Public Sector Pay 2024-25

Dan Poulter Excerpts

Wednesday 17th January 2024 Westminster Hall

[Beth Winter]

I totally agree. The PCS union has produced a number of very comprehensive reports outlining the devastating impact that the cost of living crisis is having on the mental health and wellbeing of its staff. I recommend that the Minister and those on the Benches opposite read those reports.

This comes after a two-year pay freeze between 2011 and 2013 and the four-year pay cap of 1% from 2013 to 2017, which preceded the obliteration of pay awards by inflation over the past two years. The TUC has estimated that the average public sector worker is earning £177 a month less in real terms compared with 2010. That is based on ONS pay statistics. Unison and the NEU have briefed me on the real-terms reduction in the value of wages for their members. Teachers are getting £12,000 less in real terms since 2010; social workers £15,000 less; and paramedics £16,000 less. The key workers that keep this country going are being driven into poverty by this Government. Putting money in workers’ pockets is the way out of the cost of living crisis.

The Governor of the Bank of England repeatedly warned last year that pay rises were inflationary, but provided no evidence. Some organisations have challenged that statement. For instance, the Institute for Public Policy Research said,

“Tax-funded…public sector pay restoration…is not significantly inflationary”—

again, I recommend that the Government Minister reads the documents. That is why in the past two years we have seen the most significant period of industrial action in 40 years.

The ONS states that over 5 million days of work have been lost to industrial action since the start of the current cost of living crisis. The Government’s response has been not to address the retention and recruitment crisis, but to curtail trade union freedoms by bringing in the Strikes (Minimum Service Levels) Act 2023. In Wales we have seen junior doctors on strike this week because of public sector pay cuts. Yes, they are administered by the Welsh Government, but the purse strings remain here in Westminster, which is responsible. I joined those junior doctors this week, as I have joined all public sector workers, as have all Labour Members here. Our solidarity remains strong with those workers.

[Dr Dan Poulter (Central Suffolk and North Ipswich) (Con)]

I wish to declare an interest as a practising NHS doctor. I gently remind the hon. Lady that it is beholden on the devolved parts of the United Kingdom—Scotland and Wales—to come to their own pay settlements with the trade unions. In Scotland, under the SNP, a settlement was put in place, which averted a strike by doctors. Why does she believe that things are different in Wales, and why could the Welsh Government not have averted a strike had they wished to do so?

--- Later in debate ---

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

It is a pleasure to serve under your chairmanship, Sir Robert. I congratulate my hon. Friend the Member for Cynon Valley (Beth Winter) on a passionate and well-argued debate, and I associate myself with her remarks about our friend Tony Lloyd. I first met Tony when I was an intern in Parliament nearly 22 years ago, I think. The way he was so nice to me sticks in my mind: he really showed the character of a public servant in being so nice to an unpaid, lowly intern. I am very sorry to hear that he has passed away. What a life he had—a real life of public service. My thoughts are with his family.

Working people have seen 14 years of low growth, stagnant wages and the highest tax burden in decades. What are they getting in return? On this Government’s watch, the average pay for workers is lower in value now than it was 14 years ago when the Government first came to power. The NHS, which we all love, is on its knees, with 7.5 million people waiting for treatment. Schools across the country face crumbling concrete as our children are forced into temporary classrooms.

My hon. Friend the Member for Liverpool, West Derby (Ian Byrne) and the hon. Member for Strangford (Jim Shannon) talked about how public services are broken but it is their constituents who are paying the price. My hon. Friend the Member for Liverpool, West Derby described how his constituents are facing food insecurity and skipping meals. I think you would agree, Sir Robert, that in 2024 in the United Kingdom, that is absolutely unacceptable for our constituents.

Call me old-fashioned, but I believe that it is the Government’s responsibility to ensure that quality public services are provided for the common good of the country. The sorry state of our public services and their recruitment and retention crisis are a result of 14 years of this Government. My neighbour and hon. Friend the Member for Brent Central (Dawn Butler) talked about the cost of living crisis in her constituency, the struggle that her constituents face, particularly in renting, and the fact that workers’ pay is now lower than in 2010. I believe that this is a direct result of the Government’s inability to grow the economy.

The Government like to talk about public service productivity, yet only yesterday the head of the National Audit Office, Gareth Davies, said:

“Parts of our infrastructure are crumbling…The public sector is finding it harder to retain staff…These factors and others have combined to leave public services with a productivity problem.”

Our constituents have suffered almost a decade and a half of stagnant public and private investment, and the cuts to public services are forcing them more and more into decline.

The Opposition would take a fresh approach to public services. We want to drive up standards in every state school, provide access to mental health support in every single school and recruit thousands of new teachers to ensure that their expertise is in every single classroom. We will get our NHS back on its feet with our plan to cut the waiting lists, and we will pay for it by removing the non-dom tax status. My hon. Friend the Member for Coventry South (Zarah Sultana) said that people who can afford to pay should be paying their fair share of tax; I fully agree. We will clear the backlog by offering 2 million more appointments every year, seven days a week.

We recognise that the current crisis in public services cannot be addressed through additional money alone. That is why the next Labour Government will fully transform the NHS. We need a health service that prevents illnesses and keeps people healthy and out of hospital in the first place. We will move care closer to our communities, guarantee mental health treatment where and when people need it and, most importantly, end the 8 am scramble to get a GP appointment. The next Labour Government will also use technology to overhaul every aspect of NHS delivery and deploy the power of artificial intelligence to spot diseases quickly.

We want to reform the outdated national curriculum to transform our schools with a greater focus on children’s creativity, speaking skills and the confidence to shatter the glass ceiling at source. Across our public sector, we want to provide a more dynamic, joined-up and strategic approach to government. We want to focus on Britain’s long-term national renewal. We understand that delivering fair and effective public sector pay and repairing and reforming our public services will require a strong and secure economy. That is why we set ourselves the ambitious mission of securing the highest growth in the G7.

[Dr Poulter]

The hon. Lady is making a number of points. On the specific issue of public sector pay, which is what this debate is actually about, could she please outline the Labour Front-Bench position? Does she agree with Opposition Back Benchers that public sector pay should go up this year by at least the rate of inflation, if not higher, and that there should be a long-term pay settlement of that type for the public sector?

[Tulip Siddiq]

I support the view that we have to make sure that we treat our public sector workers better. If we were in Government, Labour would ensure that the pay review bodies give greater weight to recruitment and retention issues. That is what we will consider when we are in Government—whenever the current Government decide that they want to call an election, so that we can put our views to the country. I notice that the hon. Gentleman is smiling, but the Government still have not given us a date; I will allow him another intervention if he can give me a date, but I do not think he will.

We will deliver a proper industrial strategy and higher investment, because we believe that if we can grow the economy, we can pay people properly. We want to cut planning red tape and get Britain building. We will transform our labour market with stronger workers’ rights. We want to get the economy growing again. We want to increase tax receipts and improve our public finances, so that we can invest in our public services and boost wages.

In contrast, the current broken economic model has driven down people’s wages and undermined their security. The Government have failed to deliver growth and have weakened our public services. My hon. Friend the Member for Sheffield, Hallam (Olivia Blake) made a powerful speech about the recruitment and retention crisis, and about how public services are in a state of collapse. That is not what we want to see in our constituencies. We want to get the economy firing on all cylinders; we want to repair our public services, so that they work for communities; and we want the public sector workforce across the country to work properly. I want to hear what the Minister has to say about the fact that the economy is broken. What is his plan to grow it, so that our constituents can have a better life in the future?

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[Bim Afolami]

Median pay in the public sector in 2023 was 9% greater than in the private sector, which is broadly in line with the gap between the two sectors over the past decade, so I do not fully accept the situation described by the hon. Lady. To repeat the point I made at the beginning of my remarks: inflation does erode the spending power of wages, which is why it is so important to focus on bringing down inflation.

Let me address another point that the hon. Lady made—as did the hon. Member for Liverpool, West Derby—about health in Wales. As everybody in the House knows, health is fully devolved in Wales; the Welsh Government set health worker pay in Wales, just as the Scottish Government do in Scotland.

Let me answer the question about when the devolved Governments will know their final budgets, which was asked by either the hon. Member for Glasgow South West (Chris Stephens) or the hon. Member for Strangford (Jim Shannon): they will do so following the conclusion of the supplementary documents process, which I believe is published after the Budget. That information will come.

[Dr Poulter]

The Minister might also remind the Chamber that the Welsh Parliament has had its own income tax-raising powers since 2019. I do not think that is on dividends or savings, but there are other mechanisms available in Wales to meet funding commitments that the Welsh Government may wish to make. Indeed, they may wish to make commitments with the unions to end the strikes in Wales.

I have one question for the Minister. I believe in the importance of the pay review body process, which, as he has rightly said, is independent. If the pay review bodies make a recommendation this year for public sector pay, will the Government adhere to that recommendation?

[Bim Afolami]

What I can say at the moment is that the Treasury will look at and seriously consider it. We hope to accept it in full, but I cannot make a commitment now. Obviously, I have not seen the recommendation.

Energy

Dan Poulter Excerpts

Tuesday 7th March 2023 Commons Chamber

[Amanda Solloway]

With the leave of the House, I will respond to the debate.

I thank my hon. Friends and other Members for their valuable contributions tonight. I will send on some information about some of the figures that I am unable to give at the moment. The regulations are necessary to ensure that we implement the alternative fuel payment scheme, in Great Britain, and the non-domestic alternative fuel payment scheme by allowing support to reach those who need it, and I think we all agree with that. The schemes are already in place and are delivering support to organisations across the United Kingdom.

As we are all aware, the domestic alternative fuel payment scheme is delivering £200 to households that use alternative fuels such as heating oil, liquified petroleum gas, coal or biomass, helping some 2 million off-grid households to meet their energy costs this winter. The scheme particularly supports households in rural areas that are not connected to the gas grid. Support was doubled to £200 in the autumn statement to reflect the price rises facing people using alternative fuels in their houses. The vast majority of eligible households should have received the payment automatically via their electricity supplier in February.

The non-domestic alternative fuel payment is delivering £150 to non-domestic customers who use alternative fuels for heating, helping premises in Great Britain and Northern Ireland meet their energy costs this winter.

[Dr Dan Poulter (Central Suffolk and North Ipswich) (Con)]

I want to pick up the point about park homes and site owners and ask the Minister to address that specific point in her closing remarks. There are concerns that site owners are not always passing on the benefit of this payment to the residents of park homes. I would like some reassurance that there are proper measures in place and penalties that will make a difference in ensuring that site owners pass the benefit of these payments on to residents.

[Amanda Solloway]

I will address that in a moment. As I was saying, the scheme supports a wide range of domestic and non-domestic customers, including businesses, schools, hospitals and churches that are not connected to the gas grid. It will also deliver a top-up payment to the highest users of kerosene heating oil. Most eligible non-domestic customers should receive their £150 payment automatically in March, and we continue to update and publicise our guidance on the gov.uk website to ensure that energy users and intermediaries understand their rights and obligations.

I turn now to a couple of other questions that have been raised—as I have said, if I do not address any of the questions that have been asked, I will write to hon. Members. One thing I can confirm is that the Government will not require customers to repay an alternative fuel payment that they have received, even if they use electricity to heat their house.

Thinking about how to ensure that energy users know how to make necessary claims, end users can recover claims to pass-through amounts as civil debts in the county courts, in the same way that other outstanding amounts owed to an individual can be claimed. However, for future pass-through requirements, we will be keeping ahead of that position and making sure that we review it on a constant basis. We have reflected on advice we have received regarding previous pass-through regulations and meaningfully engaged with stakeholders across the United Kingdom to promote and disseminate requirements for all the schemes. That includes working side by side with delivery partners such as utility regulators and energy suppliers, and key stakeholders including consumer ombudsman services.

We considered introducing sanctions on intermediaries if they failed to notify the end user of their rights. However, we decided that the incentive for end users to make an application for sanctions to be applied would be insufficient, given the time and the administrative burden involved in doing so. None the less, notification requirements were included in the statutory instruments, on the basis that many intermediaries are likely to comply with the requirements set out and that the published guidance clarifies the contents of this obligation. Furthermore, it was considered important to ensure consistency in approach across the pass-through regulations of all energy support schemes.

We will continue to seek views and feedback from those impacted by all these regulations, as well as from key delivery partners. I commend the regulations to the House.

Question put and agreed to.

Resolved,

That the Alternative Fuel Payment Pass-through Requirement (England and Wales and Scotland) Regulations 2023, dated 19 February 2023, a copy of which was laid before this House on 21 February, be approved.

Energy

Resolved,

That the Non-Domestic Alternative Fuel Payment Pass-through Requirement and Amendment Regulations 2023, dated 22 February 2023, a copy of which was laid before this House on 23 February, be approved.—(Amanda Solloway.)

The Growth Plan

Dan Poulter Excerpts

Friday 23rd September 2022 Commons Chamber

[Kwasi Kwarteng]

We absolutely care, which is why have the energy intervention that we announced last week and that we have mentioned today. We have eco schemes, such as the warm home discount, and a reduction of council tax for bands A to D. We have already done a huge amount of intervention and we will always protect the most vulnerable.

[Dr Dan Poulter (Central Suffolk and North Ipswich) (Con)]

My right hon. Friend has made clear his intention to lift the bankers’ bonus cap, but I draw his attention to another cap or threshold: the £40,000 annual pension allowance, which is also causing challenges, particularly to many experienced and senior public sector workers. My right hon. Friend will be aware of the NHS workforce challenges that our health service currently faces. Unless this issue is dealt with effectively and we scrap the £40,000 annual allowance for defined-benefit pension schemes, we are going to lose a lot of very experienced clinicians at a time when the NHS needs them most. If he can look at bankers’ bonuses, can he also look at this issue?

[Kwasi Kwarteng]

The issue has been raised, and it is a question of not just the annual limit but the lifetime allowance: anecdotally I hear that the fact that it has been reduced successively over time is a big driver of people leaving the profession. I would be happy to have a discussion with my hon. Friend about that.

NHS Pensions and Staffing

Dan Poulter Excerpts

Wednesday 13th July 2022 Commons Chamber

[Dr Dan Poulter (Central Suffolk and North Ipswich) (Con)]

I draw the House’s attention to my entry in the Register of Members’ Financial Interests as a practising NHS hospital doctor, although I am not personally affected by the issues I am about to raise.

I think we would all agree that following the pandemic, the NHS is facing unprecedented challenges in delivering patient care. The current demands on the system are too high to be met by the existing workforce and resources alone, and while the Government rightly seek to increase the NHS workforce by training more doctors, nurses and other frontline clinical staff, it is equally vital that we retain the existing workforce. Simply put, losing senior and experienced staff at this time would be an unmitigated disaster for the NHS and the patients it serves.

One of the biggest threats to the retention of the most senior and experienced NHS staff is the punitive and unfair interplay between long-standing Government pension taxation policies and the NHS pension scheme. Those policies, and the punitive financial penalties that result from them, will cause many senior NHS workers to take drastic steps such as reducing hours, leaving leadership roles or taking early retirement. These pension penalties will result in senior and long-serving NHS workers aged 59 or 60 potentially losing over £100,000 from their pension pot if they delay retirement by one year, rather than retiring this year. That is resulting in senior and experienced NHS workers being advised by actuaries and accountants to reduce their working hours in order to avoid being hit by huge pension tax bills that will see them working for little pay, or in some cases no pay at all.

[Dr Philippa Whitford (Central Ayrshire) (SNP)]

Obviously, I too was a doctor until recent years.

This is an issue for all four health services across the UK, and is taking away people with the knowledge, skills and experience to not just look after patients but teach. Is the underlying problem not that when this policy was introduced in 2015, the talk was about preventing tax avoidance? It is not possible to play games with a final salary scheme. It was never open to doctors to play games with their pension, and therefore it is simply the wrong policy for the wrong group of people.

[Dr Poulter]

The hon. Lady is absolutely right. There were some further unintended consequences of the Finance Act 2004, which I will come to in a moment, but doctors, nurses and healthcare professionals cannot chose the rate at which they contribute to their pensions—they have to contribute at a fixed rate. There is no choice, so unintentionally, we find ourselves in a situation where senior healthcare professionals are facing punitive, eye-watering annual charges on their pensions worth tens of thousands of pounds. That cannot be right.

[Jim Shannon (Strangford) (DUP)]

I congratulate the hon. Gentleman on all he does in his position as a doctor, and on securing this debate on a really important issue that affects many of my constituents and those of many other Democratic Unionist party Members. During April this year, 8,902 pension awards were made, compared with 6,932 in April 2021—a year-on-year increase of 28%. Does the hon. Member agree that that is indicative of an increase in staff who simply cannot take the long hours, the lack of support and the soul-destroying pressure that our NHS is fast becoming renowned for, and that it is critical that changes are made urgently to keep staff in place rather than have them bolt through the door at the first possible opportunity? I look forward to hearing the Minister’s response.

[Dr Poulter]

I thank the hon. Gentleman.

[Dame Nia Griffith (Llanelli) (Lab)]

Will the hon. Member give way?

[Dr Poulter]

Will the hon. Lady first allow me to reply to the previous intervention?

I congratulate the hon. Member for Strangford (Jim Shannon) on making those points; he is absolutely right to make them, and I am grateful to all his DUP colleagues who have turned out this evening to support the debate. It is very much appreciated, because as he rightly highlighted, this issue affects all healthcare professionals in all parts of the United Kingdom. We need to see changes to the punitive pension regime.

I will give way just one more time for now, if Members will forgive me, because I know that a lot of people want to speak in the debate.

[Dame Nia Griffith]

I congratulate the hon. Member on securing the debate, and I implore the Minister to listen, because although health is devolved to the four nations, retention is a central issue that we are all affected by. I will let the hon. Member get on with his speech.

[Dr Poulter]

I thank the hon. Lady for her support, and she is absolutely right to highlight that this issue affects all of the United Kingdom.

This year in particular, due to certain factors related to inflation, we are facing a real challenge that is created by the pension penalties that exist under the current legislation. That needs to be looked at urgently, or we will see a reduction in the NHS workforce at the very time we can least afford it, while we are tackling the covid crisis.

“Scheme pays”, which is effectively a loan against a pension, is often suggested by the Government as a way for doctors to pay their pension tax bills. However, it attracts an interest rate of CPI plus 2.4%. So in the current climate, with inflation being at over 9%, “scheme pays” is prohibitively expensive and can result in a significant reduction in the total value of the pension, particularly for younger NHS workers in their 30s and 40s. Many doctors and nurses are left with little option but to pay the tax from their post-tax income instead, take out bank loans or, in some cases, increase the size of their mortgages. As I shall explain later, due to rising inflation, senior workers are being billed thousands of pounds in tax for pseudo growth in their pensions which never materialises as inflation continues to rise.

What is the impact on the NHS? The NHS is at a care and staffing precipice. GP workforce numbers are falling, while hospital consultant numbers are not increasing rapidly enough to keep up with demand. Many staff are also feeling burned out and demoralised due to workload and rising instances of abuse. In addition, the secondary care backlog in our hospitals for both urgent and elective operations, as well as for cancer care, is at an unprecedented level, with 6.48 million people currently waiting for treatment. Return referrals to GPs have also seen an 87% increase and a care backlog for general practice, with 401,115 patients waiting for treatment as of November 2021. Those circumstances, coupled with low levels of hospital beds, mean that staff and patients alike are feeling the impact.

We can all agree that the NHS needs more staff. England would need the equivalent of an additional 46,300 full-time doctors simply to put the NHS on an equivalent standard to today’s OECD EU average of 3.7 doctors per 1,000 people. However, as of March 2022, over 100,000 posts in secondary care are vacant, more than 8,000 of which are medical posts. The NHS needs to keep the staff it has simply to keep the current level of service running. In the year between June 2021 and May 2022, the NHS lost 323 GP partners and 462 salaried and locum GPs. That means the number of fully qualified GPs decreased by a net 785 full-time equivalent GPs in just under one year.

That trend is exacerbated by the fact that despite there being 1,737 fewer fully qualified GPs today than there were in 2015, each practice has on average over 2,000 more patients than in 2015. So, there are fewer GPs but each with more patients to care for, and many more patients now have complex care needs to manage.

Pension rules are making it financially unviable for some senior doctors and nurses to either stay in the NHS or work the number of hours they would like to. By tackling the NHS pension crisis through amending the Finance Act 2004 and introducing a tax unregistered scheme for those senior NHS workers, we could help to keep those much-needed doctors and other frontline clinical staff in the NHS for longer, and we would be supporting patients to get the care they need. Without those changes to the pension rules, more staff will leave and the care backlog together with waiting times are likely to continue to rise.

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

I thank the hon. Gentleman for giving way. I congratulate him on securing the debate and on making that key point on the retention of staff. When a similar problem happened with the judiciary, the Government brought in a tax unregistered scheme which, critically, breaks the link between working more hours and the additional tax bill, as well as ensuring that the right amount of tax is paid. Does he think that the UK Government should consider that?

[Dr Poulter]

Absolutely. The hon. Gentleman is right, and that is one of the recommendations I will make in my concluding comments to the Minister.

It is useful and important to use an example of a particular workforce group. I will focus primarily on the pension crisis faced by doctors by means of an example of the way the pension rules need to be changed. How many doctors could the NHS lose as a result of the current pension rules? There is not an exact figure, but British Medical Association modelling suggests it could be anything from 10% upwards by the end of 2022. We already know that the average retirement age has fallen from 61 in 2007-08 to 59 in 2018-19. There has also been a fourfold increase in the number of voluntary early retirements since 2008, with 30% of consultant retirements and 54.7% of GP retirements in 2020 being voluntary early retirement.

A survey of 800 GPs in Pulse last month found 47% said they intend to retire at or before 60. Respondents gave a number of reasons why they wanted to retire, with problems around pensions being listed as a significant reason. A survey by the Royal College of Physicians last year revealed that more than a quarter of senior consultant physicians expect to retire within three years. A survey by the Royal College of Surgeons showed that 68% of consultant surgeons were actively considering early retirement because of the pension arrangements, and 71% of consultant surgeons were considering reducing their non-clinical commitments, including educational and managerial roles—that relates to the point made by the hon. Member for Central Ayrshire (Dr Whitford)—which has worrying implications for the future training of surgeons.

A British Medical Association survey of more than 8,000 doctors revealed that 72% said that freezing the lifetime allowance would make them more likely to retire early; 61% of respondents said that they would be more likely to work fewer hours; and 41% would be more likely to give up additional roles and responsibilities. At the time of the BMA survey, CPI was only at 0.4%. It is now at 9.1%, and in real terms that is the rate by which the lifetime allowance is reducing each year. The BMA believes, with some credibility, that if it were to rerun the survey now, the results would show a significant increase in doctors intending to retire due to the impact of inflation on NHS pension policies. There can be no doubt that senior NHS workers are looking to leave the NHS in significant numbers, and a significant contributing factor to that—alongside burnout and workload—is the punitive pension taxation policies that they face.

[Amy Callaghan (East Dunbartonshire) (SNP)]

I congratulate the hon. Member on securing the debate and on all the work that he has done so far on this issue; my constituents who have raised this issue with me are incredibly grateful for that work. As he said, the BMA figure shows that roughly 10% of medics would be affected and would potentially leave the NHS. More than 100 of my constituents have been in touch with me over this issue. If we apply the 10% to just the ones who have reached out to me, we will lose at least 10 experienced medics at NHS Greater Glasgow and Clyde. This really significant issue needs to be noticed and action needs to be taken, but not like the action that was taken with the taper, which did not affect enough doctors. We need to see this action from the Minister.

[Dr Poulter]

I agree with the hon. Lady, who, like all Members who have intervened, is strongly advocating for her constituents and for healthcare workers throughout the country. I have been written to by doctors in Scotland in advance of the debate and I know how serious this issue is. I thank all the Scottish National party Members who have come to this debate for their support in raising this issue, which is important for those working in Scotland.

Turning to the technical information—this issue is very technical—why is this happening? The pensions annual allowance allows for the value of a pension to increase by up to £40,000 without incurring penalties. That is completely unsuited to defined-benefit schemes such as that in the NHS, and it should be scrapped in defined-benefit schemes. That view has been supported by Treasury advisers and by the Office of Tax Simplification. However, the Government did not agree with the recommendations and instead only raised the annual earnings taper thresholds to £200,000 and £240,000. Pensions experts were clear at the time, and have been ever since, that although this approach mitigates some of the issues around the taper, it is not an effective solution to issues with the annual allowance, as the unfair interactions between pension taxation and the NHS pension scheme regulations remain. Crucially, it does nothing to affect the punitive effects of the general annual allowance, which is set at £40,000, nor the lifetime allowance, which is set at just over £1 million.

Not only has the rise in taper thresholds not fixed the problem, but the situation has reached a further crisis point due to the combination of levels of stress and burnout across the NHS, the freezing of the lifetime allowance in 2021 and, most significantly, the rapid rise in inflation and the CPI. That is compounded by a flaw in the Finance Act 2004 such that its provisions no longer operate as originally intended—that is, measuring pension growth above inflation. So the situation has reached a crisis point.

To address the long-standing issues of the interaction of pension taxation policies with the NHS pension scheme, it would be sensible to introduce a tax unregistered scheme similar to that made available to the judiciary—as the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) outlined—who face similar recruitment and retention problems to those we are beginning to face in the NHS.

It is worth asking why the CPI rise has turned the crisis in retention and recruitment into a disaster for the NHS, particularly this year. There are three major impacts of CPI inflation. First, the Department of Health and Social Care has suggested that, even though CPI is likely to hit 10% by September 2022, the likely pay award for hospital doctors nearing retirement age with final salary schemes will be 2% or 3%. This unprecedented gap between the level of inflation and the likely pay award risks significantly devaluing the pension of members aged 59 or above if they delay retirement by even a single year. There are no late retirement factors in the 1995 pension scheme—the scheme that the vast majority of staff approaching the age of 60 are in. That means that, for every year spent working beyond the age of 60, the level of annual pension that could have been received if they had retired at 60 will effectively be lost.

A doctor may be well over £100,000 worse off if they retire at 61 rather than at 60. That cannot be right; it is a perverse reward for years of dedicated service to patients. The consequence of the current pension rules will be to push more experienced doctors, nurses and other healthcare professionals to take early retirement at the very time when they are most needed to reduce the covid backlog.

The second pressing issue is that two different measures of inflation are used in the NHS pension scheme. That has a particular impact on those who are on a career average revalued earnings scheme; as GPs are wholly within a CARE scheme, it has the biggest impact on this group of doctors. The current rules use a different CPI value for the opening value: it is based on the CPI rate in September last year, whereas the revaluation of earnings that is built into the NHS pension scheme is based on the CPI rate in September this year. When inflation is stable, last year’s CPI rate and this year’s are similar, so that does not usually present a major problem. However, when inflation changes rapidly, as is happening now, it becomes a very significant problem for many GPs.

For example, CPI in September 2022 is likely to be approximately 10%. Under the scheme rules, the pension will be revalued by inflation plus 1.5% and will therefore increase by approximately 11.5%. However, the opening value of the pension will increase by only 3.1%, which is the September 2021 CPI figure. Therefore, even though the annual allowance is only supposed to test pension growth above inflation, the discrepancy caused by those two different measures of inflation will result in a purely inflationary growth being tested against the annual allowance. For many people, that will use a significant proportion of the available annual allowance, and in some cases it will exceed it entirely, resulting in an additional tax charge simply as a result of inflation. A GP from Scotland who wrote to me before this debate told me that it would result in her receiving a tax bill of about £19,000.

The impact is compounded by the fact that the opposite scenario will occur next year if, as predicted, inflation returns to more normal levels. Although workers in the NHS will receive only one NHS pension, following the public sector pension reforms, many NHS staff are in the 1995, 2008 and 2015 pension schemes. Under the Finance Act, those schemes are all considered separately, so even though one scheme may have negative growth, it is not offset against positive growth in other schemes. For example, if a member had £20,000 negative growth in the 1995 or 2008 scheme and £60,000 positive growth in the 2015 scheme, even though their combined pension growth was £40,000 and within the standard annual allowance, the 1995 or 2008 scheme growth is considered to be zero. Instead, the member is taxed on the £20,000 excess in the 2015 scheme.

In addition, the negative growth in the 1995 or 2008 schemes cannot be carried forward or backward to offset previous positive growth in these years. That effectively means that GPs in particular will face additional annual allowance tax bills of tens of thousands of pounds this year for pseudo growth, the majority of which will be lost next year but with no refund or reduction in the extra tax paid this year. That cannot be right; it will push many GPs into early retirement. This year, a typical GP with median partner earnings of £115,000 will receive an annual allowance charge of more than £32,000 as a result of this flaw in the Finance Act, which incorrectly measures pension growth above inflation.

Thirdly, the current high levels of inflation have exacerbated the impact of the decision to freeze the lifetime allowance.

Let me very briefly offer the Minister some possible solutions. First, we need to address the issue of CPI and rising inflation and amend the Finance Act. As I have outlined, only growth above inflation should be tested against the annual allowance. In this rapidly moving inflationary environment, section 235 of the Finance Act does not do so; two different values are used. Simply amending section 235 to ensure that the opening value is aligned with this year’s CPI—not last year’s—so that the inflationary uplift of benefits is tested in the same year will ensure that only “growth" above inflation would be subject to testing against the annual allowance, as was clearly originally intended by the spirit rather than the letter of the legislation. At the same time, it is imperative to amend section 234 of the Finance Act 2004 to recognise years of negative growth and allow them to be carried backwards or forwards to measure real growth over a longer period.

Secondly, in the year 2022-23, we should allow the NHS in all four nations to replicate the 2019-20 compensation scheme to protect clinicians from pension growth so that they are freed up to work at maximum capacity in the NHS. This is not a “tax perk” for one group, but rather recognises that the annual allowance charges are largely based on non-existent pseudogrowth.

Thirdly, to solve the wider and long-term issues facing senior and experienced NHS staff, we should move to a non-tax-registered scheme. It is clear that in the long term, the solution to this problem is a scheme of that kind for those impacted by pension taxation in the NHS. When faced with similar recruitment and retention problems with the judiciary because of these punitive pension taxes, the UK Government introduced a non-tax-registered scheme which immediately addressed the issue, and resulted in the appointment of more judges. That is a fundamentally fair system. It ensures that the correct amount of tax is paid on pension growth, and as no tax relief is provided on employee pension contributions, there is no requirement to subject scheme members to either the annual or the lifetime allowance.

Senior and experienced NHS workers are not asking for special treatment. They are, however, asking for a fair system: a system that does not penalise them for working more shifts, taking on leadership roles, or staying in the NHS after the age of 60. It cannot be right, at a time when the NHS is desperate to retain its workforce—particularly the senior workforce who are so crucial in training new doctors, nurses and other frontline staff or workers, and advising on the most complex cases—that senior clinicians will actively lose money from their pensions for working for longer, or face huge tax bills on pension growth that they will never see materialise.

If the Government are serious about valuing NHS staff, if the Government are serious about helping healthcare staff to meet the covid care backlog, and if the Government are serious about meeting the needs of patients, they must act now to reform NHS pension rules.

[Mr Deputy Speaker (Mr Nigel Evans)]

I call the Minister, and welcome him to his new role.

Public Service Pensions and Judicial Offices Bill [Lords]

Dan Poulter Excerpts

Report stage
Tuesday 22nd February 2022 Commons Chamber

[John McDonnell]

I was chair of finance at the Greater London Council at that time, and I would regularly turn up with my shares with regard to Barclays bank. When Mandela came here—some Members will have been there when he spoke—he and others, including the late Archbishop Tutu, commended those who argued for disinvestment from South Africa in order to bring about a change in that regime, and it worked.

The point I am making—I will finish on this element of it—is that I do not believe it is the role of the state to interfere in this way. Parliament can decide to expand the role of the state, but I think it begins to strain the limits of parliamentary democracy. I have listened to Conservative Ministers warn us in this Chamber about elective dictatorships, so I just warn hon. Members on both sides of the House that once these precedents are set, other Governments will be tempted to follow and, in some instances, go much further. I think this adds to the slow erosion of our civil liberties, freedom of choice and, indeed, human rights.

[Dr Dan Poulter (Central Suffolk and North Ipswich) (Con)]

On the right hon. Gentleman’s point about his own pension fund, I do not think there would be many countries left in which it could invest. I understand his concerns about pension funds making ethical investments, but the pension fund also has a fiduciary duty to sustain the fund, and to make investments in that respect and for future pensioners who will draw on it. How can he reconcile the two positions?

[John McDonnell]

I was once, in my callow youth, an adviser to the mineworkers pension scheme, and then I was an adviser at the TUC, working with Lord Bryn Davies, who is one of our colleagues in the Lords at the moment, and there was never a problem with our fiduciary duty of maximising the income to the pension fund itself because of the range of investment opportunities available to us. I think we found in the past that exercising such moral judgment can prove effective in the long term, because it ensures that the fund is not investing in countries that may in the longer term become unstable as a result of the actions they take. I would just say, and I am making a personal point, that I think new clause 1 flies against my ability to exercise my moral duties about investments by my pension fund.

Greenwashing in Finance

Dan Poulter Excerpts

Tuesday 14th December 2021 Westminster Hall

[The Economic Secretary to the Treasury (John Glen)]

It is a pleasure to serve under your chairmanship, Sir Edward. I congratulate my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) on leading this debate, even if he acquired it from my hon. Friend the Member for Kensington (Felicity Buchan). I wish him well in his new role on the Treasury Committee, subject to the approval of the House later this evening. I thank him for the constructive contributions that he has made during my tenure, including on this subject.

Let me start with a simple statement of fact: the Government have high ambition to transform the UK financial sector and align it with net zero. We are taking bold action to deliver on that. As my hon. Friend mentioned, we launched two record-breaking green gilts this year in September and October, and announced new sustainability disclosure requirements for businesses across the economy to report their impact on the planet. We are starting to see real results. London was ranked the leading hub globally for green finance this year in a leading index run by Z/Yen, overtaking Amsterdam. I do not want to be complacent, but I think we have made significant progress already, specifically on green finance.

[Dr Dan Poulter (Central Suffolk and North Ipswich) (Con)]

I thank my hon. Friend the Minister, for giving way and I congratulate my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) on securing this debate. On the issue of those reporting requirements, as has been said companies clearly have indirect as well as direct impacts through their supply chains. Is it only direct impacts that will have to be reported, or will the indirect impacts of company supply chains also have to be acknowledged?

[John Glen]

I thank my hon. Friend for his intervention. I shall come in a few moments to address the details of the reporting requirements, the mechanisms for enforcing them and their extent. If I have not adequately scrutinised his point and given him the right response, I will right to him—but I hope I will cover it fully in a moment.

Z/Yen said that London was

“propelled up the table by the government implementing measures to stimulate Britain’s green finance sector”

and that it

“has the best sustainability standards in the world”.

As my hon. Friend the Member for Thirsk and Malton mentioned, at COP26 the Chancellor announced that the UK would go further and become the world’s first net zero-aligned financial centre. That is easier said than done. In fact, delivering this will require the Government and private sector to work hand in glove—I welcome the UK private sector’s leadership on this. At COP26, we heard that organisations with $130 trillion of assets globally have now made a net zero commitment. These are big numbers with big implications; it is critical that the claims that firms make about their green performance are credible and backed up with real action.

I will now turn to the title and substance of today’s debate. It is absolutely clear that we need a robust approach to greenwashing. We have heard that phrase a lot over recent years, but I would define greenwashing as when businesses, or investment funds, make misleading or unsubstantiated claims about the environmental performance of their products or activities. That can lead to the wrong products being bought—undermining trust in the market—and to misallocation of capital intended for sustainable investments. In other words, it has the potential to be a significant problem at a time when we are trying to make a sincere and credible transition that is verifiable.

The Treasury Committee report on decarbonisation and green finance, published in June, was also clear that

“‘greenwashing’ is detrimental to good consumer outcomes and to the achievement of... net zero”.

As interest in environmental, social and governance investing increases—which it is, rapidly—it is only right that there should be more attention given to, and more scrutiny of, the claims that firms make. It is for all those reasons that the Government have sought to be on the front foot on tackling greenwashing.

I will take the Chamber through the three areas of action: disclosures, mainstreaming climate into financial regulation, and transition plans. On disclosures, as I mentioned previously, it is the Government's intention to propose legislation, I hope in the next Session, to implement economy-wide sustainability disclosure requirements. This will see financial services firms, real economy corporates and investment funds reporting information on the risks they face from climate and environment, and those that they create. A key element of SDR will be reporting against the UK green taxonomy, which my hon. Friend the Member for Thirsk and Malton has mentioned. The taxonomy will set a robust standard for when economic activities can be considered environmentally sustainable. It is specifically designed to tackle greenwashing by creating a common understanding of which activities, and which investments, can actually be considered green. There is one other aspect on disclosures. Asset managers, asset owners and investment products will all be required to substantiate any sustainability claims they make in a way that is accessible to clients and consumers. All of this will create much-needed transparency in the market and ensure that firms cannot claim things without backing them up.

Our second area of action as a Government has been mainstreaming climate change in the UK’s financial regulation. In March, the Chancellor set out new remit letters to the Financial Conduct Authority and Prudential Regulation Committee, which included climate change for the first time. In November, the FCA published its new environmental, social and governance strategy, and the themes of trust and transparency are core to the FCA’s plans in this area. I am also aware that market participants are increasingly reliant on third-party ESG data and rating services to make decisions, which is why the Government are considering bringing these firms into the scope of FCA regulation and will report back next year.

I also want to address transition plans. Industry leadership on climate change, particularly through net zero commitments, has been impressive, but commitments need to become concrete action. That is why the Chancellor announced at COP26 that the UK would move towards making the publication of transition plans mandatory in the next 12 months. A transition plan should set out an organisation’s high-level carbon targets, its interim milestones and, most importantly, the actionable steps it plans to take. That will improve transparency around how those headline commitments translate into action.

My hon. Friend the Member for Thirsk and Malton asked me a number of questions about which businesses will have to report, when those requirements will come into force and how reporting will help us reach net zero, and I will take those in turn. We will ensure that any burden on business is proportionate and provides useful information for investors’ decision making. Exact details of organisations and products in scope will be determined by the relevant regulators and Government Departments following consultation. Anticipated timings are set out in the roadmap that we published in October.

The UK’s approach ensures that the SDR will come into force in a sequenced, co-ordinated manner, so that reported data flows from corporates to the financial sector, investors and financial market participants make sense, are logical and are scrutinisable. The “Greening Finance” road map, published by the Government in October, sets out the indicative path to introducing integrated sustainability disclosure requirements across the whole economy. The implementation of legislative and regulatory measures will be subject to the parliamentary timetable that I referenced earlier.

In terms of the impact of reporting on the UK getting to net zero, high-quality corporate sustainability reporting is clearly foundational to investors having the information that they need to make well-informed investment decisions. Any action to align capital investment with the transition to net zero is contingent on financial markets having access to the right and relevant information, and identifying which companies are successfully managing their climate-related risks and opportunities. Fixing that information gap is the first phase of the UK’s approach, and getting market participants to act on the information is the second phase, which will ensure that financial flows across the economy shift to align with that net zero commitment. There has been a concerted attempt across Government to ensure that we are very clear about what that journey needs to look like, and more will flow from the legislation next year. I hope that addresses my hon. Friend’s points.

The Government are taking determined action to tackle greenwashing and maintain trust in the growing market for sustainable finance. I thank my hon. Friends the Members for Thirsk and Malton, and for Central Suffolk and North Ipswich (Dr Poulter) for their well-informed contributions and challenges. I hope that this has been a helpful exchange for my hon. Friend the Member for Thirsk and Malton. I will consider his points carefully, as I always do, and take forward any elements to which I have not responded.

Question put and agreed to.

Cider Industry: Duty Changes

Dan Poulter Excerpts

Wednesday 1st December 2021 Westminster Hall

[The Exchequer Secretary to the Treasury (Helen Whately)]

It is a pleasure to serve under your chairmanship, Mr Davies. I raise a metaphorical glass to congratulate my hon. Friend the Member for North Herefordshire (Bill Wiggin) on securing this debate, and I thank him for his constructive tone and his welcome for many of the announcements on alcohol duty in the Budget.

It is clear that my hon. Friend is indeed a true friend of the many cider producers in his constituency. I know that this is an industry with a long history in Herefordshire. In fact, as far back as 1724, Daniel Defoe wrote of the county’s people that

“they have the finest wool, and the best hops and richest cider in all Britain.”

As a Kent MP, I know that other parts of the country might dispute that claim, at least when it comes to hops. Today, as my hon. Friend pointed out, Herefordshire is home to many cider makers, small and large, producing drinks that are enjoyed both in this country and around the world. Although Herefordshire is a centre for the industry, the economic benefits of cider production are felt nationwide.

My hon. Friend is quite right to highlight cider producers’ contribution to the national economy and the many jobs that the industry supports. I am sure hon. Members can understand why the Government want this fantastic industry, which has been with us since at least Roman times, to go on to even bigger and better things.

Before I address the detailed points raised by my hon. Friend, I will briefly run through some of the changes we are making, which we believe will help the industry to go on to achieve further success. First, I will discuss alcohol duty reform. Quite frankly, reform of our alcohol tax laws is long overdue. They have barely changed since the 1990s. As my hon. Friend said, that is largely because of incoherent and prohibitive European Union rules that have hindered much-needed change. However, now we have left the EU, we have an unmissable opportunity to create alcohol laws that are simpler, fairer and indeed healthier, and by doing so we can help cider producers—along with British brewers, wine producers and spirit makers—to innovate and grow. That is why in the Budget we announced a series of major reforms to our alcohol duty laws, including the biggest reduction in cider duty for 98 years. Our new draft relief will cut duty on draft cider by 5%, encouraging people to choose to purchase cider in our great British pubs.

We look forward to working with the industry to understand how keg size and distribution methods can best support small producers and cider makers. We are also cutting duty on craft sparkling cider by up to half, so that anyone buying a 75 cl bottle of such cider that is 6.5% alcohol by volume will pay £1.25 less duty. This boost is a clear benefit of the Government’s decision to introduce a common-sense approach to alcohol duty and to remove the arbitrary and unfair premium rates on sparkling ciders and wines in the current system.

The new lower duty rates for ciders below 3.5% alcohol by volume will incentivise cider producers to innovate and develop healthier alternatives for consumers. As the Chancellor said at the Budget, sales of fruit cider have increased from one in 1,000 ciders sold in 2005 to one in four sold today. As has been mentioned, we are also cutting duty on such drinks by 13p a pint in the pub.

My hon. Friend the Member for North Herefordshire was right to highlight the health risks of white ciders. Although we are reducing the cost of lower-strength ciders, we are increasing duty on high-strength drinks, including harmful white ciders. Under our reforms, people buying superstrength ciders will pay 7p per 500 ml can. We believe that, together, such measures will not only boost British craft cider producers, but give consumers more choice, with healthier, lower-alcohol alternatives. They will boost community pubs by incentivising people to drink at their local instead of at home.

Beyond the duty changes, we are supporting the traditional cider industry in other ways. Although we are listening closely to the industry as part of our consultation on changing minimum duty requirements, we are keeping the definition of “cider” as a drink made wholly from apples and pears. My hon. Friend pointed out that we need to champion the little guy, and I agree. That is why all the measures will be underpinned by a new small producer relief for businesses making cider that is less than 8.5% alcohol by volume. That will build on the duty exemption that the smallest cider makers currently enjoy and help smaller, innovative craft cider makers and other producers, such as those found in Herefordshire and Somerset, to expand and grow their businesses without facing substantial tax increases.

On consultation, I want to stress that the reforms announced at the Budget were part of our review on alcohol duty last year. That involved a call for evidence and received over 100 responses from the industry and other groups. We spent almost a year carefully considering the feedback from cider makers and other producers. We have been closely discussing our proposals with the industry throughout the policy development process. The consultation will be published in October and remains open until January, and I welcome the industry’s views on the questions raised in the consultation documents and on the points covered by my hon. Friend during the debate.

I take on board my hon. Friend’s point about the difference in duties between flavoured and non-flavoured ciders. We believe that maintaining this difference helps to safeguard traditional cider’s valuable contribution to local heritage and agriculture. As I said a moment ago, there is also the small producers relief, which is a very important support for our smaller cider makers.

I recognise that the changes outlined at the Budget are significant, and we will continue to listen to the sector. I have heard the arguments that my hon. Friend has made, and I look forward to working with him and other colleagues on this matter.

[Dr Dan Poulter (Central Suffolk and North Ipswich) (Con)]

In the context of promoting high-quality cider in the spirt of this commendable debate, which was secured by my hon. Friend the Member for North Herefordshire (Bill Wiggin), would the Minister look at minimum unit pricing for drinks from a healthcare perspective? That would actually clear out and stop the production of dangerous white ciders, which are part of the problem that feeds alcoholism and alcohol dependence in this country. Would she take that suggestion away and look at it?

[Helen Whately]

I thank my hon. Friend for that point. I hate to pass the buck, but the question he asks about minimum pricing in shops and supermarkets—I was asked about this issue in correspondence recently—is a Home Office matter. From a Treasury point of view, and as he will have seen from the policies that I have been describing, our reforms to the alcohol duty system take a public health approach to changing the current system, in which higher-strength drinks sometimes enjoy a lower duty. We are moving to a system whereby higher-strength drinks will pay more duty, encouraging the production and, relatively, the consumption of lower-strength drinks, and therefore healthier options.

In conclusion, once-in-a-generation duty cuts, new incentives to grow and innovate, and a boost for pubs—our reforms spell exciting times for cider in this country. These steps will not only put more money in people’s pockets, but encourage people to try new healthier and, may I say, delicious drinking choices. I am confident that together these measures will support our wonderful, traditional cider industry for many more years to come.

Question put and agreed to.

Health and Social Care Levy Bill

Dan Poulter Excerpts

Committee stage & 3rd reading
Tuesday 14th September 2021 Commons Chamber

[Dr Dan Poulter (Central Suffolk and North Ipswich) (Con)]

I am someone who has believed in getting cross-party consensus on the future of social care funding, and who has been calling for a health and social care levy since 2016. Does the hon. Member recognise that there has actually been cross-party consensus on this issue, and that the shadow Care Minister, the hon. Member for Leicester West (Liz Kendall), called for a health and care levy in 2018? How does he reconcile that with his comments just now?

[James Murray]

Let us be really clear about what the shadow Care Minister, my hon. Friend the Member for Leicester West (Liz Kendall), proposed, because it was entirely different from what is being discussed now. She proposed that the tax should be raised from unearned income, and that it should be progressive and fair between generations, which fundamentally differentiates it from what we are discussing today. If the Government had truly sought to build cross-party consensus, does the hon. Gentleman not think that they would have done better to take some time over the Bill, rather than rushing it through within a week of the proposals first being announced, with limited ability for scrutiny and without any discussion of cross-party consensus about how to proceed?

[Dr Poulter]

Will the hon. Member give way?

[James Murray]

I am going to make some progress now; I have given way to the hon. Gentleman already.

As I said, although new clause 8 has not been selected today, I hope that Government Back Benchers have seen it on the amendment paper and will perhaps raise the matter with their colleagues on the Front Bench.

I hope, however, that there will be a vote this evening on new clause 5, and I urge Government Members to join us in voting for this crucial review of how the Bill will make inequality worse. We know how widespread and deep rooted inequality has become in our country. The latest bulletin from the Office for National Statistics on household income inequality in the UK for the financial year ending 2020 confirms what we all know: the income gap between the richest in society and the rest of the population has widened over the last decade. A tax rise that singles out income from employment can only make this inequality worse, and new clause 5 seeks to expose this.

Not only does inequality manifest between people who may live in the same area, it also creates divides between different nations of a country and the regions within them. In areas where average wages are lower and fewer people get income from other assets, the impact of the national insurance rise and the levy will be more acutely felt. Recent analysis in the New Statesman suggested that within the regions of England, it is people in the north-west and the west midlands who will take the greatest hit to their disposable income as a result of the Bill.

Data from the Office for National Statistics’ wealth and assets survey shows that the south-east is home to well over 3 million adults living in families with net wealth per adult of more than £250,000. That is roughly six times the number in the north-east. A tax increase that ignores income from renting out properties and selling financial assets, and that seeks to fund a plan that ignores differences in house prices and care costs between different regions, is destined to make inequality worse.

--- Later in debate ---

[Mr Fysh]

My intention with amendment 7, which I have tabled with esteemed colleagues, was to try to get the Government to focus on a way of looking at the future costs of social care and how to finance them more creatively. I have to ask: if not now, when?

We know that the most powerful way to address costs in the future is to provide for them in the present and to have the power of compounding investment returns over a period of years to meet the liabilities that people have. I am passionate about encouraging the Government to look at ways to encourage people across the board, with progressive incentives in different ways, to make provision for themselves with support from the state.

People think that they pay a contribution into national insurance that rolls up over time and gives them an entitlement to a pot of money—I have heard constituent after constituent talk about that—when we in this place know that that is not in fact the case. In fact, my right hon. Friend the Minister confirmed that that is not the Treasury’s view and that national insurance is a tax collected in-year that must be spent in-year.

There is a big opportunity for reform and innovation that could be useful and get very much back to the ethos behind the Beveridge report and the origins that I spoke to in the Second Reading debate. There was a radical movement trying to help individuals and groups provide for each other. Lloyd George and the Liberal Government’s 1911 Act was about getting national aid into the system in a creative way. I think there is an opportunity for us to talk as one whole House about innovating for the modern world in that way. What was wrong with some of those older schemes and co-operatives, friendly societies and such things in the old days was that sometimes people ran off with the money. That was one reason why there was a need to put more of a national embrace around it and administer it that way. In the modern world, we can do it differently.

All I was trying to do with the amendment was give scope for the Government to think about applying some of the funds from an element of national insurance or something related to it—that is, the levy, which clause 2 sets out—to help incentivise such pooled saving schemes. That is not necessarily insurance or private insurance with a middleman; it could be national schemes or community schemes that are properly co-operative and very low-cost. There are many modern approaches to that in the digital world, such as digital autonomous organisations, where there are no middlemen at all and people do not have to rely on a contract.

That was the pure intent of my amendment, so I am a little disappointed that the Government do not seem to want to engage with it. I urge my right hon. Friend and those on the Treasury Bench to think about ways we might do that in the future, because I can see it as a useful evolution of the policy that might bring people from all parts of the House together in the way I have been describing.

[Dr Poulter]

I am sympathetic to the point that my hon. Friend is making. In principle it is a very good point, but the practicalities are that the moment we move towards the system that he is advocating, we have to clearly define what is health and what is social care, and that makes the integration of the two systems much more challenging. In the context of better integrating health and social care, has he considered that practical element in putting forward this proposal?

--- Later in debate ---

[Stephen Flynn (Aberdeen South) (SNP)]

It is a remarkable feat indeed that the Government have managed to unite the left-wing press, the right-wing press, the Unionist press, the nationalist press, pressure groups in favour of ending poverty and pressure groups who want to see businesses excel, all in condemnation of the Bill. Although I do not think anyone in the House doubts that it will once again sail through the voting Lobbies this evening, I would like to put in my two cents for what little it is worth. In that regard, I commend the amendments in my name and those of my learned colleagues.

As colleagues across the Chamber will recognise, new clause 1 seeks to get the Government to provide an equality impact assessment of the effect of this Bill, by age, on people’s wealth or income. The reason they will not accept that, despite the polite remarks of the Minister, as always, is that such an equality impact assessment would put in black and white what all the pressure groups are telling us. Indeed, much of what we have heard from Members across the Chamber throughout today and last week is that the Bill, in its entirety, will hammer the youngest and those who work the hardest in society, but not necessarily those in the south-east of England who have the most to give.

I heard a remark earlier that about 50% of the income that will be generated by this Bill will come from those under the age of 45. It will be coming primarily from younger people, who are the very people whose horizons have been shortened by Brexit, and whose job opportunities, career opportunities and educational opportunities have been hammered by the pandemic. What the Government are seeking to do is impose further challenges to their lives. It is an unforgivable act, but one that they are going to push through with no contrition whatsoever, as far as I can see, and in the knowledge that they also plan to cut universal credit in the coming weeks—a double whammy on those in society who can least afford to face the real challenges in front of them, and an abdication of responsibility of the highest order.

However, it is not just individuals, young people, working people or families who will be hammered by this tax; it is also businesses. That takes me nicely to our new clause 2, which involves trying to get the Government to do an economic impact assessment of these policies. However, they will not do that either, because they know what the outcome would be, as we see in the language being used by business groups. The Federation of Small Businesses has been absolutely clearcut about its expectation that the proposal will force 50,000 into unemployment. It is a disaster for business.

The Tory party was once, when I was growing up anyway, regarded as the party of business. What has happened? Why are we in a situation now in which not only have the Government forced through Brexit in the middle of a pandemic—and businesses are having to deal with the challenges of exporting goods and the shortages of supplies, to pay back bounce back loans before they have even had the opportunity to bounce back, and to deal with the fact that furlough is going to end despite the clear uncertainty facing them—but they are seeking to impose a jobs tax? Where is the justification for that? I encourage any Government Member to rise to their feet and disagree with anything I have said, but they will not because they know that we are right in this regard.

[Dr Poulter]

I declare an interest as a practising NHS doctor. Will the hon. Member reflect on the fact that the single biggest transformation delivered to health and care in the last 20 or 30 years was when Tony Blair increased national insurance to give a huge injection of funding to improve care for patients throughout the United Kingdom, including Scotland? In reflecting on that, can he see the benefits that will come from this levy for patients in his constituency and all our constituencies in the years to come, because it will make a difference? Will he reflect on the difference that it will make to real people’s lives—improving cancer care, reducing waiting times—and does he see that there is a benefit in that?

[Stephen Flynn]

I thank the hon. Gentleman for his intervention and for the tone in which it was made, and I shall reflect on two points in relation to what he said. He said that perhaps the biggest change to health and social care was the action of Tony Blair, but I happily disagree with that. In fact, it was in 2016 in Scotland, when we did something that I heard Members discussing earlier at length: we integrated health and social care in Scotland. That was on top of the fact that we provide free personal care for our elderly and so on, and that is in contrast to the situation in England, which has led to the crisis we see before us.

On the hon. Gentleman’s point about finance, which is the crux of this argument, do the ends justify the means? That is the purpose of this discussion. I believe in the ends. I believe our NHS and social care services deserve more money, but I do not believe that this is the right way to do it. That obviously leads to the next question, which is about how we should fund this. I heard Conservative Members—rightly—shouting at the Labour Benches, “What is your plan?”, but what is the cost of Trident? What is the cost of nuclear weapons? Over their lifespan I believe it is between £164 billion and £200 billion. Conservative Members will not say that those weapons should be scrapped, but I will. They should absolutely be scrapped, and we can use that money to fund our vital NHS services. The answer is staring them in the face, but they choose not to look at it because this is about priorities, and their politics and priorities differ massively from mine, and ultimately from those of the people of Scotland.

Finally, amendment 4 goes to the nub of where much of our frustration lies with the Bill, because if we shake it about a bit, this is ultimately another UK Government power grab. They are seeking to tell the Scottish Parliament how it should spend money in devolved areas. Whether they agree or disagree with the national insurance hike, all members of the Committee, certainly Unionist Members, should be concerned about the consequences of the UK Government seeking to impose themselves once again on devolution. I say that not as someone who seeks to defend the Union—by all means continue to do it—but because all the UK Government are doing is driving home the message in the minds of the people of Scotland that they do not respect the devolution settlement and they do not respect the Scottish Parliament.

Social Mobility

Dan Poulter Excerpts

Wednesday 12th February 2020 Westminster Hall

[Justin Madders]

I thank the hon. Member. We have talked many times about the need to raise levels of aspiration. One of the sad things we have seen in recent times is how quality careers advice has slowly drained out of the education system. It is not just about 14 and 15-year-olds; it is about getting five and six-year-olds to think about what they can achieve. The evidence shows that the countries that tend to be more socially mobile are those where the gap between the bottom and the top is smaller, demonstrating that social mobility and inequality are closely linked. In 2019, it is a scandal that where you were born and who you are born to are still the biggest influences on your prospects. If we are ever going to move forward as a nation, everyone should have the same opportunity to achieve their potential. I think everyone in the room agrees with that.

When he resigned as the chair of the Social Mobility Commission, Alan Milburn said he was doing so because the Government were

“unable to devote the necessary energy and focus to the social mobility agenda.”

When he gave evidence to the Education Committee, he said:

“After the change of Prime Minister, following the European referendum, that whole conversation frankly went into the void. There was no conversation. There was no response.”

Those are damning word that were barely met with a shrug.

The new chair—not so new, now—Dame Martina Milburn is bringing real focus and drive to the commission which only yesterday produced a fine set of recommendations for the workplace, including internships being openly advertised— something that the all-party group on social mobility has called for for a long time. It recognises, as we do, that informal networks, which do much to stifle social mobility, creep into recruitment, even at the internship stage, for which money is a vital in order to make the first step through the door. While we are on that subject, why do we still allow internships to be unpaid? That is an invitation for exploitation.

We rightly focus on education, but addressing inequalities beyond the education system, including factors such as access to work, tax, welfare, housing, transport and health, is vital. We need to look at the world of work, particularly. For how much longer will the most likely experience for young people be casual work, low pay and insecurity in the workplace?

The Government need to stop treating social mobility as a niche issue that is the role of just one Minister. They need to make it a mission across all Government departments, with a focused and consistent approach that transcends the day-to-day world of politics and reshuffles. That is an issue to which I hope the commission can add value.

[Dr Dan Poulter (Central Suffolk and North Ipswich) (Con)]

I agree with everything the hon. Gentleman has said, particularly about the importance of each Government Department taking this issue seriously. He may recall that under the coalition Government there was a Cabinet sub-committee specifically on social mobility, which entrusted and tasked a Minister from each Department to take forward initiatives in their Department. Does he agree that that is something we can recommend for the Minister to take away and feed back, particularly in advance of events that are likely to occur tomorrow?

[Justin Madders]

I hope the Minister stays in post and is able to take back today’s messages. Government focus has not been where it should be, but in the early part of the last decade we saw a real drive, with the introduction of the Commission on Social Mobility, which has unfortunately now stagnated. We need much greater accountability and transparency across Government in this area. It seems incredible that there is no automatic impact assessment about the effect that new legislation will have on social mobility.

Our central aim and mission should be to create a society where everyone has the same opportunities in life, regardless of their background. We know we have a long way to go. As long as three quarters of senior judges, half the top 100 news journalists and two thirds of British Oscar winners are privately educated, we will not have a fair society. The kids from the council estates will still get the message that those jobs are not for people like them.

The economic imperative speaks for itself, but the moral urgency of the task is clear. The commissioners are making the case, as am I, and many other Members. The question now is are the Government listening? What happens if the commission’s many worthy recommendations are not acted on? How much longer will we expect things to stagnate? Will anyone in Government take personal responsibility to improve social mobility? It is not an easy nut to crack and it will take many years to see real improvements, but someone senior in Government, with authority and resources, is needed to build a cross-departmental approach that is clearly lacking at the moment.

--- Later in debate ---

[Laura Trott (Sevenoaks) (Con)]

It is a pleasure to serve under your chairmanship, Mr Bone. It is also a pleasure to follow the hon. Member for Barnsley East (Stephanie Peacock); I particularly agreed with her remarks about university and encouraging participation. I thank my right hon. Friend the Member for Bexleyheath and Crayford (Sir David Evennett) for allowing us to debate this today.

Given the time, I will talk about one specific thing: the importance of going to a good university in driving social mobility, and what more we can do to encourage that. I should declare an interest at the outset; I am a Sutton Trust girl and am now an ambassador for the trust. It has been mentioned a number of times, which has been a pleasure to hear.

We know that university places correlate with success; that has been shown again and again, in study after study. The Browne review showed that people are more likely to be employed, with higher wages and greater job satisfaction, if they go to university, but it is the top universities that confer particular benefit. We know that many of our top employers only recruit from a certain select number of universities. On average, they target the top 19 of our 115 universities, so it is not only university attendance that we need to focus on, but which universities our deprived kids are going to.

That has been slightly overlooked in the debate we have been having over time about university attendance, which has been more about the quantity of people going through university, rather than the quality of the education that they get and what impact that has on their educational outcomes. We have found that not enough children from disadvantaged backgrounds are going to those good universities. There have been huge upticks in the numbers over time, which is of course to be welcomed; the Government have done a huge amount to encourage that, and the Office for Students now has a plan in place for each university to encourage it further. However, the most advantaged 20% are still seven times more likely to attend the most selective universities than the most disadvantaged 40%—a statistic that we urgently need to address.

Over time, we have put a lot of emphasis on universities. That is obviously right, and there is a place for that, but, as someone who came from a comprehensive school and was lucky enough to get into Oxford with the help of the Sutton Trust, I know how difficult it is to make that transition from a comprehensive education that was good, but not amazing, to university, and the extra help that was needed once I got there. We can do more at school level to help with that transition and to raise aspiration for our kids as they are going through school.

[Dr Poulter]

My hon. Friend is right to highlight the importance of raising aspiration, but it is not just about raising aspiration a year or 18 months before the transition to university. It is about raising aspiration towards the end of primary school and at the very beginning of secondary school. There is good evidence that if that takes place, and is done effectively, we hugely increase social mobility and the aspiration of young people and their ability to attend good universities.

[Laura Trott]

My hon. Friend is right. We cannot just do this at sixth form: we need to focus on it throughout a child’s school career.

Successive Governments have tried to fix careers advice, and none has been effective in doing so. Careers advice varies hugely throughout the country and, despite the best efforts of successive Governments, evidence shows that it is not really getting much better. In our levelling-up agenda as a Government, we really need to focus specifically on that.

We also need to look at subject choice. The subject choices that children from more deprived backgrounds make tend to be less academic and I do not think they always realise how much that will drive future choices. There were people at my school who did A-levels, but did not study all the sciences, and then realised that that restricted their ability to study medicine at university. They did not know that beforehand. It is crucial that we look at how schools guide subject choices and consider what different career paths require at an earlier stage.

We come to the fundamental question of the quality of education. The education reforms that the coalition put through and that have been pushed by this Government have been critical in driving up standards in schools. We need to focus on the fact that children need to be able to read and write when they leave school; everything else that we talk about—music education, for example—is all well and good, but we must have those fundamental basics. The reforms that have been made to GCSEs and A-levels are critical and I believe will, over time, make a difference in social mobility terms.

We cannot lose sight of that. We cannot allow our Ofsted regulators to inspect everything under the sun, rather than examine quality of education. It has become a Christmas tree over time, which has diluted the focus on the quality of education in schools. We cannot allow that to happen. If we are to really succeed in changing social mobility, we need laser-like focus on quality in schools, which I know we will have. The increased funding will help with that.

In summary, we must get more disadvantaged kids into good universities. We need to highlight opportunities and instil aspiration in them throughout their time in schools.

Apprenticeship Levy

Dan Poulter Excerpts

Tuesday 11th February 2020 Westminster Hall

[Richard Graham]

I thank the hon. Member for her point. I think that the Welsh Assembly’s Economy, Infrastructure and Skills Committee published a report last week highlighting the fact that the levy was introduced without the Assembly being consulted. I have no doubt that the Minister will respond on that issue.

[Dr Dan Poulter (Central Suffolk and North Ipswich) (Con)]

My hon. Friend is making a well-informed and excellent speech. He spoke about the potential benefit to SMEs from the changes to the apprenticeship levy. However, I am sure that he recognises that there is sometimes quite a challenging relationship between the different parts of the supply chain in agriculture. The introduction of agricultural apprenticeships has not always been very successful. What would be a good way to address that problem, and what advice would my hon. Friend give the Minister and the Government?

[Richard Graham]

I intended to raise that issue in relation to the timber industry, but perhaps I will do it now. The timber industry has certain similarities with the agricultural sectors to which my hon. Friend alluded, because it too has found enormous difficulty in creating standards and courses that are applicable to a sector that employs some 75,000 people. The Timber Research and Development Association, TRADA, which is the national body, still does not have accredited apprenticeships. It has been unable to get a course accredited—it believes accreditation takes 12 to 18 months—and is deeply frustrated.

There have been similar comments from other sectors. My hon. Friend mentioned agriculture. The Minister will know that there are significant pockets of huge dissatisfaction. TRADA states that the

“Institute of Apprenticeships are trialling the concept of a face to face interview panel…But we are not being offered this interview as things stand.”

It also states that the institute has been interested in creating a course for a “timber product technician”, but that term is apparently not actually used in the timber industry.

There are detailed frustrations about how to get the right standards and courses accredited. I hope the Minister will be able to offer us reassurance that for any sector, or indeed any significant levy payer, somebody from the Institute for Apprenticeships will be available to have a face-to-face meeting to try to resolve these issues, giving us all the confidence that it will not take 12 to 18 months to set up a course, during which time employers are contributing to the apprenticeship levy, but it is not being used for their own employees.

That, of course gives rise to one of the big issues with the way in which the apprenticeship levy was structured—namely, that it is seen by many people as a tax. The principal of South Gloucestershire and Stroud College said that many major companies now contributing to the levy see it as such. They are unable to spend their levy, and

“rather than transferring this money to the restricted non-levy pot, which benefits smaller employers…the money is being held back by Treasury”

and not reinvested into training and skills for the younger generation.

As I said earlier, I do think that, to some extent, the emphasis is on levy employers to understand what the offer is and how they can use the pot more creatively. There will be individual cases where companies are not investing enough in training and skills, and should be proactively doing more to engage with the Institute for Apprenticeships to design courses, and so on. None the less, the perception that the levy is a tax is large enough that it would be helpful for the Minister to clarify whether it was always intended that there would be an element of tax contribution to the levy, and whether the £2.5 billion that I believe is being invested this year in apprenticeships by taxpayers, via the Government, is a gross or a net figure? That is to say, to what extent is the apprenticeship levy used to reduce the total cost, or is it a net figure, regardless of what comes into the apprenticeship levy?

That is important because for as long as employers view the levy as a tax and not as something that can benefit them and their supply chain it is less likely that we will have their complete buy-in. I cannot help wondering whether part of the solution might be to increase again the figure of 25% that can be passed on or traded, like carbon emissions, to SMEs. I cannot help but feel that that would increase the number of apprenticeships, which is clearly where the problem has been in delivery, and reassure businesses that the Government really do want the levy to work, maximising opportunities for both big and small employers.

I do not feel that today’s debate should be about trying to beat up the Government, either for their failure to deliver 3 million apprenticeships or for some of the complexities of the apprenticeship levy. The scheme remains relatively young, and the direction of travel should be to reform rather than scrap it. I think that that is also the view of the Chartered Management Institute and other employers’ groups. None the less, we have to recognise some of the challenges.

On the positives, the increase in higher apprenticeships has undoubtedly paid off, particularly in sectors such as those in the constituency of my hon. Friend the Member for Filton and Bradley Stoke (Jack Lopresti), where aerospace is a huge driver of employment, growth and exports for the nation at large. We have doubled the number of higher apprenticeships over the past three years, from 36,000 to 75,000. There are literally thousands of employees through some of the larger companies, such as Channel 4, Royal Mail and Lloyds Banking Group, as well as the NHS and our armed forces in the public sector. They are very comfortable, by and large, with what has been introduced, and just raise very specific implementation issues, which I will touch on.

The challenges are the fall in the number of apprentices and the complexity of some of the bureaucracy around the levy. According to the University of Gloucestershire, there have been further Institute for Apprenticeships and Technical Education delays to approvals of standards through each stage. The university gave the example of the senior leader master’s degree apprenticeships, noting that

“the standard did not achieve full approval (i.e. was not ready to be delivered)”

until several months after the launch. The university also stated:

“There is a significant administrative burden as the funding claims process is not straight forward, and subject to frequent policy and regulation changes.”

During the debate on the health Bill in the House the other day, I raised the issue of the complexity created by nursing apprentices, who must be supernumerary because the Nursing and Midwifery Council has ruled so. That makes nursing degree apprentices unaffordable for many local NHS trusts, so that issue has to be resolved.

I have been told by an intermediary business that works with large employers all over the country that

“the bulk have millions of unspent levy funds”

and that this particular company has

“attempted to introduce leadership training for which the levy would be used”,

but that there are

“so many hoops to jump through in order to get something up and running”

that it has given up. I was also emailed by the owner of a small business that employs one apprentice, who said that employing an apprentice is

“far greater a challenge than anticipated. Support in numbers, time or financial resource is limited.”

Of course—this has been said previously—one reason for employing my own apprentice was to find out precisely how complicated the process is. I do not think it needs to be that complicated, but clearly, the message from some SMEs is that it is that complicated. I hope that a change of direction to make the process simpler has taken place, and that the Federation of Small Businesses is completely behind it.

I am conscious that time is moving on, so I will just touch on a handful of key points I hope the Minister will be able to respond to. First, a number of colleagues have mentioned complexity, so any news about how the levy can be made less complex would be welcome. Some Members have also touched on the issue of inflexibility; there is a constant question mark about whether the apprenticeship levy has to be spent on only those courses that are accredited by IFATE. I understand the reasons why that might be the case, but it puts the onus of responsibility on IFATE to approve these courses—agriculture, timber, or whatever—much faster, so that people can get on them. I welcome the reduction in the amount that non-levy payers contribute to the cost of apprenticeships; it has been halved from 10% to 5%. I wonder whether that contribution is financially important, or whether it is symbolically important.

By implication, Members also mentioned the current restriction whereby at least 20% of apprentices’ time has to be spent training off-site. That is a real issue for many employers, particularly smaller ones, so I ask whether that can be either waived or improved. As has been touched on, there is a question mark about the amount of knowledge in the supply chain regarding the transferability of the apprenticeship levy, so anything the Minister could say about being able to increase that would be welcome.

Ultimately, this programme was introduced as part of the Government’s commitment to improving an apprenticeship programme in order to deliver the skilled workforce that employers need. We know that employers need more skills and more apprentices, so we need those numbers to rise, as well as the percentage of higher apprentices. A more transparent breakdown of the levy, and whether it is a net or gross contribution to apprenticeships by the Government, would be welcome. I hope that by the end of all this, IFATE and the Government will be listening more to business, so that there will be more voices out there strongly supporting the apprenticeship levy and encouraging other employers to make as much use of their levy as possible. I also hope that a new apprenticeships Minister can be appointed who will listen, oversee, champion and communicate what should be a really good, positive story for Government, business and the country as a whole.