Budget Resolutions

Geoffrey Clifton-Brown Excerpts

Thursday 7th March 2024 Commons Chamber

[Mel Stride]

What I think will be absolutely outrageous is the taxpayer having to pick up the bill for a future Labour Government. I have just explained the record of the hon. Gentleman’s party in government.

[Sir Geoffrey Clifton-Brown (The Cotswolds) (Con)]

My right hon. Friend is making a good case for yesterday’s announcements in the Budget. He has dealt very thoroughly with Labour’s record when in office, but will he turn his attention to its present proposals? If Labour will not reverse the tax on non-doms or the cuts to national insurance, does that not leave a whopping £6.5 billion in uncosted expenditure pledges?

[Mel Stride]

My hon. Friend is absolutely right. At the beginning of my speech, I invited the shadow Chancellor to explain to the House what she will do, given that the non-dom status will be abolished and windfall taxes on oil and gas will come forward. Will she once again U-turn and run for the hills, as she did with the £28 billion, or will she raise taxes or borrowing? Answer came there none.

--- Later in debate ---

[Sir Geoffrey Clifton-Brown (The Cotswolds) (Con)]

I am delighted to have caught your eye in this important Budget debate, Madam Deputy Speaker. I am also pleased to follow the hon. Member for Warwick and Leamington (Matt Western), although I disagree with almost every word he said. That is the nature of this place —we are entitled to debate these matters.

I have listened to the speeches from Opposition Members today. Both they and most of the financial commentators who have criticised the Budget—I totally agree with my hon. Friend the Member for Folkestone and Hythe (Damian Collins) on this—have failed to mention that we have been through two catastrophic world shocks: namely, the pandemic and the unexpected war in Europe, in Ukraine. They have had catastrophic effects on our economy. I ask all the Opposition Members who have criticised the Budget this: would they not have spent the money on the furlough scheme or the business loan scheme? Would they not have helped people out with energy loans? Of course they would have, so they would be in exactly the same place as we are, grappling with today’s economic problems.

A number of measures in the Budget are to be warmly welcomed, and I will come to one or two of them. I am particularly pleased that inflation has come down from a high of 11.4% to 4% today, and it is forecast to be below the Bank of England’s target of 2% by the end of this year. That is the most important thing we can do for the cost of living of all our constituents, above all tax reductions or anything else. I warmly welcome that. I will turn to some of the individual measures in the Budget, before moving to public sector productivity measures. After that, as my hon. Friends on the Front Bench will not be surprised to learn, I will mention the tourist tax.

My constituents will welcome a number of measures set out in the Budget, particularly the cut in employee national insurance contributions. Taken with those of the autumn statement, they amount to £900 for the average working person in this country earning £35,000. I suggest to everybody across the House that that is a significant increase in the take-home money that our constituents will see in their pockets today. That, combined with the number of our constituents who are self-employed—a particularly important and growing sector—means £650 for someone earning £28,000, which is also warmly welcome. That will encourage our hard-working constituents to work longer hours and become more productive.

As my right hon. Friend the Chancellor said yesterday, national insurance is a double tax on working people. National insurance combined with income tax is an unfair tax arrangement for working people. If we are to start making tax cuts, which I hope we will, it must be right to try to drop one or other of them, and that is why I warmly welcome the cut in national insurance.

[Stephen Kinnock]

Will the hon. Gentleman give way?

[Sir Geoffrey Clifton-Brown]

Let me make one important point, which I hope the hon. Gentleman will consider when he intervenes. Yesterday the Chancellor said that, through our tax cuts and by raising the personal allowance, the tax on ordinary working people today is at its lowest level since 1975, and possibly since the war, although we do not have records to prove that. It is lower than in America, France, Germany or any G7 country. The ordinary working person’s tax burden through national insurance and income tax is extremely low at the present time.

[Stephen Kinnock]

It is clear that the tax burden is actually the highest it has been in 70 years. The hon. Gentleman raised a point about national insurance contributions. I assume that he has seen the email that the Chancellor of the Exchequer sent to all Conservative party members, making it clear that the plan is to scrap NICs in the next Parliament. Does he accept that that is the Government’s plan, because it is in that email in black and white? Does he also accept that that would leave a £46 billion black hole in the public finances?

[Sir Geoffrey Clifton-Brown]

I think the hon. Gentleman is misrepresenting what my right hon. Friend the Chancellor said yesterday. I have Hansard here. I cannot look through it quickly enough to give the exact wording the Chancellor used, but he basically said that when the economy is in a fit state to so do, and when economic conditions allow, such a move is an ambition—that is not a promise or a commitment to anything at all; it is just, as my right hon. Friend said, a commitment to travel.

[Stephen Kinnock]

rose—

[Sir Geoffrey Clifton-Brown]

I will give way to the hon. Gentleman, but I hope he is not going to misrepresent what the Chancellor said. I will have to get it in Hansard, but I will give him one more chance.

[Stephen Kinnock]

As the hon. Gentleman will be aware, I am an avid reader of the Chancellor’s emails to Conservative party members. He states:

“We want a simpler, fairer tax system where you only pay tax once. If we stick with our plan that’s working, we’ll be able to make progress towards that goal in the next Parliament.”

If that is not a commitment to scrapping NICs in the next Parliament, leaving a £46 billion black hole—why do they not just own up to it, and then explain how they are going to fill that black hole?

[Sir Geoffrey Clifton-Brown]

I am grateful to the hon. Gentleman for intervening a second time, because I now have the exact words from Hansard. The Chancellor said:

“When it is responsible, when it can be achieved without increasing borrowing, and when it can be delivered without compromising high-quality public services, we will continue to cut national insurance as we have done today, so that we truly make work pay.”—[Official Report, 6 March 2024; Vol. 746, c. 852.]

I do not think it is as the hon. Gentleman is saying. I think he is misrepresenting the words of my right hon. Friend the Chancellor, and I hope he will not persist with that line of questioning.

[Jim McMahon]

I think we can all recognise a Conservative campaign headquarters rebuttal on its own Chancellor when we hear it. The substantive point was that the NICs cuts mean there is a lower tax burden, but we must be clear for the record that that is not correct. This is the highest tax burden since 1948. The hon. Gentleman must recognise that freezing the personal tax allowance has a significant impact on all taxpayers.

[Sir Geoffrey Clifton-Brown]

Again, I hope we will not have my right hon. Friend’s welcome ambition to reduce national insurance traduced in the way that it has been. I do not think we will get very far by continuing that argument. Indeed, you will probably reprimand me, Madam Deputy Speaker, if I go too far down that rabbit hole.

I was going on to say that it is not just workers, through the reduction in national insurance, who will benefit from this Budget, because of course pensioners will too. Pensioners will see a significant increase in their pension through the triple lock of a huge 8.5% this year. Together with the enormous rise in the personal income allowance that we have introduced over the years, from £8,500 to £12,500, that will affect not only those on the basic state pension but also those who earn a little bit of income on top. They will see that our measures have considerably benefited the amount that they receive in their pocket.

Moving on to our commitment to families, we recognise the importance of easing the financial strain, especially for parents. I have listened closely to those constituents in the Cotswolds who have contacted me about how they have had to tighten their purses since the covid pandemic, when so many found their work interrupted, as well as about the cost of food and energy price rises in the years following. People in rural areas will be particularly pleased to see another freeze on fuel duty, because they rely very much on having to use their cars.

I am pleased that the threshold for the high-income child benefit charge has risen from £50,000 to £60,000. It will directly impact nearly 500,000 families, providing an average boost of £1,300 per household, empowering families and ensuring that every child has the support they need to flourish. I welcome the British ISA, which allows for a £5,000 investment. It should have been more. I also welcome the incentivisation of nuclear investment assets. Rather than hitting savers, we bolster economic resilience and pave the way for a brighter future for generations to come. I welcome the disclosure moves for local government pensions that will encourage investment in UK infrastructure projects.

Our commitment to families and businesses remains unwavering, from child benefit to increasing VAT registration from £85,000 to £90,000. That should have been more, but it will help a number of businesses.

[Stephen Hammond (Wimbledon) (Con)]

One of the key measures yesterday, alongside what happened in the autumn statement, was the extension of full expensing relief to leased assets, which will drive up growth. Growth is now even tracked. As a percentage of GDP, business investment is now the highest it has been for many years, substantially higher than in the whole time Labour was in power.

[Sir Geoffrey Clifton-Brown]

My hon. Friend is entirely right. The Chancellor’s announcement in the autumn statement of £10 billion for full business expensing was one of the most important economic announcements of this entire Conservative Government. He is trying to address the problem of leasing that my hon. Friend just asked about. That is contained in the Red Book and the Chancellor is now looking at that important piece, so I welcome my hon. Friend’s intervention.

Before I turn to public sector productivity, let me put it in context. Paragraph 2.14 is one of the most important paragraphs in the Red Book. It says that over the next 25 years, growth will be at 1.7% but spending will be at 2.5%. That is unsustainable and every Government in the next 25 years will have to address that. When average growth is 1.7% and health spending in modern, civilised countries like ours is growing at 4%, that too is unsustainable. So we have to do something to address public sector productivity.

From my role as Deputy Chairman of the Public Accounts Committee, I know that one of the quickest and easiest ways to deal with that is to increase the use of digital methods, as the Committee found when we visited Denmark. The Danes have their health service properly digitalised and they are a long way ahead of the NHS. Everything from booking patient appointments, patient experience in hospitals, procurement of equipment and medicine, and everything to do with the health service is digitalised. It works incredibly efficiently. That is why I welcome the £3.4 billion for NHS digitalisation. Such investment in productivity can yield huge dividends in future outputs.

It is not just in the health service where digitalisation can have an impact. The Secretary of State for Levelling Up, Housing and Communities is currently consulting on a relatively small investment in the digitalisation of the planning system. Every business, everywhere, wanting to do anything, complains about the slowness of the planning system and that local authorities do not have enough planning officers. Digitalisation will cut some of the bureaucracy for planning officers, allowing them to take better and quicker decisions. It will help productivity enormously and have a huge knock-on effect for businesses.

As I promised the Minister, I will now turn to tax-free shopping—he would be disappointed if I did not mention this subject as there was disappointment that there was very little mention of it in the Budget. There is a small mention in the Red Book and the OBR has produced a separate report, which I will come to shortly. In the debate on the autumn statement, in response to an intervention I made, the Chancellor said:

“We changed policy on this issue a year ago because it cost around £2.5 billion a year and we did not think we could afford to continue it, but we are looking again at the numbers in the light of the most recent data and we can see what has happened to comparative shops in Paris and Milan. We will review this to see if it is still that expensive, and I hope that it is not.”—[Official Report, 22 November 2023; Vol. 741, c. 349.]

Yesterday’s OBR review was not a full review. All it did was review its very limited 2020 forecast and its own figures, with no reference to how badly the UK is performing relative to our continental competitors. The OBR made no mention of the costs and benefits to the Exchequer of extending the scheme to EU visitors, and the OBR has never been asked to look at that.

I give the Government credit where credit is due. We have a new doctrine in the OBR, and it starts to address some of the points that my hon. Friend the Member for Christchurch (Sir Christopher Chope) was making. The Chancellor said that

“if we reduced the higher 28% rate that exists for residential property, we would in fact increase revenues because there would be more transactions. For the first time in history, both the Treasury and the OBR have discovered their inner Laffer curve.”—[Official Report, 6 March 2024; Vol. 746, c. 849.]

If they can do it for the cut in capital gains tax, why can they not do it for the reintroduction of the tourist tax?

I will acquaint the House with one or two figures, because I have some figures for what is going on in the real-world economy. If the Minister will bear with me, I am not sure the Treasury is truly taking them into account. When he and the House hear the figures, they will begin to think we should be investing in this. First, let me refer to two independent reports. One is the well-respected and well-renowned forecasting by Oxford Economics, which predicted that restoring VAT RES—the VAT retail export scheme or, colloquially, the tourist tax—could increase GDP by £6 billion. Another report predicted £7 billion. We are dealing with huge stuff here, and a potential huge benefit, so I cannot see why the Government will not at least do a proper study.

We know from our figures that British businesses lost out by £1.5 billion in 2022 and by even more in 2023. The measure would benefit many of our big retailers, hospitality venues, airports and cultural destinations, particularly tourist destinations, such as the Cotswolds. The report also shows that Britain is losing out on a £10 billion EU market, and that the measure would give the Exchequer a net benefit of £500 million in VAT alone.

The figures on how we compare with our competitors are stark. In 2022, spending by American visitors to Britain was at 101% of the pre-covid level of 2019, but guess what? In France, it was 226%. In Spain, it was 206%. In Italy, it was 190% of pre-covid levels, as compared with our level pegging with the situation pre-covid. This is big stuff, and I cannot understand why the Treasury will not study it properly. In 2022, spending by visitors from the Gulf Co-operation Council states in Britain was only at 65% of 2019 levels, but it was 198% in France, 158% in Spain and 166% in Italy. Those are not my figures, but figures from real traders that have given the Association of International Retail their actual figures audited from their books. They are not made up. I gently suggest that the Chancellor and the industry—industry would fund it, if necessary—jointly commission a proper independent study into the full impact of tax- free shopping on British businesses, the economy and the Exchequer, so that we can have a real evidence-based decision on this huge and important area. Will the Chancellor meet me and industry representatives to discuss it further?

I am delighted that we have seen inflation fall from 11.1% to 4%. Wages are rising, mortgage rates are starting to fall and interest rates will hopefully fall towards the latter end of this year. It has been a tough few years. Pandemics and wars cause economic strains that few countries have managed to avoid. I was vocal last year on rising energy and food prices, which are a regressive cost hitting low earners the most. I am pleased now to see the cost of living easing.

The people of The Cotswolds want to see their hard work pay, the innovation of small and medium-sized businesses encouraged, and public services such as schools and the NHS well funded but operating efficiently. However, those services can improve only if our economy is strong and thriving and the UK is seen as the best place to do business. That is why I am so pleased that yesterday my right hon. Friend the Chancellor’s Budget covered so many world-leading sectors, including the creative economy, unicorns, artificial intelligence, and the financial and pharmaceutical sectors. We have much to be proud of in so many sectors, and the Chancellor did a lot yesterday to encourage every single one of those businesses, with their innovation and energy. I commend his Budget.

[Several hon. Members rose—]

Department for Education

Geoffrey Clifton-Brown Excerpts

Tuesday 26th February 2019 Commons Chamber

[Sir Geoffrey Clifton-Brown (The Cotswolds) (Con)]

I am delighted to have the opportunity to speak in this very important estimates debate.

I would like to start where the Chair of the Education Committee, my right hon. Friend the Member for Harlow (Robert Halfon), who made an excellent speech, finished. Every child in this country deserves a fair chance to get on the ladder of opportunity to the best of his or her abilities. While I warmly welcome the record funding that is going into education in this country at the moment, the problem is that, in some areas on the ground in our constituencies, it does not feel like that. I want to concentrate on those areas, particularly the funding of schools and further education colleges.

I welcome this debate and the increase in the departmental expenditure limit, up from £66.4 billion to £77.9 billion, although most of the increase is to cover the write-off of student loans. I also welcome the introduction of the new funding formula’s money for schools in April 2018, which should provide £4,800 per secondary pupil and £3,500 per primary pupil. The problem, as my right hon. and hon. Friends on the Front Bench know, is that the local authority distributes this money, which means that quite a number of schools in my constituency do not even receive that amount.

I am grateful to follow my friend the hon. Member for Hackney South and Shoreditch (Meg Hillier), who chairs the Public Accounts Committee, on which I serve as deputy Chair. Secondary schools in her constituency—I do not mean this in any personal or political way; her constituency just happens to be at the top of the league—receive on average £7,840 per pupil, which is a 64% increase on schools in my constituency. I ask my colleagues on the Front Bench whether that is really fair. In addition to that 64% increase, quite a lot of the schools in her constituency get the pupil premium money. One wonders, given the funding streams in this country, whether there is an element of double counting.

Of course school costs will be higher in a central London constituency, but even in Gloucestershire, costs such as the national teachers’ pay award increase in 2018, the apprenticeship levy imposition, additional HR costs, increased pension costs, higher levels of special needs and higher rural bus costs, all of which are imposed by Government, amount to about 6%. Therefore, if the Government increase their cash amount this year by 1%, it is effectively a 5% budget cut, which has to be met by efficiencies. Things have been pared down over a number of years.

Mr Will Morgan, the excellent headteacher of the excellent Cotswold School in Bourton-on-the-Water, recently wrote to me to say:

“Over recent years we have made many savings—class sizes, teacher contact time, TA support, service costs, reducing leadership, etc. Despite this, if finances continue as they are and we do nothing, we will be in deficit as a school at some point in the 2021-22 academic year.

One of our strategies to try to alleviate this ‘cliff edge’ is to ask parents to donate—for many, including myself, this goes against what we should be doing”.

That is what is happening on the ground. We need to fund our schools at a level at which they can operate properly.

When I have discussed this with various Schools Ministers in recent years, they have always told me that their Department was going to do some work on what it really costs to run a secondary school and a primary school. There are certainly inescapable costs: the teachers have to be paid, the buildings have to be maintained and kept warm, and there has to be an administration function. Let us find out what it really costs and ensure that no school anywhere in the country goes below that level. As others have said before, if we go below that level, schools have to make cuts, either in teachers or in curriculum subjects.

[Janet Daby (Lewisham East) (Lab)]

I congratulate the hon. Gentleman on his significant speech, and I concur with the point he has just made. In the London Borough of Lewisham, 71 of 73 schools are facing cuts, and are losing £8.8 million between 2015 and 2020.

[Sir Geoffrey Clifton-Brown]

I am grateful to the hon. Lady for that intervention. Nobody wants to see any schools having to make cuts; they want to see every school trying to attain outstanding Ofsted reports, to be able to educate all their children and pupils to the best possible standard according to their abilities.

I say to my colleagues on the Front Bench that I believe the maxim should be that similar schools with similar demographics, wherever they are in the UK, should receive similar funding. Unfortunately, I was unable to find an example in the time available. I ask my hon. Friends on the Treasury Bench how they intend to address that problem, and bring to their attention two other problems in the primary and secondary sectors. Gloucestershire is a well-run local authority. At the moment, it does not run a deficit in its education funding, but a number of local education authorities do. However, we have two serious emerging problems in Gloucestershire, which I hope my hon. Friends on the Front Bench will listen to seriously.

The first relates to the higher needs block. In Gloucestershire, the higher needs block has increased by 40% over three years. We were incredibly grateful when the Minister announced an extra £1.3 million over two years. That will be helpful over the next two or three years, but we have to address the structural problem. We have to work out why it is that in Gloucestershire schools—I believe Gloucestershire is not alone—there is a very large increase in special needs. I am sure it is all to do with the education and healthcare plans. How they are granted and funded, in particular for out-of-county placements, place a very high burden on the budget.

The second point I would like to bring to the attention of my hon. Friends is the significant increase in the number of exclusions in some schools, so that they do not have to bear the costs and difficulty of dealing with difficult pupils. It does seem—I ask my hon. Friends to do some work on this—that certain schools have consistently higher exclusions than others. That must be to do with a school’s policy, rather than a policy that suits the individual pupil. That cannot be right. I would like to know what happens to those excluded pupils. Some return to school and that is good. Some are withdrawn from the register entirely and may be home educated, where they receive pretty scant attention from the state. Some will be educated excellently at home, but I suspect some will receive little education at home. Some will be looked after by social services. Sadly, some will end up in the criminal justice system. That cannot be right.

Finally, in the last minute available to me, I would like to talk about further education. The principal of Cirencester College, the only college to trial T-levels in Gloucestershire at the moment, contacted me the other day to say that rather than the £4,800 per pupil it would get in the national funding formula, he is receiving between £3,600 and £4,000 per pupil. That amount has been constant for five years, despite increased costs. He says he has had to reduce subjects, teachers and mental health services, and that the funding is half of what a university student receives. He says his funding for doing the same job should, in all fairness, be the same as if his pupils were receiving A-level education in sixth form. He has higher costs in a rural area and says rurality should be one of the factors in the formula. That would help schools in rural areas like his.

--- Later in debate ---

[Will Quince (Colchester) (Con)]

It is a pleasure to follow the hon. Member for Colne Valley (Thelma Walker), who speaks with a huge amount of authority on this issue. I congratulate the hon. Member for Hackney South and Shoreditch (Meg Hillier) on securing this debate, and it was a pleasure to support her application.

I should declare an interest, albeit not a pecuniary interest. My wife is a primary schoolteacher, and as comfy as the sofa is, I prefer the bed. I also have a seven-year-old in a local primary school and a young daughter who will start primary school next year, so I suppose that I have a vested interest.

Like many of my constituents, as a parent I completely understand the importance of education. When I speak to constituents, education is often their second largest priority—second only to our NHS. As a Conservative, I completely support equality of opportunity, which stems from education. Education is at the very heart of it. To that end, I am delighted that 1.9 million more children than in 2010 are being taught in good and outstanding schools—this has increased from 66% to 84%.

This is a debate in anticipation of the Government’s spending review, and although it is not only about money, money is inevitably an important factor. Let me start with the bits that I very much support and welcome. I welcome the introduction of the national funding formula, which is supported by a not insignificant £1.3 billion across 2018-19 and 2019-20. I welcome the fact that the Government protected the schools budget up to 2016, when other Departments faced cuts in the early coalition years. I welcome the fact that the core school funding budget will rise from £41 billion in 2017-18 to £42 billion this year and £43.5 billion in 2019-20.

One of the most enjoyable parts of being an MP is attending assemblies, which I do regularly on Friday mornings, and listening to not only teachers and headteachers but parents, governors and, indeed, pupils, to hear what they think and how they talk about our role here and how it impacts on them. I suppose this is a good juncture to pay tribute to all the teachers and the amazing schools we have in Colchester. Having met those teachers, headteachers, governors and parents, I find that we are asking our schools to do more than ever before and that is putting unbelievable pressure on teachers—I see that at home, but I also understand it from having spoken to teachers from across the schools in the constituency.

Schools are facing unprecedented cost pressures, and I wish to touch on a few of them because the context of the pressures schools are under is important when we talk about additional funding in education budgets. These cost pressures include providing support and intervention for children with specific learning difficulties; mental health issues; employer pension contributions; the national living wage; academies and multi-academy trusts potentially having less bargaining power than local authorities used to in terms of economies of scale; the costs that came with the general data protection rule; the rising cost of utilities; the apprenticeship levy; the growing cost of appeals; the costs of changing to multi-academy trusts; staff development; staff recruitment; and of course the teachers’ pay award. I have just touched on a few of the many rising cost pressures on schools.

In the short time available, I wish to touch on further education, which I genuinely believe is verging on crisis. For 16 and 17-year-olds, funding has been frozen at £4,000 per student since 2013, and for 18-year-olds, it has been frozen at £3,300 since 2014. As I just mentioned, colleges and sixth forms are not immune to all those different cost rises and more, and the Government have imposed a range of new requirements. Costs have risen sharply and the budget has not risen to reflect that. That is not good for students; it is damaging our international competitiveness; and it harms social mobility.

The Secretary of State is no longer in his place, but the Minister for Apprenticeships and Skills is. They will know, because I have lobbied them both on this issue on numerous occasions, that I believe that schools have already maximised the efficiency savings that were available to them. A toolkit was helpfully provided by the Department, and schools have used it and gone even further. I genuinely believe that there is no more fat left to trim, and I do not want our headteachers focusing on how they can further squeeze their budgets; I want them focusing on educational attainment and improving outcomes for students in all our schools.

So I do have some asks. I know the Minister has heard them before, but I do not apologise for repeating them. We do need an increase in the revenue budget and in the high-needs budget. The rate for 16 to 19-year-old pupils must increase. The national funding formula needs to be rolled out and implemented in full as soon as possible. Funding settlements should be for a minimum of three years. We cannot expect schools to produce three-year budgets but not give them that certainty and consistency in their funding. We have to increase the capital budget for our schools.

[Sir Geoffrey Clifton-Brown]

Does my hon. Friend think it odd that the NHS has a budget for 10 years, local government has a budget for three years and yet schools have a budget for only one year?

[Will Quince]

I thank my hon. Friend for that intervention. He reads my mind, because I was just about to say that we need a long-term plan for education and schools, in the same way that we have one for our NHS. This is absolutely the right thing to do, because teachers and headteachers need that certainty and consistency. We also need to ensure that mental and physical health services are adequately resourced.

I genuinely believe that we are on the precipice. The vast majority of any school budget—anywhere between 80% and 90%—is spent on people. They are the asset in our education system. If there is no more fat to trim, the only place left to go is to reduce staff, and that will have a detrimental impact on pupils’ attainment and, indeed, outcomes across the board. There are already schools in Colchester that are letting support staff go and not filling vacancies. My fear is that if that continues, we will start to see a decline in results.

I wholeheartedly believe that education is at the heart of equality of opportunity. I believe in social mobility, and education is its key enabler. Education is an investment in our people. I will continue to lobby for additional funding for education and ask that the education budget is increased in all the areas I have mentioned ahead of the next spending review.

Intergenerational Fairness

Geoffrey Clifton-Brown Excerpts

1st reading: House of Commons
Tuesday 28th February 2017 Commons Chamber

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

It is a pleasure to speak in this important debate on behalf of the Opposition. I need to extend the apologies of my right hon. Friend the Member for Birkenhead (Frank Field), who I believe is doing media rounds following the news about BHS that we heard this afternoon.

I am a baby boomer, too. My girls are millennials. Many of the things that have been discussed today have been described up and down the country. How lucky I was to be able to go to university without the debt that my girls—and many other young people—are experiencing, and to be able to afford a mortgage in my late 20s, before we had our first daughter. My daughters simply do not have that opportunity. Their debt will be around their necks for a long while, and they are not in a position to buy their own homes, although they both work incredibly hard.

I absolutely agree with the premise of the Select Committee’s report—we do need to address the inter- generational inequality that is being experienced throughout the country—but I differ with it on the solutions. The report suggests that the state pension triple lock should be targeted for expenditure savings. According to the OECD, the basic state pension was one of the world’s lowest after the Thatcher Government broke the link between earnings and uprating in 1980. That led to a long decline in the value of pensions, which the last Labour Government strove to restore.

Although there have been positive efforts to ensure that the new single-tier state pension is fairer and of wider benefit to members of the current generation, there are problems with it. Over the course of their retirement, those in their 40s will be £13,000 worse off than otherwise, those in their 30s will be £17,000 worse off, and those in their 20s will be £20,000 worse off. A continued above-inflation rise will not only benefit those who are retiring now, but will be enjoyed by generations who are to retire. That is one of the central reasons for Labour’s commitment to maintaining the triple lock beyond 2020. I know that we differ from the Government in that regard, but underpinning our decision is the issue of inequalities within generations. We must not trade off the inequality of one generation against the poverty of another.

[Geoffrey Clifton-Brown (The Cotswolds) (Con)]

Will the hon. Lady give way?

[Debbie Abrahams]

I hope that the hon. Gentleman will excuse me if I do not. I am incredibly pressed for time and I have already had to cut my speech considerably.

The Select Committee recognised that those who look solely at the intergenerational picture can lose sight of important inequalities within generations. It is important to protect the triple lock and universal pensioner benefits while making different choices to support other generations. The Labour Government made great strides—about 1 million pensioners were lifted out of poverty—but one in seven have remained in poverty since 2010. That level is still much too high, and it should worry us. That is not acceptable in one of the richest countries in the world, and we must do all that we can to ensure that the trend does not rise again. That extends to our commitment to the triple lock and universal pensioner benefits, and our commitment to act immediately on the fate of the 1950s WASPI campaigners. We are committed to ensuring that every older person has dignity and security in retirement.

What are the other choices that we believe should be made? Three specific policies could immediately help to address intergenerational imbalances in a way that would not deprive one generation while supporting another. First, we want to introduce a real living wage, based on what people actually need. After evaluating the effects of the national living wage that has been introduced, the Living Wage Commission said that it failed to meet the basic needs of low-income households. Analysis by the Institute for Fiscal Studies has shown that without significant policy change, real wages are likely to remain lower in 2021 than they were after the recession. Seven years of austerity have consistently failed to deliver pre-recession wages. The decline in the value of wages has been driven by what the Office for National Statistics has described as an unprecedented decline in productivity —unprecedented since world war two. At the same time, prices of basic household goods and services have risen dramatically.

That long squeeze has been coupled with repeated attacks by this Government and the coalition Government on income support provided through the social security system. Many Members have mentioned the issue of in-work poverty: 7.4 million people—one in eight—are living in poverty, including children. I beg to differ with the point that work is the route out of poverty. Four out of five people in low-paid work will still be in low-paid work 10 years later. Taken together, those dynamics have really impacted on standards of living.

Labour has therefore committed to intervene. At our party conference last year, the shadow Chancellor announced that he would introduce a real living wage of £10 an hour. That is what is anticipated will be needed in 2020. The second step is to invest in social and affordable housing. I mentioned my own experience and that of my daughters. It barely needs repeating that the rapid acceleration in house and rental prices, which is a direct result of the failure of all Governments, but especially this Government, to build social and affordable housing, is a key driver of the declining standard of living among those of working age. It might indeed be the fundamental dynamic driving intergenerational disparities.

The consensus is that we need to be delivering 200,000 homes a year, 80,000 of which should be at affordable social rent levels, if we are to keep up with household formation and address poverty levels. Last year, unfortunately, the Government got nowhere near that. Rather than raiding the state pension, the Government should invest in socially rented housing, or allow councils to replace stock sold under the right to buy. That would have a huge impact on intergenerational unfairness, as the Work and Pensions Committee recognises.

The third policy intervention to address the inter- generational imbalance is widening access to auto-enrolment saving. It is a testament to the previous Labour Government that 10 million additional workers are estimated to be newly saving or saving more as a result of auto-enrolment. A total of £17 billion of pension savings has been put away by low-income workers. However, 37% of women workers, 33% of workers with a disability and 28% of black and minority ethnic workers are still not eligible for auto-enrolment. That must be addressed in the review that will be undertaken. We will be pushing hard for that, as the Pensions Minister would expect.

We respect the hard work that the Work and Pensions Committee has put into producing its report. We broadly agree with its analysis, but we believe that there should be a different emphasis and different policy solutions to address the intergenerational inequalities that exist.

[The Parliamentary Under-Secretary of State for Pensions (Richard Harrington)]

Having learned a word from you earlier today, Mr Speaker, I can say that hope we have all learned from the sagaciousness of the right hon. Member for Birkenhead (Frank Field), the Chairman of the Select Committee, who started the debate. I am indebted to you, Mr Speaker. At least I have got that on the record—and many other words I have learned from you.

I seriously thank all Members, on both sides of the House, for their contributions, particularly the members of the Work and Pension Committee who spoke. I appreciate the comments that have been made about the Pensions Regulator securing the settlement with Philip Green. I am very pleased about that. It is good for scheme members, and it will bring peace of mind to the 19,000 BHS pensioners who have endured uncertainty following the company’s collapse. I commend both Select Committees for the work they have done on that issue. I also commend the Pensions Regulator and its staff, who have worked very hard and done everything we could have expected of them.

This has been an informative and timely debate. Recent evidence shows that pensioner poverty is at a near record low, which is a good thing for a Pensions Minister to be able to say. We have seen a dramatic fall in the percentage of pensioners living in poverty from 40% in the early 1970s to 14% in 2014-15, but I hope that I never give the impression of complacency. Poverty is poverty, and there are still far too many pensioners living in poverty.

Intergenerational fairness is an easy thing to say. My hon. Friend the Member for Peterborough (Mr Jackson) talked about his grandparents, and I also come from a generation whose parents knew poverty. They knew unemployment, they knew the war and they knew poverty—[Interruption.] I beg your pardon, Mr Speaker; I was trying to be sagacious in my comments. I was about to mention my mother, who has a photograph of you on her mantelpiece.

We were brought up hearing people say, “You don’t know you’re born, you lot. You’re so lucky.” And we were a lucky generation. One aspect of the luckiness of my generation, as was mentioned by many Members, including the shadow Secretary of State, the hon. Member for Oldham East and Saddleworth (Debbie Abrahams), is that we were often the first generation to go to university. I want to make it clear that the answer to intergenerational fairness is not to make pensioners poorer; it is to concentrate on building the economy, building extra houses, and having better quality education and apprenticeships. All those things have been described eloquently by many Members, in most cases in what the Americans would call a bipartisan manner. I am pleased to be part of that debate.

The labour market is the strongest that it has been for years. The employment rate is at a record high, and in the past year we have seen nearly 300,000 more disabled people, over 200,000 more women and over 150,000 more black and minority ethnic people in work, so the signs are pretty good. Rightly, there is cross-party consensus that achieving lower levels of pensioner poverty is a worthy objective. Who would say that it was not? I recognise the valuable work of the Work and Pensions Committee in promoting such issues. It almost goes without saying that we want to ensure that pensioners are treated with the dignity and respect that they deserve in retirement. Anyone in the House, and in the country, would say that.

The right hon. Member for Birkenhead acknowledged that pensioner poverty had been hugely reduced over the past decade, but he and his Committee are right to look at the long-term alternatives. He said that budgetary matters are important. We cannot talk about the triple lock or any other system without considering the amount of public expenditure involved. I am sure everyone would agree that the Government’s commitment to the triple lock is an invaluable element in addressing the issue of pensioners living on a low income. As a result of the triple lock, the value of the full basic state pension as a proportion of average earnings is at its highest since the 1980s. Since 2010, the triple lock has given current pensioners, more than 1 million of whom rely solely on the state for their income, up to £570 a year more than if their pension were just uprated by earnings. As I and others have stated, that was why we introduced the triple lock in 2011, and it is why we have committed to continuing it over this Parliament. It has protected the income of millions of people.

[Geoffrey Clifton-Brown]

Will my hon. Friend give way?

[Richard Harrington]

I am sorry, but I do not have time. Normally I would be happy to give way.

As my hon. Friend the Member for Weston-super-Mare (John Penrose) eloquently pointed out, we have to be careful about creating a burden for future generations by spending money today. He made an interesting, eloquent speech, and I hope to discuss his moral prism with him on many other occasions, within the Chamber and without. Achieving for the pensioners of today does not preclude us from ensuring a good deal for the pensioners of tomorrow. The Government are determined to build a country that works for everyone. The coalition Government took some difficult decisions to put the welfare system on a sustainable footing while still protecting the most vulnerable. It is important to remember that, since 2010, the Government have focused on reducing the deficit and getting public spending under control in order to protect future generations from unpayable public debt. It is important that that is recognised, and it fits in with what my hon. and right hon. Friends have been saying.

There are clear signs that we are prioritising the sustainability of this country’s pension provision. In the limited time available, the best example that I can provide, which was mentioned by the hon. Member for Oldham East and Saddleworth, is the success of auto-enrolment, which the Department is currently reviewing. I am pleased that more than 7 million people have come under auto-enrolment which, I should say—the hon. Lady will jump up to say it otherwise—was introduced by a Labour Government. It was started through a cross-party arrangement and it has received cross-party support, but the hon. Lady is right to question the Government about the review, which we have been open about, because many categories of people have not been included. As for intergenerational fairness, the early success of auto-enrolment is a good sign for people who will be retiring in many years to come. They will be able to calculate their state pension plus their auto-enrolment workplace pension and get a clear idea of what they need to retire on. I am also pleased to say that the level of opting out is low at the moment, but that is not a cause for complacency.

While several hon. Members made this point, I want to highlight what my hon. Friend the Member for North Swindon (Justin Tomlinson) said about apprenticeships and UTCs, which are crucial for the future. As the Prime Minister’s apprenticeship adviser when the pledge for 3 million apprenticeships was made, I am pleased to say that the Government are on course to meet that target. We have all seen in our constituencies how important that is. Prosperity often comes from skills, but skills come from not only university but the alternatives to university. I am pleased that that is becoming something real, not just a political promise.

The Government’s approach to intergenerational fairness is based on ensuring that there is economic prosperity and security for working people at every stage of their life, including in retirement. The hon. Member for Motherwell and Wishaw (Marion Fellows), who I respectfully say is from my generation—[Interruption.] Okay, I know that I look a lot older than her, but I think that we are from roughly the same generation. She eloquently made the point that our generation has not had a one-way bet. I, too, remember when interest rates shot up—I was also driving and thinking about my mortgage—so I understand her point perfectly. I agree that we cannot say, “It is all right for us lot but it is not good for the next lot,” because life goes up and down. The Government have to take all that into consideration.

The Government are committed to improving productivity and innovation, which we all agree is to the benefit of everyone in society. We are acting to boost productivity, which is crucial to raising living standards, by investing in infrastructure, supporting job creation and reforming the markets.

I conclude by emphasising that Governments have to look at the whole picture. State pensioners and private pensioners are part of that picture, but achieving real intergenerational fairness for everybody—that is what we all want and it is why most of us stood for election—involves ensuring that people have long working lives, get prosperity from working, enjoy their work, and save for their future. It is for the Government to guide them, from the day they start work until the day they retire, on saving for their prosperity in the future.

Question deferred (Standing Order No. 54).

Oral Answers to Questions

Geoffrey Clifton-Brown Excerpts

Monday 11th July 2016 Commons Chamber

[Mr Vara]

I assure the hon. Lady that, under the coalition Government and the present Government, we have record levels of employment for women, including older women. That is something to bear in mind. We are working extensively with employers to ensure they appreciate the value of older workers, which they do. That is why we have record levels of employment, particularly for women.

[Geoffrey Clifton-Brown (The Cotswolds) (Con)]

I suspect that most hon. Members have been acquainted with difficult cases like the one mentioned by the hon. Lady. Will my hon. Friend the Minister keep an open mind on pension credit arrangements for these people? They are, after all, means-tested and could deal with the worst hardship cases.

[Mr Vara]

We do have particular criteria and where people fit that criteria, they will of course qualify for whatever benefit it is they are seeking guidance on.

Housing Benefit and Supported Housing

Geoffrey Clifton-Brown Excerpts

Wednesday 27th January 2016 Commons Chamber

[Brandon Lewis]

I say gently to the hon. Gentleman that the financial mess in which the previous Labour Government left this country means that we have to make difficult decisions and move quickly to ensure that hard-working taxpayers are properly protected. I am proud to be working with a Chancellor who sees that as one of our first and foremost duties.

[Geoffrey Clifton-Brown (The Cotswolds) (Con)]

Can I be the first on the Government side of the House to warmly welcome the announcement that my hon. Friend has just made? It makes eminent sense to postpone this decision for one year on the basis of proper evidence and facts. His supported housing review will report at the end of March. After the review has concluded, will he come to conclusions on the matter rapidly? I was lobbied about this on Saturday by Bromford housing association in my constituency. There is a lot of uncertainty in the sector, so I urge him to come to conclusions rapidly after the review has concluded.

[Brandon Lewis]

As my hon. Friend rightly says, as the findings of the review come in we will look to work urgently with those in the sector to provide certainty for them.

Personal Independence Payment Applications

Geoffrey Clifton-Brown Excerpts

Wednesday 17th June 2015 Westminster Hall

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

I beg to move,

That this House has considered processing of personal independence payment applications.

It is a novel and pleasant experience to serve under your chairmanship, Mr Davies. I welcome to his place the new Under-Secretary of State for Work and Pensions, my hon. Friend the Member for North Swindon (Justin Tomlinson). As my colleagues know, and as people across the House will find, he will be excellent in this role. He has great ability and compassion, and I am sure that we all wish him well in delivering for disabled people throughout the country.

Over the past several months, I have been contacted by a number of desperate constituents who feel like they have nowhere to turn. They are often severely disabled people who already have to suffer significant physical pain and distress daily. On top of their conditions, they have had to endure months of delays in applying for the personal independence payment. A system designed to help them is instead increasing their hardship and anxiety. I called for this debate to give those vulnerable people a voice.

I begin by saying that I support the underlying principle of the personal independence payment. Under the old system of disability living allowance, half of all claimants never had to undergo an assessment, and 71% of people who received the benefit never had their award reviewed. That meant that people whose conditions worsened were underpaid and those whose conditions improved received more than was necessary. That system was neither effective nor compassionate in supporting disabled people. Clearly, the money was not being well targeted at those who genuinely needed it.

By contrast, the personal independence payment is a more dynamic benefit, capable, at least in theory, of adapting to disabled people’s complex and often changing conditions, and providing them with the appropriate level of support. However, I have dealt with many cases locally of people waiting far longer than the target of 16 weeks to have their PIP claim processed. I have serious concerns that the administration of the new benefit has not functioned as well as it should have done in order properly to support some of the most vulnerable people in our society.

When PIP was introduced in the last Parliament, average delays were as long as 30 weeks. My right hon. Friend the Secretary of State for Work and Pensions rightly acknowledged that those delays were “unacceptable”. Since then, the number of healthcare professionals has doubled, the number of assessment centres has increased and their opening hours have been extended. I understand that that has helped to bring down average waiting times substantially, which is welcome. I commend the Minister, who has been in office for a limited time, and his predecessors on their work in getting to grips with the issue. However, the many letters and emails that I continue to receive from my constituents, including one only yesterday and another as I waited for this debate to start, suggest that there are still unacceptable delays.

To highlight my concerns, I shall describe in detail two cases. After having an accident at work, Mrs Lynn Dodds from Beverley suffers from two chronic pain conditions: chronic regional pain syndrome and fibromyalgia. She has to use crutches to get around her house and needs a wheelchair whenever she goes out. She has a carer for 37 hours a week. She suffers daily seizures, brought on by stress and anxiety.

Mrs Dodds first applied for the personal independence payment in November 2013 and she had to wait eight months before being assessed. In that time, her condition deteriorated. She was then, unbelievably, told by Department for Work and Pensions staff that she had to start the whole application process again. Devastated by that news, she none the less reapplied for PIP in August 2014. She had to wait a further seven months to receive her reassessment. The healthcare professional told her that the decision could have been made on paper, without a face-to-face assessment. That is what she was told after all that time.

Mrs Dodds was then told that she would receive a decision within four weeks. It has been nine weeks and she is still waiting, although I think that something may have happened in the last few days, coincidentally or otherwise. When I raised the case with the DWP, I was told that the delays in her application were due to a heavy workload. When Mrs Dodds inquired herself, she was informed that the reason was that Atos had not yet sent her assessment forms to the DWP. She is frustrated that whenever she phones up to try to register a complaint, she is told that she must wait five working days for a call-back—call-backs that of course do not come within the five days, or at any time. After her initial attempt to lodge a complaint four weeks ago, she is still waiting for the DWP to call back. So much for five days.

Mrs Dodds says that following her experiences over the past two years, she suffers from depression and anxiety. We can easily understand why. She has gone from being a wife and mother looking after her family full time to being completely dependent on the care of others. I understand there are inherent difficulties in introducing a whole new benefit. I also understand that PIP’s more rigorous and improved assessment process will lead to an increase in work for DWP staff, but the length of time it has taken to process Mrs Dodds’ claim is unacceptable and completely wrong.

The second constituent’s case that I want to highlight is that of Mr Terry Read, also from Beverley. He lives with his 16-year-old daughter and is unable to work because of his disability. Following a deterioration in his condition, he applied for a reassessment of his personal independence payment to reflect his change of circumstances in October 2014. It was not until April 2015 that he was given a medical assessment. Every day his condition was deteriorating. Every day he called the DWP to ask why the decision was taking so long. When he contacted me, he said he was at his wits’ end. When DWP eventually awarded him the benefit last week, it did not backdate it to when the decision was made, so even after months of delays, he was given less money than he was entitled to in order to support the costs of his deteriorating condition.

Although I have named only two examples, many others have contacted me in the last few months about delays in receiving the personal independence payment. Mr Davies, you may be aware of a recent verdict in the High Court: the judge ruled that the delays experienced by two PIP claimants were unlawful. In that case, the claimants had to wait more than seven months for their benefit applications to be processed. The benefit should assist with the additional costs of disabilities, but the delays make disabled people reliant on family, friends and carers, when they want to be able to support themselves. In many cases, the delays cause added stress and anxiety, which aggravates claimants’ conditions.

From October this year, those still claiming disability living allowance will be invited to make a claim for the personal independence payment. That is why it is so vital that problems in the system are resolved now, and that average delays continue to decrease. What steps has the Minister taken to reduce delays in processing applications? What lessons can be learned from the roll-out so far, as October will be the beginning of a large and doubtless challenging process? What is his analysis of what has gone wrong?

I am aware that there are particular difficulties in setting up and running assessment centres in sparsely populated rural areas. I chair the Rural Fair Share campaign and the all-party group on rural services. It is easy to design policies in this place that do not work very well for vulnerable disabled people in rural areas, where there might be few, if any, public transport services and there is a real challenge in getting to cities to be assessed. I have spoken on numerous occasions in this place about the need for the Government to ensure that their policies are rural-proofed. A disabled person who happens to live in a rural area should not have to wait longer for an assessment for the financial support on which they rely for their independence.

Is the Minister investigating the feasibility of pop-up assessment centres that have shorter opening hours, but that enable people living in rural areas, such as my constituents, to have their assessments carried out locally? If further work could be done, or if there were guidelines on what such a pop-up centre might require, perhaps communities including those in my area could look at them and identify premises where such provision could be made available.

[Geoffrey Clifton-Brown (The Cotswolds) (Con)]

I congratulate my hon. Friend on securing this important debate. He seems to be implying that rural constituencies such as his and mine suffer more delays than urban constituencies. Has he been able to conduct any research into this, because one would assume that it is more difficult to employ assessors in urban areas than in rural areas?

[Graham Stuart]

I cannot claim to have done such research, but perhaps the Minister can cast some light on the matter. Perhaps we could jointly request further work to see what can be done to try to make sure that we have a balanced system that serves everybody as equitably as possible.

I do not know whether it is wise to pick up something from Facebook at the last minute, but in response to a notice about this debate, a constituent posted this a few minutes ago:

“8 weeks to decide if you are eligible. Another 8 weeks to receive the form. You have 2 weeks to complete it. It then takes then another 8 weeks to arrange someone to visit you and a further 8 weeks for them to decide. That was what I got told this morning when I rang up! That's 34 weeks!!!! How on earth can they justify that????? We will back date it to the date I applied. It will be no good by then....!! Idiots and that's being polite”.

I hope the Minister will be able throw light on that and make sure people are not given such messages, because that is not my understanding of what the situation should look like.

I conclude by stressing again that I support in full the principle behind the Government’s reform of disability benefit. It is right that we target financial assistance at those who need it most, in a way that takes into account the changing nature of many people’s disabilities. I commend the Government’s success in bringing down the overall average processing time in recent months, albeit from unacceptable heights. However, my constituents’ cases show that significant further progress is still required in implementing this reform effectively and ensuring that the system is capable of handling the 1.5 million claimants who still need to migrate from DLA to PIP later this year. I look forward to working constructively with the Government to address the remaining delays that compound the despair and anguish felt by many of my disabled constituents.

--- Later in debate ---

[Geoffrey Clifton-Brown (The Cotswolds) (Con)]

I am grateful to serve under your chairmanship, Mr Davies, and will try very hard to conform to your stricture; in fact, my speech will last less than five minutes. I congratulate my hon. Friend the Member for Beverley and Holderness (Graham Stuart) on securing this important debate, and I am grateful to follow the hon. Member for Oldham East and Saddleworth (Debbie Abrahams).

I congratulate the Minister on his maiden appearance in this Chamber. I had a very bad constituency case. The media contacted me about it, and his Department tracked my interview on Radio Gloucestershire. He invited me in to talk about it and, having talked about it, I am now much more reassured about the PIP process, so I am particularly grateful to him.

Like other Members who have spoken, I support the replacement of DLA with PIP, which is a much more targeted allowance. My particular constituent, Mr Stephen Smart, had to wait more than a year for his PIP payment, and we would all admit that in the past the system was far too slow. Waiting for more than a year is completely unacceptable. The hon. Member for Oldham East and Saddleworth referred to the court case, and no doubt the Minister and his Department will have to react to that. The only thing I would say about my constituent’s case is that, had the Cirencester citizens advice bureau brought it to my attention much sooner, I believe that, as a Member of Parliament, I could have helped to resolve it. Indeed, I was able to resolve a number of other cases last year, so I urge my CAB to refer cases to me much quicker.

I am delighted that, in March, claim times were down to 15 weeks from 41 weeks last year. That is a terrific step in the right direction. For people with terminal illnesses, 99% of decisions lead to an award, with an average clearance time of six working days. I agree with the hon. Lady that claims involving terminal illnesses are particularly sensitive, and it is right that the time has come down.

The new scheme will need to find new resources to manage the claims process, so I am glad that the Government have doubled the number of staff working on PIP, but I suspect that the system is still patchy across the country. There are particular problems with recruiting staff in London, and I wonder whether there is the same problem in the constituency of my hon. Friend the Member for Beverley and Holderness, and maybe in my own constituency. Perhaps the Minister will say something about that, although we discussed it in the meeting and I think our constituents are assessed in the Minister’s Swindon constituency. I think we are one of the better performers, so hopefully there has been considerable improvement since my experience. It is regrettable that I was not contacted much earlier in my constituent’s claim, which would have given me time to act on his behalf.

As others have said, the trials of the scheme will go nationwide in October, and hopefully the transition will be complete for those 1.5 million people early in this Parliament. It will be a great milestone when we get everybody on to the new system. We must ensure that it is properly targeted so that they get the benefits they should have and are able to apply and get help in their own home in the most severe cases. We must be sensitive to the fact that, for some people, filling in the form is difficult. I would welcome the Minister’s assurance on that.

We should consider the issue of the appeals process to the tribunal. In particular, I urge the Minister to address the issue of further appeals to the upper tribunal. I have known cases of appeals to the upper tribunal—not just for PIP payments—to take an interminably long time. He needs to look at that to ensure that, for every Government process, everybody has access to a reasonable appeals mechanism. Things do not always go right. When things go wrong, people need to feel that there is a reasonable mechanism for putting things right if they have a justifiable case.

I absolutely take the point about people with mental health problems, which are often difficult to diagnose. The assessors need to be particularly sensitive to that.

--- Later in debate ---

[Mrs Madeleine Moon (Bridgend) (Lab)]

I will be as quick as I can, Mr Davies.

I declare an interest as the past chair of the all-party parliamentary group on motor neurone disease and vice-chair of the all-party parliamentary group on Parkinson’s in the previous Parliament. I also declare an interest because my late husband, who died recently of motor neurone disease—a condition called Pick’s disease—was in receipt of personal independence payment.

I do not think we can stress enough how PIP provides a financial lifeline for people with conditions such as Parkinson’s and motor neurone disease, which both bring increased costs to daily living, whether relating to the need for constant heating; additional laundry costs; the equipment that people need to buy; the aids and adaptation to make their home liveable in; the food wasted as they try to find food they can eat and swallow; the transport costs related to keeping a normal life, getting people out of the home and accessing daily living; and the change in clothing as weight changes. Those are just a few of the huge costs that people face—never mind the stress and anxiety that hon. Members mentioned—that make it essential to get the processing of the change to PIP right. Those changes create anxiety every day, not just for the sufferer, but for their carers, who carry on caring while being denied access to carer’s allowance because the PIP process has not been completed.

If a visual assessment is being made, the outward signs can vary, depending on the progress of the condition: in the early stages, it can include simply slowness and stiffness when moving; breathing and walking difficulties; incontinence; and loss or slurring of speech. The less physical signs are pain, depression, anxiety and memory loss, all of which are exacerbated when the process goes slowly. I remind hon. Members that those diagnosed with some conditions of motor neurone disease can be dead within one year, so people can die before accessing the benefit if there is a delay in the process.

I stress the importance of paper-based assessments for people with such long-term conditions for which there is no relief, from which there is no going back and which mean a death sentence. It is nonsense that people are still being called in for face-to-face assessments. It is also nonsense that people are being assessed in places across the other side of a town, or a country area, that are difficult to access when people get to them, with, for example, long distances to walk or steps to climb. When they get to the assessment in such a place, having suffered the pain, anxiety and difficulty of getting there, they are told, “Well, you’re obviously well enough, because you’ve managed to get here.” It is nonsense. Will the Minister commission a detailed review of delays and problems with PIP, ahead of the independent review that is due in 2016?

Lord Freud said in the other place that the Government have speeded up the PIP process by giving paper assessments for those with incurable and progressive conditions. We all welcome that, but the evidence shows it is not happening. Will the Minister please make an assessment, with providers, and ensure that they adhere to the policy and report back to the House on progress?

[Geoffrey Clifton-Brown]

I am sure that the hon. Lady was at the Motor Neurone Disease Association gathering yesterday. Les Halpin, a constituent of mine, had motor neurone disease. He told me that he had got a death sentence of between six and two years. It is just that simple. It is a dreadful disease: all the body’s organs close down one by one, except the brain. I have been listening to the hon. Lady. Will the Minister consider giving more guidance to the assessor, so that once a disease such as that is diagnosed, they have detailed notes on their IT systems on how it is likely to progress?

[Mrs Moon]

It ought, automatically, to mean that such a diagnosis leads to a rapid paper assessment, because people are facing a death sentence and their carers need to be given the financial support to help them cope with the horrible life that is ahead of them—and I promise hon. Members that it is a horrible life.

Finally, will the Minister meet Parkinson’s UK and the MNDA to hear first hand about the difficulties that people with those conditions are facing and that the PIP assessment is adding to their daily lives?

AEA Technology Pension Scheme

Geoffrey Clifton-Brown Excerpts

Wednesday 18th March 2015 Westminster Hall

[Geoffrey Clifton-Brown (The Cotswolds) (Con)]

I am grateful to you, Mr Robertson, and to Mr Speaker for giving me the opportunity to raise the matter of the AEA Technology pension scheme, following the company’s pre-pack administration in 2012. I am also grateful to the Minister, my parliamentary neighbour, for being here to respond to the debate, and to my right hon. Friend the Member for Saffron Walden (Sir Alan Haselhurst) and my hon. Friends the Members for Newbury (Richard Benyon), for Reading West (Alok Sharma) and for Oxford West and Abingdon (Nicola Blackwood) for being here to support me. I give special thanks to the Minister for Culture and the Digital Economy, my hon. Friend the Member for Wantage (Mr Vaizey), and to his staff. He is the constituency Member concerned with the matter, and he and his staff have been very active on it, as have lots of other right hon. and hon. Members.

I have received continuing representations from my constituent Dr Ken Nicholson, who has been affected by the issue. I know that constituents of other Members have also been affected. I will start with some background information for context. The AEA Technology pension scheme is a defined-benefit final salary scheme, set up when AEA Technology, which was previously the commercial arm of the United Kingdom Atomic Energy Authority, was floated on the stock exchange in September 1996. AEA Technology had become a Government-owned company that April, although staff remained members of the UKAEA pension scheme until flotation.

The Atomic Energy Authority Act 1995 detailed the conditions for the privatisation of AEA Technology and included specific information regarding the pension arrangements for transferring staff. A schedule to the Act stated that benefits from the daughter scheme should be “no less favourable” than those that would have arisen from the UKAEA scheme as it was at the time. There was a duty to ensure the arrangements for the new scheme satisfied the demands specified in the Act, something the then Energy Minister, Tim Eggar, stressed on Second Reading of the Bill in March 1995.

[Alok Sharma (Reading West) (Con)]

My hon. Friend has come quickly to the nub of the matter. People made the transfer because they believed that the terms would be no less favourable than those they were enjoying before they did so. Does he agree that the key question is, who will compensate those who have lost out? I know that it happened many years ago under a previous Minister, but perhaps the Minister will address that point as well when he makes his remarks.

[Geoffrey Clifton-Brown]

My hon. Friend has made his point cogently. I will return to the matter of compensation later in my speech.

Once part of the new scheme, members were encouraged to transfer all accrued pension service from the UKAEA scheme, by a leaflet presented as impartial advice from the Government Actuary’s Department; it has recently been found that the leaflet was changed several times at the request of the UKAEA to remove references to risks involved in the transfer. Scheme members were assured that their pension would be safe. As both schemes were based on final salary, the decision by scheme members on whether to transfer service to the new scheme or to freeze it in the UKAEA scheme was based on a judgment of what would happen to their own salary in future years. They could not make the decision based on whether the new scheme contained more risk, since they had not been warned of any.

[Nicola Blackwood (Oxford West and Abingdon) (Con)]

The AEA Technology staff are nuclear physicists accustomed to identifying risk and weighing cost-benefit. If they could not identify risk within the GAD advice, who could have?

[Geoffrey Clifton-Brown]

My hon. Friend makes a really potent point, which I will come on to later in my speech.

People had not been warned of the risks by the official leaflets that they received. The AEA Technology pension scheme received an initial injection of cash from its mother scheme, the UKAEA scheme, based on the accrued service and pension entitlements of the transferred members. The mother scheme was operating with a notional surplus at the time, but none of that surplus was passed to the new scheme, giving the Treasury an increased windfall. Since the AEA Technology pension scheme ran into deficit because of changes in actuarial valuations, it has now become apparent that insufficient funds were transferred into it when it was set up. Moreover, no written agreements appear to have been made to cover such an eventuality. In other words, either the Government have a continuing moral, and possibly legal, duty to those transferred members or they cannot have fully discharged their responsibility under the Atomic Energy Authority Act.

The Department for Work and Pensions has suggested the requirements of the Act may have been fulfilled because when it was launched the benefits from the new scheme matched those of the mother scheme. However, none of the transferring scheme members—my hon. Friend has made the very good point that they were extremely bright and able people—were eligible to draw benefits at the time, because none of them were retired, so the DWP’s claim cannot be true. The Act’s intention must have been that the new pension scheme would not change in future years if the UKAEA one did not, meaning the benefits were secure.

It is now proposed that the AEA Technology pension scheme be transferred to the Pension Protection Fund, where index-linking of benefits would be removed and replaced by an inflationary allowance, capped at a maximum of 2.5% for service from April 1997 onwards. That covers almost all post-privatisation service. It would further mean that all index-linking would be removed from service prior to that date—that is, from all service transferred from the Government sector, which the scheme members were told was secure. In addition, all members below retirement age would suffer a further 10% drop in their pension. The overall effect is a greatly diminished pension that is far less than the benefits that would have been due from the UKAEA scheme. It would not be equivalent, as was specified in the Atomic Energy Authority Act.

[Richard Benyon (Newbury) (Con)]

My hon. Friend is making a good point. The key point to which we want the Minister to respond is that, as a public sector pension, the AEA Technology scheme had full protection linked to the retail price index. That has now been lost, on the basis of wrong advice that was given at the time.

[Geoffrey Clifton-Brown]

As I will explain in a minute, it was partly wrong advice at the time and partly the fact that the subsequent company went into a pre-pack.

As I was saying, the proposed transfer to the PPF means that the scheme would not be equivalent to the UKAEA scheme, as was specified in the 1995 Act. I would be grateful to hear the Minister’s views on whether the AEA Technology pension scheme should present a special case because it was formed as a result of privatisation, as my hon. Friend the Member for Newbury said. Additionally, does the Minister believe that the Government should have a duty of care to those staff who were transferred into the AEA Technology scheme? Do the Government have a moral and legal duty to act to protect the pension scheme members against loss, given the assurances that, as my hon. Friend said, were made to staff as part of the privatisation process both in Parliament and in the printed materials provided to scheme members by an arm of the Government at the time?

I understand that in 2010 AEA Technology made an unsuccessful acquisition of the US firm Eastern Research Group by issuing a large number of shares. Problems arose with ERG the following year because of late payments and delays in the US Government’s awarding of contracts. AEA Technology issued a statement in November 2011, which played down the prospects of the UK-based part of the company and highlighted ERG’s problems. That drove the company share price down to virtually zero. Notwithstanding that, the long-term prospects for ERG appeared good, as it had recently won a £100 million contract, and AEA Technology’s successful UK-based business, which had originated from the privatisation exercise, was profitable and actively recruiting at the time.

Given its financial situation and low share price, AEA Technology ran into cash-flow problems. Therefore, in November 2011, it began negotiating with various parties, including its bank, the scheme trustees, the PPF and the Pensions Regulator. The aim of the negotiations was to improve its financial position, and the plan that was agreed involved arranging a pre-pack administration to allow it to default on its pensions obligations and to start afresh under new, improved trading conditions—AEA’s original pensioners were about to suffer a serious double whammy.

The company’s share price was driven down so low—to about 0.05p, following a peak of almost £10 soon after flotation—that the company’s market capitalisation was less than £l million, which was less than the annual profit from the UK-based business alone. Given the low share price, investors would face no great financial loss from entering administration. The idea was for the PPF to take over the pension scheme and its assets. However, the PPF has fixed rates of compensation and, in particular, limitations on its rates for inflationary allowances. The net effect on scheme members, therefore, would be to reduce their pension pots to less than half of what they might originally have expected. That drop is greater than that explained by the scheme deficit. To add insult to injury, the scheme is contracted out, which means that its members will not be eligible for an additional state pension.

The pension scheme trustees initiated the pre-pack administration of AEA Technology by electing to wind up the pension scheme and to invoice AEA Technology for the full buy-out costs. Such action would be enough to make almost any company insolvent. The argument for entering a pre-pack administration was that it would maximise—that is pretty unrealistic—the company’s value, which would, in turn, maximise the scheme’s value for its members. Of course, that later turned out to be totally false. The money put into the scheme from the sale of the company was negligible by comparison with the losses caused by winding the scheme up. Scheme members could never have benefited from that; the beneficiaries could only ever have been the bank and the PPF.

AEA Technology was profitable and expanding, and it had a healthy order book, when it elected to enter pre-pack administration. The surviving parts of the company have continued to prosper. An air of secrecy shrouds the pre-pack negotiations, with everyone stating they are someone else’s responsibility or that information is commercially sensitive. Who it is who is commercially vulnerable is a big secret. That has also been the disingenuous response of the relevant Departments, while the various ombudsmen have thus far refused to get involved. What is the purpose of an ombudsman if, the moment they encounter a really difficult case, they fold and refuse to investigate?

Pre-pack administrations were set up with the intention of being for the benefit of creditors. The PPF was set up as a safety net for company pension schemes that run into trouble. The Pensions Regulator has a duty to protect pension scheme members’ best interests, as have the trustees. Yet in the case of AEA Technology, it appears that all those parties got together to help the company financially, at the expense, yet again, of those they were supposed to protect—the pension scheme members.

The AEA Technology case is special because the company was formed through privatisation. Many of its pension scheme members are ex-Government employees, who are extremely well qualified and extremely intelligent, and the Government have a continuing duty of care towards them. For that reason alone, the pre-pack administration needs careful investigation.

The case has highlighted other important issues. For example, there is the question whether pre-pack administrations are being abused. Additionally, the implications of defaulting on pensions for commercial reasons need to be understood and controlled if the Government are to be successful in promoting saving for retirement and in introducing a unified, simplified pension system into which transfers are the norm.

Sadly, in this case, it is all too clear that a large number of very bright people were misled by the information issued by a Department. Some of the information—the drafting was heavily influenced to minimise any reference to risk—may also amount to a misleading prospectus, and it needs to be thoroughly examined by the Government regulator.

I end by saying that the pre-pack administration of the AEA Technology pension fund and the information on which members transferred their entitlements need proper and thorough investigation, and scheme members need compensating accordingly. I look forward very much to what my right hon. Friend the Minister has to say, and I thank him for listening.

[The Minister for Pensions (Steve Webb)]

I congratulate my constituency neighbour, my hon. Friend the Member for The Cotswolds (Geoffrey Clifton-Brown), on securing this important debate. As he knows, I have taken an interest in the issue, and I met his constituent Dr Nicholson with him in 2013. I have also had a number of meetings with hon. Members and scheme members.

It is important to say, for what it is worth, that I hugely sympathise with anybody who built up pension rights, was expecting a certain pension and then did not get it. Nothing I say subsequently about the Government’s position takes away from the fact that we are dealing with a very unsatisfactory situation that all of us would want to avoid.

Let me go through the points my hon. Friend raised and respond to them as best as I can. The first is the issue of what the legislation meant when it said that the value of accruals in the new scheme had to be “no less favourable”. The scheme people came out of was essentially a civil service-type scheme. That meant the new scheme had to enable people to go on building up benefits that were no less favourable; it did not mean that what was then a private company had its pension deficit, for example, underwritten by the taxpayer indefinitely—it could not have meant that.

Let us suppose that the trustees of a hypothetical privatised new scheme invested recklessly and generated a huge deficit, resulting in insolvency. Would the taxpayer be responsible for the trustees’ actions? Similarly, if investment returns went badly for that private company or other private companies, would the taxpayer be indefinitely on the hook for any deficit? Clearly, that is not what the law meant, and it is not our understanding of what it meant; indeed, the more one thinks about it, the more one sees that it could not have been what the law meant. The law was quite clear that people transferring across had to build up benefits on the same—no less favourable—basis as under the scheme they had left. That was the scheme that was set up, which complied with the legislation.

[Geoffrey Clifton-Brown]

I understand, and I agree with my right hon. Friend’s point. My point was that, at the time of transfer, the scheme was in surplus. Subsequently, the actuarial valuation proved that insufficient money had been transferred from the mother scheme to the daughter scheme. If insufficient money was transferred, the new scheme was never going to perform to the level the pensioners expected.

[Steve Webb]

Let me address that point. The first thing to say is that the trustees of the scheme the money went into agreed the transfer values. They could have said, “You’re not putting in enough money to reflect the benefits we are going to have to pay out,” but they signed off the transfer values at the time.

The notion of a surplus is strange, because this is an unfunded pension scheme until the point of transfer. It is just a liability on the Government’s books for decades to come. A flow of contributions has come in, and those are given a notional investment return in the Government books. The concept of a surplus is not what this means in plain language; it is not like the Government were sitting on a pot of money that they hid. Government accounting for public service unfunded pension schemes is very different from that for funded pension schemes, where a surplus has a real meaning. It sounds as though what we are talking about means something when it does not. This is about the way the Government accounts for public service unfunded schemes; it is not that money was held back.

A valuation was done on quite a prudent basis. If the money transferred across had been invested in quite a low-risk way, it would, at the point of transfer—that is the crucial point—have been enough to pay the liabilities that were transferred across. However, the world changed subsequently for this scheme and every other scheme: people started living longer, investment returns over time started falling and, as my hon. Friend said, accounting practices changed. All sorts of things changed, which meant that all sorts of private sector company pension schemes began to face bigger deficits. The AEA Technology pension scheme was not different or unique in that respect. The trustees accepted the transfer value, which was fair for the liabilities that were transferred across, even on a quite prudent basis.

--- Later in debate ---

[Geoffrey Clifton-Brown]

I am grateful to my right hon. Friend for that announcement, which I think affected scheme members will warmly welcome. I mentioned one other matter: being contracted out from the state pension scheme. Given what has happened to the poor people involved, is there any change that can be made, so that they could be considered contracted into the state pension scheme, and therefore receive additional state pension?

[Steve Webb]

The challenge is that the flip side of being contracted out is that both the employee and the employer paid a reduced rate of national insurance, so lower state benefits accrue, and the scheme essentially replaces part of the state benefit, up to a certain amount, often called a guaranteed minimum pension. The employee benefits from low contributions and has part of the state pension replaced by the scheme pension. I hesitate to say this definitively, but the vast majority of scheme members will certainly get at least the guaranteed minimum pension, I would expect, through the equivalent—through the PPF, now. I cannot swear that that will be true in every case. It will be very difficult to unwind all of that and to go back and say, “We offset your reduced NI, so we work out how much you and the employer saved by reduced NI; we take account of that and give you a bigger state pension and we net off the saving.” That would be a very complex calculation. I think there are occasions when this sort of thing gets unwound, but they are exceptional, and I would not want to raise my hon. Friend’s hopes.

I want to reiterate my sympathy. I believe that the Government transferred a fair amount of money across at the time and fulfilled their legal obligations to provide matching—at least as favourable—benefits. Obviously, we all regret where things ended up. I do not believe that the company was pressured into pre-pack administration. I believe that at the time that was done to save jobs, which it did. I am pleased that PPF exists to provide at least a safety net, and I hope that my hon. Friends will welcome the fact that we have done what we could to improve it during this Parliament. That will benefit a significant number of people who worked for AEA Technology and unfortunately will not get the full pension that they expected.

Universal Credit

Geoffrey Clifton-Brown Excerpts

Monday 7th July 2014 Commons Chamber

[Esther McVey]

I will look into that additional point and get back to the right hon. Gentleman. On his last point, I have had the answer checked by my officials and it was correct.

On the roll-out, the new service is now available in 24 areas across England, Wales and Scotland, where it is providing people with stronger incentives and support to get into work, stay in work and increase their income. On 23 June 2014, we began rolling out universal credit for single people to jobcentres across the north-west of England, starting with Hyde, Stalybridge, Stretford, and Altrincham. Last week, it went live in Southport, Crosby, Bootle, Bolton and Farnworth. I am pleased to say that today, Wirral, Birkenhead, Bromborough, Hoylake, Upton and Wallasey began accepting claims for the new benefit. Once the north-west expansion is complete, 90 jobcentres—that is one in eight jobcentres in Britain— will be offering universal credit.

From 30 June, we expanded the service to couples in five of the existing live areas: Rugby, Bath, Inverness, Hammersmith and Harrogate. That meets our commitment to expanding the new service to more areas and to more claimant types from this summer. We will continue to roll out universal credit carefully in a safe and secure manner—starting small, testing and learning from delivery. That remains the right approach. Later in the autumn, it will be expanded to include families.

My hon. Friend the Member for Warrington South answered the question about whether somebody will be able to feed in information about how many hours they work per week. Such real-time information is another part of the programme that we had the foresight to put in place. That is working well and the roll out of it is nearly 100% complete—it is more than 99% rolled out.

I have just received a quote from a claimant in Warrington who is working 20 hours a week:

“I’m currently working 20 hours a week but am able to pick up extra hours when overtime is on offer because UC is flexible in that way and I don’t have to worry about my benefit just stopping if I work more than 16 hours. I know I will still get support until I earn enough to completely pay my own way”.

That is what we always intended to happen. There is a cushion of benefit to support people, but they are able to take extra hours and to progress in work without being stopped from working by the old-fashioned rules and regulations that Labour Members allowed to continue for so long. That is what we are trying to change. We all agreed, including the Select Committee, that those changes were needed. That is an example of a claimant saying what is happening to them right now under this system.

Sadly, I come to the questions that were asked by the hon. Member for Oldham East and Saddleworth (Debbie Abrahams). One thing on which we agree is that the media must talk about people and depict people carefully and sensitively. Nobody wants to point the finger at anybody. Nobody on the Government Benches has used any inflammatory language, because that is not right. I have always been very careful about the words that I use, because we all know people who have fallen on hard times and have needed the support of the state. It is imperative that each and every one of us checks our language, because it means a lot, whether it is on the internet, in newspapers or on the radio. I totally agree with her about that.

However, I totally disagreed with the hon. Lady—I am sure she will understand this—when she asked how the Secretary of State is still in his job. I had to smile at that rather absurd comment, given what he has delivered in four years. We have a record number of people in work. We are delivering on youth unemployment: it has gone down consistently for nine consecutive months. It is now 100,000 lower than when Labour was in office. Under Labour, youth unemployment went up by 45%. We have had the biggest fall in long-term unemployment, which doubled under Labour, since 1998. There is not just a record number of women in work, but a record rate of women in work too. All of those things are why the Secretary of State is still in his job: he has changed things around fundamentally.

The hon. Lady talks about a £40 million write-down. Projects of this size usually have about 30% write-down rate—this has a 10% rate. Labour’s track record of IT failure is £26 billion written off with no scope whatever, so we can move on to why universal credit is so important. Even the Joseph Rowntree Foundation is very clear about the benefits of universal credit, recently stating:

“Universal Credit is a once in a generation opportunity to reform a failing and overly-complex system. It will revoke the worst work incentives of the current system, smooth transitions in and out of work and make it easier for people to access all the support they are entitled to.”

Those are the reasons why we are correct in pursuing universal credit.

[Geoffrey Clifton-Brown (The Cotswolds) (Con)]

My right hon. Friend is absolutely right. She and the Department have simplified the system, making it easier for recipients to understand what they can do to claim benefit. Above all, if they are capable of working, they should be in work. In contrast, the Labour party made the system so byzantine that our constituents had to appeal constantly to get the answers they wanted.

[Esther McVey]

My hon. Friend is spot on. Not only was it complex, but people sometimes did not know whether to take a job. People were locked into a life of benefits because they did not know if they would have been better off working. We are changing that.

I have listened to the points raised by hon. Members and I hope I have provided more clarity. I believe that we are making a transformational change. Yes, it needs to be slow and steady—[Interruption.] I am afraid that the hon. Member for Bishop Auckland (Helen Goodman) is laughing. We are putting people into work. We are getting them off benefits. We are helping them to progress and supporting them into work. That is what those on the Government Benches are about: support and reforming the benefit system to the benefit of all of the UK.

Question deferred (Standing Order No. 54).