Tuesday 6 May 2008
[Mr. Eric Martlew in the Chair]
Flood Defences (Norfolk)
Motion made, and Question proposed, That the sitting be now adjourned.—[Mr. Blizzard.]
It is a pleasure to serve under your chairmanship, Mr. Martlew. We almost have a full house of Norfolk MPs, and, from over the border, a Suffolk Whip. Alas, the right hon. Member for Norwich, South (Mr. Clarke) is unable to be with us. I suspect that he may still be waiting for his ministerial car.
I requested the debate because flood defences in Norfolk are a crucial local issue. It must be seen, of course, against a wider background. We are all conscious today that whatever problems we face, they pale into insignificance compared with the news of what has happened in Burma, where a cyclone has killed a minimum of 15,000 people. We know that many other low-lying parts of the world face appalling threats. I think in particular of the people of Bangladesh.
For many of us, the Norfolk coast is about being at the seaside. I can recall, when I was a child—it may be difficult for some people to believe that I was once a child—of about seven or eight, with glasses and an incipient moustache, being on the beach at Cromer. Later, I was with my son George, perhaps on the beach at Heacham with the tide out, building sandcastles. As you know, Mr. Martlew, however well one builds sandcastles—as a military historian, I did so in depth, using stone and with as much defensive preparation as possible—when the tide comes in, it always sweeps them away. There could be a sense that the flooding that we face from both the sea and on the land is somehow inevitable, and that there is therefore nothing much that we can do about it. I do not believe that that is so.
My interest in the debate is not because I have coastal land in my constituency; I do not. However, my area will be affected by any surge from the sea and by any flooding of the main rivers—either the River Yare, by Acle, the River Wensum or, of course, the southern broads line. The point of the debate is that significant coverage was given to a Natural England draft report outlining possible responses to the threat posed by climate change and the rise in sea levels overwhelming current coastal defences.
I am from land that is not directly affected, but a lot of Leicestershire people visit north Norfolk and settle there. I raised the matter last Thursday in the House—it is at column 432 of Hansard.
I congratulate the hon. Gentleman on securing the debate. He refers to his times at Cromer, and I am tempted to ask him what Neville Chamberlain was really like. The point that I made on Thursday, to which the Minister replied, was that newspapers have a responsibility to report matters such as these sensitively and accurately, and not unnecessarily to alarm people. Government agencies should not go beyond their remit and into areas that they neither understand nor have responsibility for. That is a fair point, is it not?
I do not necessarily agree with the hon. Gentleman’s inference that the local media somehow reported the matter irresponsibly. The trouble was that considerable angst was produced as a consequence of the Natural England report, the conclusions of which had been trailed in a previous report in 2003.
Interestingly, only today in the Eastern Daily Press, Dr. Viner, Natural England’s principal specialist in climate change, has apologised for any undermining of the morale of people living in north Norfolk and elsewhere. As I hope to show later, it was unfortunate to say the least, and some of the statements that were made gave people in Norfolk the impression that the future of their homes and communities was not necessarily the top priority for some organisations.
Yes, I intend to do that, and I am grateful to the hon. Gentleman for giving way. Will he accept that this is one issue for which we cannot blame the media? The buck stops with the Government and their policies. The media are drawing public attention to the need for good public policy that will tackle climate change and prevent the building of more houses on the flood plains in Norfolk and across the whole south-east of England.
The hon. Gentleman is correct that the media, and certainly the Eastern Daily Press and local radio and television, have played an important role in stimulating debate. He is correct in that sense.
Natural England ended up producing four options for dealing with flood defences along the coast: holding the current line; moving the sea wall slightly inland; doing nothing and letting the sea spread in naturally; and, most controversially, maintaining 9 miles of sea defences to the west of Great Yarmouth only at a level sufficient to keep water out for the next 50 years. After that, Natural England concluded, breaches would be opened in the walls and water would flood in. That would mean giving up approximately 25 square miles of Norfolk coast, about 1,000 houses and many historic buildings, as well as valuable farmland. Under existing law, the owners would have no right of compensation. It is interesting that Dr. Viner is quoted in today’s Eastern Daily Press as saying that if that option were ever used, people who lost property or their livelihood should be compensated by the Government. I shall return to that point.
As the Minister knows, the leaked report provoked anger and dismay in the communities immediately affected, where property value has been lost, and throughout the whole of Norfolk. I remind you, Mr. Martlew, that Natural England’s report was basically concerned with the Norfolk broads. Of course, Natural England and the Department for Environment, Food and Rural Affairs said that these were proposals and that nothing had been decided. During departmental questions on 1 May, the Minister said:
“It is not the role of Natural England to take such decisions; responsibility is with the Environment Agency.”—[Official Report, 1 May 2008; Vol. 475, c. 433.]
Nevertheless, the people of Norfolk feel that they are merely bystanders in a debate that dramatically affects their lives and livelihoods while others take decisions.
It may be that the issues need debating in a dramatic way. In the Natural England document, it was obvious that the authors wanted the radical proposal to be leaked. The report actually states that
“by selecting a radical option now, the right message about the scale and severity of the impacts of climate change is delivered to the public.”
It predicts “strong political resistance”. That is probably an understatement. The chairman of Natural England, Sir Martin Doughty—interestingly, he was a Labour councillor at one stage—believes that his organisation is “showing leadership” and facing up to realities. No apology there. He believes that the options that he outlined are stark, and that everybody should address them, particularly politicians.
However, the scientists, environmentalists and administrators may not be taking into account the public opinion that questions some of their assumptions and values. Two senior men of Norfolk have articulated that opinion in public. My old friend General Sir Richard Dannatt, Chief of the General Staff, the professional head of the British Army, a Norfolk resident and this year president of the Royal Norfolk show, said to the Eastern Daily Press on 17 April:
“I think to give up a great chunk of Norfolk to the sea without a fight is something I find quite counter-intuitive and quite difficult to do.
I really think we should continue to invest in the sea defences around there, I think it would be a tragedy to lose a wonderful area of the county by allowing the sea in without a fight.”
Then the Bishop of Norwich, Graham James, who is a great man, said at the launch of the new inshore lifeboat at Sea Palling on Sunday:
“The problem with any long term plan to allow villages around here to be claimed by the sea is that it has given the impression that people don’t matter. The consequential planning blight could make these coastal communities seem like prisons from which there is no escape.”
My hon. Friend makes an important point in quoting the Bishop of Norwich. Is there not underlying this whole debate, in some senses, the notion—semi-articulated—on the part of some of these official bodies that they do not think that people matter that much, and that, if there are wading birds or a rare species of grass or an area of special scientific interest, that counts for more than human beings?
I would like to believe that the official bodies do not believe that and perhaps, in general terms, they do not. However, that is certainly the impression they give. We all know that there is a massive interconnection between the environment, wildlife, human habitat and what we do. Having said that, the hon. Member for Great Yarmouth (Mr. Wright) and myself have at times been surprised by the impression given in the debate about whether the Acle straight of the A47 should be dualled. That would involve moving dykes or ditches, and we are still in the process of looking at the environmental impact and the damage that might be done to a few elements of wildlife. I must say that the wrong value system is at work in that debate.
The threats facing the coastal and inland areas of Norfolk are, of course, replicated elsewhere in the United Kingdom, including along the rest of the east coast: in Yorkshire; Lincolnshire; Suffolk, and Essex. More than 15 million people live close to Britain’s coastline. Norfolk is just one of a number of low-lying communities that must confront a series of real threats and dilemmas over the next 50 years, which include the real cost of increased erosion, and the storms and sea level rises exacerbated by global warming. They present local people and the Government with a stark dilemma: is it worth spending billions of pounds to defend homes and livelihoods, or, faced with inexhaustible sea level rises, should expensive coastal defences be abandoned, leading to the evacuation of land and houses?
As my hon. Friend will recall, last Thursday, our hon. Friend the Member for Louth and Horncastle (Sir Peter Tapsell) said that when the Lincolnshire coast was breached in 1953
“thousands of lives were lost.”—[Official Report, 1 May 2008; Vol. 475, c. 434.]
It was not just homes and livelihoods that were lost, but lives too. Is my hon. Friend the Member for Mid-Norfolk (Mr. Simpson) able to estimate what the worst-case scenario would be in Norfolk?
No, but I thank my hon. Friend for intervening and I will return in a few minutes to the historical context. Although circumstances have changed, that historical context is important.
I want briefly to consider flood defences and Norfolk under six headings: the nature and extent of the threat; what can be done in the short and long terms; the Government’s strategy; Government funding; the Government institutions to deal with floods, and finally and most important of all, the role of local communities and institutions.
First, I shall refer back to the intervention by my hon. Friend the Member for Vale of York (Miss McIntosh). What is the nature and extent of the threat to Norfolk? Norfolk, like other areas of the east coast, has faced serious floods before and I shall cite just two serious floods, and another incident when a serious flood nearly happened. In 1912, due to torrential rain, large parts of Norwich were flooded; indeed, at one stage, Norwich was physically cut off from the rest of the country for about a week. In 1953, Norfolk, Suffolk, Essex and Lincolnshire were flooded, and, of course, the flooding was far worse in Holland. Then, the sea walls were breached, partly because of disrepair dating back to the second world war. It was the usual scenario: a high tide and a major surge. At that time, hundreds of people were killed and wounded, thousands of people had to be evacuated, and tens of thousands of square miles of farm land were ruined. In November 2007, we came very close to another serious flood, when there was another surge that could very well have swamped large parts of Great Yarmouth and could have perhaps breached sea defences and introduced salt into the Norfolk broads, which would have been very unfortunate. We were very lucky indeed that that did not happen at all. So we are well aware of the extent of the danger and the power of natural forces.
Natural England, the Environment Agency, the Department for Environment, Food and Rural Affairs and many experts argue that the nature and extent of the threat, due to climate change and what we might very well call subsidence on a vast scale involving the eastern part of the United Kingdom, is much greater than any threat faced in previous crises. If the Minister concurs with such assessments which, within 50 years, might see the giving up of vast areas of the coast—not just along the east coast, but perhaps along the north-west coast too—he will recognise that this crisis is of a scale more associated with a major disaster or, indeed, a direct war against the United Kingdom. In that case, and if such assessments are correct, the Government’s response must be of a different order and on a different scale than we have seen before.
The Government’s response to this crisis is something that I assume is being addressed under their national security policy document. However, I must say that I am not convinced that, even if the Government accept the extent of this threat, they have yet to think through a strategy or produce a reorganisation of the relevant institutions, or indeed begun to communicate with public opinion on this subject. I will be interested to hear the Minister’s views on that.
No, if the hon. Gentleman does not mind. Other colleagues wish to take part in the debate.
What can be done in the short and long term? I get a feeling from Ministers and from Baroness Young, who is currently chief executive of the Environment Agency, which of course is the agency taking the lead on coastal flooding, that there is a sense of deep inevitability about the extent of flooding and also, to a certain degree, a pessimistic attitude. I think that I caught that mood in the interview that the Secretary of State for Environment, Food and Rural Affairs gave to Radio 5 on 4 April, in which he said:
“there are some very difficult decisions that are going to have to be taken. The Environment Agency has got the responsibility as it’s looking at the coast—looking at each bit of land, each stretch of coastline—saying, ‘Well, here are areas that we really, really do need to protect and here are some other areas where, over time, it may be difficult to protect for ever from a rising sea level’…In the end it’s partly about how much money we are prepared to spend as a country but it’s also about what nature in the end makes happen.”
That is hardly a clarion call to arms on this subject, and more like a sort of management, newspeak conclusion.
As I said, Baroness Young is the current chief executive of the Environment Agency. However, I am interested to see that she is about to go off to get another new job; she is down to be the chair of the new Care Quality Commission. That appointment must be agreed, but if she gets the job, she would leave her position with the Environment Agency. I only discovered that she might be getting that new position this morning by reading The House Magazine. That development, of course, would be crucially important. Given the lead role now taken by the Environment Agency, it will be up to the Government to get the best man or woman whom they can possibly find with the type of strategic vision and drive to deal with the major problems that we are facing.
Baroness Young has said:
“We have committed to trying to ‘hold the line’ for the next 50 years, but after this there are difficult decisions to make.”
She had earlier told an internal climate change seminar:
“I think the Norfolk Broads will go. They will definitely salinate.”
So she has already mentally decided that the game is up. I do not think that any of us—certainly those of us here who represent Norfolk constituencies—wish to take that view.
The Government’s strategy in facing the challenge appears to be one of fearing the worst and hoping for the best. We have seen the Pitt review and a plethora of DEFRA statements and policy papers, but I do not get the sense of the Government gripping this problem and providing reassurance to my constituents, those of other Norfolk Members, or those in other parts of the United Kingdom affected by both external and internal flooding.
The situation is not helped by the pseudo-military terminology adopted by many agencies, such as “holding the line” or “managed retreat”, although the latter term has now become “managed realignment”. Sadly, “managed retreat” gives the impression of embracing retreat. Many people in Norfolk lost relatives in the second world war in Singapore and Malaya. When General Percival, the officer commanding there, was faced with an appalling situation and the advancing Japanese, he decided to offer up space to buy time. There was a disorderly retreat down the Malayan peninsula, but he hoped that reinforcements would arrive by the time he reached Singapore. However, it was too little too late, and Singapore fell.
The Government need to set out a clear strategic plan—not a vision—for how they intend to face the challenges of flooding, the costs, the available options, and the robustness, or otherwise, of their Executive institutions. They must accept that we are looking for a multiplicity of in-depth flood defences and the involvement of local communities.
That brings me seamlessly to Government funding. The Government claim that they have increased funds for flood defences. That is true, but of course we must take into account that, in effect, there was a cut 18 months ago. They have increased spending on flood defences to £2.15 billion over the next three years, but that sum, much of which is for inland schemes, will fall far behind what is needed to protect the entire coast as sea levels rise.
The Secretary of State has already admitted that the model and its outcome are partly affected by the amount that we are prepared to spend. What discussions has the Minister had with the Treasury about the matter? What consideration has been given to the balance between the costs of building flood defences, or using natural flood defences, against the costs of areas actually being flooded or coastal areas surrendered to the sea?
The National Farmers Union has rightly drawn our attention to the link between food security, which is now a Government priority, and flooding. Our most productive soils, many of which are in Norfolk, are found in some of the most low-lying areas. How will managed retreat impact on our agricultural production capacity?
My constituent, Mr. Michael Sayer, is a former chairman of the Norfolk branch of the Country Land and Business Association. He was speaking and writing about climate change long before it became fashionable. He recently stated in the Eastern Daily Press:
“Currently, the issue is solely political. The new generation of draft Shoreline Management Plans (non-statutory as they are), merely express ex post facto rationalisation of previous Defra decisions on grant aid. Up to the mid-1990s, the Broads were seen to have a value to defend. Alter the basis of valuation for cost/benefit analysis, undervalue community, heritage and habitat benefits, halve the assumed value of farmland, apply a discount rate which (as opposed to an ‘ethical’ rate) undervalues future benefits, and then prioritise spending according to the number of heads presumed to benefit, and, unsurprisingly, the process predetermines the outcome. The area is now uneconomic to defend.”
Sadly, many of us fear that that is true.
After Government strategy and funding, we come to institutions, which are important. I understand that the Environment, Food and Rural Affairs Committee will publish its report on flooding tomorrow. I have not seen it, but, given the oral evidence that has been submitted, I suspect that it will question who is responsible for flood planning and co-ordination inland. At present there is a multiplicity of agencies, including the Environment Agency, Natural England, local authorities, water boards and the Highways Agency.
Since April fools’ day this year, the Government have made the Environment Agency responsible for a strategic overview of all flood and coastal erosion matters in England. The agency is responsible for 6,000 miles of coastline and 800 miles of coastal defences. Its new role means that it is accountable for decisions on sea flood risk management, including whether works go ahead. Its brief on flood risk management and the Norfolk coastline states that, before 1 April, more than 90 different authorities managed the coast of England. The change will mean a consistency of approach, clarity for the Government and the public, and better targeting of investment.
Such executive clarity is to be welcomed, but it raises many questions about flood defences in Norfolk. Will the Environment Agency be responsible for flooding inland? If not, there will be a major disconnect. Does the agency have the resources to meet its new responsibilities? I have already touched on the opportunity for a new chief executive to get to grips with the matter.
Can we have any confidence that the management team at the top of the Environment Agency will be able to do more than just manage problems? Many excellent people work for the agency, but several hon. Members in the Chamber have unhappy memories of the agency being unable to deal with major challenges such as the foot and mouth outbreak and other problems, which led to public confidence being undermined. To use the Prime Minister’s terminology, this will be a challenge for the new Environment Agency, and we will be looking to the Minister to provide our constituents with a great deal more confidence.
Finally, I want to press the Minister on the role of local communities and institutions. The row over the leaked Natural England report highlighted the anger and fears of local communities that feel that they are the last to be consulted about their future and their homes. All of us in politics and in government know that the public are no longer prepared to be deferential and to accept the opinions of the Government or experts being handed down to them. They will not knuckle their forelocks and say, “Thank you very much, I agree with what you say.”
There is a fundamental question about flood defences on the coast and inland. The Dutch have long recognised that protecting the coast and managing inland waterways is a national undertaking. Those things must have priority in the Government’s national security strategy. Should coastal committees be overruled if they oppose managed retreat and suggest using, and start to use, their own resources to defend their own communities? That has already happened on a small scale in Suffolk and other parts of the country.
Norfolk people are not fools. They do not have their heads in the broads or anywhere else. They know from history the power, nature and risks of flooding. They recognise the kind of threats that they are likely to see in 50 years and beyond, but they object to a mood that appears to value wildlife above human life and well-established communities. Local farmers and people frequently say that their knowledge and expertise of the land, the environment and waterways is not sufficiently taken into account.
Norfolk people are not prepared for a managed retreat. All retreats end in defeat, unless there is a counter-attack. In August 1942, before the battle of El Alamein, General Sir Bernard Montgomery told his staff to tear up all plans for a withdrawal, to hold the line and to counter-attack. That is what our constituents demand.
I congratulate the hon. Member for Mid-Norfolk (Mr. Simpson) on securing this timely debate. It is probably one of the few subjects on which we have joined together to press a point not just for our constituencies but for Norfolk and beyond. Indeed, it has always been seen as a cross-party issue, and I am pleased that several hon. Members have joined the debate today.
My constituency of Great Yarmouth is in one of the lowest lying areas of the UK. It stretches from Winterton-on-Sea in the north to Hopton-on-Sea in the south. Much of that area is always under threat from the sea. It also goes west to the border of Potter Heigham, which is a significant area as far as the broads are concerned.
For centuries, the sea has been Yarmouth’s fortune: from the early centuries when the herring industry made Great Yarmouth one of the most important ports and towns in the UK, right through to Victorian times and the start of the tourism economy, to the 1960s and beyond with oil and gas, and now to the next phase. I hope that the new harbour will bring new hope and industry to Great Yarmouth. Each one of those eras has contributed to the nation’s economy.
As the hon. Member for Mid-Norfolk explained, the floods in 1953 affected all the east coast areas. Great Yarmouth was one of the areas that was flooded, and several people along the coast lost their life as a result. At that time, flooding was regarded as a natural phenomenon. As has been said, in November 2007 the east coast was again under threat from a tidal surge, and apparently it would have been the same level as the one that occurred in 1953. Defences have been improved marginally since then, but unfortunately it was still touch and go as to whether Great Yarmouth would be inundated with water. That would have resulted in more than 6,000 properties being flooded for a considerable time. I know, Mr. Martlew, that you had experienced that in Cumbria from a different facet, and I understand that, years later, people are still suffering, so we know what the effect would have been if water had breached the banks on the east cost. We are thankful that we were not in that situation, but we had a warning that the sea is there and is dangerous. We accept that climate change is causing an increase in sea levels, and we need to take that on board.
The report from Natural England gave the worse-case scenario: that the retreat of the land to the sea would go back for miles, although that would not affect much of my constituency. A small area of West Somerton would be affected, but I will leave that to the hon. Member for North Norfolk (Norman Lamb) to discuss. However, the scenario would have a serious effect on Great Yarmouth in several ways. If part of the land retreats to the north, it would eventually have an effect further south, and that would be the thin end of the wedge.
Over a number of years, the economies of Great Yarmouth, Norwich and further south would be affected. I am not saying that that will be the case, but I would like the Minister to reassure us that he will look seriously at these issues. I have been fighting on behalf on a number of communities on the coast because there has been a failure to understand that the problem is not flooding per se, but coastal erosion. Everything on the east coast is connected, and a number of cliffs are in danger—from Winterton to Caister and from Great Yarmouth to Hopton. Communities on the back edge of those cliffs are certainly at risk. For example, in Scratby, properties are within yards of the cliff edge and the speed at which erosion has taken place in the past four or five years is far in excess of what anyone could have anticipated. Projects have been put forward by the Scratby Coastal Erosion Group and the Winterton group, and they would delay erosion for a number of years and give security of tenure to residents—indeed, the projects would also provide value for money. Some 12 years ago, a berm was put in place in front of the cliffs, and it has held back the tide.
In the debates held over the past few years, one of the bones of contention, which has been alluded to already, is the question of why we are in this position. I believe that one reason for the problem is dredging. I know that some Government scientists will say that dredging has no effect whatsoever, but I have lived by the seaside and I have always said that if someone goes down to the sea edge and digs a hole, within a minute the hole will be filled up with sand from the extremities. That is a matter of simple technology and a simpleton could come to the conclusion that dredging will steepen beaches at the edge near coastal cliffs; it must have that effect.
I have called for the Government to abandon dredging, but my appeal has fallen on deaf ears. I have even asked them to stop the export of dredging materials, which would reduce that particular problem. Again, that has fallen on deaf ears because of the significant contribution made to Treasury coffers—the value added tax levy means that hundreds of millions of pounds go to the Treasury. Will the Minister either abandon dredging with immediate effect, or give the east coast communities that are affected by dredging the resources to deal with the effect that it has on coastal resorts? That may well cost £200 million to £300 million a year over a number of years, but I think that it would be money well spent. The Natural England report called for natural habitats, and it would be worth spending the money for environmental reasons. The area is of special scientific interest, with Ramsar sites and other sites of historic interest.
As has already been mentioned, we have fought for many years—too long to remember—for safety measures in relation to the dualling of the Acle straight and for the dykes to be moved. Halvergate marshes are always significant in the arguments about that, but if they are important, so are the Norfolk broads and the whole of north Norfolk to the ecology of the area and the Government should also defend them. They should also defend the communities affected and the important site of the broads, as that would bring more resources into the UK economy—through tourism, agriculture and other means.
Will the Minister take on board those comments? I understand that the scientists will say something completely different, but they should also take those comments on board given the issues that we need to address on the east coast. We should protect the communities and the natural environment as much as we possibly can, and we must invest in a good future for the rest of Norfolk and the UK.
I congratulate my neighbour, the hon. Member for Mid-Norfolk (Mr. Simpson), on securing an incredibly important debate. It is good to see so many Norfolk MPs speaking with one voice on the issue—I think only one Norfolk MP is not here.
I shall start by stating a basic principle: it is the duty of the Government to defend their people and communities. It is an abdication of that duty if these communities are abandoned without the Government doing everything in their power to protect them and defend the coastline.
I speak as the Member of Parliament for the area most affected by this option—I recognise that it is no more than an option—but I want to leave the Minister in no doubt about the strength of feeling in the communities affected. In the last month, I have attended meetings at Hickling, Potter Heigham and Sea Palling. In those three meetings we have probably spoken to more than 3,000 people—remarkable numbers of people attended at short notice. The mood of those meetings was impressively calm, but there was no doubting the real anger, dismay and fear of many people in the those communities. People are absolutely determined to fight against this option being pursued further.
I wish to make it clear to the Minister that although on the face of it this is a theoretical, research exercise—as David Viner of Natural England described it in the Eastern Daily Press this morning—however far into the future the proposals will be, they will have a very real, immediate impact. The Minister and I have discussed those problems in the past in connection with the shoreline management plan, which affects a whole stretch of coastline in Norfolk and Suffolk, and covering the constituency of the hon. Member for Great Yarmouth (Mr. Wright).
The area affected is not a wealthy one; it is actually a low-wage economy and many of the people in those communities have everything that they have ever worked for invested in their home. However theoretical the option is, the publication of the leaked document has had an immediate impact on the value of their homes. My office has been contacted by people who have lost house sales and who have been told by estate agents that the value of their home has decreased. In addition, people who had decided to move to the area have now changed their plans. There has been a real and immediate impact. The area is beautiful and unspoiled; its landscape, its communities and its heritage are unique, and it is very much worth fighting for.
The heart of the problem seems to be a disconnect between the scientists investigating the impact of climate change and the people in the area. The scientists are right to carry out their investigations—the job needs to be done—but it is an academic exercise. They often look far into the future when considering the potential impact of rises in sea level. They inevitably speculate about the extent of that rise but without understanding sufficiently the impact that their words are having now on the communities involved. The words appear callous to those affected, even if they are not intended in that way. I believe that there is an innocence about the scientists. They are doing their job, but they fail to recognise the impact of their words. If we allow that to continue, the effects will appear callous, especially as something can be done to bring the matter to a close. The report makes no reference to people. Inevitably, the report is all about the natural environment, as that is what Natural England is charged with considering.
There is a way forward. First, the Government and the agencies involved—the Environment Agency and Natural England—must give a clear and unequivocal commitment that the coastline will be defended. Secondly, we should not speculate about the distant future without addressing the need for financial security for the people and communities affected. I note, as did the hon. Member for Mid-Norfolk, that David Viner referred to compensation. The Minister and I have talked on the subject at some length, but it is something of a breakthrough that a scientist from Natural England should use that word. However, to continue discussing future options would show a callous disregard of the rights of the communities in the area, especially now that we know the immediate impact of those discussions.
I have no doubt that there is a threat from climate change, and I have always said that Norfolk is on the front line. The hon. Member for Mid-Norfolk was right to point out that the potential consequences are even more calamitous in countries such as Bangladesh, but for England, our county is on the front line. None of us knows what the impact of climate change will be, but if its impact is great we cannot leave those on the front line to bear all the costs. That is a basic principle that goes way beyond this issue. It is a societal problem, and the general principle should surely be that society as a whole should cope with the costs.
Adaptation is now included in the Climate Change Bill, but there is a cost attached to it. The Minister and I have spoken about the £30 million that has been allocated to considering adaptation over three years. It is a start, but the cost in the longer term will be much greater.
I am grateful to the Minister for allowing me and Malcolm Kirby, a local campaigner, to meet the working group from his Department to discuss the matter. However, we also need a proper review of the cost-benefit analysis when considering the losses that occur when the coast is lost to the sea. An initial analysis suggests that the cost-benefit analysis used in the shoreline management plan is deeply flawed as it does not properly show the losses that would probably occur.
In the short term, I call on Natural England formally to withdraw the option paper, and I wrote today to its chief executive. It seems to me that if the agency is apologising for its impact, it must withdraw the option. We cannot allow matters to fester. I call on the Minister to make a clear statement advocating withdrawal of the option. I know that he understands the importance of social justice, and that one cannot consider the science without also considering social justice. I also call on the Minister to visit Norfolk to meet local representatives, to talk to the communities and thus to understand the impact at first hand. We would welcome him to discuss the matter.
It is an issue of real urgency. We must not allow it to fester. We owe it to those communities to have the option withdrawn without delay, so that social justice is properly addressed.
I congratulate my hon. Friend the Member for Mid-Norfolk (Mr. Simpson) on securing the debate. I call him a friend because many Members are united in trying to protect the beautiful county of Norfolk. In the same spirit, I congratulate my hon. Friend the Member for North Norfolk (Norman Lamb) and his action team, which includes Malcolm Kirby.
I have lived in Norwich since 1965. One of the beauties of living in Norwich is that is it easy to get to the sea; the trouble is that the sea is now coming to us. Indeed, published works show that Norwich-by-the-sea is not an unrealistic expectation. We might not have to bother about that in our lifetimes, but it will certainly be a problem in the longer term.
Much has been said about the science, and scientists are very good at getting information. I believe in climate change. I know that Lord Lawson does not, but who cares? The effects of climate change are there to be seen. The university of East Anglia has a distinguished department of environmental sciences, which was founded by the father of the hon. Member for North Norfolk. Many people have been through it, and have done some distinguished, world-class work—including David Viner.
The trouble is that scientists know nothing about politics or the social scene. They spend their lives cocooned—don’t I know it?—in a university academic environment, and do not get out to see what problems people are having. I welcome the fact that there has been some resistance to the report, leaked though it might be.
The problems for the area’s farm land have been mentioned. We know that we will need to increase the amount of farm land in our country—and in the world. There will be problems with having enough maize, rice and other crops to feed starving people—not only in the developing world, but perhaps here. Every time the sea comes in, farm land disappears, crops disappear, and farmers disappear or become bankrupt. That is very much part of the Norfolk way of life.
Science is useful for telling us what can happen, but it is very poor at deciding on new technology to do something about it. Science is about knowing the facts, but technology is about knowing what to do. I believe that we have not invested enough in considering how we might hold back the sea.
A friend of mine—Professor Vincent of the university of East Anglia—wrote to me about his work on the Sea Palling breakwaters. Sea Palling is a fine place with a great cricket square, and its people are wonderful. It is a lovely village that needs to be protected. When the Tennessee valley authority flooded areas in the United States, I remember that there was uproar there and that fights continued for years. Again, compensation was an issue, and consultation was poor.
Professor Vincent looked at the breakwaters in place to protect the sea wall and dune line at Sea Palling. He says that they are
“working pretty well although they have yet to be tested against a repeat of the '53 storm surge. More interesting are the potential impacts on the beaches 'down-drift'—towards Horsey—all the sand comes from the erosion of the cliffs between Cromer and Happisburgh (so protecting the cliffs reduces the sand available to the beaches!) and the sand 'flows' south-eastward along the beaches, but comes to a grinding halt at Sea Palling!”
As we heard from my hon. Friend the Member for Great Yarmouth (Mr. Wright), that also puts Great Yarmouth at risk, because the sand does not move down there. Scientists tell us that the protection creates problems elsewhere, so we need to do something about both problems. We cannot sort one out and leave to the other to continue. It is important to remember that there is a knock-on effect. The Environment Agency has propped up the beaches down Happisburgh way for two years or so, and things seem all right at the moment, but the problem is ongoing.
We have heard much about what the Environment Agency has said, but I finish with a final irony. At 4 pm tomorrow, the House will consider the Broads Authority Bill, but if we allow things to continue, will we have the broads to protect, and will any legislation be worth it?
I congratulate my hon. Friend the Member for Mid-Norfolk (Mr. Simpson) on securing the debate. I shall speak briefly about North-West Norfolk and then touch on some of the points that have already been made about the Natural England option paper and villages in north Norfolk.
As my hon. Friend pointed out, severe floods in 1953 led to great loss of life. In fact, the 1978 floods were worse, but by that time sea defences had improved immeasurably. Although there was significant damage to property, only four lives were lost—I say “only four”, but that is in contrast with the hundreds lost in 1953. Since then, there have been significant improvements in sea defences in my constituency, much of which lies below sea level. King’s Lynn has always been under threat, and I was fortunate enough, roughly 20 years ago, to be afforded the honour of unveiling the plaque to mark the completion of its sea defences. The plaque, which is still in King’s Staithe square, has survived the ravages of the elements, marauding youths and eight years of a Labour-controlled council, and I am proud of it.
The hon. Member for North Norfolk (Norman Lamb) has raised the issue of flood sirens on a number of occasions. They played an important role during the 1978 floods in getting people out of their properties, particularly beach houses in places such as Heacham, Hunstanton and Snettisham. The Environment Agency argues that it has a mobile telephone alert system, and that people are on the internet and have land lines, but half the joy of owning a beach house in Heacham, for example, is getting away from the madding crowd and modern appliances, so some people do not have land lines or internet access, and some will not have their mobile phones with them. I thus argue that keeping the flood sirens is important. Will the Minister address that point?
On the leaked paper, people in my constituency say that if plans are being considered by a major Government conservation body for parts of north Norfolk, they could be considered for other parts of Norfolk. That is why there is so much concern and anger about the way in which the leaked paper went about portraying and explaining that option. As my hon. Friend the Member for Mid-Norfolk and the hon. Member for North Norfolk pointed out, we are talking about 11 sites of special scientific interest in the area totalling 8,000 acres, and 25 square miles of low-lying farmland. As my hon. Friend pointed out, grain prices are rising sharply and world food shortages are predicted, so Britain’s prime arable land is even more vital. We are talking about four freshwater lakes and broads, 6,000 houses worth roughly £2 billion, six villages and five mediaeval churches. I find it ironic that Natural England, which is the Government’s principal conservation body, is even considering a paper that would lead to the destruction of those 11 SSSIs.
I had a close look at Natural England’s report. It is riddled with platitudes, glib generalisations and typical new Labour speak. As my hon. Friend pointed out, Natural England is a classic new Labour body. However, it should not interfere in such an issue, and it has caused huge alarm.
My hon. Friend the Member for North Norfolk—he is my friend for the day—mentioned the blight on properties and farmland. Who will move to those villages? How will someone sell their house in such a market? Who is going to go to work on a farm or take another job opportunity with a business that is located in a village with that blight hanging over it? Natural England must wake up to the fact that it has caused a huge amount of damage to that community, and that it has had wider ramifications and implications across Norfolk and, indeed, the whole of East Anglia.
The hon. Member for North Norfolk said that Holland has a system for sea defences; indeed; the Dutch are passionate about that. I have been to have a look at some sea defences in Holland, which are a national policy priority. Furthermore, local farming interests are represented on Dutch bodies, and local farming co-operatives have made money available to help to pay for sea defences. I gather that the Environment Agency is not prepared to countenance such a situation in Suffolk. Will the Minister comment on that?
I am grateful to my hon. Friend for mentioning Holland. The Dutch have made a significant contribution to Norfolk and the fens over the centuries, and to the development of our drainage and dyke systems. There is an awful lot of expertise there. If Natural England is not able to show the way forward, should we not get on the phone and call up the Dutch?
My hon. Friend is right. The great Dutch engineer Vermuyden was responsible for draining much of my constituency, which is still way below sea level. The Dutch pride themselves on protecting their sea and agricultural farming communities. So much of the country lies below sea level that that is a major national priority. We in this country should attach a similar priority to that.
Dredging, which the hon. Member for Great Yarmouth (Mr. Wright) mentioned, is vital. Pat Gowan has briefed us comprehensively on sea defence and dredging. In a recently published paper, he stated:
“It is not so much that global warming induced sea rise is the problem, but that offshore aggregate dredging has brought about a 5 metre deepening of the offshore sea bed, so giving greater sea depth, hence more eroding waves, whilst the increased beach slope induced by the dredging has resulted in beach sand and shingle draw down, so lowering the beach and shoreline and thus allowing the tide mark to reach the toe baselines of our existing sea defences. Thus erosion and threatened underminement is created, plus loss of our natural dune and sand cliff defence”.
That eloquently sums up the point. However, according to Pat Gowan, in the past 18 years, 189 million tonnes of sand and shingle has been dredged from the area off the Yarmouth coast, raising £1.6 billion in royalties and VAT for the Exchequer. I find it distressing that 30 per cent. of that dredging is not for our own building and construction industries and that it is instead exported to the continent—I find that completely unacceptable. Surely some of those revenues could be earmarked for improving and shoring up our sea defences.
The Minister must give a firm undertaking that the Government will take seriously the concerns set out by Norfolk Members from across the political spectrum. He must give an undertaking that the Government will protect these communities. As I said the other day, if he does not, I fear that those communities and others will be submerged under a tidal wave of new Labour complacency.
I am conscious that I have a short time in which to speak, so I shall keep my comments brief.
I am afraid that the Government have, over a period, focused on coastal defences somewhat at the expense of inland defences. Like my hon. Friend the Member for North-West Norfolk (Mr. Bellingham), much of my constituency is at sea level, and much of the surrounding area is below sea level. We have a particular problem in the fens. Year after year, the Ouse washes are flooded by water flowing from effective flood alleviation measures in Milton Keynes and Bedford, which causes havoc to people who live in the fens, particularly in the village of Welney. Its residents cannot cope with the problem.
My hon. Friend the Member for Mid-Norfolk (Mr. Simpson) talked about national priorities, so why has Norfolk suffered year after year because of the Government’s good will elsewhere? Welney is connected to the rest of Norfolk by the A1101, but only when the road is not under 3 ft of water. Last year, the area was flooded for more than 100 days. At the start of the year, the village was cut off on two sides because of heavy flooding. Local residents face long detours simply to reach their homes and places of work.
Fen flooding has had a terrible impact on local trade and business, and particularly on the rural economy, which my hon. Friend mentioned. It seems to my constituents that nothing is being done, despite the frequency of the flooding. A little more than a year ago, I raised the matter with the Government in an Adjournment debate. I highlighted how flooding in the fens had become significantly worse in the past seven years and how people in the area were worried that that would ultimately result in businesses closing and people having to relocate from their houses. I was assured that the Government were as committed to rural areas as they were to urban areas. However, that is simply not the case in my constituency. It appears that less value is put on people’s lives in South-West Norfolk than elsewhere in the country, which is outrageous—[Interruption.] Why—I put this to the Minister, who has just intervened—does it seem that nothing concrete has been done a year on from that debate? How many more years must the area suffer before decisive action is taken?
Last month, the Secretary of State for Environment, Food and Rural Affairs pledged at least £34.5 million towards fulfilling the final recommendations of the Pitt review. Will the Minister make a commitment today to invest some of that money in finding a solution for people living in Norfolk’s low-lying fen areas and particularly in Welney, in my constituency? Those people need assurances that their plight is being considered in equal measure to that of people living elsewhere in the country.
Finally, the Environment Agency has been given £1.8 billion to spend over the next three years on ensuring that Britain can deal effectively and efficiently with the threat of flooding. Does the Minister agree, however, that the Government must exercise strong leadership to reassure people in places such as Welney, and indeed the wider Norfolk population, that Ministers are not passing the buck, as they have recently done? A solution must be found and found soon.
I warmly and sincerely congratulate the hon. Member for Mid-Norfolk (Mr. Simpson) not only on securing the debate, but on the measured yet powerful way in which he introduced it. Notwithstanding one or two contributions, there has been a striking degree of cross-party consensus, and that is because the people of Norfolk are united in their profound concern about not only what is happening, but what they perceive to be happening. Indeed, one of my concerns is how much people think is going on behind closed doors. There is a sense that there is a conspiracy of silence and that members of the public are having to find things out through leaked documents.
When we quizzed the Minister at oral questions last week, he said that it was not Natural England’s job to decide the matters before us, but it is producing reports based on the assumption that it is its job to do so, and no one is telling it not to. I therefore very much echo the suggestion of my hon. Friend the Member for North Norfolk (Norman Lamb) that Natural England should withdraw its report. If the proposed option is out of line with Government thinking, there should be no cause for the alarm and concern that we have heard about. If it is in line with Government thinking, the Government should come clean, rather than just saying, “Oh well, it’s not Natural England’s job.”
At the moment, all we are getting are Orwellian euphemisms, such as “managed retreat”, “coastal realignment” and “embayment”, which, although I would not call it my favourite, does sounds quite attractive until one realises what it actually means. However, the people of Norfolk deserve clarity. In responding to oral questions last Thursday, the Minister appeared to say something very clear, but then I read the transcript. He appeared to say that there was no question of abandoning communities, but when I read the transcript, it was clear that he had said that there was no question of abandoning them in the way described in the press. I therefore hope that he can remove any caveats today and say exactly what the Government’s position is, because, having heard him attempt to clarify it once, I am not clear what it is.
We have heard about compensation, which is a central issue. Talking about compensation does not mean that we have given up the ghost; indeed, it might actually mean that we will not abandon communities. If the Government had to pay compensation, as my hon. Friend the Member for North Norfolk said in a debate three years ago, the cost-benefit analysis would show that abandoning a community would cease to be costless—to be a write-off—and would have a bill attached to it. That might change the decision, so talking about compensation is not giving in. Furthermore, if those who are trying to sell, insure or mortgage their properties knew that their financial position was at least secure, they would have some reassurance. At the moment, however, we have nothing.
Can the Minister therefore clarify the position? In today’s Eastern Daily Press, David Viner says:
“There are other scenarios in place where, as it’s part of a managed action, compensation measures would be in place.”
When I asked about compensation on Thursday, the Minister said, “No, we are not paying taxpayers’ money for this,” and that appears to be the Government’s position. There is therefore some ambiguity about the position, and we need to know. It is not as if people come along, buy a house on the edge of a cliff and then say to the Government, “Oh, the cliff is giving way. We’d like some compensation.” We are talking about communities that have lived in their villages and built up their livelihoods over generations, and they are suffering only as a direct consequence of a Government decision—that is the critical point. We are not talking just about the forces of nature; the Government have a choice about how much money they spend and how committed they are, and we have heard of the different approaches taken in Holland. There are alternatives, and if the Government choose to abandon communities, they should surely have compensation.
Also on the issue of compensation, I want to home in on the comments of my hon. Friend the Member for North Norfolk, who represents the set of villages that are most directly affected. To the extent that we are talking about climate change causing rising sea levels, this is a problem that we have all caused. It is not exclusively the people of Norfolk who have caused this climate change—we have all caused it. If one set of people are particularly affected by something that we have all done, we should surely all share the burden of helping them. That is why we have government, public services and public goods. When we all cause a problem, we all share in the cost of putting things right, and I hope that the Minister accepts that important principle, which has been advanced in the debate.
The hon. Member for Great Yarmouth (Mr. Wright) raised the issue of dredging, which my hon. Friend has discussed in the past. Will the Minister clarify the Government’s views on that? Do they have a clear view about whether dredging is an issue? It certainly needs to be looked at.
The hon. Member for Norwich, North (Dr. Gibson), who is no longer in his place, mentioned not only the scientists who alert us to the problem, but the use of technology to tackle it. He asked whether enough investment was going into technological solutions that could, at the very least, ameliorate the problems.
The hon. Member for North-West Norfolk (Mr. Bellingham) mentioned the flood sirens. That is an important issue, which I hope that the Minister will address.
Taking all these issues together, I was struck by the analogy that the hon. Member for Mid-Norfolk drew with the impact of a war and its potential for casualties. The issue before us should be seen as a national emergency because it affects not just one small part of the country, but big stretches of the coastline. We have heard the thin-end-of-the-wedge argument, and the same issue will have to be addressed up and down the coast, so it should be seen as a national strategic issue, not delegated to quangos. Yes, such bodies should have day-to-day operational responsibility, but there is also the question of democratic responsibility, and that is where there is a big gap in the process. People read that Natural England is thinking about what would happen if communities were abandoned, but who takes the decision to abandon them? It is not Natural England, but nor should it be the Environment Agency, because it is not democratically accountable either. It is Ministers who are accountable.
As we have heard, the head of the Environment Agency said in a private or semi-private meeting that “The broads will go,” but whom is she accountable to? [Interruption.] That is a verbatim quote, and I will be happy to give the Minister the source for it. The hon. Member for Mid-Norfolk and I have both heard that the head of the Environment Agency thinks that the broads will go. Does the Minister think that they will? It would be interesting to have his views on that.
What is DEFRA’s response to all this, apart from to say that it is the Environment Agency’s job to deal with the issue? In 1993, the then Ministry of Agriculture, Fisheries and Food produced a flood control and defence strategy. Guess what the Government are doing about it—they are consulting on changing it. The consultation has been going on for years.
The Minister shakes his head, and I would not expect him to be believe me, so I have brought a House of Commons Library note with me. It says:
“DEFRA is also consulting on proposals for a new Government strategy for flood and coastal erosion risk management in England to update that published in 1993.”
Perhaps the Library is wrong on that. The worry is that we have quangos that are accountable to no one in discussing options that they are apparently not supposed to discuss because that is not their job. At the same time, we have Ministers who are not saying anything terribly clear and who are leaving people with uncertainty.
I simply conclude by asking the Minister one question. I want him to suppose that we were talking about his house and that he opened his local newspaper to discover that a Government body was looking at options to abandon his house to the sea, with the result that it was unsellable and uninsurable. If so, would he be happy with the management of the current process? The buck stops with him when it comes to the management of the process. We have heard from the communities affected that they are not happy with the situation, and I hope that the Minister will take the message to heart.
I welcome you to the Chair, Mr. Martlew. It is a pleasure to serve under you. I warmly congratulate my hon. Friend the Member for Mid-Norfolk (Mr. Simpson) not only on securing the debate, but on introducing it so eloquently and researching the issue so thoroughly.
Under the proposals, about 6,000 acres—25 square miles—of the Norfolk broads would be allowed to flood, and the scale of that loss has been reflected with passion in our excellent debate. We have had excellent contributions from my hon. Friend the Member for Mid-Norfolk, the hon. Members for Great Yarmouth (Mr. Wright), for Norwich, North (Dr. Gibson) and for North Norfolk (Norman Lamb), as well as from my hon. Friends the Members for North-West Norfolk (Mr. Bellingham) and for South-West Norfolk (Christopher Fraser).
The one issue that was not covered was insurance. My hon. Friend the Member for Mid-Norfolk did mention the properties being blighted, but what representations has the Minister received about the immediate impact that there will be on home owners and on businesses that operate on the Norfolk broads—in particular boating and other leisure amenities?
Home and business owners are between a rock and a hard place. The Natural England report will undoubtedly have led to a blight on property prices, and the insurance companies and, notably, the Association of British Insurers, have said that they want to renegotiate the statement of principles with the Government on the basis that those insurance companies will continue to give insurance cover only if the Government will pledge to increase the funding for sea defences. If the report has damaged the credibility of those sea defences in the long term, that will have an immediate impact on the ability of home owners and businesses to insure themselves and their properties, and it will affect the cost of the premium and any excess.
The Minister must have an answer for us today. According to the Natural England report, if the proposal were to go ahead, the sea would be allowed to breach 15 miles of the north Norfolk coast. The area would be flooded and would revert to salt marsh, to create a new habitat for wildlife. That takes us back to what my hon. Friends have said about the possibility that wildlife and birds sadly have a bigger Government following than home owners.
Will the Minister respond to what has been said about dredging? It has been put to the Government that dredging would have prevented the flooding in Yorkshire and other parts of the country that flooded very badly last year. The hon. Member for Great Yarmouth has said today that dredging has had a perverse impact in relation to sea level, leading to increased flooding. Will the Minister respond to the point that there are apparently plans to build a barrage on the Wash? If that is true, it would also have the perverse effect of increasing the flood risk to the Norfolk broads.
My hon. Friend is right to point out that a barrage across the Wash has been suggested, but most people in Norfolk think that that is a completely unrealistic scheme, which would do untold damage to one of the most important wildlife areas in the country, to say nothing of the economic importance of fishing and shipping.
The Minister will have heard what my hon. Friend has to say, but I want to ask what the impact will be of forcing the water on to the broads and forcing the fenland even further below sea level.
The Minister heard me say last week—and I think that my hon. Friend the Member for South-West Norfolk raised this point too—that there is a divide at work; it is not so much the north-south divide that we have seen in the past, but an urban-rural divide. Even in the eastern area, it appears that urban areas are being promised and given concrete flood defences, whereas all that rural areas are offered are feasibility studies. Will the Minister redress that balance when he responds to the debate?
The Conservatives consider the risk of coastal flooding to be one of the greatest challenges that the country faces. It is incumbent on any Government or incoming Government to draft a national strategy to consider every possible solution for the protection of the nation’s coastline. If the Government are not prepared to do that, an incoming Conservative Government would certainly be prepared to take up the cudgels. Conservatives would see allowing the sea to flood the land, and realigning the coast of north Norfolk, as the last possible option. That would be highly regrettable with respect to the loss of property, of part of our cherished national heritage in the Norfolk broads, and of prized farmland.
The Government must answer the charge that they are being completely inconsistent about the science on flooding and on the response and adaptation to climate change. Will the Minister solve this matter for us today? The outgoing Government chief scientific adviser, David King, claimed that global warming and climate change were the greatest international threat that the country and the whole global community faced, whereas the incoming chief scientific adviser, Professor John Beddington, has claimed that the threat in relation to food security is greater even than that from climate change. If that is so, why are the Government even considering a report on the possibility of allowing 25 square miles, or 6,000 acres, of prime land in the Norfolk broads to be lost? Conservatives believe that it would be deeply regrettable, while we face challenges on food security and climate change, to lose prime productive farm land to flooding, as well as suffering the serious loss of a large part of the Norfolk broads as a leisure amenity. Alternative options should be explored first, and it is incumbent on the Minister to share with the Committee today what those are.
What, in principle, are the alternative options, and what would they cost? The Opposition do not have access to that information. What would be the cost of a rolling programme—the Government seem to like rolling programmes—to shore up the sea defences, perhaps by taking up the suggestions about using materials that are dredged up, which were put forward today by the hon. Member for Great Yarmouth.
And by my hon. Friend. Will the Minister give us an indication of the costs of the alternative programmes?
We have generally recognised that fluvial flooding has been one of our greatest challenges. Last year, dramatically, we saw for the first time the damage that surface water flooding can do, when 48,000 homes were flooded, 7,000 businesses were damaged, and 13 people died. More traditionally the role of the Environment Agency, and the responsibility of the Government, through DEFRA, has been to deal with coastal flooding and inundations from the sea. Today’s debate shows that low-lying areas of eastern England are particularly vulnerable in that respect.
The hon. Member for Northavon (Steve Webb) raised the question of compensation. Home owners and businesses that operate in the Norfolk broads have generally been led to believe, like the rest of the public, that their property will be protected from flooding. As the law stands, and as my hon. Friend the Member for Mid-Norfolk has said, there is, regrettably, no right of compensation under existing law. However, we do have the concept of human rights.
The possibility of a change of Government policy, given the fact that the people in question have had an expectation that their homes would be protected from flooding, means in our view that, at the very least, the principle of human rights would apply in relation to the loss of enjoyment of the Norfolk broads as an amenity, and loss of farm land, but even more importantly in relation to the possible loss of lives, homes and businesses. If the Minister is again unable to respond to the point about compensation, will he explain what right anyone living in any of the constituencies so eloquently represented here today would have to make a claim for loss of enjoyment, loss of the right to a home, or loss of the right to a livelihood, under the human rights strategy?
The Government have an opportunity to respond to widespread, indeed national, reports about this matter—they are not just in the Eastern Daily Press. I had the good fortune to represent the whole Essex coast for 10 years in the European Parliament. I am now a Yorkshire MP and last year we suffered, after Gloucestershire, or perhaps jointly with it, very badly. For all those reasons—to protect a leisure amenity that is probably the most widely enjoyed in Great Britain, and, more important, to protect home owners, businesses and farm land—we wait expectantly for the Government’s response.
It is a pleasure to be able to respond to this debate. Sincere congratulations are due to the hon. Member for Mid-Norfolk (Mr. Simpson). As a Minister, I know that when Members from throughout an area attend a debate, it reflects real public concern, and it is important that I should be able to respond.
Unfortunately, a number of misunderstandings and myths have been perpetuated in this debate. I am grateful to the hon. Member for Mid-Norfolk for giving me a platform for putting some of them right. I shall respond first to the substantial points made by the Opposition spokesperson, the hon. Member for Vale of York (Miss McIntosh), rather than to the detailed points made, which I will cover if I have time. In my view, the hon. Lady is perpetuating a number of myths that are causing great public concern. I understand the seriousness of concern about house prices and the economic prospects for particular areas, and I note that the hon. Member for Northavon (Steve Webb) said, quite fairly, that there is a difference between policy and perception of policy. We must cover both.
It is not true that, as the hon. Lady said, the Association of British Insurers is trying to re-negotiate the statement of principles because not enough money has been put aside for flood defence. The statement of principles was due to be discussed anyway; that is built into it. It is discussed every three years. The ABI has not said that it will not agree a new one unless there is more money. She said that dredging had been used in Yorkshire, but it is different in Norfolk and Suffolk. In east Yorkshire, rivers and drains were dredged; in Norfolk, we are talking about dredging the sea.
Hon. Members mentioned plans to build a barrage across the Wash. My only knowledge of that is what I have read in the papers. The hon. Member for North-West Norfolk (Mr. Bellingham) rejected the idea on the ground of environmental protection, and quite right too. That is Natural England’s concern as well. The hon. Member for Vale of York perpetuated the line, which I can only conclude is party political, that the Government are protecting urban areas and not rural ones. That is simply not the case. It is borne out by the facts about money spent in the area to protect Norfolk from flooding from the sea, for example. We have spent more than £40 million in the past 15 years. The Environment Agency has £7 million under this year’s programme and a total of £21 million approved for planned works between 2008 and 2013.
The Liberal Democrat spokesman, the hon. Member for Northavon, criticised us for reviewing a policy established in 1993. That is another myth that Opposition parties wish to perpetuate for party political reasons—the idea that in rural areas, we simply review policies rather than spend money. That is not the case. I have said that we have spent money. In fact, more money is spent in many rural areas than in urban areas. There is no difference. I must hammer the myth that all we do is review. Of course capital programmes are based on rolling programmes. All finance decisions are based on that.
I come to the nub of this debate and the issue that I imagine the people of Norfolk will be looking at. The Government have not changed our policy towards fluvial or sea defences in Norfolk. The report by Natural England considered the potential impacts of climate change, including on the natural environment, based on different possible options in a post-50 year scenario. The Government are committed to our existing policy to protect Norfolk as best we can for the next 50 years. The shoreline management plan is subject to discussion with the local authorities in the area, and many hundreds, if not thousands, of people have participated in the consultation on it. Although it is in draft form at the moment, it is public and transparent, and it commits to defence for 50 years. By April next year, although I intend to publish it before that, it will lay out proposals for the post-50 year scenario.
Does the Minister understand that even though we are talking about a post-50 year period, if no financial security is in place now—no compensation scheme or whatever one wants to call it—even discussing options for some future date can have an immediate blighting effect? That must be addressed. I know that he understands the importance of social justice.
I am grateful to the hon. Gentleman for making an important and serious point. We are having that discussion.
The hon. Member for Vale of York said that the public expect no change in policy. She must address the issue of climate change. If she is serious, her policy must state what the response to it should be. She must answer the question that we must all answer and that was posed to us by the hon. Member for Northavon: is there an argument for compensation if damage has been caused by climate change rather than by the natural processes of erosion or flooding? The question of how to determine that differentiation is exactly the reason why Natural England is charged with its task. It was said that Natural England gives the impression of being more concerned about the environment than people. Of course it is; it is the body responsible for the natural environment. That is like saying that the Royal Society for the Protection of Birds gives the impression of being more concerned about birds than people. That is its job.
I must hit on the point made by the hon. Member for South-West Norfolk (Christopher Fraser). He said that the lives of his constituents were not given equal value to the lives of others. That is not a fair accusation, it is not true and it is not backed up by the statistics. I give his constituents that reassurance.
A house on the sea front at Poole is worth substantially more than a house by the river in the centre of Leeds. Does that mean that the Government care more about the people of Poole than the people of Leeds? That accusation has been made by local authority leaders in Leeds. Those are matters of consideration for the Government. The hon. Member for Vale of York, who purports to speak for a party that wishes to form a Government, must answer those questions rather than bandying about accusations that are not based on fact.
May I make this point about compensation? A number of hon. Members have asked about it. It is not the Government’s policy to give compensation for the impact of floods and coastal erosion. One of the measures at our disposal is—I apologise for the title—the adaptation toolkit. [Interruption.] It is not a great title; I concede that. It considers what measures can be taken, particularly to address the point made by the hon. Member for North Norfolk (Norman Lamb). The discussion includes hon. Members representing the areas concerned.
I reject the charges that have been made. The hon. Member for Mid-Norfolk said that funding was inadequate, which I reject, and that the institutions were inadequate. I admit that there has been some confusion in the press; I suspect that that confusion has been deliberately fuelled. He suggested that the role of communities was not considered important, yet consultation on the shoreline management plan, which is causing the perceived delay, is occurring precisely so that hon. Members and their constituents can be involved. He also said that the Government are defeatist. Far from it. We are spending enormous sums of taxpayers’ money on the matter.
I hope that the Minister accepts that I, and most of my colleagues, were trying to make some serious points. However, he only had a short time in which to answer, so I would be most grateful if he would give a commitment to read through the report of this debate and then to answer in detail the specific questions raised.
Welfare to Work (City Strategies)
I would like to begin by thanking the Minister and his officials for their assistance. We are working together very closely on welfare to work strategies and shall continue to do so. One Nottingham—the local strategic partnership—sees employment and skills as a key dimension of our attack on underachievement and deprivation in our city, and has made that a high priority. Partners across our city are working hard to reconnect the nine poorest wards with the new opportunities that Nottingham’s economic expansion has created.
Our employment and skills partnership includes Jobcentre Plus, the Learning and Skills Council, business, the voluntary sector and the city council. In July 2006, One Nottingham became the first—and only—local strategic partnership to win a welfare to work city strategy, which is run by our employment and skills board and has brought nearly £3 million of new investment into the city to help to get people back into work. That is matched by the employment and skills projects, which remain the largest spending item of the One Nottingham budget. We have not simply arrived at the conclusion that job creation, skills and employment are important in our city, but led the way by ensuring that the biggest spending in our admittedly rather meagre budget is on skills and employment.
The council leader, Jon Collins, and I, as chair of the local strategic partnership, have agreed four worklessness indicators in our local area agreement, which again underlines our commitment to this policy area. Progress is being made. Nottingham now has the fifth highest gross value added for residents in England outside London—£24,600 in 2005—and, in 2006, there were 8,500 more jobs in the city than in 2001, which represents an increase of 4.7 per cent. compared with a figure of 3 per cent. for England as a whole. That is a good record. We have begun the long-term process of changing our local economy from one dependent on low-skill and low-paid jobs to one dependent on higher paid, knowledge-based occupations. Again, progress is being made.
Nottingham now has a higher percentage of knowledge-based jobs than England as a whole—58 per cent. against 52 per cent. Between 2001 and 2006, the knowledge sector grew by 12.3 per cent. in Nottingham, compared with 7.6 per cent. in England as a whole. Of course, those are just statistics, but they indicate that, compared with the rest of the country, Nottingham has set out its stall and is already producing significant results. We are also well ahead in our city strategy target to reduce the numbers on working-age benefits. Nearly three quarters of the reduction came from supporting lone parents back into work. We are not picking off the easy groups, but we have a long-term strategy. However, if the improvements are to be sustainable, our long-term rate of improvement might actually have to slow down.
To deliver that change, Nottingham created one of the first employment and skills boards, which is now well established as a place in which all local partners can work constructively to tackle difficult problems. That has been successfully coupled to a robust local delivery mechanism known as “making the connection”, which has been adopted as a model of good practice in the regional economic strategy and elsewhere. It led to the establishment of a number of new, innovative programmes, some of which were funded by One Nottingham—my local strategic partnership. Some of our early successes include the introduction of learning champions, who are individuals from local communities who inspire others in those communities to take up training opportunities and to find work. They can be found in shopping parades, supermarkets and local markets. So far, they have engaged nearly 10,000 across the city.
Another early success has been the next step into work scheme, which provides careers guidance and helps people to apply for jobs. So far, some 2,000 people have been supported, 710 of whom have moved into jobs. Another success has been the work of partners such as Apricot Training Management Ltd, Enable, New college Nottingham and the training framework for care management, which collectively have helped nearly 1,000 people to achieve their first qualification. Nearly 200 of those helped on their journey back into work were lone parents, and more than 50 per cent. were from black and ethnic minority communities. Again, that is innovative, creative, interesting and original assistance, owing not least to the One Nottingham influence.
A small amount of money and a little magic dust helped that innovation to take place, which has since been supported fundamentally by the Department for Work and Pensions through the city strategy. So far, I think that we have done well. It has been a tremendous advantage to have the DWP completely engaged in what we have been doing. Working together—locally and nationally—we have managed to achieve a great deal. However, we are greedy in Nottingham and would like to achieve much more and to deepen and strengthen the existing effective partnership with the Department.
The city strategy programme is about more than just our small but perfectly formed projects. One Nottingham’s funding is the tip of the iceberg. The making the connection programme as a whole has seen more than 15,000 people and worked with 350 employers to help more than 975 long-term benefit claimants back to work. However, we are not complacent and know that our work in Nottingham must move to a different order of magnitude if we are to get thousands, rather than hundreds, into sustainable employment, which means that we must work effectively with local and national partners.
On a more personal point, those of us who work in this field must seek to simplify the plethora of titles and jargon if we are to communicate with the public and claimants, rather than with fellow professionals. Few would know that pathfinders, welfare to work programmes and city strategies are actually the same. The welfare to work plan does what it says on the tin. Perhaps the Minister and his officials will pay attention to the plea from me and colleagues who work tremendously hard in this field about trying to put this in plain language to connect with those whom we are trying to serve.
On a weightier point, I would like to put on the record my thanks to the Department, both at ministerial and official level, for such positive and encouraging advice and interaction, which we now need to take further. As part of the city strategy pathfinders network, we welcome that dialogue with the DWP and other Departments, which enables Nottingham to progress our ambitions, and with other city strategy pathfinders, from which we have been able to learn.
What are our next steps? We have some to take with the Department and our local partners, but others must be taken within the broader context of what we are trying to do in Nottingham as a whole. Last Monday, the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Stirling (Mrs. McGuire), supported by a video message from the Prime Minister, launched Nottingham as the UK’s first early intervention city. The objective is to break the cycle of intergenerational underachievement—no more sticking plasters, no more little schemes, no more thousands of pounds here and there—and to get to the heart of the intergenerational cycle that often dooms people to a life on benefits. It becomes intergenerational in that there is the thought, “We are not going to be in work. We do not get the assistance that we need. We do not have the aspiration to break out of that intergenerational cycle.” In Nottingham, we have set ourselves the task of cracking through that cycle and starting a virtuous cycle, rather than a vicious cycle, in which people aspire to get into work, to do well at school, and to get qualifications, skills and a job.
That is easy to say, but difficult to do. We need to give space to people in Nottingham to ensure that they are not targeted into oblivion in the short term, but supported as they take a long-term view. That means that we can build on success rather than merely tick boxes this time next year. Like our partners in children’s services, health, crime and drug services, neighbourhoods and communities, and housing, our skills and employment partners know that it is far too late for them to operate with failed 16-year-olds. It is essential that we get in much earlier to ensure that the required social and emotional skills are in young people for an effective work-ready 16-year-old. Those skills need to be laid down before the age of three and polished through good parenting and schooling.
In Nottingham, we have targeted a package of proposals at those in the zero-to-18 age range. The proposals include the family-nurse partnership, and the SEAL—social and emotional aspects of learning—programme in every primary school. We are helping teenagers to understand relationship building and the significance of social relations so that they can make the best of themselves and their excellent schooling. That will ensure that we tackle the problems well before they have even happened. At the end of the day, no one will know that they might have happened. At the moment, all we do is swat the mosquitoes instead of draining the swamp.
Skills and employment partners know more than any of our other partners that this is about not just working with an ever-replenishing stock of “hard to employ”, but cutting off the supply much earlier in the life cycle. In employment terms, that means building aspirations, developing enterprise, and improving support for people who want to use work as the way out of poverty for them and their children. Employment and skills will contribute more policy proposals to our early intervention package. The package reads across from employment and skills into health, and crime and drugs. I will relay one or two of those ideas as my speech develops.
We have already had some success in harnessing the support of the regional development agency through our close connections with Greater Nottingham Partnership and the support of the business community. We have some 75 employers joining us in our fit for work programme. Our next step is to maximise working on health, crime and drugs, children and families, and housing. Other partnerships and agencies are jointly planning to deliver more integrated and cost-effective solutions. We all have our plans in different silos. The local area agreement allows us to start pulling that together and to drive forward partnership activity that complements, in this case, employment and skills policy. For example, we are working with the local health partnership to enable GPs and health colleagues to recognise that, for many patients, work is the best prescription for achieving an aspiration to work. Working with our crime and drugs partners will also help. As city police commander Beebe said:
“If we address attitudes to work and developing aspirations, we will also tackle one of the major contributors to crime.”
Many of us have used the catchphrase, “The best crime prevention measure is a decent job.” Our crime and drugs partners understand that as much as our employment partners. Derek Stewart, the chair of our crime and drugs partnership, has underlined the potential for improving the wraparound assistance that helps ex-offenders and problematic drug users so that more of them can get back into work.
This morning, I received an e-mail from the probation service in Nottinghamshire. It told me that through the Offender Learning and Skills Service, the European social fund and Jobcentre Plus projects, work placements that would be invaluable in assisting offenders’ return to work have to be turned down because attending the placement would contravene benefit regulations, which would mean that the offender would lose their rights to benefits. A paper is on the way to the Secretary of State setting out those issues and asking for dispensation, so that a pilot scheme can be trialled in Nottinghamshire to allow an offender to accept unpaid work placements without benefit sanctions. Those bright and constructive ideas, which Ministers and officials can assess to see whether they work, are emerging from my challenge to our partners to help address unemployment and skills. The sign has not gone up saying, “That is nothing to do with us; we deal with crime and drugs.” Our partners are reaching across to say, “We have an idea about that.”
We are working with our housing partnership and our arm’s length management organisation, Nottingham City Homes. We can provide skills and employment components to isolated 16-year-old single mums who require supportive housing. One might not think that that is an employment issue. However, if we can help those single mums by supporting them to live in a decent place and by reassuring them that their child will be cared for effectively by themselves or carers, they become available for employment and training opportunities. Again, we see that read across to a housing partnership. Next week, I hope to take the matter forward when the chair of my housing partnership and I visit officials from the Department for Children, Schools and Families and the Department for Communities and Local Government. Obviously, there is a read across and we will keep DWP colleagues informed of our impact there.
We are working with our children’s partnership to tackle child poverty and to beef up our 16 to 19-year-old agenda. Therefore, a web of assistance and support— through partnerships with crime and drugs, housing, and children’s services—is being installed to help our employment and skills partnership. It is overarched by the mission of One Nottingham—prevention, pre-emption and early intervention—to make a reality of our drive to become an early intervention city so that problems can be eliminated and reduced at source, rather than massive public expenditure being used to tackle the symptoms much later, much more ineffectively and much more expensively. If there was a reshuffle coming up, I would like to see my hon. Friend the Minister on his way to the Treasury. If that happened, he could base the next comprehensive spending review on the theme of early intervention. I would like to see a three-year package that fundamentally changes the way in which public expenditure is used so that we can tackle the problems rather than just calm some of the symptoms.
Whitehall is following our lead, and might follow even further. The Secretary of State for Work and Pensions will join us in Nottingham to see some of the things that we have achieved and, hopefully, to keynote a conference on 5 June, in which he can outline some of the next steps that the Department and ourselves can take in the coming years. Above all, we require his support to continue to break down any remaining silos or obstacles that hold back an effective city strategy. However, to do that well locally, we require national clarity about the post-Leitch and post-Freud settlement. We can adapt any strategy and make it work, providing that we know what it is, and there are a number of ways in which we would like to influence what it is.
I hope that my hon. Friend the Minister will ensure that the Secretary of State comes to Nottingham armed with responses to a number of issues that we have presented via the city strategy learning network. It has produced a rather lengthy document—necessarily so—entitled “Request for further enabling measures”. I do not know whether the Minister has seen it yet; I first saw it only about half an hour ago, so I shall forgive him if he does not have it at his fingertips. From a cursory glance through it, it strikes me as entirely constructive and positive. It contains a number of specific and sometimes technical points that will cut away some of the things that practitioners are finding difficult to deal with when helping people get back to work, which we would all like to see happen as expeditiously as possible.
There is a great deal in the document, including about leadership, how to align targets and how to improve employer engagement. There are also a couple of things that I wish to address specifically. The first is accountability, scrutiny and commissioning. We need to know whether those responsible for city strategies will continue to deliver programmes themselves, or whether they will loosely oversee private and voluntary primary providers. We can operate either system, or both, but some clarity will allow us to work more effectively, should we be requested to engage more strongly with private sector or voluntary providers.
Nottingham’s city strategy partners are particularly keen to see movement on the request for enabling measures on local scrutiny, accountability and commissioning. We feel that our employment and skills board already fulfils some of the necessary functions, including aligning funding in the city strategy commissioning prospectuses, but a more formal role would be welcome.
Through our opportunities as a pathfinder, we have been able to influence local partners to engage more effectively in DWP commissioning. Forthcoming European social fund activity will be delivered by a new and innovative private-voluntary sector partnership, and we are keen to take up further opportunities to influence the DWP’s future commissioning activity in our area. We are also interested in exploring options with the DWP for joint commissioning as equal partners, and particularly how we can add value to larger DWP programmes through our local discretionary resources.
Another matter on which further work is necessary is data sharing. That applies particularly to our efforts to create an early intervention city. We would like proper data tracking of families, from the point at which unborn children are at risk of falling into a cycle of underachievement. We could start tracking through the midwife, then through the health visitor, the primary teacher and Sure Start and children’s centres, to get intervention to a young person at the earliest appropriate moment. The golden rule is that the earlier the intervention, the more effective and cheaper it is. When tackling drug abuse, for example, if we can get effective parenting skills to a mother and effective drug education to her child for £2,000 a head, that will save £200,000 a year on often forlorn efforts at rehabilitation, which has a very poor sustainability rate, at the age of 18. Little expenditure can be more effective if it takes place earlier.
Similarly, data sharing enables public, private and voluntary sector organisations to intervene early. That is why it is fundamental to what we are doing and to the employment and skills part of what our broader partnership is intended to do. We would welcome greater opportunities to use the collective authority and accountability of the employment and skills board to analyse the performance of providers of mainstream and discretionary provision locally and, crucially, to enable us to customise provision to provide a better fit with local need. To achieve that, it is crucial that the DWP and the LSC sign up to much more effective data and performance sharing.
The Minister would be surprised if I concluded my remarks without mentioning the 16-hour rule, and I shall not disappoint him. The current lack of flexibility in that rule is critical to our ability to respond effectively to employers’ needs. Making the connection partners are working with employers to develop training packages and secure guaranteed interviews, but they often find that they cannot deliver to the employers’ time scale, as training has to be extended over many weeks to work around the 16-hour rule.
A good example of the impact of the rule is our current work with E.ON and Working Links. We hope to deliver a significant making the connections package to ensure that we move as many priority group customers as possible into the 400-plus jobs that are being created. Flexibility in the 16-hour rule would enable our response to be much more effective and more relevant to such a major Nottingham employer and to our communities. We would be interested in engaging in more detail with the DWP and Her Majesty’s Treasury on reducing the unintended job-destroying consequences of the rule.
Of course, we would want any relaxation of the rule to be clearly linked to specific employer-led pre-recruitment activity, with guaranteed interviews and sustainable outputs. We do want not a way around the 16-hour rule that would allow thousands of students to claim; rather, we want to finesse the application of the rule so that it can do the job that I know the Department wants it to do. The devil is in the detail, and we believe that we can help the Department to work through that detail and make the rule more effective.
Much of our partnership’s work is on community engagement and raising aspirations. We see that as critical to being able to turn up the pace of addressing worklessness in our most disadvantaged communities, and we would welcome a cross-departmental making work pay forum to examine some of the practical barriers to people going back to work. The remit of that group must go further and consider attitudinal barriers and perceptions.
I am sure that my hon. Friend the Minister knows that I am not attempting to claim that mine is a typical English constituency—far from it. We have the highest number of teenage pregnancies of any constituency in the UK and the fewest young people going to university, so it is clearly unusual. The ridiculously tight boundary that has been drawn around the city of Nottingham also makes it unusual, since its statistics are not leavened by figures for any suburbs, rural areas or green space. The area is tightly bounded around the inner city, with its problems, and the outer-city estates that I represent, with theirs. That makes a mockery of Nottingham’s position: it is always low in league tables merely because we do not have a nice, comfortable band around Greater Nottingham that would put the city in the middle of most league tables, as we would wish. I hope that this is not a sore point, Mr. Martlew, but that is apart from Nottingham Forest being at the top of the league table that our local clubs share. My apologies for mentioning that.
Anecdotal evidence from our local communities and from our focus groups with clients suggests that misconceptions about the working tax credit and other in-work incentives may be another barrier to people going back to work. The Government’s pledge to deliver a “better off in work” guarantee is welcome, but further work on perceptions, which can sometimes be pervasive and damaging to local confidence, could be the forum’s key role. That would enable us to be locally sensitive, particularly in areas of chronic underachievement or deprivation such as the one that I represent. The One Nottingham organisation and our skills board also hope that the forum, in which we would be delighted to participate, would be able to take a longer-term view of welfare to work initiatives, and not least of the intergenerational scope of early intervention, to prevent problems from recurring.
I have spoken at some length, but I had anticipated that other hon. Members would join me—perhaps they are still travelling back after the bank holiday. I know that the Liberal Democrat and Conservative spokesmen want to speak and that the Minister will reply, but I will continue for a few minutes, if that is in order Mr. Martlew, because I want to use the time effectively and put one or two other matters on the record.
The city strategy learning network comprises all those cities that have a city strategy welfare to work programme. The cities involved have made several points, which I do not expect the Minister to answer today, but I urge him to read the document, because it contains some good ideas. One such idea is an adult advancement and careers service, and the document identifies priority areas for developing and piloting the new service. Will he consider whether such pilots could be used to test how assessment can be enhanced from day one of a claim, with more in-depth assessment for disadvantaged groups? Where possible, information on assessment should be shared across providers and other agencies, to contribute to the customer journey.
The delivery of a wide range of information and advice should be further co-ordinated and closer links should be forged with Jobcentre Plus. Perhaps unified branding should be developed across the service delivery partnership, which returns us to the confusing number of organisations. Even as someone who is on the inside and who is trying to help people to navigate their way through the system, I find that that issue recurs, and I am sure that clients have experienced it, too. We need more proactive approaches to supporting clients, such as skills health checks.
When I mentioned exploring the 16-hour rule with the Government, I should have discussed the inflexibility regarding eligible activity for Train to Gain funding. While I am at it, I want to throw in the extension of the education maintenance allowance and the cessation of the standard training allowance, which sometimes make it problematic for young people to start employment and access training rather than stay in education. The partnership could be used to improve those arrangements.
Nationally, the partnership effort should be assisted in Whitehall. The Department for Children, Schools and Families should consult city strategy partnerships on the implementation of the children’s plan to ensure that effective links are forged with extended school and child care provision, and the child poverty unit should prioritise city strategy areas for the proposed child poverty pilots. I hope that such links, including those to housing and health provision, are made more evident by the interaction between partnerships and the Department.
On making work pay, specific attention should be focused on a number of groups. For example, eligible child care costs are currently capped for large families; the level of housing benefit loss on taking up employment is prohibitive for homeless people housed in emergency accommodation; and non-working absent parents face potentially high immediate increases in maintenance payments on taking a job. There are many other such groups, including those who are using part-time work as a stepping stone into full-time work.
We must develop a more serious cognitive behaviour therapy arm of the city strategies. If we were enabled to do what we want to do locally, there would not be enough cognitive behaviour therapists in the private and public sectors to make the breakthroughs that we need. That issue affects individuals who may not need serious assistance with profound mental health problems, although some may need such help, but who need less skilled interventions—such people may need a friend, a helper or someone to motivate and encourage them in difficult times.
We have made a sound start in Nottingham, and we have developed imaginative proposals—we want to be at the cutting edge of what happens nationally, and we are. The city strategy welfare to work scheme is helpful, and I am delighted that it was advanced by the former Secretary of State for Work and Pensions, my right hon. Friend the Member for Barrow and Furness (Mr. Hutton), continued by my right hon. Friend the Member for Neath (Mr. Hain) and is now being taken forward by the current Secretary of State for Work and Pensions, my right hon. Friend the Member for Stalybridge and Hyde (James Purnell). If the DWP continues to listen to those on the ground who are trying to make the system work, a series of possibilities will open up, which will allow the implementation of the detail to make the proposals work. For example, when antisocial behaviour orders were introduced, they were regarded as a good thing, but it took several years of Members of Parliament, as much as anyone else, interacting with Ministers to make ASBOs reliable and effective.
There has been a good start both locally and nationally, but we need to know where the Government want to take us on this journey. I assure the Minister that wherever the Government want to move the welfare to work programme, those of us who care about under-skilling, under-training and under-employment in our constituencies, whether or not we work within local strategic partnerships, will be at his shoulder trying to make those programmes work. Again, I thank the Minister and his officials for all that they have done in putting the first phase of the city strategy in such good health.
I congratulate the hon. Member for Nottingham, North (Mr. Allen) on securing this debate. I do not know whether, as he has said, the bank holiday means that many MPs are still on their way to work, but the topic and this debate are important.
Although the hon. Gentleman has mainly discussed the city strategy debate and what is happening in Nottingham, he has raised a number of broader issues, which I want to consider. In addition, I represent an area of Rochdale that is still experiencing rising unemployment, and I hope that the Minister will address the issues around that.
After 11 years of this Labour Government, more than 9 million people of working age are unemployed or receiving benefit. More than 2.5 million of them are on incapacity benefit, of whom more than 1 million suffer from mental health problems. The figure for incapacity benefit has risen dramatically since 1979, when it stood at only 800,000. It is clear to me that successive Governments, both Labour and Conservative, have used incapacity benefit to mask unemployment. Although there is now a broad consensus that that is wrong, we are dealing with the legacy of that under-investment in people.
Liberal Democrats believe that work is good for most people. It is the best route out of poverty, and it provides benefits in terms of confidence and mental well-being. In the past 10 years, policy has been driven by the Treasury, and, as the hon. Gentleman has said, it has not been joined-up.
A holistic approach is required to deal with particular problems in our industrial towns and cities. That is apparent when one looks at the Public Accounts Committee report that shows that, except for the pathways to work programme for disabled people, which has been underfunded, and the jobseeker’s allowance for the over-50s, the programmes to tackle unemployment have failed to be a cost-effective solution. Similarly, the recent National Audit Office report showed that the likelihood of exiting JSA varies from 4:1 to 20:1, depending on the location of the jobseeker. The average likelihood is 9:1 and for people over 25 and the long-term unemployed, it is 40:1. Those statistics are entirely unacceptable and show clearly that, despite their rhetoric, this Government have not succeeded in dealing with some of the longer-term problems.
When announcing a review of the welfare to work strategies on 18 December 2006, the then Secretary of State, the right hon. Member for Barrow and Furness (Mr. Hutton), said that the review would address
“How we can tackle the ‘can work, won’t work culture’”.
I hope that the Under-Secretary of State for Work and Pensions, the hon. Member for Warwick and Leamington (Mr. Plaskitt), will tell us today where that review is going. However, I have to say—I am sure that many hon. Members who are not here today would, too—that it is not just the “can work, won’t work” attitude that needs to be tackled, but the “can work, can’t find a job” attitude. Earlier this year, the Daily Express did a large piece focusing on part of my constituency—the Falinge area—showing that more than 75 per cent. of the people there were on benefits and not working. I know from talking to a good many of those people that that is not because they do not want a job, but because the support they are given is inconsistent and short-lived, is not tailored to their individual needs and does not deal with some of the serious problems that many of them have; in addition, when they have gone through all the processes and are ready for a job, there are no jobs available. In my constituency, unemployment is still rising, and a recession is likely to ensure that it rises even further. There is a need for far more imaginative strategies and greater acceptance by the Treasury of the fact that, sometimes, we must invest to save.
I know that the Government have responded to the Freud review and the Leitch report and that we are seeing change. Jobcentre Plus offices are being changed, which the Liberal Democrats broadly welcome. We want Jobcentre Plus to become a “first steps” agency, responsible for benefit claims and for identifying suitable employment support, rather than for providing longer-term support. We support the Government in their efforts to involve more private and voluntary sector organisations in tailoring provision better to the needs of unemployed people. However, we are concerned about the way the contracts are being let; we are not convinced that large-scale regional contracts, especially if they might be taken by overseas companies that have a strict profit motive, are necessarily the best approach. There is a place for small-scale, local providers and we do not want such provision to be driven out. We accept the need to tackle skills gaps, which is why we believe support should be far more tailored and should not be short term—13 weeks or a similar period. People who have been unemployed for four or five years may take longer to get a job and need to be given enough time.
We welcome Dame Carol Black’s report on health and worklessness; her work on that important link needs to be developed. The Government have not given sufficient support to that type of initiative in the past, although that work is now being done. On Saturday, I spoke to a constituent who is on incapacity benefit; he had gone back to work, but was unable to stay in the job because, owing to periodic relapses, he was unable to continue to work full time. The Government should consider what the hon. Member for Nottingham, North said about the 16-hour rule. If we are to get the more than 1 million people who suffer from mental illness in its various forms back into work, we must accept that they need more support, and their employers and the benefit systems must recognise that there may be times when they are not able to work full time or when they need time off.
We have to look at how someone’s inability to work can lead to a sudden loss of income, as their housing and other benefits are affected, or to their being told that they owe money. The whole benefits system needs to be reformed. It is far too complex and acts as a powerful disincentive to getting back into work. We believe that there should be a single working age benefit that “does what it says on the tin” and is not loaded with caveats about what individuals can and cannot claim and how they can move forward. Within that, we want a single minimum wage, without the different rates that are paid to people depending on their age, which we believe are unhelpful.
There are many barriers to work. Some 1.7 million people face withdrawal of benefits at marginal rates of more than 60 per cent. if they return to work. When people return to work, we want some of that benefit to continue to be paid to them, with perhaps some paid to their employer as a subsidy—a guaranteed investment in their job.
I hope that the Under-Secretary will outline today the commitment involved in the city strategies and how the Government envisage their development. We believe that it is not only cities, but towns such as Rochdale that need a strategy. We are considering as a borough what we can do to tackle the problems in Falinge. There is something else that the Government can do to overcome the “can work, can’t find a job” problem and to help people to find a job that lasts.
I agree with some of the points that the hon. Gentleman has made, especially on the interaction of benefits and taxation. I am not sure whether the 20p rate makes that easier or harder. Does he agree that, if city strategies are to be extended to towns as he suggests, we need to know, as a matter of urgency, that the current city strategies will continue for a couple of years, as that would provide the basis for any expansion?
I agree entirely. We need a commitment from the Government. The review of the welfare to work strategies announced in December 2006 by the then Secretary of State will enable the Under-Secretary to give that commitment to those cities that are already operating a city strategy, thus enabling the programme to be rolled out further. That is what I would like to see happen.
In my borough over the next five years, £2 billion of private and public investment is being spent. That is a combination of money through housing market renewal; Building Schools for the Future; other projects such as Metrolink, which is coming to Rochdale; the local improvement finance trust, or LIFT, programme for health centres; and £200 million that is being invested by the private sector in regenerating our town centre.
When there is such large-scale public investment going on, I would like to see the Government encouraging employers to take on board and train people who are currently unemployed. That is why it is important to shift some of the benefit that is being paid to people in Falinge to sit at home when they want to work; I could take the Minister round to people who will tell him that they want to work but cannot find a job. If we look at the unemployment rate in Rochdale, that is patently obvious; as a major manufacturing town, we are still continuing to lose employment. However, it would be good if we could get some of the money that is being invested to enable unemployed people to go into some of the major projects. For example, the housing market renewal investment going in could train people to become bricklayers, plasterers, plumbers or electricians.
Similarly, the work that is going on in Building Schools for the Future would benefit local people. That work is not all about building, because in these new schools the IT infrastructure is being put in, along with private finance initiative programmes that will enable private sector providers to deliver that infrastructure. So people can also be trained in IT.
If we could see such joined-up government, which could use the leverage that public sector and private sector investment have to alleviate unemployment problems, that would go a long way towards improving matters. That is an awful lot of what the city strategies, such as the Nottingham city strategy chaired by the hon. Member for Nottingham, North, are trying to do. It is joined-up government. It is not all about putting everything out to the private sector; it is about the private and public sectors working closer together.
That is why it is important that the Under-Secretary give an early indication of the Government’s thinking on city strategies and that the city strategies programme be rolled out. Rochdale is not a city, although we are part of Greater Manchester and we have been involved in the city strategies programme. There is a great need to develop these policies.
Unemployment, including the number of employable people who are not employed, remains stubbornly high, certainly in industrial blackspots such as my constituency. We need new thinking and we need a commitment from the Government to long-term investment, not short-termism. We also need the Treasury to begin to understand that it is possible to spend to save. If we could have such a policy, we will go a lot further than we are at the moment.
It is a pleasure to serve under your chairmanship again, Mr. Martlew, and I will not spoil things by mentioning football; we in Gloucestershire tend to play sports with a different-shaped ball, so we will stick to them.
I also offer my congratulations to the hon. Member for Nottingham, North (Mr. Allen) on securing this debate. I must say that, at the beginning, I was a little surprised by the fact that he was sitting behind me, and I wondered whether he was announcing something about his political affiliations. However, having listened to his speech, I am sure that the Under-Secretary is overjoyed to learn that he was not doing so, and that the hon. Gentleman is still on the Government Benches.
I listened with great care to what the hon. Gentleman said and I have followed a number of the things that he has said on these issues. I know that he takes very seriously the idea of joined-up government and indeed, in his own constituency, he is rather an exemplar of that approach, chairing his local strategic partnership and, as all MPs do, banging heads together locally, within both local agencies and Government agencies, to ensure that those agencies work together effectively.
The hon. Gentleman referred to the position of Nottingham in the sector of welfare to work policies. I have done some research for this debate and therefore I know that in his constituency and elsewhere in Nottingham there is a challenge, for example, in terms of the households that are claiming out-of-work benefits. As he said, his constituency of Nottingham, North has the unfortunate status of being in the top 20 nationally of constituencies that have children in households claiming out-of-work benefits, with a figure of 38.6 per cent. Again, if one looks at the number of children in those households, one sees that 8,265 children are affected. Indeed, all three of the Nottingham constituencies are right at the top of the league table if one looks at the east midlands as a whole. So he laid out extremely well the challenge for welfare to work strategies and the importance of having all the different agencies joined up.
The hon. Gentleman also made the point about the intergenerational cycle of deprivation, which is why I referred to the figures about children in households on out-of-work benefits. It is certainly the case that, if a child is brought up in a household where nobody works and in an area or estate where perhaps very few people work, that child is brought up in an environment where the norm is that people do not go out to work. I think that that is what the hon. Gentleman was referring to, and that is the problem that we have to try to crack.
I was also very pleased to listen to what the hon. Gentleman was saying about early intervention. In a different incarnation a few years ago, when he was shadow Home Secretary, my right hon. Friend the Member for West Dorset (Mr. Letwin) made similar points. My right hon. Friend used different phraseology; he talked about a “conveyor belt to crime”. However, he was very much looking at identifying families and the situations that did not give people a very good opportunity to avoid trouble, and he also considered what we could do at an early stage. The hon. Member for Nottingham, North laid out those problems and possible solutions very clearly.
The hon. Gentleman also laid out the importance of looking at benefit reform, particularly benefit simplification, and its interaction with our welfare to work strategies. It is very clear that the benefit system is very complex; it is difficult enough for Ministers, shadow Ministers and Members of Parliament to understand it sometimes. Therefore, I sometimes wonder how those claiming the benefits and those thinking about whether they would be better off in work are supposed to do things. Although there are some good calculations now for single parents on out-of-work benefits who are looking to go back into work, those calculations are not done universally for everybody on out-of-work benefits. The calculations can be very complex for people when they are trying to work out if they would be better off in work.
The hon. Gentleman raised a number of other issues, not just with the benefit system but with the Child Support Agency and the situation of absent parents paying for their children; all the sorts of things that can impact on whether someone moves back into work.
I agree with much of what the hon. Gentleman has said. There is one specific area where the benefit system interacts most negatively with people’s desire to work. That is where we are forcing someone who wants to take a job to gamble with their future benefits. If someone takes a job, comes off all their benefits and that job then falls through, they would have to start from scratch again with all the form-filling and bureaucracy. It could take many weeks and months to recoup the position that they had before they took that gamble of taking a job. Removing that “gamble” element from our welfare to work programme would be one of the key measures that both major parties could address and work on together.
I am grateful to the hon. Gentleman for making that point. He is absolutely right; one of the challenges that we face is how we can design benefit systems to recognise the fact that most people are honest, decent and want to work, and that the number of people who will abuse those systems is relatively small. How we correctly design those systems to reflect the facts, without leaving ourselves open to those people who would abuse them and take the taxpayer for a ride, is the challenge that we face. However, the hon. Gentleman is quite right; we need to design benefit systems so that they give people who want to work every encouragement to do so and do not leave them feeling that, if they take that gamble and make that leap of faith, they will come off so much worse afterwards.
One of the things that we really need to do is embed working. I think that all parties agreed today that work is generally better for people than not working. It is not just better for their financial position, but for their health and general well-being. Embedding that idea is something that we need to do when we look at these issues.
I am very pleased that earlier today my right hon. Friend the Member for Witney (Mr. Cameron) made it clear that a future Conservative Government would have welfare reform and welfare to work strategies as one of their three priorities. The hon. Member for Nottingham, North outlined the scope of that challenge.
One of the key things that the hon. Gentleman and the hon. Member for Rochdale (Paul Rowen) alluded to was the funding situation for many of these programmes. Perhaps the Under-Secretary would cover that in his remarks, as I am still not entirely clear how some of the programmes are funded. I understand that, to a limited extent, the savings that are made as people come off benefit and move into work can be reinvested in programmes and strategies, certainly city strategies, but that is not the case across the piece. At present, savings from benefits cannot be used to fund the programmes. In effect, that limits the scale of the ambition of the Government’s welfare to work strategy.
[Frank Cook in the Chair]
My hon. Friend the Member for Tatton (Mr. Osborne), the shadow Chancellor, made it clear that a Conservative Government would allow the Department for Work and Pensions to use savings from benefits to invest in the programme and therefore be much more ambitious about getting all those on incapacity benefit who can work back into work. In the Budget this year, the Government alluded to doing that, but it is not clear whether they have. It would be helpful if the Under-Secretary commented on that. The hon. Member for Nottingham, North touched on the extent to which getting people back into work can help alleviate poverty.
I welcome you to the Chair, Mr. Cook, but just before the hon. Gentleman moves on to his next point, will he say whether he believes that it would be possible, were people to be retained in employment, that any bonus payments made to companies that had achieved a six-month, one-year or 18-month period of employment would not necessarily return to the DWP but would either be retained by the private company or voluntary sector organisation delivering the service or by the city strategy organisation? In other words, will the localities be rewarded for supporting such initiatives, rather than the Government taking a cut if the localities are successful?
That is an interesting question. I believe I am right in saying that the hon. Gentleman’s strategic partnership or a similar local organisation is actually one of the Government’s welfare to work providers. Indeed, he said something that my party made clear in its strategy. We want to use the private and voluntary sectors and pay by results if they get people back into work for a sustained period. The work that they will have to put in and how we will measure that may depend on the amount of effort required for an individual—it is clear that one size does not fit all. In the design and detail of contracts, we will have to look at where the resources stay.
The hon. Gentleman’s suggestion was a good one for two reasons: first, local providers—in his case, his local strategic partnership—would be given an incentive to do the work; secondly, and importantly, the money would stay in the locality. No doubt we will be thinking over the next couple of years about the extent to which welfare reform can be done locally and not just nationally.
An interesting outcome of the trials in the United States, where such things can be tried at a federal and state level, was that doing things locally drove success. It was not a great big federal bureaucracy trying to do everything from the centre, but pushing power and programmes down not just to the state but to the city and town. That is one of the things that has not been done very well in this country. The hon. Gentleman’s question and some of the things that he is doing in Nottingham may well indicate how we could do that and how welfare reform and welfare to work strategies could be carried out more successfully at the local level in future.
It is interesting that, despite the Government’s focus on poverty and their making it a priority, the number of families in severe poverty, which is defined as below 40 per cent. of median income, has grown from 1.4 million to 1.8 million since their baseline year of 1998-99. That is on their own figures. Indeed, the number of families below 60 per cent. of median income has gone up by 200,000 in that period. Clearly, that is the national number, and it applies to places other than cities. The Department has admitted that it will not hit its child poverty targets, and it is clear that a more successful welfare to work strategy will be crucial in doing so.
I have one or two other questions for the Minister. In a previous question session, I asked the Secretary of State about the Government’s policy of reassessing all existing incapacity benefit claimants between 2010 and 2013. How many extra pathways to work opportunities will there be over and above those that have already been announced? The Secretary of State was not able to answer that, so it would be helpful if the Minister did so.
The hon. Member for Rochdale briefly touched on the age profile of people on incapacity benefit. The Government have said—obviously, this is important for cities as well as elsewhere—that they want to get 1 million people off incapacity benefit by 2015. At present, about 650,000 to 700,000 people on incapacity benefit are aged between 57 and 64, and they will have retired by 2015. Can the Minister confirm whether 700,000 of the target of 1 million will be achieved purely by the passing of time—700,000 people will have retired and therefore will not be eligible for incapacity benefit—or whether the 1 million are over and above that? It would be interesting not just from a city perspective but from an across-the-country perspective to know that.
The House owes the hon. Member for Nottingham, North a debt not just for raising this issue but for the work that he does locally, as that will provide an interesting opportunity to look at how effectively city strategies can work and how effectively local organisations and the central Government can tackle deep-seated challenges in cities across our country.
To pick up the point on which the hon. Member for Forest of Dean (Mr. Harper) ended, we do indeed owe a debt to my hon. Friend the Member for Nottingham, North (Mr. Allen) for bringing this debate to the Chamber and for reminding us what a difference it can make in a constituency and an area if the local Member of Parliament is fully engaged with service delivery, as he is in Nottingham and other Members are in other areas.
We are also indebted to my hon. Friend for ably illustrating just how effective the city strategy is when everyone gets behind it and innovation is allowed to come through. That is exactly what we had in mind when we launched the strategy. To pick up another point made by the hon. Member for Forest of Dean, as anybody would expect, it is one thing for the Government to write the general rules of welfare provision and to provide the framework, but individual areas have different and distinct needs and aspirations. The secret is to have the mix of standardised broad rules and a good deal of flexibility at the point of delivery, so that the system is better targeted and more effective in dealing with specific local issues. I pay tribute to my hon. Friend the Member for Nottingham, North for securing this debate, for his personal engagement with the subject, and for playing a leading role in the work in his own city.
My hon. Friend said that he was reviewing progress so far. He asked for more and confessed that Nottingham was being greedy as a result of his doing so. I do not think that that is true. What he expressed is not greed, but ambition on behalf of his city and the people of Nottingham. It is absolutely right that he should have that sort of ambition for his city and it is right that he comes to the Department and the Government generally to ask, “Having learned from what we have done already, how do we take this further, achieve more and make even more progress?” That is exactly the right way to respond, and if he thinks that that is being greedy, I encourage him to go on being greedy.
I would like to put the matter in context before I address the issues that my hon. Friend and others have raised. It is true to say that, so far under our Government, employment has risen throughout the economy to a record 74.9 per cent. In the course of achieving that, we have helped 1 million people to come off out-of-work benefits and to move into work. There have also been big improvements in relation to the employment of some of the most disadvantaged groups in society—for example, there have been big gains in employment for lone parents, older people and people with disabilities. Although real progress has been made towards achieving higher levels of employment and moving people off welfare and into work, as my hon. Friend and other hon. Members have said there has not been enough progress, and I would echo that. Of course, more needs to be done—he is right about that. Despite the successes that we have had, as he has described in Nottingham, there remain pockets of significant disadvantage and worklessness where extra support and perhaps a different approach will be needed to reach the target of 80 per cent. overall employment.
A recent report on Nottingham showed that we will not succeed in tackling deprivation until we raise the aspirations of young people and adults throughout the area. As he said—I agree with him on this—there remains a culture of underachievement in too many communities. That point was also made by the hon. Member for Forest of Dean. That culture of underachievement is often combined with a strong sense of dependency that becomes deeply ingrained and pervades generations. We must break that cycle and move it into the virtuous cycle about which my hon. Friend spoke.
That is why I am so pleased that Nottingham is an early intervention city—my hon. Friend was right about that. My Department has emphasised and supported that work and shares his ambitions about what it might deliver for his city. In that regard, he rightly emphasised the importance of data sharing. In pathfinder areas, we have put in place a memorandum of understanding between all parties that is designed to assist data sharing. As he knows, we have problems with that in terms of security, but once those problems are resolved satisfactorily and we are making good progress, data should flow smoothly between different bodies, which is essential to making the whole programme work.
As I have said, we have launched the city strategy pathfinders in areas such as Nottingham, and through innovation, improved partnership working and aligning resources, the pathfinders are making a real difference to tackling unemployment in such areas. In all pathfinder areas to date, lone parents, people from ethnic minorities, people claiming benefits because of health problems and older workers are receiving more specifically targeted support that is relevant to their circumstances to help them to find work. All the partnerships have agreed on targets of reducing the numbers on benefit by 3 per cent. by May 2009 and increasing the local employment rate by an exactly equivalent amount. Those are pretty stretching targets that will be met only through successful partnership working.
Pathfinders have already made great progress in successfully pulling together the right mix of organisations and employers so that they can meet their employment targets. For example, Jobcentre Plus advisers are already working with Prison Service and other agency staff to help ex-offenders to move directly into sustainable employment. In Liverpool, the pathfinder is working in partnership with Connexions and Halton council to deliver an information and communications technology apprenticeship programme that is targeted at 16 to 18-year-olds who are not in education, employment or training. They are provided with training and a placement in a local company, which means they are immediately picked up and supported at the critical time.
My hon. Friend asked about progress to date and in the future. I am pleased to say that an interim evaluation report on progress in all the pathfinders will be published soon—this month, in fact. Following on from that, the full report will be available by October, so he and others will soon be able to see the Department’s analysis and evaluation of how the pathfinders are progressing. I can add more to that: already, the pathfinders have highlighted the importance of local partners working closely with central Government to deliver successful local solutions to employment issues. Those involved with pathfinders are already emphasising a point that my hon. Friend made: that it is important to make connections run wider than the issues and services that are seen as immediately relevant to employment. For example, services could be linked to organisations that deal with health, criminality and disorder. It is not just about ensuring that there is joint working locally and centrally; working needs to be extended widely across each of the pathfinder areas.
City strategy status provides the pathfinders with the credibility and status to deal with matters that had not previously been satisfactorily addressed—for example, by local strategic partnerships—as well as additional resources, such as a dedicated £4 million from the regional development agency budget, to tackle worklessness. The work of the partnerships is beginning to unlock other avenues that were not previously available. Throughout the next year we will continue to discuss options for the future with all the pathfinder areas.
My hon. Friend mentioned the important matter of commissioning and I would like to deal with the points he made. That matter was also mentioned by the hon. Member for Rochdale (Paul Rowen), and a question was asked about how local partners can play a larger role in the commissioning of services. The Department’s new commissioning strategy is a major step forward in modernising and strengthening the welfare to work market. By incentivising and rewarding providers for securing sustainable job outcomes, we have opened the door for local partners, such as city strategy pathfinders, to play a more active role in the commissioning process. We hope that that will ensure that local providers have the discretion to deliver a more flexible and personalised service to customers. I can already report that consortium leads have worked with my officials during the commissioning process for new pathways, new European social fund contracts, and the new deal for disabled people. In fact in the roll-out of the private sector-led pathways to work, local providers are contractually obliged to work with the city strategy pathfinders. That has been taking place since the first phase of the work was rolled out in December 2007.
The hon. Member for Rochdale pleaded for contracting to be pushed down to local level, as he feared that otherwise the contractors might be too large to respond to local needs. I urge him to revisit the document that we published on commissioning. He should understand the distinction between the lead providers that oversee large areas and the plethora of smaller providers with local ability to which the leads might sub-let work. The advantages of both need to be drawn together. It is not the case that there will only be providers that are large enough to handle the tasks involved but perhaps not sufficiently fleet of foot to deal with local circumstances. The way in which the system has been constructed should answer his point.
Hon. Members rightly drew attention to the 16-hour rule and stressed features of the rule that cause concern. I believe that everyone understands why we need such a rule; indeed, no one suggested that we should not have one. However, mention was made of the consequential difficulties that can arise under a 16-hour rule and the rule’s ability to trip us up in respect of welfare to work. I can tell my hon. Friend the Member for Nottingham, North that Ministers wrestle with the issue pretty regularly, so I fully understand the points he made. They form part of my daily agenda, and I sometimes feel that I am working more than 16 hours trying to solve the issue.
I agree that it is vital that those claiming jobseeker’s allowance should be able to take up the training that they need to help them to enter employment. The employer-led pre-recruitment packages that my hon. Friend mentioned are a perfect example of the training opportunities that we want to encourage. We want to engage with any sector or employer that could provide such training through a local employment partnership. It is a promising area, and I am pleased that my hon. Friend placed the stress on it that he did. It has great potential.
Interestingly, we do not need to relax every aspect of the 16-hour study rule in order to enable people to take that type of training. We already have the flexibility to transfer an individual taking up such an opportunity to a training allowance. That removes the requirement on them to be available and actively seeking work, while still protecting their benefits. For example, the employability skills programme offers a mixture of basic and vocational skills to JSA customers; it will be available to support 11,000 people in the way I described. Those customers will not receive a lesser amount of money. In fact, they will receive an additional training premium, and they will usually get help with child care and travel costs.
As we announced last November, we will increase access to such training allowances for individuals who have been unemployed for more than six months, to enable them to undertake full-time, employment-focused training for up to eight weeks. That is a significant increase on the two weeks of full-time training allowed under normal jobseeker’s allowance rules. We expect to test that new flexibility in the west midlands later this year, and to roll it out nationally in 2009-10, using the lessons learned from the west midlands pilot.
I assure my hon. Friend that we are continuing to consider a range of ways to increase access to full-time training for jobseeker's allowance claimants, including further specific relaxations of the 16-hour rule if it helps to support their move into employment. I hope that I have reassured my hon. Friend and the hon. Member for Forest of Dean regarding the importance of continuing work on the 16-hour rule.
My hon. Friend also mentioned establishing a forum on making work pay—another interesting idea. I note the suggestion for a forum in his area, but I think that he envisages it being deployed more widely. The idea has already been suggested by a number of the pathfinders. I agree with my hon. Friend that it would provide a better understanding of how to tackle the practical and attitudinal barriers faced by a number of disadvantaged groups.
The 15 pathfinders have established a network that enables them to share good practice and promote innovative thinking between themselves. In the light of that, I have asked my officials to meet representatives of the pathfinders to establish how that network can further help my Department to develop policies to tackle worklessness among the most disadvantaged. While still adhering to universal rules, which we must have, we can engineer additional techniques to ensure that those rules, for which there are perfectly defensible reasons, do not trip us up when dealing with groups that have specific needs.
Hon. Members have spoken about the difficulties that people can have when considering a move from benefit into work. My hon. Friend was right to say that it is a gamble that people have to take, but we must be able to reassure people who are considering potential jobs that if things do not work out, they will not have to go back to square one and face the prospect of a complete lack of funding for the family while the benefit system kicks back into action. It is about defining the run-on of benefit, or a quick reclaim should a job not work out after a certain time. Elements of that are already in place. It is already possible for people to get support quickly should a job not work out.
My hon. Friend is right to say that such reassurance is essential. First, we need to be able to demonstrate when a job becomes available that it will pay and that the person will be better off taking the job than remaining on benefit. Secondly, and especially if a person has been out of the labour market for some time and is nervous about moving into work, we can add the reassurance of an ongoing support mechanism should things not work out. As a result, taking a job will be less of gamble. Access to a range of local partners across England, Scotland and Wales, in the private and voluntary sectors, has already proved an invaluable source of information to my Department; it is informing us on how to take the work forward.
The city strategy pathfinders are already working successfully. My hon. Friend believes that, and the spokesmen for the other parties seem to endorse his view. We understand that if we are to reach that important and stretching 80 per cent. employment target, we will need to do more to encourage the sort of partnership working that we have seen evolve in the pathfinder areas. It is not enough to have universal aspects of welfare provision; they must be supplemented by specifically tailored support. We have to facilitate that, but we have to allow local organisations and local partnerships to deliver it.
For the Government, that means working more closely with other Departments than has often been the case. That is why we introduced the working neighbourhood fund, which brings together £1.5 billion of funding from my Department and the Department for Communities and Local Government to tackle worklessness in England’s most deprived neighbourhoods. That funding has enabled 65 local authorities to engage in exactly that sort of programme, each of them working in areas that face the greatest barriers to employment and encompassing 1,000 of the wards in which unemployment is the most important challenge.
Partnership working also means encouraging and facilitating more co-ordinated working by employers, local authorities, third-sector organisations—
Post Office Closures (Stroud)
I am pleased to be able to raise the issue of post office closures in Stroud, even if this is the day on which we get confirmation of what is happening, which is terribly sad.
I thank the Minister for meeting me in advance of these formal proceedings. I also met Post Office Ltd, Royal Mail, Postwatch and the individual post offices affected. On the good side, in the past 11 years, I have been associated with saving post offices in Stonehouse, Cam, North Nibley, Paganhill, Oakridge and Kings Stanley. However, sadly, I have also been associated with those that have closed, and I shall have on my epitaph Whiteshill and the nine that are now deemed fit for closure in the Stroud constituency as part of the current review.
Receiving notice of the proposals on Friday, on the back of the local election results, did not cheer me up. It was not a good day to bury bad news—the news became even worse. We are faced with losing Uplands, Ebley, South Woodchester, Dersley Highfield, Sharpness, Forest Green, Horsely, Miserden and Cranham. The latter two will be replaced with outreach arrangements, on which I shall seek clarification from the Minister. In my constituency, the news is seen as little short of catastrophic. I am afraid that it adds to the sense of cynicism about politics and it makes me question the future viability of the Post Office. I can now talk in complete openness—this is in the public domain—but, until today, the news was under embargo.
Bizarrely, Stroud is in the Gloucestershire and Oxfordshire sub-region, even though it is in the south-west as far as everything else is concerned. However, whatever the sub-region, the news is not terribly good. Like many hon. Members, I have undertaken a proper and comprehensive investigation of each affected post office. I went to each at least three times, and also to some that would be recipient post offices. From the outset, I got to know those postmasters and postmistresses who wished to stay and those who wished to go. Disappointingly, there are not many post offices where the future of the postmaster or postmistress is one of unalloyed joy, and I wish to say something about where we go after this sad day.
With network reinvention, we chose the people who wished to go, but this time we chose the post offices that were most suitable for closure by location. If we had put the two approaches together, we could have come to the right conclusion but, sadly, network reinvention did not seem to work, and I obviously have my doubts about the current restructuring.
I wish to make some points about the general closure programme, but I shall exemplify that by looking at one post office in particular: Uplands. From the process that has taken place, one can see what is happening in the area. The magical figure of 18 per cent. is always referred to—it is the proportion involved in the likely closure programme—but, in Stroud, 25 per cent. of the remaining post offices will be lost, and we will go from 36 to 27. As I have made clear, some of the remaining 27 are highly vulnerable because of how some people see their future, or lack of it.
The Minister knows that I shall concentrate on Uplands, and I hope that he will refer to it in his response, as well as to the issue in general. Uplands is an interesting post office. It is in a part of Stroud that I would define as semi-urban—most of my constituency is semi-rural. It is on the edge of Stroud town, but it is an important post office in a poorer part of my constituency. It is abutted by another post office, which is important, and by the Crown post office, which is in the centre of town. It is a good walk to the Crown post office and from the top of the ward, which is a hilly part of Stroud, it is a long walk—vulnerable or disabled people would find the walk very difficult.
There was a major community response to the consultation in which I took part, and I gave the results to Post Office Ltd. Interestingly, the postmaster of Uplands, Robin Craig, fiercely defends his business. He wants to stay as a postmaster and will do everything in his powers to do so. We turned to him when Paganhill was threatened with closure. Tesco did what it does only too well and decided that it did not want a post office within its one-stop branch. We managed to set up a community response in the Maypole hall. Robin Craig took that on as part of his empire, as it were, and now runs the two post offices, which has worked out well, as far as I can establish. Business at Paganhill has increased, and it remains buoyant at Uplands. Post Office Ltd again turned to Robin when it was looking for outreach arrangements, and he is the postmaster who will take on those at Cranham and Miserden in the Stroud constituency, and two others in the Cotswold constituency.
Most importantly, Stroud town council decided that it wanted to enter into proper negotiations on Uplands. It is pleasing to see the mayor of Stroud, John Marjoram, in the Public Gallery—I know that I should not refer to people there. He did an awful lot of work, as did Andy Read, another town councillor, and produced the documentation that was submitted as a starting point for the negotiations. Post Office attended a public meeting and agreed to enter into negotiations. It had stated that publicly, so we expected the negotiations to go forward. That was the touchstone of whether the consultation would be meaningful. Postwatch has had a watching brief—I put it no more strongly than that—and knew about the negotiations, and I understood that it supported them. It was well known that Paganhill was on the original list for closure, but Postwatch persuaded Post Office Ltd to take it off the list because of the amount of public money and money from Tesco that went into saving the branch. Of course, that meant that we again thought that someone would listen to us.
We got the bombshell on 26 April. The town council was formally informed, via a message on the mayor’s answer machine followed by an e-mail, that Post Office Ltd was no longer willing to enter into negotiations. Such was the state of play that Post Office Ltd had demanded that the town council enter into a confidentiality agreement so that they could discuss money, which is at the root of the issue. No negotiations took place, yet the confidentiality agreement was signed. That suggests that Post Office Ltd was serious from the outset, otherwise it could have said, “Go away and don’t darken our door.” However, it did not do so; rather it said that it was willing to enter into negotiations if an Essex-type proposal was forthcoming. Will the Minister say what is happening in Essex? At the very least, we feel that there has been a breach of faith.
I have read the reasons that Post Office Ltd gave on 26 April for why it was no longer interested in pursuing negotiations. I will not read out the person’s name, because that would be most unfair, but she says in her e-mail to John Majoram:
“I wanted to speak to you before sending this email as I know it will be very disappointing, but unfortunately, I’ve not been able to get hold of you.
As you know, I’ve been working on your request for information about locally funding Uplands Post Office branch in Stroud. After examining the impact on other local post office branches”—
that is the key thing—
“I am unable to progress a local funding application or provide the information as requested.
As I explained when we spoke, we carry out a check on each application to see what effect a locally funded service would have on other Post Office branches in the area. After carrying out the check for Uplands, the result is that there would be an unacceptably high detrimental effect on the sustainability of the Post Office network in that area. We have identified that, as a result of the closure, a significant amount of business is predicted to migrate to other Post office branches. In the even of these branches re-opening, this business would not now migrate and these nearby branches would become less viable.”
She goes on to discuss issues such as the network change programme. The interesting point is that Robin Craig, who runs the Paganhill branch almost next door to the Uplands branch, is receiving the money. He therefore knows what impact there will be on Paganhill if Uplands closes and, conversely, if it stays open.
The only other post office that could feel the impact is the Crown branch in the centre of Stroud town, and that also raises an interesting point. On 3 January, before the process started—again, I was ahead of the process, and I am grateful to Post Office Ltd for coming to see me in my constituency that day—I asked whether it was a question of protecting the Crown post office, and I was assured that it was not. Sadly, the Crown post office is not in the best location, although it has had good management and it has good staff. The reality, however, is that it faces some questioning because of the time that it takes people to get served. That is not made easier when staff are asked to market Post Office services. I know that that is about getting business back in, but it does not help throughput. Having been given that assurance on 3 January, I question the reasoning set out categorically in today’s closure notice. The Post Office gives its reasons for not keeping Uplands open, but, interestingly, there is no reference to the impact on the Crown branch; the closure notice merely says that the Uplands branch is not viable.
I can go only on the postmaster’s knowledge of what is happening. He has grown the Uplands branch over a period of years, and it is very successful, although it is admittedly small. He tells me that about £2.7 million a year passes through it, on which the return is about £27,000 a year. That does not sound a huge return, but it is important, because we would maintain that the post office is profitable. To return to the debate initiated by my hon. Friend the Member for Hastings and Rye (Michael Jabez Foster), to which my hon. Friend the Minister responded, there is the issue of the central costs that Post Office Ltd expects to meet, compared with its overall return. If anything is viable, however, it is our post office. Our postmaster is doing good business for Post Office Ltd, he runs another post office and he is willing to take on outreach work. At best, the Crown post office is suffering because it is nearly, or already, at capacity. We have an assurance that the process is not about protecting the Crown post office.
What has been going on with the consultation? It is highly dubious. Are we looking at anti-competitive practices? Are we looking at a failure to realise that there is a degree of collusion to keep Royal Mail happy? Has Post Office Ltd done others’ bidding for them? At the very least, the consultation has been ham-fisted and has left complete scepticism in the community about what has happened and about why there was no meaningful attempt to pursue negotiations.
Let me return to the Essex arrangements. We were clearly on their coat tails and we entered the negotiations in good faith—I say “we” because I worked with the town council. The council put in its bid and signed the confidentiality agreement, but why did Post Office Ltd never come back to the council to talk about what was involved in taking on the branch and about what the finances would be? We are talking about a publicly owned asset, but can the Minister explain why I, as an MP, cannot understand what the Crown post office’s financial situation is? That information would allow us to balance what we think we know about Uplands against the business that the Crown branch is doing. Those are clear points, and I hope that the Minister will say something about them, because we will no doubt pursue the issue further, given the way in which Post Office Ltd has treated us.
I want now to say a few things about outreach. First, I am disappointed that outreach was never considered for Horsley post office, which is at the top of a hill. Again, no attempt was made to take account of the local geographical and topographical situation. Secondly, I do not want to personalise this, but I have talked to recipient post offices and, indeed, to Robin Craig, who will be taking on outreach work. My worry is that although we are paying off post offices to close, there will be some stings in the tail in terms of what happens to those post offices that remain. In the early days, Post Office Ltd was optimistic and positive about how it would make outreach work. In my area, we have a hosted arrangement, which is at least seen to work. However, I have talked to existing postmasters and postmistresses, and the difficulty is that they are expected to pay out from their redundancy packages to meet many of the basic costs of making outreach work. Those costs include dedicated phone lines, removing the counter, which is a fairly basic thing that one would want to do, and making the new arrangements secure. Romec has traditionally done that, but people are being told that they will have to pay full cost recovery to Romec. None of that is very helpful.
I turn now to what could have been done. I was one of those who sponsored what became the Sustainable Communities Act 2007. We are talking about communities reviving themselves and regenerating their services, and the situation that we are discussing was an ideal opportunity for them to do so. Perhaps the issue arose before the Act took full effect, but Post Office Ltd should, at the very least, know about sustainable communities and should be able to respond to a genuine attempt to enter into negotiations. I hope that we can remind Post Office Ltd that the universal service obligation, which is crucial in this respect, is not just a term, but a reality on the ground.
As the Minister knows—he cannot pretend otherwise—these have been a dreadful few weeks in the Stroud area. That has not been helped by the local election results or by the fact that the closure announcements have come right on the back of them. I hope that he will understand the strength of feeling that exists. The town council entered into negotiations in good faith, but Post Office Ltd has ripped everything up in front of the council. That is not acceptable, and I hope that the Minister will have a word with Post Office Ltd so that we at least have the opportunity to look at what could be a meaningful way of saving the Uplands branch.
I congratulate my hon. Friend the Member for Stroud (Mr. Drew) on securing this debate on post office closures in his constituency. As he said, seven post offices are scheduled for closure, with another two to be replaced by outreach services. Whatever else can be said about the process, I can assure him that no attempt has been made to bury bad news on any day. When it comes to an end, this process will have been going on for 15 months. Judging by the debates in the House and the campaigns around the country, it is many things, but secret is certainly not one of them. There has been no attempt to bury bad news.
I understand, as anyone would if they had been doing my job for the past nine months, that the process is very difficult for local communities. No one likes to see their post office close—even those who do not use it very much. None the less, I hope to be able to explain why the present decision was taken. My hon. Friend has been very active on the issue and has, as he said, met me, Post Office Ltd and sub-postmasters in his area.
The background to all this is the announcement made by the then Secretary of State for Trade and Industry in May 2007. That announcement said that the post office network across the country would reduce from its current level of just over 14,000 branches by up to 2,500, with 500 new outreach services being established in some areas. Obviously, that was a difficult decision, and it is easy in debates such as today’s to concentrate purely on how unpopular it is. I understand that, and do not deny its unpopularity. However, it is also incumbent on us to consider some of the changes that the Post Office faces, which provide the backdrop to the decision.
The network loses £500,000 every day. Those losses have more or less doubled in the past few years. It has also lost about 4 million customers a week, as a whole. In addition to those financial and custom reasons, several major changes are adding up to a big challenge for the post office network. Eight out of 10 pensioners have their pension paid directly into the bank. That did not happen many years ago. Among new retirees the figure is not eight but nine out of 10. We have new online services, such as car tax renewal, which is used by 1 million people a month. That service did not even exist a few years ago, and those 1 million people a month would have gone to the post office, for the most part, to renew their car tax. Now they do it online. Of course, direct debit and other changes are also relevant. There is also competition now. Companies such as PayPoint bid for, and have won, contracts for the television licence and other bill payment services.
We also need to consider the subsidy to the Post Office, because in the face of all that I have described the Government have not just walked away. We have committed significant public subsidy to the post office network. In fact, it is estimated that if it were run as a commercial network and left to survive without subsidy, it would amount to about 4,000 branches, with perhaps some more on the margins. We do not believe that that is the kind of network that the country wants, so the Government have made a major decision to subsidise it to the tune of £150 million a year. That subsidy is part of an overall programme of Government expenditure on the post office network of up to £1.7 billion in total in the years running up to 2011. No previous Governments have subsidised the post office network, and without that subsidy there would be thousands more branches under threat than there are now. It is precisely because we recognise the need for a national network that we are putting in that amount of subsidy.
We have a duty to support the network, and have backed it by that subsidy, but we also have a duty as a Government to the taxpayer. Subsidy cannot be unlimited, or ignore the effect of the internet, direct debit, direct payment and all the changes that have a major impact on the post office network. That is recognised not just by the Government but by the general secretary of the National Federation of SubPostmasters, who said at the start of the programme:
“Although regrettable we believe that closures are necessary to ensure the remaining post offices are able to thrive in the future”.
The Opposition spokesman said in a debate in the House on the issue a few weeks ago that
“we have to face the facts about the future of postal services in this country...we fully expect the network to shrink in size. We have never given a guarantee that no post offices will close”.—[Official Report, 19 March 2008; Vol. 473, c. 947.]
Across the parties there is acceptance of the size of the challenge facing the post office network, which is to do with lifestyle, technology and competition.
The whole point of the attempt that I have been describing by Stroud town council to save the branch was to bring in new money. The town council was not naive enough to think that it would save it by waving a magic wand. Is it not a little surprising, at least, that the notice that I received today does not even mention that Stroud town council offered negotiations? That fact has been washed away. That is not a sign of how a public body should operate.
I am happy to come to the specific points that my hon. Friend has made about Stroud town council, if he will bear with me, but I want to say something about perspective. He talked about the viability of the post office network in the future. It is not easy to call for a sense of perspective when post offices are closing, but is important, because even after the closure programme, there will still be a network across the country that is three times larger than that of the top five supermarket chains put together, with a presence in rural and urban communities throughout the country.
That brings me to the subject of the network change plan for my hon. Friend’s area. Even in the Gloucestershire and Oxfordshire area, 92 per cent. of customers will experience no change in the post office branch that they use, and more than 99 per cent. of the area’s population will either have no change in the branch they use or will remain within 1 mile by road of an alternative post office branch. Although it is a difficult matter—and I accept that it is difficult and unpopular—it is important to stress some sense of perspective about the remaining network.
My hon. Friend talked about outreach and its costs. I am happy to take those points up with Post Office Ltd. However, I think that outreach is a valuable way of providing post office services. When I visited outreach services, it struck me that we should have been providing services more flexibly in the past. He made a critical comparison between the way in which branches were selected for closure in the present programme and the way it was done in the urban network reinvention programme several years ago. I have received representations both ways about that. It is true that during urban reinvention, Post Office Ltd concentrated closures on the areas where the sub-postmaster wanted to leave. The problem was that asking people to come forward to take redundancy packages and leave the network did not entail a plan for the future of the network. It meant that closures were dictated by those who wanted to go. This time round the Post Office has said it does not want to proceed in that way, but wants proper coverage in rural and urban areas, using the access criteria with which my hon. Friend is familiar. Other hon. Members have told me that they are glad that that is happening, because the other way left holes in network provision. The downside is that branches run by sub-postmasters who do not want to go are selected for closure. It sounds to me as if that may be true in the case raised by my hon. Friend. The reason is that Post Office Ltd is trying to go about the process in a way that adheres to proper criteria for distance between post offices.
My hon. Friend asked about Stroud town council. The Government’s position on discussions between Post Office Ltd and any third party or local authority was set out in a letter from my right hon. Friend the Secretary of State to Post Office Ltd and the Local Government Association on 19 March. We have encouraged Post Office Ltd to discuss the matter with any local authority that is interested in the issue. However, certain criteria will have to be considered in deciding whether to proceed with proposals, including whether the authority in question is committed for several years. The full costs of the branch will have to be taken into account—not just the cost to the sub-postmaster. I counsel caution before saying that a particular branch is profitable, given that the sub-postmaster does not see the central support costs for any branch. When those are taken into account, three out of four are not profitable. The impact on neighbouring branches will also need to be taken into account, as was mentioned in the e-mail that my hon. Friend read out. With those criteria set, we have encouraged Post Office Ltd to talk to third parties who are interested in potentially supporting post office branches in the future.
Ujima Housing Association
I am delighted to have secured this important debate. The collapse of Ujima housing association is a warning to the entire sector that must be taken extremely seriously by the Government. If more disasters of a similar nature are not to occur, lessons must be learned, and quickly. There is a danger that we will believe that what happened to Ujima is an isolated case, but we cannot be so complacent. When I consider the scale of what happened there, I am astonished by the national media’s lack of interest in the matter, for example. Ujima is the first housing association ever to have become insolvent and effectively gone into receivership, putting at risk the homes of more than 5,000 families in London, Slough and Reading, including a number of families in my constituency.
The case came to my attention at about 4 o’clock on new year’s eve, when I received an e-mail from the Housing Corporation, which regulates the sector. Perhaps I am being unfair, but the fact that the e-mail had been sent on new year’s eve made me think that there might be a little more to the matter than the Housing Corporation was letting on, and I asked myself whether late on new year’s eve was perhaps a good time to bury bad news. I decided to dig deeper into the matter, and I quickly found a series of whistleblowers who felt that the whole episode had, at best, been handled incompetently. I found fraud and corruption on a sizeable scale within Ujima, as well as considerable incompetence. The Housing Corporation’s management were asleep at best, and negligent at worst.
I shall deal first with the fraud and corruption within the housing association. I reported the case to the police on 17 January this year. They came to see me, and I provided them with an extensive dossier of information. In a letter of 20 February, they confirmed that an investigation was under way. I have now heard that it is coming to its first fruition, as three arrests have been made on suspicion of money laundering and conspiracy to defraud Ujima housing association. I sincerely hope that the police will be able to make further arrests, but as a formal criminal investigation is under way, I must be careful about what I say, and I will avoid referring to particular individuals.
I shall outline the areas in which I believe fraud and corruption has taken place in Ujima housing association. First, considerable funds were paid to suppliers without any recognisable form of the tender process required by EU procurement legislation. Secondly, large invoices flagged as dubious by loyal and committed staff were ordered to be paid by those in authority at the housing association. Thirdly, a director and shareholder of Ujima’s primary maintenance contractor was also appointed as Ujima’s acting property services director, in direct breach of schedule 1 of the Housing Act 1996 and the Housing Corporation’s good practice note 3, “Maintaining standards of probity”. The note also sets out what action might be taken. Strangely, the Housing Corporation seems reluctant in this case to follow the advice in its own briefing note.
Fourthly, loan covenants were consistently breached, yet it is alleged that further loans were sought without the breaches having been declared to the banks concerned. There is some evidence that banks are now much more careful about lending money to housing associations. Andrew Heywood, deputy head of policy at the Council of Mortgage Lenders, said that the demise of Ujima would exert “upward pressure” on the sector “on its own”, meaning without any reference to the current credit crunch. In a briefing note on the Housing and Regeneration Bill, which has just gone through the House of Commons, he refers extensively to the same subject and the results of Ujima’s effectively going into receivership. As a result of what happened at Ujima, the cost of lending to the sector has risen, adding to the global credit crunch. That means that there is
“‘no certainty’ housing associations will be able to raise the estimated £15 billion private finance needed to meet government house building targets”.
That comes directly from the Council of Mortgage Lenders.
Fifthly, no management accounts were produced for Ujima’s audit committee for nine months, yet no formal questions were raised about that, which I find astonishing. Sixthly, Ujima did a series of land deals about which the best that one can say is that they look unusual and irregular. Whistleblowers allege that some of the deals were actually corrupt. I have passed information about some of those deals to the police, and I hope that they will thoroughly investigate them.
As an aside, the matter throws up a wider issue within the sector. I have been alerted to the fact that a number of other housing associations are failing to get best value on deals for land development sites, thus failing to get full value for taxpayer money. However, that is not a matter for today’s debate. Perhaps I will be able to return to that on another occasion.
Further allegations revolve around the expensive and luxurious redevelopment of Ujima’s offices at a cost of several million pounds while tenants’ basic maintenance problems were not being fixed. A small number of the senior team were alleged to be leading lavish lifestyles well beyond their personal means.
I hope that the Minister will listen carefully to what I am about to say. If only a tenth of the allegations are true, it is jaw-dropping that the problems were not spotted and stopped. But, of course, many of them were spotted—by Ujima’s committed, hard-working and loyal staff. I have rarely seen such a procession of whistleblowers from a single organisation. Several were sacked for their honesty and dedication. One employee took his case to a tribunal, which criticised Ujima severely, stating:
“We don’t understand why an employer would want to get rid of this employee.”
It is obvious to me and any other independent observer why Ujima would want to get rid of an honest, hard-working staff member: because of how the organisation was being run.
Where was the Housing Corporation in all this? What was the regulator doing while the company was being pulled apart and destroyed bit by bit? Some in the sector allege that because Ujima was a black housing association, the Housing Corporation backed off for fear of being accused of racism. We need to know whether that was the case and to understand whether there is any substance to that allegation. Unfortunately, the Housing Corporation has many more questions to answer. For example, it called in Ujima’s auditors, BDO Stoy Hayward, in both 2006 and 2007 to ask questions about Ujima’s affairs, so it must have had concerns. What were those concerns, and what did the corporation do on each of those occasions? What answers did it receive? In early 2007, Ujima’s development partner status was removed, yet it was given the green light for governance later that year.
In addition, the auditors say that they wrote a very critical management letter to Ujima’s board on 11 December 2006. As I understand it, housing associations must submit such letters to the Housing Corporation. Ujima did not respond to the letter until May 2007. The response should also have been copied to the Housing Corporation. Despite those letters, in June 2007 the Housing Corporation gave Ujima a clean bill of health for viability, governance and housing. Why did it do that? How could that happen, given that six months later Ujima was nearly £200 million in the red?
In recent years, the Housing Corporation has received a number of complaints about Ujima and on several occasions asked it to carry out independent investigations, which in fact do not appear to have been very independent. What were those complaints about, and what happened as a result of the investigations? Did any of the complaints relate to financial health? If so, did the Housing Corporation look at the management accounts and cash flow projections? How was it reassured about Ujima’s overall health? In 2006, Ujima’s statutory accounts were filed late. Did that not ring any alarm bells?
In the light of the complaints to the Housing Corporation, did it attend any board meetings or look at any board minutes? If so, was it not concerned about the lack of management accounts produced between February and October 2007, which means that there were nine months without any management accounts? Was the Housing Corporation aware that Ujima’s acting maintenance director was also its primary maintenance contractor’s director and a shareholder with a direct pecuniary interest? When did it become aware, and what action did it take when it did? Was it aware of the constant breaches of European Union procurement rules? Ujima’s own rules restrict its chairman to 10 terms in office, but the chairman continued into his 12th term, before being removed in the middle of the crisis that then hit the organisation. Did the Housing Corporation know about that? If so, why did it let that happen?
According to the whistleblowers, Ujima’s board was informed that it breached its loan covenants throughout 2006. Why did the board not do anything? Was it minuted, and if so, what action did the Housing Corporation take? How did the board appoint a finance director with no accountancy background or qualifications? Did it ask any questions? What references did it take up? When did the Housing Corporation become aware that Ujima had a totally unqualified finance director, and how did the Ujima board appoint its chief executive? What checks were made on his previous employment and qualifications? What references were obtained from previous employers? What did the Housing Corporation know about his previous activities, and when did it know it? Who was checking that Ujima was getting best value for money for taxpayers with its land deals? What process does the Housing Corporation have in place to ensure that value for money?
As can be seen, there are a considerable number of questions about the performance and directors of Ujima. However, there are also questions about the Housing Corporation as the sector’s regulator. Public money seems to have been used for personal gain and the glorification of certain individuals. The organisation was run at best incompetently and, at worst, corruptly. Either way, those responsible should be prevented from ever again taking up positions in public sector-related organisations. Is action being take to ensure that that happens?
I am aware that Simon Braid of KPMG is chairing an inquiry at the moment and I await his team’s report with interest. We will see whether the scope of the inquiry enables the sector to learn lessons. Many in the sector who have spoken to me feel that it will be a whitewash, but I remain totally open-minded. Clearly, we need to be reassured that the current regulation system works. Was Ujima an isolated example of merely a few corrupt individuals taking advantage of the system, or is this kind of behaviour endemic in the sector? That question at least needs asking and, indeed, answering.
What can be done to ensure that such behaviour is not repeated and to prevent those responsible from continuing to work in the housing sector? What changes can be made to the Housing Corporation to ensure that whistleblowers are listened to more seriously? I believe that the collapse of Ujima requires full ministerial engagement and a persistence that gets those questions answered. The Government must take this matter very seriously. A regulator exists to ensure that public money is not misused and that housing association properties receive the investment that they fully deserve. Housing association tenants are often some of the most vulnerable in our society. It is a scandal that they have been left with a poor standard of accommodation while public money has been misused for personal gain.
Despite the investigation taking place, I believe that the Minister must launch a full departmental investigation into the actions, or indeed lack of action, of the Housing Corporation in response to Ujima. I would welcome today an assurance that measures will be put in place to ensure that no other housing association will find itself in the same situation as Ujima. This scandal occurred on the Government’s watch, and it is incumbent on them to act to ensure, first, that it is not repeated and, secondly, that it is not being repeated now in other housing associations.
I look forward to the Minister’s response with interest. I fully intend to continue to pursue this matter energetically. I cannot, and will not, accept a repeat of a situation in which thousands of families have their homes put at risk due to the incompetence and corruption of others, and I hope that he agrees.
It is a pleasure to serve under your chairmanship, Mr. Cook. I apologise for not being my hon. Friend the hon. Member for Hartlepool (Mr. Wright); he had some difficulties with trains this morning. However, I am very happy to congratulate the hon. Member for Reading, East (Mr. Wilson) on securing this debate and on his dogged pursuit of this matter, not only in today’s debate, but through parliamentary questions.
The fact that this is the first such serious case in which the Housing Corporation has had to step in and use insolvency powers is a sign that, in the vast majority of cases, housing associations are very well run. However, that does not diminish the seriousness of the case before us and the importance of what needs to be done in respect of the police inquiry, which the hon. Gentleman mentioned, and the work of Simon Braid.
I hope to demonstrate that we are taking this matter very seriously, to chart some of the history of the case, and to point the way forward. In October last year, the Housing Corporation placed Ujima under regulatory supervision using its statutory powers to appoint three additional independent members to Ujima’s board. That followed a review of Ujima’s governance and took into account a number of other matters of concern relating to the management of its business. The hon. Gentleman rightly says that there have been whistleblowers and allegations dating back to 2006. The Housing Corporation got involved and, although it did not find problems of fraud, it found some control weaknesses.
The review was prompted by Ujima’s very poor development performance. The Housing Corporation considered that such underperformance raised questions about the governing board’s oversight of a key area of Ujima’s business, which in turn raised questions about its oversight of the business in general. The review identified serious weaknesses in the governance of the housing association, as the hon. Gentleman mentioned. Following the statutory appointments, significant further changes were made to Ujima’s board, including the appointment of a new chair. As a result of concerns about the management of the organisation, the new board suspended the chief executive and finance director and commissioned an urgent review of the financial position.
On the 30 November 2007, on the basis of the financial review, Ujima’s board concluded that the association was in breach of its loan covenants, which meant that some £164 million of loans had become current liabilities. Management accounts to 31 October showed losses of more than £4 million and forecast a loss of £7 million for 2007-08, against a budgeted surplus of £1 million. Furthermore, cash resources were likely to run out by the end of December, with a £20 million cash shortfall by March 2008. The scale of the financial problems meant that further loan finance was unlikely to be available. The board of Ujima agreed that its financial difficulties were such that it could not sustain an independent future and sought to work closely with the Housing Corporation to identify a solution.
Having considered proposals from a number of housing associations, the board of Ujima concluded that the best option involved transferring its stock to London and Quadrant Housing Trust. London and Quadrant is a large London-based housing association which had sufficient capacity to manage the financial situation and a good track record of providing high-quality services to tenants. The proposal was unanimously supported by Ujima’s board, but did not secure the necessary 75 per cent. majority of Ujima’s shareholders at a meeting on 17 December.
I am about to discuss London and Quadrant’s role, its liabilities and responsibilities and why the Housing Corporation thinks that it is the right partner.
On 20 December 2007, at the request of lenders, Ujima issued a notice to the Housing Corporation under section 40 of the Housing Act 1996, and presented a winding-up petition to the court on the basis that it was unable to meet its debts. As the hon. Gentleman pointed out, that was in the run-up to new year’s eve. On 21 December 2007, four secured lenders served notices to the Housing Corporation and took action to appoint a receiver. Those actions triggered a 28-day moratorium under part one of the 1996 Act. It is fair to say that a 28-day moratorium over a holiday period can provoke a few issues as well. I believe that that is a matter that Simon Braid will consider in his inquiry into governance and how things can be done better.
During the moratorium, the Housing Corporation put a proposal to secured creditors under which London and Quadrant would receive a transfer of the assets and liabilities of Ujima, including all of Ujima’s housing stock. In preparing the proposal, the Housing Corporation considered all other potential options, including those from a number of other housing associations. It concluded that a transfer to London and Quadrant was the best possible option to deliver statutory obligations to tenants, creditors and taxpayers. The proposal was agreed by the secured creditors on 14 January 2008. The corporation appointed as manager Grant Thornton, which applied to the Financial Services Authority for a transfer of engagements; the transfer was registered by the FSA on 16 January. Plans to integrate Ujima into London and Quadrant’s operations have been implemented. The statutory appointees will remain in place on Ujima’s board until the accounts have been signed off and the association can be removed from the FSA’s register.
As the hon. Gentleman said, the Housing Corporation commissioned an independent inquiry, which will be led by Simon Braid of KPMG, to assess the handling of the Ujima case and whether any lessons can be learned in the context of the Housing and Regeneration Bill and the establishment of Oftenant and the new Homes and Communities Agency. The inquiry team has been interviewing key witnesses and has been commissioned by PricewaterhouseCoopers to carry out an information-gathering exercise and to consider some legal issues. As the hon. Gentleman said, the inquiry must not be a whitewash. I do not anticipate that it will be: I am sure that Simon Braid will be aware that this debate is taking place and will listen to the hon. Gentleman’s contributions attentively.
May I place on the record my enormous concern about the number of witnesses who are not being interviewed but who have very important information to give to this so-called independent inquiry? A number have contacted me saying that they are very anxious to put their comments on the record. That is why some people in the sector think that the inquiry will be some form of whitewash.
It is useful that the hon. Gentleman has put that on the record and thrown down the gauntlet.
There will now be further rounds of interviews. PricewaterhouseCoopers is expected to submit its report to the inquiry team by the end of May, provided that it is able to schedule all its interviews promptly. I appreciate that many people will want to be interviewed, but we must let Simon Braid and his team continue with their work independently.
The inquiry team will aim to publish its full report in July 2008, so the hon. Gentleman will not have too long to wait. I know that there have been concerns that a black and minority ethnic housing association has been transferred to a mainstream housing association rather than to another BME association. Ujima’s board considered a proposal from a black-led association but did not think that it represented the best solution for the association and its tenants. Because of the scale of the financial problems faced by Ujima, only a solution involving a very large housing association with considerable financial capacity, such as London and Quadrant, was likely to be appropriate.
Having set out the history of the case, I will now draw out some issues and relate them to the powers in the Housing and Regeneration Bill, with which the hon. Gentleman must be familiar. I need to reassure hon. Members that the financial circumstances of Ujima are exceptional. As regards the overall financial position of housing associations, most appear to be well managed. Traditionally, the Housing Corporation has paid very strong attention to the viability of associations. That is borne out by the fact that the moratorium and winding-up process has only been used very rarely—twice in the past 10 years, as far as we are aware. No lender has lost money in lending to registered social landlords and no property has had to be sold because a lender enforced security. In other words, the system has been overwhelmingly successful in ensuring the viability of the sector. Lenders recognise that and their lending rates reflect the fact. At the same time, we must ensure that we learn lessons from the Ujima case and that we are not complacent.
It has been claimed that the corporation has seen viability as the overarching objective of regulation and has paid insufficient attention to quality of service to tenants. Without criticising the corporation, it is clear that many hon. Members have agreed with that view over the years. That is why I am pleased to see that the Housing and Regeneration Bill places tenants at its heart. Quality of service is a key objective, with tenants being involved through consultation in the setting of standards, and the regulator ensuring that tenants have information on which they can judge the performance of their landlords. The new social housing regulator, Oftenant, will be established at arm’s length from Government and separated from investment panels. It will be focused on the activities of registered social landlords and on what they have to offer to tenants. The Bill gives the regulator new powers to secure improvement in management and new measures that are more responsive than the nuclear options that are now available to the Housing Corporation.
Taking on board the comments made by the hon. Gentleman and his assiduous work on the matter, may I say to him that, across the board, housing associations are doing a good job. However, when they do not, it is important that we learn lessons. I hope that Simon Braid’s inquiry will help us to do just that.
Post Office Closures (Great Yarmouth)
It is a pleasure to serve under your chairmanship again, Mr. Cook. I am sure that my hon. Friend the Minister has responded to many such debates over the past few months, and that he is well versed in his responses. To set the scene, this debate comes on the back of the difficulties that the Post Office faces across the UK. The Government’s commitment to support the network to the tune of £1.7 billion over the next three years is certainly to be welcomed, and is not seen as unimportant.
There has been an imbalance in the expectations of the Post Office’s closure programmes in different areas. I wish to make it perfectly clear where I stand on the proposals for my constituency. Most of the post offices there that might be closed are in urban areas, but two are in rural areas. I shall deal with each in turn.
We must not lose sight of the fact that this is nothing new. There has been a significant number of post office closures since 1979. From then to 1997, there were 3,500 closures, and there were no compensation packages for postmistresses and masters or for sub-postmistresses and masters. The current programme is different, because there is a compensation package for those people. However, what about the communities that are being left behind?
We can consider technology, and I am as guilty as most people of using direct debit, internet banking and such like, rarely going into the post office. No wonder post offices are making a loss. The figure being bandied around is that out of 12,500 or 13,000 post offices, only 4,000 make a profit. It is a bit disconcerting when the Opposition parties make points of political expediency, given that they say clearly in their campaign documents that they will prevent the closure of any profit-making post office. Under a Conservative Government, the post office network would be reduced to 4,000, which I do not want to happen.
I wish to go through the six post offices affected in my constituency and make the case that I shall make to the Post Office in the consultation process. There are two in rural areas, the first of which is in the very small community of West Somerton. It is open two mornings a week, I believe, for four hours on Monday and Friday mornings, but it is used extensively by that small community. By and large, it is a community without access to transport, including a bus service. Given the costs involved, I question whether the post office there should be part of the closure programme. I estimate that the savings on it would be in the region of £80 a week at most. On that basis, perhaps it would be worth while for the Post Office to consider the effect that its closure would have on the 30, 40 or 50 people, mainly pensioners, who rely on it to get their benefits.
The effect of the closure would go across into my neighbouring constituency of North Norfolk, where the small community of Hickling is suffering from the closure of its post office. A number of people there use the West Somerton post office, and that has not been taken into account. Without it, the nearest one would be at Winterton and the next nearest in Martham, some miles away. People could not rely on that. I suggest, as I will to the Post Office, that if the hours were to be reduced even further so that the post office were open one morning a week as an outreach, that would contribute a little towards the savings required.
The next post office affected is in Stokesby, another small community that has about 260 people. The people there are slightly worse off, because they are really out on a limb. The community is mainly surrounded by water, and it is three miles from the closest post office. The Post Office’s access report states that in the case of both alternative post offices, the terrain between the branches is hilly and there is no street lighting or footpaths along the whole road. The nearest branch is 2.9 miles away in Acle, which is another constituency, and the second nearest 3.1 miles away in Filby. So can people go by bus? If they are lucky, there is a bus to Acle every two hours one way, and then they will probably have to wait another two hours to come back. On the other route, to Filby, there are buses at 8 o’clock, 10 o’clock, 1.30 pm and 2.47 pm. One can see the difficulties that there will be for the small community of Stokesby. Okay, only 100 people a week use that facility, but I suggest that that number increases in the summer months, because boats on the broads land there and holidaymakers use the facility.
I shall move on to discussing the town area and to a post office in the north of the town in Beresford road. I know that one, because my mother, who is a pensioner, uses it. People will say, “Well, you are going to support that one”, but I support every single one. I certainly do not put any more weight on that one than on the others. My mum tells me how she gets to the post office, which is probably a quarter or half a mile from where she lives. She struggles down there to get her pension and also to get her papers and other shopping from the local shop. If the post office closed, she would have to walk another 200 yd to the bus stop to catch the bus to the alternative branch. It is only about six or seven minutes away, on Salisbury road, but it would not lend itself to the significant increase in the number of people using it that would occur if people were asked to migrate there. It is expected that about 1,000 extra customers a week would migrate there, so there are serious issues to be addressed. A quarter of the people in that part of my constituency are pensioners, which is a high proportion.
Moving further into the town, one post office affected is in the town centre and another is on the other side of the river. The Northgate street post office is close to the town centre and is very busy. It handles a considerable number of people each week. I wish to mention it together with the Lichfield road branch, because the alternative branch to both is at WHSmith in the marketplace. In the past two weeks, I attempted to encourage the customers of both those branches to take part in an exercise by going to WHSmith at the same time and day as they would go to their normal branch to prove that WHSmith would not be accessible to the significant number of people involved. Unfortunately, or fortunately for the post offices, people remained loyal to their local branches. In fact, those branches had an uplift in their customer base. That shows the loyalty that people have to their local communities. In both those locations, there are rows of shops that rely to a certain extent on the local population and local business.
The bus stop is 300 yd to 400 yd away from the alternative branch, and the car parks are quite a way away and operate only on Mondays, Tuesdays and Thursdays. On the other days, a market operates and there are stalls on the car park. There is no parking outside the branch, because the area is pedestrianised. The post office is right at the back of the building, and people have to weave their way through the shelves. Another disadvantage of asking customers to migrate to WHSmith is that during the summer months, the population of Great Yarmouth increases, probably threefold or fourfold. The number of people that mill around in the town centre is phenomenal. This branch of WHSmith, as a popular shop in a popular destination, would certainly experience difficulties. I would defy anyone, if there were two or three wheelchairs in the shop, to suggest that that is the right and proper place for people to go.
These two shops, in Northgate street and Lichfield road, have the full support of the community. As I have said, they are fairly busy and their closure would lead to something in the region of 8,000 to 9,000 people migrating to the WHSmith shop, unless, of course, the Post Office is again looking for a reduction in the number of people using a post office. I do not want to see that reduction; I want to see the Post Office grow. I want to see it taking forward what it has left to offer in terms of the open market and trying to encourage more people to use post offices.
I fear, however, that the number of people that we have lost over the last year or so—4 million, I understand—will be revisited next year and again we will say, “Sorry, we have lost another 3 million or 4 million”. Part of that loss will be due to the effects that these closures have had on particular communities.
The last post office that I want to talk about is the Springfield road post office. Again, it is on the other side of the river and the Post Office is encouraging people to go to the main post office on the high street in Gorleston-on-Sea. The Springfield road post office is also part of a shop and, by closing it, the Post Office would encourage up to 1,500 customers to migrate to the local shopping centre, where parking is certainly limited. The centre is very difficult for some people to access and there is a fair amount of hilly terrain, too. Such a change would be extremely difficult.
In all these cases, there is also the question of the criteria to be considered. That is where I have a particular problem, because the criterion in question states quite clearly:
“99% of the total population in deprived urban…areas across the UK to be within 1 mile of their nearest Post Office branch.”
Originally, I just thought that that was okay, but let us look at the vast majority of people in the deprived areas. We have one or two of the most deprived communities in the UK in my constituency, where some of these post offices up for closure are based. The sad thing is that, when the picture is taken across the UK, it is clear that in a constituency such as Great Yarmouth, which is a mix of urban and rural areas, the 99 per cent. criterion in question nationwide could result in a situation where as few as 75 per cent. of people are within a mile of a post office. That contrasts with largely urban areas, such as inner London, the metropolitan areas and the cities, where it is quite clearly possible for everybody to be within 1 mile of a post office.
If we take an average—I have not done the figures and I am sure that it would be very difficult to do so—the 99 per cent. criterion may well be justified. However, I make a plea: why should areas such as mine, with the deprivation that they experience, have to suffer on the basis of a UK average? I respectfully ask the Minister to have another look at the criterion and consider whether it should apply to each area of closure rather than across the UK. That would be much fairer; why should my constituents have to walk further than a mile when people in the inner cities certainly have a post office within that distance?
This campaign has obviously benefited from uniting the various communities. When I have looked at the situation in many of the areas that will be affected, I have received hundreds and hundreds of letters and I have seen that petitions have been signed all over the place. The campaign ranges across all ages. For instance, in the communities of Lichfield and Cobham, there was an issue because there are two communities together. I received a letter from Jim West, the chairperson of the local Lichfield community group, that said:
“Not very long ago, the post office in Cobham was closed. We were given an assurance that our branch would therefore not be threatened.”
That branch in Cobham was within probably a quarter of a mile of the branch that was closed not very long ago, so the community in Lichfield were pretty miffed that another branch was going to be closed. The other factor is that the Lichfield branch is also separated from the other one by a river and a main road.
At the other extreme, even the pupils at the local schools are getting involved in the campaign, which shows how the whole community is involved. Just recently, I received 50 individual letters from pupils at the Edward Worlledge community middle school in Southtown. They were very concerned about the effect that post office closures would have on their parents and grandparents.
The campaign against post office closures is certainly gathering speed and strength. Every MP will no doubt have their own story as to why their post offices should remain open. However, what I am trying to do is to put together a case for each individual post office when I believe that that post office is genuinely needed, but also a case for trying to increase the trade and business of the post office network. I fear that, if the Post Office takes this particular action, it will, next year, drive people into greater use of IT and other technology and will keep them out of their local post office. We will reduce the number of customers even further. My fear is that, in the next few years, we will see another round of cuts because there will have been a further reduction in the number of people using the post office network.
There is another side to the issue. Has there been any consultation with the branches that will be regarded as the alternatives to those that are to be closed? Will they face difficulties with increased numbers of customers? A sub-postmaster at one of the branches that I have mentioned commented that the changes will create difficulties in his shop if so many people migrate to his shop. He will have to take on extra staff and probably look at other alternatives, too.
There are a number of issues that the Post Office needs to take on board. However, people can rest assured that I will be putting my comments forward in the consultation process and I sincerely hope that that process is not just a practice for the Post Office, but one that will see it taking seriously all the comments from wherever they come.
I congratulate my hon. Friend the Member for Great Yarmouth (Mr. Wright) on securing this debate on post office closures in his constituency. He knows a lot about post office closures as he serves on the Business, Enterprise and Regulatory Reform Committee, which has conducted several inquiries into post office provision and published a report just a couple of months ago. I thus acknowledge his expertise and knowledge about this subject. As he said, the consultation proposal is that six of the existing 27 post offices in his constituency should close. The consultation is still open, but that is the initial proposal.
I thank my hon. Friend for acknowledging the extent of the Government’s support for the post office network. I will go on to say a bit more about that support, but it is not always acknowledged in such debates and it is a very important part of the picture, because whatever difficulties the network is facing—in his constituency and elsewhere—they would be far greater were it not for the huge Government support and subsidy for the network.
My hon. Friend went through in some detail the cases for the individual post offices in Beresford road, Northgate street, Lichfield road, Springfield road, Stokesby and West Somerton. Of course, I bow to his knowledge of his constituency. As he said, there is a wide variety of branches in the constituency, ranging from one with less than 50 customers a week to others with between 1,000 and 1,500 customers a week.
Although my hon. Friend knows this, I want to set out some of the rationale behind why some post office branches have to close, because this is a difficult process and, I acknowledge, one that is unpopular in those communities affected. No one likes to see their post office closing; even people who do not use their post office very much do not like to see it closing.
This programme of closures is happening because the network is losing a significant amount—some £500,000 a day—and the losses have more or less doubled in the past few years. It has lost 4 million customers a week. My hon. Friend touched on some of the reasons behind those losses. Part of the cause is lifestyle and the way in which people get their benefits and pensions paid. Nine out of 10 new retirees have their pension paid directly into their bank account. The service for paying car tax online did not exist a few years ago, but it is now used by more than 1 million people a month. Those 1 million people would have used the post office to renew their car tax. Although that choice is still available, an increasing number of people choose to pay online. There is also now direct debit and competition from companies such as PayPoint, which won the contract for TV licences. Several big challenges concerning competition, technology and lifestyle mean that the Post Office is in some financial difficulty.
My hon. Friend was absolutely right to say, as I believe he did, that a commercial network would be 4,000 branches rather than the 14,000 or so that currently exist. As a Government, we do not want the network to be reduced to that level, and that is why we have put in a subsidy of £150 million a year, which is part of a total package of up to £1.7 billion in the years up to 2011. Without that, far more post offices would be facing closure than is the case under even the current proposals.
The need for closures is not just recognised by the Government, but accepted by the general secretary of the National Federation of SubPostmasters, who said at the start of the programme:
“Although regrettable, we believe that closures are necessary to ensure the remaining post offices are able to thrive in the future.”
Indeed, the hon. Member for Rutland and Melton (Alan Duncan), the Opposition spokesman on business and enterprise, said in a debate on this issue some weeks ago that
“we have to face the facts about the future of postal services in this country…we fully expect the network to shrink in size. We have never given a guarantee that no post offices will close”.—[Official Report, 19 March 2008; Vol. 473, c. 947.]
I am not sure what the Conservative campaign literature says, although I think I have seen the literature that my hon. Friend referred to, but the truth is that, in the House of Commons, the Opposition Front-Bench spokesman accepted the need for the network to reduce in size.
Alongside the proposals for closures, there are proposals for outreach and part-time services. My hon. Friend will have heard the announcement by the Post Office about a month ago that it would pilot such services in urban as well as rural areas. It is looking at alternative ways to provide post office services, perhaps in a more flexible way and at lower cost than has traditionally been the case.
My hon. Friend referred to the consultation. In truth, I doubt whether it is possible to do something like closing post offices in a way that satisfies everyone. There will always be questions raised about consultation, but one point that I want to make, which I also tried to make to the Business, Enterprise and Regulatory Reform Committee, is that the consultation is not simply a referendum on whether there should be post office closures. I believe that we know what the answer to that would be. The decision to reduce the size of the network was announced to Parliament exactly a year ago by the Chancellor, who was then the Secretary of State for Trade and Industry. Instead, the question is how closures should be made against the backdrop of the announcement. In fact, Post Office Ltd wrote to MPs last July and stated that the consultation
“would not concern the principle of the need for change of the network, nor its broad extent and distribution…Rather consultation will be seeking representations on the most effective way in which Government policy…can be best implemented in the particular area in question.”
In other words, the Post Office is asking about the detail. It is asking, given that the network has to reduce by about 17 or 18 per cent., “Have we got it right? Have we taken all the factors into account in making the best decision about what is, inevitably, a difficult process?”
The consultation has two parts. There is a pre-public consultation phase and then a public consultation phase. In the area plan that covers my hon. Friend’s constituency, nearly one in eight of the initial proposals were changed as a result of detailed input from key stakeholders, including Postwatch.
My hon. Friend raised the issue of some offices being busy, and some being busier than others. He did not get into profitability, although some hon. Members do in such debates. Profitability is judged on not just the books that the sub-postmaster keeps, but central support costs covering things such as information technology, cash delivery and distribution, and other services that are paid for centrally. They do not appear on the sub-postmaster’s books but are, nevertheless, very real costs to Post Office Ltd. Taking all those things into account, some three out of four post offices run at a cost to Post Office Ltd rather than a profit.
My hon. Friend asked about the capacity of receiving branches to deal with custom directed to them. That should be part of the process, and Post Office Ltd should be talking to sub-postmasters whose branches will not close, but who might be in the position of receiving business from other branches, and sometimes from Crown offices, too. That should be taken into account.
I appreciate the difficulty of this issue for my hon. Friend and his constituents, but we must have some sense of perspective. Even after the closure programme is over, the post office network will still be three times bigger than the top five supermarket chains put together. Even under the plan that covers his constituency, more than 90 per cent. of people will see no change to the local post office that they use, although I appreciate that that is of little comfort when one of the 8 per cent. affected is his mother—the last thing that I want to do is to inconvenience her.
I acknowledge that although most people will be unaffected, there is concern about those who will be affected, but with the access criteria that will ensure reasonable provision in rural and urban areas, we are led to the fact that in the plan covering his constituency, some 98 per cent. of people will either see no change in the post office branch that they use, or will be within a mile by road of the nearest alternative. I do not pretend that the closures will have no effect, but we must retain some sense of perspective and acknowledge that we will still have a very large network.
Finally, my hon. Friend spoke about the future and whether the process will need to happen again. Let me just say a couple of things about that. Through the subsidy, which we have guaranteed until 2011, we have given the post office network some financial certainty for the next few years. Obviously, we will then have to make a decision about the future. Like any Minister, I cannot say what subsidy or expenditure will apply after that. That means not that there will not be a subsidy, but that I cannot set out today what it will be.
We all understand that the Post Office card account is very important to the post office network. There is a debate about whether its future use can be guaranteed. Is there any way in which pressure could be put on the Department for Work and Pensions to ensure that the Post Office card account remains with the Post Office?
My hon. Friend raises a good point about the card account’s importance to the future of the network. His expertise will tell him that that has to be judged as part of a proper tendering process. That is the legal basis on which to do it. The last thing that I want to do is to say anything that interferes with a proper legal tendering process. I hope that he will not mind if I do not get drawn too much into the matter, but I acknowledge that the Post Office card account is important for the future of the Post Office, as are areas of service provision such as foreign currency services, the car and home insurance that it is expanding into, and the broadband service that has been launched in conjunction with British Telecom. We cannot—
It being Two o’clock, the motion for the Adjournment of the sitting lapsed, without Question put.