Social Mobility: Treasury Reform

Jesse Norman Excerpts

Tuesday 11th June 2019 Westminster Hall

[The Financial Secretary to the Treasury (Jesse Norman)]

It is a pleasure to serve under your chairmanship, Mr Robertson, and I am grateful for the opportunity to make my parliamentary debut as Financial Secretary to the Treasury and Paymaster General by discussing social mobility, which is an issue of great importance to the House, as today’s interesting debate has demonstrated. I have a certain degree of nerves, however, because if in my first debate a former senior Treasury Minister contemplates the abolition of the Treasury, I shudder slightly to think what my second debate may lead to, but I will take it for what it is.

I thank my right hon. Friend the Member for Putney (Justine Greening) for her fascinating and thought-provoking contribution, and I congratulate her on securing this debate. A Putney debate on social mobility is becoming an important part of the Treasury calendar—perhaps it should be counted as a fiscal event, along with other events of more familiar coinage. I very much congratulate her on her long-standing commitment to improving the life chances of people from disadvantaged backgrounds. That was a hallmark of her time in government, and I respect and applaud her tenacity in pursuing the issue now, as well as her work on social mobility more widely, which includes the social mobility pledge that she highlighted in her speech.

If I may, Mr Robertson, I will briefly canter through some facts about what the Government are doing in this area, and then come to the contributions that have been made, in particular that from my right hon. Friend. The Treasury’s record on social mobility is a good one. There may be plenty of work to do across Government, but the Treasury has had 35 new apprentices in the last financial year, and it offers internships and insight days to students from diverse backgrounds. It was ranked 34th on the Social Mobility Foundation employer survey last year. The Treasury is rightly seeking to make headway in this area, as should the Government as a whole.

The wider point is that social mobility is a force not just for social progress but, as has been highlighted, for economic progress. If one were to use philosophical terms, we should seek to create not merely negative freedom but positive freedom. We need not just relief from the things that constrict and impede human potential but active empowerment and support for people from every background in this country. Supporting social mobility is not only right but it is in the public interest, as it means that our culture, national conversation, politics and economics will benefit from the widest possible range and diversity of voices. It is also wise in a more directly economic sense because, as the global economy’s centre of gravity moves eastwards in the 21st century, the UK’s strength will lie in not merely the size but above all the quality of its workforce. Social capital and investment in human capital is vital to those things. It is therefore in our national interest to encourage and nurture people to achieve their best, because we need their talents and skills.

The Government’s record is a good one. They have achieved higher employment in every region of the UK, and introduced and increased the national living wage. They have taken millions of the lowest paid out of income tax altogether. That can, of course, only be a staging post, and the Social Mobility Commission’s report, published at the end of April, demonstrates that there is plenty of work still to be done. Importantly, however, we understand the magnitude of the task.

For many people, the yardstick for social mobility is home ownership, and as a result of Government policy, 80% of first-time buyers pay no stamp duty at all—that is one reason why the number of first-time buyers is reaching its highest level for 11 years. The Government have also made a real impact in education, which was in part due to my right hon. Friend’s time in government. A combination of the free schools programme and a reformed curriculum has narrowed the attainment gap between disadvantaged pupils and others at every stage, from early years to secondary school. Ninety-five per cent. of all early years settings are now rated good or outstanding. That is up from 68% in 2010 and means that a record proportion of children start year 1 with a good level of development.

The Government have backed schools with £1.3 billion of extra investment and protected the pupil premium, with 1.9 million more children in good and outstanding schools. However, that funding will not get to the heart of improving social mobility unless we also tackle geographical inequalities. That is why, as my right hon. Friend rightly highlighted, it is important to make school funding fairer and more consistent.

The Department for Education provides roughly £25 million every year through the national funding formula to assist the smallest and most remote schools, and in the last Budget it was announced that rural primary schools would benefit from a £200 million programme for fast and reliable internet access across the country. The apprenticeship funding model is designed to support individuals from disadvantaged areas, by providing cash payments to providers for training apprentices who live in the top 27% of deprived areas. The Government have awarded the first 11 Institutes of Technology across England, so that even more students can access an excellent technical education.

My county of Herefordshire is something of a social mobility cold spot, and I am particularly grateful to my right hon. Friend as she was Secretary of State when the Department for Education approved the New Model in Technology and Engineering in my constituency. That was the first new university in this country for 40 years, and it is a specialist tech and engineering institution that focuses specifically on a 50:50 gender balance, open access, and the kind of empowerment that is characteristic of social mobility around the country. It will make a huge difference not only in Herefordshire, where social mobility is much lower than it should be, but elsewhere around our nation.

The Government have invested in 12 coastal, urban and rural opportunity areas, where young people face entrenched challenges, to bring together local and national partners to work with local communities and bring about lasting change. Education must ultimately equip young people to make a successful transition into employment and life as a whole. Employment is obviously important, and people should have choices as they reach adulthood. That is why technical education is so important. The transformation is now under way through T-levels, which will mean that young people have the knowledge to get the highly-skilled, well-paid jobs of the future, and through continuing work on the apprenticeship programme, which will try to create more diverse opportunities; over 1.7 million people have started apprenticeships since 2015. As my right hon. Friend will be aware, in higher education we have record rates of disadvantaged 18-year-olds getting into university. There has been an increase in the take-up of degree apprenticeships, and we have been specifically encouraging bids to improve access to degree apprenticeships for disadvantaged and under-represented groups.

Skills remain of vital importance later in life, particularly in a 21st century in which people will be regularly re-skilling and re-educating themselves. The Government fully fund all adults to take English and maths to level 2, and from 2020 they will be funding basic digital skills. They are also establishing a national retraining scheme to support those in work, including the self-employed, to develop the skills that they will need to thrive in the new economy. To that end, the Government have pledged £100 million in funding to get the scheme up and running.

Let me pick up some of the questions raised by Members in the debate. The hon. Member for Strangford (Jim Shannon) rightly stressed the importance of sexual equality across social mobility and highlighted the complexity of the benefits system as a potential impediment to change. He is absolutely right about both those points. He may have misread the proposals in the Augar review. It is an independent report the purpose of which is not to diminish social mobility but to enhance it; it needs to be read as a whole. If the hon. Gentleman looks at the members of the panel who commissioned the report, he will see that they are all deeply committed to improving social mobility, not just through this report but in their wider lives and work.

The hon. Member for Glasgow Central (Alison Thewliss) gave a more combative speech. I remind her that the Treasury is the product of cross-party evolution; whatever its weaknesses, they are the product of historical processes. It may require radical change—I will come to that question later—but the suggestion that it is not an institution with its own ethos that has developed over many years and generations is one that any Treasury Minister would contest. If the Scottish Government are unhappy with the fiscal arrangements that they have with the UK as a whole, it is up to them to raise taxes themselves, using the new tax powers they have, and to spend that money as they see fit.

The hon. Lady was dismissive of the Government as regards inequality in different ways, including in education. I remind her that Scottish higher education policy has been regularly criticised for being regressive, that Scottish schools performed worse than ever in the Programme for International Student Assessment scores for 2016 and that it may be worth her while looking at the Scottish Government’s own record before raising these issues more widely.

[Alison Thewliss]

The Minister is quite wrong in what he says; I ask him to correct the record, or at least to show his working. For the first time, more than 30% of pupils left school last year with a minimum of five Higher passes at a higher level, which is up from 22.2% in 2009 and 2010. The gap between those in the most and least deprived areas achieving a pass at higher level has reduced for the eighth successive year. The Scottish Government have made huge progress on education, in vast contrast to what is happening in England.

[Jesse Norman]

The hon. Lady misunderstood what I said. I said that the Scottish Government had been regularly criticised for having a regressive higher education policy. There is some evidence for that.

[Alison Thewliss]

That is not true.

[Jesse Norman]

It certainly has been; if the hon. Lady looks at the record, she can see that. I also pointed out that Scottish schools had performed worse than ever before in the PISA rankings in 2016. She can check that; it is an objective fact, not a matter for debate. She is entitled to her views, but not to the facts.

The Opposition spokesperson, the hon. Member for East Ham—I apologise, I mean the hon. Member for West Ham (Lyn Brown); I am sure many footballers will not thank me for that. The hon. Lady mentioned table tennis tables; having been a director of the Roundhouse in London for many years, I know the value of local social involvement and engagement. I agree with it, and the Government have invested significantly in it. She seems to have forgotten that the Government will have spent almost £6 billion in 2019-20 on childcare, which is a record amount. They have doubled the amount of free childcare available for working parents of three and four-year-olds to 30 hours. The Government have a tremendous record in this area in many ways. I am glad she mentioned table tennis tables; I was playing at a free table tennis table, provided through public funding, only last weekend, in the village of Little Dewchurch in my constituency.

[Lyn Brown]

Will the Minister give way?

[Jesse Norman]

I am sorry; I have no time. If the hon. Lady had spoken for less time, I would have had more time to respond.

I will respond to the question raised by my right hon. Friend the Member for Putney. It is a very interesting attack, not just on the Treasury but on the model of Government that we have in this country. It deserves to be taken with the utmost seriousness. The point has often been made before, although not quite in the same terms. Historically, there is a tension in British Government between the Treasury as a finance ministry and the Treasury as an economics ministry; that is well understood.

My right hon. Friend’s concerns about short-termism in public policy making are also criticisms that have often been made. The extent to which this Government, their immediate predecessor and the one before that, have taken steps to attempt to ameliorate and address some of these issues is interesting. For example, we now have multi-year funding strategies for road and rail infrastructure, which we did not have before; there is a separate independent economics ministry, the Department for Business, Energy and Industrial Strategy, which is specifically designed to provide an economic counterpart to the Treasury; and, other steps have been taken to try to combat embedded institutional concerns about short-termism in public funding. Undoubtedly, there is more to do. The criticisms have weight, as has been shown by the responses that the Government have made; it is a point that the Government have well taken and are making significant progress.

There is an embedded tension between the desire for longevity in funding and the desire for democracy. If we lived in China, we would operate according to a 100-year economic plan; we cannot do that because this country has always been bound by the principle that no Government can bind their successors. It is right that we should try to build more longevity into public policy; I have touched on some of the ways in which that can be done, but I have no doubt there are many areas in which it can be done better. This embedded tension between cash constraints, managing the public exchequer, the democratic accountability of Ministers and long-term funding is one that will not be removed by abolishing the Treasury.

My right hon. Friend said that no company would ever see a contradiction between the chief executive and the financial director; I think she is mistaken. There are many companies in which the chief executive would like to spend money and the finance director, in league with the chair, prevents him from doing so. There have been many points in British government when that has been true. It is often true in a Labour Government, when the wisdom of having an independent Treasury, with a degree of control over public finances, stops a Labour Government from thoroughly spendthrift public spending policies. I close by saying that I encourage my right hon. Friend to be careful what she wishes for.