Tuesday 7 July 2009
[Sir Nicholas Winterton in the Chair]
Motion made, and Question proposed, That the sitting be now adjourned.—(Steve McCabe.)
I welcome all Members to the first Westminster Hall debate this morning. It looks comfortably attended, and I have no doubt that it will be interesting. I have great pleasure in calling the right hon. Member for Rotherham (Mr. MacShane) to open the debate.
Thank you, Sir Nicholas. Any debate that you chaired, even if it consisted of only one speaker, would be interesting.
We are here to discuss the steel industry. I am glad that my right hon. Friend the Minister for Regional Economic Development and Co-ordination is to reply, because those of us who know her in her role as the Minister for Yorkshire and the Humber know of her dedication and her hands-on, let’s-go-and-see-what-can-be-done approach. I hope that at the end of this debate she can convey the message to her colleagues in Government that we need a slightly better co-ordinated response than we have had until now.
I asked for this debate because the announcement of hundreds of steel industry redundancies in my constituency and in the neighbouring constituency of my hon. Friend the Member for Sheffield, Hillsborough (Ms Smith) is causing deep distress and concern, particularly as it appears that many of the redundancies will be compulsory. Much of the previous reduction in steel industry employment in south Yorkshire and elsewhere has been on a voluntary basis, but this situation is serious indeed.
There are many aspects of the crisis, but the basic message is simple: under the Conservatives, Britain lost its coal-mining industry; under Labour, Britain must not lose its steel-making industry. I wish to make a series of concrete proposals that I hope will stave off the worst of the impact of job cuts. I do so not with false hope nor a promise of what is beyond the power of the Government, the company or unions to deliver, but I have been raising concerns about steel across the board for the past two or three years, particularly in the past year as the worldwide recession began to develop.
Let us be clear: this is not a made-in-Britain crisis. Exports are plunging faster in Germany, unemployment is rising faster in Spain and America, and the economy of Japan may shrink by up to 12 or 15 per cent. On comparative terms, difficult as it may be for some to understand, Britain is perhaps better placed than most of our big OECD partners. But have we got sufficient grip in responding to the crisis in the steel industry? Has there been sufficient co-ordination and co-operation between Departments—I have to say politely that I do not think that that is the case—or, indeed, between the company and the union?
Corus has to ask itself hard questions. Would its dealings with the Government not have been more fruitful if, instead of its go-alone approach, it had co-operated fully with the main steel union community to work out common positions? The outgoing chief executive officer of Corus, Mr. Philippe Varin, and the new CEO, Kirby Adams, are open and friendly. They meet MPs, and they put their cards on the table. I am not making a personal criticism, but a structural approach in which the company and the union spoke as one to the Government could have borne better fruit.
I congratulate my right hon. Friend on securing this debate, and on his outstanding and sterling work in defending the steel industry, particularly in his constituency of Rotherham. He makes an important point about Government intervention, but does he agree that the Welsh Assembly Government and their ProAct scheme, which resulted from discussions, particularly with the steel union community of which he and I are members, has made a significant difference? Does he agree that it should be rolled out in England as well?
I fully agree with my hon. Friend. The scheme shows the devolved Government in Wales working well. Perhaps I should have put it on the record when I began speaking that I am a member of the trade union community.
The position of the steel industry is as it has always been: steel is the canary in the coal mine of global capitalism. Whenever a crisis is about to break, steel is hit hardest and early. Steel stocks are sold but not renewed, orders do not come in and the steel companies panic. Their answer is always the same: cut down on staff even though labour costs are a small part of total steel production costs.
We are dealing with Corus, which is part of the Indian conglomerate, Tata Steel. I know Tata from my work as an international trade union official. It is a caring company that has always sought to look after its employees, which is why I supported its takeover of Corus, just as I supported the merger of British Steel with the Dutch company. I argued in the 1990s for the newly privatised British Steel to seek European and global partners, but British Steel’s parochial and provincial leadership after privatisation was poor and without any strategic vision.
Tata is a successful, profitable company. Its turnover for the financial year 2009 was $29 billion, up $3 billion from its turnover of $25.8 billion in the financial year 2008. That was on a smaller tonnage of steel delivered: 28.54 million tonnes in the financial year 2009 compared with 31.68 million tonnes in 2008. One can actually make money out of steel while producing less, if the prices are right and there is enough demand.
Tata’s profit before tax this year was $2.13 billion dollars. We are not talking about a bankrupt or cash-strapped company. Corus figures in Europe were also strong: turnover increased in the financial year 2008-09 to $21.4 billion, with higher prices offsetting lower output.
The men whose jobs have been lost in two major Corus cost-cutting exercises in the past 18 months have contributed to the survivability of the company and its continuing strong profits. It is sad that it appears that the only way the good ship Corus can stay afloat is by throwing overboard or sinking its hard-working and loyal employees. My first demand today is for Corus to accept its duty of care to the steelworkers who deliver profits for its shareholders and large salaries for its executives.
I welcome the fact that the furnaces at Rotherham and Stocksbridge have not been shut down. The British Chambers of Commerce report today that the worst of the recession may be over. Insha’Allah—let us hope so. The stocks of steel and cars that have been waiting to be sold are now being sold, thanks to the scrappage scheme.
The most important policy objective that this or any Government could follow is to maintain demand. Corus says that the best help it could have is stimulation of demand. The leaders of the world’s steel community at the OECD steel committee meeting in Paris on 8 and 9 June noted that the best help that steel can have is continued Government stimulus aimed at long-term growth. In that regard, the constant attacks by the Conservative party and the right-wing press on the Government’s demand-side policies are deeply damaging to the future of steel. The right response to an economic recession is not to stop spending but to maintain investment programmes. Minimising debt, as called for by Opposition spokesmen, the BBC and other conservative forces in Britain, would be a one-way road to fewer steel and other jobs.
I agree with what the right hon. Gentleman says about demand. Does he agree that it is in Corus’s best interests, and it is its responsibility, to try to maintain capacity? Eventually, the marketplace will work and world demand will come back strongly, especially for niche products, specialist skills and the high-quality steels that British steel focuses on. We must ensure that when the turnaround comes, Corus has the essential skills and the capacity to take advantage of it.
I completely agree with the hon. Gentleman. Of course, the other thing that we must maintain is a strong position in the European Union. That contrasts with the position of his party, which wants to pull us out of Europe. That, of course, would exclude us from so many key markets for steel.
My right hon. Friend is being very generous in giving way. Would he not agree that the scale of the steel industry and the global nature of steel production make it essential that the Government not only act to sustain demand in this country but work with other countries, particularly the EU but other countries as well, to sustain demand internationally? To cut demand by cutting public expenditure in this country will completely undermine their attempts to do so.
My hon. Friend is right. The Conservatives are like the Bourbon kings, of whom it was said they learned nothing and forgot nothing: they want to return to the politics of the 1980s and 1930s, and we know where that will lead us. The Prime Minister’s leadership of the G20 in April showed Britain in the vanguard of creating an international response to the world recession. At the forthcoming G8, he will meet President Sarkozy.
I will not deal with it in my speech, but one of the big issues to be discussed is opposition to any rise in protectionism, which we see in China, Turkey, Russia and potentially in the United States.
No, I really want to finish because other colleagues from steel communities want to speak on this matter.
What must the Government do? I ask my right hon. Friend the Minister to open a channel of communication with Ministers to plug them into the scandal of the overly high prices that our electricity companies charge to industrial users. If hon. Members look at Hansard from 8 June 2006, at column 382, they will see that I asked the then Secretary of State for Department of Trade and Industry, now my right hon. Friend the Chancellor of the Exchequer, to take action regarding the fact that electricity prices for industry were much lower in Germany than in the UK—and they still are and no action has been taken.
On 22 January, as can be seen in Hansard, I asked the then Energy Minister, now the Minister of State, Department of Health, my right hon. and learned Friend the Member for North Warwickshire (Mr. O’Brien), what could be done, given the rapid decline in oil prices, to get electricity prices down. I do not want to read out the answer that I received, because it was not adequate. I have repeated that point in the House, in letters to Ministers and in private conversations with them, but there has been no grip on this problem of Britain’s having much higher electricity charges than the rest of Europe, which has cost the jobs of steelworkers. I ask my right hon. Friend the Minister to put effective pressure on her ministerial colleagues who are responsible for the oversight of these wretched utility companies and ensure fair prices for steel.
We also need joined-up government with the Department for Work and Pensions. My right hon. Friend the Member for Wentworth (John Healey) and my hon. Friend the Member for Sheffield, Hillsborough had a good meeting with Lord Mandelson and his ministerial team last month. We asked for a senior civil servant in the Department for Business, Innovation and Skills to be placed in executive charge of co-ordinating Government activity across Departments. Can the Minister tell us the name of that person, and if not will she write and let me know?
One bit of co-ordinated activity would be to use all the DWP’s funds, not as stretcher-bearers to help those who have lost jobs, but instead to create in-work training schemes so that some workers can be kept on the company payroll on training or community help schemes, rather than going out the door.
I congratulate my right hon. Friend on securing this debate. I, too, declare an interest as a member of the Community trade union. My right hon. Friend may be aware that I secured an Adjournment debate a few weeks ago, in which I mentioned a joint report from the TUC and the Federation of Small Businesses on supporting the work force in work. The conclusions of that report were that Government money would be much more wisely spent on that so that industry, especially the steel industry, could keep its work force in place, ensuring that we have the capacity in Britain to meet demand as it increases.
I agree with my hon. Friend. I wish that the civil servants in Whitehall would read these debates and that Ministers would act on the points made by Back Benchers who are a lot closer to the steel industry than others. I will come on to that point in a second.
Undoubtedly, we need to think differently. There is a sense that, in terms of industrial support policy, we are on tramlines that have not altered for the last 25 years: any job reduction is good and anything that a company wants to do has to be accepted, and the Government are powerless, as if decisions about electricity prices or tariffs or how to ladle out public funds to support people in difficulties are immutable things that, like the weather, cannot be altered. The Government must understand their responsibilities and act.
We need to see what can be done to use DWP funds to keep some workers—not all—on the company payroll in training or community help schemes, rather than have them go out the door. In particular, the role of the Communitas training outfit, which has specialised knowledge of steel, needs to be highlighted. I understand that there will be a meeting with Communitas later today, and I hope that the Minister can assure me that the Government will act to press Corus to co-operate fully with it, because that is the only training organisation that originates from the steel community. There are plenty of private training organisations and all the quangos that get a lot of Government money, and I am sure that they do God’s work in their own way, but Communitas can do the steel industry’s work better than anyone else. Corus must be told that, if it is to get Government help, it must co-operate with Communitas.
In particular, the £5 million that has been announced to help steel must be used jointly with the union and Communitas and must not be a blank cheque given to Corus to use for its own purposes while men go out the door. That £5 million is welcome, but it needs to be increased. The paltry sum of £5 million for thousands of steelworkers contrasts sadly with the new wages of £9 million announced for the new boss of the Royal Bank of Scotland, even though this bank is under Government supervision. Can my right hon. Friend understand—I do not ask her to comment on it—the outrage of families who now have to face the dole while the Government sign off on a £9 million pay package for this greed-soaked bankster? This not a moral maze; it is immoral, and the sense of injustice at the double standard, whereby the rich in the City are protected while the steelworkers of south Yorkshire are sacrificed, should not be underestimated.
In talks with Ministers—my right hon. and hon. Friends and colleagues—they all insist on their ideological commitment that there is not much to be learned from European Union, where different and more innovative policies to support steel are in place. I have heard all the reasons and excuses from Ministers, both at the Dispatch Box and in meetings, but they increasingly sound hollow. When the upturn comes, and it will, we will find ourselves importing steel from Germany, the Netherlands and France because we will have lost the capacity and the will to make steel across the board in Britain. Why are other Governments leading and the British Government lagging? Can we look, for example, at stock-piling some steel products to be sold, at a profit, when the upturn comes?
If a full-scale Dutch or German-style wage subsidy is ruled out, why not a temporary exoneration of social charges on the wage bill, as in Sweden? The Government’s refusal not to follow a single European model but to incorporate some of the better ideas from Europe makes the UK much more expensive now for steel operations. Why are we not able to help with credit insurance? Without accessible credit insurance the cost of raw materials and electricity is even higher for Corus. These are arguments about the need to help the industry, though the industry could help itself by working jointly with the Communitas union and presenting a common approach based on showing the jointly decided priorities to Government.
Steel is not like other industrial production. A steel plant cannot be moth-balled. The electric arc furnaces of the south Yorkshire steel industry are a key component in the new green economy, for which my right hon. Friend the Minister is a wonderful ambassador and enthusiastic advocate. But does she understand that Rotherham and Stocksbridge consume about 1.5 million tonnes of scrap metal a year? Where are all the unused, derelict cars going to be stored if they are not swallowed up as scrap by the electric arc furnaces of our region? Are they to be stacked up on street corners?
We marvelled last week at the new roof at Wimbledon, which was made with Rotherham steel. It did not bring Andy Murray quite enough luck, but it will still be there next year, as I hope will he. Half of the steel made in Rotherham goes to the car industry in the UK. If Nissan, Honda and other car manufacturers can no longer source steel in Britain because steel has gone under, they will relocate to the continent to be closer to suppliers of steel as Governments there have been willing to think out of the box and put in place pro-steel job policies.
The 800 jobs threatened in south Yorkshire represent about £3 million in local demand. There is a lot of talk about family policy these days. The best family policy is, and always will be, a secure job with fair pay so that a home can be created and children supported as they grow up. That is now under threat for too many steel communities in Britain.
Labour Members know the devastation that was caused to towns and communities when the Tories shut down the pits. My right hon. Friend the Minister represents those communities in south Yorkshire, and I am confident that she will do all in her power to help, but so far we have had more words than concrete action. It is not too late. If Labour loses steel, Labour loses power. It is as simple as that.
I congratulate my right hon. Friend the Member for Rotherham (Mr. MacShane) on securing this important debate. He referred to the impact of redundancies on steel towns and areas, with specific reference to Rotherham and Stocksbridge. The work force in Stocksbridge of approximately 850 will be reduced by 379. It does not need a mathematician to work out that the impact will be serious.
Over the years, Stocksbridge has weathered many storms, most of them from the late 1970s and early 1980s when the Conservative Government did little to intervene in the massive contractions that hit the steel industry. Stocksbridge then employed more than 6,000 people at the steelworks in the valley, but that number was reduced to 600 before increasing to 850.
Steelworking in the area goes back to the 1840s, when the works were founded by Samuel Fox. To this day, the valley is known not as the valley of the Little Don, but as the valley of the Fox, such was the impact of steel on the area. Stocksbridge exists for one reason only—steel. Without steel, Stocksbridge would still be a hamlet of a few dozen houses; instead, it has a population of 13,500. As my right hon. Friend said, the structure of the steel industry in places such as Stocksbridge has a similar effect to that of mining in any pit village. The place exists only because of steel, hence the importance of Corus Engineering Steels, even now, to towns such as Stocksbridge.
Another point that my right hon. Friend made that is worth repeating relates to the quality of the work in Stocksbridge, Rotherham and other places that provide components for niche markets, including aviation—planes have a little bit of Stocksbridge in them, whether in the landing gear or elsewhere—as well as components for the energy, oil and gas industries, and increasingly for the new green technologies, such as turbines.
If Britain is to specialise in high-value steelworking, Stocksbridge is at the niche end and highest value end of that market. Its specialisms are such that previous attempts to move steelworking capacity elsewhere have always led to its return to Stocksbridge. Attempts have been made to close the operation in my constituency, but it has always come back because the skills required to produce steel are so specialised that it has not been possible to maintain production without returning to the area. That is not surprising, because its 160 or 170 years of specialist steelworking and secondary skills in metallurgy and so on are second to none.
A long history of steelworking does not give an area an automatic right to survive, but that long history and the skills that have been built up over generations in areas such as mine means that Stocksbridge, Sheffield and so on have a right to be supported by maintaining the steel industry in their areas. What is made in Stocksbridge will be critical to the economy as it goes into an upturn. We hope that green technologies, the energy industry, aviation and the automotive industry will soon move into more positive times. Companies such as Corus will then be critical if British manufacturing is to exploit the new opportunities that will be available in the long term.
We all know why we are where we are with Corus. Demand is down and Stocksbridge is working at 25 per cent. capacity. Energy prices have crept up, as my right hon. Friend said, and it was inevitable that redundancies would be announced. We all hoped that those announced at the beginning of the year would be the only ones, so the latest announcements have been soul destroying in places such as Stocksbridge. Many of those who worked at the plant knew that there was a possibility of redundancies, but they still came as a shock when they were announced. The announcement ran like a tremor through the town: everyone was talking about it, and everyone started to worry not just about the job losses and what they would mean for local families, but about the knock-on effect on the local economy. In a small town such as Stocksbridge, many local businesses exist only because of Corus—even the local sandwich shops exist only because of Corus. On top of that, many contractors, such as electricians and so on, who are not on the Corus payroll depend on Corus for their survival and livelihood.
What can the Government do to support UK steel, and Corus in particular? First, as my right hon. Friend said, continuation of the Government’s economic stimulus is critical. The car scrappage scheme has been helpful to Corus; it should continue and, if possible, be expanded because it has done a great deal to help UK steel, and it could help a great deal in Corus’s fight for survival.
Secondly, we would like the Department—I hope that the Minister will comment on this—to do more to stabilise energy prices in the industry, which have been a huge and ongoing problem for a number of years. Since I came to the House, both Corus and the community have told me repeatedly that the price of energy, compared with that of our European neighbours, has been a key problem for Corus’s competitiveness. The more the Department can do to help to stabilise energy prices, the better it will be for the company in the long term.
Thirdly, if our Prime Minister is to engage in discussions with the French on Anglo-French collaboration on infrastructure projects, with nuclear power being a key part of that, I hope that he will do his best to ensure that British industrial interests are well represented in those discussions. British manufacturing could have a key role in building the future infrastructure of the UK and France. We know that the capacity potential for British manufacturing and specifically steel to fulfil the requirements of the new generation of nuclear power plants to be built in this country is around 90 per cent.—it is possible for UK steel manufacturing to provide up to 90 per cent. of the components required for the new generation of nuclear power plants. There are European rules on competition and so on, but it would be good to know that the Government are doing all they can to ensure that UK steel manufacturing is well placed to exploit the opportunities that will be available. Our Prime Minister can play a key role in delivering that.
A £5 million training package was announced two weeks ago. My right hon. Friend referred to ProAct, which is a Welsh scheme, and I understand that a similar scheme in England would cost around £44 million. The Department should consider introducing such a scheme. If the Welsh can do it, why cannot the English? I would like to hear from the Minister today how the Department is working with Corus to ensure that that £5 million is well used and delivers what it needs to deliver. It is a small sum. I agree with my right hon. Friend the Member for Rotherham that we need much more such money, but we need to ensure that the money that has been provided is used properly—used to secure the long-term future of the plants in Stocksbridge and Rotherham. What is the status of the Minister’s discussions with Corus, and what commitments is she trying to secure from Corus on the proper use of that money? We need guarantees from Corus that the money will be used to secure the long-term survival of the company in South Yorkshire. That is critical—from my point of view, it is the most important aspect of the discussion today.
Why is steel so important? It is easy for people who live in Sheffield to forget that others do not necessarily consider steel to be so important. Sheffield was once the largest steel producer in the world and stainless steel was invented in Sheffield, so it is easy for us to forget. We have to ask ourselves the question again and again and to remind people why steel is important, because we in South Yorkshire take it for granted.
Steelmaking is a primary economic activity. As my right hon. Friend pointed out, it is a barometer of the health of the economy and of the health of British manufacturing. Given that in recent debates, it has been recognised that we have become over-dependent as a country on financial services and the service economy and that we need to rebalance the economy in favour of manufacturing, now is the right time to think properly and strategically about the future of steel, because steel is a critical part of any manufacturing economy such as ours. In particular, Corus Engineering Steels is a critical part of the steel industry because of its production of components for the niche end of the market and because it represents exactly where the UK needs to be in terms of manufacturing—at the very top of the highly skilled, high-value end of component manufacturing.
Order. Before I call the hon. Member for Newport, East (Jessica Morden), I should like to help hon. Members by informing them that it is my intention to start the winding-up speeches at 10.30, because I want the Minister to have the full amount of time to respond to what is clearly a very important debate. That is advice to hon. Members to indicate how long they can speak for, and perhaps to indicate, if Members have not thought of speaking but would like to, that there is still an opportunity to get in. I call Jessica Morden.
I shall speak briefly, Sir Nicholas.
I congratulate my right hon. Friend the Member for Rotherham (Mr. MacShane) on securing this very important and timely debate. He made a convincing case for more Government support for the UK steel industry without, as he said, offering false hope. In my constituency as in many others, the dramatic drop in steel demand has had a tragic impact on workers and families. The job cuts announced by Corus in January have led to more than 500 losses at Corus in Llanwern, with the mothballing of the hot-strip mill. That has been a devastating blow for the very loyal and dedicated work force, who have stuck with Corus through thick and thin, not to mention the knock-on effects on contractors and suppliers.
During the current recession, steel has been hit more quickly and more severely than expected. We all understand that the industry faces extreme difficulties, but before the recession, companies such as Corus were making extremely healthy profits, and I agree with my right hon. Friend that we must avoid, where possible, short-term decisions that affect the long-term future of the steel industry as a whole. In the past, knee-jerk reactions have affected sites such as Llanwern in my constituency and we should do everything that we can to avoid that now.
As chair of the all-party group on steel and metal, I thank my right hon. Friend the Minister for Business, Innovation and Skills for agreeing to come to a meeting of the group before the recess. That follows up the steel summit held by the group in May, at which representatives of the industry and the unions had the opportunity to voice their concerns and have a full and frank discussion with the Secretary of State. I look forward to my right hon. Friend the Minister reporting back on progress made on the issues that we discussed, including, as has been mentioned, action to stimulate demand for steel through the construction and automotive sectors and the car scrappage scheme; assistance with trade credit insurance; and security for energy purchases and prices. It is clear that the burden being placed on the industry by energy companies is unreasonable and unfair; I am thinking especially of the demands to pay up front. That problem could worsen as the country emerges from recession. Traditionally, most bankruptcies occur when companies’ working capital increases as they start to ramp up production. If energy suppliers continue to demand those payments up front, that will put an even greater strain on resources.
Most crucial is the retention of skills in the industry. It would be helpful if the Minister responding to this debate talked about that. It would also be helpful to have her feedback on the commitment made during the steel summit about working groups with industry and the Department to consider the issues in detail. It would be useful to know what progress has been made on those groups and how often they have met.
Other European countries are helping their industry through problems such as that relating to trade credit insurance and are offering, for example, generous arrangements for short-time working. We need to ensure that we have a level playing field to allow us to compete. We need progress on the measures now, because the benefits in all the areas that we have discussed today will undoubtedly take time to filter through to the industry. Momentum will certainly gather with measures such as action to stimulate demand, but every day is crucial, and we need help to come as soon as possible for communities such as mine in Newport, East.
I, too, congratulate my right hon. Friend the Member for Rotherham (Mr. MacShane) on securing the debate. It is important for all our communities and I am pleased to see how many hon. Members from the all-party steel and metal group are present, representing their steel communities. We all have a common interest and a common cause.
Like Stocksbridge, Scunthorpe was built on steel. Before the discovery of ironstone, Scunthorpe was no more than five small villages. There have been enormous structural changes over the years, but the work force have responded with dedication and skill and have kept production up, even though fewer people have been employed. However, although Scunthorpe has fared better than many plants in recent times, the recent announcement of 500 job losses is a very heavy blow to the town. Of course, it is a blow not just to steel production and the steelworks, but to the whole local economy, because those are good jobs with decent pay. Taking those jobs out of the local economy has a knock-on effect all the way through the economy—on other jobs, other industries, the supply side, services and manufacturing.
In addition, we do not know what the future will bring. I endorse what my right hon. Friend said about the pressures on steel and about the pressures being global. This is not a national but an international issue. Other companies all over the world are suffering in the same way as we in the UK are.
It is important that we work together to forge partnerships and to seek common cause. There should be common cause between the trade unions, management, local authorities, the regional development agency, Government and ourselves as local Members of Parliament representing our communities and the people who work in the steel industry. The Government can take a wide range of measures to help steel, but I accept, as my right hon. Friend said, that the Tata group is a very profitable group and it has some responsibilities in relation to seeing Corus get through the current period.
One advantage of being part of a very large conglomerate is that there is some shielding from downturns, which of course are not unknown in the steel industry. Many of us have been through many downturns. In the past and particularly the 1980s and ’90s, the first thing to go was jobs. I take a lot of encouragement from the fact that Corus and the Tata group have had a more thoughtful approach. They have genuinely been trying to minimise job losses and find savings in other areas, which is exactly the right thing to do.
With my hon. Friend the Member for Brigg and Goole (Mr. Cawsey), I recently held a meeting with all the trade unions in Scunthorpe to talk about how we as local MPs could work with the unions, the company and the local council, all of which are committed to seeing us through the present difficulties, to help the steel industry, which is so important to our whole economy. Some of the issues that we discussed have been touched on in the debate and they include support for UK manufacturing. Manufacturing is an important part of our economy, but it has not had the support that it deserves.
Sometimes, a small intervention can make a huge difference. One example is the car scrappage scheme, which is having a beneficial effect. Car manufacture is not a major component of output in Scunthorpe, but some companies there supply the car industry, and there is a knock-on benefit right through the economy. That is an example of a successful scheme that the Government have put in place.
We could bring forward major infrastructure projects, such as Building Schools for the Future and the construction of new health centres, as well as road and rail improvements, which the Government have announced and which I very much welcome. A lot more could also be done on social housing and house building, which help with demand for steel and make a useful contribution to our economy.
We could promote major investment in new clean energy. We will have to have an awful lot of new power stations in the very near future. The growth of the green economy has real potential for steel manufacturing, and the Prime Minister very much believes in it, but a great deal more could be done.
We need to consider anti-dumping measures. There have been allegations of slab coming in from Ukraine at prices that are below the cost of production. We need to be wary of that and to watch what other countries are doing to ensure that there is no trade distortion. We also need to look at what we can do to promote world demand, as the Prime Minister has been doing through the G8 and the G20.
We need to explore ways to support the work force and companies in minimising job losses. We could be put at a serious disadvantage compared with what other European countries are doing to support their work forces through wage subsidies. I know the arguments on that subject and I know that this country opted out of an EU scheme in the ’80s, when anything to do with the EU was anathema, but it is at times like this that one can see the benefits of the EU, because European countries such as France and Germany are getting the benefits of the social systems that are in place.
The Welsh ProAct scheme has been mentioned, and it seems to be very successful. My right hon. Friend the Minister should look at it carefully to see how we can help through initiatives such as Train to Gain, which has been used quite successfully. How can we use support for skilling and temporary support for the work force to reduce job losses in this difficult period? We also need to ensure that UK manufacturing and UK steel get a fair share of Government contracts.
Energy prices are an issue—a complex one, as I know from my work on the Select Committee on Energy and Climate Change. It is fair to say that deregulation in the UK brought advantages for manufacturing and domestic consumers, but there is a bit of a disparity between UK and European prices. The price of gas is competitive in European terms, but the price of electricity is not, and questions need to be asked about why those disparities exist between the UK and the rest of Europe.
In some parts of the steel industry, credit insurance is a problem. I would have thought that the Government could do something to support credit insurance and to put in place measures to provide some underpinning. I hope that the Minister will look at that.
Finally, there is the question of partnerships. Steel is crucial to our local economies and to our national economy. It is in all our interests to ensure that we have a successful and viable steel industry, because steel production is part of the manufacturing base. It is important that we all work together and that the Government, the company, the trade unions, local authorities, regional organisations and trade organisations look at what we can do to ride out the world storm and ensure that we have a successful and viable steel industry in place to take advantage of the inevitable upturn. In relation to the steps being taken in other parts of Europe, we must not put our industry—steel or manufacturing—at a disadvantage. That is the Government’s responsibility, and they have introduced some very helpful and successful measures, but the points that I have raised need to be carefully considered.
Sir Nicholas, you and I have shared a great interest in manufacturing over many years in the House. As somebody who left school at 15 and served an apprenticeship in the steel industry, I can say that I have steel in my veins. That is why it is sad to be having this debate. It is particularly sad given that the steel industry in this country was probably one of the most productive and competitive in the world. The management and the work force had come together, but some irresponsible financiers around the world have brought the economy of our nation and those of many others to their knees. We are now seeing the consequences of that in the announcement by Corus.
I stress—I know that the Minister will take this back to her colleagues in the Government—how important it is that we understand the comment by my right hon. Friend the Member for Rotherham (Mr. MacShane) and my hon. Friend the Member for Sheffield, Hillsborough (Ms Smith) that the steel industry is important to this nation’s wealth-creating base. Governments now face a range of challenges, but that is particularly true of those who allowed their economies to develop into service economies, as my right hon. Friend the Member for Scunthorpe (Mr. Morley) said. We now need to reposition our economies and move them back a little in the direction of wealth creation and manufacturing, and steel is very important in that equation.
The steps that the Government have taken to stimulate the demand side of the economy are laudable and will probably mitigate the worst effects that we might have seen, as will the action taken by our Prime Minister at the G20 and the action that he will take at the G8 later this week. However, the importance of the steel industry is sometimes not understood in Whitehall. Had it not been for the steel industry, the RB211, which is probably one of the greatest aerospace engines the world, would never have got into the skies. Had it not been for the steel industry in Sheffield, Concorde would never have flown. Had it not been for the steel industry in Sheffield and the surrounding area, including Rotherham—I take a little exception to what my right hon. Friend the Member for Rotherham said about the cover at Wimbledon, because I do not think that all the steel was made in Rotherham, but we will debate that later—we would never have been able to extract oil from the North sea. The North sea is the most difficult terrain in which to extract oil, but we did it because of the brilliance of the engineers and the steel manufacturers in South Yorkshire.
We are now entering a nuclear renaissance and, as my right hon. Friend the Member for Scunthorpe said, we are moving into the green energy sector and green energy industries, which will involve not just hundreds of millions, but billions of pounds. We need to get into the supply chain as we have in the past. The British steel industry is at the start of the supply chain.
Detailed discussions are taking place with companies such as Forgemasters about investing in 15,000-tonne forging presses, which are among the largest in the world. If those discussions are successful, they will give the country a lead in the nuclear sector, which will be very welcome. I hope that the discussions reach a fruitful conclusion, because that would send a good message that we believe in the steel industry and in British manufacturing and that we will move our economy more toward wealth creation than toward the service sector. That is not to knock the service sector, which is important, but it is also important to get the balance right.
The skills base in the steel sector, which is probably one of the most productive and competitive in the world, must be supported in the current situation, which is not of the sector’s making. This is not the ’80s or the ’70s, when we were unproductive. We are talking about some of the most productive work forces in the world. In a few years’ time, if we are not careful, we will be saying, “What the hell were we doing? Why didn’t we keep this skills base?” You know, Sir Nicholas, that in the early ’90s we were arguing about the skills and manufacturing base of this nation. Lord Heseltine, as President of the Board of Trade, said, “Do not disband those work forces—those design engineers and development engineers,” but what did we do? We disbanded them, and we are now paying a massive price for that. Let us not do that again.
The Government have done a first-class job to date on the demand side. We must make sure that we keep the strategic work forces together and do anything that we can, as my right hon. Friend the Member for Scunthorpe says, to bring those partnerships together to see us through this difficult time. The present difficulties are not of our making.
I could not agree more. Even though it is difficult for Government, we must look at the matter strategically and ask, “Is this an investment for the nation in keeping the skills base of the sector together, whether that means Corus or other areas?” That is the question that we must ask my right hon. Friend the Minister, so that she can take it back to Whitehall and, through her persuasive powers, make sure we reach a satisfactory solution. If we allow the work force to be broken apart, it will be difficult for them to come back, and we will pay not just a human price, which is very important, but an economic price, because we shall not have the skilled work force to create the wealth that the nation wants when the upturn comes.
I hope that my right hon. Friend the Minister will take what has been said back to Whitehall and knock a few civil servants around, because sometimes they do not know a right lot about manufacturing. Occasionally it would be nice to invite them to the north to see how we operate; but we will educate them, I have no doubt, from the leafy suburbs of London. I am sure that my right hon. Friend will do a first-class job in Whitehall.
I add my congratulations to those that other right hon. and hon. Members have expressed to the right hon. Member for Rotherham (Mr. MacShane) on securing this important debate.
The picture that several hon. Members have painted of what the steel industry faces is grim. There is an approximately 50 per cent. fall in demand. It is a worldwide phenomenon, and in Europe recovery has been described as some years off. That means that there may be massive overcapacity in our steel industry for some years to come. The effects of that can be seen in the closely allied construction industry, which is on its knees, and the automotive industry, which is suffering greatly. Although several hon. Members have mentioned the scrappage scheme as a stimulus, there are still car manufacturers on the brink of disaster because promised help to the automotive industry from the Government has not yet materialised. I hope that, although it is not part of today’s debate, the Government will take that fact on board.
Steel is vital to the future of manufacturing, but, as several hon. Members have mentioned, we must not forget the supply side—the chain of smaller individual companies such as design engineers, whose predicament is just as bad as, if not worse than, that of the steel manufacturing side. It is incumbent on us to consider the plight of those businesses as well, and ensure that as much as possible is done to protect them.
Corus has already shed 2,500 jobs this year. On 26 June it made an announcement about a further 2,000 jobs, most of them in the UK. We have not talked a great deal about Teesside, but the fact that the consortium tore up the deal to take 80 per cent. of the output in Teesside is a matter of extreme worry to the workers there. In Port Talbot the picture seems somewhat better. The way in which the work force and management have worked together to make £150 million of savings is a fantastic, salutary lesson in partnership. Port Talbot would appear to be in great shape to survive the worst exigencies of the recession. Only 1,000 jobs remain in west Yorkshire, apparently, out of 6,000 10 years ago, so it is incumbent on us to make sure that we do not lose the tremendous skills that hon. Members described earlier. We must keep the core base of skill and ability.
The hon. Member for Sheffield, Hillsborough (Ms Smith) has talked movingly about the quality of the work that we do in this country in manufacturing, which is not lauded loudly enough. We do the clever stuff. Right hon. and hon. Members have talked about the oil industry and our managing to create the means of access to North sea oil from the most difficult parts of the North sea. The effect of the redundancies is felt in every part of the communities that the companies in question serve, right the way down to the sandwich shops that the hon. Lady mentioned. The right hon. Member for Scunthorpe (Mr. Morley) spoke very well about the importance of a multi-agency approach and how all agencies and everyone involved in the community, including Government agencies, quangos and local authorities, can get together to work for the most productive way of surviving in these times.
What is the solution? I gather, although he has not mentioned it this morning, that the right hon. Member for Rotherham has called for redundant staff to be paid £20,000 per annum and to be given public sector or community work. We have also talked at some length about wage subsidies. The Government have rejected those, and I tend to agree about the problems, such as the dead weight problem of subsidy being given to people who would have received payment anyway, and the fact that we cannot be compared with the rest of Europe, because in the UK unemployment benefits are not 60 to 70 per cent. of an individual’s wage. The cost of employment subsidy elsewhere in Europe is minor relative to what would happen in the UK. In addition, an unfair playing field is created when one company uses employment subsidy and another does not.
The hon. Lady makes a good point, but there are other ways to protect skills. The Government have announced £5 million to be spent on enabling skills to be retained. In the context of the thousands of jobs that we are talking about, it is something of a drop in the ocean, and I shall be grateful if the Minister will discuss how that sum will be utilised. How thinly will it need to be spread for workers throughout the UK to benefit?
A number of hon. Members spoke of the Welsh ProAct programme. The jury may still be out on its effectiveness, but I would not close the door on any sort of wage subsidy. It is worth considering, particularly if vital skills can be protected.
What can the Government do? I have already mentioned the £5 million that they have offered. Several hon. Members mentioned trade credit insurance. Having called for help to be given to companies experiencing difficulty in obtaining trade credit insurance, I was delighted recently to hear that the Government have introduced a scheme to share some of the risk with insurers. If the steel industry and its suppliers are still experiencing problems in obtaining such insurance, I would ask the Minister to consider what can be done.
Right hon. and hon. Members have mentioned energy prices. I shall be interested to hear from the Minister whether anything can be done to smooth the trends in energy prices. Their unpredictability is causing so much difficulty for steel manufacturers and others. Another factor that the Government could consider is procurement. The Olympics is a prime example; the Government could ensure that British steel is procured for construction, as it would help our aspirations.
The right hon. Member for Scunthorpe spoke of renewable energy. Wind turbines, transport infrastructure, home building, building schools for the future and many other creative ways of using steel have been suggested to the Government. To their credit, the Government have made a large number of announcements. The House would like to see those announcements materialise and become a reality. Warms words are great, but they will not create jobs unless the Government put their money where their mouth is.
The United Kingdom is a great place to do business. We have the best in innovation, we have a brilliant infrastructure, we have a flexible work force, and we have lower labour on-costs than many other countries. Steel is at the forefront. If we do not have steel, we will not be able to go forward with any of the areas of manufacturing that I have mentioned. The Government must support the steel industry, or the threats to steel in Sheffield and elsewhere may cause the unkindest cut of all.
It is good, Sir Nicholas, to see you in the Chair. May I add my words of commendation to the right hon. Member for Rotherham (Mr. MacShane) for securing what has been a timely debate and for his typically forthright remarks. Although our views of history may not be entirely shared, I enjoyed his line—I suspect that most here this morning will not have noticed it—of saying that the BBC was a force of conservatism. That was particularly entertaining. However, I agree with him on the question of protectionism. If it does not embarrass him too much, may I say that I think we agree on that?
The country has been producing steel for longer than almost any other nation. As the home of the industrial revolution, Britain retains a strong reputation for quality of finish, especially in the production of higher value products, as the hon. Member for Sheffield, Hillsborough (Ms Smith) rightly pointed out. However, we are far from being the largest producer, as we heard this morning. Indeed, figures show that Germany, Italy, Spain and France now produce more than the UK.
Even before the recession, there was a worrying decline in UK steel production. In 1997, output stood at 18.5 million tonnes, a level retained for much of the 1980s and 1990s. Since then, however, production has fallen. At the beginning of 2008—before the recession—output stood at 13.5 million tonnes. That was a 27 per cent. fall in steel production, but it occurred during a period of global growth. Will the Minister explain why, during those years of growth, steel production in the UK fell so far and so fast?
Allied to that fall is the fact that energy prices have badly affected heavy industry. As the right hon. Member for Rotherham pointed out, steel production is self-evidently energy-intensive. Energy prices have a tremendous impact on the competitiveness of UK steel producers and their suppliers; yet, despite that, the Government’s data show that average industrial electricity prices rose by 111 per cent. in real terms over the past five years; and, as a number of hon. Members said, average industrial gas prices rose even further—by more than 130 per cent. in real terms. Those rises have outstripped rises in most of those countries with which our steel producers must compete. Will the Minister explain why UK industrial energy prices have risen so much, especially when compared to those of many of our competitors? What does she say to those in the industry who blame the Government for failing to address the problem before it became a crisis?
Members rightly spoke of the value of steel production to the UK economy. As a passionate supporter of manufacturing, Sir Nicholas, you will know that access to working capital is vital. It is the lifeblood of major industries. That is why, last November, the Conservative party set out its plan for a single national loan guarantee scheme. Worth about £50 billion, it would be available to all sectors and to all viable businesses, irrespective of their size. By making the rules common and clear, we believe that such a scheme would ensure that businesses had access to the working capital that they clearly need.
In contrast to that, a plethora of ideas has been announced by the Government. My worry is that, to date, they have all too often failed to deliver the actual finance. I take the automotive assistance programme as an example. Car production is a crucial consumer of steel, so helping that trade would not only help the car plants but help the steel workers of Sheffield and Rotherham.
In January, Lord Mandelson announced the automotive assistance programme, telling us that it was open for business. Since then French, German and American Governments have delivered financial aid, specifically to their car producers. The money is in their bank accounts. However, despite the promises of Lord Mandelson, not a single penny has been received by British car firms. Why not? Ministers talk about providing real help. Why, under the current Government, are our car firms the last to receive the help that they have been promised? Perhaps the Minister can tell us.
The recession has hit steel hard. The sharp falls in construction, and in automotive and allied engineering production, have led to a sharp reduction in demand for steel. Those sectors represent two thirds of the UK market for steel. In that difficult context, it is not surprising that Corus has recently been struggling to cope. Hence, the company decided in January to mothball some facilities and to cut 3,500 jobs, including 2,500 in the UK.
As we heard earlier, it is the recent announcements about compulsory jobs cuts on Teesside, and in Scunthorpe and Rotherham that are of most concern. It is clear that the company takes a rather different view to the Government. It believes that the upturn is a long way off. On 25 June, the chief executive of Corus, Kirby Adams, told the BBC that the recovery
“appears to be some time off, so it is vital that we take this proportionate and responsible action now. We have to achieve long-term, sustainable competitiveness in a global and over-supplied steel market.”
In response to Corus’s announcement, the Government have offered £5 million to help to retain key jobs. It would help Members if the Minister could tell us what that means in practice, and who will and will not be helped. Also, what commitments has the company made in return for that £5 million of aid?
Furthermore, it would be very helpful to hear from the Minister what strategic interest the Government place in continued UK steel production. Some have said that Lord Mandelson does not consider steel to have strategic industrial importance. Is that Government policy?
I have been in dialogue with Lord Mandelson’s Department—I cannot remember its name because it keeps changing—and know that he has taken a very deep interest in the Sheffield steel industry. Will the hon. Gentleman please tell me where his perception comes from?
That point has been put to me in representations from the industry. It has asked me, “Is this an issue? We can’t get a commitment from Ministers.” I hope, therefore, that the Minister will make that commitment today. However, I agree with the right hon. Gentleman that we have had too many Ministers in too short a time—I am on to my eighth set of Ministers in my role—so I hope for some stability, and I sincerely hope that the right hon. Member for Doncaster, Central (Ms Winterton) lasts longer than her predecessors.
The redundancies in the steel industry are devastating for the workers and their families. I welcome the Government’s announcement of a taskforce to help those in danger of losing their jobs, and I hope that the Minister will set out the exact role of the taskforce, where its limits will lie and its progress to date. Furthermore, will she reconsider some of the rules on the existing retraining packages? Sometimes, retraining and support packages are not available until somebody has been out of work, and on benefits, for six months. That seems to make very little economic sense and is intensely frustrating for individuals who want to move on. They will often have good skills, but will need to retrain and will not want to wait for six months before a programme can kick in. Will she look carefully at the rules and undertake to remove any unnecessary restraints? It is vital that we reskill people so that, as Members on both sides have said, we can get them back into work as soon as possible.
This has been a timely and informed debate and has shown how steel is integral to many parts of the economy—not just manufacturing but across the different sectors. It has also highlighted the urgent need for change, both in rebalancing the economy, as hon. Members have said, and in the way in which the Government support industry. The Minister needs to answer some crucial questions. Why, even before the recession, did UK steel production fall by nearly one third? Why are Government aid programmes not delivering money to the businesses to which it was promised? How do Ministers intend to help workers, from Corus and elsewhere, to reskill and to re-enter work as soon as possible? I look forward to her answers.
As always, Sir Nicholas, it is a great pleasure to serve under your chairmanship. I congratulate my right hon. Friend the Member for Rotherham (Mr. MacShane) on securing what is, as has been recognised, a very important debate. He demonstrated his considerable expertise in the matter as well as concern for all constituents affected. I also thank him for his kind opening remarks about my work, particularly as Minister for Yorkshire and the Humber. The many contributions today, especially by colleagues from the Yorkshire and the Humber region, demonstrate the keen effect on the region of the recent announcements by Corus, although I am obviously aware that other regions have been affected too. We all feel strongly about the knock-on effect that the recently announced reductions in output and employment have had on individuals and their families, on our communities and, as right hon. and hon. Members have said, on suppliers.
My right hon. Friends the Members for Rotherham and for Wentworth (John Healey) and my hon. Friend the Member for Sheffield, Hillsborough (Ms Smith) recently met the Secretary of State for Business, Innovation and Skills, and have a follow-up meeting in the not-too-distant future. I hope that I can illustrate that there has been a focus within Government on this issue to establish what can be done to reflect the many concerns raised today by all hon. Members, many of whom referred to the fact that this is a global issue and that steel companies across the world have made huge cuts in output in an attempt to weather the storm of collapsing demand for, and prices of, steel, during a period of de-stocking. Obviously, the UK sector is not immune and has had to cut employment in an attempt to reduce costs and balance supply with demand. Short-term working and pay freezes have also been introduced across the industry.
The hon. Member for Hertford and Stortford (Mr. Prisk) asked about previous falls in steel production during the period of growth. The explanation relates to some of the points made by my hon. Friend the Member for Sheffield, Hillsborough. During that period of growth, the UK steel industry exploited some of its strengths by concentrating on high-value-added steels. Some of the basic bulk steels were being produced more cheaply in emerging economies, such as China, India and those in central and eastern Europe. That was the reason for the change during that time.
I accept the Minister’s point—it was a good point—but does she accept the concern, raised by many hon. Members, about the lack of competitiveness of energy prices, particularly in this country? Why has that not been tackled until now? Why did we wait until it became a crisis?
I am going to come to that point, which was also raised by my right hon. Friend the Member for Rotherham.
Right hon. and hon. Members set out the number of recently announced redundancies, which, as I have said, are tragic for individuals and their families and for communities. Corus currently employs about 24,500 people in the UK, but after the reductions, that could fall to about 20,000 or less. However, a substantial UK steel business will remain, which we must not lose sight of, if we are to do many of the things that right hon. and hon. Members have mentioned today. Some steel businesses have mothballed plant and equipment and some complete closures have been avoided. It is the job of the Government and others to look at what we can do to assist in such times.
Let me reiterate how important the steel industry is to our economy. My right hon. Friend the Member for Sheffield, Central (Mr. Caborn) referred to some of the work that the Secretary of State for Business, Innovation and Skills has been doing. He will also recall that the Prime Minister and I recently visited Sheffield Forgemasters, which again shows how much importance we attach to the industry.
Let me return to the wider issue of Government support. Obviously, to start with, we considered how to protect the wider UK economy. That is why we intervened in the banking industry. In January, the Secretary of State for Business, Innovation and Skills set out a number of ways to help businesses. Along with regional development agencies and local government, we decided to bring forward billions of pounds worth of infrastructure, to which both right hon. and hon. Members have referred. We are increasing capacity in the motorway and rail network, improving and building new social housing and primary and secondary schools, to which my right hon. Friend the Member for Scunthorpe (Mr. Morley) referred, focusing on hospitals, energy efficiency, carbon capture and many other green technologies. Such development is vital for stimulating the demand for steel.
In the meetings that Corus had with Ministers, a number of key requests were made. First, there was the fiscal stimulus, and the need to promote the demand for steel by intervening and bringing forward investment. Secondly, Corus mentioned trade credit insurance, which could be used by not just itself but customers and suppliers. We introduced the trade credit insurance top-up scheme as a direct response to the industry’s requests. A third request from Corus related to trade credit insurance and energy.
My right hon. Friend the Member for Rotherham raised the issue of energy supplies. Although wholesale electricity prices are falling, the effect will take time to feed through, particularly for those who are locked into long-term agreements. In one case, Corus is looking to negotiate a long-term agreement with Electricité de France. Officials from my Department have met separately with both companies to encourage them to reach agreement. There was a meeting on 3 July, and I will write to Members when I know the outcome. Although commercial decisions are involved, we are considering what we can do to encourage companies to make a mutually successful agreement in that respect.
I want to address the issue of what we are doing with regard to the £5 million offer that has been made to Corus. Moreover, let me mention the support that has been made available to those who, unfortunately, will be made unemployed as a result of the recent announcement. Many hon. Members talked about the Train to Gain initiatives, including one worth £2 million at the Corus Scunthorpe site to support apprenticeship programmes. There has been support for apprenticeships at the Rotherham and Teesside plants and support for Corus employees at the Redcar site. All those plants are being supported by Train to Gain. It is vital that regional development agencies, the Learning and Skills Council and Jobcentre Plus work together to continue to provide that support, which has already been effective.
However, following discussions involving the Secretary of State for Business, Innovation and Skills and the Prime Minister, we are considering ways in which we can effectively use the £5 million of training support. As my hon. Friend the Member for Newport, East (Jessica Morden) said, how do we ensure that when the upturn comes, the people who are working in our steel industry, particularly in Corus, are fully equipped, trained and skilled to take advantage of the available markets? I have met the trade unions, Yorkshire Forward and Corus in the Yorkshire and Humber area. However, wider discussions are going on, and we are saying that £5 million is on the table. We want to consider the points raised by right hon. and hon. Members today. We want to know what Corus can offer in the areas of proper training, skills and job guarantees in exchange for the Government and RDAs working to provide that assistance. That is not a meaningless offer; it is a very real offer and one that has not been made in the past. During previous recessions, Governments stood by and let people sink or swim. They did not say, “This is what we can do in terms of a fiscal stimulus.” They did not have regional development agencies, which the Conservative party intends to scrap. The RDAs provide vital help for people, communities and businesses during such times.
No, I will not, because I have only three more minutes. As I said, those are the issues that we are taking forward at this point in time. Questions have been raised about ProAct in Wales. Obviously, certain offers have been made, but so far there has been no take-up. As for the money we have on offer to Corus, we want to ensure that we get good results for the employees of the companies. We want to ensure that it can continue to exist so that the suppliers and the communities can also benefit.
My right hon. Friend the Member for Rotherham asked what was happening in the Department. We have a range of staff working in the Department from the sector unit, the regional policy unit, and the skills and innovation teams. I will pass on the points that have been made about energy prices. I have already had discussions with the Secretary of State and the Minister of State for Energy and Climate Change, and I will pass on the points that were raised in this debate.
Let me assure all right hon. and hon. Members that we do see a future for the UK steel industry. There is a huge commitment to it. I hope that the interventions that have already taken place and those that are still to take place—at regional, national and international levels—will demonstrate that we are a Government who are committed to helping people during these difficult times and looking to stimulate demand for steel in the future.
Teaching Standards (England)
It is a great pleasure to introduce this important debate under your chairmanship, Sir Nicholas. I begin by apologising to the Minister. Having said that I would try to get a copy of my speech to her in advance, I failed to do so. I shall try to be more efficient in future.
Never before have England’s young people faced such a competitive environment. The knowledge-based economy demands ever higher levels of skill and education, and the emerging giants, China and India, are producing record numbers of graduates. That is why teachers in English schools are so important. We have no divine right to remain a wealthy and powerful country, and more than ever we are dependent on the quality of the education that we give our children.
I am full of admiration for our teachers. I have visited many schools in my constituency, some more than once, and I have been struck, as you will have been in your area, Sir Nicholas, by the dedication and commitment shown by so many. Teaching is a remarkably demanding profession and not everyone can do it. Moulding the minds of our young people, inspiring them to learn and giving them rigour and academic confidence is no mean task.
I applied for the debate because of the importance of teachers to our national life. Teachers play a crucial role in tackling disadvantage, building cultural understanding, boosting our economic prospects and giving people the wherewithal to enjoy life and achieve their dreams. The quality of those teachers is critical to those outcomes. We need the brightest and the best to be attracted into teaching, and we should make that objective a central focus of Government thinking in education.
Those countries with the best educational achievement, such as Finland, South Korea and Singapore, have one thing in common: they attract the best into teaching. Michael Barber, a one-time education adviser to Tony Blair, has said that
“the quality of an education system cannot exceed the quality of its teachers”.
In Tennessee, Sanders and Rivers found that the difference between an excellent teacher and a poor teacher in maths, in terms of student achievement, was 50 percentage points over three years. They also discovered that when teacher effectiveness increases, lower achieving students are the first to benefit, so when teachers are not inspiring or effective, the most disadvantaged suffer most. The Institute for Public Policy Research found recently that a good teacher can improve performance by more than a grade, and separate research published in 2002 found that in secondary schools 53 per cent. of the variation in performance is down to the quality of the teacher.
I have agreed with every word that the hon. Gentleman has said so far, but the debate is on teaching standards in schools in England, which presumably includes private schools. Does he agree that the Education Act 1980 should be widened to include private schools such as the one he had the privilege of attending in rural Perthshire, because at present teachers in private schools can operate without qualification and registration? That is not acceptable in 2009, is it?
That goes to the heart of the debate on how to respond to the issues, to which I hope to return, but I am tempted to be discursive for now. Everyone agrees on the need to improve the quality of those going into teaching, and there are two views about how best to do it. Do we raise the barriers to entry and ensure that people have certain achievements before they come in? Obviously, there will be an element of that in any solution. Alternatively, do we need to make it as easy as possible for people to come in and go out of teaching? Perhaps we could make it as fluid as possible and lower the barriers, so that people who can inspire our young people do so.
In a straight answer to the hon. Gentleman’s question, I do not agree with him. In fact, I would like more schools to be freer to recruit as they see fit. Just last weekend, someone told me that a private school in Hull had taken on a music teacher who did not have the qualifications, but was a gifted musician who inspired the young people. I believe that she is now the head of music at the school, which is particularly successful in music, so I do not think that artificial barriers are necessarily the right way to proceed, although they may have a part to play.
I shall continue to make the case for the importance of the quality of teachers to outcomes. In Dallas, research into the effect of teachers on student achievement shows that the difference between having three great teachers in a row and having three bad teachers in a row is nearly 50 percentage points in pupil attainment. The evidence of the importance of teachers is overwhelming and consistent. Great teachers transform lives.
We can look at this another way: the impact that a poor teacher can have on pupil performance is every bit as significant. Research published in the “Educational Assessment, Evaluation and Accountability” journal this year looked at the annual progress of more than 73,000 pupils in vocabulary, reading and mathematics between 1999 and 2005. It found that children whose classes were in the bottom 16 per cent. of progress in the reception year performed on average about a fifth of a level worse in their standard assessment tests than those whose class progress was average. By contrast, those whose classes progress most in their first year at school performed about a fifth of a level better. In other words, the quality of teaching, whether good or poor, has not only an immediate impact, but a sustained impact for a number of years. If a young person is turned off learning by a teacher who is unable to inspire them suitably and who does not do a good job, the impact can endure in the following years.
When we look at the matter that way, we can see that it is as important to remove inadequate teachers as it is to attract and retain as many good ones as possible. Ten years after the former chief inspector of schools, Chris Woodhead, claimed that there were 15,000 incompetent teachers in England, it emerged this year that only 10 have been struck off in that period. The General Teaching Council has said that the systems in place for complaining about poor teachers are “virtually non-existent” in many areas, and that two thirds of local authorities have not made any referrals to it about inadequate teachers in seven and a half years.
What is the Minister going to do to put that right? Are the Government taking the issue seriously? Is peace with the unions more important than tackling disadvantage and underperformance by professionals? Will the Minister explain what has happened and why poor teaching is not being rooted out? Does she have a convincing explanation? How, working closely with those in the professions and unions, can we move from the current situation to ensure that those who teach in our classes are the best they can possibly be?
For the past 30 years, Finnish teachers have needed a five-year masters degree. That is quite different from the English system, notwithstanding the Secretary of State’s saying that he wanted teaching to be a masters profession in future. At the moment, applicants are required to have GCSE grade C in maths, English and science, and a degree. The new masters in teaching and learning looks more like an afterthought than a dramatic change. It has £30 million allocated to it in the current spending period, which may not make that much of a difference. I will be interested to hear what the Minister thinks about the quality of the maths and English skills of someone who has scraped GCSE grade C.
In Singapore teachers come from the top 30 per cent. of graduates, and in South Korea from the top 5 per cent. The United States recruits its graduates from a lower percentile than us, and seems to have commensurate underperformance in its schools, so it is critical to get the best people to go into teaching.
In relation to the earlier exchange, I entirely agree with my hon. Friend that more attention should be paid to ensuring that teaching for the poorest of our pupils is enhanced, rather than worrying too much about recruitment policies in private education.
On the point my hon. Friend just made, I understand the concern about the low educational achievement of some who go into the teaching profession, but does he agree that the single most important factor is that the teacher inspires? One difficulty is that if we are overly prescriptive about the educational attainment achieved by everybody in the teaching profession, we may end up missing out one or two great, inspirational teachers who do not have an outstanding academic record but are brilliant pedagogues.
I agree. It is a difficult balance to get right. The Conservative party’s position, as we recently announced, is that people should be required to have a B grade GCSE and at least a second-class degree in order to qualify to enter teacher training. That is how I understand it; my hon. Friend the Member for Bognor Regis and Littlehampton (Mr. Gibb) will doubtless give us a master class of explanation later. I might be pre-empting him and getting it wrong at the same time, but as I understand it, the Conservative party proposes to give greater freedoms to academies, for instance, to tackle disadvantage, so that they would have the same freedom to do what the school near my constituency did and take on people without those qualifications.
The hon. Gentleman obviously wants to intervene again, because he is obsessed with standards in independent schools. It is interesting to note that hon. Members from this party are more interested in tackling disadvantage in state schools, including those in inner cities.
What the hon. Gentleman says is not true. As he rightly said in the opening remarks of his excellent speech, teaching is one of the great professions, along with medicine, engineering, law, accounting, among others. Those four professions would not allow people to practise without qualification or registration; why should teaching?
I thank the hon. Gentleman for his intervention and apologise for speaking so harshly to him, as he is such a positive contributor to debates on so many topics. The answer goes back to the point made by my hon. Friend the Member for Cities of London and Westminster (Mr. Field) about the ability to inspire. The skill set for an effective teacher is not of the same technical importance—perhaps I am struggling here. If someone has the educational wherewithal to communicate and inspire learning in the pupil, there is not the same requirement for academic standards that there would be if they were about to operate on a vital organ in someone’s body.
That is the debate. How do we get the balance right? We do not want to create artificial barriers that limit the supply of people going into teaching. That would have an upward impact on pay, for instance. Contrary to the many myths abroad about how teaching has declined enormously in status, Policy Exchange’s report considering the history of the issue found that 40 years ago, the average pay of a teacher was the average pay of the country as a whole, whereas now it is 50 per cent. higher, yet everyone complains endlessly about the lack of status in teaching. From a pay point of view, teachers are a lot better off than they were. It is questionable—Policy Exchange certainly questions it very effectively—whether it is possible for teaching to be seen as having the same status as law, engineering and so on. However, I will come to that in a moment.
Academics at Cambridge and Leicester universities recently conducted a study on the professional status of teaching for the then Department for Education and Skills. When they asked practising teachers which profession they felt had a similar social status to teaching, 40 per cent. said social work. Policy Exchange repeated the exercise with a major survey of a group of professionals and undergraduates, and got exactly the same answer. In status terms, teaching was seen alongside social work or being a nurse, police officer or librarian. Very few felt that being a teacher was similar to the traditionally high-status professions on the list, such as doctor, solicitor or architect.
Policy Exchange also asked more than 1,000 professionals and managers what the biggest deterrent to teaching was. Some 20 per cent. of respondents said the salaries offered, 12.9 per cent. said feeling unsafe in the classroom, 10.4 per cent. said working with children or young people—one would be glad if that 10 per cent. never pursued a job in teaching, however poor employment prospects were elsewhere—and 8.6 per cent. said low staff morale. Those four reasons were also cited by undergraduates asked the same question. The evidence is fairly consistent. Can we alter teaching’s low status compared with that of other professions? As I said, Policy Exchange thinks that we cannot, and that doing so would have malign effects.
In 2007, the OECD published its programme for international student assessment survey results for 2006. The results showed a drop in this country’s performance relative to other leading nations in Europe and Asia. The OECD has published its survey every three years since 2000, and this country’s performance has slipped noticeably since 2000 compared with many other participating countries. For the first time, we fell below the international average in the maths category, coming after countries such as Slovenia, Estonia and the Czech Republic. In the literacy category, we finished 17th, while the top position was taken by South Korea.
The report blamed those shortcomings on the poor quality of graduates entering the teaching profession compared with those in countries at the top of the rankings. A number of statistics back up that conclusion. According to the Training and Development Agency for Schools, in 2005-06, 32 per cent. of entrants to the undergraduate bachelor of education course did not have any A-levels. Of those that did, the average tariff score was 269. By comparison, the average tariff score for medicine was 473, equivalent to almost four A grades, and the overall average was 318, or an A and two Bs. The average entrant to the teaching profession was below the average for graduates overall. Those are the people going out to inspire learning in the next generation.
At the postgraduate level, in 2005-06, 2,000 students entered teacher training with a third-class or pass degree and 34 per cent. with a 2:2. If the hon. Member for North-West Leicestershire (David Taylor) speaks later, as I hope he will, he will doubtless congratulate my colleague the shadow Secretary of State for education, my hon. Friend the Member for Surrey Heath (Michael Gove), on his decision to prevent those with a third-class or mere pass degree from entering educational training.
The Sutton Trust has found that when high achievers who study at the country’s top universities do go into teaching, a disproportionate number teach in the independent sector. Some 60 per cent. of teachers at independent schools have a 2:1 or higher, compared with 45 per cent. in the maintained sector. Alan Smithers at Buckingham university found that almost half of the Oxbridge graduates who enter teaching go to teach at independent schools. Independent school teachers are seven times more likely to have gone to Oxbridge than teachers in the maintained sector.
My question for the Minister is: what can be done about it? How can we ensure that the standard of people entering teacher training is improved? We need to make it easier for people to move in and out of teaching throughout their career. I found the argument in Policy Exchange’s report compelling. Has she read that report? If so, what is her analysis of its argument about how best to secure “more good teachers”, which was its title?
We should not be surprised by the figures that the hon. Gentleman quoted about teachers who went to Oxbridge going into private schools. Some 7 per cent. of young people are educated privately, but as much as 50 per cent. of the intake at Oxbridge comes from the private sector, for reasons of which we are well aware. That is likely to replicate itself when those graduates decide where they want to launch their teaching careers.
I take that point on board. None the less, I am sure the hon. Gentleman would agree that it is a shame that a greater proportion of the highest performing graduates who go into teaching do not teach in state schools, in particular in disadvantaged areas.
It will be interesting to hear whether there is new thinking in the Department about how we can incentivise that. Has any more thought gone into national pay scales? If there is a choice in the maintained sector between teaching in a school with great standards of discipline that serves a relatively prosperous area and teaching in one of the most challenging schools for the same money, the tendency will be to choose the former. How can we ensure that we provide proper recompense for people who go into challenging schools? How do we make that seem not only challenging, socially good and good for one’s career in the long term, but financially attractive? Those issues have not been dealt with by this Government, but perhaps it is not too late for them to think again about their approach.
That brings me on neatly to the incentives that must be offered to attract the best graduates. Teach First was launched by the Government as a way of allowing the best graduates to go quickly into teaching in the most challenging schools, and we all applaud that. The problem is that far too few people are going through the programme. It accounts for only 1 per cent. of new teachers each year. Just 253 graduates completed the programme in 2008 and the Government plan for just 850 to do so in 2014.
I do not agree with the critics of Teach First who complain that as many as half of those who enter the programme leave teaching a couple of years later. Such extremely talented people go into teaching on the basis that they will be free to move out, that the skills they learn will be career enhancing, and that they will have the satisfaction of going into some of the toughest schools in the country with some of the most entrenched disadvantage and of trying to tackle it. I would not worry about those who leave. The easier we make it for good people to go in and out, the more likely we are to attract more good people in the first place. We do not want to make teaching a monolithic profession that, once entered, can never be left. That would not help us to weed out those with inadequate teaching skills. I would rather focus on the fact that Teach First allows more outstanding young people who might not have entered teaching to stay, and 50 per cent. of them do stay. I would like the programme to be expanded.
The Policy Exchange report reflects the point made by my hon. Friend the Member for Cities of London and Westminster that intellectual ability alone does not make a good teacher, and that being an able communicator and having leadership and empathy skills are just as important. However, it goes on to say that
“there is quite a strong relationship between success in achieving qualifications and performance within schools. Many Teach First teachers, selected out of the group of Russell Group graduates with 2:1s or higher, have a huge impact on their schools within a few years.”
The same report, however, published survey evidence showing that just 20 per cent. of undergraduates were aware of the Teach First programme. Will the Government expand the programme more quickly and promote it more effectively?
We need to know what happens to Teach First people when they stay in teaching. In response to a written question that I tabled in October, the then Minister for Schools, the right hon. Member for South Dorset (Jim Knight), said of Teach First:
“It does not currently have detailed statistics on the destinations of completers”—
that is an ugly use of language—
“who remain in education, but I already plan to require these to be available for the 2008/09 academic year onwards.”—[Official Report, 6 October 2008; Vol. 480, c. 512W.]
Has that been done yet? Does the Minister have any data for the last academic year?
I hope that the Minister will also speak about the graduate training programme. The Policy Exchange report said:
“When asked whether they would prefer to take a one-year postgraduate course or qualify as a teacher while also working and being paid as an unqualified teacher, 53 per cent. chose the latter option and 29 per cent. the former”.
The problem again is the lack of awareness of the programme, with 58 per cent. of managers and professionals being unaware that it existed. The Government should listen to the conclusions set out in the recent IPPR report, “Those who can?”, which recommended rolling out the “teach next” programme.
Does the Minister want ever more expansion of university training for teachers or does she accept the vision set out in the Policy Exchange report of every school being turned into a training school? Some of the budget used currently for learning support assistants could be used to support the training of wannabe teachers so that they can teach in a school, earn money more quickly and support existing teachers. Does that idea attract the Minister?
Would that idea help to transform continuing professional development, as Policy Exchange suggested? If schools were all turned into training establishments for new teachers and wannabe teachers, would they be more effective in encouraging and improving the skills of their existing teachers? It would mean that teachers were not all sent off for courses elsewhere. Some of those are very good, but what is learned on others dissipates within weeks of the teacher returning. Can we make schools learning environments not only for their pupils, but for trainee teachers and teachers themselves?
The evidence shows that the quality of teachers is critical. It is the prism through which every decision made in the education arena should be viewed. When Ministers decide on any aspect of education policy, they should ask, “Will this decision help to attract and retain better teachers?” The ugly corollary is that we must ask what can be done to ensure that those who are not teaching to the required standard—however worthy they may be as human beings—are removed from the classroom and allowed to do something more appropriate with their talents.
Does the Minister think that the best route is one of ever-longer programmes and courses before one can be a teacher, which would make teaching more like the closed shops of law and accountancy, or does she share the alternative vision of people being able to go in and out of teaching throughout their careers and of mature people who have served in industry coming into teaching? Such people should not necessarily start at the bottom, but their salaries should reflect the skill sets they have achieved elsewhere, and they could contribute to school management. Can we free up the education system so that the best possible people at any given time are involved in teaching and inspiring our young people? I look forward to hearing the Minister’s answers to those questions.
I congratulate my hon. Friend the Member for Beverley and Holderness (Mr. Stuart) on securing this important debate. He will be happy to hear me say that he stated his views in characteristically robust fashion. It is important that such views are on the record, because there are grave concerns about the teaching profession and where it should be going.
Most of my comments will be specific to my local authority in Westminster, but given that we have time on our hands, I will say a little about my hon. Friend’s speech. Few of the people I graduated with in the mid-1980s would have looked on teaching as an option. There had been something of a sea change over a relatively short period. I am one of those Oxbridge graduates who were dismissed by the hon. Member for North-West Leicestershire (David Taylor) in his usual style. However, I was also a state school pupil.
In 1971, only 13 years before I matriculated at Oxford, teaching was seen as the normal choice, with one in seven graduates from that institution going into the profession. That was even before the large influx of postgraduate students taking specifically education courses. By the mid-1980s, however, going into teaching was, for most, considered to be a reflection of their failure and was seen as a secondary route. That mentality is regrettable. One by-product of the fact that, in the years to come, few graduates will go into the financial services compared with the past 20 years may well be that more of them will see teaching as a valid and acceptable choice.
I have some sympathy with the concern that my hon. Friend mentioned that the teaching profession has become more of an organised, unionised work force. That plays its part in putting many people off going into teaching. He described the prospect of people going into teaching later in life, after they have had a first career, when they have much more to give and want a second career. We all have to face the idea that working ages are likely to rise more and more as time goes by. Indeed, any future Government will have to be a lot more aggressive about that, given the demographics and the pension problems that we will have. People will be working, perhaps full time, well into their 70s in our working lifetime. It is no good simply adding a couple of years for those people who, in 25 years’ time, will reach the current retirement age; we need to be much more aggressive.
There will be the mentality that people can have several careers, so the notion that a person who goes into a career in their 40s can enter it only at the bottom rung of the ladder will, in decades to come, be seen as a rather strange idea, particularly in teaching. Some of the most inspirational teachers are not so well qualified—that was the case with the most inspirational teacher whom I recall at the grammar school I attended. I remember vividly that, as we started our A-level year, he tried to gee up the 90 boys who were about to enter the lower sixth, as it then was, by saying, “Before me, I see future captains of industry, leading lights in the armed forces and Members of Parliament.” That was the very moment at which I thought that this was something to which I could aspire—something that I probably kept secret at the back of my mind for some years before I had any political aspirations. That teacher had no formal teaching qualifications; he had spent 20 years in the armed forces before deciding to teach predominantly biology, which was a personal passion of his, but in which he had no formal post-school educational qualification.
It is crucial that we open teaching up a little, and I worry about the power of the education establishment—not just the trade unions, but the Minister’s Department and, to a large extent, local education authorities—which believes that there has to be a standard route and one has to move up a particular ladder. Much of what my hon. Friends the Members for Bognor Regis and Littlehampton (Mr. Gibb) and for Surrey Heath (Michael Gove) are doing in relation to education is forward looking and radical, and I strongly support those radical policies.
Equally, I worry that having a template about precisely the nature of degree and the GCSE grade to have been attained means that we are moving to a tick-box approach, rather than being more open-minded. The hon. Member for North-West Leicestershire mentioned that there are unqualified teachers in the independent sector, but too much of that sort of criticism is driven by the idea of equality. I am sure that the teaching unions would be concerned by that, but one needs only to look at the results of independent schools. I accept that, often, their pupils have dedicated parents and that considerable amounts of money are pumped into those schools, so any comparison would not be like for like, but those results speak to some of the more innovative, forward-looking and radical approaches that are taken to teaching, instead of it being an option that effectively means joining a highly unionised work force. We need to inspire a future generation of people to go into teaching at a later stage in their life, when much of the experience that they have gained can be brought to bear for their charges.
Having a highly organised membership is hardly unique to the teaching profession; it is true of the professions that I mentioned earlier. If the object of that grouping is to protect high standards and promote the interests of members of the profession, there is nothing sinister in that, is there?
There is nothing too sinister. Perhaps I should put on the record my own involvement with the only profession of which I was ever a part. I did not spend long as a lawyer, but I read law at university and became a lawyer afterwards, when I took great pains not to join the Law Society, which I thought an appalling organisation at that time. It was inward-looking and there seemed to be constant bickering among its members. One does not have to be a great philosopher to suggest that many such professional organisations have, to an extent, been a conspiracy against the public at large, although that is a simplistic view. The Law Society has come out of itself in recent years—indeed, both the Law Society and the Bar Council have recognised that, as well as being a trade union for professionals, they have a much more important role to play in relation to the public at large, in reflecting some of the concerns that the public have rightly had about the profession.
I take the hon. Gentleman’s comments on board, but the way in which this problem has applied to professionals has pained me. I am not making a cheap point about the National Union of Teachers or the teaching profession; I think the same applies to many of our professions, which have been far too inward-looking in the past. That goes back to an era when there was far less chopping and changing and rapid advancement for people who were able to move out of one social group into another. We now live in a much more mobile society, and amen to that, but too many of our professions have taken too long to catch up with those changes.
I want to touch on what is happening in the city of Westminster, where we have in place an education commission that is carrying out a six-month-long investigation into how we might improve educational outcomes in Westminster schools. It is due to report its findings in mid-September. The commission is chaired by Professor David Eastwood, who used to be the chief executive of the Higher Education Funding Council for England and is now the vice-chancellor of the university of Birmingham.
Like many inner-London areas, Westminster is highly polarised. It is fair to say that a significant proportion of parents send their children to schools in the independent sector, rather than state schools; none the less, the Conservative-run Westminster city council is passionately concerned to ensure that we raise standards and make more valid choices. There have been some ongoing problems with state education in inner London, one of the biggest being that articulate, educated, middle-class parents have voted with their feet and sent their children to school outside the state sector. That is a key reason why the state sector in London generally struggles, although there are some fantastic success stories such as, in my constituency, the primary schools Hampden Gurney and St. Peter’s in Eaton square. The successful secondary schools in Westminster tend to be girls schools such as the Greycoat school on Horseferry road, which is a stone’s throw from here, and St. Marylebone school. In both of those schools, it has been a long-standing head teacher who has helped to raise standards.
In the private sector, my constituency has some of the finest schools, such as Westminster school and the City of London boys and girls schools. Those schools recognise the ongoing commitment and responsibility they have to utilise some of their facilities for the purposes of other maintained schools. That is very much part and parcel of the ethos of living in our highly polarised area of central London.
The education commission’s work has revealed a problem with the ability of local authorities to get involved in improving standards when schools become academies. We have two academies in Westminster, one of which, Pimlico, is in my constituency. Authorities have an ongoing responsibility for pupil welfare, but they have no way of tackling poor teaching standards if academies are not doing well. Raising achievement of Westminster children, particularly those in the state sector, is a major priority for the city council’s children’s services department and its partners. As my hon. Friend the Member for Beverley and Holderness has rightly said, education is a main way of improving the lives of individuals. In turn, the community benefits through the social and economic contribution that those educated children—the parents of the future—are then able to make. A significant number of children in Westminster do not achieve their full potential for a number of reasons.
We have living in the city of Westminster as a whole about 40,000 people under the age of 19, 20,000 of whom are school pupils; 79 per cent. are from ethnic backgrounds other than white British and 68 per cent. speak English as an additional language. In total, more than 150 languages are spoken by children attending Westminster schools. Our educational settings in Westminster include 12 children’s centres; four maintained nursery schools; 40 primary schools, 26 of which are voluntary aided; six secondary schools, five of which are voluntary aided; four city academies; and two special needs schools. However, as an inner-London borough, Westminster also experiences high levels of migration from and to other London boroughs and the rest of the UK—population churn. What I say in this regard applies to any inner-London area and indeed to many inner-city areas, and it is what I wanted to put on the record today. The mobility of the population, including significant cross-borough flows in terms of the use of health and education services, presents significant challenges and underlines the complexity of service delivery and the importance of information sharing.
Beyond teaching standards, there is a growing issue that needs to be addressed; I wanted to put it on the record, although I appreciate that it is slightly outside the scope of this debate. That issue is the future of genuine parental choice at primary school level. In my constituency in Westminster, we have a large number of voluntary aided schools that prioritise children from a Christian background, whether Roman Catholic or Church of England. That could be a barrier to parents of children who come from non-Christian backgrounds. For example, 78 per cent. of schools achieving above average progress in English and 70 per cent. of schools achieving above average progress in maths are voluntary aided faith schools, either Church of England or Roman Catholic.
That is a problem to which there is no easy solution. In many respects, such schools are great and successful institutions and, in the process of trying to provide a level playing field for all of our children, we do not want to see standards reduced in any way; we want to see standards raised for all children in the future. I appreciate that the problem may not yet have come across the Minister’s desk in her relatively short tenure in her position, but it is a very important matter, particularly in many of our inner cities. In such areas, there has been significant depopulation in the past decades, but those sorts of schools—the voluntary aided schools, which obviously have a long-standing tradition—remain in place.
I hope that the Minister will give considerable thought to how we can try to raise the standards of all pupils, so that all of them, even those who do not come from a Roman Catholic or Church of England background, can still aspire. I know from my dealings with particular head teachers of voluntary aided schools in my constituency that they try to ensure, as far as possible, that more and more children from outside those faiths have an opportunity to go to those schools. However, the opportunities for those children are clearly not as great as they would be if there were more community schools that had a local reputation as strong as the voluntary aided schools that I have referred to.
Sir Nicholas, thank you for allowing me to speak in this very important debate. My hon. Friend the Member for Beverley and Holderness made some very valid points and I look forward to engaging on the subject not just with the Minister who is here today, but hopefully with future Conservative Ministers, because education is the key issue. Without an education system that works for the future, there will be difficulties.
I have some worries, even in the longer term, about the maintenance of the knowledge economy given our demographics, which will become an even bigger problem in the decades ahead. The competitive advantage that we have as a country has been based on having great knowledge. Obviously, we have the benefit of the English language, which is the global language and which will assist us to a large extent, but we need to ensure that we have an educated work force. I am not talking just about the elite, although I personally believe that we also need to educate our elites to the highest standards to become global players. More important in many ways are the 40 to 50 per cent. of people who will never go to university but who will still need to be educated, re-educated and trained right the way through their life. If we do not get school education right and ensure that we have teachers of the calibre needed to ensure that education is of the highest standard, we will find that those people are effectively tossed on to something of a scrap heap for much of the rest of their lives. That is not only unaffordable but ethically and morally unjustifiable.
We have discussed some very crucial issues today. I am encouraged that my own party feels strongly about them and there will be some radical changes, even in the light of the importance that must be rightly placed on the economic problems that will be the big, black cloud over much of public policy and politics in the next decade. I am obviously also interested to hear the current Government’s thinking on how we can ensure the provision of the highest teaching standards for all our children, who will obviously have an important part to play in making sure that our economy and our country can recover their previous position in the decades to come.
I also start by congratulating the hon. Member for Beverley and Holderness (Mr. Stuart). He expressed some very interesting ideas, many of which I agree with. There are probably other areas that he talked about where I would place a slightly different emphasis. None the less, the important thing that we will agree on in this debate is that we need not only an adequate supply but a full supply of highly qualified entrants into the teaching profession. It is how we attack that issue that we need to debate today.
I started thinking about this debate by focusing on the quote that the hon. Gentleman used, when he said that
“the quality of an education system cannot exceed the quality of its teachers”.
That must be fundamentally true. Starting at the top, the quality of leadership is of prime importance in any school setting.
The Ofsted figures for 2008-09 quoted in the debate pack, which are about the effectiveness of teaching and learning in meeting the full range of learners’ needs, show that 29.1 per cent. of primary schools were judged to be satisfactory and 1.8 per cent. were judged inadequate, while 32.1 per cent. of secondary schools were judged satisfactory and 1.8 per cent. were judged inadequate.
We can look at the downside and say that roughly a third of schools are judged to be either satisfactory or inadequate. Alternatively, we can look at the upside and say that two thirds of schools are good or outstanding. We must celebrate the excellent teaching that exists and the progress that has been made. However, if I was writing a report on teaching standards, I think that I would conclude that we can and must do much better.
The recent Ofsted report on standards of English in schools states:
“There is a significant gap between the most effective schools and the rest. The most effective provide a dynamic and productive English curriculum. However, too much English teaching is no better than satisfactory and too many pupils are not able to make the progress they need to catch up.”
In other words, it is particularly the most disadvantaged pupils who are suffering.
We know that about 20 per cent. of children are leaving primary school with inadequate literacy and numeracy. Only half of pupils leave secondary school with five good GCSEs, including English and maths, while 85 per cent. of poor white boys fail to achieve that benchmark. Furthermore, 55 per cent. of schools in the poorest areas fail to achieve the Government benchmark of 30 per cent. of their children obtaining five A to C GCSE grades.
Ofsted’s annual report for 2007-08 says that too many children and young people are receiving services that are “patently inadequate”, especially those who are from disadvantaged backgrounds. That is despite the fact that there have been broad improvements across schools, children’s services and further education.
The hon. Member for Beverley and Holderness touched on how we can get rid of teachers who are less than satisfactory. I think that the Government have probably taken a step in the right direction with the proposal for a teacher registration system. Of course there are poor teachers and the renewal of a licence to teach—a system similar to those that already exist in other professions and even, in a sense, for MPs—would help to eradicate those teachers who should not be in schools. However, I always have fears about Government initiatives. In principle, the teacher registration scheme is a good idea, but will it turn into a bureaucratic nightmare that takes up head teachers’ time and ends up proving to be very costly? It needs to be done properly, and we need to focus on raising the status of the profession.
We need to look at the context in which individual teachers find themselves, as well as the overall picture. We are right to focus on entrance to the profession, because we are suffering from a long-term problem that has not been tackled satisfactorily. It is true that we have all kinds of initiatives which probably do not amount to much over time, but, if one looks at the statistics, it appears that the old Teacher Training Agency—now the Training and Development Agency for Schools—did not meet the Government’s targets for filling places.
Only since April this year have predictions changed. For obvious reasons—the extra supply of graduates—all places in all subjects will be filled. Even then, there probably will not be enough physicists and chemists to meet the demand because too many biologists have been recruited. We have seen a rise in the level of qualifications held by applicants, and that is to be welcomed.
There are alternative routes into teaching. Most people think that the Teach First scheme is impressive. It has raised the status of the teaching profession, and I agree that the entry, even for a relatively short time, still can make a great contribution. Unfortunately, in the scale of things, the number involved is very small.
Again, we have to go right back to basics. We have a problem, in that there are so few schools that offer the three sciences separately. We have to go back to that before we can bring forward an adequate supply of good science teachers. Obviously, many things can be done with continuous professional development. Training can be topped up. When I was teaching, I did not necessarily always teach my first subject, and I can see that I could easily have been retrained as a full-blown mathematics teacher. There are options around, and we need to grasp them. However, it is a difficult problem, made worse because we sat on it for so long without doing enough.
I am grateful to the hon. Lady. Perhaps I misunderstood the time pressures.
Is it the policy of the hon. Lady’s party that it is necessary to get rid of national pay agreements so that disadvantaged schools can pay more—the point I made in my speech—but also so that pay can be higher for those who teach the disciplines for which it is hardest to recruit?
I thank the hon. Gentleman for that intervention. In our recent schools paper, which was passed at our last party conference, we make the point that individual schools should have more power, including the ability to offer higher pay to those who teach shortage subjects. We need to look at pay and conditions.
Moving on quickly, I often feel that there is patchy support for newly qualified teachers in this country. Some teachers experience good induction. On a recent visit to Canada with the Children, Schools and Families Committee, I learned that newly qualified teachers receive two years of support, which is much more than we offer.
The Department for Children, Schools and Families secondary school curriculum and staffing survey for 2007 shows that only 56 per cent. of pupils in secondary modern schools were taught maths by a teacher with an appropriate post A-level qualification, compared with 73 per cent. in 11-to-16 comprehensives and 88 per cent. in grammar schools. For English, the figures were 66, 74 and 94 per cent. It is a real problem that many young people are not being taught by people with specialist qualifications, and the situation is worse in the most deprived areas.
The survey reveals that children in the poorest areas of the country are least likely to be taught by well-qualified teachers, which indicates not only that there is a need for more highly qualified teachers, but that there is a particular shortage in the toughest schools. In response to comments made earlier in the debate, I would like to point out that training is needed to deal with challenging behaviour. It is not quite as easy as walking into a job. I am a former teacher, and I have taught in both the state and independent sectors.
Can the hon. Lady recollect from her teacher training days what training she was given in behaviour management in the classroom?
I would not recommend to anyone the training that I had at, I have to say, a prominent university. It was a one-year postgraduate certificate in education. Training in behaviour management is incredibly important, but, as my subject was economics, I would not necessarily have expected to receive it in my training.
We have a problem. Is the market working? Is it the Government’s fault for failing to recruit sufficient entrants, or is it the parents’ fault for not complaining loudly enough? It is all too easy just to look at the problem. The hon. Member for Beverley and Holderness is right to say that we have to come up with some better solutions.
There is a great deal of evidence that the situation is even worse in primary schools. In its state of the nation report, the Royal Society gave staggering figures showing that the number of primary school teachers qualified in stem subjects was falling. In his review of the teaching of mathematics in English primary schools, Sir Peter Williams considered that only 3,000 teachers currently had sufficient knowledge to qualify as mathematics teachers. The Government accepted all of his recommendations, and I am interested to know what progress has been made in improving the number of qualified mathematics teachers in primary schools.
I will continue with my speech so that other people have an opportunity to make theirs.
A parliamentary question last year revealed that an increasing number of training teachers are having to re-sit basic maths tests. This reinforces some of the points that were made earlier. Since 2001, trainee teachers made 20,000 failed attempts at numeracy tests, and the average number of attempts needed to pass the literacy test has increased by 16 per cent. We all subscribe to raising standards, but, unless the Government play their full part in ensuring good quality entrants to the profession in the first place, some schools and pupils will be disadvantaged.
I wonder why the Government’s new £10,000 golden handcuff for teachers applies only to secondary schools. Do we not need to attract the best applicants into primary schools in challenging areas, given the importance of basic literacy at the very start?
Far more could be done with continuous professional development, and I hope that the new licence to teach will address that, albeit rather belatedly. Since the 2007 survey that I referred to, the problem has not gone away. As Professor John Howson of Education Data Surveys wrote only last week in his most recent assessment of the labour market for teachers, English and art remain two of the more perplexing subjects, with high vacancy numbers compared with the number of trainees. For English, the estimate is that fewer than 1,800 trainees may be competing for more than 2,400 vacancies. It is staggering that we have that shortage, given current market conditions.
On lack of training, the Government have followed rather than led. The inclusion agenda, which I am fundamentally in favour of, has been promoted ruthlessly since 1997, but the basic training for teachers has only now been introduced. Teachers coming through the teacher training programme before 2011 will not have received that extra training.
[John Cummings in the Chair]
On standards in general, we need to untangle what real progress has been made from people’s lack of confidence that standards have remained constant. We really need Ofqual to be independent. We Liberal Democrats are seriously concerned about whether Ofqual will be genuinely independent and accountable to Parliament, rather than just to the Secretary of State. We have a number of proposals for an educational standards authority, which would guarantee that genuine independence.
In conclusion, although I take on board the point about teaching standards, we need to look at a range of barriers that stop children succeeding. Although a lot of progress has been made in respect of the failure to identify and resolve educational problems in early years, the standard of teaching at that stage still has to be developed much further. For example, one in five teachers in the early years foundation stage have only a level 2 qualification. In other words, we have got the most important part—the starting point—topsy-turvy and not everybody is able to access higher-level qualifications. On inadequate and inconsistent funding for schools and colleges with high levels of educational disadvantage, we advocate a pupil premium that would enable money to be found to pay staff higher salaries, if the head teacher and the governors chose to do so.
Infant class sizes are too large. The failure to plan properly this year has resulted in 10,000 pupils being in classes with more than 30 pupils. On class size, the Government made a commitment to fund state schools at the same levels as independent schools. What happened to that?
In too many schools, leadership and governance is not effective enough. Government targets and micromanagement distort priorities. Teachers are undermined by this centralised approach. The Education and Skills Bill gave Ministers more than 150 new powers. I agree with the hon. Member for Beverley and Holderness that all our schools and colleges must have the freedom to innovate.
The inappropriate offering of the curriculum, leading to pupils’ needs not being met, has made teaching difficult. Teacher training to the national curriculum means that teachers have lost the confidence to be innovative. So we are in a vicious circle at the moment that we need to break out of, because, as hon. Members have said, people remember an inspirational teacher throughout their lives, and we must ensure that we have many more inspirational teachers for children from all backgrounds.
I congratulate my hon. Friend the Member for Beverley and Holderness (Mr. Stuart) on securing this important debate and on his excellent, informative speech. I agree with most of the thoughtful speech made by my hon. Friend the Member for Cities of London and Westminster (Mr. Field), who is clearly passionate about standards and schools in his constituency.
The standard of teaching that pupils receive is one of the most decisive and important factors in determining the success of their education. A good teacher can make an enormous difference. The Sanders and Rivers study, mentioned by my hon. Friend the Member for Beverley and Holderness, which took place in Tennessee and examined the effect a teacher could have on academic performance, found that if two average ability eight-year-olds were given different teachers, one a high performer and one a low performer, the children’s academic performance would diverge by more than 50 percentage points within just three years. Other studies from the UK and the USA have produced similar findings. The Institute for Public Policy Research concluded that a good teacher could improve a child’s academic performance by more than a grade level. Those studies show that attracting high-calibre people to the teaching profession is a prerequisite to raising standards, and that in turn means a career in teaching needs to be seen as an interesting and desirable option for top graduates and those who have made a successful career in other fields.
According to Lord Adonis, one key objective of the Teach First programme, which other hon. Members have mentioned, is to reconnect the teaching profession to the top universities. Partly, this undoubtedly comes down to pay. If excellent teachers, including those with prized qualifications such as maths or science degrees, are to be attracted and retained by the profession, they need to be paid in a way that is commensurate with their value to schools. That is why schools—particularly academies—should be given the freedom to pay good teachers more.
No one should be in any doubt that we have in our schools in this country some able, highly qualified, highly motivated and first-class teachers. On Mondays, when I visit schools around the country, I meet dedicated teachers with a genuine vocation who are transforming the lives of the children they are teaching. Britain would not be the fifth most successful economy in the world if this were not true. But as my hon. Friend rightly said, we have to be cautious about the future. We need to accept that we face huge challenges. One in five children leaving primary school after seven years are still struggling with reading and 40 per cent. are leaving school without having achieved five or more good GCSEs. Half of all children who qualify for free school meals fail to achieve a single GCSE above grade D.
There are many reasons for these challenges, including the curriculum and ideologically driven pedagogy emanating from the education establishment, but a factor must also be the barriers that mean not enough highly qualified young people are choosing teaching as a career. The first and perhaps most serious of these barriers is pupil behaviour. In March 2008, the Association of Teachers and Lecturers carried out a survey examining this issue. It found that 29 per cent. of all teachers have been punched, kicked or bitten by their pupils. Nearly one in 10 teachers said they had been injured by an aggressive or violent pupil. Crucially, nearly two thirds of teachers said they had considered leaving the profession because of aggressive pupils, verbal abuse and the threat of violence.
In 2008, the NASUWT compiled a dossier that detailed the violence that teachers had faced, some of which verged on the horrific, including attacks on teachers using knives and scissors and even attacks on pregnant teachers. In light of that, research by the think-tank, Policy Exchange, which found that the principal factor deterring undergraduates from a career in education was
“the fear of feeling unsafe in the classroom”,
seems perfectly understandable. Unless the standard of behaviour in our schools improves, the teaching profession will not become a truly welcoming environment for talent.
At the moment, teachers often find it difficult to enforce high standards of behaviour because they lack the powers that they need to keep discipline in the classroom. Teachers should be given far wider powers to search for and confiscate items that are banned by the rules of the school, and not just specified items on a narrow list. We Conservatives joined forces with the Liberals on that point during the Committee stage of the Apprenticeships, Skills, Children and Learning Bill.
We would allow schools to require home-school contracts to be signed as a condition of admission to a school, which is something long opposed by Labour Ministers over the last 12 years until the 11th hour of this Administration in last week’s White Paper. We should abolish the exclusion appeal panels, to enhance the standing of head teachers by removing the ability to second-guess their decisions on discipline. These expensive, stressful and time-consuming appeals procedures are a deterrent for heads, who need to be able to expel persistently disruptive pupils. If a head teacher’s decision to exclude a pupil from his or her school were overturned subsequently on appeal, allowing the child to return, that would be in complete defiance of the head teacher’s wishes. This system completely undermines the head teacher’s authority. I believe that these changes would enhance the ability of staff to keep order in their schools and would help to make teaching a more rewarding profession for prospective teachers.
Of course, the behaviour of pupils is not the only issue. As the hon. Member for Mid-Dorset and North Poole (Annette Brooke) said, the curriculum is another important contributory factor, putting off the more academic teacher. The trends toward modularisation, thematic teaching, an outcomes or competence-based curriculum and so-called applied learning all reduce the time spent on engagement with formal, academic knowledge.
The overall standard of many qualifications has been reduced over time, making them less academically challenging and therefore less interesting for able teachers who have a passion for their subject. One subject that has suffered most from this problem is science, particularly at secondary level. Students studying for science GCSEs have in recent years been asked whether they sweat through the skin or the liver and whether they look at the stars through a synthesiser or a telescope. A report by Ofqual in March this year found that the standard of GCSE physics had fallen between 2002 and 2007. Fewer topics were covered and there was a reduction in the number of questions that required complex calculations or several steps to reach an answer. There was also a general reduction in the mathematical demands made of candidates. These findings reinforce the conclusions of a growing body of independent academics, such as Professor Peter Tymms of the university of Durham and the Royal Society of Chemistry, who have demonstrated that the academic standard of science qualifications has fallen over the years.
In addition to that problem, the new 21st-century curriculum replaces the study of scientific concepts with the study of the relationship between science and wider society. That leads to students debating stem cell research without the developed knowledge of biology that they need to appreciate the issues. The Ofqual report specifically picked out that issue when it said that
“candidates were required to discuss the advantages and drawbacks of CCTV, mobile phones and the internet. These may be interesting considerations, but they did not add to the candidates’ knowledge and understanding of physics.”
In reality, those are not even particularly interesting considerations. Goodness knows whether, in 20 years, we will even have mobile phones or CCTV. They replace the richness and complexity of scientific understanding with a pseudo, superficial learning. The drop in the standard of some science qualifications, with the movement away from teaching scientific concepts, creates a curriculum that is less likely to attract candidates with a genuine passion for their subject.
That problem is borne out by research into teacher specialisms. An investigation by the university of Buckingham in June 2008 found that 24 per cent. of state schools had no teachers with a specialism in physics. It also found that the number of applicants for physics postgraduate certificate in education courses had dropped by 27 per cent. in 2006. That problem is particularly acute in science, and affects subjects across the curriculum. In June 2008, a paper produced by the National Foundation for Educational Research found:
“Across all subjects, the proportion of lessons being taught by teachers with relevant post A-Level qualifications was slightly lower in 2007 (79 per cent.) than it had been in 2002 (83 per cent.).”
If we want to reverse that trend and encourage more graduates with relevant degrees into teaching, we must revive the academic value of the curriculum so that it is firmly focused on knowledge, concepts and ideas. At the same time, we must work to encourage individuals with a real affinity for their subject into the profession.
I am attracted to the concept of training more teachers on the job through programmes such as the graduate teacher programme, which a number of teachers go through, but there is scope for expanding that programme. I take issue with the hon. Member for North-West Leicestershire (David Taylor) about some teachers in the independent sector not having formal qualifications. The problem is not the independent sector, which achieves 38 per cent. of all A grades in A-level physics. The graduate teaching programme attracts high-quality graduates who learn how to teach in the school from the head of department. We must be flexible about entry into the teaching profession and teacher training.
We have proposed changes to enable teachers to advance further with their academic subject as their career progresses and to make it easier for them to pursue higher qualifications, such as masters degrees and doctorates, with support for sabbaticals and bursaries. When teachers join a school, they should not lose contact with the academic community of their subject at university. They should continue to deepen their understanding and maintain their enthusiasm for their specialism so that they can communicate that passion to their students.
As well as making the profession more attractive by attacking the problems of pupil behaviour and the curriculum, we must introduce specific policies to ensure that teaching is a career for strong candidates. At the moment, around 1,200 postgraduate trainees begin training each year, having achieved a degree below 2:2, and 13 per cent. of applicants—about 5,000 students—have to re-sit the on-screen numeracy test to gain qualified teacher status three times or more before passing. We would address both those problems by permitting only one re-sit for the literacy and numeracy tests, which at the moment may be taken an infinite number of times. We would fund trainee teachers only if they achieved at least a 2:2 degree.
We would also raise the bar for new primary school teachers by requiring B grades in GCSE English and Maths. Those two subjects are integral to the job of primary school teachers. At the same time, we would ensure that every publicly funded teacher training institution provided primary teachers with specialist courses in maths and synthetic phonics instructions so that they were properly equipped with the necessary skills to carry out those core aspects of their work.
In addition, we believe that dramatically expanding the academies programme will enhance the standing of the teaching profession, making it a more prestigious and attractive destination for top graduates. The greater autonomy and freedom enjoyed by teachers under that programme is part and parcel of enhancing their standing as professionals. We hope that freeing the profession from the frustrating bureaucracy of local and central Government will enhance its status, enabling it to attract more high-calibre teachers and raising standards as a result.
I congratulate the hon. Member for Beverley and Holderness (Mr. Stuart), who is my near neighbour in east Yorkshire, on securing this debate, and all hon. Members who have contributed today.
I am aware that the hon. Gentleman recently had the opportunity to discuss teaching standards with the Minister for Schools and Learners in the Select Committee on Children, Schools and Families, of which the hon. Gentleman is a member. I welcome today’s further opportunity to debate the topic and to hear other hon. Members’ comments.
The evidence shows clearly that parents are the most important influence on children’s life chances, but that nothing matters more to pupil achievement than the quality of teaching that they receive. A good teacher not only inspires—the hon. Member for Beverley and Holderness made much of the inspiration needed to bring pupils on and make learning fun—but teaches in a way that suits pupils best, stretches them, and identifies where extra support is needed to tackle the barriers to learning to secure the progress of every child. The second part is important, because teachers’ professional skills lie in being able to draw the desired progress and achievements from pupils. In short, teachers change lives, and building a world-class school system in which every child and young person can fulfil their potential and receive the support that they need to succeed requires that we have a world-class schools work force.
I shall talk about a decade of progress. I do not recognise the picture that some hon. Members have painted of today’s teaching profession. Over the past 12 years, our schools work force has been transformed: we now have more than 40,000 more teachers than in 1997, backed up by more than 200,000 support staff, including teaching assistants, who have made a huge contribution in the classroom.
I will talk about the graduate entry to the teaching profession in a moment.
Times have changed and schools are no longer places where an individual stands up in front of a blackboard with a piece of chalk. Classrooms are exciting, interactive places staffed not only with teachers, but with technicians, assistants and others who offer pupils personal support. As a result of our investment and the hard work and dedication of teachers around the country, Ofsted has rated the current generation of teachers the best we have ever had.
Teachers are now among the most valued and trusted figures in our society, which is in stark contrast with a decade ago when the public did not always accept that working as a teacher was the high-status profession that it should be. That dramatic increase in teachers’ professional status and standing is reflected in the huge progress that has been made over the past 12 years. More than 100,000 more children are leaving primary schools secure in English and maths at level 4 than did so a decade ago, and almost half of young people achieve five good GCSEs compared with just over one third in 1997. That is real progress, but we accept that there is much more to do to ensure that every child is secure in the basics and that every young person achieves a good qualification. Giving the teaching profession a further boost is at the centre of our plans.
I shall talk now about new routes into teaching, because much has been made of attracting a good cross-section of people with the skills and abilities required. We want to ensure that we have the best pool of teachers to choose from. That is why we have developed a range of routes into teaching that focus on attracting the best candidates, whatever stage of their career they have reached. The Training and Development Agency for Schools is overhauling its graduate teacher programme website to make it easier, from September, for people seeking employment-based training to find a suitable school and training provider. It is committed to marketing that route specifically once the website is ready.
The traditional PGCE route for graduates is still being used very well, but there is also the hugely successful Teach First programme, which was five times oversubscribed last year. Mention has been made of the fairly low number of places available, but we are looking for the very highest level of ability in the students, so although the programme was five times oversubscribed last year, there may be a natural limit to the number of places that we can fill. We need to keep a constant eye on that to see how it works out. The programme is making a real difference in the schools where the people are teaching. I think that we all accept that that is a positive development and we want to see the programme continue to succeed.
I am grateful to the Minister for giving way; I am aware that there is a shortage of time. Did the people who failed to get on the Teach First programme do so because they did not have the qualifications, or because the funding from Government placed a cap on the numbers?
I cannot answer that specific question, so I shall have to come back to the hon. Gentleman. I can tell him that we shall double the number of Teach First places by 2013, but I will come back to him on his specific question and I shall also consider the statistical data that have been collected by Teach First.
Teaching is in the top 10 choices for career changers and it is the No. 1 choice for new graduates, so of course competition will ensure that there are rising standards in the group that is coming into education and teaching in the years ahead. To ensure that we attract the best career changers from the private sector, particularly in the shortage subjects that we have heard about, we have launched our Transition to Teaching programme. In addition, from September we shall trial a new accelerated six-month route to qualified teacher status in maths and science subjects for outstanding candidates. That is a pilot and we want to see how it works, but again it is about working on some of the ideas that were in the Policy Exchange report.
I was struck by comments made by hon. Members about restricting entry into the teaching profession to graduates with a 2:2, 2:1 or first-class degree and not having people with a third. That struck me as odd because I think that one of the people advising the Conservative party is Carol Vorderman, who I am sure we all agree is quite an inspirational character but who, as I understand it, got a third in her degree. She would not be eligible to teach under that proposal. Perhaps hon. Members should reflect on that.
In the past 12 years, the pay and conditions offered to teachers have improved enormously. The remodelling of the work force has been a big step forward for teachers, children and young people because it is about raising standards and tackling work load, but we must continue to bear down on unnecessary burdens and ensure that teachers receive their statutory rights, so that they can focus on their core job of teaching and learning. We cannot expect teachers to continue to improve standards or narrow the attainment gap if they have not received a proper induction, are not being managed properly, or are spending their time doing things that do not make the most of their professional expertise. That is why we are legislating for a new system of warning notices for governing bodies that do not comply with statutory pay and conditions requirements.
As well as ensuring compliance with statutory rights, we want to ensure that each individual teacher receives consistently excellent training and continuing professional development so that they can improve their practice. We announced last year that we would make teaching a master’s-level profession. The course will be rolled out initially in January next year to newly qualified teachers in schools in the north-west and in national challenge schools. It will be primarily practice-based, with newly qualified teachers learning not just from school leaders but from more experienced teachers. We shall work closely with our social partners and the TDA to ensure that we get it right, because it is a great opportunity for the profession. As there is still much more to do to improve the ability of teachers to identify the children and young people who need extra support to make good progress, one of the four compulsory content areas of the new master’s in teaching and learning covers child development and behaviour management. That new qualification is specifically designed to improve classroom practice.
It might be helpful at this point if I comment on behaviour, because the hon. Member for Bognor Regis and Littlehampton (Mr. Gibb) made much of behaviour in the classroom. The present Government are the first to implement a comprehensive national programme to strengthen schools’ capacity to manage behaviour, and to strengthen the law where necessary. As he will know, the behaviour expert Sir Alan Steer acknowledged in his final report on behaviour in schools, published earlier this year,
“Schools have a broader range of powers than ever before to prevent and tackle poor behaviour.”
I therefore dispute some of the statements made about behaviour in our schools.
The licence to teach was announced last week. Teachers will need to keep their practice up to date to renew their licence, which will be linked to their commitment to continuing professional development. We shall start with newly qualified teachers beginning their training this September, those returning to teaching from September 2010 and all supply teachers shortly afterwards. We think that it will help to improve the status of a profession that is already very highly regarded, but it is not a substitute for the existing robust measures to weed out poorly performing teachers. Those measures are already in the hands of individual schools and head teachers, to be used as and when required if capability is an issue. We want to build on the best elements of the existing teacher registration process, so we shall make provision for the General Teaching Council for England to take the matter forward. We envisage the licence to teach being valid for five years, after which the licence holder would need to undergo the revalidation process. More details will be set out in the coming months and there will be further consultation.
As has been said, the most effective continuing professional development often takes place in schools where teachers can learn from one another, but teachers can also learn from other schools. That is constantly being reviewed. We said in the White Paper “Your child, your schools, our future: building a 21st century schools system” that we are asking the TDA and the national college for school leadership to work together to consider how we can best support the growth of more school-to-school, cluster-based professional development for teachers and, indeed, all the members of the children’s work force in schools.
I have set out how we are building on the foundations of the proper investment that we have made in our teachers in the past 12 years by providing new routes into teaching, ensuring that teachers have fair pay and conditions, supporting teachers with excellent professional development and matching that with the new licence to teach. Those reforms will allow our teachers to remain the best in the world. We are committed to backing them, just as we have backed them in the past 12 years, because that is what we need to do to build schools that are fit for the 21st century in which every child and young person receives the excellent education that they deserve. Excellence in education comes primarily from teachers. That is what parents expect and children need.
Like most hon. Members when they visit schools in their constituencies, I am always struck by the fact that there are not many men teaching in primary schools. I will talk to officials about how that can be encouraged, because of course good role models in primary schools are important.
Mitcham Jobcentre Plus
I am delighted to have this Adjournment debate, but I am sorry that we are holding it in the current circumstances. Despite the fact that the Government have made enormous efforts to introduce measures to help people looking for work or training, the people we expect to provide that help are ill-equipped to do so.
Over the past 12 years, unemployment has fallen in my constituency. In April 1997, the unemployment rate was 5.4 per cent. In April 2009, it was 3.7 per cent. The Government’s philosophy has been that those who can work should work. Work should pay, and we will do our best to ensure that it does. I appreciate that the unemployment figures are rising again and that there will be more people for jobcentres to deal with, but that is all the more reason for anyone who can work to be given all the help that they need to get a job.
Many good things have happened in the past 12 years, and I would not want to characterise everything as bad. Hundreds of my constituents have found work through the new deal, and thousands have benefited from tax credits for those who are in work.
I appreciate that working in a benefits office is not easy. I know that because I used to do it. My first job on leaving university was as a clerical officer in the then supplementary benefit office at Irene House in Balham. Twenty-eight years ago, it was very much a case of them and us. Many of my colleagues would look down their noses at the people on the other side of the barrier—in those days, there were real, physical barriers. Colleagues used to tease me because I always signed my letters legibly, and people could tell who had written to them. On one occasion, an Irish man who was in his 50s—not unlike my dad—and who had never before seen the inside of a benefits office was so humiliated by the officer’s questioning that he began to cry, and I am not ashamed to say that I joined him.
The Government have made great progress, and there has been some improvement in staff attitudes. However, one role of MPs is to act as a local information service to the Government nationally. We need to be able to tell the Government how their initiatives are working. If things are not working as planned, however, it is surely our role to bring them to the attention of Ministers, and that is why I called for today’s debate.
I am sure that the Mitcham jobcentre has a lot of work to do, and that work is probably not easy, while some of the people the jobcentre deals with may sometimes be awkward. Equally, I may be seeing only people who experience difficulties, and there may be many thousands of people whom I do not see because their cases are dealt with immaculately. In the past few months, however, I have seen an upsurge in the number of constituents who have contacted me about the jobcentre.
It is not only me who has been contacted. Other community groups and organisations, including the citizens advice bureau and a local community development trust, have told me that there has been an increase in the number of people complaining about the service that they receive. Those bodies have also told me that many of their clients are too intimidated to complain and are worried that making a complaint could see them lose their benefits or be treated even worse the next time they ask for help. Therefore, rather than seeing the rare, exceptional cases where problems occur, we may be seeing the tip of the iceberg, and that is why I am here today.
Like all hon. Members, I want our public services to be services. I want them to operate at a level that we can be proud of and which will help our constituents to find work or to get the training that they need to achieve their aspirations. That is what the Government are all about and it is what I am all about.
I want to highlight a number of cases that I have dealt with or about which local organisations have contacted me. We are all concerned about the standard of advice at local jobcentres and the lack of knowledge or initiative on the part of the staff. That is almost certainly the result of inadequate training. The problem has been noticed not just by me, but by the citizens advice bureau and local community groups.
While I was out canvassing in Wandle road a few weeks ago, I met a woman who had just lost her job. She had held a quite senior position in customer services and she could not believe her experience at Jobcentre Plus. She commented on the unmotivated way in which she was dealt with and on the lack of initiative. She said that she would never have accepted that lack of imagination and helpfulness in her industry.
When Mr. T from Eastfields, who has a history of serious mental health problems, went to the jobcentre, staff sent him on an entirely inappropriate training course that he could only ever fail. There was a lack of imagination about how to deal with him. His case may well have been complicated, but Merton Mind, a charity that would have been ideally placed to help him, was just across the road.
There is also Mr. F of Mitcham, a former bus driver in his 50s who was finding his work too hard. I noticed that he had a Private Security Authority licence, and I had been to a company that provided transport for special needs children the day before, so I put the company in contact with him. There was a vacancy, and he got the job. The question, however, is why Mitcham jobcentre did not suggest the same during the weeks that it saw him. It was not a difficult suggestion to make.
There is not just a lack of imagination and training; I also get complaints about the attitude of staff. I have heard stories about some of the procedures that claimants are forced to go through, which are extremely discouraging. Staff at Mitcham jobcentre are often thought to be rude or, at best, unhelpful. The jobcentre is thought to give bad advice and bad customer service on occasion.
Let me mention the case of Sandra from Morden, because there is a particular problem with crisis loans. Sandra, too, has a history of mental illness. She spent three whole days in the jobcentre because of complications in communications between Mitcham and the central processing unit in Makerfield. One day, she spent from 8 o’clock in the morning until 7 o’clock at night at the jobcentre. At the close of the day, she was told that she could go to the police station to get help. Obviously, the police officers met that advice with disbelief.
Sandra went in one day to ask whether documents might be faxed to Makerfield. She was told that she needed to make an appointment to use the fax and to return the following day. When she did go to get her documents faxed, the line was busy, but she was not told. All the time, staff knew that she had no money and that she was walking to and from the jobcentre each day.
That brings me to the issue of photocopying—I can hardly believe that I am talking in the House of Commons about a photocopier at Mitcham jobcentre, but I am. In one particular incident, someone was told to fill in a form, but they were informed they could not do so on the premises. They were forced to leave and to stand on the pavement outside while they completed the form. When they returned, they were told that it had to be copied. There was a photocopier right there, just a few feet away, and there seemed to be many staff in the office. However, the person was told that if they wanted to use the photocopier, they would once again have to leave the jobcentre and stand on the pavement outside. They had to use their mobile to phone Edinburgh to arrange to use the photocopier, which was only a few feet away in the jobcentre. Eventually, they got through to staff in Edinburgh, who booked a spot an hour and a half later on the photocopier, which was right there in Mitcham. If something like that had happened to Victor Meldrew, we would not believe it, but it is routine at Mitcham jobcentre.
From the feedback that local groups and I have obtained, it appears that the worst advice is given to lone parents and to anyone looking for training rather than work. Lone parent advisers and personal advisers often do not know about courses that are available or they provide inaccurate information. Obviously, it is not just the jobcentre that runs courses, and many organisations and colleges also run them, but staff at Mitcham jobcentre do not seem to know which courses they sponsor. There is no written material to advise clients, who are often told to trawl through large numbers of prospectuses, even though they do not know what they are looking for or what might be there for them.
At the other end of the spectrum, there are examples of Mitcham jobcentre enrolling someone on an external course, saying that it includes child care, only for the parent to turn up and discover that it does not. With all the other pressures on young parents, such mistakes are extremely disheartening.
There is also the case of a young woman who was not able to pass any exams at school. She went to see her lone parent adviser to suggest that she wanted to be a beautician. The adviser apparently frowned at her and insisted that she should redo her GCSEs instead, even though it was far more likely that she would get work if she got training.
Many staff seem either not to know about particular jobs, training opportunities or benefits or to be unwilling to let people know about them. I regularly hear people say that they are not told about benefits such as in-work credit, which is an excellent Government initiative. It is a fixed tax-free payment of £60 a week—in London—for parents bringing up children alone and working at least 16 hours a week, and it is payable for up to 52 weeks on top of earnings. The problem is that people must claim before they start work, and the claim form must be completed and returned to the jobcentre within five weeks of starting work. If jobcentres such as Mitcham will not let their clients know that they might be eligible, clients could potentially lose out on £3,000, which is unfair. After all, £3,000 would make a real difference to someone’s chances of staying in work.
I have also been told of several instances of clients not being informed of the discretionary funds that might be available to them, to help to pay for an interview suit, or for such things as fares and child care. It is as though a client needs to find out their entitlement, because the jobcentre will not let them know. Mrs. L came to see me because she had finally got a job but did not have the money for a suit or her travelcard. Mitcham jobcentre’s response was to suggest that she should ask her new employer for the money up front. I am not sure that that is living in the real world. Clients are made to feel that they, not the jobcentre, should do the research and find out what is available for them.
Even when the advice is not wrong, and my constituents are not discouraged from applying, I often hear stories about Mitcham jobcentre miscalculating what people might be entitled to. One great thing that the Government have brought about is that people who are thinking about working are given an illustration of how much better off they will be. Many people in Mitcham and Morden have complex lives, with child care to worry about, and very high housing costs. The cost of housing in London is a particular problem, and merits an Adjournment debate of its own. It is a serious worry and can be a big disincentive to working. That is all the more reason to get the figures right at the beginning. The Government’s tax credits are an enormous help to people looking for work, but if someone is advised that they will take home a certain amount, and they budget for that amount, a big mistake is not necessary for debts to mount up. Someone need not be many weeks behind on the rent for the debt to be more than £1,000. I am told by the citizens advice bureau that the biggest problems with calculations are with jobseeker’s allowance and tax credits. The problem is frequently due to poor training.
Getting bad advice is catastrophic enough, but unfortunately I have come across several examples of Mitcham jobcentre treating people in a way that would not be acceptable elsewhere. A local community group has given me the feedback it has obtained from people after they have gone to the jobcentre in Mitcham. They say that they are made to feel dumb or stupid and are not treated with courtesy or respect. They feel exasperated, saying “I did not know where to go next.” Understandably, people are unwilling to complain. They are nervous that it will affect their benefits, and they feel intimidated.
Mr. E from Morden recently contacted me to say that he had been out of work for more than six months. His story illustrates the discourtesy of the jobcentre, and the mistakes that it makes. He had child care responsibilities that meant that he could not work full time. He told me that he was pressured by Mitcham jobcentre to forgo his parental responsibilities or lose his benefits. Eventually it was he who found out about the new Government self-employment credit, which gives £50 a week if someone sets up as self-employed, to help them through the difficult first months in business. He told me that that was ideal for his circumstances, as he would be able to fit his work around his parenting responsibilities. Mitcham jobcentre had not told him about it. Indeed, he says that when he asked about it the staff did not seem to want to help. Mr. E says that he is the only person at Mitcham currently on that benefit, even though one would think it might be of interest to many people in a similar position.
I have also received complaints about form-filling. Staff will not help people to complete forms. That is not only unfriendly and unhelpful, but it leads to problems down the line, as some forms can be difficult to complete, even for those with a good standard of English. Mr. H and Ms B came to see me with a story about something that happened when they were in the jobcentre. Another client, with poor reading, asked staff for help with an application form for a job at Asda. The jobcentre staff refused, so Mr. H completed the form on the gentleman’s behalf, and he got the job within the next few days. What is worse, incorrectly completed forms lead to delays in people receiving payments, or to people getting the wrong amounts, and perhaps having to repay money that they no longer have, so why will staff not help?
I have heard of numerous instances of forms being lost or not being received. One man’s form was lost five times between Mitcham and Makerfield, where the forms are processed. When that happens, there is poor communication with Mitcham jobcentre. It is often difficult to get through to Makerfield. The onus always seems to be on the claimant and not the jobcentre to sort things out. There is an 0845 or 0800 number, but such numbers are not free to people calling from their mobile, and it always takes a long time to get through. Someone ringing the number must get through a lengthy automated inquisition, and pressing the wrong button means they have hung up, and must start over again. I am concerned about the use of 08 numbers for Government services. The people who most need them tend to be mobile users, who do not get 08 numbers free, or as part of their inclusive minutes. Several pounds can go down the drain even before a real person answers. The use of 08 numbers is a tax on benefit claimants; they should be free to all mobile users or changed to geographic numbers that are free.
I cannot believe that in this debate I must raise the issue of toilets. Even though claimants can often be expected to wait at the jobcentre for a long time, they are not allowed to use the toilet. Staff tell them to go to the pub or the betting shop, even when, as in the case of a young Muslim woman accompanied by children, that will cause considerable offence. Asking people to go to the pub or betting shop is inappropriate not just for the clients but for local businesses.
I could go on much longer, with example after example of poor service or advice, and that is why, last month, I held a meeting with the managers at Mitcham jobcentre, including the district manager at Jobcentre Plus. I was joined by a co-ordinator from Commonside community development trust. Commonside is an excellent and popular community group, based in Pollards Hill, one of the least affluent areas in my constituency. Its staff have been trained on benefits advice, and they often deal with people who have been bypassed by conventional sources of help. We outlined many of the cases and concerns that I have raised today, and promised to keep letting the jobcentre know when it got things wrong. Sadly, however, I have not noticed an improvement, and as the local MP and the Government’s eyes and ears on the ground I want to use this opportunity to make Ministers aware of the gap between what the Government hope for, and the reality for people who need help in Mitcham and Morden.
I cannot say whether the difficulties experienced by my constituents are unique to Mitcham, or whether they apply more widely. After all, my local jobcentre is the only one about which I receive complaints. However, it sometimes gives bad or incomplete advice, and on occasions the advice is given discourteously and disrespectfully. Perhaps that is due to poor training. Perhaps it is the culture of the jobcentre. However, clients often feel that they are treated as a nuisance, rather than as real people who want the best opportunities for their families. The Government have introduced some wonderful initiatives that should be a great help to people looking for work or training. Good public services matter to us and to my constituents. However, unless the people on the ground are as helpful, imaginative and thoughtful as the initiatives themselves, they will not deliver all they could.
I congratulate my hon. Friend the Member for Mitcham and Morden (Siobhain McDonagh) on securing the debate. I am sorry that she has, as we have just heard, a long list of complaints, and that she feels that the people who work in Mitcham jobcentre are ill equipped and have, at times, a poor attitude. I pay tribute to the 54 staff who work there. They deal with 3,000 claimants a month and, according to the measures that I have seen, they do a good job in one of the top-performing jobcentres in one of the top-performing districts in the country. That is why my hon. Friend’s remarks are of great concern to me.
In the period in which she has represented her constituents my hon. Friend has, I know, had by and large a good relationship with the jobcentre; she has visited several times and has been assiduous in representing her constituents there. I hope that she will continue to feel able to raise individual cases directly with the local manager. Obviously, staff are currently dealing with an increased footfall of people coming to use the services, as a result of the global recession.
The most devastating effect of any recession is its impact on families and individuals. When someone loses their job it can create a domino effect, leading to uncertainty around home life and putting stress on relationships. It can be a very worrying time, which is why the Government put such emphasis on getting people back into work. Similarly, for people trying to get back on their feet, people who have been out of work for a long period, or those who need help in finding appropriate child care or managing a health condition, the recession can make those first steps into a job just a little harder, as competition for work increases.
For the Government, unemployment will never be a price worth paying. That is why we have invested an additional £3 billion in Jobcentre Plus services since November. That extra money means that Jobcentre Plus has been able to recruit 7,000 staff and will add a further 9,000 to its work force by October. Staff have been recruited on the basis of local need.
In the last decade unemployment in Mitcham fell to historically low levels. At its lowest point, at the end of 2007, 2.1 per cent of the local population was unemployed. As a result of the global recession, that has crept up; it now stands at 3.8 per cent. However, it is worth noting that although youth claimant unemployment has increased by 1 per cent., long-term youth claimant unemployment has fallen by 75 per cent. since 1997, which shows that Jobcentre Plus is turning even young people around quickly and getting them back into work. The employment rate has risen in Mitcham by 5.6 per cent., and the number claiming lone parent benefit has fallen by 16 per cent. A long list of statistics shows that in Mitcham, as elsewhere in the country, the service has been effective in helping people back into work.
As I said, the number of staff in Mitcham has been increased from 44 to 54. As of yesterday, it extended its opening hours by one hour and will now stay open until 6 pm, Monday to Friday. Those additional resources mean that, despite increased demand for services in Mitcham, new claimants still get a first interview within three days and new claims will be processed in just over 10 days. Investment in Mitcham will continue. A further nine staff have been recruited and are expected to start work before September.
We have demonstrated that Jobcentre Plus is able to adapt to current economic circumstances and deal with the increased number of customers. Indeed, despite twice as many people claiming jobseeker’s allowance as claimed it two years ago, benefits are paid sooner and half of new claimants still leave JSA within three months. Significantly, the changes that we made over the past decade meant that when the recession hit we were able to respond to the new demands, delivering all the new help that has been developed as well as the ongoing support that we are giving to disadvantaged groups.
We are determined not to repeat the mistakes made in previous recessions, when many people were left to fend for themselves and expectations on them were lowered. For example, in the early 1980s, the conditionality for unemployment benefit was relaxed so that it was no longer necessary to register at a jobcentre to receive benefit, and it is estimated that the claimant count in 1986 could have been as much as 4 percentage points higher than if that had not been the case. A similar increase in the claimant count today would equate to about £4.5 billion of benefit expenditure. It is estimated that the active measures that we have taken during the recession have resulted in unemployment being 500,000 lower than would have been the case if we had done nothing.
I am concerned that my hon. Friend feels that people in Mitcham and Morden are not getting the high level of support that she and I would want. Mitcham Jobcentre Plus has four lone parent advisers. I know that lone parents are a great concern of my hon. Friend; she regularly speaks about them in the House. Those advisers are specially qualified, and trained to recognise the particular barriers faced by lone parents and to help them gain access to additional support so that they can get back into work. A vast programme of comprehensive training helps Jobcentre Plus advisers to understand the pressures on lone parents; it includes a one-day workshop delivered by the lobby group Gingerbread, which has particular expertise in the subject. It seeks to break down stereotypes and educate advisers on the particular child care problems that lone parents face.
The Government are committed to ensuring that their policies support the well-being of children and families. Only last week, in the other place the Government introduced a series of amendments to the Welfare Reform Bill that do just that. They set in primary legislation the fact that the well-being of a child must be taken into account when a jobseeker’s agreement or action plan is drawn up with a parent, and that victims of domestic violence will be exempt from meeting jobseeker’s allowance conditions for the first three months. We have included a commitment in the Bill that those conditions will not be extended to parents of children under three years of age.
There is a disjuncture between the figures and the reality as seen by my constituents. Is my hon. Friend interested in visiting the jobcentre in my constituency and talking to some of the local groups in order to understand their feelings? The purpose of today’s debate is not to criticise the Government’s initiatives but merely to say that they should be carried through to effect and that people’s experience of them is important. I therefore extend my offer.
I am always grateful for such invitations. I was about to make a similar suggestion. I know that one bad experience of a jobcentre can colour a person’s view of the entire service. I do not want to underestimate the seriousness of my hon. Friend’s complaints. It is a challenge to deal with an increased number of customers and to recruit and train staff to make every contact with Jobcentre Plus satisfying for our customers. It is a challenge that I want us to be able to meet.
The target for customer satisfaction is currently 86 per cent.—a magical figure—and nationally we are achieving 89 per cent. We use mystery shoppers to sample customer service at jobcentres. I shall certainly ensure that that occurs in Mitcham, and I am happy to try to find time in my diary to visit my hon. Friend’s constituency and discuss with her some of the cases at the Mitcham jobcentre. My hon. Friend will know better than me the support and training that is available in her constituency. I hope that the staff of the local Jobcentre Plus are as expert as she is, and that they can advise all customers, and not only lone parents, on the opportunities available to them. However, if she believes that that is not being properly communicated to lone parents, or to any other unemployed group in her area, I would be happy to meet her.
Finally, I alert my hon. Friend to some of the excellent outreach work being organised by Jobcentre Plus in her area. I would not want those listening to our debate or reading about it in the official record to think that all is bleak in Mitcham. As I said earlier, Mitcham is a high-performing office.
My hon. Friend will know that Mitcham has a large Somali community, and that 70 per cent. claim benefits, many because they are lone parents. Since last September, Jobcentre Plus has been working with community leaders, the Merton racial equality partnership, local authority representatives and the police to promote the support on offer to that community. That includes providing interpreters, organising network events with Jobcentre Plus specifically for the Somali community, and promoting the benefits of a diverse work force to local employers.
In the next few weeks, lone parent outreach workers will be joining staff at the Lavender centre, one of the Government’s excellent new children centres, where they will be able to reach more lone parents and offer personalised back-to-work support in a neutral setting. A further two advisers will begin working from Mitcham community centre, and another will be placed in Carshalton college. In addition, the local jobcentre has forged a number of local employment partnership agreements with key employers, including Merton council, the Metropolitan police and Morrisons, as well as hundreds of small businesses. Local employment partnerships are a great way to support the local community. Not only do they give local people access to jobs, but the links built between people and businesses benefit the whole area.
My hon. Friend raised a series of complaints, some of which will be disputed by the staff and the manager at the Mitcham jobcentre. However, I promise to explore her complaints. Some were caused by problems at the processing centre in Makerfield. I have been told that crisis loan processing takes one and a half days. Due to its nature we must ensure that it is processed quickly and that people get their money as soon as possible. I will look into my hon. Friend’s accusations of staff having a lack of imagination and taking a poor attitude: imagination and attitude are important for staff seeking to get people back into work.
My hon. Friend mentioned faxes, photocopiers, toilets and so on. I discussed photocopying before coming here this morning, and I understand that there are problems with staff being diverted to photocopy documents. However, if someone is in desperate need of a photocopy, perhaps to meet a deadline, there should be some flexibility in how the rule is applied. I am happy to continue exploring those issues.
My hon. Friend also asked about the use of 0800 and 0845 phone numbers. The permanent secretary to the Department is actively pursuing that with the mobile phone operators. I share some of her concerns on that matter. Some of our most needy claimants do not have access to a landline but use a mobile phone. We must ensure that the 0800 and 0845 services that we offer are fully accessible to them at no cost. That is our aspiration, but we are having to explore the matter with the phone companies.
I thank my hon. Friend for an interesting debate. I expect that some of the issues raised today, although very much focused on her constituency, are of interest to others in the House, because tackling unemployment is the key Government priority during the recession. The active measures that we are taking have resulted in a performance in respect of unemployment that contrasts with that in previous recessions. The use of fiscal stimulus and the difficult decision to invest £5 billion, which only the Labour party supports, are resulting in unemployed people being turned around much more quickly in Mitcham and Morden and elsewhere. Ultimately, I am sure that that is supported by all my right hon. and hon. Friends.
Structured Products Marketing
I am grateful, Mr. Cummings, for the opportunity to raise this important issue; it has affected thousands of people who have lost millions of pounds in savings. I think that this is the first time that the matter has been raised properly in the House, and it provides an opportunity for a Treasury Minister to respond to the issues, although it is a mild disappointment that we have only half an hour for this debate.
In November last year, I was contacted by Peter Howard, a constituent of mine, who bought a structured savings product from NDFA financial advisers and subsequently lost all the money that he invested—£50,000—when Lehman Brothers, which it transpired had backed the product, was declared bankrupt. Structured products are a type of bond tied to the performance of other investments and sold by specialised subsidiaries based in tax havens. I do not pretend to understand the full complexity of the products—if I did, I would probably be living in a tax haven myself.
A number of issues arise out of Mr. Howard’s personal catastrophe and that of many thousands of British citizens like him. First, NDFA, and other financial advisers, had advertised the structured product as 100 per cent. capital secure. Even I, with my layman’s understanding of financial products, understand what that means and, more importantly, what it is meant to mean to those considering buying such a product. Investors were led to believe that their savings would be entirely safe. Comments such as, “100 per cent. capital secure”, “full return of capital maturity” and “capital growth without risk to your capital” are found 17 times in some plans, as opposed to one misleading, confusing and complicated risk warning found in the middle of the accompanying documentation.
Secondly, the fact that the product was backed by Lehman Brothers was hidden. When Mr. Howard bought the product, Lehman Brothers was already in trouble, and its involvement would have been a material fact that could have affected his decision to invest. Thirdly, many investors who expressed any concern about the return of capital, or asked their advisers whether there was any risk, however remote, to their capital, were told—misleadingly—that the product was covered by the Financial Services Compensation Scheme.
As I have mentioned, Mr. Howard is not alone: 6,000 British investors have lost their savings, and the total amount saved and lost is £200 million. A Mr. Moist invested £200,000 that he had made from the sale of his business. He told his Member of Parliament that he asked his adviser, Lloyds bank, what would happen if the bank went bust, and was told not to worry. Others have lost their nest eggs, redundancy payments and lump sums from their pensions. It is a personal catastrophe for many thousands of individuals. Many colleagues have constituents who have been affected, which is why a longer debate would have been preferable. Any constituent who has contacted their Member of Parliament should not be concerned by their absence today—many have been in touch with me, and we are in constant communication on the matter. They will be following up this debate. Fifty-four hon. Members have signed my early-day motion 1432 on this subject, which reveals the extent of the problem.
Indeed, this is a global phenomenon, with tens of thousands of people affected and street demonstrations in places as far afield as Hong Kong and Hamburg. I first contacted the Treasury on this matter in November 2008, and finally received a reply, on 15 April 2009, from Lord Myners, the Financial Services Secretary. Colleagues will not be surprised that the letter begins:
“I am sorry for the delay in replying”.
He then states that the
“FSA is working closely with PwC, the Lehman administrators, to gain a full understanding of the numbers of investors affected by this issue”.
The letter goes on to set out the standard procedure for investors who feel that they have been misled: to complain to the firm that sold them the product and then to the financial ombudsman—in other words, the Treasury washed its hands of the problem.
On 27 October 2008, my hon. Friend the Member for Blaby (Mr. Robathan) also wrote to the Treasury, and received a reply on 22 April 2009, again from Lord Myners, in which he elaborated and said that the Financial Services Authority was
“considering the marketing material and risk disclosures in communications issued for the products affected…The FSCS protects investors against fraud and negligence by authorised investments companies and financial advisers, but not poor investment performance”.
I slightly admire Lord Myners’ use of the phrase, “poor investment performance”. It reminds me of the “Monty Python” sketch about a dead parrot. “Poor investment performance” is an understatement when someone invests £200,000 in a product advertised as 100 per cent. capital secure and then wakes up some weeks later to find that their investment is worth precisely zero. But “poor investment performance” is the phrase that the Treasury likes to use in this case.
In a letter dated 4 December 2008, the FSA makes it clear that people who have lost their money in this way
“are not eligible to claim for compensation from the FSCS”
because their contract was with the financial adviser and not with Lehman Brothers. On 19 March 2009, the FSA indicated what it was doing to investigate the matter. NDFA, in Mr. Howard’s case, had maintained that it had been told by Lehman Brothers that it was prohibited, under EU law, from naming it as the underlying provider of the product. The FSA states that it is
“currently looking in detail at marketing literature…at the adequacy and sufficiency of the risk and product disclosure”,
although it continues to maintain that the FSCS does not cover this issue.
NDFA has tried to defend itself by attacking the investors who have lost money, saying that their campaign is an attack on the financial services industry at large, which should give us all cause for concern. Too right! As BusinessWeek reported on 6 May, Lehman Brothers Treasury sold $35 billion of dubious bonds to small investors in Europe and Asia. It reports that brokers in Asia
“plied small investors, a few of them mentally ill, with free digital cameras and flat-screen televisions”.
That is not the way that we want the financial services industry or financial advisers to behave. So this is an attack on the industry and NDFA and other cavalier advisers like them. NDFA and other advisers sold these products and they cannot simply walk away. As another adviser put it,
“we also don’t run with terms which seem too good to be true… Both Bear Stearns and Lehman Brothers pushed for business and offered fantastic terms but we declined”.
The product was inherently unsafe, devised by a greedy bank and misleadingly sold by greedy financial advisers to people for whom it was inherently unsuitable.
I am grateful to my hon. Friend for performing an enormous service in initiating this debate. He will know that many of our constituents have referred their case to the Financial Ombudsman Service, which is waiting for the outcome of the FSA widespread investigation. Can he shed any light on the time scale of the FSA investigation, which will in turn unlock the references to the FOS?
I shall put that question to the Minister when I conclude. It is important for our constituents to be aware of that investigation.
In the jurisdiction of Hong Kong, advisers who sold such products appear to have had their feet held to the fire. Hong Kong’s regulator has forced them to pay back some of the money to investors. In January, Sun Hung Kai investment services paid back £8 million to 310 investors, and only last week Bank of China Hong Kong announced that it will buy back bonds at between 60 and 80 per cent. of the original price—a total of $322 million.
As my right hon. Friend indicated, the role of the FSA has proved frustrating for many of our constituents. How could it have allowed financial advisers to market products as “100 per cent. secure” and “100 per cent. guaranteed” when there was obviously an inherent risk? Why is the FSA—and the Treasury—now hiding behind procedures that are clearly inadequate when it should be taking action? Why is it not using its power to force such advisers to come forward with proposals for compensation? How can it argue that this is an issue of investment performance and not one of negligence? Why does it pretend that the contract was effectively between Lehman Brothers and the investors when, clearly, there was a contract between our constituents and the financial advisers who sold them such products?
Will the Minister tell us why the Treasury and the FSA believe that such products are outside the scope of the FSCS, and use the opportunity to set out exactly what the FSA is doing? What is the scope of its investigation, what are its terms and when will it be completed? What does the Minister think are the possible range of outcomes of the FSA inquiry?
As I said at the start of the debate, 6,000 people have lost their life savings. They have not done anything wrong. They were not playing the markets, gambling or day trading. They were buying products, mostly at the end of their working life, which were advertised as 100 per cent. capital secure. They specifically bought those products because they wanted to keep their capital secure. They have been left high and dry, not with poor investment performance, but with losing every single penny of their investment. Those of us who contacted the Treasury on behalf of our constituents had to wait four or five months for an initial response. We now have an FSA inquiry going on behind closed doors, and nobody knows what its terms are, when it will be completed or what the possible outcomes are. This is a great opportunity for the Minister to set out in detail what is going on in this significant financial scandal.
It is a pleasure to serve under your chairmanship, Mr. Cummings. I congratulate the hon. Member for Wantage (Mr. Vaizey) on securing the debate and thank him for his constructive approach to this important subject. I am sure that it is not just his constituents who are interested in this debate, but constituents of other hon. and right hon. Members.
Structured products are essentially pre-packaged investments that use derivatives to offer investors exposure to the performance of an underlying asset or index. Typically, they offer a full or partial capital guarantee from a third party that the investor will get at least their original investment back, although inflation would mean that it was less in real terms. The majority of the investment is usually used to issue a bond, providing the capital guarantee element, while the rest is used to generate an additional return in the form of an option.
Typically, investment banks are the third-party issuers of the bonds and therefore the providers of the guarantee portion of the structured products. Following the collapse of Lehman Brothers Holdings in September 2008, the FSA identified 5,620 retail investors who had invested in structured products in which 100 per cent. of the guarantee of the return of their capital at maturity had been provided by Lehman Brothers. The investors had invested around £107 million in three products. The products were marketed by four plan managers, with 95 per cent. sold via some 800 intermediaries. The average investment was £14,500. Most products were sold during the second and third quarters of 2008 and their maturity dates are typically in 2013 and 2014.
A stable and secure banking sector in which people have confidence is essential to the function of a modern economy. This is why the Government intervened to protect depositors and maintain a stable banking system. However, as I am sure hon. Members appreciate, it is not the Government’s role to guarantee that investments always perform as well as investors hope.
The Financial Services Compensation Scheme was established by the Government under the Financial Services and Markets Act 2000 as part of a system of financial services regulation that provides consumers with statutory protection. In particular, it protects investors who have incurred financial losses arising from regulated activities under the 2000 Act when firms regulated by the FSA, including authorised investment companies and financial advisers, are unable or are likely to be unable to pay claims against them. However, the FSCS does not cover claims arising solely from investment or market performance. The FSCS assesses the eligibility of each claim presented to it on a civil liability basis, in the light of the available information and on its own merits. FSCS pays compensation only when a claimant has suffered a financial loss.
In the cases under discussion today, it has not been possible to establish a civil liability owed by the firm to retail claimants, as there was no direct relationship between Lehman Brothers and individual consumers. However, if it emerges that any of the plan managers have caused customers to suffer a financial loss and cannot meet their liabilities, the FSCS may be able to help, but only in circumstances in which the FSCS eligibility criteria are met—in particular, that a civil liability can be established.
The Government have intervened to protect depositors, such as those who held their money in the Icelandic banks. However, parallels should not be drawn between depositors and those who invested in structured products with a guarantee backed by a third party, such as Lehman Brothers. The hon. Gentleman also asked about FSCS cover for structured products. That cover will depend on the nature of the structure that is used. The absence of compensation cover may constitute a key risk and that would therefore need to be disclosed.
The hon. Gentleman asked about terms such as “guaranteed”, “protected” and “secure” in advertising material. The FSA does not have any prescriptive rules or guidance on the use of such terms, but, at all times, firms must comply with their high-level duty to ensure that promotions are fair, clear and not misleading. Firms should consider the nature of any capital guarantee or protection and ensure that any reference to them is fair and accurate. In cases in which firms have to identify explicitly a third party guarantee, the information about the guarantee must include sufficient detail about the guarantor and the guarantee to enable the retail client to make a fair assessment of the guarantee.
Under both EU and UK legislation, the FSA is responsible for the regulation of UK-based firms that provide investment products or services. As far as structured retail products are concerned, it has several responsibilities, including the regulation of firms that provide financial advice, which may be to buy such products and the assessment of the capital adequacy of firms that may provide the debt instruments that underpin structured products. It does not regulate retail structured products as a class of products as they may take many different forms and structures, each of which will have different regulatory implications under its regime.
It is not part of the FSA’s role under the 2000 Act to make comments on or assessments of the generic suitability of types of products for retail investors. However, it considers and enforces relevant disclosure and advice requirements arising from the EU prospectus directive and the markets in financial instruments directive, both of which have been fully implemented in our regulatory regime. As I said, marketing documentation provided to investors about such products must be clear, fair, and not misleading.
I hope that the hon. Gentleman will be reassured by the fact that the FSA has been actively investigating the marketing of such structured products ever since the effects of the Lehman fallout became clear. At the end of 2008, the FSA initiated a programme to review the marketing literature of the plan managers who provided such products. The review looked at whether they had complied with the financial promotion rules when marketing their structured products. In particular it considered how the market risk is described—the risk of loss of capital protection—how credit risk is described and the risk that the guarantor cannot meet his obligations. It also looked at whether the description of any guarantees was fair and balanced; whether statements about the availability of compensation cover were fair and clear; and whether the plan managers took action to alert investors following the downgrade of Lehman Brothers in 2008. That initial review has been completed, and the FSA is now assessing the most appropriate course of action to take in the light of the findings, which will probably involve visiting intermediaries and investigating the advice that was given.
The FSA’s programme of work is extensive. In addition to the review of marketing literature relating to Lehman-backed products, the work also involves reviewing the structure, risks and quality of marketing disclosure in the wider marketplace. Furthermore, the FSA has put in place a thematic project to assess the quality of advice given by a sample of the 800 financial advisers who sold the products.
In the light of the review, the Financial Ombudsman Service and the FSA jointly agreed to initiate the wider implications process, as that may have a greater chance of remedying any consumer detriment. It could also be able to deal with the concerns of more consumers’ than those who have referred cases to the FOS. I shall speak in more detail about the process in a moment.
I can assure hon. Members that the FSA is aware of the frustration of those who have made complaints and of my fellow hon. Members who have spoken on their behalf, but it is easy to see that much hangs on legal issues. Premature public statements could compromise any future FSA action on firms, or pre-empt its eventual assessment of risk in the market. However, as I have set out, the FSA is fully engaged with the issue, as it has been from the start.
As hon. Members will understand, with our highly globalised financial system, the international element is crucial, so the FSA has been working with the Committee of European Securities Regulators on a taskforce to consider how structured products are distributed and sold to retail customers across Europe. Notwithstanding that the products are written for long durations, with most maturity dates in 2013 and 2014, and that most investors would not have expected immediate access to their money even in normal circumstances, the FSA will continue to focus on addressing the matter as quickly as possible. We expect a definitive resolution well in advance of the time when most of the investors would have expected their money back.
The FOS and the FSA agreed to initiate the wider implications process on 7 May. That means that adjudications on complaints in relation to Lehman-backed structured products have been deferred to allow the FSA to investigate options for a regulatory solution that could reach a greater number of investors and address other issues arising from the sales of the products to retail customers. The process was designed to look at the implications of an issue rather than to assess the implications for individuals on a case-by-case basis. It provides a transparent means of bridging any regulatory gaps or resolving overlaps between the FSA, the FOS and the Office of Fair Trading on significant issues, particular those that could give rise to widespread consumer detriment.
The independence of the FOS and the FSA is vital in their roles of providing a safety net for consumers with complaints against financial services firms. Their credibility, authority and value to consumers would be undermined if it were possible for the Government to intervene in their decision making. The FOS will review the position following an update from the FSA on 10 August 2009.
The Government stand by the principle that investors should have access to transparent information about the risks involved in any investment, which is why we fully support the comprehensive work that is being done by the FSA and others. We certainly appreciate that such circumstances can cause a great deal of uncertainty and worry.
May I take the Minister back to the remarks she made a few moments ago? I understand her line of argument on sector-wide regulation and the regulation of a category of products, but the problem is that we have a specific example of a product that was sold to a group of customers who were mugged, frankly, by that company. We are not talking about a City-wide practice; we are talking about just one case. The Lehman-backed products were being sold in a misleading way, and it has caught out a large number of people up and down the country. They are looking for a specific solution. They are not interested in sector-wide, generic approaches; they want answers now. They have lost their life savings.
I appreciate that the hon. Gentleman’s view will be shared by the investors, but surely it is our responsibility to ensure that the FSA looks at the products. That is why, having looked at the marketing literature, its officials are going to take a sample of the advice that was given so that they can definitively say that what happened is what the hon. Gentleman says happened. It is not for me to say, which is the reason for the FSA investigation. Under the wider implications process, we may be able to help more investors, if what he says is proved.
I do not think we should trespass on the domain of the independent bodies that regulate our financial services. As I said, we expect a definitive resolution well in advance of the time when most of the investors would have expected their money back. In the meantime, we will continue to work to support the financial system to protect depositors and to secure jobs.
Ballistic Missile Defence
It is a pleasure for me to state my case before you in this short debate, Mr. Cummings. I am particularly pleased that the relatively new Armed Forces Minister is here to respond on a subject that I have taken up with several of his predecessors.
We are here to talk about UK policy, but in a sense, that cannot be divided from American Government policy. By way of background, I should like to put on the record some comments that were made recently by the American deputy Defence Secretary, William J. Lynn III. He told the Senate Armed Services Committee that missile defences
“are affordable, proven, and responsive to the threat.”
He later went into great detail about such defence systems. He was talking about the additional budget requirements that had been set out to include things such as terminal high-altitude area defence, the Aegis ballistic missile defence ships and standard missile 3 interceptors.
Those details are important, because we tend to think of missile defence as being some kind of science fiction or that it comprises initiatives like star wars, which involved popping things out of the sky. In fact, an array of weapons systems come under the broad aegis of missile defence. If I recall, the figures that were bandied about when the current system was first proposed were enormous. I had never imagined such figures at the time, but since the banking crisis, they have become everyday. People were talking about $500 billion for the total cost of the defences, but they were pie-in-the-sky estimates—guesstimates—simply because the technology was not known and nobody knew what to expect. What we do know is this: the systems are very complicated and very expensive.
I should like to go back to that first quote that said that the missile defences are
“affordable, proven, and responsive to the threat”
because, frankly, I was mystified when I read what Mr. J. Lynn III later told the Armed Services Committee—that missile defence is expensive. He recognised that although it is affordable, it is a very expensive exercise. Having said that it is “proven,” Mr. Lynn emphasised the need for robust testing. At the same time, he terminated the troubled kinetic energy interceptor and the multiple kill vehicle programmes, and returned the airborne laser to a technology demonstration programme. He said that some facets of the programme that had been shown to be unworkable and untenable had to be cancelled.
That outcome was postulated a long time ago by experts in the field such as Ted Postol and Richard Garwin. Not only are they eminent scientists, but they are former presidential advisers, and they said it was unworkable. They said that the technology was not only unproven, but that it could not be proved. I still argue that we do not have a clue how effective the proposed systems are or might be in future. The common metaphor is a bullet hitting a bullet at 15,000 mph. That is the kind of objective that the technology seeks to achieve, and frankly, it does not seem to work.
The final part of the quote is “responsive to the threat”. I got a research paper from the Library and was particularly taken by its account of what is happening on the other side of the globe, in the far east, in relation to North Korea. Wallace Gregson, a senior US Defence Department official, was quoted as saying that the present policy on containing North Korea has not worked. Responding to the renewed debate in Japan about whether that country should develop its own nuclear weapons capability, Gregson said:
“Japan certainly has the right to consider all available options”.
That is at the heart of the whole question of missile defence. If it does not work, what is its use? Is it a deterrent? Does it in any way inhibit the likelihood that nuclear weapons will either be acquired by other states or be used by rogue states or terrorist organisations? Yet a senior official is actually suggesting that it is perfectly well and good for Japan, or indeed South Korea, to go along the road of acquiring nuclear weapons, at a time when one of the great challenges is to prevent nuclear weapons from getting into the hands of, for example, Iran.
There seems to be a contradiction. If a country’s face fits in the higher echelons of today’s nuclear-capable powers, it is okay for it to have nuclear weapons; but if a country has been deemed, for whatever reason, to be an unacceptable or rogue state—the definition tends to emanate from Washington—it cannot have those weapons. It is those very rogue states against which ballistic missile shields are supposed to defend us. That is where I have some concerns.
Anybody reading the papers today would have been absolutely convinced that the meeting between Presidents Medvedev and Obama in Moscow was a great success for the whole question of reducing the nuclear threat, which I imagine is a prime purpose of our foreign policy in that area. Of course, it depends what people read. The BBC online news headline reads “US and Russia agree nuclear cuts”. The Times shows that that is plainly untrue; I will explain why in a moment. The Times headline is “US and Russia to cut nuclear warheads—but no deal on missile defence”. That is partly true. The Guardian headline is “US and Russia agree nuclear disarmament road map”. We are getting nearer to the truth.
The truth is that what has actually been agreed is the aspiration that when START 1 ends in December this year, there will be a commitment to commence START 2, in effect, to reduce the number of warheads. I seem to recall the rather improbable figure of 1,675 warheads apiece. That is still many times the number required to smash each other into smithereens. Nevertheless, that is going on.
The other side of that equation is missile defence, because there is no agreement on that. That is at the heart of my concern about our policies and our connection with missile defence. I am not trying to raise the global issue; I am talking about what is happening here in Europe. After all, we are members of the European Union and NATO. What happens in terms of missile defence proposals, particularly in Poland and the Czech Republic, impacts strongly on the United Kingdom and its interests in the wider European sphere.
There is little doubt that there are grave concerns in Russia about the current American proposals. Where do we come into that? We are an integral part of the ballistic missile shield. The shield, by the way, has nothing to do with Europe. It does not even pretend to be a protective shield for Europe. Whatever it is, it is supposed to protect the United States. Nevertheless, two sovereign bases in the United Kingdom—Menwith Hill and Fylingdales—are meshed into the system. In the case of Menwith Hill—it might be the other one—that was agreed without any reference whatever to Parliament. It is a matter of record now that the former Prime Minister was prepared to base interceptor missiles in the UK, certainly without any reference to Parliament. It is that uncertainty—the ability of missile defence to destabilise—that ought to be a matter for concern in this House and beyond.
I return to the development of missile defence, because we must contextualise it. It took off when the United States withdrew in June 2002 from the anti-ballistic missile treaty, ensuring that it could embark on a missile defence scheme legally in terms of international agreements. Many believe—rightly or wrongly; it does not matter whether it is true—that the system, placed in Europe as envisaged by the Bush Administration, would give the US the capacity to attack another country without fear of retaliation.
Both Russia and China expressed fears along that line. That does not necessarily mean that they were obsessed by the idea that it was an offensive system, but they saw the concerns registered by academics and many others about the siting of the system, because it was not just done in splendid isolation; it was done in conjunction with NATO expansion, and it created serious tension between the US and Russia and, by extension, us. It certainly increased the possibility of a new arms race. Right up to today, in what Medvedev says and what has been issued officially from the meetings in the run-up to the summit, the Russians still hold that view. They are concerned.
In my view, whatever has been proposed and aired in the press in recent days holds no water if there is to be no agreement on missile defence. It is to be hoped—there is room for optimism—that the Obama Administration have their own reservations and recognise the destabilising effect. If that can be translated, against other elements in Washington and beyond, into some sort of positive action to allay the fears of people in Russia as well as many in parts of eastern Europe and the United Kingdom, that would be welcome. It would certainly be welcomed by most people in the Czech Republic, who, as has been shown time and again in poll after poll, want no part in having any trace of a ballistic missile screen in their country. Over a long period, we have had a lot of concerns about the circumstances facing us in eastern Europe, not just because of the missile defence proposals but because of the seemingly concomitant expansion of NATO.
Today’s Times said:
“Mr. Obama insisted that it”—
that is, the missile screen—
“was directed against potential threats from Iran and North Korea and could not affect ‘a mighty Russian arsenal’”.
It is one thing to say that, but the perception is another thing. The missile screen was likened in one colourful metaphor to a 21st-century Maginot line, meaning that the real threat could come around it. That has certainly bothered a lot of military thinkers in a time of asymmetric warfare, as it is known: there is far more likelihood of a so-called rogue nation planting an atomic weapon in London or New York, if that is their bent. They could get it in on the back of a wagon, in our case, or on a ship. Even if they had the technology, the wherewithal and the finances, there are a dozen and one ways to introduce such a threat other than by making use of an expensive, traceable and obvious delivery system of the sophisticated type to which we are used.
Russia has displayed a negative attitude to missile defence on a number of occasions. That affects us directly. Policies that do not have the support of the Russian Government might not be in our military or economic interests, and are certainly not in our diplomatic interests. For example, the overflight of troops and equipment bound for Afghanistan could be affected—there have been announcements on that today. It would be extremely helpful if the Russians ensured that the overflight facility, which enables the effort against the Taliban and the remnants of al-Qaeda in Afghanistan to continue, was maintained. However, what is opened up can easily be closed down. I hope that the recent series of meetings has brought us out of the sort of cold war mark 2 that there has been. We do not want to go back into that because it could damage the effort to stabilise the situation in Afghanistan.
We also need Russian co-operation over the Iranian nuclear programme. The Russians have co-operated strongly in the building of Iranian nuclear power facilities. People have different views on whether the Iranian uranium enrichment programme is a good or a bad thing, but as long as there is a fear that it will spill over into the development of nuclear weapons, we must have all the powers we can muster to persuade the Iranians not to go down that path. We need Russian support in that.
We need Russian support on many international challenges such as terrorism, climate change and people trafficking. We must ensure that Russia is on side for START 2, which is due for renegotiation and implementation by December this year. Last but not least, we need Russian co-operation on the security of energy supplies to western Europe, including the UK. Looking at a map, it does not seem like the new pipeline through Georgia and South Ossetia will have to go a million miles. However, we saw what happened in the war between Russia and Georgia. If the one independent pipeline becomes the subject of a conflict by proxy, it could cause immense problems for our energy supplies. We should be aware of that and should seek the co-operation of the Russians. One way to get their co-operation would be to allay their fears over missile defence.
As I said, we are talking about a system designed to make one missile hit another at 15,000 mph. It does not work. Decoys were used in getting the right test results, but nobody can say that these systems work. The United States has not tried the system against simple decoy systems of their own. Any so-called rogue state that can develop a missile to carry a warhead into continental Europe will have the wherewithal to put out decoys to upset any kind of missile defence system.
The system has nothing to do with the protection of Europe; it is about the protection of the United States, albeit an ephemeral protection. The Fylingdales early warning and tracking radar is involved. I have been there to see the improvements to the system and do not challenge its capabilities. Whether it should be used for the good of America rather than the good of the United Kingdom is a moot point. The integration of Menwith Hill into the system has never been debated in the House. A full debate is well overdue to provide parliamentary accountability of the Executive in this area.
Polls in the host countries show that 55 to 70 per cent. of people are opposed to any part of the system being sited in their country. That is destabilising. It is a matter of definition what a rogue state is.
Further down the track, there is a danger that missile defence policies will be seen as a step towards the expansion of anti-satellite technology. Hon. Members will be aware that such warfare in space is singularly prohibited. It would be a short step from anti-ballistic missile objectives to anti-satellite warfare. Interestingly, there has been a shift in opinion here and in the United States. Whether 19th and 20th-century solutions are applicable to the conflicts of the 21st century is being questioned. Doubts are being expressed about aircraft carriers, super-duper fighters and bombers, and so on. However, missile defence is the one area that appears not to be questioned. Some well briefed newspaper accounts point towards micro-satellites, with the implication that there will be a battle over communications and cyber potential via satellites in the stratosphere. That would be a dangerous development.
I hope that Her Majesty’s Government will begin to look at what is in the best interests of the United Kingdom and our partners in the European Union, rather than have imposed upon them the views of an outdated and outvoted US Administration, who have thankfully been cast into oblivion. The Government’s involvement in the American missile defence programme is of particular concern.
May I reassure my Friend the Member for Liverpool, Walton (Mr. Kilfoyle) that what drives me as a politician and a Minister on these issues is our national interest? That is my overriding and fundamental priority. I congratulate him on securing this debate. Although we do not always agree, as will become clear in this debate, I greatly respect the honesty and integrity that he has brought to these issues over many years.
Other than the US, the UK and France, about 20 countries possess ballistic missiles. In 2007, there were 100 non-US ballistic missile launches around the world, which is 30 per cent. more than in 2006 and slightly fewer than in 2008. Those figures reflect the determination of many countries to acquire a ballistic missile capability. Although many countries possess only short-range weapons that do not threaten the UK mainland, we remain concerned by missile development in countries such as Iran and North Korea.
We recognise that neither of those countries has a confirmed long-range ballistic missile capability, but Iran does possess a medium range missile, the Shahab 3, that could reach Turkey and much of the middle east. The recent test firings of those missiles and the accompanying rhetoric is a worrying development. Reports suggest that Iran is developing longer-range missiles that in time could pose a greater threat to the UK and our European allies. Tehran has acknowledged that it is pursuing a space launch capability. The successful launch of the Safir rocket, which put a small satellite into orbit earlier this year, is testament to the growing Iranian mastery of rocket and missile technologies.
As we have seen recently, North Korea continues to develop and test its missile capabilities, and shows gradual improvement in its understanding of missile and rocket systems. It continues to develop the Taepodong-2 missile, and earlier this year attempted to use Taepodong-type technology to place a satellite into Earth’s orbit. That vehicle failed to reach orbit, but the North Koreans’ intention to develop long-range rocket technology cannot be ignored. Both Iran and North Korea claim that their developments are designed for civilian applications and are meant to allow them to join the ranks of peaceful space-faring nations. However, the technologies could equally be used to develop missile systems capable of delivering military payloads over intercontinental distances. Those payloads could include chemical, biological or nuclear weapons that are capable of killing many people and inflicting massive damage with a single missile.
We assess—this is the nub of the challenge—that within the next 10 years, both North Korea and Iran could have the capability to target the UK with ballistic missiles if they so wished. Of course, the development of technological and technical capability is only one facet of the threat; the other is the intent to use missiles. We can monitor the development and proliferation of ballistic missiles and the associated technology, and we can prepare to defeat them, but it is more difficult to know with any certainty when, or even if, intent changes. At the moment, the Government assess that there is no ballistic missile threat to the UK homeland, but if we look to future trends, that could change.
Let me address some of the questions that my hon. Friend has asked. First, I shall respond to his underlying challenge about what we as a country, and particularly as a Government, want to do about the threat of nuclear proliferation and the challenge of nuclear weapons. We are very clear that we want to work towards a world free of nuclear weapons—that is our absolute intent. Of the existing nuclear weapon states, under the auspices of the non-proliferation treaty, we have the best and most forward-leaning record on disarmament. That has been attested by independent observers and is borne out by the fact that in the past decade we have reduced the explosive capability of our nuclear arsenal by 75 per cent. We want to go through further multilateral negotiations, and that is why we are emphatically committed to, and have signed up to, a comprehensive test ban treaty. That is also why we want a fissile material cut-off treaty.
My hon. Friend referred to the START 2 process, involving the United States and Russia. One of the most encouraging aspects of the current debate about nuclear weapons is the impetus and vigour that President Obama has brought to discussions. He is considering taking a comprehensive test ban treaty to Congress, which would be a very positive step forward, and he is committed to bringing about further multilateral nuclear weapons reductions through the START 2 process. I think we should support that approach.
My hon. Friend asked about the cost of ballistic missile defence. Let me be clear that the cost to the United Kingdom—that is what we are principally concerned about—is limited to the cost of running Fylingdales at the moment, which we would be paying for anyway. He also asked an important question about whether BMD systems actually worked. I do not resile from the fact that the technological challenges involved in constructing an effective missile defence system are considerable. The US is deploying an initial operational system that has undergone a great deal of testing. There have been many successful test intercepts to date—38 out of 48 tests—so a rudimentary capability exists, but we recognise that there is scope for further development and improvement as the technologies mature.
My hon. Friend discussed the situation in Iran. To paraphrase him, he said that there was a concern about Iran because its face did not fit, but I disagree wholly with that view. There is concern about Iran because it has concealed its nuclear programme for decades in contravention of its international commitments. There has been a wholesale failure by Iran to engage with the International Atomic Energy Agency, and it has failed to enable the IAEA to obtain reassurance about its studies that have a military dimension. That is why there is such significant concern about Iran.
Let me put the record straight. The issue of whether a country’s face fits, diplomatically or internationally, is important. Everything that the Minister has just said may be the case, but there is a different attitude to the hidden weapons in Israel, for example. I am not arguing the rights and wrongs of one against the other, but there are two separate approaches to two, admittedly different, problems, even though there is the same objective difficulty about nuclear weapons.
Let me deal with that point directly. We have always been clear that we want Israel to sign up to the NPT as a non-nuclear weapons state, and we are committed to having a middle east that is free from nuclear weapons. It is right that we should make that position as clear as we make our concerns about Iran. Nevertheless, our concerns about Iran are real. I welcome President Obama’s commitment to engage with the Iranian regime, but that regime must understand that it has a choice to make about engaging with the international community and reassuring us about its nuclear weapons intentions. The alternative is a much tougher regime of sanctions and pressure.
My hon. Friend talked about the former Prime Minister’s statement. It is important to state for the record what Tony Blair said in February 2007. He said that if the Government needed to re-examine their position on missile defence and to take further steps on participation, we would present those propositions to the House and have the necessary discussions, but that we would seek to do that only when there were proposals or propositions to be made. That statement was made in the context of a response to specific media allegations that there were plans to base missile interceptors in the UK. At present, there are no proposals or propositions to make, and we have stated that there are no plans to base additional missile defence assets in the UK. The key point is that we face an uncertain international environment. There is clear evidence of a determination to develop ballistic missile capability by a number of states, and in those circumstances we are right, with our international partners, to explore the potential for developing BMD systems. We need to be clear that such systems are defensive.
My hon. Friend also discussed the situation in Russia. One thing that is certain is that any future plans will include greater engagement with Russia, which the Government strongly welcome and will support. As we all know, Russia has consistently and incorrectly claimed that US proposals to place 10 ballistic missile interceptors in Poland and a radar in the Czech Republic is aimed at reducing the effectiveness of Russia’s strategic missile forces. Emphatically, that is not the case. The proposals are designed to defend against a limited threat from states of concern, rather than from countries with large arsenals of sophisticated weapons. None of us should forget that Russia understands missile defence. It has had a BMD system protecting Moscow since the cold war, and—this is the key point—it knows that 10 US interceptors would have little impact on the many long and medium-range missiles that it possesses. The Russians are fully aware of the capabilities and limitations of the proposed US system, and are aware that Russia’s security should not, and could not, be threatened by that system. Indeed, they have acknowledged that privately. Given the dialogue that has taken place with Russia, and the fact that the United States is reviewing these issues, I think that there is a way forward that addresses the concerns that my hon. Friend has raised, working with Russia to establish a collective BMD system so that it is clear that that is a defensive, rather than aggressive, posture. In those circumstances, we should support that process.
I genuinely want to get to a situation in which we live in a world that is free of nuclear weapons. The Government are leading the process multilaterally to try to achieve that state of affairs, and we should all strongly support that approach. I do not believe that a defensive BMD capability system is in contravention of that. If we get things right and work with our partners, that could give us greater security.
Question put and agreed to.