Wednesday 5 June 2013
[John Robertson in the Chair]
111 Telephone Service
Motion made, and Question proposed, That the sitting be now adjourned.—(Karen Bradley.)
May I welcome you to the Chair, Mr Robertson, and say what a pleasure it is to serve under your chairmanship? I also welcome the Minister and her shadow, the hon. Member for Copeland (Mr Reed), to their places, as well as other colleagues. I am delighted to have secured this debate on the operation of the 111 telephone service and its effects on emergency services. The service is still in its early days of operation. It has yet to be introduced in my own area of North Yorkshire, although the roll-out is expected to commence in early July.
My starting point is that I believe that the 111 telephone service could be a useful tool for out-of-hours services and patient treatment, but that some alarm bells have already been set ringing in areas where it has been rolled out. It is not my intention to go through all aspects of the general practitioner contract and out-of-hours services; I want to look at the narrower point of the potential impact where the 111 telephone service is not working.
In my view, the service might offload problems on to accident and emergency and, indeed, the ambulance service. A lot depends on the content of the script that is used and who sets the script, because the time taken should be as short as possible to allow the swiftest access to nurses and medical advice for those in palliative care, terminal care and other regular patient care, such as catheter patients. The length of time before a patient, or someone acting on their behalf, is passed to a medically qualified adviser—a nurse or doctor—is absolutely crucial.
I want to refer to my family history to illustrate the very real problems being experienced. It relates to one of the pilot areas, County Durham, where my father was a GP, but had long been retired. The carers looking after him in his home, or occasionally me, had had consistent recourse to the 111 service. The last occasion when we used the service in relation to my father was on Sunday 4 November last year. I had reason to call the number, and I explained that my father showed worrying signs of a urinary tract infection. Being a doctor’s daughter, I was well qualified to talk about such infections, which my father had had, on and off, for some two or three years.
When I called 111, I got the ritual reply of sticking very closely to a script, which I found completely inappropriate at times. I explained my father’s condition, but the responder insisted on sticking religiously to the script—asking whether the patient was breathing, whether they were bleeding—and I kept saying that I was not reporting an accident but a regular condition, the symptoms of which were extremely plain, and asking whether I could, please, just be passed to a nurse or doctor. I said that we probably needed a doctor to attend to confirm that there was an infection and to administer the relevant antibiotics.
I have to say that in the end I hung up in sheer frustration, 10 or 15 minutes into the call, because I could tell that I was not getting anywhere quickly. I had previous experience of using the 111 service, and I like to think that I am not prone to flap unnecessarily, but I found that the system failed. I then called 999, and an ambulance was dispatched immediately and attended to my father within half an hour. The paramedics confirmed my suspicion that the condition was an infection, and said that the patient was too ill and frail to travel some 25 miles on country roads in an ambulance, so that was not an option. They used their direct line to call a doctor, but even then, it took three hours for one to attend. In that case, from first calling 111 to the doctor’s arrival, about three and a half to four hours had passed.
My father subsequently died on the Thursday of that week, 8 November, and I believe that the infection had obviously taken such a grip that his death would have been very difficult to prevent. He had lived to a very grand age, and we were just grateful for the treatment he did receive. However, that example shows the pressure points that need to be addressed and which, I regret to say, have not been addressed, even though I have raised the issue, in relation to my family experience, on two or three occasions.
For the 111 service to work effectively a degree of flexibility has to be built into the system and the script. It would be helpful if the Minister told us who is responsible for setting the script. I would argue that doctors, working with community or district nurses—those medically qualified—must work out the script, so that it diverts regular patients who can be taken off it at the earliest possible stage.
What is particularly poignant for me and my family is that my father had been a local GP in that area for some 30 years. He retired as a senior partner, ironically through ill health. He attended patients in all weathers and at all hours. My father was from a generation of GPs who worked all hours: he worked every other night on call and every other weekend on duty, and he always put his patients first. It is obviously a source of some regret that he did not have similar access to a GP in his own hour of need.
The 111 service was piloted in several areas, and I am drawing on my experience of the one in County Durham before the service was rolled out nationally. I want to make some suggestions and pose some questions. It would clearly make sense for regular patients—such as those in palliative care, terminal care and catheter care—to be diverted to nursing or other medically qualified staff as early as possible in the process. In North Yorkshire, the intention is that that will happen when the service is rolled out, but I want confirmation that, now the problem has been identified, it is being addressed in all areas, including pilot areas and ones opting for early roll-out. That would save more time for those who were in urgent need of care, short of the 999 service.
We must all be aware that if a patient or someone on behalf of a loved one phones, they tend to be quite distressed and distraught, and they do not want an automatic responder to stick blindly to some script that does not fit their or their loved one’s condition. If calls are not responded to quickly, those calling will simply divert to other emergency services, such as the ambulance service and accident and emergency—I am the first to admit that that is what I did in those circumstances—because people are just desperate to get medical care.
The key to the success of the 111 service is the speed and efficiency with which one’s calls are responded to and with which access is given to medical advice from doctors or nurses, so I want to take this opportunity to ask some questions. What is the average ratio of call responders—those reading out the script—to GPs and nurses on duty? It would be helpful to know that average ratio in each area where the 111 service is in use. What is the average response time to the initial call? What is the worst response time and what is the best? What is the average time before a caller is transferred to a medically qualified person? Is it normal to expect a delay of up to two hours before a medically qualified person or even the initial responder returns the call? Is it normal to face a delay of three and a half to four hours, which is what we experienced, before a doctor is dispatched, even if it truly is an emergency?
What has been the knock-on effect on the ambulance and the accident and emergency services in those areas where 111 is operating? Is my reaction typical of those who feel they are being let down by 111? If someone dials 111 in North Yorkshire, they get through to the out-of-hours service, so it would be helpful to know how, in areas where 111 is being introduced, the roll-out will be operated smoothly.
In areas where 111 has not been seen to work effectively, what have been the implications for the local hospital, ambulance service and GP practices?
We are often at our best when we are sharing personal experiences, and I pay tribute to the hon. Lady’s father for his many years of service. The questions she is asking seem to be the right ones. I know from the clinical commissioning group in my area that GPs themselves have expressed frustration at the operation of this service. Does she therefore agree that, from each locality, we need to get their input and listen to their answers to those questions?
I entirely agree, and I welcome the hon. Lady’s intervention. One reason why the 111 service has not yet been rolled out in North Yorkshire is that GPs have expressed their concerns, which leads me to my next question, on the involvement of GPs in areas where the service is being rolled out. How are the legitimate concerns of GPs, such as those in her area and in mine, being addressed and met?
Concerns have been raised in North Yorkshire about the governance framework. How are those are being addressed? A key issue in my area is funding, and I would like to know how 111 is being funded and from whose budget the funding has come. The service is replacing NHS Direct, which caused similar concerns when it was rolled out, so this is not unknown territory for us as parliamentarians or for the Department. It is a little depressing that we are seeing the same problems being played out now, because they were clearly not addressed when NHS Direct was rolled out.
Let me express a very personal view—it is not a view I have picked up locally. As a GP’s daughter, a GP’s sister and the niece of a late surgeon, I believe that people just want to see their GP. They want to walk in to the surgery or phone up and speak to their own GP. Sometimes 111 can be seen as a barrier, as NHS Direct was, to seeing one’s own GP.
We have an historic debt of £12 million built up by North Yorkshire’s primary care trust. There is real concern locally that that debt will affect the funding of GP practices, and especially of the new 111 service. The funding issues are absolutely the key to 111 going forward.
Does my hon. Friend agree that one of the questions is at what level the 111 service should be sorted out? Is it something, for example, for Hampshire and Isle of Wight or for the south-east, or should it be sorted out nationally? There has been very little concern over this matter on my island, but that is perhaps because it is dealt with more locally.
I believe a local solution should be found. A question I will come to is whether there is a difference in the roll-out of the service in rural and urban areas—in my hon. Friend’s case, an island. Local solutions must be found. To me, the best solution will always be for someone to see their own GP on the day they are ill.
I hope that my hon. Friend the Minister will put our minds at rest and say that the story in the newspapers about rationing our visits to GPs is a myth. We cannot dictate how often we will be ill. If an elderly person has a chronic condition, they cannot limit the number of times they might have to call on a medical service in one year.
Will my hon. Friend give way?
I thank the hon. Lady; she is being very generous with her time. Dr Clare Gerada of the Royal College of General Practitioners told the Health Committee yesterday that many GPs’ books are now full at 8.30 in the morning, and that if they have open slots there are often queues down the street, which she said she had not seen for years. I agree with the hon. Lady that we need more GPs, because that is what most patients want.
I know what I am going to say is controversial but perhaps I, as a woman, can say it. Some 70% of medical students are women and they are well educated and well qualified, but when they go into practice, many marry and have children—it is the normal course of events—and they then often want to work part time. Training what effectively might be two GPs working part time obviously puts a tremendous burden on the health service. I will now give way to my hon. Friend the Minister.
On the point my hon. Friend made about any rationing of or charging for GP appointments, let me assure her that that was an idea floated on a website and is not Government policy. It is reasonable for people who have an interest in such issues to be able to debate whatever they wish to debate, but it is certainly not Government policy, and I know of no good reason why it ever should be. She makes a very important point when talks about, rightly, the good number of women who are training to be doctors, but the unintended consequences.
The problem is similar in other professions, such as my original profession of law. The Chamber will welcome the Minister’s confirmation that it is not Government policy to ration or to charge for GP appointments, as we have heard under successive Governments. We are very reassured to hear that it is not their policy to ration GP visits.
How is the interface with GP out-of-hours providers being addressed? In the rural area of North Yorkshire, three and a half clinical commissioning groups cover one constituency, which poses some real practical problems. Where there are multiple GP out-of-hours providers, what regard has the Department had to the potential difficulties of rolling out the 111 service? Furthermore, are there any issues relating to delivery in rural as opposed to urban areas? I am talking in particular about the distances that GPs or nurses might have to travel to respond to calls under the 111 system.
Most worryingly, there seems to be a political vacuum here. Will my hon. Friend the Minister reassure us that there will be political accountability? Where does the political responsibility and accountability lie for any potential failings or successes of the 111 service? Does the Department plan to review the system further? I ask that because my own experience in the pilot area of County Durham has not convinced me that the review has borne any fruit. Does the Department plan to review the system after three or six months?
I congratulate my hon. Friend on securing what is a very important debate and thank her for sharing with us her genuine and very sad experiences. Does she agree that, while everybody would accept that 111 is the way ahead in reducing the burden on A and E, it is all about integration—be it urban areas or deeply rural areas such as those that she and I represent—and that there will be future improvements in GP, 111, A and E, and other services?
The 111 service is a tool and should never be a substitute for the ability visit a GP. I accept that we cannot expect GPs and their families to put up with the antisocial hours of GPs of my father’s generation, who were leaving the profession in droves. I see 111 as a useful tool—an appendage, not a substitute. There are issues that must be addressed in that regard.
Will the system be reviewed, and if so will it be within three or six months? I repeat: is 111 really geared up to deal with sparsely populated rural areas such as those that a number of us here today represent? North Yorkshire has a sparsely populated rural area—one of the largest in the country—and a high number of older patients with complex medical needs, which the GPs are very cognisant of.
I welcome the Health Committee’s inquiry into 111 and NHS emergency care. We will all doubtless follow the proceedings, and look forward to its conclusions and recommendations with some interest.
This debate has been a wonderful opportunity to get a number of issues off my chest; to pay tribute, I hope, to my father; and to note my disappointment at how he and others were treated in the pilot scheme. I hope the issues I have raised can be addressed. The 111 service may be a useful tool—an appendage—but we need to look closely at what more needs to be done, and I invite the Government to do so. I am fearful of delegating the operation of all emergency services outwith political control, and I return to the point about where the political accountability for 111 lies. I look forward to hearing the Minister’s considered response to the debate.
It is a pleasure to speak under your chairmanship, Mr Robertson. I congratulate the hon. Member for Thirsk and Malton (Miss McIntosh) on securing this debate and on the way that she has opened it, which has been really helpful.
The British Medical Association has consistently expressed serious concerns about the transition from NHS Direct to NHS 111. I understand that the BMA wrote to the then Health Secretary—the Leader of the House of Commons, the right hon. Member for South Cambridgeshire (Mr Lansley)—in February and April 2012, to warn
“of the dangers of rushing implementation of NHS 111.”
It also wrote to Earl Howe, the Health Minister, and to the chief executive of NHS England, David Nicholson, urging them
“to delay the launch of NHS 111 beyond April 2013, due to concerns that many areas were not ready for the transition.”
Those concerns were borne out when the service was launched in Greater Manchester on 21 March, prior to the national launch one week later. I have collected information on the launch in Greater Manchester from the chief executive of Salford Royal NHS Foundation Trust. He told me:
“Significant operational problems were experienced when 111 first launched at the end of March and these problems persisted for the first two weeks of operation. 111 did not equip their call centre with the required levels of trained staff and were therefore unable to deal with the volume of calls received; some patients were left waiting up to an hour to get through on the phone lines and as a result patients just turned up at A&E/GP Out Of Hours Service causing significant capacity and demand issues.”
That is just the point that the hon. Member for Thirsk and Malton made about what people would do if they could not get through to 111.
Senior staff of the Salford clinical commissioning group told me that NHS Direct had given assurances that it had the capacity to handle calls, but after the failures that we experienced in Greater Manchester, NHS Direct admitted that it had insufficient call handlers in place. Apparently, when these problems occurred, 111 asked all GP out-of-hours providers to return to their pre-launch call-handling service. However, that was not an option for us in Salford, as our previous call handlers had transferred all their staff over to 111 under TUPE arrangements. So the problems with NHS 111 continued. Salford CCG staff also told me that the out-of-hours service in Salford came under pressure owing to this NHS 111 failure, and that pressure had to be met with increased staff capacity.
Salford Royal NHS Foundation Trust has commented that further improvement to the service is still required. It feels that
“the care pathways still need further modification to reflect local services”
“there are currently gaps in alternative routes of care”,
which the 111 service is showing up. If there are issues with social care, the community team, the district nurse or self-care, that becomes apparent. The trust also said—this is important for our debate this morning—that
“there are also concerns that what we have done with this service is to replace clinician triage in Out of Hours service with computer or non-clinician advice.”
To give an example of the problems that this change has caused in Salford, I will quote the trust again:
“This has led to patients being brought to the emergency department when they are actually on end-of-life pathways”
and should have “community input”. That is just the problem that the hon. Lady talked about—that situation has happened in Salford. It is distressing to think of people who are in their last few days of life being dragged into hospital, when they should really receive care in their own community and in their own home, which is the care that they probably desire.
Salford CCG has reported that feedback forms on NHS 111 have been received from clinicians and that two “significant events” were recorded, which are under formal investigation. The feedback tends to relate to delays in treatment. The CCG also says that its
“immediate priority has been to stabilise the service after a disappointing start. Some positive improvement has occurred but long term there are serious doubts, with NHS Direct identifying the need for extra investment about the contract level to make the service effective.”
I was also told by staff at Salford Royal NHS Foundation Trust that they felt that expectations were set too high about the outcomes that 111 would deliver. They commented that NHS 111 was operating at a level and in a role that an “experienced grandmother” might historically have achieved. That is an important point; my local NHS trust thinks that is what it is getting from the service. That advice—that of an “experienced grandmother”—could be seen as helpful, but staff told me that their preference was for
“an alternative service which had at its core clinically trained primary care staff available over an extended working day, 7 days per week.”
They also believe
“that this service would be better if it was included within a single integrated urgent care service, incorporating responsibility for GP out-of-hours triage.”
I am listening to the hon. Lady’s contribution, and given her background, it is clear that she is a specialist in this area. Like her, I met staff from my local CCG and local ambulance service last week to discuss the development of this system. I note that she talks about integration. Does she agree that the integration of those various parts of the NHS system is the absolutely crucial thing going forward?
Indeed. We talk a lot about integration, but the feedback that I have received from both my local CCG and my local NHS trust is that we have just taken a backward step. We had a nurse-led service that was working fairly well, although it was not as integrated with other services as it should have been. We now have a system that is led by computer scripts and non-clinicians, in which the patients calling the service—if they get through to it—do not have confidence, and as a result, they are falling back on visiting their GPs or going straight to A and E. My point was that that single, integrated urgent care service—the single service that the hon. Gentleman just talked about—should include responsibility for GP out-of-hours triage, and at the moment it does not. The system could have been set up that way, but it was not. Does the Minister believe that the alternative that I have just put forward is the right direction for an improved NHS 111?
Beyond our experience in Greater Manchester, there have been many criticisms of the NHS 111 service and the shambolic transition to it from NHS Direct. Dr John Hughes, a GP from Manchester, said the service had been withdrawn in his area hours before the launch, owing to problems. He told the BBC that it was “an omnishambles” and
“a waste of public money.”
Dr Hughes has called for a full public inquiry into the procurement of that service, because he feels that it was
“forced forward to meet a political objective.”
Janet Davies of the Royal College of Nursing has argued that nurses from NHS Direct have been running NHS 111. She told the BBC for a report:
“Staff from NHS Direct, the service being abandoned, are supplementing the work of 111—staff that were being made redundant and still are at the end of this month… Specialist nurses that can talk to patients have not left and they are propping up that service.”
She felt that, unlike the nationally run NHS Direct, NHS 111 was a
“fragmented service with local contracts”,
which in her view was “very, very chaotic”. She also said that NHS 111 was an attempt to cut the cost per call, by using non-clinical staff to handle the majority of call time, and that it was
“not using qualified nurses, people with the skills to talk to people and make a sensible decision”.
She felt that the Government had thought about costs but not value. As we have seen, NHS 111 is offering poor value if patients turn away from that service, because it is far more expensive to go to A and E or a GP than to have a conversation with a trained nurse.
In Salford, patients were left waiting on phone lines for up to an hour and then turned to the more expensive options of a GP visit or A and E. Our out-of-hours service came under pressure and extra staff capacity had to be brought in. The opinion of staff at Salford Royal NHS Trust is that NHS 111 operates at a level and in a role that an “experienced grandmother” might achieve. Surely, we can and should do better.
I had not expected to be called quite so early. First, I should like to put on the record that health in Northern Ireland is a devolved matter—I understand that—but I am observing the 111 system from my position as a parliamentarian. I congratulate the hon. Member for Thirsk and Malton (Miss McIntosh) on securing this debate. She has encapsulated many people’s concerns. I appreciate the Minister’s efforts on health issues. I am sure that she will, in her response, deal with some people’s issues.
I support the idea behind this phone call triage, as it is called, and its being free to contact, bearing in mind that many GP surgeries have an 0844 number, which costs a great deal from mobiles—we have discussed that in Westminster Hall previously on many occasions, and will continue to do so—but there are clearly major issues with it. Although I accept that sometimes the girls in my office have to stay on the phone for an hour or more to fix some computer glitch with the printer or scanner, we are talking about lives in respect of this service. There have been too many difficulties to ignore.
We have background information on many areas, including those the hon. Lady touched on. Yorkshire and Humber provide examples of the figures and information, which state that there were three deaths and 19 potentially serious incidents coming through the system, clearly underlining the problems.
Does my hon. Friend agree that NHS 111 should immediately answer the phone to all those who contact it—that is obvious—offer direct, accurate communication and provide people with reassurance that they are getting an accurate diagnosis? Those things will be the judgmental touchstones upon which people will base the success, or otherwise, of 111.
I thank my hon. Friend for his intervention, which clearly outlines exactly what the 111 system should be trying to achieve. Sometimes, when hon. Members ask if I will take an intervention, they are looking over my shoulder to see what I am going to say next. My hon. Friend made exactly the point that I was going to make.
There have been lots of complaints about calls going unanswered and poor advice being given, which reiterates the point made by my hon. Friend. That follows concerns prior to the national roll-out, after pilot schemes showed disastrous results, with tales of patients waiting hours for advice and others being asked to call back later. That situation is quite unsatisfactory and must be addressed. NHS England stated:
“The safety of patients must be our paramount concern”.
So it should be, and if it is not, we want to ask why. It also said:
“NHS England will keep a careful eye on the situation to ensure NHS 111 provides not only a good service to the public, but one which is also safe.”
Examples mentioned by all hon. Members—we have them in front of us—provide information that contradicts that. In Greater Manchester, the 111 service was started and then abandoned. Dr Mary Gibbs, a GP providing out-of-hours cover when the system crashed there, said:
“Calls just weren’t coming through.”
Quite clearly, that is the issue. She stated:
“It was totally inadequate. Patients’ health was put at risk.”
The 111 service tends to be busiest when local surgeries are closed. Dr Laurence Buckman, chairman of the British Medical Association GPs committee, stated:
“We are still receiving reports that patients are facing unacceptably long waits to get through to an NHS 111 operator and suffering from further delays when waiting for calls back with medical advice should they manage to have their call answered… The quality of some of the information being given out appears, from anecdotal sources, to be questionable in some instances.”
The advice that people are being given does not always seem to have been up to scratch and is not of the quality that it should be. He added:
“If any area of the country is failing to meet high standards of care, then its NHS 111 service needs to be suspended.”
This is what the experts in the field are saying. NHS England needs to be more transparent about how the system is functioning across the country.
I met one of my local ambulance service chief executives just last Friday, who told me that, in his experience, the implementation of NHS 111 was going well and was helping to reduce demand on the ambulance service locally—and they were quite happy with the service. Although there have been problems, which the hon. Gentleman is right to highlight, plenty of people have been treated well and professionally by this service, and some health service professionals think that the service is working okay.
I thank the hon. Gentleman for his intervention. I have stated that the focus of the new system was on trying to make it better. Every hon. Member accepts that. The idea behind it is great, if it works. We elected representatives will always get the complaints. Not often do we get the wee card saying, “Thank you very much for what you’ve done for us,” but we always get the ones saying, “It’s not working well.” The hon. Gentleman is right. I accept that there will be many examples throughout the United Kingdom where the system has, perhaps, worked, but equally there are a lot of examples of where it has not worked. That is the point that I am trying to make.
We highlight such issues for a purpose, not to be dogmatic, angry or always to be negative in our comments, but to try to look towards improvement. I always try to think that my comments will be constructive criticism, which can be taken on board to make things better. My idea as an elected representative over the years, as a councillor and a Member of the Legislative Assembly in a previous life, has always been to try make comments in that way.
I am conscious of my position as a Northern Ireland Member of Parliament, because health is a devolved matter and I am ever mindful of the cuts in funding faced by all Departments in an effort to reduce the deficit—every pound spent must be well spent—but, from my perspective, I urge that the Northern Ireland Direct system continue until the kinks are ironed out here. On health, we will follow, as we often do, what happens here on the UK mainland, so, from a Northern Ireland perspective, I want to make sure that the system’s fall downs and problems are ironed out and sorted out before we take on the system—if we take it on.
I have been looking at the system with great interest, because one of my jobs here as MP for Strangford and my party’s health spokesman is to consider the systems across on the mainland. Many of my queries to Ministers here in questions on health and to my Health Minister back in Northern Ireland come from what colleagues say to me and from what these debates bring out. I am interested in seeing how this system works or will work, or does not work. If it does not work, I will convey that to my Minister in Northern Ireland, to ensure that when making a decision there we will look at how it can happen. I will certainly not be urging our Health Minister in Northern Ireland to use his precious funding to implement this scheme as it stands.
It is a pleasure to be called to speak under your chairmanship for what I think is the first time, Mr Robertson. I extend my most sincere thanks to the hon. Member for Thirsk and Malton (Miss McIntosh) for securing this important debate. We have worked closely on a number of issues during my time in Parliament, and she is rightly respected across the House as an independently minded Member. I must express my most sincere sympathies to her, but also my profound thanks for the real courage she has shown in sharing her family’s experiences with us.
It is a mark of the severity of the crisis our A and Es are experiencing that Members of all shades of political persuasion have spoken at some length about their constituents’ experiences. It is no exaggeration to state that members of the public are very concerned about the situation regarding NHS 111. A and E is arguably the most visible part of our NHS, and what happens there is felt throughout the system. From the patient waiting at home for an ambulance to the person waiting on a trolley for a bed, what happens in A and E touches every patient in the NHS.
The crisis in A and E has happened on this Government’s watch. When Labour left office, A and E was performing well, with 98% of patients seen within four hours. However, the number of patients waiting for more than four hours has now doubled, and ambulance queues have doubled too. Let us not forget that the target for the number of patients seen within four hours in A and E has been reduced under this Government, from 98% to 95%. Today’s debate is therefore extremely important, and the Government must finally offer some real solutions to address the crisis they have caused.
I find it incredible that the shadow Minister states that the issue was caused by this Government. A lot of my constituents are having to ring 999 because 50,000 beds were taken out of our hospitals nationally on his party’s watch; wards were closed in my local hospital on his party’s watch. Elderly, vulnerable patients who do not have local hospital beds to go to are now forced to ring 999 to get access to emergency services, so it is pretty shameless of the hon. Gentleman to attempt to politicise the issue.
I have to say I am staggered by the hon. Gentleman’s manufactured indignation. I do not know how long he has been a Member of the House, but he will recall that, between 1997 and 2010, the Labour party took the NHS budget from about £30 billion to £110 billion. However, on every occasion the budget was put before the House of Commons, the Conservative party voted against an increase. He should think again about his manufactured indignation.
I am going to make some progress, because I want to get on to the substantive issues in play.
When Labour first suggested a new NHS 111 service, we were clear—the hon. Gentleman should listen—that it would not replace NHS Direct. Our manifesto in 2010 said:
“A new national 111 telephone number will make nonemergency services far easier for people to access and book.”
The 111 service was planned to help people find an emergency dentist, a late-night pharmacy or an out-of-hours primary care GP. This Government scrapped that and instead pressed ahead with the botched implementation of a system that just could not cope with what it was expected to do. They were warned, but, as usual, they did not listen.
There is no doubt that the 111 service is not fit for purpose. The statistics show it, the examples given by Members today show it and, most importantly, patient testimonies show it. Indeed, the Minister herself acknowledged it in response to the right hon. Member for Mid Sussex (Nicholas Soames) in late May, when she stated:
“We recognise that the service has not been good enough and we are working closely with NHS England to ensure improvement in performance. NHS England have put a number of measures in place already.”—[Official Report, 21 May 2013; Vol. 563, c. 740W.]
I hope the Minister will outline what those measures are and what their effects have been, because the contributions we have heard today suggest they are having a negligible effect.
The implementation of the system has undoubtedly caused serious problems; indeed, in my area, NHS Direct is having to be maintained alongside the 111 service to cope with demand. The Minister must explain in detail how a botched, fragmented implementation was allowed to happen despite there being a significant pilot scheme.
On the issue of propping up NHS 111, I wonder whether this is the point at which to give credit to the NHS Direct nurses whom Janet Davies of the Royal College of Nursing cited. Even though some of them are being made redundant, they were prepared to prop up the service during its few weeks in places such as Greater Manchester. We really should give those nurses credit. What a dreadful experience, just before they were made redundant, to have to prop up the service that was replacing them.
I could not agree more. We must give credit to all the people in the NHS coping and labouring under a creaking system right now. The case of the NHS Direct nurses my hon. Friend draws our attention to, who are about to be made redundant but are propping up the system, speaks volumes about their commitment to the ethos underpinning the NHS. I thank my hon. Friend for that contribution.
The 111 service data for March published by NHS England show that only 122 patients responded to the NHS 111 patient experience survey. When the Minister responds in a few minutes, I hope she will not try to justify the implementation of a system that needs to serve millions of people on the basis of the experiences of just 122 patients.
The main purpose of the debate is to look at the implementation of NHS 111 and its impact on A and E attendances. There is no better place to look than the Isle of Wight—the hon. Member for Isle of Wight (Mr Turner) was present earlier. The 111 service there went live on 25 October 2011. The area has had a long time to address teething problems and to ensure that the service operates properly. What has A and E performance looked like over the past few months? Since the end of September, almost 2,000 patients have waited more than four hours, and the trust has missed its target for 23 out of 35 weeks. That is hardly a ringing endorsement of the system, even when it has had a chance to bed in.
Consultants on the Isle of Wight have even said that although patient numbers would be falling and the pressure would be easing if NHS 111 was working as intended, that is not happening—patient numbers are rising, and the pressure on the NHS is increasing. Indeed, Chris Smith, the director of NHS 111 on the Isle of Wight told the BBC that the service is fragmented and that that has led to problems. In response to the hon. Member for Tewkesbury (Mr Robertson), the Minister said that every NHS 111 provider is able to handle inquiries from any part of the UK, but I would challenge her to repeat that assertion today, given Mr Smith’s comments. If a system is fragmented, and CCGs are commissioning different providers, it will be almost impossible for those trained to handle calls to work within different systems. For example, the process for referring people through the system in an area with which they are unfamiliar will be totally alien to them, which is bound to cause further problems.
That brings me to my final point about the system. Following Labour’s A and E summit in Westminster last week, it was revealed to us that 111 call handlers do not necessarily have clinical backgrounds, as my hon. Friend the Member for Worsley and Eccles South (Barbara Keeley) said. Even more shockingly, it was revealed that some areas have an enforced threshold on how many calls nurses can answer, and that that was as low as one in five. The fragmentation of the system means that the figure varies from area to area, because it would have been negotiated in local contracts. Therefore, the service provided is not universal. That is in stark contrast to NHS Direct, under which 60% of calls were directed to nurses. Under 111, however, the figure stands at less than 20%. Does the Minister believe that the low level of engagement between trained medical practitioners and patients in the service is contributing to A and E pressures?
The chaotic reorganisation of the NHS is clearly producing a deteriorating experience for patients. In the last week of March, one patient in the south-east waited for 11 hours and 29 minutes for a call back. In the area covered by NHS Gloucestershire and NHS Swindon, 43% of calls lasting longer than 30 seconds were abandoned by the patient before they were answered. Will the Minister outline the lessons that have been learned from that experience and explain what measures will be put in place to ensure it is not repeated on a national scale?
In four weeks, the 111 service will be live across the country, and the Government need to be more honest about how the service is performing before wider implementation. Royal colleges, patient groups and other stakeholders have long warned the Government that the health and social care reforms brought about by the Health and Social Care Act 2012 would be distracting and cause chaos, and that such top-down reforms would stop the clinically driven reforms needed to help address the crisis in A and E.
That there is now a crisis engulfing accident and emergency services is beyond doubt. It was caused by the Government. We have heard today of a political vacuum and we have heard legitimate fears about the lack of accountability. Patients deserve better; we all do. If the hon. Member for Thirsk and Malton will allow me to say so, her family and her father deserve better. I hope that the Minister will take the time to address all the issues, and to outline the Government’s plan to deal with the current A and E crisis that they have caused.
It is a pleasure to serve under your chairmanship, Mr Robertson, for what I believe is the first time.
My hon. Friend the Member for Thirsk and Malton (Miss McIntosh) made an admirable speech, raising many points and asking many questions—some of which, I will say bluntly, I will not be able to answer in my speech. I assure her that she will receive an answer to those by way of a letter. Before I discuss her speech, I want to deal with the points raised by the hon. Member for Copeland (Mr Reed). It does neither him nor his party any credit to use the serious problem in A and E as a political device to attack the coalition Government. It is not as simple as that. To suggest that the problem has been caused by the Government is plain, simple rubbish. It is accepted that there are many complex reasons for the situation, although I am reliably informed that the number of people being seen within the four-hour target is improving and that many accident and emergency departments are achieving the target, and have been doing so for some weeks. Some, indeed, are exceeding it.
There is much evidence emerging that a firm grip is being taken on the situation, but things are complex. There is no magic bullet. It does not matter which party is in power, the Government would face the problem that we have, because there are many causes. One of them, which people on all sides of the argument have identified, is the fact that we do not have the out-of-hours service we want.
The Minister says that the issue is complex and accuses the shadow Health Minister of making political points. It is about time that Health Ministers stopped making excuses. They have been in office three years and it is time they started to take responsibility for what they are doing.
I have gathered evidence, and the causes of what has happened clearly include insufficient call handlers, which is not complex—it is just a shortage of staff. Another factor is the replacement of trained nurses and trained clinician input for phone triage with computer-led or non-clinician advice. Those things are not complex. They are just wrong.
I am not for a moment saying that there are not difficulties and problems in 111. We know there are, but if only the issue were as simple as solving the 111 problems. The out-of-hours service is just one of many factors. [Interruption.] I want to make some progress on this point: 111 is one factor among the failings in relation to the sort of out-of-hours service that people want. We have also had the difficulty of a long, cold winter, which has added pressures—that is something that often happens. Also, there are 1 million more people attending A and E. That is not the fault of the Government. We have not suddenly caused it. It is because of changes—
I will take interventions, but I want to make these points first.
The population is also living considerably longer. That is good and welcome, but there are many frail elderly people with complex illnesses and diseases, so they attend A and E in a way they did not previously. In addition, we suffered under the previous Government from a lack of integration between health and social care. That was one of the things that the Health and Social Care Act 2012 addressed, and will solve. It is about better integration. The hon. Member for Copeland sneers at that.
The Minister is making sensible points. As to manufactured indignation, if that is what it is, mine comes from the fact that I spend 30 to 40 hours a week volunteering in the NHS as a first responder, and I spent 30 hours doing so last weekend.
A big issue that creates pressure in the NHS is the lack of integration between social care and health services, and a lack of proper intermediate care facilities. We do not have the step-up, step-down facilities that we need to deal with the ageing population. That is one of the biggest problems in my area and a reason for increased pressure.
I, too, know that it does no one any favours to make out that someone forcefully and passionately giving a view based on their experience is manufacturing it. I know that that is not true of my hon. Friend, and I thank him for his valuable contribution. He is right.
I think casual outside observers will struggle with the concept that politicians from different political parties should seek to have different political opinions about the services and Department for which the Minister is responsible. She makes an almost Kafkaesque defence of the Government’s NHS record, but will she accept that the awful implementation of the 111 scheme, the collapse of adult social care, the closure of walk-in centres and the huge pressures on the NHS elsewhere in the system have resulted in the crisis in A and E?
I will not accept any of what the hon. Gentleman says, because he does his cause no service when he makes cheap political points. The matter is hugely complex, but it is wrong to say that the Government caused the problems in A and E. He is wrong in that. It is difficult and complex.
No, I will not. The responsibility, if we are honest—would not it be refreshing if we could for once have an honest debate about the national health service?—probably goes back 10 or 20 years, a period encompassing Governments of different political colours. I am happy to say that—by which I do not mean I am happy that those Governments have failed, but people may think the honesty is refreshing.
I want to deal now with the excellent speech of my hon. Friend the Member for Thirsk and Malton. I pay tribute to her and her work in this place, but also to the considerable efforts and work of her late father. I am sure that if he could have heard his daughter’s speech he would have been very proud. I remember my own father saying that out of all evil comes some good, and perhaps some good may come from her late father’s terrible experience of 111 and the fact that he died shortly thereafter.
I pay tribute to all GPs. There are huge difficulties with the GP contract, which was introduced in, I think, 2004. The consequences have included the loss of the out-of-hours service that I enjoyed as a child, teenager and young woman. With few exceptions, we have wonderful general practitioners, and many whom I know, including my own, and others who are friends of mine, work long, difficult hours. It is important to make that point.
As you know, Mr Robertson, during the recess, far from enjoying holidays, as the popular press makes out, we go back to our constituencies and use the time to make or renew contact with, for example, our local clinical commissioning group or ambulance trust. Alternatively we just go out and about, as I have done, knocking on doors and talking to people. One of the things I did during my recess was meet the head of the A and E department of the Queen’s medical centre, which is the local hospital in my constituency of Broxtowe in Nottingham. The head happens to be one of my constituents, and they tell me that there is much improvement at the Queen’s medical centre, as I know from the stats and so on. I also talked to GPs, and the CCG in my constituency now opens its doors for Saturday morning surgeries, which do not replace any other surgeries; they are extra facilities. The CCG has done that for two simple reasons: first, to improve the service it gives to its patients, and, secondly, in recognition of the need to reduce the pressure on the A and E department of the Queen’s medical centre.
It is right and fair to say that many GPs look with concern at what is happening in many of our A and Es, and with 111, which is commissioned in some areas by CCGs and in other parts of England by clusters of GPs. They are by no means fools. What motivates anyone to enter the medical profession, in my experience, is a real desire to serve people. They want to help and treat people. They are motivated by the very best of motives, so of course our GPs are concerned about the situation.
There is much work to be done with the GP contract to improve out-of-hours service, but we also have to be honest in this debate. There are often urban myths and anecdotes, but it is a fact that many GPs have already said that, far too often, people who come to see them in their surgeries, who attend A and E or who dial 999 or 111, are calling when they do not need to make that call or that appointment. They might be better off making their pharmacist their first port of call.
I thank my hon. Friend for allowing me to intervene and for recognising not only the work my father did, but the work that all GPs do in very trying circumstances. May I bring her back to the Government’s framework, to which I referred, and the very real issues that GPs have raised in North Yorkshire about different GP out-of-hours providers suddenly working with one 111 provider? How will those issues be resolved?
Indeed. I will answer as many of my hon. Friend’s questions as I can. There are some questions I will not be able to answer, but I will certainly write to her.
One of the reasons we introduced pilot schemes was to learn from them, and I can tell my hon. Friend a few things as a result. The university of Sheffield did an evaluation report, which said that there was “no statistically significant” impact on services in most of the pilot areas. Importantly, NHS England is collecting data on 111 and its impact on other services, especially, as one would imagine, on A and E. NHS England is in a position to monitor that, and it will report in due course. I am told that the April data will be published this Friday.
I am reliably informed that the A and E performance of York Teaching Hospital NHS Foundation Trust, which serves my hon. Friend’s constituency, is that in 2013-14 so far, 96.1% of people have been seen within the four-hour target. That is above target. I think the average across England for people being seen in A and E is some 55 minutes.
This question is not a trap in any way, shape or form. The Minister just said that NHS England is assessing data on the performance of 111 thus far, which will be made available in due course. This is an empirical question: will the system be rolled out across the country without the data on the effect of the 111 service on the rest of the system being fully understood?
I am more than happy to write to the hon. Gentleman with some sort of answer from either NHS England or the Department.
I should say, of course, that we know that 111 has not been successful in the way it should have been in many parts of the country, and we know that there were particular problems over the bank holiday and Easter periods, but we also know that it has now been rolled out to 90% of England. NHS England is monitoring, overseeing and collecting the data, as we would all hope.
I will do my very best to respond to the content of today’s debate and the questions that have been raised, with apologies for those questions that I do not answer.
The ratio of call handlers to professionals, about which my hon. Friend the Member for Thirsk and Malton asked, is 4:1. That ratio is not specified, however. There is no prescription that it must be 4:1. As 111 is locally commissioned in the way that I have explained, it is for local commissioners to decide whether to change that ratio, depending on the particular needs of the people in their area. One of the great benefits of the 2012 Act is that we have enabled local commissioners, either as a CCG or as a cluster, to commission services to meet the specific needs of their patients. I hope that will mean that a cluster or CCG in a rural area, obviously knowing that its patients live in a rural area, will ensure that its service is tailor-made to suit the needs of those patients, which may be different from the needs of patients in, say, a city and its surrounding suburbs. That is one of the joys of local commissioning.
My hon. Friend asked whether the three to three-and-a-half hours—in truth, I think it was really four hours—before her father was seen is normal, and the unequivocal answer is no. Is it acceptable? In my view, it is certainly not acceptable.
My hon. Friend then asked who pays. She is concerned about whether the debt in which her primary care trust found itself will have an impact. The 111 service is paid for by CCGs, which is one reason why CCGs are involved in the local commissioning of the service.
How are the concerns of GPs being addressed? The NHS is having a review in the way that I described. My hon. Friend the Member for Brigg and Goole (Andrew Percy), who must be a member of the Select Committee on Health—that shows my profound ignorance, and I apologise to him—has helpfully reminded me that Dr Gerada, who is the chair of the Royal College of General Practitioners, said in her evidence yesterday that she has not seen such queues since the flu epidemic of two to three years ago. She said that the reasons for the high demand are mixed and complex, including the nasty flu virus that went around earlier this year and at the end of last year. I reiterate my point: if only it were so simple to cure the problems in A and E.
The Minister talked earlier about the issue being about out-of-hours service. The NHS 111 problems in Greater Manchester put greater pressure on our out-of-hours service. She said there was a long winter, but 111 was rolled out at the end of March. Does she think that was a sensible time? It was not even the end of a very hard and long winter. Finally, she said that we have had more A and E attendances, but the problems have caused further pressure on A and E. The point many hon. Members have made, which I hope she accepts, is that the chaotic launch of NHS 111 in the end part of winter caused more problems than it solved.
We on the Health Committee were provided with figures yesterday showing that referrals to A and E from NHS 111 were about half the amount of those from NHS Direct, but that there had been an increase in referrals to out-of-hours and GP services. The link between NHS 111 and pressures on A and E is perhaps not proven.
I am grateful for that intervention. I know that the university of Sheffield specifically examined the pilot and found that in most pilot areas, there was no impact. However, we also know that NHS England is monitoring the situation, reviewing the data and analysing all the different, complex problems causing pressure on A and E to ensure that we make the improvements that we want.
My right hon. Friend the Member for Thirsk and Malton—[Interruption.] Well, I am going to make her right hon. for the moment. It will not be put into Hansard, so no one will know; it is just between us. She made an important point about providing for people receiving palliative care, catheter treatment and so on. She said that perhaps they needed a different script. There is much merit in that. Again, I would hope that the commissioning services would put that aspect in the script. She asked specifically about the script. I am reliably informed that it has been written by clinicians at the highest levels, but I also know that there is concern at a senior level about the fact that it takes an average of 20 minutes to go through a prescriptive script.
There is a wider problem here. We live in an age in which it is increasingly difficult to rely on common sense. When somebody rings up and says, “My father is a retired GP. We’ve been here before, and he has all the symptoms of a urinary tract infection,” they should not be asked whether he is still breathing. A large dose of common sense would mean that that question would not be asked, nor would “Is he bleeding?” and so forth. That is the stuff of nonsense.
I apologise for not being here at the beginning of this excellent debate, and I congratulate my hon. Friend the Member for Thirsk and Malton (Miss McIntosh) on securing it. I have been in regular correspondence with the 111 service in the west midlands region, and with the other related services. I am satisfied that some of the teething problems will be resolved, but my local hospital asked me to raise one question with the Minister. Will she look into the treatment algorithms used by 111? There is a belief in the hospital that they are more likely to result in a referral to A and E than those used by the previous service.
I am grateful for that intervention, because I have heard that anecdotally as well. It is an important question. I cannot give my hon. Friend a full answer, but I will do all that I can to provide it in a letter if she will allow me. That concern has been raised with me on a constituency basis.
As I said from the outset, 111, which is a good service in theory and should be of considerable benefit to health professionals and, most importantly, to patients and all others concerned in the national health service, has not gone as smoothly as we had hoped. That is conceded, and one should not make party political points from it. However, the service has improved, it continues to improve and it is being monitored. I am grateful to my hon. Friend the Member for Thirsk and Malton for bringing this matter to the attention of the House, and I apologise to her for any questions that remain unanswered. I will reply to her and will address all the other points raised by hon. Members in this debate.
UK Manufacturing Sector
It is a great pleasure to serve under your chairmanship, Mr Robertson.
I want to talk about strengthening the UK manufacturing sector through innovation. UK manufacturing is going from strength to strength. We have a rich heritage of advanced manufacturing, companies in a range of sectors that are competing with the very best internationally and a world-class reputation for quality innovation. There is certainly widespread recognition by business and Government that research and innovation are essential to global competitiveness and future economic growth. Despite the obvious global economic challenges, the Government stepped up to the plate and invested in science, research and development, infrastructure and skills—all the things that innovation needs to flourish. I also hope to expand on how the Government could use their enormous purchasing power to help draw the most economic benefit from such investment.
Most manufacturers understand that their future success depends on the ability to be innovative in their thinking, ways of working and approach to business, as well as in their new product development. It is all about changing, adapting and anticipating the demands of their marketplace and their customers. Huhtamaki is one of the biggest employers in my constituency. It has a dynamic attitude towards innovation—which it has to, because its industry makes paper and plastic cups, loads of them: a staggering 2 billion a year for many well-known coffee houses and fast-food establishments. Its business motto is to “lead change before you have to”, and the company is continually innovating to maintain its position as a market leader, which means embracing new print technology, experimenting with colours and textures and introducing products that are recyclable, renewable and even compostable. The managing director told me that that philosophy gives the company the edge in such a changing industry.
Innovation can be the key to a virtuous circle: investment leads to growth and efficiency, which generates revenue that can be used to achieve change and to support further innovation. The difficulty is that innovation not only requires long-term investment, but introduces a certain element of risk that some manufacturers find difficult to justify, particularly in a tough economic environment. In fact, forward-thinking innovators might even put themselves at a disadvantage in the short term compared with their competitors, who let others take the lead and then hang on to their coat tails.
For the UK to remain a world-class manufacturing hub, it is essential for the Government to do all they can to support the innovators. Where that works best is where Government and business work together in the development of and support for new technologies, and that has made a big difference in some sectors. Thus, since 2007 successive Governments have invested support in the space sector, helping British companies to become the world-leading innovators in the field. For example, Astrium, a major employer in the Portsmouth area, specialises in the mind-blowing satellite technology that has made it No. 1 in Europe and No. 3 in the world.
Astrium is a huge employer in my constituency, and Stevenage is now the capital of the UK space industry. Will my hon. Friend join me in celebrating Astrium’s success a couple of days ago, when it launched into space a satellite that in a few months will be responsible for beaming broadcast and communications signals back to the UK?
My hon. Friend makes an excellent point. Astrium does real James Bond stuff of the future, which is incredibly impressive. In fact, the UK space industry turns over £9 billion a year and is predicted to grow by 7.5% each year in an increasingly demanding global marketplace.
Another British success story is the aerospace sector, which is the largest in Europe and the second largest in the world, after the USA. It is worth more than £23 billion to the UK economy, and 70% of its output is exported worldwide. The sector employs directly nearly 100,000 people in the UK. Its biggest challenge is that the long-term returns from research and development make it an unattractive capital market investment.
I congratulate my hon. Friend on securing this debate. During the recess, I was pleased to be present at the opening of Bosch’s new technology centre at Warwick university’s science park. I am pleased to see the hon. Member for Coventry South (Mr Cunningham) present; he was also at that opening.
The centre will support around 30 engineers and is a perfect example of bringing together our universities and businesses to help spur innovation in our manufacturing sector. Does my hon. Friend agree that the Government must look closely at such centres, how they are formed and how we can put in place more incentives for business to commit to the long-term cost of supporting innovation?
I congratulate the hon. Lady on securing this debate. In addition to what the hon. Member for Warwick and Leamington (Chris White) said about Bosch, Jaguar Land Rover has been a success story, creating not only direct but indirect jobs in the west midlands. Anyone who knows anything about industry knows that for every direct job, there are probably two or three indirect jobs, so there is a multiplying factor. Does the hon. Lady agree that in the west midlands, and particularly in Coventry, slowly but surely, manufacturing is beginning to come back? The process under successive Governments has been slow, but it is encouraging to see companies such as Bosch and Jaguar Land Rover. Not so long ago, the Minister helped out with the London Taxi Company, and that maintained an anchorage for manufacturing in the midlands and nationally.
The hon. Gentleman makes a good point. Manufacturing is growing apace, and Government intervention is key to continuing that progress. That is why their recent funding commitments through the aerospace growth partnership have been so widely welcomed.
I have given some examples of how the Government have overseen initiatives to help what might be called the push or supply side of business innovation.
Will the hon. Lady give way?
I welcome this debate, which is long overdue. The hon. Lady may be aware of the National Audit Office report on the contract that Bombardier lost to Siemens and the resulting loss of jobs. There is still time to retrieve that contract, so can she do anything to convince her Government that it should stay in the UK?
The perfect Minister is in the Chamber, and I hope he will speak about that when he has the chance to respond.
Businesses I have spoken to are really positive about some of the incentives the Government are introducing to help with innovation, including R and D tax credits and the financial incentives to innovate. Will the Minister assure me that his Department will continue to push for such incentives to be high on the Government’s priority list?
The hon. Lady is being most generous with her time. I congratulate her on securing this important debate, but I just wish it had been longer than half an hour. I am sure she will agree that innovation in British manufacturing is nothing new. An example is an illustrious son of Inverclyde, James Watt, who innovated and dominated the market for 10 years. He is a prime example showing that innovation is nothing new for British industry.
May I make a little progress? I will then be more than happy to give way.
The other catalyst for business innovation is the pull effect, and I want to say a little more about how public procurement could be used better to drive the demand side of the innovation equation. This is an area where the strategic spend of public money on goods and services has the potential to drive innovation and to create more efficient, cost-effective, high-quality public services, as well as to unleash economic benefits. The Associate Parliamentary Manufacturing Group recently held a seminar on this issue, where it listened to the manufacturing sector’s concerns about how the Government buy products, as well as hearing about current academic work on procurement as a tool to drive innovation. Many bodies, from the CBI to the foresight team at the Department for Business, Innovation and Skills, see public procurement as one of the most powerful policy levers at the Government’s disposal.
Globally, the UK is second only to the US in its scientific knowledge base, but both the US and Germany outstrip the UK in turning that knowledge into economic profit. Is that because the Americans and Germans have a greater desire to be cutting edge, or are they simply less risk averse? Either way, it seems highly inefficient to invest heavily in a knowledge base at the start of an innovation process and not capitalise on the potential economic benefits. With that in mind, will the Minister tell me what efforts we are making to learn from other nations about maximising the economic fruits of our innovation? That is something the US invests heavily in—the virtuous circle again. Demand for a product creates more jobs; more science, technology, engineering and maths-based graduates; more high-value-added companies; greater economic prosperity; and, in theory, more tax returns.
The Treasury clearly recognises that, which is why, in the 2013 Budget, the Chancellor of the Exchequer announced that all Departments must engage in the small business research initiative process and vastly increased the amount of money available through it. The Technology Strategy Board’s SBRI encourages the private sector to develop solutions to problems identified by the public sector. So far, it has had great success: 120 competitions have awarded 1,200 contracts to a value of £100 million. Those have involved 40 public sector bodies. SBRI therefore shows that in identifying new problems, the public sector has a mechanism through which it can procure innovative solutions.
However, despite its great success and even greater potential, the programme has not fully solved the procurement puzzle. It appears to be asking for solutions to new problems that are identified, but not looking for new and innovative solutions to age-old problems that cost the country so much money. Will the Minister say to what extent the SBRI encourages Departments to look again at problems that may already have a stove-pipe solution?
Let me give an example: QinetiQ has a subsidiary company called OptaSense, which has developed a way to use fibre-sensing technology to deliver real-time information to monitor assets such as pipelines or railways. In layman’s terms, that means turning fibre-optic cables into thousands of highly sensitive microphone devices capable of distinguishing between human footsteps and animal tracks. They are capable, in fact, of hearing someone walking alongside a railway track and then sawing through the railway cable, enabling the transport police to catch them red-handed before the damage has been done. That seems a good solution to all those wasted commuter hours resulting from rail cable theft.
The German railways and the north American oil and gas industry seem to think so. The technology has secured significant export contracts, and the number of employees has grown from three to 160 in the past few years. In fact, 99% of the company’s revenue comes from overseas. The problem is that, given that those countries are spending the money that is effectively sponsoring most of the ongoing research and development, OptaSense is under increasing pressure to move both that and the manufacturing overseas. The UK’s competitive tax regime for R and D is one of the main things keeping it here. Despite that world-leading solution being developed and manufactured here, Britain is in danger of being left behind by its own technology. Other companies would be tempted to move their ideas and their most brilliant scientists to where the market was, meaning that if we decided to buy back the product at some point in the future, we would effectively be buying back our own ideas, without all the economic benefits to the UK economy.
Realising the power of procurement to effect change in industrial competitiveness is a big challenge. It represents a step change in the way public bodies and Departments think about their budgets, and I think it is fair to say that risk taking—and, as a result, innovation—is not encouraged in public procurement. Public procurement still has a tendency to opt for low-risk solutions and mature technology, and innovation is not routinely welcomed or rewarded. In part, that is due to the competing objectives and bureaucratic barriers that public procurers face, which discourage risk-taking.
As we have seen, the fear of failure from doing nothing drives innovation in the private sector. My next question for the Minister is, what lessons can be learned from business to try to encourage that mentality in public sector procurement?
I will make a little more progress first. Some Departments, such as the Ministry of Defence, are more culturally competitive, more innovative in their approach to innovation, happy to manage technological risk, and have a more open architectural approach to procurement.
We should not be surprised that the procurement system produces the results that it does. If the discussions around procurement remain too closely linked to buying, without being linked to interaction with the private sector and horizon-scanning, procurers will simply keep buying as they always have. That behaviour has been compounded by the positioning of austerity policies against procurement; in the mission to try to cut costs, procurers should include in their calculations how, through the pursuit of innovation, money may be saved long-term, taking whole-life costs into account. Will the Minister tell me what more he thinks the Department can do to encourage Government bodies to be early adopters of innovation?
I thank my hon. Friend for giving way and for securing this fantastic debate. The contributions so far show that we could have had a good hour and a half on the topic. Last night, Huddersfield and Colne Valley featured on the BBC 2 TV programme, “Town”, which showcased some of the innovative engineering and textile work going on in my historic part of the world. The Enterprise and Innovation Centre has opened at Huddersfield university. Does my hon. Friend agree that skills and education blending with innovative companies is a fantastic way forward for our innovative organisations in this country?
My hon. Friend makes an excellent point. One of the key issues seems to be communication between Government and business. The Manchester Institute of Innovation Research reported that, following a survey of 800 businesses, two thirds believe that engaging with the public procurement process had a positive effect on their innovation, with a quarter saying that an innovation had come about directly as a result of engaging with the public body.
With that in mind, a commissioning academy has been set up by the Cabinet Office that will bring commissioners from different parts of the public sector together to learn from best practice. In recognition of the fact that we need capable, confident and courageous people in the public sector to deliver more efficient and effective public services, it says that success will mean commissioners embracing new and innovative forms of delivery. It is interesting to note that, of the supporting Departments for the commissioning academy, the Department for Business, Innovation and Skills is not mentioned. Will the Minister tell me why, and to what extent BIS is liaising with the Cabinet Office work on procurement?
If we are to maximise the economic potential of the Government’s enormous purchasing power, there should be pressure on suppliers to come up with new ideas and innovative solutions to problems, while still meeting the requirement to show value for money.
That is an example of how we are a little slow to adapt to new technologies and innovative ideas, which is one of the problems we are trying to address today. There should be more opportunity for unsolicited, novel approaches to meeting public sector needs, particularly where new technology is involved.
I thank my hon. Friend for giving way; she is being characteristically generous. Does she agree that many innovators and entrepreneurs, including in my constituency, lament the level of paperwork and bureaucracy in public sector performance, and that that is what prevents them from offering fantastic products to the public sector that can save money and increase the quality of services?
The Government are doing excellent work on addressing the problem. Some of the pre-qualifying questionnaires that companies used to have to undertake were horrific. The Cabinet Office now has a mystery shopper service to which small and medium-sized enterprises can feed examples of bad practice in Government commissioning.
It is important to conclude by saying that if central and local government encourage innovation through their procurement processes, more UK suppliers will invest in innovation, which will help the British economy and open up UK export opportunities, so that we can play our full part in this global race.
On behalf of us all, I welcome you to the Chair this morning, Mr Robertson, and I congratulate my hon. Friend the Member for Gosport (Caroline Dinenage) on securing this brief debate on an extremely important subject.
It was good to hear my hon. Friend’s support for manufacturing and her recognition that the Government are doing what we can to support it. I know that a number of my colleagues are doing so in their constituencies. She might like to know that QinetiQ is based in my constituency, too, as well as down on the Solent, and I was very privileged to promote the OptaSense technology that she referred to on a recent ministerial visit to Kazakhstan. We are backing that technology and ensuring that our posts overseas are doing what they can to support QinetiQ.
Innovation is a key driver of economic growth. It improves business competitiveness, GDP growth and wider welfare. We are fully committed to improving our innovation performance as an essential component of our growth plan. We encourage research and development in businesses across the country to enable that growth to happen.
At a local level, my hon. Friend’s constituency is home to the Solent local enterprise partnership, which is a dynamic, well-led, business-involved organisation that has already secured three successful regional growth fund bids and is fully involved in the Daedalus enterprise zone and in the round 2 Southampton and Portsmouth city deal. I had the pleasure of talking to Doug Morrison again on my most recent visit to the Solent.
What else are we doing? We are working with manufacturers and their supply chains and taking the steps that we can in government to strengthen and grow modern manufacturing by encouraging innovation, business investment, technology, more commercialisation, skills and exports.
Manufacturing now generates more than half the UK’s export of goods and almost three quarters of our business R and D and thus the innovation that drives growth. It also, of course, benefits other sectors through demand for raw materials, energy and services such as research, design and finance.
We have implemented the 2011 advanced manufacturing growth review and announced further measures to support the sector, including the advanced manufacturing supply chain initiative—two more rounds were announced for this year—the talent retention solution, the See Inside Manufacturing programme, a package of support for energy-intensive industries and a further £2.6 billion of investment in the regional growth fund to spend on projects such as capital investment, R and D or training.
We obviously want to keep as many jobs as we can in the UK and we do that by maintaining the science base, by providing support for technology commercialisation through the Technology Strategy Board—my hon. Friend referred to that—through investment in skills and through action to reform credit markets and to get bank lending moving again, as well as through very specific support through the industrial strategy for some of the sectors that she mentioned, such as the aerospace and automotive sectors, where we can do more to strengthen UK supply chains.
The Technology Strategy Board is the Government’s prime channel for supporting business-led technology innovation. It provides opportunities for innovative businesses through the growing network of Catapult centres. The High Value Manufacturing Catapult opened for business in October 2011. It will receive £155 million for the period up to 2016-17. It supports businesses to bridge the gap between early innovation, where the UK has traditionally been quite strong, and industrial-scale manufacturing to take the projects forward. Building on the capacity of its seven partner centres, that Catapult can cut across sectors, giving its customers access to world-class expertise, equipment and processes invested in and supported by the UK Government. I was also privileged to break ground at the expansion of the National Composites Centre in Bristol recently. My hon. Friend might like to know that since April 2010 the Technology Strategy Board has provided almost £1 billion in support for businesses across the UK, ranging from pre-start-up businesses to large multinationals.
My hon. Friend posed at least three specific questions; there may have been more than three. I hope that if I do not cover them all, she will allow me to write to her with a fuller reply.
I have not yet seen that report, which I think has only just emerged. What I can do is undertake to look at it immediately this debate concludes, but I cannot refer to it today, for the very basic reason that I have not yet read it. I hope that the hon. Gentleman will forgive me for that.
The first question that my hon. Friend the Member for Gosport asked was about tax credits. Research and development tax credits are providing the single biggest Government financial incentive for business investment in R and D, and take-up has increased steadily during the 12 years of the scheme. In the last financial year for which I have figures—2010-11—tax relief claims of £1.1 billion supported approximately 72% or £10.9 billion of all R and D revenue expenditure by business. Additionally, the patent box allows companies to claim a reduced corporation tax rate of 10% on profits from qualifying patents and certain other innovations.
My hon. Friend’s precise question, as I recall it, was whether we will guarantee to go on doing that. Nothing in this life is certain, but I am determined to go on supporting research and development tax credits. We have made some of the qualifying rules easier. What I think is more important now about R and D, in addition to committing to the funding, is ensuring that those credits work further down the company sizes, so that small businesses realise that they are just as eligible for them as much larger businesses. I do not think that tax reliefs naturally are things that Her Majesty’s Revenue and Customs would market, but certainly we need to spread the word that all kinds of business can qualify for help with research and development.
My hon. Friend’s second question was a really good one: how much are we learning from other countries about translating some of the innovation into commercially applicable projects? We do learn from other countries. For example, the German Fraunhofer centres provided much of the model for the Catapult centres that we have now established. We are not too proud to learn from or to pick up on what is happening in other countries, particularly Germany, which has always had a much higher proportion of its GDP in manufacturing. There are things that we can learn from other countries, and I assure my hon. Friend that we continue to do so. Ministers continue to visit other countries and to pick up on ideas, although of course those other countries have picked up on some of our more imaginative ways of funding as well.
The third question posed by my hon. Friend was on the small business research initiative. I am glad that she asked about that. It provides 100% R and D funding for technology-based companies that develop potential solutions to specific problems faced by the public sector where there is no readily available solution on the market. That is done on a much larger scale in the United States; it is fully supported through federal funds. That is another good example of where we can learn from the success of a scheme in another country and apply the lessons here.
My hon. Friend will recall that in the most recent Budget—Budget 2013—we announced that we will substantially expand the SBRI among key Departments, so that the value of contracts through this route increases from £40 million in 2012-13 to more than £100 million in the current year and more than £200 million by 2014-15. I hope that she will welcome that, but I fully accept that we have more to do to spread knowledge and use of the SBRI right across the Whitehall landscape to ensure that those Departments that have not yet thought of it as a potential route to solving some of the problems that they face do so. A number of Departments are already making good use of the SBRI, but I would like all Departments to consider it automatically as a source of particular strength.
I hope that my hon. Friend will forgive me if I have not answered all the other questions that she posed, but I want to conclude by saying a word or two about what is happening on skills. She suggests that we should learn from other countries. There is no doubt that countries such as Germany have been able to draw on a much wider pool of school leavers, apprentices and college leavers with the engineering, mathematical and technical skills that we still lack in this country.
On skills and innovation not only in products but into new markets, Promedics in my constituency has taken the existing skills of sewing machine technicians and moved them into a totally new market, supplying the NHS and others across Europe with surgical supports. It has taken that skill and applied it to a new market. What recognition or support can the Minister give such businesses?
I am delighted to hear that and would certainly like to hear more details and to see whether there are ways in which Government can recognise that kind of development more officially.
A skilled work force is the key to providing the innovation that business needs. Apprenticeship starts in engineering and manufacturing have increased from 26,000 10 years ago to more than 49,000 last year. There were more than 2,000 apprenticeship starts in the constituency of my hon. Friend the Member for Gosport last year. The number was up by 18% on 2010-11. She will be interested to know that nearly 900 of those apprenticeship starts were in the engineering and manufacturing sector—an increase of 32% on 2010-11, so we are making changes.
The Daedalus enterprise zone members group, which I think my hon. Friend chairs, includes the provision of a new skills training centre that is due to be built on the site from 2013. The first students are due through the doors in September 2015. That is a major achievement in my hon. Friend’s area and shows that the enterprise zone there is open for business.
I thank all hon. Members who have attended the debate and those who have contributed to it through their questions. I thank again my hon. Friend for raising this subject for debate. Let me assure her and you, Mr Robertson, that this Government are fully committed to realising the growth of manufacturing through innovation, which we see as essential to building a better balanced, more resilient economy for the future.
East Coast Main Line
[Dr William McCrea in the Chair]
It is a great privilege to serve under your chairmanship, Dr McCrea, in this vital debate on the future of the east coast main line. I am sure you will keep us on track and on time. Debates between hon. Members on nationalisation and democratic control of industry often stall due to an obstinate adherence to our political prejudices. All of us, on both sides of the House, have political prejudices about the relative merits of private and national ownership of basic industries. At the outset, I invite Members to disregard all preconceived theories and consider the future of the east coast main line objectively, as a technical problem with hard facts.
According to a written answer from the then Minister of State for Transport in 1996, the total gross proceeds to the taxpayer from selling off our rail infrastructure were £5.28 billion. Adjusted for inflation, that would be slightly more than £8 billion today—equivalent to only the past two years of taxpayer subsidy. According to the Office of Rail Regulation, the east coast main line is the only line in the country that comes close to paying for itself. Government subsidy makes up only 1% of East Coast’s income, against an industry average of 32%. The total cost to the Exchequer of the east coast main line was only £9 million in 2011-12; by comparison, Northern Rail, jointly owned by Serco and the Dutch Government, cost the taxpayer £685 million. Since the UK Government put the franchise under the publicly owned Directly Operated Railways, financial stability has been restored. The total premium, plus operating profit, amounted to £647.6 million in the four years to 31 March 2013; that is more in both cash and real terms than any previous franchise on the line, and all that money is available for reinvestment in our railway network.
East Coast has seen revenue growth of 9% over three full years, with 4.3% growth in 2012-13. The Minister of State described that growth to the Select Committee on Transport as a “plateau”. One wonders what word he would use to describe the Chancellor’s performance over the same period.
Thank you very much.
Journey numbers have grown from 18.1 million in 2009-10 to 19.1 million in 2012-13. An estimated £800 million will have been generated by the franchise for the taxpayer by April 2014. All that has resulted in a £40 million surplus: money that would otherwise be providing the profit to shareholders, if the line were privatised, and which East Coast has reinvested in its greatest asset, its staff. The fruits of that investment are clear to see: employee engagement is now at an all-time high of 71%—up from 66% in 2011 and 62% in 2010—which is the highest score of the eight train operators that is currently available. The average number of sick days has fallen from 14 to nine. Investors in People accreditation has risen from “standard” in 2009 to “silver” in 2012. Impressively, East Coast was the only train company to have achieved “Britain’s top employer” status in 2012 and 2013. Most importantly, on-board passenger-attributed accidents have reduced by 20% and staff accidents by 23% in the past year.
East Coast has also introduced a new timetable—the biggest change on the east coast main line in 20 years—seamlessly launched in May 2011. It introduced 117 extra services a week; a four-hour Flying Scotsman express from Edinburgh to London, calling only at Newcastle; and new direct services between London and Lincoln and Harrogate, and I hope that it will soon restore the link to Middlesbrough, the largest conurbation in the country without a direct link to the capital.
My hon. Friend is making a persuasive case. The east coast main line has flourished since it came back into public ownership. This is an example of privatisation for privatisation’s sake. The only people who will benefit from it are that small number of Tory pals—those profiteers who will bung their pockets with taxpayers’ money.
If I can make some progress, I will come back to the hon. and learned Gentleman.
I have laid out reforms that it might be thought would cause disruption. In oral evidence to members of the Transport Committee on 24 April this year, the Minister made the following comment about punctuality on the east coast main line:
“If you look at the latest monthly figures for reliability and punctuality, it is the worst of the 19 franchises.”
Were that the whole story, it would be extremely concerning, but East Coast during the latter half of 2012 achieved the best train punctuality on the east coast franchise since records began in 1999. In recent months, some challenging external circumstances, such as the weather and overhead wire problems on the southern part of the route, affected performance, and East Coast is implementing a joint action plan with Network Rail to ensure that operational performance on the line returns to the record levels achieved in the autumn. The results the Minister cited are completely atypical. One has only to look at Network Rail’s moving annual average for punctuality, which puts the east coast main line in the top three of the seven long-distance franchises, to see that. The encouraging performance improvements in period 1 and to date in period 2 of this year are an early reflection of that collaboration with Network Rail. The latest available figures show that nine out of every 10 East Coast trains were on time, according to the industry’s public performance measure—up considerably on the previous quarter and up year on year.
I am grateful to my hon. Friend and near neighbour on Teesside for giving way and I congratulate him on securing the debate. Does he have any idea why the new managers who were put in by the state to run the east coast main line have done so well? They are using the same people, the same equipment and the same everything else as the private company, National Express, which failed miserably, reneged on its contract and walked away.
I wish I could put my finger on it. My hon. Friend highlights a key issue, but it is useful to note that the way East Coast operates is a good comparator for the other services operating in this country.
The improvements are reflected in two key metrics. First, under public ownership East Coast achieved a record-breaking 92% overall customer satisfaction rating in the autumn 2012 national passenger survey conducted by the independent transport watchdog, Passenger Focus. That is the highest score on the franchise since the survey was launched in autumn 1999. It is 5% ahead of the score achieved in 2011 and three percentage points higher than the 89% average for all long-distance train operators. Indeed, in 2012, East Coast received the highest customer satisfaction score of any long-distance franchise operator.
Secondly, complaints stand at a rate of 150 per 100,000 journeys according to the Office of Rail Regulation’s latest available figures—down considerably on the previous quarter and back to the level prior to the disruption from the end of last year. Although that figure is relatively high compared with those of other train operating companies, it is just one third of where it stood when the east coast main line was in private ownership in 2007-08. A higher-than-average complainant rate might be due, in part, to the nature of the line regardless of its ownership, but since it is the publicly owned and publicly operated London Overground that has the lowest rate, at just two complaints per 100,000 journeys, it is difficult to claim a direct relationship between public ownership and complaints.
In addition, perhaps because of the unprecedented investment in staff that I have mentioned, there has been a 78% reduction in threats to staff in the past year. The apparent contradiction between a rise in customer satisfaction and a relatively high complaint rate dissolves entirely when we look at the Office of Rail Regulation’s breakdown of the reasons behind the grievances. Complaints about train service performance are down, year on year, from 38% to 29%, but what are on the increase and make up more than a fifth of all complaints are criticisms of the quality of the trains themselves. That comes directly from the fact that the rolling stock, which East Coast inherited from National Express, is eight years older than the industry average, at 27 years as opposed to 19.
That East Coast has achieved better customer satisfaction than any of its long-distance rivals, while running the oldest rolling stock of any franchise bar Merseyrail Electrics, is a testament to the workers and the management, and that the trains are still running at all after 30 years or more of continuous use is a testament to the brilliance of the engineers of British Rail Engineering Ltd who designed them and the factory workers of the north of England who built them.
Some elements of on-train comfort have also seen a marked increase. Of particular interest to certain hon. Members will be the new first-class complimentary at-seat food and drinks service, which has reversed historical losses of £20 million per annum and which contributed to a 21% rise in the number of first-class journeys in 2011-12, compared with the preceding 12 months. East Coast now serves a million meals per annum, which is a tenfold increase on the previous service, and its first class has certainly looked very nice on the occasions when I have walked through it.
I am very pleased that my hon. Friend succeeded in securing this debate. The first-class service, which, as MPs, we do not of course use, is important because of the environment. For many business travellers, it can make a considerable difference to their choice between flying—certainly from Scotland—and travelling by train. If we want to make the modal shift that we need for our environment, we need a service that will attract that kind of business traveller.
I agree entirely with my hon. Friend. The carbon footprint that we all imprint upon this planet is a vital issue, and she makes that point eloquently.
Ministers have admitted in the House of Commons that new investment in both rail infrastructure and new rolling stock on the east coast will come through taxpayer-funded support and not from franchisees. Funding for the 2014-19 upgrade of the east coast main line will be delivered through the Office of Rail Regulation approving a £240 million increase in the value of Network Rail’s regulatory access base. Regardless of whether the refranchising of the east coast main line goes ahead, the public, through Network Rail, will still be paying for the track. We will still be paying for the rolling stock, and we will still be paying for any upgrades, extensions or electrification that might ensue. None of the upgrades is dependent on whether the trains going along the track are painted Virgin red or Stagecoach orange. There is no deadline by which the franchise must take place, except, of course, the next election.
I congratulate the hon. Gentleman on bringing this matter forward. The Labour Government set a deadline for re-privatising the line, and even when they were unable to meet it, they continued to have it as their policy that the line should be re-privatised. Has the Labour party changed that policy?
I thank the right hon. Gentleman for his intervention. We are where we are, and we have to look at the matter on the facts of this specific franchise, examining it carefully to see whether it is working, right at this moment. Comments have been made in the context of reports that had only half the story, so when we have better information we should read it, consider it and judge accordingly, but I hear what the right hon. Gentleman says.
It is absurd for the Government to be pressing ahead with another franchise proposal when the previous franchise offering, of the west coast main line, was such a debacle and will have cost the taxpayer £100 million by the time it is resolved.
I thank the hon. Gentleman for giving way to me once again, and I take this opportunity to congratulate him on securing the debate and on the fact that so many of his colleagues—from both sides of the House—who have an interest in the franchise are present. Thank you, Dr McCrea, for chairing—I forgot to say that the first time I intervened.
The Labour Government before 2010—in fact, before 2005—acted perhaps with undue haste, in desperately getting back into the private sector the southern franchise that had been taken off Connex. They made many mistakes at that time. Does the hon. Gentleman not feel that this Government should be credited with ensuring that such mistakes are not made in re-awarding this franchise to the private sector?
I am grateful to the hon. Gentleman for highlighting the weaknesses of the entire structure of these private franchises. He does so eloquently.
A serious overhaul of the franchise process is necessary. The Minister may well claim that, following the Brown review, a new process is indeed in place. In that case, one has to wonder why existing private sector franchises, which would be the ideal testing ground for the process, are instead receiving extensions of up to 50 months. The Government’s haste to extricate themselves from running trains is all the more baffling when more than half the rail franchises in Britain are to some extent state-controlled already; it is just not the British state that is in control.
I will in a moment.
Putting aside East Coast and London Overground, there are 17 franchises in the UK, of which 10 are operated, to a greater or lesser extent, by the Governments of our European neighbours. Chiltern, CrossCountry and Wales & Borders franchises are operated by Arriva—a wholly owned subsidiary of Deutsche Bahn, the majority shareholder of which is the German Government. Greater Anglia is run by Abellio, the international arm of the Dutch Government’s rail operator Nederlandse Spoorwegen, which also runs Merseyrail Electrics and the aforementioned Northern franchise in partnership with Serco. The South Eastern, Southern and West Midlands franchises appear at first sight to be privately run and are operated by Govia—a joint venture between Go-Ahead Group and Keolis. Keolis, the largest private sector French transport group, is, however, majority owned by SNCF, the French state rail operator. Keolis also runs TransPennine Express, in collaboration with First Group. Are hon. Members, particularly those of a Eurosceptic bent, content that when they pay an extortionate sum for a ticket on Southern, South Eastern, TransPennine or West Midlands trains, their money is on the TGV to Monsieur Hollande? Why does this Government believe that other countries can run our rail services, but that Britain cannot?
The remaining seven franchises are hardly a model of laissez-faire, split as they are between three and a half private companies: Stagecoach, National Express, FirstGroup, and Virgin Trains, which is half-owned by its alleged competitor Stagecoach. New entrants cannot possibly afford to take on these mammoth projects and the risks that may accrue. The original 25 franchises offered in 1995 have shrunk to just 17 today, following mergers, making the barriers even higher.
The previous Conservative Government themselves recognised the barriers to new entrants when they banned British Rail from bidding for franchises in the wake of privatisation. The then Minister for Public Transport, now Baron Freeman, said:
“I am concerned that it would be very difficult to have a fair and equal competition if British Rail was a bidder.”—[Official Report, 26 July 1993; Vol. 229, c. 578W.]
The current debate is about not a free market versus a state monopoly, but whether a public asset, for which the taxpayer will remain liable, should be managed by the British Government, a foreign Government or one of a handful of private companies that are large enough to meet the criteria of the bid.
Such companies will always underestimate costs and overestimate revenue when they bid for contracts, because they know that, if they do not, their competitors will win the bid. They are looking to their next set of quarterly reports and their next shareholder annual general meeting; Governments are looking to the next century. The truth is that no Government can afford to let the rail network go to rack and ruin. The state will always have to intervene to protect that vital national asset and the lives of its citizens. As the saying goes, it is too big to fail.
Train operating companies know that, and they also know that if it all goes wrong, the taxpayer will be left holding the line. Christopher Garnett, the former chief executive of the train operator Great North Eastern Railway—the first franchise operators of the east coast main line—said during the failure of that company:
“The market will self-destruct as bidders bid to win on ever-tighter margins. When it goes wrong, it’s going to come right back to the Department for Transport.”
Since privatisation in 1996, both companies that have run inter-city services on the east coast have failed or walked away from the franchise mid-contract. Passengers will rightly be worried that history might repeat itself under a re-privatised service.
Many of those who are now Government Members once supported keeping the east coast main line in public hands. Before he held his current office, the Deputy Prime Minister said in 2009:
“Our railways should not be a plaything for private companies and we think giving it the stability of public ownership during the next franchise period would be much better”.
He added that
“it’s not an industry, it’s a public service. Our rail services are public services.”
If you will forgive the phrase, Dr McCrea, “I agree with Nick,” but as is ever the case nowadays, we are unsure whether the Deputy Prime Minister agrees with himself.
As many hon. Members whose constituents have lobbied against High Speed 2 know, railways do not affect just those whom the Government call “customers”. Stan Higgins, the chief executive of the North East of England Process Industry Cluster—the hon. Member for Redcar (Ian Swales) knows that confederation of the leading process businesses in our region well—told me the view of his members:
“We’re running railways for profit, as opposed to as a service to our industries and our communities.”
By the franchising process, the public are being disfranchised.
I want to quote the Conservative Secretary of State for Transport who moved the Second Reading of the Railways Bill that carved up and sold off British Rail. He said that that company had
“too little responsiveness to customers’ needs, whether passenger or freight; no real competition; and too little diversity and innovation…; an insufficiently sharp awareness on the part of employees that their success depends on satisfying the customer—indeed, on attracting more customers; and an instinctive tendency to ask for more taxpayers’ subsidy and to feel that public subsidy will always be there as a crutch whenever things look difficult.”—[Official Report, 2 February 1993; Vol. 218, c. 156.]
Those were the reasons for privatisation, and I will look at them one by one. East Coast has increased services in response to customer demand. It has successfully increased revenue in the face of competition from not only road transport, but domestic flights that are far cheaper than anything faced by British Rail. It has innovated with new services for first-class carriages and sold more than 1 million e-tickets. It has the highest rates of customer satisfaction of any long-distance franchise, and staff who are engaged with the company and with passengers. A million more journeys take place on East Coast now than when the franchise became public. Far from crying for subsidy, it makes the lowest demands on the public purse of any rail franchise.
Mr George Strauss, the Parliamentary Secretary to the Ministry of Transport at the time of nationalisation in 1946, said:
“I am sure that Parliament would not tolerate paying a permanent subsidy to a particular section of privately owned industry when, plainly, that industry as a whole, if properly organised, could be self-supporting.”—[Official Report, 18 December 1946; Vol. 431, c. 1975.]
The choice before us is between an unending subsidy to private interests and continued public ownership of a line that, in public hands, is 99% self-supporting. The question that I must ask the Government, and Members who oppose keeping the line in the hands of those who have managed it so well, is whether any evidence would get them to drop their prejudice that private is always better than public.
Order. I am endeavouring to be helpful, given that well over 20 Back Benchers are in the Chamber. Ten Members have put down their names to speak and we have only a short period, so with the authority that has been given me, I must impose a time limit of four minutes, which I hope will allow them all to speak.
It is a pleasure to serve under your chairmanship, Dr McCrea. I congratulate the hon. Member for Middlesbrough (Andy McDonald) on securing this useful debate. We can sing the praises of East Coast—I am happy to do so as someone who uses its services every week; it does not provide a bad service at all—but the idea that this is some way towards being a golden age compared with GNER, which first took over the line and provided an excellent service, is a myth.
As I have said, I am happy to congratulate East Coast, which gets us here every week, usually on time. Passengers want a clean, reliable, safe and reasonably priced service. When they sit back in their seat, they do not care whether the track is operated by Railtrack, Network Rail or a private operator, or whether their seat is in a private coach or a publicly owned one.
The fact that there is one failure—whether in the private sector, the public sector or wherever—does not automatically indicate a flaw in the system. The hon. Member for Jarrow (Mr Hepburn) said that the change would be privatisation for privatisation’s sake, but the opposite is equally true: do we want nationalisation for nationalisation’s sake? That is certainly what Opposition Members seem to want.
In his opening remarks, the hon. Member for Middlesbrough referred to Northern Rail, but to compare it with East Coast is to compare apples with oranges—a regional operator with an inter-city one. Northern Rail provides a perfectly adequate service in my constituency, between Cleethorpes and Barton-on-Humber, but it does not serve such great metropolises as York, Darlington and Doncaster. The station at Thornton Abbey—in a beautiful, idyllic setting—actually serves two farms and an ancient ruin, and I think it had 13 passengers during 2009. East Coast is fine; it provides a perfectly adequate service, but it does not dash up and down between Newcastle and King’s Cross, so there is no comparison whatever.
I am happy to criticise East Coast when it makes mistakes, which it did when it redesigned its timetable last year.
On the timetable, does my hon. Friend agree that although the increased frequency and number of trains is welcome, the lack of joined-up thinking between those trains and local ones has caused constituents real problems that East Coast needs to deal with? If the line is retendered, the Minister must ensure that that factor is included in the tendering process, as I hope my hon. Friend agrees.
I welcome that intervention by my hon. and learned Friend, who highlights a particular problem. My point is that the station in my home town of Cleethorpes has been removed from the timetable—because there is no through train to it, it is no longer shown as having a connecting service. I think that Middlesbrough was another destination that was removed from the timetable. Regrettably, despite my protests, East Coast did not correct that in its new summer timetable.
The Government show every sign of moving ahead with the new franchise to a good timetable, which I welcome. I hope that the company will put in place services that British Rail removed in 1991, namely the direct services from King’s Cross to Cleethorpes, which I know the Minister is keen to restore in the new timetable.
My hon. Friend raises a valid point. The important thing for the Cleethorpes constituency in relation to electrifying the line is that 25% of the country’s rail freight, when measured by tonnage, starts or ends at Immingham dock. The line must therefore be a potential candidate for electrification.
The hon. Member for Middlesbrough used, as I suspect all politicians do occasionally, selective statistics, especially ones that were critical of private operations. For example, he omitted the statistic that showed that the west coast main line, in private operation, generates more passenger income than the east coast main line— £820 million in 2011-12 compared with £587 million on the east coast main line.
I hope that the Minister will confirm that we are going ahead with the new franchise, that we are on course to deliver it and that the new franchise will deliver a better service than the existing east coast main line, which is, to be honest, just treading water at the moment. I know that the Minister will also want to ensure that there is a service to Cleethorpes.
I congratulate my hon. Friend the Member for Middlesbrough (Andy McDonald) on securing this important debate. The east coast main line is a vital artery for all of us, running between London and Aberdeen. My principal interest is of course Aberdeen. In the debates that we have had on this issue, it is clear that the east coast main line is generally thought to run simply from London to Edinburgh, but it runs another 130 miles further north. When the line was completed in the 1880s, it was part of the Victorian engineering miracle, producing both the Tay bridge and the Forth bridge. It allowed royalty to get away for their summer holidays, brought to London the fish and the textiles that were produced in Aberdeen and opened up the whole country to tourism in the highlands. It was an important line then, but it is even more important now, which is not always recognised.
Aberdeen is now the hub of the oil and gas industry in Europe. Over the past few decades, it has poured billions of pounds into the Exchequer, but we have a railway line, certainly the last past of it from Edinburgh to Aberdeen, that has been forgotten about. I have raised that issue in the House many times. There has been a failure to construct proper infrastructure to support the oil and gas industry. The same can be said, I think, of Norfolk, which has difficult contacts as well, but perhaps not to the same extent.
I have done a little bit of arithmetic for the debate. The journey time from London to Edinburgh, which is about 400 miles, is four hours and 20 minutes at an average speed of 92 miles an hour. Edinburgh to Aberdeen is only 130 miles, and it takes two hours and 39 minutes at 45 miles an hour. When I have raised those issues in the past, they were usually coupled with problems on the road network and with air transport. I used to be able to say that someone could travel from Aberdeen to Rome by car and find only 70 miles of single track, which was on the road between Aberdeen and Dundee. That has now been sorted. Air transport has improved dramatically as well, but we still have the same problem on the rails. One part of the east coast main line, just north of Montrose, is single track. The Minister will rightly point out that the responsibility for that lies with the Scottish Government, but for a couple of centuries it was the responsibility of Westminster, and nothing was done about it.
I also want to raise a specific issue with the Minister because it relates not just to this particular line, but to High Speed 2. In the economic evaluation for HS2, there is a suggestion on page 9 that the Government are retaining an option for removing through-trains from stations north of Edinburgh to London once phase 2 of the new high-speed rail is built post-2033. That has caused some consternation. The Minister is looking slightly bemused; he has probably not read the evaluation thoroughly.
I congratulate the hon. Member for Middlesbrough (Andy McDonald) on securing this debate and on his excellent speech, which fully covered many of the issues. I have been a regular traveller on the east coast main line for more than 25 years for business purposes. It seems hard to believe that it is the most successful and profitable line in the country, because the bungled franchises under both Governments and under-investment have left us with old trains, poor punctuality and high fares.
Arriving at Darlington station to come to Parliament, I have a choice: buy a standard return ticket, or get back in my car, drive to London and do the return trip that way. At 45p a mile, I save the taxpayer £60 if I drive. Is there anywhere else in the world where a mass transit system is so much more expensive than each passenger recovering in full the cost of driving a car?
In the year to March 2012, East Coast made a profit before tax and payments to the Department for Transport of £196 million on a £666 million turnover; that is more than 29%. It is high time that some of that money was used both to reduce the fares and to upgrade the rolling stock. Until then, users of the line are bound to feel that they are being ripped off and, in effect, used to subsidise the rest of the network.
My hon. Friend makes an important point about the quality of the rolling stock, but is he not aware that the inter-city express programme, which will be built in the north-east, will introduce new trains on the east coast main line?
Indeed, and I hope they will be built in the north-east at the new Hitachi factory. Let us hope the public procurement produces the right answer.
I note the Opposition’s position. They had the chance to make the franchise public in 2007; they did not, and they went into the last election promising a refranchising in 2011. The Public Accounts Committee, of which I am a member, reviewed the east coast fiasco in mid-2011. It mainly considered the National Express failure, which was a familiar story of unrealistic bidding, poor due diligence, poor contracting and wasted taxpayers’ money. Since then, the Department’s franchising team has caused the west coast train disaster with another huge loss of taxpayers’ money. Will the Minister give us confidence that a proper job will be done this time?
Although I understand the commercial sensitivity, I feel that the whole bidding review process should be as transparent as possible. Independent experts should be involved from the start to provide scrutiny to avoid unrealistic assumptions producing the wrong answer. Taxpayers should not have to wait for the National Audit Office to pick over the entrails again. Furthermore, if the offers are not good value for travellers and the taxpayer, continuing public ownership must be a realistic alternative. As the hon. Member for Middlesbrough said, we should not start with the answer and allow political dogma to decide.
I hope that the bid review process will also be stress-tested. For example, there should be no assumptions about tax recovery from companies, which then avoid tax, as we constantly see in the world of the private finance initiative.
With its inherent profitability, and given that the 250-mile journey from Darlington to London takes as little as two and a quarter hours, the east coast line should be the jewel in the crown of the UK rail network. However, with two bungled franchise deals behind us, the Minister has a lot to do to convince us and the public that this will be third time lucky.
I congratulate my hon. Friend the Member for Middlesbrough (Andy McDonald) on securing this important debate.
I also congratulate my hon. Friends the Members for Edinburgh East (Sheila Gilmore) and for City of Durham (Roberta Blackman-Woods) on leading a campaign that has widespread backing inside and outside Parliament. It is not surprising that it is so well supported; as we have heard, the facts speak clearly for themselves. By the end of this financial year, East Coast estimates that it will have returned about £800 million to the Exchequer since the line was nationalised. The net public subsidy in the past financial year was just 1% of turnover, compared with an industry average of 32%.
A recent report commissioned by the TUC reveals that the firms receiving the largest state subsidies spend more than 90% of their profits on average on shareholder dividends. Of those firms, the top five recipients received almost £3 billion in taxpayer support between 2007 and 2011, which allowed them to make operating profits of £504 million. However, more than 90% of that money—£466 million—was paid straight to shareholders.
It is also worth while pointing out that the taxpayer has been getting this money back from Directly Operated Railways in a context where the company has been able to operate only on a fairly short-term basis, because there is no certainty for the long term about the franchise. Is it not highly possible that, if the current operators had the security of knowing they were going to operate the railway system for a considerable number of years to come, they might make even better returns for the taxpayer and run the system even more efficiently?
I agree. That was a good point, and it was well made.
I am a regular user of the service, as are many Members, constituents and people across the north-east, and the improvements in service and punctuality have been plain to see. That is not to say that there are not occasional causes for complaint; of course there are, and we all know what they are—often, it is the toilets. However, the service has improved, without the need for the private sector ethos that we often hear about from advocates of privatisation.
In a written answer to my hon. Friend the Member for Newcastle upon Tyne Central (Chi Onwurah), the Minister said:
“The Government remains committed to benefitting from private sector innovation and operational experience in its railways.”—[Official Report, 22 April 2013; Vol. 561, c. 590W.]
Given the improvements since the line was nationalised and the low reliance on subsidy, which is 1% of turnover, as well as East Coast’s returns of £800 million to the national coffers, the private sector organisations running other franchises could learn a thing or two from Directly Operated Railways.
The east coast line is getting increasingly busy, and it needs constant investment in maintenance and capacity improvement. Incidentally, one way that we could improve capacity—I and other north-east Members recently met the Minister to make this case—would be to bring the Leamside line back into use in the north-east to take some of the freight off the main east coast line. The Minister and I have discussed that at length. The proposal would have the added bonus of providing the means to extend the Tyne and Wear Metro to Washington, in my constituency, which would bring great benefits to the town and its residents.
However those improvements are made, they do need to be made, and that will require money. The benefit of keeping the franchise in public ownership is that that investment can be made by ploughing the generous profits generated—£800 million so far—back into the service, instead of giving them to overseas shareholders. Our network sees hundreds of millions of pounds disbursed to shareholders of private companies every year, despite the fact that those companies receive state subsidies to keep going. East Coast’s performance over the past three years has shown us the folly of that model. Why send profits generated from British passengers to foreign owners abroad, when some of those owners are subsidising rail fares in their own countries? We could and should use those profits here to improve our services and to help keep our fares down.
The East Coast arrangement is not hurting my constituents; it is working. It is not broken, so it does not need fixing—apart from the toilets, of course. If anything, based on the performance of East Coast, it would be desirable to see more of our key lines under public control. What the service needed was the stability to carry on planning for the future and improving performance and service standards further, while maintaining the return to the taxpayer. What it has, however, is the uncertainty caused by being put out to the market once again, where it may even be the subject of a tender by the company that failed to run it properly last time. That would cost taxpayers millions.
Given the shambles over the west coast line, I would have thought that the Government would at least leave a successfully operating line well alone—
I, too, congratulate the hon. Member for Middlesbrough (Andy McDonald) on securing such an important debate.
Every franchise is operationally different. East Coast runs 155 services per day, with six trains per hour from London in the peak. It essentially serves two main destinations from London: Leeds and Edinburgh. The west coast operator runs 321 services per day, with 11 trains per hour from London in the peak. It serves five main destinations: Birmingham, Manchester, Chester, Glasgow and Liverpool. I have used both services; I use East Coast and First Capital Connect daily, and both work quite well.
It is impossible to argue that the private is sector is bad and the public sector is good. Many speakers so far have focused on an ideological debate, but I want to focus on what will lead to improvements in passenger satisfaction. The east coast operator could remain public, it could become a mutual-type organisation run by its own staff and members or it could be moved into the private sector, but passenger satisfaction should be the main reason for any change and the main driver of any innovation.
Stevenage is on the east coast main line. It is a category C station, with more than 4 million passenger movements a year. It is an important hub for Hertfordshire, with Stansted on one side and Luton airport on the other. That will be the subject for a separate debate between me and the Minister, because there is a proposal to expand Luton airport, with the result that a plane would fly over Stevenage every minute or so.
East Coast is used by many commuters—20,000 to 30,000—to go from Stevenage into London every day. It is a different type of service for us than it is for many Members in this room, who want it to be a long-distance operator. One of our concerns is that as it opens up more services in the north and more direct lines, it will shave minutes off the journey to London by cutting services to places such as Stevenage.
It is always a pleasure to pass through my hon. Friend’s constituency on my way up and down to Yorkshire every week. Will he join me in congratulating the Government on their record of investment in our railways? In my patch, there is the northern hub rail investment and the electrification of the trans-Pennine route. Does he agree that franchising is about where our railways—our east coast main line—will be in five, 10 or 15 years, not the adequacy of the service at the moment?
I was disappointed to hear my hon. Friend say that he passes through Stevenage without stopping—I would prefer him to stop an awful lot more. However, I, too, congratulate the Government. This Government and the previous Government have done a lot of good work on the rail industry, and we could look at the way in which King’s Cross is being changed.
I would not be able to acknowledge that, because I do not know the figures, but I can take the hon. Gentleman’s word for it.
Many people have said that the private sector ethos is not something we want to introduce to East Coast. In May 2011, I was fortunate enough to persuade East Coast to increase the number of services stopping in Stevenage by 18 per day. The number of services rose from 40 to 58 a day, which means an extra 9,000 seats a year. That all sounds great. It was the biggest rise in services to any location on the east coast main line. I did an awful lot of work on that. The individual I spoke to, who was the chairman of East Coast at the time, was previously the chief executive of First Capital Connect, and she took the private sector ethos that she received and learned at First Capital Connect and introduced it to the east coast main line. The reason First Capital Connect is important is that it shares the Stevenage station, effectively, with East Coast, and one of the main problems on a franchise that is 960-odd miles long is that it deals with so many other local operators. The point has been made that an interaction with local services would be hugely important and beneficial to many of our constituents. Fortunately for us, it works well in Stevenage.
Stevenage is only 30 miles from London, and the debate seems focused very much on services between London and the constituencies of some Opposition Members, and London and my constituency. A couple of years ago there were almost 40,000 journeys a year from Stevenage to Newcastle; a year ago there were nearly 50,000 journeys from Stevenage to Leeds; there are 11 services a day from Leeds to Stevenage and back. Stevenage is the capital of the UK space industry. We employ more than 10,000 scientists and engineers and build 25% of the world’s telecommunications satellites. A couple of days ago a satellite built in Stevenage went up, which will be responsible for broadcasting everything back to the UK. Interacting with a high-technology area such as Stevenage is important. People who engage in debate about this issue always seem to focus on the idea of a long-distance operator running the service, with Peterborough as the closest place people could get to—where they would have to change. As my hon. Friends have explained, that gives rise to the question whether it is cheaper to do that, or just to go on a plane or drive. Many of my constituents will drive to Heathrow airport and fly to Scotland, because that is cheaper than going by East Coast train. That is ridiculous. Sadly, it is faster. That is another problem. The debate and our efforts should focus on passenger satisfaction. Whether the service remains private or becomes public, or a mutual, that should be the whole idea.
In my final 30 seconds I have something to put to the Minister. Wherever the future of east coast ownership lies, it should include a mechanism for the removal—or, in today’s language, the recall—of the rail franchises, if any rail passengers are dissatisfied.
I, too, congratulate my hon. Friend the Member for Middlesbrough (Andy McDonald) on securing an important debate.
The headquarters of the east coast main line has been in York ever since the line was built in the 19th century, and hundreds of skilled jobs in my constituency depend on its staying there—jobs at the headquarters and in the Network Rail management of the east coast main line, and hundreds of jobs in private civil, structural, signalling and electrical engineering firms that work for the railways. There have been two private sector-created hiatuses, caused by franchise collapses, on the east coast main line. Now there is a Government-created hiatus—a refranchising. I urge the Minister to make sure that there is stability and that those jobs stay in York.
In February, I asked my right hon. Friend the Minister—I call him my friend because we sat next to each other at the Democratic convention, cheering Obama to the hilt; he is one of us—at Transport questions:
“Before the Government announce their franchising schedule will they look at the feasibility of running a public sector franchise on the east coast for a period to compare like for like with a private franchise on the west coast to resolve the issue”
of whether privatisation works?
“I am afraid that he is not going to tease out of me in advance what my right hon. Friend the Secretary of State will announce”.—[Official Report, 28 February 2013; Vol. 559, c. 463-4.]
I wish that the Government had given the idea consideration before they announced that they intended to go ahead with franchising, but since they deliberately did not, and told the House they were not going to do so, I ask them to consider the proposition now.
There are three fundamental questions for the Minister. Do the Government want lower fares on the railway, so that the railways become more affordable and passengers get out of their cars and on to trains? Does he want a high return on the public investment that there has been in railways for decades? Does he want ever-improving quality and safety? I am sure that his answer to all three questions would be yes. Has privatisation delivered on those dimensions? On fares: no, it clearly has not. On the return on investment, track charges now being obtained by Network Rail are lower than they were 20 years ago. The East Coast train company is giving the Government a higher return than its predecessor private companies. In round terms, it turns over £650 million a year and gives the Government a profit of £200 million. In the middle of a downturn, for East Coast to provide the Government with a 30% return is doing pretty well, and I do not think the Government should put that in jeopardy.
I congratulate my hon. Friend the Member for Middlesbrough (Andy McDonald) on a wonderful speech. My hon. Friend the Member for York Central (Hugh Bayley) is getting to the crux of the matter. I travel on the east coast line—400 miles, for four hours 20 minutes—about twice a week. Does he agree that if a private operator returned that amount of money to the Government, they would champion it as a great way for the private industry to run the railways?
They would, and rightly so but they should also do so for a public sector operator.
I was on the Public Bill Committee—they were called Standing Committees in those days—that considered the Railways Act 1993. We were told that the railways had to be privatised because there would then be masses of new private sector investment in the railways. Sadly, that has not happened. I totted up the investment for the first two years in which the Government were in power: 2010 and 2011. Network Rail invested more than 10 times as much as all the private rail companies put together. It invested £9,739 million and the private sector invested £780 million. In truth, the jury is still out on whether rail privatisation works.
No; I think I will make progress, because I have only a few minutes.
I ask the Minister to consider whether it makes sense to run a private franchise on the west coast main line, which he is obliged to do—Richard Branson will sue him if he does not—and continue, for a full franchise period of 15 years, a public sector operation on the east coast main line, and to compare like for like. Which delivers better value for money to the Government, gives a better service to the public, and does better at reducing fares? I put a final challenge to him: let the Government follow what the passengers want—put out a leaflet on East Coast trains and ask the public whether they want refranchising or to stick with East Coast. If they go for East Coast, give East Coast a whirl.
Several hon. Members rose—
It is a pleasure to serve under your chairmanship, Dr McCrea. I congratulate my hon. Friend the Member for Middlesbrough (Andy McDonald) on the fantastic speech he made in opening the debate.
Like many of my colleagues, given the recent history of the east coast main line—not to mention the Government’s failure on the west coast franchise—I am deeply concerned about their plans for the impending privatisation of the east coast main line. The announcement by the Secretary of State for Transport about the start of a tendering process for the east coast main line and nine further franchises pays no regard to the public interest, and a profitable rail service will return to private hands within the next two years. The plans will no doubt be a recipe for disaster.
My hon. Friend the Member for Middlesbrough established in his speech that Government Members support state ownership of the UK rail network, but importantly, that does not mean UK state ownership. Instead, they support German, French and Dutch Government ownership of the UK rail network. It has been interesting to hear about the lack of understanding of the complex interrelationships in the way our rail franchising system works, such as the relationship between Network Rail, the train operating companies and the rolling stock leasing companies, and about the failed diffuse franchising model established by the Tory Government from 1979 to 1997.
We are promised new rolling stock on the east coast main line, but initially only the diesel trains will be replaced, and that will not happen until 2018. No one denies that the line suffers from chronic underinvestment, particularly as there is now very tired rolling stock. However, let us not forget the burden that East Coast inherited from the privately owned rail firms, GNER and then National Express. Those problems were exacerbated, given the limited amount of rolling stock available on the line, by the Hatfield and Selby rail crashes. When full train sets are taken out of a service of that nature, it means that the operator is operating on very tight margins indeed.
The only way to run an effective rail service is to ensure that infrastructure is up to scratch through continued investment, yet from a private sector perspective the overriding objective seems to be not investing in maintenance and providing customer satisfaction, but retaining funds for shareholders.
Like the travelling public, I am deeply concerned about what is being proposed for us. If we acted on the proposal that my hon. Friend the Member for York Central (Hugh Bayley) has suggested and asked the travelling public on the east cost main line what they want for the future, we would get proof of the undoubted fact that the vast majority of them want the franchise to stay exactly where it is—in public ownership.
The ideology in this debate is clearly not on the Labour side, as is shown by the speeches we have heard. What is puzzling many of my constituents is why it is somehow so urgent to put the east coast line out to franchise now, when East Coast is working well and when the franchise process for the west coast main line was such a disaster so recently. It sounds like the answer is ideology.
A couple of misconceptions have arisen in the debate so far. One of the previous speakers suggested that refranchising would fund improvements such as electrification, but during the past few years Network Rail has made infrastructure investment from public money. It is clear that refranchising will not bring about that kind of investment. I also say to the hon. Member for Redcar (Ian Swales) that, instead of perpetuating the notion that somehow East Coast is uniquely expensive, if he took his Government’s advice to benefit claimants and became “digital by default” he could considerably reduce fares by booking in advance. That is no different from the situation with any of the other rail operators.
There is now a good argument for looking at the situation. I am sure the Minister will say, as some Government Members have already said, “Oh, but the Labour Government were going to refranchise.” We learn from experience, and we have learned that there is no inherent reason why a publicly operated railway company cannot make a success of things. One reason for that is that such a company will be operated not by some anonymous Department, but by rail professionals; it will not be run from the Department for Transport. Those rail professionals are clearly motivated to make things work, which is why we are seeing the improvements that we feel are happening on the east coast line.
The time has now come for us to look again at some of the assumptions that were made at the time of privatisation.
I am sorry; I do not think I have time to give way.
There was a view that the track should be separated from the trains and that the network should all be split up. However, we know from the McNulty report that the unit cost of railways in this country is 40% higher than in countries in Europe where there are publicly owned, integrated rail services. The time has come not to be ideological about this issue, nor even defensive about what anybody’s Government did in the past, but to look at what is actually happening out there.
In the first instance, we should say of the east coast line, “No, we will not put this out to franchise again at this stage. There is no need to do so.” Secondly, we should look at the whole process and analyse what is happening. Thirdly, we should perhaps look again at having an integrated rail system—
As ever, Dr McCrea, it is a pleasure to serve under your chairmanship, and I congratulate my hon. Friend the Member for Middlesbrough (Andy McDonald) on making an excellent contribution to the debate.
I have only three minutes to speak, which does not give me much time to consider the privatisation or nationalisation of the east coast main line; I would need a lot of time to do that. Quite simply, I will focus on saying that the privatisation of the railways—some might even say the theft of the railway infrastructure—is totally unacceptable. It has been an unmitigated disaster, and franchise after franchise on the east coast main line has been a shining example of that.
I have looked at the results of the east coast main line. Since it has been in public ownership, it has been absolutely outstanding and there have been some things that private companies would be absolutely delighted with: increased passenger numbers, profits, premium payments and passenger satisfaction, and better turnover and punctuality. Also, passenger fare revenue has increased by 34% to £820 million. In 2012, turnover was £665.8 million, which was an increase of £20 million, leaving a profit before tax and service payments to the Department for Transport of £195.7 million, which was an increase of £13 million. Passenger journeys with East Coast, which runs trains from London to Yorkshire and from the north-east of England to Scotland, increased by 2.1% in 2012.
In addition, there is another important point, which I think has been agreed on by Members of all parties today. Customer satisfaction with East Coast has risen by 2%. Also, the company’s latest punctuality figures are the best since records began in 1999. What a credit to East Coast that is, and why on earth the Government are hoping to privatise the east coast main line quite frankly beggars belief. Again, it is about absolute ideology and absolute dogma, and who will benefit from this privatisation? It will not be the passengers and it will not be the work force; the financial bonanza will be distributed between shareholders.
I ask the Minister why on earth National Express—a company that threw the keys back at the Government because it could not cope with privatisation last time—will be allowed to bid for the east coast main line for a second time. If it could not cope the first time, why is it even being allowed to put itself forward a second time?
It is a pleasure to serve under your chairmanship, Dr McCrea, and I congratulate my hon. Friend the Member for Middlesbrough (Andy McDonald) on the timely and comprehensive speech that he gave on this very important subject.
Government Members have accused Labour Members of making this an issue of ideology. Well, in Westminster Hall today we have a Minister who oversaw the architecture to privatise the NHS and who is now overseeing the privatisation of a successful publicly owned rail franchise in the north-east. Indeed, this process is an experiment. Under the previous Conservative Government, the rail network was broken up and a new model devised in a way that any objective commentator must acknowledge was a failure.
We have seen a decline in the quality of service, a lack of investment, higher public subsidies and inflation-busting fare increases since privatisation. In fact, a report by Just Economics showed that UK rail services were less affordable, less comfortable, slower and more inefficient than publicly owned rail services in Germany, France, Italy and Spain. British train tickets are now the most expensive in Europe. A typical season ticket in the UK now costs 14p per kilometre, compared with just 8p per kilometre in Germany, Holland and France, which are the next most expensive countries in Europe. So, if we are making comparisons on price or value for money, the privatised franchise model that we have here just does not stack up.
I do not wish to go off the rails in terms of time, Dr McCrea, but I am under a bit of pressure and we have had some first-class contributions from Members. I do not want to repeat what has been said. However, I am perplexed about why, after four years of stability, rising passenger satisfaction and significant returns to the Treasury, the Government are rushing through the privatisation of the east coast main line, if not for reasons of ideology and dogma, ignoring the evidence. Conservative Members ask, “Would you nationalise the industry?” Well, in public polling, not just of Labour voters, but generally, those in favour of nationalisation poll in excess of 70%, by MSN and NOP and 93% in The Guardian. There is nothing more ideological than privatisation for privatisation’s sake. This is a privatisation too far, and it is not fit for purpose.
It is a pleasure to serve under your chairmanship, Dr McCrea. I congratulate my hon. Friend the Member for Middlesbrough (Andy McDonald) on securing this important debate. We have heard about the many improvements that have been made on the east coast since 2009. My hon. Friend set out the hard facts. East Coast has made real progress since Directly Operated Railways stepped in. Yes, there is more progress to be made, but I struggle to recognise the picture of East Coast treading water. A number of puns have made, but I am not sure that the metaphor of a railway treading water, used by the hon. Member for Cleethorpes (Martin Vickers), is one that I would use. However, hon. Members have provided examples of hard facts that support the call for the east coast main line to remain as a not-for-private-profit operator.
My hon. Friend the Member for Washington and Sunderland West (Mrs Hodgson) noted the improvements to punctuality that she and her constituents have benefited from. My hon. Friend the Member for Edinburgh East (Sheila Gilmore) noted the improvements in targeting business travellers, who might otherwise travel by plane, with worrying environmental consequences. There has been a 19% increase in those using the first-class service.
The hon. Member for Stevenage (Stephen McPartland) described a huge improvement in services to his constituency. He also said that passenger satisfaction should be a key measure. Of course, East Coast is getting better and better. Passenger Focus, the independent watchdog, recently recorded 92% satisfaction with East Coast—the best score found in its survey on that line since it was launched in 1999, better than under GNER or National Express.
As my hon. Friend the Member for Easington (Grahame M. Morris) suggested, the hard facts point to this being a dogmatic, ideological privatisation, rather than one based on the service.
I take it that the hon. Lady would want completely to dissociate herself from the comments made by the former Labour Transport Secretary, Lord Adonis, who said:
“I do not believe that it would be in the public interest for us to have a nationalised train operating company indefinitely.”—[Official Report, House of Lords, 1 July 2009; Vol. 712, c. 232.]
I do not know when the hon. Gentleman last spoke to Lord Adonis, but sensibly, like the rest of us, he responds to a change in circumstances. Over the past four years, we have seen East Coast perform well under Directly Operated Railways. Therefore, now is the time to keep it as a publicly operated service.
Does my hon. Friend recognise that Lord Adonis made his remarks some years ago on the basis of a National Audit Office report that looked at only eight franchises? That report underestimated the 2011-12 subsidy necessary from the taxpayer to those eight franchises by £224 million. We cannot rely on those comments, which were made in good faith at that time on false information.
I agree that we should be paying tribute to the work of East Coast staff. They stepped into the breach at a difficult time. The two previous franchise holders failed, with one operator walking away from its obligations entirely. Yet East Coast, run as a not-for-dividend operator, has achieved what its predecessors could not: stability and constantly improving services. This Government’s actions are putting that progress at risk.
It is worth briefly highlighting how strong East Coast’s performance has been. Passenger satisfaction is up by 12% over the last year; 3 million more seats per year have been provided; punctuality has improved and a new timetable has been established; and the service has more than held its own financially. As a not-for-dividend operator, East Coast has already returned £640 million in premium payments to the taxpayer, while recording a £40 million profit.
I am sure that my hon. Friend is aware that the east coast main line passes through my constituency. It not only gives passengers a beautiful view of East Lothian, but is an essential part of the community of Dunbar. The instability is worrying people who use that service both to commute to London and into Edinburgh.
My hon. Friend is right. That instability is causing concern. Another thing causing concern is the fact that that £40 million profit, which has been reinvested in the service, would, under this Government’s plans, be split with shareholders instead.
I know from my own region how better services have made a real difference to passengers. In the east midlands, more services now stop at Newark; direct trains have been established daily between Lincoln and London; and two weeks ago a new commuter service was launched from Grantham. Bearing all this in mind, it is difficult to recognise the Government’s description of East Coast’s performance. Indeed, the Minister has said that punctuality on the east coast has plateaued. He even said that East Coast was the worst operator for punctuality when he appeared before the Transport Committee in April. He was then quoting from a very narrow, four-week window. Will he acknowledge today that this picture is not representative? According to Network Rail’s most recent punctuality figures, East Coast outperformed Virgin in both the last quarter and over the whole year, without the benefits of a £9 billion upgrade of its infrastructure. So this privatisation cannot be about punctuality, given that the Government have announced an extension to the operator’s contract on the west coast main line, where delays are more common.
It has been said that the Government are seeking a commercial partner to deliver investment, but will the Minister confirm today that the cost of upgrading the east coast main line and procuring new rolling stock will be met through public spending? In April, the Minister said that franchises should be measured
“by the premiums that are paid to the Government”,
as well as by reliability and overcrowding. But East Coast has made improvements in all those areas and grown the business, on a route that was last upgraded in the 1980s. The operator has developed a five-year plan and could deliver further success, if only the Government took the sensible step of backing it. Instead, we have seen an ideological decision to re-privatise the service. This is a damning indictment of this Government’s priorities at a time when the franchising system has collapsed and the National Audit Office has questioned the Department’s ability to deliver major projects.
The collapse of franchising has cast a long shadow over the rail industry. The fiasco has cost the taxpayer at least £55 million. Orders for rolling stock are on hold and the supply chain has been hit, threatening jobs and skills. The Government should be putting their house in order, so it is worrying to see Ministers instead, devoting their time to this unnecessary and unwanted privatisation, which suggests that they have not learnt the lessons from the recent past.
East Coast is working. The Office of Rail Regulation recently confirmed that East Coast receives virtually no subsidy and makes the second highest contribution back to the Treasury. We should not be undermining a successful service that has delivered real benefits for passengers. There has been enough instability on the line and the network as a whole benefits from having a public sector comparator, as my hon. Friend the Member for York Central (Hugh Bayley) suggested. I hope that the Government will now do the right thing and cancel this costly and unnecessary privatisation.
It is a pleasure to serve under your chairmanship yet again, Dr McCrea.
I congratulate the hon. Member for Middlesbrough (Andy McDonald) on securing the debate. The east coast franchise competition has become a subject of keen interest to many, not only in this room but beyond. The presence of so many hon. Members in the Chamber today to take part in and listen to this debate is a reflection of that keen interest.
The east coast main line serves a huge number of communities and businesses, as a number of hon. Members have made clear, and it connects industries in the north with commerce in the south, provides cross-border services to Scotland and helps to drive the development of tourism and the success of Edinburgh and Leeds as key financial centres outside London. That is why it is at the forefront of our new rail franchising programme, which was announced by my right hon. Friend the Secretary of State in March.
The programme that we announced is the right one. We want to secure the best possible rail services for both passengers and taxpayers, and the programme confirms our belief that franchising is the right way to do so. By publishing the programme, we have provided the whole rail industry with a long-term plan covering every rail franchise for the next eight years. That gives certainty to the market and supports the Government’s major investments in the country’s vital rail network. It is also exactly the same policy that the last Labour Government operated for 13 years when running our railways.
I think it was the hon. Member for Middlesbrough who seemed to be a little confused as to when the noble Lord Adonis made his comments on franchising being the right way, which have been quoted during this debate, so I will help him by saying that they were made in another place and repeated by the right hon. Member for Tooting (Sadiq Khan), who was the senior Transport Minister in the House of Commons at the time, during the debates on having to take the east coast main line into DOR.
I am grateful to the Minister. Lord Adonis was saying that we would not want to run the east coast as a public operation indefinitely. No Opposition Member is asking for the east coast to be run as a public sector operation indefinitely; we are asking that it remain with the public sector for a franchise period so that we can compare like with like—public performance against private performance. We will then not have to rely on ideology because we will have some facts.
I will return the compliment the hon. Gentleman gave me earlier by saying that he is on the reasonable wing of the parliamentary Labour party. I have to tell him, though, that Members from the more exotic wing of the Labour party were not saying that in their speeches; they want the east coast main line to be permanently in the public sector, not the private sector.
The hon. Lady anticipates the very point I am about to make, which is that, under the Railways Act 1993, the Secretary of State has a statutory duty to ensure the continuous, seamless provision of rail services. That is why the Department for Transport has Directly Operated Railways. It is a body of last resort when there is a problem; it is not a permanent company, for want of a better term, to run a rail franchise indefinitely. My hon. Friend the Under-Secretary was correct in 2009, and the noble Lord Adonis was also correct.
I am going to make progress, because I have only six minutes.
We have ensured that the delivery of the key inter-city franchises, both on the east coast and the west coast, is staggered so that they are not let at the same time in the economic cycle. The east coast is the first of those franchises to be let, and it is being returned to the private sector, as hon. Members know, after an extended and successful period of public ownership through force of necessity because of the fiasco with National Express. No one doubts that.
No, I do not have time. I am not giving way.
When my right hon. Friend the Secretary of State announced the new franchise programme, he set out three key principles that we want rail franchising to follow: first, that passengers gain; secondly, that the rail industry thrives, with growing companies and new competitors coming into the market; and thirdly, that the taxpayer gains through more efficient use of public money and less waste in the industry. We believe that letting the east coast main line back to the private sector in line with those three principles will deliver the best possible long-term outcome for passengers and taxpayers.
I am aware of a number of concerns raised by hon. Members, including the hon. Member for Aberdeen North (Mr Doran), on services to Scotland. Mindful of that, officials from the DFT who are developing the proposition for the future inter-city east coast franchise are meeting a number of interested parties along the route, including Transport Scotland, as I am sure he would expect, and other transport bodies in Scotland, as well as local authorities, to understand their concerns. The specification for the new franchise will address both current and potential markets along the franchise route, including those between London and Scotland and up to Aberdeen.
East Coast has delivered a great deal in the past three-and-a-half years of public ownership, which provides the foundations for more to be done by a private sector company that has certainty of ownership, longer planning horizons and an innovative and entrepreneurial approach to doing more for passengers and taxpayers. The operation of the east coast by the public sector was never intended to be a permanent arrangement.
Lord Adonis himself, when he was Secretary of State, said that he did not believe it was in the public interest for us to have a nationalised train operating company indefinitely, and I believe he still believes that. I would be fascinated if the hon. Member for Nottingham South (Lilian Greenwood) intervened to tell me exactly what he said when he told her that he had changed his mind, because I have great difficulty believing that someone as intellectually astute and consistent as the noble Lord Adonis has changed his mind now.
The announcement that we will return the franchise to the private sector in February 2015 provides the certainty that is needed so that longer-term plans for the business can be made. We now need a strong private sector partner.
If the hon. Gentleman listens, I will tell him.
A strong private sector partner is needed to build on what has been done and take forward our exciting plans for the route as part of the next franchise. The Government are making a significant investment in the route over the coming years, as a number of hon. Members mentioned, with new trains provided by the substantial inter-city express programme and new capacity provided by infrastructure projects. To ensure that that is managed and delivered so that those investments are put to best use, with minimal disruption for passengers, the inter-city east coast franchise needs a long-term partner that is able to deal effectively with the risks and challenges that come with such huge investment and change. That is best provided by the private sector.
Much of the debate has centred on the idea of privatised railways versus nationalised railways. The implication is that the running of the east coast by the public sector through DOR represents an alternative model to normal franchised services. That is not the case. The operation of train services by DOR is an essential part of the privatised franchising model. The Secretary of State has a statutory duty to maintain and ensure continuous provision of service, which is why DOR exists, but it is a short-term mechanism to meet immediate problems. Once those problems have been sorted, the intention is always to return to franchising.
Time is running out. Hon. Members have mentioned a number of issues, and I will write to them with answers to their questions, but I have to conclude by saying that it is almost Alice in Wonderland to believe in the so-called halcyon days of British Rail. I do not remember them; I believe things have improved under the franchise system.
Welfare Benefits (EU Citizens)
It is a pleasure to serve under your chairmanship, Dr McCrea, and to know that my hon. Friend the Minister will respond to the debate. I hope he will answer all the questions I ask.
The topic of this afternoon’s debate is very important to people not only in my constituency, but in many others. Almost all the British public are concerned, because too many British citizens are out of work, and taxpayers resent their money being used to fund welfare for foreigners. That is why my constituents wish to restrict access to out-of-work benefits that are currently being paid to non-UK nationals from other EU countries. I think that is the wish of the vast majority of the British people, and also, I hope, of our Government. Whatever the gravity of the situation now, it is nothing like as bad as it will be after 1 January next year, when the group of non-UK nationals from other EU countries will include Romanians and Bulgarians, who hitherto have been prevented from getting full access to welfare benefits and the employment market.
Does the Minister agree with the basic proposition that if someone from another European country decides to move to the United Kingdom, they should not expect to receive taxpayer-funded assistance for their housing, health care, education or living expenses? Does he accept that freedom of movement under the EU treaties should be defined as being a freedom to leave, as well as to arrive? If a person who is a non-British EU national cannot afford to live in the United Kingdom without recourse to taxpayer-funded services, should not that person return to his own EU country, rather than rely on UK taxpayer handouts?
How much money is being spent on those handouts? Unfortunately, the Government cannot tell us, because, as the Minister told the House in a written answer,
“the UK’s benefit payment systems do not currently record details of a claimant’s nationality. Looking forward, the Government is considering ways of recording nationality and immigration status of migrants who make a claim to universal credit”.—[Official Report, 14 January 2013; Vol. 556, c. 466W.]
I think it will come as a shock to many that after three years of a Government led by a Prime Minister who says that he is determined to take action on this subject, we have not even begun to collect the most basic information necessary to inform public debate. When are we going to start? Why can we not start right now and record the nationality of people when they claim benefits?
Only two months ago, the Prime Minister assured us that he was going to get tough on benefits being claimed by foreigners in the United Kingdom. A month ago, the Home Secretary, along with her counterparts from Germany, Austria and Holland, wrote to Alan Shatter, president of the EU Justice and Home Affairs Council, demanding tighter restrictions on immigrants’ access to welfare handouts and other state-funded services.
We are told that the Prime Minister is actively engaged in negotiating a new relationship between the British people and the European Union. I asked him a written question for answer on Monday this week about his top priorities for reforming the UK’s relationship with the EU. Unfortunately, the Prime Minister transferred the question to the Foreign Office, and the Minister for Europe’s reply makes no mention whatsoever of either welfare or immigration as being among the top priorities for reforming our relationship with the EU. That is despite a recent ComRes/Open Europe poll showing that 55% of voters regard those issues as a top priority, and despite the Prime Minister’s recent speeches in which he has indicated that he also sees them as a top priority.
I shall be grateful if the Minister can explain in detail which aspects of access to British taxpayer-funded welfare are currently being negotiated in the EU. What is the state of those negotiations, their time scale, their prospects for success and why, at the moment, are they not a top priority for our Prime Minister?
Please can the Minister also explain how confident he is that we can resolve the issue to our satisfaction, when the European Union Commission is saying that the UK, far from being too generous in welfare payouts to foreigners, is not being generous enough? That was the effect of the decision six days ago, on Thursday 30 May, by the EU Commission, when it announced that it is launching a prosecution against the United Kingdom in the European Court of Justice, because we have different and less favourable rules for access to out-of-work benefits for EU nationals, compared with British citizens. Even the EU-loving Financial Times described, in its leader on 31 May, the EU Commission as having
“lobbed a hand grenade into the political discussion about Britain’s membership of the EU”.
Does that episode not illustrate perfectly the utter contempt in which the EU Commission holds Ministers in our elected Government? In the 20 months since the EU Commission first threatened such action, there has been much huffing and puffing by our Government, but all apparently to no avail. If it has taken 20 months to make zero progress with the Commission on that issue, what hope is there that other issues we wish to renegotiate will be dealt with any quicker or with any greater success?
The background to the debate is the question I asked the Minister on 20 May, which was, what steps are the Government taking to reduce the eligibility to United Kingdom benefits of nationals of other European Union states? In his careful response, he told me:
“We are strengthening the habitual residence test; the Home Office is creating a statutory presumption that European economic area jobseekers and workers who are involuntarily unemployed will not have a right to reside here after six months unless they can demonstrate they are actively seeking work and have a genuine chance of finding a job; and we will prevent those with no entitlement to work in the UK from claiming contributory benefits.”
Analysing each element of the Minister’s response in turn, one can see the credibility gap between his precise words and the overall impression of toughness, which I am sure he was seeking to give. The habitual residence test was introduced on 1 August 1994. I recall my right hon. Friend the Member for Hitchin and Harpenden (Mr Lilley), as Secretary of State for Social Security, telling the Conservative party conference in 1993 that he wanted to curb spending on benefit tourists. It is almost 20 years later, and have we succeeded in doing so? No. The situation has got worse rather than better. This coming weekend, it will be 30 years since I was first elected to the House, and it is a pity that all I have to report over those 30 years is a continuing decline in UK sovereignty, and ever more powers and decisions over our lives being taken away from us by the EU, despite the brave words of successive Ministers.
In 2004, the habitual residence test was supplemented with the requirement that a person has to satisfy a preliminary test of a right to reside in the UK, but that does not apply to EU and European economic area nationals who are classed as workers or self-employed persons under EC directive 2004/38 and the family members of such persons. On analysis, therefore, how is the Minister proposing to strengthen the habitual residence test, and how will it do anything to reduce the eligibility of nationals of other EU member states to access UK benefits? It does not seem to me as though it will achieve anything.
The second point that the Minister made in his answer, about jobseekers and workers who are involuntarily unemployed having to leave after six months, invites the question as to what is meant by “involuntarily unemployed”. How will one assess whether they have a genuine chance of finding a job? Are we going to introduce a language test? If so, how would that be compatible with current EU legislation? What about those who are self-employed, such as Romanian Big Issue sellers?
The third part of the Minister’s answer is perhaps the most disingenuous. He says that
“we will prevent those with no entitlement to work in the UK from claiming contributory benefits.”—[Official Report, 20 May 2013; Vol. 563, c. 890.]
How many people fall into that category? Every EU national who moves to the United Kingdom has the same entitlement to benefits as a UK national, regardless of their previous tax or national insurance contributions. That principle applies, without qualification, to all those who are “workers” or self-employed, while the qualification of “worker” is so broad as to include those not working but purportedly seeking work. Would it be unfair and going too far to summarise the Minister’s position as tantamount to an admission of impotence in the face of this crucial issue?
Let me emphasise that I do not blame the Minister at all, but do not his answers and the concerns of the Prime Minister, the Home Secretary and the Secretary of State for Work and Pensions amount to little more than spitting against the wind and grandstanding? What prospect is there of being able to change the European Union treaties to enable us to discriminate on the grounds of nationality in the way in which we distribute our welfare payments? Indeed, what is parliamentary sovereign democracy if it is not about the ability to treat our own citizens differently from the citizens of other countries?
One of the fundamental freedoms that lie at the heart of the EU treaties is “freedom of movement”. That was sold to the British people on the basis that we would be able to move to another country in the EU without impediment. We would be able to work there and live there and, through reciprocity, citizens of other EU countries could do the same in the United Kingdom. But what has happened is that, as with so many other aspects of the United Kingdom’s relationship with the European Union, freedom of movement has been applied as if to a federal superstate where there is no distinction between a British citizen and a Romanian or Bulgarian. The European Union Commission has continued to apply its ratchet of integration—ever closer union—systematically undermining our ability even to decide to whom we give British taxpayer-funded services.
Does this issue not illustrate the fundamental chasm between the European Union and us? The European Union sees itself as one country, with all its citizens sharing the same European nationality. Meanwhile, the United Kingdom sees itself as one of 27 separate countries within a free trade area, but with control over its own destiny and, in the context of this debate, control over those to whom it does and does not pay taxpayer-funded benefits. Does this not illustrate perfectly why my noble Friends Lords Lawson and Forsyth and Michael Portillo, all former Cabinet Ministers with a wealth of experience in negotiating with the European Union, are spot-on in pointing out the utter futility of the renegotiation exercise on which the Prime Minister has embarked? Does this saga not illustrate graphically the extent to which this Parliament has lost control over the most basic elements of national policy?
The starting point for the right to vote in a UK parliamentary election is being a British citizen. Citizenship confers privileges for citizens over non-citizens. Why cannot the same basic principles apply to the allocation of taxpayer-funded welfare benefits? Please can the Minister tell me how we will be able to restore control over our own affairs and give preference to our own citizens over foreigners without leaving the European Union? It seems to me that actions such as we have seen from the European Commission in recent days are driving more and more people to the conclusion that there is no alternative but to leave the European Union and that we would be much better off out, and in control of our own destiny.
There is a big issue about the fact that the European Union originally started off with a whole lot of countries that each had relatively similar standards of living, but now there are countries that are new entrants, particularly Bulgaria and Romania, where the standard of living is infinitesimal compared with that which we are lucky enough to enjoy in this country.
Figures I have obtained from the Library show that the annual household net income of a single-earner couple on the average wage with two children in 2011 was, using purchasing power parity exchange rates, €31,616 in the United Kingdom but only €7,750 in Bulgaria and even less—€7,514—in Romania. That means we have an average annual household net income of more than four times that of citizens in Bulgaria and Romania, so why will the Bulgarians and the Romanians not come to the United Kingdom in large numbers from next January? Apparently, there are already about 1 million of them in Spain, so it will not be very expensive for them to get here from Spain if they want to do so, and once they get here, unless something is done to the existing rules, they will basically have free access to as many benefits as they choose to apply for. They can come. They can try to get work. Even if they are unsuccessful at getting work, they can say that they are trying to get work and then access our benefits system. That can include other benefits that they can then export back to their families in their own countries. Is this not a state of complete farce? Have the Government grasped the political significance and importance of it?
Answering questions in the careful way that the Minister has answered them is absolutely right, because he wants to be intellectually honest in answering them, but could he also ensure that much fuller answers are given and that the areas where we obviously do not have any control at the moment are highlighted? I hope that as a result of this debate, he will assure us that the Prime Minister is serious about trying to do something about all this and that it is not just huffing and puffing, because we cannot carry on like this. There was 20 months between the European Commission saying that it was going to start taking infraction proceedings against us, and the matter now being referred to the Court. Will it take two years—three years?—before the Court decides? Many of us hope that we will have an in/out referendum long before then, but in any event, does this not show that the whole renegotiation process is a complete charade?
One example can be worth a thousand generalities, and the example highlighted in this short Adjournment debate is one the Government need to take really seriously.
I congratulate my hon. Friend the Member for Christchurch (Mr Chope) on securing the debate and trying to highlight some of the challenging issues we have to deal with. The Government are rightly concerned that our rules on migrants’ access to benefits should be robust. We already have strong rules to protect the taxpayer and the public purse from abuse and fraud. Those rules are fair and just, and I think they are entirely consistent with the freedom of EU citizens to work and to look for work here—I will come back to the issue of those who come here with no intention of working and the controls that are in place in that regard. The rules rightly ensure that migrants cannot get benefits if they have never worked here and have no intention of doing so.
Let me set out a bit of the background to assist my hon. Friend. European law says that an EU citizen can move to another member state if they are a worker, self-employed or a student, if they are seeking work or if they are self-sufficient. When EU nationals come to work in the hotels and guest houses of Bournemouth and Christchurch, it is that right that they are exercising, in the same way that UK nationals exercise their right when they go and work in other European Union countries.
European law also says that we must treat EU nationals who come here to work in the same way as we treat British nationals. We comply with that principle. EU nationals who work here and then lose their job can claim jobseeker’s allowance and housing benefit and, if they are temporarily unwell and unable to work, they can claim employment and support allowance.
EU nationals who come here to seek work are expected under EU law to be actively seeking work and to have a genuine chance of getting a job, and if they do, we say that they can claim jobseeker’s allowance. When people try to claim JSA, we apply a fair test to assess whether they are genuinely here to seek work—the habitual residence test. That test is applied to jobseekers whether they are EU nationals or UK nationals.
My hon. Friend is absolutely right that no member state can afford to support migrants who have no intention of working and contributing economically to the community in which they choose to live. There is no requirement under EU law to provide such support, nor should there be. EU law has not sought to harmonise benefit regimes, nor should it. As he rightly points out, those are matters for national Governments. Member states have their own benefit regimes, some of which are more or less generous to their citizens than ours. It is easy to see why some people feel that they can move, not to work, but to take advantage of what they think is more generous welfare support in another country.
EU law sets out rules for co-ordination between member states to ensure that people who are genuinely exercising their free movement rights are not disadvantaged. There is no free movement right for those who are economically inactive and have no intention of working but want to be supported by state funds. We cannot be expected to support those who move just to take advantage of different benefit regimes, and the public are rightly concerned that that is what would happen if we were not allowed to check the legal basis for someone’s residence in this country, which is the basis of the infraction proceedings against us.
My hon. Friend the Minister uses the expression “no intention of working”, but all they need to do is show that they are applying for jobs and that they hope to be able to work. It is very hard to prove that they are not intending to work, particularly when his Department does not even have the information on whether they are British nationals.
I just say to my hon. Friend that when someone seeks to claim jobseeker’s allowance, they go through vigorous tests to identify whether they are looking for work. The only basis on which people receive benefit is by demonstrating that they are looking for work, which is why we have the habitual residence test. It tests not whether someone has popped across on holiday and decided to sign on while they are here, but whether they have any real intention to be here and work. That is why we ask a range of questions and why we are trying to strengthen the test, which I shall come on to in a moment. It was one of the commitments the Prime Minister made. I want to say more about the habitual residence test and the infraction process.
The Commission says that we discriminate against EU citizens when we apply the habitual residence test. We believe that we are following EU law correctly when we apply those rules. Rules in the residence directive explicitly allow us to protect our national finances and prevent migrants from becoming an unreasonable burden on our welfare system. When we ask people to satisfy the habitual residence test, we do so not on the basis of their nationality but on the basis that they have moved to the UK from abroad, even if they have previously lived here. We do so to protect our system from abuse. Why would a member state not want to protect its benefit system from abuse by checking that someone is legally resident before they make a claim? The advocate-general of the European Court, in giving his opinion on an Austrian case called Brey, said that
“the Court has held in various circumstances that Member States may require lawful residence before granting social assistance benefits, providing that such a requirement complies with EU law.”
That is exactly what we do when we assess someone’s right to reside as part of our habitual residence test. We treat each case on its own merits and consider the individual circumstances of the claimant. Our test is fair; it legitimately requires that a benefit claimant has a reasonable right of residence here and a degree of interconnection with and integration into UK society.
This is not the first time that someone has sought to challenge the habitual residence test. We have already successfully defended challenges to our test in our Supreme Court and the domestic courts. They found that the habitual residence test does not discriminate on the grounds of nationality and that its use is justified because it protects the public finances of the UK and prevents benefit claims by people who have no intention of working here at all. My concern and that of the Government, and the reason why we are fighting the case, is that if the Commission is successful in arguing its interpretation of the rules, it will open a new door that will mean that member states can no longer check that migrants meet national residence laws, thus extending free movement to inactive migrants who believe they can move to any member state and get social assistance benefits soon after arriving. That cannot be right, which is why the Government, the Secretary of State and I are determined to defend the test. We believe that we have strong grounds to win the argument in the Court.
My hon. Friend mentioned the measures that the Prime Minister announced to strengthen our position. I shall highlight two announcements, the first of which was on time-limited access to benefits. Under EU law, someone has a right to reside as a worker or a jobseeker only if they are “continuing to seek employment” and have a
“genuine chance of being engaged”.
It is not unreasonable to take the view that if someone has not found a job within six months, that right should terminate. At the moment, we expect that most jobseekers will find a job within six months. The Home Office will amend the regulations to create a statutory presumption that EEA nationals who are coming to look for work in the UK or who have lost their job will no longer be exercising their free movement right of residence as a jobseeker after six months, unless, in line with EU law, they demonstrate that they are actively seeking work and have a genuine chance of getting a job. Most jobseekers will find work quite quickly—within six months. It is hard to demonstrate after six months that they have a genuine chance of getting a job.
The other announcement was on strengthening the habitual residence test. We will continue our work to ensure that our decision making when assessing whether someone satisfies the test is consistent and fair. We are improving the test, as the Prime Minister said, by increasing the range and depth of evidence that advisers collect from claimants and making it easier for advisers to tailor the questions to someone’s circumstances. Those improvements will support our argument that our test is robust and that our decisions are fair and comply with EU law.
My hon. Friend asked about language skills and the assessment of the genuine chance of finding a job. We will assess whether language skills are a barrier to work, as part of the habitual residence test—it is built into the test. He also commented on the fact that we are in discussions with our European neighbours. My right hon. Friend the Secretary of State for Work and Pensions has been in Germany to meet his opposite number, the Deputy Interior Minister. The Home Secretary will raise these issues with other Interior Ministers at the Justice and Home Affairs Council over the next week. I am going to the Netherlands this evening to talk to my opposite number about how we can work together more closely. There are clear concerns in a number of member states that the Commission is seeking to extend its influence in this area and subvert the right of free movement, which is widely supported in member states. We need to continue to work with our allies, demonstrate a need for change and recognise the concerns expressed across a wide number of member states about the Commission’s role.
My hon. Friend started his speech by talking about the broader issues of access. I am sure that he will welcome the immigration Bill announced in the Queen’s Speech, which will tighten access to the NHS and controls on private landlords letting property to tenants from overseas. The Government are taking steps to tighten access to not only welfare benefits but other public services, which is an important part of our approach.
Does my hon. Friend not agree that it would be much better if we could do all that under our own control? If we were outside the European Union, we would be able to make such decisions ourselves, instead of being beholden to the European Commission, which, from the way he has described the infraction proceedings, is wholly intransigent. I sympathise with him. For all the effort he is making, he is banging his head against a brick wall; there is no give on the part of the European Commission. Does there not come a time when the British people have to say, “Enough’s enough. If you do not concede anything, we will leave”?
My hon. Friend is being uncharacteristically defeatist. We can make progress, which is why we are engaging with other member states. The support among other member states—we were party to the Brey case—demonstrates to the Commission how much concern there is. Member states can take the initiative to change the regulations, and we need to demonstrate to the Commission that there is support for that. I fully support the Prime Minster’s policy. We need to have the renegotiation and put the outcome of that renegotiation to the people in a referendum when we win the next general election. That is the right approach. We need to build alliances with other member states; we are not alone in our concerns. My hon. Friend will be relieved to know that other member states share his concerns exactly.
I hope that from my remarks this afternoon my hon. Friend sees that the Government are actively taking steps to protect our position not only in domestic law, by strengthening the habitual residence test through the new rules and the presumption about someone being out of work for six months, but by defending the matter strongly in the Court and building alliances with other EU countries. Our approach is right.
Sitting adjourned without Question put (Standing Order No. 10(13)).