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Oral Answers to Questions
(13 years, 1 month ago)
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Bill Esterson (Sefton Central) (Lab)
1. What assessment he has made of the effects on the economy of the trade in mortgage-backed securities and collateralised debt obligations.
The Chancellor of the Exchequer (Mr George Osborne)
The rapid increase in mortgage-backed securities and collateralised debt obligations contributed to a build-up of excessive and unstable levels of private debt in the UK in the years running up to the financial crisis. Although we would wish to see a properly regulated securitisation market reopened to help with lending, this must happen under a much more effective supervision regime. That is why we are abolishing the failed tripartite system and have restored to the Bank of England the responsibility for monitoring overall levels of debt in the economy. We have already established a new Financial Policy Committee to assess risks to the stability of the system, such as the emergence of excessive debt.
Bill Esterson
Although I accept the analysis in the first half of the right hon. Gentleman’s answer, I wonder whether the fact that financial services companies donated 51% of all funds to the Conservative party has led to a conflict of interests that prevents adequate regulation.
Mr Osborne
I think that I pointed out in an earlier exchange that an ex-Lehman Brothers and RBS banker contributed to the leadership campaign of the shadow Chancellor, so if the hon. Member for Sefton Central (Bill Esterson) wants to make that point again, and if you would allow, Mr Speaker, perhaps he could intervene.
Sir Peter Tapsell (Louth and Horncastle) (Con)
Does the Chancellor agree, as I do, with the Governor of the Bank of England in asserting that if we are to avoid another banking crisis in this country, we must have a complete separation between commercial and investment banks, which of course create these collateralised debt obligations?
Mr Osborne
If my hon. Friend will allow me, I will keep my personal views on this matter private while we await the publication of the independent commission that has been set up to look at this issue, and which I, the Business Secretary and the whole House will have to consider. It is producing its interim report in April, and will produce a final report in September. Let us remember that the commission was set up by this Government to ask the difficult questions of the kind that he is asking, because we are determined not to repeat the mistakes of the past.
Sheila Gilmore (Edinburgh East) (Lab)
2. If he will bring forward proposals for a scheme to provide looked-after children with a savings account or trust fund funded by contributions from the Exchequer; and if he will make a statement.
The Chancellor of the Exchequer (Mr George Osborne)
In October, the Government announced that we will create a new tax-free children’s savings account to be known as the junior ISA. We expect the accounts to be available from this autumn, and will be setting out details of how they will work next week. As the hon. Lady and the right hon. Member for Wythenshawe and Sale East (Paul Goggins), who is my constituency neighbour, will know, Barnardo’s and Action for Children have proposed that these accounts be used to support saving for looked-after children. I know that these children face particular challenges, and I can tell the House that the Department for Education will work with others to make the necessary funding available to ensure that we can provide the support that they deserve. We will work with charities and interested parties to develop detailed proposals funded by the Government, so that junior ISAs can best support these children.
Sheila Gilmore
There were warm words on this last summer when the child trust funds were abolished, and there are warms words now, but will the Chancellor tell us when such a savings scheme, backed by the Government, will be introduced for looked-after children?
Mr Osborne
I have just announced the money for the scheme that the hon. Lady asked me about, and we will now engage with Barnardo’s and Action for Children. I have seen their report, “On Our Own Two Feet”, and we will provide the funding to make the scheme a reality for looked-after children.
Mr Edward Timpson (Crewe and Nantwich) (Con)
As chairman of the all-party group on looked-after children and care leavers, I warmly welcome my right hon. Friend’s announcement today. Is he aware that the proposal has widespread cross-party support? The fact that the Government have listened to all representations and taken steps to make provision for the most vulnerable children in our society is extremely welcome.
Mr Osborne
I thank my hon. Friend for those words of support. I know that he has personal experience, through the work his family have done with children in care, of the contribution that society can make to helping these children. Frankly, all Governments have struggled to provide a decent level of care for the children to whom we owe the greatest obligation. As I said, I will engage with interested Members of Parliament, particularly my constituency neighbour, the right hon. Member for Wythenshawe and Sale East, and the two charities that produced the report to make this a reality and get it up and running as soon as possible.
Mr David Hanson (Delyn) (Lab)
May I remind the Chancellor that he broke his original election promise—a promise he made in the general election and ripped up on 3 January—to provide a trust fund for the poorest third of families? I welcome his announcement today, but we will look at the detail. We pushed on this issue in Committee on the abolition of the child trust fund Bill, and my right hon. Friend the Member for Wythenshawe and Sale East (Paul Goggins) has pushed outside that Committee. We welcome this announcement, but can the Chancellor say what that contribution will be and, given that this is a Department for Education issue, as he has said, whether the provision will extend to Scotland, Wales and Northern Ireland, as the trust fund originally did?
Mr Osborne
First, of course we will ensure that the scheme is available across the UK, although the exact design has to be determined with the charities. I have listened to the case made not so much by those on the Opposition Front Bench—if the right hon. Gentleman does not mind my saying so—but by the right hon. Member for Wythenshawe and Sale East and the two charities concerned. The sum of money involved will be around £5 million.
Paul Goggins (Wythenshawe and Sale East) (Lab)
There is a bit of good neighbourliness breaking out on the eve of the Budget. I welcome the announcement that the Chancellor has made this afternoon. Three quarters of young people leaving care do so with no savings whatever, yet they are expected to be almost totally self-reliant. As ever, the devil will be in the detail, but I am certainly prepared to work with the charities and his Ministers to ensure that we get a scheme that is effective in giving support to care leavers.
Mr Osborne
I thank the right hon. Gentleman for his support—we are one big happy coalition on this issue. I will ask Treasury officials to engage with him so that we get this right. We have to work in a way that is not bureaucratic, but gets money to those who really need it. Having looked at the issue, I think perhaps the best route is to work closely with the charities that know the sector best. Let us work together and make the scheme work.
Albert Owen (Ynys Môn) (Lab)
3. If he will estimate the revenue to the Exchequer attributable to receipts from the increase in the standard rate of value added tax on road fuel.
Vernon Coaker (Gedling) (Lab)
5. If he will estimate the revenue to the Exchequer attributable to receipts from the increase in the standard rate of value added tax on road fuel.
The Economic Secretary to the Treasury (Justine Greening)
The VAT forecast is estimated on an aggregate basis, as registered traders are not required to record in their VAT return the type of goods or services on which VAT has been collected.
Albert Owen
I agree with the Prime Minister that VAT is a regressive tax that hits the poorest hardest. Today’s figures show that the rise has also pushed up inflation, hitting people in their pockets and at the pumps. Will the Treasury team look again at the VAT rise on fuel—which is hurting motorists, hauliers, businesses and families across the country—and reverse it?
Justine Greening
I welcome the hon. Gentleman’s concern for motorists. However, I note that when the VAT rise passed through Parliament on 13 July 2010, he did not vote against it. I assure him that the Government are looking at what we can do to support motorists, hauliers and businesses with the cost of fuel, but I have to say that his party’s proposal on VAT is illegal, unworkable and unfunded.
Vernon Coaker
Does the Minister agree with the Transport Secretary—who, on the “Daily Politics” show on 2 March, dismissed the rise in VAT as a spurious argument—or does she agree with my constituents that by adding £1.35 to the cost of filling up a 50-litre tank with fuel, the VAT rise is the wrong tax at the wrong time?
Justine Greening
Perhaps the hon. Gentleman should talk to his former Prime Minister, Tony Blair, or the right hon. Member for Edinburgh South West (Mr Darling), the former Chancellor, who both said that our decision to raise VAT was necessary to tackle the huge deficit that was left by his party. Again, if he is so concerned about the VAT rise, how come he did not vote against it last July?
Michael Fallon (Sevenoaks) (Con)
Will my hon. Friend confirm that the Government inherited plans for six increases in fuel duty from their predecessor, four of which have yet to come into effect? Of all the groups of people who are quite reasonably concerned about the increasing cost of fuel, surely the least qualified is the Labour party.
Justine Greening
My hon. Friend is absolutely right. In fact, the previous Government introduced 12 duty rises during their time in office. As he pointed out, they also legislated for a further six rises, bringing in the fuel duty escalator, and these would have been on top of inflation rises. It was absolutely amazing to see the Labour party table a motion last week bemoaning the amount of tax that motorists are paying, when they legislated for all—
Mr Speaker
Order. I am grateful to the Minister, but we must concentrate on the policy of the Government.
Stephen Williams (Bristol West) (LD)
I am sure that the Chancellor will respond to the concerns of the motorist tomorrow in a fiscally responsible and environmentally sustainable way, but does the Minister agree that road fuel duty is a blunt instrument for taxing motoring, and that what we need in the long run is a more flexible, market-oriented mechanism for taxing road use?
Justine Greening
Obviously, my hon. Friend has his ideas about how he would like to see motorists being taxed in relation to the environment. He will be aware that the way in which vehicle excise duty is structured encourages motorists to purchase and use cars with lower emissions.
Ms Angela Eagle (Wallasey) (Lab)
On the day that diesel prices have hit a new high and inflation has jumped higher still, making the squeeze on living standards even worse, why do not the Government admit that they got it wrong on VAT and give struggling working people some much-needed support by reversing the Tory VAT rise on petrol, which would take 3p off the price of a litre? Just do it!
Justine Greening
The hon. Lady says, “Just do it!”, but she should know that that is simply not legally possible. She fully understands that. The reason that the Opposition are talking about that is that the fuel duty rises that are coming through were legislated for by Labour, so they are desperately looking for something to say about an issue that they themselves created. She knows that her policy on the VAT rise is illegal, totally unworkable and completely unfunded. Labour wants to take seven years to support motorists; we want to see what we can do to support them now.
Charlie Elphicke (Dover) (Con)
Will the Minister tell us by how much duty has risen in recent years, and whether the person who put the duty up is in the House today?
Justine Greening
When the Labour Government came to power in 1997, fuel duty was 36.86p per litre. By the time they left office, it had risen to 57.19p per litre. As I am sure my hon. Friend is aware, one of the architects of those tax rises was then the chief economic adviser to the Treasury; he is now the shadow Chancellor.
Lindsay Roy (Glenrothes) (Lab)
4. What assessment he has made of the effect on levels of employment of the increase in the standard rate of value added tax.
Mike Gapes (Ilford South) (Lab/Co-op)
8. What assessment he has made of the effect on levels of employment of the increase in the standard rate of value added tax.
The Chief Secretary to the Treasury (Danny Alexander)
The Government have taken urgent and unavoidable action to tackle the deficit and to put the public finances on a sustainable footing. That is essential for jobs and growth. Raising the standard rate of VAT is an important element of the plan and, in November, the Office for Budget Responsibility’s forecast, which took full account of the VAT increase, was for total employment to rise by 1.1 million in 2015.
Lindsay Roy
I thank the Minister for that answer. Will he tell us what impact the VAT rise has had so far on himself and his family?
Danny Alexander
The VAT rise of course leads to increased prices in the shops, and that affects everyone in the House.
Mike Gapes
The Chief Secretary to the Treasury had a meeting—a crisis meeting, according to The Daily Telegraph—with senior retailers a few weeks ago. Was there any discussion of the impact of the VAT rise at that meeting?
Danny Alexander
I did indeed meet senior retailers from the British Retail Consortium and we discussed a whole range of issues in a private meeting. If the hon. Gentleman is interested in the consortium’s views, he should listen to what its director general said on 20 October, the day of the spending review. He said that delays in public expenditure cuts
“would just store up more pain for later, risking increased borrowing costs, higher taxes and more job losses.”
Alec Shelbrooke (Elmet and Rothwell) (Con)
Which does my right hon. Friend think is the lesser evil: a rise in VAT that does not apply to food or children’s clothes, or taking almost 1 million of the lowest paid workers out of income tax altogether?
Danny Alexander
I certainly think that our Government have got their priorities right when it comes to lifting the burden of income tax on low-income workers. The increase in the personal allowance by £1,000, which will come into effect in April this year, will ensure that 880,000 low-income workers will no longer pay income tax. Furthermore, 23 million basic rate taxpayers will see a tax cut of £200 next year.
John Thurso (Caithness, Sutherland and Easter Ross) (LD)
Has my right hon. Friend considered the letter sent to him by the chair of the tourism group of the Sutherland Partnership, which outlined the importance of tourism for employment in the area and the barriers that VAT is creating, particularly in relation to road fuel? Is there anything that the Government can do to mitigate that effect?
Danny Alexander
I have seen that letter and, as a fellow highland MP, I am fully aware of the impact that high fuel prices have on families and individuals. We have already taken steps to deliver a 5p duty discount to island communities, and I hope that we will be able to do what we can tomorrow, but that will be a matter for the Chancellor to announce in the Budget statement.
Andrew Stephenson (Pendle) (Con)
7. What fiscal measures he has taken to support economic growth in the manufacturing sector.
Stephen Metcalfe (South Basildon and East Thurrock) (Con)
12. What fiscal measures he has taken to support economic growth in the manufacturing sector.
The Chancellor of the Exchequer (Mr George Osborne)
Manufacturing is now expanding after years of contraction. In order to support it, the June Budget contained four reductions in the main rate of corporation tax and a cut in the small companies rate from 21% to 20%. The manufacturing sector is expected to gain over £250 million annually when the package is fully implemented. We have committed ourselves to 75,000 more apprenticeships and nine university-based centres for manufacturing. Tomorrow’s Budget will set out further details of the Government’s plan for sustainable, private sector-led, balanced growth.
Andrew Stephenson
On Friday I visited Kirk Environmental, a company in Nelson that specialises in turning waste into electricity and usable biogas. It is experiencing rapid sales growth internationally, is recruiting more locally, and is at the forefront of the United Kingdom’s transition to a low-carbon economy. What incentives is my right hon. Friend providing to encourage such companies to invest more in Pendle and in the United Kingdom?
Mr Osborne
As I am sure my hon. Friend knows, in the spending review we allocated £860 million to the new renewable heat incentive, and earlier this month, in the House, my right hon. Friend the Secretary of State for Energy and Climate Change announced the introduction of the first phase of the scheme. It provides financial incentives to support a range of technologies and fuels, including those involving the use of biogas. I hope that that will help excellent companies such as Kirk in my hon. Friend’s constituency.
Stephen Metcalfe
Does the Chancellor regret the fact that manufacturing declined by 50% under the last Government? What plans has he to reverse that trend as we rebalance our economy, so that companies actually start to make things again in the United Kingdom, as they are already doing in South Basildon and East Thurrock?
Mr Osborne
My hon. Friend is right. The share of manufacturing in our economy halved during the years of the Labour Government. However, there is good news today: the CBI industrial trends survey shows that total order books are growing for the first time in three years. We are determined to move from an unbalanced economy that placed all the bets on the City of London to an economy that grows across the regions and in all sectors.
Mr Andrew Love (Edmonton) (Lab/Co-op)
The trade-weighted exchange rate has fallen by 20% in the last few years. Manufacturing has not increased as much as we expected, and there are even worse figures for the investment industry. What is the Chancellor doing to ensure that we gain the advantages of that exchange rate depreciation?
Mr Osborne
I do not know why Opposition Members want to talk down the British economy. What the chief economist at the CBI said contrasts with the hon. Gentleman’s remarks about manufacturing. The chief economist said:
“The outlook for UK manufacturing output growth is very encouraging.”
We are going to support manufacturing. We have the corporation tax cut that I announced in last June’s Budget, and we have the new centres for innovation and manufacturing. We are going to help manufacturing, whereas Labour shrank manufacturing.
Barbara Keeley (Worsley and Eccles South) (Lab)
Talking of making things, a small manufacturing firm in my constituency is investing in the development of a new engine. If it moved into production, hundreds of jobs would be created in the 15th most deprived area in the country. Will the Chancellor tell us why the Government have cut Labour’s investment allowances, which would be just the thing to help and support a small and vital manufacturer like the one in my constituency?
Mr Osborne
Manufacturers, including the one to which the hon. Lady has referred, benefit to the tune of £250 million from the reductions in corporation tax that we announced in the June Budget. That is what we have done to support British industry. As I have said, under the Labour Government British industry shrank: while the share of the economy taken by financial services grew by a third, the manufacturing share halved.
George Freeman (Mid Norfolk) (Con)
Does my right hon. Friend agree that, as we see signs that business confidence in the economy is being restored, tomorrow’s Budget presents a key opportunity to support the high-technology entrepreneurs who put their own wealth at risk in starting the businesses of tomorrow?
Mr Osborne
Yes, we will support enterprise and innovation in tomorrow’s Budget, but my hon. Friend will have to be patient and wait until then to hear about the precise measures that are involved.
Ed Balls (Morley and Outwood) (Lab/Co-op)
Manufacturers up and down the country and the whole House are awaiting the Chancellor’s long-delayed growth strategy to be published tomorrow, but I have a copy of that document with me today. It says:
“Growth comes first for this Government”
and that their strategy will
“underpin private confidence, investment and job creation.”
The Chancellor has no need to worry however, as I will not be handing this document to the press. I read it last night and, frankly, there is nothing in it worth leaking. Has this document been audited by the Office for Budget Responsibility? Is the Chancellor really clear that getting rid of maternity and paternity rights and enterprise zones will boost jobs and growth in our economy? Is this going to be enough to stop the Budget growth forecast tomorrow being downgraded for this year and next?
Mr Osborne
I am not sure that that is the document in question—but if the right hon. Gentleman hands it over, I will have a look—because we are not getting rid of maternity and paternity rights, so I do not know where he got that from. Besides, I have a copy of his document, and it contains all the spending commitments he has been making. If he cannot control his own Front-Bench colleagues, how on earth is he going to control the nation’s finances?
Ed Balls
Is this really the best the right hon. Gentleman can do? I bet he will have Treasury officials scrabbling around all afternoon trying to deliver a further 1p cut in corporation tax tomorrow and a further tax cut for the banks. Let us wait and see. The fact is that a year ago inflation was low and unemployment was falling, and a year on, as we see today, inflation is up to 4.4% and borrowing is higher than a year ago, not to mention unemployment. If the Chancellor will not listen to me, will he listen to his colleague who said:
“We must not cut Government spending too soon and risk plunging a fragile recovery back into recession. Cuts without economic growth will not deal with the deficit”?
The Business Secretary was right. Why will the Chancellor not listen?
Mr Osborne
The right hon. Gentleman really needs to brush up on his question practice, but let me say this to him: the idea that we were somehow left a fantastic economy by the Labour party is quite the most ludicrous claim in the country, and the only reason he makes it is because he was responsible for the economic mess that left this country on the brink of bankruptcy.
Sir Robert Smith (West Aberdeenshire and Kincardine) (LD)
One of this country’s great manufacturing success stories is world-leading subsea engineering that has grown up on the back of investment in the North sea oil and gas industry, based in my constituency but working throughout the United Kingdom. What reassurance can the Chancellor give my constituents that the Government will build on their constructive relationship to ensure a fiscal regime that maximises investment in North sea oil and gas production and exploration and that boosts the manufacturing that supports that?
Mr Osborne
Of course we want to ensure that we prolong the life of the North sea fields. One area on which we can work with the industry is ensuring greater certainty about decommissioning costs and about the tax regime that was operated under previous Governments and how that will apply over the next 10 years. I hope to work with the industry on that.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
9. If he will review the pace of proposed reductions in public expenditure to take into account GDP figures for the fourth quarter of 2010.
The Chief Secretary to the Treasury (Danny Alexander)
I welcome the hon. Lady to the House. The short answer to her question is no. Of course, growth in the final quarter of last year was disappointing, but, as we always said, the recovery in the early stages would be choppy. Deficit reduction is the essential precondition for growth, and the OBR’s November forecast stated that we would see growth in every year of the forecast.
Debbie Abrahams
Will the Chief Secretary explain to my constituents who are either unemployed or facing redundancy how his Government’s catastrophic economic policy is in the interests of the country? Clearly, we are not all in this together.
Danny Alexander
I hope the hon. Lady will take the opportunity to explain to her constituents that it is the legacy of the previous Labour Government that has caused the enormous mess and all the problems in our economy. They left us with the largest Budget deficit in Europe, and one of the largest in the world. Countries in our position have to take the sort of action we have taken, or risk being in a much deeper mess. If that is what she is advocating, I suggest she tells her constituents.
Margot James (Stourbridge) (Con)
We are spending £120 million a day on debt interest—£1 billion by the end of next week. How many representations has my right hon. Friend received from reputable international and national organisations advising him to slow the pace of deficit reduction?
Danny Alexander
None. The hon. Lady will be aware of the report that the OECD published last week, which strongly endorsed our plans. Its general secretary, Angel Gurría, said that the fiscal position we inherited was “clearly unsustainable” and that the
“consolidation measures and plans that the”—
Government—
“have put in place were therefore vital.”
I agree with that.
Chris Leslie (Nottingham East) (Lab/Co-op)
Today’s inflation figures show a sharp leap in the retail prices index to 5.5%, the highest level in 20 years. That hits not only living standards, but public service expenditure plans. Is the Chief Secretary sticking to the coalition agreement guarantee of real-terms growth for the NHS in each year or is he resolutely sticking to his plan A, regardless of economic realities?
Danny Alexander
We are sticking to the spending plans that we set out in the spending review, and that is the right thing to do. Of course I understand that inflation has an effect on people’s living standards, which is why it is particularly important to emphasise the increase in the personal income tax threshold—£1,000 extra on the threshold—that comes into force this April, which will put £200 back into the pockets of hard-working people in this country. That is the action this Government are taking to help people through these difficult times.
Stephen Phillips (Sleaford and North Hykeham) (Con)
10. By what date he expects revenue to the Exchequer to match levels of public expenditure.
The Financial Secretary to the Treasury (Mr Mark Hoban)
Excluding capital expenditure, the Office for Budget Responsibility forecasts revenue to exceed current expenditure by 2015-16. This is further evidence that this Government believe that the country should live within its means.
Stephen Phillips
I am grateful to my hon. Friend for that answer. The shadow Chancellor was reported as saying in Saturday’s The Daily Telegraph:
“The idea that Labour profligacy caused the crisis is utter tosh.”
Does my hon. Friend agree that the only tosh to be seen in that statement is the suggestion that Labour had not created the mess we are in? Is it not the case, as the CBI has said, that the previous Government’s target of balancing the budget by 2018 was set too far off to—
Mr Speaker
Order. We are asking about current policy, and some of these questions are simply—[Interruption.] Order. We have got the gist.
Mr Hoban
My hon. and learned Friend is absolutely right, and a number of organisations, both at home and abroad, have criticised the lack of ambition of the previous Chancellor’s plans. That is why the Obama Administration, the International Monetary Fund, the OECD, the Institute for Fiscal Studies, the CBI, the Governor of the Bank of England, 35 leaders of British businesses, the European Commission, the World Bank, three major credit rating agencies and the world’s biggest bond trader have been backing our plans—the only person the shadow Chancellor can find to back his is The Guardian.
Tony Lloyd (Manchester Central) (Lab)
Public expenditure is to be matched by revenue in 2015, but has the Treasury made any estimate of the amount of growth and employment that will have been forgone by these policies of making too-deep cuts too quickly?
Stephen Hammond (Wimbledon) (Con)
Does my hon. Friend agree that real progress on growth has to be made through not only matching expenditure, but cutting the deficit, and that the OECD says that the only way we will get future growth is by ensuring that the deficit plans are continued and this Government pursue their policy?
Mr Hoban
My hon. Friend is absolutely right. The OECD is one of a number of organisations that have supported our plans. The IMF has said:
“The government’s strong and credible multi-year fiscal deficit reduction plan is essential to ensure debt sustainability.”
That theme continues to come across from international organisations, which demonstrates that we are on the right track to get this economy growing again and ensure that Britain continues to live within its means after a decade of a Labour Government who maxed out on the nation’s credit cards.
Helen Goodman (Bishop Auckland) (Lab)
11. If he will (a) prepare and (b) publish an assessment of the relative effect of his forthcoming budget on women, families and ethnic minorities.
The Exchequer Secretary to the Treasury (Mr David Gauke)
Consistent with the approach taken at the June Budget, the Government will publish analysis on the Budget’s overall impact on households across the income and expenditure distributions in the Red Book. The Budget is an overall statement of economic policy containing a wide range of measures, and it is not possible to make a robust assessment of its overall impact on specific groups.
Helen Goodman
I am surprised by that answer. Since the general election, the Government have made 17 distinct cuts to tax credits and child benefit, which are paid to women. Tomorrow, the Chancellor will announce increases in personal allowances, which will benefit millions more men than women. Does the Minister think it is fair that money should be taken from women to give it to men?
Claire Perry (Devizes) (Con)
Is the Minister aware of my freedom of information request from last September which found that the previous Government never carried out an equalities impact assessment—not in the March Budget, the December pre-Budget report or the March 2010 Budget? They never did it either.
Mr Speaker
Order. I am sorry but I must repeat, and I hope that the message will be heeded, that questions must be about the policy of the current Government.
Mary Macleod (Brentford and Isleworth) (Con)
Does my hon. Friend agree that raising the income tax threshold, protecting spending on the NHS and increasing spending on social care will definitely benefit women?
Kerry McCarthy (Bristol East) (Lab)
The Chancellor chose to hit women three times as hard as men in his Budget last year and now, as living costs rise and the public sector is slashed, he wants to hit them yet again by changing the rules around maternity and paternity leave and flexible working in small companies. Is it really women whom the Prime Minister has in mind when he talks about taking on the enemies of enterprise, and can the Minister reassure the House that it will not be women who bear the brunt of tomorrow’s Budget?
Amber Rudd (Hastings and Rye) (Con)
Does the Minister agree that the fact that we are not cutting the NHS will really support women because they are so often carers in their family and it is so important that we support them in that important role?
Anas Sarwar (Glasgow Central) (Lab)
13. What assessment he has made of the effect on road fuel prices of the increase in the standard rate of value added tax.
The Exchequer Secretary to the Treasury (Mr David Gauke)
How much of the rise in the standard rate of VAT is passed on to consumers is a commercial decision for retailers.
Anas Sarwar
I thank the Minister for that answer. Treasury Ministers are very wrong to suggest that the calls to scrap the VAT increase on fuel is illegal and unworkable. There is precedent for it: the French President recently got a derogation from EU laws for French restaurants. Will this Government stand up for UK families who have been hard hit by the rise in fuel costs and look for derogation powers on fuel duty?
Richard Graham (Gloucester) (Con)
In terms of the value for money of decisions taken by the Treasury, whether on road fuel tax or other things, does the Minister agree that one of the best value creations of this Government has been the increase in apprenticeships, which is widely appreciated around the country? Does he agree that apprenticeships are critical both to our growth strategy and to the reduction of youth—
Mr Speaker
Order. I am sorry, but that question suffers from the disadvantage that it bears absolutely no relation whatever to the question on the Order Paper.
Mr Peter Bone (Wellingborough) (Con)
May I suggest a much quicker way of changing the VAT rate without that being illegal—by pulling out of the European Union?
Mr Speaker
I have to say that that was not much better, but the Minister may have a go.
Mark Lancaster (Milton Keynes North) (Con)
14. What recent representations he has received on measures to reduce the budget deficit.
The Financial Secretary to the Treasury (Mr Mark Hoban)
The Government have received a number of representations for the Budget referring to the need to reduce the budget deficit. In addition, the Government’s strategy has been endorsed by a number of organisations, including the OECD, which said in January that the Government should
“stay the course…The fiscal situation in the UK absolutely requires this approach”.
Mark Lancaster
The Government’s plan to eliminate the deficit by 2015 is in stark contrast to the Darling plan, which was simply to reduce it by half. What assessment has the Minister made of the likely impact of the Darling plan on the level of debt and the cost of servicing it?
Mr Hoban
If we had continued with the previous Government’s deficit reduction plan, debt would still be rising in 2015, not falling, meaning that we would have to spend an extra £3 billion in one year on debt interest while still having to make spending cuts. The lack of ambition in the previous Government’s plan put our credit rating at risk, thus threatening the prospect of higher interest rates and putting a brake on the recovery.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
When such representations were being made, was the Minister conscious of the effect that these cuts might have on young people in our country? Did he look at last week’s level of unemployment among young people? When will his Government do something for young people in this country?
Mr Hoban
The legacy left by the previous Government was that youth unemployment was continuing to rise. The other problem with which the Opposition left us was that our children and grandchildren would have to pick up the tab for Labour’s mismanagement of our economy. We need to get the deficit down to create the foundations for economic growth to ensure that more young people are back in work.
Duncan Hames (Chippenham) (LD)
The Chief Secretary to the Treasury has certainly received representations from me on such measures, including about the estimated loss to the Exchequer of more than £100 million due to tax avoidance through low value consignment relief on VAT. Will the Minister at least confirm that the Government’s conclusions on that will be shared with us in tomorrow’s Budget?
Mr Kevan Jones (North Durham) (Lab)
15. What recent assessment he has made of the effect on economic growth of the spending reductions set out in the June 2010 Budget.
Mr Geoffrey Robinson (Coventry North West) (Lab)
16. What recent assessment he has made of the effect on economic growth of the spending reductions set out in the June 2010 Budget.
The Economic Secretary to the Treasury (Justine Greening)
The independent Office for Budget Responsibility’s November economic and fiscal outlook takes into account the spending plans set out in the 2010 spending review. The hon. Gentlemen ask about a recent assessment, and I can tell them that the OBR will publish an updated forecast alongside tomorrow’s Budget.
Mr Jones
Durham university’s economic model shows that between 45,000 and 50,000 individuals will lose their jobs in the north-east of England as a direct result of public expenditure cuts, including 20,000 in the private sector. What message does the Minister have for those individuals and also for the 10.2% of the north-east population who find themselves unemployed?
Justine Greening
Coming from a Labour Member, given that unemployment rose during his party’s time in government, people will find that pretty hypocritical. The only way in which we will get sustainable jobs and a sustainable economy that is not as reliant on the public sector will be to carry out our deficit reduction plan. The hon. Gentleman will hear more about our growth review tomorrow.
Mr Robinson
Is not the Minister aware that all the independent indicators and forecasters suggest that there will be a sustained period of low growth below forecast, and that almost every single economic indicator is going in the wrong direction? Can she not therefore see that the Chancellor’s plan is simply not working? Why are the Government in denial about that?
Justine Greening
I simply do not agree. As we have heard, every independent forecaster is backing our fiscal consolidation plan. The hon. Gentleman talks about evidence, but the retail sales volume grew strongly in January. The Chartered Institute of Purchasing and Supply purchasing managers index grew faster in January than analysts expected, while manufacturing reached a record high. Only today, the CBI industrial sector survey says that orders are going up. Our economy is rebalancing over time, and although the hon. Gentleman says that there is no evidence for that, there is such evidence. There is job creation, and that is what we will need if we are to turn our public finances around.
Jacob Rees-Mogg (North East Somerset) (Con)
Is it not the case that the Government’s debt reduction plan is absolutely right, as we see in the gilt market and the country’s credit rating? Is it not also true that, throughout history, coalition and Conservative Governments clean up the economic mess left by socialists?
Justine Greening
My hon. Friend is right. The consequence of that economic mess is that Labour Governments always leave unemployment higher than when they came into office. It is always that that we seek to tackle. He is right that there is no alternative plan. We have heard about a defunct plan for VAT and petrol, but we have not heard from the Opposition any plan to tackle the deficit. They said they would have some thoughts. Clearly, they are totally thoughtless.
Sajid Javid (Bromsgrove) (Con)
The Government inherited the largest budget deficit of any major country, yet today the UK enjoys one of the lowest interest rates of any major country. Does the Minister have an explanation for that?
Justine Greening
My hon. Friend is right to point out that the previous Government maxed out the country’s credit card. Worse still, they want us to hand on those debts—their debts—to our children and grandchildren. The reason that we have been able to enjoy lower interest rates for our borrowing than countries such as Ireland is that the markets know that we have a plan to get our public finances back into shape. That is benefiting this country every day.
Tom Brake (Carshalton and Wallington) (LD)
T1. If he will make a statement on his departmental responsibilities.
The Chancellor of the Exchequer (Mr George Osborne)
The core purpose of the Treasury is to ensure the stability of the economy, promote growth and jobs, reform banking and manage the public finances so that Britain finally starts to live within her means.
Tom Brake
More than 1,500 people in Sutton will be taken out of paying income tax altogether from next month as a result of the increase in the tax threshold. What estimate has the Chancellor made of the number of people who will be taken out of paying tax altogether in 2015, when the tax threshold is increased to £10,000?
Mr Osborne
I think my hon. Friend is getting a little ahead of himself. The commitment is to a real-terms increase in the personal tax allowance in each and every year. People will have to wait for the Budget tomorrow. The increase of £1,000 in the personal tax allowance has taken 900,000 people of out of tax.
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)
T4. Writing in The Independent at the end of 2009, the then shadow Chancellor said:“If I become Chancellor, the Treasury will become a green ally, not a foe.”Will that pledge be reflected in tomorrow’s Budget?
Mike Freer (Finchley and Golders Green) (Con)
T2. The Financial Services Authority’s mortgage market review stated:“Our existing regulatory framework has been shown to be ineffective”and that“regulatory reform is needed to reduce the probability and severity of future financial crises”.Does the Minister agree?
The Financial Secretary to the Treasury (Mr Mark Hoban)
My hon. Friend is right. The mortgage market needs reform, but it needs stability as well, which is why I welcome the statement by the FSA today. It says that it will not introduce reforms this year and will take into account overall economic stability before it introduces any further changes. It has also made it clear that lenders should not pre-empt any conclusions from its review.
Bill Esterson (Sefton Central) (Lab)
T5. Can the Chancellor confirm that between 1990 and 1997 the proportion of tax paid on a litre of fuel rose from 59% to 75%? Can he also confirm that the proportion of tax paid then fell by more than 10% between 1997 and 2010?
Mr Osborne
What I can confirm is that Labour left us with six duty rises. Now they are wriggling desperately to find some excuse to get off the hook they put themselves on.
John Pugh (Southport) (LD)
T3. Can the Chancellor tell me when the Treasury’s detailed investigation of the feasibility of incorporating a general anti-avoidance rule in British tax law will conclude?
The Exchequer Secretary to the Treasury (Mr David Gauke)
My hon. Friend is right to highlight the matter. We have asked Graham Aaronson QC to undertake a study on the matter and he will report in the autumn.
Mrs Linda Riordan (Halifax) (Lab/Co-op)
T6. Following the announcement last week by Lloyds of more job cuts, many of them in my constituency, to a work force who have showed total loyalty to the company, and as the Government own a large percentage of the company—a company that made more than £2 billion profit last year—will the Chancellor intervene to protect people’s jobs and livelihoods, and stop the constant drip-feed of job losses by Lloyds?
Mr Osborne
Of course we are concerned when people lose their jobs, including in the banking sector, but what Lloyds is undergoing is the process of merging HBOS with Lloyds bank, which was waved through by the previous Government.
Dr Julian Huppert (Cambridge) (LD)
T7. I have had the privilege of talking to the Chancellor about a charter for entrepreneurs that I drew up, based on discussions with entrepreneurs in and around Cambridge. I am sure he will not want to pre-empt what he will say tomorrow, but can he say that he has looked carefully at some of those issues, in particular reforming the enterprise investment scheme and enterprise management incentives, and making research and development tax credits easier for small companies?
Mr Osborne
I have a copy of the hon. Gentleman’s document here. He has some excellent ideas on promoting enterprise and entrepreneurs. He will have to wait until tomorrow to see how we respond to them.
Mr Geoffrey Robinson (Coventry North West) (Lab)
T8. Can the Chancellor not see that the figures —current and forecast—for inflation, unemployment, growth, borrowing and even the deficit are all way off his target? Can he not see that the plan is not working, or is it a sad case of him not wanting to see?
Mr Osborne
What I would say to the hon. Gentleman is this: we inherited a record budget deficit and there was no credible plan to deal with it. We put a plan in place and it is supported by the international community. The result of all this is that we have interest rates that are closer to Germany’s, despite having been left a deficit that is bigger than Portugal’s or Greece’s.
Mr Andrew Tyrie (Chichester) (Con)
Will the Chancellor make every effort to keep the House informed about the cost of our operations in Libya by providing an estimate at the earliest opportunity? Will he also tell us whether those costs will be funded from the Ministry of Defence budget or drawn from the Treasury reserve?
Mr Osborne
My hon. Friend alerted me to the fact that he might ask this question. The House will understand that it is too early to give a robust estimate of the costs of the operations in Libya, but I can say that they should be modest compared with some other operations, such as Afghanistan. The MOD’s initial view is that they will be in the order of tens of millions of pounds, not hundreds of millions. I can tell the House today that whatever they turn out to be, the additional costs of operations in Libya will be fully met from the reserve.
Mr Kevan Jones (North Durham) (Lab)
T9. The Chancellor said on Sunday that the present financial difficulties were the result of “a decade of overspending”, so can he tell the House why in July 2008, 11 years into a Labour Government, the then Leader of the Opposition, now the Prime Minister, told the CBI conference“we are sticking to Labour’s spending totals”?
Mr Osborne
What we did on coming into office was set out a credible plan to reduce the budget deficit that has moved this country out of the financial danger zone. One month ago, the shadow Chancellor told his entire Front-Bench team not to make any spending commitments, and after that they committed to more than £10 billion of spending commitments. They have opposed £50 billion of the cuts. It is completely incredible, and that is why they cannot find any reputable organisation in the world to agree with them.
Mr Douglas Carswell (Clacton) (Con)
How high would inflation need to be before we halted further quantitative easing, stopped printing money and raised interest rates?
Mr Osborne
The Bank of England’s Monetary Policy Committee is of course independent. It is set a target by the Chancellor, and I expect the Bank to pursue that target.
Graeme Morrice (Livingston) (Lab)
T10. Contact a Family and the Children’s Trust have been campaigning for a change to the current rule that suspends disability living allowance payments for children under 16 once they have spent 84 days in hospital. The cost of this is around £3 million, compared with the overall deficit reduction measures of £80 billion. As this is a financially driven measure, will the Chancellor undertake to discuss the funding issue with colleagues in the Department for Work and Pensions so that some of the most severely disabled and sick children and their families continue to receive the financial support required when they need it most?
The Chief Secretary to the Treasury (Danny Alexander)
The Secretary of State for Work and Pensions is bringing forward proposals to reform the disability living allowance system and replace it with a new personal independence payment. I am sure that he will have heard what the hon. Gentleman said and will be very happy to discuss the matter with him.
Greg Mulholland (Leeds North West) (LD)
The previous Government’s beer duty escalator was damaging to pubs, ill-considered and did not raise the revenue that it should have done. Considering that the Prime Minister has said that he wants this to be a pro-pub Government, will we get some good news for pubs tomorrow?
The Economic Secretary to the Treasury (Justine Greening)
The hon. Gentleman will have to wait until tomorrow’s Budget, but he will recognise that in the emergency Budget last year we left beer duty frozen.
Stewart Hosie (Dundee East) (SNP)
The Chancellor knows that the long-term solution to the spikes in fuel prices is a stabiliser or a regulator, and hopefully we will hear about that tomorrow. However, is he aware that the price rises in fuel over the past four of five weeks equate to an additional £1,000 a year for running every truck in the country? Does he not agree that that is hugely inflationary and utterly unsustainable?
Mr Osborne
Of course, the very sharp rise in the world oil price has posed a challenge to lots of economies—all but the oil-exporting economies. That is one of the headwinds currently facing the global economy. Specifically on fuel duty and other issues, the hon. Gentleman will have to wait for the Budget.
Andrea Leadsom (South Northamptonshire) (Con)
Will my right hon. Friend undertake very carefully to consider improving the diversification of financial services provision in the way that United Kingdom Financial Investments Ltd divests itself of taxpayers’ shareholdings in the banks?
Mr Osborne
I am very happy to consider a number of ideas that have been put forward, but we have not yet reached that stage. If we sold the bank shares today, we would still be making a loss as a nation. That is an indication of the scale of the banking crisis. When we come to put those banks back in the private sector, I am sure that there will be a healthy debate in this Parliament and elsewhere about how we treat the proceeds.
Andrew Gwynne (Denton and Reddish) (Lab)
Ministers will be aware that there is a sunset clause in the Debt Relief (Developing Countries) Act 2010, which comes into effect in June. Does the Treasury have a view about renewing this important landmark legislation, which tackles the worst abuses of vulture funds?
Jesse Norman (Hereford and South Herefordshire) (Con)
Is my right hon. Friend aware that the Governor of the Bank of England confirmed to me recently in the Treasury Committee that without the current austerity measures, our international borrowing rates would be some 3% higher?
Mr Osborne
Of course, the Governor of the Bank of England is one of many people who have pointed out that there was no credible plan when we came into office and that we have put a credible plan into place.
Mr Chuka Umunna (Streatham) (Lab)
The Chancellor and other Ministers have cited investor confidence as the reason why they cannot revise their original plan for fiscal consolidation, but Jonathan Portes, the immediate former chief economist at the Cabinet Office, said:
“This is not a justification, economic or otherwise, for”
not changing policy. He said that
“it relies on an odd view of market psychology, one that says markets have more confidence in governments that never adjust policy, even when it is sensible, from an economic perspective, to change course.”
Why is he wrong?
Mr Osborne
Our country’s credit rating was on negative watch when we came to office and as a country we did not have a credible plan to reduce the budget deficit. Since that plan has been put in place we have been able to see the effects because our market interest rates and our spreads over bunds have come down. We have interest rates that are closer to Germany’s despite, as I have said, having a budget deficit left to us that was higher than either Greece’s or Portugal’s.
Richard Harrington (Watford) (Con)
Would my right hon. Friend the Chancellor like to inform the House which organisations have made representations to him that the deficit should be halved over the course of this Parliament?
Ian Paisley (North Antrim) (DUP)
The Chancellor might know that my constituent, Jenifer Herald, employs 40 people in Northern Ireland in a number of Subway cafés. The chief executive officer of that company has written to the Chancellor to say that inconsistent VAT policies for toasted sandwiches are damaging the growth of that industry. Does the Minister intend to review how VAT applies to toasted sandwiches and does he, like me, want to get his toasted sandwiches at a reasonable price?
Mr Aidan Burley (Cannock Chase) (Con)
Is the Minister aware that according to the Institute for Fiscal Studies, if we only halve the deficit rather than close it completely over the lifetime of this Parliament, we will spend an extra £10 billion on interest? Does he think that that is money that would be better spent on schools and hospitals in this country rather than foreign investment bankers?
Mr Osborne
I certainly do. This country is spending £120 million a day on debt interest, which is now one of the largest items of Government spending. These are taxes we raise from people and money we borrow to pay debt interest. The truth about Labour’s plan is that it would mean billions of pounds more in debt interest—something that will become clear later in the Parliament.
Jim McGovern (Dundee West) (Lab)
I am sure the Chancellor and his Front-Bench colleagues will be aware of the recent Scottish Affairs Committee report on the computer games industry in the UK, which states that there are “compelling reasons” for introducing tax relief. Will he tell me, the House and people in my constituency, where the industry is very important, just what progress has been made?
Mr Gauke
That industry, like other industries, will benefit from the policies that we have introduced to ensure that we grow more strongly and have pro-business policies. On video games tax relief, we looked at it and did not feel that it achieved good value for money for the taxpayer.
Jessica Lee (Erewash) (Con)
May I welcome the recent visit by the entire Cabinet, including of course my right hon. Friend the Chancellor, to the city of Derby, near my constituency? Manufacturers and wealth creators have been waiting for a long time for some support in the east midlands, and I would be grateful if my right hon. Friend could set out what plans are in place to assist that important area.
Mr Osborne
At that meeting at Rolls-Royce, John Rose made a very compelling case for how little we had done as a country to support our manufacturing sector. We will set out policies tomorrow to assist, and we have already, as I said, put in place four annual reductions in the corporation tax. More broadly, we have to get away from a model of growth that was pursued over the last decade—based on excessive debt, and growth in one sector, the City of London, in one corner of the country, the south-east. We must have more balanced and sustainable growth in the future.
Ian Murray (Edinburgh South) (Lab)
Does the Chancellor of the Exchequer recall saying at the end of 2007:
“Today I can confirm for the first time that a Conservative Government will adopt these”—
Labour’s—
“spending totals…to…the year 2010-11”?
Does he regret calling the article, “Tories cutting services? That’s a pack of lies”?
Mr Osborne
We got into office in 2010-11, and we abandoned those spending plans for the years ahead.
Stephen Barclay (North East Cambridgeshire) (Con)
The Chancellor has a strong commitment to open and transparent government. Will he therefore ask his officials to look again at the number and value of special severance payments paid by foundation trusts, which must be reported to his Department but which his Department is not currently willing to disclose?
Danny Alexander
I should be very happy to look again at the matter and to talk to the hon. Gentleman about it.
Mr Speaker
Order. As usual, demand has exceeded supply, but I am afraid we must move on.
Petition
Mark Tami (Alyn and Deeside) (Lab)
The petition is of residents of Alyn and Deeside and neighbouring areas, totalling some 3,000 persons.
The petition states:
The Petition of residents of Alyn and Deeside,
Declares that Peter Jones, a 24-year-old former pupil of Alun School, Mold, died in hospital following an attack by Gafyn Thomas Denman, 21, who is from the Mold area; notes that Gafyn Thomas Denman was found guilty of manslaughter and was jailed for 40 months for an unprovoked attack; further notes that, at the time of sentencing, Judge Merfyn Hughes QC explained that his hands were tied by the sentencing guidelines in cases of “one-punch” manslaughter such as this.
The Petitioners therefore request that the House of Commons urges the Government to review sentencing guidelines for those convicted of manslaughter so that sentences can better reflect the severity of the offence.
And the Petitioners remain, etc.
[P000905]
Student Visas
(13 years, 1 month ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Secretary of State for the Home Department (Mrs Theresa May)
The UK has a worldwide reputation for providing quality education to overseas students, and Britain is rightly the destination of choice for many people wishing to study abroad, but under the previous Government the student visa system became the symbol of a broken and abused immigration system. Labour claimed that it had capped unskilled immigration at zero, but it was happy just to sit back and watch as unskilled migrants abused the student route to come here. We had too many people coming here to work and not to study, we had too many foreign graduates staying on in the UK to work in unskilled jobs, and we had too many institutions selling immigration, not education.
We want to attract only the best and the brightest to Britain. We want high-quality international students to come here, we want them to study at genuine institutions whose primary purpose is providing a first-class education, and we want the best of them—and only the best of them—to stay on and work here after their studies are complete. That is exactly what we are doing across all the immigration routes: tightening up the system, tackling the abuse and supporting only the most economically beneficial migrants.
I have already announced and begun to implement our plans to limit economic migration—cutting the numbers by more than one fifth compared with last year. I will return to the House later this year with a consultation that will set out proposals to break the link between temporary migration and permanent settlement. I also intend to consult on changes to the family migration route. I will be bringing forward proposals to tackle sham marriages and other abuse, promote integration and reduce the burdens on the British taxpayer. We aim to reduce net migration from the hundreds of thousands back down to the tens of thousands.
The most significant migrant route to Britain is the student route, and we must take action there, too. Immigration by students has more than trebled in the past 10 years, and it is now far larger than immigration through the work or family routes. It is unsurprising that more and more overseas students are attracted by our world-renowned higher education institutions, but there has also been an increase in abuse in the private further education sector.
Students now make up the majority of non-EU migrants: including their dependants, they accounted for about two thirds of the visas issued last year under the points-based system. When Labour introduced the current system in 2009, almost a third more student visas were issued that year than the year before—an increase from 230,000 to 300,000. Numbers were so high that the UK Border Agency had to suspend student applications in some parts of the world because it could not cope with the demand, and much of that demand was simply not genuine. We have so-called students turning up at Heathrow airport who cannot answer basic questions in English or even describe what their course is about. One institution has an intake of 90% international students and asks only for GCSE-level qualifications to do a supposedly degree level course. Another college’s own sales agent actually helped a student to cheat in their entry exam. Legitimate colleges should still be able to recruit legitimate overseas students, but we need to stop the abuse and return some common sense to our student visa system.
The current system is based on a sponsorship regime that trusts educational institutions to assess the quality and ability of students, and puts the responsibility on the institution to ensure that the student is in fact studying and obeying the immigration rules. That trust has been well placed in some sectors: universities, independent schools and publicly funded further education colleges mostly take their sponsorship duties seriously and act responsibly. But some, particularly in the private FE sector and parts of the English language college sector, are not exercising the due diligence we expect. Those institutions make up the largest single group on the sponsor register. The sector is essentially unregulated; those institutions are not subject to a statutory system of education inspection and can offer any type of course they like. Although some of them are legitimate, for many their product is not an education, but immigration, together with the ability to work here.
It is absolutely clear that the current regime has failed to control immigration and failed to protect real students from poor-quality colleges. That is why the proposals I am announcing today are unashamedly targeted at the least trustworthy institutions. Our proposals protect the interests of our world-class universities, protect our leading independent schools and public FE colleges and, ultimately, are in the best interests of legitimate students.
In future, all sponsors will need to have been vetted by one of the approved inspectorates—Ofsted and its devolved equivalents, the Quality Assurance Agency or the relevant independent schools inspectorate—and all must become highly trusted sponsors. Once they achieve that status, private colleges offering quality, bona fide training programmes of genuine educational value will be able to continue to recruit legitimate international students. All current sponsors who do not meet the requirements will be allowed to stay on the register for a short period from April 2011. During that time they will be limited in the number of students they may sponsor. They will first have to apply for highly trusted sponsor status and accreditation. They will then be required to achieve highly trusted sponsor status no later than April 2012, and accreditation by the relevant agency by the end of 2012.
As well as cracking down on bogus colleges, we will crack down on bogus students. Students who want to come here should be able to speak English, to support themselves financially without taking paid employment, and to show that they are coming for study, not for work. So we will toughen up the entry requirements. First, we will strengthen the evidence that students need to demonstrate that they have the financial means to fend for themselves. Secondly, we will streamline the requirements for students from low-risk countries and prioritise resources on high-risk students. Thirdly, we will toughen up the rules on English language competence. Those coming to study at degree level will have to speak English at upper intermediate level; others will have to speak English at intermediate level. UKBA officers will be given the discretion to refuse entry to students who cannot speak English without an interpreter and who do not meet the required minimum standards. Let me be clear: you need to speak English to learn at our education establishments; if you can’t, we won’t give you a visa.
If someone is coming to the UK as a student, study should be their main purpose, not work. So we will end permission to work during term time for all students other than those at university and publicly funded FE colleges. Students at public sector FE colleges will be allowed to work for 10 hours per week in term time, and students at university for 20 hours per week. We will reduce the amount of work that can be done on work placement courses for non-university students from 50:50, as now, to two thirds study, one third work. At present, students on courses of six months or more can bring their dependants with them. In 2010, over 31,000 student dependants came here. We will remove this right for all but postgraduate students at universities and Government-sponsored students.
Coming to the UK to study for a course should, by definition, be a temporary step, so we will limit the amount of time that students can spend in the UK. Too many students who originally came here for short courses have been staying for years and years by changing courses, often without showing any tangible academic progress. We will limit the overall time that can be spent on a student visa to three years at lower levels, as now, and to five years at higher levels. There will be exceptions for longer courses such as medicine and veterinary science, and for PhD study, but no longer will students be able to stay here and switch from course to course to course.
We want the best international graduates to stay and contribute to the UK economy. However, the arrangements that we have been left with for students who graduate in the UK are far too generous. They are able to stay for two years, whether or not they find a job and regardless of the skill level of that job. In 2010, when one in 10 UK graduates were unemployed, 39,000 non-EU students with 8,000 dependants took advantage of that generosity.
We will therefore close the current post-study work route from April next year. In future, only graduates who have an offer of a skilled graduate-level job from an employer licensed by the UK Border Agency will be allowed to stay. Post-study migrants must be paid at least £20,000 or the appropriate rate for the occupation, as set out in the relevant code of practice, whichever is higher. That will prevent employers from recruiting migrants into skilled occupations but paying them less than the going rate. We estimate that had this measure been applied last year, it would have halved the numbers staying in the UK through this route. We will not impose a limit on that group next year, but we will keep the position under review. If the number of foreign students entering the labour market as post-study workers increases significantly and unexpectedly, we will ask the Migration Advisory Committee to look at how abuses can best be addressed. That would potentially include the introduction of a separate temporary limit on post-study workers.
As we restrict the post-study work route, we will ensure that innovative student entrepreneurs who are creating wealth can stay in the UK to pursue their ideas. The message to the brightest and the best students around the globe is clear: Britain’s world-class universities remain open for business.
We recognise the need to implement these changes in a staged manner that minimises disruption to education providers and students. We will therefore implement the measures in three stages, starting with new rules, which will be laid by the end of this month. I will publish the full details shortly.
The package of measures that I have outlined today is expected to reduce the number of student visas by between 70,000 and 80,000—a reduction of more than 25%—and it will increase the outflow of foreign students after they have concluded their studies. There will be a proper system of accreditation to root out bogus colleges; tough new rules on English language skills, financial guarantees, working rights and dependants, to root out bogus students; and new restrictions on post-study work to make sure that all but the very best return home after study. This package will stop bogus students studying meaningless courses at fake colleges, protect our world-class institutions, stop the abuse that became all too common under Labour, and restore some sanity to our student visa system. I commend this statement to the House.
Yvette Cooper (Normanton, Pontefract and Castleford) (Lab)
I thank the Home Secretary for the half-hour’s advance sight of her statement, as has become the form for the Home Office. Helpfully, however, we were, of course, able to read about the main changes in the newspapers this morning. As has become the form for this Government, we were also able to read opposing stories in opposing newspapers. The Business Secretary briefed the Financial Times that the policy had been completely changed so that he could support universities in expanding the number of their foreign students; the Home Secretary promised The Sun that the policy meant slashing foreign student numbers. Different policies for different papers, policies changing all over the place, and an unseemly row at the heart of the Government—such is the chaos at the centre of the Government’s immigration policy for students.
The Home Secretary is right to say that migration makes an important contribution to our economy, the strength of our business and our vibrant society. She is also right to say that migration needs to be properly controlled to sustain social cohesion and an effective labour market. She will recognise the importance of the higher and further education sector to the British economy. Non-EU students contribute an estimated £5 billion to the UK economy, support thousands of jobs in teaching and related areas, and make education an extremely important export industry. It is important that we recognise that economic value in providing workable migration policies. She will know that the Home Affairs Committee stated in its important report that it
“would caution against measures which could be detrimental to a thriving, successful industry.”
Does she recognise, too, that CentreForum has said that moves to tighten the restrictions on overseas students will risk nearly 12,000 jobs in education and another 12,000 in the wider economy?
Some of the damage has already been done. Anecdotally, some universities are already noticing a significant drop in applications from foreign students as a result of the signals being sent out by the Home Secretary’s consultation. Does she believe that the 80,000 drop in student visas to which she has referred will consist entirely of visas for bogus students on bogus courses, or does she believe that some legitimate students, too, will be put off as a result of the measures that she has announced?
We agree that we should not tolerate bogus colleges and fake students. People who want to come to this country need to play by the rules. That is why the Labour Government introduced a system of highly trusted sponsors through our respected universities, and we support measures that will build on that, so long as they are introduced in a workable way. It is also why we closed 140 bogus colleges.
Can the Home Secretary tell the House how the UKBA is going to increase its checks on colleges and students when it is facing staff cuts of 9,000?
What is the Home Secretary’s position now on pre- degree courses? In the consultation she said that she would introduce substantial restrictions on pre-degree level courses being covered by tier 4 visas, but there was silence from her on that issue in her statement today. Can she confirm that she has now ditched that proposal to remove pre-degree level courses?
We also agree that there should be appropriate restrictions on students’ employment. It is welcome that the Home Secretary has taken into account some of the evidence about the international competitiveness of UK higher education, but she put that into the context of trying to help youth unemployment. Is not the truth that her figures will mean restricting post-study work permits for non-EU students by about 19,000 at a time when youth unemployment is nearer 1 million? If she were serious about tackling youth unemployment she might be talking to the Chancellor about reversing some of his cuts, and reinstating the future jobs fund. Is not the truth that this policy is not about youth unemployment or bogus courses, but about hitting higher education because she cannot meet her promise to cut net migration to tens of thousands over the course of this Parliament?
What is now the Government’s policy towards foreign students studying bona fide courses at legitimate institutions? Does the Home Secretary want their number to increase or fall? The Business Secretary has said of the higher education sector:
“It’s an export industry; we want to grow it.”
But the Home Secretary has said that she wants the numbers cut. The Business Secretary wants more foreign students, and she wants fewer. If Britain’s major universities and colleges, faced with nearly £3 billion of cuts, decide to expand their courses and double the number of legitimate foreign students paying full fees in order to subsidise British students, will she support them or not? If they increase their legitimate students by 80,000, will she support them or not?
Finally, will the Home Secretary tell the House what the position is on student visitor visas, which she did not mention? Will she confirm that although she is restricting tier 4 student visas, in December she increased the number of students and courses eligible for student visitor visas? Will she confirm that under that visa, people can still apply for non-degree courses that are not run by highly trusted sponsors and do not have any minimum language requirement? Will she confirm that she has done nothing to prevent an increase of perhaps 80,000 in student visitor visas, and will she admit that the people on those visas will not be included in the net migration figures? Does that not expose the real con at the heart of her policy? Although she is making restrictions in one area, she is increasing the student visitor visas in another area that does not count towards her net migration targets.
The Home Secretary promised that she would put an end to non-EU students working once they had finished their course: the plan is ditched. She promised that she would put an end to non-EU applicants taking courses that were not degrees: that plan is ditched. She promised a new border police force, and that is still on the Conservative party website, but instead the Government have cut 5,000 staff from the UK Border Agency.
Time and time again policies are switched backwards and forwards, and in the end, it is all because the Home Secretary knows she cannot meet the promise that she made to cut migration numbers to the tens of thousands by the end of this Parliament. Is that still her target, will she still deliver it by the end of this Parliament, and is it not time she made policies that are in the interests of British universities, the British economy and a sensible, controlled migration policy, rather than taking risks with an important export industry for the sake of promises she knows she cannot keep?
Mrs May
I have to say that I am incredibly disappointed by the right hon. Lady’s response—but to be fair to her, there was one bright spark in it: she actually gave a statement on Labour’s immigration policy, which she has failed to do for two months. She said that the Labour party agreed that migration should be properly controlled. Sadly, however, in every other statement that the Opposition have made, be it in response to this announcement or the announcement on curbing the number of non-EU economic migrants, they have refused to support the measures that will bring about that proper control. We see that policy approach from the Labour party in relation to other things as well, such as public spending. The Opposition say they want to do something, but do not support anything that would enable it to be done.
The right hon. Lady made an amazing series of statements and asked an amazing series of questions. It would have helped her if she had actually listened to my statement and looked at it properly before she responded. She asked me whether it is still our aim to reduce net migration from the hundreds of thousands to the tens of thousands, but as Hansard will confirm, the answer to that was on page 3 of the text of my statement. The very sentence I used was, “We aim to reduce net migration from the hundreds of thousands back down to the tens of thousands.” I said that in my statement; she did not need to bother with that question.
Let me go through the right hon. Lady’s other points. I find it difficult to take some of her statements. She said that the previous Labour Government targeted bogus colleges, but listening to her, one would have thought that immigration was fine under the previous Government—that it was controlled, and there were no problems with abuse of the student visa system. I could take such things from her a little better if the number of student visas had not increased by a third to 300,000 when the Labour Government closed tier 3 of the points-based system. They were not controlling the student visa system or immigration at all. Because of their lack of control, the most recent figures show net migration of over 200,000 in the last year. Far from Labour controlling that, it was going up under the previous Government.
There are one or two other facts that the right hon. Lady might like to reconsider. She claims that 9,000 staff have been cut in the UKBA, but that is not the correct figure; the correct figure is around 5,000. She said that the Government were not going to do anything about courses below degree level. The whole point of the private FE college sector is that it offers courses below degree level. We intend to remove the bogus courses, colleges and students so that we can do what her Government failed to do: deal with and control immigration.
The right hon. Lady made a lot of statements about the importance of universities to the UK. Yes, universities are an important part of the UK economy. That is precisely why the measures that I have introduced take great pains to ensure that we protect universities. We are protecting universities, our independent school sector and public sector FE colleges, and we are ensuring that those who want to come here as legitimate students on legitimate courses of study at legitimate institutions can do so. We are doing what she failed to do: we are cracking down on the abuse.
Mr Speaker
Order. A great many hon. and right hon. Members are seeking to catch my eye. I should like to accommodate everyone who has an interest, but brevity is vital if I am to have any realistic chance of doing so.
Mr Graham Brady (Altrincham and Sale West) (Con)
Thank you, Mr Speaker. I have an unremunerated interest as a governor of Manchester Metropolitan university.
Will my right hon. Friend clarify two points? First, what is her view of students progressing from courses on English for academic purposes to degree courses? Secondly, what about those progressing from proper undergraduate degree qualifications to postgraduate courses within the same or other British universities?
Mrs May
I thank my hon. Friend for his question, because it enables me to clarify a point about students who currently do so-called pathway courses for English language. One of the points made clear to us by the university sector was that it often has arrangements with colleges to allow students without the required level of English to come and learn it at a pathway college and then progress to university. They will be able to continue to do so, but the students entering the college must be sponsored by the university. The university’s highly trusted sponsor status will cover those students, and undergraduates who wish to progress to postgraduate studies will be able to do so. Our requirement for progression is that it is clear that academic progression is taking place, and obviously moving on to postgraduate study is exactly that.
Mr David Blunkett (Sheffield, Brightside and Hillsborough) (Lab)
As a lifelong expert in hyperbole, I advise the Home Secretary to ease off on it in the message to undergraduate and postgraduate students across the world. Some £25 million will be lost to the university of Sheffield and Sheffield Hallam university from legitimate overseas students in the coming year. Will she promise the House that in taking the necessary tough measures in one area she will change the hyperbole and send the message to legitimate students across the world that they are welcome in the United Kingdom?
Mrs May
As I said in my statement, the message to the brightest and best students around the globe is clear: Britain’s world-class universities remain open for business. However, as I have said to the university sector, we need to work together to ensure that that positive message is the one given, not the negative one given by the shadow Home Secretary.
Nicola Blackwood (Oxford West and Abingdon) (Con)
I welcome the Home Secretary’s statement, particularly on the retention of a reformed post-study work route, on which I was especially keen. Given her estimate that the reforms will lead to about 80,000 fewer student migrants, does she believe that our world-class universities, such as the two excellent universities in my constituency, will still be able to recruit the brightest and the best, which is what our economy so urgently needs?
Mrs May
I thank my hon. Friend for her question, and for the considerable interest that she takes in the university sector. I can assure her that the proposals we have introduced today will ensure that universities are protected and will continue to be able to attract the brightest and best students from across the world.
Mr Frank Field (Birkenhead) (Lab)
I welcome the Home Secretary’s statement, particularly on behalf of my unemployed constituents who are desperate to find work. Given that the numbers coming in and leaving the country are crucial to the whole debate, when will she be able to come to the House and announce a system for border controls that counts people in and counts them out again?
Mrs May
I thank the right hon. Gentleman for his question. This is an issue in which he has taken a long-standing interest. I will give two answers to his question. The e-Borders system, which is being put in place, is partly working at the moment; complete application will come in 2015. In the next couple of months we will also make proposals on settlement, in which I know he has taken a particular interest.
Tom Brake (Carshalton and Wallington) (LD)
Does the Home Secretary agree that higher education in the UK is world class, and that our top institutions should remain open for business to genuine students, but that bogus colleges, which provide nothing more than an excuse for entry into the UK, should be forced to close their doors promptly?
Mrs May
My hon. Friend is absolutely right. The package that we have introduced today will protect our universities, which provide a world-class education. Students should want to come here for that quality of education, and we need to crack down on bogus colleges. It gives the UK a bad name when people see that they can come here supposedly as students but not get a proper education.
Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)
It is estimated that the loss of income to higher education resulting from the Government’s current policies on the issuance—or non-issuance—of tier 4 permits for pre-university pathway courses is costing higher education an enormous amount of money. I waited in vain during the Home Secretary’s statement for clarification on the position pending the announcements. Will she make it clear whether tier 4 applicants can now come here to do pre-university pathway courses?
Mrs May
The hon. Gentleman is correct: I did not mention that in my statement; I referred to it in response to my hon. Friend the Member for Altrincham and Sale West (Mr Brady). Pathway courses for students without the correct level of English to enable them to study at university will continue, but the student will need to be sponsored by the university concerned—the highly trusted sponsor.
Mr Mark Field (Cities of London and Westminster) (Con)
In recent years I have been on the advisory board of the London School of Commerce.
I want to ask the Home Secretary about post-study work, as did my hon. Friend the Member for Oxford West and Abingdon (Nicola Blackwood). I have slight reservations. Given the excellence of our offering and the idea that we will get some phenomenally innovative students from across the globe who will go back as ambassadors for this country, has any research been done in the Home Office showing that we might lose some of those students to places such as the United States or Australia, or are we confident that the changes will have no such adverse impact?
Mrs May
I am happy to tell my hon. Friend that there is no evidence that that will be the upshot. Our system is similar to those in operation elsewhere. It is wrong to say that the United States has a formal post-study work route; it does not. There are some abilities for people to stay and do some work in the United States, but they are different. Indeed, in some ways our requirements will continue to be less tough than those in countries such as Australia.
Keith Vaz (Leicester East) (Lab)
I thank the Home Secretary for keeping to her promise to publish her proposals after the Select Committee on Home Affairs had published its report last week. I hope that she found the report helpful. There is much to welcome in her statement—we recommended action on bogus colleges, reform of the post-study route and better accreditation—but will she look at the two most important recommendations, on whether students are migrants if they come here genuinely to study and then to leave, and on the issue of data? Unless we have proper data, we can make only flawed policy.
Mrs May
Obviously one is always looking to improve the quality of the evidence on which policy can be based. As for whether students are migrants, we use the internationally accepted United Nations definition of “migrant”, which is somebody coming to stay for over 12 months.
Mr James Clappison (Hertsmere) (Con)
I warmly welcome the package that the Home Secretary has announced today and her determination to tackle the problem of bogus colleges and bogus students, which the Home Affairs Committee has been warning about for a long time, but on which no action had been taken. She has announced that she will return a measure of independence to entry clearance officers, which is welcome. Will she consider returning to them—as recommended by the Home Affairs Committee and Migrationwatch—the wider discretion that was removed under the points-based system, which would be in the interests of both facilitating genuine students and keeping out bogus students?
Mrs May
Having spoken to UK Border Agency officers at points of entry, I am conscious of the frustration that they have felt at not having the discretion to deal with people whom they have plainly seen were not coming here as bona fide students, so I am pleased to restore a degree of discretion to them. My hon. Friend tempts me to go further than that, but that is not a path down which I intend to go at the moment. There were some issues raised about the greater degree of discretion available previously, but we are constantly looking at our immigration system and the way in which UKBA officers operate.
Andrew Miller (Ellesmere Port and Neston) (Lab)
I welcome the continuation of the notion of trusted status among the universities. When the Home Secretary finesses the rules, will she ensure sufficient scope for universities to take into account the realities of the circumstances that face them? In some areas of science and engineering, students come here with weak English but amazing skills and the ability to learn very quickly. Equally, some post-doctoral or postgraduate students come here with spouses who do not speak English. Will she ensure that universities have the capacity to deal with all those complex cases?
Mrs May
We have already introduced some English language requirements for people coming here to marry somebody in the UK, but the English language requirement relates to the postgraduate student who will be at university, not to a spouse entering as the dependant. It has been put to me that there are potentially a small number of cases of people who are extremely bright, but who do not have the correct level of English. My answer to that is twofold. First, it will be open to those people to go through a pathway course to the university. However, secondly, we will retain a small margin of flexibility where academic registrars have an individual student who is particularly brilliant but whose English they do not think will improve to the necessary level within the time scale required.
Nicholas Soames (Mid Sussex) (Con)
May I congratulate the Home Secretary and her Minister of State on this important and long overdue measure to put right years of neglect in the system? After the system has had time to settle down, will she consult the Migration Advisory Committee and ask for any recommendations it might have on how to tighten up on bogus students?
Mrs May
I thank my hon. Friend for his welcome for the statement. We are asking the Migration Advisory Committee generally to look annually at the immigration arrangements that we are putting in place, but it will be consulted, as I made clear in my statement, if we find that the number of students staying on for post-study work rises unexpectedly and significantly. We would ask the MAC to look into such a situation and to determine whether any abuse was taking place, and that could include the possibility of a limit.
Pete Wishart (Perth and North Perthshire) (SNP)
Will the Home Secretary tell us what the tone has been of the representations that she has received on this issue from the Scottish universities and the Scottish Government? What have they said about the funding issues and about the competitive situation? The Home Secretary knows that we do not have a fixation with immigration in Scotland; in fact, we are experiencing a structural fall in population numbers. We also have no evidence of bogus colleges. Will she consider an exemption for Scotland, so that any unforeseen consequences of her announcement today do not impact on our universities north of the border?
Mrs May
During the consultation, we had discussions with the Scottish Government and the Secretary of State for Scotland. He and I spoke about the concerns that Scottish universities had raised with him, one of which related to students who had an entrepreneurial idea and wished to stay on to launch a business. That is why we are ensuring that, within the post-study work rules, there will be a possibility to protect student entrepreneurs.
Lorraine Fullbrook (South Ribble) (Con)
The shadow Home Secretary claimed last month that, under the points system, “a lot of progress” was being made. Will my right hon. Friend assess the progress that Labour made in controlling migration?
Mrs May
I thank my hon. Friend for her question. The answer is a very short one, because Labour did not make any progress in controlling migration, as we saw from the fact that it closed tier 3 of the points-based system, as though that would have some magic result for immigration, and all that happened was that the number of student visas went up instead.
Sir Gerald Kaufman (Manchester, Gorton) (Lab)
Given that a substantial segment of the economy of the city of Manchester depends on the success of its world-class universities, one of which occupies the biggest campus in western Europe, and that those universities have already begun to cut courses as a result of other Government policies, can the right hon. Lady assure Manchester that her policies will not irrevocably damage the city’s economy, which is already suffering dreadfully under this Government?
Simon Hughes (Bermondsey and Old Southwark) (LD)
I thank the Home Secretary and her Cabinet colleagues for listening to the representations of the university communities. As the questions of exit visas and bogus colleges and the success of our students and universities are a continuing matter of concern for the growth of the British economy, will my right hon. Friend and the Business Secretary undertake to report back annually to Parliament on this matter, to ensure that the successful import of academics into this country can continue?
Mrs May
I can assure my right hon. Friend that we will be giving regular reports to Parliament on what we are doing on the immigration system. People will also be able to see what is happening with other aspects of the system, as I have said; I shall be coming back to Parliament to discuss those as well. I am absolutely clear that what the coalition Government have announced today will ensure that our universities can continue to attract students from across the world and to provide world-class education.
Joan Ruddock (Lewisham, Deptford) (Lab)
Some of the brightest and best international students attend Trinity Laban, the dance and music conservatoire in my constituency. Will students who wish to progress from undergraduate to postgraduate studies have to return home to obtain visas, and will students be able to work in this country if they are offered a job paying less than £20,000 a year, which is possible? Many have international careers ahead of them.
Mrs May
Let me deal with the right hon. Lady’s second question first. A code of conduct will be agreed between the UKBA and the Department for Business, Innovation and Skills—obviously the Home Office will look at it as well—and will set out the requirements for the post-study work route. I outlined those requirements briefly in my statement, but it will be necessary to consider particular sorts of occupation and the appropriate rates applying to them. As for the right hon. Lady’s first point, no, those students will not be required to return home.
Mr David Evennett (Bexleyheath and Crayford) (Con)
I warmly welcome my right hon. Friend’s statement, and congratulate her on her approach. Can she assure me that she will be tough and allow only legitimate institutions on to the highly trusted sponsor list? That would of course benefit us in the United Kingdom, but we must also be fair to students who come to the UK to study.
Mrs May
My hon. Friend has made an extremely important point. It will not benefit the UK if people throughout the world who have received the message that they can come here and be given an education end up in a bogus college. We will certainly be tough on highly trusted sponsor status. We will ensure that there is proper accreditation in terms of the educational qualifications and educational standard that colleges must offer, while the UKBA will look into whether they are observing immigration rules.
Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)
What level of English language qualification will be required for students attending English language schools? I understand from the proposals that even students taking short courses will require an intermediate-level qualification. If that is the case, will it not prove damaging to many genuine colleges that make an important contribution to the economy in our constituencies?
Mrs May
The requirements will be B2 for university-level study and B1 for below degree-level study, so there will be a B1 requirement for the pathway courses. As the hon. Gentleman will know—this enables me to answer a question asked earlier by the right hon. Member for Normanton, Pontefract and Castleford (Yvette Cooper) —we are piloting a system enabling student visitor visas to remain valid for 11 months. The right hon. Lady appeared to suggest that they were included in the migration figures, but they are not.
Mrs May
They are not included in the migration figures, and they are therefore not covered by my statement. However, as the hon. Gentleman will probably know from discussions in which he has engaged in the past with, among others, the Minister for Immigration the requirements of the English language colleges were of particular concern to us, and we have dealt with that by piloting the extension of the visitor visas.
Dr Julian Huppert (Cambridge) (LD)
I declare an interest as a member of the university of Cambridge, one of the three excellent universities in my constituency.
I welcome the changes that the Home Secretary has announced, because the original proposals in the consultation would have caused a great deal of harm to much of our education industry. I was interested to hear what she said about student entrepreneurs. How will that system operate? Will it form part of the post-study work system, and will it apply only to new applicants? Will we be telling students who came here expecting a particular set of post-study work rules that they will be changed while they are in the middle of their studies?
Mrs May
We will make absolutely clear when the new post-study work route proposals will be implemented. Students will have reached various stages in their courses, but there will be a specific point at which the post-study work route requirement is introduced. Those who are already studying in the UK and may have expected to stay will still be able to stay, provided that they obtain graduate-level jobs. It is the qualification level for the jobs that will change.
As for the arrangements for student entrepreneurs, we are considering how best to position them in the immigration system. I hinted earlier that they might form part of the post-study work route, but we might consider other routes. The intention is to enable a student who is graduating from university and who has a first-class idea to set up a business and put that idea into practice, and I think it right for us to do so.
Roberta Blackman-Woods (City of Durham) (Lab)
I understand the right hon. Lady’s concern to reduce abuse in the visa system, but what is she doing to ensure that the measures announced today do not simply send a message to bona fide students applying to legitimate institutions that they are not welcome, especially as that would create huge problems for our excellent universities and colleges?
Mrs May
What I am doing at every possible opportunity is saying that our universities are still open for business to overseas students. I have said at every stage, both throughout the statement and in response to a number of questions, that the whole point of what we are proposing is to protect the universities while dealing with the bogus colleges. I think that is the right approach, and I hope it meets with agreement across the entire House.
Mr Brian Binley (Northampton South) (Con)
I welcome the general thrust of the statement, and my constituents will be delighted to hear about it. I particularly welcome the statement that Britain’s universities are open for business to the brightest and best, but I must tell the Home Secretary that that perception does not hold good in China. In fact, the Chinese think we are closed for business. What specific measures will the Home Secretary take to improve that situation?
Mrs May
I thank my hon. Friend for his opening comment, but I do not think that there is any reduction in the number of applications from Chinese students wanting to come to the UK. However, as I have said in answer to a number of other questions, we are absolutely clear about the purpose of what we are announcing today, and I have talked with the university sector about the responsibility that it also has for ensuring that the message is given that UK universities are open for business.
Pamela Nash (Airdrie and Shotts) (Lab)
Which criteria will the Home Office use to differentiate low-risk and high-risk origin countries, and will they change as a result of today’s announcements?
Mr Rob Wilson (Reading East) (Con)
I also welcome the Home Secretary’s statement, as will my constituents. She will be aware of the recent Home Affairs Committee report, which noted from the evidence taken that the student visa system was likely to remain leaky until an effective method of counting students in and out of the country was established. She has already said something about that to the right hon. Member for Birkenhead (Mr Field), but can she say a little more?
Mrs May
There are various aspects of that particular issue, of course. In addition to the response I gave to the right hon. Gentleman on the e-Borders system, I might add that the UK Border Agency will, as part of its assessment of whether institutions can become highly trusted sponsors, examine whether they ensure that their students go home after their period of study. That is another way in which we will try to ensure that the issue is addressed.
Ms Gisela Stuart (Birmingham, Edgbaston) (Lab)
I serve on the external board of Birmingham university’s business school and I must tell the Home Secretary that both Birmingham university and Aston university are experiencing a reduction in the number of applications, so her message is not being heard. May I challenge her a little further on post-study work? Is she working with business schools on that, because they have very specific requirements, and if we lose sight of them, we will harm ourselves greatly?
Mrs May
We have been discussing with business and the university sector what might be the appropriate criteria for the post-study work route, and the message both those sectors have given me loud and clear is that if international students graduating from UK universities are to go into a job, that should be a graduate-level job.
Mark Reckless (Rochester and Strood) (Con)
Three months ago, the Home Secretary proposed closing the post-study work route, expressing concerns that it was adding to graduate unemployment. Will she explain to unemployed graduates in my constituency why she now says that foreign students can stay on, so long as they take a graduate job earning at least £20,000 a year?
Mrs May
We have looked at the balance of interests among universities, the UK economy, businesses and, of course, those currently resident in the UK who are graduating from UK universities and looking for jobs. That is why we have not said that graduates can stay on under the terms of the current post-study work route, which allows them to stay on and go into unskilled jobs or stay on and not be in employment. We think it is right that the brightest and best should have an opportunity to stay here for a limited period of time, but they must be in a skilled graduate-level job. We have been absolutely clear, however, that if the numbers unexpectedly or significantly increase, we will ask the Migration Advisory Committee to look at how we can ensure that abuses do not continue—if that is happening—and that could include limiting the numbers.
Tony Lloyd (Manchester Central) (Lab)
The Home Secretary will get support—not least from me—for her previous answer, because it is important to get that balance right. Will she clarify something for me? One of the things involved in the post-study work route that she has described is a system of UK Border Agency licensing. If that is to exist, will those who operate it be properly trained and will they operate with proper flexibility? That has not always been the case in the past. Does she recognise the point made by my right hon. Friend the Member for Lewisham, Deptford (Joan Ruddock) that for some graduate professions, such as the performing arts and dance, the £20,000 limit could be impossible to attain in post-study work?
Mrs May
I am happy to say to the hon. Gentleman that we are not creating a new process at the UKBA; it already has such a process for tier 2 of the points-based system. The UKBA is used to operating the system and to discussing with business and others the appropriate codes of conduct and measures within those codes, in order to ensure that people stay on in the right level of job. The UKBA is well used to employing a degree of flexibility in dealing with occupations that do not fit into a more stereotypical approach in terms of levels of salary.
Pauline Latham (Mid Derbyshire) (Con)
May I welcome the Home Secretary’s decision to ensure that all sponsors will now need to be accredited by the relevant body and become highly trusted sponsors? Can she confirm that that will also apply to universities and in particular to the university of Derby in my constituency?
Mrs May
Yes, I am happy to say to my hon. Friend that universities are highly trusted sponsors and will need to continue to be so. As they are audited by the Quality Assurance Agency for Higher Education, they fall into that definition, as I set out in my statement. I would expect our universities to continue to be highly trusted sponsors.
Paul Blomfield (Sheffield Central) (Lab)
I welcome the Home Secretary’s recognition of the importance of the post-study work route as a significant part of this country’s attractiveness to international students compared with our competitor countries, but I fear that her proposed changes will not go far enough in convincing potential students that this country really is open for business. Would it not be better to take the advice of the vice-chancellors of both the Sheffield universities in my constituency, which is that we should simply exempt highly trusted sponsor institutions from any changes to the post-study work arrangements?
Mrs May
As I said in response to an earlier question, both the universities sector and the business sector have indicated in my discussions with them that they think it is right that the post-study work route should allow to stay on only those individuals who are going into graduate-level jobs. The hon. Gentleman says that the post-study work route is an important attraction for international students in deciding to study in the UK. Frankly, what should attract international students to the UK is the quality of education provided by our universities.
Mr Robin Walker (Worcester) (Con)
The Home Secretary is absolutely right to crack down on bogus colleges, which are at the heart of this problem, and I welcome her assurance that legitimate colleges can continue to attract legitimate students. One such highly trusted institution in my constituency is the university of Worcester. How will she ensure that highly trusted universities of that sort can continue to attract the best and can benefit from these changes overall?
Mrs May
First, as I have just said, I expect the universities to continue to retain their highly trusted sponsor status and therefore to be open to attract individuals to come from overseas to study at them. Many universities have done a very good job of advertising themselves and promoting the quality of education that they can offer. It is for the universities and for us to be absolutely clear in saying to people that our universities remain open for business and provide a first-class education.
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)
Liverpool’s three universities attract approximately £66.6 million in gross income from international students. That income is a significant driver for Liverpool’s economy and is absolutely vital at a time when university funding is being so drastically cut. Will the Home Secretary please expand on what the tougher entry requirements for demonstrating international students’ financial means will be and can she guarantee that the proposals will not prevent genuine students from coming to study in Liverpool?
Mrs May
The proposals will not prevent genuine students from coming to study, but we do need to look at things such as documents provided by banks to ensure that they are genuine institutions that are genuinely backing up the financial claims being made by individuals who come here to study. It is in nobody’s interests to allow people to use documents that are not legitimate when they apply for a student visa to come to the UK. As regards the three universities in Liverpool, as I have made absolutely clear, they will continue to be able to attract international students.
Mr Stewart Jackson (Peterborough) (Con)
I congratulate the Home Secretary on facing down some of the hysterical hyperbole from the Opposition, parts of the media and parts of the further and higher education sector. On English proficiency and integration, will she please work with our colleagues across government to address the very specific issue of the hundreds of millions of pounds spent by British taxpayers on translation and interpretation services—a non-statutory duty—and to reduce such expenditure in these financially straitened times?
Mrs May
My hon. Friend is taking me down a road that goes beyond the Home Office’s area of responsibility, large though that is. I fully accept the thrust of his comment about the importance of people being able to speak English, which is precisely why we introduced a requirement last year that those who come here to marry or join a partner should be able to speak English to a particular standard.
Ian Paisley (North Antrim) (DUP)
I welcome much of the sentiment in the Minister’s statement. Will she facilitate a meeting with representatives of Queen’s university Belfast and the Royal Victoria hospital? They provide many opportunities for students to come and learn about medicine and then to go into those teaching institutions and provide services to many of our patients in Northern Ireland.
Stephen Mosley (City of Chester) (Con)
One popular scam involves students deliberately failing their examinations repeatedly in order to retake them and hence prolong their stay in the UK. What action is my right hon. Friend proposing to tackle such scams?
Mrs May
I referred in my statement to students who stay on and move from course to course but I had not got as far as those who deliberately, as my hon. Friend suggests, fail their exams. There will be a time limit on how long someone can stay in the UK—three years for a below degree-level course. The limit will be extended for postgraduate studies and to accommodate those who are doing medicine and longer courses, but there will be a limit on the number of times that someone can try that ruse.
Mr David Nuttall (Bury North) (Con)
One in five of the students granted a student visa in 2004 was still here in 2009. Will my right hon. Friend please confirm whether the measures in her statement will end that type of abuse of the system?
Roger Williams (Brecon and Radnorshire) (LD)
Universities across Wales will welcome today’s statement, particularly as the right hon. Lady has been able to address so many of their concerns. Will she commit to maintaining the dialogue with the vice-chancellors that has proved so productive over the past couple of months so that we can ensure that the proposals deliver in the way that they are intended?
Mr Marcus Jones (Nuneaton) (Con)
I strongly welcome the Secretary of State’s statement, particularly as I have learned that in one private college there was no classroom tuition whatever and there were so-called work placements up to 280 miles from the college. Does she agree that it is important that student visa holders should be studying and not working?
Stephen Hammond (Wimbledon) (Con)
I congratulate my right hon. Friend on her statement, which will be warmly welcomed by the legitimate private language college sector throughout the country. There are a number of such legitimate colleges in Wimbledon, so will she outline the changes that she expects that they will need to make to comply with her statement?
Mrs May
A process will be set out for those legitimate colleges by the UK Border Agency. It will be necessary that they apply for highly trusted sponsor status and for accreditation, and we will set out the time limit for that application process soon. They will need to receive highly trusted sponsor status by April 2012 and educational accreditation by the end of 2012.
Mr Aidan Burley (Cannock Chase) (Con)
Last and hopefully not least, I am sure that I am not the only Member of the House who is astonished by how widespread the abuse of the student visa system has become. May I ask the Home Secretary whether our policy to reduce net migration from hundreds of thousands to tens of thousands is supported by the shadow Home Secretary?
Points of Order
Mr John Spellar (Warley) (Lab)
On a point of order, Mr Speaker. Have you received any communication from Vodafone to explain its poor network coverage in the Westminster area since last Friday? Fortunately, I am on another network, but other Members are experiencing irregular reception and failing to get Rapide messages, which is quite unacceptable. Are you able to do anything about the situation, which is highly disruptive to the work of the House and its Members?
Mr Speaker
I fear that that is not a point of order and that the right hon. Gentleman perhaps entertains unrealistic expectations of my powers, although I take his point in the constructive spirit in which he volunteered his remarks. I have received no communication from Vodafone on this important matter. However, I think that I am right in saying that it would be of interest to the Department for Business, Innovation and Skills, representatives of which, I hope, will get to hear of what he said.
Dr Thérèse Coffey (Suffolk Coastal) (Con)
On a point of order, Mr Speaker. During Treasury questions, the shadow Chancellor of the Exchequer, the right hon. Member for Morley and Outwood (Ed Balls), brandished what he claimed to be a leaked copy of a Government document due to be published tomorrow. Is it in order for Government documents that have been obtained illicitly to be brought into the Chamber or, indeed, to be referred to?
Mr Speaker
I am grateful to the hon. Lady both for her point of order and her courtesy in giving me advance notice of it. Not only was that courteous, but it gave me the chance to look into the matter, as she would wish. “Erskine May” is helpful on the subject, and I quote from page 443 for the benefit of the hon. Lady and the House:
“There is no rule to prevent Members not connected with the government from citing documents in their possession, both public and private, which are not before the House, even though the House will not be able to form a correct judgment from partial extracts.”
Whether or not, in the words of the late Lord Birkenhead, we are any the wiser, I hope that we are at least, as a result, somewhat better informed.
Miss Anne McIntosh (Thirsk and Malton) (Con)
On a point of order, Mr Speaker. You are the custodian and guardian of the courtesies and conventions of the House, so I would be most grateful for your guidance on a matter of which I have given you advance notice. Is it not customary for an hon. Member to inform another Member in advance of a visit to their constituency? Was it sufficient, for example, for the shadow Secretary of State for Environment, Food and Rural Affairs simply to announce at DEFRA questions that she intended to visit, for political reasons, a forest in my area? Would it not have been normal for her to write in advance to inform me of the matter? I am sure that this was an oversight on her part, but your guidance would be most helpful.
Mr Speaker
I am grateful to the hon. Lady for her point of order. The answer is that if a Member is visiting the constituency of another Member on official or public business, it is courteous for them to notify that other Member of their intention to visit, preferably reasonably in advance. This convention has been breached on both sides of the House, and I hope not to have continually to make the point that it is really a matter of elementary courtesy that we should adhere to this convention.
If there are no further points of order, we come to the ten-minute rule motion, for which the hon. Member for South Northamptonshire (Andrea Leadsom) has been patiently waiting. May I appeal that Members who are leaving the Chamber do so quickly and quietly so that these important matters can be addressed?
Dangerous and Reckless Cycling (Offences)
Andrea Leadsom (South Northamptonshire) (Con)
I beg to move,
That leave be given to bring in a Bill creating new offences of causing death or serious injury through dangerous or reckless cycling; to make provision regarding minimum sentencing and fines for those convicted of such offences; and for connected purposes.
I am a keen cyclist and I heartily support the many people who leave their cars at home and cycle to work and school. Over the last few years, there has been an upsurge in cycling, which is a great way to keep fit and healthy and a green initiative that I fully welcome. Let me be clear from the beginning that it is not my intention to criminalise cyclists or to discourage people from using their bikes.
In fact, in the vast majority of cases, it is the cyclists themselves who are the victims on our roads when they are killed or injured by motorists who simply fail to spot them. The penalties for dangerous or careless driving for motorists are as they should be—very strict. Occasionally, however, it is the cyclist who injures or kills while riding their bike, and this is the area I want to address today. At the moment, the punishment for cyclists falls far short of the crime, and I believe we need to update the law so that all road users are equally protected and take equal responsibility for their actions.
I want to tell the House the tragic story of Rhiannon Bennett, the beloved daughter of Michael and Diana Bennett, who was knocked down and killed by a cyclist in your constituency of Buckingham, Mr Speaker. I am grateful that you are presiding over this ten-minute rule Bill. I know that you are aware of this case, Mr Speaker, and that you have been very sympathetic to Rhiannon’s family, for which I also know they are grateful.
In April 2007, Rhiannon Bennett was walking with friends on the pavement near her home. She was 17 years old. A cyclist approached the group at speed, jumping from the road to cut across the pavement, yelling “Move, I’m not stopping!”. He was travelling so fast that the group had no time to react. He hit Rhiannon, knocking her over and smashing her head against the kerb. She was rushed to hospital with severe head injuries, but she died six days later.
It is not possible fully to explain the grief that Rhiannon’s parents, Michael and Diana feel—but the pain did not end there. They had to sit in Aylesbury magistrates court at the trial of the cyclist, a man who lived just around the corner from them, and hear the verdict of the court. He was convicted by the magistrates of dangerous cycling and his punishment was a fine of £2,200. There was no prison sentence. Mr and Mrs Bennett did not just lose their daughter; they had to go through the pain of discovering that their daughter’s reckless killing did not merit a prison sentence. We should just imagine what would happen if a motorist drove on to a pavement and killed a teenager. If the driver had walked away with only a fine, there would have been a national outcry.
The police and the Crown Prosecution Service had an alternative to the dangerous cycling charge. The Offences Against the Person Act 1861 carries a section on “drivers of carriages injuring persons by furious driving”. It declares:
“Whosoever, having the charge of any carriage or vehicle, shall by wanton or furious driving or racing, or other wilful misconduct, or by wilful neglect, do or cause to be done any bodily harm to any person whatsoever, shall be guilty of a misdemeanour, and being convicted thereof shall be liable, at the discretion of the court, to be imprisoned for any term not exceeding two years, with or without hard labour.”
The Act is still in force, but for obvious reasons it is little used. It was developed to deal with the century during which horses pulled carriages and coaches, and is now completely out of date. From what little information I have found on it, this law is rarely, if ever, invoked. In any case, the CPS found that the charge of dangerous cycling was the most appropriate in Rhiannon’s case. There are other offences, such as manslaughter and grievous bodily harm, that could theoretically be used against a cyclist, but these are also rarely appropriate in the case of road accidents.
What is needed is an offence that fills the gap in the law and provides a charge that reflects the seriousness and the consequences of a cyclist’s actions. In other words, an updated law is required so that cyclists can be charged with similar offences and given similar punishments to those that motorists currently face. For a motorist, causing death by dangerous driving carries a penalty of one to 14 years in prison; causing death by careless or inconsiderate driving carries a penalty of up to five years in prison. We need to give justice to the small number of pedestrians killed each year by dangerous cycling, by applying similar penalties to those that exist for causing death by dangerous driving and causing death by careless or inconsiderate driving.
It is worth making it clear that the cyclist who killed Rhiannon Bennett was most definitely found guilty of a crime. The problem of achieving justice arose because there simply is no charge that is appropriate to the crime. The Crown Prosecution Service even acknowledged this when it stated:
“The real problem is the fact that as yet there is no offence of causing death by dangerous cycling.”
The cyclist responsible for the death of Rhiannon Bennett was convicted of dangerous cycling and fined £2,200. His bicycle was worth an estimated £6,000, almost three times the amount of his fine. I have not met anyone who considers this to be fair punishment for someone found guilty of a crime in which a young girl died. There need to be a charge and an offence that reflect the reality of what is happening on our roads and pavements in the 21st century.
The idea of creating a new law to deal with this problem was last considered in 2005 by the Ministry of Justice, which decided that no such law was required at that time. Six years later, with the growing number of bikes on our roads, more and more cycle lanes being introduced and the introduction of excellent schemes that I take advantage of myself, such as the cycle hire scheme in London, we need to look at the matter again, and I ask the House to support the Bill.
Question put and agreed to.
Ordered,
That Andrea Leadsom, Amber Rudd, Dan Byles, Damian Hinds, Mark Lancaster, Harriett Baldwin, Mary Macleod, Chris Heaton-Harris and Margot James present the Bill.
Andrea Leadsom accordingly presented the Bill.
Bill read the First time; to be read a Second time on Friday 4 November 2011, and to be printed. (Bill 168).
Budget Responsibility and National Audit Bill [Lords]
(13 years, 1 month ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Chris Leslie (Nottingham East) (Lab/Co-op)
I beg to move amendment 1, page 1, line 13, at end insert—
‘(d) the Treasury’s objectives in relation to economic policy and policy for the advancement of jobs and growth in the UK economy.
(e) the means by which the Treasury’s objectives in relation to economic policy will be attained (“the growth mandate”).’.
Mr Speaker
With this it will be convenient to discuss the following:
Amendment 3, in clause 4, page 2, line 20, at end insert
‘and the impact of Treasury policy on jobs and economic growth’.
Amendment 4, page 2, line 26, at end insert—
‘(c) an assessment of the extent to which the growth mandate has been, or is likely to be, achieved and the impact on employment and economic growth within all regions and nations of the United Kingdom.’.
Chris Leslie
It is fitting that we are discussing the Bill the day before the Budget. I understand that there are particular reasons, which the Minister will no doubt explain to the House, why the Bill needs to receive Royal Assent this evening, before we reach Budget day, so I am conscious that the ministerial clock is ticking. I pay tribute to the Public Bill Committee, whose members scrutinised the Bill in what I regard as sufficient detail.
Essentially, the first half of the Bill sets out the establishment of the Office for Budget Responsibility, and the second half makes a series of changes to the National Audit Office governance arrangements. It is fair to say that the Committee spent less time on the second half of the Bill, as the House had previously scrutinised many of those measures, but for various reasons that legislation was not included in the wash-up before the last general election. Most of our attention today will focus on the OBR.
Clause 1 relates not specifically to the OBR, but to the creation of a charter for budget responsibility. As we know, the Government have their reasons and rationale for making this set of legislative proposals. It was notable in Committee that Members were quizzical about why the charter for budget responsibility has been quite narrowly defined and why the OBR’s duties are similarly quite controlled and slimline. My view is that any realistic definition of budget responsibility must take account of the impact on jobs and growth of the wider economy and Treasury decisions on fiscal policy, particularly in the current context.
We know that Her Majesty’s Treasury is currently grappling to acquire a growth strategy, some of which might have been left on a number of photocopiers around the building before Treasury questions, although I have not been party to the memo that my right hon. Friend the shadow Chancellor picked up—I will try to get hold of him later to see what was in it. Clearly, the real economy has clashed with the Government’s plan A, which they have refused to depart from, which meant that in the fourth quarter of 2010, as GDP figures show, the economy went into reverse and shrank. The Chancellor blames the wrong kind of snow, but evidently the Government’s approach to fiscal policy has created circumstances that have not only put the brakes on economic growth, but unfortunately seem to have put it into reverse.
When we debated clauses 1 and 4 in Committee, Members felt that it was important to try to challenge the notion that we should somehow have an Office for Budget Responsibility that confines itself to fiscal, deficit and debt issues, to the exclusion of other equally important indices drawn from the wider economy.
Mr Mark Field (Cities of London and Westminster) (Con)
The course of events that the hon. Gentleman describes is surely a tribute to the independence of the advisory body—the OBR—during its first phase following last June’s Budget, but does he not share my concern that if it were to have the increased powers, it would cease to be advisory and independent, which it should be, and in some way would become a challenge to Treasury policy? It is correct that it has relatively limited powers, but above all those powers should remain independent and advisory to the Treasury.
Chris Leslie
I understand the hon. Gentleman’s point about creating a third institution when it should be Parliament’s job to challenge the Executive and the Treasury on their policies. The point we want to make through the amendments is essentially that, simply to have a fiscal mandate in the charter for budget responsibility is inadequate. We feel that it is important to have a growth mandate to supplement the fiscal mandate in the charter and, more than that, that the Office for Budget Responsibility should also have a duty to assess the impact of the Treasury’s policies on the real economy, on employment and on growth. I do not think that that necessarily sets the office’s face against or in juxtaposition to the Treasury—it would simply give it absolute clarity that it had the right and appropriate remit to consider those wider real economic effects.
Mr Field
But there is already a clear monetary mandate in the hands of the Bank of England. Surely a growth mandate along the lines that the hon. Gentleman suggests would muddy the waters, if not necessarily between the Treasury and the OBR, then between the Bank and the OBR?
Chris Leslie
Perhaps this is where I differ from the hon. Gentleman. I think that a slightly dry and narrow focus on the accountancy issues in the draft charter for budget responsibility, as well as a monetary policy focus at the Bank of England and in the charter, with no or scant focus on the real economy—economic growth, employment and some of those very important issues that affect all our constituents—would be a deficiency in the role of the OBR.
Mr William Cash (Stone) (Con)
The shadow Minister and I took part in a debate the other day that goes to the heart of these questions. Does he not agree that although fiscal policy is regarded—with qualifications as the result of the motion the Government put before the House the other day—as exclusively a matter for the House of Commons, unfortunately and disastrously, European economic governance affects the question of growth and the issues that go with it? Does he not agree that his proposals would be overtaken by the proposals that are going through the European Union?
Chris Leslie
I understand where the hon. Gentleman is coming from. I hope that he would acknowledge that we have tried to table a constructive set of amendments because we do not believe that a purely fiscal mandate for the Treasury or the OBR is wide enough. His view is that growth and fiscal policy will also be influenced from beyond these shores and especially by European Union policy. That may well be true.
Mr Cash
I do not wish to correct so much as to advise the hon. Gentleman that my position is exactly the opposite. Fiscal policy remains in this House and should do so, despite what the Government did the other day, and economic growth should also be determined here and not in other arenas. In the Public Bill Committee, he referred to judicial authority as a result of the interpretation of the statutory duties imposed in this place. Does he really want the Supreme Court to apply its determination of its ultimate supremacy over both fiscal policy and economic growth?
Chris Leslie
No, I do not. That was one reason why we raised this issue in Committee. The Bill sets out tests on the responsibilities of the OBR and the Treasury yet there was not really an adequate response from the Minister about the justiciability of those tests. For example, the Minister gave no cut-and-dried answer to the question of a member of the public who might wish to sue the OBR on its efficiency or effectiveness, what sort of legal process that might entail and where it would eventually go. The hon. Gentleman makes an important point.
In a cynical moment in Committee, I raised an eyebrow about the fact that 10 clauses are necessary to establish the OBR. I queried whether we needed 10 clauses to do that. The Bill contains a number of embellishments that, in a more sceptical moment, made me suspect that it was slightly padded out to make it appear to be a grander piece of legislation when a couple of clauses and a schedule would probably have done the trick. Perhaps I was unfairly cynical.
Kelvin Hopkins (Luton North) (Lab)
The hon. Member for Cities of London and Westminster (Mr Field) draws a useful parallel with monetary policy and the Bank of England, but in reality the bank’s Monetary Policy Committee currently interprets its remit flexibly because of the state of the economy. If the committee interpreted its remit rigidly, it would raise interest rates, because inflation is above the target level. It is not doing so, however, because it is sensibly looking at the wider interests of the economy.
Chris Leslie
My hon. Friend is entirely correct, and I am glad that the Bank of England is being flexible, but absolutely, if such mandates are set out rigidly in legislation, as the mandate is before us, and if they are interpreted as they currently are, it is hardly any wonder that the Treasury has a blinkered view of the economy and is obsessively—some might say, fetishistically—focused on deficit reduction and debt to the exclusion of almost any other facet of the economy. What we need right now is a flexible approach to economic policy which can take account of environmental and external facts, jobs and growth, and those are the issues we are raising today.
John Mann (Bassetlaw) (Lab)
I thank my hon. Friend for giving way on the point about flexibility. Where does he think the 2% inflation target, set for the Bank of England, should be, not least in the context of the Japanese economic crisis, with the pressures on US dollars and the insurance industry, and with the potential for rapidly growing inflation, which might require the 2% figure to be reconsidered imminently?
Chris Leslie
Of course, those issues are in the hands of the Chancellor. He has a Budget tomorrow, and I do not know whether he is thinking of revising his monetary policy mandate, but I would be very surprised if he were. My hon. Friend will notice, however, because I know he follows the small print of the Budget and of financial documents, that in the small print the Treasury has chosen for its GDP deflator, when it comes to public expenditure, an inflation rate of 1.9%, which is slightly at odds with the fact that the retail prices index is 5.5%. Again, the cynic in me would suggest that the Treasury has chosen that approach, because to do otherwise would blow a hole in the middle of the Government’s financial plans.
John Mann
I thank my hon. Friend for generously giving way a second time. The reason for exploring the issue is in this “charter”—this grandiose term—set out before Parliament. Chancellors might change their point of view, perhaps sensibly, if they look at the real economy, but how hamstrung will a Chancellor be in the future if some back-dated charter has been agreed but is itself too restrictive and requires change? Is not the measure before us rather a stranglehold—purely presentational—that could come to haunt this or future Chancellors?
Chris Leslie
My hon. Friend suggests that the measure is phantom paraphernalia, enrobing the creation of the Office for Budget Responsibility simply to give it a sense of grand importance, and in fact it could have deleterious consequences. That is certainly one crucial reason why we felt it important to table the amendment, stating that at the very least there should be a broader set of mandates within the charter, and that a growth mandate would be especially important.
Chris Leslie
Before I give way to the hon. Gentleman, I just want to point out that in Committee we debated the remit of the Office for Budget Responsibility and whether it should be broader and take account of wider economic and social policies. So, for example, we tested out the notion of whether the OBR could have responsibility for assessing the impact of Treasury policy on child poverty, or whether it should have responsibility for assessing the impartiality of the local government finance settlement.
One promise in the Conservative party’s localism paper, which came out before the general election, was to have the Audit Commission undertake an independent test of whether there was impartiality in the settlement. That has been dropped subsequently.
Chris Leslie
It has been dropped, and that is indeed something that we should come back to at another point.
This time, on Report, we thought, “Let’s look as strategically as anybody could possibly want to,” and having a growth mandate—a responsibility for growth and employment—and assessing the impact of Treasury policy seemed quite unobjectionable, at least to me when tabling the amendment.
Mr Field
It would probably be unwise for these provisions to be too wide. The credibility of inflation targeting would be undermined if the target were to be changed even on an irregular basis, if at all. As the hon. Member for Luton North (Kelvin Hopkins) said, the remit of the Bank of England covers not only inflation targeting but the greater interests of the overall economy. The latter remit is less well known than the former, but it is the reason interest rates have stayed at a very low level given the high levels of RPI and CPI that we are experiencing.
Chris Leslie
I would recommend that all hon. Members take a look at the draft charter for budget responsibility, which has several interesting facets. I have no doubt that the Minister will explain, in layman’s terms, what is meant by a
“rolling, five-year forecast period”
in relation to the cyclically adjusted current balance. Some hon. Members might find it difficult to envisage how that rolling forecast will operate in principle. Many of us can understand the concept of a fixed year or a fixed date against which a set of targets are to be judged, but if the horizon shifts continually, that is different. It would be interesting to hear the Minister explain that when she responds.
Mr Cash
I am sure that the hon. Gentleman also has in mind clause 6(3), which imposes the following obligation:
“The Office must, in the performance of its duty…act consistently with any guidance included in the Charter”.
As he well knows, I am rather particular about the words used in legislation. I like to know, first, what they mean and, secondly, what their consequence would be; I do not think that is unreasonable. I worry about the extent to which he would effectively be taking away from this House or, for that matter, from the Minister, any responsibility whatsoever for any aspect of the running of the macro economy. I have sympathy with his objective, but I am worried about how it fits into the framework of these provisions.
Chris Leslie
I would not want the hon. Gentleman to misunderstand the point of our amendment. It would, in essence, ensure that the charter for budget responsibility had a wide enough definition to give the new Office for Budget Responsibility, if it is indeed an independent body, more latitude to look across the wider set of economic indices and make its analysis and assessment of the impact of the Treasury’s policy on the ground—in the real world and the real economy—instead of looking merely at the desiccated issue of deficit reduction.
Stewart Hosie (Dundee East) (SNP)
I understand why the hon. Gentleman wants this provision, and I am not unsupportive. I am worried that he would conflate the work of the OBR with that of the Financial Policy Committee. We should remember that the FPC is charged with looking at the macro economy, which may well mean looking beyond monetary policy—the responsibility of the Monetary Policy Committee—and the macro-prudential. It might be able to look at the other aspects that he is expecting the OBR to look at, and that could muddy the waters even further. Does he see the potential for conflict between the OBR, with the role that he wants to set, and the FPC, with the role it is likely to have?
Chris Leslie
I understand where the hon. Gentleman is coming from. As I understand it, however, the Government, in creating the Financial Policy Committee at the Bank of England, propose to give it a particular responsibility for macro-prudential regulation. That is quite different from the role of the OBR, which, as an analytical and assessing independent body, will have a duty to provide comment and analysis on, and a degree of scrutiny of, the proposals of the Treasury and, more narrowly, the Treasury’s policy in relation to the accounting aspects of fiscal policy alone. If we are to have an Office for Budget Responsibility—or, as some hon. Members have suggested, the equivalent of the Congressional Budget Office, with some kind of parliamentary Budget office, which we will discuss later—it must be an independent body, so it must have the indisputable right to comment on the Treasury’s policies writ large on macro-economic and fiscal policy. I do not feel that there is necessarily a conflict with the Government proposals on changing financial services regulation, although we have not yet seen their proposals, and we do not really know what powers they intend to vest with the Bank of England on macro-prudential regulation. We will come to that another day.
I will explain why I think it is important that we focus on the concept of a growth mandate. It is not something that was just dreamed up by the Opposition. The Engineering Employers Federation has also called for a growth mandate to supplement the fiscal mandate in the charter for budget responsibility and in the Budget. It states that a growth mandate would
“send a powerful signal to business in the forthcoming Budget that government has a clear strategy to address the barriers to growth”
and calls for
“a Parliament long programme to deliver on it.”
Terry Scuoler, the chief executive of the EEF, has said that a growth mandate should be introduced to
“report on the progress at each Budget in the same way it does with the Fiscal Mandate.”
The EEF also states that
“like the Fiscal Mandate, the Growth Mandate should span the lifetime of a parliament with each subsequent Budget and policy announcement showing further incremental progress.”
The EEF makes a good point about the impact on the industries that it represents, which are in the real economy. Ultimately, that is what matters to our constituents.
Kelvin Hopkins
In line with that, would it not be sensible to ensure that the members of the OBR, when they are appointed, represent a range of views? The Monetary Policy Committee has hawks and doves, who have widely differing views on what should happen to interest rates. Equally, there ought to be voices in the OBR putting the case for the real economy, as well as simply for the Budget.
Chris Leslie
That is absolutely right. The Government have given the concession to the Treasury Committee that it can hold pre-appointment hearings for three of the five members of the OBR board. That is, of course, welcome.
Chris Leslie
We debated that point in the Public Bill Committee. Having consulted the Treasury Committee Chair subsequently, I understand that it has to weigh up how much time it has for such matters versus other things. That may well be a matter for the Treasury Committee to revisit. I urge it to ask for the ability to appoint all five members, not least because the two non-executive members who will not have a pre-appointment hearing are essentially appointed by the Chancellor of the Exchequer. To ensure their impartiality beyond doubt, it would seem necessary for the Treasury Committee to have the right, if it saw fit, to scrutinise all five.
John Mann
As a member of the Treasury Committee, I wholeheartedly back the principle that all five members should be scrutinised appropriately, not least because of the point that my hon. Friend the Member for Luton North (Kelvin Hopkins) made about ensuring that there is the maximum possible specialist input, including from the labour market, in the decision making. Let us scrutinise all five.
Chris Leslie
I look forward very much to those pre-appointment hearings and the reports of them. It is important to have people who understand the real economy. That is the gist of our amendments. We are worried about these matters.
Chris Leslie
If the hon. Gentleman will allow me, I will make a little progress, because I want to ensure that other Members have the chance to comment in this debate.
One reason we feel it necessary to put the concept of a growth mandate in the charter for budget responsibility is our anxiety that the current Chancellor of the Exchequer and Treasury are slightly blinkered when it comes to growth and employment. We know that in all probability, the Chancellor will announce tomorrow that the OBR is to downgrade the growth forecast. [Hon. Members: “No!”] Yes, my hon. Friends may be shocked at that piece of advance news, but apparently it says on the front page of the Financial Times today that the growth forecast for 2011 will be downgraded from 2.1% to 1.8%. The British Chambers of Commerce has also downgraded its 2011 gross domestic product forecast and is now expecting GDP growth of only 1.5%, down from a forecast of 1.9%. Other consensus forecasters are moving in the same direction.
Ian Murray (Edinburgh South) (Lab)
Will my hon. Friend explain to the House, and particularly to us new Members, whether the OBR has reduced its forecast at any other time in the past year?
Chris Leslie
It is a one-way journey, unfortunately. The OBR started with high expectations of growth soon after the general election, and at every stage at which it has made adjustments, the spiral of the economy’s growth prospects has descended.
Thomas Docherty (Dunfermline and West Fife) (Lab)
Like the Lib Dem poll rating.
Chris Leslie
Possibly, but in a more tragic and important way that affects real lives and real people. It does not really matter what happens to the Liberal Democrat poll rating, but growth falling behind and diminishing as unemployment rises is a really important issue in the real world.
Stewart Hosie
May I bring the hon. Gentleman back to the amendment for a second? I am sure he is not suggesting that the OBR should have any role in setting the fiscal mandate. I understand why he wants the consideration of growth to be part of its mandate, but the Treasury Committee stated that the OBR’s commentary function
“should be one of informing public debate through disseminating better understanding of fiscal policy and long-term economic trends, identifying possible risks”
and so on. Those long-term trends would inevitably include growth. Although none of us would want the OBR to comment on individual policy measures, even the Government’s response—I certainly do not defend them—states that the OBR would be
“examining and reporting on…the long-term impact of the Government’s decisions.”
Again, that would include their impact on growth. Does the OBR not already have the ability that he is looking to give it?
Chris Leslie
I suspect that the Economic Secretary will make that point in her retort, when she eloquently resists all amendments, as is her usual pattern of behaviour. However, it is not clear enough that growth and employment are matters that the OBR can comment on and analyse. I absolutely would not want to give it the power to determine the mandate, but the Treasury should be big enough and ugly enough to withstand commentary from such an independent body.
Mr Cash
May we park that matter for now, without in any way undermining the hon. Gentleman’s main point about judicial authority? What he said in the Public Bill Committee was completely right—if we impose a statutory duty, we have to accept that the courts will adjudicate.
That is important enough, but how would the hon. Gentleman reconcile clause 6(3), which states:
“The Office must, in the performance of its duty…act consistently with any guidance”
under the charter with, for example, European directives that will emerge under the 2020 strategy? Under his proposals, which would prevail?
Chris Leslie
The growth mandate that we are suggesting would be a responsibility of the Treasury, not of the OBR, but it would give the OBR a duty to have regard to whatever else was in the charter. Simply inserting the fact that the Treasury had to follow a growth mandate would give the OBR the right to comment on the Treasury’s performance in respect of that mandate. Whether there are European or other influences on the Treasury’s policies and performance is a debate for another time, I suspect.
Chris Leslie
I am quite sure that there are influences, but we tabled the amendment to draw out answers to some of these questions.
John Mann
One statistic that is not currently provided by the OBR is its projection of the number of new employees entering the country from abroad, including from within the EU. The amendment might mean that the OBR must provide that statistic, which is important in social and economic policy. At the moment, the OBR gives only a general figure from which we cannot deduce, without more detailed and hidden questioning, precisely how many new jobs come from abroad. My understanding is that currently, 700,000 to 800,000 of the new jobs being created will involve EU migrants. What does my hon. Friend say to that?
Chris Leslie
If the OBR is to do an adequate and holistic job in commenting on economic prospects, it surely needs the clear and explicit right to comment on employment policy, growth policy and so forth. My hon. Friend is absolutely right to raise the issue of employment and jobs. The most recent figures show that the jobseeker’s allowance claimant rate is 8% of the population, which is a 17-year high, and a prediction of 2.6 million unemployed. Again, that is likely to be revised upwards by the OBR when it comments on the forthcoming Budget.
My constituency, Nottingham East, symbolically passed the 10% claimant count rate, which is a very depressing milestone. For those reasons, and because long-term unemployment is increasing so quickly—it is up 24% in the last year—and more than one in five young people between the ages of 16 and 24 are out of work and on the dole, surely we need the charter for budget responsibility to include a growth mandate, and for the OBR to have the ability to assess the impact of the Treasury’s polices on jobs and growth.
Geraint Davies (Swansea West) (Lab/Co-op)
The Bill states:
“It is the duty of the Office to examine and report on the sustainability of the public finances.”
The sustainability of public finances involves three factors: tax, spend and growth. In tomorrow’s Budget, the Chancellor is expected to say, “This is a Budget for growth with very little change in tax and spend,” but it would be remarkable and ridiculous if two massive parts of the sustainability of public finances were not properly accommodated within the OBR.
Chris Leslie
My hon. Friend is absolutely right. It would be such a pity if this edifice—the OBR—did not scrutinise the things that the Government know they are vulnerable on, and on which their policies are deficient. The Government do not have a strategy for growth and jobs, and we need the OBR to be able to expose that. Growth has a number of drivers—
Chris Leslie
I will not, if my hon. Friend will allow me, because I want to focus on what the OBR needs to take account of.
The Economic Secretary to the Treasury (Justine Greening)
I have been listening to the hon. Gentleman for a while, but I want to draw his attention to the OBR’s economic and fiscal outlook, which was published in November last year. I do not know whether he has looked at that, because it contains 50 pages that consider the forecasting issues about which Opposition Members are raising concerns. I thought I would mention that because I get the impression from what he is saying that he has not read it.
Chris Leslie
Quite the contrary. Perhaps that was published in the free phase when the OBR, untrammelled by legislation and existing in the ether, as it currently does—we are post-hoc legislating now—had its moment of freedom when it could comment on such things. If the Bill locks the OBR into a narrow band of responsibilities and duties, it is reasonable to worry that it will be limited to commenting on a certain number of aspects. I accept absolutely that, as the Minister says, fiscal policy is affected by growth, and that therefore the OBR has an implicit right to comment, but that has not been made clear enough, which is a sign that she still does not understand the centrality of growth and employment policy to what the Treasury should be pursuing.
Kelvin Hopkins
My hon. Friend is right to focus on the importance of flexibility and the ability to deal with the problems he has described in his constituency. However, the hon. Member for Stone (Mr Cash) made a useful point about the EU’s arrangements, under which a completely independent central bank with no democratic controls sets interest rates that might or might not be appropriate for different nations. There are Maastricht rules and a rigid currency that cannot be flexed by countries that need to do so. Our situation is so much better because we have preserved a degree of flexibility so that we can manage our economy in the interests of our people.
Chris Leslie
Indeed, and we should pay tribute to the previous Prime Minister for maintaining and establishing those freedoms and that independence. However, you would rule me out of order, Mr Speaker, if we departed too much from the amendments.
A growth mandate is necessary on the four principal components of growth. The Government’s strategy on consumer spending is falling apart by the day. The nationwide consumer confidence index published this week showed a record low among the general public. One reason consumers are losing confidence is the possibility of VAT going to 20%. Real disposal incomes are falling back to the 2008 level, and median income is falling more than at any time since the 1980s. John Lewis reported falls in sales last week, Debenhams is saying that trading conditions are tough, credit levels are contracting, and from April onwards, of course, some of the tax credit changes and other changes will take money out of the pockets of consumers. We know therefore that on the consumer spending components of growth the Government have already lost control of a decent growth strategy.
On business investment, banks are still slow to lend to high-growth businesses. More than 20% of commercial real estate loans are in default or in breach of their covenants, and the much-trumpeted national insurance holiday that Ministers offered to new start-up businesses has not been taken up to the extent predicted by Ministers, owing to the complexities they have imposed on the arrangements. The Government’s growth strategy currently seems to depend on a number of odd assumptions, including that it is the fault of employee rights, which need to be eroded to boost growth. That is the kernel of their growth strategy.
On planning law, the Government are sometimes localist and sometimes not; sometimes they devolve powers but sometimes they do not want to give certain powers to councils. Their approach on planning is confused. Will they relax Sunday trading laws? There is speculation all over the place. There is even confusion over business rates. The Minister’s colleagues in HMRC have issued 40 different consultations, discussion documents, updates and responses on tax changes since the previous Budget, which, as many businesses complain, brings uncertainty and confusion. And to cap it all, with the abolition of the regional development agencies, they have created these local enterprise partnerships, with no clarity about their role or budget. We will see tomorrow about the enterprise zones, but on business investment the growth strategy is very deficient.
The Government are relying totally on an export-driven miracle to be the salvation of their growth strategy, yet if the Treasury predictions are correct we would need the highest export growth every year for the next three years, which last occurred in 1974, I think. That means, for example, that our exports to the USA would have to triple or our exports to China would have to grow twentyfold. That is not a growth strategy, but a prayer for a miracle.
To cap it all, we know what is happening with public sector expenditure. The rush to reduce the deficit so deep and so fast is causing great harm to the growth prospects of the economy and taking out a number of posts, particularly in parts of the country that are least resilient.
Amendment 3 would add to the Office for Budget Responsibility’s duties the requirement to assess the impact of Treasury policy on jobs and economic growth. Defining responsibility as such a purist, accountancy-type concept is to take a slightly dry and aloof approach, which seems to us irresponsible, given the real-world impact on people, jobs and society. We need to ensure that the OBR is a more rounded organisation that is grounded in the real economy, not just a narrow, bean-counting institution that looks at statistics or just one aspect of economic policy. It needs to be strategic, predictive, competent and authoritative, and it can do that only by having a duty to analyse the Treasury’s impact across the board. That would be one way of creating longer-term sustainability for the Office for Budget Responsibility, beyond the Government’s current plans for deficit reduction.
Amendment 4 would give the OBR a duty to assess the impact of growth in our regions and nations. We know that the Government’s spending cuts are hitting less prosperous parts of the country disproportionately. The disparities in our economy are growing as a result of the Government’s policies, and clearly that is harmful. Indeed, we saw that in the unemployment statistics this week, for example, with 27,000 more people made redundant in the west midlands and 8% unemployment in my region of the east midlands.
Stewart Hosie
We have indeed seen unemployment statistics, which show unemployment in Scotland falling for three months in a row, employment rising for three months in a row and construction up massively, specifically because of decisions taken by the Scottish Government to re-profile capital expenditure. How would the OBR relate, for example, to the Scottish Government on the different routes that they had taken over the same period? How would that technically work?
Chris Leslie
If the OBR could explicitly comment on employment and growth policy, it would be able to look at the different tactics employed in the economic policies of the different regions and nations. If there were good or poor policies in different corners of the country, the OBR would be able to analyse and pass comment on them.
Stewart Hosie
The hon. Gentleman is being generous in giving way, but I am quite keen to probe on this issue. What he has said makes perfect logical sense, but at that point the OBR would be commenting not on UK policy, but on regional or national policy. If it were commenting on a micro-policy, rather than policy at the UK level, would that not put it in difficult political territory?
Chris Leslie
If a policy were having a significantly adverse effect on jobs, such as some of the policies pursued by the current, Tory-led Government, it would be useful to have an independent, authoritative budget office to comment on that and to flag it up—to put out a red alert, as it were—as something that parliamentarians ought to comment on. I would not have a problem with that level of commentary. We should be big enough to cope with that level of challenge, audit and scrutiny. We would not be giving the OBR any power to make decisions; the point is simply to shine a spotlight on Treasury and Government policies.
Chris Leslie
If my hon. Friend will allow me, I will not give way. I have been speaking for rather a long time and I want to stop, but hon. Members may wish to make their own comments individually.
Clearly we need a proper growth strategy, but a growth mandate would also help. We need to start focusing on future growth industries and maximising our comparative advantage. We need to cast forward with a growth strategy not just for a decade, but for several decades. We need to focus on skills and, yes, a fiscal strategy, but we also need to focus on job creation, and a growth mandate with the clarity for the OBR to make its own assessments would certainly be a step in the right direction.
Mr Cash
Some time before the general election, as the financial crisis was developing—particularly in relation to the banks—there was a certain amount of talk about the idea being put forward by the then Opposition for an office for budget responsibility. I remember participating in some of those debates, and saying that I thought that it was an extremely good idea to have a much clearer picture of how we organised our finances. However, at that time the true level of debt was not being revealed by the then Government. We had reason to believe that the actual amount of debt was very different from what was being put forward. That had significant repercussions for the question of how we should deal with it. The OBR, or whatever else was going to be put in place, would have had to deal with the reality of the debt.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. The hon. Gentleman knows what I am going to say. I do not want to spoil what he is going to say on Third Reading, so it might be better if he stuck to the subject of the amendments. That would be more useful to us at this stage.
Mr Cash
I am very glad to be able to follow that advice. In order for the provisions contained in the amendments to be inserted in the Bill, it is essential for the House to be aware of the implications of judicial authority, the assertions of the Supreme Court in that context, and the sovereignty of Parliament. There is, for example, the question of fiscal policy and the charter, which is set out in clause 1(2) and to which the question of economic growth and job creation would be added by the amendments. Clause 6(3) states:
“The Office must, in the performance of its duty under section 4, act consistently with any guidance included in the Charter by virtue of this section.”
I am deeply worried about the legal status of the charter in this context.
As for fiscal policy, I remind the House that the other day, probably for the first time since 1640—Pym and Hampden and all that—the Government passed a motion saying that we were only primarily responsible for it. I voted against the motion—as did my hon. Friend the Member for Bury North (Mr Nuttall) and a number of others—but the whole House should have voted against it, because in fact we are exclusively responsible for fiscal policy, and that is what the Bill is supposed to be based on.
What worries me particularly is the inconsistency with fundamental questions that are in the background, involving the primacy of European law, sovereignty and judicial authority. I need make no further points, because in a nutshell, if those issues cannot be reconciled with what is in the Bill, and if the duties of the Office for Budget Responsibility are to examine and report on the sustainability of the public finances, to prepare “fiscal and economic forecasts”, to make assessments and analyse sustainability, and to act consistently with the charter as a matter of law, we are surely entitled to ask: which law will prevail?
Obviously, I agree with all the ideas that are being presented. We all want an efficient economy, we all want jobs and we all want growth. We cannot survive without growth, and we cannot generate the revenues to pay for the public sector without that growth in the private sector. What worries me is that all those ideas are being imposed through a Bill, rather than through the judgment of Ministers who are accountable to the House of Commons, and should not be required to refer back to the judicial authority of the courts or the alleged primacy of the European Union.
I fear that we are embarking on one of those Lewis Carroll-type situations. I am reminded of “The Hunting of the Snark”. Members may recall the phraseology. We know that we want it, we know it is there, but the question is, what is it going to do? I have a serious problem with the Bill for that reason. I fear that we are engaged in a process of wishful thinking rather than achievement, and that we are being locked into a withdrawal from parliamentary accountability—and, as some Members may know by now, I regard that as the ultimate test of our democratic system.
Ian Murray
It is a pleasure to follow the hon. Member for Stone (Mr Cash). At the end of his contribution he referred to wishful thinking. Labour Members certainly think the Chancellor’s gamble with the UK economy is wishful thinking. The recent reduction in GDP came as a shock to everyone, and serves to highlight some of the wishful thinking indulged in by those on the Treasury Bench.
I think that everyone supports the establishment of the Office for Budget Responsibility. One of the best measures taken by the Labour Government was the courageous step of making the Bank of England independent. We have all seen the benefits of that, in good times as well as bad, as it can now make decisions for the benefit of the economy, rather than the benefit of the Government.
In the establishment in law of the OBR, the Bill should focus on more than just deficit and debt issues. Clause 1(1) states that the Treasury must look at
“the formulation and implementation of fiscal policy and policy for the management of the National Debt.”
That narrow focus takes us away from what we need most, which is economic growth. It does not even give the OBR the ability to take account of various specific objectives the Government may want to achieve, such as on child poverty or unemployment, or in terms of the impact on the economy of decisions made by the Chancellor and his team.
Justine Greening
To reassure the hon. Gentleman, may I point out that the OBR is free to consider the impact of any Government policy on the sustainability of the public finances? It therefore does have the discretion to conduct analysis that it may think necessary to assess whether the public finances are in a sustainable state.
Ian Murray
I am grateful to the Economic Secretary. As I have said previously in the House, she is one of the more capable Ministers, but she does occasionally fail to see the wood for the trees, and I would point out to her that the OBR’s remit is purely fiscal, and its fiscal forecasting may not always take into account what is happening on the ground in all the local communities that we represent.
That brings me neatly to my next point, which is about independent forecasting. That is certainly no panacea, nor is it a substitute for the judgments made about the public finances by the Chancellor and Prime Minister. We need to be able to hold the Government to account on the accuracy of the forecasts and the consequences of the judgments and choices that they make. The Conservatives have repeatedly claimed that the Labour Government fiddled the figures, but that is not borne out by the statistics published by the Library. In all the years before the crash, in only two years did the growth forecasts fall below the range that the Treasury had published, so the Treasury was dealing with those issues. The Government are wrong if they believe that the OBR would have prevented a crisis, or that it will protect us from the consequences of some of what in my view are the Chancellor’s misjudgments.
Stephen Williams (Bristol West) (LD)
If the OBR is such a good idea, why did the previous Government not introduce it during their 13 years in office? But leaving that aside, will the hon. Gentleman concede that if we had had an office for Budget responsibility in the last Parliament, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown) would have found it much harder to dismiss warnings about the economy overheating, because those would have come from an independent office such as that created by this Bill?
Ian Murray
I am grateful to my hon. Friend; I get on very well with the hon. Gentleman, so I consider him to be my hon. Friend—
Ian Murray
That may not please every Labour Member, but nobody is objecting to the setting up of the OBR. My point is about the previous Government’s record: in only two years did the growth forecast fall below the range that the Treasury had published. I am not claiming that the OBR does not do sterling work.
That last intervention brings me neatly to my point about what the OBR has been able to do. It serves as a strong antidote to the propaganda about the figures that we have been hearing from the Government. The OBR said that because of the actions of the Labour Government, the deficit in 2009-10 was more than £20 billion less than had been expected. It also said that under the Tory-led Government’s plans there would be 110,000 more people on the dole by the end of this Parliament than would have been the case under Labour’s plans. Those are the OBR’s figures, which is why I am so delighted that it was set up—the hon. Member for Bristol West (Stephen Williams) can check the figures if he wishes. The OBR forecasts based on Labour’s plans until the election were that the economy would grow by 2.6% in 2011, whereas the figure under this Government spirals down to 2.1%—and even that may be reduced when the Chancellor speaks at the Dispatch Box tomorrow. So the OBR has been a good antidote to the propaganda that we have heard from those on the Government Benches.
Andrew Bridgen (North West Leicestershire) (Con)
I welcome the fact that the OBR is in place. Does the hon. Gentleman think that if it had been formed back in 1997, it would have advised the Labour Government against increasing the national debt by a stonking £74.9 billion in the boom years between 1997 and 2004?
Ian Murray
One would have thought that the three interventions I have taken were scripted across the Chamber, because the hon. Gentleman leads me to the second point in this part of my speech. I was talking about the deficit and the national debt, so let us dispel some of the propaganda in the OBR’s reports. He is welcome to read both them and the fantastic summary of performance indicators in the economy that the Library has produced. This point shows why it is incredibly important that the OBR should examine a wider set of figures, rather than just fiscal and national debt. Public sector net debt was down to 36.5% of gross domestic product in 2007-08, compared with the 42.5% that was inherited in 1996-97. Most of that borrowing was to do with financing capital investment, and not day-to-day expenditure as the Conservatives claim.
Stewart Hosie
Unfortunately that is not quite true, because the bulk of the capital expenditure took place through the private finance initiative. If memory serves, the outstanding balance on the credit card for that is £200 billion—of which, under the Labour Government, two thirds was off the balance sheet.
Ian Murray
The figures are there for people to see. I am delighted that we have had a contribution from the hon. Member for Dundee East (Stewart Hosie) on this subject, because in the past four years of Scottish National party government not one brick has been laid to build new infrastructure in Scotland. They have refused even to set up anything to do with building public infrastructure.
Mr. Deputy Speaker (Mr Lindsay Hoyle)
Order. We are not going to be drawn into the party politics of Scotland. Let us stick to the amendment.
Ian Murray
Thank you, Mr Deputy Speaker. I will resist the temptation to have another go at the Scottish National party in the Chamber, and will take your guidance.
I shall finish on two quick points. First, the level of borrowing before the financial crisis did not cause the recession. Every country in the world was affected, so it does not take a rocket scientist to work out that it was a worldwide financial crisis. The coalition Government’s propaganda—
Ian Murray
I may just carry on, as I know you are trying to get through the speakers, Mr Deputy Speaker.
The coalition would have us believe that the previous Government were responsible for the economic crisis in, to name but a few countries, Germany, France, the US, Japan, Greece, Portugal, Spain, Italy, Iceland, and that member of the arc of prosperity, Ireland.
Finally, I want to give a human story and show why there is a need for a growth factor mandate at the OBR. On Sunday in my constituency I met a family who raised the spectre of what the Government’s changes mean for them and the problems that they face as a result. The OBR reflects these issues in the figures it produces, but not in terms of growth. That family gave me a list, which follows on from a list given to me by someone at Her Majesty’s Revenue and Customs: they have listed the cost of all the changes to their family budget, which amount to a loss of £4,000 a year. One member of the family earns just into the upper tax bracket, and his partner works part-time and tends to look after the children. When the national insurance increase and the child benefit cut—because he is a higher tax bracket earner—are taken into account as well as the increase in VAT and pension contributions, the overall consumer prices index increase to pensions, his public sector pay freeze, the extra cost of fuel going into the car, the increase in utility bills, food inflation and general inflation in the economy, it all has a rather hard-hitting effect on the family budget. That is why I think the amendments are sensible, and why the OBR needs a growth mandate to get the Chancellor out of a hole—because he does not have a plan B, and it does not really look as if he has a plan A, either.
John Mann
I shall speak solely to the excellent amendment that my hon. Friend the Member for Nottingham East (Chris Leslie) so eloquently put forward. In doing so, I shall argue why it is in the Government’s interests to accept the amendment. I am certain that by the end of my speech the Minister will wish to accept it and will accede by nodding that she will do so.
The amendment is a pro-Government amendment and would be pro-Government whoever was in government, because unlike the usual party-politicking that we tend to get on Report, particularly early on, the amendment is a highly pragmatic and practical amendment to a process that, as the Government stated when they set up the OBR, was itself meant to be independent, practical and pragmatic. The shame is that we could be in a Public Bill Committee given the paucity of the number of Members present to debate this rather important Bill and an area of the economy that is the most fundamental issue that we face, along with every other Parliament in the world. I know we will not have a green Budget tomorrow, but today the green Benches are largely empty of hon. Members ready to participate in and listen to the debate. That is an indictment of the confidence that Back Benchers from both halves of the coalition have in their Government's economic policies on the verge of the Chancellor’s second Budget.
We have an opportunity to shape the independent analysis that will sit alongside this and all future Budgets, including when, at some stage, the coalition parties are in opposition—although I appreciate that the Liberals are, in essence, already in opposition. It is extraordinary that so few of them are present. If I were a Liberal now—I never will be, but if I were—I would be thinking, “Here is an opportunity, with this amendment, to try to have a smidgen of influence over this tawdry Government.” That smidgen of influence is entirely lacking now, because the Liberals are nothing more than lapdogs to the Tories’ economic policies.
I shall illustrate my point with two examples, the first of which concerns the labour market and issues such as immigration and why it is so relevant to what the OBR is not doing and, I believe, will not do in its report that will be presented with the Budget tomorrow. When assessing job creation, it is essential from a Treasury and from a social policy point of view to ascertain precisely what new jobs there are. In doing so, work should not be broken down to the micro-level of particular kinds of jobs, as policy makers do not need to know that. However, they do need to know about the people who have entered the labour market and were not in it before. If it is projected that just over 1 million jobs will be created in this Parliament, it makes a world of difference if those jobs are taken by young people coming into our economy from the accession countries of eastern Europe, perhaps on a temporary basis, to participate in those elements of growth in our economy rather than being taken by the domestically resident, unemployed, underemployed, retired or partially retired population.
The economics of this issue are as important to decision making as the social policy side, which I am sure all hon. Members will recognise is very important. If the majority of jobs being created are semi-permanent, service sector-based jobs in the south-east, particularly in London, and if they are filled by people from overseas, there will be economic and social consequences. One economic consequence will be an overheating of the London and south-east economies.
The failure to take that into account in economic planning was by far the biggest fault line under the previous Labour Government. It is foolhardy of the current Government, with the cheering on the Conservative Back Benches that there has been, to do exactly the same thing given that a tool has been created that would allow that objective analysis—if it were allowed to do that job. If the OBR’s report tomorrow gives a breakdown of where jobs are coming from, how many are in the south-east and London, and how many are new jobs going to people coming into the country for the first time, that will give us far greater certainty about the economic and social consequences. Some of those economic consequences, as well as social consequences, will be an overheated housing market in London and the south-east, which has previously been an impediment to certain forms of growth and to those who have wished to get into the labour market but have not been able to do so.
Stewart Hosie
The hon. Gentleman makes an interesting point about the nature of employment, but I am not sure whether the growth mandate to which amendment 1 refers would help. There were years under Labour in which there was net growth, but the Labour Government still managed to lose 1 million manufacturing jobs in those years—this was before the recession—and I am not sure how the growth mandate would have helped to inform us that we had lost those jobs, given that net growth was being identified and, presumably, reported on, as it would be by the OBR.
John Mann
We, like other countries in the western world, are losing manufacturing jobs because of our refusal to deal with Chinese imports and the consumer myth of buying ever cheaper from China. The inherent trade imbalances and problems that accrue as a result will come back to haunt us, and while I know that the Government will want to allocate time to discuss that vital subject in the near future, it is slightly outside our present debate.
The hon. Gentleman is partly right and partly wrong. While it would be wrong to discuss policy issues relating to the economy now, if the statistics had been broken down at that time to allow his assessment to be made more accurately, it is rational to assume that the situation could have been debated more regularly and in a more informed way. That might have had a positive impact for Opposition Members such as him as well as Labour Back Benchers. Indeed, such information might also have informed the previous Government’s policy making, which explains why amendment 1 is in the Government’s favour.
We need to know about job creation and what jobs are available not only in London and the south-east, but in other parts of the United Kingdom. I have talked about immigration, but there is an equally vital factor for economic and social policy: the blurring, albeit for rational reasons, of retirement age. We have to consider early retirement, late retirement and the retirement age itself, as well as the vital question of pensions. Some employers in areas such as mine have deliberately targeted getting the over-60s back into employment. That is perfectly rational, and it is good for those people, for the social economy and, perhaps, for the economy overall. We need the information, however; not because that is a bad thing, but because we need to know whether the new jobs in our regions and constituencies are getting those people who are deemed to be retired into the labour market, as opposed to people who are not working—whether they want to work or not. If we are to crack the problem of those who choose not to work, or who are incapable of getting work—again, the rational employer goes for the person with work history—such understanding will be vital to our economic and social policy. I put it to hon. Members that the rational employer is far more likely to employ a 67-year-old with an excellent work history who is re-entering the labour market, perhaps in a part-time job, than a 57-year-old who has been unemployed for 10 years.
The decisions taken by employers and those individuals who wish to re-enter the labour market are not necessarily matters for us, but the consequences of their decisions are important to us, and especially to economic policy making. An understanding of the precise breakdown of new jobs and job losses is fundamental to economic policy making. Several of the economic assumptions that can be made about consumer behaviour, pensioners and wage demands flow from such analysis. That is why, as a slight aside, it would be foolhardy not to give the Treasury Committee a role in all five OBR appointments, because such a role would ensure that if a Chancellor were so foolish as to skew the appointment process towards people with a certain mindset or from a certain discipline in economics, as opposed to trying to achieve a balance, that Chancellor could be corrected through appropriate cross-party decision making. I am talking about any Chancellor—the present one, whoever replaces him in future reshuffles and our Chancellor, when we are in power. It is vital that there is an evidence base that stands independent of the Government so that we can all decide how to vote on the various measures that the Government bring forward. How can we possibly make an informed decision otherwise, except by political instinct, which is important but insufficient compared with having all the information?
I am therefore puzzled by why the Government are not leaping to thank my hon. Friend the Member for Nottingham East for tabling the amendment. Labour Members might see the fact that his approach would help out such a Tory Government as somewhat treacherous, but this is clearly the new politics. It is coalition gone mad when a Labour Front Bencher is putting forward a proposal that would help Conservative Back Benchers, the handful—a tiny number—of Liberals who are anywhere near government and the Government themselves.
Let me give another example about policy making. Who knows what will be determined about petrol policy tomorrow, but that is a good example of something that should be covered by the OBR’s analysis. We need to know what has happened, including in the past, so that we can assess the impact of VAT on petrol, as well as on petrol duty, and the changes to petrol duty itself. The Chancellor might decide not to cut the price of petrol and yet not to increase it further, even though the price paid by drivers such as myself has gone up by ten quid since he became Chancellor. If he decides not to increase the price further, we will need to see a breakdown of the relevant information. We could go back through history, although I can guarantee that such a consideration will not be in the report that the OBR produces tomorrow. I could assist the office, however, because I have statistics that demonstrate that 70% of the existing tax on petrol was brought in by Conservative Chancellors since 1973. One might ask why Conservative Chancellors pick on the motorist to such an extent, but that is a debate for tomorrow rather than today, although I know that you, Mr Deputy Speaker, and others in the rural community will want to know why that is the case.
The point, in the context of the amendment, is that we must know precisely what is going on. I imagine that Conservative Back Benchers would be shocked to find out that Conservative Chancellors are responsible, as of today, for 70% of the tax on petrol. If the OBR had the mandate, however, those statistics could be laid out for us at every Budget and the pressure would be on. The pressure would, of course, be on Labour if the reverse had been the case and Labour Chancellors such as my right hon. Friends the Members for Kirkcaldy and Cowdenbeath (Mr Brown) and for Edinburgh South West (Mr Darling) had been responsible for the rise.
Andrew Bridgen
I applaud the hon. Gentleman’s honesty in saying that Conservative Chancellors are responsible, because there is no doubt that Labour Chancellors have been extremely irresponsible. [Interruption.]
John Mann
I struggle with the humour, Mr Deputy Speaker.
The facts cannot be hidden. The facts about immigration cannot be hidden because they can be rooted out. My point is that the facts should be there and they should be presented. The facts on the semi-retired, part-retired, would-be-retired, past-retired and those back in the labour market are not there, but they would help with some of our social policy making and, I repeat, are vital to our economic policy making.
When it comes to the price of petrol and the level of tax on it, I imagine that some Greens and others—there are not many Green Members, of course—would see those statistics as important for social policy. As I have said, however, I am mainly interested in economic policy. I am interested in knowing about the impact in my area on small businesses as well as the larger businesses that rely on vehicles. I used to rely on vehicles when I had my own small family business, driving lorries across Europe. We know how much it costs to fill up, but as a new MP entering Parliament in 2001, I would have been interested in challenging Labour Chancellors over what they were going to do with the historic tax on fuel that had been imposed by their Conservative predecessors, particularly between 1979 when it was 6.6p and 1997 when it was about 45p—the biggest increase in petrol duty anywhere in the world. I appreciate that statistics can be embarrassing to Governments.
Stephen Williams
The hon. Gentleman objects to taxes on fuel—we hear a lot from many Labour Members about their objections to different tax rises by this and previous Governments—so where does he think that the tax burden should fall, given that billions of pounds are raised by fuel duties?
John Mann
I will have to resist—not because I am not keen to respond, but because I see immediately that Mr Deputy Speaker does not want me to stray into taxation policy. This is about the statistics, and the statistics are fascinating when we know that Labour Chancellors have put up petrol duty so little in comparison with Conservative Chancellors. We know why: it is because we are on the side of industry and of business. We have not said that enough; we have not been proud enough to say it, and we need to say it far more.
When it comes to economic decision making and the ability to have comparators, the statistics are vital. That is why I emphasise that, in essence, amendment 1 is a pro-Government amendment. I predict that, at tomorrow’s Budget, the Office for Budget Responsibility will not provide such analysis. It is wrong that it will fail to do so, but its excuse will be that it does not have a mandate. We have an opportunity to put that right. I look to the Minister to nod to show that she is going to accept this excellent amendment in order to strengthen decision making and to be on the side of the motorist and those who want a proper debate on the labour market and jobs in this country. I commend the amendment to the House.
Geraint Davies
The amendment is essentially about making growth a centrepiece of the Office for Budget Responsibility—for very obvious reasons. The OBR’s remit, as set out in clause 4, is to
“report on the sustainability of the public finances”.
That sustainability consists of tax, expenditure and growth. We are not saying that the OBR makes no implicit consideration of growth, but that growth needs to be made a much more central part of the information available for our deliberations.
Justine Greening
Clause 5(1) states:
“The Office has complete discretion in the performance of its duty under section 4”.
Does the hon. Gentleman think that that is somehow insufficient to provide the OBR with the absolute discretion it needs to do any analysis it wants to fulfil the main duty he mentioned?
Geraint Davies
Having complete discretion is useful, but the word discretion means that something remains a matter of discretion—these things do not have to be done. The OBR has the discretion to go around looking at whatever it likes, but the amendment is saying something different—that the centrepiece of our economic future is economic growth. That has belatedly been recognised by the Chancellor, as we will see in tomorrow’s Budget, when he will say, “I have done all the tax and spend, but, oh no, everything is going wrong because growth is going down the chute, so I had better belatedly do something about it.” The previous Government had sent us on a trajectory of positive growth, albeit that it was a fragile recovery after a financial crisis. The Chancellor has seen that we are going into negativity, so he has scratched his head and realised that growth has something to do with the public finances.
We have been lambasted by Conservative Members who say that the deficit is terrible and Labour left the cupboard bare. They conveniently forget that, as reported by all the economic forecasters, including the Institute for Fiscal Studies, two thirds of the £84 billion deficit came from the international financial crisis. That was not Labour’s fault. When Conservative Members suggest, “Oh, well, we should have had more regulation”, they seem to forget that when we created the Financial Services Authority to introduce more regulation, they said they wanted self-regulation and complained about red tape. In fact, it would have been much worse had it not been for the Labour Government. Furthermore, that regulatory hole in the armoury was commonplace across the globe. That is why Governments in Greece, America, Spain and elsewhere have had problems dealing with the financial deficits they inherited. Obviously, we were more vulnerable to sub-prime debt, as we know because the financial sector is larger in Britain.
Let us get away from the myths about why we have the deficit and deal with the challenge of how to get rid of it. We get rid of it by striking a proper balance between growth, making savings over time and ensuring that the bankers pay their fair share. It is convenient for the Conservatives to say that there is only one way of achieving the task. Instead of having a balanced approach to maximising growth, making the bankers pay their fair share and making credible savings that are realistic over time and would halve the deficit in four years, Conservative Members say, “No. We don’t want to halve the deficit in four years; we want to get rid of it in four years, and we do not want to use growth or involve the bankers. The bankers are our mates after all, so they can have some more money. What we will do is make the cuts twice as fast in just one way—through savaging public sector jobs and services.”
Then, remarkably, growth starts to recede so that the sums no longer add up, as there is obviously an interrelationship between private sector growth and public sector funding. Thus they suddenly realise that they have to do something about growth. The amendment is about recognising that the centrepiece of macro-economic planning and fiscal responsibility is growth. It is all very well for the Minister to say, “Oh well, the OBR will have absolute discretion; it can look at growth if it likes, but if it doesn’t want to, it doesn’t have to.” That is the problem; its eye is off the ball. We need to get the finances in proper balance without destroying communities, which is what Labour Members stand for.
Stewart Hosie
If I may take the hon. Gentleman back, he mentioned Greece and banking regulation. Can he explain to the House how the failure of Greek banking regulation had anything to do with the sovereign debt crisis, and what on earth the amendment, which is about a growth mandate, has to do with that?
Geraint Davies
I will try and speak more slowly. My point was that the international financial crisis affected all countries’ debt, not least that of Greece. Obviously, it has its own banking system, underneath the European Central Bank. There was a common cause for many of the deficit problems around the globe. It was not uniquely Labour’s fault, as the Government make out. The amendment seeks to clarify the factors that are generating the fiscal future, including growth.
Justine Greening
The hon. Gentleman keeps talking about the deficit as though it was something that descended upon us. The bottom line is that the UK had a structural deficit. That means that his Government were spending more money on public services than was being generated in taxation, even in the good years, so we were never going to be in a position to start paying off any of our debts, which is why the markets got so concerned about continuing to lend to us. That is a structural deficit, and it is a fact, even if the shadow Chancellor will not accept it, and that is why we have to have a deficit reduction plan in place.
Mr Deputy Speaker (Mr Nigel Evans)
Order. This is a fascinating debate, but not for today. If we could get back to the specifics of the amendments before us, perhaps we could make some progress.
Geraint Davies
I am grateful for your advice, Mr Deputy Speaker, and for the Minister’s intervention. In a way, her intervention makes the case for having growth at the centre of the OBR. I am sure that when she reads her words, which I appreciate were spoken with some emotion and anger, she will wish that she had picked them more carefully.
When we look at the facts and strip out the impact of the international financial crisis, which is about £84 billion in terms of our structural deficit, there was a residual deficit, to which the hon. Lady refers. There was an excess of expenditure over income, but that was taken into account in future planning. There was a savings plan from the previous Chancellor, as she knows, to cut the deficit in half in four years. That was not exclusively reliant on cutting public services and jobs. Rather, it relied on stimulating growth.
The OBR’s estimates of growth have been downgraded. Those higher levels—2.6%—would have provided more fuel to get the deficit down. I recall that the projected deficit in the pre-Budget report was £30 billion less than had been predicted previously. In other words, growth had been occurring faster than was thought. Now it is growing less fast—in fact, it is growing negatively.
Justine Greening
Just on the off-chance, I wonder whether the hon. Gentleman would be able to set out what the £14 billion of cuts were that his party was planning to start in April.
Mr Deputy Speaker (Mr Nigel Evans)
Order. We are going much wider than the amendments. Could we please confine our comments from now on to the amendments before us?
Geraint Davies
The point I was making before I was distracted was why there should be growth in the OBR. What were the previous Government’s plans to get the deficit down? That is what the hon. Lady asked. It is important to recognise that the plans that we had were largely growth plans, which will now not be taken up. I shall give one simple example.
The Government said, “We’ll cut some expenditure. We’ll cut the regional development agencies.” So there I was, going to speak to UK Trade and Industry which, as Members know, is the marketing operation for Britain abroad, about encouraging inward investment and trade with foreign countries. I was talking to UKTI in Germany, as it happens—
Geraint Davies
No, in Welsh. I was in Dusseldorf, talking on behalf of the Welsh Affairs Committee. This is relevant, Mr Deputy Speaker. UKTI had been marketing Britain, and various German companies had been saying, for example, “We want to invest in a food and drinks factory. We want these skills and this site, and ideally these grants and these communications.” That would have been put on a computer platform and pulled down by regional development agencies to encourage inward investment. I asked what was happening now, and was told, “All these bids are coming forward for creating jobs in the UK, and the RDAs are not pulling them down because they have been abolished.”
That is a simple example of how the cuts in administration and red tape are stopping quality jobs being created in Britain. The cuts undermine growth and are false economics. To answer the question about where we would cut the deficit, Labour would reduce the deficit by encouraging growth and jobs. I was talking to a business man last week in Swansea. He said, “I run a business. Why are the Government always talking about cuts? If I was making a loss and wanted to cut my costs, I would not sell my tools. Yes, I’d keep my costs down, but I’d invest in sales.” The Government’s position is like paying off the mortgage by selling the furniture, rather than getting a job. That is ludicrous.
That is why growth as the centrepiece of the Office for Budget Responsibility is so important. To release the entrepreneurial spirit and focus it on export-driven growth is the primary aim of Labour, but not of Government Members, who have let down business.
Stewart Hosie
I am trying to understand the amendment. To have a growth mandate in the OBR would have allowed it to explain precisely where the £57 billion of cuts every year under Labour from 2013-14 onwards would have come from. Is that correct? The growth mandate would have explained where the £57 billion of fiscal consolidation would have come from. Is that correct?
Chris Ruane
No. The hon. Member for Dundee East (Stewart Hosie) is listening too slowly.
Geraint Davies
There was never any suggestion that the OBR could miraculously conjure up the optimum strategy, which has not even been launched by the Opposition, to solve the deficit problem more effectively. The Government are struggling with a one-string bow. They said, “We’ll get the deficit down by sacking everyone quickly,” forgetting that that would grind growth into the ground. We need to evaluate the changes in policy and particularly cuts in growth-creating capacity.
The problem might not be RDAs. It might be that we are undermining the capacity of our universities to ensure that the most able students are not deterred from going and that they become future growth generators and entrepreneurs. It might be the failure to provide connectivity between industry and universities to ensure that good ideas are commercialised and that there are opportunities for clusters of SMEs around universities. There are lots of ideas that can be calibrated for their impact on the public accounts. This move is an attempt to refocus all our minds on the importance of engines for growth, instead of cutting the legs away from the players.
Stephen Williams
Given that the hon. Gentleman wants growth-led manufacturing and university clusters, does he welcome the announcement made last week by the Business Secretary and the Deputy Prime Minister of technology and innovation centres around the country, including the composites centre in Bristol?
Mr Deputy Speaker (Mr Nigel Evans)
Order. We seem to be skiing off-piste every time there is an intervention and trying to tempt Mr Davies on to territory that is not relevant to the amendment.
Geraint Davies
I am grateful for your guidance, Mr Deputy Speaker, because I would not want to be tempted in the least. I will resist temptation.
The focus of the amendment is very much on the important area of growth. As I have mentioned, the important opportunity is to refocus our entrepreneurial activity on export-driven growth. For example, in the Budget tomorrow the Chancellor might announce tax breaks for investment in small and medium-sized enterprises, which I would welcome. I do not think that he will, because he does not particularly care about SMEs; he will just say something about not giving mothers and fathers rights to see their children. The fact is that, with regard to the engines of growth, the liquidity has been taken out by the banks, which are just rebalancing their balance sheets. They should be pressurised into providing the fuel to allow the entrepreneurial engine to move forward, because so many companies have full balance sheets but no cash flow because the banks are letting them down.
It would also be a good idea to have a tax break for investment in SMEs in order to push things forward, as that way people could put in their own money and it would produce a better rate of return from the point of view of the business and venture capitalists. I do not think for one moment that the Chancellor will announce such a tax break—he does not have the imagination—but if he did, that could be factored into the growth figures for the OBR, because obviously the money we would spend on the tax break would be recovered from business growth, particularly if it was targeted at export-driven, high-quality manufacturing.
Andrew Bridgen
Does the hon. Gentleman believe that the OBR, had it existed before the financial crisis, would have been able to tell the previous Government that much of the growth they were claiming was actually a mirage? That growth was driven by a Government who were spending more than they were gaining in taxes and so creating a deficit. To pick up on a point made by the hon. Member for Bassetlaw (John Mann), they were also exporting manufacturing jobs to the far east and importing cheap goods, which was having a deflationary effect on our economy, allowing interest rates to be kept artificially low and feeding a housing bubble that was getting ever bigger. When it burst, that was when it all happened.
Geraint Davies
I am glad that the hon. Gentleman is wearing a badge saying that he has a GCSE in economics, but I doubt it.
On a serious point, I have already accepted that prior to the financial crisis there was a marginal deficit to be confronted, and it was going to be confronted through growth initiatives. We have since had the financial crisis, and the important thing now is to move forward with ideas for investing in growth. Clearly, there are big questions on tax and spend and where those will be deployed. Many new ideas might emerge in the Budget, such as a windfall tax on the energy giants, whose profit margins have suddenly increased by 38% because they did not adjust their prices when costs changed and so ripped off Britain’s consumers. That is obviously a legacy of the previous Conservative Government’s privatisation and the lack of controls.
There is money available to invest in growth and services and to close the deficit gap. The point about the amendment is that we must put growth centre stage, as that will enable us to move forward in a balanced way, rather than in the narrowly defined way that the Government prescribe. With those thoughts, I will give other Members the chance to make their own unique contributions.
Chris Evans (Islwyn) (Lab/Co-op)
After the epic speeches from my hon. Friends the Members for Bassetlaw (John Mann), for Swansea West (Geraint Davies) and for Edinburgh South (Ian Murray), I will keep my comments succinct and tight, and I will try to keep to the amendment.
The most important thing about the amendment is that growth is key and that there must be some plan for growth. It is all very well saying, as many Members have, that there is no plan B, but it seems to me that there is no plan A. There is no rationale for a plan A or a plan B. It is important to know what that rationale will be. We need to know how the Government reach their decisions.
I am going to say something quite shocking: I do not believe that the majority of people in this country care about the deficit. Government Members can call me a deficit denier all they want, but I believe that when people are sitting around their kitchen tables at night they are most concerned about their jobs, their borrowing, their mortgages and their houses. That is what keeps them awake at night, not the deficit. Yes, the deficit is important.
Mr Marcus Jones (Nuneaton) (Con)
Does the hon. Gentleman think that people such as me who are parents of young children do not worry about the deficit and the legacy that the Labour Government left their children and mine?
Chris Evans
If I was in the hon. Gentleman’s position, I would be more worried about whether I will have a job in four or five years’ time. That is what most people are concerned about, but they are concerned about what will happen in six month’s time—
Mr Deputy Speaker (Mr Nigel Evans)
Order. I will tell Members what I am concerned about: no one is talking to the specific amendments before us. If it is at all possible for you, Mr Evans, to mention the amendments now and again, that really would be very useful.
Chris Evans
Thank you for your advice, Mr Deputy Speaker—I have not been here very long.
Getting back to the amendment, it is important that we have the rationale for growth and know how the Government reach their decisions. We cannot talk about this in the microcosm of a dry subject of forecasts. We cannot debate forecasts in this House; we can only debate judgments on how the Government arrive at those policies.
Geraint Davies
The hon. Member for Nuneaton (Mr Jones) mentioned his children. Surely the important point about growth and the amendment is that if we invest in his children, in their education and in the opportunity to go cost-effectively to university, to add value and to promote future growth, that is the future they can look forward to. That is why his children are probably a bit disappointed that he supported the increase in tuition fees. Let us have growth.
Chris Evans
I totally agree. If I may digress a little from the amendment, it is all very well paying off the deficit, but if there is no economy at the end of it we can forget about it all and worry about all our futures. I have tried to keep my comments brief and say in closing that I support the amendment because we need to know how the Government arrive at their decisions so that this House can properly scrutinise them.
Justine Greening
I am pleased to have the opportunity finally to respond to some of the points that have been made and to the amendments that have been tabled. It is important to say first that I very much welcome the contribution that Members not only in this House but in the other place have made to get the Bill to its current stage. Despite the debate we have had on growth, which of course is important, I think that there is broad support across the Chamber, as there was in the other place, for what the OBR is intended to do and for setting up such an office that can work effectively.
All the amendments relate to growth, so perhaps we have stared the debate that will no doubt continue tomorrow after the Budget. We believe that economic growth and job creation are absolutely vital, and Members will see tomorrow that that is a core part of the Budget. I agree with many of the comments that have been made about why we need to see growth as part of the Budget. I want to take the time to clarify some points that have been raised.
The debate so far has been about policy and strategy, but the OBR is not a policy-making body; it is there is look at the forecasting and produce the official forecast for the UK Government. It is precisely not intended to make policy. One of the things we have been very careful to do in setting out how the clauses and the charter work is ensure that the OBR’s independence, impartiality and transparency, which are also vital, are not compromised.
Geraint Davies
Having said that, will the hon. Lady accept that some of the OBR’s responsibility should be to forecast what it regards as the impact of policy changes from the Chancellor? For example, if he was to announce suddenly that he will let the private sector deliver public services so that entrepreneurial capacity will be taken out of export-driven growth and put into making easy money out of monopoly-provided public services, would it not be right for the OBR to say, “Hold on, that capacity has gone over there so our growth will go down”?
Justine Greening
I hope I can provide some clarification. The OBR has the freedom to consider the impact of policies on sustainable public finances, including employment policies. If the hon. Gentleman looks at some of the forecasts the OBR has already made, he will see forecasts for employment, average earnings, ILO unemployment, the percentage of the claimant count and, of course, growth. Hon. Members talked about the OBR’s assessment of growth and what it will show over the coming years. The OBR is already producing an awful lot of the analysis that hon. Members want to see, but it is fair to say that today’s debate will—I hope—be of interest to the OBR in understanding what information and analysis it might feel it needs to provide to convey what it wants to, which is some assessment of the economic growth forecast for this country.
Let us be clear that the duty of the OBR is very clear and is set out in clause 4. It should examine and report on the sustainability of public finances but, as hon. Members have said, Government policy clearly impacts on that. By definition, the OBR will consider how policy impacts on the sustainability of public finances.
John Mann
From what the Minister is saying, I presume that if the OBR—or even the Treasury Committee, but the OBR in particular—were to say that it was unable to provide the analysis that it would like to because it was not sufficiently resourced, that would be seen as a serious question for the Government to address.
Justine Greening
The hon. Gentleman will be aware through his role as a member of the Treasury Committee that when the chair of the OBR, Robert Chote, was asked whether he felt it was sufficiently resourced he said he felt it was. The hon. Gentleman will also be aware that one reason we have carved out sufficient money not just for this year but for the whole spending review period, which will be reported on separately, is to ensure that the OBR understands that it is sufficiently resourced not just for this year but for the years ahead, so that it has that certainty about its resource base to do the work it needs to do.
John Mann
That is a vital point, because Robert Chote was speaking as the first permanent employee. Others are now employed by the OBR who might have different perspectives and priorities. There is a critical question: if the OBR feels restrained by resources, will that become a politically contentious issue as regards objective statistics? Presumably, in such a case, if the OBR was kicking up about being unable to provide the detail in independent statistics, the Government would regard it as vital to address that resource need.
Justine Greening
I can go back to the reply I just gave the hon. Gentleman. The charter and the Bill clearly set out the OBR’s duties and Sir Alan Budd, as the interim chair, produced his report and talked about what he thought that the duties of the OBR should be, about its resourcing and about how it should be run. Of course, we reflected many of those comments as we introduced this Bill to set up the OBR. If we take that together with the fact that the permanent chair, Robert Chote, has said that he does not feel that there will be an issue with resourcing, we can be relatively confident that the OBR will be adequately resourced to fulfil the duties clearly set out in the Bill.
Let me turn briefly to the amendments. They all concern growth and the problem is that they start to stray into the OBR’s becoming bound up in policy rather than analysis. Amendment 1 would require the charter to include the Government’s economic policy objectives and the means by which that objective would be attained—what has been called a growth mandate. The charter, however, is a fiscal policy document that transparently sets out the fiscal policy framework. The purpose of the charter, the OBR and the Bill is to create the fiscal policy framework that supports the Government’s delivery of our fiscal policy objectives. Rightly, the charter focuses on fiscal policy issues, as was the case with the previous Government’s code for fiscal stability.
Geraint Davies
In conversation with the Institute for Fiscal Studies, I asked various questions about growth and its calculations and it was pointed out to me that the IFS was in essence made up of micro-economists who were aggregating up to deliver predictions about Government fiscal outputs. I respect what the hon. Lady is saying, but it seems to me that she is basically saying that the OBR will be doing something very similar. It is very easy to make such predictions if we say, “Assuming that everybody is still employed, that we have taxed them this and that they spend that, this will happen.” What is more difficult is to model the impact of individual policies in a Budget on growth and hence on the public finances. The hon. Lady is giving us some reassurances, but I think the point of our amendment was to push her to say that this would become a priority for the OBR so that we could have a richer understanding of the growth scenarios in the future. I appreciate that some of that is done, but we want more.
Justine Greening
Ultimately, a key clause—I think clause 5—sets out that it is at the OBR’s discretion to decide how to carry out its duty. A fundamental building block of the OBR’s credibility is its independence. I assure the hon. Gentleman that the risks he mentions, such as the concern that the OBR might not carry out robust analysis, are mitigated by other safeguards in the Bill. For example, one duty of the OBR will be to produce a report on the accuracy and robustness of its forecasting. As he will be aware, there are also non-executive directors who will be there on a day-to-day basis to challenge how effectively the OBR works and every five years, at a minimum, there will have to be a completely external peer review of the OBR’s workings.
I think we have managed to strike a balance by setting up the OBR in the way I have described—on the one hand by giving it independence, so it has that key element of credibility, and on the other by including some safeguards, in terms of its structure, its management and the review, so that, if for some reason it does not produce the quality of forecast that we need, those safeguards will be in place to ensure that we tackle the issue. Let us not forget that the OBR is accountable not just to Parliament, but to the Chancellor, because it produces the official forecasts.
Finally, amendment 4 suggests another new related role for the OBR, which as we have heard would be to assess the Government’s growth mandate. As I said in response to amendment 1, the Government seek to achieve their economic policy objectives through a range of policy tools and frameworks, not just through fiscal policy, but the OBR has been established to increase the credibility of the Government’s economic and fiscal forecasts and to hold the Government to account for their economic and fiscal policies.
That highly valuable role is recognised by a wide range of domestic and international commentators. The hon. Member for Swansea West mentioned the Institute for Fiscal Studies, and it warmly welcomed the establishment of the OBR, which, through its role, has already provided forecasts of key economic variables. In its November report, the OBR set out forecasts for the next five years, covering a range of key macro-economic variables, such as GDP and its forecast growth, inflation, employment, average earnings, unemployment and the output gap. In addition, the OBR will have the freedom to consider the impact of Government policy on economic growth and employment within our regions and nations, and in line with its main duty. I therefore consider all the amendments to be unnecessary, and I hope I have addressed the issues that hon. Members have raised.
Mr Cash
I do not want to put my hon. Friend on the spot, but I am troubled by a motion that the Government tabled in relation to a European document. I have an idea that they did not really mean to do so, but I just want to make the situation completely clear. The motion said that the Government and the House of Commons were only primarily responsible for fiscal matters and direct taxation. Will the Minister be kind enough to get that out of the way, so that we might now know that they are exclusively and solely, not merely primarily, responsible?
Justine Greening
I do remember the motion to which my hon. Friend refers. We were trying to be very clear, as he will be aware, and no doubt deeply unhappy, that some aspects of our fiscal and taxation system—for example, VAT—are set in relation to a broader pan-European directive. As we have discovered, that is one reason why the Opposition’s policy on reducing VAT on fuel alone is simply illegal, and I hope I can reassure him that we were trying to be very clear that it is primarily the UK Parliament that takes those decisions.
Perhaps I can reassure the rest of the House that growth is already an integral part of this Government’s approach to turning around our country’s public finances and economic fortunes. I understand why the amendments have been tabled, but they are unnecessary.
Chris Leslie
I am grateful to the Minister for her generosity in at least admitting that our debate and amendments will be of interest to the Office for Budget Responsibility. Indeed, I hope that is the case. We have tried our best on many occasions, and my hon. Friends the Members for Bassetlaw (John Mann), for Swansea West (Geraint Davies), for Edinburgh South (Ian Murray) and for Islwyn (Chris Evans) in particular have in plain terms tried to impress upon the Treasury Minister our anxiety that the Chancellor, in his blinkered obsession with hasty deficit reduction, risks harming the wider society and economy, particularly when it comes to jobs and economic growth. We have said that on several occasions, and it was important to reiterate the point today.
I understand, however, that the Minister has explained that the implied terms of the Bill do, indeed, allow for the OBR to focus on economic growth and employment matters. The Opposition hope that the OBR, at least, will do so, even if there is a deficiency in the Government’s strategy on the matter. We will no doubt debate those questions more, in terms of substantive policies, over the coming days.
The Opposition feel that fiscal policy cannot be looked at in isolation from economic growth, because the two are inextricably linked, and we will continue to make that point, even if Ministers seek to separate them. For the time being, however, I do not feel it appropriate to push the amendment to a vote, so I am happy to withdraw it. I think the Minister has heard the point. My hon. Friend the Member for Bassetlaw has accused me of tabling pro-Government amendments, and for that reason alone I should take them off the Table, given that we have other matters that the House will want to consider on Report. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 2
Annual Budget documents
Chris Leslie
I beg to move amendment 2, page 2, line 14, at end add—
‘(5) The Treasury must place in the House of Commons Library the costing methods and assumptions underpinning all revenue implications and projections of each Budget announcement.’.
Mr Deputy Speaker (Mr Nigel Evans)
With this it will be convenient to discuss amendment 6, in clause 8, page 3, line 29, at end insert ‘subsequently’.
May I remind the House that by contrast with the amendments in the previous group, which were very narrow, these amendments are very, very, very narrow? I do not want Members to consider that a challenge to see how long they can make a speech on the amendments. May I also remind the House that we have several days ahead of us when we will be able to talk about the economy, growth, jobs, taxation—and they start tomorrow?
Chris Leslie
It is early, Mr Deputy Speaker, but I understand your point about the ticking clock.
Amendment 2 seeks to require the Treasury to place in the Library the costing methods, models and assumptions that underpin all the revenue projections, implications, yield estimates and so forth from each Budget announcement. Hon. Members will know that the Red Book produced at each Budget contains a number of costing projections, and there is always a fantastic table somewhere towards the end of the document which gives a sense of the revenue gains or losses, depending on each tax or public spending measure in the Budget.
In Committee, it became clear that the Office for Budget Responsibility will have the right to gain some insight into the detailed methodologies that the Treasury uses to underpin the assumptions and costings. The methodologies are therefore publishable, because they can be transferred to the OBR, and all that amendment 2 seeks to do is to share them with the wider world, and in particular with Parliament, because if hon. Members are to scrutinise effectively the assumptions on which the Chancellor makes various decisions, the methodologies and costings used to underpin those calculations should be transparent.
In order to support full and proper scrutiny, and to ensure that we can debate those Budget decisions effectively, we think it a reasonable request that the Treasury should place those costings and methodologies in the Library. It would be inconsistent, given the Prime Minister’s protestations about
“a new generation that understands and believes in openness, transparency, accountability”,
for those models not to be in the public domain. We should not have to rely on freedom of information requests to elicit such information from the Treasury; if the OBR has it, so should Parliament. The amendment is very simple, and we should not simply have to have faith to trust the Chancellor’s judgments. If we are to have such transparency, we should all be able to see right through to the methodologies, and perhaps to challenge and test them.
Amendment 6, on a different matter, seeks to ensure that the OBR, when it does publish its reports, gives those changes to Parliament first. If hon. Members look in the Bill, they will see a simple clause that states:
“The Office must—
publish the report,
lay it before Parliament, and
send a copy of it”—
I am not sure whether it is to be sent first class—
“to the Treasury.”
All our amendment seeks to do is to place the word “subsequently” after the words “Parliament, and”. In other words, Parliament should have those reports first and the Treasury should get them subsequently—although I do not particularly mind if it gets them at the same time.
Stewart Hosie
Amendment 2 calls for the OBR’s reports to be published. The Treasury Committee said:
“The OBR should have discretion in the models it uses in drawing up its forecasts. It is a matter for the organisation itself as to whether it is content to use is the Treasury models, or wishes to make changes. Whatever course the OBR takes, there would be benefits in it being as transparent as possible about the models it uses.”
I assume that that would also include the assumptions that underpin those models. The Government’s response was positive. They said that they would
“provide the OBR with full access to Treasury and other forecasting models, as well as support to scrutinise and develop these models.”
Again, I assume that that means the assumptions that underpin the Treasury models and whatever other modelling it wishes to undertake. The hon. Member for Nottingham East (Chris Leslie) said that the OBR could take those models and assumptions from the Treasury, and he is absolutely right about that.
The OBR currently publishes a number of assumptions. For example, the impact multipliers were included in the June 2010 report, showing the one-for-one impact of capital expenditure cuts. Reports at the time of the Labour Government published assumptions about oil prices, and North sea corporation tax and petroleum revenue tax was used to calculate those yields. Given that several such assumptions are already published, and that the OBR can take all those assumptions, models and changes and create new ones, does it have the discretion to publish what it sees fit? Would it not be better to have a guarantee from the Minister that it will not unnecessarily withhold assumptions where it is important for us all to have transparency? Instead of the Treasury putting the material in the Library, we should ensure that the OBR has the ability to do that, so that we have the information and can come to a proper, reasoned view on whether we believe its figures.
That is a simple question, and I am sure that the answer is yes; I certainly hope so. There is no reason why we should not have that transparency so that we can all guarantee the efficacy of the reports that the OBR produces.
Justine Greening
On amendment 2, the Government are committed to increasing transparency in public life. That transparency is essential to good fiscal policy, as the hon. Member for Dundee East (Stewart Hosie) said. In fact, the Government already provide the costing methods and assumptions for policy proposals. Those were made available in policy costings documents at the last Budget and spending review, and copies were made available to the House. That is a step change in transparency in fiscal policy making. Specifically in relation to the OBR, the additional transparency referred to in the amendment is already required by the statutory charter for budget responsibility, which says at paragraph 3.9:
“The Budget Report shall provide, at a minimum: an explanation and costing of the impact of all significant fiscal policy measures introduced by the Government since the last Budget and an explanation of the methodology used to cost the fiscal impact of each of those measures”.
In relation to the Bill, I draw the hon. Gentleman’s attention to clause 4(6), which explicitly refers to the OBR’s reports being clear in explaining the factors that it took into account when preparing the report—not only the assumptions that he mentioned but the main risks that it considered to be relevant. So there is a safeguard not only in the charter but in the Bill to ensure that there is transparency about how the official forecasts have been arrived at.
On amendment 6, the OBR is accountable to Parliament in order to enhance Parliament’s ability to hold the Government to account for fiscal policy. The OBR’s forecasts and analysis will be laid directly before the House. The budget responsibility committee will be appointed with the consent of the Treasury Committee, and will be available for scrutiny. There will be separate reporting to Parliament of the OBR’s expenditure, and, as many Members have already discovered, relevant written questions will be answered by the OBR. The OBR is also accountable to the Chancellor, reflecting its role in producing the official forecast, which will form the basis of the Chancellor’s Budget decisions.
Herein lies the challenge to Labour Members. The OBR will provide the Government with timely access to the information necessary to reach policy decisions ahead of fiscal policy events. The Treasury Committee recognised that in its report last year, when it said:
“Involvement In the Budget process necessarily involves close contact between the Treasury and the OBR”.
Close working also means that the OBR has access to all Government information to ensure that its conclusions reflect the most accurate and up-to-date information. It is therefore right that the OBR provides the Government with pre-release access to its forecast in order to ensure the accuracy of both it and the Budget documents, which are published simultaneously.
It is also right that there is transparency in the approach to the sharing of information. The OBR has chosen to follow the well-established pre-release practices put in place by the Office for National Statistics. I can assure the House that this arrangement does not compromise the OBR’s independence. It is an approach that has worked well for the ONS. The OBR has been transparent about when reports have been shared. It confirmed in its November “Economic and fiscal outlook”:
“We have come under no pressure from ministers, advisers or officials to change any of our conclusions.”
The OBR’s access to Government information distinguishes it from other UK forecasting organisations, and ensures that the Chancellor and Parliament are provided with the most up-to-date information regarding the latest UK economy and public finance figures.
I understand the rationale behind amendment 6. However, given the practicalities of the OBR’s accountability to the Chancellor and its role in producing the official forecasts, we feel that it is better for it to act on its own decision to follow the ONS pre-release guidelines. I will resist both amendments.
Chris Leslie
I am getting used to the hon. Lady’s resistance to our amendments. One day we will persuade her to accept even the smallest, most generous Opposition amendment, but perhaps not to this Bill.
I understand the points that the hon. Lady made about amendment 2 and costings. I know that there have been attempts to broaden access. If and when we hit obstacles or refusal to publish, we will come back to her to try to get more information into the public domain. However, I accept that she is committed to a particular direction of travel, so we shall not press the amendment.
On amendment 6, the Minister seems to understand that several members of the Public Bill Committee might have hoped for an Office for Budget Responsibility that looked more akin to the Congressional Budget Office or a parliamentary budget office, and was a little bit closer to the legislature and less cosy with the Executive. She knows why we want that. If the OBR places absolute primacy on its independence and impartiality, we must surely move away from any perceived suspicion that it is too close to or cosy with the Executive of the day.
We know that there is due to be a review of the OBR within a number of years. How that review will take place is a bit of a moot point, but we will come to that in due course. The Economic Secretary understands that we will be watching carefully for circumstances in which the OBR is too close to the Chancellor of the Exchequer. It is vital for it to remain distant from, and impartial between, the political parties. It must also have a good dialogue with Parliament.
Those are the important points that we wanted to make, and we know that the OBR will be listening to this debate. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Third Reading
Queen’s consent signified.
Justine Greening
I beg to move, That the Bill be now read the Third time.
As we have heard, this is an important Bill. It puts the new Office for Budget Responsibility on a statutory footing, and puts in place reforms to the corporate governance of the National Audit Office.
As part of a new and enhanced fiscal framework, the OBR is being established to make independent assessments of the public finances and the economy. For the first time the judgments underpinning the official forecast will be determined by independent experts, not Treasury Ministers. Since the coalition was formed last year, every official forecast for the economy and the public finances has been produced by the independent OBR. When the Chancellor presents his Budget tomorrow, it will be accompanied by the OBR’s official forecast. The establishment of the OBR has been welcomed by the International Monetary Fund and the OECD.
The main duty of the OBR, as we have heard, is to examine and report on the sustainability of the public finances. The Bill makes it explicit that the OBR has complete discretion over how it carries out its statutory duties. That is a broad remit. It is not limited to forecasting, but the OBR will be required, as a minimum, to produce economic and fiscal forecasts at least twice a year; make an assessment of the likelihood of the Government meeting their fiscal mandate alongside those forecasts; publish a sustainability report at least once a year; and publish a report on the accuracy of its forecasts at least once a year.
The OBR must perform its duty objectively, transparently, impartially and on the basis of Government policy. Those principles will protect independence and ensure that there is a clear separation between analysis and policy making. Analysis is rightly the domain of the OBR, but policy making is the responsibility of publicly elected Ministers.
The charter for budget responsibility will set out further details on the OBR’s remit. A full draft was published in November, and a final version will be laid before Parliament once the Bill has come into force. The OBR will report directly to Parliament on the public finances. The budget responsibility committee will be available for Select Committee scrutiny. The OBR’s forecasts and analysis will be laid before the House. On funding, there will be separate reporting of the OBR’s expenditure in the estimate that the Treasury presents to Parliament. In addition, the OBR will be able to submit an additional memorandum, alongside that of the Treasury. As we have heard, written questions will be passed to the OBR to be responded to. All those measures will enhance the ability of Parliament and the public to hold the Government to account for their fiscal policy.
The OBR will have its own legal identity, and will be a civil service employer, to allow appropriately skilled staff to move easily to and from the OBR. The OBR’s executive responsibilities will be led by the three-person budget responsibility committee. Its members will be appointed by the Chancellor, and the Bill provides the Treasury Committee with a veto over their appointment and dismissal. The Chancellor has said that he is giving the Treasury Committee that veto to ensure that there is no doubt that the individuals leading the OBR are independent and have the support and approval of the Treasury Committee. All staff will report to the chair of the OBR, and that person will control the hiring and firing of staff. To provide support and constructive challenge, there will be at least two non-executive members. Advertisements for those members will be issued shortly, so that they can be in place before the summer recess.
Part 2 of the Bill modernises the governance of the National Audit Office. It will strengthen the resilience and integrity of that body, which is best placed to assess the Government’s use of public funds at this time of fiscal constraint. It builds on the recommendations of the all-party Public Accounts Commission’s 15th report and has commanded support on all sides of this House. The provisions passed through the House in substantially the same form in the previous Parliament, when they were considered as part of the previous Government’s Constitutional Reform and Governance Act 2010, just before the election.
The Bill has benefited from much parliamentary scrutiny. Before it was introduced, the Treasury Committee produced a detailed inquiry into these matters. I am pleased to say that the Bill is very much in line with the recommendations made in that report. I thank the Committee for the interest it has taken. When the Bill was introduced in the other place it received extensive debate. The Government tabled a number of amendments to bolster the OBR’s remit and to enhance the arrangements for the scrutiny of its work, which were welcomed.
Finally, the Bill has been debated at length in this House. I thank all hon. Members who have spoken and participated, in particular the Opposition spokesmen, the hon. Members for Bristol East (Kerry McCarthy) and for Nottingham East (Chris Leslie). I hope that hon. Members will agree that even though we have not reached a meeting of minds on some of the detail, there is much more on which we agree in principle.
The Bill is a key part of the Government’s fiscal reforms. It will provide an independent assessment of the public finances and the economy, with official forecasts from independent experts, not Treasury Ministers. The Bill will provide a strong institutional foundation for the future through the OBR, and I commend it to the House.
Kerry McCarthy (Bristol East) (Lab)
The Opposition support the Bill. It has been debated at length in the other place and in this House on Second Reading, in Committee and—perhaps at greater length than some of us anticipated—on Report today.
Not much has been said during the passage of the Bill about part 2, which relates to the National Audit Office. That is not least because it implements the measures that were introduced in the Constitutional Reform and Governance Act 2010. It is fair to say that there is widespread agreement on part 2.
As was clear in previous proceedings, there is similarly common agreement on the creation of the Office for Budget Responsibility and on placing it on a statutory footing. We did, however, table a number of amendments in Committee to challenge some of the details of how the OBR will function, as one would expect from the Opposition. In particular, we addressed the concern that has been expressed inside and outside this House that the OBR may not turn out to be sufficiently independent from the Government. For the public to have confidence in the OBR, it has to be seen to be independent. That is why we proposed measures that would have made it more accountable to the House and measures that would have increased the role of the Treasury Committee. We also wanted to ensure that the division between the Treasury and the OBR in terms of staffing and premises was enshrined in law. We are grateful for the assurances that the Economic Secretary gave in Committee on those points. We also welcome her promise that substantive details of the contact between OBR staff and the Minister’s special advisers and private office staff will be published.
We were also concerned about the potential overlap between the OBR’s responsibilities and the Bank of England’s economic forecasts. We therefore proposed that the Bill provide for a memorandum of understanding to ensure that there was clarity from the outset for all parties. I urge the Economic Secretary to ensure that the memorandum is subject to proper scrutiny in this House. I hope that the OBR and the Bank of England will in time formally agree their working relationship.
We consider that a crucial way to secure the independence of the OBR is to ensure transparency in its funding so that the budget responsibility committee is not at the mercy of the Treasury and vulnerable to the whim of the Chancellor. Comparisons with other countries were made earlier. In Canada, the Parliamentary Budget Officer published two critical reports of the Government in its first year. It is difficult to divorce that from the fact that its budget was frozen, despite promises that it would be increased by a third. Some people would say that that was not a coincidence.
Likewise, Sweden has a similar organisation to the OBR in its Fiscal Policy Council, which reported that its resources were not sufficient to enable it to carry out its remit properly. In response, the Minister for Finance suggested that the council’s budget be cut. We obviously want to avoid a situation like that, and we have received assurances from the Economic Secretary that the OBR’s funding is secure for the next five years. We very much welcome that.
Much of the OBR’s decisions and remit will be based on the charter, so it is disappointing that we have not had the opportunity to scrutinise the revised charter today alongside the Bill given that it is so central to the OBR. The Economic Secretary has assured us that it will be published promptly after Royal Assent, which we expect in no time at all, so we look forward to a full debate on the charter in the Chamber before too long.
Although we support the principle of the OBR and the Bill, we have reservations about how the OBR will work in practice. A major concern is the Treasury’s insular conception of economic policy and sustainability, which seemingly allows it to focus narrowly on the deficit and to ignore the consequences of its own policies. Rising unemployment, rising inflation, as seen in today’s figures, and falling growth are not sustainable and cannot be ignored, so we hoped that the Government would allow the OBR the latitude to take into account those crucial determinants for the long-term recovery, even if the Treasury will not. Unfortunately our amendments were rejected, so we could not enshrine that in the Bill, but we hope that a truly independent OBR will include those matters in its remit. The House may well return to the definition of “sustainability” and the issue of intergenerational fairness when we come to debate the revised charter.
During Labour’s last Budget, the present Prime Minister was fond of claiming that our growth forecasts did not match those of the independent experts. In fact, they were consistently much more reliable than he made out. He concluded:
“What we need is a proper independent office of Budget responsibility, which we would set up to set independent forecasts and to keep the Chancellor honest.”—[Official Report, 24 March 2010; Vol. 508, c. 268.]
I agree with the present Prime Minister, for once, about the need for that, but as is so often the case, the reality does not match his rhetoric. Now we have the OBR, but its independence has been undermined by the release of favourable figures in time for a recent Prime Minister’s Question Time.
Moreover, the British Chambers of Commerce has described the OBR’s growth forecasts as “too optimistic”, and despite the Prime Minister’s concern that official forecasts should match those of independent experts, it seems that other independent experts disagree with the Government’s independent experts. In February, the consensus forecast for 2011 was 1.9% growth, which was downgraded to 1.8% in March, whereas the OBR forecast was a more optimistic 2.1%. The discrepancy increases for next year’s forecast. The consensus forecast is 2.1%, compared with the OBR figure of 2.6%, which it has already had to downgrade once thanks to the Government’s policies.
The differences between the OBR and consensus forecasts could be critical. The Institute for Fiscal Studies, which the Government seem to respect on the occasions when it says anything favourable about their policies, has reported that they will fail to achieve their fiscal mandate to
“achieve cyclically-adjusted current budget balance by the end of the rolling, five-year forecast horizon”
if growth does not meet the OBR’s central economic forecast. Whether the Chancellor will achieve his fiscal mandate is clearly in the balance, and although he may use the OBR figures, it would be a great mistake if we held the OBR responsible for whether he fulfils that mandate. Only the Treasury can determine that.
Fundamentally, and finally, we have to remember that the Bill places no enforceable obligations on the Chancellor for responsible fiscal policy. The OBR can report on the state of the economy, and its analysis will no doubt be very valuable, provided it is genuinely independent. However, the Government already have a track record of ignoring expert advice and indisputable evidence that their policies are failing.
The British Medical Association and almost every health organisation that we care to think of warned against the Health Secretary’s reckless experiment with the national health service, but with the Prime Minister’s full backing, he ignored the evidence and carried on regardless. The IFS published independent research proving that the Government’s June Budget and comprehensive spending review would disproportionately hurt women and children and the most vulnerable people in our big society, but the Chancellor ignored the evidence and carried on regardless.
The Office for National Statistics reported that unemployment had reached a 17-year high and that youth unemployment was at its highest level ever, and the OBR itself reported that the Tory-Liberal Democrat plans would mean 110,000 more people on the dole by the end of this Parliament, but did the Chancellor and the Secretary of State for Work and Pensions review their policies in the light of that evidence? No, they ignored the evidence and carried on regardless.
The OBR downgraded growth forecasts after the coalition’s emergency Budget, and again as a result of its comprehensive spending review, and the economy contracted by 0.6% in the last quarter of 2010, proving that the Government’s policies had undermined the economic recovery, but the Chancellor ignored the evidence and blamed it on the snow. The question for the House is whether we can do enough to secure the status of the OBR so that ideologically driven Ministers cannot just disregard its reports.
Kerry McCarthy
No, I am just drawing to a close.
I urge the Minister to ensure that the principles of objectivity, transparency and impartiality are respected, particularly when she lays the revised charter before the House. Most importantly, we seek assurances that Ministers will actually listen to the evidence provided by the OBR and respond accordingly.
When the Chancellor came to office, unemployment was falling, growth was predicted at 2.3% for this year, inflation was lower and falling, and borrowing had come in £20 billion lower than was forecast in 2009. I do not need to tell the House again how the Chancellor has reversed that recovery, but that is the context in which we must consider the role of the OBR. The office is intended to report on responsibility, but it cannot guarantee responsibility. That is the Chancellor’s role, and it is about time he realised it.
Stephen Williams
This is a short but very important Bill which I hope will change the conduct of economic debates. Of course, we have a Budget and days of economic debate starting tomorrow. I do not know whether the former Prime Minister and Chancellor, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), is going to be with us in person, but I am sure that his parliamentary ghost will be with us as we remember Budgets from previous years. We remember his earlier Budgets and his close relationship with Prudence, and we remember that after the 2001 general election was safely out of the way, spending soared. So began the structural deficit, long before the intervention of the banking crisis.
I remember listening to those Budgets, autumn statements and pre-Budget reports year after year, both in a professional environment before I became a Member of Parliament and, from 2005, as an MP. I remember listening to the then Chancellor’s reports of rosy growth and nirvana ahead of us. We heard a bit more of that today from my neighbour, the hon. Member for Bristol East (Kerry McCarthy). One would swear that the current Government had inherited a golden legacy in May 2010 rather than the catastrophic public finances that we are actually having to cope with.
Mark Tami (Alyn and Deeside) (Lab)
Does the hon. Gentleman recall that at the time, the Liberal Democrats were attacking the Government by saying that they were not spending enough, not that they were spending too much?
Stephen Williams
I recall very well that from 2001 onwards I and my colleagues, whether candidates or Members of Parliament, were saying that the Government should spend more on health and education, but we actually said where the money was going to come from. It may not have been popular, and it did not lead to great electoral success in 2001, but we said it should come from an increase in taxation, not from building up a structural deficit over the next six years.
We all remember the Budgets back then—they were essentially a combination of forecasting, policy, boasting and spin. That is why the OBR is so welcome. In the Budget tomorrow, the Government will take political responsibility for the difficult decisions that we have to make. I welcome that, and I welcome the scrutiny of it. It will be based on a separation of forecasting by independent experts and policy making by elected politicians.
There will certainly be no scope for boasting, and I think it will be some time yet before the coalition Government can take credit for rescuing this country from the dire economic circumstances in which we find ourselves. I cannot promise a complete absence of spin—that would be asking too much of all of us—but we will have a Budget based on independent forecasts and sound political judgment, and it will be a better Budget for that.
Mr Andrew Tyrie (Chichester) (Con)
The Chancellor took a major step by handing responsibility for fiscal forecasting to an independent body, and he took an equally bold step by asking it produce a long-term assessment of the strength of the public finances. He could have opted for a validation model, and instead he has gone for something much more adventurous.
The first inquiry of any significance that the Treasury Committee undertook after it was reformed at the start of this Parliament was on this subject. Rather than wait for the Government to come forward with a draft Bill, we took the initiative and tried to make some suggestions on how we thought it should look. We set eight criteria as minimum requirements for the new body, which for the most part the Government met. I thank the Treasury team for their co-operation in doing what they could to accommodate the Committee’s points.
Absolutely crucial to the success of the new body will be its credibility on independence. To achieve that, some new, groundbreaking arrangements have been made in the relationship between parliamentary Committees and the Executive. The Bill establishes a statutory veto for the Treasury Committee over the appointment of the chairman and executive members of the OBR. This is the first time that a Select Committee has been given such a veto over public appointments, which reflects the importance of cross-party parliamentary oversight of the OBR’s work, and the need for people of the highest calibre and independence to take on the job of running the OBR.
The Treasury Committee has already held its first appointment hearings for the OBR committee, and endorsed the appointments of Robert Chote, Stephen Nickell and Graham Parker. We also welcomed the appointment of two non-executive members. We were particular eager that there should be non-exec oversight of the work of the executives. The non-execs will provide an important check to ensure that the OBR lives up to its requirement to act transparently, objectively and independently.
Non-execs provide an opportunity for two-way traffic. If the OBR chairman becomes a patsy, they have a good chance of alerting the Treasury Committee at an early stage. If the Chancellor or the Treasury lean on the chairman too much, the non-execs offer a first line of defence. If the OBR chairman gets carried away and starts to offer a running commentary beyond his brief on the overall conduct of fiscal policy, the non-execs, as a first port of call, can say, “Steady on.”
The Committee looked carefully at how the OBR’s success ought to be measured. Economic forecasting is an imprecise art, and success on that cannot necessarily tell us much. To be seen as successful, the OBR must provide clear, impartial forecasts and a commentary that improves public debate on the key issues. It must guard against optimism and pessimism, and above all, it must avoid being drawn into political controversy. The Treasury Committee will monitor how the OBR fulfils those performance criteria. We will watch carefully and speak up if we feel that the OBR is not doing its job properly.
Of course, ultimately and simply, the OBR will be judged on the quality of its publications and its responsiveness to reasonable requests from Parliament or the Government for information or work. A few weeks ago, I wrote on behalf of the Treasury Committee to the OBR chairman to seek further information on the treatment of privatisation receipts in the accounts. Frankly, I was not encouraged by his reply. These are early days, and I very much hope that there is more responsiveness to future requests.
In two ways, the Government did not fully implement the Treasury Committee’s recommendations. The Committee asked that an independent group accountable to Parliament be set up after five years to review the OBR’s work. We said that among other things, that group should examine whether the model for the forecasting body chosen by the Chancellor was the right one in the light of experience. To make that judgment, the group would need to examine both the validation model and the much more independent model—the fully independent model—implied by the Congressional Budget Office in the United States. I think, and the Committee concluded, that judging which model is best should be done after a period of experience of the OBR’s work, which is why we suggested the five-year review. I urge the Government to agree, on a non-statutory basis, that the five-year review should report directly to Parliament rather than to the Government via the non-executives, as the legislation currently envisages.
One other proposal in the Treasury Committee report is that the OBR should retain the ability to assess the robustness of the fiscal plans of major political parties in the run-up to an election. That would enhance the quality of debate and take us forward from the world of claim and counter-claim on Labour tax bombshells and Tory stealth cuts and so on, which often leave the public perplexed and do not necessarily move the debate forward much. Although the Bill does not rule that out, it strongly discourages such a role.
I understand the OBR’s reluctance to get involved in anything that could prejudice its appearance of independence, but I hope the door is not completely closed to the idea. Public understanding of what is at stake in elections could be enhanced by the OBR’s involvement. Furthermore, the need for such scrutiny might make parties more careful with their claims and improve their pre-election proposals. I hope we can return to that idea when the OBR’s reputation for independence has been firmly established after a run of years—that could also form part of the five-year review to which I alluded.
Overall, the Treasury Committee was greatly heartened by the degree of engagement from the Government and from the Opposition over the creation of the OBR. That demonstrates that the Select Committee corridor can influence policy rather than just offer critiques of it, which I hope marks a way ahead for improving legislation more widely.
Question put and agreed to.
Bill accordingly read the Third time and passed, with an amendment.
Sentencing Guidelines (Manslaughter)
Mark Tami (Alyn and Deeside) (Lab)
The petition is of residents of Alyn and Deeside and neighbouring areas, totalling some 3,000 persons.
The petition states:
The Petition of residents of Alyn and Deeside,
Declares that Peter Jones, a 24-year-old former pupil of Alun School, Mold, died in hospital following an attack by Gafyn Thomas Denman, 21, who is from the Mold area; notes that Gafyn Thomas Denman was found guilty of manslaughter and was jailed for 40 months for an unprovoked attack; further notes that, at the time of sentencing, Judge Merfyn Hughes QC explained that his hands were tied by the sentencing guidelines in cases of “one-punch” manslaughter such as this.
The Petitioners therefore request that the House of Commons urges the Government to review sentencing guidelines for those convicted of manslaughter so that sentences can better reflect the severity of the offence.
And the Petitioners remain, etc.
[P000905]
Driving Test Centres (Closure)
(13 years, 1 month ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Sandra Osborne (Ayr, Carrick and Cumnock) (Lab)
I am very pleased to have secured this important debate on behalf of my constituents in Cumnock and Girvan. I will shortly present to the House a petition signed by thousands of local people who are against the closure of driving test centres there. A pattern is being repeated throughout the length and breadth of the country, with dozens of closures over the last two years. Many closures have happened without any consultation with those directly affected or the local community. As many hon. Members have said, including those who signed early-day motion 1294, which is in the name of the hon. Member for Angus (Mr Weir), such closures are against the Government’s own policy of localism.
The overall policy of the Driving Standards Agency has national implications. The proposed closure of the Cardiff office will involve a loss of 70 to 80 jobs. Union members in the DSA already have very low morale resulting from pay restraint, and attacks on redundancy terms and possibly pensions. There is now a commitment to strike action following a ballot of union members. Are the closures driven by a rationalisation programme, which is referred to in documents that, I believe, have been leaked into the public domain? Those documents mention a wish to move from 350 to 400 current testing locations, not all of which are full time, to about 150 main centres. Alternatively, does the rationalisation of test centres into a network of multi-purpose test centres make a more attractive package for a future privatisation?
The Minister’s public statements appear to indicate that his plan is to take testing to the customer by sending examiners to casual hire locations to deliver tests. He talks about testing from libraries, community centres and the like, but in many parts of the country these facilities are being closed as well. There are potential problems with, for example, operating out of supermarkets in terms of what facilities may or may not be made available, dedicated parking slots, suitable test routes and whether there would be too much congestion in and around retail parks for the tests to be uniform and fair. Having said that, if this leads to an appetite to revisit the closure decisions in Cumnock and Girvan, I will welcome it, and I intend to raise practical ways in which this could be done.
I would like to concentrate my remarks on the two centres in my constituency and the resultant loss of local service. Both are in rural areas, both are only too familiar with the never-ending withdrawal of local services and both have suffered from structural changes. In Cumnock, the closure of deep mining devastates the community to this day, and in Girvan, which is a seaside town, there has been a downturn in tourism as people have increasingly taken holidays abroad. Both town centres have been decimated and are in need of urgent regeneration, and in the case of Girvan even the local swimming pool has closed.
It would be difficult to overstate the strength of local feeling in both these communities at what they see as continual neglect and particularly a lack of understanding and empathy about what it is like living in a rural area and the difficulties of accessing services. However, given that it is my privilege to represent both communities, I am also very much aware of their resilience and ability to look at constructive solutions to problems.
I want to highlight my disappointment at how these closures were handled in my constituency. There was a consultation process of some four weeks basically over the Christmas holiday period, which was totally inadequate and frankly reprehensible. There was never any intention in my view to acknowledge—far less to listen to—local opinion. I hope that the Minister will feel able to redress that situation this evening. I am proud of the representations both communities have made, and I congratulate them, including those who took the time and trouble to collect signatures for a substantial local petition with the help of local Labour councillors.
What response did they get to their representations? On 3 December 2010, Mr Jonathan Hall from the Driving Standards Agency corporate correspondence unit replied to Girvan community council:
“Decisions on the number, location and size of centres must therefore take into account affordability, existing levels of demand and the Agency’s service level travel-distance criteria, where most customers travel no more than 7, 20 or 30 miles to their nearest test centre, depending on the population density of the area.”
How does that tie in with localism? I will go on to say why I think those distances are unreasonable in these two specific cases.
I will also challenge other comments made by DSA corporate services and by the Minister, but before that I would like to highlight a number of questions and points made to me by local people. In areas where local jobs and small businesses are struggling already, the livelihoods of local driving instructors are now under threat. Whatever the DSA says about a full licence allowing a person to drive on any public road, not simply those on which a person was trained or tested, the reality is that most people prefer, at least for some of the time, to practise near a test centre. Those in Ayr and surrounding areas will still be able to do this, while those in the rural area will not. I believe this is discrimination as well as a diminution of rural services, as I have already stated.
For reasons of familiarity, people will not want to take their lessons in areas where they are not sitting their test. To take a driving test on an unfamiliar route is an extra problem for any learner driver. If that is not the case, why do instructors make a point of taking their customers to streets they know are part of the test runs in their area? If learners know the route of their driving test and have driven it numerous times with a driving instructor, they are surely much more likely to pass the test. Driving instructors in the rural areas in my constituency will lose business to those in Ayr. Girvan, for example, had a driving test centre in the town for more than 60 years. It can take 45 minutes to drive to Ayr, which is a fact I am very familiar with because I do it often. Having a driving lesson and another 45 minutes to drive home can come to two and a half hours for an hour’s lesson. Taking public transport to lessons with a local driving instructor in Ayr is not unproblematic, because transport is often not that frequent and adds to cost. For that very reason it is essential for many people in these rural areas to drive for access to education and employment.
The DSA is obviously unaware of the logistics around Cumnock and Girvan and has taken the decision to close the facility purely on a theoretical basis of mileage. Many rural villagers already need to travel some distance to get to Cumnock or Girvan in the first place. As one constituent told me:
“My local test centre is Girvan, but I live a further 15 miles away and the total mileage I would have to travel to the Ayr Driving Test Centre is 37 and a half miles.”
I want to say a word about the new Ayr multi-purpose test centre, which is to serve Cumnock and Girvan following these closures. I welcome the new facility and lobbied the then Government to make sure it went ahead. It is great to have a new super-duper facility in any area, but it should not be at the expense of services to rural areas, especially when there are other ways of cutting costs. The DSA conducted 789 tests at Cumnock and 268 at Girvan in the last financial year. I think that I have made it clear that the decision should not just be about numbers, but it is recognised in both these communities that driving tests being conducted in the areas could be less frequent. However, can the Minister confirm that the same examiner passes through Girvan once each week to go to Stranraer?
Surely a common-sense solution could be found here. Both communities have suggestions for maintaining a reduced service at little cost in accommodation. East Ayrshire council has unanimously agreed, on a cross-party basis, that it will look at offering the premises it owns in Cumnock at a peppercorn rent. Girvan community council has acknowledged that there is no need for an examiner every week given the numbers, but that every four to six weeks would suffice. I said earlier that these communities are proactively seeking a solution, rather than just talking about it. Will the Minister be prepared, as the Prime Minister has done in other cases, to look at this again, given the good will there is to seek an agreement?
My worry about what is being done by the DSA is that in rural Scotland, the test demand may not be sufficient to justify a proper test centre. However, these people pay the same fee as those in more populous parts, so why should they get a lesser service? All this, as I have tried to indicate, could add to the costs of learning to drive and increase the problem of unlicensed driving, which has road safety implications and will impede the economic development of areas already hard hit by the current economic situation. I look forward to the Minister’s reply, which I know will be followed closely by my constituents, and I hope that he can suggest a positive way forward.
The Parliamentary Under-Secretary of State for Transport (Mike Penning)
I pay tribute to the hon. Member for Ayr, Carrick and Cumnock (Sandra Osborne) for securing this debate. I am sorry but I am not responsible for swimming pools or libraries in her constituency—I believe it is a devolved issue that she needs to take up with the Scottish Parliament. However, I understand where she is coming from.
I was surprised to hear that the hon. Lady was campaigning so hard for the Ayr centre. What Ministers should have said at the time to the hon. Lady was that if the plans went ahead, there would closures in her constituency at the other centres, given the capacity that the Ayr centre was designed to have. That is a fact, and given the capacity of what was designed, that is exactly what is happening. If I had been the Minister, I would not have gone ahead with a programme of that size in Ayr, because—I agree with her on this—it is taking away a service from her constituency. I know that she has heard me speak before on this subject; indeed, she extensively quoted my views on where tests should be. They should be in the community—they should be a service to the community that the Driving Standards Agency provides, not a Soviet-style system that makes everybody come to us.
Mike Penning
If the hon. Lady does not mind, I will continue. It is unusual to give way in an Adjournment debate, because of the limited time we have.
I understand the concerns that have been raised, particularly by driving instructors, and I will try to deal with them. There are some big issues that we need to deal with, not least the many people who go out with someone who they think is a licensed and qualified driving instructor, but who is not actually qualified. That is an issue that I am taking up with the industry. It is wrong that people pay good money and in good faith, thinking that they have a fully qualified instructor, when what they have is someone who is just trained. Not all driving schools allow that, but it is allowable under the existing legislation, which I will look at carefully.
The hon. Lady is absolutely right about the service that is provided, within reason, in the kind of urban and rural communities that she and I serve. I accept that hers is a much larger rural community than mine, but I have many parts of the beautiful Chilterns in my constituency. I see lots of learner drivers, particularly at the weekend, learning how to drive on rural roads—as well as on urban roads—because that is a skill that they need to adjust to as they learn to drive.
We have reformed the test quite extensively in the short period in which I have been the Minister. One of the reforms that I have introduced is to ensure that instructors do not know exactly what the route is, because people can learn a route, but does that teach them to drive? The purpose of the test is to give people skills so that they can enjoy driving on the road, while at the same time ensuring that others are safe. What currently happens—the hon. Lady is absolutely right about this—is that instructors know exactly what the routes are, within reason. They take people round and round the circuit in their lessons, so that when they take their tests, they normally go along one of three or four routes, which they probably know back to front. We will stop the routes being published. We will develop new routes, so that instructors will not know what the likely routes are.
It is a testament to the hon. Lady’s understanding of her constituents’ needs that, as well as putting a petition together, the local authorities and the community have come together to look carefully at what the service provision needs to be and how it can be delivered. As she knows, neither I nor this Government is fixated on bricks and mortar. What I am interested in is the service being delivered to the community. I am not sure that the Public and Commercial Services Union is fully on board with that, but I am sure that we will get there eventually, because what it wants to do is the same as what I want to do, which is to provide a service to the community.
The previous Government’s policy was to implement a closure programme. I have suspended the closure programme while we address the question of how we can deliver facilities and tests to communities. I cannot go back on the campaign that the hon. Lady said she was so in favour of, but the new Ayr centre is now in place. It has a rather large capacity—much greater than the needs of Ayr—and was designed so that other areas would close their facilities, which would then come into a hub. I will not repeat myself too much, but I would not have done that, and it does not fit with this Government’s ideas of how we should deliver the service.
However, what I am doing—I have asked my officials to proceed with this, and they have already started—is speaking to local stakeholders, including councils in the areas where closures are taking place, to see whether we can deliver a service in the hon. Lady’s community that is not about bricks and mortar, but about tests being given. In two areas we are looking at delivering around 1,300 tests in the average year, with about 80% in one centre and 20% in the other. She is absolutely right that the figures suggest that we could send a tester every day—or every other day—to do one test, or we could bring the tests together in a package and have a tester arrive every four to six weeks. My figures indicate that it would be closer to every four weeks, particularly in certain parts of the year, when there tend to be more tests than in others.
It is crucial that the community understand that the service is for them. I know that my officials have been talking to the chief executive of the local authority about how we can facilitate that, which is something that the hon. Lady mentioned. As she is aware, in one case we were using a hotel in her constituency as a headquarters before we got a hub centre. I do not mind if it is in a hotel or a supermarket; indeed, if the libraries in her constituency stay open, I do not mind if it is based in one of their car parks or in a civic centre.
It is crucial that the service should be delivered locally, although let us remember that this is not all about the instructors. I stupidly sat next to my daughters on several occasions when the L plates were up, and it was the most frightening experience known to man—for them, I should stress, not for me. This debate is not all about instructors, but there is an industry out there and I am conscious of their needs. If everything is done in Ayr, there will perhaps be an issue with people looking to the Ayr driving schools rather than their local schools. I do not want everything done in Ayr; I want it done in the hon. Lady’s constituency. We are working hard to ensure that localism is delivered, because people pay for a service and they are entitled to it.
Let me quickly touch on some of the other changes to the test, which is vital to the hon. Lady’s constituents. I do not think that the test in its present form delivers what it is intended to, which is not a group of people who can pass a test, but people who have the skills that allow them—this is particularly true for young people—the freedom to enjoy the road while at the same protecting others. I have already said that we will ban the publication of routes, so that when people leave the test centre, the Sainsbury’s car park or the local council offices, they will not know exactly where they are going to go—clearly they will have to go left or right, but they will not know exactly where they will go after that.
At the same time, people who are learning need the skills for when they do not have someone sat next to them, as a companion or guide, or as someone telling them when they have done something wrong. Therefore, we are introducing a part of the test where people will be asked to go from one place to another without being told how to. They will have to find a route themselves by reading the road signs. Some people have said that they are concerned about this, and have asked whether people will fail their test if they go in the wrong direction. No, they will not; it is how they react to making a mistake that is crucial when we are trying to teach them how to be good drivers.
We have a massive issue in the whole of this great nation of ours with young drivers. That is one of the reasons their insurance premiums are so high. With two daughters, I am proud to say that lady drivers—and particularly younger lady drivers—are much safer than boy drivers. Indeed, 17 to 25-year-old girls are some four times safer than 17 to 25-year-old boys. We must work together to ensure that they have the skills that they need to go forward. One of the proposals that we have made is for qualified driving instructors to be able to use roads that learners do not usually use, particularly motorways. It seems ludicrous that someone can pass their test with someone else sitting next to them, then leave the test centre—perhaps the instructor will have taken someone else out on another test, in another car—and be legally allowed, on their own, to drive for the first time ever at 70 mph on a motorway. Frankly, they will probably be petrified—I know I was very frightened when I first went on a motorway, and I know my daughters were as well.
We are therefore looking at giving fully qualified instructors the ability to teach enhanced skills, including post-test. Indeed, a lot of work is being done with the Institute of Advanced Motorists, the AA and the RAC on what skills we can give people when they have passed their test, so that they face less of a liability in their insurance. That is the sort of steer and guidance that we need from the DSA and Government. It is not about regulating, but about giving people the skills that they need.
The hon. Lady asked me for an assurance that we will bring testing to her community. Yes, we will, and we will do it as soon as we can. Pilots have already started around the country. I hope that the union will support what is being done, because it will protect jobs rather than cause them to be lost. We will need people, albeit that they will not be sitting in a building. I remember the vicar of the first church I went to in my constituency saying to me, “It’s not about buildings, Mike. It’s about people. That is what the Church means.” The same applies to services in the community.
We need to deliver this much-needed service in the community, so that people can have the skills that they need—and at cost, so that they can afford them. In a rural community, passing the driving test is one of the great freedoms that we can give to young people. We need the skills to do that, and we need to bring that service to them at no extra cost to them. That is crucial. Buildings cost a lot of money. The hon. Lady mentioned a peppercorn rent, but in some cases, there might be no rent involved at all. Some commercial organisations might welcome the footfall that would come to them while people were waiting to take their test, if their location became known as the test centre.
I have an open mind on who should deliver these services. As I have said, discussions are going on in the hon. Lady’s constituency with her local authority, and I am more than happy to share with her after the debate the information on who we have been talking to. Perhaps she also has ideas about who we should talk to. We will deliver driving tests in the community, where they should be, rather than a huge distance away, which was the previous Government’s policy. I have inherited that policy, but I will not continue with it.
Madam Deputy Speaker (Dawn Primarolo)
I have to notify the House, in accordance with the Royal Assent Act 1967, that the Queen has signified her Royal Assent to the following Acts:
National Insurance Contributions Act 2011
Budget Responsibility and National Audit Act 2011.
Question put, That this House do now adjourn.
Question agreed to.
Ministerial Correction
(13 years, 1 month ago)
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Foreign and Commonwealth Office
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Mr Hague
Iran, of course, is an exception to that. Iran has shown breathtaking hypocrisy in claiming to support freedom in the Arab world, while violently suppressing demonstrations and detaining opposition leaders back home—acts that we deplore. We want Iranian citizens to enjoy full civil, political and human rights, and all the benefits of an open relationship with the rest of the world, but that will require the settlement of the nuclear issue, where the ball is firmly in Iran’s court. Until Iran negotiates seriously on that issue, the international pressure on it will only increase.
[Official Report, 17 March 2011, Vol. 525, c. 499-500.]
Letter of correction from Mr William Hague:
An error has been identified in a statement given during my opening speech to the all day debate on North Africa and the Middle East on 17 March 2011.
The correct statement should have been:
Mr Hague
Iran, of course, is an exception to that. Iran has shown breathtaking hypocrisy in claiming to support freedom in the Arab world, while violently suppressing demonstrations and detaining opposition leaders back home—acts that we deplore. We want Iranian citizens to enjoy full civil, political and human rights, and all the benefits of an open relationship with the rest of the world, but the latter will require the settlement of the nuclear issue, where the ball is firmly in Iran's court. Until Iran negotiates seriously on that issue, the international pressure on it will only increase.
Westminster Hall
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Promotion of Women in Business
Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
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Mrs Helen Grant (Maidstone and The Weald) (Con)
Balance is the centrepiece of science; it is the fulcrum of philosophy; and it is stability in society—light and dark, hot and cold, yin and yang. We need to balance the resources at our disposal in order to exist and grow. Good business managers embrace balance in so many ways—risk and return, investment and innovation, supply and demand. However, an imbalance that is common in business, the professions and politics is the one between men and women in senior positions.
That imbalance is often labelled a gender equality issue, but actually it is a business performance issue. Men and women bring different things to the business table, which are not mutually exclusive. Women can be great at multi-tasking; men can be cool under pressure and very spontaneous. Both have different attitudes towards risk and confrontation. However, if we put the two together, it is no surprise that gender-balanced businesses are more stable, more sustainable and more profitable. Those involved with such businesses tend to make better decisions about people, risk and customers. Let us not forget that women make 80% of consumer purchase decisions in many countries.
If we can share the best of what we have as men and women, our diversity will enrich us all. There are many barriers to progress. Business is a man’s world built by men and, because people tend to recruit in their own image, male imbalance prevails. In the home, women are still the primary carers, and the struggle to juggle domestic duties and a demanding job can be a major hurdle. Silly stereotypes have been created in relation to both domains. Men are characterised as being confident, aggressive and direct, while women are characterised as being kind, warm and gentle, and therefore as perhaps not having quite what it takes to tackle tough business decisions. The truth could not be further from the myth. However, even today, some people still argue that gender difference in attainment is simply because of personal choice, aspiration and preference.
Some Governments have already taken action. Eight years ago, Norway passed legislation requiring all public and state-owned company boards to be 40% female. Spain and France are now following suit. Norway has achieved its quota, but succession is now a problem. Board members typically come from senior management in private companies. However, in Norway, only 6% of those posts are held by women. Clearly, a root-and-branch approach is still required.
Gareth Johnson (Dartford) (Con)
I congratulate my hon. Friend on securing the debate. I know that the issue is very important to her. I hope that she agrees that we are striving for a quality of fairness. Does she also agree that we need to ensure that such fairness is not patronising to women and does not replace one form of apparent discrimination with another?
Mrs Grant
My hon. Friend makes a very good point—I could not agree more. I shall cover that issue later. I am grateful for his intervention.
In Britain, we have much to do. Only 5% of FTSE 100 companies have a female chief executive, and only 12% of board directors are women. Our Government have promised to promote gender equality, and I am encouraged by coalition policies on flexible working and parental leave. Lord Davies of Abersoch is leading a review on women on boards, and his report has just been published. He has got it just about right and is seeking to accelerate glacial rates of change without causing global warming. Recommendations include encouraging head-hunters to put more women on shortlists, requiring chairmen to explain why boards lack female representation, inviting investors to take more responsibility in holding their plcs to account on matters of gender balance and, importantly, introducing voluntary targets to raise the number of female directors in Britain’s biggest companies while not ruling out quotas.
Enforced quotas worry me. I am really, really sceptical about them, because such positive discrimination can demean a woman’s real value among her peers and alienate men. Some would also say that quotas treat symptoms, not causes, and there is some truth in that. Surely our aspiration must be the creation of fair, real and equal opportunities, where meritocracy wins the day. Change is coming, and whether it comes eventually through quotas or by more gentle pressure will be a matter for serious and ongoing debate. Even without legislation, some British companies are already committed to gender balance and a variety of methods are being used. Mentoring and sponsorship, setting targets and using best practice illuminated by the light of transparency can all work very well. Part-time working arrangements can improve female retention. In fact, any family-friendly strategy that allows women just a little more flexibility, especially when their children are young, can pay big dividends—and word gets around because women talk. On an individual level, women can help themselves, too. We may need to be more assertive in our approach and not be afraid to take credit for our achievements.
David Simpson (Upper Bann) (DUP)
I congratulate the hon. Lady on obtaining the debate. I promised my wife that I would be here this morning, because she is a business woman—it is more than my life is worth not to be. Although we perhaps have an issue around Government policy, does she agree that dealing with the matter should start earlier in life and that our colleges and universities could help to encourage women in entrepreneurship, so that things are more equal across the boardroom table?
Mrs Grant
The hon. Gentleman makes a very important intervention—I am sure that his wife will be proud. I could not agree more. Part of dealing with the problem is considering how to ensure that our girls—our young ladies—have much brighter, bigger, bolder, ambitious career advice when they are at school and university. The sky should be the limit—I agree with him completely.
I come back to men. Men, too, need to become better listeners. They need to learn to hear a woman’s voice and embrace the enlightenment of a broader horizon, because when courageous women and enlightened men—we have a few of those here today—come together, there is little that cannot be achieved. The non-believers should consider the following comment made by an all-male board member:
“Our board is really effective. We all think the same way. We all have the same views. Discussions are very short and we always reach the same conclusions”.
That all sounds very happy, but is that board healthy? Balanced boards are a noble aspiration, but there is a bigger picture. Boards are central in corporate life, but senior executives and managers create the wealth. That is where gender balance can be so effective. If we can recruit more women to those senior executive positions and train, nurture, promote and encourage them, then the transition to CEO and the board should be a much more natural step. In many ways, dealing with that is more difficult than dealing with quotas.
Enlightened leaders, both male and female, cast a lengthy shadow. Our Prime Minister, David Cameron, has set himself a target of one third of Ministers to be female by 2015. Likewise, a group of powerful London businessmen are aiming at one third female boards by 2015. A few weeks ago, the Financial Times published its list of the top 50 women in world business. Those women run organisations such as PepsiCo, Kraft Foods, Yahoo! and Xerox. Their success is cause for much celebration and they stand as much-needed role models. The aspirations of those leaders encourage millions. I take great heart in their initiatives, because it says to me that there is room at the top and the door is open.
In conclusion, this is an exciting time for the promotion of women in business, the professions and politics. Government have an important role to play, but legislation alone will not fix the problem. We need chairmen, chief executives, investors and head-hunters to all take action. The Davies report is a step in the right direction. I urge the Government to accept its sensible recommendations and to reconsider the whole issue of child care. Inadequate and unaffordable child care prescribes many women to the home, or to not having children. If some improvements can be made, many capable women will be released back into the working economy as taxpayers, entrepreneurs and wealth creators, which is exactly what our country needs at this difficult time.
Mary Macleod (Brentford and Isleworth) (Con)
I congratulate my hon. Friend the Member for Maidstone and The Weald (Mrs Grant) on securing this important debate on an issue that, for me, is all about aspiration and allowing individuals—men and women—to achieve their potential. We know that many women are stopped from achieving that potential, from being the best they can be and from delivering real value at senior levels in business. We need to do something about that.
I welcome the report from Lord Davies. He has looked at the issue in detail, involved many people in the discussion and come out with a good series of suggestions. I am a strong believer—as might be imagined from me being here—in the importance of having more women in business at senior levels. I worked for more than 20 years in the City in different sectors and have seen the lack of women at senior levels. I fundamentally believe that that is not necessarily because women are doing something wrong—although I agree with my hon. Friend that they can promote themselves better—but because there are serious issues about how we select women and people on to the boards in the City.
Anne Marie Morris (Newton Abbot) (Con)
Does my hon. Friend agree that part of the challenge is the structuring of the career path? We are all now living longer. If we could find ways of structuring career paths, whether in the corporate or professional worlds, so that men or women could go into it at different times, that might ease the problem. In the professional and corporate worlds, we see a hub at the age of 30 where it is either make or break—the same time that many women want to have their families. That puts on undue pressure and makes that decision much harder than it would be if we had a career span that was much longer, over the many years that we are going to be working.
Mary Macleod
I agree with my hon. Friend. There is not a one-size-fits-all way of doing things. Different women will have different career paths and will do things at different stages of their lives. We want the flexibility to adapt to those different career paths and still to allow people to get to the top levels in business. I have seen the lack of opportunity and meritocracy that currently exists in business. We are not drawing from the possible range of talent that exists. That means that organisations suffer, that business and the economy generally suffer, so the country suffers. We need to do something about that, because there is a huge untapped pool of talent.
Why is this issue important? As my hon. Friend the Member for Maidstone and The Weald has mentioned, some of the reports and studies are not only about aspiration, but performance. Studies such as one by McKinsey’s have looked at a range of statistics that show that companies with a higher proportion of women in senior management teams, in essence, outperform their rivals, with a 42% higher return on sales, a 66% higher return on invested capital and a 53% higher return on equity. There is improved decision making, as was mentioned. Such companies may also be more responsive to the market, make better decisions and have improved corporate governance.
The current position is an issue. Only 12.5% of directors of FTSE 100 companies are women and only 7.8% of directors of FTSE 250 companies are women. Some 52.4% of companies have no women on their boards at all. That is a disgrace. There are a few reasonably good examples. GlaxoSmithKline, in my constituency, has 38% of senior positions held by women. It is good that that has improved year-on-year in the past five years, and that it has improved at the different levels—whether manager, director, senior vice-president or vice-president. That is what we want to see: an ongoing improvement at all levels so that there is opportunity for all.
In so many organisations, the frustrating thing is that progress has plateaued. Contrary to the widely held myth, there is no evidence to suggest that there is a shortage of appropriately qualified women in the pipeline. There are plenty of women to take on board-level roles, but we need to start to change the thinking about what the requirements are. As Lord Davies said, we must promote on the basis of merit and skills. That is important if we want a true meritocracy, and to have true fairness and opportunity. Lord Davies’ report mentions getting companies to talk about and publish their figures. That is a great starting point and something that we absolutely should do.
Other measures that need to happen include the better mentoring and sponsoring of the next generation of executives. One programme that exists and works very well is the FTSE 100 cross-company mentoring programme. Many chairmen of FTSE 100 companies are trying that new mentoring approach that will help in the long term, because it aims to sponsor, nurture and mentor the next generation and help them with the skills and experience to get to the next level.
More also needs to be done with networking for senior women in business. A study by Higgs and Tyson found that almost half of the directors they surveyed had been recruited through personal friendships and contacts. That is probably something that we all recognise, so it is important to build up those networking opportunities.
We also need to fight media images and stereotypes. The more we can create, promote and highlight role models, the better it will be, because we want the younger generation of women to see that it is possible to get to the top of their business or sector, and that that will happen purely on the basis of fairness and merit.
Also, we should promote companies that have a good record on gender diversity and flexible working options, which, for some people, is important. We have to work with the chairmen of FTSE 100 and FTSE 250 companies so that, as Baroness Bottomley put it, they look through the window when recruiting boards and not in the mirror. That is something that needs to be adjusted so that, as my hon. Friend the Member for Maidstone and The Weald said, people do not recruit only those who are similar to them and who are already on boards but see the value of having new and different skills on boards.
Claire Perry (Devizes) (Con)
My hon. Friend is doing a fantastic job of setting out many of the challenges that need to be overcome, and how we might do that. Does she agree, though, that perhaps there is another approach, which is to think about how we actually structure roles? It is inevitably the case that those of us with families end up being torn in our daily lives. I have always thought that job shares—potentially having a Cabinet position as a job share—would send a powerful signal, allow women to achieve their best and also recognise the complexity of many of our lives.
Mary Macleod
My hon. Friend makes an excellent point. If there were job sharing in politics—there is no reason why the role of MP or Cabinet Minister could not involve a job share—we would show that we have made a real difference and made ground, and that there is no reason why that cannot happen in business.
The time has come to address the issue and really do something about it. It has been talked about for so long but very little has been done. The opportunities for business right now are too significant, at a time when we really need enterprise and growth, flourishing businesses, and more people creating their own business. We must do something about the issue. Women must be recruited to senior levels in business based on their merit and skills. Perhaps the definition and assessment of the skills that are required need closer attention, but I have no doubt that plenty of women with the right skills to take companies forward are waiting for the opportunity to do so. If we could let everyone, both men and women, aspire to be their best and achieve everything that they want, businesses across the country would flourish.
Julian Smith (Skipton and Ripon) (Con)
I join this debate as a head-hunter—I declare that interest—who, until recently coming into the House, worked on senior-level executive search assignments for global organisations. I am the employer in an all-women company and the proud husband of a wife who has just set up a business as part of a job-share situation. I am also a colleague of some exceptional new MPs on both sides of the House, many of whom are women. It is unfortunate that more of my Opposition colleagues are not here today.
As a small business owner, I have spoken frequently about the avalanche of regulation and red tape that hit small businesses over the 13 years of the Labour Government, and the impact of such legislation globally on Britain’s competitive position in respect of inward investment compared with Hong Kong, Asia and other international locations. As a head-hunter, I saw that people were beginning to hire in those locations rather than the UK as a result of our employment law.
Therefore, I was pleased that Lord Davies chose not to advocate legislation in his report, “Women on boards”, which came out in February. I add that I could not find a copy of it in the House of Commons yesterday when I sought one—that was not a great indication of the importance of the topic.
When I first sat on the Government Benches last May, I realised that never in my life had I been involved in something so male. When I reflected on the companies for which I had recruited as a head-hunter, I thought again about the stark differences between those that had seriously taken an interest in diversity and put it at the top of the agenda of their organisations, and those that had not. When I listened to the debate on UN Women, which I thought was one of the most productive and positive debates in this House, I resolved to try to play my part on this issue. I compliment my hon. Friend the Member for Maidstone and The Weald (Mrs Grant) on securing this debate, and on all her work in this country and internationally—recently in Malaysia, I believe—on the issue.
Things have been improving, but progress is so slow. Statistics in the Lord Davies report show that 12.2% of directors of FTSE 100 companies are women, and that 7.3% of people on the boards of FTSE 250 companies are women. That is appalling. Our economy, which is on its knees, and which needs to use all its talents to get out of the current crisis and to deal with a competitive world, needs to address that. There are moral reasons as well: in a society that aspires to be equal, such statistics are not acceptable.
The best companies I have worked with in recruiting at senior level have not focused solely on women. Their big focus has been on diversity. They have been hard-wiring into their organisations the approach that it is not acceptable to come up with a shortlist of white males but instead it is better to come up with a diverse list of people and then select on merit. However, the number of organisations and companies that think that way is not as large as it should be, and we need to increase it over the next few years.
Andrea Leadsom (South Northamptonshire) (Con)
Recently, the Monetary Policy Committee announced that it was recruiting another white man, and that it was absolutely delighted—as, indeed, we all are—with the extremely talented gentleman whom it had chosen. In small print at the end, as an afterthought, it said that only one of the 27 applicants was a woman, and that it wished that more women had applied. Does my hon. Friend agree that it would be a good idea proactively to encourage more women to apply for senior roles?
Julian Smith
My hon. Friend makes an important point. There is a great deal of work to be done in the public sector as well as the private sector, but the Government now need to put significant pressure on the private sector, and not just on targets. One area I would advocate as well worth looking at is performance management generally in organisations. Can the Government do more to highlight those organisations that performance manage their staff and that look at things such as the approach that my hon. Friend the Member for Devizes (Claire Perry) suggested? Can we highlight, as well as company growth, those companies that manage their human resources positively?
Mary Macleod
Does my hon. Friend think that it is important to have real performance measures and that that should affect how people are remunerated? If they are not assessed on that, which might affect what they earn, people tend to forget about it. It is a nice-to-have, but there is no focus on it and nothing ever gets resolved. If people are actually measured on that and remunerated accordingly, something might change.
Julian Smith
My hon. Friend is absolutely right. The client that I worked with that did best in this area had such considerations hard-wired into compensation and promotion at all levels in the organisation, not just at board level. To get a pipeline of candidates for board positions, one has to work right down the organisation, at every level of management. In that organisation, the key question at every performance review was, “What diversity hiring have you done in the past six months?”
A relentless focus is required in the House and at every level of government. I am not convinced that having a unit on women and equality is the right way to go. We need this to be driven from the highest level in the Department for Business, Innovation and Skills, and we need to showcase with awards and in every way possible those organisations that are doing the right thing.
Julian Smith
The role of head-hunters is important. The reason for stressing companies is that head-hunters are driven by their fees, and if the underlying companies are pushing them, that is when there is a change in the approach of the head-hunters. I was pleased that Lord Davies advocated a voluntary code for head-hunters, and some are doing great work in this area, but we will probably end up having to look more closely at this unregulated part of the business world, and push hard if they do not move quickly on their voluntary code.
On parental leave, child care and other matters that have been discussed this morning, I hope that the Government, with their moratorium on regulations for small businesses, will advocate a frank conversation between employers and female employees. My best employee relationship was with someone I could talk to about her plans for child care and family development, and we interweaved her talent and desire to build her family with the business’s needs. That employee was paid more and performed better than any other person in my company.
As well as the Government’s role, there is a strong role for Parliament. There is a strong argument for setting up a new Select Committee for the lifetime of this Parliament to focus on women and diversity. It could be wrapped up at the end of this Parliament, but in the meantime it could be used as a vehicle to demonstrate that parliamentarians in the class of 2010 will ensure that we move the issue on, drag companies in and question them. We want to ensure that the matter is nailed once and for all.
My concern and my message to business, whether head-hunters, global businesses or small businesses, is that if we are still here in 2015 having these arguments about the paltry number of women in the senior echelons of our businesses, it will be very difficult for people such as me, as a great supporter of less regulation and red tape, to stand up and say that there should not be legislation and intervention. This Parliament has an opportunity, as does business, to go for it, and to make a substantial change along the lines of what Lord Davies said, but it must be done now. We must get on with it.
Lorely Burt (Solihull) (LD)
I congratulate my hon. Friend the Member for Maidstone and The Weald (Mrs Grant) on securing this important debate. I also echo the excellent suggestion of my hon. Friend the Member for Skipton and Ripon (Julian Smith) to introduce a Select Committee on women and diversity. The Minister will be listening carefully, and I shall make representations through the Liberal Democrats’ Business, Innovation and Skills parliamentary committee, which I co-chair.
We have heard excellent contributions this morning, and I need not reiterate why we must bother with women on boards. The aspiration of equal opportunities clearly does not work. It is 40 years since the Equal Employment Opportunity Act 1972, but still only 12.5% of members of FTSE 100 boards are women, and only five are run by women. Evidence shows that companies that increase the number of women in leadership positions outperform those that do not. Clearly, it is good for business to have more women.
On stereotyping, Martin Vander Weyer said in The Spectator on 26 February:
“Women are more risk-averse, less driven by raw competitive urges, and more likely to stay focused on generating steady returns; and those are precisely the qualities needed in non-executive directors to counterbalance the machismo of thrusting executives.”
Such stereotyping is dangerous. Not all women are like that, any more than all men are testosterone-fuelled risk-takers. We all have a bit of yin and a bit of yang in us, and it is important not to accept stereotypical opportunities.
Who is calling for change? Last year, the CBI called for a comply-or-explain policy for all businesses, and Viviane Reding, European Commissioner for Justice, is considering calling for quotas. She has started a five-year strategy to achieve 30% of women on boards by 2015 and 40% by 2020.
What are the problems? Many have been discussed this morning, and they include lack of flexibility, and linear advance patterns. My hon. Friend the Member for Brentford and Isleworth (Mary Macleod) talked about whole-life careers. We now have many careers during our lives, and the idea that one must go from one step to another clearly does not work for women or for men.
The male culture of people of the same sex, who perhaps went to the same school or who even belong to the same club, is harmful in achieving diversity of view and opinion and opening up boards to new ideas in all sorts of ways. On nominations committees, we heard an expert speech on the position that head-hunters are in. They may be eager to please, but I welcome the voluntary code that is being promoted by Lord Davies.
There are many things we can do to help—for example, flexible working. I am delighted that the Government are committed to flexible working not just for women and not just for men with children, but for everyone, because quality of work and life makes people better contributors to the work force. We must recognise people for their contribution, not for the number of hours their coat is on the peg at work. I call that “presentism”.
Collaborative leadership styles would be much more positive and helpful in some circumstances, as would effective succession planning. Women respond really well to coaching and mentoring, and we are often our own worst enemies, because we do not recognise how good we are. I had to have a stiff talking to by a friend before I accepted that I would be good enough to become a Member of Parliament. Talent must be recognised in organisations. My hon. Friend the Member for Maidstone and The Weald referred to the leader of the Conservative party and said how well the Conservatives have done in bringing on women. One could argue about whether that constitutes positive discrimination, but the A list has certainly introduced a new generation of women MPs, and I assure you, Mr Caton, that there are no token women in this Chamber; they are all full-on, first-class Members of Parliament.
Mary Macleod
Does my hon. Friend agree that the Conservative party increased the number of its women MPs at the last general election partly because we had a leader overseeing the matter from the top? He promoted it and ensured that it was at the top of the agenda. The same must happen on boards. Does she agree that it is important for chairmen, chief executives and board members to say, “This is really important; we must do something about it.”? If that happens, something will be done?
Lorely Burt
I could not agree more.
I want to finish by referring again to Lord Davies. I have spoken about head-hunters and the requirement on listed companies to disclose annually the proportion of women on boards, how many are senior executives and how many are in the work force generally. That would shame a lot of companies into looking at the poor representation of women.
Lord Davies leaves formal quotas as a future possibility, but states that there is overwhelming opposition to them. Well, there would be. To require someone to comply would challenge the stereotypical grey men in grey suits. Will we need quotas? The Davies challenge is for the make-up of boards to include 25% of women within four years. I believe that we will probably need to move towards some form of quota system if boards do not comply with that. This is the last chance saloon for the grey men in grey suits.
Martin Caton (in the Chair)
I will now call Andrea Leadsom, but I advise the Chamber that five hon. Members wish to speak and I want to start the winding-up speeches by 10.40 am. We need more brevity and more speakers.
Andrea Leadsom (South Northamptonshire) (Con)
I, too, congratulate my hon. Friend the Member for Maidstone and The Weald (Mrs Grant) on securing this important debate. I start by saying that I absolutely love men. I have two beautiful sons and a nigh-on perfect husband, and I assure the Chamber that this debate is not about bashing men; it is about trying to promote more good and fantastic women, and even—let us face it—more mediocre women. In any society not everybody can be fantastic but everyone can achieve a lot more than they currently do, and that particularly applies to women. Let us bring on more women of all shapes and sizes, whether mediocre or utterly brilliant.
I want to be a tiny bit selfish and talk about my story. I represent a classic tale of someone who has suffered from the determination of society to promote one type of structure. My parents divorced when I was very young, and for a long time it was just me, my two sisters and my mum. My mother taught us that, “The world does not owe you a living; you get on and you do it for yourself, my girl,” and that was very much the mantra with which I grew up. My sisters and I were all driven to do well in our careers, while still loving men and having a place for them in our hearts. You can rest assured, Mr Caton, that my two boys are clear that women are their equals and every bit as good as them.
I went on to jump out of my political science degree and into the City with huge enthusiasm. I worked 60 hours a week and did all the things that the men did—I worked shoulder to shoulder, neck and neck, competing with the best of them. At the age of 30, I discovered the wonderful thing that was being married and having a child. When I was eight months pregnant—nobody could accuse me of concealing the fact that I was about to have a baby—I was promoted to be the youngest senior executive that Barclays had ever had. That was a huge privilege and honour and I was thrilled. I was also, however, about to have a baby.
I went away and had about three minutes’ maternity leave. I worked until two weeks before the birth and came back after less than three months. I was desperate to get back into the job, but I was knocked for six by the whole experience. Within a year of trying to hold down such an enormously challenging job, I spoke to my boss about whether it would be possible to do it part time. I will not name names, but the answer was, “We’ve managed without many women directors until now, and we certainly don’t need part-time ones.” I struggled on for another year, but two miscarriages later I gave up, went away and thought, “Right, I’m just going to be a mum.” I had a second child and worked as the managing director of a hedge fund. It might seem rather ridiculous to go from working in a mainstream bank to becoming a senior person in a much smaller organisation, but somehow that worked better. It involved less process and more interpersonal relationships, and people talking to each other and understanding what was necessary to get the job done. Even though I had an important position, it was understood that I also had other priorities.
My story is indicative of what so many women go through. They start off neck and neck, fighting on equal terms, but then something happens—they start a family and their career is never the same again. The past 10 years of my career were happily spent in a funds management organisation at senior level, but with no prospects of promotion because I was working part time. I recognised that and was happy to pay the price because being a mum has always been the most important thing in my life. At the moment, however, that price must be paid, which I do not think is right. It holds women back, and many women give up altogether. A wealth of evidence suggests that women deliberately apply for more junior jobs that do not meet or challenge their skill sets, simply because they want the time and space to raise their family. That is a tragic waste of talent, and I believe that so much more could be done.
I do not plead for quotas. As my hon. Friend the Member for Skipton and Ripon (Julian Smith) so eloquently said, employers should be encouraged to talk to their staff about what works for them. Such flexibility is not legislated for, but we need to get away from the situation where an employer can never ask someone if they are planning to have a baby, or whether they need to go to parents’ evening, because that is a taboo subject. Inadvertently, legislation and workers’ rights have made that an even more knotty topic, but if we could get away from that problem and arrive at a position where employers can talk to staff about their priorities and the things that they need to do, we would be in a much stronger position due to that mutual recognition.
In my office I employ a fantastic caseworker whose wife is about to have their second child. That is bearing down on us all, and we will accommodate his needs as a father. It is not just about women; it is about families. Accommodating the needs of families will go a long way towards improving the talent base in this country, and it will improve business across the board.
Brandon Lewis (Great Yarmouth) (Con)
I, too, congratulate my hon. Friend the Member for Maidstone and The Weald (Mrs Grant) on securing this debate. Ever since I left university, I have worked in business, and over the past 10 years I have run a couple of businesses. I was not sure what I, as a man, could bring to the debate, but when I spoke to my hon. Friend yesterday, it suddenly occurred to me that for 10 years I have run a business with about 80 staff of whom more than 90% are women. That had not occurred to me in the context of this debate, because we did not go out looking to recruit women or in any specific area. I fully agree with the comments about discrimination made earlier by my hon. Friends. Discrimination is not acceptable, but equally, we do not want positive discrimination.
I agree with my hon. Friend the Member for Skipton and Ripon (Julian Smith) that we should not seek Government legislation that makes work more difficult for small and medium-sized enterprises. It is already difficult enough to employ more people under the existing regulations, which put companies off. The Government can set an ethos, however, and perhaps I can add my experiences to the debate, and say what it is we do that means we attract more women, and why that works so well.
Dr Julian Huppert (Cambridge) (LD)
The hon. Gentleman is right to say that there is a limited role for Government in terms of imposing rules. Does he agree that it is important to encourage mentoring? A lot of studies show that all people benefit from mentoring, and women do not get as much of that as possible. Organisations such as Enterprising Women do a lot to try to promote that aspect, and I hope that the hon. Gentleman will mention it.
Brandon Lewis
The hon. Gentleman is right. People across the board benefit from mentoring, and men are sometimes afraid of saying, “Look, I need a bit of help.” Some women I have worked with do that better and have benefited from it. Women hold top positions across my business. As declared in the Register of Members’ Financial Interests, my business involves a couple of schools and a nursery in which the head teachers are women. My administration team that runs the business is also made up of women. I have to say that they do a far better job now that I am not there interfering than was the case when I was. As an employer, we have appealed to women partly because primary education, on which we focus, tends to attract women. The tougher part of our job has been recruiting men into primary education, which is important because of balance.
When I was a council leader, I was always proud that I had a council group with very good balance. My hon. Friend the Member for Maidstone and The Weald made the point that for any business or organisation, it is balance that makes it work. The balance of men and women in my council group was about 50:50. I was very proud of that and made a big point of it, because we achieved it before many authorities could get anywhere near it. We also had people from different walks of life and different business backgrounds. They ranged from a councillor of 18—the youngest councillor in the country—through to councillors in their 70s. It was the balance of members—members who agreed with one another and members who did not—that made it a more powerful team.
In my business, it is the balance that works, and flexible working also appeals. As we are an educational establishment, we have a slight advantage, in that we can advertise jobs for people who want to work only in term time to fit with their families. More men might consider that, too. This is a time when we are looking for more opportunities for men, and men are sometimes afraid of admitting that they want to spend more time with their families. I am sure that many of us in the Chamber would fall into that category, if we could. However, the ability to work in term time—the ability to work part-time hours—has meant that we have attracted women, which is benefiting our business. Our turnover of staff is extremely low. I think that in the 10 years that I ran the main administration team, we lost only one member of staff, who went on to a promotion elsewhere and has been very successful as a result. Business can consider those issues. This is about achieving a good balance across the board, with different types of input from people with different backgrounds, from men and women, from different age groups and from people with different professional backgrounds.
With regard to being flexible about work, the hon. Member for Solihull (Lorely Burt) made the point about “coat peg hours”—a phrase that has stuck with me for many years. When I first qualified in law, I spent some time in a law firm and it always struck me as bizarre that the lawyers, particularly in the corporate law departments, seemed to feel that they had to be in the office from 8 am until 10 pm or later just to prove that they could be there. They were sitting in a square box, staring at a wall, doing work that they could easily have been doing at home, probably more productively.
Therefore, I have always taken a different view with people in my company, whether they are men or women. What interests me as a boss is that the work gets done and is of high quality. Unless there is a particular time demand, I am not interested in whether it is done at 8 am in an office or at 8 am in someone’s home. With the way communications work these days, businesses should think outside the box and be more open-minded about allowing staff, of whatever background and sex, to do their work to the best of their ability and not be so focused on “coat peg hours” and sitting in an office for the sake of being seen to be there. That in itself would be a big step forward for business.
If we can do nothing else in the next few years but encourage businesses to be more open about their working practices to allow people to be more flexible in that respect, we will see more women in business and certainly more production for business, without the need for legislation. I agree wholeheartedly with what hon. Members have said about how business has an opportunity now to make progress on this issue and to have more diversity across the board. Otherwise, we will end up having to look at more legislation, something which all of us who have been in business agree that business can do without.
Caroline Dinenage (Gosport) (Con)
I congratulate my hon. Friend the Member for Maidstone and The Weald (Mrs Grant) on securing the debate, which is incredibly valuable. We have heard some excellent contributions and some interesting ideas, particularly the idea about job shares in the Cabinet.
I endorse the comments made by my hon. Friend the Member for South Northamptonshire (Andrea Leadsom). Every mum faces huge dilemmas in her everyday working life. Productive women are those who feel that their family life is respected.
I wanted to take part in the debate to talk about the untapped potential of women as entrepreneurs. As a business owner myself, I have experienced at first hand the challenges that women face in starting their own companies. It is a world dominated by men. I have experienced for myself the days of walking into a trade show or a builders merchant and it being a bit like the saloon in the wild west where everyone stops what they are doing and turns round to look at the strange being that is among them. When four of the five dragons from “Dragons’ Den” are male and men such as Richard Branson and Alan Sugar fly the flag for UK entrepreneurship, it is not surprising that less than half of businesses are started by women. The stereotype of the ambitious, ruthless male entrepreneur needs to change.
Women can bring a huge amount to business and the economy. Worldwide, women have been shown to be successful and conscientious business leaders. In microfinance initiatives in Africa, 90% of female entrepreneurs plough the profit from their businesses back into the community, compared with only 50% of the men. In the UK, we have inspirational women such as Deborah Meaden and Tamara Mellon, who prove that it is possible for women to succeed in starting their own business. With women making more than 70% of household purchasing decisions, they surely know what the market wants. So why are those inspiring business women so few and far between?
Anyone starting a business will face daunting tasks. They must win over potential investors, persuade their family that it is worth it and, perhaps more importantly, persuade themselves that they are capable of succeeding. That is often the most insurmountable hurdle for women—summoning the self-confidence to take on that task and that risk.
I am involved in a fantastic project in my constituency of Gosport. It is called AWESOME—all women entrepreneurs supporting opportunity and motivating their expertise. It brings budding female entrepreneurs together to provide a network of support. Despite having brilliant ideas, they tend to hold themselves back, perhaps due to a fear of rejection. It is almost as though they regard their business idea being rejected by a potential customer as a rejection of themselves. They have difficulty separating themselves from their business idea.
Mrs Grant
My hon. Friend makes a very important point about confidence. I agree that there is a fundamental confidence issue for us, which has come from years of sexism. Does my hon. Friend agree that if there were more female role models, that might help to correct the situation?
Caroline Dinenage
Absolutely. That is exactly right and it is the point that I was going to make and probably will in a second. Even when a woman succeeds, the challenges posed by approaching a bank or taking on greater responsibility sometimes prevent her from taking those steps and expanding the business to its full potential. I have seen so many women who have got to a certain stage and thought, “I don’t know whether I can take that final step,” and have then just stopped where they are. It is tragic to see that amazing potential go to waste, especially when our economy desperately needs the passion, hard work and vision of all entrepreneurs, but particularly female entrepreneurs. We just need to find a way of unlocking that talent.
By bringing female entrepreneurs together, as we have in Gosport, a network of moral support is created that allows a woman’s true passion for her business to shine though. Women say that they cannot do the hard sell. They say that that is the one thing they cannot do. They say, “I can’t do the hard sell. I can’t go into business.” However, when they are asked to talk about their businesses, their passion and enthusiasm for their product sells it for them. I could tell hon. Members about the number of times that I have walked out of a meeting, having subscribed to things that I did not even believe I needed—including a cat sitter when I do not even have a cat. They are incredible saleswomen, but they do not know that they are doing it.
Successful business women get involved in the group to which I am referring. They inspire confidence in those starting out and help to overcome the little barriers and difficulties that hold people back. We need to develop a network of such groups throughout the UK. They are self-started; they are not funded; and they are just self-help groups. We need to develop a network of such groups throughout the UK to ensure that in every constituency women are getting the support that they need.
Most importantly, we need to foster a culture of female leadership. We need to inspire and build self-confidence in people from a young age, whether that is done through debating clubs or programmes such as Young Enterprise. I did Young Enterprise at school. The business that we had was called Big Time and designed clocks—given my reputation for timekeeping, people find that quite surprising.
We also need to tap into the potential of the media and popular culture in promoting entrepreneurship. I visit many schools in my constituency, and nearly every time I ask the kids what they want to do when they leave school. Very rarely does a girl say to me either that she wants to start a business or that she has an entrepreneurial idea, yet so many want to be actresses, models and performers, which always staggers me. We need some more positive business role models in the media. After all, why should only Alan Sugar have an apprentice?
There will be great benefits for women and for the economy in promoting female-led business. It will bring fresh ideas and different qualities to the business world, while allowing women to set their own hours and agendas, which is what we are talking about. Entrepreneurship is not the preserve of men. It is our responsibility to ensure that women have the support and confidence to be entrepreneurs.
Anne Marie Morris (Newton Abbot) (Con)
Many of the points that I might have made have been made already, given that I am speaking towards the end of the debate, but perhaps I can dwell on a couple of them and give them a little more thought.
In an intervention earlier, I raised the idea of flexibility over career timing. The ability to start a career later—perhaps after having children—is often not open to those of us who work in the City or the professions. I agree with other speakers that that is perhaps not something that can be legislated for; rather, it is about creating the right environment. We need to look at the issue, however, because we will all live longer and need to work longer. This is not, therefore, just a women’s issue, but a cross-gender issue.
Brandon Lewis
I am sorry to delay my hon. Friend, but having had two children, my wife has gone back into work and successfully set up her own business, in exactly the way my hon. Friend has described. Does my hon. Friend agree that part of the issue is the need for us all to highlight the fact that such things can be done? More women, and indeed men, would then realise that being a certain age does not mean that they cannot achieve something and do something new. Highlighting such things would raise the profile of this issue in the way that my hon. Friend has.
Anne Marie Morris
I absolutely agree. That is absolutely right. However, the real challenge is changing that culture.
My second point builds on the idea of confidence and experience. I welcome the idea of a Select Committee, which would be a first-class way of encouraging more thought on this issue. I was delighted to hear about the FTSE 100 mentoring programme, which sounds like a first-class initiative. The challenge is to have more role models and better mentoring programmes—I agree that they should be for men and women—and to help rebalance individuals, so that they have the broad suite of skills that we all need.
In that respect, perhaps I can dwell on men for a minute. If we look at what is happening in schools, we see the reverse of that. Boys’ results are not as good as girls’. Girls are tenacious and exam focused, and they are good at the process involved in passing exams. More and more women are going into the professions, and more women than men are going into the junior level—not the top level—of medicine and law. Leaving aside the leadership issue, we therefore also have a problem with the gender balance in those professions. We need to help men to go into those professions and to compete, just as we need to help women to go into the corporate world and compete there. The gender balance in the professions and corporate life is completely different.
One of the challenges facing us is that the skills that make people successful in the corporate world are not embedded at school, and I suspect that that may be an issue for the Secretary of State for Education. The issue is which skills we need people to gain at school to help us right the imbalance that I have described. Another challenge is to ensure that we have better integration between school and the workplace. One of my frustrations is that the children we talk to about the requirement to do work experience talk about it as if it were a tick-box exercise; there is no real sense of the role they will have in the workplace. Indeed, there is still a bit of a sense that the expected option is to stay at home.
Anne Marie Morris
That would be very helpful. In the same way that we have looked at the intellectual aspects of education, including issues such as the English baccalaureate, we are now looking at the skills aspects of education through the Wolf report. I agree that we need to develop a fundamental understanding of these issues among boys and girls at school. I do not have an answer as to how we can more effectively integrate business into education, but the issue absolutely needs to be resolved.
My third point relates to child support, which is a real issue. Partly, it is about money, but is also partly about culture, expectation and provision. A number of organisations are looking at crèches, part-time working and job sharing. However, it is one thing to look at introducing such provisions and to recognise that they are the right thing to do, but another thing to work out how to make them really effective. There is a bit of a tick-box approach, with people thinking that they have ticked the box because they have a crèche. In that respect, I was really struck by the comments of my hon. Friend the Member for Skipton and Ripon (Julian Smith). What is important is the ability to sit down and have a meaningful conversation about how we can work together and take on board the fact that, biologically speaking—certainly in our lifetimes—only women will have children. The question is how we make a different outlook more of a reality, and a Select Committee could probably sensibly spend some time looking at the issue.
When I was thinking about today’s debate, I remembered that we had a married man’s allowance in the old days, and I wonder whether a working mother’s allowance might be appropriate in the modern world. I put that out as a thought, and I appreciate that the piggy bank is a little empty at the minute, but such a proposal might be food for thought. We need a holistic approach to the fact that women have the babies. We need to integrate that and enable women to contribute in the workplace, which is crucial.
My final point relates to the corporate issue. I was impressed by what I read in the report to which a number of contributors have alluded. Diversity is certainly key. I agree that it would make a lot of sense to ensure that the numbers of women coming through an organisation are published in the accounts. Although I agree that we do not want more bureaucracy, such a process would not be a big issue for the top FTSE companies. We have information about the very senior women, because of the reports to Companies House, but we need to see the progression planning, and we will not get it without information about the women coming through the organisation. That is what I would describe as a nudge, rather than a push. I agree that legislation is not the answer, because we need to shape and encourage. Once organisations begin to see that there is a spotlight on the issue, it will begin to make a difference.
The real difference in corporate life will come, however, with the review of the governance code, which is important. How do we ensure that we are really talking about diversity, not trying to right the gender balance? We have to acknowledge that women want to be recognised for the different skills that we bring. I would almost like to see job descriptions that show that companies have thought through the different skills that they need and how roles might work slightly differently to encompass the broader range of skills that are available through employing women. When we look at the governance code, we could try to give some guidance on what might go into it. We are not talking just about men and women, but about the qualities of good management. If we can articulate that, it would be a good way forward. However, I am conscious of the time, so, on that note, I will conclude my contribution.
Nia Griffith (Llanelli) (Lab)
I warmly congratulate the hon. Member for Maidstone and The Weald (Mrs Grant) on her excellent opening speech and on securing the debate. I thank the many Members who have contributed in a positive way. There is much that we can agree on in terms of the need for encouragement, mentoring, sponsorship, role models and enterprise awareness, and those are very much the steps we need to take.
Ensuring that women can participate as fully as possible in business and enjoy full recognition of their abilities and potential is vital not only to promote a more equal and just society, but to make the best possible use of their skills to increase wealth creation and make a more prosperous society. Women are, of course, involved in many different types of business, from the self-employed woman who works just a few hours a week to the woman with the busy corner shop or the woman working in the very largest of companies. Many of the difficulties they face are not necessarily specific to women. Generalisations over the huge diversity of business can be misleading, and there are, of course, many excellent examples of good practice and success stories.
Over the past 30 years, women’s employment has significantly increased and women are making a greater financial contribution than ever to family incomes. Therefore, it is not surprising that more women’s jobs, particularly jobs in the service sector, have been affected in the current economic crisis than in previous recessions. With the expected job losses in the public sector likely to affect women disproportionately due to the high concentration of women in the public sector, it is important that the Government do more than simply hope that the private sector will grow. There needs to be a clear strategy for growth and encouragement for women to take up jobs in the private sector, particularly those who have not worked there previously.
During Labour’s time in office, we introduced measures that have supported women. We extended maternity leave and introduced paternity leave. We also introduced the right for parents and carers to request flexible working, and many speakers today have mentioned its importance. There is more to do to ensure that employees and employers are aware of the right to request flexible working. It can be daunting to be the first in a workplace to make the request. Many women are worried that such a request might harm their career prospects or make them look half-hearted about work. Properly managed, flexible working, such as changes in working hours to allow a parent to drop off children at school in the morning, can result in the mum or dad feeling much less stressed and better able to concentrate on their work. For some women, it can make the difference between continuing in work and having to leave a job.
Lorely Burt
I agree with all the points that the hon. Lady has made. Is it not good that the Government are introducing flexible working for everyone, because that deals with the stigma of asking? Anyone can ask for flexible working, whether they are picking up their children or going to the golf course, so it is seen as part of the norm and not a condescension for someone because they happen to be a parent.
Nia Griffith
Indeed, the opportunity to have flexible working is extremely important. That is why it is particularly perturbing that news is coming through of an exemption for microbusinesses. That effectively denies employees in businesses with fewer than 10 employees the right to request flexible working. I question the Government’s rationale for making that exemption. They seem to be saying that denying employees that right will somehow stimulate growth in the economy.
If we cast our minds back a few years, we will remember that the Prime Minister, in his speech to the 2007 Conservative party conference, spoke about flexible working:
“Companies that have adopted this have found that they are able to grant the request in the vast majority of cases, they have actually found that productivity has gone up, profits have gone up, staff morale has gone up and keeping staff is easier.”
So what exactly has changed? Will the Minister explain what sort of analysis his Government have done that suggests that flexible working hampers growth? What economic impact assessment did his Government do before deciding the exemption for microbusinesses? How will this move impact on women in business? How is it compatible with the Prime Minister’s promise when he was in opposition that a Government whom he led would be the “most family friendly ever”?
The loss of the right to request flexible working will affect both men and women, but at the moment, it is likely to affect women far more widely than men. It will be yet another obstacle to women being able to combine work and family responsibilities. It might mean some women giving up work altogether, or it might deter women from seeking promotion. Was an equalities impact assessment undertaken on the exemption decision, and if not, why not? We are getting used to the Government breaking promises, and that action is usually accompanied by some sort of lame explanation, so I am curious to learn how denying employees the right to request flexible working will stimulate growth in the economy. To most people, it just looks like a backwards step.
When in office, the Labour Government introduced the Equality Act 2010, which not only streamlined the law by replacing nine major pieces of legislation and around 100 statutory instruments with a single Act, but introduced measures to create a more level playing field and make life fairer for women. Those measures include requiring gender pay reports, using public procurement to improve equality, extending the use of positive action in the workplace, and protecting carers from discrimination—although that, of course, applies equally to men and women, the reality is that women are more likely to be carers. Can the Minister confirm that his Government will implement in full all the measures in the 2010 Act?
We, on the Opposition Benches, welcome the work undertaken by Lord Davies of Abersoch in producing the Department for Business, Innovation and Skills report, “Women on Boards”. In particular, we welcome his recommendations that UK-listed companies in the FTSE 100 aim for a minimum of 25% female board member representation by 2015, that FTSE 350 companies set their own challenging targets to ensure that more talented and gifted women can get into top jobs in companies across the UK, and that those targets be set in the next six months and chief executives review the percentage of women they aim to have on their executive committees in 2013 and 2015.
The question is how we ensure that companies really make progress. The lesson from Norway, which is often quoted as having 40% women on boards, is that it does not happen simply by exhortation. That was tried first, but it took quotas to achieve the 40%. It is not nice to be accused of being on a board solely to make up a quota or to be used as a symbol that a company is addressing gender equality, but companies need to ask themselves exactly how appointments to boards are made. Does the process stand up to scrutiny? Is the best person for the post appointed? It may be that the best person for the post may not even be encouraged to apply. I hope that the recommendations in the report will make companies look very carefully at the whole pattern of promotion within the organisation, as many hon. Members have suggested, and identify whether there are factors, such as particular types of socialising after work, which tend to exclude women. It may be that much more subtle forces are at work, which amount more or less to that well documented tendency to select people like oneself.
What exactly will the Government do to ensure that the recommendations in Lord Davies’s report are fully implemented? Will the Government require companies to disclose each year the proportion of women on boards and in senior executive positions, and the proportion of female employees in the whole organisation, as recommended by Lord Davies? Will the Government insist on the disclosure of meaningful information about the company’s appointment process, as recommend by Lord Davies? How will the Government take forward the recommendation that a
“combination of entrepreneurs, existing providers and individuals needs to come together to consolidate and improve the provision of training and development for potential board members”?
The situation of part-timers needs particular attention. Some women find that they need to go part-time to combine work and a family. Other women would like to work part time, but are afraid of the consequences of doing so, knowing that too often going part time will set them back a long way in the pecking order. I have employed women part-timers, and have always found that their attitude to work is anything but part time. They invariably give over and above what is required for the hours they work. We need companies to take a serious look at how they deal with employees, largely women, who are working fewer hours than the full working week. Are they included in decision-making meetings? Are they encouraged to further their careers and seek promotion while remaining part time? Are they given training opportunities? Are they allowed to work part time only if they can find a person with whom to job share to replicate the exact pattern of a full-time post? Is part-time working considered appropriate only in the lower ranks of the company?
What is happening in other countries? In Spain, gender equity laws passed in 2007 obliged IBEX 35 firms to get a minimum of 40% women on boards in eight years. France passed a Bill applying a 40% quota for female directors by 2016. In Germany, the Justice Minister has threatened legislation if boards do not achieve a better balance in the next 12 months. Can the UK also move forward and can that be done without introducing quotas? Will the Government give companies sufficient encouragement to make the necessary changes voluntarily or will we find ourselves back here in two, three or four years’ time ruing the lack of progress?
The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Mr Edward Davey)
This has been an excellent debate, and I congratulate my hon. Friend the Member for Maidstone and The Weald (Mrs Grant) on securing it. We heard some powerful speeches, in which Members showed their experience and knowledge of the matter.
One of the key things mentioned by my hon. Friend, which was picked up by others, is that it is not only about equality but about business performance. I shall stress that aspect because I believe that the issue is about growth. We have the Chancellor’s Budget tomorrow. I believe that the Budget and other such measures are aimed at improving corporate performance and thus the performance of the wider economy.
My hon. Friend spoke of the extra benefits and skills that women bring to the boards of our great companies—their attitude to risk, how they manage employees and how they think about customers. She was right to say that the studies cited in Lord Davies of Abersoch’s report and elsewhere are unequivocal on the subject. The evidence is unambiguous that having more women on boards improves corporate performance.
The debate focused on the leadership of women on boards, following Lord Davies’ report. It was good to see such widespread welcome for his report. We also heard about practical support for women and families in the workplace and about supporting women entrepreneurs. I shall try to cover all those aspects. Before doing so, however, I make two further comments on my hon. Friend’s speech.
First, my hon. Friend reminded us of the Prime Minister’s aspiration for a third of Ministers to be female by 2015. Her speech may be an early suggestion that she is heading for promotion. Secondly, she made the important point that men need to listen to women in this debate. One of my favourite books when reading on the subject at university was a book about men and women in conversation called “You just don’t understand me” by Deborah Tannen, a socio-linguist. Listening to each other, particularly across sectors, is most important. We need to understand each other.
It is not only about listening in this debate, as we try to improve business and Government performance on the matter, but about putting that message across in the workplace, with employers and employees listening to each other and having grown-up, adult conversations. Indeed, many of the concerns that lie behind what was said this morning can be addressed in a way that does not require legislation or regulation. My hon. Friend spoke well and to the point.
Many Members spoke of legislation and non-legislation, and it is important that we realise the power of the nudge—the power of the non-legislative approach. That is one reason why I was keen to publish what has been called the employers charter. It sets out what employers can do under current legislation, and gives examples of the sort of conversation that employers are allowed to have with their employees—for example, about maternity leave and workers’ plans. It is important that we change some people’s perceptions about employers. Actually, employers have rights if they behave reasonably, and they can therefore work productively with their employees.
Right-to-request legislation, which was mentioned today, is a sort of nudge. It is about enabling employers and employees to have a conversation about flexible working. I have some concerns about the way in which the previous Government implemented right-to-request legislation. They took a prescriptive approach, and some employers find it rather regulatory and over the top. However, the Government are committed to right-to-request legislation. We will consult on it in due course. As I made clear in a written statement—
Mr Davey
In a moment, but first I want to reply to my hon. Friend. The hon. Lady may want to intervene if she does not like my answer.
When we consult on extending the right-to-request legislation to all employees, we will also consult on whether there should be an exemption for micro-businesses. That may be appropriate because conversations are more easily had in small businesses. As my hon. Friend the Member for Skipton and Ripon (Julian Smith) said, by and large smaller firms are better at having such conversations than larger companies. We will listen to people when we consult; the hon. Lady may believe too much of what she reads in the papers.
Nia Griffith
The question is whether people have the right to request flexible working. As everyone who has spoken today has been very much in favour of the right to request it, and as no one is obliging anybody to grant it, what is the difficulty with insisting that micro-businesses do the same as every other business?
Mr Davey
The hon. Lady anticipates our consultation document. I believe that we will get the balance right, and better than the previous Government did; their approach was over-prescriptive. Indeed, that points out one of the differences between the two parties. I regret to say that for the vast majority of this debate, the hon. Lady was the only Labour Member here, but the Labour Government seemed often to think that the only way to secure progress in this area was through regulation and legislation. Sometimes that is needed, but it is often not necessary. For example, the employee engagement taskforce led by David MacLeod and Nita Clarke, which is business-led and is trying to promote best practice in employee engagement, and the employers charter that I mentioned earlier both take a non-legislative approach, and that can have a big impact.
Other questions raised this morning relate to the wider debate, particularly on how to take forward Lord Davies’ report. That report focuses not only on Government but on companies, their chairmen and chief executives and on the head-hunting industry. However, it recommends how the Government should ask quoted companies to report on their performance on this matter. We will be publishing proposals on improving narrative reporting following our consultation—the document was published in July 2010—and that issue will be included. I assure hon. Members that the Government strongly welcome the report, which paves the way to massive improvements in this important matter, on which the previous Government did little.
The hon. Member for Llanelli (Nia Griffith) asked whether the Government were taking forward measures in the Equality Act 2010, but she may have missed the fact that most of its provisions were brought into force on 1 October 2010. We have concerns about one or two areas, particularly to do with section 78, which provides for mandatory reporting on gender equality, and we are working with business to see whether we can take a voluntary approach, which we think is right. While we engage with business on that matter and try for a voluntary approach, we will not commence, amend or repeal section 78.
Another matter raised by the hon. Lady was that child care is inadequate and often unaffordable. I am proud to say that, in the spending review, the Government did not merely maintain spending on that but increased the opportunity for child care, particularly for the young of deprived families. Our commitment in that area is strong.
That brings me to the debate about maternity leave, paternity leave and parental leave. We will be consulting on that later this year. We already have a lot of legislation on the matter, but it does not work terribly well. It is inflexible, gender-biased and it does not work with the grain of many companies. Our consultation paper will take forward the coalition agreement, and I believe that we can achieve a win-win by making things more flexible for employees and employers. We want them to work better together to ensure that we have more family-friendly workplaces, but that it does not come at a cost for employers.
It has been an excellent debate. I pay tribute to my hon. Friend the Member for Maidstone and The Weald. I believe that the House could play a critical role. I do not know whether we could go for the Select Committee option put forward by my hon. Friend the Member for Skipton and Ripon, but I am sure that he will want to raise the matter with the Leader of the House. It certainly received support this morning.
Regional Development (North-East)
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Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)
At the risk of making this Adjournment debate appear like the alternative Budget for the north-east—or of the hon. Member for Middlesbrough South and East Cleveland—I warn the Minister that the breadth of coverage of this speech will be large. However, I am sure, as I know my hon. Friends are, that such a diverse speech can only partially cover the wide sectoral diversity that has been achieved in 13 years of patient investment in the region by the previous Labour Government.
Let me give the Minister a brief overview of some of the issues of concern that face my region. I hope I speak for all parliamentary representatives of the north-east region when I say that a north-south divide still exists in England; it is deep, long term, continuing and persistently separates a nation on the basis of where an individual is born and raised, without due regard to the exceptional talent at hand within the boundaries of the Tees and the Tweed. Indeed, the current economic gap—which is perpetuated by the current economic climate—between the north-east and the rest of England is likely to widen, with the serious economic and social consequences that that entails.
PricewaterhouseCoopers’ analysis of the comprehensive spending review indicates that the north-east will be disproportionately hit by spending cuts and job losses. Unfortunately, the coalition Government’s hope that private sector growth alone will fully compensate for such consequences ignores broad economics and, therefore, looks highly unlikely. Indeed, with the Government doing less—or rather, intervening less—in the north-east in particular, the economic position of the region will be made far worse, not better. The coalition Government are not supporting with adequate institutional arrangements or money their declared aim of rebalancing. Rebalancing without the support of adequate resources is a recipe for failure.
Ministers have consistently disputed the need for proactive regional policy or strong Government intervention. That stands in stark contrast to what happened this time last year, when the parties in the current coalition, unaware of the then Labour Government’s actions behind closed doors, called for direct state intervention in Teesside Cast Products. They disingenuously confuse and coalesce the logic of the “crowded-out private sector” with a laissez-faire, sideline observing position, away from the crucial brokering of integral business deals necessary for a burgeoning and diverse manufacturing sector.
For my sub-region within the north-east, “primers”, or large industrial foreign and domestic investments, still dictate the pace of a regional economy outside a city. They historically work in our region, and our region, more than most in England, wants them. The new orthodoxy, rooted to agglomeration, relies on the purely local—almost parochial—delivery of economic planning. I do not decry that in its entirety, but for local partnerships with very limited resources, manpower, expertise, clout, cash and perspective, to deliver will be difficult and will only get more difficult.
Localism and equity are not the same thing. If the objective is to ensure that northern authorities have the resources both to support their local economies and to provide local public services, the greater the extent to which the business rate is devolved, the more extensive the equalisation scheme that would be needed. Such a policy approach remains spatially blind, with absolute priority given to the destruction of existing regional economic structural drivers, such as the regional development agencies, which is simultaneously delivered cap-in-hand with grossly exaggerated local government budgetary cutbacks in the north-east. It is evident that, for this Government, deficit reduction takes primacy over economic rebalancing and any notion of localism.
RDAs were emasculated before any local enterprise partnership was fully set up, allowed to root itself or to be fully financed in and around the expectations of the present Government. That is not the fault of the LEPs—in my case the Tees Valley LEP—because the structures, finance and guidance were delivered to them by the Government. A plan to allow LEPs organically to transform themselves and direct themselves—or perhaps that is the lack of a plan—has been the Government’s prevailing philosophical hobby, rather than occupation. However, that is a smokescreen. It only proves again that deficit reduction takes primacy over any economic rebalancing, and trumps any new trumpeted localism for this Government.
If we are to make LEPs work, they must be properly funded and have access to funds. They should not have to bid with raffle tickets for funds from a regional growth fund—such a fund is less than the total budget for a still non-defined mutualisation model for post offices—that is suffering under the gross weight of demands. LEPs need a proper funding apparatus, whether localised or national in source.
The rush to condemn the RDA within the crucible of the coalition’s gaze has been pursued with a vigour that borders on an almost McCarthyite zealotry. On 12 October 2010, the Minister said:
“The economic divide between the Greater South East and the rest of England is as wide today as when the RDAs began their work. That by any measure is a failed policy.”
The case against One NorthEast totally and utterly reduced it to a list of failings, without due or proportionate regard to its obvious successes, which, unfortunately, did not come to light until after it had effectively been dismantled. Many of the coalition’s policies, including the new homes bonus and impending reforms to the business rate, are likely to favour the south over the north, and the north-east in particular. Recent spending decisions in key areas such as science and technology largely favour a strong southern bias.
The bias in research and development towards the south is cumulatively increased when areas that produce traditional industrial products, such as Teesside, require further state investment, such as grants for business investment schemes, job creation programmes, and public sector relocation. If that investment is not forthcoming, the north-east will remain behind the curve in comparison with its sister regions in England.
James Wharton (Stockton South) (Con)
The hon. Gentleman speaks very passionately on the subject; none the less, I find it hard to agree with some of his comments. He says that the north-east is falling behind, but since mid-August there have been announced almost 26,000 new private sector jobs, investment worth some £9 billion and private sector contracts worth £1.5 billion. The north-east economy is booming in some areas, and that should be welcomed. Far from falling behind the rest of the country, we are showing all the signs of powering ahead, rebalancing our regional economy and getting the private sector up and running again.
Tom Blenkinsop
The hon. Gentleman is a strong advocate for Stockton South and a worthy adversary indeed. He is right: Teesside has a fantastic industrial economy and many new projects have opened up across the region, in his own patch as well as my own. However, those jobs will be created over a certain time period. Many of those were to have been announced before the general election, but for a number of reasons the announcement was halted until after the election was called. It would be false to say that One NorthEast did not have a prime role in bringing those businesses to our region. As a former union official in the steel industry, I know how much One NorthEast has worked with both Governments in trying to get Sahaviriya Steel Industries into the region. What I am trying to say is that a list of failings was produced but there was never an equitable list of positives and negatives when we were assessing RDAs.
We strongly require support for the emergence of a range of different financial sources for infrastructure development, including the green bank, and a greater localised and decentralised source of capital explicitly held for manufacturing entrepreneurship. That will allow risk-takers to take those industrial strides around the existing capital and skills inherent in the cultural demographics of our region. I hope that, unlike the Secretary of State for Energy and Climate Change, the Minister will consider a manufacturing green bank that works with the agencies to deliver the technology and product design that will give us green technologies—working and operating out of Edinburgh, the Secretary of State’s preferred location—rather than holding debates on “green” ISAs or other financial products that simply have the term “green” before them. That green finance must be aimed at manufacturing and not solely at financial high-street products if the Government’s own agglomeration policy is to be pursued for manufacturing.
However, I understand where the Government are coming from on industry. Agglomeration is fine, but industrialised clustering works even better, as we have seen in Germany and the Netherlands, when industry has its own access to funding to implement its own decisions, or when financiers are educated in industry and are located nearby, as documented in yesterday’s Financial Times. However, that connection between finance and industry is still vague and I very much doubt that Ministers at DECC and the Treasury are concerned about it at present, as both Departments appear to have a more obvious preoccupation with carbon floor pricing than with industrial finance. Carbon floor pricing, which I will discuss later, is perhaps the most important issue for Teesside.
I also challenge the Government’s huge assumptions about another topic that I will discuss later: export-led growth. It is obvious to any man and woman in the street that all Governments at any point in time want export-led growth. A healthy balance of trade is integral to a modern industrialised economy. However, we have to be vigilant about the economic mood music emanating from Asia at present.
Enterprise zones—an issue particular to my area—are the Thatcherite reprise of this Government. The enterprise zones policy is not wholly bad, but previous examples have shown that they are best used in certain sectors such as retail and finance. Our financial capitals are established overwhelmingly in London, although Leeds has developed in that regard in recent years. A previous example of enterprise zone growth in the north-east is evident at Gateshead’s Metro centre. However, what we do best on Teesside is not best suited to enterprise zones, and they ignore the broader view of industrialists in the port and chemical sectors.
I also want to look at particular areas in my constituency, such as our local high streets in Middlesbrough, Guisborough and East Cleveland.
Ian Lucas (Wrexham) (Lab)
I promise not to intervene often, as many Members are here for this debate. My hon. Friend mentioned my home town of Gateshead, and the Metro centre, which was viewed as a tremendous success in the 1980s, when it was initiated. However, did not the Metro centre have a profoundly negative effect on Gateshead town centre? That is the real danger that exists with any introduction of enterprise zones. They might assist a very small geographical area, but they might also create what is almost a wasteland outside their boundaries.
Tom Blenkinsop
I thank my hon. Friend for his intervention and I have to agree with him. Obviously, there are benefits from enterprise zones. They bring a certain percentage of business in, but they also displace existing business. I will go into that issue in more detail later.
What can we do for small and medium-sized businesses and the self-employed? I have already talked to the Minister about that, and I believe my comments were received very positively. Ultimately, however, the direction of the north-east must be viewed from the perspective of the north-east. Until our region has more command of its economic destiny, it will continually have to bid against other English regions and Scotland and Wales for attention and investment.
Economic development in the north-east is a subject of deep concern to my constituents and the people of the wider region. Indeed, it should also be of concern to all the people of the UK, because without shared growth our country can never travel the road to prosperity. In the coalition agreement last year, the Prime Minister and the Deputy Prime Minister said:
“We both want to build a new economy from the rubble of the old. We will support sustainable growth and enterprise, balanced across all regions and all industries”.
That was and is an admirable pursuit, but my constituents are not seeing words being translated into action. In contrast, despite the north-east having the highest proportion of workers in the public sector of any English region, the Conservative-led Government have vague plans for growth in the north-east’s private sector, while simultaneously attacking its public sector base and the businesses—small and medium-sized, as well as self-employed—that thrive as a result of that public spending. The Prime Minister and the Deputy Prime Minister may have likened the economy under the last Government to “rubble”, but the last Government understood the regions and gave real teeth to regional development.
For example, the north-east regional development agency—One NorthEast—was one of those rarest of things: a public body with almost unanimous support that attracted praise from public and private sectors alike. However, a subtle criticism I have of the agency is that the region should have capitalised on the opportunity that it provided to take strides on its own. With a regional assembly that is democratically legitimate, our region would certainly be in a stronger position to attract business as well as to retain it, rather than witnessing what we are seeing in some areas: a partial and gradual leakage of industry from our region.
Praise for One NorthEast is well deserved. An independent report by PricewaterhouseCoopers showed that regional development agencies return £4.50 to regional gross value added for every £1 spent, if allowance is made for the expected persistence of economic benefits. Furthermore, the National Audit Office’s independent performance assessment concluded that One NorthEast was performing strongly. So why has it been abolished, especially after the Business Secretary said that the regions could decide what best suits their area? The only answer can be that the Conservative-led Government’s business policy is dictated from an informed position, but one that looks from London. It is a policy that will work, but not for all, and is ultimately submerged in an ideological fervour. It is formed not by regional or local opinion but Whitehall dogma. However, I reiterate that I do not believe that Ministers are stupid or ignorant of economics; they are simply applying a view that does not have a kernel within my region, and which does not redistribute wealth.
One NorthEast is the body that helped to set up and support the North East of England Process Industry Cluster, which made £1 billion gross value added in six years with just £3 million of public support. However, in addition to the scrapping of One NorthEast, we have now seen the abrupt end to the emergency package devised for Teesside in the wake of steel job losses. That fund targeted jobs growth in the chemicals sector, particularly in the growth area of agri-chemicals, as an alternative to lost steel jobs. Obviously, we have had the excellent news of the investment by SSI at Teesside Cast Products. However, that emergency jobs scheme has been axed, even though it is still allocating work and has £18 million in uncommitted funds that could have been used to support and enhance the objectives of NEPIC members’ companies.
Now we hear that a long-standing and successful job creation fund, which in the past decade has helped to create many hundreds of thousands of jobs in areas such as the north-east, is to be axed by stealth. That fund—the grants for business investment scheme, under the name regional selective assistance—has been responsible in the north-east for pumping £112 million into poorer parts of the region, helping to create 25,000 jobs. In various forms and under successive Governments, the scheme has been in place since the late 1960s. It survived the Heath years, the 1970s Labour Governments and even the Thatcher and Major years, as well as the following Blair and Brown Governments. Despite differences of economic policy, all those Administrations recognised the value of regional selective assistance. Throughout that whole post-second world war period, that element of consensual “Butskellism” remained and only now has it been totally dismantled.
The Chancellor has announced the creation of at least 10 enterprise zones across Britain, in a scaled-down revival of Margaret Thatcher’s flagship urban renewal programme of the 1980s. The Chancellor hopes that those zones, which will offer simpler planning rules and corporate tax breaks, will accelerate development in areas that already have high growth potential. They will not simply be created in areas of physical decline. However, sceptics believe that they could be ineffective and that the appeal of the tax breaks will be limited by the fact that only £100 million of Government subsidy will be available, spread over four years.
The Chancellor’s announcement is part of a wave of initiatives to be unveiled by Ministers before the Budget tomorrow, all of which are intended to prove that the Government have a coherent strategy for growth. He will announce at least 10 zones, which are expected to be chosen by Ministers on the basis of submissions by councils and business leaders. To address fears that this is a top-down initiative that might sideline town halls and local enterprise partnerships, the Chancellor will say that local authorities will be able to keep all of the business rates that they raise in the new zones.
However, retention of the business rates will almost certainly benefit a number of London and south-east areas. In fact, the special interest group of municipal authorities, or SIGOMA, analysis of 2009-10 settlement-based grants showed that the top 10 councils to benefit are Westminster, City of London, Surrey, Hertfordshire, Hillingdon, Hampshire, Camden, West Sussex, Kent and Essex. The London boroughs of Westminster, Hammersmith and Fulham, Kensington and Chelsea, and the City of London will gain £1.6 billion in total in local spending, whereas the north-east, north-west and Yorkshire will lose out by £760 million in total.
The Chancellor insists that the coalition’s initiative will shift growth from London and the south-east to other regions, and he says that it contrasts with what he claims was Labour’s attempt to micro-manage the economy. He told his party’s spring conference in Cardiff:
“Our approach is different: tax breaks and less bureaucracy, not quangos and more regulation.”
James Wharton
As I sense that the hon. Gentleman might be moving on in his speech, it is important to put very clearly on the record that, although he and I disagree about enterprise zones, there is a great deal of support right across Teesside for the campaign to get an enterprise zone in our local area. That support comes from not only me and the hon. Member for Redcar (Ian Swales) as local MPs but Ray Mallon, the mayor of Middlesbrough, and business people such as Steve Gibson, who is the chairman of Middlesbrough football club, as the hon. Gentleman knows. Moreover, the local enterprise partnership is extremely keen to secure an enterprise zone. It is important that the Minister hears those comments, which should be on the record. We really want an economic zone, although I acknowledge that the hon. Gentleman, who represents a neighbouring constituency, has a different view of the success of such zones from me.
Tom Blenkinsop
Yes, I know Steve Gibson—I am a season ticket holder at Middlesbrough FC. I partially agree with what the hon. Gentleman has said. Local authorities, business leaders and LEPs have to work within the frameworks and structures that they are given, and they have to make those frameworks and structures work. However, this is a broad debate about the policy, and if I did not talk about the economic implications of the policy, I would not be doing a proper service to my constituents.
Reviving enterprise zones will prove ineffective, even if that aim is achieved at less cost than that of the 1980s model and the zones are redesigned for today’s circumstances. The Work Foundation and the Centre for Cities think-tanks argue in recently published reports that zones created under the now Lady Thatcher and Sir John Major created too few jobs and were too expensive. The Work Foundation has said that such zones typically created only a three-year boost before areas lapsed into depression, and that up to four fifths of jobs were simply displaced from other areas, often within the same town.
London’s Isle of Dogs—now Canary Wharf—was among the most successful of 38 enterprise zones created between 1981 and 1996, but others in places such as Middlesbrough, Speke, Hartlepool and Swansea left a less impressive legacy. The EEF manufacturing association has said that the policy sounds like a return to the past. The rhetoric deployed by the Government indeed sounds attractive, but I signal real caution and suggest to them and to supporters of enterprise zones that they reacquaint themselves with Teesside’s history in the 1980s. Enterprise zones offer potential relief on local business rates, reductions in corporation tax or national insurance contributions, tax credits or capital gains allowances on investment in premises, and the relaxation or fast-tracking of planning processes and capital expenditure subsidies. Did that work in the ’80s throughout the north-east, and throughout all sectors and, more importantly, will it work now in 2011? I had a look at my old economics notes from Teesside university, and all the evidence from the past suggests that enterprise zones did not work, and possibly will not again.
Locally, Middlesbrough’s Riverside Park, which has since been very successful, was designated as an enterprise zone, but all that happened was a rush to get speculative office development off the ground with no tenants and no businesses to fill the new buildings. That, of course, did not worry the developers, who simply benefited from the tax perks from building in an enterprise zone and allowed the empty buildings to be used to make artificial losses, which reduced the total taxation on their developments elsewhere. Such experiences, bar perhaps the Metro centre and Black and Decker in Durham and the London Docklands, were admitted as a failure at the time by the Thatcher Government. In their official evaluation, the Government admitted that between 1981 and 1986 they poured £300 million into the scheme but created only 13,000 new jobs nationally, which equates to £45,000 of public cash per job at the mid-1980s value of sterling. The same study also stated that enterprise zones mainly encouraged job displacement rather than real new jobs, and it showed that 25% of new jobs in enterprise zones were displaced from within the same town.
Repeated today, that type of local displacement risks seriously destabilising our local economy, as it involves artificially enticing businesses into what could be seen as less competitive areas within the same town. On the face of it, it might seem obvious that lower taxes boost business, but that was not borne out by experience. It quickly became clear for the majority of small businesses that their biggest concern was about making a profit in the first place, and about the risks associated with achieving that, rather than about tax on revenue or profit. Questions of rent, skilled workers and access to markets were more significant than a temporary lifting of a tax burden in a specific area rather than across the board.
The only people who benefited in the 1980s were the developers, not wealth-creating manufacturing businesses. We should not dismiss out of hand any proposals to encourage job creation and, for the sake of my area, if the plan goes ahead I will wish it every success, but the evidence of actual gain is thin indeed. Some already established businesses and their owners might see it as a helpful tax avoidance scheme, but that only benefits the already rich by possibly multiplying their wealth and does not create any added value.
Guy Opperman (Hexham) (Con)
I congratulate the hon. Gentleman on securing the debate, because it is a very helpful process. I have listened for 23 minutes now, and there is a great deal of criticism of what is being tried by the Government but no alternative being put forward. I look forward with great interest to hearing what the alternative will be—
Guy Opperman
The hon. Gentleman says that, but someone has to pay back the £120 million-a-day debt. Speaking as the son of manufacturers who have been in the industry for many years, what the hon. Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) describes is not necessarily how my family have found it.
Tom Blenkinsop
I will come on to discuss the alternatives. We have seen borrowing increase by £2 billion, and certain policies, which I will come on to later, have economic effects on the national economy, and more profoundly on that of the north-east. Those effects will be part and parcel of the package due to inflation, and the retail prices index is currently running at a 20-year high. Such national policies are being put in place to deal with the deficit, but they seem to do only that, rather than presenting a progressive or prospective economic plan.
Turning to industry, chemical firms with major operations on Teesside, as well as our local steel producers Tata, have grave and well-founded concerns about industrial growth policy. I am, of course, talking about carbon floor prices. A consortium of firms, including SABIC, Lucite International and GrowHow, has recently criticised the Government’s energy strategy, justly claiming that it hinders the competitiveness of UK manufacturers more than any employment regulation or tribunal. The implementation of a minimum price for carbon will add a minimum of 20% to energy-intensive users’ energy bills. If the policy is implemented, our nearby EU competitors will no doubt exploit the situation, as will competition further afield. The policy will hinder further inward investment, and might lead to the departure from our region of good companies that provide long-term, well-paid, skilled work. EU competitors have attempted and then pulled away from equivalent policies. Changes to the carbon reduction commitment scheme, which amount to a £1 billion tax, will also delay green investment and hurt small downstream industry that aids steel production in the UK. Ultimately, potential and existing investors will move abroad to less efficient and less green arrangements, which will not benefit our economy either nationally or regionally.
Alex Cunningham (Stockton North) (Lab)
Yesterday evening, some other MPs and I met some of the major companies in the energy-intensive industries, many of which are in our constituencies in the north-east. The Government plan to have carbon capture programmes, but none of them takes into account the specific needs of those industries. Does my hon. Friend believe that the Government should think again, and instead of just concentrating on energy plans concentrate on the needs of industries as well?
Tom Blenkinsop
My hon. Friend hits the nail right on the head. Whatever policy we have—an agglomeration policy, or a slightly different industrial policy—the energy factor, which I will go into in more detail later, will have a more and more profound impact on industry’s ability to retain and maintain its current position as well as to invest. Teesside is potentially one of the key areas in the country, never mind the region, for that investment, particularly in the chemical and steel sectors. My hon. Friend makes an excellent point.
Of anything that I say today, I beg the Minister to take that message about carbon floor pricing back to the Department for Business, Innovation and Skills, the Treasury and the Department of Energy and Climate Change, to block any moves that will hurt our north-east in general, and Teesside’s industrial core in particular. The announcement of a supposed regional growth strategy for the north-east as part of the comprehensive spending review is at best misleading and at worst a smokescreen to hide the deep cuts that will stunt economic growth in our region. The regional growth fund will also have to finance bids for housing and transport plans, so it is obvious that even a successful LEP bid to the fund will mean only a small slice of a very small cake. The fund was designed to redress the regional imbalance in the economy, so surely providing funds to companies in the affluent south-east will undermine its objectives.
I am also extremely concerned that the Government may well be turning away millions of pounds of EC funding for new economic initiatives and infrastructure projects, because their blunders over the winding-up of the regional development agencies means that they do not have the match funding for those job-creating schemes. On Teesside that is made worse, as the back-up service for a Tees valley LEP will rely on the existing Tees Valley Unlimited agency and its staff. However, that too has had £7 million of its £9 million budget slashed. There will also be a real terms cut of 9% to the science budget, which threatens to leave the UK behind international competitors such as the US and Germany, which are still increasing their science spending despite the economic climate. Even the Minister for Universities and Science said recently that scientific research contributes to long-term growth. If the Chancellor agrees with that, why are we not increasing the science budget like other countries?
The Government announced in the CSR that £1 billion would be provided to fund carbon capture and storage. According to Jeff Chapman, chief executive of the Carbon Capture and Storage Association, that will fund one project,
“but it’s not enough for four”.
I argue that the Wilton site, in the constituency of the hon. Member for Redcar (Ian Swales), is ideal for the project in many respects.
We must be able to capitalise on foreign export opportunities, yet we must not rely wholly on them. As I have said, this Government have given absolute economic primacy to deficit reduction. That has massive implications for a sector-led agglomeration anywhere in England, but it will particularly affect how potential foreign export purchasers view England, especially the north-east.
Chemicals are a major player nationally as well as locally on Teesside, and they make up more than 30% of UK economic exports. Teesside has massive potential, with projects such as Chain Reaction by PD Ports at Teesport and Hartlepool, agrichemicals as a new growth sector, petrochemical developments, SSI and Tata at Teesside Cast Products and many more.
US ambassador Louis Susman has questioned the wisdom of the Chancellor’s massive spending cuts, warning that they risk plunging Britain into a double-dip recession. His remarks echo those of leading economists at the International Monetary Fund, who said last week that the US and EU economies remain too fragile to absorb major deficit cuts, concluding that additional spending and tax breaks would be a much more sensible strategy. In an interview with The Daily Telegraph, Susman praised the Chancellor’s determination to eliminate the deficit within a single Parliament as “very admirable”, but warned:
“But the question is, is it too much, too fast? We worry about double-dip recession and the lack of growth.”
So do I.
China reported a trade deficit in February of £4.5 billion. Exports from China grew by 2.4%, which was less than expected, mainly due to the appreciation in value of China’s currency. However, growth in imports also decreased from an expected 30% to 19.4%. We must remember that under Labour, between January and August 2010, exports to China from the UK rose by 44%, which especially helped manufacturers. Between January and April 2010, manufacturers boosted UK exports by £21.3 billion. The demonstrable reduction in Chinese demand is having huge effects on other international economies that export or rely on exports.
The coalition Government must understand that an export-led growth strategy alone will not suffice. Besides the obvious structural unemployment issues—the skills of redundant public service workers in the north-east will not match the growing sectors, if any grow—manufacturing sector credit squeezes in China, the terrible floods in Australia that have limited coke exports, desperate earthquakes and tsunamis in Japan and ongoing events in Libya, Bahrain, Yemen, Saudi Arabia and the wider middle east and north Africa will affect an overly optimistic and wholly reliant British exports policy. Iron ore, steel, cotton and other commodities are peaking at extraordinarily high levels. More importantly, coal, gas and oil markets are peaking as Japan, China, and Germany re-evaluate their nuclear policies, which is already affecting our access to fossil fuels and their domestic and industrial usage and price. That will undoubtedly affect not just our north-eastern industry but our national export capability.
By betting the house solely on exports, we expose ourselves to a potential backfire. However, public sector investment and an export policy need not be mutually exclusive. Obviously, we can pursue an export policy while retaining our levels of public sector investment in the north-east. Again, however, an export policy with no real investment and no public sector expenditure belies the coalition’s policy of giving economic primacy to deficit reduction. We should not reduce the deficit at the price of our public sector and, in turn, of the small and medium-sized businesses in the north-east that rely on it.
The planned changes implemented so far include a rise in VAT to 20%, which will affect consumer spend. Businesses such as leisure, hotels, restaurants and retail will bear the brunt. Indeed, figures from the Office for Budget Responsibility stated today that the consumer prices index was at 4.4%, double the Tory-led Government’s estimates. I am a traditionalist, and as a former union officer I never dealt in CPI, but always in RPI. The OBR says that the retail prices index has risen from 5.1% to 5.5%, the highest in 20 years. Funnily enough, that was the last time there was a Tory Government. We have had the wrong kind of snow from this Chancellor, and now he claims, as he did on the front page of the Financial Times, that we have the wrong kind of inflation, causing him to have to borrow £11.8 billion, up from £9.5 billion last year. I thought that we were making cuts in order to reduce loans.
The effects of the Government’s policies resonate hugely, and nowhere more than in the north-east. R3, the association of business recovery professionals, regularly contacts me regarding time-to-pay arrangements for small and medium-sized businesses, especially given the impact of oncoming public sector cuts. Time to pay is crucial in the north-east to help the self-employed and small businesses currently in trouble to avoid insolvency and prevent the further private sector redundancies that will be inevitable after public sector cuts.
R3 surveyed 300 small businesses and found that one third relied wholly on public sector spending in one form or another. The survey was nationwide, and things will undoubtedly be more severe in the north-east. The situation will be more acute, of course, if interest rates increase on top of the inflationary figures estimated today by the OBR.
On behalf of small businesses, I welcome the Government’s potential simplification of tax, especially if national insurance and income tax are combined. However, the Government could go further for the north-east and its small businesses. High streets in ancient market towns such as Guisborough, Brotton, Loftus, Skelton, Saltburn and other East Cleveland villages need help. Some great small businesses are developing in my constituency. Coastal View, for example, is a new free monthly paper that advertises other local businesses. In south Middlesbrough, retail is also key at shopping areas such as the Parkway in Coulby Newham, Easterside, Marton, Marton Manor, Hemlington and Park End.
Self-employed women and men in my region need quick assistance. On behalf of small businesses, I ask the Minister this: rather than enterprise zones, could the north-east as a whole pilot a 5% VAT rate for construction? Evidence in France has shown it to have turnover benefits of 7%. The Government must act on VAT and fuel duty, and the consensus on that is cross-party, especially on fuel. The 5% VAT rate could be extended in turn to public houses, restaurants and food service in general, helping struggling small businesses while aiding our region’s burgeoning activity tourism economy. Similarly, VAT exemption rates could be lifted from £60,000 to £90,000 for small businesses and the self-employed, bringing in broadly the same revenues for the Treasury while giving small business a break. Again, that could be piloted in the north-east.
I give the Government credit for relaxing planning regulations to allow some commercial properties to be changed to housing accommodation. It might prove a more viable solution in rural areas of my constituency, particularly on certain high streets in East Cleveland. Even so, small businesses will become increasingly key in the fine economic blend of the north-east region.
I understand that I have raised many sectoral topics and a diverse array of issues, but I look forward to any response that the Minister can give.
Guy Opperman (Hexham) (Con)
It is a great pleasure to follow a fine, long and detailed speech that took us on a lovely journey through your constituency and touched on many local areas, but not on many others. I waited—I probably waited too long to intervene—for you to acknowledge that the £120 million-a-day debt with which the Chancellor must deal is something that you caused. It did not arise out of nowhere. I hope that it is accepted that whoever was in power—this applies just as much to your good selves as it does to us—would have had to deal with that debt. To ignore the huge debt that we must deal with when addressing the economics of the situation is unacceptable.
If I counted correctly, there were few things of which you were in favour: simplification of tax, a possible VAT cut to 5% and the relaxation of some planning regulations. In 35 minutes, almost no description of anything that we are doing did not chime with McCarthyite zealotry, which is the most eloquent and powerful description of what you were trying to do—
Martin Caton (in the Chair)
Order. Mr Opperman, you keep saying “you” and “your”. You are supposed to be addressing me, and you are ascribing to me views that perhaps I do not hold.
Guy Opperman
I apologise. That is entirely true, Mr Caton. I could not possibly comment on whether anybody had McCarthyite zealotry.
I have listened to the hon. Member for Middlesbrough South and East Cleveland and hope that he will advance the issue. It is wrong, however, to describe enterprise zones as a bad thing and to say that policies should be implemented in a way that ignores tremendous benefits. I am sure that my hon. Friend the Member for Redcar (Ian Swales) would describe the great benefits of Corus, and we should not ignore the fact that the North East of England Process Industry Cluster has come forward. All of those are good things.
Frankly, it is important, at this moment in time, to deal with deficit reduction. If there is a manifest difference between the proposals of the hon. Member for Middlesbrough South and East Cleveland and ours, it is about whether the deficit is the key or not. I suggest that, at a time in which we are in so much debt, the deficit is always the key, because if we do not address it, we will disappear into a situation akin to that of Greece or Portugal.
Tom Blenkinsop
I do not deny that the Government’s plans are sensible, have a point and a logic, and that they might work. The point is about who they will benefit. Is this yet more trickle-down economics, or are we genuinely talking about redistributive economics? Redistributive economics favours the north-east, but I am afraid that trickle-down economics favours the south-east. The Chancellor’s plans may indeed work, but to whose benefit?
Guy Opperman
The dispute between us is fairly stark in terms of the extent to which we have the potential to repay. My view is that the Chancellor is trying—this is not something he wanted to inherit—to address the £120 million-a-day debt and to be in a position to do that. I believe that he will take the issue forward and that there are real opportunities in the way ahead. I speak as the representative of a fundamentally rural constituency, but jobs are up and the points made by my hon. Friend the Member for Stockton South (James Wharton) are fair. It will be difficult, but I am absolutely certain that the Chancellor has the right policy.
Catherine McKinnell (Newcastle upon Tyne North) (Lab)
I congratulate my hon. Friend the Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) on securing this timely and important debate, and on his excellent overview of the north-east economy. Given the particular challenges faced in a region such as ours, and the already felt and anticipated impact of this Conservative-led Government’s policies, I could touch on so many issues in this debate. However, given that Newcastle airport is based in my constituency, I think it appropriate to address the important role played by aviation in the development of the north-east economy.
With about 3,000 people on site, the airport is the largest employer in Newcastle upon Tyne North. It contributes about £400 million to the north-east economy annually, and it handles more than 5 million passengers a year. The excellent service provided by Newcastle airport to domestic and international passengers has been nationally recognised by its peers, having been voted the best UK airport by the British Air Transport Association for two years running.
Indeed, the service provided by Newcastle airport has become increasingly important to the region’s economy over the years, with the growth of the tourism industry in the past decade or so being one of the real success stories for the north-east. Tourism is now worth nearly £4 billion to the region’s economy and employs more than 65,000 people, while the increase in visitor numbers to north-east England has been outstripped only by London in recent years. To give just one example of the airport’s impact on the north-east economy, the new Emirates route that launched in 2007 saw the region’s first ever scheduled long-haul route. It flies daily from Newcastle to Dubai, and it has opened up onward connections to more than 50 destinations around the world. It has also opened up a whole new tourism market for north-east England, leading to One NorthEast’s award-winning “Passionate People, Passionate Places” campaign heading as far afield as Australia and New Zealand to target those people who were then within easier reach of our region.
The Conservative-led Government’s cuts, however, and their decision to abolish our regional development agency, mean that north-east England no longer has the capacity to promote itself as a tourism destination either nationally or internationally. This situation and the abrupt end to the “Passionate People, Passionate Places” campaign have been rightly and roundly criticised in the region.
As the Minister should be aware, north-east England is also one of the few regions in the UK with a positive balance of payments—recently published figures indicate that the total value of north-east exports was £11.91 billion in 2010. At the same time, inward investment has played an increasingly important role in the north-east economy, creating or safeguarding more than 6,500 jobs in our region in 2009-10 alone, and levering in £720 million in capital. About 82% of the inward investment came as a direct result of One NorthEast. I hope that the Minister will reflect on that serious point.
Newcastle airport plays an important role in supporting the strength of the north-east export market and our foreign trading links, providing the region’s businesses with easy access to key international markets. Direct flights from Newcastle to Stavanger in Norway, for example, have proved crucial in supporting the development of the north-east’s offshore and subsea industries. Moreover, the Emirates link to Dubai, which I have mentioned, now provides easier access to commercial opportunities in China, the far east and India, as well as the middle east.
Another key area vital to the growth of the region’s economy is ensuring that we have the skilled work force of the future. I am a passionate supporter of vocational education and apprenticeships, which is why I tabled my Apprenticeships and Skills (Public Procurement Contracts) Bill. Recently, it was a pleasure to go to the airport and meet one current and one former motor technician apprentice—one at the start of their career, the other at the end—who have both trained and worked at the airport. I also pay tribute to the £3.3million Newcastle Aviation Academy, which was officially launched in 2009 having received investment from Newcastle college, One NorthEast and the Learning and Skills Council. This top-of-the-range facility, based at Newcastle airport, provides a wide range of training in all aspects of the aviation industry, including aircraft engineering, aeronautical engineering, and airport and airline management. It is exactly the sort of thing that the previous Labour Government invested in to support young people, rather than write them off, which is what some of the Government’s policies are doing.
Newcastle airport has, therefore, played an integral part in the north-east’s economic past, and will continue to do so in the future. However, a key, ongoing issue for the airport and north-east businesses has been the impact of air passenger duty and the Government’s proposals to move to a per plane duty. Notwithstanding the importance of ensuring a greener, low-carbon economy and the important part that aviation must play in achieving that, this and any other taxation policy must concentrate not only on increasing revenue for the Treasury and greening our economy, but on rebalancing our economy in a way that will not impact disproportionately on our regions.
The Newcastle Journal’s long-standing campaign, “A Tax Too Far”, has called on Governments, past and present, to recognise the disproportionate impact of APD on regional airports. It urges that APD or PPD be restructured in line with the impact they have on regions, compared with London, and for consideration to be given to reduced rates of APD for new start-up routes in and out of the north-east. The Newcastle Journal’s campaign has clear support from the business community. In January, the Emirates vice president for the UK and Ireland, Laurie Berryman, made it clear that larger airlines would be forced to consider their position at UK regional airports if APD becomes too great and passenger numbers fall. Moreover, earlier this month, the North East chamber of commerce wrote to the Secretary of State for Transport to call for an overhaul of the APD system, stating that it has a disproportionate impact on our region’s businesses. The NECC is calling for differential rates for regional airports, to replace the current blanket duty, in order to ensure that the north-east economy does not suffer and that its export businesses can continue to grow. As the NECC chief executive, James Ramsbotham, has pointed out:
“North East businesses already face heavier costs than their counterparts in other regions in order to access common markets due to high fuel prices, so addressing the anomalies that APD gives rise to will ensure that our exporting businesses have a much better chance of realising their potential.”
Of course, if differential rates of APD or PPD were introduced for regional airports, it would also reduce pressure on Newcastle airport’s already overcrowded south-east counterparts. In the words of Graeme Mason, head of corporate affairs at Newcastle airport:
“By freezing or reducing the rate of APD out of regional airports, the Government could, at a stroke, rebalance the economy, reduce the North-South divide, and take the pressure off the South East.”
An announcement on the issue is expected in the Chancellor’s Budget tomorrow. Will he recognise the regional impact of tax and provide a real stimulus for regional economies like ours in the north-east in his so-called “Budget for growth”? Like Newcastle airport, the North East chamber of commerce and many other north-east businesses, I—and I am sure my colleagues—await the Chancellor’s announcement tomorrow with great anticipation.
Ian Swales (Redcar) (LD)
I congratulate my hon. neighbour—as I suppose I should call him—the hon. Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) on securing the debate and on his powerful and very well-researched speech. He has done excellent work.
As we know, the north-east economy is largely founded on the historic industries of coal mining, ship building and steel manufacture. For decades, we have had issues with both the run-down of those industries and the run-down of employment in those industries, even those that continue. Although the news of the revival of the steel industry is very welcome in my constituency, I do not think it will employ 10,000-plus people again, which it did not so long ago. There has been a long history of assistance being given to the north-east in relation to various coal and steel closure areas and regional development grants. In the 1980s, I remember filling in the forms for regional development grants in a former life. There has been a long history of needing to do something about the north-east, and various Governments have continued that.
I accept the points made about the RDA. RDAs around the country have had patchy success. However, I think that even the other RDAs would recognise that One NorthEast was probably the best and most successful. I pay tribute to the former Minister for the North East, the right hon. Member for Newcastle upon Tyne East (Mr Brown), for his passion and advocacy both of RDAs and the region. Something we should all recognise in this place is that what divides us politically is far less than what joins us when it comes to regional issues.
The RDA did good work but, as I said in the recent debate in the House led by the right hon. Member for Newcastle upon Tyne East, we need to consider the study done last year by Experian and the BBC. They looked at 324 areas in the country in terms of economic strength and rated Hartlepool as 314th, Redcar and Cleveland as 319th and Middlesbrough last at 324th. Whatever else has happened, we have not driven the Teesside area up the economic league. The only time we had any significant urban renewal in Teesside was from 1987 to 1998, when we had Hartlepool marina, Stockton riverside and university campus, Teesside barrage and waterpark, Teesside retail and leisure park, and Middlesbrough riverside. That was the period of the flawed but, nevertheless, energetic and focused Teesside development corporation, which was scrapped by the Labour Government when they came to power. Much less has happened since in that regard.
I shall turn to transport. The Tees valley is the birth place of passenger railways. If someone were to ask in a pub quiz where the first passenger railway was, most people would say that it was Stockton to Darlington, which runs along the Tees valley. So where are we today with our railways? We still have a railway that runs from Darlington, almost touches Stockton and goes all the way through to Saltburn. It passes very close to the Riverside stadium, but does not stop there; it passes very close to Teesside retail and leisure park, but does not stop there; and it passes within half a mile of Teesside airport, but does not stop there. Is there another airport in the country that has virtually no public transport? The failure to even allow a railway that already exists close to Teesside airport to be part of the transport structure in the area shows that there is an awful lot to do. Middlesbrough is the largest town in the country without a direct link to London, which is another example of what is left to do. We have some real issues to deal with and real work left to do.
In business, I always used to say that one could tell whether a committee was any use, first, by how it was formed—did it form itself?—and, secondly, whether people attended it. Teesside Valley Unlimited formed itself as a private-sector led, private-public partnership about five years ago, because of the perceived needs of the Tees valley and the difficulties there. It is no surprise that that organisation was very quick out of the traps when it saw the opportunity to have a local enterprise partnership for the area. I know that that enraged some people further north and that it was felt to be a fragmentation of effort that may lead to outcomes that are not as good.
Alex Cunningham
I have always been a one region person. Although I congratulate the people of Tees valley on putting together the first LEP in the region, does the hon. Gentleman not agree that it is important that the north-east—the smallest region in the country—works closely together and has a tremendous partnership with our local authorities and other organisations in order to drive the region forward? We should not simply try to plough our own furrow, as some people would have us do.
Ian Swales
I was about to come on to that matter. I thank the hon. Gentleman for his question. Absolutely, we need one regional voice on a number of issues. This Government perhaps differ from the previous Government in that we do not see the need for such an approach to be prescribed in detail for every region. I hope that the existing structures can make decisions, create what they think they need and make it work. If there are two LEPs in an area, the Government are not prescribing that they cannot talk to each other and say, “Okay, let’s jointly work on this.” A good example is European funding. The Government have already decided to retain a regional focus for European funding, because that is what is necessary.
Tom Blenkinsop
The hon. Gentleman is an excellent advocate for the region, and it has been a pleasure working with him on getting steel back to Teesside. However, there are some fundamental problems with the LEP structure. Let us consider, for example, Hitachi. As he has rightly mentioned, that is a great success story for the region. How will small and medium-sized enterprises in the Tees Valley LEP that want to grow around Hitachi, which is not in the Tees Valley LEP, interact with the new LEP, the North East Economic Partnership and the other structures?
Ian Swales
I thank the hon. Gentleman for mentioning that. Not everything happens through Government agencies. Business is business. If I were running a business, or if I wanted to run a business in the Tees valley, and I knew that a train manufacturing facility was being set up 10 miles away, I would not need a Government agency to lead me to talk to people and make things happen. We have suffered from the idea that people wait to be told what to do, and that is a good example.
Tom Blenkinsop
That still does not answer my point. If an SME wants to get regional growth fund funding, which LEPs does it talk to? Does it talk to both? Does it also talk to the NEEP, or does it talk to the Department for Business, Innovation and Skills and the Treasury directly? It seems that the need for further meetings will increase, rather than decrease.
Ian Swales
Okay. I will be more specific for the hon. Gentleman. Clearly, if a business wants to base itself in the Tees valley and has customers—wherever they are—it should talk to the Tees Valley LEP. If those customers happen to be in the region, that is fine. I do not see a problem with that. As I have said, there is no law that states people cannot talk to each other.
An almost religious adherence to the regions has had some benefits, but it has also created some problems. In 2004, the people of the north-east firmly rejected the idea of regional government. Some of us regretted that more than others, but the decision was absolutely overwhelming—not just from the fringes of the north-east but from the heartlands of Tyneside and Wearside.
Ian Mearns (Gateshead) (Lab)
I welcome the hon. Gentleman’s point, but I think that he accepts that if he wanted to put together a worse set of circumstances to get a yes vote, it probably could not be done. Does he agree with that?
Ian Swales
Absolutely. One issue was whether central Government were prepared to release enough powers. I remember reading the document and being unimpressed by such statements as the “power to advise Ministers”, which did not strike me as a particularly powerful power, so I agree with that. Regionalisation, however, has had some impacts—I will come on to wider issues in a moment—on the Tees valley. For example, our area, which contains 750,000 people, has been deemed unable to run our own ambulance service, which has been moved out of the area. The fire service was about to be moved, and an attempt was made to try to get the police to merge with another organisation. We need to stand up strongly for what is a very natural, large area of population, and, sadly, regionalisation has not always helped.
[Mr Edward Leigh in the Chair]
I am not a “little Teessider”—my wife comes from Stanley, which is quite a bit further north. My right hon. Friend the Member for Berwick-upon-Tweed (Sir Alan Beith) would not let me get through this debate without mentioning the dualling of the A1. Just in case hon. Members did not think that was going to happen, it has happened. [Interruption.] Sorry, the dualling has not happened. I have mentioned it on behalf of my right hon. Friend. It would be great if that dualling were to happen. I recognise that the north-east has a lot of coherence, though it seems a long way from the end of my constituency to the north of my right hon. Friend’s constituency.
The north-east has a lot of strengths. In many cases, we can work together. In other cases, it is not appropriate to work together. There are enormous strengths in terms of industrial background and the conversion of people and industries in those historic sectors to doing new things. We have people who are highly skilled, as the hon. Member for Newcastle upon Tyne North (Catherine McKinnell) has said. We already show, particularly through process industries and other manufacturing, that we can make and export things, and I know that the Government are very keen to see that happen.
On rebalancing the economy—yes, the process is redistributive, but as the hon. Member for Hexham (Guy Opperman) has said, what is it redistributing?—we know that the country has a huge economic problem at the moment. I welcome mechanisms such as the regional growth fund, but we have a massive issue in terms of small and medium-sized enterprises. I hope that the Minister will respond specifically to this point: 97% of the grants given out by One NorthEast were less than £1 million. That £1 million threshold has to be very short-term. If the board of the regional growth fund cannot consider hundreds and hundreds of projects, then we need a programme mechanism beneath that board.
Ian Mearns
It has been estimated in some quarters that the potential growth in supply chain jobs from the Hitachi development is as much as 7,000 jobs. There is very little chance, however, of 7,000 supply chain jobs in the north-east of England coming from the SME sector, if there is not much more flexibility in the distribution of the regional growth fund and in grants that are fit for the SME sector. At the moment, such grants are out of reach for many businesses.
Ian Swales
I welcome that intervention, which powerfully supports the point that I was just making. I hope that the Minister will respond to that point.
I would just like to mention two other issues that the Minister could perhaps touch on. One issue relates to energy prices.
Mr Edward Leigh (in the Chair)
Order. I hope to start the winding-up speeches at 10 minutes past 12, and the hon. Member for Stockton North (Alex Cunningham) wants to come in. Perhaps the hon. Gentleman will bring his remarks to a close.
Ian Swales
I will do that, Mr Leigh.
Energy pricing has already been mentioned by the hon. Member for Middlesbrough South and East Cleveland. I also want to press the Government on the Infrastructure Planning Commission. We have a large project in my constituency at the moment that must divide itself, completely artificially, in two. Part of the project is supposedly covered by the Infrastructure Planning Commission and part of it will be approved by the local authority. It is costing the business a fortune to fight two planning processes.
I will draw my remarks to a close now. Again, I congratulate the hon. Member for Middlesbrough South and East Cleveland. As I have said, there is a lot more that joins us on these issues than that separates us.
Alex Cunningham (Stockton North) (Lab)
I will cut parts of my speech to make your deadline, Mr Leigh.
In the past 10 years or more, there has been a radical change in the mix of industry, business and public service in the north-east. Much of that was led by One NorthEast, the regional development agency, and by forward-looking local authorities of all political colours working in partnership. The result was that the north-east was slightly less vulnerable when the world economic crisis hit us, but we still need major change and investment to ensure that the region does not slip way back to where we were in the 1980s and 1990s. The number of unemployed claimants in my constituency of Stockton North in February 2011 was 3,812. That is 9.2% of the economically active population aged 16 to 64, which is a good reason why we need growth not only for my constituency, but for the whole north-east, where 10.2% of people are unemployed.
I would like to make a final comment on the RDA—I am sure that many hon. Members will welcome my saying that. Other RDAs may not have been a resounding success, but One NorthEast was. It was an organisation that we could be proud of. It played a huge role in developing the region’s renewable industries and in helping local firms grow. More importantly for me was that it also put together strategic land and other assets—packages—to build on for the future. With the demise of One NorthEast comes the question of what will happen to its assets. I am very worried that the Government might be preparing a fire sale for billions of pounds of RDA assets, such as business parks and development land, or that they will just pool them into some central bureaucracy in London. We argue that local enterprise partnerships should have first say over the RDA assets, which would enable real local influence. LEPs currently have one hand tied behind their backs, with no dedicated funding stream to aid them with their start-up costs and initial research. That would give them a real boost and real clout. To deny them operating funds is like giving a child a toy and forgetting to put the batteries in it.
Tees Valley Unlimited, the new LEP in my area, has confirmed that it has submitted 20 bids to the Government’s regional growth fund, asking for almost £80m of support. If granted, I am told that those plans have the potential to create a significant number of jobs. However, as we know all too well, the total pot of money for the regional growth fund is not nearly enough at £1.4 billion over three years. In comparison, in 2010-11 alone, the RDA fund for one year was £1.4 billion. It is clear that the money will be spread thinly. In the first round, which closed in January, bids worth £2.78 billion were made to the regional growth fund. Clearly, many bidders will be disappointed tomorrow, when I understand that we will learn who has, and who has not, been successful.
On a more positive note, I was pleased to learn in October that the Government are committed to offshore wind and did not cut Labour’s £60 million investment in our ports to ensure that that part of the renewable industry is supported and encouraged to invest in the north-east. We have yet to see whether the Government will deliver on that. If we are to meet EU targets that require Britain to increase the proportion of electricity that comes from renewable sources, from 7% to 30% by 2020, the Government must do more on renewable industry. Despite rising unemployment and the sluggish economy, there are a few good stories in region. The Hitachi trains were mentioned earlier, and the campaign led by my hon. Friend the Member for Sedgefield (Phil Wilson) for investment from Sahaviriya Steel Industries in Teesside steel, will create or secure hundreds of jobs.
We wait to see whether there will be a Budget for real growth, backed by substantial resources when the Chancellor stands up tomorrow. Resources must be the key. A jobless recovery would be a disaster for our region, and without growth there will not be enough new jobs. So far, the Government have been much too focused on the Budget deficit, cutting too far and too fast. I hope that they have finally realised that without a genuine plan for growth and real resources, the economy will continue to be sluggish.
Ian Lucas (Wrexham) (Lab)
It is a pleasure to address colleagues under your chairmanship, Mr Leigh, for the first time, I believe. I congratulate my hon. Friend the Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) on securing this debate, and hon. Members on their interesting contributions. I wish we had more time, because I am sure that more could be added to the debate. I shall not deal with each of the speeches now but will refer to them in my comments.
It is imperative that the north-east has a strong voice in Parliament. The new generation of MPs who came into Parliament in the last general election are a powerful group who have contributed hugely to the voice of that region being heard in Parliament, and I am sure that they will continue to do that. That is enormously important when we know that regional assemblies have gone away for a while and that the Government’s focus is on local government.
The north-east is a powerful region. I was born there, and I am proud of the fact that I come from there. It has a distinct identity within England, and Ministers have to understand that. The voices that we have heard included that of my hon. Friend the Member for Newcastle upon Tyne North (Catherine McKinnell), who spoke about Newcastle airport. She told us how important its development has been to the region and how it has introduced so many more tourists to the area. People are able to see what a beautiful region it is and what a superb place it is to invest in.
We heard from my hon. Friend the Member for Middlesbrough South and East Cleveland about the varied industries in the north-east, from the chemicals sector, which is long established on Teesside, through, of course, to coal, steel and shipbuilding, which, I am afraid is long gone. The demise of those industries under the previous Conservative Government largely forged my identity in politics. The concern of Opposition Members is that the policies that are being pursued by this Government are a rerun of policies in the 1980s. We profoundly disagreed with what happened and think that it is a mistake to repeat it.
The hon. Member for Wrexham—I am sorry, the hon. Member for Hexham (Guy Opperman)—made some succinct comments about the deficit. Labour Members accept that it needs to be reduced, but we remember that 3.5 million people were unemployed in the United Kingdom under the previous Conservative Government, as opposed to the 2.5 million who are unemployed now. All those people received benefits that were paid from taxpayers’ money, and largely funded by the benefits the Conservatives received from the North sea oil revenues that were available at the time. That waste and spending of public money will be repeated if this Government continue with their policies, which will create a lack of confidence in the economy and business community, and less demand in the economy, less consumption by people and a smaller market. All that will lead to increased unemployment, increased burdens on the state and the type of long-standing depression that we had in the ’80s and again in the ’90s, when unemployment reached 3.5 million again.
Fortunately, the north-east has developed its economy since the 1980s. There has been development in the constituency of my right hon. Friend the Member for Newcastle upon Tyne East (Mr Brown) at the Clipper site, which is a magnificent site on the banks of the Tyne, and development of the low-carbon industry in the north-east with companies such as Romag, which brings so much benefit and forward thinking to industry.
I should mention at this juncture the appalling decision by the Government to bring forward the review on feed-in tariffs, which is hugely damaging for companies such as Romag. The Government purport to know something about business, but that review will result in a lack of long-term stability for decision making. Business complains so much about that. The Government are changing a successful scheme, bringing forward a review, creating instability and creating difficulties for successful businesses that are benefiting not from state support but from direct investment, often from outside the UK. The whole industry would welcome the Government’s looking at that again.
It is important that we accept that regional development agencies are no more. I have attended several debates, and know about the success of One NorthEast. The hon. Member for Redcar (Ian Swales) recognised it in an interesting speech. However, we are moving on. The Government, as they are entitled to, are talking about local enterprise partnerships now, and we need to ensure that they work for the benefit of the north-east region. We need to address what I consider to be some of the failings of LEPs.
The first failing is the lack of resources. LEPs cannot sensibly contribute to driving the region forward if they do not have the resources to set up and develop businesses in their area. It is important that the partnerships should have resources. Of course they need to work with other LEPs in the region, but it is interesting that the Government themselves are showing a lack of confidence in LEPs; for example, on the hugely important issue of broadband. The authority that will contract for the provision of broadband services in the north-east and other areas of England will not be the LEP but the local authorities in individual regions. Having so many contracting bodies trying to formulate an infrastructure for a communications industry will be complex and difficult, and relying on delivery by individual local authorities which may or may not decide to take forward applications to develop broadband services in their area is a big mistake. LEPs, which cover larger areas and which more closely involve business than some local authorities do, should have a role in formulating a policy to take that forward.
The instruments that need to be used by LEPs must be made available to them by the Government. That must include, to some extent, financing, and it must also include the ability at least to be involved in securing funding.
We have heard references to the regional growth fund. There is general agreement in this room that there should be a rebalancing of the economy. The irony of the regional growth fund is that it is not regional at all. Its approach is entirely centralising. It is based not on localities but on a small group of people in a centralised area making decisions for areas about which they know little. That is the tragedy of the operation of the regional growth fund.
We all know that the fund is too small. The number of bids that have been made to it do not correspond in any way to the money that was available through RDAs, and we all know, as the hon. Member for Redcar pointed out, that the limits on the application of money by the regional growth fund are such that many of the grants and support that were given to small businesses in the regions will no longer be available to them. That is an urgent issue that needs to be addressed by the Government.
The other urgent issue that needs to be addressed is the lack of investment by banks and regional bodies in business and industry. We heard a massive amount about that from the Government when they were in opposition—day in, day out—but it has largely disappeared from their public pronouncements. I regret that the only thing that this Government have done as far as investment in business is concerned is to extend Labour’s successful enterprise finance guarantee scheme, which was a strong support for business and industry at a time when it was difficult to secure investment and keep businesses going.
Mrs Sharon Hodgson (Washington and Sunderland West) (Lab)
Will my hon. Friend give way?
Ian Lucas
I have only a minute left, so I cannot give way.
I remember being criticised by the Minister when I sat where he is sitting now, and I shall criticise him now, although he and I get along very well. I do not recall his criticising me for spending too much money at the time. I remember his criticising me for not getting money out more quickly in support of the car industry. I do not remember the Conservatives or the Liberal Democrats opposing the introduction of the car scrappage scheme, and I do not remember their opposing any of the support that brought fundamental investment to the UK and benefited regions such as the north-east. Only now do we hear their constant mantra. The Government’s problem is that they will not reduce the deficit. They are damaging the economy in the same way as they did in the north-east in the 1980s and again in the 1990s. I hope and pray that they do not make the same mistake again.
The Minister of State, Department for Business, Innovation and Skills (Mr Mark Prisk)
I congratulate the hon. Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) not only on the debate, but on an interesting contribution. We may disagree about the outcomes and the analysis, but a debate on how to enable different parts of the United Kingdom to grow sustainably is important. This is the first time I have been described as a McCarthyite zealot, but I shall work my way through it, and the hon. Gentleman hinted that he was perhaps not fully serious. Nevertheless, I shall put that comment up on the wall and remember.
I thank other hon. Members for their contributions. We have had an excellent and balanced debate, and it has been helpful, not least because I shall be travelling to the north-east tomorrow night, and I am looking forward to meeting some of the businesses that have been referred to. On the tourism front, if I am allowed a couple of days off during the Easter holidays, I am hoping to start at the north-eastern end of Hadrian’s wall and to head westwards.
Alex Cunningham
I am pleased that the hon. Gentleman will spend some of his money in our tourist industry in the north-east of England. Is he aware that money to promote tourism in the north-east was choked off through the regional development agency this year, and that we saw an increase in the number of visitors to Yorkshire and Cumbria to the detriment of the north-east?
Mr Prisk
The hon. Gentleman started well, before coming to a money issue. We are looking not only at the need to deal with public finances, which my hon. Friend the Member for Hexham (Guy Opperman) accurately described, but at how they are organised as we change the landscape for public bodies. We must revisit the regional approach to tourism, allied with the RDAs’ work, which is what VisitEngland will do with local enterprise partnerships and so on. I greatly value the role of tourism, but I want to move on.
The hon. Member for Newcastle upon Tyne North (Catherine McKinnell) referred to airports, and she will understand that as it is just 24 hours before the Budget, I would be wise not to pre-empt the Chancellor, not least if I hope to continue to be Minister of State, Department for Business, Innovation and Skills.
We all share the wish of the hon. Member for Middlesbrough South and East Cleveland that the north-east enjoys sustainable and long-term economic growth, which is certainly our overriding priority. We are seeking not only to tackle the public finances, as any incoming responsible Government would need to do, but to ensure that we have a new model for growth. In practice, that means not just rebalancing the geography, challenging as that will be—I will come to RDAs and LEPs—but ensuring more sustainable roles in different sectors.
The hon. Member for Wrexham (Ian Lucas) was a Minister, and we jousted when he was, but he and his colleagues were right when they established, for example, the sector skills council, Automotive Skills, so that the Government could be a better partner. We have continued it, and that sectoral role is important. In the Budget tomorrow, we will seek not merely conventional tax and spend, but to set out the detailed work that has been undertaken throughout Whitehall on a growth review looking at manufacturing, construction, retail and other core parts of the economy, so that we have an agenda and a strategy that is the most comprehensive, pro-enterprise and pro-growth Budget for a generation.
The hon. Member for Middlesbrough South and East Cleveland mentioned both at the beginning of his comments and later the role of small and medium-sized enterprises. Before I go into the specifics of the north-east’s economy and LEPs, it might be worth reminding hon. Members of the key changes that will help, and have already been announced, irrespective of what may or may not be said tomorrow. As hon. Members know, we are reducing corporation tax to 20p. We are doubling the threshold for small business rate relief, which is very important for businesses outside the greater south-east, so that for more smaller businesses that fixed overhead will fall instead of remaining as it is. Six months ago, we introduced the national insurance contribution holiday for new firms.
As the hon. Gentleman rightly said, we must encourage more entrepreneurs in the north-east. I have spoken to many SMEs throughout the country, and the shift in relief for entrepreneurs—10% capital gains tax—has given a boost to people who start a business, build a business and create jobs. Taking the limit up to £5 million is an important improvement.
Mr Prisk
With respect to the hon. Lady, other hon. Members have spoken and I should first respond to their points in the five minutes remaining.
The tax changes are important, and I hope that hon. Members recognise that they have been matched with a clear commitment to the Federation of Small Businesses on Friday that, for three years, microbusinesses—those with up to 10 employees—will have a three-year moratorium on all domestic regulation. Many SMEs have told me that the problem is not just one measure, but the fact that the Government constantly provide things to do when they want to get on and grow their business. That moratorium will be important, and it has been warmly welcomed. More will be said about the regulatory issue later.
My opposite number, the hon. Member for Wrexham—for a moment, I thought there had been a geographical shift when he referred to my hon. Friend the Member for Hexham as the hon. Member for Wrexham—talked about finance. He was right to say that there are issues. We have extended the enterprise finance guarantee, which is a scheme that needed to be extended, and we are proud that we have ensured an additional capital opportunity of some £2 billion. That should help about 6,000 additional viable businesses. We have gone further and put another £200 million to one side for capital for equity investment programmes. Those are important plans to help high-growth businesses throughout the UK. In addition, we have managed to secure from the banks a £1.5 billion growth fund to inject into SMEs. I hope that the hon. Gentleman recognises that those are important changes.
Mr Prisk
With respect to the hon. Lady, I have three minutes left. She did not make a contribution to the debate, and I must respond to hon. Members who spoke.
On the balance, there are challenges in the north-east, and no one denies that, but we should recognise that manufacturing there is doing well. A survey by British Chambers of Commerce shows that for the most recent quarter manufacturing grew most quickly in the north-east out of all the regions. Hon. Members have rightly referred to the decision on Tata Steel and Sahaviriya Steel Industries, and we hope that it will progress in the next few days or weeks, so that the agreement that was tragically mothballed a while back will be developed. Some 800 jobs will be created at the site, which will sit alongside the existing 700 jobs, but that is not all. There is a £420 million investment by Nissan, and the Hitachi development in County Durham, which are very welcome and very important.
I turn to RDAs and LEPs, where there may be a difference. No one denies that the RDAs, including One NorthEast, made successful and worthwhile ventures during their time—I accept that—but in 11 years, that agency received £2.7 billion to spend, and the reality is that the gap between the north-east and elsewhere grew. The reality of the gross value added—the measure per person—is that when it started it was approximately 83% of the national average in the north-east. Eleven years later, having spent £2.7 billion, it fell to 78%. It has not only not improved, but gone backwards.
There is a challenge, and the two partnerships that have been created, which I greatly welcome and am looking forward to meeting tomorrow and Thursday, have an opportunity to address their local priorities rather than what we think is best for them, which is an important shift. They can work together, as my hon. Friend the Member for Redcar (Ian Swales) has rightly pointed out, because they do not need Government permission to do so. I have every confidence that the business and civic communities will make that alliance and work together. We will set out the specific actions that they will be able to undertake. I will respond to my hon. Friend the Member for Redcar in writing about the regional growth fund.
The enterprise zones, which my hon. Friend the Member for Stockton South (James Wharton) has campaigned on—
Pakistan
(13 years, 1 month ago)
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Andrew Stephenson (Pendle) (Con)
In January, a cross-party group of eight UK parliamentarians, including myself, visited Pakistan to look at the challenges facing that country. Given the close historical, economic and social ties between our two nations—over 1 million people living in the UK trace their roots to Pakistan, and that country is on the front line in the war on terror—getting the policy towards Pakistan right is crucial to the UK.
The aims of the visit were to give UK politicians a better understanding of the democratic challenges facing our parliamentary colleagues in the national and provincial assemblies, to understand the impact of amendment 18 on the constitution, to energise existing bilateral links, and to learn more about the work of the UK Foreign Office, the Department for International Development and the British Council in Pakistan.
All those in the delegation hope for a longer and broader debate on UK Government policy on Pakistan in the future, and I am sure that other hon. Members in the Chamber will wish to participate in that. Today, however, I will focus my remarks on one specific issue: the murder on 2 March of Shahbaz Bhatti in Islamabad, and the plight of Christians in Pakistan.
During our visit, our delegation met Shahbaz Bhatti in the Ministry for Minorities. We discussed a range of issues, including interfaith dialogue and the murder of the Governor of Punjab, Salmaan Taseer, a Muslim politician who was killed by one of his bodyguards after he criticised Pakistan’s blasphemy laws. Shahbaz Bhatti was the only Christian in the Pakistani Cabinet, but he stood up for all minorities in Pakistan and wanted to see the tolerant, liberal and secular country envisaged by the country’s founding father, Jinnah, who said
“let all people worship freely in churches, masjids and temples.”
I will explain a bit more about Shahbaz Bhatti and his work. From 2008 until his assassination at the age of 42, he was the first Federal Minister responsible for minorities. At the time of his appointment, he said that he had accepted that post for the sake of
“the oppressed, down-trodden and marginalised”
of Pakistan, and that he would dedicate his life to
“struggle for human equality, social justice, religious freedom, and to uplift and empower the religious minorities’ communities.”
He added that he wanted to send
“a message of hope to the people living a life of disappointment, disillusionment and despair.”
During his time as a Federal Minister, Shahbaz Bhatti took steps in support of religious minorities. Under his guidance, the Government introduced for minorities affirmative action regarding 5% of all federal employment, and designated 11 August as a holiday to celebrate minorities. The sale of properties belonging to minorities while law enforcement authorities took action against them was banned, and a national campaign was launched to promote interfaith harmony through seminars, awareness groups and workshops. Shahbaz Bhatti initiated comparative religious classes in schools and universities, introduced a prayer room for non-Muslims in the prison system, and started a 24-hour crisis hotline to report acts of violence against minorities. He began a campaign to protect religious artefacts and sites belonging to minorities.
Shahbaz Bhatti, a Catholic, was also a critic of Pakistan’s blasphemy laws, and that was what led to his recent and untimely murder. He had been the recipient of death threats since 2009 when he spoke in support of Pakistani Christians attacked in the 2009 Gojra riots in Punjab, and those threats increased following his support for Asia Bibi, a Pakistani Christian who was sentenced to death for blasphemy in 2010.
Simon Danczuk (Rochdale) (Lab)
I thank the hon. Gentleman for securing this important debate and I have some brief comments. I accompanied him to Pakistan some weeks ago, and had the pleasure of meeting Shahbaz Bhatti. From that visit, we learned that the country is more progressive than one might have initially anticipated. Some laws are very progressive, such as the 18th amendment that concerns devolving power and money to provinces and regions. This Government, and the previous Government, could learn from that.
It is not for us to tell other countries what laws to have, but the issue with the blasphemy law is not so much the law itself but rather the interpretation of that law, both formally and informally. Formally, the penalties linked to the law are far too severe, and informally—this is the problem—
Mr Edward Leigh (in the Chair)
Order. This is an intervention. Please bring it to a close.
Andrew Stephenson
I agree with the hon. Gentleman. As he pointed out, we met Shahbaz Bhatti during our visit to Pakistan and we saw different sides to the country. Some things filled us with hope for the future, and some things led to real concern. That is why I hope that we can have a longer debate in which all hon. Members may participate fully and relate their experiences of the country.
Asia Bibi is a 45-year-old mother of five from Punjab province. She has become the first Christian woman to be convicted and sentenced to death, by hanging, under Pakistan’s blasphemy law. As of today, she remains in jail despite many people acknowledging that she was falsely accused of blasphemy, and repeated international calls for her release.
According to the BBC, on the day he was murdered, Shahbaz Bhatti was travelling to work through a residential district having just left his mother’s home, when his vehicle was sprayed with bullets. At the time of the attack he was alone and without any security. The group Tehrik-i-Taliban—the Pakistani Taliban—told the BBC that it carried out the attack, and it left pamphlets at the scene stating that it had done so because Shahbaz Bhatti was a “known blasphemer.”
The assassination was condemned by the Pakistani Government, whose spokesman stated:
“This is a concerted campaign to slaughter every liberal, progressive and humanist voice in Pakistan.”
President Zardari vowed to combat the forces of obscurantism and said,
“we will not be intimidated nor will we retreat.”
The Government declared three days of mourning and Prime Minister Gillani led a two-minute silence in Parliament.
Jim Shannon (Strangford) (DUP)
The hon. Gentleman will be well aware of Release International and Open Doors, two organisations that work on behalf of Christians in Pakistan, highlighting and cataloguing brutality against them by radical groups. Does he feel it is important for our Government to convey to Pakistan in strong terms that something must be done on behalf of Christians in Pakistan, to ensure that they are not subjected to authoritarian and critical blasphemy laws?
Andrew Stephenson
I agree. There are growing calls across the country from people of all faiths saying that we must engage more effectively with the Pakistani Government, and that the rights of all citizens must be respected, whether they are Muslim, Sikh, Hindu, Christian or of no faith at all. The rights of all Pakistanis must be respected.
Andrew Griffiths (Burton) (Con)
I thank my hon. Friend for securing this important debate. He will know that as vice-chairman of the all-party group on Pakistan, I was due to host an event with Shahbaz Bhatti in this House, just a few weeks before he was assassinated. Unfortunately, he had to return to Pakistan because of the instability of the Government. My hon. Friend will also know that I visited Islamabad recently. I am sure that, like me, he has received a huge number of e-mails and letters from the Pakistani diaspora in Britain, where people are equally outraged about the assassination of Shahbaz Bhatti. Does he agree that we have a responsibility to ensure that the voice of those people is heard, and that their condemnation is relayed to the Pakistani Government, urging them to take action?
Andrew Stephenson
I thank my hon. Friend for that point. I agree that we must work across faiths. I think that all people recognise that Shahbaz Bhatti was not just a Christian, but one of Pakistan’s most progressive politicians. His death is a blow not just to the Pakistani Christian community, but to all Pakistanis and to the nation of Pakistan.
Following Shahbaz Bhatti’s death, I tabled early-day motion 1518 not just to condemn his murder, but to recognise the work that he had done in Pakistan and to urge the Government of Pakistan to consider reviewing section 295 of the Pakistani penal code, commonly referred to as the blasphemy laws. I am pleased to see that as of this morning my early-day motion has gained the support of 82 other Members of Parliament.
The blasphemy laws were first introduced by the British in 1860 in a mild form that gave equal protection to all faiths and provided for a maximum sentence of two years in jail. Unfortunately, they were given their present form by General Zia ul-Haq in 1986. There is now a mandatory life sentence for desecrating the Koran and a death sentence for blaspheming Mohammed. Unlike the Racial and Religious Hatred Act 2006 in the UK, which prohibits people from stirring up hatred against religious groups or individuals on religious grounds, the Pakistani blasphemy laws protect the Islamic scriptures and the person of Mohammed from criticism or insult.
Although all of Pakistan’s population of 170 million people are subject to the blasphemy laws, it is worth remembering that religious minorities make up only about 4% of that number.
Eric Ollerenshaw (Lancaster and Fleetwood) (Con)
I congratulate my hon. Friend on initiating the debate and on his work as chairman of the all-party group on Pakistan. I also congratulate my hon. Friend the Minister on his moving words last Thursday at the memorial service for Shahbaz Bhatti. Like other colleagues, I had met him; in fact, I met him two weeks before his untimely death and was extremely impressed by him. The practical point that I want to make is that it needs to be pointed out continually—I think that the hon. Member for Rochdale (Simon Danczuk) was coming to this point—that the majority of people affected by the blasphemy laws are Muslims. People use the laws quite often in vexatious business disputes to get rid of the person with whom they are arguing on a trumped-up charge, while they carry through the business deal that they wanted. If we are to win the hearts and minds of the Pakistanis, who are the only ones who can alter those laws, we need continually to be pointing out that yes, the treatment of Christians is appalling, but equally many Muslims in Pakistan suffer from the abuse of the laws by their fellow co-religionists.
Jason McCartney (Colne Valley) (Con)
It is a pleasure to speak under your chairmanship, Mr Leigh. I congratulate my hon. Friend on securing this important debate, which is about Government policy on Pakistan. I have visited Islamabad myself. I visited the Nowshera region, the flood-hit region to the north of Islamabad, in November and I went on to Kashmir—to Mirpur and Dadyal. I would therefore like to take this opportunity to hear my hon. Friend the Minister reaffirm the Government’s position—their stated thoughts—on the situation in Kashmir, because if we are to have security and peace and an end to the violent murder in Pakistan that we are hearing about, it would be a great asset—a great positive move forward—if there were peace and stability in Kashmir as well. That is a real cause of instability in the region.
Andrew Stephenson
I thank my hon. Friends the Members for Lancaster and Fleetwood (Eric Ollerenshaw) and for Colne Valley (Jason McCartney) for their contributions to the debate. My hon. Friend the Member for Lancaster and Fleetwood is exactly right to say that the majority of people affected by the blasphemy laws are Muslims. However, we have seen a disproportionate effect on some of the minority communities. Also, even simple allegations made under the blasphemy laws have quite often led to mob violence that has killed many hundreds in Pakistan before cases have ever come to court.
There was an interesting article by the daughter of Salmaan Taseer in The Guardian recently. Shehrbano Taseer wrote that
“more than 500 Muslims, 340 Ahmadis, 119 Christians, 14 Hindus and 10 others have been charged under the laws.
Thirty-two of those accused—and two Muslim judges—have been mowed down by Islamist vigilantes.”
That was before the trials were heard. It is worrying that religious zealots in Pakistan have now deemed man-made laws non-negotiable, with a very real threat of death hanging over anyone who disagrees.
I would therefore welcome the Minister’s comments on the blasphemy laws in Pakistan and, more importantly, as other hon. Members have pointed out, their abuse and misuse in the settling of scores and other disputes against Christians and other minorities in the country. I hope that he will agree that we should stand shoulder to shoulder with those of all faiths who want to see a debate about reform of the laws, so that they can no longer be used as a tool of oppression against Christians and other minority groups.
I met a group of Pakistani Christians on Sunday 13 March at Woodlands Road Baptist chapel in Nelson in my constituency. In addition to many Pakistani Christians who live in Pendle, such as David Dean, who organised the event, we were joined by others, including Canon Yacub Masih and Wilson Chowdhry from the British Pakistani Christian Association. I know that the Minister is aware that a number of Pakistani Christians live in Pendle, as some time ago, before the election, he attended an event at which some of them were present. I know that he will remember talking to them.
At the meeting, I heard from many about their shock at the murder of Shahbaz Bhatti, but also about their desire that his death should be a wake-up call not just for the Pakistani Government, but for the international community. Those at the meeting felt that there was no better illustration of the rising problems of anti-Christian discrimination in Pakistan than the murders of Salmaan Taseer and Shahbaz Bhatti over reform of the blasphemy laws.
Concerns were also expressed about whether the UK could not do more, given the amount of money that we give Pakistan in foreign aid. As the Minister will be aware, that issue was picked up by Cardinal Keith O’Brien last week, when he criticised the Government for increasing overseas aid to Pakistan to more than £445 million without demanding religious freedom for Christians and other minorities, such as Shi’a Muslims. Cardinal O’Brien was quoted in the press as saying:
“I urge William Hague to obtain guarantees from foreign governments before they are given aid. To increase aid to the Pakistan government when religious freedom is not upheld and those who speak up for religious freedom are gunned down is tantamount to an anti-Christian foreign policy.”
Although I share the cardinal’s concern about the plight of Christians in Pakistan, I am not sure whether withdrawing or cutting aid in response to Shahbaz Bhatti’s death would be the most productive thing to do right now. I would, however, welcome the Minister’s comments on what the cardinal said, because many people would agree with them.
To date, no one has been arrested and brought to justice over Shahbaz Bhatti’s murder, which makes matters even more painful for the religious minorities that hold him in such high regard. It is of course possible that the security services in Pakistan and the Government do not know who the killers are or where they are. However, with no one being arrested and held accountable for so many other incidents of violence against minorities, such as in Sangla Hill in 2005—
Jim Shannon
Does the hon. Gentleman share my concern and the concern of many that it seems that the gentleman who was murdered had requested a bullet-proof car and bodyguards just a few days beforehand? None of those requests was agreed to, and shortly after that he was murdered. Is there not concern about that as well?
Andrew Stephenson
Many have raised those concerns. Having visited Pakistan and seen the security available not just to Ministers but to all politicians in the country, at provincial level as well as national level, it strikes me as somewhat unusual, shall I say, that on the day when Shahbaz Bhatti was murdered, he had no security and no armoured car to use on the way to work.
That no one has been brought to justice for Shahbaz Bhatti’s death is a real concern for many. As I was saying, there have been so many incidents in the country— not just against individuals but much larger incidents, such as in Sangla Hill in 2005 and in Gojra in 2009, and no arrests have been made for those incidents.
In the time allowed, I have tried my best to describe the situation in Pakistan. I could have added numerous other incidents of persecution. Many were detailed to me by Pakistani Christians now living in this country. I believe that the only way in which we will see Pakistan become a liberal and tolerant nation, which values and treats all its citizens fairly, is through increasing rates of education in the country. I was therefore pleased to see an increasing focus on education in DFID’s recent aid review. The Minister may like to touch on that in his reply. The Government of Pakistan also need to do more to reverse the gun culture, to promote tolerance and to ensure that no part of the Government, the military or the security services appeases or supports extremists.
I pay tribute to organisations such as Christian Solidarity Worldwide, the British Pakistani Christian Association and many others, which do so much good work in promoting interfaith harmony and raising the profile of issues such as those I have outlined, which would rarely make it into the British press without their help.
By focusing only on Christian and minority rights, I fear I have painted a fairly bleak picture of Pakistan and its future, but that was not my intention. With the right leaders, things can and will change for the better. The country has so much potential, and we need to work with it to ensure that issues such as those I have outlined are resolved. In doing so, we will ensure that Shahbaz Bhatti did not die in vain, but gave his life to make Pakistan a greater and more tolerant nation.
The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Alistair Burt)
It is a pleasure to serve under your chairmanship, Mr Leigh. I thank my hon. Friend the Member for Pendle (Andrew Stephenson) for securing the debate. Many colleagues in the Chamber also went on the visit to Pakistan and share our communal passion for Pakistan, and I thank them, too, for their contributions.
Time is desperately short, and colleagues will understand if I am not able to answer all the questions that have been raised, but I do want to make some remarks. I also want to put on record my appreciation for my hon. Friend’s work as chair of the all-party group on Pakistan and for the fact that he raised this subject during the Commonwealth Parliamentary Association’s visit earlier this year.
Time is tight, so let me say just a couple of things about the relationship between our two countries before turning to the meat of my hon. Friend’s remarks. The United Kingdom and Pakistan are close and historic friends and partners, and that partnership is set to continue. Nearly 1 million British citizens claim Pakistani heritage. More than £1 billion of trade flows between our two countries each year. There are 1.4 million journeys between Pakistan and the UK each year. We are building on the many strong ties we share.
At the end of his remarks, my hon. Friend said that he had focused on one area of our relationship and that he feared he had given a negative impression of Pakistan, but I can assure him that those of us who are friends of Pakistan recognise that there are many parts to our relationship, and we will continue to build on our history, our extensive cultural and business links and all the deep family connections. My hon. Friend need have no fear that his remarks will be misinterpreted.
The Pakistani diaspora in the UK makes a huge contribution to our national life, including our Parliament, our schools, our legal system and our universities. Its members make a remarkable contribution in the media, business, sports, entertainment and many other areas. It is clear that the British Pakistani community has offered, and will continue to offer, much to this country.
Pakistan faces many challenges. Last year’s flooding prompted a huge outpouring of support from this country. That support came not only from the Government but from churches, mosques and every community in the UK. The Government provided £134 million, giving a very strong sense of support.
Our bilateral aid review indicates that UK aid to Pakistan is likely to more than double to an average of £350 million a year until 2015. That will help to tackle poverty and, with the Pakistani Government, build a stable, prosperous and democratic Pakistan. The country faces economic challenges, and we are working with its Government to tackle them. We support the difficult reforms that Pakistan seeks to introduce. We also have strong links in terms of combating terrorism, which afflicts us both and which has echoes in some of the issues that my hon. Friend raised.
My hon. Friend the Member for Colne Valley (Jason McCartney), in particular, discussed the situation in Kashmir. The Government’s long-standing position is that it is very much a matter for the Indian and Pakistani Governments to deal with, although we understand the wish for self-determination among the people of Kashmir. We continue to encourage the parties to do as much as they can to deal with the situation—it is clearly difficult, and that has been the case for a long time—so that Kashmiri people have the opportunities they seek. We will encourage that dialogue wherever we can, but it is not the UK’s position to mediate in that situation.
Let me turn now to freedom of religion, which was at the heart of the remarks by my hon. Friend the Member for Pendle. The many links between the UK and Pakistan mean that we engage with each other on many subjects, such as counter-terrorism, security policy, trade, development and the rule of law. A theme that underlies all that is human rights, which is critical to the conduct of UK foreign policy. It is as relevant to our relationship with Pakistan as it is to our relationship with many other countries. We do not shirk our responsibilities to highlight our concerns about human rights to our friends. We will raise our concerns about human rights wherever and whenever they occur, without compromise. We are improving and strengthening the work of the Foreign and Commonwealth Office on human rights. That will be underpinned by British values and by our support for democratic freedoms, universal human rights and the rule of law.
My hon. Friend has set out compelling reasons why freedom of religion and the rights of minority groups are issues on which we need to speak out. It is vital that the Government of Pakistan uphold the fundamental rights of all Pakistani citizens, regardless of their faiths or belief. Pakistan can benefit only if all its citizens can play a central role in society. All Pakistani citizens should be able to live their lives without fear of discrimination or persecution, regardless of their religious beliefs or their ethnic group. I can assure my hon. Friend and all hon. Members present that we regularly reinforce the importance of upholding those fundamental rights to colleagues at all levels in the Government of Pakistan.
The Government of Pakistan have taken some positive actions on the rights of minority groups. They have reserved quotas for minorities in the public sector and Parliament. They have set up a complaints procedure for those encountering discrimination or abuse. Through our lobbying and project work, we will continue to support those who wish to see reform in Pakistan. Worryingly, however, allegations continue that the blasphemy legislation is being misused against Muslims and non-Muslims. That abuse often results in prison sentences for those accused of blasphemy, and we continue to hear of cases in which those accused of blasphemy offences have died in custody.
As well as raising the wider issues of freedom of religion and minority rights, we continue to engage directly with the authorities in Pakistan in relation to Asia Bibi. She was found guilty under the blasphemy laws and is the first woman in Pakistan to be sentenced to death. We oppose the death penalty in all circumstances. In December 2010, I raised Asia Bibi’s case with the former Pakistani Minister for Minorities, Shahbaz Bhatti. I have also discussed the blasphemy laws with the Pakistan high commissioner in London. Baroness Warsi highlighted our position to the Speaker of the National Assembly in Pakistan when they met on 17 January.
Those who champion such values in Pakistan are now under threat. The assassination of Governor Salmaan Taseer in Islamabad on 4 January was shocking. He was a strong advocate of religious tolerance and of the importance of reforming the blasphemy legislation to prevent its misuse. The scenes of congratulation following his murder and the behaviour of the lawyers who strewed rose petals in the path of his killer outside the courts were sickening, and those involved are a lasting disgrace to their profession.
Shahbaz Bhatti spoke out courageously on the issue before us, and his assassination marked a new low point in Pakistan’s struggle against violent religious extremism. He was a powerful voice against extremism and a fearless voice for tolerance and respect for minorities. His death is a tragic loss for Pakistan and for us all. I met him on a number of occasions as a fellow Minister, and also as a believer in the rights of minorities and a Christian. I did all I could to support my friend in his difficult role and in his attempts to revise his country’s blasphemy laws. It is deeply saddening that his courage in urging peaceful, moderate change was met with such violence. This was an attack not only on a dedicated Government Minister but on the people of Pakistan and their future. I was proud to speak at his memorial service last week. Following his murder, the Prime Minister wrote to express his condolences to President Zardari. The Foreign Secretary, Baroness Warsi and I all made statements condemning his killing.
The Christian community in the UK is correctly very active in supporting the persecuted Church wherever it is under pressure. I commend the work of the Barnabas Fund, Open Doors and others in this field. As a member of the board of patrons of Christian Solidarity Worldwide, I understand these issues very well. The Government will take up cases and we will do more work, including, I hope, a Wilton Park conference.
I wish the solution was as simple as a declaration of freedom of religion that was instantly acceptable and enforceable in any society with which we have contact. However, the sad truth is that that is not the case, and nor will it be, no matter how loudly we shout about it. We are talking about conservative societies that are fearful of change. We are sensitive and patient in addressing their fears, and we recognise that our overt intervention may be harmful or dangerous. However, we wish to make sure that we continue to raise these issues and work with people in these countries in the way they think best, so that we can free people from religious persecution and fear. In that way, we can get to the position we all want. I commend my hon. Friend for raising this issue.
Cross-border Child Custody
(13 years, 1 month ago)
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Mr Frank Doran (Aberdeen North) (Lab)
I want to use this debate to highlight a case that shows that our legal system has badly failed one of my constituents, Mr Robert Bennett. I raised his case in an Adjournment debate on 4 December 2007, when there were ongoing legal proceedings in England and Scotland involving the custody of my constituent’s child. He has now exhausted all remedies in the courts, but there are legal issues that I want to discuss. I rely heavily on the advice given to my constituent by Mr Alan Inglis, a barrister and advocate, who has considerable experience of family law in the courts of Scotland and England.
The facts of the case are fairly straightforward. Mr Bennett married and had a child. The family lived in Aberdeen, and therefore were habitually resident in Scotland. Without Mr Bennett’s knowledge, his wife left the matrimonial home in September 2000 with the child and moved to London. He did not know her exact whereabouts and at no time did he consent to his daughter’s removal. A few months after Mrs Bennett left the family home, she commenced legal proceedings in Willesden county court, where she obtained an ex parte residence order and an order preventing Mr Bennett from removing the child from her care.
A key part of the law that determines such matters is the Family Law Act 1986. Section 41 is the key part here, and I can summarise its effect as follows: where a child under the age of 16 is moved from, for example, Scotland to England, as in this case, then in certain circumstances a court in England would have jurisdiction to deal with any issue relating to the child after one year has elapsed. One of those circumstances is set out in subsection (2)(a), which states that it is required to be shown that there is
“the agreement of the person or all the persons having, under the law of that part of the United Kingdom, the right to determine where he is to reside”.
In this case, that means both parents. Mrs Bennett had effectively abducted the child from Scotland to England, and Mr Bennett, as a legal guardian of the child, had not given his consent.
Mrs Bennett made her application to the court before the year set out in the legislation had expired, and Mr Bennett also entered appearance in the case within the time limit. Notwithstanding those facts, the judge in the Willesden court made an order in favour of Mrs Bennett. It is clear that none of the lawyers involved at that stage—the solicitors or the judge—properly understood the implications of the 1986 Act, or, for that matter, indicated that they were even aware of its existence.
Mrs Bennett’s solicitors had a duty to the court as well as to their client, and should not have raised the action, because any interpretation of the Act would make it clear that the Willesden court had no jurisdiction. The judge should not have granted the order, and Mr Bennett’s solicitors should not have neglected to raise the point of jurisdiction before the court, despite his explicit instructions. I should add that Mr Bennett took action subsequently against his solicitors for that neglect and received an award of compensation.
That was the first stage before the one-year period had expired. As the case moved through its various stages, it seems clear that none of the judges who later considered it looked very closely at Mr Bennett’s rights under the legislation as a parent and legal guardian of his daughter. The 1986 Act provides that
“Where a child…becomes habitually resident outside that part of the United Kingdom...he shall be treated for the purposes of this Part as continuing to be habitually resident in that part of the United Kingdom for a period of one year beginning with the date under which those circumstances arise.”
That section therefore applies only where the child has already become habitually resident in another part of the UK, and it postpones the legal effect of that habitual residence for a period of one year. Correctly construed, it does not operate as a time limit of one year on habitual residence as held later by the Court of Appeal in England.
Jim Shannon (Strangford) (DUP)
Is the hon. Gentleman aware of examples similar to the one that he clearly outlines? Is this an isolated case or do many others fall into this category?
Mr Doran
There are lots of examples of couples splitting up and moving to different jurisdictions, but, as far as I am aware, this is the only case in which the 1986 Act has not been properly construed—at least, that is my allegation.
In Mr Bennett’s case, for the child to have become habitually resident in England and, therefore, to give the English courts jurisdiction, both parents would have been required to consent, and even then there would have been a delay in operation of one year. There is ample legal authority to show that habitual residence cannot be changed by the unilateral action of a parent who shares parental responsibility with another. That is also the law in Scotland, and it follows that the courts in England have never had jurisdiction in this case because both parents had not given their consent.
Despite those facts, at every stage in the court proceedings in England, from the judge at first instance through to the Court of Appeal, section 41 has been interpreted as giving the English courts jurisdiction as soon as the child’s stay in England had exceeded one year. In its judgment, the Court of Appeal, through Lord Justice Wall, said:
“on the facts of this case Section 41 ceased to have effect in September 2001”.
As additional cover, the court also argued that even though there was no jurisdiction, the original decision was not a nullity. Lord Justice Wall said:
“The normal rule about orders, which on their face are regular, but which are in fact made without jurisdiction, is that they remain in force until they are discharged”.
He quoted the case of Hadksinson v. Hadksinson in 1952, but I am advised that it is questionable whether that case supports the Court of Appeal’s position. The ratio decidendi of that case is that there is an
“unqualified obligation of every person against…whom an order has been made by a court of competent jurisdiction to obey it until it is discharged”.
The difference between that case and Mr Bennett’s case is that the Willesden court was not
“a court of competent jurisdiction”.
I have been directed to “Halsbury’s Laws of England”—as a Scottish lawyer by training, I am not very familiar with it—and page 314, chapter 10 of the fourth edition says:
“Where a court takes upon itself to exercise a jurisdiction which it does not possess, its decision amounts to nothing”.
When it was clear to Mr Bennett how the English courts were dealing with his case, he raised the issue in the Scottish courts by raising an action of divorce. I will not go through all the processes, but the case eventually reached the inner house of the Court of Session, having started its processes in the Aberdeen sheriff court. The inner house decision is directly in conflict with that of the Court of Appeal. Among other points, it noted that the order that initiated the proceedings in England was made without jurisdiction—a very clear statement. It agreed that the habitual residence of the child of a marriage cannot be changed without the consent of both parents. It doubted that the effect of section 41 of the 1986 Act was automatically to change habitual residence one year after an abduction. It recorded the failure of the English courts to hold a welfare hearing during the whole period when the matter was before them, despite a recommendation from Children and Family Court Advisory and Support Service that it was necessary, which is quite a serious matter. However, the inner house of the Court of Session also accepted that
“the Court of Appeal considers that the English courts have jurisdiction to make orders respecting the child with which this divorce action is concerned”.
The word “considers” is very important. The inner house does not cede jurisdiction, but recognises that the English court thinks it has jurisdiction. It is clear that the inner house of the Court of Session did not wish to get into a direct conflict with the English courts, and it has been tactful and diplomatic in the way in which it has questioned the decisions of the English courts.
Over the years, I have written to the Ministry of Justice and the Scottish Government about the apparent conflict in the law. I understand that meetings were held between representatives of the Scottish Government and the Ministry of Justice. I have not been formally advised of the conclusions of those meetings, although I received a brief letter from Scotland’s deputy Justice Secretary, who said that the meetings had concluded that section 41 of the 1986 Act did not require changing. It was as blunt as that. That view is probably correct.
As I pointed out earlier, the problem seems to be one of interpretation and application rather than the legislation itself. However, I am deeply concerned about the way in which the courts have acted in this case and the impact that the decision of the Court of Appeal could have in other cases. I find it extraordinary that all the lawyers involved in the initial proceedings in the Willesden court could either be so ignorant of the legal position in such cross-border cases or so easily misinterpret the legal position.
As the case moved on through the system, all the arguments that I have presented today were presented by Mr Bennett, my constituent. Part of the tragedy is that once he had discharged the lawyers who so wrongly advised him and who refused to carry out his instructions, Mr Bennett found it virtually impossible to find another solicitor to represent him, and he was forced to represent himself. He is a very single-minded individual and has become extremely knowledgeable in this area of law.
Reading through the various judgments, it is quite clear that the judges viewed Mr Bennett as an obsessive who was more concerned about legal principles or niceties than his daughter. I get the impression that he was not taken seriously. He desperately wanted contact with his daughter and felt that he was the more suitable parent to look after the child. He also strongly believed that it should be for the Scottish courts to decide the matter. It is probably fair to say that he was not learned in the law and did not treat judges with the respect that they are used to. He also became frustrated at what he believed was their refusal to consider his arguments.
I have had the opportunity to meet Mr Bennett and his child, who is disabled. He visited my office several times with the child on a previous matter. When we spoke about the difficulties that he was having with this case, I was in no doubt that he had a strong relationship with his daughter and was able to care for her. He and his wife—they are not divorced—split care between them, and he made quite a contribution to the care of the child in the household. Unfortunately, he never had the opportunity to have his side of the argument on residency or access considered by the court.
In Scotland, the inner house of the Court of Session made it clear that the court could have been obliged to consider the interests of the welfare of the child by carrying out the usual investigations and having an appropriate hearing regardless of the other issues in the case. The courts in England took no action in this respect. In addition, Mr Bennett was told by a legal adviser that if he tabled a motion on residency or contact, it would prejudice his argument on jurisdiction. He would effectively cede jurisdiction to the English court. That matter needs to be considered seriously by the Minister.
Cases such as Mr Bennett’s are not that unusual. What is unusual is his tenacity in pursuing this point of law. It is wrong that, in all the years while the English courts were considering the matter, no consideration was given to the interest of the welfare of the child—apart, of course, from Mr Bennett’s continuing interest in maintaining contact with his daughter.
I practised in the Scottish courts for a number of years, and family and child care law were my special areas of interest. I have not held a practising certificate since 1988 and do not claim any special expertise, but I do know that the guiding principle in all child care cases is and should always be the paramountcy of the welfare and interests of the child. Those interests cannot be met if a court has a case before it for about four years and does not itself inquire into that child’s situation. I am not significantly well versed in English law to know whether that suggested failure is a failure of the various courts in this case or a failure of the system, but I believe that the Minister should look into the matter urgently.
As I said earlier, Mr Bennett was put in an invidious position, because he was told by legal advisers that if he tabled a motion on contact or care and control, he would prejudice his case on jurisdiction. He should not have faced that dilemma. If they do not already have the power to investigate a child’s situation of their own volition—I suspect that they do—the courts in England should have that power, without prejudice to any other issue before them.
When there is a clear conflict between the decisions of the courts in England and Scotland, public confidence in the system requires there to be a proper inquiry. I do not know what understanding was reached by the Scottish and English civil servants who met to discuss this case, but I do know that nothing has been published. It is not enough to say that everything is okay and that everything is working fine, when clearly it is not. I should like a report published on the discussions that took place and on the details of the conclusions that were reached and why they were reached.
Of course, there is another way to resolve this case: to take the matter to the Supreme Court. That might seem appropriate, given the conflict between the two jurisdictions. Unfortunately, when Mr Bennett and his advisers—he now has legal advice—attempted to take the case from the Court of Appeal to the Supreme Court, his application was refused.
Without fully understanding all the mechanics, the idea that courts in Scotland dealing with the same circumstances and the same legislation could be in complete conflict with the courts in England is difficult for the lay person to understand. It is extremely regrettable that this important issue has not been considered by the Supreme Court. I know how important it is that politicians do not interfere in any way whatever with the judicial process, but I believe that a number of serious matters need to be fully considered, and the best place for that is the final court of appeal of both civil jurisdictions—the Supreme Court.
The issues that I have raised primarily affect my constituent and his daughter, who is denied access to her father. However, breakdown of marriage and movement between jurisdictions is not uncommon in our society. I believe that the courts in England have got the interpretation of the law completely wrong as it is applicable to this case. Now that the case is concluded, I hope that the Minister will agree that a serious injustice has been done and that Mr Bennett is fully entitled to feel that the legal system has let him and his daughter down badly. It is incumbent on our legal system and the Government to do something to correct the situation. As I said, changes do not necessarily need to be made to the Family Law Act 1986—unless section 41 can be amended so that it is more clearly understood, particularly by lawyers.
I ask the Minister to give serious thought to the matters that I have raised today, and to consider how we can move forward, so that the case of B v. B does not stand as a precedent to be applied in similar cases of conflict.
The Parliamentary Under-Secretary of State for Justice (Mr Jonathan Djanogly)
I congratulate the hon. Member for Aberdeen North (Mr Doran) on securing this debate. It has enabled him to raise the concerns of his constituent on the difficulties that can arise when a child is taken from the part of the United Kingdom where he or she is habitually resident. May I say how sensitively he put his constituent’s case? He did so in the personal context a concerned parent. That should not be forgotten.
At the outset, I should make it clear that in all cases involving a child’s upbringing—including where the child should reside and who should have contact with the child, as the hon. Gentleman rightly said—the court’s paramount consideration must always be the welfare of the child. The welfare of the child should be paramount in all cases involving decisions about his or her life. The welfare of the child is paramount in the law in all parts of the United Kingdom. English courts are required to consider the child’s situation and hear any application made by a parent; the courts can also make orders on their own initiative, as required under the Children Act 1989.
The Government appreciate that disputes about arrangements for children—for instance, where the child is to reside, contact and the continuing involvement of both parents in the child’s life—will be extremely upsetting for all concerned, and will frequently be damaging for the child. The Government firmly believe that it is in the best interests of the child for both parents to continue to be involved with his or her upbringing, and for both parents to have regular contact with the child, provided it is safe.
The Government are conducting a review of the family justice system in England and Wales, and one consideration is increasing contact between children and the non-resident parent following divorce or relationship breakdown. The serious problems that can arise for parents in maintaining a relationship with their children when a relationship has broken down will be increased if the child is moved from one part of the UK to another. There is then a cross-border element in the family situation. The hon. Gentleman made clear the distress caused to his constituent by the circumstances surrounding the removal of his child and subsequent events. When a child is taken without consent, it inevitably causes great distress for the parent who is left behind. The parent can also be left facing considerable difficulties in obtaining the return of their child. As the child has been moved from one part of the UK to another, the parent has to deal with the question of which court will have jurisdiction. The Family Law Act 1986 provides rules of jurisdiction in the different territorial parts of the UK. The primary rule is that the courts of the part of the UK where the child is habitually resident will have jurisdiction in any proceedings regarding the child. That much is clear.
Identifying habitual residence is a question of fact for the courts. However, the 1986 Act contains rules to prevent a person who removes a child from his or her habitual residence without consent from benefiting from that wrong. That benefit could occur if the person could take advantage of any change in the child’s habitual residence resulting from the unlawful move to claim that another part of the UK now had jurisdiction. Allowing jurisdiction to change immediately in those circumstances would encourage child abduction, which is clearly contrary to a child’s welfare. Lengthy disputes about which courts should hear a case delay resolution for the child and are also clearly not in the child’s best interests. It is important that clear rules exist to prevent abuse of jurisdiction through child abduction.
As the hon. Gentleman describes, section 41 of the Family Law Act 1986 deals explicitly with the situation in which a child under the age of 16 who is habitually resident in one part of the UK becomes resident in another part without the agreement of all the people who have the right to determine where the child should reside. In those circumstances, the 1986 Act provides that the child shall be treated as still habitually resident in the part of the United Kingdom from which he or she was removed for a period of one year from the date of removal. In practice, that usually means that the courts of the part of the UK in which the parent from whom the child was taken lives will have jurisdiction over any proceedings regarding the child during that year even if the child becomes habitually resident elsewhere. To ensure that children are always protected, a court in the jurisdiction in which a child is present can take urgent, provisional action to protect the child.
In that way, the 1986 Act promotes child protection; it discourages wrongful removal of children by removing any jurisdictional advantage that the person removing the child hopes to gain. The Act also provides an important protection for the parent who did not consent to the child being taken, as the person has a significant period of time in which to challenge the removal of the child and to make an application to the courts of the child’s original habitual residence for the child to be returned. Once jurisdiction is accepted by the correct court, it will consider the merits of the case in the light of the child’s welfare. That may or may not involve a return of the child to the original habitual residence. The court will consider with whom the child will live, and how contact with the non-resident parent should be supported.
Mr Djanogly
The hon. Gentleman makes a fair point, and I was coming on to that. However, I will say now that it is accepted that the original English without-notice decision was made without jurisdiction. However, there were numerous ways in which the order could have been challenged, either on the point of the lack of jurisdiction or on the terms of the order made. It must also be accepted that courts can make orders, and sometimes have to make orders, for the welfare of the child without all parties being informed of the application, if that is felt to be appropriate in the circumstances of an individual case. Such orders would usually be drawn up so as to provide for a review at an early stage—perhaps after seven days—so that all parties can make representations.
If the courts of the part of the UK to which the child has been taken make an order in respect of the child, then the parent who did not consent to the child’s removal can challenge that order in the court which made it on the basis that the court did not have jurisdiction to make it. It is very regrettable if an impression has arisen that to challenge the jurisdiction of the court to make an order is, by implication, to accept the jurisdiction of that court. That is absolutely not the case in English law, and indeed nothing in the 1986 Act seems to suggest it. The law is clear that to challenge the order in the court in England and Wales, which made it in this way, is not to surrender to or accept the jurisdiction of that court. This is a rule which is clear both at national and international level. However, even orders made without jurisdiction must be obeyed until such time as they are successfully overturned, and proper action must be taken to overturn them.
However, balancing the requirements of a child’s welfare requires that the rule in section 41 does not last indefinitely. Habitual residence is a question of fact for the courts to determine, and it is generally accepted, including in international law, that the interests of a child are usually best determined by the courts of the territory in which the child is habitually resident, as that court is best able to judge the child’s needs and situation there—the court is “proximate” to the child.
A year is a long time in the life of a child, especially a young one, and circumstances can change very quickly. If nothing is done in the original jurisdiction to address the removal promptly, and within the year at most, that child’s life will have moved on and courts need to be able to address the child’s situation as it is at the time any application is made. There seems to be little point in making the child’s habitual residence the primary rule of jurisdiction in the Act to ensure a close connection between the court hearing the case and the child’s actual situation, only then to refuse to acknowledge the reality of the child’s situation in determining jurisdiction because a non-consensual removal occurred quite some time in the past—even more so when that removal could have been dealt with promptly by the courts of the child’s original habitual residence had they been seized of the case by the left-behind parent within a year.
The hon. Gentleman has asked for the Government to examine this matter and consider a review of the provisions of the Family Law Act 1986. The Government do not consider that a formal inquiry would be appropriate here as the provisions of the law are quite clear and generally provide reasonable protection for children who are wrongfully removed. The Government do not believe that it is necessary to amend the provisions of the Family Law Act 1986. However, it is important that the provisions of the Act should be operated properly in practice and that the courts should follow its provisions as they determine the question of jurisdiction for proceedings.
The Government have undertaken to consider whether the question of jurisdiction regularly causes difficulties. Following the hon. Gentleman’s previous debate on cross-border contact issues in December 2007, officials wrote to the Law Society in England asking for its assistance in identifying the extent to which jurisdictional issues arose in cross-border cases and the extent to which they prevented people making substantive applications and having their cases resolved and whether any procedural or other changes might be required. Similar inquiries were made by the Northern Ireland Court Service with the Law Society of Northern Ireland, and by the Scottish Government with the Law Society of Scotland. Following receipt of the replies, officials have discussed the question of what further should be done to address the jurisdictional issues. Concern was expressed about the courts’ ability to deal with jurisdictional issues, particularly by Scottish colleagues.
I am not convinced that jurisdictional issues are preventing people from having their cases resolved. However, I fully accept that the sort of unfortunate circumstances underlying this debate today must be avoided if at all possible. We will consider whether anything more needs to be done.
The underlying question in all proceedings relating to children must be the welfare of the child or children concerned. The provisions relating to jurisdiction in the Family Law Act 1986 are intended to support the child’s welfare by deterring wrongful removal of children, but also by ensuring that the court with the closest connection to a child makes the decision about that child. Underlying the Act is the premise that it is normally better for decisions about a child’s upbringing to be made by the courts of the part of the UK where the child is habitually resident. That continues to be the case, even if the child was moved without consent.
The hon. Gentleman mentioned that the Scottish courts have criticised the English High Court. It is not for the Government to comment on the observations of a judge in deciding individual cases.
Mr Djanogly
I will certainly correspond with the hon. Gentleman on those issues. With that comment, I bring my points to a conclusion.
Civil Recovery (England and Wales)
(13 years, 1 month ago)
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Simon Hughes (Bermondsey and Old Southwark) (LD)
I am grateful for the opportunity given by Mr Speaker to have this debate and to the Minister for doing a back-to-back session by responding to two successive debates.
Colleagues who have looked at the Order Paper and seen that this debate is about civil recovery in England and Wales may not have realised immediately what the subject of the debate is. “Civil recovery” is not a phrase that people regularly use. I want to introduce the debate by giving two examples of incidents that came to my attention as an MP in Southwark and that precipitated my interest in the subject.
A constituent of mine came to me after her 15-year-old daughter was accused of stealing £6 worth of goods from a London store. The daughter was then sent a demand on behalf of the store from which she was alleged to have stolen those items asking for £137.50. The explanation given was that she was being asked to compensate the store for the £6 worth of items and to pay the rest of the costs of the administration, the store security and so on. Another constituent then approached me on behalf of one of her daughters, who had been with two friends at Primark. One of the three girls—not my constituent’s daughter—was accused of stealing, but demands for £87.50 were sent to all three girls on behalf of Primark. These two incidents alerted me to what I have since discovered is a very widespread practice.
Tom Brake (Carshalton and Wallington) (LD)
My right hon. Friend is right that this is a widespread practice. I want to draw to his attention to a very similar case involving a constituent of mine. She was stopped and accused of shoplifting. Nothing was found, and she was released by the police, but subsequently she received a letter from a civil recovery company saying that she needed to pay £70.
Simon Hughes
Like my hon. Friend, all Members of this House who are MPs for any length of time will discover, if they go through their casework files, that this practice is being brought to their attention. At the beginning of this debate, I unambiguously want to pay credit to the citizens advice bureaux and in particular to Richard Dunstan, who had done some work on this issue long before I became aware of it. On behalf of the CAB, he has brought together all the examples of this practice in the best possible place. As a result of his work, two briefings have been published by the CAB, which I recommend to colleagues and others who have an interest in this subject. The first, “Unreasonable demands?”, was published in December 2009, and the second, “Uncivil recovery”, was published in December 2010. The subtitle of the second briefing tells us succinctly what we are talking about. It is:
“Major retailers’ use of threatened civil recovery against those accused of shoplifting or employee theft.”
Colleagues in both the last Parliament and this one have shared my interest in this subject. In the previous Parliament, I know that Ian McCartney was particularly concerned about the issue, and in this Parliament I know that Baroness Hayter has already registered her interest in the subject. I am grateful to her for her continuing interest, which I think that she will want to pursue in the other place.
None of us who are here for this debate are defending shoplifting or employees who shoplift or take property from their employer. However, there are proper procedures, proper criminal processes and proper civil processes. What should not happen is that people who often are young—that is, under the age of majority—vulnerable, mentally ill, distressed or disturbed are intimidated, charged extortionate fees or threatened with what are, bluntly, bogus actions, either by the shops themselves or more frequently nowadays by those who are employed by shops to act for them.
I have discovered that this problem is significant. In each of the past three years, some 100,000 people have received one or more letters demanding a substantial sum of money as “compensation” for their alleged shoplifting or employee theft, and threatening civil court action and associated extra costs if the sum demanded is not paid promptly. Since 2000, more than 600,000 people have received such civil recovery demands, issued by one of a handful of agents acting for well known high street retailers such as Asda, Boots, Debenhams, Tesco and TK Maxx. In the great majority of those cases, the value of the goods or cash allegedly stolen was relatively low. If the accusation is of shoplifting, the value was just a few pounds. In four out of five cases, the goods were recovered intact for resale. In many cases, somebody was apprehended when they were accused of leaving a store with an item—for example, an eyeliner worth £2 or a grocery item worth £1.60—without having paid for it. They then paid for it and were released, but they still received the civil recovery demand later. Among those cases reported to the CAB, one in four of the recipients of such demands are teenagers, most of them aged between 14 and 16, and other recipients are particularly vulnerable.
In many cases, the alleged theft is strongly denied, so it is not always the case—indeed, it is normally not the case—that these allegations are accepted by the person who is charged. In some cases, there was clearly an innocent mistake; in other cases, there was an error; and in other cases there was confusion. However, it matters not, because these stores have behind them a small but growing army of lawyers and other companies that are making a hefty profit from this business.
There is a common feature in these cases. If the sum demanded is not paid, the threat of county court action is often repeated. There is a second threat and then a third threat, giving ever closer dates of notice. However, at the end of all these threats county court action does not materialise, because it was invalid and unjustified in the first place.
The most prolific civil recovery agent, a firm called Retail Loss Prevention, is the biggest player among a small army of players in this sector. It has confirmed that it has never successfully litigated a fully contested county court claim in respect of an unpaid demand. The CAB has also received advice, which I have seen, suggesting that there is no obvious legal authority for most of these demands. Taken together, those two facts suggest that the practice of threatened civil recovery relies on fear and/or shame, as well as ignorance of the law, for its effectiveness.
When I began thinking about how I would raise this issue, I wondered which Government Department I would, as it were, “summon to answer” to me in the first place, because it is very clear that this matter is not only the responsibility of the Ministry of Justice. However, I thought that I would start there, because it is a justice issue, and I am very grateful for the Minister’s presence today and for his Department’s interest in this subject. Shortly, I want to put to him some specific issues that I hope his Department can pick up, because I believe that it has a responsibility to do so and that it can do things.
There is no way that that we should continue to permit this system of civil recovery, and I hope that today’s debate will precipitate a working-together across Departments. Obviously, there is a Home Office interest in this issue and there is also an interest for the Department for Business, Innovation and Skills, as well as an interest for the Ministry of Justice, in trying to ensure that we shut down this business and make those who are involved, which are otherwise reputable major retail outlets, behave in a much more reasonable way.
Nobody condones retail theft. It is a big issue, and we need to ensure that stores are not pilfered and that there is the best possible policing of them. However, even if one accepts that retail theft is a big problem, the percentage of the money stolen from shops that is recovered by these means is a very small proportion of the total. So it is not as if the retailers involved are able to cover all their costs by doing this type of thing. I will turn to some examples.
Simon Hughes
I am grateful for my hon. Friend’s suggestion, and I hope that the Minister will address the areas that the Ministry of Justice can pick up. If over the next few weeks, with concentrated efforts in both Houses, we can get a coalition—as it were—of determination to do something, I, with my hon. Friend and others, will look for the earliest available opportunity to deal with the legislative changes that I think are part of the response that is needed.
On the protagonists, I have listed some of the major retail players, and I will now deal with the agents. In eight out of 10 of the cases reported to citizens advice bureaux the demand was issued by a Nottingham-based company called Retail Loss Prevention Ltd. Since 1999, that company has issued more than 550,000 demands on behalf of dozens of retailers, including Argos, E.H. Booth, Debenhams, Harrods, Iceland, Lidl, Matalan, Morrisons, Mothercare, Netto, Primark and Waitrose. The company retains some 40% of any money it recovers and the remainder goes to the retailer client. The owner and managing director of the company, who is being pursued by Citizens Advice and by others in the media, has said that the company is
“passionate in our belief that we are helping the community by going after the ‘soft’ criminals who are often seen as lower priority by the police”.
In seven out of 10 of the cases that have come to the notice of citizens advice bureaux, the demand was issued on behalf of one of just six retailers—Boots, TK Maxx, Tesco, Wilkinson, B&Q and Superdrug. The predetermined fixed sum demanded by RLP in most if not all shoplifting cases varies according to, and is determined by, the total value claimed of the goods or cash involved. If the value is between nothing and £10, the sum demanded is £87.50 and the 21-day settlement offer is £70; if the goods are worth between £10 and £100, invariably £137.50 is asked for, with a discounted 21-day-period amount; if the value is more than £100, £187.50 is asked for, with a quick-pay discounted amount of £150; and if it is more than £300, £250 is asked for, with a quick-pay amount of £200. It is clear that the company has never justified the legitimacy of its action. It has been asked persistently about the evidence for its actions, and it has repeatedly declined to produce any evidence that claims have regularly and successfully been pursued by means of county court proceedings.
The company has also clearly misrepresented the position. Until last November, RLP’s website stated that
“we have established operating procedures for Civil Recovery and agreed guidelines with the Association of Chief Police Officers (ACPO) and Association of Chief Police Officers Scotland (ACPOS)”.
However, in October last year, the assistant chief constable who leads on retail crime for ACPO wrote to Jackie Lambert at RLP stating:
“Whilst there may have been agreements in the past about exchanging data and operating civil recovery with ACPO…there are no such agreements in place now and indeed on several occasions over the last few years I and my colleagues have asked that such references be deleted. Please remove from your website any and all references which state or imply that RLP operates its civil recovery in agreement or cooperation with the Police Service. Clearly if you have an agreement with an individual force you could make reference to that, but I know of none.”
In November last year, ACPOS said:
“At no time have ACPOS entered into any formal agreement with RLP or assisted them in any civil recovery”.
The other players are Drydens, a law firm based in Bradford, Nottingham-based Civil Recovery Solutions and, more worryingly in a way, a Florida-based law firm, Palmer, Reifler and Associates, which is a major player on the United States civil recovery scene but is not regulated to practise in the UK and uses Wigan-based law firm Goddard Smith as its agent. Lastly, there is the London-based firm Civil Recovery Limited, which acted for only Tesco and was closely related to a security company called TSS, which supplies security guards to Tesco, Boots and other retailers. Civil Recovery Limited ceased trading last summer.
Penultimately, there is of course a civil wrong if someone steals something from someone else. There is a tort as well as a crime, and there is a breach of contract if an employee steals from their employer. I am not arguing that there might not be proper civil proceedings, but this is a contrivance. It is an intimidation, with the protagonists selling their services to the retail fraternity and then recovering a large amount of money under clearly false pretences. What please can we do about it?
I would like the following from the Ministry of Justice. I would like it to ask the Law Commission, which has a report in the pipeline, to ensure that it urgently reviews the entire law on civil recovery, with a view to eventually ensuring, by law if necessary, that civil recovery is limited to cases involving serious, determined and/or persistent criminal activity for which there has been a criminal trial and conviction. I would like the Ministry, as a matter of urgency, to prepare and disseminate public information and advice on threatened civil recovery, and in particular on the options available to people who might receive a civil recovery demand from Retail Loss Prevention, Drydens or other civil recovery agents. That could be done through the Government’s public information service—Directgov—citizens advice bureaux and other advice outlets.
I also want the Ministry of Justice to talk to the Solicitors Regulation Authority to see whether it needs to take further action to ensure that the civil recovery practice of solicitors, including employed solicitors, is consistent with the solicitors’ code of conduct. I would then like the Home Office, the Department for Business, Innovation and Skills, the retail industry and the police to identify and develop a range of alternative ways of dealing with those involved who, if they are young, mentally ill or vulnerable, are often better dealt with by cautions and the early stages of the pre-criminal procedure in my experience.
As the total amount recovered by the civil recovery agents for their retailer clients each year seems unlikely to be more than £16 million, the practice is clearly completely unacceptable, given that they say that they lose £4 billion every year as an industry. I hope that some major retailers will hear this debate and agree to review their practice. Most of all, it is clear to me that the practice has become an opportunity for great profit-making by a few at the risk of improperly influencing and intimidating people who ideally should not be in the criminal process, unless they are regular offenders, and certainly should not be the victims of communications that distort the facts, misrepresent the law and often put the fear of God into people who certainly do not have the money to pay large sums.
I hope that the Minister can be helpful, that he understands the importance of this issue to all our constituents, and that today will be the beginning of the end of this practice. I am very grateful to all those people who have brought the issue to the public’s attention, and I hope that there will be continued significant public reporting, until the practice is ended.
The Parliamentary Under-Secretary of State for Justice (Mr Jonathan Djanogly)
I am grateful to my right hon. Friend the Member for Bermondsey and Old Southwark (Simon Hughes)for providing me with this opportunity to outline the Government’s position and the action being taken in respect of civil recovery.
The Government are firmly committed to working alongside business and trade associations to find effective solutions and responses to business crime, including retail theft. My right hon. Friend identified that civil recovery is dealt with by a number of Departments in addition to the Ministry of Justice—for example, the Home Office, in preventing and tackling retail crime; the Department for Business, Innovation and Skills, in retail business, sponsorship of Citizens Advice and employment relations; and both DBIS and the Office of Fair Trading, in consumer protection legislation. As my right hon. Friend requested, and as I will come to later, the Law Commission is reviewing this area, and officials in the Departments that I have mentioned will respond in due course.
Civil recovery is the legal means by which anyone who has suffered a financial loss due to the wrongful actions of someone else can seek appropriate compensation under civil law. Civil recovery schemes are used by many high-street retailers to deter shoplifting and recover from shoplifters the management, administration, security and surveillance costs incurred in dealing with the case, including the costs of the civil recovery action itself. That ambition is both understandable and justifiable. Shoplifting is not a victimless crime. Businesses employ civil recovery agents to recover through the civil courts often relatively low-value losses arising from, for example, shoplifting or employee theft. The alternative would be criminal proceedings rather than a suit, with the likelihood of a criminal record for the person being prosecuted.
Retailers have a clear legal right to recover the costs of goods that they lose as a result of crime. The Government recognise the appropriate and proportionate use of civil recovery as one option available to retailers for dealing with low-level criminal activity that also amounts to a civil wrong. We believe that civil recovery, when used proportionately, provides an effective response to low-value and often opportunistic crime that often involves teenagers and other vulnerable people.
The national retail crime steering group set up by the Home Office with the British Retail Consortium provides a forum for the Government, law enforcement agencies and retailers to discuss and devise strategies for tackling crimes of concern to retailers. At that national level, the Government are working with industry and business to broker solutions that cannot be solved by local action alone and to promote the sharing of effective practice. The group focuses on the significant crime issues affecting businesses, including tackling shop theft, violence against staff and the growing threat of e-crime, to adopt a task-focused, action-orientated approach.
We are encouraging businesses to do more to protect themselves from crime. Effective crime prevention advice is available for businesses to use, and we are making it a priority to share effective practice examples of businesses working together and in partnership with the police and other law enforcement agencies to tackle retail crime across their local areas.
As the right hon. Gentleman said, most retailers who adopt the civil recovery procedure normally employ specialist civil recovery companies to seek damages on their behalf, to meet the losses caused by individuals who steal from them. I understand that in addition to the actual cost of any goods stolen or damaged, retailers seek to recover the overall costs that they have incurred in dealing with the matter. The additional costs are usually claimed to cover the costs of general store security measures such as CCTV, security tagging and security staff, as well as any administrative costs incurred by the retailer.
In the great majority of cases, the value of the goods or cash allegedly stolen is relatively low, sometimes just a few pounds. However, the sum sought in damages can be substantially higher once additional costs are included. Such costs are often charged as a fixed sum of between £100 and £150, depending on the value of the goods or cash involved. I note that the right hon. Gentleman mentioned the amount of £137. The practice adopted by most companies involved in the sector is to write to individuals demanding payment. Failure to pay is followed by a threat of a court action for unpaid damages and the subsequent use of debt collection agencies. Such individuals are advised that their details will be entered on a national database, which can be accessed by retailers, prospective employers and credit providers.
Let me be clear that the Government are entirely satisfied that retailers have a legal right to recover the value of any goods lost or destroyed as a result of an individual’s actions. Defendants can go to their local CAB and receive advice about what to do with the claim. The Government accept that a retailer arguably has a legal right to recover any additional costs or losses directly caused as a result of dealing with a case. However, we appreciate that there is no statutory or other clear basis for setting the amounts of such costs or losses that can be recovered in an individual case. Therefore, the amount of money, if any, that a retailer can recover from an individual accused of low-level theft in respect of its wider costs is entirely a matter for the courts based on the circumstances and facts of the case.
I say “if any” because my officials have not yet been able to identify any cases in which the issue has been tested before the courts and a definitive judgment given. A specialist recovery company confirmed to Citizens Advice in 2010 that it had never issued a claim seeking recovery where an alleged shoplifter had failed to pay the sum requested. Therefore, that area of the law remains untested. CitA—the new name for Citizens Advice—has undertaken a lot of valuable work, for which we are grateful, to highlight what it believes are the relevant problems. I will refer to that valuable contribution later. However, given that some civil recovery is clearly entirely legitimate, we consider that the question deserving further examination involves the means used and the proportionality of losses recovered.
Simon Hughes
Has any work done by the Minister or his officials confirmed that the amounts sought in such cases have no relation to the costs incurred? People should be entitled to recover the £5 cost of a stolen item, but the £135 or £235 top-up fee does not appear to have any basis in reality.
Mr Djanogly
That would be a matter for the courts to decide, and as I have just tried to explain, there has not yet been a test case. A test case might be a good idea.
There is no clear basis for setting claims for additional costs at a specific level. Indeed, retailers can seek to recover such additional costs only to the extent that they can show that they have been incurred directly as a result of dealing with a case, so it is not at all clear how such costs could be set at standard levels. However, as I said, the point has yet to be tested fully in the courts.
As I said, Citizens Advice has raised a number of concerns about how civil recovery companies operate and has conducted valuable work on the matter, culminating in two reports. “Uncivil Recovery”, which was published in December 2010, set out detailed case studies drawn from 300 CitA-reported cases in which individuals had been accused of shoplifting or employee theft and were then pursued for substantial sums of money as compensation for what was described as
“loss and damage caused by your wrongful actions.”
I understand that in the vast majority of cases the police were not involved, nor were criminal charges brought. CitA suggested that it is unfair to use the civil courts in such circumstances, argued that the practice of civil recovery effectively relies on fear and ignorance of the law for its effectiveness and made a series of recommendations.
We believe that the recommendation that the law should be clarified to prevent any civil recovery unless there has been a criminal trial and conviction would result in undesirable additional pressure on the criminal justice system. As I have mentioned, the Government accept fully that some civil recovery is entirely legitimate. Accordingly, we consider that the question of the means used and the proportionality of losses recovered might deserve further examination. However, we accept that one important issue is what approach companies acting on behalf of retailers adopt when pursuing such cases.
In that context, I am pleased to be able to tell my right hon. Friend that the topic, and whether any guidance needs to be issued or other action taken, is being considered across a number of Departments, and good progress is being made. For instance, the Law Commission intends to seek views on the question in a paper soon to be issued on consumer redress for misleading or aggressive practices. The Law Commission project reviews the directive on unfair commercial practices implemented in the Consumer Protection from Unfair Trade Practices Regulations 2008 and asks whether consumers should have a right of redress of breaches of the regulations, and that includes the question whether civil recovery is a commercial practice within the meaning of the directive.
The issue is not beyond doubt, but on a broad interpretation of the meaning of a commercial practice, the directive could apply to civil recovery where it is used against shoplifters. That would not make civil recovery illegal, but specialist recovery companies would not be permitted to send misleading or aggressive letters. More generally, the Law Commission is also considering whether there should be a statutory right of redress for people to reclaim, along with moderate and appropriate damages for distress and inconvenience, any moneys that they might have paid as a result of a misleading or aggressive letter.
The Citizens Advice report implies that civil redress is sometimes uncalled for, but the Government do not support that position. The report is certainly useful in raising important issues, not least those that concern aspects of consumer protection, but I accept that some technical issues need to be resolved.
Simon Hughes
I see that the Minister is on his last page, so I will ask him one last question. A Law Commission report is imminent. Do the Government have a plan to bring together views across Departments and produce a coherent collective response later in this parliamentary Session? I am sure that it would be welcome in both Houses.
Mr Djanogly
I cannot guarantee the timing today, because it will need to be agreed among several Departments, but the issue will be considered on a cross-departmental basis, and we will come back with proposals.
Written Ministerial Statements
(13 years, 1 month ago)
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Sunset Clauses (New Regulations)
(13 years, 1 month ago)
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The Minister of State, Department for Business, Innovation and Skills (Mr Mark Prisk)
I am publishing today the guidance prepared by the Better Regulation Executive to assist Departments in implementing the Government’s commitment to introduce sunset clauses in new regulations.
The policy that is set out in the guidance will contribute to the Government’s goal of transforming the role of regulation in our society. Where regulation is no longer needed, or where it results in disproportionate burdens, the use of review and sunset clauses will help ensure that it is removed. It will strengthen the current process of post-implementation review, and also promote greater transparency and scrutiny of Departments’ regulatory activities.
The initial focus for the policy will be new domestic regulation introduced by Whitehall Departments that results in a net burden on business and civil society organisations, and domestic legislation implementing new EU obligations. The Government’s intention is that all measures that are in scope will be subject to a statutory review obligation, with those domestic measures implemented through secondary legislation also subject to a sunset provision. For secondary legislation, implementation in each case will be subject to the vires under which the relevant regulations are made.
Ministers will be under an obligation to carry out and publish a review of the regulation within five years of it coming into force. The review will look at whether the regulation is effective in meeting its original objectives, whether it is still required, and whether it can be improved. Where there is a sunset clause Ministers may also, depending on the outcome of the review, need to renew the legislation in order for the regulation to remain in force. The renewal, amendment, or revocation of regulations resulting from the new policy will be carried out through existing legislative processes.
The guidance is being published on the BIS website at: http://www.bis.gov.uk/policies/better-regulation/better-regulation-executive/reducing-regulation-made-simple /reviewing-existing-regulations/pirs-and-sunset-reviews. Copies will be placed in the Libraries of both Houses.
Defence Business Services
(13 years, 1 month ago)
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The Secretary of State for Defence (Dr Liam Fox)
As part of the process of departmental reform, today we are announcing the commencement of consultation on a significant organisational change within the Ministry of Defence, with the proposed establishment of a defence business services organisation.
Defence business services will deliver corporate services —human resources, finance, information, commercial and vetting—from a single structure to all areas of the Department. This new single organisation will allow us to provide high-quality professional services more efficiently and with fewer civil servants. We are exploring options to strengthen our ability to manage this change, including the possibility of bringing in outside professional management expertise to lead and direct the new organisation.
By making these changes we expect to reduce the overall civilian work force by about 2,000 corporate services posts with a net saving of £73 million per annum by 2014. This will make a significant contribution to the civilian staff reductions set out last October in the strategic defence and security review.
These proposals are a development of the recommendations made in Gerry Grimstone’s independent review into the use of civilians in defence in 2010. Along with the creation of a new defence infrastructure organisation, which I announced to Parliament on 16 February 2011, the corporate services reforms are the first changes arising out of the work of the defence reform unit chaired by Lord Levene on restructuring the Department. There will be more such changes as we receive and consider further proposals.
Consular Services (Fees)
(13 years, 1 month ago)
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The Minister of State, Foreign and Commonwealth Office (Mr Jeremy Browne)
In addition to its assistance to British nationals in distress, the Foreign and Commonwealth Office (FCO) provides a range of consular services to British nationals who live, work and conduct business overseas. On 16 March 2011 Her Majesty in Council approved the Consular Fees Order 2011. Part I of that order, which has been deposited in the Library of the House, sets what the FCO charges for these services (and for emergency passports, travel documents, and transferring money to those in distress overseas) from 6 April 2011. At the same time the FCO is also making broader changes to these services, most of which will affect very few British nationals.
From 6 April 2011 we will no longer provide as standard some niche administrative services. We will cease offering searches in foreign archives for personal documents, such as for foreign birth certificates. Modern communications allow customers to approach the relevant authority themselves, and where necessary we will offer guidance on how to do this. We will no longer automatically offer management of estates overseas for the deceased; instead, we will provide customers the details of local lawyers who are better placed to provide this service. And we will stop offering translation or interpretation on notarial services, instead putting customers in touch with expert local translators and interpreters.
These changes should contribute to reducing the time consular officers spend processing documents and increase the time they have to focus on the most vulnerable in most need of assistance. They will not diminish the FCO’s assistance to British nationals in distress nor its crisis response capability, including its ability to assist and evacuate British nationals from a country or region.
It is right that, as a general principle, those who benefit from consular services should meet the cost of them, rather than the general taxpayer. The increases to the fees in part I of the order will result in income from the fees increasing by 3.85%. Some fees are reduced, and some are increased by more than this amount. The new fees represent the full economic cost of what we do, and will ensure that British missions continue to provide a high standard of service to consular customers. They are also a sensible rationalisation of the structure of the fees charged.
Fees in part II for passport applications made in the United Kingdom and overseas remain at current levels.
Fees in part III for receiving applications for entry clearance to Commonwealth countries, British overseas territories and Crown dependencies continue to be charged in the order. These fees are “Home Office fees” and are approved by the Home Office Minister but are still contained within the Consular Fees Order.
Torture and Mistreatment Reporting Guidance
(13 years, 1 month ago)
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The Secretary of State for Foreign and Commonwealth Affairs (Mr William Hague)
I wish to make the House aware that I have updated and reissued guidance on reporting torture and mistreatment to all FCO staff, including contractors, secondees and temporary staff and staff from other Government Departments. I have made this guidance available to the public by publishing it on the FCO website.
The UK Government’s policy is clear. We do not participate in, solicit, encourage or condone the use of torture or cruel, inhuman or degrading treatment or punishment for any purpose. We have consistently made clear our absolute opposition to such behaviour and our determination to combat it wherever and whenever it occurs. We take all allegations and concerns about torture and cruel, inhuman or degrading treatment or punishment very seriously.
We are determined to strengthen the FCO’s institutional capability on human rights at home and overseas. The updated guidance reiterates existing advice, setting out the process for FCO staff and other staff working in Her Majesty’s diplomatic missions and offices for reporting information about torture and mistreatment.
Timely, accurate, specific and full reporting is crucial in strengthening the Government’s work to eradicate torture and CIDT around the world. The FCO is committed to this work and staff already report cases, raise concerns and take action.
A copy of the guidance will be placed in the Library of the House by 22 March 2011.
UK Influenza Pandemic Preparedness Strategy
(13 years, 1 month ago)
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The Secretary of State for Health (Mr Andrew Lansley)
I am publishing today, for consultation, a new “UK Influenza Pandemic Preparedness Strategy”. This cross-Government strategy updates the previous national framework, published in 2007, in the light of the experience from the H1N1 (2009) pandemic including the findings of the independent review chaired by Dame Deirdre Hine and the latest scientific evidence. The strategy has been developed jointly with the devolved Administrations.
It is vital that we remain prepared for a new pandemic, the threat of which remains undiminished. Given the uncertainty about the scale, severity and pattern of development of any future pandemic, three key principles underpin the new strategy. These are that the response to a new pandemic should be precautionary, proportionate and flexible. The draft strategy sets out our proposed strategic approach to apply these principles to pandemic preparedness.
The strategy is intended to inform the development of updated operational plans by local organisations and emergency planners. As a result of their experience in the H1N1 (2009) influenza pandemic, many other organisations and individuals have extensive experience of the challenges that can be posed by a pandemic and will have given these challenges much thought. The Government are keen to ensure that this experience is fully reflected. Therefore, we are inviting comments and views on the strategy set out in this document. The consultation runs until 17 June 2011. We intend to publish the finalised strategy later this year.
The strategy has been placed in the Library. Copies are available to hon. Members from the Vote Office and to noble Lords from the Printed Paper Office. The document is also available at www.consultations.dh.gov.uk
A plan for improving the response to seasonal influenza will be published shortly.
EU Directive (Human Trafficking)
(13 years, 1 month ago)
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The Minister for Immigration (Damian Green)
I am writing today to the Parliamentary Scrutiny Committees in both Houses, seeking their views on the Government’s intention to apply to opt in to the EU directive to combat human trafficking upon its adoption. The Government’s view remains subject to parliamentary scrutiny.
In June, the Government took the decision not to opt in at the outset to the proposal for a directive to combat human trafficking but undertook to review the position when there was a finalised text. We have now carefully considered the finalised text. The main risk associated with the text has now been overcome: by waiting to apply to opt in, we have a text that has been finalised and we have avoided being bound by measures that are against the UK’s interests.
The new text still does not contain any measures that would significantly change the way the UK fights trafficking. However, the UK has always been a world leader in fighting trafficking and has a strong international reputation in this field. Applying to opt in to the directive would continue to send a powerful message to traffickers that the UK is not a soft touch, and that we are supportive of international efforts to tackle this crime.
Equality and Human Rights Commission
(13 years, 1 month ago)
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The Secretary of State for the Home Department (Mrs Theresa May)
I am today launching a public consultation on the Government’s plans to reform the Equality and Human Rights Commission.
The coalition programme for government commits to “reduce the number and cost of quangos”. In order to deliver this, the Government carried out a major review of public bodies last year. Following that review, the decision was taken to retain the commission but substantially reform it to focus it on the areas where it alone can add value, and to increase its accountability to Government, Parliament and the public.
We want the Equality and Human Rights Commission to become a valued and respected national institution. To achieve this aim, we have today set out our proposals for legislative and non-legislative reform in three key areas:
Clarifying the EHRC’s remit—the Government will amend the legislation that established the EHRC, the Equality Act 2006, to clarify the commission’s core functions. This will allow the EHRC to focus on the work that really matters, where it alone can add value. At present, vagueness in the Equality Act, for example, the duty to “promote understanding of the importance of equality and diversity”, has led to the EHRC undertaking a wide range of activities that are not regulatory in nature, including running summer camps for young people.
Stopping non-core activities—one of the causes of the commission’s difficulties was the breadth of its remit, extending beyond its core role to, for example, operating a helpline and grants programme. The commission has struggled to do these things well in the past, so we have decided that we should not fund it to do them in the future. The evidence suggests that this work could be done better or more cost-effectively by others.
Improving transparency and value for money—problems with financial controls mean that each set of the EHRC’s accounts have been qualified since its creation, and it has struggled to deliver value for money. Today’s proposals include a legal requirement for the EHRC to publish an annual business plan in Parliament, and comply with the same rules as all other public bodies when spending money. Where the commission fails to show that it has spent taxpayers’ money wisely, financial penalties will apply.
Copies of the consultation document will be placed in the House Library and can also be found on the Government Equalities’ Office website at the following link www.equalities.gov.uk.
“Police (Northern Ireland) Act 2000 - Review of Temporary Recruitment Provisions”
(13 years, 1 month ago)
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The Secretary of State for Northern Ireland (Mr Owen Paterson)
I have today published the Government’s response to the public consultation on the “Police (Northern Ireland) Act 2000—Review of Temporary Recruitment Provisions”. The response document has been placed in the Library of this House. The temporary provisions came into force in 2001 and the previous Administration renewed them by order on 29 March 2010 for a period of one year.
A total of 162 responses were received to the consultation. Of these 152 were in favour of letting the provisions lapse on 28 March 2011, six were against this proposal and three did not express a definite view. One respondent was in favour of letting the provisions lapse for PSNI officer recruitment, but called for the provisions to be retained for support staff.
The Government have considered the responses to the consultation. They have noted the considerable progress made towards securing a police service that is more fully reflective of the community in Northern Ireland. This follows the recommendation in the Patten report that in order to make a police service representative, community leaders should take steps to remove all discouragement and make it a priority to encourage members of their communities to apply to join the police service.
At the time of the Patten report only 8.3% of Royal Ulster Constabulary officers were from a Catholic community background. Today 29.76% of officers are from a Catholic community background, the top end of the critical mass identified by Patten.
Against this background and given that policing in Northern Ireland is now, rightly, devolved and under local control, the Government consider that the continued use of the temporary provisions can no longer be justified and they will therefore lapse on 28 March 2011. Patten himself said the use of special measures should be revisited after 10 years.
The Government believe that maintaining a police service which is reflective of the society it polices is as important as ever. This view is shared by the Department of Justice and the PSNI themselves and they will continue to work to this end in the years ahead. We want to see this progress continue and for Catholic representation in the PSNI to grow further over time. Patten’s vision of a fair, impartial and effective police service does not end with the provisions.
PSNI recruitment issues are regularly monitored by the policing board which will continue to hold the PSNI to account. The PSNI shared future strategy agreed by the board demonstrates the PSNI’s continuing commitment to promoting equality and diversity, achieving good relations and building trust with the community.