House of Commons

Tuesday 7th January 2014 Commons Chamber

Tuesday 7 January 2014

The House met at half-past Eleven o’clock

Prayers

Tuesday 7th January 2014 Commons Chamber

[Mr Speaker in the Chair]

Oral Answers to Questions

Tuesday 7th January 2014 Commons Chamber

The Deputy Prime Minister was asked—

[Nick Smith (Blaenau Gwent) (Lab)]

1. What measures are in place to prevent a fall in the number of people registered to vote after the introduction of individual voter registration.

[Paul Blomfield (Sheffield Central) (Lab)]

4. What measures are in place to prevent a fall in the number of people registered to vote after the introduction of individual voter registration.

[The Minister of State, Cabinet Office (Greg Clark)]

A happy new year to you, Mr Speaker, and to colleagues.

There are three ways in which the Government are ensuring that the electoral register under individual registration is complete and accurate: first, using data matching so that the majority of voters are automatically registered; secondly, phasing in the transition over two years so that people who are not individually registered can nevertheless vote in the 2015 general election; and, thirdly, providing additional resources above what is usually spent at a national and local level to fund activities to boost the completeness and accuracy of the register.

[Nick Smith]

I thank the Minister for that answer. What are the Government doing to ensure that when members of the public come into contact with Government agencies such as the Driver and Vehicle Licensing Agency or the UK Passport Service, that is used to promote electoral registration?

[Greg Clark]

The hon. Gentleman makes a good point. One of the features of the transition that we are putting in place is to use Government databases automatically to register those whose details are held. In the test of this, well over three quarters were automatically registered; in fact, in his constituency the figure was 84%. We are continuing to make use of those sources.

[Paul Blomfield]

Ministers will recognise the particular challenge of encouraging young people to engage in the electoral process, so what consideration has been given to having polling stations in sixth-form colleges, further education colleges and universities to encourage 18-year-olds to vote?

[Greg Clark]

The hon. Gentleman makes an interesting point. Of course, it is in all our interests to ensure that as many young people register as possible, especially in student cities such as his. It is for local authorities to determine polling places, as he knows, but I will take away his suggestion and raise it with the relevant authorities.

[David T. C. Davies (Monmouth) (Con)]

Does the Minister agree that increasing voter registration and voter participation is absolutely vital, but that we must not do so in any way that increases the incidence of voter fraud?

[Greg Clark]

My hon. Friend is absolutely right. The purpose of individual electoral registration is to make sure that those who vote are those who are entitled to vote, so the accuracy of the register is important as well. It is not just important, vital though it is, for voting, because identity fraud is often associated with a fraudulent entry on the electoral register. In fact, the Metropolitan police found that nearly half of fraudulent IDs corresponded with a fraudulent entry on the register. That is another good reason why this change is important.

[Mr Peter Bone (Wellingborough) (Con)]

Surely the way to stop a decline in individual registration is to make politics interesting. Is it not therefore essential that we continue with the leaders’ debates and that they should include the Prime Minister, the Deputy Prime Minister, the Leader of the Opposition and the leader of the UK Independence party? Does the Minister agree that afterwards it will not be a case of “I agree with Nick” but “I agree with Nige”?

[Greg Clark]

All I would say is that my hon. Friend is a personal example of someone who makes politics interesting, and there is a good case for his being included in those debates for that reason.

[Mr Clive Betts (Sheffield South East) (Lab)]

11. In a debate on a statutory instrument before Christmas, the Minister indicated that where local authorities needed extra resources to make proper efforts to maximise the number of people on the register, those resources would be available to them. How are they going to go about applying for them—what will the process be?

[Greg Clark]

The process is already under way. There has been an allocation based on the assessed requirement of the local authority, but it has been made very clear that if it produces evidence of why its need is higher, that need will be met. In the hon. Gentleman’s constituency, in Sheffield, £240,000 has been allocated on top of what is usually spent on electoral registration for this purpose. If there are any exceptional circumstances, they are being considered by my officials right now.

[Mr Philip Hollobone (Kettering) (Con)]

The hon. Member for Blaenau Gwent (Nick Smith) made an extremely good point. Will my right hon. Friend use his considerable influence across all Government Departments to ensure that whenever a member of the public comes into contact with one of those Departments, or a local authority, they are asked, “Are you on the local electoral register”, and if they are not, they are helped to fill out a voter registration form then and there?

[Greg Clark]

My hon. Friend makes a very good point. A public awareness campaign promoting electoral registration will be held during the summer and beyond. My hon. Friend makes a valuable contribution in suggesting that every Department that has contact with the public can play its role.

[Stephen Twigg (Liverpool, West Derby) (Lab/Co-op)]

At a statutory instrument Committee last month, the Minister said that the point of individual electoral registration

“is to drive up registration”.—[Official Report, Third Delegated Legislation Committee, 16 December 2013; c. 12.]

Frankly, most people expect the opposite. How many people would have to fall off the register for the Government to consider using their power to delay implementation of full IER?

[Greg Clark]

I am surprised by the hon. Gentleman’s question, given that this policy was originated by the Labour party. Everyone agrees that we should modernise our electoral system so that people vote individually. The hon. Gentleman did not oppose the passage of the legislation. We need to proceed with it. The Electoral Commission will monitor it and provide advice as we go.

[Ann McKechin (Glasgow North) (Lab)]

2. What his plans are for reform of the House of Lords.

[The Minister of State, Cabinet Office (Greg Clark)]

In the absence of wider reform—[Interruption.]

[Mr Speaker]

Order. There seems to be a problem with the microphone. We will try to have the problem solved, but in the meantime if the Minister speaks up we will all be able to hear him.

[Greg Clark]

In the absence of wider reform, the Government have said that they will support the private Member’s Bill promoted by my hon. Friend the Member for North Warwickshire (Dan Byles), which proposes changes to the rules governing the membership of the House of Lords, including removing peers who are convicted of a serious offence—bringing the rules into line with those of the House of Commons—and removing peers who do not attend.

[Ann McKechin]

I am obliged to the Minister for his response. According to the House of Commons Library, the additional costs of running the House of Lords have increased by £42 million since 2010. Will the Minister confirm how much his Government’s policy of stuffing the Lords until it bursts will cost the taxpayer between now and the general election?

[Greg Clark]

I will raise my voice to make the point that the hon. Lady has some nerve to lecture us on House of Lords reform when the Labour party blocked such reform. [Interruption.] The right hon. Member for Tooting (Sadiq Khan) is right to say that some of my colleagues voted against it, but they did so because they disagreed with it; Labour Members voted against it despite the fact that they said they agreed with it.

[Sir Peter Tapsell (Louth and Horncastle) (Con)]

Why is the Deputy Prime Minister not answering this question?

[Greg Clark]

In the interests of the coalition, the Deputy Prime Minister occasionally allows his coalition partner to answer questions.

[Sadiq Khan (Tooting) (Lab)]

I am also surprised that the Deputy Prime Minister is not answering the question. [Interruption.] I have been called to stand up and speak, and I will do so.

Over the past three years, the size and cost of the House of Lords has gone up. Does the Minister realise that the more Tory and Lib Dem peers the Deputy Prime Minister and Prime Minister appoint, the less effective the House of Lords becomes, because they do as the Government Whips say? Does the Minister therefore agree that, over the past three years, the House of Lords has become bigger, more expensive and less effective?

[Greg Clark]

The right hon. Gentleman does not have a shred of credibility, because Labour voted against the proposals that would have blocked that. Of course, we all know that 408 peers were created under the previous Labour Government.

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

Does my right hon. Friend have any idea whether the Deputy Prime Minister has adopted a new year’s resolution to stop blocking the eminently sensible proposal of his own former party leader, Lord Steel, for modest but necessary House of Lords reform?

[Greg Clark]

I have a post-Christmas gift for my hon. Friend: the Government are indeed supporting—[Hon. Members: “Hurrah!”] Ah, we are back. The Government, including my right hon. Friend the Deputy Prime Minister, have announced that we will support the very sensible and modest, common-sense proposals in the Bill proposed by our hon. Friend the Member for North Warwickshire.

[Mr Speaker]

I call Chris Kelly. Not here.

[Damian Hinds (East Hampshire) (Con)]

5. What recent progress the Government have made on their social mobility strategy.

[The Deputy Prime Minister (Mr Nick Clegg)]

Improving social mobility—[Hon. Members: “He speaks.”] He does, indeed, speak. Improving social mobility is the principal goal of this Government’s social policy. Progress is being made in a range of areas, and we continue to increase investment. Next year, we will double our offer of early education for two-year-olds from lower-income families, and we will add a further £400 per child to the pupil premium. As announced in the autumn statement, we will soon invest about £10 million extra per year in Jobcentre Plus to help young people access apprenticeships.

[Damian Hinds]

Following recent media comment, some of it misinformed, about heritability, will my right hon. Friend confirm the Government’s belief that a huge part of long-standing social immobility in Britain has nothing to do with inherent ability? Will he reaffirm the Government’s core purpose to ensure, through school reform and every other lever available to Government, that everybody in our society can reach their full potential?

[The Deputy Prime Minister]

May I first pay tribute to my hon. Friend? I know that he has done a huge amount of work in this area, and I have read with great interest the reports that he and the all-party group on social mobility have published. He is absolutely right. It is a counsel of pessimism somehow to assume that people’s life chances are blighted at birth. That is why I am so proud that this coalition Government—across the coalition—have dedicated so much time and resources in rectifying the mistakes of the previous Labour Government: providing better child care and more opportunities for two-year-olds from the most disadvantaged backgrounds; providing a £2.5 million pupil premium for children from the most disadvantaged families; expanding apprenticeships on a scale never seen before; and ensuring we have a welfare and tax system with which people can get into work and keep more of the money that they earn.

[Sheila Gilmore (Edinburgh East) (Lab)]

Does the Deputy Prime Minister agree with the social mobility commission that the decision to abolish the education maintenance allowance was badly conceived, and what steps will he take to make up for that error?

[The Deputy Prime Minister]

The education maintenance allowance, as proven by study after study, was not targeted at the problem it was supposed to address. That is why it has been replaced by a fund, which is now used at the discretion of colleges to cover classroom costs and transport costs for those students at college who otherwise cannot access it. I hope that the hon. Lady will welcome the fact that we have recently announced—as well as free school meals for all children in the first years of primary school—that we will finally address the inequity of providing free school meals to youngsters from disadvantaged backgrounds at college as well.

[Tim Farron (Westmorland and Lonsdale) (LD)]

Given that one of the key determinants of social mobility is the availability of affordable new housing, will the Deputy Prime Minister disassociate himself from words attributed to the Prime Minister over the holiday period about the Price Minister being opposed to the development of new garden cities to help meet that desperate need? Will my right hon. Friend support proposals to build in fresh places to make our economy stronger and our society fairer?

[The Deputy Prime Minister]

I have been a long-standing advocate of garden cities. If we are to avoid endless infill and endless controversy about developments that sprawl from already established urban or suburban places, we have to create communities where people want to live—not just with affordable housing, but with the amenities of schools and the infrastructure necessary. That is why I believe in garden cities and why, as a Government, we are committed to publishing a prospectus on them, which I very much hope we will do as soon as possible.

[Jenny Chapman (Darlington) (Lab)]

Another recommendation of the social mobility commission was a substantial increase in the minimum wage that would bring it up to about £7.45 outside London, which would seriously benefit constituents in Darlington. What is the Deputy Prime Minister going to do about that one?

[The Deputy Prime Minister]

My right hon. Friend the Secretary of State for Business, Innovation and Skills has asked the Low Pay Commission precisely the question about the merits and the economic knock-on effects of increasing the minimum wage by a higher rate than in the past. That is what the Low Pay Commission is about and why we have asked that question. We have asked that question; it was not asked by the Labour Government.

[John Howell (Henley) (Con)]

6. What recent discussions he has had with his ministerial colleagues on the role of decentralisation in the implementation of the Heseltine review.

[Nick de Bois (Enfield North) (Con)]

7. What progress he has made on implementing the recommendations of the Heseltine review.

[The Minister of State, Cabinet Office (Greg Clark)]

The Government published its response to Lord Heseltine’s report in March 2013. We accepted its proposition that more funding and powers, currently held centrally, should be available at local level. Some £2 billion a year has been taken from central Government Departments and is available for that purpose. I look forward to assessing proposals during the weeks ahead.

[John Howell]

Decentralisation, as outlined by my noble predecessor’s review, can help to promote private sector business. In this context, what progress is my right hon. Friend making with the Oxfordshire growth deal?

[Greg Clark]

I am delighted to say that there has been very good progress. A city deal for the city of Oxford and the surrounding area is being negotiated and we hope to complete it shortly. I will meet the representatives of Oxfordshire to go further than that by devolving more power and resources to the county to further private sector growth.

[Nick de Bois]

May I press the Minister to confirm that the Government will genuinely look at new ideas that are proposed by local authorities? More importantly, will he confirm that the onus will shift from Whitehall having to approve ideas to it having to disprove their viability?

[Greg Clark]

My hon. Friend is absolutely right. That is precisely the rubric that has been given to local authorities. It is up to Departments to demonstrate why an innovation should not proceed, rather than simply to say, “The computer says no.”

[Mr Barry Sheerman (Huddersfield) (Lab/Co-op)]

May I press the Minister further on this matter? There is a devolved Assembly or Parliament in Northern Ireland, Scotland and Wales, and there is a powerful Greater London axis under Boris Johnson that is enormously influential, but we in the regions have nothing—Yorkshire has nothing. We have no focus, no strategy, no leadership. The Heseltine review said that we should take this matter seriously. When will the Minister take it seriously?

[Greg Clark]

It is taken immensely seriously. The hon. Gentleman does a disservice to the leaders in Leeds and West Yorkshire, who have been extremely effective in producing a plan for a combined authority that puts their resources together. They have been very clear that progress has been made. More progress has been made in the last three years than was made in the 13 years when the Labour party was in power. Lord Heseltine will be travelling to Yorkshire with me to make it clear that the implementation of his report is as serious as the agreement of it.

[Lucy Powell (Manchester Central) (Lab/Co-op)]

The Minister will be aware that Manchester has made huge progress with its combined authority and that the Manchester city deal, which will devolve £1.2 billion to Manchester, was one of the first such deals to be announced by the Government nearly two years ago. Will he say when that deal will be signed, given the ongoing delay in his Department’s signing the deal?

[Greg Clark]

There is no such delay. The deal is agreed.

[Mr Speaker]

I call Paul Uppal. Not here.

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

T2. If he will make a statement on his departmental responsibilities.

[The Deputy Prime Minister (Mr Nick Clegg)]

As Deputy Prime Minister, I support the Prime Minister on the full range of Government policies and initiatives. [Hon. Members: “Oh no you don’t!”] Oh yes I do. I say to Opposition Members that the pantomime season is over. I take special responsibility for the Government’s programme of political and constitutional reform.

[Debbie Abrahams]

A and E departments across the country are in crisis, despite the valiant efforts of NHS staff, including staff at Royal Oldham hospital in my area. The cuts to social care mean that there is often insufficient support in the community to allow patients to be discharged from hospital safely, and beds are blocked as a result. Why did the Deputy Prime Minister support his coalition partners in the £3 billion top-down reorganisation and the £1.8 million cuts to social care when these things were predicted?

[The Deputy Prime Minister]

I wish that the Labour party would stop talking down the NHS. The fact is that A and E is performing better than it did under Labour. We have 300 more A and E doctors than there were under Labour; 2,000 more patients are seen every day within the four-hour limit than when Labour was in control; 1.2 million more people are now using A and E; and there is a new £3.8 billion fund to promote the integration of social care and health care that the hon. Lady advocates. Is it not time to support, rather than denigrate, the NHS?

[Sir Bob Russell (Colchester) (LD)]

T3. I extend birthday greetings to the Deputy Prime Minister. Will he give a progress report on the triple lock for pensions—an ingredient in the coalition agreement that is 100% Liberal Democrat?

[The Deputy Prime Minister]

I thank my hon. Friend for the birthday greetings. On my birthday, I look forward to nothing more than coming to Deputy Prime Minister’s questions. He asks for a progress report on the triple lock. It is true that in the last election the triple lock was not in the Labour manifesto or the Conservative manifesto, but only in the Liberal Democrat manifesto. I am delighted that we have delivered it in coalition. It has led to the largest cash increase in the state pension ever. It is a great idea that has been delivered to the benefit of millions of pensioners across the country.

[Sadiq Khan (Tooting) (Lab)]

May I bring the Deputy Prime Minister back down to planet Earth? NHS England’s own figures show that almost 18,500 beds were unavailable over Christmas because patients spent the holidays in hospital, even though they were well enough to be discharged. Is the Deputy Prime Minister aware of that, and why does he think it was?

[The Deputy Prime Minister]

As I said earlier, given that we have more A and E doctors and thousands more patients being seen within a four-hour period than under the Labour Government, given that A and E NHS departments across the country are performing better than they did under Labour, and given that more than 1.2 million more people are using A and E departments, I think we should get behind the NHS, not constantly look for crises where they do not exist.

[Sadiq Khan]

It would be nice if the Deputy Prime Minister answered a question or two once in a while. The real reason that thousands of people were stuck in hospital over Christmas is that cuts to elderly care make it harder to discharge patients back home. Those cuts also have a knock-on impact on A and E. Official figures show that over Christmas, 13 patients had to wait at least 12 hours on trolleys before being found beds. What message does the Deputy Prime Minister send to those families and patients?

[The Deputy Prime Minister]

For a party that allowed the scandal at Stafford hospital to take place on its watch, it is pretty rich to start complaining about hospital conditions. The failure of social care and health care to work together effectively and address the problem, to which the right hon. Gentleman rightly alludes, went unaddressed for 13 years. We have offered £3.8 billion to local authorities across the country, in an unprecedented attempt to integrate social care and health care. That is what we are doing and what Labour failed to do when it was in office.

[Mr David Ward (Bradford East) (LD)]

T5. Irrespective of the outcome of the national debate on the level of net immigration, does the Deputy Prime Minister believe that sufficient support is given to those communities where there are disproportionately high levels of immigration, and in particular to the public services available in those areas?

[The Deputy Prime Minister]

That obviously touches on an issue of widespread public concern, and my hon. Friend will know that local public services are funded on a needs-based formula, which relates in large part to the number of people in a local area. The changes in population in a local area are reflected in the funding settlements for our schools and health system. To that extent, changes in local population are of course reflected in the funding provided to our local services. More generally, I think we all need to work together to ensure the public have confidence that we have a firm but fair immigration system that welcomes to this country people who want to contribute to the United Kingdom and play by the rules. We must, however, stamp out abuse and illegality, and ensure that in the European Union, for instance, the right to move to look for work is not synonymous—as it was in the past—with the right to claim benefits, no questions asked.

[Ian Lucas (Wrexham) (Lab)]

T6. Will the Deputy Prime Minister agree and support the placement of a limited number of the most vulnerable refugees from Syria in the UK?

[The Deputy Prime Minister]

We have already accepted a number of—[Interruption.] Yes we have. We have accepted, I think, about 1,500 asylum seekers—[Interruption.] Yes we have; that is a fact.

[Ian Lucas]

indicated dissent.

[The Deputy Prime Minister]

The hon. Gentleman keeps shaking his head, but it is a fact that we have accepted hundreds upon hundreds of individual asylum seekers from Syria, under our international asylum obligations. Of course we should do that.

[Ian Lucas]

Answer the question.

[The Deputy Prime Minister]

The hon. Gentleman asked about asylum seekers from Syria, and I am giving him a fact that he does not seem to want to recognise. We have accepted hundreds of asylum seekers who have sought and been provided with refuge in this country under our international obligations. At the same time, I think Members from across the House should be proud of the fact that we, and the generosity of the British people, have led to more British assistance—£500 million of assistance—going to Jordan and other front-line states, and to those communities in the region that are dealing with this terrible humanitarian crisis.

[Nick de Bois (Enfield North) (Con)]

T7. The Deputy Prime Minister and I agree that the integrity of voter registration is crucial, and he will know that I am interested in the issue. Will he change his mind and press for voter identification cards such as those used successfully in Northern Ireland?

[The Deputy Prime Minister]

I recognise that my hon. Friend has raised this issue on several occasions and he clearly feels strongly about it. We are confident that the measures being introduced through the individual voter registration system, originally planned by the Labour party and being delivered ahead of time by us, will stamp out the problems of fraud about which he is rightly so concerned.

[Kevin Barron (Rother Valley) (Lab)]

T8. In response to the Chancellor’s statement yesterday about further welfare benefit cuts in years to come, the Deputy Prime Minister said that those would be cuts for cuts’ sake and would be Conservative cuts. Can he explain to people who live on welfare benefits why he keeps the Conservatives in office?

[The Deputy Prime Minister]

There is a really important debate emerging. We have to finish the job of fiscal consolidation, and there are at least two parties in the House which understand that—the two coalition parties. We understand that we have to fill the black hole in the public finances left by the Labour party, and that will require several further years of difficult choices. Then there is a debate about how we get to that objective and clearly there are differences there. In my party we feel that we should ask those with the broadest shoulders to continue to make an effort in the ongoing fiscal consolidation: my coalition partners do not. That is a legitimate debate, but what divides this side of the House from the other side is that at least we recognise that we have to clear up the mess left behind by the Labour Government.

[Mr Philip Hollobone (Kettering) (Con)]

T10. Does the Deputy Prime Minister believe that unrestricted immigration from the European Union is in Britain’s national interest?

[The Deputy Prime Minister]

Being part of the single market, on which more than 3 million jobs in this country depend, is absolutely necessary to our national self-interest. The CBI, no less, has said that it is worth about £3,000 per household in this country. Turning our back on the idea of the world’s largest borderless single market would be an act of monumental economic suicide and it is something that I would never support.

[Mr David Hanson (Delyn) (Lab)]

T9. Does the Deputy Prime Minister agree with the Business Secretary that the net migration target is not helpful and will not be met?

[The Deputy Prime Minister]

The Conservative party has a long-standing aspiration to reduce net immigration to tens of thousands rather than hundreds of thousands. The Business Secretary was entirely right to point out that the Government need to be open with the British people about those factors in the immigration system over which the Government have control and those over which they do not. He rightly pointed out that the number of British people leaving Britain to live elsewhere, or those Brits living elsewhere coming back, is something that no Government can necessarily control.

[Mr Speaker]

I call Peter Aldous. Not here.

[Mr Andrew Turner (Isle of Wight) (Con)]

Will the Deputy Prime Minister inform the Secretary of State for Business, Innovation and Skills that there are no promises from the Government to cut the number of migrants coming into the UK from the European Union?

[The Deputy Prime Minister]

I may have misheard the question. We are clear as a Government, across the coalition, that what we are delivering is a reduction by a third in the levels of net immigration. I very much want to see this happen more quickly, with the reintroduction of the exit checks that have been removed in the past and, generally, a firm but fair approach towards immigration that says that those people who want to come here and play by the rules, pay their taxes and make a contribution to this country are welcome to do so.

[Kerry McCarthy (Bristol East) (Lab)]

T12. Last January I asked the Deputy Prime Minister if he was ashamed of the shocking rise in food banks under this Government. He has had a year to come up with a decent answer, because I did not get one back then. Does he agree that it is a scandal that more than half a million people are now using food banks and, more importantly, what does he intend to do about it?

[The Deputy Prime Minister]

The hon. Lady might have prefaced her question with the observation that food banks increased tenfold in the years in which Labour was in office, but—as with so much else—amnesia settles on the Opposition Benches and they entirely forget their responsibility for the problems we have and many of the errors that we are correcting in government. We should pay tribute to people who work in food banks and make sure that they help the most vulnerable in society, rather than constantly seeking to make opportunistic political points to their cost.

[Martin Vickers (Cleethorpes) (Con)]

T13. At a meeting held last week between the chairman of the Humber local enterprise partnership and local MPs, the chairman briefed us on the successful conclusion and signing off of the Humber city deal. The meeting recognised that if the area is to meet its full economic potential, a number of major infrastructure projects will need to be carried forward. Can the Deputy Prime Minister give an assurance that the Government will work across Departments to ensure that that happens?

[The Deputy Prime Minister]

While my hon. Friend did not say so, I assume he is referring to the much- anticipated agreement on the Siemens investment in the area and other infrastructure projects. I can certainly reassure him that on the back of the Humber city deal, which was confirmed by the Minister of State, Cabinet Office, my right hon. Friend the Member for Tunbridge Wells (Greg Clark) shortly before Christmas, we are working across all Departments to ensure that where there are steps that we can still take as a Government to ensure that these investment projects are finally given the go-ahead, that should be the case as quickly as possible.

[Andy McDonald (Middlesbrough) (Lab)]

T15. Given the geographical imbalance in the economy, does the Deputy Prime Minister share the analysis of the Business Secretary that the way forward for expansion of airport capacity is to make more use of provincial airports, such as Durham Tees Valley, rather than continuing to stretch capacity in the south-east?

[The Deputy Prime Minister]

I certainly agree with the hon. Gentleman—I am sure everyone will—that we all need to work together to try to ensure that the profound geographical imbalances that have existed in the British economy for a long time are overcome. That can be done in any number of ways. Proper infrastructure investment is clearly needed, which is why, in my view, High Speed 2 will play such a galvanising role in healing the north-south divide. We need to liberate local areas, such as with the Tees Valley city deal, so that they can make their own economic fortunes rather than constantly being at the beck and call of decisions made in Whitehall; and we need to celebrate the fact that, unlike previous recoveries, we are seeing a broadly based recovery, not least in manufacturing in the north, as well as in the service sector heavily located in the south.

[Jason McCartney (Colne Valley) (Con)]

T14. With regard to the Heseltine report, does the Deputy Prime Minister agree that local leaders are best placed to understand the opportunities and obstacles to growth in their communities, whether that be in my part of West Yorkshire, or in relation to the Leeds city region local enterprise partnership, the Huddersfield “The Place to Make it” campaign or even the Calderdale and Kirklees Manufacturing Alliance?

[The Deputy Prime Minister]

I strongly agree. I think the fundamental insight from Lord Heseltine was one that we have ignored at our peril as a country for far too long: we have relied on a culture of government that has always assumed that Whitehall knows best. Whitehall does not always know best—I have certainly learned that after four years in Whitehall. The more we can allow local business leaders and local politicians to come up with locally innovative solutions, the better for our country in the long run.

[Mr Dennis Skinner (Bolsover) (Lab)]

When the Deputy Prime Minister kicked off this session, he said he supported the Government’s policies. I have to tell him, looking around the Chamber, that I do not think the leading Members of the Tory party are supporting him. They have not turned up. Three Tories have not even asked their questions. The only one who has been here all the time, the Chief Whip, is not a proper member of the Cabinet. Why can the Deputy Prime Minister not read the signs? The Government are disintegrating before our eyes. Why does he not do the decent thing and pack it in and let us have an early election?

[The Deputy Prime Minister]

I might ask: where is the hon. Gentleman’s deputy leader? I ask him to stop insulting the Chief Whip, who I consider to be a fully fledged member—[Interruption.] Stop denigrating the Government Chief Whip—very unfair on him indeed. Far from this Government disintegrating, we have continued steadfastly to clear up the mess left by the party of the hon. Member for Bolsover (Mr Skinner), to fill the black hole in our public finances, to give tax cuts to millions of people on low and middle incomes, to introduce the pupil premium, to increase apprenticeships on a scale never seen before, and finally to put this country economically back on the straight and narrow.

[Mr David Ruffley (Bury St Edmunds) (Con)]

Yesterday, Robert Chote, the director of the independent Office for Budget Responsibility, said:

“Not very much has actually come from a reduction in social security spending as a share of national income.”

In the light of that, would the Deputy Prime Minister care to apologise to the Chancellor of the Exchequer for criticising the Chancellor’s excellent speech on welfare yesterday?

[The Deputy Prime Minister]

No, I will not do that because there is a sincerely held difference of view. I believe that if we are to complete the job of further fiscal consolidation we need to do what pretty well every mainstream economist in the world advocates, which is a mix of, yes, public spending restraint, welfare savings and fair taxes on those with the broadest shoulders. If the Conservative party chooses to do it all through further sacrifices by the working-age poor who are dependent on welfare, that is its choice. It is not a choice that my party has signed up to.

[Mr David Winnick (Walsall North) (Lab)]

Given that this Government have been waging war on the poorest and most vulnerable in our society, how much more is the Deputy Prime Minister willing to put up with? Is it what he came into politics for?

[The Deputy Prime Minister]

For an hon. Member who has been here so long, the hon. Gentleman’s questions are truly infantile. The most regressive thing to do is to shrug one’s shoulders, like the Labour party does, and say, “We can’t be bothered to fill the black hole we have left in the public finances. We’ll let our children and grandchildren do it.” There is nothing more infantile than doing what the Labour party is doing—going around pointing at things that are expensive, but never actually spelling out how much its own policies would cost.

[Dr Julian Huppert (Cambridge) (LD)]

There is much in this country that is archaic and out of date. For example, section 3 of the Treason Felony Act 1848 makes it an offence even to imagine—[Interruption.]

[Mr Speaker]

Order. I want to hear from the hon. Gentleman about the 1848 Act.

[Dr Huppert]

The Act makes it an offence even to imagine this country being a republic or to “overawe” Parliament. Will my right hon. Friend have a look at whether such archaic legislation can be repealed?

[The Deputy Prime Minister]

I will, of course, look into these provisions, following my hon. Friend’s entreaty, but I do not want him to hold his breath, thinking that in the latter stage of this Parliament our absolute priority will be the reform of the 1848 Act.

[Helen Jones (Warrington North) (Lab)]

Was the Deputy Prime Minister consulted on, and did he approve of, the Prime Minister’s plan to create 117 new peers, at a cost of £18 million, and how does that square with the Government’s promise to cut the cost of politics? Was it only elected politics they had in mind?

[The Deputy Prime Minister]

The Labour party stuffed the House of Lords year after year. More than that, we debated hour after hour how we could take all party leaders out of the equation and bring the British public into it by introducing a smidgeon of democracy in the House of Lords, and what did the Labour party do? Having lectured people for decades about the need to reform the bastion of privilege and patronage, when it had the chance to reform the House of Lords, it voted against it.

[Guy Opperman (Hexham) (Con)]

Mr Speaker—[Interruption.]

[Mr Speaker]

Order. We must hear Mr Opperman. [Interruption.] Order. Hexham must be heard.

[Guy Opperman]

Returning from planet Bolsover, devolution has been one of the successes of the coalition Government, and the city deal for Newcastle and the north-east local enterprise partnership are two of the finest successes in the north-east, but will the Deputy Prime Minister go one step further and consider expanding the city deal to a rural deal so that the most sparsely populated counties, such as mine in Northumberland, get the same opportunities as cities?

[The Deputy Prime Minister]

I welcome my hon. Friend’s comments and I strongly agree with him. At the end of this Parliament, we will have left England in particular significantly more devolved in how money and powers are allocated than it has been for a very long time. For instance, the devolution of business rates, which is often unremarked upon, is probably the greatest act of fiscal devolution for a very long time. I strongly agree that devolution should be not just an urban phenomenon, and at the heart of the local growth deals lies exactly the promise that city deals in urban areas will be extended to rural areas too.

The Attorney-General was asked—

[Nick de Bois (Enfield North) (Con)]

1. On how many occasions in the last 12 months he has referred a criminal sentence to the Court of Appeal for review because it was felt to be unduly lenient.

[The Attorney-General (Mr Dominic Grieve)]

From 31 December 2012 to 1 January 2014, the sentences of 67 offenders were referred as unduly lenient and have either been heard or are due to be heard by the Court of Appeal.

[Nick de Bois]

The will of Parliament was that the use of a knife in an aggravated fashion would carry a mandatory six-month jail sentence, but according to the latest statistics, the courts have imposed such a sentence in only half of all cases. Does the Attorney-General agree that perhaps these should be considered for appeal, and does he back Parliament’s will?

[The Attorney-General]

My hon. Friend may be aware that such cases are not currently referable. It is for Parliament to decide whether it wishes to extend and make referable those sentences. If Parliament’s will is that they should be, it is my job to consider that. It is worth bearing in mind that the principle enunciated originally was that only a small number of cases in specified and very serious offences would ever be referred. But there needs to be finality in sentencing and, of course, if many more cases are referred, that will place burdens both on the Court of Appeal in considering them and on my office in making the assessment of around 450 cases per annum.

[Valerie Vaz (Walsall South) (Lab)]

rose—

[Keith Vaz (Leicester East) (Lab)]

rose—

[Mr Speaker]

Ah! The vying Vazs. What a delicious choice. I call Valerie Vaz.

[Valerie Vaz]

Thank you, Mr Speaker and happy new year. Does the Attorney-General agree that, at the end of the day, it is for the judges who hear the evidence in a case to decide what the sentence should be?

[The Attorney-General]

The hon. Lady is quite right. We must rely on judges’ judiciousness in deciding what sentences should be. Occasionally there will be examples that are unduly lenient and fall within the specified schedule where I can make a reference. The object of the reference is not only to correct the particular sentence that has been passed but to try to lay down a good precedent for the future. It is noteworthy that we have referred fewer cases overall in the last 12 months than the 12 months before. That may be an indication of the extent to which the Sentencing Council is working to ensure consistency.

[Sir Paul Beresford (Mole Valley) (Con)]

What proportion of the 67 cases were for child sex abuse or child sex pornography in some form or other? Is the Attorney-General prepared to review the sentencing of those sorts of cases in terms of the sentences that are available?

[The Attorney-General]

My hon. Friend can be reassured that most of those cases will be referable and, indeed, I have referred such cases to the Court of Appeal. I am afraid that I cannot give him the statistics at the Dispatch Box but I will write to him with the statistics for the last 12 months.

[Keith Vaz]

As the Attorney-General has said, there are a number of very serious cases that cannot be referred. He says that that is a matter for Parliament. But will he take the initiative and start a consultation, allowing Members to put forward their views as to which offences should be subject to these reviews?

[The Attorney-General]

As the right hon. Gentleman will be aware, other offences have been added to the specified offences. In August 2012, we added trafficking people for exploitation. In May 2006, various offences under the Sexual Offences Act 2003, to which we have just referred, were added. Of course that is possible but, as I said in my first answer, we need to balance the need for finality and the need not to end up with a system where the Court of Appeal becomes the sentencing court for almost all offences. But if the right hon. Gentleman has examples that he feels need to be considered, I strongly urge him to write either to me or to my right hon. Friend the Lord Chancellor and those can undoubtedly be considered.

[Julie Hilling (Bolton West) (Lab)]

3. What recent assessment he has made of the options available to victims of crime who wish to complain about the performance of public prosecutors.

[Andy McDonald (Middlesbrough) (Lab)]

8. What recent assessment he has made of the options available to victims of crime who wish to complain about the performance of public prosecutors.

[The Attorney-General (Mr Dominic Grieve)]

Since the Crown Prosecution Service launched its new victims’ right to review scheme on 5 June 2013, victims have the right to request a review of a CPS decision not to prosecute in qualifying cases. The CPS feedback and complaints policy has also been revised to reflect the appointment of the independent assessor of complaints for the CPS. The VRR scheme was the subject of a consultation, concluded on 5 September 2013, and the CPS is considering the responses to the consultation with a view as to how best to operate the VRR scheme in the future.

[Julie Hilling]

There have been 600 requests from victims of crime to review prosecutors’ decisions to drop their case since the victims’ right to review was introduced six months ago. Given that level of demand, will the Government consider looking at widening the right to review to include decisions to caution instead of charge and decisions to alter substantially the original charge?

[The Attorney-General]

It might be worth while seeing first how the current changes, which are significant, operate in practice. The hon. Lady referred to the figure, which is 662, of which the determination was that the original decision was incorrect in, I think, 18 cases. There have also been cases referred to the independent assessor, where six have been upheld and three partly upheld. I am utterly pragmatic about this; I wish to see victims’ rights at the heart of the criminal justice system, but there are significant changes and we need first to see how well the system is operating and, in particular, how it will operate once the CPS responds in February to its consultation.

[Andy McDonald]

The Crown Prosecution Service is prosecuting fewer and fewer cases each year, and has been referred fewer cases to charge by the police. This suggests that more cases are being dropped at a stage in the criminal justice system where no right to review exists. Is the Attorney-General concerned by that?

[The Attorney-General]

The hon. Gentleman may be right, but there may be other explanations, one of which is that the noticeable fall in crime is leading to fewer cases coming to the police in the first place. I am obviously not answerable for the actions of the police who, as the hon. Gentleman will be aware, are in fact independent in the way they operate. They can be subject to judicial review, but certainly not to ministerial command. If the hon. Gentleman or indeed any hon. Member has examples where they think that the police decision-making process is not working properly, I would be most grateful if they brought them to my attention or indeed to that of the Home Secretary.

[Philip Davies (Shipley) (Con)]

Many people, not just victims of crime, have concerns about the performance of public prosecutors in court. Will the Attorney-General set out what inspections are made of public prosecutors in court and how many unannounced visits are made in order to assess the performance of the CPS prosecutors?

[The Attorney-General]

The Crown prosecutors who appear in court as advocates are monitored. Indeed, it is a rather more rigorous monitoring process than the one available, for example, for the independent Bar that does their work. I would be happy to write to my hon. Friend with further details of how this monitoring is carried out. The previous Director of Public Prosecutions, Keir Starmer, made a very particular point in the first year that I was working with him in carrying out an extensive review of the performance of Crown prosecutors. This is monitored and it is also the subject of inspections by the Crown Prosecution Service inspectorate. There are published reports on the quality of the advocacy being delivered.

[Mr David Burrowes (Enfield, Southgate) (Con)]

Now that wasted cost orders are no longer available in legally aided cases awarded against the Crown, how can accountability be enforced against Crown prosecutors who have plainly not only wasted the court’s time, but let down the criminal justice system, which includes victims?

[The Attorney-General]

First, if there is adverse publicity in respect of prosecutors not doing their jobs properly, that is a matter of very serious concern to me and should and would be a matter of serious concern to the Director of Public Prosecutions. That provides some sanction in itself, quite apart from the fact that I have to answer for the work of the Crown prosecutors once a month in this House.

[Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)]

The day after we saw barristers and solicitors withdrawing their labour in the teeth of the cuts to legal aid, what is the Attorney-General doing to try to improve the efficiency of the Crown Prosecution Service? When I was a witness just over a year ago, I saw at first hand the inefficiencies and time wasted—for victims, witnesses and prosecutors—in the system. With these stringent cuts, that should surely be an area in which to look for efficiencies.

[The Attorney-General]

The hon. Lady will be aware that we are seeking to introduce many efficiencies into the system, including digital working, early guilty plea systems and better warning of witnesses. Some of those are in the hands of the Crown Prosecution Service, but others, as she will appreciate, are not. They lie with my right hon. Friend the Lord Chancellor and the Court Service. There is a great drive for efficiency: efficiency delivers savings and in a time of austerity, there is no doubt that improving the efficiency of the Court Service and of the throughput of the criminal justice system is one of the highest priorities—both for me and, I know, for the Director of Public Prosecutions.

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

Can anything be done to rectify a perceived imbalance in criminal cases where the person on trial has direct access to the barrister who is representing him while the victim, as a witness, has no direct access to the prosecutor? Victims sometimes feel that their case is not as fully understood by the prosecutor as it should be. Can anything be done about that?

[The Attorney-General]

There are limits to what is feasible, although it is also right to say to my hon. Friend that the previous practice, whereby the prosecuting counsel could have no contact whatever with the witness, is now at an end. There is now an opportunity for an introduction and an explanation of how the court process is likely to develop, which I think is a great improvement. That said, there should be no suggestion that a witness is being coached, which my hon. Friend will appreciate could undermine a prosecution case. Those two things have to be balanced. A point that was always made to me when I prosecuted was the absolute necessity of informing witnesses, introducing oneself to them and keeping them informed within the bounds of propriety and the court process about what is actually going on, including talking to witnesses who turn up to find that they are not needed because the defendant has pleaded guilty. It is important to explain that to them.

[Julie Elliott (Sunderland Central) (Lab)]

4. If he will take steps to ensure that the causes of the recent decline in prosecutions for rape, child abuse and domestic violence are investigated.

[Susan Elan Jones (Clwyd South) (Lab)]

7. If he will take steps to ensure that the causes of the recent decline in prosecutions for rape, child abuse and domestic violence are investigated.

[The Solicitor-General (Oliver Heald)]

In September the former Director of Public Prosecutions, Sir Keir Starmer, chaired a meeting with the Home Office and national police leaders, the outcome of which was a six-point action plan to investigate and increase the number of rape and domestic violence cases that are referred by the police to the CPS for charging decisions.

[Julie Elliott]

What recent discussions has the Solicitor-General had with Home Office Ministers about the fall in the number of referrals of rape, domestic violence and child abuse cases to the CPS?

[The Solicitor-General]

I have not engaged in any specific bilateral discussions, but I am a member of a number of Government committees that discuss these matters, including the committee that deals with violence against women and girls. There are falls in the number of referrals, which the six-point action plan is addressing, but it is worth pointing out that the rates of convictions for domestic violence, rape and child sex abuse are at record highs.

[Susan Elan Jones]

What has been the impact of the closure, under the present Government, of 38 out of 39 joint police-CPS offices nationwide on the close co-operation between police and prosecutors that is so vital in relation to this very sensitive subject?

[The Solicitor-General]

I agree that close co-operation between the police and the Crown Prosecution Service is important. As the hon. Lady will know, there are rape and serious sexual offence units that are combined. However, there are advantages in a more efficient system and a cluster of excellence in the CPS, and the view is that, on balance, the way in which the system is currently developing is more efficient and effective.

[Tim Loughton (East Worthing and Shoreham) (Con)]

I congratulate my right hon. and learned Friend the Attorney-General on the progress that has been made in ensuring that the court process is less traumatising for victims, especially victims of child sexual exploitation. The greater profile that is now given to some of those cases is a sign of that success.. However, will my hon. and learned Friend tell me what work he is doing with, in particular, children’s charities and child protection professionals with the aim of communicating to some of the victims the information that the court process is now less traumatising and more user-friendly, so that more of them will be encouraged to take their cases all the way to court and appear as witnesses, rather than being scared off and allowing the perpetrators to get off?

[The Solicitor-General]

The inter-departmental committee on violence against women and girls, which I mentioned earlier, is involved with representatives of various organisations who attend its meetings, so there is that connection. The new guidelines on child sex abuse that were issued last October are intended to bring about a big change in the way in which such cases are dealt with. They recommend an holistic approach and consideration of the credibility of the allegation rather than just the credibility of the witness, and I think that that will help a great deal.

[Dr Julian Huppert (Cambridge) (LD)]

In July 2012, Canadian police closed a child abuse network. They released hundreds of children and passed 2,345 names of suspects to British police, who then did absolutely nothing for 16 months. What assessment has the Solicitor-General made of the effect that that has had on the number of successful prosecutions?

[The Solicitor-General]

The way in which the police investigate cases is independent. The hon. Gentleman could raise it with the Home Secretary, but it is not dealt with by the Crown Prosecution Service. The new CPS guidelines constitute a major step forward, as do the new national network of rape and child sex abuse prosecutors, which provides a source of expertise on such offences in each area. That will lead to more effective prosecutions.

[Emily Thornberry (Islington South and Finsbury) (Lab)]

One of the reasons for the decline in the number of prosecutions for child abuse is that the police are not referring as many cases to the Crown Prosecution Service despite the fact that the numbers remain constant, but the other major factor is that local authorities are not co-operating with the Crown Prosecution Service. Was the Minister as shocked as I was to discover that in the past three years two thirds of councils have refused to disclose information to the police and to the CPS in child abuse cases? Does he think in future he should monitor this, rather than leave it to me, through the Freedom of Information Act, to discover that information, and will he consider making disclosure compulsory in future if this situation does not improve?

[The Solicitor-General]

In fact, the Attorney-General and I have been concerned about this issue and as a result Her Majesty’s inspectorate of the CPS has undertaken a report on disclosure, which was published recently. It is a matter that needs to be addressed. Having said that, the new protocol and the way in which the various authorities are coming together on this is encouraging. [Interruption.] The hon. Lady says something from a sedentary position which I cannot hear, but I assure her that all efforts are being made—

[Emily Thornberry]

I said they are not coming together.

[The Solicitor-General]

I do not want to get into pantomime mode and say, “Oh yes they are,” but the fact of the matter is that considerable progress is being made.

[Mr Marcus Jones (Nuneaton) (Con)]

5. What steps the Crown Prosecution Service is taking to increase the rate of successful prosecutions of cases of online stalking and harassment.

[The Solicitor-General (Oliver Heald)]

The CPS has published guidance for its prosecutors on stalking and harassment cases and on prosecuting cases involving communications sent via social media. In addition, all prosecutors must complete an online e-learning course on cyber-stalking, non-cyber stalking and harassment.

[Mr Jones]

Will my hon. and learned Friend help reassure victims of stalking and help prosecutors by setting out exactly what training and guidance is being brought in for the CPS following the Government’s implementation of the new tougher stalking offences?

[The Solicitor-General]

Yes, I am happy to do that. My hon. Friend will recall that just over a year ago the Protection from Harassment Act 1997 amendment provisions dealing with stalking and with stalking leading to fear of violence and alarm and distress were introduced. Since that time new guidance has been brought forward dealing with the way in which such offences are to be identified and with harassment, and also specifically how they should be dealt with if they involve the social media. Some 438 cases have been prosecuted so far under the new law. That figure is not necessarily too low given that we are at a very early stage, but it is important that this should be driven forward so a joint protocol is being produced by the CPS and the Association of Chief Police Officers. That is due in spring 2014 and it will set out in more detail how both sides of the criminal justice service should perform.

[Mr Elfyn Llwyd (Dwyfor Meirionnydd) (PC)]

Those of us who campaigned for the new law are disappointed in as much as we now have evidence of under-charging by the CPS using the old 1997 Act as it was, and also, regrettably, many Crown prosecutors have not been sufficiently trained to implement the new law. Will the Minister please have a word with the Director of Public Prosecutions and ensure this is put right, because otherwise we will be failing many thousands of people?

[The Solicitor-General]

May I start by paying tribute to the right hon. Gentleman and his all-party group on their work in this area? These two new offences, which were introduced just over a year ago, are an important step forward. It is too early to say whether it is disappointing that the number of offences so far charged is 438 rather than a higher figure, because we want to see how this goes forward from here, but there is no lack of drive or push in trying to deal with these offences, which are horrific and require a very firm approach, and I think this joint protocol will certainly help. If the right hon. Gentleman wants to discuss it with me, I will be more than happy to do so.

[Robert Flello (Stoke-on-Trent South) (Lab)]

6. What steps he is taking to promote awareness of the laws on contempt of court among users of social media.

[The Attorney-General (Mr Dominic Grieve)]

The media and those who publish information on social media sites should always be alert to the requirements of the Contempt of Court Act 1981. In December I announced that in future, if appropriate to do so, advisory notices that I issue for specific cases will be published on the Government UK website and my office’s Twitter feed as well as being issued to mainstream media. These advisories will not take the form of general guidance, but there will also continue to be some information on contempt available on our gov.uk website and this has been updated today. Providing advisory notices to the wider public on a case-by-case basis will, I hope, ensure greater awareness of the law of contempt and its applicability to both the mainstream media and users of social media and help prevent people from inadvertently committing a contempt of court.

[Robert Flello]

I am grateful to the Attorney-General for that response. Do the Government plan to follow the Law Commission’s recent recommendations on contempt of court, which include the introduction of a new statutory offence for jurors who google extraneous information relating to their case?

[The Attorney-General]

I have read the Law Commission’s report and proposals with great interest, and I am taking them very seriously. They are an extremely important contribution to how we might be able to improve matters.

[Several hon. Members]

rose—

[Mr Speaker]

Order. We must move on.

European Council

Tuesday 7th January 2014 Commons Chamber

12:35

[Ms Gisela Stuart (Birmingham, Edgbaston) (Lab)]

(Urgent Question): To ask the Prime Minister if he will make a statement on the European Council meeting of 19 and 20 December 2013.

[The Minister for Europe (Mr David Lidington)]

I have been asked to reply. The European Council focused on three things: defence; economic and monetary union; and EU enlargement and association agreements. On defence, the Prime Minister made it clear that NATO would remain the bedrock of our national defence. As a result of United Kingdom lobbying, NATO’s Secretary-General Rasmussen was invited to attend and address the Council as a symbol of the importance of the European Union’s efforts, which complement rather than duplicate the role of NATO in our collective security. It is right for European countries to co-operate on defence issues such as tackling piracy, and this country has consistently supported other European allies, including the French efforts in Mali. However, it is important that defence co-operation is driven by nations themselves, on a voluntary basis, according to their own priorities and needs, and not by the Brussels institutions.

My right hon. Friend the Prime Minister ensured that the conclusions excluded any ambiguous language or proposals that could lead to new bureaucracy, new EU institutions or increased EU competence on defence and security matters, including any ambitions to own dual-use capabilities such as remotely piloted air systems. The conclusions of the Council were clear that nations, not the EU institutions, were in the driving seat of defence policy and would remain there.

On economic and monetary union, the United Kingdom is not in the eurozone and will not be joining the euro, but we want our trading partners in Europe to have a strong and stable currency and we support their efforts to achieve that, provided that Britain’s interest are properly protected. My right hon. Friend ensured that there would be no financial liability for this country from banking union or from any future euro area mechanism of loans or guarantees for eurozone countries The conclusions also reiterate the importance of making the EU more competitive, including cutting red tape for business.

On enlargement and association agreements, the European Council welcomed the initialling of association agreements with Moldova and Georgia, and made it clear that the EU’s offer to Ukraine remained open. The United Kingdom has long supported enlargement because the prospect of EU membership has proved a huge driver for peace, prosperity and reform across our continent. My right hon. Friend made it clear that he continued to support enlargement and saw it as one of the European Union’s greatest strengths. At the same time, however, he argued that when new countries join the EU in future, we should look again at the transitional arrangements for the free movement of workers. He argued, too, that the free movement of workers was different from the free movement of people seeking the best benefit deal. Other member states share our concerns about this matter, and we look forward to continuing those discussions over the coming year.

[Ms Stuart]

Delightful as it is to see the Europe Minister here today, it is the Prime Minister who is meant to make statements following European Council meetings. Why is the Prime Minister not here today? If he has a good excuse for not being here today, why could he not have made a statement yesterday? Is it now Government policy not to make statements following European Council meetings, even though the House has observed that practice for many years? It would be particularly regrettable if that were the case, given that we no longer have pre-Council debates.

Does the Minister think, on reflection, when he reads the written ministerial statement, that even if the Prime Minister had to make such a statement, the one published in Hansard is not brief, but tawdry? It really is quite an insult, particularly when compared with the official Council conclusions. The written statement makes it clear that there will be no EU ownership, no EU headquarters, no reference to Europe’s armed forces, no European pooled acquisition mechanisms, no EU assets and fleets, no EU drones and no EU air-to-air refuelling tankers. Of course, that leaves one to wonder what there will be, given that this meeting was the first since the Lisbon treaty came into force where the Council had a themed debate focusing on defence.

How does the Government’s statement square with the Council conclusions, which say:

“The European Council remains committed to delivering key capabilities and addressing critical shortfalls through concrete projects by Member States, supported by the European Defence Agency.”?

Given that whole list of noes, including on the institutions, what is the role and function of the European Defence Agency? Similarly, given that there are meant to be no EU drones, what are we to make of the Council conclusion that we remain committed to a 2020 to 2025 time frame for the

“preparations for a programme of a next-generation European Medium Altitude Long Endurance RPAS; the establishment of an RPAS user community”

group and European Commission regulations on that?

The Council conclusions also state:

“The European Council welcomes the Commission communication ‘Towards a more competitive and efficient defence and security sector’. It notes the intention of the Commission to develop, in close cooperation with the High Representative and the European Defence Agency, a roadmap for implementation”

of a more co-ordinated defence industry. Will the Minister comment on the clear contradiction between the written ministerial statement and the conclusions?

I have two final points to make. First, how does the statement square with the French Prime Minister’s demand for the setting up of a permanent fund to finance operations such as France’s operation in the Central African Republic? Secondly, did the Prime Minister have any discussions with the new German Defence Minister, Ursula von der Leyen, who until that point had been personally very deeply committed to a united states of Europe?

[Mr Lidington]

First, I am grateful for the hon. Lady’s words of welcome. Let me respond to her first question by reminding her that since May 2010 my right hon. Friend the Prime Minister has made no fewer than 18 oral statements here following Councils that took place while Parliament was sitting—that is double the number of such oral statements given by his immediate predecessor. It has been the practice of successive Governments not to make an oral statement following Councils taking place during a recess, and my right hon. Friend therefore made a full written ministerial statement on Monday, which set out in detail the key outcomes from this Council.

On the hon. Lady’s important points about common security and defence policy, the key is to understand the distinction between ownership by the EU of defence capabilities, which we do not support and have resisted successfully, and co-operation by European countries in providing greater defence and security capabilities. What was good about the conclusions both of the December European Council and of the previous week’s Foreign Affairs Council on CSDP matters was that they made it very clear that the EU first had to work with, and not duplicate, the efforts of NATO and work alongside other partners in different parts of the world. Secondly, they made it clear that the EU would look for ways in which to encourage co-operation on capabilities, for example, on drones, which she mentioned. That is not some new EU-directed operation, but a facility that individual members of the EU can decide whether or not to take part in. There is no secret plan to direct some Euro drone out of the Berlaymont; it is very different. It is about co-operation between willing member states.

On the defence industry point, the conclusions made it clear that the European defence sector needed to become more competitive and efficient. The language that we successfully negotiated makes it clear that rather than there being any question of European national champions, the defence sector must comply with European law, which means that there must not be illegal state subsidies, except where subsidies are explicitly protected under the treaties. The language also makes it very clear that we, or indeed any other country, are not in any way constrained from continuing to work with the United States or other international partners on our defence industries. When the hon. Lady comes to look in more detail at the conclusions, I hope that she will agree that it was a good outcome for the United Kingdom and a successful negotiation.

[Mr William Cash (Stone) (Con)]

This morning, the European Scrutiny Committee cross-examined the Minister for Europe on these issues. I have written to the Prime Minister accordingly in relation to the fact that he is not here today, as he should be and as our Committee recommended in our recent European scrutiny report. The substantive matter is that, on the one hand, the Prime Minister did say in his press statement that defence must be driven by the nations and not by Brussels diktat, but, on the other, Mr Van Rompuy states that we must have credible European scrutiny and

“a strong, credible, common security and defence policy”.

He also suggests that there is a greater role for European defence. Does my right hon. Friend agree that it is impossible to compare and to reconcile those different approaches given that there is an ever-increasing competence towards European defence irrespective of what the Minister has just said?

[Mr Lidington]

On my hon. Friend’s first point, I am aware that he has written to the Prime Minister about the matter of oral statements. There is of course that recommendation in his Committee’s report. I am sure that my right hon. Friend will reply to the letter. For the record, I repeat the Government’s commitment to give their full detailed response to the European Scrutiny Committee’s report in due course, and I pledge to do that as soon as we are able.

On his point about CSDP matters, I do not agree with him. I, too, want to see a European arm of the Atlantic alliance that is more credible and effective than it is at the moment. That is certainly a message that I hear consistently from the other side of the Atlantic as well. But there is a difference between that and the European Union and its institutions owning and directing those policies. What we support and advocate is a system in which European countries take more seriously their obligations to deliver effective security and defence contributions to that trans-Atlantic alliance, and that is where the conclusions of the European Council represented a clear victory for our vision. It advocated an emphasis on capabilities and political commitment, not on new EU institutions and not on the EU ownership. Rather, it insisted on the EU complementing NATO and working with the grain of member state responsibility and competence over defence policy.

[Chris Bryant (Rhondda) (Lab)]

I rather agree with much of what the Minister has said and congratulate him on being a rather fine Minister for Europe in that he does not subscribe to some of the looney-tunes ideas proposed by some of the people sitting behind him. May I ask him about the European Council and whether there was any discussion about who will be the new British commissioner? The European Parliament will get to have a view, so should not this House get to have a view on who the next British commissioner should be?

[Mr Lidington]

The straight answer to the hon. Gentleman’s question is that there was no discussion by this country or any of the other member states of who their nominee might be later this year. That is a matter, as always, on which the Government will come to a view and we will nominate a man or woman in due course. I must advise the hon. Gentleman to be patient for a bit longer.

[Sir Nick Harvey (North Devon) (LD)]

I commend the Government on successfully resisting the idea of EU-owned military assets or capabilities and underline the support of the Liberal Democrats for European co-operation in defence to be based on nation states putting their forces into joint operations when appropriate, which works very well with the naval counter-piracy mission and various land operations in Africa. Given that the US is rebalancing its defence efforts to the Pacific and is taking 20% of its defence spend out of Europe, is it not more important than ever that the 28 member states of Europe should share their capabilities and expertise where possible to ensure the best possible return on limited investment?

[Mr Lidington]

I agree with my hon. Friend’s points. One thing that the habit of working together on security and defence matters through the EU does is enable us to bring in those countries that are members of the EU but are not, for historical and constitutional reasons, allies of ours in NATO. The very fact that Secretary-General Rasmussen not only spoke at the summit but warmly welcomed its conclusions as pointing the way towards a more effective European arm of defence that complemented and supported what NATO was doing should give us all confidence.

[Kerry McCarthy (Bristol East) (Lab)]

I thank my hon. Friend the Member for Birmingham, Edgbaston (Ms Stuart) for securing the opportunity to discuss this issue in the Chamber today and I share her regret that the Prime Minister broke with precedent by not appearing in person to answer her question.

Let me first touch briefly on the banking union. We welcome the progress that has been made, but what discussions were had during the summit to ensure that the European Central Bank’s risk assessments, which are due to be conducted later this year, will be sufficiently rigorous?

On migration, I welcome the Prime Minister’s statement that there will be further discussions on the

“need to find a better approach to tackle free movement abuse”

at an EU level. As we in the Opposition have said before, we need to reform the way free movement works so it is not seen as a part of a race to the bottom in the world of work. This means looking again at the transitional controls, including extending them over longer periods so that when new countries move into the European Union we learn the lessons from the past. With the recent lifting of transitional controls on Romania and Bulgaria, will the Minister set out what steps the Government are taking to address practical problems around those who exploit migrant workers to undercut local businesses and staff? EU reform will be achieved through building alliances for change among other EU member states rather than escalating rhetoric and alienating allies, so can the Minister set out who will be leading the negotiations on any proposed EU reform agenda on behalf of the Government?

The summit should have been a vital opportunity to build coalitions to secure the changes that must be made in Europe for Britain yet, once again, it seems the Prime Minister viewed it as merely providing the opportunity for securing headlines rather than securing change.

[Mr Lidington]

The hon. Lady is being unusually churlish. If she looks again at the Council’s conclusions, she will see that we not only managed to secure important and positive British interests that take the development of the common security and defence policy in the direction that the UK has long advocated, but—and she omitted to mention this in her question—we secured key safeguards on the operation of the banking union to ensure that the taxpayers of this country are not liable for the consequences of any solvency decision made by our eurozone colleagues. The Opposition might have had the grace to pay tribute to what the Prime Minister achieved; otherwise people might come to think that the Opposition are somehow dismissive of the interests of British taxpayers and of safeguarding them against such liabilities.

The hon. Lady asked directly about the safeguards that the Government were putting in place for people who might be exploited if they came here from other parts of the EU or elsewhere in the world. I can reassure her that the Government are doubling the fine for people who employ illegal workers and quadrupling the fine for paying people below the statutory minimum wage. Under the previous Labour Government, the fine for paying somebody below the minimum wage was £5,000 per employer. Under this Government, the fine will be £20,000 per employee, not per employer. When it comes to the protection of exploited workers, the Opposition’s record does not give them anything of which to be proud.

[Sir Gerald Howarth (Aldershot) (Con)]

I warmly welcome the Prime Minister’s repeated assertion that NATO remains the cornerstone of the defence of the United Kingdom and, of course, of western Europe. However, may I put it to my right hon. Friend the Minister that the observations made by the hon. Member for Birmingham, Edgbaston (Ms Stuart) and my hon. Friend the Member for Stone (Mr Cash) illustrate that there is no reduction in the enthusiasm of some of our continental partners about creating an EU defence identity in conflict with NATO? Should not those countries be working within NATO to strengthen NATO’s capabilities as the United States inevitably reduces its interest in Europe in favour of the Pacific? I remind my right hon. Friend that we have a veto on defence matters in the EU and I hope that he will ensure that that is maintained.

[Mr Lidington]

Yes, we not only have a veto but we have legislated in the European Union Act 2011 to require a referendum were anybody to propose that that veto be lost and that we should move to a system of qualified majority voting instead. Those safeguards, thanks to this Government, are written into law. If my hon. Friend looks again at the detail of the language in the European Council and Foreign Affairs Council conclusions, he will see a welcome emphasis on the need for the EU to complement NATO and the importance of capabilities. The issue of an EU operational headquarters, which was the cause of a rancorous debate 12 months ago, was not even pursued this year. That is evidence that we are winning the argument on the direction in which the European CSDP should go.

[Angus Robertson (Moray) (SNP)]

On the question of European enlargement and immigration, I pay tribute to the overwhelming majority of citizens from elsewhere in the European Union who, in my constituency in Scotland and in the rest of the UK, work hard, pay their taxes and are a benefit to society. Will the Minister take the opportunity to confirm that more than 2 million UK citizens live elsewhere in the European Union, and that the Department for Work and Pensions is right in confirming that the percentage of benefit claimants in the UK is significantly lower among EU nationals than among UK citizens?

[Mr Lidington]

Statistically, as far as I am aware, the hon. Gentleman is right on that point, although of course it in part reflects the fact that the majority of people from elsewhere in the EU who are here are of working age and not retired and in receipt of pensions, so it is not an exact comparison. I very much agree that we should acknowledge that the great majority of people from other EU countries who come here do so to work, to pay taxes and to contribute to society, but that does not mean that we should dismiss the cases in which there is evidence that people have either tried to exploit our benefits system or have engaged in organised or perhaps low-level but still very antisocial crime. It is right that action is taken to tighten up access to benefits and free public services in the way that the Government are proposing. That is important in order to maintain public support and confidence for the principle of free movement of workers—and workers alone.

[Mr James Gray (North Wiltshire) (Con)]

I, too, welcome much of the language used by the Prime Minister at the time of the Council and by my right hon. Friend in the early part of his statement indicating our opposition to a move towards European stand-alone defence capabilities of any kind. However, I also very much share the scepticism voiced particularly by the hon. Member for Birmingham, Edgbaston (Ms Stuart) as to whether this is for real. Surely my right hon. Friend agrees that if defence and foreign affairs are the primary and exclusive role of nation states, now is the time to start moving towards abolishing the CSDP, not praising it as he has done.

[Mr Lidington]

No, I do not agree. I think we should look to the CSDP within the European Union as we look to our co-operative defence and security arrangements, bilaterally with other European countries and with countries elsewhere in the world, as mechanisms by which we can enhance and strengthen the United Kingdom’s security and defence and take forward our global security objectives. Provided that that is done in the right way without the accretion of new powers to EU institutions or the establishment of new EU institutions, then we can succeed in benefiting from sensible, pragmatic co-operation between willing European countries in a way that strengthens the transatlantic alliance as a whole and our national security.

[Kelvin Hopkins (Luton North) (Lab)]

The Minister made reference to economic and monetary union. It is clear that a number of countries have suffered terrible economic experiences as a result of membership of the eurozone. Eurozone membership is now having a deflationary impact in France, and its economy is definitely going in the wrong direction. Has there been any discussion about the likely longer-term implications of France suffering the same kind of experiences as other countries in southern Europe?

[Mr Lidington]

It is for French Ministers to defend French economic policy, including membership of the euro. I am very glad that the United Kingdom remains outside the euro and has no intention of joining it, and that this Government have introduced a statutory referendum lock against any future prospect of our doing so. However, in all my conversations with ministerial colleagues from those countries that have elected to join the single currency, their political commitment remains very strong, and we have to respect the sovereign decisions that they have taken.

[Andrea Leadsom (South Northamptonshire) (Con)]

Will my right hon. Friend confirm once and for all that, notwithstanding what Labour Members say about the value of immigrants to this country and the fact that they claim fewer benefits than the indigenous population, it is perfectly right and legitimate for British taxpayers to be concerned about the speed and rate of immigration, particularly under the previous Government, and that we are therefore right to be doing something not only about reducing immigration overall but specifically about the unintended consequences of free movement of labour? What is his assessment of Angela Merkel’s decision to hold an inquiry into the unintended consequences of free movement, and does he think that that will give us the opportunity to sort out a sensible solution that works for the British taxpayer?

[Mr Lidington]

We need to do two things. First, we need to make sure that our law and European rules distinguish clearly people who want to travel in order to work or who are genuinely able to support themselves, from those who are not able to do so—a principle of free movement to work that benefits a large number of United Kingdom citizens as well as people from other European Union countries. Secondly, when we come to look towards future enlargement of the European Union—we are some years away from any other country being ready to join the EU—we need to revisit the issue of transitional controls and ask ourselves whether simply having a specified, perhaps somewhat arbitrary, number of years after which all controls come off is the right way to address the issue. My right hon. Friend the Prime Minister alluded to that and started a debate on it in his article in the Financial Times just before Christmas. On that matter and on the relationship between freedom of movement and the benefits system, we are indeed looking forward to taking discussions forward over the next year, not only with our German colleagues but with other member states.

[Keith Vaz (Leicester East) (Lab)]

I have known the Minister for Europe since he was 20 years of age, and he has always been very cheerful and talented, but I am afraid he is not a substitute for the Prime Minister. I agree with the hon. Member for Stone (Mr Cash) and my hon. Friend the Member for Birmingham, Edgbaston (Ms Stuart): this is a European Council statement that ends the Lithuanian presidency and begins the Greek presidency, and it ought to have been given by the Prime Minister as soon as the House sat yesterday.

Is it now the policy of this Government to veto enlargement unless we have agreement on transitional arrangements? What exactly are we providing under presidency conclusion 41? Are we giving additional support to countries such as Greece?

[Mr Lidington]

I will have to advise my right hon. Friend the Prime Minister to divert his flight to Luton airport when he next comes back from a Council meeting so that he can be sure of seeing the right hon. Gentleman in person.

I refer the right hon. Gentleman to what I said earlier, which is that when Parliament has been in recess during a European Council, successive Governments have followed the practice of giving a full written ministerial statement rather than an oral statement. His strictures should therefore be as much directed against the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown) as against my right hon. Friend the Prime Minister. In his time as Prime Minister, my right hon. Friend has given twice as many oral statements on EU summits as his immediate predecessor, so I do not think he has anything to apologise for.

[Jacob Rees-Mogg (North East Somerset) (Con)]

My right hon. Friend is very precise in his language—he is a model for a learned lexicographer. I wonder therefore how he might construe this phrase in the conclusions of the Council of Ministers on the CSDP that was endorsed by the European Council, which says that the EU is

“to engage in all domains—land, air, maritime, space and cyber.”

How does that equal his assurance that what will be done will be mainly intergovernmental?

[Mr Lidington]

I take my hon. Friend’s description of me as a compliment, though I recall that Dr Johnson described a lexicographer as “a harmless drudge”—if I remember the quote from his dictionary accurately.

The answer to my hon. Friend’s question is that we must again go back to the distinction between a policy that is directed by and owned by the EU collectively and its institutions, which we do not have, and a broad policy on security and defence that rests on free co-operation between willing national Governments working together so that their capabilities complement one another, and working in partnership particularly with NATO but with other partners around the world as well. There is nothing to fear from the latter version of the common security and defence policy, and that is the version embodied in the European Council conclusions.

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

In advance of the summit, the Prime Minister made great play of new rules regarding access to benefits for EU migrant workers. What proportion of claimants for working-age benefits are made up of EU migrant workers?

[Mr Lidington]

As my right hon. Friend the Secretary of State for Work and Pensions has said in this House before, one of the difficulties we have had is that the previous Government chose not to collect statistics for social security benefits categorised by nationality of claimants. He and his team at the DWP are now changing that, and I am sure that they will produce those figures in due course, but they do not exist for the period of years that the right hon. Gentleman wants, because his Government did not bother to collect them.

[Mr John Baron (Basildon and Billericay) (Con)]

I suggest that the vast majority of immigrants come here for work and not for benefits. Nevertheless, as the Prime Minister suggested at his press conference after the Council meeting, if not during it, the issue of migration needs to be addressed. Will the Minister enlighten the House on how the Prime Minister proposes to move this issue forward in negotiations with his EU partners, given that this is a fundamental right and freedom which might require treaty change by all members?

[Mr Lidington]

We are at an early stage of those discussions. As my right hon. Friend the Prime Minister made clear when he wrote for the Financial Times just before Christmas, he wants to start a debate about how we should manage these matters better in the future. As my hon. Friend the Member for Basildon and Billericay (Mr Baron) knows, this subject causes concerns, particularly among Interior Ministers and Social Security Ministers in a number of different European countries. The conversations are being taken forward by my right hon. Friends the Home Secretary, the Secretary of State for Work and Pensions and, of course, the Prime Minister. We are at an early stage, but we will be taking the discussions forward over the next 12 months.

[Sammy Wilson (East Antrim) (DUP)]

Conclusion 36 indicates that the Council is calling for further discussions on tax evasion, aggressive tax planning, base erosion and so on. Does that include changes in EU regulations which currently permit workers posted to the UK for less than two years to avoid paying tax here and to opt to pay tax in their own country while still being eligible for benefits in the United Kingdom?

[Mr Lidington]

I think the appropriate Minister will have to write to the hon. Gentleman about the particular issue he mentions about posted workers. The key point about the conclusion on tax is that it is part of taking forward the G8 agenda on tax transparency that the Prime Minister led at the Enniskillen summit last year.

[Mr Bernard Jenkin (Harwich and North Essex) (Con)]

If EU defence is really just harmless intergovernmentalism, why do we have directives that have the force of law in the field of defence? Why do these conclusions include invitation after invitation for the Commission, which is not an intergovernmental institution, to lead on initiatives? Why are we still in the European Defence Agency, which contains expensive provision for qualified majority voting on defence? Is not my right hon. Friend becoming somewhat blind to the fact that we are moving towards a federal defence policy and a European army? He is in denial.

[Mr Lidington]

My hon. Friend is mistaken in his analysis of the EDA. The Under-Secretary of State for Defence, my hon. Friend the Member for Ludlow (Mr Dunne), who has responsibility for defence procurement, took a very hard line and successfully won a flat-cash settlement for the EDA this year. We held out and it required unanimity for that budget to be agreed. It is simply not the case that we can be overridden by a QMV vote.[Official Report, 15 January 2014, Vol. 573, c. 11MC.]

The Commission has a role under the treaties with regard to industrial policy and, of course, the operation of the single market. However, the single market as regards defence is qualified in the treaties by articles that make it clear that certain matters are reserved from normal single market arrangements because they are critical to national security. Embodied in the European Council conclusions is a very clear direction from all 28 Heads of State and Government that the Commission should stick to what is given under the treaties, that there should be no attempt at competence creep and that there should be no move towards national European champions or a circumvention of the freedom of member states to strike sensible defence partnerships with countries outside Europe, and instead that the Commission should work on ways to make Europe’s defence industries more competitive and its defence markets more open in a way that, incidentally, would provide great opportunities for the United Kingdom’s first-class defence suppliers. That move towards greater openness in areas of defence procurement is something that United Kingdom companies have been pressing Ministers to achieve.

[Wayne David (Caerphilly) (Lab)]

The conclusions of the European Council state:

“The European Council welcomes the signature this week of the biggest ever single EU humanitarian financial allocation”

to Syria. Why did the Prime Minister not make any reference to that in his written statement? Indeed, why has the Minister not mentioned it in his response this afternoon?

[Mr Lidington]

There is a lot in the European Council conclusions. I do not think it would serve a huge purpose if a written statement simply rehearsed every single item when there is a link in the statement on the Council conclusions to the full text itself. I am also somewhat constrained—quite properly—by the time permitted to respond to the urgent question asked by the hon. Member for Birmingham, Edgbaston (Ms Stuart).

The hon. Member for Caerphilly (Wayne David), however, is right: this was a very important breakthrough. There was a commitment by all 28 Heads of State and Government for European countries to do more to help people in Syria who have been displaced and are in need and those who have taken refuge in neighbouring countries who face huge problems. What is also needed—we have supported the efforts of other EU countries on this—is some declaration, if we cannot get a resolution, at the United Nations Security Council to provide safe passage for humanitarian organisations to reach people in Syria who are in desperate need and find it impossible to get access to the aid available.

[Mr James Clappison (Hertsmere) (Con)]

My right hon. Friend the Prime Minister has undoubtedly won some crucial victories in our national interest, in the face of the unremitting efforts of the Brussels institutions to fulfil ambitions that are set out in the treaties for all to see, including that of having a European army. Sadly, there are some new commitments in the conclusions, including one in paragraph 9 for

“an EU Maritime Security Strategy by June 2014, on the basis of a joint Communication from the Commission and the High Representative, taking into account the opinions of Member States”.

Is that not precisely a case of the Brussels institutions being in the driving seat and an open invitation for them to indulge in more competence creep?

[Mr Lidington]

The maritime security strategy is about trying to make the different efforts of the 28 European Governments over matters such as piracy and port security more cohesive and co-ordinated than they are at present. It does not involve any kind of direction. It is trying to establish a framework for effective partnership and working together so that we have fewer weak links in security—whether it be maritime or terrestrial—anywhere across the continent of Europe. Any weakness in security arrangements elsewhere in Europe can end up providing a point of entry for people who want to threaten our interests directly, so this sort of effective working together is very much in the interests of this country.

[Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)]

What the Minister has told us about the European Council discussions is obviously welcome, but six days before the European Council an Amnesty International report said:

“European leaders should hang their heads in shame over the pitifully low numbers of refugees from Syria they are prepared to resettle”.

Is it not the fact that Europe as a whole, with the exception of Germany, has been failing in its humanitarian duty to support refugees from Syria? Should not this have been pursued more actively by our own Prime Minister at the European Council, and should not it be taken forward in other European forums as well?

[Mr Lidington]

It is a pity that the hon. Gentleman did not acknowledge the very significant sums of humanitarian relief that this country has provided through the Department for International Development. What we surely want to see in Syria is a ceasefire leading to a political settlement that enables Syrian people to return home, rather than to be dispersed into a diaspora community around the rest of the world.

[Mr David Nuttall (Bury North) (Con)]

Once again in its conclusions the Council has restated the need to cut EU-imposed red tape on businesses, but British companies want action now, not just words. Is my right hon. Friend able to indicate when any of the existing EU-imposed rules and regulations, such as those on the registration, evaluation and authorisation of chemicals, will actually be repealed?

[Mr Lidington]

In fairness, I think that what the industry has been calling for is modification of the registration, evaluation, authorisation and restriction of chemicals directive—REACH—and flexibility in its interpretation, rather than its outright repeal. I can point my hon. Friend to the agreement by all Governments to exempt micro-businesses from future EU regulations as the default position. I can also point him to the Commission’s refit package published earlier this year. Among other things, the Commission has announced that it will withdraw some proposals to impose extra regulations on professions such as hairdressing, and it will also take action about the over-prescriptive aspects of the soils directive. A lot more can and should be done. That is why we have pressed very hard for the recommendations of the Prime Minister’s business taskforce to be taken forward, and why we strongly welcome the fact that the taskforce report has had strong support from Government leaders representing all the main political families right across the European Union.

[Jim Shannon (Strangford) (DUP)]

I thank the Minister for his response to the urgent question. I note that there was no discussion at the Council about a Spanish naval ship’s unlawful incursion into Gibraltar’s territorial waters. The EU is adamant that member states must respect each other’s sovereignty, but Spain is obviously ignoring that agreement. What steps will he take to address that issue?

[Mr Lidington]

We make it clear every time there is a Spanish incursion into British Gibraltar territorial waters that that is unacceptable through a formal protest of some kind to the Spanish Government, which, depending on the circumstances, has ranged from a note verbale to a public summoning of the Spanish ambassador. We continue to make representations to Spain at the highest level about the fact that this sort of behaviour is not tolerable, as well as the fact that Spain would be better off recognising that a large number of Spanish citizens benefit from the prosperity of Gibraltar—from being able to take work there and from the spending power it provides to the Andalusian economy—and that it would be in Spain’s interest to start trying to make friends with Gibraltar, instead of issuing threats.

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

A common defence policy for Europe would clearly undermine the crucial link between Europe and America that forms the basis of NATO. What assessment have our Government made of the number of our fellow EU member states that favour a common defence policy, and of their motivation for favouring such a dangerous step?

[Mr Lidington]

It all depends on what is meant by a common defence policy. There is widespread support, including in the United States and from the NATO Secretary-General, for European members of the transatlantic alliance to be more effective and cohesive in their contributions to our joint security arrangements. My hon. Friend is right that some people in Europe want to go a great deal further, particularly in some of the European institutions, such as the Parliament and the Commission.

For rather obvious reasons of parliamentary accountability and a consciousness of the importance of national sovereignty over defence and foreign policy, there is greater reluctance among national Governments. As a rule of thumb, smaller member states often see security advantages in closer European integration at defence level, and the significant defence players are generally the most conscious of the need to preserve national autonomy and to defend what the treaties lay down, which is that defence and security remain national competences and rights.

[Mr William Bain (Glasgow North East) (Lab)]

What further reassurances can the European Council provide to the people and the Government of Ukraine that signing the draft association agreement with the European Union remains in their long-term economic interests? When the Minister next speaks to his counterparts in Russia, will he remind them that the decision about whether to sign that agreement is one for Ukraine alone, not one that should be subject to pressure by Ukraine’s neighbours?

[Mr Lidington]

It is important that we do not just make statements at European Councils or the like about this issue, but that we try to reach out to ordinary Ukrainians. Our embassy in Kiev has been leading on that and encouraging embassies from other European countries to do so as well, particularly to get the message through to those in the Russian-speaking areas in the east and south of Ukraine that greater integration with the world’s biggest single trading market will, in the medium and long term, hugely benefit the prosperity of people of every ethnic background within Ukraine.

I agree with the hon. Gentleman in relation to Russia. I have certainly made such a point directly to my Russian opposite number. It is in Russia’s interests to have a Ukraine that is more prosperous and stable than it is today, so I hope that Russia will in time see that Ukraine’s association with the EU should not be perceived as a threat.

[Mr Tobias Ellwood (Bournemouth East) (Con)]

On enlargement, there is a huge disparity between income per head in new member states and that in existing states, which results in many people abandoning their country for a richer one. Is it time for the EU to legislate against new entrants gaining access to other labour markets until their own economic fortunes are growing?

[Mr Lidington]

As the Prime Minister has said, we need to look at how transitional arrangements should operate in future. In his Financial Times article, my right hon. Friend suggested the idea of looking at a new entrant’s GDP in relation to average EU GDP. However, he made it clear that we are not necessarily wedded to that proposal, and are keen to hear ideas from others.

It is clear that simply relying on a somewhat arbitrary number of years and saying that all restrictions will fall away automatically at the end of that period will not restore public confidence in the enlargement process. I profoundly believe that enlargement has worked to the benefit of Europe as a whole, including the United Kingdom, so I want to see public confidence restored, and looking again at transitional controls is one important way to do that.

[Mr Barry Sheerman (Huddersfield) (Lab/Co-op)]

I am sure that if the Prime Minister were here—I wish he was—he would join me, as I hope the Minister will, in wishing the Chancellor of Germany, Angela Merkel, a speedy recovery from her serious skiing accident.

Will the Minister take it from me that I am a very strong pro-European—always have been—but even I am very concerned that this miserable little Council meeting seems, according to his statement, to have spent so little time on the real problems that the European economy still faces. I am talking not about the eurozone, but about the heath of our economy. Only two weeks ago, Angela Merkel made a very important speech about the rift between the rich or super-rich and average, ordinary people being a danger to democratic institutions.

My last point is that we seem to be sleepwalking towards enlargement with three other poor countries, which concerns my constituents and me.

[Mr Lidington]

On the hon. Gentleman’s last point, there is no question of sleepwalking. There is a very rigorous process of accession negotiations, each stage of which succeeds only if every EU member unanimously agrees that the relevant standards have been reached by the candidate country. Even on the most generous estimate, it will be a fair number of years before any of the current candidate countries are in a position to be ready to join the European Union.

I happily concur with what the hon. Gentleman said about Chancellor Merkel. She is a formidable leader of Germany, and a good friend of this country as well. I am sure that the whole House will wish her a very speedy recovery from her skiing injury.

On the hon. Gentleman’s point about debates on the economy, this Council had been designated for a long time as the occasion for the first discussion at Heads of Government level on defence and security policy for several years. There is a limit to the number of significant issues that can be pushed into a single summit meeting without doing injustice to their importance. There was a very good discussion of some broader economic issues at the October European Council, and I am absolutely confident that the Heads of Government will return to the economy in 2014.

[Mr Peter Bone (Wellingborough) (Con)]

The whole House will be disappointed that there was not an oral statement by the Prime Minister yesterday, and the Minister has not explained why the Prime Minister has not popped over from Downing street to spend an hour answering the urgent question that has been granted today.

On a specific matter, did the Prime Minister bring up the issue of Romanian and Bulgarian migration at the Council, and did he suggest that this country wanted to extend the limits? Talking about future transitional arrangements, which are years away, is rather like shutting the stable door after the horse has bolted.

[Mr Lidington]

The Prime Minister and the Government have always made it clear that we will abide by the law in respect of Romania, Bulgaria and other accession countries. The treaty of accession, which was negotiated by the last Government and agreed by the House in the last Parliament, laid down that the transitional controls on migration from Romania and Bulgaria should continue for a maximum of seven years. We were right to put transitional controls in place for the full seven-year period. Unlike in the case of the 2004 accession states, we are lifting the transitional controls at the same time as every other country in the EU that has maintained such controls. The situation is therefore somewhat different.

The measures that we have announced and are implementing to make it more difficult for people who are not workers to access social security and public services ought to provide considerable public reassurance, as should the knowledge that under this Government about two thirds of new employment is being taken up by United Kingdom citizens, whereas under the last Government the figure was only 10%. That is the first sign that this Government’s reforms to welfare, education and training are having the beneficial effect of making more of our young people employable and willing to take the work that is available.

[Ian Murray (Edinburgh South) (Lab)]

I have asked this question of the Minister for Europe before. Now that another European Council meeting has concluded, is he able to tell the House whether he is any closer to determining what is the top policy priority for repatriation that would encourage the Government to campaign to stay in the European Union?

[Mr Lidington]

I have to confess to the hon. Gentleman that he is not the first person with whom I will share the secret. The Government have a clear policy on reform of the European Union to make it more competitive, democratic and flexible. In his party capacity, the Prime Minister has set out that at the next election he will advocate a programme of further European reform, including treaty change. The hon. Gentleman will have to contain himself and see what is in the Conservative manifestos this year and next. They will give him a bit more detail.

[Mr Philip Hollobone (Kettering) (Con)]

I suggest to my right hon. Friend that these defence discussions are a classic example of EU competence creep, or should I say incompetence creep? I put it to him that the United Kingdom should have nothing to do with establishing an EU-led so-called European arm of NATO, because if the EU gets anywhere near the NATO-led defence capabilities of European nations, including our own, it will wreck them, just as it has wrecked economic and monetary union.

[Mr Lidington]

I assure my hon. Friend that we are not doing that. Nothing in the European Council conclusions should give credence to the idea that there is such a threat. I say to him that it is a mistake always to see Europe as threatening and to think that we are unable to influence the way in which Europe works together. The record of this European summit again shows that when we put our minds and energies to it, we can influence, and to a considerable extent direct, the future shape of European policy in a way that serves our national interests, the interests of all our people and the interests of Europe as a whole.

[Chris Heaton-Harris (Daventry) (Con)]

Does my right hon. Friend know whether the Prime Minister had any conversations or open debates on protecting parliamentary sovereignty, given the growing crisis in subsidiarity in the European Union following the yellow card that was issued by 19 reasoned opinions across member states on the European public prosecutor’s office being blatantly ignored by the European Commission, which is ploughing forward on this matter?

[Mr Lidington]

That issue was not on the agenda for the European Council, but I made a point of raising it in strong terms at the General Affairs Council a few days before the summit. I was pleased to be supported strongly by my Dutch colleague and a number of other Ministers who were present.

[Guy Opperman (Hexham) (Con)]

Does my right hon. Friend agree that we should be stressing the fact that this coalition Government have given unprecedented aid support to the Syrian refugees and to individual aid agencies such as UNICEF and the neighbouring countries that are doing what they can to address this local humanitarian crisis?

[Mr Lidington]

I agree completely with my hon. Friend.

[Rehman Chishti (Gillingham and Rainham) (Con)]

I very much welcome the statement that has been made by the Minister. On the issue of security, was there any discussion at the Council of Iran’s nuclear programme and the deal that has been reached, because there is concern among neighbouring Arab states, such as Saudi Arabia and other members of the Gulf Co-operation Council, not only about the deal but about the fact that it was reached without any representations from Arab countries at the table where the discussions took place? Does the Minister agree that a country from the GCC should be at the table when there are further discussions about Iran’s nuclear deal?

[Mr Lidington]

Iran was discussed at the Foreign Affairs Council. Of course, my right hon. Friend the Foreign Secretary talks regularly to his counterparts in Germany and to the other permanent members of the Security Council about this matter. We also talk to our friends in the Gulf Co-operation Council about our relationship with Iran and the progress towards an acceptable solution to the Iranian nuclear issue. It is in the interests of countries in the region, as well as countries in Europe and north America, that such a solution is found as quickly as possible.

[Jason McCartney (Colne Valley) (Con)]

I joined fellow members of the NATO Parliamentary Assembly for a very informative briefing at NATO maritime command in Northwood about Operation Ocean Shield, which is the NATO operation against piracy off the horn of Africa. After an hour, we were asked to sit through pretty much the same briefing, but delivered by an EU admiral, about Operation Atalanta, which is the EU operation against Somali piracy. Is not that the kind of duplication and confusion in command and control that we must reject, and should we not instead commit ourselves fully to NATO?

[Mr Lidington]

The two operations off Somalia involve two sets of countries, the membership of which is not identical. Having EU and NATO elements means that we are able to involve more nations than would otherwise be the case. In practice, the two operations work pretty seamlessly together. As I understand it, they apply common rules of engagement. The importance of the EU common defence and security policy complementing and not duplicating or being a substitute for NATO was reinforced by the presence of Secretary-General Rasmussen at the European summit in December. The fact that the Secretary-General, on behalf of NATO, felt able to welcome warmly the conclusions that had been reached ought to reassure all of us in the House who are champions of NATO that there is no threat to NATO’s role or primacy here.

Point of Order

Tuesday 7th January 2014 Commons Chamber

13:39

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

On a point of order, Mr Speaker. At 5.15 pm on Sunday at Her Majesty’s prison Oakwood, which is managed by G4S, a group of prisoners refused to be locked down. That led to a 10-hour disturbance in which they allegedly barricaded the Cedar wing and smashed windows. According to the BBC, up to 50 prisoners were involved, and eventually officers in riot gear had to enter the prison. We now know from leaked reports today that there was another disturbance back in November. Staff in riot gear were again deployed to a disturbance involving 18 prisoners, most of whom were said to be drunk and armed with pool cues, and who threatened prison officers and lit small paper fires. The following week, there were five outbreaks of violence in which staff or prisoners were attacked. We are also aware that a prison inspector’s report on that prison demonstrated that it was easier to obtain drugs than a bar of soap, under the management of G4S.

When such an incident has occurred in the past, we have at least received a written ministerial statement, if not a full oral statement. Have you been notified at all, Mr Speaker, about whether there is to be any form of statement about the incident and how it will be addressed? If not, may I urge the Government, through you, to at least provide some form of written statement about how the issue is to be tackled?

[Mr Speaker]

I am grateful to the hon. Gentleman for his point of order. The short answer is no, I have received no such indication. The Leader of the House and other representatives on the Treasury Bench will have heard the concern that has been expressed. What follows, I know not, but the hon. Gentleman will keep his eyes and ears open. There are other ways he can pursue the matter through Adjournment debates or written and oral parliamentary questions if he so chooses, but he might want to wait to see the response to his point of order, and I thank him for it.

Community Hospitals

Tuesday 7th January 2014 Commons Chamber

Motion for leave to bring in a Bill (Standing Order No. 23)

13:41

[Charlie Elphicke (Dover) (Con)]

I beg to move,

That leave be given to bring in a Bill to make provision for community ownership of hospitals owned by NHS Property Services Ltd; to facilitate the integration of health and social care services provided in those hospitals; and for connected purposes.

Colleagues will know that there are more than 300 community hospitals in England. They are deeply rooted in their local communities and provide great support and personal services. They are well supported by leagues of friends who work tirelessly to raise funds and improve services and equipment in those hospitals still further. They provide treatment that is much closer to home than many other health facilities, and they have a personal, caring approach that is not always possible in large, busy, acute hospitals.

Community hospitals such as the one I represent in Deal in my constituency have a real role in the future of the NHS. They provide cheaper care beds than an acute hospital can provide; they are a good basing for community services and a potential engine for bringing together health and social care in our community. They relieve the bed-blocking pressure on busy acute hospitals where beds are often scarce. They do intermediate care—step up, step down, end-of-life care, palliative care—very well. It is better to have care that is local and more cost-effective, and such hospitals are well positioned to help with an ageing population.

Community hospitals up and down the land provide diverse services. Deal hospital serves a population of 36,000, and services include minor injuries, diagnostics such as X-rays, care beds, antenatal care, mental health support, community clinics for cardiac nurses, sexual health, baby clinics, eye tests, dietary advice, and even a dental suite. Out-patient clinics are also provided. Sadly, the local acute trust wants to withdraw those services, but my case is that where patients—particularly elderly patients—find it hard to travel, we must be more understanding with our out-patient services, and more careful to provide them locally. With an ageing population and people who find it hard to travel long distances, it is important that we can carry out more local services in our community hospitals.

With the transfer of many community hospitals to the NHS PropCo, many were worried—at least in Deal, and more widely—that the hospital would close. I ran a campaign to save the hospital that saw 2,500 local households—that is 20%—answer a survey, and more than 400 people pack into a public meeting. Those institutions are cared about deeply. People care about community hospitals; they want to save them and to know they have a secure future. They worry about their hospital being in the PropCo, and those concerns will not be reduced by today’s report in the Financial Times about the difficulties that PropCo has had.

I believe that communities should be able to own their hospitals if they wish. Many will ask, “How we can possibly allow that? How can people in local communities have responsibility for looking after a community hospital? Look at them—they have straw in their hair, green wellies, and they can barely speak English.” My answer is simple: many, possibly most, community hospitals were founded by public subscription in local community trusts. As people did it then, so they could again. I think we can trust our communities to run hospitals properly and competently, and history teaches us that they did it very well in the past.

Why should we not have community hospitals back in local ownership? Why cannot community trusts take back those hospitals and social enterprises? Whether it is the big society, localism, Labour’s co-operative movement—call it what we will—it amounts to the same concept, idea and ideal. Why cannot GPs take up the management and have right of admission, as they used to? This is not just an issue for Deal, which I represent, but a concern up and down the land. There are clever people up and down the land, as well as brilliant leagues of friends who do much good work. There are community hospitals such as that in Deal everywhere across this country.

That is my case. It goes far and wide and is supported by many colleagues present today, which I appreciate and thank them for. My case is supported across the House, and in addition to the official supporters—who I shall read out if the House is kind enough to give me leave to bring in the Bill—I want to place on record my thanks to many other colleagues who have kindly provided support. They include my hon. Friends the Members for Bracknell (Dr Lee), for Woking (Jonathan Lord), for North East Cambridgeshire (Stephen Barclay), for Mid Norfolk (George Freeman), for Penrith and The Border (Rory Stewart), for Congleton (Fiona Bruce), for Wellingborough (Mr Bone), for Harwich and North Essex (Mr Jenkin), for New Forest East (Dr Lewis), for St Ives (Andrew George), for Bristol North West (Charlotte Leslie), and for Altrincham and Sale West (Mr Brady).

Let communities own their own hospitals again and enable them to take responsibility. Let them feel that the future is something they are part of, rather than something that happens to them. Give them shared responsibility in the planning of local health care and coping with an ageing population. I believe that with ideas, innovation and ownership, communities will be able to help drive the changes that the NHS needs to succeed in the future.

Question put and agreed to.

Ordered,

That Charlie Elphicke, Dr Sarah Wollaston, Rosie Cooper, Mr Aidan Burley, Andrea Leadsom, Mr Robert Walter, Priti Patel, Christopher Pincher, Dr Thérèse Coffey, Peter Aldous, Tracey Crouch and Laura Sandys present the Bill.

Charlie Elphicke accordingly presented the Bill.

Bill read the First time; to be read a Second time on Friday 28 February, and to be printed (Bill 151).

Mesothelioma Bill [Lords]

Tuesday 7th January 2014 Commons Chamber

Consideration of Bill, not amended in the Public Bill Committee

13:48

[The Minister of State, Department for Work and Pensions (Mike Penning)]

I thank you, Madam Deputy Speaker, and Mr Speaker, who is now back in the Chair, for permission to make some opening remarks at the start of Report. While I am enormously proud to bring this important and long-awaited Bill before the House, it is with a sad heart that I do so without the presence of the right hon. Member for Wythenshawe and Sale East (Paul Goggins), who has campaigned for this Bill for many years. Although we may not have agreed fully on all parts of the Bill—we will come on to those parts later—he was enormously helpful to me, not only in the Bill Committee of which he was a member, but outside the House. When I first became a Minister he was very open, and discussed with me the sort of pressures and worries that I would be having. It is a real shame he is not here today, and our thoughts and prayers are with him and his family. We wish him a speedy recovery. I know that he is very poorly, but I know that the thoughts and prayers of both sides of the House go out to him today, and I hope that we will do him proud with the Bill today.

[Kate Green (Stretford and Urmston) (Lab)]

I thank the Minister for the remarks that he made about my right hon. Friend the Member for Wythenshawe and Sale East (Paul Goggins). He is a good friend and colleague to Members on both sides of the House. He is my parliamentary next-door neighbour and, as the Minister has said, for those who are new in this place or to a role, my right hon. Friend is a tremendous source of support, guidance, help and friendship. We miss him very much today.

I am delighted that some of the amendments that my right hon. Friend was able to table before he became unwell will be debated this afternoon, and I hope that the Minister and others will want to do all that they can to honour Paul’s intentions. I know from my right hon. Friend the Member for Leigh (Andy Burnham), who has been in touch with Paul’s family, that they are hugely appreciative that we have the opportunity to debate these amendments this afternoon, and that can be the best tribute to Paul to wish him a full recovery so that we have him back with us as soon as possible.

[Mr Speaker]

I thank the Minister and the shadow Minister for their words.

New Clause 2

Research supplement

‘(1) This section makes provision about the research supplement mentioned in section 13.

(2) The research supplement—

(a) must be expressed by regulations under section 13 as a percentage of the amount set for the purpose specified in section 13(1) in accordance with section 13(2) to (5); and

(b) may not exceed 1 per cent of that amount.

(3) Regulations under section 13 must include provision about the application of the research supplement; in particular, the regulations—

(a) must include provision for amounts raised by way of the research supplement to be applied by way of grants or other financial assistance for research into mesothelioma;

(b) must require the scheme administrator to make arrangements for the application of the research supplement;

(c) may allow the scheme administrator to arrange for a body which handles applications for research funding to administer the research supplement on the scheme administrator’s behalf;

(d) may allow receipts by way of research supplement in respect of one period to be held for allocation in a later period, and for investment of receipts pending allocation.

(4) Before making regulations in respect of the research supplement the Secretary of State must consult—

(a) insurers;

(b) medical charities and research foundations; and

(c) other persons or bodies who the Secretary of State thinks are likely to be interested.’.—(Tracey Crouch.)

Brought up, and read the First time.

[Tracey Crouch (Chatham and Aylesford) (Con)]

I beg to move, That the clause be read a Second time.

[Mr Speaker]

With this it will be convenient to discuss the following:

Amendment 11, in clause 1, page 1, line 6, at end insert

‘; and for funding research into mesothelioma (through the research supplement under section [Research supplement]).’.

Amendment 12, in clause 13, page 7, line 10, at end insert—

‘( ) The regulations mentioned in subsection (1) must provide for the levy to include a research supplement in accordance with section [Research supplement] (in addition to the amounts set for the purpose specified in subsection (1)).’.

Amendment 13, in clause 13, page 7, line 11, after ‘levy’, insert ‘(not including the research supplement)’.

Amendment 14, in clause 13, page 7, line 16, after ‘levy’, insert ‘(not including the research supplement)’.

Amendment 15, in clause 13, page 7, line 18, after ‘levy’, insert ‘(not including the research supplement)’.

[Tracey Crouch]

New clause 2 and the associated amendments were tabled by the right hon. Member for Wythenshawe and Sale East (Paul Goggins), and are supported by me and other hon. Members. It seems an appropriate moment to send my very best wishes to the right hon. Gentleman and his family, and I pray that he recovers soon from his severe illness. He is well respected on both sides of the House and has been a champion for fairer and quicker justice and compensation for victims of asbestos-related diseases. While we do not agree on all aspects of asbestos compensation, the one condition we do share a deep commitment to is that of mesothelioma, and we have worked hard together to find cross-party consensus on aspects of the Bill. Although it is somewhat humbling, it gives me great pleasure to move this new clause and the consequential amendments on the right hon. Gentleman’s behalf.

The right hon. Gentleman spoke on the issue of medical research at length in Committee, and I do not wish to repeat all that he said. However, it is important to remind the House of several key points. The first, and in my view one of the most important points, is that we must remember the sufferers of this dreadful condition in everything we debate today. Mesothelioma is a fatal disease caused only by exposure to asbestos and while its severity can be affected by other factors, it is effectively a disease contracted simply as a consequence of going to work. Doctors who treat meso victims will tell you that it is by far the worst type of lung cancer that anyone can contract, and unfortunately it is likely to cause not only a swift death but an incredibly painful one.

Mesothelioma is not an industrial working-class disease. Although it may be more prevalent among those who have lagged ships or worked in heavy industry, the truth is that anyone exposed to asbestos can become a victim of mesothelioma. We are seeing an increasing number of teachers suffering from this disease and of course there are those who contract it via secondary exposure, such as the wives who washed their husbands’ overalls.

Medical research to help ease the pain and suffering of those who contract mesothelioma is essential, but we must also try and find a cure, not least because we know that the peak of those to be diagnosed is yet to come. Nearly 2,500 people will die from meso this coming year and over the next 25 years some 60,000 might die from the disease, but research into this cancer is shamefully underfunded.

Before entering this House, I was proud to be part of the efforts made by my then employer, the insurance company Aviva, and three other global insurers—AXA, Zurich and RSA—to provide funding of more than £2.5 million to the British Lung Foundation to invest in research projects. It was good to meet many of my former colleagues at a reception held in the House last year to see progress on some of those projects, one of which has been the incredibly important development of a meso-bank. The meso-bank collects tissue and blood samples from sufferers and will provide an opportunity for fundamental and translational research, which will help not only those with the condition in the UK but those in developing countries where the export and use of asbestos has been less controlled—an issue that the right hon. Gentleman also raised in Committee.

Alongside the meso-bank there have been other projects including those being run at the Queen Alexandra hospital in Portsmouth, which is looking at whether specialist palliative care immediately after diagnosis could help relieve the symptoms of mesothelioma, and that at the university of Sheffield which is looking at different treatment packages to relieve pain from this awful disease. Those projects are excellent, top-quality research projects, which would not have been possible without the initial grant from the big four insurers, but unfortunately the funding comes to an end this year, which is somewhat disappointing given that we are about to start the upward trend in those being diagnosed with mesothelioma.

Sadly, meso research funding lags far behind that of other cancers with similar mortality rates. Myeloma and melanoma had £5 million and £5.5 million spent on research respectively, which is about 10 times more than on meso—the irony being that the UK has the highest death rate from mesothelioma in the world.

The amendments would kick-start a long-term secure funding stream for further medical research into mesothelioma by placing a hypothecated levy on all members of the industry, not just the big four. There is concern about whether that would create a precedent for such a levy, but that precedent already exists. We have seen levies placed on the gambling industry, under the Gambling Act 2005, to fund projects related to addiction, and on lotteries, for similar reasons. Levies have also been placed on utility companies. This could be done for the right reasons—to provide essential funding for research projects.

I have read Hansard for the previous discussion on this matter, so I know that the Minister pledged to raise the issue with the industry. My sources tell me that that has now happened, so it would be useful to have an update on the meeting. I believe it was agreed that further discussions with the Association of British Insurers and the British Lung Foundation were to be arranged but that this has yet to happen. I appreciate that with the severe weather over the Christmas period there may have been a delay, but it would be extremely helpful to the House if the Minister could update us on where he thinks this is now going. While I recognise the desire from the Minister for it to remain a voluntary agreement between the industry and research organisations, I would be keen to hear what he intends to do if there is no long-term stable funding agreement, and whether he would commit to introducing secondary legislation to this Bill if that is the case. It would also be helpful if the Minister could commit to the Government overseeing the facilitation of the voluntary scheme. By what date does he hope it will be in force, and can he say in terms how much he would hope the funding to be?

Mesothelioma is undeniably a dreadful condition and research into it is shamefully underfunded. We anticipate more people will be diagnosed over the coming years, from all occupational backgrounds, so it would be helpful to have a strong commitment from the Minister —albeit one recognising that this is not wholly his departmental responsibility—that there will be progress in trying to discover a cure and/or suitable treatment to relieve the horrible suffering from mesothelioma.

In moving the new clause, I hope that I have done justice to the right hon. Member for Wythenshawe and Sale East on the need for extra funding for research, and I look forward to the Minister’s reply.

[Hon. Members]

Hear, hear!

[Steve Rotheram (Liverpool, Walton) (Lab)]

New clause 2 on the importance of research was tabled by my right hon. Friend the Member for Wythenshawe and Sale East (Paul Goggins), who sadly cannot be with us today to speak to it. I am sure that the very best wishes of the whole House for a speedy and full recovery will be relayed to his family by my right hon. Friend the Member for Leigh (Andy Burnham). I thank the hon. Member for Chatham and Aylesford (Tracey Crouch) for her contribution today and the work she has done through the all-party group with my right hon. Friend the Member for Wythenshawe and Sale East. We wanted to ensure that my right hon. Friend’s amendments were debated in the House and taken forward due to the importance of this issue. He worked tirelessly on behalf of his and all our constituents on this important issue, which still blights the lives of thousands of people. There remains no cure for mesothelioma, but it is vital that research continues to offer hope to those still suffering from asbestos-related diseases. It is also essential that sufferers receive the maximum possible compensation, and that it is not reduced by having to pay legal fees. My right hon. Friend sought to improve this proposal and I intend to press it to a vote.

14:00

New clause 2 seeks to ensure that a small part of the levy imposed on the insurance industry—no more than 1% of the total claim bill—is used to fund additional research into mesothelioma. Some 2,400 people a year die from the disease, and it is estimated that approximately 56,000 to 60,000 people, as the hon. Lady said, will die from this terrible disease in the next 30 years unless a cure is found. In the other place, the Government continually suggested that they were sympathetic, but they did not provide a guarantee to support and implement a scheme to fund mesothelioma research on a sustainable basis. That is why my right hon. Friend is so determined to see a small proportion of the levy used for research purposes. As I said at the beginning, my right hon. Friend is a tireless campaigner for mesothelioma victims. I hope this House will feel able to support these important amendments in his name.

[Jim Sheridan (Paisley and Renfrewshire North) (Lab)]

I also add my best wishes to my right hon. Friend the Member for Wythenshawe and Sale East (Paul Goggins), who is an avid campaigner on this issue. I will make a brief contribution.

Mesothelioma has long been neglected in terms of research funding. Lord Alton highlighted that while mesothelioma received £1.4 million in voluntary and private sector funding, £22 million is spent on bowel cancer, £41 million on breast cancer, £11.5 million on lung cancer and £32 million on leukaemia. Those are all terrible diseases in desperate need of research, but so is mesothelioma.

The amendments have the potential to save tens of thousands of lives. If a cure is found it could reduce the number of compensation payments required. It is money well spent. Not only will it save lives, it will save the insurance industry money in the long run. It is for this reason that I fail to understand why it is not on board.

I want to expose the myth that mesothelioma is related only to industrial diseases. The hon. Member for Chatham and Aylesford (Tracey Crouch) mentioned the impact on teachers, but it also affects children, ancillary workers, janitors and all kinds of people who are now employed by, or attend, schools. I ask the Minister to take the time to look at the excellent TUC and National Union of Teachers report on asbestos in schools and future compensation payments. There is evidence that some 75% of state schools have asbestos in their buildings. That is a time bomb waiting to explode. It is important to get that message out there.

Equally, it is important to let potential governors of private fee-paying schools and academies know that they could be liable to pay compensation, should they take on that responsibility, if future pupils are cursed with mesothelioma. It is important for the Government to make people aware that, when they take on governorships or other voluntary jobs in schools, they could be made liable for insurance claims.

[Jim Shannon (Strangford) (DUP)]

I would like to associate myself with the thoughts and best wishes to the right hon. Member for Wythenshawe and Sale East (Paul Goggins). He is a good friend. He has been a good friend to the people of Northern Ireland, both as a Minister and outside of that role. We respect him greatly and hope he will return to health and strength in a short period of time.

I support new clause 2, which, in the absence of the right hon. Gentleman, was moved by the hon. Member for Chatham and Aylesford (Tracey Crouch) and is supported by the other hon. Members who have spoken. It is clear that investment in research into mesothelioma is desperately needed. The UK has the highest rate of the disease in the world. That is not a No. 1 spot that we should be proud of, but one we should be working to change. The British Lung Foundation, which I will refer to throughout my small contribution, estimates that 2,400 people will die of the disease this year and that in the next 30 years more than 50,000 people will die of mesothelioma unless new treatments are found.

Relatively little is spent on mesothelioma research in the UK, compared with other cancers with comparable mortality rates. In 2011, the National Cancer Research Institute reported that £400,000 was invested in mesothelioma research by its partners. That compares with approximately £5 million and £5.5 million spent on myeloma and melanoma respectively, two cancers that kill a similar number of people each year. I have been informed that the research amendments would charge a small additional annual administration or membership fee to participating insurance firms. Those small payments would make a huge difference to the future of mesothelioma research in the UK and could lead to a cure that would save tens of thousands of lives. It is estimated that 150 insurance firms are active in the employers' liability insurance market. This measure could raise a vital £1.5 million each year for mesothelioma research.

I am also informed that during debates in the House of Lords, the Government suggested that the lack of mesothelioma research is due to the poor quality of research proposals, not the funding available, and that therefore a fund for mesothelioma research would not represent value for money. That was the spirit of the Government’s reply to the debate in the House of Lords. The British Lung Foundation, however, put it to me that that argument does not take into account the opinions of many eminent medical and research experts. Advances have already been made through research by the BLF and others. More funding will attract more and better quality researchers and research proposals to an area of research that is still playing catch-up, having been neglected for so long. Members have talked about other cancer charities that are better funded. The BLF, as an individual organisation, has awarded more than £2.5 million to mesothelioma research in the past three years. The Government, with great respect, have fallen short. The BLF uses a robust international peer review process to ensure world-class quality that is respected the world over, and its research and advice is sought by other countries. The experience does not identify any shortage in quality whatever.

In conclusion, it is clear that something more must be done, so I support the new clause.

[Dr Sarah Wollaston (Totnes) (Con)]

I rise first to pay tribute to the right hon. Member for Wythenshawe and Sale East (Paul Goggins) and his work in this area. I wish him well, as all hon. Members have done, and hope for a speedy recovery. I support the amendment in his name, which was moved so ably by my hon. Friend the Member for Chatham and Aylesford (Tracey Crouch).

We must not miss the opportunity to fund research into preventing the disease. One important aspect of prevention mentioned is the risk to children in schools. More than 70% of schools still contain significant amounts of asbestos. There is emerging technology for real-time testing of asbestos fibres in schools. We must continue to have a strong research base not just to relieve those who are suffering the terrible symptoms of the disease, but to research treatments and, most importantly, to look at how we prevent and protect in the workplace, so we can prevent exposure to asbestos. As all Members will know, this disease is caused entirely by exposure to asbestos, and it will be a real wasted opportunity if we do not make this funding available to advance research.

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

Obviously, I pay tribute to the work of my right hon. Friend the Member for Wythenshawe and Sale East (Paul Goggins). One reason he tabled the new clause and amendments was that, although we commend the insurance companies that came together voluntarily to contribute £2.5 million, there are, as has been said, 140 to 150 insurance companies, and one of his concerns was the virtual impossibility of securing an agreement across them all. I hoped his claim would be put to the test before now. Had we secured a voluntary agreement by now, we would not have required the new clause and amendments, but it has not been possible, and I doubt the feasibility of bringing all those companies to the table and securing a voluntary agreement to raise sufficient funds.

I worked in factories in the north-east when I was a youngster, and I can remember the Hebden Bridge experience and the asbestos factory there. For limited periods—tragically—I have known many mesothelioma sufferers, and the two things they want are, first, speedy compensation so that they and their families can get some compensation while they are still alive, if possible, and secondly, that no one else should go through this absolutely appalling suffering. That is why the emphasis has been placed upon seeking prevention. I agree with the hon. Member for Chatham and Aylesford (Tracey Crouch) that education is critical, and that is why some of the original funding—a limited amount, admittedly, but at least some—from the insurance companies was put towards education and, more importantly, finding treatment practices and palliative measures that would reduce the suffering and, in the short term, not the long term, finding a cure.

For those reasons, the new clause and amendments are key to the Bill. Without them, the Bill will not be as welcomed as many of us would have thought. I therefore urge Members and the Government to recognise this as a matter of urgency. We cannot wait for voluntary agreements any longer; we need legislation in place that can generate the income for prevention activities and research. Like other hon. Members, I hope that my right hon. Friend comes back healthy and spritely to engage with this matter and that this will be a tribute to all his hard work, but what better message to send to his family than to encapsulate at least some of his work in the Bill today?

[Mr Mike Hancock (Portsmouth South) (Ind)]

I apologise for not being in the Chamber at the start of the debate; I was tied up in another meeting. I also pass on my good wishes to the right hon. Member for Wythenshawe and Sale East (Paul Goggins), who is not with us today. I hope to see him back here as quickly as possible.

In my constituency, hardly a week goes by when a local newspaper does not report on the inquest of someone who has died from an asbestos-related illness, having worked either in the dockyard in Portsmouth or in one of the many industries that have served the defence industry over the past 50 or so years. Interestingly, time and time again, coroners’ reports request—virtually demand—that more action be taken to research and develop better techniques for helping sufferers of this godforsaken illness, which besets and destroys their lives and those of their families. I am therefore fully behind Members advocating that we do more.

The hon. Member for Paisley and Renfrewshire North (Jim Sheridan) spoke very well about the problems in our schools. I have a caseload of about two dozen people affected by this disease and fighting various stages of the illness, and that includes an ex-school teacher exposed to asbestos. The only place it could have happened was in a school classroom, and it is sad to see the burden she now carries. Even though she has retired from education on health grounds and despite the effects of this appalling illness, she is working hard to keep her family together.

The British Lung Foundation says that even a small contribution from these various organisations would lead to great improvements in research and development and help all sufferers—those in the last stages of the disease and those yet to reach that point—so I urge all Members to support the new clause. I hope that the Government will see sense and recognise that it tries to do what most people in the Chamber and the country who know anybody affected by this disease want to see happen. I hope that will be the case when we vote on it later.

14:15

[Kate Green]

I thank all hon. Members who have contributed to this debate, particularly the hon. Member for Chatham and Aylesford (Tracey Crouch), who moved the new clause on behalf of my right hon. Friend the Member for Wythenshawe and Sale East (Paul Goggins). We support the new clause and the amendments and are pleased to have heard so many endorsements of them from hon. Members across the House.

As has been said, about 2,400 people a year die from mesothelioma and about 56,000 are expected to die from it in the next 30 years, unless a cure is found, yet, as has been shown, very little funding in the UK is being directed to research into mesothelioma. Tragically, the UK leads the world in the incidence of mesothelioma, so one might have expected us to want to lead the world in investment in research to find a cure and treatment.

[Alison Seabeck (Plymouth, Moor View) (Lab)]

I apologise for interrupting my hon. Friend’s flow; she was building on the comments from around the Chamber. On research in the UK, does she share my concern that my constituent, Debbie Brewer, who contracted diffuse mesothelioma from her father who had worked in the dockyard and who died last year, was forced to travel to Germany for treatment because not enough research had been done in the UK to support treatment here? That should not be happening.

[Kate Green]

I am shocked to hear of the case that my hon. Friend reports. For anyone suffering terribly from a disease they know will be fatal and cruel in its passage, one of the most important things is being as close as possible to home, to their family and friends, and naturally we want to do all we can to invest in good-quality, well-researched treatment so that every mesothelioma sufferer can access care as close as possible to home.

Members across the House have pointed out the differential in the level of funding afforded to mesothelioma research relative to that directed to other medical conditions and other cancers. In fact, mesothelioma research receives no state funding at all, yet as more people access pay-outs from the scheme introduced in the Bill, the Government should begin to enjoy financial savings as a result of reduced statutory pay-outs. It is not one of the amendments proposed today, but the Minister might like to consider whether the savings that the Government can look forward to enjoying might also, to a degree, be directed towards funding further research into a treatment and cure for this terrible disease.

Today, mesothelioma research receives £1.4 million of entirely voluntary and private sector funding, and I pay tribute to the voluntary and private sector funders, including the insurance funders, that have made those research funds available. Some £1.4 million is available to mesothelioma each year, compared with, for example, £22 million for bowel cancer, £41 million for breast cancer, £11.5 million for lung cancer and £32 million for leukaemia. Clearly we are not anxious to be in some form of league table for which form of cancer is the most deserving of funding for research—all are terrible for those hit by them and for those close to them—but it is clear that mesothelioma is a poor relation in the funding that is available for research, and there is a real will across the House and, as we know, in the other place to address that matter during the passage of the Bill.

This issue was debated extensively in the House of Lords as a result of an amendment tabled by Lord Alton. At that time, a number of useful and welcome pledges were secured from the Health Minister, Earl Howe, including the announcement of a joint strategy between the DWP and the Department of Health on how to encourage proposals for high-quality research into mesothelioma. Since Earl Howe’s statement in the House of Lords, we have heard that a meeting has been hosted with potential researchers and funders to begin to take forward the implementation of that strategy. We are pleased to hear that.

As the Minister will recall, when we debated the matter in Committee my right hon. Friend the Member for Wythenshawe and Sale East absolutely rejected any suggestions that it was a lack of suitable research proposals, rather than a lack of adequate research funding, that was leading to the dearth of activity in mesothelioma research. The proposal in the new clause, which was made at every stage in Committee and in the other place, is very modest in the context of the overall scheme that we are discussing. It proposes a supplement of 1% to go towards research funding on the levy on insurers. That is not 1% of gross written premium, but 1% of 3% of gross written premium—a very modest sum for a multibillion pound insurance industry to afford, but a sum that could make an exponential difference to the scale of research that is possible into the disease. I hope that the Minister is listening carefully to the pleas that we should secure that.

In Committee, my right hon. Friend the Member for Wythenshawe and Sale East listed a series of research programmes that are already under way; the hon. Member for Chatham and Aylesford also referred to those programmes. We would like to take the opportunity to secure funding to extend, expand and continue those research programmes, and to open the opportunity for further new areas of research—as I say, there is no shortage of good research ideas.

It is important to note that such research would of course be of benefit to mesothelioma sufferers in this country. We have the highest incidence of mesothelioma anywhere in the world and, as hon. Members have pointed out, the reach of mesothelioma is extending; not just to those who worked in our traditional industrial sectors but across other sectors. Schools have been particularly highlighted, as have family members who may have been exposed to secondary contamination when workers brought home asbestos fibres on clothes and work equipment.

Not just sufferers and their families here in the UK but sufferers right across the world will benefit from investment in research. That is an important point, and one that my right hon. Friend the Member for Wythenshawe and Sale East would have wanted us to consider this afternoon. In the UK, we think that we are shortly to pass the spike in mesothelioma. The history of asbestos exposure and of health and safety action and legislation to prevent people from being continually exposed to that risk means that the spike in the number of sufferers will come within the next few years. That is to be welcomed tremendously here in the UK, but it is absolutely not the case around the world, particularly in developing economies—especially developing economies where health and safety standards may be much less rigorous than we are used to in this country and where economies may be expanding very rapidly—where hundreds of thousands, if not millions, of workers may even now be exposed to the risk of mesothelioma despite all the collective knowledge and wisdom that we have of the damage that exposure to asbestos will cause.

It is also important to note that in many of those developing economies, UK companies and businesses will have business interests and investments. In some cases they may be drawing profits from industries that are continuing to expose workers worldwide to that risk. The moral obligation on us here in the UK to lead the world in research funding arises first because of our early experience of asbestos exposure and mesothelioma and secondly because we continue indirectly to be complicit in the exposure of workers in developing economies around the world.

It has been powerfully conveyed this afternoon how strongly the House feels not just about making sure that the funding proposals come forward, but that funding to support and encourage future proposals is guaranteed and secured. I know that the insurance industry feels as concerned as any of us to address the horrors of this disease and to seek to turn a corner in dealing with the risks to which we have exposed too many generations. I hope that it too will consider this very modest proposal, which merely builds on the voluntary contribution that many of them are already making. I hope that the industry will not feel that this is a step too far for it to contemplate. Even if it does feel that, it is the responsibility of those of us in this House first and foremost to speak up for victims—today’s victims and victims in the future. That is why I hope that the Minister will at last feel able to accept the amendments that have been moved on behalf of my right hon. Friend. I very much look forward to a positive response.

[Mike Penning]

I paid tribute to the right hon. Member for Wythenshawe and Sale East (Paul Goggins) earlier. When I heard the news, I e-mailed his office, as that was the only way I could contact his family. I hope that the message got through. It is not just in my current post that the right hon. Gentleman has been supportive; he was also supportive when I was a Northern Ireland Minister. He was an excellent Minister there as well. I pay tribute to the measured response from Her Majesty’s Opposition so far today and I am sure that that will continue. I particularly pay tribute to my hon. Friend the Member for Chatham and Aylesford (Tracey Crouch) on what must have been a difficult speech to make. The right hon. Gentleman, who is very poorly, is a close friend; we are friends across the House. It is a tribute to my hon. Friend that she was able to move the amendments today.

During the Committee stage, I gave undertakings to the right hon. Member for Wythenshawe and Sale East—inside and outside the Committee—and discussed the restraints I was under, which he fully understood, given the deal that we struck with the insurance industry to get the Bill to where it is today. As promised, I met the ABI, to which my hon. Friend the Member for Chatham and Aylesford Urmston (Kate Green) alluded, and the ABI has gone to the industry and will come back to me and to my noble friend Lord Howe as part of the joint approach that we have with the Department of Health on future research.

I have also spoken to Lord Howe, as I committed to do in Committee. As has been said, we have had the first meeting. One of the things I touched on with him was the issue of quality of research. That matter has been taken out of context slightly, although there was no intention to do so. It is like when anyone bids for anything; they have to tick the right boxes. When people go for a loan at the bank, they need to make sure that they have ticked the right boxes. It is not a question of the quality of research; in many cases, it is how that research has been bid for by the establishments.

It is true that the National Institute for Health Research provided £2.2 million in 2012-13 on top of the £1.4 million from the private sector. There has been money and we expect more money to come as bids come forward that match the way in which the research funding is allocated. I completely agree with the shadow Minister that we need to look at research not just in this country, as a developed nation, but for developing countries. A lot of the industries that developed products with asbestos in them have been selling them to the third world for many years. Thank goodness, many of the nations that we traditionally thought of as third-world nations are now developing nations, and it is important to force this issue forward.

14:30

I fully understand the context, tone and feelings in the House today in support of the new clause, as supported by my hon. Friend the Member for Chatham and Aylesford, but I honestly cannot break the deal, which is what would happen. We have a 3% provision based on a 75% basis, to which we will return later. Although I truly understand the feeling to press the new clause to a vote on behalf of the right hon. Member for Wythenshawe and Sale East—I would have done so myself if I were in opposition—we do not know whether he would have accepted the work I have done with Ministers in other Departments.

I have done everything I was asked to do and had committed to doing in Committee. Much more work is to be done, but I cannot break the deal that has been agreed. I am afraid that this is going to be a repetitive comment from me, as it was in Committee. I see the right hon. Member for Newcastle upon Tyne East (Mr Brown) nodding, because he knows of the constraints I am under, just as the right hon. Member for Wythenshawe and Sale East always knew. We need the deal to go through, so that we can get the compensation going out as soon as possible. With that, I respectfully ask for the new clause to be withdrawn, although I would fully understand it if we proceeded to a vote.

[Tracey Crouch]

This has been an incredibly hard debate for me to participate in. I do not think I have ever contributed to a debate on mesothelioma in this place without opposite me the right hon. Member for Wythenshawe and Sale East (Paul Goggins) discussing the surrounding issues. He is a decent man and he would have heard what the Minister said; he would have understood the lengths to which the Minister has gone to make some progress on the issue. As the Minister says, none of us probably knows for certain what the right hon. Gentleman would have done on this issue right now. Given that I moved the new clause on his behalf, however, it is incumbent on me to say that I think he would have liked to see a more concrete response, although I say that without any disrespect to the progress that the Minister has made. I would therefore like to press new clause 2 to the vote.

Question put, That the clause be read a Second time.

14:32

Division 168

Ayes: 226

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Labour: 205
Conservative: 7
Scottish National Party: 5
Democratic Unionist Party: 3
Social Democratic & Labour Party: 2
Plaid Cymru: 2
Independent: 1
Alliance: 1
Green Party: 1

Noes: 266

---

Conservative: 224
Liberal Democrat: 40
Independent: 1

Clause 2

Eligible people with diffuse mesothelioma

[Mr Nicholas Brown (Newcastle upon Tyne East) (Lab)]

I beg to move amendment 5, page 1, line 15, leave out ‘25 July 2012’ and insert ‘10 February 2010’.

[Madam Deputy Speaker (Mrs Eleanor Laing)]

With this it will be convenient to discuss the following:

Amendment 6, in clause 3, page 2, line 44, leave out ‘25 July 2012’ and insert ‘10 February 2010’.

Amendment 4, in clause 4, page 3, line 4, at end insert

‘but shall not be less than 100 per cent. of the average damages recovered in civil mesothelioma cases.’.

Amendment 1, page 3, line 5, at end insert

‘but shall not be less than 80 per cent of the average civil compensation recovered by mesothelioma claimants.’.

Amendment 9, page 3, line 5, at end insert

‘and shall be met by a levy on insurers of not less than 3 per cent of gross written premium during any given period.’.

[Mr Brown]

Before I explain the purpose of the three amendments that stand in my name, I want to make two more general points.

First, let me identify myself and my constituents with the tributes that have been paid to my right hon. Friend the Member for Wythenshawe and Sale East (Paul Goggins). My right hon. Friend has been a champion of my constituents as well as his own in all his work on issues relating to mesothelioma. Like many other Members whose constituencies are hot spots for the condition, I greatly appreciate the work that he has done over the years in trying to help those who suffer from it, and, indeed, his work more generally as a widely respected parliamentarian. I know that the whole House wishes him a speedy recovery.

Secondly, let me pay tribute to the Minister for managing to take the Bill so far forward—further forward than I managed to take the measure that I attempted to introduce when I was a Minister in the Department, which was slightly more wide ranging and was certainly brought to a halt more effectively. It is with some admiration that I pay my small tribute to the Minister—or, rather, my large tribute, for why should quantum be an issue? Actually, it is the issue in this part of the Bill, but we shall come to that shortly. I know of the pressures that the Minister has faced externally and within the broader Government over this issue, and I think he has done extremely well to get us to where we are now.

Having said that, I should explain why I tabled my three amendments. There is no position that cannot be improved with a little bit of thought, and in any event it is right to test the arguments. The amendments seek to increase the share of the amount that the arbitrator gives the victim that actually reaches the victim, and to give the legislation an earlier start date—2010 rather than 2012.

Let me address the compensation issues first. My amendment says compensation should be 100% of what is due. Nobody in the discussions we had on Second Reading and in Committee has made a moral case against giving somebody 100% of what they are entitled to. In fact, some very powerful speeches were made in this place on Second Reading on precisely this point, and I think it was my hon. Friend the Member for Blaydon (Mr Anderson) who pointed out that within a few months the victims are going to be 100% dead, so 100% compensation does not seem unreasonable. After all, the employers paid 100% of the premiums and they thought they enjoyed 100% of the cover. Had there been recourse in law, they would have got 100% of the damages. In not one of these cases has the defence argued that to some extent the victim contributed to his or her own misfortune, and, when we think about it, what contribution could they have made that led to their own misfortune—breathing? It is a ridiculous contention. The victims are not to blame and therefore they should not have their compensation cut.

[Hywel Williams (Arfon) (PC)]

Does the right hon. Gentleman agree that it is significant that a similar scheme under the 1979 Act provides for 100% compensation for slate workers in my constituency who cannot identify the insurers of their previous employers?

[Mr Brown]

The hon. Gentleman is correct, but the issue before us today is the rules for a very specific scheme that evolved through a voluntary negotiation with the industry. As we know, the Minister will say that there are financial parameters to the scheme that he cannot break.

[Mr Barry Sheerman (Huddersfield) (Lab/Co-op)]

Does my right hon. Friend agree that there have been so many injustices in this area? My brother, Bob, died of this condition. He worked for BP all his life. When it was proven he had this condition, BP worked as hard as it could to give him as little as possible. The company put all that money into addressing the oil spill in America, yet that is how it treats its own employees. I feel very strongly about this, therefore, and support my right hon. Friend’s amendments absolutely, and I do so, too, because many people in the asbestos industry worked in west Yorkshire.

[Mr Brown]

I care about this issue and I know my hon. Friend cares about it, too, and it is true that many Members of Parliament on both sides of the House, but especially those who represent communities that suffer disproportionately from this, know that their constituents face a desperate injustice. The burden of this condition is not shared evenly across the country. It affects our population by class; working-class constituents are far more likely to suffer from it than middle or upper-class ones. It affects our constituencies by region, too; there are regional hot spots, historically found in areas of heavy industry where people were very likely to be exposed to the dust, whether because they sprayed it on railway carriages or worked with it in the shipyards or as thermal insulation engineers and were not properly protected.

[John Woodcock (Barrow and Furness) (Lab/Co-op)]

rose—

[Mr Brown]

I give way to my hon. Friend who represents a similar constituency to mine with a similar history.

[John Woodcock]

My right hon. Friend is absolutely right in what he says. I, too, want briefly to add my tribute to our right hon. Friend the Member for Wythenshawe and Sale East (Paul Goggins). I know many other Members have done so, but this is a fitting time to do so.

Does my right hon. Friend the Member for Newcastle upon Tyne East (Mr Brown) agree that the people we are discussing served their country for many years? Barrow and Furness has the highest incidence of mesothelioma in this country. They served their country in making what they did and they deserve justice now, and this is our opportunity to give it to them.

[Mr Brown]

I wholly agree with my hon. Friend. We as a House should find a way of doing more. If we cannot do it within the parameters of the scheme, we should find a way of doing more outside the parameters of the scheme.

[Mr Mike Hancock]

If the right hon. Gentleman presses his amendment to a Division he will have my support, but what does he say in response to the argument that if his amendment is carried it will delay the scheme and lead to a legal challenge, which, once again, will mean many people will die before the scheme can be implemented? What is the rebuttal to that, because it is important that we have one?

[Mr Brown]

I hope to make my position clear as I develop my arguments, but I want to do the best I can for the victims of this terrible condition and that will, at the end of the day, involve compromise. We are about to debate among ourselves how far we have to compromise, but I am not going to hold to some theoretically correct position if the arguments march in the opposite direction. We all have a responsibility to do what is right for the victims and if we recognise—I think as the debate progresses the majority of those taking part in it will do so—that there are injustices left unaddressed, then maybe we should return to those issues and find a way of addressing them comparable with agreements that have been made with the industry.

[Sammy Wilson (East Antrim) (DUP)]

Will the right hon. Gentleman accept that of course the insurance industry is going to come in with a heavy hand, arguing that it will take this to court and make legal challenges and that will delay things? We had the same experience with pleural plaques legislation in Northern Ireland. The industry backed down when the legislation went through. Given that the insurance companies have reaped the benefit of these premiums over the years, is it not up to this House to make sure they pay out proper sums to the victims?

[Mr Brown]

The answer to that is that they did take the premiums and prior to 2007 there was an assumption that pleural plaques cases could go against the insurers. It was only the High Court 2007 judgment that put a stop to all that. The premiums did not have to be refunded; they were just kept. The figure I have for that is over £1.4 billion held by the insurers. If companies have taken premiums for something they are never going to have to pay out for, that seems to me to be a pretty good business.

[Toby Perkins (Chesterfield) (Lab)]

I also want to echo the comments of colleagues who have paid tribute to the work of my right hon. Friend the Member for Wythenshawe and Sale East (Paul Goggins), and to pay tribute to the work done by Derbyshire asbestos support trust. It has done tremendous work in supporting asbestos victims. It had 14 new victims in the last year and they continue to come forward. I am very pleased with what my right hon. Friend the Member for Newcastle upon Tyne East (Mr Brown) has said about the moral case being made for these people, and I also entirely agree that we need to work these arguments out, make the moral case for these people and make sure they get justice as quickly as possible.

[Mr Brown]

My hon. Friend will have his share of constituency cases, just as I do, and for the same reason: the industrial heritage of his constituency. We know that the profile of the victims is forecast to be different from the historical legacy, but it depends on the effectiveness of the protection measures we as a House have put in place. That was done with all-party consent—in fact, I think I was the Minister who moved the last set of regulations covering asbestos. We do not yet know how effective they are, however. As has been said from the Opposition Front Bench, we expect the number of cases to peak about now—in a year or so—but we do not know that that will be the case. I hope it will be, but we need to maintain our vigilance. The new cases will come from building contractors, people dismantling, rather than erecting, structures, and people who have come into contact through, perhaps, thinking they were dealing with a solid piece of material and who then hammered a nail into it or scratched it and breathed in the dust.

Exposure once is enough to cause mesothelioma and the consequences are fatal, so it is important that we take this issue seriously. I know the Minister is doing so and that the House is attempting to do so as well, but I think we should have it in the forefront of our minds that we may be returning to this issue in future.

The scheme before us today is targeted on people in a very particular position: they cannot find an insurer or they cannot trace an employer.

[Mike Penning]

It is important to remember that this is about employee liability in cases where the insurer cannot be found. A great deal has been said about public liability, but this scheme would not cover that. The right hon. Gentleman is right to say that we will see more and more examples of schools in which pupils will have been affected, but that will be covered by public liability insurance. Schools and similar institutions are public places, so it will be a lot easier to find the insurer involved.

15:00

[Mr Brown]

I agree wholeheartedly with the Minister on that point. My thoughts are with the young children in Leeds who found an abandoned pile of what turned out to be asbestos dust that had not yet been mixed with water and used for its purpose. The children, being children, formed it into “snowballs” and threw them at each other and breathed in the dust. Some 40 or 50 years later, their cases are now turning up as mesothelioma cases, but who is the insurer or the employer? It is difficult to say who is the responsible party. No one could possibly argue that those young children contributed to the ill health that they are suffering later in life. The Minister rightly says that we must deal effectively with such public liability cases, and I wholeheartedly support him in trying to find a way of addressing the matter.

There are two arguments against my proposal for 100% compensation. The first—and, incidentally, the weakest—is that it would incentivise the victim to see whether there was an insurer or employer against whom a case could be taken. It is argued that the prospect of getting 100% compensation, compared with 70% under the proposed scheme of last resort, would incentivise someone—whose life expectancy was now a matter of months rather than years—to go out and hunt for the insurer or employer, using whatever resources were available to them.

Let us pause and think about that. How on earth would an ordinary citizen go about tracking down those missing people? A good argument that was made in the other place was that the incentivisation should surely work the other way round. If there is to be incentivisation through paying less compensation, surely we should make the compensation not 100% but 110%, so that the administrators of the scheme, who had access to the former insurance companies’ records, would have to go hunting to determine whether it was possible to launch a case. They should be the ones to be incentivised. I am not arguing for more than 100% compensation, by the way, although I did table a proposal to that effect in Committee.

I believe that any incentivisation should work in that way, rather than suggesting that some poor old victim whose days are numbered should turn themselves into a modern-day Perry Mason and hunt down an employer that probably no longer exists—particularly in the case of a contractor—or an insurance company that has gone into receivership or will not acknowledge its liabilities. I think that the argument about incentivisation is pretty disgusting, and I do not support it.

[Sammy Wilson]

Does the right hon. Gentleman also accept that the very people towards whom the incentive might be directed are least able to track down those organisations? The situation would be doubly unfair, because their health is not great and they do not have the resources to do the tracking.

[Mr Brown]

I agree 100% with the hon. Gentleman, who represents a community in Northern Ireland with exactly the same history as that of the former Swan Hunter shipyard workers and others whom I represent. We have a common cause in this regard. A lot of help is given by the trade unions in the shipyards—the cases involving Short’s and Harland and Wolff are exactly the same as those involving Swan Hunter—but even with that help, the balance of advantage remains with those who know the insurance industry. Those with links to the relevant trade associations have the resources to find out whether the insurers still exist, and can find that information pretty quickly these days. Some work has been done to try to improve that process, and I am grateful for the efforts made by our Government and the present one to ensure that that continues.

The principal objection to the payment of 100% compensation is that it would break the agreement that the Minister has made with the industry. I know that he does not take offence when people like me say that a lot of premiums have been taken to insure against things that the industry is now not going to have to pay out on. It would pay out if I had my way, but the law established in 2007 says that it need not do so. The pleural plaques judgment has meant that the industry is the beneficiary of the premiums that it has taken in relation to pleural plaques, although not to mesothelioma, because the cause of action has been struck down. I think I am right in saying that that does not apply in Scotland or Northern Ireland, although it certainly does in England.

[Mike Penning]

I apologise for not intervening on the right hon. Gentleman earlier before he moved on to this point. I completely agree that it is spurious to argue that 100% compensation would act as an incentive. That suggestion has come from other parties, but certainly not from the Government. I want to place on record that that is not the Government’s position.

[Mr Brown]

I am grateful to the Minister for that intervention, and for its tone. The incentivisation argument is a distasteful one, and I am glad that the Government are not associating themselves with it. That makes it clear that the argument is about affordability within the parameters of the scheme.

I accept that the case for 100% compensation cannot convincingly be made, even by me, if the test is affordability within the parameters of the scheme. Amendment 1 proposes a figure of 80%, and whether that would be affordable within the parameters of the scheme is a finer point. I am not giving in, however. I believe that the victims deserve 100% compensation, but I understand that, if the Government are saying that the test should be the parameters of the negotiated scheme, we will have to maximise the money available to the victims within those parameters. We have all used the useful chart produced by the Minister’s Department as the factual background to the debate. The outcome will depend on whether we factor the percentages over four years or whether we take a longer, 10-year view. The Minister will not be surprised to hear that I take the longer view because I want the victims to have more money.

In determining whether the proposals are affordable within the parameters of the scheme, the Minister needs to explain two points. First, he must explain why 80% compensation would not be affordable, on his own figures. My submission is that it would be if it were spread over a longer time period and therefore cost less per year. The second point involves the cost of lawyers. This is set out in regulations, and the Minister is right to say that it should not be in the Bill itself, but the legal costs are going to have to be met. The estimate was £2,000 per case, but the figure then rose to £7,000. It is not clear which is the right figure. I do not want to mislead anyone; the cost will not come out of the money awarded to the victim, but it will come out of the overall cost of the scheme. The question of whether the cost is £2,000 or £7,000, or somewhere in between, will therefore make a difference. Will the Minister tell us what the correct figure is?

[Mike Penning]

The figure is £7,000, and the right hon. Gentleman is right to say that the figure comes out of the overall cost of the scheme—out of the 3%. If the claimant pays less than that figure, they keep the difference—thus, it becomes part of their compensation. We discussed the reason why the figure moved in Committee and in the Lords: it was felt that £2,000 was too low and so people would not get the sort of legal advice they needed. We desperately did not want the situation that had happened with other schemes whereby the legal teams got more money out of the compensation than that—that is why the figure is £7,000. In the negotiations I have been having, the feeling has been that the actual amount will be less, so the recipients or their loved ones will get the difference.

[Mr Brown]

I understand what the Minister is saying, and we all travel in hope—I certainly travel with him in hope. I hope this does not sound unduly cynical, but once the legal profession knows that a maximum of £7,000 is available for the cost of administering this, the work done and the effort put in by the individual law firms is likely to rise up towards the £7,000 ceiling. The Minister’s hope that simpler and more straightforward cases will confine themselves to a lower fee is correct, and I am with him on it, but I have the feeling that things will not work out that way. If they do not, there will be a cost on the scheme and so it will become harder to say, “We will put up the money for the victims” because the 3% ceiling will have been approached.

The second issue in this group of amendments is when the scheme should start. The Government’s proposal is to start it in 2012—backdating to the commencement of the Bill’s proceedings. My argument is that it should be backdated to the date of the consultation that led to the Bill. The consultation started under the previous Labour Government and was designed to meet exactly the same problem that the Government have identified. That consultation was on a slightly more generous scheme than this one, but of course the fruits of that consultation have not been heard and the discussions were only in their infancy when the general election interrupted proceedings.

It would be possible to make a case for a much earlier start date for a scheme of this nature. We could go back to the date of guilty knowledge for the industry as a whole, which would take us back before the second world war—if we were being really rigorous. There are certainly milestones in how our thinking has developed on these issues which go back a lot earlier than 2010. However, the Opposition Front-Bench team and I have put forward the most modest proposition that it would be possible to conceive of. We are saying that the start of consultation was the start of legitimate expectations in the minds of the victims who were being consulted and it put the industry on notice that there was to be a statutory scheme or that at least the then Government were contemplating such a scheme. This could not have come as a complete surprise to the industry.

[Alison Seabeck]

I entirely agree with the point my right hon. Friend is making. When the consultation was taking place under the previous Labour Government, my constituents did become enthused. There is not too much to enthuse someone suffering from mesothelioma, but they were enthused because they felt there was some light at the end of the tunnel. It is, therefore, entirely appropriate that we do look back in this regard. I have no doubt that the insurance companies, which understand risk better than anybody, would already have started planning at that stage to deal with a start date going back to 2010.

[Mr Brown]

My hon. Friend, who represents a community that faces exactly the same issues as mine for exactly the same reasons—wrongful exposure to asbestos dust—will have constituents raising exactly the same issues with her. She says that the industry ought to be experts in assessing risk. That is certainly true, but it did not half get it wrong over asbestos. We can all remember the crisis over asbestos liabilities that the industry went through. What relieved the burden more than any other single thing was the 2007 judgment on pleural plaques, which meant that that much larger swathe of cases was taken off the shoulders of the insurers, so the remaining insurers were better able to deal with the mesothelioma cases. We also saw some unhappy episodes relating to the work of Lloyd’s. We will perhaps not go over those again, but they did not reflect well on the industry, which is why we should be a little careful before taking everything it says to us absolutely at face value.

15:15

The other point to make for the earlier start date relates to the short life span of the victims. New drugs such as Alimta, however, are offering a few months’ extra life to the people for whom they actually work—responses to these drugs are different depending on the individual. We are talking about an early but very promising development, and I am proud of the work that Newcastle university has helped to do in the development of this intervention. This underpins the points made in our earlier debate about the need for more research. If we bring the start date back, living people could possibly just come into the scope of the scheme. In any event, their families will fall under the scheme and it is for the dependants and the families that we should make this modest decision and use the start date of the consultation, when the then Government’s intentions were clear and the industry was put on notice, rather than do the meanest thing possible and make the start date 2012. I understand that it is anticipated that an extra 600 cases, or something of that order, would be affected by such a move, but the Minister will have a better figure.

[Mike Penning]

The right hon. Gentleman has alluded to the fact that I am trapped within the funding parameters of the scheme. It will be 80 million extra if we took the start date back to 2010 and that would take us outside the scheme—

[Mr Brown]

I take it that when we are talking about “80 million” we are talking about money rather than about people—I know that there is a separate debate about immigration and so on.

[Mike Penning]

I apologise if I have misled anyone; I was talking about the funding parameters I am restricted by. The cost of taking the date back to when the consultation started would be £80 million. One other issue that we discussed in Committee was that although the consultation rightly contained an option that the then Government were looking at taking forward, there was also an option to do nothing. That is obviously an issue, but the big issue is the money.

[Mr Brown]

On that last point, I am more aware than anyone else in this place could be of the forces that would be in favour of the option to do nothing, and I have paid my tribute to the Minister for doing something rather than nothing. He should take pride in the job he has done, and I pay him all credit for it. That £80 million will be the top figure—it will be the highest possible figure that the officials believe they can give the Minister so that he can use it to dissuade the House. I am not entirely convinced by it. He cannot possibly know the real figure, because we will not know that until the cases come forward—it could well be a lot less. I would be willing to take a chance on it and to do justice to the victims. Let us stand the Minister’s argument on its head. He is inviting us to do the victims of this horrible disease—or, more likely, their families and dependants—out of £80 million. I do not want to do that, so I will want to put the proposition to the vote.

[Tracey Crouch]

It is a pleasure to follow the right hon. Member for Newcastle upon Tyne East (Mr Brown), to whose contribution I listened with interest. I rise to speak to amendment 1, which stands in my name and that of other hon. Members from all parts of the House. It is an amendment on a variation of the theme: there is not a consensus, particularly among campaigners for fairer compensation for mesothelioma victims, that the current 75% figure is acceptable. Despite the excellent efforts of Lord Freud and the Minister to bring this Bill before the House, I am afraid that there is still some disappointment that the level of compensation does not go far enough. My amendment seeks to increase the level of compensation from 75% to 80%, and not to the higher percentages proposed by others. Although I recognise that 100% would be the most perfect outcome for victims, the truth is that the Bill would probably not be in front of the House today if that were the case and if that were the only option under consideration.

Although an extra 5% compensation does not sound very much, it is the equivalent of an average extra £6,000 to the victim, which is no small sum to someone trying to finalise their financial arrangements before they pass away. To those of us who seek justice on their behalf, that seems a much fairer figure, not least because they will be asked to give back 100% of the industrial disease and social security benefits that they have received as a consequence of getting mesothelioma, and that is estimated to be around £20,000 on average.

Much has already been said on that issue during previous stages of this Bill in both Houses. I will repeat what I said on Second Reading, which is that Lord Freud deserves praise for negotiating with the insurance industry and for raising the original figure for compensation from 70% to 75%. However, sources in the insurance industry told me that Lord Freud himself wanted 80%, and therefore by moving this amendment today, I am merely reiterating the Minister’s previous desire for a better outcome. Then, with the support from colleagues today, he could have a parliamentary mandate to go back to the industry to start renegotiating compensation levels.

The negotiations and their subsequent outcome were based around another figure—that of the cost of the scheme to the insurance industry being no more than 3% of gross written premium. The argument for introducing the arbitrary figure of 3% was to ensure that the insurance industry would not pass on to its own customers the cost of running the scheme. In its more recent impact assessment, the Government surprisingly stated:

“It is possible that insurers will pass the cost of the scheme onto customers via increased premiums. If it did happen the impact on customers would be relatively low, estimated at 2.46% on average per year on EL insurance premiums.”

Given that inflation is currently running higher than the estimated potential increase in employers’ liability premiums as outlined in the impact assessment, I am pretty certain that the premiums will go up regardless of this scheme. That means that the insurance industry will incur no net loss as a consequence, especially as it will still receive the same Government funding incentive to smooth the first four years of the running of the scheme. The argument being put forward about the EL insurance premium rise is a bit of a red herring. The real debate is around the assumptions of the scheme. Under previous assumptions of legal costs, the scheme could have been extended to provide compensation of 80%. We have had that debate before. We had it on Second Reading and throughout the Committee stage, and the right hon. Member for Newcastle upon Tyne East has mentioned it again. Revised figures of costs—assumptions provided to the Department by insurance and personal injury lawyers—mean that 80% compensation would push the levy over a four-year period above the 3% figure, albeit marginally. However, over a 10-year period—the period I too prefer to look at given the longevity of the mesothelioma disease and when it is likely to occur—80% compensation is well below the threshold at 2.61%. Arguments over the precise nature of legal costs aside, albeit ones that were superbly made in Committee by my hon. and learned Friend the Member for Sleaford and North Hykeham (Stephen Phillips), it seems incredibly unfair that two days before Second Reading in this House, assumptions were changed, and that was wholly for the convenience of the insurance industry. Unfortunately, that means that the victims of the disease will not get the extra compensation they deserve.

I have been warned that if my amendment were to be agreed, the insurance industry would walk away from providing the scheme. I am afraid to say that that is bunkum, and it would be incredibly foolish of the industry to do such a thing. It has highly paid public affairs advisers—I should know as I was one before I entered this House—who will be telling their bosses to read the mood music from the contributions to debates on this Bill in both Houses. There have been calls for the scheme to pay out compensation of 110%, 100% and 90%. There have been calls for the legislation to extend to other asbestos diseases such as pleural plaques and to include those suffering from mesothelioma from secondary sources. There have been references to the profits made by the UK’s £40 billion insurance industry and there have been expressions of disappointment in the long-term failure of the industry to deal with this matter prior to statutory intervention via this Bill.

Do I think the insurance industry will walk away from this Bill leaving tens of thousands of mesothelioma victims without compensation? We are talking about victims who contracted a fatal disease because they did the honourable thing and went to work to provide for their family and who need this scheme because of poor record keeping by the insurance industry and/or their employers. No, I do not think that will happen.

[Mr David Anderson (Blaydon) (Lab)]

I congratulate the hon. Lady on what she has done and on what she is saying so far today. I hope that she is right, but does she not understand the track record of these insurance companies? They have challenged mesothelioma victims for decades, and I hope that we can stop them today because people are getting fed up with the way they behave.

[Tracey Crouch]

I am grateful to the hon. Gentleman for his intervention. Decades ago, the insurance industry would have held up its hands and said that, in hindsight, it had treated victims very badly. To be fair to the bigger players in the insurance industry, they have certainly tried, over the past five to 10 years, to improve the system of compensation for victims. They have set up the Employers' Liability Tracing Office and provided funding for research. Some of those bigger insurers have started to play catch-up for the mesothelioma victims. However, I recognise the concerns expressed by the Opposition over pleural plaques. As it happens, I was part of the insurance team that ensured that pleural plaques did not become a legislative issue in this House, and I stand by that decision today. That will remain a difference of opinion that we have on a specific asbestos-related disease. Where we do need consensus is over mesothelioma. It is a fatal condition and one that will kill somebody incredibly quickly and very painfully. I want to make sure that those victims who cannot trace their insurer or employer have access to the scheme and get the highest amount of compensation possible.

[Andrew Percy (Brigg and Goole) (Con)]

My hon. Friend is making an excellent speech. She said that people will be looking at this debate and, with that in mind, I hope that she understands that I also want to support her amendment this afternoon. However, the impact of the £6,000 she mentioned—the additional 5%—on the people in my constituency who have been affected, or know someone who has been affected, by this, cannot be underestimated. I entirely concur with what she said on the figure, and I hope that the Minister will listen and consider how the £6,000 will impact on the people in our areas.

[Tracey Crouch]

I am very grateful to my hon. Friend for raising that issue. The people we represent share a similar profile and we both have former dockers in our constituencies who will contract mesothelioma in the future, so I am very grateful for his support. I know that the current and future victims will be grateful to him.

[Mr Sheerman]

I know that the point about traditional employment and so on has been reiterated many times, but my dear brother, Robert—Rob—who died of this disease, worked in the research centre at Sunbury-on-Thames for British Petroleum, one of the leading science and technology companies in the country. As my right hon. Friend the Member for Newcastle upon Tyne East (Mr Brown) said, those people knew about the disease very early on. Does the hon. Lady agree that the insurance industry too often hides behind the trade association, the Association of British Insurers? We cannot get through to the real insurers as that very combative trade association gives them cover.

[Tracey Crouch]

I am interested in the hon. Gentleman’s first point about occupations. We must be very clear that this situation is not confined to the traditional working class, although it is more likely to be prominent as they were more exposed to asbestos than anybody else. Anyone who has been exposed to asbestos is in danger of contracting mesothelioma.

On the hon. Gentleman’s second point, he must recognise that there are 150 players in the insurance industry and it is only fair that they should have a trade association that represents them. When I recently looked through the ministerial meeting list, I noticed that although the ABI was meeting Ministers, it did so with the top four insurers by its side. There are representatives in such meetings of the individual insurers as well as the trade association.

15:30

Let me go back to the question of whether the insurance industry will walk away from the Bill. I do not think that it will. It needs to be reminded that it will receive a £17 million taxpayer-funded gift to help smooth the running of the scheme for the first four years, followed by a £30 million loan. I think that that is rather ironic, given the fact that it will be part paid for by the victims through the recovery of benefits. The industry needs to be firmly reminded of that, not least because many people in this place could say what £47 million could be better spent on. We want to ensure that the mesothelioma victims get fair levels of compensation, but they will do so through Government-funded assistance to the insurance industry, which has been strongly criticised in the past for not doing enough.

Before the industry starts to cite pressures on finances because of flooding or economic circumstances—we can be sympathetic about some of the initial costs of the recent severe weather—it is important to remind it that the scheme has been long in the making. Risk analysis was done long before the Bill was introduced and reserves were allocated accordingly, which was a point made by the hon. Member for Stretford and Urmston (Kate Green). That is what good companies do: they manage risk for others and for themselves.

Let me, if I may, make a party political point. We should remind the industry that since the coalition was formed it has had its corporate tax rate cut and its employee costs reduced, that steady growth in the economy has created stability, particularly for those on the FTSE, that share prices have increased and that thousands of small businesses have been created, all of which will require some form of employers’ liability insurance. Business is good for the insurance industry at the moment.

I will defend the industry for many things, but, at a time when business is growing and returns on investments are being maximised, to threaten to walk away from a scheme providing victims with compensation that they should have been able to receive through the civil procedures but cannot, through no fault of their own—a scheme that will be funded through £47 million of Government money—is utterly outrageous. I am absolutely certain that that decision would come back to haunt them later and, based on other Members’ contributions today and in the Bill’s earlier stages, would have far more punishing consequences than that proposed in the amendment.

I will press my amendment to a vote this afternoon. I had hoped that I would receive the backing of the Government but, regardless of the outcome, I urge the Minister in this House and Lord Freud to return to the issue of increasing compensation for victims. If it remains at 75%, the question will not be over and could be returned to in the future. However, with cross-party consensus on 80%, not only would it be harder to increase compensation levels down the road and in the future, but it would be a welcome and worthwhile compromise for politicians, support groups and those most affected by this dreadful disease, the mesothelioma victims themselves.

[Jim Sheridan]

I speak as a former ship worker on the Clyde. I have seen at first hand the pressure that was brought to bear on employees who worked in and around asbestos and whose jobs were threatened if they refused to work with it. It was only with the support of the trade unions and the health and safety part of those unions that we managed to get that pressure taken off the employees and to give them the protective clothing they had so long deserved.

I do not think that I am the only person in this House who has had a visit from someone who has been diagnosed with mesothelioma. We can see the desperation in their eyes when they know that they do not have long to live and the only thing that keeps them going is the fact that they can get some compensation, not for them but for their families. That is the important thing. The most graphic description of mesothelioma I have heard was from a victim who told me that it was like a tree growing inside you which eventually chokes you to death. That is the kind of death we are seeing, and it is somewhat disappointing.

My right hon. Friend the Member for Newcastle upon Tyne East (Mr Brown) talked about Scotland and pleural plaques. The Scottish Government took a different road and were successful in the courts in pursuing compensation for those with pleural plaques, but just for the record, no one in Scotland has received a single penny of that compensation because the insurance industry has now taken the matter through the European Court of Human Rights.

People will have different views of the insurance industry, but I personally have a very toxic view. That is based on my own experience some years ago in Scotland, where there is a different legal system. Then, when people were diagnosed with any asbestos-related disease, their claim died with them. The insurance companies would go to court and have sitting beside them a doctor who would, from a distance, try to gauge how long the person had to live, and the companies would then find some sort of technical reason to get their case put back or delayed in the hope that they would die and their claim would die with them. That is the reason for my toxic view of the insurance industry.

I spoke about the cut-off date on Second Reading, and my opinion has in no way changed. The consultation in 2010 was extremely clear in its intention, and the industry’s very competent public relations people—perhaps the hon. Member for Chatham and Aylesford (Tracey Crouch) might have been one of them—picked up on this issue immediately. There is no doubt that the companies have been preparing for the scheme since the day the consultation was launched, and there is no reason why we should be letting them set the agenda in this way. The rights of victims are being completely ignored by the arbitrary setting of a cut-off date in 2012. The argument that basing the legislation in 2010 is

“unlawful interference with insurers’ property rights”

does not give due importance to the rights of the victims. Having more money should not buy someone more rights, though under this Government that seems to be exactly the case. Nor do I believe the argument about the initial spike in payments. Insurance companies would have put money aside to alleviate the risk of making those payments, and even if they did not, the payments would be a drop in the ocean for this multi-billion-pound industry, which can easily afford to make them.

Between February 2010 and 25 July 2012, an extra 700 people will have died as a result of mesothelioma, and they should not have had to suffer due to the insurance industry dragging its feet. This proposal is affordable within the Government’s figures and, more importantly, it is fair.

[Mr Iain McKenzie (Inverclyde) (Lab)]

My hon. Friend and I come from the same area of the Clyde, which has had a long tradition of shipbuilding, and we know that victims of asbestos-related illnesses are still being identified. Does he agree that perhaps the insurance industry is looking ahead and estimating that what we had hoped would be the peak in the number of these victims is not the peak? In fact, still to this day, GPs on the Clyde actively ask people who go to see them with chest complaints, “Where did you work? Did you work near asbestos?” Is not that why the insurance companies are so reluctant?

[Jim Sheridan]

My hon. Friend and neighbour is absolutely right. He, like me and many people who worked in the industrial sector, whether it be in the shipyards, in the mines or wherever, live with the constant fear that a cough could develop into something more worrying like mesothelioma. In the industrial sector, regardless of the part of the country we come from, that is something we have to live with on a daily basis.

[Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)]

In my constituency the kinds of activities that tended to provoke this condition, such as dock-related activities, declined some time ago. That was not, however, many decades ago, so this is still an issue for people in my constituency. Does my hon. Friend agree that months, let alone two years—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. Unfortunately, interventions have to be very short, because others want to speak. If interventions could be shortened, that would help.

[Jim Sheridan]

My hon. Friend is absolutely right. The docks are another area where mesothelioma was a constant threat and problem, particularly in places such as Leith, which is a big dock area.

On compensation, as I have said, I think the numbers are still to peak. There is a mesothelioma problem in schools and I think the problem will only get worse. It will be interesting to hear what the insurance companies have to say about teachers and others in schools who will suffer from this horrible disease.

On the levels of payment, it is totally unjust and unfair that victims of mesothelioma whose documents were either lost or destroyed will receive less than 100% of the average compensation. In an earlier debate we argued that the level should be set at 90% of the average. A precedent has already been set in the Financial Services Compensation Scheme, which covers the liabilities of insolvent insurers in circumstances involving compulsory insurance.

We support the cross-party amendment 1, which would set a lower level of 80%, although it is not ideal. I think that amendment 4, which would set the level at 100%, is the fairest solution and perhaps that is what we would seek in a different and better political environment. I think that the insurance companies, as opposed to the victims, could agree to set the level at 80%. The 90% level was already affordable, as it was still within the 3% levy on gross written premiums with which not only the Government, but the industry, are happy. If we set the level at 80%, I am sure the insurance industry would not only be happy, but feel as though it had got a good deal. At least it would put an extra £6,200 in the pockets of victims. Morally, 80% is the absolute bare minimum the Government should be aiming for.

[Andy McDonald (Middlesbrough) (Lab)]

My hon. Friend is making a good point about the moral limit, but does he agree that the whole concept of contributory negligence and the apportionment of damages suggests that the victim is in some way responsible for the damage caused? That is anathema in these circumstances: these people are totally and utterly innocent, but they will walk away with less than what they truly deserve.

[Jim Sheridan]

My hon. Friend is absolutely right. We now live in a society in which some of this country’s most vulnerable people are being asked to pay the price with regard to not only mesothelioma, but other areas relating to quality of life.

[Grahame M. Morris (Easington) (Lab)]

My hon. Friend is making some excellent points. The clawback provisions mean that victims will have to pay back 100% of previously paid benefits. Is there not an inconsistency in the fact that the state seems to have a greater demand of 100% clawback, whereas the victims will get only 75% of the compensation due to them?

[Jim Sheridan]

My hon. Friend is absolutely right. Do we really aspire to live in the kind of society that does that to people? They needed those benefits for various reasons, but now 100% of them will be clawed back.

[Sammy Wilson]

Is it not even more disgusting that the money clawed back is then given in compensation to the insurance companies to reduce their costs?

15:45

[Jim Sheridan]

As they say in the best pantomimes, the hon. Gentleman is absolutely right—you could not make it up. It is incredible that the clawed-back money goes to the insurance company.

To move on to ring-fencing and the 3% levy, insurance companies will get a good deal from the Bill, as I have said. Even if they keep paying a 3% levy until no more mesothelioma cases exist, it will be a good deal. It is therefore completely right that the 3% should be ring-fenced. Colleagues have already mentioned many ways in which the Bill falls short, but the extra money that ring-fencing the levy gives could pay for some of those shortfalls: to compensate victims of other asbestos-related diseases, to research a cure or, indeed, to increase the fund payments to a much fairer 100% of the average compensation. The insurance industry well and truly expects to pay 3%, and is financially prepared to do so. There is no reason to let it get away with paying less.

I well understand that the Minister, who is a decent man, claims to have done his best on the issue, but I still think that there is room for improvement. I encourage him to continue to pursue insurance companies for a better deal for those who deserve it—the victims and their families.

[Andrew Bingham (High Peak) (Con)]

I do not intend to delay the House for too long. Many of the points I wanted to make have already been very eloquently made by my hon. Friend the Member for Chatham and Aylesford (Tracey Crouch). I pay tribute to the Minister and the Government for introducing the Bill, which I support.

As has been mentioned, mesothelioma is an industrial disease, but I assure the House that in my constituency—constituencies do not get more rural than the rolling hills of north Derbyshire—the incidence level of mesothelioma is higher than the national level owing to some of the industries operating there. As all of us in the Chamber and more widely know, through casework and from friends and relations, mesothelioma is a truly dreadful condition that causes great pain and is incurable.

I added my name to amendment 1, which I am now speaking to, because I think that 70% to 75% represents progress. In an ideal world, 100% would be the ultimate progress that we would want. However, the 80% figure is a good compromise: it is viable, doable and, as other hon. Members have highlighted, achievable. I do not think that insurance companies will walk away. In the world we live in today, more companies are concerned about their reputation, and given the cross-party strength of feeling in the House about compensation for mesothelioma, it would be reputational suicide for insurance companies to walk away now. I think that we can squeeze that extra 5% out of them, which would be better in the pockets of the victims of this dreadful condition than anywhere else.

I am proud that the Government have gripped the issue, but if we agreed to amendment 1, they could grip it just a little harder. That extra grip would make the mesothelioma sufferers’ prognosis that little bit better and I for one, as a Member representing a constituency affected by this dreadful condition, would be that little bit prouder and stand that little bit taller after what I had done here today.

[Simon Danczuk (Rochdale) (Lab)]

Like other hon. Members, I start by mentioning my right hon. Friend the Member for Wythenshawe and Sale East (Paul Goggins), who has done much on this subject. He organises an annual memorial event in Greater Manchester, in the city centre, and as a Greater Manchester Member of Parliament I have always been pleased to attend, so I thank him for his work in that regard. I pass on my best wishes to his family, and I hope he will be well again soon.

Hon. Members will be aware that Rochdale was home to the world’s biggest asbestos factory—Turner and Newall dominated the town for many years—and it is fair to say that the legacy of asbestos still haunts our town and its people. Walking around my constituency, it is hard to find anyone who has not been affected in some way by asbestos, whether through family members, friends or colleagues, many of whom have been affected by asbestos-related diseases. Asbestos destroys lives and breaks families. In Rochdale, it has left a community legacy in the form of a massive derelict factory site that nobody is prepared to remediate effectively.

The lack of justice and compensation for many of the victims of asbestos is a scandal that has lasted for far too long. I am pleased that the Bill is before us, but we must go further than what is proposed. I believe that the Bill falls woefully short of providing adequate compensation for the victims.

The Bill contains a number of arbitrary decisions that I think are designed purely to appease the insurance industry. First and foremost among those is the cut-off date for diagnosis, 25 July 2012, which my right hon. Friend the Member for Newcastle upon Tyne East (Mr Brown) mentioned. I have heard no credible argument for why it cannot be put back to 10 February 2010, when the original consultation started, as my right hon. Friend suggested. I understand that that would assist an additional 700 people. The argument must not just be about cost. However, it is my understanding that with that change, it would fit within the 3% levy if it was taken over the 10-year period.

Secondly, the Bill is very limited in terms of who it supports and helps. It is being spun as a victory for asbestos sufferers, but it is limited to covering just mesothelioma victims and it will not affect people who have come into contact with asbestos domestically. That is a cause for concern.

My final point is about the level of compensation. Frankly, 75% is insulting. We must remember that the Government were proposing a 70% limit. My opinion is that a fair level of compensation would be 100%, as my right hon. Friend the Member for Newcastle upon Tyne East suggested. I am prepared to support an 80% level. That modest increase would at least give some comfort to the victims.

All those arbitrary decisions raise serious questions about the Bill. I get the impression that the Government are good at standing up for the strong insurance industry, but weak when it comes to standing up for the victims of asbestos.

I will finish by referring to the case of a lady called Mrs Nellie Kershaw. She started work as an asbestos spinner at the age of 12 in the Turner and Newall factory in Rochdale. In 1922, she became too sick to work and was diagnosed by a local doctor as suffering from asbestos poisoning. As it was an occupational illness, she was ineligible for sickness benefit from a local scheme to which she had contributed. Her husband, Frank, who was having to look after the couple’s two children, pleaded with her employers for assistance. They refused to offer any help and she died in poverty on 24 March 1924. To this day, she lies in an unmarked pauper’s grave in Rochdale cemetery. She was 33 years old when she passed away.

Nellie Kershaw was the first person in this country to be diagnosed with asbestosis. She and her family were left with absolutely nothing. Fast-forward 90 years and we are here today quibbling over who should and who should not receive compensation and over how much the compensation should be. As it stands, the Bill does the minimum possible to support asbestos victims.

[Mike Penning]

I am listening intently to the hon. Gentleman’s comments, but I am really disappointed by some of them. I understand him wanting to get more compensation, but the Bill would not be here today without Lord Freud fighting to get time, and this Government getting it on the statute book, which, as the right hon. Member for Newcastle upon Tyne East (Mr Brown) said, is difficult and had not been done previously. Most people who know me know I do not do party politics, but I cannot sit back and say that we have not done our bit because we are doing our bit—that is why we are here today.

[Simon Danczuk]

I accept the Minister’s intervention and I am not trying to be overly party political about the issue. As I said earlier, I accept that progress has been made, which I welcome, but I am pushing for more intervention from the Government, and for a better compensation scheme for my constituents and those across the country who deserve more from this Bill. I hope we can achieve that today.

[Ian Lavery (Wansbeck) (Lab)]

It has been a decent debate this afternoon. I am not sure whether we are here to discuss how perfect the Bill could be, or who would be the best recipient of the measures in it, but I think we are here for fairness and justice for individuals who have suffered greatly as a result of mesothelioma. There may be a difference of opinion about who we should be looking after—should we be looking after the insurance companies, or should we look after those who are suffering greatly as a result of mesothelioma?

Right through the Bill, from First Reading until now, the costs of the insurance companies have dominated the debate, yet we rarely discuss the individuals who have suffered and who have died. We rarely discuss the victims or those who are perhaps sitting on the sofa at home watching this debate now. As I am sure everyone is aware, once someone has been diagnosed with mesothelioma, they have a very short time to live. I just want people to be fair; I am not asking for the world, but I think that as politicians we have the right to be fair to ordinary people. Is anything wrong with being fair? Sometime we short-change people, which is not just or fair.

My hon. Friend the Member for Paisley and Renfrewshire North (Jim Sheridan) spoke in a previous debate of someone who went to see him and said, “This is horrendous; it is like a tree growing inside, and it eventually chokes you. It eventually kills you.” That is what we should be thinking about and discussing in lots more detail, not the fact that insurance companies have come forward with a potential 3% levy. What about those who are dying? What about the people who are suffering? Once they have been to the doctor, their life has ended. Let us start discussing those people.

[Mr Anderson]

My hon. Friend is being his normal forthright self. Does he feel—as I do—that he is in the middle of a negotiation, when, like me, he expected to be making the law of the land? We are basically saying that we make the law of the land if the insurance companies will agree to it. It is unbelievable.

[Ian Lavery]

I totally agree with my hon. Friend. I have been through the Bill and I am puzzled by the fact that there is a threat—if we do not agree to something that is a lot less than what people deserve—the insurance companies will walk away. I always thought that if the Government pushed through a Bill that said 100%, it would be 100%. If that is what the Bill says, surely that is what it means and what the insurance companies will have to do. From what has been said throughout the stages of the Bill, it appears that the insurance companies are running this, not Parliament. That concerns me because there have been great discussions and great debates on all sides, but I am yet to hear any persuasive reason why the victims should not receive 100% of their compensation.

[Grahame M. Morris]

My hon. Friend is making a powerful argument. The very lifeblood of insurance companies is the assessment and measurement of risk, so would it not be reasonable to have expected them, from the start of the consultation in 2010, to set aside a contingency fund to meet the full liability of the victims’ claims?

16:00

[Ian Lavery]

That possibly should have been considered, but we must remember that these insurance companies do not lack finance. They have had the money already, so why should we accept that those victims and sufferers—and their families and carers—should have anything less than 100% compensation? The claimants under the scheme have to meet the same standards of evidence and burden of proof as those who make successful civil claims. The only difference is that those who make a successful civil claim get 100% of the compensation.

The benevolence of insurers has been raised. Should we clap our hands or embrace the insurance companies because they have done a marvellous job with regard to the people we represent? Should we class them at this time of year as industrial Santa Clauses with presents for people who might not be here next year? Should we applaud the companies’ efforts? I think not. The insurers collected premiums in full and invested them for decades.

[Mike Penning]

The hon. Member is making a passionate speech, as he did on Second Reading, and he is rightly standing up for his constituents. I have to tell him that the insurers did not come happily to the table to have this discussion. When the discussions with Lord Freud started, they were told to come, and the negotiations were based on what we could get agreement on without putting a further burden on business—in other words, the 3% levy does not go on to new business. I heard what my hon. Friend the Member for Chatham and Aylesford (Tracey Crouch) said, and we will take a close look at that. We have to look at the context. Nothing had been done for so long, but now something is being done and the insurance companies are not happy about it.

[Ian Lavery]

Every hon. Member who has spoken today understands that the insurance companies had to be dragged to the table, because contribution after contribution has cited examples where the first thing an insurance company does after an individual has been diagnosed with mesothelioma is run away and deny it for as long as possible in the hope that the problem goes away. In Committee, I applauded the work done by successive Governments in getting the Bill to this stage. We are just a little too far away from this Bill being absolutely fantastic for mesothelioma sufferers. Three or four points mean that it is nowhere as good as it could be, and some great arguments have been made today on how to bridge the gap.

I return to the point that the insurance companies are not companies that are just surviving. They have made profits over generations—10, 20, 30, 40 and 50 years. They took the premiums and invested the money. Never mind contingency funds, the funds should be there—unless, of course, the money has been paid out in dividends or in other ways. That means that the money that should have been there for mesothelioma sufferers is not there any more because it has been given to shareholders. That is simply a point. The insurers paid out nothing on the untraced policies that they lost or destroyed. Again, that is not the fault of the people who are suffering—it is not their difficulty. Remember, the only thing wrong that they have done is to attend the workplace. For goodness’ sake, we cannot forget that that is the main point.

[Dr Alan Whitehead (Southampton, Test) (Lab)]

Does my hon. Friend accept that in terms of events in the workplace we are talking about identical events with a different period of maturity into full-blown mesothelioma? Some people with identical circumstances will not qualify, while others will. Will he speculate on the issues that that may cause? Someone may have been through the same process as the person sitting next to them in the workplace—in the case of Southampton, handling blue asbestos in the docks, bailing it up and throwing it on to the dockside—with the disease appearing many years later over different periods for different people—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. We need shorter interventions—there are quite a lot of other speakers to get in. Interventions are important, but they must be shorter.

[Ian Lavery]

This issue has been explained. This is not just a shipyard, mining or other heavy industry problem; this disease can be contracted in the classroom. We really need to look at the position with asbestos in schools. I fear that not enough data have been kept on children over the years. People never believe, 30 or 40 years later, that they have mesothelioma. They think back to what type of employment could have caused it, but it could have started in school. I accept my hon. Friend’s point.

Lloyd’s made £2.7 billion between January and June 2012. Royal and Sun Alliance made £233 million last year. Aviva, between January and June 2013, made £605 million. That is just three companies. They are awash with finance. Believe me, Mr Deputy Speaker, they intend to continue to be awash with finance.

The regulatory impact assessment estimated that approximately 6,000 mesothelioma sufferers lost about £800 million in compensation due to untraced insurance. If we add that to the cost to the victims of other asbestos diseases, and the deal cooked up between the Government and their friends in the insurance industry, that represents a saving to insurers of about £1 billion. That is absolutely scandalous.

[Mr Anderson]

Does my hon. Friend agree that in 2007, as a result of the decision on pleural plaques, the insurance companies were handed a windfall of £1.4 billion that they were not expecting?

[Ian Lavery]

That is absolutely true, and that strengthens the argument put forward with regard to the apparent finances and wealth of the people who are threatening to walk away if they are asked to pay the right amount of compensation, or even more than 75% of it.

There are other examples where compensation has been paid at 100% or at 90%. The pneumoconiosis scheme in the Pneumoconiosis etc. (Workers’ Compensation) Act 1979 pays 100% compensation and the Financial Services Compensation Scheme paid 90% to asbestos sufferers, so there are examples.

On the cut-off date, which my hon. Friend the Member for Southampton, Test (Dr Whitehead) mentioned, why on earth is 25 July 2012 being suggested? Why not February 2010? In other case law, compensation has been paid from the guilty date of knowledge. In this case, that would mean paying compensation right back to the 1960s, but the cut-off date is 25 July 2012, and that causes huge problems. I understand that with a cut-off date there will always be losers—that is a matter of fact—but the 25 July cut-off date was when the written statement was made on the Bill, whereas the consultation started way back in February 2010. That would seem to be the most appropriate cut-off date.

[Mike Penning]

May I politely correct the hon. Gentleman? The date in 2010 was when the previous Administration issued the consultation document, not when the Bill started.

[Ian Lavery]

Yes, the consultation document was issued in 2010, but the cut-off date in the Bill will be 25 July 2012. I cannot see any rationale for that. I cannot understand the reason for it. Eligibility should at least commence with the publication of the consultation document in February 2010, but, as I say, there are strong arguments for going back even further.

It comes down to whose side we are on. As politicians, we face tough choices every day of the week. Are we on the side of the victim who will sadly pass on within months, or are we on the side of the insurance companies, which, as the Minister said, had to be dragged to the table to pay any compensation at all? The insurance companies are getting £17 million from the Government just to start the scheme, and it has been agreed they will get a further £30 million from them through some sort of borrowing arrangement.

In conclusion, when someone with mesothelioma who is soon to pass on comes to one of our surgeries and we explain that the insurance companies have only to pay 75% compensation, I wonder what their reaction will be. It is not fair, it is not just, and it is not acceptable. Wherever there is 100% liability, there should be 100% payment.

[Sammy Wilson]

It is a privilege to follow the hon. Member for Wansbeck (Ian Lavery). He has brought the human side of this debate into the Chamber, which is important, because while we can throw around the percentages that insurance companies will have to pay, cut-off dates and so on, we need to remember that we are dealing with people who have suffered greatly as a result of their employers’ negligence, not their own, and whose suffering will inevitably result in death.

At the outset, I also pay tribute to the right hon. Member for Wythenshawe and Sale East (Paul Goggins), who is fondly remembered in Northern Ireland, where he served as a Minister. Since he left office, he has always taken a great interest in the affairs of Northern Ireland. I also pay tribute to the Minister. Although I am critical of much of the Bill, I fully understand the pressures he came under when introducing it.

The insurance companies are not easy to deal with and when it comes to paying out, they are bullies. I had a similar experience in Northern Ireland when we were taking through legislation to overturn the House of Lords decision on pleural plaques. Officials advised that we should not do it as we would have a hard time. The insurance companies jumped up and down, threatening all kinds of legal action. They threatened to challenge the legislation in Northern Ireland; the argument was that we would be raising expectations and that the measure would be delayed for years. But at the end of the day, when it was seen that there was a determination to push it through—and it did go through—it was, ironically, the Attorney-General for Northern Ireland who challenged it in the courts, and lost. [Hon. Members: “Your friend?”] My friend, yes.

16:15

[Mike Penning]

I have had my own experiences with the Attorney-General when I was a Minister in Northern Ireland; I am sure other colleagues have as well. The difference between what is happening here today and what happened in Northern Ireland was that we have done a deal with the insurance companies before proposing the Bill rather than, as in the negotiations on pleural plaques, there not being a deal, so the legislation had to be forced through. That is the real difference; we have an agreement that will not affect businesses or premiums and will allow us to get the money through.

[Sammy Wilson]

I want to come on to that agreement. As the hon. Member for Wansbeck (Ian Lavery) said, at the end of the day this Parliament sets the rules by which insurance companies and everybody else must abide. I understand that the Minister has had the discussions with the insurance companies. I have to say that I think that the companies have come out with a very good deal. Do not forget; despite the fact that we are dealing with people who perhaps cannot trace where the insurance was with their companies, that does not mean that, in most cases, the insurance was not paid. The premiums went to the insurance companies. They benefited from the money and they have not paid it out when the claims were made. This is not a case of there never being any insurance paid, in many cases. In most cases, the insurance was paid and the insurance companies have escaped.

Secondly, as has been pointed out, as a result of House of Lords decisions and other decisions on claims that could have been paid for pleural plaques, for example, the insurance companies have got a windfall. We can debate the size of that windfall but figures up to £1.4 billion have been thrown around. On top of that, the Government will underwrite part of the cost; £17 million plus another £30 million loan to them. Then, the companies will only have to pay out 75%, and 50% of the people who should have been covered—because they did experience health problems as a result of exposure to asbestos—are not even covered. I reckon that that is a very good deal for the companies. If this House were to say, “We think that the deal struck is overly generous and we are going to make amendments to the Bill to compensate for the overly generous deal that was struck,” I doubt very much that the insurance companies would walk away or that they would challenge it, especially as the mood of the House is that many people who should have been included in this are not, and that there are levels of compensation that should have been paid that are not being paid. Those are the kinds of arguments that I have found persuasive when listening to the arguments for the amendments.

The Minister has sat face to face across the table with the insurance companies. It is his judgment that the insurance companies will not buy any strengthening of the Bill. Given the generosity of the deal and that insurance companies try to eyeball Ministers and see who blinks first, it is my judgment that if the Government stand firm, we can get a better deal for those who suffer enormously as a result of negligence.

[Ian Mearns (Gateshead) (Lab)]

Surely the nature of the insurance business in this respect is that the risk is spread over a whole range of different liabilities. The very fact that the insurance companies have done that means that they should pay up when they ought to. They are not doing so; they are trying to wriggle out of it.

[Sammy Wilson]

I wanted to come on to that point, so I will jump to it now. The risk is, of course, fairly minimal in any case. First, it has already been covered and, secondly, I heard the Minister say that this cannot be passed on through additional premiums on employers’ liability insurance. No Minister can guarantee that when insurance premiums go up, some of the marginal increase is not to enable the additional costs to be recouped by the insurance industry. I do not know what kind of scrutiny of employers’ liability insurance premiums the Minister intends to introduce to ensure that the costs are not passed on, but in any case, as the hon. Member for Chatham and Aylesford (Tracey Crouch) has pointed out, the insurance companies will already have made provision for this Bill.

[Ian Paisley (North Antrim) (DUP)]

My hon. Friend is making a compelling case. He is absolutely right about how the insurance companies will operate in this field. They not only insure the initial risk, but sell it on. We can be assured that they are definitely covered, and I believe that the Minister should take cognisance of that in making his decision.

[Sammy Wilson]

I thank my hon. Friend.

Let me deal with the two amendments that deal with whether the compensation level is acceptable. For 28 years, I represented east Belfast—the inner part within the shadow of the shipyard—on Belfast city council, and I saw and represented, at disability living allowance tribunals and so forth, many people who had suffered as a result of exposure to asbestos in the shipyard. I have seen the suffering that they went through. I have gone into their houses and seen people who could hardly walk across a 12-foot wide living room, who could not climb the stairs and who knew that they were in for a horrible and painful death. Those are the sort of people we are talking about, and that is the outcome of the exposure to which they have been subjected. That is what we are dealing with.

I must say that I find it grossly offensive that people who qualify for 75% compensation under this scheme will have 100% of their benefits taken from them, yet that will be paid back to the insurance companies to try to “relieve the burden” on companies that already have the money to cover the costs. We should bear that in mind when we look at amendments 1 and 4, which provide for increasing the level of compensation.

[Jim Shannon]

We are very much focusing on what happened to the individuals who had the disease, but perhaps we have not focused enough on the ripple effect on the families that comes out of that. Does my hon. Friend agree that it is not just individuals, but families and wider family circles that are involved, and that because of that, the squeeze should be put on the insurance companies to ensure that they pay more? Should not the Minister do that as well?

[Sammy Wilson]

We should, of course, bear in mind what it is like for any wife, husband or child who sees their father, mother or son going through the sort of agonies they have to endure when they die from this disease.

Let me deal with the issue of the cut-off date. I understand that cut-off dates are difficult: how should we choose them? No matter what is chosen, some people are going to feel aggrieved or short-changed. The proposer of the amendment spoke about a range of cut-off dates, going right back to before the war when people first knew that exposure to asbestos led to a terrible disease and death. However, there must be some logic to the cut-off dates that we set, and, in seeking that logic, we should be asking how we can apply it to encompass as many people as possible.

Although I am not particularly happy with it, there is logic in the argument for a cut-off date of 2010, when expectations were first raised and the insurance industry was first notified, and when preparations for the payment of compensation could begin. The Minister said that setting a date of 2010 would add £80 million to the cost of the Bill, but I should like him to explain how he arrived at that figure. Given the 75%, the cost of payments will be £343 million over the next 10 years. It has been accepted—and I saw the Minister nod on a number of occasions when this was mentioned—that the bulk of cases will arise in future years. How can we have a figure of £343 million for the next 10 years, during which we expect the bulk of cases to arise, and a figure of £80 million for the two years preceding 2012? Those figures simply do not add up. I should be happy to hear the Minister’s explanation now, or, if he prefers, when he sums up the debate, but I suspect that the figure has been over-inflated and gold-plated in an attempt to establish arguments for not setting a date of 2010, presumably because the insurance companies will ensure that that does not happen.

[Mark Lazarowicz]

Like the hon. Gentleman, I could not see where the figure had come from. If the Minister has that information, should he not give it to us now in order to illuminate the debate?

[Sammy Wilson]

I will happily give way to the Minister if he can provide an explanation. However, I should point out to him that even if we did incur an additional £80 million—and I suspect that it will be nowhere near £80 million, because £80 million does not seem logical—according to the Minister’s own figures, that would add 0.53% to the premiums that the companies would have to provide, while also encompassing, as we have heard, 700 people who are currently not covered by the scheme.

I realise that much of what I have said has been negative. I understand the pressures that the Minister is under, and I believe that the attitude that he has taken today shows that he genuinely wants to help those who suffer from this disease and will die as a result of it. However, I also believe that more can be done. I believe that logic is on the side of those who have tabled the amendments, and I trust that the House will support them when they are put to a vote.

[John Woodcock]

I shall speak only briefly.

I support all Members on both sides of the House who are pushing for more in this deal. As I said in an intervention earlier, Barrow contains the largest number of mesothelioma victims in the country. In most of those cases, the employer can be traced, because it was the Vickers shipyard. However, the families of the victims—wives who have seen their husbands die, children who have seen their fathers, and in some instances their mothers, experience that horrible, horrible death—are standing in solidarity with other families throughout the country, just as they have throughout the struggle for appropriate compensation that has continued for far too long.

Let us be clear about the fact that there can be no total fairness in this regard. If there were total fairness, people who went to work to do an honest job, to earn a living, to build ships and to work in industry would not have caught this disease and died in terrible ways, or caught a disease which is a ticking time bomb and which hangs over their lives now. Do we want to see premiums go up for current payers of insurance cover? No of course we do not, but it is absolutely clear that the victims who have waited so long for compensation should not be the ones who continue to bear the financial cost and penalty of this.

16:30

The Minister and his predecessors deserve some credit for taking on the consultation that the previous Government set out. As I have said before in the Chamber, my hon. Friends who were here before me pushed for this for so many years under the last Government and they should have got further faster, but that was not for want of trying by Ministers.

[Steve Rotheram]

My hon. Friend is making a powerful point, but does he agree that premiums should not be increased, because premiums have already been paid to insurance companies who made huge profits and distributed them to shareholders? They have had the money and they should pay out, as that is what happens with an insurance scheme.

[John Woodcock]

My hon. Friend is absolutely right. Insurance companies now have an opportunity to do the right thing and to be seen to be doing the right thing, and I hope they take it.

I said the Minister deserved some credit but I think he has blinked too early in this negotiation. We have all said we recognise the pressures he is under, but there are a lot of Members of this House who know a bit more about negotiations than I do and they will all tell him, just as I am about to do, that people do not tend to go into a negotiation saying, “Well, we’re going to offer this now, but, to be honest, there’s a bit further we could go so just push us a bit more and we’ll be prepared to give you a bit more.” They always say, “This is the last offer and we are not going to go further.”

[Mike Penning]

If that was what happened I would agree with the hon. Gentleman, but that is not what happened. The figure started at 70% and now we are at 75%. I have never blinked early in my life, and nor did Lord Freud.

[John Woodcock]

The Minister is absolutely right; it has gone up from 70% to 75%, but the case has been made powerfully and strongly today that he can go further, to 80% at least.

[Mr McKenzie]

Does my hon. Friend agree that the deal that has been struck is allowing the insurance companies to renege on their commitment to these victims, and, not only that, but perhaps we are seeing a precedent being set for industries who are yet to leave their legacy of industrial victims?

[John Woodcock]

My hon. Friend is right and that does not leave the insurance companies doing sufficient.

Of course time is a factor, and we do not live in an ideal world. Today we will probably not achieve giving these people everything that ought to be given to them, and God knows they have waited far too long already, but we should all thank the hon. Member for Chatham and Aylesford (Tracey Crouch) for her tenacity. She has brought her considerable expertise to bear on this. I am sure her former friends and colleagues in the insurance industry think of her as a poacher turned gamekeeper—[Interruption.] Perhaps it is the other way round in this instance. Her expertise and inside knowledge have enabled the way in which the insurance companies work to be exposed in the House today. Some of us will struggle to see the logic of the 3% cut-off. If we stretch this and have a longer period for making the pay-outs over the next decade, even by the parameters the insurance industry has set itself, the figure will still come in at 3%.

We have shown today that we can go further and I really hope that, even at this late stage, the Minister will listen to the arguments made in this House and improve what is on offer for the victims of this awful, horrible disease.

[Mr Anderson]

I will try to keep my voice going if I can. I appreciate the work the Minister has done but this debate saddens me. We have got a situation where employer liability was paid to these insurance companies. They have had their money and they have run with it. People have died, and that was not a surprise. We have known for a century that asbestos kills people, so the fact that people would need compensation was not a surprise. The whole argument about the cut-off date, and that we cannot just spring this on the insurance companies, is nonsense. Looking back over the last decade, at the Fairchild rules, the Barker rules and the Rothwell rules, we can see that those were all cases in which the industry tried to get out of its responsibilities.

I raised this point with the Prime Minister on 18 December. I asked him to intervene to try to resolve the issue and he said:

“I will obviously look at what he has to say”.—[Official Report, 18 December 2013; Vol. 572, c. 732.]

I understand the time constraints that he has been under since then, but will the Minister tell us whether the Prime Minister has had a chance to look at the Bill? Where has the Prime Minister been to take that look? Has he been to the TUC? The trade unions have supported people through this morass for decades. Has he been to the asbestos victim support groups, including those who have been here today, who have real-life experience of these matters? Has he been to the employment lawyers who have sat with the people while they have died, and with their families?

[Mike Penning]

As a trade unionist myself, I would have expected the TUC to contact me for a discussion, but it has not done so. Other groups, including victim support groups have. This is an interesting situation. I would have been more than happy to speak to the TUC, but it did not knock on my door.

[Mr Anderson]

I thank the Minister for his intervention, but I am talking about what the Prime Minister has done since he made a promise to the House from the Dispatch Box to look into the situation, knowing that the Bill was coming back to the House today.

Perhaps the Prime Minister has looked at what the employment lawyers have been dealing with over the years. Or perhaps he has done the other thing, and spoken to the people who have set the parameters for this debate: the people in the insurance companies. After all, he knows them all. They have bankrolled his party for decades, and they have bankrolled his constituency and those of hundreds of Conservative Members across the country. If a trade union had exerted that much influence, we on this side of the House would have been nailed to the wall. The Prime Minister knows the insurance industry well enough to have appointed the Association of British Insurers to lead the consultation. My hon. Friend the Member for Barrow and Furness (John Woodcock) talked about gamekeepers and poachers a moment ago. If this is not the most glaring example of that, I do not know what is.

At the end of the day, however, the Prime Minister could have gone somewhere much closer to look into this matter. If he had gone to his constituency office, he would have found a document in his in-tray that was sent to every one of us as constituency MPs. It is from the Asbestos Victims Support Groups Forum UK, and it is entitled “The Mesothelioma Bill [HL]—the Victims’ View”. I shall read out a few examples from across the country.

A constituent from Stockton North asks:

“After being robbed of my husband and father of two sons why am I now being robbed of compensation for my children?”

A constituent from Birmingham, Selly Oak states:

“I hope you never have to watch a loved one on oxygen fighting to get his breath, carrying it around to be able to live, or should I say exist. You have no idea what mesothelioma sufferers go through.”

A lady from Halesowen says:

“I watched my husband suffer for 3 years and then his horrific end to this illness. I’m sure that if the Ministers in Parliament witnessed this they would change the Bill without any hesitation”.

A lady from Eltham states:

“My husband was murdered. His name was Alan. My husband died aged 58 because he went to work every day in places riddled with asbestos.”

Mrs Barker from Staffordshire Moorlands says”:

“If you haven’t seen a man die of mesothelioma like I saw my husband in hospital then maybe you ought to go to a hospital. To see him go from a healthy active man to nothing, skin and bone, or anyone diagnosed with mesothelioma fall to pieces…is heart-wrenching.”

Mrs Bell from Telford states:

“My husband died within 2 months of diagnosis of mesothelioma. He was a strong, healthy man brought down to a weak, skeletal figure in that short time. Watching someone you love reduced to such a state is soul destroying.”

Mrs Barclay from Cannock Chase says:

“Come and spend time watching someone you love struggle to walk because of pain and lack of oxygen. My husband was 6 ft 2 in tall and now he is bent double struggling to walk.”

But the Prime Minister need not even have gone there; he could have gone to visit Mr Larrie Lewington, who lives in Witney and who said:

“I’m disgusted because 90% of the work I did was for people like the Ministry of Defence, police and hospitals. I now have this death sentence hanging over me for helping the government and they are trying to reduce the amount of money that I deserve. It’s an absolute insult. I could have had another 20 years left, everything else is perfectly healthy except this horrible disease. No amount of money will ever compensate what this has done to me and my family but it will help, and give me peace of mind that I can live without worry for the rest of my time.”

That is the real story here. It is not about whether the insurance companies can afford this or not; it is about the moral duty of the people in this House to do the right thing and not be told, “We might have to put the insurance bill up and some businesses will be wobbling.” We do things in this House every day of the week that put businesses, people, trade unions and every other organisation in the country under pressure, yet somehow we are saying that because we have this deal we should not put these people under pressure. There is absolutely no excuse for what is going on here today. The least that should be done is that we should start the scheme from 2010, because that is the last point when insurers can say, “We did not realise we were going to have to face up to this.” They should be made to face up to it. They have had their money and they ran with it. They should be caught, brought back to book and made to pay the proper compensation—anything below 100% is a disgrace.

The other clear disgrace—I am glad that the Minister of State, Department for Work and Pensions, the hon. Member for Thornbury and Yate (Steve Webb) is in his place—is the concept that somehow the Government can claw back 100% of benefits from people and yet give only 70% compensation. Where on earth has that come from? Where is the morality in that? Has anybody made the case to say that that is fair? It is obviously wrong. Somebody who goes to the courts because the employer is identifiable will get, on average, £154,000, whereas under this scheme the most somebody will get, even though they have to go through all the same hoops, except that they do not have an identified employer or insurance company, is £115,000. So they are already £39,000 worse off. Then 100% of the benefit they had is going to be clawed back because they are lying on their death bed—it stinks! We have to put this right. If it is not put right today, we need to continue on it because this is not the end of the matter. If it is not put right in this Parliament, I hope that when Labour comes to power in the next one we will resolve it.

[Hywel Williams]

It is a pleasure to follow the hon. Member for Blaydon (Mr Anderson) and all the other hon. Members who have spoken most eloquently about this terrible disease in support of the proposal made by the right hon. Member for Newcastle upon Tyne East (Mr Brown), which my party and I support. The hon. Member for High Peak (Andrew Bingham) said that it seemed unlikely that he would be so concerned about mesothelioma, given that he represents a rural area, and the same applies to me; what does mesothelioma mean to us in rural Arfon?

In the early 1960s, a Ferodo factory was established just outside my home town of Caernarfon. The slate industry was dying at the time, and many slate workers were affected with the dust disease that led to the 1979 Act to which I referred earlier in an intervention. At the time, people believed in economic planning and the plan was to establish a large factory in the constituency to mop up the unemployment arising subsequent to the closure of the slate industry. Ironically, the factory was that of the Ferodo firm, which then used asbestos in the production of brake linings, leading to cases of mesothelioma in my constituency.

I will be brief because the arguments have been very well made this afternoon by a variety of hon. Members on both sides of the House, and I pay tribute to the hon. Member for Chatham and Aylesford (Tracey Crouch) for her interesting and well-informed speech. As has been said, the scheme is being set up for individuals who have not only been diagnosed with a terminal illness, but who have been suffering the misfortune of being unable to trace their employer’s insurers. It is plainly unjust that these claimants should automatically lose a significant percentage of the compensation that is rightly theirs through no fault of their own. The industry has argued that mesothelioma claimants should be encouraged to look at all other avenues before making a claim under the scheme. At a meeting I had some months ago with insurers, that point was made most strongly.

[Mike Penning]

It is the Government who are saying that a victim must do everything they possibly can to ensure they get a claim against an insurance company before they approach the scheme, because the scheme is a fund of last resort.

16:45

[Hywel Williams]

I stand corrected. However, that argument was made to me by representatives of the insurance industry when I met them on this issue. I understand the argument that it would spur people on to take any action they can and that the fund should be a matter of last resort, but it seems that we are in danger of giving the impression that the Government are heedless of the bitter realities and the ferocity of this disease. I am sure that the Minister does not see it that way, but that is the impression that might be given to sufferers in the short time that is available from diagnosis to the outcome. There are also cruel pressures on their families. As we have already heard, sufferers can die very shortly after being diagnosed, which leaves their families with little time to seek more positive avenues of compensation. There is the matter of basic humanity here. Should we expect people to use their precious final months of life to pursue these legal means of tracing their previous employers’ insurers when the fault is not of their making?

Briefly, let me repeat a point that I made in an earlier intervention. I referred to the slate industry and the fact that there is compensation for slate workers who are unable to trace the insurers of their former employers, and the compensation is paid at 100%. That is in respect of slate workers and workers in other industries, such as the jute industry in Dundee and the china clay industry in Cornwall.

I have heard the arguments and that there have been negotiations and that a figure has been arrived at, and I can see the practical politics of that. I will end by saying that whatever the technical aspects of the case, there is a moral issue here. I support amendment 4, tabled by the right hon. Member for Newcastle upon Tyne East, but if that fails, I will back the other relevant amendment.

[Kate Green]

I rise to speak to amendment 9 in my name and to support all the other amendments in this group. Amendment 9 seeks to enshrine in the Bill the 3% of gross written premium, which is the levy to be imposed on insurance companies to fund the mesothelioma payment scheme.

What I want from this amendment is a cast-iron guarantee that that levy will remain in place as long as the scheme continues. I am sure that the Minister feels that he has already given me that guarantee on at least one occasion—if not on many occasions. For example, he gave it in Committee on 10 December.

[Mike Penning]

May I reiterate the guarantee that I gave the hon. Lady in Committee and again today that it will stay at 3%?

[Kate Green]

I am grateful for that further assurance. On 10 December, the Minister said that 3% “is not going anywhere”. On 12 December, he said:

“Three per cent. is 3% and we have no intention of moving away from it.”––[Official Report, Mesothelioma (Lords) Public Bill Committee, 12 December 2013; c. 117.]

He has given us a further assurance this afternoon. He was a wee bit more equivocal, if he will forgive me for saying so, in his letter to Committee members on 17 December, where he said:

“We will look to ensure that the rate of the levy continues to be 3% of GWP...or equivalent to 100% of average civil damages.”

I am particularly concerned about this, because the Government’s impact assessment says that the levy will raise £371 million over 10 years, but I have subsequently learned from the economist at the Department for Work and Pensions that its modelling to arrive at that figure is based not on 3% “not going anywhere” but on how much it costs to meet pay-outs at 75% of average civil damages and the associated costs. In fact, the figure of £367 million in the impact assessment, which is what the Government have been relying on as the cost of the scheme that they say is affordable to the industry, means that the industry will face a levy of just 2.46% over 10 years. I know that the Minister has assured us that there will be a review after four years of the operation of the scheme of the amount the levy has raised and what can be done to increase the rate of payments beyond 75%. Indeed, the Minister has said to me that there might be other things that can be done, too.

If the industry can afford 3% today, it can afford 3% over the lifetime of the scheme. If the rate were maintained at 3% over the first 10 years of the scheme, it would raise £452 million rather than £371 million. That would be a further £81 million for sufferers that the industry is telling us it can afford. Indeed, the industry thinks that the scheme will run for 30 or 40 years and talks about there being a cost of £30 million to £35 million a year, or £1.2 billion to £1.4 billion over the whole period of the scheme. The cost of 100% payouts going back to 1968 will be £1.1 billion, so 3% would allow us a much earlier start date and to increase the rate while leaving some money over for research or to cover other diseases.

It seems to me that there is plenty of scope to enshrine the level of 3% in legislation. The industry can afford to pay it and we have no reason to believe that it cannot or will not be able to afford it in the future. The industry says that that is an acceptable levy that would put more money into the scheme, if not immediately then in subsequent years. The industry will face the levy during the first four years of the scheme, so we are not asking for any extra money during those years. I cannot understand why that levy cannot be enshrined in the Bill today.

I strongly support amendment 5 on the start date, proposed by my right hon. Friend the Member for Newcastle upon Tyne East (Mr Brown), for exactly the reason given, for example, by my hon. Friend the Member for Wansbeck (Ian Lavery)—the guilty knowledge which backdates, even on the most modest reading, to at least February 2010 when the Labour Government launched the most recent consultation. I would argue that since that date the industry has been on notice that there will be a scheme, and one for which it will have to pay.

The Minister says that one option in the consultation was to do nothing, and that might be true. Consultation documents always contain a do nothing option, but that rarely suggests that nothing will transpire. I do not think that the Government of the day, this Government or insurers have thought that doing nothing was the option on the table. Labour’s consultation document specifically said that Ministers were

“persuaded that an Employers’ Liability Insurance Bureau…should form part of the package”

creating a compensator of last resort. The industry has been planning for a scheme based on market share of employers’ liability insurance, either historic or current. In its response to the Labour consultation, the industry concentrated on only two costed models and made it quite clear that that was the basis on which it expected the scheme to proceed.

It has been noted, although I think some of my colleagues were rather sceptical about the figure, that backdating to 2010 could increase costs by £80 million over 10 years. I think that figure is acceptable and understand why the Government have suggested it. We will see an early spike in claims during the first few years of the scheme and in later years, of course, we will expect the number of claims to reduce. I accept that backdating the scheme to February 2010 would breach the 3% levy by taking it to 3.56% over the first four years of the scheme, although it would be comfortably within 3% over the first 10 years. However, I strongly contend that for a multibillion-pound industry that is receiving, as colleagues have pointed out, a £17 million gift and a £30 million loan from the Government, it could easily swallow that cash-flow issue, especially given that, as has been pointed out repeatedly this afternoon, it has been taking income in premiums for such policies over years—in fact, over decades. The money is already in its hands.

Let me remind right hon. and hon. Members that it is not possible to access the scheme unless the technical committee that will manage it takes a view that an employers’ liability insurance policy was in place. It is not possible to access the scheme on the basis that there was no policy; there must be prima facie evidence that there was a policy and that premiums were therefore collected.

I understand and strongly sympathise with the points made by colleagues about the moral case for 100% of average civil damages to be the basis on which the scheme should operate. In fact, I believe that that is the Minister’s, and everybody’s, preferred moral position in relation to the victims of this horrific disease. I was very pleased to hear him put on the record—I think it is the first time he has had the chance to do so—that it was not his view that a figure below 100% was necessary to create some sort of incentive to sufferers to find an insurer rather than simply come to the scheme. I think we have all found quite offensive the suggestion that sufferers are in some way shopping around for the best deal. I am grateful to him for putting on the record that the Government do not believe that that would be the case.

I was struck by the point made by my hon. Friend the Member for Middlesbrough (Andy McDonald)—sadly, he is not in the Chamber at the moment—that because of well-established principles of contributory negligence, in paying out less than 100% to victims we albeit inadvertently send a message to them that it may be perceived that to some degree the suffering that they are facing is their own fault. That is an extremely unfortunate and unjustified message to send to victims who have contracted a disease simply from going out to work to earn a living and support their families. I hope we can all accept that whatever the constraints imposed by the deal that the Minister has been able to negotiate, the moral case for mesothelioma sufferers coming to this scheme is that they should be compensated in full.

The proposal by the hon. Member for Chatham and Aylesford (Tracey Crouch) is supported right across the House. We recognise that an 80% payout is a very reasonable compromise even within the terms of the scheme that the Minister has negotiated. There would be more money in the scheme if the Government and the industry stopped messing around with the likely legal fees that claimants would be facing. The fees were £7,000 and then went down to £2,000, which somehow magically allowed us to get the pay-outs up to 75%, and now they have gone back up to £7,000 again. The hon. and learned Member for Sleaford and North Hykeham (Stephen Phillips) is not able to join us in today’s debate, but in Committee he made some very telling points about lawyers’ fees. He is a well-paid lawyer, so I am sure he will forgive me for saying that he ought to know —[Interruption.] The fees were considerably more modest than his fees, as I think we all heard. He pointed out that any assumption of the basis on which legal fees were calculated within the scheme would create the danger of that becoming the tariff for its legal fees. The Minister undertook to have further discussions to see whether it would be possible to bear down on the level of legal fees.

I have since been advised by an asbestos victims support group that it has been asked to help to get mesothelioma victims to put pressure on their lawyers to keep the fees low. That is unacceptable. At a time when they are coping with an appalling illness and worrying about the future for their families, as they know they may not even survive to receive the compensation that they are due, the last thing they need is to get into an argument with their lawyers about fees. I really hope that the Minister is able to do much more than simply pass the problem back to victims. Perhaps he will respond to that point in his comments.

Another issue that we discussed in Committee and have not yet got to the bottom of is that a whole range of other fees are covered by the levy, as we have debated during the passage of the Bill: the insurance industry’s legal fees of £24.2 million, as distinct from the victims’ legal fees; the scheme administration costs of £4.4 million; and the set-up costs of £1.4 million. In Committee, the Minister assured me that the industry’s legal fees would be spent to the benefit of claimants and said he would get back to me if he was wrong about that. As he has not done so, I assume that those fees will be spent for the benefit of claimants. However, since he told me that on 12 December, I have been racking my brains as to how they would be spent for the benefit of claimants, and I have not been able to think of anything. I therefore hope that he will now be able to give me chapter and verse on exactly how those fees are to be deployed.

I also hope the Minister will be able to confirm that the sum set aside for setting up and administering the scheme will contain no profit element. This is of particular concern, because we know that the insurance industry itself is likely to bid to run the scheme. The Minister assured us in Committee that the process of appointing the body to run the scheme would be a competitive one. He said it would be based on value for money and commercial criteria, which is welcome, but those criteria would not necessarily preclude the administrator from making a profit: they might simply have to come up with the best price.

I am still in some about doubt about the position on arbitration costs and whether they are also being taken out of the levy. The Minister has not yet responded on that.

All those factors could serve to deplete funds that could otherwise be deployed for more generous pay-outs or to an earlier start date. It really is not good enough that we are still in the dark at this very late stage as to how much of the levy is earmarked for expenditure other than direct payments to victims.

17:00

I welcome the debate we have had this afternoon and the attempts made by Members throughout the House to extend the generosity of the scheme to victims. I very much hope that the Minister will be able to give us some positive reassurances as to how that can be achieved, because I know he shares with all colleagues the wish for the scheme to be as generous as possible. It is strongly our view that there is every reason to believe—we have heard the evidence this afternoon—that the scheme can afford to be more generous than it is at present.

[Mike Penning]

I again thank colleagues from all parties for the tone of the debate and the measured way in which it has been conducted. I thank in particular the shadow Minister, the hon. Member for Stretford and Urmston (Kate Green), for her comments. I hope she will agree that we have been as helpful as possible to her, her team and other colleagues, not only through letters but through access to our team managers. I am slightly concerned about the technical questions she asked at the end of her speech, because I had hoped that they had been addressed. If I am not able to address them all now, I will make sure that my team contacts her to do so in the near future.

We have heard some excellent contributions. As has been said several times, morally I am probably in agreement with nearly everything that has been said. These people are not at fault. They mostly went to work in good faith and they have contracted an atrocious, abhorrent disease that is fatal. They and their loved ones need this fund’s support. There are no arguments whatsoever about that. Many of us are disappointed that we are still discussing this issue all these years after this terrible disease, its cause and its effects—it is fatal—were known about.

At the outset I thank the right hon. Member for Newcastle upon Tyne East (Mr Brown) for his very kind comments. I praise the work he did when he was a Minister trying to introduce a similar Bill. I also praise not only the support groups, but the trade unions, because without their pressure over the years we probably would not be in this position.

Having said that my moral position is absolutely as one with that of colleagues, I have to be a pragmatist. The Bill has come from the Lords and I am the Minister with responsibility for taking it through the House.

The hon. Member for East Antrim (Sammy Wilson) mentioned the figure of £17 million, but that is to get the fund going and to keep us below 3%. It is not being given to the insurance companies to do whatever they want with it. It is to get the fund running for four years. On the issue of 3%, the right hon. Member for Newcastle upon Tyne East was spot on to say that, although he was thinking of a 10-year period, I was thinking of four years, and that after that four-year period there will be a review.

I am restricted by the maths and our agreements. Could the insurers afford this? I have no doubt whatsoever that they could, but that is not the deal that has been struck. As has been said, the House could decide to set the limit at 80%, but I want this Bill to receive Royal Assent and for compensation to be paid in July. That is not happening at the moment and it has not happened for years. Could it be better? Yes, it could. I said as much on Second Reading and I have said so extensively elsewhere.

[Grahame M. Morris]

I agree with much of what the Minister has said. Will he respond to the point made by my hon. Friend the Member for Stretford and Urmston (Kate Green) about the 3% levy? If the advice is correct that the money will not be spent in the first years of the scheme, perhaps it could be redirected into medical research on the causes of mesothelioma.

[Mike Penning]

What I have said in Committee and today is that there will be a review after four years. I have committed to the 3% figure beyond the four years, as is absolutely right. I will come back to the £80 million that has been touched on in a second. Actuaries have looked at this very carefully and the Health and Safety Executive, for which I am also responsible, has looked at the costings. We will consider the review at the end of the four years, but there is no way in which the figure will drop below 3%. As far as I am concerned, that will flow through until we get 100% compensation.

It is very important for hon. Members to understand that we are talking about 75% of the average, which means that some people will be worse off—I fully admit that—but that some people will get more than they would have done if they had been able to trace their insurer or employer and go through the scheme. That is an interesting parallel. The percentage is an average, and in working with an average some will be on one side of the line and some will be on the other side of the line. I know that it is really difficult for those on the wrong side of the line in theory, but there will be people on the other side of it.

Where should the arbitrary line be? Of course I could say, as I did in Committee, that the consultation issued by the Government before the last election included a proposal to do nothing. I accept that there is a proposal to do nothing in most consultations, but it was there. I do not, however, think that that is the biggest issue; the biggest issue is how we stay within the 3% over the period and within our financial obligations. That is the position that I am in.

I cannot, obviously, support the 100% figure. I pay tribute to my hon. Friend the Member for Chatham and Aylesford (Tracey Crouch) for her work on the cross-party group, including before she entered the House, but, sadly, I cannot accept 80%. We have discussed that, and I think that she understands why. I need to make sure that we stay within the realms of what we have agreed and get the Bill through the House and on to the statute book.

[Mr Anderson]

I regret to hear what the Minister is saying. One thing he could do is to change the clawback from 100% to 75%, which would at least give people a little more money.

[Mike Penning]

Some things are out of my hands, and such is the legal situation in relation to clawback. I cannot change that through the Bill. It just happens: if someone gets compensation, there is clawback on it at 100% because taxpayers’ money is used to pay the compensation.

[Bob Stewart (Beckenham) (Con)]

From what the Minister is saying and the feeling of the House, it may well be that the Bill is just a work in progress. Are we collectively agreed—the Minister, in particular—that we may well have to revisit the Bill properly after, say, three years and try again to give decent compensation to everyone?

[Mike Penning]

That is exactly what we are doing because there is a four-year review. It was announced in the other place, and I talked about it on Second Reading and in Committee. We are committed to the four-year review, which I know we will work on.

All the amendments would affect the speed at which the Bill goes through, because if we amend it today, it has to go back to the other House and there will be ping-pong. That would delay the compensation, which should be remembered by hon. Members who really want their constituents to get compensation. Along with the restraints on me within the agreement, that is why I will oppose the amendments. I hope that hon. Members will not press their amendments, so that we can make progress and get on to the next group.

Question put, That the amendment be made.

17:09

Division 169

Ayes: 232

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Labour: 214
Democratic Unionist Party: 7
Scottish National Party: 5
Social Democratic & Labour Party: 2
Plaid Cymru: 2
Independent: 1
Alliance: 1
Green Party: 1

Noes: 303

---

Conservative: 257
Liberal Democrat: 44
Independent: 1

Clause 4

Payments

Amendment proposed: 1, page 3, line 5 , at end insert ‘but shall not be less than 80 per cent of the average civil compensation recovered by mesothelioma claimants.’.—(Tracey Crouch.)

Question put, That the amendment be made.

17:24

Division 170

Ayes: 247

---

Labour: 216
Conservative: 12
Democratic Unionist Party: 7
Scottish National Party: 5
Social Democratic & Labour Party: 2
Plaid Cymru: 2
Independent: 1
Liberal Democrat: 1
Alliance: 1
Green Party: 1

Noes: 286

---

Conservative: 241
Liberal Democrat: 42
Independent: 1

Clause 5

Applications and procedure

[Kate Green]

I beg to move amendment 10, page 3, line 32, at end add—

‘(3) Clause 18(2)(a) of the Commissioners for Revenue and Customs Act 2005 is amended as follows—

After sub-paragraph (ii) there is inserted—

(a)

(i) is made to representatives of persons preparing an application to the Diffuse Mesothelioma Payment Scheme or being assisted by that scheme to bring a claim under the Fatal Accidents Act 1976, and/or the Law Reform (Miscellaneous Provisions) Act 1934.”.’.

I apologise to the House for what will prove to be a rather technical and nerdy amendment. To reassure the Minister and the House before we start—[Interruption.]

[Madam Deputy Speaker (Dawn Primarolo)]

Order. Will Members please leave the Chamber quietly so that we can complete the business before the knife at 6 o’clock?

[Kate Green]

I reassure the Minister and the House that it is not my intention to press the amendment to a vote. I hope that he will be able to offer me at least some indication of the way forward as a result of the concerns I am about to raise.

The amendment was discussed in Committee on 12 December and relates to the fact that Her Majesty’s Revenue and Customs has now decided that a High Court order will be needed in order for it to release the employment records of deceased customers and protect employers’ confidentiality. Clearly mesothelioma sufferers coming to the diffuse mesothelioma payments scheme will need to have employment records to demonstrate their prima facie case that an employers’ liability policy of insurance existed.

Under the Data Protection Act, disclosure about employers to customers while still living is permitted because that would be part of their personal information. But this cannot apply once the customer is deceased. It might then be possible to look to the Commissioner of Revenue and Customs Act 2005 to enable access to employment records but this does not appear to offer circumstances in which HMRC is prepared to release the records without a High Court order, as HMRC confirmed in a letter to the Association of Personal Injury Lawyers on 2 December last year.

Clearly this is a worry in relation to the diffuse mesothelioma payments scheme because it will be very burdensome for families to get such a court order—burdensome and potentially costly. We must recognise that the need to do so will be quite frequent because victims die so quickly after diagnosis. The Data Protection Act exemption that is available to customers while still living will in many cases not be available.

When we discussed the matter in Committee before Christmas, I asked the Minister what consideration had been given to the impact of the changed interpretation on mesothelioma victims. I asked what consultation had been carried out and how the change in interpretation could be reconciled with the Ministry of Justice’s aim to speed up the process of claims. I emphasise of course that this is an issue not just for those coming through the diffuse mesothelioma payments scheme, but for anyone pursuing civil claims in relation to the scheme.

Since our debate in Committee I have learned that the concerns that I raised are shared more widely. Coroners, in particular, are becoming very anxious. I am sure that the Minister will be aware that in the Liverpool coroners court the other day, the coroner required HMRC to produce the employment records of a Mr Roger Carmichael. HMRC, relying on its new interpretation of the law, declined to provide those records and to appear before the coroner. I understand that the ruling is now being challenged in a judicial review. Clearly, with the matter proceeding through the courts, both the Minister and I are going to have to be careful in what we say about that case—indeed, I do not intend to say anything about it.

What is clear, however, is that the situation is just a mess—a mess that will bear adversely on mesothelioma sufferers and one that we need to sort out. It is potentially a costly mess for the Government if, for example, coroners needed to be funded to make applications to the High Court for the release of employment records. It is potentially a mess because it could be a breach of the Government’s obligations under the European convention on human rights, particularly in respect of people’s ability to exercise their article 2 rights, which would apply to mesothelioma claims. It is a confused mess when it comes to coroners’ matters as to whether the Commissioners for Revenue and Customs Act 2005 or the Coroners and Justice Act 2009 prevails on disclosure—a mess that I imagine would be a subject of judicial review. In any event, if we are speedily to introduce the diffuse mesothelioma payment scheme, it is a mess that we—and, I am sure, the Minister—will want to see speedily sorted out.

This mess has arisen not because the law has changed, but because HMRC’s interpretation of the law has recently changed. Of course we understand and I accept that if HMRC receives legal advice saying that it should act differently from how it has worked previously, it cannot casually disregard it, but there is clearly an urgent need to clarify the exact position. The judicial review to which I referred might not adequately clarify the position for mesothelioma sufferers and their dependants coming into this scheme because, as I say, it might make a ruling only on mesothelioma matters before the coroner—not necessarily or likely to be applicable to accessing this scheme.

I know that the Minister recognised this concern when I raised it in Committee and he said that he was anxious to see it resolved, but reluctant to do it in this Bill because of his wariness around ping-pong. While I am, frankly, doubtful whether this would be a major stumbling-block if we had to ping this back to their lordships, who I think would be pretty happy to see an amendment put through simply and straightforwardly to address the particular problem, I understand that the Minister, in conjunction with his colleagues in other Departments, is now looking for another legislative vehicle.

That is certainly welcome, but I have to ask the Minister whether he is going to find that legislative vehicle quickly enough for it to be available before the diffuse mesothelioma payment scheme comes into effect? He has repeatedly stressed that this scheme needs to be up and running by the summer of 2014, which does not leave a lot of time to find a suitable legislative vehicle to sort out the problem and ensure that it is dealt with robustly so that the scheme can properly be the beneficiary of such sorting out. I am thus extremely anxious that the Minister might find himself in some difficulty if his colleagues cannot oblige him with a handy, urgent and useful Bill.

The Minister might like to think about accepting this amendment. It is intended to help what he says he wants to happen, which is to get the scheme up and running, operational and effective as quickly as possible. It is not a contentious amendment; it is not one about which there is going to be any dispute either here or in the other place in respect of what it is designed to achieve. The amendment is narrowly drafted to relate specifically to those seeking employment records in relation to accessing the scheme that this Bill covers. If the Minister is unable to accept my amendment, I hope he will be able to assure me at least that the matter will be sorted out in good time before the scheme comes into operation this summer. I hope he will explain how he thinks that will happen. We do not want warm words alone; we need specifics. Time to sort this out is becoming urgent.

[Mike Penning]

I thank the shadow Minister for tabling the amendment and for setting out her position early when she said that she would not press the amendment to a vote. She is quite right, and I reiterate the point I made in Committee: I do not think this is the right Bill for addressing that important issue. I agree that the change in HMRC’s interpretation of the existing law—as opposed to a change in the law itself—is a massive issue, but fortunately there is time for us to deal with it between now and July. I have been meeting Justice Ministers to discuss the matter. As I am sure the House will understand, the Ministry of Justice does not want the courts to be clogged up with people asking for court orders in order to obtain their employment records, and I am sure that that was not the intention when the legislation was enacted.

17:45

Our priority—apart from publishing the regulations, which we hope to do tomorrow—is to address this matter. I will meet a Justice Minister, and we will find a vehicle to simplify the way in which the employment records are obtained for those who are making claims on the mesothelioma fund, so that we can do exactly what it says on the tin. What we have wanted to do all along is secure a speedy resolution for those who need access to the fund because they have no other recourse, and it is imperative for the House and Ministers to ensure that that happens. I hope the hon. Lady accepts that we are working very hard, and are also asking for legal opinions on whether we can take some action between now and the passing of the Bill.

[Sir Edward Leigh (Gainsborough) (Con)]

Could the matter eventually be dealt with by means of delegated legislation?

[Mike Penning]

I understand that that is possible. It could also be dealt with through a deregulation Bill. In any event, we will find the necessary vehicle. As I have said, the Ministry of Justice does not want the courts to be clogged up with requests for court orders, and the matter will be resolved.

[Kate Green]

I am grateful to the Minister, I am also grateful to the hon. Member for Gainsborough (Sir Edward Leigh) for his helpful intervention about the possibility of secondary legislation. Perhaps the Minister could discuss with his colleagues and with the Government’s legal advisers whether the regulations under the Bill—which I expect to complete its passage later this evening—could be used as a vehicle for the change. Although more substantial Bills such as the Deregulation Bill may make some progress between now and July, we have not observed legislation proceeding all that speedily under this Government, particularly given the notorious requirement for a legislative “pause” while Ministers go off and rethink from time to time. Obviously, if the Minister has to use colleagues’ primary legislation to deliver his intent, he will be careful to select a Bill that would pose no such risk.

[Mike Penning]

Just to have a little bit of fun with the hon. Lady, let me point out that, having first been accused of trying to rush the Bill through, I am now being criticised for the fact that the Government are slowing down legislation. One cannot win, can one?

[Kate Green]

It must be tough being the Minister. I am sure that all our sympathies go out to the hon. Gentleman.

As I have said, I do not intend to press the amendment to a vote. The judicial review may give us some indication of the interpretation of the current legislation, which would be helpful, and I think that we should wait for that. I know that the Minister fully appreciates the urgency with which my amendment seeks to drive the process, and I hope that I can work with him to find and expedite the most suitable vehicle. If that turns out to be regulations under the Bill, we will stand ready to help him to ensure that they are passed.

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Third Reading

17:48

[Mike Penning]

I beg to move, That the Bill be now read the Third time.

It is an honour and a privilege to be the Minister who has taken the Bill through the House so speedily, with the help of Her Majesty’s Opposition and many other Members. Let me explain why the Bill is necessary. It will provide a fund of last resort for those who suffer from mesothelioma as a result of asbestos poisoning, and for their loved ones. As was pointed out earlier by the right hon. Member for Newcastle upon Tyne East (Mr Brown), it has been on Ministers’ desks for an awfully long time. It is not perfect—I accept that it is not perfect—but it will, I hope, do what it says on the tin and get compensation to those who so greatly need it.

I want to pay tribute to those who have helped get this Bill where it is, in particular the civil servants in the Box this evening—my Bill manager, Lee Eplett, Rose Willis, Fiona Walshe and Jenny Vass—the Bill Committee joint-Chairs, the right hon. Member for Knowsley (Mr Howarth) and my hon. Friend the Member for Shipley (Philip Davies), and the Government Whip, my hon. Friend the Member for Devizes (Claire Perry), for their assistance in expediting the Bill’s passage. We had three days—six sessions—for the Bill Committee if we needed them. I think everybody who served on the Committee will accept that we discussed it at length yet we still had time to spare. That is exactly what should happen with a Bill; no one should come out and say, “We haven’t discussed it at length.” We will be finishing slightly ahead of schedule this evening as well. I hope the tone with which the Bill has been addressed during its progress through the House, with the assistance of Her Majesty’s Opposition, will be continued, and I pay tribute to the hon. Member for Stretford and Urmston (Kate Green) for the way in which she has worked with me and my officials so that, should the Bill get its Third Reading, we can send it off to Her Majesty for Royal Assent, get the regulations down, and get compensation paid to those who so desperately need it, hopefully by July. I commend the Bill to the House.

17:51

[Kate Green]

The Opposition welcome this opportunity to put a scheme into law that will provide a measure of payment to victims of what we are all agreed is a most horrific and terrible disease. I pay tribute to Ministers in this Government and past Governments who have worked over many years to bring us to the point we reach today, and also to Members of all parties who have been so determined to fight for the best possible deal for victims of this terrible disease. May I also place on record my thanks to the campaigners who have been actively and determinedly lobbying for many years for justice for victims, including trade union campaigners and especially the victim support groups around the country who I know have been in contact with many of us about the very complex and technical details of this Bill? I also want to echo the Minister’s thanks to his officials, who have been extremely helpful, in this Chamber and the other place, and to both Opposition and Government spokespeople, in ensuring that we all have a full understanding of the often complex and technical analysis of the likely consequences of different scenarios, which we sought to test as we considered the Bill.

The Minister said a few moments ago that the Bill is not perfect and we concur. We are pleased to have made the progress we have, but we regret that there have been some missed opportunities which many of us feel did not need to be missed. There was scope to have gone at least a little further than we have managed tonight. The Bill could be so much better than it is and, in the House of Lords, in Committee, on Second Reading and again this afternoon and this evening, Members on both sides of the House have highlighted its deficiencies and have suggested very constructive, practical—and affordable, where cost implications have been involved—ways to remedy them. It is disappointing that the Minister has felt under such pressure from the deal that has been done with the industry that he has been unable to accept any of the amendments, which I think have been brought forward in a very constructive manner. I think the Minister himself said that that has been the spirit in which we have sought to make the changes we have advanced.

However, we welcome the promise that the regulations that we will shortly be studying will provide for a review of the operation and effects of the scheme in four years’ time. We are determined to see that provision appearing in the regulations, and Members across the House will be equally anxious in four years’ time to hold Ministers to a full, meaningful and effective review that genuinely addresses the operation and consequences of the scheme and the potential for its expansion and extension.

It is a matter of concern that we are passing legislation today that we already think will need improvement in four years’ time. I hold the rather old-fashioned view that we ought to try to get legislation right first time, and it is a shame that we already know that Parliament will want to come back to certain areas of this Bill after four years. Mention has been made repeatedly during the passage of the Bill of the areas involved. They include: eligibility; access to the scheme; the cost of running and administering the scheme; the processes surrounding the scheme; the funding of research into the treatment and cure for mesothelioma; and, of course, the generosity of the scheme. There is a clear need for us to make progress in the development of each of those areas, and I believe that the Bill should have been used to ensure that progress.

On the question of generosity, it is widely agreed that there is no moral case whatever for sufferers to receive a pay-out of less than 100%. Even if we accept that there is a constraint on 100% pay-outs that is dictated by affordability—the industry has suggested that that affordability is restricted to an amount set at 3% of gross written premium—I suggest that that figure is laughably small in the context of a multibillion pound industry that has been collecting premiums and avoiding pay-outs for decades. There should have been some scope for pushing the industry for more.

Regrettably, the amendments to introduce an earlier start date, to increase the level of pay-outs and, crucially, to protect the 3% levy were all rejected by the House. The Minister was reluctant to accept them, and the House did not vote for them. Those amendments would have meant: more money for victims; more victims benefiting; the possibility of more asbestos-related diseases being covered; more funding for research; and the inclusion of the self-employed and those who are currently forced to access less generous schemes.

On research, the Government’s response, as articulated by Lord Howe in the House of Lords, has been welcome as far as it goes. We very much hope that it will bear fruit in bringing forward more, better-funded and more fully developed research proposals. However, we really cannot overlook the moral responsibility of everyone involved in the sorry history of asbestos exposure to invest now in the best quality research that we can possibly promote to tackle this horrible disease. It was pointed out earlier that our obligation is not just to sufferers who are experiencing and dying of the disease now, and not just to sufferers in the UK. Developing economies mean that exposure rates around the world will rise for many years to come. Good research programmes and proposals exist, and more will come forward. Ministers have given a welcome indication of what they intend to do to galvanise and support such proposals, but we will want to keep a close watch on the practical consequences and effects of the guarantees that have been given. Unless they turn into properly funded, meaningful research programmes, I fear that we will have heard little more than warm words.

We very much look forward to seeing the draft regulations, which the Minister has indicated will be available tomorrow. I hope that will give us the opportunity to see some of the details of how the scheme will be run, which remain to be teased out, even after our debates. We particularly wish to scrutinise the detailed operation of the scheme, because we know that the insurance industry hopes to create a vehicle that can bid to administer the scheme. Understandably, there is a certain amount of suspicion among victims’ groups about the industry, which has so wronged them over so many decades, now becoming the vehicle responsible for operating the scheme that is to give victims some level of financial satisfaction.

I have to say that the representatives of the Association of British Insurers who have discussed the Bill and the scheme with me have given me an encouraging impression of how committed they are to operating an effective and well-run scheme that will get funds moving swiftly to victims. However, as I am sure the Minister will expect, it is not enough that we have a scheme run wholly in the interests of victims; the scheme must also be seen to be run in that way. That requires a tendering process that is entirely transparent. It requires transparency about the costs of running the scheme and who is recouping what payments for running the scheme, including details on a range of costs and fees that we are still unclear about: the legal fees, the arbitration costs, and the set-up and running costs. Those simply must not deplete resources that ought to be available to make pay-outs to victims. I hope that when the regulations are introduced, much more financial and operational detail will be given about the running of the scheme.

I am pleased that the Minister is working with colleagues in other Departments to sort out some difficulties that lie outwith his control but which, none the less, threaten either to derail or to have an adverse impact on this scheme. He said that he was working collaboratively with colleagues—I hope he will be a little more assertive than that. We urgently need a resolution to the difficulties created for us by Her Majesty’s Revenue and Customs’ new interpretation of disclosure rules in relation to employment records. I hope, too, that he will continue the dialogue with the Ministry of Justice about the baffling correlation it makes between the Legal Aid, Sentencing and Punishment of Offenders Act 2012 provisions on mesothelioma and this scheme, which is, of course, designed entirely for victims who cannot access civil justice through the courts.

[Mr Andy Slaughter (Hammersmith) (Lab)]

Has my hon. Friend had a response yet to the request in the letter she wrote to the Justice Secretary, which I believe was brought up in the Justice questions before last, about exactly this point? If so, will she enlighten us as to what the connection is between that Act and this Bill?

[Kate Green]

I am pleased to tell my hon. Friend that I have had a response. In fairness to the Justice Secretary, I should say that a response was received before Christmas. Clearly, he took note of the debates that were happening in our Committee, and the Minister of State, Department for Work and Pensions, the hon. Member for Hemel Hempstead (Mike Penning) was extremely helpful in expediting a response to a query that I had first raised in Justice questions on 11 November. I would be lying, however, if I said that I could now answer my hon. Friend’s substantive question as to what that connection is. It is not for me to put words into the mouths of Ministers or to suggest what Ministers think the connection is, but let me roughly paraphrase the letter. It said, “We think the two are connected because we are going to do them at the same time.” If I am doing wrong to the Minister’s colleagues in the Ministry of Justice, I am sure that they will want to make it clear how I am being unfair to them—

[Madam Deputy Speaker (Dawn Primarolo)]

Order. I have given the hon. Lady quite a lot of latitude in respect of her comments about a parliamentary question, but I would like her to return now, however tempting the question is from the hon. Member for Hammersmith (Mr Slaughter), to the Third Reading and what is in this Bill.

[Kate Green]

I am grateful to you, Madam Deputy Speaker.

The scheme that we will pass into law tonight is a start, but it is far from being all we can do for the victims of mesothelioma. I am glad that Parliament will keep close oversight of the scheme via the mechanism of the four-year report. That must be an opportunity for the fullest and most open scrutiny and should be taken as a genuine effort to develop and expand the scheme. As debate on the Bill has proceeded, it has been quite clear that it is the strong will of parliamentarians in both Houses and across all parties to secure justice for sufferers of this appalling disease, which was so often contracted by people who simply went out to work to earn a living to support their families, and yet in so doing were put under terrible threat. Today we have made a start in securing some justice for those victims, but there is much more for us to do. We can, we must and—as it is the mood of Parliament—we will do better for victims than we have been able to do to date.

18:05

[Tracey Crouch]

I am pleased that we have reached Third Reading of this Bill. It is a welcome Bill, but I remain disappointed that it is not as good as it could and should have been if we were to provide fair and reasonable justice to the victims of mesothelioma. I recognise the constraints that the Minister was under as a consequence of the negotiations that were made before the Bill entered this Chamber. Although it is a good day for the victims of mesothelioma, it could have been a great day for them had some of the amendments that were tabled on Report been listened to.

[Mike Penning]

Let me place it on the record—I think I did this earlier—that my hon. Friend could not have done more for her constituents during the progression of this Bill through the House. I paid tribute to her earlier on, and I do so again now.

[Tracey Crouch]

I am grateful to the Minister for his comments. My constituency has high levels of mesothelioma because of its dockyard history and the heavy industries that surround the Medway towns. Earlier, the hon. Member for Barrow and Furness (John Woodcock) expressed concern that I might be poacher turned gamekeeper as a consequence of my time in the insurance industry before coming to this place and trying to secure better compensation for mesothelioma victims. My bosses from my previous life know that I was strong campaigner for mesothelioma victims. Indeed I was proud of the efforts that I took during my time in the insurance industry to try to improve access to compensation. It just so happens that I was also elected to a constituency that has high levels of mesothelioma.

I am pleased that we had a debate today, but, as I have said, I remain slightly disappointed that nothing has happened to the Bill since it received its Second Reading. I see that as a failure in the way that Parliament works. Although I pay tribute to the Minister’s officials, who have worked incredibly hard and been generous with their time, it is a shame that the Bill that was prepared before our debate in Parliament is exactly the same now despite the fact that there is a strong will on both sides of the House to improve the legislation.

Let me pay tribute, as I did on Second Reading, to Lord Freud. He had a difficult time in getting the insurance industry to the table. I notice from the list of meetings that he met with the industry many times. Although he has had fewer meetings with the asbestos working group, it has had access to civil servants. He has done a good job, and would, I think, share the Minister’s view that this is not a perfect Bill. In a perfect world, he would have liked much better legislation.

None the less, both Ministers, my hon. Friend the Member for Hemel Hempstead (Mike Penning) and Lord Freud, are quite right when they say that this legislation would not have happened had it not been for this Government, and I welcome that. I remember the negotiations that took place with the previous Government and it is quite right for the Ministers to say that they are proud of where they have got to. Mesothelioma victims will be better off as they will have access to some compensation but, as I have said, I still think that the Bill is flawed.

I also want to pay tribute to my hon. and learned Friend the Member for Sleaford and North Hykeham (Stephen Phillips), who did a fantastic job in Committee in raising many of the issues I would have liked to have raised personally. He brought to the debate understanding of the issues of mesothelioma and the concerns of the victims. Having met victims, he understands how awful the disease is, that it is a fatal disease that can be contracted only through exposure to asbestos and that victims will, unfortunately, die an incredibly painful death. He did a fantastic job of bringing forward many of the points I would have liked to have made.

I also want again to pay tribute to the right hon. Member for Wythenshawe and Sale East (Paul Goggins). He and I have worked on this issue for many months and years and it seems strange to stand up in this Chamber and discuss mesothelioma without his being in the House. I hope that he recognises that those of us who have tabled amendments and spoken in the debate have done so partly on his behalf. He has been a sound campaigner on the issue for many years. He is a decent man and all he wants to do is to try to improve the compensation for victims of this dreadful disease.

I look forward to the publication of the regulations and welcome the fact that there will be a review of the legislation. Like the hon. Member for Stretford and Urmston (Kate Green), I rather innocently and possibly even naively believe that we should be making legislation that does not need to be reviewed in four years’ time and that it could be better scrutinised and considered in this place and in the other place before it passes into law. We are where we are, however, so I congratulate the Minister on getting the Bill through the House on time. I am pleased that many victims will secure some sort of compensation for a disease that they got simply by going to work.

18:12

[Jim Shannon]

I, too, put on record my thanks to the shadow Minister, the hon. Member for Stretford and Urmston (Kate Green), for the way in which she made her argument today on an issue that is close to all our hearts. I also thank the Minister. We know him as an individual, but we also know the work that he has done. His responses to our questions today would suggest that he might have wished to have seen something better but had to settle for a wee bit less than what we had hoped for.

Many passionate speeches have been made on behalf of individuals and families. They stick in my mind most of all because they come from knowledge and living with people who have had the disease. I have been an elected representative for almost 30 years as a councillor and an Assembly Member in Northern Ireland, and now I am privileged to be the Member of Parliament for Strangford. I have met a lot of people over the years who have had mesothelioma and serious health problems. I have helped some of those people with their disability living allowance and their incapacity benefit, as it was, or employment and support allowance, as it is now. I have seen those people deteriorate healthwise. I have known them personally and it was never easy to watch that marked deterioration in their health over a period of time.

My colleague, my hon. Friend the Member for East Antrim (Sammy Wilson), wearing his other hat as Finance Minister in Northern Ireland, introduced legislation to deal with compensation and in doing so brought about equality and fairness for sufferers. Today, we have contributed to a Bill that might not go as far as we would like, as the hon. Member for Chatham and Aylesford (Tracey Crouch) and the shadow Minister have said, but which goes a long way towards addressing the issues of those sufferers and those people. For that reason, we should take some credit for delivering that for our constituents.

I would have loved more pressure to be put on the insurance companies, as was suggested in the previous debate, and the percentage of compensation is not what I wished to see. However, this is a big step as regards people out there being able to see that this House can deliver such legislation, and in an urgent fashion. The Minister said that his imperative was urgently to produce legislation that could deliver, and that is clearly what he has tried to do. We want fairness for these sufferers to enable them to have some quality of life in their lifetime, however short it might be. I always think of the families, in particular, who watched their loved one deteriorate markedly in a very short period. This Bill takes a massive step in the right direction for all of the United Kingdom of Great Britain and Northern Ireland.

18:15

[Andrew Percy]

It is a pleasure to follow the hon. Member for Strangford (Jim Shannon). I am also pleased to speak so soon after my hon. Friend the Member for Chatham and Aylesford (Tracey Crouch), who has done a fantastic job in highlighting this issue and fighting for her constituents, not just on this Bill but on the Bill that became the Legal Aid, Sentencing and Punishment of Offenders Act 2012, when we had a rebellion in this House which, I am proud to say, led to changes in the other place as well. I was happy to be part of that.

This is a big issue for my constituents and for those of my neighbour, the hon. Member for Scunthorpe (Nic Dakin), who is on the Opposition Front Bench as a Whip today and so cannot speak. We have a mix of industries across our region, including the steelworks, which are largely in his constituency but also in mine. We have a shipbuilding past, particularly in Goole, and I have in my constituency a number of former coalminers and a lot of power station workers who, even today, are affected by this.

[Mr Slaughter]

I entirely agree with the hon. Gentleman about the debate on LASPO in which Government Members played a strong part, as did Members in the other place. It is regrettable, though, that the Government are not going ahead with any changes to the provisions in LASPO, as was announced just before Christmas.

[Andrew Percy]

Indeed. My hon. Friend the Member for Chatham and Aylesford just whispered to me that new clause 3, tabled in the name of the right hon. Member for Wythenshawe and Sale East (Paul Goggins), who obviously, very sadly, cannot be here, would have progressed that matter as part of this Bill.

I will comment more on my unhappiness with some aspects in a moment, but I was regaling the House on the importance of this issue for constituents in my area, several of whom have been to see me. They do not just come from the traditional industries. Very sadly, a lady who is a former schoolteacher recently came to see me who has the difficulty of having worked for a number of different education authorities and suffers from this terrible disease. It is very sad when we meet these individuals because, as hon. Members have said, a diagnosis of this disease is a death sentence. That should not be forgotten in any of our debates, and I do not think it has been.

I am proud that the Government have introduced this Bill. Members in all parts of the House recognise that we now have a scheme that will provide for hundreds of people who otherwise would not have been provided for, and that is certainly progress. I am a little saddened that some of the debate turned into an attack on insurance companies, although I understand that there is legitimate cause for concern about the behaviour of some of them. I voted for the 80% compensation amendment because I felt that the extra £6,000 was significant and deliverable, and, like other Members, I could see no reason why insurance companies would walk away from such a deal. That £6,000 would have made a very significant difference to people in my constituency who suffer from this disease and who often live in some of the poorest areas.

I pay tribute to the Government for introducing this Bill and getting the scheme in place. I am sad that the Bill is not as good as some of us would have liked it to be, and I hope that that will be considered when it is reviewed. The hon. Member for Stretford and Urmston (Kate Green) said that we would rather not pass legislation and then have to review it, but would rather it were perfect from the start. I suspect that there are very few pieces of legislation where that is the case, and this will clearly not be one of them.

I just want briefly to say, on behalf of my constituents who will benefit from this Bill, how pleased I am that something is in place. It may not be exactly what we wanted—some of us have tried to make it better and I am sorry we have not succeeded in doing so—but the scheme is to be welcomed and I hope we can all now support the Bill. I hope there will not be a Division, but if there is I shall be more than happy to support the Bill.

18:20

[Mr Slaughter]

I am grateful for the opportunity to speak in this Third Reading debate. I have not taken part in the Bill’s previous stages, but I have followed it very closely and I will confine my comments to one specific point. It was raised in Committee on 13 December and was the subject of new clause 3, which was not selected for debate on Report.

[Madam Deputy Speaker (Dawn Primarolo)]

Order. I am sorry to say to the hon. Gentleman that this is the Third Reading debate. It is not a debate about amendments that were not selected or a Second Reading debate. The Third Reading debate is about the Bill as it now exists. I am afraid that the hon. Gentleman will be out of order if he tries to make a speech that goes beyond the contents of the Bill as it appears now before the House. The hon. Gentleman is experienced in this House and I know that he will stick closely to that.

[Mr Slaughter]

I will indeed, Madam Deputy Speaker. I referred to new clause 3 simply because it was tabled by my right hon. Friend the Member for Wythenshawe and Sale East (Paul Goggins). I was present when the Minister paid tribute to him earlier and I just wanted to add my voice to that, because my right hon. Friend has been of great assistance to me on this issue elsewhere. I think he would have wanted to address the issue.

If the shadow Minister, my hon. Friend the Member for Stretford and Urmston (Kate Green), was right to say in her response to my earlier intervention that the Bill no longer gives recourse to the matters dealt with under sections 44 and 46 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012, it would be helpful if the Government could make that clear. The Bill has received qualified support from Members on both sides of the House and it would be helpful if those outstanding matters could be satisfactorily addressed.

There is an outstanding consultation or review to be had; the Government have not been clear about exactly what it will be. My right hon. Friend the Member for Wythenshawe and Sale East raised matters of serious concern. There has not been a proper consultation so far with regard to LASPO. The hon. Member for Brigg and Goole (Andrew Percy) has just alluded to the fact that when the issue was debated in both Houses there was a very strong feeling that mesothelioma should be exempt, but that is not being honoured by the Government.

[Madam Deputy Speaker]

Order. [Interruption.] The hon. Gentleman will sit down. I spoke to him very gently earlier. He has been in this House a long time and we all hold the right hon. Gentleman to whom he is referring in the very highest regard, but, frankly, the hon. Gentleman is now drifting considerably from this Bill and I now want him to refer only to the Bill or to conclude his remarks. I do not want him to refer to justice or other things; I want him to refer to this Bill and its contents.

[Mr Slaughter]

I am grateful for that guidance, Madam Deputy Speaker. I have made the point that I wanted to make. I simply say to the Minister that, as this Bill stands on Third Reading, it would be helpful if the outstanding matters connected with mesothelioma could be dealt with properly and the Bill was not used as a way of occluding them.

Question put and agreed to.

Bill accordingly read the Third time and passed, with an amendment.

Welsh Grand Committee

Tuesday 7th January 2014 Commons Chamber

18:25

[The Leader of the House of Commons (Mr Andrew Lansley)]

I beg to move,

That

(1) the matter of—

(a) the Autumn Statement as it relates to Wales, and

(b) the Government Response to Part I of the Commission on Devolution in Wales

be referred to the Welsh Grand Committee for its consideration;

(2) the Committee shall meet at Westminster at 9.30am and 2.00pm—

(a) on Wednesday 22 January to consider the matter referred to it under paragraph (1)(a);

(b) on Wednesday 5 February to consider the matter referred to it under paragraph (1)(b); and

(3) on each such day, the Chair shall interrupt proceedings at the afternoon sitting not later than two hours after their commencement.

The House will recall that Standing Order No. 108 specifies that a motion may be made by a Minister of the Crown providing for the Welsh Grand Committee to sit on specified days at Westminster or in Wales, at such hours as may be specified. The motion will allow the Welsh Grand Committee to meet twice in the next month to consider the autumn statement as it affects Wales and, separately, the Government’s response to part I of the Commission on Devolution in Wales. The sittings will take place on Wednesday 22 January and Wednesday 5 February at Westminster. They have been proposed in consultation with the Opposition and Plaid Cymru.

The timing of the second sitting has been scheduled with the intention of informing the work of the Welsh Affairs Committee as it undertakes pre-legislative scrutiny of the draft Wales Bill. The House will recall that the Secretary of State for Wales made a statement on 18 November. The draft Bill was subsequently published on 18 December, following publication of the UK Government response to the Silk commission’s first report on the devolution of tax and borrowing powers to the National Assembly for Wales and the Welsh Government. The House will further recall that the UK Government agreed to almost all the recommendations, in whole or in part.

The Welsh Affairs Committee will take evidence on the draft Wales Bill this month, including at an oral evidence session on Tuesday 14 January. The Committee has set a deadline for written submissions of Thursday 16 January. It is the intention of the Committee to report in late March on the two main areas of the Bill—the devolution of taxation and borrowing powers, and the electoral arrangements for the National Assembly for Wales. A meeting of the Welsh Grand Committee in the form proposed in the motion and focused on the devolution of taxation and borrowing powers will enable it to inform the pre-legislative scrutiny of the draft Bill.

The two sittings will be the 10th and 11th Welsh Grand Committee sittings held during this Parliament. Since the 2010 general election, the Welsh Grand Committee has debated Budgets, Queen’s Speeches, the Commission on Devolution in Wales, legislative programmes, energy matters and the comprehensive spending review. The 2013 autumn statement and the draft Wales Bill can now be added to that long list. I commend the motion to the House.

Question put and agreed to.

Dementia Care and Services

Tuesday 7th January 2014 Commons Chamber

Motion made, and Question proposed, That this House do now adjourn.—(Anne Milton.)

18:27

[Alec Shelbrooke (Elmet and Rothwell) (Con)]

Dementia services need to be addressed now. According to the Office for National Statistics, by 2030 the number of people entitled to draw a pension will be 15.6 million, of whom more than 3 million will be over 85. Society has done much to prolong lives through a focus on helping ageing bodies and faulty organs, but for too long help for the brain has not kept pace with that for the rest of the body.

With an ageing population, it is no surprise to hear the worrying prediction that 1 million people will be living with dementia by 2021, up from 800,000 today. There is obviously a massive financial worry resulting from the figures, especially when dementia is already predicted to cost the UK economy £23 billion a year, which is more than cancer, heart disease or stroke. It is therefore crucial to have plans in place that are proven to deal effectively and compassionately with dementia and that can be improved and expanded as necessary over the next 10 years.

Aside from the economic argument, the more pressing issue for me is that of compassion, care and support. When my grandmother was diagnosed with dementia 25 years ago, little support or information was available for carers. Being painfully aware that the last two years of her life were spent with little memory or recognition of family members, I now wish that she could have received an earlier diagnosis, so that we could have found professional help much earlier.

To put the problem that we face in context, I will give some statistics from the Alzheimer’s Society, which has been hugely supportive during my preparation for this debate and has worked to raise awareness of these issues in Parliament and throughout the country. One in three people over 65 will die with dementia. Two thirds of care home residents have some form of dementia. There are 600,000 family carers of people with dementia. It is estimated that a quarter of hospital beds are occupied by people with dementia. The most poignant statistic for me when I was preparing for this debate was that dementia is now the most feared health condition among people aged over 55.

[Steve Rotheram (Liverpool, Walton) (Lab)]

I congratulate the hon. Gentleman on securing this debate on such an important issue. As we know from previous debates, this issue is close to the hearts of many people in this Chamber who have first-hand experience of dementia. Given what he has said about people living longer, which is to be welcomed by everyone, does he agree that one of the most important things that we can do is to ensure that there is better co-ordination in the research into the prevention of dementia? The issue of treatment is secondary. Preventing people from getting dementia is surely the most important thing that we can do.

[Alec Shelbrooke]

I am grateful for the comments that the hon. Gentleman has made. He is right that we must not only treat the illness, but consider what preventive work can be done. I will speak later about the need for the national strategy to focus not only on the treatment of people with dementia, but on what other research can be done.

It is obvious that dementia is on the radar of an ageing society. However, given the emotional toll of dementia and its prevalence at the end of life, I was horrified to hear that only 48% of people who live with dementia receive a formal diagnosis, meaning that many people are denied the care and support that they and their loved ones need. Before the national dementia strategy for England was introduced in 2009, the rate was 33%. If further proof were needed that dementia care and services need to be improved as soon as possible, those awful diagnosis rates should be enough to show that something needs to change.

I am proud to be part of a coalition Government who have shone a long-overdue light on dementia, not least through the Prime Minister’s decision to host the G8 summit on dementia last month. However, there is still much to do before we can be confident that everyone who is living with dementia—individuals and families—is able to have a fulfilled life.

[Neil Parish (Tiverton and Honiton) (Con)]

It is good that my hon. Friend has secured this debate. It is not only the people who are suffering from dementia who are badly affected, but those who are looking after them. We must therefore not only get the diagnosis right for those who are suffering from dementia, but ensure that there is respite care for those who are looking after them. They need a break in order to fulfil their caring role properly.

[Alec Shelbrooke]

I am most grateful to my hon. Friend for those comments. I am sure that everybody has experiences of their own, but perhaps it will help the House if I speak about my grandmother, as I did earlier. I was aged about 12 or 13 at the time of her diagnosis, and my sister was two years younger. My dad was working as a teacher and supporting me, my mum and our family, but he was also dealing with his own mother. I remember the toll that that took on him. He had to work out what was the best thing to do for his mother. He toiled over the decisions that he had to make for a long time, such as selling the family home in which he had been born and brought up in order to raise money for the care home. My hon. Friend is right that there is a massive toll on the families involved, as well as on the people who have this terrible disease.

Despite the focus on dementia, there is a danger that the momentum that has been created by the Prime Minister’s challenge on dementia, the G8 summit and the work of the Science and Technology Committee and the all-party parliamentary group on dementia will be lost if the Government do not act in a number of areas.

[Jim Shannon (Strangford) (DUP)]

I thank the hon. Gentleman for bringing this matter to the House for consideration. Every one of us will have knowledge of this matter personally and from our position as elected representatives. One of the homes in my area has 23 residents and 20 of them have dementia. The magnitude of the problem is tremendous. Does he agree that an exchange of medical information would be helpful? Northern Ireland has the highest diagnosis level in the United Kingdom. Perhaps it is time to exchange the knowledge in Northern Ireland, Scotland, Wales and England to come up with a strategy for the whole of the United Kingdom of Great Britain and Northern Ireland.

[Alec Shelbrooke]

I am most grateful to the hon. Gentleman. I am sure the Minister heard his comments and will perhaps reflect on them when he sums up the debate.

I was talking about a number of areas. First, to continue making improvements along the current trajectory, it is crucial that the national dementia strategy for England is updated from the 2009 version. That strategy identified 17 key objectives for the NHS and social services aimed at improving the commissioning of dementia services, the quality of care delivered in hospitals and care homes, developing a clear picture of research and evidence needs, and providing support for carers. Will the Minister please outline what meetings have taken place about the effectiveness of the NDSE, and say what plans he has for a formal evaluation of it?

Secondly, in spite of the obvious benefits of the national strategy, so far the Government have made no plans to renew it. I welcome the Prime Minister’s challenge on dementia, which is ambitious in its plans and places a welcome political spotlight on the issue. However, that challenge alone does not provide the breadth of detail needed to guide health and social care services to make improvements, and neither does it carry enough accountability measures, which a national strategy would do.

A new national dementia strategy, with guidance for commissioners of health and social care, GPs, hospital trusts, care homes, and others, must be published before the current strategy expires in April this year. It does not seem to be a new trend of coalition Government not to renew national strategies, because in 2011, new national strategies for cancer and chronic obstructive pulmonary disease were published, and one for hearing loss is due.

[Hazel Blears (Salford and Eccles) (Lab)]

I have been listening carefully to the hon. Gentleman who is making an eloquent and powerful case. His point about the strategy is fundamental. We have a system of different clinical commissioning groups, and a lot of fragmentation, and we need a holistic strategy that brings together the national effort. All credit to the Government for pursuing the issue, but I echo what the hon. Gentleman is saying about the need to renew the national strategy to maintain that momentum and energy, and ensure we get good services across the country. Will he join us all in continuing to press the Minister for renewal of the strategy?

[Alec Shelbrooke]

I am most grateful to the right hon. Lady, and I congratulate her on the work she does with the all-party group on dementia. She and all hon. Members will recognise that on this subject the whole House is fairly united in trying to get the Government to make those changes, regardless of whether we sit on the Government or Opposition Benches.

Our international partners, many of which attended the G8 summit in December, have ambitious long-term plans. In the US, for example, President Obama published a dementia strategy that runs until 2025, well beyond his own term as President. France has recently published its fourth dementia strategy. The economic case for having a clear directive for dementia is overwhelming. Dementia costs the UK £23 billion a year, which is more than cancer, stroke or heart disease, yet the annual research spend into dementia is about £51 million, rising to £66 million in 2015. That compares with £521 million spent on cancer.

The ambition announced at the recent G8 summit to double the spend on research in the UK by 2025 is an excellent step forward, but a new national dementia strategy that covers all aspects of dementia, including research into prevention and finding a cure, will ensure that the momentum gained from the good work undertaken by the coalition Government will be turned into improvements for people affected by dementia. To be clear, I am not suggesting that money be taken from the other crucial health causes I have mentioned; I wish merely to illustrate the numbers involved.

What plans does the Minister have to renew the current national strategy on dementia? That point was left unanswered in the Backbench Business Committee debate last year. As past statistics have shown, the introduction of a national strategy for dementia in England has caused a rise in the rate of diagnosis, although the level is still worryingly low at 48%. More needs to be done on prevention, particularly further investigation into whether the small change of introducing homocysteine level tests on the NHS could act as an early-warning sign in identifying the problem.

[Mr David Ward (Bradford East) (LD)]

Bearing in mind what the hon. Gentleman has said about low diagnosis rates, does he agree that the national strategy should include promoting greater awareness for many of those close to dementia sufferers who do not identify with the condition? They think people are just losing their hearing or becoming visually impaired as they grow older, and the diagnosis is then made far too late because symptoms are not realised early enough.

[Alec Shelbrooke]

That is a very helpful intervention from my hon. Friend. I will move on to cover some of the care homes in my constituency that are tackling those issues as one, but as he says it is important that a national strategy has accountability written into it so that these issues can be tracked as we move forward.

More than half of people with dementia cannot access the treatment, services and support they need because they have not officially been diagnosed. Furthermore, carers of people living with dementia also suffer. They have the uncertainty of knowing that something is wrong with their loved one, but have no official diagnosis. Patients and carers are therefore denied expert support through health and social care services and often feel that they cannot approach organisations such as the Alzheimer’s Society without a proper diagnosis.

In my constituency, the two clinical commissioning groups that are spread across Elmet and Rothwell have wide-ranging and impressive plans to increase diagnosis rates, but their ambition can go even further. Currently, NHS Leeds North diagnoses 50.85% of people with dementia, while NHS Leeds West CCG is only slightly better with 54.35%. My constituency reflects the picture across the rest of the country, meaning that half the people living with dementia are denied the certainty of a diagnosis.

[Heather Wheeler (South Derbyshire) (Con)]

I congratulate my hon. Friend on securing this debate. Will he congratulate the staff of Lloyds bank in Swadlincote high street who have taken the Alzheimer’s Society as their charity of the year? The local Alzheimer’s carers group works there and raises hundreds of pounds every month for that very important cause.

[Alec Shelbrooke]

My hon. Friend eloquently describes the work going on in her constituency to raise funds for this very important issue. I wish to add my congratulations to my hon. Friend the Member for Chatham and Aylesford (Tracey Crouch) on her dedicated work and on securing the debate last month, as well as to the right hon. Member for Salford and Eccles (Hazel Blears) and my right hon. Friend the Member for Sutton and Cheam (Paul Burstow). I hope that the recent momentum achieved by the efforts of the all-party parliamentary group to shed light on this issue will result in achieving the aim—backed by NHS England—of 66% of people with dementia receiving a formal diagnosis by 2015. It can be done, as some CCGs already have a 70% diagnosis rate. Can the Minister shed any light on why individual CCG diagnosis rates are so varied and do not add up to the NHS England ambition of 66%? Are there any plans to investigate further the effectiveness of homocysteine tests on the NHS?

[Bob Stewart (Beckenham) (Con)]

Is this not a very human problem? Diagnosis rates will depend entirely on whether people go to see their doctor, who, using a simple test, identifies whether someone has dementia. It is a bit unfair to say one CCG has a better rate than another because the determinant of the rate of identification is whether people go to see their doctor or are taken to see them by family and carers.

[Alec Shelbrooke]

I seem to be one page behind the House in my speech this evening, because interventions keep pre-empting the next part of my speech. My hon. Friend is correct that we need wider support. I have become a dementia friend, as I know many other hon. Members have.

The aforementioned points all combine in reality to have an impact on post-diagnostic support, as well as the support for those who have not been diagnosed but need care. In my constituency, some inspiring examples make me feel optimistic that dementia can be dealt with effectively and compassionately. I have seen at first hand that such support, delivered well and early in a person’s dementia journey can lead to better outcomes.

[Jim Shannon]

There have been great advances in medication. If people get an early diagnosis, medication can give them an extra five to six years of quality life. Does the hon. Gentleman agree that it is important that medication is available across the whole United Kingdom to give people with dementia or Alzheimer’s a better quality of life?

[Alec Shelbrooke]

I thank the hon. Gentleman for that intervention. He makes important points that reflect what the hon. Member for Liverpool, Walton (Steve Rotheram) said earlier: it is not just about treating the disease when it is there, but about how much preventive work can be done in the first place.

As I said at the start of my speech, I wish only that some of the strategies, diagnoses and drugs that are now available were there for my grandmother 25 years ago. I was only about 11 to 13 years old in the two years before she finally went into a home, but I realise in hindsight how her quality of life was slipping away. I talked about the toll that that took on my father when he was trying to do what was best for his mother. He would be at work all day. His mother lived in south-east London while we lived 20 miles away in Kent and he would get a phone call at 3 am from her next-door neighbour saying, “Your mother”—she was in her late 70s—“is out walking the street in her nightgown.” Those are the pressures and there was nothing in place at that time. She was still living on her own and, as her grandchildren, we would still visit her. Today, I believe that she would have had a better quality of life.

I am encouraged by some of the things that are going on. I want to draw attention to a chap called Paul Mancey and his team at Orchard Care Homes. They are located in my constituency and are developing care partnerships between charities and care providers, which is very much what my hon. Friend the Member for Bradford East (Mr Ward) was talking about. This new approach means that residents are tested for hearing loss, diabetes and dementia symptoms on entry to the care home, ensuring that appropriate care packages are put in place.

Many other care homes are developing innovative ideas, too. I am pleased to say that care homes have developed immensely since we moved my grandmother into one in the early 1990s, and even more delighted that the leading company on the development of care villages is located in my constituency. Graeme Lee and his team at Springfield Healthcare have set the bar on building a quality and comfortable dementia-friendly care village at Seacroft Grange, which is located in the constituency of the hon. Member for Leeds East (Mr Mudie).

As is often the case, however, the truly inspirational support networks are not those provided by the professionals. My hon. Friend the Member for Beckenham (Bob Stewart) talked about early diagnosis, and there are community champions. One community champion in my constituency is Peter Smith, who established the Tea Cosy Memory Café in Rothwell, which provides a welcoming place for those with dementia and their carers, as well as making Rothwell the first dementia-friendly community in Leeds.

The Alzheimer’s Society has done great work to promote awareness of dementia. Hon. Members can play a greater role, too, in raising awareness. I alluded to the fact that, like many Members, I am proud to be a dementia friend and to support the work of the Alzheimer’s Society. I urge as many Members as possible to become a dementia friend and to help the Alzheimer’s Society.

[Hazel Blears]

I am delighted that the hon. Gentleman is a dementia friend. Will he join me in encouraging all Members to make their constituency offices dementia friendly? We have just embarked on this journey. We are looking at special signage and at constituency letters to ensure that they are written in a way that people can understand, and all my constituency staff have been trained to be dementia friendly. If every Member of Parliament’s constituency office was dementia friendly, that would be a significant step forward. Perhaps we could work together on that.

[Alec Shelbrooke]

I hugely welcome what the right hon. Lady has just said. Perhaps I could be cheeky and suggest that she e-mail every one of us in this House to outline what she has been doing in her constituency office, because sharing information and best practice is the best way we can help people on this journey. I look forward to working with her.

I urge as many people as possible to become dementia friendly and help the Alzheimer’s Society achieve its goal of creating a network of 1 million friends across the UK by 2015.

Those examples prove what many health professionals know: that peer support networks and dementia advisers are effective in providing information to people with dementia and their carers, and they are valued by service users. They should therefore be supported and I welcome the “Carers call to action” campaign by the Dementia Action Alliance to promote this particular facet of the issue—not to mention that they are a relatively cheap intervention that also raises awareness of dementia and tackles stigma.

What are the Government doing to improve post-diagnosis support and what plans does the Minister have to ensure that all people with dementia have access to a dementia adviser or to equivalent suitable named carers?

18:49

[The Minister of State, Department of Health (Norman Lamb)]

I congratulate my hon. Friend the Member for Elmet and Rothwell (Alec Shelbrooke) on securing another debate on dementia. It is important that we maintain the pressure, keep talking about this subject and keep challenging ourselves to take the necessary further steps. I am delighted to hear he is a dementia friend. I hope that everyone in the Chamber this evening is a dementia friend. [Interruption.] There is lots of nodding, which is encouraging.

[Bob Stewart]

Will the hon. Gentleman define exactly what a dementia friend is so that those of us who are not yet one can understand what we should do?

[Norman Lamb]

I am delighted by that intervention, because it gives me the opportunity to say something very quickly about the initiative being taken by the Alzheimer’s Society. If someone applies to be a dementia friend, they can go along to an hour-long session on understanding dementia better. It is very illuminating to go through that process. We got the initial idea from Japan, where it has gathered enormous momentum. If we can get a million people across society who better understand dementia, it could have an enormously powerful impact by making our communities more dementia-friendly and understanding and giving people with dementia a better life. I would therefore encourage my hon. Friend to become a dementia friend.

The right hon. Member for Salford and Eccles (Hazel Blears) talked about her constituency office. I will accept the challenge she laid down. I absolutely accept the case she makes. We are all serving the public, and it is critical that we make our own facilities friendly for people with dementia and their carers. My constituency office staff do not know this yet, but I will encourage them to go through this process, as all right hon. and hon. Members should.

I was struck by the constituency examples that my hon. Friend the Member for Elmet and Rothwell gave. He mentioned Paul Mancey of Orchard Care Homes, which is ensuring that people entering care homes get proper care and support and that their particular needs are met, and the Springfield Healthcare initiative.

[Glyn Davies (Montgomeryshire) (Con)]

I thank the Minister for allowing me to intervene on an issue that, usually because of personal experience, is close to our hearts. He speaks of the importance of care homes, understanding dementia and caring for sufferers properly, but does he agree that the best treatment is care in the home of the person suffering from dementia? In my experience, a change in circumstances advances dementia faster than anything else. By far and away the best way to treat people suffering from dementia is to make it Government policy to support people to stay in their own homes.

[Norman Lamb]

I broadly agree with my hon. Friend. The most important thing is that the care and support should always be right for the individual. Whatever they need they should be provided with. I recently visited the most amazing GP surgery in Gnosall, Staffordshire, which has managed—this demonstrates a point that my hon. Friend the Member for Elmet and Rothwell made about the variability of dementia diagnosis rates—to achieve diagnosis rates of close to 100%. That demonstrates what is possible. Most of the diagnosing is done in the community within primary care without referral to a memory clinic. What they have found is that by getting early diagnosis and then having very good community follow-up and support—the general practice is central to that—people are staying in their own homes and maintaining a good life for far longer and admissions to care homes and nursing homes are significantly reduced. That demonstrates what is possible and confirms the point that my hon. Friend the Member for Montgomeryshire (Glyn Davies) made.

[Steve Rotheram]

Will the Minister give way?

[Norman Lamb]

I will. I am still on page one of my speech.

[Steve Rotheram]

I thank the Minister for giving way. He is absolutely right about the individual care package that somebody who, unfortunately, has dementia or Alzheimer’s gets. Thankfully, long gone are the days when somebody was given a couple of tablets in the hope that that might somehow affect their condition. Is he aware of the House of Memories project in Liverpool? Is he also aware that there is an event that I am hosting here on 17 June that Members of this House are welcome to attend?

[Norman Lamb]

I thought for a moment that the hon. Gentleman was not going to mention the House of Memories. He always does. Of course I am aware of it because he keeps talking to me about it and knows what I think. I am incredibly impressed by it and there is a plan for me to visit and see it for myself. He is right constantly to make the case for it and for spreading what has been demonstrated is possible in Liverpool to other parts of the country.

It is less than two months since the last debate on dementia and it is a measure of the importance that Members put on the subject and the extent of the challenge that we face as a nation that, thankfully, the House has recognised the importance of debating it regularly. It is also less than two months since we published our dementia state of the nation report, which sets out the progress that we have made on dementia and the challenges we are facing.

The report is an incredibly important document because it also includes online a set of interactive maps that, for the first time, allows someone to enter their postcode to see how their local dementia services are performing and how that performance compares with the rest of the country. Having this level of transparency, as well as the extent to which people will be able to hold their own local areas to account, will have a big impact on driving up diagnosis rates. I have already made the point that some parts of the country have demonstrated that high diagnosis rates are possible. There is no rocket science here and no reason why other parts of the country cannot follow suit, understand and learn that best practice and, critically, apply it to ensure that people get the support they need.

My hon. Friend the Member for Elmet and Rothwell is absolutely right when he makes the point that unless someone has had that diagnosis, they do not get access to the advice, guidance, support and services that are potentially available in a local area to make the life of that individual better and, critically, to provide more support for the carer as well. The maps highlight the variation in dementia care across the country and allow people, but also commissioners and providers, to use the data to see how they compare against other areas and then work to deliver improvements.

Around the world, someone is diagnosed with dementia every four seconds. Over 35 million people have it and as people live longer than ever before that figure is set to double every 20 years. Among them, 58% live in low to middle income countries and this proportion is projected to rise to 71% by 2050. We cannot ignore the pressure on our health and care systems and dementia costs society as a whole as much as £23 billion in the UK alone. The cost of dementia worldwide has been estimated at about £400 billion, or 1% of the world’s GDP. This is why dementia is a major priority for the UK Government and why the Prime Minister launched a dementia challenge in 2012. But we must fight back on an international scale, breaking down barriers and joining forces to address this issue, which has such an enormous human and economic cost.

Five years ago, the national dementia strategy was developed. It has achieved a lot, laying the foundations for real change. We are currently evaluating progress on dementia and on how we have achieved improvements in dementia care, and we are looking at both the national dementia strategy and the Prime Minister’s challenge. I shall come back later to the point about what comes after, and it seems to me sensible first to understand—

19:00

Motion lapsed (Standing Order No. 9(3)).

Motion made, and Question proposed, That this House do now adjourn.—(Anne Milton).

[Norman Lamb]

That was unexpected; I have never had this happen to me before, so I apologise for looking confused! I shall carry on.

It makes sense to understand the success—and, indeed, sometimes the failures—of the current strategy and the Prime Minister’s challenge before designing what follows on afterwards. It is absolutely clear—I have tried to demonstrate this on other occasions—that something must follow; there must be a continuation. This disease has such a profound impact on people and on society that we have to keep developing our understanding and maintaining the momentum.

[Hazel Blears]

I am grateful for the Minister’s commitment that there will be a follow-on from the dementia strategy. He is right to look at what has worked and what might not have worked quite so well. My concern is that whatever comes next must find a way of uniting the whole system. In proceedings on the Care Bill, we debated integration and how important it was, particularly for dementia, because it will save us money. When the Minister looks at the next set of strategies, I urge him to bear in mind that the country must not have in place a set of fragmented relationships that are not bringing the system together to make things better for people with dementia and their carers. The economic impact on the country is also important.

[Norman Lamb]

I very much agree with the right hon. Lady on that. I think that what she argues for is developing. We are not there yet, but it is important that we have developed this ambition to achieve a diagnosis rate of two thirds, which encourages every part of the system to focus on what it needs to do. It is not a nationally imposed arbitrary target; it was based on getting every part of the system to think about what it can achieve by setting ambitious objectives. Collectively, that amounts to an ambition to achieve a two-thirds diagnosis rate, but in itself, of course, a two-thirds diagnosis rate is not good enough. We should not be satisfied when we achieve that; we have to press on. We know that the community in Gnosall has a diagnosis rate of close to 100%, so we should not be satisfied until everyone is getting properly diagnosed on a timely basis. I agree with the right hon. Lady’s point. Under the new system, with the health reforms making clinicians much more involved in the commissioning of care locally, there is a greater chance of getting the engagement of general practice across the country than we perhaps had in the past through the primary care trust route.

[Jim Shannon]

Has the Minister had an opportunity to consider the point I made in my intervention on the hon. Member for Elmet and Rothwell (Alec Shelbrooke), which was about the exchange of good practice and information between the four regions of Scotland, Northern Ireland, Wales and England? Ever mindful that the highest levels of diagnosis for the whole of the United Kingdom are found in Northern Ireland, has the Minister had a chance to discuss these matters with the Health Minister, Edwin Poots from the Northern Ireland Assembly, for instance, to take the issue forward? We all gain from good practice across the whole of the United Kingdom of Great Britain and Northern Ireland, and we all gain from the exchange of good ideas.

[Norman Lamb]

I completely agree. This disease knows no country boundaries. We all face the same challenge across the whole of the UK and, critically, across the world. That is why we pursued the matter in the G8 summit of December. There should be good collaboration across the UK through all of the devolved Administrations and the Government here. I am always happy to engage with colleagues from Northern Ireland to understand what we can learn from Northern Ireland and also because the exchange of information helps everybody to improve.

We recognise the need to build on the strategy. That is why the Prime Minister’s challenge on dementia is now the main vehicle for change and improvement across health and care, in the community and for the purposes of research. The Prime Minister’s challenge runs until 2050, not just outliving the dementia strategy, but broadening its vision and providing better accountability.

Last year we hosted the G8 dementia summit. I was delighted that the right hon. Member for Salford and Eccles participated in it, and challenged me during one of the sessions. The summit attracted interest all over the world, and harnessed the efforts and expertise of the G8, health and science Ministers, the World Health Organisation, the OECD, industry, researchers, philanthropists and civil society to secure much greater international collaboration in order to tackle and defeat dementia. The declaration and communiqué announced at the summit set out a clear commitment to working more closely together on a range of measures to improve early diagnosis, living well with dementia, and research.

The G8 announced an ambition to identify a cure or a disease-modifying therapy by 2025, which we hope will focus minds internationally. It is backed by a commitment to increase significantly, together, the amount spent on dementia research—we know that at present it is a fraction of the amount committed to research in other areas of medicine—and to increase the number of people involved in clinical trials and studies of dementia. The United Kingdom has committed itself to funding a global dementia innovation envoy to draw together international expertise, stimulate innovation, and co-ordinate international efforts to attract new sources of finance. That will be incredibly important if we are to crack this disease.

In partnership with the OECD, the WHO, the European Commission, those involved in the EU joint programme on neurodegenerative disease, and civil society, the G8 will hold a series of high-level forums throughout 2014 on social impact investment—it will be critically important to attract new sources of funding—new care and prevention models, and academia-industry partnerships, which will also be extremely important. The G8 will meet again in the United States in February 2015, along with other global experts including the WHO and the OECD, to review the progress that has been made on the research agenda. That will enable us to focus minds and try to increase the momentum.

The G8 is an exciting global initiative, and I am immensely proud that the United Kingdom led the way in that regard. However, we are also keeping our focus on dementia in England, and we have made progress since the launch of the Prime Minister’s challenge. We have launched a new dementia friends scheme—which has already been mentioned—to make a million people more aware of what dementia actually is, thus helping to break down the barriers between people with the condition and their local communities. It is important to challenge the stigma that still exists in many places. The Alzheimer’s Society has published guidance setting out the criteria for becoming a dementia-friendly community. I was pleased to hear that Rothwell, near Leeds, is becoming a dementia-friendly community: that is very good news.

The NHS continues to support dementia care in hospitals through its CQUIN scheme—commissioning for quality and innovation—which is generating between 3,000 and 4,000 referrals for diagnosis each month. We have allocated £50 million to 116 schemes to make health and care environments such as hospital wards and care homes more dementia-friendly. Making the environment in which people live with dementia more dementia-friendly is critical to the provision of a calm atmosphere. When we see places to which attention has been given and in which investment has been made, we realise what a difference can be made. The Government’s mandate for the NHS prioritises dementia, and, as I said earlier, includes the ambition of a diagnosis rate of two thirds. My hon. Friend was right to say that the current rate is far too low. We are letting people down in many parts of the country by not securing early diagnosis.

[Mr Ward]

Obviously there is an opportunity to do something once a person has been identified as needing a diagnosis, but in my experience the problem is that other things are usually taking place in people’s lives, and GPs often assume that they are just part of the ageing process. There is a failure, often because of the lack of skills of the GPs, to recognise that diagnosis is required.

[Norman Lamb]

My hon. Friend is absolutely right and there are still GPs who do not really believe in the importance of a timely diagnosis. I have heard GPs say, “What’s the point, because it will make no difference?” However, we know it does make a massive difference not only to the person with dementia but to the rest of their family, in understanding the condition and what they can do to help. Education among GPs is incredibly important, and attitudes are changing but we still have a way to go.

Clinical commissioning groups are working with their local councils and other partners to better understand how widespread dementia is in their communities, including among people living in local care homes. This will mean they can identify and support people with dementia in a timely way. GPs are now able to use the new directed enhanced service to improve the diagnosis of dementia by asking people in certain at-risk groups about their memory. This proactive approach should help to identify patients who are showing the early signs of dementia.

Health Education England has prioritised dementia training and has already delivered 100,000 dementia-trained staff. Again, ensuring the work force within health and care have a proper understanding of dementia is critically important.

[Hazel Blears]

I am pleased the Minister has now come on to the area of the work force. He will know that many of the carers in this area are paid the national minimum wage if they are lucky. Many of them are on zero-hours contracts. Many of them do not get paid for travelling between the appointments they undertake. We ask them to do some of the most difficult work that one can ever imagine but the rewards and the training and support they get is minimal. Is the Minister committed to tackling some of these issues in the care sector, which in my view are unacceptable?

[Norman Lamb]

I feel as strongly as the right hon. Lady does about this. We can never get good care on the back of exploiting very low-paid workers. It is not acceptable to not pay a care worker when they are travelling from one home to another. That is a breach of the minimum wage legislation unless their rate overall comes above that level. HMRC has specifically targeted the care sector and has found quite widespread abuse of, or failure to comply with, the national minimum wage. It is very important that it is complied with.

It is also important for councils commissioning care to be absolutely clear with those they contract with that they expect total compliance with the law. If a council is commissioning in a way which almost becomes complicit in a breach of the law, that is completely unacceptable. Some of the commissioning around the country is very poor and we have got to move on from commissioning on these 15-minute, short-time periods resulting from contracts being opened up for bids and there being a race to the bottom with the cheapest offer winning the contract. We have got to move on to commissioning for quality and for better outcomes.

Wiltshire has now introduced commissioning for home care based on outcomes and quality. One of the care providers now pays salaries to its care staff. So the whole attitude and approach changes and the incentive on the care provider is to improve care, not to get away with the quickest possible care visit.

It comes down very often to the way in which the care is commissioned. That is what has to change and we are working with the Association of Directors of Adult Social Services and the Local Government Association to change the way in which commissioning is undertaken. There is also an amendment to the Care Bill which will require that commissioning takes into account an individual’s well-being. Councils cannot commission on the basis of 15 minutes of care when important care work needs to be undertaken. They will not meet their obligation under the Care Bill if they are doing it in that way. That change will also help to drive up standards. Care workers need to be respected. They do incredibly important work, and they are undervalued by society.

Since 2009-10, Government-funded dementia research in England has almost doubled, from £28.2 million to £52.2 million in 2012-13. Over the same period, funding by the charitable sector has increased, from £4.2 million to £6.8 million in the case of Alzheimer’s Research UK and from £2 million to £5.3 million in the case of the Alzheimer’s Society. In July 2012, a call for research proposals received a large number of applications, the quality of which exceeded expectations. Six projects, worth a combined £20 million, will look at areas including: living well with dementia; dementia-associated visual impairment; understanding community aspects of dementia; and promoting independence and managing agitation in people with dementia.

The hon. Member for Liverpool, Walton (Steve Rotheram) made the point about doing research into how we can prevent the onset of dementia in the first place. We know that vascular dementia is often related to lifestyle, including factors such as heart condition, smoking and alcohol consumption. If we can understand better how to prevent dementia from occurring, we will achieve a massive advance. Research needs to focus on that as well as on finding a cure and on living better with dementia, which is another critical area of research. It is essential that we do all this collaboratively and internationally. We cannot simply find all the results by ourselves, here in the UK. There needs to be an international effort.

The coalition Government have clearly demonstrated their commitment to dementia, but there is a massive amount still to do. We are not looking inwards to solve the problems that we are facing. At the G8, we brought the world together to work collaboratively and to look for solutions. By leading the way with the G8 summit, and with our own domestic agenda of the Prime Minister’s challenge, the UK is mobilising all available resources. We should be proud of the leadership we have shown as a nation to date, but as ever, we will continue to push much further, and we must never be complacent.

Question put and agreed to.

19:17

House adjourned.

Ministerial Correction

Tuesday 7th January 2014 Ministerial Corrections

Tuesday 7 January 2014

Roads: Accidents

Tuesday 7th January 2014 Ministerial Corrections

[Robert Flello]

To ask the Secretary of State for Transport how many people were (a) killed and (b) seriously injured whilst working on the hard shoulder in each of the last three years.

[Official Report, 10 December 2013, Vol. 572, c. 185-86W.]

Letter of correction from Robert Goodwill:

An error has been identified in the written answer given to the hon. Member for Stoke-on-Trent South (Robert Flello) on 10 December 2013:

The full answer given was as follows:

[Mr Goodwill]

The following data has been provided by the Highways Agency who manage and operate the Strategic Road Network in England:

[Mr Goodwill]

The following data has been provided by the Highways Agency who manage and operate the Strategic Road Network in England:

Petitions

Tuesday 7th January 2014 Petitions

Tuesday 7 January 2014

Animal Protection Laws in Thailand, Vietnam and China

Tuesday 7th January 2014 Petitions

The Petition of residents of Coatbridge, Chryston and Bellshill,

Declares that any torture and eating of cats and dogs in Thailand, Vietnam and China is unacceptable; further that the practices in place in Thailand, Vietnam and China cause unnecessary stress and harm to the cats and dogs involved; and further that these practices are a cause of concern for the British and Scottish athletes who will be attending the Winter Olympic Games in South Korea.

The Petitioners therefore request that the UK Government urges the governments of Thailand, Vietnam and China to strengthen and enforce their animal protection laws and further requests that the House urges the Government to consider incoming visits from the governments of these countries.

And the Petitioners remain, etc.—[Presented by Mr Tom Clarke, Official Report, 19 November 2013; Vol. 570, c. 1202.]

[P001295]

Observations from the Secretary of State for Foreign and Commonwealth Affairs:

The British Government take seriously reports of animal cruelty throughout the world and are committed to raising standards of animal welfare at home and abroad. The UK is at the forefront of international animal protection efforts. We welcome the work undertaken by non-governmental organisations, such as the International Fund for Animal Welfare, PETA and the Royal Society for the Prevention of Cruelty to Animals. This includes the work they do, for example, with the Chinese authorities to improve standards of animal welfare and to gradually build support for animal welfare issues in China.

While the UK cannot intervene directly in the protection of wildlife abroad, we have raised our concerns on specific animal welfare issues with the Chinese authorities. We are aware of the illegal smuggling of dogs from Thailand for consumption in Vietnam. In April 2012 an Animal Welfare Bill drawn up with the involvement of the Thai Society for the Prevention of Cruelty to Animals was submitted to the Thai Parliament, and is now going through the legislative process. In October 2012 the Bill passed its First Reading, and the Bill has since passed the Committee stage.

St Raphael’s Hospice (Cheam)

Tuesday 7th January 2014 Petitions

The Petition of residents of the UK,

Declares that the future of St Raphael’s Hospice has been put in doubt by plans drawn up by Daughters of the Cross, a charity who fund the hospice, and by plans to sell off St Anthony’s hospital which shares the site with the hospice and provides administrative and other support services worth up to a million pounds a year; further that the sale of the hospital will break the funding link with the hospice and undermine the Christian character of the institution; further that the Petitioners regret that rather than engaging with the staff and supporters of the hospice and hospital to find a mutually agreed solution to the future of both institutions the charity has pursued a course of action that is not widely supported; and further that the Trustees have failed to grasp that the success and respect in which both institutions are held is the result of a shared endeavour between themselves, the staff and volunteers and the local community who raise and donate the funds to pay for them.

The Petitioners therefore request that the House of Commons thank Her Majesty’s Government for raising the matter with the relevant authorities in the Vatican; further that the House urges the Papal authorities to intervene to protect the ethos of St Anthony’s hospital and its special relationship with St Raphael’s Hospice; and further that the House holds a debate on the future of St Raphael’s Hospice and possible ways forward.

And the Petitioners remain, etc.—[Presented by Paul Burstow, Official Report, 20 November 2013; Vol. 570, c. 1341.]

[P001297]

Observations from the Secretary of State for Foreign and Commonwealth Affairs:

I understand the strength of feeling about this issue, particularly amongst the constituents of Sutton and Cheam. It is clear that St Raphael’s Hospice plays an important role within the community, providing a dignified and caring environment for those with serious illnesses. The British Government are committed to giving hospices the support they need to carry out these vital duties and awarded an extra £60 million in Government funding to hospices across England earlier this year. We believe this investment is crucial as we face the challenge of caring for an ageing population and supporting their families. Hospices such as St Raphael’s play an increasingly important role in delivering this care and support.

I understand that the Daughters of the Cross, who act as the Trustees for St Raphael’s, are members of an International Order of Religious Sisters who are subject to the jurisdiction of the Congregation for Institutes of Consecrated Life and for Societies of Apostolic Life, based in Rome within the Roman Curia of the Holy See. In July 2013, the British Ambassador to the Holy See met Archbishop Jose Rodriguez Carballo, the Secretary of the Congregation for Institutes of Consecrated Life and raised the concerns of the local community about the future of St Raphael’s Hospice. The Archbishop confirmed he was aware of the issue and assured the Ambassador that he would look carefully at the case. He did make clear that the decision on the future of St Raphael’s was ultimately one for the Trustees but advised that he would give guidance to the Trustees on the basis of the known preference of the Church that such good works should continue to be run on Catholic lines.

The Foreign and Commonwealth Office also suggested that the Honourable Member for Sutton and Cheam raise this issue with the Apostolic Nuncio in the UK, Archbishop Mennini. I understand that this meeting took place recently and that Archbishop Mennini recognised the Honourable Member’s concerns. The British Government values the work of the Daughters of the Cross in running St Raphael’s Hospice and understands their difficulties in maintaining these responsibilities. I very much hope a sustainable solution can be found.

Westminster Hall

Tuesday 7th January 2014 Westminster Hall

Tuesday 7 January 2014

[Jim Dobbin in the Chair]

Annuities for Pensioners

Tuesday 7th January 2014 Westminster Hall

Motion made, and Question proposed, That the sitting be now adjourned.—(Mark Lancaster.)

09:29

[Richard Graham (Gloucester) (Con)]

Today we are covering a subject that in many ways is both dull and important. “Annuity” is a difficult word, which lacks a simple definition, and it is not something that a man or woman under the age of 50 would wisely bring up in discussion with friends. However, 400,000 people this year will buy an annuity. That figure will grow substantially over the years, and anything that affects such a large percentage of our country’s population is therefore worthy of the first Westminster Hall debate in 2014. Annuities are dull, but important, and absolutely ripe for review and improvement. It is therefore timely that Mr Speaker has chosen the subject for the first Westminster Hall debate of the year, and it is a pleasure to participate in it under your chairmanship, Mr Dobbin.

I will first outline annuities and their market as it is at the moment, who buys them, for whom they are best and least suited, and whether we need them, before looking at specific issues raised by recent investigations and considering what more might be done to improve the world of annuities. Historically, pension structures have required individuals to bring certainty to our savings, effectively by exchanging whatever pool of savings we have for known income, by drawing an annuity or by having income draw-down—two technical terms already, which are perhaps better described as “income for life”. That is what an annuity was designed to deliver, and it is derived from a complex calculation that involves bond yields, longevity and charges. In due course, I will return to discuss the last especially.

The concept of an annuity is relatively simple: to provide older people with the certainty of knowing what their income will be in an otherwise uncertain world of costs and, perhaps, care. In a world of defined-benefit pensions, we had such certainty, but that world—outside the public sector—is going fast, so certainty of income is a bigger issue than it was, and in today’s world many people are searching for it. We might therefore imagine that an annuity is the product for today. As auto-enrolment expands, reaching about 8 million new pension savers, net of opt-outs, the number of new annuity customers will surely grow. It will be a slow burn, because most of those auto-enrolling over the next few years will not reach annuity-type age for some decades, but eventually the figure used in the media—the number of annuity customers doubling—will be reached. As a result, instead of more than 1,000 new customers a day in 2014, before long there will be 2,000 new buyers of annuities every day.

The annuities market will therefore soon have 500,000 customers a year, predominantly in their 60s and 70s, making what for most will be the second most important financial decision of their life—the first being their home. As Ros Altmann has pointed out, as things stand with an annuity, unlike buying a home, there is no going back: someone buys it and that’s it—no change, no transfer, no flexibility and no equivalent of renting out, moving on, selling or downsizing. An annuity therefore best suits customers who know exactly what they are looking for—because they are well versed in the language of annuities, such as open-market options, enhanced annuities or comparisons with income draw-downs—and perhaps already have a defined benefit pension and are looking to convert a smaller defined contribution pot, which is a modest percentage of their total savings.

Such customers use the comparison tables of the office of the Pensions Advisory Service, provided by the Money Advice Service. They shop around for alternatives offered by online and household-name providers. They know that they will keep the same wife, husband or partner for ever, that they will live long enough for the income draw-down to exceed the capital exchanged and the commission charges, and that, ideally, both partners will exceed the lifespan expectations of their current health and the geography of where they live—alternatively, perhaps they will buy their annuity in a poor city and thereafter move to an idyllic village where people live longer. Such a customer should do well in the current world of annuities. Unfortunately, he or she is as exotic and rare as a sacred ibis on the banks of the river Severn in my constituency.

[Alun Cairns (Vale of Glamorgan) (Con)]

I pay tribute to my hon. Friend for securing the debate and for the way in which he is presenting it. He rightly highlights the fact that the transaction is extremely complicated—that is exceptionally important—and he has used a range of phrases that are commonplace to financial advisers, but not necessarily understood by the clients. Does he accept that the retail distribution review, although perhaps painful in the short term, will deliver significant benefits over the longer term, but that the charging structure and the change in the culture might well put some people off seeking advice for annuities, thereby making this extremely complex transaction far more difficult for the average punter to decide on?

[Richard Graham]

My hon. Friend has spent a lot of time working in the sector and knows the issues well. He is absolutely right to highlight the unintended consequence of the retail distribution review, which in a sense is to put people off the idea of buying up-front advice on a complex product such as an annuity. For those who have a relatively small pot of savings, such as £20,000, £30,000 or £40,000—a lot of money for some people—the idea of paying £400 or £500 for advice is not attractive. My hon. Friend is right to highlight that, because it is one of the issues.

I drew attention to the perfect customer for an annuity; let me now give the other side of the coin. By contrast is the customer who is told by the provider of their direct contribution pension—his or her only modest source of savings—that they need an annuity, has no idea what an annuity is and asks the pensions provider what they can offer; who has no idea whether that offer is good, bad or indifferent, goes for the cheaper of the options available, probably leaving out any cover for his or her partner and certainly any provision for inflation, and forgets to mention perhaps a hereditary heart weakness; and who moves from a suburb to the inner city to be closer to shops and a hospital, lives for a few years and then dies, having drawn only a small percentage of income from a capital sum that has now disappeared, leaving their wife, husband or partner on the state pension. For what purpose did he or she save?

With longevity the way it is, we might argue that such a customer scarcely exists, as we would all hope, but the reality is that some of his or her characteristics are a reality—as the Pensions Advisory Service has confirmed—especially in the understanding of what they are buying. Ros Altmann has estimated that insurers will often keep between half and three quarters of a pension fund they take over and convert it into an annuity.

I did a quick reality check on the word “annuity” in a Gloucester pub last weekend. Of the 22 people I asked, six said it was a financial thing like a pension, one of those said it gave income and most of the rest said they had no idea. I accept that it was a bad weekend for Gloucester rugby, and trying to discuss annuities in a pub was pushing my luck, but I do not believe that the people of Britain know what an annuity is or that the average response would be any different. Why is an annuity useful? Do people have to have one? The answer is no. How do they go about getting one? An annuity is potentially the second biggest financial purchase of our lives, so the current state of information about them is worrying.

In any market that size—£12 billion a year is big—if a customer feels that he or she has to buy something but does not really know what it is, the definition of good value is elusive. Customers need a lot of knowledge to pick the right product and the market is dominated by a handful of big names, so there is a danger of high charges, a lack of transparency and inadequate protection. The annuities market more than lives up to all those risks. I rang the Pensions Advisory Service yesterday to get some initial advice—just one man in his 50s ringing in to ask questions about annuities. I got good general advice on a whole number of issues, but when I asked about charges, I was told confidently, “You will never be able to work out what the charges are.” I asked the helpful adviser whether he thought that was right. “Not for me to say,” he replied, which was fair enough. However, it is right for hon. Members to raise and challenge the situation on behalf of our constituents, who ought to know what they are being charged for a product as important as an annuity.

Almost 20,000 of my constituents in Gloucester are between 50 and 64. For all of those people, some understanding of annuities would be useful. It is not good enough to have a product for which people will simply never know the charges. The situation for annuities sits oddly beside that for their stepbrother or sister, the pension. Huge efforts are being made to clarify, and make as simple as possible, all the costs and charges for pensions; to estimate a management fee that is neither rapacious nor drives investment managers to the lowest common denominator; and, above all, to make charges transparent to the client. The status quo is tantamount to an insurance firm—everyone is under the same roof, in the same organisation—saying, “Right, over here is a team of investment managers managing pensions: you need to be squeaky clean, work out all the costs and charges and report them completely. Your margins will be tight. Over here, in this corner, we have the annuities guys: your pricing is roughly what you want it to be, and there is no need to explain or declare anything.” That has to be wrong. When such efforts are being made to ensure transparency about money coming into a pension, it is especially strange that, at the moment, the system does so little for moneys coming out of a pension and into an annuity.

For today’s debate, we have the benefit of the detailed investigations by the Financial Conduct Authority’s consumer panel and The Daily Telegraph. The latter found that differences between annuities offered amounted to as much as £1,444 a year on a pot of £100,000. The FCA’s consumer panel found that commission charges vary by up to £1,000, which might, for the cynical, explain why the industry is so shy when it comes to explaining what the charges are.

The FCA found in general that the industry was “very dysfunctional”, with “possible exploitative pricing”—up to 6% of a customer’s pot could go in commission. In a rebuke to any of us who thought that the answer might simply be to provide more information, the consumer panel found that customers are put off by the mountain of jargon and “information overload”. Frankly, I am irresistibly reminded of the endowment mortgage I was obliged to buy in the 1980s: however it was explained, it was absolute gobbledegook, and there were high commissions, often from one insurer to another. The consumer panel found that 3.5% commission for an introduction from Zurich to Legal & General seemed to be the going rate for annuities today. In the 1980s, if someone wanted to buy a house, they had to have an endowment mortgage. Later on, of course, the fabulous projected investment returns did not materialise, the mis-selling was investigated, fines were levied, the product was binned and the financial sector moved on. Will we see a repeat of that?

I chaired a seminar recently on annuities and asked the Association of British Insurers whether there was a danger of any of its members being sued for mis-selling. There was a long pause before the answer came: “Not yet.” It is therefore not surprising that the FCA consumer panel has recommended urgent regulatory and Government-led reforms to protect and benefit millions of our constituents.

I will turn now to what changes have already been made, and then move on to what could or perhaps should be done next. I start by recognising what the Government have already done. Some of the changes made by the Treasury should have been made a decade ago. For example, it has removed the default retirement age and the effective requirement to purchase an annuity by the age of 75. That is a vital change: it means people no longer have to buy an annuity, and, if they do not, they can take 25% of their savings tax-free and draw an income from the rest. That is a serious option for many people. The starting point of a debate on annuities for every individual should always be whether an annuity will be useful and helpful to them, and what the alternatives are.

There have also been changes to the capped draw-down rules—more jargon, I am afraid, but those rules have been reformed, and that matters within the sector. The Treasury has also encouraged the ABI’s new code of conduct for retirement choices, which has come into play and has made modest steps forward on explanations and general advice, but I do not believe that that is enough. At the same time, the Department for Work and Pensions has promoted open market options and obliged DC schemes to provide what it calls a “wake-up pack” of information, pre-retirement.

[Heather Wheeler (South Derbyshire) (Con)]

It is a pleasure to serve under your chairmanship, Mr Dobbin. On that point, when people previously received their packs on coming up to retirement, there was every chance that there would have been a standard form in the pack from a chosen insurer detailing a chosen product. That has now gone, and people are given a form listing their options and saying where they need to go for each. That is a great step forward.

[Richard Graham]

My hon. Friend is knowledgeable and absolutely right to highlight that all ways of giving people more options and widening the market to give them choice must be steps in the right direction.

The changes that the Treasury has made do not in themselves answer the nub of the issue, as highlighted so well by the FCA consumer panel. The uncomfortable truth remains that very few people understand annuities or make the informed choices that increased choice should enable them to make. They do not understand what they are buying or whether it is the right product for them, and they have no idea what charges are being levied and whether they are appropriate. As the consumer panel concluded, much more needs to be done. The fundamental issues that I flagged up at the beginning of the debate remain unresolved. An annuity is still something that is bought once and that lasts for ever; however, the circumstances of the buyer might change.

I will finish by touching on some of the issues that could and should be addressed. I do not want to make too much of the structure of the market, but it would be interesting to hear the Minister’s views. In a way, an annuity is an offshoot of the pensions sector—it is what happens after a pension—but because it is provided by the insurance sector, it is regulated by regulators that are ultimately responsible to the Treasury. The Pensions Advisory Service is DWP funded; the Money Advice Service is separately funded, and the appointments of its chairman and chief executive are approved by the Treasury, but it is answerable for its strategy to the Department for Business, Innovation and Skills. There is therefore a sense of different advice being offered by different agencies that are responsible to different Departments. That situation does not seem wholly satisfactory to me. It is interesting that the Opposition have today chosen to put up their pensions spokesman rather than someone from their Treasury team.

There is the structural issue of how annuities are regulated and whether the gap between increasing regulation on the pension side, especially in the context of defined contributions and auto-enrolment, could be mirrored by more regulation on the annuities side. I hope that the DWP’s consultation on charges will also shed light on the charges on annuities. Perhaps the Treasury will be able to absorb that when the FCA investigation gets under way.

The broader issues remain, and the nub of the problem is that annuities are unchangeable and inflexible. It is well worth considering the suggestion floated in The Sunday Telegraph by the Minister of State, Department for Work and Pensions, my hon. Friend the Member for Thornbury and Yate (Steve Webb)—that annuities might be changeable when circumstances change, so that they become more like mortgages that may be fixed for a period and thereafter traded or renewed.

A couple of hon. Members have highlighted advice. There is a strong case for believing that annuity brokers are not adding value for customers and that hidden commission should be revealed and consideration given to whether it is appropriate. More specific advice should be offered. When someone rings the Pensions Advisory Service to talk about annuities, they are told straight away that the service cannot discuss an individual’s specific circumstances and cannot access information about their pension or anything else. The advice, although good, is generic, but specific advice about people’s individual situations is most needed and least available.

[Heather Wheeler]

I am delighted that my hon. Friend called today’s debate because I have received a letter from a constituent, Mr Tejpal Singh of Stenson Fields, who asked me to ensure that the House had a debate on annuities, so a new year resolution has been kept. Mr Singh’s point was that people were given specific advice to save and were given to understand that when they took out an annuity at a specific age, the return would be £10,000 or £7,500 a year, but they are lucky to get £4,000 or even £3,000 now. That is difficult for people who have done the right thing on this important cost-of-living issue, but then the market has collapsed. I wonder whether the advice that my hon. Friend is referring to could help with that.

[Jim Dobbin (in the Chair)]

Order. Interventions should be short.

[Richard Graham]

I am grateful to my hon. Friend, who raises an important point. There is no doubt that annuity rates have dropped sharply from 10% to 5% over the last few years. Rather like charges on pensions and on investment management generally, it is only when a market becomes more difficult that it becomes more important to shine a light on charges and commission structures, because they become a much higher part of the total cost. If someone’s significant pension pot does not generate a significant income, they want to know where the money is going. My hon. Friend is absolutely right to raise that issue, which has propelled the annuities issue on to the front pages of newspapers from the business and financial sections.

I must sound a warning to the Opposition. We have heard from them over the last few weeks and months a sudden and dramatic cry that something must be done urgently. That rather prompts the question why they did so little during their long 13 years in office, with almost as many pensions Ministers. Some of the issues have been around for a long time. I am pleased that the FCA took up the issue of annuities relatively soon after its birth, put its consumer panel on the case and has now come up with research showing, I think without further question, that the annuities market is not working satisfactorily.

I want to make three points to clarify the matter. First, the annuities market is no longer working for many people in this country. It needs to be reformed, and if that is to be useful, it should be welcomed by everyone in the industry; otherwise, annuities will have no real role in future financial planning. Secondly, the opaqueness of the market stands in stark contrast with the increasing amount of light in the pensions industry as a whole and is therefore more of an anomaly than it was. Thirdly, the reports now coming in from regulatory bodies provide the Government with a wonderful opportunity to do something that millions of people throughout the country would be grateful for and reform an imperfect market so that it works much more effectively than at present. It falls to our Government to have that opportunity, and I hope we will seize it in the remaining 18 months of this Parliament.

09:56

[Mr Mark Hoban (Fareham) (Con)]

I congratulate my hon. Friend the Member for Gloucester (Richard Graham) on securing this debate. He is spot on in saying that annuities represent an important market and that we must ensure that it functions properly, fairly and to the benefit of those who have saved for their retirement and done the right thing but now face the second most difficult financial decision of their lives. The cost of getting that decision wrong is clear.

The National Association of Pension Funds has suggested that, every year, pensioners lose between £500 million and £1 billion by not shopping around for the best annuity rate, and that they make the wrong choices for a variety of reasons. We must tackle that. The research suggests that more than half of retirees do not shop around for an annuity but roll over to one of their existing pension provider’s annuities.

When I was a Treasury Minister, I worked with the Association of British Insurers in drawing up its code of conduct, which helps to shift the balance away from the default option of staying with the pension provider and towards shopping around. My hon. Friend the Member for South Derbyshire (Heather Wheeler) referred in her intervention to the change in the wake-up pack and the forms in it. However, I question whether that code of conduct is working; we must look carefully at whether the effective default is to shop around. I am not sure that the evidence exists that the code has been as effective as it should be.

My second point, raised in the report produced by the Financial Conduct Authority’s consumer panel, is about what happens when people do shop around. It is clear that the quality of help available is variable. There are some good sources of advice, but too often they are less than satisfactory. Some websites are not clear about the charges and commission earned from putting someone in contact with an annuity provider. It is sometimes not clear whether the website is offering a view of the whole market or just part of it. I looked at the Money Advice Service’s website this morning and it is clear that its comparison tables draw information from a panel of annuity providers. Firms must be much clearer about what service they are offering when people are shopping around.

We must consider whether consumers are being ripped off by hidden charges when they are shopping around, whether they are comparing the whole market or a segment of it, and whether they understand the regulatory protection when using such websites. We must ensure that consumers are properly protected and think about existing sources of information and whether they are adequate. My hon. Friend the Member for Gloucester referred to the Pensions Advisory Service. The Money Advice Service also provides information on annuities; one recommendation from the consumer panel was that the support given through the Money Advice Service and the Pension Advisory Service should be beefed up to help consumers.

We need to bear employers in mind, as they are another important player in the market. The reason why our constituents have to make difficult decisions about how to spend their pension pot is that employees are moved away from defined benefit schemes to defined contribution schemes. We are putting much more risk on the shoulders of employees. Although a large number of employers support their employees in making such choices and put them into contact with a pension adviser at retirement, we need to encourage more employers to do that, so that more employees who are coming up to retirement know exactly what they should be looking for and who they should be consulting.

We need to look at how the annuities market functions, because a poorly performing market has a detrimental effect on income for pensioners and also, in the longer term, reduces the incentive to save. If people feel that they will not get good value for money when they retire, they think, “Why should I put money into a pension? Why shouldn’t I put money into a house instead, or into an ISA?”

We need to make sure that we have a properly functioning market. That is not to say that all that providers should be doing is the bare minimum set out in regulation. Providers should recognise that they have a role to play in having high standards, so that consumers feel that they are being treated fairly and they know, for example, what they are being charged, that they have the best possible rate and that they have explored all the options. Providers have a role to play, too, in ensuring a high standard of conduct in those sectors. A low standard of conduct will lead to potential mis-selling risks in future and, as we have seen in the banking sector, that costs the industry dear.

[David Rutley (Macclesfield) (Con)]

I congratulate my hon. Friend the Member for Gloucester (Richard Graham) on securing the debate. My hon. Friend the Member for Fareham (Mr Hoban) is making a compelling argument about the need to open up the market. I have been doing some research and it is clear that more than 400,000 people a year are making this decision. That is a huge number and it makes the case for opening the market up even more important. He talked about trying to delink product choices; we can look at what has gone on in the mortgage industry, for example, in decoupling household insurance. If we move forward to a more retail approach to the segment, it will help more people have a wide range of options as they consider this very important decision.

[Mr Hoban]

My hon. Friend is absolutely spot on. We need to ensure that there is a more retail-type approach. One reason why people are able to shop around and compare mortgages is that there is good-quality information out there.

It is easy to compare the different rates on mortgages and the monthly payments people will make on different mortgages. The charges are very transparent as well. We can learn things from the mortgage market and its transparency that can be applied to the annuities market. I do not often disagree with the pensions Minister, my hon. Friend the Member for Thornbury and Yate (Steve Webb), but I am not entirely convinced that being able to trade in annuities will work and be effective. There are some comparisons with the mortgage market that we cannot necessarily draw.

Finally, I want to make a broader point. Over the course of the past decade, there has been quite a lot of focus on, to use another bit of jargon, the accumulation phase—what happens when people build up their pensions savings. The previous Government commissioned Lord Turner to look at pensions. I think there was some dispute between Tony Blair and the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown) about whether Lord Turner’s recommendations should be implemented, but they were, with cross-party consensus. There is considerable consensus over the introduction of the single-tier pension. One area that we have not debated in enough detail today starts that process. What happens when people spend their pension pot? What choices are available to them?

My hon. Friend the Member for Gloucester talked eloquently about an asymmetry of knowledge between someone seeking an annuity and an annuity provider, and about the circumstances that people face. Alternative products, such as income draw-down products, are out there, but that transfers both the investment risk and the longevity risk to the investor—the pensioner. We need to look carefully at the products out there, recognising that this very polarised market, with annuities on the one hand and draw-down products on the other, may not necessarily be in the interests of consumers. Other alternatives might be out there.

[Steve Baker (Wycombe) (Con)]

My hon. Friend is making his points with typical perspicacity. Before he concludes, will he consider what I think is one of the biggest factors in the market—the role of the Bank of England, both in terms of what it does to savers and what it does to the annuities market?

[Mr Hoban]

We were not going to get very far in the debate without that being mentioned; I am surprised that we got to four minutes past 10 before my hon. Friend raised the role of the Bank of England. I do not want to digress too much into that, but the Bank of England’s research into the inpact of quantitative easing on the pensions market demonstrates that there are upsides and downsides—that QE has stimulated the economy, and that has improved the value of equities as well as having a potential impact on gilt yields. However, let us leave that to one side.

We are moving to a situation in which people coming up to retirement will have a number of different sources for income in retirement. Those may be part-time work, equity in their houses or ISAs. There will certainly be a DC pension pot and there may be a DB pension. People’s income sources and needs will change over their retirement. Given that we are all expected not only to work longer, but to live longer, we will have choices to make. We need a proper debate about how we equip people for that post-retirement phase and how they can have the information they need to make the right choices—not only about what costs they will face in retirement, but about how to maximise their income in retirement.

Annuities are an important part of the market, but they are not the whole of it and we need a bigger debate to look at what is happening. That debate needs to involve not only pension companies and fund managers, but representatives of those in retirement, as well as those approaching retirement. It needs to ensure that the regulators—the FCA, particularly—are involved, as well as the Money Advice Service.

It is important that we get the issue right, because if we do not, many of our constituents will enter retirement with a lower income than they expect—perhaps lower than they feel is necessary to meet their financial needs. That is not good for them and it is not good for us. This debate has helped to spark a much wider process of debating how we ensure that people approaching retirement get the best financial deal possible.

10:06

[David Mowat (Warrington South) (Con)]

I congratulate my hon. Friend the Member for Gloucester (Richard Graham) on securing the debate and on his chairmanship of the all-party parliamentary group on pensions, which has aired these issues on a number of occasions.

Over the lifetime of this Parliament, we have discussed the pensions industry a number of times. To date, the discussion has mostly been of the accumulation part and not, to use the jargon, the decumulation part, which we will talk about today. However, the issues are similar. I am a little less sanguine than some hon. Members who have spoken about the fact that we have fixed the transparency problems in the accumulation part of the industry—I believe we have not started to do so yet. The same problems of market failure, asymmetric knowledge and lack of transparency exist in the industry. Whether hon. Members represent the party of the cost of living or the party of hard-working people—Conservatives seem to have won in terms of numbers, at least in today’s debate—the issue really matters.

The fact that annuities are talked about so little compared with, say, energy prices, is a function of the point my hon. Friend has made. People understand annuities so little—annuities take people outside their comfort zones. That is a terrible thing when 400,000 people a year sign up for such products. This morning, during the time of the debate, 250 people will have signed up for an annuity. By lunchtime, a constituent of every Member in the Chamber will have signed up for an annuity. Approximately a third of them will have bought the wrong product within the market, even by the terms of the market. In my opinion, the market is inappropriate and a great disincentive for people to be part of the pensions industry. It is one of the reasons why so many people who should be investing in pensions would rather bite their arm off than get involved in either the accumulation or decumulation part of the industry.

Let us step back and think about the structure of the industry, because my solution responds a bit to that. It is an artificial industry, fed by tax relief. We have made the decision in the UK to have a pensions industry that is predicated on the relatively low basic state pension—it is low compared with the rest of Europe—but one that is supplemented by tax relief and private sector provision, of which the annuity is one of the final products. The tax relief that we pump into the industry is about £30 billion a year, which clearly behoves the Government to get involved. With auto-enrolment, that urgency is becoming much greater. It is not acceptable for us to leave it as an industry that has failed, on any measure, at any time when it has been looked at. It is reasonable that the Government get involved.

There are two parts to the failure. The one that gets most attention is the failure of people to shop around—the open market option—notwithstanding the progress that the ABI has made with its code of conduct. It is in that context that one third of people are currently making the wrong choices. However, that is not the only aspect of the failure. The industry is not subject to the market pressures that would cause better performance. Within the context of the industry, one third of people are choosing wrongly, but the whole industry is failing to provide products that are competitively priced and transparent.

The industry has fairly viciously applied the term “caveat emptor”. It is playing it long, because it is only a matter of time before a Conservative Government or a Labour Government take the matter more seriously and start to fix things. In discussions of energy companies, in which I have also been involved, it has been said that they operate a cartel. I do not like to use words such as “cartel” lightly, but we have to look at the return on capital employed in industries and at transparency. Anybody who compares the pensions industry with the energy industry will know where the evidence of a cartel, such as it is, exists.

The National Association of Pension Funds and Cass business school report estimated that about £1 billion a year was being misappropriated, or at least was not going to the pension holder, because about one third of people buy the incorrect product. We could fix that through the application of the OMO—more attempts to make the market transparent—but the view I took as I was doing research for the debate is that that is not actually the solution for annuities market. The solution is that the Government should offer annuities. People will say, “You want to nationalise the industry.” I do not want to nationalise the industry—I am a free marketeer. I was about to say that I am as much of a free marketeer as anyone in the debate, but then I saw my hon. Friend the Member for Wycombe (Steve Baker), who possibly would challenge that. However, I really do believe in the free market. I believe that the free market is a panacea and a great mechanism for allocation of capital and all that goes with that, but the annuities market is not working. When a market does not work, particularly a market that is at the centre of Government policy on retirement and incomes in old age, and all that goes with that, it is reasonable that we look at what we might do about it.

Our national savings organisation in Glasgow offers interest rates as the Government sell gilts. I see no reason why an organisation like that cannot offer annuities in the same way. It is basically a very simple product. Because of the interest of the industry in developing the asymmetry and all that goes with it, the product has been overly complicated.

[Sheila Gilmore (Edinburgh East) (Lab)]

I apologise for missing the initial part of the debate because I was in a Select Committee.

The market is not completely free. The Government have already intervened to say that people should be contributing to pensions. People do not have a choice or increasingly will not have a choice not to take part. The Government have a responsibility to the people they have placed in that position.

[David Mowat]

That is absolutely the point that I am making. It is not a free market, and it behoves Government to do more than they have done so far to get it right.

One approach is to try to make the market work better—that was the subject of some of the points that have been made already. The other way of dealing with it is more dramatic. I believe it is reasonable that the Government think very hard and seriously about providing products that would compete in the market with the industry guys, because, in any event, the principal thing that annuity providers do is match Government bonds. One reason why QE has been an issue is that the industry is buying Government bonds in order to match income and liability. It is a classic middleman thing. It is entirely reasonable for the Government—a Government of either complexion—to look long and hard at that suggestion. I believe that will happen, because we cannot continue with the market abuse that has occurred over the past two decades.

[Richard Graham]

My hon. Friend makes an interesting point on which we will no doubt hear more from the Opposition spokesman, the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East (Gregg McClymont). Does my hon. Friend really believe that nationalisation of the annuities sector is in the overall interest of large numbers of taxpayers, who will in effect see the risk for their product transferred to them?

[David Mowat]

The point that has been made, I think, is that that risk is currently with the annuity providers; that seems to be the implications of that point. If that is my hon. Friend’s belief, it would be reasonable to say that their profits should be transparent, understood and not abusive.

[Richard Graham]

Does my hon. Friend not see that that is precisely the argument for reform? The case I have made is that the opportunity is there. The initial research by the consumer panel provides enough light to justify a more detailed investigation, which is happening. The Government can then make decisions to reform the industry. The mortgage sector was reformed, but the Government are not providing the country’s mortgages.

[David Mowat]

My hon. Friend is right that the Government do not provide mortgages, but they do provide people with interest rate products. There is an analogy with annuities, which are an extremely important transaction. In any event, the industry is an artificial one, because it is driven, as I have said, by tax relief. Annuities are not optional—we can draw down, but, broadly speaking, until very recently, everybody has had to buy an annuity.

By the way, I did not advocate nationalisation. I am advocating that the Government offer a product. They can compete with the existing market, rather like the National Employment Savings Trust competes with the existing market. That is not nationalisation. If the existing market is pricing things in a certain way and making very clever decisions on longevity and actuarial things and so on, it will win, and so be it; good luck to it. However, I suspect that that may not be the case. We must bring trust back. I agree that it is important to make the market work. I floated the point about national insurance because I think that that proposal will have to happen, but I also think that there are a number of things we could do to make the market work better.

[Mr Hoban]

One objective of the FCA is to promote competition. It is currently undertaking a thematic review of the annuities market. That would be a very good starting point for it to undertake a market study to look at the economics of the annuity industry, to see whether it is making excessive profits, and to understand the charging structures in order to help to inform what the next stage of the reforms of the annuity market should be.

[David Mowat]

I have absolutely no problem with any of that. In fact, the next point in my notes is on the Office of Fair Trading. We should try to make the annuities market work better, in the same way as we should make the accumulation market work better. The fact that NEST has been introduced is not a reason not to have that happen. My proposal on the Government offering annuities alongside the market is not a reason not to make the market work better.

The point was made earlier on education in the market, the retail distribution review and all the rest of it. I do not agree that the charging structure is a disincentive, if that was the point made by my hon. Friend the Member for Vale of Glamorgan (Alun Cairns), who has left the Chamber. It might be a disincentive, but it is no worse than a charging structure that pays people to recommend products based on commission and all that that means. That is not a solution in its own right, but I agree that we should try to make the market work better. We should hold the ABI to account on the application of the OMO.

We could try other things. If one third of people continue to stay with their existing supplier and buy inappropriate products as a consequence, there is a case for enforced separation, meaning that people buy the decumulation product from a different provider from the one from which they buy the accumulation product. That is entirely reasonable if the OMO code of conduct does not work better—it is currently rather patchy.

Another thing we could do to make the market work better is enforce the simplification of annuities, exactly as we have done in the energy industry, with bands to allow the comparison of products from different providers. The case for that is even stronger in the pensions industry than in the energy industry. I want recognition that draw-down might be used on smaller pots than at present, so that it receives wider application. When I speak to anybody who is about to make a decision on whether to use an annuity or a draw-down, I recommend that they think long and hard before they go down the annuity route. We could do more on that.

We need to make the market work better. The point I made about national insurance also applies to accumulation. NEST is working quite well, and it will be an incentive for reform in the industry. We could do the same with the decumulation part of the industry.

I have a couple of final points. It is interesting that a Treasury Minister is replying to the debate and a pensions spokesman is speaking for the Opposition. In a way, the issue has suffered because it has not wholly been owned by either Department and has tended to fall between the two. I hope that that does not continue. I also hope that people in the industry listen to the debate—I see that a couple of them are in the Public Gallery—because it is not right for the current situation to continue. It is not right that the industry response is to play it long. In the time I have been speaking, 40 people will have signed up for annuities, 15 of whom will have bought the wrong ones. We owe it to all our constituents to get that fixed.

10:22

[Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Dobbin. I congratulate the hon. Member for Gloucester (Richard Graham) on securing the debate, because annuities continue to rise up the political agenda. I was struck by the hon. Gentleman’s speech, which I interpreted as a clear message that the market is not working properly. Indeed, I understood him to say that the annuities market was broken and cannot be fixed simply through individual engagement by consumers. The repeated references to the Financial Conduct Authority’s consumer panel report were helpful, because the whole thrust of that report was that the market cannot be fixed purely by increased transparency.

Several Government Members referred to mortgages. A big difference between mortgages and annuities is that annuities are one-off products, so consumers cannot learn more about annuities over time through repeated purchases. I agree with the hon. Member for Fareham (Mr Hoban) that the idea of tradeable annuities, which was floated over the weekend by the Minister of State, Department for Work and Pensions, the hon. Member for Thornbury and Yate (Steve Webb)—I was a little surprised that the hon. Member for Gloucester repeated that suggestion—will not get far.

The hon. Member for Gloucester provided compelling evidence of the fact that the market does not work effectively and cannot be fixed by individual engagement. His speech might stand as a metaphor for the Government’s approach, because there is general agreement that the market does not work properly—the hon. Member for Warrington South (David Mowat) made that argument eloquently. Moving from diagnosis to solution, however, the Government’s cupboard is pretty bare. I listened carefully to the solutions that the hon. Member for Gloucester suggested at the end of his speech. He noted that the Treasury had acted to remove the default retirement age and that people are no longer required by law to annuitise by 75. As the House of Commons Library made clear earlier this year, however, someone with a secure pension of less than £20,000 essentially has to annuitise by 75. Draw-down works well for those with big pension pots, but the rest of us still have to annuitise our defined contribution pot, so that is not a solution.

The hon. Gentleman was good enough to mention the Association of British Insurers code, but he was absolutely right to say that that is not enough. Let us be clear about what the ABI has done so far. The open market option gives people more information about their ability not to take an annuity from their existing pension provider. The hon. Member for Fareham was somewhat generous when he suggested that the results were not in yet to show whether that will deal with the lack of shopping around. It will not deal with the problem. All the evidence in the market shows that inertia is a powerful force on consumers that leads to excess profits for providers.

[Mr Hoban]

The code of conduct came into place only on 1 March last year, so it has run for less than a year. It is therefore hard for either of us to say that it has or has not worked.

[Gregg McClymont]

The hon. Gentleman referred to the Turner commission. The thrust of its conclusions—and, indeed, of the auto-enrolment pensions policy pursued by the previous Labour Government and the current Government—was that inertia is a fact of pensions markets. Auto-enrolment is an attempt to use inertia for the good of the public and the consumer. That is the basis on which pensions policy is developing under the pensions Minister—a process that began under the previous Labour Government.

There is a massive lack of engagement and involvement in pensions. Leaving aside the ABI, there is general recognition in the pensions world that the open market option is simply not going to do the job. That is the thrust of the FCA consumer report, which has been mentioned several times. Having looked at the matter closely over two years, and based on the Turner commission consensus, which we wish to maintain, I am prepared to say that inertia in the annuities market is a reality that leads to excess profits. That is not only my description, but the description given by the pensions Minister, who said in a recent television documentary that excess profits were being made by insurers, which is a product of inertia.

[Richard Graham]

The interesting point about inertia is that that is precisely the context in which I recommended that a change be considered to the current requirement for an individual to buy an annuity for life, whatever their circumstances or however those circumstances change. That crucial change would affect the inertia about which the hon. Gentleman is concerned, because it would enable people to reconsider and change their annuity if circumstances demanded that. Does he agree?

[Gregg McClymont]

No, I do not agree. The problem in the market is that people do not shop around, but the hon. Gentleman suggests that we should solve that problem by creating an even more complex product, in which people will magically start to engage in trading and moving from one annuity to another.

[Richard Graham]

Will the hon. Gentleman give way?

[Gregg McClymont]

No, let me continue. It is simply not feasible or credible. The idea of tradable annuities is a non-starter, and I will set out the response to it from across the industry. Phil Loney from Royal London said they had not been thought through by the Minister. Mark Wood from JLT Employee Benefits described it as misleading to compare annuities to mortgages. Tom McPhail, who is present in the Public Gallery, said that the Government

“should not try to invent products which…aren’t likely to be…value for money.”

The Actuary magazine described the wider response from the industry as “scathing”. The idea is a non-starter.

[Richard Graham]

Will the hon. Gentleman give way?

[Gregg McClymont]

We have heard from the hon. Gentleman, who gave a long and interesting speech, and it is now my duty to respond. I shall make a little more progress and then I will let him back in. He diagnosed the problem effectively, but provided no solution. The airy-fairy, half-baked suggestion that we should think about tradable annuities does not deal with the reality, which more than one Conservative Member has set out this morning, that hundreds of thousands of people are annuitising every year, right now. What are the Government doing about that now, in real time?

Interestingly, the hon. Member for Gloucester diagnosed the problem very well, and understood that transparency will not solve it. The solution cannot be based on a utopian hope for greater individual engagement; it must be like what the OFT report did more widely for pensions. The demand side—the buy side—is too weak; how can we strengthen consumer weight or consumers’ ability to get a good deal? My view is that although individual engagement is a good thing, and anything that encourages it should be welcomed, it will not solve the problem, given that inertia is a central fact of the pensions marketplace.

The Opposition tabled a sensible amendment to the Pensions Bill which would at least have begun to tackle the problem, by ensuring that in the existing market—in the real world, right now—those who annuitise would get access to properly regulated, independent brokerage. That is not a panacea, but it is a reasonable starting point. It bears positive comparison with the Government’s lack of action. They have done nothing on annuities; there are no clauses about them in the Pensions Bill. That may or may not be an indictment of Government policy. No one says that the problem can be solved overnight, but surely an amendment of the kind tabled by Labour is a reasonable starting point.

More widely, the only answer is more purchasing power on the side of the consumer. That means we need to move to mandatory independent brokering, ideally in-house rather than external. [Interruption.] The hon. Member for South Derbyshire (Heather Wheeler) looks puzzled. In 2012, the National Association of Pension Funds, which is represented in the Public Gallery, rightly suggested that the annuity-buying process should be part of a pension scheme—that goes to the point that building up a pension pot is entirely part of the same process as producing an income at the end. Pension schemes should have a role in providing annuity brokering advice—that is what I mean by “in-house”.

Of course, that leads us into the argument about pension schemes being big enough for that to happen. I know that the hon. Member for Gloucester is aware, although it was not mentioned in the debate, that the market is fragmented. There are hundreds of thousands of pension schemes, but the providers of annuities are four or five insurance companies and three or four specialists. It is worth asking why market entrants do not emerge to compete with the giants. It is probably to do with the amount of capital needed, and the fact that on the insurer side it is possible to cross-subsidise products, because of being involved during the phase of building up the pension pot, as well as in the creation of a retirement income at the end. We need pension schemes to be involved as a matter of course in ensuring that their members get the best possible annuity at the end of the saving process. That seems a sensible way to proceed.

The hon. Member for Warrington South, who has done doughty work in the area we are debating, suggested that there should be a Government-backed annuity provider, and the hon. Member for Gloucester intervened and said that that was nationalisation. If it is, then so is the National Employment Savings Trust, which the Government support. NEST is a Government-backed scheme intended to bring down the benchmark for charges during the phase of building up a pension pot, and it has been very successful. That is not nationalisation, and nor is the suggestion of the hon. Member for Warrington South.

[Richard Graham]

The hon. Gentleman’s earlier reluctance to give way is uncharacteristic, especially as 45 minutes were left in the debate for Front-Bench spokesmen. He has two or three times confused issues, especially on my exchange with my hon. Friend the Member for Warrington South about nationalisation. My hon. Friend clarified that and explained that he was looking for participation in the market, not domination of it. Members on both sides of the House have an opportunity today to express their views and reach a consensus; the review by the Financial Conduct Authority and the consultation by the Department for Work and Pensions provide an opportunity for the House to move forward on an issue of concern to all our constituents. Does the hon. Gentleman agree? He should surely reach for consensus, not political division.

[Jim Dobbin (in the Chair)]

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

[Gregg McClymont]

I am not sure what the point of the hon. Gentleman’s intervention was, other than to show that he had not understood the point made by the hon. Member for Warrington South. Everyone else understood that he meant proceeding in the way NEST does, rather than nationalisation. For people who understood the point, no clarification was needed.

[Mr Hoban]

There is a fundamental difference between NEST facilitating the building up of pension pots and the state bearing additional longevity risk by providing annuities. The additional longevity risk would be borne by taxpayers if it were not correctly assessed. That would add to the existing longevity risk that taxpayers face through changing demographics and increased care bills and pension costs.

[Gregg McClymont]

That sounds a plausible point; I should say it is for the hon. Member for Warrington South, who put the idea forward. My observation is that the idea is not nationalisation, but something along the lines of NEST, and that it would at least be worth thinking about for the Government.

[David Mowat]

Since we are discussing the point I made, I feel I should chip in. Of course it was about participation. Two of my hon. Friends have made points about risk. The state already carries risk of inadequate pension provision, which is manifested daily. To talk about further risk in that context is disingenuous.

[Gregg McClymont]

That is clearly a matter for Conservative Members to debate among themselves after we leave the Chamber.

We face a broken market; the question is what to do about it. It seems to the Opposition that the way forward is increasingly to involve pension schemes in—I am wary about using this term, as I try not to use the jargon—“decumulation”. Pension schemes are involved in building up savings pots for members. They should also be involved in turning those savings pots into retirement income, which is what the process is all about, after all. Moving to a system in which pension schemes ensured that their members got decent, well regulated brokerage advice would mean bigger pension schemes, because many very small pension schemes do not now have the ability.

We have mentioned NEST. What does it do about annuities? It has sealed panel bids from annuity providers for each cohort coming to retirement. That is not the whole of the market, because NEST must annuitise for people with very small pots, as part of its public service objective, but that is the road we must go down. The Royal Mail pension scheme is another one that recently announced that it would provide an in-house brokerage service for its members.

The hon. Member for Gloucester was absolutely right in his analysis of the market. The problem—it is not his problem; he is an august Back Bencher, but not on the ministerial team—is that so far the pensions Minister and, I assume, the Treasury have not come up with anything concrete. Until they do, the hundreds of people who are annuitising as we speak and the 400,000 people who annuitise every year will surely look at the Government and ask when they will end the rip-off and the excess profits. If the pensions Minister says that insurance companies are profiting excessively from annuities, when will the Government act? Surely it must be sooner rather than later.

I make this point again to the Government, in the hope that they might listen. Any solution that depends solely on increasing individual consumers’ engagement in the process of buying an annuity will not succeed. The whole thrust of Government pensions policy since Turner, which this Government have continued, is that inertia is a reality that we must make work in the public interest, rather than in the interests of pension company shareholders. That has been the thrust of pensions policy for a decade now. Any solution to the annuities market dysfunction must start from that assumption. In the spirit of the Turner consensus and co-operation on auto-enrolment, I urge the Government to take heed of that reality in the annuities market.

10:42

[The Exchequer Secretary to the Treasury (Mr David Gauke)]

It is a great pleasure to serve under your chairmanship, Mr Dobbin. I congratulate my hon. Friend the Member for Gloucester (Richard Graham) on securing this debate and opening it so well. He brings to the matter his professional experience before entering the House, his experience as chairman of the all-party parliamentary group on pensions and his experience of discussing these matters in Gloucester pubs, all of which have helped our deliberations. I thank my hon. Friend the Member for Fareham (Mr Hoban), who served with such distinction as a Treasury Minister dealing with such matters for more than two years and made a substantial contribution to the Government’s achievements in the area. I also thank my hon. Friend the Member for Warrington South (David Mowat), who spoke with great passion and demonstrated his determination to ensure that consumers—our constituents—are served well by the annuities market.

It is a priority for all of us that the annuities market should work in consumers’ best interests. When people have saved hard for a pension, it is right that they should get the best out of their savings on retirement. The decision that people make about their savings on retirement can determine what income they receive for the rest of their lives. Undoubtedly, it is one of the most important financial decisions that a person can make. As we have heard, more than 400,000 people purchase annuities each year, and studies show that there can be more than a 30% difference in the incomes offered by providers, highlighting the importance of making the right decision.

The Government want to ensure that the annuities market works in favour of the consumer and that consumers can make well-informed decisions to secure the best rates and exert effective competitive pressure on the market. The Government have been working with industry and consumer groups to make effective changes in the market, including work carried out by the open market option review group, which has introduced a number of measures aimed at encouraging consumers to shop around on the open market when buying an annuity.

For example, as my hon. Friend the Member for Gloucester pointed out—as did my hon. Friend the Member for Fareham, who worked so hard on the matter—the Association of British Insurers has introduced a code of conduct for retirement choices, which came into effect on 1 March last year. The code is binding on all ABI members that sell annuities, covering almost all the market. In addition, tailored advice and tools have been developed by the Money Advice Service and the Pensions Advisory Service to help consumers understand their choices and promote the benefits of shopping around.

The ABI code has brought about an important change in how annuity providers communicate with their customers, a point raised by my hon. Friend the Member for Fareham and my hon. Friend the Member for South Derbyshire (Heather Wheeler). The removal of application forms from pre-retirement packs actively encourages consumers to engage with the important process of choosing their annuity type and provider, ensuring that they do not automatically settle for the default. Through requirements on providers to provide better information to retirees in their wake-up packs, and new and improved tools such as the Money Advice Service’s comparison tables and the Pensions Advisory Service’s online planners, we can ensure that consumers have the resources that they need to make informed decisions.

The ABI will evaluate the impact of its code in March this year, one year after its implementation. The OMO review group will also evaluate its wider package of measures and their effectiveness.

[Jim Shannon (Strangford) (DUP)]

I apologise for not being here in time, Mr Dobbin. My plane was an hour late, so I could not be here. I also apologise to the Minister and to the hon. Member for Gloucester (Richard Graham). I wanted to speak in this debate, but I did not have the chance. Does the Minister agree that the language used in the selling of annuities, especially to elderly people, must be such that they can understand what they are getting themselves into? I believe that they do not.

[Mr Gauke]

The hon. Gentleman raises an important point. It must be right that we should do all that we can to ensure as much transparency for consumers as possible. That includes a number of aspects, some of which I have mentioned. Let me go further.

The code and other measures will only be as successful as the outcomes that they prompt. We want clear evidence that more people are making active, better choices about their retirement income as a result of the changes. If we do not, we will not hesitate to consider further action. In addition to the ongoing work to help consumers make better choices, the FCA is currently conducting a thematic review of the annuities market and how well it is working to serve consumers’ interests, a pricing survey of all annuity providers and a comparison of the rates available to consumers through a range of distribution channels. The review will consider whether firms create barriers that can restrict consumers from shopping around, and what risks and potential for detriment those barriers may present for consumers. I look forward to the report’s initial findings, which will be published next month.

Although it is imperative that the annuity market works in the consumer’s interests as an effective option for retirement income, it is important to consider the retirement income market as a whole to ensure that consumers have income flexibility in retirement. To increase flexibility, the Government have removed both the default retirement age and the effective requirement to purchase an annuity by age 75. Whether they annuitise or not, individuals are permitted to take 25% of their accumulated pension savings as a tax-free lump sum before going on to secure an income with the remaining savings. To ensure that that income can best serve retirees’ needs, the Government have reformed the capped draw-down rules and raised the annual withdrawal limit from 100% to 120% of the value of an equivalent annuity. That can help to raise the retirement incomes of individuals in draw-down arrangements who may recently have experienced reductions in income due to wider economic conditions.

There is additional flexibility for those with a guaranteed income of at least £20,000 a year. With income already secured, they have the option of a flexible draw-down arrangement, in which they can withdraw any amount from their pension pot. Those coming to retirement will benefit from having more flexibility in deciding how to provide an income for themselves in retirement, and for those with small pension pots, the Government have taken steps to reform the trivial commutation pensions tax rules. An individual who is aged 60 or over with total pension savings of less than £18,000 can withdraw the entirety of their savings as a lump sum. The first 25% of that lump sum is normally tax-free, with the remainder taxable as income. In addition, small occupational pension pots under £2,000, and up to two small personal pension pots under £2,000, can be taken as a lump sum for those aged 60 or over, even when people have savings in excess of the aggregate limit. All those options add flexibility.

Having a decent retirement income is driven by two factors: saving enough for retirement through working life, and making good choices at retirement to secure a reliable and maintainable income throughout retirement. It is important to remember that the biggest determinant of how much income someone receives in retirement is how much they have saved during their working life. With the introduction of auto-enrolment, the Government have taken a huge step forward towards ensuring that consumers start to save for their retirement and carry on saving throughout their working life. Auto-enrolment is the most important pensions change for a century—around 6 million to 9 million people will make new savings and increase savings for their retirement. It is estimated that that will generate around £11 billion in extra pension saving by 2020, which will mean an extra £11 billion coming to the retirement income market within the next six years and a new wave of retirees with robust defined contribution pension pots, making it all the more important that we ensure that the retirement income market is working effectively.

The Government are also acting to protect those valuable savings. We recently consulted on proposals to cap pension charges and introduce a range of transparency measures as a means of ensuring that savings are not eroded by charges. We are currently assessing the responses to the consultation and an announcement will be made when that work is completed.

[David Mowat]

The Minister is right that the Government are consulting on pension charges. I have two questions for him. First, have the Government given any thought to annuity charges and to capping them? Secondly, approximately what level of charge does he believe is reasonable on an annuity of £100,000 during the lifetime of that annuity?

[Mr Gauke]

I suspect that my hon. Friend will not be surprised to learn that I am not inclined to be drawn into specifying what I believe is a reasonable charge for an annuity. What I will say to him—I will expand on this in a moment—is that we want to ensure that the annuities market works. We want to ensure that there are competitive pressures in that market. In the light of the consultation that we have undertaken on pension charges, the work undertaken by the FCA and the analysis of the evidence that has already emerged on the ABI code of conduct and so on, we want to ensure that the spotlight remains on the market, so that we do everything we can to ensure that it works effectively for consumers.

We are committed to ensuring that consumers have access to retirement income options that provide a reliable and decent income throughout retirement. That is an agenda to which ministerial colleagues in the Treasury and the Department for Work and Pensions and I are committed. We are working together to ensure that consumers have appropriate options, value for money and support when they come to turn their hard-earned pension savings into a retirement income. As the Minister of State, Department for Work and Pensions, my hon. Friend the Member for Thornbury and Yate (Steve Webb), who has responsibility for pensions, has recently suggested,reforms will be considered in the context of that work. That is why the Treasury and the DWP are currently considering the broad range of research and evidence on decumulation and how the market is working—to explore the impacts and interactions between market and consumer behaviour and Government policy.

I thank my hon. Friend the Member for Gloucester for securing and opening this debate. It has allowed us to discuss important annuities issues that are crucial for consumers if they are to secure the best from their savings at retirement.

[Richard Graham]

Will the Minister give way?

[Mr Gauke]

I will certainly give way to my hon. Friend—I can assure him that I am not about to conclude my remarks in the next sentence or two.

[Richard Graham]

I will be very brief, and I am grateful to my hon. Friend for his very measured reply to the debate. When the FCA review is published and when the ABI one-year review of the code of conduct comes out, the Treasury—as the Minister was saying—will look closely at how well the market is working. Just so we can be absolutely clear, if there is evidence that it is not working as well as it should and that there are hidden commissions, unnecessary charges and all the rest of it, will they be taken into consideration and reviewed and changed if need be?

[Mr Gauke]

Let me put it this way: the industry, the Government, the regulator and consumers all have roles to play in ensuring that consumers get the best deal. So far, action by the Government, the industry and the regulator has focused on ensuring that the market works more effectively to ensure that consumers shop around; identifying conduct risks that prevent them from doing so; and ensuring that they have the right tools and information to make informed choices and provide competitive pressure on the market. However, as I said earlier, those measures are only as effective as the changes they bring about, and they should not stop here.

The Government look forward to the results of the ABI’s evaluation of the effectiveness of its code, and to the FCA’s findings following its thematic review of the market and how consumers are being treated. They will complement the Government’s review of the evidence on how the market is operating and whether improvements are necessary. However, to answer directly the question put by my hon. Friend, the Government are serious about ensuring that the action already under way has a clear and positive impact. We have not ruled out further action in future.

[Gregg McClymont]

Does the Minister accept that the thrust of pensions policy has been to accept the reality of inertia and harness it for the public good? Everything that he has read so far from his script has been about individual engagement. Does he think that individual engagement is enough in this market?

[Mr Gauke]

The hon. Gentleman is too quick to dismiss the role of individual engagement—it seems to me that he dismisses it almost completely. It is important that we engage individuals in such hugely important decisions, that we increase transparency and that we remove any hidden barriers that may exist. There is consensus—we all want the market to work. If we are to succeed, we must take every measure available to improve individual engagement. We should not dismiss it.

[Mr Hoban]

Is not the point that we can design legislation around inertia to benefit from it, and that we can also design out inertia? The default—acquiring an annuity from a pension provider—can be designed out through an effective open market option, which will ensure that consumers can shop around and have good-quality information. The mass engagement solution put forward by the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East (Gregg McClymont) is another way of tackling inertia. He accepts that we can change inertia and get people to shop around instead.

[Mr Gauke]

My hon. Friend puts it very well and I agree with his point.

To conclude, the view of all hon. Members who have spoken in the debate is that annuities are very important. There are concerns as to whether the market has worked as well as it might have done during a number of years, but there is recognition that the Government have made a number of reforms on our watch—I am delighted that my hon. Friend the Member for Fareham, who was so involved with those reforms, is here. However, we must keep our eyes on the matter and keep the spotlight on the annuities market. Crucially, we must ensure that the market is working in the best interests of consumers.

Health Funding (Telford and Wrekin)

Tuesday 7th January 2014 Westminster Hall

11:00

[David Wright (Telford) (Lab)]

Mr Dobbin, it is a pleasure to see you in the Chair this morning and to have the opportunity to talk about health funding in Telford and Wrekin.

The objective of all of us, across the political divide and in the health community, is to strengthen the links between the formal national health service and local authorities and care providers in the community. That is the general consensus and I think everybody agrees with that as an overarching policy. However, I am concerned about the amount of resource available to tackle issues to do with continuing health care in the community in Telford and Wrekin, and about how that health funding integrates with the work that the local authority is doing.

It is pretty much acknowledged, across the political divide, that Telford and Wrekin council is a good unitary authority. It performs well and is working hard to ensure that it protects local residents as we move through a period of budget restraint and cuts to services. That is difficult and tough for the local authority and it has a major impact on our community. The way we integrate health services with the ongoing provision of front-line social care services is important.

The council is undertaking a consultation on its budget. Real pressure is emanating from Telford and Wrekin clinical commissioning group’s stance on funding continuing health care cases in the town. Some 50% of the council’s revenue budget—the money it spends on day-to-day services, such as caring for the elderly, looking after children and taking care of the environment—comes from the Government, and in the last three years it has been cut by almost £29 million.

By the end of 2015-16, the cut in the council’s funding from the Government will have reached nearly £50 million. These are cuts to cash grants that the Government provide to the council. Clearly, if inflation is taken into account, the real-terms cuts are much greater. At the same time, the council is facing major challenges from the growing cost of caring for increasing numbers of vulnerable people in our community. The CCG has added to the financial pressure by shunting around £8.5 million of costs that it would previously have covered in respect of CHC cases to the local authority. That is being done by the CCG’s taking a much harder line in the assessment of CHC cases. That is impacting seriously on the council and its budget.

Today is about exploring what more we can do to integrate health funding with the work that the local authority is doing in its social care environment. To set this out fairly starkly, in 2009-10 the primary care trust spent some £13.9 million on CHC cases. In 2012-13, the equivalent body in Telford and Wrekin spent just £2.3 million directly on care packages for CHC. I acknowledge that the CCG has topped that money up this year, with an additional £2.4 million, but that is a one-off payment. There is concern that such an enormous reduction in funding for CHC cases is putting enormous pressure on the health service and on front-line integrated health and social care services.

The other important issue to consider is how the funding formula has been calculated in respect of the number of people receiving continuing health care funding in our community, in comparison with surrounding locations. As at 30 June last year, there were 19.4 people per 50,000 population in Telford and Wrekin receiving CHC funding; in Shropshire, the figure was 82.2 per 50,000 population. Considerably fewer people, proportionately, are receiving CHC funding in Telford and Wrekin, but I cannot for the life of me determine why. Some have said that it is because Shropshire has an older population and because its structure is different, but it might be imagined that, given the provision of community hospitals in other parts of Shropshire, the figure would be different and that Telford and Wrekin would be doing far better.

If Telford and Wrekin is compared with similar local authorities—what might be called its Chartered Institute of Public Finance and Accountancy neighbours—we see that we are struggling to match the numbers of people per 50,000 weighted population who are receiving continuing health care funding. For example, in Warrington the figure is 54.6, in Darlington it is 65.1 and in Stoke-on-Trent it is 48.4 of weighted population per eligible 50,000 people. I reiterate that the figure is 19.4 in Telford and Wrekin and I cannot understand why, in that context, so few people are receiving continuing health care funding. This places enormous pressure on the local authority. As people move out of hospital or into care, whether at home or in other settings, the council is having to step in and try to provide care and support that ought to be provided, in my view, by the health service.

Although I accept that the primary care trust, at one time, was generous in its CHC funding compared with national averages—I mentioned the historical figures—the position now seems to have reversed. As I said, the ratio of CHC cases per 50,000 population in Shropshire is almost four times higher than in Telford and Wrekin. The council has calculated that, if the CCG spent at the national average, it would need to spend in the region of £7.65 million. That is significantly different from our current funding profile. I am concerned that the formula is not working effectively for Telford and Wrekin—either that, or the assessment procedure is not being undertaken in the same way as in other areas of the country.

The Prime Minister made it clear in the Conservative manifesto for the last general election that health funding would be protected. I am concerned that costs are being shunted away out of the health service and on to local authorities. The real concern is that these hidden cuts within the health service are being fed through into the local authority sector, so that nobody notices. Well, I hope that after today people will notice. This dilemma will be faced by a range of local authorities that will increasingly have to pick up costs that would previously have been met by the health service.

The Minister is a good man with a good reputation for understanding how the health service works—understandably, given his background—and I am sure that he agrees with my opening remarks. We want to see better integration between the health service and social care, as provided by local authorities. That is what I am calling for today. I should like him to look at the formula for Telford and Wrekin overall, in terms of the work being done by the CCG, and at whether the assessment procedure operating in our area is correct and being applied effectively.

The council is making a lot of savings. It has delivered more than £50 million of ongoing annual revenue savings, and it is considering proposals to cut the remaining £23.7 million that has to be saved over the next two years. Colleagues from mid-Wales will have seen the coverage in the Shropshire Star over the past few days on how the council is working extremely hard to identify where some of the cuts can take place. We have already seen significant cuts in the council’s back-office staff, and large numbers of people have left the structure of the local authority—1,000 posts at the council have been deleted or become subject to voluntary redundancy in recent years—so there has been a lot of work to try to pare back costs.

In the next two years, the council will endeavour to meet the Government’s proposal to freeze council tax too, because we are conscious of the big cost-of-living issues for ordinary people. That means that some of the cuts to front-line social care services will fall on the most vulnerable people in our community. If the continuing health care budget is not correct, and if the health funding that passes through, in partnership with local authorities, to care for the most vulnerable people in our community is not correct, we will have an even greater challenge in the long term.

We are trying to develop proposals to make savings at local authority level, but the Government need to reconsider the issue of continuing health care. I would like the Minister to address direct support for trying to achieve a fairer apportionment of CHC costs between the CCG and the council in future years. The council’s managing director has written formally to the CCG. I understand that, fortuitously, a meeting is taking place today to discuss some of the issues.

I am not pitching for large pots of new money. We just want a fair deal on what we are entitled to, and I hope that the Minister can reassure us today that he is aware of the issues and how important they are for health funding within our community. I also hope that he is aware of the pressure on Telford and Wrekin council, which I think he will agree is a good council that tries to do a good job and is trying to deliver on the Government’s commitments while ensuring that we provide care and support for some of the most vulnerable people in our community.

11:12

[The Parliamentary Under-Secretary of State for Health (Dr Daniel Poulter)]

It is a pleasure to serve under your chairmanship for the third time, Mr Dobbin.

I congratulate the hon. Member for Telford (David Wright) on securing today’s Westminster Hall debate, on his strong advocacy for the needs of his constituents and on his highlighting of the importance of political consensus on these issues. He is absolutely right to do so.

We know that the single biggest challenge facing our health services is how better to look after older people and people with long-term disabilities and how to provide dignity in the care of people as they grow older. The key to delivering better health services for that group—and for all patients, including those in the early years of life—is an increased focus on integration and more joined-up health care services. That is very much at the heart of the hon. Gentleman’s contribution, and I hope my remarks will reassure him that it is very much the focus of the Government’s stewardship of the health care system.

The hon. Gentleman will be aware that a £3.8 billion integration fund has been set up that will, in the longer term, drive and improve joined-up services between local authorities and the NHS. For far too long, there has been too much silo working. Silo budgets have sometimes reinforced the silo working, and it is often patients who have fallen through the gaps and paid the price. That is why the Government are determined to fix the situation and ensure that, not just through the changes we are introducing in the Care Bill but through the integration fund, there will be greater synergy of joint commissioning and pooled budgets between local authorities and the NHS, where that is to the benefit of patients.

It was a pleasure for me to visit the Princess Royal hospital in November 2013 to see the birthing centre and the development of the new women and children’s centre. As the hon. Gentleman will be aware, the trust has benefited from some £35 million of external capital money to support its capital investment programme, including the development of the women and children’s centre, which is due to open in autumn 2014.

Before we proceed, there are two issues. First, there is the key issue of how the national funding formula is set. I reaffirm that throughout the NHS, including in Telford and Wrekin, there have been real-terms increases in NHS funding under this Government. Secondly, the local CCG has discretion on how it allocates its budget, so there is some local discretion, which probably goes to the heart of some of the hon. Gentleman’s concerns.

Until recently, the funding allocation was set by the Department of Health, but under the new arrangements politics has been taken outside the setting of health care funding; NHS England now has direct responsibility for funding allocations. The NHS, through NHS England, relies on the Advisory Committee on Resource Allocation, or ACRA, and its assessment of the expected need for health services to help set allocations for each area.

We were all pleased that, for the 2013-14 allocations, NHS England decided that following the ACRA recommendations exactly would lead to higher growth for areas with better health outcomes and possibly reduced budgets for areas with less good health outcomes. Given that, like NHS England, we are all concerned about reducing health inequalities, the important decision was made to maintain the substantial weighting in the formula for areas of deprivation and health care inequalities. The ACRA formula was not directly followed, an issue on which we have touched in previous Westminster Hall debates. NHS England’s thinking, in outline, was that the recommendations were inconsistent with the responsibility to reduce health inequalities. NHS England conducted a fundamental review that has informed the allocations.

On 17 December 2013, NHS England’s board met and agreed CCG planning guidance and allocations for 2014-15, which will help commissioners to commission services for the benefit of local populations. The Government have protected the overall health budget, and NHS England has ensured that every CCG in England will continue to benefit from at least stable real-terms funding for the next two years.

The Government’s mandate for NHS England makes it clear that we expect it to place equal access for equal need at the heart of its approach to allocations; to consider health inequalities; to ensure a transparent process; and to ensure that changes to allocations do not destabilise local health care economies. A rapid change to or endorsement of the ACRA recommendations would have led to mass destabilisation of local health care economies. NHS England was mindful of that, and of the need to prioritise funding for areas of deprivation, in its allocations.

The 2014-15 allocation for Telford and Wrekin CCG will be almost £187.8 million—the per capita allocation is £1,058 a head, about the same as my constituents receive in Suffolk. That is a cash increase of 2.14% on the funding that the CCG received this year. The CCG will also receive a 1.7% increase on its allocation for 2015-16, which means that its funding will go up to almost £191 million. Additionally, NHS England has announced that the Shropshire and Staffordshire area team will receive a 2.38% rise in primary care funding in 2014-15 to almost £342 million and a further 1.8% increase in 2015-16 to more than £348 million. Those increases are higher than average, which reflects the historical underfunding in those areas against the primary care funding formula adopted by NHS England. I hope that is some reassurance to the hon. Gentleman that, in a general sense, increased funding is coming to his part of the country.

The hon. Gentleman will be aware that the Government have also provided £221 million in additional funding to the NHS to help cope with winter pressures this year so that patients get the treatment they deserve. Winter is a challenging time for all health care services, and it is right that we have put in place additional money for the NHS. The local health economy has received £4 million in additional funding, of which £1.2 million will be directly invested in Shrewsbury and Telford Hospital NHS Trust to staff all escalation areas.

The trust has also outsourced a proportion of day surgery to the Nuffield hospital to protect elective activity, should that be necessary at times of high demand during the winter. The remaining £2.8 million is being used to improve unscheduled care capacity and flow outside the hospital. An additional 69 beds have been sourced outside the trust, including intermediate care, care home and specialist dementia beds.

As the hon. Gentleman will be aware, the winter pressures money is being used to fund intermediate care beds and the focus on rapid discharge, not only in Telford and Wrekin, but nationally to some extent. That benefits not only the NHS, but local authorities, and it is part of the drive to achieve more integrated and joined-up health and social care.

If an old person can be promptly discharged home with the right care package, it is important that that happens; that is better for the person and the care they receive, but also better for the NHS’s financial settlement. To put it crudely, stuffing beds with patients does not make good financial sense, and it is not good for patients, who would much rather be at home in their communities. I am pleased that the money is going towards making that possible in the hon. Gentleman’s area.

[David Wright]

I absolutely agree with everything the Minister says—it is basic common sense. Although I am glad to hear him say it, and it is really positive, it would be helpful if he could address one concern, although I am not necessarily suggesting he will have an answer today.

I accept that we want to get people out of hospital and into their homes if possible to ensure they are cared for effectively. However, he must admit that the figures I highlighted, as well as the local authority’s concerns, suggest there has been a fairly significant reduction in the CHC pot. Given the scale of the local authority’s budget, compared with the health service’s budget, that reduction has an enormous knock-on effect on the local authority. I hope the Minister will take some time to look at that.

[Dr Poulter]

The hon. Gentleman is absolutely right to highlight the issue. The point I was coming on to is that although the region’s funding allocation from the Government through NHS England is going up, the CCG obviously has some local discretion over how that allocation is spent, and that goes to the heart of the matter.

As has been highlighted, continuing health care funding is the crux of this matter, and it is relevant to mention NHS continuing health care, which is a package of ongoing care arranged and funded solely by the NHS where the individual is found to have a primary health need. The NHS provides that throughout the country, and it is vital that it does.

There is sometimes quite a blurred line between where NHS funding and care end and where local authority responsibility starts. The issue is not whose budget is involved or which budget the money comes from, and that is part of the reason why the Government set up the £3.8 billion integrated care fund. This is about joining up budgets. The hon. Gentleman and I, the doctors and nurses on the ground, and the local authority are interested in the person, rather than who pays for treatment. The fund is a recognition of that, and we are setting it up to drive forward joined-up working.

However, we have to look at where we are now and why we have come to the place the hon. Gentleman highlighted. He will be aware that audits were carried out in 2009-10 and 2010-11 of the then PCT’s accounts. It was decided that the continuing health care funding was not being allocated properly, appropriately or even, potentially, legally.

At that point, the PCT was putting a lot of additional money into continuing health care, but a similar approach was not being taken elsewhere in the country. The auditors therefore rightly took the view that funding had to be allocated in accordance with the correct public rules for spending money, including NHS money, and that if money was, potentially, being allocated in an illegal way, that needed to be addressed under the rules at that time.

[David Wright]

rose—

[Dr Poulter]

I absolutely accept—the hon. Gentleman may wish to elaborate on this in his intervention—that, fundamentally, this is not about rules, but about making sure we have a better service for people. That is what we need to focus on.

[David Wright]

Yes, indeed, I do believe that. My concern is that the figures I highlighted suggest that, in comparison with similar and surrounding authorities, we are doing very badly per head of population in terms of the assessment process for qualification for continuing health care. That suggests to me that the pendulum has swung too far in the other direction and that the assessment procedure is being used to ensure that the figures are kept down.

I am concerned that some people with care needs in the community will lose out—as the Minister rightly said, this is not about structures and silos in the health service, but about individuals and their families in the community who are trying to cope.

[Dr Poulter]

The hon. Gentleman is right. In terms of the per capita spend in CCG allocations, Suffolk similarly has large towns with very rural surrounding areas, and the CCG in the hon. Gentleman’s area has a fairly similar allocation to the one I represent.

There is also an issue about how the money given to CCGs is spent. In a knee-jerk reaction, perhaps, to the auditors’ findings and the fact that the spend was not allocated appropriately, Telford and Wrekin went from being almost one of the highest spenders on continuing health care to being one of the lowest, and that is the crux of the problem. That is down to decisions by the CCG, or the PCT as it was, about how to allocate the budget given to it.

If, in 2009, 2010 and 2011, the PCT was picking up funding responsibilities that should perhaps have been the local authority’s, but then, in response to the audit, changed the amount it allocated to continuing health care, that could clearly have a destabilising effect on the local authority. However, the PCT and then the CCG have done everything they can to mitigate that, and they have given the local authority discretionary funding.

In particular, just over £3 million has gone to the local authority thanks to the fund set up by my right hon. Friend the Member for South Cambridgeshire (Mr Lansley) to facilitate exactly that kind of activity. At its own discretion, the CCG has also given the council £2.4 million on top of that, over and above what the council expected to receive. The CCG has therefore acknowledged and accepted that, in reacting to the auditors, there was perhaps an over-reaction, and it has now righted that by giving the local authority some discretionary additional funding.

That does not detract from the overriding point that, generally throughout the country, and particularly in Telford and Wrekin, we need to see increased emphasis on integration and joined-up care. It is in no one’s interests to have such discussions about funding, which waste a lot of time and effort on the part of the local authority and the CCG. If we can drive more joined-up working, more joint commissioning and more pooled budgets, where appropriate, as the Government will be doing through the Care Bill and the integration fund, the number of these turf wars will be reduced, because the emphasis will be on the patient, rather than the budgetary silo. That must be the right way forward.

I am sorry that, in this instance, the hon. Gentleman’s constituents and local authority have perhaps been caught up in errors made by the former PCT, although I am pleased the CCG is doing all it can to redress the balance by giving the local authority discretionary additional funding. I hope working relationships will improve and that, as we move forward, with further emphasis centrally on integrated health care and joined-up budgets, we will see greater improvements to the local health care economy and, more importantly, continuing improvements to patient care locally. If the hon. Gentleman wants to discuss the matter further or to meet me, I will be happy to do so.

11:30

Sitting suspended.

Financial Sustainability (Local Government)

Tuesday 7th January 2014 Westminster Hall

[Mr David Crausby in the Chair]

14:29

[Ms Gisela Stuart (Birmingham, Edgbaston) (Lab)]

This debate is about sustainable local authority funding. It is my contention that it is neither sustainable nor local, and it certainly does not confer any authority. I will focus on our cities, not because I want to set up an argument between urban and rural areas, but because what is bad for our cities is bad for our urban areas. If our cities do not do well, rural areas will suffer.

Our cities do not reflect the national economy; they are the national economy. If our cities do not do well, the country will do not well. If we do not generate growth, the rest of the country will suffer, and one certainly does not generate growth by throttling one’s engine. Our cities are competing not with rural areas, but with other cities internationally. Cities are a complex system, even though Whitehall treats them as though they are only complicated. Jet engines are complicated; they are predictable and have predictable outcomes. Cities are complex; their outcomes cannot be predicted, and the players are not always rational. Above all, cities are systems that can come up with their own ideas and solutions to problems, if given permission to do so.

England is the most centralised country in the world—something that holds back our cities, stymies growth and productivity and produces poor value for our public services. Our cities were once great—Birmingham MPs will certainly be aware of that—but their power has continuously reduced since the 19th century and there has been a shift toward the centre. The most radical power shift probably came in the 1980s, when rate capping and financial penalties were introduced. Then, in 1986, the Greater London council and the six metropolitan counties covering England’s largest cities were abolished.

It is worth looking at the continent, where things are different.

“Every city outside the capital in Germany has GDP per capita above the national average, they are dragging the national average up. In Italy it’s six out of the eight, in France all are at or above the national average. We are the only country in Western Europe where, apart from Bristol, the level of the eight cities are some way below the national average and therefore are bringing down the national average of GDP per capita.”

14:32

Sitting suspended for a Division in the House.

14:39

On resuming—

[Ms Stuart]

Those were not my words—the comparison of England with France, Italy and Germany —but the words of the Minister of State, Cabinet Office, the right hon. Member for Tunbridge Wells (Greg Clark), who has responsibility for cities.

Previously, the Labour Government embraced devolution. We devolved power to Wales, Scotland and Northern Ireland, and we restored London’s city-wide government in 2000, led by a directly elected executive Mayor. England outside the capital, however, remains unfinished business. It is a shame that the Government imposed police and crime commissioners, but presented us with a rather botched referendum on directly elected mayors in some of our cities.

I regret that our major cities do not have directly elected mayors, because such leaders need the support of the whole electorate and not only a small cabal of their own councillors. They need authority. To be frank, the names of the leaders of the core cities ought to be rolling off the tongue in the same way as we can name Cabinet Ministers, but they do not. Running a city the size of Birmingham is probably a far more difficult task than many a Cabinet post, yet we do not give those leaders the political authority that they ought to have.

A small way to remedy the situation, citing the noble Lord Whitby of Harborne as a precedent, might be for retiring council leaders to join the House of Lords, giving some representation for local government. I am not sure that the Mayor of London would be terribly keen on a place in the House of Lords after he finishes his term, but it is worth a try.

My second contention is that local government funding is not actually local. To quote again from the cities Minister:

“At the root of the problem is a lack of local control over the cities’ own affairs and spending”.

When talking about taking up his post, he said that he had to do two things, the first of which was

“to persuade the Cabinet to accept the principle to have licensed exceptions to national policy”,

so that cities could come up with their own way of dealing with things. If I remember rightly, in questions to the Deputy Prime Minister today, a number of Members also suggested that the presumption about deviations from national strategy should be that they were allowed, rather than having to prove the case.

[Chi Onwurah (Newcastle upon Tyne Central) (Lab)]

I congratulate my hon. Friend on securing the debate and making such excellent points. In response to my recent debate on local government finance hold-backs, the Under-Secretary of State for Communities and Local Government, the hon. Member for Great Yarmouth (Brandon Lewis), who will respond to this debate, claimed to be freeing local authorities to stand on their own two feet. Does my hon. Friend agree that it is the height of hypocrisy to claim to be freeing up our great cities when actually the Government are taking key powers into Whitehall, such as on inward investment, housing, skills, economic development and European funding?

[Ms Stuart]

Indeed, and I shall make that case with regard to Birmingham. Presumably, a true liberal regards the freedom to fail as a freedom, and that is one of the freedoms that our cities have been given.

The cities Minister also said:

“The second thing is to liberate from the central government barons funding that can be better spent locally.”

I cannot improve on his observation. Quite a number of colleagues will agree, in different ways, that the current funding structure is not sustainable. If there were some great vision of how our cities can succeed, we could engage with that, but what is happening at the moment is that, to quote Sir Albert Bore, the leader of Birmingham city council:

“Politicians in Westminster are systematically dismantling services that maintain the very fabric of culture and community here.”

Birmingham’s total budget for 2013-14 was £3.4 billion. That sum has to cover a whole number of things that the council must do and a number of things that the council might do. The money comes from a variety of sources, and the structure of the system is virtually impossible to explain to our voters.

I am wary of quoting figures, for two reasons. One is that we throw the words “millions” and “billions” around as if the difference is a change of just one letter. I have always found it useful to remind myself that 1 million seconds is 11 and a half days, whereas 1 billion seconds is 31.7 years. There is a massive difference. The second reason is that whenever I think I have a handle on the cuts, things change. I turned on the television yesterday and found that the Chancellor was in the west midlands announcing another £25 billion of cuts. I am not entirely sure where they will come from.

The latest figure for Birmingham is that we need to find savings totalling just under £840 million between 2010 and 2018, including £120 million of cuts in the financial year 2014-15.

[Mr James Gray (North Wiltshire) (Con)]

The hon. Lady is making a powerful case for maintaining local government funding across the nation—not just in cities, but everywhere else—but I have one question. Those cuts are necessary because of the financial situation that the Government found themselves in three years ago. Would she prefer savings to come from local government or national Government, and, if the latter, in what areas?

[Ms Stuart]

That is a fair point, but as I will come to later, by the end of this Parliament local government will have taken 33% of the cuts, whereas Whitehall will have taken 12%. I will also suggest some ideas that would not be robbing Peter to pay Paul but would instead give greater liberty, in a managed way, to our cities to survive. At the moment, those areas in the greatest need are being cut most.

This might sound slightly boring, but let us look at the figures per dwelling. In Birmingham in 2014-15, using the Government’s preferred measure—that of spending power—we will lose £145.59 per dwelling, a cut of 5.3%. The national average is £71.58. Leafy Wokingham—Wokingham is not popular in my constituency because of the comparison, although one of my local councillors comes from there and takes slight umbrage that we keep quoting it—gets an increase in funding of £5.20, or 0.3%. In 2015-16 it will be even worse: Birmingham will lose 5.6% and Wokingham will have an increase of 3%. There is a whole list of shires and counties that are also getting an increase. At every turn, the combination of grant reduction and budget pressures widens to the point where—let us be clear on this—it is no longer a question of cutting services: some services simply will not be delivered.

[Lilian Greenwood (Nottingham South) (Lab)]

My hon. Friend is setting out an important case. Does she agree that the issue is not just the impact of cuts on local authority spending, but the cumulative impact when taken along with welfare reforms, which tend to hit our most deprived cities the hardest? That combination is having a detrimental impact on local economies.

[Ms Stuart]

Absolutely. I have a couple of specific questions for the Minister that will help me outline how we can minimise further cuts.

In answer to a question on 18 December, the Minister suggested that Birmingham should

“be more efficient with its back office, and look at how to use its reserves to invest for the future.”—[Official Report, 18 December 2013; Vol. 572, c. 750.]

I had a chat with people at Birmingham city council about how much it spends on its back office services. It has already made some cuts to them, and will go on to make some of the largest single cuts in 2014-15. However, even if Birmingham were to remove its back office services entirely, it could not meet the required cuts for 2014-15, let alone those for 2015-16.

That puts me in a rather unusual position, in that I am at one with the noble Lord Heseltine. When he addressed the 200th anniversary dinner of the Birmingham chamber of commerce in April 2013, he called for no less than a “peasants’ revolt”, and I agree that that is what is needed. His definition of a peasants’ revolt was a reallocation of power back to the people who created the wealth in this country in the first place.

For that, we require three elements. The first is more control over the money received from central Government and—this is an important point—a time scale that allows for proper planning. At the moment, cuts are being imposed so quickly that local authorities, whether in cities or rural areas, have not had the time to reflect properly on how best to reorganise. In some areas, we even find confusion over which duties are statutory, because some statutory functions have been farmed out—councils have found that when they cancel the contracts, they are in breach of their statutory duties. The second element is greater freedom over the money raised locally, and the third is the means to benefit financially from investments and savings made.

However, I do not believe that that will be sufficient. Something far more radical is required. Relying on council tax to raise revenue will help only affluent areas. Capping via referendum and the utterly out-of-date banding system mean that, for authorities that rely heavily on central Government grants, relying on council tax to raise revenue just makes the situation worse. We need a more radical idea. We could raise a local tax or look at a system of apportionment of locally raised VAT to replace the grant. At this stage, I am simply looking for the Minister to acknowledge that if he continues on the current trajectory, some of our cities will go to the wall. I do not say that to be dramatic; the statement is borne out if we look at the figures.

I also have a number of specific questions. First, on the better care fund, am I right to assume that, although NHS transfers across clinical commissioning groups, which start in 2015-16, will not overtly redistribute funds from rural to urban areas, they will end up doing so in practice, given the age profile of rural areas? The better care fund is not new money, but a kind of redistribution. In Birmingham, almost 46% of the population is under the age of 30, compared with 36.8% in England as a whole. In contrast, Birmingham’s over-65s represent 12.9% of the population, compared with 16.9% in England as a whole. If we focus on the older population, therefore, we will be disproportionately hit.

The second question is about education. Education funding was not part of the local government finance settlement, because it comes mainly through the ring-fenced dedicated schools grant. However, the current formula is historic, and a consultation is going on. When can we expect the result? Will it include a minimum funding guarantee that protects against losses at a per-pupil level? Next year will be a crunch year for our cities and local authorities. Unless they have some indication of how not just the known grants, but the ones that underpin them, will play out, they will not be able to plan.

That takes me to my final observation. The Local Government Association already says some councils are not viable. How many councils does the Minister think are in that category? Does he agree with the work done by the Mayor of London, which suggests we should hand tax-raising powers to England’s largest cities? Will he give English cities control of the revenues from all property taxes, such as stamp duty, council tax, land tax and business rates? One thing is for sure: they will manage those funds differently and, I would contend, better. Will he also lift the cap on local government capital borrowing? I am not for one moment saying that local authorities do not need renewing or that some of the funding structures do not need to be looked at. However, that needs to be done in a planned and sustainable way that allows authorities to respond positively.

Finally, I invite the Minister to come to Birmingham, because 2014 marks the 100th anniversary of the death of Joe Chamberlain—the man who introduced the concept of good governance into our cities. If we do sit down and talk together about some of these structures, I hope we can come up with a way of maintaining the strength of our cities, rather than marking the 100th anniversary of Joe Chamberlain’s death by killing our cities with 1,000 cuts.

[Several hon. Members]

rose—

[Mr David Crausby (in the Chair)]

Order. I intend to call the two Front Benchers at 3.55 pm, which will give them 10 minutes each to sum up. I think six people want to speak, and while I do not intend to impose a time limit, we should be able to get everyone in if Members keep their contributions to less than 10 minutes.

15:02

[John Pugh (Southport) (LD)]

I congratulate the hon. Member for Birmingham, Edgbaston (Ms Stuart) on calling this timely debate and on introducing it in a constructive fashion. However, I do not share her enthusiasm for elected mayors, so I must demur on that point.

Several people in the room have probably sat on both sides of the political fence that divides local government from central Government, so they will be familiar with the scenario many of us have had visited on us: we listen to a statement about the local government finance settlement and think, “That’s not so bad,” but when we talk to our borough treasurer, we find that the world has more or less fallen in. I am very familiar with that scenario because my first experience of Whitehall involved coming down to Richmond house to see the now Lord Boateng, who was a Minister at the time. I was castigated on behalf of Sefton council because he felt we had quite enough money to deal with our problems, while we felt the money he was giving us fell significantly short of what he should have given us.

That scenario is fairly familiar, and it is part of a very dishonest conversation that has taken place decade after decade between local authorities and central Government. It is a dishonest conversation about local resources, central resources and their effect on services. All Governments say that the funding settlement is fair and generous in the circumstances and that councils surely have sufficient funding to get by. If Ministers need a further defence, they will point to occasional—or perhaps less than occasional—instances of local authority inefficiency or profligacy. They will then point to some local authority—normally one from their own political party—that does things particularly well and set it up as an exemplar for all others to follow.

Local authorities, in turn, talk about savage reductions, service impairment and the new and sometimes unnecessary burdens that have been imposed on them, but not financed, by central Government. Characteristically, they will accuse the Government of deceitful sleights of hand, favouritism and formula rigging. I think Members will acknowledge—particularly those who have sat on both sides of the fence—that those involved put their side of the case in a very one-sided way.

The past few years have been no exception. It helps local authorities that are making their case to their local populations to blame the Government for the totality of their woes, whether those result from demographic factors or unaddressed issues from years gone by. Most local authorities worth their salt big up the cuts, blame all the financial pressures they face on central Government and try as far as possible to ignore their own failings.

Equally, central Government help themselves by confusing the grant regime, changing the names of the grant from year to year—from revenue support grant, to formula grant, to spending power or whatever—and presenting their case in the best possible way. The Minister and I have had many interesting discussions about whether to describe a local authority’s situation in terms of a fall in its spending power or a fall in its grant. I prefer the latter; he prefers the former.

[Angela Smith (Penistone and Stocksbridge) (Lab)]

The hon. Gentleman talks about authorities bigging up the cuts, but, taking into account all the adjustments he has just spoken of, Sheffield will, by 2015-16, have seen a 50% reduction in funding since 2010. That is not bigging up the cuts; it is the absolute fact. Sheffield cannot go on with that level of cuts to its funding base.

[John Pugh]

I have no experience of Sheffield, but I have experience of my own local authority, and at times it rolls up many years’ cuts into one total figure, as if those cuts were imposed in one particular year. That is par for the course. Equally, central Government will find obvious scapegoats and point to the things such as assets and reserves—they are sometimes usable, but sometimes not—as though they can be regularly tapped.

Such things are all part of the toolkit or the argument, and most people are fairly familiar with them. The public tend not to pay a lot of attention to the debate, and they almost split the difference in many cases, because they are not certain who is telling the truth. They do get exercised when council tax goes up and certainly when services they are particularly enamoured of disappear, but, by and large, they are fairly agnostic on this issue, and they do not always know who should be blamed.

However, the game has now got deadly serious. What has been a familiar scenario over many years is now having a more severe effect. As the hon. Member for Birmingham, Edgbaston suggested, the sustainability of local services and, in some cases, local councils appears to be at stake—there is a fair case to be made in that respect. If we cut through what I described as the usual dishonest conversation, there are four absolutely indisputable facts.

First, in terms of deficit reduction, councils have been hit first—that is not particularly helpful, because they have to work within annual budgets and cannot make plans over two or three years—and they have been hit hardest, as has already been said. The second fact is that the reduction in central Government expenditure is considerable, and it may end up being something like £20 billion.

Thirdly, it is also an indisputable fact that the funding reduction for local authorities is proportionally greater in the poor areas and particularly the metropolitan districts. I take that as an unarguable fact, which we can all acknowledge around the room, although we may want to explain it in different ways. That fact is well documented, and it is what the Rowntree research, the Institute for Public Policy research, the National Audit Office and the Audit Commission report “Tough Times” all say. It is an indisputable fact.

Clearly, one element in it was the initial loss of area-based grants. We could argue that that happened because the previous Government were looking after the local authorities that were most of their persuasion. However, the fall in the less affluent areas, if I can put it like that, is in no way compensated for in its totality by city deals or regional growth funds. Those are often talked of as a compensating factor, but they must be looked at in terms of the general decline in regeneration funding in those areas as a whole. Taking the totality of the issues, I would be prepared to—although I will not—argue that case at length. There is nothing to suggest that things are otherwise; the proportionate reduction in poorer areas is greater.

It would be inappropriate for the Minister to respond, as often happens in parliamentary debates, by saying that none the less Birmingham gets so much per head, as opposed to some other area that he wants to nominate. I assume that we all buy into the assumption that grant support for local authorities must be based in some way on need. Therefore we would expect per capita spending in Liverpool, for example, to be greater than per capita spending in Surrey, and so on.

[Mr Gray]

Like the hon. Member for Birmingham, Edgbaston (Ms Stuart), the hon. Gentleman makes a powerful case for maintaining spending on local government. I disagree with his thesis that cuts are deeper in urban areas than rural areas, but let us leave that on one side for a moment. If I am right in guessing that the hon. Gentleman is saying that spending must be maintained at local government level, will he, a Liberal Democrat, tell us which central Government budgets he would like cut so that the local government settlement could be increased?

[John Pugh]

I am not necessarily making a case for increasing the local authority settlement. I am mainly making a fair case for different distribution, and for spreading it over more years, to enable local authorities to make the appropriate adjustments.

My fourth point, which has not been stressed in the debate so far, is that local authority spending is now significantly unbalanced. Because of the nature of the cuts, local authorities have had to concentrate on their statutory services, which primarily means social services. Most ordinary punters and electors do not ordinarily interact with social services. That is a democratic problem as well as a financial one. We have all heard of the graph of doom and the view that some local authorities will end up spending on nothing but social services. If that happens, neither electors nor the authorities will welcome it.

The hon. Member for Birmingham, Edgbaston is right about the situation. She did not say that it was not sustainable; she said that the trajectory we are on is not sustainable, and I agree. Various things could be done about it, and she suggested some. I shall not cover the same ground that she did. We can spread good practice and develop community budgets—the Select Committee did some work on that. We can talk about possible savings from the integration of health and social care, which would be good, or about possible benefits from the repatriation of rates, and accompanying incentives.

We can talk about things on a grand scale, as the Local Government Association is doing at the moment with the Rewiring Public Services campaign, which would also be good. All those ideas are ways forward, but they will not work at all unless we sensibly and intelligently—starting in this Chamber—stop the dishonest conversation and look at the facts for what they are. If we concentrate on formulae designed to present the Government’s or a local authority’s case polemically in a particular way, we will never get central and local government speaking the same language, or succeed in making local authorities sustainable as a result.

15:13

[Steve Rotheram (Liverpool, Walton) (Lab)]

It is a pleasure to serve under your chairmanship this afternoon, Mr Crausby. I congratulate my hon. Friend the Member for Birmingham, Edgbaston (Ms Stuart) on securing today’s debate.

I was disappointed at the contempt with which the Minister dealt with my question to him in response to the statement on the local government finance settlement before Christmas. Liverpool’s settlement is so dire that I offered personally to fund two rail tickets for him and the Secretary of State, so they could visit my city and look at the books. If they truly believe that Liverpool has not done everything they say a responsible council should do to mitigate the cuts, surely the Minister should have bitten my hand off and accepted the offer. It is still open—to avoid confusion, I want to make it clear that it would not cost taxpayers a penny: I would fund it from my own pocket—so perhaps the Minister will respond.

The cuts to Liverpool’s funding are deadly serious. They deserve not light-heartedness or levity, but sombre deliberation and scrutiny. That is why I felt so strongly about the lack of an adequate response from the Minister in December. Far from being a good news story for local government, as he injudiciously claimed, his statement was a disaster for local government. He also argued that the cuts he announced were fair to all parts of the country. However, far from that being the case, they disproportionately hit core city regions—those least able to absorb their severity and those with lower levels of gross domestic product.

I want to concentrate on what that so-called good news day for local government meant for Liverpool. Unsurprisingly, but none the less shockingly, Liverpool city council was once again hit hardest. The latest cut of 5.5% will have a devastating impact on a city that is working tirelessly to pull itself up by its own economic bootstraps. Even the Prime Minister has recognised the work that Liverpool has done to cut out waste and restructure its services.

Indeed, despite the latest savage cuts, Liverpool’s entrepreneurial spirit is alive and kicking, and in a few months we will host the international festival for business on behalf of the UK. Hundreds of thousands of businessmen and women will once again be able to see our city and feel the warmth of our welcome. That will happen despite what the Government are doing to us, but our resilience is legendary. It is crucial to understand that Liverpool, like all the core cities, is asking not for handouts but for a fair local government settlement, so that when the Government wield their axe it will not be hit disproportionately.

[Mr Gray]

I have great sympathy when the hon. Gentleman speaks up for his wonderful city, but I feel uneasy about the way the debate is centred on how the cuts focus on poor areas and cities. Leafy, Conservative Wiltshire this year received 18.2% cuts; next year it will have 26.8% cuts; the year after that they will be 7%. We are going from a revenue support grant of £76 million down to one of £45 million. That is a great deal deeper than Liverpool’s.

[Steve Rotheram]

That is absolute nonsense. It is possible to pick individual statistics, but cumulatively the cuts and other Government policies have a disproportionate effect on my city. It is a greater effect than the hon. Gentleman could ever understand.

[Steve McCabe (Birmingham, Selly Oak) (Lab)]

I do not know the source of the evidence cited by the hon. Member for North Wiltshire (Mr Gray), but I think the Audit Commission showed that one in 10 of the best-off areas suffer only a fraction of the cuts being suffered by the poorest 20% of areas in the country. Has my hon. Friend seen that evidence?

[Steve Rotheram]

I have, and I mean to refer to it later. I also have further evidence about how badly the Government have treated Liverpool. I understand what the hon. Member for Southport (John Pugh) said about years of dishonest argument, but that is not what we are talking about. At times that dishonest argument was about some authorities that thought they should get a greater increase than other authorities. We are now talking about savage cuts, not increases.

Not only is Liverpool’s cut the deepest; there are 38 other areas that will receive either a flat settlement or an increase in funding. How can that be fair? What happened to the Chancellor’s claim that he would not balance the budget on the backs of those in most need, or to the Government mantra that we are all in this together? Before some hon. Member intervenes with the inevitable argument that Liverpool will still receive above the national rate per capita, let me point out that the very fact that the city is struggling to meet its statutory requirements as a local authority gives credibility to the argument that further consideration of the funding formula is necessary to reflect socio-economic and multiple deprivation indices.

Perhaps the best description of the consequences for Liverpool of Ministers’ actions was from the shadow Health Secretary when he suggested:

“The Government do not understand, or they do not care, and they just rip up the fabric of an entire city. It is disgraceful.”—[Official Report, 18 December 2013; Vol. 572, c. 765.]

I could not have put it any better myself: it is managed decline, based on an inequitable formula that, at its core, is predicated on an ideological assault on the cities that no longer offer the Tories or Lib Dems any form of electoral support. It is not fair and it is not good news for local government.

[Jesse Norman (Hereford and South Herefordshire) (Con)]

I wish, in a way, that the debate had followed the lines laid out by the hon. Member for Birmingham, Edgbaston (Ms Stuart) in an admirably even-handed and non-partisan way. Is it not true, as a matter of historical fact, that under the previous Government, heat maps were generated that specifically tied public funding to areas of actual and potential Labour support? That has been in the newspapers. We know that it is a well established fact, which has been well attested from other grounds. Should the hon. Gentleman not be properly recognising that in his remarks?

[Steve Rotheram]

Deprivation has always been recognised on heat maps and areas of the country are well known in that regard. I do not accept the premise of the hon. Gentleman’s question. If he is saying that money in the formula was given to those areas of greatest need, and that showed up on a heat map, yes, that is true, and quite rightly so—it should have been.

Some might argue that it is simply coincidental that Labour-controlled Liverpool, Labour-controlled Manchester, Labour-controlled Birmingham, Labour-controlled Sheffield, Labour-controlled Newcastle and so on are the hardest-hit councils, with, in some cases, cuts to their budgets of more than 50% over the life of this Parliament, while councils that benefit most are well-off, Tory-controlled authorities. Some might suggest that that is just a coincidence, but I do not buy that. The formula was designed to do exactly that.

[Jesse Norman]

Let me put on the record that the heat maps are not reflective of imbalances in deprivation funding at all. Let us take an example that is completely open and known to everyone, which is the scandal of the private finance initiative, in which 106 new hospitals were built at enormous cost. The vast preponderance of them were built around a model of funding that was for very large outpatient hospitals in major cities, and it was deliberately targeted on those cities. The result has been, at a time when health care has been moving to a much more localised, technology-enabled solution, a disaster for health care. We will find that these great hospitals, including the new one being built in Liverpool, struggle as a result.

[Mr David Crausby (in the Chair)]

Order. Interventions should be kept short.

[Steve Rotheram]

It absolutely beggars belief that individual Members of Parliament do not understand that every area is different. Areas that had infrastructure from Victorian times, hospitals that were literally falling apart and schools that leaked, needed intervention at that time—not in 15 or 20 years, when the country might well have been able to afford it. Intervention was needed.

I am no great fan of PFI, by the way, but according to the latest figures the Chancellor is signing off as many PFI contracts, worth as much, as the previous Labour Government did. Members really cannot have it both ways—be anti-PFI while not even standing up to their own Chancellor, who is signing off these huge contracts, including the one for Liverpool.

My right hon. Friend the Member for Leeds Central (Hilary Benn) said:

“Tough times do indeed require tough decisions”—

nobody would argue against that—

“but this Government, as they have shown time and again, from the bedroom tax to the top rate of tax and local government funding, take most from those who have least. That is unfair and unjust.”—[Official Report, 18 December 2013; Vol. 572, c. 746.]

A cumulative 52% cut to Liverpool city council will mean not only that it has to make staff redundant, which means even more human misery and an even higher benefit bill, but, as I have said, that it may not even be able to fulfil the requirement to deliver statutory services to the level that it has to date. In other words, keeping our libraries open will be virtually impossible. Services for the young and old will be decimated. Children’s centres will be affected. Street lights and roads will not be repaired at the same rate, and the legacy of our year as European capital of culture will be damaged, possibly beyond repair.

Perhaps the most devastating aspect of the whole debate is the fact that decisions continue to be made, by a Minister and his boss in a cold and calculated manner, that I know will detrimentally affect Liverpool’s history, heritage and traditions and adversely affect every man, woman and child in our city.

[Several hon. Members]

rose—

[Mr David Crausby (in the Chair)]

The number of Members standing to speak seems to keep increasing, so Members will have to keep their contributions shorter if we are to accommodate them all. I call Jesse Norman.

15:24

[Jesse Norman (Hereford and South Herefordshire) (Con)]

Thank you, Mr Crausby. I am grateful to you and to the hon. Member for Birmingham, Edgbaston for calling this important debate.

I absolutely applaud the measures that the Government have taken over the past couple of years, not merely to bring the national economic crisis under some kind of financial control, but to make specific improvements to local government in the hope of making it more relevant, more accountable and more autonomous. The hon. Lady made the very good point that local government was glorious in the 19th century, and one reason for that was how autonomous it was. It is very important that we restore proper dignity to town halls, and I think the Government are doing that.

It is remarkable that the Government have been able to do that in the extremely difficult financial conditions in which we find ourselves. It is extraordinarily hard to change embedded funding decisions and disparities that have been left over from times past. In my county of Herefordshire—although we are talking about cities and the wider impact, I hope that we can strike a rural note, as the hon. Lady acknowledges the differences between them and the effects that each can have on the other—levels of funding have always been extremely low. The culture is one of making do and mending. To take one example, it was a minor miracle when we moved from having the third worst-funded schools in the country to the fourth worst-funded schools in the country, in the past year or two. I hope that we will continue to motor rapidly up the tables thereafter.

Above all, the issue is not only about local government, but about the totality of public services, because, as I think all Members would recognise, the services interlink with each other and the cumulative and interrelated effect of them makes all the difference. I am perhaps somewhat unusual in that I commissioned an independent study of underfunding in Herefordshire in 2010, which concluded, based on a comparison with other authorities, that it had been underfunded to the tune of £174 million over the previous five years—the period from 2005 to 2010. That is £35 million a year or roughly 10% of local government spending.

Those totals broke down across the public services as: police, £11 million a year; fire, £4 million a year; schools, £30 million a year; and health, £44 million a year. Each of those sums, in turn, was dwarfed by the underfunding of local government, which was £85 million over that period, or £17 million a year.

It is important to put that in perspective. It is not only about underfunding in some of the leafy suburbs to which people like to refer, because there are areas of deprivation in Herefordshire. It is not a rich place; it is a county in which the average earnings are significantly below the averages for the west midlands and for England as a whole. It is well known to those who have studied the issue that public services are harder, not easier to deliver, and more expensive, not cheaper to deliver, in rural areas than in cities, whether that involves filling potholes or the number of women whom a midwife can see in a given year.

[Steve McCabe]

I want to see whether I understand the essence of the hon. Gentleman’s point. Is he arguing that his area is underfunded, as a number of us would think of our areas, and therefore that central Government need to do something to relieve that underfunding? Alternatively, is he arguing that money should be taken off other areas and given to his area to address what he perceives as the underfunding problem in his area alone?

[Jesse Norman]

I am arguing that the situation in Herefordshire is the result of well over a decade—possibly two decades—of underfunding and that therefore, although every area has been hit badly because that is the nature of the tough times we are in, the case for treating with care and attention areas that have suffered from that inherited imbalance of underfunding is clear.

Let me give an example. In many parts of the country, local councils have reserves—indeed, large amounts of reserves that they have stored up over many years against a rainy day. That is not true in Herefordshire. Herefordshire council is only 10 or 15 years old. It does not have large inherited reserves. All the reserves it has are spoken for, more or less, and therefore it is not in the position that some cities are in of being able to draw on inherited reserves.

[Ms Gisela Stuart]

Will the hon. Gentleman give way?

[Jesse Norman]

I am winding up my speech, but I defer to the hon. Lady so much that I am happy to take her intervention.

[Ms Stuart]

I am exceptionally grateful. The hon. Gentleman mentioned that Herefordshire is a relatively young county. Is not that the problem? When there was a split between Herefordshire and Worcestershire, there was always a debate about whether they were big enough to be sustainable local authorities. Do not some of the problems in his area relate to the question whether the size and configuration of local authorities is optimal?

[Jesse Norman]

Of course, that point would be much stronger if it were ever true that Herefordshire had received anything like a fair level of funding relative to its comparators. Unlike, I think, most other hon. Members, I have the facts and the evidence in my hands and on my iPad if anyone would like to check them, so we can be quite precise about it.

My final point has to do with reserves. Herefordshire does not have huge reserves. It has virtually no reserves and an embedded underfunding over at least two decades. In that context, the Government’s efforts to level the playing field, if that is what they are, are to be welcomed, because that is doing a difficult thing in unusually difficult circumstances. I am grateful to the Minister and his colleagues and hope that they will continue to look closely at this issue and at the disparities between different authorities as reflected in their reserves.

15:31

[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Crausby. I, too, congratulate my hon. Friend the Member for Birmingham, Edgbaston (Ms Stuart) on securing this important debate. She is a tireless campaigner for the people of Birmingham and, like me and many of my colleagues on the Opposition Benches, is simply unwilling to let the issue of unfair cuts to local government go.

Indeed, I have lost count—I am sure that the Minister has too—of the number of times I have raised with him and other Ministers the impact of disproportionate cuts on cities such as Newcastle, yet he continues to bury his head in the sand about the scale of the consequences of the decisions that the Government are taking. I therefore look forward to hearing his response and seeing whether he will acknowledge the impact of those decisions on communities and services in cities such as Newcastle. However, given the provisional local government finance settlement that was confirmed to the House on 18 December, I am not holding my breath.

The United States celebrates groundhog day on 2 February, but I think mine might be occurring at the beginning of this month, because on 8 January last year, I introduced an Adjournment debate on the effect of funding cuts on Newcastle city council, during which I was complacently told by the Minister:

“Predictably, the doom mongers have been consulting their Mayan calendars and issuing dire warnings about the end of the world as we know it and a billion pound black hole in local budgets. Concerns that the poorest councils or those in the north will suffer disproportionately are well wide of the mark”.—[Official Report, 8 January 2013; Vol. 556, c. 293.]

What is the reality facing cities such as Newcastle? In the debate last year, I outlined how in 2012 Newcastle city council had started to consult on a three-year budget for the period from 2013-14 to 2015-16 in the light of the unprecedented funding challenges it faced. When it began the consultation process, it believed it was looking at a funding shortfall of £90 million over three years as a result of disproportionate central Government funding cuts and rising cost pressures, such as inflation, energy prices and the costs of providing services to an ever-ageing population. That figure rose during the consultation process to £100 million, following further cuts announced in the 2012 autumn statement and the local government finance settlement. However, following the 2013 spending round and provisional local government finance settlement announced in December 2013, Newcastle city council now believes it faces a funding gap of £108 million over the same period.

I have no doubt that the Minister will again seek to dismiss concerns about the scale of the cuts faced by cities such as Newcastle by reminding us, again, of the “spending power” that Newcastle has at its disposal—it is groundhog day, after all—but I suggest, as other hon. Members and I have suggested on several occasions, including today, that that measure is absolutely meaningless if it is used simplistically to compare total spending power without taking into consideration the completely different spending pressures facing cities such as Newcastle and those facing other parts of the country with totally different needs and challenges to support.

The Minister repeatedly fails to mention the scale and the speed of the change in spending power that is proposed for the next two years. Newcastle may have a higher total spending power than certain parts of the country, but it faces a cut in that spending power of £232 per dwelling over the next two years. In sharp contrast, Wokingham, which my hon. Friend the Member for Birmingham, Edgbaston also referred to—I appreciate the concerns of the friend to whom she referred—and which the Minister often likes to cite, will see its spending power rise by £60 per dwelling, and Windsor and Maidenhead’s will rise by £32 per dwelling. Therefore, although the spending power of cities such as Newcastle is being significantly cut, the spending power of some of the wealthiest and least deprived areas of the country is not only being protected but increased under this Government. The straight fact is that the additional spending power of cities such as Newcastle has not originated from some unfair funding decision of the past, but reflects very real differences in spending pressures and, in particular, differences in the requirement for statutory services.

Newcastle, as an urban and relatively deprived city, faces significantly greater spending pressures than the two councils that the Minister frequently chooses to compare it with. However, as Newcastle city council officers have pointed out:

“The reduction in spending power of areas with higher needs and lower resources and the increase in spending power in the wealthiest areas is a trend that will continue each year if the Government continues to operate the grant system as is currently proposed. It will not just close the funding difference between these areas but in time will potentially reverse it...This effect is happening because the Government’s funding system now focusses on self-sufficiency and providing incentives for areas where economies grow as opposed to applying the core principles of providing sufficient funding to reflect the different needs to provide statutory services across the country and to compensate for very different abilities to raise money locally from a standard council tax. These were the core principles introduced…in 1993/94 by the Conservative Government at that time. The principles were aimed at ensuring that residents anywhere in England could receive a standard level of service to meet their needs with a similar council tax charge for similar bands of property. Now that this no longer holds true the provision of statutory services can and will only be achieved by councils in poorer areas with higher services demands by charging a higher Band D council tax than wealthier areas of the country. As the Government is effectively restricting increases in council tax this will in effect mean that similar levels of service (including statutory services) can no longer be provided in poorer areas of the country or those areas with higher calls on statutory services.”

Crucially, the officers say:

“It is unclear whether Ministers...fully understand the implications of the new funding system that they have introduced.”

With regard to the title of today’s debate, the key concern is the cumulative impact of higher percentage cuts and higher cash cuts in spending power per dwelling. Far from Opposition Members bigging up the cuts, those cuts will place much greater pressure on the financial sustainability of councils sooner than would be the case if they were proportionate. The Minister may decide to use his response to the debate to continue to bury his head in the sand on this critical issue. Perhaps he thinks that if he sticks his fingers in his ears and sings loudly enough, we will all just go away, but it is not just Opposition Members and Labour-run councils that fear that, although they are clearly the ones worst affected by the Government’s decisions. Ahead of the autumn statement, the Conservative chairman of the Local Government Association, Sir Merrick Cockell, commented:

“The next two years are make or break for many councils and the Chancellor has it in his power to either deliver a stable environment in which they can plan for the unprecedented challenges ahead, or he can deliver uncertainty and risk which will put even more stress on vital local services and push councils toward failure…This Government is testing the resilience of councils to breaking point and in many areas the cracks are starting to show. 2015/16 is shaping up as the crunch year and we expect some councils to be placed in a position where they do not have the money…to meet their statutory obligations.”

That is a truly damning statement, and if it comes to fruition, it will be residents of constituencies such as mine, in Newcastle North, who will pay the price.

15:39

[Robert Neill (Bromley and Chislehurst) (Con)]

It is a pleasure to serve under your chairmanship, Mr Crausby. I am slightly disappointed at the outcome of the debate, although I congratulate the hon. Member for Birmingham, Edgbaston (Ms Stuart) on the thoughtful way in which she introduced it. The subject of the debate deserves a little better than some of the contributions that have been made. I agree with the hon. Member for Southport (John Pugh) that we must use the debate as an opportunity to think about the sustainability of local government finance in the longer term.

Some of the matters that have been raised relate, I suggest, to symptoms rather than disease. The hon. Member for Birmingham, Edgbaston hinted at the real problem with financial sustainability in local government, which is that the state in this country is highly centralised. That needs to change. I gently say that that is not the construct of any one party; it has happened over about 50 years. In fairness, it must be said that this Government have taken important steps to seek to reverse that.

I agree with my hon. Friend the Member for Hereford and South Herefordshire (Jesse Norman) that Ministers should be congratulated on the devolutionary steps they have taken at the same time as having to make significant spending reductions to meet the economic crisis we inherited. We cannot have sustainable financing for local government, which accounts for some 25% of the spend on public services, without a sustainable economy for the public finances as a whole. I do not accept lectures from Opposition Members who suggest that we should exempt local government from the necessary spending reductions.

In the longer term, we need to tackle the real problem, namely that local government has historically been too dependent on central Government grant for its finance. The Government have taken important steps to address that, but the degree of the problem is highlighted by the London Finance Commission. I represent a suburban London seat, which falls somewhere between the two poles when it comes to the matters that are being discussed. The LFC report, which the Mayor of London commissioned and endorsed, points out that some 7% of all the tax paid by London residents and businesses is retained locally, as opposed to, say, New York, where the picture is some 50%.

I am not saying that it is realistic to change those figures overnight, because we come from different constitutional and historical traditions, but we can move in that direction. In that regard, the Minister and the Government—I might have a slight interest in this—are to be commended for providing other financial levers to local authorities beyond pure dependency on central Government grant or council tax. The new homes bonus was an important additional income stream from central Government.

[Mr Clive Betts (Sheffield South East) (Lab)]

Recycled money.

[Robert Neill]

The hon. Gentleman rather misses the point. During the whole time that the Labour party was in government, it made no such devolutionary steps in local government finance. It ill behoves the Labour party to criticise the steps that the Government have taken against a background of financial stringency.

Secondly, the retention of business rates, particularly if we follow it through in due course and increase the local share, has a real opportunity to reduce dependency on central Government grant. Currently, for understandable reasons such as deficit reduction, the local share has to be constrained. The primary legislation is drafted in such a way as to permit the local share to increase as the economy grows. I hope that happens, and I think hon. Members would do better in the longer term at finding financial sustainability for local government if they were to support that growth on a cross-party basis rather than seek to make short-term points about the funding of individual local authorities.

[John Cryer (Leyton and Wanstead) (Lab)]

To some extent, the hon. Gentleman makes a fair point about the long term. The problem is that we are dealing with the situation we are in, which is that local government is dependent on grant from central Government. Waltham Forest council, which covers most of my constituency, has already faced extensive cuts and will probably face further cuts in grant from central Government of some 8% over the next two years. That reaches the stage, as Sir Merrick Cockell has said, where it is unsustainable and cracks start to appear. My local authority has wrought miracles in delivering services in difficult circumstances, but I am not sure that that can continue.

[Robert Neill]

With every respect to the hon. Gentleman—I know he thinks about such matters carefully—the problem with his analysis is that simply shovelling more money into the system that cannot be paid for in a sustainable way is not, I regret to say, the answer. A much more radical approach is needed to the way in which we deliver services, which good councils of all political persuasions are willing to undertake. We should move away from the high levels of dependency that local government in this country has on central Government bail-out.

There are things we could do. I hope we will not only increase the local share of the retained business rate and therefore reduce dependency on central Government grant, but work with the Local Government Association to deliver a genuinely sustainable market in municipal bonds, which holds real opportunities, particularly for big cities.

I hope we can extend the period of the funding settlements for local authorities. It is worth recognising, as the LGA recognises, that in the autumn statement this year we set out that local public services will get the same long-term indicative statements as central Government, which will provide more certainty. That is an important and valuable step forward, on which I congratulate the Minister. We might, in due course, roll that out to five-year settlements for local government, which will provide a sensible approach to long-term planning.

There are things that can be done, but it is not enough simply to talk about a system and to have a needs-versus-resources argument that does not recognise efficiency. We can do more in the system to recognise efficiencies and past efficiencies. Although the cities are a pressure point, it struck me when I was a Minister that we should not forget that there are financial pressures on rural authorities as well. One thing that concerned me when I first came into office at the Department for Communities and Local Government was that the then formula grant system did not recognise the cost of rural services or the particular pressures that give rise to rural deprivation. I congratulate the Minister and the Government on taking important steps to recognise that. There are positive, long-term things that we can do, and I hope the Minister will reflect on what we can build on in a constructive way.

15:46

[Mr Clive Betts (Sheffield South East) (Lab)]

I congratulate my hon. Friend the Member for Birmingham, Edgbaston (Ms Stuart) on securing the debate. Reference has been made to the Local Government Authority’s position. It is a good idea to take notice of those who, day to day, have to deal with the problems we are discussing and make decisions in local government. Sir Merrick Cockell, the Conservative leader of the LGA, which has a Conservative majority, has said clearly that the position of local Government finance is not sustainable. I happen to agree with him, and there is cross-party agreement in the LGA. That comes about because, as my hon. Friend has said, local government has been asked to make twice the level of cuts demanded of central Government Departments. Local government services are more important than that, and the extent to which local government services have been singled out for disproportionate cuts is unacceptable.

We can argue about which authorities have had the worst deal, and I certainly argue that those with the greatest needs and traditionally the highest level of grants have had the biggest cuts in their grant. That is not questionable—the figures are there to back it up. Local government generally has a good record on efficiency savings. It has coped with the cuts so far quite well, but we have already seen across the country cuts to community services such as libraries and changes to eligibility criteria for adult social care that are affecting communities and individuals in local authorities of all political persuasions.

We cannot continue on that basis, because it is not sustainable. Cuts that are made one year cannot be simply repeated and enhanced the following year. Every year it becomes more difficult because there is less room for manoeuvre and a lower percentage of discretionary spend that can be cut. That is not a steady state, because more pressure is being put on spending for adult social care all the time. The graph of doom that the hon. Member for Southport (John Pugh) referred to is already there. As cuts are made in spending availability and extra demands are made on adult social care, the amount left for other local government services is squeezed until it becomes non-existent. Adult social care and care for looked-after children ultimately benefit a minority of people, important though those services are, and the rest of the population do not know what they get from local councils because virtually nothing is left. That undermines local democracy, which is very worrying.

The hon. Member for Bromley and Chislehurst (Robert Neill) is absolutely right that we have to look towards the longer term. The Government have done some good things, such as abolishing ring-fencing, moving a little on business rates—I would like to see more—and introducing city deals. The most significant thing they have done, however, is to undermine the basis of local government finance in this country to such an extent that a future Government simply will not be able to come back and build on what was there before.

There has to be a fundamental and radical change. There was a good contribution to the debate from the LGA with the “Rewiring Public Services” document. There was a good contribution from the London Finance Commission. The Communities and Local Government Committee is to conduct an inquiry into local and inter-city financing and how city governance affects other parts of the country. Important elements have been raised for discussion, and I hope we can take that debate forward.

In the meantime, what will the Minister do when a local authority gets into real difficulties? The National Audit Office has been highly critical that the Government have not done an impact assessment on the cumulative impact of cuts to local councils. The LGA has said that 56 councils will spend 15% above their income by 2015-16. What happens if one of those councils gets into serious financial difficulties? Would the Government insist on a council having a referendum if it needed to raise council tax by 20% to make ends meet and to deliver its statutory service? Will the public vote for an increase in a referendum if they know that the Government have section 31 powers—civil servants and Ministers revealed them to the Committee—to step in at any point and give councils extra grant to stop them from going bust? Where do we stand when an authority gets into serious difficulty, whether that authority is Conservative, Labour or Lib Dem, rural or urban, a city authority or a district council? What action will the Government take if a council gets into difficulty, which seems to me to be almost inevitable?

[Angela Smith]

rose—

[Mr David Crausby (in the Chair)]

Order. I plan to call the first Front-Bench spokesman at 3.55 pm, so, with four minutes to go, I call Angela Smith.

15:51

[Angela Smith (Penistone and Stocksbridge) (Lab)]

I will do my best, Mr Crausby. I congratulate my hon. Friend the Member for Birmingham, Edgbaston (Ms Stuart) on her excellent speech, which had depth and context. The only thing I can add on the history of local government is its contribution in cities such as Sheffield and Birmingham to our housing, our schools, our leisure facilities and our libraries. The green legacy, particularly in Sheffield, bears a heavy debt to the history of local government in the area. She succinctly outlined the declining powers of local government over many decades, which was echoed by the hon. Member for Bromley and Chislehurst (Robert Neill).

The case for cities as economic motors was powerfully made by my hon. Friend the Member for Birmingham, Edgbaston. I want to compare Sheffield with Pittsburgh in the USA—she made comparisons with Europe, but comparisons can occasionally be made with the USA. Pittsburgh is Sheffield’s sister city and suffered the same decline in its industrial base, but it is now motoring ahead. Why? It is because Pittsburgh had the powers available to rebuild itself. It has focused on life sciences and hydraulic fracturing—fracking to most of us—and has rebuilt its economic base very successfully. It has managed to tap in to resources made available by the federal Government, but beyond that it has tapped into local resources and rebuilt itself. It stands as a shining example of what can be done when a city is given control of its destiny. It is not just Europe we can look to for comparisons of what can be done; sometimes, the US can teach us lessons.

By comparison, Sheffield will, over the lifetime of this Parliament, suffer a 50% reduction in its grant. Barnsley, the other borough I represent, will suffer a 41% cut over the same period. The contrast between what is happening in some of the great cities of the world and what is happening in the UK could not be greater. People living in Sheffield and south Yorkshire more generally feel emotional and strongly about the loss of their industrial base. Something has to be done to rebuild the economy of south Yorkshire. Even the boroughs of Barnsley, Rotherham and Doncaster would acknowledge that Sheffield has to be at the heart of that regeneration.

The myth about the rural and the urban needs to be scotched. Some 70% of south Yorkshire is rural, but it is within a metropolitan area. It has suffered declines greater than Herefordshire, Worcestershire and other areas in the country. I do not want to pitch south Yorkshire against other parts of the country, but south Yorkshire and areas like it helped to build the UK’s industrial base, and they have the capacity to do that again. The role of local government in that is critical. Local government as we know it is broken for ever. The model has gone. Devolution has to be at the heart of the solution for countries and regions such as ours. For Birmingham, for south Yorkshire, for Greater Manchester, for Newcastle and for the north-east, we have to have devolution and a different model for delivering local government in future.

15:54

[Andy Sawford (Corby) (Lab/Co-op)]

It is a pleasure to serve under your chairmanship, Mr Crausby. I congratulate my hon. Friend the Member for Birmingham, Edgbaston (Ms Stuart) on securing this very important debate and on how she has spoken up for her constituency and her city and made a wider and powerful case on the importance of our cities to the UK economy. Cities have helped to shape local government as we know it.

As my hon. Friend has said, urbanisation and industrialisation in the 19th century created the impetus in cities for the growth of local democracy, whether that was guilds of merchants and craftsmen coming together; the turnpike trusts and the improvement commissions; or the local Acts of Parliament, such as in Newcastle, to ensure that houses had privies attached to them, or those in the west midlands, where councils came together to promote an end to animal cruelty, or those of many local authorities who sought public health measures to tackle diseases such as cholera and tuberculosis. There was also the invention and confidence of municipalism in Birmingham, symbolised by Joseph Chamberlain—he was mentioned by my hon. Friend—who municipalised the gas works and the water supply. London blazed the trail for the national health service. Some 40,000 of the 55,000 hospital beds in the city were run by the county council.

Today, the challenge is even greater for our big cities. They must lead the renewal of local government, not only for local citizens who rely on their local services, but also, as my hon. Friend rightly said, for our national economy. They must do that in spite of Government policies that have hit our cities hardest of all. Birmingham council’s leader, Sir Albert Bore, said that

“these cuts will mean the end of local government as we know it”.

My hon. Friend the Member for Liverpool, Walton (Steve Rotheram) spoke powerfully about how his council has already worked incredibly hard to reform local public services and to make efficiencies. We know that local government, despite receiving the biggest cuts of any part of the public sector, is viewed by the Government as the most efficient part of it. The Prime Minister has said that.

The core funding reductions in local government are an average real terms cut of 33%, and the figures announced in the 2013 spending round envisage a further 10% cut in the local government resource budget, but I believe that it goes further than that. The key issue is the unfairness of the distribution of those cuts. By 2014-15, the 10 most deprived local authorities in England will have lost six times more than the 10 least deprived local authorities, compared with 2010-11.

While Birmingham, Newcastle and other cities will lose most, the Prime Minister’s local authority—West Oxfordshire council, which is one of the wealthiest—is seeing its spending power increase. My hon. Friend the Member for Birmingham, Edgbaston contrasted the cuts to her local authority, as did other hon. Members, with the increases in Wokingham, Hampshire, Surrey and Windsor and Maidenhead. Where is the fairness in a policy that takes most from those with least to give to those with most and a policy that takes from the have-nots to give to the haves? The council cuts are brought to us by the Government who gave millionaires a tax cut while imposing the bedroom tax on the poorest.

We know that the policy is deliberate. The former local government Minister, the hon. Member for Bromley and Chislehurst (Robert Neill), whom we have heard from, is on record as saying that. Both the Audit Commission and the Joseph Rowntree Foundation have said that councils in the north have been hit harder than those in the wealthier south-east. Can the Minister explain why that is right?

The National Audit Office has warned that cuts are having a direct impact on front-line services—we know that from our own areas—and that many councils are at risk of being unable to balance their books in future, with potentially disastrous consequences, not only for the delivery of those discretionary services, but for the delivery of those statutory services that our constituents rely on. The Public Accounts Committee report on the financial sustainability of local authorities found that there had not been a proper analysis of the impact of the cuts. The Committee highlighted the unfairness of the cuts for different areas of the country and raised serious concerns that some councils will simply not be viable.

As my hon. Friend the Member for Newcastle upon Tyne North (Catherine McKinnell) has said, it is not just the scale of the cuts but the pace of them that is having such a significant impact on our areas. The Chair of the Committee has said:

“Central government is cutting funding to local authorities by more than a quarter over four years but does not properly understand what the overall impact will be on local services.”

For instance, the Department for Education has failed to provide a proper cost analysis of how funding reductions will affect children’s services. As my hon. Friend the Member for Liverpool, Walton has said, the cumulative impact of cuts in other departmental budgets on local authority public services is affecting our cities most. Nor is enough work being carried out across Departments to determine how funding reductions in one area of spending might affect services in another—for example, how cuts in local authority adult social care are leading to bed blocking in hospitals, as they are in my area.

The Public Accounts Committee says that the Government do not understand the impact of their cuts on vulnerable groups. We know that, and it is reflected in other policy areas across government, not least welfare reform. We want to know what actions the Government would take in the event of the financial failure of multiple local authorities. As my hon. Friend the Member for Sheffield South East (Mr Betts) said—he is the Chair of the Select Committee on Communities and Local Government, and I hope the Minister will listen to him—we must hear from the Government what action they will take if councils cannot balance the books.

The hon. Member for Bromley and Chislehurst told us that the shifting of funding is aimed at reducing dependence, but the truth is that often the areas with the highest demand for services have the least capacity to raise income through business rates or council tax, as I am sure he knows. Although some of the changes to business rates can be built on and are to be welcomed, on the issue of fairness, he is not right. It has compounded the problem for some of the toughest areas of our country with greatest need.

In the Government’s spin operation following the provisional finance settlement, they said that there would be no more cuts to local government. I was astounded to read august publications such as the Local Government Chronicle reporting “No more cuts to local government”, when we know that next year, the year after that and—to listen to the Chancellor yesterday—in the five years that follow, if the Conservatives are in power, there will be substantial further cuts to local authorities. The Chancellor has said that 10% will be cut in the next two years, but I ask the Minister to take this opportunity to correct the record. The Local Government Association, a cross-party organisation, is clear that without including NHS support for social care, which is not available for all councils, the reduction over the next two years will be 15.9%.

The Minister and I are having our own groundhog day; we were here a few weeks ago debating holdbacks. I welcome the Government’s U-turn on holdbacks, particularly the decision to return some of the money held back as part of the new homes bonus, which was the subject of a debate led by my hon. Friend the Member for Newcastle upon Tyne Central (Chi Onwurah), who was here earlier. The second U-turn that we heard about was to adopt Labour’s policy to act on business rates, which have increased for small and medium-sized businesses by £2,000 under this Government. However, we would go further, freezing and then cutting business rates for 1.5 million small and medium-sized businesses. If the Minister were to confirm that the Government are willing to take that U-turn, I am sure it would be welcomed around the country.

My generosity to the Minister does not extend to the fairy tale that we are likely to hear about council tax and the notion that it will again be frozen. When will we hear the details of the council tax freeze grant for 2014-15? What is his response to the recent report in The Daily Telegraph that at least 42 councils, more than half of which are Conservative-led, plan to reject the Government’s additional funding and raise council tax this year? The leader of Conservative-led North Yorkshire said that

“settling for the additional funding for another year could place the council’s finances in a perilous position.”

The next Labour Government will not be able to turn back the clock, but we can offer hope to local authorities and local government around the country that we understand the depth of the financial challenge that councils face and are committed to finding a way forward. We will start by putting fairness back at the heart of the relationship between central and local government. We will acknowledge the difficulties that councils face, not try to sweep them under the carpet. We will respect decisions made by councils at local level about how to use resources, not criticise and carp from Whitehall, as the Secretary of State does about everything from the level of reserves to bin collections.

The next Labour Government will, of course, want councils to meet communities’ needs, but our approach will be one of partnership. It is crucial that we support councils to deliver economic growth in all areas of the country with fairness. We will consider the report of the London Finance Commission and some of its proposals, and the LGA document “Rewiring Public Services”. We want to devolve power over housing and planning, and jobs and skills. Councils will have to come together to decide how best to use those powers, not just in our cities but across England, as part of what my right hon. Friend the Member for Leeds Central (Hilary Benn) calls the English deal. We will take the process of devolving power from Whitehall further, through Labour’s “Total Place” programme, which has sadly stalled under this Government, but whose pilots in places such as Greater Manchester show that there is much potential.

The local government innovation taskforce, set up by the Leader of the Opposition, makes it clear that Labour in local government is already innovating in responding to the challenges faced by our communities. As my hon. Friend the Member for Liverpool, Walton said, our councils are doing a great deal already, even in these difficult circumstances. That taskforce will press for a growing role and greater freedom for local government. Labour’s localism will be an ambitious programme requiring Whitehall and local government to work together as we transfer much more power and responsibility to local councils. In that way, although resources will be tight, councils will have a better chance to find a sustainable and fair way forward for their communities.

16:04

[The Parliamentary Under-Secretary of State for Communities and Local Government (Brandon Lewis)]

One would be forgiven for believing that there was some golden inheritance for local government when this Government came in. Many council leaders across the political divide would struggle to recognise the description given by the shadow Minister. Having been a council leader under the last Government, I find the idea of the Labour party favouring anything involving flexibility or partnership with local government, as opposed to top-down central control through one mechanism or another, almost laughable.

We should put this debate in context. We still have not heard anything from the Labour party about the £52 billion in cuts to local government that they outlined—local government still has something to fear. Members have also talked about money for areas. We have heard the debate about the difference between rural and urban areas. We would argue that we have created a fairer position, but we should also remember the backdrop outlined by the right hon. Member for Birmingham, Hodge Hill (Mr Byrne): the previous Government basically spent all the money. As my hon. Friends the Member for Bromley and Chislehurst (Robert Neill) and for Hereford and South Herefordshire (Jesse Norman) rightly said, we are working within the tight financial envelope left to us by the mess of the last Labour Government.

Having said all that, I must also congratulate and thank the hon. Member for Birmingham, Edgbaston (Ms Stuart) for securing a debate on this important issue and for her thoughtful opening speech. This Government have armed local government with a fair funding deal for all parts of the country—rural and urban, district and county, city and shire—which means that councils can plan budgets and deliver sensible savings while protecting front-line services. I will come back to the context of “fair” in a moment.

As has been outlined, every bit of the public sector must do its bit to pay off Labour’s deficit, including local government, to account for a quarter of all public spending. Our hats should go off to local government for the impressive work it has done, because we have shown that we can make those savings and still deliver good front-line services. Public satisfaction is at an all-time high, especially compared with 2010.

The autumn statement ensured that local government is protected from further spending reductions for 2014-15 and 2015-16. Councils now have the stability and certainty to plan their budgets and move ahead with transforming local services and ongoing efficiencies, which they absolutely need to do.

[Richard Burden (Birmingham, Northfield) (Lab)]

Will the Minister give way?

[Brandon Lewis]

No, I will not, due to the time constraints.

Councils now have stability. A number of local authorities have already done much work to prove that efficiencies deliver not only savings, but better services for their residents. Ultimately, that is the key. It is not about Government money or councils’ money; it is about taxpayers’ money being spent on good front-line services for local residents. I encourage authorities to look at the good councils out there doing great work with efficiencies and innovation, such as those that have done work through the community budget programme and the public service transformation network.

Their work is becoming more efficient and effective for council residents. Independent reports show that it is saving about £20 billion a year in this country. More importantly, areas going forward with such innovation show better outcomes for residents, not the least of which is being highlighted through the work of the better care fund, which involves work between the Department for Communities and Local Government and the Department of Health, and is showing benefits. I will touch on Members’ individual points in a moment, and I will write to the hon. Lady with some details about the better care fund, particularly with relevance to Birmingham. I am happy to meet her separately on that issue as well.

The average spending power reduction for councils in 2014 is expected to be limited to 2.9% per household. Members have mentioned the top 10% and the bottom 10%. Let us be clear that authorities’ spending power in the most deprived areas is much higher. In 2014-15, it is up to about £4,200 per dwelling in the 10 most deprived authority areas, compared with about £2,100 per dwelling in the 10 least deprived. That absolutely reflects, as the hon. Member for Southport (John Pugh) said earlier, ensuring that need is recognised.

The hon. Member for Birmingham, Edgbaston mentioned better care, as I have said, and education, which I will feed through to the Department for Education. I appreciate the invitation to Birmingham. I will look at the diary and see whether we can work out a visit, to ensure that we get up there. However, I gently point out to Members from Birmingham, Liverpool and Newcastle that we are holding consultations right through January—councils are coming to see me to talk about the financial settlement—and at the moment those individual authorities have not even asked for an appointment to come and see the Department. I gently suggest that those Members go back and say to those authorities that if they feel they need to talk to the Department they should make appointments to come and see us. I am seeing the councils from the north-east next week, but at the moment Birmingham and Liverpool councils have not asked to come and see us.

[Several hon. Members]

rose—

[Brandon Lewis]

As I have said, I am not giving way, either to tide or time.

Regarding Liverpool more generally, I will happily see Mayor Anderson. In fact, I saw him just a few months ago, and the next time I am in the north-west I will make a point of ensuring that I go to see him again. I appreciate the kind invitation that has been made to visit him, but if it is a working visit it will be even more efficient for the taxpayer.

My hon. Friend the Member for Hereford and South Herefordshire quite rightly made the point about the backdrop we are working with. He also made the point about rural and urban funding. I appreciate his comments on the work we have done in that regard, which recognises the problem for young councils.

As I have said, some councils have been mentioned today whose representatives have not yet made an appointment to come and see us. I hope that they will do so, but I particularly want to point out that my hon. Friend the Member for Bromley and Chislehurst quite rightly highlighted the key role for moving the relationship between local and central Government, particularly on funding, so that we have a system that is much more based on reward rather than handouts, and on giving local authorities the power—the autonomy—to decide their own future and their own destiny, which is something we are very keen to do. That is about ensuring that we get efficiencies, and that we encourage local government to move away, as some councils are doing—not all councils are doing so but there are some really good councils doing great work, across the political divide. As has been highlighted, Manchester is a good example, with its community budgets work.

However, councils must not do what they do just because they do it. They must go even further than the occasional stop and pause to think, “Can we do this better and quicker and faster?” They should start from the beginning by asking, “What is it we are looking to achieve? What is the outcome we want for our residents and how do we best supply that?” The councils that do so are finding substantial savings.

There is significant scope—with small things as well, in some cases—for small authorities with a small budget of £5 million to £20 million to merge back office services to do more joint working. Councils that are doing that are finding up to 18% in savings—substantial money. They can get more for less that way and do better with the £60 billion-a-year procurement budget that local authorities have; they could tackle the £2 billion of local fraud that is still there; they could reduce the £2 billion of lost money in council tax arrears, with arrears substantial in some areas such as Liverpool; or they could use their record £19 billion of reserves and get better value for money from the billions they have in property assets.

We touched on spending power this morning in the House and the Government grant is, of course, not the only way councils receive their money. People need to understand why we look at spending power. Local councils have income from a wide range of sources, so it is right and accurate to look at their overall spending power. The Government have again looked at all of a council’s income, from council tax, settlement funding assessment figures, specific grants, new homes bonus and, as I have said, from 2015-2016 the pooled money that will come from the NHS to support health and social care.

Councils still have a long way to go in terms of the work they can do to be efficient. They can look at the transformation fund—there is a new fund of £330 million. There is a £200 million extension of the troubled families programme to support 400,000 more families that need help and to build on the progress that has already been achieved. There is £100 million to enable efficiencies in service delivery; a £30 million revenue fund; and £45 million to drive transformational change just in the fire and rescue service.

There are rigorous safeguards in place to protect local authorities’ sustainability. Local authorities are legally required to balance their books and are responsible for managing their cash budgets within each financial year. The chief finance officer plays a key role in positively influencing the budget-setting process, including setting out the key risks associated with the budget and helping to find sustainable solutions in future. Chief finance officers have a duty to stop council spending effectively instead of allowing an overspend, and there is an audit process in place to ensure that the books are balanced. I encourage authorities to look at the 50 ways to save for local government and at what good authorities are doing to find those savings, and to learn from them.

Authorities have considerable flexibilities to set income and spending levels and to move money between years to help themselves. We have given more flexibility and more local autonomy, and councils are now directly able to benefit from local business growth for the first time in a generation, with around £11.5 billion per annum available through business rates and the annual growth on their share. Therefore, there is a strong incentive to support and develop local businesses, and to help people get into work and to see those businesses grow. There are cutting-edge councils that are doing this work—they know how to do it and they are leading by example in developing best practice for the rest of the country to follow.

I know that getting the ball rolling can be a hard part of overhauling local services. We have seen that. That is why the transformation challenge award was brought in. We were pleased to announce 18 successful schemes just last year, including projects looking at shared services and integration of health care and council services.

Local government has shown commendable skill in reducing its budget and protecting front-line services. With the economy now in recovery and more job opportunities being created, councils are managing their budgets and have a once-in-a-generation chance to step out from Whitehall’s shadow and be masters of their own destiny.

Mid Staffordshire NHS Foundation Trust

Tuesday 7th January 2014 Westminster Hall

16:14

[Jeremy Lefroy (Stafford) (Con)]

Thank you very much, Mr Crausby, for calling me to speak. It is a pleasure to serve under your chairmanship. Given the interest of several colleagues from the Staffordshire area, with your permission I will take a number of interventions in the course of making my remarks.

On 18 December, the administrators of the Mid Staffordshire NHS Foundation Trust published their final report. It recommended the dissolution of the trust as soon as possible and the absorption of Stafford and Cannock hospitals into the University Hospital of North Staffordshire NHS Trust and the Royal Wolverhampton NHS Trust respectively. It also set out proposals for the services that would continue to be offered at both Stafford and Cannock. The total cost over three years would be £220 million, of which £63 million is revenue and £157 million capital.

Let me first address the proposal to dissolve MSFT. I believe that is the right thing to do. It will enable both Stafford and Cannock hospitals to work much more closely with larger specialist teaching hospital trusts. They will both then be able more easily to recruit clinical staff who see greater opportunities for skills development within a larger organisation working across two or more sites and overhead costs will also be reduced.

However, the administrators’ proposals do not go far enough in ensuring that the interests of those who currently use MSFT are fully taken into account. Monitor and the Secretary of State clearly need to state that the expanded trusts should immediately recruit suitable non-executive directors from the areas served by MSFT, such as Stafford, Cannock, Penkridge, Rugeley, Stone, Brewood and so on, to ensure that those areas are properly represented.

[Paul Farrelly (Newcastle-under-Lyme) (Lab)]

Under the proposals, the University hospital of North Staffordshire will take over Stafford hospital. North Staffordshire hospital has a deficit at the moment, caused by reopening beds to cope with blockages in A and E and in admissions. Does the hon. Gentleman agree that in taking over Stafford hospital, it is very important and in the interests of everybody—everybody in Stoke-on-Trent, Newcastle-under-Lyme and Stafford—that the University hospital of North Staffordshire has the prospect of attaining financial stability?

[Jeremy Lefroy]

I thank the hon. Gentleman for his intervention and I entirely agree with him. I would see the situation more as two hospitals coming together, but it is vital that the financial difficulties that UHNS is facing are sorted out. I particularly urge the Government to look at the private finance initiative cost, which is too great for that particular trust.

[Joan Walley (Stoke-on-Trent North) (Lab)]

I am most grateful to the hon. Gentleman for giving way and I congratulate him on securing the debate. May I point something out for the record, so that when the Minister comes to reply he can, hopefully, give cast-iron assurances about the financial input that will be needed for this reconfiguration to take place, addressing the issue that UHNS has identified—that the additional expenditure needed for service configuration is in the order of £28 million or £29 million, whereas the trust special administrator has said that only £13 million would be needed? Also, the trust special administrator has proposed a cost improvement programme of 8.5%, whereas Monitor has said that anything above 4.5% is dangerous. We need a very clear, detailed calculation and input from the Government as to how these extra costs will be met, also taking on board the issue about PFI.

[Jeremy Lefroy]

I thank the hon. Lady for her intervention and I entirely agree with that point. There is no point in Stafford’s merging with Stoke if the consequence is that we have a trust that will be financially failing in the future.

The administrators rightly place emphasis on the need for swift action, and I believe that the dissolution of MSFT in the autumn of this year should be possible—indeed, it should be possible even earlier. In fact, I would go further. MSFT has improved greatly in recent years following the huge failings brought to light through the vital work of Cure the NHS and documented in the Francis report. Its recently published hospital standardised mortality ratio figures were the best in the west midlands, but it is fragile and finds it difficult to recruit in some areas. We need the overall arrangements to take immediate effect, even in shadow form. In recent weeks I have detected less engagement than is necessary, because of the uncertainties of the administration process. That needs to stop.

This is all taxpayers’ money. It is our national health service. It is time to work together.

[Andrew Griffiths (Burton) (Con)]

I congratulate my hon. Friend on securing this debate and on the work that he has done in recent years. He used the words “fragility” and “uncertainty”. He understands the fragility and uncertainty of the health care economy in Staffordshire. Queen’s hospital, in my constituency, is a Keogh hospital, which has huge financial debts and is struggling to survive. Does my hon. Friend agree that it is essential that this reorganisation takes place and is properly funded? If not, the knock-on effect on other hospitals, such as Queen’s, and on the wider health economy, could be damaging and have a domino effect, with other hospitals falling over.

[Jeremy Lefroy]

My hon. Friend is right. We must make sure that we do not jump from the frying pan into the fire. We must get to a sustainable condition for the health economy. These new overall arrangements must take immediate effect. I urge the Minister to make that clear today, to give the various managements confidence to get on with their work.

I shall make one final point about the future UHNS and the Royal Wolverhampton hospital. The Secretary of State has rightly emphasised patient safety and care since the publication of the Francis report. The new expanded trusts have the opportunity to become national leaders in zero-harm health care, so I urge Monitor and the Secretary of State to seize the opportunity to support them in doing so at this time. Let this administration not be a dry legal exercise. Let it be the chance for Stoke, Stafford, Cannock, Wolverhampton and Walsall to become, even more, shining examples of the best 21st-century health care.

[Mr Aidan Burley (Cannock Chase) (Con)]

I congratulate my hon. Friend on securing this debate. I do not think that any other hon. Member has had to deal with a local hospital issue as all consuming and difficult as the one in Stafford. I congratulate him, on behalf of everyone, on his tireless dedication to getting the best deal for his constituents.

My hon. Friend mentions Cannock Chase hospital, in my constituency—the other hospital run by Mid Staffordshire NHS Foundation Trust—which will be taken over by Wolverhampton as part of the administration process. I welcome the abolition of that trust, which left my hospital 50% empty and which, even as we speak today, has just closed Littleton ward, to decant nurses to Stafford to try to shore up the hospital there.

Does my hon. Friend agree that we cannot wait until later—until sometime this year; perhaps even the back end of the year—for Wolverhampton to take over running Cannock and for UHNS to take over running Stafford, and that we need to move to the new organisational structure as soon as possible? I mean weeks, not months, so that both of our hospitals can have a secure future and the staff can know that their jobs are safe.

[Jeremy Lefroy]

I agree. I welcome my hon. Friend’s huge support, both for Stafford and Cannock, throughout this process.

[Valerie Vaz (Walsall South) (Lab)]

I congratulate the hon. Gentleman on securing this debate. I know how hard he has worked and I echo the tribute of the hon. Member for Cannock Chase (Mr Burley).

The impact on the Manor hospital in Walsall has been immense, as the hon. Gentleman said. We have already had to open 70 beds, as well as attempting to open two wards. The hospital desperately needs £40 million. I have raised this matter frequently with the Minister. I should be grateful if the hon. Gentleman took that on board in his summing up and if the Minister looked at the Manor hospital—he has visited it, although I was not there when he did—to ensure that it gets the funds that it desperately needs, having taken the impact of the closure of accident and emergency at Stafford hospital.

[Jeremy Lefroy]

I am grateful. I place on the record my thanks to all the staff at all the hospitals—Stafford, Cannock, Wolverhampton, Walsall and Stoke—for all they have done through this difficult time.

Let me turn to the detail of the services, which comprises the bulk of the trust special administrators’ report. We have come a long way from 11 months ago. Then, the contingency planning team recommended removing A and E and all acute services from Stafford, as well as elective surgery from Stafford and/or Cannock. We now have proposals that retain elective surgery at Cannock and, indeed, foresee increased activity there. At Stafford, we retain 14/7 A and E, together with acute medicine, elective and some less serious non-elective surgery, day-case surgery and a large out-patient department.

As a result of the consultation, the administrators proposed a midwife-led unit for maternity, when their original proposals removed all childbirth from Stafford. The estimate is that some 90% to 91% of all current patient attendances would remain at Stafford and Cannock.

[Gavin Williamson (South Staffordshire) (Con)]

Most of my constituents and, I am sure, many of my hon. Friend’s, would find it deplorable if Stafford hospital did not have a consultant-led maternity unit. The pressure that that will place on so many hospitals—Walsall, Manor, New Cross, Queen’s or the University hospital of North Staffordshire—will be unsustainable. I urge Ministers to look at the issue again.

[Jeremy Lefroy]

I am most grateful to my hon. Friend. I will come to that important point.

I pay tribute to the work of Support Stafford Hospital, because the impact of its campaign has shown just how much the community values the services at Stafford and Cannock. I also pay tribute to the working group, which I set up, and all those who have worked with me on that to provide us with the detail on alternative proposals, some of which I shall outline.

There is no doubt that the administrators listened carefully to what was said in the consultation and made a number of changes in their final proposals. However, the proposals as they stand are insufficient. What I am setting out requires not a re-doing of all the work of the trust special administrator—given what I have said about the urgency of the situation, that would not be sensible—but a modification of the detail.

I do not believe that such a modification would necessarily require more money than is currently proposed, although that remains to be seen, but it would be of huge benefit to many thousands of my constituents, and those of hon. Friends and other hon. Members. It will also ensure that both Monitor and the Secretary of State can fully comply with their legal obligations under the Health and Social Care Act 2012, in respect of health inequalities, as I will show later.

My proposal is that rather than cutting three areas of service in Stafford, those continue in a more cost-effective form, at least for two or three years. I, and the clinicians at Mid Staffs, consider that it will be quite possible to show how these services can be run across the two sites in Stoke and Stafford on a networked basis. The areas concerned are paediatrics, obstetrics and maternity and critical care.

First, the report proposes a reduction of the critical care unit to four beds. It says that the possibility of the highest level of critical care—level 3—should be maintained, but it is not clear how this will be possible without a rota for specialists in critical care. The critical care department at Stafford made its own submission to the consultation, which suggested a reduction in beds and a networked specialist rota. That seemed eminently sensible. Given that the CCU at Stafford is a net contributor and supports several other activities, I urge Monitor and the Secretary of State to determine that this model is tried for a period, during which it will, hopefully, be proven to operate well, clinically, operationally and financially.

The TSA’s final report also proposes, as my hon. Friend the Member for South Staffordshire (Gavin Williamson) mentioned, removing the consultant-led obstetrics and maternity service and replacing it with a midwife-led unit dealing with approximately 350 to 400 births a year. That is a step forward from the draft report, which proposed no childbirth at all at Stafford. However, my constituents and I do not believe that it is sufficient.

Currently, Stafford sees more than 2,000 births a year and that is likely to rise, with extensive house building, various new business parks being built and the doubling of the size of MOD Stafford, to mention but some developments, resulting, in the coming years—even with a MLU—probably in some 2,000-plus babies being born in other maternity units, mainly at Stoke and Wolverhampton. UHNS in Stoke already sees some 6,000 a year and its population is also growing. With at least 1,000 births, and probably more from Stafford, UHNS will probably approach 8,000, which is the number currently born at the largest unit in the country, in Liverpool.

The NHS rightly promotes choice for women about where to have their babies and the Prime Minister has spoken out against the trend towards ever larger units. Yet that is precisely what is being proposed here for women who are unable to use a MLU, due to the possibility of complications in childbirth. There would also be an impact on those who currently use UHNS and the Royal Wolverhampton, as their local units will become even busier—probably including Walsall as well—taking in women from a much wider area.

My proposal, and that of clinicians at Stafford, is to continue with the current service, fully networked with UHNS, while the impact of the current rise in both the population and birth rate is assessed. That would also enable the special care baby unit at Stafford to continue to support the regional intensive care network for babies, as it currently does. An added benefit would be that women will continue to have a local obstetric and gynaecology service, which I am sure the Minister will appreciate as he comes from that specialty. Again, that would relieve pressure on the larger University hospital of North Staffordshire and the Royal Wolverhampton hospital.

Thirdly, the TSAs propose to reduce the paediatric assessment unit to 14 hours a day from 24 hours a day and to do away with in-patient paediatric beds. There will be no paediatric rota, although A and E doctors will receive extra paediatric training and paediatric out-patient services will continue. The principal reason given by the TSAs is the national standards of the Royal College of Paediatrics and Child Health, which state that such services should be provided by a full consultant rota, which is usually between eight and 10 consultants, whereas at Stafford it is between five and six.

Let me be clear about the consequences: if the proposal is allowed to happen, the clear logic is that dozens of other paediatric units across the country that have similar numbers of consultants, or indeed fewer consultants, must be closed or have their activities drastically curtailed. Monitor cannot use the argument that that must happen at Stafford but not at other foundation or NHS trusts for which Monitor or the NHS Trust Development Authority are responsible, and neither can the Government.

The argument that all in-patient paediatric care should take place in the largest hospitals is not accepted by the general public. They fully understand why very sick children should go to specialist units; they do not understand why their local general hospital cannot receive sick children at night or for short stays, and neither do I. If experts at the Royal College insist on making that argument, however, let it be open, let it be consistent across the land and let it be agreed by all political parties. The proposal should not be implemented by stealth through a trust special administration that in no way arose because of the performance of the paediatrics department at Stafford.

I have one final point.

[Mr William Cash (Stone) (Con)]

I have been waiting for my hon. Friend to reach his conclusion so that I can say how much I support him in his endeavours on Stafford hospital, which affects my constituency of Stone. I had to fight so hard to get the public inquiry that has led to many of the changes, and I simply offer him many congratulations. I support pretty much everything that he says, and I believe that he has done an enormous service to his constituents through his work over the past few years.

[Jeremy Lefroy]

I am most grateful to my hon. Friend, and I return his compliments. He has likewise tremendously supported the trust and the work that has been done.

My final point is that the children and families who will be most affected by the paediatrics proposal are those on the lowest incomes. Such families are the least likely to have access to private transport to take their children nearly 20 miles to the nearest hospital at night. For them public transport in the daytime is often poor, and a taxi fare is beyond their means—certainly if they have to visit a sick child several times. I believe that those on low incomes should have fair access to health care, which both Monitor and the Secretary of State have a responsibility to ensure.

The paediatrics department at Stafford made an alternative proposal in its response to the consultation. That alternative was measured and understood the need to cut costs. The alternative proposal included a reduction in the number of in-patient paediatric beds, and consultants would have worked in a network across both of the new trust’s sites.

A pattern can be seen: critical care, maternity and paediatrics. There are sensible alternative proposals.

[Robert Flello (Stoke-on-Trent South) (Lab)]

I echo the sentiments of other hon. Members in thanking the hon. Gentleman for securing this debate. I also echo the sentiments of my colleague and near neighbour, the hon. Member for Stone (Mr Cash).

Before the hon. Member for Stafford (Jeremy Lefroy) concludes, I have two points. First, he is absolutely right that there are sound alternatives that need to be considered very quickly, and a proper process must be put in place. Secondly, the situation’s impact across the whole of north Staffordshire, and indeed the whole of Staffordshire, should not be underestimated. I hope he agrees that there is probably no right solution, but we must get as near as possible to a right solution.

[Jeremy Lefroy]

I entirely agree with the hon. Gentleman, and I appreciate his support and the support of colleagues from Stoke-on-Trent, Newcastle and across Staffordshire. We have worked together, which is a great achievement on a subject that can be political.

In conclusion, surely it makes sense to work through the proposed clinical networks while Stafford is joining the expanded UHNS—with things roughly as they are now—for a period of two or three years. I believe that those network solutions can work. If they prove as effective as the clinicians and I think they can be, we will have achieved the objective of securing services that are financially, clinically and operationally sustainable in Stafford, and indeed elsewhere, under the expanded UHNS. Such services would be welcomed by my constituents and would reduce the potential pressure on other hospitals, such as UHNS, the Royal Wolverhampton, Manor hospital in Walsall and hospitals in Burton.

16:35

[The Parliamentary Under-Secretary of State for Health (Dr Daniel Poulter)]

It is a pleasure to serve under your chairmanship, Mr Crausby. It is also a great pleasure, as always, to respond to my hon. Friend the Member for Stafford (Jeremy Lefroy) and, indeed, to all hon. and right hon. Members who have contributed to and supported this debate, which raises an important issue for patients and constituents, not just in my hon. Friend’s Stafford constituency, but across Staffordshire and the wider region.

It has been an incredibly difficult time for local patients and staff at the Mid Staffordshire NHS Foundation Trust. I entirely agree with my hon. Friend that the trust has come a very long way since the terrible events exposed by the inquiries and the Francis report last year. My hon. Friend has walked the journey every step of the way with his constituents and with the patients, and he should be congratulated and commended on his strong and superb advocacy of the needs of local patients, of all his constituents and of the families of those who were treated appallingly by the trust in the past. He should also be congratulated and commended on his strong advocacy for the improvements and the high-quality care that is now being delivered by parts of the trust today. I am sure we would all like to put on record our congratulations on his advocacy and on the work done by him and my hon. Friend the Member for Stone (Mr Cash), who for many years has also been a strong champion of local patients.

In responding to some of the points that have been raised today, it is important to talk a little about the trust’s background to provide some context. The trust has been operating at a deficit for some time, and certainly since 2009. In April 2013, the trust reported a deficit of £14.7 million. As my hon. Friend the Member for Stafford alluded to, that position is expected to get considerably worse. As a proportion of the trust’s turnover, the deficit forecast for 2014 is higher than that of almost any other trust in the country. For the past two financial years, the trust received approximately £20 million a year in support from the Department of Health. Without that funding to supplement its income, Mid Staffs would have been unable to pay its staff.

The contingency planning team sent into Mid Staffs in late 2012 concluded that the trust was delivering services at a cost substantially higher than most other trusts in the country. A key challenge faced by the trust is the recruitment and retention of staff and the high cost of temporary staff, which is no wonder, given that it must have been a very demoralising time for those working in the trust when there have been ongoing investigations into events that took place in the past. Additionally, some of the trust’s services are operating with consultant numbers significantly below Royal College guidelines. The 2012 contingency planning team reported that, despite improvements in clinical services, the trust is unlikely to be able to achieve the required cost savings without adversely affecting the quality of care provided to patients.

On the reasons why the special administration process has been set up, it is important to take the initial report into account and to recognise that we are where we are today because of that report. In cases such as this, where a trust is facing substantial financial challenges, it is crucial that action is taken quickly to secure services for patients and ensure that high-quality patient care can still be delivered. The special administration process for foundation trusts offers a time-limited and transparent framework for resolving the problems of a significantly challenged trust. Like the regime for NHS trusts, the special administration process is intended to be used only in the most serious circumstances.

As my hon. Friend the Member for Stafford is aware, Monitor made the decision to place Mid Staffs into special administration on the basis of the 2012 work. The CPT’s first report concluded that Mid Staffs is not financially or clinically sustainable in its current form and recommended the appointment of administrators as the best option for identifying the changes required in the years going forward to continue to secure high-quality patient care. Acknowledging the serious financial challenges facing the trust, the Secretary of State wrote to Monitor giving his support for the appointment of the trust special administrators.

It is worth touching briefly on the work of the trust special administrators at Mid Staffs. The TSAs have been in place since April last year, and they have had two tasks. First, they had to take over the day-to-day running of the trust. Secondly, they have had to work with the trust’s staff, commissioners, providers and other local stakeholders to develop a plan for services. The work undertaken by the TSAs builds on the earlier conclusions of the CPT and only strengthens the case for urgent change. If no action is taken, the TSAs estimate that Mid Staffs’ annual deficit will exceed £40 million in four years.

[Joan Walley]

I am conscious of the amount of time left to reply to the specific points made by the hon. Member for Stafford (Jeremy Lefroy) and in interventions, so will the Minister ensure that the issues flagged up will be responded to in detail in this debate?

[Dr Poulter]

I will of course respond to those that I can, but as the hon. Lady will be aware and as I will set out later, the TSAs’ report is currently with Monitor—I would expect it to be recommended to the Secretary of State by the end of this month—so it would be inappropriate for me to comment on it at this stage. I hope she understands that it would be wrong for me to make assumptions about a report that has not yet been submitted to the Secretary of State.

[Mr Cash]

Will the Minister give way briefly on that point?

[Dr Poulter]

I will, but I am conscious of the time.

[Mr Cash]

I have asked nearly 10 times for a report to be debated on the Floor of the House in Government time, but it has not happened yet. Nobody can understand why it has not happened yet. Can we please have an assurance that a debate will take place and within a matter of weeks?

[Dr Poulter]

My hon. Friend makes an important point. The Secretary of State has previously given that assurance, and I give my hon. Friend that assurance again today. It is obviously for the Leader of the House to organise Government time, but I will have conversations with and write to him following this debate to ask him to expedite the issue.

Returning to the report, the TSAs have also highlighted the serious clinical implications of failing to act. They predict that services operating below the recommended consultant level, such as A and E, would need to be reduced. Low-volume services would risk being closed altogether, forcing patients to travel further for treatment. Throughout the process, the TSAs have stressed the fragility of the trust and emphasised the huge importance of agreeing to and implementing the changes required as soon as possible.

I will now move on to the next steps, about which all hon. Members are concerned. I know that it is frustrating for hon. Members wanting answers that I cannot provide them all today. The report is currently with Monitor, so it is for Monitor to make recommendations to the Secretary of State on the basis of that report. That will be the appropriate time for the Secretary of State and Ministers to comment. That may be frustrating for hon. Members, but that is the way that things need to be. We cannot comment on the matter until Monitor has made its recommendations. If Monitor is satisfied with the TSAs’ final proposals, the Secretary of State will have a maximum of 30 working days to consider them against a set of requirements defined in legislation. These aim to secure services for patients that are of a sufficient level of safety and quality and that offer good value for money. The Secretary of State will consider each requirement carefully before coming to his final decision.

As I have said, it would be inappropriate for me to pass further comment today on the TSAs’ final report because its final version has not yet been submitted. It is clear from the debate, however, that there is widespread interest from around the region and from local Members who are concerned about the wider impacts of the report on the health care economy and on services for other local patients. I am confident, however, given the interest from Members and the support provided to the trust from other health care trusts and hospitals in the area, that we will come to the right conclusion. We all want to see a strong and viable health care service for patients in Stafford and the surrounding areas, and I am confident that that is what we will have delivered once the Secretary of State has considered the report.

Autumn Statement (Coventry)

Tuesday 7th January 2014 Westminster Hall

16:44

[Mr Jim Cunningham (Coventry South) (Lab)]

This is one of the few times I have had the honour of serving under your chairmanship, Mr Crausby. I will start by looking at the background to why I asked for this debate.

The Chancellor said he would eliminate the deficit by 2015, but we heard yesterday that he is going to have to make a further £25 billion of cuts. At the same time, the Government have presided over a cost of living crisis that is affecting ordinary families right across Coventry. Families are on average £1,600 a year worse off. The purchasing power of their wages is down by 5%. Energy prices have rocketed, adding £300 a year to the average family bill. Train fares have increased by up to 6% and bus fares have increased by 2.5%.

Food prices have also increased. The bedroom tax has penalised many in the social housing sector, while rents in the private sector are at an all time high. The benefit cap is also making life difficult for children in Coventry, in particular those in care—the Government are making things harder for around 287 children who have already had a tough start in life.

All that has culminated in large numbers of people relying on food banks across the city, with 67 families receiving food vouchers from the Coventry citizens advice bureau in November alone. Nationally, Citizens Advice expects to allocate over 100,000 vouchers this year.

Cuts could mean that pensioner benefits, such as the winter fuel allowance, could be cut back. As a result of spending cuts, other pensioner benefits are also at risk. Centro, the west midlands transport agency, has to cut £14 million from its budget over the next two years, which will mean reducing pensioner benefits to the statutory minimum.

Benefits for the disabled are also at risk in the transport budget, with Centro having to consult on removing up to a third of ring-and-ride services. Many of my constituents are also facing long delays in receiving their benefits and problems with Atos, which seems to be forcing ill and vulnerable people off benefits and back to work.

Since the Government came to power, the cost of child care has gone up by 30% while wages have been cut by 5%. Moving on to the situation regarding women, tax adjustments made last year raised £14 billion, of which women contributed £11 billion. Given the £11 billion in tax that was inflicted on women and the cost of child care, women are hardest hit by this Government. More women than ever before are on low wages. More women than ever before cannot get a job. More women than ever before are bearing the brunt of cost of living increases.

I turn to the settlement for Coventry. Core funding has been cut by £45 million since 2010. Coventry will face a further £19 million funding cut in 2014-15, which is a 10.6% cut. In 2015-16, the provisional settlement indicates that Coventry will face a 15.2% cut. Government figures regarding Coventry’s spending power do not make sense as they ignore inflation and include funding from council tax and new burdens placed on the council. The council tax base is being eroded; council tax has not increased as a result of the freeze grant, which is storing up problems for the future.

I turn to the impact on children’s services and education. There will be a significant impact on youth services and social care services to support education and the well-being of children, and schools’ basic need grant has been reduced to zero. That may be a mistake by the Government that needs clarifying urgently, because it puts in jeopardy plans to expand our local schools. If what I have said is correct, plans to expand primary schools to meet the demographic changes will have to be cancelled.

[Mr Bob Ainsworth (Coventry North East) (Lab)]

In our casework and surgeries, we are all seeing the effects of what my hon. Friend is outlining. If we couple that huge increase in need, which is apparent to Members of Parliament and is impacting on the services provided by the local authority, with the deep cuts that have taken place and will continue to take place, is there not a substantial magnifying effect of the gap between needs and the ability to provide for those needs?

[Mr Cunningham]

I totally agree with my right hon. Friend. I come back to something that Nicholas Ridley said many years ago—about 25 years ago. He foresaw a time when local councillors would meet once a year and give contracts out to the private sector. If we look at the strategy of this Government and of previous Conservative Governments, we see that they have slowly but surely taken powers away from local authorities. They do so in a number of ways, in particular by slowly but surely cutting budgets and forcing services out to the private sector, and yet the private sector does not always know best.

Also, we have a big issue regarding pensioners, in particular caring for them, that started under the previous Conservative Government and the matter has never been resolved, as far as I can remember. We are still debating changes that should have happened 25 years ago. Instead, 25 years ago local authorities were forced to hand over—or sell, if people want to put it that way—old people’s homes to the private sector. Five or seven years down the road, however, after the private sector had made a profit, the homes closed down. That, too, created a shortage of beds, but more importantly it forced the prices up for care for elderly people.

The whole strategy can be seen. I have always said that this Government think in generations: what the previous Conservative Government leave off, the next Conservative Government pick up. At the end of the day, in local government we will have only one or two little services, while the rest is in the private sector. Mr Ridley’s prophecy is becoming true.

I move on to the impact. Support for Age UK and other local charities will reduce by 22%; there are significant reductions to housing-related support; the housing-with-care scheme in Coventry at Jack Ball house and George Rowley house has ceased; a range of day centres and the in-house, short-term home support service have closed; and charities will no longer get the business rate support that they once had, even though that is meant to be something to do with the Prime Minister’s big society.

If we cut the public sector—the social sector, in particular—we can hand things over to the private sector, or the voluntary sector, but if we hand it over to the voluntary sector, the Government inflict cuts on the voluntary sector. It is an endless cycle of viciousness. If the Government want to get some credibility in local government—even Conservative councils are concerned about what the Government are doing—they need to get a grip and have a good look at what they are doing.

Finally, there is the impact on benefits, such as the local welfare provision grant, which will also end this month—£1.4 million for Coventry, providing emergency funding to those in direct need.

[Mark Pawsey (Rugby) (Con)]

Many of my constituents in places such as Binley Woods, Bulkington and Brinklow see Coventry as their major city, so what happens in Coventry is important to them. I notice, however, that the hon. Gentleman is not merely restricting himself to the autumn statement; he is having a rather broadsided blast at lots of things that the Government are doing. Does he agree, however, that the steps the Chancellor took in the autumn statement to reduce the burden of business rates on small businesses is beneficial to the prosperity of Coventry, as was the freezing of fuel duty, which means that fuel is now 20p less than it would have been had Labour been in power? Are those things not beneficial to his constituents and mine?

[Mr Cunningham]

I expected the hon. Gentleman to come in on that. That should have been done three and a half years ago, and not left until now. He mentioned that I have had a wide-ranging debate on a lot of subjects, but the Government have had three or four Budgets since coming to power, and each one has had an effect on the areas that I have outlined.

As I said, the Government have to look seriously at the burdens that they are inflicting on local government and, more importantly, on the public. Up to 1,000 more jobs in Coventry, or 1,800 over the past three or four years, will go as a result of the Government’s so-called rebalancing of the economy.

16:55

[Mr Geoffrey Robinson (Coventry North West) (Lab)]

I am pleased, Mr Crausby, to serve under your chairmanship. I congratulate my hon. Friend the Member for Coventry South (Mr Cunningham) on securing the debate, and I thank Mr Speaker for allowing this important local debate on the impact on Coventry of the autumn statement.

My hon. Friend covered well and succinctly the overall impact of the autumn statement on the country as a whole. We have at last had some small growth, which is very welcome, with a continued reasonable increase in employment, but there is no point in trying to kid ourselves that we are anywhere near where we said we would want to be. Furthermore, the Government should not kid themselves that they are anywhere near where they want to be on the deficit, because the deficit has not been tackled to anything like the extent that they said with such confidence that it would be when they took office in 2010. As a result, we are still facing the cuts, an increasing level of cuts, that we are discussing this afternoon.

Coventry, which is anything but one of the richest cities, has suffered a massive collapse. All Members who know the west midlands or live near there will recall that in the first period of the Thatcher Government up to 1983, we lost something in the order of 30% of our manufacturing capacity—certainly more than that in Coventry—and the city has never really recovered. Whether that was necessary is not for today’s debate, but the hangovers and the legacy are still with us, meaning that Coventry is quite simply not a rich city and cannot bear the level of cuts being imposed on it.

Since 2010-11, we have lost £45 million from the core support to Coventry, which is 20% over about three years. I have heard it said by various business men, in the House and in particular elsewhere, that 10% of any company’s budget can be cut and it will survive quite well. Frankly, I have done that myself—it can be done. I have never heard any sensible business man say, however, that that should be done for three or four years running and then tried for another two years at an even higher level of cut than 10%. I have certainly never attempted to do that myself. It simply cannot be done, but the figures show that in effect that is what the Government are trying to do.

The figures given by my hon. Friend bear repeating, I am sorry to say. In 2014-15 we face a 10.6% cut, and in 2015-16 a 15.2% cut. I am well aware that that is not the entire income of the company, if we want to regard the local authority as a company. Nevertheless, that is a substantial and continuing sustained cut to its core budget, from which it has to deliver the key services.

Put together, the cuts from 2010 through to 2016 in Coventry, I think, come out as something in the order of a 65% cut in the core budget—making allowance for inflation and all the other things that the Government do not necessarily allow for in their figures. I do not invite the Minister to bandy her figures against ours—we all know that local government finance is an extremely complicated and tiresome matter, which can be twisted in any way and used to prove almost any argument—because that would not be helpful.

Instead, I ask the Minister to address two questions asked by my hon. Friend, to see whether we can get clear answers. I think that she has passed a message back to the officials about one of them, which—to quote from a note received from the local council—is:

“Coventry’s capital allocation for Schools Basic Need has, without prior explanation, been reduced to zero for 2015/16”.

That is surely a mistake. The council cannot believe it. How will it maintain its school buildings? The worst thing a school can do is neglect its buildings. I remember that when we took office in 1997, schools had buckets underneath the holes in their roofs where the rain was coming in. Difficult though it was, the first thing we did was to release £1 billion from the tax on utilities’ excess profits to deal with that situation. It costs a lot more in the long run to deal with such situations in that way. What I read out must be a mistake; I am sure that the Minister will be able to reassure us on that point.

The other specific point put to us by the Coventry local authority, to which my hon. Friend the Member for Coventry South also referred, is that the local welfare provision grant will end from 2015-16. That is worth £1.4 million to Coventry. That is not a lot of money, but it is a line in the budget until 2015-16. There has been a line in our budget for local welfare for as long as I can remember.

My right hon. Friend the Member for Coventry North East (Mr Ainsworth) referred to what we are seeing in our surgeries. People turn up destitute: they have nowhere else to go or to look. A constituent came to my surgery with two young children and asked, “What am I going to do?” I said that we had to release some funds from what I think we call the hardship fund—that is the vernacular for it. That fund, too, has disappeared as a line in the budget. I would like the Minister to note that.

Now, if a line in a budget disappears, we can bet our bottom dollar that the money for that line in the budget has disappeared as well. We had a temporary holding reply from the Government—I do not think that is good enough—on this matter, which says that the money is still there, but is simply in the whole total rather than being identified separately. Nobody is going to buy that—if a line has disappeared, the money has disappeared. We are facing a 16% cut in the year. It is simply not possible to believe that that money is still there. The money comes from core funding, and has gone down by 16%, yet we are being asked to believe that the money is still there. It is not.

Those are the two fundamental errors in the settlement that we are discussing this afternoon, and we need a reply on each. There are many other problems in Coventry, of course, that are very sad. The hon. Member for Rugby (Mark Pawsey) spoke of the small amount of help on business rates: every help is welcome, especially from this Government, and so we welcome the measure. But then one thinks of what could be done for small businesses. We could get rid of national insurance for new small businesses, or get rid of NI for businesses taking on new employees. There are so many imaginative measures that could grasp the attention of small businesses—particularly in the west midlands, where we have not done so well and could do so much more. But none of that was in the local government settlement in the autumn, and we did not imagine that it would be.

I ask for three things. The level of cuts should be re-examined; they are simply unmanageable in their present form. They cannot happen. They are just too big. Will the Minister also please answer the two specific points I raised, if possible this afternoon? If not, will she answer them in writing as soon as she is able to?

17:03

[The Economic Secretary to the Treasury (Nicky Morgan)]

It is a pleasure to serve under your chairmanship this afternoon, Mr Crausby. I congratulate the hon. Member for Coventry South (Mr Cunningham) on securing this debate, and the hon. Member for Coventry North West (Mr Robinson) on his speech. I shall try to address the points hon. Members have raised. Although I appreciate that this is not always the style of the House, it would have been helpful if an indication of specific questions had been given in advance, so that I could have come with specific answers. If I do not answer the specific points raised by the Member for Coventry North West, I shall write to him with further information.

I should say that the subject for this afternoon’s debate was the effect on Coventry of the autumn statement. The points that have been raised are partial and do not fairly reflect the impact on the city of Coventry and the surrounding areas of Warwickshire of the Chancellor’s autumn statement. Hon. Members have focused on local authority funding as the main reason for the debate, but the whole point was that local government funding was excluded from the autumn statement and 2013 Budget reductions to help local authorities to freeze their council tax for 2014-15 and 2015-16. In fact, it is central Government Departments that are going to have to make further spending reductions as a result of the autumn statement, not local government.

The hon. Member for Coventry South started by talking about a cost of living crisis. The best way to deal with the fall in living standards is to deal with the economic crisis left to us by the previous Government. The hon. Gentleman is shaking his head, but he cannot possibly ignore the fact that the economy at the end of last year was 7% smaller than in 2008. That will have an impact on every household budget and every business in this country. My right hon. Friend the Chancellor has made enormous progress, as heralded in 2010, in putting our economy back on track. That should be welcomed by all hon. Members on both sides of the House.

[Mr Jim Cunningham]

I do not know whether the hon. Lady was in the House when the Chancellor was the shadow Chancellor and used to tell us that there was too much red tape. The actual economic crisis was worldwide and started in America with Lehman Brothers. She should not rewrite history.

[Nicky Morgan]

I thank the hon. Gentleman for that intervention. There was certainly an issue with the banks that had to be bailed out. I was not in the House when that happened; his colleague, the former Chancellor of the Exchequer, the right hon. Member for Edinburgh South West (Mr Darling), made the decision to do so—rightly, in my opinion—but the point is this: from the early 2000s, the then Chancellor, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), was running a deficit budget, which means that a huge gap now needs to be plugged. The previous Government consistently spent more than they raised, which means that the achievement of this Government in cutting the deficit by a third—indeed, the Office for Budget Responsibility is forecasting that the deficit will be halved by next year—is an enormous one and should be welcomed by all people in this country.

[Mr Robinson]

If I could take us all back to the situation in Coventry—we could argue indefinitely about local finance and about the Government’s economic policy—I wanted to raise one other point, and apologise to the Minister for not having mentioned it before. I will write to her about, and hope that she will take note of, another issue arising directly from the cuts in Coventry, concerning the Meriden Street Housing Co-operative, which is facing cuts of 60%—a figure she will recall. I promised to raise that matter today, and I look forward to her reply.

[Nicky Morgan]

I look forward to the hon. Gentleman’s letter. Either I shall answer or I shall ensure that a colleague in the Department for Communities and Local Government answers if the issue is more within its remit than within the Treasury’s. He is right: today’s debate is about Coventry. When I was handed the brief I was amazed and impressed—although I should not be, as I am an east midlands Member of Parliament and Coventry is in the west midlands—at the amount of investment that both the Government and the private sector are making in Coventry. I will come on to the city deal that was announced recently, but I am also impressed by the number of new jobs that have been created in Coventry. Only yesterday, I was reading an article in the Coventry Telegraph about a software company, Phocas, which is choosing to locate its global headquarters in Coventry, bringing jobs with it. That should be welcomed and I am sorry that the hon. Member for Coventry South chose not to make a single mention of job creation or of companies choosing to locate in the midlands, a part of the country that I would agree is a fantastic place for companies to locate.

I will leave aside statistics on the autumn statement, and will talk about ensuring fairness. The hon. Gentleman failed to mention the rise in the personal allowance that came into force last April, and the further rise that will come into force this year: from this April people will be able to earn up to £10,000 without paying any income tax. If he thinks that that is not making a difference to the pockets of hard-working families in Coventry, he is very much mistaken. I can tell him from my constituency casework that it is very much making a difference to the hard-working families in Loughborough and the east midlands.

The autumn statement delivered an average saving of £50 in household bills. It will maintain support for the poorest families and provide new home owners with incentives worth up to £1,000 to undertake energy efficiency measures. That package of support will also help more than 2.3 million households in the west midlands with the costs of their electricity bills. We are freezing fuel duty for the remainder of this Parliament, saving motorists in Coventry £11 every time they fill up their tanks.

17:09

Sitting suspended for Divisions in the House.

17:29

On resuming—

[Nicky Morgan]

I will be brief because we expect further Divisions, but I want to finish the points that I was making, particularly in relation to council funding. The hon. Member for Coventry North West talked about not trading figures, but as he referred to some figures in the debate, I will tell him that, for Coventry city council in 2013-14, the spending power per household —per dwelling—will be £2,323, which is £107 more than the England average of £2,216. In relation to welfare payments, I think he was referring to the discretionary housing payment, which residents can apply for in relation to the spare room subsidy. My figures show that in the first six months of the scheme, Coventry city council allocated only 20% of that budget to households that had asked for help, so I hope he asks the city council why some of the funding remains unspent.

[Mr Jim Cunningham]

We have the cabinet member responsible for the city council’s finance here in the room, so he will be making a note of that.

[Nicky Morgan]

I thank the hon. Gentleman very much indeed. Let me finish with some good news, which I did feel was lacking from his speech.

We have already talked, thanks to the intervention from my hon. Friend the Member for Rugby (Mark Pawsey), about the announcements in the Chancellor’s autumn statement on business rates, which will benefit 174,000 properties in the west midlands. Thirty-seven per cent. of properties will see their business rates either frozen or falling, which is extremely welcome news. We are making it cheaper for businesses in Coventry to employ young people by abolishing employer national insurance contributions for under-21-year-olds. That will help 123,000 people in the west midlands under the age of 21.

I mentioned the good news announced yesterday that the software firm Phocas is to move its global headquarters to Coventry. Its work force will increase by one quarter. In China, Geely, which had recently acquired the London Taxi Company, announced that it was to quadruple its work force, creating 500 jobs in Coventry. In the hon. Gentleman’s constituency, food manufacturer Mission Foods has announced 50 new jobs as part of an expansion of its factory in Coventry. I understand that the hon. Gentleman used to work for Rolls-Royce. He will know the extremely good news about the success of that company. I am pleased to say that the east midlands, through the facility in Derby, shares that success.

On 12 December, my right hon. Friend the Prime Minister announced the agreement of a bespoke city deal for Coventry and Warwickshire. I know that that is the result of an enormous amount of hard work by Warwickshire Members of Parliament, including my hon. Friends the Members for Nuneaton (Mr Jones) and for Rugby. The city deal recognises the fact that the west midlands and Coventry and Warwickshire are a key engine of growth for the United Kingdom. Part of that success is the advanced manufacturing and engineering sector, including the automotive sector, but further growth in that sector is being impeded by a series of barriers, including insufficient business support advice, access to finance and the non-availability of individuals with appropriate skills. The city deal rightly seeks to tackle those key barriers.

The Coventry and Warwickshire local enterprise partnership predicts that the deal will include the delivery of more than 15,000 jobs in the wider economy, of which 8,800 will be in the advanced manufacturing and engineering sector. A range of innovative business support programmes will support further growth in the advanced manufacturing and engineering sector and a new flagship clearing house centre, where key business support agencies are co-located in one building.

[Mr Jim Cunningham]

Over the years, the local MPs have pushed for a lot of the companies that she has mentioned—for example, Jaguar Land Rover—in the midlands and particularly in Coventry. A city deal would push for that as much as anyone else, so we are not totally negative. We have played a part in some of the things the Minister has outlined.

[Nicky Morgan]

I am very glad to end the debate in a spirit of positivity. I thank the hon. Gentleman. He is quite right. All hon. Members, from both sides of the House, come together to support their local areas. That is why I felt that his speech missed the importance of the west midlands and the successes that are being achieved there. I am sure that neither he nor any MP would want to talk down their constituency or city. I am pleased to see that, as we approach the end of the debate, we are getting there.

Before I finish, let me talk about education funding, which was referred to by the hon. Member for Coventry North West. I have just been handed some figures, which show that Coventry’s capital allocation for 2014 to 2017 is £6.25 million. That is funding for new school places. In relation to the pupil premium, the extra in 2013-14 is £13 million and in 2014-15 it is £17 million. I will write with more detail to both hon. Gentlemen who referred to the figures, but I wanted to get that on the record.

I thank the hon. Member for Coventry South for organising the debate, for bringing this matter to the attention of the House and for enabling me to highlight some of the positive impacts that the autumn statement has had on Coventry, the west midlands and the United Kingdom.

Question put and agreed to.

17:38

Sitting adjourned.

Written Statements

Tuesday 7th January 2014 Written Statements

Tuesday 7 January 2014

Tax Information Exchange Agreement (Anguilla)

Tuesday 7th January 2014 Written Statements

[The Exchequer Secretary to the Treasury (Mr David Gauke)]

An arrangement comprising an exchange of letters amending the 2009 tax information exchange agreement (TIEA) with Anguilla was signed in duplicate on 13 and 20 December 2013 to permit automatic and spontaneous exchange of information. At the same time an agreement was also signed to improve international tax compliance which sets out the precise details of the information which will be automatically exchanged.

The text of the agreement to improve international tax compliance has been deposited in the Libraries of both Houses and will be made available on HM Revenue and Customs’ website. The text amending the tax information exchange agreement will be scheduled to a draft Order in Council and laid before the House of Commons in due course.

Veterinary Products Committee (Triennial Review)

Tuesday 7th January 2014 Written Statements

[The Secretary of State for Environment, Food and Rural Affairs (Mr Owen Paterson)]

Today I am publishing the report of the triennial review of the Veterinary Products Committee (VPC), which was launched by DEFRA’s then Minister of State on 26 March 2013. Triennial reviews of non-departmental public bodies (NDPB) are part of the Government’s commitment to ensuring accountability in public life.

The VPC is an advisory NDPB which reports to the veterinary medicines directorate (VMD), an Executive agency of DEFRA. The VPC exists to provide independent expert technical advice to Ministers in relation to aspects of veterinary medicinal products, in order that VMD’s remit can be fully achieved. The Committee requires very broad and also specialised expertise in order to be knowledgeable across the broad scope of issues the Committee may be asked to consider.

The review has found that the functions of the VPC remain necessary and should continue to be carried out independently of Government by an advisory non-departmental public body.

The report of this review will be published online, and copies will be placed in the Libraries of both Houses.

Greek Presidency

Tuesday 7th January 2014 Written Statements

[The Minister for Europe (Mr David Lidington)]

I am keen to keep Members fully informed of developments in the European Union, their implications for the United Kingdom and our priorities. I would, therefore, like to draw Members’ attention to a paper on the priorities of the Greek presidency of the Council of the European Union, which has been placed in the Library of the House. I have also deposited a copy of the calendar of ministerial meetings for the duration of their presidency.

International Tribunals (Sierra Leone) Act 2007

Tuesday 7th January 2014 Written Statements

[The Secretary of State for Foreign and Commonwealth Affairs (Mr William Hague)]

The Government have today laid before Parliament a memorandum to the Foreign Affairs Committee on the post-legislative scrutiny of the International Tribunals (Sierra Leone) Act 2007.

The Foreign and Commonwealth Office carried out the post-legislative scrutiny, which includes a preliminary assessment of how the International Tribunals (Sierra Leone) Act 2007 has worked in practice, and has set out the findings in a Command Paper (Cm 8775) to the Committee.

Copies of the Command Paper have been placed in the Libraries of both Houses and also in the Vote Office and Printed Paper Office.

Maternity Care

Tuesday 7th January 2014 Written Statements

[The Parliamentary Under-Secretary of State for Health (Dr Daniel Poulter)]

On 20 December 2013 I published information about the availability of £10 million capital funding in 2013-14 to improve maternity care settings across England so both mothers and fathers, and the staff who work in the units, can benefit from a more pleasant and appropriate environment. “Improving Maternity Care Settings: Capital fund programme 2013-14: Information and criteria” 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.

Improvements to over 100 maternity units across the country funded by the £25 million improving birthing environments capital fund in 2012-13 are making a big difference to families, with more choice and better environments where women can give birth.

This year, the funding criteria prioritise:

services where the birth rate has increased quickly or where the environment needs to adapt to local demographic population changes, or

initiatives that can make a difference to women who have mental health or substance misuse problems.

Information on how to apply for this funding was made available to maternity units in December 2013 and can be found at:

https://www.gov.uk/government/publications/improving-maternity-care-settings-applying-for-funds

The closing date for applications is 5 pm on Friday 10 January 2014.

It is important that the views and experiences of women and their families locally inform the development and design of birthing environments. The successful projects will have demonstrated involvement and support from service users and the ability to deliver the project in the current financial year.

Contingencies Fund Advance (Single Tier Pension)

Tuesday 7th January 2014 Written Statements

[The Minister of State, Department for Work and Pensions (Steve Webb)]

The Department for Work and Pensions has obtained approval for an advance from the Contingencies Fund of £984,000 for the development of IT for the single tier pension before Royal Assent. This advance is necessitated by the lead in time for delivery in April 2016 which requires IT development work to begin prior to Royal Assent of the Pensions Bill.

Parliamentary approval for additional resource of £984,000 for this new service will be sought in the main estimates for the Department for Work and Pensions for 2014-15. Pending that approval, urgent expenditure estimated at £984,000 will be met by repayable cash advances from the Contingencies Fund. The repayment is expected to be made in the financial year 2014-15.

This advance will allow the single tier programme to continue to work to meet the revised timetable of April 2016 to implement the single tier new service.