Tuesday 5 March 2013
[Martin Caton in the Chair]
Beer Duty Escalator
Motion made, and Question proposed, That the sitting be now adjourned.—(Stephen Crabb.)
It is a pleasure to serve under your chairmanship, Mr Caton. I am delighted to have secured this topical and most important debate in the run-up to this year’s Budget. Since I was elected to the House, I have taken part in a number of debates of this kind, and they are usually extremely well attended. Despite the fact that there are huge pressures on parliamentary time this morning, given the plethora of Select Committees, it is good to see how many hon. Friends and Members are here to support this debate. Given the debate title, I intend to keep to the narrow issue of the beer duty escalator, and I urge colleagues to do likewise. Just as none of us would want our beer watered down, I do not want us to temper our arguments by being distracted from the issue of beer duty.
I will set out a simple, clear case for why the beer duty escalator should be scrapped and beer duty should not be increased in the forthcoming Budget. In making that case, I will discuss the impact of the escalator on the beer and pub industry and the negative effect that the escalator is having on our economy and communities across the country. I will also discuss the positive story that our beer and pub industry has to tell and the reasons why that industry should not be compromised by further rises in the already excessive beer duty rate.
In the UK, 30 million adults drink beer each year and 15 million visit the pub each week. From my postbag, I know what an important issue it is for many of my constituents. Campaigns organised by the Campaign for Real Ale, the British Beer and Pub Association, the Society of Independent Brewers, the National Farmers Union, the TaxPayers’ Alliance and The Sun newspaper have captured the spirit—I probably should not use that word in a debate on beer—of public opinion. The campaigns have chimed with the breadth of public opinion on the subject, and the strength of feeling involved has been expressed by the 108,000 people who recently signed an e-petition calling for the beer duty escalator to be scrapped.
From my postbag, I know that popping down the local for a pint is becoming more and more expensive and out of reach for many of my constituents. Incomes have been squeezed over the past five years or so, and the cost of a pint has become more and more unaffordable. Beer is fast heading towards being a luxury item.
On the economic impact of the escalator, the beer and pub sector is vital to our country; nearly 1 million people across the UK work in the industry. Some 46% of those are younger people aged 16 to 24. The beer industry is also a true success story for British manufacturing: 87% of all beer consumed in this country is made in the UK. If only we could do the same for other products that we consume, our economy would be far more balanced. That is one reason why we should encourage the beer and pub industry and the manufacture of great British beer in our country.
I congratulate my hon. Friend on the speech that he is making. The pub industry is a fantastic way to get young people into work, give them work experience and teach them the business model. Does he not agree that supporting the pub trade is a fantastic way to tackle our problems with youth unemployment and young people not in education, employment or training?
My hon. Friend is absolutely right. Young people can enter the beer and pub industry at the bottom by pulling pints behind the bar, an extremely important role, and work their way up within companies to become managers or work for pub companies and breweries. It can be an extremely fulfilling and constructive career for many. We should encourage the industry to take on more and more young people.
I congratulate my hon. Friend on securing this debate, which is important to many of our constituents. He mentioned the manufacturing contribution that beer makes to the economy. Does he agree that it is not just made by the big brewers—the Carlsbergs and Tetleys—but by the microbreweries popping up across the country? In my constituency, I have a brewery in Buxton and the Howard Town brewery in Glossop. They are also part of the local economy, particularly in rural areas such as mine.
I thank my hon. Friend for that extremely pertinent comment. I will come to that.
In my constituency, the sector accounts for 1,441 jobs, employing 431 young people. It also contributes £33.7 million in gross value added to the local economy. Nationally, the sector adds £19 billion to the UK economy, and it currently contributes £10 billion in taxation to the Treasury. Since the previous Chancellor introduced the beer duty escalator in 2008—my right hon. Friend the present Chancellor continued it in May 2010—beer duty has risen by a staggering 42%. If the planned increase is effected in April following the coming Budget, beer duty will have increased by an eye-watering 50% in five years.
I join others in congratulating my hon. Friend on securing this debate. He mentioned that the escalator principle of the beer duty was introduced by the last Labour Government. Does he not agree that there is something profoundly un-Conservative about having a tax that automatically increases year after year? Would it not be a mark of a Conservative Government to scrap that principle on both the fuel duty and the beer duty?
Absolutely. It is not a Conservative principle to impose taxes such as the escalator year on year without reassessing the effect of such a tax. He is right that it would be an excellent move for a Conservative-led Government to scrap the escalator and freeze beer duty this year. That is in the context of the challenge for hard-pressed UK citizens, who now pay 40% of all Europe’s beer duty despite drinking only 13% of the beer consumed in Europe.
I congratulate the hon. Gentleman on securing this debate. Does he agree that one purpose of Government alcohol taxation policy is to drive consumer behaviour, and that reviewing and changing the beer duty escalator could encourage drinkers towards lower-strength British-made drinks such as beer, which I am sure is made in his constituency as it is in mine?
I thank the hon. Lady for her comments. It is nice and extremely refreshing to be able to agree with comments made by an Opposition Member. She has made an extremely pertinent point. Beer is a lower-strength product, and it is far better for people, if consumed in moderation, than higher-strength drinks, which may well be more damaging to health if consumed in excessive quantities.
The increases in duty are having a disproportionate effect, in particular on our pub industry and if we compare on-sales with off-sales, especially off-sales made in supermarkets. Before the escalator was introduced, drinking in a pub was four times more expensive than drinking at home; now, after a few short years, it is eight times more expensive, which shows the disproportionate effect on the great British pub.
I join the chorus of MPs who are congratulating my hon. Friend on securing this important debate. Is there not a real danger—a point he touched on—that we are in an ever-increasing downward spiral? Beer sales are falling and pubs closing; consequently, the revenue to the Treasury is going down. Given that, should not the Treasury focus on the overall tax take and the wider benefits to the economy?
I think that my hon. Friend has probably read my speech; he has made a pertinent point which I completely agree with. Since the escalator was introduced, beer consumption in the UK has fallen by 17% overall and by nearly a quarter in our pubs; almost 6,000 pubs have closed their doors for the last time and more than 60,000 beer-dependent jobs have been lost. As my hon. Friend the Member for Isle of Wight (Mr Turner) mentioned, we are still seeing 18 pubs close per week, which is extremely alarming when we are trying to encourage economic growth and want to get people into work.
I can recount the pubs in my constituency over the past few years that have had to put the towels on for the last time, such as the Fox and Crane, The Graziers Arms or The Boot Inn, not to mention the many social clubs that have also ceased to exist. Notwithstanding the financial benefit of the beer and brewing industry, pub closures are having a detrimental effect on the fabric of our society, due to the high social impact when a pub closes. Our pubs offer a unique leisure experience, are a great addition to the social fabric of our country and are often at the heart of our local communities; they are akin to community centres for their areas. They offer a safe environment in which drinking can be supervised and highly regulated, which is in stark contrast to much of the street drinking and pre-loading culture that has developed since drinking in our pubs has become more expensive.
Pubs are also great places to meet friends and to make new friends. I met my wife in the Chetwynd Arms in my constituency back in 1997. Although 1997 was obviously a dreadful year in many ways—[Hon. Members: “Particularly for your wife.”] Especially for Mrs Jones. The year had one shining light: I met the future Mrs Jones.
Pubs are also a great place to do business. Many small business people such as tradesmen who frequent the local pubs in my constituency often secure new work from going into the local for a pint, by way of word of mouth, with other customers speaking to relatives and so on and so forth.
As my hon. Friend the Member for Burton (Andrew Griffiths) mentioned, local pubs are also a place where many young people get their first taste of work. I had one of my first part-time jobs in my local pub and found it an interesting experience; at the tender age of 16, and very green at the time, I did not realise some of the things that go on in life, although it became absolutely obvious that they do. Not only was it a great learning experience but it taught me how to deal with people. The experience I gained then has stood me in good stead ever since and is extremely important to my work as a Member of Parliament.
Community pubs sustain many positive community activities. Many of our pubs, their licensees and customers contribute towards the funding and running of all sorts of sporting and other activities, such as football, darts, dominoes and cribbage. I could go on with a long list, but a large number of community activities are run because of our pubs. Also, pub customers are extremely generous people; they contribute financially to charities to the tune of £120 million each and every year.
I have set out why our beer and pub industry is so important economically and socially. Finally, I want to start on the road of appealing to the Minister. He is a listening Minister and takes the concerns of Back-Bench Members of this House extremely seriously. I appreciate entirely the Government’s work in reducing the deficit, which has given us far lower interest rates, helping the whole economy and in particular those people who want to frequent our pubs. I appreciate the freeze on council tax for the past three years, which has helped with the cost of living, and the freeze on fuel duty, which has no doubt helped the beer and pub industry because when the fuel duty goes up the price of a pint goes up. I appreciate the other measures that the Minister and his colleagues are taking to reinvigorate the economy as well, but I also urge my hon. Friend to assess the beer duty escalator and beer duty in general to see if the effect is disproportionate. I and many of the industry bodies believe that the negative effect on the industry is disproportionate. Furthermore, as he knows, estimates from the Office for Budget Responsibility expect £100 million less from beer and cider duty in 2013-14, despite the proposed 5.1% duty increase.
My hon. Friend the Minister and my right hon. Friend the Chancellor want to build on the 1 million private sector jobs created under this Government and to keep the momentum. They do not want to see jobs lost unnecessarily as a result of the planned beer duty increase, but the British Beer and Pub Association, as I know from speaking to it, estimates that up to 10,000 jobs could be lost in the industry if something is not done about the tax on beer and the escalator.
I ask the Minister to give our great British beer and pub industry a break by urging the Chancellor to scrap the beer duty escalator and not to increase beer duty this year. If the Chancellor makes the right decision and backs our British pubs, we will hear the clinking of glasses throughout the country on the night of the Budget, and he will be cheered in every pub in the land.
It is a pleasure to serve under your chairmanship, Mr Caton. I hope that you, the Minister and the hon. Member for Nuneaton (Mr Jones) will understand if I have to disappear for part of the debate to attend a meeting relating to my work on the Environmental Audit Committee, but I hope to be present for the closing speeches.
I congratulate wholeheartedly the hon. Member for Nuneaton on securing this timely debate. Only last week, in relation to a briefing in the Palace of Westminster, many of us sent postcards to the Chancellor, with the support of CAMRA and the Society of Independent Brewers, to say that the time has come for the Government to review the escalator. As the hon. Gentleman set out, the debate is relevant not only to the Chancellor and the Treasury but to the Department for Business, Innovation and Skills, because we are talking about British manufacturing and a sector that is at the core of all our constituencies. During the preparations for the Budget, it is vital that the sector’s contribution to the economy is recognised. In recent years, we have had lots of leaks in advance of the Budget statement, but in this instance I hope there might even be an early celebration of the Government looking again at what needs to be done.
In my constituency, the brewing and pub sector is a historic yet dynamic and vibrant part of the local economy; it creates jobs and is at the centre of the local hospitality industry. It is part of our cultural heritage and the social life of every community. For those reasons alone, the Minister should listen hard.
I congratulate the hon. Lady on taking part in the all-party beer group’s campaign to get MPs to work behind the bar of their local boozer. I know that she learned a great deal from that. Almost 100 MPs took part in that scheme. Does she agree that that shows how strongly MPs want to support our local pubs and that they value them greatly?
I am grateful for that intervention. Many hon. Members belong to that all-party group and regularly attend its functions. I do not know, Mr Caton, whether you are one of them, but I know that you have many wonderful pubs in your constituency of Gower.
Members of Parliament join all-party groups not just to go along for half an hour or so, but to represent their constituents. They would not be part of such groups or put postcards into a barrel to send to the Chancellor if hundreds of people had not contacted them by e-mail and letter and through local pubs. I have visited many local pubs in my constituency and, as a Member of Parliament, have become involved in resolving all sorts of issues. If he listens to anyone, the Minister should listen to Members of Parliament who have first-hand experience of how important the issue is.
My constituency has 93 pubs and one brewery, and I want to speak on behalf of that brewery—the Titanic brewery. It has won awards and works alongside local pubs. The total number of jobs in the beer and pub sector in my constituency is 1,290, of which 668 are direct jobs and 327 are direct jobs for 16 to 24-year olds. It is very much part of local business. The total value that it adds to the local economy is a grand £32.1 million with £0.9 million invested in the local economy.
I am particularly proud of Titanic, and of Keith Bott and the employees, who play a leading role in the Society of Independent Brewers and have been at the forefront of campaigning for the Government to consider their industry during this economic recession. Times have changed since the escalator was introduced, and the Minister should tell us what progress he has made on the review since the last debate in Parliament back in October or November. I hope that he will give assurances on that.
Titanic plays an important and vibrant role in the life of my constituency. It is 27 years old and has grown from two to more than 130 employees, including 35 jobs in Stoke-on-Trent North alone. I draw particular attention to the Bulls Head, where anyone who wants to taste good real ale goes, particularly before a good football match.
The majority of that employment has been enabled by investment in pubs. It is worth noting that although the hon. Member for Nuneaton wanted to talk about the escalator, the value of the small breweries relief has made an enormous difference to many small breweries all over the country. If ever there was evidence that investment in a sector can bear fruit, it is that small breweries relief, which has made such a difference since its introduction back in 2002. The Government should now go one step further and examine the escalator.
The current policy of increasing duty above inflation may seem to be one way of raising revenue, but the Treasury’s figures show that that is misguided. They forecast a very small increase in duty revenue from this policy—small enough that no additional revenue is predicted. The policy is changing societal behaviour. An unintended consequence of duty increases—we heard about this during interventions—is that more and more people are choosing to drink at home or on a park bench, unregulated and unsupervised, and they are switching from beer to wine and spirits. Part of my career many years ago was working with homeless alcoholics, and I cannot stress enough the importance of having supervised places where people may drink responsibly. Pubs are such places.
This debate is critical not just for small breweries such as Titanic, but for the beer and pub industry as a whole, and the supply chain that contributes to it. Since the introduction of the beer duty escalator, excise duty has increased by at least 20p a pint. Beer sales in pubs and clubs have fallen by 23% and more than 6,000 pubs have closed. Beer taxation now costs the average pub around £66,000 a year. Instead of that, we should be creating more jobs, employing more people, and creating more wealth locally. That is possible if we do not have excessive taxation, which is simply not working in a time of economic austerity. For those reasons, I hope that the Government will listen to what is being suggested today.
I congratulate my hon. Friend the Member for Nuneaton (Mr Jones) on securing this debate. He is a big supporter of beer and pubs and it is a great pleasure to be working again with him and colleagues from across the House who support our national drink and our community pubs. This seems to be a case of here we are again, and here we go again.
As chair of the all-party save the pub group, it is always a pleasure to discuss these issues, but I hope that this is the last time we have to discuss the beer duty escalator in Parliament, because I hope that in two weeks this ill-conceived tax—it has not done what the Chancellor in the previous Government predicted, but has caused damage and held back our brewing industry—will become a thing of the past and that we need not ever discuss it again.
I am pleased to see the Minister in his place, and I thank him for the way he has engaged in the matter and listened. He is a supporter of beer and pubs, and he has acknowledged the important role of the brewing sector and pubs, and the opportunities for growth and to be part of getting the British economy back on its feet. I warmly welcome that. He has been listening carefully and reflecting, and I hope that that can also be said for the Chancellor and the Chief Secretary to the Treasury. I urge coalition Members particularly to ensure when we bump into them in the Lobbies that they are also listening. However, the listening must be coming to an end, because there has been a lot of it, as well as a lot of reflecting and campaigning. It is now time for action, and the message from this debate is that nothing other than announcing the abolition of the beer duty escalator in the Budget in two weeks will be acceptable. We urge the Minister to ensure that.
I want to emphasise to the Minister, the Chancellor, the Chief Secretary to the Treasury, the Prime Minister and the Deputy Prime Minister that this is a hugely positive opportunity. Too often in debates, MPs say that they want a tax break here and a tax break there, or a favour and a leg-up. That is not what this argument is about. It is simply about two things. From an economic point of view, the tax simply does not add up. It does not make sense. Even the Treasury’s figures have shown that if the predicted rise in beer duty goes ahead in two weeks’ time, the revenues from beer duty will fall, yet we do not need to be geniuses to see what effect the duty is having on brewers, particularly medium-sized brewers. We need to remember that the tax is a producer tax; it is levied on brewers at the point of production, so it directly affects that sector. Taking it away would lead to a change in investment decisions by those companies.
I had a very powerful and stark conversation with Lancaster brewery—it is not in my constituency. The brewery has done incredibly well to get above the level of small breweries relief, to the extent that it is helping either very little or not at all. I heard about how much the brewery would have to pay in duty, and where it would spend that money otherwise. It would spend it on investment, on employment, on increasing production, on taking on more people, and on supplying more beer around the region, and no doubt, around the country.
If the Minister wants clear evidence—I know that he is both a pub lover and a very capable economist—he only has to look at the astonishing effect of small breweries relief since it was introduced in 2002, and I am not churlish enough not to give credit to the previous Government for doing that. I did so at the time, and it has been hugely important. Some people have the idea that small breweries relief is simply something that has helped small breweries—these cuddly microbreweries—to brew beer, and that that is great for beer lovers, but actually, we are talking about incredibly powerful facts.
Figures from the Society of Independent Brewers—SIBA—show that volume sales of locally brewed SIBA beer, against a declining level of sales in the on-trade, were up 6.8% in 2012. Those local brewers already employ nearly 5,000 people, and the really stark figure is that on average, SIBA brewers invested 23% of their turnover back into the business, and into employment, increasing production, and growth. Clearly, there is a direct link between the level of beer duty and the level of investment that brewers are able to make into their business, and that has a huge knock-on effect. As the chairman of the all-party save the pub group, I am deeply concerned about the number of pub closures in this country. It would be wrong to suggest that that is down to one factor, when a number are involved, but clearly the unfair level of beer duty is a factor, and it is time to address it.
The reason why pubs are affected in a powerful way is that supermarkets can absorb any increase in duty that the Treasury throws at them. They have ways of doing that and even now, they are selling alcohol at a price that many people believe is not responsible. The difference between the price of a pint in a supermarket and a pub is now tenfold—it is ten times cheaper to buy alcohol in a supermarket, compared with in the controlled, sociable environment of the British pub, which as we know, provides community value. The Institute of Public Policy Research published an excellent report, which estimated that the wider social value provided per pub was between £20,000 and £120,000, on top of the economic benefits. An interesting fact for the Treasury and BIS about the local pub is that for every pound spent in a pub, compared with a supermarket, twice as much is then circulated and invested in the local economy.
Therefore, it really is a win-win situation. We all know that the Budget has to focus on growth—I look forward to some of the excellent suggestions from Lord Heseltine being included—and here is a simple opportunity to send the message to Britain’s brewers that we want them to invest, to continue to succeed, and not to fall into the trap that we currently have with small breweries relief, where if brewers start to be too successful, they find themselves being penalised.
I also ask the Minister to look carefully at the levels of duty for all drinks, because when it comes to beer, there has been a blind spot that many of us simply do not understand. Beer has been seen as a cash cow for the Treasury, and that must end. However, I also urge the Minister and his colleagues to look at other levels of duty, and particularly to consider the situation with cider. Cider is, of course, another wonderful drink, which is often produced by small producers. There is also a relief for small cider producers, but interestingly, it does not go as far as the relief for beer.
However, I need to bring the Minister’s attention to the situation we have in which huge, mass-produced cider brands—the likes of Magners and Bulmers—pay a fraction of the duty that equivalent large beer brands pay, and that is simply because of the idea that all cider is produced by small producers. I am afraid that there is a lot of dishonesty in the cider market. When it comes to Magners, so-called “Irish cider”, if it really was Irish cider made from Irish apples, every Irish apple would be making something like 20 litres of cider. Some marketing kidology is going on—I say that as someone who used to work in marketing—and there is a profound unfairness.
I want to see a way of helping our wonderful small cider and perry producers. That is absolutely important, and perhaps the relief to them could be extended, but we must also ensure that someone buying a pint of Marston’s Pedigree or Fuller’s London Pride is not paying significantly more—currently more than double the duty—than someone buying a pint of Strongbow, Magners or Bulmers. There is no justification for that, and that inequality must end.
The hon. Gentleman is making an important and strong case. Does he share my concern about figures that I have recently discovered showing that one of the largest producers of cider in this country imports 77% of the apples that it uses in production? On the argument that we need to support the cider industry with special pleading because of its importance to UK apple production, does he not agree that those figures demonstrate that all we are doing is subsidising apple production overseas?
The hon. Gentleman is absolutely right, and that is what I was alluding to when I mentioned the marketing claim that Magners Irish cider is made with Irish apples, when it clearly cannot possibly be.
A pint serving of beer is subject to 41p of duty, whereas cider is subject to 19p. I want to reiterate that when we are talking about those wonderful, small producers of cider and perry, they should have our support, but we cannot have a situation where the huge producers—as the hon. Gentleman has said, many of which are not using British or Irish apples—are being given the subsidy that they are getting, frankly, from overpriced beer. As well as protecting small producers, we need that issue to be looked at.
We need to remember that the beer duty escalator is not the only issue facing pubs, and I am delighted that the Government have now pledged to deal with the behaviour of large pub companies. I reiterate the message that the Minister must send to the large pub companies, which is that if the Government go ahead, as they must, and get rid of the beer duty escalator, pub companies need to pledge that they will pass on the reduction in duty and cost directly to their lessees on their so-called wholesale and list prices. That is fundamental, or frankly, those pubs will not see any benefit, because the money will simply deal with the debts that the companies have got themselves into. The Minister must put that message out, as well as listening carefully to the figures on investment that have been put in front of him, when considering the effect of his decision.
To help our hon. Friend the Minister, we know that money is short and that taking this action will cost the Treasury money, so what suggestions does the hon. Gentleman have on how the Government can make countervailing savings? It is unfair for us to go into a Budget discussion and ask the Government to make a cut in the duty that will be raised without coming up with suggestions on how the shortfall will be made up.
The first point is that this tax does not make economic sense, because it is not bringing in what it is predicted to bring in. That simply is not sensible. A great deal of work has been done—this was a conversation that happened after last year—to show the effect that it will have on investment. In the end, we all agree that taxation is there to encourage. That is really what we would like taxation to do—to encourage positive decisions. What we are saying is, “Get rid of this tax and have fairer beer duty to encourage the sort of investment that has been demonstrated at the smaller end, where people do have lower and slightly fairer beer duty.” The prediction is that 10,000 new jobs would come from doing that. Then there would be the employment tax and the increase in business rates.
At the moment, instead of that, we have declining sales, which means lower duty and lower VAT. We have pub closures, which means a loss of business rates, council tax, employment tax and so on. We must turn this vicious circle into a positive one, and this is an opportunity to start to do that, but the hon. Gentleman is right to say that we must be focused on those economic issues. Let us look at the unfair subsidy provided to the huge producers of mass-produced cider. That would be one way of equalising things. We need to take the opportunity to look at that.
I have had conversations with the Minister about specific ways to assist pubs through the tax system. I hope that he has been looking at that. I hope that he has been trying to find a way, perhaps through rates, to have relief for the community value of a pub. I hope that he will continue to look favourably at anything that can encourage people to consume alcohol responsibly in pubs, as opposed to buying it from supermarkets.
I hope that this is the last time that we need to discuss this issue. It is great to see the faces supporting this campaign around the table, but I genuinely hope that the next time I see them will be with the Minister and that we will all be able to have a pint of excellent, locally produced British beer, knowing that it no longer has been subject, at the point of production, to the unfair, unnecessary and illogical beer duty escalator.
It is a pleasure to speak in the debate. I join in the congratulations to my hon. Friend the Member for Nuneaton (Mr Jones) on securing it. We have spent much of the past year working together on beer, as we both took part in the all-party beer group’s inquiry into the smuggling of beer to try to get round the UK duty rules. That issue has not yet been raised much in this debate. One reason why we do not get the increase in revenue that we would expect from the beer duty escalator is the increasing amounts of beer that are brought over in what we could euphemistically call white vans. I suspect that they are actually large trucks, sneaking through our border, so that the beer can be sold round the backs of industrial estates.
It was quite scary, when we took evidence from Her Majesty’s Revenue and Customs, to hear exactly what the scale of the fraud was. It was something like the equivalent of all off-sales outside supermarkets in the UK, which is a seriously large volume. I am not saying that every small shop selling beer is selling non-duty-paid beer; that was just to show the scale of the problem that we have. We have to consider whether, all other things being equal, a policy that just generates extra rewards for people smuggling and avoiding beer duty is sensible when we are trying to encourage the legal trade.
I agree with what everyone else has said. I think that everyone has used the useful statistics that we have for the debate. The idea of increasing beer duty by more than inflation every year was probably wrong when it was introduced four or five years ago. In fact, various members of my party and the Liberal Democrats said at the time that it was wrong. It is a pity that taking on the chains of office means that we change our mind on some of these things.
It was intriguing to see that the present Secretary of State for Health was not happy with the policy when he was in a shadow role five years ago. I hope that that is something that my right hon. Friend has taken with him into the Department of Health and that we can see a reduction in the rather scatter-gun and unfair efforts to stop ordinary, reasonable people having an ordinary small amount of drink every week. It is right that we tackle excessive drinking, but we should not be trying to tackle the ordinary drinker and push the cost up for them.
If we are trying to tackle excessive alcohol consumption, which we clearly should, it is important to point out that the beer duty escalator targets people who drink, in pubs, pints of British-brewed beer. I suspect that that is not the biggest health problem caused by alcohol that this country has. We should be encouraging people to drink a nice, relatively weak pint of beer, rather than sitting at home drinking a litre of spirits or whatever. That is the direction of travel we should be looking at—encouraging the supervised drinking of British-brewed products in pubs and discouraging the drinking of imported cheap spirits.
I am not convinced by the arguments for the health benefits of this policy and I am probably even less convinced of its economic advantages. The forecast in the Red Book last year showed that the expected increases in this Budget would not actually raise any more money. I accept, and I will happily make the argument, that we are pretty desperate for revenue to reduce our deficit, but it seems bizarre that a policy would be introduced that raises no money and actually does damage to a pretty important industry that is a significant employer throughout the country. While I am on that issue, I should join the list of hon. Members praising their small local breweries. I can think of a fair few—Amber Ales, Leadmill, Bottle Brook, Coppice Side and Marlpool. I have to say that I think I have drunk quite a lot of all their beer. I made a special effort to have a barrel of beer from the Marlpool brewery at my engagement party a few weeks ago, which went down very well, so I am happy to say that I will do my bit to support my local brewery trade.
We can see that the number of these breweries is growing every year. Every time we drive round an industrial estate, we find that a new brewery has sneaked up round the corner. We should be supporting this trade. We should be supporting our pubs. They generate employment and they provide a community facility that we value. Therefore, I do not believe that the original case for increasing beer duty by more than inflation holds water any more. We should at the very least be stopping that above-inflation increase. I can see the argument that all other costs go up by inflation, so why should not the duty element? I cannot see the argument for putting it up by RPI plus 2%.
I happily agree with all the other hon. Members who say that beer duty is too high now and it is doing great damage. We have had a 42% increase in beer duty in the past four years. We have had enough. Let us try to support people and freeze it. If the Government cannot quite go that far, let us at least announce in two weeks’ time that we are scrapping the escalator and we will have to deal only with inflationary rises each year. That would at least be a fair situation from which to go forward.
Thank you for allowing me to speak in the debate, Mr Caton. I feel very much like a new boy: I have been listening to hon. Members who have been involved in this issue for a long time. I came along to the debate today because it is very important to my constituency and I want to add to and perhaps build on points with a local perspective that other hon. Members have raised. Of course, like others, I congratulate my hon. Friend the Member for Nuneaton (Mr Jones) on initiating the debate.
We are talking about the rapidly increasing level of duty, and I want to refer to the impact that the rapid changes in cost have on the social life of my constituency. I join others in appealing to my right hon. Friend the Chancellor of the Exchequer, or to my hon. Friend the Minister who is before us today, to think not just of the economic impact, although that is hugely important, but of the social impact.
In my constituency, there is a social impact to discouraging people from using the local pub, which is still a huge part of the local community. Montgomeryshire is a very rural constituency, and traditionally the social life in small villages is only about the local pub. The situation is not what it was when I was young and the whole of village life centred on the young farmers club and the local pub, but today the pub is still very important, particularly to elderly people. I believe that visiting the pub is a very good way of counteracting the loneliness that often arises because people are living so much longer; the social life associated with a pub can often be helpful in counteracting depression and perhaps even dementia. I believe that social activities do have an impact. That is an important issue for us to consider.
I agree with my hon. Friend that in a rural community very small micro-breweries and pubs are very important. My constituents in Devon are great supporters of Teignworthy, Isca, Hunter’s and Red Rock. However, we need to look at something creative. Has my hon. Friend considered looking at the EU rules in this area? We all seem to be saying that pubs need our support and that if beer in pubs was taxed less than the beer in supermarkets or wholesale, the situation would improve. As I understand it, EU legislation does not prohibit that distinction, but it does not make provision—
Thank you, Mr Caton. I was enjoying that intervention, although I must admit that I had some initial doubts about the reference to involving the EU and introducing regulations. I have always found myself nervous about encouraging that; we have rather too much of it already. There are instances in which the EU can be useful to us in achieving our objectives, so I will have to consider how that could happen.
A Treasury Minister will respond to the debate today. It could be said that it is an appeal before the Budget—it seeks to influence the Budget. We are talking about a reasonable level of taxation on beer. Most people think that the level of taxation is unreasonable. Due to its negative impact, it does not even produce extra income that might interest the Treasury, because it has risen incredibly quickly.
I felt some association with the comment of my hon. Friend the Member for Bedford (Richard Fuller), who said that the policy was un-Conservative. I do not want to draw a distinction between a Conservative policy and a policy from the other side, but it must be un-Conservative to seek to introduce social change in our country through the escalator’s year on year additional taxation, over and above what might be considered an inflationary increase by the Treasury. It is incredibly un-Conservative and I very much hope that we will see the end of it next week.
A lot of hon. Members have talked about the economic impact. It is a great British industry. Even in my constituency, which has had no tradition of brewing at all— the Eagle Brewery was the last major brewery, and that closed in the 1980s—there are new micro-breweries. They are employing people. One of them has taken over a local pub that was in danger of closing. Monty’s Brewery and the Waen Brewery are the subject of conversation. They are not employing a lot of people, but the potential for micro-breweries across Britain is huge. They are an important part of British industry, and we should not clamp down on them or discourage them.
My last point is that the British beer drinking industry—if I may call it that—is hugely important to the agricultural sector. Not so much in my constituency, where most of the barley grown goes into feedstock, but in England in particular and in some parts of Wales and Scotland, growing malting barley is a massive part of agriculture, and we need to act to protect it. In south-east England, the hops industry is important and a huge number of jobs are involved.
We are used to and accept a reasonable level of taxation, but a 50% increase in five years is not reasonable and not sustainable. It causes huge damage—social damage—across the country and in the end it will cause economic damage to the Government as well. The Minister should sit down with the Chancellor, have a long discussion about this issue as they prepare to deliver the Budget, and bring the beer escalator duty to an end.
I am grateful to be bringing up the rear in the debate today. I am mindful that time is short; it always frustrates me when I sit in a debate and the Minister has less time to contribute than the others who have spoken, so I will keep my comments brief. Everybody knows that I bang on for Britain about beer.
We are at the culmination of a hard-fought campaign to support British brewing and save the great British pint. I do not think that we can overestimate what a perilous situation our brewers and publicans find themselves in. It is for that reason that so many people have come together in support of the campaign. We all recognise how important it is for the future of British society, as well as being an important part of the economy.
I am grateful to the hon. Gentleman for giving way. I wish him a gool Peran lowen—a happy St Piran’s day. In regard to his point about traditional British culture, does he agree that the British brewing industry is looked at by other parts of the world for its innovation and the diversity of its products? There is a huge export market and we need to encourage the growth of the brewing industry.
Gool Peran lowen to my hon. Friend. He has been fantastic in supporting the British brewing industry and the all-party beer group. He is right to say that massive innovation is taking place in British brewing. Only this month, a beer innovation summit organised by The Publican’s Morning Advertiser was held in my constituency at St George’s Park. It showed the depth and breadth of new ideas and the potential for the industry to export a great British product overseas. It is interesting that almost 90% of all the beer brewed in this country is drunk in this country. That is because we recognise brilliance and what a great product it is. We can export it overseas and create jobs as a result.
The campaign has brought together the British Beer and Pub Association, the Society of Independent Brewers and the Campaign for Real Ale, and all those we would expect to support the brewing industry, but it has also brought others together. The TaxPayers Alliance has got on board and put together a fantastic campaign—“Mash Beer Tax.” I encourage hon. Members to go online to www.mashbeertax.org. The TaxPayers Alliance has a reputation for standing up for the British taxpayer and has done a great job in getting behind this important campaign.
Hon. Members will have noticed the support we have from The Sun, which has launched its own campaign to scrap the beer duty escalator and save the great British pint. I am sure that the Minister will have noticed the contribution to the debate yesterday, made by Sabine from London on page 3, “News in Briefs.” She railed against the unfairness of the duty that British beer drinkers pay compared with what Spanish beer drinkers pay, and quoted:
“Beer is proof that God loves us and wants us to be happy.”
The Minister could make a great many people across the country happy at the Budget by scraping the hated beer duty escalator.
Let us look at the impact of the beer duty escalator since it was introduced by the previous Government. Sales are down 17% in the off-trade and sales are down 24% in pubs. That equates to 1.5 billion fewer pints sold in pubs across the country. Those are jobs. Every time we do not sell beer, jobs are lost in my constituency and in constituencies across the country.
I notice that we have had a fantastic game of “brewery bingo” today; hon. Members have named the breweries in their constituencies.
Since the beer duty escalator was introduced by the hon. Lady’s Government, we have seen beer duty increase by 42%, and anybody can work out that that will have a very damaging impact. I am a little disappointed that she is trying to score political points. The debate has been notable for its cross-party support.
This important debate has united the House. Some 151 MPs from all parties have signed my early-day motion on the beer duty escalator, and it has support from across the House. It is notable that when we debated the matter on the Floor of the House, only one Member spoke in favour of the beer duty escalator, and I hope that the Minister will repent and change his mind, because he was isolated in that debate.
In the final quarter of last year, 138 million fewer pints were sold in this country compared with the previous year. That is significant, and that is why we must support the brewing industry.
My hon. Friend the Member for Bedford (Richard Fuller) asked from where the money would come to replace the beer duty escalator. I will say two things: first, it is clear that the beer duty escalator is not raising money, because it impacts on beer sales. Beer sales are plummeting, and the Treasury is not raising the money that it expected from the beer duty escalator. Secondly, let us look at the sectors that are growing: cider is in substantial growth, and vodka, which is the drink of young people now, is in growth. We need to have fairness across the duty system that encourages a great British manufacturing success story.
I will point the Minister to some important facts. In his constituency, 2,370 people are employed in the brewing and pub trades, and 898 16 to 24-year olds in his constituency are employed as a result of brewing and pubs. That could be boosted; the brewing and pub industries could help support growth and employ young people. We all recognise the importance of brewing in our constituencies as an economic driver and employer. We also recognise the cultural importance of the great British pint.
There has been some talk today about the impact of drinking on health and antisocial behaviour. I think that the great British pub is the answer here, not the problem. Drinking in a supervised environment with a landlord who would tell someone, “I am sorry. I think you’ve had too much. I am not serving you any more,” is a far better way for young people to be introduced to alcohol than, as the hon. Member for Stoke-on-Trent North (Joan Walley) mentioned, drinking on a park bench or unsupervised at home when mum and dad are not there.
Drinking a pint of beer in a great British pub is one of life’s simple pleasures. It should be enjoyed by every British man and woman across the country and they should do it more often, but they are being priced out of that simple pleasure.
The point about the beer duty escalator—or any escalator—is that when one reaches the top, it is time to get off. We have seen from the falling revenue and sales and the number of pubs that are closing up and down our country that it is time to get off the beer duty escalator. By scrapping it in the Budget, the Minister will be able to promote growth and jobs and put a smile on the face of British drinkers across the country.
It is a pleasure to serve under your chairmanship this morning, Mr Caton. I thank the hon. Member for Nuneaton (Mr Jones) for securing this important debate. As a number of hon. Members have suggested, there is a certain sense of déjà vu, given the number of debates that there have been on the issue, but the timing of this debate, ahead of the Budget, is critical.
I stress at the outset that a number of my hon. Friends have let me know that they would have liked to participate in this debate, but they were not able to do so because of other parliamentary business or commitments that they had already made. I hope that we can continue with the generous spirit in which the debate has been conducted, and focus on a number of issues that Members on both sides of the House would like the Minister to answer—although that is not to say that I will not make some reference to the previous Government’s position or press the Minister on some questions that I think all of us would like to be answered.
It is important to recognise, as many hon. Members have, the organisations that have briefed Members and allowed them to make visits and listen to representatives of the industry in their constituencies. Those organisations include the British Beer and Pub Association, the Society of Independent Brewers, the all-party groups on beer and on pubs and the Campaign for Real Ale. I have worked closely with CAMRA in my constituency; I had the joy of judging one of the beer competitions at a local real ale festival, for which I thank the local CAMRA organisation. We also heard about representations made by the TaxPayers Alliance and The Sun.
I always enjoy such debates, because they allow us to have, as one hon. Member suggested, not just a brewery bingo, but a pub bingo. They give us a list of places to visit when we travel around the UK when not involved in parliamentary business.
A number of hon. Members have talked about the importance of the wider brewing industry and of manufacturing. There is also, of course, the bottling sector, from which representations have also been received. We have discussed small and medium-sized enterprises, micro-breweries, the rural economy, and the focus of the pub trade as a base for the local community. The hon. Member for Montgomeryshire (Glyn Davies) recognised the impact on elderly people and the important social role that pubs play in the community. We also heard about the charitable events and the various activities that pub goers regularly get involved in.
In his opening speech, the hon. Member for Nuneaton praised the Minister as a listening Minister. He recognised the need to deal with the deficit and welcomed, as I have, some of the actions taken on fuel duty. He urged the Minister, as other hon. Members did, to assess whether the escalator was disproportionate. I will return to that issue with some specific comments for the Minister to consider.
My hon. Friend the Member for Stoke-on-Trent North (Joan Walley) talked about responsible drinking, which is important. Like her, I spent some time working in the voluntary sector before becoming a Member of Parliament. I have worked in a project that dealt with homeless people with drinking problems. I have also spent some time, when I was a social work student, working at a drinking problems unit in a psychiatric hospital. I have seen the difficulties and problems that emerge when people get involved in problem drinking. One theme that has come out from the discussion is the importance of the pub sector in providing a different ethos, culture and way for people to consume alcohol enjoyably and responsibly. We are all concerned to ensure that that continues.
Whatever regimes are put in place—this is where there is a VAT issue—to support responsible drinking, we all want to ensure that supermarkets are not given an unfair advantage over the pub sector. A number of hon. Members have talked about that. Regarding VAT, I do not think my hon. Friend the Member for Nottingham South (Lilian Greenwood) intended to make a hugely party political point—perhaps a slightly party political point. This important issue needs to be addressed.
The Opposition believe that the Government made a mistake in 2011 in increasing VAT, which had an impact not only on the pub trade, but more widely on families and businesses around the country. That rise, which was equivalent to a 12% increase in tax for the industry, was in the same year that the coalition introduced the biggest ever pence per pint increase in beer duty.
We all know that the last Labour Government left a crippling deficit for this coalition Government—I am being slightly party political—who have had to clear up the mess that they left behind. The escalator increases taxes on working people who enjoy a pint. Does the hon. Lady think that it was a mistake in principle for the last Labour Government to introduce that to our taxation system?
I hear what the hon. Gentleman says about the deficit, but the last Labour Government had a very good reason for doing what they did at the time; the circumstances are now different. Far be it from me to try to defend the Minister or give him a way out of dealing with the difficult issues, but I say gently to hon. Members that, as a responsible Opposition, with a stream of people saying, “You must not raise this, tax that or do anything else,” at the same time as dealing with the deficit, there are hard choices to be made.
In the debate in the Chamber on 1 November, I said that it was right, in the present economic circumstances, for the Government to undertake a review of the economic impact of the escalator. Indeed, I have called on them to do the same on a range of other matters, one of which is air passenger duty, about which many people are making representations. I simply make that point because we must address the wider economic issues.
The hon. Gentleman knows as well as I do the history of the increase, and I simply say that it was at that stage. This Government have to accept responsibility for the decisions that they have taken: they have not chosen to change the escalator that was introduced by the previous Government.
I am all ears to hear what the Minister will say this morning. I have heard a couple of such debates. In the last one in the Chamber, he was in “listening mode”, as he reassured us several times. He said that
“as an incoming Minister who is new to this portfolio, I plan to keep nothing on the shelf. I will be looking at everything, which includes all duties and taxes for which I have responsibility. That would be a sensible thing for any Minister to do.”—[Official Report, 1 November 2012; Vol. 552, c. 439.]
I agreed with that at the time, because I thought that it gave him the opportunity to introduce changes.
As has been mentioned, The Sun is undertaking a campaign about the increase. In a recent article, a Treasury spokesman was quoted as saying:
“Revenues from alcohol excise duty make an important contribution to reducing the deficit. But where we can take action we have.”
I want to hear from the Minister whether that means that any change has been ruled out or is still being considered. I also want him—I will give him plenty of opportunity to respond—to answer the question asked by the hon. Member for Leeds North West (Greg Mulholland) about the amount of savings and the effect on investment. Is it not now the time for a proper review of the economic impact of the escalator, to give us an evidence base in today’s economic climate? Will the Minister give us his latest assessment of the economic impact of the cancellation of the escalator? Will he simply give us the information that he and his officials have already worked on? Will he address what the impact would be of the Government acceding to our request to cut the rate of VAT temporarily?
We are at the stage in the parliamentary cycle when the coalition Government must absolutely take responsibility. Hon. Members who are in government have the power at this time. As I have said, the then Chancellor took that decision on the basis of the economic circumstances of the time, as Ministers must do today.
I simply hope to extract some information from the Minister about what assessment he has made and what the current thinking is. I would not expect a Minister to say what will happen in the Budget. It would clearly not be right for him to do that, but he could give us some information about his thinking and perhaps about what he has ruled out, and I look forward to his speech.
I thank all hon. Members who have taken the time to speak in the debate. As I have said, the fact that only a few Opposition Members could take part this morning does not in any way suggest that they do not take the issue seriously. We look forward to hearing from the Minister.
May I say what a pleasure it is to see you in the Chair, Mr Caton?
I thank my hon. Friend the Member for Nuneaton (Mr Jones) for, and congratulate him on, securing this important debate. I note with interest that he is holding this debate only 15 days before the Budget, so I congratulate him on his excellent timing. I thank all hon. Members—I counted seven—who contributed to the debate. I recognise the work done on this subject by institutions outside Parliament, particularly the British Beer and Pub Association, CAMRA and the TaxPayers Alliance. That work adds to the quality of the debate, and that quality is always welcome in our debates in Parliament.
My hon. Friend made some excellent points. One of the most interesting, which I recall from the debate in November, was that he met his future wife in a pub. That shows that pubs really are rich institutions that play an important role in social cohesion, a point that was well made by my hon. Friend the Member for Montgomeryshire (Glyn Davies). His focused point was on how the issue is about not just the economy or the cost of beer but the social contribution of pubs throughout the country, particularly in rural communities—like his and, I might add, mine—in which pubs are a key part of the local community. Pubs and brewers up and down the country should be assured that they have some passionate advocates in Parliament.
In the time available, I will try to respond to all the issues raised today about beer duties, the actions taken by the Government to help pubs and brewers in general, and the Government’s alcohol strategy. In response to the shadow Minister, the hon. Member for Kilmarnock and Loudoun (Cathy Jamieson), my hon. Friend the Member for Burton (Andrew Griffiths) said that, understandably, he wanted this to be a cross-party discussion. I think that that is right, so I will not point out that I did not hear the hon. Lady apologise for introducing the escalator in the first place.
I will first focus on beer duties. The Government inherited the current rises in alcohol duties from our predecessors, as has been said. The 2008 Budget announced that alcohol duties would rise by 6% that year, and then by the retail prices index plus 2% in the next four years. The Budget in March 2010 extended those rises for a further two years, until 2014-15. If the Government were to cancel the planned 2 percentage point rises for beer, it would cost the Exchequer £35 million next year and £70 million the following year. Given the current public finances and the sums involved, it would be prudent for the Government to think carefully about the consequences of making any such tax changes. The Government continue to keep all taxes under review and regularly monitor the impact of alcohol duty rates on both the industry and consumers.
At present, our monitoring suggests that the decline in the nation’s beer consumption predates the increases in duty and is a reflection of how consumer tastes have changed. Beer’s share of the total alcohol market has declined by nearly 30 percentage points since the mid-1970s. More than 85% of the beer consumed in the UK is brewed in the UK, which was a point made by my hon. Friend the Member for Nuneaton, and we want to continue to support such business.
Brewers will benefit from a number of actions this Government have taken to support all businesses. The reduction in the rate of corporation tax and the temporary increase in the annual investment allowance, for example, will enable them to invest in new machinery. As my hon. Friend the Member for High Peak (Andrew Bingham) highlighted, the small breweries relief supports microbreweries by reducing their beer duty by up to 50%, and it has contributed to an increase in the number of such breweries. Both consumers and pubs benefit significantly from the diversity of products produced by the 730 microbreweries in the UK, and the Society of Independent Brewers estimates that small breweries relief has increased the number of jobs by 1,000 since it was introduced in 2002.
There are many ways in which the Treasury supports brewers. For example, my right hon. Friend the Chief Secretary to the Treasury recently helped to launch the Ginger Rodent beer at Aviemore brewery. Perhaps that is what my hon. Friend the Member for Nuneaton meant when he mentioned innovation in the industry. We must recognise, too, the contribution made by the right hon. and learned Member for Camberwell and Peckham (Ms Harman) in helping to promote and popularise that product.
I thank the Minister for giving way and for his support for the industry. He will know that beer and pubs pay £11 billion in tax, and that some brewers are paying 50% of their turnover in tax and duty. If we compare what those brewers are paying with what some UK businesses pay, perhaps he should consider scrapping the beer duty escalator and introducing a coffee tax.
My hon. Friend is always full of innovative ideas, but he makes a serious point about tax avoidance, which this Government take very seriously and will continue to do. Clearly, the more we clamp down on tax avoidance and tax evasion, the greater our scope to act more flexibly with measures such as beer duty. May I take this opportunity to thank him for the work that he does in chairing the all-party beer group and my hon. Friend the Member for Leeds North West (Greg Mulholland) for his work in chairing the all-party save the pub group?
The Government recognise the importance of brewers and the contribution that pubs make to our local communities and the wider economy. Unfortunately, the number of pubs has been declining for decades, but that reflects the changes in consumer tastes and in lifestyles. The number of pubs continued to decline in the early 2000s, despite relatively flat alcohol duties in real terms. None the less, we continue to support pubs through our policies. For example, the drop in the small profits rate from 21% to 20% in April 2011 has supported thousands of small businesses such as pubs. About a fifth of pubs currently receive a reduction in the business rates they pay. Small pubs can also benefit from small business rates relief or rural rates relief, and the Government have extended the small business rates relief holiday until March 2014.
The majority of pubs have also benefited from the reform of gaming machine taxation introduced on 1 February, and they have the opportunity to benefit from the Live Music Act 2012, which came into force last October, making it much easier for pubs to put on live music events. On top of that, in January the Government announced plans for a statutory code alongside the independent adjudicator to ensure fair practice between large pub companies and their tenants on issues such as rent and the price publicans pay for their beer. The Government will be consulting on those plans shortly, and I hope that Members present will make pubs and publicans in their communities aware of the proposals.
Let me talk about our wider economic policy, which includes the strategy to reduce the record budget deficit that we inherited. That strategy has led to lower interest rates, which benefit people who have mortgages. If interest rates were just 1 percentage point higher, the average mortgage would go up by almost £900 a year, which is money that could be spent in pubs, and companies up and down the country would pay another £10 billion in interest in servicing their loans. Clearly, low interest rates have been helping companies, especially small and medium-sized companies. Our record increase in personal allowances has also put more money in people’s pockets, which they can use in their local pub. My hon. Friend the Member for Amber Valley (Nigel Mills) mentioned the change in fuel duty, which means that rises that we inherited from the previous Government have not gone ahead, and that again has meant more money in people’s pockets.
I want to say a quick word about our alcohol strategy. Moderate alcohol consumption can be positive for people’s well-being, but the Government are committed to tackling cheap alcohol and irresponsible alcohol consumption. We have therefore reformed beer duty to support responsible drinking. In October 2011, duty was halved on low-strength beer, while duty on high-strength beer increased by 25%. That was warmly welcomed at the time by many hon. Members and by CAMRA.
The Government have also had a consultation on minimum unit pricing, and we will be announcing the results very shortly. My hon. Friend the Member for Burton made some excellent points about responsible drinking.
In the interests of time, I shall conclude my remarks. I am glad that we have had the opportunity to discuss beer duty, brewers, pubs and the alcohol strategy, and we have had, I think, a constructive debate. I hope that I have reassured hon. Members that the Government fully support pubs and brewers. As I have shown in some of the examples that I have cited, the Government have already taken action in that regard, and, despite our tight fiscal situation, I am keen for them to go further. Hon. Members will understand that I cannot make any specific commitments on action; we have to leave that for the Budget. None the less, as one of my hon. Friends mentioned, I like to be seen as a listening Minister, so please be reassured that I take the matter seriously, and that today’s debate has served to underline its importance.
Social Care (Bradford East)
Thank you very much, Mr Caton, for calling me to speak. It is good to appear before you today and to have my hon. Friend and colleague, the Minister of State, Department of Health, responding to this debate.
The Secretary of State for Health said in his statement to the House of Commons on this issue that
“these reforms herald an historic change in the way in which care and support are funded.”—[Official Report, 11 February 2013; Vol. 558, c. 594.]
Indeed they do, and the Minister is not only obliged to see these measures through—he has a duty to do so—but is actually quite privileged to be part of what I believe will be seen in the future as incredibly important legislation. As the Secretary of State said, the reforms that we are planning are “historic”. I think that the Minister like me, would want to thank on the record his predecessor as Minister, our right hon. Friend the Member for Sutton and Cheam (Paul Burstow), for the work that he did in introducing the Health and Social Care Act 2012 and for his commitment over a long period of time to this crucial area.
I believe that how we deal with social care, and how we fund it, is one of the biggest challenges that the Government face. To provide a local context, Bradford has 79,000 people over the age of 65, and that number will increase during the next 10 years to 85,000. The cost of caring for people over 65 in Bradford will increase by £30 million by 2025, on demographics alone; that does not take into account the increasing level and scale of need that people over 65 will have. Across the Bradford district, it is estimated that 5,500 people have dementia, but only 52% of those people are currently diagnosed.
We felt that this issue was so important that we could not ignore it. We not only needed to find out what the local perspective was but beyond that we needed to give an opportunity to people across Bradford, and not just to people within my constituency, to contribute to legislation. We carried out a survey; 35,000 survey forms were distributed. We also carried out interviews with carers, users and stakeholders, and we held a summit in January, which was attended by Baroness Barker, to report back on our findings. I want to put on record my thanks to Bradford council, Bradford Alliance on Community Care, Age UK Bradford and District, Alzheimer’s Society Bradford, Ideal Care Homes, the Bradford and District Disabled People’s Forum, the Consortia of Ethnic Minority Organisations and the Carers’ Resource, whose help and support were received during the production of the report; indeed, without their support we could not have compiled the report, which we have already submitted to the Minister. We have also received research and case studies from Scope, and we thank it for that.
I must say that, although I may refer to one particular case study today, reading the case studies that were submitted to us and that we collected was the most disturbing aspect of the work we carried out. We can look at statistics, figures, trends and analysis, but when we look at how the care system treats individuals—I have to say that very often such care is not very good—the importance of this issue really comes home to us.
We made a range of findings. Of course, funding is a crucial issue. We can look at the background. Yes, we can say that it is for local authorities to make priority decisions within their own areas, but that is happening against a background of a reduction in funding to local authorities. Many of the remedies that we came across required local solutions, but the context is that there has been a 16% reduction in spending on social care in Bradford in the past two years, and there is a proposed further reduction of £7 million for 2013-14.
We found that enormous contributions are made by family, and often also by friends, towards paying for the costs of care. In Bradford, 65% of the residential homes charge top-up fees, and 21% of the contributions to pay for those fees come from family and friends. I must say that the Dilnot proposals and principles received widespread support from the people we contacted. In particular, it was interesting to note that when we talked about the funding of social care, although the average age of respondents was over 65, many of them regarded the funding of social care from universal benefits to wealthier older people as being their favoured way forward in order to address the funding gap. The average house price in Bradford is £94,000, so people can immediately see the benefit to a place such as Bradford of having a £123,000 threshold by 2017. However, we worry about a national cap because it represents a greater share of wealth in a place such as Bradford, where there is much deprivation and lower incomes than elsewhere, but the general principles are applauded.
We have some problems in Bradford with self-funders, who pay more than local authority-funded care users. I think that there are provisions in the Health and Social Care Act 2012 to look at finding a greater role for the local authority in brokering services on behalf of self-funders, which people welcomed.
There was an issue that cropped up time and time again, and not only in our research; when I was a councillor, I held a hearing to try to get the views of the elderly across the constituency and it cropped up then. It is the issue of isolation and loneliness for the elderly, and it has become an issue of the utmost importance. Age UK believes that 10% of over-65s are either lonely or very lonely. Of course, there is not only the impact of loneliness on how a particular person feels there and then but the impact on their long-term health. Indeed, there are indications that isolation and loneliness may, in certain cases, lead to premature death. In our survey, 95% of respondents believed that the loneliness and isolation that I have referred to would have long-term health repercussions for those affected.
To provide more local context, some cultural barriers to ethnic minority communities’ acceptance of residential care were identified. We believe that that issue needs to reviewed on a national basis, to see whether any generalisation can be made from the particular experience of Bradford.
The issue of access to information was considered very important by respondents to our survey, and people’s increased dependence on online access to information was not accepted as being the best way forward. There is still a desperate need for face-to-face contact, so that information can be transmitted to those who are often in a vulnerable position and who are entering a world they have not been in before. For many people it will be a completely different world, either as a receiver or user of care. It will involve jargon, including technical terms, with which they are simply not familiar and which requires a personal input.
The issue of fair access to care services—FACS—threshold is crucial in Bradford. The idea of setting a national minimum standard, as contained in the 2012 Act, is good, but the fear expressed by many of our respondents was that that national minimum standard would result in a levelling-down, not a levelling-up, of provision. That is because the Lib Dem group in Bradford has fought hard to ensure that “moderate” levels of need are supported, as opposed to “substantial” levels. Scope has told us that in 2005 50% of local authorities were operating on the basis of a “moderate” threshold, but by 2012 84% of local authorities had transferred to using a “substantial” criteria threshold.
The effect of that change in Bradford would mean that 800 18 to 64-year-olds and 1,300 over-65s would lose the support they receive. It may not sound like a serious loss of support, because after all we are talking about “moderate” levels of need. However, it pays for the cooking, the cleaning and the support for learning opportunities. Such opportunities encourage engagement and reduce isolation, and therefore the loneliness that often accompanies old age. The long-term impact of reducing loneliness means that it is a false economy in the long run to save on things such as adaptations, which I will come on to in a moment, and preventive support, which is how we regard the support for people in “moderate” levels of need. It is a false economy given the later costs that will be incurred by individuals, and indeed by the state, in supporting those we have not dealt with at an earlier stage of need.
The issue of adaptations came through time and again. There were some distressing case studies of people requiring special attention who were let down by the system. I will mention one, although the report contains more. I recently visited a gentleman who had had an occupational injury. He was tetraplegic and after receiving fantastic intensive support in Pinderfields, including occupational therapy, he was returned to his own home, to another world. He received some support—four times a day he was visited to help him get out of bed with a hoist—but the rest was left up to him. He had no idea. His wife was in despair, unsure about what financial support would be available in future and how long the support they were receiving would last. In addition, a ramp—a simple thing, some might have thought—was taking months to arrive. The disparity between the first-rate service in the NHS and the level of support received once the gentleman returned home was stark and depressing.
Approval for the ramp was given, but its delivery and implementation was simply dumped on the man’s wife, for her to sort out herself. A temporary ramp was installed that the ambulance service refused, for health and safety reasons, to use. That was the only ramp that she could use to get him out of the door, and she had to do that on her own because none of the services, for health and safety reasons, would use it. That is not care; it is careless.
The final part of the statement by the Secretary of State was about the ultimate aim: where we would like to get to by the end. We want a good place to grow old in, but that will not be achieved on the cheap. It is to the credit of the Government that they have not waited until better times but have identified the burning need to address the issue of the funding and quality of social care. However, we must address the problem of how this is funded. The measures have been proposed, and we will see how the legislation proceeds.
We also need to understand the additional contribution that is being made day in, day out, voluntarily, by people who do not have the training or the background, and often do not have the financial resources available, to supplement an inadequate level of funding.
Mine is unashamedly a Bradford perspective, but as with all research the key is to look at the generalisations that stem from it. I hope that my hon. Friend the Minister will take on board some areas that we have identified in considering the national situation and carry out further research on regional caps, adaptations, the FACS threshold, the contribution that changing the threshold will have on isolation and loneliness, and the subsequent increased costs to individuals or the state of the failure to deal with what should be preventive measures. I hope that my hon. Friend the Minister will respond to those points either today or later.
It is a pleasure to serve under your chairmanship for the first time, Mr Caton. I congratulate my hon. Friend the Member for Bradford East (Mr Ward) on securing the debate and on a brilliant piece of work—not just the report, which is fantastic, but the degree of discussion, debate and engagement with ordinary people and all the organisations that he listed, to get an understanding of what is going on in his community. That is immensely impressive. He has gone further than anyone else in understanding what is going on, on the ground. I thank him for his work. He is right to say that although the report looks in depth at a particular community and its needs, wider lessons can be learned from it. The report makes a useful contribution.
Like my hon. Friend, the coalition Government know how important it is to reform the current system of care and support. The voices of the people of Bradford reflect what we have heard from care users, their carers and voluntary organisations across the country, regardless of who they are or where they come from. They say that care and support needs to change. We have to move from an old-fashioned paternalistic system, where the council or the NHS knows best, to a personal system where we give real power to individuals to determine what their priorities are, what works for them and what makes them happy and contented in later life, despite sometimes having acute care needs.
My hon. Friend rightly highlights the significant demographic challenge facing us in years to come. About 14%—more than 71,000 people—of Bradford’s total population is aged 65 and over. Bradford’s local joint strategic needs assessment for 2012 predicts that by 2033 the number of local people over 90 will triple from 2,800 to 8,700. We should celebrate that. It is great that people are living to be older and often enjoying great quality of life for more years, but also many people live for years with more than one acute condition, which presents a challenge for them, but also a cost to society. Such a demographic shift will always be an immense challenge. Only if the care and support system changes and adapts can it meet the new demands and expectations of an ageing population in modern Britain.
The organisations that my hon. Friend mentioned are vital partners. This is not something that Government or local government can do on their own. The care and support White Paper, published in July last year, is an important step towards addressing these challenges. Our reforms will focus more attention on people’s well-being and independence throughout their lives, instead of waiting for them to reach a crisis point. They will also put people in control, giving them a far bigger say in their own care and support, and ensure that services are designed around their needs, rather than the needs of an institution.
The White Paper, together with the draft Care and Support Bill, will shape the care sector for years to come. The draft Bill, which my hon. Friend knows has been subject to pre-legislative scrutiny, sets out how we will put the plans into law. For the first time, we will create a single, modern statute, bringing everything together for adult care and support. It is good that that is written in plain English—English that people can actually understand without being a lawyer—which is quite useful. That statute will be clearer, fairer, and built around people, not processes, and around individuals, not institutions. It will empower people in Bradford and across the country to take control.
My hon. Friend highlighted the importance of the reforms to funding recommended by Andrew Dilnot. Last month, the Secretary of State for Health announced groundbreaking proposals to cap the costs of long-term care. That issue has been in the long grass for far too long. Successive Governments have put it in the “too hard to solve” category and just left it. As a result, ever more people have suffered catastrophic loss, losing everything that they have worked for. There is an acute unfairness in how the system almost penalises people for having been prudent and careful throughout their working life.
Individuals currently have little or no protection against the cost of care in older age. In Bradford, for example, some 5,000 people a year turn 65, and around 500 of those people each year could face significant care costs under the current system. Our reforms will ensure that everyone gets the care they need. We are ending the unfairness of, and fear caused by, unlimited care costs, while making sure that most support goes to those in greatest need. People will be protected from having to sell their home during their lifetime to pay for care.
The Government have committed to a £75,000 cap on care costs across England in 2017. I note my hon. Friend’s concerns about the cap’s geographical impact, and he proposes a regional cap as an alternative. The cap provides the same financial protection for people of equivalent wealth from different regions, and everyone will benefit from more peace of mind. However, I would say to my hon. Friend that, in some parts of the country, the costs of care are higher, so people reach the cap more quickly because they have to spend more of their own money. In a way, it is swings and roundabouts.
The other thing I would stress—my hon. Friend was right to point this out—is the significant increase in the range of means-tested support. At the moment, if people have more than £23,250, they get no help at all; they are on their own. That limit will be extended to £123,000. My hon. Friend said the average house price in Bradford is £94,000, so a substantial number of people there will get contributions towards their care costs.
In the spending review, we made clear our strong and ongoing commitment to adult social care by prioritising an additional £7.2 billion over four years—my hon. Friend raised concerns about tight social care budgets. Independent research by the King’s Fund supported our view that that should be enough for councils to maintain services, provided they make sure those services are delivered efficiently. Since that announcement of £7.2 billion, we have added another £500 million. In the context of a challenging local government settlement, that means that local authorities should be able to protect access to care. Ultimately, however, it is for local people and local authorities to determine their care spending priorities.
We cannot improve care and support simply by shovelling ever more money into the system. My hon. Friend was right to say that we must do things differently and work more efficiently to achieve better outcomes. Critically, that will be about a partnership between statutory authorities and the voluntary sector, including the organisations he spoke warmly of, which can really make a difference.
People have told us that the process of determining who is eligible for care and support is confusing and unfair. Decisions are not transparent, and they vary across the country. The result is that people are left without the support they need. The draft Bill provides for the national threshold my hon. Friend talked about. I understand his concern to protect the moderate threshold that Bradford has managed to maintain, and I applaud it for doing that. However, even if the threshold is set at a higher level—it has not been determined yet—Bradford will still be able to maintain a more generous system, if that is what it chooses.
My hon. Friend rightly focused on prevention as one of the key themes running through our reforms. We want a care and support system that is proactive and preventive, rather than reactive—repairing things when they have gone wrong. Such a system helps people to stay healthy and independent in the first place. We need to help people to maintain their health throughout their lives so that they do not, we hope, have to go into acute hospitals when everything goes wrong.
My hon. Friend might be aware that I recently announced a £300 million fund for specialist housing. Bradford already has seven extra care housing schemes, and it has submitted a bid to the specialist housing fund to develop further schemes. I applaud it on the work it has done locally to secure those schemes.
At the end of last year, the Government made available an additional £40 million across the country for aids and adaptations, and my hon. Friend referred to that. Bradford council will receive an extra £336,000. In total, £785 million will be provided over the four years to 2015. That will enable people to remain independent for longer.
My hon. Friend talked movingly about the problems of loneliness and isolation, and it is critical that we challenge them. If people are on their own, with no human contact, their mental and physical health will deteriorate. That is dreadful for them, but it is also costly for the system. We need to be much more effective at maintaining contact and using the voluntary sector—good neighbour schemes and so forth—to maintain human contact and friendship.
I want to say a word about integration. The White Paper sets out our ambition for health, care and support to be organised around the individual’s needs, rather than focusing on organisations and services. My hon. Friend mentioned the case study involving the ridiculously long wait for a ramp, which demonstrates how dysfunctional the system can be. It is crazy that someone returning home needs that little adaptation to maintain their independence, but it does not arrive for so long. That puts them at risk of a fall, which would result in their returning to hospital. That is a dysfunctional system. The Government’s absolute focus on encouraging and incentivising areas to integrate services across health and social care, and mental and physical health, is critical to providing better care and support for individuals.
The absurd thing about this tragic case is that the gentleman was in Pinderfields for five months, and people knew throughout that time that he would go back to his own home. Yet, when he arrived, it was as if they thought, “What a surprise. He’ll need a ramp.” As I said, the gentleman is tetraplegic.
That is unbelievably stupid. All the preparation could have been done before he returned home so that everything was ready for him when he came back.
The draft Bill will significantly benefit those with caring responsibilities. It will simplify the process of assessments and, for the first time, place a duty on councils to meet a carer’s eligible needs for support. There will be a new resource of £175 million to ensure that that is implemented.
The Government’s independent advisory body—the standing commission on carers—visited Bradford in 2011 as part of a series of fact-finding visits. It had the opportunity to see first hand some of the valuable initiatives, including the carers information service and the emergency planning service, that have been commissioned by Bradford council from the carers resource.
Let me say a word about personal care. One of the best ways we can improve the quality of care is by getting people to exercise choice and control over how their needs are met. The draft Care and Support Bill will place personal budgets on a legislative footing for the first time. Local authorities should be working to meet the objective set out in the vision for adult social care and provide personal budgets for everyone eligible for ongoing social care. Preferably, that should take the form of a direct payment to individuals, so that they can determine exactly how they want the money to be spent. That should apply from April 2013.
My hon. Friend mentioned the importance of information and knowledge. He said that online information is not always accessible to all. IT and providing information online can be transformational in getting vastly more information out to people who need it, but we must always recognise that some people cannot access it in that way, and we must ensure that it is available in other ways.
Let me reiterate the fact that the White Paper, the draft Care and Support Bill and the Government’s decision to reform the funding of care and support represent a radical transformation of the way we meet the needs of individuals, families and communities. That transformation will require close collaboration and genuine cultural change, involving the Government, local authorities, the NHS, care providers, voluntary organisations, care workers, care users and their families, and communities.
I am therefore really encouraged by the brilliant work that has been undertaken in Bradford and by the local engagement and insight clearly evidenced in my hon. Friend’s report. Again, I congratulate him on the dedication and commitment he and his team have shown on one of the most important issues we face as a country. As our society ages, we face enormous challenges, but there is a message of hope, because these reforms will start to prepare us for the challenges of an ageing society.
[Mr Mike Weir in the Chair]
I am grateful for the opportunity to introduce this debate.
No debate on London can start without an assessment of where the capital city finds itself. Without doubt, London is the world’s greatest city. No other metropolis can claim to be so vibrant or so beautiful. London is a magnet for the world’s greatest talents, and it is the birthplace of some of the world’s most successful businesses and the adopted home of countless others. This city has been the inspiration to so many of our musicians, authors and artists.
There are thousands of reasons, including London’s great multi-culturalism, that make this a modern city that outfaces the world, but peel away the veneer of the capital’s dramatic skyline, scratch away at the patina of the city’s bustling shopping streets, and we will see one of them—the tube is the engine room that has propelled London’s success story for 150 years.
The Metropolitan line shooting off from Baker Street up towards Harrow and into Hertfordshire and Buckinghamshire began to make commuting to London possible. The City and South London railway, to be rechristened the Northern line, first tunnelled deep under the Thames so that people in Clapham no longer had to ride the omnibus to get to Bank or Euston, and in the middle of the great depression it was the Piccadilly line extension north to Finsbury Park on the edge of my constituency that drove growth and jobs to places such as Finsbury Park, Wood Green and Enfield. Yet that history of infrastructure has slowly been squandered by inertia, chronic underinvestment and a cowardly lack of ambition.
There has been relatively little investment since the Victoria line opened in 1967. The opening of the Fleet line, or the Jubilee line as we now know it, was, for the most part, a rebranding of an existing branch of the Metropolitan line. Although the subsequent extension to Stratford was impressive, it was also horrifically over-budget and over-deadline.
Small extensions to the docklands light railway and the construction of the Croydon tramlink have made differences in some quarters, but it is still fair to say that the overall reach of London’s transport network has barely changed for almost 50 years. Sadly, the signs of decay are there for all to see.
Despite the illusion created by Harry Beck’s distorted London underground map that coverage is almost universal, huge pockets of London are actually islands of isolation. Even in 2013, my constituents in the Northumberland Park ward of Tottenham, which has among the highest unemployment rates in London, are served by just one train an hour on weekdays and no trains at all at weekends.
Dalston Junction is just 3½ miles from Tottenham Court Road, but the journey on public transport takes more than half an hour. Huge swathes of south London rely on consistently inconsistent suburban rail services that are plagued by delays, cancellations and overcrowding. [Interruption.] I see my hon. Friend the Member for Lewisham East (Heidi Alexander) nodding her head, because she has waited for those trains on many occasions.
That those areas have the highest rates of unemployment, the highest levels of child poverty and the lowest levels of attainment is no coincidence. Without vital transport links, they are starved of investment, bled of ambition and left marooned from the city’s throbbing economic heart. In areas where services are frequent and extensive, users find themselves on some of the most overcrowded and expensive journeys in Europe.
On my right hon. Friend’s point about overcrowding, the section of the underground that goes up to Finsbury Park runs through my constituency. Does he agree that, although in 2007 we had more than four people per square metre in my part of the underground, even after 2021, when more investment is proposed, there will still be more than four people per square metre? That is why I put on record my complete support for Crossrail 2.
My hon. Friend is absolutely right. In the morning rush hour more than four people stand per square metre on rail services in her constituency and across London. More than four people stand per square metre on all peak-time District line trains from Putney Bridge to Earl’s Court. The same is true for Victoria line trains from Finsbury Park to Victoria, for all Piccadilly line trains from Finsbury Park to Holborn, for Bank branch Northern line trains from Clapham Common to Euston and for Central line trains from Stratford to Holborn.
In this country it is illegal to transport cattle if there is more than one cow per square metre, to transport pigs if there are more than two pigs per square metre or to transport sheep if there are more than three sheep per square metre. Yet each rush hour in our capital city, more than four human beings cram into every square metre available just to go to and from work. At present, Londoners can only dream of being herded like cattle as they commute to work.
London’s viability as a global centre is already being undermined by a failure to resolve questions over its airport capacity, but the unspoken fact is that we are soon to lose out to our competitors because of what happens to those passengers the minute they leave the terminal building, wherever the new airport capacity is located. As Tony Travers puts it:
“London survives despite, rather than because of, its transport infrastructure planning and implementation”.
There are some who dismiss those concerns. They say that London’s congestion will be relieved once tube upgrades are completed and the long-awaited Crossrail 1 opens at the end of this decade. There will be some relief, of course, but such an attitude ignores the enduring lesson of the past century that, even if the economy stops, London does not. The capital is about to be hit by a demographic tsunami that, worse still, has taken policy makers by complete surprise.
The Mayor’s London plan forecast that the capital’s population would break 8.5 million in 2027. Data from the 2011 census suggest that that will now be exceeded in 2016 or earlier. By 2031, there will be almost 10 million people living in London, more than 1.5 million more than are living here today. An extra 700,000 jobs are expected to accompany that growth over the next 20 years, which means 700,000 extra daily commutes.
I congratulate the right hon. Gentleman on securing this debate. In addition to population growth and jobs, does he agree that, as London tries to develop beyond the Olympics in attracting visitors, the last thing inward investors and tourists on short holidays want is a massively overcrowded underground as they go to see the attractions?
The hon. Gentleman makes a good point, and he will know that there are great cities with great histories such as Athens that have been plagued by a sense that they do not work, that they are polluted and that they are not the great cities that many would like. The Olympics made a difference, but, of course, there are big economic problems in Greece. Nevertheless, cities can establish reputations. Before Mayor Giuliani, New York had a reputation for crime and congestion, and the horribleness of getting on the subway there undermined the attempts being made to promote it as a world city.
The hon. Gentleman will also know that we have good plans, which we must get on with, to bring High Speed 2 to our country. That will increase the number of morning arrivals at Euston station by 30%. What capacity gains are made by Crossrail 1, the tube updates or the Thameslink programme are set to be wiped out by 2030. By 2031, overcrowding on network rail routes into London and London underground lines will be at the same utterly unacceptable levels as today. On the main north-south lines—the Northern, Victoria and Piccadilly lines—they will be even worse.
The Chancellor is fond of saying that Britain is open for business. Is it open for business if it takes the average worker more than an hour to commute? Is it open for business if we ask our business men and women to travel to and from work in conditions unfit for livestock? Is it open for business if the underground interchanges at the main line termini in our capital city—Victoria, Euston, King’s Cross and Waterloo—must close during rush hour due to dangerous overcrowding? Members will have found themselves in such shutdowns while attempting to get into or out of Victoria station as they commute in this city. What use is High Speed 2 if we must wait an hour and a half to leave Euston station?
As long as London keeps growing, the Government and this Mayor must ensure that our infrastructure is one step ahead, not two steps behind, yet if they pursue the same course that they have trodden during the first half of this Parliament, they will condemn London to some degree of failure. After all, they almost cancelled Crossrail 1 on entering office, the Thameslink programme is beset by delays, they cancelled the third runway at Heathrow and kicked the search for an alternative into the long grass and they cancelled the four-tracking of the west Anglia line, which would finally have provided a decent train service to some of the poorest neighbourhoods in the capital.
The only ambition that this Government presently have for the capital—the only vignette of a solution to the challenge that they face—is the two-station spur of the Northern line to Battersea power station, an extension that will make its Malaysian owners incredibly rich but do little for the businesses in Lambeth and Wandsworth that are being asked to foot the bill.
London needs a game-changer. We need a wholly new project to alleviate congestion, drive growth and improve journey times for Londoners. The Minister will have seen the report, published last month by Lord Adonis and London First, detailing the case for a new line, dubbed Crossrail 2, linking south-west with north-east London. He will also notice the breadth of support for Crossrail 2. It commands the support of London’s businesses: 69% of members of the London Chamber of Commerce and Industry say that Crossrail 2 is vital to London, and a ComRes poll showed that 95% of London businesses believe that any cut to transport investment will damage the capital’s businesses in the long term. It commands the support of the major transport unions, and of successive Mayors of London.
The reason why Crossrail 2 unites so many frequent foes is that the case for it is utterly compelling. As Lord Adonis and his colleagues made clear, it is the only way that London will be able to cope with the challenges that it will face over the next 20 years and handle the 700,000 extra commuters who will be working in central London by 2031, and it is certainly the only way to deal with the extra burdens that High Speed 2 will put on congestion in the capital.
Better still, the report sets out the case for a regional and suburban route that will deliver immense benefits to London and beyond. It will finally bring tube stations to Mare street in Hackney, and it will double train frequency to places such as Kingston and Twickenham. It will also free track for South West Trains to increase the number of trains from Portsmouth, Basingstoke, Southampton and Farnham to London Waterloo that serve stations throughout Hampshire and Berkshire. Most importantly, it will provide a reliable train service and huge economic benefits to some of the most isolated and deprived areas of the Upper Lea valley, which includes my constituency.
The line can also be developed from Cheshunt through to Stansted airport, providing a stopping service on new tracks to complement a more frequent and faster Stansted express service. Not only could that mean better use of the excess capacity at Stansted airport, it would mean that communities with some of the highest unemployment rates in the country could benefit economically from having an airport on their doorstep and a new line connecting areas such as Northumberland Park, Edmonton, Tottenham, Dalston, Hackney and Wood Green to central London, Clapham, Wimbledon and Stansted station. It would clearly leverage investment from businesses and developers, create jobs each year after it had been completed and open up the Upper Lea valley as a growth area for the capital.
The right hon. Gentleman is making an excellent speech, and I am grateful to him for allowing me to intervene. Does he agree that London is already well served in its number of runways and its total airport capacity? I think it has more than any other city in Europe, with the exception of Paris, which has one more runway. The problem in London is that we do not make good use of the capacity that we have. The point that he has just made, which is exactly right, is that by extending Crossrail to Stansted, for which the current Mayor of London has been pushing hard, at a stroke we would transform Stansted, which is only half used at the moment, into a natural destination for business travellers, which would in turn relieve pressure on Heathrow. To me, it seems like a no-brainer solution to our airport capacity problem. What does the right hon. Gentleman think?
The hon. Gentleman knows that I tend to agree with much that he says, even though he belongs to another party. He makes his point incredibly well. Stansted is key to London’s development. It is extraordinary that the line currently running from Stansted to Liverpool Street is as chaotic, delay-prone and slow as it is. Clearly, efforts must be made to improve that service. He is absolutely right: a lot of attention has been paid to airport capacity. That is not the subject of this debate, but it is clear that investment in our train capacity, so that people can move around the city, will take a fine eye and focus. I hope that it will command the attention not just of the Mayor, as he rightly pointed out, but of the Government.
Yes, Crossrail 2 is ambitious. Its ambition comes with a price tag, but the central question is: what price doing nothing? What is the price of leaving communities cut off from central London, letting travel across London become more arduous than it is and causing major businesses to leave our capital for more mobile and modern competitors in Asia, Europe and America?
Some will still say that this is all too sudden and that more time is needed to consider and contemplate before the Government can decide, presumably, to consider and contemplate a bit more. I have sat where the Minister is sitting, as a Minister in different Departments, and I know the business of kicking things slightly into the long grass as one negotiates hard with the Treasury, but let us not forget that Crossrail 2 is quite long in the tooth. Part of the route was originally conceived as early as 1901, only to be dropped five years later. After the second world war, the idea of a Chelsea to Hackney line peppered almost every London rail study. In the early 1990s a route was finally safeguarded, and mutations of it have slowly been making their way between Whitehall in-trays ever since. Successive Governments have already had time to contemplate and consider the plan. It is now time for leadership and action.
As I outlined, London’s congestion problems will come to a head during the next period. The line needs to be open in the early 2030s, which means breaking ground in the early 2020s. We therefore need a hybrid Bill sooner rather than later and, because this project will no doubt be completed, owned and amended by successive Governments, it is critical that we establish cross-party support now, before the parliamentary cycle begins to gear up for the 2015 general election. In that spirit, I invite the Minister to address the inaugural meeting of the all-party group on Crossrail 2 that I am hoping to set up with colleagues here and in the other place over the coming weeks. Most importantly, will he detail exactly when he expects the review of the safeguarded route to begin, with an outline of the process involved, and when he expects it to be complete?
The Government’s role is not only to take leadership on this issue but to empower others to do the same. The most recent comprehensive spending review outlined funding for the Department for Transport only up until 2014-15, scrapping the long-term funding guarantee in previous spending reviews that provided a 10-year forecast of budgets. In December 2012, therefore, we had the ludicrous scenario of Transport for London publishing a 10-year business plan that could only outline funding until 2014-15. If that practice continues in the second spending review later this year, TfL will still have no certainty over its funding settlement after the 2015-16 financial year. It is clear that we need a proper funding settlement and that that need is great. Does the Minister agree that the best way to ensure the delivery of transport investment projects such as Crossrail 2 is to provide the bodies tasked with delivering them with clear indications of their future funding settlement over the long term?
Furthermore, I am sure that all of us who are keen to see more transport investment are concerned at the enduring silence of the Secretary of State for Transport while his Cabinet colleagues are peacocking across television studios to try to spare their Departments from further cuts. I invite the Minister to put all our minds at rest when he responds. Will he announce his membership of the national union of Ministers and will he put on record that he would like to see Crossrail 2 explicitly included in the comprehensive spending review in the same manner in which Crossrail 1 was included in the spending reviews of 2004, 2007 and 2010?
Will the Minister ensure that he does his best to get us into position to have a hybrid Bill shortly, with cross-party support and with some certainty that the dates will hold? Although 2030 or 2031 is still some distance away, we want to be sure of getting there so that we can begin the work now and not delay it until after a general election kicks the project into the long grass, in which case we will not see Crossrail 2 come to fruition during the lifetime of anyone in the Chamber.
It is a pleasure to serve under your chairmanship, Mr Weir.
I congratulate the right hon. Member for Tottenham (Mr Lammy) on securing the debate and on his powerful and eloquent support for Crossrail 2. I am not a London Member of Parliament, but a large proportion of my constituents travel into London daily, while a growing number of Londoners travel out to businesses in Milton Keynes. That is exemplified by the new Network Rail headquarters, which is based in the centre of Milton Keynes. I want to make a short contribution to the debate for two reasons: first, to talk about the improved connectivity that a scheme such as Crossrail 2 could deliver; and, secondly, wearing my Transport Committee hat, to pick up on a couple of the points that the right hon. Gentleman made about High Speed 2 and, once it has been developed, the capacity at Euston.
I know the commuting line to and from Milton Keynes well, and the volume of passengers into and out of Euston at the morning and evening peaks is growing. Getting on a Victoria or Northern line tube train is an art at times; it is not uncommon to let two, three or four trains go through before being able to board one. The upgrade to the Victoria line with the new stock has improved the situation, but I suspect that it has merely bought time and that in a few years the line will be as congested as ever. Having a line such as Crossrail 2 going through Euston, therefore, would be a major benefit to arriving commuter passengers. It would improve connectivity with different parts of London, make public transport more attractive and encourage a modal shift, with all the environmental benefits that that would gain. It would be a win-win for Londoners and for people in the northern home counties and beyond travelling into London. To strike a slightly confrontational note with the Minister, given that he represents Wimbledon, I note that the line would connect Wimbledon to Euston, so it might allow AFC Wimbledon fans to travel to see MK Dons, were the two teams to play each other regularly in future.
There may or may not be outstanding benefits from Crossrail 2, but that would certainly be a disbenefit.
The Minister and I agree on many things, but we will disagree in our football team allegiance.
On whether the proposed scheme for Crossrail 2 is the optimal one, I have an open mind. It might be, but a slightly different one could be used, linking with the North London line to Willesden and elsewhere and with extra branches. I have an open mind, but I am happy to support the principle of Crossrail 2.
My second point is in the context of High Speed 2. If HS2 goes ahead with its planned route into Euston, that will deliver a huge increase in the number of passengers into and out of the station. For the reasons I mentioned, I fear that the existing tube network will not be able to cope. Yes, some passengers will get off at Old Oak Common and come into central London via Crossrail 1, but not all will. I suspect that a comparatively small percentage of the arrivals will want Euston as their destination; they will want to travel on to other parts of London. If they are faced with enormous congestion at Euston, the attractiveness of HS2 will be diminished and its business case undermined; however, Crossrail 2 feeding in more people to use HS2 from Euston would augment the business case, about which there has been controversy lately.
The purpose of my contribution was briefly to make those two points. I am supportive of the principle of Crossrail 2 and happy to look in further detail at specific schemes. I am also happy to join the all-party group, once it is up and running. I will not make any comments on the funding, although I agree with the point made by the right hon. Member for Tottenham that the cost of doing nothing might be far too high. I congratulate him once more on securing this important debate.
I congratulate my right hon. Friend the Member for Tottenham (Mr Lammy) on securing the debate. I represent a south-east London constituency. My constituents would not necessarily benefit directly from new stations on a Crossrail 2 project. Nevertheless, they would benefit from improved transport links in London more generally, so it is important that we are having the debate today.
I want to discuss another strategic transport project in London—some might call it Crossrail 3—that would bring huge benefits to our capital city. It would improve capacity on transport links between south-east and north-west London, as opposed to Crossrail 2, which improves the links between south-west and north-east London. I urge the Minister, when considering Crossrail 2, to think more strategically about the transport needs of London as a whole. For my constituents, one of the most important issues in public transport is extension of the Bakerloo line from Elephant and Castle, where it currently stops, through Southwark to Lewisham and then to join the Hayes line. That would provide huge benefits in relieving congestion on existing transport routes to London, and would support growth in south-east London and Canary Wharf.
I want to take a couple of minutes to share with hon. Members some of the reasons why that transport route is equally important to the strength of London’s economy. At the moment, my constituents rely heavily on overland trains, as my right hon. Friend the Member for Tottenham said. The recent census figures show that one in five of the working population in Lewisham uses trains to get to work, and the number in Bromley is similar. At the moment, south-east London benefits from the East London line, which runs through Honor Oak and Forest Hill to Crystal Palace, but that skirts the western border of south-east London, and the tube network does not extend into south-east London, although we are fortunate in having the docklands light railway.
Overcrowding on overland trains to London Bridge and Cannon Street is unbearable for my constituents. I regularly take the train to London Bridge and it is unpleasant to be stuck in the armpit of a stranger. Overcrowding during the rush hour is intense and there is a desperate need to relieve that congestion. The benefit of bringing the tube network to south-east London would be felt not just in people’s quality of life, but in the planned regeneration projects in south-east London.
Southwark and Lewisham are two of the fastest growing boroughs in London, and it is projected that by 2030 Lewisham’s population will be 346,000, which is 70,000 more than at the moment. The rise in Southwark’s population will be similar. We have a terrifically young population who want to access job opportunities in central London. Those huge population increases in south-east London mean that we must find a way to transport people around. Lewisham plans to build 18,000 homes by 2026, and when new developments go up in our town centres my constituents come to me to ask how people will get on trains because they are already full. There is a desperate need in south-east London to address capacity on public transport.
The links from Lewisham in particular to Canary Wharf are strategically important. Canary Wharf as a commercial and business centre has grown very quickly. I understand that its working population is about 100,000, and I am told that by 2025 it will have doubled to 200,000. We have read about the problems in the financial sector, but there will be huge growth in that part of London. Linking the population of south-east London to those opportunities by extending the Bakerloo line, through a connection to the DLR, is terrifically important. The centre of economic activity in London is shifting eastwards, so when this and future Governments consider how to address strategic transport needs they should look at London as a whole.
Will the Minister tell me and other hon. Members what discussions he has had with the Mayor of London and Transport for London about the possibility of extending the Bakerloo line? I am aware that upgrade work will be done on that line within the next 10 years and it would be good to hear whether that work can be done in a way that allows a later extension to the Bakerloo line. It would be good to know what vision he and TfL have for addressing those transport needs in south-east London.
I was recently speaking to a good friend who is a transport planner. She told me that in London we need to find a way of addressing the next century’s transport needs. The Victorian era left us with a fantastic underground network, and we now need to ask what the 21st century’s legacy will be. Whether it is Crossrail 2 or Crossrail 3, London is a fantastic world city that will continue to grow, and we must find a way of moving people around and getting them from their homes to their jobs so that they can enjoy the most this incredible city has to offer. I hope that the Minister will be able to provide some reassurance that he is on the case and considering how to tackle those transport needs in the next few decades.
I congratulate my right hon. Friend the Member for Tottenham (Mr Lammy) on securing the debate, and apologise for the fact that I was not here at the beginning. His battle for Tottenham is akin to the one we fought and, to some degree, won in Hackney. We had poor transport links, and we now have new links that have transformed the borough. For his sake and that of my constituents, I hope that we will see a change.
I want to pick up on the point made by my hon. Friend the Member for Lewisham East (Heidi Alexander) about the need to absorb growth. It takes me back to when I was mayor of Islington in the late 1990s. Angel station was revamped from a grotty little station to a brand new one with platforms so wide that you could park a car on them. That station is already overcrowded. Canary Wharf just about manages to cope with the crowds as does, arguably, Westminster, but it will not be long—perhaps a decade—before there will be too much growth.
When we set up the mayoral system in 2000, there was a decision on the first Mayor’s desk. His job was to develop transport and planning strategies for London. After much thought and discussion, the then Mayor, Ken Livingstone, decided that we would absorb population growth in London instead of having another wave of new-town building with new towns such as Milton Keynes. London was set to grow from then until 2015—we are still part of the way through that growth—by the equivalent of a city the size of Leeds. All the experience that hon. Members have outlined about the difficulty of squeezing on to tubes, whether travelling from Milton Keynes or Hackney, demonstrates that growth. Whenever I cannot get on the tube, I think back to those discussions when I was a member of the London assembly with my right hon. Friend the Member for Tottenham back in 2000. We are now seeing the impact of that.
Part of that strategy was to have a transport hierarchy. We encouraged people to change their transport habits so that those who travelled by tube would get on the bus, and the then Mayor greatly improved the buses. We then wanted people who travelled by bus to walk and cycle. Cycling increased massively after the 7/7 bombings, when the tragedy made people think about their transport and get into the habit of cycling. I represent the borough that has the highest number of cyclists of any borough in London, and perhaps anywhere in England. The history of it is long-standing, and it has grown with population growth.
The then Mayor invested massively in bus transport, and bus ridership rose 7% during the first two terms of the London assembly and Transport for London. I am sure that the Minister is aware that Transport for London is a model for a good transport authority. Sadly, there is a slight reversal with the stealth cuts in bus services. The frequency of the 242 bus in my constituency has fallen from 10 an hour to around seven an hour. It is the only bus serving the Clapton Park and Nye Bevan estates to and from Homerton hospital, and with six bus stops on those estates the cut in service is a big one for my constituents. When I raised the issue with Transport for London, it argued that the East London line, which I will mention in a moment, solved the problems. Well, that is not the case for someone who lives on the Clapton Park estate and who has to walk up the hill every morning, or for older ladies or men who have to wait for the bus so they can take their shopping home.
The 38 bus has recently seen a similar reduction, with every other off-peak bus turning at Hackney Central. That is fine for people who want to get off there or anywhere between there and Victoria, but not for those who live anywhere between Hackney Central and Clapton pond, as many of my constituents do. I therefore urge the Minister to look back at the glory days of London bus travel and to bear these issues in mind when he looks at budgets and policy for buses. Unless the bus service is good, the transport hierarchy will not work. People will not get off the train and on to the bus, because they will not be sure the bus will get them where they want to go on time. Once we lose that reliability, things could start going backwards from the huge achievement we saw in London.
To return to the issue of my constituency and borough, London was to absorb the huge growth I mentioned. My hon. Friend the Member for Lewisham East described what has happened in her neck of the woods. Similarly, Hackney grew by 30,000 people between the last two censuses. Those are mostly under-fives, and I confess I have contributed to that, having given birth in the past few years. There are also a lot of young people in their 20s and early 30s. Another 30,000 people will be born in Hackney by 2020, so there will be exponential growth. A lot of that has been boosted by some of the new private and public sector housing developments.
That is putting public transport under great pressure, and we need to look at how we change travel routes. Boosting the North London line was a great move by Transport for London, and we all applauded the fact that it took over the route. We had a disciplined campaign in support of the East London line, which serves stations from Dalston Junction, slightly north of my constituency —it was in my constituency when it was built, but we then had a boundary change—right down to New Cross. The line has been hugely successful—it is impossible to get a seat in the morning—and that has made a big difference.
We can all learns lessons from the East London line campaign as we campaign for the much-needed benefits of Crossrail 2. It was a disciplined campaign. We were all urged to ask not for lots of whizzy things to make our stations even more beautiful, but for basic stations and basic rolling stock to ensure that we had the service running. Of course, we were fortunate that there was an existing rail line. There were regular meetings between local authorities, officers and elected Members from across the board. Every time a problem came up, we discussed how we would deal with it as a group, rather than striking out alone to argue that Hackney should have something better than Tottenham, or that Tottenham should have something better than Hackney, much as we might have felt like doing that. We realised it was better to focus on discipline and to achieve the ultimate end. The East London line opened in 2010, and it has been a huge success.
I hope the same discipline can be applied to the new all-party group on Crossrail 2. I would certainly join it and support my right hon. Friend the Member for Tottenham. The line would link Dalston Junction to Tottenham Court Road and mean an 11-minute journey; it will change things phenomenally. [Interruption.] If only I had time to go shopping in Tottenham Court road. I am thinking more of jobs for constituents who could work in the area.
When I was on the London Assembly, I also represented Waltham Forest. The council had a good plan at the time—this was between 2000 and 2004—to get people into jobs at Stansted airport. The transport links were there to make that easy. Hackney, which is virtually the same distance away, but which did not have the transport links, did not have the same jobs programme. The difference was phenomenal, and that has been one of the things driving my support for these new transport links. I saw the stark difference transport links made when I represented the boroughs of Waltham Forest and Hackney.
When we build railway lines, there are also issues about homes. There has been a housing boom along the East London line. That is quite a good thing. If we are to change travel habits and travel patterns, we need people not to go through the centre of London, so it is good to boost our suburban and outer-London areas. However, there is also the issue of prices and rents going up, which has a huge impact on many of my constituents. I am delighted that, among other developments, Peabody is building a number of affordable housing units at Pembury Circus, with a mix of properties for rent, sale, social rent, part-buy and so on. After a long campaign by me and many residents of the Kingsland and Haggerston West estates, London and Quadrant Housing Association is finally building there. Those changes are happening close to the rail links, and that will make a difference.
Let me say in passing, although it is important, that Hackney is very much against the Government’s proposal to allow offices to be easily converted into homes under a light-touch planning rules. That would be disastrous for my borough, where there are jobs, and where office space is used properly by a range of creative businesses. Those businesses are an engine room for the British economy. I hope bits of the Government are having a word with the Secretary of State for Communities and Local Government about the folly of his race to build inappropriate homes in the wrong places. The occupants of No. 10 and No. 11 regularly appear in Shoreditch, which the Prime Minister calls “Tech City”, although it is still known as Shoreditch to the people who live and work there, while someone else’s Department is saying that we should turn vacant offices into homes. That would be a mistake. Those properties would be chichi loft apartments for certain strata of people, not homes for local families who live in overcrowded conditions in my area. Although I want travel links to spur the building of homes—again, building homes near transport links fits into the hierarchy of transport because people have to travel less if they live near stations—I do not want that to happen at the expense of our valuable office space.
Generally, I support Crossrail 2 and Transport for London taking on more rail. I congratulate the Minister on his openness in talking to Members early about plans to pass more rail lines to the Mayor of London and Transport for London. Whoever the Mayor is, I support Londoners, through their Mayor and Transport for London, being more in control of the lines that serve them and help them get to their jobs. That is a good step. I hope we will see a similar openness and engagement from the Minister on Crossrail 2. I know he is not in a position to wave a magic wand or, more importantly, a cheque book at the moment, or to give us absolute deadlines, but I hope that, in the spirit of openness he has shown on other issues, we can have a similar dialogue. We can help him argue our case in the heart of Government for Crossrail 2, which will make a huge and beneficial difference to my constituency if we do it right and get cracking.
To pick up on the point made by my hon. Friend the Member for Lewisham East about Crossrail 3, if we do not get Crossrail 2, Crossrail 3 will be a pipe dream. However, we need to start now, and we need to lay the framework. We need to be disciplined about the planning, and we need to make sure all the ducks are lined up.
The Minister has here the nub of a body of people, from inside and outside London, who are willing to argue the case for Crossrail 2, and others would have liked to be here today but could not be. We will do anything we can to make this case stack up. We can always argue for the best and most wonderful railway line, but, above all, we want a railway line, and we can compromise if that is what it takes to get it delivered. However, we really want and need this line in my constituency and in London.
I congratulate my right hon. Friend the Member for Tottenham (Mr Lammy) on securing the debate. I also congratulate Members who have spoken on their knowledgeable and passionate speeches about their constituencies and the links they need.
There is little doubt that the taskforce’s final report set out a strong case for Crossrail 2. Credit should be given to Andrew Adonis, a former Labour Transport Secretary, and London First. The report is well researched, and it good to see a growing consensus, particularly on the line of the route. That is a tribute to the knowledge and hard work of all those involved.
The case for a new rail line between Hertfordshire and parts of Surrey and Middlesex, via a new tunnel between Tottenham and Wimbledon, is based on the increasing congestion that will accompany the projected rise in population and employment in London over the coming decades. As the report says—my right hon. Friend touched on this—employment in London is expected to grow by 700,000 in the next 20 years, with the population overall rising by 1.5 million. Increased congestion is expected to be particularly severe on an alignment running south-east to north-west, and that will not be significantly alleviated by Crossrail 1 or Thameslink.
Crossrail 2 has the potential substantially to increase capacity, relieving congestion on some crowded sections of the underground, particularly on the Victoria, Northern and Piccadilly lines. That could take great pressure off some major termini interchange stations, such as Euston, King’s Cross, Waterloo and Victoria. Beneficiaries would include commuters coming from as far afield as Southampton and Portsmouth.
This is clearly a persuasive document—almost as persuasive as the passionate speech by my right hon. Friend the Member for Tottenham—but there are questions to be answered. Crossrail 2 is an expensive project. The report costs it at about £12 billion. How will it be paid for? What relationship does it have to HS2, which was recently given the go-ahead by the Government, at a cost of £34 billion?
There is growing consensus that the completion of the second phase of HS2 will have significant consequences for the London transport system. Again, the report makes that clear. Even without HS2, passenger arrivals at Euston in the morning peak period are set to rise by 30% by 2031, and HS2 would perhaps double the number of people arriving at that time. That would seem to make the Crossrail 2 interchange at Euston essential. If HS2 and Crossrail 2 are interdependent schemes, surely their planning and funding must be looked at together.
I repeat my question, however: where is the money to come from? It has been suggested that the funding stream from Crossrail 1 could be redirected to Crossrail 2, but has not that money already been allocated to HS2? Obviously HS2 and Crossrail 2 cannot be funded at the same time with the same moneys. Could businesses make a contribution? After all, they will undoubtedly gain, as well as commuters. At the time of Crossrail 1 the then Labour Government gave the Mayor the power to introduce a business rate supplement. Could that happen with Crossrail 2? Has the Minister had any discussions with the Mayor or with businesses about contributing to the cost?
Indeed, what discussions have been taking place at all? I should like to know how much preparatory work the Government have already undertaken on the project. In particular, what analysis have Ministers made of the impact on London’s transport system of HS2 without Crossrail 2? That is the crucial question.
Transport systems are naturally interlinked. One part affects the others. Crossrail 2 is about London, of course, but it connects to other parts of the country. Our transport policy needs to be nationwide. How does the Minister think Crossrail 2 fits in with the bigger transport picture? It is vital that essential transport projects in other parts of the country should not be adversely affected by the concentration of funding in one geographical area, despite that area’s undoubted importance.
I congratulate the right hon. Member for Tottenham (Mr Lammy) on securing the debate and on his eloquent and intelligent speech. His opening remarks rightly stressed the history, from which, of course, we can learn. He is right: here we are celebrating 150 years of London Underground. London has long relied on transport for its prosperity. The first underground trains, in the 19th century, brought prosperity to London and the suburbs, as the right hon. Gentleman said, but that process has continued through the extension of the bus network in the 20th century, and today’s concentration on other aspects of travel, such as bikes.
The future of London’s economy will depend on transport systems, and the right hon. Gentleman is right to say we must think about what London needs in the long term to meet the demands of the economy, as well as of the people who live here. A modern, customer-focused transport system should meet that rising demand. Several hon. Members have referred to the demand forecast that shows that, without additional investment, crowding, on which we have made some progress, will return to unacceptable levels. There have been several comments on the growth of this great city, and it is right to think about the challenges that will arise as we try to meet demand for 2030 and beyond. The debate about Crossrail 2 is an opportunity to consider how to meet some of the challenges.
I welcome the work that has been done by Transport for London and London First. The hon. Member for Makerfield (Yvonne Fovargue) was right to praise the work that Andrew Adonis did. The proposal was also supported by the Mayor. I understand that it would provide a north-east to south-west transport link that would complement the current Crossrail project, and that it would complement and work alongside the tube upgrade project. It would also have the potential to support increased journeys right across the capital. As several hon. Members have pointed out, it would also, of course, help to create jobs, both directly, in construction, and indirectly, in communities. The right hon. Member for Tottenham spoke about what it could do for his constituency, and it would also have an effect in Hackney and the Lea Valley. Perhaps I should declare an interest, because I hope that it will bring jobs to Wimbledon too.
My hon. Friend the Member for Richmond Park (Zac Goldsmith), in an intervention, talked about extending the proposed line northwards to Stansted. That should be an option for both TfL and the Mayor to think about in the planning stages. I hope that they will do so, and that they will work in conjunction with Network Rail. Several hon. Members pointed out the interconnectivity and linkages of the systems. It would be inappropriate for the Mayor to think about connecting the line to Stansted without making sure that he was working in conjunction with Network Rail.
Does the Minister recognise the fact that the Maidenhead connection off Crossrail 1 is at the same distance as the Stansted connection would be for Crossrail 2? If we have achieved that connection into what might be called the south-east/London shires, for Crossrail 1, a Mayor should be able to do it for Crossrail 2.
I recognise that fact about distance. I was agreeing with the point about linkages and interconnectivities in planning, development and, hopefully, later construction; I think that the right hon. Gentleman was agreeing with me. Something particularly worth considering is what the work has spared—not only at Maidenhead, but some of the works further out at Reading. That is all as a result of work on Crossrail. The linkages with Network Rail are hugely important.
The case has been made, this afternoon, that Crossrail 2 will offer essential congestion relief and help to meet demand on the underground and at London termini. Also, as the right hon. Member for Tottenham and the hon. Member for Hackney South and Shoreditch (Meg Hillier) said, it will offer essential access and opportunity to areas of London that are less well provided with public transport at the moment, as well as suburban connectivity.
It is right to say that, as with Crossrail 1, the genesis of the idea was not the report; it has been around a long time. The idea of a Chelsea-Hackney line has been around in one form or another for many years; some people can trace it back to before 1920, I think. The proposals for Crossrail 2 have similarly generated wide support, and they would benefit London, without question.
The issues for the Mayor and TfL to consider carefully include the scheme engineering design and technical design, the consultation process and the views of those who will benefit, and the route alleviation procedures. They will also need to consider how the route will be funded. Those are clearly some of the challenges. For my part I reaffirm that the Government will work with TfL to safeguard the route for Crossrail 2, which is scheduled to start later this year. It is essential that we do so, because we have agreed with TfL that the previous safeguarding, which was last updated in 2008, would leave several areas uncovered. I was asked about that, and my understanding is that the safeguarding process for the new route will start in April.
I am grateful for that assurance. There is some urgency about the matter, which I hope the Minister recognises, and I am concerned about a hybrid Bill—something that must come from the Government. I hear what he said about the Mayor, and that is obviously right, but, as Crossrail 1 comes to an end in about 2018, we want a transfer of engineers, project managers and others on to Crossrail 2. I suspect that that will be part of the Mayor’s thinking, and I hope that the Government would support that approach, and understand why it is sensible.
I understand entirely the right hon. Gentleman’s point. That is why, in terms of the next stages, the challenge for TfL—I could have gone into it in greater depth, but he understood the point that I was making about why it is important for TfL to lead—is to go from the London First report into schematic detail and engineering detail. Those sorts of issues can be thought about and a business case properly developed only once the initial work is done. Clearly, one challenge for the Mayor and the Department—the Department wants the Mayor to undertake the challenge—is to look at building a comprehensive business case in the near future.
The right hon. Gentleman challenged me, saying that he had sat in my place and that he knew some of the tricks about discussions with the Treasury, and pushing things into the long grass. I also sat in his place and made exactly the same challenge to Ministers. He will know, as the hon. Member for Hackney South and Shoreditch said, that I do not have a cheque book in my back pocket and I will not be wielding it this afternoon. I can, however, give this commitment: before the next spending review, the onus is clearly on the Government to give serious consideration to Crossrail 2, its business case and the options for funding, and we will do so. The challenge, therefore, is for the Mayor to come forward with a proposition—a business case—that could be delivered in time for this spending review, and if not, it potentially looks to be a post-election issue. We can commit to giving the issue serious consideration, but the Mayor needs to develop that business case.
The Government’s record on making those commitments has been good. We have protected capital spending in spending round 10. We are determined to invest in essential infrastructure to support the economic recovery, both in London and nationally. We want to prioritise the schemes that offer best value for the taxpayers’ pound and the best growth potential. The business case must be developed and it is essential, therefore, that the Mayor and TfL show that the efficiency of the spending that they are using in this spending round, and in this spending review period, can be continued. The Mayor needs to ensure that there is the same rigour as has been seen—we would like to see more rigour—in terms of the efficiency of how he is spending the taxpayers’ pound when he develops the business case. For instance, it is also clear that in central Government we have borne down on administrative costs in that area. Administrative costs across Whitehall in this spending review have gone down by 33%, which is important. It is important to show that where we are spending the taxpayers’ pound, we are spending it efficiently.
The right hon. Member for Tottenham was slightly unkind to the Government—I would expect nothing less—in terms of the picture that he gave about investment in London. It was certainly not a picture that I recognised. A massive amount of transport investment is going into London. The Government have clearly, and rightly, recognised that London is the economic engine of the UK economy. In the last spending review, we provided TfL and the Mayor with a settlement, despite the tough economic environment, that allowed progress on the tube upgrade, Thameslink, and Crossrail. They have had certainty through this spending round, and another settlement and spending round will allow them to make their case.
Spending review 10 provided a multi-billion pound funding package for Crossrail, and we can think of the package coming through: for instance, there is £4.5 billion for the tube upgrade programme. The Jubilee upgrade that was completed last year has increased capacity by 33%. The Victoria line upgrade that was completed in January this year gave another 21% capacity. Delays on the underground have been reduced by more than 40% since 2007. That is not to be complacent. This is exactly the challenge. We have done these things to catch up. This is the 150-year celebration, and both the previous Government and this Government have made that investment to catch up. The potential for Crossrail 2 is the future.
The Minister rightly describes London as an economic powerhouse. I am pleased that the Government recognise that, and it has led to some investment. Will he illuminate for us the internal discussions in Government about whether his Department, obviously buying into that agenda through the investment in transport, has had any conversations with the Department for Communities and Local Government about its policy to convert offices into homes? It is the crack cocaine of developers and a quick buck for the owner of the property, but it means devastation for the economic powerhouse for which he professes Government support.
I am here to talk about what my Department is doing for transport to ensure that London remains an economic powerhouse, and I wish to continue on that line. I am sure that the hon. Lady will want to make that point to my colleagues—I am sure that they have heard it before. None the less, I do not think she would wish to stop all office development, or all offices with the potential for conversion being developed. It may or may not be the crack cocaine in certain areas, but it is providing essential housing in other parts of the capital. I have seen a number of social housing schemes being developed from old office blocks in south London as well, so one needs to be a careful about over-generalising.
The point I was making a moment ago is that the Government are, and have been, spending a huge amount of money on the tube upgrade system and the tube upgrade plan. The Mayor of London and the Secretary of State for Transport opened the Clapham Junction to Surrey Quays link of the London Overground, completing the overground orbital network, which allows people from south London to commute to the City and Canary Wharf without travelling through central London.
I know that will be of some benefit to the constituency of the hon. Member for Lewisham East (Heidi Alexander). I hear her points about the Bakerloo line. I say to her again that, as she will recognise, transport in London is a devolved issue, and it would be for the Mayor to come forward with proposals to the Government. Any proposal for London Underground to extend the Bakerloo line further in south-east London is a matter for the Mayor and TfL. They would have to come up with a plan, and potentially, if they seek to fund it in sponsorship with the Department, come to the Department. It is not for the Department to impose the proposal on TfL or the Mayor.
I hear what the Minister has said, but he will have heard my case about the population increase in south-east London and the existing problems with overcrowding on the overland rail network. Would he undertake to discuss the Mayor’s current thinking on the Bakerloo line extension with him?
Whenever I meet the Mayor, I discuss many things with him. I promise that when I next meet him—in one of our regular meetings—I will make sure that that is on the agenda. I hope that the hon. Lady will recognise that any proposal to extend the underground is a matter for the Mayor and TfL.
The Government are committed to extending the Northern line into Battersea. The funding agreement with TfL has enabled Crossrail to go ahead. The Government are making a contribution of some £5 billion over the lifetime of the project. That will transform the south-east, delivering faster journey times, and it is likely to generate 14,000 jobs during the peak construction period. It will have a major impact on London’s economy, and I therefore accept the potential for Crossrail 2 to have a similar impact.
On the Northern line extension, the Minister will recognise that it involves two stations. There has been quite some coverage of the Malaysians who now come to own Battersea power station and of the very luxurious flats that attract a lot of money. There is some disquiet, particularly in the London borough of Lambeth, that local people are being asked to pick up a tab for effectively two stations; the stations are, of course, important to London’s development, but there are other transport options around. I want some clarification on the funding formula for the Northern line extension, because Crossrail 2 could benefit the area greatly, and I am slightly worried that Londoners will be saddled with a bill that could overrun into billions, as the Jubilee line extension did.
I hear that point. I shall say two things to the right hon. Gentleman, if I may. He will recognise that although the Northern line extension involves only two stations, it has the potential to achieve a transformational impact in terms of housing development, job creation and journey times to the City and the west end—further job creation. He has asked me about the funding package. Because I am not clear on some of the elements of commercial confidentiality, I will, if I may, write to him and set out what is in the public domain or what I am allowed to tell him. I do not want to be injudicious and I hope that he will accept that as my response.
In opening the debate, the right hon. Gentleman showed that Crossrail 2 could have huge potential for his constituency. The Government have supported his constituency through the London enterprise fund, aimed solely at Tottenham and Croydon. There is further potential to regenerate London directly through some of the aspects of the Localism Act 2011 that are going to the Mayor. None the less, it is clear that the key thing is to ensure that the transport system is fit for the development and the regeneration of London, not only for our generation, our children’s generation and our grandchildren’s generation, but for the generation of Members of Parliament who will be sitting here in 100 years’ time saying that this was a new Victorian age.
The Government are clearly committed to supporting transport in London. Of course, it should not be the default position that the Government fund everything. In a world of constrained public sector resources, it has been recognised, rightly, that there is a role for alternative financing mechanisms, such as tax increment financing and the community infrastructure levy. I have no doubt that in formulating the business case for Crossrail 2, the Mayor will be considering those as well. We want TfL, London boroughs and the Mayor to share in the profits of London’s growth, giving them a much greater incentive to invest in business-friendly measures and to work with business to develop the measures that will ensure the regeneration and continued growth of this great city. That is one reason why some of those important changes took place in local government finance.
The Government will continue to support London, continue to support transport and continue to support infrastructure, not just today but tomorrow and through the next spending review. I welcome this debate on Crossrail 2. It has been an excellent debate. It has highlighted the potential for Crossrail 2 and what it might deliver for London. I note the invitation to address the all-party group’s inaugural meeting; I would be delighted to accept. The key challenge now is for the business case to be developed, so that it can be properly assessed and the project can move forward.
Erdington Walk-in Centre
It is a pleasure to serve under your chairmanship, Mr Weir.
Today I bring a simple message from my constituents—“Save our walk-in centre.” Over recent months I have led, together with the user group and the local community, a campaign to save Erdington walk-in centre—a centre at the heart of our local community and considered one of the best of its kind. It is being threatened with closure as a consequence of a review by the Birmingham and Solihull national health service of all walk-in centres in the city. The threat is not just to the centre on Erdington High street but to the one in Kingstanding, which is also in my constituency and in one of the poorest wards in Britain.
My constituents may not agree with one another on every issue, but if there is one thing on which there is unanimity of opinion, it is that they know a good thing when they see it, and they have rallied behind their walk-in centre. I was proud to see just a few weeks ago hundreds of local residents turning out on a freezing Saturday to protest on the High street in support of their much-loved and much-used walk-in centre.
The Erdington walk-in centre offers a general practitioner-led service to walk-in patients from 8 am to 8 pm, seven days a week, including bank holidays. In 2012, an average of 76 patients a day were seen in the centre. The centre participates in accident and emergency diversion when necessary and accepts some category C ambulance referrals. It has close links with two other units in the same building—the New Attitudes sexual health team on the floor above and the Health Exchange team on the floor below—and houses some community clinics, for example for drug workers and users.
The centre has served to support the local population in accessing quality GP-led health care through extended opening hours that are convenient for patients, including those who are registered with a GP but have difficulty accessing services during normal opening hours. The centre also provides an important service to vulnerable local people, including those who are unregistered or homeless. The service means that they have access to high-quality medical care.
I know first hand how the centre matters—I have used it myself. Indeed, I have used both the Erdington and Kingstanding walk-in centres. Much more importantly, I know, from talking to literally hundreds of local people, just how important the centre is to the local community, providing accessible and high-quality health care in the heart of our High street. The closure of the much-used and much-loved facility would be a devastating blow. In the words of one of my constituents, Nathalie Lynch:
“Anyone with children knows how essential it is to have quick access to medical help. My doctor’s surgery is so oversubscribed that I can’t get an appointment. The walk-in centre has been a lifeline. On three separate occasions, my son has received nebulisers for his breathing and then been sent on to hospital. What would he do without this service, I dread to think.”
Currently, the nearest alternative providers of urgent care services are the accident and emergency departments at Heartlands and Good Hope hospitals. If we lose the walk-in centre, not only will the health of local people suffer but, if local people are desperate, they will go to those A and E departments, in turn costing the taxpayer more.
Although the decision to close the walk-in centre—if that decision is made—lies with the health service, the true responsibility lies with the Prime Minister and the Government. As cuts to health care start to hit the front line—almost 7,000 nursing posts have already been lost since the general election—NHS bosses have been put in an impossible position by the downward pressure created by the top-down reorganisation of the NHS.
Despite the Prime Minister’s pledge to protect the NHS, health care bosses in Birmingham are struggling with a £76 million cut, forced on them by the Government. That is a direct result of the Government’s top-down reorganisation of the NHS, which is threatening the vital services we rely on most while costing the taxpayer £3.5 billion—all that from a Conservative party that pledged before the general election that there would be
“no more top-down re-organisation of the NHS”.
In the party’s manifesto for the 2010 general election, it pledged that
“every patient can access a GP in their area”
and not have to travel miles to meet their urgent care needs. It is wrong that local Tories who pledged all those things before the general election are now trying to wash their hands of responsibility for what their Government are doing and for that which they said should never happen.
It is vital that Ministers know the impact that their decisions will have on local communities and people. What happens when local walk-in centres are closed? People like my constituent Paul Flynn, whose 19-month-old twin girls had both caught viruses that became chest infections on a Sunday, when his doctor’s surgery was closed, would be forced to go to A and E. However, because Paul was able to take his daughters to the walk-in centre on Erdington High street, they were immediately put on nebulisers to alleviate their breathing difficulties. In his words:
“We do not know what we would have done without the walk-in centre.”
Or take Audrey Smith, a local teacher, who would be forced to take time off work if she wanted to see her GP, particularly at a time of discomfort or pain, because her surgery has restricted hours from Monday to Friday. Without vital facilities that provide accessible urgent care services, many people like her would be forced to choose between taking time off work and attending A and E.
Just last night, I received a heartfelt e-mail from a constituent, Peter McDonald, who had had a heart attack just a few yards from the walk-in centre on Erdington High street. Peter managed to walk in and see a doctor within minutes, who gave him a GTN spray before he was taken to hospital. In his words:
“I owe my life to the doctors at the centre. If the walk-in centre wasn’t there, it might have been a different outcome. This centre must stay open.”
Sadly, walk-in centres are closing. We are seeing the results, as A and E waiting times are going up, with 47,000 more people waiting more than four hours since September compared with last year. More than 100,000 extra patients have now waited longer than four hours for treatment in A and E since the start of 2012-13.
What is more, A and E departments are themselves being closed. Before the 2010 general election, the Prime Minister toured marginal seats, promising to save accident and emergency facilities in a cynical attempt to win votes. He promised a “bare-knuckle fight”—those were his words at the time—to save accident and emergency services at 29 hospitals, but 12 of them have now been closed or downgraded.
Two and a half years into this Parliament, we have seen broken promise after broken promise from the Prime Minister on the national health service. Not only has he cut NHS spending in real terms but his Government’s reckless approach to top-down reorganisation is creating increasing pressures and consequently casualties, which might include the walk-in centres on Erdington High street and in Kingstanding in my constituency. The message before the election was one that valued those walk-in centres; the message after the election has been very different, with more and more services being closed.
What has been the response of the Government thus far to the closure of 54 walk-in centres nationally since 2010? They have made the local NHS responsible for NHS walk-in centres. It is true that the last Labour Government realised that local people best know what is in their interest, so allowing health and well-being decisions to be taken locally, including through primary care trusts. Given what is now happening, however, I have to say to the Minister that if he dams the river at its source, he should not be surprised if the water runs dry downstream.
In conclusion, the Erdington and Kingstanding walk-in centres both provide accessible high-quality medical care to thousands of local people. I again stress that the Kingstanding one is located in one of the poorest wards in the whole of Britain. There is no alternative service within the immediate locality. If the vital centres on Erdington High street and in Kingstanding close, the hard work of the dedicated staff that has gone into the development of the walk-in centres will be wasted, as will the considerable investment that has gone into them, and local people will again have to travel miles for their urgent care needs.
The closure of the much-loved and much-used facility would be a devastating blow. That is why, with the user group and the local community, I have led a campaign against closure for the past five months, and that is why I bring this unmistakable message from the community I represent to Parliament today. I am grateful to the Minister for agreeing to meet representatives of the patient and user group. It is right that the case for the walk-in centre be heard on the Floor of the House, and that the voice of those in the community who love, use and value their walk-in centre should also be heard.
It is a pleasure to serve under your chairmanship, I believe for the second time, Mr Weir, and to reply to the hon. Member for Birmingham, Erdington (Jack Dromey), whom I congratulate on securing this debate. I acknowledge his hard work on behalf of his constituents in campaigning for the retention of Erdington walk-in centre, and the strength of feeling locally, which he eloquently outlined.
Before I move to the local context, it would be remiss of me not to pick up the issues of national consequence raised by the hon. Gentleman. This Government will have invested £12.5 billion more in the NHS between the last election and the one in 2015, which is providing some, albeit small, real-terms growth in the NHS budget. Even though we are in difficult economic times, the Government have made a clear commitment that the NHS is a special case that needs further investment, which we are providing. It might be worth the hon. Gentleman taking that up with one of his Front-Bench colleagues, the right hon. Member for Leigh (Andy Burnham), who in contrast said that such investment was irresponsible. Indeed, the Labour party running the NHS in Wales intends to make an 8% real-terms cut in its budget. It is worth reflecting on the reality of the situation before getting drawn into any political rhetoric.
The hon. Member for Birmingham, Erdington is right to raise the specific pressures on A and E. We know that A and Es are being accessed by increasing numbers of patients, and we know from history that one key driver of that was the previous Government’s decision to contract out-of-hours GP care away from local GPs. One direct consequence of that has been additional pressures on accident and emergency departments. In many ways, that pulls against what he spoke about and what I believe in, which is the need to deliver more and higher quality care in the community. That cannot be nine-to-five or nine-to-six care in the community; it has to be all-day, 24/7 care, which is what integrated good health care looks like. I believe that the decision was bad. I saw its consequences when I worked as a casualty doctor in A and E. We have lived to regret it, and it has been badly to the detriment of patients.
The report on the Mid Staffordshire NHS Foundation Trust graphically outlined the fact that targets have often got in the way of front-line patient care. That is why this Government, when they came to power, relaxed the 98% target for the four-hour wait in A and E and set it at 95%, which doctors, nurses and my fellow health care professionals said was in the best interests of patients. Too often the four-hour target meant that a patient who perhaps had a broken toe was given priority ahead of a patient with potentially life-threatening chest pain. That was not good medicine or patient care, but showed targets getting in the way of looking after patients effectively, a lesson that was graphically depicted in the Francis report on the Mid Staffordshire trust. We must learn such lessons and acknowledge that although targets can have a place in health care, we have to trust and listen to front-line health care professionals if we are to deliver high-quality care for patients.
On the national context of urgent care and accident and emergency care, the Government are committed to developing a more coherent 24/7 urgent care service in every part of England. That will provide universal access to high-quality 24/7 urgent care services, so that whatever people’s needs or location, they will get the best care from the best person in the best place and at the right time.
The NHS has always had to respond to patients’ changing expectations and advances in medical technology. As lifestyles, society and medicine continue to change, the NHS will also need to change. The reconfiguration of urgent care services is therefore about modernising the delivery of care and facilities to improve patient outcomes, develop services closer to home and, most importantly, save lives. We are clear that, as the hon. Gentleman outlined, the reconfiguration of front-line services is a matter for the local NHS. That was the previous Government’s policy and is this Government’s policy.
Services should be tailored to meet the needs of the local population. We expect proposals for service changes to meet four tests: to demonstrate a clear clinical evidence base underpinning any proposals, focusing on improved outcomes for patients—in other words, to save lives—and to show clear support from GPs as the commissioners of local health-care services, strengthened arrangements for public engagement and support for patient choice. Even when all those tests are met, if the responsible local authority is concerned about a decision, it will have the option to refer such a decision to the Secretary of State.
Our vision for urgent care is to replace the ad hoc, unco-ordinated system that has developed over the past few years—characterised by poor quality and too much variation in care throughout the country—with a more consistent system that delivers improvements in patient care. The Government are committed to putting GPs in charge of commissioning urgent care services. We believe that empowering GPs and other health professionals will achieve better and more patient-focused services.
It would be wrong not to talk about the winter pressures faced by the NHS. In response to those pressures, we have put about £330 million of additional money into the NHS to deal with them. I am aware that local hospitals in the Birmingham area recently issued a statement advising patients to attend A and E only for matters requiring urgent attention, because of the pressures of demand experienced by emergency departments. There is always more pressure on the NHS during winter months, with more demand on urgent and emergency care services, and this year is not different. During October and November 2012, NHS Midlands and East scrutinised winter plans, escalation triggers and protocols across its health economies, and it is monitoring pressure on health services during the winter across the whole of the strategic health authority area to ensure that patients continue to have access to high quality NHS care in Birmingham and elsewhere.
I turn to the local context, which is obviously of importance to the hon. Gentleman and his constituents. He is a tremendous advocate for his constituents, and has eloquently outlined some of the local concerns, which relate to an NHS review of urgent care provision in Birmingham and Solihull. The clinical commissioning groups in the area are developing an urgent care strategy to improve access to and integration of services for people with urgent health care needs, to make the system simpler to navigate and to avoid duplication.
I understand that local commissioners have engaged stakeholders in the process, and they include clinicians, patient groups, providers and health overview and scrutiny committees. The local NHS has collected evidence from local people to understand the usage of current urgent care services, such as walk-in centres.
The hon. Gentleman will be aware that the local NHS is now developing a draft strategy outlining some initial options. However, it is important to make it clear that as yet no decisions have been made. That is for local determination, and it would not be appropriate for me to comment further on the detail of the urgent care review.
I am assured by the local NHS that engagement with local people and other stakeholders will continue over the coming months to ensure their input in the final proposals ahead of the formal consultation later in the year. Of course I expect any proposals to meet, where appropriate, the four tests for service change.
I understand that the hon. Gentleman met representatives of Birmingham CrossCity CCG in December 2012 to discuss the review, and I encourage him to continue engaging with local NHS staff on the matter.
It is certainly true that we had a meeting in December and that it was clear beyond any doubt that there was a real threat to both the walk-in centres. A commitment was given that by the end of January there would be a route map of the next stages of process and engagement, but here we are in the first week of March and it has yet to be produced. The suggestion now is that it might not be with us until mid-April at the earliest. Although I understand what the Minister is saying in good faith about the importance of proper engagement with the community, I have to say that those responsible in the national health service in Birmingham have been dragging their heels.
The hon. Gentleman is right to say that when there is talk of service change, effective engagement is important and must be dealt with in an expedient manner. There must be an awareness that the prospect of any change can lead to understandable concerns among both staff and patients. A time of change is always potentially unsettling. I know that he, like me, will want to encourage the CCGs to come to the table and address this matter more effectively than they have done. I will endeavour to ensure that there are representatives from the CCGs at the meeting that we have later in the month, as that will be an effective way of helping to facilitate matters and bring them to a more speedy resolution.
In conclusion, I encourage local people in Birmingham and Solihull and their elected representatives, including the hon. Gentleman, to participate in the engagement process and subsequent consultation to ensure that their views are taken into account. I look forward to meeting the hon. Gentleman later this month to ensure that we do all we can to facilitate a speedy resolution of the matter and to ease these times of uncertainty that are faced by his constituents.
Thank you, Mr Weir, for calling me to speak. It is an absolute pleasure to serve under your chairmanship this afternoon. I also thank the Minister for turning up. Our last encounter in an Adjournment debate was on the rather more controversial issue of trade union reform. I can assure him that although this afternoon’s debate may be slightly less spicy, the topic that we are discussing will nevertheless be just as important.
I was prompted to apply for this debate after recently attending the opening of a new IT recycling facility in my constituency by a company called PRM Green Technologies. As a declaration of interest, I am delighted to say that several of the company’s directors have travelled down from Cannock to Westminster to be here for this debate this afternoon. I am very happy to see Richard Manning, Paul Mallet and Tim Hawkins sitting in the Gallery. If I get any of the IT detail wrong, no doubt they will intervene on me from a sedentary position.
Well, perhaps not.
What I learned from my recent visit to PRM Green Technologies was very interesting. Here was a local firm exhibiting strong and sustained growth, and providing much-needed jobs for local people; in fact, it recruited especially from the disadvantaged and long-term unemployed. Yet it appears to be deliberately operating at a competitive disadvantage, because it has long been the IT recycling industry’s standard to charge end users and organisations, including public bodies such as schools and hospitals, to dispose of all their old, unwanted and end-of-life IT equipment. However, PRM offers that service for free while remaining a profitable business.
Whenever an organisation has finished using its IT equipment—whether that equipment is computers, laptops or other hardware—and wants to get rid of it securely, which is an important issue that I will come on to in a minute, the accepted practice is to pay a firm to collect the equipment and take it away. There are sensible reasons for doing so, because a company is paying not only for its items of IT equipment to be collected as people might pay to have household waste collected but for a service whereby the data left on them will be wiped and they will be securely recycled. That is especially important if there is sensitive material on the equipment, as might be the case if the computer had been used in a hospital to store medical files, by the police for criminal records or by a school or care home to store data on vulnerable children. The last thing that we want is British police computer data ending up for sale on second-hand computers in Iraq, as has happened recently.
However, PRM Green Technologies in Cannock offers all those services—the collection, the secure recycling and the data wiping—for free, and does so at a national level. Its business model does not charge the service user a single penny to recycle their redundant and end-of-life or damaged IT equipment. As I learned on my visit, the company already has more than 4,000 customers, who enjoy a service that is completely—100%—free of charge.
Why is all this important, and why have I secured the debate? Well, I have a simple question this afternoon: if this service is available for free, to nationally agreed standards of data cleansing, why would any organisation—public or private—pay for the same service? If we think about it, this process has the potential to be incredibly important for the public sector as a whole, which, as we know, is already struggling to deal with budget reductions in this age of austerity. If a school spends money on paying to have its old IT equipment recycled, that money cannot be spent on teachers, sports facilities or a new playground. If an NHS trust spends money on paying to have its old IT equipment recycled, that money cannot be spent on doctors, nurses or medicine, and if a council spends money on paying to have its old IT equipment recycled, that money cannot be spent on libraries, leisure facilities or resurfacing roads, which are services that we know all our constituents rely on and prioritise.
Let me give just one example. Many of PRM’s customers are education providers, such as schools, colleges and universities. The company calculates that it alone has saved the education sector in excess of £5 million, which is the same amount of money that could have employed a total of 237 teachers. Just imagine what that could mean if the system were rolled out nationally? If a small company from Cannock, with 28 employees, can effectively pay the salaries of 237 teachers, how many more teachers could be provided nationally if school budgets were better managed? This one firm also has 17 local authorities on its books, as well as three NHS health care trusts. Again, think of how many council staff or medical professionals could be employed if all the other local authorities or health care trusts in the UK did not waste their budgets on paying to have their old IT equipment recycled.
I have a number of questions for the Minister. First, what can the Government do to make public bodies aware that there are companies—not just PRM in my constituency but other companies—that will absorb all the costs of recycling all of their old IT equipment? Secondly, what can we do to ensure that public bodies do not waste their budgets on IT recycling and instead spend every penny on the front line? Thirdly, will he start the process with his own Department and write to me to say whether the Cabinet Office spends any of its departmental budget on disposing of its old computers? Finally, will his Department write to the other Whitehall Departments to ask similar questions of them?
I ask those questions now because if so many organisations, bodies and individuals can already see the benefit of using PRM—not only once, but time and again—why are more sections of society, industry and Government not waking up to the fact that, even in these austere times, there are companies run by individuals such as those sitting in the Gallery today that will charge nothing for IT recycling? If they did wake up to that fact, they could—indeed, would—make a difference to their organisation’s ability to serve the public.
Having said that, we need to go slightly further. We must ask ourselves what challenges, real or perceived, prevent Departments or larger parts of the civil service from availing themselves of such a service provision for no cost whatever, and therefore from providing far greater value for money for the taxpayer?
After talking to PRM when I visited its facility, I learned that the biggest issue regarding Government assets would appear to be security. The feedback that PRM receives is that the possibility of events such as data being lost, assets going untracked and personnel entering sites without the correct checks being in place presents great concerns.
People might ask, “Are companies that perform this service for free actually capable of providing the level of data security required, and yet still maintaining zero costs?” To do so, all of a company’s staff would need to be vetted to BS7858 standards. Its premises would need to protected by several layers of physical security, including two external rings of steel, 24-hour security guards, CCTV monitoring 24 hours a day, monitored alarm systems, internal access control and interior steel cages that are protected 24 hours a day. All that security is needed to ensure that the data remain secure once they have been collected from an organisation and before they are deleted and wiped. A company would need to destroy data assets using Government-approved software and devices, as well as special shredding techniques. Its vehicles would need to be fully liveried, satellite-tracked and have CCTV on board, to further protect the assets that the company carries on behalf of its service users. Surely a company cannot do all of that without charging its customers. Well, companies can and do. PRM does all that, and other companies around the country do it too. Quite simply, there is no catch. And if PRM and other companies can do that, concerns about data security need not be valid and need not be a reason to continue with existing paid-for IT collection contracts.
How does PRM manage to offer such a service? It does so because it extracts every little bit of residual value from every kilogram of every item that it collects and processes, and because it has chosen to model its business in this way it ensures that it extracts maximum value from IT equipment, therefore guaranteeing minimum waste and landfill. If a company has to absorb its own collection costs, not least the petrol and the vans, let alone the infrastructure that I have described, it makes sure that it extracts every bit of residual value from every kilogram of every item of IT equipment it collects, because it has to.
However, here is the depressing bit. Although companies such as PRM Green Technologies can offer that service, increasingly Departments and the NHS are unable to respond to its unique offer. In initial contacts, PRM often talks directly to the responsible IT department or the finance department, but often it finds that current contracts blanket-cover all aspects of a service, otherwise known as the dreaded outsourcing, or facilities management. By way of a total tangent, these are the same sort of all-inclusive outsourced contracts that led to the TV chef, James Martin, discovering that Welsh hospitals could not buy Welsh lamb to serve to their patients, because their outsourced contractor bought all its lamb from New Zealand, even though lambs were literally grazing on fields outside the hospital and local farmers could charge almost 50% less than the New Zealand imports. I digress, and that is a debate for another time, but the point is valid. Even if a Department wanted to be involved, it is often tied into a cost-making exercise.
Senior people in a Department or buyers in councils are often surprised that this free service even exists. What should be most shocking of all to the Minister is that often, their tendering model cannot cope with assessing tenders that have a negative or zero value in the calculation. Perhaps the Minister will think about that for a second: because councils cannot conceive of not paying for the service, the computer says no. That being so, we must examine the charges that are incurred across every part of Government and question the structure of contracts. Those charges appear to be part of much larger and more complex contracts of service provision, which we need to investigate to render them more transparent for the public good.
What can be done to ensure better procurement of goods and services throughout the public sector, allowing schools, hospitals, police forces and councils to avail themselves of a free IT recycling service? Perhaps we as a society need to rethink our negative attitudes to people who offer something for nothing. In this instance, that should not apply, because as I have already explained there is always residual value in IT equipment, which all providers need to ensure that their commercial model is viable. In short, even companies that are paid to collect unwanted computer equipment still need to be able to sell them on or break them down for parts to be a viable, profitable business. The difference is that some companies, such as PRM, have the social conscience not to skim extra cream off the top.
All that the organisations need to know, whether police forces, councils, hospitals, or businesses, is one thing: where are their assets going to end up? It makes more business sense for IT recycling providers to ensure that they can extract maximum value from assets without charge to the service user. If they get paid only for what they can repair, refurbish and resell, or recycle in full, it cannot be in their interest to dump or dispose of these items incorrectly, as they will not get a penny for any item dealt with in such a manner. With asset-tracking and reporting systems in place, the customer can be further reassured of their good intentions.
There is no inherent greater security in a firm that charges to pick up IT equipment, and then recycles it and sells it on, than in a firm that picks it up for free before recycling it and selling it on. In fact, the reverse may be true. If a company is making a margin on picking up the goods, they arguably have less incentive to securely recycle them and squeeze out every penny of margin, as they already have some cash in the bank simply from collecting the items.
Perhaps the greatest problem presents itself when the very people tasked with ensuring that assets are disposed of correctly are poorly equipped, through no fault of their own, to make an informed decision about how to deal with that problem. For example, the head teacher of a primary school, who deals with the school’s entire IT assets and support, may receive little direction on how to approach the challenges of safe and correct disposal of IT equipment while ensuring value for money for their school. To that head teacher, paying for such a service might seem a sensible, industry-accepted practice, not least because they might never have heard of alternatives that could mean that they could pay for a new classroom extension, playground, or even computer room.
I do not know how to change those perceptions, but I know that the Minister, wearing his other hat, has responsibility for communicating the not entirely straightforward concept of the big society. In responding, perhaps he will draw on his communications experience, and the power, leverage and tentacles of his Department, in saying how we can change people’s perceptions. Once the benefits are fully realised, many further positives can flow, with public money being better directed to the front line rather than wasted in unnecessary ways.
Even though the waste electrical and electronic equipment directive, the European Community directive that requires all our electrical items to be registered and recycled safely, has placed the onus of the cost of recycling on the producers and importers of these items, that has not filtered down to many of the organisations previously mentioned. Despite computer companies having to adopt membership of approved compliance schemes and having to pay to offset the large tonnages of equipment that they place on the market every year, there are still just as many companies in existence that charge for the service that they provide.
Every electrical item has some degree of residual value, and with modern recycling techniques there is no reason why that value should not be returned in some measure. If a service provider, such as PRM, is prepared to speculate that the residual value in any goods collected will be greater than the overall costs of collecting and processing them, surely that must be to everybody’s advantage.
There is a moral case for public sector organisations to spend as many pennies as possible on their front line, rather than paying for redundant IT equipment to be taken away, and a financial case for spending more money on teachers, nurses, doctors and policemen, and less on IT waste recycling.
How do we make the decision makers in these organisations more accessible to the providers of these free services? How do we make them more aware of the alternative, cheaper options that exist? Should we compel them, by law if necessary, to use free providers, rather than pay for the equivalent service? What can we do about the outsourced contracts that I mentioned, which tie big organisations such as NHS trusts into schemes they cannot opt out of even when they see a better alternative? What can the Government do to help the public sector help itself in respect of bearing the costs of recycling old IT equipment?
Those are the questions for the Minister, who has a huge opportunity to make massive savings across the public sector at no cost to jobs by ensuring that no one spends a single penny to recycle their redundant and end-of-life or damaged IT equipment, and that people instead use firms such as PRM Green Technologies, which is a great example of a private sector firm acting in the best interests of the public sector, taxpayers and society as a whole.
Mr Weir, I am delighted that I did turn up, not least to serve again under your chairmanship, and to listen to a crackingly good speech by my hon. Friend the Member for Cannock Chase (Mr Burley). He is right. This debate is a lot calmer than the previous one he initiated on trade union reform, although not so well attended. However less spicy, he is entirely right. We are debating the fundamental question of how committed the Government are to getting best value for the taxpayer, because every £1 we save by driving greater efficiency in the procurement of goods and services is £1 we do not have to cut from something else and £1 we can invest in the front-line services that our constituents care about. That matters enormously.
I congratulate my hon. Friend both on securing this debate and on the way he made his case. As an excellent local MP, he is a great champion of local businesses. I extend my welcome to the directors of PRM Green Technologies, which seems to offer an excellent service, as is substantiated by its 4,000 clients and counting. The company is clearly working, and it is an example of a good British business that is coming up with new solutions and offering real value at a time when we need to challenge the system, which spends so many billions of pounds of our money, to be more efficient and effective.
As a Cabinet Office Minister, I felt genuine shock when I saw the attitude that we inherited to public money. We embarked on a process of doing straightforward, simple things to make Government procurement more efficient, and it is genuinely shocking that we are already delivering billions of pounds a year in savings to the taxpayer. That should not be possible, but it is, due to the previous Government’s attitude to public money.
The debate draws out the system’s attitude to risk and how good people are at buying things. Too often, and we are trying to break down this frustration, procurement seems to be too much about process and not enough about what we are buying and how we can get best value. There is too much risk aversion and too much emphasis on box-ticking. People are not asking, “What are we really buying? Do we really need to spend this money? Isn’t there a smarter way of doing this?” If there was ever a time to break down that culture, it is now, because of the pressure to be more efficient in how we use taxpayers’ money. That matters, because every £1 we save is £1 we can put to more productive use for the benefit of the people we serve.
The debate is also about the need to create the conditions to open up the system to smaller, more entrepreneurial, more creative and more dynamic organisations. There are such companies across the spectrum, in both the for-profit sector and the not-for-profit sector. There is a similar complaint about the difficulty of getting into a system that is geared to buy from the big, the safe and the very expensive, which we must try to break down.
I have several assurances to offer my hon. Friend. The first may sound a bit motherhood and apple pie, but I assure him that the Government support recycling IT equipment for both financial and sustainability benefits. I would expand on that if I had more time, but it is a point of principle that is worth asserting. Recycling IT equipment matters to us.
We are aware of the value of surplus and redundant IT equipment. Through proper recycling, the Government may not only dispose of redundant equipment at no cost but profit from the sale and reuse of the scarce and valuable resources that it contains. We are voracious in trying to get better value for the taxpayer, and we are working to ensure that as much of that value as possible is extracted and returned to Government.
I refer my hon. Friend to the “Greening Government: ICT Strategy,” which was published in October 2011—I am sure he keeps a copy by his bed—which sets out how Government information and communications technology, including its end-of-life reuse and recycling, will be made green. The strategy includes the adoption of a clear waste hierarchy in which surplus equipment is reused or refurbished to avoid the unnecessary procurement of new equipment, thus saving money and reducing waste. The strategy also includes the donation of surplus equipment to benefit big society initiatives—I am grateful to him for mentioning the big society—and the recycling and reuse of ICT equipment components and materials. The strategy clearly articulates the value of recycling redundant ICT equipment, and metrics are being introduced to ensure that it is done effectively across all Departments.
My hon. Friend asked what we were doing to ensure that public bodies did not waste their budgets on IT recycling but instead spent them on the front line. The Government Procurement Service offers public bodies a method for recycling ICT assets under the supported factories and businesses framework agreement, RM722. The agreement ensures that equipment is recycled responsibly and maximises the cash return from the extraction of valuable components and materials, which has seen limited but growing take-up since launch. In the financial year 2011-12, and in the current financial year to date, the agreement has been used by at least 33 bodies, including schools, councils, agencies and Departments, so it has made a decent start.
I am grateful to the Minister for his bedtime reading recommendation.
IT recycling is an opportunity that will only get bigger as more IT equipment is bought and new ways of working progress into all parts of the public sector. He may be aware that some councils now have a policy that, when an employee leaves and a new employee takes on their role, the old employee’s laptop is not given to the new employee. The policy is that the old machine must be destroyed and that the new employee, even if they are doing the same job, must have a completely new laptop or desktop. The problem, therefore, is only going to get bigger, and the opportunity for saving the cost of recycling will be ever greater.
If we are ever to break down that culture, now is the time, because there is no organisation in the public sector, or arguably in the private sector, that is not thinking about how it can be more efficient and reduce unnecessary costs.
There is an awareness of the importance of IT recycling, and there is a public strategy to which we can be held accountable—the “Greening Government: ICT Strategy.” The GPS offers a support mechanism to public bodies that is beginning to be taken up.
The Cabinet Office is keen to show a lead—I will write to my hon. Friend on this—but our ICT services are provided by the Treasury under the public sector flex framework agreement as part of a fully managed shared ICT service. I am using this debate to poke at the issue and at the leadership we might be able to show.
If there was ever a time when we have an opportunity to change the culture and to instil much more efficiency and creativity, it is now, because of the financial pressures upon us. We also have a friend in the process, which is the Government’s commitment to much greater transparency on how public money is spent. Down to the last £500, the public and companies such as PRM will know and will be much freer to challenge the spending of local authorities. As we see leadership, and as we see more public sector organisations showing initiative in doing things better, there will be more information available about those that are not doing so. We in this place, and people outside, will therefore be much freer to challenge inefficiency and say, “You can do this more intelligently. Look, they have done it over there.” We have not had such information, and we are only just beginning to get proper information about the cost of IT recycling across Government. That is our inheritance, because previous Administrations did not care enough about the cost of IT recycling, and they did not care about efficiency. We are genuinely committed to changing all that.
Question put and agreed to.