Post Office Mediation Scheme

Baroness Clark of Kilwinning Excerpts

Wednesday 17th December 2014 Westminster Hall

[Katy Clark (North Ayrshire and Arran) (Lab)]

It is a pleasure to see you in the Chair today, Ms Dorries. I congratulate the right hon. Member for North East Hampshire (Mr Arbuthnot) on all his work on this issue and on securing what I understand is his first Adjournment debate. I refer to my entry in the Register of Members’ Financial Interests and inform the House that I am the chair of the Communication Workers Union group of MPs. I have had a wide range of discussions with the CWU and in particular with the postmasters branch, which has had a number of its members affected by the issues raised today.

As has already been made clear in the debate so far, this issue has been ongoing for many years. I want to reiterate a point made by my hon. Friend the Member for Batley and Spen (Mike Wood): what has come across clearly to me in discussions with sub-postmasters and mistresses is denial from the Post Office that a problem exists. The experience of those directly affected is that, if a problem occurs in relation to the finances, the initial response from the Post Office is to blame the postmaster or mistress rather than to conduct a serious inquiry to see whether there is a fault in the system or to find out what has gone wrong. That is devastating for the individuals involved, who, as has already been shown, often face years of anguish as a result.

The Communication Workers Union is supporting a number of members who are waiting for their cases to be heard as part of the mediation service. Indeed, one of its members has been suspended without pay for more than a year as he waits for his case to be heard. For more than eight months, another has been facing increasing losses hanging over him despite ongoing involvement with Post Office technical staff who have come to see what the cause of the losses is and to try to find out why there are losses and whether there are gains.

The CWU gets involved with postmasters and postmistresses who are seeking help with the computer system on a regular basis. They are not necessarily being accused of anything, but they are having problems with the system. As workers, they find numerous problems with it, as has been highlighted in the debate.

The general point that comes through is that the support systems provided by the Post Office are inadequate. Wrong advice and assistance is regularly given by the help desks that are there to try to deal with such situations as they arise. Indeed, I have been informed that the technical help desk, which is crucial to identifying solutions when problems arise, is based in the Philippines. Therefore, as well as all the other issues when attempting to sort out technical problems, a significant problem is language difficulties. Will the Minister deal with that in her response? We have already heard in the debate about the job losses threatened and it is clear that the current support systems are inadequate.

The main concern that comes through from those directly affected is that there does not seem to be a fair and open process to deal with a postmaster or postmistress who it is believed might bear some kind of responsibility for a shortage in the accounts. The Communication Workers Union is regularly involved in such cases, even when they do not amount to the serious problems identified in earlier contributions to the debate.

The CWU postmasters branch informed me that it has seen the leaked report issued by the forensic investigator, Second Sight. Indeed, I understand that that report has been seen by many journalists and Members. One of the concerns is the lack of public scrutiny and the fact that these issues are not in the public domain. It seems that the contingent liabilities and the amounts of money involved over many years are significant. That is highlighted in the report and is not officially in the public domain. Indeed, it does not appear in any way in the annual reports and accounts that the Post Office has to publish.

There needs to be a much higher level of transparency because we are dealing with public money. The people whom I have spoken to who have experience of the system accept much of what is in the Second Sight report. Their view is that there is not one single fault with the system, but dozens and dozens of things that make up the problem when one steps back and considers the system as a whole. The major cultural problem we seem to have is that the initial response from the Post Office, despite everything that we have heard today and all the representations made over many years, is that the individual is responsible if there is an issue. I hope the Minister will look seriously at that cultural problem. It is clearly significant. No one is fully clear on exactly why there are all these problems in the system, but all the evidence is that this is an extremely significant issue. It is resulting in low morale among those working in the system, and I hope she will respond fully to the matter.

Universal Postal Service

Baroness Clark of Kilwinning Excerpts

Thursday 17th July 2014 Commons Chamber

[Katy Clark (North Ayrshire and Arran) (Lab)]

I beg to move,

That this House believes that the Universal Service Obligation as set out in the Postal Services Act 2011 is under threat from unfair competition from organisations which are rapidly expanding end-to-end delivery services in low-cost, high-density urban areas while leaving high-cost, low-density rural areas to be covered by Royal Mail, the universal service provider; and calls on the Government to instruct Ofcom to bring forward proposals to protect the Universal Service Obligation and the commercial viability of Royal Mail against this threat.

I am very grateful to the Backbench Business Committee for allowing us to have this important, timely, and indeed urgent, debate, given the threat to the universal service obligation. I refer to my entries in the Register of Members’ Financial Interests and advise the House that I have worked with Royal Mail, the Communication Workers Union and Unite the union on the issue in the run-up to the debate.

The London assembly yesterday passed a similar motion expressing concern at the expansion of end-to-end postal services by TNT Post and the ability of such organisations to cherry-pick services that provide the most lucrative work. The assembly was particularly interested in that, as TNT started off providing end-to-end services in London. The motion it passed went further than the one we are considering today, as it called on Royal Mail to be brought back into public ownership.

Royal Mail is the UK’s universal service provider. It is required under the Postal Services Act 2011 to deliver to 29 million UK addresses six days a week, and five days a week for other packets, all being delivered at an affordable, geographically uniform price.

Ofcom became the official regulator of postal services on 1 October 2011. Its primary duty is to secure the provision of the universal service obligation for postal services. It also has a duty, under the Communications Act 2003, to further the interests of citizens and consumers, where appropriate, to promote competition, but its duty to secure the universal service obligation always takes precedence.

There are two types of competition in postal services. The first is downstream access, which allows providers other than Royal Mail to collect and sort mail and then give it to Royal Mail to deliver over the so-called final mile. Obviously, it is not always only a mile, and sometimes it can be less than a mile, but that final part of the process is the part that Royal Mail has a legal obligation to carry out. The other type is the end-to-end service, which is the direct delivery of mail to the customer without any need for Royal Mail to get involved in the process. That is what I will focus on today.

TNT Post is currently Royal Mail’s main competitor in the end-to-end market. In 2012, it launched a direct delivery trial providing a full end-to-end service in west London. Since then, it has rapidly expanded into other parts of London and into Manchester and Liverpool. It plans, by the end of 2017, to cover over 42% of households in the UK, although only about 8.5% of the UK’s geographical area.

[Ms Diane Abbott (Hackney North and Stoke Newington) (Lab)]

Is my hon. Friend aware of the many complaints about TNT’s service in London because of its use of agency staff, with letters being dumped and put through the wrong letterboxes? It does not just create unfair competition; it provides a poor service.

[Katy Clark]

Indeed, we are aware of the concerns about the inferior terms and conditions of TNT’s staff compared with those of Royal Mail, and about the service that customers are receiving. Of course, organisations other than Royal Mail are not required to meet the standards of service that it has a legal obligation to provide.

[Mr Gareth Thomas (Harrow West) (Lab/Co-op)]

I apologise for missing the first part of my hon. Friend’s remarks. Further to the point made by my hon. Friend the Member for Hackney North and Stoke Newington (Ms Abbott), when the then Conservative-run council in Harrow decided to use TNT for the delivery of council tax letters, there was a whole series of reports of bad distribution processes—so much so that in the end Royal Mail had to be used to get the letters out in their entirety.

[Katy Clark]

I am grateful to my hon. Friend for that example, which illustrates the problems we are having and are likely to have to a greater degree as time goes on if the expansion takes place in the way that is intended.

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

I congratulate the hon. Lady on securing this debate. It is important for people to realise that one of the problems is that while the customer is the person posting the letter, it is the recipient who does not get their bank statement, bill or cheque, and they have no say in that. That is why conditions are an important part of what Ofcom needs to look at.

[Katy Clark]

Given the hon. Gentleman’s constituency, I suspect that he shares many of my concerns. I hope that we will explore all these issues in the debate.

I do not think the House necessarily fully appreciated that the expansion of TNT would take place quite so rapidly, and that is why this debate is so urgent. This expansion is a direct threat to the universal service because Royal Mail needs the universal service in order to be able to use revenues that it generates in areas where it is easier to deliver mail. In the areas I mentioned—London, Manchester and Liverpool—it is easier to deliver mail and therefore easier to generate profits. It is necessary for Royal Mail to use that work to generate profits to help to cover the rest of the national network.

I represent a large rural constituency in Scotland with islands and many small communities. In many parts of it, the costs of providing a mail delivery service will be quite considerable, no matter how we organise postal services.

[Mr David Hamilton (Midlothian) (Lab)]

Surely that is the whole point. Royal Mail needs the cross-subsidy to be able to deliver to the sparsely populated areas that my hon. Friend and I represent. That is key, and the ombudsman has to take it into account in relation to fair competition.

--- Later in debate ---

[Katy Clark]

The hon. Gentleman, or rather my hon. Friend—

[Mr Hamilton]

Comrade.

[Katy Clark]

Indeed—he is both a friend and a comrade. I am delighted that he is here today. He represents a very similar constituency to mine.

Members in all parts of the House represent constituencies where we know it will never be profitable to deliver mail. That is why the universal service is so important. It is also important that we ensure that stamp prices are kept at a level that is affordable in all parts of the country.

[Mr Iain McKenzie (Inverclyde) (Lab)]

Does my hon. Friend agree that we have seen this unfair competition before when the Conservatives were last in power and they privatised British Telecom? The other companies wanted the cities but not the rural areas, and now we see that again with Royal Mail.

[Katy Clark]

My hon. Friend makes an important point. Perhaps we can enter into that debate on another occasion.

The Government are allowing TNT to cherry-pick the services in more profitable city areas, where its presence has already led to reductions of 14% to 15% in the use of Royal Mail.

[Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)]

I apologise for missing the first two minutes of my hon. Friend’s speech in this very important debate. Does she accept that, although Labour Members voted to maintain the public ownership of Royal Mail, it is now notionally a private company? The USO is about providing a service, irrespective of the company that does it, across the country. There has to be an understanding from the Government, which was missing in Committee when Labour Members argued vociferously that this type of situation would occur, that we need to use a levy on TNT and other private sector companies or look at the structure of how mail is distributed across this country, on a regional basis or otherwise, to make sure that provision is universal.

[Katy Clark]

My hon. Friend is absolutely right. Many predicted that we would face this problem. Indeed, we are here to give a warning that it is already beginning to happen and that action is necessary now—we do not have time to wait. He is absolutely correct that that action is required whether Royal Mail is in the public sector or the private sector—given that most of it is not held by the Government or the work force.

[Mr Peter Hain (Neath) (Lab)]

I very much support my hon. Friend’s argument. I wonder whether, early in the morning a couple of weeks ago, she heard the interview on Radio 4’s “Today” programme with a business analyst who predicted the end of the universal door-to-door service because, he said, it will be impossible for Royal Mail, faced with this unfair competition, to sustain it. The universal service exists in statute, but does she agree that it is not specified what that means? It could mean collection from a central collection point, not delivery door to door.

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[Katy Clark]

My right hon. Friend is absolutely right. Of course, he has a very long track record and great expertise on these issues. If we do not take action now, then when the House considers this matter in a number of years’ time, there will be serious proposals for a reduction in the kind of service that people receive. We hope that the Government will take action now to make sure that we are not faced with that problem.

At the moment, Royal Mail still delivers 99% of mail in the UK. Our concern is that that situation could change very quickly given the current expansion plans of TNT, in particular, and perhaps other providers as well. Royal Mail itself estimates that TNT’s expansion strategy could result in a reduction of more than £200 million in Royal Mail revenue by 2017-18. The reality is that much of the most profitable section of the market, namely the business mail, is already handled by companies other than Royal Mail. Indeed, that has been the case for a considerable period. There has also been a significant reduction in the volume of letters over the past decade, which also continues to put pressure on the universal service obligation.

Royal Mail is subject to vigorous and rigorous performance standards. Its competitors are not subject to the same standards. There is also no requirement on competitors to report on service standards, as Ofcom says that service standards are driven by market forces. However, as my hon. Friend the Member for Hackney North and Stoke Newington (Ms Abbott) has pointed out, there are many concerns about the poor quality of service that customers receive from TNT in areas where it operates. There are also many concerns about the terms and conditions of the work force, which are considerably worse than those of the Royal Mail work force.

I believe that the motion is moderate. It calls on Ofcom to carry out a full review and to make proposals for regulation to create a level playing field in the postal services market. In particular, I ask Ofcom to consider whether a compensation fund could be established to support the provision of the universal service, which could be used to collect contributions from those that benefit from providing en-to-end service without the requirements of meeting the universal service. I also ask Ofcom to consider whether the general service conditions that currently apply specifically to Royal Mail alone should be extended to apply also to other operators.

We should also consider removing the requirement on Royal Mail to allow other operators to access its network. Hon. Members who visit the postal depots in their constituencies at Christmas will know that the work force have been raising concerns about that issue for many years. There is no doubt that that requirement to deliver mail for others has been a burden on Royal Mail.

[Mr McKenzie]

It is not only about the commitment to deliver that mail for others; often, Royal Mail also has to sort that mail before delivering it for them.

[Katy Clark]

My hon. Friend and his family have a great deal of experience in these matters, as do I. He is absolutely correct. I think that the situation is slightly less frustrating for the work force now, because the work used to be even more of a drain on Royal Mail and it made a considerable loss as a result. The financial arrangements have improved slightly, but this is very much an area that Ofcom needs to look at.

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

My hon. Friend has come up with concrete proposals and a recommendation for Ofcom, but is not the problem that Ofcom has no sense of urgency at the moment? It says that it will not institute a review until the end of 2015 and that the 2011 legislation statutorily barred it from establishing a fund for five years, which means that it will not be able to do so until 2016, unless the Secretary of State acts. There is, therefore, a twin responsibility; on the Secretary of State to act in order to enable a discussion about the fund; and on Ofcom to institute the review now.

[Katy Clark]

There is a great deal of complacency on this issue from not only Ofcom, but the Government. We are seeing the warning signs now and we need the Government to make it very clear that we believe there is a real threat to the universal service. Ofcom needs to look at the matter urgently, carry out a full review and come up with proposals to ensure a level playing field in the postal services market and to protect the universal service.

--- Later in debate ---

[Mr Reid]

My hon. Friend makes an important point. Some forms of high-volume business mail incur lower costs than for people sending Christmas cards or postcards. Obviously, if a company has high-volume mail from a big organisation coming into its system, that is much easier for it to deliver.

In fairness, it should be pointed out that Royal Mail has some advantages. For example, it has a nationwide infrastructure and benefits from economies of scale.

Royal Mail is very concerned about TNT’s plans and sees them as a threat to its ability to deliver the USO. We must always remember that Royal Mail is a private company with a duty to maximise the revenue for its shareholders. Therefore, it may or may not be crying wolf. It is Ofcom’s responsibility to decide whether Royal Mail is crying wolf.

Ofcom has many tools at its disposal to protect the USO. It could impose regulatory conditions on other operators to level the playing field. For example, it could require other providers to deliver over a larger geographical area than just a small urban area or to deliver on more days in the week. Ofcom also has the power to introduce a universal service fund. It can review whether delivering the universal service places a financial burden on Royal Mail and determine whether it is fair for Royal Mail alone to carry that burden. However, that cannot be done before October 2016 without Government direction.

[Katy Clark]

The hon. Gentleman has mentioned the possibility of a compensation fund, which organisations such as TNT could pay into. Does he agree that organisations that deliver business mail, which they have been able to do for many years, might also be required to pay into such a fund, given the amount of money they make from the lucrative work that they do?

[Mr Reid]

I agree with the hon. Lady that it is not just TNT and companies like it that would have to pay into the fund, but a wider range of companies. That would be a decision for Ofcom.

If Ofcom finds that there is a net burden on Royal Mail, there is a provision in the 2011 Act that allows the Government to direct Ofcom to establish the universal service fund. That would require other operators to contribute financially to support the universal service. I do not think that we are at that stage yet, but the Government and Ofcom might have to use that power at some time in the future.

Royal Mail has pointed out that it has to meet all the targets that are set by Ofcom and publish its performance against those targets quarterly and annually.

--- Later in debate ---

[Katy Clark]

The debate has been extremely useful. I hope that what the Minister says in private is slightly different from what she has said in public today, because she has shown a level of complacency that was not seen in the contributions of Back-Bench Members on both sides of the House. There is a huge amount of concern about the speed at which TNT is expanding its service in the UK and about the impact that that could have on the universal service. I am interested that the Minister is meeting Ofcom later today and welcome the suggestion that Ofcom meet hon. Members, which would be useful. It would also be helpful if Ministers attended the meeting, so I would be grateful if she undertook to do so.

The Minister says that only a small proportion of work is currently undertaken by operators other than Royal Mail, which I made clear in my opening contribution. However, the concern is that TNT’s proposals, which are publicly available and which most hon. Members here have already seen, make clear the speed at which it will expand in this country. As a result, it will be covering a huge number—over 40%—of households, which is different from anything that the House discussed in the various debates that took place—

[Mr Binley]

rose—

[Katy Clark]

I am not sure whether I am able to take interventions when making a closing speech, but if I could allow anybody, it would be the hon. Gentleman given his track record on this issue.

Yes, we have had 10 years of competition, but the lesson that we have learned is that the market does not respond well to competition. The current regime is not protecting the services that we receive. The reality is that we have fewer services now than we did when competition came in. We all remember Sunday collections and twice-a-day deliveries. The road that we are on is extremely dangerous and is a threat to postal services in all parts of the UK. I hope that the Government will take on board the emotion and passion of hon. Members’ contributions today and insist that Ofcom urgently carry out a speedy review.

Question put and agreed to.

Resolved,

That this House believes that the Universal Service Obligation as set out in the Postal Services Act 2011 is under threat from unfair competition from organisations which are rapidly expanding end-to-end delivery services in low-cost, high-density urban areas while leaving high-cost, low-density rural areas to be covered by Royal Mail, the universal service provider; and calls on the Government to instruct Ofcom to bring forward proposals to protect the Universal Service Obligation and the commercial viability of Royal Mail against this threat.

Enterprise and Regulatory Reform Bill

Baroness Clark of Kilwinning Excerpts

Wednesday 17th October 2012 Commons Chamber

[Katy Clark (North Ayrshire and Arran) (Lab)]

I will speak to new clauses 1 and 2, which relate to different aspects of whistleblowing. The current provisions on whistleblowing are in the Public Interest Disclosure Act 1998, a landmark piece of legislation introduced by the previous Labour Government. That legislation was fought for by many people over many years, and came about as a result of decades of campaigning by many across the political divide. I am therefore pleased to see that the hon. Member for Aldridge-Brownhills (Mr Shepherd) is listening to the debate, as he was one of those who campaigned on this matter during the previous Conservative Government.

Clause 15 introduces a public interest test into the whistleblowing legislation, and future claims will be successful only if the worker believed that the disclosure was made in the public interest and—in the case of wider disclosures—can demonstrate that that belief was reasonable under the circumstances. The clause will make it more difficult for people to rely on the 1998 Act, as it creates yet another legal test in what is already a complex legal area, and means that those who may be considering whistleblowing will face yet another hurdle to obtain the protection of the legislation. New clause 1 would remove one of the other legal tests—the good faith test—from the legislation.

There is no doubt that lives have been saved as a result of public interest disclosure legislation. However, as the Minister indicated, Dame Janet Smith stated in the Shipman inquiry that the good faith test was a barrier to whistleblowers, and that is borne out in reports from the ongoing Mid Staffordshire and Leveson inquiries. Given that another test is being added for a protected disclosure to be met, we must consider whether the proposed legislation will make it more difficult for someone to get the protection of the law.

I believe that Parliament and politicians should want individuals to whistleblow when that is in the public interest. Indeed, at almost any point in history, there have been situations in which it was—and should have been—appropriate for an individual to bring information to the attention of the relevant authorities or, where appropriate, the public, irrespective of whether they could prove that they were acting in good faith.

[Julian Smith]

I pay tribute to the work done by the hon. Lady on this important issue. Does she think that the time has come to consider the American model in which society starts to give incentives to whistleblowers, and will she comment on that?

[Katy Clark]

I would not necessarily say there should be incentives, but people should not be punished for whistleblowing. It is currently very difficult to get the protection of the law, and we need to look at that. That is why I, together with others, have called on the Government to look at the entire area. It is now more than a decade since the 1998 Act was introduced, and we need a thorough review and full public consultation on all issues associated with whistleblowing.

Current topical examples of where I believe it should not be necessary for someone to show that they are acting in good faith include the allegations that are coming to light about Jimmy Savile, and the cover-up that we have seen over many years following the Hillsborough disaster. There will be many other examples central to the political debate where politicians would welcome whistleblowers taking action.

[Julie Hilling]

Briefly, I would like to give another example. At Network Rail, women were consistently getting compromise agreements and therefore being gagged from speaking about things that were taking place. They were all women, so one can imagine the sorts of situations involved. The proposed legislation would make life much harder for people in such situations.

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[Katy Clark]

My hon. Friend is absolutely correct. There must be mechanisms by which people can bring problems of that nature to the attention of the appropriate authorities.

By going ahead with this legislation and creating new hurdles, the Government will make it more difficult to rely on whistleblowing legislation. There is a strong argument that the motives of the claimant are irrelevant if bringing forward such information is in the public interest. As they stand, the Government’s proposals will significantly water down whistleblowing legislation in this country, but that balance would be significantly restored if new clause 1 were accepted.

New clause 2 deals with vicarious liability and addresses a loophole that has arisen as a result of the case of NHS Manchester v. Fecitt and others, of which the Minister will be aware. Three nurses from Manchester raised a concern about a colleague lying about his qualifications, but they were unable to rely on the protection of the law. Will the Minister seriously consider accepting new clause 2, as that would allow that loophole to be closed?

[Mr Richard Shepherd (Aldridge-Brownhills) (Con)]

I apologise for not having heard the opening remarks by the hon. Member for North Ayrshire and Arran (Katy Clark). I can see, however, that she was doing a bonny job, and these are important issues that, in a sense, have been imported into the Bill because of what she describes.

I am a passionate believer in whistleblowing, and I stand in the shadow of some giants from the time just after the election of the previous Labour Government. Tony Wright came up with the idea that people who make disclosures in the public interest should be protected by law, and that surprising proposition met with approval across the House. Other people were involved. Sir Ian McCartney, then a distinguished Member of this House, fought within his Department to see this process advanced, and the Liberal Democrats supported it with interest and vigour. From my party, the Secretary of State for Work and Pensions, then Leader of the Opposition, supported the legislation and served on its Committee. Nor should I forget Lord Borrie, who did sterling work in the House of Lords.

Tony Wright’s original idea that something could—and should—be done, set in train a motion that found supporters from across the House and among their lordships, and from the then new Labour Government. I was fortunate enough—or merely the vessel, depending on how one looks at it—to deliver the idea through a private Member’s Bill. I am, therefore, delighted to hear a newish Labour Member standing up for something that reaches across the parties and has an important principle behind it.

The confusion identified by Public Concern at Work seems to many to cut across what the Government are trying to do. Hon. Members are sympathetic to the Government’s attempt to bring clarity, and many of us are mindful of bullying in public places or the workplace. Nothing should harm the feeling that an individual should be able to come forward and argue that they are making a disclosure, because that is in the interest of society as a whole and of corporate government.

I am cheered by comments from some of my colleagues, who clearly want to make this legislation a working part of ensuring that fraud and criminal activities, as well as all the other matters that have been raised by Public Concern at Work and that are in the public interest, do not take place. After all, the legislation is entitled the Public Interest Disclosure Act 1998. I urge the Government please to enter into negotiations with wider society, and particularly organisations such as Public Concern at Work. The Bill must go to the House of Lords, and I have no doubt that the legal differentiation between terms will be closely scrutinised. I advocate that the bonny Minister raises the flag and fights for a change to the formulation of words, as proposed in new clauses 1 and 2.

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[Katy Clark]

This Bill is a mishmash of ideologically driven measures that have no evidence base. As Opposition Members have repeatedly said, it is Beecroft by the back door. There is no evidence whatever, anywhere in the world, that taking people’s employment rights away from them leads to growth. There is no evidence base for the view that taking away our health and safety protections, which have been fought for by generation after generation, will lead to job creation.

The backdrop to the Bill is, of course, the Government’s red tape challenge and their belief that deregulation will in some way lead to enterprise and a better society. Some Opposition Members have always fought against the Government’s measures, but many Government Members have always believed that they represent the type of society that they wish to see. It is shameful that the Liberal Democrats are providing a face to those measures, and I believe that at the next general election we will see the result and Liberal Democrat Members will be thrown out by the British people.

Farepak

Baroness Clark of Kilwinning Excerpts

Wednesday 14th December 2011 Westminster Hall

[Jessica Morden]

I thank my hon. Friend for his intervention. He makes an incredibly valid point. The people involved had modest incomes, and could least afford to lose that money. They ended up paying twice for Christmas, or borrowing money. The whole matter was a scandal, and we are still no clearer about when it will be resolved. Farepak victims were ripped off twice: once when the company collapsed, and secondly by an establishment that has not protected them.

The history of Farepak’s collapse is well documented, and has been the subject of debates in the House, often initiated by Anne Snelgrove, the former Member for Swindon South, whom I applaud for her unstinting work in standing up for Farepak customers and employees. As this is only a half-hour debate, I will not rehearse the history, except to say that Farepak went bust on 13 October 2006, and the result was that the Christmas savings of around 120,000 people, in total about £38 million, were apparently lost. The money seemed to have been siphoned off to help to combat the debts of the parent company, European Home Retail but as my hon. Friend said, Farepak continued to collect money even when it knew that it had problems.

My inspiration for the debate is my constituent Deborah Harvey, who was a Farepak agent. The word tenacious does not come anywhere near doing her justice. Deb was an agent in Alway in Newport, and encouraged eight friends to spread the cost of Christmas by saving with Farepak with her. Like many agents, she was not motivated by self-interest; she was driven by wanting to see justice for the friends who saved with her because they knew her. They are owed a total of £2,100, and if they ever recoup any money, they will probably receive just £315.

[Katy Clark (North Ayrshire and Arran) (Lab)]

My constituent, Jean McLardy, has given me a Farepak customer payment card that belonged to her mother, who has passed away. It looks identical to those of credit union savings schemes, and it is clear that the people who put money away every week thought it was in a savings club.

--- Later in debate ---

[Jessica Morden]

I thank the hon. Gentleman for that intervention. He goes precisely to the crux of the issue: self-regulation is simply not acceptable. We need statutory guidance. We must compel companies to protect their customers’ money. Can the Minister assure us that the Government will do that? If not, can he explain the reasons why, especially as just today we have seen that banks are to be compelled to display prominent signs telling customers that their savings are protected up to £85,000. What should we do in this case?

[Katy Clark]

Does my hon. Friend agree that one of the problems highlighted is that the victims have been treated as unsecured creditors, so they are right at the bottom of the pile? The Office of Fair Trading report, which was published in December 2006 after Farepak collapsed, highlighted the problems with prepayments for funerals, holidays and mail order, but this case goes way beyond that. Has my hon. Friend had an opportunity to look at the scale of the problem?

[Jessica Morden]

My hon. Friend is exactly right. There are a whole range of prepayment schemes. She mentioned prepayment for funerals, which is a huge issue that I shall address later.

Farepak customers were on modest incomes, and in October 2006 their Christmas was destroyed. All their carefully saved money disappeared overnight. These are people who did the right thing. They planned how they were going to pay for Christmas, they worked hard all year round, they made their monthly payments and Christmas was going to be sorted. They are predominantly women managing household finances to provide for their families. They were doing what we ask people to do. When Farepak went bust, Christmas was ruined for many. They were on modest incomes and could not get money out of the bank to cover the loss.

The Government owe it to Farepak victims to do the right thing. Farepak is a special case and the Government should step in and help. We did it for Equitable Life victims; quite rightly, the Government are stepping in to the tune of £500 million for them this year. Farepak victims are owed around £38 million. In the same way as we did with the banks, we should send the right signal to savers on modest incomes that their money is safe in the event of bankruptcy.

Royal Mail Privatisation

Baroness Clark of Kilwinning Excerpts

Tuesday 18th January 2011 Westminster Hall

[Katy Clark (North Ayrshire and Arran) (Lab)]

It is a great pleasure to see you in the Chair again, Mr Dobbin. I am pleased to have secured this timely debate on the implications of the proposed privatisation of Royal Mail for our post office network. There will, of course, be many repercussions if the privatisation goes ahead, but the subject of this debate is, perhaps, the aspect about which the public are currently most concerned.

No other country in the world has separated its mail service from its post office network, and I hope that the Minister will accept that there is genuine concern that this privatisation will have a negative effect on an already vulnerable post office network. Many of the issues that I will raise today have already been raised with the Government during the proceedings of the Postal Services Bill in this House, and I suspect that they will be raised again in the Lords. I have given the Minister notice of what I will say today—I will ask him many questions that have been put to the Government but that have not, as yet, been answered adequately.

We heard many warm words from the Government during the progress of the Bill about their commitment to the post office network, and, indeed, an announcement of a short-term subsidy. However, my contention is that those warm words will not be sufficient to protect our post office network and that the legal framework that the Government are putting forward with a privatised Royal Mail, which will have a legal duty to its shareholders to maximise profits rather than any duty to the general public, provides no guaranteed protection in law for the post office network as we currently know it, and will put our post offices at risk.

We have read in the media that some fear that the privatisation will result in 4,400 post office closures. That figure comes from the fact that the current access criteria mean that we would have a post office network of 7,500 post offices, and we also know that approximately only 4,000 post offices are currently considered to be financially viable. There is, therefore, a great deal of concern that privatisation could lead to the closure of post offices. There is also concern about whether the standard rate for stamps will be able to survive in a uniform way throughout the country, and that there could be a serious deterioration of the service provided, particularly in rural communities, deprived urban areas and in any part of the country where the postal service is expensive. There is a concern that a privatised Royal Mail will cherry-pick the business and that the post office network will be left with what was left.

During the passage of the Bill, the Government were asked to guarantee the size of the network. The Minister will be well aware of those calls being made to him. We currently have 11,905 post offices. The access criteria laid down by the previous Government would, according to Post Office Ltd, mean that there would have to be a minimum of 7,500 post offices. The Government have said, in the course of proceedings, that they are committed to the post office network and would like to see a network of 11,500 post offices. In her evidence, Paula Vennells, the managing director of Post Office Ltd, said:

“What is absolutely important in this new approach is that there will be no closures whatsoever.”––[Official Report, Postal Services Public Bill Committee, 9 November 2010; c. 5, Q6.]

That call has been made repeatedly to the Government in the past few months. I ask the Minister again today whether he agrees with that statement by Paula Vennells and that a central plank of the Government’s policy is that there should not be post office closures, and whether he will undertake to ensure that the size of the network will remain at 11,500 post offices, as opposed to outlets, which is something that I will come on to in more detail later.

When those questions have been put to Ministers, the response has been an explanation of how the post office network operates—that, as we all know, post offices are run by private individuals who may decide that they do not wish to continue in the business for a whole range of reasons and that such decisions may not be in any way connected with Government policy or, indeed, the framework in which those people are operating. We all appreciate that, but we are asking the Government to confirm that their policy will be to create a framework that enables existing post offices to continue. It would assist if we had a specific answer on why legal guarantees would not be helpful. Surely the Minister agrees that it would be helpful to the post office network if he came forward with a legal guarantee on post office numbers, given the huge concern. If he is not willing to do so, will he explain why it is such a priority to get a quick sale—probably to a foreign buyer—but not a priority to find a way to give legal guarantees to our post office network?

We also know that the Government are being pressed by a wide range of organisations to guarantee the inter-business agreement between Royal Mail and the post office network. The National Federation of SubPostmasters, the Communication Workers Union and Consumer Focus, as well as a whole range of other organisations, have made that call and, in particular, are asking that a 10-year contract be entered into by Royal Mail to ensure some kind of security for at least that time. Consumer Focus has said that it is concerned about how few safeguards the current legislation proposes. Andy Burrows, its postal services expert, has said:

“There are few safeguards to keep that contract in the long term. It’s entirely conceivable—though it seems an odd thing to suggest—but several years down the line you could have a post office network where you cannot undertake mail transactions. It would be for Royal Mail to determine which operator—whether it was Post Office Ltd or Tesco or whomever—to offer mail services and there would be no requirement for stamps or parcels. You could see a scenario where Royal Mail looked to cherry pick so Tesco, say, could meet its requirements in urban areas and the Post Office could pick up the slack in rural areas where there isn’t anyone else. And that has very serious implications in terms of the viability and integrity of the network because urban areas typically make money.”

That really goes to the nub of the concerns that many people have about the future of our post office network.

Will the Minister respond to the allegation, which has been made again and again, that many of those who run post offices will view the future of work in a privatised Royal Mail to be so uncertain that they will be more likely to leave the business? The Government must respond to that allegation. There is huge uncertainty about what will happen if Royal Mail is privatised, which is bound to lead to individuals making business decisions that will take them out of the trade.

Will the Minister say what steps the Government would take if a privatised Royal Mail decided to award the work to supermarkets rather than to post offices? I want to know whether the Government would allow that to happen. If Royal Mail were to decide not to award work to post offices but to another organisation or range of organisations, would they allow that to go ahead?

My final request to the Minister—again, it has been put to the Government on many occasions—is that we use the opportunity of the Postal Services Bill to guarantee the access criteria in law, so that there is more certainty about the future. I have already referred to the view that the access criteria guarantee only 7,500 post offices, but even that is subject to uncertainty, given the legal framework.

I ask for all that because our post office network is already so vulnerable. More than 150 post offices closed on a long-term basis over the past year, and 900 are up for sale. Over the past 30 years, the number of post offices has almost halved, and the trend has been consistently downwards, irrespective of which political party or, as now, combination of parties is in power.

As someone who represents many deprived mainland communities, many small towns in areas of unemployment and rural island areas, it is clear is that the public are well aware of the vulnerability of the post office network. They are rightly suspicious of the Government’s assurances. That may be why people express a great deal of concern about the proposal to privatise Royal Mail whenever they are asked about it, whether it is through opinion polls or in other ways. The fear is that post offices will be at risk, particularly in deprived and remote rural communities. The Government may say that there will be no closure programme—indeed, they have said that—but that does not mean there will not be post office closures.

We know that the majority of work for post offices comes from either Royal Mail or the Government, but business from those providers is not secure. Royal Mail provides post offices with about one third of their work, and we are told that it is unthinkable that it would not use the network. However, it is clear that many competitors may be interested in the work, including supermarket chains, PayPoint—they are the two most obvious options—and a range of other providers. Surely it is a real possibility that a privatised Royal Mail would tender the work, either in whole or in part, to the cheapest provider in the future.

The reality is that because of how Royal Mail will be constructed legally, it will be under an obligation to ensure that it gets best value for its shareholders. There will be nothing to make it use post offices to the same extent. As a private company, its duty will be to its shareholders, which would put the work that many post offices currently rely on at risk. It is only common sense to think that more post offices would be in greater financial difficulty and that more of them would find it difficult to justify their existence.

We have heard a great deal about alternative sources of work for post offices. Indeed, the previous Labour Government were doing a considerable amount of work to develop a people’s bank, which was dropped by this Government. Will the Minister explain why the Government are not proceeding with some form of post bank or people’s bank? We would like an explanation as to why they do not accept that local post offices would be on a stronger footing if the post bank work had gone ahead. I also understand that the Department for Work and Pensions green giros contract is under threat. Will he explain why DWP work is not being channelled to the Post Office?

The reality, of course, is that the historic link between Royal Mail and the Post Office means that Royal Mail supports post offices in a range of different ways. The Royal Mail chief executive has said that, in effect, Royal Mail subsidises the post office network by £150 million a year through the central provision of services alone. Obviously, if the two organisations were to separate, that would be another way in which funding and support would be taken away from the network.

The previous Labour Government put substantial funding into the post office network, and this Government have announced a £1.34 billion subsidy, which I welcome, although I have been told that it will not increase the level of annual social subsidy to the post office network. However, my greater concern is that the funding is not guaranteed beyond 2014-15, and, even more, that the Government’s stated policy is that the subsidy will reduce over time. That must give us great concern. I do not know whether post offices will be able to survive in the future.

Does the Minister expect that the number of post offices or outlets will shrink over the coming period? Also, does he believe not only that the number of post offices or outlets will reduce but that the quality and extent of the service operated at post offices will shrink? The Government’s plans for changing the network over the next four years include replacing 2,000 post offices with “essentials” or “locals”, which will provide a more limited range of services, often from a venue such as a shop. I understand that the scheme is designed as a pilot, but many of us will already know from our constituency experience of examples of a Crown post office closing down and the service moving into, perhaps, a local newsagent. It is clear that our constituents feel that the quality and range of the service has decreased, even if it is simply because there is less space in the post office area. There is less ability to take in wheelchairs—the conditions are more cramped. That is a great concern to our constituents.

[Lorely Burt (Solihull) (LD)]

I congratulate the hon. Lady on securing this important debate. There is great potential for a more flexible approach to the format of post office that people want. I have one in my constituency that is in a convenience shop. A point has been opened in the shop itself, so people do not have to wait for post office opening hours. The number of open hours is phenomenally greater, so everyone who wants to cash in their lottery winnings goes to the shop. There are great opportunities, and not everyone needs all the services or wants them at specific restricted times.

[Katy Clark]

There may be some benefits in certain circumstances. The example that I was thinking of is a local one. The small town of Kilwinning in my constituency previously had a spacious Crown post office that was heavily used by the local community. When the service moved into a newsagent, the quality of service experienced by constituents became much worse. However, there may well be other situations that are success stories.

One of the concerns at present is that many of the proposals would actually mean a reduction in the number of hours that postal services will be available in some communities. That is the point that I have put to the Minister. There may be exceptions where the service improves, but my contention, and the evidence from the work that has been done, is that the trend is for the range and quality of services to diminish. The reason for that is the difficulty in making post office services pay, which is why we are having this debate. For public policy reasons, post offices are essential parts of our communities, and we should be finding a framework within which post office success would be most likely.

Related to that, a great deal of concern has been expressed about the network size being affected by the extension of outreach services, which are often provided by a van and often mean a substantial reduction in the hours a postal service is available in a specific community. Instead of having a post office, which would be available all week, a van might come once or twice a week, for a relatively small period. Those vans, or many of the facilities to which the hon. Member for Solihull (Lorely Burt) has referred, often do not provide the whole range of postal services that might have been available in a more traditional post office. I ask the Minister to respond to the considerable concern expressed about the quality of services provided by some outreach services.

The Select Committee on Scottish Affairs, for instance, made submissions to the Government after taking evidence in Scotland on such issues. An extension of such outreach facilities leading to a continuing deterioration of service is a concern. I have to declare an interest, because of the kind of constituency that I represent. I have many remote rural areas in my constituency, in particular the island of Arran, the kind of area for which outreach services are often proposed. As we know from the evidence given by members of the public and by hon. Members, often the view is that the level of service is far less good than that which was previously provided.

Huge concern has been expressed about the universal service obligation and whether a postal service could be maintained in all parts of the country, no matter how remote. What is perhaps more at risk is the continuation of the universal service as a six-day service everywhere and of a uniform affordable price throughout the UK. Can the Minister give an assurance on that continuation and whether there will be legal protection? The proposed legislation, similar to current legislation, allows Ofcom to waive the universal service obligation given exceptional geographic or other conditions. Will the Minister outline when that opt-out would be used? What guidance would be given about when Ofcom is allowed to say that the universal service obligation need not operate?

If the Postal Services Bill becomes an Act, we are creating a legislative framework in which it would be quite possible and highly likely that Royal Mail will move its work in the future. MPs of all political parties are concerned about their local post offices and wish them to survive. I urge the Minster to ensure that we organise our postal services in a way that enables them to have the business to make that a realistic possibility in the future. In particular, I ask that he uses the opportunity of the legislation to ensure that we have a legal framework whereby post offices can continue. There is huge concern that a privatised Royal Mail will operate in a manner that will undermine our post office network. Will the Minister please respond to the points made today and over the past few weeks?

[Anne Marie Morris (Newton Abbot) (Con)]

I thank the hon. Member for North Ayrshire and Arran (Katy Clark) for securing an excellent opportunity to talk about the future of the wonderful post offices that we all love and need and upon which our constituents—in particular, some of our small businesses—are dependent. However, I am surprised that the hon. Lady raised the issue of post offices when the Bill we are talking about and have been debating recently is about Royal Mail. The debate is meant to be about Royal Mail, rather than about post offices, but I was encouraged by the response that the Government gave, indirectly, with regard to post offices, effectively guaranteeing that we would be able to retain post offices, which we all value. I was absolutely delighted.

The other measure in the Bill, which the hon. Lady did not mention but which I find exciting, is the concept of mutualisation. It is a huge opportunity.

[Katy Clark]

There have been many opportunities over the past few weeks to make all sorts of points about Royal Mail privatisation. The debate today is about the implications of Royal Mail privatisation on the post office network. There are genuine concerns. Does the hon. Lady share any of those concerns?

[Anne Marie Morris]

I thank the hon. Lady for her comment but, to be honest, hearing her discussing the concerns about the future of the post offices was very reminiscent of the concerns felt by Opposition Members under the previous Administration. Our concern in opposition, when there were mass closures of post offices, was that the Government of the day had failed to recognise that such post offices were crucial to communities and were providing a social service as much as anything else.

I am delighted that both parties supporting the coalition Government are determined to ensure that post offices have a bright future. I do not share the hon. Lady’s concern about the future of post offices; they are far better off under the new coalition Government than they ever were under the previous Administration.

The hon. Lady made some points about universal delivery, but I am very heartened. It is important. The Government look on it as fundamental and will retain it.

Turning to post offices, we must remember that 99% of the population live within three miles of a post office. In the grand scheme, that is not a bad position to be in. The Government subsidy to non-commercial post offices is currently £150 million, but I am pleased that it will increase to £180 million in the next financial year.

Oral Answers to Questions

Baroness Clark of Kilwinning Excerpts

Thursday 13th January 2011 Commons Chamber

[Katy Clark (North Ayrshire and Arran) (Lab)]

12. Whether arrangements for the privatisation of Royal Mail will enable it to discontinue the use of post offices in favour of other outlets.

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Mr Edward Davey)]

Royal Mail and the Post Office are natural partners with a strong existing commercial relationship. As the House heard yesterday, the chief executive of Royal Mail, Moya Greene, has said that it is “unthinkable” that that will not continue after the separation of Royal Mail and the Post Office.

[Katy Clark]

The Minister will be well aware of the huge concern in the country over the implications of the privatisation of Royal Mail for the post office network. Will he give a simple assurance that not a single post office—not no outlet, but no post office—will close as a direct result of privatisation?

[Mr Davey]

We had this debate yesterday and I answered that very question. I made it clear, as did Ministers in the previous Government, that it is impossible for a Minister to say that no post office anywhere in the country will close, because 97% of them are run by private individuals, who may decide to sell up or retire. That cannot therefore be required. However, we will not repeat the major closure programmes of the previous Government.

Financial Support (Students)

Baroness Clark of Kilwinning Excerpts

Wednesday 15th December 2010 Westminster Hall

[Mr Pat McFadden (Wolverhampton South East) (Lab)]

My hon. Friend is right to say that the Government have based their whole case for withdrawing EMA on the research that she mentioned. The Minister will base his case on that research, saying that only a minority of students say that they would not have pursued any course at all if they had not received EMA, but that is not the sole point, is it? Surely the point is the level of sacrifice that families will have to make so that their young people can pursue education.

Does the Minister accept that if he withdraws EMA, even from those students who say that they would proceed with a course, the sacrifice that families have to make will be increased, particularly among those who need the help most—students with learning disabilities, teen parents and those from the poorest families? Does he really want to pursue that policy?

[Katy Clark (in the Chair)]

Order. Can I remind hon. Members that interventions should be short?

[Teresa Pearce]

My right hon. Friend raises an interesting point.

Students who receive EMA and are mid-way through their courses began those courses in good faith and could not have foreseen that the funding that they were promised would be withdrawn later. On 25 November, my hon. Friend the Member for Wigan (Lisa Nandy) and I wrote to the Secretary of State for Education, urging him to ensure that students would continue to receive EMA for the duration of their courses. We have not yet had a clear response from him, so I would be grateful if the Minister clarified what is to happen to those students, particularly given the recent confusion between written answers and information appearing on Government websites.

In answer to my hon. Friend the Member for Warrington North (Helen Jones) on 15 November, the Minister said that £174 million would be set aside for EMA in 2011-12, the next school year. Yet the Directgov website states:

“If you currently get EMA you will continue to receive it for the rest of this academic year, but you will not receive it next academic year”.

I would be grateful if the Minister clarified which is the correct answer.

EMA keeps young people focused on their studies, as other hon. Members have mentioned, meaning that they do not have to take on part-time jobs to see them through their education. Long gone are the days when students could get Saturday jobs to do that, because those jobs are often taken by middle-aged women. The jobs just are not there.

In a letter that I received yesterday, the Minister says that

“the expectation that young people will remain in education or training post-16 is much stronger…than…when EMA was introduced. Already, 96 per cent of 16 year olds and 94 per cent of 17 year olds participate in education, employment or training. Attitudes to staying on in education post-16 have changed.”

I totally agree with the Minister, but that change is precisely because of EMA.

The Government have indicated that future decisions on who will receive payments will be made at individual institutions. The coalition Government say that that is because the school or college is closer to students and can make better judgments, but those very institutions are opposing the withdrawal of EMA. If the Minister trusts their judgment about the administration of the enhanced discretionary learners support fund, perhaps he will tell us why he does not trust their judgment on the value of EMA as a whole.

I would like answers to the following questions. Will the new scheme take account of travel costs? A written answer to my hon. Friend the Member for Wigan shows that the last time the Government assessed the average travel costs per student was in 2003. How will we know what the costs are now if the figures are eight years old?

Will the enhanced discretionary learners support fund even include travel costs? At the moment, it does not. What safety net will be in place if too many students need funding, but not enough money is available locally to fund them? Will that mean less funding per student, will allocation be on a first come, first served basis, will students have to parade their poverty to see who is at the front of the queue, or will more funding be made available? If a college does not use all its grant, what will happen to the surplus? My constituency could be considered to be an area with a high level of student need, and those questions are important to me and the people who sent me here.

[Katy Clark (in the Chair)]

Order. I have received written indications from 12 Back-Bench Members who wish to speak, and I ask hon. Members to bear that in mind when making their contributions.

--- Later in debate ---

[Mr Chuka Umunna (Streatham) (Lab)]

My constituency is in the 19th most deprived local authority area in England. On the dead-weight issue—I do not accept the survey’s figures—does the hon. Gentleman share my frustration about the way the argument is made? If young people say that despite abolition of EMA they will remain in education, that is being used against them. I met a group of students this morning who said that they would do whatever it takes to stay in education because that is their future, even if abolition of EMA means that they cannot have lunch for a few days a week at least, or pay for transport and will have to walk to college instead. The issue is not just about people being put off and abolition of EMA deterring young people from going into further education. A member of Lambeth youth council, Stephen, is sitting behind me and can back me up on that. For those who choose to stay in education regardless, the abolition of EMA will subject them to extreme hardship.

[Katy Clark (in the Chair)]

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

[Julian Sturdy]

There is no doubt that there must be support for the poorest and most deprived areas to help young people into education, and I will come to that. Government policy allows for that, but the question is whether the money is best used and targeted at people who fall outside and are at the top end of the threshold. Perhaps it is not.

--- Later in debate ---

[Julian Sturdy]

If I am correct—I hope the Minister will highlight this point—we are saying that we will give college principals the power to allocate funding. It is about devolving local decisions to local people and I will speak further about that later in my remarks. I am looking at this issue from the point of view of those in my constituency, including the two principals who have contacted me. I believe that such people are best placed to take such decisions because they have local knowledge, which is important. I am not present just to speak in support of the Government—I do broadly support them, but I have some concerns that I shall outline in more detail.

The flaws in the central administration of EMA are well known. Last year alone, the running costs of the scheme totalled a staggering £35.8 million. That is of concern and I welcome news of the increased discretionary learner support funds that will replace the EMA. That support will be targeted more directly towards those from the lowest income households to ensure that accessibility to post-16 study remains viable and attractive for all students. That is the crucial part of the policy.

I welcome the decision to localise the distribution of the learner support funds by empowering local colleges and educational providers to carry out that administrative role. That process will hopefully save money that should be going to students in the first place. Some will argue that such a transfer of responsibility will increase the workload for colleges, but in my view it is right for local education providers to use their local knowledge to tailor the support offered to young people in their specific areas. That is a local and flexible solution to the problems of poor and costly administration.

I am generally supportive of the measures outlined by the coalition but I hold two reservations about the new system. First, I am concerned about ending the scheme for those students who will be only half-way through their courses by next summer. I support the new system, but I believe that it would be better for those already receiving EMA payments to see the initial agreements honoured. My second concern, which has been raised already, relates to transport. Many students who attend colleges across York and North Yorkshire rely on EMA to help meet their travel costs. Many have £10 automatically withdrawn from their allowance in return for a free bus pass. Given the likelihood of cuts to local authority transport subsidies, I would be interested to know whether the Government are considering the introduction of any transport-related financial assistance for full-time 16 to18-year-old students. In essence, however, I hope that all of us in the Chamber today share the same goal to protect and enhance the accessibility to education that our 16 to 18-year-olds currently enjoy and deserve. That is a noble and worthwhile ambition, and countless colleagues across the coalition genuinely share that vision.

The choice is not merely between EMA on one hand and no financial support whatsoever for 16 to 18-year-olds on the other. If that were the case, it would be quite wrong. Instead, an unwavering commitment to those who face genuine financial barriers to participation can be delivered through a more localised and efficient scheme, and that is why I broadly support what the coalition Government are doing.

[Katy Clark (in the Chair)]

Order. I remind hon. Members that they must stand if they wish to speak.

--- Later in debate ---

[Karl Turner]

Not at the moment. Many hon. Members are eager to speak, so you will forgive me, Ms Clark, if I do not give way.

Debbie, who lives on Bransholme, does not have the luxury of ambitious parents. She says her parents do not understand the value of further education. She says that they cannot afford to, and will not, pay for her to study, but that EMA does just that. Darren lives on Greatfield estate. His parents are among the lowest 10% of earners in the country, earning just less than £16,000 a year. He needs to pay board, but he cannot afford to. However, his EMA allows him to contribute to the family pot. EMA allows individuals to break through the boundaries and access further education. It puts an end to generation after generation of young people being locked out of further education. It truly enables social mobility.

It is illogical that, on the one hand, the Secretary of State for Work and Pensions is emphasising the importance of breaking the cycle of welfare dependency, while, on the other, the Education Secretary is removing the support that would enable young people to do better for themselves. If we want families to break free from welfare traps, surely it is important that we instil in our young people a thirst for education, and underline the importance of that. Offering students EMA provides them with an incentive and support to help them along the way. If Gary is without his EMA he will be without his A-levels, and therefore without his physics degree. The domino effect continues. Science and the state will be without that young talent. Can the Government honestly say that they will withdraw their support for Debbie to complete her course, denying her the chance of achieving her true potential? What about Darren, who will no longer be able to complete his NVQ in fashion design? Should he be locked out because he simply cannot afford to do the course without financial support?

I have not even mentioned the unprecedented hike in tuition fees. Even those who are lucky enough to make it through further education will have a mountain to climb on the other side as they face the prospect of £9,000-a-year fees. Let us imagine the situation, in which any of the 16-year-olds whom I have mentioned managed to complete access-to-university courses without support, but then are faced with the prospect of convincing their parents, who are of modest backgrounds, that they are about to embark on a three-year degree course that will cost them £27,00—and no doubt an awful lot more, when accommodation and living are taken into account. I know what my parents would have said to me. I left school at 16 with few qualifications. I ran a business for a while and eventually, when I was financially stable, I went off to do A-levels before completing a law degree. I eventually qualified as a barrister in 2005 at the age of 34. When I was nearing the end of pupillage, I was possibly the most elderly pupil at the Bar; so I know what a struggle it is to get educated.

I have no doubt that without the Labour Government’s lifelong learning agenda I would never have had the academic success and confidence to reach the dizzy heights of membership of the Bar, and of being elected to this place. We should make no mistake. The Government’s policy on further and higher education is not progressive. It is shamefully regressive. It effectively does away with further and higher education for those who cannot afford to pay for it. The Government are more than happy for further and higher education to become the privilege of the few. Those who can afford an education will pay for it and those who cannot simply will not have one. That is the reality of the Government agenda. I hope that hon. Members will forgive me if I appear angry, but the subject makes me extremely annoyed. The Government will not easily be forgiven by those young people, who are locked out of further and higher education.

EMA is important not only to the family and the student; it has a wider social benefit. Why do the Government insist on washing their hands of post-16 education, leaving the next generation unable to get access to the qualifications that they require to improve their lives? We hear a lot of talk from the Government about fairness. Is this fair? Is it productive, or is not it narrow-minded, ideological, regressive and wholly flawed? I know where I stand. I ask the Minister to look again and to think very carefully about the choices that are being made, and about the aspirations of our constituents. I ask him to put the brakes on and allow Gary, Debbie and Darren, my constituents who have bothered and troubled themselves to e-mail me about their stories, the chance to improve their situations for the benefit of us all. I cannot support the Government’s attempts to create a divide in the education system between those well off enough to pay and those less fortunate, who cannot. For those reasons I will actively oppose the Government every step of the way.

[Katy Clark (in the Chair)]

Order. I remind hon. Members that a considerable number still want to speak; the shorter the contributions, the more I can call.

--- Later in debate ---

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

I am grateful to my hon. Friend for giving way. Does he accept that the two strands of the allowance are becoming intermixed? There is the role of the allowance in persuading people to stay on, and there is the role of the allowance in enabling people to stay on who might otherwise not be able to afford to do so.

A briefing from the Conservative Councillors’ Association points out that the staying-on age will be raised, but that will not happen until 2015. What worries people such as the principal of Brockenhurst college in my constituency is that the EMA will stop in September 2011. In the limited time that remains, I hope that my hon. Friend will focus on the transition arrangements, which are of great concern to us all.

[Katy Clark (in the Chair)]

I remind Members that interventions should be short.

[Mr Gibb]

I shall come to that point in a moment.

The fact is that 90% of recipients of EMA would have stayed on in education regardless. Given that evidence, the fact that we have a major budget deficit crisis and the fact that the programme costs so much each year, it was clearly going to be a candidate for major reform.