Universities: Financial Sustainability

Gareth Thomas Excerpts

Monday 11th February 2019 Commons Chamber

[Chris Skidmore]

I entirely agree. I am proud to be a member of the Government who reduced the student number cap between 2012 and 2015, and eventually abolished it in 2016, allowing a record number of students to access higher education. We know that, going into the 2020s, we will need a knowledge-based economy, so it is right that we allow more people the opportunity to succeed in their ambition to achieve a degree. Abolishing student finance by looking at fee levels would simply give away a fee freeze to the children of millionaires while capping the number of students who could attend university.

[Gareth Thomas (Harrow West) (Lab/Co-op)]

The Minister has said that the Government will not bail out universities in financial difficulties, yet virtually his first act as Universities Minister was to take through Parliament a 20% increase in tuition fees, albeit just for accelerated degrees at this stage. Can he reassure the House that he has no plans to allow other degrees to see a 20% hike in tuition fees as a result of the financial problems currently facing universities?

[Chris Skidmore]

I welcome the measures we are putting in place to increase course innovation and flexibility within the HE sector. I passionately believe that that is the future and where we need to go. People may need to train and retrain across the course of their lives, so we will need course provision that allows people to access the HE market at every stage of their lives, right the way through their 20s and 30s. Two-year degrees are not a silver bullet—in fact, they were put forward in a Labour party amendment to the Higher Education and Research Act—but we have tried to ensure that they open up the market and we have encouraged more HE providers to take up two-year degrees. At the moment, they have been capped by the financial ability or the lack of financial ability to do so. Ultimately, it is £22,000 for a degree as opposed to £27,000. It is not necessarily an increase in fees; it provides people with an opportunity to study at a time of their choosing.

Draft Higher Education (Fee Limits for Accelerated Courses) (England) Regulations 2018

Gareth Thomas Excerpts

Monday 14th January 2019 General Committees

[The Minister for Universities, Science, Research and Innovation (Chris Skidmore)]

I beg to move,

That the Committee has considered the draft Higher Education (Fee Limits for Accelerated Courses) (England) Regulations 2018.

It is a pleasure to serve under your chairmanship, Mr Robertson.

The draft regulations were laid before Parliament on 29 November 2018. They should be read alongside the wider fee limits regulations which set tuition fee limits to apply to all standard or non-accelerated degree courses from August 2019 and were approved by Parliament last summer.

The Higher Education and Research Act 2017 provided that regulations may be made to set different fee limits specifically for accelerated courses. The draft regulations set out various fee limits in respect of accelerated degree courses starting from August 2019. The limits cover both full-time study years and permutations matching those of standard degrees, for example where a student takes an accelerated course that incorporates a sandwich year. All accelerated degree annual fee caps at public providers of degrees are set as a multiple of 1.2 times the annual standard degree equivalents.

An accelerated degree is the equivalent of a standard degree in every sense but one: it is completed one year sooner than the same degree studied at the widely established pace of three years of 30 weeks’ study and 22 weeks’ vacation each year. By studying for more weeks each year—about 45 weeks for the year—and taking shorter breaks between terms, accelerated students can complete exactly the same teaching content of, for example, that typical three-year degree, but graduate in two years.

Accelerated degrees are not new. About 20 public universities and 11 private providers already offer accelerated degree courses, although the range of subjects and the number of providers of accelerated degrees have remained small in the context of all undergraduate enrolments. We estimate that fewer than 1,000 students are enrolled on accelerated degree courses at public universities, with about a further 3,000 studying with private university providers.

Good examples of providers successfully offering accelerated degree courses include the University of Buckingham, which has delivered two-year degree courses for about 40 years. Its students regularly give excellent feedback on the quality of teaching and on their study experiences. Staffordshire University has offered accelerated degree courses for more than a decade, with a high proportion of mature and commuter students among its cohorts.

I have only been Universities Minister for about a month, but I have visited two institutions that celebrate their accelerated degree course provision. It was fascinating to discuss with students at St Mary’s University in Twickenham the theatre-production technical course that they were taking. It used to be offered as a three-year degree, but it has now become a two-year degree, because many students were simply finding work after two years and not completing their three-year course. As a result, St Mary’s decided to institute a two-year degree programme to help students not only to enter work but to achieve their qualification.

This morning, I visited Middlesex University London, where I had another fantastic discussion with students. They were on the business administration two-year accelerated degree course. All the students mentioned that, while such courses were not for everyone, they meant something not only to those people who wanted to get on in life, ensuring that that they would enter the world of work earlier, but perhaps to students who started a foundation course and wanted to go on to further study with a shorter time limit.

I can see the benefits of such courses being offered at universities around the country. The problem is that the existing limits on the annual fees that public universities can charge have made it hard for most public providers to offer accelerated degrees. The tuition fee cap applies to all public universities on an annual rather than a per-course basis. That reflects the length of the total period of study, but not the substantive volume or cost of teaching delivered in each study year.

Condensing three years’ teaching into two, by reducing the number of weeks of vacation downtime throughout the course, has generally not been seen as financially justifiable under the existing arrangements. Public providers of accelerated degrees, however, attest to the wider benefits that make accelerated provision worth while, which include highly motivated undergraduates; a more intense and engaged teaching experience; and the incentive to shake up established teaching and working practices and to innovate in tuition delivery.

For students to complete their degree one year sooner than a standard degree means that they accelerate their graduation and have one year less of living costs, crucially, alongside lower total tuition fees.

[Gareth Thomas (Harrow West) (Lab/Co-op)]

The Minister said that St Mary’s University in Twickenham already offered accelerated degrees, but he then said that the financial circumstances of other universities meant that they were not willing to provide accelerated degrees. Why does he think financially St Mary’s can offer two-year accelerated degrees, but other universities cannot?

[Chris Skidmore]

That is a good point. As I have said, Buckingham has had accelerated degrees for 40 years, and I have a list of publicly funded HEs that I could share with the Committee, but uptake has been limited due to the restriction on the ability financially to provide those courses—the difference between an £18,000-a-year degree course and a £27,000-a-year one. St Mary’s in Twickenham has a course that runs for two years, but for a very limited number of students; it is not able to expand that course. Having talked to providers who currently run two-year courses, we have learned that they, too, have a limited ability to extend the programme to meet current and possible future demand. That is why this provision is in the regulations that have been introduced on the Floor the House, to make sure that we can benefit not only institutions that are yet to take up accelerated degrees, but institutions that may want to create new courses with accelerated programmes. I stress again that accelerated programmes are not a silver bullet; we are not assuming that every student will take up a two-year degree instead of a three-year or four-year course. However, they provide flexibility and innovation, and crucially allow for the greater student choice that I hope the regulations will provide.

As a result of students being able to take an accelerated degree over two years, they will start full-time work one year sooner than their peers; they will potentially benefit from an average annual salary of £19,000 straight away. Customer surveys conducted by the Student Loans Company in summer 2018 show that both accelerated and standard degree students regard the year of time saved as the most valuable benefit of accelerated degree study. As I have said, accelerated degrees are not for everyone, but for some—mature students, for example, or young people with a keen appetite for learning who want to study more and take fewer breaks to secure a faster entry or return to the workforce—they are exactly the right choice, or the only possible choice. Some employers also like accelerated degrees, as they offer an early opportunity to recruit demonstrably ambitious, focused and motivated graduates.

Following a commitment that the Department for Education gave in late 2017 during the passage of the 2017 Act, we consulted on a proposed 20% uplift in the annual tuition fee for accelerated degrees. That uplift aimed to ease the financial barrier inhibiting the wider provision of accelerated degree courses while still offering students a saving of roughly £5,550 on their total tuition fees, compared with a three-year degree course. On top of that, we must add the savings on living costs—roughly £7,500 a year—and also take into account a possible extra year of earned income as a result of starting work early. That is effectively going to benefit those who embark on a two-year accelerated degree course; it will be a saving for students.

Last year, we published our response to that consultation. It set out our intention to proceed with the regulations, to enable a specific new annual tuition fee for accelerated degrees at 1.2 times the standard equivalent. We consider that this fee will better reflect the actual weight of teaching and support delivered in the accelerated degree year; with it, more universities will be able to expand their range of courses and offer students greater choice, with more flexible modes of study. Wider provision will in turn offer many more students the choice of applying for an accelerated course in their preferred subject at their preferred university, and even with the increased annual fee cap, accelerated degrees offer big overall savings for students. As I have said, the total cost of tuition will be 20% lower, alongside no final year living costs and the unique opportunity to graduate and begin full-time work a year earlier.

The UK is widely envied for the quality and vigour of its higher education system. Our universities regularly rank among the best in the world. Their doors are open to anyone with the potential to succeed, including more disadvantaged students than ever before.

--- Later in debate ---

[Chris Skidmore]

When it comes to access and participation, one of the Government’s key commitments is to ensure that, regardless of their background, people are able to go to university, if they wish to take that route. The two-year accelerated degree course provides people with the opportunity to see a destination, to not have to cover an extra year of living costs, and to then go into work.

One of the two students I spoke to at Middlesex today was a girl who had started out on a higher apprenticeship at the City of London Corporation, without the qualifications to get her into a position to take a degree. She realised she had hit a wall, and that if she wanted to go further in her profession she would need to reach degree level, but, effectively, she had already begun work. What I am keen to expound to the Committee is that the two-year degree is not a silver-bullet solution; it is part of a menu of options that enables us to break down the artificial wall between further and higher education for students who may not have had the best start in life, those who are not from the most advantaged backgrounds and who may not have achieved the qualifications they have the potential to achieve.

I am keen to explore how students may take a foundation year and then an accelerated degree course on top, accessing higher education in a way in which they may not initially have been able to. We need to take this under the whole umbrella of future qualifications that will allow for the increased participation of disadvantaged students.

[Gareth Thomas]

Further to the intervention by my hon. Friend the Member for Oldham East and Saddleworth, a number of years after the Government decided to put tuition fees up to £9,000, mature students were one of the groups in which significant numbers had been deterred from going to university. What discussions have the Minister and his Department had to check that the measure would not be a further discouragement to mature students?

[Chris Skidmore]

As the new Universities Minister, I am keen to be seen not just as a Minister for students. I am Minister for everyone in the HE sphere, and that covers mature students as well. It is crucial that we look at the decline in mature learners.

On mature learner provision, I hope that the expansion of the accelerated degree course will allow someone who has entered the world of work, or has a mortgage or other financial commitments, and who looks at a three or four-year degree course and thinks, “Maybe that’s just a bit too much of a time commitment”, to find that a degree of about two years, at an accelerated learning pace, will suit them. It is crucial that we look at things and outcomes through the eyes of the student, whether an 18-year-old or a mature learner. It is crucial that they have this option. We are not forcing two-year degrees on anyone; we are allowing an expansion to take place so that people can look at institutions and choose a course that will be tailored to their individual learning needs.

[Gareth Thomas]

If the Minister wants to be the Minister for students, presumably he has talked to student representative bodies. What is their assessment of the proposed 20% fees hike?

[Chris Skidmore]

I have been the Minister for a month, and I have been to about eight HE institutions so far. I have an ambition to reach them all. Whether I will be able to do that as a new year’s resolution I am not quite sure, but I am determined to get out and listen to the student voice and to concerns.

When I speak to students, I also want to ensure that they are getting the student experience and having the opportunity to build friendships as part of an HE community. What was really interesting in going to Middlesex was talking to some of the students who are doing the business administration course. They felt they had twice as much access to the student community because they got to meet different groups, including the peer group in the year above them, as a result of their accelerated course. They felt it was an advantage to be able to talk to both sets of peer groups in the course structure.

An evaluation was carried out before I became Universities Minister. It showed 92% support among students who take accelerated degree courses, but it raised the issue of public understanding of accelerated degrees—55% of students did not know they existed. There is a question about how we ensure that universities that want to investigate offering accelerated degree courses have the opportunity to do so, and the draft regulations will allow that expansion to take place.

[Jess Phillips (Birmingham, Yardley) (Lab)]

rose—

[Gareth Thomas]

rose—

[Chris Skidmore]

I am coming to the end of my speech, but I will take one more intervention. I have been quite generous to the hon. Gentleman, and I am sure he will be able to come in again later, so I give way to the hon. Lady.

--- Later in debate ---

[Gordon Marsden (Blackpool South) (Lab)]

It is probably almost too late, but may I wish you, Mr Robertson, and the Committee—not least the Minister—a happy new year?

I am glad that we finally have the opportunity to debate the proposed changes, because over the years—I do not think it is down to any particular Government—the gap between something being passed and in some cases being implemented, and its reaching the backstop of parliamentary approval seems to have become longer and longer. I am glad we now have the opportunity to continue the significant debate we had on the Higher Education and Research Bill.

I welcome the Minister’s enthusiasm for the broader issues that he believes accelerated degrees may open up. We can all agree that there is a need urgently to address the lack of flexibility in our higher education system. With the emerging challenges of Brexit and automation, the world of work changing, and higher education, further education and online learning slowly merging, our education system urgently needs to adapt. I have said frequently that that will involve people, young and old, doing not only the traditional three-year degree model, but short, sharp training courses to help retrain and upskill, and being able to drop in and out of education to suit their life circumstances. Incidentally, these are all things that our party’s national education service and lifelong learning commission will focus on. We must develop a higher education system that will produce a high-skilled workforce to meet those growing demands and fit our local economies.

The essential question—where, I am afraid, I begin to part company with the Minister—is whether today’s proposals, which greatly expand and increase accelerated degrees on an annual basis, will help or hinder that process. I am grateful to my hon. Friends who have posed questions, as the Minister has already heard some concerns and about the need to nail down not just aspirations but facts about how this is will be taken forward and what its implications will be.

During all the stages of the Higher Education and Research Bill, in both Houses, we talked about the importance of making the current system fit for the 21st century. Accelerated degrees might play a useful part in a more flexible HE system for all ages. However—this is crucial to our misgivings about the regulations, not just about what they say but about when this will happen—as my colleague Lord Stevenson said in the debate in the Lords, it should only be as part of a wider overhaul in the sector. That overhaul is nowhere near happening yet.

[Gareth Thomas]

Would it be fair to say that today we are being asked to vote for a 20% hike in tuition fees, albeit for accelerated degrees, without any commensurate guarantees of an improvement or at least maintenance of quality of tuition and other provision from universities?

[Gordon Marsden]

My hon. Friend hits the nail on the head and echoes the other misgivings expressed by colleagues.

As the Minister pointed out, accelerated degrees—fitting three years into two—are not new, and have always been with us. He has quoted some examples. They have often been crafted closely to specific needs of individual HE institutions. I hear what he has to say about the various universities; they have clearly found that that is a good model, which they have wanted to take forward. The devil is always in the detail; it is the details and the firm focus on increasing the maximum fee cap to which we are vehemently opposed, because we do not believe that, at this stage, they will bring the wider benefits to universities and most importantly to would-be students that the Minister thinks they will.

It is not just us saying that; a large number of dissenting voices the demand for accelerated degrees in the form that the Government propose. It is all well and laudable for the Minister to talk about how we might see the effects that we would all like to, but at the moment that has not been the case. That is reflected in the comments of the various university groups. The chief executive of the Russell Group, for example, Dr Tim Bradshaw, said:

“Greater choice for students is always good but I would caution ministers against ‘overpromising’…The Government’s own projection for the likely take-up of these degrees is modest and we actually hear many students calling for four-year degrees, for example, to spend a year on a work placement or studying abroad.”

The group MillionPlus said something similar:

“Demand for accelerated degrees has been low for many years and is unlikely to increase significantly on account of these fee changes.”

Who therefore will the accelerated degrees benefit? The trade union that represents many of the staff in universities states that

“there is little evidence of solid demand for this type of course”,

and that—I am afraid to say that I agree with this, in particular because it is the thrust of what the Minister’s predecessor but one, the hon. Member for Orpington (Joseph Johnson), laid out clearly in the White Paper and the Bill that followed—

“this decision is being driven by the government’s marketisation agenda and the need to row back on the spiralling costs of university education, particularly in light of the withdrawal of maintenance grants.”

We await the Augar review, and lots of promises are floating around, but as of this moment nothing concrete is in place.

I have emphasised time and again that the Government’s need to facilitate changes for a better work-life balance and the progression needed to benefit our economy must include looking at credit transfers, flexible courses and urgent action to address the catastrophic fall in part-time learning since 2010. Unfortunately—which this is, because I wish we could have a consensus on it—the Government’s pitch for the accelerated degrees we are debating smacks simply of a PR initiative that has been fashioned for new HE entrants, often with narrowly focused HE objectives, which my hon. Friend the Member for City of Durham (Dr Blackman-Woods) and others were worried about during debate on the Bill.

The result of the Government’s 2012 HE funding changes, including the tripling of tuition fees—we cannot get away from this—is that the average debt for students in England is £46,000. The Institute for Fiscal Studies found that the removal of maintenance grants from students from low-income families meant they were graduating with the highest debt levels, which are in excess of £57,000. We therefore have clear evidence that the nudge factor, which the Government—or their predecessor—have been very keen to push, is actually operating to nudge people against participating in higher education. Yet the Government have chosen this time to introduce this statutory instrument, before the Augar report has even appeared.

During the passage of the Bill, we challenged them consistently about the way in which they wanted to use the teaching excellence framework to increase or remove the fee cap. The draft SI increases the higher amount to start a degree to £11,100 on an annual basis. We have to address the impact that that will have on less well-off students’, or would-be students’, ability or willingness to take places on those courses. Can we realistically expect all the people who might want to do such a course to ratchet up to the figure mentioned?

As the University and College Union has said:

“This is not about increasing real choice for students,”

but it could allow

“for-profit companies to access more public cash through the student loans system…Instead of gimmicks which risk undermining the international reputation of our higher education sector, the Government should focus on fixing the underlying problems with our current student finance system, which piles debts on students.”

The idea that accelerated fees only mean a cut in student debt is, I am afraid, knowingly or unknowingly, hiding another motive. Wedded as they still appear to be—I have heard no repudiation of the broad themes that the hon. Member for Orpington spelled out when the Bill was introduced—to an outdated market-driven view, the Government have pinned their hopes on a rapid expansion of new providers that charge the higher fees on a two-year basis. All that is all in the various secondary papers and instruments that were produced during the Bill. So far, we have seen no evidence of that expansion.

Do all the leaks that suggest that Augar is now under pressure from the Government to lower tuition fees per year make nonsense of the rhetoric and the introduction of this statutory instrument? Incidentally, will the Minister give us the latest estimate for when the Augar review is to report?

The draft explanatory memorandum lists the theoretical benefits for providers and students, but it also refers to the numerous concerns that have been expressed across the sector. It says:

“Students on existing accelerated degrees report a very high level of satisfaction, and highlight the opportunity to graduate and start or resume work a year sooner”—

the Minister talked about that—

“together with costs savings and academic benefits.”

How many and what sort of students, and with what financial background, were interviewed to reach that conclusion? It ignores the fact that those degrees would be available only to students able to study all year round. That has major implications for access and participation, which are already faltering for part-timers under this Government.

The total number of English undergraduate entrants of all ages from low-participation areas fell by 17% between 2011-12 and 2016-17. There were 12,600 fewer English undergraduate students from low-participation areas starting university courses each year than there were in 2011-12. We must ask ourselves what these accelerated degrees, on the basis on which they have been put forward in the statutory instrument, do for them, and the answer is relatively little. There has been a 54% fall in entrants from low-participation areas studying part time, who will not be able to access funding for accelerated degrees. How does the Minister plan to address that? Can he explain in any shape or form how accelerated degree will address the devastating fall in part-time HE study?

Critics have also pointed out the danger of squeezing three years into two for personal development opportunities or participation in extracurricular activities and volunteering. Does the Minister not value the important personal development that our universities provide outside the classroom, which could be denied by this acceleration? UCU also pointed out:

“Accelerated degrees...result in reduced opportunities for students to engage in part-time employment over the course of their studies. This limitation is particularly acute for students from disadvantaged backgrounds who are more likely to need to seek employment…to fund themselves through university.”

We would like a situation with fees in which students did not have to work part time as much as they do, but given that that is the case, perhaps the Minister will admit that the giveaway in the accelerated degree proposals is that they are not focused on those sorts of people, but in many cases on richer or employer-funded applicants. UCU also said:

“The lack of holiday time factored into these degrees also means that they could prove difficult to student parents; those with caring responsibilities; and students whose disabilities mean that they might benefit from low-intensity study. For this reason, there is a risk that take-up of these courses could have strong socio-economic stratification and that students from less advantaged backgrounds might have lower attainment on these courses.”

Incidentally, there is a reference in the draft explanatory memorandum to the impact of the statutory instrument on the Erasmus+ programme. Will the Minister tell us the situation regarding ensuring our continued participation in the scheme?

--- Later in debate ---

[Chris Skidmore]

I thank the Committee for taking time to consider the regulations.

I will turn to points made by the shadow Minister in what was a rather wide-ranging speech. Turning to some of the broader issues around the Augar review, I am sure he will understand that it is an independently led review that will report in due course in 2019. I, as much as anyone else in this House, look forward to studying its conclusions carefully.

We agree on the importance of creating greater flexibility in post-18 provision. Putting party political hats aside, we all understand that we need to work harder on ensuring that those who are able to go to university have the opportunity to do so. The Government have put access and participation for the most disadvantaged communities right at the heart of our vision, and we have seen an increase of 52% in the most disadvantaged students going to university since 2009. We all know that more must be done to ensure that we open up the vocational and technical route for those students who deserve better, and for our economy and our industrial strategy, ensuring that we can increase productivity and develop a dynamic and modern economy.

It is in light of that that we have introduced the regulations. This is the beginning of what I hope will be a far greater flexible provision in post-18 education—[Interruption.] Would the hon. Member for Harrow West like to intervene?

[Gareth Thomas]

No—I was heckling.

[Chris Skidmore]

I will come to the hon. Gentleman’s heckle in a moment. I wanted to start on a point of agreement, which is that Members on both sides of the Committee share the ambition that we can and must do more for post-18 education. As for the regulations—the point on which the hon. Gentleman heckled—increasing the cost of fees by 20% must be seen in the round: this is a saving of £5,500 for a two-year degree as opposed to fees for a three-year degree. It is a saving of one year, or £7,500, on living costs and, crucially, potentially a gain of up to £19,000 of annual earnings if that student is able to access the workplace early. I stress that this is not a silver bullet. It is not the only part of a strategy that must deliver for students in higher education; it is opening up a menu of options that we hope to develop.

The shadow Minister talked about access for disadvantaged students. The Government want to ensure that the most disadvantaged students are able to access this provision. Our consultation on accelerated degree proposals asked higher education providers specifically about access arrangements, and 74% responded that they wanted accelerated degrees to be treated the same as any other higher course fees for the purpose of access. We have seen a revolution in the amount of funds spent on access and participation over the past four or five years, from £440 million to £860 million. We must look at how we can invest to ensure that we open those routes for the most disadvantaged students.

Draft Textile Products (Amendment) (EU Exit) Regulations 2018

Gareth Thomas Excerpts

Monday 19th November 2018 General Committees

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)]

I beg to move,

That the Committee has considered the draft Textile Products (Amendment) (EU Exit) Regulations 2018.

It is a pleasure to serve under your chairmanship, Mr Hosie. The draft regulations, which were laid before the House on 10 October, will be made under the powers conferred by the European Union (Withdrawal) Act 2018. They form part of the wider programme of work to adjust our existing legislative framework in readiness for leaving the European Union. While we remain optimistic of reaching a Brexit deal that is of mutual benefit to the UK and the EU, it is the duty of a responsible Government to prepare for all scenarios. That is why we are bringing the draft regulations, and other such instruments, to the House. The regulations are part of contingency planning to ensure that our consumer legislation continues to function effectively after exit day.

Maintaining a comprehensive framework of consumer rights is crucial for prosperity. Household expenditure accounts for about 60% of the UK economy. In 2016, retail sales stood at £800 million for textile stores and £40 billion for clothing stores. Confident consumers help to raise productivity and deliver an economy that works for everyone.

The draft instrument amends EU regulation 1007/2011 on textile fibre names and related labelling and marking. The EU regulation prescribes labelling or marking that must be applied to textile products to inform consumers of the product’s textile fibre composition and the presence of non-textile parts of animal origin, such as fur.

[Gareth Thomas (Harrow West) (Lab/Co-op)]

Confident consumers need confidence that regulations are enforced. Will the Minister explain how the regulations are enforced at the moment, and how she envisages the draft regulations being enforced if they are needed?

[Kelly Tolhurst]

The EU regulations are currently enforced by the individual member states of the European Union, of which we remain one. Our enforcement is currently carried out via trading standards at regional and local level, in conjunction with our National Trading Standards force. That is the system that will be in place if we approve the instrument.

The EU regulation also empowers the European Commission to approve new textile fibre names and to modify technical provisions, such as testing methods. The draft regulations also modify the Textile Products (Labelling and Fibre Composition) Regulations 2012, which set out enforcement provision for the EU regulations in the UK.

The European Union (Withdrawal) Act retains in UK law EU regulation 1007/2011 in its entirety on exit day, but once the UK leaves the EU, the EU regulation will no longer apply to textile products placed or made available on the UK market. To maintain high consumer protection, the draft regulations make essential changes to ensure that requirements to indicate the fibre content of textile products and non-textile parts of animal origin continue to apply after our exit from the EU. The draft regulations also remove provisions that will no longer be relevant, such as requiring a label to be in an official language of the European Union. After exit, the label must be in English.

The draft regulations also transfer the power currently exercised by the European Commission to approve new fibre names, tolerances—the difference between the fibre composition on the product label and the actual composition demonstrated through testing—and testing procedures to a UK Secretary of State. This is necessary because after the UK leaves the EU it will no longer be appropriate for the European Commission to approve new textile fibres for the UK market. Repatriation of the functions will enable the UK to amend its textile labelling requirement to take into account innovation and technical advances in the textiles sector.

[Kelly Tolhurst]

As I outlined, we already have a strong enforcement regime exercised by trading standards at local level. Also, trading standards and the Office for Product Safety and Standards work at the borders making checks on products coming into the marketplace that may not be legal under the regulations. That will continue.

After EU exit, businesses will be able to apply to a UK Secretary of State to have a new fibre name adopted for the UK market, just as they can now apply to the European Commission. Finally, to maintain higher levels of consumer protection, the powers and penalties applicable to breaches of the EU regulation will be retained after EU exit. The regulations make only minor amendments to the UK textile labelling regulation to ensure that there are no references to the EU process: for example, they remove the need for the Secretary of State to have regard to the penalties for breaching the EU regulation in EU member states when carrying out a review of the regulation.

The draft regulations deliver certainty and stability for consumers and business—a key objective for the Government.

[Gareth Thomas]

Further to my earlier intervention, and the intervention by the hon. Member for Glasgow South West, trading standards has been one of the areas of local authority services hardest hit by cuts. Do the Government have any plans to increase funding for trading standards, so that consumers can genuinely have confidence that in the brave new world that hon. Lady imagines, consumers will not suddenly lose out?

[Kelly Tolhurst]

The hon. Gentleman raises an important point. It is true that the Government are committed—I am particularly committed—to enforcement and to a trading standards service that carries out its required role. There is, as the hon. Gentleman knows, a consumer Green Paper. We are looking at ways to improve services, and a key priority for me is how trading standards are working nationally. I am extremely aware of the issue, and I recognise the importance of the service as we leave Europe, in whatever way that happens.

[Gareth Thomas]

The hon. Lady has given an interesting answer—but to a different question. I asked specifically whether she envisages more funding for trading standards, and I press her gently to be more specific.

[The Chair]

Order. I think we will make that the last question specifically about trading standards, as it goes slightly beyond the scope of the regulations.

Public Holidays on Religious Occasions

Gareth Thomas Excerpts

Monday 29th October 2018 Westminster Hall

[Gareth Thomas (Harrow West) (Lab/Co-op)]

It is a pleasure to serve under your chairmanship, Mrs Main, and to take part in the debate. I strongly echo the support we have heard for public holidays on Diwali, Dussehra, Eid al-Fitr and Eid al-Adha. I find myself agreeing with the hon. Member for Harrow East (Bob Blackman)—a most unusual position for me—that the two most important days of the Jewish calendar are also very worthy of reference in a debate such as this.

I commend the hon. Member for Linlithgow and East Falkirk (Martyn Day) and the Petitions Committee for initiating the debate, which is surely about the ambition of the Muslim and Hindu communities to recognise their most holy of days with public holidays and about their demanding that they are better valued, as communities and individuals, by the country in which they live. I strongly agree with the hon. Gentleman that it beggars belief that exams are allowed to take place on such important occasions. Just as with Brent Council, Harrow Council makes a point of not holding significant council meetings on days when important holidays are taking place within the communities that they serve.

I must confess that I have always supported increasing the number of public holidays and have always been sceptical of the claim that doing so would cost an arm and a leg. It is difficult to believe that the bank holiday granted for the diamond jubilee cost employers around £1.2 billion. I suspect that that is about as robust a statistic as one from the Vote Leave campaign during the Brexit referendum. I welcome that the Labour party is committed to making the national days of the home nations public holidays, but I ask Front-Bench Members, as I ask the Government, to go further.

The hon. Member for Harrow East alluded to the idea of a four-day week, which is no longer seen as a completely mad, hare-brained idea. There are progressive employers that have already introduced four-day weeks for their employees, or that are generous in giving employees time off to attend to matters of personal importance or to celebrate religious occasions. It really should not be beyond the wit of the greatest country on earth to find a way to grant public holidays for these hugely important days.

It is worth spelling it out that Islam and Hinduism are the second and third largest religions in the country. Islam represented almost 5% of the UK population as far back as 2011; I suspect that figure is higher now. Hinduism represents more than 1.5% of the English population, and I am pleased to say that many Hindus live in my constituency.

Let me start with Diwali and Dussehra, which are both major Hindu festivals. I intend to spend much of Diwali visiting some of the great temples that serve my constituency, be it the International Siddhashram Shakti centre, Stanmore temple—that is in the constituency of the hon. Member for Harrow East, but we think of it as in Harrow West—or, in Brent, Neasden temple, which is one of the great Hindu temples worldwide and which many of my constituents attend regularly, particularly during Diwali.

Diwali symbolises the spiritual victory of light over darkness, good over evil and knowledge over ignorance. During the celebration, temples, homes, shops and office buildings owned by the community are brightly illuminated. One of the great joys of Diwali is seeing such celebration and such light.

Other faiths celebrate their respective festivals alongside Diwali. The Jains—it has been an honour today to attend the Jitopreneurs event taking place in the House of Lords—observe their own Diwali, alongside the Hindu Diwali. There is a Jain temple in Kenton Road; that, too, is not quite in Harrow West, although we see it as in Harrow West. There is a temple in Hayes, which many of the Jains in my constituency attend. The most important Jain temple in the UK is at Potters Bar, and many of my constituents will go there to celebrate Diwali.

It is worth spelling it out that the festival of Diwali is already an official holiday in a number of countries around the world, many of which have hugely close links to the UK. If it can be achieved that Diwali is marked in other countries, why cannot it be marked in the UK?

Dussehra, too, is a major Hindu festival and it is celebrated at the end of Navratri every year. It is observed in different ways from Diwali and is to remember the goddess Durga’s victory over the buffalo demon Mahishasura to restore and protect dharma. It is equally, if not more, important.

The two Muslim events that the petitioners understandably think should be marked as public holidays are Eid al-Fitr and Eid al-Adha. Eid al-Adha is arguably the most holy of days, coming as it does at the end of the annual Hajj to Mecca—arguably one of the most remarkable acts of pilgrimage of any faith worldwide. It honours the willingness of Ibrahim—Abraham—to sacrifice his son as an act of obedience to God’s command, so even those of us of a Christian faith can recognise the significance of that moment without, surely, too much thought or effort. Eid al-Fitr is also a hugely important religious holiday for many of my constituents. It celebrates the conclusion of the 29 or 30 days of dawn-to-sunset fasting during the month of Ramadan.

On those occasions, the Salaam centre in north Harrow in my constituency, Harrow central mosque and, indeed, Stanmore mosque in the constituency of the hon. Member for Harrow East, which many of my constituents attend, are hugely busy places as people from my constituency attend to mark days that are of huge spiritual significance to them.

I recognise that there has traditionally been a reluctance with regard to the change that is sought, so it is worth my pointing out, as others have, that England and Wales have the lowest number of public holidays. Germany, whose economy some would say is doing slightly better than ours at the moment, has almost 50% more public holidays than the UK and productivity that is significantly higher. If Germany can make its economy work well with a larger number of public holidays, why on earth should not England and Wales—and, indeed, Scotland and Northern Ireland—do so as well?

Given that I suspect that the Front Benchers will not immediately cave today and say that they will support this change, I shall briefly mention an initiative from the United States, where the most progressive employers have introduced paid personal days for staff members to enable them to observe religious occasions or to use them for other personal reasons. They are not written into law as such, but they are a concept widely recognised by employers. Perhaps with tax incentives to assist, even the most recalcitrant of employers’ organisations might be willing to recognise that that could be a route, initially, to help employers to adjust to their employees being able to take time off to, perfectly reasonably, celebrate those two hugely important sets of public holidays in the Hindu community and the Islamic calendar.

In a spirit of optimism but also of hard-nosed realism, I recognise that those of us on the Back Benches still have some way to go to push Ministers and Opposition Front Benchers to accept the case for further paid public holidays to recognise important religious occasions, but I hope that this debate will contribute to that process and reassure those of Hindu or of Islamic faith that there are Members of Parliament who are determined to make the case for the special and holy days of their religion to be recognised in the way they should be.

Domestic Gas and Electricity (Tariff Cap) Bill

Gareth Thomas Excerpts

3rd reading: House of Commons & Report stage: House of Commons
Monday 30th April 2018 Commons Chamber

[Gareth Thomas (Harrow West) (Lab/Co-op)]

I draw to my hon. Friend’s attention the comments of Miss Burdett from Rayners Lane in my constituency, who notes that online rates for energy bills are often cheaper than the standard rate, potentially leaving elderly and vulnerable people who cannot go online for whatever reason at a significant disadvantage compared with the rest of us. Would my hon. Friend’s amendments help people such as Miss Burdett, in the situation that I have described?

[Dr Whitehead]

I thank my hon. Friend for that important observation about what one might describe as one of the current market anomalies. It is not just about the differentials between the different ways that one can secure a tariff; it is about the issue of prepaid metering and the differential between the bills of people who are in fuel poverty or are vulnerable in other ways and the bills of those who have more resources. Indeed, some of the amendments that we have tabled—and one in particular—would secure firmly in the Bill matters that Ofgem and the Minister would be required to take into account when considering the introduction of the price cap and the period after which it ends.

Amendment 5 would start the process of strengthening the Bill by ensuring that the cap takes effect within no more than a known period that is stated in the Bill. That is because we want the cap in place for this winter. We know that the equivocation on the cap has lost valuable time. The Government introduced it as a manifesto item before the last election, but then apparently went cool on the idea, before suggesting that it was the administrative responsibility of Ofgem. Only then, after a pause of a number of months, was it actually introduced as legislation, and we are now rushing to get the Bill on the statute books so that the cap can be in place this winter.

Domestic Gas and Electricity (Tariff Cap) Bill

Gareth Thomas Excerpts

2nd reading: House of Commons
Tuesday 6th March 2018 Commons Chamber

[The Secretary of State for Business, Energy and Industrial Strategy (Greg Clark)]

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

Virtually every household in the country depends on gas or electricity, or both. They are essential services on which we rely. On average, each household spends around £1,250 a year on energy at home—it is one of our biggest household bills—and for the poorest 10% of households, energy is 10% of their annual household expenditure.

Since the early 1980s, when the industry was privatised, consumers have benefited from a more reliable service. Power cuts are at half the level that they were before privatisation and prices have been among the lowest in Europe. Last year, household electricity prices were 13% below the EU average. In recent years, more than 60 new energy suppliers have entered the market, selling direct to consumers. One in five consumers are now with small and medium-sized suppliers and save significant sums.

[Gareth Thomas (Harrow West) (Lab/Co-op)]

Is not the problem with the Bill the fact that it locks the stable door after the horse has bolted? Energy companies have jacked up their prices ever since whispers of an energy cap surfaced, such that there is a nice cushion that they can continue to benefit from enormously over the coming months.

[Greg Clark]

I disagree with the hon. Gentleman. As I will go on to explain, part of the problem that we are addressing is that the competition authorities have for some time identified this tendency on the part of companies, and the Bill’s proposals will give Ofgem the power to correct that. He brings me to my next point: for all the progress that has been made since privatisation, it is clear that the market is not perfect. That is indeed why the coalition Government referred the industry to the Competition and Markets Authority to assess how competitive the retail market was.

In 2016, the CMA concluded, following a two-year investigation, that

“our view is that the overarching feature of weak customer response gives suppliers a position of unilateral market power concerning their inactive customer base and that suppliers have the ability to exploit such a position through their pricing policies…by pricing their standard variable tariffs materially above a level that can be justified by cost differences from their nonstandard tariffs; and/or by pricing above a level that is justified by the costs incurred in operating an efficient domestic retail supply business.”

The CMA identified the detriment to consumers—that is, how much consumers are overpaying compared with a fully competitive market—at an average of £1.4 billion a year. This comes from the approach to pricing that is practised by the biggest six energy companies, which for the most part, inherited their customers from previous monopolies. Their approach is to charge their customers on default tariffs much more than those who engage in the competitive part of the market. Currently, the differential for the big six stands at around £300 a year. Those paying the default tariff are much more likely to be in reduced circumstances; 80% of households with an income of less than £18,000 did not switch supplier in the past three years.

From the outset, the UK’s energy market has had a regulator whose responsibility is to act in the interests of consumers. Indeed, if we look back, we can see that Britain has long been a pioneer in not only the privatisation and liberalisation of industries but the regulation of these utility industries, too. Indeed, the British model of privatising state-owned monopolies is to liberalise the market to allow new competitors in and to protect consumers against the power of incumbents—from BT to British Gas—which enjoy an advantage of inertia and loyalty. That has always been recognised in our regulatory arrangements.

--- Later in debate ---

[Rebecca Long Bailey]

I refer the hon. Gentleman to the Labour party’s manifesto, which clearly states that we wish to increase competition in the energy market by creating regional suppliers. We want to promote fair and transparent competition within the energy market, but unfortunately the Government do not advocate a similar position. We hope to fine-tune aspects of the Bill as it goes through the House so that competition in the energy market will be effective, fair and transparent.

[Gareth Thomas]

The hon. Member for Middlesbrough South and East Cleveland (Mr Clarke) deliberately misinterprets our policy. The shadow Chancellor has committed the Labour party to supporting a doubling of the co-operative sector. Energy co-operatives do not mean nationalisation, but they do amount to democratic public ownership. Will my hon. Friend re-endorse the commitment to see more energy co-operatives in the market?

[Rebecca Long Bailey]

I wholeheartedly support my hon. Friend’s fantastic point. I think that our manifesto commitments have been misrepresented or, in the case of the hon. Member for Middlesbrough South and East Cleveland (Mr Clarke), overstated. I again encourage him to read our manifesto, which encourages competition in the energy market while also considering some of its fundamental problems, such as in relation to grid ownership. I will address those points later in my speech.

With regard to the factors that Ofgem must consider, the problem is that although the Opposition are not averse to these principles, at present they are at best ambiguous, and there is no duty to consult on how such measures can be accurately quantified. Perhaps the Minister for Energy and Clean Growth will confirm how these measures will be quantified. Will they form part of Ofgem’s cap methodology consultation? If not, how will Ofgem determine these ambiguous proposals?

Speaking of those guidelines, Energy UK has highlighted the uncertainty in which the provisions are shrouded. Indeed, The Guardian’s financial editor recently commented of the chief executive of Ofgem:

“At best, he is being sent mixed messages by government. At worst, he is being asked to deliver contradictory goals.”

We recognise that Ofgem will consult on the cap methodology to be used, but has the Secretary of State given any indication to Ofgem of the final outcome he wants to see? The Prime Minister promised that £100 would be knocked off 17 million household bills, but nothing in the Bill will ensure that that happens.

Labour has confirmed that we would introduce an immediate emergency price cap to ensure that the average dual fuel household bill remains below £1,000 a year. Had that policy been in place since 2010, the average customer would have saved more than £1,000 on their bills by now. Will the Minister confirm whether the final cap will go anywhere near Labour’s proposals, or indeed anywhere near the Prime Minister’s promise?

Just as ambiguous is the mechanism for deciding whether to extend the cap beyond the end of 2020. The Bill merely states:

“The Authority must carry out a review into whether conditions are in place for effective competition for domestic supply contracts.”

It does stipulate that the review must include an assessment of progress made in installing smart meters, but unfortunately that is as good as it gets. The industry has expressed concern that this provision is unclear. I agree. For example, Energy UK says that there is an absence of a

“clear and realistic definition of effective competition”.

Which? says:

“the criteria for effective competition are not defined so it is not certain under what circumstances the cap will be lifted or how its success will be judged.”

Will the Secretary of State issue any further guidance on what the conditions for effective competition might be, or are we simply deferring to Ofgem to determine that without question?

--- Later in debate ---

[Rebecca Long Bailey]

I thank the hon. Gentleman for that very helpful comment. I have not opposed the Bill in any of my comments so far; I am providing helpful advice. We support the principle of a price cap and want it to be introduced in the most efficient and detailed way possible.

I think that there is consensus across the House that the energy price cap is no more than a sticking plaster, and that much deeper problems within the UK’s energy market need to be addressed. The market is fundamentally broken. Electricity bills soared by 20% between 2007 and 2013, while in the past year alone, every household in the UK paid £120 for dividends to energy company shareholders. Over the past few months, report after report and news story after news story have detailed the unfairness of the current system, but it must be noted that the final bills that consumers face are not simply a consequence of manipulation by some supply companies. As the Business, Energy and Industrial Strategy Committee has highlighted, network costs make up the second highest element of a duel fuel energy bill.

The Energy and Climate Intelligence Unit found last year that the six distribution network operators made an average profit margin after tax of 32% a year between 2010 and 2015, equating to £10 billion over six years. At the same time, shareholders received £5.1 billion in dividends. In a subsequent report, the ECIU calculated that electricity network companies’ exceptionally high profits are set to add £20 to household energy bills this year. Moreover, analysis by Citizens Advice last year calculated that network operators, including National Grid, had made £7.5 billion in unjustified profits, which it thinks should be returned to consumers. Quite frankly, that is the exploitation of a natural monopoly. It is not a market and there is no effective competition, and I want to hear how the Minister will deal with competition within this element of the energy market.

[Gareth Thomas]

I am grateful to my hon. Friend for giving way a second time. Is it not a problem—and deeply ironic—that Conservative Members should defend an energy system in which foreign nationalised companies have more control and earn more income and wealth from the distribution and supply of British energy than the British citizenry?

[Rebecca Long Bailey]

My hon. Friend makes a fantastic point. Many people across Britain find the situation absurd.

As I said, I welcome the Minister’s comments about how she will tackle network exploitation but, along with the BEIS Committee, the Opposition are closely monitoring the next phase of network regulation. We also wonder whether the Minister will shine a little more light on what that might entail, what benchmark the Government have set as their acceptable level of regulation, and what actions she will take if Ofgem’s proposals are insufficient, as was the case with the initial price cap proposals.

The Labour party has been clear that it will not allow the exploitation to continue. We will radically reform the UK’s energy system, not just tinker around the edges, and if the Government are serious about reforming the market and protecting consumers, it is about time that they keep up. Sadly, however, the Secretary of State’s opening remarks were rather thin on proposals for long-term market reform. Reform of the market is not just critical in order to instil fairness and affordability, but vital to ensure that Britain has an energy system fit for the future.

We are experiencing a pace of technological change within the energy sector that has never been seen before. Batteries, storage and smart systems are transforming demand and supply. There is a move to smarter, more decentralised forms of energy generation and supply, emulating many of the models we have seen established across Europe, along with the potential of accessing a low-carbon market that is, according to Goldman Sachs, worth over $600 billion.

Dieter Helm, who was commissioned last year by the Government to conduct a review into the cost of energy, said:

“The corporate structures and policies designed for the 20th-century world no longer work well.”

That review had two main findings: first, that the cost of energy is significantly higher than it needs to be to meet the Government’s objectives and, in particular, to be consistent with the Climate Change Act 2008 and to ensure security of supply; and, secondly, that energy policy, regulation and market design are not fit for the purposes of the emerging low-carbon energy market as it undergoes profound technical change. Dieter published his report in late October. It echoed our calls for a change in ownership of the electricity network; unsurprisingly, we heard little from the Government.

Following the report’s publication, the Government launched a call for evidence to gather the views of stakeholders. That process closed on 5 January this year. I have not heard anything from the Government about that, so in the absence of any future energy vision from the Secretary of State today, perhaps the Minister for Energy and Clean Growth will confirm when a response to that consultation will be published and if the Government agree with Dieter Helm’s proposals.

--- Later in debate ---

[Gareth Thomas (Harrow West) (Lab/Co-op)]

I agree with the right hon. Member for West Dorset (Sir Oliver Letwin) that we collectively owe praise to the hon. Member for Weston-super-Mare (John Penrose) and my right hon. Friend the Member for Don Valley (Caroline Flint) for bullying the Government into bringing the Bill before the House. Nor do I completely reject the right hon. Gentleman’s final assertion about the importance of having an effective regulator to regulate the market. What he missed, however, was the need to shake up significantly the way in which the market operates at the moment, to fundamentally challenge the power of the big six and the way in which regulation works between the transmission provider—National Grid—and the various distributor companies, given the impact that that has on bills.

As other hon. Members have said, while the Bill is good in that it will finally introduce an energy cap, it does not address the full scale of concerns across the House about how the energy market operates. E.ON put up prices last week on the coldest day of the year. Experts are increasingly concerned that the lights will go off at some point in the future. Gas capacity is another fear, and the energy ombudsman is unable or unwilling to enforce rulings in favour of consumers. Those are just some of the concerns about how the energy market works. It would have been good to have a far more comprehensive energy market reform Bill, of which the energy price cap was only part.

I fear that Ministers’ reluctant acceptance that a wider price cap is needed confirms the failure of regulation as it stands, and specifically confirms concerns about the powers and practices of Ofgem and its ability to keep the big six energy companies honest, along with National Grid and the distribution companies.

The Competition and Markets Authority, in its landmark investigation of the industry some four years ago, said that customers had essentially been ripped off to the tune of £1.4 billion—and that was since 2012. The only reason the Government referred the energy market to the CMA for investigation was the pressure from shadow Ministers and the then Leader of the Opposition. In the circumstances, and given the scale of overpayment by consumers, an energy price cap is hardly going to fundamentally change the dynamics of the energy market. Therein lies the problem with the Bill. It does not address the issues of ownership and the lack of accountability of those who currently own and distribute our energy. I therefore suspect that it will be of limited benefit to customers.

When the energy market was privatised, the country was promised the chance to have a stake in the new market. There was the famous “Tell Sid” campaign, which offered everybody a chance to own a stake in the energy market. Many mergers and acquisitions later, all we have seen in practice is that centralised unaccountable decision making has shifted from a series of Government Departments to six privately owned companies that control pretty much the whole chain from power station to customer. At the time, we were promised that unleashing competition would bring considerable benefits: prices would be driven down alongside an increase in innovation and efficiency. It is difficult to see exactly where those benefits are. Dissatisfaction with the energy market is so great that it is ranked bottom of all UK industries by the Institute of Customer Service. Part of the reason why people do not switch from one supplier to another is that they do not think they will get much benefit from switching, given the time and hassle it takes.

Six years ago, a very impressive ten-minute rule Bill was brought forward by the hon. Member for Harrow West, which I commend to the House, proposing that customers should be given the right to own the grid in their area, and that more people should be given the right to help control who benefits from the energy market. In effect, it proposed the sort of democratic public ownership that at the time was less fashionable on the Labour Benches, but which has become a bit more fashionable of late. I very much welcome that.

[Albert Owen]

I am sure the author of the Bill would agree with me that one model is the not-for-profit Welsh Water, which runs the utility and competes against others where necessary, but has competition in its tendering process so that it meets European competition rules for utility companies. It also invests in its customers, which is what is missing from the private monopolies that run distribution and transmission.

[Gareth Thomas]

My hon. Friend makes a very good point. If I may, I commend to him and the whole House the Co-operative party report on the reform of the energy market, which contains several proposals. One suggestion is that Welsh Water and the energy distribution model of similar mutuals in New Zealand might be the model for future of energy distribution in this country.

I do not hold the dogmatic view that public ownership through nationalisation might be a sensible way forward. I can see that there might be a case for some of the transmission network to be publicly owned, and I can see the argument for some public ownership of crucial, strategically important power stations to keep the lights on while a broader transition process is taking place. Fundamentally, however, I would like to make the argument for more co-operative, community-owned not-for-profit energy companies. They would own and supply energy, help to decarbonise our existing energy supply, be properly regulated, and, crucially, help to keep in the local community some of the wealth that is generated by energy, which I gently suggest should be strongly encouraged and allowed to emerge. Robin Hood Energy in Nottingham is a great example of that, as are Bristol Energy and Westmill Solar Co-operative.

I finish by gently saying to Government Members that I understand why they are tempted, for political reasons, to attack Opposition Members for looking again at public ownership, but when so many of the energy businesses in this country are owned, or part-owned, by state-owned companies from other countries, it prompts the question why public ownership by the British Government, or by the people of this country, could not be given a bit more encouragement by Ministers.

Oral Answers to Questions

Gareth Thomas Excerpts

Tuesday 30th January 2018 Commons Chamber

[Andrew Griffiths]

The Secretary of State, I think, has already outlined the approach with which the Government are handling the takeover of GKN, but I can assure my hon. Friend that the implications of business actions, and particularly takeovers, in relation to pension schemes are a priority for the Government. We will continue to proceed with care and caution to protect the interests of all members of pension schemes.

[Gareth Thomas (Harrow West) (Lab/Co-op)]

14. Whether he plans to review the rules governing the use of agency workers.

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Andrew Griffiths)]

The Government work to ensure that our labour markets work for everyone. That was why the Prime Minister asked Matthew Taylor to carry out an independent review on modern working practices. The Government are considering the issues that the review has raised, including rules governing the use of agency workers. The review is comprehensive and detailed, and we have been giving the report the careful consideration it deserves. We will respond shortly.

[Gareth Thomas]

Two thousand workers in BT call centres, some of whom handle 999 calls, are paid up to £500 less per month than permanent staff because BT uses the loophole known as the Swedish derogation under agency workers regulations. Taylor recommended its abolition; when will the Minister get on with it?

[Andrew Griffiths]

As I have outlined, the Matthew Taylor report does, in some depth, look at the Swedish issue. I am meeting Matthew Taylor this afternoon, and that issue will be one of those that we shall discuss. I can reassure the hon. Gentleman that in 2017, the employment agency standards inspectorate dealt with more than 800 complaints from agency workers. EAS investigations have protected an estimated 303,000 agency workers, and we will continue to defend their interests.

Backbench Business

Gareth Thomas Excerpts

Thursday 17th November 2016 Westminster Hall

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

I am delighted to catch your eye, Mr Wilson, in this very important debate. I pay great tribute to the hon. Member for Luton North (Kelvin Hopkins), who secured the debate today. News of any organisation looking at the closure or franchising of 59 Crown post offices with a projected loss of 2,000 jobs should rightly be met with horror, as the hon. Gentleman described. This reduction in operations can only mean a worse service for customers, longer queues, fewer staff, worse disabled access and the loss of a crucial community asset. I am sure many hon. Members are here today because of a threatened closure in their own constituency and, sadly, I am no different. As the MP for one of the largest rural constituencies in the country, having easy access to the services that a post office provides is an utter necessity. Since 2000, the number of rural post offices has decreased by about 3,000. Likewise, the number of Crown post offices—the larger branches that have more services—has dropped by 1,200 in the past 25 years.

The largest town and principal economic and commercial hub in my constituency is Cirencester. Its branch is one of the 59 proposed closures. It operates from a leasehold property and offers a wide range of services, including access to pensions and benefits, tax payments, driving licence and passport renewals, lottery terminals and foreign exchange. The four counter positions and two self-service kiosks are often subject to long queues and high demand. For such a valuable service to continue to exist, we must look at ways for Crown post offices to diversify their services and grow their dwindling customer base. As I said in my speech on the Post Office’s future way back in 2010:

“The message that the Government need to give to the Post Office is not ‘closure, closure, closure’ but ‘opportunity, opportunity, opportunity”.—[Official Report, 2 November 2010; Vol. 517, c. 213WH.]

[Mr Gareth Thomas (Harrow West) (Lab/Co-op)]

I do not know whether the hon. Gentleman is aware, but there are rumours that a third round of franchise announcements and therefore closures of Crown post offices is due at any moment, with a potential loss of 190 jobs. Does he not think this debate might be an opportunity for the Minister to put some pressure on the Post Office to think again about that third round of potential franchises?

[Geoffrey Clifton-Brown]

I am grateful to the hon. Gentleman for bringing that to the attention of the House. I have not heard those rumours; I will simply respond with a line from later in my speech. If the Post Office were Tesco, it would be thinking not about closing profitable branches but about how to make those branches more profitable by providing a more attractive service for the customer. That is what I would like my hon. Friend the Minister to take away from this debate today. Let us see how we can make the Post Office work better for its customers.

What the Post Office needs is a proper business model for the future, which, above all, needs to consider how much of the business should be commercially profitable and which bits of it the Government, through the taxpayer, are prepared to subsidise. Although I do not agree with the hon. Member for Luton North that it should be wholly brought back into public ownership, there is no doubt, given the number of small suburban and rural branches, that it will inevitably need some form of public subsidy in future. That public subsidy should be clearly defined. The bits that can be profitable, such as the Crown post offices, should be made to operate as efficiently as possible.

--- Later in debate ---

[Mr Gareth Thomas (Harrow West) (Lab/Co-op)]

There are five questions that the Minister should answer. Before raising them, I join other Members in praising my hon. Friend the Member for Luton North (Kelvin Hopkins), and I echo his declaration of interest.

First, it would be helpful to hear from the Minister why she thinks Post Office income from financial services have grown so slowly? It was heralded as part of the great future for the Post Office by Vince Cable when he launched a document on its future back in November 2010. Secondly, why has Government business going through the Post Office been allowed to plummet? Ministers promised the reverse, again back in 2010.

It is not only the French who seem to be able to run postal services better than the current Government. The Italians have also made a huge success of getting a post office bank up and running. Similarly, New Zealand has a highly successful post office bank, which was established in the past 15 years. There are successful models involving financial services. What is striking about the debate is the cross-party concern about the crisis in the Post Office at the moment.

Thirdly—I ask this as a Co-operative Member as well as a Labour Member—whatever happened to the idea of the Post Office becoming a mutual, with a more involved workforce and local community involvement to help to plot a more co-operative future for the Post Office? The last ministerial mention of that vision from November 2010 that I can find was in November 2013. It would be helpful to know whether the Minister still adheres to that possibility. Fourthly, is the Post Office’s 2018-19 funding package, which I understand is being negotiated in Whitehall at the moment, going to lead to more closures and to more full-time employees being pushed out of the door, or is it going to be a genuine opportunity for serious investment in new services?

Fifthly, and lastly, as I understand it, the 10-year contract that the Post Office has with Royal Mail can be reviewed from January next year. It would be good to hear reassurance from the Minister that Royal Mail intends to stick absolutely to the terms of its contract with the Post Office going forward.

Post Office revenues from Government services have fallen by almost 40% since 2010, as no new Government services are using the Post Office. Of those that still are, many Departments are promoting online alternatives. Again, it would be useful to hear from the Minister what discussions she has had with other Government Departments to encourage them to use the Post Office. I ask that question because the Post Office being the front office for the Government was the first part of the great vision that Vince Cable set out in November 2010. If revenues from Government services have declined by 40%, it raises some fairly alarming questions. There are rumours that Government insiders themselves accept that that option for the Post Office’s future has largely been a failure.

The second objective that Vince Cable set out was the expansion of financial services. The Post Office’s revenue from financial services has grown by just 2% over the past six years. Why does it still not offer a business account? In one of the district centres in north Harrow in my constituency, there is no bank, and there has not been for some time. The Post Office is the only financial services player still in existence there. The option of a business account would be hugely beneficial to small businesses in that one district alone.

I am told that the Post Office is trialling a current account. Indeed, we are apparently four and a half years into the trial; it was supposed to launch in 2014. Why has it taken so long before that product could possibly be launched? There is no dedicated children’s product either. I am aware of the junior individual savings account, but £500 has to be put into that account up front to get it up and running, and that money cannot be accessed until the child turns 18. Given that many people stick with the financial services provider that they start with, it would surely make good economic sense for the Minister to insist that the Post Office quickly gets its act together on a dedicated children’s product.

All of those problems suggest a business that is not taking seriously the ambition of substantial revenue growth from financial services, as Vince Cable once promised. The hon. Member for Yeovil (Marcus Fysh) rightly praised the contribution of postmasters and postmistresses—particularly those who are members of the Federation of Small Businesses. The FSB published a report in October called “Locked Out”, which said:

“Business banking services provided at some Post Office branches and franchises are too limited. Some services, such as cash and cheque clearing facilities, also appear to be processed more slowly than in bank branches. Other services, such as inter-account transfers and currency exchange, are not available. As the future of the network moves away from full-service post offices to franchises there is concern about the impact on small business access.”

It is not just the Communication Workers Union and staff that want change in terms of financial services; it is small business that have genuine concerns. I hope that the Minister will act.

--- Later in debate ---

[Margot James]

I am really sorry not to be able to give way again, but I have got to stop in two or three minutes’ time. I want to answer a couple of points made by the hon. Members for Sheffield, Brightside and Hillsborough (Gill Furniss) and for Harrow West (Mr Thomas).

Use of Government services at post offices is down by 40%, which is disappointing. I do not really foresee a huge improvement in that, because with so many Government services—for instance, on the motor vehicle front—so much is now done online that any operation in that sector would have experienced similar losses. I am much more hopeful about financial services. That sector has grown by 17% since 2012. It is steady, albeit slow, growth year on year. The Post Office has an arrangement with the Bank of Ireland and will be offering more services. Hon. Members have pointed out that bank branches around the country are closing at a swift rate, and that does create an opportunity for the Post Office. I will be lobbying, alongside Members, for the Post Office to embrace this opportunity even further, but I do think that it is doing a good job. I will sound a note of caution that unfortunately—well not unfortunately; it is just a development that we are all part of—more and more banking is now done online as well, but I do see some grounds for hope in that sector.

I want to talk a bit about WHSmith. A great many WHSmith branches are now either hosting or franchising post office services. Virtually all the services remain on offer to the public in convenient locations. I accept that some—a minority, I think, of 11 out of 61—post offices that operate in WHSmith branches are on the first floor. That does present issues for people with disabilities, but they are issues that the WHSmith branches have resolved in conjunction with local groups representing people with disabilities. They have managed to provide lifts and also, in case of lift breakdown, mobile tills so that people with disabilities can be welcomed into the branches.

[Mr Gareth Thomas]

What about the mutual option?

[Margot James]

On the mutualisation that the hon. Gentleman mentioned, yes, the Postal Services Act 2011 requires that the Post Office be maintained either in public hands—public ownership—or in a mutualised setting. At the moment, it continues in public ownership and we have no plans to change that. Indeed, for it to be mutualised the model would have to be based even greater financial sustainability than it is at the moment. Currently, the Post Office is making losses and we would not be able to mutualise it, but the plan is for it to become more and more financially sustainable over time.

The hon. Member for Luton North also made the point about Royal Mail, and various Members have called for Royal Mail and the Post Office to be reunited. I do not see that happening—Royal Mail is now an independent public company—but thanks to Government investment, the Post Office is now in a far stronger position for its impending negotiations with Royal Mail about its business arrangements. That is thanks to the huge investment that we have made in Royal Mail.