1. If his Department will increase the level of funding provided to the Department of Health.
12. If his Department will increase the level of funding provided to the Department of Health.
Annual funding to the Department of Health is already being increased by £17 billion by 2020-21. This reflects the priority that the Government put on investing in the NHS.
OECD statistics show that the Governments of Germany, France, Holland, Sweden and Denmark spend an average of 9% of GDP on health compared with 7.7% in the UK—a massive difference of £23 billion a year. The NHS is desperately underfunded and it is no surprise that it is suffering, so is the Chancellor really going to take this seriously in the Budget?
I think the hon. Gentleman will find that the OECD has more recently put out revised numbers to show that the UK’s expenditure on health is very close to some of those other countries. The fact is that we can only have a properly funded NHS if we have a strong economy, and only the Conservative party can deliver it—a point that the people of Copeland may have noticed.
When lives are on the line it is imperative that we as parliamentarians get it right. We need some honesty about what the current NHS crisis means: cuts to staff, longer waits, and hospitals at risk of closure. Does the Minister agree that the Government need to provide a long-term, sustainable financial package to guarantee NHS services for the future?
It was this Government who announced a long-term, financially sustainable package, which is why, in real terms, funding for the NHS will increase by £10 billion above inflation by 2020-21. Let us remember that since 2010 there are 2,300 more people attending accident and emergency departments within the four-hour A&E standard, 5,000 more operations every day, and 1,400 more people every day treated for mental health conditions, and the NHS is conducting 16,000 more diagnostic tests every day.
For the past two years the Department of Health has cut its capital budget by 20% and used that for running costs and to pay for salaries. Did the Treasury press for these cuts in capital spending—I hope not—and does the Chief Secretary agree that raiding the capital budget is no way to find efficiency savings?
The switch from capital to resource was actually made at the request of the health service and the Department of Health. In terms of finding efficiencies in the NHS, and indeed in the public sector as a whole, it is important that we deliver sustainable efficiencies, embed a culture of efficiency, and ensure that we get value for money for the taxpayer.
While I welcome this Government’s commitment to health, may I invite my right hon. Friend to take a leaf out of President Trump’s book and increase defence expenditure by 10%, funded from the bloated overseas aid budget?
Splendid idea.
It is quite a naughty idea, not because of its merits or demerits but because it has nothing to do with the Department of Health budget, as the hon. Member for Wellingborough (Mr Bone) is perfectly well aware. However, the Minister is a dextrous fellow and I am sure he can answer in an orderly way.
Although, as you say, Mr Speaker, there may perhaps have been a slightly tenuous link with the question, it was still a predictable question from my hon. Friend the Member for Aldershot (Sir Gerald Howarth). We are delivering on the 2%-plus expenditure commitment on defence, and we are increasing defence spending in real terms. Again, it is important that we have a strong economy so that we can properly fund our defence.
The shocking revelation that NHS Shared Business Services Ltd misplaced more than 500,000 pieces of sensitive medical data is a direct result of a health service that is being squeezed by the Chancellor’s purse strings. The Tory Government are clearly putting patient safety at risk through lack of resourcing and a targeted savings drive. Will the Chancellor immediately reassess the situation and the level of NHS funding?
On the level of NHS funding, the hon. Lady will find that expenditure has gone up more in England than it has in Scotland. Given that it is a devolved matter, she might want to raise her concerns with the Scottish Government.
Will the Chief Secretary confirm that record amounts of money are being spent on the NHS, that record numbers of patients are being treated and that he will give clear incentives to local authorities and health services to join up the delivery of NHS and social care?
My hon. Friend raises an important point. He is absolutely correct about the resources that we are putting in, but if we want to improve the quality of healthcare, particularly in the context of social care, it is also important that there is greater integration. That is why we announced the better care fund, which is making an important contribution to supporting social care and improving integration.
The Chair of the Treasury Select Committee is absolutely spot on. If the Chancellor does discuss with the Department of Health any increase in levels of funding, will he point the Health Secretary in the direction of the Public Accounts Committee report, which says that he should stop “plundering” NHS funds? In particular, it asks him to stop his “repeated raids” on NHS capital funds, with £950 million having been taken out of £4.5 billion.
First, may I congratulate the hon. Gentleman on his promotion to the post of shadow Chief Secretary? He is my eighth shadow as a Treasury Minister, so I look forward to sparring with him over the weeks ahead Let me repeat what I said earlier: the agreement on the budget settlement for the NHS and the balance between resource spending and capital spending was reached with the Department of Health. Indeed, that switch towards more on resource was very much pushed by the Department of Health.
So I am the eighth shadow Minister, “How very promiscuous of you”, as I said in my tweet to the Chief Secretary Some 4,000 urgent operations have been cancelled, 18,000 people a week waited on trolleys in January, 3,000 community pharmacies are going to be lost and £4.6 billion has been cut from social care. When those funding levels are discussed with the Department of Health, will he tell his colleague that he should be caring for the NHS, not giving it a lethal injection?
If the Labour party’s policy could move beyond the level of placard design, that might help. Let me be clear: we are putting more money into the NHS and it is providing more support and help to people than ever before. I have listed some of the achievements since 2010. This Government remain committed to the NHS, which is why it has been a priority in our public spending plans for the past seven years.
We do need to speed up in terms both of questions and of answers.
2. What steps he is taking to support economic growth in Yorkshire.
The Government will drive productivity and economic growth in Yorkshire by investing in its infrastructure, developing the skills of its people and supporting its companies. At autumn statement we announced that the four local enterprise partnerships covering Yorkshire will receive £156.1 million from the local growth fund to back local priorities and support new jobs, as well as £3.7 million extra investment to bolster its resilience to flooding.
Will the Chancellor join me in welcoming recent investments by the likes of Boeing and McLaren in Yorkshire? Will Yorkshire continue to receive investment through the northern powerhouse investment fund, which is backed by the British Business Bank?
Yes. I welcome those investments by large companies, which will bring a large number of jobs to the area. It is also important that we support small and medium-sized enterprises, and the northern powerhouse investment fund will have a specific remit to target and support smaller businesses across the north.
Fourteen months after the devastating Storm Eva floods, it is welcome news to people in Kirkstall that the Sheesh Mahal restaurant will reopen tomorrow. However, many other businesses in my constituency are still struggling with astronomical increases in the costs of insurance and we still do not have a date for having proper flood defences in my constituency. What assurances can the Chancellor give businesses in my constituency that he has not forgotten about us?
As I have said, we have put additional money into flood defence spending, but—notwithstanding the reopening of the Sheesh Mahal restaurant—I take on board the hon. Lady’s comments about the delay that others are experiencing and I will look at the facts.
Purely in relation to Yorkshire—Michael Fabricant.
Absolutely, Mr Speaker. By the way, I would love to visit that restaurant My right hon. Friend will know that Boeing is a major employer in the United Kingdom. The opening of Boeing Sheffield, as it will be known, means that a major manufacturing plant—the only one of its type—will be introduced into Europe. Is that not a major endorsement by Boeing of post-Brexit Britain?
Yes, that is two things: it is a major endorsement by a global company and a major vote of confidence in the British economy. It is also a reflection of this Government’s policy that where we place large contracts for military equipment, as we have done with Boeing, we insist on some compensating investment in our economy, so that the investment in our military capability pays for jobs, skills and technology in the UK.
The Chancellor referred to local enterprise partnerships. Will he undertake to bring the LEPs across Yorkshire together to look at what further powers can be devolved to them to decide priorities on regional infrastructure investment and on the skills agenda? Will he also bring them together to talk about what needs to be done to prioritise their potential for inward investment in terms of Brexit?
We are very keen on LEPs working together across regions so that these very large pots of devolved funding, including some of the money in the national productivity investment fund that I announced in the autumn statement, can be used to maximum effect across a coherent economic geography. I am not so sure that it is within my power to bring them together, but I would certainly encourage them to work together.
Yorkshire is of course home to some of the country’s finest financial institutions, such as the Yorkshire Bank and the Yorkshire Building Society—
And the Skipton.
Like all financial institutions in the UK, they will be desperately keen to understand what the Government’s Brexit plans will mean for financial services. The Treasury still has not replied to my letter in January asking for some basic clarity, but we need to know how the Government intend to achieve equivalence, how it will be made certain and how we will avoid becoming just a rule taker from the rest of the EU. Chancellor, these are reasonable questions, so may we start to have some answers, please?
They are perfectly reasonable questions. I am not sure that the Skipton Building Society is holding its breath on how equivalence will work to allow it to carry on marketing complex financial instruments across the European Union. These are matters for negotiation. If we end up with an equivalence regime to allow financial services businesses to continue to trade into the European Union, it will be important that that equivalence regime is based on objective criteria, not political criteria, so that as long as our regulatory regimes are in fact equivalent, we can be confident of continuing to be able to trade.
3. If he will make an assessment of the potential merits of ring-fencing national insurance revenues for spending on health and social care.
As hon. Members will know, although national insurance contributions are primarily used to fund state pensions, a proportion of NICs is already allocated directly to the NHS, but beyond that, the Government do not have any plans to ring-fence national insurance contributions to fund health and social care.
I thank the Financial Secretary for that answer, but with a view to the long-term sustainable financing of health and social care, will she look into this as a means of depoliticising the debate and ensuring long-term funding for health and social care not just for today, but for decades to come?
I understand my hon. Friend’s core point. The Government have taken action to ensure that the NHS has the funding it needs by increasing its annual budget by £10 billion above inflation by 2020-21. We are mindful of the long-term challenges. The issues were recently highlighted by the Office for Budget Responsibility, which laid them out quite starkly in its latest fiscal sustainability report. On depoliticising the debate, I would say that backing the NHS’s own plan for its own future in the way we have done is the best way of doing that.
Back in 2010, to meet the rising costs of social care I proposed a compulsory care levy on all estates. From memory, the Conservatives produced an election poster with gravestones on it and called it a death tax. I read in The Times today that Ministers are now considering exactly the same proposal. Can this possibly be true?
No.
There is, however, an emerging consensus that we need to better integrate our social care and health system. We already have the better care fund and the Chancellor’s prudent management of the economy, but if he has any wriggle room in the forthcoming Budget may I ask him whether we can have some transitional relief for social care until we can work out the best model?
The Government have been very clear on a number of occasions that we recognise the pressures in the system and additional money has been made available through the social care precept. We are well aware of the pressures in the system and, as my right hon. Friend says, the long-term need for more integration—the Chief Secretary has already referred to the better care fund—but his point is well made.
How can it be right that the local authorities under the most pressure in terms of social care can raise the least amount through the council tax precept, when that precept is the basis of the Government’s social care policy? East Riding Council, next to my own, can raise 56% more than Hull even though it has less demand.
As the hon. Lady knows, the better care fund, which we have already referred to, adjusts for that. We are responding to the pressures, which we acknowledge, in the social care system in a range of ways.
4. What steps he is taking to support regional infrastructure development.
We recognise the need to enhance public infrastructure across all regions of the UK. That is why at autumn statement 2016 we committed additional capital to fund new productivity-enhancing economic infrastructure through the national productivity investment fund. We are committed to putting local and regional needs at the heart of the fund. For example, we are spending £1.1 billion on local projects to improve our existing transport networks.
As the UK automotive sector continues to embrace new technologies, ensuring the necessary energy supplies are in place is of increasing importance. What support can the Government give to the midlands, so that our region can lead the transformation of the sector, not least with electric vehicles?
My hon. Friend is right that the midlands is home to some of the world’s leading automotive manufacturing. It is also home to cutting edge battery technology research, including by the Warwick Manufacturing Group at Warwick University. My hon. Friend is absolutely right. If we are going to electrify the vehicle fleet, we have to ensure that clean, sustainable and reliable supplies of electricity are available to meet the needs of the 21st century economy. Our national infrastructure plan does exactly that.
On leaving the EU, areas like Yorkshire will no longer benefit from EU structural funding. How will the Chancellor meet the shortfall?
As we have made clear, the arrangements we have with the European Union, and with any of the organisations and funds the EU operates, remain to be discussed during the negotiation phase. If the hon. Gentleman is right and we end up not participating in such arrangements in the future, we will clearly have to make separate similar arrangements on a UK-only basis—or, indeed, on an individual nation within the UK basis.
14. Does the Chancellor agree that alongside large-scale investment in infrastructure, such as the Thameslink upgrade, relatively small amounts of money on local roads and station facilities can rapidly improve journey times and therefore boost productivity?
I absolutely agree with my hon. Friend. It is often the smaller local projects that deliver the greatest benefit. They do not have the same kind of grandstanding possibilities around them and therefore are not always quite as favoured, but they are often the most effective way of intervening. They have another benefit: they can often be delivered very quickly by local levels of government, rather than having to go through many years of planning.
The Chancellor simply did not answer my hon. Friend the Member for Barnsley Central (Dan Jarvis). The UK Government’s funding and investment in London has always far outstripped that for any other region. The OECD says that we have had no regional policy since 2010, so will he answer my hon. Friend? What will happen to investment in the north when Brexit occurs?
We will continue to invest in our economy, and the distribution of that investment will be in accordance with the Government’s priorities. The hon. Lady should look at the industrial strategy paper that we have published and at statements the Government have made, including on the national productivity investment fund we announced in the autumn. We are committed to infrastructure development in all the regions of the UK. It is a key element of our productivity agenda.
23. In order to support infrastructure investment effectively, we will need to upskill our workforce to deliver the projects we need, especially hi-tech projects. Does the Chancellor of the Exchequer agree that we need investment in the post-16 arena quite quickly to ensure we fill that skills pipeline?
I will take that as a Budget representation, and yes I do agree with my hon. Friend. We set out in the autumn statement how we would increase investment in infrastructure. That is one of the challenges we face in raising this country’s productivity. Skills is another.
The Swansea Bay city region deal has the potential to boost infrastructure development in the west of my country. The board’s proposals, which have been presented to the Treasury, have the support of the relevant local authorities and universities and of the Welsh Government. When can we expect the Treasury’s response to them?
This discussion is still ongoing. I hope we may bring it to a conclusion within, let’s say, the next eight days.
5. What recent representations he has received on the level of beer duty.
I thank my hon. Friend for his question and note the constructive meeting we had just yesterday with representatives from across the beer and pubs sector. In addition, the Treasury has received representations from several other organisations and individuals with suggestions for what should be in the Budget, including measures on beer duty.
My hon. Friend will be aware of the great contribution that the great British pub and great British beer make to local economies, employing nearly 1 million people and contributing £10 billion in tax. The Government have a proud record: in the last three years, we have scrapped the hated beer duty escalator and cut beer duty for three consecutive years. Will she seriously consider continuing the good work by cutting beer duty?
As the Chancellor just said, I will take that as a Budget representation. Of course we recognise the contribution of the beer and pubs industry across the UK—I am particularly aware from my previous job of the role pubs play in promoting responsible drinking— but it is worth noting that the public finances assume that alcohol duties rise by retail prices index inflation each year, meaning that there is a cost to the Exchequer from freezing or cutting alcohol duty rates. As I say, however, we consider all representations carefully.
When considering beer duty, will the Minister maintain, or at least not further erode, the differential with cider duty? Labour’s lower cider duty has led to a fantastic renaissance in both cider drinking and orchard planting in England, but if the differential is narrowed any further I am afraid it will do untold damage to our cider makers.
I am well aware of the sensitivities around the duty bands, on which we have received a number of representations, and of the renaissance not just in the industry to which the right hon. Gentleman refers but, for example, in respect of the number of microbreweries and the flourishing investment in that area. There have been a number of good news stories in this sector in recent years.
24. The Minister has also received representations about a wholly different kind of cider that has not seen much of a real apple, and that is super-strength white cider, which is very harmful and cheap. Will she consider using the new freedoms following Brexit that will enable the Government to take seriously the evidence in favour of a minimum unit price of alcohol, given its consequences for the health of young and vulnerable people?
I am extremely well aware of the points my hon. Friend makes, not least, as I say, because of the role I last held in government. We look carefully at all these things, particularly the issue of white cider.
6. What fiscal plans he has to support small businesses.
The Government continue to support small businesses to access the finance they need to grow through the British Business Bank, which supports almost £3.4 billion of finance to 54,000 smaller business. In the autumn statement, I announced an additional £400 million of funding for the bank. We also reaffirmed our commitment to the business tax road map, including the permanent doubling of the small business rates relief and the extension of the thresholds for the relief, so that 600,000 small businesses—occupiers of one third of all business properties—will pay no rates at all.
Federation of Small Businesses research says that over a third of small businesses expect their business rates to increase from 1 April. Small shops will be hit hard, while large supermarkets are set to gain. In Hounslow, the estimated 12% increase has led worried businesses to tell me that they expect to see jobs and investment cuts. The Chancellor would not want his fiscal decisions adversely to impact on growth and prosperity, so will he now commit to righting this wrong in his Budget? Will he also support Labour’s five-point plan to help small businesses through the revaluation?
I think the last thing small businesses need is any help from the Labour party. From what I have seen of Labour’s plans, that would be the final straw for most of them As we have said, we recognise that some small businesses are facing very substantial percentage increases, even where the actual amounts might not be very large, and that that can be difficult for businesses to absorb. We have committed to coming forward with a proposal that will address those who are hardest hit by that phenomenon.
In Stow-on-the-Wold in my constituency, the actual business rates payable by Tesco, which is five minutes’ walk from the centre, is £220 per square metre, whereas a delicatessen in the centre of the town will pay £500 per square metre. Does not my right hon. Friend think that the system of rating valuation needs to be re-examined?
The rating system is what it is; it reflects the rental value of properties. I readily acknowledge that in an economy that is changing shape rapidly, where the digital economy plays a much larger role and where some of the biggest businesses are not based on bricks and mortar, there are some very significant challenges for us, which we need to look at. In the short and medium term, business rates play a vital role in providing revenue to the Exchequer—and from 2020, of course, they will be used wholly to support local authorities.
16. In York, many businesses are paying inflated rents from overseas and local landlords, pushing up the rateable value, so business rates are sky high. The revaluation has caused some businesses a 600% increase, which is detrimental to the local economy and the high street. Will the Treasury work with the Department for Communities and Local Government to carry out an urgent review on the whole business rate system, because the model is broken?
I will say something more about the medium and longer-term challenges to business rates when I deliver my Budget next week. The hon. Lady would not want to alarm anybody in her constituency and she will know that nobody will see their rates bill go up by 600%.
They have.
Nobody will see their rates bill go up by 600%, and the damping mechanisms make that clear. Of course rateable values may go up by very significant amounts. I shall have more to say about this next week.
I welcome the Chancellor’s promise to explain more about what he is going to do about business rates in the Budget next week. Does he recognise, however, that in taxing our towns and villages around the UK, especially the beautiful ones in west Kent, he is in danger of changing the culture that is at the heart of our community, not just raising money for the Exchequer?
Yes, I absolutely recognise my hon. Friend’s concern. It is for that reason, as well as for reasons connected to the economic sustainability of individual businesses, that we have said that we will look at how best to help those most seriously affected.
20. Excellent businesses such as Dunn’s Bakery, the Railway Tavern and Elsie Café in high-value areas such as Crouch End and Muswell Hill have made representations. Will the Chancellor please confirm that he will look again at the business rates revaluation?
What I cannot do is look again at the business rates revaluation, which is an independent statutory exercise undertaken by the Valuation Office Agency. As the hon. Lady will know, if experience is anything to go by, of the 2 million business properties revalued, about 1 million will lodge appeals, so there will be a process of reviewing the way in which the valuations have been conducted. I have said I will look at those small businesses facing the largest increases and see how best to help them.
I strongly welcome the Chancellor’s commitment to look again at small business rates taxation in the Budget. The big four supermarkets are being given, on average, a 6.9% cut in their business rates. Will the Chancellor consider setting that rate at zero so that it is becomes “upward only”, and using the extra money to soften the blow for smaller businesses?
I do not think that that is the right way to proceed. The business rates revaluation reflects the underlying value of premises, and I am afraid it is an inconvenient fact that some large organisations have premises in low-value areas and some small organisations have premises in very high-value areas.
The Chancellor was right to talk about access to finance, but most small businesses depend on lending from safe high street banks. What discussions has he had with the banks to ensure that they remain safe and continue to fund small businesses so that they can benefit from the other fiscal measures?
Different high street banks have different models, but it is certain that some high street banks are aggressively pursuing small and medium-sized enterprises. When I say “aggressively pursuing”, I mean actively seeking their business. However, it is also important for us to diversify the range of financing options that are available to small and medium-sized enterprises, which is one of the reasons why we have pushed money, through the British Business Bank, towards other intermediaries that can provide equity and debt finance for SMEs.
The other part of my question was about the banks staying safe, which is vital to small businesses and the whole economy. The Chancellor will have observed the worrying signals from the United States that the new President intends to roll back some of the regulation that was introduced to make banks safer. Will the Chancellor assure us that he does not intend to play follow my leader and deregulate the banks unnecessarily in this country?
Our banking system in the United Kingdom ensures that our banks are safe, and is tackling the “too big to fail” culture. We have a high level of confidence in our banking system. The reserve ratios of our banks are improving consistently, and we do not want to do anything that would undermine them.
Thank you, Mr Speaker, for allowing me to join my former team today to discuss this important issue As we have heard, the FSB has found that more than a third of small businesses will see an significant increase in business rates, whereas the big four supermarkets may see a 5.9% reduction. Crucially, more than 55% of those small businesses plan to reduce, postpone or cancel further investment. If the Chancellor is serious about productivity, will he tell us what additional transitional relief he will provide for businesses that are facing a cliff edge?
The hon. Lady is only repeating what I have already acknowledged. Many very small businesses will see big increases because they are coming out of small business rates relief and facing the full rates regime for the first time. We understand the stress that they will experience at that point, and we will be considering how best to deal with those that are worst affected by the phenomenon.
7. What fiscal steps he is taking to support the development of digital infrastructure.
The Government are taking action to give the United Kingdom the world-leading infrastructure that it needs. The Government-led £1.7 billion superfast broadband programme will extend coverage to 95% of UK premises by the end of 2017.
From artificial intelligence to mechanisation, we live in a period of unprecedented technological change, and the Government should foster it in rural and urban areas. Can the Economic Secretary confirm that he will resist the calls of a new generation of Luddites for robots to be taxed?
I was going to make a joke about the Liberal Democrats, but as there are none in the Chamber I will merely reassure my hon. Friend that the Government have no current plans to introduce a robot tax.
Current tax rules do not allow companies to set the cost of mathematical research against tax. That is obviously very out of date in an era of data science, and it does not apply to science and engineering. Will Ministers take this as a Budget representation, please?
We have significantly increased R and D tax credits; and, as a mathematician, I agree with the hon. Lady that maths is always important.
8. What fiscal steps he is taking to support the development of long-term infrastructure.
13. What fiscal steps he is taking to support the development of long-term infrastructure.
We recognise that the need to increase public spending on infrastructure is at the heart of our productivity agenda. That is why, at autumn statement 2016, we committed £23 billion of additional capital to fund new productivity-enhancing economic infrastructure through the national productivity investment fund. Coupled with the commitments made at spending review 2015, that means that between 2016-17 and 2020-21 central Government investment in economic infrastructure will rise by almost 60%, from £14 billion to £22 billion.
After a 40-year wait, I am delighted that the Chancellor has announced a £25.7 million investment in the Stubbington bypass—vital infrastructure that will ease the terrible congestion between Fareham and Gosport. I commend my neighbour, my hon. Friend the Member for Gosport (Caroline Dinenage), for her work. Does my right hon. Friend agree that that is a great example of partnership between Hampshire County Council and Solent local enterprise partnership and that it will be the catalyst for a boost in jobs and the creation of growth?
I think the Stubbington bypass was well worth waiting for. It will indeed support growth and development by improving access to both the M27 and the A27, allowing much needed business investment, creating new jobs, but also enabling the development of 900 new homes. Where we can get transport infrastructure investment to perform its transport function but also to help to open up land for development for new homes, that is a double hit.
My right hon. Friend will be aware of the appetite for non-Government sources to provide funding for UK infrastructure. Can he confirm whether the Government are considering regional, national or project-based infrastructure bonds? Will he agree to meet me and a group of funders to discuss the attractions of such bonds?
The most economical way for the Government to fund infrastructure investment is through conventional gilts—that is the lowest cost to the public purse. However, the Treasury backs infrastructure bonds and loans issued by the private sector through the UK guarantees scheme. At autumn statement, I announced that that scheme would be extended until at least 2026. It has played a vital role not just in underwriting and guaranteeing finance for projects, but in allowing a large number of projects to go ahead without the Government guarantee, simply by having underwritten the financing during the programme phase.
What steps is the Chancellor—I agreed with his answer on clean-energy long-term projects—taking to support and facilitate with the Welsh Government and with the Department for Business, Energy and Industrial Strategy the Swansea Bay tidal lagoon project, following the Hendry review?
We have received the Hendry review report and we are considering the merits of the Swansea Bay tidal lagoon project, including discussions with the Welsh Government.
Does the Chancellor believe that the balance of infrastructure spending between the north and the south-east is fair?
First, I should say that the Government are committed to addressing infrastructure needs across the UK. We will look at how best to use the available infrastructure funds based on the value for money of the projects that are brought forward, and different regions of the country will receive different allocations according to the projects that are available for development. The hon. Gentleman’s constituency has done well out of infrastructure funding.
Order. We have to be sensitive to the fact that lots of other Members are trying to get in. It is a matter not just of giving the answer but of knowing that other people want to take part. It is a fairly elementary point.
9. What discussions his Department has had with the Department for Communities and Local Government on the potential effect on the economy of the level of social care funding.
The Treasury regularly discusses social care funding with the Department of Health and the Department for Communities and Local Government. We have introduced a new social care precept and additional grant funding for social care. Taken together, those provide an additional £7.6 billion of dedicated funding for social care over the four years of the current settlement. That means that councils can afford to increase spending on social care every year.
The lack of funding for social care is having a devastating impact on people requiring care, carers and workers themselves. The 3% levy raises only £2.8 million for Rochdale. That does not even cover the cost of increasing the minimum wage for care workers. Does the Minister accept that?
As I say, it is not just about the council tax precept. We also have the better care fund coming in. We should also accept that this is not just about money. There is very variable performance around the country. It is worth pointing out that 50% of the delayed discharges attributed to social care take place in only 24 local authority areas.
Some areas, including the island, have taken the difficult decision to increase council tax by 3% to protect social care. Would the Chief Secretary to the Treasury consider finding ways of ensuring that councils have done all that they can to help themselves as well as ensuring that any Government support is made available now?
My hon. Friend raises an important point. There is a considerable amount of discretion for local authorities in regard to how much they want to prioritise social care, and the Government have given them greater flexibility in relation to the council tax precept.
10. What progress the Government have made on assessing the potential merits of the Ayrshire growth deal.
The Government have focused on taking forward city deals with Edinburgh, Stirling and Tay cities and we are looking to agree city deals with all of Scotland’s great cities. The Government have also published their Green Paper on the industrial strategy and are engaging closely with the Scottish Government and local partners on how the strategy can work for all parts of the United Kingdom.
We heard earlier about investment in Yorkshire. Would the Chief Secretary to the Treasury acknowledge that the Ayrshire growth deal would provide a much-needed economic boost to the area and reflect the Government’s promise to drive growth throughout the whole country, as outlined in their recently published industrial strategy?
As I said, we are focusing the city deals on cities. If the Scottish Government wish to take forward projects to enable growth in Ayrshire, they are able to do so.
11. What fiscal steps he is taking to support the British wine industry.
The UK’s wine industry benefited from a duty freeze at Budget 2015, which means that the price of a typical bottle of wine is 7p lower since the end of the wine duty escalator in 2014.
The English wine industry is going from strength to strength, particularly in Sussex. I have five award-winning vineyards in my constituency. The Wine and Spirit Trade Association estimates that a 2% reduction in duty would not only boost the industry but generate an extra £368 million for the Treasury. Will that be considered in the Budget next week?
I heard those arguments directly from the Wine and Spirit Trade Association, alongside representatives from the all-party parliamentary wine and spirit group, recently. The issue of English and Welsh wine was raised, and I listened carefully to their Budget representations.
15. What options he is discussing with the City of London to secure passporting for UK financial services into the EU.
We are ambitious for a deal, and it is clear that it is in the interests of both sides to maintain reciprocal market access. The important thing, however, is the end result, rather than the mechanism.
A lot of jobs in the UK depend on EU banking passports. For example, US banks can locate subsidiaries in the UK and then trade freely across Europe. In the Minister’s view, what are the prospects for keeping all those jobs in the UK after Brexit?
We want to ensure that British companies have the maximum freedom to trade and operate within European markets, and financial services are one of the areas in which we will be seeking a bold, ambitious agreement.
As the Minister continues his discussions on passporting, will he ensure that he maintains a dialogue with business associations and trade bodies such as TheCityUK, to ensure that we get the best possible settlement?
I can reassure my hon. Friend that the Treasury is very much in listening mode. We definitely want the best possible deal and we are clear that it is the end result, rather than the mechanism, that is important.
17. Whether his Department has made an assessment of the effect of the depreciation of the pound on levels of disposable income.
I am pleased to say that the Government are taking action to support the level of real disposable income per head, which is forecast to be 2.8% higher by 2021 than it was in 2016.
There can be few things more tragic than a Treasury in denial. As sure as night follows day, the collapse of the pound will lead to higher prices, particularly for food and household technology, so when will the Minister’s Department get its head out of the sand and bring forward proposals to boost disposable income, to help people to meet these rising costs?
Average earnings growth has now outstripped inflation for 27 consecutive months, and the Office for Budget Responsibility has forecast that real disposable income will be 2.8% higher in 2021 than it was in 2016.
Recent Office for National Statistics figures show that exports have grown and imports have fallen. Is that not good for jobs, the economy, and employment?
Yes, it is good for jobs, the economy and, indeed, the Scottish whisky industry.
T1. If he will make a statement on his departmental responsibilities.
As we approach the beginning of the UK’s negotiations with the European Union, my principal responsibility remains delivering near-term measures to ensure stability and resilience in our economy, while also addressing the UK’s long-term productivity challenges. The package that I will announce at spring Budget next week will address both objectives.
Not replacing teachers, scrapping subjects, and even going to a four-day week are just some of the measures that our hard-pressed schools are having to take given what the Institute for Fiscal Studies has confirmed are the first cuts to schools’ budgets in over 20 years. Will the Chancellor use his Budget to invest in our future, reduce the productivity gap, and ensure a high-skilled, high-wage economy?
Yes. There was a slight disconnect in the hon. Lady’s question, but I will certainly do those things. Investing in our future, addressing the productivity challenge, and dealing with the skills gap will be at the centre of the Budget.
T2. What steps are the Government taking to support economic growth in Medway through investment in transport infrastructure, such as the lower Thames crossing and roads, and help for small businesses?
The Government are taking forward plans for the lower Thames crossing and major road upgrades, such as at junction 5 on the M2. We are also establishing a Thames estuary 2050 growth commission, which will set out a vision for development in the area.
Last week, the Government snuck out a statement on regulations denying 150,000 disabled people access to personal independence payments awarded by the upper tribunal. That was brutal. Last year, the previous Chancellor absorbed the costs when the Government were forced to halt cuts to personal independence payments to disabled people. In this case, are those disabled people being denied benefits because the Chancellor has refused to absorb the costs resulting from the upper tribunal decision?
What we are doing is restoring Parliament’s original intention for the payments, ensuring that they go to the people to whom they were intended to go and that the benefits cap, which is in place as part of our fiscal rules, is able to be met.
One of those people contacted us. She has type 2 diabetes, fibromyalgia, depression, and anxiety. As a result of the Government’s action, she will now not be extended the support that the courts awarded her. It is clear from last night’s announcement of further austerity measures for Departments that the Government are all about forcing Departments to meet the Chancellor’s spending targets so that he can pay for further tax giveaways to the wealthy. Will he rule out further unfair tax giveaways, such as cutting the top rate of income tax to 40p in this Parliament? Otherwise, it is clear that he wants tax giveaways for the wealthy few and austerity for the most vulnerable in our society.
The right hon. Gentleman will have to wait until next week to find out what my proposals are, but let me be clear that we have no plans for further welfare reforms in this Parliament. However, the reforms that we have already legislated for must be delivered, and Parliament’s original intent in legislating for those reforms has to be ensured.
T3. In constituencies in London suburbs such as mine, ordinary family homes are caught by the upper levels of stamp duty land tax, and estate agents regularly tell me that that is creating cirrhosis in the market. If people are not moving at that level, people are not moving further down, meaning that others are unable to get on to the housing ladder. Is it not time to look again at the unintended consequences of the upper levels of that tax on home ownership and mobility?
It is worth noting that the SDLT reforms in the 2014 autumn statement reduced the tax for the vast majority of homebuyers and that all transactions up to £937,000 now pay the same or less in SDLT. As a London MP, I am obviously aware of the phenomenon to which my hon. Friend refers, but from the available data we do not yet have a clear consensus on the market impact of the higher rates of SDLT for additional residential properties or those at the upper end. We will continue to look carefully at that.
T7. The systemic maltreatment of businesses, as exemplified by the Royal Bank of Scotland’s dash for cash, requires action. Does the Chancellor accept the case for imposing a duty of care on the banks, particularly in their dealings with small and medium-sized enterprises?
The Financial Conduct Authority has published a summary of the main findings of its skilled persons report on RBS’s global restructuring group. The FCA is carefully considering that, and it would not be appropriate for me to comment while the process is ongoing.
T4. I have been conducting a survey in my constituency with local campaigners Peter Booth and Nick Craker, and many people have raised concerns about road safety in our towns and villages. Can my right hon. Friend inform me of any additional funding for road safety improvement?
My hon. Friend makes an important point, and road safety is a key priority for the £15.2 billion road investment strategy. In November 2016 we announced an additional £175 million to improve the 50 most dangerous roads in the country. As she will be aware, Cornwall has received £78 million from the local growth fund, including for investment in local roads.
Our biggest businesses are already benefiting significantly from the cut to corporation tax, yet today we find that profit-making Caffè Nero has paid zero in corporation tax. Given that the Chancellor is trying to balance the Budget on the backs of the disabled and the ill, what more will he do to stop profit-making companies avoiding tax on his watch?
As the hon. Lady will know, I cannot discuss the affairs of an individual taxpayer in this House, but this Government and their immediate predecessor have taken more steps over seven years than the previous Labour Government did over their whole 13 years in office to address the abuse of the tax system and aggressive tax avoidance and evasion.
T5. In the past year international tourist rates and spend grew faster in the south-west than in London, and the south-west also attracted more domestic tourists than any other region. Given the Mayor of London’s plans for a hotel levy, will the Chancellor look again at cutting the rate of VAT on tourism?
I agree that when a man is tired of London he should visit Somerset. Although tourism growth across the UK is indeed very welcome, and the Government will look at all opportunities to support it, reducing VAT would cost up to £10 billion, which is money that is needed to underpin our public services and to help to deal with our deficit.
I am glad that the Chancellor is in listening mode on the mess created by the Government on business rates. Can I urge him similarly to be in listening mode on the potential mess that will be created by the provisions of the Local Government Finance Bill on funding local authorities?
I will take the hon. Gentleman’s comments as a Budget submission, and I will pass them on to my right hon. Friend the Secretary of State for Communities and Local Government.
T6. Does the Chancellor share my concern about reports that billions of pounds in VAT and customs duties are not being accounted for? Will he look carefully at the role of fulfilment houses such as Amazon and eBay to ensure that we get the money that is due to the Exchequer?
My hon. Friend raises an important point, and at Budget 2016 the Government announced new measures to better enable Her Majesty’s Revenue and Customs to tackle just such activity. The measures are forecast to raise £875 million in total by 2021. Over the past year, HMRC has already seen a more than tenfold increase in online non-EU businesses applying to register for VAT.
A week before the election, the Chancellor’s predecessor came to Sussex and pledged support for infrastructure improvements to the rail line between London and Brighton. He commissioned a £100,000 study that has never been released. When will the Government release the south coast and London main line upgrade programme report?
Shortly.
T9. For many of my constituents in Kettering even a small amount of household debt can turn out to be unaffordable and can turn into a personal financial nightmare for them and their family. When will the Treasury respond to the excellent “Breathing Space” proposals to help people who are trying to get on top of their household debts by giving them statutory protection from unscrupulous, ruthless lenders?
The “Breathing Space” proposals are being carefully considered by the Government and we will report on them shortly.
Unsecured consumer credit is rising at a level last seen before the banking crisis. Does the Chancellor accept that that is unsustainable?
Clearly, it cannot go on forever, but households do have some capacity for debt, and consumer borrowing and consumer spending have been an important component of the robustness of the economy over the past few months. What I hope to see is business investment and exports providing a greater share of the growth during 2017.
I very much welcome this Government’s healthy commitment to scientific spending over several years, but it seems that our business investment in research is below the OECD average. May I urge the Chancellor to examine measures that will increase private company business expenditure on research?
As the Chancellor announced at the autumn statement, the Government are significantly increasing investment in research and development, rising to an extra £2 billion a year by 2020-21. We have also made the R and D tax credit regime much more generous. We want to ensure that the UK remains an attractive place for business to invest in innovative research.
Given the shameful neglect of social care spending in the autumn statement and straws in the wind about how that is going to be put right in the Budget, will the Chancellor take account of the fact that authorities such as ours in Wirral are having to deal with £45 million-worth of pressure due to the number of our older people who are needing help, and that a 3% increase in council tax will deliver us only £22 million?
I generally find it best not to comment on straws in the wind, but I recognise the pressure that many authorities are under from underlying demographic trends. As we have said before, we are alert to that concern and will seek to address it in a sensible and measured way.
For people moving into a residential care home the means test takes into account the value of their home, whereas it does not do so if they are applying for care in their own home. Does the Chancellor agree that there should be one simple system of means-testing, for whatever state funding people are applying?
The system that my hon. Friend refers to has been around for many years and predates the deferred purchase agreements which all local authorities now offer to people contributing to their care. We do not just need to look at individual, specific aspects of this challenge; we need to look broadly at the question of how to make social care funding sustainable for the future, in the face of a rapidly ageing population.
Since 1994, the Government have received £10 billion of pension cash which could have benefited miners. A Treasury written answers says that a further £153 million will be pocketed in the next three years. Will the Chancellor use the Budget to look again at the injustice of the mineworkers pension scheme?
I do not recognise the numbers the hon. Lady has given the House, but I will look at them and write to her accordingly.
Estate agents report that the number of transactions of so-called “prime properties” in London and elsewhere fell by 50% last year and that at the beginning of this year the situation is even worse than it was the year before. If it were proven that tax revenues had fallen as a result of policy, would the Chancellor be willing to review and change it?
As we have mentioned, it is not really clear that there is a consensus on what the data are saying. However, as with all taxes, we keep this one constantly under review.
Oil and gas received only a passing mention in the industrial strategy and was classed as a low priority for the Brexit negotiations. Will the Chancellor commit to actually doing something to support the future of the oil and gas industry in next week’s Budget?
The hon. Lady will have to wait and see, but I am well aware of the concerns that the industry is expressing. My hon. Friend the Financial Secretary met industry representatives last week and we understand their principal asks.
Will the Chancellor of the Exchequer give a guarantee to the House that the details of the Budget will be first revealed to this House, and that we will not find out about them in this weekend’s press?
What I can do is give my hon. Friend a guarantee that I will follow all proper procedures. Unfortunately, I cannot give him a guarantee that that will necessarily lead to the outcome that he seeks.
The former Chancellor, the right hon. Member for Tatton (Mr Osborne), has said that withdrawing from the single market would be “the biggest single act of protectionism in the history of the United Kingdom” and that the Government have chosen not to make the economy the priority. Is the former Chancellor launching a soft coup, or has he got this Government absolutely bang to rights for their economic vandalism?
The hon. Gentleman understands very well that being a member of the single market was not an option for the UK given the clear views expressed by the electorate in the referendum, but having comprehensive access to the single market will deliver the great majority of the benefits that he seeks from single market membership.
Some 100,000 UK businesses have already registered companies in the Republic of Ireland to hedge their bets given the policy and regulatory uncertainty caused by the vote to leave the European Union. Will the Chancellor urge his Cabinet colleagues, when they are negotiating around the table, to give policy and regulatory certainty to industries such as the chemical industry, which are not waiting to see what the Government are doing, but are simply haemorrhaging jobs and investment out of this country?
I agree with the hon. Lady that certainty as soon as possible is important, as are understanding of what implementation arrangements will look like and over what timescale. However, I urge her not to be hysterical about these things. [Interruption.] Many companies are making contingency plans, including setting up and incorporating subsidiaries in other European Union countries. It is another step altogether to be moving jobs and enterprises abroad. Most of the companies that we talk to have made it clear that there is more time yet for them to be reassured during this process before we see irrevocable moves.
On a point of order, Mr Speaker.
We will come to points of order.
The Treasury supported the launch of the National Needs Assessment’s infrastructure report, which clearly states that carbon capture and storage is required as part of energy policy going forward. When will the Treasury do the right thing and reinstate the funding for carbon capture and storage?
I think the hon. Gentleman was talking about carbon capture and storage. That is a matter for my right hon. Friend, the Secretary of State for Business, Energy and Industrial Strategy, and I will raise with him the point that the hon. Gentleman has made.
On a point of order, Mr Speaker.
If it flows from discussions, which I think that it does, I will take it.
In response to my recent Treasury question, the Chancellor of the Exchequer accused me of being hysterical. May we have a ruling from you in the Chair, Mr Speaker, about that sort of sexist language, which is used to diminish women who make a perfectly reasonable point? That sort of language would not have been used had I been a man. My question on the registration of companies in Ireland had nothing to do with the condition of my womb travelling to my head, as in the traditional rhetoric about hysterics. I expect that sort of language from the sketch writers of the Daily Mail, not from the Chancellor of the Exchequer.
Further to that point of order, Mr Speaker. I did not accuse the hon. Lady of being hysterical; I urged her not to be hysterical. [Interruption.]
Order. A point of order has been raised. The Chancellor is responding. Before anybody else says anything, we must hear what he has to say.
If my comments have caused the hon. Lady any offence, I of course withdraw them unreservedly.
I think that we should leave it there. I thank the Chancellor for what he has said. There is a difference between order and taste. People will have their own view about taste, but the point has been raised, and the Chancellor has made a gracious statement in response. For today, we should leave it there.
(Urgent Question): The prisons Minister told the Select Committee on Justice this morning that he has the number of the chair of the Prison Officers Association on speed dial.
Order. The hon. Gentleman is getting a little ahead of himself. At this stage, all he needs to do is put the urgent question in the very simple terms in which it was put to me, by saying, “To ask the Secretary of State for Justice if she will make a statement on the Prison Officers Association instruction to withdraw from voluntary tasks.” I have just done the hon. Gentleman’s work for him. If he wants to say it again, he may, but that is the way to deal with it. He will have his opportunity to speak in a moment. He is ahead of himself, which I suppose is better than being behind the curve.
Mr Speaker, thank you for asking the urgent question on behalf of the Opposition. I am grateful for the chance to update the House on this important issue Strike action is unlawful, as we have said to the Prison Officers Association. It will seriously disrupt normal operations in prisons and, although we will of course take any actions we can to mitigate the risks, we are clear that action of this nature by the POA poses a risk to the safety of prisons and prison staff. The duties that the POA refers to in its bulletin are not voluntary but a fundamental part of a prison officer’s role, and essential to running a safe and decent prison. They include: assessment of those at risk of suicide; first aid; restraint training and intervention; and hostage negotiation. The instructions by the POA are clearly designed to disrupt the safe and decent running of prisons We have made the maximum pay offer that we could to all operational staff in prisons. In addition, we offered a £1,000 retention payment to all operational staff and a reduction in pension age to 65, fully funded by the Government. We were disappointed that the offer was rejected by the POA membership, despite being endorsed by the POA leadership. This year’s pay award is now a matter for the independent Prison Service Pay Review Body, which will take evidence from all parties and report to the Government in April. The POA, of course, has the opportunity to make its case to the pay review body, but we are not waiting for the pay review body to respond In the past week, we have outlined progression opportunities that will take earnings to more than £30,000 a year for more than 2,000 staff across the country. We have also introduced allowances in areas in which the cost of living is higher to take basic rate prison officers up to £30,000 a year. We understand that prison officers do a difficult job in very challenging circumstances, so we are making these moves on pay to recognise their effort and hard work. In addition, the Government are investing £100 million to increase the net number of prison officers by 2,500 in the next two years. I urge the shadow Minister, if he has good sense and cares about the safety and order of our prisons, not to put prison officers and prisoners at risk, but to condemn this unlawful strike action.
The prisons Minister told the Justice Committee this morning that he has the number of the chair of the Prison Officers Association on speed dial. If the Minister is dialling, it is clear that he is not connecting because the situation could easily have been avoided. Ministers could have spoken to the POA before imposing a pay policy that has proven to be so divisive and unpopular. They need to sit down and talk to the POA, rather than threaten legal action and claim the action is unlawful before any court has made any such determination. In order to fix a prison system currently relying on staff doing extra work voluntarily—for no extra money—to keep our system running, Ministers need to focus on the real problems At the Conservative party conference back in October, the Justice Secretary announced 400 more officers to work in 10 challenging prisons, but the staffing shortfall at those prisons has grown in the last quarter. After the White Paper announcement of 2,500 additional officers, there was a fall of 133 staff in the last quarter of 2016. That 2,500 is now further away than it was in November So where is the Justice Secretary? Why have some prisons with no recruitment and retention problems received the pay award, while some prisons struggling most on that front have received nothing? How much additional money has been earmarked for this recruitment drive? What discussions have taken place with the POA leadership today To turn around this mess, we need a Justice Secretary who is serious—serious about working with prison officers—and we need a prisons Bill that will deliver serious reform. Sadly, at the moment, we have neither.
In relation to the additional allowances that were announced for staff last week, and also the pay progression opportunity for 2,000 prison officers across the estate, the POA was consulted. If the hon. Gentleman had read its press release in detail, he would have noticed that the POA actually welcomed those things; its issue was that it wanted them to apply to all the country. However, it is not novel to have a pay allowance in areas where it is difficult to recruit and where the cost of living is too high—it is not novel in the Prison Service, and it is not novel in the public sector The hon. Gentleman talked about extra money that is going into the Prison Service. I made it absolutely clear that we have £100 million for a net 2,500 officers. He referred to data relating to December last year, following our announcement in November, so let me update him briefly on where we are on prison officer recruitment. We are on track to recruit the 400 new officers the Secretary of State announced in October for the 10 most challenging jails. We have more people in training today to be prison officers than ever before. We are also investing £4 million in marketing to attract new prison officers The Labour party, I am afraid, is confused on prisons. Last year, it told us that it wanted the prison population cut from 80,000 to 45,000. Last Sunday, we heard from the shadow Attorney General that prisoners should be allowed to keep mobile phones so that they can carry on their life of crime in prison. Until the Labour party has sorted out its position, it is in no position to question us.
The Justice Committee has always made it clear that it recognises that there are great pressures on our prisons, and that includes pressures on the dedicated men and women who work in them. However, does the Minister accept that it is not helpful, given the efforts that are being made to turn the situation around, which takes time to achieve, to embark on a course of action that, legal or otherwise, creates further restrictions on the regime and, therefore, further tensions in the prison population? That makes it harder to deliver rehabilitation and, sadly, makes the job of prison officers harder in the long term.
The Chairman of the Justice Committee makes an important point. We have made progress on pay with the Prison Officers Association, and we have had progress on health and safety; indeed, today we were to meet the POA to discuss pensions. I absolutely agree with the Justice Secretary that today’s action only puts prisoners and prison officers, who work very hard, at risk.
As we have heard, prison staff in England and Wales have been demoralised by understaffing, underpayment and overcrowding in prisons. While the Government have offered a pay rise to prison staff to encourage further recruitment and retention of current staff, as we have heard, that will apply only in the south-east and London. The Minister said that that is not novel, but it does not address the issue of morale across the board This is a matter for England and Wales, but I am here to encourage the Minister to look at the Scottish Government’s attempts to reduce the number of people in prisons by moving away from ineffective, short-term prison sentences and making more use of community alternatives. Does he agree that he should concentrate efforts on such schemes? Never mind the marketing budget he spoke of to recruit people, what will he do to ensure that newly recruited prison officers are retained and that the morale of all prison staff, who already have a very stressful job, is restored?
The hon. Lady is right—the morale of prison officers is important to us. However, let me be clear: we had a pay deal endorsed by the Prison Officers Association towards the end of last year that was rejected. That pay deal is now a matter for the independent pay review body. We have submitted evidence and the POA can submit its evidence, so we are taking action on pay for the Prison Service as a whole. We have also put in place additional allowances for 31 jails where it is particularly hard to recruit. Further to that, we have created a new progression opportunity for 2,000 prison officers across the country, and today we were due to be in talks about pensions. We value prison officers and the work they do, and we want to support them, but unlawful strike action is not the way to progress. It would actually achieve the opposite, which is to put prison officers at risk.
While strongly regretting the strike action announced by the POA, I welcome the reduction in retirement age to 65 that the Minister has told the House about. In his further discussions on pensions when this strike is over—I hope he will be able to get back around the table soon—will he bear in mind the comparison with the pension offers for the police and the armed services, in that members in those schemes have to pay more?
I will certainly bear that in mind, although the pension deal offered to the POA and prison officers would have been fully funded by the Government.
Last year 119 prisoners took their own lives in our prisons—the highest level of suicides on record. The POA instruction urges members to withdraw from ACCT—assessment, care in custody and teamwork. While I have every sympathy with the 7,000 POA prison officers who now face these challenges in our prisons, what impact will that withdrawal have on the already dismal mental health support available in our prisons?
As I said earlier, involvement in ACCT processes and ceasing suicide and self-harm are fundamental to a prison officer’s duty. I would encourage and urge all prison officers to carry on with their tasks as they should.
May I congratulate my hon. Friend on the excellent work that he is doing with a difficult pack of cards? Does he agree that a prison officer joins to serve, and that that means to serve in whatever guise without striking?
I certainly do agree. In fact, the legislation on this was introduced by the previous Labour Government, so I was surprised that the shadow Minister would not condemn this unlawful strike action.
When prisons are in crisis and staff are on strike, every available penny should be spent on making prisons safe. Is the Minister aware that last year £500,000 of compensation was paid to serious criminals because they were released late from prison? When will he get that under control and provide prison officers with a safe working environment and prisoners with a safe and drug-free environment in which to be detained?
The right hon. Gentleman will be aware that we published a White Paper last year, and only last week introduced the Prisons and Courts Bill—the first Bill in 65 years that not only puts turning around our prisoners’ lives at the centre of our work but improves safety and security in our prisons. We are taking action.
Will the Minister update the House on some of the measures in the Bill that should help to resolve the situation and ensure that our prisons are places of safety and reform?
The central aspect of the Bill is to make it very clear that the fundamental purpose of prisons is to turn around offenders’ lives. If prisons are focused on that, we will reduce reoffending, and the £15 billion reoffending bill, but also help to make our prisons places of safety and reform.
To avoid any doubt, will the Minister say today that he will accept the recommendations that the independent pay review body makes?
We will obviously look at its recommendations. Let me make this clear: we value prison officers and the hard work they do, and we have already taken a lot of action to recognise that. The right hon. Gentleman cannot ask me to commit at the Dispatch Box to results that I do not know.
I agree with the Minister that it is wrong for this strike to go ahead, particularly given the services that it affects. I know he will share my concern at the 6,000 assaults on prison officers up until June 2016. Will he reassure me on the actions being taken to tackle this and to ensure that those who commit these assaults are held to account?
My hon. Friend is absolutely right. Prison officers work in a very challenging environment, and our job is to keep them safe in that environment. We are looking at a number of things, including making sure that any crime scene is preserved, working with the local police forces that attend the scene, and making sure that impact statements are well prepared and admissible in court. We are also ensuring that when someone assaults a prison officer and is convicted, the sentence is consecutive rather than concurrent with their existing sentence. I agree that it is vital that we keep prison officers safe.
This dispute is, on the surface, about pay, and the Minister has said an awful lot about that, but he must realise that it is also about unhappiness that has been developing in the Prison Service for many years now, principally about safety at work. The levels of assaults on prison officers, suicide and self-harm are unprecedented. Fixing that is how the Government are going to resolve this in the longer term. When are we going to start to see safety in prisons improve?
I have said right from the start that the levels of violence in our prisons are too high. We have been working very closely with the Prison Officers Association on health and safety and have made progress—for example, on regime management plans that the POA would accept. We are also investing £100 million to add 2,500 officers to the frontline, in addition to the points on pay that I have already made. These problems were long in the making, and yes, it will take time to resolve them, but we have the resolve to do so and we are doing it.
The job of prison officers is made more difficult by the presence in our prisons of drugs and mobile phones. Can my hon. Friend tell me by what date will we have at least one prison—just one—that is free of drugs and mobile phones?
My hon. Friend will have noticed measures in the Bill that we introduced last week to make it easier to test for drugs and deal with the problem of drugs in our prisons, and we are taking a lot of action on mobile phones. For example, new legislation under the Serious Crime Act 2015 has allowed us to turn off 160 mobile phones in our jails in the past few months. We are also working with mobile network operators so as to be able to switch off mobile phones in our jails. A lot of work is being done, but it will take time.
These are worrying developments. Does the Minister share my concern that this action will have an impact on family visits? As he knows, the ability for prisoners to meet their families and see their children—there are 200,000 children of prisoners—is extremely important for rehabilitation. Can he confirm that this will not be affected?
As I have said, strike action is unlawful. If prison officers withdraw their labour, that will make the regime even more restrictive, as the Chairman of the Justice Committee suggested. That is why we are urging hard-working prison officers to go back to work and make sure that prisoners can carry on with these regimes, whether in continuing important rehabilitative work or in making sure that our prisons are safe.
It is concerning that this action could lead to Tornado teams being withdrawn. Will the Minister confirm that contingency measures are in place to ensure that prison order can be maintained at all times?
I am sure that our prison officers will always do their duty if there is disorder in prisons, even at this difficult time. We are obviously urging the POA to withdraw its bulletin, but we also make sure that we have contingency plans for times like this.
The Minister does not need me to tell him that staff morale in our prisons is extremely low, which is not helped by very low staff numbers. In my constituency since 2010, the numbers at Frankland have gone down by 32%, at Durham by 48% and at Low Newton by 17%. When does the Minister think that he will be in a position to produce a pay offer that recognises the difficult and dangerous job that prison officers do?
We are already doing that; we are recognising that difficulty. As I have said, pay packets will go up to about £30,000 as a result of the measures we have introduced in the past week. The independent pay review body will report in April, after which we will take further action.
The Government’s commitment to opening new prison places in fit-for-purpose buildings, including in north Northamptonshire, is very welcome news. What impact does the Minister think that that will have on prison officer safety?
Modern, fit-for-purpose prisons will have a huge impact on prison officer safety, not least because they will not have all those corners where people can hide. They will also be good for rehabilitation. Today we have opened Her Majesty’s Prison Berwyn, which is the largest prison in Europe and is taking its first prisoners today. That is a huge step in our efforts not only to reorganise the estate, reduce overcrowding and improve safety in our prisons, but to ensure that they can be places of rehabilitation.
I have listened carefully to the Minister. He said that he thought that this action was designed to disrupt the safe and decent running of prisons. Does he not understand that the whole reason why prison officers are withdrawing from these tasks is that we do not have safe and decent prisons? We have intolerable and dangerous prisons; I would not want to work in them, and I am sure that the Minister would not either.
As I have said, our prison officers do an incredibly difficult job. I visit prisons almost every week and I know how hard the officers work. The POA has decided to make a stand on pay, as we have seen in today’s bulletin. I urge it to withdraw its bulletin because it will not do anything to improve safety in our prisons.
What steps has the Minister taken in the past few months to improve the career prospects of prison officers?
In addition to the workforce strategy that we will publish later this year, which will focus on the professionalisation of the workforce, last week we announced a progressive promotion opportunity that will allow band 3 officers to do roles relating to safer custody, mentoring and hostage negotiation, and to get a pay rise. That is a huge step not just in professionalising the workforce and allowing people to operate in more senior roles, but in improving the pay packets of our hard-working prison officers.
Does the Minister accept that his precipitative action will be counterproductive and that any lockdowns are likely to lead to a lot more trouble in prisons?
The precipitous action, if I understand the hon. Gentleman correctly, is unlawful strike action, which will do nothing to make our prisons safe.
It would be easier to manage the 85,000 prisoners in our jails if we did not have to incarcerate 10,000 foreign nationals who should be in prison in their own country. This week Jamaica rejected the Government’s offer of returning its foreign nationals. What steps are the Government taking to get these people back to secure detention in their own countries?
Since 2010 we have deported 33,000 prisoners —5,810 in 2015-16 alone—to their home country. There is a lot more work that we can do, and I am engaging directly with the Governments of the top 10 countries from which foreign national prisoners come in order to speed up the process.
Our prisons are unsafe and dangerous, and the Minister inherited that situation. We must not forget that we have lost 7,000 experienced prison officers. When Spice, which is a very cheap drug, came on the market, prisoners who were recalled within 28 days of being released were able to expand their business on the next landing. The steps that are being taken are a sticking plaster rather than major surgery. We need to recruit massive numbers of prison officers. We need proper pay and proper skills, not adverts for 18-year-olds with no experience.
We lost 6,000 or 7,000 prison officers, as the hon. Lady has said, but during that period we also closed 18 prisons. The key change in our prisons, as she has rightly says, is the advent of drugs such as Spice and Black Mamba, which have a huge value in prisons and make prisoners violent. In addition, our cohort of prisoners has become more violent: three fifths of people in our prisons are there for dangerous or drug-related offences. That is why we face a game-changing situation. More staff is part of the answer, but dealing with drugs and mobile phones is a key part of it, too.
Is not improving working conditions for prison officers part of the solution to the problem, and are not the Government wholly right to close old Victorian prisons and open modern ones, such as that in Wellingborough?
My hon. Friend is absolutely right that the working conditions for prison officers and the estates in which we house prisoners are important to improving safety in our prisons. I look forward to the new prison in Wellingborough opening shortly.
Given that 15 of the most dangerous prisoners have been transferred to Hull following the Birmingham riot earlier this year, that prison officers are saying that they fear for their safety, and that the prison was in lockdown in December, does the Minister understand why morale is so low, especially when the pay award is not going to areas such as Hull? Will the governor there have the flexibility come April to give these hard-working prison officers that pay increase?
Yes, prison governors will have control over their budgets and will be able to make decisions about staffing and how their staff are deployed from this April. We have to be absolutely clear. The POA says that this unlawful strike action is about pay. However, only last week we announced not only promotion opportunities but increased pay for vast numbers of prison officers across the country.
Having had an in-depth conversation with a constituent who has just left his role as a prison officer, I understand that the prison population is getting younger, that Spice and mental health issues are on the rise, and that morale is at rock bottom. Given the POA instruction urging its members to withdraw from detached duties such as Tornado work during prison riots, what is the Minister doing to reassure the families of vulnerable people in prison that they will not suffer during this dispute?
The best reassurance we can give to the families of prisoners is for the Prison Officers Association to withdraw its bulletin and not to pursue unlawful strike action.
(Urgent Question): To ask the Secretary of State for Work and Pensions to make a statement on the cuts to entitlement to personal independence payment.
Recent legal judgments have interpreted the assessment criteria for PIP in ways that are different from what was originally intended by the coalition Government. We are therefore now making amendments to clarify the criteria used to decide how much benefit claimants receive in order to restore the original aim of the policy previously agreed by Parliament, which followed extensive consultation I want to be clear about what this is not. It is not a policy change, and nor is it intended to make new savings. I reiterate my commitment that there will be no further welfare savings beyond those already legislated for. This will not result in any claimant seeing a reduction in the amount of PIP previously awarded by the Department for Work and Pensions Mental health conditions and physical disabilities that lead to higher costs will continue to be supported, as has always been the case. The Government are committed to ensuring that our welfare system provides a strong safety net for those who need it. That is why we spend about £50 billion to support people with disabilities and health conditions, and we are investing more in mental health than ever before, spending a record £11.4 billion a year Personal independence payments are part of that support, and they provide support towards the additional costs that disabled people face. At the core of PIP’s design is the principle that support should be made available according to need, rather than a certain condition, whether physical or non-physical. PIP is also designed to focus more support on those who are likely to have higher costs associated with their disability. PIP works better than disability living allowance for those with mental health conditions. For example, there are more people with mental health conditions receiving the higher rates of PIP than there were under the old DLA system This is about restoring the original intention of the benefit, which has been expanded by the legal judgments. It is entirely appropriate for the Government to act to restore clarity to the law, as Governments have done before and will no doubt continue to do in the future.
In a written statement published without warning on Thursday, Ministers announced the cuts to which the Secretary of State has just referred, which will take effect in two weeks’ time. Over the weekend, another Member in government said that this was to stop the payment of benefits to people “taking pills at home, who suffer from anxiety” Why is so little notice being given, with no opportunity at all for parliamentary scrutiny of these substantial cuts? Will the Secretary of State confirm, as stated in the impact assessment published with the regulations, that people suffering from schizophrenia, learning disability, autism and dementia will be among those worst affected by the cuts? The cut is being achieved by taking the benefit away from people whose mobility impairments are the result of “psychological distress”. According to the wording of the regulations, they will no longer be entitled to benefit. Does that not directly contradict the Prime Minister’s commitment to treat mental health on a par with physical health?
I thought every part of that question was based in error, if I may say so. Nobody is losing money compared with what they were originally awarded by the DWP, so that part of the right hon. Gentleman’s question is simply factually incorrect Far from being slipped out, the Department made a huge effort to let people know that this was happening. I left a message for the shadow Secretary of State, the hon. Member for Oldham East and Saddleworth (Debbie Abrahams), and I spoke to the Chairman of the Work and Pensions Committee, the right hon. Member for Birkenhead (Frank Field). I know that my hon. Friend the Minister for Disabled People, Health and Work also spoke to a number of colleagues, so the idea that this was slipped out is simply ridiculous The right hon. Gentleman talks about individual conditions, and I can only repeat what I said earlier: PIP is awarded not for conditions, but for the living or mobility difficulties that result from such conditions. All that the regulations do is to restore the situation to what it was in late November, before the two court judgments. This is not a new policy or a spending cut; this is simply restoring the benefit to what was intended when it was first introduced under the coalition Government.
Does my right hon. Friend agree that any welfare payment, especially one providing a tiered range of cash payments to people living with enormously diverse physical and mental conditions, requires clear assessment criteria and clarity in law? The new regulations will restore precision to the law, which will benefit all users of the system.
I completely agree with my right hon. Friend, who obviously has huge expertise in this area, that we need clarity. In particular, the vulnerable people receiving PIP deserve clarity. I reassure them and the House that all the regulations will do is to restore us to the situation that everyone knew they were in late last year, and in which they have been ever since PIP was introduced.
As we have heard, on Thursday the Government issued the new regulations by which disabled people or people with a chronic condition will be assessed for eligibility for personal independence payments. PIP helps disabled people to fund their living costs and, in particular, the additional costs that they face because of their condition. The regulations will come into force in just over two weeks’ time, but they were issued without any consultation with the Social Security Advisory Committee. The Government have said that this is because of the urgency of the issue The Government are in effect overturning two tribunal rulings that allow chronic “psychological distress” to be included in the PIP assessment. However, if the Secretary of State was so unhappy with the tribunal rulings, why did he not use his powers under sections 25 and 26 of the Social Security Act 1998 and regulations 21 and 22 of the Social Security and Child Support (Decisions and Appeals) Regulations 1999 to challenge those rulings in the courts The Secretary of State’s actions not only undermine the judicial process, but reduce eligibility to PIP support for over 164,000 people with debilitating mental health conditions, including those not able to go outside their own homes. What discussions has the Secretary of State had with disabled people’s organisations ahead of bringing forward these regulations? What is his assessment of the effects on the health and wellbeing of the people affected by the cuts? Given that disabled people are twice as likely to live in poverty as non-disabled people as a result of the extra costs they face, how many disabled people will be driven into debt or face poverty as a result of these cuts? What is the cumulative effect of these cuts along with the employment and support allowance work-related activity group cuts that are due to come into effect in April, which will affect 500,000 disabled people? Finally, why are the Government contradicting their earlier argument in the 2015 upper tribunal case of HL v. the Secretary of State for Work and Pensions in which they argued that “psychological distress” should be included in PIP assessments We have been arguing for parity of esteem for mental health with physical health for some time now. Indeed, the Prime Minister famously said that people with mental health conditions need more support. Why will the Government not honour that?
Let me deal with some of the detailed points raised by the hon. Lady. Incidentally, we are appealing the judgments, but because of the lack of clarity that would be caused by leaving the current regulations in limbo following the upper tribunal’s decisions, it is better to move quickly. I should also say that the tribunal has itself said that the assessment criteria are not clear. If the tribunal believes that, I am more than happy to accept it—indeed, I am grateful to it for telling us that the criteria are not clear—so I am now taking the opportunity to clarify the existing regulations The hon. Lady talked about the effect on disabled people. I absolutely agree with her that that is the central core of what we are trying to do. I point out to her that over two thirds of PIP recipients with a mental health condition get the enhanced rate daily living component, compared with just 22% who used to receive the highest rate of DLA care. That is why PIP is a better benefit than DLA. That happened previously under the existing regulations, and I am now restoring that situation The hon. Lady’s questions were predicated on this being a cut. It is simply not a cut; it is not entirely honest of her to say that it is a cut. If she looks at the facts of the case, she will recognise that people claiming PIP—specifically those with mental health conditions—have been and are better off with PIP. We are making the benefit clear. We are making the change so that the benefit is paid as it has been since it was first introduced, which is better for people, particularly those with mental health conditions.
Order. I respect the cut and thrust of debate, but there can be no accusation of dishonesty in this Chamber.
I will happily withdraw—
Order. That is quite sufficient. No further explanation is required. I am very grateful to the Secretary of State, and deeply obliged to him.
I welcome the fact that the Government are now, rightly, spending a record amount to support those with long-term health conditions and disabilities. If the Government were to decide to increase that amount yet further, surely that should be done in conjunction with charities and stakeholders, utilising their expertise, rather than on an ad hoc basis dictated by the courts?
My hon. Friend, who also has huge expertise in this area, is exactly right. There was very extensive consultation when PIP was first introduced about the design of what is, inevitably, a very complex benefit. As I have explained, we have seen a considerable improvement in awards, particularly for those with mental health conditions. The Government’s changes will restore that situation, which was better than people ever knew in the past.
The changes will, despite what has been said, exclude disabled people from vital financial assistance. They send a dangerous message to the public that people suffering from mental health conditions are less worthy of support than those with physical disabilities. We cannot and should not pit one disability against another. With condemnation across the spectrum, I urge the Secretary of State to rethink these callous changes. Can the Secretary of State offer any explanation as to why those with mental health conditions are not entitled to the same levels of support as others? Will he clarify whether this matter will be brought to the House? Finally, I ask that a debate takes place as a matter of urgency to give the House the opportunity to scrutinise the proposals fully and to put forward the concerns of disabled people across the UK.
The hon. Lady will know that what is considered for debate are matters for the usual channels. It ill behoves any Secretary of State to try to interfere in the actions of the usual channels The hon. Lady’s first question is based on the misapprehension that people with mental health conditions are doing worse under PIP as it is currently run. That is simply factually not the case. I am proud of the fact that overall the Government are spending £11.4 billion on people with mental health conditions—more than any previous Government have paid out. Overall, we are spending £50 billion a year on disability benefits. In every year of this Parliament we will be spending more than was spent in 2010. That is how we are meeting our commitments to disabled people, which I take very seriously and the whole Government take very seriously.
Are there lessons for the framers of the regulations to avoid them effectively being rewritten by the tribunals?
There are always lessons for anyone who writes regulations. By necessity, benefit regulations are complex, particularly because they need to be very sensitive. We are dealing with vulnerable people. In this case, we are dealing with disabled people who have extra living costs or difficulties with mobility. Inevitably, the framers of regulations try to make them as exact as possible. It is one of the roles of the courts to point out where that has gone wrong. In this case, the courts have said that they were not clear. What the Government are doing is clarifying them. That is to everyone’s benefit.
The Prime Minister has said that there should be parity of esteem between mental and physical health conditions. By overriding the courts on this matter, 160,000 people who would otherwise have been receiving support through PIP will not now receive it. Did the Prime Minister agree with the decision to overrule the courts and deprive these people of the support they desperately need?
The hon. Lady is wrong to say that 160,000 people will not get PIP because of the decision. She knows the details well enough to know that this is not about whether or not people receive PIP. There are two different cases and two descriptors—[Interruption.] She keeps treating me as though I am the Prime Minister. I am grateful, but I am not. I am the Secretary of State for Work and Pensions. The hon. Lady is simply wrong when she says that this will deny people PIP. As she knows, PIP is given on the basis of the difficulty of living costs or mobility costs. It is not a binary case. Twelve different attributes are considered and each attribute has a large number of descriptors. The court case affects two descriptors. It is not as she paints it.
I thank the Secretary of State for his clarification. Can he assure my constituents who are affected by PIP that the Government are committed to ensuring that PIP assessments are high quality and that people are properly supported throughout the process?
We are engaged in a PIP improvement project. My hon. Friend is right to ask the question about consistency of assessments. That is one matter we are certainly addressing. The other matter, which I know is of concern across the House, is delays. I am glad to report that because of the PIP improvement plan, claims are now being cleared at over five times the rate they were in January 2014. The delays in the system are being reduced and we are addressing the issue of consistency.
Has the Secretary of State forgotten that one of his predecessors resigned a year ago because of cuts to the disabled? Does he understand—it does not seem that he really does—the strong feeling among so many of the vulnerable that they will again be in the firing line for cuts? There is so much anxiety. We receive emails constantly from those affected, and from organisations, about the way the disabled are hit time and time again.
I am happy to assure them and the hon. Gentleman that what I am talking about today is not a cut. We are not going to have any new welfare cuts in this Parliament, apart from those that have already been legislated for. The decision we have taken is not—not—a cut.
It is clear that different medical conditions will have different impacts on people’s living and mobility. Does my right hon. Friend agree that we must recognise this simple fact if we are to continue to target resources on those who are most vulnerable and most in need?
I do. Indeed, that was the purpose of the original design of PIP. It is better than disability living allowance, which it replaced, precisely because it reflects the reality in individuals’ lives that some will have more difficulty in going about their daily business because of a disability. The PIP benefit is specifically designed in a very careful, and therefore complex, way to achieve that and it does. Ministers have to ensure that the rules are completely clear and that is what we are doing today.
If everything is working so well, why are my advice surgeries full of people who have been waiting for their PIP assessments for a very long time? Long-term disabled people are being denied them and being caused massive amounts of distress by the process. They feel utter despair at having to have anything to do with it.
As I say, an improvement plan is in place, which lets the hon. Lady know that things need to improve. They are being improved, as I explained in answer to the question from my hon. Friend the Member for Rochester and Strood (Kelly Tolhurst). I hope the hon. Member for Wallasey (Ms Eagle) can be reassured by the fact that we are recruiting a team of health professionals to help us to scrutinise the suppliers’ training and assessments. Both suppliers have their own improvement plans in place as well. We will be trialling audio recording of selected assessments from the beginning of next month to understand better how assessments can be improved.
As part of the improvement plan the Secretary of State refers to, will he ensure that those who need assessments in their own homes will be able to get them from both providers?
Yes. That point has been made by a number of non-governmental organisations, as well as colleagues on both sides of the House. We are looking at it very seriously.
Some of my constituents are unable to leave their homes without assistance due to a physical disability and some are unable to leave their homes because of a mental disability. Why should one be entitled to receive support via PIP, but not the other?
They will both be entitled to PIP at the level that will be assessed. Each individual is different and has different levels of difficulty. It is often the case that for people who are blind, with visual or cognitive impairments, they will not have a fluctuating condition. It will clearly be less amenable to treatment than some other conditions. It is the level of difficulty in a person’s daily life, whether they have a physical or a mental health problem, that matters in terms of the PIP assessment.
The Secretary of State will be aware that since joining this place I have been a strong campaigner for parity of esteem between mental and physical health. Is not one of the key points he is making that this is not a binary decision between mental and physical health? The point of PIP is that it promotes targeted help for people with mental health conditions. Is it not also the case that more people are receiving payments under PIP for mental health conditions than ever was the case under DLA?
I pay tribute to my hon. Friend for the very good work he has done in his time in the House on mental health. He is absolutely right. A core tenet of PIP’s design is the principle of equivalence between physical and non-physical conditions. The whole House ought to welcome this move. It is why, as he has explained, it is a better benefit than DLA. Rolling PIP out in this way and attempting to improve the assessment process in the way we are is the best way for us to help people with all kinds of disabilities, specifically those with mental health conditions.
I received an email following the remarks of the No. 10 adviser over the weekend. My constituent wrote: “As someone who has been diagnosed with PTSD and phobic anxiety, I am deeply distressed and angry about his remarks. Considering the current lack of funding and social stigma that mentally disabled people already have to suffer, this is beyond the pale.” Do the Government recognise the offence these remarks caused, and will they dissociate themselves from and apologise for them?
The hon. Gentleman talks about a Government adviser. I assume he is talking about my hon. Friend the Member for Mid Norfolk (George Freeman), who has apologised for his remarks and who has, as it happens, also done a lot of work on mental health issues. As he has explained, he has a personal and family history that makes him particularly sensitive to mental health issues. I hope that the House can accept his apology.
For those of us who deal with vulnerable constituents, it is frustrating to hear these matters described as cuts when they are clearly not. Where in the £50 billion disability budget would savings have to be made to pay for this increase?
Since the purpose of the announcement and the regulations that the Government are introducing is not to have to look for cuts elsewhere, I am happy to say to my hon. Friend that we can avoid those, but he is quite right. We have a welfare budget and are spending more on disability benefits than any previous Government, and we are proud of that fact.
The Liberal Democrats have tabled a prayer on this to try to force a debate, and I thank the Leader of the Opposition for supporting it. A constituent, Katherine, has contacted me concerned about how the amendments will impact on her when she is transferred from DLA to PIP. She currently receives the lower rate mobility component and suffers from attention deficit hyperactivity disorder, depression, generalised anxiety and social phobia. Her life is severely affected by her mental health. She cannot plan the route of a journey or follow the route of a familiar journey. Why do the Government want to deny her the mobility component of PIP?
Katherine will see no change to the rules that have applied to her in the past. I gently point out to the right hon. Gentleman that these rules were passed by a Government of whom he was a member.
I am grateful to the Secretary of State for providing some helpful clarity on this issue. Will he confirm that people who need help managing their medication will continue to receive that support?
Yes. Not only will they come under the appropriate descriptor for PIP, but—this has not been mentioned yet—they will receive support from the NHS as well. We have a healthcare system precisely to advise people on issues such as medication, so the state is already doing something to help them. Clearly that is necessary and will continue to be an important part of the system.
Mind says that the proposed changes will affect about 160,000 people and could prevent people from accessing the financial support they need to get to health or job appointments and from getting out to pay for fuel and heating, take their children to school or see friends and families—things essential for their daily lives and recovery. If the Secretary of State is so confident that he is right and Mind is wrong, will he meet representatives from Mind to discuss who is right and who is wrong, and then come back to the Chamber and give the same assurance?
I am always happy to meet representatives from Mind. As it happens, the Minister for Disabled People, Health and Work, my hon. Friend the Member for Portsmouth North (Penny Mordaunt), has already spoken to Mind on this matter, and it is coming into the Department to speak to us again soon.
On this issue?
On this issue, yes. As I have already pointed out, nobody is losing any benefit originally awarded to them by the DWP. That is the fact that most needs to be conveyed to those receiving the benefit.
I read the media reports on this change with some alarm, until I read into the detail of the regulations. To that end, will the Secretary of State confirm my understanding that far more people with mental health issues will be eligible for PIP than were ever eligible for the old DLA?
Yes, my hon. Friend makes a correct point, and one that I have made several times in the past few minutes. PIP is a better benefit than DLA for several reasons, perhaps the most important being that it is more available to those with mental health conditions. It always has been. The rules we are putting in place will make sure that it continues to be.
Why are the Government contradicting their argument in the 2015 upper tribunal case of HL v. SSWP, where they argued that psychological distress should be included in PIP assessments?
I am happy to assure the hon. Lady that psychological distress is included in PIP assessments. It always has been. Nothing changes as a result of these regulations.
I thank the Secretary of State for the reassurances, given the correspondence I received after the media coverage. Will he go further and confirm that the regulations will not result in anybody receiving less money than they were awarded by the DWP and that there is no intention to make new savings?
I am happy to repeat—yet again—that nobody will receive less money under PIP than they originally received in their award from the DWP as a result of the regulations we have introduced.
People with learning disabilities, schizophrenia and autism—the conditions highlighted by my right hon. Friend the Member for East Ham (Stephen Timms)—are more likely to feel anxious about their assessment and experience greater difficulty in conveying information about their condition and, according to my constituents, are increasingly subjected to a more hostile and aggressive assessment process. Does the Secretary of State share my concern that these people will be particularly vulnerable if the proposals are not introduced very carefully?
We are introducing them very carefully. I completely agree that people likely to suffer from anxiety should not be made unnecessarily anxious, which is why I am at pains to reassure them, the House and everyone else that this is not a policy change or a cut. Nobody will receive less benefit than they were originally awarded by the DWP.
I commend the Secretary of State for his response. Through the PIP improvement plan, can he assure constituents of mine who find it difficult to travel to assessments that they will be supported?
Yes I can. Assessors already visit people who need that particular service, and obviously that will continue.
Is not the reality of the situation that the disability benefits system, whether PIP or its predecessor benefits, has never been sufficiently sensitive or flexible when it comes to the needs of people with mental health illnesses, and that the court ruling was one small step in interpreting existing regulations—not new ones—to make the system just a little better? Does the Secretary of State not recognise that by rushing out these new regulations, he is changing the interpretation of an existing one, and in doing so will make people with mental health problems and illnesses a lot more anxious and unfairly treated?
The hon. Gentleman makes an important point, but I do not agree with his assessment. The upper tribunal said that the regulations were not clear enough, so we are clarifying them in a way that restores the original intention of the benefit. That should provide certainty to people, not uncertainty.
I recognise that the Government are retaining the scope of PIP and the funds for it, but does not the focus on vulnerable people with the most challenging needs highlight the need for more integration and more funds for social care?
As ever, my hon. Friend makes a good point. He is right about greater integration, which is precisely why we created a work and health unit. For the first time, my Department and the Department of Health are working together daily for the many people whose needs fall partly under health and partly under the benefits system, so that we can provide a more integrated, personal and sensitive service.
So many of my constituents have had to go through the mandatory reconsideration process all the way to a tribunal to be awarded the number of PIP points they should have been awarded in the first place. Alongside these regulations, does the Secretary of State have any plans to introduce support for disabled people who are awaiting the outcome of tribunal decisions?
The hon. Gentleman makes a point about people who appeal, but only 6% of PIP judgments are appealed—a very low number. We are seeking to improve the system by making sure that more health information is available earlier in the assessment process, which I am sure will help the hon. Gentleman’s constituents.
I have been following exchanges closely, and my constituents will want to know that their MP has understood things correctly. Can the Secretary of State confirm my understanding from what has been said that 25% of PIP claimants now get the highest rate compared with 15% under DLA, and that more people with mental health conditions qualify for PIP than ever did before under the old DLA system?
Yes, my hon. Friend is right in both those assumptions, and I am happy for him to share them with his constituents. Let me add a more specific assurance—that more PIP claimants with mental health conditions claim the mobility component, which stands at 27% as compared with 9% of those on DLA, which is another improvement.
In common with my hon. Friend the Member for Wallasey (Ms Eagle), who has just left her place, I have had surgeries at which constituents are increasingly anxious about these changes. Can the Secretary of State please confirm what assessment the Government have undertaken on the impact of these cuts on the already vulnerable mental health status and well-being of claimants, and will he make that assessment available to the House?
The equality analysis is available. I can only emphasise to the hon. Lady’s constituents—[Interruption.]—and indeed to those of the shadow Secretary of State, who is chuntering from a sedentary position, that this is not a change in policy or a cut. Nobody will receive less benefit than they were originally awarded by the DWP. [Interruption.]
There are people on both sides who are chuntering from a sedentary position, which is certainly not something I ever remember doing myself when I was on the Back Benches.
I remember that you sat next to me on those Benches, Mr Speaker We have an excellent Secretary of State, probably one of the most caring in the Government, and I am sure that what the Government are doing is correct. As the hon. Member for Torfaen (Nick Thomas-Symonds) said, however, Members have the opportunity today to highlight the fact that the process of assessment is not working for a number of our constituents. I am fed up with seeing every week a constituent who clearly should have been awarded PIP but is not getting it. Will my right hon. Friend say a little more on how we are going to improve that situation?
I am grateful to my hon. Friend for his kind remarks and indeed for your remarks, Mr Speaker, about the fact that you never chuntered from the Back Benches. This means that I will be able to correct my own memory of those circumstances, having sat next to you on the Back Benches for many years as well We are obviously trying to improve all aspects of the PIP process—the accuracy and the speed of the assessments—and, as I have said, the early provision of more objective health information will improve the situation hugely, not least for my hon. Friend’s constituents and others who find the process stressful.
I challenge the assertion that PIP is better for people with mental health conditions. One of my constituents has a diagnosis of bipolar disorder and used to receive DLA on the grounds of a need for continual supervision. This procedure is not recognised under PIP, and my constituent has lost not only her entitlement to PIP but consequently her working tax credit, which was passported via DLA. She is now considering leaving her job. What reassurance does this announcement give to my constituent and others in similar situations?
I can only repeat the facts to the hon. Lady. Over two thirds of PIP recipients with a mental health condition get the enhanced rate daily living component, which compares with just 22% who received the highest rate DLA care. As I have just explained to my hon. Friend the Member for Kettering (Mr Hollobone), for the mobility component, which is the other part of PIP, the relevant figures are 27% and 9%. The facts are incontrovertible. More people with mental health conditions are receiving PIP than used to receive DLA. It is a better benefit for people with mental health conditions than DLA.
My South Dorset constituents will be relieved to hear what my right hon. Friend said about looking at the assessment process, which goes horribly wrong far too often. Would he give more consideration to home visits and take into account information not only from health officials and GPs but from relatives, families or friends?
As I explained to my hon. Friend the Member for Crawley (Henry Smith), we already do home visits. If there are cases where my hon. Friend the Member for South Dorset (Richard Drax ) thinks people should have had home visits but did not, I encourage him to get in touch with me so we can look at the details of them.
Of the many constituents who have come to my surgery with problems over PIP, one particularly sticks in my mind: a man whose long-term mental health issues meant he simply could not get out to work, yet PIP was refused for him. This was not somebody who wanted to sit at home and take pills; he was simply unable to get out there. How can the Government possibly claim to want parity of esteem for mental health when they are trying to enshrine disparity as a result of this change?
It is impossible for me to comment on an individual case when I have not seen the details, but the parity between mental and physical disabilities is embedded in PIP. It is the whole point of PIP. I shall not weary Members by repeating the figures, but far more people with mental health conditions are receiving PIP than used to receive DLA. It may be an uncomfortable truth for Opposition Members, but it is still true.
Why was the Social Security Advisory Committee, in effect, bypassed when this regulation was put through? What consultations has the Secretary of State had with organisations that represent disabled people? What does he say to those organisations that are concerned about his Department’s repeated attempts to award people with mental health conditions who cannot follow the route of an unfamiliar journey alone the lower and not the higher mobility rate?
I spoke to the chairman of the SSAC and explained why I was invoking the urgency procedure, which is allowed. He and his committee still have the power to look at these regulations and make recommendations. The hon. Gentleman will have observed that many Members of all parties have talked about the problems of uncertainty and how they particularly affect many of those people with mental health conditions whom we have been discussing. What we are doing as quickly as possible is removing the uncertainty, meeting the upper tribunal’s desire for greater clarity in the system and restoring it to where it was before, so that everyone understands it. These are the rules under which people have claimed for a long time, providing quick certainty for people, which is what many people want.
On a point of order, Mr Speaker. Will you advise and guide me on the appropriate step I should take? At last week’s Prime Minister’s questions I asked about a petition being handed in at 10 Downing Street. The Prime Minister said that she did not understand what I was talking about, because a petition had been received. My question, however, was very specific. The petitioners said that they had made an appointment to hand in the petition, which usually means going outside Downing Street and knocking on the door to hand the petition in. I subsequently contacted one of the petitioners on Twitter, and found that they had made an appointment to go into 10 Downing Street, but that they had not been allowed to hand the petition in, and the security officer or policeman had taken it in.
I am bound to say two things to the hon. Lady. First, I have no responsibility for arrangements for the delivery of petitions, and certainly no responsibility for any security or other arrangements in the immediate environs of, or anywhere near, 10 Downing Street. The hon. Lady may think it very satisfactory that I have no such responsibility, or she may be gravely dissatisfied by that fact, but it remains a fact none the less Secondly, I think that the hon. Lady has found her own salvation in this matter. She has registered her discontent very forcefully on the Floor of the House, as she is privileged to be able to do as a Member of Parliament. I feel sure that she will communicate that point to her constituents, but I do not myself think that the argument need run any further, and even if it does, it certainly should not involve the Chair.
rose—
We will leave it there for now, at least as far as the hon. Lady is concerned, but the day would not be complete without my taking a point of order from the hon. Member for Christchurch (Mr Chope).
On a point of order, Mr Speaker. On 9 February a group of councils in Dorset made a submission to the Secretary of State for Communities and Local Government, seeking to abolish Christchurch and two other councils that are strongly resisting abolition. A week ago, I asked the Secretary of State whether he could give a closing date for the receipt of objections to that submission, and also a closing date for the receipt of alternative proposals. Those seemed to me to be reasonable requests My question was due to be answered on Friday. I received a holding reply. I assumed that I would receive a full reply yesterday, but I did not. I have still not received a reply. I wonder what could be done, Mr Speaker, to ensure that such a modest question can receive a timely response from the Secretary of State, because a great many of my constituents want to know how much longer they have in which to register their objections.
I do not have any great sagacity in these matters, but my response to the hon. Gentleman is as follows. It does seem to be a pretty straightforward inquiry, and, of course, it is a general rubric in this place that responses to hon. Members’ questions should be both timely and substantive In my limited experience, Ministers in successive Governments, irrespective of the hue of those Governments, tend to find it rather irksome, and possibly even embarrassing, if the non-answer to a question is regularly highlighted on the Floor of the House. I do not want to raise a spectre, but if the Minister does not respond, and if the hon. Gentleman—discontented as he would then continue to be—were to raise a point of order on a daily basis, it would be gravely embarrassing to Ministers in the Department concerned, and I am sure that they would not want that to happen.
I beg to move, That leave be given to bring in a Bill to require schools in England to provide access to their premises and pupils to representatives from post-16 education establishments and others providing guidance on careers, training and courses; and for connected purposes Having a goal is hugely motivational, especially for young people, and access to impartial guidance about what opportunities are available, linked to labour market information, should be a given for all young people so that they can set their goals in an informed way When I stood down as principal of John Leggott College on being elected to the House in 2010, careers education, information, advice and guidance were not perfect in our schools and colleges, but they were a lot better than they are now. The deterioration of careers education over the last six years is deeply concerning. The CBI was right to state in its 2015 education and skills survey that careers guidance in schools was “not good enough”: more than three quarters of the businesses in the UK said that careers advice was not good enough to ensure that young people made informed decisions about their future career options. It therefore does not surprise me that, having seen the Bill listed on today’s Order Paper, a large number of individuals and organisations have contacted me to provide encouragement For a long while the Government were in denial about the impact that a plethora of changes, combined with significant funding cuts, was having on the provision of careers education in schools. To be fair, Ministers responsible for careers education—from the right hon. Member for South Holland and The Deepings (Mr Hayes) to the right hon. Member for Harlow (Robert Halfon), the Minister for Apprenticeships and Skills—did recognise the deficit, and I believe that they advanced the arguments within the Government just as employers and educationists, along with Her Majesty’s Opposition, advanced compelling arguments from outside the Government. However, for far too long there was no positive response from the Government. Then the penny dropped. The response was the establishment of the Careers & Enterprise Company, which I have always seen as an expensive and complicated way of fixing a fairly simple problem MyBigCareer is a charity that provides free advice in many disadvantaged areas of the UK. Volunteer career advisers from the independent sector and professions give up their time to go into schools and give free impartial advice on apprenticeships, university and work-related courses, and are overwhelmed by the response. They say that not one school with which they have worked has ever heard of the Careers & Enterprise Company, despite millions being ploughed into the organisation Back in 2012-13, when I led a commission on skills involving the Humber local enterprise partnership, businesses and schools were agreed on the need for better careers education, and were keen to work together to make it happen. However, it did not happen, because the pressures of the performance of the bottom line of results make organisations look inward rather than outward. What was missing was the capacity and time for businesses, schools and colleges to co-ordinate their efforts. That, in my opinion, is where the resources should be simply and ruthlessly targeted, and the need remains as strong today as it was then It is worth pausing to applaud the fantastic work that goes on in many schools, despite the pressures and funding challenges. Some amazing people with both business and education backgrounds are working to provide young people with impartial information and choice. Nevertheless, students should be entitled to quality careers education that meets an agreed standard, wherever they go to school The ambition of my Bill is not to transform the whole of careers education, information, advice and guidance so that all young people have a consistent entitlement to quality advice, wherever they go to school. Would that I could do that, but my Bill has a much more limited ambition. It seeks to ensure that, at the very least, colleges and post-16 providers can talk directly to school students about the opportunities that are available to them in their area. Sadly, too many schools, especially some with their own sixth forms, put obstacles in the way of students’ receiving this crucial information In response to a question from me, the Minister for Apprenticeships and Skills himself said: “I recently visited degree apprentices at Gateshead College whose own school refused them a visit in order to talk about apprenticeships, skills and technical education.”—[Official Report, 6 February 2017; Vol. 621, c. 13.] He was rightly outraged by that, but it is not an isolated case. Colleges all over the country report the placing of similar barriers in school students’ way. That just is not good enough. Even in my own area, where the situation is generally good, the two excellent local colleges, North Lindsey and John Leggott, report that things are becoming more difficult than they used to be. When I met students and staff at North Lindsey, staff reported that school student access was becoming more difficult, and that was confirmed by the students’ experience. John Leggott reports instances in which students have been denied access to careers events because their schools chose not to participate. The pressure on schools to deliver results sometimes leads to an understandable reluctance to provide time for careers education that could otherwise be spent on mainstream studies, but I would argue that once young people have a personal goal, often linked to where they progress to next or a career target, it can motivate them to achieve much more, thereby transforming their performance in their academic studies As a result of its inquiry into careers education in July 2016, the Sub-Committee on Education, Skills and the Economy found that too many young people were leaving education without having had a chance fully to consider their future options, or how their skills and experiences would accord with opportunities in the jobs market. It also judged that a host of policy changes, initiatives and new bodies introduced in recent years had failed to make serious improvements, and had even been counterproductive in some cases. It welcomed the Government’s intention to legislate, and recommended that they set out robust mechanisms to ensure that the new law was well publicised and properly enforced In their response, the Government said that they were determined to tackle the patchy state of careers provision, and to raise its importance and profile in schools. They said that new legislation should be publicised and properly enforced, and made a commitment to update existing careers statutory guidance to ensure that schools were clear about what they needed to do to comply with any new legal requirements before they came into force. The Government made clear their intention to “publish a comprehensive careers strategy for all ages” The post-16 skills plan reiterated the Government’s intention to develop an “overarching careers strategy” and last month the Government’s industrial strategy Green Paper repeated the pledge: “we need to do more to empower students, parents and employers to make confident and informed choices about their education and careers options, whether they are in schools, technical education or higher education.” The previous Secretary of State, the right hon. Member for Loughborough (Nicky Morgan), had plans for legislation requiring schools to allow other providers of education and training to talk to their pupils about opportunities post-16. That was scheduled to be included in the now defunct education for all Bill. A statement at the time said that schools would “be required by law to collaborate with colleges, university technical colleges and other training providers” That seemed to have been shelved. However, there does now appear to be a chink of light at the end of a very long tunnel. Last week, Lord Baker proposed an amendment to the Technical and Further Education Bill that the Government accepted. It says that schools must ensure that there is an opportunity for a range of education and training providers to access pupils to inform them about technical education qualifications or apprenticeships That is a positive move, but the Government can seize the opportunity of my Bill to go that bit further, in line with their earlier intention and ambition. My Bill will ensure that school pupils have access to information from the providers of post-16 pathways locally direct to them. It will require schools in England to provide access to their premises and pupils for post-16 education establishments and other providers. That would significantly improve the quality of information available to young people when they make decisions about their future. As such it would be a great step forward All my experience tells me that education delivers best when it is focused on the interests of learners, not the interests of providers. Learners, young people, deserve a careers education, information, advice and guidance system that is focused on them and that delivers information directly to them. That is what this Bill will achieve Schools cannot deliver professional and independent careers advice and guidance on their own. They are not best placed to talk about the benefits of career pathways, courses post-16, technical and professional education or apprenticeships: colleges and training providers are. Colleges recognise the critical nature of good careers education and are keen to work with their local schools. These changes to access need to happen; they can no longer be swept under the carpet. We owe every young person this entitlement to information, so that they can achieve their potential and find the best routes into the right career. What will benefit our young people will benefit our businesses and economy. It will benefit us all Question put and agreed to. Ordered, That Nic Dakin, Neil Carmichael, John Pugh, Kelvin Hopkins, Caroline Lucas, Jason McCartney, Martin Vickers, Danny Kinahan, Jenny Chapman, Angela Smith, Lucy Powell and Lilian Greenwood present the Bill Nic Dakin accordingly presented the Bill Bill read the First time; to be read a Second time on Friday 24 March, and to be printed (Bill 148).
I welcome the opportunity for the House to debate the supplementary estimates affecting the Department for Business, Energy and Industrial Strategy. It is a real honour and pleasure to chair the Select Committee and I am particularly fortunate to lead a Committee with excellent hon. Members—I see some of them in the Chamber: the hon. Members for Cannock Chase (Amanda Milling), for Derby North (Amanda Solloway), for Edinburgh West (Michelle Thomson), for Bedford (Richard Fuller) and for Warwick and Leamington (Chris White). We try to work hard together to put in place policies that ensure workers in this country have higher skills and wages and greater protection, in firms that are productive, competitive, profitable and have barriers to scale up removed The title of today’s debate references the Government’s productivity plan, and I shall come on to that in a moment. However, given that this debate is about the estimates, I want to mention a couple of points regarding them. On a broader point, in my time in the House, it has always struck me as odd, even concerning, that billions of pounds of taxpayers’ money are voted through on the nod without any real debate, scrutiny or challenge. This debate will be about the Government’s productivity plan, and most of the contributions, including my own, will be on that document, which already seems to be becoming rapidly obsolete. At the end of it we will be asked to approve billions of pounds. The manner in which estimates are presented is opaque and often downright unhelpful. It is difficult to follow the money Of course, Departments produce annual reports, which are more helpful. They are scrutinised by Select Committees such as our own, and the National Audit Office conducts its own work, but the basic point of this place is to scrutinise and to challenge the Executive and then legitimately to permit the Government’s wish to tax the general public. I am far from convinced that the current system allows that to happen in an effective manner. Therefore, I look forward to the Procedure Committee coming up with some more radical improvements in this area The supplementary estimates reflect the machinery of government changes, with two Departments, the Department for Business, Innovation and Skills and the Department of Energy and Climate Change, coming together and losing responsibilities for further and higher education and for exports. BIS and DECC had resource savings targets of 16% and 17% respectively by 2020. The BIS Department had the “BIS 2020” publication, which contained a number of proposals to make budget cuts in this period, including, for a Department tasked with regional growth and pushing the northern powerhouse, the closure of the Sheffield office. A large part of the savings for the BIS Department was to be achieved through changing the way further education and higher education were to be funded. However, given the machinery of government changes, that option is no longer available to BEIS. Therefore—this relates to the point I made on the opaqueness of the estimates—it is impossible to tell, based on the information in front of us, what the planned savings of the new Department are and whether the “BIS 2020” programme is continuing When the Secretary of State came before the Select Committee before Christmas, I asked him whether similar savings of 16% to 17% would be required. He confirmed that. He said that the “BIS 2020” programme was no longer available, because it was a new Department, but he did not offer any alternative. When I asked what things the Department would stop doing in order to make the necessary cuts to the resource budget, the Secretary of State said: “We are going to set out the proposals to the Department and I am sure the Committee will want to see that. I am very happy to send them to the Committee to look at. We want to take the opportunity of the two Departments coming together to, as it were, re-engineer the way that the Department is run to make sure that we take advantage of a big opportunity to tie things up here internally.” That is very clear. However, no such proposals have been brought forward. I would be grateful if the Minister could outline what specific savings the new Department has to make and precisely how he intends to make those savings, including what activities will be stopped. That is in the context of the supplementary estimates before us, which state that the administration costs of the Department are rising from £425.6 million this year to £528.5 million next year. There is no explanation for that in the memorandum. Could the Minister provide one On the Government’s productivity plan, the factors regarding the UK’s productivity performance are well rehearsed but worth reiterating. At a national level, productivity has stalled. GDP per hour stands at 17% below its 35-year long-term trend and has only just exceeded the peak it had reached prior to the global financial crash. We as a nation are falling further behind our major competitors. Output per hour in the G7 excluding the UK was 18% above that of the UK, the widest gap in productivity since records began in 1991. That statistic shows the marked differences in performance between ourselves and our competitors. When it comes to productivity, we are above Japan by about 16 percentage points. Italy, however, is 10 % more productive than we are. The US and France are 30% more productive than we are, and Germany is 36% more productive than the UK. Of course, productivity in all developed countries was badly jolted as a result of the 2008 global crash, but the gap between our long-term productivity trend and that of our competitors in the G7 is about twice as big. Productivity and pay are intimately linked. Productivity gains are the way in which real wage growth—and, hence, living standards—can rise.
Does the hon. Gentleman accept that some countries with very high levels of unemployment can have a higher productivity figure, whereas we put the people to work in lower value activities, which is surely better than them being out of work, because the best way to get a job is to start off in a job that is not so good?
I will respond to the right hon. Gentleman in a moment when I talk about the structure of our employment market and how I do not think it deals with living standards, helps our constituents, or improves the long-term competitiveness of our nation It is little wonder, given the intimate link between productivity and pay, that Paul Krugman said: “Productivity isn’t everything, but in the long run it is almost everything.” Reflecting this, wage growth has been anaemic. In the period between 2007 and 2015, British workers suffered a bigger fall in wages than those in any other advanced country with the exception of Greece. Average pay fell in real terms by more than 10%. In the same period, real wages grew in France by 11% and in Germany by 14%. Median pay for workers in this country is still around 5% below its pre-crisis peak. There has been a lost decade of wage growth for our constituents, the British workers However, the headline nationwide figures for productivity, worrying though they are, mask the stark differences in regional productivity. Gross value added per hour in London is 32% above the UK average. The only other region with productivity above the UK average is the south-east of England, which is 9% above the average. The regions of the north and the midlands—including my own region of the north-east, and those of my fellow Select Committee members, the hon. Members for Cannock Chase, for Derby North and for Warwick and Leamington—have productivity levels between 10% and 15% below the UK average. In the nations of the United Kingdom, productivity in Scotland, which includes the constituency of the hon. Member for Edinburgh West, is 2% below the national average, while in Wales it is 19% below the average. Were it not for the performance of London and the south-east, the gap between ourselves and our major economic rivals, with whom we are competing for orders, trade and market share, would be even more dire.
In this place, we habitually compare our productivity with that of the G7, but I recall a debate on this matter around this time last year for which I did some research into medium-sized countries such as Norway, where productivity levels are significantly higher than in any of the G7 countries. Is the hon. Gentleman going to explore how the scale of those medium-sized countries could be a factor affecting productivity?
I am going to talk about scale in relation to the size of firms, as opposed to the size of nations, but the hon. Lady makes an important point This is not a dry and dusty economic treatise. I am talking about real, unsatisfactory productivity growth across the UK that is affecting the living standards of the constituents of hon. Members on the Committee and of Members across the whole House. That is why the Committee wanted to examine the Government’s productivity plan. This is not about dragging London and the south-east back; it is about moving the regions and nations closer to the economic performance of the capital The distinctive structure of our economy could also be acting as a drag on our economic performance. About four-fifths of our economy is made up of services, which is higher than in any other G7 country. It is clear that the service sector has driven the economic recovery since the downturn in 2008, but in the main the sector tends to have lower productivity than manufacturing. Moreover, in the past 30 years, we have seen a shift in the nature of jobs in this country. For every 10 middle-skilled jobs that disappeared in the UK in the 1990s and the first decade of the 21st century, about 4.5 of the replacement jobs were high-skilled and 5.5 were low-skilled. In Ireland, the ratio was 8:2 in favour of high-skilled jobs; in France and Germany, it was about 7:3. The nature of our economy and our skills set means that our major economic rivals are moving away from us and going higher up the value chain than we are. That is clearly having an adverse impact on productivity and living standards In addition, Britain is a nation, if not of shopkeepers, then certainly of small businesses. That is a great thing. In the 21st century, the number of businesses in the UK has increased by an average of 3% per year, to reach 5.5 million, which is 2 million more businesses than in 2000. However, the proportion of firms that employ people has fallen in the same period from about a third of companies in 2000 to around a quarter today. Micro-businesses—those enterprises employing fewer than 10 people—account for 96% of all businesses in the UK. The domination of small businesses in our economy has implications for productivity levels. They are unable to take advantage of economies of scale, they are more likely to face difficulties in accessing finance for new product, for process development or for scale-up activity, and they may find it difficult to find the time not merely to fulfil existing orders but to identify opportunities and secure bigger contracts for domestic and export markets. Those companies cannot afford armies of procurement and export teams.
Does the hon. Gentleman agree that in certain sectors of industry, such as tourism, the jobs that are needed are low-skilled jobs such as running a caravan park?
The right hon. Gentleman makes an important point. I want to see a pound generated being a pound generated throughout the economy, but I would like the structure and model of our economy to move higher up the value chain than running a caravan park, as he suggests Another big factor determining productivity levels is investment in research and development. R and D spend by UK businesses hit almost £21 billion in 2015, with an average growth rate of 4.2% since 1991. On the face of it, that is impressive, although the publication “The UK R&D Landscape” has stated that “the business enterprise component of R&D expenditure in the UK is low by international standards, even after adjusting for structural difference between countries. It is also concentrated in the hands of a few very large firms and the small number of industrial sectors in which they are based.” Indeed, seven sectors of our economy account for over two thirds of all R and D spend. The pharmaceutical industry accounts for a fifth of all R and D in this country. The automotive sector now accounts for 13%, reflecting its growth spurt in recent years, which is testimony to the great work that the car manufacturing businesses are doing. Aerospace accounts for 8% of the total Investment in R and D is concentrated in the hands of foreign-owned businesses. A quarter of a century ago, 73% of business R and D spend was undertaken by British-owned firms and 27% by foreign-owned companies. Since 2011, however, more than half the investment spend has been undertaken by foreign-owned firms. This has reflected the changing ownership of UK plc, with foreign direct investment often taking over larger British firms. This has certainly resulted in a boost to productivity, but it also leaves us vulnerable. In the event of a downturn in those investors’ home countries, there is no patriotic “stickiness”, and that R and D investment could fall and jobs and production facilities here in the UK could be cut to safeguard activity overseas in their home market.
I take the hon. Gentleman’s point about the “stickiness” of that investment, but it is a tribute to this country’s universities and the skills to be found here that foreign investors choose to come to the UK and base R and D resources here.
The hon. Gentleman is absolutely right. In terms of bang for our buck, the amount of great work that the universities sector carries out and the number of spin-out companies that higher education provides are a magnet, in contrast with the “stickiness”, for foreign direct investment. We have to make this country as attractive as possible to such investment. Just as I referred to London and the south-east pulling up our productivity, I dread to think what our productivity and investment levels might be if we did not have that foreign direct investment Despite the R and D spend of both Government and business, we have never spent the OECD average—far from it. In the past 35 years or so, we have spent 2% of GDP on R and D only once and that was in 1986. The long-term trend is around 1.6% or 1.7%, which is not good enough if we want living standards to be maintained or productivity to rise. Productivity weaknesses clearly need addressing, and the previous Government introduced the productivity plan. We welcomed the Government’s attention on this pressing matter, but the plan lacked focus and did not demonstrate how success would be judged. Rather than being a clear road map or strategy for how the UK would close the productivity gap, it disappointed by being a mere collection of existing policies, with nothing new, distinctive or game-changing. The plan had 15 areas covering all aspects of Government and business activity, incorporating skills, R and D, housing and transport. However, it had no meaningful metrics to evaluate its relative success or failure and no milestones to track progress Although the plan was a Treasury initiative, the old Department for Business, Innovation and Skills clearly had a role to play, but clear lines of communication and accountability were non-existent. BIS and Treasury Ministers told our Committee that the plan was monitored by civil servants, which seemed somewhat relaxed given that productivity was meant to be the Government’s most pressing economic challenge. They seemed to forget that they were members of a ministerial Sub-Committee. Productivity now seems so 2015.
My hon. Friend is giving a superb speech about the impact of productivity and the role of the Business, Energy and Industrial Strategy Committee, which he chairs and on which I proudly serve. Will he say a couple more words about the importance of the machinery of government in delivering a productivity plan? He just mentioned it, but it is shocking that Ministers came before our Committee and were totally unaware that their responsibility for the productivity plan was being scrutinised by a Cabinet Sub-Committee. The machinery of government and Departments, such as the Treasury, will play a crucial role in scrutinising the strategy and delivering for organisations on the frontline.
One of the weaknesses of government—this is based not on the colour of Administrations but on the nature and culture of Whitehall—is that it is silo-based. The lack of co-ordination is clear. In the modern age, with pressing economic challenges, we need greater monitoring, scrutiny, supervision and co-ordination across the Government It would be interesting to hear about the current status of the productivity plan because, as I said, it seems so 2015. It was intensely fashionable, but only for around 12 months. The new buzz phrase is “industrial strategy.” The strategy contains 12 pillars, as opposed to the 15 areas of the productivity plan, so we are seeing some efficiency. I welcome the Government’s willingness to embrace the phrase as a potentially positive thing, but it exemplifies one of the problems that we face. Successive Governments have tended to announce something, to provide a new initiative or to undertake a review. Policy flits like a butterfly from one thing to the next, with little if any meaningful impact on the ground on firms’ productivity or our constituents’ living standards, which is to the detriment of long-term economic competitiveness.
The hon. Gentleman is making a well-informed speech. He says that there is no influence on businesses’ productivity, but it actually has a damaging impact in certain cases. Take investment in renewables, for example. The industry ramps up and is able to support it, but then the pipeline that it is relying on is whipped away through Government policy changes.
The hon. Gentleman is spot on. Constantly changing energy policy can undermine long-term investor confidence and the ability to ensure that foreign direct and other investment is attracted to this country. Businesses require as much certainty and clarity as possible. Of course, things change—“Events, dear boy, events”—but it is important to have a clear road map and to minimise policy tinkering as far as possible.
Before the hon. Gentleman concludes, will he return to the point made by my right hon. Friend the Member for Wokingham (John Redwood)? Perhaps the largest piece in our productivity puzzle is the fact that we have essentially traded some of our productivity for high levels of employment. That is a good thing, so we must proceed cautiously before wishing away any job—even if they do tend to be lower paid and lower skilled.
I thank the hon. Gentleman for reminding me about that intervention. Employment is crucial and having record levels of employment is a good thing. However, we want good, full-time employment on permanent contracts. We want people to be secure in their jobs and able to invest in their own lives and communities with some confidence. Over the past 20 or 30 years, we have moved towards insecurity and precarious forms of employment, such as bogus self-employment, zero-hours contracts or agency work. We have to think about our vision for the economy. Is it about everybody in work being paid pitiful wages or ensuring that we can pull the activities of Government and industry together to upskill people and move them up the value chain so that, ultimately, they have higher living standards?
I think the hon. Gentleman and I agree on this. My point is that it is easier to get to higher pay, more skills and smarter working if we start from a base of many more people being in work, which is the good news about Britain. None of us is happy with people in low-paid jobs without skills or machine power at their back.
The right hon. Gentleman must accept that although the best position to be in to get a job over the past five or 10 years was to be in employment, people are stuck on low-paid, zero-hours contracts in precarious types of employment. They are not moving on. There is no social mobility or economic progress. We seem to be stuck at the bottom floor when it comes to getting people into employment and that is not the model that we should be using I hope that the industrial strategy learns the lessons of the productivity plan. The Select Committee will publish our report into the Government’s industrial strategy later this week, and we hope that it will address some of the matters that the productivity plan does not: a longer-term focus providing more policy certainty; greater collaboration and co-ordination across Government to mitigate the problem of a silo-based approach across Whitehall Departments, as mentioned by my hon. Friend the Member for Hove (Peter Kyle); and the lack of meaningful metrics, milestones and measurements of success. If it is to work and succeed, the industrial strategy cannot just be this year’s model; it needs to be a thoughtful and well-established cornerstone of an economic and business policy framework, and an economic and business mindset, to increase productivity, compete with the rest of the world, and improve living standards for all in this country.
I am delighted to follow the hon. Member for Hartlepool (Mr Wright). I want to put it on record that he is an excellent Chair of the Business, Energy and Industrial Strategy Committee, although he seems to be a bit more of a “glass half empty” man, particularly in this debate. He supports many of the measures in the productivity plan and the industrial strategy, and members of the Committee share similar views, with perhaps the notable exception of my hon. Friend the Member for Bedford (Richard Fuller) Improving productivity in the UK has to be a priority if we are to achieve our potential for economic growth. I welcome the premise of the Government’s productivity plan and, in equal measure, suggest that it should continue to be scrutinised by Parliament and the Committee as we work to address the fact that our productivity is below the European average. It is worth noting that that is the case despite the levels of employment that we currently enjoy, and I agree with my right hon. Friend the Member for Wokingham (John Redwood) that that situation puts us in a good position to increase productivity and to move from lower-paid to higher-paid jobs. As we all know, the UK is currently ranked equal fifth among the G7 countries for labour productivity, but there is much about which to be positive, and I am sure that the trend can be reversed As co-chair of the all-party group on manufacturing, I know the immense value to the sector of automation and technological advances. Continuing to invest in innovation can be instrumental in improving productivity. It is vital to recognise the role that Industry 4.0—the fourth industrial revolution, as it is known—will have in rapidly developing our economy. Nations such as Japan and Germany are already embracing the concept, and the UK must develop a solid foundation on which to build our manufacturing capability.
My hon. Friend mentions Germany and the importance of manufacturing. Does he agree that one lesson we can learn from Germany is the importance it places on technical education? The Government’s record of investing more in technical education and improving apprenticeships, in both number and quality, should be commended and will help with the aims he outlines.
We are sometimes in danger of thinking that Germany is so far ahead and advanced that we should try to do our own thing. Germany has a number of ideas that we can borrow and from which we can learn a great deal, meaning that we can advance significantly in manufacturing.
Does my hon. Friend also agree that quite a bit of the problem resides in the public sector, not the private sector? Our best car plants are world beaters and have world-leading standards of productivity, but publicly owned Network Rail is way behind the continental railways in terms of productivity. We have the solution in our own hands in the public sector.
I agree with my right hon. Friend about our automotive plants. However, I will not criticise Network Rail today because it has just announced that it will be installing lifts in my local railway stations, on which I congratulate it most profusely The Catapult network is a good example of what can be achieved through innovation. Some £15 of benefit is returned for every £1 of investment, and we should remember the advantages of the Catapult centres as we come towards the Budget. Some 69% of business R and D can be found in the manufacturing sector, which highlights its importance to the wider economy. The UK is also championing the idea of horizontal innovation, whereby intelligence and technologies can be shared across industries, which could have a significant impact on how sectors such as shipbuilding and construction could learn from the best practice of industries such as the automotive sector Through-life engineering services—TES—are increasingly on the agenda, with manufacturers going beyond production to retain responsibility for maintaining systems throughout a product’s life. I particularly commend Cranfield University for its work in that area, and I am pleased to co-chair the TES Council, which brings together industry leaders to discuss how best to develop such services. One area in which the UK leads its international counterparts is additive manufacturing, or 3D printing, which we can see at the high-value manufacturing technology centre in Ansty We are starting to see a recovery, but productivity in the services sector is outstripping that of the manufacturing sector. It is well documented that UK productivity is weak—stubbornly so, as the hon. Member for Hartlepool said. Job quality, whether through wages, skills and training or employment security, must continually improve for us to reverse poor productivity growth As a midlands MP, I take particular interest in the midlands engine initiative and look forward to the publication of the regional strategy—I hope that the Minister will shed more light on that. The midlands has a rich tradition of manufacturing and can be at the forefront of a manufacturing renaissance in this country. However, as has been noted, productivity in the west midlands has been consistently falling against the UK average. The midlands engine is a welcome initiative that can define our priorities and develop the skills we need in key industries such as the automotive sector on which we so heavily rely At today’s Treasury questions, I asked the Chancellor about the provision of an adequate energy supply as electric vehicles become more prevalent. Companies such as Jaguar Land Rover are developing technologies that will shape the future of the sector, but they cannot do so without the necessary infrastructure. Electric cars will be the future, and it is important that we provide the necessary power so that we can build their batteries in the vicinity of those car plants. That is the kind of joined-up approach that will be so important The final point of the 15 in the productivity plan emphasises rebalancing the economy and regional empowerment. London and the south-east contribute an enormous amount to the national economy, but economic growth should be powered from every corner of the UK.
My hon. Friend talks about the historical low productivity in the west midlands. Does he agree that the long-running under-investment in transport infrastructure, particularly in the road and rail network, is hampering the region’s strong underlying economic fundamentals on exports? We need a higher rate of investment in our infrastructure in the west midlands.
I most certainly agree with my hon. Friend. We should be looking to the productivity plan and the industrial strategy, which address issues such as infrastructure. The West Midlands combined authority and our local enterprise partnerships should come together to think about how we address issues such as our transport infrastructure far more effectively By allowing for strong economic growth, investing in infrastructure will increase our productivity, whether in transport or digital services. As with all such initiatives, it is important that individuals feel part of regional and national growth. That can only be beneficial for job satisfaction, which in turn increases the likelihood of the productivity plan achieving its aims I particularly highlight the need for the plan to be measured against clearly defined objectives using metrics. A loose framework can give useful direction but lacks the necessary precise approach and timescales. Tying skills development to the productivity plan must also be a priority. Identifying the changing landscape of our economy and the skills required to keep pace with that change will be a phenomenal challenge. Encouraging greater uptake of science, technology, engineering and maths, for example, is key Productivity is clearly an issue that needs to be addressed urgently. I welcome the Government’s determination to put productivity at the heart of the industrial strategy and suggest that we must prioritise investment in R and D, as well as focusing on improving job quality. Embracing new technologies, such as through Industry 4.0, should be central to our approach.
I congratulate the hon. Member for Hartlepool (Mr Wright) and his Committee on their sterling work in this area. I was particularly intrigued by his opening remarks about the nature of these estimates debates and their weakness. I was reminded of my experience when I was faced with the House for the first time after being elected back in May 2015. I walked around and found all these peculiar signs, such as for the Vote Office, where the one thing we cannot do is vote. The one thing we are unable to do in estimates debates is scrutinise the estimates properly. That certainly needs to be addressed in the longer run I was also taken by what the hon. Member for Warwick and Leamington (Chris White) said about the importance of innovation for productivity. It reminded me of an old teacher of mine, Professor Tom Burns, who, in 1960, wrote a book along with Graham Stalker called “The Management of Innovation”. How many years ago is that? It is a long, long time ago—57 years. The lessons of back then, when Professor Burns was talking about the growth of Marconi in Scotland, are just as relevant today in respect of what is involved in innovation. He argued that two main types of skills or knowledge needed to be deployed, and therefore developed in society. The first was the ability to have what he called “analytical skills”, which we might relate to STEM subjects and other quantitative skills. We need the ability to analyse problems and weaknesses, be it in technology, social fields or whatever, but that is not enough—we all know that we can analyse problems. Everyone in this House might agree what the level of unemployment is, but we would have different recipes to deal with it. So as well as having analytical skills, he said society had to be good at developing creative skills. That might be through “simple creative thinking”, as we could call it today, but I believe he was thinking more widely about how we bring decision-making and judgment skills to enhance the capacity to meet new types of challenges The other thing that Professor Burns mentioned drew on what happened in Scotland in the 18th century, at the time of the Enlightenment, and the ideas produced there. His argument was that not only did we have some uniquely brilliant individuals but, for the first time, we had the effective networking of people and of ideas. We were not building false barriers between people, be it by subject or geography. We should reflect on that today as people too often get stuck in professional silos, with ideas not being shared and networked enough. The possibilities therefore do not come to fruition in the way that they might The final thing that Professor Burns said in this book of 57 years ago was that we needed circumstances in which people valued and encouraged the “application of novelty”—in other words, experimentation. We all know that if that is done well, it will inevitably lead to a failure rate, so risk taking, as we would call it today, has to be part of the recipe. One thing that Governments of all hues are very bad at doing is putting in place policies that recognise that although we are going to generate some things that might fail, that is worth it, because we will generate other things that are a great success.
My hon. Friend is making an excellent speech. I concur with what he is suggesting about entrepreneurs—our wealth creators—being given both the framework to succeed and the framework to fail. Does he agree that this is about looking at not just our innovation structures, but at more systemic issues such as banking? When a small business does fail, it is often hauled over the coals and loses absolutely everything, so we fundamentally need to change some of the ways in which we do business in this country.
I quite agree with my hon. Friend. Today I asked a question of the Chancellor of the Exchequer, which once again attracted the typical non-answer. I asked whether, given what has happened to businesses over the past few years, with things such as the RBS “dash for cash” and the like, there was not a case for having banks accept their duty of care towards the business community, and small and medium-sized enterprises. We need to look more widely at how we create a context that will really support innovation and risk taking.
What study have the Scottish Government made of the big impact on Scottish productivity of the pronounced decline in output from the North sea as the fields mature? What can they do to offset that?
The best thing I can do is leave that to my hon. Friend the Member for Aberdeen South (Callum McCaig), who is an expert in these matters. He will be summing up for our party and is from that part of the country. I am aware that the Scottish Government have been undertaking considerable work on this matter. Our growth commission is under way, and part of its work deals with looking at precisely the matter the right hon. Gentleman raises. The commission is yet to report.
My hon. Friend would agree that the Scottish National party is doing a lot on this issue. In Aberdeen, we are holding a meeting next week with the London Stock Exchange Group so that supply chain companies can learn about alternative methods of capital financing, meaning that we can secure those industries in our city and ensure that they can continue exporting way into the future.
I thank my hon. Friend for that intervention I wish to move on to another area that has been addressed. I believe it was the hon. Member for Horsham (Jeremy Quin) who mentioned the importance in our society of universities, the production of higher levels of knowledge and our research capability, and how that was a tremendous attraction if we are to drive up levels of productivity. I agree entirely with him, but there is a problem that we must be willing to face. The universities are under a type of strain that they have never faced before: the threat to the research community created by the Government’s attitude towards EU nationals. I can take Members to universities in Scotland and show them people who are leaving, or planning to leave, the university and the research community because of the uncertainty created by this Government. If there is one thing the Government could do, either today or very soon after, to secure our research community, it would be to give these people absolute guarantees that they are welcome and will carry all their rights with them into the future Scotland has different productivity needs, one of which relates to our attitude towards immigration. I would argue that we need more immigration, of the right type. Many blockages to enhancing that immigration can be found in the Government’s policies, and I wish to give hon. Members one example. A few years ago, for the tier 1 investor visa, the Government increased the sum that people would have to have to bring into the economy to invest in British business to a minimum of £2 million. I would be very happy for Scotland to attract people with a wee bit less than that to invest in Scottish business, because they could still do a tremendous amount of good As the Minister knows—we have discussed this in the past—another tier 1 visa is the entrepreneur visa. Residents and citizens of England or Scotland do not need bags of cash to become an entrepreneur. Indeed, some of our most wonderful entrepreneurs started with very little but an idea. What do we say to people who want to come here as entrepreneurs? At the moment we are saying, “You have to produce, in advance, a detailed business plan to be assessed.” It is doubtless to be assessed by the Home Office. They have to produce a business plan of how they will start a business in the UK, even though they are not in the UK. That strikes me as a wee problem to begin with. Secondly, they need a minimum of £50,000 in their back pocket to bring in with them to invest here, along with the business plan. We would never ask that of people who live here domestically. There are therefore things that could be done to sort out a number of the supply-side blockages that prevent us from attracting some of the investors and entrepreneurs who could do so much to help to build capacity and improve productivity in our society in the longer run Finally I wish to touch on skills, which has also been mentioned. Many years ago—it was 1990 or 1991—in the early days of “competence-based qualifications”, we had a body called the National Council for Vocational Qualifications, which was based in London. The people there had seen me on a television programme, so they called me to ask whether I would come down to give it some advice. Because they waved a cheque in front of me, and being a Scotsman, I readily agreed. They said to me, “We have a problem with competence-based assessment. We are unsure that it is actually delivering and accrediting people for their competence.” I did a piece of work that they subsequently published, which I have never seen refuted, in which I said that the method of competence-based assessment operating in the UK would generate a vast number of false positives—that is, a large number of people who receive qualifications but are not actually competent. That might be a contributing factor to the fact there is no evidence at all that those who come into the labour market with competence-based qualifications are doing anything to enhance productivity in our society. There is therefore a long way to go, but it has been a privilege to take part in the debate.
It is a great honour to follow the hon. Member for Kirkcaldy and Cowdenbeath (Roger Mullin); I always listen to him with great enthusiasm. It is also great to be here with fellow members of the Business, Energy and Industrial Strategy Committee. To add to the comments of my hon. Friend the Member for Bedford (Richard Fuller), it is a great privilege to serve under the chairmanship of the hon. Member for Hartlepool (Mr Wright) Productivity is an essential driving force for the country’s economy, with direct implications on our long-term growth, living standards and wages. Its importance was highlighted by my right hon. Friend the Chancellor of the Exchequer in his autumn statement back in November, when he spoke about how the UK is trailing behind several countries in terms of productivity, including the US and Germany. In seeking to tackle that problem, he announced £23 billion of investments, designed to improve output, with particular emphasis on infrastructure and housing. Along with the productivity plan and industrial strategy, that illustrates the Government’s commitment and determination to making the UK the best place in the world—
I hope the hon. Lady will forgive me for interrupting her in her stride—she is making an interesting argument—but the largest proportion of the Chancellor’s £23 billion productivity innovation plan is for house construction. How does that add to productivity?
I will come to that later in my speech. I apologise, but I am having difficulty seeing today, so Members should shout loudly if they want to intervene I was saying that the Government’s commitment to making the UK the best place in the world to do business should be warmly welcomed by the House I have spent most of my life in retail and manufacturing, so I am acutely aware of the challenges faced by the sector, which are clearly not unique to the industry and can be seen throughout the business community. With the right foundations, business and industry can and will flourish; we just need to provide the right conditions, which the productivity plan rightly addresses. In doing so, it is essential for us to focus on improving the quality of our primary and secondary education to provide an adequate starting point for young people heading into further education, apprenticeships and employment. I welcome the Government’s recognition that improvements to basic skills such as numeracy and literacy play a vital role, and the fact that they are putting those skills at the heart of their reforms. It is skill provision in general that I shall touch on today The UK’s competitiveness in the open market is now more important than ever. Following the result of last year’s referendum, as we seek to find new avenues for investment and trade, the potential opportunities for and contribution to our nation’s productivity should not be underestimated. New capital, more competition, and new technologies will all be vital as we look to compete with the rest of the world From a Derby North perspective, the success of the midlands engine is incredibly important to me. The midlands engine strategy can be a vehicle to deliver policy that will not only increase productivity but support the vision for a successful United Kingdom. We have a strong offering in the midlands that can deliver growth that is not only balanced by sector, geography and trade, but sustainable, in that it creates skilled, highly productive roles backed by private sector investment. The midlands engine must focus on elements that give us competitive advantage, central to which is our expertise in key sectors, especially advanced manufacturing In my constituency alone we have a high density of original equipment manufacturers—such as Toyota, Rolls-Royce and Bombardier—and a well-established supply chain that serves them all. It is essential that we have the training and skills that match local employers’ needs, which is something the productivity plan looks to address.
Today I met Katie Goodwill, who won the gold medal in computer numerical control turning at the 2016 WorldSkills show in November, and Ryan Worthington, another award winner; both work for Rolls-Royce in Barnoldswick in my constituency. Does my hon. Friend agree that apprenticeships play a vital part in developing the skills we need to improve productivity, and join me in congratulating Katie and Ryan on their success?
Of course I do, and I congratulate them both on their great success. I was about to mention the apprenticeship levy, which is essential because it encourages large businesses to invest in their workforce and in the future, and will ensure that the UK has the skilled workforce it needs in the years to come During my time as an MP, I have regularly heard that more needs to be done to tailor skills to play to local strengths and boost productivity. Brilliant work is being done in Derby to try to tackle that problem. For example, in response to the needs of businesses such as Rolls-Royce and Bombardier, the university in the city recently opened a new science, technology, engineering and maths building. Apprenticeship providers such as 3aaa are building initiatives to link employers, schools and apprenticeship providers to tailor skills. A great example is the recently opened construction academy in Derby North, which looks to encourage and train young people in the much-needed skill of bricklaying. More needs to be done to support such hard work, and giving the required resources to the productivity plan will do just that. Initiatives such as those I have mentioned can make a real difference locally, and will not only set the foundations for growth but keep the east midlands and the UK on the map as a place where a technically skilled workforce is in place to meet demand It is reported that there is an annual engineering skills gap of 82,000 staff, which is clearly cause for concern. However, it is widely recognised in Derby that the local worker supply chain is struggling to keep up with the demand for skills that employers need. There are, though, positive signs that with smart investment and the long-term vision that comes from the productivity plan, those problems can be overcome. The Government have shown that they are committed to tackling our productivity problem, whether it is through new funding and capital, or through education, infrastructure and research and development. It is imperative that we support the plans outlined as we look to implement a long-term vision for our economy. I certainly feel that for Derby and the east midlands there are some great proposals in the plan that will go a long way towards addressing our specific concerns, while also addressing the issue of productivity and output throughout the UK.
It is a pleasure to take part in this debate. I commend the hon. Member for Hartlepool (Mr Wright) for his contribution and for his leadership of the Select Committee. I reiterate a point that he made: the productivity plan, “Fixing the foundations”, was published in July 2015. We should step back and think about the radical changes we have seen since then, because it is ever a moving target. We have a new Department for Business, Energy and Industrial Strategy, a new Prime Minister, a new Cabinet, an industrial strategy Green Paper and, fundamentally, a new relationship with the EU. In terms of the estimates, it is indeed a moving target. There is a real challenge in the macro relationships of how we get policy provision to guide us going forward among all that shifting Obviously the most important of those changes is Brexit, and how the Government respond to it will be crucial for the future of any industrial strategy or productivity plan. Prime Ministers come and go and Departments get renamed, but leaving the EU is the sort of event that is going to take massive energy to achieve anything positive. Worryingly, the rhetoric I have heard so far does not fill me with a great deal of faith. We are undermining some of the noble intentions of the productivity plan and industrial strategy. Putting up barriers will have an impact on productivity. I am in no way convinced by some of the grandiose sentiments along the lines of, “If everything doesn’t work out, we can always revert to World Trade Organisation rules”—most people do not seem to be aware that the fundamental work of revising and agreeing schedules is a massive amount of work in itself It is probably not a surprise to my colleagues here that I will focus briefly on Scotland, as is my wont in every BEIS Committee as well. A good job has been done with productivity in Scotland. We are now at the point where our output per hour is much the same as the UK average, and that has happened over the past 10 years. We have managed to close the large gap, but, as has been commented on previously, we are, frankly nowhere in terms of the wider UK. I managed to dig out the statistics that I quoted last year and the research that I had done in the House of Commons Library, which showed that Norway’s productivity was 77% ahead of the UK, and that continues to shock me The analysis paper of the respected think-tank, the Fraser of Allander Institute, on the impact of Brexit suggests that Scottish productivity will be negatively affected by leaving the European Union. To me, that is absolutely fundamental. Ending the free movement of people and thus reducing labour mobility is a fundamental issue for us in Scotland, and it cannot be overstated. One impact could be reduced inward investment, which could affect higher productivity Commitment 55 in the productivity plan report calls for a continuation of “the long term decarbonisation of the UK’s energy sector through a framework that supports cost effective low carbon investment.” The industrial strategy Green Paper then adds to that by calling for an upgrade in infrastructure and a delivery of affordable energy and clean growth. However, from my point of view, this Government are actively undermining these laudable aims by selling off the Green Investment Bank with undue haste. I understand in principle why one might want to capital raise, but I remind the Minister that the Green Investment Bank is quite clear that it does not need to capital raise until 2018. Furthermore, in terms of the nature and the type of projects that have been selected to address market failure, I now have a concern that there will continue to be a gap. Yes, market failure has been affected, and even blocked, by the introduction of the Green Investment Bank in some areas, but it has yet to be addressed in other areas.
Is my hon. Friend aware that Macquarie Bank wants to buy the Green Investment Bank for the brand name, so that it can exclude competitors from taking part in local authority environmental investment schemes? Selling the bank will mean less competition in environmental investment, which in turn means reduced productivity in the long run.
I am aware of that, and I have had conversations with the Minister, Macquarie and the Green Investment Bank. The fundamental concern is that, potentially, Scotland risks losing an asset in terms of the headquarters in Edinburgh. Despite the assurances of the preferred bidder—let us call it Macquarie—I will be watching this matter very carefully, because there is a risk that we will lose head office functions and the board. Going back to my hon. Friend’s point, it is building an infrastructure that enables productivity and these kind of things to succeed. If we put in public capital investment and we then do not get the value from it, that seems to me to be short-sighted and misguided. Equally, without the firm commitment to maintaining jobs in Scotland, all the productivity plans and industrial strategies in the world will not address the regional disparities that we see in Scotland, especially if we promptly roll away all these things On carbon capture and storage, we have spent £100 million on two competitions to try to kick start this new technology. We heard yesterday on a BEIS Committee day trip to Edinburgh that that is very difficult, and I accept that. As my hon. Friend the Member for Kirkcaldy and Cowdenbeath (Roger Mullin) commented, we must be prepared to take risks to drive things forward for future gain. We accept that £100 million has been spent, but if we do not press ahead with some of these proposed projects, our country could once again lose its competitive advantage, and we cannot rule that out and forget about it I am most concerned by some of the narrow-minded views that have been exhibited in some of the debates around Brexit. They have a pervasive narrative that sounds isolationist and deeply disappointing when it comes to the wealth of opportunities of renewable energy. For example, a new interconnector between Scotland and Norway will soon allow the transfer of wind power and hydro power between the two nations, allowing them both to cut their emissions. This is not the time for retrenching and retreating. Construction has also started on a new 1 GW interconnector to France, further demonstrating our inter-dependence with our European neighbours Let me move away from energy and quickly dwell on some of the other issues that have been most affected by Brexit in the productivity plan. The first is the issue of international students. In the BEIS report on the productivity plan we said: “We recommend the Government does not allow migration pressures to influence student or post-study visa decisions. It is illogical to educate foreign students to one of the highest standards in the world only for them to leave before they have had an opportunity to contribute to the UK economy.” I have a story from my constituency of Edinburgh West. A remarkable young man, Mr Olubenga Ibikunle, won a substantial sum of money to do a PhD in civil and coastal engineering. As soon as he completed his course, he was turfed out. The level of his ground-breaking research, commitment and dedication to self-improvement means that he is exactly the sort of person that we would like to keep in Scotland The Prime Minister refused to consider removing students from net migration targets when she was in front of the Liaison Committee. I hope that she will reconsider her position, because international student numbers are already beginning to fall as evidenced by the latest immigration statistics. We cannot allow our position as a world leader for international students to be eroded by a dogmatic fixation on an arbitrary target of tens of thousands of migrants.
Obviously, Scotland’s higher education sector is a huge success story and does fabulous work. The Smith Commission explicitly mentioned that we should be looking at the possibility of a post-study work visa in future for Scotland. The UK Government have announced that they might consider that for some universities in the south of England, but that does not help universities in my constituency, or in the constituency of my hon. Friend.
I absolutely agree with my hon. Friend. Part of the problem could be solved by devolving those powers to Scotland so that we can protect our own higher education sector We have also heard this month from the chief executive of Innovate Finance, Lawrence Wintermeyer, who told the BBC that “Brexit has had a chilling impact on investment.” Investment is vital to industrial strategy and productivity. Wintermeyer backed up his statement with figures that show venture capital investment in FinTech firms, which is vital for my city of Edinburgh, has dropped in the UK from £970 million in 2015 to £632 million in 2016. In objective 12 of the productivity plan, the Government used Innovate Finance’s investment figures as a measure of success Finally, the productivity plan wanted to “help deliver a Europe that is more dynamic and outward focused...by accelerating the integration of the single market, completing trade agreements, and improving the quality of regulation.”
That is a good idea.
Yes, indeed. It was a sensible aim at the time and it is one that Scotland still supports. I hope that the Prime Minister takes serious note of the Scottish Government’s proposals to keep Scotland in the EU. She could then come back to us having had substantive discussions of what is contained in the paper. Obviously, we would formulate a considered response, but Scotland regards the proposals as vital. We are committed and dedicated to growing our economy, creating wealth, and increasing our productivity, but we cannot do it on our own and we need help. We are ambitious and we want Scotland to grow, and we say to the Government: do not hold us back.
I call Mr Quin —[Interruption.] Mr Jeremy Quin.
I am most grateful to you, Mr Deputy Speaker, for calling me. I was thinking long and hard about the wise words of the hon. Lady who preceded me This is a debate in which we are showing the way for the UK economy. Up until now, the debate has been of a very high quality, albeit with a relatively low number of Members present. It was opened by the hon. Member for Hartlepool (Mr Wright). It has been a pleasure to work under his joint chairmanship of the Select Committee investigation into BHS and Sir Philip Green. I believe there has been some news on that this afternoon.
Take your glasses off.
Indeed.
I hope we can agree that it is due to the successful joint working of the BEIS Committee and the Work and Pensions Committee that this afternoon we have seen Sir Philip Green agree to pay £363 billion into the pension scheme.
I also heard the figure of £363 million. I, too, hope that it may be a tribute to the work of the Committee and, in particular, the joint Chairs of the inquiry. However, having taken part in that investigation, I take nothing at face value. I hope the hon. Lady will forgive me if I do some proper research before saying how happy I am. I hope there will be grounds for happiness, particularly for the pensioners involved In his introduction, the hon. Member for Hartlepool quoted Paul Krugman: “Productivity isn’t everything, but in the long run it is almost everything.” It is rare that I concur with the éminence grise of economists on the Opposition Benches, but on this—uniquely, perhaps—I think the hon. Gentleman is right. I hasten to add that there are two clauses to that sentence. The first is, “Productivity isn’t everything”. I agreed with the interventions made, which I will dwell on for a minute, by my right hon. Friend the Member for Wokingham (John Redwood) and my hon. Friend the Member for Newark (Robert Jenrick) regarding employment. We have to start with the realisation that where we come from economically could be a lot worse Many of us will recall vividly the impact of the dreadful recessions of the ’80s and ’90s in which homes were repossessed, factories were laid waste and there was mass unemployment. It has been bad enough this time around. We are still facing the challenge of rebalancing our fiscal position, but coming through the 2008 financial crisis—the worse since the 1930s—we have had some stellar successes. We have grown the economy since 2010 faster than any country in the G7 other than the United States. We enjoy the highest rate of employment on record; households with no workers are at the lowest level for 30 years. Youth unemployment for those who have left education stands at less than 6% It seems strange that I am saying this but, yes, I greatly admire the French and French productivity. We have much to learn and do, but I would rather be here debating a plan for improving our long-term productivity than standing in the Assemblée Nationale trying to defend high rates of youth unemployment. A distinguished economist and a distinguished statistician—even if he cannot count up to 57—are both in the Chamber, and I hope they will forgive me for saying that whenever something is referred to as a “long-term problem” by an economist, it normally means that they find it hard to measure in the short term Great trends in productivity are easy to spot, especially after the event. Instantaneous judgments are still worse, and forecasting is less easy. Before tackling what we should be doing better, we should keep an eye on where we are currently. This recession was very different from its predecessors. Although it was not always adhered to—there are some ghastly, scandalous examples, some of which have been highlighted by the hon. Member for East Lothian (George Kerevan—there was, by and large, a policy at the top levels of banks to practise forbearance, and by Her Majesty’s Revenue and Customs on troubled businesses. This, combined with base rates at low levels, provided the lifeline through the recession for many firms This also went with the grain of how businesses wanted to operate. Businesses could remember how frustrating it was in the ’80s and ’90s to fire highly trained, experienced and loyal employees, only desperately to try to re-recruit the same individuals two or three years later. They wanted to avoid those problems this time. It is a tribute to employees and unions that there was a recognition that constrained wage growth would enable more people to stay employed through the recession. The legacy is clear. We have not had the increase in unemployment that has helped to flatter the productivity growth of many of our competitors. I am glad of it because a labour force that has retained its skills and its practices is a vital asset High rates of employment are a boost to the UK while being negative for our productivity. We are not, of course, alone in having high rates of employment. The hon. Member for Hartlepool referred to the German economy, which is some 20% more productive than ours, despite similar rates of employment. My only note of caution about Germany’s incredibly impressive productivity performance is that we are talking about two very different economies Germany’s economy has an unrivalled capacity to produce capital goods that are hugely in demand from emerging markets going through a strong growth period, underpinning already firm foundations in that economy. But there is a caveat. My hon. Friend the Member for Warwick and Leamington (Chris White) also mentioned the German economy. I spoke regularly in my prior employment to German businesses and opinion formers, who were acutely aware that, although they were producing hugely sought after assets of huge value at the current phase of economic expansion, they looked to our economy and our ability to deliver on services and tech, as potentially the drivers of the next phase of economic development I do not for one second suggest that we should rest on our laurels, especially as the two most productive sectors in the UK—financial services and, looking at the hon. Member for Aberdeen North (Kirsty Blackman), North sea oil—have suffered most in the past decade. It goes without saying that we need to broaden and drive the overall success of the economy, but we should not dismiss too readily the strength of the platform from which we start The Government’s productivity plan is a solid document that has been made even more solid by the 10 pillars of wisdom in the industrial strategy that was published earlier this year. I will pick up three broad themes within it: infrastructure, people and finance. As the House will be aware, we have one of the most congested road networks of anywhere in the G7. I welcome the targeted investment announced by the Government in the autumn statement. Infrastructure spend has two benefits. The practical one is shifting goods from A to B, but there is also a psychological benefit on people’s ability and interest in spending and investing in the private sector. In both contexts, I welcome the decision on the third runway at Heathrow, and the ongoing delivery of Crossrail, which each have a psychological benefit way ahead of the immense direct practical benefit It may sound strange that, as a Member of Parliament proud to represent a Sussex seat, I also endorse what the Government are doing on the northern powerhouse. Anyone who has taken more than a slight look at the extraordinary extra housing numbers required in Mid Sussex and focused on their implications, and anyone who has endured the congestion on Southern rail—when it is running—or tried the M23, would know why support for a balanced growth in the economy is a general point right the way across the UK Our people are our country’s most important asset, just as they are any company’s. A fair point that was picked up in the Business, Energy and Industrial Strategy Committee report is the importance of parity of esteem between university students and those who choose more vocational routes. I am delighted that the institute for apprenticeships will be up and running in a few weeks, providing vigour and scrutiny to the courses being rolled out as part of the apprenticeship levy. Alongside that, I welcome the Government’s continuing commitment to the Catapults, and their boost to research and development—both new ventures. Assisting in the key phase between product development and launch is to be welcomed. It is the biggest boost to R and D at any stage since 1979—a good year. This is the right point in the cycle to be making that investment. However, in the long term, Government investment to support economic growth, proportionate and appropriate though it is, should not be seen as an end in itself. It can be dwarfed by the available capital in corporate coffers looking for a home. Government investment can oil the wheels and improve tax efficiency, as it is doing, on R and D Patient capital, which is incredibly important—I look forward to the report—must be encouraged, but it is to the private sector that we must really look to take up the challenge and invest. The sector knows that it will be doing so with a Government who are on a path to long-term fiscal sustainability, who are driving up education and training standards and, as they have shown with Heathrow, are prepared to take difficult decisions to boost our infrastructure Now is the time to invest in the UK economy. Nissan, Facebook, SoftBank and Google are all showing the way. UK companies should continue to take up the gauntlet. We have a good economic platform. Now is the time to invest; it will not only be our productivity growth rates that benefit.
It is a real pleasure to follow my hon. Friend the Member for Horsham (Jeremy Quin), with whom I sat on the joint Committee inquiry, and so many colleagues from the Business, Energy and Industrial Committee including: the hon. Member for Edinburgh West (Michelle Thomson) who, as ever, demonstrated she is a strong voice for Scotland on the Committee; our excellent Chair; and my hon. Friends the Members for Derby North (Amanda Solloway) and for Warwick and Leamington (Chris White) Many Members have mentioned that the Government’s focus on productivity is very welcome. While many economic indicators are good—we have debated the fall in unemployment this afternoon—productivity remains stubbornly poor, and the word “stubbornly” has been mentioned several times this afternoon. If we are to ensure a sustainable economic recovery—one that is resilient to potential economic challenges—we really do need to address the issue of productivity. Let us be honest: that is not something new, and it is an issue that successive Governments of all political parties have struggled to tackle The Government’s focus on improving our productivity was first introduced with the publication of the productivity plan back in 2015. As other members of the Committee have outlined, we conducted an inquiry into the plan, and I want to pick up on a number of the points and concerns the Committee raised. One was about the lack of real focus—more specifically, the lack of measurable objectives—in the plan, and I want to come back to that. There was also the lack of a real plan in terms of implementation, milestones and timeframes. To be honest, there was a sense that, in some ways, the plan was a bit of a basket of different policies, rather than necessarily a strategic plan for the future. Some of those issues are relevant when we look at the industrial strategy—the Green Paper on it was published earlier this year I think it is fair to say—I am looking to the Chairman of the Committee for a nod at this point—that the fact that the Government response provided some measurable objectives was welcome. The Committee did not necessarily agree with all of them, but we were pleased that there were some measurements and metrics in there As everybody has mentioned this afternoon, the focus on productivity has been central to the Government’s energy since the new Prime Minister took office. She has been very clear that she wants to create an economy that works for everyone. A key part of delivering that will be developing this new, modern industrial strategy, and, as I said, we saw the publication of the Green Paper in January. I want to pull out something that was in the Secretary of State’s introduction to the industrial strategy Green Paper: “the Government is committed to a modern industrial strategy. Its objective is to improve living standards and economic growth by increasing productivity and driving growth across the whole country.” In short, the industrial strategy has productivity at its heart I am sorry to repeat the same point, but many Members have already mentioned that our productivity is poor, and we underperform compared with international counterparts—we are equal fifth with Canada among the G7 countries. Our productivity is 18 percentage points below the average for the rest of the G7. However, there is also a significant disparity regionally, and the Chairman of the Committee made the same point. As the Chancellor said in January: “The challenge before us is to work out how to spread across the economy the best practice in productivity…so that all regions, and all corners and sectors of our economy, can share in this productivity performance and thus deliver the higher real wages and living standards that that implies.”—[Official Report, 24 January 2017; Vol. 620, c. 236.] It has already been mentioned that London has the highest productivity of any region or country in the UK—let us be honest, that is not necessarily surprising. The only other region above the UK average in 2014 was the south-east What was really worrying to me, as a Staffordshire MP, was the position of the west midlands. We are the worst-performing English region. The question I have been asking myself is, why are the west midlands performing so poorly relative to other regions? More specifically, what do we need to do to address that? My hon. Friends the Members for Derby North and for Warwick and Leamington talked about some of the excellent manufacturing businesses we have in the west midlands. We have Jaguar Land Rover, JCB, Toyota and Rolls-Royce to name just a few. Is the issue the make-up of our businesses, or is it, as my hon. Friend the Member for Halesowen and Rowley Regis (James Morris) mentioned, transport? The M6 is not a million miles from my constituency.
My hon. Friend makes a good point about transport connectivity, but does she agree that as well as road connectivity, rail and freight rail connectivity are particularly important? The Felixstowe to Nuneaton freight rail link is essential to ensure that freight and goods can get out through Felixstowe port, and improvements to the line are essential if we are to deliver the improved productivity in her region that she talks about.
I am grateful for my hon. Friend’s intervention, and some Members might hope that I do not start to talk about rail in too much detail, because I have spoken about it a lot in the House. My hon. Friend makes an incredibly important point, and one of the issues with the west coast main line is capacity in terms of not only passenger trains but freight trains. That is a key part of the transport infrastructure piece we need to look at. This is about road and rail, among other things One question I want to ask the Minister is: what is being done to look at the drivers of this regional disparity so that the different regions can understand what they need to do to address it?
On that point, there is perhaps a third reason why manufacturing areas such as hers find it difficult to compete with European levels of productivity, which is that we have a very small equity market for medium-scale industrial firms. They have to rely on bank financing, which is very inefficient. In the United States and Germany, firms can get equity funding, and it is much easier for medium-sized manufacturers to expand.
The hon. Gentleman makes an interesting point, and it is one that the Select Committee explored in relation to access to finance. There is an over-reliance on bank lending. There is a plethora of ways in which we can finance small businesses, but people do not necessarily look at all the options available to them Let me go back to the point about the regions. In the context of devolution, we have combined authorities and local authorities, and in my area we have the midlands engine. I would be interested to hear what support the Government will give those different bodies to try to improve productivity in their areas Another point I want to pick up on is that it is very evident in the productivity plan and the industrial strategy that they require cross-Whitehall buy-in, and a number of Whitehall Departments are involved. Before I go into detail on that, let me say that the productivity plan was really led by the Treasury, while the industrial strategy is largely led by the Department for Business, Energy and Industrial Strategy. That raises a couple of questions. To what extent does the Treasury have input into the design of the industrial strategy? What is the relationship between the productivity plan and the industrial strategy? Is the industrial strategy the successor of the productivity plan? If not, how will the two work together, and who will manage them, given that they came from different Departments in the first instance? We have talked about transport, skills, and digital infrastructure. In looking to deliver the industrial strategy, we need many Departments to be fully bought into that. For instance, during this Parliament there has been a real focus on various Departments owning exports and taking a degree of responsibility for that area. It is welcome news that the Prime Minister chairs the Economy and Industrial Strategy Committee and the Secretary of State for Business, Energy and Industrial Strategy serves on a lot of Sub-Cabinet Committees. What are the Government doing to ensure that the industrial strategy is truly embedded into each of the Departments and that they take responsibility and are accountable for its delivery, thereby in turn improving our productivity I want to make a point about measuring success. My hon. Friend the Member for Warwick and Leamington touched on this. It goes back to my original point about the productivity plan. We had concerns as a Committee that the productivity plan was lacking in measurable metrics and delivery timeframes. During the course of our inquiry, it was really noticeable that if we asked people how they defined “industrial strategy”, we got a whole wide range of answers. We need to be very clear about what it is, but also how it is going to be measured so that we can assess whether we are succeeding or otherwise. As we all know, it takes time to see whether we are improving our productivity, so I would also be interested to understand what is being done in the short term to assess our progress on that I think we all welcome the focus on productivity. A number of Members have talked about the balance between productivity and employment rates. We need to try to tackle this ongoing issue that we have faced for decades. As a west midlands MP, I think we really do need to look at how we can rebalance and improve our productivity in the regions. I do not want to see the west midlands at the bottom of the English areas in this regard. I welcome the industrial strategy because it looks to have productivity at its heart, but we need to have a commitment to it across Government. We need to look at how it works at a regional level, and to have clear metrics.
It is a pleasure to speak in this debate. I congratulate the Chair of the Business, Energy and Industrial Strategy Committee and its other members, most of whom are here, on their success in pursuing tenaciously Philip Green. I have heard during the course of the debate that he is making a payment equivalent to four of his super-yachts, and that will be on the way as soon as possible. That shows that tenacious and persistent Select Committee questioning can yield results I do not intend to speak for long, having spoken in at least two similar debates on this topic over the past year or two. During that time, as a result of a management change, productivity plans have become industrial strategies, but I hope that most of the salient points will remain from the previous approach. The first point I want to make is one that my right hon. Friend the Member for Wokingham (John Redwood) and I made earlier: that we have to proceed with some caution before we are too blasé about the incredible job creation record of this Government and their predecessor. In my constituency, unemployment is now about 0.5%. The average wage in my town remains pretty low, at about £22,000 or £23,000 a year. Like other right hon. and hon. Members, I would like to see wages rise and none of my constituents stuck in poorly paid, low-skilled jobs. I want everyone to have not just the dignity and security of a job but the fulfilment of a career path to better-paid, better-skilled employment. However, we have to be careful before wishing away these jobs. One piece in this country’s productivity puzzle that is perfectly explicable is the fact that we have had extremely high levels of employment while some of our competitors have not. I am sure that none of us in this House would wish to replicate the levels of employment in countries in continental Europe such as France, Spain and Italy Immigration has certainly played a part in this. In my constituency, the fact of very high levels of migrants coming into my community has led to very little pressure on wages. Local employers I have met, particularly in the low-skilled or even unskilled areas of food production, agriculture and the care sector, have seen no demand on them to increase wages in the past five years or even more. That will of course change with Brexit. It will be a major challenge to my local economy, as to the whole country, to maintain this level of employment in those circumstances. Having said that, we obviously all share the objective of becoming a country in which people are not just employed, but well paid.
My hon. Friend makes some good points about productivity challenges and those of stagnating and low wages in certain sectors. I caution him, however, on the care sector, because workers from the EU and from further overseas fill those jobs. The care sector faces huge challenges in finding enough people to do that work, be they from overseas or from Britain, and, in the long term, the issue of wages is not going to be solved by Brexit.
I apologise if I chose my words poorly, but the point that I was trying to make is that we need to exercise great caution, because two things have had an effect. The first is that high levels of immigration have meant that wages have been supressed, but as we leave the European Union we also need to ensure that people continue to do those jobs, whether they be in the care sector or, indeed, in the food production industry in my constituency. There is a challenge ahead for the Government not only to maintain employment levels, but to ensure that there is a better-paid workforce Secondly, as has already been said, a major contributor to our loss of, or stagnating, productivity in recent years has been the decline in the financial services sector since the financial crash of 2008. That has happened not just in London, but across the country, including Edinburgh in Scotland, Manchester and my own city of Nottingham, where the related company Experian is based. There are fewer jobs and less productivity. Nobody is a friend of investment bankers, but they are highly productive members of the economy and we need to be careful about how we accommodate the financial services sector post-Brexit. Personally, I am fairly optimistic about the future, given that those investment bankers and lawyers to whom I have spoken will not follow the entreaties of Mr Macron and move to France, with its sclerotic, socialist economy, any time soon We need to be careful, however, about how we proceed in tackling the productivity gap. I am particularly cautious about spending more money and getting the country into further debt. The national debt, of course, is £1.8 trillion and it is increasing at a rate of £5,000 per second. Levels of austerity have been grossly overstated: public spending has fallen by only 5% or 6% in real terms since 2010. Although it has fallen as a percentage of GDP, it remains a major problem, and I am particularly concerned that fewer and fewer right hon. and hon. Members even mention the debt and the deficit as part of our national dialogue. That needs to change, because the greatest threat to our economy and productivity is the debt we are leaving to future generations.
I presume that the hon. Gentleman is aware that when Harold Macmillan was Chancellor of the Exchequer, the national debt was double what it is now. Even though it has doubled in the past 10 years, it was double the current figure as a proportion of GDP, and the economy was growing even faster and productivity was even higher.
The problem with higher levels of debt lies not just in passing it on to future generations, but in the consequences of that for them. It will mean higher taxes, a less competitive economy and poorer productivity for generations to come. Just because many of our competitors around the world, including the United States under President Trump, have chosen to go down that path, that does not mean that we should follow them. I for one want a Government who in the years to come tackle the debt and deficit as aggressively as they have done in the past I am cautious of trying to tackle the productivity gap by spending money on high-expenditure infrastructure projects that have over-optimistic claims—a result, I am afraid, of politicians being both their promoter and their scrutineer. I suspect that HS2 falls into that category I welcome the National Infrastructure Commission. I hope that it has teeth and that it will provide balance and ensure that we start investing in those infrastructure projects that actually improve productivity and take long-term decisions for the future of the country. Given the current scale of the national debt, borrowing for rushed, so-called shovel-ready projects will have a limited multiplier effect and will only add to the debt burden, thereby necessitating future tax increases and a less competitive economy in the years to come I am in favour of us investing in those infrastructure projects that promote long-term growth which do not necessarily cost the earth and have the highest productivity potential. I am also interested in supply-side reforms that cost either little or nothing at all, such as deregulation and tax simplification, or that are likely easily to pay for themselves, including the creation of a lower-tax economy that will benefit us for years to come. Let me take each of those points in turn In relation to creating a longer-term, higher-growth investment plan that will tackle low levels of productivity, I have some sympathy with some of the areas that have already been discussed. The congestion on our roads is a major issue. As hon. Members have mentioned, our roads are among the most congested of any country in the G7. This does not necessarily require the most expensive road investment strategies, but it does require investment in bypasses, junctions and mending potholes. My own town of Newark is one of the most congested towns in the midlands, and freeing it up would give a major boost to the economic prospects of the whole of the east midlands We should take some long-term decisions even though they are expensive, such as investing in Heathrow. No Government who actually believe in tackling the productivity gap or in putting us in the right position to be a global trading nation can afford to let such a decision be pushed further into the future. Less sexy decisions to do with long-term infrastructure are also important. We heard my hon. Friend the Member for Central Suffolk and North Ipswich (Dr Poulter) talk about trying to sort out the problems of freight on our road and rail. I am sure that my friend Sir John Peace, the head of the Government’s midlands engine, will make that a priority in his forthcoming report Lastly, it is very important to take seriously the need to reduce energy costs for manufacturing and other parts of our economy. It is of course important to produce a sustainable energy economy and ecosystem, but we are pricing out many of our most important manufacturing businesses with expensive energy projects. I am particularly concerned about some of the Government’s decisions in recent years that have produced extremely expensive projects, for which we will have to pay for years to come. It was imprudent of us to have closed some of our power stations, such as Cottam in my constituency, which were operating perfectly well and helping to keep energy costs down for consumers and businesses On supply-side reforms, I think tax simplification is extremely important. Frankly, no Government since the chancellorship of Nigel Lawson have taken tax simplification seriously in this country. The former Chancellor, my right hon. Friend the Member for Tatton (Mr Osborne), took an interest in this matter—he created the Office of Tax Simplification—but, in fact, relatively little happened, and the tax code only increased in length. Tax simplification need not cost the taxpayer anything at all, but it would make a huge difference by making it easier, not harder, to employ people, to grow the economy and to get investment into this country On our tax competitiveness, it is extremely important that we continue the pattern created by the previous Chancellor of reducing our corporation tax to levels that are among the most competitive in the world. Clearly, there may be new challenges ahead with the United States, if indeed they materialise, but it is extremely important for us to persist. I thought the former Chancellor was right, despite some rather opportunistic criticism from the Labour party, to reduce capital gains tax. Even with the changes, capital gains tax will remain higher under the Conservative Government than it was at the end of the Gordon Brown era, so that intervention by Labour was really baffling. We need an economy that is the most tax competitive we can possibly make it We have already spoken about research and development. Incentives for research and development, such as the reliefs created by the coalition Government, have been extremely effective, as I know from speaking to large and small companies in my constituency, and I would like them to continue As we approach Brexit, it is extremely important that the Department starts to look, industry by industry, at what low-cost deregulation could be achieved that does not sacrifice workers’ rights or infringe sensible environmental protections, but may be a game changer in those industries. In the two or three industries I have worked in—the legal sector, and running an auction house —there are European regulations the repeal of which would not be offensive to most people in this country, and that would give us a small but none the less significant competitive advantage over our major competitors in other countries. I will not bore the House with the details of such regulations, but the Government, in preparation for our departure from the European Union, should now work on a sectoral or industry-by-industry basis to work out which they are The penultimate point I want to make is that we should give greater thought to the long-term sustainability of the British economy. I am concerned not only about the deficit, but about welfare, and the Government should look at our state retirement age. It is inevitable that with an ageing population all of us will need to work longer. This produces a number of major challenges, particularly for those who work in sectors, such as on the shop floor or in heavy industry, where the work is extremely tiring. There is no doubt that people will need to retire or change career at a later stage. It is inevitable that the Government will have to look at this and act quickly if we want to signal to the markets our continued careful stewardship of the economy It is extremely important now, particularly as we are leaving the European Union and setting our sights on the world beyond, that we invest more of our time and effort in creating the kind of entrepreneurial culture found in the United States that this country has never quite managed to replicate. This will mean more allowances for entrepreneurs. I would like to see entrepreneurs’ allowances preserved, if not increased. I would be interested in them being focused on longer-term investments. At the moment, most reliefs are available after, I think, only a year of holding assets. They could be focused on investments further in the future.
Does the hon. Gentleman agree with my point that the tier 1 visa regime is counterproductive in that respect, and that much more could be done to encourage entrepreneurs to come here?
I am sympathetic to that argument. There is a lot more we can do, when we create our own immigration system after we leave the European Union, to attract the most talented people from the rest of the world, including entrepreneurs. The examples of Israel and Australia, which have different systems for attracting entrepreneurs, are good ones to look at. I urge the Minister to give some consideration to them, particularly the Israeli example which has had a lot of success at luring successful entrepreneurs back to Israel from places like silicon valley It is incumbent on this House to place creating an entrepreneurial culture at the heart of everything we do. That includes tax rates. I am afraid it includes having to find a reward for enterprise. It means considering the 45p rate of tax and making other difficult political choices. But if we want to inspire a generation to innovate to create businesses, we have to ensure that they feel fully rewarded here, particularly versus our competitors. Many of our competitors in the modern economy are not the competitors of five or 10 years ago. They are Dubai, Singapore and parts of the world that have no capital gains tax, limited corporation tax, if any, and where entrepreneurs are able to keep the lion’s share of the profits. I am not for a moment suggesting that we go as far as that, but I think we have to view our competitors much more widely than we do today I am grateful for this opportunity to speak in the debate and thank the Select Committee for its continued work on these issues.
It is a great pleasure to follow my hon. Friend the Member for Newark (Robert Jenrick). I agreed with almost everything he said Just to remind everyone why we are here, let me say that this debate is about the supplementary estimate for the Department for Business, Energy and Industrial Strategy. This is the point at which the Government own up at the end of the year to where they are spending too much or too little against what they said they were going to spend, and set out whether they are going to invest more or less than they said they would. The variance can sometimes involve outstanding amounts of money. For this year, the Department is requesting further resources to be expended not exceeding £10.7 billion; that resources for capital purposes be reduced by £10.5 billion; and that the sum authorised for issue out of the Consolidated Fund be reduced by £13.8 billion. Those are large changes, but to spare the Minister’s blushes, let me say that he knows well that that is because of major structural changes in the Department over the year that have moved it from being an expenditure-heavy sector to one that will be ultimately much more focused on capital I challenge anyone to wade through document HC 946 and understand where the money is going—if they can do so, they are a better person than me. Given that the Minister is so sensible, may I ask him to challenge the Government to put a couple of things into these documents that reflect the current times? First, on variance at the end of year—when Departments are looking for more or less money—can they explicitly say, “Here is where we have saved money”? As several hon. Members have pointed out, people accept that we have to live within our means, so why can we not use this end-of-year variance accounting to say explicitly, “These are the areas where we have wished to save money,” because it would be a good opportunity to get the message out Secondly, on capital budgets, it would be nice in an end-of-year summary to get a sense of the return on capital to remind us how the Government judge the returns on the projects they are asking about through the variance—either when they are cutting money, as in this case, or if they are asking for more money. That is my overall point about estimates. I am just asking for a few things to improve the process for those of us who cannot easily understand what is going on from looking at six columns of numbers This debate also comes in the context of the productivity plan and its younger sibling, the document on the industrial strategy. Those two documents sit together. I very much welcome the initiative of my right hon. Friend the Member for Tatton (Mr Osborne) and the current Secretary of State for Communities and Local Government—he was then the Secretary of State for Business, Innovation and Skills—to pull together these various projects into a productivity plan. Yes, that plan was a bit of a mixed bag of initiatives that could easily have suffered from the criticism that my right hon. Friends were just pulling things together into a single document but, my goodness, at least we had a single document against which we could evaluate projects and with which we could hold the Government to account on this crucial issue of productivity Productivity is one of those shrouds that politicians like to grab hold of so that they can worry. We like worrying more than we like being happy, and when it comes to the national economy, it has to be either our balance of payments deficit or our poor productivity level that politicians wish to grab. They like to do that because they like to intervene in the economy and try to improve it. I have to admit that, in many instances, the Government play a positive and active role in the economy, but when they look to do too much, they have to know when to stop, so I make my third recommendation to my hon. Friend the Minister, which is that he learns this most important word to use in his deliberations—the word “no”. That means, “No, we’re not going to spend money on that”, “No, we’re not going to invest in that project”, “No, you haven’t done your analysis correctly”, or, “No, that rate of return is not correct.” I make that recommendation because the Minister will be inundated with a variety of people who will attach their requests to the broad principles in the productivity plan, or the even broader principles in the Government’s industrial strategy, so that their ideas might gain favour. He will have to analyse those deeply and make some people very disappointed and unhappy by saying that their projects and initiatives are not worthy of taxpayer investment. That is extremely important because, as my hon. Friend the Member for Newark (Robert Jenrick) said, we have a responsibility to future generations. We cannot carry on living beyond our means. Before we spend what is essentially their money, we must have an acute sense that, if we are investing for the future, the rate of return will benefit them The productivity plan had another tremendous advantage, because it focused our attention not on how much we were spending, but on how quickly we were implementing the projects to which the Government were committed. One of the projects in the plan—it was subsequently raised by the National Infrastructure Commission—that was highly thought of was the Oxford to Cambridge corridor, to connect through Milton Keynes and Bedford, and onward to Cambridge. I am pleased that the Department for Transport has heard the message and is now coming forward with new ideas to make that happen sooner than was envisaged even at the time of the productivity plan I ask the Minister to pay particular attention to how procedures involving the interaction of Departments can be enhanced. I am talking about the time a proposal spends sitting in the inbox of one part of this complex system of organisations, Departments and agencies that have to approve something before it moves to the outbox and on to the next Department. This applies particularly to aspects of the road highway between Oxford and Cambridge, where there is an opportunity to move the timeframe forward. I would be very grateful for the opportunity to talk to the Minister or his counterparts in the Department for Transport about this.
The hon. Gentleman is making an interesting speech. When he said that his advice to the Minister was that he should say no to projects, I assume that he did not mean the ones that he was putting forward himself, which are of course very valuable.
I would hope that the Minister would use exactly the same assessment for that project as he would for any other. We have to build an economy that works for everyone. We have the tools at our disposal to do that, and it would be good to see the Scottish Government using some of the tools at their disposal to do something productive about their own economy, rather than complaining all the time and blaming others, as the hon. Gentleman has just done Let me respond to the challenge from the hon. Gentleman. If the Minister believes, as seems to be the case on the basis of what the National Infrastructure Commission has said, that the corridor between Oxford and Cambridge is important, he has a responsibility under the principles of the productivity plan to implement the relevant initiatives, plans and investments as quickly and effectively as possible, and to set a new benchmark for the speed of implementation Let me briefly touch on two further aspects of the plan. First, the Government response to the Select Committee report talks about the commitment to “funding innovation”—yes, yes, yes. “Yes” is the word—I repeated it three times—that the Minister should be saying about innovation. When Governments seek to intervene through something as cumbersome as an industrial strategy, there is a risk that they do not listen to the voices of the entrepreneurs—those who are prepared to take risks or those who want to disrupt. As we leave the European Union, there will be a number of additional things that the Government can do on innovative financing, such as peer-to-peer lending, and especially to reduce some of the restrictions on the enterprise or seed enterprise investment schemes. That would get people investing in our early-stage businesses much more effectively Similarly, we have heard a lot of good things from the Government about their commitment to improving management and leadership. It is easy for us to take that for granted. It is one of the soft things that arise when we think about productivity, but it is essential that the management and the leadership of our businesses have the resources, skills and capabilities to be expected from a global leader in business and a country that wants to trade freely and openly with the rest of the world Finally, in both the productivity plan and the industrial strategy, my personal feeling is that not enough reference is made to the future way in which employment and work will operate. We heard from the Chair of the Select Committee about how a lack of security in the labour market is a concern to not just the people directly affected, but all of us who want a country and an economy that work for all. We heard from my hon. Friend the Member for Warwick and Leamington (Chris White) about the potential of the fourth industrial revolution, but with that great potential to improve our productivity will come quite dramatic changes in the skills and work required from people who are currently employed in many segments of our economy In those sectors and industries, what will be the Government’s answer to the impact of achieving higher productivity? This is the other part of the point about what happened in the past that we discussed earlier. More people are employed, and we should not throw that away in pursuit of higher productivity because we should be able to accomplish both things. Similarly, in the future, we should not look only for increased productivity if it means that what for many people is part of their being—going to work, working hard and having purpose—will be dramatically changed by measures that are taken to invest in and take up the challenges of the fourth industrial revolution If the Government are silent about that in their productivity plan over the next few years, they will fail the British people. From what we hear from the Prime Minister, she will not do that, but we have to get the detail of what the plan will mean as we look beyond today’s estimates debate.
Let me begin by echoing what was said by the hon. Member for Hartlepool (Mr Wright). This estimates day debate is slightly archaic, in that, with the honourable exception of the hon. Member for Bedford (Richard Fuller), we are not actually discussing the estimates. Instead, we are discussing a report produced in February last year by the Business, Innovation and Skills Committee—a very valuable report—on a Government paper published in 2015. The hon. Member for Hartlepool said that that paper was rapidly becoming obsolete. That casts a favourable light on this process, which, I would say, became obsolete some time ago Rather than our discussing how the Government spend all their money, the Committee—and I mean no disrespect by this—has, essentially, presented its homework to the Chamber. That process has been entirely valid. It has been extremely instructive for someone who is not a member of the Committee to learn what it has done, and I commend it for its work. It would be interesting to know what a report from a Select Committee that did not contain a Government majority would say, because this report pulls no punches. I commend Conservative Members who engaged constructively with the process to ensure that the Select Committee did its job of holding the Government to account Let me now deal with the matter that should, or perhaps should not, be at hand: the report on productivity. I do not wish to repeat what has been said by many other Members at any great length, but there is clearly an issue. The general growth trend was 2% per annum before the financial crisis, and it is barely above that now, which the Office for National Statistics has described as unprecedented in the post-war period. As we have heard, ours is the second worst figure in the G7. It has been said that such comparisons may not give us all the detail, and that is certainly true, but there are some stark comparisons to be made in this context One of the most striking parts of the report, which was quoted by the hon. Member for Edinburgh West (Michelle Thomson) but which is worth repeating, concerns post-study work visas. It states: “We recommend that the Government does not allow migration pressures to influence student or post-study visa decisions. Specifically, it should relax the post-study visa restrictions. It is illogical to educate foreign students to one of the highest standards in the world only for them to leave before they have had an opportunity to contribute to the UK economy.” That, in a nutshell, is the critique of the Government’s immigration policy, and I do not think that it could be put any better. During a period of stagnating productivity growth, we have seen economic growth. Perhaps the two should not go together, but the reason we have no productivity growth but do have GDP growth is largely due to immigration. Following the ending of free movement of people and the pulling up of the drawbridge to immigration, we shall have to get serious about productivity, because if we are not going to secure growth from immigration, I shall be concerned about how we are going to secure it My hon. Friend the Member for Kirkcaldy and Cowdenbeath (Roger Mullin) talked about tier 1 visas. I think that, in raising those two issues, my hon. Friends have nailed some of the imponderable follies surrounding an immigration system that does not work for our economy, and I fear that the situation will only get worse Of course, immigration is only part of the debate about our economy; productivity is also an important part of that debate. So how do we go about boosting productivity? I think there is a general consensus—although there are varying degrees of enthusiasm about the individual elements—that we need to invest in our infrastructure: our roads, railways, bridges and airports, and, crucially, our digital infrastructure. We need to invest in skills and training, we need pay growth, we need inclusivity in the workforce, and we need more internationalisation. The hon. Member for Bedford suggested that the SNP should get on with doing some of those things rather than criticising what others did. I can tell him that we have done them all, and that, as a result, Scottish productivity rose from 94.5% of the United Kingdom level at the time of the financial crisis in 2007 to 99.9% in 2015. In 2015, growth in Scotland was 3.5%, compared with 0.9% for the UK as a whole. The action we have taken has had a demonstrable benefit. I urge the Minister and his colleagues to look at what we have done in Scotland The right hon. Member for Wokingham (John Redwood) mentioned the oil and gas sector. Clearly, there are issues in the sector. The Scottish figures do not include figures for the offshore sector, but they do include many of the figures for the onshore activity in the oil and gas sector. That sector has a success story to tell. In the face of plummeting commodity prices, it has been able to bring down its costs dramatically. It has increased efficiency dramatically and put its business on a firm footing. It is ready for growth. My hon. Friend the Member for Aberdeen North (Kirsty Blackman) asked the Chancellor about the Budget at Treasury questions earlier. The sector is ready for growth and, with support from the Government, who hold the key tools for boosting that sector, it will be able to grow further My hon. Friend the Member for Kirkcaldy and Cowdenbeath (Roger Mullin) mentioned avoiding working in a silo. The oil and gas sector has learned to look at other industries to see how it can boost its productivity. About a fortnight ago, I was at the opening of the Oil and Gas Technology Centre in Aberdeen, a collaboration through the city deal for Aberdeen between the Scottish and UK Governments, both universities and both local authorities in the region. The guest speaker was the chief executive of the Advanced Propulsion Centre in Coventry. The oil and gas industry is looking to learn how others have boosted their productivity in the face of difficult economic pressure As I say, the Scottish Government have invested in these things. One of the key things that has led to the boost in productivity in Scotland has been the introduction of the Scottish business pledge by the Scottish Government —some 330 businesses across all sectors have signed up to that. Its key component is the agreement to pay the living wage—that is the real living wage, as opposed to the national living wage. It has also agreed to sign up to two of the other options, which include no zero hours contracts, improved workforce engagement, investment in youth, having a balanced workforce, investment in innovation, internationalisation, connecting with the community and prompt payment of suppliers. Those moves are making a manifest difference May I draw attention to the living wage aspect? Earlier, the right hon. Member for East Yorkshire (Sir Greg Knight), who is no longer in his place, asked the Chairman of the Select Committee about workers and caravan parks and talked about the economy perhaps requiring low-skilled workers on low pay. I disagree with that premise. The tourism sector is vital to the UK, and is of specific importance to Scotland. Having well trained people who can welcome folk and explain things and who have built up experience is a benefit. When companies have higher wages—when they pay the minimum wage—they experience lower worker turnover. Those companies then have to spend less on training and on recruitment and they get a better outcome, so let us not diminish jobs that may seem to be unskilled. If we can invest in those, treat those people properly, with the respect they are due, and pay people a decent wage, they will have greater pride in their job and produce more I mentioned in my intervention on the Chairman of the Select Committee that there have been damaging changes in policy. I, too, welcome the production of the Government’s industrial strategy. I hope that they will learn the lessons of previous mistakes. The constant moving of the goalposts was particularly acute in the energy sector, where expertise had been built up over a number of years, but the productivity increases were pulled away because of Government changes to the investment climate—onshore wind and solar PV have faced a headwind. The decision on carbon capture and storage was taken with zero consultation. That is not good for the economy or for productivity growth We also need to focus on Brexit. If we are serious about boosting productivity, let us ask ourselves how the productivity of our exporters is going to be increased by having to fill out forms because we have come out of the customs union. They will need to go through complex processes to export the same goods; more work for the same product. That will not boost productivity. How will the productivity of our university sector increase when students, academics and funding that had previously come from the European Union cease to arrive as a result of a hard Brexit? Our food and drink sector relies on the European Union for funding—through the common agricultural policy, for example. It exports a huge amount to the single market, and 8,000 nationals work in it. How is the productivity of that sector going to be boosted by Brexit? It is not, and we have to face that The Scottish Government, and my hon. Friends and I, have been clear about how we wish to proceed from a Scottish point of view. We have sought compromise over Brexit. We have sought to ensure that the UK as a whole stays in the single market and the customs union because we believe that that is the best thing for our economy and our productivity, for the reasons I have just outlined. Before we get too far down that road, however, I urge the Minister to look at the Scottish Government’s policy paper, if he has not already done so, and to react to it and respectfully agree that we will pursue that aim. To boost productivity, we need to invest in all the areas that I have outlined, but above all, we need to avoid the hard Brexit that is facing us. I plead with the Minister and his Government to listen carefully and to protect Scotland’s place in Europe.
It is a real pleasure to speak in this debate and to follow so many excellent and well considered contributions. I must draw particular attention to the opening speech from my hon. Friend the Member for Hartlepool (Mr Wright), the Chair of the Business, Energy and Industrial Strategy Committee, who made almost all the points I intend to make but much more eloquently than I could ever hope to do. This is one occasion on which Newcastle will follow in Hartlepool’s train As many Members have said, productivity is a key subject. It is one of the most important challenges facing our economy, as the hon. Member for Warwick and Leamington (Chris White) emphasised. High productivity is correlated with high wages and high skill levels. If we want a high-wage, high-skill economy—as we on the Labour Benches certainly do—improving our productivity must be a key goal. However, under this Government our productivity has fallen consistently. We are now 30% behind Germany, the US and France—the widest gap since 1992. That was decades ago, when there was another Tory Government with a small majority. Since 2010, UK productivity has grown on average by just 0.4% a year. The OECD, the CBI, the Office for Budget Responsibility and the Bank of England have all expressed concern that continued low productivity growth is holding back our economy How can we improve our productivity? It is quite simple, in a way. We need to get more out of the same inputs, and that is about either people or technology. The economist Mariana Mazzucato has said that productivity comes from allowing people “to work more efficiently, with state of the art training, technologically advanced machinery, an innovative division of labour, and harmonious capital-labour relations.” First, let me discuss people. As the hon. Member for Horsham (Jeremy Quin) said—I entirely agree with him on this point—people are the key asset of our economy and businesses. However, this Government consider labour to be a commodity, and commodities are not productive. Imagine a worker sitting at her desk feeling disempowered, unvalued, and disfranchised. Of course her productivity will be lower. But empower her and give her a sense of agency and her productivity will rise. Skills are an essential part of empowering workers and improving their productivity, as emphasised by the hon. Members for Kirkcaldy and Cowdenbeath (Roger Mullin), for Derby North (Amanda Solloway), and for Aberdeen South (Callum McCaig) However, the productivity plan that we are debating with the estimates committed nothing to skills other than a promise to fund Charlie Mayfield’s initiative to boost management skills to boost business—hardly an extensive investment. The BEIS Committee’s report criticised that lack of commitment and argued for a renewed focus on upskilling the workforce. Unfortunately, the Government do not seem to have taken that criticism on board. It has been 18 months since the productivity plan and six months since the BEIS Committee’s report, and last month’s industrial strategy Green Paper did not recognise the criticisms at all, simply promising £170 million for higher-level technical education when the Government have already cut the further education budget by 14% in real terms in the last financial year alone. That hardly remedies the inequality of esteem between further and higher education highlighted by the Committee, never mind going some way to deliver the high skills that we need to be competitive on the global scene In an era of technological change and when people are living and working longer, lifelong learning should be a key part of any Government strategy to upskill workers and improve national productivity. People no longer have one job for their entire career. We need to be able to upskill and respond to changing technological requirements. However, the productivity plan and the Green Paper—220 pages in total—contain only a smattering of references to adult learning and not one specific policy commitment The second significant factor in productivity is technology. There is both opportunity and threat in the technological transformation that we are undergoing. Analysis from the Centre for Economic Policy Research demonstrates that industrial robots and information technology can increase both wages and productivity. It also found that the increased use of robots raised countries’ average growth rates by about 0.4 percentage points between 1993 and 2007. It is clear that sustainable, long-term, smart growth requires significant investment in technology. The BEIS Committee report argued that “if the Government is serious about productivity and competitiveness, it needs to commit to a total level of public and private R&D investment” of 3% of GDP. Labour has committed to that target. Will the Government? In advance of the Budget, will the Minister say today that he is proud to commit to a 3% target As has been mentioned, output in Germany is 34% higher than in the UK. Germany’s R and D spend as a percentage of GDP has been at or near the 3% target for many years. In contrast, our spend has languished at barely half the 3% target. However, the productivity question is not just about the development of new technologies; we must ensure that businesses can use them and utilise the productivity benefits that they bring. That is crucial in sectors such as retail.
The hon. Lady has talked a lot about the targets for how much we invest in R and D, but does she appreciate that there are other points of view that say that it is about the way we account for our R and D investment? If we look at the type of investments that we make in the UK, we see that the comparison between us and other countries is much more favourable. It is not just about the quantum of our investments but about the returns on those investments.
I agree with the hon. Gentleman that it is not only about what we invest but about the returns and where those returns go. For example, it is about how the public sector ensures that it reaps those returns We can use statistics in many different ways, and I will not attempt a battle of statistics here, but I hope the hon. Gentleman is not arguing that the UK is leading the world. However we account for it, the UK is not leading the world in investment in technology, science and R and D, which is where our future lies. We need greater investment in that. [Interruption.] I am not sure what the Minister is saying from a sedentary position, but I hope to be enlightened at some point Again, the Government’s industrial strategy has absolutely nothing to say about ensuring that sectors such as retail can take up technology. The Government chose to cherry-pick certain favoured sectors for backroom deals and failed to address the root cause of our productivity crisis, leaving the majority of British workers out in the cold Skills and technology are key to improving productivity, but we also need a strategic vision, which is notably absent from the Government’s productivity plan. As the hon. Member for Cannock Chase (Amanda Milling) highlighted, we need a plan and a strategy. When the Government’s industrial strategy came out, we saw that it had plenty of pillars but no vision. Adding the 10 pillars of the industrial strategy to the two pillars of the productivity plan results in 12 pillars and no vision. The Government are building pillars on hot air.
As the hon. Lady has represented a north-east seat for seven years, surely she understands that part of the problem is over-reliance and overdependence on financial services, construction and Government expenditure, which are concentrated in the greater south-east. Her Government did next to nothing about that when in power.
The hon. Gentleman fails to recognise the work of the regional development agencies, which his Government abolished and which contributed significantly to changing the industrial landscape. He appears to be arguing against the financial sector, the construction sector and Government spending, and we do need to diversify, but the Government can aid that process. He fails to recognise the role that an intelligent, smart Government can play in supporting smart, sustainable economic growth. So long as Government Members fail to recognise that, we will not see smart growth in this country.
I am a fair-minded and generous person, so I will agree that it was more successful in the north-east than in other regions, but several academic studies have found that, in the period up to 2010, the inequalities both between and within regions were not ameliorated in any respect by the regional strategy of the Labour Government.
It is interesting that the hon. Gentleman likes to concentrate on the record of the last Labour Government, which was more than seven years ago, instead of looking at the record of this Government, of the institutions that they have or have not put in place and of their success or absolute lack of success either in addressing regional imbalances or in addressing the debt. They have succeeded in increasing national debt, while also not generating any smart, long-term growth. I would be reluctant to get up to praise that record Despite the Prime Minister’s rhetoric about a “new, active role” for the state in the economy, the average level of public investment in this Parliament is set to be 1.9% of GDP, which is lower than the level during the coalition’s austerity agenda and barely half of what it was under Labour. This Government are, in effect, reducing private sector investment and public sector investment at the same time, taking away the lifeblood that our economy needs. Austerity did not deliver smart growth, and austerity in all but name will not do so either. The Labour party has committed to investing £250 billion in capital expenditure over 10 years, as well as committing to a national investment bank and regional development banks. I ask the Minister to say how he will be able to change our productivity and deliver on smart growth without those things In conclusion, our country’s productivity problem will not solve itself. We need sustained, long-term investment in skills and technology. That will not be forthcoming unless the Government have a clear, strategic vision for the future. We need to mobilise both public and private actors, crowding in investment to boost skills and innovation, and tackle the root causes of our productivity crisis. Only by doing that can we create the high-wage, high-skill, high-productivity economy that this Government say they want, that the British people deserve and that only a Labour Government can deliver.
I thank the hon. Member for Hartlepool (Mr Wright) for opening this debate and the hon. Members who have taken part in this afternoon’s excellent proceedings. I welcome the Committee’s decision to focus on the challenge of boosting productivity in the UK; it is one of the Government’s key economic priorities over this Parliament, as we of course recognise that this is the route to raising living standards for people in the UK. Since the financial crisis, we have focused on stabilising the economy, tackling the deficit and creating jobs. As hon. Members have said, the UK has seen strong growth since then: the economy has grown by more than 14% since 2010—that is the second fastest growth rate among major advanced economies, after the United States; employment has reached a record high, with 2.8 million more people in work now than in the first quarter of 2010; and unemployment is at its lowest level for 11 years However, if we raised our productivity by just one percentage point every year, within a decade we would add £240 billion to the size of our economy—that is £9,000 for every household in Britain. That is why the Government have taken action to improve productivity in the UK economy. As hon. Members have noted, we published “Fixing the foundations: Creating a more prosperous nation”, a plan for productivity growth in the UK over a decade. It outlines how we can encourage further investment in science, education, skills and infrastructure, and how we can promote a dynamic economy through reforming planning laws, boosting competition and creating a northern powerhouse Today, I will seek to address some of the Committee’s concerns and report back to the House on some of the progress we have made in implementing the plan’s commitments. Before doing so, I would like to tackle the questions the hon. Gentleman put about the status of “BIS 2020” and the impact of the machinery of government changes he mentioned on the delivery of the plan. The principles behind the “BIS 2020” work are still important: creating a simpler, cheaper and better Department by 2020. Recent events reaffirm the importance of our becoming increasingly flexible and able to respond rapidly to the demands of new priorities. Given the machinery of government changes, we will be considering in the coming months how the reform plans of BEIS—of its two predecessor Departments—should be best aligned.
The Minister is giving a similar answer to the one given by the Secretary of State before Christmas, but the new Department has now been in operation for seven months and the Minister still cannot say what the savings will be and what activities will be stopped. Does he really think that is good enough, seven months into the new Department’s life?
As I said, the alignment of the two Departments’ work programmes is complex, but the process is well under way. Further reports will be made available to the Select Committee in due course In its report, the Select Committee expressed concerns about the clarity of the productivity plan’s objectives and the extent to which it represented a new plan for productivity growth. The plan sets out clear objectives that directly target the high-level drivers of productivity performance. It also contains several innovative new policies, such as the commitments to set up a national roads fund and a network of prestigious institutes of technology The report also questioned the extent to which Ministers are engaged in the implementation of the plan’s policies. The ministerial team regularly discusses issues relating to the main policies in the productivity plan at several Cabinet Committees, including the Economy and Industrial Strategy Committee. Alongside the Cabinet Committees, the Government have set up a series of implementation taskforces, which are attended by relevant Ministers and senior officials. For example, the earn or learn taskforce is supporting the Government’s commitment to reach 3 million apprenticeships starts in England by 2020, which is one of the many ways the Government are addressing the skills challenges the country faces As recommended by the Select Committee, our response includes an update that details the progress made on and future implementation of each of the plan’s 172 commitments. It shows that more than a third of commitments have now been fully delivered, and that outstanding commitments remain on track. For example, we have published a new national infra- structure delivery plan, which details more than £100 billion of planned public investment in infrastructure to 2021; we finalised the funding policy for the apprenticeship levy ahead of its introduction in April 2017; and, through the Housing and Planning Act 2016, we legislated for key planning reforms, such as automatic permission in principle on brownfield sites Further mayoral devolution deals have been signed in Liverpool, Sheffield and the west midlands and we have increased the annual investment allowance to £200,000, which is its highest ever permanent level. We also announced at autumn statement a new national productivity investment fund, which will provide £23 billion of additional investment between 2017-18 and 2021-22. That will be targeted at four critical areas for improving productivity: housing, transport, digital communications, and R and D.
Some £7 billion of the £23 billion investment fund has been put back to 2021-22. If that money is so important to drive productivity and growth, why is it not being invested now?
The plan is ambitious and involves the expenditure of an unprecedented sum of £23 billion between 2017 and 2021-22. The profile of that expenditure is optimised so that it has the greatest impact on productivity outcomes On 23 January this year we published a Green Paper, “Building our Industrial Strategy”, which sets out our approach to developing the strategy. Its main goal is to improve living standards and economic growth by increasing productivity and driving growth throughout the whole economy. My hon. Friend the Member for Cannock Chase (Amanda Milling) asked what the relationship is between the two plans: they are part of the same family of work that sits beneath the long-term economic plan. The industrial strategy will form a key part of how the Government take forward the productivity agenda set out in the productivity plan Crucially, the Green Paper sets out three key challenges that we must face up to, now and in the years ahead. First, we must build on our strengths and extend excellence into the future. The UK has real strengths, but we cannot take them for granted. We need to invest in research and development, develop our infrastructure, and make ourselves ever more attractive to inward investment. That is why we announced an additional £4.7 billion by 2020-21 in R and D funding at the autumn statement. This extra £2 billion a year by the end of this Parliament is an increase of around 20% to total Government R and D spending, and more than any increase in any Parliament since 1979. The hon. Member for Newcastle upon Tyne Central (Chi Onwurah) offered empty promises, but we are delivering hard cash, and I know which I prefer The second challenge is to ensure that every place meets its potential by working to close the gap between our best performing companies, industries, places and people, and those that are less productive. We have sectors and businesses that are among the most productive in the world, but we also have too many that lie far behind the leaders. Driving up our productivity across the country means that we must enable those industries and regions that lag behind to achieve their potential. Members asked what it is that creates these divergences in regional productivity. This is a complex phenomenon, as many factors drive differences in growth and productivity, including weaknesses in infrastructure and connectivity, different levels of qualifications and skills, different levels of R and D investment, which tend to be correlated with lower levels of productivity, and many other factors It is important to note that there are other structural factors, including the quality of management in our companies, which is why the Government are providing significant resources to support the UK’s business-led Productivity Council, which is to be chaired by Sir Charlie Mayfield. This will provide strong and sustained leadership, help support business-to-business engagement and improve productivity across the business community, which is something that my hon. Friend the Member for Bedford (Richard Fuller) wanted us to do Thirdly, we need to make sure that the UK is the best place in the world in which to start and grow a business. The UK has a strong record on business start-ups, but too many fail to scale up into the big employers of the future. Through the industrial strategy, we will aim to identify and address the barriers that many businesses face to scaling up and growing. We have invested an additional £400 million in the British Business Bank to catalyse later-stage capital investments by the private sector, and we will work with it further to understand the obstacles that firms face in accessing capital outside London and the south-east. By responding to all the challenges presented by each of the strategy’s 10 pillars in a rigorous and strategic way, we will be able to achieve our objective, which is to improve living standards and economic growth by increasing productivity across the whole country If we want to create a country that really works for everyone, then we need to address this productivity issue. We want to see the same high level of success witnessed in Britain’s best-performing companies, industries, people and places in those areas that are still lagging behind. We plan a bold, new and collaborative approach to industrial strategy in the UK. This is a new approach with the Government stepping up, not stepping back. I am talking about designing an industrial strategy in collaboration with people and organisations across the country, and not imposing it from Whitehall. We recognise our productivity challenges, and we also recognise where we can make improvements and build on our strengths to make the UK a more productive and prosperous economy.
I reiterate what I said earlier about welcoming this debate on the Government’s productivity plan, and I thank all hon. Members who have contributed to it. It seems curiously appropriate that, as we were debating this, news came through that Sir Philip Green is providing up to £363 million to sort out the pensions debacle that he himself created. Many Members of the Committee worked very hard to achieve that result—the hon. Members for Horsham (Jeremy Quin), for Bedford (Richard Fuller), for Cannock Chase (Amanda Milling), for Derby North (Amanda Solloway) and for Edinburgh West (Michelle Thomson). They were forensic and professional, and they put aside party politics to all work as one in order to continue to put pressure on Sir Philip Green. They should be very proud of themselves today I find it appropriate that a great, great parliamentarian and a fantastic co-Chair, my right hon. Friend the Member for Birkenhead (Frank Field), is also in the Chamber. He especially provided leadership of the Joint Committee and put pressure on Sir Philip to do the right thing—to right the wrongs that he had put in place. I pay tribute to my right hon. Friend, who is also a great friend of mine We can see a theme in all this, which is that the economy does not work for everyone. There was a disconnect: at a time when BHS workers were facing redundancies or cuts to their pension entitlements, Sir Philip Green was getting ownership of a third yacht. There is something profoundly wrong, and structural weaknesses need to be addressed. I hope that that was the purpose behind the productivity plan and the Government’s new industrial strategy. However, this cannot last just for 12 or 18 months. It must be long standing to ensure that we get permanent change and address the problems of inadequate investment in infrastructure, skills deficiencies and appalling regional imbalances in productivity and high growth. That is the challenge. I hope we can have a long-term view to ensure that the industrial strategy becomes embedded. The productivity plan seems to be last year’s thing, frankly. I hope that the industrial strategy can persist and last for decades to come so that we can really have an economy that works for everyone Question deferred (Standing Order No. 54).
On a point of order, Madam Deputy Speaker. The Department for Education briefed the media earlier today that it was planning to bring forward a change to the Children and Social Work Bill to introduce statutory sex and relationships education for pupils from key stage 1 onwards. It was also my understanding that there would be a written ministerial statement outlining the update to that Bill. However, I now understand—once again, from briefings to the press, rather than any written or oral statement to this House—that there will not be an announcement today. The House is being held in contempt. This matter relates to a Bill that will return to the Floor of the House next Tuesday and that has wide support across all parties. Hon. Members need clarity from the Government. Madam Deputy Speaker, will you tell me or the House what notice, if any, you have received of whether the written statement will go ahead? If you have not, when will it be put before the House?
I thank the hon. Gentleman for advance notice of his point of order but, as he knows, it really is not a matter for the Chair. The Clerk has shown me that notice of the written statement was scheduled on today’s Order Paper. The hon. Gentleman has put his point on the record. The Government and the Whips have heard his point of order, so perhaps he will see some action
In some ways, it could not be better that this debate is following the previous one, because, as was rather graciously referred to by the leader of the previous debate, the Chair of the Business, Energy and Industrial Strategy Committee, my hon. Friend the Member for Hartlepool (Mr Wright), we have had an announcement today from Sir Philip Green about part of a settlement to bring justice to BHS workers and pensioners. The inquiry on BHS showed how two Select Committees working together can be more powerful than the sum parts of each Committee. I continue to emphasise, as my hon. Friend did, that the announcement represents the first piece of the puzzle on pensions being put in place. We have not had a chance to read the small print, but one hopes it is good as the headline A number of reports are still outstanding, including from the Inland Revenue, which has arrested Dominic Chappell—the person who, wisely or foolishly, bought BHS for £1. There are outstanding reports from the liquidators, the Serious Fraud Office and the Insolvency Service. The Prime Minister has made it plain that she will make no move on making a recommendation to the Honours Forfeiture Committee that it should begin work on considering whether Sir Philip should keep his knighthood until she has access to all those reports. That is immensely sensible, as one would expect from somebody who is as careful as she is before taking such decisions. All I would add is that although we know that seeing justice as a result of the reports from the Revenue, the Serious Fraud Office, the liquidators and the Insolvency Service is much more important in the longer run than any knighthood, some in the country will look for sacramental changes that show that the Government have really taken on board how horrendous the BHS chaos was I am obviously not going to talk any more about that subject, Madam Deputy Speaker, because you have been kind in letting me make a follow-up statement on this of all days, when we are following a debate on a Business, Energy and Industrial Strategy Committee report with one on a Work and Pensions Committee report. Those Committees joined forces to look carefully at the beginnings of a longer-term solution for the pensioners and workers, and what these things mean for public companies, as well as a whole host of other issues. The two Committees began that work together, and I am pleased that our two debates have, with providential luck, somehow been joined together We are using the privilege of occupying the Chamber of the House of Commons to debate the Work and Pensions Committee report on intergenerational fairness. I am pleased that a number of members of the Committee and others are here to make a contribution. If I keep disappearing, Madam Deputy Speaker, to make some comments on Sir Philip Green, I hope I will be allowed some leniency; normally I would stay in the Chamber for the whole three hours By way of introduction, I would stress two points. First, intergenerational fairness is a huge, huge topic. The problem for any Select Committee—or for Select Committees that have joined together—is where to begin in order to make sense of a topic. The Committee has looked at, and made recommendations to the House on, the triple lock, and that will be the main subject of my speech. I agree that we could have started with other topics and looked at other aspects of intergenerational fairness, but the triple lock was where we began our inquiry. As my speech unfolds, I hope that Members will see that while there were immediate pressures that pushed us to look at that area rather than other aspects of intergenerational fairness, those other aspects need to be considered.
Does not my right hon. Friend agree that the fundamental core of this issue is that there are people in our society who will succeed because they have assets? However, someone who is talent-rich but asset-poor is unlikely to succeed in life, in terms of getting into the school they need to go to, educational attainment, and health and economic outcomes. The core challenge for our generation is to make sure that everybody has access to the best our economy can deliver, whether they are born into a family with assets or otherwise.
I could not agree more, but I hope that my hon. Friend will forgive me if I do not follow that up, because one of our colleagues wants to talk about how aspects of education affect intergenerational fairness The Committee decided democratically that it would look at the triple lock. However, I was also struck by the difference between my life chances and those of people who are the age that I was when I set out to earn a living after university. When I graduated, I was one of 3%. People might say, “Well, we can see which cohort you belonged to,” and it was a very privileged cohort. I went to university, but I did not pay fees—we expected county scholarships to see us through university, and we did not come away with debt. When we graduated, we interviewed big firms to see whether we wished to work for them, and now graduates are scrambling for jobs, so it is a very different world. I expected to get a job, I expected at least to own a house—if not more than one house—I expected to have savings and I expected to have a pension. One need only look at how privileged my life has been compared with that of people in their 20s who are graduating today to realise, as my hon. Friend the Member for Hove (Peter Kyle) said, that the wheel of fortune has turned. Whatever one wants to say about the golden oldies, we are in a very privileged position, and that has been reinforced by the Government. I shall return to that in a moment The Committee wanted to test whether the triple lock was viable for the next Parliament and beyond. If it was not, we wondered whether we could marshal a report on which all of us agreed, and behind which political parties could slowly move before deciding what policy they would stand on in the election, perhaps in 2020. We now see our role as a Select Committee as taking on controversial topics and letting the Government and Opposition judge for themselves what nuclear warfare should be employed against us. Then, if we are still standing to tell the tale, perhaps the Government can be a little more brave than they would otherwise have been I am not saying—the whole Committee was united on this—that there are not a number of very poor pensioners in all our constituencies, but the position of pensioner poverty has been transformed over the past 10 to 15 years through Gordon Brown’s pension credits and the coalition Government’s triple lock. If we were having this debate 10 years ago and talking about not making moves to benefit the vast majority of pensioners, we would be laughed out of court, but now the debate has significantly changed. Despite that, I do not want anybody to think that we do not have to rack our brains to think how we can sensitively, but equally effectively, ensure that we continue to deal with poor pensioners. One does not have to be a very bright Member of Parliament to know that we all have some very poor pensioners in our constituencies. However, we also now have a growing number of rich pensioners, thank God It was against that background that we considered the whole business of the triple lock. There are four ways in which the Government could deal with this issue. First, they could just ignore it and allow the public finances to let rip, depending on the international money markets to shovel us loans at very low rates of interest forever so that we can continue, right into the sunset, to live beyond our means. I do not think for a minute that the historically low interest rates that we have at the moment will last for very long, let alone that we would have a Government who would commit the next Parliament to the triple lock. I cannot see that our public finances will be secure unless the Government take a deep breath and think very carefully about our report I also make a plea to Labour Front Benchers. People are now saying that it is impossible to envisage another Labour Government in anybody’s lifetime, but funny things have happened this year—funnier things than the election of a Labour Government. I therefore would not bank on Labour being unelectable and our party therefore not having to consider how fiscally responsible we have to be as we approach an election The second approach to the triple lock would be to say, “We’re going to increase taxation.” If we were to go down that route, we would need to raise the same amount of money that we would otherwise have to borrow, so we would be talking about raising an additional £40 billion in today’s money. That is half the sum that we raise from income tax, so it would mean saying to the country, “We expect to be continuously elected on the basis of putting up your income tax by 50%.” I do not think we would be able to hold that position for very long. If we look at the marginal tax rates paid not by the rich, but by the working poor who draw benefit and then lose it as they work harder, we will see that the idea of putting 10p on the standard rate of tax seems so absurd that there is hardly any point in suggesting it, but that is the second way in which we could square the circle of keeping the triple lock The third approach is to continue the policy of not just this Government but previous Governments of favouring pensioners and reducing the living standards of the working population. I do not believe that that is tenable now, but it is what will happen until the end of this Parliament. It is certainly not tenable beyond that point, however, because we are taking resources from the working population and giving them to many pensioners who are well off. People sometimes hear what they want to hear rather than what is being said, so I want to emphasise again that I am not denying that there are not too many poor pensioners. However, the standard of living of the vast majority of pensioners is of a kind that the pensioner population has never experienced before. Thank God for that, but cuts in the living standards of the working poor are already starting to result in people of working age being reduced to destitution.
It is heart-breaking that 73% of working parents already go without a meal during the school holidays in order to feed their children. Is not that an indictment of exactly where we are going wrong as a country and society?
It is, and my hon. Friend’s intervention could not be better timed. Members who followed closely the Archbishop of Canterbury’s Christmas message will know of an example from Feeding Birkenhead. A family would lower their child into a supermarket waste bin to scavenge for food before rescuing them and seeing what food they had. The mother is suffering from cancer. She is now fed by Feeding Birkenhead with food that would otherwise go to the tip, but she says that she has never been better fed. Is this House prepared to continue policies that put so much pressure on working-age families that that example will no longer be exceptional? More and more of us will be troubled by examples of our constituents nobly not feeding themselves, as my hon. Friend says, and it will happen more regularly. Destitution is an issue.
I agree with the argument that the right hon. Gentleman is developing, but what he is suggesting would be politically unpalatable. Given that the majority of healthcare costs that we generate in our lifetimes come at the extremes of life, does he agree that one way of selling this to the population, and especially those pensioners who are principally in the frame, would be to say that the £2.2 billion per annum that the 2.5% element of the triple lock will probably generate by the end of this decade might be hypothecated into the national health service? In that way, we might gain some level of acceptance from pensioners.
Again, I could not agree more. I did not want to fan out the debate—I wanted to keep it as tight as possible so that we might get some agreement—but these are proper options that have to be considered. There is no way, sadly, that we as pensioners can get all the goodies and expect other people to pay for them. The issue of how we integrate care into the NHS will grow in importance as each month of this Parliament passes The fourth and last way in which we could keep the triple lock would be to raise the retirement age continually. Again, I make a plea to Front-Bench and Back-Bench colleagues, because such a policy would adversely affect our constituents almost more than any other. The Select Committee has published the names of the constituencies where the average life expectancy for males is such that they simply will not reach retirement age if we say that we will square the books by increasing the retirement age from 68, which is the figure that it is expected to rise to, to 70 or 71 There is a commonality between the constituents of my hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams), who leads for the Opposition on these matters, and my constituents. We do not say that no male in our constituencies will on average receive a pension if we raise the retirement age to 70 or 71, thank God, but we know that swathes of our poorer, older and frailer constituents will not actually reach the retirement line—the point at which they pick up the state retirement pension—at the age of 70 or 71, because they will simply have died.
As usual, the right hon. Gentleman is making an excellent and well considered speech. Notwithstanding what he says, given that average life expectancy has increased from 71 in 1960 to 81.5 now, and that 9.9 million people over 50 are working, people surely want to work longer—I know that the situation is different for those who work in heavy industry, which has killed a lot of people shortly after their retirement—and to be able to exercise their choice to do so.
I would not for a moment—look at me—say that people over the state retirement age should not be allowed to work; far from it. However, there is a difference when people have had jobs such as those in factories—I have not had such a job—and are simply worn out by the cost of such jobs, meaning that they will not make it to the finishing line if we keep extending that line. I am therefore making a plea that we do not go down the route of keeping the triple lock by just continuing to raise the retirement age, saying, “With fewer of you drawing the state retirement pension, we will balance the books.” That approach was one of the alternatives, and I will go through the others again. One was just to continue putting all the cost on people of working age, and I have made a plea about why we should not do so. Another is to think we can just tax and tax again, but I simply do not think that Governments can get elected on that basis. They cannot put up income tax by 50% over a number of Parliaments and expect to be elected—and thanked in the process. Finally, I do not think that any party that wishes to be elected can let borrowing rip to the extent that would be needed to balance the books while keeping the triple lock I therefore make a plea to both the Government and the Opposition that they look carefully at the Select Committee’s proposal for a double lock-plus. Pension credit and the coalition Government’s triple lock have already—this will continue—raised the value of the state retirement pension compared with average earnings to a historical high. The Select Committee report says that by 2020, we should peg the state pension against earnings at the level at that time. The double lock-plus would ensure that the state pension would never from that day forward fall relative to average earnings. As there will be—perhaps in the very short term—periods during which price inflation exceeds earnings, we should honour the prices link at those times, albeit coming back to the earnings link as soon as possible. In that way, we would not actually have to face many of the terrible scenarios I have painted As my hon. Friend the Member for Stoke-on-Trent North (Ruth Smeeth) said, the cost of the existing policy has been borne by people of working age. We should not pursue a policy of continuing to take money from that group, especially those who already find it difficult to put food on the table for their children for every meal in the way that our parents fed us when we were growing up This is not about begging both sides. If people came here with a script saying that they were going to reject the Select Committee’s report, I ask them not to read that passage, but perhaps instead to enter into discussions more widely with the House of Commons about how we can guarantee standards of living against pensioners’ earnings in 2020. We must ensure that they are never eroded, but we must also ensure that this policy of making increases at the expense of the working population ceases. We should all put such a programme to the electorate when the general election comes.
It is a real pleasure to follow the widely respected and thoughtful comments of the right hon. Member for Birkenhead (Frank Field). Sometimes they are difficult for the Government and sometimes they are difficult for the Opposition, but we should always take heed of his comments and listen to them very carefully This debate nearly passed me by until I saw a quote in the report stating: “An economy that is skewed towards baby boomers and against millennials” That panicked me. We all have our own calling into politics. I went to a school that was bottom of the league tables in Kidderminster and my father died at an early age. Many of my friends did not fulfil their potential. I was always driven by the thought that, given the right opportunity, everybody can be successful if equipped with the right skills, sometimes the right luck, the right support and the right direction. All too many people—very, very good friends of mine—did not take that path and have missed out. That is bad for them, bad for the economy and bad for society I looked at that quote and I worried, because to me it was one versus the other, rather than the core principle that we have a duty to do our very best by everybody. I know a lot of people will focus their comments on the triple lock—whether it is right, whether we are doing too much for pensioners and whether we should be doing it in a different way. I would just gently say, because I wish to focus my comments on the younger generation, that we all welcomed the triple lock. There had been a long time when perhaps we had underserved those who had worked hard all their lives. I just urge caution. Once people get to pension age, they have limited opportunities through which to change their circumstances. They have either fulfilled their potential or there is not really much more opportunity to do so. They have reached the finish line that the right hon. Member for Birkenhead talked about. We have to respect the fact that their incomes are predominantly fixed, and we have to do our best by them.
There is a lot in the report that I would recommend to my hon. Friend, but does he share my slight concern that we must not allow our long-term thoughts on pensions to be coloured by a particular cohort of pensioners retiring right now? In 10 or 15 years’ time, defined benefit schemes will have gone and people may be in a much worse position than those retiring this year or in the next few years.
I am very grateful for the fact that we have a fantastic Pensions Minister who will be responding to the debate and who will no doubt comment in detail on that point The broader point, as I turn to the opportunities for younger people, is that we all collectively—the Government and the Opposition—have a responsibility to recognise that we have a habit of spending more money than we get in as tax revenue. Since the second world war, I think there have been only six years where the Government of the day have spent less money than they have collected. What that really means in plain English is that we, as the generations from most of those years, wish to have more than we can afford and we would like our children, or maybe our children’s children, to pay for it. This applies to all Governments, except in those six years where, for whatever reason, the Government of the day were able to collect in more tax revenue than they spent. We have a moral duty and responsibility to future generations not always to take that easy decision I was doing a radio interview yesterday on a relatively contentious issue involving possible additional Government spending, and another MP said, “Well, if I was the Minister, I’d have taken the hit.” The key point was that it was not they who would have taken the hit; it was everybody. Given that we already spend more money than we collect, what they were saying was, “I’d pass that one on to the next generation as well.” We all know that. We would all like to balance the books immediately, but we also all have a long list of personal priorities we would like to spend money on—our inboxes are full of helpful requests from residents for where we could spend more money. Many of those are very important—a balance always needs to be struck—but I gently remind the House not to lose sight of the fact that if we wish to give the best opportunities to future generations, we must not saddle them with too much of our own overspending I am inherently a very positive person—I believe that if we equip people and give them the opportunity, they will seize it with both hands and make a huge success of it—so I am greatly encouraged that our Government have delivered 1.8 million more good or outstanding school places. As someone who went to a school at the bottom of the league tables, I understand the importance of equipping people with the right skills. In my constituency and across Swindon, we have had a difficult Ofsted report recently. We have fantastic teachers, headteachers and governors all trying their best in Swindon and we have secured extra funding for our schools, but we are not quite there yet We all—the Government, MPs, the council, the schools collectively, the parents—have to look at what more can be done. I am encouraged that the schools Minister recently visited two of my local schools, Nova and Swindon Academy, both of which are transforming the opportunities for their children, having come from what not so long ago were very poor ratings. Frankly, they were failing the children who were relying on them to equip them for the future, but both have transformed their ratings through strong leadership, and I am delighted that yesterday Ofsted confirmed that Nova had moved to “good” in all categories. I pay tribute to Mr Barton, the headteacher, and all his staff who have worked incredibly hard to achieve that. Schools are the fundamental building block for equipping young people in life I am also a huge fan of the National Citizen Service, a new initiative giving young adults real, tangible life skills, and every summer, without fail, I visit every stage of the three to four-week programme. It takes a random collection of young people—the activities cost about £1,500—and sends them away for a week to learn teambuilding skills. They then come back, form teams and choose a charity. They learn about that charity, organise entrepreneurial and fundraising activities, volunteer for the charity to see it at first hand, learn presentation skills, haggling, engaging and so on, and at the end, they graduate as NCS students. There is an incredible transformation in all those young adults, who arrive well educated by their schools but perhaps not quite ready for the workplace. I ran my own business for 10 years and employed a lot of young people and I am encouraged to see the huge difference in those young adults. They take the time in their summer holiday, when it is tempting to do other less-constructive things, to go and engage. In doing so, they give themselves the best opportunity when entering the workplace University numbers continue to increase, but the Government have rightly put a huge emphasis on apprenticeships. For generations, Governments and Opposition parties got into an arms race on students going to university. Every general election, we would hear, “We sent 25%.”, “Well, we’d send 30%.”, “We’d do a third.”, “We’d do 45%.”, “We’ll break 50%.”. Everybody has a talent. David Beckham is not renowned for being academically gifted, but he has a gift that has earned him more money in a week than the majority of people in society will ever earn, and that was because somebody recognised his skill and allowed him to develop it We all have a talent. Every time I failed to make it on to a sports team, I wondered whether I did—perhaps that is why I am here—but everyone has a talent, and apprenticeships rightly recognise that. Workplace learning provides people with real, tangible skills and a fantastic opportunity to secure a long-term career with good career prospects. That is also vital for our growing economy, particularly where we have skills gaps In the last Parliament, we had a commitment to 2 million apprentices, which we have met, and in this Parliament we have rightly identified an even more ambitious target. It will be tough to get there, but it is right to have such challenging targets. I have spent, as I am sure have all hon. Members, a lot of time meeting the young apprentices who are doing things that I have absolutely no idea about—advanced engineering, all sorts of complex things with computers. They are on the first rung on the ladder towards their brilliant careers. They will all go on to huge success Across the economy, this Government have now delivered record employment—2.7 million more people are in work than when we came to office in 2010. That is not just in London or the south-east, as has sometimes been seen in previous strong economic performances; it is in every single region of the country. In my town of Swindon, 8,400 more people are in work, which is greater than the number who currently go on a weekly basis to see Swindon Town bravely fighting the relegation battle. Thankfully, with the victory at the weekend, we have got a bit closer to achieving the objective There are now 865,000 fewer workless households, and youth unemployment is at its lowest since 2005. In Swindon—I know that people are keen to know how well we are doing—youth unemployment is down by 69.2% since 2010, which is a fantastic achievement. The Government have rightly introduced the national living wage so that we are looking at a wage of about £9-plus by 2020. That will help 6 million of the lowest earners to have a pay rise and to share in the proceeds of the strong economic growth that we have delivered. The increases in the personal tax threshold have taken the 3.2 million lowest earners out of paying any income tax at all, and we are continuing to raise that threshold to £12,500, after which it will be index linked, making sure that the lowest earners will never return to the point of having to pay income tax again.
My hon. Friend is making an excellent speech, based on his expertise as a former Minister. We share something in common, in that our towns and cities of Swindon and Peterborough are, unfortunately, the two largest conurbations in the UK without a university that was created from the beginning. Does he agree that, in that respect, it is important to build on apprenticeships, with university technical colleges, for instance, so that young people who are not of an academic bent can be persuaded to pursue a technical and vocational education, which is so important for our future economy?
I thank my hon. Friend for that powerful intervention. He is a real champion for his constituency. On his point about universities, my Swindon constituency benefits from having a huge influx of graduates, so we benefit from the network of local universities within striking distance of Swindon, which is why our area has seen such strong economic growth My hon. Friend is absolutely right to highlight the importance of university technical colleges. My constituency had one of the first UTCs—a £10 million facility in Swindon. It has had its teething problems, but the principle is fantastic, because it is identifying the people who would ultimately be doing advanced engineering and technical work, giving them a real focus on that. They are working with local businesses, which can help to shape the curriculum to fill the skills gaps that can be identified in the local economy. This means that young people will have the best chance of having a career at the end of their education The challenge with university technical colleges is how to attract the best and most able students for that type of education at the age of 14. Not unsurprisingly, schools, which are all judged by league tables, are not always brilliantly keen to encourage their most able students to transfer, because it will have a detrimental effect on their place in the league tables. I would urge the schools Minister to consider having a dual score in the league tables, whereby the student remains attributed to the original school, but the results can be shared with the UTC. That would get around the disincentive facing schools if they lose some of their best students. It will give them the opportunity to say, “Look, they are doing great; but they can do even greater with that type of specialist education”. Undoubtedly, apprenticeships and UTCs are making a huge difference Not everybody has the opportunity to walk straight into work. As a society, we therefore have a duty to make sure that our jobcentre network is at its most able to support people. I was not the Minister responsible for jobcentres during my time in the Department for Work and Pensions but we had a lot of joint meetings and I got very excited about the need to refresh our jobcentre network. I had been on a number of visits and I was fundamentally depressed when I saw the 1960s and 1970s concrete structures and the security guards who are, understandably, needed. Let me imagine, though, that I am going to a jobcentre. I am almost certainly nervous, and I am then greeted by a security guard in bleak surroundings. There is no celebration of the successes, and no highlighting of those who have faced the same challenges that I fear but know that I must overcome I also visited a Shaw Trust community hub that helped a number of people who were a long way away from entering the workplace. There were bright colours and great furniture. This security guard had a different uniform to show that he was a welcomer: as soon as people arrived they were made to feel special, were congratulated on taking this step, and were made aware that he was there to be their anchor throughout the process. It was a real hub of activity. I could see nervous people coming into the building, but as soon as they met the guard they were at their ease, keen to engage in the process and fulfil their potential I am delighted that the Government have rolled out this system. When I visited the Swindon jobcentre a few weeks ago, I was not sure what to expect. I was greeted by senior members of staff, who told me excitedly that although the jobcentre had a budget of only about £3,000, they had painted the walls, changed the furniture around, changed the way the entrance worked, and provided work stations so that people could use computers to look for jobs independently after receiving support from the staff. Those staff members were excited because those improvements had transformed their morale and engagement among those with whom they sought to work The staff were then keen to talk to me about the difference that universal credit was making by simplifying what had been an incredibly complex benefits system. Under the old system, involving about 167 benefits, it was necessary to be a nuclear physicist to work out what people were or were not entitled to. All too often, through our casework, we would discover that, because of the complexity of that system, our constituents were missing out on support to which they should have been entitled Everyone supports the idea of a simplified single benefit that enshrines the principle that the more people work, the better off they will always be, and removes the ridiculous 16-hour cliff edge that prevented people from progressing from part-time to full-time work, to the frustration both of employers and of those whose circumstances were changing and who wished to build up their hours. Crucially, real-time technology now allows people with fluctuating health conditions to have a minimum income. As the condition goes up or down, the system automatically kicks in, so that people no longer constantly have to reapply and experience complicated bureaucracy when they want to focus on dealing with their health challenges and with remaining, or progressing, in work Often it is the simplest things that make the biggest difference. Another exciting development is that, for the first time, there are named work coaches. When people arrive at the jobcentre, they do not just need direct help with their search for work; there are a number of other challenges that they may need to navigate, such as securing childcare or additional training. The named coach will help them through that process, giving them significantly more time to concentrate on looking for the work that they would like. The coach will stay with people when they start work, which will also make a huge difference Many of us, looking back on our careers, will realise that we were probably driven mostly by our parents encouraging us to make progress—encouraging us not to be complacent; encouraging us to push ourselves—but that is not a given in life. When I was at school, it was a given that many people had no interest in going to work. That was a shame, because they were brilliant people, and with the right encouragement they could have made huge successes of themselves Often, people—especially those who have been out of work for a long time—will enter work, but on the lowest wage. Sometimes they will then stagnate, and will not have the confidence to kick on to higher levels. Let us suppose, for example, that I have been out of work for a long period, and have secured work in a supermarket. I am determined to make it a success, so I turn up every day, work my hours diligently, and stay there. Now, however, the named work coach would contact me and ask, “How is it going?” I would say, “For the last three months I have turned up every day and worked as hard as I possibly can.” The named work coach might say, “Have you thought about asking to become the supervisor?” The reply would be, “I’m too shy to do that.” The named coach would say, “No problem,” and then ask the supervisors and managers in the store, “Is he ready to take that step up?” Therefore, the coaches help people to progress in the workplace It is great that we have 2.7 million more people in work and that we have introduced the national living wage, which has helped the 6 million lowest earners to get a pay rise, but the next challenge, as we move close to full structural employment, is to ensure that there is support for in-work progression, so that everyone can not just get a job but fulfil their potential. By working hard, they can then progress through those organisations.
I want to come back to the subject of the debate, intergenerational fairness. My hon. Friend has made some points about working issues. Does he agree that for those who have retired or are working but are due a pension a key issue is not only intergenerational fairness but fairness between people who own and run companies and who have responsibilities to people in pension schemes? The news today is a good example of how this place can help to secure the best outcomes for those who are promised pensions in a not very rich retirement world.
I thank my hon. Friend for his intervention. I am always at a loss to understand why he is not a Minister. He is one of our most able MPs. In the debates that I have attended, time and again, he is so thoughtful. I had a brilliant time visiting his constituency as a Minister to see the great work that he had done to help to promote apprentices, before it became fashionable and all of us started to campaign for more apprenticeships. He is always ahead of the curve. Rightly, his intervention highlights that we have to look at people of all ages and at the opportunities. I was an employer myself, so I understand the responsibilities to staff in respect of pensions and other benefits and career progression. As ever, he makes a powerful point.
Before my hon. Friend finishes his speech, on a positive note, does he agree that it is important that we have done everything we can to remove the badge of shame in the way we treat disabled people who want to work, and that the Disability Confident scheme, with which he was very much involved at the Department for Work and Pensions, is going from strength to strength, so that more disabled people, who should not be put in the shadows but allowed to fulfil their potential are able to do so in the employment market?
I thank my hon. Friend for his intervention. I know that he personally supported the Disability Confident campaign. I am coming to that, if he can hold on for a few more seconds Another thing that the staff at the jobcentre highlighted was the great initiative of the school advisers from the jobcentre going into schools, starting to identify those who would need help at an earlier stage and working with them to prepare them for their final day in education and to have a smooth transition. Staff are very excited about the early stages of that initiative. I am delighted that the small employment offer, a pilot that I introduced, is making a difference in getting more businesses to engage directly with the jobcentres, which are now a hub of activity, creating more potential vacancies for those who are still looking for work As a former disability Minister, it would be remiss of me not to talk about the additional opportunities that have been created for disabled people. On all the visits I ever did, the most passion I saw from people was when I played my favourite game, which was to ask anyone I ever met, “You are the Minister—what would you do?” I was always looking for good ideas. Without a shadow of a doubt, the most passionate, enthusiastic and engaged cohort of people I talked to were young disabled people who wanted to have exactly the same chances and opportunities as their friends. These were highly talented, often highly educated, brilliant young people, but not all employers had the confidence to consider offering them an opportunity. Nearly always, the employer just needed to make a relatively small change and they would benefit. As an employer, by accident—I am not looking for a halo—I employed people with a disability and it made a huge difference. Therefore, I welcome the fact that over the past three years 600,000 more disabled people have gone into work and that the Government are committed to delivering the disability apprenticeships. Those are real opportunities, predominantly for that younger generation I welcome this report, but I urge everyone to remember: it is not them versus us. We have a duty to do our best by people of all ages. I very much hope the Government continue their good work in this area.
Order. I have not yet suggested that Members limit the length of their speeches, because it appeared that we had plenty of time, given the number of Members who had indicated that they wish to speak. Such is the interest in the debate now, however, that there are more Members wishing to speak than there were an hour ago. They must have been prompted by the last two excellent, thoughtful speeches. As a result, I now ask Members to take 10 minutes or less. That would be helpful in allowing everyone an opportunity to speak.
It is a pleasure to follow the eloquent speech from the hon. Member for North Swindon (Justin Tomlinson). The report on intergenerational fairness by the Work and Pensions Committee, under the chairmanship of the right hon. Member for Birkenhead (Frank Field), raises some interesting points. The UK Government have built an economy that offers no long-term security for future generations. The Scottish National party’s vision of economic development is, however, built on the idea of inclusive growth based on equal opportunities, a fair and inclusive job market and a safe, secure future for the younger generation I know you, Madam Deputy Speaker, will find it hard to believe that I am not a millennial, but I am apparently a baby boomer. To make my contribution more authentic, I shall use personal examples of what has happened either to me or to others of my generation. According to the report, my fellow pensioners and I are in danger of breaking the intergenerational contract, in that my state pension—which I will always assert is not a benefit but a contract between me and successive Governments—and those universal pensioner benefits that I receive come at too high a cost for today’s working-age population I shall pause for a moment to consider the WASPI women, who have been treated abominably by this and previous Governments. Many of them have been required to wait far too long for their pension, which will come later than they were told, and this is causing them serious hardship. I was fortunate to be born when I was. I paid national insurance contributions until I was 60, and I continue to pay PAYE on my salary. I contribute to the national Exchequer. Indeed, over my lifetime, I have paid in more than I take out. I am happy for my fellow pensioners to be paid what they deserve, even if they have been unable to contribute as much as I have done. In Scotland, there are many more folk like me I welcome the report’s conclusion that it is not the fault of the baby boomers that the economy has become skewed in their favour. This echoes a point made by the hon. Member for North Swindon. We should not be allocating blame. Believe me, Madam Deputy Speaker, there have definitely been times in my life when the economy was not skewed in my favour. Some people in the Chamber will remember 16 September 1992, and I certainly cannot forget that day. Two years previously, I had taken out my first mortgage at a rate of 7.5% and, after numerous increases on that day I found myself laughing hysterically on my drive home from work. I had just found out that the interest rate was now 15% and that it could rise even higher. Actually, it is not exactly true to say that I was laughing hysterically. I had stopped worrying by that point, because I figured out that no one else would be able to pay their mortgage at that rate either, and that my house would be repossessed and my three children made homeless only after the building society had repossessed the homes of all the people whose names began with the letters A to E The economy was definitely not skewed in my favour when the then Chancellor Gordon Brown’s change to dividend taxation in 1997 sounded the death knell for defined benefit pensions. For many of my generation and for future generations, that has had an ongoing effect. After his decision, pension schemes became unable to reclaim the tax credit on dividends. Regular dividends are hugely important to overall investment returns, so having a significant chunk taken out of them at a stroke blew a huge hole in the schemes’ finances, and the vast majority of them were frozen and closed to new entrants Speaking at his party conference in 2009, the right hon. Member for Tatton (Mr Osborne) said: “Gordon Brown’s disastrous tax raid on pensions heralded the start of the age of irresponsibility.” He also said that a Conservative Government would “reverse the effects of Gordon Brown’s pensions tax raid and get our country saving again.” However, the right hon. Member for Tatton abolished the dividend tax credit altogether in 2010, making it impossible for him to reverse Mr Brown’s raid by making the credit reclaimable in future. Thus, we now have the rise of money purchase schemes, which means that pension values are even more subject to the variations of the stock market. Indeed, many people of my generation suffered after their defined benefit pension schemes were frozen, and the money purchase schemes that they were forced into did not even hold the value of the contributions subsequently paid in. In one case, a pensioner and his employer paid in for more than 10 years, but he received less back when he retired because the market was at its lowest point on his retirement date. All generations will feel the effects of those calculated moves as they move towards retirement age When addressing working-age challenges, it is important to be mindful of generational gaps. It is the protections offered by the triple lock to the state pension that protects pensioners in their old age. With inflation set to rise further, the protections must be retained while we address the stress on younger generations. While the triple lock remains in place, we need cast-iron guarantees that it will not be abandoned after 2020.
The hon. Lady is making a captivating speech. None of us wants to make changes to the triple lock, but there must be some recognition of what the country’s finances can afford. That recognition must be balanced against the security for pensioners.
There certainly is recognition, but I totally disagree with some of the ideological truths held by those on the Government Benches. We have to look after pensioners just now and pensioners in the future. Indeed, Age UK told me to refer to the Pensions Policy Institute, which calculated that a younger person with lower earnings has a 63% chance of achieving an adequate retirement income if the new state pension is increased by the triple lock, but that could fall to 36% if it is linked to earnings. That is about future generations, not just me and my generation. Other parties should be united with the SNP on future protection. Notwithstanding the report’s importance, we must be clear that addressing the challenges for working-age individuals does not mean deprioritising the safeguards for future pensioners. The way to tackle intergenerational fairness is through inclusive growth, ensuring that all generations can live in security in retirement The report also looks at universal pensioner benefits such as winter fuel payments, which are not index-linked and have dropped in value over the years. The Committee’s opinion is that universal benefits should not be off limits when spending priorities are set by future Parliaments. However, some commentators have said that the cost of removing them from better-off pensioners could be more than the benefits themselves I have granddaughters and I might have grandsons one day, too—who knows? I want things to be better for them. I would like the UK Government to look closely at what can be done to improve matters for them. As I said, the UK Government have built an economy that offers no long-term security for future generations. The SNP’s vision of economic development is to build on the idea of inclusive growth based on equal opportunities, a fair and inclusive jobs market, and a safe and secure future for the younger generation The Scottish Government are building a safe and secure future for future generations. They believe that a fair and inclusive labour market that provides sustainable and well-paid jobs is key to a more equal society and a more resilient economy. To achieve intergenerational fairness, we need to tackle the legacy effects of the economic recession, such as youth unemployment and in-work poverty. The Scottish Government are ambitious in their aim to reduce youth unemployment and are now implementing the Wood commission’s recommendations through a youth employment strategy. Scotland has been a strong advocate of collective action at EU level and has supported initiatives such as the European youth initiative I might run out of time, but I will swiftly talk about home ownership and housing costs, which the Scottish Government have done a lot to improve. The Scottish Government will build 50,000 affordable homes, which will help the younger generation, and passed the Private Housing (Tenancies) (Scotland) Act 2016 to create simpler tenancies that offer stability and security to the 700,000 tenants who call the private rented sector home. The Act improves security for tenants, contains comprehensive and robust repossession grounds and includes an opportunity for local authorities to implement rent caps What we need for all generations is hope for the future and robust policies that do not pit one generation against another. My children and grandchildren do not begrudge what I have earned and paid for, and I want the best for them, too, but I have grave misgivings about their life chances under this Tory Government. Theresa May has indicated that the UK could follow down a road of deregulation.
Order. The hon. Lady is fine for time, but I am sure she meant to say, “The Prime Minister.”
Yes. I beg your pardon, Madam Deputy Speaker A tax haven-style economy would deny opportunities and security to millennials and the generations to come. Finally, to pursue a deregulated tax haven charter is not only a futile race to the bottom that will affect businesses and harm the economy but a clear admission that the UK Government have not learned from mistakes made during the 2008 financial crisis and, more recently, the Panama papers.
The Chair of the Select Committee, the right hon. Member for Birkenhead (Frank Field), in a typically assured and authoritative speech, began by saying, absolutely rightly, that intergenerational fairness is a huge issue. He said that the Select Committee, of necessity, had to focus on the particular area of the triple lock—it is a pretty big and important area—but that the issue is much broader than that Intergenerational fairness, or generational justice if we want to call it that, is not a brand-new concept, but it is gaining in political salience. It is an idea whose time is coming, if it has not already come. That is partly because of the changing demographics of this country, which underlie the Select Committee’s decision to consider the triple lock. We have had what some people call a “demographic time bomb” ticking away, and successive Governments of every stripe have had to deal with the arithmetic logic that that means for our fiscal future. There is an impact on the state pension, other state benefits and many other facets of our Government finances The concept of generational justice therefore provides us with an incredibly useful new moral prism through which to view our spending decisions today. My hon. Friend the Member for North Swindon (Justin Tomlinson) rightly said that it is extremely rare for Governments since the second world war to run a budget surplus. By and large, we have outspent ourselves as a nation—it does not matter who has been in government. We have overspent. We have been Mr Micawber, spending today and hoping that something will turn up tomorrow. That cannot go on because the notion of generational justice is increasingly in people’s minds, and rightly so We need to ask ourselves the moral question: if we are spending on things today that just help our lifestyle, how can it be fair on our children and grandchildren? If we borrow to support that spending, they are the ones who will have to pay for our lifestyle today, which cannot be right or fair. We will have to justify that to them when we, in turn, come to claim our state pension or state benefits I am a little more generous than my hon. Friend, because I would say that there are a few occasions when it is justified to borrow more than we receive in tax revenue, particularly where we are borrowing to spend on things that are then going to be enjoyed by our children and grandchildren, as they are going to be able to use them. People in this country today benefit from the investments our predecessors made in railways and roads. We, in turn, are investing in digital infrastructure, which our children and grandchildren will be able to use. Those things last and will yield a benefit to not only us, but future generations. The moral prism that this new concept brings means that we can then start to distinguish between things that our children and grandchildren will be able to use for their own benefit, as well as for ours, and things that only we benefit from—things that subsidise our lifestyle today. That is the new moral prism, and we would not have heard many people in this Chamber or elsewhere in our national debate talking about it even five or 10 years ago—they certainly would not have been talking about it 20 years ago That is the new concept, and it is extremely powerful and important for us. Let us suppose we start to view things through that lens and start to apply the same kinds of fiscal and financial discipline that an independent pension fund would apply to its liabilities. Let us suppose we try to value the financial liabilities inherent and embedded in the state pension and the state benefits system, just as the trustees of the Rolls-Royce pension scheme or any other private or occupational pension scheme would. What happens if we then apply those actuarial calculations to the liabilities—to the cheques we are all collectively in this place writing on our own behalf and the costs that we are therefore imposing on future generations? We find that those actuarial liabilities look, feel, sound and are economically the same as a gilt, a Government bond, a long-term liability—and I suggest strongly that it is only generationally just that we should also treat them the same. If we apply those calculations, the Government’s balance sheet—the public’s balance sheet—and the Government’s overall commitments start to look very difficult indeed That is not a comment on the current Government or on the previous couple of Governments, either the coalition or Labour. This is a comment on the way this country has been thinking and behaving since the second world war—since we founded the welfare state. If we add those actuarially calculated liabilities on to what we normally call the national debt—the stock of gilts; the stock of Government bonds in issue—we do not just get the figure of about 90% of GDP that is projected for the national debt. That level already gives people like me a nosebleed, thinking about the altitude we are going to be operating at in due course. The strain on our Government balance sheet is already high, but we do not just get a figure of about 90% of GDP as Government debt; depending on which external valuations and assessments we choose to believe, we get a figure that is somewhere between 350% and 400% of GDP It is time we started being honest with ourselves, not just across the aisle here in this Chamber, but as a society and as a nation, about the scale of the cheque that we are asking our children and our grandchildren to cash on our behalf. It means that the Government’s finances are a great deal more brittle, fragile and exposed to external shocks of the kind we suffered in the 2008 banking crisis than we have been willing to admit to ourselves. We have been a high-rolling economy of that kind since we first invented the welfare state The Select Committee Chair rightly pointed out that we could react in a number of different ways to this inconvenient truth—for example, by raising taxes or by ignoring the problem; he mentioned that, but I think his tongue was firmly in his cheek when he did so. I would like to offer for consideration one alternative that he did not mention. The only way we can deal with the generational injustice of charging our children and grandchildren for the liabilities we are building up under the state pension and state benefits system is to switch from the current pay-as-you-go system. That is a gulpingly large financial commitment, but it is also I am afraid unavoidable and inescapable once we have accepted that we have been kidding ourselves about the scale of the public liabilities that this country has been writing for itself for the past 50 years or more The only way to move from a pay-as-you-go system to a fully paid up system, which is what we already demand from the occupational schemes that we look at with some degree of envy and approval—the occupational schemes are held up by many as the apple of the pensions eye—is through a very slow and steady process. It would clearly be generationally unjust the other way around not only to charge the current generation of taxpayers the cost of supporting the pay-as-you-go system, in which we all pay for the current pensions liabilities, but to ask us to build up a fund to afford the future pensions liabilities so that we can wipe out the generational injustice. We would end up paying twice, which would be a generational injustice of a different kind and scale I make this point, then, to all those present and to everyone listening more widely: if we are serious about generational justice and about trying to make sure that we do not expect our children and grandchildren to fund our pensions and benefits, whatever we may need if we get sick or are out of work—those vital parts of our lifestyle—we need to make a long-term commitment to deal with their inheritance as well. Families do this all the time—they make commitments on behalf of their children and grandchildren. As a nation and as a society we need to start to be honest with ourselves about the size of the burden we have been and are placing on future generations, and about the fact that the generational time bomb is starting to impose ever heavier burdens. The only solution—to be approached slowly, carefully and over a very, very long timescale—is to make the commitment to switch from a pay-as-you-go system to a fully funded system, so that we can look our children and grandchildren in the eye and say, “We did not ask you to pay any more for our lifestyles.”
Order. Right, let us try for nine minutes or less.
I congratulate my right hon. Friend the Member for Birkenhead (Frank Field) on introducing this important debate on intergenerational fairness—or social mobility, as it may also be called We are, of course, not the only country dealing with longevity, which is a positive thing. I am the shadow Minister for the far east. China is, of course, the most populated country in the world, and its large, ageing population has created a massive question mark over how to proceed. We are therefore not the only ones questioning how the best policies and ideas might be brought forward Let us not forget that pension credit is one benefit that is under-claimed. When I meet older folk in my advice surgery, I am always surprised by just how many pensioners are living in poverty. One part of my constituency is one of the most well-to-do areas while the other part is one of the poorest. People in Wood Green live 10 years longer than my constituents in Muswell Hill—I think I have that the right way around. The important thing is that in just one constituency there can be a 10-year difference between the ages at which people pass away Members will have seen headlines today saying that people will have to work until they are 71. We know that a feature of older age is the scourge of loneliness. Many people might be quite well off but, in the end, it is the loneliness that is fatal for them. As we think about these intergenerational issues, we should consider the wonderful, cross-party memorial project for our former colleague, Jo Cox, which is all about dealing with loneliness Let me turn now to younger people. This dovetails nicely with our previous debate on productivity, because we know that if we had more effective childcare, many more working-age parents would be able to earn and make those steps in the workplace that the hon. Member for North Swindon (Justin Tomlinson) mentioned in his speech. Many women missed out on career opportunities because the childcare was simply not there when they needed it. That in turn meant that they were not able to get the pay increases that would have enabled them to have a better pension, and so it goes on The former Prime Minister Tony Blair said, “Education, education, education,” because he knew that better jobs would bring in more tax receipts. That is why it is so important that education is central to what we do in this place. It is a great pity that we are seeing the first real-terms cut to schools in 30 years. As the places that educate more than 90% of our children, state schools have to be at the forefront of what we do. The latest cut is very regressive indeed A cut of 50% to further education can only lead to a lowering of educational attainment and reduced opportunity within the general population. My right hon. Friend the Member for Tottenham (Mr Lammy) is now calling for something similar to working men’s colleges because of the lack of an opportunity to learn. When I go to my advice surgeries in Wood Green library, I am always delighted to see how many adults there are learning English, maths or another subject to give them that golden bit of education that will get them into a good job Let me turn briefly to the matter of university fees. The other day, a lecturer at London Metropolitan University, which educates nurses, told me that the average nurse now comes out of university with a debt of £54,000. If a nurse has a starting salary of £24,000, it is quite obvious that it will take them a very long time to pay off that debt, and they will end up as a victim of these intergenerational issues that we are debating Working-age families face increasing travel costs when commuting to work, as well as higher energy and telecoms bills. If three or four children in a family each have a mobile phone, things are much more expensive than when each house had just one landline, but phones are not considered to be a luxury anymore—they are just something that we need for our work. Many working-age families are therefore treading water, and some are even going backwards On the psychology of universal goods and services. I want briefly to relay an experience that I had as a council leader. As a council, we wanted to do something for older folk, so we introduced a £100-back scheme. I received the most interesting thank you letters—not that council leaders receive many of those; the letters are usually the opposite. People said, “Thank you. I am just over the benefit level. I have worked all my life, and it feels wonderful to have this recognition from the council. This £100 will help me to have a holiday or a day out.” We know that the freedom pass, the concessionary travel scheme for older Londoners, is greatly cherished. I would like many more travel concessions for the regions. The fact that people cannot get on a bus in their village so that they can go shopping in the local town holds back our high streets and the economy enormously. A Labour Government would almost certainly address that issue. The NHS is, of course, a very popular universal service. If we followed the reasoning we have heard in several Members’ speeches, we would assume that targeting everything is the right way to go, but we know that universalism works Housing is the big divide between the higher and lower value areas of the country. People who want to take up a job in a high-value area such as London, Oxford or Bristol face difficulties because of the astronomical cost of renting. The best investment the state can make is in bricks and mortar—as we know, because every other wealthy investor is doing that. The average local authority home costs £100,000 in capital to build. If that cost is paid back at a rate of about £150 a week for a family, it is soon made up over a 10-year period. Social housing is a wonderful investment. In fact, housing in general is a wonderful investment, and the wonderful thing about housing stock is that it is there forever to use and let out again In conclusion, Madam Deputy Speaker—[Interruption.] Oh, Mr Speaker, you have slipped in unannounced; it is so unlike you to be so quiet My first point on social mobility was simply to reiterate that pension credit and benefits for pensioners are often under-claimed. We should not assume that everybody over the age of 65 is doing very well. My second point was about the increasing pressures on working families. There is a desperate need for affordable childcare, and people face increasing costs of commuting to work alongside flatlining wages or household debt, which is creeping up again, so we need to watch the situation carefully. Government investment in education and housing is the way forward. I hope that we will learn much more from the report of the Work and Pensions Committee, which is chaired by my right hon. Friend the Member for Birkenhead, but we must not forget the complexities of the situation.
As far as I can see, there are four more would-be Back-Bench contributors. I should have thought that we will need to start the Front-Bench wind-ups no later than 6.30 pm. The right hon. Member for Birkenhead (Frank Field) might want to make a two-minute wind-up.
indicated dissent.
No—well, the wind-ups should certainly start no later than 6.30 pm.
This has been an excellent debate, which was brilliantly introduced by the right hon. Member for Birkenhead (Frank Field) and has included thoughtful and intelligent contributions from all hon. Members This debate is about poverty, wealth, the accretion of assets and life chances. My grandmother, Kathleen Woodman, was one of 13 children born in County Wexford in Ireland. Eleven of those children died of tuberculosis before Kathleen was taken to England in the late ’40s to live out the rest of her life. I mention that because it is impossible not to remember that the reality of life for so many of our fellow citizens for so many hundreds of years was brutal, grinding poverty. We have come an enormous distance. I say to the right hon. Member for Birkenhead that, yes, there is much to be done, but we have done a great deal to right the wrong of the grinding poverty that afflicted so many people over so many years It is important to remember that the modern welfare state was debated after Lloyd George’s 1909 people’s Budget, which brought in social insurance, pensions and the pre-Beveridge foundations of the welfare state. For that reason, we ought to recognise that we have gone in the right direction over the years. To use another statistic, it is impossible to believe that 44% of the world lived in absolute poverty as recently as 1980. In 2015, that figure was 9.6%. We have done an enormous amount—through technology, science, innovation and advances in healthcare—to lift the burden of destitution, misery and poverty from our fellow man, and we should accept the importance of that I will confine my remarks to the specific issues raised in the report. The debate between the so-called millennials and the baby boomers does not have to be acrimonious and adversarial. None of us can do anything about the societal change inherent in it, which is essentially demographic. The number of over-85s will double in the next 25 years, and that is a fantastic piece of news. As recently as 30 years ago, people worked incredibly hard—often in manual work. They reached 70 and had a few years tending their plants or their budgie, and then they fell off their perch. That was the reality of our life then. People now are richer, happier and healthier, generally speaking, than they have ever been, and that is a good thing It is also true to say, though, that we have not always done the right thing in response to that significant demographic change. To go back to the points made by my hon. Friend the Member for North Swindon (Justin Tomlinson), we have made some policy mistakes. We had a fetish in the 1980s and 1990s for university education—academic education. We did not consider the importance of technical and vocational education to young people who were not necessarily academically gifted. We drove the target of 50% of 18-year-olds going to university, which is great if someone goes to Harvard, Oxford or Cambridge, but not if they go to a less prestigious university and end up earning £7.50 an hour in a call centre, with £40,000 of student debt. We have to really consider whether we made the right decision. For instance, we turned polytechnics, which did a great job in providing technical education for young people, into universities. Was that the right thing? We are doing our best now to ameliorate those issues by, for instance, creating university technical colleges and a brilliant apprenticeship programme across the country, but I am not sure that is enough Housing is an important issue, and it was raised by the hon. Member for Hornsey and Wood Green (Catherine West)—I think she got her figures the wrong way round, unless Muswell Hill has gone downhill a lot since I last visited it, compared with Wood Green. It is absolutely right to point up the issue of older people, who are, in any case, better off, hoarding capital assets and, particularly in the planning system, preventing younger people from having what they themselves had. When someone who wants to buy a home has to be 37 years of age and to have something like £25,000 for a deposit, that cannot be right, and it distorts the system. We must build more homes, release more land and liberalise the planning system to address the specific issue of housing and intergenerational fairness We have to look at the triple lock, and we need a national debate about it. I am indebted to the Resolution Foundation for the paper it produced last year—“Stagnation Generation: the case for renewing the intergenerational contract”—and for the work of Lord Willetts, among a number of people. It is scarcely believable that the Resolution Foundation could say: “Millennials are at risk of becoming the first ever generation to record lower lifetime earnings than their predecessors” That is the political inheritance we are potentially giving to people who are under 30 at the moment.
Does my hon. Friend therefore agree that we should reform pensions tax relief to enable younger people to save more? Three quarters of pensions tax relief goes to higher earners, who are often older. If we reformed it—moving to, say, 28p or 30p in the pound—lower-income people would have more bang for their buck.
I absolutely agree. In terms of fairness and social equity, that is an excellent fiscal policy, which we should look at As the Select Committee report said, we also need to look at the information gap. We need qualitative and quantitative data on what goes in and comes out across both generations. We need to publish that analysis and study it independently We need to look at universal pension benefits, such as the winter fuel allowance. With demographic change, it is inevitable that we need to make sure we marshal our public resources in the best way we can. We need to look at a smoothed earnings link—a nuance in terms of prices-related indexing of benefits to pensioners. Life expectancy is increasing and health outcomes are getting better It is not that we have not done a good job, with automatic enrolment, changes in tax allowances, the national living wage, record employment of 74.6%, apprenticeships, and real incomes now rising by 2.6%. As we have heard, the number of those not in education, employment or training is reducing. Youth unemployment in my constituency has seen one of the biggest falls in any constituency in England—about 70%. Work means wealth. Work is the biggest determinant of getting out of poverty. Albeit that it might be low-paid and low-skilled work at the beginning, it is the No. 1 determinant of breaking the cycle of intergenerational welfare dependency. It is hugely impressive that the Government have taken 865,000 people out of workless households since 2010, although obviously they need to do more Before I conclude, may I be a little disobliging to the Scottish National party? The hon. Member for Motherwell and Wishaw (Marion Fellows), who is an excellent representative of her constituency, was rather churlish in the partisan point that she made. If we are talking about ideology, perhaps she can explain the £2,000 gap per head in public expenditure as a result of the Barnett formula, as between my constituents and hers. I will leave that in the air for her to think about My hon. Friend the Member for Weston-super-Mare (John Penrose) made a superb speech. In fact, we do not have an approach where we just put money in a biscuit tin and take it out when we are 68 or 70—we have a pay-as-you-go system. We must have a national consensus and a proper debate on this issue, because we cannot kick it into the long grass any longer. As I said at the beginning, grinding poverty, destitution, ill health and hidden mental illness are all things that we never want to go back to. The system we have is a price we are paying for a civilised society.
I want to avoid seeing this as an issue of young versus old. I am conscious that there is a huge variation in the incomes of pensioner households, with some relatively affluent and others struggling to get by. I recognise the dangers of too much means-testing among elderly people, and particularly the risk that it can lead to people going without despite genuine need and entitlement However, I am also aware that this is not a great time to be young. Average household income, which has been rising for every successive generation since 1910, has stopped rising for those born in the 1980s, who are the first generation to start their working lives on an income lower than that of the previous generation. This younger generation will also do less well on pensions, both through the lack of access to defined-benefit schemes and the age at which they will be entitled to a state pension. It is true that, as we have heard, auto-enrolment will help, but it is hardly generous, and it will require a steady rise in employee contributions over the coming years. I would like the Government to take a good look at pension tax relief. In response to the hon. Member for Weston-super-Mare (John Penrose), I would like to see what can be done to incentivise those on lower incomes and at the early stages of their working lives to save in a pension pot. That would be a better use of public money than a generous relief for those who have already built up a healthy and, in some cases, quite substantial pension pot We need to think about how hard it is for young people to get on the property ladder and the proportion of their already limited income that so many are forced to pay in rent and other housing costs. The Institute for Fiscal Studies reports that homeowners spend about 15% of their income on mortgage payments, which is about half the amount that renters are forced to spend in this country I was struck by a proposal in the report of a recent British Academy-IFS roundtable on intergenerational fairness, which suggested that one answer to the double dilemma of accommodation costs for the young and of the social care crisis would be to encourage a model of co-habiting with older people. That might provide benefits of increased companionship and new understandings between generations at a time when the idea of the extended family has all but ceased to be a feature of our society and so many people feel isolated. The arrangement could also afford a measure of care and have a positive impact on wellbeing. It might also help those who are property-rich but cash-poor. If costs could be set at a fair and realistic level, it might offer some hope to those whose accommodation costs mean that they have no prospect of saving to get on the property ladder I support the Chairman and other members of the Work and Pensions Committee in calling on the Government to come clean about their future plans for the triple lock, which I honestly do not think is sustainable. I do not want an election campaign to be fought on a false bidding war for pensioners, only to be followed by a harsh U-turn shortly afterwards, as we have already seen with tuition fees and expectations on social care I am aware that many pensioner groups will oppose what I have to say. I have already had a hard time from the West Midlands Pensioners Convention for being a member of a Committee that could dare look at this issue. I am also aware that Labour Front Benchers are currently committed to maintaining the triple lock for the whole of the next Parliament, but I ask them to look again and see whether there is a better way to both protect pensioners and hold the Government to account on their vague plans There are two problems with the triple lock. First, it has a ratchet effect, which means that it demands an ever greater share of GDP when we have seen no income growth in working-age households for the past 10 years. Secondly, the triple lock creates a trade-off that means that the state pension age will have to rise above 70, which means pushing it above average life expectancy in some of the poorer parts of the country. In some parts of Birmingham, average male life expectancy is already 70.4 years and healthy life expectancy is as low as 53 years. In many parts of the country, average life expectancy and healthy life expectancy are even worse. We have already seen the problems caused by the rising pension age for Women Against State Pension Inequality, a group that I think should get transitional help I wonder what the risks will be if we pursue a policy of an ever-rising pension age. A better alternative would be to link the state pension to average earnings, but with added inflation protection in periods where price growth exceeds earnings. I ask my party’s Front Benchers to think about that. As a politically acceptable sweetener for such a change, it might be worth considering replacing the hugely expensive 2.5% component of the triple lock with a pledge to set a different cap on care costs and more support for social care We have to accept that workless pensioner incomes—that is, those of people who are fully retired—have grown more rapidly than those of any other group since 2001. Today’s young workers are set to be net contributors to the welfare state over the course of their lives, while the baby boomer generation, as we have heard, will be net beneficiaries. I want honesty for the future, fairness for current and future pensioners, and sustainable and affordable plans for the challenges that lie ahead.
It is a real pleasure to follow the hon. Member for Birmingham, Selly Oak (Steve McCabe), who is a very good member of the Select Committee on which we both serve. I will echo one of his key arguments, which is that we need to reform the triple lock and other pensioner benefits and to use the savings for adult social care and the NHS, given how much of those savings would go to those who are pensioners The key word used by the hon. Gentleman was “honesty”. We must level with the British people about the financial situation we are in. The way to look at it is to ask: if we had a blank canvas today, what would we keep of what we have now? No one starting a pensions system today would come up with the triple lock. No one would suggest a winter fuel allowance, costing £2.1 billion, which is paid to everyone regardless of their income or their national insurance record. In my view, no one would suggest a free bus pass, which costs £1.2 billion. No one would even suggest the £10 Christmas bonus, which Ted Heath introduced in 1972, costing £124 million at Christmas, at a time when the NHS is in crisis and needs more funding The essence of my argument is that 2020 is way too late. To have such a date is to use an arbitrary political timetable to enforce policy, at a time when the national interest requires us to look at the state of adult social care and the NHS and to find the money needed for them in a fair way. To me, the proposition that we are about to put more money into adult social care and the NHS but that none of it will come from existing pensioners is extraordinary. We have to look at pensioner benefits and the triple lock When it comes to the triple lock, we must remember that by 2050 the number of pensioners—the number of people over 65—will not be 10 million as it is today, but 19 million, which is almost twice as many. Look at the pressure our services are under today, let alone when there are almost twice as many pensioners. If we keep the triple lock, it will cost an extra £15 billion by 2050. My view is that we should recognise that the most vulnerable pensioners—those who need help from the state the most—are in the care system or in the NHS and in need of care I think we should look very hard at the winter fuel allowance. I would capitalise it for a year to invest in remediation measures, provide help with heating and so on, and move people on to more competitive energy tariffs, and then I would wind it down and spend the money on the care system, because that is what pensioners need, particularly in the winter We should look at the free bus pass. We could put a nominal charge on the pass and allow pensioners to travel at peak time. According to my county council, that would be a huge saving. It is actually what many pensioners want, bearing in mind how many do not take advantage of the free pass, which costs the Exchequer £1.2 billion a year I have to add that we should look at free prescriptions. In England, we say that we pay for our prescriptions, but 90% of prescriptions in England are not paid for, because so many of them go to the over-60s. The cost of free prescriptions in England for the over-60s is £4.8 billion. I recently went to a pharmacy in the beautiful village of Clare in my constituency. Most of the over-60s there are relatively well-off and probably own their properties outright—of course, there are pensioners there who are not well-off—but the fact is that they receive free prescriptions while many far less well-off people of working age do not. That is the sort of moral issue we must talk about What would I use the savings on? People should be as open and honest about this as I and our Committee have been prepared to be.
My hon. Friend is slaughtering sacred cows in such a steady fashion that I am wondering whether he is also considering looking at free BBC TV licences. Is that an expense we cannot afford?
My understanding is that the BBC will be asked to pick up the tab for that shortly, which I think is fair enough As I say, none of us would introduce such things today. They were political measures that bear no relation to contributions to the national insurance system or to the incomes of the recipients. That is the sort of politics we simply cannot afford today. Instead, we should be prepared to look at these measures, and use the savings to support a fair deal for those who have assets and need the care system, as well as to support those in the care system who cannot support themselves. Raising money to support the care system offers the possibility of another aspect of intergenerational fairness. The care sector is desperately short of staff and too many are badly paid. If we raise the money to support the social care sector, which will not be hit by the robot employment era, we have a way to give better paid work to young people and to provide a better career structure to those who might otherwise be on relatively low pay I want to finish on the key point made, in an excellent speech, by my hon. Friend the Member for Weston-super-Mare (John Penrose). I strongly agree with him on the issue first raised by my right hon. Friend the Member for Hitchin and Harpenden (Mr Lilley) in relation to the basic pension plus in April 1997 that we should move to a funded system. All our constituents who are pensioners will make the point, “Why should you take this stuff away from me when I have paid into this all my life?” And quite right. Pensioners come to my surgeries worried about having low interest rates on their savings when council tax is going up. They are affected by that. I accept that many of them are not wealthy. In fact, many are struggling. I accept that, but the root of the problem is that we have a pay-as-you-go system. We have vast freebies, such as prescriptions, and nobody feels any link to them. My hon. Friend is right that this is about the contrast between a Government who would be doing the right thing, even though it is not popular, of building towards a funded system, and those in the past who have given out vast freebies at the expense of future generations. The former is the model we should move towards. It may not be popular, but I think the public know that tough decisions have to be made. We should not shy away from them. If we want inter- generational fairness, we will have to have a little bit of intergenerational honesty.
It is a great pleasure to join the debate at this late stage, a debate introduced in a sense with the very good news about BHS pensioners. Many of us serving on the Select Committees chaired by the right hon. Member for Birkenhead (Frank Field) and the hon. Member for Hartlepool (Mr Wright) share the enthusiasm for that result On intergenerational fairness, let me start by putting the case for the prosecution, as it were, which was laid out in more detail in the Select Committee inquiry that I and many other Members here today were involved in. The Committee effectively said that the UK economy is skewed. We focused on some key elements: house prices; life expectancy; the burden of looking after the old financed by the young; the triple lock on pensions; and the implicit social contract between generations that we felt had become skewed. That triggered two or three specific recommendations, in particular on the new state pension tracking earnings and doing away with the triple lock The factual evidence behind the case for the prosecution is highlighted in the figure that the value of the full state pension as a percentage of average earnings is now the highest it has been since the late 1980s. However, there is of course more to it than that. Some of the points I would like to highlight include the fact that spending on pensioners as a percentage of GDP is falling. That is partly due to a growing economy, increases in the state pension age and the fact that the triple lock applies only to the basic state pension and new pensions. The statistics, therefore, are not always helpful in terms of anticipating the future. One other point is that there is a strong feeling among some of us that the basic state pension needed to increase quite sharply, particularly between 2010 and 2020, because it had fallen behind strongly in the previous decade. Everyone will remember the business of the 75p increase under a previous Government. This is, therefore, not quite as simple a proposition as it first appears Among our pensioners today are those who served this country in extremely difficult times, including world wars and other conflicts. Many were brought up in very difficult circumstances in a world far removed from the conditions that most people today can imagine. There is then the matter of the young. The young have always faced challenges; their challenges have just changed over time. One hundred years ago people leaving school at the age of 18 were facing extremely different challenges, many of them on the western front. My own grandparents, as young people, met shortly after the carnage on the Somme, where my grandfather had been severely injured. The woman who became his wife was nursing him. Although the challenges of today are considerable, we should not underestimate those of the past One of the ironies of our leaving the EU at this stage is that we are just beginning to adopt a more European approach to the homes we live in and to rent them for much longer, as they do on the continent. In a sense, the Government have recognised that in their ambition to create more social housing available for rent Other points have been well made, particularly by my hon. Friend the Member for North Swindon (Justin Tomlinson), who articulated much of what many of us feel about the National Citizen Service, which has so far cost about £1.2 billion—that is not on any balance sheet, of course, in terms of intergenerational fairness—apprenticeships and youth unemployment, which is at its lowest for 12 years, and the openings and opportunities in universities and further education colleges In that regard, I hope that the former right hon. Member for Havant, in his current role as chairman of the Resolution Foundation, when he is being provocative from that platform, does not try to set pensioners, those of working age and the young against each other, for that could be extremely counterproductive, as I will go on to set out. [Interruption.] Of course, things can be done to improve the balance in the relationship. Some of those were mentioned by my hon. Friend the Member for Weston-super-Mare (John Penrose), and we could look at a double, not a triple lock I can see that you are agitating, Mr Speaker, so I shall finish. In our efforts to make sure that the costs of old age do not cripple the future generations paying for them, we should never forget the hugely positive role that so many pensioners, grandparents and great grandparents play, looking after children and sharing their love and wisdom with their families, especially where the parents’ own relationships have broken down and the children are often being guided by their grandparents. In many ways, older people are always helping out and passing on knowledge. Let us never forget that The Resolution Foundation wants to analyse the balance of fiscal contributions and withdrawals. It is right that that should be done by that foundation and not the Government. Let us not forget, however, that incredibly sensitive issues are at stake, some of which emerged as moral issues during our discussion of the Assisted Dying Bill. We do not want to end up inadvertently setting generations’ interests against one another. At the end of the day, let us be mindful of what many in the House believe and the late Jo Cox articulated brilliantly: what we all have in common is so much more than what divides us, including across generations.
Hon. Members might have heard me talk before about my issues with the estimates process. I do not agree that we should do them in this way and I think that the Government should seriously consider the reforms recommended by the Procedure Committee in respect of how we deal with them. We should be allowed to discuss and scrutinise them at length That said, I want to talk specifically about the intergenerational fairness report—it works quite nicely that I and my hon. Friend the Member for Motherwell and Wishaw (Marion Fellows) are the SNP team on this. I want briefly to touch on my story and then talk about some of the issues that people my age face. My grandparents were part of the silent generation mentioned in the report, my parents were at the tail end of the baby boomer generation, I am a millennial and my children are of the generation called “the latest”, which I think is sometimes termed generation X, but I am not sure My grandparents are still alive and have spoken to me about their story and the hardships they faced. In my family, we have faced all the issues discussed in the report. Those issues that people my age face differ from those faced even by relatively recent generations. There are issues with precarious jobs and the gig economy. It has not been talked about a huge amount today, but it is important to note that there is no longer the job security that some people had in previous generations. Young people cannot expect to walk into a job and still be there in 20 or 30 years. They walk in wondering if they will still be there in six months, given the precarious nature of contracts these days Another thing that has not been discussed is the fact that people my age are delaying having children, which stores up even more problems for the future demographically. What we should have been doing is having more children 20 years ago; now the problem is exacerbated even more because people are pushing having children later into adulthood. This is causing a problem, because we will not have the working-age population to support us. I am not going to be able to retire for another 38 years, which is when I will hit state pension age. By that time, I will have been working full time for about 49 years. Other people of my age are in the same situation Let me touch briefly on housing costs. In 1990, around the time that my parents were buying houses, the average housing cost in Scotland was 2.4 times the average income. By 2010, it was 3.7 times, so buying a house is much more difficult for this generation than it was for previous generations. One of the biggest problems that I see coming through my door is the lack of council housing. That issue can be firmly placed with the Thatcher Government and the right to buy. That is absolutely and unequivocally the reason for this problem I was a local authority councillor for a long time before I became an MP, and almost everybody who walked through my door had concerns about the lack of council houses. In 2004, 2005 and 2006, Scotland saw six council houses built across the whole country in that three-year period. Since then, we have cancelled the right to buy, and the number of council houses being built in Scotland is back to being more than 1,000 a year. It is not high enough—I would like to see us building more—but we are getting there. We are trying to dismantle the legacy of the Tory right to buy that has caused such a huge problem for this generation Let me briefly touch on how to fix the problem. I have touched on social housing. “Inclusive growth” is really important. It is one of those buzz phrases that are talked about. What inclusive growth means is not just sitting down to work out how to grow the economy; it is about sitting down to work out how to grow the economy so that everybody benefits—not just the people at the top of the pile. When we are thinking about how to grow that economy, we need to start by thinking about how it will benefit the people at the bottom of the pile who need it the most. That is what this Government have been lacking in their thinking about economic growth We need to have more children, but as I said we should have started doing that 20 years ago, and unfortunately we did not. What we need to do is ensure that we keep having the level of immigration that we have had. We should not have these attacks on immigration, particularly in respect of people who are coming here to study, for example, who then give us the benefit of that study by working in our economy, generating and paying taxes. It is important that people come here to study and then contribute to our economy. In many cases, they go back to their country, having paid taxes here, which is great and helps to support our older generations Finally—I know I am tight for time—as a millennial, I am not happy with the situation that people my age are facing: I am not happy with the precarious nature of the jobs market; I am not happy with expensive housing. However, I do not believe that we should take things away from the people who are currently pensioners in order to fix that. What we should do is to grow the economy inclusively, ensure that there are better workers’ rights and ensure that companies spread their wealth so that everything is not just divvied out to shareholders who already have lots of money. We should ensure that there is a fairer and more balanced economy, rather than taking things away from pensioners who have worked for so many years.
It is a pleasure to speak in this important debate on behalf of the Opposition. I need to extend the apologies of my right hon. Friend the Member for Birkenhead (Frank Field), who I believe is doing media rounds following the news about BHS that we heard this afternoon I am a baby boomer, too. My girls are millennials. Many of the things that have been discussed today have been described up and down the country. How lucky I was to be able to go to university without the debt that my girls—and many other young people—are experiencing, and to be able to afford a mortgage in my late 20s, before we had our first daughter. My daughters simply do not have that opportunity. Their debt will be around their necks for a long while, and they are not in a position to buy their own homes, although they both work incredibly hard I absolutely agree with the premise of the Select Committee’s report—we do need to address the inter- generational inequality that is being experienced throughout the country—but I differ with it on the solutions. The report suggests that the state pension triple lock should be targeted for expenditure savings. According to the OECD, the basic state pension was one of the world’s lowest after the Thatcher Government broke the link between earnings and uprating in 1980. That led to a long decline in the value of pensions, which the last Labour Government strove to restore Although there have been positive efforts to ensure that the new single-tier state pension is fairer and of wider benefit to members of the current generation, there are problems with it. Over the course of their retirement, those in their 40s will be £13,000 worse off than otherwise, those in their 30s will be £17,000 worse off, and those in their 20s will be £20,000 worse off. A continued above-inflation rise will not only benefit those who are retiring now, but will be enjoyed by generations who are to retire. That is one of the central reasons for Labour’s commitment to maintaining the triple lock beyond 2020. I know that we differ from the Government in that regard, but underpinning our decision is the issue of inequalities within generations. We must not trade off the inequality of one generation against the poverty of another.
Will the hon. Lady give way?
I hope that the hon. Gentleman will excuse me if I do not. I am incredibly pressed for time and I have already had to cut my speech considerably The Select Committee recognised that those who look solely at the intergenerational picture can lose sight of important inequalities within generations. It is important to protect the triple lock and universal pensioner benefits while making different choices to support other generations. The Labour Government made great strides—about 1 million pensioners were lifted out of poverty—but one in seven have remained in poverty since 2010. That level is still much too high, and it should worry us. That is not acceptable in one of the richest countries in the world, and we must do all that we can to ensure that the trend does not rise again. That extends to our commitment to the triple lock and universal pensioner benefits, and our commitment to act immediately on the fate of the 1950s WASPI campaigners. We are committed to ensuring that every older person has dignity and security in retirement What are the other choices that we believe should be made? Three specific policies could immediately help to address intergenerational imbalances in a way that would not deprive one generation while supporting another. First, we want to introduce a real living wage, based on what people actually need. After evaluating the effects of the national living wage that has been introduced, the Living Wage Commission said that it failed to meet the basic needs of low-income households. Analysis by the Institute for Fiscal Studies has shown that without significant policy change, real wages are likely to remain lower in 2021 than they were after the recession. Seven years of austerity have consistently failed to deliver pre-recession wages. The decline in the value of wages has been driven by what the Office for National Statistics has described as an unprecedented decline in productivity —unprecedented since world war two. At the same time, prices of basic household goods and services have risen dramatically That long squeeze has been coupled with repeated attacks by this Government and the coalition Government on income support provided through the social security system. Many Members have mentioned the issue of in-work poverty: 7.4 million people—one in eight—are living in poverty, including children. I beg to differ with the point that work is the route out of poverty. Four out of five people in low-paid work will still be in low-paid work 10 years later. Taken together, those dynamics have really impacted on standards of living Labour has therefore committed to intervene. At our party conference last year, the shadow Chancellor announced that he would introduce a real living wage of £10 an hour. That is what is anticipated will be needed in 2020. The second step is to invest in social and affordable housing. I mentioned my own experience and that of my daughters. It barely needs repeating that the rapid acceleration in house and rental prices, which is a direct result of the failure of all Governments, but especially this Government, to build social and affordable housing, is a key driver of the declining standard of living among those of working age. It might indeed be the fundamental dynamic driving intergenerational disparities The consensus is that we need to be delivering 200,000 homes a year, 80,000 of which should be at affordable social rent levels, if we are to keep up with household formation and address poverty levels. Last year, unfortunately, the Government got nowhere near that. Rather than raiding the state pension, the Government should invest in socially rented housing, or allow councils to replace stock sold under the right to buy. That would have a huge impact on intergenerational unfairness, as the Work and Pensions Committee recognises The third policy intervention to address the inter- generational imbalance is widening access to auto-enrolment saving. It is a testament to the previous Labour Government that 10 million additional workers are estimated to be newly saving or saving more as a result of auto-enrolment. A total of £17 billion of pension savings has been put away by low-income workers. However, 37% of women workers, 33% of workers with a disability and 28% of black and minority ethnic workers are still not eligible for auto-enrolment. That must be addressed in the review that will be undertaken. We will be pushing hard for that, as the Pensions Minister would expect We respect the hard work that the Work and Pensions Committee has put into producing its report. We broadly agree with its analysis, but we believe that there should be a different emphasis and different policy solutions to address the intergenerational inequalities that exist.
Having learned a word from you earlier today, Mr Speaker, I can say that hope we have all learned from the sagaciousness of the right hon. Member for Birkenhead (Frank Field), the Chairman of the Select Committee, who started the debate. I am indebted to you, Mr Speaker. At least I have got that on the record—and many other words I have learned from you I seriously thank all Members, on both sides of the House, for their contributions, particularly the members of the Work and Pension Committee who spoke. I appreciate the comments that have been made about the Pensions Regulator securing the settlement with Philip Green. I am very pleased about that. It is good for scheme members, and it will bring peace of mind to the 19,000 BHS pensioners who have endured uncertainty following the company’s collapse. I commend both Select Committees for the work they have done on that issue. I also commend the Pensions Regulator and its staff, who have worked very hard and done everything we could have expected of them This has been an informative and timely debate. Recent evidence shows that pensioner poverty is at a near record low, which is a good thing for a Pensions Minister to be able to say. We have seen a dramatic fall in the percentage of pensioners living in poverty from 40% in the early 1970s to 14% in 2014-15, but I hope that I never give the impression of complacency. Poverty is poverty, and there are still far too many pensioners living in poverty Intergenerational fairness is an easy thing to say. My hon. Friend the Member for Peterborough (Mr Jackson) talked about his grandparents, and I also come from a generation whose parents knew poverty. They knew unemployment, they knew the war and they knew poverty—[Interruption.] I beg your pardon, Mr Speaker; I was trying to be sagacious in my comments. I was about to mention my mother, who has a photograph of you on her mantelpiece We were brought up hearing people say, “You don’t know you’re born, you lot. You’re so lucky.” And we were a lucky generation. One aspect of the luckiness of my generation, as was mentioned by many Members, including the shadow Secretary of State, the hon. Member for Oldham East and Saddleworth (Debbie Abrahams), is that we were often the first generation to go to university. I want to make it clear that the answer to intergenerational fairness is not to make pensioners poorer; it is to concentrate on building the economy, building extra houses, and having better quality education and apprenticeships. All those things have been described eloquently by many Members, in most cases in what the Americans would call a bipartisan manner. I am pleased to be part of that debate The labour market is the strongest that it has been for years. The employment rate is at a record high, and in the past year we have seen nearly 300,000 more disabled people, over 200,000 more women and over 150,000 more black and minority ethnic people in work, so the signs are pretty good. Rightly, there is cross-party consensus that achieving lower levels of pensioner poverty is a worthy objective. Who would say that it was not? I recognise the valuable work of the Work and Pensions Committee in promoting such issues. It almost goes without saying that we want to ensure that pensioners are treated with the dignity and respect that they deserve in retirement. Anyone in the House, and in the country, would say that The right hon. Member for Birkenhead acknowledged that pensioner poverty had been hugely reduced over the past decade, but he and his Committee are right to look at the long-term alternatives. He said that budgetary matters are important. We cannot talk about the triple lock or any other system without considering the amount of public expenditure involved. I am sure everyone would agree that the Government’s commitment to the triple lock is an invaluable element in addressing the issue of pensioners living on a low income. As a result of the triple lock, the value of the full basic state pension as a proportion of average earnings is at its highest since the 1980s. Since 2010, the triple lock has given current pensioners, more than 1 million of whom rely solely on the state for their income, up to £570 a year more than if their pension were just uprated by earnings. As I and others have stated, that was why we introduced the triple lock in 2011, and it is why we have committed to continuing it over this Parliament. It has protected the income of millions of people.
Will my hon. Friend give way?
I am sorry, but I do not have time. Normally I would be happy to give way As my hon. Friend the Member for Weston-super-Mare (John Penrose) eloquently pointed out, we have to be careful about creating a burden for future generations by spending money today. He made an interesting, eloquent speech, and I hope to discuss his moral prism with him on many other occasions, within the Chamber and without. Achieving for the pensioners of today does not preclude us from ensuring a good deal for the pensioners of tomorrow. The Government are determined to build a country that works for everyone. The coalition Government took some difficult decisions to put the welfare system on a sustainable footing while still protecting the most vulnerable. It is important to remember that, since 2010, the Government have focused on reducing the deficit and getting public spending under control in order to protect future generations from unpayable public debt. It is important that that is recognised, and it fits in with what my hon. and right hon. Friends have been saying There are clear signs that we are prioritising the sustainability of this country’s pension provision. In the limited time available, the best example that I can provide, which was mentioned by the hon. Member for Oldham East and Saddleworth, is the success of auto-enrolment, which the Department is currently reviewing. I am pleased that more than 7 million people have come under auto-enrolment which, I should say—the hon. Lady will jump up to say it otherwise—was introduced by a Labour Government. It was started through a cross-party arrangement and it has received cross-party support, but the hon. Lady is right to question the Government about the review, which we have been open about, because many categories of people have not been included. As for intergenerational fairness, the early success of auto-enrolment is a good sign for people who will be retiring in many years to come. They will be able to calculate their state pension plus their auto-enrolment workplace pension and get a clear idea of what they need to retire on. I am also pleased to say that the level of opting out is low at the moment, but that is not a cause for complacency While several hon. Members made this point, I want to highlight what my hon. Friend the Member for North Swindon (Justin Tomlinson) said about apprenticeships and UTCs, which are crucial for the future. As the Prime Minister’s apprenticeship adviser when the pledge for 3 million apprenticeships was made, I am pleased to say that the Government are on course to meet that target. We have all seen in our constituencies how important that is. Prosperity often comes from skills, but skills come from not only university but the alternatives to university. I am pleased that that is becoming something real, not just a political promise The Government’s approach to intergenerational fairness is based on ensuring that there is economic prosperity and security for working people at every stage of their life, including in retirement. The hon. Member for Motherwell and Wishaw (Marion Fellows), who I respectfully say is from my generation—[Interruption.] Okay, I know that I look a lot older than her, but I think that we are from roughly the same generation. She eloquently made the point that our generation has not had a one-way bet. I, too, remember when interest rates shot up—I was also driving and thinking about my mortgage—so I understand her point perfectly. I agree that we cannot say, “It is all right for us lot but it is not good for the next lot,” because life goes up and down. The Government have to take all that into consideration The Government are committed to improving productivity and innovation, which we all agree is to the benefit of everyone in society. We are acting to boost productivity, which is crucial to raising living standards, by investing in infrastructure, supporting job creation and reforming the markets I conclude by emphasising that Governments have to look at the whole picture. State pensioners and private pensioners are part of that picture, but achieving real intergenerational fairness for everybody—that is what we all want and it is why most of us stood for election—involves ensuring that people have long working lives, get prosperity from working, enjoy their work, and save for their future. It is for the Government to guide them, from the day they start work until the day they retire, on saving for their prosperity in the future Question deferred (Standing Order No. 54).
I rise to present a petition with 300 signatures—a similar petition co-ordinated by the Public and Commercial Services Union has 309 signatures—that reflects the concern of hundreds of Liverpool residents at the proposed jobcentre closures in my constituency. If they are allowed to go ahead, they would deny more than 3,000 local people employment support and leave my constituency without a single jobcentre, having had three in 2010, despite our having the 41st highest level of unemployment in the UK The petition states: The petition of residents of the UK, Declares that the closure of the two remaining Jobcentres in Wavertree should not take place; and further that meaningful consultations should take place on proposals that consider the delivery of services to the public The petitioners therefore request that the House of Commons urges the Government to stop the closure of two remaining Jobcentres in Wavertree; and further that the Government should immediately halt all DWP Jobcentre/office closure proposals, undertake immediate Equality Impact Assessments, and enter into proper meaningful consultation on all proposals that affect communities and the delivery of services to the public And the petitioners remain, etc [P002017]
I rise to present two petitions on behalf of the people of the village of Mevagissey and the town of St Blazey, which relate to the decision of Lloyds bank to close both its branches in those two communities. Lloyds was the last and only bank in both communities, so this decision leaves them without suitable banking facilities, putting great pressure on businesses and residents alike. The petitions state: The petitioners therefore request the House of Commons to call upon Lloyds to reverse its decision or put alternative provision in place for those who need it most Following is the full text of the first petition: [The petition of residents of St Blazey, Declares that on 10 November 2016 Lloyds announced it will be closing its branch in St Blazey; and further that this is a very well-established, much used branch, with many elderly or vulnerable customers who would have no alternative if this last bank in the village were to close. The petitioners therefore request the House of Commons to call upon Lloyds to reverse its decision or put alternative provision in place for those who need it most. And the petitioners remain, etc.] [P002018] Following is the full text of the second petition: [The petition of residents of Mevagissey, Declares that on 10th November 2016 Lloyds announced it will be closing its branch in Mevagissey; and further that this is a very well-established, much-used branch, with many elderly or vulnerable customers who would have no alternative if this branch were to close. The petitioners therefore request the House of Commons to call upon Lloyds to reverse its decision or put alternative provision in place for those who need it most. And the petitioners remain, etc.] [P002019]
I rise to present a petition organised by my constituent Mr Tony Smith of Bramcote, which has been signed by 1,600 of my constituents in a very short time. It calls on Highways England to introduce traffic calming measures along the A52 between the Bramcote roundabout and Priory Island, following a fatal accident involving two people at the end of last year, where it is believed that excessive speed was the major factor The petition states: The petition of residents of Broxtowe, Declares that as a result of the lack of traffic enforcement measures along the A52 road between the roundabouts known locally as Bardill’s Island, which crosses with the B6003, and Priory Island, which is at a junction with the A6464, there is excessive speeding and as such the road is unsafe The petitioners therefore request that the House of Commons urges the Government to install traffic enforcement measures along the A52 between the two roundabouts known locally as Bardill's Island, which crosses with the B6003, and Priory Island, which is at a junction with the A6464 And the petitioners remain, etc [P002020]
I am grateful for the opportunity to debate the rationing of surgery. The reason this is such an urgent issue is threefold: first, it is causing detriment to the health of the people of York; secondly, it is discriminatory; and, thirdly, the policy now reaches beyond York I am sure the Minister will set out how, under the Health and Social Care Act 2012, matters of clinical decision making were devolved to clinical commissioning groups to make decisions about local need, but this matter is so serious that I urge him to take action, as the Secretary of State said he would. I have exhausted all routes to getting the policy reviewed, so I am now appealing, through this debate, for a complete review. NHS England has previously been clear that even time-limited bans on particular groups of patients receiving treatment is inconsistent with the NHS constitution. In the light of that, I trust it will commit to withdrawing its support for rationing now that evidence of its detriment is coming through The Vale of York CCG determined to delay surgery to patients who smoked or had a body mass index of more than 30. The policy came into force on 1 February 2017. It was first proposed in September last year, but then withdrawn and reintroduced in November. The reason: to delay immediate spend on surgery. However, it is a totally false economy, and although it may delay CCG spend now, in order to meet imposed spending restrictions, the Royal College of Surgeons says that it may actually increase NHS costs if patients develop complications while waiting for surgery. The college has been clear that rationing policies, such as those implemented by the Vale of York CCG, are unacceptable The York CCG’s ability to make rationing decisions comes direct from the 2012 Act. The duty on the Secretary of State for Health to “provide or secure” the health service was removed from section 1 of the National Health Service Act 2006, thereby removing his responsibility, and replaced by a duty to make provision for the health service. The list of services that the NHS had to provide—a principle that had been embedded in the NHS since its inception—was also removed, meaning there no longer had to be a universal list of service provision, and that each CCG could determine its own. In other words, it became a complete postcode lottery: where someone lives determines the healthcare they can access Nevertheless, I was encouraged by the Secretary of State’s response to a question on rationing from the Health Committee on 18 October 2016. He said: “When we hear evidence of rationing happening, we do something about it…we are absolutely determined to give people the clinical care that they need.” In response to the Chair of the Committee, he said: “When we hear of occasions when we think the wrong choices have been made, when an efficiency saving is proposed that we think would negatively impact on patient care, we step in, because, challenging though it is, our responsibility to the public is to make sure that we continue to make the NHS safer and higher quality and that it offers a higher standard of care” Minister, it is time to step in Early on, the Vale of York CCG hit the headlines and became unstuck when it rationed interventions such as in vitro fertilisation treatments—a decision that was reversed—so this CCG has form. As we saw from yesterday’s health and social care debate, the NHS financial model has failed. Not only does the funding formula fall short of real need, but the NHS now has the wrong financial drivers in place, resulting in a demand- led approach to health provision and uncontrollable spend I could talk more on that, but the Vale of York CCG introduced a delay on surgery as a direct result of its failure to contain its spend within budget; it now has special measures bearing down on it. The CCG receives around £1,150 per patient, when demand seriously exceeds that. CCGs just down the road are receiving 50%-plus more. York has an ageing population demographic and areas of serious deprivation. I urge the Minister to look again at NHS funding, because it simply is not working and our CCG is being penalised for that The Vale of York CCG took the decision to ration surgery for up to a year for those overweight and up to six months for smokers. Having worked in the NHS as a clinician—I was a senior physiotherapist—I am all too aware of the risk factors created by people smoking and being overweight, not least when it comes to surgery, and I do not need the Minister, as a non-clinician, to spell them out to me today. I would see patients pre-operatively to provide advice, and would also treat them post-operatively to address the risks through respiratory therapy and mobilisation. All clinicians understand the risk factors, which is why it is so important that money is invested in public health services—something that the Government have failed to do A child receives, on average, 12 minutes a year of school nursing, which includes child protection work. That means that they get only a few minutes a year of advice on diet, exercise, smoking and sex education. Clearly, that is not enough, especially as PE has also been cut. Yesterday, I met local school nurses who set out how their service was being cut, and how school nurses are being downgraded and de-professionalised to make savings in York When the Government switched public health back to local authorities, which have had their grants slashed, public health services also suffered. The irony is that York’s council completely cut funding for smoking cessation services and for NHS health checks. It also cut the health walks programme, which was a service to help people exercise more and lose weight. Therefore, public health measures to address smoking and weight were cut first, and then patients were denied surgery because they smoked or were overweight—you could not make it up. It again shows how fragmentation creates health detriment GPs are now actively writing to patients to ask them whether they smoke—not that they have a smoking cessation service to refer them to. They say that it is just “for their records”. Patients who are seen by their GP and who are considered to be in need of an assessment by a specialist for surgery fill out a form. They have to declare their smoking and weight status. One would think that the surgeon would receive a letter, highlighting the risk, and then would make a clinical assessment of that risk—but no. The referral is diverted, and the patient is sent a standard letter and a leaflet, which does not reflect on their own personal circumstances, but tells them that they smoke or are overweight and therefore need to change their ways. As a penalty, they are denied surgery. The specialist never gets the opportunity to assess the patient and make clinical judgments accordingly I am sure that the Minister will recall the narrative, which enticed some in this House to support the Health and Social Care Act 2012. We heard that doctors will be at the heart of the NHS and that they, not bureaucrats, will be the ones making the decisions. Then there was, “No decision about me without me.” Here we have a system where clinicians are being undermined by diktats from bureaucrats; patients and clinicians have no say; and clinical evidence is left wanting Before I progress, let me turn to this letter that patients are sent. First, it is generic and has no personal advice about the patient’s own clinical circumstances. By the time a patient reaches the third paragraph, they are told how obesity is costing the CCG £46 million and smoking £7.2 million a year, as if that is an issue for the patient who needs surgery. The penalties are then set out. Those who are obese have to lose 10% of their weight or reduce their BMI to under 30, or wait 12 months. Those who smoke have to stop smoking for eight weeks, or wait six months. Enclosed with the letter is a leaflet entitled “Stop before your op” and a web address so that people can find out how to get support. I went through this and the convoluted website. Any public health practitioner would tell you how inappropriate and ineffective this whole system is. There is no real help available The Royal College of Surgeons states that denying or significantly delaying access to NHS treatment does not help patients to lose weight or stop smoking. Now those being denied surgery are paying a heavy price. I have spent much time talking to GPs and surgeons about this matter, as well as to patients. I have also talked to the CCG, which knows that the system is totally wrong, but because it is in a financial hole and NHS England has waved it through, it is just complicit. It is not standing up for patients in York One more point on the process: in York, patients who were referred for surgery, ahead of this policy being introduced, had their referrals sat on. The first thing that they received was their refusal letter. It is shocking that those patients’ surgery was delayed by the CCG even though their referral was made before the policy came into effect. So what is the impact on patients? Well, it is devastating. We already know that waiting times for surgery are going up, and delay in itself creates detriment. It is true that some patients are exempt—I am talking about those needing urgent care, the removal of a tumour, or trauma surgery. However, if someone requires a joint replacement because they have not mobilised well for some time due to osteoarthritis, is in pain, and, as a result of not mobilising, have put on weight, things are very different. With a new joint, they will be back on their feet. A 12-month delay in being referred will exacerbate their problems. A year of degeneration, pain and not being able to mobilise, an initial clinical assessment and then the wait for surgery will result in a surgeon presented with a more complex operation, and a physiotherapist with a patient who is less mobile and weaker, needing more input and possibly longer in rehab. Bang!—there go all the savings from rationing and more, all at a cost to the patient and a risk that the long-term clinical outcomes will be worse The British Orthopaedic Association said: “There is no clinical, or value for money, justification…Good outcomes can be achieved for patients regardless of whether they smoke or are obese” If someone were 20 stone, they would have to drop to 18 stone before having surgery, but if they were 18 stone, they would have to drop to 16 stone 2 lbs. One person asked why surgery is safe at 18 stone in one case, but not the other. I ask the same. A patient has presented to me who was prescribed medication that had a side effect of weight gain. They were on drugs that risked weight gain, required surgery and were denied by the same GPs who gave them the drugs I have had a patient who is active and works full time, but is over the weight threshold. She needs surgery to enable her to conceive. She is not young. Surgery is needed now, as recommended by her GP. However, it was denied and could result in her never having a family. A patient with hypothyroidism, a chronic condition that leads to weight gain, needs surgery for gastrointestinal abnormalities but, despite their condition, will be restricted. One patient was a very fit body builder, but was refused surgery because of their high BMI. The case for delay has not been evidenced From talking to epidemiologists and reading academic papers on the issue, we know that there is a strong correlation between smoking and obesity, and social and economic deprivation. As the British Medical Association said, this could also be seen as rationing on the basis of poverty. Those with mental health challenges have a higher propensity to smoke, and those with chronic conditions are more likely also to have elements of depression and possible weight gain. Many people find it difficult to lose weight or give up smoking. Minister, you know the figures. This policy is totally discriminatory.
I am quite sure that the hon. Lady did not mean to address the Chair, but means to ask the Minister whether he knows the figures.
Indeed that is the case This policy is totally discriminatory and is having further detriment for those with co-morbidities. It is creating problems, not solving them. All surgery carries a risk, and it is for clinicians to assess that risk. As the Royal College of Surgeons says, “It risks preventing a patient from seeing a consultant who can advise them on the best form of treatment, which may not be surgery. Surgery may be needed to help someone lose weight.” That point was also made by a patient who was able to mobilise after a joint replacement. This is why clinical decision making is needed. Patients have to be part of this too Public health programmes need restoring so that patients can properly engage with people to help to optimise their health. The passive approach of the CCG is setting patients up to fail. David Haslam, chair of the National Institute for Health and Care Excellence, said that rationing of surgery concerned him. He says that the NICE osteoarthritis guidelines make absolutely clear that decisions should be based on discussions between patients, clinicians and surgeons, and that issues such as smoking, obesity and so on should not be barriers to referral. These are the experts The Vale of York CCG has gone down this route, and others are now following, with 34% of CCGs looking to ration on the basis of obesity or smoking. Harrogate and Rural District CCG and East Riding of Yorkshire CCG target smokers and those who are overweight with a six-month delay. Wyre Forest, Redditch and Bromsgrove, and South Worcestershire CCGs ration on the basis of pain impact. South Cheshire CCG requires a BMI of less than 35—not 30—as does Coventry and Rugby CCG. The policy is spreading. Although York is the worse example of rationing, every clinician knows that it is wrong and contravenes their professional duty of care I am blowing the whistle on this today because the policy is directly discriminatory, clinically contraindicated and financially perverse. I would be the first in this House to advocate health optimisation programmes supporting smoking cessation or providing help to improve diet, exercise, wellbeing and lifestyles, but to leave someone in pain or without a child brings our NHS into disrepute This evening, I have made a clear case for why the rationing of surgery must end. As the Secretary of State said to the Health Committee, it is time to step in.
Madam Deputy Speaker, it is a pleasure to join you this evening. I would like to start by paying tribute to the hon. Member for York Central (Rachael Maskell), who speaks with considerable conviction on this subject. She takes a clear personal interest in it, and she does so as a former clinician, as she indicated, so she speaks with a degree of authority The hon. Lady has called this evening for a complete review of CCGs’ decisions to amend their pathways for individuals who are smokers or who achieve a certain body mass index, and I will come on to that shortly. However, I would like to try to reassure her that there is no blanket ban in place in our NHS, and it is our intent to ensure that any decisions about individuals are taken according to the best clinical advice for those individuals Madam Deputy Speaker, you will be relieved to hear that, although my remarks will take us to the end of proceedings this evening, they will not necessarily take up the full allotted time. I want to start by talking a little about the fact that we are clearly facing challenges across the NHS, given the persistent increases in demand that our clinicians are seeing across all aspects of the NHS. As Members know, and as we discuss in this House seemingly every day, our attempts to meet that rising demand were set out in the “Five Year Forward View”, and have been endorsed by the Government. They recognise three principal challenges facing the NHS: health and wellbeing, care and quality, and finance and efficiency, and there is an interplay between all those pressures We also recognised in the “Five Year Forward View” that different areas face different challenges, so the problems facing York and the Vale of York CCG are not necessarily the same as those facing Yeovil. It is an accident as much of history as anything else—a legacy of the development of services across the country and the patchwork that developed over 150 years or so—that each area is dealing with different challenges. In part, of course, it is also a consequence of population, with those areas with greater populations facing different challenges from those with sparser populations and rural pressures We firmly believe that the best way to address local differences and challenges is through clinically led decision making taking place as close to the patient as possible. That is the answer the hon. Lady expected me to give, but it remains at the heart of our belief about the way the NHS should operate. GPs, as members of clinical commissioning groups, are better placed to understand the needs of their patients and the services available to them, and to shape them according to local priorities.
The Minister is talking about clinically led decision making, but in Cheshire and Merseyside CCGs, there have been announcements about rationing particular services. Can he see that, from the point of view of the patient, it sounds like this is just about saving money, rather than clinical decisions? If someone has a condition, and they know the money for it is rationed, they have a real feeling that they are not being treated in the same way as someone with a condition for which the money is not being rationed.
I do not want to get into an argument about what rationing means, but I do not recognise that services are being rationed. There are pressures as a consequence of increasing demand, and the issue is how that demand is dealt with in relation to specific services, although the hon. Lady did not mention where the rationing—to use her word—applies. Does it apply to patients who have similar issues, as suggested by the hon. Member for York Central?
Wirral clinical commissioning group has said that there will be rationing for vasectomies, surgery for damaged skin, surgical face procedures, arthroscopy shoulder surgery—all sorts of things. There are particular conditions—
The hon. Lady has made the point that she is referring to different conditions. If she would like to write to me about that, then I can give her a considered answer in relation to her CCG We firmly believe that decisions about treatments should be made by clinicians as they determine them to be in the best interests of patients. I will go on to develop what I mean by that in this context. We agree with both hon. Members that blanket bans on treatment are not acceptable and that they are incompatible with the NHS constitution. Every person in England entitled to NHS care has the right to receive treatment that is appropriate to his or her needs, and not to be refused access on unreasonable grounds. CCGs have a statutory duty to meet the reasonable health needs of their local population. They also have a duty to have regard to the need to reduce health inequalities, and to act with a view to improve the safety outcomes of the services they commission. To ensure that they commission cost effectively, CCGs must have regard to NICE guidelines I am aware that, as both hon. Members have said, some CCGs have changed their commissioning policies in a way that may have been misunderstood. The hon. Member for York Central referred to specific changes to commissioning policies on surgery, and the manner in which those changes were announced and introduced—in particular, asking patients who smoke or are obese to try to give up smoking or to lose weight in order to ensure that they have the best chances of successful treatment without complications It is not for me, particularly as someone without a clinical background, to comment on any of the individual cases that the hon. Lady mentioned. She did not go into specific detail, but she touched on a number of patients who have been offered an alternative pathway treatment—I think that is how the NHS would express the changed circumstances in which their treatment was offered. It is right that clinicians make decisions on an individual basis about the right treatment options for their patients as they present. In some cases, that may involve a direct route to surgery, while in others it may involve some other intervention that might put the patient into a better place to be able to respond most positively to the treatment. If that involves surgery in due course, putting themselves in a better place may lead to better outcomes To give an example, tomorrow I am hosting a roundtable on maternity with clinicians and leaders of the all-party parliamentary group on trying to prevent stillbirth. One of the key messages that we try to give expectant mothers is to stop smoking, because, as the hon. Lady recognises, there is a clear correlation between smoking, including smoking prior to pregnancy, and harm in pregnancy. As an ardent non-smoker, I am absolutely convinced that giving up smoking is a desirable outcome for as many of the population as possible who are able to do so. However, it is not for politicians, even those, if I may say so, who have been clinicians, to seek to take over the clinical pathway decision making for their constituents—although of course the hon. Lady was not trying to do that. It is right that clinicians make those decisions based on the individual circumstances In relation to Vale of York CCG, I understand that the policy development that the hon. Lady described was developed by Dr Alison Forrester, who is the CCG’s healthcare public health adviser. It was agreed by the CCG clinical executive under the responsibility of Shaun O’Connell, who is the GP lead on the CCG. It was reviewed by NHS England, so the review of the Vale of York CCG’s proposals that the hon. Lady has called for has taken place. NHS England has been working with it to ensure that its policies are in the best interests of patients.
The reality is that since the policy has been introduced clinicians have not had jurisdiction over which pathway their patient should follow and which they believe is in their best interests. They are being diverted off that path due to the policy. Clinicians are therefore saying that they should be able to determine the right assessments and treatments for those patients. Also, as part of the NHS constitution, patients need to be part of the co-production of their own healthcare in the future.
I cannot speak for the CCG. I presume that the hon. Lady’s comments are based on her conversations not only with the clinicians to whom she has referred, but with the CCG management. I assume that the CCG in her area is predominantly led by GPs, as is the case in most other areas. I have referred to the GP lead on the CCG and GPs are involved in making these decisions The hon. Lady has rightly said that patients who need an urgent intervention will not be affected by the policy. Patients who may have a need and are supported by their clinicians have an opportunity to apply for an individual funding request. She might like to encourage some of the patients to whom has referred to do that, to see how that process goes. That might be a route for some of those individuals I am in danger of breaching my promise to conclude my remarks before the set time. I want to give the hon. Lady an appreciation of the pressures that her own area is under and put the issue in a national context. We recognise that the Vale of York has had some financial pressures in recent years. Its budget increased to £394 million this year—that 3% increase is close to the average across England—and it will rise to £402 million next year. However, we recognise that the CCG is in deficit this year. It was subject to directions from last September, as part of which an interim accountable officer was appointed and is working with NHS England to put together a medium-term financial strategy. NHS England recognises that there have been pressures in the area and it is seeking to get on top of them On procedures, across England as a whole—this gives an idea of the demand—there were 11.6 million operations in 2016, which was 1.9 million more than in 2010, meaning a 16% increase across the country. More locally, the York Teaching Hospital NHS Foundation Trust performed more than 106,000 operations in the last financial year, which was almost 53,000 more than in 2009-10.
rose—
I am afraid that I have to conclude. As far as the performance of referral to treatment is concerned, the Vale of York has performed better than many other areas in the country. The percentage of patients seen within 18 weeks of referral in the Vale of York was 94% in December 2015, compared with 92% in the north of England. In 2014, the figure was 95% compared with 94% in the north of England and 93% across England. It is therefore outperforming its peers in the area and across the country. I hope that the hon. Lady recognises that Question put and agreed to.