Westminster Hall

Thursday 15th March 2018 Westminster Hall

Thursday 15 March 2018

[Mrs Madeleine Moon in the Chair]

Backbench Business

Thursday 15th March 2018 Westminster Hall

Psychosis: Early Intervention

Thursday 15th March 2018 Westminster Hall

13:30

[Norman Lamb (North Norfolk) (LD)]

I beg to move,

That this House has considered access and waiting time standards for early intervention in psychosis.

It is a great pleasure to serve under your chairmanship, Mrs Moon, for what I think is the first time. I thank the Backbench Business Committee for facilitating this debate on an issue of real importance and something I care about a lot. I will start with the origins of early intervention in psychosis and then raise my specific concerns about the progress made under the Government’s programme.

The approach dates back to the 1990s. In 1999, the Labour Government decided to give a significant national push to the development of early intervention in psychosis services. There was a mental health policy implementation guide of that date, and at that time the service was to focus on those aged 14 to 35, the years when psychosis was most likely to emerge. Once an individual started their treatment, there was to be a three-year programme. Critical to that was small case loads, so that the professionals in multidisciplinary teams could work closely with the individuals involved. It also involved family interventions. In a 10-year period, the national case load grew to 22,500 for what was widely seen as a valuable innovation.

The National Institute for Health and Care Excellence review of psychosis and schizophrenia in 2014 concluded that early intervention services,

“more than any other services developed to date, are associated with improvements in a broad range of critical outcomes, including relapse rates, symptoms, quality of life and a better experience”

for service users. I will return to that later, but an excellent annual report by the Southern Region EIP programme—for the south of England—specifically highlighted the impact on employment rates. When these services have proper investment, people who experience a first episode of psychosis can often be got into employment or education at far higher levels that has traditionally been the case with generic mental health services. That is an enormous prize to be won, when we think about quality of life and sense of self-worth, and indeed the cost of the condition to the state—so, lots of praise for the impact of early intervention services.

The Schizophrenia Commission said that early intervention services were the “great innovation” of the last 10 years, referring to multidisciplinary working, recovery ethos, co-production, working with people with the condition and achieving high standards. Professor Louis Appleby has described the service as the

“jewel in the crown of the NHS mental health reform because…service users like it…people get better”—

that is important—and

“it saves money”,

which is also critical.

On that point, we know from analysis that for every £1 properly invested in early intervention in psychosis, there is a return of £15 over subsequent years. Of course, one of the complications is that the return is not just concentrated in reduced use of the NHS, but comes through getting people off benefits and into work, bringing in tax revenues and reducing the number of people who end up going through the criminal justice system. For all those reasons—the impact on individuals and the extraordinary return on investment—this seems like a very good thing to do. However, as the NHS’s finances started to get tighter, there was clearly disinvestment in many places—it varied around the country, but it was happening.

My insight, as Minister responsible for mental health from September 2012, was that two particular elements of the way that the NHS works end up massively disadvantaging mental health. First, there are a set of politically demanding access standards in physical health, such as the four-hour A&E standard, the cancer waiting time standards and the 18-week referral to treatment standards. I do not know if it still happens, but in my time at the Department of Health, every Monday morning all the great and the good of the NHS sat around the Secretary of State’s table with a spreadsheet for every hospital in the country, looking at performance against those waiting time standards—in physical health. There was nothing for mental health—a complete imbalance of rights of access.

Then there is payment by results, which is actually payment for activity. It means that when patients get referred to an acute hospital, that hospital receives more income. There have been adjustments and reforms over the years, but the basic principle of incentivising activity in acute hospitals, which is not matched in mental health, combined with those exacting access standards, puts enormous pressure on the system to drive people into acute hospitals to meet those standards. That has the effect of sucking money into acute hospitals. Even during the last five to seven years of tight finances in the NHS, income for acute hospitals has continued to increase, but income for mental health and community services, which do not have those financial incentives, has stayed level or, in places, decreased.

I felt we had to start addressing those perverse incentives that were disadvantaging mental health, which amount to discrimination against people who experience mental ill health. Why should the treatment for someone who experiences psychosis be in any way inferior to the treatment of someone suffering from cancer or any other physical condition? In 2014, we decided across government to publish a vision called “Achieving Better Access to Mental Health Services by 2020”, a joint publication by the Department of Health and NHS England. The vision was to achieve comprehensive maximum waiting time standards in mental health by 2020—if only. The plan was to start with two standards: a six-week standard for access to the IAPT—improved access to psychological therapies—service and a two-week standard for early intervention in psychosis.

Critically, this was not just a two-week standard. When the Government report on whether they are meeting the standard, the focus tends to be on whether more than 50% of people start their treatment within two weeks, which was the standard set at the start. However, the standard was in two parts: to start treatment within two weeks and then to have access to the full evidence-based, NICE-approved treatment package. I will focus on that element because, depressingly, evidence shows that the system is falling far short of what it should be doing.

I want to focus on a freedom of information survey conducted over this financial year to try to establish the position across the country, looking not just at how long people wait but, critically, at whether they get access to the full evidence-based treatment package. The evidence that emerges from that survey is deeply disturbing. First, only 29% of trusts across the country stated that they were meeting the full NICE-approved, evidence-based treatment package. That is 29% on a standard that the Government say is being met. It is not being met. Even 29% is generous, because within that I think there were two trusts that were delivering the service only up to the age of 35, whereas the standard says that people up to the age of 65 should be included. Across the country, people are simply not getting access to the evidence-based treatment that we know works and delivers such an extraordinary return on investment.

I suppose I would put it this way. Can we imagine a cancer service saying to patients, “We’ll give you half the chemotherapy or radiotherapy treatment,” or, “I’m sorry, but there are no professionals available to deliver this part of your treatment”? There would be an outcry. It would be impossible for the Government to get away with it. The Daily Mail would be apoplectic. We know that the result would be that the standard would be met, one way or another—but here, day by day across the NHS, this standard for mental health is routinely being missed in a wholly unacceptable way.

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

I thank the right hon. Gentleman for his important speech and his comments. Does he agree that there is a particular challenge in mental health, in that, in the wake of the Health and Social Care Act 2012, parity of esteem is enshrined in law, and we should be not just aspiring to, but achieving equality for mental health? This is just another indicator of how far we are from achieving that goal.

[Norman Lamb]

I totally agree. The 2012 Act is clear that there should in effect be equal treatment between mental health and physical health, but the evidence shows it is not being delivered. I fully understand that it takes time to get there with a new programme, but it is the way it is being implemented that gives me greatest cause for concern. I will focus on how we are falling short of that standard.

In the south region, there is a brilliant programme; it is always important in these debates to recognise that there are sometimes areas of fantastic practice that should be applauded. In the south of England, an amazing woman called Sarah Amani is the programme manager, and there is a full implementation programme. My argument to the Minister is that what is happening in the south should be happening everywhere. The programme produces annual reports, so it is completely open and transparent about the progress it is making and the obstacles that lie in its way.

I should have mentioned that our survey showed that across the country not much more than 50% of the total amount that NHS England says must be invested per patient is being spent per patient on delivering the service. If we are only spending a bit more than 50% of the amount we need to spend, it will fall short. What NHS England in the south is doing is admirable. It highlights that in many areas things have improved over the last year in its region, because it is driving that, but it also says:

“There is four-fold variation between the most and least funded EIP teams in the South of England.”

A fourfold variation would never happen with the cancer service. Furthermore:

“None of the providers have investment recommended to provide a NICE concordant package of care”.

In the best region of the country, no provider is meeting what it needs to spend to deliver the full package of care.

On workforce, the report says:

“Recruitment has been in part hindered by lack of extra investment and compounded by a national reduction in the number of qualified staff, particularly nurses”.

On intelligence, it says:

“Although all mental health providers use Electronic Health Record (EHR) systems, the majority (13 out of 16) of providers have yet to automate reporting, resulting in clinicians having to manually troll through whole caseloads for multiple data requests.”

In this day and age, that should not be necessary. There should be a system across the country to enable us to monitor performance against that important standard. When we go through the elements of the NICE-approved treatment package, such as cognitive behavioural therapy for psychosis, across the best region in the country there is enormous variation in the amount of therapy available to people. Some trusts provide what is required, but most fall short.

If we then look at comprehensive physical health checks, there is a target of 90%. We know that people with severe and enduring mental ill health die 15 to 20 years younger than other people, and that part of that can be addressed by having physical health checks. There is a Commissioning for Quality and Innovation standard established for 90% of people with severe and enduring mental ill health to have physical health checks. Across the south of England it is 56%, not 90%. Individual placement and support is a critical element of getting into work, with loads of evidence to support its effectiveness; 30% in the south of England have access to individual placement and support. Going back to what I have said, we must look at the results that flow if we make the investment. It is not only morally wrong but economically stupid to avoid making that investment.

I come now to the evidence on outcomes. The programme can show that where it does the work, hospital admissions are substantially reduced. The evidence is clear for anyone looking at the report to see. The report then looks at employment and education, where it is achieving substantially better rates of employment than generic mental health services, at 46%. Fascinatingly, it even analyses the relationship between investment and outcomes, so it can show that the more we invest in these evidence-based interventions, the better the outcomes. What a surprise: more people get into work, more people get into education and lives are transformed.

The report then talks about securing investment. Bear in mind that I am not quoting a politician but an internal document, led by the Oxford Academic Health Science Network:

“If the Five Year Forward View commitment of £40 million for EIP teams in 2015-16 had been honoured, EIP teams in the South of England would have seen a total growth in budgets of around £15 million. Instead, in 2015-16 the South region EIP teams saw a meagre increase of £3 million.”

That is £3 million instead of £15 million. The report continues:

“Between 2016-18, this trend of lack of investment has continued with a £3.5 million increase in EIP team budgets compared to the £15 million that was expected. Of the 16 providers delivering EIP in the South of England, none have the £8,250 investment per patient recommended to deliver a NICE concordant package of care. The South of England has a poor track record of investment in EIP services”.

That is the best region in the country. It leaves me feeling frustrated that such a prize—such an opportunity—is being squandered through lack of investment and lack of effective implementation.

I then look to the midlands. I have received an email from someone who is working on early intervention in psychosis in the west midlands, which reads as follows:

“There is wide variation in service quality, data reporting, outcomes, resourcing and resource allocation. This has not been made public, presumably because it is politically inexpedient to do so…Many trusts have chosen to disband EIP teams as a cost saving exercise (in Nottingham), or to allow caseloads to rise from 1:15 to 1:30”—

the whole essence of this approach is low case loads, so that people can get the personal attention that they need—

“not provide enough of the NICE mandated therapies, to not appoint psychologists or enough support workers, leading to expensive but ineffective teams…There is currently no governance or accountability in place, which enables the triangulation of proper resources, recommended service levels and outcomes.”

No governance or accountability in place across the midlands. That leaves me totally bewildered. Would this ever have happened when they implemented the cancer standards in the last decade? Of course not. Yet that is what has happened.

“There are systems in place in the north…and in the south…to provide the mechanism by which the accuracy of data, resourcing, services and outcomes can be verified and addressed…The Midlands region of England (west, central, east midlands, and East of England) are the only areas without any established regional development programmes and therefore have no reliable mechanism to prevent the inexorable decline of standards in EIP.”

That is from the frontline and, it seems to me, ought to be taken extremely seriously.

In a presentation given recently in February, in the west midlands, a west midlands clinician said:

“We are really struggling to provide an EI service that meets the NICE quality standards. Most of the focus of the Trust has been on meeting the two week access standard, which we have done most of the time. We did get some additional money, but it was non-recurring. Caseloads are way above the national average and we are really struggling”.

It then goes through the various elements of the NICE-approved programme.

“Referral rates are very high and we are discharging people sooner than we should.”

That should not be happening in a programme that the Government ought to be really proud of. It is a gem that ought to be nurtured and developed in order to get the very best from it.

When we published the survey that we did earlier this year, the response from NHS England was deeply disappointing. The official was quoted as saying:

“10,000 people each year are now receiving treatment through the early intervention in psychosis programme, with over three-quarters of patients getting treatment within two weeks…The analysis inevitably gives only a partial and dated picture of progress in these services.”

Well, I do not think that public bodies should be making misleading statements like that, because the analysis was full and complete across the whole country. It was not dated in any way. But this quote from NHS England—an anonymous quote—was designed to discredit the analysis. Rather than discrediting the analysis, it seems to me that a public body should be acknowledging the problem and addressing how it will try to solve it. This sort of denial approach is unhelpful. I wrote to the UK Statistics Authority, because I think it is inappropriate for public bodies to respond to analyses in that way.

Before I finish I want to deal with some asks of the Government. This is part of the five-year forward view. The Government have stated that it is a clear priority, so I want the Government to make it a priority. I want the Government to look at the implementation of this programme and to recognise that in some regions, nothing is happening to drive the implementation of these national standards. Personally, I think that it is intolerable that someone with psychosis in Dudley, in the west midlands, gets a raw deal compared with someone in the south of England, but that is what is happening now, because NHS England has no implementation programme in the west midlands, or across the entire midlands, including my own region—the East of England.

First, it needs sufficient investment. Given that there is a return on investment of £15 for every £1 spent, my plea to the Government is to make the investment because they will see a return on it, and benefit from improved employment rates and everything else. Secondly, address the staff shortages that are clearly—according to our survey—holding back services all over the place. It really means that Health Education England needs to create a credible plan to address the workforce shortages in early intervention in psychosis services, so that no area falls short because it cannot recruit the right people to deliver the service. Again I ask, would it happen in cancer? Of course not.

Thirdly, end the outrageous age discrimination. A quarter of the trusts that responded to our survey still have a limit of 35 on the service that is delivered, which means that anyone over the age of 35 is not getting access to the evidence-based treatment programme. Fourthly, get back on track with the two-week standard. We are also seeing that even though the standard is being met, the performance is deteriorating. The figures for early this year are worse than the whole of last year, suggesting increasing pressure on services around the country. That is important for the Government to address as well.

Fifthly, the standard applies not only to people who experience a first episode of psychosis, but to people who are at risk of psychosis; but many services simply say, “We don’t deliver a service to those people.” Of course, that is the best early intervention. If we can intervene before the psychosis has occurred, everyone benefits massively, particularly the individual concerned. In many areas, though, there is simply no service, despite the standard being very clear about what is required. Sixthly, the Government need, as I have said, to fund implementation programmes for every region, modelled on the plan and programme in the south of England, so that everywhere gets access to the same level of service.

Finally, our vision of comprehensive maximum waiting time standards in mental health by 2020 was published not just by Lib Dems, but by Conservatives. It was the Government’s vision. The point of it was to end such discrimination in a publicly funded service. It is not justifiable to have rights of access to treatment for physical health services, but not for mental health services. Why should people be left waiting, sometimes for months on end, for access to treatment? Treatment should be based on evidence and clinical need. But that vision, it seems to me, although included in the “Five Year Forward View”, is not being funded. There is no resource available to implement it. So my plea to the Government is: return to that vision. It was a good vision in 2014.

I will end by making this point: nothing that the Government could do would have a bigger impact on the wellbeing of our communities than to end the under-investment in mental health services. The best example, where the evidence is at its strongest, where you can reduce the flow of people into long-term support from secondary mental health services, is early intervention in psychosis services. There is an enormous prize to be had, but it needs investment and attention, which is lacking at the moment.

13:58

[Dr Paul Williams (Stockton South) (Lab)]

It is a pleasure to serve under your chairmanship, Mrs Moon. I congratulate the right hon. Member for North Norfolk (Norman Lamb) on securing this debate. It is a subject that we are both passionate about, as are many people in this room. I pay tribute to the commitment that he made to mental health services during his time as a Minister and beyond.

Psychosis can be a terribly destructive condition. When it starts in adolescence, as it does for most people, people can lose out on schooling, relationships with friends and family are strained and the foundation on which the rest of people’s lives will be built is severely tested. Psychosis is not just about the symptoms—the delusions, hallucinations and suspiciousness that people feel. It is a social condition too. It often leads to a withdrawal from society—avoiding friends, avoiding leaving the house, losing schooling and losing work—and that is why it is such a pernicious condition. It can harm somebody’s life chances. It is a condition that leads to lost opportunities.

I am pleased that the right hon. Gentleman has drawn parallels between psychosis and cancer. We have not conferred, but I am also going to do so. We see how good cancer services are. It is important to have that comparator and to hold mental health services to the same standards as physical health services. We should think about psychosis in the same way as physical health services think about cancer. As soon as somebody shows signs of psychosis, they should have rapid—two-week—access to expert diagnostics. If the diagnosis is made, it is right that they get a superb package of care to give them the best possible chance of recovery. That care includes psychological therapies, medication, help with their physical health and, of course, rehabilitation.

If somebody receives that rapid package of care and support, there is half a chance that they will get back into education, employment or an apprenticeship. The rest of their life will be radically different. However, if they do not get that care, support and treatment, the figure for that drops to between 7% and 12%. That is what happens to people who do not get that package. If there was a pathway for cancer that improved survival and recovery from 10% to 50%, we would all know about it and fight for it. I am pleased that within this room there is the same passion and commitment to early intervention in psychosis.

The right hon. Gentleman outlined some of the costs to society of untreated and unmanaged psychosis, but I have a few things to add. Some 65% of all admissions to in-patient mental health units are for psychosis. The police spend increasing amounts of time detaining people under section 136, many of whom have psychosis. A lot of homelessness is associated with psychosis, and many prisoners have or had psychosis. As well as costs to society, there are also big costs to the individual. A person with a severe mental health problem such as psychosis will die, on average, 20 years younger than someone who does not. They are not dying of the psychosis; they are dying of physical health problems that are caused by their underlying mental health problems.

It is important that we are having this debate, but it is unfortunate too. In September 2016, the right hon. Gentleman led a similar debate on this very subject, and 18 months on we are learning that many of the things raised in that debate are still not happening. During that debate, the then Minister said:

“To improve access to NICE-recommended psychological therapies, we have to ensure that there are the staff numbers and the appropriate skills mix to deliver the full range of treatment to those who need it.”—[Official Report, 7 September 2016; Vol. 614, c. 163WH.]

Yet the survey conducted for the right hon. Gentleman’s recent report highlighted some worrying trends around resources and staff numbers. Many patients are not receiving the full range of treatments and interventions that should be included in the specialist EIP care package. Many trusts say that they simply do not have the staff and resources to meet demand.

I return to the analogy with cancer. The Government’s ambition is that 50%, rising to 60% by 2020, of people aged 14 to 65 experiencing a first episode of psychosis should have access to a NICE-compliant care package. If we were to replace the word “psychosis” with “cancer”, there would be outrage at that target. Why should it not be 90% or 95%? Why should the ambition not be 100%? If we were talking about cancer, we would already be hiring the radiologists, laboratory scientists, surgeons, nurses and technicians that we need for the pathway. I want to give credit where credit is due. Setting a 50% standard is at least a step towards achieving parity of esteem, but that ambition is clearly not yet a reality.

NHS England’s data show that more than 60% of patients start treatment within two weeks of referral. However, if we look at the data in a different way and ask people who have started treatment how long they waited, the figures paint a very different picture. In January 2018, even though 722 patients had started treatment within two weeks of referral, 1,344 patients were still waiting to start treatment, and more than 700 had been waiting more than two weeks. We are talking about figures, but those figures represent people—more than 700 people who were waiting in January of this year. Often these are young people who are not going to school because of new mental health problems that could be managed. During that time relationships are breaking down, people are losing their jobs and people’s life chances are being harmed.

There is regional disparity as well. The north of England, where my constituency of Stockton South is, has the lowest proportion of pathways completed within two weeks of referral and the highest number of total referrals still awaiting treatment. It seems that we have not yet put sufficient resources into our mental health services for the psychologists, occupational therapists, mental health nurses and care co-ordinators who are important to implement this pathway. I have to say that the staff who are working in this area are doing amazing work and transforming lives. I would like to thank them for what they do, but this now needs to be taken to another level and delivered to a much greater scale.

The right hon. Gentleman’s research shows that mental health trusts invest, on average, just half the amount that NHS England estimates is needed to provide EIP in line with NICE guidelines. As he stated, only 29% of trusts say that they are able to offer their patients the full NICE package of care. I urge the Minister to acknowledge that service providers still have ground to make up, and to recognise that they need greater support and resources to do so.

I really hope that the Minister responds with a plan to make things better for the people who we all know are still not getting the service that they need. I have no doubt of her personal commitment to improving mental health services, but she must match rhetoric with ensuring that commissioners are actually putting significant amounts of extra money into mental health services on the ground, and that providers are turning that cash into services that meet the needs of these priority patients. If this were cancer instead of psychosis, we would be doing it—let’s make parity of esteem a reality.

14:07

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

It is a pleasure to serve under your chairmanship, Mrs Moon. I congratulate the right hon. Member for North Norfolk (Norman Lamb) on proposing this debate to the Backbench Business Committee—a proposal for which I was a signatory—and securing this important and timely discussion.

The right hon. Gentleman and I have shared many platforms in supporting joint campaigns, and we have debated often the state of our mental health services. We have come to expect from him a level of forensic detail, commitment to improvement and genuine compassion for those with severe mental illness, and today he has not disappointed. We may have very small differences in approach or policy, but he and I share a big-picture commitment to world-class mental health services in this country; to genuine, tangible parity of esteem—real equality—between physical and mental health services; and to a transformation in the way that we view mental illness, talk about mental illness and treat those with mental health conditions.

As with many other forms of mental illness, all the experience and evidence point to the fact that the best time to intervene in cases of psychosis is as soon as possible. The work of Professor Patrick McGorry in Australia and proponents of early intervention in the UK clearly shows that early intervention can have a huge impact on the health of the individual patient, with more chance of them living with conditions in a managed way and ultimately more chance of their recovery.

I echo some of the right hon. Gentleman’s points about the benefits of getting back into employment and the importance of accessing individual placement and support. That is a well-evidenced measure that has already made a tangible difference to many people living with mental ill health. I will reflect on the experience in my area, Merseyside, where Mersey Care provides the majority of mental health services, including early intervention in psychosis. It did an audit of all the patients that it looks after in both the community and in-patient services. It is staggering that just 3% of their patients are in any form of employment. If we compare that figure with people in physical health services, the inequality—the massive disparity—when it comes to mental health is a great concern. That strikes at the heart of the issues that we are discussing.

It should not surprise hon. Members that the earlier we treat any condition, be that a mental or physical health condition, the more likely we are to get a positive result. In terms of system reform in the health service, early intervention clearly fits into the mantra of prevention being better than cure. I have said it before, but I will say it again: if people are not convinced of how important this is by the moral and social reasons, the financial and economic consequences of not contending with mental health sooner should be enough.

For the NHS to be sustainable in the long term, when it will increasingly have to contend with lifestyle-related diseases, we need a seismic shift from treating diseases and conditions when they present in crisis in their most acute forms to a system that allows us to detect them in their earliest stages, to manage them with early interventions and to do everything to avoid certain conditions in the first place, although that is not always possible. That is as true of mental illness as it is of cancer, cardiovascular disease and coronary heart disease.

The issue is not just health outcomes, but the impact that psychosis has on the totality of an individual’s life and their opportunity to be involved in education, employment and training, to maintain relationships with family and friends, to own a home or maintain a tenancy, to be able to go to work and to not be in our criminal justice system. Those outcomes have far-reaching and long-term consequences that are not contained solely within the Department of Health and Social Care, although a Health Minister will respond to today’s debate.

With that in mind, in February 2016, the Labour Front Bench, including me as the then shadow Minister for Mental Health, welcomed the inclusion of the access and waiting time standard for early intervention in psychosis in “The Five Year Forward View for Mental Health”. The commitment was that NHS England should ensure that by April 2016, 50% of people experiencing a first episode of psychosis had access to a NICE-approved care package within two weeks of referral, rising to at least 60% by 2020-21.

It is important to reiterate that laudable target and ambition. It was modest, but it was an important first step and it was welcomed across the House, so it is with heavy hearts that we review progress since then, and realise that the system is failing to reach the target stipulated in the “The Five Year Forward View for Mental Health”.

Once again, we should recognise the detailed work of the right hon. Member for North Norfolk in unearthing the emerging picture from across the country. Every Minister’s worst nightmare is the ex-Minister armed with the tools of freedom of information requests and parliamentary questions, and who knows the darkest secrets at the heart of the Department.

We now know that the access and waiting time standard for early intervention in psychosis is not being met. Too many providers cannot offer the full NICE-approved package of care. There is variation across the country, with, as ever, the poorest people in the poorest parts of the country receiving the poorest levels of service. That real inequality is a social justice issue.

I echo the concerns expressed by my hon. Friend the Member for Stockton South (Dr Williams) about the figures for his constituency in the north of England. The north of England commissioning region has the lowest proportion of completed pathways and the highest number of total referrals still awaiting treatment—two thirds. That should be a serious concern for us all. The inverse care law, first identified some 40 years ago, is alive and kicking when it comes to mental health services.

The latest picture published by NHS England shows that far from the steady progress we all desire, the proportion of patients in the early stages of psychosis that started treatment within the two-week target was lower in January than it was in May 2016. In the first 10 months of 2017-18, 9.1% fewer patients started EIP treatment within the two-week target, compared with the first 10 months of 2016-17.

Behind those figures, as other hon. Members have indicated, are real people who are suffering the early manifestations of psychosis, which can be extremely disturbing for them and for their friends and family. I have had the privilege of visiting a number of in-patient units, not just in my constituency but across the country, and I have heard first hand about patients’ experiences. The longer they have to wait, the greater the negative impact can be on their condition and on their chance of recovery.

The Royal College of Psychiatrists points out that if people do not receive help early enough, they are more likely to experience poor physical health, lower levels of social functioning, and poorer occupational and educational outcomes. That is a serious concern for us all, which is why we are here this afternoon.

We also have to think about what happens in the future. I am grateful to YoungMinds for its analysis of the sustainability and transformation partnerships, due out next month, which shows that less than a quarter of STP plans demonstrate an explicit commitment and clear plan to meet the EIP target for 2020-21. It is not just about what has happened in the past and looking at the results retrospectively, but about what will happen in the coming years. The Government have endeavoured to have STPs, and the EIP target should be at the heart of what they are doing. Unfortunately, it is not, despite the fact that the implementation of that waiting time target is one of the nine requirements for STPs, as set out in the NHS planning guidance.

I will turn to an area that is of particular interest to me. In the year since the birth of my child, I have been even more aware of the need to support the mental health of new mums. Around 85% of new mothers experience some change in their mood, and for around 10% to 15% of them, that might mean more serious symptoms of anxiety and depression. More than 1,400 women experience post-partum psychosis each year in the UK, which is between 1 and 2 in every 1,000 mothers. I was struck that a woman is between 30% and 40% more likely to experience a period of psychosis in the year after childbirth—more than at any other point in her life.

Post-partum psychosis can take many forms, including hallucinations, depression, delusions and mania. It can be extremely distressing for mothers, their partners, their wider families, and of course, the child. I have had the opportunity to visit two mother and baby units across the country to hear from mums first hand. The condition does not discriminate. It can affect women of any background, colour and income, and it can have serious and far-reaching consequences.

The National Childbirth Trust, the Maternal Mental Health Alliance and others have specifically highlighted the paucity of provision of mental health services for new mothers and the effectiveness of the six-week check in identifying the early stages of mental ill health, including psychosis. In the mix of the debate, I hope the Minister will be able to comment on that.

[Dr Paul Williams]

I, too, have read the National Childbirth Trust’s report, “The Hidden Half”. It says that despite it being a vulnerable time for women, more than half of women who experience post-natal mental health problems say that they were not asked about them by any health professional. Will my hon. Friend join me in calling for that to be added to the GP contract so that GPs routinely provide a six-week check for the mother, as part of the six-week check for the baby?

[Luciana Berger]

I thank my hon. Friend for raising that important report and the campaign, which I have considered as well. The National Childbirth Trust makes an important point about the connection that GPs have with new mums and their babies. I recall that my GP did ask me about my mental wellbeing and how I felt, but that is not the case for every mum. It is something that we should consider, along with ensuring that every contact counts when it comes to new mums and their babies—be that with the health visitor, a midwife who might come to the home or someone in the hospital. We need to look at the whole spectrum of engagement to ensure that we consider the mental health of mum and baby every step of the way.

I mentioned mother and baby units, which are incredibly important. For anyone who does not know, they are an opportunity to ensure that if the mum is experiencing a period of psychosis or another serious mental illness, they are still able to be with their child. The units offer extremely specialised care and incredible attention from clinicians, who do a remarkable job of ensuring attachment so that mums are not disconnected from their babies, even if they have to be moved across the country.

Mother and baby units are very important for recovery rates. I have asked several parliamentary questions about them, but I want to ask more in the context of this debate because of their importance to mums who experience post-partum psychosis. In January, I asked the Secretary of State, in a written question,

“how many mother and baby beds commissioned by NHS England Specialised Services in 2016/17 are (a) available and (b) in use.”

I asked that because although we know that beds have been commissioned, it is not clear whether they are available or in use. The figures that I received in response to a previous question showed a decrease of one in the number of beds available across the country since 2010. I ask the Minister the same question again, publicly, because her response in January was:

“The information requested is not available.”

I do not think that it is a difficult question to answer. In the context of this debate, it is a very important one, so I hope the Minister’s officials will provide her with an answer today. Post-partum psychosis, no less than any other kind, requires early identification and early intervention, but we are not doing enough to treat or support post-partum psychosis alongside other forms.

Let me conclude with some brief questions that I hope the Minister will address. First, what steps is her Department taking to address mental health inequalities and the waiting times postcode lottery, particularly in cases of early episodes of psychosis?

Secondly, how can the Minister guarantee that money allocated for mental health services is actually reaching the frontline in all the areas in which it is needed? There are many examples of mental health budgets being raided to pay for other parts of the NHS.

Thirdly, does the Minister agree with the Royal College of Psychiatrists that we need to improve the financial data available for early intervention in psychosis services? Without it, we cannot be sure that services are properly investing in EIP.

Fourthly, does the Minister believe that frontline mental health services have adequate numbers of staff—including psychiatrists, mental health nurses and therapists—to meet the targets set out in the five year forward view? I echo the praise of other hon. Members for our frontline clinicians, who do an incredible job under very challenging circumstances but are severely stretched, as we hear time and again. They cannot meet the workforce challenge alone.

Lastly, what steps will the Minister take to drastically improve early intervention in cases of post-partum psychosis, especially at the six-week check for new mothers, so that we can support women in the first weeks after the birth of their baby?

I congratulate the right hon. Member for North Norfolk again on securing the debate. Let us hope that our deliberations this afternoon will lead to concrete improvements and swift action from the Government to prevent unnecessary psychosis, intervene early to prevent unnecessary suffering, and help as many people as possible across the country towards a meaningful path to recovery.

[Mrs Madeleine Moon (in the Chair)]

I will call the first Front-Bench speaker at 2.30 pm.

14:23

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

I have been trying to think about how to put the experience of psychosis into words. Having observed it rather than experienced it personally, I suspect that I will not do it justice. From my observation, however, it is a devastating thing to experience: it is debilitating, frightening, bewildering and enormously destructive to someone’s life, aims and prospects. Its impact on people’s lives is severe, as other hon. Members have described.

In the past, a diagnosis of psychosis was essentially a life sentence, but now early intervention and treatment can lead to recovery. People can get their lives back on track—we are not in the dark old days when if someone had a mental illness, that was it. People can and should recover, but getting early treatment is crucial.

I will be brief, not only because you said that the winding-up speeches would begin at half-past 2, Mrs Moon, but because the issue has been covered comprehensively by the right hon. Member for North Norfolk (Norman Lamb), who has such huge knowledge and has clearly done an enormous amount of groundwork; by the hon. Member for Stockton South (Dr Williams), who brings to the debate his expertise as a doctor; and by the hon. Member for Liverpool, Wavertree (Luciana Berger), who does a huge amount of work in the area. I will therefore make only three points.

First, I express my appreciation to the Government, and to the Minister, for their enormous commitment to mental health and their huge focus on improving mental healthcare, achieving parity of esteem and ensuring that far more people have access to treatment, starting from a really low base. They set out that commitment in the “Five Year Forward View”, the most comprehensive strategy for mental health, and have demonstrated it with an increase in mental healthcare funding and with greater transparency. The fact that we can even have this debate, and that there are targets for waiting times and access to mental health, represents great progress from the time described by the right hon. Member for North Norfolk, when targets and transparency were making a huge difference to the quality of physical healthcare but there was no information about the quality of mental healthcare or access to it. We now have a developing, albeit early, set of data about access to mental healthcare. There is a long way to go, and that includes getting much more data about progress through treatment and outcomes, but the access data has at least given us a start. I welcome the fact that we are in a better place with mental healthcare, and that there is a great commitment to improvement.

My second point, however, is about the worrying trend in the treatment of people with psychosis. The direction of travel seems to be towards a decline in early access to treatment—not just in percentage terms, which could be explained by rising demand, but as an absolute number. The data cited by the right hon. Member for North Norfolk shows the gap between the treatment that some patients receive and the full recommended amount. A large number receive only some treatment, so we cannot hope for the recovery and outcomes that the full NICE-recommended package would offer.

My third point is that we need to know the reason for this worrying trend, which goes against our ambition to treat more people and help them to recover, and against the Government’s commitment to mental health. What is going on? Why do we appear to be going in the wrong direction? We have heard some possible reasons this afternoon, including lack of governance and accountability; lack of focus in many parts of the country, although there is clearly huge variation; underfunding of treatment packages, despite the overall backdrop of more money going into mental health; and shortage of workforce. Under the “Five Year Forward View”, there were meant to be 60 extra psychiatrists to provide early intervention in psychosis, but it is not clear—perhaps the Minister will tell us—whether those posts have been filled. It is clear to all hon. Members who work on mental health issues that the workforce is facing a huge challenge in recruitment and retention.

Is there a lack of ambition to provide early access to treatment for psychosis? Even achieving the 2020-21 target of 60% would leave 40% of people without much-needed treatment; we could argue that that is too low an ambition, especially as we know how effective treatment can be. I welcome the Government’s commitment, but it is worrying that the direction of travel seems not to be positive, so it would be extremely helpful if the Minister gave us some insight into what is going on and what steps are being taken to ensure that people get treatment that works.

14:29

[Neil Gray (Airdrie and Shotts) (SNP)]

Thank you for calling me, Mrs Moon. I should perhaps have said earlier that I would take only a short amount of time in my winding-up speech, particularly as we are discussing a devolved issue. I hope that the hon. Member for Faversham and Mid Kent (Helen Whately) did not have to cut what was a very good speech short. I should perhaps have indicated to you, Mrs Moon, that I only intended to take a short amount of time, to enable everyone to get the full coverage.

It is a pleasure to speak with you in the chair, Mrs Moon, on this very important subject. I congratulate the right hon. Member for North Norfolk (Norman Lamb) on securing the debate and pay tribute to his awareness-raising and campaigning work on this important issue over a great number of years, as has been mentioned. I also commend him for his detailed and comprehensive speech and, as I have indicated, for bringing people together today in search of consensual debate, especially when we consider that the topic is health, which normally divides political opinion. On this occasion it has rather united political opinion, so I commend him for that.

The right hon. Gentleman’s powerful speech was supported by others. The hon. Member for Stockton South (Dr Williams) spoke of the stark reality that sadly faces people who do not get access to early intervention following diagnosis with psychosis. He spoke with experience and knowledge of this issue, and added greatly to the debate. The hon. Member for Liverpool, Wavertree (Luciana Berger) has also worked tirelessly for a number of years on this issue. The statistic she cited—that just 3% of those with psychosis in her area are in employment—is quite frankly staggering. She also spoke of the prevalence of mental health vulnerability for women after childbirth. For me, those two issues alone, among all the others, highlight the importance of getting this right across all areas and why we all need to do more in all areas of this country, and all Governments should do that.

[Luciana Berger]

Forgive me, but in my remarks I was due to pass on a contribution by the hon. Member for Belfast East (Gavin Robinson), who wanted it made known on the parliamentary record that there is no mother and baby unit in Northern Ireland. Although the issue is not devolved, he wanted that point about the availability of support for new mums to be made in the context of this debate.

[Neil Gray]

I thank the hon. Lady for that intervention; it is clearly important that that is put on the record.

Also, as I have already indicated, the hon. Member for Faversham and Mid Kent made a very honest speech. Her observations from her clinical experience highlighted how destructive psychosis is, so I pay tribute to her for her contribution. I hope that the Minister will respond not only to hers, but to all the points raised by right hon. and hon. Members.

This issue is important, because when the Prime Minister entered Downing Street on 13 July 2016, she listed a number of “burning injustices” that she hoped to address, in order to make Britain

“a country that works for everyone”,

among which was the injustice that

“If you suffer from mental health problems, there’s not enough help to hand.”

Clearly, such rhetoric is to be welcomed, as is the Prime Minister’s promise that parity of esteem would be introduced in dealing with mental health services in the NHS in England. However, as demonstrated in I think all the speeches today, we have not really got to the point of matching that rhetoric with actions and outcomes. I think there was a universal acknowledgement in today’s speeches that not enough is being done.

Today’s debate focuses specifically on psychosis and the waiting-time standards for early intervention in this area. As we are all too aware, mental health in general often comes with many stigmas and misconceptions attached, and that is nowhere more apparent than in relation to the subject of today’s debate. In psychosis, people experience symptoms of paranoia, and often delusional belief systems that take them outwith reality—that was covered so well by the hon. Member for Stockton South. It affects sufferers socially and in terms of their work, education and overall health. Although only a small proportion of the population are impacted by psychosis, particularly compared with other mental health issues, its impact on the individual and those around them can be devastating, and sufferers require long-term support and help to recover.

As my hon. Friend the Member for East Kilbride, Strathaven and Lesmahagow (Dr Cameron), who is herself a clinical psychologist, pointed out in a similar Westminster Hall debate in September 2016, behavioural family therapy is also extremely important. Psychosis affects not just the person who suffers, but their whole family and social circle. People can suddenly find themselves in a caring role, and research indicates that spending 10 hours or more a week as a carer can be a challenge to someone’s wellbeing.

As the subject of today’s debate and the contributions of many Members have made clear, early intervention is key to ensuring that the support and recovery process can be as successful as possible, for both the individual and those around them. In Scotland, the Scottish National party Government have made mental health one of their main priorities, and they will continue to place a high importance on mental health services. A key part of that prioritisation in relation to psychosis has been focusing on prevention and early intervention, particularly for infants, children and young people—it has already been said why that is important—who are the groups most likely to be impacted by the first episodes of psychosis.

Analysis undertaken by the King’s Fund recommended that

“Providing high-quality care to patients requires two things: first, that NHS trusts have the revenue to recruit and retain the correct mix of staff, and second that these staff exist and want to work for the NHS. Our analysis highlights that there are underlying issues with the supply and availability of key staffing groups in mental health. Investing in the skills, job satisfaction and wellbeing of our current workforce should be a priority, but we must also invest to ensure sufficient workforce capacity.”

In Scotland, the Government have attempted to address those important staffing and funding issues by increasing NHS mental health spending from £651 million in 2006-07 to £937 million in 2016-17, which has enabled the aim of placing an additional 800 mental health workers in key settings by 2022 to remain on course.

However, I am not trying to argue that there is no room for improvement in Scotland—clearly there is—and that everything is as good as it can be. Clearly, there is more that we could and should do. The Scottish Government are aware that there is room for improvement and their “Mental Health Strategy 2017-2027” has identified a number of areas where further improvements can be made. In particular, the strategy acknowledges that

“Working to improve mental health care is not just the preserve of the NHS or the health portfolio.”

Instead, improving mental health care requires improving a wide range of public services, such as education and justice, as well as addressing other important societal problems, such as poverty and employment, all of which have a relationship with mental health and a role to play in improving health outcomes.

Again, I commend the right hon. Member for North Norfolk, and I hope that the Minister, when she replies, will reflect on all the comments from the right hon. Gentleman and from others, and respond to the examples given from the frontline and to the asks that he and others from different parties have made today.

14:37

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

As has already been said, and I will echo it, it is a pleasure to speak in this debate with you in the Chair, Mrs Moon.

I also join others in congratulating the right hon. Member for North Norfolk (Norman Lamb) on securing this important debate, and on the way that he opened it. In addition, I thank my hon. Friends the Members for Stockton South (Dr Williams) and for Liverpool, Wavertree (Luciana Berger), as well as the hon. Member for Faversham and Mid Kent (Helen Whately), and the hon. Member for Airdrie and Shotts (Neil Gray), the Scottish National party spokesperson, for their contributions.

Experience of psychosis can be frightening for those affected by it, and for their families. The hon. Member for Faversham and Mid Kent talked about how debilitating and frightening that experience of psychosis can be.

A story that came to my attention was from a woman called Louise, who wrote a blog for Mind, the mental health charity. In that blog, she described her experience of psychosis. She said:

“While everyone was celebrating the Olympics, I was sectioned and spent a week in hospital. I had started to hear voices and was living in a very strange world. Being in hospital was a terrifying experience and I couldn’t understand why I was there or what had happened to me. I thought the nurses were trying to kill me and I refused medication. Eventually, I accepted the drugs and I did recover. I was released after a week and received treatment in the community.”

The interesting thing about that story and blog is that Louise goes on to say:

“Even a year on, I still find it hard to accept that this happened to me: an independent, strong career woman.”

I wanted to touch on this story because it demonstrates how psychosis affected somebody who was

“an independent, strong career woman”.

The story shows, even in those few words, how debilitating and frightening a first experience of psychosis can be.

Given that, and we have heard about it extensively in this debate, it is clear that early intervention and access to treatment for psychosis is a really vital issue: a moral issue, an emotional issue, a financial issue, and an issue of investment. It is about helping people when they are at their most vulnerable and supporting them to recover.

From this debate alone, the evidence is clear that early intervention can significantly improve a patient’s mental health recovery. That has been highlighted by all the contributions we have heard today. One of the most important benefits of early intervention—this has not yet been mentioned—is the finding in studies that it can reduce the risk of a young person who is experiencing psychosis attempting suicide. That is clearly an important thing. As we have heard, the care packages approved by NICE can also have an impact beyond the mental health recovery of a patient, impacting on their physical health and their chances of remaining in employment. Each part is vital. A key statistic comes from the mental health charity Rethink. It found that 35% of young people in early intervention in psychosis care are in employment, as compared with just 12% of young people in standard mental health care. The right hon. Member for North Norfolk discussed that.

The access and waiting time standard for early intervention in psychosis is not being met, partly because the official figures are for patients who have started treatment. As my hon. Friend the Member for Stockton South discussed, YoungMinds has stated that in January 2018, even though 722 patients had started treatment within two weeks of referral, 1,344 patients were still waiting to start treatment, and 727 of them had been waiting more than two weeks since referral. We are getting a partial picture from NHS England. We were all sent a briefing this morning that said that the access standards are being met, but they clearly are not if they are not taking account of patients who are waiting. The figures for January 2018 also showed that 401 patients had been waiting more than six weeks and still not started treatment, and 217 patients had been waiting for more than 12 weeks without starting treatment. As is familiar when we are looking at issues around mental health, it is the people waiting for long periods who we have to reflect on.

We have also heard about the regional variations. This has been an important debate for highlighting them. The right hon. Member for North Norfolk reported in detail on performance in the south region, which is the best-performing region. YoungMinds reported that the north of England is the worst-performing region. It has the lowest proportion of pathways completed within two weeks of referral.

It is clear that the Government have not invested in the staffing and resources needed to deliver the full package of NICE-evidenced support and treatments. It is clear that many local areas are facing challenges in implementing the early intervention in psychosis access and waiting time standard because of those substantial variations. What is the Minister’s assessment of how those challenges can be overcome? That is one of the most important questions from today.

We have had a briefing this morning from NHS England on the NICE-recommended interventions and the scoring matrix to be used, including on carer support. The hon. Member for Airdrie and Shotts mentioned carers, but I will discuss the subject a bit more fully. Psychosis can cause considerable distress not only for the person experiencing it, but for their family members who are carers. Why are the targets for carer support so low within that NICE evidence package? The figures that NHS England sent to us this morning show 38% of carer support taken up against targets of 25%, 50% and 75% for 2017-18. Take-up of support by fewer than four out of 10 carers is a poor achievement, given the impact that psychosis can have on unpaid carers.

I do not want to miss the opportunity to question the Government about the shameful way they have been treating carers in recent months. I have raised this before with the Minister, but the Government have abandoned their promised carers strategy after 6,500 carers gave up their time to contribute to the consultation. I know it is not her responsibility any more, but it was at the time, and she gave this reply to me in December. She said that,

“it is very important to pull together exactly what support there is at present and then respond to that, and we will publish our action plan in January”.—[Official Report, 7 December 2017; Vol. 632, c. 1239.]

It is now the middle of March, and we have no carers strategy and no carers action plan. Will the Minister raise the matter with her colleague the Minister for Care, the hon. Member for Gosport (Caroline Dinenage)? I suggest that the Government stop treating carers in this shabby way. In terms of this debate, will the Minister look at the low targets for carer support in the targets for early intervention in psychosis? Will she set a more ambitious target to provide higher levels of support to carers of people experiencing psychosis?

My hon. Friend the Member for Liverpool, Wavertree rightly raised the issue of perinatal mental ill health. As we have just had International Women’s Day, I wanted to refer to the 2003 women’s mental health strategy. It was a comprehensive strategy for women’s mental health issues from the previous Labour Government. I was glancing at the document on my iPad, and section 8.8 is about women with perinatal mental ill health. What has happened to the previous Labour Government’s comprehensive women’s mental health strategy? Does the Minister agree that perinatal mental ill health and other aspects of women’s mental ill health merit a gender-specific approach? Will the Government start to think about implementing that?

I want to briefly touch on one further area of concern—the lack of good-quality data. All of us involved in these debates on mental health have to spend a large amount of time asking parliamentary questions that do not get answers because the data are not there. The right hon. Member for North Norfolk is to be commended for his freedom of information survey. In 2016, Public Health England produced a report into data around psychosis and found what the Centre for Mental Health has described as “massive inequalities” in care, which is just what we have been hearing about in this debate. The report found that the proportion of people who have experienced psychosis who have a comprehensive care plan ranges from around 4% in some local areas to 94% in others. The evidence was there in 2016 that massive variations existed.

As the Centre for Mental Health put it:

“The report is as remarkable, however, for the data it cannot present as for what it can. There is very little information about the lives of people with psychosis and how far the services available help them to recover”.

The report was unable to give any information about the prescribing of anti-psychosis medication. Shockingly, it found that there were no known recent robust estimates of local numbers of people with psychosis. How can we deal with recruitment and staffing issues and the resources plan that Members have talked about if that is the state of the data?

I appreciate that there have been some improvements in mental health data in recent years, but it has been very slow progress and there are still many gaps. The Government talk about parity of esteem between mental and physical health, but it is hard to imagine a situation where we did not know the number of people in a local area being diagnosed with different cancers. That situation just would not arise. When I meet campaigners who work on mental health issues, the lack of readily available data is a constant and major concern.

The former Under-Secretary of State for Health, Nicola Blackwood, liked to talk about accountability through transparency. She said:

“One of the ways in which we are ensuring that money reaches the frontline is through driving accountability through transparency. Mental health services have lagged behind the rest of the NHS in terms of data and our being able to track performance. That is why the NHS will shortly publish the mental health dashboard, which will show not only performance but planned and actual spend on mental health.”—[Official Report, 27 October 2016; Vol. 616, c. 513.]

We still have that severe problem. Despite the publication of the mental health dashboard, we have a far less clear picture for mental health data than we do for physical health. We will never be able to plan, resource or move through these issues unless we do. What is the Minister doing, and planning to do, to make better data available across mental health services, particularly for psychosis?

I briefly return to Louise’s story. She was lucky. She said in her blog that she received good-quality treatment. Despite going through some difficult times, when she wrote the blog she was positive about her future, her relationships and her career. She was looking forward to starting a family. If we want to live in a society that has more positive stories like Louise’s, we have to begin to take a much more preventive approach to mental health. Getting the right support can lead to brighter days.

14:49

[The Parliamentary Under-Secretary of State for Health (Jackie Doyle-Price)]

It is fitting that you are in the Chair for this debate, Mrs Moon, given your interest in these matters. I am grateful to the right hon. Member for North Norfolk (Norman Lamb) for securing this debate. It is always with some mixed feelings that I face him across the Chamber, not least for the reasons that the hon. Member for Liverpool, Wavertree (Luciana Berger) pointed out. However, this has been an extremely well-informed debate on both sides. I have not disagreed with very much of what has been said. It is great to respond to such a passionate debate, among people who genuinely care about the issue.

The right hon. Gentleman is absolutely right that improving access and waiting times for early intervention in psychosis must be a top priority. I will set out some of the things that we are doing, which I hope will reassure him of the direction of travel. He is rightly holding us to account on where we are. I quite agree that it is not good enough, and assure all Members who have participated in today’s debate that I am not complacent in any way about any of this.

First, I want to set the context. The hon. Member for Liverpool, Wavertree often challenges me that we have not achieved parity of esteem. I do not pretend that we yet have, but we have embarked on a genuinely transformational programme to raise the treatment of mental health issues to parity with physical health. However, that is essentially a cultural change, which will take time.

I want to set out that we do have a plan, to reassure the hon. Member for Stockton South (Dr Williams). We have now got to the stage in that plan where we have to be a lot more outcome focused, and really get to the grit of what is happening on the ground. As the right hon. Member for North Norfolk set out, there is widespread regional variation. We have to ensure that we are not only increasing access, but doing so in a consistent way. There are lots of challenges in doing that. People have raised the issue of the workforce. Obviously, we cannot magic up a workforce overnight, but there are plans to address that issue.

The right hon. Gentleman mentioned the Secretary of State’s weekly meetings where we interrogate health officials. I assure him that we are reviewing each individual mental health trust to scrutinise their performance, and the Care Quality Commission advises us on a weekly basis about that performance. I assure him that it is improving—it has massively improved, in fact—but there is still more to be done.

When we bring in standards and targets, the risk is always that we build in perverse incentives, and that institutions can game the system. Until the data we collect is embedded properly, there will be some risk of that, but we have to be on it. I acknowledge the right hon. Gentleman’s pivotal role in introducing those standards, and all his work in Government to drive this agenda. Having inherited his mantle, I look forward to him continuing to challenge me to deliver what he set in train.

Given that time is short, I want to home in on what we are doing to implement the waiting time for early intervention. The latest data that we have shows that we are exceeding the target of 50% for access to early intervention in psychosis services, with more than 70% of patients starting treatment within two weeks in the most recent quarter. I know that the right hon. Gentleman has rightly raised concerns about his freedom of information request on mental health trusts. Only 29% of 49 trusts that returned the request could expressly confirm that they were able to deliver the full NICE-concordant packages of care to their patients. To reassure him, the moment at which he made his request was at the start of the programme.

[Norman Lamb]

It was this year.

[Jackie Doyle-Price]

It was measuring the kick-start of the programme. I would hope that if the right hon. Gentleman repeated that in a year’s time, he would get a very different picture. I assure him that we are making progress, but I invite him to continue his scrutiny, because sunlight is the best disinfectant, as I often say.

The hon. Member for Stockton South asked whether we had a plan. We do. The issue is that our plan is often based on inputs and structures. It is only when we get the kind of analysis that the right hon. Member for North Norfolk applies that we can see whether an input is really delivering the outcome that we want. Using our tools of leadership, we are now ensuring that we are holding everyone’s feet to the fire to deliver those standards, and that we are actually implementing the plan that we have in place.

To give some detail on what that plan is, we are investing an initial recurrent £40 million per annum for EIP in clinical commissioning group baselines. That will rise to £70 million recurrently by 2021. I have heard the message loud and clear from all hon. Members that they want to be reassured that that money is reaching the frontline. We will go away and think about how we can best illuminate that. We are funding clinical networks in all regions to provide clinical leadership for implementation, and to support local efforts across the country. Those networks provide a great deal of support on sharing best practice, training and innovation. Quite often, sharing best practice can be the best way of driving improvement.

We are investing in a national team to co-ordinate regional teams and to support the monitoring of delivery through the regions. We are developing the data set to illustrate how much progress we are making and how the interventions are being delivered to people. That will allow commissioners and providers to prioritise how they develop and improve their services in line with the National Institute for Health and Care Excellence guidance. What is especially welcome is that there is now a recognition of the link between mental and physical health in NHS England’s work, although we have to continue to build on that.

The hon. Member for Liverpool, Wavertree rightly raised the issue of support for new mums. I am glad to hear that she has visited mother and baby units, as I have. Seeing the reality of that treatment shows how important that service is. We continue to prioritise investment in tackling post-partum psychosis. We are investing £365 million into those services, and are currently looking at issuing contracts for four new mother and baby units. She asked me some specific questions about the number of beds. I will write to her on that, because although it might seem like a simple question, it is slightly more complex. As she has rightly highlighted, it is a very vulnerable time for new mothers. We must ensure that we have services available across the country, as we still have some geographical discrepancies in the level of provision. I highlight the fact that we are putting more support for new mums in the community, based around the whole ethos of early intervention. I think that is extremely important.

I could say an awful lot more, but I promise hon. Members that all those who spoke in today’s debate have given me many things to think about, and I will reflect on them. I look forward to debating all these measures regularly. It remains the Government’s priority to deliver a step change in how we provide services for poor mental health. That is a cultural change, and it will take time. That is why we have it as a five-year forward view. We will make the investment in additional staffing resources to deliver that step change, but I have no doubt that all hon. Members in this room will continue to hold my feet to the fire to make sure that we deliver.

14:57

[Norman Lamb]

I thank the Minister for that response. I ask her to write to all hon. Members who have taken part in today’s debate, responding to each of the issues that have been raised, so that we get clear answers on them all. I would highlight two points. First, regional implementation plans are critical in making things happen. Secondly, a point was made earlier about the sustainability and transformation partnerships. If a significant proportion of them simply do not include a commitment to meeting the standard by 2020, that is basically a recipe for disaster. That has to be addressed.

I thank the other two Front-Bench spokespeople for their really excellent contributions. The point that was made about suicide was absolutely right: we can reduce the suicide rate through this programme in particular. I also thank the three Back-Bench contributions, which were all really excellent and well informed, and covered such important ground. In the Minister’s response, I would like her to deal particularly with the YoungMinds point about the calculation of how long people are waiting. I would like her to address the issue about only a quarter of STPs making that commitment by 2020, and the issue of post-partum psychosis that was correctly raised by the hon. Member for Liverpool, Wavertree (Luciana Berger).

Finally, I join others in expressing my appreciation for some incredibly inspiring staff who work in these services, and who demonstrate how lives can be transformed through doing the right thing with the necessary investment. The plea to the Minister is to make sure that the investment and implementation are there to take advantage of this opportunity.

Question put and agreed to.

Resolved,

That this House has considered access and waiting time standards for early intervention in psychosis.

GKN: Proposed Takeover by Melrose

Thursday 15th March 2018 Westminster Hall

[Graham Stringer in the Chair]

13:15

[Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)]

I beg to move,

That this House has considered the proposed takeover of GKN by Melrose.

I start by saying what a pleasure it is to serve under your chairship, Mr Stringer. I think it appropriate to mention as a matter of interest that, as a trustee of the Industry and Parliament Trust, a few years ago I undertook a secondment at GKN and witnessed some of its activities throughout the world at first hand. It is also appropriate that I mention Professor David Bailey of Aston University for the work he has done on this issue, which in part informs my comments today. I know there are other speakers with specific constituency interests who want to participate in the debate, so I will try to leave plenty of time following my introduction for them to make appropriate and relevant contributions.

I sought this debate because of the strategic interest of the issue for British manufacturing, but also because of its wider implications for long-termism, investment and responsible capitalism. In a former incarnation, when I was Chair of the former Business, Innovation and Skills Committee, we held inquiries into the Kraft-Cadbury takeover and the proposed Pfizer-AstraZeneca takeover. They flushed out many of the relevant issues. They are now even more relevant and are highlighted by this proposed takeover. Although GKN may be a rather different sort of manufacturer from Kraft and Cadbury, or Pfizer and AstraZeneca, the issues are very similar.

Following the deliberations of the Select Committee on those issues and its recommendations, there was an enhancement of the takeover code, particularly in the context of post-offer undertakings, which arose from Kraft reneging on the commitments it had made to Cadbury during the course of negotiations. I am pleased to say that that issue was highlighted in the inquiry by my hon. Friend the Member for Leeds West (Rachel Reeves) on this particular takeover. I note that my hon. Friend commented this morning that Melrose, in the context of this takeover, has refused to commit itself to the sort of post-offer undertakings that would be legally binding and potentially give reassurance to GKN shareholders.

[Mr Bob Seely (Isle of Wight) (Con)]

Does the hon. Gentleman agree that in many cases Melrose aims to own businesses for only between three and five years, and during that time seeks to maximise shareholder value, selling on the parts of those businesses that it sees as underperforming, sometimes without regard to the long-term benefit of the business and its individual plants? Therefore, a takeover by Melrose may mean a break-up of GKN. Does he share my concerns and those of others like me, who are fearful for the GKN plants in their constituencies? There is one in the Isle of Wight.

[Graham Stringer (in the Chair)]

Order. I would remind Members that interventions should be brief.

[Mr Bailey]

The hon. Gentleman has put his finger on an issue that I will develop at some length during my speech. He is absolutely correct.

Perhaps I should state that, from a philosophical or ideological point of view, I am not anti-private sector. I am not anti-City. I recognise that globalisation is a potential force for good, even though it does throw up some considerable challenges and needs to be managed. I feel, however, that the role of Government must be to ensure that where vital national interests are at stake, the private sector is regulated in such a way that those interests prevail over what are often the short-term or illusory interests of the shareholders involved or the myriad City professionals and advisers that tend to make a lot of money from takeover bids. Some of the issues that arise from this proposed takeover bid are specific to GKN and Melrose, but others throw up broader, national issues.

GKN is a company of enormous strategic importance to the British economy. In 2015, it made sales of more than £16 billion worldwide and contributed £1.36 billion to our economy. It is one of the major—perhaps the major—tier 1 providers within the automotive and aerospace industries.

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

My hon. Friend has brought a timely debate. I have worked in defence industries. The Secretary of State has got to look at this in the context of the national interest, because the real danger is that the Americans will hive it off piece by piece. The hon. Member for Isle of Wight (Mr Seely) is right when he says that Melrose only keeps businesses for about five years, makes a profit for shareholders and is gone. This is probably one of the last bastions of Britain’s independent defence industries. More importantly, there are 6,000 jobs at stake. No doubt Melrose has its eye on the pension scheme as well—most of them do.

[Mr Bailey]

My hon. Friend anticipates some of the points in my speech. I agree with him completely.

GKN holds the position as one of the world’s greatest tier 1 providers in part because of the number of portfolios it holds worldwide with other joint venture companies, as well as with British companies, but also because of its research, development and technological advances, particularly in the automotive and aerospace industries. The UK aerospace sector is the largest in Europe, second globally to the USA. It supports more than 210,000 well-paid jobs in this country and delivers £29 billion in exports, generating £32 billion in turnover each year. GKN, as the only large tier 1 supplier, has a strategic role in the growth of the sector and, as I said earlier, it makes a total contribution to the UK economy of more than £1.3 billion.

GKN’s identity as a sector leader is largely based on the large amount it invests into research, development and technological advances. The distinctive focus on research has for decades been the cornerstone of the company. By its very nature, research and development involves long-term investment projects. The benefits of such programmes are often enjoyed only decades or even longer after the investment has started.

Typically, the motor industry has a product cycle of seven to 10 years, but at the moment major car manufacturers are looking for long-term partners to invest in future generations of electric vehicles. Because of its long-standing association with those companies, GKN is currently well placed to be a partner in such ventures. The aerospace sector has a product cycle of 20 to 40 years, again highlighting the importance of a company investing long term with the companies it serves. Since 2000 GKN has invested more than £561 million. That has created long-term, well-paid, highly skilled jobs that are of particular benefit to our regional as well as our national economies.

[Rachel Maclean (Redditch) (Con)]

I agree with the speech the hon. Gentleman is making and his excellent points. Will he touch on the issue of the productivity gap between the south-east and the midlands? We are midlands MPs, so is he concerned about that in relation to the takeover?

[Mr Bailey]

Absolutely. The hon. Lady puts her finger on a very important point. Productivity in the motor and aerospace industries is way ahead in manufacturing overall, and in other types of business as well. Anything that damages such industries will damage the level of productivity in our economy, which we all know is a matter of considerable concern.

GKN not only invests in research and development in its own companies, but partners universities up and down the country—Leeds, Manchester, Warwick, Nottingham and Sheffield, for instance—again helping to underpin regional economies, driving research excellence and giving students the level of skills that they need and an involvement in manufacturing that is absolutely crucial for developing our future skills base. As the hon. Member for Isle of Wight (Mr Seely) mentioned, the Melrose business model appears to be fundamentally incompatible with that approach.

I was chided by the Melrose chief executive for calling Melrose a hedge fund company. It says it is not; it says it is a turnaround company. In the Business, Innovation and Skills Committee it was called an asset-stripping company. Whatever we call it, it has a short-term strategy reminiscent of the way in which hedge funds work. It aims to buy and sell companies within a window of between three and five years. Despite protestations that it does keep companies for the longer term, one example that must be considered is that of Brush of Loughborough, a UK company that makes gas turbines. It was taken over by Melrose 10 years ago and is failing. Melrose has been unable to sell it on in its desired turnaround window because of the huge structural change in the sector owing to the move away from fossil fuels. Melrose has failed to invest in development to mitigate the changes and save employment within the company. It has already halved its workforce and has recently announced another 270 job cuts.

Although Melrose has invested £230 million in research and development in various companies over the past five years, the significant thing is that that is less than it paid its top 20 executives in the past year alone. That does not seem to be indicative of a company that is committed and wedded to long-term investment in research and development.

Many Members will have seen the announcement from Tom Williams of Airbus. The Financial Times has today published an interview with Tom Williams, the chief executive of Airbus, which is one of GKN’s biggest customers. He said it would be “practically impossible” to give new work to the engineering group if Melrose succeeded in its hostile bid. He cited the lack of “strategic vision” and the lack of long-term investment owing to the short-term ownership model. We could not detect a more telling intervention and substantiation of the point being made. We must remember that Airbus is only one customer of GKN, but Airbus’s public statement sends a signal to many other strategic customers of GKN.

Another cause for concern is the relative size of the companies. Last year alone GKN had revenue in excess of £10 billion, compared with just over £1 billion at Melrose, which proposes to finance its bid by borrowing £3.5 billion.

In addition, GKN employs 60,000 people across 30 countries, a level of personnel management that Melrose has no comparable experience of. As part of its takeover bid, Melrose has revealed plans to sack the entire board of GKN. Melrose as a company would double in size, but with no commitments to further capacity and an absence of the management expertise that has historically been part of GKN. Furthermore, Melrose has never taken over a company that specialises in aerospace manufacturing, which is perhaps one of the most concerning issues of all.

GKN’s prominence in the aerospace sector means it has a unique stake in the maintenance of our national security. As a leading world tier 1 supplier, it operates on a lot of UK defence platforms. As its order book with the Ministry of Defence is relatively small, Melrose has claimed that that issue is not significant. It ignores the fact that many of GKN’s customers are foreign companies that provide defence equipment that is subsequently procured by this country, so there is a much greater strategic involvement than the figures quoted by Melrose suggest.

GKN’s military aerospace involvement includes Lockheed Martin, Lightning, Raptor, Boeing, Eagle, Hornet, Harrier II, Eurofighter, Typhoon, Panavia, Tornado, Saab, Gripen and the new B-21 engine—a huge range of engines and vital components in a vast range of our defence components and needs for the future. Significantly, our own Defence Secretary felt the need to raise this issue with the Department as he no doubt responds to concerns that lie within the industry. I hope the Minister will refer to that when he sums up.

The US Government are highly likely to review any takeover via their Committee on Foreign Investment. The UK has a clear interest and should do the same. The public interest test applies under the national security element of section 58 of the Enterprise Act 2002, and the UK Government have the power to consider whether the takeover is in the public interest.

[Mr Cunningham]

Earlier, I mentioned the fact that GKN is one of the few companies that now gives Britain its independence in defence terms. It has been known for years—and if we think about it, it is a matter of the national interest—that, for example, Pratt & Whitney has always been after Rolls-Royce. That gives an indication of what is likely to happen at GKN if Melrose takes it over and asset-strips it. American companies will come in, and we will no longer have an independent role to play in manufacturing our own defence equipment.

[Mr Bailey]

My hon. Friend anticipates, with great foresight, some of the potential developments if the takeover were allowed to happen.

I believe that there are broader issues, however. The GKN takeover is a case that goes well beyond defence. It is relevant to our productivity, as the hon. Member for Redditch (Rachel Maclean) said, to our economy and research capabilities, and to the jobs and pensions of about 6,000 people in the UK. I am not here to argue that GKN is a perfect company and perfectly managed—that issue is widely acknowledged; but in view of the contribution that it makes to our industry as a whole, the highly paid and highly skilled jobs that it provides, its innovative research-led developments in key sectors of the economy and its commitment to maintaining a strong manufacturing industry in the UK, its future development needs to be carefully thought through, balancing the interests of shareholders with the vast number of other stakeholders involved.

Neither the takeover, nor a hastily contrived reorganisation in response to it, is the best way to deal with the problems. A solution centred on preserving shareholder value at the expense of all else would be disastrous for regions, such as the west midlands, that depend on manufacturing, and for productivity and the economy. The far-reaching implications of the proposed bid should prompt the Secretary of State to look at widening his powers of intervention on takeovers to include broader considerations of public interest. I appreciate that it was a Labour Government who withdrew that consideration, in the Enterprise Act 2002, but since then the global nature of the world economy has changed rapidly. Welcome adjustments were made to the takeover code relating to post-offer undertakings following the Kraft-Cadbury takeover. However, it is time to re-examine the situation, and to seek a more robust set of criteria that acknowledge the integrated investment and research-led nature of the 21st-century global economy, to ensure that the globalisation that benefits many areas does not decimate others. That could be done by broadening the criteria for defining the public interest, from the existing four, by increasing the percentage of shareholders who have to vote in favour of a takeover, or in other ways. It is time that the question was re-examined, to get a more robust set of criteria, which would preserve vital national interests.

In answer to a question on 7 February, the Prime Minister said at column 1494 that she would act in the “national interest”; and in August 2016 she launched her Cabinet Committee focusing on delivering one of her Government’s top three priorities—an economy that works for everyone, with a strong industrial strategy at its heart. The case of the GKN takeover provides the Prime Minister with a chance to prove the strength of her commitment to her self-defined mission to make Britain a country that works for all.

[Several hon. Members rose—]

[Graham Stringer (in the Chair)]

Order. Five Back-Bench Members want to speak, and the arithmetic is straightforward. I intend to call the Scottish National party spokesperson at 4 o’clock, so I hope that people will respect that time.

15:19

[Rachel Maclean (Redditch) (Con)]

It is a pleasure to speak under your chairmanship, Mr Stringer. I will of course stick to the timing, but if I stray over, please do not hesitate to call me to order. It is a great pleasure to follow the hon. Member for West Bromwich West (Mr Bailey). I heartily congratulate him on securing this extremely important debate. I agree with virtually everything he said, and it is a pleasure to have that experience about a speech made from across the Chamber. I see other midlands MPs in their places; we have many common interests in this important matter.

GKN has a 250-year history and has played a significant part in the manufacturing heritage of the midlands for many years, since it was established as an ironworks in 1759. In Redditch we are proud to host the global headquarters of that multinational business. As the local MP, I have engaged with it through visits and through discussions of how it will continue to work proactively in the local community, of which it is a great supporter. That is a responsible approach and GKN is leading by example.

Unfortunately, when GKN announced its results in 2017, although the latest annual sales figures were up, its trading margins had started to fall. It was evidently vulnerable and it set out to launch a new strategy to boost the company. Once it became clear to me that GKN was under threat of a hostile takeover, I spoke without delay to the company bosses and was told in no uncertain terms that all 260 employees in Redditch, many of whom are my constituents, would lose their jobs if Melrose were to be successful in its takeover. It is for those 260 people that I speak today. As the hon. Member for West Bromwich West has said, they are among a small number around the world. I welcome the Government’s recent move to strengthen the takeover rules, following the report from the Takeover Panel. It is welcome, and is in line with the Prime Minister’s manifesto commitments. I ask the Minister to update us on the consultations and proposals. My constituents and GKN employees would welcome further clarity.

The hon. Member for West Bromwich West, who spoke so well, covered most of the points that I wanted to make, and I shall confine my remarks to a few key areas. I agree that the takeover appears to be opportunistic, and there is great concern that the offer would undervalue GKN’s business culture, which it fought hard to build up for many years. GKN has invested heavily in research and development expenditure, skills and engineering jobs, all of which are badly needed in the UK, particularly in the midlands. Its work and portfolio have been built up with years of experience, which are not matched in Melrose. We in the midlands are proud of our record—our heritage—of making things.

GKN may have lost its way, up to a point, in recent years. Perhaps it is not performing to the full extent of its capability, but it has a focus on a long-term business model. That is a welcome contrast to the short-termism of Melrose, which is not seen as a sustainable long-term investor in the best interest of the company. Indeed, GKN’s former CEO, Nigel Stein, resisted splitting up the firm because he felt that the expanding aerospace business provided a degree of security against the typically cyclical nature of its auto side. It made sense to grow, given the increasing overlap of aerospace and automotive, and the fact that a bigger business is better able to resist takeovers—witness what happened to Cadbury after it separated from Schweppes.

I have written to the Secretary of State and have met him to put those concerns to him. I fully understand that, as he has explained to me, he is unable to comment directly on the matter, owing to the quasi-judicial nature of his role. I understand that any comments that he made could be construed as affecting the course of the takeover and could undermine and invalidate it. However, I am calling on the Minister who is responding to this debate to provide any further clarity he can. The Business, Energy and Industrial Strategy Committee, led by its excellent Chair, the hon. Member for Leeds West (Rachel Reeves), is looking at the matter and would, I am sure, welcome clarity. I see that a fellow Committee member, the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry), is present for the debate. It was interesting today when GKN’s biggest customer announced its view. I believe it is quite rare for not only a customer, but the board of pension trustees and the entire board of directors to reject a bid in that way.

I want to touch on one matter that I believe is in the takeover code, which is that a company that is going to take over a company must provide assurances as to what it will do. Melrose has tried to provide assurances to our Select Committee and in the public arena, and it has sent letters to me—I do not know whether the other members have received them. It has pledged to keep GKN’s headquarters in the UK and maintain the same levels of research and development funding, but we do not know what those pledges are based on and what is behind them. How can we be certain that they will be adhered to and delivered? That is a matter of great concern to GKN and people in Redditch. Since GKN’s sale of its Driveline business to Dana, there has been a lot of turbulence inside the company. A number of issues are affecting GKN employees in Redditch and are causing them to worry.

In Melrose’s defence, it has said that it is a people-focused company with an outstanding track record on pension schemes, and it has indicated that GKN’s current schemes will be safe. It has said that it invests more in R&D than GKN does, and that its actions are in line with the Government’s industrial strategy. It has said all those things—I am putting them on the record to be fair to it—but I want to see more evidence of that because the weight of evidence is not currently in its favour. We must find a balance between a short-term cash injection and a long-term strategic overhaul, and it must be managed by those with knowledge of and expertise in this industry.

I believe, as the hon. Member for West Bromwich West said, that the Government are responsible for supporting the growth and productivity of this sector and for creating the right business environment. That would have so many benefits for our economy in the midlands, for our productivity and for the whole skills piece. We are encouraging young people in our communities to set out a path for themselves in the fantastic science, technology, engineering and maths subjects. We have skills gaps in those sectors in our country, including in the midlands. GKN is a great example of a company that has brought on young people and promoted such careers, but I fear for the future of that.

The evidence in front of me does not convince me that this takeover bid is in the best interests of the company, the country’s long-term industrial strategy and the shareholders. There are important questions to be answered about how we define our national interest and defence.

15:32

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

I thank my hon. Friend the Member for West Bromwich West (Mr Bailey) for securing this important debate. I echo the serious concerns that he and the hon. Member for Redditch (Rachel Maclean) raised about the bid for the proposed takeover by Melrose of GKN. GKN employees raised similar concerns when I recently met them at a lobby organised by Unite the union just a couple of weeks ago, and they are echoed in my constituency, where GKN Aerospace employs 220 people and is a world leader in commercial and military flight-deck transparencies. It provides toughened glass for flight-deck windows, and specialist safety glass to more than 50 programmes. There is no better illustration of why this takeover bid has national security implications than GKN Aerospace’s military involvement at Kings Norton.

I do not need to remind the Minister of the importance of the UK’s aerospace industry. That is why we need to take the concerns raised by the industry seriously. ADS, the leading organisation representing the aerospace sector, warned that what happens to GKN is of critical importance to the wider sector. My hon. Friend the Member for West Bromwich West rightly mentioned the unprecedented intervention of the chief operating operator of Airbus, who said yesterday:

“It would be practically impossible for us to give any new work to GKN under such an ownership model when we don’t know who will be the long-term investor.”

GKN is also a key strategic player in the automotive sector. Driveline does pioneering work on components for the ultra-low-emission vehicles of the future. I am aware that GKN’s management is proposing to split off that part of the company through the merger of Driveline and the United States firm Dana. On the positive side, there is the prospect that that will create an engineering powerhouse in the automotive sector on a global scale. I very much hope it achieves that prospect, but I do not want to be starry-eyed about it. Ministers should seek assurances from GKN and Dana about the long-term commitment of the new merged company to the UK, including on jobs and our research and development base.

Also, if GKN Aerospace is left as a stand-alone company, I endorse west midlands industry analyst Professor David Bailey’s call—my hon. Friend is right to pay tribute to his work on this issue—for the Government to consider taking a golden share to protect the public interest in the company for the long term.

None of that makes me any warmer about the Melrose alternative. Melrose claims—the hon. Member for Redditch mentioned this—that it will

“return GKN to be an engineering and manufacturing powerhouse”,

but its track record of taking over and selling on companies does not give me confidence that its takeover bid is in the interests of the long-term future of GKN or British industry, whether in the aerospace or automotive sectors. That is why there is such cross-party opposition to the takeover bid in this House. I am pleased that Birmingham City Council’s leader, Councillor Ian Ward, and its cabinet member for jobs and skills, Councillor Brett O’Reilly, have warned about the consequences of the Melrose bid for the industrial base of Birmingham and the wider west midlands. I am pleased that they have been joined by the West Midlands Mayor, who has added his voice on the subject.

Industry analysts have observed that such a takeover bid would not be allowed to go ahead in France or Germany. That is yet another reminder, if we needed one, of why the UK’s takeover laws need urgent reform, including the public interest test, against which takeovers are assessed, and the majorities needed to approve takeovers. Why cannot we require a majority of 75% in this country, as Germany does? We must ensure that institutions whose interests are intrinsically short-term, such as hedge funds, are not able to decide on issues that affect the long-term future of key, strategic companies in our economy.

That is for the future, but GKN’s extensive role in the UK defence industry indicates, as my hon. Friend the Member for West Bromwich West said, that this takeover bid raises national security issues, which means that the Government already have the grounds and the responsibility to intervene under section 58 of the Enterprise Act 2002. No doubt the Minister will say that, because the Secretary of State has a quasi-judicial role on these matters, he is prevented from saying much today, but I put this to him: it is not what Ministers say about this takeover bid that is important; it is what they do. They should intervene and block it.

15:38

[Mhairi Black (Paisley and Renfrewshire South) (SNP)]

I congratulate the hon. Member for West Bromwich West (Mr Bailey) on securing this debate. I echo many of the comments that have been made. It is clear that there is a consensus that GKN is at the cutting edge of the UK Government’s industrial strategy and plays a key part in that. We have heard that it is involved in sensitive programmes, and that it provides technology for a US defence company. I say that because the Royal Air Force has ordered 138 of the F-35B fighter jets made by that company. That is worth noting. The lifespan of some of those products could be up to 50 years from initial development, and that requires continuous maintenance. We already know that the London-based company Melrose has a record of buying companies, holding on to them for a few years and then stripping them. Given the nature of the technologies we are talking about, it makes no national sense to allow a hostile takeover to happen.

GKN operates in more than 30 countries and has 58,000 employees, including 6,000 in the UK. Even the workers are expressing concerns that a takeover by Melrose could leave the Government’s industrial strategy in tatters and see GKN sold off piecemeal, bit by bit, with jobs cut or shipped abroad. The warnings could not be clearer. Even the Secretary of State for Defence recently said before the Select Committee that he felt it would have been remiss of him to fail to express concerns. The merger could see parts of the business that provide components for military equipment falling below standards. The Committee on Foreign Investment in the United States, a US regulator relevant to military implications, must give approval, but GKN has warned that it does not believe that Melrose will be able to obtain that approval within the required time. As the hon. Member for Birmingham, Northfield (Richard Burden) said, we are talking about a potential and unnecessary risk to national security.

Under the Enterprise Act 2002, a number of authorities have the statutory power to intervene in takeovers. The power can, rightly, be exercised only on certain specified grounds. There are three main grounds on which certain authorities can stop takeovers. The Secretary of State for Business, Energy and Industrial Strategy may intervene on the grounds of national security and of financial stability. We have already established that national security is an issue, or at least an argument, but there is also a clear argument for financial stability.

As if the scale of what is at stake were not argument enough to act, flinging in the political chaos and uncertainty surrounding our political future due to Brexit ensures that the stable continuation of a major employer is more important than ever. We only need to look at the pensions aspect. The chief executive of the Pensions Regulator wrote to the Work and Pensions Committee to express grave concerns about the GKN pension scheme. We are trying to promote pensions and to convince people to ensure that they are secure in later life, because we recognise there is ticking time bomb, which could be disastrous, but at the end of December the GKN pensions deficit officially stood at £700 million. GKN warned that Melrose’s intention to ramp up the debt would lower its ability to support the pension scheme. That seems to be totally counterproductive, given the language continually used about pensions in particular.

Surely, before any progress can be allowed, Melrose must submit its takeover plans to the Pensions Regulator to show that the security of the retirement scheme will remain intact, and that is even without all the other arguments I have given. The reality is that the Government have the power, the reasons and the support to act. The question is, do they have the will?

15:43

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

It is a pleasure to serve under your chairmanship, Mr Stringer.

Guest, Keen and Nettlefolds has a ring to it, and GKN is an iconic engineering company, a British success story with a history stretching back over 259 years, founded in south Wales. Three years ago, I remember a man who had worked 44 years for GKN calling it “as British as the royal family”.

Here in Britain, GKN employs 6,000 people across major sites in Filton near Bristol, Birmingham and, in particular, the Isle of Wight. It now employs 58,000 people worldwide, with companies and joint ventures in more than 30 countries. Crucially, GKN undertakes the largest portion of its research and development work in the UK, with the majority of aerospace R&D taking place in Filton and automotive R&D in Abingdon.

I welcome the all-party approach to this issue, and the hon. Member for Redditch (Rachel Maclean) is right to say that we talk with pride about GKN, its workers and what it does—so do I. The Driveline factory is in my constituency—800 excellent men and women who serve the industry and the nation well.

The takeover puts a great British engineering icon into jeopardy, because of not only the history of Melrose but what is happening with some of GKN’s major customers. Reference has already been made to the revelations made only yesterday in the Financial Times about what Airbus has made abundantly clear. In the words of its chief operating officer:

“The nature of our industry is one that requires a commitment to long-term investment and strategic vision...The industry does not lend itself to shorter-term financial investment which naturally reduces R&D budgets and limits vital innovation.”

As my hon. Friend the Member for West Bromwich West (Mr Bailey) rightly said, typically we are talking about development lines and R&D strategies that stretch over 20 or 30 years, and the Airbus chief operating officer went on:

“It would be practically impossible for us to give any new work to GKN under such an ownership model when we don’t know who will be the long-term investor.”

He is right and—I can say this with confidence—others will follow in the days to come.

As the hon. Member for Isle of Wight (Mr Seely) said earlier, Melrose has a chequered past with regards to the companies it has owned. For example, Melrose owned Dynacast from 2005 to 2011, during which time it moved much production overseas to—in its words—“cheaper countries”. Melrose closed its Alcester site the same year that it took over the company and had no UK presence between 2005 and 2008. In July 2008 it acquired the FKI group, of which manufacturing firm Brush is part. Melrose began selling off parts of the group in 2009 and sold off about 15 businesses between 2009 and 2014. It implemented severe job cuts at the Brush plant in Loughborough, taking the number of employees down from 1,200 to 600, with a further 270 redundancies announced this year, again moving production overseas and hollowing out a once great company.

One of the workforce’s big concerns, which I share, is pensions. As the hon. Member for Redditch said, like many UK companies GKN has a significant pensions deficit that it is working hard to reduce. By agreement with its workforce and their trade unions, in 2017 the GKN group pension scheme was closed to future accruals. A contribution of £250 million was paid into the scheme. Crucially, on assessment of the company’s pensions covenant, the scheme was found to be the “high end of good”. No concern was expressed about GKN’s ability to deal with the pensions problem.

Significantly, however, Melrose has not given the guarantee it was asked for. On the contrary, its whole approach has been to increase debt significantly. The consequences of that will be to weaken the strength of the covenant and to put at risk the pension scheme. In the aftermath of tragedies such as Carillion and British Steel, the last thing we need at an iconic British engineering company is such a problem befalling the workers of GKN.

To turn to the defence issue, GKN Aerospace has 52 manufacturing locations across 14 countries and turnover of £3.5 billion, much of it defence work. Reference has been made to GKN Aerospace and what it does here and abroad. It supports the British armed forces, such as with the Typhoon, the F-35, the P-8, the A400M, the Chinook, the Apache and the MQ-9. Equally, many of the other platforms that GKN Aerospace is a part of support the armed forces of NATO allies. GKN is a strategic supplier of defence platforms, making canopies for the Typhoon, for example, or being a strategic supplier for the F-35. In factories all over Britain, its role in support of our armed forces and that of our NATO allies is critical.

In a former life, I was chairman of the defence unions and worked closely with the Ministry of Defence. Time and again at events and at first hand, I saw GKN on the ground with that intimate relationship with the Ministry of Defence and our allies. That is why I say to the Minister that he has the power to intervene. The Secretary of State has the power to intervene under section 52 of the Enterprise Act 2002.

Another reason I think this issue is important is that one of the last battles I fought in my former life was the battle against Kraft’s takeover of Cadbury. No one in Britain wanted it. Cadbury was a profitable, iconic British company that was taken over by a debt-laden American multinational. Guarantees were given, but the first guarantee about the Bristol plant was broken and it was closed. Sadly and inevitably, that led to a debate about tightening up the rules on corporate takeovers.

The Government have made some faltering progress in the right direction, but they have gone nowhere near far enough. The Prime Minister has committed to look at the rules and to change them so that we do not have such bids ever again succeeding. Having said that, and however important the future debate is on general takeover regimes, the Government have the powers here and now. They have the grounds. If there is a will, there is a way. I earnestly hope that the Government will respond to the very substantial all-party concern that has been expressed in this place.

I feel a particular passion because I used to represent the people concerned. I have been into the GKN Driveline plant and others; I have seen men and women who are the salt of the earth, with 25, 30, 35 or 40 years’ service, following their mums and dads. I have been into their homes; they have GKN awards and certificates up on their walls. They are proud of who they are and what they do. This country is proud of GKN, and the last thing we want to see is for GKN, that great British engineering icon, to become history.

15:51

[Wayne David (Caerphilly) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Stringer. I congratulate my hon. Friend the Member for West Bromwich West (Mr Bailey) on securing this vital debate. As has already been said, GKN has a long and proud history dating back to 1759, when Guest established the ironworks in Dowlais, in Merthyr, south Wales. I suggest that there is no better pedigree than that. Today, the company has developed and expanded so that it operates in 30 countries and employs 6,000 people in the United Kingdom, many in well-paid jobs.

Let us be clear about the nature and the intent of this takeover bid. Melrose is a hedge fund operator, despite what it might say, and an asset stripper, despite its protestations. As other hon. Members have said, that was clearly laid bare by the statement made by Airbus, which has been widely reported and quoted today. The response of the GKN chairman, Mike Turner is interesting. He said:

“The comments from Airbus that stress the need for long-term investment and strategic vision in our industry emphasise our firmly held belief that Melrose is not an appropriate owner of GKN. Its management lacks the relevant experience and its short-term business model”—

he is being very polite—

“is inappropriate for GKN’s customers and investors.”

That sets out the situation very clearly and succinctly.

I want to focus on the implications for the defence sector in this country. There is a very genuine and real concern about the defence implications of this takeover. GKN is a major defence partner to Boeing and to Airbus, and it supplies and maintains UK defence equipment for the RAF and the Army. Importantly, GKN is very involved with the Typhoon aircraft production; the Chinook and Black Hawk helicopter programmes; the very important F-35 joint fighter aircraft programme, which is coming on-stream now in this country; and the A400M aircraft produced by Airbus. If the GKN takeover comes about, we are likely to see a big question mark over the nature of the successor company’s involvement. Make no mistake: Melrose’s track record shows clearly that it has no interest whatever and no expertise at all in anything related to defence. We are likely to see sell-offs of its defence interests, and that would have major defence implications for this country.

I welcome the Chair of the Defence Committee, the right hon. Member for New Forest East (Dr Lewis), to the debate. He has said that the takeover puts a question mark over the ownership of intellectual property. If that section of GKN is sold to another firm that is located in another country, the intellectual property goes with it. Who knows what country it may end up in? More than theoretically, it is quite possible that some of the intellectual property rights will go to countries that are not friendly to the United Kingdom.

The Secretary of State for Business, Energy and Industrial Strategy has a moral reason to be very concerned about the situation, and he has the practical means to intervene. As has been said, under section 42 of the 2002 Act, he can intervene on the grounds of public interest and in section 58 of the Act, public interest in these circumstances can be defined as placing in jeopardy our national security. If the Secretary of State chooses not to intervene now, it may be too late to ever intervene again. The Secretary of State can intervene only if the turnover of a business that is threatened by takeover is greater than £75 million, or the business has more than 25% of market share. It is possible that once the sale of the company takes place, the sale of the company’s assets through downsizing will mean that the Government do not have the legal base to intervene to protect our national interest. That is why I believe that the Government must act.

The Secretary of State for Defence indicated in his evidence to the Defence Committee that he is very concerned about the situation. On 6 March he put his concerns in writing to the shadow Secretary of State for Defence, my hon. Friend the Member for Llanelli (Nia Griffith). He said:

“Both GKN’s existing Board and Melrose have publicly indicated their intentions to restructure, and potentially sell, some elements of the business. I recognise that this will be unsettling for staff who might be affected but the impact of either of these proposals on defence and aerospace jobs is currently unclear.”

It may be unclear to him, but it is not unclear to many others.

I urgently ask that the concerns are delved into in some detail and depth as then they will be apparent for all to see. I hope the Government will bite the bullet and necessarily intervene, to stop this hugely damaging takeover.

15:58

[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

It is a pleasure to serve under your chairmanship, Mr Stringer. I congratulate the hon. Member for West Bromwich West (Mr Bailey) on securing this important debate on a strategic issue. He raised the long-term aspects of GKN ownership, and gave a warning about the short-term or illusory interest that might be shown towards shareholder gain. He also gave a warning about the relative sizes of the companies and reflected on GKN’s sheer breadth of manufacturing interest in aerospace and automotive.

The hon. Member for Redditch (Rachel Maclean) rightly raised concerns about possible local jobs losses due to the takeover; she indicated that it is very important that pensions protections should be put forward, and I will come back to that subject later in my speech.

It is certainly worth underlining the need to invest in young people and in the future by investing in science, technology, engineering and maths skills. It would be remiss of me not to say that that should very much include girls and young women. It should be noted that GKN has committed to young people and STEM subjects. The hon. Lady clearly is not convinced by the proposed takeover by Melrose.

The hon. Member for Birmingham, Northfield (Richard Burden) mentioned the range of assurances that are required about jobs and research and development, which I will come back to. He certainly seems to have no confidence in Melrose. He rightly raised the concern of other local politicians who are involved, including the council leaders and the Mayor. Importantly, he touched on the need for urgent reform of the takeover rules. Perhaps that needs to be looked at a bit more urgently. He also touched on the German model. We know that German manufacturing has been extraordinarily successful because it has been able to take a more long-term view and make long-term investments.

My hon. Friend the Member for Paisley and Renfrewshire South (Mhairi Black) got straight to the nub of the issue with what she said about the UK Government’s strategic positioning and industrial strategy. She rightly warned that without the proper resources and investment in manufacturing, the industrial strategy is very much at risk.

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Andrew Griffiths)]

On that point, let me reassure the hon. Gentleman that the Government are committed to supporting the sectors that he talks about. We are investing £1.95 billion in aerospace and £1 billion in automotive research.

[Drew Hendry]

I am grateful for the Minister’s intervention. It is good to know that that is the intention, but as hon. Members around the Chamber mentioned, that investment could be lost with GKN. Members will be interested to know what assurances he can give that that money will actually stay in the UK’s economy.

My hon. Friend the Member for Paisley and Renfrewshire South clearly pointed out the grounds on which the Minister could intervene—I understand that he has difficulties in terms of what he can say about national security and financial stability—and mentioned the uncertainties of Brexit as context for the need to ensure that investment and stability are maintained. Importantly, she also mentioned that the chief executive of the Pensions Regulator wrote to raise his concerns about the long-term prospects for GKN’s pension scheme.

The hon. Member for Birmingham, Erdington (Jack Dromey) rightly talked about workers in his constituency, Airbus’s warning about taking a short-term approach and the need for a long-term strategic vision. He gave dire warnings from history about the severe jobs cuts at Dynacast and the FKI group. He, too, mentioned the GKN pension deficit. I must say that I am not as assured as he is about the pension fund. Whichever company is in control—GKN or Melrose—must ensure that it is properly funded so that people do not lose out. He underlined the fact that the Government have the powers, should they choose to use them in this case, and rightly talked about his pride in GKN.

The hon. Member for Caerphilly (Wayne David) concentrated heavily on the fact that Melrose is trying to buy a major player in an industry in which it has no experience. He warned about the potential loss of defence and intellectual property, which the Minister should consider very carefully. His point that this may be the last chance to look at that was poignant, and it should be considered. Several hon. Members mentioned that the benefits of automotive and aerospace are realised over decades. A long-term approach is not only required but demanded by the people who will depend on the jobs, by the companies that will need the skills and by the public purse, and therefore the public services, which will be funded by the tax that is paid. Again, the Government should concentrate heavily on that.

I share the concerns expressed by Members around the Chamber about the rights of workers in these companies and their jobs, and about the fact that we should seek to maintain industrial and engineering capabilities, jobs and skills. I underline again the concerns that were raised about the pension scheme: any diminution of the company’s ability to pay pensions would be deeply troubling. I will not go over the points that other hon. Members made, but that is critical: people who have given their lifetimes to working in the industry should not be abandoned when the time comes for them to draw their pensions. GKN has pointed out that its pension fund has been driven down by Brexit and currency fluctuations. Hon. Members’ national security concerns must also be taken seriously, especially given the intervention on that subject by the Minister’s colleague, the Secretary of State for Defence. The Government must carefully consider all the contributions we have heard in deciding whether they will intervene.

16:07

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

It is a pleasure to serve under your chairmanship, Mr Stringer. I thank my hon. Friend the Member for West Bromwich West (Mr Bailey) for calling this important debate and acknowledge the many impressive contributions by Members on both sides of the Chamber. We heard that GKN is one of the world’s oldest and most prestigious engineering firms. As an engineer myself, I can imagine people’s pride at knowing they are following in such an illustrious tradition. I appreciate the pride of the hon. Member for Redditch (Rachel Maclean) and my hon. Friend the Member for Caerphilly (Wayne David) at having GKN in their constituencies, and that of other Members, too.

GKN is at the centre of the fourth industrial revolution, boasting of strengths in defence, aerospace, automotive, batteries and the internet of things. My hon. Friend the Member for West Bromwich West set out the significance of its economic contribution, and my hon. Friend the Member for Birmingham, Erdington (Jack Dromey) emphasised the significance of its investment in R&D in the United Kingdom. As the shadow Minister for industrial strategy and a chartered engineer, I believe that all those factors make GKN an important part of our future innovation economy. As my hon. Friends the Members for Birmingham, Northfield (Richard Burden) and for Caerphilly emphasised, it plays an important part in our national security, too.

Members on both sides of the Chamber critiqued the Melrose bid. Unite, which represents most GKN workers, has called the bid “predatory” and Melrose an “asset-stripper”. It calls for the Government to halt the bid, as does the Chair of the Business, Energy and Industrial Strategy Committee, my hon. Friend the Member for Leeds West (Rachel Reeves). Melrose contests that, but admits that it would cut GKN’s management, deliver a “fundamental” culture change, sell sections of the company and boost the firm’s profitability through what its CEO calls

“the catharsis of a change of control.”

It sounds like Melrose is an advocate of Schumpeterian creative destruction, but with little regard for what is destroyed or, indeed, created. In practical terms, that could mean the closure of sites and divisions across the UK, the loss of jobs, a threat to pensions, as we heard, and the disappearance of crucial engineering expertise.

As my hon. Friend the Member for Birmingham, Erdington emphasised, Melrose’s record does little to assuage those concerns. It does not make purchases for the long term. The biggest example is its stewardship of Brush Turbogenerators, bought as part of FKI in 2008. Since then, the firm has had five different managing directors, and just last month it announced that it would cut up to 270 jobs in Loughborough and shift production overseas, despite the fact that last year Melrose paid out bonuses worth £160 million to only four people. My hon. Friend the Member for Redcar (Anna Turley) remarked earlier this week that meeting representatives from Melrose was like “meeting neoliberalism in person.”

However troubling we might find Melrose’s practices, this is not about just one company; it is about how our economy works. The Secretary of State for Business, Energy and Industrial Strategy hosted and attended the first meeting of the University College London commission for mission-oriented innovation and industrial strategy, chaired by world-leading economist Mariana Mazzucato. In her new book, she argues that the “two faces of financialisation” are at the heart of capitalism’s fundamental failure. The first is the way in which the financial sector has stopped resourcing the real economy—making stuff. Instead of investing in companies that make stuff, finance is financing finance.

The second aspect is the financialisation of the real economy, with industry driven by short-term returns, which results in less reinvestment of profits and rising burdens of debt in a vicious cycle, which makes industry ever more driven by short-term considerations. Such finance is not neutral but changes the nature of what it finances. As we have seen in Melrose’s approach to managing Brush, its short-termism has led it to neglect the difficult, costly business of maintaining sunk assets such as factories or developing new technologies, such as those we heard about in the automotive sector. Melrose’s expenditure on R&D is proportionally less than a fifth of GKN’s.

Melrose’s track record indicates that it will focus on strategies such as offshoring jobs that neglect people and places but provide an immediate financial return. A Melrose takeover would therefore lead to the financialisation of GKN, placing UK jobs under threat and eroding our industrial base. That was very much the point made by Tom Williams, the chief operating officer of Airbus, when he said it would be practically impossible for his company to give new work to GKN after a Melrose takeover.

The debate is not about Melrose alone but about how our country’s economy works. As the Leader of the Opposition said last month at the EEF conference:

“The next Labour Government will be the first in 40 years to stand up for the real economy. We will take decisive action to make finance the servant of industry, not the masters of all.”

In the immediate term, as Members on both sides have said, there are powers that the Government can use to stop the Melrose takeover. When I mentioned that in the Chamber to the Secretary of State, he said, correctly, that according to the Enterprise Act 2002 he could intervene

“only in mergers that raise public interest concerns on the grounds of national security, financial stability or media plurality.”—[Official Report, 13 March 2018; Vol. 637, c. 711.]

As others, including Unite and the BEIS Committee have made clear, the proposed takeover raises national security concerns, given GKN’s close involvement with sensitive defence projects. While the Minister cannot answer in detail, will he answer in principle whether the Government believe that Melrose’s proposed takeover could raise public interest concerns on the grounds of national security? Will he explain what process the Government will go through in reaching a conclusion?

The Secretary of State also praised his Government’s corporate governance reforms, which

“have ensured that GKN had longer to prepare its defence, preventing the kind of smash and grab raid that Cadbury’s was subjected to under the previous Government”.—[Official Report, 13 March 2018; Vol. 637, c. 711.]

That has been mentioned in the debate. Kraft’s takeover of Cadbury in January 2010 did prompt changes to the takeover code in 2011 and further amendments to the takeover regime with the Enterprise and Regulatory Reform Act 2012, which set up the Competition and Markets Authority. I served on the Bill Committee, when Labour proposed amendments to strengthen the new CMA and broaden the scope of the public interest test. For example, one amendment would have allowed the Secretary of State to consider the effects of the proposed merger on the long-term competitiveness of the UK economy as part of the public interest test.

I sat and watched as the Government voted down amendment after amendment that would have provided them with a framework to act. Will the Government now explore and legislate for the expansion and broadening of the public interest test, which they failed to do six years ago? That would not be without precedent—for example, the financial stability clause, added in 2008 during the financial crisis. Can we tighten the financial stability test to include considerations of long-term financial viability, as suggested by the hon. Member for Paisley and Renfrewshire South (Mhairi Black)?

Only this morning, Unilever announced that it will relocate its headquarters from London to Rotterdam. One key factor in that decision was the greater protection afforded to the company by Dutch takeover law. Will the Government look at improving the protection offered by takeover rules to British companies?

Both Dana and Melrose have questions to answer with regard to the future of pension schemes that GKN is currently responsible for. Will the Minister explain what assessment has been made of the schemes and what assurances the Government have sought?

The Secretary of State talks of building an economy for the long term, just as his predecessor did. This is a litmus test for his industrial strategy. It cannot hold if time and time again our most successful and innovative companies are taken over and then taken apart. Investing in innovation is a long-term bet; Melrose is a short-term player. Do the Government have the will to build a high-skill, high-wage, high-productivity economy, or is casino capitalism what our future holds?

[Graham Stringer (in the Chair)]

Before I call the Minister, I ask him to leave three minutes at the end to allow Adrian Bailey to sum up.

16:18

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Andrew Griffiths)]

It is a great pleasure to serve under your chairmanship, Mr Stringer. I think that gives me nine minutes to cover the points and address the issues raised by hon. Members, so, to coin a phrase, I will crack on. I congratulate the hon. Member for West Bromwich West (Mr Bailey) not only on securing the debate but on the thoughtful, clear tone in which he made his contribution. He has no constituency interest but raises this issue because he cares passionately about the UK economy and our manufacturing industry in particular. I applaud him for that.

The context is important. The hon. Member for Newcastle upon Tyne Central (Chi Onwurah) said we want to be a nation of makers, and it is important to recognise that we have just seen the longest consecutive period of growth in manufacturing in the UK for 50 years. I am therefore pleased to report to the House that manufacturing is in rude health. The United Kingdom is a successful open economy and the Government’s industrial strategy, which has been discussed at length today, will build on our strengths and address our weaknesses to create a Britain fit for the future.

A key part of the UK’s dynamic economy is our mergers regime. Mergers and takeovers can bring benefits to both consumers and the UK economy. I can report to hon. Members that the UK has the third-highest foreign direct investment stock in the world, behind only the US and China. That investment means jobs in growing sectors and opportunities to develop skills, and it helps companies deliver products and services at competitive prices. Mergers and takeovers also provide important opportunities for companies to grow and innovate. Many of the UK’s most successful companies have grown through mergers and takeovers, both in the UK and abroad.

The UK’s merger regime is highly regarded the world over due to its design. The regime, based on transparent rules administered consistently by expert bodies, recognises that decisions are primarily a matter for the shareholders and restricts the role of Ministers to transactions that raise public interest concerns. As a result, the regime offers clarity for businesses and maintains investor confidence.

For example, the takeover code, administered by the independent Takeover Panel, provides a robust framework to ensure that takeovers of listed companies are conducted in an orderly manner with fair treatment of the shareholders. The Takeover Panel has repeatedly strengthened the code. Its most recent changes, which came into effect on 8 January 2018, require bidders to make earlier and fuller disclosure of takeover plans and to give companies subject to a bid more time to prepare their response—the question that the hon. Member for Newcastle upon Tyne Central raised earlier. Those changes have applied to the bid by Melrose.

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

I apologise for coming late to the debate. While what the Minister says is absolutely beyond question, does he accept that where the defence of the realm is concerned, certain other considerations must also apply?

[Andrew Griffiths]

I thank my right hon. Friend, who as always makes a salient and sensible contribution to the debate. I agree with him wholeheartedly that the defence of our nation is the most important point in any of these decisions.

As hon. Members have heard, the Enterprise Act 2002 grants Ministers statutory powers to intervene in mergers that give rise to public interest concerns only on the grounds of national security, financial stability or media plurality. The hon. Member for Paisley and Renfrewshire South (Mhairi Black) raised the issue of that financial stability. It is the financial stability of the country’s economy as a whole. This Government take very seriously our responsibility to protect national security in particular, and we are robust in assessing any possible public interest concerns and carefully considering when those powers should be exercised. If necessary, they will be exercised.

I appreciate that there has been much speculation about the potential use of those powers in this case. However, as we heard earlier, public interest interventions are quasi-judicial in nature. It is therefore important that Ministers act, and are seen to act, impartially, on the basis of an open mind and of the evidence available. For that reason, it is not appropriate for me to comment on their use in this individual case. As hon. Members might expect, my right hon. Friend the Secretary of State and I have taken a close interest in events. He has spoken to the chief executive officers of both GKN and Melrose to understand their intentions and to make it clear that he wants an open line with the companies, consistent with his potential statutory role in the process.

The bid, however, is primarily a commercial matter for the parties concerned, and we wait to see how things develop. GKN shareholders now have until 29 March to decide whether to accept the Melrose bid. It has become clear that, regardless of whether the takeover by Melrose is successful, GKN will not be the same company we know today. Beyond the potential sale of the Driveline, both GKN and Melrose have outlined plans to sell the powder metallurgy business and other non-core businesses. There remains the distinct possibility that, irrespective of which party ultimately controls GKN after the resolution of the bid, it will choose to sell all or parts of GKN’s current business to foreign companies.

On 13 March, Melrose wrote to the Business, Energy and Industrial Strategy Committee at its request, setting out the company’s position on pensions and post-offer undertakings. In addition to the conversations held between the Government and the parties involved, the hon. Member for Newcastle upon Tyne Central, who raised the question of Unite, will be pleased to know that the Secretary of State has been in close contact with the union.

I know that some hon. Members have concerns about GKN’s pension schemes. Individual cases are a matter for the independent Pensions Regulator, but the Government are aware that the parties are in discussions with the pension trustees, who have made their expectations clear. The hon. Member for West Bromwich West raised the issue of R&D investment; Melrose has told the Business, Energy and Industrial Strategy Committee that it supports R&D and will maintain the level of investment in R&D that GKN has spent in the past, which I think was 2.2% of sales between 2014 and 2016.

The hon. Gentleman also mentioned the question of how France and Germany could block takeovers. The reality is that they cannot. The UK’s takeover rules are based on EU takeover rules, which apply to all European countries and limit the ability of national Governments to block mergers unless they are based on national security, financial stability or media plurality grounds. France and Germany would also be unable to block a takeover of that kind due to EU takeover rules.

My hon. Friend the Member for Redditch (Rachel Maclean) is a doughty fighter for her constituents, and I know how passionate she is about this issue. She asked whether we are confident about the assurances Melrose has given about the UK headquarters. Under the takeover code, companies can make legally binding post-offer undertakings, and that is an important element. The hon. Member for Paisley and Renfrewshire South raised the question of pensions. Of course, it is a matter for the Pensions Regulator and it would be inappropriate for me to comment; however, the Government understand that the Pensions Regulator is in discussion with all parties.

The hon. Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry)—I hope I got that right—asked what assurances we can give that Government R&D investment will stay in the UK. I can tell him that Government grants to support R&D are awarded on the basis of R&D carried out in this country, so the conditions of any contract with Government would mean that those responsibilities would transfer to the new company.

[Drew Hendry]

I appreciate the Minister’s giving way in the limited time he has. I want to make it clear that my concern was that the investment, and therefore the resulting intellectual property, might be lost elsewhere.

[Andrew Griffiths]

I understand the point that the hon. Gentleman makes.

Finally, my hon. Friend the Member for Redditch asks what the Government are doing to further strengthen the codes. I will highlight that the Government are exploring proposals to strengthen our powers to scrutinise investment for national security purposes, which would bring our regime in line with those of other developed countries. The national security and infrastructure investment review that my hon. Friend talked about closed in January, and the Government will publish its firm proposals in a White Paper this year.

The Government will continue to monitor the situation very closely over the days and weeks ahead, and I can assure hon. Members that we will always act in the best interests of the country.

16:28

[Mr Bailey]

My experience of parliamentary scrutiny of takeover bids, from Kraft and Cadbury to Pfizer and AstraZeneca and, I hope, this one, is that, irrespective of the outcome, the fact that Parliament has scrutinised it has benefited the outcome—first, by holding the Government to account, and secondly, by holding the participant companies to account.

I make no apologies for having the debate, because I feel it is performing an essential role of Parliament. Today’s debate has demonstrated that, by demonstrating the unanimous strength of opinion on both sides of this House on the issues arising from this particular takeover bid, and the earnest desire that the Government use all the powers they have to intervene in the best interests of not just GKN but our economy, our productivity, our employment, our pensions and so on.

I understand the quasi-judicial role that the Government have in this matter and how that might inhibit any public pronouncement, but in this debate we have spoken clearly and demanded action. The debate reflects the opinion of Parliament in general, and I ask the Minister to act in the best interests of GKN and our economy.

16:30

Motion lapsed, and sitting adjourned without Question put (Standing Order No. 10(14)).