Tuesday 6 March 2007
[Mrs. Joan Humble in the Chair]
NHS Trust Debts
Motion made, and Question proposed, That the sitting be now adjourned.—[Steve McCabe.]
Thank you, Mrs. Humble, and good morning. It is a pleasure to serve under your chairmanship—for the first time, I think.
NHS trust deficits have exercised me for a long time; I have a local interest in them, as will quickly become abundantly clear. I had intended in this debate to focus principally not on where the deficits came from, but on what we should do now that we have them. There are a variety of accounts of where the deficits have come from. The Health Committee identified issues of central Government policy and local financial management—a whole range of factors that have led to the deficits. However, we are where we are, and my key concern is that trusts should know where we are going.
Normally, I am pleased when a public sector body in my constituency tops a league table. However, I regret that my local NHS trust—North Bristol NHS Trust—is at the top of a league table in which I should rather we did not feature at all. As at 31 March 2005—I am using figures cited by the Audit Commission in its June 2006 report—North Bristol NHS Trust features right at the top of the league table of NHS trusts with the largest cumulative deficits. I do not know whether the Minister will be able to give us the figures for March 2006; I have cited the latest cumulative deficit figures, based on audited NHS accounts, that I was able to obtain. However, I strongly suspect that North Bristol’s premier position in the league table will not have radically altered since the end of March 2005.
Three of the league table’s top 10 trusts are local to my constituency. It is an interesting point that, when we think about NHS finances, it is in many ways sensible to think about what is known in the jargon as the local health economy, rather than about an individual NHS trust. So although the top spot went to the North Bristol NHS Trust, the Royal United Hospital NHS Trust at Bath came in at No. 4 and the trust in the centre of Bristol—United Bristol Healthcare NHS Trust—came in at No. 10.
I want to focus briefly on the North Bristol trust, describing where its deficits came from and raising questions with the Minister on where that trust is going. That is really why I sought this debate. Then I should like to reflect more widely on the fact that such situations are not unique to my local trust; there are wider issues on which I am sure the respective Front Benchers will want to comment and on which I should like to make observations of my own.
By way of background, North Bristol NHS Trust managed to accumulate a deficit of £52 million by 2003-04. I fully accept that local financial control had failed; there is no question about that. I remember one member of the board telling me how the finance director used to present the financial reports. Nobody really understood them, but he was a convincing sort of chap, and if he said that things were all right, they probably were. Clearly, in an era of a £70 billion or £80 billion national health service, we cannot begin to operate on that basis. I fully accept that the issue was particularly one of local control. Indeed, the then chairman and then chief executive are no longer in post—nor is the finance director, I believe. My comments about that period do not at all relate to the trust’s present management.
Accountants were called in to investigate how the situation had got so out of hand. Early warning signs might have been registered much sooner before the huge £52 million deficit had been accumulated. That money was not written off, but added to what is known in the jargon as the public dividend capital of the trust. I shall come back to that. However, once that deficit had been run up, it was not going to be removed overnight. A recovery plan was put in place, but in each of the succeeding years, deficits—falling deficits, but deficits none the less—carried on. During the succeeding years to 2005-06, a further £48 million was added to the deficit; £48 million more than the trust’s income was spent. Clearly, that money had to be loaned, or provided to the trust, from elsewhere in the NHS.
Add the £52 million and the £48 million and we get an uncomfortably round figure of £100 million. The Department of Health used that figure in a letter to North Bristol NHS Trust that turned down its application for foundation status. The Department said that that was in part due to the £100 million debt. Indeed, the local south-west strategic health authority, NHS South West, opposed North Bristol NHS Trust’s bid for foundation status, partly—principally, I think—because of uncertainty about that £100 million debt.
Interestingly, when one talks to the trust, one finds a rather different perspective. Although the letter from the Department of Health talked about a debt of £100 million, the trust denies that it has a debt or deficit at all. Semantics and the arcane niceties of NHS finances are involved in all that, but it is worth understanding how the Department of Health can think that there is a deficit or debt of £100 million and the trust can think that there is not one at all.
The story is in two parts: the £52 million deficit run up in the years to 2003-04 was added, as I say, to the public dividend capital of the trust. I had not realised, until I spoke to representatives of the trust, that that was not the trust’s only public dividend capital. It has several hundred million pounds of public dividend capital. I have tried to get to the bottom of the issue, and it appears that a kind of fairly low-interest mortgage, a sort of long-term loan, is involved, a little bit akin to Treasury debt or gilts or bonds, except that—this is the crunch—nobody knows whether that £52 million will have to be repaid.
My understanding of the trust’s position is that it is happy and able to continue servicing that public dividend capital—paying the Treasury, I assume, the interest, repayments or whatever label that money goes under. Paying the debt on that £52 million of public dividend capital is sustainable; what is not sustainable is paying back that £52 million, plus the £48 million. Paying back £100 million—getting on for a third of the trust’s entire annual income—is not sustainable in my view.
It would be exceptionally helpful if the Minister could say anything about the status of that £52 million. I believe that the Government are thinking about it and that some sort of announcement may be imminent. If the Minister made an announcement to the House in the first instance, rather than our having to read about it first in the columns of the local newspapers, that would be particularly welcome.
There is the £52 million of deficit; then there is the £48 million, which, as I said, is the further deficit run up during the recovery period. No one blames the hospital for the fact that it could not turn a huge deficit around overnight. It did what happens whenever a trust is in deficit: it did more day-case surgery, got people out quicker and cut down on the use of agency nurses. Many such things are not at all exceptionable.
Interestingly, the trust was failing, back in those days, lamentably to cut its agency spend. It had huge buying power in the regional health economy as a buyer-in of agency nursing services and was paying over the odds for them. Owing to poor management of resources, it was using too many agency and temporary staff at a very high premium. In a sense, the financial crisis that it was clearly in prompted a more efficient way of working, and that is entirely proper. As much as anybody else in this Chamber, I want to see NHS resources well spent; when changes are about greater efficiency, I applaud and support them.
Again, however, the status of that £48 million bail-out over three years to 2005-06 is not clear. Incidentally and for the record, my understanding is that North Bristol NHS Trust will receive no bail-out of any description for the current financial year; its current expectation is that its income will exceed its expenditure without any bail-out from the rest of the NHS. That is a salute to the work done by the hard-working staff—and also, although I am not always their greatest fan, to that of the trust’s management for getting it into ongoing financial balance.
Somebody had to mention resource accounting and budgeting in the debate, and I suppose it ought to be me. Part of the problem that I have been describing is that, once a trust is in a downward spiral, it is very difficult to get out of it. I shall quote a sentence from the June 2006 joint Audit Commission and National Audit Office report:
“Experience indicates that once an NHS body incurs a significant deficit, it becomes increasingly difficult to return to financial balance, particularly where management’s attention is focused on resultant short-term pressures rather than longer-term financial balance.”
That is part of the problem. If a trust spends more than its income, the deficit is knocked off its income for the following year, so that if it has a structural deficit in year one, it will have a double structural deficit in year two. Unless it can get things under control, that double deficit is deducted from the income in year three, and so the downward spiral continues.
I think that the Government recognise—the Audit Commission certainly does—that although resource accounting and budgeting have some merits at a national accounts level, it is not working for the NHS. That would seem to be the view of the chief executive of the NHS, who was quoted in The Guardian in December 2006 as saying that the NHS accounting system was “unsustainable and inconsistent”. He said that the way in which resource accounting and budgeting
“is applied to NHS trusts, although providing a strong disincentive to overspend, will become increasingly unsustainable as we move forward with the programme of reform.”
In a sense, even the chief executive of the NHS and the Audit Commission—balanced, sane voices—are saying that something has to change and that something has to give.
So what do we do about the £100 million debt? Hundreds of local people have signed an online petition on my website for some of the debt to be written off. In a sense, one would imagine that that is a no-brainer—an MP asks local people whether they want their hospital trust debts written off, and one would think that people would just say, “Yes please, it’s free money”. However, some of my constituents did not respond in that way, such was the problem with the financial management at the trust. Some contacted me and said that they wanted the debt written off only if the trust could prove that it had its financial house in order. That is my view, too.
We cannot simply write a blank cheque for trusts that have got into a complete mess. One of the conditions for any financial assistance needs to be a requirement that good money is not merely being poured after bad and that financial discipline has been restored. I believe that to be the case at North Bristol NHS Trust. It has its financial house in order subject to one caveat, which I shall come on to. That condition is met, but I want to stress that we are not simply rewarding failure in any sense.
That brings us on to a slightly wider question that would apply to all the deficit trusts. There is a paradox. If a trust gets in to a mess, do we let it sink or do we bail it out? If we bail out trusts that are in a mess, are we rewarding failure? If the money used to bail out failing and struggling trusts is taken from trusts that are doing well, have made a surplus and have managed well, is that penalising and disincentivising success? I would be the first to recognise the trade-off that is at work. There is not a free lunch, although there are issues about incentives.
My view is that we do not need to take an extreme position. At one extreme we could say, “The trust is in a mess; it needs bailing out; give us some cash”, and at the other we could say, as Ministers are fond of saying, “Trusts need to learn to live within their means—no bail-outs, no help, period.” Somewhere between those two extremes lies common sense and sanity. It has to, because some of the trusts will never recover from their debts. I want to quote from the Select Committee on Health’s first report of the 2006-07 Session. It states:
“While the NHS may be in overall surplus by the end of March 2007, not all trusts will be in surplus by then”—
this is the key point—
“and it is unlikely that trusts with the biggest deficits will be able to repay their accumulated deficits in 5 years.”
Obviously, that is a significant period because it covers the statutory requirement to achieve financial balance. The report continues:
“It is important that as a first step they achieve ‘in-year balance’.”
That is what North Bristol NHS Trust has done. The report then states:
“Where there is no realistic chance of recovering the deficit over the 3- to 5-year period without severely affecting services, consideration should be given to allowing a longer period to pay off historic deficits.”
The Select Committee, with a Labour majority, is saying that in respect of a subset of trusts—perhaps a small number—for which things have gone too far for the normal rules to be applied. I believe that North Bristol NHS Trust falls into that category.
To stick with the example of the North Bristol NHS Trust, why is all this particularly important? As the Minister will know, the trust applied for foundation status, which the Government want every trust to have by the end of next year. It was turned down because of the uncertainty about the debt. I find that puzzling. As I understand it, the status of the whole £100 million is uncertain: the status of the £52 million public dividend capital is uncertain, as we do not know whether it is time-limited or indefinite—infinite, as it were—and the status of the £48 million is uncertain, because we do not know what will happen to that. Much of the debt was accumulated some four years ago, so why do not we know? That is one of my key questions to the Minister.
In the NAO and Audit Commission league table that I cited, there is a column for cumulative deficit as at March 2005, one for the number of years of cumulative deficit—at that point, North Bristol NHS Trust had four years in that column—and a final column for the anticipated year of recovery. For five of the 10 trusts in the list, that final column does not give a date, but says, “To be agreed”. Nearly a year on from the publication of the report in June of last year, that date is still to be agreed. The trust was encouraged to make an application for foundation trust status, not knowing whether it will have to pay off the £100 million deficit, how much of it will have to be paid off and over what time.
Let us imagine someone who applies for a mortgage and explains that they might or might not have to pay back a third of their income. The mortgage company might well be a little reluctant to take that person on. They would want a bit more clarity. That is the problem. How have the Government allowed North Bristol NHS Trust to be left in limbo for so long, without an answer about how much of the debt must be repaid, on what terms and in what form? I hope that the Minister can answer that question.
As the Minister announced last Monday or Tuesday, North Bristol NHS Trust is about to embark on a private finance initiative worth some £350 million. The investment is welcome—the way in which it is funded is not, and neither is the place where it is going, but apart from that, it is fine. However, that £350 million will incur a substantial liability for decades to come, with creditors who will be near, if not at, the front of the queue. How will that work? Would a private finance company be willing to build a hospital for North Bristol NHS Trust, anticipating a future stream of revenue from the trust, if it does not know whether the trust has a £100 million hole in its balance sheet? I hope the Minister will say that all that will be resolved soon, but until it is, the process cannot move forward.
Although I would like to see the new hospital somewhere else, we are in limbo in terms of the money that is being spent on modernising our local NHS, because the PFI cannot go any further without certainty about the debt. There is a linked issue, because we all know that servicing PFI debts can place a severe burden on some trusts. My hon. Friend the Member for North Norfolk (Norman Lamb), who speaks for our party on such matters, has constituency experience of the sometimes adverse impact of PFI projects on NHS trust finances. How can a trust budget for the coming years, with all the uncertainties that every other trust has to deal with, as well as a PFI commitment that will not go away, a debt that the trust will have to service for decades to come and uncertainty about debt servicing costs?
We are just a few weeks from the start of a new financial year. I have no doubt that North Bristol NHS Trust has already planned its finances for 2007-08, but has it done so with or without knowledge of what the Government will decide about the repayment of any or all of the £100 million? My impression from the trust is that it does not know. There might have been nods and winks, and conversations that I have not been privy to, but as far as information in the public domain is concerned, we do not know. For example, what if it had to pay back a 10th of the deficit next year? That does not sound much; it is £10 million. Let us imagine what it would be like for a body to discover two weeks into the financial year that it had to find £10 million. That would be crazy, but it is absolutely typical of the way in which NHS finances are managed. Indeed, it is something of a privilege to find out about financial change in the NHS before the year starts; it is normal to find out halfway through.
I hope that the Minister can assure us that, whatever decision he comes to about the repayment of any or all of the money, the trust will be given plenty of forewarning and not be expected to make substantial repayments early and in a way that would affect front-line patient care. In a sense, that brings us to an important facet of the issue. Ultimately, it is not about an accounting or technical matter, but about the impact that deficits have on the effective functioning of the NHS. I wish to discuss why deficits matter so much, again drawing on the excellent report of the Audit Commission and NAO, which highlighted four important reasons why deficits matter.
The first reason is the impact of cost-cutting on service delivery. The Minister will say that we are treating more people, that we are hitting the targets and that waiting times are coming down, and so on. There is a lot of truth in that, but anything that does not have a target attached to it is affected by cost-cutting. Anything that does not involve a performance indicator or that is not monitored in respect of targets gets cut.
There are things that trusts can do to deal with cost-cutting. For example, the introduction of minimum waiting times—treating people later than is necessary—happens because trusts are trying to make ends meet, and that affects front-line patient care. I fully accept that it does not take us back to the extraordinary waiting times of 10 years ago, but it is clear that trusts that are trying to make ends meet sometimes make short-term decisions that may not be optimal for the long term. That is one of the worries that the Audit Commission and the NAO rightly highlight.
Some trusts make ends meet in the short term by doing entirely short-termist things that have a damaging long-term impact. For example, in the past—I believe that the rules have changed now—capital investment was deferred, to the long-term detriment of the trust, and funds were switched into trying to make the revenue budget add up.
Again, I urge the Minister to ensure that any schedule of repayment that is announced for the North Bristol trust will allow its long-term stability to be preserved. It must be able to make decisions based on the long term, not just on desperately scrabbling around to try to make the budget add up by the end of Wednesday fortnight.
Obviously, the fundamental concern is the impact of cost-cutting on service delivery, but the second is cash shortages, from which the North Bristol trust has suffered. Even towards the end of last year—a year in which the trust was on the brink of financial balance—it had to borrow money to pay its bills. That seems a ridiculous situation.
Cash shortages can have serious effects. The NAO provides a case study of the Queen Elizabeth Hospital NHS Trust, which was struggling financially in 2005-06. Some of the things that it considered withholding were tax and national insurance payments on behalf of its staff, payments to PFI partners and general payments to creditors. Each of those would have had a worrying consequence. In the end, the trust was bailed out through a sort of emergency cash brokerage. But imagine what could have happened. Non-payment of PFI partners would increase the cost to everybody in the NHS for future PFI projects. If people who are involved in PFI projects in the health service were to realise that cash-strapped trusts might default on or delay payment, it would be more expensive to do things through PFI. There is a cost implication.
What if trusts were to delay paying bills from private suppliers and small businesses? They are doing that. The public sector is supposed to set standards in prompt payment, but NHS trusts are some of the worst for paying bills, and that of course leads to a premium. If I want to do business with an NHS trust, I will build into my price the cost of a delay in payment. The cash crisis has a consequence. Should Revenue and Customs—the general taxpayer—have to wait for NHS employees’ national insurance payments because trusts are broke? Short-term cash shortages have real impacts, and too many trusts are facing them.
The third thing that the NAO and Audit Commission report highlights is how management resources are diverted. The chances are that the finance director, not the clinical director, will get the most attention in a trust with a cumulative deficit of £100 million, and that is a real worry. That is not to say that there is not first-rate clinical care at the North Bristol trust. In many cases, there is such care, but it is human nature that managers wrestling with such a debt without knowing when it has to be repaid will devote much of their energy to trying to save money, and will make short-term economies that, inevitably, will be at the expense of a focus on patient care.
The last concern highlighted by the NAO is about future foundation status, to which I referred earlier. How will trusts with accumulated deficits ever become foundation trusts? It is clear that there is a different regime, as foundation trusts can fail, although I believe that the failure mechanism is not yet well worked out. Could the Minister clarify whether his timetable for making all NHS trusts foundation trusts is still on track? Does he still expect that to happen by the end of 2008? I cannot see how the North Bristol trust, with an accumulated deficit of £100 million, can become a foundation trust without a write-off of some of the debt, and a clear and affordable repayment schedule—even coupled with the PFI liability that it is about to take on. Are we on for 2008, and how is that compatible with wider Government policy? The issue is local and specific, but the effects of deficits are also more general.
I mentioned that the North Bristol trust does not believe that it actually has any debts at all, as they do not formally appear on the balance sheet in the normal way. I mentioned the private dividend capital, but I would like some clarification on the other slice, the £48 million. The way that the North Bristol trust tells the story is that in any year that it was bailed out—it does not use those words, but that is obviously what happened—there was a freestanding transaction and no clear reciprocal obligation arising from it. There was never a deadline for paying back money that was handed over. That situation, which increases the uncertainty that trusts face, is not clear to me.
If the North Bristol trust, as well as simply breaking even were to start to make surpluses, and if a hypothetical neighbouring trust that had no historic deficit were also to start to make surpluses, would there be, in effect, a North Bristol trust tax to match the North Bristol trust subsidy? I do not want to be hysterical about this, but I hope that the Minister will respond on that specific point. In other words, if two identical trusts next door to each other—one with an accumulated deficit, one without—both make a small surplus, will they be equally required to put money into the national pot to deal with deficit trusts, or will the North Bristol trust have more of a handicap because of the help that it received in the past? Will there be more of a penalty on financial recovery if a trust has historic deficits?
How will that work with foundation status? Presumably, once a trust is a foundation trust, it can dispose of surpluses as it sees fit. Perhaps the Minister will say that that will be resolved before the trust becomes a foundation trust, but if the time scale is the end of 2008, the North Bristol trust will not be able to pay the money back. It may never be able to do so, but certainly not by the end of 2008. Some deficit must be carried forward into a trust’s existence as a foundation trust, so how will that work? Will there be a first claim on surpluses, if a trust makes them? It would be helpful if the Minister could clarify that.
To draw the threads together, there have been improvements in the NHS. I supported the extra investment, which was entirely welcome. But one of the things that has bedevilled the NHS in recent years has been financial uncertainty and in-year changes—I believe that some primary care trusts have been top-sliced three times within a year—and now acute trusts are expected to plan for new hospitals and a new generation but still do not really know where they stand.
As I said, the issue does not affect North Bristol NHS Trust only. In the piece in The Guardian that I referred to earlier, the chief executive of the NHS “did not dispute”—I am not quite sure what that means—reports that
“at least a dozen trusts were in an irrecoverable financial predicament.”
I am aware of the statutory duty to break even. The letter from the Department to the North Bristol trust said that the trust was in breach of its statutory duty to break even because it had failed to recover within five years.
I would not want to be reported as saying that the chief executive of North Bristol NHS Trust should be clapped in irons and dragged away to Horfield prison, but what does breaching a statutory duty mean? If it is statutory, if a law has been broken, what should happen? I am not clear that the statutory duty has any force. The letter spoke of a breach of statutory duty, but life appears to be going on pretty much as before. Will the Minister clarify what force it has? Four of the 10 trusts mentioned in the league table had, at that point, four years of cumulative deficit, so several of them are on course to breach their statutory duty.
At one level, we could have spent the entire debate talking about the deficits in NHS trusts in any given year, but my focus has been on accumulated deficits. It is my perception that those deficits are like millstones around the necks of those trusts and their hardworking staff, North Bristol NHS Trust being the exemplar. I am sure that the Minister will properly pay credit to the people who work at North Bristol NHS Trust, who do an outstanding job.
Inevitably, Members of Parliament are contacted when things go wrong, but I receive a good flow of information from people saying what a good experience they have had. Nothing that I have said this morning was designed to say anything other than that. Those people and the patients of the North Bristol trust need to know where they stand.
I draw those threads together. My first plea, for my constituents and my trust but also for trusts across the land, is for certainty. They need to know where they stand, and they need plenty of warning if they are going to have to repay some or all the money. My second plea is for those trusts that, in everyone’s words, are in an unrecoverable position as regards their historic deficits. The current position may be recovered, but the historic position is a millstone.
Action needs to be taken. I realise that it must be conditional on the trusts getting their financial houses in order—which the North Bristol trust has now done. The uncertainty has continued for far too long. I believe that the Government may be about to make a decision on the matter, which I would welcome; but in recognition of the achievements and the progress that has been made, I urge that the debt does not remain as a millstone. I would particularly value an assurance that the public dividend capital will be allowed to roll on indefinitely, because the most sustainable way to deal with the problem is to allow the trust to continue servicing the debt but without having to repay the capital.
I would be grateful for the Minister’s clarification on what future liabilities have been incurred by the North Bristol trust, either implicitly or explicitly, in respect of the help that it has had since the lump-sum bail out—in other words, when it was helped during the past three years. Is there now an expectation that the money will be paid back; or as the trust goes into surplus, will some or all of that money go into the pot for those parts of the NHS that are no longer in surplus?
It is a privilege to have had the opportunity to raise such an important issue in this Chamber, and I look forward to hearing the contributions of other hon. Members.
It is a pleasure, Mrs. Humble, to serve under your chairmanship for the first time. I congratulate my hon. Friend the Member for Northavon (Steve Webb) on securing this debate. The subject is clearly central when it comes to delivering good-quality health care, both now and in the years ahead.
Of all the points that my hon. Friend drew to our attention, one of the most important seems to be that health trusts are rightly expected to demonstrate clear financial discipline. We can only go forward if trusts delivering health services do so, but it is extremely difficult if they are operating in an uncertain financial climate—and the financial climate is provided by the Government.
My hon. Friend used as a case study his local North Bristol NHS Trust, which has a deficit of £100 million. He made interesting and important points about the public dividend capital of £52 million—the first part of the debt. The trust is able to make the repayments, but—this is one of the examples of uncertainty—it appears to be unsure whether it will ever have to repay the money. That is an impossible position for such an organisation, and not one that any private company would suffer.
That position reminds me of the problems of the Norfolk and Norwich University Hospital NHS Trust which were brought to my attention. Just before the start of the financial year, the trust received the full details of the financial package within which it would have to work during the coming financial year. When it came to managing its resources effectively, it said that it had heard about the package far too late. When planning for the year ahead, it was faced with an extremely challenging financial position and unexpectedly had to make cutbacks of several million pounds because the settlement was worse than expected.
On the current deficits of trusts around the country, the figures for the third quarter were published recently. The forecast gross deficit across the NHS for that quarter is £1.3 billion. The deficit at the end of the second quarter was £1.179 billion. The position has worsened, and those figures were higher than those for 2005-06. The commentary that accompanied the figures confirmed that 35 per cent. of organisations are in deficit—a high total. We keep hearing that we will secure a financial balance across the NHS, but the fact that 35 per cent. of organisations are in deficit is clearly a cause for concern. Again, that figure was up on the second quarter, when it was only 33 per cent.
The commentary also reported a sharp increase in the number of primary care trusts in deficit in the current financial year, when it is supposed that things were starting to be sorted out. Richard Douglas, who wrote the commentary—he is the Department of Health’s director of finance and investment—said that the problem remains a “cause for concern”.
I understand that the figures take account of top-slicing. I shall return to that, but it is clear that the process has plunged more trusts into deficit. Many feel a sense of grievance that they have managed to operate in surplus, but then an arbitrary decision is suddenly taken to slice off some of their funding. I appreciate that, in theory, the funding comes back later, but not all trusts believe that it will be refunded in full. They feel that their position has been made a lot more difficult.
I spoke over the weekend to the chairman of a primary care trust in an impoverished part of London. He explained that it gets extra funding because of the community that it serves but that it then suffers top-slicing, which takes away some money and makes its position more difficult. I accept that the Department said in its commentary that there was an expectation that £300 million of that top-slicing could be repaid. That is about a quarter of the total money taken from trusts, but it would still leave a gross deficit of a little over £1 billion.
The position is clearly different in various parts of the country. The Select Committee on Health considered where the deficits were occurring and their cause. It is hard to define any clear link, as there are many causes, and I shall return to that. In some parts of the country the position is very bleak. I come from the east of England, where the situation is extremely challenging and, most important, getting worse. There is no sense of improvement. I met the acting chief executive of the newly formed Norfolk primary care trust in October last year. Incidentally, she has now gone—forced out, it seems, by the strategic health authority. The Norfolk PCT talked about significantly reducing the deficit in this financial year and suggested that it could cut £9 million off the deficit and then clear the rest in the next financial year. The reality is that it is now forecasting a deficit, which, if anything, is slightly higher than that inherited when it took over at the beginning of October. No progress has been made with that at all.
London and the south-east continue to suffer substantial deficits within strategic health authority regions. London contains many deeply impoverished boroughs, and the anxiety that I hear when colleagues talk about the impact on local health services is disturbing. On individual trusts, the point that my hon. Friend has made is that some are clearly in an impossible position. Most people concede that it is impossible for trusts ever to clear the total deficit that they face. Trusts must carry the burden of deficits at the same time as a rapid pace of reform is imposed by the Government and must cope with substantial deficits and an imperative to clear those deficits in a tight time scale.
By implication, much of the Government’s rhetoric puts the blame for large historic deficits purely on the local trust organisations that face such deficits. As my hon. Friend mentioned, there has been a lack of financial discipline in the past—we all recognise that. Part of the problem is that many trusts have been starved of investment for so long that when the extra investment was suddenly made, it was difficult to handle such a significant and sudden inflow of additional resources. There has been much discussion of how money went into employing more staff. Trusts now find that they must cut back on staff and that that creates a boom-and-bust effect. Staff are brought in and then must be cut again because of the financial crisis faced by many trusts.
In his commentary, Richard Douglas refers to the
“previous overspending that they will need to address”.
His rhetoric points to responsibility simply resting with the local trusts concerned. However, in the Health Committee report published before Christmas, a far more complex picture emerges about how deficits have developed. It is harsh to suggest that there is a unique concentration of financial incompetence in the east of England. If that is really what the Government are saying, I certainly take offence, and I am sure that people working in the NHS in the east of England would too. As we know, the position is far more complex. The third quarter report acknowledges that
“there will remain a number of individual organisations with significant problems”.
On the complex pattern of how such deficits have built up, my hon. Friend discussed the rather pernicious effect of resource accounting and budgeting and the double deficit. The Health Committee highlighted how that could lead to a rapid worsening of accumulated deficit and create a downward spiral. The Committee’s conclusions were stark:
“As presently operating RAB is not a suitable accounting regime to use within the NHS.”
It could not be any clearer than that.
As my hon. Friend said, David Nicholson—chief executive of the NHS—used the phraseology “unsustainable and inconsistent” in relation to the principles of fair funding for hospitals. On the one hand, he accepted the logic of the Audit Commission’s proposal to exempt trusts from the resource accounting and budgeting regime. On the other hand, he said that no change was likely in the near future. While such a regime continues, the problems continue to stack up.
The Government’s response, published a fortnight ago, to the Health Committee’s report confirmed the view that the RAB accounting regime was becoming increasingly unsustainable. The response states:
“At this stage, it is not possible to commit to changing the RAB regime”.
Tantalisingly, the response goes on to say:
“the Department is looking seriously at the case for reversing the impact of past RAB deductions for NHS trusts for delivery of financial balance in 2006-07”—
this financial year—
“and at the future application of the RAB regime for NHS trusts.”
The Government are considering that issue, but, as my hon. Friend asked, will the Minister make an announcement today about the financial uncertainly that trusts face? Trusts still do not know whether ultimately the rules will change, even though they are required to behave in a way that will clear deficits and make tough, difficult decisions about local health services. What is the time scale for the review and when will the Government know whether a change will occur?
On other causes for the problems which go beyond RAB, the Health Committee referred to the funding formula. A funding formula from central Government will always lead to complaints that certain parts of the country are unfairly penalised compared with others. The Committee highlighted concerns that the formula had an unfair effect—for example, on rural areas. I do not know what the conclusions were, but there is clearly a continuing concern in the health service that resources are not fairly allocated from the centre. The Committee referred to the effect of Government policies in terms of the development and build-up of deficits—particularly the accident and emergency department four-hour target. I readily accept that the four-hour target has, in many cases, transformed how hospitals operate. When I recently visited the Norfolk and Norwich accident and emergency department, people were broadly positive about the effects of the target. However, the financial consequences for trusts already in some financial difficulty have been tough.
The Committee’s report refers specifically to poor management by the Department and the fact that it went over budget on the “Agenda for Change” and on the GP and consultant contracts. The Committee refers to the cost estimates as “hopelessly unrealistic”, which is a fairly damning indictment from an all-party Committee and highlighted poor local financial management, which is clearly part of the overall cause. The Committee specifically mentions the impact of private finance initiative schemes—as raised by my hon. Friend—and also refers to the impact of the independent sector treatment centres on finances.
My hon. Friend referred to a matter that relates to the Norfolk and Norwich University hospital. In that case, the local chief executives and chairs of the previous primary care trusts in Norfolk warned, at the time, that there would be substantial refinancing. They also warned that the costs of the hospital were excessive and had a damaging effect on the finances of local primary care trusts. That warning was given to the Government and I subsequently referred the issue to the National Audit Office, which confirmed in a parliamentary report that, through PFI, we were paying over the odds for the hospital, one of the earliest to pioneer PFI. That has had a damaging effect on the finances of the Norfolk health economy, but do the Government help? No, they do not. Norfolk PCT has a £47 million deficit, which it is expected to clear by the end of the next financial year. The people and patients of Norfolk will ultimately pay the price for those deficits unless the Government are prepared to consider how to resolve accumulated historic deficits.
On the impact of how the Government have tackled the debt problem, it is worth noting that substantial debt existed before the 2005 general election. However, then there was a different approach to how to deal with the problem. More time was given, which got trusts through the difficult period of the general election, but once we were through the election, the position started to change, and of course the Secretary of State gave the infamous commitment that by the end of this financial year the NHS “as a whole” would break even. That seems to me to have driven the policy—the political imperative to ensure at all costs that the NHS as a whole breaks even.
What has suffered? My hon. Friend the Member for Northavon referred to cash shortages and the perverse consequences of those, but in terms of the health services that have suffered, the Health Committee referred to soft targets, including voluntary organisations, often doing incredible work on a shoestring, which suddenly find that their funding has been cut. Soft targets also include hospital chaplaincies and mental health services. There is lots of evidence from around the country that critical mental health services have been cut. Another soft target is public health and, in particular, sexual health services. Money allocated to those services has been diverted to clear deficits.
There was reference to out-of-hours services. In Norfolk, when the contract goes out to tender this summer, there will be a reduced specification, and the out-of-hours service will decline. As we saw this week in the report relating to ambulance trusts, that has knock-on effects. It is the law of unintended consequences: the out-of hours service is reduced, suddenly more people are calling ambulances, at great cost, more people are admitted to A and E, and the overall cost to the NHS ends up increasing.
Large numbers of posts have been deleted. It is great to avoid the particular damage caused by compulsory redundancies. No one wants individuals to lose their jobs, but if posts are simply deleted when people retire or leave their employment, that is totally arbitrary in its effect. Some departments can be affected far more than others. Trusts have found the impact of lost posts very damaging.
Training budgets held by SHAs have been cut by, I think, £350 million. My hon. Friend referred to short-term measures having long-term damaging consequences. What is happening with training budgets is one such short-term measure. There is also the impact of top slicing, which I have mentioned. Management resources are diverted to try to cope with an endless financial crisis, rather than an attempt being made to deal properly and objectively with Government reforms.
I want to say a few words about the role of strategic health authorities. I have witnessed in the east of England that SHAs are in an incredibly powerful position. From what I hear off the record, they are dictating how PCTs clear their deficits. We have ended up losing the acting chief executive, we understand, because of pressure from the SHA. SHAs seem to operate entirely without public accountability. They operate in the shadows and are accountable only to the Secretary of State. That needs to be examined. There ought to be transparency in the operation of SHAs and the directions that they give to local health trusts.
What is to be done? We all accept that as we go forward, there should be strict financial disciplines. Simply to remove deficits or clear deficits without requiring trusts to demonstrate that they are achieving in-year financial balance and are likely to continue to do that into the future on a sustainable basis would be ludicrous. However, there are reports of turmoil from all over the country and massive opposition is building up, because people are, rightly, protective of their local health services. When some trusts are in such deep financial difficulty that objective reports from the outside recognise that they are in an impossible position when it comes to clearing those deficits, something has to be done.
I repeat my hon. Friend’s plea that, above all else, there has to be certainty and clarity so that trusts can demonstrate financial discipline. People cannot demonstrate financial discipline when they are operating in a vacuum in terms of what the Government expect from them. Therefore, will the Minister provide clarity about the review that is apparently under way and particularly about the impact of the RAB accounting regime, and can he give any reassurance to those trusts and those parts of the country that are currently seeing fairly savage cuts to their local health services?
I congratulate the hon. Member for Northavon (Steve Webb) on securing this important and timely debate. He obviously wanted the opportunity to return to the health portfolio.
In the time that is left to me after nearly an hour of a Lib Dem fest, I want to start by reiterating my and my party’s unequivocal support for all the wonderful work of the clinical and the non-clinical NHS staff. Too often as we lay bare the myriad incompetences of the Government, we hear the silly accusation that we are attacking NHS staff. It is terribly important that we place on the record the fact that we salute and applaud them for what they do. However, there are big issues of strategic direction, management and Government responsibility that we have to discuss without that being considered unfair or inappropriate.
The Labour Government have presided over the biggest deficit ever in our NHS. The Minister will no doubt talk about the extra investment, but as we approach conditions of famine following the feast, we have to examine the effect that the deficits are having on the overall confidence that many trusts and the public at large have in the Government’s ability to manage the crisis, which is of their own making.
Let me remind the Minister of the figures. In the last financial year—2005-06—NHS trusts had gross deficits of £1.312 billion. A third of acute trusts and PCTs were in deficit, and 42 organisations had deficits of more than £10 million—a huge increase on the two organisations with such a debt in the financial year 2003-04.
It would be wrong of the Minister to repeat his mantra that most of the debt is concentrated in a small number of trusts. It is true that in the last financial year, 11 per cent. of the 174 trusts in deficit accounted for 70 per cent. of the gross deficit, but the Minister’s protestations on that score have been misplaced and will be again if he repeats them today. First, the argument is irrelevant, as NHS organisations are, rightly, not profit-making organisations—that is, they cannot recoup the deficits of one year through what might be described as a bumper year the following year, if they are fortunate enough to have one. Secondly, and more importantly, the Labour Government’s system for solving the deficit crisis has impacted adversely on the finances of all trusts and, consequently, on front-line services to patients.
A rigid system has been put in place this year to try to recoup the deficit money. It looks as though the Government may have skimmed off enough money to deliver something approaching a net run rate balance by the end of the current financial year at the end of this month. However, the figures tell a different story. Labour has imposed draconian measures on the NHS. Patients, students and NHS staff—we have read this week about junior doctors, in particular—have borne the brunt of the Government’s financial management. That is unfairness of the highest order. We have seen about 20,000 job cuts—I hope that the Minister is listening; the phrase is “job cuts”—through vacancy freezing, post cutting, wastage and redundancies. Training budgets have been savaged—behaviour that is utterly short-sighted. The derisory pay settlements that the Government have put in place for this year are a naive attempt to claw back some cash, but no credibility, after the mess they made of renegotiating salaries with NHS staff.
The hon. Gentleman has referred to “derisory” pay settlements. Would he care to go on the record, then, with what the current Conservative policy is on public sector pay?
Much as I would like to be in the Minister’s post, I am not, and it is up to him to sort out the pay settlements. The real issue, given the previous, failed negotiations, which were carried out in a deeply incompetent way, is what the Government have had to do this year. This has been a very sorry tale in terms of motivating people. The accusation stands, and patient services have been cut as a result. As ever, however, the Minister has focused totally on taking the use of words such as “derisory”, which are intended to be suitably insulting and critical of the Government, to mean that an Opposition Member has suddenly made a spending commitment, but I have not, do not and will not make such commitments. That is the sort of silly banter that comes across the Chamber when we try to deal with serious issues such as the motivation of staff who are deeply committed to the NHS.
The Government have been deeply incompetent and allowed themselves to be rolled over by certain parties with whom they negotiated. This has been a long story of incompetence. Above all, patient services have been cut. I know for a fact that there have been cuts in the number of Parkinson’s disease nurses and podiatrists, and in many other services that are vital to people with particular conditions, such as diabetes. The Government’s short-sighted approach has resulted in a shortage of the very services that, through early intervention, help to keep people off the more expensive treatments in hospitals.
None the less, the Government have failed to solve the debt problems, despite unquestionably savage cuts and an increasingly expensive turnaround programme—getting up-to-date information on the cost of that programme is like trying to pull teeth, although that is probably more than dentists who have run out of units of dental activity can do at the moment. It is the gross, not the net deficit figures that display whether the situation is improving, and NHS trusts forecast a deficit of £1.318 billion in 2006-07, which is slightly larger than last year’s deficit. The debts of NHS hospital trusts have accumulated over the past three financial years. At the end of 2005-06, their accumulated debt was £1.1 billion, but by the end of this financial year, based on the month 9 forecast, it could be £1.7 billion. As the hon. Member for Northavon said, measures to bring NHS trusts back to a run-rate balance will not deal with that accumulated debt.
In part, that failure is a reflection of the Government’s inability to increase efficiency in the NHS. The Chancellor may spin the figures to the press, as he does, but he must surely recognise that successive Labour Health Secretaries have failed to deliver anything like the efficiencies that have been repeatedly promised at the Dispatch Box. Indeed, the Labour party has presided over an NHS in which, on the latest available figures, productivity has fallen by 1 per cent. for every year in which they have been in office. That is in somewhat stark contrast to the previous Government’s record.
The deficits in each trust lead to two problems. First, as has been rightly argued, resource accounting and budgeting means that hospitals that are affected are regarded as having pre-empted resources. Their income for the next year must therefore be reduced by an equivalent amount, which is treated as a first charge on that income. That is the double-counting of the deficit, which carries on to the balance sheet and the income and expenditure account. In business, however, people put a plan in place over a period of, say, three years to ensure that there is no attack on their core business, and so it should be here. The Audit Commission has recommended that RAB should be applied not to NHS trusts or NHS foundation trusts, but to PCTs, and we agree. When will Ministers respond positively to that recommendation? It was to be covered in the operating framework for 2007-08. Why was it not?
Secondly, as has been argued, accumulated deficits on the balance sheet prejudice the ability of NHS trusts to achieve the financial control and credit worthiness necessary for foundation trust status and to undertake borrowing for capital investment. It is therefore necessary to have a plan to determine how such historic debts can be dealt with.
Write-off is seductive, but wrong. It was interesting to listen to the hon. Member for Northavon go through his case, and many of the revelations that he and others have unearthed are quite shocking. I notice, however, that his website says that he will be
“pressing for a swift resolution to this issue, and for a serious write-off, conditional on assurances that NBT have now got their finances in order”.
We need to be careful about what we ask for, and I think that I heard the hon. Gentleman repeat that he is looking for an element of write-off. This is a tough question, but I think that write-off will send trusts entirely the wrong signal: it will tell them that, once again, they do not have to face up to deficits. Furthermore, write-off cannot be the priority for NHS resources.
One possible option, which must be explored—this has already been touched on—is that NHS trusts that have otherwise met all the requests for foundation trust status, especially in terms of having sound financial control and business planning, as well as no current deficit, should be enabled by the Government to convert historic debt into public dividend capital on their balance sheet—still paying a dividend, but not prejudicing their future status and capital investment. That could avoid the terrible damage that is being wreaked on trusts’ core business—the front-line services. I urge the Minister to say whether he is looking at that; I hope he is.
If such an approach were adopted, after having been fully explored, it could carry a powerful positive incentive. Trusts such as North Bristol—once a byword for financial deficits, but which has been turned around financially—could be given an opportunity. We need only compare the financial performance of foundation trusts with that of other NHS trusts. SHA performance management has clearly failed compared with Monitor.
I am interested in the hon. Gentleman’s point, but I think that he has drawn a dubious conclusion. If we select only those trusts that are financially well managed and whose finances are under control and call them foundation trusts, we will mysteriously discover that they are better at financial management than the trusts that we decided were not good at financial management. It is therefore a complete non sequitur to conclude that Monitor is better than the SHA.
No, that is being over-simplistic. Monitor has demonstrated that it can look at organisations’ conditions and financial health in a way that makes less of an imposition on the conduct of their core business and interferes less with it. So far, therefore, that is the better model.
What is certain is that the Secretary of State and her Ministers must be held to account for the deficits, the failure to solve the problem and, in particular, trying to mask that problem through savage cuts to front-line patient services. I hope, therefore, that the Minister will acknowledge that the disaster that has been created and perpetuated could be mitigated by ensuring that the Government at least think about RAB.
On the “Today” programme of 11 December 2006, the Secretary of State said that RAB
“is not causing the overspending”.
However, in evidence to the Health Committee inquiry on NHS deficits, on 21 November 2006, she said that
“whereas the application of RAB to hospital trusts might have been appropriate in the old days what we and the Audit Commission found was it was not consistently applied as between one region and another or one Trust and another. It is not consistent with payment by results and the new financial regime we are putting in place and it cannot be applied to foundation trusts. For all of those reasons we all agreed that it needed to be looked at.”
It is hardly surprising that NHS finances are in such a parlous state if the Secretary of State herself does not know what the system should be. In November last year, she vowed to take responsibility for solving the deficits. Therefore, I hope that the Minister will tell us whether he or any Labour Minister—particularly the Secretary of State—will take responsibility.
The fundamental point is to recognise that there cannot be simplistic write-offs. There must be a planned approach that does not simply cater arbitrarily to the Secretary of State’s convenience, but which is rather more focused on ensuring that the core business of delivering front-line patient services to, for instance, the constituents of the hon. Member for Northavon, is not affected. A proper business and financial plan must be put in place in recognition of the fact that the accumulated deficits must be paid back over time.
The proposal to look at that issue should be explored. The Opposition, who do not have the resources available to Ministers, have not been able to examine it, so it would be helpful if the Government said that they are genuinely considering the opportunity of exploring how public dividend capital and the dividends paid out of it could contribute to finding the solution.
I add my congratulations to those that have been offered to the hon. Member for Northavon (Steve Webb). It is good to have him back on health matters. Like the hon. Member for Eddisbury (Mr. O'Brien), I think that we have had a rare treat this morning, with the finest brains of the Liberal Democrats giving us their thoughts: Liberal Democrats and NHS finances—an enticing prospect.
The hon. Member for Northavon spent much of his speech describing the details pertaining to North Bristol NHS Trust, and I shall deal specifically with some of the questions that he raised about it, but I hope that he will permit me, given the ambit of the debate, to go more broadly and discuss some more general points about the treatment of debt in the NHS. I am pleased that my hon. Friend the Member for Bristol, North-West (Dr. Naysmith) has joined us, as he takes a close interest in the future of the trust and its plans.
We are 25 days away from the end of the financial year, and I readily accept that it has not been an easy financial year for parts of the NHS. All three hon. Members who have spoken have tempted me to pre-empt some of the decisions that the Government might take when reviewing the financial year. They will have to forgive me if I do not accept their invitation to do that, but I shall try to give a greater flavour of our thinking on those matters and share some of our thoughts about where that will lead us.
As the hon. Member for Northavon anticipated, it is right to set out some context for this debate about the treatment of debt in the NHS. The Government have injected unprecedented funding into the NHS and, in doing so, have improved the quality of patient care and access to health services beyond all recognition. NHS funding has doubled in the years between the Government’s first taking office and the current financial year, and it will effectively treble by the end of 2007-08—the financial year that is just about to begin. In fact, under our stewardship, the NHS has enjoyed the benefit of average annual real terms growth of 6.3 per cent., which is more than double the historic annual growth before 1997. Those figures should be put in context. Demands on the health service rise every year, but nevertheless the figures speak for themselves.
Perhaps I may answer just one of the comments of the hon. Member for Eddisbury: he said that the deficit at the end of the 2005-06 financial year represented the biggest in the history of the NHS. I think that those were his words. The audited year-end net deficit of £547 million needs to be set against the final accounts for 1996-97, when the deficit was £459 million. Granted, that was lower than last year’s deficit, but £547 million represented 0.7 per cent. of total NHS revenue spend. The 1996-97 deficit represented 1.5 per cent. of NHS total revenue spend. I am pretty confident in saying that that was a far larger percentage than had ever been seen in the NHS previously. The hon. Gentleman should reflect on that before handing out the lessons.
Every primary care trust received an above-inflation increase in funding in 2006-07 and will do so again next year. That is an average of 9.4 per cent. across the NHS. By far the majority of NHS organisations have also continued to deliver the high quality improvements to patient care that we have asked for, while remaining in financial balance or better. Moreover, we believe that allocating the vast majority of central NHS programme funds to strategic health authorities much earlier in the year, and thereby devolving significantly more control over funding to local decision making, has given the NHS much greater local flexibility to balance local needs and the delivery of national targets.
I want to say something about the announcement last week on the North Bristol PFI scheme. For the hon. Member for Northavon, that is a matter of some controversy, whereas my hon. Friend the Member for Bristol, North-West considers it a very welcome announcement. I picked up from the hon. Gentleman a kind of grudging pleasure that the decision was finally taken and that the trust could move forward. On that matter, and on finances, I accept his point that clarity is the important thing for that hospital trust at this time. It needs to know its future, where it is heading and how it can go from a cycle of difficult decisions into a cycle of improvement and clarity about the future. I accept that general point and I hope that we can begin to provide more of that certainty as the weeks go by.
I believe that the scheme that was put forward—a £347 million PFI for North Bristol NHS Trust—is exciting and financially viable, and I am led to believe that it will transform acute services in the area. I pay tribute to my hon. Friend the Member for Bristol, North-West for the persistence with which he pressed the case for the trust and the need for an announcement. In the end, I was happy to meet him and make that announcement for the benefit of the trust.
I hope that the hon. Member for Northavon will accept that, having regard to the management of finance in the long term, it makes more sense—although he may disagree about the location of the scheme—for the trust to benefit from modern facilities in which to provide health care, and that the facilities should not be spread over multiple sites. The arrangements will give the trust financial and running cost benefits in the long term, and there will also be the benefits that come from a larger, integrated clinical team sharing experience and knowledge. That is part of the background to the hon. Gentleman’s debate, but I shall come on to some of the questions that he asked me about the trust’s financial certainty. That is the other side of the equation, now that we have more clarity on the estates question.
We do not underestimate the very real financial and, in some cases, operational challenges faced by some organisations in 2006-07. The hon. Member for North Norfolk (Norman Lamb) referred to some of them. We have always been clear that the priority for this year would be to return the NHS to financial balance overall. For that reason, as the current year got under way, my right hon. Friend the Secretary of State for Health set out three clear financial objectives to be delivered by the NHS without compromising progress against public service agreement targets. Those objectives were to deliver net financial balance across the whole NHS by 31 March 2007; to see an improvement in the financial performance of all organisations that reported a deficit in 2005-06; and to achieve recurrent monthly run-rate balance across as many NHS organisations as possible by the end of the financial year.
The hon. Member for Eddisbury asked what we would take responsibility for: we will take responsibility for the delivery of those objectives, alongside the commitment that they will not lead to the breach of key public service agreement targets. I am confident that we shall be held to those promises, and the NHS is well placed to deliver on them.
As we reported in our third quarterly report on NHS finances, the NHS has made considerable progress in delivering against each of our key financial objectives, and remains on course to end the year in net financial balance. Taking account of the £450 million savings that strategic health authorities have identified by their continued good management of central NHS programme funds, the NHS overall recorded a forecast year-end surplus of some £13 million at the end of the third quarter of the year. That is a remarkable achievement and bears witness to the hard work of NHS staff across the country in seeking to deliver savings, increase the efficiency of working practices and reduce deficits.
I thank the hon. Member for Northavon for saying that he did not demur from the principle that people should be constantly challenged to provide more efficient and productive ways of working. The magnitude of the improvement is perhaps best understood by looking at the movement in net deficit in the past couple of years. It stood at £221 million at the end of 2004-05, and had increased to £547 million in the 2005-06 final accounts. If that trend had continued on a simple linear basis, we might have expected a net deficit of around £750 million by the end of the current year. Instead, the forecast surplus of £13 million at quarter three, coupled with our expectation at least to achieve financial balance by the end of the year, illustrates very clearly just what a significant improvement has been achieved and creates a platform of stability from which the NHS can move on.
We should consider organisations that were in deficit at the end of the last financial year in terms of their current in-year financial position, when the impact of deductions for prior overspending is ignored. There has been a significant improvement in those organisations. Our analysis shows that 82 per cent. of trusts and 69 per cent. of PCTs are forecasting an improved in-year position compared with 2005-06. Deficits continue to be concentrated in a small minority of organisations, with 50 per cent. of the gross deficit being attributable to just 5 per cent. of organisations. By far the majority of organisations are in balance or better, and continue to deliver quality services and improvements.
On achieving run-rate balance, I am pleased to say that a healthy majority of NHS organisations reported a positive monthly run-rate balance at quarter three. Indeed, our analysis indicates that only a small number of organisations— 17, to be precise—are not likely to achieve that objective by the end of March. It is right to pay tribute to the trust that serves the constituents of the hon. Member for Northavon and my hon. Friend the Member for Bristol, North-West, because it has made a clear and obvious improvement since its difficulties a few years ago and is now in run-rate balance, hence its wish to push on and achieve foundation trust status. There has been clear improvement, and I am sure that the hon. Gentleman and my hon. Friend will join me in welcoming that.
I agree with the Minister on that, but can he explain why the situation in the east of England appears to be moving in the other direction? The total deficit in the strategic health authority increased at the end of quarter three compared with quarter two, so all the disciplines that he is talking about appear not to be working there.
I shall answer that point in relation to the causes of deficits. As the hon. Gentleman said in his speech, the origins of deficit are not simple and one cannot pinpoint one factor, because they are complex. He also said that it is not good enough just to say that the quality of management is not good enough in a geographical area. That is true, but there has been a pattern of overspending in certain parts of the country that has been allowed to continue, rather than being tackled. That is part of the reason for what has happened this year—that nettle has been grasped.
The NHS financial system of old did not provide ready transparency on overspending. When people looked at the end-of-year accounts, they did not automatically see that there was a clear problem with overspending in a certain region. It did not become clear, as if by magic, where the problems were. The new financial regime is bringing much greater clarity about where the problems with overspending lie. One difficult point that we need to explain more is that the NHS is not the same in all parts of the country. The infrastructure is different in different parts of the country, and that needs to be considered when working out the causes of deficits.
I shall now answer some of the specific points that the hon. Member for Northavon raised. He asked about the trust’s situation regarding its private finance initiative and how the two could be married up, given that the big issue of debt must still be addressed, while progressing with the PFI. I confirm that the trust’s plans were assessed as being financially sound as part of the Government’s overall review, which considered the size of the scheme and whether it would meet future health needs. When we come to the final business case assessment and the final process, we will need to consider the financial position of the trust. Any such consideration will take the trust’s current financial position into account.
The hon. Gentleman asked about the force of the statutory duty to break even and what it means. When an organisation breaches a statutory duty to break even, the appointed auditors will issue a public interest report to the Secretary of State notifying her of the breach. The Department will work with the organisation, via the SHA, to put in place a plan to manage that financial position and to ensure that the organisation remains a viable public body. No penalties are imposed.
That brings me to the hon. Gentleman’s central question about what happens to the debt and what the position is going forward. North Bristol NHS Trust is one of a small number of organisations that present particular challenges to the Department regarding how to map a forward course, because their debts are significant. The hon. Gentleman used the figure £100 million, and we accept that the overall figure is in that region. He pre-empts the decision that will be taken about how to put that trust on a viable footing, but I assure him that his comments will be borne in mind.
I accept the hon. Gentleman’s points about the viability of services, about not requiring the trust to make unacceptable changes to them and about giving it sufficient time to plan, so that the impact of changes can be properly absorbed without threatening the viability of services. If he is asking me for a final conclusion about what is to be done, I am afraid that he pre-empts the discussion and decision.
Is the Minister considering the suggestion that the £52 million that was added to the public dividend capital might remain? Is that an option?
I shall answer that in relation to resource accounting and budgeting, which other hon. Members have mentioned. The hon. Gentleman said that there is no such thing as a free lunch, and that is absolutely true. Given the way in which the financial regime now operates, the NHS cannot allow a deficit to spring up in one part of the system and not seek to deal with its consequences. Under the RAB regime that the Department operates, under the Treasury, overspending in one part of the system has to be accounted for by underspending somewhere else, otherwise the Department overall incurs a problem. That is absolutely the way in which the Department is taking matters forward, as a principle.
Debts should lie where they are incurred, otherwise there will be unfairness to other parts of the country that are not experiencing the problems that the hon. Gentleman mentions. However, the position with a small number of trusts gives rise to special consideration of their financial position. We need to get them back to being viable and able to provide services sustainably. No final decisions have been taken within the Department. I shall not lay out a clear timetable for that, but this issue is being actively considered. As with the PFI situation, we intend to give clarity to the trust about its viability going forward, which we will do at the earliest opportunity. The hon. Gentleman must forgive me, but we are 25 days away from the end of the current financial year, and it is too early to pre-empt some of those decisions.
We accept the Audit Commission’s analysis on RAB and the rationale of its review. Overall, its application provides a strong disincentive for overspending, but it is becoming clear that it is increasingly unsustainable for NHS trusts. I cannot commit to a timetable for the implementation of the Audit Commission’s recommendations, partly because a resource buffer would have to be created to cover NHS overspending centrally. I do commit, however, to accepting the principle of what was put to us. We will bring forward further details soon.
There are other issues that I would like to cover, and I hope that the hon. Gentleman will accept my writing to him to tidy up those issues. This has been a good debate at a very important time for the NHS.
I am glad to have secured this debate on what I am sure all hon. Members will agree is a hugely important subject. The Government made an historic commitment to halve child poverty by 2010 and to abolish it within a generation. I congratulate them on that commitment. I also thank the Minister for the work that he has put in on the issue and, in particular, for attending last week’s launch of Save the Children’s exhibition on child poverty at which he spoke eloquently from his experience about the importance of achieving those targets to reduce child poverty.
It could be argued that we do not need a Westminster Hall debate to bring the matter to the Government’s attention or to urge them to make tackling child poverty a central part of their programme. We have already won the battle of ideas, but with the three-year comprehensive spending review coming up and the Budget due on 21 March, it is important to use this opportunity to urge the Government to reaffirm their commitment to abolish child poverty and to highlight how much more needs to be done to achieve our targets.
I am pleased to see representatives from the other main parties in the Chamber, and I look forward to hearing their commitments to tackling child poverty. The right hon. and learned Member for North-East Fife (Sir Menzies Campbell) “signed the pledge” in a speech on 19 December, so better late than never.
I am somewhat confused about where the Conservatives stand, and I hope that we shall be enlightened today. I gather that the abolition of child poverty is an aspiration rather than a target for them. I am not sure what that means, but I think it means that they think it would nice to abolish child poverty, but they will not spend any money or implement any policies to achieve that. Perhaps we shall find out more about the Conservatives’ intentions.
When the Government came to power, they inherited an appalling legacy. Child poverty had increased under the Conservative Government from 14 per cent. in 1979 to 33 per cent. in 1998—from one in seven children living in poverty to one in three. A generation of children had been abandoned. We know that poverty is often handed down from one generation to the next, so their actions condemned future generations to live in poverty.
The Government should be commended on their work so far in introducing measures such as the national minimum wage and raising it year on year, as well as tax credits, record rises in child benefit, funding child care, Sure Start, children’s centres, the new deal for lone parents and Jobcentre Plus. I could go on.
We have lifted 700,000 children out of poverty, and have achieved a much faster reduction in child poverty than has been achieved in other European Union countries. Child poverty is now at a 15-year low, and we should not overlook that achievement when we consider the scale of the problem that still faces us. A quarter of Britain’s children—3.4 million—still live in poverty. We are all familiar with the UNICEF report that was published last month, which shows the UK at the bottom of the international league tables.
On the UNICEF report, the hon. Lady makes good points about the financial aspect of child poverty, but overall well-being comes into the debate. Does she agree that to prevent the spiral of child poverty from passing from one generation to another, we must, in addition to measures to tackle financial poverty, provide opportunities—through education and out-of-school activities—to involve young people in decision making so that they can escape the poverty trap?
I thank the hon. Lady for her intervention, and I agree entirely that the problem is not just about financial targets. I shall come to that later.
There is probably a lot of common ground here, but it is right to pay tribute to schemes, such as Sure Start, which, in addition to making a real difference to families in the poorest circumstances, have perhaps done more to alter how people deal with their lives and their capacity to start making decisions about their own lives.
I thank my hon. Friend for his intervention; he makes an important point. I agree that the issue is not just about putting money in people’s pockets. We must look at their whole lives, and everything that impacts on them and results in the downward spiral of poverty, which then passes to future generations.
The Government have achieved a great deal in reducing the number of children living in poverty, but they missed their target for 2005 by about 300,000. In 2004-05, the last year for which statistics are available, only 100,000 children were lifted out of poverty. I believe that the figures for 2005-06 are due out on 27 March, and I hope that with the figures for tax credits and so on included there will be an improvement, but there is a lot more to do and I want to use this debate to flag up some ways to move forward in achieving those targets.
First, I want to talk about what child poverty means for children. According to Bristol university’s millennium survey on poverty and social exclusion in Britain, which was published last year, a third of British children are forced to go without at least one of the things they need—for example, three meals a day, toys, out-of-school activities or adequate clothing—while 750,000 children go without essential clothing, such as a warm winter coat or new, properly fitted shoes, because of a lack of money. Furthermore, 400,000 children do not have enough food each day and 1 million are too poor to be able to engage in common social activities, such as visiting friends or family, having friends round to play, celebrating birthdays and so on.
In school, children from low-income families risk being isolated, stigmatised and bullied, perhaps because they do not have the right uniform or they cannot afford to go on school trips. Their living conditions in cramped, overcrowded, noisy or damp houses often make it difficult for them to study at home, so they fall behind with their school work.
Poverty also has a significant impact on children’s health, from lower birth rates to shorter life expectancy. Children from manual social backgrounds are one and a half times more likely to die as infants than children from other social backgrounds. The important research in the Save the Children and Family Welfare Association survey, which was published yesterday, shows that children living in financially excluded families with no access to a bank account pay the price of being poor in the UK—the poverty premium—because that has a significant impact on household finances.
The survey also shows that poor families pay up to £1,000 more for essential goods and services such as gas, electricity, insurance and accessing cash. That includes paying about 150 per cent. more for basic household goods bought on credit, more than 50 per cent. more on credit or loans, and 10 per cent. more on gas bills paid through prepayment meters rather than by direct debit. That represents about 9 per cent. of the income of a family on £250 a week. Being poor makes people poorer.
That is the situation—what can we do about it? We are still waiting for the Government’s response to the Harker report, which I hope will flag up some measures that the Government are introducing, and I hope, too, that the Minister will give us a preview in his winding-up speech. I want to make a few suggestions. I am sure that it will not surprise the Minister to hear that some of them involve spending commitments, but before coming to that I want to make some other points.
Half the children in poverty are in families in which at least one parent is working. Will the hon. Lady address important issues such as training and better-quality jobs?
I will touch on that, but obviously in a debate such as this when several hon. Members want to speak I must skim over some issues. It is important to remember that the issue is not just getting parents into work. The focus has been on that recently, but work must pay, and be accessible and affordable to people.
Some issues do not require Government spending, and a point that is made to me time and again by campaign groups is the importance of having a cross-Department approach to tackling child poverty, perhaps with the social exclusion task force leading the way. There is some confusion about whether the Treasury or the Department for Work and Pensions is leading on the public service agreement target of halving child poverty by 2010. It would be useful to have a steer on that.
Another point that has been made is that legislation should be poverty-proofed, whether it comes from the Treasury, the DWP, the Department for Education and Skills, the Department of Health or the Department for Transport. The Minister will recall that at the Labour party conference last year we met a group of young people from an estate in south Wales who had been brought together by Save the Children. The point that they made time and again was that transport was the biggest issue in preventing them from staying in education or getting their first job. Even transport must be poverty-proofed.
I congratulate my hon. Friend on securing this important debate. She mentions Departments working together, but does she agree that the devolved Parliaments and Assemblies in Scotland and Wales also have a major role to play and that we need not just a Westminster approach, but a concentrated and co-ordinated UK approach to the problem?
I agree entirely with my hon. Friend. I must admit that I am not that familiar with events in the Scottish Parliament, but recently, when I ended up speaking at a meeting in Merthyr Tydfil of all places, I spoke to a Welsh Assembly Member who leads on the issue. He stressed that in Wales there is a joined-up approach and that issues such as transport are considered in a well thought out way. We should not only emulate such approaches, but tie them in with the approach being taken at the Westminster Parliament level.
On spending, the Joseph Rowntree Foundation has estimated that it would cost about £4 billion to £5 billion extra a year to meet the Government’s targets. I do not know whether the Government accept that estimate, but I know that the Institute for Public Policy Research came up with a figure of £2 billion last year, which might be more palatable to the Treasury.
I am sure the Minister knows that there have been several suggestions on how the money might be spent if it were available. Save the Children, for example, has called on the Government to introduce seasonal grants, so that families would receive £100 per child in summer, £100 per child in winter plus an extra £100 per household to meet fuel bills. That would help families who can tick along day to day on their low income, but who cannot afford the extra items that come up. For example, in summer, there are school uniforms to buy and children do not have free school meals for those six weeks in the year. Save the Children estimates that such grants could lift 440,000 children out of poverty at a cost of £1.4 billion a year.
The End Child Poverty campaign is calling for the equalisation of child benefits, so that the second and third child each receive the same amount as the first. End Child Poverty believes that that would help large families in particular, because they are more likely to be poor.
Other people are calling for a view on how local authorities exercise their discretionary powers to provide grants to low-income families. A Citizens Advice survey found that in 2004, 42 per cent. of local authorities did not offer any grants, so in effect there is a postcode lottery.
Poor housing is a major factor. According to Shelter, 1.6 million children live in bad housing, which impacts on their health, education and emotional well-being, and even on their safety. We desperately need more investment in building social housing and meeting the decent homes target, and it has been suggested that housing should be at the heart of the social exclusion unit’s work.
Financial inclusion is also an important issue. I have been involved with it as a member of the Treasury Committee, which has produced some excellent reports recently. The Government are to be commended for what they have done so far, such as introducing basic bank accounts, but we must do more to ensure that high street banks meet their obligations. We learned yesterday that their profits hit almost £40 billion last year, and although I do not have anything against banks making profit, one would think that, at that rate, they could afford to provide basic bank accounts and free cash point machines in deprived areas without taking too much of a hit.
The private sector should also be encouraged to remove tariffs that discriminate against the low paid, such as higher costs for prepayment meters and penalties for people who cannot pay by direct debit. In effect, the poorest people subsidise those who can afford to pay through their bank accounts.
More support for credit unions could also make a huge difference. In my constituency, the Department for Work and Pensions growth fund has given the credit union £200,000 in capital and £50,000 in revenue a year to provide quick cash loans to people on low incomes. So far, the union has made about 200 loans at an average of £450. It says that 80 per cent. of those loans have been made to women and 60 per cent. to lone parents, which is hugely important, because about 3 million people use doorstep lenders.
I have been given figures showing that if those people were to borrow £500 over a year from Provident Personal Credit, the biggest doorstep lender in the country, they would end up paying back £825, which equates to an APR of 177 per cent. If they were to borrow the same amount from a credit union, however, they would pay about £65 in interest, which would obviously make a huge difference to that household’s financial sustainability. We are encouraging Farepak customers, who were hit by its collapse just before Christmas, to sign up to credit unions instead, as a way of saving money.
I hope that the Minister will not consider reinstating the policy—perhaps I should say “value”, because that is the term currently in use—of the married couple’s allowance, which is gesture politics at its most meaningless. Either it would be set so low as to have no impact at all or it would divert funds from the people who really need them. I am told that 13 million couples would be eligible, but if they were given even a small incentive of £100 a year, it would cost £1.3 billion. An allowance of £26 a month would equate to the £4 billion that we need to tackle child poverty, and £26 a month would do nothing to encourage a couple to get or stay married. It would be meaningless.
Whatever we think of parents’ choices or circumstances, and whether we blame or commend them, it is the children who really matter. We should spend money on all children who need it, rather than on those who happen to come from the “right” family background.
The most important element of the chid poverty strategy is the Government’s emphases on moving from welfare to work and making work pay through such initiatives as tax credits, the minimum wage, child care and so on. I fully endorse the Government’s strategy for and target of getting 80 per cent. of people into work, as well as their new strategies on incapacity benefit and lone parents.
On incapacity benefit, one in three children living in poverty has a disabled parent. Only 16 per cent. of mothers of disabled children work. In some cases, their circumstances may mean that they are unable to work, but in cases in which they just need extra child care support and extra financial help, it is important to give them the opportunity to work.
According to the Child Poverty Action Group, children of lone parents face a much higher risk of poverty—the figure is 48 per cent.—than children of couples. Giving a figure of 90 per cent., it also says that most lone parents want to work when it is right for their children that they should do so, but there are obstacles in their way, including the steep taper on housing benefits, inflexible working hours and the loss of passported benefits such as free school meals and free prescriptions.
The affordability and accessibility of child care also remain a problem. In a recent survey of more than 1,000 lone parents, 70 per cent. cited a lack of child care and being unable to find work that fitted around school hours as barriers to finding a job.
There is also a discrepancy between free nursery provision and tax credit rules. Parents of three to four-year-olds are entitled to 12.5 hours of nursery provision each week, but to claim tax credits parents must work more than 16 hours a week. We must extend that provision so that parents can not only undertake 16 hours of work a week, but find the time to get to and from work and collect their children from nursery. That would make a huge difference to their employability.
We must also stress that work itself is not always the answer—a point that has already been made. Some 54 per cent. of children living in poverty have a parent who is already in work. We must therefore consider whether we want to get parents into short-term jobs or long-term careers. The Single Parent Action Network has its headquarters in my constituency. I have met single parents there, and they have huge ambition and determination to do well for themselves and put their children on a secure financial footing. However, if we were to tell them that they should take up work now as a cleaner, a waitress or a shelf stacker in a supermarket on the national minimum wage, boosted by tax credits, the chances are that they would remain in such employment for the long term and that their children would still live in poverty.
If, instead, such people were encouraged to get some qualifications under their belt and to take a few years before moving into the job market, their long-term prospects would be much more secure and their financial situation much more viable. The network is doing excellent work through its study centre. It received a £400,000 lottery grant recently to help it to carry on that work, encouraging women to gain skills and qualifications, and giving them confidence and life coaching classes. We must continue that work.
I shall focus on those people who are the hardest to reach and whose problems are the hardest to solve. Much of the Government’s work so far has been to top-slice at children in poverty, lifting those just below the poverty line to just above it. However, my constituency includes the most deprived ward in south-west England, and those of us who represent areas with significant deprivation know that there are families who sometimes seem beyond help and that mere cash injections will not solve their huge, intractable problems.
I speak to head teachers in my constituency who are in absolute despair at the dysfunctional and chaotic lives of some parents who bring children to their schools. I am not saying that those parents do not care about their children—they do—but sometimes they do not know how to care for them, or they have so much to contend with in their daily lives that they cannot give their children the care, attention and love that they need to thrive. I am talking about parents who are drug users, and who might be involved in violent or abusive relationships, or might be engaged in drug dealing, crime or prostitution. About 300 women are working on the streets of Bristol at any given time, and many of them are mothers. Of course, some of those mothers are little more than children themselves.
I am also talking about the families of asylum seekers and refugees, who are struggling to cope with life in a strange land and to learn English and English ways. A huge number of myths circulate about what those families get, but the reality is that they get very little. Poverty is entrenched within certain ethnic minority groups—57 per cent. of Pakistani and Bangladeshi children and 43 per cent. of black children are poor. Obviously, we cannot solve those problems overnight, but it might help to focus attention if the Government were also to measure severe poverty—say at 40 per cent. of median household income, rather than the 60 per cent. of median household income that is used as the measure of relative poverty.
I welcome the Government’s attempts to address such issues holistically through such things as Sure Start and the children’s centres. In Bristol, we have also been given funding for what people have dubbed the “supernanny” scheme, where parenting experts will work with families who need help in acquiring parenting skills. That is a valuable initiative.
I applaud the hon. Lady for securing the debate. Before she concludes, I would be interested to know what reasons she feels there are for the fall in real income since 1997 for the very poorest members of our society. Does that relate to the issues she highlighted regarding the poverty premium or are there other reasons for that particular impoverished group being worse off than it was in 1997?
I might leave it to the Minister to reply to that point in detail. I am not sure that I accept the premise of the question, certainly bearing in mind the number of people who have moved into work and the boost to household incomes through things such as the minimum wage and tax credits. Issues such as housing costs are factors, but I think that the Minister is much better briefed about that than me.
To sum up, it is clear that we cannot look at these issues solely in financial terms; we need to look at the bigger picture. To quote the Minister at a recent Downing street seminar:
“Too often the debate [on child poverty] is soulless and focused on government targets and not real people’s lives.”
That is hugely important. This is a matter not of targets, statistics or numbers on a piece of paper, but of making a lasting difference to children’s lives and the lives of the generations of children who will follow them. I hope that in some small way, by raising these issues and having this debate, we can move a little further towards achieving the goal that we have set.
I express my gratitude to the hon. Member for Bristol, East (Kerry McCarthy) for raising the debate and I congratulate her on that. The debate is important, particularly with regard to my constituency, which is placed 14th in the UK in terms of the number of parents on income support. Indeed, 40 per cent. of children living in poverty, as defined by the London Child Poverty Commission, live in London. The issue concerns many of us who represent urban seats.
The hon. Lady is right to recognise that worklessness is relevant, although I accept that the quality of jobs secured by lone parents who are seeking to better their circumstances and those of their families is also relevant. The problem is particularly relevant to worklessness in London, where the economic participation rate of lone parents is 5 per cent. below that of the rest of the UK. Good work is being done by the Government through Sure Start and other means to bring lone parents into economic activity. There are real challenges, however, in reaching out to those who are socially excluded. Despite the best efforts of national, regional and local government to secure such economic participation, my constituency has been able to fill only half the child care places that would facilitate such involvement. I know that good work has been done recently by the London Development Agency to try to put that right, but more needs to be done.
In the London borough of Croydon, 23,000 young people in families are dependent on income support or other means of benefit. It is important to consider how we deal with worklessness. The increase in the number of jobs in the Croydon economy is only half of the percentage increase in the London economy as a whole. We should, therefore, pay careful attention in a constituency such as mine to the way in which the tax credit system works, particularly its implications and the best use of child care provision.
The tax credit system, with its embedded element of child care, can cause difficulties. There are many benefits to the tax credit system: the funding goes to the parent, and there is a precise targeting of credits to those most in need. However, it also leaves parents without a good understanding of, or full information about, the real value of child care costs. Of course, there are problems with the tax credit system. I need not dwell on them—I am sure that all of us have a large constituency case load arising from it—but they can lead to a situation in which parents are discouraged from pursuing applications. Indeed, the problems of overpayments are often due to the child care cost element in the calculation.
As is often the case with any benefit system, the perverse marginality of loss of income takes place. As more work is secured, extra hours or child care are purchased. In combination with the tapering off of benefits, that leads to an extremely adverse disincentive to secure the progression in the work market that would create a situation in which children are taken out of poverty.
My final point about the way in which the tax credit system relates to child poverty is that providers of child care sometimes do not get money because of entitlement misunderstandings or even fraud. What work have the Government done on changing the way in which the tax credit system is undertaken to remove the embedding of the child care element from the calculations? Perhaps it would be better to place a fixed amount of child care credit on a credit card in some way, bearing in mind the ambitions of the Government to ensure that the banking and payments system continues to give support to the most socially excluded. That would provide for those purchasing child care to have a good understanding of the fixed amount of child care moneys available and ensure that the provider is much more likely to receive the money and, perhaps, to go back to Her Majesty’s Revenue and Customs in order to claim it.
Through the creation of extra transparency on the value and costs of child care, we might encourage the further development of that market and give a better understanding to those securing it and those who provide it. In that way, we could provide a special element to the tackling of child poverty, which is a curse in my constituency and in London as a whole.
I am very grateful to my hon. Friend the Member for Bristol, East (Kerry McCarthy) not only for securing this debate but for chosing to focus on this subject, which is of enormous importance to my city and my constituency. Child poverty is important in many large cities, including London and those in the south-west, but it is particularly important in the north. According to UNICEF figures, my constituency is the worst in the country for child poverty and is the only constituency in which well over 50 per cent. still live in poverty. No one can be proud of that; I cannot, as a constituency MP, and nor can society.
For those who live not just with the word “poverty”, but with what poverty does, the statistics and the reality behind them are absolutely dire. A male child born in my constituency today will live for eight years less than a male born in Surrey. That is a massive indictment of the type of world into which we bring our children. A child in my constituency—male or female—is more likely to die in the moments before or immediately after birth. In so far as they do survive, they will have poorer health and, for the most part, access to poorer health services, albeit massively improved over the past 10 years. That child will have poorer outcomes in education and be more likely to be involved in those aspects of life that we know are harmful to health. Access to cigarettes and serious alcoholism are more common among the poor, and abuse of hard drugs is more likely, too, in those areas that I have mentioned. Involvement in crime is more likely for a young male born in my constituency, while young females in my constituency are more likely to be pregnant earlier than elsewhere.
As my hon. Friend said, we know that all those factors will lead to the replication of poverty into the next generation by either the males who, in the worst cases, live potentially disordered lifestyles, or the young women who get caught by teenage pregnancy. However, it is important to put it on the record that many people who live in poverty in constituencies such as mine do not live disordered live. They work hard and try to bring up their families in the most exemplary way, so it is not possible to make a connection between social value and any judgment about poverty.
That is important, because I want to touch on something that my hon. Friend mentioned, namely the concept of giving a differential advantage to married couples. I do not often use my personal experience in these terms—partly because my personal experience of childhood was some year ago—but my parents never married when I was growing up. My father died when I was quite young and for a significant part of my growing-up years I was brought up by a single, unmarried mother. I hope that the hon. Member for Basingstoke (Mrs. Miller) will understand when I say that I would deeply resent the idea that the contribution that people such as my mother made to my family—bringing up five children and taking them all through higher education—might be seen as less worth while than the contribution of those who, for different reasons, were able to marry. I hope that she takes that message back to those in her party who are talking about giving a financial advantage to married couples in a way that would discriminate against worthwhile parents in all parts of our land who do their best to bring up their children in the best circumstances, despite those handicaps. It is of enormous importance that we do not fall into the lazy moral trap of trying to pretend that there are easy ways forward. I note her indication of assent, so I look forward to hearing what she has to say later.
Poverty has all the impacts that hon. Members have talked about: poorer education and poorer access to almost all the worthwhile services and advantages in our society. My hon. Friend spoke about the world of work. It is easy to recognise the work that the Government have done, and they have done a lot. It would be difficult to prove the case that any other Government have seen poverty as such an important part of their financial policy, and we can see the real difference that that has made. Nevertheless, it is still a fact that there are those among my constituents and other fellow citizens who still suffer the effects of poverty.
We must break the cycle of poverty. In part, that is most certainly about money. To those who say, “It’s not about money,” I would say that we must look at how unfair a society we are when, as I heard this morning, the chairman of British Petroleum has taken a pay cut from eight point something million pounds last year to seven point something million pounds this year. That would pay for whole communities in a constituency such as mine to raise their standards. Money would make a material difference to those people’s lives, just as I suspect it does to the chairman of BP and his lifestyle. That is not the politics of resentment; it is the politics of total incredulity that we can have the disgustingly rich alongside the disgustingly poor.
I want to the press the hon. Gentleman on the issue of top-slicing and lifting those who are just below the poverty line to just above it, which the hon. Member for Bristol, East (Kerry McCarthy) mentioned. Has he had any experience in his constituency of cases where those who are in deepest poverty have been left on the sidelines, as the hon. Lady mentioned?
That is a good point, which we must address in non-emotive terms. It is a real issue, because it concerns exactly the kind of person or family about whom my hon. Friend spoke—often single-parent mums bringing up families or women who have massive difficulties, which can be of many kinds, such as educational disadvantage or a disability of one form or another. Such women can live disordered lives because of drug addiction, and women with drug addictions are the ones who will be engaged in prostitution—an almost perverse lifestyle that makes it harder for the mother or the children to get their heads above water. It is more difficult—it always will be—for us all to reach out to those forgotten people in our communities. However, they do exist and they exist in big numbers, not only in cities such as mine but, I suspect, in areas such as those of the hon. Member for Croydon, Central (Mr. Pelling)—I applaud him for his comments—and my hon. Friend. We know that we have to reach out more than we do.
What are the real pathways out of poverty? Of course income is important. I shall say again and again to my Government what I say to Opposition parties: please never forget that if we do not see income as central to poverty, we miss the most important issue. However, we also need joined-up government, because income of itself will not solve all the problems of poverty. We know that with poverty comes all the things that I have talked about, such as a lack of attainment elsewhere. We need to look at those who are most likely to be the next generation of the poor.
We need to think about very young pregnant women in our society. Of course we support them, but we do not support them enough to give them the opportunity to break away from what pregnancy in early years has always done in the past, which is to give an automatic passport to the world of poverty. We must break that, by ensuring that our education system is flexible for the very young women—actually, young girls—who are pregnant in cities such as mine, but also throughout the country.
We must ensure that support mechanisms are in place in child care services. We have done an awful lot on child care in our society, but we must recognise that child care of itself is central to poverty. We must recognise that health education is fundamental. Again, we fail to recognise reality if we do not accept the fact that it is much more likely that the child growing up in Surrey will have supportive parents in a supportive family, will have health education, access to a good diet and all the things that promote healthy living. In areas such as mine, however, far too often we see parents who smoke and communities that regard hard drinking as a social norm. I do not stigmatise my community, but I come from it and know very well the temptations and the reality of life there. We are stupid if we ignore those things.
In the end, however, the world of work is tremendously important. We know that in the not-too-distant future there will be very little in the way of unskilled work for people in our society. The poorly educated mother, whom we want to get back into the world of work and who desperately wants to do so as a better way of supporting her family and aspiring to a lifestyle of dignity, will be massively handicapped unless we recognise that the skills training available is not adequate for those of our fellow citizens who have been the most disadvantaged in the educational race up to the point of motherhood. They need a lot more support in the process.
We must call for joined-up government, and the Government have gone a long way towards achieving that. I do not want this to end up as a bizarre debate about the failure of the Government, who have done an awful lot. The reality, however, is that we must consider what more we need to do to ensure that we lift those who are the most disadvantaged by the poverty trap and continue the significant progress that has been made.
The hopeful point is that we can see that if we take co-ordinated steps, we will begin to make a difference. I recently visited a scheme in London called The Place2Be, which is about active intervention in schools. I want it to come into my inner-city constituency as it supports young children who bring massive emotional, sometimes psychological, difficulties into school, which makes teaching them a problem unless there is a package of support. The scheme makes a difference for young people where it exists and, five or six years in, we can begin to see the results. Young children who would not have made educational progress now make precisely that progress. Such things change people’s aspirations.
In my constituency schemes such as Sure Start have made a difference. It makes an enormous difference when families know that they have a supportive environment and when families—mothers in particular—know that they have a properly supportive child care structure that allows them not to spend their time racing around looking for an aunt, brother, cousin or friend to look after their children. Such things make a real difference by allowing people to live an ordered life in which aspiration is the norm and poverty does not always pull them back into a difficult, problematic way of life. We know that we can make a difference.
I again congratulate my hon. Friend on raising the debate and I applaud what she said about our need to translate the real progress made on income support and specific schemes into a joined-up approach to poverty. That will allow us both to address the problems experienced by those to whose lives we have already made a significant difference and to float off the rocks of poverty those for whom we have not properly begun the process, teaching them that aspiration and the other things that the rest of society takes for granted can be within their reach as families and, in particular, in the reach of their children. We can then break for ever the cycle of poverty that has been handed down from one generation to another, just as wealth is unfortunately handed down from one generation to another in our two-tier society. It is vicious to be at the wrong end of that, and we must break the cycle once and for all.
I warmly congratulate the hon. Member for Bristol, East (Kerry McCarthy) on raising this subject. It is an incredibly important issue, and she has raised it at a timely moment, for reasons that she set out.
I believe that I am right in saying that the last time we had a debate on the issue was about nine months ago, and that it was also a Westminster Hall debate. It was secured by one of the hon. Lady’s Back-Bench colleagues. It was rather a pity that the only Members to speak in that one-and-a-half-hour debate were the three Front Benchers and the Back-Bench Labour Member who raised the issue. It is striking that, although the matter ought to be one of the biggest economic and social policy priorities for us as a country and for the Government, we seem to be unsuccessful in engaging many of our colleagues in the House. That indicates some of the challenges in engaging the public and making them understand the extent of child poverty in a country that is otherwise regarded as extremely affluent.
I repeat the request, which I made in the previous debate but which has obviously fallen on deaf ears, that we should consider the issue in more detail in the Government’s time. Rather ironically, I cannot remember any debate on child poverty issues in Government time since I became the Liberal Democrat spokesman after the 2005 general election. Given that it is a huge priority for the Government, we would all benefit from a debate and from an exchange of the ideas and opinions of the parties.
Perhaps one of the reasons why hon. Members are frightened away from these debates is that the issues are so complex and span such a wide variety of subject areas. It is tempting to think that none of those subject areas falls within any one portfolio. Today, we have heard good Back-Bench speeches from the hon. Members for Croydon, Central (Mr. Pelling) and for Manchester, Central (Tony Lloyd), touching upon a range of policy issues from tax credits to education and health. All those matters need to be taken into account if we are to deal with the problems of child poverty.
The debate is important, not only because of the extent of child poverty, which, as the hon. Member for Bristol, East indicated, rose from something like 14 per cent. in 1979 to about one third of children by 1997—one of the worst figures in the European Union and probably in the developed world. On reflection, that demonstrates that there is nothing inherent about us as a country that causes us to have child poverty at the levels of the past decade or so, because we had far lower levels in the 1970s.
It is sad that the increase in child poverty seems to have corresponded with a decline in social mobility, so that it is getting tougher and tougher for many children from some of our most deprived neighbourhoods—undoubtedly including those that the hon. Member for Manchester, Central represents—to succeed in life and rise to the level that their ability should allow.
We would all have assumed that, in the past 30 or 40 years, a more affluent society with free public services would also be one in which social mobility increased. However, it seems that social mobility is reducing—something that is recognised even by the Prime Minister and senior members of the Government. The recent report on housing by John Hills showed that many poor communities are getting a much greater concentration of low-income individuals. In the 1960s and 1970s, many poor communities used to have much more of a mixture of people on middle incomes and in employment. One aspect of the problems in our housing market is that people with high needs are much more concentrated in certain areas.
The issue is massively important, and the hon. Member for Bristol, East was right that my right hon. and learned Friend the Member for North-East Fife (Sir Menzies Campbell) made it clear in December that our party would sign up to the child poverty target. We thought that it was an important enough issue and a big enough commitment to consider it carefully before doing so, but we believe that it is the right target to set and that we should get down to the lowest levels in the EU. We intend not only to set an aspiration and a target but to say later this year how, in detail, we believe we should move towards it. The hon. Lady will be delighted to know that we shall release a policy paper in the summer—she can read it in her summer vacation—and we will debate it at our conference in the autumn.
I have said that the issue is important, and the debate is also timely for three reasons, one of which is the spending review, which the hon. Lady mentioned, towards which we are heading. I am bit unclear on whether it is likely to drift backwards. I am not sure why, but perhaps because of organisational issues within the governing party, there was some suggestion that the review might move off into the autumn. It would be interesting to hear from the Minister whether that will be the case and to have clarification on the question, asked by the hon. Member for Bristol, East, of which Department will take lead responsibility for delivering the public service target on child poverty.
At the moment, the responsibility sits slightly uncomfortably between the Treasury and the Department for Work and Pensions, partly because of the rather bizarre transfer of child benefit and tax credits from the DWP, where many of us believe they belong, to the Treasury. It would be useful to have clarification on those points at this very important time; as we know, the next spending review will be extremely tough. Public expenditure will grow much less than since 1999, so it is a question of not only whether the Government will manage to provide money to reduce child poverty, but where the money will be targeted and on which Departments.
The second reason why the debate is topical is that it comes on the back of the important UNICEF report that came out a month or so ago and is a terrible indictment of the circumstances in which we now find ourselves. Of 21 developed countries, the United Kingdom was ranked 21st for child well-being, behind countries such as Hungary, Portugal, the Czech Republic and Poland. We should all be ashamed of that.
In fairness to the Government, I should say that many of the figures are early ones, from about 2000-01; there will have been some improvement since then. It is also fair to point out that the figures emphasise relative poverty. Young children in Britain are better off than those in some of the countries that I have mentioned, which have lower relative poverty, but higher absolute poverty.
What is striking about the UNICEF report—I recognise this from my constituency—is the variety of the sources of deprivation. Obviously, the report considers not only relative poverty, but issues such as health, which was mentioned by the hon. Member for Manchester, Central. It considers alcohol issues and the proportion of young children who are failing in education. The hon. Gentleman talked about the aspirations of young children and low skills, and how significant they are in respect of the labour market. It was disturbing to see in the report that, in the United Kingdom, the percentage of pupils aged 15 who expect to find work that requires only low skills was, at 35 per cent., one of the highest of all the developed countries. That is worrying in the context of the skills problem for about a quarter of our young people and given the lack of aspiration that the percentage reflects.
Although the Government might take some comfort from the fact that the figures are a bit out of date, none of us should take too much—first, because of the magnitude of the problem that we still have, with a quarter of children in relative poverty, and secondly, because the issues reflect much more than economic problems or the amounts of money in particular households. They reflect many social problems that have emerged in the past 20 or 30 years with which any Government would have to struggle.
I recognise the UNICEF report’s conclusions from what young people who have come to my constituency from abroad to help in Yeovil’s schools have told me. They are from a pretty diverse range of countries—Brazil, Canada, the United States and European Union countries. When I met them a few months ago, they told me that they were shocked not so much by the levels of economic deprivation—actually, compared with those in many of the countries from which they came, British youngsters looked fairly affluent, with their television sets and all sorts of things that are not possessed in other countries—as by the level of deprivation in respect of family relationships, the use of alcohol and illegal drugs, violence and the unfriendly nature of many communities and youngsters, all of which are picked up well in the UNICEF report. Those young people felt that such deprivation was a particularly striking indictment of our country. We cannot easily deal with such problems simply by spending extra money on benefits or tax credits. Those things may help, but they will not solve the problems overnight.
Undoubtedly, one of the underlying problems of child poverty and some of those social issues has to do with the breakdown of family life in the United Kingdom in the past 20 or 30 years. UNICEF had interesting things to say about that. First, its report acknowledges that plenty of children in single-parent families and step-families are growing up secure and happy. The hon. Member for Manchester, Central made that point, but the report said:
“But at a statistical level there is evidence to associate growing up in single-parent families and stepfamilies with greater risk to well-being—including a greater risk of dropping out of school, of leaving home early, of poorer health, of low skills, and of low pay.”
It went on to say that that relationship persists even if one adjusts for poverty, which tends to push those things up anyway. That makes sense to me and matches what I see in my constituency. However, I am not sure that I draw the conclusion that others do: that we should go back to the days of tax allowances and other such incentives for marriage.
Some years ago, the right hon. and learned Member for Rushcliffe (Mr. Clarke) put his finger on it when he said that he knew of many reasons why people married, but the existence of the married couple’s allowance had never been one of them. Given that the married couple’s allowance was in operation for a huge part of the time during which there was enormous family breakdown, it was clearly not very effective in that previous form.
Other than making speeches berating people and saying that they should marry, there are probably only two things that we can do on family issues. We should be very careful about erecting barriers against marriage and partnership. There is concern that incentives in the tax credit system give powerful reasons for people either to misrepresent their circumstances or, when they form relationships and live in two separate properties, to move in together. If the purpose of tax credits is in part to give powerful economic incentives to people on low incomes, we should be careful not to assume that they will not respond to such incentives in ways that we do not intend.
The other thing that comes out powerfully from the UNICEF report is why so many young people end up at an early age with children—often, therefore, becoming lone parents. Page 31 of the UNICEF report states:
“To a young person with little sense of current well-being—unhappy and perhaps mistreated at home, miserable and under-achieving at school, and with only an unskilled and low-paid job to look forward to—having a baby to love and to be loved by, with a small income from benefits and a home of her own, may seem a more attractive option than the alternatives. A teenager doing well at school and looking forward to an interesting and well-paid career, and who is surrounded by family and friends who have similarly high expectations, is likely to feel that giving birth would de-rail both present well-being and future hopes.”
The conclusion of the UNICEF report is not so much that tax allowances will solve such problems; it may be that dealing with poverty, and low skills and aspirations in schools will help encourage some of those people who are not aspiring to go on to earn lots of money on the labour market, so that they can get out of poverty. Such people are making decisions to have children at a very early age and often to end up in single-parent households. Perhaps all the Government can do is focus their policy efforts in those areas to try to stop some of those people from taking such decisions.
I suppose that I agree with what the hon. Gentleman is trying to say, but with a caveat. I hope that I can take him along these lines. There will always be single-parent families in our society, for many reasons— divorce or separation, obviously, but also death or early pregnancy from a relationship that was never properly formed. All such reasons may apply. We have to live with the reality of single-parent families in our society. The one thing that we must not do is stigmatise the nature of such families as something less worth while. If we do, we fail to begin to establish a framework in which we can nurture the children in all our families. For all our parents and families, it is the nurturing that really matters.
I strongly agree. We must certainly not stigmatise lone-parent families. However, we have to be honest in considering the UNICEF report. What is striking is that one would expect family structures to be similar across Europe—countries with similar levels of development—but they are not. Britain is considerably divergent on some of the issues, in respect of not only family structures but the use of alcohol, for example. If so, we should think about why and whether we can do anything about it.
One of the benefits of not having too many Back Benchers speaking in the debate is that we are allowed to speak for a little longer than normal. Notwithstanding that, I am probably coming towards the end of your period of tolerance, Mr. Amess.
I want to touch on one final point about why this debate is so topical: it comes at a time when people are considering not only whether the Government will put the money into their child poverty target, but how. The Rowntree report that came out last year was interesting in suggesting that there was a danger that putting more and more money only into tax credits would not deal with all the causes of poverty, would run the risk of creating bizarre anomalies and incentives in the benefits system and damage some of the incentives to work.
Some of the matters that the Government should consider in order to deal with child poverty need to go far beyond the tax credit approach, which is perhaps unfairly characterised as the Government’s main club in dealing with child poverty. I hope that they will consider the structure of child benefit and the fact that because of its odd structure the rates for second and third children are much lower than for first children; the tax issues that affect lone-parent families, particularly those to do with council tax; and the low-income costs mentioned by the hon. Member for Bristol, East, such as the higher costs that often fall to low-income families through such things as prepayment meters.
I hope that the Government will consider what they can do in a far more ambitious way, given the need not only to give people money to get them out of poverty, but to solve the generational problems. They must consider what they can do to be even more ambitious on education than they have been so far and should perhaps contemplate doing what some other countries in the EU do and target educational funding even more significantly on the most deprived pupils to level the playing field between affluent areas and those with high levels of deprivation.
I hope, too, that the Government will take forward speedily the proposals in David Freud’s review on employment yesterday, which are incredibly important. I fear, however, that they will take a long time to implement and will also be expensive in some respects, such as in dealing with health and educational problems.
I have probably gone a minute beyond my time, so I conclude by thanking the hon. Member for Bristol, East for securing the debate. In future, I hope that we will not have to rely on a Back-Bench Member to debate the issue and that the Minister will take the example that the hon. Lady has set and initiate a wider debate of his own.
I congratulate the hon. Member for Bristol, East (Kerry McCarthy) on securing the debate. As has been said, it is timely, not least because there has been something of a Government hiatus on the issue of child poverty since the publication of the Harker report in November last year, although at a recent Department for Work and Pensions Question Time the Minister said that he is refreshing our child poverty strategy. Perhaps he will articulate a little more of what that means. If not today, perhaps he will say when we will hear more about what that refreshment entails.
It is not only Opposition Members who are concerned about the Government’s stance on child poverty. The Treasury Committee, when it reported late last year, expressed its concern about how the Government will work towards their target to halve child poverty by 2010. That concern is widespread and I hope that today’s debate will start to flesh out the Government’s plans for the future. As all speakers have acknowledged, aspects of child poverty have improved significantly. However, I fear that the reason for holding today’s debate is that the hon. Member for Bristol, East and other hon. Members who have spoken feel that there is more to do. That has been articulated clearly.
Recently, the Government have come in for significant criticism from many quarters about how they will take their child poverty strategy forward. We have talked already about those children living in the severest poverty. Late last year, Save the Children raised the point that the percentage of children who live in severe poverty in Britain has improved little or not at all. Perhaps the Minister will say how that is to be reviewed in his refreshed child poverty strategy.
We have already had quite a lengthy discussion about the tax credits system in the UK and the fact that there are significant concerns about how it works in respect of child poverty. As constituency Members of Parliament, we are all aware of the problems. Overpayments amount to £1.8 billion according to the Government’s data, given in May last year. The other side of that figure is the fact that nearly 1 million of the poorest families were underpaid over that same period and did not get the help that the Government promised them because of the inadequacies in the workings of that tax system.
Another criticism concerns the extension of means-testing, and the Institute for Fiscal Studies and the Joseph Rowntree Foundation have highlighted the fact that means-testing has weakened incentives for many people to stay in work and increase their earnings, despite that being proven to enhance a child’s prospects.
I shall touch briefly on some of the speeches that have been made. The debate has been excellent, and I welcome the fact that the hon. Member for Bristol, East secured it. It is clear from what she said that she is committed to the subject and has done a great deal of work on it. We Conservatives perhaps need to clarify a little our position on the child poverty target. We are committed to the Government’s target to end child poverty by 2020. That is an aspiration, because we do not know where we will be in respect of that target by the time that we get into government. It is therefore responsible to say that that is our aspiration, as opposed to submitting a pledge.
The hon. Lady has reaffirmed that she thinks it is a good idea to abolish child poverty. When will the Conservative party make suggestions on how it would achieve that? I assume that its other aspiration is to be in government in a couple of years, so time is running out for putting policies on the table.
As the hon. Lady probably knows already, our social policy group is considering the matter and it is right for the group to report before we put our policies before the House. We expect the group to report this summer; it will make firm recommendations on the policies that we should adopt to try to resolve some outstanding problems that have not been resolved in 10 years of Labour government.
The hon. Lady also raised the issue of lone parents. She needed a little more clarity on the Conservative party’s position and I am happy to provide that. In all our discussion of child poverty in all parts of the party, it has been recognised that the role of a lone parent is one of the hardest. As a parent, I know how difficult it is for two parents to bring up three children. To bring up children with one parent in the household must be one of the most difficult jobs.
We need to ensure that those people get the support they deserve, but that does not take away from the fact that there is a great deal of evidence to suggest that the outcomes tend to be better for children in two-parent households in terms of their futures and those of the family unit as a whole. If one supports families, that does not mean taking away one’s support from lone parents. We need to support children in whichever position they find themselves. The research suggests that the work that the Government could do not to disincentivise families from staying together would be welcome.
The hon. Lady rather infelicitously mentioned supporting families rather than lone parents. Lone-parent families are still families. The real question is similar to the point made by the hon. Member for Yeovil (Mr. Laws) when he referred to the former Chancellor, the right hon. and learned Member for Rushcliffe (Mr. Clarke), and concerns whether we should give a financial incentive to keep families together. Most of us would agree that a nurturing family—grandmothers, grandfathers, uncles, aunts or two parents—is better than a single-parent family in isolation, but the point is about how we support those family units. Does the fiscal incentive work?
A fiscal disincentive should not be in place and a number of groups are concerned that there is a disincentive to families staying together.
Will the hon. Lady clarify whether the Conservative party is now committed to a transferable tax allowance to give an incentive to marry? Her last comment confused me.
I shall leave such comments to my Treasury team. It is not for me, as a Department for Work and Pensions spokesperson, to comment on that.
I shall deal quickly with other speeches. The hon. Member for Manchester, Central (Tony Lloyd), who made a valuable contribution, spoke eloquently about the persisting problems of inequality between children born in different parts of the country. My hon. Friend the Member for Croydon, Central (Mr. Pelling) spoke about worklessness, which clearly is a great problem in his constituency, and I thank him for that contribution. The hon. Member for Yeovil (Mr. Laws) spoke about the decline in social mobility. He will be aware of the Sutton Trust report, which said that someone born in 1958 is more likely to break free of their social roots than someone born in 1970. All Members of Parliament should ponder on that fact and see how they can make things better for children.
I want to pose questions to the Minister on three areas, and perhaps he will respond in his winding-up speech. Recently, searching questions were asked by my hon. Friend the Member for Runnymede and Weybridge (Mr. Hammond) about child poverty in London. It appears that Government statistics on child poverty in our capital city may be somewhat misleading. When one considers the median income of Londoners, the number of children who are classified as living in poverty is more likely to be over 500,000 than 384,000. What policies will the Minister put in place to ensure that those children get the support that they require and does he feel uncomfortable about the fact that the methodology for measuring poverty may understate the problem in our capital city?
Will the hon. Lady give way?
I need to make progress. Time is running out, and I want the Minister to have ample time to respond.
The second issue on which I would like the Minister’s thoughts is the future of the Child Support Agency. The Government believe that it is an important tool for alleviating child poverty, but does the slowness of CSA reform trouble him? Each month, an additional £13 million of debt is added as a result of non-collection of child support payments. Applications now take 36 weeks to clear, which is longer than a year ago. Families are waiting longer to receive money. Will he join me in calling on the Secretary of State to fast-track the changes in the assessment process that have been proposed for the CSA, so that we can get a better, fairer and faster method of collection, rather than waiting for the Secretary of State’s proposals, which will not come into effect until 2013?
The third issue, couple families, has been raised by other hon. Members. Half of all children living in low-income households are in such families, but research shows that two-parent families are penalised by the tax and benefit system. A Joseph Rowntree study carried out last year states that a lone parent with one child will be clear of poverty when they achieve16 hours of work a week, whereas a couple family who have two children and earn the minimum wage need to work 74 hours a week to clear the poverty line.
Does the Minister share our concern that, if the situation persists, there may be a resulting disincentive for families to stay together and that that discrepancy in how the system works is not good if we are trying to alleviate further child poverty? As I said before, we support the Government’s commitment to tackling poverty, but they need to re-evaluate their approach. If they do not, they will risk leaving many children unsupported and continuing in poverty.
I have some further questions for the Minister. When does he plan to publish his refreshed policies on child poverty? Does he plan to sort out what Save the Children called the absurd mess of 11 different Departments working on child poverty without a joined-up strategy? As part of his review, will he consider fast-tracking CSA reform and reviewing how he assesses child poverty? Will he commit the Government to a simpler, fairer welfare system that is fit for the 21st century and does not penalise couple families?
I am delighted to see you in the Chair, Mr. Amess, as we conclude the debate this afternoon. I was equally delighted to see Mrs. Humble in the Chair when we opened it this morning.
I congratulate my hon. Friend the Member for Bristol, East (Kerry McCarthy) not only on securing the debate but on how her clear passion and detailed understanding of the complicated nature of child poverty contributed to the construction of her argument. As I said to her at the Save the Children reception last week, as parliamentarians we are all busy in different ways, and Save the Children is fortunate to have her as a champion in Parliament. Without her, its cause would be promoted much less effectively in the corridors of power, in this Chamber and in the main Chamber. Save the Children should be grateful to my hon. Friend for her activities. I wanted to put that on the record.
My hon. Friend spoke about her constituency and the work done by Single Parent Action Network. She also spoke about the wider nature of poverty and emotional well-being, which my hon. Friend the Member for Manchester, Central (Tony Lloyd) also discussed. It is important to acknowledge that financial position is the primary measure of poverty—of course it is, and it should be—but we should not lose sight of the wider impact of child poverty. It affects people while they are growing up but they also carry the scars—I believe that that is a fair way of putting it—throughout their life.
On the basis that my hon. Friend the Member for Manchester, Central spoke passionately about his experience, I shall mention this for a second time—I spoke about it at the Save the Children event, but I will not make a habit of discussing it. I represent the most prosperous constituency in the whole of Scotland, but I grew up one street away from it, and one street away could be a world away. I grew up in one of the poorest parts of Glasgow, separated by one street and one open piece of land from my constituency. None of us seeks to mislead our constituents—far from it—but when my would-be constituents asked me during my first two election campaigns where I was from, my standard response was that I was from the edge of the constituency. It was about personal confidence—perhaps the most prosperous people in Scotland would not vote for a candidate who came from the other side of the street. By the time of my third election, I was confident enough to say, “To heck with it.” I felt that my constituents had become used to me over the years, and I was confident enough to acknowledge my upbringing.
That does not add to the debate, but it illustrates that all of us who grew up in circumstances such as those that my hon. Friend spoke about—others have their own experiences—take our past into our adult life, and it helps to shape our perspective on politics and, importantly, on policy.
I shall deal with some of the specific points raised by my hon. Friend the Member for Bristol, East. She asked about child poverty-proofing policies. I know that she and other hon. Friends welcome the commitment by the Secretary of State for Work and Pensions to child poverty-proof every one of the Department’s proposals and policies. My hon. Friend rightly acknowledged that responsibility for the public service agreement on child poverty is shared by the Treasury and the Department. I cannot speculate on the reconfiguration of PSA targets, but it is essential to remember that the issue is not one just for the Department or even the Treasury. She alluded to that when she spoke about her experience at the Labour party conference with the young folk from rural Wales. She rightly said that the issue was also for the Department for Transport and, in respect of transport in Wales, the Welsh Assembly. By mentioning that, she highlighted again the continuing need for the Government to look for additional ways to join up their strategy and ensure that it is coherent.
My hon. Friend also spoke about the findings that poorer people have more expensive sources of financial support, and she rightly identified credit unions as an alternative. They can be found across the country in all sorts of communities, but they do not get the acknowledgment to which they are entitled. They are a fantastic source of affordable financial resources to many of our poorer constituents. It is puzzling that some high street banks are able to make pretty substantial charges for auto-teller financial withdrawals in the poorest communities. Credit unions are the polar opposite; they exist to serve and support the communities in which they operate.
I support my hon. Friend in what she said: it is unacceptable that some financial institutions, including the banks, should make excess profits on the back of charges on our poorest constituents. We all celebrate the fact that the banks make profits, but it is difficult to justify doing so on the back of the cashpoint charges imposed on our poorest communities.
My hon. Friend the Member for Manchester, Central brought a personal insight to our debate. It was a thoughtful contribution. I recently visited Manchester—not my hon. Friend’s constituency, but the Sure Start centre in Harpurhey. I was told that only a few years ago the centre was a car park beside the shopping centre. It has been transformed into a hub for the local community and provides exactly the sort of early intervention of which my hon. Friend spoke.
My hon. Friend also mentioned an unjustifiable difference in life expectancy of eight years. We all know that children in this country have never been born equal—it is an unacceptable truism. At no point in our history have children been born equal, and one way to measure it is by life expectancy. I remind hon. Members that eight years is entirely unjustifiable. However, the difference in life expectancy between the east end of Glasgow—my hon. Friend the Member for Glasgow, East (Mr. Marshall) attended the debate—and Kensington is not eight years but 27. That is a real difference.
What does the Minister think is his most effective policy in trying to reduce the continuing gap of eight years in life expectancy between children born in different parts of the country?
If time allows, I shall come to that. However, the House will acknowledge that although the hon. Lady made an interesting speech, it was policy-lite.
Some of the important things that we can do are contained in the Welfare Reform Bill. I know that Glasgow and Manchester share the experience of having too high a concentration of people on incapacity benefit. One in six of those on that benefit have dependent children. The welfare reform proposals currently being debated by Parliament could have a real impact on child poverty.
My hon. Friend the Member for Manchester, Central spoke about the married couple’s allowance, and I echo his strong critique of what I think is a Conservative policy, although I am no clearer on that because the hon. Member for Basingstoke was no clearer on it. I repeat that no Government have ever designed a tax credit that makes people fall in love—and no Government have ever designed a tax credit that ensures that people stay in love. A public policy and a financial incentive designed around the false sense that it could bring about that state of affairs would be entirely flawed.
The hon. Member for Croydon, Central (Mr. Pelling) made a series of entirely reasonable points, echoed by the hon. Lady, about the specific challenges of child poverty in London—partly based, if he does not mind me putting it this way, on the poverty of race and of place. As we know, there is a concentration of children living in poverty in some of our ethnic minority communities, with a particular concentration in London, so the challenge there is acute. Another challenge of place, in ensuring that people are better off in work than on benefits is the additional cost of housing in London. I am happy to listen to him if he wishes to make further specific points in the next few weeks and months.
The hon. Member for Yeovil (Mr. Laws) made a fair and genuinely interesting contribution on the evolution of Liberal Democrat policy. Of course, he would expect me to say that it is a commitment of sorts that he has decided again to shake the Liberal Democrat money tree to fund the commitment on child poverty.
To suggest, as the hon. Gentleman did, that responsibility for social mobility lies with the current Administration would be quite wrong. To allege that, as others have done, ignores the causes, the time scale and the drivers. The big opportunity to have an impact on children’s chances of social mobility comes in the early years, which is why child poverty is such a problem, why early years education is so important, and why family support and aspiration in the soft skills that the family can provide are crucial.
I did not suggest that social mobility was getting worse as a consequence of Government policy, but I did say that even the Prime Minister has acknowledged that no progress has been made in turning the problem around.
That is entirely fair, but the question for us all, despite the real and remarkable improvements of recent years, is whether we are satisfied that we have done everything that we can to drive future social mobility. Labour Members would never suggest such a thing. The progress that has been made is remarkable and historic, but it is not enough to guarantee that our political philosophy—that everyone should be born with an equal chance in life—has yet been achieved.
There has been real progress, as my hon. Friends said. Under the previous Conservative Government, 210 children were falling into poverty each and every working day. Under this Government, 240 children have been lifted out of poverty each and every day. As my hon. Friend the Member for Bristol, East said, under the previous Government the United Kingdom had one of the highest poverty rates in the industrialised world. The child poverty rate is now at a 15-year low. The previous decade saw the UK making the biggest improvement in child poverty of any European Union nation.
It did not happen by chance. It happened by choice—the choice of a Labour Government to make it an overarching priority, to invest in early intervention and to ensure that everyone has an opportunity to develop to their full potential. I welcome what the hon. Member for Yeovil said, and I look forward to discussing the detail of his policies later in the summer.
It is characteristic of me to say that we heard the traditional warm words from the Conservative party, but today they were not so much warm as tepid. There is no new commitment from the Conservative party on any specific anti-poverty measures. They will not even commit themselves to adhering to our investments to lift children out of poverty. They opposed the minimum wage, tax credits, flexible working and the money for Sure Start and for early intervention and education. Their only possible policy is a non-committal on an ineffective married couple’s allowance. Those excellent campaigning organisations such as the End Child Poverty coalition, the Child Poverty Action Group and Save the Children acknowledge that there is little commitment from the Conservative party on the means to achieve an end to which the Labour Government have been committed for the past decade.
It is generally acknowledged that Lisa Harker’s report was an excellent piece of research. She made 31 recommendations. In her report, she said that
“there is wide recognition that relying solely on benefit/tax credit increases to reduce child poverty would be undesirable since, for many families, an income through paid employment offers a more effective and sustainable route out of poverty.”
We will respond to that report in the coming weeks, but it acknowledges, as others have done, that there has been real improvement in recent years.
My hon. Friend the Member for Manchester, Central spoke about lone parents, and the children of lone parents not in work are five times more likely to live in poverty than those of lone parents in work. The core of a refreshed strategy on child poverty has to be an assessment of work—supporting people to get into work that pays and work that becomes a career—and supporting the transition into work by upskilling people while they are in work.
I thank my hon. Friend the Member for Bristol, East not only for securing the debate but for setting its parameters. I look forward to specific proposals from hon. Member for Yeovil in the summer—
Order. We now come to the next debate.
State Benefits and Taxation Rules
I am grateful for the opportunity to raise an issue of particular concern to one of my constituents that may, in broader terms, affect many other people. I am mildly surprised, although delighted, to see that the Paymaster General will be responding on behalf of the Government. I had expected a Minister from the Department for Work and Pensions, because I believe that this is an issue dealt with by the DWP rather than the Revenue. The right hon. Lady may be relieved to know that I do not intend to dwell on tax credits––that will happen in about a fortnight’s time. I make no apology for saying that this issue is emotive and personal. It is not personal to me, but there is animosity towards the Government. I hope to convey the frustration that has been felt by my constituent.
Let me start with some background. Elizabeth—not the name by which this young lady is ordinarily known, although it is her middle name—was born in May 1985 and is nearly 22. She was born with muscular atrophy and was in hospital––not all the time, but regularly––from 1985 to 1996. She was in hospital in 1991 and in 2001 was diagnosed with thyroid cancer and had her thyroid removed. From 2001 to 2004, she was again in hospital. She has been seen by eight consultants and, sadly, is currently in King’s College hospital where the prognosis is not good. She is a very sick young lady.
Elizabeth’s mother, who is well known to me as a constituent, is an extremely brave woman who has sought to care for her daughter for the whole of her relatively short life. Elizabeth’s mother was the manager of a retirement home, but gave up her job to look after her daughter and, because her flat went with her job, also gave up her flat. She gave up her home and her livelihood to look after her daughter, who because of medical incompetence was incorrectly diagnosed. In fact, that was not entirely surprising because she had a condition that was one in a million. We now know that it is two in a million because one other person with the same condition has been found. I do not pretend that the medics should not be forgiven for getting the diagnosis wrong, but they did get it wrong and, as a result, Elizabeth was denied disability living allowance and her mother was denied carer’s allowance.
Elizabeth’s mother spent her time looking after her child and went to the jobcentre for help where she was told that she must go back to work because she did not qualify for benefits. To qualify for jobseeker’s allowance, someone must be working or be available for work, but Elizabeth’s mother could not be available for work because she was looking after a very sick girl. She set up a business because that was the only way that she could survive, which shows that she is a woman with real guts. She established a design business, which I will not identify because I do not wish to identify the lady concerned.
The Government abolished the annual review for tax purposes in April 2004. The previous review was in December 2003 when, for benefit purposes, Elizabeth’s mother declared her design business as having a nil income because it was an embryonic business that was making a loss, not a profit. The conflict between Her Majesty’s Revenue and Customs and the benefits system began at that point. There was no review in 2004 because the Government had abolished it. The next review that she was subjected to was in August 2005—just over a year later—by which time the design business was failing. In order to hold the body and soul of herself and her daughter together, she went into the care business and established a care services enterprise that made a modest profit. The design business went out of business in December 2004.
Elizabeth’s mother received a letter from Thanet district council about her housing benefit in 2005. It stated that her housing benefit had been cancelled with retrospective effect from 2003 because she had made a profit on one business—the care business. The “massive” profit accepted by the Inland Revenue amounted to just under £8,000. The regulations do not allow for the losses of the design business to be offset against the profits of the care business in the same way as they do for tax purposes. Thanet district council informed me in a letter dated 28 November 2005 where a
“claimant is engaged in self-employment and also engaged in one or more other employments as either an employed earner or self-employed earner, any loss incurred in one cannot be offset against earnings in any other of his employments, Regulations 31(10) and 22(10) respectively. This, again I understand differs in Tax Credits where a business loss can be offset against other income, any income of a spouse or partner, and even carried forward to set against the profits of the same business in the next tax year.”
On the one hand, a loss can be offset for tax credit purposes, but it cannot be offset for benefit purposes.
Thanet district council, which it now transpires acted entirely properly and within the regulations, informed me that
“The additional income from her second business was added to her claim from 4 October 2004.”
That has left my constituent in a black hole.
I wrote to the Minister for Local Government to inform him that my constituent was doing her utmost to remain self-sufficient and at the same time provide support for a severely handicapped child while the system was doing its utmost to confound her best endeavours.
A letter from Thanet district council dated December 2005 states that my constituent’s
“rent account is falling further into arrears. I would strongly suggest that she increases her payments.”
That was written about a woman with virtually no income who is caring for a sick child. Those responsible for the benefits system have told her that she must find some money from somewhere.
The Under-Secretary of State for Work and Pensions, the hon. Member for Warwick and Leamington (Mr. Plaskitt), who I thought might be here this morning, wrote to me on 11 January 2006 and stated:
“deductions which may be allowed against tax liability are not allowed as deductions when calculating benefit entitlement.”
He helpfully goes on to say:
“The calculation of self-employed earnings is not always straightforward and whatever evidence is required by the decision maker will depend on the circumstances of the individual case.”
In this individual case, my constituent has been told that she has made a profit—a net loss in revenue and customs terms—of £7,337, which added to everything else puts her outside the housing benefit margins. The council wrote to her and told her that according to the regulations, she has been overpaid housing benefit by £2,622—riches beyond the dream of avarice. This woman does not have 2,622 pence, never mind pounds, but the council wants her to begin to repay the money, because the regulations require that.
Thanet district council wrote again on 18 January 2006, citing
“Regulation 31 of the Housing Benefit Regulations and its equivalent in the Council Tax Benefit Regulations”.
It again said—quite correctly, apparently—that those specifically exclude
“any loss incurred in any one self-employment”
“against the earnings in another employment. There is no discretion that the Council can exercise.”
Thanet district council is bending over backwards, trying to keep the bailiffs out. It wants to help a woman who is trying to help herself and her child.
I wrote to the Under-Secretary on 27 January 2006, saying:
“As I have already indicated in previous correspondence this lady is doing her absolute utmost to look after herself and to provide a living for herself and for her very disabled child. I believe that it is quite wrong that she should be penalized in the way that she is apparently penalized by the Regulations. Either some way has to be found to make an exception in this case or the Regulations have to be changed.”
That was on 27 January 2006, and at the end of the letter I said that, although I did not want to do so, unless an answer was found the case would have to be raised in public in an Adjournment debate. That is why I am here today. I have waited a year. I also wrote to the leader of the council, saying that unless we did something, the family would be brought “to its knees”—the family is on its knees.
The Under-Secretary wrote back to me on 13 February 2006, saying that
“the rules for calculating social security income-related benefits and tax credits are different because they differ in nature”
and that local authorities
“do not have the discretion to make an exception in individual cases.”
You bet your sweet life they don’t. The Under-Secretary says that he “fully” understands that my constituent
“is doing her best to care and provide for herself and her disabled child and I do appreciate that there are times when the rules may not seem to have the flexibility to meet…special circumstances”.
Well, they do not.
The leader of the council wrote back to me, saying that
“any remaining overpayments will be dealt with sympathetically.”
The bottom line is that we are dealing with a lady who has a dying daughter; who is deprived of benefit; and who is being told by the council that she has to increase her repayments. She has got the amount that she owes down to £660. She is being told that she has to increase her payments to £15.95 a week out of her pitiful income to repay a debt that should never have existed in the first place. That is what is so iniquitous about this case.
Revenue and Customs understands that business loss is set against business profit for tax purposes. I understand the argument that it is not up to Revenue and Customs or the benefits system to allow one business to subsidise another, but we are not talking about Rolls-Royce. We are talking about a woman who is struggling to bring up, to survive with, a very sick, very disabled child.
I raised the case with the Under-Secretary a year ago. Earlier this year—last month—I wrote him a letter in which I said:
“I write with some bitterness to say that I trust that you and your Government will take pride in the manner in which the system—which you described as ‘not seeming to have the flexibility to meet special circumstances’—disadvantages some of the most already disadvantaged people in the country!
A year has gone by since…13th February 2006 but I cannot perceive any beneficial changes whatsoever in these regulations.”
I cannot, which is why I am here today.
Just before I came into this Chamber, my constituent rang me because she knew that I would be here, raising the issue not only on her behalf, but on behalf of some of the most disadvantaged people in the country, who find that the tax regime is not compatible with the benefits regime and that therefore they are disadvantaged. My constituent rang to tell me that she had just seen figures provided to her by Macmillan Cancer Support on the basis of an Opinion Leader Research programme, showing that one in 17 people suffering from cancer lose their home, that 11 per cent. of those are self-employed, like my constituent—we are talking about people who are right at the bottom of the pile and are penalised for trying to help themselves—and that 28 per cent. of parents who have children under 18 suffering from cancer experience problems with mortgage and rent.
The Minister has 15 minutes to explain to me why the two systems are incompatible and what the Government will now do practically to ensure that the tax system, which seems to me to be eminently sensible in this regard—the Minister may be surprised to hear me say that, but I am prepared to say it on this occasion—is no longer in complete conflict with the benefits system. Perhaps only a very few people are affected, but as a result of the current situation some of the most needy, some of the poorest, some of the most desperate people are denied the very modest benefits that for them would make the difference between survival and going under.
If my constituent loses her home—it is a rented home, by the way—the local authority will have to provide a home for her and for her daughter, who will require, until she dies, a monumental level of care. I do not know how any local authority could be responsible for that.
Having heard the description that the hon. Member for North Thanet (Mr. Gale) has given of the case, I apologise to you, Mr. Amess, and to the hon. Gentleman because, frankly, I, too, am surprised that I am here. None the less, I will make a number of points—it will not take me 15 minutes—with regard to the case that the hon. Gentleman has raised this afternoon.
Hearing about the case for the first time, I have tried to follow the complex details and the points about interaction with the tax system—the self-employed side of it—and the benefits system and, in particular, housing benefit. We are specifically focusing on the role of carers, which continues to be an area that the Government are working on. Whoever looked at the title of the debate thought that the hon. Gentleman would be raising a slightly different point today. That is why I am here. I shall not pretend that I can answer the detailed points that he has raised. He is right to highlight the fact that, with regard to the tax credits system, the purpose was to remove some of the contradictory rules as between those receiving payment from the Government and those making payment to the Government. That is why the tax credits system is placed within the tax system. As he rightly pointed out, for tax credit purposes, the situation described would not have occurred, because the tax rules are followed.
I shall not ask the hon. Gentleman questions across the Floor of this Chamber. I need to speak to my colleagues in the Department for Work and Pensions, but it seems to me that there are a number of points for further exploration both on the DWP side and on the HMRC side. I am thinking particularly of the interaction involving the self-employed rules. The hon. Gentleman may want to answer this: I wondered why his constituent was not, perhaps, in receipt of the working tax credit. Was it because she was working for less than 16 hours a week in her business? If she was working for 16 hours a week or more, we would need to look at the interaction.
I have never been in this position before, and I must apologise to you, Mr. Amess, and particularly to the hon. Gentleman. I shall not ask him to write to me, because the issue will be set out clearly in Hansard. However, I give him—and, if necessary, you—a personal assurance that I shall take the matter away with me, even though it is not strictly within my remit. I undertake to get back to him as quickly as I can to see what can be done and what proposals have been made to take forward the important points that he identified. The tax and benefits systems should support people and encourage them to make the choices that they want to make, not force them into activities that have consequences for their receipt of benefits or their entitlement to tax relief.
As I said, I cannot apologise enough to the hon. Gentleman: this is a serious and tragic case, and I agree with all the points that he made about his constituent’s endeavours, against all the odds, to do the best for her family, and particularly her child. I shall certainly do my level best during the rather interesting conversations between the two Departments about how we might resolve the issue.
Again, I can only apologise, and I hope that the hon. Gentleman and you, Mr. Amess, accept that. I cannot add any more, given that I am not fully aware of the interaction with housing benefit, which seems to be the crucial issue for Thanet district council. As the hon. Gentleman rightly said, the council is doing its level best, but within rules that do not necessarily facilitate helping this particular individual.
I thank you, Mr. Amess, and I thank the hon. Gentleman for his tolerance on this matter.
This is very unfortunate, and I feel sorry for the hon. Gentleman, who has waited a year for the debate. However, the problem is certainly no fault of the Paymaster General’s. I suspend the sitting until 1 o’clock.
International Committee of the Red Cross
I thank Mr. Speaker for granting me this debate on parliamentary oversight of matters raised by the International Committee of the Red Cross, which brings together matters that are dear to my heart: Parliament—essentially, the democratic accountability of the Government and of the Executive generally to Parliament, and human rights and justice, especially matters involving public health and decent standards for detainees.
As I think the role of Parliament is important, I had sought to raise the matter with the Leader of the House. However, I appreciate the fact that a Foreign Office Minister is responding to the debate. I know from the answers that the Minister gives to my parliamentary questions that he is invariably informative and generous with information. However, I shall shortly refer to two parliamentary questions on which he was not particularly forthcoming. I understand that there was a reason for that, which I shall go into. That goes to the central reason for initiating my debate on parliamentary oversight—there isn’t any.
Despite the fact that the ICRC submits reports, there is no process by which Parliament can be told about them—what is in them, important matters of principle that they raise, or major abuses of human rights or decent standards on the British watch in Iraq, say, or Afghanistan. In fact, there is a block on such information from the ICRC reaching Parliament.
I tabled one of the two questions that I want to discuss following a meeting on 26 April last year of the all-party parliamentary group on global security and non-proliferation. The subject was “Iraq: supporting civil society”. Roland Huguenin-Benjamin, who was at that time UK spokesperson for the ICRC, spoke at the meeting. He pointed out that the ICRC has an official role as custodian of the Geneva convention and that it reports breaches of the convention to relevant Governments. That would apply, if appropriate, to our Government and our allies in relation to Iraq. He added during the discussion that although the ICRC submits its reports to the Government confidentially—the ICRC itself would not disclose publicly what was in them—that does not preclude the Government from responding when such matters are raised in Parliament. However, I have found that the Government say that their arrangement with the ICRC is totally confidential. Thus, they keep the matters involved secret from Parliament.
In my question following the meeting, I asked the Foreign Secretary
“what reports relating to Iraq the Government has received from the International Committee of the Red Cross (ICRC) in its capacity as custodian of the Geneva Convention; whether the reports indicate breaches of the Convention by forces in Iraq; what (a) the UK’s and (b) the Allied Command in Iraq’s response has been; if he will place relevant correspondence between the ICRC and the Government in the Library; why the Government decided not to disclose such reports as a matter of course; if he will ensure in future that the Government exercises the option available to it to disclose such reports in full”.
The Minister replied on 3 May:
“The International Committee for the Red Cross (ICRC) has unfettered access to British security detention facilities in southern Iraq and reports its findings to us, and we respond, on a confidential basis.
It is customary international practice for reports from the ICRC on security detention to remain confidential between the ICRC and the detaining power. We believe it is important to maintain that policy of confidentiality so as to, inter alia, encourage the free and frank exchange of views about detention in all locations where ICRC carry out their valuable work.”——[Official Report, 3 May 2006; Vol. 446, c. 1654W.]
In February this year, I asked
“how many issues have been raised with the Government by the International Committee for the Red Cross in (a) Afghanistan and (b) Iraq; how many of the issues raised (i) related to the UK forces and (ii) were communicated to the UK in its role as a member of the multinational forces; how many detainees were the subject of issues raised; whether the Government has responded in each case; whether the International Committee of the Red Cross has declared itself to the Government as dissatisfied with the response or raised the issue again subsequently”.
The Minister replied, referring to the earlier reply, and said that the Government
“and the International Committee of the Red Cross (ICRC) regard the contents of our frequent contacts with them, including on Iraq and Afghanistan, as confidential. We would not wish to break with this customary practice as it would risk undermining the ICRC’s work in other countries. This principle of confidentiality allows the ICRC to remain impartial, gain repeated and unrestricted access to prisoners, and urge detaining authorities to make any improvements that may be necessary.
We value our excellent, constructive and co-operative relationship with the ICRC.”—[Official Report, 19 February 2007; Vol. 457, c. 392W.]
Of course that is an important relationship, and I pay tribute to the ICRC for visiting, I am told, 600,000 people in 2,400 places of detention worldwide, but I am talking about people who have been detained by UK and US authorities. We are mature democracies, not totalitarian states. Our Parliaments can and should be told where there are exceptions to normally accepted standards. The ICRC and the totalitarian Governments whose prisoners it visits can keep their confidentiality, if openness is thought to put visiting at risk, but that surely cannot apply to our mature democracies. The Minister talked of the
“free and frank exchange of views”
and “unrestricted access”. Surely those would not be jeopardised in our countries if our Parliaments were told about the issues of concern arising from visits.
By the way, Mr. Huguenin-Benjamin is not the only ICRC representative to have said, or at least implied, at meetings I have attended that the Government could, if they wished, disclose relevant information to Parliament. Although Mr. Simon Brooks, the ICRC’s new senior delegate in London, who has been in post one week, told me yesterday that the committee would prefer its reports not to be made public so as to facilitate access to prisons globally, he still acknowledged that aspects of such matters were between the Government and Parliament.
I state clearly—this is why I sought the debate—that such total secrecy towards Parliament is wrong. In our democracy, there are three parties involved—not just the ICRC and the Government, but Parliament. Parliament has the right to know, especially when a Government have been dragging their feet on proper standards, or where major issues are involved or the Government do not properly respect the Geneva convention or other important treaties. I do not say that that is happening, but we just do not know.
The ICRC would not disclose the matters that were raised, but I contend that the Government could disclose them to parliamentarians if they wished. We are talking about major issues of principle. Mostly, the ICRC raises matters that are of concern to it and calls on the Government to address them. If they do not, the ICRC may raise such matters again in another report, and then, perhaps, in yet another. Matters that are repeatedly not addressed, or that are not addressed in a way that is satisfactory to the ICRC so that it must raise them repeatedly, should, I believe, come before Parliament. The Government may have a reason for that not happening that they want to stick to, but they should be accountable and should justify themselves to Parliament.
Three examples illustrate my case. First, we know that there was routine hooding of prisoners in Iraq. It was initially justified by the armed forces and the Government. The ICRC may have reported its concern, which would have been kept secret. It was only through the work of others such as diligent MPs—me included, by the way—that the practice was put into the public domain and challenged. Only when the Government realised that routine hooding breached accepted standards, including an earlier assurance by the Heath Government that it would not be deemed acceptable in Northern Ireland, was the policy towards Iraqi prisoners changed. If the matter had been subject to totally secret communication between the ICRC and the Government, nothing would have changed.
My second example concerns the case of Abdul-Razzaq Ali al-Jedda, the 49-year-old dual Iraqi-British national who has been held by our armed forces in Iraq without charge or trial since 10 October 2004. The Government say that they are justified in doing that under United Nations resolutions. Only after Amnesty International put that case in the public domain was I able to ask a parliamentary question to establish the Government’s position on it.
That case has huge implications for the process of law, but had it been raised only in the ICRC’s confidential report to the Government, it would have remained a secret. I hope that there will be an occasion on which the Minister or a Law Officer has to respond to questioning from Jeremy Paxman, Jon Snow or Jon Craig on the implications of that case, but that can happen only if such cases are known about. That is how an open democracy properly functions.
My third point is about Abu Ghraib prison. The spectacular abuses there were brought to light by a leak in the US, using warders’ trophy photographs. If it had been left to the cosy ICRC-Government relationship, knowledge of those abuses would not have made it to the public domain. Indeed, I do not think that the ICRC even told the UK Government what was going on in Abu Ghraib, despite the operation in Iraq being a coalition operation overall.
I have here the Foreign Office’s 2006 annual human rights report. The pages on Afghanistan have these words highlighted in red at the top:
“We believe states should be open and accountable for their human rights records: how a state responds to criticism is one of the best measures of its commitment to human rights.”
The first paragraph adds that
“we will continue to respond positively to criticism of our own performance by non-governmental organisations (NGOs) and others.”
But it seems that the FCO will not respond in the same way to the ICRC’s criticisms, because they are not mentioned.
Some human rights abuses are mentioned in the report, including domestic violence and the lack of respect for women’s rights, the high rate of illiteracy and child mortality, and the persecution of an Afghan who converted to Christianity, but the ICRC must have raised its concerns about Afghanistan. I bet that more concerns are not in the report than are in it. Even if they are not attributed to the ICRC, why are they not in the report? Mr. Brooks told me that the ICRC visited 14,000 detainees in Afghanistan. Any comment on that reported to the Government does not get a mention.
There is much on Iraq in the “Security and law and order” section of the report, which is at pains to say that white phosphorous is not a chemical weapon, although most people think it is. That section discusses military operations in Falluja and other operations affecting citizens; allegations of abuses by authorities, including the military; refugees and internally displaced people; the infringement of women’s and minority rights; and, of course, detentions. It is likely that the ICRC has raised those issues in its reports to the Government, but other than explaining their political position on those matters, have the Government addressed the ICRC’s detailed concerns? There is no sign of that in the report.
I suspect that if the ICRC were doing its job properly, it would have reported on Iraqi prisons such as the one at site 4 in east Baghdad; US prisons—not just Abu Ghraib, but secret ones; torture and degrading treatment or the risk of such treatment in certain circumstances, such as when people are being detained for long periods; and whether relatives are being allowed access. It would also report on executions; deaths in custody; people being held without any proper legal process, not in accordance with international humanitarian law; and lack of access to legal counsel or any form of representation.
The ICRC would also report cases in which detainees are not allowed to know the charges against them, or the allegations against them in the many cases in which no charges are ever brought. It would also report on the impact of psychological or other undue pressure upon prisoners, perhaps to confess falsely.
In the wider context, the ICRC would report on the operation of death squads, including those that are officially sponsored and trained; the consequences for citizens of military operations such as the current US surge; the insufficiency of measures to help refugees and internally displaced people; the crisis in public health, especially for children; and the adequacy of public provision such as schools and hospitals. I find it hard to believe that the ICRC has not expressed its concern to the Government on those issues.
It might be worth bringing some of the ICRC’s more specific concerns to Parliament’s attention, as well as the general ones. The Government’s detailed response to those concerns should be available to parliamentarians. Her Majesty’s inspectorate of prisons writes regular, often critical, reports on UK prisons, which are placed in the public domain and come before MPs. It is strange that there is not the same accountability to Parliament regarding prisons that the UK runs abroad.
There are several ways to get the relevant information to Parliament, even in an abridged form. The Joint Committee on Human Rights, which deals with human rights issues in the UK, could cover matters on which the UK is in control as an occupying power. We could also get the information through the Foreign Affairs Committee or the Defence Committee, or through parliamentary or Government websites. The Foreign and Commonwealth Office probably has several websites that could be used. Parliamentary questions could be answered more frankly, there could be parliamentary debates and the Library’s facilities could be used.
I fail to see how denying that information to Parliament and MPs, even in an edited form, serves any useful purpose in our mature democracy. I urge the Minister to reconsider.
I am grateful to my hon. Friend the Member for Leyton and Wanstead (Harry Cohen) for raising this important subject. No other part of my brief at the Foreign and Commonwealth Office requires such a fine balance between the needs for confidentiality and for complete transparency in all matters of governance, in which I am totally in favour. That is a difficult balance to strike, and it is interesting that he is the only Member ever to ask about the nature of that confidentiality. That says something about the House of Commons.
My hon. Friend is very enthusiastic about pursuing such matters, and I am glad that he has pursued this. He is right to quote the FCO’s belief that we judge civilisations and societies on their attitudes to crucial issues such as human rights. However, all other right hon. and hon. Members seem to agree with my written answers that we have to maintain the confidentiality of our relationships regarding the reports and articles that we receive from the International Committee of the Red Cross. I shall try to explain why.
The debate is timely because there is a new ICRC representative to London, who may or may not be in the Chamber, and because I shall meet its president, Dr. Jakob Kellenberger, on Thursday, when he will also meet the Secretary of State for International Development.
Before I address the issues that my hon. Friend raised, let me express how much the Government value their constructive and co-operative relationship with the ICRC, which is a unique organisation. It is impartial, neutral and independent. Its humanitarian mission is to protect the lives and dignity of victims of war and internal violence, and to provide them with assistance. It directs and co-ordinates the international relief activities conducted by the International Red Cross and Red Crescent Movement in situations of conflict. It also endeavours to prevent suffering by promoting and strengthening humanitarian law and universal humanitarian principles. It is worth recalling that its mandate is conferred by international humanitarian law, notably the four Geneva conventions of 1949, the additional protocols of 1977 and the statutes of the Red Cross and Red Crescent movement.
The United Kingdom is a committed and active state party to the Geneva conventions and additional protocols. We seek at all times to support the work of the ICRC through our work to promote effective application and strengthening of international humanitarian law, and by supporting its humanitarian work through our financial contribution, which is administered by the Department for International Development. The UK contributes £20 million annually to the ICRC.
My hon. Friend referred to provision of information to Parliament on representations to the Government by the ICRC. That is at the heart of this debate. The effectiveness of the ICRC’s work depends on its impartiality, neutrality and independence. It has unrivalled access to those it assists, to responsible authorities and to belligerents in situations of conflict and humanitarian need.
At the moment, we are worried about our diplomats who are on holiday in Ethiopia and who have been kidnapped. We are not sure where they are or who is holding them. So often, the International Red Cross knows belligerents with whom state parties have no contact. It has unrivalled knowledge and, more importantly, it is trusted. I shall return to that.
The ICRC treats information that it receives or gathers as confidential, and it expects its interlocutors to do the same. That confidentiality is the customary practice of the ICRC, and is accepted and expected by states and victims alike. We do not want to break with that customary practice because we would risk undermining the ICRC’s work, not only with the UK Government, but in other countries.
That principle of confidentiality allows the ICRC to remain impartial, to gain repeated and unrestricted access to prisoners, and to urge detaining authorities to make necessary improvements. The ICRC stresses the confidential nature of its reports on visits to places of detention and expects that to be respected by those to whom representations are made. I shall return to that, but I want to remind my hon. Friend that this country, this Minister and this Department have nothing to hide in that respect. I shall try to expand on that.
The ICRC is clear that neither an entire report nor any part of it may be divulged to a third party or to the public. It does not want reports or representations disclosed, although it is well known that it conducts visits that may result in such reports and representations. As well as preserving the ICRC’s neutrality, the principle of confidentiality also helps to preserve the safety and security of ICRC staff and those who assist it by talking freely to it. Without that, the ICRC would not be able to provide the assistance that it does.
It is in nobody’s interests for third parties, including the Government, to take action that would risk undermining the effectiveness of the ICRC and its work. For that reason, the Government accept and respect the confidentiality of information required by the ICRC, and will continue to do so.
I want to refer to an article in the “International Review of the Red Cross”, which the ICRC published in June 2005. It is headed, “Action by the International Committee of the Red Cross in the event of violations of international humanitarian law or of other fundamental rules protecting persons in situations of violence”. It is a long title, but it describes precisely what the article does. Section 2 spells out the ICRC’s requirement for confidentiality, and we have drawn conclusions from that. We regard the content of ICRC’s reports and representations made to us as confidential unless the ICRC itself says otherwise. It represents the victim, so it should take the lead, and we do not believe that third parties should make that judgment. That is important. I would be worried that a consequence of us making such a judgment might jeopardise its ability to visit the most difficult places—for example, Guantanamo bay, and many others, such as those mentioned by my hon. Friend.
We do not disclose the fact that the ICRC has reported or raised an issue with us, which is clearly in line with what is set out in the article. We have regular contact with the ICRC on a range of issues and we consider respect for the confidentiality principle by both the ICRC and states as fundamental to the exercise of its functions. We may be able to disclose information when we are asked more generally about a humanitarian issue when we are aware of the ICRC’s public position or when we have been briefed in accordance with its publicly available lines. Such situations are distinct from those in which the ICRC has reported specifically to us, or made representations to us on specific issues.
The Government have nothing to hide in terms of how we treat prisoners in any country, including Afghanistan and Iraq. Those countries have become my second home, and I make a point of visiting prisons, holding facilities and so on. I have seen the new prison at Pol-e Charki outside Kabul, which is probably the best public building in Afghanistan. At the heart of its architecture and design and the way in which it functions is a concern for human rights that is the most sophisticated and the best that I have come across in the world. We have nothing to hide on that front. There is no question but that some terrible things have happened in Afghanistan and Iraq, and my hon. Friend was right to raise them, but the Government are determined that that will not fall within our bailiwick. We look after prisoners because that is a mark of civilisation.
My hon. Friend knows that there are many ways and means by which Members of Parliament and Ministers can obtain information on alleged abuses of human rights and the status of people who may be held in any part of the world. I have never known this Parliament to be backward or quiescent in searching for answers to and the truth about the most opaque and difficult questions. I have pursued them many times. The Government judge that the ICRC’s work in its totality is so important that we must respect its demand for confidentiality, and we shall continue to do so. We will not jeopardise its ability to go to places where Governments cannot go and to do work that Governments cannot do. That is extremely important. I know that it is irksome to my hon. Friend, and I share his desire for transparency in all things, but I hope that he accepts my answers to his written questions, and that they will protect the ICRC’s ability to do its invaluable job in the future in some of the most dangerous places in the world, where its work is so necessary.
Sign Language Support
I am very glad to have the opportunity to debate this issue. I have campaigned on it over many years, and I shall be intensifying the campaign, because sadly we have been going backwards rather than forwards.
Although I have no commercial interests in the issue, I have many personal interests that I should like to record. I am an honorary vice-chairman of the National Deaf Children’s Society, a trustee of the Royal National Institute for Deaf People and chairman of the all-party group on deafness, and I have a grown-up deaf daughter, who of course has been the driving force behind my interest in the issue. She has just celebrated her 30th birthday, but I worry that if I had a deaf daughter today—and I have small children—she would not receive the same quality of education as my daughter did, because the provision of support for deaf children and their parents, particularly in the sphere of sign language support, has gone backwards rather than forwards.
There have been significant advances. There are much earlier diagnoses of deafness and much improved technology, with digital hearing aids and cochlear implants, providing extra support for deaf people—both children and adults—but there is no cure for deafness, and still three deaf children are born every day. Many will benefit hugely from sign language support, but for many other children and parents in many parts of the country, it is simply not available.
I attend many events, and there are many active and lively young signers in their teens and twenties in the population who complain to me vehemently about the lack of access to interpreters, and about their consequential exclusion from many activities in the hearing world.
During previous Parliaments, I was a member of the Parliamentary Assembly of the Council of Europe, and during my time there I was honoured to be rapporteur on sign languages. I was particularly pleased when the Assembly overwhelmingly supported my report calling for legal recognition of sign languages, on a par with other minority languages, which in UK terms include Welsh, Gaelic and even Cornish. I am sorry that in spite of such support from parliamentarians throughout 46 European countries, the Council of Ministers has been extremely dilatory in introducing a legal instrument that would provide such a guarantee.
I find it interesting that the countries that most proactively support the role of sign language are those where bilingualism is well embedded in their society. The trailblazers are by far and away the Scandinavian countries, where in mainstream education children have to learn English as well as their mother tongue, as a curriculum requirement. As a result, those countries have no difficulty persuading the parents of deaf children to learn sign language and the mother tongue as their equivalent of bilingualism.
Although the debate and my questions are about England, examples elsewhere in the UK are important. In Wales, where bilingualism between Welsh and English is well established, the Assembly has recognised that another minority language in Wales is British sign language. It has undertaken a radical programme—radical for the UK, not across the piece—to raise the provision of sign language interpreters to the European Union median, which is one in every 45,000 of the population.
At the programme’s outset, there were 12 sign language interpreters in Wales; at its end in 2008, they hope that there will be 64. In Scotland, there are fewer than 30 interpreters, and we would need to train more than 80 to meet even the Welsh aspirational standard. In England, 700 additional interpreters would need to be trained to meet the Welsh standard, which is the EU median. We have not met that—and it is nothing like the ideal standard. We must treble the number of interpreters in the UK simply to deliver the European average of support for deaf children and their parents.
Those are some practical facts. If you want to know the aspirational best, Mr. Amess, I shall point you in the direction of Finland, which with a population of 5.5 million has more than 600 interpreters. If the UK were to aspire to the same level of performance, we would need 6,500 interpreters, compared with the present estimated total of 435, which is a huge deficit.
I shall begin with education and schools, because that is where support is vital. Will the Minister recognise that the right of deaf children and their parents to learn and be supported in sign language should be fundamental and guaranteed? Will he acknowledge that it is a function of his Department at least to monitor and possibly to require delivery, not simply to say that it is up to local education authorities to deliver? It is absolutely clear that many authorities neither deliver nor even aspire to do so.
There are 35,000 deaf children in the UK, and we must address what happens when a child is diagnosed as deaf, and what support the parents receive. Then we can ensure that the child is granted the maximum opportunity to attain the communication skills that will give them the best chance of making their way in life.
First, parents should be advised about the role that sign language can play—I do not seek imposition—in their children’s education. They should also be given the right to learn sign language—a right that they should be able to exercise without having to pay for it. It should apply to the immediate family, too, because they will give the closest support to the parents.
Indeed, under the Every Disabled Child Matters aspirations, the service that a deaf child requires is access to sign language for them and their parents whenever they wish. That, I am afraid, is neither a Government target nor even an aspiration.
My hon. Friend the Member for Harrogate and Knaresborough (Mr. Willis), who very much wanted to attend this debate but is away on Select Committee business, has tabled his own early-day motion on lip reading and sign language services. It has attracted many signatures, and it speaks for itself about the growing frustration in many parts of the country. People have to pay for support, and more often than not classes are over-subscribed, and the number of interpreters available to provide teaching and support is nothing like adequate.
Indeed, sign languages interpreters and other communicators for the deaf often have to travel 200 or 300 miles to support a meeting, because communicators are not available locally. It creates huge extra expense and delay, and it indicates the shortness of supply.
I have received from many sources examples that amount to a catalogue of frustration. People have been unable to access classes or obtain support for sign language education, they have been actively discouraged from the idea that sign language should be used in the education of deaf children, and they have found that provision is patchy across the UK.
In London, for example, Frank Barnes school for deaf children in the borough of Camden provides access to the national curriculum for deaf children through the medium of BSL. Camden is in the process of redeveloping the site, and although no decision has been taken, there is a concern that the service, which is provided to boroughs right across London, may no longer be available in the future.
I want to try to anticipate some of the Minister’s replies in the hope that he will not go down that avenue. Yes, it is a matter for local education authorities to determine provision and they have discretion in that, but it his Department’s responsibility to monitor what is provided, set minimum standards and ensure that deaf children throughout the country get access to the sign language support they need. If necessary, it should intervene where that is not happening. My challenge to the Minister relates to the fact that it is not happening, and there is no evidence that his Department is prepared to intervene.
For 30 years, I have been involved in many discussions on this matter, and it disappoints and distresses me that a debate I thought we had dealt with 30 years ago seems to be reasserting itself. There was a school of thought in this country that suggested not only that deaf children should not be taught sign language but that it should be actively suppressed. The oral tradition was a very vigorous school, which regarded sign language as an obstacle to learning and held that because the hearing world did not use it, deaf children should somehow be forced to learn to speak and lip-read. If the outcome had been that every child was able to speak and lip-read, the method would be totally applauded, but that was not the outcome. Many deaf children are simply not able to acquire that degree of speech and lip-reading understanding, and they rely on sign language.
I contend, perhaps more controversially, but I have no evidence to the contrary, that sign language gives profoundly deaf children access to an understanding of speech and communication much more effectively than the lack of it would. I profoundly believe that, so to deny them sign language is to deny them the means to acquire the best possible understanding of the spoken and written language. My own daughter would certainly have had considerable difficulty in acquiring the level of speech and linguistic understanding she has without sign language support. Incidentally, she often says to me, “I don’t really use sign language.” She tries not to, and has to do without it in most circumstances, but when I see her with deaf friends, it is suddenly all sign language, and speech goes out of the window, which is true of many young deaf people.
Does the Minister have information on the current number of school and pre-school children who are deaf? The estimated figures that I have come from organisations such as the Royal National Institute for Deaf People and the National Deaf Children’s Society. Does he know how many schools offer specialised training for deaf children? How many of them provide BSL in England, and how many pupils are benefiting from that, whether they are in special units in special schools or in mainstream schools with support? How many interpreters are currently being trained? Those are the most important questions, because if we do not have that information how can we tell whether deaf children are getting access to the services that they need?
Consideration should be given to offering the teaching of sign language, as a language, as an option in schools. After all, we have given legal recognition to the spoken minority languages of the United Kingdom—Welsh, Gaelic and Cornish—but we have no such recognition or teaching of a minority British language used by at least 70,000 deaf children, and there are probably many more who communicate with them.
If the Minister were to go to Sweden, he would find that Swedish sign language is offered as a language on the national curriculum, and in any given year 10,000 people are learning Swedish sign language. That massively increases the understanding and acceptability of sign language across the whole community in Sweden, and it increases the provision of potential interpreters, who have had their appetite for sign language whetted and are then encouraged to provide interpreter support in the deaf community.
When my daughter signed the national petition to Downing street calling for such action, she got a reply from the Prime Minister that entirely addressed the English curriculum and said nothing about Scotland, even though she was writing from Aberdeen, and also said that it was entirely a matter for local authorities. I beg to differ. The Prime Minister often tells us that education, education, education is his priority, and he often wants to direct in very great detail how the school curriculum should develop. In that context, it would be regrettable if sign language did not have the same level of campaigning support from the centre. I have received a heartfelt plea from Sense, which is a charity for deaf-blind children. For many such children, sign language that is touched on the hand is a vital means of communication, but again there is no absolute right of access to such support.
I am anxious that the Minister should have time to respond, and in conclusion, if his Department wants to pursue the matter further—I hope that it will—many agencies representing the deaf community will be happy to supply him with detailed anecdotal information on the huge variation in provision across the country, and the huge frustration for parents denied sign language for themselves or their children, who feel that their children lose out as a result. There are many instances of young people and children diagnosed as having behavioural problems that, when analysed, are found to be entirely due to the fact that they are unable to communicate effectively. They are frustrated because they are not understood and are not able to make themselves understood. In some specific cases, giving them access to sign language support has been the practical solution to that problem.
I urge the Minister to recognise that it is simply not good enough to deny deaf children and their parents the right to be taught sign language, use sign language and be educated with the support of sign language in their school environment—in a special or mainstream school. I urge him to ensure that he knows what is going on. If he does, and agrees that it is inadequate, will he tell us what action he proposes to take to put the matter right?
This is the first time I have had the privilege to serve under your stewardship in Westminster Hall or anywhere in the House, Mr. Amess, and I am grateful for the opportunity to do so. I should like to put on the record my congratulations to the right hon. Member for Gordon (Malcolm Bruce) on securing the debate. I know that he feels very passionately about the matter, not least for the reasons he has given concerning his family. Someone told me yesterday that his maiden speech was given in BSL.
One of my early speeches.
The fact that one of the right hon. Gentleman’s early speeches was signed shows that his commitment to this cause is commendable. From the outset, I shall not try to pull the wool over his eyes or use jargon. It is important to get a number of things on the record, and in that context, he made some interesting points. I was keen to listen to what he had to say, and I would be happy to encourage a further dialogue, should he wish it, with me or my noble Friend the Lord Adonis, who takes lead responsibility in the Department for Education and Skills on this issue, and the stakeholders whom he has mentioned or himself. He is greatly respected in the House with regard to the issue. I would be happy to have that dialogue, or facilitate it with my colleagues.
We know that about 35,000 deaf children and young people in the UK have moderate to profound hearing loss. BSL is the first language of around 70,000 people and the most popular form of communication for deaf people in this country. Advances in computer technology, to which the right hon. Gentleman alluded, such as digital hearing aids, and surgical interventions, such as cochlear implants, have broadened the range of possibility for deaf children and adults who were either born deaf or lost their hearing as a result of disease or a trauma in their lives. Those advances have simplified and enriched the lives of many hearing-impaired people, but they have also further complicated a debate that stretches back many decades, perhaps even centuries.
There are a number of different forms of communication in sign language in Britain, and sign language varies from country to country. BSL finger spelling is, for example, different from American sign language; it uses two hands, whereas ASL uses one It is also distinct from signed English—a manually coded method expressed to represent the English language.
Parents of deaf pupils who have statements of special educational needs are able to express a preference for the maintained school that they would like their child to attend and also to make representations for a place at an independent or non-maintained special school. Before expressing a preference, parents can consider the different communication approaches for deafness. Auditory-oral, total communication or sign bilingualism are the most popular methods offered by different schools.
The right hon. Gentleman stressed the importance of pupils having access to BSL, but that is already possible through the statementing process, as families can choose BSL if they wish. However, I hear what he said about patchiness of provision. I would be interested to hear more about that, whether through the anecdotal experience of stakeholders or others with whom he is linked.
We know that the attainment of hearing impaired children falls below the national average. Only 32.9 per cent. of hearing impaired children achieve five GCSEs at grades A to C, compared with a national average of 57.1 per cent. Although BSL is not a core national curriculum subject, as it is in Sweden and other countries, schools are free to offer it as a non-core subject, according to local needs and preferences. Local education authorities determine what provision they make for children with special educational needs, including deaf children, taking into account the needs of the individual child, parental preferences and local circumstances.
I hear what the right hon. Gentleman said about monitoring information from the centre, rather than leaving everything to local authorities. However, in this day and age, when we are looking to work more closely with local authorities, it is important that we should let them have responsibility over their budgets. The national framework is obviously “Every Child Matters”. That framework needs to be responsive to the needs of each and every child.
I accept that point, but does the Minister not acknowledge that, when local authorities have constrained budgets, the cost of providing those extra resources to a small number of children is disproportionately high? Too often, the service is not available locally and parents are forced to look elsewhere, and that can involve boarding, which is discouraging in itself. It is not good enough to leave the situation like that, so we need to get beyond those bald statements.
I appreciate what the right hon. Gentleman says. In a couple of moments, I shall speed through some of those points and come to the funding side of things, specifically as it relates to local authorities.
The Government have already taken action to improve access to BSL and steps to ensure that deaf children, young people and adults generally have access to BSL provision where it is appropriate to their needs. Many teachers and other staff have taken the opportunity to make use of the resources that the Government have made available that can be used to support training in special educational needs and disability, to improve their understanding of BSL. Courses in BSL are widely available in local colleges and through other training providers throughout the UK.
The Government will seek to ensure that teachers and other staff have access to appropriate training in BSL wherever appropriate. For instance, as part of its programme for raising standards in schools, the Department is focusing specifically on improving the education of children with SEN through training and professional development, including in BSL. We have worked closely with charities such as the RNID, which co-badged the early support materials, and the National Deaf Children’s Society, which sits on working parties such as our early support management group. There is more that can be done, but we are working with stakeholders.
We are also working with the Training and Development Agency for Schools and the Children’s Workforce Development Council on a number of initiatives to build staff skills at all levels. Through the specialist schools programme, we are enabling many more special schools to develop their outreach capacity and provide access to specialist advice and support for mainstream schools. We are encouraging all schools, mainstream and special, to collaborate and share their most effective practice in SEN. We shall also use the findings of the national audit of specialist provision for low incidence needs to promote collaboration between local authorities and other agencies, to provide for children with the most complex needs.
The Department has produced a leaflet, “Access To Achievement”, which publicises the role of teachers of the deaf and other specialist teachers working with children with sensory impairment. “Removing Barriers to Achievement” is the Government’s long-term strategy for giving children with special educational needs and disabilities the opportunity to succeed. The strategy sets out the Government’s proposals for working together with local authorities, schools, early-years services, the health service and the voluntary and private sectors, to enable children and young people with special educational needs and disabilities to achieve their potential.
I am aware of the work being done in places such as Gloucestershire, where my child—I am the father of a one-year old—has had the chance to learn baby signing. There have been similar schemes in other parts of the country, often run by local private sector firms, to encourage children at an important stage in their development to learn those new skills.
The right hon. Gentleman made a good point about bilingual countries perhaps being more aware of the benefits of picking up BSL as another language. Our early support programme is making a step change nationally, regionally and locally to the delivery of family-centred local services for disabled children. For example, there is a local authority monitoring protocol for deaf babies and young children, guidance for lead professionals and a range of materials for parents of hearing impaired children.
We have made progress in recent years in improving provision for children with special educational needs, but there is further to go before we can achieve our aims. The work of the Select Committee on Education and Skills, in its report on SEN, has helped us to review our priorities. Over the coming years, we intend to raise the awareness and skills of staff in identifying special educational needs and personalised learning. We shall also improve the specialist support to schools and early years settings in meeting children’s special educational needs, so that all children with special educational needs and disabilities receive the support that they need.
The right hon. Gentleman asked about the number of children in pre-school settings. I do not have those figures, but I shall write to him as part of the dialogue that I hope we can have. After that he might wish to request a meeting, which I should be happy to facilitate.
We want to ensure partnership working between education and health services, and social care and the voluntary sector, to provide integrated services organised around the needs of children with SEN and their families. We shall build on the proposals for integrating children’s services in “Every Child Matters”—in particular, the common assessment framework, multi-disciplinary teams and children’s trusts—to deliver joined-up services for children and families.
Considerable funding is already in the system to support the education of children with special educational needs, including hearing impairment. Expenditure on SEN nationally has increased from £2.8 billion in 2001-02, to £4.5 billion in 2006-07. That is an increase of 60 per cent. and represents approximately 13 per cent. of all education spending. Local authorities decide how best to distribute funding and how to allocate their budgets between and within services. It is right that we work with local authorities and that they should be able to set their local priorities, because every area is different and every cohort of children in a locality is different.
I accept, however, that there may be some patchiness in provision. I am willing to hear that case and to have the dialogue that I have promised with the right hon. Gentleman. Local authorities decide how best to distribute funding and how to allocate their budgets. The Government’s view is that a range of educational provision should be available to deaf or hearing impaired children. Four fifths of deaf children and young people in the country as a whole are currently educated in mainstream schools, but that will vary among authorities.
There are other points that I would like to answer, about the siblings and parents of deaf children, but we are running out of time, so perhaps we can do that as the right hon. Gentleman and my Department enter into, I hope, an honest and open dialogue on the issue.
It being Two o’clock, the motion for the Adjournment of the sitting lapsed, without Question put.