Tuesday 13 March 2012
[Mr George Howarth in the Chair]
Pay and Consultants (Public Sector)
Motion made, and Question proposed, That the sitting be now adjourned.—(Mr Newmark.)
It is a great pleasure to be here, Mr Howarth, with so many hon. Friends and hon. Members, for what I hope will be an interesting, if somewhat controversial, debate. It is a pleasure to serve under your chairmanship. I look forward to the Minister’s response to some of my specific points, and to the comments of my hon. Friend the Member for Kilmarnock and Loudoun (Cathy Jamieson).
To be clear about the topic, I intend to cover three closely related issues, which I believe raise the question of financial, moral and, in some cases, legal abuses in the employment practices of public sector organisations. Those issues are absolute levels of remuneration; the use of consultants—sometimes called interims—and agency and other alternatives to employed staff; and the avoidance and sometimes evasion of tax by the improper classification of employees as consultants. All three often occur together, although not always, and there are often other related abuses. I shall give examples of how that works and use one egregious example from my local authority that has wider implications.
Such practices would be offensive at any time, but when the country is in recession, when many, if not all, workers in the public sector at a lower level are facing pay freezes and when there are hundreds of thousands of redundancies, it is particularly offensive that what I can only describe as a new elite in the public sector appears to be immune to the worries, fears and constraints of ordinary working life and, in some respects, seems to be more comparable with those at the top of the banking or other private sector industries. The difference is, of course, that everyone thinks of bankers—outside the Royal Bank of Scotland, perhaps—as being in the private sector and responsible to shareholders. The people whom I am concerned about are responsible to us, the taxpayers or council tax payers.
The issue is not only controversial, but very topical. The Daily Telegraph has an article today headed “Council chief executives enjoy pay rises as services are cut”. It reports:
“Town hall chief executives have seen their pay packets rise by as much as £17,000 while cutting front-line services, including libraries, care for the elderly and bin collections.”
It goes on to point out that the average council chief executive is still paid more than the Prime Minister, with one in 20 earning more than £200,000 last year. At a time of pay freezes in the public sector, the average relevant salaries in local authorities were £143,995 last year, with total pay packages averaging £146,957.
The hon. Gentleman may be right to point out that the average salary in that category last year was £143,000 and that the average remuneration was £146,000; but does he accept that before 2010, or before the Government took action in 2011, the average was something like £221,000? There has been a significant drop under the Government’s procurement rules.
I cannot say that I will keep away entirely from party politics in what will be quite a long speech, but I will try to make a point with which I hope all hon. Members agree. The hon. Members whom I shall refer to come from both sides of the House. I take the hon. Gentleman’s point but would rather that he addressed his comments, and that the Cabinet and other Ministers would address themselves, to the current abuses, rather than playing some sort of tit-for-tat game.
On the point made by my hon. Friend the Member for Wimbledon (Stephen Hammond), will the hon. Gentleman at least acknowledge that rocketing salaries in some public sector jobs are not a recent phenomenon? That is something that mushroomed in the previous 13 years, under Labour.
I suspect that it goes back even beyond then and that the tradition of public service and people doing jobs not primarily for the remuneration changed in the 1980s, when a lot of moral values went out of the window in the era of Gordon Gekko and Margaret Thatcher. We could talk about that all night if we wanted to, but I would rather talk about the current situation—and the issue is very contemporary. At 8 pm this evening on Radio 4, “File on 4” will cover tax avoidance through personal service companies. I think—I am never quite sure, with the BBC—that it will cover some of the same examples that I will give today. The brief for that programme begins:
“How strong is the government’s commitment to ending schemes set up to minimise tax? A number of schemes have proved popular in the private sector, including Employee Benefit Trusts. These have been used by football clubs for tax planning purposes, but are now in the sights of HMRC as it attempts to recoup what it sees as unpaid tax. But how widespread are these trust schemes and why are they so popular with companies that have large government contracts?
As the Treasury reviews tax avoidance by senior government employees, it has emerged that employees in other parts of the public sector are using payment schemes that keep them off the payroll. There is growing concern that paying public servants through personal service companies may be inappropriate.”
I have received briefings in advance of the debate from the TaxPayers Alliance and the Public and Commercial Services Union. The concern that these issues cause across the political spectrum is such that I could read a paragraph from each briefing, seamlessly, without affecting the flow of my argument. That is not something that can be said about every topic.
The Treasury review, to which the “File on 4” blurb refers, is the one announced in the main Chamber on 2 February by the Chief Secretary to the Treasury, in response to an urgent question from my right hon. Friend the Member for Newcastle upon Tyne East (Mr Brown). That, in turn, was a response to the exposé of the funding of the head of the Student Loans Company. The investigation at the time was, I think, by “Newsnight”, but I am now referring to a report in The Daily Telegraph. The investigation showed that the
“chief executive of the Student Loans Company, was paid through a private firm he had established rather than being paid direct—a tax avoidance mechanism which could reduce his income tax liability by £40,000 a year.
The disclosure threatens to undermine Coalition pledges to crack down on tax avoidance in the private sector and opens ministers up to accusations of double standards.”
“Documents show the deal was signed off by David Willetts, the Universities minister, who said in a letter that it had been ‘agreed by the Chief Secretary to the Treasury’ Danny Alexander.
Mr Alexander insisted he did not know that the arrangement allowed him to avoid tax, and has ordered an urgent investigation across Whitehall to see if the practice is widespread.”
I am sure that many hon. Members remember that urgent question and that many took part in the debate. I could not be there, but I have of course looked at the Hansard and will outline what the review was said to entail. After, rightly, quoting the Treasury’s “Managing Public Money” guidance, which states that
“public sector organisations should avoid using tax advisers or tax avoidance schemes as any apparent savings can only be made at the expense of other taxpayers or other parts of the public sector”
and making the bold assertion that
“There is no place for tax avoidance in Government”,
the Chief Secretary said in relation to his review:
“I have asked the Treasury urgently to review the appropriateness of allowing public sector appointees to be paid through that mechanism”—
the one used by the chief executive of the Student Loans Company. After being interrupted, the Chief Secretary continued:
“I have also asked the Treasury officer of accounts to write to all accounting officers across Whitehall to remind them that all appointments should, in line with existing guidance, consider the wider cost of lost revenue to the Exchequer when considering value for money.”—[Official Report, 2 February 2012; Vol. 539, c. 1001.]
Will my hon. Friend not go further and say that anyone working directly for the public sector in any capacity should be employed by, and accountable to, the public sector? There should be utter transparency about their employment, and we should not have these ludicrous schemes that are probably to do with tax avoidance and lack of accountability.
My earlier pleas clearly fell on deaf ears. If the hon. Gentleman wants to have a debate on that subject, he is entitled to request one. This debate is not on that subject. It is about people who are employed by the public sector—they are actually employees—who are receiving, in many cases, high remuneration, but who are falsifying their employment status not only to make more money for themselves and possibly for the organisation for which they work, but effectively to defraud the taxman. None of those points applies in the hon. Gentleman’s case, and if we go down those avenues, we will not get far with this debate. I hope that he has not come here today to score points—or to fail to score points.
Let me return to the urgent question on 2 February. I think that it is fair to say that the Chief Secretary was struggling that day. I think that he was trying to come to terms with what had effectively been exposed in the media a couple of days before. Hon. Members from all parts of the House raised other examples. The hon. Member for South Norfolk (Mr Bacon) raised the case of the chief operating officer of rural payments. The innovation director of the Technology Strategy Board has been referred to subsequently, as have at least 25 senior officials at the Department of Health and employees of health trusts.
I am sure that the hon. Gentleman welcomes the review that my right hon. Friend the Chief Secretary announced. Is it not quite extensive in its scope, taking on board more than 4,000 contracts across Whitehall? Moreover, it is already having the effect of terminating some of the arrangements that the hon. Gentleman is talking about. It is, therefore, a review that he should welcome.
Oh, I do welcome the review. I think that the hon. Gentleman may be quoting from The Guardian article in the debate pack. It said:
“Treasury review of the extent to which civil servants channel salaries into tax-efficient private firms is to look at more than 4,000 postings across Whitehall and its quangos—and is expected to conclude that such schemes must end for full-time permanent staff, even if the arrangement led to a net financial gain for government departments.
The Department of Health is deciding whether to cancel contracts paid to at least 25 staff via private firms worth over £4m… The Guardian has been alerted to similar schemes operating in NHS trusts and primary care trusts. In one recent case, the Milton Keynes Hospital paid its acting chief executive Mark Millar via a partnership called Millar Management Associates. There is nothing illegal in staff being employed as consultants, especially if they are temporary.”
While my hon. Friend is on the subject of acting consultancies in the national health service, does he share my concern about the signal that was sent out by the Imperial College Healthcare NHS Trust last year when it appointed an interim chief executive allegedly on an arrangement of £2,000 a day for up to 200 days. Does he accept that, with a £35 million deficit, that sends out a very worrying message to the public? Moreover, does he not think that the fact that the chief executive has now been appointed the permanent managing director—I welcome that move and do not throw any doubts on his competence to do the job—implies that that consultancy arrangement was wrong?
My hon. Friend is absolutely right. Our constituencies share the world-renowned Imperial health care trust. When I was first introduced to the new chief executive, I assumed that he was just that—a paid chief executive. It was only when I read the articles in The Sunday Times that I understood that he was being paid £2,000 a day as a consultant. I do not know whether it was always the intention to regularise his position or whether it was The Sunday Times and perhaps my hon. Friend who acted as a prompt. I am, however, pleased that the chief executive, Mark Davies, applied for the job and has now been appointed to the full-time position. If that is a precedent in removing such anomalies and abuses, I hope that it will be followed.
Going back to the point made by the hon. Member for St Austell and Newquay (Stephen Gilbert), I do not object at all to the review. However, as he will have seen, the issue goes wider than Departments and non-departmental public bodies. It is my understanding—the Minister may want to correct me when she responds or even now—that that is the limit of the review at the moment. Even in the statement on 2 February, my hon. Friend the Member for Tynemouth (Mr Campbell) asked about local government—a topic to which I will return—and the hon. Member for Warrington South (David Mowat) asked about the BBC. Will the Minister update us on whether the terms of reference of the review have been extended to cover those areas, what progress has been made so far and when will we see a report?
To assist the debate in its early stage, I am happy to confirm that the review extends to all bodies that are covered by Her Majesty’s Treasury’s guidance on managing public money, with which Members will be familiar. That includes all central Government bodies, such as Departments and their arm’s length bodies. On the subject of the BBC, I can confirm that the review will not cover arrangements in public corporations, public broadcasting authorities or the publicly owned banks. I hope that that information is of assistance.
That is disappointing. I wish that both local government and councillors were covered. The leader of Kensington and Chelsea is paid a six-figure salary. The days of councillors being volunteers or being paid small amounts have gone. The review should also cover health trusts, non-executive directors of health trusts, the whole panoply of organisations that surround the public sector bodies, the Local Government Association and the Local Government Improvement and Development board, because those are the organisations in which abuses are likely to take place. We are talking about bodies that recruit people who have retired from the public sector and who, because of restrictions on their earnings thereafter—such earnings affect pension rights—will be prone to adopt these devices to avoid being classed as employees.
The figures for high pay in the public sector speak for themselves. The Chief Secretary conceded that he had cognisance of more than 180 civil servants on packages in excess of £142,500. I commend the work of the TaxPayers Alliance—I have been doing that quite often recently—in publishing the “Town Hall Rich List”, which shows that the highest paid chief executives, who are, I think, in Wandsworth, are on around £350,000 a year. That list of shame, which is regularly updated and published, is a great public service.
Let me just say, though, that as someone who has spent 20 years in local government, I have worked with some very fine public servants who did not do the job primarily for money. I even had a chief executive who capped his own salary, which is not something that we see much of at the moment. However, I have also had the unedifying experience of seeing the last chief executive of Hammersmith and Fulham, which is one of the smallest unitary local authorities in the country, retire on a salary of £281,000 a year. That salary had been increased by £11,000 in the last year of service—the salaries of everyone else in the organisation had been frozen—in order, I suspect, to enable him to retire on the maximum pension. The authority would not divulge the details of that pension but the House of Commons Library calculated that it would be substantially in excess of £100,000 a year. In addition, he received a lump sum payment of a sum much larger than £250,000 a year. To my mind, that is not where local government should be.
I will return to the issue of consultants. I say again that I am grateful to a number of organisations for their help, particularly the PCS union, which takes an interest in this subject.
I want to make a point before my hon. Friend moves on from consultants. Before I do so, Mr Howarth, I give early apologies that I have to leave Westminster Hall early as I am on Select Committee business with the Culture, Media and Sport Committee this morning. Coincidentally, the Committee will be taking evidence from the Under-Secretary of State for Culture, Olympics, Media and Sport, the hon. Member for Wantage (Mr Vaizey), who is the Minister at the Department for Culture, Media and Sport who is closing libraries up and down the country. Can my hon. Friend just clarify his earlier comments about chief executives being awarded something like a 17% pay increase? Is that accurate?
It must be accurate—it is in The Daily Telegraph.
The PCS union quantifies the amount spent by Government on consultants at more than £1 billion; I think that that amount is based on figures from the National Audit Office. Before Government Members jump up and down, I accept that the figure paid to consultants has been too high for too long, but that is not any reason for not addressing the issue.
The PCS union says that, when hundreds of thousands of jobs are being cut in the public sector and its members on low pay are being forced to take pay cuts, it is not right that, for example, the Ministry of Justice—an organisation with which I am reasonably familiar—spent £43 million on consultants between May and November 2011. The Legal Aid, Sentencing and Punishment of Offenders Bill, or LASPO, is currently being mauled in the House of Lords, particularly about the issue of social welfare legal aid. If that figure of £43 million were annualised, the cost of consultants to the MOJ would effectively pay for the entire cuts in social welfare legal aid. So, all the agonising about cuts to citizens advice bureaux, law centres and to the funding for disabled people seeking advice on welfare benefits, housing or whatever would be unnecessary, if only the Lord Chancellor and Secretary of State for Justice could address his habit for consultants.
I thank the hon. Gentleman for allowing me to intervene, and I must say that I have a lot of sympathy with the general principle of some of the things that he has said this morning, but not with everything he has said. Is his opposition to the public sector’s use of consultants completely based on principle, even if such use of consultants adds to efficiency and does not cost any more money? Even if those situations existed, which in some cases I believe they do, would the hon. Gentleman still oppose the use of consultants just on principle?
There is a definition of consultants that I will give—it is not the PCS definition, which I think is plagiarised anyway:
“People who borrow your watch, tell you what time it is and then walk off with it.”
The definition that I will use is:
“People who do a specific task, which is needed, usually for a short period of time, and which is a particular piece of expertise that is being bought in.”
What we are talking about this morning is—in very many cases—absolutely not that, and I will now give the hon. Gentleman an example. I hope that it is not a typical example, but it is certainly a very shocking example.
I will give way once more.
The hon. Gentleman is being very kind in giving way. Just before he moves on from this issue, I want to ask him a question. He has talked about the £43 million spent by the MOJ on consultants. Can he tell the House exactly what that £43 million was for, and can he say whether there was a public sector evaluation of the cost if the work for which that money was paid had been carried out in-house? I think an answer to that question would aid the debate.
I think answering that question would take us off on a siding, albeit an interesting siding, and I am not sure that the hon. Gentleman really wanted to come to Westminster Hall today to defend that spending by the MOJ. If he does, he is very brave, but there it is.
Of course, the MOJ pales into insignificance beside the Ministry of Defence and what are euphemistically—well, perhaps appropriately—known as FATS, which are framework agreements for technical support, and beside the hundreds of millions of pounds that have been spent through that route. The Department for Work and Pensions is another major offender. According to the PCS, “business consultancy services” cost the DWP £18.2 million in 2010-11. At a time when the Government could not find the money for the future jobs fund, that seems to be wrong. I could give a lot more examples in relation to Government Departments.
I will not give way, if the hon. Gentleman does not mind, because I want to press on and hopefully finish by ten minutes past 10.
As I was saying, I could give a lot more examples about Government Departments, but I think that the point is made and I hope that it is a point that the Minister, when she responds to the debate, will say the Government are taking very seriously. I hope that takes seriously not only the issues about the levels of remuneration and taxation problems but whether the public sector is getting good value for money for the number and type of consultants that are hired.
I will give just one other little anecdote about consultants and again it is an anecdote from my own backyard. My local authority has got rid of 1,800 staff in the last five years—I think that is the figure—and that is a substantial proportion of its work force. A lot of that is related to cuts and a lot of it has proved unwise. However, the local authority has now cut so many staff that it is now “taking on”—to use the authority’s own words, which it uses to defend the number of consultants that it employs—agency staff and consultants, simply because it has got rid of so many PAYE staff. That cannot be the right way to run a public sector organisation.
Let me give another example of what I think we all know as IR35. Let me talk about a particular case in Hammersmith and Fulham. It has received some media attention, but I am not sure that the full horror of it has been expounded. It relates to a particular gentleman. I am sorry to have to talk about individuals, but obviously this issue is about individuals who have these consultancy contracts. That gentleman is called Nick Johnson. He used to be the chief executive of the London borough of Bexley, on a salary in excess of £200,000. His partner—his common-law wife, if that phrase is still in use—is a woman called Kate Davies, who is the chief executive of Notting Hill housing trust, and she is also on a salary of about £200,000. They jointly set up a personal service company, or PSC, called DaviesJohnson, to tender for work. I should point out that Ms Davies is still the chief executive of the Notting Hill housing trust, but Mr Johnson is no longer the chief executive of Bexley.
Rather than explaining their situation in my words, I will quote from a letter; although it is quite long, reading from it will save time. It was written by Councillor Stephen Cowan, who is the leader of the opposition in the London borough of Hammersmith and Fulham, to the Secretary of State for Communities and Local Government on 16 December 2010, which is some time ago. As far as I am aware, Mr Cowan is still awaiting a response to that letter. Mr Cowan wrote:
“I was interested to read your view that ‘Councils could cut chief executive’s pay’ as a means of saving money in these difficult times. You will no doubt have seen this article in the Mail on Sunday when it appeared on the 31st October 2010.”
The letter goes on to talk about the contents of that article. It continues:
“I believe that the issue it raises warrants investigation by your Department and the loopholes that have allowed this to occur need to be tightened. Such measures are likely to result in significant savings to the public purse. The Mail on Sunday reveals how Nick Johnson ‘receives a total of £310,000 a year, making him what is believed to be the highest paid council-funded official in Britain.’ However, this money is a combination of Dr Johnson’s ability to draw an alleged £50,000 local government pension as well as invoicing H&F Homes”—
that is, Hammersmith and Fulham Homes, which is the council’s ALMO, or arm’s length management organisation—
“over £260,000 a year. He is able to claim both these amounts because the ALMO’s money is paid to his private limited company (Davies Johnson Ltd) rather than directly to him. On the 24th of June 2010, Nick Johnson gave evidence to the Borough’s Housing Health and Audit Social Care Select Committee to say that he worked ‘full time’ for H&F Homes and now also LBHF”—
that is, the London borough of Hammersmith and Fulham. Mr Cowan went on:
“Nick Johnson worked as Bexley council’s chief executive. But he retired earlier than normal pensionable age on 4th November 2007. This happened after he was deemed to be ‘permanently unfit to discharge his duties or any comparable duties as defined by the Local Government Pension Scheme regulations.’ In a note to Bexley Councillors, the current Chief Executive of that authority explained that an ‘Independent Occupational Health Consultant’ reached the conclusion about Dr. Johnson’s health and the decision to retire him was made by ‘the Acting Chief Executive’…However, Dr. Johnson started work in Hammersmith and Fulham on 11th February 2008—fourteen weeks and one day after he retired. Since then he has billed Hammersmith and Fulham around £700,000…Bexley councillors have questioned why they are paying a pension to an individual who appears to still be working full time… Many people have raised concerns about this.”
Mr Cowan goes on to quote newspaper articles and adds that Conservative colleagues argue that Nick Johnson is good value for money. I think that £260,000-plus is a lot of money to pay a local government official. I question whether such payments have been correctly monitored. Only recently, the chief executive officer wrote to inform me that Mr Johnson’s company is paid £950 a day, which equates to an annual salary of approximately £160,000.
Mr Cowan then goes on to request action by the Department for Communities and Local Government, which has not been forthcoming.
Does my hon. Friend agree that what people find so shocking is not just the huge sums that are being paid out to these individuals, but the fact that many of the organisations in question do not even pay their lowest paid employees the London living wage, and the discrepancy between the pay at the bottom and the pay at the top is absolutely huge these days?
My hon. Friend is right. If I have time, I will comment on the wider trend towards the involvement of such private sector companies in the public sector, which seems to be something that the Government intend to encourage.
I have calculated, from documents supplied to me, the sum that Mr Johnson has been paid so far since 2007. As a consultant—as a PSC—to the London borough of Hammersmith and Fulham and its daughter organisations, he has been paid £957,481, just shy of £1 million. That was for a series of contracts, but principally for being chief executive of the arm’s length management organisation running the council’s public housing in the borough, and subsequently as the council’s director of housing and regeneration. To my mind, that is a post of employment, not a post as a consultant.
Following that letter 15 months ago in December 2010, the matter was not allowed to rest there, despite the fact that the local authority wished that it would. Eventually, audit reports were commissioned to look not only at Mr Johnson and DaviesJohnson, but at the wider trend for Hammersmith and Fulham council to employ consultants. I want to put on record the shocking findings about how that local authority conducted itself. If this practice is common in other local authorities, I urge the Minister to consider that this needs to be looked at as surely as Government Departments are.
Following the complaints made by the leader of the opposition, a report from Deloitte was commissioned to undertake an internal audit of the use of personal service companies across the council and in Hammersmith and Fulham Homes, and in particular the contracts between DaviesJohnson and Hammersmith and Fulham Homes and the council. In summary, the findings were:
“There is currently no corporate policy covering the use of consultants appointed to interim positions or as temporary staff, regardless if they are self employed consultants or operating as Personal Service Companies (PSCs);
We were unable to obtain evidence of any formal, documented selection and recruitment process being followed for the appointment of any of the PSCs within our sample;
For the seven appointments examined that were procured by the Council, we were only able to obtain one agreement;
For the four PSC appointments within H&F Homes we identified a number of issues including agreements not being available for the entire period of engagement; the absence of signed original agreements; an agreement with a dissolved company and an agreement between the ALMO and the individual rather than the company;
PSC invoices tested were found to be authorised in all instances tested;
Departments are required to submit returns detailing all consultancies appointed; however this does not include individuals covering posts as interims. Therefore there is no complete, centralised listing of all PSCs currently in use by the Council; and
We were unable to obtain evidence of formal performance monitoring of PSCs.
2.2 These findings have led to a ‘nil assurance’ in this area and seven recommendations have been made that are currently being implemented. All the recommendations have been accepted by the council. Timeframes for implementation are given in the report and range through to September 2011 for all recommendations to have been implemented.
2.3 The internal audit identified three individuals in particular where the auditors thought that professional advice on tax status should be sought, including the contracts in relation to Davies Johnson Ltd that the Audit and Pensions Committee had asked to be reviewed.”
It separately looked at the issue of DaviesJohnson. Although the view of Deloitte is not necessarily that Mr Johnson was an employee, in words that may come back to haunt the local authority, it states:
“the application of the tax and NIC regulations in such situations is not clear cut and HMRC may form a different view. Therefore, to this end, we would strongly recommend that, if not done so already, H&F Homes Ltd documents the services provided by Davies Johnson Ltd during this period, which will support the tax/NIC application by H&F Homes Ltd and help counter any potential challenge from HMRC should it consider there might be a case to form a view that NJ was an officer holder and an element of the payments made were solely linked to that of NJ holding the office of Chief Executive.”
He held that post for more than three years on a remuneration of approximately £1,000 a day.
My next point deals with where the investigations are going now. I urge the Minister to consider how unlikely it is that organisations such as Hammersmith and Fulham will put their house in order. I am sorry to single out Hammersmith and Fulham, because it is my local authority. I am sure that the same malpractices occur elsewhere. I pay tribute to local media—the Hammersmith & Fulham Chronicle, the Shepherd’s Bush blog and the Hammersmith Today website—which have highlighted these issues constantly and have been the driving force, along with the opposition on the council, in getting any movement on the issues. The council remains stubbornly of the view that it will not investigate these matters. It has now instructed PricewaterhouseCoopers, following the Deloitte report, to look at whether it is or is not complying with the law—in other words, whether it has or has not broken tax law.
Deloitte has revealed that, on June 30 last year, there were 69 consultants working at Hammersmith and Fulham council, 17 of them working via personal service limited liability companies. It found that Hammersmith and Fulham council had broken all its own rules for hiring consultants. There was no evidence of a formal documented selection recruitment process and no evidence of formal performance monitoring. The council had potentially wasted up to £12 million in this way, potentially operating outside UK tax laws with a possible £15 million in back taxes, fines and other sanctions that could hit the borough’s finances. That was the reason for bringing in PricewaterhouseCoopers at the end of last year, but—this is an important “but”— PricewaterhouseCoopers’ remit is simply to look at the future. It is to look at whether— this is in the response from the director of finance to a member of the audit committee—contracts in Hammersmith and Fulham will comply with tax legislation in future. What it should be looking at is whether it has done that in the past. If it will not do that, HMRC should.
There was a council meeting on 29 February. The motion put by the opposition stated:
“This council is committed to full cost transparency wherever possible to enable tax payers to hold us to account. This council notes that it has employed 540 agency workers over the past year—20% of the directly employed workforce.
This council has also employed sixty-nine consultants, with almost twenty of those employees working via service limited companies. The Local Government Pension Scheme forbids retired local government employees from being re-employed in local government. However, a personal service limited company allows this rule to be side-stepped.
However, there are clear rules laid down by Her Majesty’s Revenue and Customs about what defines a consultant and there is a likelihood that the London Borough of Hammersmith and Fulham may have breached those rules in directly employing people to work in its management structure as “consultants” via personal service companies.
This Council therefore resolves:
1. To inform HMRC of all cases where it has employed individuals via personal service companies and ensure its tax obligations are met and up to date
2. To report to Cabinet and the Audit and Pensions Committee full details of any back-taxes and fines issues by HMRC on IR35
3. To review its use of agency workers looking for more cost effective means of employing individuals and to publish all details of agency workers employed by LBHF and/or its subsidiaries and details the salaries of all of those over £100,000 per year.”
That was proposed by the opposition and voted down by the administration.
The final and perhaps the most shocking matter is this. I have dealt in some detail with the DaviesJohnson contract, as it is such a significant contract—more than £1 million was paid to a private company—and because it opened the door to the other abuses occurring in the authority. However, when an opposition member of the audit committee asked whether the council should report the DaviesJohnson contract to HMRC, the director of finance said that
“given the high profile of the situation in the media, HMRC would be aware of the situation, and had not approached the Council. If the Council approached them directly, a further inquiry would take place, with further impact on officer time and resources. Given the PWC findings, she did not propose to refer the matter to HMRC.”
The opposition councillor
“then proposed that the decision to refer or not to refer the matter to HMRC be put to the vote. The vote having been tied 2-2, it was agreed, on the Chairman’s casting vote, that the committee should not refer the matter to HMRC.”
The hon. Gentleman has rightly given many examples of indefensible salaries and egregious working arrangements, but does he accept that there are 1.6 million freelancers throughout the country who contribute £21 billion? Is there not a danger of tarring the entire sector with the same brush?
I do not disagree with that point, but the hon. Gentleman seems to be somewhat in opposition to his colleague sitting next to him, the hon. Member for Shrewsbury and Atcham (Daniel Kawczynski), who was tut-tutting earlier about a small business run by the former Mayor of London. I hope that they get their ducks in a row.
However, I have moved on from that point; I will draw my remarks to a close in a moment. I am now dealing with a different point: public authorities had it drawn to their attention, if they did not know it at the time, that they might be in breach of UK tax law, and are covering it up, refusing to engage with HMRC and making every attempt to suppress that information. That must be wrong, and it must be a matter for the Government, and above all for the Treasury and HMRC.
I do not have time, although I wish I did, to discuss A4e and the role that it is playing in the public sector. That organisation has multi-million-pound contracts in the public sector. It is taking huge sums of money and paying its chief executive huge sums of money, and it is now under investigation on five separate counts of fraudulent activity. McKinsey, too, was exposed three or four weeks ago in The Mail on Sunday for the role that it is playing in promoting the private health care industry. Again, to use an example from my own backyard, the Association Of British Insurers and the insurance industry have been pushing their own agenda with the Ministry of Justice in the drafting of the legal aid Bill. Those are all more than warning signs; they are indications that something is seriously wrong in public procurement, and the Treasury above all must handle it.
The two most infamous names in local government in my lifetime were probably Poulson and Porter. What is happening in my local authority has overtones of both. First, it involves a cabal of people who seem intent on feathering their own nests and earning huge sums of money from the public sector. Secondly, the project in which Mr Johnson is engaged involves the sale of two council estates for £100 million to a private developer so that they can be demolished to make way for luxury homes. The project will benefit the developer and Mr Johnson, but not the thousands of my constituents, mainly low-income, who live on those estates. Whether or not it is legal is not the point, although I do hope that there will be a proper investigation into the issue of tax law by HMRC, to which I have written; it is clearly quite wrong.
I pay tribute to the media. For every issue that I have introduced in my speech, I have referred to a media article. The campaign has been driven by papers from The Guardian to local newspapers, by blogs and by the BBC. They have done the job that the Government should be doing. I thank all those in the media who have taken the trouble to investigate the matter, and I urge people to listen to “File on 4” this evening.
I also pay particular tribute to the councillors in my borough—I am pleased to see that one of them has attended this debate—including the leader of the opposition, Councillor Cowan, whom I have quoted extensively. However, we cannot rely on volunteers and newspapers alone to ensure probity, fairness and economy in the public sector. I hope that the examples that I have given today are sufficient to show that something is seriously wrong, not just in the one or two examples that have been debated previously in the House and not just in central Government Departments and quangos but throughout the public sector. I hope to hear from the Minister that she is serious about tackling it and will talk to the Chief Secretary to the Treasury about extending the remit of the review to cover the matters that I have mentioned.
Order. Before I call the next speaker, it might be helpful if I make two comments. First, there are 44 minutes left, and quite a number of people wish to speak. If Members are disciplined about putting their arguments, we might be able to get everybody in, and I will certainly try to do so. Secondly, I should draw hon. Members’ attention to the title of this debate, which deals with excessive pay and the use of consultants in the public sector. Tempting though it might be to introduce topical examples of people’s income and tax arrangements, unless those people are already working in the public sector, it is not within the terms of the debate.
I congratulate the hon. Member for Hammersmith (Mr Slaughter) on securing this important and timely debate. I speak as somebody who has worked in both the private and public sectors. I started my life after university in the private sector. I spent a great deal of time trying to secure as large a salary from my bosses as I could, always pushing for a better company car, health insurance, ever greater bonuses and shares in the company. I felt that that was fair and appropriate, as the company was making a great deal of money, I was contributing to that wealth and the shareholders were happy to pay that sort of remuneration.
Having come into the public sector, I think that those of us who work in it should not be thinking about trying to make a lot of money. It has a lot to do with mindset and with educating people about the different responsibilities involved in working in the public rather than the private sector. One must never forget in the public sector that one’s salary comes, in the main, not from wealthy people but from extraordinarily hard-pressed families who are struggling to pay their bills and, in certain cases, to keep a roof over their heads and those of their family. All of us who work in the public sector must bear that in mind.
I am participating in this debate because I want to raise something specifically with the Minister. I went to Pontesbury village hall in my constituency to meet first responders, people in remote rural Shropshire villages who respond to emergency cases before an ambulance arrives. In many cases, they save people’s lives. It is the big society in action. I found out on Saturday that there are 144 such responders in Shropshire, and I pay tribute to them. Someone said to me at that public meeting that the chief executive of the west midlands ambulance trust earns £180,000 a year. I was absolutely staggered by that, bearing in mind that a lot of the work carried out by the first responders—as I have said, they are all part of the big society in action—is charitable work. They are on a shoestring budget and yet provide a vital service.
I telephoned the chief executive of the West Midlands Ambulance Service NHS Trust following the meeting because of the concerns raised by that constituent at the public meeting in Pontesbury, who said to me, “We do the work primarily from charity. Did you know that the chief executive of the ambulance trust is on £180,000?” There was anger, frustration and bewilderment from my constituents, who were all there in a voluntary capacity, undertaking a vital role in teaching people how to be first responders. Even I was taught how to resuscitate someone while I was there—not that I want to put it into practice, of course, for fear of hurting someone. I was extremely impressed with what was going and worried about my constituents feeling upset about the high salary.
I telephoned Mr Marsh, the chief executive, to ask him how he could possibly justify earning £180,000 a year, which is a staggering amount. His response was, “I do a very important job.” Of course he does an important job—managing the West Midlands ambulance service is an extraordinarily important job. However, I tried to convey to him that it is no more important than the job of the Prime Minister, a point that the hon. Member for Hammersmith alluded to at the beginning of his speech. Why should any public sector employee be paid more than the Prime Minister of the country, who has a huge amount of responsibility on his plate?
Police and crime commissioners will be elected in November. My understanding is that the police and crime commissioner for our area in Shropshire will be remunerated somewhere along the lines of £100,000 per annum, which I am pleased about. That is a far more suitable salary for people in the public sector rather than sky-high, rocketing salaries.
The issue is not just about mega-high salaries for individuals, but about how even small organisations manage taxpayers’ money. One parish council in my constituency, Bayston Hill parish council, manages to spend £43,000 per annum on administration costs and the salary of a clerk—this is just one parish council. We all have a responsibility to acknowledge and accept that our wonderful country is on its knees financially, and we all have to take responsibility in ensuring that debts are paid off and that salaries are reasonable.
I am conscious of the time, so I will end by talking briefly about my concerns about the pay of certain BBC executives. My understanding is that Mark Thompson is on a salary of more than £600,000 per annum, which I find—I will go as far as to say this—nauseating, deeply distressing, worrying and troubling. At a time when BBC Radio Shropshire is facing cuts—not a single person in that entire organisation is paid more than £55,000 per annum, and it is a wonderful service that provides many people in our rural county with vital services—the director-general of the BBC is earning more than £600,000. I fundamentally object to that.
We have just heard the exposition of Kawczynski’s law—that one squeezes as much from their employer as they possibly can, including company cars. Surely the director-general of the BBC is merely following the sound and good advice of the hon. Gentleman?
There is an important distinction. I was working in the private sector, with shareholders as private individuals. Mr Thompson works for the BBC, which, by the way, forces millions of people up and down this country to pay for TV licences. I have applied for a debate on the rationale and efficiency of the way in which that tax is collected. There is a fundamental difference.
I am grateful for being called, and I end my speech now so that other hon. Members may speak.
This is the first time that I have participated in a debate under your chairmanship, Mr Howarth, so I am pleased to be here today. I congratulate my hon. Friend the Member for Hammersmith (Mr Slaughter) on securing this important debate.
In response to concerns about the time, I will make just two quick points to add to the forensic examination by my hon. Friend regarding public sector pay and the use of consultants, and I would like the Minister to consider them.
When my hon. Friend opened the debate, he was intervened on several times, and Members pointed out that some of the problems had existed under the previous Government. I fully accept that. A lot was made of the issue around the time of the general election, and the then Opposition were right to do so. There were concerns in the public about the rates of pay that were paid through public funds—taxpayers’ money. That is a legitimate issue to raise. Having raised the issue, even going as far as to say in the coalition document that the Government would reduce public sector pay, that there would be a cap on pay and that a mechanism would be put in place for agreeing pay that is above the rate of the Prime Minister’s salary, it is legitimate to have a debate such as today’s to examine what progress is being made.
What we have seems to be an approval of a mechanism for avoiding tax and paying higher salaries for the performance of tasks and roles that are paid for out of the public purse. There is a certain irony in that some of the mechanisms seem to allow payments that end up reducing the amount of tax that is available to pay for the services in the first place. We are talking about people who are recognised to be on the payroll, but whose salaries are paid through private companies. An article in The Guardian on 16 February states that many people who are being paid through private companies and who are avoiding paying tax at source
“are listed as full-time legal, IT or human resources consultants. The department said many of them had been employed for a long time, and appear on staff directories.”
Such people are, for all intents and purposes, full-time employees—of the national health service, in this particular case—and yet they are being paid through service companies that allow them to reduce their tax liabilities.
The article says that Departments are complicit in that. It states:
“The arrangement can be tax-efficient both for the individual and for the Whitehall department, including arm’s-length bodies, since the department may not need to pay national insurance in addition to fees.”
My concern here is that Departments, which are paid for by tax and whose revenues are collected by the Exchequer, seem to be colluding to reduce the amount of money paid to the Exchequer. Will the Minister respond to that, or at least look at the issue? When she conducts her review, will she specifically respond to that? Am I alone in thinking that there is something peculiar about a Whitehall Department seemingly colluding with the private sector to reduce the amount of tax payable? Is that practice acceptable? Should we be encouraging such practice?
My hon. Friend came into the House at the same time as I did. He will remember, as I do, the huge debate on IR35 at the time, which I thought had addressed the issue. Is he as shocked as I am to hear today, and to read in the sheets of that august organ, Private Eye, that a golden carousel fuelled by avarice is spinning chief executives from one fleshpot to another, letting them fill their boots on the public purse without even pausing for breath? Does he agree that that should have been sorted years ago? I thought that it had been by IR35.
My hon. Friend is tempting me along a path that I do not wish to go down because I have limited time. However, he has made his point and put it on the record.
I will quote from another article in The Guardian dated 15 February to illustrate my point further. What is disturbing about that article is that the officers within the Department—whether inadvertently or not—have failed to give the full facts in answer to a Member asking questions specifically about the use of such vehicles for paying permanent members of staff in the NHS. The confusion seems to rest around whether those people are classified as civil servants, or whether they are private sector consultants.
The series of e-mails that The Guardian quotes from in the article suggests that there are attempts within the Department to facilitate that sort of arrangement. I find that alarming. The answer provided failed to give the full facts to the House. The article states:
“The emails handed to the Guardian also show senior civil servants at the department discussing the possible reputational damage to the department and seeking to avoid ways of revealing the nature of the payments sought in a written question last December by Gareth Thomas, the shadow Cabinet Office minister”.
The Guardian goes on to say that the answer to the question from my hon. Friend the Member for Harrow West (Mr Thomas) stated:
“It is not the department's policy to permit payments to civil servants by ways of limited companies.”
That led to the belief that no civil servant was being paid through such a mechanism. However, it transpires that there is an issue surrounding the definition of a civil servant. A civil servant is someone who is on pay-as-you-earn, rather than someone who is being paid through one of those mechanisms. Therefore, the answer was entirely misleading. Whether that was deliberate or not, we need to have some answers to that practice. Do the Government think that that is a satisfactory definition? Alternatively, does it need clarification so that when hon. Members seek answers in the future about how people are being paid, we get accurate answers? We can then be the scrutineers of what is going on with public sector pay and how much public sector money is being used. With that, I conclude my speech.
Thank you, Mr Howarth. For the record, I am Stephen Hammond—Philip is the tall, good-looking one. I listened carefully to your strictures and have therefore ditched my section on people seeking to re-enter public life and avoid tax. At the outset, I remind hon. Members of and guide them to my declared interest in the Register of Members’ Financial Interests.
I have listened carefully to the debate. I only wish that I had known my hon. Friend the Member for Shrewsbury and Atcham (Daniel Kawczynski) sooner, as I could have followed Kawczynski’s law when I was in the private sector, but I singly failed to do so. I also listened to the fascinating opening speech of the hon. Member for Hammersmith (Mr Slaughter). He chided us on party politics, but I say gently that it might have been helpful if some of the examples had not been exclusively from Hammersmith and Fulham. On that basis, we might take his comments as a party political contribution.
I shall raise three points in my remarks. First, I shall discuss the concept of value for money. I shall then talk briefly about excessive pay and contractors. Many of us feel that one of the big areas where problems arose with value for money in relation to outside firms being used in the provision of public services was with the private finance initiatives that were set up. The public sector should be the enabler. Sometimes, it will also be the facilitator, but it does not need to be so. The real scandal of excessive pay and excessive failure to manage arrangements was in the unitary payment scheme set up under PFI. That unitary payment allowed the capital and the current payment to be collided for the deliberate obfuscation of what was being paid in current payments. That was a real scandal, and value for money was impossible to assess.
On excessive public pay, the hon. Member for Hammersmith is absolutely right: payment should be in line with performance. As reflected by the view of the vast majority of the public, the scandal has been that, at the time of entering austerity, a number of people in the public sector were getting paid well beyond their perceived performance. Although I was chided for using this example, it is absolutely true that, since the Government have come to office, there has been downward pressure on the overall pay in local government. Again, I give the example that, before 2010, £221,000 was the average salary for chief executives. It is now £143,000, which may well still be too high in terms of what is being delivered. None the less, there has been downward pressure. The TaxPayers Alliance “Town Hall Rich List” is a good touchstone for us all, but one should not forget to put the matter into context. Under the previous Administration, we had to revise the definition of public sector productivity twice, because pay increased without a commensurate increase in performance.
I want to put some balance into the debate because if we are not careful, we will end up saying that all contractors and freelancers are bad value and try to evade tax. That is simply not true. The skills that some of those people provide contribute a huge amount to not only the economy, but the public sector. That is clear. The public sector needs all sorts of skills in addition to the work that dedicated, hard-working public servants and public sector workers provide. Some 1.6 million people in the UK work as freelancers. The idea that all those people are tax dodgers is simple nonsense. Oxford Economics has made the point that, in 2009, the overall benefit to the economy was around £21 billion.
I want to touch briefly on the review that the Chief Secretary to the Treasury has set up. That review started because of the Ed Lester case and the fact he was given special concessions. However, the idea that all those concessions apply to every individual who is a freelancer in the public sector is simply wrong. We should not forget—I say this to the Minister, as I hope she will address this point—that the reason why a number of freelancers put themselves into limited companies is that the Government procure through agencies rather than directly. Those agencies require that the contract goes to a limited company. The Government need to address that in their review.
I want to allow my hon. Friend the Member for Hexham (Guy Opperman) time to speak, but I should like to say that, although I support what the Chief Secretary is saying, I hope that the Treasury will ensure that the review focuses on value for money. That is the key. The danger is that contracts will be delayed and taken away and that it will become a witch hunt, rather than a proper review of value. I hope that the Minister can reassure us that that is what will finally happen.
I did not catch exactly what the hon. Member for Ealing North (Stephen Pound) said, but he mentioned IR35. The Government rightly set up a review of IR35, but I say to the Minister that there is real concern that HMRC’s fairly simple business tests, which would have allowed a relatively clear definition of someone who is a freelancer or someone who is working full time, are going astray. I therefore urge the Treasury to get back involved in that debate to ensure that the tests are clear, because IR35 could be a good way to ensure that certain people working in the public sector are true freelancers and contractors, not people who should be on the full-time books of the public sector.
I have 60 seconds to change the world. In my respectful submission, no one should earn more than the Prime Minister, the lead general in Afghanistan, the Lord Chief Justice or my local chief constable. The issue of excessive pay is raised on the doorstep in the north-east, and should, frankly, be addressed.
The Government are right to raise the tax threshold to £10,000, but I would like to go further. No one—at all—who earns the minimum wage and works a standard week should pay tax on their income. That would take it slightly beyond the £10,000 threshold. I support the work of the TaxPayers Alliance, the High Pay Centre, the High Pay Commission and the campaign against excessive executive pay—organisations that I work with regularly.
I finish my 60-second bid for glory on executive pay in the public sector by saying that, while I support a lot of what the hon. Member for Hammersmith (Mr Slaughter) said, it must be acknowledged that we are clearing up the mess of a light-touch regulation regime and the problems relating to Mr Thompson’s £600,000-plus salary, which not a single member of the BBC whom I have ever met could possibly justify.
It is a pleasure to serve under your chairmanship once again, Mr Howarth.
I congratulate my hon. Friend the Member for Hammersmith (Mr Slaughter) on securing the debate and on giving us an extensive and forensic tour around local and national concern. He said that his speech would be both interesting and controversial. Actually, it has been helpful that there have not been too many controversial issues. Perhaps there is more agreement than disagreement, notwithstanding some party political points. My hon. Friend talked about the financial, the moral and the legal practices in relation to some contracts in the public sector and to absolute levels of remuneration. They have been reflected in the contributions of various hon. Members. He was clear that he was most concerned to focus on deliberate avoidance and evasion and the improper use of the rules, or attempts to use the rules improperly, to benefit individuals.
I have worked in the public sector. It would never have occurred to me, when I worked in a senior post of a local authority social work department, to set myself up as a company and contract my services to that local authority. I was brought up—this was mentioned by a number of hon. Members—with a public sector ethos that recognised that working in the public sector made us accountable to the local taxpayers who paid our wages.
The hon. Member for Shrewsbury and Atcham (Daniel Kawczynski) made a distinction between the private sector and the public sector. I hope that he feels that the private sector ought to have a set of business ethics. Everyone operating in the private sector ought to take account of that. It is not simply about squeezing as much as possible out of employees because they happen to be in the private sector.
We heard that people are angry about such arrangements. They are angry because they feel that low-paid workers, particularly in the public sector, are suffering the squeeze more than those at the top. The Minister will recall that I raised this issue last week at Treasury questions. I asked what the Government are doing to ensure that they deliver on their promise that the lowest paid public sector workers receive the £250 a year pay rise that they believed they were going to get. We also need to ensure that we do not have a further expansion of excessive pay at the opposite end.
Perception is an issue. The public understand that people whose primary job is with a local authority or public body—whether nationally or locally—and who are being remunerated by it, should pay their fair share and be involved in a proper, transparent arrangement. The public become concerned when it looks like individuals or companies have set themselves up in a particular way to benefit themselves financially, and are not paying their fair share.
In response to points made by the hon. Members for Shrewsbury and Atcham, for Wimbledon (Stephen Hammond) and, in his brief contribution, for Hexham (Guy Opperman), I do not think that anyone is suggesting for a moment that everyone who is self-employed, works as a consultant or in such organisations, is “at it”, to use a term used on the streets of my constituency. There are many people who add value, who can offer very specialist knowledge and expertise and who can be paid through appropriate contracts in the public sector. However, there is genuine concern about some of the arrangements, which we heard about in the forensic contribution by my hon. Friend the Member for Hammersmith, whereby it is clear that people are contracted to do a particular job and, in any reasonable definition, would be seen as employed by the public sector.
Some hon. Members mentioned IR35, which not only affects people in the public sector—I do not intend to deviate from the subject of the debate other than to mention the review of IR35—but many small businesses. There are many situations where people, who are either self-employed or in small businesses, find themselves at odds with HMRC when dealing with definitions of how tax should be collected and paid. I hope that the Minister will say a bit more about the progress on IR35, and how it will be modernised and changed. A quick look at the Treasury website showed me that, far from the situation being simplified, there were about 40-plus—I lost count—different guidance notes on IR35 that would have to be interpreted to decide whether someone was an employee or not. That is not helpful and gives rise to speculation that such guidance is not necessarily there to help people, but to help people avoid the payment of taxes. Many small businesses feel that they are currently being pressed, unlike some of the arrangements we have heard about this morning.
I am conscious of the time, so I will not go through, point-by-point, everything that was raised. Clearly, there have been situations over a number of years—I do not think that anyone particularly wanted to make a party political point—and the general public, understandably, feel that they are taking the pressure to do their bit on deficit reduction. I do not always feel that we are all in it together. It is not fair that those on the lowest pay are set to lose some of their benefits. As was pointed out, those on the lowest pay are feeling the squeeze and do not have a living wage. We are not focusing on pay at the top or the ratio—the difference—between those on the lowest pay and those on the highest pay in the public sector. We should do everything possible to ensure that there is openness and transparency.
There is a place—perhaps not all my colleagues agree—for using specialist expertise and consultants on a short-term basis to add value to the public sector, but that must be done openly and transparently, with proper processes in place. We should never allow people to use the rules and regulations to avoid paying the appropriate tax or to benefit themselves—that is not what the public expect.
Finally, I have already mentioned IR35. Will the Minister say what action has been taken to ensure that, across local authorities, there will be no other examples of the type of practices that give rise to public concern? What will the Government do to monitor them in the future?
It is a pleasure to serve under your chairmanship, Mr Howarth, in an important debate to which hon. Members have contributed with some thoughtfulness. I should like to mention my entry in the Register of Members’ Financial Interests for 2009.
Hon. Members are aware that we face a tough challenge to repair the damage to our economy resulting from the recent crisis. Restoring the economy to prosperity requires restraint in many sectors of society. It is right that public sector pay restraint plays a part in that fiscal consolidation. I shall start with general pay restraint and then refer to various areas mentioned by hon. Members.
I am confident that all hon. Members agree that public servants do a crucial job delivering the high-quality public services on which we all rely. It is right that we continue to offer rewards to those who have skills that would help and assist all our constituents who need those services. At the same time, however, given the pressures on public finances, public pay restraint can help to protect jobs and services in the public sector. That is why, in the June 2010 Budget, the Chancellor announced that there would be a two-year pay freeze for public sector workers earning more than £21,000. At the autumn statement, the Chancellor announced that, for the two years following the freeze, public sector pay awards would average 1%.
On senior pay restraint, it is particularly important, in a context of overall pay restraint, that senior managers show leadership on pay. That is why, at the first meeting of the coalition Cabinet, Ministers announced that they would take a 5% pay cut and that their pay would be frozen for the rest of the Parliament. In May 2010, it was announced that the number of senior civil servants receiving bonuses would be reduced by two thirds, which I am sure hon. Members welcome. At the same time, it was also announced that the Chief Secretary to the Treasury would sign off any appointments for those earning more than £142,500, in areas where Ministers control pay. Of course, much of what we are discussing today can only cover the areas where central Government have control over pay. There is a certain amount of complexity in that landscape to which I may not have time to do justice, but I hope that hon. Members will understand what the Treasury could comment on today.
The Government asked Will Hutton to review senior pay in the public sector. The Government accepted his recommendation that Departments publish a top-to-median pay multiple each year, and Departments will include that as part of their annual reports from this year.
Likewise, the Government are also clear that any consultancy arrangements in the public sector should provide good value for money. In May 2010, we announced that the Cabinet Office and the Treasury would join forces to drive out waste, through a new group called the Efficiency and Reform Group. One of that team’s first priorities, with immediate effect, was to freeze all new consultancy spend unless it was an operational necessity. Where such spending was proposed, ministerial sign-off was required for £20,000 or above. This spending control remains in place. Because of that decision, in the 10 months from May 2010 to March 2011, £870 million was saved through a reduction in consultancy spending by central Government. I am sure that hon. Members welcome that.
On tax avoidance by senior staff, which has been of interest to hon. Members throughout this debate, the Government have been clear that we are committed to tackling all forms of tax avoidance. We do not believe that tax avoidance is appropriate in the public sector. Indeed, it is expressly forgiven—[Interruption.] It is expressly forbidden—I hope Hansard can hear this—in a document entitled “Managing Public Money”, which I know hon. Members have as their bedside reading. The hon. Member for Eltham (Clive Efford) asked whether an NHS trust would be covered by that guidance and I confirm that that would be so. All bodies covered by that guidance are covered by the Chief Secretary’s review, which has been mentioned in the debate.
The review occurred after it came to light that a senior public servant had been appointed in way that could be perceived as minimising his tax. The Chief Secretary therefore announced a review of the tax arrangements of senior public sector appointees. This review will consider the extent to which use is made of arrangements whereby the tax position of appointees can be perceived to be minimised, and will make appropriate recommendations. The review will include individuals being paid through PSCs, to use an abbreviation relevant to this debate.
Several hon. Members, including my hon. Friend the Member for Wimbledon (Stephen Hammond), have mentioned that there is much complexity here that the review should reasonably take into account. The review is not intended to be a witch hunt.
The hon. Member for Kilmarnock and Loudoun (Cathy Jamieson) asked specifically about IR35. She will know that in the Budget last year, following a review by the independent Office of Tax Simplification, the Chancellor announced that IR35 would be maintained, but that Her Majesty’s Revenue and Customs will take forward options for improving its administration. That is a separate point, but I hope that that answers the hon. Lady’s question.
I had better write to the hon. Lady, not being able to cover that matter under the terms of today’s debate.
The review is due to report to the Chief Secretary by the end of March, so hon. Members will understand that I cannot comment further at this time.
Local government is outside of the scope of the review, although I hear the points made by the hon. Member for Hammersmith (Mr Slaughter), including his wish for the review to go wider. He will know that the Secretary of State for Communities and Local Government has written to the Local Government Association to urge it to consider similar action.
It is right that light should be shone upon practices in the local government sector as well, although central Government do not control pay in local government: it remains, rightly, a matter for local authorities. We have taken several steps to bring greater local accountability and transparency to pay in local government, which I think local taxpayers welcome strongly. They now have the tools and information needed to hold their councils and elected councillors to account, through the Localism Act 2011.
I hear what the Minister is saying and I look forward to the review, but will she at least hold open the prospect of widening its ambit, because what she has just said is not correct? In my experience, in my local authority, the audit committee is not meeting—it is being made inquorate by the majority party—and documents are being refused, not only to me but to the leader of the opposition, who has particular rights in law to get such documentation. If councils are going to abuse the position of trust, surely the Government and HMRC must act in this matter.
Perhaps the hon. Gentleman feels that the council was better off his watch, when it was 363rd in respect of value for money out of 387 local authorities.
Let me provide one example of ways in which local authorities are now more transparent. I have no doubt that the good citizens of Hammersmith enjoy holding the pay practices of the council to account through measures under the 2011 Act. They can do that because local authorities are obliged to publish their pay policy statements by the end of March.
On the responsibilities that I am drawing attention to, the Government believe that there should be public accountability in this regard, not only for employees but for elected councillors. The responsibility for meeting the transparency that we all demand of the public sector rests not only with locally elected councillors through some of the measures in the 2011 Act, but with citizens who are now empowered to understand more about the choices that their councils take.
It is right that, as we call time on a decade of ever-increasing centralisation, targets, levers and poor value for money, greater localism must come with greater transparency and accountability. Opening up the pay deals of top town hall jobs to public scrutiny will mean that taxpayers know with certainty that their interests are being protected, complementing measures taken by central Government to control and cut consultancy spending under their areas of responsibility, while also freezing and tackling excessive pay elsewhere in the sector.
It is a pleasure to serve under your chairmanship, Mr Howarth. I am delighted to have been able to secure this important debate on work experience. I am also delighted to see so many hon. Friends and hon. Members from throughout the House in the Chamber today, to debate a subject that not only is topical and relevant to the recent newsfeed but has seen the concept of work experience turned into a matter of political ideology, rather than of pragmatism in how to help our young people and create opportunity for them. I bring the subject to the House in all seriousness, and out of concern for many of our young constituents whose future well-being could lie in the debate around work experience. I therefore ask right hon. and hon. Members to approach the debate in the spirit of helping our young people into work from a pragmatic rather than what I might describe as an ideological standpoint.
I come to the debate as a parent with two young children. Despite their ages, I am not prevented from being a little concerned about their future and what the employment market will look like by the time that they step into the big, wide world of work, whether from school, college or university. I suspect that many of my thoughts are not far removed from those of most parents throughout the country, which is why I wish to consider briefly what the Government are already doing to tackle youth unemployment, and to put that into the context of the importance of work experience, which will be the focus of the majority of my comments.
I congratulate my hon. Friend on securing this important debate. Does he agree, on pragmatism, that MPs can lead the way? I employ an apprentice, as part of my team working in the House of Commons, but we can also have work experience in our constituency offices—we had 40 in the Hexham office over last summer.
My hon. Friend is absolutely right. MPs can certainly show the way practically and, as I will come on to, by supporting people who are willing to give work experience opportunities to our young people.
Youth unemployment is not a new phenomenon in this country, and it has been on an upward trend since 2004, when we were in a better economic position, although getting young people into work should be a priority for any Government regardless of the economic situation. Tomorrow we will see the latest unemployment figures, and we wait to see the figures on youth unemployment with bated breath. The current figures indicate that we have more than 1 million young people unemployed and out of work, which equates to 22% of young people in the country.
It is excellent that my hon. Friend has initiated this debate but, given what he has just said, is it not extraordinary that we are having to have what is a needless debate? It is extraordinary that anyone out there should be opposed to young people getting work experience.
My hon. Friend is absolutely right. It is incumbent on Members of the House to support work experience and any tool that we can put into the toolbox to reduce the shocking number of young people who currently lack opportunity.
To return to our 1 million unemployed young people, if we compare our situation with that in many European Union countries, we will probably see our figures compare reasonably favourably. We should, however, never be satisfied or content to have one in four young people unemployed. For that matter, we should never be content to have any young people out of work. Recently, we have started to see policies put in place by the Government to increase opportunity for our young people. For example, places for apprenticeships have increased by 50% over the past year, to 440,000; my constituency, I am glad to say, has had a 56% increase in apprenticeship take-ups, more than half by young people. The youth contract, starting in April, will also see many more opportunities, including financial incentives for businesses to take on young people, which I hope will mean the creation of up to 160,000 opportunities—as quoted, I believe, by the Department for Work and Pensions, in particular given the £2,275 wage subsidy to support young people.
Under the youth contract, a number of opportunities are coming along in April, but we should also realise that, although we have many opportunities and however many schemes we have, there is always a cohort of young people who struggle to take up such opportunities, often because the education system has failed them and sometimes because they have low self-esteem or no experience or track record in employment. They might have previously experienced employment but had a poor experience.
My hon. Friend is absolutely right. For far too long a cohort of young people has been failed by the education system in this country, and we need to ensure that such people have the maximum opportunity to gain a high-quality education. Hopefully, we will reduce the number of people who need work experience. Until that happens, however, it is incumbent on us all to support the principle of work experience, because we need to reach that cohort. Figures from the International Labour Organisation show that, of the young people out of work in this country, more than 50,000 have never had a formal job and 20,000 have poor or no formal qualifications. If we are to reach out to that cohort of young people and if we are serious about getting them back into work and engaging them to become part of the mainstream work force, work experience is an essential tool to have in the toolbox.
Can the hon. Gentleman define the difference between work experience and an internship, because the two phrases are becoming increasingly blurred? There is definitely a difference and it is important to state it. What is it, in his view?
I thank the hon. Lady for her comments. There is a distinction. With work experience, we are talking about a short-term opportunity for young people; they can be given some short-term experience of work to allow them to get into mainstream employment, often with employers who are keen to take on a certain number of those who have been on work experience and to put them into proper employment. There is a distinction from internships, which have traditionally been used as a method of giving people experience in this place, but also in law firms and all sorts of other professions. There is a distinction, and we need to be alive to that.
Over recent weeks, I have been pretty dismayed by the response to the current Work Experience scheme offered by the Government in partnership with many of our best companies in this country. I have been dismayed by the vitriol towards employers, who have not sought to create a free supply of labour but, on the contrary, have shown a genuine will to give experience and a chance to young people who, for whatever reason, have not been given that chance elsewhere.
I was open to the hon. Gentleman’s comments about not being ideological, so I hoped that he would rebut some of the interventions that he has already had, which were extremely ideological. On the specific question of the Work Experience scheme, does he agree that the work experience must be relevant to the needs and previous experience of the participants?
It does have to be experience, but I hope that the hon. Lady is not taking us down the route of demeaning certain types of employment—I will come on to this in a moment—or of being what I call a job snob. I am sure that she is not seeking to do that at all. Over recent weeks, however, we have seen a small cohort of people who have been willing to show a great deal of vitriol towards some of those companies which were willing to give young people an opportunity. In the debate today and over the past few weeks, we have seen what I consider to be the huge red herring of whether work experience is compulsory or voluntary, and that has been a huge distraction from the real issue.
I associate myself with my hon. Friend’s disappointment at what has happened in recent weeks. Does he condemn those organisations that have sought to spread fear, and have organised letter-writing campaigns, with no basis? They have made the scheme, which should have been a great success, questionable. Does he welcome the fact that we seem to have dealt with the issue, that the argument seems to have turned around, and that the scheme is now being welcomed?
I thank my hon. Friend for his intervention, and I agree absolutely. A small number of people—I emphasise that it is a small number—have put their political ideology before the best interests of disadvantaged young people, whom the Government and employers who have taken part in the Work Experience scheme are seeking to help. That is disgraceful, and an indictment of the methods that some of the people in that extremist group use. I hope that today we will hear from the shadow Front-Bench spokesman that the Opposition do not support such groups, and that they support the Government’s scheme to give young people opportunities. It is incumbent on the House to provide as many routes as possible for our young people.
I thank my hon. Friend for being so generous with his time. To follow on from the point made by the hon. Member for Edinburgh East (Sheila Gilmore), does he agree that a key reason why the scheme is so important and why young people who have taken part speak so highly of it is that the experience that they get and where they are placed is based on the experience they want in an industry that they are interested in going into?
My hon. Friend hits the nail on the head. Most of the placements that have been offered to the cohort of young people are relevant to them, and it is important to bear that in mind.
On the debate about the Work Experience scheme over the past few weeks, and the fact that there has been a red herring, or an elephant in the room, about whether it is compulsory, we all know that it is voluntary, and that the only sanctions relate to conduct, and willingness to see the placement through when someone has embarked on that route. That is not irrelevant, but it is not the most relevant issue. The most relevant issue is to give young people, sometimes with what some people call tough love, the opportunity to go out and get themselves into a position where they can compete in the labour market.
In a moment, I shall discuss employers, but before doing so I want to tackle negativity and ideology, which are damaging opportunities for our young people. Later, I shall use the word “unskilled” with extreme caution. There is no doubt that there is a skill in doing any job properly. I am worried about the rhetoric from some people who seek to demean jobs such as shelf-stacking, because there is no doubt that all jobs are important. We all need to start our career somewhere. For some, that may be shelf-stacking. For some that may be their niche, but regardless of that we in the House should show that any job that is legal and above board should be respected. We need to drive the job snobs out and to promote the fact that we support all people who work, whatever they choose to do or whatever they have to do to make a living and to achieve self-respect.
My intervention is now three or four minutes out of date, but I will make it anyway. Does my hon. Friend agree that work experience is the ultimate job interview for a job that might not exist initially? I am a former employer of work experience people. Does he also agree that the great value is that enthusiastic and willing people become part of the team?
I thank my hon. Friend for his positive comment, and he is absolutely right. It is important that businesses seek to grow their own. Many receive a lot of benefit from bringing young people on in that way. He makes the important point that work experience is often a job interview. We are discussing people whose CV may arrive by post in a pile of 20 or 30 other CVs, and the employer may just put it into the filing cabinet, or write back saying that perhaps they will contact the applicant if a suitable vacancy comes along, or it may end up in a filing cabinet on the floor, which is usually a bin. We must ensure that we provide opportunities to people who need a leg-up.
I thank my colleague from Warwickshire for securing this important debate. Since I have been a Member of Parliament, I have had 16 people doing work experience in my office, and I welcome Thomas Hart, who is in the Public Gallery today. Some employers ignored the protest activity. How can we encourage more employers to ignore it, and to take on the scheme in greater numbers?
I thank my hon. Friend, who, as a fellow Warwickshire MP, knows the importance of getting young people in our area into work. He is absolutely right that we must encourage employers, and ensure that they are not frightened of the vocal minority who seem to put political ideology before young people. Hon. Members on both sides of the House should support the Work Experience programme. It is not a panacea for the whole youth employment issue, and is probably applicable to only a small cohort of people who are difficult to get into work. We should all support the programme, and back employers to the hilt in supporting it.
No matter how unskilled—I have said that I am worried about using that word—a role may be, new staff cannot be brought into a business, whether or not they are doing work experience, without providing training. Some young people will pick up that training more quickly than others, but regardless of that, people must be trained. All employers will say that. So they must invest time, provide training, perhaps buy a uniform, and generally invest in that young person, who may be a member of staff for only a few weeks.
Does the issue not go even deeper than that? The House should celebrate the fact that some companies are a force for social good. They do not just make profits for the shareholder, but provide an enormous amount of employment across the piece, and ensure that this country is put on a sound financial footing. We should celebrate that.
As ever, my hon. Friend is absolutely right. When I go out and speak to businesses in my constituency, I detect that people are becoming alive to the issue of youth unemployment, and that there is a real will in businesses to try to give young people opportunities, whether through the apprenticeship route, work experience or other parts of the Government’s Work programme. We should embrace the good will in businesses throughout the country and ensure that we fully support them, not demean them or try to make out to the public that they are trying to get something for nothing. At the end of the day, we rely greatly on the good will out there, and we must not spoil or stymie that. If we start to go down that route, we will defeat the object. Given some of the ideologies expressed, however, it seems that some people are willing to see that happen just because the current Government may not be of the same colour as them, and that seems pretty disgraceful.
Will my hon. Friend widen his thinking on the issue to women returning to work? I know from my experience of being a stay-at-home mum for seven years that it is unbelievably difficult to get the confidence to return to the workplace. For me, work experience was the best way to build up work attachment and work habits. Will my hon. Friend join me in urging Ministers to ensure that opportunities for work experience are offered to older people—particularly women—who are an economic force to be reckoned with?
I totally agree with my hon. Friend. There is a cohort of people who have perhaps looked after children but are willing and able and capable of returning to the labour market although they may lack confidence. In time, the Work Experience scheme could be widened in the way that she suggests.
I also wish to focus on some of the ladies and gentlemen of Her Majesty’s press who have perhaps not given this issue the fairest of hearings. I appeal to them to dismiss any rhetoric or old-fashioned and outdated views from the far left that they may have, and to think about young people and look to support this policy. By setting out to try to destroy work experience, all they will do is destroy a route to work and an opportunity for our young people. Work experience is not the be-all and end-all for young people, but it is a route into employment nevertheless, and Members of this House should seek to provide as many such routes as practicable to help our young people into work.
I think that is absolutely fantastic. It is a shame, however, that some of those who work for the publication to which my hon. Friend referred may not share the same view as that taken by their employer. That is sad, and I hope that people will think a little more carefully before making the sorts of comment that may destroy the life chances of the most vulnerable young people in this country.
Safeguards must be in place and we must ensure that we protect young people who may be vulnerable. No hon. Member would want any young person to be exploited, but that does not detract from the fact that employers need positive support and encouragement to be offered through the leadership of this House and its Members. It is, therefore, incumbent on Members of Her Majesty’s Government and Opposition to do all they can to encourage employers to offer work experience, and to fight against the small minority of people who seem intent on putting their ideology before the needs of the most vulnerable people in society who need a little extra help to get on the work ladder and into a job.
I will conclude by saying that we must move this debate away from the discussions of the past couple of weeks and towards the political centre ground and a sensible viewpoint that is shared by most people in this country. Most people are supportive of this policy, and I look forward to hearing from the Minister about how the Government intend to support it and ensure robustly that we do not give in to that small minority. I also look to the Opposition Front-Bench spokesman to back the policy to the hilt and do the right thing for young people in our country.
It is a pleasure to serve under your chairmanship, Mr Howarth. I congratulate the hon. Member for Nuneaton (Mr Jones) on securing this debate, although despite his claims that he would not be ideological, I think that he was ideological throughout.
Last Friday, I met a young man in a local community café that is run entirely by volunteers and opens for two hours a week. It is quite new, but it has been very successful. The young man started to volunteer in that café through an arrangement with his school, as he was soon to be a school leaver and had some learning difficulties. He has since left school, although he has continued to volunteer. He told me that as a result of that volunteering experience, Debenhams had offered him the opportunity for paid work in its city café for four hours a day. I thought that that was a great story and a wonderful example of what work experience can do.
When I served on Edinburgh council, we started a scheme called JET—jobs, education and training—first in one high school, although it was subsequently rolled out to others. It was for a cohort of pupils who were in their final year at school but who were likely to emerge with very little to show for it, probably because they hardly ever attended. The pupils and their families were approached and asked to sign up for the scheme. They had a reduced school timetable; they spent one day a week doing work experience and one day a week at a college doing training that was related to that work experience. There were about 20 of those pupils in each school, and although I cannot say that they all came out with jobs at the end of the scheme—we discovered that a lot of them had deep-rooted personal problems—it was a good programme that involved a period of work experience and, importantly, was related to training.
I therefore refute absolutely the allegations that Labour Members are somehow against work experience or even—this is the allegation repeated by the hon. Member for Nuneaton—that we are content to leave people stuck in unemployment. That is totally wrong.
I was about to come on to that, but I wanted to establish the importance of correctly managed work experience.
What is wrong with the current scheme? To me, the most important thing is that work experience moves people away from their current situation and towards employability, whether or not that involves a job right away. As Ministers and others have said, it is essential to get people away from lying in bed or watching daytime TV—anyone who has been the parent of a teenager, particularly a teenage boy, will say amen to that. However, there is no one-size-fits-all solution.
The first, but by no means that last, example of the scheme was related to me by a constituent. She was still quite young and had worked in the past. She had qualifications and had done holiday jobs, but she had then become unemployed. Her complaint was that she was expected to do eight-weeks’ work experience—the shelf stacking that everybody goes on about—and wondered how that related to moving her to where she wanted to be or make her more employable. I do not think that that is being a job snob. We are mixing up two things.
My first work experience, which was paid, was washing dishes in a department store in Coventry. We have all had such jobs. The point that I am trying to make is that, in the case to which I referred, it was not the young woman’s first job experience. She was not someone who had never worked and needed to get from that situation to another. Of course most of us have experience of different types of temporary work.
The hon. Lady just said that the lady she was referring to was forced into work experience. It is a voluntary programme. Frankly, if the lady is doing work experience, it might involve another skill that she can learn, but it is voluntary; she cannot have been compelled to do it.
I shall explain the issue as far as this young woman was concerned, and I think that this is where it comes down to conditionality. She was certainly put under, as she explained it, considerable pressure—as part of a general conditionality point—to do the work experience or her benefits would be put at risk. That was how she perceived it.
Is not part of the problem that, as the Minister has repeatedly said, and as others have said today, this is a voluntary scheme, but jobcentres sent out letters telling people that they would lose their benefit if they did not join the scheme? There is, at the very least, huge confusion in Jobcentre Plus about what the terms of this arrangement are.
That is the kind of information that I have been getting from constituents. I am referring to the rules on conditionality and the advice or information that they were getting from the local jobcentre. This point is different from the point about whether people are sanctioned when they leave the scheme; it is about the conditionality regime.
My advice to people in that situation—the young woman to whom I was referring had already completed the period of work experience—would be to question the relevance or appropriateness of the work experience to their situation. The young lady to whom I was referring did not need to learn those skills; she already had them. A different question might arise if we want to say about someone, “Should they apply for a job of that nature?” That young woman would have been qualified for any vacancy that came up of that nature. Some hon. Members present would no doubt say that she should simply apply for such a job, but anyone who has gone for such jobs when they are in that situation will find that they are likely to be turned down as over-qualified, or employers might think that they would leave quite quickly. It is a different question from whether work experience of that type is useful. They are two completely separate issues.
I am not convinced, from the young woman’s description of her experience, that she was in the shop window of anything. I should like to quote the chief executive of the Centre for Economic and Social Inclusion. His view is not that there should be no work experience, but that there should be
“a good ‘match’ between the nature of the work experience and the young person”.
He gives an example. He says that
“for someone with a law degree doing work experience at a legal firm would be a much better match than, say, the night shift at a pound shop. We have learned time and again that the better the match,”
the better the prospect of someone getting employment.
I thank the hon. Lady for giving way again and being so generous with her time. This scheme is voluntary and the work experience that people do is based on an area and an industry in which they are interested. The hon. Lady is a member of the Select Committee on Work and Pensions, but I suggest that she look at what her constituent has brought her, because she may be getting confused—mixed-up—between the work experience scheme and other schemes such as the mandatory work scheme, the skills and training schemes and even the Work programme. It seems as though she is talking about a totally different scheme, which is part of the problem that the Socialist Workers party has had in purposely trying to confuse the situation.
I accept that there is a plethora of schemes and some confusion—the media have been confused—but I am absolutely certain that the mandatory work experience scheme was not involved in this example. It is not good enough to have the view that when people make the point about relevant work experience—relevant to people’s existing experience and skills—they should simply be condemned as snooty job snobs and people who are not willing to work. That is not the case.
Absolutely, but we must ensure that these schemes build on the experience and skills that people already have. Of course, some people have not worked for a very long time. Some young people have never held down a job. For them, some basic experiences will enable them to grow, develop and mature.
I come from a town with 14% unemployment; indeed, it has a history of unemployment over the past two or three decades. Most people will make any sacrifice, in any way, shape or form, for the promise of a job. The problem at the moment is not necessarily this policy in its totality; I think that it is well meaning, although perhaps it has a few kinks in it. The problem is the change to tax credits. There may be no promise of a job at the end, or particularly in retail, there may be a job that is part time and for fewer than 24 hours a week. Some people might therefore see such work experience as valueless, because the job at the end might not pay as much as they would receive on the dole.
My hon. Friend is correct. Someone spoke previously about an elephant in the room. The job at the end is probably the biggest elephant in the room. It is not good enough to say that the whole problem is about people not having skills or training and that, somehow, if we list all the schemes, work programmes and other programmes, we have solved the unemployment problem. There are two sides to the unemployment problem. There is the problem of the lack of jobs, which is very considerable in some areas of the country, and, yes, there are issues about whether people have the proper skills and experience to take up opportunities. We need both. To say constantly that we are on top of this because we have programme X, Y, Z and goodness knows what else will not solve the problem of the lack of jobs.
One big issue that we face is that we do not know a lot about the outcomes of the scheme. We are told that it is a wonderful scheme and is having great results. Will the Minister tell us when he will give us more detailed information about what is actually happening? Ministers and Back Benchers constantly recite the fact that half of those doing work experience are in jobs within a short time. That is based on an initial pilot involving some 1,300 people between January and March 2011. The more accurate statement—I accept that the Minister usually gives the more accurate statement, although others do not—is that one half or 51%, to be exact, were off benefits 13 weeks after the work experience period. They may have come off benefits and gone into a job or to college, or simply not have been claiming. For example, someone who has got to the end of their six months on jobseeker’s allowance and who has a working partner may simply stop claiming.
Will the hon. Lady confirm that the benchmark that we use to judge the success of the work experience programme is exactly the same benchmark that she and her colleagues used to judge what they claimed to be the success—it was at a much higher cost—of the future jobs fund?
I am not going to dispute—[Interruption.] It is important to know a bit more about what has been happening. All these assertions are made on the basis of a fairly small number. If the Minister has other information to give us, that is all well and good, but we are not hearing that at the moment. I asked him in a written question how many of those who had taken part in the scheme, either between 16 and 18 years of age or between 18 and 25, had found employment with the firm with which they had done the work experience or with another employer. The answer was that the Department does not hold that information. The Government are not tracking that information. I find that worrying, because assertions and statements are being made about the success of a programme, but answers to the detailed questions that anyone might reasonably want to ask about these programmes are simply not being given to us.
May I give my hon. Friend an example? The Government are changing the point at which an employee’s rights kick in and they become a full employee with full rights to 24 months. What is there to say that a young person who has got work experience through this scheme and gets a job will not find that the workplace is subject to a short-time-working agreement and that they are probably first in line for a LIFO—last in, first out—scheme, unofficially, by that employer, because their employment rights do not kick in for another 12 months?
The situation might be even worse than that. At Treasury questions last week, my hon. Friend the Member for Chesterfield (Toby Perkins), who is not here today, raised the case of two young people who had been given a job at the end of a work experience scheme, but who were paid off within two weeks, which is not particularly satisfactory. If we are not tracking outcomes properly, we should be. If we are to judge the validity of schemes, we need the data.
That is precisely what I said—that 51% of the first 1,300 people who took part in the scheme between January and March 2011 were off benefits. That was the point where I came in.
We have to look not only at the quality of work experience, but at the fact that some firms may simply be using schemes to get people to do jobs they would otherwise have employed someone to do.
On a slightly different matter—this does not relate to the work experience scheme pure and simple—I was astonished to read in no less a paper than The Sunday Times, which is hardly a friend of the left, that McDonald’s had, it seemed to me, reframed its trainee posts as apprenticeships. It was taking Government money to train people in the skills they would need if they got a job at McDonald’s, such as customer service and food hygiene. Many people, including students and others, have gone through the McDonald’s scheme over many years and they have gone on to work in McDonald’s. However, people on the scheme are now being designated as apprentices, and I know of one case in which somebody doing a Saturday job got a contract as an apprentice. McDonald’s got the money from the Government and was quoted as saying that no additional jobs had been created.
Is the hon. Lady aware that she is describing the previous Labour Government’s policy of allowing companies that developed in-work training places to designate them as apprenticeships? Does she accept that what she is describing originated under the Labour Government and has been deemed—by that Government and this one—to be an important part of the career development mix?
Even if the Minister tells me that that is the case, I would not necessarily always accept everything previous Governments have done, because such provisions are not helping us in any respect to create additional jobs. The worry about firms taking successive people to do work experience without payment is that they may be reducing their other employees’ opportunities to do paid work—through additional hours, for example. We need reassurance that that is not happening, and if we do not get it, we will have some queries.
When I looked into the success of the future jobs fund, there was much trumpeting of 50% placements and costs per placement being reasonable. However, the cost per placement was about £3,000 to £5,000, while the figure under the work experience scheme is £200 to £300. Does the hon. Lady not agree that it was somewhat perverse for 80% of the placements under the future jobs fund to be in the public sector? Looking around the piece, that would hardly save the Government money in the long run.
My understanding regarding those public sector jobs is that there was, in part, a difficulty over whether the measures would constitute state aid if they were carried out in some other way. It is regrettable if that became an obstacle, because the future jobs fund was a good model and gave people good-quality work experience. I hope that the Government will consider returning to it in the future.
It is not my position or that of any Opposition Member that work experience is simply not to be done. However, we want people to have work experience that genuinely improves their employability; if it does not, it has to be questioned.
It is a pleasure to serve under your chairmanship, Mr Howarth. I congratulate my hon. Friend the Member for Nuneaton (Mr Jones) on securing this important debate.
It is important to start off with why we are here. The scheme, which has worked successfully, has been in place since January last year, and it is only in the past few weeks that it has gained any publicity. It has been working very nicely, the companies involved in it have been taking people on and more than 34,000 people have been through it. That tells us that something has happened in just the past few weeks to bring it to public attention.
I hope the hon. Gentleman will accept that some of us did, in fact, raise questions considerably longer ago than the past few weeks, but we were put down with exactly the same suggestions that we were being over-fussy and supporting people who thought they were too good to work.
I thank the hon. Lady for outlining that she supports the Socialist Workers party position on this. The reality is that the publicity came about a few weeks ago, when the Socialist Workers party started a campaign, having placed an advert that was wrong.
I thank my hon. Friend for that helpful intervention. He has probably said everything that needs to be said.
Over the past couple of weeks, I have debated this issue a few times with people from Right to Work and various other groups that are backed or supported by the Socialist Workers party. What has been particularly noticeable, however, is that there has, until very recently, been a lack of Labour Members debating it. It was therefore somewhat surprising, if not frustrating, that when Labour Members started agreeing to come out during the last couple of days of the real media coverage, they quite openly said that they supported the scheme’s principle—I hope the shadow Minister, the right hon. Member for East Ham (Stephen Timms), will do so again today—but then complained that the problem was miscommunication.
The miscommunication has come about, however, purely because the Socialist Workers party and its representative protest groups have purposely confused things in every single debate. Before one debate I took part in, a member of the Socialist Workers party was chatting quite happily outside the studio. He understood exactly what the different programmes were and how they worked. When we went in to debate them, however, he straight away confused the mandatory Work programme with work experience—he knew exactly what he was doing. It is a real shame that Labour Members did not come out with us, even if they do disagree with the programme, to clarify that work experience is a straightforward and simple voluntary programme that gives people experience in an industry or field they have expressed an interest in going into.
We should remember to congratulate the companies involved in the scheme, and it is great that hundreds more are joining, thanks to the publicity it has had—we should possibly thank the Socialist Workers party for giving it that extra coverage. Those companies should be congratulated for doing young people a service by providing opportunities and experience of a range of issues. They are providing not just the skill sets that people want, whether that is in engineering, technology, retail or any other industry, but the interpersonal skills that Members mentioned and the skills that come with simply understanding what it means to get up and go to work. Last week, The Sunday Telegraph carried a story about people on the work experience programme of a company in Kent. Those people said how much higher their self-esteem was as a result of getting up in the morning and having a project, and most of them were going on to full-time jobs with the company.
We must, however, be careful. The real shame is that if we do not make it clear what a good scheme this is, organisations such as charities that run work experience schemes could lose the benefit of them. Through the Prince’s Trust, I have had people work in my office for a couple of weeks. They have been excellent people, and they have used that experience on their CVs and gone on to really productive ways of life, which was perhaps not the case before. A range of charities could be threatened if we are not careful.
The most important people in all this, however, are the young people who take part in the scheme. They have voluntarily said they want to do something with their lives; they want to think out of the box and take a different path. As we have heard, many of us, and many people who work in the media, have had work experience. I was fortunate enough to do so when I was young because my father happened to know somebody who offered me work experience, and that led to other opportunities. Other young people do not necessarily have those connections and opportunities. It is right and courageous of the Government to put the scheme forward, to give a chance to people who may not have those contacts. That is hugely important.
We have all perhaps worked in jobs that we have seen as only the first step. My first paid job was in a warehouse. I did not particularly want to spend my life working in a warehouse. I wanted to be a buyer, and move on from there, but to get into a particular company I needed to take a job in the warehouse. It was step one on the ladder. We must encourage the 34,000-plus young people who have done the work experience programme to feel that they have done a good thing. They have shown motivation, and are inspired to go and do something different—to take a step on to the first rung of the ladder, and not to expect to jump on to rungs four, five or six, which too often is the case these days. We should really congratulate the young people who have had the motivation to get involved with the scheme, as much as the companies that give them the opportunity. It is a good scheme and we should support it.
Thank you for calling me to speak, Mr Howarth, despite the fact that I have an awful cold. I hope to get through my speech without coughing too much.
I congratulate my hon. Friend the Member for Nuneaton (Mr Jones) on securing the debate. I asked for a debate on the same matter in business questions recently. It is important to use this opportunity to clarify the terminology, which I shall do in the form of a media guide, as it were. I hope the Minister will confirm my understanding of the categories. The three that get most confused are Work Experience programme, the Work programme and workfare.
My experience of the media confusion came when, like my hon. Friend the Member for Great Yarmouth (Brandon Lewis), who is a colleague on the Select Committee on Work and Pensions, I was invited on to “Newsnight”. The producer said to me, “We are going to have one young person with a good experience of work experience, and one with a bad experience, and we would like you to come and debate it.” I thought it seemed sensible, but when I turned up there were three people, one of whom was a young person who had had a positive experience of work experience. However, there was also a 48-year-old gentleman who was clearly either in some form of the Work programme, or had some other experience, and a 40-year-old gentleman. It did not help—I do not know whether it was deliberate or accidental—that the producer had accumulated three people with experience of different aspects of back-to-work activity.
It would be helpful to use the debate to clarify the fact, which does not seem to have got through loud and clear to certain segments of the media, that the Work Experience programme is a voluntary one for people under 24. It changes the unfortunate situation that existed under the previous rules. We have heard that the BBC, ITV and The Guardian offer work experience, often in four-week tranches. Under the previous rules, a young person looking for work who was fortunate enough to be offered work experience by one of those organisations would have to give up jobseeker’s allowance for taking work experience that lasted longer than two weeks. That is profoundly unfair, because we all know, as my hon. Friend the Member for Great Yarmouth said, that many perhaps more middle-class families can afford to subsidise their young person under the age of 24 to take that kind of work experience. It is extremely progressive that the Government have changed the rules, so that now a young person whose family relies on their jobseeker’s allowance can take the work experience opportunities that have been largely the preserve of sharp-elbowed middle-class people.
The Work programme is completely different. It is not age-dependent. The Government put out contracts, which became live last June. The Work and Pensions Committee is looking forward to hearing from the Minister next Monday some of the early indications of the results of the contracts. Obviously, there is regional variation in providers and who won the contracts. The important thing about the Work programme is that, rather than being prescriptive about the contracts, the Government have for the first time created a black box: the providers can do what they find works to get people back into work. It is a completely different kettle of fish from voluntary work experience for young people. Yes, participation in the Work programme comes about when someone has either spent a period on incapacity benefit or been out of work on jobseeker’s allowance for an extended time, and those activities do tend to be mandatory in many cases. That is the second thing that gets confused when it is brought into the picture.
I would like to ask the Minister for clarification about workfare. My understanding is that the Department’s use of workfare—having to work while on benefits—is quite limited, particularly where it is mandatory. However, it is a tool that jobcentre advisers have in their armoury. If they suspect, for example, that someone is working and claiming benefits, they can use workfare to identify those situations. It would be helpful to hear from the Minister whether that is the correct way to define workfare.
I think that there has been media confusion. I hope that in my speech I have created a helpful media guide for any producers out there who may be doing programmes on the subject, and I look forward to clarification of the definitions from the Minister.
It is a pleasure to see you in the Chair, Mr Howarth. I congratulate my hon. Friend the Member for Nuneaton (Mr Jones) on securing this important debate, on behalf of the striving majority for whom work experience is a great opportunity, for themselves or their children—something to be celebrated and encouraged.
I want to broaden the debate slightly to talk about work experience before children leave school, but before I do that I want to talk about the Government programme that has caused some controversy: what it is, what it does, and for whom. From an employer’s point of view it is a fantastic extended job interview, and an opportunity to see someone in action. Anyone who has ever taken anyone on will know that giving someone a job is always a risk. The more it is possible to see the person in action, the more the risk is mitigated. An employer will get some productive work out of a short-term work experience placement, but, to be honest, it is not nearly as much as some media commentators have suggested. I suggest that, for employers, taking part in the programmes is far more to do with investing in the future and the next generation.
For the individual, the key advantage of work experience is proving oneself—first to the employer directly concerned, bearing in mind the possibility of a job at the end; but, perhaps more importantly, to any employer, by demonstrating recent work experience, involving turning up on time and undergoing the discipline involved. Along the way, of course, people develop skills, and experience a business or occupation that may interest them. But most of all work experience is an in. It is an opportunity that people might not otherwise get. The hon. Member for Edinburgh East (Sheila Gilmore) said that people who apply for jobs in retail know how hard it is to get them. Well, yes: one reason is that without recent work experience people are far less likely to be considered. Other things being equal, at the same rate of pay, the risk is lower and the odds of success are far higher if an employer employs someone who is already in a job or who has just left one, than if they take a punt, as they might see it, on someone who has been out of work for some time. I suggest that anyone who thinks that great employers—great firms with consumer brands of huge value—are in the programme just to get cheap labour, has never held a supervisory position in a consumer-facing branded organisation.
The Government Work Experience programme has generated controversy. I have had e-mails from bemused constituents about both the opposition and Her Majesty’s Opposition: the deafening silence from the Leader of the Opposition has done no credit to the great Labour movement, the party of work.
We have yet to hear from the Government Benches about how this policy rebalances the economy and how work experience can be used in manufacturing. We hear about employers in the retail sector, but I am interested to hear whether manufacturers have taken on people in this work experience role and whether, if there have been long periods of such experience, greater numbers of people in the north-east have been employed in manufacturing in the traditional sense.
[Mr David Crausby in the Chair]
The hon. Gentleman makes a good point. I shall leave it hanging, so that the Minister can pluck it at the appropriate moment. All I would say is that the service industry is an enormous part of the economy. We all want to see growth in manufacturing, but services are a huge part of the economy in many of our constituencies. Getting work experience in that area is absolutely valuable in its own right.
The bemused e-mails that I have been receiving from my constituents say something along these lines: “I understand that the programme is voluntary. There are some advantages to the individual in taking part, but if, after a period of time—not on the first day but after a week or so—they just cease to turn up to work for no good reasons, there are adverse consequences.” It is called a work experience programme—I do not know about you, Mr Crausby, but that sounds an awful lot like an experience of work. I pay tribute to the firms that have taken part in the programme, particularly those that have stood firm and not given in. However, I also understand the nervousness of some of the firms that have issued statements expressing concerns.
We all welcome the new media campaigns with which we are pleased to communicate on a regular basis. As politicians, we also know that they are not always all that they purport to be. I am probably unusual on the Conservative Benches in being a Guardian reader. Perhaps I was the only Member present who was a little bemused, or amused, to read the helpful clarification in The Guardian that this right to work campaign was not run by a bunch of lefties because it contained not only the Socialist Workers party, but members of UK Uncut and the Occupy protest movement. I understand the nervousness of firms with quarterly results to deliver and daily revenues to monitor. We need a debate about how some of these campaigning organisations work and about their proper role in society.
I can say from my long political experience that if views that might be deemed extremist do not strike a chord with the public, they will simply sink. If some of the criticisms of this initiative, which have been raised in this House previously, had had no resonance with the public—
I am grateful to the hon. Lady. All credit to those organisations for creating a splash over the issue. However, I am afraid that they have done it by misleading the public and saying that young people are being forced into slave labour when that is absolutely not the case. This relates to what I was saying about the Opposition—I do not include the small number of Labour Members who have come here today. When their leader had an opportunity to debunk that theory and to put the record straight, he failed to do so. It was a great shame that we did not hear such a view from Labour, the party of work.
I know that we are short of time, but I should like to broaden my contribution to include work experience at school. Whenever employers give evidence on the Education Committee, on which I sit, they predictably complain about qualifications not doing what they say on the tin and about young people not being work ready. Work readiness is sometimes called employability skills, soft skills or, when the terminological obfuscation gets extreme, transferable non-cognitive skills. Essentially, what it means is all the stuff about dealing with other people—turning up to work on time, knowing the right way to dress, empathy with the customer, smiling and pride in a job well done. All those things can be partly developed through work experience. When we ask employers if the situation is getting worse, they often say that it is. We cannot demonstrate that it is getting worse. It may be just not getting better, but we are in the business of economic growth. To achieve economic growth, we need such things to be improving year on year.
We need a debate about the role and quality of work experience in schools. It may be that the two-week block in years 10 or 11 is an important part of that, but it does not seem to be doing the full job. With the rise in the participation age, I wonder whether moving the bulk of work experience into the sixth form might be more appropriate. It may well be that there is a role for both. I also hope that we can consider other ways of augmenting and bolstering that work experience. Perhaps we can have a more formal assessment of that young person’s performance in work experience that can count towards their future job prospects.
The hon. Gentleman makes an interesting point. I suggest that we bring in that introduction to work experience at the options stage, when children at 14 and 15 are choosing their options for GCSEs, which usually indicate what career they might be going into.
I absolutely see that point. That is why I said that there could be a role for both. Even at the options stage, there is only an opportunity to see one employer, so it will not give a full range of career choices. We certainly need more firms to step up to the plate for school-age work experience. There are many myths about health and safety compliance and Criminal Records Bureau checks and so on. I hope the Government will turn their attention to encouraging more and more quality employers to get on board with that programme and offer more opportunities to young people.
There is a particular area in which school-age work experience can deliver huge benefits to our country. I am talking about work in the public sector, particularly in teaching. The Education Committee is currently conducting an inquiry into what makes a great teacher. One of the recurring themes is that everybody knows what a great teacher is because they have had one. They know it when they see it, but it is very difficult to predict in advance who is going to make a great teacher unless they are seen teaching. I hope we can encourage young people who are interested in teaching, particularly from the sixth form, to do teaching placements of one or two weeks in a school. By working alongside a QTS teacher, they will be able to develop their skills and decide whether teaching is right for them. Furthermore, qualified teachers will be able to assess whether they are well suited to the job.
Just this morning, I visited the charity City Year, which enables young people to volunteer for one year to work, unpaid, in local schools—Hackney schools in this particular instance. Some 86% of students who volunteer get a job after, largely as teachers.
I will crack on with my very short contribution. I am grateful for the opportunity to contribute to this very interesting debate. I congratulate my hon. Friend the Member for Nuneaton (Mr Jones) on securing it. He is a hard-working advocate for his constituents and deserves considerable credit for his work. Like his good self, I have a young family, so we both have a vested interest in this topic. I know first hand the importance of experiencing the world of work. I grew up on a council estate in Poynton and left my local state school with few qualifications. My first job was stacking shelves in the local Co-op. I went on to get a job working on nimrods at BAE Systems at Woodford. I was able to study at night school and build a successful career in manufacturing. The hon. Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) talked about opportunities in manufacturing. Under Labour, between 1997 and 2010, the number of people employed in manufacturing halved. In 1997, manufacturing’s contribution to GDP was 22%. In 2010, it was 12%.
It is a great honour to represent the people of Weaver Vale. That would not have been possible if I had not been able to get my first experience of work. We all know how vital work experience is for young people. The previous Labour Government acknowledged that and used it as part of their new deal. The evidence is even clearer now. Statistics from the Department for Work and Pensions tell us that 50% of all participants on work experience schemes move off benefits within three months. Obviously, work experience schemes can be a key weapon in the fight against youth unemployment, but why is that fight so important?
As I have said in recent debates on apprenticeships, there is a significant correlation between the eastern expansion of the European Union and the increase in youth unemployment from 2004 onwards. Despite repeated warnings from the Conservative Opposition at that time, the Labour Government decided against having transitional immigration controls. The impact on youth unemployment has been dramatic.
If someone wants to understand why youth unemployment has become such a problem, they should put themselves in the shoes of a prospective employer. Are prospective employers going to pick a school leaver with zero work experience or training ahead of a 30-something migrant who has extensive work experience? Would they take on the risk, costs and effort to train young people who are lacking any sort of work experience, and who therefore have no way of demonstrating that they are reliable, instead of older migrants who are already trained and have a CV demonstrating a strong work ethic? So it is screamingly obvious why work experience schemes can help to tackle youth unemployment, and I am delighted that the Government recognise that and are spending £1 billion on the youth contract to create incentives for employers to create an extra 250,000 work experience places during the next three years.
Given some of the utter nonsense that has been spouted in recent weeks about these work experience schemes, it is important to remember that they are voluntary. Furthermore, people have an opportunity to try out the scheme first before giving a commitment. In addition, it is absolutely ridiculous to assert that businesses are exploiting young people and getting free labour. There are significant costs for businesses that are taking part: to arrange the placements, to train the people, to mentor them and to provide equipment and uniforms. Businesses that take part should be applauded, not attacked. So all Members should get behind the Work Experience scheme and the Government’s—
I will finish quickly. A record 440,000 apprenticeships have been created this year alone. There has been £150 million of capital spending to support improved technical and vocational education. There are ambitions for at least 24 new colleges by 2014 and, of course, there are the fantastic education reforms. The future competiveness of our economy depends on these initiatives.
I am grateful to you, Mr Crausby, for giving me this opportunity to speak. I also thank the hon. Member for Nuneaton (Mr Jones), who has done us a great service by securing a debate on this very important topic.
The Government have got themselves into an extraordinary muddle over work experience. Labour supports work experience. It can be invaluable in reconnecting people with the labour market; it has been a part of labour market intervention since the 1970s; and it was a key feature of the success of the new deal. Unfortunately, however, the Government have got themselves into a terrible mess.
On 29 February, the Minister—in an attempt to extricate himself from that mess—announced a U-turn and that the “Work Experience” scheme was to be fully voluntary. Previously, he had said that it was a voluntary scheme; I suppose that his announcement on 29 February means that it really will be voluntary. However, his problem is that the letters that Jobcentre Plus staff sent out to claimants said something quite different. He was memorably confronted on “Channel 4 News” with a letter that had been sent out to somebody who was being told about a placement on a “Work Experience” scheme; the hon. Member for Great Yarmouth (Brandon Lewis) quite rightly said that there are other schemes, but in this case the placement was part of a “Work Experience” scheme. The letter said:
“You have been referred to the following Opportunity: retail assistant…If you cannot attend for any reason or if you stop claiming Jobseekers Allowance please contact this Jobcentre immediately. If without a good reason you fail to start, fail to go when expected or stop going...any future payments of Jobseekers Allowance could cease to be payable or could be payable at a lower rate.”
There is no point in claiming that the scheme is voluntary if Jobcentre Plus staff—staff in the Minister’s job centres—are telling people precisely the opposite.
Let me tell the right hon. Gentleman what I suspect is the source of the confusion. It arises from the decision maker’s guide, which any Member of the House can read on the website for the Department for Work and Pensions. That guide says:
“JSA may not be payable or it may be payable at a reduced rate to claimants who are entitled to JSA and have...after being notified by an Employment Officer of a place on a Work Experience scheme, refused without good cause or failed to apply for it or to accept it when offered, or...neglected to avail themselves of a reasonable opportunity of a place on Work Experience.”
A Jobcentre Plus adviser who is doing their job and looking at the official guidance discovers that that is what the guidance is—a clear description of a mandatory scheme.
It is no wonder, therefore, that Jobcentre Plus staff have been so confused and have contradicted what the Minister has said. Of course, as we know, a number of businesses also lost confidence in the scheme. But the muddle goes even further, because the DWP’s provider guidance for the Work programme says:
“Where you are providing support for JSA participants, which is work experience, you must mandate participants to this activity. This is to avoid the National Minimum Wage Regulations, which will apply if JSA participants are not mandated”.
The DWP was saying that until a few weeks ago, but that particular statement has now been deleted from the guidance on the website.
Therefore I want to ask the Minister three specific questions. First, now that there are no sanctions in work experience other than for gross misconduct, will he amend the decision maker’s guide? Secondly, how will he ensure that the policy is now implemented in line with what he has announced? Thirdly, what has changed in the legal position so that work experience no longer has to be mandated to “avoid”—to quote the guidance that was on his Department’s website—the national minimum wage rules?
The Work Experience scheme is too valuable to let this muddle continue. And as we have already heard in the debate, there are other schemes apart from the “Work Experience” scheme. In fact, Inclusion says that there are seven different current work experience schemes, which may be part of the reason for the muddle. At the time that some claimants are starting on the “Work Experience” scheme, others start on mandatory work activity, which was the scheme referred to by the hon. Member for Great Yarmouth. That may well be another source of the confusion. As the name of the mandatory work activity scheme suggests, it is not voluntary. It is designed for people who are a long way from the labour market and who have no experience of work or the work ethic. Placements are for a similar period to those in the Work Experience scheme, and they are sourced through private welfare-to-work providers. The total value of the contracts for mandatory work activity is £32 million. I have repeatedly asked the Minister to tell the House what the average cost of such a placement is, and various other details. He has repeatedly refused to answer those questions, claiming that it is “Commercial in Confidence” although heaven knows why.
The right hon. Gentleman has talked a lot about “confusion”, but from where I sit in Westminster Hall today I am extremely confused about the position of his party in relation to the Government’s work experience programme. On the one hand he says that he supports work experience, but on the other he seems to be coming up with all sorts of “confusion” in his argument to try to get away from supporting that programme. Does his party support the current Government’s work experience programme and will he commit to supporting those employers that are doing a fantastic job in giving our young people this type of opportunity?
I very strongly support work experience and I strongly support the contribution of employers. However, what I regret and deprecate is the extraordinary muddle and confusion that the Government’s handling of the Work Experience scheme and the six other similar schemes has created.
On mandatory—[Interruption.] Time is running out and I want to give the Minister every chance to respond to these points, so let me just tell the House about one of my constituents. She was put on to mandatory work activity. She was not a long way from the labour market; indeed, after I inquired about her, she received a phone call to say that she should never have been put on mandatory work activity in the first place. The letter that was sent to her initially was a classic of incomprehensibility; I sent a copy of it to the Minister. It instructed her, a resident of east London, to go to an obscure Sheffield postcode, and it said that if she had any queries she should ring telephone number 000. Her placement was at a charity shop. When she arrived, there were 14 other people on mandatory work activity who had also been sent to the same charity shop to help out. There was nowhere near enough work to go round, although presumably all 15 of those people attracted a payment to the provider from the Minister’s Department.
Experiences such as that will not help anybody into work. I ask the Minister: what checks is he making on placements to mandatory work activity? In fact, does he know if his Department is being ripped off on a large scale, as the example that I just gave suggests? Also, why does he insist on secrecy about all of this, when the openness that is being promoted by the Cabinet Office would help to resolve all these problems? This Minister has some form on this. He has been officially rebuked for misusing statistics—I think more than any other Member of the House—including on three separate occasions since he has been a Minister. That is a pretty extraordinary record.
On a point of order, Mr Crausby. Is it in order to make allegations about another Member without giving details? I am certainly not aware of the issues that the right hon. Gentleman has just raised. He has made quite a serious comment about another Member. I have no knowledge of any such occasions since I have become a Minister.
I can tell the right hon. Gentleman that the three occasions are all on the UK Statistics Authority’s website: first, data relating to the flexible new deal; secondly, data relating to worklessness statistics; and thirdly, data about benefit claims on the part of immigrants. The first and third of those were widely publicised at the time. I have the letter on the second in front of me. The Minister publishes statistics that he thinks advance his partisan case, but he refuses to publish straightforward, routine data that certainly should be in the public domain.
Further to that point of order, Mr Crausby. Since becoming a Minister I have not received, to the best of my knowledge, any communication from the UK Statistics Authority questioning any statistics that I have published. I want to place that on the record and ask whether it is in order for a shadow Minister to make an allegation of that kind.
I will gladly copy the letter from the UK Statistics Authority website for the Minister.
Work experience should have been straightforward and uncontroversial. It is valuable and we need more of it. Instead, we have had U-turns, public relations fiascos and even street protests. The Minister needs to clear up the confusion at Jobcentre Plus, level with us about mandatory work activity and embrace at last the open data initiative that was conceived by the Minister for the Cabinet Office and Paymaster General so that everybody can judge for themselves the effectiveness of the schemes.
We have just heard a clear example of why the Opposition have yet to adapt to opposition. In long years of opposition, we learned that there are times when one should simply accept that what the Government are doing is right. I am sorry to hear the right hon. Member for East Ham (Stephen Timms), for whom I normally have a high regard, misrepresenting the situation around any letters or communications that the Department has received from the UK Statistics Authority. I am also sorry that he is dancing on a sixpence to try to oppose something that he should support.
Mr Crausby, if you had told me three months ago that we would be dealing with protests against the work experience scheme, given all the difficult decisions that we are taking in the Department for Work and Pensions, I would have thought you were mad. Among all those difficult decisions, this is a positive programme that is designed to help. It is innocuous. It does what it says on the tin. It started as a result of a complaint that I personally received from the mother of a young woman who said, “My daughter has arranged a month’s work experience for herself and been told she will lose her benefits if she carries out that experience.” I regarded that as unacceptable, so we started to use the teams of people we have in Jobcentre Plus to look for opportunities for young people to do work experience, precisely because of the issues raised by my hon. Friend the Member for Great Yarmouth (Brandon Lewis). It is all well and good if someone comes from a prosperous background, but not everyone does. Helping young people find work experience opportunities is enormously important.
I will deal straight away with the issue raised by the hon. Member for Edinburgh East (Sheila Gilmore). I am afraid she needs to look in the mirror and ask the question about being a job snob. The row came about because of a computer error, which published an internal bulletin about a work experience placement at Tesco. Had it been Airbus, this would never have been a story, and the hon. Lady would not be complaining today. I commend Airbus for joining our scheme, along with many other manufacturers.
About 12 months ago, I met an older, former unemployed worker at an Asda store in Birmingham. He said: “I came here after years of unemployment. I got a job at the bottom level of the scale. A few months later, I was running a department with a staff of 20.” The job of running a high street retail branch—a big supermarket—can be a job that oversees a large staff in a business turning over tens of millions of pounds a year. In a large company such as Tesco, there are a vast range of opportunities in IT, HR, logistics, or community outreach. There was magnificent community work at Asda in my own constituency. There are all kinds of opportunities for someone to go in at the bottom and work their way up.
Let me explain to the hon. Member for Edinburgh East how the scheme works. Our advisers sit down with young people and talk about different career options. They ask them about the sectors that interest them, and find them—if we can—a placement in one of their preferred sectors. It is their choice. We listen to them and try to find the opportunity. Unfortunately, we cannot find opportunities for all the young people, because the scheme is over-subscribed. That is the nature of what we are trying to do. We expect them to turn up, if they have taken a placement from someone else; we expect them to fulfil the placement if they stay beyond the first week’s grace; and we expect them to behave themselves. It is the lightest-touch conditionality anywhere in the welfare system. We have listened to the employers—given all the brouhaha—and accepted that we would remove the attendance requirement. We still have sanctions in place for things such as racism in the workplace, theft in the workplace and abusive behaviour towards customers or fellow co-workers. Only about 200 out of 34,000 participants have been sanctioned.
The scheme was and will continue to be a voluntary scheme that is positive and beneficial. Some of the coverage—particularly the BBC’s—and wilful attempts to mislead were disgraceful. My hon. Friend the Member for West Worcestershire (Harriett Baldwin) is absolutely right. The way in which this was covered was nothing short of disgraceful. The scheme is aimed at the under-24s. Putting people in their 40s on the TV was nonsensical and extremely poor-quality journalism. However, a small number of older people do get work experience placements: for example, long-term carers and people who have been out of the workplace for long periods for whom such experience is beneficial.
The right hon. Member for East Ham raised a variety of questions about letters and so forth. Of course, someone does not get a letter about the scheme unless they have volunteered to be on it. It is as simple and straightforward as that. I will tell the House a simple story, which was fed back to me by one of our Jobcentre Plus teams a couple of weeks ago. They were briefing a group of young people about the work experience scheme and opportunities. One of them—a young woman—said, “I don’t wanna do that. It’s slave labour.” Our staff said that they did not have to do or say anything at all, because the rest of the group turned on her and told her in no uncertain terms how important the opportunity was to them and how important it was that they all took part. By the time they had finished discussing it as a group, she was going to take part, too. There was no mandation from us, but mandation from her peers.
The scheme is positive. It is not about retailing. The tragic aspect to the debate is the absurd discussion about whether we should be helping young people get work experience places—of course we should. There should be no doubt about that. We are still not hearing, especially from the right hon. Member for East Ham, “This is a good scheme that we will back publicly. It is the right thing to do. We will continue it if we get back into Government.” All we hear is cavilling about this and that detail. Let us stand up and say, “We have a problem with youth unemployment. We need to do something about it. We will do something. We will all work together.” Every single one of us in this House, whether it is the right hon. Gentleman, me or any other Member here, could do a power of good for this scheme, Mr Crausby. Indeed, you could yourself, sir, in your constituency. We can talk to local employers and say, “Get involved.” This is a real way to help young people. It makes a difference. It is great. They go on into employment and many of them look back and say that it is the best thing that ever happened to them.
We do have mandatory programmes. The mandatory work activity programme gives our Jobcentre Plus advisers the discretion to refer someone whom they believe is struggling, not pulling their weight or having real difficulty in their work search to a month’s full-time activity. We do not mandate to go and work for private companies—they would not take it even if we did. The same is true of the Work programme. We cannot send people against their wishes to work for a big retailer.
I will not, because I have very little time.
Mandation in our system will apply to community benefit schemes and to nothing else. We are absolutely clear about that. It is the same for the Work programme. The work experience scheme is a good scheme, which must and will continue. It will now grow, because more people are coming forward to help—after all the publicity, ironically. The protesters are plain wrong. They are misguided. It is a tragedy that they are supported by the unions and Labour MPs, but we will not listen to them. We will listen to the young people who say, “This is the best thing that could happen to us.”
Investigation of Suicides
It is with delight that I appear before you, Mr Crausby, as I know that you take a particular interest in this matter. This debate has been prompted by my role as chair of the all-party parliamentary group on suicide and self-harm prevention, and is based on the testimonies that I have heard from families bereaved by suicide. I will raise two key issues in the short time that I have. The first involves how police officers interact with bereaved families, and the second involves how suicides are investigated, most notably where the internet may be a factor. I will make eight clear requests for change, which I ask the Minister to consider.
Suicide is a tragedy for the individual who takes their own life, and it brings long-term distress for the family and friends left behind. For every suicide, six people close to the person who died—in England and Wales, that means 30,000 people each year—will experience a deep sense of grief. Families bereaved by suicide inevitably find themselves in direct contact with the authorities. In many cases, a knock at the door by a police officer informs them of what has happened.
Families touched by suicide can suffer a greater stigma than is attached to other forms of death, and they may avoid reaching out for support. They are vulnerable. As the Government’s draft suicide prevention strategy notes, family members are approximately two and a half times more likely to take their own life after the suicide of a close relative.
At a recent meeting of the all-party group, we considered bereavement. Many spoke about their initial contact with the authorities. I will share one statement:
“The police who dealt with my son immediately following his death were, as I would have expected, matter-of-fact but kind and sympathetic to the family. I can’t imagine how difficult it must be for them to have to deal with a family like ours who are expressing a mixture of utter shock, bewilderment, hysteria, and sheer terror when a family member takes their own life. It happened late in the evening, and by the time the police had left around midnight, it was dark and cold and trying to get children to sleep, let alone ourselves, was impossible.
The following day, another policeman arrived to take statements. He again did his job well and with sympathy. However, I found the whole event very distressing, and it would have been very helpful if someone had been there—a trained counsellor—to help us through this process, to offer some comfort and attempt to give us some level of understanding as to what had just happened. As it was there was no one. No one gave us the ‘Help is at Hand’ booklet, no one gave us any numbers to call. Nothing.”
I recommend that the Minister read the work of Dr Sharon McDonnell, or at least that one of his team read it. She is at the university of Manchester and has researched how health professionals and police officers interact with bereaved families. For her PhD, she interviewed bereaved families, finding that eight out of nine participants informed by the police reported feeling distressed, traumatised and angry at how they had been informed. Dr McDonnell is seeking funding for further research in the area. I urge the Minister to discuss not only the changes that she has identified as necessary but how we can move forward and ensure that we change families’ experience.
None of the families with whom I have had contact ever received a copy of “Help is at Hand”. I would be interested to know whether the Minister is aware of the booklet to which I refer. It is a Department of Health document offering advice for those bereaved by suicide or other traumatic deaths. It includes contacts for support groups and covers practical matters such as the inquest procedure and methods for dealing with grief. Sadly, that invaluable resource is being wasted through patchy distribution and a lack of awareness.
Last year, when I took part in the police service parliamentary scheme with South Wales police, I was already aware of the expertise of officers across my constituency on the issue, and I take this opportunity to commend them. However, away from Bridgend, I was concerned by the lack of guidance that individual officers appeared to receive on how to deal with families and media inquiries. It left me wondering whether standard guidance and training for police officers exist or whether it is left to chance.
In the first instance, investigations of a death are steered by the murder investigation manual, which is employed for investigation into unexplained deaths. After criminality has been ruled out, the manual no longer applies. Apparently, it is left to local forces to produce their own guidance on investigating non-suspicious deaths.
I congratulate the hon. Lady on securing this debate on an important issue. On police investigations, is it not important that suicide should never be presumed but that a finding must be based on evidence? For a family, suicide is a traumatic experience. Police must therefore eliminate all other possibilities in their investigations.
It is vital that the police conduct a full inquiry, but they must be aware of the sensitivity of the issue and the risks associated if the inquiry presses too much on possible family engagement or involvement in the death. I will address that later in my speech, but I thank the hon. Gentleman for his intervention.
Once a suicide has been determined, it is important that the police reconnect with families to ensure that they are not left feeling that they have caused or been implicated in their relative’s death. Families have expressed a feeling of being on trial, and that feeling can resurface, particularly during the coronial process. They feel that they carry some guilt and responsibility for the death. That is the cause of the risk of trauma.
The House of Commons Library undertook research on my behalf into what guidance is available to police forces, but it drew a significant blank. Although I plan to meet the lead on the issue from the Association of Chief Police Officers, will the Minister examine how advice and guidance can be issued by the Home Office to bring consistency to the investigations carried out by police forces after a death has been recognised as suicide? Will he examine the training provided to police officers on the difficult role that they play in breaking the traumatic news of a death to families, the sensitivity of gathering information to further their inquiries and the need to provide support and information to the bereaved? In particular, will he ensure that all front-line police officers are made aware of “Help is at Hand” and that families access it as a matter of course?
Families have also suggested that, in the event of a suicide, an immediate response plan should be put in place, bringing them into contact with someone with professional training to help them through the first few days and weeks and to give practical advice. As the first responders, the police often seem to be the trigger for generating such support. In addition, families propose that, in the first few days after a suicide, local agencies should work together to share information, agree lines of communication and ensure that lessons are learned. I can tell the Minister that it happens in my constituency, where it works extremely well and is very effective.
Australia leads the world on police and media communications after suicide. The all-party group heard from Professor Jane Pirkis, a leading expert in suicide research from Australia, about a programme called Mindframe designed to equip police officers with the necessary skills for dealing with the media. Officers are issued with a small card to keep in their wallet offering advice about appropriate language to use and how best to deal with media inquiries. It also highlights information to be passed to families, localised to individual police forces, about local and national support services. It is simple, but it ensures a high level of consistency, which we also need to achieve. Will the Minister look at Mindframe, with a view to adapting something similar for use by police forces in England and Wales?
Not only are the police often the first agency to be involved in a suicide, but police officers are more likely to have contact with people who are distressed and may go on to take their own lives. It is estimated that as many people see a police officer in the three months before their death as see a mental health professional in the 12 months before their death. Police officers are often the authority figures with whom the suicidal are in contact before their death; they are in contact with them more often than with any other professional. Will the Minister consider how police training can be used to build awareness of suicidal behaviour, so that officers are better equipped to recognise those at risk?
Social media such as Bebo and Facebook create an additional burden for bereaved families. Photographs posted on personal sites can often be accessed by journalists. I cannot begin to say how many families I have spoken to have been distressed when they saw photographs of their relative—often photographs that they have never seen before—printed without their knowledge or permission, often on the front page of a local newspaper. A few years ago, I worked with the Home Office to provide a simple telephone contact for each social network provider for police media teams to use to close access to individual sites. Will the Minister look at that again to ensure that police forces are aware of the process and that families can be advised of that service?
My second area of concern is about the investigation of suicides, in particular where the internet may have been a factor. In the past year, I have been contacted by several bereaved families, the majority of them parents who have lost a child. The communications follow a similar pattern. In the aftermath of a suicide, it becomes apparent that the individual may have used the internet to access information on the means and methods to take their own life. They may also have been offered encouragement to do so via internet sites. In all the cases brought to me, the police have decided not to investigate the individual’s computer. The reasons are varied, including the Regulation of Investigatory Powers Act 2000, general privacy issues, time and money—the latter becoming a growing issue as police forces face budget constraints.
Without investigation, what may amount to criminal incitement to suicide is going undetected and unchallenged. Papyrus, a suicide prevention charity that works with bereaved families, is aware of 50 cases in which the internet played a significant part in a suicide. If the police do not routinely investigate websites explored by individuals before their suicides, we will never know the real scale of the problem or what the most dangerous websites are. If the police are unwilling to investigate, surely the full facts are not being presented to the coroner. We need national guidelines for such investigations and we need police forces to investigate computers and internet use as a matter of course where there is a suspected or known suicide. Will the Minister examine the 2000 Act to see whether any aspect of the Act is seen by police forces as a prevention to further investigation of computers? Will he issue clear guidance to police forces to ensure that, at the least, the history of internet use before death is examined and notified to the coroner? That is a small task, and for an expert it takes a matter of minutes. However, most families cannot do that for themselves.
I wish to end by thanking the many police officers who have been given the awful task of investigating suicides and who have been given the even worse task of notifying the families of those who have died. In securing this debate, I have aimed to bring greater clarity and consistency for police officers and families alike. We ask a difficult task of our police officers: to be able to go on dangerous streets, to tackle violent crime and drugs, and to be able to deal with people in a high state of distress and trauma. It is important that they are given the guidance and training to do so, and I look forward to hearing from the Minister.
First, I congratulate the hon. Member for Bridgend (Mrs Moon) on securing the debate. I pay tribute to her excellent work in the prevention of suicide through her role as chair of the all-party group on suicide and self-harm prevention. I am sure that her efforts have helped to keep the issue at the forefront of the political and public agenda. I am aware of her particular interest in such issues, following the spate of terrible deaths of young people in her constituency a few years ago. Every suicide is a tragic event, and it is hard to imagine how traumatic an experience it must be for the bereaved family and friends.
The Government take the issue seriously, and we are committed to suicide prevention. Last July, we published a consultation on preventing suicide in England, which set out a draft cross-departmental outcomes strategy to save lives. I understand that the Welsh Government have their own national action plan to reduce suicide and self-harm in Wales.
A whole range of factors come together to increase a person’s vulnerability to self-harm or suicide. The Government are committed to ensuring that the right support is in place for individuals who find themselves in such desperate situations. As part of a range of measures to reduce the suicide rate, the draft strategy highlighted the need for continuing to support the internet industry to remove content that encourages suicide and to provide ready access to suicide prevention services—a particular concern to the hon. Lady following the deaths in Bridgend.
The consultation ended on 11 October last year and received around 200 responses from a broad range of organisations and individuals. We are now considering all the responses received and intend to publish the final strategy later this year, so the hon. Lady’s intervention and list of suggestions are timely.
Turning to the role of the police, which is the specific topic that the hon. Lady has raised, it is important to set out the different but complementary roles of the police and coroners when there has been a sudden death. The coroner is an independent judicial officer who has a statutory duty to investigate every death where he or she has reason to suspect that it may have been violent, unnatural or of an unknown cause. The police have a duty to investigate all sudden deaths. They also act as coroners’ officers and are required to collect information and evidence that will enable the coroner to determine accurately the cause of death.
The police also have a core duty to establish whether a crime has been committed. Even when a death becomes no longer suspicious and appears explainable, they have an ongoing duty to assist the coroner by collecting and recording all available evidence for an inquest. Both the coroner and the police share the view that a suicide must never just be presumed, and they are diligent in their duty to establish unambiguous evidence that the deceased had intended to take his or her own life and to rule out other possibilities.
Training on how to deal with sudden deaths, including suicide, is mandatory for all police officers. Suicide is covered in training given to officers in a range of areas, including missing persons, coroners’ investigations and inquests and domestic abuse. Some forces have developed additional advice to police officers through local guidance or protocols on the investigation of sudden or unexplained death, including suicide.
It is the responsibility of the chief officer of each force to take appropriate steps to ensure that their staff receive appropriate training. They take that responsibility seriously and are alert to the need for their officers to behave with the utmost sensitivity and support when dealing with suicide. Nevertheless, I will certainly draw to the attention of the Association of Chief Police Officers the hon. Lady’s comments about the need for some kind of national guidance; about the booklet “Help is at Hand”, distribution of which she said is patchy; and about the Australian Mindframe programme that is issued to all police officers, about which I would certainly like to find out more.
We are in the process of setting up a professional body for policing, and this area is exactly the kind that that body would look at, because it is about standards in policing. We have to strike the right balance in deciding between what is appropriate to issue national guidance on and what is a matter for the police themselves to issue guidance on. That is consistent with our policy.
We want to hold the police accountable for the outcomes that they achieve, but to be less prescriptive in terms of Government direction about what they are doing. Our ambition is the same: to improve the service that the public receive. These are clearly very sensitive matters, and although it might not be appropriate to issue national Government guidance, that does not mean that it would be inappropriate for police guidance to be issued in the future by policing professional bodies. That is a matter that we can discuss and that I am open-minded about. I am conscious that we must be careful about adding to the burden of guidance.
The police coroner interface—the process by which a death is deemed not suspicious and is passed to the coroner, and through which evidence is shared—is important, as is the role of the police and other partners and organisations in supporting bereaved relatives. We accept that practice in those areas can vary across forces. That is why these issues are currently subject to discussion and review through a number of Government-led, cross-sector forums that want to improve the practice and investigations of sudden deaths and the support given to bereaved relatives. Representatives from ACPO are playing an active part in those discussions.
In November last year, the Government announced that they intend to proceed with the implementation of the office of the chief coroner, which will provide leadership and oversight of the coroner system. Once the chief coroner is in post, ACPO intends to meet him or her to indentify and discuss these cross-cutting issues. In addition, the Ministry of Justice plans to publish its charter for coroner services shortly. For the first time in the 800 years since the office of coroner was established, that will set out the standards of service that bereaved people can expect to receive and what they can do if they are not satisfied.
The other issue that the hon. Lady raised, which is obviously very serious, is that concerns have been expressed that the police should routinely examine the computers of suicide victims to determine whether they have received online encouragement to take their own lives. Any decision to access the computer of a person who has committed suicide rests with the relevant police force. I will come back to that, but it may be helpful if I first explain briefly the relevant provisions in law that have been simplified and modernised to reflect concerns about the misuse of the internet to promote suicide.
Under section 2(1) of the Suicide Act 1961, as amended by section 59 of the Coroners and Justice Act 2009, it is an offence to carry out an act capable of encouraging or assisting the suicide or attempted suicide of another person with the intention of so doing. The person committing the offence need not know the other person or even be able to identify them. Therefore, the author of a website promoting suicide and suicide methods may commit an offence if the website encourages or assists the suicide or attempted suicide of their readers and the author intends that the website will so encourage or assist them. Crucially, the law also allows that person to be prosecuted, irrespective of whether a suicide or attempted suicide takes place. Similarly, any person making a posting to an online chat room or a social networking site that intentionally encourages another person to commit or attempt to commit suicide may be guilty of offence.
The police can investigate those suspected of encouraging suicide by accessing the relevant computer and analysing the data on it after obtaining a warrant or an authorisation under the Police Act 1997 or RIPA, which the hon. Lady mentioned. Both routes would be authorised by senior police officers on the basis that the action is necessary and proportionate to detect a crime, including the crime of encouraging or assisting suicide. The 1997 Act authorisation would be necessary to open the computer and the RIPA authorisation would be necessary to examine the private information it contains. RIPA also permits the police to authorise the access of data from a communication service provider, including internet service providers, on the same basis to determine what sort of sites had been accessed or who had been in contact.
The decisions to take those actions would be a matter for the police. Neither the 1997 Act nor RIPA place any restriction on investigations into the use of the internet to encourage or assist suicide. In circumstances where the police believe that a suicide and content on the internet are linked, they might consider it appropriate to investigate the computer of the person who has committed suicide. As the hon. Lady knows, that can include the investigation of activity on social network sites, which have been thought to play a part in some incidents.
Any decision to access the computer of a person who has died following a suicide of course rests with the relevant police force. That must be done sensitively. If the bereaved family is not satisfied with the police’s actions, they can complain to the force directly. If they remain dissatisfied, they should raise any concerns with the Independent Police Complaints Commission.
The hon. Lady raised a separate issue about the role of social media following a suicide and the fact that it may be possible through social media for people to access information, including photographs, in a way that distresses the family. She mentioned that some kind of protocol to address that is already in existence. I am very happy to consider that matter and examine whether that protocol is being used effectively. I can understand that a social website through which photographs are shared and available when somebody is alive and perhaps happy may take on an entirely different complexion to the family of that person if a suicide occurs. Therefore, it is desirable to be able to ensure that information that was publicly available in different circumstances cannot be misused. I am happy to consider that matter and examine how we might work with the social media providers to ensure effective action in such circumstances.
I reiterate the Government’s commitment to preventing suicide, which requires co-ordination and contributions from public services and organisations, voluntary groups, the private sector and individuals. The forthcoming Government strategy will play an important part in helping to prevent vulnerable people from taking their own lives and in supporting those who have been bereaved following suicides. The Government are ensuring that we have a support framework in place, so that the right help is available to those who are at risk of suicide. Furthermore, the existing legal framework ensures that the police have sufficient powers to investigate sudden deaths and to support the work of the coroner.
I will ensure that we study the hon. Lady’s speech carefully, so that all the issues that she has raised are picked up, as we consider the publication of the strategy and the responses to it. If necessary, I will write to her to set out what more we think we might need to do. I certainly do not want her to think that I am not taking seriously her request that there should be national guidance in this respect, but I am conscious of the background of the burden of national guidance that has been coming from the Home Office on a range of matters. That is why the appropriate first step will be for me to discuss these issues with ACPO and find out what it believes is necessary by means of further doctrine and what it thinks the appropriate doctrine should be. The overall burden is something that concerns me; but equally, it is important to ensure proper practice.
Clearly, we will not prevent every tragedy. However, we can assure ourselves that we have done everything in our power, so that those with suicidal thoughts have somewhere to turn for support and bereaved families are treated with sensitivity by the police, who will leave no stone unturned in their pursuit of answers. I hope that that is an adequate response to the hon. Lady, given the seriousness of her concern about the matter, which I recognise.
It is an honour to serve under your chairmanship, Mr Crausby. I believe that the free market is by far and away the best method by which to allocate resources effectively. Provided the often-quoted five criteria regarding the definition of perfect markets—identical product, all firms are price takers, all firms have a relatively small market share, perfect knowledge, and no barriers to entry or exit—are mostly met, the market should be left alone to do what it does best.
Consumers should have the ultimate say on how products are delivered and at what price. However, with live music and many other activities where a finite amount of tickets are available, there is a major perfect market imperfection. Music and other forms of creative expression are vital to the British economy—from earnings to employment—and for quality of life as well. The performing arts and sport sustain employment and tax revenues that benefit all our citizens. Some 1.5 million people are employed in the creative industries or in creative roles in other industries. Exports of services from the creative industries accounted for 10.6% of the UK’s exports of services, and there were an estimated 106,700 businesses in the creative industries, which represents 5.1% of all companies. British musical talent earned £139.6 million from overseas earnings in 2008. The top three earners, in order, were the Police, Iron Maiden and Coldplay. The Performing Rights Society for Music has said that Britain is the No. 1 home of musical talent in the world. In short, it is worth us all taking an interest in the continued prosperity of the creative industries.
There is, however, a blight that creams off revenues by exploiting an imperfect market and contributes nothing to the creative copyright holders, or indeed the venues and staff who put on events. The blight consists of those who profiteer by exploiting excess demand. In rapidly changing times in the internet world, what was previously considered quaint and not much of a problem, or indeed a possible service, has now been overtaken by industrial-scale activities at the touch of a button. Government have not kept up with the rapid pace of change.
Absolutely. I agree—it is a drain on the Exchequer. Of course, some secondary ticketing organisations pay tax, but there is an amount of VAT and so on that is not necessarily reclaimed.
The issue is recognised by some of the music and sports industries’ leading names. The list of those who joined me to meet the Secretary of State for Culture, Olympics, Media and Sport last year reads like a “Who’s Who”: Melvin Benn, Festival Republic, who runs the Glastonbury and Reading festivals and is chairman of Wembley stadium; Harvey Goldsmith, legendary promoter of live events; Rod Smallwood, Phantom Music, manager of Iron Maiden; Ian McAndrew, Wildlife Entertainment, manager of the Arctic Monkeys; Anthony Addis, Brontone Management, manager of Muse and the Pogues; Emma Banks, Creative Artists Agency; John Jackson, K2 Agency and Sonisphere festival; Simon Davies, the Teenage Cancer Trust charity; James MacDougall, Sport and Recreation Alliance; Dan Fahey, Virtual Festivals; Neil Warnock and Geoff Meall, the Agency Group; Jeff Craft, X-ray Touring; Brian Message, ATC/Courtyard Management and Music Managers Forum; and Danny Newby, Big Green Coach. Those industry leaders have been joined by many others in recent months, including DJ Rob da Bank; Phil McIntyre, Phil McIntyre Entertainments; James Sandom of Supervision Management, who look after the Kaiser Chiefs; and Steve Parker of Live UK. That group cannot be called an isolated few—the industry is very concerned.
I was surprised by the number of e-mails I received on this issue. Having heard that list, perhaps I should not have been. I received an e-mail from a constituent, Mr Sunderland from Larkfield. He said that a typical scenario is for tickets to go on sale on a Friday at 9 am, and by 9.10 am they are sold out. They are then listed on other websites at triple the face value, or even more, of the original tickets. Does my hon. Friend agree that we should be putting the fan, not the salesman, at the centre of the ticketing process for live music and other events?
I could not agree more. I will come on to that point in a moment—it is on an industrial scale now. The intention of the person buying the ticket is important. If the intention is to make a profit, I argue that that is to the detriment of the industry.
It can be argued that there are occasions where intermediaries, such as agents, or, in this example, ticket touts, provide a supply and demand service. However, in the case of exceptional excess demand for a finite product, supply cannot be increased to match demand. With only a finite number of hours available to the performers, the free market falls down due to a restriction of supply. Ticket touts who take advantage of that market imperfection do nothing to add to our creative industries in terms of revenue and profits to those putting on the shows.
In addition to profit being driven into the hands of those who have done nothing to nurture and develop the product, there is the added consideration of who owns the product being performed. I hope that everyone listening to this debate will readily agree that a performance belongs to an artist, and that the artist has the right to be in control of the terms of that performance. Indeed, today the French Government have enacted a law stating specifically that. Any hon. Member who wishes to explore further why the protection of intellectual property rights is so important may wish to check out my “Rock the House” website, www.rockthehouse2012.com, which goes into that particular debate in some detail. The creative person should at all times be able to retain control of how the end product is produced, marketed and used.
I am well aware of the argument that artists realise the full value of the ticket sales, so who are they to complain if others also make a profit? That argument, however, falls down on three counts. First, there are many reasons why a business may wish to price at below full market value, such as market penetration and reward for loyalty. There is differential pricing in football stadiums; for example, in a young persons area where the club wishes to build a fan base. They could sell at a much higher rate, but choose to price market segment. The clubs would be disadvantaged if those young persons simply sold on their tickets for a profit—that would defeat the intention of a lower-priced ticket. I will come on to the Olympic example later.
Secondly, another reason would be to control the type of person attending—for example, crowd separation at football matches. That argument is well established in other areas, too. There are restrictions on who can buy certain properties, such as affordable housing units that cannot be bought by speculators and sold at an immediately higher value to someone not in the target housing audience. In addition, a band may wish to have a young crowd at the front of the stage, rather than people who can afford the premium pricing, which would not necessarily create the same atmosphere.
Thirdly, there is criminality relating to ticket forgeries and organised crime, which I will come on to later. I should point out at this point that I am not totally against the on-selling of tickets. There must be a mechanism that allows ticket buyers to recover the price of their ticket, and maybe make a small profit for their troubles, if they cannot attend. That could be done via a fan-to-fan website. That is an essential safeguard, but it is the intention when buying the ticket that is the most important consideration. We saw recently, with the debenture ticket holders story at the Royal Albert hall, that some were buying their debenture—or season ticket, if you prefer—with no intention of going to the shows, but because they were able to make a profit of 10 times the face value.
At the moment, with huge profits available for popular events, tickets are being purchased on an industrial scale, with no intention of going to the event itself. People up and down the country are contracted by ticket organisations—or are freelance themselves—that make it their job to sit at banks of computers to buy the maximum allocation of tickets at face value as soon as they go on sale. As we saw on the “Dispatches” programme a few weeks ago, some companies are willing to use their staff, and credit cards obtained for this specific purpose, to buy tickets and resell for a profit.
Before I move on, may I just address the issues brought up in the “Dispatches” programme? A lot of the focus of the programme was based on artists, promoters or venues holding tickets back and using free market mechanisms to sell tickets at an additional profit to the benefit of those putting on the concert or event. I see nothing wrong with that if it is done with the copyright holder’s permission. It seems that that was given, since it would appear that the promoter ticket allocation, for example, was in the contracts. That was known to all parties and is no different from premium pricing at the front end. It is simply a mechanism that reduces the risk to the artist on pricing, and shares that with those operating the system for them. Some artists grade their tickets from the outset at a higher premium value. We have heard about certain artists charging £1,000 for tickets in the front row. The mechanism on fan-to-fan websites is no different from that; it just uses the free market to set the price. What was wrong, as mentioned earlier, was where the secondary ticket seller was buying, via a network of intermediary operators, for the specific purpose of on-selling at a profit to them, not to the artist.
That brings me on to the Olympics. As is well known and accepted as a matter of principle, it is against the law to on-sell an Olympic ticket, whether at a profit or not—it must be sold back to the organiser. It strikes me as baffling that the Government accept this for a specific sporting event and promote strong enforcement, but are reluctant to take action for the benefit of our creative industries. Some 6.6 million Olympic tickets have been sold to the public, raising £527 million. That figure could have been much more, but the price was set and the Government seek to enforce it so it remains a “games for all”, and not just those who can pay the premium. Some 25% of tickets have been held back for other purposes, such as corporate sales and other premium pricing, but a decision was taken that 75% of the tickets should go to enthusiastic fans at a specific price below market value. The atmosphere inside the arena will benefit as a result, contributing to what I am sure will be a fantastic games.
The Home Secretary is so determined to crack down on touts, the fine was raised from £5,000 to £20,000. In May 2011, she said:
“The 2012 Games will be a once-in-a-lifetime opportunity to experience the Games on home soil. By increasing fines for touting we are sending a clear message to criminals…that it is not worth their while and they are not welcome.”
The police, under Operation Podium, have announced that every ticket tout caught will also be pursued to recover their assets, with no maximum limit to the amount that can be recovered. Additionally, internet companies such as eBay and Gumtree could also face action if they do not take immediate action, once notified of illegal activity.
The worry about the effects of ticket touting goes further. Detective Chief Inspector Nick Downing, in charge of Operation Podium, said:
“we have already seen the demand for Olympic tickets which gives criminals greater opportunity to run scams, sell non-existent tickets and even steal your personal and credit card details to use in other crimes…As soon as you allow things to go out of control, opportunities for criminals grow. And I do not want London to be associated with disappointment at finding out all the money paid out was to criminals and no tickets exist”.
That last point could have been echoed by any bank manager, who I am sure would worry about exactly the same thing.
Although examples that I have given show that extensive action is, and can be, taken to prevent ticket touting at the games, it only serves to highlight the lack of action taken against ticket touts at other events. Without legislation, artists are forced to think of innovative ways to prevent touts. Glastonbury, for example, uses a picture of every ticket holder and other events have insisted that people bring with them the credit card used to purchase tickets. But this fails in a number of ways, from the father wanting to give a present to his kids, to those who do not have a credit card or driving licence as proof of identification. Such approaches can also create problems with crowd surges before curtain-up: checking 10,000 IDs will add to entrance delays, which venues are not geared up to handle, and there are obvious safety concerns—and anyway, it adds to the Big Brother state, which surely we should avoid if we can.
I am pleased that the ticket sales for the games have gone well. The Olympics are inspirational in so many ways and I hope that the Minister will be inspired by the ticketing arrangements for the London games and use that inspiration to help all our creative industries and events that could benefit similarly from Government and police assistance.
I know that the hon. Gentleman is probably just about to wind up, so I thank him for giving way. I wanted to listen to his speech in full and not interrupt along the way. He has made an excellent speech, as I would expect, because he is knowledgeable about this subject. With everything that he has said, and taking into account everything that he knows about what is going on, which “Dispatches” highlighted, does he think that the time has come for the Government to consider legislation, and not just say that the industry has to try to regulate itself?
I thank the hon. Lady for her intervention and I applaud her efforts in this field, without which I would never have been alerted to the issue. I thank her for that. I agree and France does, too. As I said, France has gone live today with a law specifically about this form of ticket touting, which is along the lines of the hon. Lady’s private Member’s Bill, which although introduced did not get past the next stage.
I am not advocating that every ticketed event be subject to additional legislative support. Many artists and events will be happy for the secondary market to buy and sell their tickets, but those that wish to have protection should be able to apply for support under law, in the same way the Olympics did. If it is good enough for the world’s premier sporting event, it should be good enough for our creative industry, which is worth protecting before we lose the world-beating position Britain currently enjoys.
Does my hon. Friend agree that, whereas in days gone by people queued to buy tickets and paid cash, many tickets are now bought online via different means and that is another example of how the internet and online communication are moving at a pace? We should move to use that to help us to prevent the scenarios that he is outlining.
I agree. Some 20 years ago, ticket touting at events was a quaint issue, but now it is on an industrial scale. We live in rapidly changing times. I agree that the internet is a huge game changer. The UK Government need to catch up.
It is worth noting, as I said earlier, that a secondary ticketing law goes live in France today. The French are leading the way, the Olympics demanded it, the music industry is begging for action and the fans certainly want it, but what is lacking is our Government’s grasp of the overwhelming evidence for action.
I congratulate my hon. Friend the Member for Hove (Mike Weatherley) and acknowledge, as other hon. Members have done, his expertise in this subject since he first came to Parliament and beforehand. Given that his speech was mainly about the music industry, I apologise for not being my hon. Friend the Member for Wantage (Mr Vaizey), who is normally the Minister responsible for matters musical. For some reason—I suspect because of the Olympics—the responsibility for such matters lies in my portfolio.
I will deal with various points that my hon. Friend has made. First, I am aware that there has been a spike of interest about secondary market issues, following the recent edition of the “Dispatches” programme, which he mentioned. I take the points that he made. I gather that the Office of Fair Trading has been asked to investigate a number of allegations made in that programme. As a result, I am told that I am not in a position to comment further on those allegations at the moment.
Secondly, my hon. Friend mentioned the Olympics. Let us be clear that we did not introduce a ban on secondary ticketing because we in this country thought that the Olympics needed such protection. To be brutally honest with my hon. Friend, we did it because it was a requirement of the bid. The International Olympic Committee requires that. A country has to sign up to a number of things in that regard, not all of which are universally popular in this country—from Olympic-specific lanes onwards. The commitment to introduce the ban was made quite correctly by the previous Government, precisely because it was a requirement of the bid.
To be clear about the quote from the Home Secretary, which my hon. Friend quoted correctly, the fine was raised to that level and not a great deal higher—the hon. Member for Washington and Sunderland West (Mrs Hodgson) was a member of the Committee that dealt with this matter—although an amendment was tabled to do just that, in response to specific police advice about the appropriate fine and the seriousness of the threat. The Home Secretary did not dream it up for policy reasons; she was responding to a recommendation from the police.
As the Minister mentioned, I was a member of the Committee that considered that matter. We took evidence from the Metropolitan Police Commissioner, who, when I questioned him, said that he had evidence that the criminal activity that he was citing with regard to the fine having to be quadrupled to £20,000 also existed across the whole ticketing market. I pressed him to give his thoughts on whether the legislation should be extended, but obviously he said that it was not his place to say so. However, he gave evidence that this was rife across the whole ticketing world.
After the hon. Lady’s private Member’s Bill was introduced, I undertook some checks with both the Home Office and the wider security services. I have checked with both the Metropolitan Police and the wider security services, and without going into too much detail about the information that they have given me, I regret to say that those organisations have told me that they think that we have the balance about right. They have said that this is a moving threat.
It is fair to say—it came across clearly in Assistant Commissioner Allison’s evidence to the Committee—that this is a new and growing threat. It is reasonably easy, through Operation Podium, to nail that down for the Olympics. However, the organisations that I mentioned do not feel—I really have asked them about this—that there is sufficient evidence at the moment for them to tell the Home Office, “Our legislative offer is deficient in this regard; we want a ban across the piece.” The police have not said that and neither, yet, have the security services.
I have asked the security services this specific question every time that we receive a briefing about intelligence behind a large range of threats to the Olympic games. We always ask about Operation Podium and the influence of large-scale criminal gangs, and the rest, on the games. The security services are happy that the current fine is sufficient to deter that activity. They are making good progress in targeting those who have offended and taking down dummy websites that have sprung up all around the place offering tickets that they cannot supply—people send off money out of misguided enthusiasm, but find that the thing is a complete sham.
At no stage, however, has anyone said that the threat is sufficient to support a more general ban. I shall come on to that in a minute, but I have an open mind. When that Rubicon is crossed, we will need to look at the matter very carefully, but I think that I have covered the Olympic-specific points, about the bid requirement and last year’s London Olympic Games and Paralympic Games (Amendment) Act 2011 being a response to a specific threat identified by the police and to a need for a higher penalty than the existing £5,000.
My hon. Friend the Member for Hove went through the range of opportunities open to event organisers, but I suspect that we are on slightly different sides of the argument. The Government are keen for event organisers to look at all the options currently available to them before we legislate, whether paperless tickets or photo IDs, although I recognise what he said about some of the shortcomings in given situations.
The short answer, following on from the meeting that my hon. Friend had with the Secretary of State a month or so ago, is that we are very much waiting for the industry to come back to us. It will not surprise my hon. Friend or the hon. Member for Washington and Sunderland West, who are assiduous campaigners on the issue, to know that every time that they campaign there is a counterblast from the other side—the secondary ticketing organisations, which do not want legislation for a number of reasons. Every time the matter is highlighted, we inevitably get a blast from the other side; but, as I say, we are keeping everything under review. We would like to explore the point made by another of my hon. Friends about whether the internet can be used more effectively to provide extra protection before we move to legislation.
Where does all that leave us? Personally, I have an open mind, but it is worth recording that the previous Government asked the Select Committee on Culture, Media and Sport to conduct an inquiry. The Committee included a wide range of different views but concluded, in about 2009, that there was no need for legislation at that stage. The previous Government also considered the matter and came back to it a number of times, because I think that it was a manifesto commitment of the new Labour Government back in 1997, as acknowledged by a number of my predecessors, with whom I have discussed the subject. They thought that the argument could be cut either way and that extra evidence would be needed to prove that large-scale criminality was taking place as a result of secondary ticketing.
The current Government have agreed with that approach until now, but I have an open mind. Purely in my own opinion, the moment that the security services or the police say that the activity is becoming a proxy for large-scale criminal activity and that large amounts of money are being laundered through the system, the case for legislation will become much easier to make. At the moment, the Government are satisfied to follow the recommendations of the Culture, Media and Sport Committee and the approach of the previous Government, and not to advocate a more general ban.
Indeed it is, and intellectual property and all the rest are a hot topic at the moment. There is no point in my pretending that there is anything other than a range of views. Both parties include people who believe that secondary ticketing and exchange are a perfectly reasonable way for individuals to buy tickets. It is an open market and people should be allowed to do that. There are a range of views; but, for myself, although I always have to defend the Government’s line, I have a very open mind. I am perfectly happy for us to give guarantees to events with such a bid requirement—I have no ideological problem with that at all.
Following on from the point made by the hon. Member for Hove, I have had representations from people who consider that a ticket is nothing more than a receipt for access to an event. Some very clever people, including some studying law in university, are researching whether there is a case in law to find that selling on such a receipt is illegal. It is a ticket, but it is actually a receipt, to take part in an experience, and it is not something in and of itself.
I am dangerously close to being out of my depth. I studied a little law at university, getting close to 30 years ago now, a bit more military law when I joined the Army and a little banking law 15 years or whatever ago, but I am not an expert. That is the first I have heard of that idea, but if someone is able to prove such a case legally, clearly the terms of the whole debate will be changed.
At the moment, I have an open mind and am happy to grant the necessary exemptions if required by a bid, but as a Government we are not yet ready to move beyond that. If the case can be proved and a particularly strong one can be made about criminality, we are open to that.
I most certainly give my hon. Friend that undertaking. I had better tread carefully, but there are a lot of things that the French do differently throughout sport and the wider entertainment industry. For example, they have a betting law around image rights, so that sports bodies can gain money from the betting industry that they can reinvest in grass-roots sports—many of the bodies are keen on that. Other things they do not do: they do not have a national lottery, which keeps many of our sports and arts events going. I will, absolutely, look at the French example, although that is not to say that, if it is a success, we will necessarily incorporate it directly into practice.
I am very grateful to the Minister for giving way again, and I realise that we are operating a pincer movement on him at the moment. One of the responses that the Secretary of State gave at the meeting the hon. Member for Hove and I had with him was that the issue could be looked at again if market failure, and not only criminality, was demonstrated. The Minister mentioned the investigation by the OFT, which I wrote to following the “Dispatches” programme to ask it to look at market failure. He cannot go into such details perhaps, but I think that the OFT will find demonstrable market failure, so would the Government then look at this again?
Absolutely. Personally, as the Minister responsible, I have an open mind, as I said. The OFT is another good example, because if its investigation were to demonstrate market failure, we would clearly have to look at the market, to analyse the failure and to see what can be done, if appropriate, to put things right. That would most certainly change the debate, as would a firm police or security services commitment that large amounts of money were now being laundered through the secondary market and that not having legislation was helping criminal gangs.
I shall try to wrap up my comments, given the time. The position remains that we have an open mind on secondary ticketing. We are happy to legislate for events with a bid requirement, but we do not think that there is yet an absolutely sound case for a more general ban. We will keep an open mind, however, and look at the case as the months progress.
Work Capability Assessment
It is a pleasure, Mr Crausby, to serve under your chairmanship. I hope that the Minister is not tired of hearing from me this morning. During this debate on the employment and support allowance, and the independent review of the work capability assessment, I want to concentrate on the recommendations for new mental, intellectual and cognitive function descriptors, which is a fairly narrow part of the overall picture. Before the Minister jumps up to remind me, I am well aware that the work capability assessment was introduced by the previous Government, and I hope that I would say exactly the same now if my party were in power.
We must not forget that the issue is about people, such as my constituent with mental health problems who has twice scored nil points on a work capability assessment, and who was twice placed in a support group after appeal, having waited seven months and nine months respectively for those appeals. He is currently awaiting the outcome of his third assessment, and the stress of that has affected his recovery.
The issue is a narrow one, but with 35% of the people going through work capability assessments being recorded as having a mental or behavioural condition as their primary condition, it is the largest single group of employment and support allowance claimants, so it is of considerable significance. The Scottish Association for Mental Health, using Government data, says that 43.9% of incapacity benefit claimants who are undergoing reassessment have mental health problems, and in Scotland the figure is 46% of claimants. Getting the assessment right is critical.
In his first review in November 2010, Professor Harrington acknowledged that inadequacies in the descriptors for mental, intellectual and cognitive function were likely to play a substantial role in the high rate of successful appeals. In September 2010, three organisations—Mind, Mencap and the National Autistic Society—were asked to provide recommendations on refining the descriptors. They presented initial recommendations to an independent scrutiny group in December 2010, and both groups jointly submitted their report to the independent review in April 2011.
Following two written parliamentary questions and some initial reluctance to publish, the Minister was good enough to place a copy of the document in the Library on 1 December 2011. Professor Harrington endorsed the report and its recommendations in his second independent review, which was published in November 2011. Parallel with that, there was an internal review by the Department for Work and Pensions, and as a result the descriptors were changed in March 2011.
In the report prepared for Professor Harrington, the charities reaffirmed the importance of getting the descriptors right, and said:
“Some of the problems...are probably attributable to procedural or training factors. However...it is inconceivable that the descriptors do not contribute substantially to this unacceptably high error rate in decisions.”
It concluded that the internal review had not resolved the concerns, and it noted specifically that measuring just one of the relevant aspects of an applicant’s condition, or trying to include more than one aspect on a single linear scale are part of the problem. Although that makes the assessment quicker and easier to carry out, it fails to take account of the multiple features of impairment, and how they interact.
The document explains that the existing assessment does not take systematic and consistent account of the frequency of particular problems, or their severity. If a problem or difficulty is likely to occur infrequently, it could have a very different effect on potential for employment compared with the situation when the problem occurs several times a day.
How will the proposed new descriptors vary? First, the Department for Work and Pensions has been asked to consider reversing the previous reduction in the number of descriptors from 10 to seven. That was done in the internal review. The charities’ view is that by doing that
“Features which have been combined in this way represent separate impairments and…need to be considered separately to ensure a comprehensive assessment.”
Secondly, the proposed descriptors are multi-dimensional. Let me give a brief example:
“Michael experiences frequent spells of anxiety when he finds it…difficult to engage socially with almost all people. These episodes reoccur on average once a month, and tend to last for a few days at a time, after which Michael is usually able to bring them under control with some basic techniques from a short spell of cognitive behavioural therapy which his family paid for.”
It is considered that he is likely to score no points under the current descriptors, two of which relate to social contact. The first is:
“Engagement in social contact is always precluded due to difficulty relating to others or significant distress experienced by the individual”.
That covers engagement with anyone, and scores 15 points on the current descriptors. The second is:
“Engagement in social contact”—
with someone unfamiliar to the claimant—
“is always precluded due to difficulty relating to others or significant distress”.
The word “always” appears in both those current descriptors, and the report’s writers suggest that that is not taken into account in the complexity and difference in that individual’s situation.
Does my hon. Friend agree that the problems tend to be compounded when people have to appeal, particularly as appeals require advocates who have some knowledge of mental health issues? They are few and far between, and services are stretched at the moment.
I am grateful to the hon. Lady not just for giving way, but for her persistence in pressing the issue, particularly in parliamentary questions to obtain information. A key recommendation in the Harrington review that relates to this debate and particularly the point she is making is that each and every assessment centre should have a mental, cognitive and intellectual champion. Only two assessment centres in Scotland have one, although all centres were supposed to have champions by this time last year. Does the hon. Lady share my concern about that?
I do share that concern, and the recommendation, which the Government indicated initially that they would accept, was that there would be such champions in all assessment centres. I appreciate that some centres are small and isolated, but two in the whole of Scotland is low, and it will be difficult for them to make a significant impression on the system.
A distressing case recently at my surgery was a constituent who was in tears and crying hysterically because she believed that she had been placed in the wrong work-related activity group. She is appealing, but the appeal process in Nottingham takes an average of 56 weeks. She is really struggling in that group—she is asked to carry out role play and interviews when she believes that she is in the wrong group. I thank my hon. Friend for raising the issue, and hope that she will press the Minister to address my constituent’s case.
I thank my hon. Friend for her helpful intervention.
On the current descriptors, Michael would be unlikely to score any points. Because of the multi-dimensional nature of the proposed descriptors different aspects are looked at, including the severity of an applicant's difficulties with social engagement, the degree to which that varies between familiar and unfamiliar people, and how frequently that occurs. Those separate factors are scored, and are then multiplied together, with final points being allocated accordingly. The view in the report is that someone such as Michael would be expected to be awarded around nine points rather than none.
The purpose of the proposed descriptors is to account better for fluctuations in impairment that are commonplace in such illnesses, and the amount of support a person might need to overcome their impairment. They are structured in such a way that they could be used as the direct basis for the questions and would be better understood by the claimant.
Those were the recommendations in the report, but what about the Government’s response? As Professor Harrington made clear when he passed his report to the Government, he endorsed the proposals when writing his second review. To date, however, the Department for Work and Pensions has decided not to introduce the new descriptors, arguing either that there is insufficient evidence that the current descriptors are not working—that seems surprising given that that point was made in Professor Harrington’s first review and was accepted by the Government—or that the new ones would work better. In response, the Government said that the Department would “consider” a gold standard review that would take place in the first half of 2012.
The charities that are involved in these matters accept that more research is needed, but in the run-up to this debate they expressed their concern that no gold standard review has yet been initiated. Will the Minister confirm whether such a review will take place, and if so, when? Have DWP officials met with Professor Harrington, Mind, Mencap and the National Autistic Society regarding the establishment of such a review?
The charities have also expressed concern that a number of civil servants on the employment and support allowance team have recently moved on and have not yet been replaced. As a result, the DWP claims to have insufficient staff to initiate the review. Will the Minister ensure that staff are allocated to the ESA team to carry out the gold standard review? If the DWP is unable to provide staff to carry out that review, the charities have suggested that such work could be contracted out to an independent organisation. If that were to happen, would the Minister accept the findings of that review?
The Government accepted a suggestion about revising the ESA50 questionnaire that people fill in when making an initial application, and the idea was to reconsider and adapt, although not change substantially, the wording of the existing descriptors. Will the Minister tell us what progress has been made on that?
More broadly, my fear is that the Minister might use the cover of the gold standard review to kick the proposals into the longish grass because looking at a better way of assessing mental, intellectual and cognitive functions would shine a light on the whole work capability assessment process. That was illustrated by the Minister’s response to an oral question from my hon. Friend the Member for North Tyneside (Mrs Glindon) on 24 October 2011. She asked whether the Government would be implementing the recommendations in the report and the Minister replied:
“The challenge facing us is that the recommendations will involve a complete change of the work capability assessment, not simply for mental health issues, but for physical issues, and is therefore a multi-year project. We are considering whether we can incorporate elements of the recommendations into the current approach much more quickly.”—[Official Report, 24 October 2011; Vol. 534, c. 8.]
Perhaps that is the crux of the matter. The Minister appears to be saying that a substantial change of approach is needed to the whole way that assessment is carried out for issues of physical as well as mental health. The longer the process takes, however, the more people are at risk of being wrongly assessed as fit for work, with all the stress and emotional turmoil that that causes. That is not a small matter for the DWP given the high rate of appeal and the cost and effort involved.
In conclusion, I urge the Minister to press on with the gold standard review for mental, intellectual and cognitive function. In doing so, however, he should not shy away from confronting the real issues that exist with other aspects of the work capability assessment.
I have a sense of déjà-vu because the hon. Member for Edinburgh East (Sheila Gilmore) and I are continuing a debate, albeit on a different subject, from an hour ago.
Let me start by saying that it is of paramount importance to get right issues of mental health in the work capability assessment process. That is the most difficult challenge, because in many respects mental health can be the most intangible of the various areas that we need to assess when we seek to understand what people can and cannot do, and there are clearly many people with mental health problems who cannot possibly be expected to work. I do not have detailed knowledge of the case highlighted by the hon. Member for Ashfield (Gloria De Piero), but people will appear in our surgeries saying that something is not fair or right, or that they are in the wrong group. Some people will genuinely believe that they cannot return to work, but that will not always be the case.
A few weeks ago, I sat with a woman in one of our Work programme centres. She had arrived having been mandated to the Work programme after 14 years off work with chronic depression, and she said that on the first day she was in tears, did not believe that she should be there and that she was protesting bitterly. I met her about eight weeks later, by which time she had started doing voluntary work in a charity shop and had begun to apply for jobs, and she said that that was the right thing to do after all. We will not always get it right, but we are taking some people down a path that can be right for them, even if they are reluctant to follow it at first.
I completely accept that, and we have started to reduce the backlog of cases. It is a big challenge, and we have put extra resources into the tribunal service for that. We have also tried to strengthen the reconsideration process in Jobcentre Plus, so that new medical evidence seldom appears at appeal stage. In his first report, Professor Harrington stated that one key reason why so many decisions were being overturned on appeal was that new evidence was appearing at appeal stage. We have tried hard, both at the start of the assessment process and the reconsideration stage, to ensure that such evidence is in place.
I ask the hon. Member for Edinburgh East to step back for a moment because it is tempting to take what the charities say at face value. Charities do good work and have long experience, but they do not always get it right and the internal review was the clearest example of that. I sat through meeting after meeting with the charities at which they said that we should not proceed with the internal review because it would lead to more people with mental health problems being found fit for work and that all the evidence suggested that it was the wrong thing to do.
Work had been done by the previous Government using the approach that the Department always takes to such matters, which is to take a batch of cases, put them through a new methodology and see what difference that makes. Our team of officials advised that, although there were fewer descriptors, the changes would lead to an increased number of mental health claimants in the support group. The charities protested and said, “That won’t happen; you’re wrong. That is not the case and you shouldn’t do it.” A few months later, however, that internal review led to an increased number of mental health patients in the support group. Indeed, the support group as a whole has got bigger. It is easy for groups that advocate change to existing systems to say, “We’ve got the experience; we’re right and you must do this,” but that is not always the case. It was certainly not the case for the internal review.
I should like to bring the Minister back to the first Harrington review, particularly recommendation 7. He has previously told Members, including myself, that those recommendations have been taken on board and implemented, but why has recommendation 7 not been implemented in Scotland?
In relation to mental health champions, let me explain some of the things that we have done for mental health patients. We have a pool of about 60 specialists who provide advice within the Atos network, and their skills are available to every centre, either in person or by phone. Professor Harrington has looked at how we implemented that change, and he praised it because he thinks that it was done well and effectively. We think that we have delivered that expertise, as does Professor Harrington who is an independent assessor and can say whether or not his recommendation has been implemented properly, which in his view it has been.
If I find evidence that we are not getting things right, we are open to change. As I have said from the start, this programme does not have a financial target and is about saving lives, not saving money. If we are successful in moving people back into work it will, of course, reduce the cost to the welfare state, but it will do so in a right and positive way that will help people such as the woman whom I described, who I hope will return, step by step, to the workplace. The alternative is for her to spend the rest of her life on benefits suffering from depression at home, and no one benefits from that.
That is the spirit in which we have approached all this. We tried very hard to ensure that we got it right with the internal review. There was no particular reason for me to implement the internal review. It was set up by the previous Government. The findings were put together by the previous Government. It would have been easy just to say no, but the advice was that it would increase the size of the support group, and that is what has happened. I regard that as a positive step. I always said, and said on a number of occasions in the House, that I was happy to see the dividing line between the work-related activity group and the support group move a bit in the direction of caution, because we are trying to get this right and I do not want people in the wrong place. There will never be a perfect system—I wish there would be—but we shall try to get this right.
I will move on to the recommendations of the work carried out by the charities. I commissioned that myself. I asked the charities to come back with recommended changes to the descriptors. I very much wanted, and do want, to get this right. The problem is straightforward: they did not actually do what they were asked to do. They were asked to make recommendations about further ways to improve the descriptors that would allow us further to ensure that the assessment process for people with mental health challenges was accurate, effective and reflected their needs and potential. That is not what happened.
The charities came back with a recommended system that would have involved tearing up the whole work capability assessment for mental, fluctuating and physical conditions and starting again from scratch, redoing all our computer systems and all the training for every member of staff in the entire network. That was not just a tweak; it was a comprehensive change to the whole thing, based on no actual evidence. The charities did not come forward with tangible evidence. They simply said, “We think it would work better this way.” They may or may not be right, but that is quite a big step to take just on the basis of a set of recommendations from a group of charities that had been proved wrong in the internal review process.
The recommendations from the charities were put to an independent scrutiny panel that had a large number of people with considerable expertise, so will the Minister agree that it is not true to say that they were simply the recommendations of a group of charities?
That is the case, but what we lack and what we intend now to get is hard evidence to determine whether this is right. Given that the charities were wrong the first time round, I am very reluctant to tear up the whole thing and redo all the computer systems—a vast amount of change; probably a two or three-year project—only to discover that that does not make a difference.
Alongside this, we have been doing work on fluctuating conditions. These are the two particularly challenging areas. Fluctuating conditions can represent a real challenge in the assessment process, because someone who is fine one day may not be fine the next. There are a range of fluctuating conditions and, again, I want to be careful to ensure that we get this as right as we can. In a moment, I will touch on some of the changes that we have made. I just want to explain first where the issue arises with the new set of recommendations.
The working group on fluctuating conditions reported at the end of last year. We intend this year to do that gold standard work, which in effect involves applying the new systems recommended by both groups to a set group of cases to understand what the difference would have been. If we discover that there is very little variation between what they are recommending and the existing system, there will be no point in changing it. If we discover big changes, we will want to understand why. I am perfectly open to making changes in the future if I think that that will make a significant difference. I will state again that we are not trying to force into work people who should not be there. We are not trying to get this wrong, but at the same time this is not about a simple change. It is not about introducing mental health champions throughout the network, improving the quality of the telephony process, ensuring that our staff are better trained or strengthening the reconsideration process. It is about tearing the whole thing up and starting again. That is quite a big step and a very long step to take.
We shall do the gold standard work. We have already done the initial scoping work. It is very important that that is completed. I am very open to making changes, but I will not make changes on the hoof without clear evidence that they will make a difference. The hard evidence that was there for the internal review, which I based my judgment on, proved to be right, whereas the external advice, based on what the charities thought, proved to be wrong, so we have to be very careful.
I thank the Minister for taking another intervention. Obviously, there have been many changes in the system and changes initiated after Harrington 1 as well. Is there a reason why the Minister thinks that the change in the descriptors has resulted in more people being put into the support group?
The general view of the team who worked on the internal review was that the assessors were better placed with a broader base and less specific descriptors in relation to mental health. People should bear in mind that both the assessors and the subsequent tribunals and decision makers have to operate to a pretty tight template around the descriptors as set in law. By creating additional flexibility within the descriptors, we end up with more people being put into the support group than was previously the case, and that is indeed what happened.
I thought that there was good and sensible thinking in the way that the charities brought forward their ideas. We made some pretty rapid changes. We have continued to adapt the ESA50. We have adapted our training, so that some of the issues that they have highlighted are built more clearly into it. We have also invited all the charities—some have taken this up—to work with decision makers, to contribute to the training process for decision makers.
Probably the biggest change that we made to the whole process was to de-emphasise slightly the role of the assessment itself. One of the criticisms levelled at the whole WCA process before we took over was that it was much too formulaic, with far too little flexibility. Of course, one of the reasons for the appeals issue was that a vast amount of new evidence came forward only at the appeal stage. As a result of Professor Harrington’s report, we tried to create a more holistic process, so we actively ask people for evidence from their specialists up front.
Our decision makers have the discretion to look for additional evidence at the point at which they reach their view, based on the evidence that has been submitted by the individual themselves, the ESA50 and the outcome of the work capability assessment. Likewise, we now actively encourage people to supply new evidence at the reconsideration stage. It is now almost universally the case that we see most if not all of the evidence before it leaves Jobcentre Plus. That has to be the right thing to do.
We have tried to build the learning from the work done by the mental health group and by the fluctuating conditions group into the decision making that is already happening. We have not parked this on the sidelines and said that we will come back to it at a later date. I can explain my problem using the analogy that I used in the Select Committee. It is rather like taking one’s car in for a service. When we come back at the end of the day, it looks great. The people who did the service have done a brilliant job, but they have turned it into a boat. That is not a lot of use if we have to drive it on the road. That, in a nutshell, is the position that I am in. The charities made a recommendation. If they had recommended some tweaks to the descriptors, we would have done that by now, but they did not; they recommended a total transformation of the whole process, including redoing everything for physical health conditions as well—all the descriptors for them—a new scoring system and a new computer system. It would be and will be, if we do it, a monumental task.
We are therefore putting together the mental health work and the fluctuating conditions work. We are looking at the consequences of the approach, through the gold standard review, in a way that the previous Government did, and rightly so. It involves taking a selection of cases, applying the new methodology and understanding what the difference would be. However, we are not sitting on our hands in the meantime. We are not just saying, “Well, that work has been done. Maybe we’ll get round to it at some point in the future.” We have used that as the basis for changes across the way that we interact with people through the assessment process, because we genuinely want to get it right.
I have said on many occasions that this is about helping people who are potentially able to return to work to do so. That is the right thing to do. We will not always get the decision making right, whatever we do. Even if we implement everything that the charities are recommending, we still will not have a system that is perfect in all circumstances. That is why we have the appeal process. We are not talking about putting people into a position whereby they are doing an activity that is damaging to them. We are, step by step, helping people to get back into a process whereby they can apply for jobs and get into work—sometimes quite gently.
I have not instantly, but it is certainly my intention that we will complete it within the next few months, as we said that we would. I think that it is necessary to understand the impact. Above all, I want to get this right. Our objective has only ever been to find the right number of people we can help back to work, not any number of people. That is a human goal, not a financial one.
Question put and agreed to.