Wednesday 23 March 2011
[David Amess in the Chair]
Public Sector Funding
Motion made, and Question proposed, That the sitting be now adjourned.—(Brooks Newmark .)
I am pleased to have secured a debate on the important topic of the effects on the voluntary sector of reductions in public sector funding. I am also pleased to serve under you as Chair, Mr Amess.
In the current economic context, a thriving community and voluntary sector is vital. Locally, people with debt problems need their citizens advice bureau, carers need their carers centre and people need support from organisations that work with children with special needs or with people who have long-term conditions. The previous Labour Government have a proud record of support for a stronger voluntary sector. We doubled the funding to the sector from £5.5 billion to £12 billion in 2009, and created the first ever Minister for the third sector, with an office putting the third sector at the heart of Government. In addition, we gave the third sector a strong voice in Government through the Third Sector Partnership Board.
We also supported social enterprise. At the end of 2010, there were approximately 62,000 social enterprises in the UK, contributing at least £24 billion to the economy and employing 800,000 people. Labour did much to boost and encourage volunteering in our communities when we were in government. Some 850,000 charity trustees serve on the governing body of a charity, and 780,000 paid staff work in the sector to provide services and to support and encourage volunteering. There are also 2.7 million volunteers, on whom many small charities rely. For example, my local citizens advice bureau in Walkden has 20 volunteers a day working with staff who are trained debt advisers or are trained to offer legal advice.
Some 40% of adults report that they have volunteered formally at least once in the past 12 months, with 25% volunteering formally at least once a month. However, despite the coalition Government’s rhetoric about the big society, cuts in funding from central and local government are damaging the sector. It has been estimated that the voluntary sector is facing cuts of £1.1 billion just this year, rising to more than £3 billion next year. There are also real fears for the capacity of the voluntary sector. At a time when the Government are talking about localism and creating opportunities for charities and community organisations, the sector will almost certainly do less this year than in previous years.
The collaborative website, www.voluntarysectorcuts. org.uk, is mapping those cuts. One of them is a grant cut of £500,000 from the Office for Civil Society to the volunteering support organisation, TimeBank. I want to discuss that as an example of what initiatives are affected when such a cut is made. TimeBank was set up in February 2000 and was funded by the Home Office and the BBC as a support agency to inspire a new generation of volunteers. Its vision is to make volunteering part of the fabric of everyday life. In the past 10 years, TimeBank has helped and encouraged 30,000 people into volunteering. For example—this is a good example to consider at the moment—in 2004, TimeBank asked people to back London’s bid for the Olympics and 14,000 potential volunteers responded. That has now risen to 100,000 people who want to volunteer for the Olympics. In the same year, it recruited 1,900 people aged 20 to 35 for volunteering opportunities with hospices. In 2008, 1,400 parent volunteers were recruited to mentor other parents for Home-Start. TimeBank offers tailored support to anyone interested in volunteering or running a dedicated help desk and website. The organisation has established good practice and provides space for local, regional and national sharing of experience. It runs a dedicated help desk and website to signpost people towards volunteering opportunities and to increase accessibility and engagement.
TimeBank recently launched something called the volurater, which is a forum like TripAdvisor that allows people to review their volunteering experience. TimeBank says that the cancellation of its funding from the Office for Civil Society means that its support functions will be severely undermined. The staff and resources for that work have been paid for from the core funding that it receives from Government. All its other funding streams are ring-fenced for programme or project delivery, so the loss of £500,000 of grant funding puts a significant proportion of TimeBank’s work under threat. As I said, the volurater is a review tool for volunteers to rate their volunteering experiences. It aims to help to drive up standards in volunteering across the board and to give volunteers a voice. No other organisation has such a tool for volunteers, and it is now under threat.
Junction49 is also under threat. It is a web platform aimed at young people that acts as a type of Facebook for volunteers. It was set up in 2007, and it allows young people to share and develop ideas, and to make a difference in their communities by setting up volunteering projects. Junction49 has supported 1,145 young people, and helped them to volunteer through advice, support and connecting them with other like-minded people. TimeBank’s website and newsletter are also at risk. The website receives 16,000 new visitors a month, and is designed specifically to help people to volunteer. The website includes ideas and inspiration, such as a blog, a postcode search for local opportunities and a “how to get started” section. There is also a help desk that is contactable by phone or e-mail, with a dedicated staffing resource to answer questions about volunteering and help people along the way. TimeBank has a monthly electronic newsletter that is sent out to 300,000 volunteers whom it calls time givers, and it includes ideas and tips about volunteering. Regular social media activity—the type of things I have been describing—drives people to the website and raises awareness of volunteering issues and best practice. It also helps with recruiting volunteers and signposting volunteering opportunities.
TimeBank also runs programmes to match people with volunteer mentors. I shall mention two of those that are under threat as a result of the funding cuts. TimeBank has worked in partnership with Carers UK to develop a mentoring programme for new carers, who often feel overwhelmed by their responsibilities. Those two organisations are providing new carers with access to information and advice from a mentor who has been a carer themselves. A groundbreaking TimeBank project called Shoulder to Shoulder supports ex-servicemen and women returning to civilian life who have mental health problems. More than 20,000 people leave the service to return to civilian life each year, and around a quarter of those have a mental health problem. One in five of those have a mental health problem resulting from traumas and injuries that they experienced during their service.
Another valuable area of work for TimeBank is support for businesses involved in employee volunteering. Participating organisations include Sky, Virgin, Vodafone, Sony, T-Mobile and even the Cabinet Office. Years ago, I worked on such a project with the organisation, Business in the Community. I arranged community development assignments for staff from organisations and corporate companies, such as IBM and Marks & Spencer. Support for that type of volunteering from business is needed if such things are to happen. I know how valuable that is, both for the employee who volunteers and for the community organisation for which they volunteer. For instance, in 2008, TimeBank organised T-Mobile employees to help young people who are not in education, employment or training set up their own projects and design a mobile application to tackle a social issue. That work could also be under threat.
In December 2010, the Minister posted a message on Twitter congratulating TimeBank on its 10th anniversary. Cutting one sixth of its funding three months later is hardly the right way to support an organisation with a 10-year track record of innovative support for volunteering. TimeBank’s chief executive has said:
“This decision will hugely undermine the Government’s vision for a Big Society…For the past decade we have made an important contribution to mobilising an army of 300,000 volunteers and to improving the quality of volunteering across the board. Without this vital core funding we will not be able to continue to deliver the level of service that we have based our reputation on and will have to considerably reduce our activities and staff as a result.”
I have an example in my own constituency. Kids in Communication is a youth media group that operates KicFM, and it has recruited 5,000 volunteers in the past decade. I urge the Minister to look at that group with some urgency. It will run out of funding at the end of next week. He has previously mentioned that 50% match funding might be available. If we are going to create a big society and sustain it, we need such organisations to recruit volunteers. By rolling back the funding, the Government are decreasing the number of volunteers in society, which goes against the whole spirit of the big society.
Indeed, and I thank my hon. Friend for her intervention. I personally believe that some of the decisions to cut grant funding to organisations that support volunteering, such as TimeBank and the one that my hon. Friend has just mentioned, are difficult to understand, because Ministers have talked about encouraging social action and the need to support the community and voluntary sector. In fact, we recently had a debate on the big society in the House. The Minister said:
“I really believe that we have barely scratched the surface of what can be achieved in this country if we strike a more effective and balanced partnership between Government, business and civil society”.—[Official Report, 28 February 2011; Vol. 524, c. 131.]
I congratulate my hon. Friend on securing the debate. Is the real problem that the Government do not appear to understand the role of the voluntary sector? It is often professional, well run, well organised and extremely hard-working. It brings in lots of money from charities and other places, but it absolutely relies on basic core funding in order to succeed. The Government seem to confuse it with charitable good works in small towns, and that model simply does not apply to complex, urban areas such as the one that I represent.
Indeed. That is right, if there is an urge, as the Minister has said, to discuss partnerships between Government, business and civil society. I talked earlier about employee volunteering from business in the voluntary sector. That has to be arranged, however, because there is a big, wide cultural gap between the private sector and the voluntary sector. We cannot just leave a new business volunteer to flounder in an organisation. I used to arrange business volunteering as part of a job that I did in the past. I know that someone needs to be the link in-between, so I very much agree with my hon. Friend.
The Minister described one strand of action for the Government as
“encouraging more social action in our communities”.—[Official Report, 28 February 2011; Vol. 524, c. 132.]
How on earth is that going to happen if we cut away the infrastructure of organisations such as TimeBank?
I congratulate the hon. Lady on securing the debate. She has very clearly outlined the case for volunteers in our society. Every one of us in the Chamber this morning will be aware of the work of volunteers. It seems as if Ministers are diverting money to sports, heritage and arts, and away from voluntary and charity groups and those who do good work in the community. Does she share my concern that there are more worthy cases in relation to the voluntary and charity work that is done in the community?
Indeed. I said in my opening paragraph that in the current economic context issues such as debt advice and other ways in which people volunteer in communities and societies are crucial. Volunteering in sports organisations is important, and sport and culture are important too, but in the current context the social function of volunteering roles are vital, so I agree with the hon. Gentleman.
I shall return to the question of how the Government will encourage more social action if they close off financial support to those small—and they are small—but vital charities that support and encourage people to volunteer. I just want to touch briefly on support for carers, which is one strand of the work that TimeBank is seeking to do, and which is under threat. Support for carers is vital and will become even more so, given the cuts and uncertainty that are now affecting us as a result of proposals in the Health and Social Care Bill. Schemes such as the one developed by TimeBank are essential, and working with Carers UK to put new carers in contact with experienced carers could be a lifeline. Such a scheme helps the new carer to care more effectively, which is important in our communities.
No, let us leave it at that. The Minister and hon. Members have to understand that we cannot remove £500,000 of an organisation’s funding and then expect it to carry on with new initiatives. Clearly, it would not be able to do so.
I was discussing the vital scheme that TimeBank is setting up with carers. The groups with which TimeBank works are crucial in our society, but carers are in a special category. Carers who care for more than 50 hours a week are twice as likely to suffer from ill health, while those who care for a person suffering from dementia or stroke disease are even more at risk of ill health. If we do not support carers, therefore, we are causing additional health problems in our communities. In my local area, there are some 22,000 carers, one in four of whom care for more than 50 hours per week.
How are we to take initiatives if we cut the infrastructure funding for organisations? Last week, the Carers Identification and Support Bill, which I introduced, was not debated because we spent much of the time discussing a string of Bills introduced by the hon. Member for Christchurch (Mr Chope). I am sure that hon. Members who are here on Fridays understand that that is a common occurrence these days. There are no new measures to support carers in the Health and Social Care Bill, so how will they be supported? Will the Minister tell us why his Government’s cuts to TimeBank have been made, as they will cause the potential loss of a new way to support carers—people who give their up so much of their lives caring for family and friends?
The debate on funding must focus on the important issue of support for the infrastructure of the voluntary sector. Organisations such as TimeBank are on the front line of finding and supporting volunteers for charities, such as hospices and the Olympics, and they help to support and mentor carers. Labour’s support helped maintain high levels of participation in volunteering. Cuts to the funding of volunteering charities will result in the organisational cutbacks that I have discussed, and which will lead to a decrease in volunteering, not an increase. I hope that the Minister will tell us today, as my hon. Friend the Member for Wolverhampton North East (Emma Reynolds) encouraged him to do, that he will think again, and that some way can be found to reverse cuts which could be damaging to the cause of volunteering.
Order. I have some words of advice. Westminster Hall debates are important, and the proper procedure is for hon. Members to drop a note to the Chair beforehand if they wish to speak. Certainly, when I am chairing proceedings, those hon. Members will receive preference when I call speakers. If an hon. Member pops in, makes an intervention and clears off before the end of the debate, that is to be deprecated—hon. Members have to stay for the whole debate. Finally, I know which hon. Members wish to speak, but I do not know whether other hon. Members have come to the Chamber to make speeches or interventions. There are five Government Members and eight Opposition Members waiting to speak, and the winding-up speeches will begin at 10.40 am. As hon. Members have taken the trouble to be here, I would like to call everyone. However, they can do the maths as well me, so it is up to them to share the time out.
I think, Mr Amess, that coming in, making an intervention and disappearing is known as doing a Spink, is it not?
It is a great pleasure to follow the very thoughtful speech made by the hon. Member for Worsley and Eccles South (Barbara Keeley). She and I are involved as officers of the all-party group on carers. I think there is no one in this Chamber who does not support the work of volunteers and we would all like to see the maximum amount of volunteering. We all have to accept, however, that we start from a position of having to manage an enormous budget deficit. Each and every day, the Government have to spend £120 million, just on interest, to service the deficit. I did a calculation the other day. I added up all the money that the Government give to my constituency through the local district council, the money it gives in grants to Cherwell district council, Oxfordshire county council, the Oxfordshire primary care trust and Thames Valley police for the whole of Oxfordshire, Berkshire and Buckinghamshire. The total equates to just 11 days’ interest on the budget deficit. We all have to put this in some sort of context.
I want to make some general comments about local government. I have come to the conclusion that the way it operates will have to change radically and fundamentally, and I shall give the House examples of that. We have had a system under which we all pay our taxes, the taxes go to the Treasury, the Treasury allocates money to local government, and local governments, from their largesse, allocate money to voluntary groups in their area, as they see fit. Voluntary groups have very much been rentiers, dependent on the largesse of local government and what it has chosen to give them. That needs to change considerably.
First, there needs to be a commitment by local government to allow much greater community scrutiny. May I give the House an example of why that is the case? On Saturday, I met with campaigners in Deddington in my constituency who want to retain their library. As we discussed the situation, it became apparent that we have in Oxfordshire a public library service, but also a schools library service, which is operated completely separately. That prompts the question, why do we need two services? What happens with back office costs? As we discussed the matter further and began talking about the mobile library, we realised that it was going to villages to which, at the same time, the GP surgery—in the village that has the library—sends transport to collect people to come into the surgery.
As the discussion continued, it struck me that, under that system, the risk is that the greatest cuts will be made at the front end—that is, at the service end—yet no one has had an opportunity to understand the full central costs of running the services. The local authority has not been subjected to complete scrutiny so that people may make proper value judgments about whether it is ensuring that any spending reductions it has to make are fairly distributed between it and the services that it might hitherto have supported.
There is a danger that local authorities will simply retrench to their statutory obligations and duties, and say, “If we don’t have a statutory duty to do this, we won’t do it.” However, as we all know, the reality is that, for a long time, part of the fabric of society has been local authorities funding all sorts of organisations and operations that are not necessarily part of their statutory obligations.
There needs to be a new obligation on local authorities to subject themselves to much greater community scrutiny, and that would happen in part if they had to put all their expenditure online and be much more transparent about how they spend their money. Transparency is one thing, but we also need to ensure that they subject themselves to much greater scrutiny so that people can ask questions about how money is spent.
The hon. Gentleman is talking about local authorities retrenching and cutting back on support for the voluntary sector, but I have just outlined an example of the Government doing that. Does the same duty fall on the Government when they start retrenching and substantially cutting grants to charities?
The hon. Lady is already able to scrutinise Government decisions—that is exactly what she is doing today in this Chamber. She will have the benefit of a response from my hon. Friend the Minister, whom I am sure will answer her questions about TimeBank, which is an excellent charity and an excellent initiative, in his winding-up speech. Local government needs to take a new approach to scrutiny.
My second point is about engagement. My constituency happens to have been confronted with a threat to the local general hospital. Over time, that has constructively resulted in much greater engagement between local authorities, the primary care trust and various campaigning groups, which has been incredibly successful. As a consequence, we have managed to keep the local hospital as a general hospital.
It strikes me that that is a new, organic pattern of engagement between the local authority and, importantly, its officers, and members of the voluntary and community sectors. There are no rigid demarcations as to who is accountable or who is elected. It involves people coming together constructively to try to work out what is in the best interests of the community as a whole. We need the local government, its officers and elected members to be involved in much more of that sort of broader community engagement so that there can be an ongoing discussion with the community.
My last point is that there needs to be much greater commitment on the part of local government and central Government to put opportunities to tender out to social enterprises and voluntary organisations, and they need to be much clearer about how that should happen. The last example from my constituency is a new social enterprise in Banbury that was set up by people who had been working for many years with offenders at Bullingdon prison who were addicted to or had a dependency on drug or substance abuse. They have been doing excellent work involving ex-offenders in therapy. They have a good, reputable board of trustees, including some eminent doctors and others, and are doing a great deal of work with people who voluntarily self-refer. However, they could do a great deal more in the rehabilitation revolution by offering their services to people who may recently have come out of custody or may be in danger of going into custody—for example, there could be referrals from the courts.
The difficulty is that there is a disconnect in the rehabilitation revolution between how such groups get referrals, who buys the services and how they buy services. If government collectively wants social enterprises to develop, there needs to be a much clearer indication of where, within the machinery of central Government and local government, organisations can buy services. Otherwise, it will be extremely difficult for social enterprises to grow because they will have no idea how they might be able to maintain a sustainable income.
We are in incredibly challenging times because of the need to tackle the budget deficit, but we also have an opportunity to rethink much of what we do and how we approach central Government and local government. In the past, there has been a completely top-down, paternalistic, dirigiste system in which a citizens advice bureau at the bottom of the pile is lucky if it gets a grant each year from the district council. We should turn that on its head. There should be a bottom-up, community-driven process of priorities so that people in Deddington or Adderbury who are concerned about their library can drive the agenda, rather than it being imposed on them from the top. We should see this as an opportunity for real change.
I look forward to your unofficial imposition of a four-minute limit.
I welcome this debate and congratulate my hon. Friend the Member for Worsley and Eccles South (Barbara Keeley) on securing it. The voluntary sector is very important in our society. It is important for community cohesion and for newly arrived communities, and, in inner-urban areas such as the one I represent, it is a crucial part of the social fabric of both local government and health services. It is highly professional, efficient and well organised, and stressful for those who work in it. I am president of Voluntary Action Islington, formerly Islington voluntary action council, and a trustee of several local organisations, including Hanley Crouch community centre, Elizabeth House and a new-ish group called Light Project International, which provides weekend and after-school activities for young people, so I am acutely aware of and involved in the valuable work done by the voluntary sector.
The voluntary sector has always been a combination of a small amount of general fundraising from events and collections, and much larger funding from local health authorities, local government, various charitable institutions and, occasionally, business donations. That is complicated, and we should have regard and respect for those people who manage community centres and local organisations, and spend an inordinate amount of their time stressing over funds, staff and conditions, and funding applications. They spend a fantastic amount of their time completing funding application forms. An industry has grown up, with professional fundraisers offering to complete application forms and to fundraise for fixed fees or a proportion of the funds raised.
We must think through the efficiency of having highly skilled community centre managers spending sometimes 70% of their time on fundraising activities, which obviously diminishes a centre’s day-to-day work. A clearer, more defined role for local government and local health authorities in supporting and funding over a much longer period would be much more efficient. The current system is not efficient.
I have been involved in voluntary sector organisations in my constituency for a long time, and in a previous incarnation I was chair of community development in Haringey council. We developed community centres, particularly for minority ethnic communities, disability groups and others, as a way to bring in people in partnership with local authorities and health authorities. I strongly support the voluntary sector, but am sanguine about its role.
When I hear the Prime Minister talking about the big society, there seems to be a complete disconnect between my experience in inner urban London and what the voluntary sector means there, and the vision that he seems to have of fairly well-off retired people donating money to run a library and so on in a community with highly skilled people with time and money on their hands. That is not the reality of life in my community. If the council closed a library, which fortunately it has not done, and offered it to the local community to run, it would not happen, not because people do not value the library—they absolutely do—but because they do not have the time, the money or the skills necessary to do it. If we want to maintain the social fabric of our society, we must be prepared to put public money into voluntary organisations with the add-on benefit of community usage and all that goes with that. However, as my hon. Friend the Member for Worsley and Eccles South said, that core funding is essential.
Another point for the Minister, which I hope he will answer seriously, is the operation of the transition fund. As with every other community in the country, mine faces enormous cuts in local government expenditure and less grant money from the health authority, as well as less money from London Councils. There are great difficulties. The Government established the transition fund, but I have concerns about it. I received a good brief on it from Gerard Omasta-Milsom, director of Islington Peoples Rights, which is a very good voluntary advice agency. He says that to be eligible for the transition fund, applicants must be
“spending… 50 per cent of your total income delivering frontline… services”.
I wish that someone would define what a front-line service is. It is easy to say that we must support people on the front line and not those in the back office, but if a community centre does not have a bookkeeper, a cleaner, a caretaker or someone to repair computers and so on, it does not work. There cannot be a simplistic distinction between the front line and the back office. It is the totality of the service that is most important.
Another condition on transition fund applicants is that they
“have approved annual accounts that are no more than 12 months old which show that… your total income for that year was between £50,000 and £10 million and”
“at least 60 per cent of your total income came from taxpayer-funded sources.”
But £50,000 is quite a lot. We set up a community chest system in Islington, which operated until the Government cuts, and the council has now set up a new but smaller community chest. It gives small grants to new, seedcorn organisations such as new Somali organisations—we have a growing Somali community in Islington. The grant may be as little as £4,000 or £5,000, and in some cases even less. When such organisations are small and have only just come into existence, a small investment goes a long way.
The briefing goes on to say that free reserves could
“pay for your organisation’s total expenditure for no more than six months.”
I do not understand that requirement. Anyone who is running an organisation must have enough money to pay for ongoing costs and redundancy costs for at least three months. I hope that the Minister will tell me two things: first, whether the transition fund will be simplified and will continue beyond this financial year and, secondly, whether, as it has been so vastly oversubscribed throughout the country, he will speak to the Chancellor and obtain more money for it.
As every other part of the Budget seems to have been leaked, there will be no harm done if the Minister tells us exactly what part of the transition fund will be made available to the voluntary sector. It is vital to put money into such organisations and to keep them going. The health, well-being and strength of communities are so important. Removing the seedcorn funding and the basic running cost is damaging, and I hope that the Government will think again about that.
It is a pleasure to serve under your chairmanship this morning, Mr Amess. I pay tribute to the hon. Member for Worsley and Eccles South (Barbara Keeley) for initiating this debate. It is a privilege to follow the hon. Member for Islington North (Jeremy Corbyn) and the four-minute suggested time limit. He did not quite stick to it, but his maths were welcome.
The issue is an urban one, but also a rural one. I represent a large tract of rural west Wales, which has a proud history of volunteering, and I will start with the Welsh perspective. There are 30,000 groups throughout Wales, and 650,000 volunteers. It was estimated that in 2005, 54% of adults in Wales were volunteering in one way or another. Many of those groups—some 10,000—received no public funding whatever and relied on donations, as they had incomes of up to perhaps £10,000 a year. They ran small projects, with the emphasis on developing volunteers’ skills.
A huge number of other schemes in Wales relied on core funding in one manifestation or another, whether from our Assembly Government or through local authorities. I shall cite some examples in my constituency, and their valuable work. Many operated under the guise of a scheme initiated by our National Assembly which is called the Communities First project. It is very relevant in deprived urban communities, and in scattered rural communities. I am not sure whether it is the Liberal Democrats’ policy in the forthcoming Assembly elections to retain that project, but they should do so, because it has been a laudable success in my part of Wales.
The village of Ystrad Meurig wanted a mobile phone mast, because it did not have any reception, and it was supported in that by the Communities First project. A scheme to develop a youth club in one of my deprived wards in Aberystwyth was not short of volunteers, but it needed strategic leadership to organise and support them. I suspect that the idea that under the big society, green shoots of initiative will spring up throughout the country is far from the reality. That may happen in many cases—the hon. Member for Islington North spoke about protecting libraries, and we heard about the enthusiasm in Deddington in Oxfordshire. However, many of our communities require a lead and some measured core funding.
The hon. Member for Worsley and Eccles South referred to citizens advice bureaux. I have two excellent bureaux in Aberystwyth and Cardigan, and my wife is a trustee of one of them. Again, there is an abundance of volunteers, but what really worries citizens advice bureaux is the cut in the central training budgets, which affects volunteers’ ability to deliver a critical service to my constituents. We have heard about carers. I launched a project with Crossroads Care, an organisation in mid-Wales working to support carers with training, enabling them to take advantage of new flexible working structures and, when given the opportunity, return to the labour market. More than anything, carers require the stability of core funding, and I hope that the Minister will address that issue.
The Liberal Democrats held a much heralded conference in Sheffield a few weeks ago. The party was, in my view, discussing sensible proposals for the national health service, but tucked away in the agenda was a motion on volunteerism. That might seem peripheral, but it is a helpful pointer to show what can be done. I suggest that the Minister look at a couple of points raised in a paper that we debated, which was launched by my noble Friend Baroness Barker. The paper pointed out that we do not always make the most of opportunities available for funding the voluntary sector. In October last year, a report by ResPublica described the system of gift aid as an “antiquated” bureaucracy, and pointed out that digital processing of gift aid could be worth £750 million to charities. The Minister was present at that launch, and he indicated that he would think about the proposal. Is there any news on that?
The report also suggested that charities should make more use of social networking to raise funds. Many charities have done good work using social networking, but many others have not. We suggest a fund to provide a social networking school for charities: in other words—yes—public funds to encourage charities and give them the training and expertise that they need. We cannot hide from the fact that voluntary sector budgets will face cuts as a result of cuts to public spending, but local authorities have shown that the way in which such cuts are managed can have a major impact. I do not want to get into a debate about £16 billion of cuts by this party or £14 billion by that party, and the effect on the voluntary sector. Nevertheless, the hon. Member for Banbury (Tony Baldry) was right to make a point about transparency. People and communities need to see the situation and put pressure on local authorities to drive the agenda as they see fit. That is a wise initiative.
I do not deviate from that message at all. My constituency includes communities with high rates of deprivation, so that is a strong point. As has been stated, however, the role of this debate and of Parliament is to allow hon. Members to challenge the Minister, and the hon. Lady has done so effectively in her intervention.
I would like to hear more from the Minister on the big society bank. I note his written statement, and I agree with what the hon. Member for Islington North said about the limitations of the transition fund, particularly the scale of that fund, which is oversubscribed. It would be a tragedy if some of our voluntary organisations were allowed to wither because of its limitations.
The written statement published this week talks about “developing a proposal”, “engaging with the sector”, “further development work” and talking to the European Commission about state aid approval. Impatience with this matter has been well articulated by the voluntary sector, and I would appreciate it if the Minister indicated what time scale he is working to. In reality, the big society bank seems to be some way off. There are concerns about the ability to defend charities and the voluntary sector from local authorities. The transition fund is over-subscribed. The stakes are high and there is a mixed message about how the voluntary sector can respond.
There is a great deal of support for the principles behind the big society, if not the term itself. It was noticeable that our Sheffield motion did not contain one reference to the big society, although volunteerism was described as “principled.” There will be unanimity across the Chamber on the role that volunteers can—and should—play in our society, working co-operatively with local authorities to deliver meaningful services to people on the ground. There are still huge, immediate concerns about funding, and I hope that the Minister will allay some of those concerns in his response to the debate.
I thank my hon. Friend the Member for Worsley and Eccles South (Barbara Keeley) for securing this debate. I will try to be brief. The Minister and I have already debated the future of the voluntary sector in Nottingham. As he knows, I believe that the Government are cutting public spending too far and too fast, and I have already mentioned my concern that the cuts are not being distributed fairly. The cuts will have a devastating impact on the city that I represent, and those who will bear the brunt of that impact are the very people least able to withstand it.
A number of hon. Members have expressed concerns about the limitations of the transition fund. Given the time scale involved, that fund will not protect the services that people rely on, the jobs of those working in the voluntary sector, or volunteering opportunities. In the short time available, I would like to focus on that last aspect.
The Government have stated that a key objective of the big society is to encourage and enable people to play a more active role in society. It is therefore incomprehensible and strange to make cuts that undermine the organisations that provide such opportunities. Nottingham has a volunteer centre that supports groups to recruit and retain volunteers, as well as helping volunteers to find suitable placements. In the past year, the centre matched about 2,500 people with volunteering opportunities in the city. In less than two weeks, however, all funding to support volunteering in Nottingham will end. The volunteer centre is particularly affected by the scrapping of the working neighbourhood fund and the national youth volunteering programme, which is called vinvolved. Eight members of staff will lose their jobs.
In Nottingham, over half of the volunteer centre’s service users are aged 25 or under; 16% of those supported by the v project last year were classed as NEET—not in education, employment or training. At a time of record youth unemployment, when one in five young people are unable to find work, it is counter-productive and short-sighted to cut that vital link to skills, training and confidence for the most disadvantaged groups. Figures released last week by the House of Commons Library show that over 3,500 young people aged 24 and under in Nottingham constituencies claim jobseeker’s allowance. In some areas, 19 young people are chasing every vacancy advertised by Jobcentre Plus.
The Government’s decisions do not only affect young people, and 40% of those who come to the volunteer centre are out of work. The loss of the service will reduce the opportunities available for people to retrain and improve their skills and employability, and it will also deprive organisations of volunteers who could help to deliver vital services. On CSV “Make a Difference Day”, I helped out at the local Barnardo’s shop. I talked to the volunteers, some of whom had become staff, and I heard how important volunteering was, particularly for people who were returning to work after a long period caring for a family, those getting into work, and those with learning difficulties or a disability. Taking away that opportunity removes that stepping stone into work.
Unfortunately, as hon. Members have mentioned, many local community and voluntary sector groups are unsure about the future of their own services. They will also lose the capacity to recruit and train volunteers. For most organisations, fewer paid staff means fewer volunteers, not more. I hope that the Minister appreciates that cutting resources to organisations that provide people with work and life experiences, skills training and support, is not sensible, practical or affordable. Finally, I invite the Minister to visit the volunteer centre in Nottingham so that he can see the outstanding work being done, hear what people have to say, and learn why they are so worried about the future of volunteering in the city, and about the future of the unemployed and vulnerable under this Government.
I, too, am grateful for the opportunity to speak in the debate. The issue affects a range of communities, including in my own constituency.
We all appreciate that these are difficult economic times and that it is tough to find savings, but the first message that we should be sending out from the debate, and one that I support my right hon. Friend the Prime Minister in articulating, is that local authorities should consider every other available saving before reducing support to our voluntary services. We should be squeezing budgets, sharing services, cutting back-office institutions, generating efficiencies and trying to get maximum value for money in procurement before we even begin to consider reducing funding for voluntary organisations. Warwickshire county council, for example, has cut its youth service budget, yet it has so far made only a 2% reduction in staffing. That is not how it should be. Every local authority should view reducing spending on voluntary organisations as a last resort.
In my experience, quite a lot of councils have risen to the challenge from my right hon. Friend the Prime Minister. My local borough council in Castle Point has gone so far as to cut members’ allowances this year to secure the funding for Crossroads, the Association of Voluntary Services and the citizens advice bureau, because it recognises their importance to the local community. Many councils are doing a very good job in that regard.
Has not the chair of the Local Government Association, who is a Conservative, said that the cuts imposed by central Government on local government go way beyond efficiency savings and will therefore necessarily put local government in the impossible position of having to cut some services?
I refer the hon. Lady to the fact that these are difficult economic times, which were not brought about by the coalition, and something needs to be done. At the moment, I do not see the Opposition doing anything at all to begin to address some of these issues.
Voluntary services in a range of areas, from welfare to social care and from youth services to health care, enable the public sector to reduce “failure demand”, which is one of the biggest costs to the taxpayer. Because we fail to do the right thing the first time, we end up having to make more expensive interventions further down the line. That is not the right approach to providing services. Local authorities should work with the voluntary sector to use its expertise and understanding of the needs of service users to build better platforms. Although voluntary organisations can be a short-term expense, they can also generate significant savings in the long term. If anything, we should seek to shift funding towards voluntary organisations, rather than taking funding away from them.
An excellent report by the Association of Chief Executives of Voluntary Organisations called “Replacing the State?” gave four strong reasons why voluntary organisations are better placed to provide services than traditional in-house bodies. They are local and focus on the needs of their users, rather than on what is best for providers. They have higher levels of co-ordination, as they have a community-wide focus. They command a high level of public trust. They are incredibly innovative and able radically to change the delivery of services for the better.
There is an even plainer economic argument. Voluntary organisations are already saving the public sector more than £20 billion in staffing costs, given the fact that 17.1 million people volunteered in 2010. If we cut the funding on offer to the sector, we will reduce the infrastructure that channels those volunteers, either leaving people without services or leaving the public sector having to hire paid staff. I believe that if we integrate voluntary organisations further into public service delivery, we will not only see long-term costs go down, but we will be able to secure the future of many important groups throughout the country—something that can benefit all our local communities.
I congratulate my hon. Friend the Member for Worsley and Eccles South (Barbara Keeley) on obtaining the debate. In the short time available, I will consider two areas. The first is the cuts to the advice sector throughout the country and the complexity of the funding for that sector. Local authority funding constitutes the building blocks on which a local bureau or a local advice centre works, although such places have a range of other funding. The National Association of Citizens Advice Bureaux has recently published a report to show that, throughout the country, bureaux face on average a 15% cut. There are some notable exceptions, both good and bad, but a simple salami-slicing approach has been taken in a number of cases. Local authorities have not appreciated the cost to them of cutting those services—when the services go, people end up on their doorstep in a worse position.
I thank the hon. Gentleman for his intervention. I completely agree.
Also at risk was the funding for face-to-face debt advice, which has been given a year’s reprieve, although there are still arguments about the management costs centrally. It is proposed that social welfare law should go out of the scope of legal aid funding at the very time when we are introducing a new welfare system. Many bureaux have funding from primary care trusts, which are also going. Advice agencies could disappear—97% of law centre funding is under threat. I make this plea to the Minister: will he please look across the board and bring all the Departments together when they consider the funding for advice services? Otherwise, the cuts to each Department will affect that sector particularly badly.
I also want to consider my local services in Makerfield borough. Makerfield and Wigan benefit from 24,900 volunteer hours a week, and 68,835 people benefit from the services provided. Those volunteers need the support of paid staff and, often, the support of the infrastructure organisations. We would not expect any employee to work without the support of management and without a decent regime of health and safety, supervision and career development, so why do we expect volunteers to do that? That is what the cuts mean—the volunteers will not be there without the support of those paid staff.
Central Government are looking at cutting the infrastructure organisations. One particular concern for my local council for voluntary service is the vinvolved funding. Over three years, the vinvolved project in Wigan has dealt with 1,071 youths, most of whom were classified as NEET—not in education, employment or training. There has been a significant reduction in repeat antisocial behaviour orders for that group and an increase in the number of people going into work. Cutting that programme will leave those youths with nowhere to go. They will be back on street corners in the neighbourhoods that have previously complained about them. It is so important to young people that they be brought into volunteering. My local branch of Age Concern has pointed out to me the value of bringing those young people into its organisation and the cross-generational work that that has engendered.
Absolutely. My local CVS managed the future jobs fund in my borough, and youth unemployment among 18 to 24-year-olds was reduced by 56% in 2010 as a result. It halved the number of jobseekers from 900 to 450 in that period. To cut that at this time, when young people are coming out of education and training without a job to look forward to, is sheer folly.
I do not believe that the big society is new—in my borough or in any other borough—but I do believe that, due to the cuts, it is becoming the shrinking society, which is dangerous.
I congratulate my hon. Friend the Member for Worsley and Eccles South (Barbara Keeley) on securing the debate. I want to follow what seemed to me to be her theme—what on earth are the Government playing at? In their wholesale rush to get rid of everything that the Labour Government did, they are destroying structures that would help to deliver the big society. I shall talk specifically, as did my hon. Friend the Member for Makerfield (Yvonne Fovargue), about vinvolved—the national young volunteers service. Its aim was to get 500,000 young people into volunteering. It developed out of millennium volunteers and was directly funded by the Government. It has eight days left to be saved.
The initiative was funded by the Government and run by v, the independent charity. There were 107 vinvolved teams nationally. Its focus was on creating new volunteering opportunities, including working with community and voluntary organisations, to create more high-quality, diverse volunteer opportunities for young people; supporting local organisations that work with young volunteers; brokering 16 to 25-year-olds into volunteering opportunities; finding the right opportunities for new and existing volunteers; helping young people to set up their own voluntary projects; and championing youth-led action, with each team including a youth action team made up of young volunteers giving advice on what projects and work vinvolved teams should get involved in.
What happened? Young people were matched to opportunities that suited their interests and aspirations, and that were sensitive to their individual circumstances. That was particularly important for young people with multiple barriers to participation—for example, people leaving care, asylum seekers, refugees and people with mental health issues. The vinvolved project particularly targeted young people who would not normally be involved in volunteering and who faced great difficulties in their lives. Such young people were at risk of being socially marginalised. However, apart from the effect on the young people themselves, there is also a real cost to society when young people are no longer part of it and have additional needs, which society must then tackle.
In matching young people with appropriate and fulfilling volunteering opportunities, which in turn acted as a stepping-stone for their progression, vinvolved allowed many young people to find a new, positive direction. The project enhanced employability and provided references for young people who had problems and who may never have completed their secondary education. Those young people may have had nobody in their lives to provide a reference for them, but they got one through their volunteering opportunities. The project also supported those at risk of social exclusion, increasing their confidence, helping to overcome feelings of isolation and loneliness, and improving community relations as young people from different communities came together to work across communities and with people from different backgrounds, including with lesbian, gay, bisexual and transgender young people, and black and minority ethnic young people. I should add that the voluntary work brokered by Manchester vinvolved equates to £232,380—I like the precise figure it has produced—based on salaries at the national minimum wage.
I could speak for a great deal longer about vinvolved, but I am aware of the time. I could also speak for a long time about the wonderful young people who have been involved in the project, whom I had the honour of meeting at an awards event for Greater Manchester a few weeks ago. Those young people have overcome their disabilities and other issues, such as the need to care for relations or the fact that they have come from broken homes or experienced homelessness, and they have gone on to contribute enormously to the society they live in. Without projects such as vinvolved, such young people will not get involved in volunteering, because they need organisations to support them, bring them together and give them the chance to make a difference to their lives and the lives of people in the community.
The vinvolved initiative is the sort of project that the Government need if they are ever to deliver their big society. I agree with my hon. Friends that we already have the big society, but if we want to extend and expand it, we must have projects that support the voluntary sector and that help young people and adults into volunteering. There are only eight days left to save vinvolved, and I really hope that the Minister will act so that we can continue a project that serves the needs of young people and their communities in such a splendid way.
I am here to listen to the debate and to contribute where necessary, Mr Amess, but I have not prepared a speech.
I congratulate my hon. Friend the Member for Worsley and Eccles South (Barbara Keeley) on securing this important debate. It has been very instructive to listen to the contributions made from both sides of the Chamber.
People in Newcastle are concerned about the speed with which the local authority cuts have been imposed and about the impact that that has had on the voluntary sector and support for it. Newcastle is one of the cities that has a thriving citizens advice bureau service, and it served more than 26,000 people last year, but it has now received a 20% salami-sliced funding cut, which is one of the worst cuts to services in the country.
The issue remains very much the speed with which the cuts have been imposed on local authorities, as well as their impact on different regions, particularly urban areas, where cuts to funding to combat deprivation have had a disproportionate impact—for example, in cities such as Newcastle upon Tyne.
Clearly, all Members in the Chamber share the view that the volunteering sector is important, but while listening to Opposition Members’ contributions I had the strong feeling that we have created an over-dependence on the public sector for volunteering organisations’ funding in the past 10 years. That over-dependence is as much about creating a big state as it is about creating a big society.
Does the hon. Lady agree that many of the best organisations working with local communities—certainly in constituencies such as mine—are free from Government intervention and Government funding? The point has been strongly made that there are bureaucratic issues in volunteering when organisations depend on Government funding. We need to create a society in which people volunteer, but do not depend on Government funding to do so.
I do not agree with the hon. Gentleman’s assertion. I agree that there are some fantastic voluntary organisations that do not rely on any public funding. They are supported, and have to be supported, across the country, and they are warmly welcomed. However, one of the main issues is that the abilities of those organisations are not necessarily distributed in such as way as to target the most hard-to-reach areas, which require more structured funding to support and assist voluntary activities. That point has been made very clearly by my hon. Friends and, indeed, by Government Members.
There might be another interpretation of the points raised by the hon. Member for Aberconwy (Guto Bebb), which is that there is a fundamental misunderstanding of the relationship between the voluntary sector and the state, and of the importance of funding in ensuring that the voluntary sector has had the capacity to thrive over the past 13 years. One of the dangers now is that services will be affected when funding is taken away and that the capacity to thrive, as well as the voluntary sector’s ability to deliver activities and to be a voice for many people in our communities, will be damaged. Some of the comments that we have heard reflect a misunderstanding of why it is so important to support the voluntary sector if we want volunteering to thrive and if we want to tap into all the benefits it offers our society.
I thank my hon. Friend for her intervention. That is exactly the point that needs to be made. As my hon. Friend the Member for Worsley and Eccles South said at the beginning of the debate, there is genuine concern that we need to understand how the voluntary sector works, how it is funded and how it is supported. There is huge concern about the Government’s pursuit of an economic policy that is reducing the deficit at a rate that is too fast, that is reckless and that will cause long-term damage to our civil society.
I want to put those issues on the record. The voluntary sector in Newcastle continues to thrive, but it sits in sheer trepidation, because most organisations have no security of funding beyond the end of this month.
Before my hon. Friend finishes, does she agree that we could characterise this debate as one in which Government Members have hectored and lectured local authorities about not cutting grants to voluntary organisations in their areas, even though Ministers are cutting the number of their strategic partners from 42 to 14, and cutting their funding, too? Is it not inappropriate for coalition Government Members to lecture local authorities about what they must and must not do, when they themselves are scything away the infrastructure of the voluntary sector?
May I say how delighted I am to serve under your chairmanship, Mr Amess? I begin by paying tribute to my hon. Friend the Member for Worsley and Eccles South (Barbara Keeley) for securing this extremely timely debate. Its timeliness is evidenced by the large number of Members here this morning.
At this time, up and down the country, voluntary and community-based organisations are extremely concerned about their funding situation. Some, sadly, are trying to cope with vastly reduced budgets for next year and uncertainty as to whether they can even continue to operate. My hon. Friend in her amazingly comprehensive contribution, pointed to Labour’s proud record of supporting the voluntary sector—in contrast, I think, to the withdrawal of funding we see from the coalition parties. She used the cuts to TimeBank as an example of how that withdrawal will affect volunteering and volunteering support organisations. I want to speak about TimeBank in a minute or two.
My hon. Friend also emphasised the importance of supporting advice services, particularly in today’s economic climate. My hon. Friend the Member for Makerfield (Yvonne Fovargue) stressed that issue in what I thought was a very passionate contribution. My hon. Friend the Member for Worsley and Eccles South also reminded us, as she often does, of the need to continue to support carers. My hon. Friend the Member for Islington North (Jeremy Corbyn) hit the nail on the head when he said that this Government simply do not understand the nature of the modern-day voluntary sector and its wide range of activities, or the complexity that exists in the neighbourhoods in which it operates or the complexity of the problems that it must face.
Actually, I think the point my hon. Friend made was that the current Government do not understand the nature of the modern-day voluntary sector. That point was emphasised by my hon. Friend the Member for Newcastle upon Tyne North (Catherine McKinnell) in her spontaneous but extremely informed—if I may say—contribution. If he will forgive me for saying so, the contribution from the hon. Member for Banbury (Tony Baldry) verified the point made by my hon. Friend the Member for Islington North. Other Members also made useful points, which I will deal with as I go through my speech.
I want to emphasise two things at the outset. First, in government, as in opposition, Labour knew that the deficit had to be reduced, but, crucially, we would not have cut so deeply or so quickly. Evidence seems to suggest that it is the up-front cuts to local government and central Government Departments that are proving so damaging to the voluntary sector. We know that it is some of our poorest areas with the highest levels of need that are facing the largest cuts. That point was excellently made by my hon. Friend the Member for Nottingham South (Lilian Greenwood), who spoke about the huge impact the cuts to the voluntary sector will have on her constituency.
Secondly, it seems particularly unfair to ask more of the voluntary sector in terms of delivering services and filling gaps in provision, while cutting the resource base of a range of civil society groups. It has led the National Council for Voluntary Organisations to conclude:
“The scale and speed of the cuts affecting the voluntary and community sector are severe and there is a very real danger that the sector will not be in any fit state to contribute to the ‘Big Society’ unless further action is taken.”
I can see little evidence that the Government are taking that further action.
The Government often raise the transition fund, which was mentioned by Members today, as the mechanism for plugging the gap. However, it is restrictive in coverage and demands significant change from a great many organisations—for example, they must become social enterprises—and a huge number of the 1,700 applications are still being assessed. Other funding that may reach the sector in future, such as that from the big society bank, is unlikely to be made available early enough to prevent some organisations from going under, regardless of how useful they are to their local communities, and we heard examples of that today. My hon. Friend the Member for Bolton West (Julie Hilling) made a passionate speech about vinvolved in her constituency and the need for it to continue to support young people’s volunteering. Cuts are being made regardless of how good organisations are at providing services or supporting volunteers.
We have had some indication of what the impact of the cuts will be. The sector receives £12.8 billion from a range of statutory sources, and about 52% of that comes from local authorities. Overwhelmingly, that is in the form of contracts for services delivered, rather than grants. I am not sure that Government Members picked up that point. Although it is difficult to put a precise figure on the totality of the cuts affecting the sector nationally and locally, the available estimates put it at somewhere between £3.2 billion and £5.1 billion. That is a huge sum, and a substantial proportion of the sector’s income from statutory sources. At the same time, giving is £700 million less than its pre-recession level, so the gap is not being plugged by another source. The end of transitional relief on gift aid in April 2011 will cost the sector at least £100 million, and the increase in the main rate of VAT to 20% will cost the sector an estimated £150 million per year. This adds up to a range of cuts and cost-saving measures by the Government that are impacting on the sector’s ability to deliver.
The Government want to encourage more services to be delivered by employee-owned companies, mutuals, co-operatives and social enterprises. Of course, Opposition Members are not against that as a general policy direction, especially as it is one that we started while in government. We are against the rushed withdrawal of funding from organisations without time for them to develop new sources of funding and without a framework to help them to manage the transition from a charity or partner in service delivery with the local council to a social enterprise or something similar. That transition takes time, support and resources.
There seems to be a particular willingness on the part of Government to cut infrastructure organisations such as TimeBank, Volunteering England, local CVSs and similar agencies. Where organisations directly support volunteers, drastic cuts might be very short-sighted indeed, especially when the previous citizenship survey showed a reduction in the number of people volunteering. We need to have more volunteering support organisations, or at least support the ones we have adequately. TimeBank and Volunteering England do an excellent job at supporting volunteer development, so why dismantle tried and tested methods of effective volunteer support in the vague hope that something might become available in future?
We know from the Charity Commission that voluntary organisations employ approximately 780,000 staff, supported by 2.7 million volunteers who help them to fulfil their aims. It appears that the Government want to rely on volunteers more and more, but they do not always recognise that volunteers need to be trained and encouraged. The cuts agenda may put at risk the key planks of support for volunteers.
My hon. Friend the Member for Worsley and Eccles South told us how Labour has supported the voluntary sector. We understand it and value it, particularly its expertise and flexibility, and its ability to innovate. Before Labour left office, we set out radical plans to boost funding for volunteers and to make asset-transfers to the third sector. We designed the social investment wholesale bank, which was ready for launch, and launched the social impact bond. We also supported the move for more mutuals and co-ops. We would like to see the Government building on that agenda, not dismantling it. We do not want to see the sector devastated by unnecessarily deep and rapid cuts, that at worst will merely provide an opportunity for the further marketisation of our public services.
It is a great pleasure, Mr Amess, to serve under your chairmanship. I congratulate the hon. Member for Worsley and Eccles South (Barbara Keeley) on securing the debate and on the way that she spoke. However, special congratulations are in order for the hon. Member for Newcastle upon Tyne North (Catherine McKinnell) on thinking so quickly on her feet, and on representing so sincerely sentiments that I heard directly only a few weeks ago in Newcastle from people concerned about what is going on.
The hon. Member for Worsley and Eccles South spoke passionately about TimeBank, and tried to make some wider points. I know that she has a particular interest in carers, and has done some distinguished work in this place since being elected on that important agenda. The leadership of TimeBank is here, and those people are probably shooting daggers at me; we shall meet soon to discuss the decision, but of course they will not agree with it.
I shall start with the specifics before going on to wider matters. I make no apology for rationalising the Office for Civil Society strategic partner programme. We inherited a situation with more than 40 strategic partners and almost as many civil servants, at a cost of some £12 million a year. I could not see what value the taxpayer was getting from that programme, and I received a lot of support from within the sector to rationalise it.
The intention to rationalise was communicated to all strategic partners in July 2010. As a result, all partners were effectively at risk of seeing some reduction in their funding. We announced yesterday that we would be reducing it to nine organisations or partnerships, and I am satisfied with the mix. The simple fact is that no organisation has the right to be a strategic partner of the Government. The right has to be earned, and the process must be run robustly and professionally by civil servants, I received a recommendation about those nine organisations, but unfortunately TimeBank was not included. I do not expect it to like that decision, but it was a robust process which I think was run properly.
May I finish my point about figures, because it is perhaps the most important? Does it mean that TimeBank and other organisations that are working hard to manage and structure volunteering opportunities and inspiring people to volunteer will have no further opportunity to access taxpayers’ money? Of course not. I refer the hon. Lady and all with an interest in the subject to the recently published Giving Green Paper, which will lead to a White Paper. In it, we made it clear that we will be investing in a volunteering infrastructure programme with voluntary match funding, which will be worth about £40 million over this Parliament. There will be opportunities for TimeBank and other organisations to add value to those programmes.
As the Minister is touching on his reasons for cutting away at the infrastructure of an organisation that supports volunteering for hospices, for the Olympics and for carers, I invite him to explain exactly why—beyond a departmental goal to rationalise the number of strategic partners—the Government are cutting away at a vital organisation? The same question could be asked about others. TimeBank is crucial to supporting volunteering, and has an excellent 10-year track record. Indeed, he sent it a message when it achieved its 10-year anniversary. Why is he doing this?
I tried to explain why earlier. We ran a process to identify a shorter list of strategic partners, with criteria; TimeBank and other organisations on a longer list did not make it through that process. As I said, no organisation has the right to be a strategic partner of the Government, but I do not expect them to be comfortable with that.
I have to tell the hon. Lady that her approach is symptomatic of the previous Government’s approach to public money. There was absolutely no rigour in the strategic partner programme that we inherited; we are trying to introduce it for the first time. The hon. Lady speaks about our cutting funding, but she completely ignores the fact that there will be further opportunities, in what are frankly more appropriate programmes, for organisations such as TimeBank to access taxpayers’ money and continue their work.
I wish to make progress.
The wider context is extremely important. It is not just about TimeBank, or the other organisations mentioned by the hon. Members for Bolton West (Julie Hilling), for Makerfield (Yvonne Fovargue), for Nottingham South (Lilian Greenwood) and for Wolverhampton North East (Emma Reynolds). There is considerable concern in communities across the country about the impact of the cuts.
It would have been nice to have heard more recognition from the Opposition about the economic context, but that fell to my hon. Friends the Members for Banbury (Tony Baldry) and for Warwick and Leamington (Chris White). The fact is that we are spending £120 million a day in interest, and that is entirely unsustainable. A sector that receives £13 billion of taxpayers’ money cannot be immune from the process.
The public hate to see politicians playing the blame game, and I understand that, but nor should we take them for fools. I believe that they understand the basics—that the Labour Government left this country massively over-borrowed and that the coalition Government were elected to sort it out. That means that tough choices have to be made by councils. As my hon. Friends the Members for Warwick and Leamington and for Castle Point (Rebecca Harris) said, some have decided to give priority to cutting internal costs and making efficiencies before making cuts in the voluntary and community sectors. Others have taken a different course for very different reasons.
No one pretends that it is an easy business—it is not—but the Government want to put in place active programmes to help the voluntary and community sector manage the transition. We understand the need for such a transition—from a situation in which too many organisations depend on state income to one in which the sector will have to diversify its sources of income in new ways.
We want to help manage the transition because we see big opportunities for the voluntary and community sector to do more to deliver more public services, and to have a bigger voice at the local level, exactly the point made by my hon. Friend the Member for Banbury. In future, there will be many more arguments about local priorities, and the voluntary and community sector can give a voice to people who often struggle to have their voices heard. The localism agenda will give them a big opportunity. We are obviously very ambitious in our wish to encourage people to give more time and money to help others.
I do not have time to give way.
People will go to charities and the voluntary sector. There are significant medium and long-term opportunities for the sector, but we have to help manage the short-term transition.
That brings me to the transition fund and the specific questions raised by the hon. Member for Islington North (Jeremy Corbyn). Most of the answers are contained in the basic statement. The fund had to be rationed. It had to be targeted on those organisations most vulnerable to a cut in public grant or contract. We took advice from the sector on the criteria. We had to set an income threshold.
We are proud of the progress that BIG fund has managed for us. I visited an organisation yesterday that has benefited from it. The charities’ fund is £100 million, and it was topped up yesterday by £7 million from the Department of Health. That is serious money, and it will help organisations that are particularly vulnerable, or that have more than 60% of income vulnerability to the state, to make the transition.
The hon. Member for Ceredigion (Mr Williams) asked about the big society bank. It is not a panacea for cuts in grant. It is a serious strategic long-term intervention, designed to make it easier for the sector to access capital. I expect between £60 million and £100 million from dormant bank accounts to be released in the third quarter and be made available for deployment. I expect £200 million to come from the four major banks before the end of the year. The balance of the bank’s capitalisation will come from the rest of the dormant bank accounts, once they have passed through the state aid process, but it is difficult to pin that down at the moment.
We are talking about a £600 million opportunity—a serious attempt to make it easier for social entrepreneurs to access capital in this country. It is part of our programme to help the voluntary and community sector play a full role; it will help to build a stronger society, which we want to encourage, and a better partnership between the state, business, the voluntary and community sector, and active citizens who feel empowered to take more control over their lives.
Steel Industry (Carbon Floor Pricing)
Thank you, Mr Amess, for the opportunity to take part in the debate today. I am so grateful for the attendance of Members with an interest in steel, which shows the strength of feeling on the issue.
I put in for the debate after one of my regular visits to Llanwern steelworks in my constituency. There has been a steelworks plant at Llanwern since 1962. Although steel making ceased in 2001, Tata at Llanwern is still a major employer with a hot strip mill and a galvanising line run by an extremely enthusiastic work force who make a high-quality product for the automotive industry, among others.
The industry has had ups and downs over the years, with the loss of the heavy end and heavy job losses in 2001, but the dedicated work force produce a high-quality product. Tata’s investment down the road in Port Talbot, to which Llanwern is inextricably linked, means that at the moment things are looking good and employment is back up to around 700. This is a good-news story, but the threat to the steel industry from Government legislation is making the industry wary, and I want to explore that today.
I am also glad to be introducing the debate because on two occasions in the past week the issue of carbon floor pricing has been raised: in the Welsh Grand Committee by my hon. Friend the Member for Llanelli (Nia Griffith), and in the all-party group on energy-intensive industries. Startlingly, there was no Government response in either forum to address the industry’s concerns. I hope that today’s short debate will give the Minister the chance to hear the very real concerns and address them in person so that the industry knows where it stands.
Although “steel” appears in the glamorous title of the debate, the issues apply equally to other intensive energy users such as the paper, glass and ceramics industries, which employ about 225,000 workers in the UK. The issue that concerns the industry is the carbon floor price, which might be introduced in today’s Budget, although the Minister will know more about that than I do.
The Conservative manifesto pledged to reform the climate change levy to introduce a carbon floor price or a stability mechanism so that the total cost of carbon for generators could be more certain. A policy seems to have developed in practice that increases the cost of carbon for UK electricity generators, yet is seen as another tax on the fuel used by generators. The Government’s stated aim for the carbon floor price is to boost investment in low-carbon energy, especially in nuclear power, by putting a minimum price on carbon through taxing fuels used for generating electricity according to carbon intensity. That pushes up the cost of producing electricity from high-carbon fuels such as coal, making renewable and low-carbon means of electricity generation relatively cheaper. UK energy-intensive producers will therefore face huge cost increases that will not be borne by other competitors elsewhere in Europe or the rest of the world.
The UK steel industry’s submission to the consultation makes it clear that the carbon floor price is the wrong policy for three reasons. First, multiple regulations are trying to fix individual problems in lots of different ways. Carbon is already priced through the European Union emissions trading scheme, the climate change levy and the carbon reduction commitment, alongside the renewable subsidies. Secondly, it runs the very real risk of having a negative impact on the competitiveness of UK manufacturers—a disincentive to invest in the UK. Finally, the industry claims it is questionable whether the policy will deliver the desired outcome at all.
I thank the hon. Lady for giving way and for securing this important debate. Does she agree that many of the industries we are talking about are owned by foreign companies, which can choose where to invest, so if the UK adopts policies different from those of the rest of the world, that will simply drive those industries out of this country?
I thank the hon. Gentleman for his well-made point, which covers the precise subject of the debate. I shall return to it.
We all know we have to reduce our carbon footprint, but industries such as steel use large amounts of power out of necessity and have no other realistic option at the moment. In the steel industry in my constituency, I see an industry that supports plans to make the transition to a low-carbon economy and is actively trying to be involved in being part of the solution to reduce CO2 emissions. For Tata, that might involve developing products and improving processes such as the £60 million basic oxygen steelmaking—BOS—gas recovery investment it has made at its Port Talbot plant, which will have great benefits for us at Llanwern, or products such as the photovoltaic project being developed in Shotton.
It is worth remembering that to build low-carbon energy sources, improve energy efficiency and drive advancements in low-carbon construction, steel will be in high demand. Steel is a high-carbon industry in its production, but an essential product for the low-carbon economy.
Has my hon. Friend seen scrap metal being recycled in an electric arc furnace? An element powered up to 2,000° of heat plunges into it and recycles instantly, but that requires a huge amount of electricity and energy. I understand where the Government are coming from, but unless they find a solution to the problem, their proposals might have the perverse effect of making that unprofitable, and their welcome focus on manufactures and exports—there is a demand—might come to nought. For the first time in 17 years as MP for Rotherham I am desperately worried about the future of electric arc furnace steel manufacture in our country. We must find a tweak and a solution to the problem, so I welcome my hon. Friend securing the debate.
I welcome my right hon. Friend’s intervention. Steel making is an incredibly beautiful process. His point is that we must ensure balance and that the new tax does not drive heavy industry out of this country.
Steel is a high-carbon industry in its production, but an essential product for a low-carbon economy. Surely we all want the UK’s low-carbon economy to be built with steel produced in the UK, not imported from China, Russia, Ukraine and other steel-producing countries that do not face the same regulatory restraints.
The industry would say that there is consensus for some regulation in this area, but that current policies are complex and over-burdensome. As I have said, if carbon floor pricing goes ahead, there will be four prices on carbon—the carbon floor price, the climate change levy, the carbon reduction commitment emissions trading scheme, and the renewable subsidies—but no consistent way of measuring carbon as between those. The industry argues that if the Government are to price carbon, they must make it simpler for everybody involved.
The major issue, to which the hon. Member for Redcar (Ian Swales) alluded, is competitiveness. The debate takes place in the context of escalating costs for UK steel producers from existing UK and EU climate policies that are eroding their international competitiveness. Nobody else in Europe or the world will face those costs, which is a threat to UK steel. The Government are asking the private sector, especially manufacturing, to create jobs, but that will not happen if we impose certain conditions and have carbon leakage. Manufacturers will choose to go to parts of the world where they can get away with less stringent conditions. They will be able to produce steel with the same amount of emissions and we will have lost the industry. Where is the sense in that? That applies not only to some developing countries, but, most worryingly, to Europe. No other EU Government are making similar proposals, and many have taken steps to reduce the impact on trade-exposed industries precisely to avoid the problem.
The figures are quite stark. Tata Steel estimates that by 2020 the cost of carbon floor pricing will add at least an extra £20 million per year to its energy bill. I also draw the Minister’s attention to the Waters Wye report, which documents the cumulative impact of all climate change policies on heavy energy users.
My hon. Friend has secured a very important debate and she is making an excellent argument for the steel industry. Is she aware that we now have a 14-month high in the inflation rate, with the retail prices index running at 5.5%? That is pushing sterling to a much higher rate than previously. Coupled with current commodity prices, particularly for coke and iron ore, there is already a strain on the industry.
My hon. Friend makes a valid point, which I am sure the Minister will address. My hon. Friend is, of course, quite an expert in this field.
Tata’s submission to the consultation on carbon floor pricing also questions the effectiveness of the measure, claiming that it will have only a limited impact on reducing carbon emissions, even though its cost is real and direct. Tata’s submission suggests better ways to achieve lower emissions, which I will not go into now, but I draw the Minister’s attention to the submission and ask that further consultation with the industry be pursued.
I also ask the Minister to address several other points. It would be helpful if he outlined how the Department for Business, Innovation and Skills has worked with the Treasury and the Department of Energy and Climate Change to limit the impact on intensive energy users of the proposals for carbon floor pricing and of the wider electricity market reform. Does he accept that the Government’s proposals will have a serious impact on the competitiveness of key industries? If so, does he understand how such an impact will directly conflict with the Government’s policies on private sector growth and an export-led recovery?
How do the Government intend to ensure that these measures do not impact on the competitiveness of UK manufacturers? Given that there was only a very short time for consultation—I believe it was about six to eight weeks over Christmas—will the Government at least commit to carrying out a comprehensive assessment of the impact on energy-intensive industries of their proposals for electricity market reform and a carbon floor price? Many organisations raised fears about the proposals during the consultation, including the Engineering Employers Federation, the CBI, the TUC and the Energy Intensive Users Group. Has the Minister taken their views on board and are the Government listening?
Finally, in fairness to the steel industry, I must say that I believe that it is continuously looking for ways to improve its CO2 performance through improvements to processes, products and investment, particularly in research and development. The UK steel industry wants to be part of the solution to climate change, but it needs the Government to understand that it must compete on a level playing field around the world to do so. Otherwise, we will face a situation where companies could make long-term investment decisions based on the Government’s policies and take their investment plans abroad. As an MP with a steel interest, I certainly do not want that to happen, so let us make our steel industry part of the solution to climate change. I look forward to the Minister’s response.
Thank you very much, Mr Amess, for calling me to speak. It is good to see you in the Chair.
I want to begin by congratulating the hon. Gentleman—sorry, the hon. Member for Newport East (Jessica Morden). There is obviously a little too much gin in the water in Westminster Hall. I congratulate the hon. Lady not only on securing the debate but on her incisive comments about the balance that we all have to strike between the environmental and business challenges. I will respond specifically to the points that she has made.
It is slightly unfortunate that today is the day of the Budget because, as right hon. and hon. Members will understand, that somewhat hampers my ability to be more specific about measures such as the carbon floor price. The Chancellor will be on his feet imminently and I am sure that he will set out some things in that regard in more detail. The hon. Lady not only has an interest in the steel industry in her own constituency but she is chair of the all-party group on the steel and metal related industry. That combination of interests was very evident in her speech and indeed in her responses to questions from Members, all of whom have a strong constituency interest in this important industry. The right hon. Member for Rotherham (Mr MacShane) is absolutely right that this is a very important industry. It is dramatic, in the way that he rightly described, but it is also fundamentally important to many other industries, particularly in manufacturing. Later today, the Chancellor will set out our framework for growth for manufacturing, which I hope Members will welcome. That framework reflects some of the long-term issues that the steel industry and similar industries face.
I should point out that I am speaking today in my capacity as the MP for Ogmore and not in my capacity as a shadow Energy Minister.
I am not asking the Minister to reveal the details of what is in the Budget. However, he just used the word “framework”. That is quite interesting, because the Energy Intensive Users Group and others have been calling for us not to pin this down, right here, right now, in the Budget, but to allow scope for further discussion. Is that what the Minister meant when he used the term “framework”?
Yes. The manufacturing framework covers issues that are broader than the issue that we are discussing in this debate. It is about all the issues of capital investment, skills and so on. However, the hon. Gentleman is quite right. What we have tried to do with the growth reviews for manufacturing as a whole—I am just going slightly beyond the purview of this debate, Mr Amess, but not too far—is to ensure that we have listened carefully to manufacturers about all the different aspects of manufacturing, so that we understand how the proposal will work. The hon. Gentleman is quite right that the framework needs to be one in which the Government are a partner with industry, so that it is not simply something that we have decided is the right thing without listening to others. That will be reflected particularly in our response to energy-intensive users.
I will be very quick. Is the Minister aware that this very week we have had the first full meeting of the new all-party group on energy-intensive industries? I am the vice-chair of that group and I have never been to an all-party group with a higher attendance. Every single industry that has been mentioned in this debate was represented at senior level, which illustrates the level of concern about the issue. It also supports what the hon. Member for Ogmore (Huw Irranca-Davies) was saying, that we need time to engage with the Government to ensure that they truly understand these issues.
I welcome that. It is very important that we have a good and thorough debate, and that Members across the House can participate in it. That is very welcome news.
The industry is crucial. We have talked about it in principle, but when one looks at the facts, last year, some 9.7 million tonnes of crude steel were produced in the UK and the industry employs 25,000 people directly. Encouragingly—and this goes back to the point that the right hon. Member for Rotherham made—about half of the UK steel industry’s output is now exported and we are now a net exporter. That is not necessarily something that one reads in the newspapers, but it is a success story, and in that context I commend both the previous Administration and the industry itself. That is quite something.
In Wales—this is particularly relevant to the hon. Member for Newport East—I believe that about 7,000 people are employed in the steel industry, with 4,000 employed at Port Talbot and 1,000 at the Llanwern rolling mills, so that is an important part of the sector. What is encouraging is that despite the fact that in 2008, the industry saw demand for its products drop by 50%, which would be devastating for any industry, it has been able, through good management of production, good co-operation and a flexible and committed work force, to ensure that there were not any major long-term job losses in those plants, which have been able to come back into production. Of course, there were some job losses, but in any industry if demand and production drop by half, that is potentially a killer. Thankfully, that did not happen.
I turn to the specific issue of the carbon floor price, before addressing the energy-intensive industries strategy and thus responding to the question about what my Department is doing to mitigate the impact. We have just consulted on the issue across Government, although the consultation was of course led by the Department for Energy and Climate Change. To respond to a question from the hon. Member for Newport East, we consciously made a specific point of talking to the key industries involved, including the Engineering Employers Federation, which she mentioned, so that we have a careful understanding of the practicalities of the measure for all energy users and for particular industries.
I will be brief. I regard the Department for Business, Innovation and Skills as an ally in this process while, as we know, the real enemy is across the road in the Treasury. Then there is DECC, with its open-toed sandals, greenery and all that nonsense.
The Minister of State, Department of Energy and Climate Change, the hon. Member for Bexhill and Battle (Gregory Barker) told me on the Floor of the House before Christmas that he would accept an invitation to meet a delegation, but nothing happened. I then asked him about it face to face in the Lobby, and he said, “Oh, I’m terribly sorry, Denis, we’ll try and sort this out”, but nothing happened. Does the Minister accept that there has not been enough consultation, especially with hon. Members, the workers and trade union employees? As this process unfolds—I think that we will be discussing this for some time; it will not be fixed for ever, either today or tomorrow—will he agree to receive a bit more input from right hon. and hon. Members, the trade unions and the work force?
My hon. Friend the Energy Minister is a very busy man, and I suspect that it will be through no fault of his own if he has not yet been able to fulfil that obligation. However, the door is not closed in this area. There is work to be done. My view, and I am sure that it is the view of my hon. Friend, too, is that we would always encourage involvement in this process. If there is an opportunity to do that at the right moment, yes, we will do so.
Let me come back to where we are on the carbon price floor, then look at the strategy as a whole and at how we mitigate some of the impacts. The aim is to encourage investment in low-carbon electricity generation, by giving greater support, yes, and also by providing certainty on the price of carbon in the power sector. Getting that right is important for the whole of manufacturing but, as Members have rightly pointed out, we must strike a balance between the environmental gain and improvements in energy efficiency, which could help all manufacturing, and doing so in a way that does not pinch key energy-intensive sectors unreasonably. Members will understand that as the price is going to be set in the Budget later today, and as I would like to continue to be a Minister of State for a little while yet, it would be unwise to pre-empt what the Chancellor will say, in what I know will be an excellent Budget.
Let me turn to the question that the hon. Member for Newport East rightly asked about what my Department is doing in conjunction with others to consider how to mitigate the impact. We are working with the Department of Energy and Climate Change on a comprehensive strategy on energy-intensive industries, including steel. The strategy is deliberately intended to look at energy costs, and to assess the incremental changes that industries have made—I will come on to some that have very successfully been achieved in Wales—and possibly the longer-term transformational changes that might help the industry to deal with the bigger, long-term issues.
The Minister has said that a line in the Budget will set the carbon floor price, but before he moves away from the issue I would like to ask him whether he is alive to the concerns raised by my hon. Friend the Member for Newport East (Jessica Morden) about the complexity of different measures. The carbon floor price sits alongside the ongoing electricity market review and other measures that are already in place. Is the hon. Gentleman, as a Minister in the Department for Business, Innovation and Skills, focused on streamlining, and on removing complexity to achieve the overall outcome? Is he having those discussions with his colleagues in the Department of Energy and Climate Change to see what is the simplest, most direct and most effective way of achieving the decarbonisation objectives, and boosting renewables and potentially the nuclear industry—despite what is going on in that field at the moment—while at the same time stripping out layers of complexity and bureaucracy?
Absolutely. The hon. Gentleman is right. There are two challenges for the Government in this context: dealing with the low-carbon energy issue and ensuring that the lights do not go off in a few years’ time. Those two challenges do not necessarily run in the same direction, and if there is any conflict or tension we need to ensure that we get the balance right. As the hon. Gentleman rightly says, as a Minister in the Department for Business, Innovation and Skills, I want to ensure that we do not lose our competitive edge. The export roles that the right hon. Member for Rotherham referred to are very important. We must ensure that we remain competitive and continue to be a net exporter, and I would like to encourage that.
Let me come back to the strategy and explain to Members what is in it, how it works, and how we are involving the industry. The strategy is designed to deal with a number of key objectives. First, it will assess the potential for cutting greenhouse gas emissions, not just in steel but across the industries, and look at the interplay between the sectors. There are a number of subsectors, and if we are not careful we will lose the capability of the larger sector because we have not taken care of the smaller ones. That is sensitive issue of which we are very much aware, and there is a thorough technological review of the sectors and their processes, because that, I suspect, will be where the transformational change can best be achieved in the longer term. There have nevertheless been some very good short-term changes, which I will mention in a moment.
Secondly, what we are trying to do with the strategy is build on existing research and both public and industry initiatives, to look at how reducing emissions can be progressed further. In many ways, it is about extolling and developing best practice. Thirdly, the review looks at a whole range of ways of decarbonising energy-intensive sectors. We are examining improvements to existing processes, as well as looking at substitutes and alternatives. That is partly to do with materials, as well as with processes. Fourthly, the strategy is embedded in a collaborative process with industry, the regulators and the various experts engaged in the field, such as institutions dealing with materials, and we seek to provide evidence to make the case for the EU to move towards a 30% EU emissions reduction target, to which we committed ourselves in the coalition agreement. That is an important shift, and it comes back to competitiveness.
Lastly, we are looking to introduce, promptly but not unduly hastily, a range of policy options on which we can work with the industry so that it can make the transition, while—from my point of view—always looking at competitiveness. That is a difficult balancing act, and I suspect that we will not achieve it perfectly because of the inherent tensions and the nature of the industry, and of the steel sector in particular. We are looking at the sector leaders and the supply chain, and at engaging with them through the strategy, to ensure that it can work. Although there are natural anxieties there is some really good practice, and I want to highlight a couple of examples that I suspect the hon. Members for Newport East and for Ogmore will know, given that they are Welsh Members.
Last spring, Tata Steel in Europe completed a £60 million investment to recycle process gases from the Port Talbot melt shop. The new facility reduces Port Talbot’s carbon dioxide emissions by 240,000 tonnes a year, its particulate emissions by 40 tonnes a year and, most interestingly, cuts its energy requirement from the grid by half. As the right hon. Member for Rotherham rightly says, this is a genuinely energy-intensive industry. It is also an industry in which we need to be able to control the energy in key bursts, and therefore the ability to reduce the energy requirement from the grid by half is tremendously encouraging.
A further £185 million investment at Port Talbot was announced last August, and the project, which is due to finish in July, will involve the rebuilding of blast furnace No. 4 and will increase liquid steel capacity at the plant by 400,000 tonnes, while improving environmental performance and safety. If production can be increased and performance improved, let us see how we can roll that out and work with the rest of the industry on that best practice.
I think that that is a good argument, but if the Minister or the Government are going to propose new taxation on carbon, one option might be to recycle some of those funds into industrial programmes that would help the steel industry across the board and across the nation to do similar projects.
We are always mindful of the need to consider whether we can help the industry, particularly where there are up-front capital projects that need to be bridged, and I am always in discussions with the sector. I cannot make open tax promises at this stage as that is not my job; it is the job of the Chancellor, and rightly so. I am nevertheless always happy to talk to the industry on that basis.
The strategy, together with the carbon price floor and the fact that the strategy is founded on a consultative approach, means that we can, I think, work with the industry. As the right hon. Member for Rotherham rightly says, the Treasury, the Department of Energy and Climate Change and the Department for Business, Innovation and Skills all need to be involved, and that is the approach that we seek to take. If we had only a single Department approaching the issue from one perspective, we would be in danger of not looking at it in the round.
The lead on this is not my Department; the proposal comes from the Department of Energy and Climate Change, which has been looking specifically at the impact of the price across sectors. I deal with deregulation, and impact assessment has many other, often challenging, implications. We have been looking at how it impacts on the sector, what it means and, most of all, what the practical outcomes are that the industry can use to progress. That is the key point.
In conclusion, we believe that energy efficiency and business competitiveness go hand in hand. We are trying to ensure that the challenge for the environment does not become something that is done at the expense of the economy, and we are very sensitive to the fact that particular industries, whether it is steel or—as I saw for myself recently—brick making, understand the practicalities of changing processes, changing materials and the regulatory environment, and how the carbon price floor will work, so that we can help businesses move through this period and successfully decarbonise themselves and compete at the same time.
[Hugh Bayley in the Chair]
It is a great pleasure to serve under your chairmanship, Mr Bayley. I am delighted to have secured this debate, as we have reached a critical juncture in the British pig industry. I am also particularly pleased to see the Minister in his place, as I know that he is a friend and ally of Britain’s pig farmers and has taken a lot of trouble to understand the problems faced by the industry.
We should not underestimate the size of the industry. The value of pork retail sales in the UK is about £8.7 billion, outpacing chicken, beef or lamb. This is an important industry, but I am sorry to say that it is in trouble. Just three weeks ago, pig farmers from our constituencies and across the country flocked to Westminster to draw the Government’s attention to the plight of their industry. Many MPs will have signed the 16-foot sausage in Whitehall and heard the rousing rendition of the industry anthem “Stand By Your Ham”, all in support of the cry, “Pigs are still worth it!”
I say “still worth it” because the Minister and other colleagues with long memories may recall attending the 2008 “Pigs are worth it” rally. Like this month’s rally, the 2008 gathering was a response to a sharp increase in feed costs that left the industry on the brink of collapse. After the 2008 rally, led by the much-missed standard-bearer of the “Pigs are worth it” campaign, Winnie the pig, the industry returned to profit in 2009. That breathing space allowed farmers to recoup some of their losses and take the opportunity to invest in improvements to production and infrastructure.
Despite fluctuations in profit margins, the outlook remained positive, at least for a few months, until last August, when the industry was driven into crisis once more. The fleeting period of profitability was not long or profitable enough for pig farmers to recoup the severe losses that they sustained in 2007-08.
I am grateful to my hon. Friend for giving way, and I congratulate him on securing the debate. Does he agree that one problem has been our loose labelling law? Many consumers wanting to support the British pig farmer by buying British pork have not always known when they were doing so, because it is possible to package pork reared overseas as British if it is merely processed here.
My right hon. Friend is correct. He might have seen my Food Labelling Regulations (Amendment) Bill, which is scheduled for Second Reading on 1 April. Should the Government wish to take this opportunity to announce that they will give it Government time, I would be only too pleased to hand it over to officials to be steered through the House. Yesterday, I was encouraged by a phone call from the Department for Environment, Food and Rural Affairs asking to see a copy. It is important to say that there has been some improvement in labelling in the pork sector, but I still believe and have always maintained that the only viable long-term answer is a mandatory regime. We already have mandatory regimes for many other foodstuffs; we should have one for pork and pork products as well.
The inexorable slide into loss-making as rising feed prices have affected the industry has begun to cripple pig farmers in this country once again. The price that pig farmers pay for feed has more than doubled since 2010. Feed costs are rising faster than during the crisis of 2008, and I am afraid that the omens for the future are not good. BPEX—the British Pig Executive, which is the industry body—estimates that feed, which is generally made up of a combination of wheat, barley and soya, remains the single largest cost for British pig producers and accounts for 77% of pig farmers’ costs, up from 60% in 2009. BPEX expects food costs to remain historically high this year, and possibly beyond.
That gloomy forecast is being borne out by recent movements on the international cereals market. The Food and Agriculture Organisation of the United Nations expects a tightening of the global cereal supply this year, driven by growing demand after the slump in world cereal production in 2010. According to the FAO, export prices of major grains have risen at least 70% since February last year, and global cereal stocks are expected to fall sharply due to a decline in supplies of wheat and coarse grains. Market uncertainty after the Japanese earthquake caused prices to fall from £214 a tonne in February to £170 a tonne last week, but as of last Friday, wheat prices had climbed back to £195 a tonne. As one might imagine, recent increases in the price of pig feed have had a severe impact on the cost of pig production, which has risen to £1.64 a kilogram.
However, although production costs continue to rise, the dead-weight average pig price—the price farmers receive for the pigs they produce—has fallen during the same period. In February, the DAPP stood at £1.35 a kilogram, 29p short of covering pig farmers’ costs and 12p a kilogram below the July 2010 price of £1.47 a kilogram.
Britain’s pig farmers started 2010 in a state of cautious optimism, their hope to rebuild based on the reasonably steady costs that they faced and their improved returns in 2009, but by September 2010 the industry had returned to making a loss, and by January 2011 the cost of production had risen by one third compared with 2007. According to BPEX, a farmer sending 200 pigs to slaughter in January this year stood to lose £4,500 in a single week. The pig industry is facing overall losses of £4 million a week, and farmers are estimated to be losing more than £21 on every pig produced.
Although the rising price of feed is undoubtedly a major factor in the pain being suffered by British pig farmers, it is far from being the only factor. The pressure on Britain’s pig industry caused by rising feed prices is being amplified by what can only be described as the decoupling of the supply chain. For a supply chain to work properly, manufacturers, processors and retailers must work collaboratively to bring down its costs effectively and sustainably. However, it is clear that the pressure of high feed costs is not being shared across the pigmeat supply chain. If anything, the reverse is the case. Feed manufacturers have passed on the rise in the cost of cereals to their customers—that is, pig farmers—but the costs of rising prices have stopped with farmers and are not being passed up the supply chain to producers and retailers.
The disconnect in the pigmeat supply chain can best be illustrated by the relative performance of its constituent parts in the 12 weeks up to the end of January 2011. In that period, British pig farmers suffered losses estimated at £35 million, which equates roughly to £416,000 every calendar day. However, over the same 12-week period, the processing sector made an estimated profit of £100 million, or just over £1 million a day. Retailers, including Britain’s supermarkets, which set much store by their support for British farmers, enjoyed combined profits of £192 million from pork and pork product sales, equivalent to daily profits of £2.3 million.
On the point about retailers, particularly supermarkets, the hon. Gentleman well knows that we hope the Government will shortly introduce the proposed supermarket adjudicator Bill. Although that cannot and should not be a price-sensitive or price-setting mechanism, it will address the issue of fair dealing. Does he agree that the sooner we pass such a Bill, the sooner we can help not just pig farmers, but many other farmers and suppliers to supermarkets?
I agree. We all use supermarkets because in many ways they are efficient, but we love to hate them because they are very powerful. We are not discussing perfect competition. People sometimes speak of supermarkets as though they were speaking of the market for foreign exchange, but this is an oligopolistic arrangement. Supermarkets have large amounts of power that they do not always use in the right way, and sometimes they misuse that power. I welcome the Government’s proposals for an adjudicator.
I congratulate my hon. Friend and neighbour on introducing the debate. If he will pardon the pun, this is like “Groundhog Day” for other hon. Members and for me, as we have been debating the pig industry for at least 10 years. Although I do not want to turn supermarkets into devils, it seems to me that they stand condemned in two ways. The first relates to driving down costs and forcing down farmers’ profits, and the second is the labelling itself. They are better now than they ever have been, but all too often, as my right hon. Friend the Member for East Yorkshire (Mr Knight) pointed out, they put the Union flag on something and it is only when one reads the small print that one realises that it is imported bacon or ham.
My hon. Friend is right. There have been some egregious examples involving some of the best known and highly admired supermarkets. Marks & Spencer, for example, was guilty of such practices, but I think that there are fewer of them now. The use of Union, English and Scottish—I was in Scotland for Christmas—flags in supermarket aisles is better and more appropriate, but we are not there yet and he is right that there is still work to do. Some supermarkets are leading the way on doing what I think would be the right thing, both for themselves in the long term and for the industry. I shall mention Morrisons in particular in a moment.
There is no doubt that supermarkets in general seem to be using their part of the supply chain to insulate themselves against the increasing costs of the production of pork and other pigmeat product, such as bacon, ham and sausages.
Is it not a shame that we import 50% of all pig products? Given that the Chancellor has just given a Budget for growth, would it not be a good idea to try to become a net exporter of pork products, particularly from Norfolk, which is where my constituency, as well as that of my hon. Friend, lies? There does not seem to be a level playing field on welfare internationally to enable us to increase our exports and decrease our imports.
My hon. Friend is absolutely right—there is not a level playing field. BPEX has done a lot of work on the issue and estimates that 70% of the pork imported to this country is produced under animal welfare standards that would be illegal here. In other words, 30% of what comes in meets our standards, and 70% does not.
Price promotions in supermarkets are a particular problem. Tesco ran a price promotion in January in what are called the gondola ends—the ends of the aisles—and it was very successful because of its high visibility. Such promotions can increase sales by up to 200%. If a supermarket has an uplift of 200%, not only will it want to keep the promotion going for longer, but it will need more product. I fear that, at such times, even if supermarkets such as Tesco are adhering, or say that they are adhering, to the standards for their imports, suppliers will be under pressure and will get the product from wherever they can, and the standards will not always be adhered to.
People may be familiar with the concept of stalls and tethers, which are banned in this country. Tesco wrote to me this morning pointing out that they will be banned in the European Union, but they will not—an allowance will still be made for the use of stalls and tethers, although the period will be restricted. Even so, that will not be introduced until 2013, which means that if one visits a British farm and sees a stall and tether, one will know that it is illegal, whereas if one visits a farm in other parts of the EU, one will still be able to see stalls and tethers and will then have to audit whether they are used for more than four weeks. I really do not know how that can be successfully audited. There are still big issues to resolve.
I have no doubt that the behaviour of some supermarkets has helped to suck in imports, which has had the effect of keeping the lion’s share of the profits at the customer-facing end of the supply chain, and of ramming the rising production costs on to pig farmers.
It would be interesting to know whether the promotional campaign to which my hon. Friend referred was effectively being funded by the suppliers themselves. I am afraid that, too often, the so-called promotional campaigns of two for the price of one are largely or mostly funded by the suppliers, not the retailers.
Of course, that is a common problem with very powerful retailers. We have seen it in the book trade—many book publishers have been driven under by that sort of practice by some book chains. We know that big factors in the marketplace mean that it is constantly dynamic—no static position, even if it holds for a while, will hold for ever—but that is another thing that the adjudicator needs to look at, because it is an exercise of market power that distorts in a way that could sometimes be thought of as anti-competitive.
Retailers have the power, if they choose to use it, to make a difference by using their stocking, labelling and pricing policies to promote the prominence of British produce and to ensure a fair return for British farmers, including British pig farmers. I pay particular tribute to Morrisons, which is the only one of the big four supermarkets to source 100% of its fresh pork from Britain. Morrisons has also committed to using British-only meat in its own-label sausages, and earlier this month the company’s chairman, Sir Ian Gibson—I am led to believe that he is no relation of the former Member for Norwich North—wrote to me about Morrisons’ backing for British farmers. He said:
“We recognise the pressure pig producers are under and will continue to be strong supporters of the sector. We are the only major supermarket to have such close control over the provenance of its meat, buying pigs directly from Britain’s farmers and processing the pork ourselves”.
“This results in exceptional quality, freshness and value. It also enables us to offer industry-leading support to British farming. Our commitment to source 100% British fresh pork is unique among the major supermarkets and in 2011 we expect to reach the milestone of purchasing a million pigs a year from British farmers”.
That is extremely good news. Sir Ian added:
“This policy is popular with customers who we know show a preference for British produce if the price is right. Our combination of British provenance and quality at an affordable price sees us overtrade on pork—that is to say, our share of the pork market exceeds our overall market share”.
I think there is a lesson there for other supermarkets. Sir Ian continued by saying that not only are Morrisons
“major customers of British farming but we consistently pay over the market price for our pigs and we always have done. This was reflected in the results of an independent satisfaction survey of our pork farmers last year, with over 70% responding that they were happy at the price paid by Morrison”.
I salute Morrisons for backing British farmers so wholeheartedly and I wish them every success in their million pig milestone.
It would be remiss to not also mention supermarkets such as Waitrose, Marks & Spencer, Aldi, Lidl and the Co-op, which now all source 100% of the fresh pork that they stock from British pig farmers. All of that pork displays the red tractor mark, which is an independent logo that guarantees that the food it adorns was sourced from farms and food companies that meet Britain’s high standards of food safety and hygiene, animal welfare and environmental protection.
Such support, however, is not constant throughout the retail industry. On the day before the “Pigs are still worth it!” rally, Mr Andrew Opie, food director at the British Retail Consortium, commented in a press statement entitled “Pig farmers do have retailers’ support”:
“Retailers know some consumers prefer to buy British. They’re already doing what they need to to look after their supply chain and secure a sustainable UK pig industry”.
I am afraid that that will raise a hollow laugh from many pig farmers. Mr Opie goes on:
“Supermarkets do not generally pay farmers directly for their pork.”
Well, that will be news to Sir Ian Gibson, because that is exactly what Morrisons does. Mr Opie concludes by asserting that supermarkets have no direct relationship with farmers. Unsurprisingly, the BPEX chairman, Stewart Houston, described those comments as “complete rubbish”, before adding that supermarkets
“dictate prices to processors who pass those prices directly to producers. It is a very short supply chain and they have nowhere to hide. How much money there is in the supply chain is determined by the price supermarkets pay. It is as simple as that.”
They certainly do. They inspect or employ auditors independently to inspect British farms and say—Tesco has been saying this in correspondence with me over the past few days—that they do the same in relation to their foreign supply chain. I fear, however, that, when they have promotions at the discounted end of the market, that audit trail may run out and the provenance will not always be as clear as it should be.
Hon. Members may be disturbed to hear that there is evidence to suggest that British pork products are quietly being withdrawn from the shelves of our largest supermarkets and displaced by imports. Data from Kantar Worldpanel show that, over the past three years, the volume of pork on sale in British supermarkets that does not clearly identify a specific country of origin has increased, with a spike in sales of non-British pork having been recorded recently, in the past few months of this year and late last year.
Families in my constituency and across Britain who make their living from farming pigs may find their weekly shop at the local supermarket increasingly dispiriting. In-store observation by BPEX suggests that an overall increase in pork sales is being driven by promotional sales of imported pork that does not carry a quality mark. Imported pork has replaced British pork carrying either the quality standard or the red tractor. Where major supermarkets have run promotions on pig products that are multi-buy packs or are heavily discounted on price, it is mostly imported pork. According to BPEX, just one in five pork loins promoted by Sainsbury’s two weeks ago was British, Asda’s three for £10 promotion only included imported pork, and anecdotal evidence from BPEX members suggests that Tesco’s recent in-store promotion on the so-called gondola end—end of aisle—of three pork products for £10 also featured only Danish or Dutch meat.
That is borne out by Pork Watch, the bi-monthly survey of supermarkets conducted by representatives of the National Pig Association and by Ladies in Pigs. The most recent survey found that the overall number of pork facings—the shelf space allocated to a product line—has fallen from 80% in November last year to 77% in February, which is the lowest figure for the past 12 months. Facings of the red tractor or the quality standard mark for pork—both indicators that British welfare standards have been adhered to—have also fallen slightly from 75% to 73%, after making small gains last year. It is worth taking a particularly close look at Pork Watch’s findings on Tesco: it found that facings of “British” on Tesco pork had tumbled from 73% to 59% and red tractor facings had slumped from 63% to 55%—a fall of 14 percentage points in the British category, which is the largest decline of facings of “British” on pork in any British supermarket. About half of the pork on Tesco’s shelves does not bear the red tractor, which makes it unlikely that imported pork meets the UK’s welfare standards in all cases, despite Tesco’s claim that its overseas suppliers’ standards “broadly equate” to red tractor standards.
Let us be in no doubt that the situation facing British pig farmers is extremely serious. Of course, neither retailers, individual farmers, their industry bodies nor Members of Parliament can do much to influence world commodity prices. Feed is expensive because cereals are expensive, and that looks unlikely to change in the near future.
I hope that my hon. Friend can help me on one point. Presumably, the story he is telling ends with pig farmers leaving the industry. If that is the case, is the situation not serious for not just pig farmers, but for agriculture and indeed rural Britain as a whole? I suggest that problem goes much further than pig farming.
It does go much further than pig farming. People are beginning to exit the industry and many are worried about whether they can expect to still be in the industry by the end of this year. My point is that if we have a stronger pig farming and farming sector, that is good for Britain, for the rural economy and for the economy as a whole, and that that is good for the Tescos of this world and their like. If the supermarkets took a longer-term view, rather than just worrying about the next three months and the next quarterly results, it would be better for them in the end. It is not an accident that Morrisons’ fresh meat sales have increased by 12% since it announced its 100% British pork policy. I urge supermarkets that are not currently doing so to take a more pro-British stance. It is incumbent on institutions—and such companies are institutions—of the like, size and power of Tesco to do more than just think about one set of shareholders; they have to think about the entire community of stakeholders, of which they form such a powerful part.
Let me give an example. Tesco states on its website that it supports British farmers, and hon. Members will have probably seen the signs as they go into Tesco showing that it is the biggest customer of British agriculture. On its website, it identifies 27 farmers whom it supports: five produce apples and pears, five produce cheese, nine produce either beef or lamb or a combination of the two, one produces watercress, one produces rapeseed oil and one produces milk. There is not a single pig farmer among the 27.
Will my hon. Friend explain why the economics mean that Morrisons can make a profit by sourcing 100% British pork when Tesco and the other superstores he has mentioned cannot? What is the economic reason he has divined for that?
My hon. Friend makes a very interesting point because one might think that if everybody could do it, they would. My point is they can do it and they should. The economic case is that when customers see that supermarkets, such as Morrisons, are backing British farmers and backing Britain, they are disproportionately likely to go and shop in those shops and buy those products. They want to see that the supermarket that they endorse by their shopping decisions—it is their spending the money in their pocket that means a supermarket is profitable—is also helping to back our community, back Britain and back British farmers. When people see that, they respond. That has an economic effect of its own, which is why Morrisons’ policy has proved to be so successful. Other supermarkets should follow suit.
The even broader point is that, even if the effects were cost-neutral in the long term—I do not believe for one moment that they are—the supermarkets should recognise that they are British supermarkets and they are succeeding only because we have allowed the planning permissions to go through, sometimes against people’s better judgment, and enabled them to have those locations. It is because we go into those supermarkets and spend our money that they are able to make such profits. I come back to the question: what kind of market are we talking about? We are not talking about the market for foreign exchange; we are talking about enormously powerful players, and with enormous power comes enormous responsibility. I am asking the supermarkets to exercise that responsibility in a more measured way in the interests of this country. I do not want to rant even more on that point, so I shall stop there.
It is certainly true that some British supermarkets can and do support British pig farmers, but only one of the big four sources 100% of its pork in Britain. That is not good enough. In addition, the biggest of the big four also seems to be slowly turning its back on British farmers, offering cheap imports in the misguided belief—promoted by the British Retail Consortium but disproved by Morrisons—that British shoppers do not care where the meat comes from as long as the price is right. Retailers will no doubt respond that they have to meet the variable demand of their customers and that in the current economic climate price has to be a factor. However, I question how much of the instability in the pigmeat supply chain is due to fluctuations in customer demand on price and how much is caused by the internal operations of the supply chain which, as I have set out, is entirely skewed in favour of retailers.
This is not simply a case of backing our heroic pig farmers against the evil supermarkets because, as we have heard, some of our supermarkets are trying to do the right thing. Of course it would be foolish to state that shoppers will buy British whatever the price, but we also know that it is possible to offer consumers British food at high standards of quality and animal welfare all at an affordable price. Morrisons have shown that that is possible and, if the producers can get a fair price for their pigs, we will have the best of all possible worlds.
When feed prices peaked in 2008, it took six months for prices to fall back to a sustainable level, during which time many pig farmers had left the industry. Today, three quarters of the remaining farmers say that they too will get out of the pig business if things do not improve within the next 12 months. That would be a tragedy for not only pig farmers, but processors, retailers and consumers. British consumers want to buy British produce because they want to support British farmers and they believe that it is the best. I have not wavered in my belief that a mandatory country of origin labelling regime, combined with the widest possible support for the red tractor and quality standard marks, will give shoppers the information they need.
The Minister acknowledged in the House last week that the pig industry receives no subsidies. That is quite correct and I am certainly not calling for that to change. However, if the Government value having a British pig industry that sets the highest standards for quality and animal welfare, they cannot simply shrug and believe themselves to be powerless in the face of global food prices and grocery behemoths. The Government must encourage the pigmeat supply chain to work as it should, so that pig farmers can make a living, not a loss. Pigs were worth it in 2008. They are still worth it today.
It is a pleasure to serve under your chairmanship, Mr Bayley. I congratulate my hon. Friend the Member for South Norfolk (Mr Bacon) on securing the debate. I hope he will not mind if I take his name in vain. Pigmeat is really important to this country and, dare I say it, there is never a better way to start the day than with a cup of tea and a bacon sandwich. I can hear people salivating around me as I mention that. The state of the industry has already been well described, and there have been numerous interventions from hon. Members about some of the points that I will try to present in a slightly different way in my speech. There is no doubt, however, that the industry needs some action from the Government. I will ask for clarity on actions that are already under way, and make some suggestions about the future.
In 1998, this country was 80% self-sufficient in producing enough pigmeat for our needs. This year we are at 48%, for reasons that have already been referred to: aspects of the animal welfare standards; the stall and tether and castration bans; and the dumping of cheap meat on our market, especially when we had the German dioxin feed scare. The current value chain has been well documented. I received my figures from one of my local farmers, Jimmy Butler of Blythburgh Pork, who has approximately 18,000 pigs at any one time, all of which are free range and very tasty. I had better not promote any more producers. He told me that farmers effectively end up losing £20 per pig. From the figures he gave me, the farming industry loses £4 million per week, while processors make £8 million, and retailers make £16 million, profit per week. There are various causes. We have already heard that the pricing that cannot be agreed with supermarkets, but there is also an issue about the price of feedstock. I appreciate that the Government cannot control that particular aspect of the input, but they can do something about the output prices in their proposed legislation for groceries and the inclusion of a draft adjudicator code for supermarkets. There is also the issue of welfare standards.
My hon. Friend has introduced an important issue to the debate—the dioxin scare in Germany, which has caused a fall-off in demand for pork in that country. Is there a sign of hope in the fact that the lack of demand for pork in Germany is likely to be a very short-lived phenomenon, and will hopefully lead to prices being a little more buoyant in future than they have been this year?
My right hon. Friend makes a very good point. I hope that that will be the case and, going even further, that our British farmers will be able to exploit an export opportunity. It would be interesting to see Germans eating British sausages, rather than their own bratwurst, but why not? We have won on other fronts in Germany in the last century and I am sure that our pig farmers would be proud to go in and make sure that an English wurst—
Indeed. My hon. Friend is absolutely right. I was not referring to anything else.
We should be proud of the welfare standards that we enjoy in this country. My hon. Friend the Member for South Norfolk is right that some of the regulations have been partly changed, and the task of bringing welfare standards up to those enjoyed in the United Kingdom will be completed by 2013. I call on the Government to ensure that they use all possible influence to make sure that that date is not delayed in any way. We have already heard other examples of derogations that have been extended. It is critical for our industry, and just as important for the welfare of the animals that are farmed, that we do not delay.
What can we do? The industry is innovative. We have heard about Ladies in Pigs, with its lip-smacking recipes and demonstrations around the country. The industry is good at talking about consumer choice and education. We can continue to advertise the fact that 45% of pig herds in this country are reared outdoors, whereas in the rest of Europe it barely reaches 5%. Such things are important, and they are one reason why British pork is rightly a premium product. I wonder whether it is appropriate to bring in the following point, and I do not know if the pig industry has ever done this. I have received a number of letters from constituents who are concerned about halal labelling on other forms of meat. Regularly, meat is presented—one might buy chicken or something similar—as having been prepared to halal standards. I think I am right in saying that halal is irrelevant when it comes to pork, bacon and so on. Therefore, if people want to be confident that they are not eating meat that has been prepared in a halal way—or indeed in a kosher way—then eating a pigmeat product would be one particular avenue for them to pursue.
We should also make sure that the industry of butchers continues to recommend itself to consumers. I think that we all regret the loss of any high street butcher from our constituencies, and I am proud that we have so many—do not worry, Mr Bayley, I will not be naming them all, or any. Butchers provide a professional insight for consumers and help with choice. I hope that they will be encouraged by the information in the Budget today on small business rate relief. There will be significant reductions for properties with rateable values of less than £12,000—an example of the Government supporting high street shops, including butchers, to ensure that they can continue to sell good British pork and other pig products.
My hon. Friend the Member for South Norfolk said that we are not calling for a subsidy. I completely agree with that, and I do not believe that the industry is calling for it either. However, the Government could make sure that they take advantage of my hon. Friend’s excellent Food Labelling Regulations (Amendment) Bill. We were very strong on that issue before the election and I am very keen to see that we make good progress. That would not cost money, it is free to do, and it would have a dramatic effect on consumer education, as the consumer would know that the products that they buy that sport the British flag were raised and reared here and conform to UK welfare standards. It might also be worth trying to pull together all the different legislation on UK food labelling and having a more simplified process. My hon. Friend’s Bill might be a good avenue for doing so.
It would be helpful if the Minister clarified the position on Government buying standards for food, which were due to come into effect this month. I understand that that is not a buy-British campaign, but it is supposed to ensure that a high quality standard of food is purchased by Government. I look forward to clarification on that.
Another slightly controversial question concerns feedstock. Pigswill was banned as a source of food for animals, which was understandable at the time. I am not suggesting that all pig farmers want pigswill to return, especially those at the premium end, but have the Government considered reviewing that policy as a way of trying to reduce the input costs for our farmers? Will the Minister also clarify what the UK pigmeat supply chain task force is doing, as well as the EU advisory group on pigmeat? I only learned about that group yesterday through a response to a question about pigs in the House of Lords. It is good to see that the other place takes an interest in this issue too. I appreciate that the Government cannot just go out and tell people to buy pigmeat, but there is a lot that they can do to ensure that the product that we are proud to see on our shelves, when carrying a British label, is deemed to have been produced to the same welfare standards anywhere in this country. I look forward to the action of a great friend of farming—the Minister.
Finally, I must apologise for forgetting to congratulate my hon. Friend the Member for South Norfolk on securing this debate. I hope that it will not be groundhog day, as my hon. Friend the Member for Broadland (Mr Simpson) suggested, but all I can say is that, with the friends of the farming industry who are present in the Chamber today, the Minister will know that we will not give up.
It is a great pleasure to serve under your chairmanship, Mr Bayley. I congratulate my hon. Friend the Member for South Norfolk (Mr Bacon) on securing the debate, which is very important not just for us in East Anglia, but for many rural communities all over the country. Pig farming and farming in general have suffered in the past few years. Although it is important that we have a comprehensive debate about pig farming, it also helps us to raise a number of issues that are important to the wider farming sector.
One of my first engagements as a new MP last year was a visit to Stuston farm in my constituency, where I was introduced to a new breed of pig—the mangalitsa pig— which has just come into the United Kingdom; that was a great pleasure. Today’s debate is about the future of pig farming, which is one of the most important parts of agriculture in East Anglia, particularly in Suffolk and Norfolk. I am therefore delighted that we have replying to today’s debate a great friend of East Anglia, Suffolk and my constituency. The Minister knows the issues better than many and I am sure that he will do all he can to help us resolve them.
My hon. Friend the Member for South Norfolk talked about a number of important issues, including the fact that the pig industry slid back into loss making in 2010, its problems exacerbated by the rise in wheat prices and the fact that retailers are not passing on their profits to pig producers. According to the National Farmers Union, over the past three years pig producers have been losing £20 a pig, whereas retailers have continued to make a profit of £100 a pig. That is unacceptable. Retailers should show more corporate responsibility in supporting British food producers.
Of course, the increasing cost of fuel will further exacerbate the problems in the pig industry, so we were pleased to hear in today’s Budget statement about the fuel stabiliser, which will help many farmers. Another important problem is the difficulties in many parts of the country with getting planning permission for local abattoirs, so that we can reduce food miles. I am delighted that we finally have in East Anglia, in my constituency, an abattoir. Local pigs can now be slaughtered locally, which is a very good thing.
We have talked about broader questions of Britain’s food sustainability and the importance of supporting a profitable and sustainable agricultural sector to improve that. In the past decade or so, the amount of food consumed in Britain that is produced here has fallen quite dramatically: we now produce only about 40% of the food that we eat. With climate change already affecting many major agricultural producers such as Australia, where extreme temperatures could undermine a major world supplier of wheat, it is all the more important that we promote food sustainability and support British pig farmers as a means of doing that. I am pleased that that matter has already been raised: the Minister talked about it in response to parliamentary questions from my hon. Friend the Member for North Warwickshire (Dan Byles), who touched on it in the context of supporting our armed forces. It is important that we make sure that Britain can feed itself and that we have proper food security and food sustainability for the future.
One important point that has been teased out in the debate is that British pig producers have much higher standards of traceability and animal welfare than many of their overseas competitors, but they are not competing on a level playing field in the supermarkets where they sell their goods. An important related point is that 30% of imported pork does not meet UK standards of animal welfare, but it is still sold in our supermarkets.
I thank my hon. Friend for that clarification, which makes the point even more forcefully. As he says, only 30% of imported pork in our supermarkets meets UK standards, according to BPEX. We need action from the Government to put the onus on supermarkets to show greater corporate responsibility and to provide a more level playing field for British food producers and the goods they sell.
My hon. Friend is making a powerful point about the need for a level playing field. Pig farmers in my constituency are not asking to be given any artificial support; they are asking to compete on a level basis. They go to other countries and see farmers putting in new sow stalls when they themselves spent hundreds of thousands of pounds per unit replacing their stalls 10 years ago, and they are rightly upset. Does my hon. Friend agree that other countries should not be allowed a derogation in due course? If our farmers have had to make that investment, so should farmers elsewhere and they should not be allowed to import their meat into this country unless they follow the same rules.
My hon. Friend is absolutely right and makes the point very powerfully. The fact is that there is not a level playing field, particularly in the European Union. Stricter EU animal welfare laws for pigs have been agreed, but they will come fully into force only in 2013. As he forcefully argues, we need those standards to be applied in Europe. However, it is not just a question of standards being applied universally; our supermarkets must also show corporate responsibility. If overseas food producers do not produce food to the same high standards of animal welfare and traceability as British farmers, our supermarkets should not buy food from them. We need to see that corporate responsibility from the industry.
I represent an area in Northern Ireland where almost everyone used to keep pigs, sometimes in large numbers. We are now down to only one producer, albeit a big one, which indicates that we are hearing the death knell of the pig industry. In some parts of Europe, regulation is non-existent, so does the hon. Gentleman feel that the Minister needs to convey to European Ministers and to Brussels the fact that whereas regulation is enforced with almost evangelical zeal in parts of the United Kingdom, the same is not true in other parts of Europe?
I thank the hon. Gentleman for that forceful intervention, and I absolutely agree with him. British pig farmers have struggled a great deal over the past few years, and it is a great pity that the number of people farming pigs has consistently declined throughout the UK. We would like that to be put right and we would like to see greater support for pig farmers. He is right to mention the EU, because over the past decade or so Whitehall has been fond of gold-plating and platinum-plating European legislation, whereas countries that do not like the legislation tend to ignore it. He is absolutely right to say that we need to seek consistency across the EU, and that needs to be taken up at a European level. We want a level playing field so that our farmers can have a thriving and prosperous future.
I do not want to detain colleagues much longer, because we want to hear from the Minister. We have talked much about honest food labelling, which applies across the farming sector, but particularly to British pork. At the moment, bacon only has to be sliced in the UK to be labelled British, which is unacceptable. UK law requires that labelling should not be misleading, which is a good thing, but it does not define how much British involvement is required before produce can be counted as British. Traditionally, slaughtering animals in this country would count, so calling something British lamb or British pork could mean that although the meat was imported, slaughter and packaging took place in the UK, but now meat need only be sliced here to be labelled British. That can be misleading in supermarkets. We want stronger action on labelling, and I am sure that the Bill to be introduced by my hon. Friend the Member for South Norfolk will go a good way towards countering that great problem, which would also help to support British pig farmers.
We have talked a lot about getting greater corporate responsibility from our retailers. I mentioned the fact that while pig farmers have been losing £20 per pig over the past three years, our retailers have been making profits of £100 to £120 per pig. Surely there must be an onus on those retailers not only to support honest food labelling and promote the fact that British farmers produce pork to higher animal welfare standards and with greater traceability, but to want to support local and British produce. That has to be a good thing. As we know from the example of Morrisons, cited by my hon. Friend the Member for South Norfolk, consumers want to buy British and support local food producers. Consumers in East Anglia, Suffolk and Norfolk want to support our local food producers. That would be a good thing for supermarkets to do.
I could not resist attending the debate, if only for a few minutes. Does the hon. Gentleman agree that one consequence of the pricing system used by supermarkets is that pig production in this country is driven down and more pigs are produced in sub-standard conditions in other countries? That is a serious problem.
My hon. Friend is right. The key point, which my hon. Friend the Member for Beverley and Holderness (Mr Stuart) raised, is the need for a level playing field. We are proud that Britain has high animal welfare and traceability standards, but if our farmers are not competing on a level playing field with farmers in Europe and overseas, with 70% of overseas pork not being produced to the same high animal welfare standards, that is wrong. There is an onus on our supermarkets to show greater corporate responsibility and to make a stand by supporting local food producers and ensuring that they help their customers to understand the issues. I hope that we will hear strong words of support on that from the Minister.
We have talked today about the importance of backing British pig farmers, because we believe in backing British food sustainability and security. We have talked about the fact that there should be a level playing field for British farmers and pork producers, with their high animal welfare and traceability standards compared with the standards of their European competitors. We have talked about the need for honest food labelling, which we will discuss further in the main Chamber in the near future. The Minister is a great friend of farming and we look forward to his reply to the debate and to him telling us how he and the Government will support the British pig industry.
Thank you for calling me, Mr Bayley, and I thank my hon. Friend the Member for South Norfolk (Mr Bacon) for securing this opportune debate.
I want to concentrate first on the profitability of the pig sector. It is obvious that pig farmers cannot go on losing £20 per pig—something needs to be done. At other times when pig farmers lost money due to high cereal prices, cereal prices subsequently fell, so pig farmers could bridge the gap and the profitability of pigs returned. This time, we cannot guarantee that the peak in cereal prices will be here for only a short while; it may be here for quite a lot longer. It is always difficult to predict a market while thinking on your feet.
We must say clearly to the supermarkets that it does no good to drive pig farmers out of business, which is what they are doing. It is very short-sighted and has a knock-on effect on the cereal producer, because we produce a lot of barley and wheat for feed that goes to the pig and poultry sectors.
As many hon. Members have said, the pig industry is unsubsidised. It does not get any single farm payments, and pig farmers have to make their money back from the marketplace. We have to help them to do so through the grocery adjudicator and others. Hon. Members also talked about labelling, and although the “British” label is not always easy to get, there are regional labels, which have legal standing and are easier to maintain. When I was in the European Parliament, the French, and particularly the Italians, seemed to manage to label everything with a region and, largely, get away with it. We have to be keen on this.
Back in the ’90s, we introduced extra welfare standards for pig farming. Why did we bring those in? Because our people are very keen on animal welfare, but, to put it bluntly, if they are keen on animal welfare, they should put their money where their mouth is. Clearly, higher standards make costs higher, so we must ensure that produce is properly labelled in supermarkets so that consumers know what they are buying and are able to buy a British product.
Our main competitors in the pig industry are the Danes, probably closely followed by the Germans, and they are using sow stalls and tethers to this day. I remember trying to table an amendment to get them banned in Denmark by 2004, but the Danes are getting away with it until 2012. The Minister is a friend to farming, and I know that he will fight our corner very hard to ensure that there is no extension. This has gone on for far too many years and driven far too many pig farmers out of business.
Pig farmers do not want to join the subsidy junket. One or two might, but generally they want a fair price for their pigmeat. I have been to many local producers in my constituency to see the farrowing and the outdoor pig systems. We have some of the best, if not the best, pig systems in the world, but that costs more money. We have all made this plea to the Minister: let us look at this matter every way we can. Let us help pig farmers to brand their produce with a local label—Devon meat, of course, is better than any, but perhaps Norfolk meat is nearly as good—and to market it so we can get an increase in price. We give Morrisons top marks, but other supermarkets have lower grades, so let us say to the supermarkets that they cannot go on making pig farmers produce pork at a loss, because the pork will not be there. Once pork in the rest of Europe has decreased—the German situation—and production has fallen, there will not be this vast amount of pork sloshing about in the European market. What the supermarkets are doing is all very short-sighted.
We should look at ways that Government can help, but this is also about the power of the consumer. We must get the message over to consumers that they must go into the supermarkets, look at the label and ensure that the Union Jack is not just for processing, but that the pork was reared, slaughtered and processed in the UK. That someone can still put a Union Jack on a label just for processing is a problem. Often, people will pick that product up as though it is a genuine British product.
I welcome the debate. The number of Members present this afternoon, even with the Budget debate going on, shows how important we feel the topic is. I also welcome the presence of the Minister and the shadow Minister.
It is a pleasure to serve under your chairmanship once more, Mr Bayley. I congratulate the hon. Member for South Norfolk (Mr Bacon) on securing this important debate, which is also timely, given the number of pig farmers who recently attended the House and put their points on the future of the British pig industry very forcefully.
I commend the contributions made by the hon. Members for Suffolk Coastal (Dr Coffey), for Central Suffolk and North Ipswich (Dr Poulter) and for Tiverton and Honiton (Neil Parish), who expressed their concerns, but also their hopes for the expansion of the industry. They were united in their call for reform of the supply chain, which I shall address later.
The number of pigs in the UK declined from 7.9 million in 1996-98 to around 4.7 million in 2009, although numbers have stabilised since, and world pork production has increased in recent years after pauses in growth earlier in the decade. The United Nations Food and Agriculture Organisation estimated that global production reached 106.5 million tonnes in 2009, and 108.5 million tonnes in 2010. Pork accounted for 37.8% of global meat production in 2010, and pork production is rising in the Asia-Pacific region, but falling in Latin America.
From 2005 until 2010, the European Union exported more pork than any other region or trading bloc, but the Food and Agricultural Policy Research Institute has established that EU exports fell by 19% in 2009, and it forecasts a progressive loss in EU global market share, which is partly accounted for by the differentials in animal welfare treatment. It identifies Brazil and the United States as areas with a quickly expanding global pork market share.
That raises the question whether the EU, in negotiating to complete the Doha round of the World Trade Organisation trade talks, ought to consider trying to level up environmental and animal welfare commitments and guarantees across the world, given the competition that the European pig industry faces from Brazil, the US and other regions. That is an important point.
In this country, the pig industry has made real efforts on reform—for example, greater use of anaerobic digestion to cut down on food waste—and has operated to the highest level of animal welfare, but, as hon. Members have pointed out, food labelling and supply chain problems are placing our farmers in increasing financial difficulties. The previous Government set up a taskforce on the pigmeat supply chain, which produced a code of practice on labelling pork and pork products. It was based on the best practice available from the Food Standards Agency and had the support of the industry.
On research and development, the taskforce sought to extend new systems for surveillance and epidemiology, IT systems for integrating health schemes, slaughterhouse surveillance and quality assurance schemes, and schemes for reducing waste and emissions to the environment from the supply chain. There may be many measures in the Budget that I will not be able to support— [Interruption.] I am sure that hon. Members will not be too surprised by that.
Shocked, even—dismayed, perhaps. However, I hope that pig producers, and indeed BPEX, will take up one of the welcome measures in today’s Budget: the expansion of small business relief for research and development. That has the potential to improve the competitiveness of the British pig industry.
The Opposition call on the Government to act in three areas. The first is ensuring that the cross-EU enforcement of directives 2001/88/EC and 2001/93/EC on banning close confinement sow stalls takes effect on 1 January 2013, as scheduled. I am aware that the Government are supporting an intra-EU ban on the sale of eggs from countries that do not introduce the new provisions on egg-laying hens from 1 January 2012. Will they adopt the same position in respect of any breach of the directives on pig welfare standards by any member state? I hope that the Minister addresses that point in his winding-up speech.
Secondly, on food labelling, we call on the Government vigorously to support country of origin labelling in their discussions at the Council of the European Union, as alluded to in the coalition Government agreement.
I do not know whether the hon. Gentleman, from the rural idyll that is his seat, will be able to answer this question. He said that he wants the Government vigorously to act on food labelling. Why was so little done during the 13 years of the previous Administration, although I know he was here for only a little while during that time?
I am grateful for the hon. Gentleman’s intervention. I remind him, as I did the hon. Member for Christchurch (Mr Chope) during a debate on the Sustainable Livestock Bill some months ago, that there are three arable farms at the very top of my constituency. I am hoping to visit them during the Easter recess. Indeed, I have had a good discussion with the National Farmers Union Scotland on a range of issues in the past few weeks.
The hon. Member for Beverley and Holderness (Mr Stuart) raises an interesting point. We can bat around what did or did not happen during the past 13 years, but what will certainly be most effective is cross-EU standards in this area. He knows that the food labelling directive is before the European Parliament, and that it may have a Second Reading by early summer. We should focus our efforts and show unity across the House on getting decent standards that will protect the pig industry and other parts of our arable and livestock farming industries.
I want to address the anomaly that the hon. Member for Central Suffolk and North Ipswich pointed out—that is, food that is processed in the UK can be labelled as produced in this country. We need reform and clarity across the EU through regulations to deal with that issue.
The third area in which we seek Government action is in respect of a plan for the food industry. The previous Government commissioned the report “Food Matters”, under the auspices of the Cabinet Office, and the study “Food 2030”, under the auspices of the Department for Environment, Food and Rural Affairs, but circumstances have moved on. The Foresight report sets out new challenges for better use of water and soil. It also sets the global challenge of feeding 9 billion people by 2050, but with potentially fewer resources—increasing food production by 50%, but in a sustainable way.
To meet the challenges of sustainable food production, which the pig industry will be involved with, and to show that we can meet our climate change reduction commitments, the Opposition and the NFU call on the Government to adopt a proper plan for food, which should include the pig industry. If there is to be a plan for growth arising from today’s Budget, the UK’s largest manufacturing industry—namely, agriculture—cannot be left out. The plan should contain strong proposals for a groceries code adjudicator with the statutory power to tackle unfairness and inequity wherever they are found throughout food supply chains. As hon. Members have pointed out, such an ironing out and levelling of the market would be enormously beneficial to our pigmeat producers.
One of the subjects that the hon. Gentleman has not mentioned—perhaps he is about to do so—is the supermarket ombudsman, for whom I think there is a role. There is a margin between the £16 million per week profit made by shops and the £8 million per week that the pig producer gets. Is there a method whereby the supermarket ombudsman could bring those figures closer together, thereby keeping pig farmers in production?
It is precisely that ability to take steps to iron out market inequalities that we are calling for. The previous Government called the institution a supermarket ombudsman; the new Government call it the groceries code adjudicator. What matters is the powers that it will have, and we look forward to the draft Bill that the Department for Business, Innovation and Skills promised to publish by Easter to see how rigorous it will be in helping the sector and the dairy sector as well.
Hon. Members have alluded to the fact that the British pig industry needs not a handout, but a hand up. With the combination of an increase in research and development, a strong groceries code adjudicator, better and stronger EU food labelling rules, fairer supply chains and reform of the WTO animal welfare rules, we can collectively ensure a brighter future for our pig farmers, which is what they want and deserve.
I too, welcome you to the Chair, Mr Bayley. I genuinely congratulate my hon. Friend the Member for South Norfolk (Mr Bacon). During his time here, he has been a stalwart supporter of the pig industry, and I am sure that that is not because of his name. His Bill, to which I shall return, is being presented to the House for the fourth time, which shows his determination. I have attended innumerable breakfast and other meetings that he has hosted on the pig industry, and it is fortunate to have someone who is so determined to support it and the pig producers in his constituency.
On one occasion, most of the Suffolk and Norfolk MPs were in the Chamber, which demonstrated not just the importance of the concentration of the pig industry in those two counties—[Interruption.] My colleagues from east Yorkshire also joined us. Those are the main pig producing parts of the UK, and the fact that so many hon. Members decided to attend demonstrates the importance of the pig industry to them, and it reflects the lobbying that has taken place. As a former pig producer in the constituency of my hon. Friend the Member for Central Suffolk and North Ipswich (Dr Poulter), I entirely understand its importance.
As my hon. Friend the Member for South Norfolk rightly said, the industry is vital. He said that its total value is £8.7 billion, which is a significant sum in the retail sector. Others hon. Members have referred to the collapse of the pig herd since the mid-1990s. It is impossible to say precisely how much of that is attributable to the unilateral ban on stalls and tethers that we introduced, but it is obviously a significant part.
One of the changes over 20, 30 or 40 years has been rationalisation into specialist pig units. Years ago, pigs were one unit on a generalised farm, and a rise in grain prices had less impact, because farmers were feeding their own grain to their pigs, so they lost on one side and gained on the other. Now, more and more farmers are specialist pig producers, and must buy all their feed, so they can only lose from rising grain prices.
I shall try to address some of the issues that have arisen during the debate. My hon. Friends will be aware that there has always been pig a cycle. Pigs have a relatively short gestation and growth period, so the rise or fall in supply is a reasonably short-term phenomenon. They were always muck or money as supply and demand fluctuated slightly, but the level of fluctuation has become much worse, and the £20 a pig loss to which several of my hon. Friends referred reveals a dramatic downside of the cycle. It is unfortunate that the cycle was already beginning to drop off when feed prices were hiked up because of the grain price. That exacerbated the problem, but we are there, and the situation is horrendous.
My hon. Friend the Member for South Norfolk referred to some of the costs that our producers incur. Stalls and tethers were first phased out in the early 1990s, and were banned completely by 1999. Tethers were banned in the rest of Europe in 2006, and stalls will be banned by 2013, although, as my hon. Friend correctly pointed out, it will be permissible to keep sows in stalls for up to four weeks after service, and that brings me to the question asked by the hon. Member for Glasgow North East (Mr Bain). I assure him that the Government are absolutely opposed to any extension or derogation. As with battery cages for chickens, countries have known for a long time that the change was coming, and farmers have no excuse for not making the transition.
The hon. Gentleman asked me quite rightly about enforcement, and the fact that farmers will be allowed to have stalls on their farm in which to keep sows for four weeks will create a big challenge. Responsibility for enforcement will rest with the competent authority—usually the Department of Agriculture in member states—and I recognise the issue. We must keep pressing the Commission to ensure proper enforcement, because that is a worrying loophole.
Will my right hon. Friend say whether the Government have consistently made the case that there should be no derogation after 2013, and whether he has any idea of when the Commission might publish details on enforcement? The earlier we see the proposed enforcement mechanisms, the more we will be able to influence them before they are introduced, when they will be harder to change.
The answer to the first part of my hon. Friend’s question is that we constantly tell the Commission that when a rule is introduced, every country should comply with it, and that there should be no derogations. He is right in saying that we have not seen any proposals for enforcement, and I am not aware that we have seen any assessment of what stage other countries are at. There were efforts to do that with conventional battery cages, but there were difficulties. The matter is important, and I will chase it up to see whether there has been any assessment of what other countries have done. To be fair, we know that many countries with a significant number of pig farmers, such as Denmark, which is a major pig producing country, have converted, but I cannot tell my hon. Friend precisely what the proportions are and how many remain to convert.
The hon. Member for Glasgow North East challenged me on whether we would support an intra-EU ban on those countries that have not introduced the measure. I shall be completely honest, as I always try to be. We have not considered that yet, but he makes a valid point. I made the point about eggs, and there is no logical reason why we should not do the same for pigmeat. However, we want everyone to convert, and until we see some sort of assessment, we cannot speculate too much, but I entirely accept the hon. Gentleman’s point.
I have just been passed a note saying that no official information is available about how far EU countries have moved towards complying with the directive. Denmark and the Netherlands have said that they will comply, but the situation in some other countries is different and vaguer. There are different rules on castration and tail-docking in different countries, and there is a competitiveness issue. Some hon. Members referred to supermarket specifications and, as my hon. Friend the Member for South Norfolk said, claims by Tesco and others about their supply sources. It is reasonable and acceptable, of course, for retailers to ensure that their supply chains comply with British standards, and it is not in the Government’s gift to check whether they do. There is no doubt that tail-docking and castration rules are different in other countries, and it is only right and proper that they should insist on the same standards. I shall return to the supermarket issue.
That leads me to my last point on welfare. My hon. Friend the Member for Suffolk Coastal (Dr Coffey) referred to pigs being kept outdoors. Anyone who drives through Suffolk and South Norfolk will see that tens of thousands of sows are kept outdoors, even through the recent winter and the snow before Christmas. There is no doubt that keeping pigs outdoors is more expensive in production costs. Productivity is lower, there are not so many pigs a year from the sows, and growth rates are slightly affected. Those systems are being adopted because the drive for better welfare from retailers has pushed them that way, but higher management standards are required and farmers do not receive the price for their pigs that that higher standard demands.
I was with a group of Agriculture Ministers in Belgium before Christmas, and we were taken to a modern, highly efficient Belgian pig farm operated in totally enclosed buildings, where the hygiene must have been incredible, as there was no disease. Nevertheless, there were just spartan, bare shelves with a few rubber balls hanging on chains for the pigs to play with. Those pigs compete with our pigs, which are reared outdoors. Apparently, British consumers prefer pigs that have been reared outdoors, but they are not always told about it.
My hon. Friends referred to the overall issue of supply, and to dioxins, which was a problem from Germany that we had in January. The Commission introduced a private purchase scheme for a short space of time, and some pigmeat was taken off the market, which helped for a while. What concerned me was the allegation—I say only that—that certain supermarkets were dropping their British suppliers because the European mainland market was awash with cheap pigmeat as a result of the dioxin scare. To me, that undermines the claims made by my hon. Friend the Member for South Norfolk about supermarkets looking after our sector.
As the Minister said, it is not in the Government’s gift to check whether claims made by supermarkets about animal welfare standards are adhered to by overseas producers whose products the supermarkets import. Even if the Government cannot do that, however, does the Minister agree that there is an interest on the part of consumers and of Government in knowing whether such claims are true?
My hon. Friend is right and we stand four-square behind the assertion that it is important that the consumer be properly informed about what is available for sale. There should be an effective traceability chain that can verify the claims made on the label.
At this point, I should probably discuss the issue of labelling. I welcome my hon. Friend’s Bill, but he knows as well as I do that there are question marks—to say the least—about the legality of the UK legislating alone on food labelling. There is good news, however, and since we came to office, two things have happened. The hon. Member for Glasgow North East made a point about the pigmeat supply chain taskforce and the code agreed with the industry. That happened before we took office, and I am the first to recognise that. Since we took office, a bigger agreement on all meat has taken place between the supermarkets, the meat trade, the catering and hospitality trades and the producers, resulting in a much broader voluntary code of practice concerning country of origin labelling. That is the key issue. That code is now in place, and we are currently doing an evaluation exercise to baseline it so that we can measure progress in the future.
Alongside that, there are negotiations on the EU food information regulation. Since taking office, we have toughened up the UK’s approach to support the idea of mandatory labelling for meat and meat products, and that is what the regulation currently requires. As my hon. Friend the Member for South Norfolk says, there is a long way to go and I do not want to forecast the outcome. At the moment, however, the food information regulation would achieve what he seeks with his Bill, except that it would apply not only in the UK but across the EU. That is the best way forward, and potentially that is encouraging news.
My hon. Friend the Member for Tiverton and Honiton (Neil Parish) asked about regional labels. There is nothing to stop anybody from marketing and using regional labels, and we strongly support protected name indicators—PNIs—in principle. The two examples I give will not make or break the pig industry, but Gloucester Old Spot pigmeat, and more recently Cumberland sausages, both in the pigmeat world, have been approved for that status. PNIs are a marketing tool, but like any other form of marketing they are effective only if the labelling is honest about the country of origin where the pig was born, reared and slaughtered. That is the point about labelling espoused by my hon. Friend.
Does the Minister agree that the most important thing about labelling, including mandatory labelling, is to stamp on the canard that giving full, accurate information to consumers somehow distorts the market, because consumers might act on that information? The only possible consequence of accurate food labelling is to assist the clear operation of market preferences.
I entirely agree. We are constantly told by retailers, “We are doing what the consumer demands.” Well, let the consumer demand, but make sure that they are properly informed so that we know that the demand is genuine. There is no reason for anybody, whether producer or retailer, to be afraid of the consumer, and we should not be afraid of consumers being properly informed.
I will touch on the two final issues raised by hon. Members. First, the coalition Government are committed to introducing Government buying standards, and we are on schedule to do so. Some parts of that relate to food but concern health, rather than the DEFRA rules on food, so I will concentrate on pigmeat. Our clear objective is that we should spend taxpayers’ money only on food that has been produced to British standards, as long as it does not cost any more—there are plenty of examples and pieces of casework to demonstrate that it will not cost more. That is only right and fair, and it means using farm assurance schemes as benchmarks to ensure that it takes place. That objective is on schedule.
My final point, on which I have been challenged, concerns the adjudicator. That is the responsibility of the Department for Business, Innovation and Skills and it is clear that the Department is determined to go forward with it. I was asked about its role, and the adjudicator will investigate complaints from anyone in the supply chain who has been affected, either directly or indirectly, by what they believe to be a breach of the code. Furthermore, the issue can be dealt with anonymously. Those are the two big issues that we will see when the legislation is published.
Finally, let me turn to the wider issue of supermarkets. I must resist the temptation to identify individual supermarkets and say what each is doing, because I do not have full knowledge of that. Morrisons is distinct, because it has its own abattoirs, unlike any other supermarket. That is why it buys pigs from the farmer as opposed to from a processer, as other supermarkets do. Usually, however, supermarkets are closely involved in sourcing their meat.
I entirely share the general thrust of the comments made by my hon. Friend the Member for South Norfolk, and those of everybody else who has spoken. If supermarkets and retailers believe that future consumers will want to buy British pigmeat, they have a responsibility to ensure the supply of British pigmeat for the future, and that lies behind the adjudicator and the code. The Competition Commission’s conclusions were not about farmers but about consumers. It was concerned that retailers were shifting too much risk on to the supply side, and that in future the consumer might lose because the supply side was constrained. Therefore, it is in the interests of the consumer to ensure a supply of British pigmeat for the future. I share the view held by my hon. Friends that although no one pretends that there is a single solution to the challenges we face, supermarkets have a big role to play. To be fair, it is not only Morrisons that takes the more responsible line to which my hon. Friend referred.
I am grateful for the compliments that I have received from hon. Friends about my feelings on this matter, but that is not really important. What matters is what the Government do, and we have made a pledge on the adjudicator and are making dramatic progress on the labelling front and on Government buying standards. We have dealt with the issue of potential GM contamination of imports, and we are determined to do everything we can in an industry that, as others have said, is unsubsidised and vitally important. I congratulate my hon. Friend on securing this debate.
This is a very oversubscribed subject, and we have only a short time. I am keen for all hon. Members present to intervene. Some 15 hon. Members have been in touch with me about that. I ask them to give me three or four minutes to get under way and then I will try to bring everyone in.
I begin by thanking my hon. Friend the Minister very much. He came up to Nenthead in my constituency on what was a hairy day over the top of the Alston fell. He saw us install the new broadband network and launched our conference. In general, this is a very positive story. It is the beginning of a new story, but a very positive one. I thank also all the MPs here today. Incredible work is being done constituency by constituency. If there is a broader constitutional lesson from all this, it is about the role of Members of Parliament in driving forward superfast broadband.
I say a huge thank you also to the officials. We have had incredible support from Anton Draper in the Department for Communities and Local Government, from Mike Kiely and Robert Sullivan in the Department for Business, Innovation and Skills, from Alan Cook at Cumbria county council and from communities themselves. This is above all a story about community pressure and Government responding to it. Within the confines of Cumbria, there has been huge pressure from a diverse range of communities. The people and places include Libby Bateman from Kirkby Stephen, Miles Mandelson, who has constructed one of the most exciting superfast networks imaginable in Great Asby, Leith-Lyvennet Broadband and Northern Fells Broadband. They have all been pushing ahead on this issue.
There is a huge need, which I am sure all hon. Members will speak to, particularly for rural areas—for our economies above all. Isolation cripples our economies. As a group of MPs, we tend to have in our constituencies far more self-employed people than any other constituencies in Britain and far more people working from home. Broadband is essential for that, but also for public services such as health and education. It allows my neighbour with Parkinson’s disease, instead of making a four and a half hour round trip to Newcastle general hospital, to have a live video link to the consultant without leaving home. The same is true of distance education and learning.
The challenges, which again are not things I need to talk about at length today, are challenges of topography, scarce population and the amazing shifting sands of technology. Every time I talk to the Minister, a new person has emerged with a new and astonishing solution. I am thinking of point-to-point microwave links; the fact that one Minister is pushing satellite technology; cellular solutions; long-term evolution solutions; and, today, people talking about moving signals down electric wire.
I am grateful to my hon. Friend for giving way; I am sorry if I am a minute early according to his guidelines! If there is one message that we all want the Minister to take away from today’s debate, is it not this? Communities that are geographically isolated should not be allowed to become digitally isolated.
That is a fantastic point. Of course, the complexity of what the Government are dealing with is astonishing. It is not just topography or technology; it includes cost, legal issues such as European state aid regulations, and issues such as the spectrum auction, which I hope to come on to briefly.
May I make a little progress for another minute and a half before I take any more interventions? This project owes an enormous amount to ministerial leadership—not just that of the Minister, but of my right hon. Friend the Secretary of State and the Department for Environment, Food and Rural Affairs—and has seen enormous progress to date. However, it is a revolution in methodology and procurement. People are having to push boundaries on procurement and methodology that would have been unimaginable 11 months previously. People are having to be much more flexible. Instead of going for big, framework, county council solutions, they are having to respond, often parish by parish, to very different technological solutions within a single area of 100 square miles. That involves risk. It involves generous investment by the Government. It involves piloting measures.
What does this mean? For the new policy, it means three lessons. We need to share the lessons from all the pilots much more effectively around the country. I hope that this is the beginning of a series of Westminster Hall debates—if anyone has the patience—in which we can take the lessons further. We need to look much more seriously at finance. Of course, there is great inspiration from the United States in the 1920s and ’30s, when a dedicated bank was set up for communities to electrify rural areas. The green investment bank is a good beginning for our Government in that direction. The big society bank is another good beginning. I would like to see finance facilities available specifically for parishes and communities to be able to move ahead with their own broadband.
The final issue is the rural spectrum auction. We talk a lot about broadband. We must think about mobile coverage. An Ofcom consultation is taking place at the moment. Ofcom is pushing only for 95% coverage for this spectrum. We need to shove it up from that, because 95% coverage will mean that most of the areas represented in this Chamber will not be covered. On those grounds, I will take my second intervention.
Does my hon. Friend agree that now is an excellent time to urge the Minister to address the twin problems of broadband and mobile phone coverage, not one or the other and not even sequentially, because in rural areas it would be impossible to deliver on the big society pledge without both those issues being addressed?
I would like to reinforce a suggestion that has already been made twofold; I echo both suggestions that have been made so far. We have had a second summit in Herefordshire. We have been one of the very fortunate recipients of the first pilots, for which I am enormously grateful to the Minister and to officials. The overwhelming feedback that has come through has picked up both the mobile point and the point about 100% coverage in rural areas. That is regarded as the basic requirement. There is a sense of digital entitlement that will not be thwarted. That means an interesting mix of technologies, which takes us that final mile to the person who is living in the mountains.
Those were two very important and effective interventions. Mobile telephone coverage is better in Kabul than in Cumbria. Any of us who travels around Europe will find that the coverage is much better in the Norwegian fjords than it is in Cornwall or Wales. That really matters for us.
I endorse what my hon. Friend says about coverage. In Devon, my part of the world, 9% of people have either no coverage at all or less than 2 megabits per second, which is horrendous, and 22% of rural businesses say that without superfast broadband, they are going to move nowhere fast, so it is imperative that we take action on that.
I thank my hon. Friend very much. On the point about mobile coverage, the statistics on coverage are very dodgy. In the Ofcom consultation document, there is a shocking paragraph in which it says, “We do not have the methodology to work out exactly what the current coverage is in rural areas and therefore it is difficult for us to factor into the auction what the economic benefits will be of achieving 100% coverage in rural areas.” Therefore, Ofcom is saying that it is likely to push ahead with a lower coverage obligation, not on the basis of any research but on the basis of an assumption that research would be difficult and that the results would be unquantifiable. I do not think that anyone in this Chamber thinks that that would be acceptable.
As another Devon MP, I would like to reinforce what my hon. Friend the Member for Newton Abbot (Anne Marie Morris) said. We have beautiful countryside in Devon, but we also have very poor roads. Therefore, if we had good, fast broadband, many of the businesses could remain in the area and could be built up, along with all the health and education needs being met. This is about delivering competitive broadband throughout rural areas. I urge the Minister to ensure that when bids are being considered from various areas, Devon is given a bite of the cherry.
To finish on mobile coverage, the rural spectrum auction will be essential. As people are aware, a big auction of 4G is being consulted on at the moment. That includes very exciting spectrum that comes from the digital switchover. That is spectrum that allows us to push signals a very long distance, but perhaps not so many data down those signals. That is the kind of spectrum that we would like to get for rural areas. Everyone in this Chamber who can join us in pushing the Government from 95% to perhaps 98% in the rural spectrum auction and pushing back against the Treasury, which will say that it will not receive as much money from the mobile phone providers if that kind of rural requirement is put in place—
On that point, I could not agree more with my hon. Friend. There is a risk that the Treasury will demand a high price now, but it will cost a fortune later, when we are reliant on delivery of services, as he described, through the use of mobile broadband. The cost of putting in extra provision then will cost the country so much money that we will be told that we cannot afford to do it.
My hon. Friend reminds me that when I was in the mountains of Kyrgyzstan, I noted that coverage was much better than in South Norfolk.
May I point out that six of the Members here for this debate were here for the previous debate on pig farming? They stayed because we all represent isolated rural areas, and many of the problems that we face apply not only to agriculture but to broadband. Does my hon. Friend agree that what was said about the Treasury is particularly important? Getting it right, and getting 100% coverage, will enable the kind of economic growth and the extra tax base, with more tax being paid by rural communities, that will do a great deal to get us out of the present economic hole in which we find ourselves.
That is a brilliant point, and a very good one to make about the Budget. The Budget focuses above all on two things—what we are doing with fuel and what we are doing for small and medium-sized enterprises in trying to support exactly the sort of businesses that exist in our areas. Without superfast broadband and mobile coverage, it is difficult to understand how they will flourish.
I am grateful to my hon. Friend for giving way. As usual, he speaks powerfully and succinctly. He spoke of pushing the Government to go from 95% to 98% in the auction. Is there any reason why we should not aim for 100%—that we set it out as a universal service base?
We in the House should send a clear message to the Minister and others that unless there are overwhelming financial or technical arguments against it we should look for 100% coverage. We have long had universal post, but universal digital access is more important than the post ever was. Perhaps we need to send that signal, and ensure that Ministers cannot chivvy away at a few percentage points on the side.
My hon. Friend makes a powerful and important point. The answer must distinguish between broadband coverage and mobile phone coverage. We have a universal commitment for broadband coverage, and we are pushing for a 2 megabits universal service commitment by 2015, but mobile phone coverage is not in place. Were we to push for 100%, as my hon. Friend the Member for Hereford and South Herefordshire (Jesse Norman) suggested, instead of the mobile telephone companies paying the Treasury for that spectrum we would end up with the Treasury paying them to take it. It is perfectly possible, as was suggested, that we could make a powerful economic argument to the Treasury on why it might make sense for the Treasury to pay mobile telephone providers to take it, but to do so we would need some very robust figures.
One sad thing about the Ofcom debate is that we do not yet have a group powerful enough to put those figures in place. Such figures would prove that 92% of those businesses in Penrith and The Border that employ fewer than 10 people would benefit enormously. In addition—this applies in all our areas, because many retired people live there—applications for telemedicine and telehealth with mobile phone coverage are much more exciting than those that currently exist on broadband.
I want to say how important it is for businesses to get proper access to broadband and mobile coverage. I would add that in rural areas, it is good to facilitate independent living through good communications. That is another aspect to be considered.
I thank my hon. Friend for giving way—and for having his finger on the digital pulse, given the number of Members packed into the Chamber. I do not know why we are not having an hour-and-a-half debate, although I suspect that my hon. Friend tried for one.
We heard in the Budget that superfast broadband will be a big benefit for enterprise zones. I am in a rural community, and my businesses were badly hit in December because of the heavy snow. Andel, a firm that is based at the top of the valley in Marsden, wanted to Skype when doing business with eastern Europe, but it could not; the firm raised the matter with me a couple of weeks ago. Can we try to ensure that the money that is raised—something mentioned by my hon. Friend—is ring-fenced, and that some of the funds raised through the 4G auction are invested in the superfast broadband network?
My hon. Friend may not be aware that below Lincoln are urban areas, within the constituency but outside the city boundary, and including Bracebridge heath, that still have problems with a lack of suitable broadband provision. All Conservative councils, particularly North Kesteven district council and local Conservative Councillor Mike Gallagher, have been active in seeking to resolve the matter, and have established a good connections group as part of the Lincolnshire sustainable community strategy. Indeed, they have applied to BDUK—Broadband Delivery UK—for pilot scheme funding to improve the provision of broadband in those areas. Does my hon. Friend agree that we need to work together to improve our constituents’ access to suitable broadband connectivity and to enhance the competitiveness of businesses in our constituencies?
I am a little concerned that my hon. Friend is about to finish his speech, because I would like briefly to pay tribute to his leadership on this matter, on which he is the most knowledgeable person in the House. I hope that Cumbria, together with north Yorkshire, will build the arc of superfast broadband across rural northern Britain.
Before he concludes, will my hon. Friend talk a little about the responsibility of communities in dealing with the matter? I am concerned that the debate has gone a little too far towards Government solutions and council solutions. He has played an exceptional role in getting communities motivated. How does he do it?
I thank the hon. Gentleman for giving way, and I congratulate him on securing this debate. Will he adequately distinguish between superfast broadband and the kind of broadband that small businesses need in order to make the economic difference that we all want them to make as quickly as possible? The Government do not always distinguish between broadband, which enables small businesses to offer their services to the entire world, and superfast broadband which may have economic benefits in future that have yet to be fully quantified.
I thank my hon. Friend for giving way, and pay tribute to his leadership in this important field. He mentioned the Treasury, and I wish to speak about the payback potential of such investment.
As with so many infrastructure matters, the payback is enormous, and I urge the Minister to make the case to the Treasury. The Chancellor gave a stunning Budget today, outlining investment in East Anglia—for science in Norwich and Cambridge and for the A11. It could herald a renaissance of small business and high technology, but it will not happen without good broadband. With it, we would be paid back in spades—it would pay huge dividends to the Treasury. Somehow, we must find a mechanism to anticipate that growth, using it now to fund the infrastructure that will feed it.
I represent undoubtedly the most remote and hard-to-please area. The Minister must understand that there is a way forward, provided that we harness the efforts being made for existing communications. If we do so, there will be a great addition.
My hon. Friend is generous in giving way. He started the debate, but he has not had time to speak. Does he concede that we are talking about rolling out broadband to rural businesses to help support them? If we do not do this, businesses will leave rural areas for urban areas and end up exacerbating rural deprivation.
I thank all who have intervened. I shall try to conclude in 60 seconds, and I shall take no more interventions. I thank the hon. Member for Airdrie and Shotts (Pamela Nash) for what she said, and all who intervened on the subject of communities, because I wish to conclude by mentioning those two factors.
The Government are handling two complex issues. One is how to deal with a rapidly changing technological picture, where the fibre-optic investment that seems sensible this year may seem less sensible, than the 4G investment next year, or moving signal down an electric wire the year after.
The most important thing is not just the flexibility with technology or, indeed, the distinctions that the hon. Member for Newcastle upon Tyne Central drew between the 2 meg access many businesses want today and the superfast access they might want in future but the question of communities. Our procurement processes have tended to be very centralised and one size fits all, of which Cornwall was the absolute epitome, with more than £100 million being spent on an area of 1,000 square miles and delivered through the county council with a major telecoms provider.
As my hon. Friend the Member for Skipton and Ripon (Julian Smith) suggested, it is essential that we give parishes a voice. Parishes and communities will provide financing and labour, they will waive wayleaves, they will dig their own trenches and they will connect their own fibre-optic, allowing us to achieve much broader coverage and much faster speeds in a fraction of the time. That will be possible only if the Government hold their nerve, resist the temptation, often from county councils, to spread the money thinly across a large area and allow genuine pilots in response to communities. That requires the commercial sector to be more flexible, allowing communities to connect to their point of presences. Data charging rates must be reasonable, and if the community digs and installs the fibre it must not be charged as though the commercial provider had dug it.
The Government are absolutely on the right track with those huge challenges.
I wish to reinforce my hon. Friend’s argument. I have a cautionary tale from my own patch, in the parishes of Over Wyresdale and Quernmore. The community, which is prepared to do the digging and where farmers are on board, made a bid, but it has been swept into a county-wide European regional funding bid involving a national internet provider. It will not get what it wants and will lose all the economic benefits of a community doing things for itself. The service will be far more costly and will deliver less than the community could do itself.
On that note, I will conclude by making four points: first, huge thanks to the Government; secondly, in the spectrum auction we must push for much broader coverage of rural mobile; thirdly, there must be much more flexibility for communities in procurement; and, fourthly, I wish everyone good luck.
I thank you, Mr Bayley, for your patience during this rather eccentric debate.
I am grateful for the opportunity to serve under your chairmanship, Mr Bayley. May I say what a lovely time I spent in your constituency visiting the National Railway museum, which was placed in York by Margaret Thatcher, who pioneered the role of culture in urban regeneration? I know that you will want to acknowledge that.
I thank my hon. Friend the Member for Penrith and The Border (Rory Stewart) for initiating the debate. With a one-line Whip on a Wednesday afternoon following the Budget statement, I had expected a quiet discussion between him and me, but I should have known that when he is involved in something it always becomes much bigger than it says on the paper.
I pay tribute to my 17 Conservative colleagues who have turned up and to the hon. Members for Airdrie and Shotts (Pamela Nash) and for Newcastle upon Tyne Central (Chi Onwurah), who is no longer here, but who is a former Ofcom employee and perhaps should be lobbied by hon. Members on rural mobile coverage. Having heard interventions from Carmarthen, Herefordshire, East Yorkshire, Suffolk, Norfolk, Gloucestershire, Devon, Lincolnshire, Northumberland and Lancashire, no one can doubt rural communities’ desire to achieve broadband roll-out. Although it would be iniquitous to pick a single example, I pay tribute to my hon. Friend the Member for Stroud (Neil Carmichael) for the simple reason that my wife was born in Stroud. In fact, her birth appeared on the front page of the Stroud newspaper because she was born on new year’s day—but enough of that.
I concur with my hon. Friend the Member for Penrith and The Border, who praised me and the Secretary of State for the work we are doing on broadband roll-out. We have managed to purloin £530 million to help to fund broadband roll-out. It is important to make the point that that is specifically for places where the market will not deliver. The broadband for about 66% of the population will be delivered by the market—I understand the tone of the debate; that will broadly be BT and Virgin Media—but the rest of the money is set aside for mainly rural communities.
I also concur with my hon. Friend in his praise for key officials—Rob Sullivan, Mike Kiely and all the others who work so hard at Broadband Delivery UK, as well as officials now at the Department for Culture, Media and Sport supervising the process. They have worked intensively with local authorities. Four pilot areas, three of which are represented in the debate, are about to go out to tender. A second wave is on the stocks; 11 areas have already expressed an interest and there are two more days for a local authority or local community to express an interest in bidding for broadband delivery. Hon. Members are free to speak to any areas that have not yet expressed an interest in bidding, and we hope to announce the next wave towards the end of May. We are also working closely with the devolved Administrations of Scotland, Wales and Northern Ireland to ensure that this is a United Kingdom initiative.
I am confident that we will soon make rapid progress. The pilots have been extremely important for Broadband Delivery UK in understanding and learning about the tendering process, and although people might feel that it has taken some time, the hard work of the four pilots—the vanguard—will ensure that future pilots are taken forward much more quickly in understanding the tendering process and in continuous learning following the tendering process, as we begin to dig holes in the ground to lay broadband.
A number of other key points were made. To a certain extent, the debate morphed into a discussion of mobile coverage. I want to make these points. I stress that the pilots and the future waves of broadband delivery are technology-neutral. The best broadband is probably delivered by fibre, but there will be other solutions in some rural areas, such as digital fibre points, whereby WiMax will take the broadband further, and mobile solutions. There will also be satellite technology solutions.
Rural mobile coverage is extremely important. Ofcom has begun its consultation on the auction of 4G spectrum. I ask hon. Members who bump into the chief executives of the four chief mobile operators to urge them not to turn to their learned friends and litigate with the Government over the rules. We are anxious to get the spectrum out there; it has been a protracted process. We are very aware of the needs of rural coverage, and I am discussing with Ofcom how we ensure that it is available under the spectrum allocation. Let us not forget that spectrum allocation is important to the whole UK and to the UK economy, especially with the rise of the smart phone.
I hear what my hon. Friend the Member for Penrith and The Border says about the possibility of broadband roll-out being a big government solution. He will know that I am extremely anxious to see community broadband solutions, but—perhaps this is pushing back on my hon. Friends—but they are in a position to sit down and discuss with their county councils the best way forward on the bidding process. It is easier for a county council, perhaps with its own money and additional money from Europe, to seek match funding from the Government, but its tender need not be a big company or big government solution and can include community broadband solutions.
The key is to ensure that community broadband solutions are technically joined up so that that network can be available for other users. Should, for any reason, a community broadband operator fall away, that network would still be available to be used and integrated into the county-wide network. I urge my hon. Friends who, on behalf of their constituents, have rightly expressed an interest in rural broadband to discuss with their county councils how they are bidding, urge them to put in place one or two people who will lead the process full time and ensure that community and parish voices are heard in proposing the solution.
The debate has shown that the broadband initiative is gaining real momentum. The Government have put in place the money. We are also putting in place deregulatory initiatives—for example, on deployment of broadband across telegraph poles for the first time and on wayleaves. We are anxious to work. Towards the end of the year, we will begin to see a process whereby counties, when they are ready, can simply come to us with a proposal and, I hope, some funding of their own, which we will be in a position to match.
Disability Living Allowance
I will give colleagues leaving the previous debate an opportunity to sneak out—I am sorry that they cannot stay.
I am delighted to have secured this debate and I look forward to hearing the Minister’s reply and her comments on the wider issues that I am about to raise. There is probably no better place to begin debating disability living allowance than with the mobility component for blind people. An amendment that I tabled to the Welfare Reform Act 2009 and that will come into force in April will enable blind people to claim the higher mobility rate component of DLA. However, if the Government go ahead with the proposals in the consultation on a new assessment for DLA to remove the amendment that I successfully tabled to the 2009 Act, about 20,000 blind people across the UK could lose out. That means that 20,000 blind people in the UK, including 2,000 blind people in Scotland and 300 in my own city of Glasgow alone, could lose access to the higher rate mobility component DLA. That means they would lose at least £1,500 a year. That is a considerable sum for anyone, but it is a vital lifeline for blind people, who generally come from poor backgrounds.
The public consultation by the Department for Work and Pensions on DLA reform, which was published in December last year, raised concerns about the issue. The specific threat to the DLA mobility component appears in point 6 on page 4 of the document, which says:
“Currently individuals on DLA with certain health conditions or impairments are automatically entitled to specific rates of the benefit without a full assessment. We propose that for Personal Independence Payment there are no automatic entitlements, other than the special rules for people who are terminally ill. Instead, each case will be looked at individually, considering the impact of the impairment or health condition, rather than basing the decision on the health condition or impairment itself.”
My hon. Friend makes a good point and I will use a couple of cases as examples as I go through my speech.
On page 37 of the DWP consultation document, there is a list of automatic entitlements that the Government propose to remove, including one for blind people—the “severely visually impaired”. That entitlement was brought in as result of my amendment to the 2009 Act. The DWP consultation posed many more questions than it answered. We learned that the assessment for the new personal independence payment, which I will call “PIP”, will
“prioritise support on those individuals who face the greatest day-to-day challenges and who are therefore likely to experience higher costs.”
However, that wording was sufficiently vague that it could be overshadowed and interpreted in the light of other developments. Rules on eligibility would be restricted in such a way as to question the ongoing entitlement of disabled people in receipt of the lowest rates of the care and mobility components. PIP would consist of a mobility and daily living component, but unlike the existing care component, the new daily living component would comprise two rates, not three. An individual’s adaptation to their impairment would be taken into account in determining entitlement to PIP, presumably as a cost-cutting exercise.
I will not deal now with the plans to remove DLA mobility from individuals in residential care, as those plans were the subject of another Westminster Hall debate that was secured by the hon. Member for Arfon (Hywel Williams). I will simply add that it is reassuring that the Government will review mobility provisions for people living in care settings, but I still note the intention to remove DLA mobility for people in residential care in 2013, albeit one year later than originally proposed.
One of my most serious concerns relates to the Government’s plans to end automatic entitlement to DLA for people who clearly ought to have it, including the higher mobility component for people who have severe mental health problems, who are deafblind or are severely visually impaired. Individuals with those disabilities, along with people who are double amputees, automatically qualify for the higher rate, because they meet the strict criteria on the severity of their impairment.
That automatic entitlement is a clear and administratively efficient way of identifying disabled people with the highest level of mobility needs. In future, each case will be looked at individually, except the cases of people who are living with a terminal illness. Organisations for disabled people tell me that they do not believe that that is a sensible approach, as it will increase the costs of assessment while leading to the same outcome as the original system, and people with the most severe impairments will still receive the higher rate of benefit.
As I have mentioned, in three weeks’ time, more than 20,000 people in the UK with severe sight loss will be entitled, for the first time, to the higher rate mobility component of DLA and they will receive the extra £30 a week that they need in their pockets to maintain a decent quality of life. I tabled my amendment to the 2009 Act in the first place because of my strongly held belief that there is no good reason for discriminating between someone who faces physical barriers to mobility and someone who is unable to move around safely and independently as a result of blindness.
I want to tell the Minister about one of my constituents, as his case was the one that spurred me on to table the amendment to the 2009 Act in the first place. Alan McDonald has been blind from birth, has orientation problems and faces huge hurdles in getting around. He is unable to use public transport because of his difficulties in getting on and off buses and trains. Either he has to spend his other benefits on taxis, although they are meant to provide other support, or he is forced to rely on his sister to give him a lift to wherever he needs to go; otherwise, he has to stay at home.
Alan’s blindness is not the only barrier to his mobility. For example, when I tabled the amendment to the 2009 Act he was awaiting a second kidney transplant and was due to undergo surgery for hardening of the arteries. Despite all those difficulties, however, he was told on several occasions that he simply did not qualify for the higher-rate mobility component of DLA, because he was physically able to walk. Yes, he could walk—he could walk into wheelie bins, or into a set of traffic lights, or even into the middle of the road where he would be knocked down; but he could walk, so he did not get the money.
The barriers that Alan faces are just as great as those faced by someone who cannot walk, and the current situation is nonsensical. I believe that the Minister has to consider such things. It is unbelievable that somebody with such disabilities might not receive the higher rate of disability allowance in two years’ time, having finally received it after all these years.
Blind people such as Alan are justifiably angry about the discriminatory and unfair treatment that they receive, but they will feel even angrier and let down when the DLA mobility component, which comes into being in April, is taken away from them in just two years’ time. That will put them back to square one.
Many charities have contacted me because they are alarmed about the Government’s proposals. For example, the Guide Dogs for the Blind Association is concerned about the proposal that PIP should replace DLA. In particular, the association is concerned about the proposal in the DWP report on DLA reform proposals to
“take greater account of aids and adaptations”.
Taking into account the use of aids and adaptations when assessing eligibility could inadvertently penalise an individual who uses such equipment to try to reduce some of the difficulties that they face as a disabled person.
I commend my hon. Friend’s campaign and the passion with which he is putting a very powerful case. Has he been contacted by the National Autistic Society? I ask that because there is enormous concern on the part of those who care for autistic people and those with family members who are autistic, as DLA is crucial for communication, travel and services for autistic people. It is crucial that access to DLA be retained for autistic people as well as for the other people whom my hon. Friend has mentioned.
I thank my right hon. Friend, who has more than a little reputation of looking after these people, both as a Minister and as a member of the previous Government. I congratulate him on the work that he has done. I have been contacted by so many groups that I could not possibly name them all in my speech today. If I miss any of them out, it is not because I want to do so, but because my speech is time-limited, but yes, I have received correspondence from the National Autistic Society and I thank my right hon. Friend for his input.
Any reduction in disability-related benefits simply because of someone’s access to equipment could significantly inhibit their efforts to lead a more independent life. Disability-related benefits enable people not only to live independently, but to participate in community activities. Such community engagement could include volunteering, which is a core component of the big society and could help someone to gain skills and experience that could enable them to go on to seek and obtain work.
Several wrong assumptions could be made about the effectiveness of aids and adaptations. They might work for some individuals, but others might struggle with them. Issuing someone with a cane or a low-vision aid such as a monocular, does not necessarily mean that that person will continue to use it, or use it correctly. Even if the aids and adaptations are used appropriately, they are likely to have only limited uses. For example, a liquid level indicator might help someone safely to make a hot drink, but it will not make it any easier for them to make a meal to go with that drink. How will the Government help these people?
I know of another gentleman, David Griffith from Walthamstow in London, who receives the mobility component of DLA because he is deafblind, like Alan. He uses his DLA to pay for taxis, and for other support in getting out and about. He also tries to walk in his local area, and has recently applied for a guide dog because he has had a few near misses with cars of late. However, having heard a feature on the BBC Radio 4 programme “In Touch,” he is now worried that becoming a guide dog owner might result in the removal of his DLA. Under the proposals, a guide dog would enhance his life and make him safer in one element of his mobility, but he would never have the independence that sighted people have. He would not be able to jump out of the way of the car that was about to hit him, and he might travel on a bus that he did not mean to get on in the first place.
Does my hon. Friend agree that something else that is hitting people is the proposed extension of the waiting period for DLA from three to six months? A constituent came to me who had been blinded in a road accident and was considering adaptations. He faced the cost of those straight away, and under the proposal he would have to wait even longer for the money.
My hon. Friend makes a very good point. She is absolutely right, and perhaps the Minister could reflect on the impact of that increased period on people who do not have the extra time to wait. They need the money now, not in six months’ time. There is a danger that people like David will turn down help such as that provided through mobility training with a guide dog or a cane for fear of losing a benefit that they would still need, with or without the mobility aid. What does the Minister propose to do for Alan and David and people like them?
In conclusion, the Government state that 3 million people receive DLA and that the budget will reach £12 billion, and they draw the conclusion that the benefit is not fit for purpose. I wonder whether a better conclusion would be that the benefit rightly reaches the millions of people it is supposed to help. Reform might be necessary, and disabled people have expressed themselves on the changes they would like, not least shorter application forms in line with their disability and, of course, quicker receipt of the money. Are we not in danger, however, of going so far with the reforms that we lose sight of what DLA was originally set up for? DLA is there to assist people with disabilities that make life more expensive. It is there to help people stretch their incomes that little bit further, so that they can achieve the levels of independence and enjoy the opportunities that their non-disabled peers take for granted. Are we really saying that a fifth of today’s case load is no longer in need of that support? Have we really examined how the reforms will exacerbate disability poverty? Those questions are, in my view, central to this debate on the Government’s plans for DLA.
I hope that the Minister listens to and answers my questions. Let me reiterate some of them. Will the Government confirm that their intention is to revise this policy, which has been hard fought for and pursued over a number of years by parliamentarians on every side? Will the higher rate mobility component for individuals with severe visual impairments be awarded for just two years? Have the Government modelled the net loss of household income when individuals lose entitlement to DLA, and does their equality impact assessment acknowledge the lack of social care and other support for people with less complex needs? How much will that cost? What steps will the Government take to ensure that the assessment for PIP is not just a cost-cutting exercise but is fair and accurate, especially with regard to its suitability for people with fluctuating or mental health conditions, and those with lower-incidence conditions? At a time when the Government wish to tackle bureaucracy and simplify the benefits system, how can it make sense to insist that all disabled people, including individuals who evidently have severe needs, undergo regular reassessment?
I am calling for greater clarification on what impact the 20% cuts will have on determining who will be eligible for the new PIP and at what level. Will people who qualify for the lowest rate of DLA qualify for PIP under the new system? Will the Government ensure that those who qualify for the higher rate mobility component because they are deemed to have severe blindness can continue to receive PIP via that route? Finally, will a comprehensive training programme on blindness be made available for assessors for PIP? I look forward to the Minister’s answers.
It is a pleasure to serve under your chairmanship of this very important debate, Mr Bayley. I congratulate the hon. Member for Glasgow North West (John Robertson) on securing both the debate and the attendance of so many Members when the Budget debate is taking place in the Chamber. I welcome the opportunity to set out again some of the facts to counter some of the assumptions that have been made, not only by organisations but by some people who have been listening to the debate thus far. I hope that the hon. Gentleman’s questions are answered in my comments, but if he feels that any of them need to be further investigated I will be very happy to do that with him separately.
I would first like to ensure that it is very clear to Members that the Government are not talking about a 20% cut in the current case load, but about ensuring that the budget for DLA is kept under control in the future, and that the rate of increase that we have seen—some 30% in the past eight years—does not continue as steeply. That is important, because the misunderstanding about how the budget works has caused great distress among my constituents, the hon. Gentleman’s constituents and, I am sure, other Members’ constituents.
Will the Minister accept that the impression is that it is the budget and not the people who have the disabilities that will determine how much people get? It is not possible to budget for people with disabilities, but if we do we have to say, “We’re going to let only so many people get disability allowance.”
I am sure the hon. Gentleman knows that the Government have to make difficult decisions in many areas, not only regarding how much we spend to support disabled people. At a time of financial crisis, as a result of the problems with controlling costs under the previous Administration, we have to make tough decisions, but the decision that we have made is that we want to support the most vulnerable people through DLA and its successor, and also through many of the other benefits that we have. The introduction of universal credit will do a great deal to support those people in the hon. Gentleman’s constituency, and in mine, who are disabled.
I shall just make some progress.
The hon. Member for Glasgow North West has long battled to change how blind and severely impaired people are treated under the old DLA regime, and that serves as an excellent example of the shortcomings evident in DLA because of its complexity, poor targeting and inflexibility. I certainly applaud his determination to get the support that disabled people need. The failure of his constituent to get the support that he needed through DLA is a great example of why we need reform.
If the hon. Gentleman had not had to deal with the faulty framework of the DLA in the first place, it might have taken him slightly less determination, and slightly less than two years—some people might say less than 10—to make the changes in primary legislation and then in regulations that were needed to get the present measure supporting severely visually impaired individuals on the statute book. That is why we are taking a fundamentally fresh approach to dealing with that area of benefits through the personal independence payment, so that we can adjust it and the assessments through regulations in the first instance and maintain the flexibility required to ensure that the benefit reflects people’s experiences and is adaptable enough to cope with the dynamic nature of society’s response to disability.
The personal independence payment has been designed with the support of disabled people and specialists to provide an objective assessment and ensure that we can help disabled people overcome the barriers that they face to living full and independent lives. That means looking past broad categories of impairment and labels and instead treating people as individuals. In doing so, we must consider the impact of all disabilities: not only physical disabilities—some criticise the DLA for favouring people with physical disabilities—but the mental, cognitive and sensory impairments that many of us know need more support. The right hon. Member for Oxford East (Mr Smith) mentioned individuals dealing with autism. Some people deal with multiple disabilities as well. That is the only way for us to deliver targeted benefit that is fair to all those who need extra help and who face the biggest challenges leading independent lives.
The personal independence payment also addresses yet another of the many weaknesses of DLA. The DLA assessment for the higher rate of mobility component, on which the hon. Member for Glasgow North West focused, is framed in the rather simplistic medical context of whether the person can walk. In practice, that means that people facing broader issues involving mental health problems, learning disabilities or sensory impairments such as blindness could be left, as they have been, disadvantaged under that narrow definition. With the introduction of PIP, what we want to ask is not simply whether people can walk but whether they can get out and about, plan a route and navigate from A to B, because that is the challenge that disabled people face.
I understand what the Minister is trying to say, but just because I can plan a route does not mean that I can go that route. We are trying to help people who have been assessed as unable to work, but who might be able to work if we can get them to the right place. My constituent Alan can work at a computer, but first he must get there, and the only way for him to do so is for somebody to be with him. He must get a lift, and he must be accompanied. If people have no one to do that for them or cannot afford a taxi, it cannot happen. The money that Alan gets is vital, and he is not alone. There are lots of people like him all over the country. Why must they be reassessed all the time? They know what they are like. They have been through the system already.
The hon. Gentleman raises several issues. DLA is not an out-of-work benefit. People in work can claim it, as they can claim access to work, which can also help them. However, I think his fundamental point is that we must recognise the true barriers that people face, not simply say that because they have a particular impairment they should receive a particular rate. We must understand the realities of their lives. He has made that point clearly on behalf of his constituent. I agree absolutely. That is how we are designing the personal independence payment. We are not saying that if somebody has a particular condition, their assessment should have a particular outcome; we are doing what he has done and considering the impact on people’s lives. I do not think that DLA does so.
The hon. Gentleman mentioned aids and adaptations. We must ensure, again, that we do not try to squeeze individuals into a one-size-fits-all box. That is doomed to fail, as he has pointed out. We need to consider how people can use aids and adaptations to improve how they live. We cannot simply ignore or discount aids and adaptations; the taxpayer pays £250 million a year for them. The main point is that if we do not consider how people actually live, we will never be able to provide more targeted support. What has happened is an extrapolation of what that might mean for the assessment process. I am not saying that we will include the imputed value of an aid or adaptation as a part of the assessment process. We are asking what day-to-day adaptations help improve people’s ability to live an independent life. The hon. Gentleman mentioned the example of guide dogs. I will explain why the issue is not being understood as well as it needs to be.
I assure hon. Members that we have absolutely no intention of penalising visually impaired people who can get out and about and live independently only with the help of a guide dog, largely because the activities that the assessment is likely to consider are not activities with which a guide dog can necessarily help. Guide dogs are extremely intelligent animals, but they do not help people eat, drink, manage their personal care, take treatments or communicate. Well, some of them help people communicate, but in a different way. Although guide dogs help people get out and about, they do not in themselves improve an individual’s physical ability to walk or to plan a journey. I hope that reassures the hon. Gentleman that there is little opportunity for someone who uses a guide dog to feel that they will be penalised for making that important adaptation.
Another aspect on which we have been asking for people’s thoughts in the consultation is whether we could use the new personal independence payment assessment as an opportunity to signpost people to additional support and help, or a touch point for getting people the help that they need. I hope that the hon. Gentleman will agree that we should not miss such an opportunity. Too often, disabled people do not get treatment for all the conditions with which they must cope. The assessment is an opportunity.