to the homes of the most vulnerable?

[Lord Freud]

We are having a very substantial study done on the supported housing sector. That will come out later this year and we are looking at what our policies should be to support that sector.

[Baroness Bakewell of Hardington Mandeville (LD)]

My Lords, as private sector rents are normally higher than social rents, this could lead to an increase in housing benefit paid to private sector landlords, if the volume of private sector rental properties available is outstripped by demand from those renting there instead of in the social sector or from those who cannot afford to buy a property. Does the Minister agree?

[Lord Freud]

No, you have to look at the round trip. A single person in a three-bedroom place, say, may move out to the private rented sector. That might be more expensive, but then you can take a family, who are very expensive in the private rented sector, and put them in the cheaper, social rented sector. That round-trip effect in somewhere like Enfield is worth £2,500 a year to the state; the typical figure for a place such as Lincoln would be more than £600 to the state.

[Lord Skelmersdale (Con)]

My Lords, is there not a direct relationship between the amount of capital that local authorities are allowed to spend and the number of council houses built by those authorities?

[Lord Freud]

My Lords, we are looking to double the housing budget to more than £20 billion over the next five years. We are committed to 400,000 new affordable housing starts worth £8 billion—£1.6 billion of that is going to the rented sector. This is from a Government that are really trying to get housing back after the last Labour Government in 2010 left housing starts at the lowest level ever since the 1920s.

[Baroness Sherlock (Lab)]

My Lords, let us put a couple of facts on the table. The Government said they are going to spend £20 billion on housebuilding this Parliament, of which only £1.6 billion will go on affordable housing. Under the welfare reform Bill that the Minister is dealing with at the moment, the OBR has said that 14,000 fewer social housing units will be built as a direct result of the plan to force housing associations to cut rents. How does that help bring the housing benefit bill down?

[Lord Freud]

I just repeat what I said: we are spending £20 billion to have 400,000 new starts. That is more than this country has seen. Where there might be a policy that may have a pressure, we will look at that but, overall, we are determined to get the houses built in this country.

Flooding: Relief Effort

Monday 25th January 2016 Lords Chamber

Question

14:51

Asked by

[Lord Lennie]

To ask Her Majesty’s Government what assessment they have made of the capacity of local authorities to manage the relief effort in areas affected by flooding in December 2015 following the 29 per cent cut to the budget of the Department for Communities and Local Government announced in the Autumn Spending Review.

[The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Williams of Trafford) (Con)]

My Lords, we are working closely with authorities to help get those affected back into their homes and businesses back on their feet. We have already pledged almost £200 million help those affected by the floods and to support the recovery and repair of communities. In addition, Rory Stewart MP and Robert Goodwill MP will act as flooding envoys, giving authorities a dedicated champion co-ordinating the flood recovery operation across local agencies.

[Lord Lennie (Lab)]

I thank the Minister for that Answer. Proper effective flood defences should mitigate much of the need for flood relief to be provided. The Prime Minister, in response to a question last week in the other place, confirmed that the Government do indeed have a long-term strategic flood plan and it consists of more than simply giving a name to the storms as they come across the Atlantic. I therefore ask the Minister when this plan was drawn up, what it consists of and whether, in the Government’s assessment, it would be more effective in the short-term in protecting Britain, particularly in the north, from the fast-approaching Storm Jonas, than it was in protecting us against Desmond, Eva or Frank.

[Baroness Williams of Trafford]

My Lords, the Prime Minister also said that we are going to have a complete review of how we mitigate flooding because the floods, both Desmond and Eva—and hopefully not Jonas—have seen unprecedented patterns in terms of both the strength of the rainfall and the destruction done. Therefore, there is going to be a complete review of how we actually manage flooding as well as the flow of water that we talked about in this House last week.

[Lord Cormack (Con)]

My Lords, what exactly does a flooding envoy do? Does he work with the usual channels?

[Baroness Williams of Trafford]

Boom, boom, my Lords. He acts as a co-ordinator of what is being done and if anything in addition needs to be done in supporting those areas in managing the relief operation.

[Lord Shipley (LD)]

My Lords, there is a suggestion that the Government are now considering applying to the EU Solidarity Fund after all. Would the Minister agree that it would make sense to do so, since there would be a net financial gain to the United Kingdom?

[Baroness Williams of Trafford]

My Lords, we are considering all forms of support, not at all ruling out using the EU Solidarity Fund, but in considering whether to use that fund, it is important to note how long it would take for the funding to be received and what ultimate cost/benefit it would bring, given that it would not actually bring additional funding.

[Lord Clark of Windermere (Lab)]

My Lords, it is reported today that, after encouragement from the Government, the local authorities in Somerset are increasing their council tax to pay for flood defences. It is suggested in the north that the same encouragement will be made to Cumbria County Council. Will the Minister give us a categorical assurance today that Cumbria County Council will not be expected to pay for the almost £0.5 billion in flood repairs?

[Baroness Williams of Trafford]

My Lords, it is entirely up to local authorities, when considering whether or not to increase their council tax, what their priorities are and what the money would go towards, but we have protected flood funding and are considering whether to ring-fence it. The case of Cumbria was brought up last week in your Lordships’ House. If there are additional infrastructure repairs that Cumbria feels that the Government have not considered, I invite the council to come to me with them and we can either deal with them ourselves or ask the Department for Transport to consider them.

[Baroness McIntosh of Pickering (Con)]

My Lords, will my noble friend explain what the timetable for the flood plan and review is? Can she confirm to the House that, short of ring-fencing the flood relief funds allocated to local authorities, they are competing with claims for the vulnerable—the very old and the very young?

[Baroness Williams of Trafford]

My Lords, ring-fencing is being considered in the light of recent events, but we are going out to consultation on it. On speed of repair, we are doing things as quickly as possible.

[Lord Wigley (PC)]

My Lords, will the noble Baroness confirm that the allocation of any central funds by the Government will be on the basis of need, not on any arithmetic formula? That being so, can she further confirm that the resources made available to the devolved legislatures will also be on the basis of need and not on something such as the Barnett formula?

[Baroness Williams of Trafford]

My Lords, they will be on the basis of need, but areas that have experienced higher than usual disruption because of flooding will also need to be considered.

[Baroness Jones of Moulsecoomb (GP)]

My Lords, the noble Baroness mentions unprecedented floods, but in Cumbria this is the third once-in-a-lifetime flood event in the past 10 years. Is it perhaps time that the Government improved their attitude towards climate change and introduced some policies that would help people to prevent such floods in future, which can be done?

[Baroness Williams of Trafford]

I think that the noble Baroness has a valid point, in the sense that we are seeing a lot of unprecedented flooding. Has it been a blip in the past, or is it becoming a more frequent trend for the future? That is informing the Government’s thinking in the review and on how we manage flows of water.

[Lord Beecham (Lab)]

My Lords, the coalition Government initially cut the flood defence programme that they inherited from the Labour Government. The Government are presumably now contemplating an increase. What scale of increase are the Government looking at, and over what period will sustained investment take place?

[Baroness Williams of Trafford]

My Lords, it might be helpful if I outlined that under the Labour Government from 2005 to 2010, £1.5 billion was put into flood defence schemes. Under the coalition Government, £1.7 billion was put into flood defence schemes. Over this Parliament, £2.3 billion will be put into flood defence schemes.

[Lord Campbell-Savours (Lab)]

In this discussion about flooded homes, scant regard is being paid to the position of small businesses, particularly on flood plains, very often uninsured and very often faced with the prospect of closing down. Will the Ministers now go to Flood Re and talk to these people about enhancing its scheme to help small businesses to be protected in future flooding incidents?

[Baroness Williams of Trafford]

My Lords, the noble Lord is absolutely right in saying that Flood Re does not cover businesses. One reason may be that there might be a state aid issue in providing insurance for businesses. We understand that it is not so much a problem for small businesses as it is for households. Nevertheless, we are working together with the industry to make sure and keep an eye on businesses that might struggle to get flood insurance.

Forests: Coal-bed Methane Extraction

Monday 25th January 2016 Lords Chamber

Question

15:00

Asked by

[Baroness Royall of Blaisdon]

To ask Her Majesty’s Government what assessment they have made of the social and environmental impacts of the potential extraction of coal-bed methane on forests such as the Forest of Dean.

[The Parliamentary Under-Secretary of State, Department of Energy and Climate Change and Wales Office (Lord Bourne of Aberystwyth) (Con)]

My Lords, as part of the 14th onshore oil and gas licensing round, Southwestern Energy Ltd was formally offered two petroleum exploration and development licences within an area encompassing the Forest of Dean, each earmarked for coal-bed methane development. A strategic environmental assessment was undertaken for all areas offered for licensing applications in that round.

[Baroness Royall of Blaisdon (Lab)]

My Lords, the hydrogeology of the forest is complex. The former mine workings are flooded, and there are still freeminers working underground. Labour introduced environmental safeguards for the Infrastructure Bill, but those have been downgraded, disregarded or weakened. The assessment to which the Minister referred is regarded by many to be flawed and inaccurate. Have there been independent risk assessments into coal methane extraction that consider all health and environmental impacts that have been observed elsewhere and have been considered specifically in relation to the Forest of Dean? If so, have they been made public? I would be grateful if I could have a meeting with the Minister and his officials, together with some colleagues from the Forest of Dean, to discuss this further.

[Lord Bourne of Aberystwyth]

My Lords, as I have previously mentioned to the noble Baroness, I am very happy to have that meeting along with officials. The system is extremely robust; this is but the first stage in the process. Consents will be needed before anything can go forward—for planning, from the Environment Agency, along with scrutiny by the Health and Safety Executive, an access agreement with the Coal Authority and consent to drill from the Oil and Gas Authority.

[Lord Hayward (Con)]

Can my noble friend confirm that any application for coal-bed methane extraction will be subject to a full and rigorous process, which will include receiving all independent reports, following the same process as applications for other forms of methane extraction?

[Lord Bourne of Aberystwyth]

My Lords, I can certainly confirm that that is the process. Only one commercially running coal-bed methane extraction operation is going on at the moment, and there have been no issues since 2007, when it started, with regard to health and safety or contamination.

[Baroness Featherstone (LD)]

My Lords, what evidence-based case is there for applying far less stringent environmental controls and protections to coal-bed methane than to hydraulic fracturing?

[Lord Bourne of Aberystwyth]

My Lords, the process for coal-bed methane is essentially parallel with that for fracking. There are no separate considerations here—or in so far as they are separate, it is only because of the slightly different technology. Both have extremely robust systems. In addition, if fracking was involved where we have coal-bed methane, a separate system of protections and consents would be needed.

[Baroness Young of Old Scone (Lab)]

My Lords, the Government rode rather roughshod over the environmental conditions that your Lordships’ House believed should be applied to fracking and responded by saying, “Oh well, in that case we’ll make sure that we protect areas of outstanding natural beauty and groundwater protection zones by doing it at 1,200 metres under those sites and no closer to the surface”. The coal seams in the Forest of Dean are at 450 metres from the surface, and many are much closer than that. Can the Minister confirm, or not, that the environmental restrictions that apply to fracking apply also to coal-bed methane extraction in the Forest of Dean—and, if not, what environmental protection conditions will apply? Was it wise to issue a licence when many of the environmental impacts had not been assessed in detail for this particular application until after the licence had been granted?

[Lord Bourne of Aberystwyth]

My Lords, coal-bed methane is not as deep as 1,200 metres. So, obviously, that is a separate consideration; we are not talking about fracking. In so far as there is fracking, if it is fracking in addition, there will be the additional protections that are available. But, as I have indicated, there are also planning consents, Environment Agency consents, Health and Safety Executive requirements, access agreements from the Coal Authority and consent to drill from the Oil and Gas Authority. We have a very effective, robust system of protections of which we can be proud.

[The Lord Bishop of St Albans]

My Lords, this Question raises a much broader issue, which concerns many people, about the protection both of the ancient forest lands and of the forestry estates. Could the Minister update your Lordships’ House on what progress has been made towards the appointment of the new public forest body, which was the recommendation of the independent forestry report? If no progress has been made, what role is, for example, the Forestry Commission taking in protecting this land, which the public hold so dear and for which they have such great concern?

[Lord Bourne of Aberystwyth]

My Lords, I am always grateful for people exaggerating my powers, but this is very much outside my brief in relation to forestry. I will ensure that the right reverend Prelate gets a full response on the subject, and I know that the Government take it seriously.

[Viscount Ridley (Con)]

My Lords, does the Minister agree that if this country had not switched to fossil fuels in the last couple of centuries, the Forest of Dean—and every other forest—would long ago have been cleared for fuel? I declare my energy interests as listed in the register.

[Lord Bourne of Aberystwyth]

My Lords, what I would say is that we, as a nation, must determine that we shall have secure energy, and energy that is not imported. If we do nothing about coal-bed methane or, more broadly, about fracking, by 2030 we will have to import 70% of our gas rather than the 45% that we import now.

NHS (Charitable Trusts Etc) Bill

Monday 25th January 2016 Lords Chamber

First Reading

15:06

The Bill was brought from the Commons, read a first time and ordered to be printed.

Agricultural Holdings Act 1986 (Variation of Schedule 8) (England) Order 2015

Monday 25th January 2016 Lords Chamber

Motion to Approve

15:07

Moved by

[Lord Gardiner of Kimble]

That the order laid before the House on 2 December 2015 be approved.

Relevant document: 13th Report from the Joint Committee on Statutory Instruments. Considered in Grand Committee on 18 January.

Motion agreed.

Legislative Reform (Exempt Lotteries) Order 2016

Monday 25th January 2016 Lords Chamber

Motion to Approve

15:07

Moved by

[The Earl of Courtown]

That the order laid before the House on 9 November 2015 be approved.

Relevant document: 15th Report from the Regulatory Reform Committee. Considered in Grand Committee on 18 January.

Motion agreed.

Welfare Reform and Work Bill

Monday 25th January 2016 Lords Chamber

Report (1st Day)

15:08

Relevant documents: 13th and 19th Reports from the Delegated Powers Committee

Amendment 1

Moved by

[Baroness Campbell of Surbiton]

1: After Clause 1, insert the following new Clause—
“Disability employment gap: reporting obligation
(1) The Secretary of State must lay a report before Parliament annually on the progress which has been made towards meeting the commitment to halve the disability employment gap.
(2) The report under subsection (1) must set out—
(a) how the Secretary of State has interpreted “halving the disability employment gap”;(b) the factors that the Secretary of State has used to determine whether progress has been sufficient, including the extent and speed at which progress has been made; and(c) if progress under subsection (1) has been insufficient, what remedial steps will be taken.(3) The report under subsection (1) must contain data on—
(a) the overall rate of employment, and(b) the progress of the rate of employment of people at working age with—(i) a learning disability;(ii) autism;(iii) mental health problems;(iv) visual impairments; and(v) any other disability as the Secretary of State may by regulation specify on the grounds that the people with the disability are marginalised from the labour force and require a specific focus.”

[Baroness Campbell of Surbiton (CB)]

My Lords, I have returned today to ask the Government again to include this amendment in the Bill. It would impose a requirement to report annually on the progress made towards their manifesto commitment to halve the disability employment gap. If the Government do not have a disability-focused reporting methodology embedded in their strategy, there will be no robust way of analysing what exactly is preventing disabled people from working, and of putting it right.

Once again, the so-called disability unemployment problem will be passed around to some official or some department to resolve. I have seen this again and again throughout my career. We tinker at the edges, running pilots, employer awareness campaigns and support programmes with short-lived funding and we wonder why the figures remain abysmally low. Halving the employment gap is a very ambitious commitment, which has not been achieved by any Administration in my lifetime. It will take a well-informed, cross-government strategy that addresses the barriers specific to different impairment groups to understand what lies behind the barriers to work.

In response to my amendment in Committee the Minister said that,

“as progress against the disability employment gap commitment is a key factor of our overall commitment to full employment, these”,

reporting,

“amendments are not necessary, as that progress will be reported in the annual report on full employment”.—[Official Report, 14/12/15; col. 1941.]

I am afraid that I am not confident that generic annual reporting on full employment will receive the detailed attention that is necessary to understand the obstacles that have dogged disabled people since I began work in the 1980s. The employment rate for disabled people is currently 47.6%, while for non-disabled people it is 80.5%. That is a gap of over 30 percentage points, and it has remained at that level for over a decade. The Government need to radically think again and put a specific reporting obligation in the Bill. I know that departments will then give it higher priority, and everyone concerned will see that the Government’s commitment in their manifesto is genuine.

In Committee the Minister argued that setting up such a reporting mechanism is costly and will delay universal credit. None of us wants to see this, but I cannot believe that this would further delay its introduction. Reporting is not a difficult task. Indeed, it would help the Government to identify those who encounter the biggest barriers to work, ensuring better targeting of resources for support. It would also give far greater clarity on where the role of academics, disabled people, their charities and employers can help the Government to realise their very exciting commitment. No one sector and no one Government can expect to do it alone.

My experience of working with Governments on challenging initiatives is that they work when they have legislative priority, detailed analysis, appropriate piloting and good reporting mechanisms. The community care direct payment scheme was a prime example. The collaboration between government, social care professionals and disabled people and their organisations turned a culture of formal care dependency into one of independent living and civic participation. The establishment at that time had always maintained that disabled people could not operate their own care—a bit like the way people think that most disabled people cannot hold down a full-time job. Professionals at that time developed an expensive industry telling us how to live a passive life. It took a very bold Government—a Conservative Government—to turn this around. We can do this again with the employment gap—of that I am sure—but not without a whole-system change that is tracked and reported on regularly so that we can all scrutinise it.

15:15

The life opportunities survey provided a much-needed insight into disabled people’s lives—but, sadly, the last wave was published in September last year. I know that reassurance from the Minister today about putting a reporting duty on the face of the Bill would further develop what the survey has really begun to reveal.

The Minister must go further than general reporting, which will not identify very complicated disability issues. He needs to set a challenge across government to report accurately on the barriers faced by millions of disabled people who want nothing more than a worthwhile occupation, personal status and a financial reward for working. If the Minister does not accept my arguments, I hope that he can present this House with a credible alternative strategy and not simply tell us again that it will be reported generally and will be highlighted in a White Paper. I am afraid that that generic approach will not work for disabled people—we simply do not fit the generic lexicon. I beg to move.

[Lord Low of Dalston (CB)]

My Lords, I support the amendment, which my noble friend Lady Campbell moved with great eloquence. After her speech, there is not really a lot that I can add but I will summarise the points that I want to make.

The Conservative Party manifesto set this ambitious aim to halve the disability employment gap by 2020. As we have heard from my noble friend Lady Campbell, this gap has been intractable over many years. It is quite structural and it will not be easy to reduce it substantially, let alone halve it. There is a real concern that, unless the Government actively measure, and are required to report regularly on, progress towards attaining this goal, it may not be achieved and a crucial opportunity to deliver on disability employment will be lost. This is a wonderful opportunity. The Government are much to be congratulated on setting this goal but it will take a lot of work to achieve it. Having targets specific to this objective and reporting regularly on them will be necessary if we are to monitor the progress desired and to take remedial action if required.

There are three other specific reasons why I think we should support the amendment. The first is simply consistency of approach. The Bill introduces reporting requirements on the Government’s pledges to achieve full employment and fund 3 million new apprenticeships but there is no similar reporting requirement on halving the disability employment gap. So simply from the point of view of consistency of approach, it would seem to make sense to have a specific reporting requirement for this objective as well.

Secondly, disability employment presents very specific problems which are not well understood across government, and that is part of the reason why the employment gap has proved so intractable over so many years. The DWP is getting on top of it but I do not think the same can be said of government departments generally. It would provide a departmental and cross-governmental focus on disability employment and reducing the disability employment gap, and help to embed this in the organisational culture, if there were specific reporting requirements in relation to this.

Thirdly, simply from the point of view of targeting support, introducing clear reporting on how many disabled people are in employment, separate from scrutiny of other employment statistics, will allow better analysis of how current support arrangements are working and help the Government to better target resources and support where they are most needed. It will also enable data to be disaggregated by such things as learning disabilities, autism, mental health problems, visual impairment, deafness and hearing problems—things such as are mentioned in the amendment.

On all these grounds—consistency of approach, providing an incentive for action across government and targeting support where it is most needed—my noble friend Lady Campbell has made a very strong case for the amendment, and I wholeheartedly support it.

[Baroness Doocey (LD)]

My Lords, I, too, support this amendment. As the noble Baroness, Lady Campbell, has said, in Committee, the Minister said that the amendment is not necessary because a report on progress will be included in the annual report on full employment. However, my concern is that although the Government are very good at proposing big ideas and related targets, they seldom back them up with clear and unambiguous plans as to how they will achieve them. Halving the disability employment gap is a prime example of this.

Amendment 1 will guarantee that the Government must report to Parliament on progress and sets out clearly the form that this reporting should take. It will enable proper public and parliamentary scrutiny, and will provide consistent and thorough data which will give the Government the information that they need to measure the impact and progress of their policies, year on year.

I know from a number of my disabled friends of the enormous barriers that they have to climb through in trying to find a job: being invited to interviews just to ensure that employers can tick a “disability” box; losing out, time and again, to candidates far less qualified than they are to do the job for which they are being interviewed; receiving rejection letters giving reasons for their rejection that simply do not add up; and the heartache of knowing, without a shadow of a doubt, that the real reason they did not get the job is simply because they are disabled. This is all because employers, particularly SMEs, do not understand that somebody who is blind can be every bit as good as, if not better than—at IT, for example—somebody who is able to see properly. These employers running small companies have no idea of the specialist equipment that is available to disabled people. So although they are generally sympathetic, they are just not willing to take a step into the unknown by employing disabled people.

I am very grateful to the Minister that in his letter following Committee stage he answered the questions I had posed to him about the steps the Government were taking to support more disabled people into work. At the moment, the Bill is quite silent on that. I look forward to seeing what the White Paper will say on how the Government plan to improve support for disabled people. However, to significantly close the employment gap, we need to begin now and to raise the game of all government departments on meeting the target. This can be achieved only by giving the exercise a much higher priority.

At a time when so much is happening, a separate reporting amendment will provide cross-governmental focus on the laudable aim of halving the disability employment gap. Placing this requirement in the Bill will demonstrate the commitment the Government have made to improve the employment rate for disabled people. It will also clearly demonstrate to Parliament and the public the priority and importance that the Government place on this goal and ensure efforts to deliver it.

[The Lord Bishop of St Albans]

My Lords, I, too, support the Government’s aim of getting people out of unemployment and back into employment and I am grateful to the Minister for his clarification in Committee that reporting on the disability employment gap will be included as part of the Government’s overall employment reporting. However, like other noble Lords, I fear this commitment may not go quite far enough.

If the Government are to stay true to their commendable aim of halving the disability employment gap, detailed data and thorough reporting are absolutely crucial to achieving it. Particularly important is the breakdown of how unemployment rates differ across disability groups. If the government reporting looks only at the disability employment gap as a whole, it will be extremely difficult to see which disabled groups are making progress and which are not. I am concerned that this would make it possible for the employment gap to drop significantly through government interventions targeting only those with the most limited impairments.

We know anecdotally that those with physical impairments tend to find it easier to return to work than those with mental health problems and learning difficulties. While it might therefore make economic sense to target programmes and interventions at this easier group, I am sure the Minister will agree that this will go against the spirit of the Government’s manifesto commitment. Any government reporting needs to look at the range of barriers faced by those in all disability groups and work to combat these barriers across the board.

We need work programmes that are properly targeted to address the needs of all those who are seeking employment across different disability groups. Statutory reporting of the disability employment gap, using the metrics outlined in this helpful amendment, would put such programmes on a clear footing and will provide a clear rationale for the way forward. Anything less than this would be a missed opportunity for the Government. I hope the Minister will consider carefully the points that have been raised.

[Baroness Howe of Idlicote (CB)]

My Lords, in supporting the amendment so ably spoken to by my noble friend Lady Campbell, I will speak to my Amendment 42, which seeks to make changes to the Welfare Reform Act 2007.

The amendment would much improve the support provided to help people with mental health problems into work. It would add people with mental health problems in the ESA work-related activity group to the list of those currently exempt from the higher levels of conditionality introduced in the Welfare Reform Act 2012.

We all want the same thing: to help more people into work. We are also far more frequently discussing in your Lordships’ House the importance of better supporting those with mental health problems. My amendment speaks to both of these motivations.

The types of conditions that people in the ESA work-related activity group experience are more complex than those experienced by people on jobseekers’ allowance. We can easily imagine how people’s symptoms could be exacerbated when they are required to attend activities in order to qualify for their benefit. However, we also know that many of the activities are not tailored to their individual needs. People with social anxiety disorders can be mandated to attend confidence-building classes with 20 other people who do not have a mental health problem, and many people talk of being sent to health and safety courses. Often nothing is offered to address their real barriers to work.

The individual placement and support model is currently being piloted by the department to support people with mental health problems into work. This approach has been shown to work. At WorkPlace Leeds, part of Leeds Mind, 32% of its clients secured employment through voluntary support last year. That is a far higher rate than the 9% achieved through the Government’s Work Programme nationally.

15:30

I conclude by highlighting one of the biggest issues with back-to-work support at the moment; it is one on which we really need to make some progress. The whole system is desperately out of date: it is based on an assumption that people with mental health problems lack motivation or the willingness to work. This simply is not the case, and I agree with the Government that people with mental health problems have a high want-to-work rate. My amendment seeks to end this outdated and unhelpful system. It provides a real opportunity to transform the support offered to people with mental health problems. I hope that the Minister and the Government will accept my amendment.

[Lord Wigley (PC)]

My Lords, I apologise for not having taken an active part in Committee, for reasons outside my control. Noble Lords will be aware of my interest in these areas, and I particularly declare my links with Mencap and Autism Wales. I warmly support the amendment moved by the noble Baroness, Lady Campbell. Attention needs to be given to the matters that she raised for two or three particularly important reasons. All our experience over the past 20 or 30 years has shown that having specific, detailed reports coming forward before Parliament in a coherent manner has enabled a focus to be given to issues relating to disability and, in particular, disability in the context of employment. It has enabled both Houses of Parliament to move forward in making better provision. The recommendations put forward in this amendment are important in that context.

The amendments are timely because, unfortunately, we are seeing a backward movement with regard to the employment of disabled people in many areas. We are seeing, for understandable reasons, the closure of some specific facilities that were available, such as Remploy and other similar organisations, where the argument was that disabled people would be employed within the mainstream and that, therefore, specific provisions did not need to be made in this way. That is fine, provided that that employment in the mainstream is available. However, as we see economic pressure increasing in both the private and the public sectors, the reality is that the number of jobs for disabled people is very often squeezed. I regret to say that in the public sector, jobs that had very often been specifically offered to disabled people because of their difficulties are the first to be cut when financial pressures lead to a reduction in resources and employment. For those reasons, I believe that this amendment, and the one put forward by the noble Baroness, Lady Howe, are important and should be taken on board. The resolution of the issues underlying them should certainly exercise our minds.

[Baroness Thomas of Winchester (LD)]

My Lords, I, too, am happy to support the amendment of the noble Baroness, Lady Campbell. Although the Bill as drafted requires the Government to report on progress towards their aim of full employment, there is no reference to reporting on the employment of disabled people, even though the Government made a manifesto commitment to halving the disability employment gap, as the noble Lord, Lord Low, has said. This is an ambitious target and, of course, a welcome one, not just for the economy as a whole but for disabled people themselves, whose talents and contributions would otherwise be wasted.

Full employment cannot be achieved without getting more disabled people into work, so why are we not satisfied with the Government’s assertion that the amendment is not necessary because a report on the aim is already in the Bill? It is because we are not convinced by what the Government have told us so far. The current employment rate for disabled people, as we have heard, is about 48%. For those with learning difficulties, it is only 8%, and for those with autism, it is 15%. The gap between the employment rate for disabled people and the rest of the population has remained at about 30% for more than a decade, as the noble Baroness, Lady Campbell, has said.

However, as the recent report Fixing Broken Britain? from Frank Field and Andrew Forsey has shown, existing policies, such as the Work Programme, have not been very successful in finding work for claimants with disabilities. It is estimated elsewhere that only about one in 10 of those on the Work Programme and in receipt of ESA have satisfactory employment outcomes; that is, keeping a job for at least three months. Evidence from Mind indicates that only 8% of people with mental health problems who have gone through the work programme have achieved a long-term job outcome.

The Government originally set a target for contractors of achieving a “job outcome” for at least 22% of ESA claimants. This was then reduced to 13%. Neither target had been met by the end of the last Parliament. The reduction in the number of people supported by the Access to Work programme, the reduction in the number of disability employment advisers at Jobcentre Plus centres and the job opportunities for disabled people in Remploy factories, to which the noble Lord, Lord Wigley, referred, have all played their part in the lack of progress in trying to get more disabled people into work. I fear that other proposals in this Bill will make the situation worse.

While announcements in the spending review on the provision of specialist employment support are to be welcomed, this is going to be offset by a cut of around £30 a week for new claimants in the ESA WRAG. For those whose recovery from, for example, chemotherapy will take some time, this cut in support is likely to push them further from the job market. The Joseph Rowntree Foundation found no evidence that disability employment rates are improved by reducing benefits.

In conclusion, it is unclear from the Bill, and from what Ministers have told us so far, how the Government intend to deliver on their commitment to narrow the disability employment gap. We need those answers and we clearly need this amendment to the Bill.

[Lord Lansley (Con)]

My Lords, perhaps I may intervene briefly to say a word about Amendment 42 in the name of the noble Baroness, Lady Howe, and Amendment 43 in the name of the noble Lord, Lord Layard. In Committee, we discussed this briefly. While I have previously made it clear that I would seek to minimise those occasions on which we seek in statute to specify the circumstances in which people should access NHS treatment, that principally should be determined on a clinical basis. Past experience has demonstrated the value of the Improving Access to Psychological Therapies programme in providing assistance to people with mental health and behavioural disorders, especially anxiety and depression. Your Lordships will know that the numbers who are in receipt of benefit and who are out of work by reason of those conditions has significantly increased over the last two decades. We need to respond to that.

The IAPT programme, which begun under the Labour Government before 2010, was continued and rolled out during the coalition Government after 2010. I stress that the importance of this will, I hope, give the Minister the opportunity to say that, while not accepting the letter of Amendment 43, the Government are sympathetic to the spirit of it. After 2012-14, there has been a 25% increase in the number of therapists providing psychological therapies through the National Health Service. That rollout is continuing. Health Education England anticipates that the increasing supply resulting from its commissions for training places for psychological therapists should arrive at the point whereby at 2017-18 the demand for such therapy is able to be matched by the supply of trained therapists. We have an opportunity, in the timeframe anticipated for the measures in the Bill, to make it more certain that somebody with anxiety and depression requiring access to therapies while signing on for benefits should be able to access that therapy. I hope that the Minister can give that positive response to these amendments.

[Baroness Meacher (CB)]

My Lords, I really was not expecting to speak today on this. We had asked that Amendment 43, on IAPT, be shifted and taken separately on Wednesday. The IAPT programme has now been going for 10 years: we had the first pilot in the mental health trust in east London 10 years ago. The point of that pilot, and of the whole programme, was to help the large numbers of people with mental health problems back into work. I remember talking to jobcentre staff and having great difficulty persuading them to refer people to the programme. Ten years on, we have so much evidence that if people with depression or anxiety receive good therapy quickly, they achieve remarkable results—far better results than any other that I am aware of in the psychological therapies. I stand here completely unprepared, save only to say to the Minister: please make use of what is an excellent programme on the whole—nothing is perfect everywhere, of course not—to help the 50% or so of unemployed people who desperately need precisely such help so that they can quickly get back to work. I make that big appeal to the Minister.

[Lord Kirkwood of Kirkhope (LD)]

My Lords, I add my support to the opening remarks of the noble Baroness, Lady Campbell. She said that she was somewhat disappointed by the Minister’s response to these amendments in Committee. She is right. He founded his response on a defence that these statistics are already available if you know where to find them and that they will continue to be published. That is only half the story. There is a case to be made for looking at more qualitatively based, specific disability-related data that are not available. It would not cost a great deal of money. The DWP has a capable resource department. Over a period of years, a lot of small but very important disability employment issues could be explored and the trends chased down and studied.

I give the example of the change as we move to universal credit, using work coaches rather than disability advisers. I understand that and I am very supportive of that new environment, but the work coaches are not dedicated specialists. They will have access to people, but I would love to watch how that works—if it does—as universal credit is rolled out. If it does not, we will need to change the setup, as I am sure the Minister will agree. I would like to see that kind of thing in gremio of the other suggestions for the reporting requirement from the noble Baroness, Lady Campbell. I support her in observing the need for what does not currently exist. With a bit of good will, working with the disability communities, we could have better sight of some of these problems.

My second point is that a contract of employment takes two people: you need an employer as well. We must not forget the employers. They try to do the best they can. As was said, physical disability is in some ways easier to address because the solutions are more obvious. Potential employees who suffer from any kind of intermittent condition—it is mainly, but not just, mental illness—are in a different category altogether. I remember feeling sympathy for the Minister when he got into trouble for saying that people with disabilities were not worth the money, or something—I am sure he never said it and that he did not mean it even if he did. However, he is right, in that the one risk that a potential employer fears—if I can put it that way—with regard to a very good candidate with intermittent conditions is that they cannot control their ability to turn up at key moments. Therefore, we need flexible working and to compensate for or take account of that, to reassure employers. You could do it by mitigating NI contributions, for example. We are not yet engaging in sufficient outreach with employers who might otherwise be willing to address this gap.

15:45

When all is said and done, this is still a saving measure. According to the briefing I received from the department, £640 million will be saved by 2020, which is a huge amount of money. Of course, we look forward with interest to the Green Paper, through which we will get an extra £100 million a year, which is very welcome. However, if the gap is not addressed by 2020 I, for one, will say—if I do not, the noble Baroness, Lady Campbell, will get there before me—“There is half a billion pounds of savings here”. If we cannot tackle this issue with the money allocated in the Green Paper, we should go back to central Government, or the next Government, and say, “You have saved a lot of money out of this. However, we are still not doing the job with the money and resources that are available, so we want more assistance to get to where we all want to be: to seriously address this gap”.

[Baroness Hollins (CB)]

My Lords, I support Amendments 1 and 42. I will not repeat what I said in Committee or what has already been said today. However, I want to emphasise why the reporting duty needs to report on different groups, particularly people with learning disabilities, people with autism and people with mental health problems. The Work Programme and Work Choice just have not worked for people with learning disabilities. The disability employment gap is approaching 70% for people who would like to work but cannot find work and need specialist support to enable them to do that. That is why we need to look specifically and carefully at some groups quite separately from each other. Therefore, I support these amendments.

[Baroness Afshar (CB)]

My Lords, I support the comments of the noble Baroness, Lady Meacher. In the case of minorities, mental disability is regarded as a dishonour or as a great failure for the family, and only within the formal context of education, and at early stages, is it possible to intervene. Furthermore, because the intervention adjusts a young person to the requirements of the British community, with which the minority communities are not very familiar, it is essential to bring in these potential talents by catching them early and helping them.

[Baroness Manzoor (LD)]

My Lords, I support the amendment of the noble Baroness, Lady Campbell. I thank the Minister for meeting some of us last week to talk about why we felt that this amendment was so important. I shall outline the four key themes from my perspective. I agree that we need consistency of approach, as outlined by the noble Lord, Lord Low. We need to monitor and evaluate progress on the target. This is the Government’s target and it is laudable and very welcome. However, do they really not want to measure it and evaluate improvement? One could perhaps think that the Government do not want to measure progress towards the target, and consider that it is easier to pick off low-hanging fruit than to assess the great variations in disability and tackle those, so that more people enter employment. As has already been said, this measure is not costly and will certainly help to identify the support that employers need to help people with disabilities.

[Lord McKenzie of Luton (Lab)]

My Lords, we support Amendment 1 for the reasons advanced with conviction by the noble Baroness, Lady Campbell, strongly supported by the noble Lord, Lord Low, and pretty much every other Peer who has spoken in this debate so far. We heard from the noble Baroness, Lady Doocey, about the importance of proper reporting to the ability to deliver proper parliamentary scrutiny. The right reverend Prelate the Bishop of St Albans raised the very important issue of the need to have data on different groups, otherwise there is a risk that targets will be achieved by dealing just with those closest to the labour market. The noble Lord, Lord Wigley, reminded us about the impact of specific, detailed reports which come before Parliament. The noble Baroness, Lady Thomas, said that we can get full employment only if we make progress on the disability employment gap. The noble Baroness, Lady Hollins, and other noble Lords, talked about the failure of the Work Programme at the moment—a running theme on these issues. I am delighted that the noble Lord, Lord Lansley, and the noble Baroness, Lady Meacher, touched on Amendments 42 and 43. That enables me, in the absence of my colleagues, to address those and I will do so in a minute. The noble Baroness, Lady Afshar, made an important point about tackling the stigma around mental health which, sadly, still pertains in some communities.

We, too, welcome the Government’s commitment to halving the disability employment gap by 2020. We are grateful to the Minister for organising a meeting last week, together with his colleague, Justin Tomlinson MP, although the message delivered was that the amendment would be resisted by the Government. I hope there has been a change of heart in the interim. This is notwithstanding the generally encouraging noises and the promise of a White Paper. We know that the disability employment gap has stayed stubbornly persistent—the noble Lord, Lord Low, referred to it as intractable—for too long and cross-government effort will be needed to deliver on the commitment.

The reasons why we need regular reporting have also been summarised, too, by Leonard Cheshire in its briefing paper and these include, in particular, the incentive for action in that it will provide a departmental and cross-government focus on the gap. As the Minister himself has frequently opined, it is that which gets measured and reported on which gets government attention. That briefing highlighted the somewhat conflicting messages we have received from the Government. The Employment Minister in another place stated that the Government did not see the need to report on disability employment, as the measure was essential to achieving the wider commitment to full employment. However, the more enlightened Minister for Disabled People did promise that the annual report on progress to full employment would include an update on the Government’s progress towards halving the disability employment gap.

We need some clarification on this, particularly considering the comments made by the noble Lord, Lord Freud, in Committee, to which the noble Baroness, Lady Campbell, referred. The thrust of those comments was that the management information which this amendment seeks has not been built into the current plans and would not represent value for money, given the timeline to just 2020. Do the Government have no ambition after that? It would also disrupt the universal credit timeline, wherever that currently stands. If the Minister rejects the amendment, but promises regular reporting, will he make it clear what that will entail and what the sources of the data will be? The amendment is seeking not just aggregated data reporting but a proper analysis of progress over a range of conditions. If we do not have clarity on this and the noble Baroness, Lady Campbell, is minded to test the opinion of the House, we will support her.

Amendment 42, in the name of the noble Baroness, Lady Howe, seeks, as we have heard, to add people with mental health problems to the list of groups which are exempt from the conditionality element of back-to-work support schemes. We have received a very helpful briefing from Mind which covers this and other issues. It is suggested that conditionality, with its threat of sanctions, has a negative impact on people with mental health problems, that it undermines the relationship between claimant and adviser, removes choice and control, and has no evidence to support it working for people with mental health problems. It seems to us that this is fundamentally about having the right sort of support for people with mental health problems. Mind and others point out that the mainstream back-to-work support is currently often generic, as we have heard today, untailored and does not address the barriers to work which disabled people face. The lack of specialist support is undermining the opportunities for individuals to access work. This is a constant complaint from those who engage with these issues, so perhaps the Minister will tell us how he is to address this in the context of halving the disability employment gap.

Amendment 43, in the name of my noble friend Lord Layard, refers us back to psychological therapies, as we have heard. I am grateful for the interventions of the noble Lord, Lord Lansley, and the noble Baroness, Lady Meacher, so that we can at least debate this a little today. On the matter of drafting, we need to reflect on the reference to “primary medical condition” given that entitlement to the WRAG is determined by a range of descriptors which can be for physical or mental health factors. Drafting aside, my noble friend's objective is to encourage and assist those with a mental health or behavioural disorder to access assessment and, if appropriate, treatment. This is an objective which we wholeheartedly support.

My noble friend Lord Layard has previously made a powerful case in identifying that nearly a million people are on ESA due to depression or anxiety disorders but that only about half are getting treatment. We have heard that improving access to psychological therapies can make a real difference, as the noble Baroness, Lady Meacher, confirmed. The pilots that took place were 10 years ago. My noble friend has previously explained that around half of those treated under the programme last year recovered during treatment. Such results could obviously assist the path for people back to work and we know of the evidence that work—good work—is good for people’s health. His amendment does not mandate anyone for treatment—we have been down that path before—neither is it instructing the NHS to treat in a specific way a group of individuals. But it requires that those with a mental health problem be encouraged and assisted to be referred for assessment and treatment. There is no conditionality attached and no suggestion that such individuals should somehow jump the queue.

If assessment and treatment is key to making individuals well and helping them move closer to the labour market, is that not exactly what the system should be about? This of course begs the question of what the process should be. I hope that the Minister will accept the thrust of this amendment and follow up with my noble friend and others who have been engaged in the past. We used to have mental health champions in Jobcentre Plus; perhaps the Minister could tell us what has happened to this role.

I finish where I started: fundamentally, we are very happy to support Amendment 1, which is very important, and to help the noble Baroness test the opinion of the House if that is her decision.

[The Minister of State, Department for Work and Pensions (Lord Freud) (Con)]

My Lords, Amendment 1 would build on Clause 1, which sets out the Government’s commitment to report to Parliament annually on the progress made towards full employment. Producing an annual report which illustrates progress towards full employment across the UK demonstrates this Government’s clear intention and continuing commitment to building a strong economy, growing business and ensuring labour market opportunities for all.

The purpose of this amendment is to require a further annual report to Parliament on the progress that has been made towards narrowing the disability employment gap. The amendment would also require the report to include how the Government have defined the disability employment gap, how they will assess whether progress has been sufficient and what remedial action will be taken if progress is insufficient. The amendment also requires that the report should include data on progress in increasing the employment rates of specific groups of disabled people, including people with autism, a learning disability, mental health problems and visual impairments.

I hereby formally commit the Government to report on our progress towards halving the disability employment gap in the annual report on full employment—no ifs, no buts. Halving the disability employment gap is a crucial part of achieving our full employment aspirations and a key priority for this Government in its own right. I hope also that, following my meeting with Peers on this very subject last week, they are assured of my commitment and that of my honourable friend, the Minister for Disabled People, who was also at that meeting.

16:00

There is no need to include a reporting duty in the Bill to drive progress or signal commitment in this area. We have already said that we will publish a White Paper later this year to set out our plans for improving support for disabled people and people with health conditions, to further reduce the disability employment gap and to promote integration across health and employment. Last summer, we established the new work and health unit between the two departments, the DWP and DH, to bring together and drive progress in this area. Clearly, to pick up the point made by the noble Lord, Lord Kirkwood, employers are key in this. That is what the Disability Confident campaign is about, which has shown some good success.

On the detail of the full employment report that we are talking about, the Government have already said that we will use the first annual report to set out a framework for considering full employment in a modern economy. However, I must make a point about specifying the particular groups that this amendment does. The Government are acutely aware that many of the most vulnerable in our society are affected by multiple conditions. Reporting progress against specific groups would draw focus away from others while failing to reflect this nuance. We are committed to enabling all disabled people to fulfil their potential.

The noble Baroness, Lady Thomas, raised a point about the various programmes, voluntary and mandatory, that we put through. We are building our knowledge about how to help people, and the new work and health programme will provide specialist support for claimants with health conditions and disability, including of course those with mental health conditions. Noble Lords will be delighted to know that one of the reasons we are driven in this direction is because we have been so successful in getting people back to work. People with health conditions are now becoming the biggest group and therefore the group we need to concentrate on.

I offer assurance, particularly to the right reverend Prelate the Bishop of St Albans, that our treatment of progress on the disability employment gap will include information that will allow people to understand the key drivers of changes in this vital area, such as changes in the prevalence of disability and health conditions and demographic changes. For this reason, the amendment is unnecessary. We have, I think, encapsulated its spirit in my formal commitments.

I thank the noble Baroness, Lady Howe, for tabling Amendment 42. I clearly need to acknowledge her particular interest in the area of mental health. She knows that I support her in trying to get support for those with mental health disorders, and I hope I can reassure her with this answer. Before I start, I have to say that the intention behind this particular amendment is not entirely clear. I have therefore assumed that it seeks to remove all work-related requirements for claimants with a mental and behavioural disorder within ESA or universal credit, where they are found to have a limited capability for work, although I must point out that this is not quite achieved by the drafting.

I understand the motivation behind this amendment, but I am afraid I cannot agree with it. It is fundamentally opposed to the direction of travel since the publication of Waddell and Burton’s seminal report in 2006, Is Work Good for Your Wellbeing?, which I know has influenced me and, indeed, the department ever since. Growing evidence over the last decade has shown work can help keep people mentally as well as physically healthy and help to promote recovery if someone falls ill. Indeed, NICE guidance recognises that work is a key component of recovery from a mental health condition.

In contrast, there is a strong link between not being in work and poor health, including poor mental health. In recognition of this link, we believe that where appropriate it is right to offer people work-related support. That is why over the next three years the Government are investing £43 million to develop the evidence base on what works for those with mental health conditions. This will be done through a series of voluntary pilots that will test a different approach of combined health and employment support for benefit claimants with or at risk of mental ill health.

Furthermore, the spending review announced an increased commitment to support people with health conditions and disabilities. This is on top of the additional funding announced in the summer Budget of £60 million in 2017-18, rising to £100 million by 2020-21, to support claimants with a limited capability for work. In addition, as I have already mentioned, the Government have committed to publishing a White Paper that will set out reforms to improve support for people with health conditions and disabilities. I certainly look forward to taking advantage of the noble Baroness’s expertise and getting some advice from her as we develop our proposals.

I recognise that there are concerns that some people with a mental health condition or behavioural disorder may not be able to cope with the work-related requirements placed on them. I reassure noble Lords that claimants who are placed in the work-related activity group agree, through discussion with their work coach, steps that are reasonable for their circumstances, taking into account their mental health condition. In a small number of cases where an individual may not agree with the steps their work coach has proposed, there are checks in the system which allow the individual to ask for this to be reviewed. Clearly, to pick up the point made by the noble Lord, Lord Kirkwood, this is an area we are watching with an eagle eye and we will develop processes to make sure this works, whether it is through a work coach, a specialism, support for that work coach, or whatever it takes.

I turn to Amendment 43. I am sorry that the noble Lord, Lord Layard, is not in his place—I think there was a slight mix-up. I have talked to him in great depth on this matter and the noble Lord, Lord McKenzie, was good enough to allow us to debate it today by formally introducing it. He has a long-standing commitment to mental health generally and improving access to services, and I admire him greatly for that. This amendment seeks to put a statutory duty on the Secretary of State to encourage and assist all ESA claimants with a mental and behavioural disorder as a primary medical condition to be referred immediately to treatment in local NHS services as soon as they are awarded a benefit. There are actually technical issues that mean that it would not be possible to implement but, subject to my discussions with him, the noble Lord is interested in the direction of travel here rather than the precise amendment. What he is actually after is timely access to appropriate treatment—a point made by my noble friend Lord Lansley. On this point, I can offer assurance that it is absolutely the Government’s intention to improve the links between health and employment support, recognising timely access to health treatments can help individuals return to work quicker—a point made by the noble Baroness, Lady Meacher.

There are a number of significant measures the Government have taken and are taking to improve that access. I remind noble Lords that we have the national rollout of the IAPT programme: over £400 million was provided by the Government during 2010 for that. More than 100,000 people have been supported to recover since the programme started in 2008, and Department of Health officials are currently working closely with NHS England to build on the success of the programme to date in the light of the recent spending review settlement.

As we have already discussed, we are committed to halving the disability employment gap. That is why we are investing the £43 million I mentioned to develop the evidence base on what actually works. The voluntary trials will test a different approach of combined health and employment support. This includes a trial to test co-location of IAPT within jobcentres currently under way in Canterbury, and we plan to roll this out more widely in a number of still-to-be-determined jobcentres.

On our further commitment to the joint work and health unit, we are spending more than £115 million on the unit, including at least £40 million for the health and work innovation fund—again, to pilot new ways to join up health and employment. I believe that the forthcoming White Paper will address some of the challenges of how we improve access to treatment and provide it earlier. Again, I will take advantage of the advice of the noble Baroness, Lady Howe, and the noble Lord, Lord Layard, in making that work as well as I can.

The amendments cover a lot of ground and touch on some very important issues. I hope that I have been able to assure noble Lords of the Government’s commitment and determination in this area and that the noble Baroness will feel able, on the back of those commitments, to withdraw the amendment.

[Baroness Meacher]

My Lords, before the Minister sits down, perhaps he would help us by explaining what the technical problems are in a simple referral to NHS by IAPT of people who have a diagnosis of a mental health problem.

[Lord Freud]

Yes. The Secretary of State for the DWP has no power to make referrals into the health system. That is just the way that these things are kept separate, and there is enormous sensitivity in the medical area about data and information flowing around the systems. In practical terms, that makes it impossible to join them up; it must be done in a much more subtle and clever way.

[Baroness Campbell of Surbiton]

My Lords, I thank the Minister for his reply to my amendment, which I shall come to in a moment. First, I thank the right reverend Prelate the Bishop of St Albans, the noble Baroness, Lady Doocey, and of course my noble friend Lord Low for putting their names to my amendment and believing in some of the arguments that I put forward in Committee. I would also like to thank everyone else, but they are too numerous to mention. I am thrilled to get that amount of support for the amendment.

I am fully aware of the Minister’s and the Government’s good intentions towards helping disabled people gain fulfilling employment. They were and, I believe, still are very serious about wanting to halve the disability employment gap. I welcome that, but I remember thinking the day I heard it, “My God, that’s going to take some work!” and, “Goodness me, we are really going to have to understand what lies behind the lack of mobility and movement within the unemployment field as it concerns disabled people”. I am aware that it will be tough—it will be really tough.

I hear what the Minister says about committing to making sure that disability is properly scrutinised in the annual reporting system. He will probably even get them to give a dedicated chapter to disability, but I also know that this will not do what it needs to for disabled people in really beginning to address that 30% gap.

I have been involved in writing and being part of generic reporting many times in my life. I have often been asked to do the work on disability for general reporting on health and social care. One very clear example struck me when the Minister was speaking—from when the Disability Rights Commission and the reports written by it was amalgamated into the Equality and Human Rights Commission, a lovely generic body where we would all work together on addressing the barriers that everyone faces with getting into work, housing, and so on. I am currently sitting on the post-legislative scrutiny committee on disability to see how well it is doing under the Equality Act and the commission. I have to say that we are receiving overwhelming evidence that the generic approach is simply not working. Disabled people are complex creatures; we are all so different, and all our support is different. Understanding why we are not entering the employment market will take something else—something more than a chapter in a generic report. However committed the Minister is that it should reflect the situation, I am afraid that it will not. That is why I was very keen—and I am keen—that something more should be put forward to address this intractable problem, as unemployment among disabled people is probably one of the biggest.

I am very tempted to test the House, but I am not sure that it would work—and, if it did, I am sure it would be overturned. So I am looking to the Minister to go back to the Government and to departments other than the Department for Work and Pensions, which, frankly, will write the report. Who will collaborate with the department across government? Which departments will really throw their weight behind this? I am sceptical, because they have not done very well so far on other issues. I would like the Minister to go back to the Government and say, “Okay, this will be part of the generic report, but I want it to be a substantive part, and I want more than a generic report with a chapter on disability that tells us all the things that we already know”. For that reason, I beg leave to withdraw the amendment.

Amendment 1 withdrawn.

16:15

Amendment 2

Moved by

[The Lord Bishop of Durham]

2: Before Clause 4, insert the following new Clause—
“Child poverty: reporting obligation
(1) The Secretary of State must lay before each House of Parliament an annual report on child poverty.
(2) The report must include information on the percentage of children living in households where—
(a) equivalised net income for the financial year is less than 60% of median equivalised net household income for the most recent financial year;(b) equivalised net income for the financial year is less than 70% of median equivalised net household income for the most recent financial year, and which experience material deprivation;(c) equivalised net income for the financial year is less than 60% of median equivalised net household income for the financial year beginning 1 April 2010, adjusted in a prescribed manner to take account of changes in the value of money since that year; and(d) equivalised net income has been less than 60% of median equivalised net household income in at least 3 of the survey years.(3) For the purposes of subsection (2)(d), the survey years are the calendar years that ends in the financial year addressed in subsection (2)(a) and (b), and the 3 preceding calendar years.”

[The Lord Bishop of Durham]

My Lords, I start, as I began my speech in Committee, by recognising that everyone in this House has a shared commitment to tackling child poverty in this country. We all want to see the end of child poverty; I am sure that no one in this House would want deliberately to keep children in a state of poverty. This debate is, therefore, not about the ends but about how we monitor progress towards that goal. Previously, I expressed my agreement with the Government that to maintain that income poverty alone is an adequate way to measure child poverty is no longer sustainable. I agree that there are other root causes, such as lack of work, low skills, poor housing, family instability and addictions, which must be recognised and tackled. But then we must also remember that many children in poverty are in families where a parent is in work; these children are currently trapped in poverty. I, along with the many organisations that work in this area, remain convinced that financial poverty is a crucial matter that must be recognised and reported on adequately.

It is, of course, possible to overstate the importance of material well-being alone. Many other things matter in children’s lives, including loving parents, good schools and safe neighbourhoods. They are all needed for children to thrive and achieve their potential. But it is also possible to understate the importance of income, or the lack of it—especially among those of us who have plenty, and perhaps take such things for granted. According to the latest deprivation statistics, 1.7 million children live in families that cannot afford to heat their homes properly, 1.3 million children lack the funds to take part in at least one organised activity each week, and 1.1 million children cannot afford to have their friends around for tea or a snack once a fortnight.

We know that money matters, because this is the experience of people in poverty, and of the many organisations and charities that work with them daily. There is also a wealth of academic evidence pointing to the damaging effects that income poverty has on children’s well-being, including their health, education and future employment prospects. We know, for example, that low income impacts on children’s cognitive ability, educational attainment, conduct problems and mental health, with serious implications for their future life chances.

Does the Minister accept that low income is an important influence on children’s outcomes and life chances, as his own department’s review of the evidence concluded in 2014? Can he explain why the Government are studiously ignoring the views of nearly everyone who responded to the consultation on child poverty measurement in 2013? According to a recent analysis by the London School of Economics, 202 out of 203 respondents to that consultation believed that income should be included in the poverty measures.

If I have heard the Minister correctly, the Government’s concern about the current child poverty measures is that they have encouraged an overdependence on income transfers, diverting attention from policies that tackle the root causes of poverty. However, the amendment does not seek to reassert the primacy of the existing child poverty measures: it simply requires that income-based measures of poverty be reported on alongside, and on a level footing with, other life chance indicators, such as worklessness and educational attainment, in order to acknowledge the significance of family income for children’s well-being and future prospects.

Furthermore, the amendment is about indicators for monitoring progress, not about targets or deadlines, so there is not the same risk that it could drive policy in an unhelpful direction. And with all due respect, the temptation to place too much emphasis on income transfers as a means of reducing child poverty is not one that the current Chancellor appears to struggle with. I agree that it is important to tackle the underlying drivers of poverty, but that can be done without abandoning all the existing income-based measures of poverty. The real issue is committing to, and resourcing, an effective long-term strategy to reduce child poverty, rather than finding alternative ways to measure it.

No economic or social indicators are perfect. Let us take the employment statistics. I note that recent trends in employment are encouraging, but those statistics do not allow for the quality of employment, and hide substantial levels of underemployment. Similarly, GDP statistics give equal weight to desirable and undesirable economic activities, and take no account of many priceless commodities. It is no surprise that existing poverty measures have flaws too.

The relative income measure, in particular, has been criticised for showing a decline in poverty during the recent recession. But that is precisely why there are three other measures of poverty in the Child Poverty Act. The absolute poverty measure is not affected by annual variations in median income in the same way. The deprivation measure, which focuses on the affordability of basic necessities, has the added benefit that it captures people’s living standards more directly than low-income measures. Nor can it be manipulated—if that is the right word—by targeted government transfers to low-income households. I therefore encourage the Minister to consider seriously the adoption of a deprivation-based measure of poverty as a way of recognising the importance of material poverty within the proposed set of life chance indicators.

The biggest gap in the proposed set of life chance indicators is that the existence of in-work poverty is completely ignored, even though nearly two-thirds of children in poverty have at least one parent in paid employment. We all agree that work is usually the best route out of poverty for those who are able to work but at present, sadly, it is not sufficient for many parents in low-paid or insecure employment. It seems inconsistent that, while introducing a national living wage and in-work conditionality to encourage people to look for better-paid jobs, any reference to in-work poverty in the indicators is omitted from them, and they will be used to monitor progress. This is why I also support the amendment in the name of the noble Baroness, Lady Lister, to introduce an indicator of in-work poverty alongside the worklessness indicators.

I anticipate that the Minister will respond by saying that the existing poverty measures will continue to be published and will be available for everyone to scrutinise each year. However, without a statutory reporting requirement, there will be nothing to stop a future Government or the Office for National Statistics, if it is its decision, from ceasing the annual production of the HBAI statistics at some later date. Dropping these measures also sends a clear message that income-based poverty does not matter to this Government, which, unless I am mistaken, is not their view or the Minister’s view.

In conclusion, first, I thank the Minister for offering to meet with me. My apologies: I could not make it but my daughter’s graduation trumped him. I note that consistently in response to our previous debates, the Minister has argued that the Bill is but one part of the Government’s programme to move towards a society with more people in work, on higher wages and paying lower taxes. He has noted other measures, such as the national living wage, the increasing thresholds for paying tax, and others, stating that these measures combined will raise the living standards of many. Of course, this is disputed by others. However, my point here is that since the Government are confident that their measures will be successful, they need have no fear of a statutory duty to report these income figures. Indeed, they should welcome it as a clear statement measuring their anticipated success. I commend the amendment and beg to move.

[The Earl of Listowel (CB)]

My Lords, I support the right reverend Prelate and thank him for moving this amendment, to which I have added my name. I will mention two principal reasons for my doing so. One is a concern that I think and hope is shared around the House: the changing nature of a Parliament and the experience of families that grow up in poverty. It is very easy to avoid meeting families in poverty. Many of the leaders of this country will perhaps have been educated privately from a young age, and there may have been few reasons for them to come into contact with families in poverty. They may never have worried about where the next meal will come from or whether they can afford to heat their homes, and they may not mix with people who have those worries. My personal experience of course is that I and my family have never had to worry about whether our home could be heated or whether there would be enough money for the next meal. However, the families we are talking about worry about whether they can feed their children and whether they will have to go without a meal to feed their children.

I recently met with Ms Lorna Sculley, who is a 36 year-old and has three boys: the oldest is 15 and the youngest is fairly new-born. She works for 16 hours a week and lives in poverty, so she is one of the “working poor” that the right reverend Prelate described. During her last pregnancy and maternity leave, there were difficulties with her benefit payments, which meant that she got into debt and had difficulty in meeting her rent. She became increasingly desperate. Fortunately, there was a food bank local to her. With the help of the education welfare officer, she was referred to the people running the food bank and she sought their help. Not only did they provide much-needed food for her and her boys but they gave her advice about how to negotiate with the benefit system and to catch up as much as possible. Unfortunately, I think that it is possible to get only a three-month rebate if one has had these sorts of slips, so she could not gain all the money that she needed. She also told me that, because she is working, her boys are not entitled to free school meals and it can be particularly difficult to get severe hardship payments. Her two older boys had destroyed their mattresses by jumping up and down on them but it was hard to get the money to replace them.

16:30

My fear is that, unless we include an amendment of the kind that the right reverend Prelate has suggested, or unless the Minister can give a clear commitment to the House at this point that a statutory measure of poverty will be developed on the basis set out in the amendment, perhaps looking particularly at material poverty, this constituency may get lost because it is so alien to the experience of many of us. As is so often the case, the people with the highest needs—those who need the most attention in our society—often have the smallest voices and are the least well represented, so I beg the Minister to give the assurances that the right reverend Prelate has asked for, and I look forward to his response.

[Baroness Lister of Burtersett (Lab)]

My Lords, the right reverend Prelate has made a very convincing, strong argument for retaining income and, as he pointed out, deprivation measures. We talk about income measures as shorthand but it is important to remember that the measures in the Child Poverty Act include a deprivation measure.

The 2012 consultation, to which the right reverend Prelate referred, said:

“There can be no doubt that income is a key part of our understanding of child poverty … Household income has a significant impact on childhood and life chances … The impact of growing up in a low income household can last a lifetime”.

That consultation was premised on income being one element of a multidimensional measure, and it made it clear that the Government are not playing a zero-sum game with child poverty measurement as between income and multidimensional indicators. It is not clear what has changed since then. Why have the Government changed their view on that? Do they no longer believe that income is important, despite the evidence, as the right reverend Prelate said, from their own life chances review, which made very clear the impact of low-income, low-material resources on life chances, and despite the advice that they received from their own Social Mobility and Child Poverty Commission? Its response to the consultation was that any new multidimensional measure,

“should be supplementary to the existing framework”,

and it looked to the Government to make clear their commitment,

“to maintain the centrality of income in measuring poverty”.

More recently, it said that it is simply not credible to try to improve the life chances of poor children without acknowledging the importance of income on those life chances and that, without an assessment of income, any measure would be inadequate.

As the right reverend Prelate said, the response to the consultation was overwhelmingly in favour of maintaining measures of income and deprivation. That included a response from the Royal Statistical Society, the academic scientific community and civil society organisations. In Committee, my noble friend Lady Blackstone, who is not in her place today, asked what alternative scientific advice the Government had to, in a sense, overturn that overwhelming response, but I do not think that we heard an answer to that.

It may seem rather academic and people may ask: why are we talking about measures; what does this matter? Actually, it matters a lot, and it is quite significant that a petition has been presented. Over 50,000 people care enough about this, and one woman in the country collected these signatures because people do care. If there is no statutory obligation for income and deprivation measures, it looks as though the Government think it simply does not matter if people do not have a sufficient income to live on.

There is no mention of targets in the amendment, unlike the amendment that was put forward in Committee, acknowledging, as the right reverend Prelate said, that the Government are reluctant to sign up to targets. In Committee, all I heard in response to the arguments put was an argument against targets. I did not hear any convincing argument against low-income and deprivation measures. Therefore, I hope that the Minister will think again and respond positively to the right reverend Prelate’s amendment.

[Lord Northbourne (CB)]

My Lords, on this kind of issue I am usually very much on the side of those who are sorry for those who have problems. But I think a much stronger case would be made if the amendment could be rephrased so as to take into account the possibility that, at times, the family themselves ought to do more to create the income that they so desperately need. I have not come prepared with any evidence but, being involved in issues around child poverty, I hear a good deal to suggest that a number of families prefer to live on benefits rather than go to work. I do not blame them for doing that, but I think they should share their responsibility in providing that income which, indeed, is so essential.

[The Earl of Listowel]

My Lords, I wonder whether my noble friend is aware that of the children in poverty who we are discussing at the moment, two-thirds have parents who are in work. The majority of the children we are discussing have parents who are in work.

[Baroness Hollis of Heigham (Lab)]

My Lords, very briefly, I support the amendment in the name of the right reverend Prelate the Bishop of Durham.

I am puzzled. When we considered the 2012 Welfare Reform Act, the Minister rightly commanded the respect of the entire Committee and allowed the proceedings to be lengthened from the original 10 or 11 days to 17 days, in the process of which he negotiated, discussed and shared information because he was determined that the introduction of universal credit would be, as far as was possible, evidence-based. That was something that we all responded to: we were not being motivated by the latest piece of journalism or an ideological twist; it was evidence-based.

What puzzles me about the Government’s position is not that they are seeking to get analysis of the impacts of poverty in terms of well-being measures, adult worklessness, child educational attainment at 16, and so on—it is perfectly sensible to have information about that. But this is not an either/or situation. We all know that we need to know about the income going into a family as well as about the impact of that lowered income on the outcomes that affect the family and the children, as the noble Lord, Lord Northbourne, said. This is not an either/or situation. We need both because, above all, government need to know where they can most effectively intervene to ensure that, as far as possible, children and their families have good, strong, decent and well-funded lives. We cannot know that unless we collect the information on both income and on what the Government believe to be the impact. It is not a question of which comes first, which drives one or the other, or which is the gateway. That does not matter—we need both. On the basis of that evidence, we, as a House and as Parliament, can come in behind government to see what levers are most effective in addressing the issues that that evidence has identified.

The Minister is an evidence-based Minister, which is why he has our respect. Therefore, in the light of that and all the work that he did on the 2012 Bill, I urge him not to sabotage it by ignoring crucial evidence of how best the Government should use the resources at their disposal. I hope that he will accept the right reverend Prelate’s amendment.

[Baroness Sherlock (Lab)]

My Lords, we on these Benches are fully supportive of Amendment 2, to which I have appended my name. The right reverend Prelate the Bishop of Durham has made a strong case for his amendment, backed up ably by my noble friends Lady Lister and Lady Hollis, and I will not add a great deal to the fundamental case that they have made. However, I do wish to say a brief word.

The Bill has a lot in it which will have a serious impact on the incomes of millions of families in Britain, particularly families with children and households with disabled people in them. I would love to send the whole Bill packing, as I would love to dispatch various statutory instruments recently passed through both Houses, but that is not what we are going to do; it is not our job. Our job over this week is to send back to the Commons for further consideration parts of the Bill where they have simply not begun to understand the consequences of some of what they have done; where the costs can be significant but often have just been shunted rather than taken away.

The great advantage of this amendment is that it does not cost any money and yet it would be incredibly powerful in holding the Executive to account, something which this House always takes seriously.

I have been struck, not only in listening today but in re-reading the excellent debate on this subject in Committee, that the Minister was signally unable to persuade Peers from around the House of the case that he made. Let me summarise the Government’s case. The report to Parliament by the Secretary of State for Work and Pensions on the drivers of child poverty said this:

“From the range of academic and institutional evidence reviewed we can confidently conclude that”—

brief pause—

“The key factor for child poverty now is parental worklessness and low earnings … The other main factors include low parental qualifications, parental ill health, family instability and family size”.

It also highlighted child education attainment as a key factor in increasing the risk of a poor child growing up to be a poor adult.

So what have the Government done in response to that evidence? This Bill guts the Child Poverty Act 2010, removes the requirement to report on income poverty at all and requires Ministers in future to report on only two factors—worklessness and educational attainment. That leaves a couple of key questions.

First, Ministers are not saying that these factors equal poverty but that they drive it. So presumably the Government will seek to address those factors and, if they are successful in addressing them, child poverty will fall—but how will we know? If we do not expect the Government to report on the effect on child poverty of the work they are doing, then how do we know whether their strategies are succeeding or failing? The Minister may point to the fact that data on households below average income are currently published, but, as the right reverend Prelate pointed out, there is no guarantee that that will carry on indefinitely without a statutory routing. If the Government are so confident, why will they not report on the impact of their policies on child poverty and be accountable for it?

Secondly, Ministers have cherry picked some of the factors on their own list and ignored others. In particular, as has been mentioned, why have the Government ignored the key factor of low earnings, which is the first in their line of analysis of drivers for staying in poverty. Is it because, by definition, it must be an income measure, to which there was therefore a political objection? Or is it because, as the noble Earl, Lord Listowel, pointed out, they know full well that two-thirds of poor children are living in households where a parent is in work. I will return to this issue in a later group but I remind the House that if the Government continue to damage work incentives by attacking universal credit and cutting the value of in-work benefits they can hardly be surprised to find that work is no longer a route out of poverty.

No one is arguing that money is all that matters—the right reverend Prelate the Bishop of Durham expressed that very well. I fully recognise his comment that the idea that money does not matter is often most closely held by those who have plenty of it. I make an exception in the case of the noble Earl, Lord Listowel, who despite, as he said himself, having always been comfortable has shown an impressive concern for those who have not had the benefits to which he found himself entitled. I commend him for that. Nobody is arguing that, but when 202 out of 203 responses tell you that you have got it wrong, it really is time to think again. The odds on that only one being the one that is right have to be pretty small.

16:45

The Government’s own statutory Social Mobility and Child Poverty Commission, in its response to the consultation, said this:

“In our view, lack of income is central to the experience of poverty and therefore needs to be central to poverty measurement. However, other things matter too. So a broad approach is sensible”.

Of course it is: how could that not be true? Of course income matters, right from the start of a child’s life. CPAG reminded us that children from low-income families are more likely to die at birth or in infancy, to suffer chronic illness in childhood or have a disability. As the right reverend Prelate pointed out, their experience of everyday life is fundamentally affected by money. If you cannot afford to invite your friends round to tea, that creates social isolation. If your parents cannot afford to heat your house, that makes it hard to do your homework or to sleep or to grow up healthy. These things matter enormously.

Nobody is trying to stop the Government measuring and reporting on educational attainment and worklessness. All this amendment does is to ask them also to report on income measures alongside the others. The data for this are already available, so there is no extra cost in gathering them. I urge the Minister to accept this very reasonable amendment, and if he will not, to explain very clearly to the House why he will not. Otherwise, we can conclude only that the Government are not willing to account to the public and to Parliament for the consequences of their policies. This Bill is full of measures that will drive more children into poverty. If the Government are willing to do that, they should be willing to stand up and account for it.

[Lord Freud]

My Lords, Amendment 2 seeks to insert a new clause that would expand the annual report to include data on children living in households with low relative income, combined low income and material deprivation, absolute low income, and persistent poverty. It would effectively reintroduce the same income-based poverty measures as set out in Sections 3 to 6 of the Child Poverty Act 2010—measures that fail to tackle the root causes of child poverty. I know that the amendment is well intentioned, but as it is drafted, it is technically faulty and cannot achieve what the right reverend Prelate, the noble Baroness and the noble Earl want it to achieve. For example, the amendment refers to how equivalised net household income is to be adjusted by regulations, but there is no regulation-making power in relation to the life-chances clauses in the Bill.

However, this is not the foundation of my disagreement with the amendment. I firmly believe that the existing statutory framework, set around the four income-related targets, simply does not drive the right actions to transform children’s lives. That is what we are all aiming for, so I think it is important for me to spend some time explaining why income measures are not the way to achieve what we all want to see. There will always be natural variations in income levels in society. However, having less money than someone else does not necessarily mean that an individual is in poverty. Income measures do not take this into account effectively.

Income measures focus on the economics of poverty and ignore the human dimensions: the social causes and the reasons people can get stuck in poverty. But even as economic indicators they are flawed. They are an indirect and imperfect indicator of poverty. They do not account for the full needs of the family or other financial deductions that reflect a family’s true financial situation, such as the amount of debt a family has, or even their non-income based resources, such as the benefits from education, such as the pupil premium. Households that have large savings or capital can still count as being in income poverty. This means that income measures can provide only a partial reflection of a family’s economic well-being.

There are other weaknesses, too. For example, the measures are based on current parental income and do not incentivise action to prevent poor children becoming poor adults. They do not reflect government action on raising attainment and improving life chances for disadvantaged children. These are some of the general weaknesses of income measures. I would now like to speak briefly in turn about why specific measures of relative low income—including persistent poverty, absolute low income and material deprivation—are unhelpful in tackling poverty.

If we first consider measures of relative poverty, the problem is that a household can be moved into or out of relative low income without any change in its circumstances. For example, in a recession, as median income falls, so does the relative poverty line. This means that many households that were previously in poverty will now be above the new, lower poverty line, even though their income and life chances have not changed. This incentive of “poverty plus a pound” does not drive transformative change in the lives of family members who still face multiple barriers to lift themselves out of disadvantage.

Conversely, policies such as raising the personal tax allowance and introducing the higher national living wage that give poor families a higher income could lead to increased average household incomes. This in turn raises the poverty line and brings more children into low income, punishing Governments for doing the right thing. As an example, while the economy grew from 2003 to 2009, income measures incentivised the previous Government to tackle the symptoms of poverty through expensive income transfers, such as spending £300 billion on working-age welfare and tax credits. This strategy did not tackle the root causes of child poverty or make a long-term difference to children’s prospects as the number of children in relative poverty remained broadly unchanged. Given that the proposed persistent poverty measure is based on families being stuck below the relative low-income line, it, too, will suffer from these same weaknesses.

I turn now to the disadvantages of absolute low-income measures. By definition, absolute poverty measures the proportion of children below a fixed income line, which is only adjusted each year to account for changes in prices. The current measure of absolute poverty uses the relative poverty line for 2010-11. However, the decision to use this as the absolute low-income line is essentially arbitrary, in the sense that there is no logic to why this is better than any other reference threshold that could be chosen as the absolute standard of what households should be able to count on in order to meet their needs.

Notwithstanding the clear criticism that this measure is subject to some of the same flaws as the relative poverty measure, it also leads to illogical changes in the level of children in absolute poverty. When the absolute poverty line was rebased to the 2010-11 relative poverty line, the number of children in absolute poverty under this measure went from 1.4 million children under the old baseline to 2.3 million children under the new one. These children saw no material difference in their lives or changes in their circumstances, yet just because the line was being drawn somewhere else they were all brought into poverty.

Finally, measures of material deprivation simply do not capture real material living standards robustly. The material deprivation measure asks subjective questions around whether families think that they can afford a certain set of items. We have looked into the accuracy of what it is trying to measure. Analysis from the IFS shows that almost 50% of children who live in a household that is deemed to be materially deprived have incomes well above the most commonly used relative low-income line. This brings up questions around whether material deprivation measures accurately reflect the true living standards of families. I hope that I have been able to show why the existing income measures are a poor test of whether children’s lives are really improving and a distraction from the aim of tackling the key drivers of child poverty.

[Baroness Hollis of Heigham]

Before the Minister goes on to his next point, I am puzzled. He is going through the individual indicators as though those are the exclusive and sole measurement of child poverty. That is precisely why the previous Government introduced a suite of measures. Each one captured some aspect and together they captured the broad range of issues that determine how we assess child poverty. So deconstructing and challenging each individual measure is not the point: it is the suite of measures that is being dumped, and it is that suite which caught what it means to be in poverty.

[Lord Freud]

The noble Baroness is making a presumption that the suite of four is self-reinforcing and that the weaknesses of one are balanced by the strengths of the others, but I hope that I have been able to describe that there is no necessary reason why they should be self-reinforcing. In fact, they may be taking us all in the wrong direction. That is the presumption that I challenge.

On the right reverend Prelate’s points, the consultation demonstrated support for a wider range of measures of child poverty beyond income. More than 90% of respondents showed support for measures that drive the Government’s action in tackling child poverty. Our new approach—this is a point that the noble Baroness made—has been informed by our evidence review, which underlies the crucial importance that worklessness and educational attainment play in improving children’s life chances.

Poverty is highly complex and affected by a large number of interrelated factors. The evidence review showed that low income is one of several factors affecting educational outcomes, but worklessness is the most important driver of low income. The evidence also showed that the best way to increase incomes and exit poverty is to enter work. We want to drive the action that will make that difference. That is why the two measures cover worklessness and educational attainment.

On the point about working families with low incomes, work remains the best route out of poverty. Around 75% of poor children in families where parents move into full employment leave poverty altogether. We will return to this on a later amendment, so I will not go into it in any more detail.

The income measures that the amendment would introduce are essentially symbolic. It is important that we recognise this for both sides of the debate. The Opposition have laid out their argument of how these measures are a symbol of where the Government should focus their action. However, to us they are a symbol of the old world—of how easy it is for Governments to be incentivised to push people’s incomes £1 above the poverty line without any real transformation to their lives. This is of huge importance to us as we want to move away from these types of drivers and instead focus on the right type of actions.

In response to the concerns from the right reverend Prelate and the noble Baroness, Lady Sherlock, about the information, the Government have made a strong commitment to continue to publish the HBAI figures. I should add that HBAI is a national statistic. That means that it complies with the Code of Practice for Official Statistics, which states that it must be produced independently of political influence. That may be a stronger position to protect the statistics than a statutory base. It is hard for them to be removed.

[Baroness Lister of Burtersett]

The Minister says that the figures are independent. What if those producing them are under great financial pressure, and they look around and think, “What measures can we stop? What data can we stop collecting and statistics stop analysing?”. They could say, “The Government show that they’re not interested in these statistics, so perhaps we should stop analysing them”. Whatever the Minister says, without a statutory obligation we cannot be absolutely sure that those statistics will continue to be produced and analysed. That is one reason why we had a bit of a debate on this in Committee. The Minister said that he thought that the only real difference between us was the word “statutory”. That is why we believe that statutory accountability is so important.

[Lord Freud]

We have made this commitment to continue to publish the HBAI figures. They are national statistics and part of what is almost a huge industry of measurement around the world, as countries do it in the same way. It is always conceivable that that outcome could happen, but in the real world it is almost unthinkable.

[Baroness Lister of Burtersett]

If countries around the world are doing it in the same way, does that not suggest that it is the right way?

17:00

[Lord Freud]

We had this debate in Committee. We all measure this in the same way; we are the only country in the world that has put it in an Act. We are now moving to how other countries treat these statistics. The behaviour of other countries supports in practice what we are doing in leaving these as national statistics, with the commitment I have just made to make sure that they continue to be published.

I have spent time on these points because this Government believe that the measures we opt for really matter. Let none of us be in any doubt that there is an important choice to make with this amendment and with Amendments 8 and 11, which follow. Resources are finite and it is crucial that we prioritise the actions that will make the biggest difference for our children. Do we choose income measures which would disincentivise a range of actions which will actually help improve the life chances of children, and incentivise others which will not tackle the underlying factors at play? Or do we put our wholehearted effort into the areas which can help transform children’s prospects—worklessness and educational attainment? Indeed, I was pleased to note that the right reverend Prelate the Bishop of Durham prioritised his daughter’s graduation, showing what he thinks of educational attainment compared with anything else, for which I commend him. This amendment would end up taking resources away from these areas. I firmly believe that it would end up being detrimental to the transformational actions we want to see.

I think noble Lords will agree that these are the key drivers which the Government must focus on. The evidence behind this is set out in our published 2014 evidence review and I have spoken at length on it on previous occasions and now. The statutory life chances measures of educational attainment and worklessness are the right measures that will incentivise government to bring about real change in children’s lives.

I urge the right reverend Prelate to withdraw the amendment.

[The Lord Bishop of Durham]

I thank the Minister for his very full response, for which I am grateful. If the amendment is technically faulty, my understanding is that it could be redrafted, so that is not a reason for not pressing it. I am grateful to the noble Earl, Lord Listowel, for his support and was moved by his story about Ms Sculley. I am also grateful to the noble Baronesses, Lady Lister, Lady Hollis and Lady Sherlock, for their expressions of support and the points that they made. I hope that the comment of the noble Lord, Lord Northbourne, on family was addressed by the noble Earl, Lord Listowel.

I will not go through all the points that the Minister made, because I think that we fundamentally disagree about the importance of reporting on income statistics. This amendment would not in any way detract from the drivers that the Minister wants around worklessness and educational attainment; those would absolutely still be there. This is simply about a reporting mechanism which we believe is important as part of the monitoring. I say “we” because I have consulted with bodies such as the Child Poverty Action Group, the Children’s Society and many others which work with children and families in poverty day in and day out and are still convinced that this is important information to have alongside tackling the other drivers. Therefore, although I know that the Minister will not be pleased with me, I wish to test the opinion of the House.

17:03

Division 1

Ayes: 290

---

Labour: 148
Liberal Democrat: 77
Crossbench: 46
Independent: 6
Bishops: 4
Democratic Unionist Party: 2
Plaid Cymru: 1

Noes: 198

---

Conservative: 180
Crossbench: 17

Child Refugees

Monday 25th January 2016 Lords Chamber

Statement

17:19

[The Minister of State, Home Office (Lord Bates) (Con)]

My Lords, the Government are at the forefront of the international response to the unprecedented migration flows into and across Europe. We want to stop the perilous journeys that migrants, including children, are making, which have had such terrible consequences. For the majority of refugees, of all ages, the clear advice from experts on the ground is that protection in safe countries in their region of origin is the best way of keeping them safe and, crucially, of allowing them to return home and rebuild their lives once the conflict is over. That is why we are providing more than £1.1 billion in humanitarian aid to the Syrian crisis. It is also why we have a resettlement scheme for the most vulnerable Syrian refugees. One thousand arrived before Christmas—around half of them are children. A further 19,000 refugees will be resettled by the end of this Parliament. Many of them will be children too.

Our resettlement scheme is based on referrals from the UNHCR. We are already considering referrals of separated children or orphans under the Syrian resettlement scheme where the UNHCR assesses that resettlement is in the best interests of the child. The UNHCR has a clear view that it is generally better for separated children and orphans to be helped within the region and to stay there as they are more likely to be reunited with their family members or taken into extended family networks. Last week, the International Development Secretary announced an additional £30 million for shelter, warm clothes, hot food and medical supplies, including for 27,000 children and babies. This assistance will be distributed to aid agencies including UNICEF, UNHCR, the Red Cross and the International Organization for Migration to support vulnerable people, including children on the move or stranded in Europe or in the Balkans.

We have heard calls for the UK to take more unaccompanied children from within the EU. The Prime Minister has committed to looking again at this issue and it is currently under review. Such a serious issue, potentially affecting the lives of so many, must be considered thoroughly and no decision has been taken at this stage. The UK Government are clear that any action to help and assist unaccompanied minors must be in the best interests of the child, and it is right that that is our prime concern. We take our responsibilities seriously and this issue is under careful consideration. When this work is completed we will update this House accordingly.

17:22

[Lord Rosser (Lab)]

I thank the Minister for repeating the Answer to the Urgent Question in the other place. We welcome the comments by the Government that they are looking again at the issue of child refugees in Europe. However, are the Government giving serious consideration to the call from NGOs such as Save the Children, and also from my noble friend Lord Dubs and other noble Lords in an amendment to the Immigration Bill to be debated next week, that the UK should offer refuge to 3,000 unaccompanied children in addition to the 20,000 Syrian refugees they have already committed to help? Are the Government also considering taking some of the 26,000 unaccompanied children who are in Europe today, and not just those from camps adjacent to Syria. The thought of any child genuinely alone in a foreign country without the basic necessities of life including protection and comfort, is completely unacceptable, particularly when they are vulnerable to trafficking, prostitution and other forms of abuse, and in some cases also face the prospect of simply disappearing completely. Finally, some of those children genuinely alone will have family here. Are the Government considering doing more to allow reunification of families?

[Lord Bates]

My Lords, apologies for confusing the procedure on Statements with Urgent Questions. I will deal with points in the reverse order to which they were raised by the noble Lord, Lord Rosser. First, the criteria for family reunion are set out in the Dublin regulations. They are currently under a period of review, but we will certainly honour the family reunion commitments under the existing Dublin arrangements. Regarding trafficking and the dangers, we are absolutely confident, in terms of the current Dublin regime, that all children—all adults, for that matter—arriving into the European Union should be identified with biometric passes at that point and recorded as such with as much data as are available. Once the data are there, at least that person is correctly identified. We have been providing support through the European Asylum Support Office in those regions to ensure that that recording of children and adults is going ahead.

I should say that the figure of 26,000 is an estimate of the number actually coming in to the European Union; the numbers are not held in one place. The Prime Minister is deeply concerned about that. This time last year, we had a couple of hundred coming in under the Syrian vulnerable persons resettlement programme. The Prime Minister announced that that was to increase to 20,000, and we brought in 1,000 before Christmas, 50% of whom were children. So we are not unmoved by that plea, but UNICEF and the UNHCR have seriously warned about the interests of the child being best served when they remain with wider family networks in the region, as that offers the best prospect for their safety and well-being once, as we hope, the conflict there is resolved.

[Baroness Hamwee (LD)]

My Lords, like others, I suspect, I would have welcomed a rather wider and more positive announcement about immediate steps to be taken for children not just from Syria but from Afghanistan, Iraq and Eritrea. When, as I hope we will, we get a positive announcement about the Government’s plans, will it include detailed proposals for everything that needs to be done to support the children whom we wish to welcome: funding and wider support for local authorities, training and support for social workers and, in particular, a focus on the availability of foster placements and support for foster parents, who will be dealing with very delicate situations?

[Lord Bates]

That is certainly the arrangement that we have under the Syrian vulnerable persons relocation scheme: they get that assistance, which comes out of the overseas development assistance budget in the first instance. We have a real problem with unaccompanied asylum-seeking children who are in the UK already, a high proportion of whom are in Kent. Funding is available to the authorities, and we will make sure that they have the resources necessary to provide the level of care that we expect under our international obligations, and our national obligations under the Children Act.

[Lord Hylton (CB)]

My Lords, I was in Calais in the “jungle” camp last Thursday—not, I add, in combination with the leader of the Opposition in the other place. The visit was organised by two leading Catholic social agencies, one in Britain and the other in France. It included meetings with three deputies of the French National Assembly. Will the Government provide legal routes to apply for asylum in this country for purposes of family reunion or for former employees of British Armed Forces?

[Lord Bates]

Certainly under Dublin there is a route for family reunion, which we honour and respect. Harrowing pictures come from the camp; I have not had the opportunity to visit. It is absolutely critical that the people in those camps claim asylum in France and therefore start to get care and attention that the children, in particular, need in France. We would encourage them to do that.

[Lord Roberts of Llandudno (LD)]

Does the Minister remember that on 2 December, the Prime Minister gave exactly that assurance to Tim Farron in the other place? That is seven weeks ago, seven weeks of torture under intolerable conditions for so many kids. We should move immediately on this, not waste a moment longer. They are children just like our children, and they deserve our concern and care.

[Lord Bates]

I agree, but it is more complex than that. The noble Lord follows these issues very carefully. He should know that when we talk to the UNHCR and UNICEF, they say that there are real dangers in taking children within the European Union and that the best place for them is in the camps in the region, where they can be considered and cared for in wider family units. We must listen to that, balance it and reach a decision, which the Prime Minister will do.

[Viscount Hailsham (Con)]

My Lords, I endorse the point made from the Liberal Democrat Benches about the availability of foster parents; that is very important. Furthermore, before the Government come to a concluded view, I hope that they will carry out an assessment as to how many adults not currently in the United Kingdom might have a claim under the human rights legislation to join unaccompanied children who are admitted here.

[Lord Bates]

Yes, there would be that—and, of course, one advantage of the Syrian resettlement programme as it is currently configured is that we relocate not just children but family groups into the UK. That is something to be appreciated. We will ensure that that study is carried out.

[Lord Dubs (Lab)]

My Lords, of course, what the Government are doing to support refugees in the camps in Jordan, Lebanon, Turkey and so on is good—and of course the 20,000 scheme is a good one, although far too small. But the winter is coming and there are children in European countries who are not being looked after, who are in danger of being trafficked and who might die in the winter. We do not have time to spare while the Government dither. Can we get on with it?

[Lord Bates]

We have been getting on with it. There is a relocation scheme for Europe, where they said that they would take 160,000. So far, as of today, they have managed to relocate 331,000. The Prime Minister said that we would take 1,000 before Christmas and 1,000 came—50% of them children. That is not dilly-dallying; that is taking action, but we want to make sure that it is always in the best interests of the child to do so.

[The Lord Bishop of Durham]

My Lords, I declare an interest as one of the co-chairs of the National Refugee Welcome Board. Is the Minister aware that the organisations Home for Good and Coram have somewhere between 9,000 and 10,000 families already offering to take unaccompanied minors? Of course, they have to have all the safeguarding checks and they will not all be suitable, but there is a vast body of people already willing to offer to help to resettle unaccompanied children in this country. The National Refugee Welcome Board is committed to working with the Government to try to help in that, with those organisations.

[Lord Bates]

That is a very generous welcome and one that we appreciate very much indeed. We are conscious that a lot of the people who are coming in the first wave are those who are most in need; those who have been victims of torture, with acute medical needs, and those most at risk. They may not be appropriate for the type of generous hospitality being suggested. But certainly as the scheme progresses we will very much want to call on that active and typical generosity on behalf of the British people.

Welfare Reform and Work Bill

Monday 25th January 2016 Lords Chamber

Report (1st Day) (Continued)

17:32

Clause 4: Workless households and educational attainment: reporting obligations

Amendment 3

Moved by

[Lord Ramsbotham]

3: Clause 4, page 4, line 31, at end insert—
“Maternal nutrition: reporting obligationA1ZA Maternal nutrition and poverty: reporting obligation
(1) The Secretary of State must publish and lay before Parliament a report containing data on—
(a) maternal nutrition in workless households in England;(b) maternal nutrition in long-term workless households in England.(2) The report must set out how the Secretary of State has interpreted the following terms for the purposes of the report—
(a) maternal nutrition;(b) household;(c) worklessness;(d) long-term worklessness.(3) The data contained in the report, and the provision about how the terms used in it are to be interpreted, must, so far as practicable, be derived from any relevant official statistics.
(4) The first report must be published before the end of the financial year ending with 31 March 2017.
(5) Later reports must be published before the end of each subsequent financial year.
(6) In this section “official statistics” has the meaning given by section 6(1) of the Statistics and Registration Service Act 2007.”

[Lord Ramsbotham (CB)]

My Lords, in moving Amendment 3 I shall speak also to Amendments 4, 5, 6, 7, 9, 10, 12, 13 and 14, which are all to Clause 4 of the Bill. Indeed, they are all amendments in effect to the Child Poverty Act 2010. They represent a repetition of amendments that I tabled in Committee about the annual reporting on health and well-being and on children aged five, as opposed to at key stage 4. For very logical reasons, the Public Bill Office has put Amendment 3 before my old amendment, which is now Amendment 5, because maternal nutrition obviously comes before children who have already been born. Therefore, I shall speak first to Amendments 5 and 6 to amplify what I said in Committee, on which I had a discussion with the Minister before Christmas following the rather inconclusive conclusion to our debate that evening, following timing problems in the House. I particularly want to talk about the link between extreme poverty and mental health, particularly of children, which was highlighted in the previous amendment.

In any situation, it is grossly inefficient to tax people who cannot pay. Local government has been quite right to draw the Government’s attention to the inability of councils in England and Wales to collect the £1 billion in three years that they were instructed to start taxing in April 2013. Of course, as has been said many times during the passage of the Bill, there is a cumulative impact on the health and well-being of residents when the benefits provided by central government for survival are being reduced in value as the rents that they have to pay rise. Therefore, in fact, we are talking about the cumulative effects of a great number of issues that are not in themselves all the responsibility of the Department of Health, or, indeed, the Department for Communities and Local Government, which have to deal with the outcomes.

The economic and social costs of mental health provision, which is the subject of this amendment, have been calculated by the Centre for Mental Health, in which I declare an interest as a vice president, as being £105 billion in 2009-10, which is reckoned to be an underestimate. That is a huge amount of money and a great deal of that is caused by the conditions that we have been discussing in this Bill. It is of interest that Dr Angela Donkin, who is a deputy director at the Institute of Health Equity, has said that the national audit in 2010 found that 82% of homeless people had at least one physical health problem, and 72% had at least one mental health problem. So there is a huge cost to all this poverty.

Some 10.4% of those in fuel poverty, living therefore in extremely cold houses, showed higher levels of respiratory conditions, cardiovascular disease and poor mental health as the result of the conditions in which they lived. You then add food poverty, which has been mentioned—and, again, the lack of proteins, iron and the correct vitamins, minerals and fatty acids leave a higher susceptibility to illness and infection and heart and lung complications. It is said that preventing low birth weight should be an absolute must for all public health officials, but all their efforts will be hampered by inefficient incomes, which mean that people cannot buy what is required to produce that high birth weight. Finally, there are many mental disorders, particularly evident in women who, in addition to handling the family budget, suffer from maternal depression, which is bound to impact on the children and their social development.

As I mentioned before, we have a situation here where the Chancellor is apparently directing, without ever taking evidence from such as the Barrow Cadbury Trust, whose evidence was used by the Mayor of London to calculate the London living wage—and also, I fear, there is a lack of tie-up between the Treasury, the Department of Health and the Department for Work and Pensions as well as the Department for Communities and Local Government. There is too much silo working. My amendments aim collectively to ensure that the collection of evidence by one ministry or another should be made available to all the others so that they have an aggregated picture on which to make their judgments.

Amendment 3 would introduce reporting on maternal nutrition—an addition to what I tabled in Committee. Also, it has been taken forward considerably since we debated it in December, particularly in a speech by the Prime Minister on 11 January, when he announced his life chances strategy. In addition to maternal nutrition, he also endorsed what was in my previous Amendment 4: the suggestion that reporting on children should not be left until key stage 4, at the end of schooling, but should be done at the age of five, because we would then have some chance of taking remedial action based on something that we had found early, thus increasing life chances. It is interesting that in his speech on 11 January, the Prime Minister said that,

“we must think much more radically about improving family life and the early years”.

He called that a “life cycle approach”—one that takes people from their earliest years through schooling and through adolescent and adult life.

This strategy clearly points to the importance of early child development and getting children ready for school, thus endorsing the assessment currently done of every child by the age of two, which I mentioned in Committee. Without measuring a child’s progress at the age of five, the Government cannot know how successful or otherwise any remedial treatment initiated following the health visitor assessment at two has actually been in preparing children for school.

I also mentioned in Committee that the All-Party Group on Speech and Language Difficulties, which I co-chair, in a report on the links between disadvantage and speech, language and communication needs, found that children with a low IQ from advantaged families overtook children with a higher IQ from disadvantaged families by the age of five. That is a terrible factor to consider: that overtaking will happen unless remedial action is taken. Therefore, I strongly believe that tackling child poverty and improving children’s life chances—the right reverend Prelate has just spoken about this, and we have just voted on it—is a national endeavour and responsibility. My amendment is designed to present the Government with the opportunity, through the evidence produced every year, to learn about what is actually happening to our children, and then to enable all the departments involved, not just the Department for Work and Pensions, to use the information to improve life chances, and thus to invest the nation’s money in its future—our children—more wisely.

My other amendments—Amendments 7, 9, 10 and 12 to 14—are textual adjustments to reflect the content of Amendments 3 to 6. I beg to move.

[Baroness Meacher (CB)]

My Lords, I strongly support the amendments tabled by my noble friend Lord Ramsbotham. The main amendments in this group are of fundamental importance if the Government are to make a success of their own DWP policy. The Government want to focus upon the life chances of children rather than upon poverty alone—but I do not believe we should lose sight of the significance of poverty, particularly when the levels of poverty will worsen so severely in the coming years. I was relieved to hear the Minister assure the House that the Government will continue monitoring poverty as before, whatever becomes of the amendment on which the House has just voted when it gets to the other place.

Of course, there is a lot more to successful parenting and the life chances of children than income alone. As we all know, sufficient income is a necessary but certainly not a sufficient condition for a successful childhood. Parents’ mental and physical health and well-being are essential to successful parenting. If a mother is malnourished, she is most unlikely to provide for her child’s mental and physical needs. If she is depressed, she may not be able to look after her child at all until her mental health improves.

As my noble friend Lord Ramsbotham reminded us, the Prime Minister himself has highlighted the early years as one of four areas in which to anchor the Government's approach to life chances. The Government’s life chances strategy can, in my view, set a course for improving school readiness for the poorest and most disadvantaged children—but only, of course, if it is introduced across the country and is adequately funded. But only by monitoring progress in improving the health and well-being of children in workless households, particularly during the early years, is there any hope that policies will be developed and adjusted over time to ensure that they help rather than hinder the life chances of those children. Any Government will need to learn from their mistakes over time—and as we all know, Governments certainly make mistakes.

17:45

I was a member of the Marmot Commission on Social Determinants of Health. That commission made it clear that parenting in the early years is a key determinant of the school readiness of any child. If a child starts school at a significant disadvantage, that failure will dog them throughout their school life and throughout their entire adult life. We need to understand why a child is not school-ready on their first day at school, so all the information that the Government can gather is imperative—absolutely essential. It is concerning that only 58% of children from the most deprived communities reach a good level of development, compared with 77% in the better-off areas. That gap of nearly 20% is utterly disgraceful. Monitoring, as proposed by my noble friend Lord Ramsbotham, will enable better targeting of the most successful programmes on those who can benefit most.

While so much is being cut back, the Government have made vital investments in the health and development of young children in recent years. I applaud their investment in expanding the health visiting programme by nearly 50% in four years, increasing the numbers by more than 4,000 health visitors. These health visitors could contribute to the monitoring of maternal nutrition and mental health. I am sure that they already do a lot of that, but an obvious thing to do would be for the Government to systematise the information and gather it nationally. Health visitors can also monitor the health and well-being of the children of workless households. We need to understand which interventions really help a child and which have little or no effect. Resources are going to be incredibly scarce in the coming years. We need them to be smartly focused.

The free early education for the most deprived two year-olds is welcome. But the Marmot Commission pointed to the importance of parents’ involvement with their child’s learning—such as reading stories at bedtime and other basic activities, which some parents may lack the confidence to do. The monitoring and reporting required in these amendments will make sure that the policies are really working. It may be that investing in two year-olds’ education will achieve little unless we go the extra mile and help parents become involved, if necessary by offering them some help with basic skills. I regard these amendments as non-political but essential for a Government of any complexion.

[The Earl of Listowel (CB)]

I support these amendments. I too am most grateful to the Prime Minister for his recent announcements on maternal depression during and after pregnancy. I attended the launch last year of the Maternal Mental Health Alliance report on maternal depression and other mental ill-health issues. It found that the nation loses about £1 billion a year through maternal perinatal mental ill health. The main cost is incurred because the relationship between mother and child is impoverished by the mother’s mental ill health. I therefore strongly support the amendment tabled by my noble friend Lord Ramsbotham, and I look forward to the Minister’s response.

[Baroness Manzoor (LD)]

I too support the amendments tabled by the noble Lord, Lord Ramsbotham, particularly Amendment 4. I tabled an amendment in Committee on reporting on attainment at key stage 1. I felt that was imperative, because that is the age at which early measurement of children, when they are going to school, can take place. I do not want to say any more now, because we had a very full debate in Committee; I just want to lend my support to these amendments. As an ex-health visitor—that was many years ago, I hasten to add—I recognise the importance of the health and well-being of both mothers and children. Measuring those factors in children at the age of five is imperative, rather than leaving the measurement of educational attainment, as the Bill now does, until the age of 16. We on these Benches therefore support the amendment.

[Baroness Hollins (CB)]

My Lords, I will speak briefly to Amendments 5 and 6. I remind noble Lords that the terms of reference of the health and well-being boards, established through the Health and Social Care Act 2012, require them to report on local efforts in reducing health inequalities and improving the well-being of their population, so it should not be too difficult to find a way to report on health and well-being, as suggested by my noble friend. On Amendment 3, the evidence is enormous that the nutritional status of women both before and during pregnancy can have an important influence on foetal, infant and maternal health outcomes. I remind noble Lords of the enormous parliamentary and public interest in the manifesto The 1001 Critical Days and the work that goes on in thinking about the first two years from conception to age two, and how nutrition is such a key part of improving the life chances of children and young people.

[Lord McKenzie of Luton (Lab)]

My Lords, this is an interesting group of amendments. If I heard correctly from each of the speakers, the thrust of it is that government should be entitled to a whole range of information that will best inform it across the piece as to how to tackle a range of issues. Specifically, the group of amendments seeks to add to the reporting requirements to Parliament: the progress of children at five in areas of cognitive, personal, social, emotional and physical development—likewise for children living in disadvantaged households; the health and well-being of children living in workless and long-term workless households; and maternal nutrition in workless and long-term workless households.

The noble Lord, Lord Ramsbotham, referred to a range of matters. In particular he spoke about the collection of disadvantage that you get: homelessness, mental health, fuel poverty and low income—it is that collection of issues which makes more difficult the life chances of individuals. A number of speakers emphasised the importance of education—the noble Baroness, Lady Manzoor, picked up again the point she made in Committee about key stage 1 for education, and the noble Baroness, Lady Hollins, spoke about the importance of health and well-being boards. I understand that the Office for National Statistics produces data on national well-being and on the well-being of children; I think it reported in 2014 and again just last year. It is interesting that a whole range of data goes into those measures. It is said with regard to children that there are something like seven domains and 30-odd measures of children’s well-being, which is a whole collection of stuff to have to handle and deal with.

At the end of the day, government ought to welcome the information that this collection of amendments seeks to be reported on, which is a range of information across the piece. The key issue that flows from it is what you do with it, or what strategies or interventions will flow from that collection of data which will make a difference to the life chances of young people—which is the thrust of this.

The noble Lord, Lord Ramsbotham, made the point that we do not have a collective figure for the consequences of all the changes in the tax and benefit system in recent times. I know that the IFS did a calculation of what had happened under the coalition Government with regard to tax and benefit changes and concluded that if you look at those changes—the percentage of the income of various groups of people—the lowest two percentiles bore the greatest burden. If you look at it in terms of absolute amounts, the top 10% bore the most, but if you look at it as a percentage of income, the poorest have had the worst outcome from all these changes the Government have introduced—and that is before we get into ones that are reflected in the Bill we have debated to date.

When we talk about health and well-being, we need to be clearer about our distinctions. We have the national statistics data and the background to that, which is a very broad measure. The issue around health and well-being boards’ and local authorities’ responsibility is a slightly different focus, but important nevertheless. So far as we are concerned, we can see the benefits of this range of amendments, which try to encourage the bringing-forward of data to underline just what the consequences of these policies are. I think the noble Earl, Lord Listowel, talked a moment ago about how it is all too easy for us in this Chamber to see this in perhaps rather abstract terms and not the reality. People out there have to face the reality of what these policies mean, and the collection of data of which noble Lords speak will help bring that home to government as well as to campaigners generally, so that those who bear the largest burden feel that that is understood, reflected and challenged—which is our job here.

[The Minister of State, Department for Work and Pensions (Lord Freud) (Con)]

My Lords, these amendments on Clause 4 have been grouped together quite widely. I will start by making a general point about adding to the reporting duties that the Government have already set out. The best way of securing progress by government is to have a focused set of measures. I echo the implication of what the noble Lord, Lord McKenzie, said. The more you have, the more likely you are to have a diluted effort and distraction from the key issues, which in this case the evidence tells us are worklessness and educational attainment. Of course many factors contribute to these headline measures. For example, we know that children’s health is an important factor in their educational attainment. Tackling health at work will help ensure that more adults are able to work. Therefore delivering on worklessness and educational attainment calls for a wide set of actions. However, it is important that we focus government on its core objectives that will tackle the root causes of child poverty.

First, with regard to additional statutory reporting duties, I turn to Amendment 3. With this amendment the noble Lord, Lord Ramsbotham, seeks to introduce an additional reporting duty on the Secretary of State. The report must contain data on maternal nutrition in workless and long-term workless households in England. I have already set out that our evidence review published in 2014 makes it clear that worklessness and educational attainment are the factors that have the biggest impact on child poverty and children’s life chances. We are committed to supporting families at the earliest stage and to helping parents move into work and earn more through universal credit or investment in childcare, the national living wage and increases to the personal allowance in the tax system. This is the best way to secure children’s life chances and ensure that parents are able to care for themselves, too.

I cannot overstate the importance of ensuring that we focus on measures that tackle the root causes of child poverty and not be distracted by others that do not do so. Of course, the issue raised by the noble Lord, Lord Ramsbotham, is important. The Government take action. They provide advice for parents on maternal and infant nutrition via NHS Choices and Start4Life. Government also operates the Healthy Start vouchers scheme, which provides low-income people with vouchers that can be spent on milk, plain fresh and frozen fruit and vegetables, and infant formula. It already publishes the results from the National Diet and Nutrition Survey, which includes results by age and gender. There are a variety of reasons why adults have poor diets, and it is important that we look at the whole picture, which gives us valuable information and helps shape interventions. I therefore cannot support this amendment.

Through Amendment 4, the noble Lord, Lord Ramsbotham, seeks to expand the duty placed on the Secretary of State to include a duty to report on the progress of children and disadvantaged children living in England at age five in their cognitive, personal, social, emotional and physical development. It is vital that all pupils thrive and develop in their early years. Monitoring children’s personal development is already a core function of every education setting. This monitoring then enables teachers to tailor their support based on how each individual is progressing. I assure your Lordships that we do not take this issue lightly. As the Prime Minister said during his speech about children’s life chances—quoted by noble Lords—we want,

“stable families and good parenting, because we know the importance of those early years in setting children up for a good life”.

There are two key issues at the heart of the life chances reforms—action on work and action on education. Lives can be transformed by focusing on these two most significant drivers of poverty. The Bill will start to realise the vision set out by the Prime Minister when he said that,

“we can rescue a generation from poverty and extend life chances right across our country”.

We all know that the end of key stage 4 is a vital juncture in a young person’s education. It represents the culmination of primary and secondary schooling and provides a consistent point at which to measure attainment across all young people. Pupils who fail to achieve at the end of key stage 4 are at high risk of not being in employment, education or training, so the Secretary of State is committed, through the life chances measures in the Bill—

18:00

[Baroness Manzoor]

My Lords, I get what the Minister is trying to say but unless there is a comparator at key stage 1, by key stage 4 it will be too late—the children will be 16 years old. If the Government really are to assess the development of children from the ages of five to 16, there is a need for that assessment to start at key stage 1. If there is an issue, they can be given support much sooner so that they have much better outcomes at 16. That will not happen if we do not have information from key stage 1.

[Lord Freud]

As the noble Baroness knows, we have a lot of information about how pupils progress. The point is that it is necessary to have something that absorbs all that rather than having detailed measures at each point. The earlier processes have to be right to attain the achievements at the key target date. I have spoken in this House before about “targetitis”. If you give hospitals 220 different targets, for instance, which is what happened a decade ago, nobody knows what on earth they are looking at, whereas if you focus on the two things that really matter and not on the culmination of a lot of measures, you drive coherent behaviour through the targets that are set, and that is exactly what this strategy does.

I have already made the House aware that the measures that we have include key stages 1 and 2. Annual reporting at different stages of primary schooling already provides significant detail of the progress and attainment of disadvantaged pupils. Monitoring personal development in the way that the noble Lord suggests—

[Lord Ramsbotham]

My Lords, these reports include the Department for Education and the Department of Health, as well as the Department for Work and Pensions. Who is making these reports and to whom are they going?

[Lord Freud]

The whole point is that these reports are published. It is a forcing mechanism to make sure that the relevant Secretaries of State and the relevant departments of government work together to tackle the fundamentals that produce these outcomes.

Returning to the educational issue, if we made this change to the Bill, it would increase the burden on primary schools and send a signal to schools that Parliament does not trust them to carry out their core functions. That is why I cannot support this amendment.

Amendments 5 and 6 look to expand the reporting duty placed on the Secretary of State so that his annual report containing data on children living in workless households and long-term workless households in England must include data on the health and well-being of these children.

It goes without saying that the Government want the best for our children. We want all children to have the opportunity to have fulfilling lives and to realise their potential, and clearly their health and well-being is an integral part of that. However, we can achieve this aim, which is one that we all share, only by tackling the root causes of child poverty, and I will not parrot what I have already said on this point. Our evidence review shows clearly that worklessness and educational attainment are the two factors that have the biggest impact.

We recognise that, as the evidence review pointed out, child ill-health is also a driver of poverty. We are absolutely committed to reducing health inequalities in terms of access and outcomes, and we are working across government to ensure that ill health does not hold our children back from fulfilling their potential. The Government have already put in place a well-developed reporting framework—the public health outcomes framework—that supports health improvement and protection at all stages of life, especially in the early years. The framework includes a large number of indicators on children and young people’s health and, along with the NHS outcomes framework, sets a clear direction for children’s health that allows anyone to hold us to account.

We are committed to improving access to better services and to promoting early intervention to address children and young people’s mental health issues before they worsen. We are investing £1.4 billion in that over the next five years, and we have invested more than £120 million to introduce waiting time standards for mental health services—the first time that we have done that.

If we concentrate our actions and resources on the root causes of child poverty, such as worklessness and education, that will be the springboard from which everything else will follow. While the Government recognise the importance of tackling child ill-health, these amendments would ultimately distract the Government’s focus and finite resources from what is most important for our children’s future life chances. For these reasons, I cannot support the amendments of the noble Lord and the noble Baroness.

Amendment 7, tabled by the noble Lord, Lord Ramsbotham, would require separate reports for measures of worklessness and educational attainment. We are already committed to reporting on these measures and believe that it is sensible to deal with them together as they are jointly fundamental to improving life chances.

Amendments 9, 10, 12, 13 and 14 are consequential on Amendment 7 and therefore, in the Government’s view, unnecessary.

Once again, I thank noble Lords for their contributions but, on the basis of what I have said, I urge the noble Lord to withdraw his amendment.

[The Earl of Listowel]

Before the noble Lord sits down, will he reassure the House about the future of health visitors? Clearly, they have a very important role in the welcome things that he has just said. The Government have done a great job in recruiting and developing the workforce, but now that responsibility for health visitors has been moved to local authorities, which must fund them, there has to be a concern that in the current atmosphere for local authorities we may go backwards and health visitors will not be commissioned to do the work that is so necessary in relation to what we have just been discussing. Perhaps the noble Lord would consider writing to noble Lords who are interested in this area about the mechanisms that exist to ensure that that does not happen.

[Lord Freud]

I shall be happy to write.

[Lord Ramsbotham]

My Lords, I am very grateful to all those who have contributed to this short debate. I am particularly grateful to the noble Lord, Lord McKenzie, for summing up what people said.

I listened very carefully to what the Minister said, and I am grateful to him for repeating what he has said before about the Government’s concentration on worklessness and educational achievement as being the main causes. However, I do not think that they are unique causes. The health and well-being, not just of the children but also of the families, and particularly the mother, is something that is a huge cause of the subject that we are looking at, and it ought to be added to worklessness and educational attainment.

It is all very well saying that we are going to do a great deal and going to improve the child mental health treatment processes in the National Health Service, but that comes at an enormous cost. The National Health Service cannot afford to do all this at present; otherwise, it would already have done it. I am very concerned that health and well-being in particular are being excluded from the terms of the Bill. They ought to be before everyone who is considering the issues of which the Bill is made up, particularly tackling the problems of worklessness and educational attainment, both of which have mental health as one reason—not the only reason—that they are there.

I am in something of a quandary. In many ways, I would like to test the opinion of the House on each of these three amendments, because I think that they are each important. However, if I may, I would like to withdraw Amendment 3 and not move 4 and test the opinion of the House on Amendments 5 and 6, which deal with health and well-being, which are, I think, the guts of all this issue.

Amendment 3 withdrawn.

Amendment 4 not moved.

Amendment 5

Moved by

[Lord Ramsbotham]

5: Clause 4, page 4, line 36, at beginning insert “the health and wellbeing of”

[Lord Ramsbotham]

My Lords, I wish to test the opinion of the House.

18:10

Division 2

Ayes: 110

---

Liberal Democrat: 60
Crossbench: 33
Bishops: 4
Labour: 4
Independent: 3
Democratic Unionist Party: 2
Plaid Cymru: 1

Noes: 184

---

Conservative: 175
Crossbench: 8
Independent: 1

18:22

Amendments 6 and 7 not moved.

Amendment 8

Moved by

[Baroness Lister of Burtersett]

8: Clause 4, page 4, line 41, at end insert—
“( ) children in low income households where one or both parents are in work.”

[Baroness Lister of Burtersett (Lab)]

My Lords, in moving Amendment 8 I shall speak also to Amendment 11. Once more I have the support of my de facto noble friend Lord Kirkwood of Kirkhope. I am also grateful to the right reverend Prelate the Bishop of Durham, who expressed his support when moving his amendment. These amendments bring up the rear of his amendment but complement and cement it. We do not know what will happen to his amendment in the other place but, because it is partly based on the need to take account of what is happening to children in working families as well as in workless families, it is important that we still debate it.

The purpose of these amendments is to balance the obligation introduced by Clause 4 to report data on children in workless households with a similar obligation in regard to children in low-income working households. As I argued in Committee, whether the primary concern is life chances, as in the Bill, or child poverty, which Ministers assure us they are still committed to eliminating, it cannot make sense to exclude from reporting obligations the two-thirds of children living in poverty in households where at least one parent is in paid work. Indeed, in the mean time the Prime Minister has repeated his welcome pledge of an “all-out assault on poverty”. Surely an all-out assault has to include this group. It is therefore appropriate that the poverty and disadvantage experienced by families with a wage earner should be included in the life chances reporting obligations.

The fundamental importance of the issue to the Government’s life chances strategy and assault on poverty is one of the reasons I return to it on Report. Its importance is underlined by the Social Mobility and Child Poverty Commission in its latest State of the Nation report. It states:

“A One Nation country would be one where work offered a guaranteed path out of poverty”,

and it documents how it fails to do so. As I said in Committee, the amendment has the support of the Equality and Human Rights Commission and End Child Poverty.

The other reason I am returning to this issue is that I was not satisfied with the Minister’s response to the arguments put in Committee. For instance, I specifically asked him to answer a question posed by my noble friend Lady Hollis of Heigham at Second Reading: how will the Government account for the poverty among children of working families? His response had been to refer to the continued publication of the HBAI statistics, which was welcome, but he did not give an explanation of the lack of any reporting obligation on this matter to ensure accountability with regard to in-work poverty. He still did not provide a satisfactory explanation under questioning in Committee.

The Minister pointed out that the current situation of the majority of children in relative poverty living in a family where at least one parent is in paid work,

“has developed over the past couple of decades due to the improved progress in tackling poverty in workless families”.—[Official Report, 9/12/15; col. 1586.].

That is fair enough up to a point but is no answer to the question in hand, nor is the fact that the risk of child poverty remains higher among workless households. Whatever the trend or the reasons for it, and whatever the relative risks, it does not absolve the Government of the responsibility to report to Parliament and the country what is happening to children in poverty, regardless of their parents’ employment status.

If the Government are reporting only on children in workless households, they will distort the overall life chances picture and the policy responses. Given that paid work is held out as the route out of poverty and the universal credit’s objectives, surely the Government will want to know what is happening to those who have set out on this route and to analyse any obstacles they encounter.

In Committee, we engaged in a textual analysis of the Government’s own publication An Evidence Review of the Drivers of Child Poverty worthy of an academic seminar. In the end, it all seemed to come down to whether, in its reference to “low earnings”—I note that the Minister carefully omitted reference to that part of the report yet again in his earlier responses—as a key factor, along with worklessness, that impacts on children’s life chances, “low earnings” was in brackets. The Minister seemed to suggest that, because it was in brackets, that meant low earnings “out of worklessness”. I was not sure what he meant by that. I have gone back to the original source and it is clear that the key passages contain no brackets.

To recap, the table on page 6 listing “Relative influence of factors on length of child poverty spell” is headed by “Long-term worklessness & low earnings”. The review spells out that,

“lack of sufficient income from parental employment … is not just about worklessness, but also working insufficient hours and/or low pay”.

Page 9 states:

“The key factor for child poverty now is parental worklessness and low earnings”.

Page 56 summarises the key finding:

“Long-term worklessness and low-earnings are principal drivers of child poverty and the key transfer mechanism through which the majority of other influential factors act”.

Note the “and” and the “and” and the “and”.

The significance of what we, in shorthand, call “in-work poverty” is not surprising, given the nature of the contemporary labour market. A new analysis of the Poverty and Social Exclusion survey by Professor Nick Bailey of Glasgow University shows that,

“one in three adults in paid work is in poverty, or in insecure or poor quality employment”.

Using various measures of in-work poverty, he found:

“one in six is in poverty on the low income measure, one in three on the deprivation measure”—

we spoke on a previous amendment about the measures being about deprivation as well as low income—

“and one in six on the combined PSE poverty measure”.

Professor Bailey wrote:

“It is particularly striking that a large minority of the working poor are working full time and/or live in a household with near full work intensity so that it is hard to see how more work can be the solution to their problems”.

He also notes that, for a substantial minority, what he terms “exclusionary employment” is an “enduring condition”.

Surely this is the kind of analysis the Government would want to draw on to balance and contextualise their focus on worklessness, not least given the extent to which parents on low income move in and out of paid work and worklessness in what has come to be known as the “low pay, no pay cycle”. Indeed, the fluidity of the dividing line between paid work and worklessness, which universal credit in effect recognises, makes a nonsense of a life-chances measure that ignores one side of the disadvantaged labour market position of low-income parents.

When I withdrew my amendment in Committee and warned that I might return to it on Report, I finished by saying that perhaps by then the Minister would have come up with some more convincing arguments than he had done hitherto. However, I realise that I was being rather unfair to him, because I do not believe that there are any convincing arguments, so how could he be expected to do so? Instead, it would be refreshing and welcome if he were able now to accept this amendment—which, after all, allows the Government to define their terms—or, if he prefers, to undertake to bring forward a government amendment at Third Reading to achieve the same end. I beg to move.

18:30

[Lord Kirkwood of Kirkhope (LD)]

My Lords, I support the case that has been powerfully made by the noble Baroness, Lady Lister. We have been discussing for what seems like years what should be done to help low-income families in work, and she has made a very good case. I cannot understand why the Government do not see the force of monitoring carefully the circumstances and environment in which these children will live, admittedly in England, in low-income households.

The Minister referred—and I know the work well—to the Waddell and Burton concepts of the sustainability and well-being that derive from work. That study was done in the early 2000s, and it was a changing experience for me as well—it was new to me. He also referred to the work that he then went on to do with the Labour Government in his important report. It all suggests that low-income working families are struggling to get to the kind of rewards that Waddell and Burton were talking about in their biopsychosocial model, which was so instructive in changing the terms of the debate.

I agree with the noble Baroness, Lady Lister, that the evidence is that we are in a very precarious employment environment. It is particularly true, and becoming more so, of self-employment. Single-parent families in low-paid work suffer increased and increasing stress, and all the other well-known elements that lead to deprivation in terms of the indicators of disability. Large households and some ethnic groups have historically had challenges relating to making work not just something that pays a wage but leads to a fulfilling life. This whole area will become more, rather than less, important in future, as the precarious employment environment increases.

There are big regional differences to which, as policymakers, we are at the moment blind. There are geographical areas and differences within England—as the amendment refers only to England—that would be instructive for policymakers looking at children in low-income working families and to which we do not have access at the moment. We could so easily have it if this amendment were adopted by the Government.

Finally, the universal credit change that is coming in this direction is quite new. Not only does it require families on universal credit under the claimant commitment to get themselves ready and able for work but, once within work, they are under pressure under the new system to go for longer hours and higher-level wage contracts of employment. That is all backed by sanctions. That is something that, once universal credit eventually rolls out across 7.7 million households, we will have to watch very carefully in relation to the trends. I am not saying that there is anything wrong with trying to get people into higher-level jobs, because that is important for low-income families, but that element of universal credit is quite new, to me certainly, in relation to how the social security and social protection systems that we have in the United Kingdom work.

I would be much more comfortable if the Government were to agree to these amendments. We would be better informed and, as legislators in the future, we would be in a much better position to protect the interests of children in low-income families who struggle with poverty in this country. It is time that we tried to do something about that.

[The Earl of Listowel]

My Lords, I support these two amendments. In the family to which I referred earlier, Ms Lorna Sculley has three children; the oldest and youngest sons have a disability, and she is a working mother. She works 16 hours a week as a dinner lady at the First Love Foundation—the food bank—and she discussed the prospect of getting more work. She calculated that if she worked seven more hours a week, she might get only another six pounds. It just was not worth her while to progress along a work route. I welcome very much what the Government have said about introducing the new, much higher, minimum wage, but the actual effect on families’ incomes might not be as positive as we would all hope, so I hope the Minister will consider accepting this proposal.

I would like to raise another point about a further complication for Ms Sculley. She depends on housing benefit and lives in Tower Hamlets. Her benefit has not been sufficient to pay her rent, so she has to subsidise it from her other income. She says that she cannot move from where she is because of her eldest son’s disability: he is at a school that is good at meeting his needs. That is what I understood from what she said, so that is perhaps relevant to others in our discussion.

My final point in relation to Ms Sculley is that she was offered a parenting class because of her two sons’ disabilities, but it took place on a Thursday, which is when she has to work at the school. She is therefore, in a way, disadvantaged by being in work because she cannot take up the opportunity of attending the parenting class. There is a lot to be said for these two amendments, and I look forward to the Minister’s response. Before I finish, however, I would like to thank him for the time that he took last week—an hour—to speak on the needs of children as they relate to this Bill. I certainly appreciate that very much.

[Baroness Hollis of Heigham (Lab)]

My Lords, I very much support the amendment of my noble friend Lady Lister, which was supported so ably by the noble Lord, Lord Kirkwood. I will be puzzled if the Government propose to resist the thrust of this amendment. The Government know perfectly well that, although the incidence or percentage of poverty among workless families is high, and higher than that among working families because the number of working families is so much greater than the number of workless families, as has been mentioned already, two-thirds of children who are in poverty live in a family where an adult is in work. Part of that might be that the parent, if a lone parent, has restricted hours, but we know that, with insecure contracts and the minimum wage and so on, the key lever to get that family out of poverty is not just to get the single adult into work but, where there are two adults, to get the second adult into work as well. We know that that is a function of the age of the youngest child and the size of the family. Child poverty might well be for a temporary period until the second earner—let us say, for this purpose, the mother—is able to go back into the labour market along with her husband or partner in order to amplify the family income. The need to support those children may be a temporary issue.

Given that the Minister today has put so much weight on the strain being carried by the new minimum wage and given that he will want to know, as we will all want to know, the interaction of that with the benefit bill, and the extent to which, therefore, that helps to address the levers of child poverty, above all of which is getting the second earner into part-time work, I do not understand why he would not want to track the information that my noble friend has called for. We all support the Government’s move to increase the national minimum wage. If he is right, this hopefully will have repercussions that we would all accept and support for the benefits system. But do we need to do more than that? We do not know. It may be about the size of sibling groups or the need for a second earner. We need to know what levers to pull. Unless the Government track that information, we will not know. I am sure that the Minister does want to know, so I hope that he will think very carefully about this amendment.

[Baroness Manzoor]

We totally support this amendment in the name of the noble Baroness, Lady Lister. I also totally agree with my noble friend Lord Kirkwood, who has amply identified the arguments as to why it should be supported. The noble Baroness, Lady Hollis, rightly said that we need levers. If we do not have such levers, how are we to address the issues about people who work, those who are not in work and in-work benefits? We will talk about the universal work allowances and the implications and ramifications of that. I hope that the Minister is listening very carefully. If the amendment is called to a vote, we on these Benches will support it.

[Baroness Sherlock (Lab)]

My Lords, I thank my noble friend Lady Lister for tabling this amendment and for introducing it so well. In Committee, she made a very compelling case and I share her view that the Minister’s response was more than usually unpersuasive. In fact, she may have identified the reason for that and may be on to something. It is not as though we lack evidence. We have heard that two-thirds of children in poor households have a parent in work. I think we all accept that the risk of poverty is lower in families where parents are working and that the risk rises as the hours worked do not. But that does not change the fact that today large numbers of children are in poverty even though their parents are in work.

My noble friend Lady Lister and I clearly had the same weekend reading. How sad am I? I, too, dug out the State of the Nation 2015 report from the Social Mobility and Child Poverty Commission and the original evidence command paper from 2014. The commission put it really clearly. It states that,

“today 1.5 million children are in poverty because their working parents do not earn enough to secure a basic standard of living and the risk of absolute poverty for working families after housing costs has increased over the last decade”.

We clearly have a problem. In their command paper, from which my noble friend Lady Lister quoted, the Government analysed what drove how long a child stayed in poverty. They state:

“The main factor is lack of sufficient income from parental employment … this is not just about worklessness, but also about working insufficient hours and/or low pay”.

They did not mention something which was picked up by the noble Lord, Lord Kirkwood—namely, that another crucial determinant is the nature and level of in-work benefits and the way in which they apply. But the Social Mobility and Child Poverty Commission did raise that. In its 2015 report, it commented:

“Many families will find it very difficult to increase their earnings enough to make good the cuts in state support even if they benefit from the welcome introduction of the National Living Wage … we recommend that the Government should, as the public finances improve, revitalise employment incentives in Universal Credit”.

However, as we know, things are going in the opposite direction. The Government have done real damage to work incentives—the very thing that UC was designed to tackle—by cutting work allowances. In this Bill, they are cutting the value of the main in-work benefits through the benefits freeze. They are abolishing the family premium in universal credit for all families and significantly cutting child tax credit for families with more than two children, both of which will hit working families with kids. On Saturday, the Times reported that cost-cutting means that 240,000 families will be denied the free childcare promised to them in the Conservative manifesto.

In Committee, the noble Lord, Lord Freud, argued strongly against targets on relative poverty because he believes that they drive government decisions on allocation of resources and he does not like the way they do it. He got his way on that, if not on measurement. But the information should at least be recorded. The risk of failing to measure and to discuss the trends in in-work poverty is that the Government will not do anything about it because it somehow legitimises the idea that poverty is not about money but about worklessness, as though, by definition, children with working parents could not be poor. If we do not focus on that, it could distort policy-making too.

If the Government are focused only on worklessness, they could end up pursuing policies that just move children from being poor in households where they see their parents a lot to being poor in households where they do not see their parents very often because they are out working unsocial hours in order to be able to make ends meet. With all the consequent damage to family life that that does, that is not the answer. I live in hope that the Minister will accept this amendment, having been persuaded by the brilliant arguments of my noble friend Lady Lister, but just in case, unaccountably, he is not going to do that, will he tell the House one very specific thing? Does he accept that it is possible to be poor if your parents are in work and you are a kid? If so, what are the Government going to do about it?

18:45

[Lord Freud]

My Lords, let me go straight to that question while it is fresh in my mind. It is, of course, possible to be poor while both parents are in work, particularly under the present legacy system. That is why we are bringing in universal credit—to make that much harder. We are not arguing about the level of poverty; it is about what is likely to happen to the life chances of that child compared to both parents being at that level of income and out of work and in work. That is the argument I have been trying to make all afternoon, with, I think, some resistance.

Under Amendments 8 and 11, noble Lords seek to expand the reporting duty placed on the Secretary of State so that his annual report to Parliament must include data on children living in low-income families where one or both parents are in work. Their amendments would add the terms “low income” and “in work” to the list of terms to be defined in the annual report.

I have already gone on enough about the centrality of worklessness and educational attainment. Alongside these statutory measures, the Prime Minister has announced that we are committed to publishing a life chances strategy in the spring, which will set out a comprehensive plan to fight disadvantage and extend opportunity, including a wider set of non-statutory measures on the root causes of child poverty such as family breakdown, problem debt, and drug and alcohol addiction.

I have said before that work is the best route out of poverty but I want to restate our arguments about the centrality of tackling worklessness. The risk of a child being poor is dramatically reduced if at least one parent works. According to the latest statistics, the risk of being in relative poverty for a child in a working family is 13%, compared to 37% for a child in a workless family. So a child in a workless family is almost three times as likely to be in poverty as a child living in a family where at least one adult works. Perhaps those are the figures for which the noble Baroness, Lady Sherlock, was asking.

Last year, we published an analysis on the transitions into and out of poverty. What we found was staggering, although some might say that it was obvious. Of the children who are in poor workless families, 74% will leave poverty altogether if their parents move into full employment. The analysis also made clear that the more work parents do, the more likely they are to leave poverty, with 75% of children from poor families in part-time employment leaving poverty if their parents enter full-time employment. I remind noble Lords that we have a package of reforms to encourage people to work. These policies include the national living wage and changes to the personal tax allowance, which will allow people to keep more of what they earn. Furthermore, over 30 million individuals will see a tax cut as a result of the changes we will make in this Parliament. Some 570,000 individuals will be lifted out of income tax altogether by 2016-17 and, as a result of the introduction of universal credit, more people will enter work due to improved financial incentives. We have a vibrant and growing economy, and last year real pay grew by 2.1%.

On the question from the noble Baroness, Lady Hollis, on support for women, we are supporting families through the national living wage, which is expected to have a stronger positive impact on the female workforce, boosting the wages of three in 10 female employees by 2020. Our childcare reforms will provide support to women who want to find employment, helping them to increase their income.

We have discussed before that two-thirds of children in relative poverty are from working families, but let me go over my argument. I am not convinced that it will convince the noble Baroness, Lady Lister, but I must try. It is correct that the latest figures published in the HBAI show that 64% of children in relative poverty are from a family where at least one adult is in work. This proportion has grown over the last couple of decades due to the improved progress in tackling poverty in workless families. In 1996-97—the earliest period for which data are available—around 60% of children in relative poverty were from workless families, which is around 2 million children, and around 40% of them were in working families, which is around 1.5 million children. During the 2000s, there was progress in reducing the number in poverty in workless families by focusing spending on tax credits, but this had the unintended consequence of weakening work incentives that resulted in hardly any change in the number of children in in-work poverty, which stood at 1.3 million in 2009-10.

[Baroness Hollis of Heigham]

My Lords, if the Minister will allow me to say this, he is misrepresenting the statistics. It may be a statement about children in poverty, but in particular the number of lone parents in that period who were in work went up from barely 50% to some 65%. Therefore, tax credits made work pay for them.

[Lord Freud]

It may have made work pay for some people, but it had the effect that, while it was possible, through income transfers, to drive down the out-of-work poverty of children, which is what they were designed to do, it had virtually no impact on in-work poverty. That brought that policy to a reductio ad absurdum: you could not do it without undermining your work incentives because you were raising the level of the benefit structure and it was beginning to knock up the income scale. That was the problem; that is what the data show.

In-work poverty, combined with falling levels of children in poverty from workless families, led to a greater proportion of children in poverty being from those workless families. This meant that, from 1996-97 until the end of the last decade, the proportion of children in poverty from working families actually went up from four in 10 to six in 10. That is the reality of the situation today. I can see that there is some ideological difference to be found over that analysis.

The evidence review, raised by the noble Baroness, Lady Lister, highlighted the importance of low earnings, but emphasised the impact of working a lower number of hours, rather than the impact of low-paid work. On the question of how we will know about the levels of poverty—in work and out of work—I reassure her, as I already have, that we will have that data in the HBAI. It will continue to be available. Indeed, those in-work poverty figures in the HBAI can always be broken down by whether the family is in full-time or part-time employment.

I described why having two separate systems worked so poorly. We are introducing universal credit exactly to address those disincentives. I can tell noble Lords that I have spent the most enormous amount of personal time trying to get this structure so that we do not have these odd disincentives, which are really undermining for society. Universal credit is the best way to give people the incentive to enter work: it reduces poverty by making work pay and making sure that people do not lose out as they start to earn more, which is the terrible discontinuity in the legacy system. It provides an effective route out of poverty, while supporting the most vulnerable households. We already see the evidence under universal credit that people are working more and are better off in work.

As with Amendment 2, which we discussed earlier, these amendments would reintroduce an income-based relative poverty measure, which, as I have tried my best to explain—perhaps not as successfully as I might—do not tackle the root causes of child poverty. The Government are concerned with focusing our efforts and attention on those areas that will make a real difference to children’s lives, and concentrating on those root causes.

Resources are finite. It is crucial that we prioritise our actions to make the biggest difference for children. Statutory income measures cause the Government to focus their action and resources on direct and incremental increases to family income, but that does not necessarily drive any real change and is detrimental to the things that we think are vital—noble Lords know what I think they are.

Let us focus on the things that matter and drive the actions that will give our children the future they deserve. Let us not be distracted by measures that detract from that aim. As I said, we will continue to publish the HBAI figures so that we will know exactly what is happening. I therefore urge the noble Baroness to withdraw the amendment.

[Baroness Lister of Burtersett]

My Lords, I am grateful to all noble Lords who spoke in support of the amendment. I am grateful to the Minister, who at least went into more detail. As he expected, I was not convinced by his arguments, because I still have not really heard a convincing explanation of why there should be no accountability for what is happening. He said that we must focus on the things that matter, but surely what is happening to, for instance, the lady referred to by the noble Earl, Lord Listowel, matters? My noble friend Lady Sherlock talked about those who work such long hours that they do not see their children. We know from research at Bath University that children care about that. It talked about children and lone mothers in particular: they are glad when their mother gets paid work, but it affects them. They hardly see their mother. That time squeeze on such families is important. These things matter as well.

I do not necessarily think that this is ideological, as the Minister said. At the beginning he said that it is not the level of poverty that matters, but what is likely to happen to the life chances of children—as if these were totally separate things. The whole point, as the Social Mobility and Child Poverty Commission and the driver analysis said, is that life chances are affected by income poverty. Therefore, we need to know what is happening to the life chances of children, regardless of the employment status of their parents. I will not go into the detail of the trends; it is pretty much what the Minister said in Committee. I do not think that that is the point; the point is that there should be government accountability about what is happening to those who, as the Minister likes to say, are “doing the right thing”—although I am not so sure it is always doing the right thing—and who are in paid work.

I am disappointed. What the Minister said at the end suggests, if we are focusing on what matters and we do not focus on the poverty of those whose parents are in paid work, that that therefore does not matter. That says volumes. I do not suppose that low-paid parents are sitting at home watching this debate—they are probably out there working—but if they read about it or hear about it, they would say, “Don’t we matter? Don’t the hours I am putting in for little pay matter? Don’t the Government want to report on what is happening to people like me? Doesn’t it matter?”. I think that it matters enormously. However, I will not push our luck and test the opinion of the House, so, regretfully, I beg leave to withdraw the amendment.

Amendment 8 withdrawn.

Amendments 9 to 14 not moved.

19:00

Clause 5: Social Mobility Commission

Amendment 15

Moved by

[Baroness Lister of Burtersett]

15: Clause 5, page 5, line 23, leave out “Social Mobility” and insert “Life Chances”

[Baroness Lister of Burtersett]

My Lords, I wish to speak to Amendments 15 to 23. I am very grateful to the right reverend Prelate the Bishop of Durham for adding his name to them.

The amendments would rename the Social Mobility and Child Poverty Commission the Life Chances Commission, rather than the Social Mobility Commission, as in the Bill, so as to align the commission’s remit with the new focus on life chances introduced in the Bill and about which the Minister has spoken a lot this evening. I still think that the removal of the words “child poverty” from the commission’s title—after all, it was originally named just the Child Poverty Commission—is sending a message that the Government no longer care about child poverty, which is surely not their intention given that they assure us of their continued commitment to the elimination of child poverty. However, in the spirit of compromise, I realise that the inclusion of the “CP” words might be sensitive, so I have not included them. I return to this amendment because, as I put it in Committee, I was “desperately disappointed” by the Minister’s response, or rather lack of response, to the case we had made.

To recap that case: the amendment would, in my view, better capture the spirit of the new focus on life chances enshrined in the Bill. Thus I was, and remain, genuinely puzzled about why the Government did not use this opportunity to rename the commission the Life Chances Commission. As I said in Committee:

“At Second Reading the Minister underlined that the Government’s new approach is the life chances one, focused on transforming lives through tackling the root causes of child poverty, and he referred to the new statutory measures as key life chances measures”.—[Official Report, 9/12/15; cols. 1592-3.]

This stance was reinforced by the Prime Minister’s recent speech in which he sketched out the principles underlying the Government’s planned life chances strategy, to which the noble Lord, Lord Ramsbotham, referred earlier, as did the Minister. The strategy that the Prime Minister sketched emphasises, as he put it, “a more social approach” that moves “beyond the economics” and develops “a richer picture”. In other words, it seems to me that the Prime Minister understands that a life chances agenda is less economistic and is richer than a social mobility agenda. Indeed, I suggest that social mobility is an example of the 20th century thinking—that is, old thinking—that he argues we need to move beyond.

Therefore, I welcome the Government’s introduction of the concept of life chances, even if I argue that they should pay more attention to the importance of material resources, as the current commission recognises. As I explained in Committee, I believe that it is richer than the narrower, meritocratic notion of social mobility. I drew on the work of the Fabian Commission on Life Chances and Child Poverty—chaired by the noble Lord, Lord Adebowale, who is no longer in his place—of which I was a member. As a good academic, I will define my terms. The commission defined “life chances” simply as referring to the likelihood of a child achieving a range of important outcomes which occur at successive stages of the life course. Again, the Prime Minister talked about a life-cycle approach.

Therefore, the emphasis is on a range of outcomes, including health and well-being, as well as those associated with social mobility. Children must be given the chance to enjoy a happy, flourishing childhood, and to continue to thrive as they grow up. Thus, as I explained, it is about caring about children as beings as well as “becomings”, both of which can be damaged by child poverty. I suggest that, again, this chimes with the Prime Minister’s speech, which for instance emphasised factors such as mental health and character and talked about cultural disenfranchisement.

The commission preferred the concept of life chances over the narrower one of social mobility because the latter reflects the kind of economistic thinking rejected by the Prime Minister and does not embrace the idea of ensuring that everyone has the chance to live a full and flourishing life. Moreover, it ignores what happens to those who are not able, or may not want, to climb the education and career ladder. In Committee, I gave the example of someone who devotes their life to caring for others—undervalued, be it on a paid or unpaid basis. As I asked, do we want to say to children that it is an ignoble ambition to care for others instead of climbing the economic ladder? To these arguments the right reverend Prelate the Bishop of Durham added a perhaps even stronger one—that the notion of life chances resonates with children themselves in a way that social mobility never would. I hope that he will expand on that in a moment.

In his response, the Minister maintained that the reformed commission would be able to focus more single-mindedly on social mobility, and that its remit on social mobility would be expanded. However, its overall remit is, of course, being narrowed in a way that I argue is out of line with the much broader life chances approach outlined by the Prime Minister. It also apparently excludes child poverty, which, as the current commission makes clear, undermines social mobility and restricts life chances. I believe that this will diminish the commission’s role and the value of its work. What the Minister did not do was explain why the Government believe that it is better to focus the commission’s remit on social mobility when the whole thrust of the Government’s thinking, as otherwise enshrined in the Bill, is life chances. Therefore, I was left even more puzzled at the end of our debate than at the beginning.

I know that the Minister takes our debates seriously and goes away and thinks about what has been said. Therefore, I end on a note perhaps more of hope than expectation, but I am hoping that he has done so with regard to this amendment and realised that what I am proposing is helpful to the Government’s cause and, indeed, would be welcomed by people in the field, including many who are otherwise critical of what the Government are doing in the Bill, and, indeed, as the right reverend Prelate indicated, perhaps by children themselves. I beg to move.

[The Lord Bishop of Durham]

My Lords, I support this amendment. Yesterday, I spent a delightful evening with a small number of academics after preaching at Evensong in an Oxford college—Worcester College. It was a very pleasant evening. However, as I sat there, I kept coming back in my mind to today’s debate because I was reminded of the extraordinary privilege of being in an Oxford college and the elite nature of it. This is not to criticise it or put it down; I had the privilege of studying in a private hall in Oxford when I trained for my ordination. However, I found myself thinking about the vast number of children and young people I meet in schools and colleges around the north-east, and have met in other parts of the country over the years, for whom such privilege is not their aim. Most of those I meet do not talk or think about being socially mobile. They do talk, however, about wanting a decent home and growing up and finding a good job on a decent wage. They also talk about having a stable, loving family through their childhood and wanting to create stable, loving families in the future. Those are the hopes and dreams of most of them. I believe that we have a lot more work to do on aspiration levels. I would love more of them to dream that one day they could go to Oxford or Cambridge, and that they can be significant players in their own communities and transform them, because that is where most will do it. Of course, we all know people who make huge impacts on their local community because they believe in it.

Social mobility is simply too narrow a focus. I absolutely support the move to the term “life chances” as a better expression of a broader base on which to think about these matters. I am not a great sociologist, but I went back to Max Weber, who was the first person I could find who talked about life chances and who introduced the concept of social mobility. In that, he talks quite clearly about social mobility being only one of the factors. He also talks about social stability, social cohesion and social integration. These are at least as significant and, for large numbers of people, they matter as much as, if not more than, social mobility.

Life chances around worklessness, educational attainment and, indeed, income are a broader-based way of assessing poverty. They will tell us more about the health of society than simple social mobility. Changing the name of the commission will absolutely reflect more closely the intention of the Government and offer a way of monitoring progress and feeding into it through the commission’s work. It matters and it would be nice to have a commission with a title that children themselves recognise, understand and could talk about and debate in their schools. How much they would, I do not know, but the idea of a title that they relate to is very valuable. This is intended to be helpful. To call the commission the Life Chances Commission fits absolutely with what the Government are aiming at and will help serve that aim better than the simple, narrow focus of social mobility.

[The Earl of Listowel]

In listening to this debate, I find myself sympathetic to the notion of social mobility but I also think of the play “Macbeth” and of Macbeth and his wife. There is a risk, I suppose, if one puts too much weight on social mobility, of a society which is red in tooth and claw. The addition of the words “Life Chances” balances that. Your Lordships may also remember the series “Seven Up!”, which I think started in the 1970s and followed 10 children through their lives into adulthood. To my mind, the happiest life in the group was that of a young black boy who grew up in foster care and then went on to become a butcher, marry and have a family. He seemed the most contented of the lot. To be able to achieve a stable and loving family is also important to society, so it would also be helpful to measure that.

[Lord McKenzie of Luton]

My Lords, this amendment has been moved very comprehensively by my noble friend Lady Lister and spoken to by the right reverend Prelate the Bishop of Durham, to whom I should say that the closest I got to Oxford on Sunday night was watching “Endeavour” on television. This is a re-run of an amendment moved in Committee as part of a wider group covering life-chances strategies. The Minister’s response then, as reported in col. 1598 of Hansard on 9 December 2015, was clear on a commitment to publish a life-chances strategy, as well as the annual report as set out in the Clause 4 obligations, but there was no commitment to make this a statutory obligation. As my noble friend Lady Lister has argued, the concern which has been expressed about the commission is that, for the future, it has no obligation explicitly to promote the tackling of child poverty. Although there is a commitment to report on life-chances data, and a statement on the record that there will be a life-chances strategy, the role of the Social Mobility Commission seems somewhat removed from this.

As my noble friend Lady Lister pointed out in Committee, promoting social mobility is a narrower ambition than tackling poverty and promoting life chances: it is not a substitute. It is, of course, a not unreasonable ambition, but a commission focused on life chances would naturally encompass the prospects of social mobility. The reverse is not the case. We therefore support my noble friend’s amendment. It seems odd that the Government are keen to have a commission reporting on progress on improving social mobility but not on life chances.

19:15

[Lord Freud]

These amendments seek to rename the reformed commission as the Life Chances Commission, rather than the Social Mobility Commission, and to amend the duties placed on the commission to promote and improve life chances instead of social mobility. The two concepts—social mobility and life chances—are different although there are, of course, areas of overlap between the two. The Prime Minister’s speech earlier this month demonstrated the importance this Government place on improving children’s life chances. The statutory measures of worklessness and educational attainment and the Government’s life-chances strategy will drive action that will make the biggest difference to children’s life chances. Together, they will provide transparency and enable anyone to hold the Government to account.

The Government also place great importance on improving social mobility and providing equality of opportunity for all citizens. Our proposals for the reformed commission will enable it to have a single-minded focus on social mobility and play a crucial role in its scrutiny and advancement. That is about ensuring that everyone has the opportunity to realise their potential in life, regardless of their background. Perhaps those in Oxford do not need quite as much looking after as others. The commission will also have a new duty to promote social mobility in England, enabling it to engage with a wide range of partners, including government, business and the third sector. This will be crucial to tackling the institutional biases and cultures that prevent individuals fulfilling their potential. Through our new statutory life-chances measures and strategies and the reformed Social Mobility Commission, the Government will drive action and enable scrutiny on these two vital issues. I therefore urge the noble Baroness to withdraw the amendment.

[Baroness Lister of Burtersett]

My Lords, I am very grateful to the noble Lords who have spoken. I feel slightly embarrassed; I am supposed to be the sociologist but it was the right reverend Prelate who quoted Max Weber. I had better go back and read my old sociology textbooks. I still do not feel that the Minister has given a true explanation. He seems to be making a distinction: the way he and the Prime Minister see it, life chances are about children’s life chances, while social mobility is about everyone—children and adults. However, children become adults and I see life chances as being about the whole life course, from cradle to grave. If that is the case, and the distinction lies in the commission’s focus being more on what is happening to adults, that worries me even more. Let us remember that this started life as a child poverty commission. In the Welfare Reform Act 2012, it became the Social Mobility and Child Poverty Commission and some of us were a bit worried about that at the time. Were we not right to be worried? Now it is not just child poverty that has been dropped, but children, too. Apparently it is not now supposed to be interested in children at all. I am not so much puzzled now as quite worried about what this means for the commission, because the Social Mobility and Child Poverty Commission has produced very valuable reports about what is happening to children in this country. The Government no longer have a statutory obligation to report on children in poverty, other than in relation to worklessness and educational attainment. We do not know what will happen to the Child Poverty Unit. It is as though children—and children in poverty—are just disappearing.

I am less puzzled than really upset about what has happened here. The complete shift of focus away from children in this commission is disgraceful. I am not going to push it now, for obvious reasons, but I hope there may be some other way that we can come back to this, though I do not know at what point this can happen or what scope there will be for the commission to try and expand its remit. I find what the Minister is saying quite extraordinary. As he himself has said, we want to focus on what matters: he is saying that children do not matter. I leave it there and beg leave to withdraw the amendment.

Amendment 15 withdrawn.

Amendments 16 to 23 not moved.

Clause 7: Benefit cap

Amendment 24

Moved by

[Baroness Pitkeathley]

24: Clause 7, page 9, leave out lines 5 and 6

[Baroness Pitkeathley (Lab)]

My Lords, the purpose of this amendment is to remove carer’s allowance from the list of qualifying benefits for the benefit cap. It would also remove an injustice.

While an exemption for households including a disability living allowance or personal independence payment claimant exists, this does not protect all families affected by disability or all carers from the cap. This is due to the way that a household is defined by the benefit system, as your Lordships will know. For the purposes of that system, a household is considered to be an adult, their partner, if they have one, and the children that they have who are under 18. If any other adult relatives—for example, older parents, brothers and sisters or even adult children—live in the same house, they are considered to be part of a different benefits household or unit, even though they live together. This means that while carers looking after disabled partners and disabled children under 18 are exempt from the cap, those caring for adult disabled children, siblings or elderly parents are subject to it. Currently, about 1,400 households containing carers are affected by the benefit cap—please remember that figure, as it is a relatively small number.

The Government’s stated objective for the cap is to encourage more households to move into work. A new lower-tiered cap has been designed to strengthen the work incentives for those on benefits. That is a perfectly respectable aim but if it is designed to be fair to individuals who are working hard and contributing to society, it cannot be right that it is applied to carers. There are two main reasons.

First, carers contribute an enormous amount to society; your Lordships will be familiar with this. The value of unpaid carers’ support to the economy is £132 billion every year—the cost of a second health service. Indeed without the support from carers, health and social care systems would simply collapse. There is no doubt that carers are a major contributor to society. Secondly, carers cannot mitigate the impact of the cap in the way that the Government suggest. In Committee in the Commons, the Minister, Priti Patel, said:

“We all acknowledge the important role that carers provide, but we do not accept that carers are unable to work. Although seeking work is not a condition for receiving carer’s allowance, many carers are nevertheless able to and combine work with caring responsibilities”.—[Official Report, Commons, Welfare Reform and Work Bill Public Committee, 17/9/15; col. 237.]

The Minister is quite right but your Lordships should remember that to receive carer’s allowance, carers must be caring for a minimum of 35 hours a week, the equivalent of a full working week.

While it is true that some carers combine work and care, for the majority the intensity of their caring role means that this is simply not possible. For those who combine heavy caring with significant work, the prospect of reaching breaking point, where carers suffer exhaustion and physical and mental breakdown, is greatly increased. The latest survey from Carers UK about carers at breaking point shows that six in 10 people caring for an older, disabled or seriously-ill loved one have reached that breaking point at some time.

The cap is applied unequally to carers. While the exemption for households in receipt of PIP or DLA is very welcome it means that carers who are considered not in the same household are penalised, although they may be living in the same house as the person they care for. This means that of two carers who are caring for exactly the same amount of time with the same income, one would be subjected to the cap and one would not. Surely subjecting those who provide unpaid care to the benefit cap is unfair, counterproductive and inconsistent with the Government’s stated aims for their policy.

Hearing me say those things, your Lordships may think, “Well, she would say that, wouldn’t she?”, but they are very much reinforced by the recent High Court decision. On 26 November, the High Court ruled—

[Lord Freud]

It might be worth my intervening on the noble Baroness, I think, in the interests of not hearing too much more vituperation—there is only a certain amount that I can take.

[Noble Lords]

Oh!

[Lord Freud]

Amendment 24 seeks to remove carer’s allowance from the list of benefits that are included within the benefit cap. As written, the effect is that recipients of carer’s allowance with a benefit income above cap levels would still be included in the cap but their carer’s allowance payment would be disregarded from the cap. That is the way that this amendment works.

I emphasise to the noble Baroness, and to your Lordships, that this Government value the contribution which carers make to society, and shall outline the further steps that we are taking to support carers. As I indicated earlier in the process, the Government have been carefully considering the position of carers and the people who they care for in relation to the benefit cap. I am grateful for the patience which noble Lords have shown while we completed this consideration. I know that your Lordships have been keen to hear where we would come out but it is necessary to look at these things in detail and take the right time to do so. We keep all these policies under review and have been looking at support for carers with particular attention—that is, across the piece and not just here. In relation to the benefit cap, the position of carers cannot be considered in isolation from wider policy aims. Our strategy is to support and invest in carers. We have therefore looked at the evidence and considered the best way to continue to support carers in the context of wider government strategy.

We do not consider that the disregard which this amendment would create is the right approach. We want to go further; we will be exempting all recipients of carer’s allowance from the benefit cap, whether they are single or part of a couple. This approach fits within the wider government strategy to support and invest in carers. Many carers wish to enter paid employment and many have done so while sustaining the role. We recognise that in some cases, it is beneficial for both the cared-for person and the social care system if people are cared for at home. It continues to be the case that some paid employment, alongside caring, will be right for many carers. But our strategy to support carers through the Care Act and through wider investment strategies provides new, targeted opportunities for help and encouragement, where appropriate, to remain close to paid employment.

As I say, we will be exempting recipients of carer’s allowance from the benefit cap. This is of course complex and we will need to get it right. But with my assurance that to support this exemption we will bring forward an amendment at Third Reading, and then appropriate regulations in due course, I therefore ask the noble Baroness, if she has finished moving her amendment, to withdraw it.

[Baroness Pitkeathley]

I am always happy to spare the Minister more vituperation, as he pleaded for. I am of course delighted with what he said, with the recognition that the Government have given to the contribution which carers make and to their inability to mitigate the effect of the cap in other ways. Certainly, some carers combine paid work with caring but, as I have said, for many their caring responsibilities are too heavy for them to do that without enormous stress. I am very glad that the Minister has taken account of that, and that the Government have taken account of the very strong wording of the High Court judgment. The wording was extremely well put but extremely firm. It would have been very difficult to understand if the Government had not heeded the very strong words of that High Court judgment. At the time, it seemed that there was neither logic nor justice in the Government’s position. I beg leave to withdraw the amendment.

Amendment 24 withdrawn.

Consideration on Report adjourned until not before 8.30 pm.

Education (Student Support) (Amendment) Regulations 2015

Monday 25th January 2016 Lords Chamber

Motion to Regret

19:30

Moved by

[Lord Stevenson of Balmacara]

That this House regrets that the Education (Student Support) (Amendment) Regulations 2015, which change the existing student support arrangements so that new students starting full-time courses after 1 September 2016 will no longer qualify for a means-tested maintenance grant, will result in a significant decrease in participation in higher education by those in low-income groups, older students, female students, and students from ethnic minorities (SI 2015/1951).

Relevant document: 18th Report from the Secondary Legislation Scrutiny Committee

[Lord Stevenson of Balmacara (Lab)]

My Lords, I start by declaring an interest; I have two children currently enrolled in British universities. I think both attend, although I am not absolutely sure about the second one—but I want to make sure that that is on the record. I am also very grateful for the excellent work of the Secondary Legislation Scrutiny Committee, which alerted your Lordships’ House to the regulations that we are discussing in its 18th report.

The Government are proposing, under these regulations, to take grants away from around 500,000 of this country’s most disadvantaged students and replace them with maintenance loans, to be paid back when their earnings exceed £21,000 a year. The Government estimate that this will save £2.3 billion by 2020-21. My first point is that a change of this magnitude, which could affect more than 500,000 people, ought to have been made by primary legislation. According to the House of Commons Library, there were 395,000 students on full grant and 135,000 on partial grant in 2014-15. This SI affects a very significant number of people.

I checked with our Library over the weekend, and the last higher education Bill to go through your Lordships’ House was in the summer of 2004. Here we have Ministers trying to shut down parliamentary scrutiny by introducing major changes to the negative procedure, when we all know that SIs cannot be amended and that no formal approval is required in either House. It is not a proportionate way of proceeding, even if the powers are in the substantive legislation.

My second point is that this measure was not included in the Conservative Party manifesto. This U-turn comes just four years after grants for students from disadvantaged backgrounds were hailed by the Government as an essential element in their higher education strategy. Could the Minister explain the thinking behind this change of approach, given that the previous higher education Minister, the noble Lord, Lord Willetts, who unfortunately is not in his place, said that ever since tuition fees were raised in 2012, the Government had acknowledged that maintenance grants were central to ensuring that higher education was still accessible for poorer students? The noble Lord said that tuition fee rises were,

“progressive, because they help to encourage people from poorer backgrounds to go to university, because of the higher education maintenance grant”.—[Official Report, Commons, 3/11/10; col. 940.]

This is not of course an isolated proposal but part of a pattern. It mirrors, for example, changes that removed NHS bursaries for nurses and other staff. It has been foreshadowed by changes that the Government have made in the support for further education over the past three or four years.

We put down this regret Motion today to hold the Government to account over what I see as a major policy change. It seems to many observers that the Government have been on the defensive all the way through this process. There was very little detail to be had when the Chancellor first mooted this change in the summer Budget, and not much more in the Autumn Statement. It was only when the National Union of Students raised the alarm about the impact of the policy and threatened a judicial review over the lack of consultation and the failure to publish the equality assessment that we began to see what was going on.

The generation of students entering further and higher education from September 2016 are going to be saddled with even greater debts—or “income-contingent tax liabilities” as the Government like to call them—than they were already likely to be from their course fee loans of £9,000 per annum going up. The IFS said in a press release summarising its briefing note on the summer Budget 2015:

“Students from households with pre-tax incomes of up to £25,000 (those currently eligible for a full maintenance grant) will have a little more ‘cash in pocket’ … But they will also graduate with around £12,500 more debt, on average, from a three-year course. This means that students from the poorest backgrounds are now likely to leave university owing substantially more to the government than their better-off peers”.

The IFS also states:

“The poorest 40% of students going to university in England will now graduate with debts of up to £53,000 from a three-year course”.

Note the use of “debt” rather than “income-contingent tax liabilities”—the IFS certainly calls a spade a spade. All this is backed up by the Sutton Trust, which says:

“Shifting grants to loans may move them off the balance sheet, but it could also put off many low and middle income students and tip the balance against their going to university”.

In a recent publication, million+ says that research from the NUS published last week by Populus shows that parents are concerned that the Government’s plans to scrap the maintenance grant will discourage their children from applying to university. The change could also have a serious impact on postgraduate enrolment, since it is clear that the abolition of grants will increase individual student debt significantly. Indeed, the range of groups affected by these changes is daunting. The equality analysis published last November concedes that black and minority-ethnic students in particular will be disproportionately worse off. As for older learners, it says:

“Mature students will be disproportionately impacted by the policy proposals”.

The Government have also conceded that disabled people will be badly affected by this decision as well as by the decision to delegate responsibility for much of the disabled student allowances schemes to institutions.

The equality analysis also raised the question of discrimination because of concerns among some Muslim students about taking out interest-bearing loans. Can the Minister update us on the discussions which took place during the last Government on the introduction of sharia-compliant loans? Finally, it also states that female students will be particularly affected given their “significant overrepresentation”, as it is described, in populations currently receiving grants.

These damning details from the Government’s own equality analysis should surely give Ministers pause for thought. Does the Minister have anything to offer which might ameliorate these shocking findings? These issues need to be addressed urgently, otherwise any progress towards making higher education more diverse, particularly at postgraduate level, will be jeopardised.

Finally, it is also important to note that this policy does not exist in isolation. The cumulative impact of the rise in tuition fees, the scrapping of maintenance grants and the freezing of the repayment threshold all point towards a more hostile environment for those thinking about higher education. What is driving these panic measures from the Government? Is it a belated recognition that the whole set of financial assumptions about the repayments that underpin the trebling of student fees in 2012 is, as we predicted, producing a black hole for them and for future taxpayers?

Removing maintenance grants makes no economic sense. The IFS conclusion is that this change will not improve government finances in the long term. It states:

“The replacement of maintenance grants … will raise debt for the poorest students, but do little to improve government finances in the long run”.

The IFS points out that the rationale behind this is clearly political. The Government will gain in the short term because current spending on grants counts towards current borrowing—clearly bad—while current spending on loans does not impact on borrowing until the debt is written off at the end of the 30-year repayment period, which is good for current Treasury Ministers. The change helps the Chancellor to balance the books in this Parliament even though it will be at the cost of higher borrowing three decades or so into the future.

On 11 January this year, the Prime Minister gave a speech on life chances, referred to in the previous debate, explaining how the Government intend to transform the lives of the poorest in Britain. He said that his Government’s mission was to,

“look each … child in the eye and say, ‘Your dreams are our dreams. We’ll support you with everything we’ve got’”.

It is a good line and I sincerely wish it were true. But the reality is that there is a growing disconnect between the rhetoric and the action. Scrapping maintenance grants sends out a message that runs counter to any prospect of increased social mobility. This policy will impact heavily on women, the disabled, black and ethnic-minority students and older learners. To cap it all, it will end up being more expensive than the current grants system.

The Government should bring forward a higher education Bill. If we had it here today, we could have been discussing how to realise the wider benefits of having more people educated to degree level in our country and how best to fund that investment in our future prosperity and to properly support every young person in the country to develop themselves to the best of their ability. I challenge the Minister to convince us tonight that these regulations are the right thing to do and that her Government are supporting our young people with everything we have. I beg to move.

[Baroness Garden of Frognal (LD)]

My Lords, I welcome the noble Lord, Lord Stevenson, securing a debate on these regulations and join with him in his regrets.

There has been widespread concern at actions the Government are taking which place additional burdens on those least able to accommodate them. The Liberal Democrats will feel particularly outraged at these regulations. As the junior coalition partner, we were notoriously unable to implement our policy of no tuition fees, but we were able to use our influence in government to fend off some of the harsher proposals of our coalition partners, to produce a fairer system for students from lower-income backgrounds and to give incentives and support to those who might be deterred from further learning.

I was a Government Whip in the coalition Government, working for the noble Lord, Lord Willetts, as Universities Minister, who the noble Lord, Lord Stevenson, has already quoted. He understood fairness and we were delighted when he said that the proposals would,

“encourage people from poorer backgrounds to go to university, because of the higher education maintenance grant”.—[Official Report, Commons, 3/11/10; col. 940.]

The way in which these changes are being brought in—through the back door, as it were—seems to indicate that the Government are rather ashamed of them, and hoped to sneak them through without having to face the music of their impact. They are, indeed, a backward step.

Of course any additional support in the form of loans is welcome, but that really is not relevant to this argument. Maintenance grants have the great advantage of being non-repayable. The sums, of up to £3,387 a year, certainly do not allow students to live the life of Riley, but they can make all the difference to a student struggling to pay for the necessities of life and study—rent, food, other bills and the items they need for their learning. They have enabled some of the most disadvantaged to participate in higher education, many the first in their families to do so, without the burden of additional debt.

Changing grants to loans is a very significant move for those who will see their university debts soar. I, too, was startled at the Institute for Fiscal Studies warning that,

“The poorest 40% of students going to university in England will now graduate with debts of up to £53,000 from a three-year course, rather than … £40,500”,

which is already an eye-watering amount to this cohort.

Those who will be most deterred by additional debt include those the Government most need to engage in education. Women, for example, tend to be more debt averse than men as well as being a large proportion of this population. Disabled students have the additional deterrent of changes to the disabled students’ allowance, which we were debating only last week. Adult learners and black and minority ethnic learners are more aware of the burden of loans, which they are unlikely ever to be able to repay.

What benefit will this bring to government finances? It will be disproportionately little in comparison with the damage it will do to encouraging social mobility and building an inclusive graduate population. Many of these loans will never be repaid anyway, but for the students they will be there as a reminder of a debt instead of a grant that can be long forgotten.

The Government should be facing up to skills shortages in the population and tackling the increasing divisions between rich and poor. We need to encourage learners to improve their skills and knowledge, to be ambitious, to fulfil their potential and thus to make a greater contribution to the economy and to the well-being of themselves and the country.

These regulations will do nothing to encourage those from less advantaged parts of society to work hard and achieve. The Government did not need to do this. It was not a manifesto commitment. As the National Union of Students rightly said, the decision is “undemocratic and ill-considered”. There has been no effort at thorough consultation with those people and organisations most affected by the changes.

Would the Minister please clarify for the House the justification for saddling the poorest students with the greatest debt? In coalition, my party argued consistently for measures to encourage—not deter—women, adult learners, ethnic minorities and disabled people. What are this Government doing to encourage these learners? What consultation will be put in place before such a damaging change is inflicted on those learners we most wish to be helped to fulfil their potential?

I urge the Government to think again about these mean-spirited and harmful changes.

[Baroness Deech (CB)]

My Lords, most speakers tonight will focus on cost and the increased debt that will accrue to students if these grants are converted to loans. I want to explore an effect that, in my view, is far more serious and damaging to the Government’s aspirations for higher education. The effect of ending grants designed for food and rent costs is that more students will have to stay at home for their studies. I will explain briefly that this will eventuate in a decrease in social and academic mobility and a ghettoisation of universities.

It is already the case that teenagers from better-off families are more likely to attend top universities than those from low-income backgrounds, even though more students from less well-off backgrounds are attending university. Some 5% of poor students went to Russell Group universities according to the latest statistics, compared with 12% from more affluent homes. It is very likely that this is simply because the teenager from a comfortable home can afford to go to any university of his or her choice throughout the country, knowing that they are able to pay the rent and all the added costs of living away from home, while the less well-off student is increasingly forced to attend whatever university is close to home. Average rents for students living away from home are around £400 a month and over £500 in London. Therefore, of course the less well-off London student will live at home, even though academically and socially his or her choice might be Oxford or Cambridge.

19:45

Much though those top universities have done to make themselves affordable by way of bursaries, the prospect of adding to one’s debt will be off-putting for the student from a modest background. Government Ministers of all parties are frequently heard to complain that disproportionately few poor and ethnic minority students attend Oxford and Cambridge. These proposals will make that situation far worse, and undermine all the imaginative and extensive efforts made by top universities to reach out to underprivileged students all over the country.

It is also the case that students from ethnic minority backgrounds are already more likely to study close to home, maybe in part because their parents are fearful of letting them go too far away. To take away from them the maintenance grant, the one factor that could help them place their foot on the ladder of opportunity and independence, is short-sighted and will retard, if not block, the integration of youth of all backgrounds into a better-educated society—an aim allegedly close to the heart of the Government, and indeed to all of us.

More than 20% of students live at home, and the number is already rising. The better-off ones are more likely to live away from home. Of course, many students freely choose to live at home; I am concerned with those from whom choice will be taken. What is wrong with living at home and studying at your local university because you cannot afford any longer freely to choose to move away? There is the time and expense of commuting, especially in London; exclusion from the networks formed by those who live in halls or shared accommodation; and the evening social life. If university becomes a 9 to 5 existence, they are missing some of the university experience, are less likely to make friends and will feel less involved in campus activities.

Without maintenance grants, students are more likely to take jobs, which might cause their academic work to suffer, whereas the better-off ones can still rely on their parents’ support. The student who lives at home delays that important moment of learning to be self-reliant, living on a budget, cooking and mixing with all sorts.

It is absolutely vital that students of different backgrounds get to mix with those who have the same academic and career aspirations as they do. This is the key to integration and to a healthy, undivided society. A student who has grown up in a part of the country heavily populated by one ethnic group stands to gain enormously—as does the whole of society—by going off to a university in another region, meeting others and learning to live and study with them.

Academic studies have shown that there is very marked ethnic segregation in our school system. Far too many children are attending schools where their own ethnic minority within the UK context is actually a majority. They are segregated in school education by faith and by ethnicity. They do not learn how the other half lives, how to challenge the prevailing culture, how to share experiences, how to appreciate multicultural living, how to criticise and how to aspire to a life different from that of their parents. The most segregated areas for very young pupils include Bradford, Birmingham and Bolton, among others.

If we extend this analogy into student life, it must be wrong that a student who, as a school pupil, spent their time in one community only continues to do so by studying at the local university and living at home. Moreover, they are being deprived of academic choice. If, because they have no maintenance grant, they cannot afford to leave home, then they cannot study the course that is right for them and is academically the most suitable, because it is not offered at their local university.

In sum, what the Government are doing by removing maintenance grants is not merely saving money but reinforcing segregation. Poor and ethnic minority students will have taken from them that golden opportunity at a critical age to widen their horizons and leave home for another part of the country. Academic choice will suffer. Racial and social integration will be put back. Better-off students will continue to surge ahead in educational opportunities, and universities will become as segregated in their make-up as some schools in some parts of the country already are.

If the Government believe what they say about every pupil fulfilling their potential, about all young people living in harmony in a society open to all and equally accessible to all, they must restore maintenance grants. Can they explain how to avoid real social and academic harm resulting from this penny-pinching measure?

[Baroness Shephard of Northwold (Con)]

My Lords, I have just three points to make. I shall be very brief, because many other noble Lords want to participate in this important debate.

First, many here will well remember the anxiety that many of us felt about the possible effects on student participation rates in higher education in 1998, when students became responsible for paying upfront tuition fees, and more recently—there have been many changes since then, but to take just one example of other changes—when tuition fees were raised to £9,000. Many believed at the time that those measures would have a particularly adverse effect on the higher education participation rates of young people from poorer families, thereby affecting not only their life chances but, longer term, the national economic effort.

In fact, according to UCAS, the proportion of young people in higher education eligible for free school meals has increased by a percentage point a year since 2012, and the number of young people from places in England with the lowest HE participation—I come from one of those areas—has increased year-on-year from about 19,000 in 2012 to about 22,500 in 2015. As Universities UK pointed out in its report of June last year:

“There is no evidence that the funding reforms of 2012 have deterred young, full-time students from applying to university. Numbers of applications from all socioeconomic groups have been increasing steadily”.

My second point is that in the past—this may be an explanation for that steady increase in participation rates of children from poorer families—increases and changes in student fees have been accompanied by grants, loans and bursaries and, in 2012, a 10% rise in the maintenance grant for poorer students. It is therefore welcome that, as part of this proposed switch from grants to loans, the maximum available finance for poorer students will rise by about £500 a year to more than £8,000. This has been welcomed by, among others, Sir Les Ebdon of OFFA.

However—my noble friend will be aware that a “however” usually comes in at this stage when I am making points about education, and I pay tribute to the extremely valuable and passionate points made by the noble Baroness, Lady Deech—the Department for Business itself acknowledges that the prospect of increased debt may deter some low-income households from undertaking higher education. It is for this reason that I strongly urge my noble friend to ensure that the effect of these changes is closely monitored. I ask this in the name of social mobility. The Government’s 2015 higher education Green Paper commits them to doubling the proportion of students from areas where participation is low by 2020. This is an admirable objective in line with many other policy areas where the Government’s pursuit of greater social mobility is succeeding. It would be regrettable if that progress in social mobility were to be checked at this stage for the sake of an omission of careful monitoring of the effects of these measures on precisely the groups already referred to by the noble Baroness—and those that I suspect will be mentioned by other noble Lords who will contribute to the debate. I know that my noble friend will undertake to keep a more than close eye on the way that this develops.

[Baroness Kennedy of The Shaws (Lab)]

My Lords, I thank my noble friend Lord Stevenson for bringing the Motion of Regret to the House. I feel more than regret; I feel alarm and despondency. I share the word used by the noble Baroness, Lady Garden: I feel a sense of shame that we have embarked on this step without proper legislation. I have to say to the noble Baroness, Lady Shephard, that monitoring itself will be too late. The consequences will be very obvious for the groups about whom I am going to speak.

The removal of the maintenance grant from the poorest and most disadvantaged is something with which I am very familiar. The reason is that back in the mid-1990s, the noble Baroness, Lady Shephard, appointed me to lead a small commission to look at some of the problems that had arisen over the funding of further education at the time. One thing that became very apparent was that for the poorest in society, the route to higher education is often via further education. It became clear in the report that eventually came from the work I was deputed to do by the noble Baroness, who was a most remarkable and fine Secretary of State in those years, that many people who had been failed by the system—young women who had got pregnant in their teens, boys who had become disaffected and sometimes got into trouble and people whose families went through problems when they were at a crucial point in their schooling—missed out on the golden ladder, so familiar to people in this House either for themselves or for their children, of going through school and proceeding into university. For many, the route back into education was through further education, and further education is the ladder into higher education.

I still see such people regularly because, at the end of the reporting I was commissioned to do, the further education world put together a little foundation which bears my name, for which I continue to raise funds and to which I contribute, to create bursaries for students of the category I described: those who try to use further education to better themselves, the very people I so often hear described as those who should be given opportunities. This Government claim to be totally committed to aspiration. I know, because of that little foundation, the Kennedy Foundation, that those people are often hardest hit by the current funding system. It is a hard business, taking out loans when you are the mother of young children, when you are from a really disadvantaged family and have no safety net or back-up from other members of your family. We contribute a bursary to them. It is not a significant sum of money, but if they did not also get the maintenance grant, they would not go to higher education at all.

This will be a deprivation; I have no doubt about that. We do not have to use more than our imagination to know that there will be a great cohort of young people—people in their 20s and early 30s—who will not go back into education because the idea that they will not get such support will be too much of a disincentive. That should be a source of shame to all of us, but certainly to the Government.

I have listened to what others have said. I was very moved by the comments of the noble Baroness, Lady Deech. It is true: those who are poorest do not want to do the business of going off to university. Even in my youth—I was brought up in Glasgow in a family where no one had gone on to higher education—almost everyone who went to the schools that I went to went to the local university because they just could not afford to go somewhere else. I flew the coop and it changed my life, and I want that for other people from my background. I urge the Government to think about this again, because I think that not enough thought went into it. The cost to the lives of people is too great. The numbers are not huge, the money is not that huge, and I think we will pay a terrible price. I would ask the Government to think again.

20:00

[Lord O’Shaughnessy (Con)]

My Lords, I wish to speak in support of the Government’s higher education policy and against the content of the Motion—and, in particular, the contention that these changes will result in a,

“significant decrease in participation in higher education by those in low-income groups, older students, female students, and students from ethnic minorities”.

We have been here before. The doom-mongers have been making these claims about the changes to the higher education system for about 20 years. This is not a party-political point; those doom-mongers were in the Conservative Party in the late 1990s, they were in the Liberal Democrat Party in the early part of the 2000s, and now they are in the Labour Party. At each point they have been proved wrong. I had a small responsibility for working on the policy that brought about the current system, working with my noble friend Lord Willetts.

It is worth remembering what the purposes of these reforms are. The first is to share more fairly the burden of cost between the taxpayer and those who go to university and benefit hugely over their lifetime in terms of income. Therefore, it is only right that they should share some of the cost. It is also designed to set higher education institutions free. Finally, specifically, it is designed to get more disadvantaged students into higher education. It was on that basis that the Liberal Democrats went through an incredible amount of political pain to support the reforms of the coalition Government; it is exactly the same reason why the Labour Government introduced the reforms that they did in the late 1990s and early 2000s, introducing whatever you want to call it—an income-contingent tax liability, or a loan system. What it amounts to is a time-limited graduate tax, which is, I think, all the rage at the moment on the other Benches.

It is important to remember the remarkable benefits that these changes have brought about. We have a record number of students—a 3.1% increase in the number of people entering UK higher education in 2015—and more students from disadvantaged backgrounds. The proportion of English students from disadvantaged backgrounds is up from 13.6% in 2009 to 18.5% in 2015. Part-time students studying for their first degree also get student loans now, and graduate contributions have become more affordable. By sharing out the burden more broadly, graduates now have to earn £21,000 before they start to pay back.

It is also worth thinking that we have the opportunity to compare what would happen if we went back to the old system, because it is running in Scotland. In Scotland there are no fees, yet the poorest fifth of Scots are three and a half times less likely to go to university than the best-off, and that figure is two and a half times in England—it has improved. There is also less financial support available in Scotland, precisely because the taxpayer has to share the entire burden. So the opportunity for the poorest young people has increased, and would be restricted by plans to scrap fees. Specifically, these reforms have had a benefit for disadvantaged pupils. The maintenance loan has risen, as my noble friend Lady Shephard said; there is much more support than was there before. Also, under the access agreements that universities now have, they are planning to spend £719 million in 2015-16, up from £407 million in 2011-12. So, overall, the amount of support for disadvantaged students and the number of students who are studying is increasing.

The final point to bear in mind here, which is critical, is that, as a result of sharing the burden more broadly, we have more students going to university, which is an ambition shared by everybody, throughout the House. An estimated 60,000 more young people are going to university every year because of these reforms. It is important to see these reforms in the round; if you do so, it is difficult to argue that they have done anything other than increase participation and, in particular, increase participation for disadvantaged young people.

[Baroness Sharp of Guildford (LD)]

I join others in thanking the noble Lord, Lord Stevenson, for bringing this Motion of Regret before the House—and I join others in supporting it. I do so because it is very clear from the analysis by the Institute for Fiscal Studies and others that this move will impact more heavily on students from poorer families who, up till now, have received substantial maintenance grants to help offset the considerable debts that they incur from the cumulative effect of tuition fees over three years. As my noble friend Lady Garden said, that amounts to something like £43,000 at the moment. The result of this would be to raise that debt by some £17,000, up towards £60,000.

The numbers involved in this are not trivial. In 2014-15, 42% of students in this country got a full grant, while 14% got partial grants. More than 50% of students currently benefit from the maintenance grant in one form or another; that is approximately 500,000 students—very considerable numbers. As BIS’s own impact assessment makes clear, and as others have mentioned, it will disproportionately affect those such as black and ethnic minority students and women.

[Lord Winston (Lab)]

I am grateful to the noble Baroness for giving way. Could she clarify a point that is puzzling us on these Benches? It has been stated that students undertaking part-time studies can get their grant in full; that is the impression that has been given. Is that correct? I know that she has spent a lot of time discussing part-time students and their remuneration.

[Baroness Sharp of Guildford]

The answer, I believe, is that until now part-time students have had no maintenance grants. One of the beneficial effects of this—I was going to mention it later—is that it has enabled the Government to extend maintenance grants to part-time students. That is one group of people who will be better off. But it is noticeable that among the students who will be affected are, as the noble Baroness, Lady Kennedy, said, mature students—those who come to university late. They have shown already, by the way they have reacted to the introduction of high tuition fees, that they are much more risk-averse than younger students.

Perhaps I should declare an interest as a member of the all-party Higher Education Commission, which a couple of years ago published a study of the financing of higher education. The evidence that we took included a short survey of quite a number of students and their reactions to this. An interesting fact that emerged from the survey was that the 18 year-olds knew very little about the financial effects of the debts they were taking on. As far as they were concerned, it was all a long way in the future. They felt, as I remember I felt when I was 21 and people were talking to me about pensions, something along the lines of, “I couldn’t care less”. Later on one realises how important these things are.

It became clear that older students, on the other hand, are worried about taking on further debt. Many of them already have mortgages and children, and are trying to manage their costs. They are much more worried about taking on debt than younger people are. That was one reason why, among mature students, who are disproportionately also part-time students, there has been an enormous drop in numbers. There has been a 45% drop in the number of part-time students since the introduction of tuition fees.

I feel strongly about all these issues. I accept that under the present repayment terms the actual amount repaid will remain at 9% on all income over £21,000 each year. The only difference is that those from lower-income households will have bigger debts, which for many of them will remain for 30 years. The Institute for Fiscal Studies reckoned that under the old system, before the introduction of these new measures, 73% of student loans would never be fully repaid. The measures before us will mean that more students from lower-paid households—these are the students who tend to go into lower-paid jobs—will have bigger debts, and that proportion can only increase.

As the noble Lord, Lord Stevenson, pointed out, there is a certain amount of creative accounting which enables the Government to take some £2 billion off the books today, with the idea that it will be picked up 30 years hence, in never-never land. There are only two good things about this. First, it has enabled the Government not to cut the adult education budget in money terms. I was very pleased about that. Secondly, it has enabled them to put some funding into maintenance grants for part-time students.

But I am particularly sorry to see this measure involving maintenance loans, because the previous system, along with the national student scholarship scheme and all the fair access measures taken in 2012, was part of the compact between the coalition partners on the introduction of full-cost tuition fees. My former leader in the other place, the right honourable Nick Clegg, went to considerable trouble to ensure that the introduction of fees would not impact more toughly on students from lower-income backgrounds. This measure seems to me to be yet another cynical unwinding of the coalition agreements. What were very carefully balanced measures to promote equity are now being cast aside with remarkably little thought.

[Lord Berkeley of Knighton (CB)]

My Lords, may I make a point, not as an expert on the figures—we have heard from them in various parts of the House—but to suggest that the Government might be walking into a false economy here? I say this as someone who, as a broadcaster, has talked to artists, musicians, novelists and other people who have made the creative economy glow—a glow in which the Government frequently feel able to bask. Many of those people who came from very impoverished backgrounds feel that they owe their success, their chance in life, to the support they got at a moment when they needed a maintenance grant.

I will not bore your Lordships with lots of names, but I could reel off pop stars, painters, novelists—you name it—who, had it not been for this support, might not have been able to make the contribution to our creative economy that they have. We should tread very carefully in cutting off funds to that section of our community.

[Lord Winston]

My Lords, I declare an interest as a paid employee of Imperial College London, which is a Russell Group university, and as chairman of the Royal College of Music and chancellor of Sheffield Hallam University in Yorkshire. I am sure that the noble Baroness understands that these are very different higher educational institutions and that they will all be seriously worried about this measure. One issue is that this seems to have been slipped under the wire without proper discussion in the House of Commons and has now come to be debated only as a result of my noble friend’s excellent Motion of regret. A key issue here is the debate on higher education altogether. I fervently hope that the Minister will do something to ensure that there is a proper debate about the Green Paper that is currently being processed, because a number of measures in there are very serious.

I will not detain the House for long, because I have not prepared a speech, and I do not intend to prepare speeches. But I must tell the Minister that I remember vividly a graduation ceremony at Sheffield Hallam University when a 55 year-old, rather ageing-looking man came up to me with tears running down his cheeks and told me, “This university has completely changed my life”. This is not just an isolated example; it happens every day in Sheffield.

20:15

Since I started as chancellor 12 years ago, Sheffield’s economy has been transformed in a remarkable way by people who would never have gone to university, from families who had no idea about university, who desperately need every bit of support they can get to get there. This has made a massive difference to the economy of Sheffield. The moment you get off the train at Sheffield station and walk up towards the university, you can see what has happened in that city, which was deeply depressed after the loss of steel, coal, cutlery, and much of the engineering that went on in that city. That transformation has been very much a result of Sheffield Hallam University and its relationship with that community.

But the fact of the matter is that these measures will affect “rich” Imperial College as well. To live in South Kensington will cost those less well-off students a great sum of money. As a result we will undoubtedly lose students, who will decide not to apply even though they are good enough to do engineering at one of the best universities in the world; bear in mind that so many of our universities are in the top 10 in the world. We must do everything we can to nurture them. As regards the Royal College of Music, there is no question that many of our musicians will always be desperately underpaid, rather poor, and will often come from underprivileged families, and it is very important that they get every bit of support that they can.

I regret that we have to discuss this now. I have to say to the noble Baroness, Lady Shephard, who was rightly regarded as an outstanding Secretary of State, that that change in the applications to many universities is happening now. Indeed, at Sheffield Hallam we are beginning to see that fewer students are applying. This is not unusual in many of the newer universities, and it may of course apply certainly to home students in some of our universities such as those in the Russell Group. So I urge the Government to think again and press them to have a proper debate on the future of higher education in the near future.

[Lord Howarth of Newport (Lab)]

My Lords, this policy of removing maintenance grants and replacing them with loans, whichever way you look at it, is reckless. It is reckless fiscally. In the early 1990s, I was Higher Education Minister when the Government of that time introduced the original system of maintenance loans for students in higher education, but we did so on a very carefully circumscribed basis. Looking across the Atlantic to the United States of America, where there was a very extensive system of student loans, we saw how unhappy were the consequences, both financially and in human terms. That approach, taken by that Conservative Government, was reasonable and responsible and is in strong contrast to the approach now being taken by this Conservative Government. The Institute for Fiscal Studies has explained to us how the policy we are now debating is a device to enable the Chancellor to achieve a modest additional reduction in his deficit by 2020—political window-dressing for him, but the price that will be paid is a much more significant increase in national indebtedness in years after that.

It is reckless financially: the Government are quite deliberately proposing to create bad loans. It would appear that their business model is that of the purveyors of sub-prime mortgages; the fact that they admit it does not make it any better. They intend to dump a poor-quality loan book on the financial system in the future. That is cynical. We expect a Government to act with prudence and integrity in such matters.

It is reckless in terms of the life chances of people who come from disadvantaged communities, in contradiction to the Prime Minister’s professions. This policy will be socially regressive: Ministers are setting out to tempt with additional cash in hand people who come from lower-income households, knowing very well that such people will leave university with larger debts than their peers from better-off households.

As the Minister who also introduced the disabled students’ allowance, I feel particularly strongly about the accompanying policy to freeze that allowance. In their equality impact assessment, the Government admit that this policy will bear disproportionately on disabled people, although they say that it will not do them that much harm. However, if you are disabled, a little goes a long way, and I would add that such a policy is surely discriminatory. The whole purpose of the disabled students’ allowance was to enable disabled people to experience higher education on a basis equal with non-disabled people, so it cannot be right to freeze the allowance for disabled students, who are increasingly disadvantaged.

Those who resist the cash bait will probably do so because they are deterred by the prospect of taking on a substantial additional personal debt. That is extraordinarily retrograde when we know that our economy urgently needs a higher level of skills across wider sections of the population so that we stand a chance of improving our national productivity and competitiveness. The noble Baroness, Lady Deech, made an important point about the retrogressive effect of confining to studying close to home students from poorer households who do not want the debt, thus making them unable, unlike their counterparts from better-off households, to avail themselves of the full range of opportunity in higher education.

The policy is contrary to the whole ethos and principle of the welfare state, which is to redistribute resources and opportunity across the lifespan, so that people contribute when they are able to do so but, when they need support, they get it in health, social security and education—precisely the support that this measure is going to reduce. That is part of the principle of fairness. That principle of the welfare state is what binds us together as a society and, as my noble friend Lady Kennedy said, it is shaming that the Government neglect such a principle.

The policy is reckless in terms of intergenerational fairness. The Government are intending to ask our children and our grandchildren to pick up the tab for it. They should not behave like that—it is a betrayal of the generations to come.

The policy is reckless, too, in terms of truth. The Conservative Party did not tell voters in its manifesto at the election last year that it intended to introduce this change. That was cowardly. In this measure the Conservatives are reneging on the commitments made by David Willetts, now the noble Lord, Lord Willetts, to Parliament in 2012—in good faith, I am absolutely certain. He assured Parliament that any financial hardships that might be created by the trebling of tuition fees would be mitigated by the continuing availability of maintenance grants. However, the Government are dishonouring that commitment and, in doing so, they are acting to the detriment of trust in government and respect for politicians.

The policy is also reckless constitutionally. Here they go again, introducing major change affecting a large number of people, with major expenditure implications, by way of a statutory instrument. That is in defiance of the conventions of Parliament. It is an abuse. The noble Lord, Lord Strathclyde, in the report of his review urged the Government not to leave too much in legislation to be provided for by way of statutory instruments. We know that the negative resolution procedure makes accountability of the Executive to Parliament almost non-existent, and we know—the noble Lord, Lord Strathclyde, has said this too—that the whole system of parliamentary scrutiny of statutory instruments needs to be overhauled.

Your Lordships’ House is, in one of its most important functions, a guardian of the constitution. We have not voted down this particular statutory instrument but I believe that, had we done so, we would have been well within our rights, because it is for us, again and again, to prevent as well as we can abuse of power by the Executive. The House of Commons, dominated by the Executive, will never do that reliably; we, at least, have to accept that that is part of our responsibility. The noble Baroness, when she seeks to defend this policy at the Dispatch Box, should blush.

[Baroness Evans of Bowes Park (Con)]

My Lords, I thank all noble Lords for their contributions to this debate. Let me briefly address the points raised about the parliamentary process for scrutinising statutory instruments before I come on to the substance of the debate.

The regulations were laid before both Houses on 2 December 2015 and were made under powers granted by the Teaching and Higher Education Act 1998. The instrument was prayed against in the other place and a debate took place in committee on 14 January, which was followed by a full opposition day debate on 19 January. So this SI has followed the procedure agreed by Parliament. But of course, as ever, we have had a further extremely valuable debate in your Lordships’ House today.

Let me start by placing this instrument in the context of the Government’s higher education policy. As noble Lords have said, we have a higher education system to be proud of and a worldwide reputation for excellence, with three universities in the world’s top 10 and the most productive research base in the G7. We have lifted the cap on student numbers, putting into practice Lord Robbins’s famous principle that university places,

“should be available for all those who are qualified by ability and attainment”.

We have seen record numbers entering higher education, including record numbers of students from disadvantaged backgrounds, as my noble friends Lady Shephard and Lord O’Shaughnessy highlighted. The OECD has said that England is,

“one of the few countries to have figured out a sustainable approach to higher education finance”.

When Lord Robbins set out his principle in the early 1960s, participation in higher education was around 5%. That figure is now approaching 50%, something that we should be proud of. However, in this context of rapidly growing student numbers, funding universities sustainably can be achieved only by asking students to meet a greater part of the cost of their education, paid not upfront but out of their future earnings. This reflects the principle that, if you benefit from higher education and secure higher lifetime earnings than taxpayers who do not go to university, you should contribute to the cost of your education. It is vital to the continuing success of the sector that the cost of higher education is sustainable for government and the taxpayer, so that more young people can undertake the transformational experience of going to university. In short, we cannot have social mobility without sustainability.

Offering increased loans for living costs instead of grants allows the Government to make significant progress against their fiscal mandate but offers more upfront support to students for their living costs: up to 10.3%, or £766, more additional support in 2016-17 for eligible students—money that they will then have to spend during their time at university on, for instance, rent and all the other things your Lordships have mentioned.

Noble Lords have referred to the equality analysis that the Government have published, and a number of issues it covers have been raised in the debate, in particular in relation to the potential impact on disadvantaged groups and those with protected characteristics. The Government carefully considered these before laying this instrument. That is why, alongside the potential risks that the equality analysis identified, a number of mitigating factors were also outlined, including, as I mentioned, the increase in living cost support in 2016-17 for students from some of the most disadvantaged backgrounds, the fact that graduates do not have to pay anything back until they earn over £21,000 and, of course, the fact that graduates earn considerably more over their lifetime.

This is far from all that the Government are doing to ensure the widest possible access to higher education. The Prime Minister has set out his ambition of doubling the proportion of people from disadvantaged backgrounds entering higher education and increasing the number of BME students at university by 20% by 2020. The sector is our partner in achieving these goals. In response to a request from the Government, Universities UK has set up a social mobility advisory group to report to the Universities Minister. It will provide advice and action to widen access to higher education, including on meeting the Prime Minister’s ambitions. I have absolutely no doubt that it will keep a very close eye on the broad effects of government policy in this area. To back this up, in 2016-17 universities expect to spend £745 million on measures to support the success of disadvantaged students. That is up significantly from £444 million in 2011-12.

Any higher education provider who wishes to charge above £6,000 for a full-time course must agree an access agreement with the Director of Fair Access and as part of this agreement the institution must devote a proportion of the fee income above £6,000—typically around 25%—on measures to support widening access and support for disadvantaged students.

20:30

We certainly do not want to see the kind of academic segregation about which the noble Baroness, Lady Deech, expressed concern, and that is why we and universities are focusing on a variety of measures, particularly outreach into schools. For instance, students of Northumbria University and Newcastle University are working in school programmes in which undergraduates work as tutors in schools, raising aspiration and attainment among the students they engage with. The University of Nottingham devotes access money to mature students, offering them mentors in order to improve their chances of completing their courses.

The noble Lord, Lord Stevenson, asked about changes to NHS bursaries. The current system for funding health students was not working. Last year, the cap on applications meant that we had to reject 37,000 applications from people who wanted to study nursing. By introducing loans, we can scrap that cap and train up to 10,000 more nurses as well as increasing the up-front support these students receive.

On the question of sharia finance, the noble Lord rightly said that the coalition Government was the first to seriously explore a sharia-compliant student finance product. The Government have consulted and, upon reviewing the consultation responses, the Government supported the introduction of sharia-compliant “takaful” alternative finance product available to everyone. Our commitment was reaffirmed in the Green Paper, but we need primary legislation and we are actively looking at an appropriate vehicle through which to bring this forward.

I will also deal with the questions on the value of savings of this proposal which a number of noble Lords have mentioned, including the noble Lord, Lord Stevenson, and the noble Baronesses, Lady Garden and Lady Sharp, among others. The switch from maintenance grants to loans will save £2.5 billion per year from the fiscal deficit. This is a substantial contribution towards delivering on the Government’s fiscal mandate. However, of course, I acknowledge that a proportion of the loan outlay may not be repaid by students. Therefore, we forecast that the long-term annual economic savings will be around £800 million a year.

A number of noble Lords mentioned the Institute for Fiscal Studies research, which last summer estimated the long-term annual savings to be around £270 million. At that time the IFS was working on the information it had available, but the Treasury’s estimate of the Government’s cost of borrowing has fallen since then, which is why we now estimate that these savings will be more like £800 million a year.

This Government offer young people more than one high-quality route to a successful future. Higher education can be a life-changing experience but so, too, can an apprenticeship. That is why the Government are committed to seeing 3 million apprenticeship starts in England by 2020.

We are also committed to enabling access to higher learning by other routes. For instance, we have announced for the first time—to make this clear to the noble Lord, Lord Winston—that we will be introducing maintenance loans for part-time students, and the recent changes allowing access to government support for part-time study towards a second degree in some STEM subjects will be extended further. It has also been confirmed that from September this year students aged up to 60 undertaking postgraduate masters would be able to access government loans for the first time.

The Government are able to make these changes because they are ensuring that higher education is funded sustainably. That is what this instrument helps to achieve. I hope I have addressed all the points raised by noble Lords in the debate and that the noble Lord, Lord Stevenson, will be sufficiently reassured to withdraw the Motion.

20:33

[Lord Stevenson of Balmacara]

I can answer that—no—but I would like to take a little longer.

I apologise to the noble Lord, Lord Willetts, for not spotting him in his place when I started my speech. He must have slipped in. Two brains are obviously much easier to hide than one. I am sorry that he was not there. We have had Hamlet without the prince. Where is the speech? Surely the architect of this wonderful policy, as we have heard it described, should have been there shouting from the rafters. Can I encourage him to rise? No.

We have had a good debate and I thank all those who have contributed. It could allow us to look forward to further discussions on higher education and, if it does so, allow us to probe some of the assertions of the noble Lord, Lord O’Shaughnessy, that somehow the garden is blooming, roses are flowering everywhere and higher education is in a good state. It certainly is not. It is time that we got some real discussion and debate going on this.

It was useful, in another sense, that we got some rather interesting insights into the internal debates under the last Conservative Government from my noble friend Lord Howarth and under the coalition Government from the noble Baronesses, Lady Sharp and Lady Garden, and others. I think there is more to come on that, and I look forward to hearing it as it dribbles out over the next few years.

This policy does not enhance social mobility; we have heard that echoed all around the Chamber. Despite the good points made by the noble Baroness, Lady Shephard, monitoring is not enough. We have heard that the golden ladder of opportunity that is represented by access to higher education will be destroyed, and life-changing opportunities will be removed. We are working on shaky constitutionality: the Minister skated over why we are doing it this way. We may well have fulfilled the letter of the law, but I do not think that we have fulfilled the spirit of it.

This policy does not save money in the long term, despite the Minister’s assertions. If it is, as seems to be the case, simply a bit of creative accounting, as the noble Baroness, Lady Sharp, called it—I could not possibly comment—to get away with changing the RAB charge in the short term, it is mean-spirited, and leaving it to the burden of future generations cannot be right. Indeed, we are talking about very long timescales, where we really cannot assert what is going to happen to earnings or people’s working lives. Therefore, we are talking about trust. Do we have sufficient ability in looking at this to trust our instincts about it?

The noble Lord, Lord Berkeley, and my noble friend Lord Howarth mentioned the intergenerational impact, and that is a real irony. Many of us were the beneficiaries of full fees and full maintenance grants. I would not be here if I had not had that benefit or that chance in my earlier life. I wonder whether the students of the generation that is being disadvantaged by this statutory instrument will ever forgive us for encouraging them to take out the loans and debts for a future that might be so different that it might eliminate the graduate premium that they were promised. Somebody said—I think it was my noble friend Lady Kennedy—that it was shaming to be associated with this policy. I do not wish to be so, and I wish to test the opinion of the House.

20:37

Division 3

Ayes: 138

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Labour: 99
Liberal Democrat: 28
Crossbench: 9

Noes: 155

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Conservative: 148
Crossbench: 5
Ulster Unionist Party: 1
Independent: 1

Welfare Reform and Work Bill

Monday 25th January 2016 Lords Chamber

Report (1st Day) (Continued)

20:48

Amendment 25

Moved by

[Baroness Lister of Burtersett]

25: Clause 7, page 9, leave out lines 7 to 10

[Baroness Lister of Burtersett (Lab)]

My Lords, Amendment 25 would remove child benefit and child tax credits from the benefit cap. I return to this amendment, which raises an important point of principle together with children’s rights questions, partly because in Committee it was grouped with various other exemptions from the cap, but, more importantly, because—and at the risk of being accused of being vituperative—once again, the response from the Minister was inadequate. He was challenged a number of times to justify why these benefits should be subject to the cap for those out of work when they are received by those in work, so that the cap is premised on a comparison between earnings in work and income out of work, but he failed to do so.

The argument boils down to what we believe is fair. According to the impact assessment, the clause promotes even greater fairness between those on out-of-work benefits and taxpayers in employment. Our view is that fairness requires that old cliché of the level playing field, on which, if you ignore the child benefit received by all taxpayers in employment on wages of £20,000 to £23,000 and the child tax credits received by a good proportion of them—how many and how much the Government refuse to say—you must ignore it when calculating the income of those on out-of-work benefits.

The exchange between my noble friend Lady Hollis of Heigham and the Minister on this point could have come straight out of a pantomime: “Oh, yes, it’s earnings”, “Oh, no, it’s income”; or that old song, “Let’s Call the Whole Thing Off”: “I say income, you say earnings”. But whereas my noble friend, as you would expect, offered argument, the Minister offered only assertion. He just kept repeating:

“We are looking at the level of earnings”,

without ever saying why, other than, as my noble friend put it, “Because I say so”. Therefore, I thought it only right to give him the opportunity to offer an argument today in justification so that noble Lords can decide whether it is indeed fair to base the policy on such an uneven playing field.

Other arguments that did not get addressed properly by the Minister concerned the impact on children. How did the policy fare against the family test, which was not even mentioned in the income assessment? He assured me that the family test was applied, but, as he could not,

“recall what was in it”,—[Official Report, 21/12/15; col. 2378.]

he promised to write to me with the details. I do not believe that I have received them, so perhaps he could provide them now. What is the likely impact on child poverty? That was conveniently circumvented on the spurious ground that it is all too difficult to estimate the likely dynamic effects of the policy. There is no reply to the argument that the policy has a disproportionate impact on children.

In the judgment in the recent Supreme Court case on the cap, which we spent some time debating in Committee, Lord Justice Carnwath made the point that the inclusion of child benefit and child tax credits in the cap raises the question as to why,

“the viability of a scheme, whose avowed purpose is directed at the parents not their children, is so disproportionately dependent on child related benefits”,

and said:

“The cap has the effect that for the first time some children will lose these benefits, for reasons which have nothing to do with their own needs, but are related solely to the circumstances of their parents”.

The noble and learned Baroness, Lady Hale, observed that, as a result, the children affected,

“suffer from a situation which is none of their making and which they themselves can do nothing about”.

This brings me to the children’s and human rights implications of the policy, which, as the Equality and Human Rights Commission has complained, were dealt with inadequately in the Government’s human rights assessment and the impact assessment. What is at issue is whether the inclusion of children’s benefits in the cap is in the best interests of the child in line with Article 3 of the UN Convention on the Rights of the Child.

In the human rights memorandum, the Government note the Supreme Court’s decision and assert that they have fully considered their obligations to treat the best interests of the child as a primary consideration. However, their analysis of the,

“best interests of the child”,

seems to rest on this proposition:

“The best interests of children overall is to have parents in work and work remains the surest route out of poverty”.

As the EHRC observes, this betrays,

“a particular lack of understanding regarding compliance with the UNCRC”.

It may well be in the best interests of many children for parents to find work, but it will depend on the work available, the circumstances and the durability of any work found. Moreover, this bald statement ignores the fact that the great majority of those already subject to the cap did not find work as a result. Is it really in the best interests of their children to have their standard of living reduced even further when a survey reported in the first-year review of the operation of the cap found that over a third of those affected had already had to cut back on household essentials and many had incurred debt, which the Government identify as a root cause of poverty? In fact, the Government’s position pretty much ignores the judgment of the noble and learned Baroness, Lady Hale, echoed by the noble Lord, Lord Kerr, that they,

“misunderstand what article 3(1) of the UNCRC requires. It requires that first consideration be given to the best interests, not only of children in general, but also of the particular child or children directly affected by the decision in question. It cannot possibly be in the best interests of the children affected by the cap to deprive them of the means to provide them with adequate food, clothing, warmth and housing, the basic necessities of life. It is not enough that children in general, now or in the future, may benefit by a shift in welfare culture if these are also the consequences. Insofar as the Secretary of State relies upon this as an answer to article 3(1), he has misdirected himself”.

In his response, the Minister did not address the substance of these arguments, but took refuge behind what he called the “sterling work” of the noble Lord, Lord Blencathra, whom he described as “utterly masterful” on the legal aspects and who he said had certainly taught him a lot. I am no lawyer, and I am sure the Minister will not consider me masterful on the subject. I am diffident about getting involved in legal disputation once more, but I am assured by the CPAG’s solicitor, to whom I am grateful—I make my usual declaration as the group’s honorary president—that the interpretation by the noble Lord, Lord Blencathra, is open to challenge. The Minister’s law lesson might, therefore, need some revision. It is not the case, as the noble Lord, Lord Blencathra, asserted, that the Supreme Court found the Government to have been “perfectly correct” when they were taken to court on not implementing the UNCRC, nor that five of the noble judges ruled, in the Government’s favour, that the benefits cap was not contrary to the rights of the child. Rather, the court found, by a majority of three to two, that the benefit cap regulations are in breach of Article 3(1). It is true that they went on to find that, as the convention is not incorporated into domestic UK law, it should be for Parliament, not the courts, to decide how to remedy the breach. Lord Justice Carnwath advised that the court’s concerns about the rights of the child would need to be addressed in the political arena. In other words, the court was looking to us—to Parliament—to find a way to ensure that the Government upheld the UK’s obligations under international law with regard to the cap.

That is what the amendment seeks to do. Just because the UN convention is not directly enforceable in UK courts, the Government cannot simply ignore it when their claims to have complied with it are challenged by the Supreme Court. It must concern us that, far from responding to the Supreme Court’s ruling and to the specific recommendation of the noble and learned Baroness, Lady Hale, that the Government consider removing children’s benefits from the cap, the Government are now compounding the infringement of children’s rights by reducing the cap to below median earnings, thereby bringing many more families into its net. I suspect that it is only a matter of time before the matter is before the courts again, as this could now mean that the cap is in breach of the European Convention on Human Rights because of its disproportionate impact.

On grounds of both fairness and the rights of children, I believe there is a strong case for the exclusion of children’s benefits from the cap. I hope that today the Minister will actually engage with the arguments, rather than continue with the “because I say so” approach. Given that that approach tends to be used when there is not a valid case to be made, better still, he should accept the amendment on grounds of both fairness and children’s rights. I beg to move.

[Baroness Sherlock (Lab)]

My Lords, I thank my noble friend Lady Lister for the way she has introduced the amendment and for her persistence and expertise on this subject. My noble friend raised this issue in Committee but did not get an adequate answer. One of the things I find most depressing about the debates on the benefit cap is that Ministers increasingly lump all benefits together as just welfare payments. No distinction is made between the various kinds of benefit we have traditionally had in the British social security system: between contributory and non-contributory benefits or between income-replacement benefits and those designed to compensate for extra costs. The failure to make such distinctions tends to demonise recipients. It also muddies the policy-making waters, because Government are reduced to making fairly broad claims for the behavioural impacts of benefits the purposes of which are, in fact, quite distinct from each other.

Child benefit is a good case in point. It has traditionally been a universal benefit and is still available to all but the highest-earning households. In effect, it is a horizontal transfer from taxpayers as a whole, including those who do not have children, to those who have children. Originally, it replaced an allowance in the tax system and it is there because, as a society, we recognise that children are a public as well as a private good. We all have a stake in ensuring that parents can afford to raise the next generation healthily. Child benefit goes to parents in and out of work, of course, as does child tax credit—the two benefits that are the subject of this amendment.

21:00

We heard at earlier stages of the Bill about the impact on children of the lowering of the benefit cap: that twice as many children as adults are affected and that 230,000 children have been affected. We have also heard in previous sessions from charities working with children about how worried they are that children and families could be left without sufficient income to meet their basic needs. The House has a right to know whether the Government have considered sufficiently the impact of this change on children.

My noble friend Lady Lister mentioned her exchange in Committee on 21 December, in relation to the family test, when the Minister said:

“We did apply the family test; I had better write to the noble Baroness with the details because I cannot recall what was in it. There was quite a lot of material going through in a short time”.—[Official Report, 21/12/15; col. 2378.]

I can assure my noble friend that the Minister did in fact reply, but unfortunately not until last Thursday and admittedly not at any great length or utility. I will not have to delay the House unduly by quoting his reply in full on this subject. It said exactly this:

“The Government has fully considered the family test criteria as an integral part of the policy development process. The published assessment of impacts of the measures in the Welfare Reform and Work Bill incorporates these considerations”.

That is it, in its entirety. Your Lordships will search in vain the impact assessment on the lowering of the benefit cap for any account of the impact on families with children. Yet the DWP has actually published guidance for other government departments on the application of the family test. The guidance says:

“It is important that the application of the Family Test is documented in an appropriate way as part of the policy making process … Departments should consider publishing assessments where they are carried out”.

So, where is the documented DWP family test assessment for this policy, or indeed for the Bill? Why has the DWP not published it when it is advising other departments to publish theirs? Why does it yet again refer my noble friend to the impact assessment when Ministers must know that the answers she seeks will not be found therein?

I would be very grateful if the Minister would tell us three things. What was in the family test assessment? Why did DWP not publish it, and what are the Government going to do to monitor and mitigate the impact on children if the level of the cap is reduced as proposed?

[The Minister of State, Department for Work and Pensions (Lord Freud) (Con)]

My Lords, Amendment 25 seeks to remove child benefit and child tax credit from the list of those benefits included within the benefit cap, so that they are disregarded when calculating the total amount of benefits that a household can receive before the cap is applied. This amendment undermines the fundamental principle that we established when we introduced the cap: that there has to be a clear limit to the amount of benefits that an out-of-work family can receive. This principle has gained very broad support across the country.

The benefit cap is just one part of our suite of welfare reforms, which are restoring work incentives and fairness to the benefits system. The previous system was not fair on working taxpayers, nor on claimants who were trapped in a life where it was more worthwhile claiming benefits than working. Our welfare reforms are about moving from dependence to independence and the benefit cap is helping people to take that important step into work. Indeed, the evidence shows that the cap is working, with capped households 41% more likely to go into work than similar uncapped households. In fact, more than 18,000 households have entered work since the cap was introduced.

However, we have always accepted that there should be some exemptions from the benefit cap which support the cap aims of incentivising work and bringing greater fairness to the welfare system, while supporting the most vulnerable. To incentivise work, the cap does not apply to those households which qualify for the in-work exemption in universal credit. Nor does it apply to those households in receipt of working tax credit. For lone parents, this is just 16 hours of work per week; for couples with children it is 24 hours of work per week. In recognition of the extra costs that disability can bring, households which include a member who is in receipt of attendance allowance, disability living allowance, the personal independence payment and the Armed Forces personal independence payment are exempt. Those who have limited capability for work and receive the support component of employment and support allowance, or the universal credit limited capability for work- related activity element, are exempt. Furthermore, war widows and widowers are also exempt. Noble Lords should also not forget that if the claimant, their partner or a child for whom they are caring is in receipt of an exempt benefit, the cap will not apply.

As well as promoting fairness for those families who are in work, the welfare reforms are about transforming life chances. Since the cap was introduced in April 2013, nearly 9,400 capped lone parents have moved into work and claimed working tax credits, joining the 1.26 million lone parents in employment in the UK. By going out to work, parents show their children the importance of a strong work ethic and reinforce the message that work is the best route out of poverty, while improving their longer-term life chances.

As to the ECHR criticism about the rights of the child, the interests of children are best served by doing everything possible to get their parents into work and providing the right support to remove the barriers to work, such as employment support, training, budgeting advice and free childcare. DHPs are available to assist in hard cases, and the Government will make £870 million available in that area over the next five years.

The noble Baroness, Lady Lister, raised the family test, and the noble Baroness, Lady Sherlock, was kind enough to remind her that I managed to get a letter to her saying that the family test had been applied when considering the benefit cap changes. The way that the test works on the whole is that the department thinks carefully how the new policy can support family relationships. We have been very clear, as I have been this evening, that it is important that children grow up in households that are in work. The cap is a key way of delivering this particular policy and this particular change.

Like other welfare benefits, child-related benefits are provided and funded by the state, and it is therefore right that they are taken into account along with other state benefits when applying the cap. It is only fair that households receiving benefits should make the same choices that families in work do. The cap levels are equivalent to annual pre-tax incomes of £29,000 and £25,000. These are still considerable incomes, with around four in 10 households earning these sums in London and the rest of the country respectively.

It is a simple matter of fairness for those families with children who are in work to set the cap at these levels and to include child-related benefits within its scope. To be clear, households who go out to work and qualify for the in-work exemption in universal credit or for working tax credits will be entirely exempt from the cap and will receive all of these benefits over the cap level. For those households who need additional support in adjusting to the cap, DHPs are available: £800 million has already been made available and a further £70 million was added to that figure in the Autumn Statement.

There is of course a nine-month grace period in which the cap may not be applied to those have recently left sustained employment. This gives households, including those people who are receiving child benefit and child tax credit and who may have had to leave employment, time to adapt to their new circumstances or find work before the cap is applied to them.

For the reasons I have explained, I do not agree that we should remove child benefit and child tax credit from the cap, as would be the result if this amendment, as drafted, was passed. I ask the noble Baroness to withdraw her amendment.

[Baroness Lister of Burtersett]

My Lords, I am grateful to my noble friend Lady Sherlock and to the Minister. I never received the letter last Thursday, although I recall there was another letter when we raised the question of the family test in relation to the policy we will be discussing on Wednesday about families with two or more children. That said exactly the same thing—I think it was almost the same sentence.

When I was preparing this over the weekend, I realised I had never received a letter about our fourth day in Committee, so I emailed the Minister’s office to ask whether there had been such a letter, and I have not had a reply yet. Perhaps the letter about our fourth day could be re-sent, because I have certainly not received it. Anyway, it sounded horribly familiar—that is, it did not tell us very much at all, as my noble friend said.

I did not really expect we would agree on this. The Minister has certainly not satisfied me that it is fair when we are not comparing like with like. That is really the nub of the argument. On the rights of the child, he simply repeated the very argument that the noble and learned Baroness, Lady Hale, had pretty much destroyed in the Supreme Court judgment. He brought up the old DHPs again—many moons ago I said this was the loaves and fishes argument. DHPs have to be extended to cover everything and they do not provide anyone with any kind of right because they are discretionary. Clearly we are not going to make progress on this but it is important that we at least keep maintaining why we believe that this is not fair. I beg leave to withdraw the amendment.

Amendment 25 withdrawn.

Amendment 26

Moved by

[Baroness Hollis of Heigham]

26: Clause 7, page 9, leave out lines 15 and 16

[Baroness Hollis of Heigham (Lab)]

My Lords, guardian’s allowance is not separately listed in the Chancellor’s Excel sheets of benefits and budgets in the Autumn Statement. It is invisible. However, it emerges from obscurity to be included in the benefit cap.

What does guardian’s allowance do? Why does it matter and why should it be exempt? Guardian’s allowance supports those at the sharpest end of kinship care, not where parental care is extremely neglectful or unstable, as it is for many children in kinship care, but where no parental care is possible at all. It goes to those caring for orphans. Usually they are physical orphans whose parents have died but, very occasionally, they are what the Victorians would call moral orphans—the father is in jail and the mother is an addict or on the game, sectioned or imprisoned.

More usually, the mother has died and the father is missing, not known or not registered on the birth certificate. There is no known parent. Sometimes, sadly, both parents have died in a car crash. In one case, a lorry lost its load and killed both parents in the car behind it. In another instance, an 82 year-old grandparent, not of course herself affected by the cap, learned that her daughter had died of an overdose and 24 hours later her son-in-law followed suit. At 82, she was asked to be guardian to four children. Guardian’s allowance is worth just £16.55 a child on top of child benefit. It goes to those caring for those children: the maternal grandparent, sometimes an aunt, often the close friend of the child’s dead mother. Their guardian receives the allowance until the children leave school.

Why do they need it? The children come to them following an extreme, often unexpected and irreversible emergency, and they come for life. This is not revolving-door temporary care. They immediately need extra bunk beds and bedding and, depending on the home from which they have come, clothes, shoes and toys. There are no grants and no social fund for this. They may need a larger home with higher rent and therefore more housing benefit. They will be the most distressed and traumatised of children and usually it is distressed and traumatised adults who will be caring for them, having themselves lost their daughter, sister or best friend. Such guardians, if in work, usually have to give it up.

Few people know about guardian’s allowance. Government certainly seem to discourage any take-up of it among kinship carers, although I am sure that kindly staff do their best. The result is that only around 2,500 people receive guardian payments each year, a figure that has been stable since my time in DWP. No one can find out the total cost because the Chancellor does not seem to publish it. However, I estimate—and I could be wrong—it is in total perhaps £3 million to £4 million a year.

Most guardians will not be affected by the benefit cap. The maternal grandmother may be of pension age, although with women becoming a grandparent at the age of 51 and the raising of the state pension age, many other grandparents will be trapped.

Other guardians may be in a household where an adult works and is therefore not caught by the cap, but there will be some of those 2,500—perhaps 500 or 1,000—who will be caught by the benefit cap because they too, like the children’s dead mother before them, are in straitened circumstances. They will be her mother, her sister, her friend. They may be on benefit themselves. They probably have children themselves. If they are on benefit, have children of their own and become guardians, they will probably be caught three times over. First, they will be caught by the two-child policy: no additional child tax credit payments for them for cherishing these bereaved, traumatised children. Secondly, if they are in the private rented sector, they will be caught by the various housing benefit caps: no larger home for them, but more children cramped into the same tiny bedrooms as their birth children. Thirdly, if they are near or at the benefit cap, there will be no extra child tax credit, no child benefit and no guardian’s allowance either.

21:15

Children already deeply traumatised will also bring with them as their dowry greater poverty for every other member of the family which has taken on their guardianship. The same income at the benefit cap must now be stretched to cover them as well. Stretch and you tear. The orphaned children often have to be split up because of financial pressure. Having lost their parents, they lose their brothers and sisters as well and cry their way into their future.

Guardian’s allowance is not itself a means-tested benefit and currently does not count against tax credits or tax, so somewhat better-off families will receive it in full. They are better off, and they will rightly get the lot. Poorer families whose needs are greater, who are pushing at the benefit cap, may get nothing at all. That is palpably wrong. We offer more money to the better off and deny it to the poorest when they are doing the self-same selfless job of caring for grieving children. Decent social policy would seek to do the exact opposite: prioritise those in greatest need. Unless, of course, we think that poorer families are not up to being kinship carers and that these bereaved children should be removed from their family and community roots for the fault of being orphaned. I am sure that that is not what the Government intend, but that may be the effect.

You might think that this policy was essential to give the Chancellor big-ticket welfare savings, but it is to save what? I calculate that it saves perhaps £500,000 or £750,000 a year by removing guardian’s allowance from the benefit cap. I stand to be corrected, because I have been unable over a week to find the statistics.

Do we want kinship care? Do we want loving friends and family, themselves and their birth children already on benefit, to provide a lifeline and lifetime care for these additional traumatised children whose parents have died? Do we want them not to live in severely overcrowded homes as a result of the cap? Do we want such children to have the best possible chance of recovering from the unimaginable tragedy of their young lives by being wrapped in love and care and so making a decent life of their own?

If so—and I am sure that everyone in this House wants this, certainly everyone on the government Benches—why in heaven’s name are we including guardian’s allowance in the cap? Why are we punishing the poorest for undertaking some of the hardest, most generous and selfless care of other people’s children in our society for the sake of saving less—possibly quite a lot less—than £1 million a year?

On the contrary, we should be increasing this amount, widening its eligibility and encouraging more kinship carers who qualify to apply for it. We should as a society be for ever grateful for the loving duty that they have so generously undertaken. I beg to move.

[Baroness Sherlock]

My Lords, the amendment would exclude guardian’s allowance from the cap. I shall briefly set out the regulations on exactly who gets guardian’s allowance, because I think it is worth doing. You can get it only if you are caring for somebody else’s child, you are entitled to child benefit for the child and both of the child’s parents are dead, or one of the child’s parents is dead and at that time the whereabouts of the other parent is unknown and you have made all reasonable efforts to find them, or one of the child’s parents is dead and the other is in prison with a minimum sentence of two years remaining to serve, following the death of the other parent. People do not get this allowance lightly. It is not paid to foster parents or prospective adopters. My noble friend Lady Hollis, with a precision and a lyricism that I could not begin to match, set out the effects of taking this away from a group of people who are reaching out to some of the most vulnerable children in our country. I hope that that has persuaded the Minister how important this is. But given those effects, and given how few these people are in number, and given how vulnerable the children are, I would like the Minister to explain why they do not fit into the category that he described under the last amendment, when he said that the Government wanted to incentivise work but also to protect the most vulnerable. Why do they not count as the most vulnerable?

In Committee on 21 December I asked the Minister what behavioural incentives the Government were seeking by including guardian’s allowance in the cap. He said:

“Recipients of maternity allowance and guardian’s allowance will be affected by the benefit cap only if they are in receipt of a significant amount of other welfare payments”.—[Official Report, 21/12/15; col. 2378.]

That is not a justification. Either it is right to include guardian’s allowance in the cap or it is not; it cannot be right because you get other benefits as well. So if the Government believe that it is right, can the Minister please tell the House what behavioural response the Government are looking for from people who receive guardian’s allowance as a result of the cap? If he cannot provide one, will he accept that the fact that they will be affected by the cap only if other benefits are also received is not a good argument for guardian’s allowance itself to be counted towards the cap? That argument could be made for any benefit. I look forward to the Minister’s explanation.

[Lord Freud]

Amendment 26 seeks to remove guardian’s allowance from the list of those that are included within the benefit cap, so that it is disregarded when calculating the total amount of benefits a household can receive before the cap is applied. Guardian’s allowance is paid to those who are responsible for a child or young person and either both parents or in some circumstance one parent have died. The Government recognise the crucial and valuable role that recipients play in helping children to recover from the loss of their parents, but I do not agree that it should be excluded from the benefit cap. That is about the principle that there is a clear limit to the amount of benefits that an out-of-work family can receive.

In the interests of time, I shall not repeat my previous arguments, but will provide the best information that we have, which is that the noble Baroness, Lady Hollis, is right to say that this affects very few people. On our sums, the inclusion of the guardian’s allowance within the cap affects fewer than 50 claimants—those are the figures that I have. Rather than a blanket exclusion of this benefit, it is better that targeted support is offered to those who need it. That is where the discretionary housing payments of £870 million come into play. On that basis, I ask the noble Baroness to withdraw her amendment.

[Baroness Hollis of Heigham]

First, I thank my noble friend who spelled out the devastating situation in which these children find themselves, and how those who care for them—on kinship care, usually—are therefore entitled to receive guardian’s allowance.

The Minister made two points. First, he said that the principle was that there is a clear limit to benefits that out-of-work families can receive, even when that out-of-work family has taken on the joyless but essential and necessary task of caring for another family’s children. Why does the Minister not consider that therefore they are entitled morally—I am not saying practically, but morally—to benefits for two families, because that is what they are doing? We are not talking about families of their own children; we can argue for that, as my noble friend did, and she was absolutely right to do so.

I am talking about a situation at the extreme end of kinship care, when somebody has taken on responsibility for another family’s children. To say that, on principle, that out-of-work family should not get additional money for doing that—that is not a principle. A principle usually has some sort of moral quality to it. That, I am afraid, is a Treasury statement. I cannot believe that the Minister believes that it is the right policy to uphold in this situation. We should be hugging those kinship carers who are entitled to guardian’s allowance and giving them every support we can. Instead, what we do is to make them poorer.

The Minister’s second point was that he reckoned there were 50 families. I would love to see how he got to that figure. I could not work it out—obviously, because I could not work out how many people were grandparents, how many were in-work families and how many were below the limit, and therefore exempt, because they did not already have children of their own.

If we are really talking about 50 families, why on earth are the Government not conceding? How much does the Minister think this will cost? Let us assume that the average number of children taken on by a guardian is one and a half—in some cases one child, in others two children, and in a few cases three or more. I estimate that that would work out at about £1,000 to £1,200 a year. For 50 families that would be about £50,000 to £60,000 a year. The Minister cannot find £60,000 a year—or £65,000, if we push it—to address this problem? I am going to sit down and ask him whether, in the light of the information he has so far given, he is willing to reconsider his position.

[Lord Freud]

No, I am not in a position to reconsider at this stage.

[Baroness Hollis of Heigham]

What does that mean—“at this stage”? Is the Minister willing to come back at Third Reading with a little amendment just taking out this group of people, who are among the poorest of the poor, who are taking on the hardest of hard tasks—caring for bereaved and traumatised children—at a time when they themselves are probably also bereft?

[Lord Freud]

Regrettably, as I said, I am not in a position to make any kind of commitment.

[Baroness Hollis of Heigham]

I guess it is my fault. I should have brought this up in Committee and perhaps given the Minister more time to think about it. Perhaps he will look back on today’s proceedings. He absolutely rightly responded to my noble friend Lady Pitkeathley on a situation that we all recognised it was important that he should respect and meet—and not just because of the court case. I suggest to him that this is another such case—and I think he may wish to do otherwise. Obviously I shall withdraw the amendment now, but I would hope, none the less, that on reflection he will feel able, for 60,000 quid a year, to take guardian’s allowance, at the extreme end of kinship care, out of the benefit cap. He will not even notice it—but they will. I beg leave to withdraw the amendment.

Amendment 26 withdrawn.

Amendment 26A

Moved by

[Baroness Hollis of Heigham]

26A: Clause 7, page 9, line 37, at end insert—
“except in the case of persons who are at least 29 weeks pregnant or who are responsible for the care of a child aged under nine months, in respect of whom “welfare benefit” means any prescribed benefit, allowance, payment or credit.”

[Baroness Hollis of Heigham]

My Lords, this amendment relates to a situation that we touched on earlier, when we were debating the amendments tabled by the noble Lord, Lord Ramsbotham. Gingerbread reports that if a single parent with two primary school children is expecting a baby next month, just at the time when her needs increase she will lose £32 in housing benefit because of the benefit cap. The amendment is tightly targeted and would exclude women in late pregnancy—at 29 weeks or beyond—and for nine months following the birth of a child, from the benefit cap.

There are three reasons for this, which I hope the Minister will address. The first is parity with the rights of women in work, the second is consistency with the DWP’s own benefit conditionality rules, which do not apply when a child is under two, and the third is concern for the health and well-being of mother and baby.

On parity, the Government want parents on benefit to face the same choices as parents in work. The Minister has repeated that several times today. Yet when those in work—better-off people—enter late pregnancy or care for a newborn, they rightly get protection and income that reflect their situation. Those on benefit may instead face a benefit cap and therefore an income cut. Parents in work have pregnancy and maternity rights. They can commence maternity leave at 29 weeks, at which point a mother will be eligible for statutory maternity pay or maternity allowance, both of which run for 39 weeks; maternity leave is of course for 52 weeks.

21:30

Women in late pregnancy or with a small baby, who are on benefit and faced with the cap, have just two options. First, they can move to cheaper housing to cut their outgoings. That is almost impossible, yet they do not qualify for DHPs. I know that the Minister places such huge reliance on DHPs, but I know from experience of local authorities that they do not look anywhere near the groups of people the Minister believes they should cover; the numbers are too large. Those people, too, will not qualify for DHPs to help with the rent shortfall.

The other option is to seek work at 29 weeks’ pregnancy. Is that reasonable? Do we think that a woman in late-stage pregnancy or who has a tiny baby whom she is perhaps still breastfeeding or who is recovering from a caesarean should seek a part-time job to get around the benefit cap? Even if she wanted to and was up to it, and could, those jobs are not there. Gingerbread has given me the stats. As of August 2015, two-thirds of those facing the benefit cap were lone parents. Of those, three-quarters had a child under five, half had a child under two and 10% had a child under one. On DWP’s Universal Jobmatch only 5% of jobs were part-time—and, even if such jobs existed, there is no entitlement to free childcare for a child under two.

So DWP recognises that a woman with a child under two does not come into work conditionality and is not expected to get a job, and it does not provide free childcare for her if she did. So in all consistency it should exempt such women from the cap. As it does not expect her to work, it should not punish her with a benefit cap as a crude way of pushing her back into the labour market, when its own policies say that this is not appropriate. If a woman, either heavily pregnant or with a small baby, is not expected to work, and if government accepts that it is reasonable for her to go on income support rather than JSA at that stage, which it does, why is she being benefit-capped when she can do absolutely nothing to change her situation and remove the cap?

As I say, in an earlier debate led by the noble Lord, Lord Ramsbotham, we talked about the implications of maternal deprivation of nutrition, heating and eating. Is this what the Government would recommend to expectant mothers and those on benefit with newborns? No woman, mother or parent who has been in that situation could believe that that is what the Government want them to do: cut back their income, outgoings, food and heating to cope. That would be ugly beyond belief. In which case the Government must come up with an alternative strategy for her and accept this amendment.

What would it cost? Given that 10% of those affected by the benefit cap are lone parents with a child under one, I estimate that the cost would be less than £10 million a year for each year’s cohort. I repeat that this is a very targeted amendment, focused on women and babies at their most vulnerable.

There is one ray of hope. Given that if she is wise she will probably choose rent arrears rather than risk the health of her newborn by cutting back on heating or eating—that is what I would do—she may well end up in temporary accommodation, where, according to Shelter, over a quarter of capped households currently live. That number will soar as a result of the benefit cap. Hopefully, however, at least she will then have the cash to feed and keep warm her baby and any other children she may have. Of course, this will cost the local authority far more, DWP will export its costs on to the local authority, and her children in consequence may not be school-ready and, because they are in temporary accommodation, may suffer developmental delays; we all know those early years findings. But no—DWP will have saved some £8 million to £10 million a year. Does the Minister really think it is worth it? I beg to move.

[Baroness Sherlock]

My Lords, this amendment, in the name of my noble friend Lady Hollis, would exempt from the cap women who are at least 29 weeks pregnant or responsible for a child under nine months of age. I thank my noble friend for making it clear to the House just what a perilous situation these women will find themselves in if things proceed as planned.

Some very strong arguments were made to me by Gingerbread as to why this particular group ought to be excluded. It suggests, first, that the group will find it most difficult to move into work to escape the cap and therefore will simply be pushed deeper into poverty. Of course, that is the last thing that it wants for a woman who is pregnant or has a very young child. Secondly, it points out that the Government want families on benefits to make the same choices as those who are in work. Parents in work have pregnancy and maternity rights, including an expectation that they will have some time away from work both when they are in the later stages of pregnancy and in the first months of their child’s life, so this exemption would mirror the rights of working families.

As my noble friend Lady Hollis pointed out, pregnant women and those with very young children are not listed as a priority group for discretionary housing payments, despite the complex challenges that they face as they move into work, and therefore they cannot have that to fall back on as other vulnerable groups might. I would be very interested to hear the Minister’s response to these challenges.

In Committee, I tabled an amendment that would have excluded maternity allowance from the cap. I did so to probe the Government’s reasoning and particularly to try to find out what behavioural responses the Government were expecting of pregnant women. However, as I explained earlier, I could not get an answer from the Minister. The only thing that I got on maternity allowance was the same as for the guardian’s allowance: the response was that people would not be affected unless the household was also getting other benefits. As I have said, that is not an answer.

This amendment from my noble friend seeks to protect a very narrow group of people at a very vulnerable time. The Government’s usual response is that if someone wants to escape the cap, they should either get a job or move house. Can the Minister explain to the House what he thinks the chances are of a woman who is 29 weeks pregnant getting a job? How strong does he think her chances will be out there in the job market if she has not worked previously? Secondly, if that is not a practical thing for her to try to do, maybe he thinks she should move house. I do not know whether he has ever had to help a very heavily pregnant woman move house, but would he really suggest to her that moving house when she is very heavily pregnant or has a brand new baby is either desirable or practical, unless of course she is forced into it in the circumstances described by my noble friend because she ends up being evicted for rent arrears?

I just want to get the Minister to address the practicalities of this situation. This is a very narrow group of people. What do the Government expect them to do if they find themselves hit by the cap? Will he please tell the House?

[Lord Freud]

My Lords, as I have already set out, those with a sustained work history benefit from a nine-month grace period before the cap is applied to them. Therefore, those households that have been in employment for at least 50 out of 52 weeks will be exempt from the cap. This gives time for households, including those with a new child, to adapt to their new circumstances before the cap is applied to them.

Households in receipt of working tax credits or which meet the UC earnings threshold will be entirely exempt from the cap. Although some single mothers will not be immediately able to move into work, for those households consisting of couples, the partner need work only 24 hours a week for the household to qualify for the exemption. Around 45% of households that include a maternity allowance claimant who will be affected by the new cap levels are households consisting of a couple, meaning that a partner can help to exempt a household from the cap through work. Households that include a claimant in receipt of maternity allowance may also be entitled to working tax credits and so be exempt from the cap.

Although I am grateful to the noble Baroness for speaking on this issue and for the research that she has put into it, I am not sure that the amendment would do what is intended. It would not create a disregard or exemption from the cap for the specified group; it would, however, appear to make the group subject to a different prescribed list of benefits to be defined by the Government in regulations. That would of course go against the approach that the Bill adopts of providing certainty about the capped benefits by including them in the Bill. I therefore ask the noble Baroness to withdraw the amendment.

[Baroness Hollis of Heigham]

I thank my noble friend Lady Sherlock. The Minister’s answer is that if a woman has a partner, he can increase his hours and she will be okay; if she does not, the amendment is technically deficient and so she cannot be helped. Is that a fair summary of what the Minister has argued? I think it rather is. But what about the situation of a deserted mum? She has one or two children already, she is now pregnant and the man has swanned off. What then? She has no partner who can increase his hours, she already has the care of children and she is up to or at the point of the benefit cap. She is now 29 weeks pregnant and trying to manage a budget, given she is in the private sector, that means she is probably unable to follow the nutritional guidelines and all the rest of it that is heavily recommended for her at this stage. I ask the Minister the same question that my noble friend asked: what is she supposed to do—apart from find another man?

[Lord Freud]

One of the things we have tested rather thoroughly through the courts is the role of discretionary housing payments for the kind of hard cases that the noble Baroness is so adept at finding. This is precisely where one would anticipate that provision, which is quite substantial, being used. The courts have found, again and again, that it is appropriate to use those payments for such cases because they are so hard to define in statute. Because of that difficulty, the flexibility of the DHP is the way to address the issue.

[Baroness Hollis of Heigham]

In that case, why do such women not fall within the Government’s guidelines as having high priority for DHPs? As my noble friend says, they do not. Although I have not been able to verify it myself, I understand that, as a result of that, in most local authorities they do not get such money because the money is not there. They certainly, I suspect, would not get it for nine months after and up to two months before, or something like 11 months’ continuous payment, because local authorities cannot run it. They use DHPs to deal with temporary, immediate emergencies. Therefore, if the Minister means what he says, he should be giving guidance to local authorities that this should be a priority consideration and he should back that with the necessary money, which is not there at the moment, to do so. However, I see that he is standing up, perhaps to respond to that.

[Lord Freud]

I just want to make the point that DHPs can be used for the long term. They are not just a temporary thing and the guidance says that very precisely.

[Baroness Hollis of Heigham]

I do not know how many local authorities the Minister has spoken to about their use of DHPs, but that is not my experience. Obviously, I have not been able to test the opinion of the entire local authority movement, but certainly this is what I am assured. I have crawled over some of the priority considerations of certain local authorities and can assure the Minister that what he is saying does not hold good: there is simply not enough money.

As far as I can see, the only advice the Minister is offering is that these women should throw themselves on the mercy of non-existent DHPs from local authorities whose money is already spent, cross their fingers and hope. I do not think that is a policy. I do not even think it is appropriate for the Minister to possibly suggest that that is what they should rely on. However, at this point, and given the time of night, I beg leave to withdraw the amendment.

Amendment 26A withdrawn.

Amendment 27

Moved by

[Lord McKenzie of Luton]

27: Clause 7, page 9, line 39, at end insert—
“( ) After subsection (11) insert—
“( ) Persons who have been placed in temporary accommodation by a local authority which has found them to be in priority need as defined in section 189(2) of the Housing Act 1996 (priority need for accommodation) are exempted from the benefit cap.””

[Lord McKenzie of Luton (Lab)]

My Lords, Amendment 27 stands in my name and that of my noble friend Lady Sherlock. This is also a rerun of an amendment that we moved in Committee, then part of a trio of similar amendments, so I will be brief.

The amendment would cause those families to be outwith the benefit cap if placed in temporary accommodation under the 1996 Housing Act. Regardless of whether the benefit cap has played a role, local authorities are legally obliged to rehouse families who are homeless through no fault of their own, are vulnerable in some way or are in priority need for rehousing. Families will be placed in temporary accommodation while a council decides whether it owes them a rehousing duty and then until a settled home can be found. The wait can be considerable, as can the costs. Invariably the temporary accommodation is leased by councils from the private sector, which charges the tenant a rent to cover these costs and expenses. These costs are commonly paid for by housing benefit with some top-up from DHPs.

21:45

Temporary accommodation is generally leased at a premium, placing a considerable burden on local authorities. We know that councils are already struggling to secure enough temporary accommodation as a result of the combined effect of limited funding and a shortage of self-contained accommodation. This is already leading to an increase in bed and breakfast use or people being rehoused away from their local area. The lower benefit cap will increase demand for homelessness services and exacerbate the pressure on the local authority supply of temporary accommodation. With more families affected by the cap, local authorities are likely to be forced into further subsidising the cost of such temporary accommodation. This will be difficult for cash-strapped councils, increasing the incentive to place families in the cheapest areas, far away from their support networks.

It will also make it harder permanently to rehouse homeless families, as the benefit cap will make alternative housing options unaffordable. For larger families, even social housing will be subject to the cap. The policy therefore risks the perverse scenario in which families are made homeless because of the benefit cap and trapped in the limbo of temporary accommodation by the benefit cap at the expense of the public purse. The amount that can be reimbursed through the local housing allowance is limited, which means that other costs over and above that amount must be met by local authorities. In some cases this will come from funding for discretionary housing payments but increasingly that seems to have been allocated—just this evening my noble friend has used a chunk of it—and it is a diminishing fund.

Our amendment would exempt newly homeless households from the benefit cap. This will allow councils to continue to procure nearby temporary accommodation and make it easier for them to move households into affordable accommodation. It will also help councils focus their DHPs and their own budgets on homelessness prevention. If the Government are serious about cutting back on public expenditure associated with the benefits system, and in targeting the benefit cap at families in a position to make choices about where they can afford to live, it is hard to see why they should argue against exempting homeless families being housed in temporary accommodation.

The Government resisted this approach previously because they said there would be no incentives for families to move into work; that they would stay put in their temporary accommodation and avoid the cap. What is the evidence for asserting that families would react in this way? Why would not families do their best to move out of temporary accommodation and move to more settled, better quality accommodation with more secure arrangements for as long as they are available, where a family could put down its roots? It is almost as though the Government are seeking to take advantage of people who find themselves homeless and consequently face an increase in benefit entitlement which draws them into the cap with work the only route out. They will be trying to find work at the same time as looking for permanent accommodation, potentially in an unfamiliar area.

It is not that households are making extravagant choices about their accommodation—they have to take what is on offer—and surely exempting these situations from the benefit cap is the fair thing to do. I beg to move.

[Lord Freud]

Amendment 27 seeks to exempt people in temporary accommodation from the benefit cap. I do not agree that it is appropriate to have a blanket exemption from the cap for people living in temporary accommodation. Rather, the best approach is to provide targeted support early so that people may better address their barriers to work. As I said in Committee, an exemption might, in fact, prolong a stay in temporary accommodation if it is likely that the cap will apply when a household moves to more permanent accommodation. That is an incentive both on the local authority and on the family.

I have already explained how £870 million in discretionary housing payments will be available for those households that need additional support in adjusting to the cap. Provision already exists to support the most vulnerable people who might be affected by the cap. Housing benefit paid to households in specified accommodation is disregarded from the benefit cap, and we included refuges within the definition of “specified accommodation”. While this does not mean that such households are exempt, by not including housing benefit in the calculation we expect that the vast majority of these cases will not be affected in practice by the benefit cap.

From April 2017, the weekly management fee in respect of temporary accommodation, currently £40 in London and £60 elsewhere, will be abolished and replaced with a grant that devolves this funding to local authorities. Unlike the existing management fee, this new grant will not count towards the benefit cap and that will help local authorities tackle homelessness more effectively. I therefore ask the noble Lord to withdraw his amendment.

[Lord McKenzie of Luton]

I thank the Minister for his reply. None of it was a surprise, and I will, of course, withdraw the amendment in due course. I would just like to ask the Minister a few questions. He said that if there were a blanket exemption, this would prolong the stay of people in temporary accommodation. What evidence is there for that? Is it not generally the case that temporary accommodation is not of the best quality, and some of it pretty grotty? Why would families not want to move out of temporary accommodation as soon as they could to put down their roots in a more permanent arrangement? In relation to the grant, that seems helpful in principle, but on what basis is that grant going to be made available? Is it going to be ring-fenced for these situations, or just generally devolved to local authorities and caught up in the morass of funding and cuts that they are having to face?

[Lord Freud]

One of the most worrying aspects about temporary accommodation is that many cases have not been temporary. There have been cases where people have been kept in temporary accommodation for months, stretching to years. One of the reasons for that was that the only way it could be extinguished was by going into social housing. People were quite keen on that route through. That was changed in the 2012 Act so that it can be extinguished by going into private housing. Nevertheless, we want to incentivise councils to move people into settled housing as quickly as they can. Indeed, I think that the limit is 13 weeks. There are just too many examples; I do not have the exact number, but there are too many cases where it has gone on too long.

On the fee, funding previously paid to local authorities will become an upfront payment no longer tied to households remaining in temporary accommodation. The fund will be administered by the DCLG and the devolved Administrations. We will be able to give further details of that process in due course. That is all I have at the moment.

[Lord McKenzie of Luton]

I am grateful to the Minister for that. I will read the record, but I am not sure that I would agree with the proposition about local authorities not wanting to move people into more permanent accommodation as quickly as they can, and away from temporary accommodation, which is expensive for them. Having said that, and given the hour, I beg leave to withdraw the amendment.

Amendment 27 withdrawn.

Amendment 28

Moved by

[Lord Freud]

28: Clause 7, page 9, line 41, at end insert—
“(b) in subsection (4), omit “other”.”

[Lord Freud]

The Delegated Powers and Regulatory Reform Committee recommended in its report of 23 November a number of amendments to the benefit cap clauses in the Bill. Amendments 29 and 30 are technical and consequential amendments as a result of the committee’s recommendations. Amendment 28 is a tidying amendment and not as a result of the committee’s recommendations.

Before I do that, I would like to explain that, although the committee recommended that Clause 7 should be amended so that new Section 96, which it inserts into the Welfare Reform Act 2012, should reference single persons, couples and lone parents, and provide for the meaning of those terms to be specified in regulations, the Government do not consider this to be necessary. Redrafting the provision in the way suggested would overly complicate the legislation. The Government have been very clear in debates and briefings that the higher tier of the cap levels will apply to lone parents and couples, and that the lower-tier levels will apply to single people without children. I am happy to formally put on record again here today that this is the policy.

Turning to the amendments that are being taken forward, the committee recommended that the affirmative procedure should apply to any regulations amending the level of the benefit cap, using the power introduced in new Section 96A of the 2012 Welfare Reform Act to be inserted by Clause 8. As currently drafted, the affirmative procedure is applied only if the level of the cap is lowered. The amendments to Clause 8 mean that any change to the levels of the cap will be subject to parliamentary debate in line with the committee’s recommendation. This is a considerable level of extra parliamentary scrutiny for these future decisions. I am sure that these amendments to Clause 8 will reassure noble Lords’ concerns that for any future review of the cap this House and the other place will have the opportunity to have the decision explained and debated, and to agree it.

The committee also highlighted that currently regulations pertaining to the benefit cap are not required to be referred to SSAC. It has recommended that an amendment be made to provide that regulations pertaining to the cap must be referred to SSAC. After careful consideration, the Government accept this recommendation in principle and will table an amendment at Third Reading to reflect this. However, the Government do not accept that regulations relating solely to the level of the cap should be referred to SSAC, as that is a matter for Parliament.

A consequential amendment to Clause 7 has been identified. It has arisen as a result of the removal of Section 97(3) of the Welfare Reform Act 2012. Section 97(3) provided that the first set of regulations made under Section 96 were affirmative. As the first set of regulations has been made, the removal of the word “other” from Section 97(4) is purely consequential on that. I beg to move.

[Baroness Sherlock]

My Lords, I thank the Minister for that explanation. We welcome the move to affirmative regulations and are happy to accept his assurance that the other amendments are technical and consequential. I look forward to his returning at Third Reading with details of the amendments relating to SSAC. I would like to ask him to come to Third Reading armed with some specific information. If the Government are not minded to make reference to SSAC in relation to the level of the cap, and given that all the benefits affected by the cap are now in the Bill, will the Minister come back and detail for us precisely what those regulations might refer to that are still available to be sent to SSAC? Will he come back at that point and give a better explanation, of appropriate length—I am not blaming him for not doing it now—as to why the Government do not think that the level of the cap should be referred to SSAC, given that that is probably the single biggest determinant of the impact on those affected by it?

Amendment 28 agreed.

Clause 8: Review of benefit cap

Amendments 29 and 30

Moved by

[Lord Freud]

29: Clause 8, page 11, line 21, leave out from “subsection” to “may” in line 23 and insert “(4) insert—
“(4A) A statutory instrument containing regulations under section 96A”

30: Clause 8, page 11, line 26, leave out subsection (6)

Amendments 29 and 30 agreed.

22:00

Clause 9: Freeze of certain social security benefits for four tax years

Amendment 31

Moved by

[Lord McKenzie of Luton]

31: Clause 9, page 11, line 32, leave out from “to” to end of line 33 and insert “be reviewed annually by the Secretary of State having regard to—
(a) the rate of inflation, and(b) the national economic situation.”

[Lord McKenzie of Luton]

My Lords, in moving Amendment 31 in my name and that of my noble friend Lady Sherlock, I shall speak to our other amendments in this group. Noble Lords will be aware that this is also a rerun of the amendments discussed in Committee. We found the Government’s arguments on that occasion less than convincing. As they stand, Clauses 9 and 10 provide for the freezing of certain working-age benefits for four years until 2019-20. This would follow the 1% uprating imposed in 2013. Our amendments would require that these benefits instead be reviewed annually, taking account of inflation and the national economic situation.

We understand that the benefit freeze is designed to contribute to the Government’s cuts programme, and it is alarming that this measure will garner the Government some £3.5 billion in 2019-20, compared with a CPI uprating. This comes on top of benefit cuts and tax increases borne under the coalition, where the IFS reminds us—I raised this figure earlier—that, as a percentage of income, the poorest two deciles suffered the largest reductions. The End Child Poverty alliance reminds us that some 4.1 million families and 7.7 million children have already been affected by below-inflation rises over the last three years. As my noble friend Lady Lister pointed out in our previous debate, the inflation index does not properly capture the budgets of low-income families because they spend more on essentials, the costs of which have tended to rise faster than the average price index in recent years.

My noble friend Lady Sherlock articulated our major concern with the freeze, which is that it both cuts the link between prices and earnings and widens the gap between the income of the poorest and the living standards of the mainstream of society. It is part of a growing trend under this Government to uncouple eligibility for support from need. Our amendment would not preclude the Government freezing working-age benefits for four years, although it has manifesto cover for just two. It would at least cause the Government to confront the extent to which they are causing the poorest to miss out, and to account for their actions.

The Government’s rationale was that those on certain benefits—JSA was one—have done too well in the past few years in comparison with earnings and the minimum wage, and that the trend needed to be reversed. On 21 December, the noble Baroness, Lady Evans, told noble Lords that the Government had struck,

“a balance between the needs of claimants and affordability”.—[Official Report, 21/12/15; col. 2388.]

Perhaps we can hear how the needs of claimants have been assessed for these purposes. On what basis has it been determined that claimants can accommodate a real-terms reduction in their income for each of the next four years? What rate of inflation have the Government assumed in making this judgment? The noble Baroness told the House that 7% of global expenditure on social protection is spent in the UK, which has only 1% of the world’s population. Is it now the Government’s serious intent to benchmark UK social security spending against some of the poorest countries in the world?

So far as Amendment 32 is concerned, I look forward to hearing from my noble friend—and, indeed, namesake—but, so far as the support group is concerned, his amendment seeks to ensure that the full amount of the allowance is to be the subject of uprating, not just the support group addition. I wait to hear what he says, but it seems to me entirely reasonable, particularly since those in the support group are not able to work, so issues of work incentives have no application—but, equally, such individuals are generally unable to supplement their income. I support my noble friend’s amendment and I beg to move.

[Lord MacKenzie of Culkein (Lab)]

My Lords, I support Amendments 31, 33 and 34 in the names of my noble friends Lady Sherlock and Lord McKenzie of Luton. However, I shall concentrate on Amendment 32, which is almost but not quite the same as an amendment tabled in my name in Committee. I regret and apologise that I was unable to be in the House on that day. I am most grateful to the right reverend Prelate the Bishop of Durham for moving that amendment on my behalf—more importantly, perhaps, on behalf of people with life-limiting illnesses such as motor neurone disease.

In speaking to that amendment, the right reverend Prelate reminded the Committee of the promises made by the Conservative Party in the run-up to the general election. I want to refer to that promise again, writ large in its manifesto, which was to always protect the benefits for the most disabled. Despite that promise, the Bill before us does not fully protect people with life-limiting illnesses such as motor neurone disease and other similar rapidly progressing ghastly conditions. Either the words in the manifesto say what they mean and mean what they say or they do not. As of this moment, these promises are not being kept. Going some of the way is what has happened in the Bill—and some of the way is not fully protecting, and is not always protecting, benefits for the most disabled. Unless this amendment is agreed, or the Government come forward at Third Reading with something to produce the same outcome, they will have failed to keep that manifesto promise. I do not believe that is good enough in a modern, civilised society, where people with life-limiting illnesses should not be expected to suffer any more financial hardship than is the inevitable consequence of their illness.

People with motor neurone disease frequently end up having to build bedrooms and wet rooms downstairs, adapt furniture and face all sorts of costs. Couples who may have been reasonably comfortably off rapidly find themselves in considerable debt. As the right reverend Prelate the Bishop of Durham put it:

“Those whom we cannot reasonably expect to support themselves should not be expected to shoulder the burden of austerity”.—[Official Report, 21/12/15; col. 2405.]

The most disabled will lose perhaps more than £250 per annum by 2020 because the basic rate of the employment and support allowance is not exempted. I appreciate that the amendment in my name is rather complicated, but it is a serious attempt to right a potential wrong. If it is too complicated, I do not believe that it is beyond the wit of government to find another formula to produce a result that will give the full protection that is needed.

In Committee, the right reverend Prelate the Bishop of Durham expressed the hope that Ministers would give the matter further and serious consideration. The noble Baroness, Lady Evans of Bowes Park, said in response that benefits,

“are designed to provide a basic standard of living to those who are not in work but at a level that does not disincentivise moving into work”.—[Official Report, 21/12/15; col. 2406.]

People with life-limiting illnesses such as motor neurone disease are not disincentivised from going to work. They cannot go to work—would that they could. There is no behavioural change that people with these dreadful illnesses can make to get back into work. The noble Baroness, Lady Evans, concluded by agreeing that,

“we absolutely must provide suitable protections for disabled people”.—[Official Report, 21/12/15; col. 2407.]

However, she then did not support the amendment. The meaning of “suitable” is very different from the meaning of “full protection”, as was promised in the manifesto. A great many people with life-limiting illnesses, and their organisations such as the Motor Neurone Disease Association, take a great interest in what the Government will now do. I hope the Minister, for whom I have the greatest respect, will be able to say that he will bring something back at Third Reading along the lines of this amendment, which will honour the promise that the Government made in their manifesto in the run-up to the election.

[Baroness Evans of Bowes Park (Con)]

I thank noble Lords for tabling these amendments. I do not wish to spend too much time restating the same points that were made in Committee so I will keep my remarks brief. First, I address the amendments tabled by the noble Baroness, Lady Sherlock, and the noble Lord, Lord McKenzie, which replace the provisions in the freeze with a duty on the Secretary of State to review the benefits in question, having regard to inflation and the national economic situation.

I remind noble Lords that the provisions in Clauses 9 and 10 contribute £3.5 billion of the £12 billion of welfare savings by 2019-20 that the Government are committed to. The Government have a £35 billion consolidation plan, as the Chancellor set out in the summer Budget and the joint Autumn Statement and spending review, and we are on target to achieve a surplus of around £10 billion by 2019-20. The savings that the freeze provide therefore represent a significant proportion—10%—of the work that remains to be done through this Parliament to restore the nation’s finances.

Noble Lords have argued that these amendments would merely place a review on the freeze rather than remove it altogether, but they would remove the certainty provided by a legislated-for four-year freeze. This would lead to increased uncertainty about where the Government intend to find the necessary savings to restore the nation’s finances and could decrease market confidence in the Government’s ability to deliver their target surplus by 2019-20. Noble Lords have also raised concerns about the impact of this freeze. I reiterate that there are no cash losers to this policy and that inflation is still forecast, by the independent Office for Budget Responsibility, to be relatively low over the next two years, providing time for benefit recipients to adjust their finances to compensate. Furthermore, OBR forecasts at the Autumn Statement projected average earnings growth of around 3.9% by 2020, higher than projected inflation at around 2%, meaning many working families can expect to see the impact of the freeze offset by their rise in earnings. The annual average income of the poorest fifth of households has risen by £300 in real terms, compared to 2007-8.

I turn to the amendment in the name of the noble Lord, Lord MacKenzie of Culkein, regarding employment and support allowance. This amendment seeks to place into legislation a requirement for the support group component of ESA to be uprated by an additional amount above the amount it would otherwise be uprated by. This additional amount would be equal to the difference between the current main rate of ESA and that rate if it were uprated by inflation. I should remind noble Lords that, as said in Committee, those in the ESA support group receive an additional amount on top of the personal allowance—the support group component—which we have specifically exempted from the benefits freeze. Furthermore, the enhanced disability and severe disability premiums within ESA are also exempt from the freeze, as are benefits which contribute towards some of the additional costs of disability such as disability living allowance and personal independence payment.

Noble Lords will be aware that spending on main disability benefits went up by over £2 billion over the course of the last Parliament, and that the proportion of those in relative poverty who live in a family where someone is disabled has fallen since 2010. We believe that we are continuing to provide important protections for the most disabled through the exemptions we have from the freeze, and that this amendment is therefore not required.

In conclusion, the Government believe that the freeze strikes a necessary balance between making important welfare savings while having in place the protections for the most vulnerable and disabled. I therefore urge the noble Lord to withdraw the amendment.

[Lord McKenzie of Luton]

My Lords, I thank the noble Baroness for her response. If the Government are to be in surplus in 2019-20, why is it necessary for any benefits freeze to extend into that year, whatever the rationale for earlier years? The noble Baroness said that there are no cash losers, but we know what that means: in real terms, people are going to miss out. Specifically, I refer the noble Baroness to my question about what she said in the previous debate about the balance being struck between—in her words—the needs of claimants and affordability. I ask again: how were the needs of claimants assessed in that determination?

The response to my noble friend, who made a compelling case, was deeply disappointing. In any reasonable understanding of language, the commitment made in the manifesto has not been met by how this issue has been dealt with this evening. I ask the noble Baroness to reflect again to see whether the Government could at least come back on the issue raised by my noble friend. As he outlined, those with life-limiting injuries are the most disadvantaged and are missing out. This is simply not fair.

[Baroness Evans of Bowes Park]

As I said in relation to the disability element, we have exempted quite a number of elements from the freeze, so we believe that we are ensuring that disabled people continue to get support and that the most vulnerable are protected. In more broad terms, we need to ensure that benefit spending is sustainable in the long term.

[Lord McKenzie of Luton]

Is that it? Given the hour, I think there is no point in pursuing this, except to ask whether, on that point, there is nothing further the Government wish to say to my noble friend Lord MacKenzie in relation to those people who find themselves in the support group and are undoubtedly short-changed by the way that the Government have dealt with this uprating.

[Baroness Evans of Bowes Park]

As I have said, we are protecting certain elements of disability benefits. We understand the needs of disabled people which is why, as I set out in my response, a number of elements are being kept outside the freeze. Overall, we have increased spending on the disabled and will obviously continue to try to ensure that they have the support that they need.

[Lord McKenzie of Luton]

My Lords, we are clearly not going to make much further progress this evening. In the circumstances, I beg leave to withdraw this amendment but it is deeply disappointing that this issue of the support group has been dealt with in this way.

Amendment 31 withdrawn.

Amendment 32

Tabled by

[Lord MacKenzie of Culkein]

32: Clause 9, page 11, line 33, at end insert—
“( ) For each of the tax years ending with 5 April 2017, 5 April 2018, 5 April 2019 and 5 April 2020, the amount of the support group component of employment and support allowance is to be up-rated in accordance with Part X of the Social Security Administration Act 1992 (review and alteration of benefits) plus an additional sum equal to the difference between the value of the basic allowance of employment and support allowance as subject to subsection (1) and what the value of the basic allowance of employment and support allowance would have been had it been adjusted for inflation for the specified year.”

[Lord MacKenzie of Culkein]

My Lords, like my noble friend Lord McKenzie of Luton I find it deeply disappointing that the Government cannot take this away and give it some further consideration. It reminds me of the days when I used to be lead negotiator for Britain’s nurses and midwives. The management side across the table used to give us answers which I knew were not theirs but those of the Treasury. I think that is the case here again tonight. We are dealing with the dead hand of the Treasury but, unfortunately, they are not across the table where we can negotiate with them. I am sorry that we have reached this sad situation on behalf of people with these life-limiting illnesses.

Amendment 32 not moved.

Amendment 33 not moved.

Clause 10: Freeze of certain tax credit amounts for four tax years

Amendment 34 not moved.

Consideration on Report adjourned.

House adjourned at 10.17 pm.